Eastern Bankshares, Inc. Reports Second Quarter 2021 Financial Results and Declares Quarterly Dividend

BOSTON--()--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 2021 second quarter financial results and the declaration of a quarterly cash dividend of $0.08 per share. Net income for the second quarter of 2021 was $34.8 million, or $0.20 per share, compared to net income of $47.7 million, or $0.28 per share, reported for the first quarter of 2021.

Financial results for the second quarter of 2021 include $3.5 million in merger and acquisition expenses, primarily related to the pending merger with Century Bancorp, Inc. (“Century”) announced on April 7, 2021 and $3.3 million in expenses related to the anticipated settlement of overdraft litigation. Excluding these, and certain other non-operating expenses, operating net income* for the second quarter of 2021 was $37.1 million, or $0.22 per share, compared to $46.5 million, or $0.27 per share, reported for the prior quarter.

Our second quarter financial results continue to demonstrate our organic growth, strong fee income generation, sound asset quality, and focus on our long-term profitability,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “COVID-19 vaccination rates in our core markets are among the highest in the country, and we’re seeing significant progress in our local economy as businesses were able to reopen their doors and look to the future. Excluding PPP loans, we saw loan growth of $117 million this quarter, or growth of over 5% on an annualized basis, which provides further evidence of confidence and business expansion. We are optimistic about our continued growth as our colleagues work diligently on the integration of Century. We’re pleased that Century shareholders approved the transaction earlier this month and are working towards a smooth integration later this year.”

HIGHLIGHTS FOR THE SECOND QUARTER OF 2021

  • Total loans excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans grew $116.9 million, or 5% on an annualized basis from the prior quarter. Residential and commercial loans excluding PPP loans grew 15% and 5%, respectively, on an annualized basis from the prior quarter.
  • Net interest income increased $4.5 million from the prior quarter due to growth in the Company’s securities portfolio and higher loan income, primarily attributable to higher PPP fee recognition.
  • An improving economic outlook coupled with strong asset quality led to a $3.3 million release of loan loss reserves. Nonperforming loans were $41.6 million, or 0.43% of total loans at the end of the second quarter.
  • The second quarter saw solid fee generation with insurance, wealth management and debit card revenues up 4%, 17% and 36%, respectively, from the prior year quarter.

BALANCE SHEET

Total assets were $17.0 billion at June 30, 2021, representing an increase of $320.7 million, or 2%, from March 31, 2021.

  • Available for sale securities increased $862.5 million, or 22%, on a consecutive quarter basis, to $4.8 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined $296.1 million to $1.6 billion.
  • Total loans were $9.6 billion, representing a decrease of $295.4 million, or 3%, from the prior quarter as the pace of forgiveness of PPP loans accelerated in the second quarter. Excluding PPP loans, total loans grew $116.9 million, or 1%, from the prior quarter, driven by growth in commercial loans excluding PPP loans of $80.7 million and residential loans of $51.0 million.
  • Deposits totaled $13.3 billion, representing an increase of $269.6 million, or 2%, from March 31, 2021.
  • Shareholders’ equity was $3.4 billion, representing an increase of $43.6 million, or 1%, from the prior quarter. The increase is driven by higher retained earnings of $21.0 million as well as an increase in the after-tax market value of the available for sale investment portfolio, which drove the increase in accumulated other comprehensive income of $19.9 million.
  • At June 30, 2021, book value per share was $18.37 and tangible book value per share* was $16.33.

NET INTEREST INCOME

Net interest income was $104.6 million for the second quarter, compared to $100.1 million in the prior quarter, representing an increase of $4.5 million on a consecutive quarter basis.

  • Included in net interest income was $9.3 million and $8.3 million of SBA PPP fee accretion net of deferred cost amortization in the second quarter and prior quarter, respectively. Between March 31, 2021 and June 30, 2021, $502.9 million in PPP loans were forgiven through the SBA or otherwise paid down compared to $240.7 million in the prior quarter. In the second quarter, PPP loan forgiveness was concentrated in higher balance loans where the Company received a lower percentage loan processing fee from the SBA relative to the prior quarter. Loans forgiven in the second quarter had lower unaccreted fee income at the time of forgiveness relative to the first quarter.
  • Interest income on available for sale securities increased $2.3 million to $14.3 million in the second quarter as excess cash continues to be deployed into securities. Investment securities averaged $4.3 billion for the second quarter compared to $3.6 billion for the prior quarter, an increase of $713.2 million.
  • The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.69% for the second quarter, representing a 2 basis points decrease from the prior quarter. The net interest margin continues to be pressured by the low interest rate environment and excess liquidity. The core net interest margin* in Appendix E demonstrates the impact of excess cash and the PPP program.

NONINTEREST INCOME

Noninterest income was $45.7 million for the second quarter, compared to $55.2 million for the prior quarter, representing a decrease of $9.5 million. The decline was primarily driven by lower insurance revenues from the seasonally high prior quarter and lower loan-level interest rate swap revenue due to lower market interest rates.

  • Insurance commissions decreased $4.5 million to $23.7 million in the second quarter, compared to $28.1 million in the prior quarter, driven by seasonality. Compared to the prior year quarter, insurance commissions increased $1.0 million, or 4%.
  • Trust and investment advisory fees increased $0.4 million on a consecutive quarter basis to $6.1 million primarily due to higher equity values.
  • Loan-level interest rate swap losses were $1.2 million in the second quarter, compared to $5.4 million in revenue in the prior quarter, representing a decrease of $6.6 million that was primarily driven by a $6.4 million decrease in the fair value of such interest rate swap transactions due to lower market interest rates.
  • Income on securities held in rabbi trust accounts was $4.2 million in the second quarter compared to $1.8 million in the prior quarter, representing an increase of $2.4 million primarily due to higher equity market gains in the second quarter of 2021 as compared to the prior quarter.
  • Mortgage origination activity was lower in the second quarter as compared to the prior quarter with the gain on sale of loans held for sale totaling $0.8 million, down $0.6 million from the prior quarter.

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

NONINTEREST EXPENSE

Noninterest expense was $107.3 million for the second quarter representing an increase of $13.3 million, or 14%, from $94.0 million the prior quarter. The increase was primarily driven by higher salaries and employee benefits expense, expenses related to the pending merger with Century, and expenses related to the anticipated settlement of overdraft fee and nonsufficient funds fee lawsuits. Noninterest expense on an operating basis* for the second quarter of 2021 was $99.9 million, compared to $92.5 million in the prior quarter.

  • Salaries and employee benefits expense was $69.3 million in the second quarter, representing an increase of $5.2 million from the prior quarter. The increase was primarily driven by higher incentive compensation expense of $3.4 million and an increase in the defined contribution supplemental executive retirement plan (“DC SERP”) expense of $1.1 million associated with the increase in the market value of investments held in rabbi trust accounts.
  • Data processing expense was $13.6 million in the second quarter, an increase of $1.4 million from the prior quarter. Professional services expense was $6.4 million, an increase of $2.3 million from the prior quarter. These increases can be primarily attributed to costs associated with the pending acquisition of Century.
  • Marketing expenses were $3.5 million in the second quarter, representing an increase of $1.8 million from the prior quarter.
  • Other noninterest expense increased $2.5 million in the second quarter to $3.0 million. In the second quarter, the Company recorded expenses of $3.3 million related to the anticipated settlement of overdraft fee and nonsufficient fund fee suits brought against the Company that were the subject of mediation during the quarter. Partially offsetting this increased expense in the second quarter was the reversal of an impairment charge on tax credit investments of $1.4 million.

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

ASSET QUALITY

The allowance for loan losses was $105.6 million at June 30, 2021, or 1.10% of total loans, compared to $111.1 million or 1.12% of total loans at March 31, 2021. The Company released loan loss reserves totaling $3.3 million in the second quarter, compared to a release of $0.6 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at June 30, 2021 and all preceding periods.

Non-performing loans totaled $41.6 million at June 30, 2021 compared to $44.0 million at the end of the prior quarter. During the second quarter of 2021, the Company recorded total net charge-offs of $2.1 million, or 0.09% of average total loans on an annualized basis compared to $1.4 million and 0.06% in the prior quarter, respectively.

At June 30, 2021, approximately $149.8 million in COVID-19 modified loans remained under modified payment terms, down from $178.4 million at March 31, 2021. The commercial real estate portfolio contained $113.3 million of the remaining COVID-19 modifications at period end, of which $89.3 million or 79% were in the hotel segment.

Please refer to Appendix F for a detailed breakout on COVID-19 related loan modifications.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s second quarter 2021 earnings will be held on Friday, July 30, 2021 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (833) 233-4460 from within the U.S. or (647) 689-4543 if outside the U.S. and reference conference ID 7899073. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website at investor.easternbank.com. A replay of the webcast will be made available on demand on this site.

Following the webcast, Eastern will post its general investor presentation incorporating the second quarter results on its website at investor.easternbank.com under the “Events & Presentations” section.

DIVIDEND DECLARED

The Company’s Board of Directors declared a quarterly cash dividend of $0.08 per common share, payable on September 15, 2021, to shareholders of record as of the close of business on September 3, 2021.

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 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of June 30, 2021, Eastern Bank had approximately $17 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 1,900 deeply committed professionals who value relationships with their customers, colleagues, and communities. For investor information, visit investor.easternbank.com.

NON-GAAP FINANCIAL MEASURES

*Denotes a non-GAAP financial measure used in this press release.

A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).

The Company presents non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company’s core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

There are items in the Company’s financial statements that impact its financial results, but which management believes are unrelated to the Company’s core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders’ equity, the operating efficiency ratio, and the ratio of noninterest income to total revenue on an operating basis. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) expenses indirectly associated with the Company’s initial public offering (“IPO”), (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (“EBF”, formerly known as the Eastern Bank Charitable Foundation) in connection with the Company’s mutual-to-stock conversion and IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. The Company does not provide an outlook for its total noninterest expense because it contains expense components, such as expense associated with rabbi trust accounts, which is market-driven, over which the Company cannot exercise control. Accordingly, a reconciliation of the Company’s outlook for its noninterest expense on an operating basis to an outlook for total noninterest expense cannot be made available without unreasonable effort.

Management also presents the Company’s core net interest margin which excludes the impact of items management determines as being one-time in nature or not indicative of its core operating results. Such items include the impact of excess liquidity in the form of excess cash volume, PPP loans originated in response to the COVID-19 pandemic, and material purchase accounting adjustments. Similarly, management presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolios. These metrics include the ratio of total nonperforming loans to total loans excluding PPP loans, the ratio of the allowance for loan losses to total loans excluding PPP loans, and the ratio of annualized net charge-offs to average total loans excluding PPP loans. The Company anticipates that the vast majority of its PPP loans outstanding at June 30, 2021 will be forgiven, and to the extent not forgiven, a PPP loan is intended to be 100% guaranteed by the SBA.

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

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

FORWARD-LOOKING STATEMENTS

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

Certain factors that could cause actual results to differ materially from expected results include developments in the Company’s market relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown, adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses, increased competitive pressures, changes in the interest rate environment, risks associated with its proposed merger with Century, including the possibility that revenue or expense synergies or the other expected benefits of the transaction may not materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, the Company’s or Century’s businesses may not perform as expected due to transaction-related uncertainty or other factors; that the Company is unable to successfully implement integration strategies; that required regulatory or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that the timing of completion of the proposed merger is dependent on various factors that cannot be predicted with precision at this point; reputational risks and the reaction of the companies’ customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; and diversion of management time on merger-related issues, as well as general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including inflation, interest rates, interest rate sensitivity and liquidity, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including fluctuations due to actual or anticipated changes to federal tax laws; and credit quality, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans. For further discussion of such factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov.

Further, given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely. You should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this press release. The Company does not undertake any obligation to update forward-looking statements.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

 

Certain information in this press release is presented as reviewed by the Company’s management and includes information derived from the Company’s Consolidated Statements of Income, non-GAAP financial measures, and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

 

 

As of and for the three months ended

(Unaudited, dollars in thousands, except per share amounts)

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

104,608

 

$

100,091

 

$

103,608

 

$

98,742

 

$

98,755

 

Noninterest income

 

45,733

 

 

55,212

 

 

49,638

 

 

47,709

 

 

47,657

 

Total revenue

 

150,341

 

 

155,303

 

 

153,246

 

 

146,451

 

 

146,412

 

Noninterest expense

 

107,335

 

 

94,049

 

 

199,169

 

 

109,817

 

 

100,765

 

Pre-tax, pre-provision income (loss)

 

43,006

 

 

61,254

 

 

(45,923

)

 

36,634

 

 

45,647

 

(Release of) provision for allowance for loan losses

 

(3,300

)

 

(580

)

 

900

 

 

700

 

 

8,600

 

Pre-tax income (loss)

 

46,306

 

 

61,834

 

 

(46,823

)

 

35,934

 

 

37,047

 

Net income (loss)

 

34,809

 

 

47,663

 

 

(44,062

)

 

28,505

 

 

29,850

 

Operating net income (non-GAAP)

 

37,097

 

 

46,537

 

 

31,612

 

 

32,322

 

 

27,301

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings (loss) per share

$

0.20

 

$

0.28

 

$

(0.26

)

 

n.a.

 

 

 

n.a.

Operating earnings per share (non-GAAP)

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

 

 

 

n.a.

Book value per share

$

18.37

 

$

18.14

 

$

18.36

 

n.a.

 

 

 

n.a.

Tangible book value per share (non-GAAP)

$

16.33

 

$

16.12

 

$

16.34

 

n.a.

 

 

 

n.a.

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

0.83

%

 

1.19

%

 

(1.11

)%

 

0.80

%

 

0.88

%

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

 

0.89

%

 

1.15

%

 

0.79

%

 

0.90

%

 

0.81

%

Return on average shareholders' equity (1)

 

4.10

%

 

5.66

%

 

(5.61

)%

 

6.65

%

 

7.11

%

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

 

4.36

%

 

5.53

%

 

4.02

%

 

7.54

%

 

6.51

%

Net interest margin (FTE) (1)

 

2.69

%

 

2.71

%

 

2.84

%

 

3.04

%

 

3.23

%

Cost of deposits (1)

 

0.03

%

 

0.03

%

 

0.03

%

 

0.06

%

 

0.11

%

Fee income ratio

 

30.42

%

 

35.55

%

 

32.39

%

 

32.58

%

 

32.55

%

Efficiency ratio

 

71.39

%

 

60.56

%

 

129.97

%

 

74.99

%

 

68.82

%

Operating efficiency ratio (non-GAAP)

 

67.78

%

 

60.22

%

 

68.33

%

 

69.95

%

 

68.90

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

17,047,453

 

$

16,726,795

 

$

15,964,190

 

$

15,460,594

 

$

13,996,523

 

Total loans

 

9,621,075

 

 

9,916,475

 

 

9,730,525

 

 

9,944,241

 

 

10,014,338

 

Total deposits

 

13,250,433

 

 

12,980,875

 

 

12,155,784

 

 

13,332,585

 

 

11,846,765

 

Total loans / total deposits

 

73

%

 

76

%

 

80

%

 

75

%

 

85

%

PPP loans

$

825,784

 

$

1,238,053

 

$

1,026,117

 

$

1,123,493

 

$

1,100,181

 

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL")

$

105,637

 

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

ALLL / total nonperforming loans ("NPLs")

 

253.74

%

 

252.72

%

 

261.33

%

 

257.47

%

 

210.55

%

Total NPLs / total loans

 

0.43

%

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

Total NPLs / total loans (excl. PPP loans) (non-GAAP)

 

0.47

%

 

0.51

%

 

0.50

%

 

0.51

%

 

0.62

%

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

 

0.09

%

 

0.06

%

 

0.13

%

 

0.08

%

 

0.04

%

NCOs / average total loans (excl. PPP loans) (non-GAAP) (1)

 

0.10

%

 

0.06

%

 

0.15

%

 

0.09

%

 

0.05

%

Remaining COVID-19 loan modifications (2)

$

149,805

 

$

178,430

 

$

332,682

 

$

701,227

 

$

945,995

 

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

20.12

%

 

20.25

%

 

21.47

%

 

11.08

%

 

12.10

%

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

 

18.30

%

 

18.42

%

 

19.58

%

 

8.87

%

 

9.67

%

 

 

 

 

 

 

(1) Presented on an annualized basis.

(2) See Appendix F: COVID-19 Related Loan Modifications

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

Jun 30, 2021 change from

(Unaudited, dollars in thousands)

Jun 30, 2021

Mar 31, 2021

Jun 30, 2020

Mar 31, 2021

Jun 30, 2020

ASSETS

 

 

 

△ $

△ %

△ $

△ %

Cash and due from banks

$

58,490

 

$

79,497

 

$

67,264

 

(21,007

)

(26

)%

(8,774

)

(13

)%

Short-term investments

 

1,505,757

 

 

1,780,835

 

 

1,365,297

 

(275,078

)

(15

)%

140,460

 

10

%

Cash and cash equivalents

 

1,564,247

 

 

1,860,332

 

 

1,432,561

 

(296,085

)

(16

)%

131,686

 

9

%

Available for sale securities

 

4,848,781

 

 

3,986,253

 

 

1,600,354

 

862,528

 

22

%

3,248,427

 

203

%

Total securities

 

4,848,781

 

 

3,986,253

 

 

1,600,354

 

862,528

 

22

%

3,248,427

 

203

%

Loans held for sale

 

2,734

 

 

2,022

 

 

2,972

 

712

 

35

%

(238

)

(8

)%

Loans:

 

 

 

 

 

 

 

Commercial and industrial

 

1,740,679

 

 

1,986,366

 

 

2,271,700

 

(245,687

)

(12

)%

(531,021

)

(23

)%

Commercial real estate

 

3,775,771

 

 

3,676,941

 

 

3,584,358

 

98,830

 

3

%

191,413

 

5

%

Commercial construction

 

237,927

 

 

249,416

 

 

282,246

 

(11,489

)

(5

)%

(44,319

)

(16

)%

Business banking

 

1,339,852

 

 

1,513,051

 

 

1,234,961

 

(173,199

)

(11

)%

104,891

 

8

%

Total commercial loans

 

7,094,229

 

 

7,425,774

 

 

7,373,265

 

(331,545

)

(4

)%

(279,036

)

(4

)%

Residential real estate

 

1,457,498

 

 

1,406,510

 

 

1,400,855

 

50,988

 

4

%

56,643

 

4

%

Consumer home equity

 

834,938

 

 

832,466

 

 

905,484

 

2,472

 

%

(70,546

)

(8

)%

Other consumer

 

234,410

 

 

251,725

 

 

334,734

 

(17,315

)

(7

)%

(100,324

)

(30

)%

Total loans

 

9,621,075

 

 

9,916,475

 

 

10,014,338

 

(295,400

)

(3

)%

(393,263

)

(4

)%

Allowance for loan losses

 

(105,637

)

 

(111,080

)

 

(116,636

)

5,443

 

(5

)%

10,999

 

(9

)%

Unamortized prem./disc. and def. fees

 

(29,739

)

 

(32,673

)

 

(34,722

)

2,934

 

(9

)%

4,983

 

(14

)%

Net loans

 

9,485,699

 

 

9,772,722

 

 

9,862,980

 

(287,023

)

(3

)%

(377,281

)

(4

)%

Federal Home Loan Bank stock, at cost

 

10,601

 

 

8,805

 

 

8,805

 

1,796

 

20

%

1,796

 

20

%

Premises and equipment

 

44,733

 

 

46,619

 

 

52,475

 

(1,886

)

(4

)%

(7,742

)

(15

)%

Bank-owned life insurance

 

79,634

 

 

79,110

 

 

77,528

 

524

 

1

%

2,106

 

3

%

Goodwill and other intangibles, net

 

380,402

 

 

376,002

 

 

376,331

 

4,400

 

1

%

4,071

 

1

%

Deferred income taxes, net

 

26,161

 

 

31,508

 

 

7,663

 

(5,347

)

(17

)%

18,498

 

241

%

Prepaid expenses

 

145,941

 

 

150,453

 

 

92,517

 

(4,512

)

(3

)%

53,424

 

58

%

Other assets

 

458,520

 

 

412,969

 

 

482,337

 

45,551

 

11

%

(23,817

)

(5

)%

Total assets

 

17,047,453

 

 

16,726,795

 

 

13,996,523

 

320,658

 

2

%

3,050,930

 

22

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Demand

 

5,399,297

 

 

5,369,164

 

 

4,740,125

 

30,133

 

1

%

659,172

 

14

%

Interest checking accounts

 

2,656,610

 

 

2,482,731

 

 

2,385,912

 

173,879

 

7

%

270,698

 

11

%

Savings accounts

 

1,403,472

 

 

1,362,463

 

 

1,157,606

 

41,009

 

3

%

245,866

 

21

%

Money market investment

 

3,544,897

 

 

3,522,990

 

 

3,254,202

 

21,907

 

1

%

290,695

 

9

%

Certificates of deposit

 

246,157

 

 

243,527

 

 

308,920

 

2,630

 

1

%

(62,763

)

(20

)%

Total deposits

 

13,250,433

 

 

12,980,875

 

 

11,846,765

 

269,558

 

2

%

1,403,668

 

12

%

Borrowed funds:

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

14,323

 

 

14,473

 

 

14,922

 

(150

)

(1

)%

(599

)

(4

)%

Escrow deposits of borrowers

 

14,119

 

 

14,878

 

 

14,233

 

(759

)

(5

)%

(114

)

(1

)%

Total borrowed funds

 

28,442

 

 

29,351

 

 

29,155

 

(909

)

(3

)%

(713

)

(2

)%

Other liabilities

 

337,956

 

 

329,524

 

 

426,973

 

8,432

 

3

%

(89,017

)

(21

)%

Total liabilities

 

13,616,831

 

 

13,339,750

 

 

12,302,893

 

277,081

 

2

%

1,313,938

 

11

%

Shareholders' equity:

 

 

 

 

 

 

 

Common shares

 

1,868

 

 

1,868

 

 

 

 

%

1,868

 

%

Additional paid-in capital

 

1,856,241

 

 

1,854,895

 

 

 

1,346

 

%

1,856,241

 

%

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

 

(145,219

)

 

(146,472

)

 

 

1,253

 

(1

)%

(145,219

)

%

Retained earnings

 

1,723,979

 

 

1,702,946

 

 

1,681,164

 

21,033

 

1

%

42,815

 

3

%

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

 

(6,247

)

 

(26,192

)

 

12,466

 

19,945

 

(76

)%

(18,713

)

(150

)%

Total shareholders' equity

 

3,430,622

 

 

3,387,045

 

 

1,693,630

 

43,577

 

1

%

1,736,992

 

103

%

Total liabilities and shareholders' equity

 

17,047,453

 

 

16,726,795

 

 

13,996,523

 

320,658

 

2

%

3,050,930

 

22

%

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Three months ended

 

Three months ended Jun 30, 2021 change from three months ended

(Unaudited, dollars in thousands, except share data)

Jun 30, 2021

Mar 31, 2021

Jun 30, 2020

 

Mar 31, 2021

 

Jun 30, 2020

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

90,936

 

$

88,639

 

$

92,143

 

 

2,297

 

3

%

 

(1,207

)

(1

)%

Taxable interest and dividends on available for sale securities

 

12,457

 

 

10,206

 

 

7,600

 

 

2,251

 

22

%

 

4,857

 

64

%

Non-taxable interest and dividends on available for sale securities

 

1,857

 

 

1,856

 

 

1,905

 

 

1

 

%

 

(48

)

(3

)%

Interest on federal funds sold and other short-term investments

 

431

 

 

432

 

 

284

 

 

(1

)

%

 

147

 

52

%

Interest and dividends on trading securities

 

 

 

 

 

1

 

 

 

%

 

(1

)

(100

)%

Total interest and dividend income

 

105,681

 

 

101,133

 

 

101,933

 

 

4,548

 

4

%

 

3,748

 

4

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

1,031

 

 

1,002

 

 

3,104

 

 

29

 

3

%

 

(2,073

)

(67

)%

Interest on borrowings

 

42

 

 

40

 

 

74

 

 

2

 

5

%

 

(32

)

(43

)%

Total interest expense

 

1,073

 

 

1,042

 

 

3,178

 

 

31

 

3

%

 

(2,105

)

(66

)%

Net interest income

 

104,608

 

 

100,091

 

 

98,755

 

 

4,517

 

5

%

 

5,853

 

6

%

(Release of) provision for allowance for loan losses

 

(3,300

)

 

(580

)

 

8,600

 

 

(2,720

)

469

%

 

(11,900

)

(138

)%

Net interest income after provision for loan losses

 

107,908

 

 

100,671

 

 

90,155

 

 

7,237

 

7

%

 

17,753

 

20

%

Noninterest income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

23,664

 

 

28,147

 

 

22,697

 

 

(4,483

)

(16

)%

 

967

 

4

%

Service charges on deposit accounts

 

5,708

 

 

5,367

 

 

4,364

 

 

341

 

6

%

 

1,344

 

31

%

Trust and investment advisory fees

 

6,074

 

 

5,663

 

 

5,194

 

 

411

 

7

%

 

880

 

17

%

Debit card processing fees

 

3,170

 

 

2,749

 

 

2,337

 

 

421

 

15

%

 

833

 

36

%

Interest rate swap (losses) income

 

(1,164

)

 

5,405

 

 

771

 

 

(6,569

)

(122

)%

 

(1,935

)

(251

)%

Income from investments held in rabbi trusts

 

4,216

 

 

1,846

 

 

7,745

 

 

2,370

 

128

%

 

(3,529

)

(46

)%

Losses on trading securities, net

 

 

 

 

 

(1

)

 

 

%

 

1

 

(100

)%

Gains on sales of mortgage loans held for sale, net

 

848

 

 

1,479

 

 

1,420

 

 

(631

)

(43

)%

 

(572

)

(40

)%

Gains on sales of securities available for sale, net

 

1

 

 

1,164

 

 

163

 

 

(1,163

)

(100

)%

 

(162

)

(99

)%

Other

 

3,216

 

 

3,392

 

 

2,967

 

 

(176

)

(5

)%

 

249

 

8

%

Total noninterest income

 

45,733

 

 

55,212

 

 

47,657

 

 

(9,479

)

(17

)%

 

(1,924

)

(4

)%

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

69,276

 

 

64,040

 

 

63,335

 

 

5,236

 

8

%

 

5,941

 

9

%

Office occupancy and equipment

 

8,094

 

 

8,217

 

 

8,615

 

 

(123

)

(1

)%

 

(521

)

(6

)%

Data processing

 

13,572

 

 

12,129

 

 

12,180

 

 

1,443

 

12

%

 

1,392

 

11

%

Professional services

 

6,439

 

 

4,148

 

 

4,396

 

 

2,291

 

55

%

 

2,043

 

46

%

Charitable contributions

 

 

 

 

 

2,797

 

 

 

%

 

(2,797

)

(100

)%

Marketing

 

3,497

 

 

1,691

 

 

1,645

 

 

1,806

 

107

%

 

1,852

 

113

%

Loan expenses

 

1,854

 

 

1,847

 

 

2,036

 

 

7

 

%

 

(182

)

(9

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

985

 

 

948

 

 

944

 

 

37

 

4

%

 

41

 

4

%

Amortization of intangible assets

 

625

 

 

532

 

 

701

 

 

93

 

17

%

 

(76

)

(11

)%

Other

 

2,993

 

 

497

 

 

4,116

 

 

2,496

 

502

%

 

(1,123

)

(27

)%

Total noninterest expense

 

107,335

 

 

94,049

 

 

100,765

 

 

13,286

 

14

%

 

6,570

 

7

%

Income before income tax expense

 

46,306

 

 

61,834

 

 

37,047

 

 

(15,528

)

(25

)%

 

9,259

 

25

%

Income tax expense

 

11,497

 

 

14,171

 

 

7,197

 

 

(2,674

)

(19

)%

 

4,300

 

60

%

Net income

 

34,809

 

 

47,663

 

 

29,850

 

 

(12,854

)

(27

)%

 

4,959

 

17

%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (1)

 

172,173,707

 

 

172,049,044

 

 

n.a.

 

 

 

 

 

 

Earnings per share

$

0.20

 

$

0.28

 

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) 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.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Six months ended

 

 

(Unaudited, dollars in thousands, except share data)

Jun 30, 2021

Jun 30, 2020

 

Change

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

Interest and fees on loans

$

179,575

 

$

187,681

 

 

(8,106

)

(4

)%

Taxable interest and dividends on available for sale securities

 

22,663

 

 

15,778

 

 

6,885

 

44

%

Non-taxable interest and dividends on available for sale securities

 

3,713

 

 

3,826

 

 

(113

)

(3

)%

Interest on federal funds sold and other short-term investments

 

863

 

 

801

 

 

62

 

8

%

Interest and dividends on trading securities

 

 

 

6

 

 

(6

)

(100

)%

Total interest and dividend income

 

206,814

 

 

208,092

 

 

(1,278

)

(1

)%

Interest expense:

 

 

 

 

 

Interest on deposits

 

2,033

 

 

8,518

 

 

(6,485

)

(76

)%

Interest on borrowings

 

82

 

 

673

 

 

(591

)

(88

)%

Total interest expense

 

2,115

 

 

9,191

 

 

(7,076

)

(77

)%

Net interest income

 

204,699

 

 

198,901

 

 

5,798

 

3

%

(Release of) provision for allowance for loan losses

 

(3,880

)

 

37,200

 

 

(41,080

)

(110

)%

Net interest income after provision for loan losses

 

208,579

 

 

161,701

 

 

46,878

 

29

%

Noninterest income:

 

 

 

 

 

Insurance commissions

 

51,811

 

 

50,174

 

 

1,637

 

3

%

Service charges on deposit accounts

 

11,075

 

 

10,462

 

 

613

 

6

%

Trust and investment advisory fees

 

11,737

 

 

10,289

 

 

1,448

 

14

%

Debit card processing fees

 

5,919

 

 

4,807

 

 

1,112

 

23

%

Interest rate swap income (losses)

 

4,241

 

 

(5,238

)

 

9,479

 

(181

)%

Income from investments held in rabbi trusts

 

6,062

 

 

1,002

 

 

5,060

 

505

%

Losses on trading securities, net

 

 

 

(3

)

 

3

 

(100

)%

Gains on sales of mortgage loans held for sale, net

 

2,327

 

 

1,513

 

 

814

 

54

%

Gains on sales of securities available for sale, net

 

1,165

 

 

285

 

 

880

 

309

%

Other

 

6,608

 

 

7,735

 

 

(1,127

)

(15

)%

Total noninterest income

 

100,945

 

 

81,026

 

 

19,919

 

25

%

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

133,316

 

 

124,924

 

 

8,392

 

7

%

Office occupancy and equipment

 

16,311

 

 

17,304

 

 

(993

)

(6

)%

Data processing

 

25,701

 

 

22,184

 

 

3,517

 

16

%

Professional services

 

10,587

 

 

8,085

 

 

2,502

 

31

%

Charitable contributions

 

 

 

3,984

 

 

(3,984

)

(100

)%

Marketing

 

5,188

 

 

4,113

 

 

1,075

 

26

%

Loan expenses

 

3,701

 

 

3,148

 

 

553

 

18

%

FDIC insurance

 

1,933

 

 

1,850

 

 

83

 

4

%

Amortization of intangible assets

 

1,157

 

 

1,403

 

 

(246

)

(18

)%

Other

 

3,490

 

 

8,942

 

 

(5,452

)

(61

)%

Total noninterest expense

 

201,384

 

 

195,937

 

 

5,447

 

3

%

Income before income tax expense

 

108,140

 

 

46,790

 

 

61,350

 

131

%

Income tax expense

 

25,668

 

 

8,495

 

 

17,173

 

202

%

Net income

 

82,472

 

 

38,295

 

 

44,177

 

115

%

 

 

 

 

 

 

Share data:

 

 

 

 

 

Weighted average common shares outstanding (1)

 

172,111,372

 

 

n.a.

 

 

 

Earnings per share

$

0.48

 

 

n.a.

 

 

 

 

 

 

 

 

 

(1) 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.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN

 

 

As of and for the three months ended

 

Jun 30, 2021

 

Mar 31, 2021

 

Jun 30, 2020

(Unaudited, dollars in thousands)

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

7,301,745

 

$

71,747

 

3.94

%

 

$

7,317,951

 

$

69,210

 

3.84

%

 

$

7,195,093

 

$

69,779

 

3.90

%

Residential

 

1,433,056

 

 

11,397

 

3.19

%

 

 

1,393,139

 

 

11,274

 

3.28

%

 

 

1,416,326

 

 

12,555

 

3.57

%

Consumer

 

1,061,900

 

 

8,597

 

3.25

%

 

 

1,105,698

 

 

8,937

 

3.28

%

 

 

1,263,691

 

 

10,610

 

3.38

%

Total loans

 

9,796,701

 

 

91,741

 

3.76

%

 

 

9,816,788

 

 

89,421

 

3.69

%

 

 

9,875,110

 

 

92,944

 

3.79

%

Investment securities

 

4,344,690

 

 

14,778

 

1.36

%

 

 

3,631,530

 

 

12,577

 

1.40

%

 

 

1,455,901

 

 

10,083

 

2.79

%

Federal funds sold and other short-term investments

 

1,617,741

 

 

431

 

0.11

%

 

 

1,740,561

 

 

432

 

0.10

%

 

 

1,148,332

 

 

284

 

0.10

%

Total interest-earning assets

 

15,759,132

 

 

106,950

 

2.72

%

 

 

15,188,879

 

 

102,430

 

2.73

%

 

 

12,479,343

 

 

103,311

 

3.33

%

Non-interest-earning assets

 

1,061,121

 

 

 

 

 

 

1,120,603

 

 

 

 

 

 

1,106,217

 

 

 

 

Total assets

$

16,820,253

 

 

 

 

 

$

16,309,482

 

 

 

 

 

$

13,585,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,385,735

 

$

69

 

0.02

%

 

$

1,300,057

 

$

64

 

0.02

%

 

$

1,095,806

 

$

64

 

0.02

%

Interest checking

 

2,541,862

 

 

253

 

0.04

%

 

 

2,391,025

 

 

234

 

0.04

%

 

 

2,414,356

 

 

649

 

0.11

%

Money market

 

3,523,330

 

 

605

 

0.07

%

 

 

3,440,214

 

 

587

 

0.07

%

 

 

3,192,669

 

 

1,929

 

0.24

%

Time deposits

 

246,801

 

 

104

 

0.17

%

 

 

251,115

 

 

117

 

0.19

%

 

 

313,410

 

 

462

 

0.59

%

Total interest-bearing deposits

 

7,697,728

 

 

1,031

 

0.05

%

 

 

7,382,411

 

 

1,002

 

0.06

%

 

 

7,016,241

 

 

3,104

 

0.18

%

Borrowings

 

25,042

 

 

42

 

0.67

%

 

 

25,625

 

 

40

 

0.63

%

 

 

74,960

 

 

74

 

0.40

%

Total interest-bearing liabilities

 

7,722,770

 

 

1,073

 

0.06

%

 

 

7,408,036

 

 

1,042

 

0.06

%

 

 

7,091,201

 

 

3,178

 

0.18

%

Demand deposit accounts

 

5,355,170

 

 

 

 

 

 

5,125,831

 

 

 

 

 

 

4,448,756

 

 

 

 

Other noninterest-bearing liabilities

 

335,816

 

 

 

 

 

 

358,087

 

 

 

 

 

 

356,700

 

 

 

 

Total liabilities

 

13,413,756

 

 

 

 

 

 

12,891,954

 

 

 

 

 

 

11,896,657

 

 

 

 

Shareholders' equity

 

3,406,497

 

 

 

 

 

 

3,417,528

 

 

 

 

 

 

1,688,903

 

 

 

 

Total liabilities and shareholders' equity

$

16,820,253

 

 

 

 

 

$

16,309,482

 

 

 

 

 

$

13,585,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

105,877

 

 

 

 

 

$

101,388

 

 

 

 

 

$

100,133

 

 

Net interest rate spread (2)

 

 

 

 

2.66

%

 

 

 

 

 

2.67

%

 

 

 

 

 

3.15

%

Net interest-earning assets (3)

$

8,036,362

 

 

 

 

 

$

7,780,843

 

 

 

 

 

$

5,388,142

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.69

%

 

 

 

 

 

2.71

%

 

 

 

 

 

3.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loans.

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

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

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

(5) Presented on an annualized basis.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN

 

As of and for the six months ended

 

Jun 30, 2021

 

Jun 30, 2020

(Unaudited, dollars in thousands)

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

7,309,803

 

$

140,952

 

3.89

%

 

$

6,735,075

 

$

139,394

 

4.16

%

Residential

 

1,413,208

 

 

22,671

 

3.24

%

 

 

1,423,161

 

 

25,858

 

3.65

%

Consumer

 

1,083,677

 

 

17,534

 

3.26

%

 

 

1,287,430

 

 

24,017

 

3.75

%

Total loans

 

9,806,688

 

 

181,157

 

3.73

%

 

 

9,445,666

 

 

189,269

 

4.03

%

Investment securities

 

3,990,080

 

 

27,360

 

1.38

%

 

 

1,478,156

 

 

20,768

 

2.83

%

Federal funds sold and other short-term investments

 

1,678,812

 

 

863

 

0.10

%

 

 

694,386

 

 

801

 

0.23

%

Total interest earning assets

 

15,475,580

 

 

209,380

 

2.73

%

 

 

11,618,208

 

 

210,838

 

3.65

%

Non-interest-earning assets

 

1,089,585

 

 

 

 

 

 

1,064,218

 

 

 

 

Total assets

$

16,565,165

 

 

 

 

 

$

12,682,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,343,133

 

$

133

 

0.02

%

 

$

1,036,344

 

$

118

 

0.02

%

Interest checking

 

2,466,860

 

 

487

 

0.04

%

 

 

2,158,242

 

 

1,467

 

0.14

%

Money market

 

3,482,002

 

 

1,193

 

0.07

%

 

 

3,087,048

 

 

5,833

 

0.38

%

Time deposits

 

248,946

 

 

220

 

0.18

%

 

 

320,277

 

 

1,100

 

0.69

%

Total interest-bearing deposits

 

7,540,941

 

 

2,033

 

0.05

%

 

 

6,601,911

 

 

8,518

 

0.26

%

Borrowings

 

25,332

 

 

82

 

0.65

%

 

 

119,211

 

 

673

 

1.14

%

Total interest-bearing liabilities

 

7,566,273

 

 

2,115

 

0.06

%

 

 

6,721,122

 

 

9,191

 

0.27

%

Demand deposit accounts

 

5,241,134

 

 

 

 

 

 

3,963,066

 

 

 

 

Other noninterest-bearing liabilities

 

345,776

 

 

 

 

 

 

337,679

 

 

 

 

Total liabilities

 

13,153,183

 

 

 

 

 

 

11,021,867

 

 

 

 

Shareholders' equity

 

3,411,982

 

 

 

 

 

 

1,660,559

 

 

 

 

Total liabilities and shareholders' equity

$

16,565,165

 

 

 

 

 

$

12,682,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

207,265

 

 

 

 

 

$

201,647

 

 

Net interest rate spread (2)

 

 

 

 

2.67

%

 

 

 

 

 

3.38

%

Net interest-earning assets (3)

$

7,909,307

 

 

 

 

 

$

4,897,086

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.70

%

 

 

 

 

 

3.49

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loans.

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

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

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

(5) Presented on an annualized basis.

 

 

 

 

 

 

 

 

 

 

 

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - NON-PERFORMING ASSETS (1)

 

 

As of

 

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

29,356

 

$

30,275

 

$

30,059

 

$

28,968

 

$

31,273

 

Residential

 

6,445

 

 

8,127

 

 

6,815

 

 

7,419

 

 

11,693

 

Consumer

 

4,106

 

 

3,873

 

 

4,131

 

 

4,727

 

 

9,374

 

Total non-accrual loans

 

39,907

 

 

42,275

 

 

41,005

 

 

41,114

 

 

52,340

 

Accruing loans past due 90 days or more:

 

 

 

 

 

Commercial

 

1,439

 

 

1,390

 

 

1,959

 

 

3,384

 

 

2,802

 

Residential

 

277

 

 

280

 

 

279

 

 

326

 

 

244

 

Consumer

 

9

 

 

9

 

 

9

 

 

9

 

 

9

 

Total accruing loans past due 90 days or more

 

1,725

 

 

1,679

 

 

2,247

 

 

3,719

 

 

3,055

 

Total non-performing loans

 

41,632

 

 

43,954

 

 

43,252

 

 

44,833

 

 

55,395

 

Other real estate owned

 

38

 

 

 

 

 

 

40

 

 

40

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

41,670

 

$

43,954

 

$

43,252

 

$

44,873

 

$

55,435

 

Total accruing troubled debt restructured loans

$

38,316

 

$

39,367

 

$

41,095

 

$

39,881

 

$

40,691

 

Total non-performing loans to total loans

 

0.43

%

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

Total non-performing assets to total assets

 

0.24

%

 

0.26

%

 

0.27

%

 

0.29

%

 

0.40

%

 

 

 

 

 

 

(1) Non-performing assets are comprised of NPLs, 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.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS

 

Three months ended

 

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

9,796,701

 

$

9,816,788

 

$

9,796,697

 

$

9,914,731

 

$

9,875,110

 

Allowance for loan losses, beginning of the period

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

$

109,138

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

550

 

 

 

 

1,603

 

 

140

 

 

27

 

Commercial real estate

 

 

 

234

 

 

 

 

 

 

24

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

1,838

 

 

1,384

 

 

1,433

 

 

1,179

 

 

1,198

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

 

 

 

 

79

 

 

22

 

 

 

Other consumer

 

275

 

 

364

 

 

713

 

 

1,077

 

 

15

 

Total charged-off loans

 

2,663

 

 

1,982

 

 

3,828

 

 

2,418

 

 

1,264

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

13

 

 

9

 

 

92

 

 

306

 

 

58

 

Commercial real estate

 

4

 

 

 

 

220

 

 

4

 

 

5

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

291

 

 

365

 

 

47

 

 

91

 

 

27

 

Residential real estate

 

17

 

 

10

 

 

9

 

 

43

 

 

13

 

Consumer home equity

 

3

 

 

71

 

 

100

 

 

31

 

 

8

 

Other consumer

 

192

 

 

156

 

 

59

 

 

39

 

 

51

 

Total recoveries

 

520

 

 

611

 

 

527

 

 

514

 

 

162

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

537

 

 

(9

)

 

1,511

 

 

(166

)

 

(31

)

Commercial real estate

 

(4

)

 

234

 

 

(220

)

 

(4

)

 

19

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

1,547

 

 

1,019

 

 

1,386

 

 

1,088

 

 

1,171

 

Residential real estate

 

(17

)

 

(10

)

 

(9

)

 

(43

)

 

(13

)

Consumer home equity

 

(3

)

 

(71

)

 

(21

)

 

(9

)

 

(8

)

Other consumer

 

83

 

 

208

 

 

654

 

 

1,038

 

 

(36

)

Total net loans charged-off

 

2,143

 

 

1,371

 

 

3,301

 

 

1,904

 

 

1,102

 

(Release of) provision for loan losses

 

(3,300

)

 

(580

)

 

900

 

 

700

 

 

8,600

 

Total allowance for loan losses, end of period

$

105,637

 

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

Net charge-offs to average total loans outstanding during this period (1)

 

0.09

%

 

0.06

%

 

0.13

%

 

0.08

%

 

0.04

%

Allowance for loan losses as a percent of total loans

 

1.10

%

 

1.12

%

 

1.16

%

 

1.16

%

 

1.17

%

Allowance for loan losses as a percent of nonperforming loans

 

253.74

%

 

252.72

%

 

261.33

%

 

257.47

%

 

210.55

%

 

 

 

 

 

 

(1) Presented on an annualized basis.

 

APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics

 

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

 

 

Three Months Ended

(Unaudited, dollars in thousands, except share data)

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

 

 

 

 

 

 

Net income (GAAP)

$

34,809

 

$

47,663

 

$

(44,062

)

$

28,505

 

$

29,850

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

(Income) from investments held in rabbi trusts

 

(4,216

)

 

(1,846

)

 

(5,535

)

 

(3,800

)

 

(7,745

)

(Gain) on sales of securities available for sale, net

 

(1

)

 

(1,164

)

 

(3

)

 

 

 

(163

)

(Gain) loss on sale of other assets

 

(29

)

 

(18

)

 

(49

)

 

71

 

 

27

 

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit expense

 

2,063

 

 

986

 

 

2,838

 

 

1,445

 

 

3,985

 

(Reversal) impairment charge on tax credit investments

 

(1,419

)

 

 

 

3,189

 

 

7,590

 

 

 

Indirect IPO costs (1)

 

 

 

 

 

 

 

549

 

 

380

 

(Gain) on sale of OREO

 

 

 

 

 

(61

)

 

(546

)

 

 

Merger and acquisition expenses

 

3,479

 

 

589

 

 

90

 

 

 

 

 

Settlement and expenses for putative consumer class action matters

 

3,325

 

 

 

 

 

 

 

 

 

Stock donation to the EBF

 

 

 

 

 

91,287

 

 

 

 

 

Total impact of non-GAAP adjustments

 

3,202

 

 

(1,453

)

 

91,756

 

 

5,309

 

 

(3,516

)

Less net tax benefit (expense) associated with non-GAAP adjustments (2)

 

914

 

 

(327

)

 

16,082

 

 

1,492

 

 

(967

)

Non-GAAP adjustments, net of tax

$

2,288

 

$

(1,126

)

$

75,674

 

$

3,817

 

$

(2,549

)

Operating net income (non-GAAP)

$

37,097

 

$

46,537

 

$

31,612

 

$

32,322

 

$

27,301

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period (3):

 

 

 

 

 

Basic

 

172,173,707

 

 

172,049,044

 

 

171,812,535

 

 

 

 

 

Diluted

 

172,173,707

 

 

172,049,044

 

 

171,812,535

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share, basic

$

0.20

 

$

0.28

 

$

(0.26

)

 

n.a.

 

 

n.a.

Earnings (loss) per share, diluted

$

0.20

 

$

0.28

 

$

(0.26

)

n.a.

 

 

n.a.

 

 

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

 

 

n.a.

Operating earnings per share, diluted (non-GAAP)

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

 

 

n.a.

 

 

 

 

 

 

Return on average assets (4)

 

0.83

%

 

1.19

%

 

(1.11

)%

 

0.80

%

 

0.88

%

Add:

 

 

 

 

 

(Income) from investments held in rabbi trusts (4)

 

(0.10

)%

 

(0.05

)%

 

(0.14

)%

 

(0.11

)%

 

(0.23

)%

(Gain) on sales of securities available for sale, net (4)

 

%

 

(0.03

)%

 

%

 

%

 

%

(Gain) loss on sale of other assets (4)

 

%

 

%

 

%

 

%

 

%

Rabbi trust employee benefit expense (4)

 

0.05

%

 

0.02

%

 

0.07

%

 

0.04

%

 

0.12

%

(Reversal) impairment charge on tax credit investments (4)

 

(0.03

)%

 

%

 

0.08

%

 

0.21

%

 

%

Indirect IPO costs (1) (4)

 

%

 

%

 

%

 

0.02

%

 

0.01

%

(Gain) on sale of OREO (4)

 

%

 

%

 

%

 

(0.02

)%

 

%

Merger and acquisition expenses (4)

 

0.08

%

 

0.01

%

 

%

 

%

 

%

Settlement and expenses for putative consumer class action matters (4)

 

0.08

%

 

%

 

%

 

%

 

%

Stock donation to the EBF (4)

 

%

 

%

 

2.29

%

 

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4)

 

0.02

%

 

(0.01

)%

 

0.40

%

 

0.04

%

 

(0.03

)%

Operating return on average assets (non-GAAP) (4)

 

0.89

%

 

1.15

%

 

0.79

%

 

0.90

%

 

0.81

%

 

 

 

 

 

 

Return on average shareholders' equity (4)

 

4.10

%

 

5.66

%

 

(5.61

)%

 

6.65

%

 

7.11

%

Add:

 

 

 

 

 

(Income) from investments held in rabbi trusts (4)

 

(0.50

)%

 

(0.22

)%

 

(0.70

)%

 

(0.89

)%

 

(1.84

)%

(Gain) on sales of securities available for sale, net (4)

 

%

 

(0.14

)%

 

%

 

%

 

(0.04

)%

(Gain) loss on sale of other assets (4)

 

%

 

%

 

(0.01

)%

 

0.02

%

 

0.01

%

Rabbi trust employee benefit expense (4)

 

0.24

%

 

0.12

%

 

0.36

%

 

0.34

%

 

0.95

%

(Reversal) impairment charge on tax credit investments (4)

 

(0.17

)%

 

%

 

0.41

%

 

1.77

%

 

%

Indirect IPO costs (1) (4)

 

%

 

%

 

%

 

0.13

%

 

0.09

%

(Gain) on sale of OREO (4)

 

%

 

%

 

(0.01

)%

 

(0.13

)%

 

%

Merger and acquisition expenses (4)

 

0.41

%

 

0.07

%

 

0.01

%

 

%

 

%

Settlement and expenses for putative consumer class action matters (4)

 

0.39

%

 

%

 

%

 

%

 

%

Stock donation to the EBF (4)

 

%

 

%

 

11.62

%

 

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4)

 

0.11

%

 

(0.04

)%

 

2.05

%

 

0.35

%

 

(0.23

)%

Operating return on average shareholders' equity (non-GAAP) (4)

 

4.36

%

 

5.53

%

 

4.02

%

 

7.54

%

 

6.51

%

 

 

 

 

 

 

(1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital.

(2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits.

(3) 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.

(4) 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, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

104,608

 

$

100,091

 

$

103,608

 

$

98,742

 

$

98,755

 

Add:

 

 

 

 

 

Tax-equivalent adjustment (non-GAAP)

 

1,269

 

 

1,297

 

 

1,357

 

 

1,353

 

 

1,378

 

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

$

105,877

 

$

101,388

 

$

104,965

 

$

100,095

 

$

100,133

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

45,733

 

$

55,212

 

$

49,638

 

$

47,709

 

$

47,657

 

Less:

 

 

 

 

 

Income from investments held in rabbi trusts

 

4,216

 

 

1,846

 

 

5,535

 

 

3,800

 

 

7,745

 

Gain on sales of securities available for sale, net

 

1

 

 

1,164

 

 

3

 

 

 

 

163

 

Gain (loss) on sale of other assets

 

29

 

 

18

 

 

49

 

 

(71

)

 

(27

)

Noninterest income on an operating basis (non-GAAP)

$

41,487

 

$

52,184

 

$

44,051

 

$

43,980

 

$

39,776

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

107,335

 

$

94,049

 

$

199,169

 

$

109,817

 

$

100,765

 

Less:

 

 

 

 

 

Rabbi trust employee benefit expense

 

2,063

 

 

986

 

 

2,838

 

 

1,445

 

 

3,985

 

(Reversal) impairment charge on tax credit investments

 

(1,419

)

 

 

 

3,189

 

 

7,590

 

 

 

Indirect IPO costs (1)

 

 

 

 

 

 

 

549

 

 

380

 

(Gain) on sale of OREO

 

 

 

 

 

(61

)

 

(546

)

 

 

Merger and acquisition expenses

 

3,479

 

 

589

 

 

90

 

 

 

 

 

Settlement and expenses for putative consumer class action matters

 

3,325

 

 

 

 

 

 

 

 

 

Stock donation to the EBF

 

 

 

 

 

91,287

 

 

 

 

 

Noninterest expense on an operating basis (non-GAAP)

$

99,887

 

$

92,474

 

$

101,826

 

$

100,779

 

$

96,400

 

 

 

 

 

 

 

Total revenue (GAAP)

$

150,341

 

$

155,303

 

$

153,246

 

$

146,451

 

$

146,412

 

Total operating revenue (non-GAAP)

$

147,364

 

$

153,572

 

$

149,016

 

$

144,075

 

$

139,909

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

71.39

%

 

60.56

%

 

129.97

%

 

74.99

%

 

68.82

%

Operating efficiency ratio (non-GAAP)

 

67.78

%

 

60.22

%

 

68.33

%

 

69.95

%

 

68.90

%

 

 

 

 

 

 

Noninterest income / total revenue (GAAP)

 

30.42

%

 

35.55

%

 

32.39

%

 

32.58

%

 

32.55

%

Noninterest income / total revenue on an operating basis (non-GAAP)

 

28.15

%

 

33.98

%

 

29.56

%

 

30.53

%

 

28.43

%

 

 

 

 

 

 

(1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital.

 

APPENDIX C: Reconciliation of Non-GAAP Capital Metrics

 

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

 

As of

 

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

(Unaudited, dollars in thousands, except share data)

 

 

 

 

 

Tangible shareholders' equity:

 

 

 

 

 

Total shareholders' equity (GAAP)

$

3,430,622

 

$

3,387,045

 

$

3,428,052

 

$

1,713,372

 

$

1,693,630

 

Less: Goodwill and other intangibles

 

380,402

 

 

376,002

 

 

376,534

 

 

375,632

 

 

376,331

 

Tangible shareholders' equity (non-GAAP)

 

3,050,220

 

 

3,011,043

 

 

3,051,518

 

 

1,337,740

 

 

1,317,299

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

Total assets (GAAP)

 

17,047,453

 

 

16,726,795

 

 

15,964,190

 

 

15,460,594

 

 

13,996,523

 

Less: Goodwill and other intangibles

 

380,402

 

 

376,002

 

 

376,534

 

 

375,632

 

 

376,331

 

Tangible assets (non-GAAP)

$

16,667,051

 

$

16,350,793

 

$

15,587,656

 

$

15,084,962

 

$

13,620,192

 

 

 

 

 

 

 

Shareholders' equity to assets ratio (GAAP)

 

20.12

%

 

20.25

%

 

21.47

%

 

11.08

%

 

12.10

%

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

 

18.30

%

 

18.42

%

 

19.58

%

 

8.87

%

 

9.67

%

 

 

 

 

 

 

Common shares outstanding

 

186,758,154

 

 

186,758,154

 

 

186,758,154

 

 

 

 

 

 

 

 

 

 

 

Book value per share (GAAP)

$

18.37

 

$

18.14

 

$

18.36

 

 

n.a.

 

n.a.

Tangible book value per share (non-GAAP)

$

16.33

 

$

16.12

 

$

16.34

 

 

n.a.

 

n.a.

 

APPENDIX D: Reconciliation of Non-GAAP Credit Metrics

 

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

 

 

As of

(Unaudited, dollars in thousands)

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

 

 

 

 

 

 

Total loans excluding PPP loans:

 

 

 

 

 

Total loans (GAAP) (1)

$

9,591,336

 

$

9,883,802

 

$

9,706,989

 

$

9,911,494

 

$

9,979,616

 

Less: PPP loans (1)

 

799,964

 

 

1,210,598

 

 

1,007,487

 

 

1,098,883

 

 

1,072,312

 

Total loans excluding PPP loans (non-GAAP)

$

8,791,372

 

$

8,673,204

 

$

8,699,502

 

$

8,812,611

 

$

8,907,304

 

 

 

 

 

 

 

Total nonperforming loans (NPLs) (GAAP)

$

41,632

 

$

43,954

 

$

43,252

 

$

44,833

 

$

55,395

 

 

 

 

 

 

 

Total NPLs / total loans (GAAP)

 

0.43

%

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

Total NPLs / total loans (excl. PPP loans) (non-GAAP)

 

0.47

%

 

0.51

%

 

0.50

%

 

0.51

%

 

0.62

%

 

 

 

 

 

 

Allowance for loan losses (ALLL) (GAAP)

$