Financial News

Eastern Bankshares, Inc. Reports Third Quarter 2023 Financial Results

~ Company Announces a 10% Increase to Quarterly Dividend ~

Eastern Bankshares, Inc. (the “Company,” or together with its subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2023 third quarter financial results and the declaration of a quarterly cash dividend of $0.11 per share, representing a $0.01, or 10%, increase from the most recent quarterly dividend.

The release of the Company’s quarterly financial results follows its September 19, 2023 announcement of the sale of the insurance operations of Eastern Insurance Group, LLC (“Eastern Insurance”) (“the insurance transaction”) and the pending merger with Cambridge Bancorp (“Cambridge”) (“the merger”). Proceeds from the insurance transaction will allow Eastern to focus on the growth and strategic initiatives of its core banking business, including the merger with Cambridge. The merger will create a combined franchise with approximately $27 billion in total assets, create the largest bank-owned independent investment advisor in Massachusetts, and further solidify Eastern as the largest Boston-based mid-sized bank by deposits. On a combined basis, the transactions are financially compelling with expected earnings per share accretion in excess of 20% and an expected 10% improvement to the Company’s efficiency ratio.

“The strategic transactions we announced just last month mark the next step in our journey, and will enhance our Boston franchise, allowing us to better meet the needs of our customers and communities,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We are on track to complete the insurance transaction next week. It’s been a remarkable effort by so many to get to the finish line, and I express my gratitude to Tim Lodge, President and Chief Executive Officer of Eastern Insurance, and his entire team. Regarding the merger with Cambridge, we have submitted all required regulatory merger applications and mobilized internal integration resources at both Eastern and Cambridge. I’m confident that the combined transactions will improve our focus, efficiency and profitability, as well as enhance our liquidity position as we continue to operate in a challenging environment.”

FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2023

  • Net income of $59.1 million, or $0.36 per diluted share, compared to net income of $48.7 million, or $0.30 per diluted share, for the prior quarter.
  • Operating net income*, which excludes the revenues, expenses, and tax provision of discontinued operations, of $52.1 million, or $0.32 per diluted share, compared to $41.1 million, or $0.25 per diluted share, for the prior quarter.
  • The insurance transaction triggered the elimination of a $14.6 million tax valuation allowance that was established as part of the sale of available-for-sale securities in the first quarter of 2023 (the “securities sale”).
  • The net interest margin on a fully tax equivalent basis held relatively steady at 2.77% as compared to 2.80% in the prior quarter.
  • Continued focus on efficiency with total operating noninterest expense of $98.7 million, essentially flat from the prior quarter.
  • Healthy balance sheet with 11.6% shareholders’ equity to assets, 8.7% tangible shareholders’ equity to tangible assets* and 16.0% common equity tier 1 capital ratio1. Borrowings and brokered deposits totaled 5.2% of assets.
  • Overall credit metrics remained strong with net charge-offs less than 1 basis point.
  • Board declared a 10% increase in the quarterly cash dividend to $0.11 per share.

Regarding the Company’s third quarter financial results, Mr. Rivers commented, “Our results continue to demonstrate our robust capital position and the strength of our franchise. We are confident in our earnings capacity and remain focused on long-term shareholder value, and the increase in our quarterly dividend is further evidence of that confidence and commitment.”

In September 2023, following the approval of the insurance transaction by the Company's Board of Directors and in accordance with applicable accounting rules, the Company classified its insurance operations as both held-for-sale and discontinued operations. Accordingly, the Consolidated Balance Sheets and Statements of Income present discontinued operations for the current period and were adjusted for prior periods on a retrospective basis. Please refer to Appendix G for the results of discontinued operations.

____________________

1
Regulatory capital ratios are preliminary estimates.

BALANCE SHEET

Total assets were $21.1 billion at September 30, 2023, representing a decrease of $437.2 million, or 2%, from June 30, 2023.

  • Total securities decreased $267.9 million, or 5%, from the prior quarter, to $4.7 billion, due to a decrease in the market value of available-for-sale securities as well as principal runoff.
  • Total loans were $13.9 billion, representing a decrease of $42.6 million, or 0.3%, from the prior quarter. The decrease was driven primarily by the sale of approximately $192 million of Shared National Credit (“SNC”) loans from the commercial and industrial loan portfolio. This was partially offset by loan originations to core customers.
  • Deposits totaled $17.4 billion, representing a decrease of $756.8 million, or 4%, from the prior quarter caused primarily by a decrease in municipal deposits of approximately $375.0 million due in part to seasonality, as well as a decrease in brokered deposits of $305.9 million.
  • Borrowed funds increased $364.2 million from the prior quarter to $715.4 million in the third quarter, as Federal Home Loan Bank (“FHLB”) borrowings were used to replace certain maturing brokered CDs.
  • Shareholders’ equity was $2.4 billion, representing a decrease of $80.2 million from the prior quarter driven primarily by a decrease in accumulated other comprehensive income, partially offset by retained earnings. Please refer to Appendix D to this press release for a roll-forward of tangible shareholders’ equity*.
  • At September 30, 2023, book value per share was $13.87 and tangible book value per share* was $10.14.

NET INTEREST INCOME

Net interest income was $137.2 million for the third quarter of 2023, compared to $141.6 million in the prior quarter, representing a decrease of $4.4 million.

  • Net interest margin on a fully tax equivalent (“FTE”) basis* was 2.77% for the third quarter, representing a 3 basis point decrease from the second quarter, as higher funding costs more than offset increases in asset yields.
  • Total interest-earning asset yields increased 10 basis points from the prior quarter to 4.05%, due to increased loan and short-term investment yields as a result of higher interest rates during the quarter.
  • Total interest-bearing liabilities cost increased 20 basis points from the prior quarter to 1.99%, due primarily to higher deposit costs resulting from deposit pricing increases and deposit mix shifts.

NONINTEREST INCOME

Noninterest income, which excludes revenues from discontinued operations, was $19.2 million for the third quarter of 2023, compared to $26.2 million for the prior quarter, representing a decrease of $7.0 million. Noninterest income on an operating basis* was $20.7 million for the third quarter of 2023, compared to $23.2 million for the prior quarter, a decrease of $2.5 million.

  • Service charges on deposit accounts increased $0.2 million on a consecutive quarter basis to $7.4 million.
  • Trust and investment advisory fees increased $0.1 million on a consecutive quarter basis to $6.2 million.
  • Debit card processing fees decreased $0.1 million from the prior quarter to $3.4 million.
  • Loan-level interest rate swap income increased $0.9 million from the prior quarter to $1.7 million. The increase was driven by higher cash income due to higher customer swap transaction volume and an increase in the fair value adjustment of such transactions.
  • Losses from investments held in rabbi trust accounts were $1.5 million in the third quarter compared to gains of $3.0 million in the prior quarter due to investment performance.
  • In the third quarter, the Company incurred losses on sales of commercial and industrial loans totaling $2.7 million due to the sale of SNC loans. There were no sales in the prior quarter. The losses on sale were partially offset by the release of loan loss reserves totaling approximately $2.0 million associated with the sale of SNC loans.

NONINTEREST EXPENSE

Noninterest expense, which excludes expenses from discontinued operations, was $101.7 million for the third quarter of 2023, compared to $99.9 million in the prior quarter, representing an increase of $1.8 million. Noninterest expense on an operating basis* for the third quarter of 2023 was $98.7 million, compared to $98.6 million in the prior quarter, an increase of $0.1 million.

  • Salaries and employee benefits expense was $60.9 million in the third quarter, representing a decrease of $1.3 million from the prior quarter.
  • Office occupancy and equipment expense was $8.6 million in the third quarter, a decrease of $0.4 million from the prior quarter.
  • Data processing expense was $13.4 million in the third quarter, an increase of $0.6 million from the prior quarter.
  • Professional services expense was $7.1 million in the third quarter, an increase of $4.1 million from the prior quarter, due primarily to merger and acquisition expenses of $3.6 million related to the planned merger with Cambridge.
  • Marketing expense was $1.8 million in the third quarter, a decrease of $0.3 million from the prior quarter.
  • Loan expenses were unchanged at $1.1 million in the third quarter.
  • Federal Deposit Insurance Corporation (“FDIC”) insurance expense was $2.8 million in the third quarter, a decrease of $0.2 million from the prior quarter.
  • Other noninterest expense was $5.5 million in the third quarter, a decrease of $0.6 million from the prior quarter.

DISCONTINUED OPERATIONS

Net loss from discontinued operations was $4.4 million in the third quarter, compared to net income of $4.2 million in the prior quarter, a decrease of $8.6 million.

  • In the third quarter of 2023, there were approximately $10.7 million of expenses associated with the insurance transaction, including the buyout of certain insurance producer contracts, professional services expenses, and real estate lease impairment charges.
  • Discontinued operations is excluded from operating net income.*

Please refer to Appendix G for additional information on discontinued operations.

INCOME TAXES

The income tax benefit for the third quarter was $16.2 million compared to income tax expense of $15.9 million in the prior quarter, a decrease of $32.1 million.

  • The insurance transaction triggered the elimination of a $14.6 million tax valuation allowance that was established as part of the securities sale in the first quarter of 2023. The elimination was made following the determination that the capital gain from the insurance transaction and the capital gain carrybacks would be greater than the previously incurred capital loss associated with the securities sale.
  • Excluding the impact of the tax valuation allowance elimination, the tax benefit for the third quarter is reflective of Eastern’s year-to-date net pre-tax loss position without consideration for any pre-tax gains resulting from the insurance transaction in the fourth quarter.

ASSET QUALITY

The allowance for loan losses was $155.1 million at September 30, 2023, or 1.12% of total loans, compared to $148.0 million, or 1.06% of total loans, at June 30, 2023. The Company recorded a provision for loan losses totaling $7.3 million in the third quarter of 2023 driven primarily by an increase in specific reserves associated with three commercial real estate loans collateralized by investor office real estate located in Boston’s financial district.

Non-performing loans totaled $47.5 million at September 30, 2023 compared to $30.6 million at the end of the prior quarter. The increase was driven by the non-accrual designation of the three aforementioned commercial real estate loans. During the third quarter of 2023, the Company recorded total net charge-offs of $0.1 million, or less than 0.01% of average total loans on an annualized basis, compared to $0.5 million or less than 0.01% of average total loans in the prior quarter, respectively.

Please refer to the investor presentation for a review of the Company’s office-related commercial real estate exposure.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors has declared a quarterly cash dividend of $0.11 per common share, representing a $0.01, or 10%, increase from the prior quarter. The dividend will be payable on December 15, 2023 to shareholders of record as of the close of business on December 1, 2023.

The Company’s share repurchase authorization expired in August of 2023. The Company did not repurchase any shares of its common stock during the third quarter of 2023.

CONFERENCE CALL AND PRESENTATION INFORMATION

A conference call and webcast covering Eastern’s third quarter 2023 earnings will be held on Friday, October 27, 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 50539618. 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 September 30, 2023, Eastern Bank had approximately $21 billion in total assets. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes, and takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern 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. Except as otherwise indicated, these non-GAAP financial measures presented in this press release exclude discontinued operations. Please refer to Appendix G to this press release for further information regarding discontinued operations.

There are items in the Company’s financial statements that impact its financial results, but which management believes are unrelated to the Company’s core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders’ equity, operating return on average tangible shareholders’ equity (discussed further below), and the operating efficiency ratio. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) other real estate owned (“OREO”) gains, (vii) merger and acquisition expenses, (viii) the non-cash pension settlement charge recognized related to the Defined Benefit Plan, (ix) certain discrete tax items, and (x) net income from discontinued operations. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company’s outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense, respectively, cannot be made available without unreasonable effort.

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

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

FORWARD-LOOKING STATEMENTS

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

Certain factors that could cause actual results to differ materially from expected results include; adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses; increased competitive pressures; changes in interest rates and resulting changes in competitor or customer behavior, mix or costs of sources of funding, and deposit amounts and composition; risks associated with the Company’s completion and/or implementation of the merger with Cambridge, including risks that required regulatory, shareholder or other approvals for the merger are not obtained or other closing conditions are not satisfied in a timely manner or at all and that the merger fails to occur in the timeframe expected or at all; prior to the completion of the merger or thereafter, Cambridge or the Company may not perform as expected due to transaction-related uncertainty or other factors; and revenue or expense synergies may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; risks associated with the disposition of Eastern Insurance, including risks that the disposition fails to occur in the timeframe expected or at all, does not provide the full expected economic or strategic benefits, 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 or a failure to raise the national debt ceiling; market and monetary fluctuations, including inflationary or recessionary pressures, interest rate sensitivity, liquidity constraints, increased borrowing and funding costs, and fluctuations due to actual or anticipated changes to federal tax laws; the realizability of deferred tax assets; the Company’s ability to successfully implement its risk mitigation strategies; asset and credit quality deterioration, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; and operational risks such as cybersecurity incidents, natural disasters, and pandemics, including COVID-19. For further discussion of such factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov.

You should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this press release. The Company does not undertake any obligation to update forward-looking statements.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed merger transaction, the Company intends to file with the SEC a Registration Statement on Form S-4 that will include a Joint Proxy Statement of the Company and Cambridge and a Prospectus of the Company (the “joint proxy statement/prospectus”), as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF THE COMPANY AND CAMBRIDGE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND EACH OTHER RELEVANT DOCUMENT FILED WITH THE SEC, AS WELL AS ANY AMENDMENT OR SUPPLEMENT TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and Cambridge, can be obtained without charge, at the SEC’s website (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to the Company’s Investor Relations team via email at InvestorRelations@easternbank.com or by telephone at (781) 598-7920, or to Cambridge Investor Relations via email at InvestorRelations@cambridgetrust.com or by telephone at (617) 520-5520.

PARTICIPANTS IN THE SOLICITATION

The Company, Cambridge, and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and/or Cambridge in connection with the proposed transaction under the rules of the SEC. Information regarding the Company’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2023, and its Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on February 24, 2023, and other documents filed by the Company with the SEC. Information regarding Cambridge’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 16, 2023 and other documents filed by Cambridge with the SEC. Other information regarding the participants in the proxy solicitation and a description of their interests will be included in the joint proxy statement/prospectus and other relevant materials filed with the SEC, which may be obtained free of charge as described in the preceding paragraph.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

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

 

As of and for the three months ended

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

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

137,205

 

$

141,588

 

$

138,309

 

$

149,994

 

$

152,179

 

Noninterest income (loss) (1)

 

19,157

 

 

26,204

 

 

(309,853

)

 

22,425

 

 

19,524

 

Total revenue (1)

 

156,362

 

 

167,792

 

 

(171,544

)

 

172,419

 

 

171,703

 

Noninterest expense (1)

 

101,748

 

 

99,934

 

 

95,891

 

 

112,583

 

 

95,765

 

Pre-tax, pre-provision income (loss) (1)

 

54,614

 

 

67,858

 

 

(267,435

)

 

59,836

 

 

75,938

 

Provision for allowance for loan losses

 

7,328

 

 

7,501

 

 

25

 

 

10,880

 

 

6,480

 

Pre-tax income (loss) (1)

 

47,286

 

 

60,357

 

 

(267,460

)

 

48,956

 

 

69,458

 

Net income (loss) from continuing operations

 

63,464

 

 

44,419

 

 

(202,081

)

 

40,918

 

 

52,808

 

Net (loss) income from discontinued operations

 

(4,351

)

 

4,238

 

 

7,985

 

 

1,376

 

 

1,969

 

Net income (loss)

 

59,113

 

 

48,657

 

 

(194,096

)

 

42,294

 

 

54,777

 

Operating net income (non-GAAP) (1)

 

52,085

 

 

41,092

 

 

53,134

 

 

48,570

 

 

53,602

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings (losses) per share, basic and diluted

$

0.36

 

$

0.30

 

$

(1.20

)

$

0.26

 

$

0.33

 

Continuing operations

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

$

0.32

 

Discontinued operations

$

(0.03

)

$

0.03

 

$

0.05

 

$

0.01

 

$

0.01

 

Operating earnings per share, basic (non-GAAP) (1)

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

$

0.33

 

Operating earnings per share, diluted (non-GAAP) (1)

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

$

0.33

 

Book value per share

$

13.87

 

$

14.33

 

$

14.63

 

$

14.03

 

$

13.59

 

Tangible book value per share (non-GAAP)

$

10.14

 

$

10.59

 

$

10.88

 

$

10.28

 

$

9.87

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1) (2)

 

1.18

%

 

0.81

%

 

(3.64

)%

 

0.73

%

 

0.93

%

Operating return on average assets (non-GAAP) (1)(2)

 

0.97

%

 

0.75

%

 

0.95

%

 

0.86

%

 

0.93

%

Return on average shareholders' equity (1) (2)

 

9.91

%

 

6.85

%

 

(33.31

)%

 

6.71

%

 

7.55

%

Operating return on average shareholders' equity (1)(2)

 

8.14

%

 

6.34

%

 

8.76

%

 

7.96

%

 

7.66

%

Return on average tangible shareholders' equity (non-GAAP) (1)(2)

 

13.38

%

 

9.19

%

 

(45.55

)%

 

9.23

%

 

9.88

%

Operating return on average tangible shareholders' equity (non-GAAP) (1)(2)

 

10.99

%

 

8.50

%

 

11.98

%

 

10.95

%

 

10.03

%

Net interest margin (FTE) (2)

 

2.77

%

 

2.80

%

 

2.66

%

 

2.81

%

 

2.87

%

Cost of deposits (2)

 

1.33

%

 

1.22

%

 

0.92

%

 

0.37

%

 

0.10

%

Efficiency ratio (1)

 

65.07

%

 

59.56

%

 

(55.90

)%

 

65.30

%

 

55.77

%

Operating efficiency ratio (non-GAAP) (1)

 

60.83

%

 

58.47

%

 

57.97

%

 

57.26

%

 

54.49

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

21,146,292

 

$

21,583,493

 

$

22,720,530

 

$

22,646,858

 

$

22,042,933

 

Total loans

 

13,919,275

 

 

13,961,878

 

 

13,675,250

 

 

13,575,531

 

 

12,903,954

 

Total deposits

 

17,424,169

 

 

18,180,972

 

 

18,541,580

 

 

18,974,359

 

 

18,733,381

 

Total loans / total deposits

 

80

%

 

77

%

 

74

%

 

72

%

 

69

%

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL")

$

155,146

 

$

147,955

 

$

140,938

 

$

142,211

 

$

131,663

 

ALLL / total nonperforming loans ("NPLs")

 

326.86

%

 

484.18

%

 

407.65

%

 

368.38

%

 

387.77

%

Total NPLs / total loans

 

0.34

%

 

0.22

%

 

0.25

%

 

0.28

%

 

0.26

%

Net charge-offs (recoveries) ("NCOs") / average total loans (2)

 

0.00

%

 

0.01

%

 

0.00

%

 

0.01

%

 

0.01

%

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

11.57

%

 

11.71

%

 

11.35

%

 

10.91

%

 

10.96

%

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

 

8.73

%

 

8.93

%

 

8.70

%

 

8.24

%

 

8.20

%

 

 

 

 

 

 

(1) Excludes discontinued operations.

(2) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

Sep 30, 2023 change from

(Unaudited, dollars in thousands)

Sep 30,

2023

Jun 30,

2023

Sep 30,

2022

Jun 30, 2023

Sep 30, 2022

ASSETS

 

 

 

△ $

△ %

△ $

△ %

Cash and due from banks

$

72,689

 

$

105,066

 

$

102,776

 

$

(32,377

)

(31

)%

$

(30,087

)

(29

)%

Short-term investments

 

536,119

 

 

768,436

 

 

55,661

 

 

(232,317

)

(30

)%

 

480,458

 

863

%

Cash and cash equivalents

 

608,808

 

 

873,502

 

 

158,437

 

 

(264,694

)

(30

)%

 

450,371

 

284

%

Available for sale ("AFS") securities

 

4,261,518

 

 

4,520,293

 

 

6,844,615

 

 

(258,775

)

(6

)%

 

(2,583,097

)

(38

)%

Held to maturity ("HTM") securities

 

455,900

 

 

465,061

 

 

481,963

 

 

(9,161

)

(2

)%

 

(26,063

)

(5

)%

Total securities

 

4,717,418

 

 

4,985,354

 

 

7,326,578

 

 

(267,936

)

(5

)%

 

(2,609,160

)

(36

)%

Loans held for sale

 

23,892

 

 

2,835

 

 

951

 

 

21,057

 

743

%

 

22,941

 

2412

%

Loans:

 

 

 

 

 

 

 

Commercial and industrial

 

3,087,509

 

 

3,341,976

 

 

3,023,729

 

 

(254,467

)

(8

)%

 

63,780

 

2

%

Commercial real estate

 

5,396,912

 

 

5,242,290

 

 

4,985,654

 

 

154,622

 

3

%

 

411,258

 

8

%

Commercial construction

 

382,615

 

 

371,367

 

 

314,193

 

 

11,248

 

3

%

 

68,422

 

22

%

Business banking

 

1,087,799

 

 

1,089,548

 

 

1,096,436

 

 

(1,749

)

%

 

(8,637

)

(1

)%

Total commercial loans

 

9,954,835

 

 

10,045,181

 

 

9,420,012

 

 

(90,346

)

(1

)%

 

534,823

 

6

%

Residential real estate

 

2,550,861

 

 

2,510,705

 

 

2,118,852

 

 

40,156

 

2

%

 

432,009

 

20

%

Consumer home equity

 

1,193,859

 

 

1,198,290

 

 

1,168,476

 

 

(4,431

)

%

 

25,383

 

2

%

Other consumer

 

219,720

 

 

207,702

 

 

196,614

 

 

12,018

 

6

%

 

23,106

 

12

%

Total loans

 

13,919,275

 

 

13,961,878

 

 

12,903,954

 

 

(42,603

)

%

 

1,015,321

 

8

%

Allowance for loan losses

 

(155,146

)

 

(147,955

)

 

(131,663

)

 

(7,191

)

5

%

 

(23,483

)

18

%

Unamortized prem./disc. and def. fees

 

(19,307

)

 

(15,202

)

 

(19,349

)

 

(4,105

)

27

%

 

42

 

%

Net loans

 

13,744,822

 

 

13,798,721

 

 

12,752,942

 

 

(53,899

)

%

 

991,880

 

8

%

Federal Home Loan Bank stock, at cost

 

37,125

 

 

26,894

 

 

18,714

 

 

10,231

 

38

%

 

18,411

 

98

%

Premises and equipment

 

59,033

 

 

59,421

 

 

63,022

 

 

(388

)

(1

)%

 

(3,989

)

(6

)%

Bank-owned life insurance

 

163,700

 

 

162,718

 

 

159,838

 

 

982

 

1

%

 

3,862

 

2

%

Goodwill and other intangibles, net

 

566,709

 

 

567,213

 

 

568,308

 

 

(504

)

%

 

(1,599

)

%

Deferred income taxes, net

 

416,081

 

 

352,060

 

 

342,937

 

 

64,021

 

18

%

 

73,144

 

21

%

Prepaid expenses

 

156,113

 

 

157,675

 

 

180,234

 

 

(1,562

)

(1

)%

 

(24,121

)

(13

)%

Other assets

 

527,873

 

 

476,074

 

 

342,435

 

 

51,799

 

11

%

 

185,438

 

54

%

Assets of discontinued operations

 

124,718

 

 

121,026

 

 

128,537

 

 

3,692

 

3

%

 

(3,819

)

(3

)%

Total assets

$

21,146,292

 

$

21,583,493

 

$

22,042,933

 

$

(437,201

)

(2

)%

$

(896,641

)

(4

)%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Demand

$

5,177,015

 

$

5,346,693

 

$

6,582,122

 

$

(169,678

)

(3

)%

$

(1,405,107

)

(21

)%

Interest checking accounts

 

3,671,871

 

 

4,173,079

 

 

5,047,018

 

 

(501,208

)

(12

)%

 

(1,375,147

)

(27

)%

Savings accounts

 

1,393,545

 

 

1,495,540

 

 

1,990,188

 

 

(101,995

)

(7

)%

 

(596,643

)

(30

)%

Money market investment

 

4,709,149

 

 

4,814,412

 

 

4,757,477

 

 

(105,263

)

(2

)%

 

(48,328

)

(1

)%

Certificates of deposit

 

2,472,589

 

 

2,351,248

 

 

356,576

 

 

121,341

 

5

%

 

2,116,013

 

593

%

Total deposits

 

17,424,169

 

 

18,180,972

 

 

18,733,381

 

 

(756,803

)

(4

)%

 

(1,309,212

)

(7

)%

Borrowed funds:

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

673,525

 

 

314,021

 

 

384,215

 

 

359,504

 

114

%

 

289,310

 

75

%

Escrow deposits of borrowers

 

24,947

 

 

22,980

 

 

21,853

 

 

1,967

 

9

%

 

3,094

 

14

%

Interest rate swap collateral funds

 

16,900

 

 

14,210

 

 

16,650

 

 

2,690

 

19

%

 

250

 

2

%

Total borrowed funds

 

715,372

 

 

351,211

 

 

422,718

 

 

364,161

 

104

%

 

292,654

 

69

%

Other liabilities

 

525,378

 

 

488,007

 

 

428,663

 

 

37,371

 

8

%

 

96,715

 

23

%

Liabilities of discontinued operations

 

34,820

 

 

36,531

 

 

42,008

 

 

(1,711

)

(5

)%

 

(7,188

)

(17

)%

Total liabilities

 

18,699,739

 

 

19,056,721

 

 

19,626,770

 

 

(356,982

)

(2

)%

 

(927,031

)

(5

)%

Shareholders' equity:

 

 

 

 

 

 

 

Common shares

 

1,766

 

 

1,766

 

 

1,778

 

 

 

%

 

(12

)

(1

)%

Additional paid-in capital

 

1,661,136

 

 

1,656,750

 

 

1,676,396

 

 

4,386

 

%

 

(15,260

)

(1

)%

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

 

(133,992

)

 

(135,232

)

 

(138,950

)

 

1,240

 

(1

)%

 

4,958

 

(4

)%

Retained earnings

 

1,747,225

 

 

1,704,470

 

 

1,855,757

 

 

42,755

 

3

%

 

(108,532

)

(6

)%

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

 

(829,582

)

 

(700,982

)

 

(978,818

)

 

(128,600

)

18

%

 

149,236

 

(15

)%

Total shareholders' equity

 

2,446,553

 

 

2,526,772

 

 

2,416,163

 

 

(80,219

)

(3

)%

 

30,390

 

1

%

Total liabilities and shareholders' equity

$

21,146,292

 

$

21,583,493

 

$

22,042,933

 

$

(437,201

)

(2

)%

$

(896,641

)

(4

)%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Three months ended

 

Three months ended Sep 30, 2023 change from three months ended

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

Sep 30,

2023

Jun 30,

2023

Sep 30,

2022

 

Jun 30,

2023

 

Sep 30,

2022

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

169,274

 

$

160,862

 

$

124,992

 

 

$

8,412

 

5

%

 

$

44,282

 

35

%

Taxable interest and dividends on securities

 

24,191

 

 

24,618

 

 

29,280

 

 

 

(427

)

(2

)%

 

 

(5,089

)

(17

)%

Non-taxable interest and dividends on securities

 

1,434

 

 

1,434

 

 

1,917

 

 

 

 

%

 

 

(483

)

(25

)%

Interest on federal funds sold and other short-term investments

 

7,269

 

 

14,851

 

 

1,638

 

 

 

(7,582

)

(51

)%

 

 

5,631

 

344

%

Total interest and dividend income

 

202,168

 

 

201,765

 

 

157,827

 

 

 

403

 

%

 

 

44,341

 

28

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

59,607

 

 

56,146

 

 

4,781

 

 

 

3,461

 

6

%

 

 

54,826

 

1147

%

Interest on borrowings

 

5,356

 

 

4,031

 

 

867

 

 

 

1,325

 

33

%

 

 

4,489

 

518

%

Total interest expense

 

64,963

 

 

60,177

 

 

5,648

 

 

 

4,786

 

8

%

 

 

59,315

 

1050

%

Net interest income

 

137,205

 

 

141,588

 

 

152,179

 

 

 

(4,383

)

(3

)%

 

 

(14,974

)

(10

)%

Provision for allowance for loan losses

 

7,328

 

 

7,501

 

 

6,480

 

 

 

(173

)

(2

)%

 

 

848

 

13

%

Net interest income after provision for allowance for loan losses

 

129,877

 

 

134,087

 

 

145,699

 

 

 

(4,210

)

(3

)%

 

 

(15,822

)

(11

)%

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

7,403

 

 

7,242

 

 

6,708

 

 

 

161

 

2

%

 

 

695

 

10

%

Trust and investment advisory fees

 

6,235

 

 

6,131

 

 

5,832

 

 

 

104

 

2

%

 

 

403

 

7

%

Debit card processing fees

 

3,388

 

 

3,513

 

 

3,249

 

 

 

(125

)

(4

)%

 

 

139

 

4

%

Interest rate swap income

 

1,695

 

 

825

 

 

1,562

 

 

 

870

 

105

%

 

 

133

 

9

%

(Losses) income from investments held in rabbi trusts

 

(1,523

)

 

3,002

 

 

(2,248

)

 

 

(4,525

)

(151

)%

 

 

725

 

(32

)%

Losses on sales of commercial and industrial loans

 

(2,651

)

 

 

 

 

 

 

(2,651

)

%

 

 

(2,651

)

%

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

 

(164

)

 

(50

)

 

22

 

 

 

(114

)

228

%

 

 

(186

)

(845

)%

Losses on sales of securities available for sale, net

 

 

 

 

 

(198

)

 

 

 

%

 

 

198

 

(100

)%

Other

 

4,774

 

 

5,541

 

 

4,597

 

 

 

(767

)

(14

)%

 

 

177

 

4

%

Total noninterest income

 

19,157

 

 

26,204

 

 

19,524

 

 

 

(7,047

)

(27

)%

 

 

(367

)

(2

)%

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

60,898

 

 

62,183

 

 

61,292

 

 

 

(1,285

)

(2

)%

 

 

(394

)

(1

)%

Office occupancy and equipment

 

8,641

 

 

9,067

 

 

8,880

 

 

 

(426

)

(5

)%

 

 

(239

)

(3

)%

Data processing

 

13,443

 

 

12,814

 

 

12,242

 

 

 

629

 

5

%

 

 

1,201

 

10

%

Professional services

 

7,125

 

 

3,025

 

 

4,218

 

 

 

4,100

 

136

%

 

 

2,907

 

69

%

Marketing expenses

 

1,765

 

 

2,111

 

 

2,118

 

 

 

(346

)

(16

)%

 

 

(353

)

(17

)%

Loan expenses

 

1,082

 

 

1,115

 

 

2,211

 

 

 

(33

)

(3

)%

 

 

(1,129

)

(51

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

2,808

 

 

3,034

 

 

1,578

 

 

 

(226

)

(7

)%

 

 

1,230

 

78

%

Amortization of intangible assets

 

504

 

 

504

 

 

299

 

 

 

 

%

 

 

205

 

69

%

Other

 

5,482

 

 

6,081

 

 

2,927

 

 

 

(599

)

(10

)%

 

 

2,555

 

87

%

Total noninterest expense

 

101,748

 

 

99,934

 

 

95,765

 

 

 

1,814

 

2

%

 

 

5,983

 

6

%

Income before income tax (benefit) expense

 

47,286

 

 

60,357

 

 

69,458

 

 

 

(13,071

)

(22

)%

 

 

(22,172

)

(32

)%

Income tax (benefit) expense

 

(16,178

)

 

15,938

 

 

16,650

 

 

 

(32,116

)

(202

)%

 

 

(32,828

)

(197

)%

Net income from continuing operations

$

63,464

 

$

44,419

 

$

52,808

 

 

$

19,045

 

43

%

 

$

10,656

 

20

%

Net (loss) income from discontinued operations

$

(4,351

)

$

4,238

 

$

1,969

 

 

$

(8,589

)

(203

)%

 

$

(6,320

)

(321

)%

Net income

$

59,113

 

$

48,657

 

$

54,777

 

 

$

10,456

 

21

%

 

$

4,336

 

8

%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

162,370,469

 

 

162,232,236

 

 

163,718,962

 

 

 

138,233

 

0

%

 

 

(1,348,493

)

(1

)%

Weighted average common shares outstanding, diluted

 

162,469,887

 

 

162,246,675

 

 

164,029,649

 

 

 

223,212

 

0

%

 

 

(1,559,762

)

(1

)%

Earnings (loss) per share, basic:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.39

 

$

0.27

 

$

0.32

 

 

$

0.12

 

43

%

 

$

0.07

 

21

%

Discontinued operations

$

(0.03

)

$

0.03

 

$

0.01

 

 

$

(0.05

)

(203

)%

 

$

(0.04

)

(323

)%

Earnings per share, basic

$

0.36

 

$

0.30

 

$

0.33

 

 

$

0.06

 

21

%

 

$

0.03

 

9

%

Earnings (loss) per share, diluted:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.39

 

$

0.27

 

$

0.32

 

 

$

0.12

 

43

%

 

$

0.07

 

21

%

Discontinued operations

$

(0.03

)

$

0.03

 

$

0.01

 

 

$

(0.05

)

(203

)%

 

$

(0.04

)

(323

)%

Earnings per share, diluted

$

0.36

 

$

0.30

 

$

0.33

 

 

$

0.06

 

21

%

 

$

0.03

 

9

%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Nine months ended

 

 

 

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

Sep 30, 2023

Sep 30, 2022

 

Change

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

Interest and fees on loans

$

483,676

 

$

333,595

 

 

$

150,081

 

45

%

Taxable interest and dividends on securities

 

77,451

 

 

88,277

 

 

 

(10,826

)

(12

)%

Non-taxable interest and dividends on securities

 

4,302

 

 

5,585

 

 

 

(1,283

)

(23

)%

Interest on federal funds sold and other short-term investments

 

27,384

 

 

2,726

 

 

 

24,658

 

905

%

Total interest and dividend income

 

592,813

 

 

430,183

 

 

 

162,630

 

38

%

Interest expense:

 

 

 

 

 

Interest on deposits

 

158,686

 

 

11,164

 

 

 

147,522

 

1321

%

Interest on borrowings

 

17,025

 

 

959

 

 

 

16,066

 

1675

%

Total interest expense

 

175,711

 

 

12,123

 

 

 

163,588

 

1349

%

Net interest income

 

417,102

 

 

418,060

 

 

 

(958

)

%

Provision for allowance for loan losses

 

14,854

 

 

7,045

 

 

 

7,809

 

111

%

Net interest income after provision for allowance for loan losses

 

402,248

 

 

411,015

 

 

 

(8,767

)

(2

)%

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

21,117

 

 

23,558

 

 

 

(2,441

)

(10

)%

Trust and investment advisory fees

 

18,136

 

 

17,967

 

 

 

169

 

1

%

Debit card processing fees

 

10,071

 

 

9,417

 

 

 

654

 

7

%

Interest rate swap income

 

2,112

 

 

6,087

 

 

 

(3,975

)

(65

)%

Income (losses) from investments held in rabbi trusts

 

4,336

 

 

(13,997

)

 

 

18,333

 

(131

)%

Losses on sales from sales of commercial and industrial loans

 

(2,651

)

 

 

 

 

(2,651

)

%

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

 

(288

)

 

240

 

 

 

(528

)

(220

)%

Losses on sales of securities available for sale, net

 

(333,170

)

 

(2,474

)

 

 

(330,696

)

13367

%

Other

 

15,845

 

 

13,527

 

 

 

2,318

 

17

%

Total noninterest (loss) income

 

(264,492

)

 

54,325

 

 

 

(318,817

)

(587

)%

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

185,264

 

 

171,525

 

 

 

13,739

 

8

%

Office occupancy and equipment

 

26,797

 

 

28,804

 

 

 

(2,007

)

(7

)%

Data processing

 

38,555

 

 

39,711

 

 

 

(1,156

)

(3

)%

Professional services

 

13,277

 

 

11,510

 

 

 

1,767

 

15

%

Marketing expenses

 

4,899

 

 

6,262

 

 

 

(1,363

)

(22

)%

Loan expenses

 

3,292

 

 

5,757

 

 

 

(2,465

)

(43

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

8,388

 

 

4,710

 

 

 

3,678

 

78

%

Amortization of intangible assets

 

1,299

 

 

899

 

 

 

400

 

44

%

Other

 

15,802

 

 

6,888

 

 

 

8,914

 

129

%

Total noninterest expense

 

297,573

 

 

276,066

 

 

 

21,507

 

8

%

(Loss) income before income tax (benefit) expense

 

(159,817

)

 

189,274

 

 

 

(349,091

)

(184

)%

Income tax (benefit) expense

 

(65,619

)

 

43,681

 

 

 

(109,300

)

(250

)%

Net (loss) income from continuing operations

 

(94,198

)

 

145,593

 

 

 

(239,791

)

(165

)%

Net income from discontinued operations

 

7,872

 

 

11,872

 

 

 

(4,000

)

(34

)%

Net (loss) income

$

(86,326

)

$

157,465

 

 

$

(243,791

)

(155

)%

 

 

 

 

 

 

Share data:

 

 

 

 

 

Weighted average common shares outstanding, basic

 

162,199,158

 

 

166,682,222

 

 

 

(4,483,064

)

(3

)%

Weighted average common shares outstanding, diluted

 

162,260,503

 

 

166,867,643

 

 

 

(4,607,140

)

(3

)%

 

 

 

 

 

 

Earnings (loss) per share, basic:

 

 

 

 

 

Continuing operations

$

(0.58

)

$

0.87

 

 

$

(1.45

)

(167

)%

Discontinued operations

$

0.05

 

$

0.07

 

 

$

(0.02

)

(29

)%

(Loss) earnings per share, basic

$

(0.53

)

$

0.94

 

 

$

(1.47

)

(156

)%

 

 

 

 

 

 

Earnings (loss) per share, diluted:

 

 

 

 

 

Continuing operations

$

(0.58

)

$

0.87

 

 

$

(1.45

)

(167

)%

Discontinued operations

$

0.05

 

$

0.07

 

 

$

(0.02

)

(29

)%

(Loss) earnings per share, diluted

$

(0.53

)

$

0.94

 

 

$

(1.47

)

(156

)%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the three months ended

 

Sep 30, 2023

 

Jun 30, 2023

 

Sep 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

$

9,988,712

 

$

128,051

 

5.09

%

 

$

9,920,608

 

$

121,319

 

4.91

%

 

$

9,138,029

 

$

96,270

 

4.18

%

Residential

 

2,553,150

 

 

22,988

 

3.57

%

 

 

2,513,941

 

 

21,992

 

3.51

%

 

 

2,043,219

 

 

15,811

 

3.07

%

Consumer

 

1,386,350

 

 

22,227

 

6.36

%

 

 

1,370,011

 

 

21,045

 

6.16

%

 

 

1,341,528

 

 

16,072

 

4.75

%

Total loans

 

13,928,212

 

 

173,266

 

4.94

%

 

 

13,804,560

 

 

164,356

 

4.78

%

 

 

12,522,776

 

 

128,153

 

4.06

%

Investment securities

 

5,777,173

 

 

26,009

 

1.79

%

 

 

5,885,545

 

 

26,435

 

1.80

%

 

 

8,716,105

 

 

31,708

 

1.44

%

Federal funds sold and other short-term investments

 

537,602

 

 

7,269

 

5.36

%

 

 

1,174,964

 

 

14,851

 

5.07

%

 

 

282,629

 

 

1,638

 

2.30

%

Total interest-earning assets

 

20,242,987

 

 

206,544

 

4.05

%

 

 

20,865,069

 

 

205,642

 

3.95

%

 

 

21,521,510

 

 

161,499

 

2.98

%

Non-interest-earning assets

 

1,033,879

 

 

 

 

 

 

1,084,413

 

 

 

 

 

 

911,025

 

 

 

 

Total assets

$

21,276,866

 

 

 

 

 

$

21,949,482

 

 

 

 

 

$

22,432,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,441,636

 

$

43

 

0.01

%

 

$

1,552,702

 

$

47

 

0.01

%

 

$

2,021,125

 

$

51

 

0.01

%

Interest checking

 

3,903,062

 

 

6,302

 

0.64

%

 

 

4,270,945

 

 

6,141

 

0.58

%

 

 

5,211,914

 

 

2,686

 

0.20

%

Money market

 

4,836,895

 

 

27,695

 

2.27

%

 

 

5,064,469

 

 

26,611

 

2.11

%

 

 

4,824,452

 

 

1,893

 

0.16

%

Time deposits

 

2,341,684

 

 

25,567

 

4.33

%

 

 

2,275,844

 

 

23,347

 

4.11

%

 

 

380,560

 

 

151

 

0.16

%

Total interest-bearing deposits

 

12,523,277

 

 

59,607

 

1.89

%

 

 

13,163,960

 

 

56,146

 

1.71

%

 

 

12,438,051

 

 

4,781

 

0.15

%

Borrowings

 

414,252

 

 

5,356

 

5.13

%

 

 

348,597

 

 

4,031

 

4.64

%

 

 

157,686

 

 

867

 

2.18

%

Total interest-bearing liabilities

 

12,937,529

 

 

64,963

 

1.99

%

 

 

13,512,557

 

 

60,177

 

1.79

%

 

 

12,595,737

 

 

5,648

 

0.18

%

Demand deposit accounts

 

5,257,704

 

 

 

 

 

 

5,332,045

 

 

 

 

 

 

6,614,467

 

 

 

 

Other noninterest-bearing liabilities

 

541,827

 

 

 

 

 

 

505,555

 

 

 

 

 

 

445,640

 

 

 

 

Total liabilities

 

18,737,060

 

 

 

 

 

 

19,350,157

 

 

 

 

 

 

19,655,844

 

 

 

 

Shareholders' equity

 

2,539,806

 

 

 

 

 

 

2,599,325

 

 

 

 

 

 

2,776,691

 

 

 

 

Total liabilities and shareholders' equity

$

21,276,866

 

 

 

 

 

$

21,949,482

 

 

 

 

 

$

22,432,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

141,581

 

 

 

 

 

$

145,465

 

 

 

 

 

$

155,851

 

 

Net interest rate spread (2)

 

 

 

 

2.06

%

 

 

 

 

 

2.16

%

 

 

 

 

 

2.80

%

Net interest-earning assets (3)

$

7,305,458

 

 

 

 

 

$

7,352,512

 

 

 

 

 

$

8,925,773

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.77

%

 

 

 

 

 

2.80

%

 

 

 

 

 

2.87

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 nine months ended

 

Sep 30, 2023

 

Sep 30, 2022

(Unaudited, dollars in thousands)

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,892,337

 

$

365,298

 

4.94

%

 

$

9,019,196

 

$

258,082

 

3.83

%

Residential

 

2,526,980

 

 

66,593

 

3.52

%

 

 

1,980,630

 

 

44,966

 

3.04

%

Consumer

 

1,371,761

 

 

63,333

 

6.17

%

 

 

1,315,136

 

 

38,016

 

3.86

%

Total loans

 

13,791,078

 

 

495,224

 

4.80

%

 

 

12,314,962

 

 

341,064

 

3.70

%

Non-taxable investment securities

 

197,744

 

 

5,452

 

3.69

%

 

 

264,717

 

 

7,072

 

3.57

%

Taxable investment securities

 

6,244,397

 

 

77,451

 

1.66

%

 

 

8,484,540

 

 

88,277

 

1.39

%

Total investment securities

 

6,442,141

 

 

82,903

 

1.72

%

 

 

8,749,257

 

 

95,349

 

1.46

%

Federal funds sold and other short-term investments

 

721,025

 

 

27,384

 

5.08

%

 

 

541,285

 

 

2,726

 

0.67

%

Total interest-earning assets

 

20,954,244

 

 

605,511

 

3.86

%

 

 

21,605,504

 

 

439,139

 

2.72

%

Non-interest-earning assets

 

952,378

 

 

 

 

 

 

1,099,406

 

 

 

 

Total assets

$

21,906,622

 

 

 

 

 

$

22,704,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,570,803

 

$

172

 

0.01

%

 

$

2,046,254

 

$

153

 

0.01

%

Interest checking

 

4,177,492

 

 

17,155

 

0.55

%

 

 

4,897,321

 

 

6,778

 

0.19

%

Money market

 

4,979,820

 

 

74,612

 

2.00

%

 

 

5,151,384

 

 

3,559

 

0.09

%

Time deposits

 

2,184,631

 

 

66,747

 

4.08

%

 

 

429,401

 

 

674

 

0.21

%

Total interest-bearing deposits

 

12,912,746

 

 

158,686

 

1.64

%

 

 

12,524,360

 

 

11,164

 

0.12

%

Borrowings

 

478,347

 

 

17,025

 

4.76

%

 

 

75,027

 

 

959

 

1.71

%

Total interest-bearing liabilities

 

13,391,093

 

 

175,711

 

1.75

%

 

 

12,599,387

 

 

12,123

 

0.13

%

Demand deposit accounts

 

5,469,593

 

 

 

 

 

 

6,698,640

 

 

 

 

Other noninterest-bearing liabilities

 

512,546

 

 

 

 

 

 

436,724

 

 

 

 

Total liabilities

 

19,373,232

 

 

 

 

 

 

19,734,751

 

 

 

 

Shareholders' equity

 

2,533,390

 

 

 

 

 

 

2,970,159

 

 

 

 

Total liabilities and shareholders' equity

$

21,906,622

 

 

 

 

 

$

22,704,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

429,800

 

 

 

 

 

$

427,016

 

 

Net interest rate spread (2)

 

 

 

 

2.11

%

 

 

 

 

 

2.59

%

Net interest-earning assets (3)

$

7,563,151

 

 

 

 

 

$

9,006,117

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.74

%

 

 

 

 

 

2.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

31,703

 

$

14,178

 

$

17,271

 

$

21,474

 

$

19,886

 

Residential

 

8,075

 

 

8,796

 

 

9,603

 

 

9,750

 

 

8,513

 

Consumer

 

7,687

 

 

7,584

 

 

7,699

 

 

7,380

 

 

5,555

 

Total non-accrual loans

 

47,465

 

 

30,558

 

 

34,573

 

 

38,604

 

 

33,954

 

Total accruing loans past due 90 days or more:

 

 

 

 

 

 

 

 

 

 

Total non-performing loans

 

47,465

 

 

30,558

 

 

34,573

 

 

38,604

 

 

33,954

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets (1)

$

47,465

 

$

30,558

 

$

34,573

 

$

38,604

 

$

33,954

 

Total accruing troubled debt restructured ("TDR") (2)

$

 

$

 

$

 

$

28,834

 

$

36,275

 

Total non-performing loans to total loans

 

0.34

%

 

0.22

%

 

0.25

%

 

0.28

%

 

0.26

%

Total non-performing assets to total assets

 

0.22

%

 

0.14

%

 

0.15

%

 

0.17

%

 

0.15

%

 

 

 

 

 

 

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

(2) The Company adopted ASU 2022-02 on January 1, 2023 which eliminated the TDR recognition and measurement guidance. Accordingly, the Company 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

 

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

13,926,194

 

$

13,803,292

 

$

13,633,165

 

$

13,203,450

 

$

12,521,426

 

Allowance for loan losses, beginning of the period

 

147,955

 

 

140,938

 

 

142,211

 

 

131,663

 

 

125,531

 

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

 

 

 

 

 

(1,143

)

 

 

 

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

11

 

 

 

 

 

 

256

 

 

11

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

303

 

 

254

 

 

343

 

 

370

 

 

369

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

 

 

 

 

7

 

 

1

 

 

 

Other consumer

 

731

 

 

591

 

 

561

 

 

515

 

 

603

 

Total charged-off loans

 

1,045

 

 

845

 

 

911

 

 

1,142

 

 

983

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

120

 

 

26

 

 

139

 

 

248

 

 

126

 

Commercial real estate

 

2

 

 

2

 

 

4

 

 

38

 

 

3

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

609

 

 

204

 

 

481

 

 

391

 

 

286

 

Residential real estate

 

30

 

 

18

 

 

15

 

 

14

 

 

56

 

Consumer home equity

 

39

 

 

 

 

1

 

 

8

 

 

6

 

Other consumer

 

108

 

 

111

 

 

116

 

 

111

 

 

158

 

Total recoveries

 

908

 

 

361

 

 

756

 

 

810

 

 

635

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(109

)

 

(26

)

 

(139

)

 

8

 

 

(115

)

Commercial real estate

 

(2

)

 

(2

)

 

(4

)

 

(38

)

 

(3

)

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

(306

)

 

50

 

 

(138

)

 

(21

)

 

83

 

Residential real estate

 

(30

)

 

(18

)

 

(15

)

 

(14

)

 

(56

)

Consumer home equity

 

(39

)

 

 

 

6

 

 

(7

)

 

(6

)

Other consumer

 

623

 

 

480

 

 

445

 

 

404

 

 

445

 

Total net loans charged-off

 

137

 

 

484

 

 

155

 

 

332

 

 

348

 

Provision for allowance for loan losses

 

7,328

 

 

7,501

 

 

25

 

 

10,880

 

 

6,480

 

Total allowance for loan losses, end of period

$

155,146

 

$

147,955

 

$

140,938

 

$

142,211

 

$

131,663

 

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

 

0.00

%

 

0.01

%

 

0.00

%

 

0.01

%

 

0.01

%

Allowance for loan losses as a percent of total loans

 

1.12

%

 

1.06

%

 

1.03

%

 

1.05

%

 

1.02

%

Allowance for loan losses as a percent of nonperforming loans

 

326.86

%

 

484.18

%

 

407.65

%

 

368.38

%

 

387.77

%

 

 

 

 

 

 

 

(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)

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

 

 

 

 

 

 

Net income (loss) from continuing operations (GAAP)

$

63,464

 

$

44,419

 

$

(202,081

)

$

40,918

 

$

52,808

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts

 

1,523

 

 

(3,002

)

 

(2,857

)

 

(3,235

)

 

2,248

 

Losses on sales of securities available for sale, net

 

 

 

 

 

333,170

 

 

683

 

 

198

 

Gains (losses) on sales of other assets

 

(2

)

 

 

 

5

 

 

10

 

 

(467

)

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(586

)

 

1,314

 

 

1,274

 

 

1,103

 

 

(867

)

Merger and acquisition expenses

 

3,630

 

 

 

 

 

 

 

 

 

Defined Benefit Plan settlement loss

 

 

 

 

 

 

 

12,045

 

 

 

Total impact of non-GAAP adjustments

 

4,565

 

 

(1,688

)

 

331,592

 

 

10,606

 

 

1,112

 

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

 

15,944

 

 

1,639

 

 

76,377

 

 

2,954

 

 

318

 

Non-GAAP adjustments, net of tax

$

(11,379

)

$

(3,327

)

$

255,215

 

$

7,652

 

$

794

 

Operating net income (non-GAAP)

$

52,085

 

$

41,092

 

$

53,134

 

$

48,570

 

$

53,602

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period:

 

 

 

 

 

Basic

 

162,370,469

 

 

162,232,236

 

 

161,991,373

 

 

162,032,522

 

 

163,718,962

 

Diluted

 

162,469,887

 

 

162,246,675

 

 

162,059,431

 

 

162,263,547

 

 

164,029,649

 

 

 

 

 

 

 

Earnings (losses) per share from continuing operations, basic:

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

$

0.32

 

Earnings (losses) per share from continuing operations, diluted:

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

$

0.32

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

$

0.33

 

Operating earnings per share, diluted (non-GAAP)

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

$

0.33

 

 

 

 

 

 

 

Return on average assets (3)

 

1.18

%

 

0.81

%

 

(3.64

)%

 

0.73

%

 

0.93

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (3)

 

0.03

%

 

(0.05

)%

 

(0.05

)%

 

(0.06

)%

 

0.04

%

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

 

0.00

%

 

0.00

%

 

6.00

%

 

0.01

%

 

0.00

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

(0.01

)%

Rabbi trust employee benefit (income) expense (3)

 

(0.01

)%

 

0.02

%

 

0.02

%

 

0.02

%

 

(0.02

)%

Merger and acquisition expenses (3)

 

0.07

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.21

%

 

0.00

%

Less net tax benefit associated with non-GAAP adjustments (2) (3)

 

0.30

%

 

0.03

%

 

1.38

%

 

0.05

%

 

0.01

%

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

 

0.97

%

 

0.75

%

 

0.95

%

 

0.86

%

 

0.93

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

9.91

%

 

6.85

%

 

(33.31

)%

 

6.71

%

 

7.55

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (3)

 

0.24

%

 

(0.46

)%

 

(0.47

)%

 

(0.53

)%

 

0.32

%

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

 

0.00

%

 

0.00

%

 

54.92

%

 

0.11

%

 

0.03

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

(0.07

)%

Rabbi trust employee benefit (income) expense (3)

 

(0.09

)%

 

0.20

%

 

0.21

%

 

0.18

%

 

(0.12

)%

Merger and acquisition expenses (3)

 

0.57

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

1.97

%

 

0.00

%

Less net tax benefit associated with non-GAAP adjustments (2) (3)

 

2.49

%

 

0.25

%

 

12.59

%

 

0.48

%

 

0.05

%

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

 

8.14

%

 

6.34

%

 

8.76

%

 

7.96

%

 

7.66

%

 

 

 

 

 

 

Average tangible shareholders' equity:

 

 

 

 

 

Average total shareholders' equity (GAAP)

$

2,539,806

 

$

2,599,325

 

$

2,460,170

 

$

2,420,174

 

$

2,776,691

 

Less: Average goodwill and other intangibles (4)

 

658,591

 

 

659,825

 

 

660,795

 

 

661,841

 

 

656,684

 

Average tangible shareholders' equity (non-GAAP)

$

1,881,215

 

$

1,939,500

 

$

1,799,375

 

$

1,758,333

 

$

2,120,007

 

 

 

 

 

 

 

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

 

13.38

%

 

9.19

%

 

(45.55

)%

 

9.23

%

 

9.88

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (3)

 

0.32

%

 

(0.62

)%

 

(0.64

)%

 

(0.73

)%

 

0.42

%

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

 

0.00

%

 

0.00

%

 

75.09

%

 

0.15

%

 

0.04

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

(0.09

)%

Rabbi trust employee benefit (income) expense (3)

 

(0.12

)%

 

0.27

%

 

0.29

%

 

0.25

%

 

(0.16

)%

Merger and acquisition expenses (3)

 

0.77

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

2.72

%

 

0.00

%

Less net tax benefit associated with non-GAAP adjustments (2) (3)

 

3.36

%

 

0.34

%

 

17.21

%

 

0.67

%

 

0.06

%

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

 

10.99

%

 

8.50

%

 

11.98

%

 

10.95

%

 

10.03

%

 

 

 

 

 

 

(1) Net income from continuing operations is used for computing return on average assets, return on average shareholders' equity, and return on average tangible shareholders' equity. Noninterest income and expense components presented in this table exclude discontinued operations.

(2) 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 for the three months ended September 30, 2023 was primarily due to the reversal of the remainder of the federal portion of the valuation allowance established in connection with the sale of securities in the first quarter of 2023, described further below, and a net tax benefit associated with a change in management’s estimate of annual pre-tax loss for purposes of determining our quarterly income tax provision. Upon the sale of securities in the first quarter of 2023, we established a valuation allowance of $17.4 million, as it was determined at that time that it was not more-likely-than-not that the entirety of the deferred tax asset related to the loss on such securities would be realized. Following the execution of the agreement to sell our insurance agency business in September 2023 and our estimate of the resulting capital gain, which is estimated to be sufficient to realize federal capital losses related to the securities sale, we reversed the associated federal valuation allowance previously established as we had determined it was more-likely-than-not that the entirety of the federal deferred tax asset related to the loss on such securities would be realized. The tax expense resulting from the sale of the insurance agency business is expected to be recognized in the fourth quarter following the closing of the sale.

(3) Presented on an annualized basis.

(4) Includes goodwill and other intangible assets of discontinued operations.

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

 

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

137,205

 

$

141,588

 

$

138,309

 

$

149,994

 

$

152,179

 

Add:

 

 

 

 

 

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

 

4,376

 

 

3,877

 

 

4,445

 

 

3,780

 

 

3,672

 

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

$

141,581

 

$

145,465

 

$

142,754

 

$

153,774

 

$

155,851

 

 

 

 

 

 

 

Noninterest income (loss) (GAAP) (2)

$

19,157

 

$

26,204

 

$

(309,853

)

$

22,425

 

$

19,524

 

Less:

 

 

 

 

 

(Losses) income from investments held in rabbi trusts

 

(1,523

)

 

3,002

 

 

2,857

 

 

3,235

 

 

(2,248

)

Losses on sales of securities available for sale, net

 

 

 

 

 

(333,170

)

 

(683

)

 

(198

)

Gains on sales of other assets

 

2

 

 

 

 

(5

)

 

(10

)

 

467

 

Noninterest income on an operating basis (non-GAAP) (2)

$

20,678

 

$

23,202

 

$

20,465

 

$

19,883

 

$

21,503

 

 

 

 

 

 

 

Noninterest expense (GAAP) (2)

$

101,748

 

$

99,934

 

$

95,891

 

$

112,583

 

$

95,765

 

Less:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(586

)

 

1,314

 

 

1,274

 

 

1,103

 

 

(867

)

Merger and acquisition expenses (2)

 

3,630

 

 

 

 

 

 

 

 

 

Defined Benefit Plan settlement loss

 

 

 

 

 

 

 

12,045

 

 

 

Noninterest expense on an operating basis (non-GAAP) (2)

$

98,704

 

$

98,620

 

$

94,617

 

$

99,435

 

$

96,632

 

 

 

 

 

 

 

Total revenue (loss) (GAAP) (2)

$

156,362

 

$

167,792

 

$

(171,544

)

$

172,419

 

$

171,703

 

Total operating revenue (non-GAAP) (2)

$

162,259

 

$

168,667

 

$

163,219

 

$

173,657

 

$

177,354

 

 

 

 

 

 

 

Efficiency ratio (GAAP) (2)

 

65.07

%

 

59.56

%

 

(55.90

)%

 

65.30

%

 

55.77

%

Operating efficiency ratio (non-GAAP) (2)

 

60.83

%

 

58.47

%

 

57.97

%

 

57.26

%

 

54.49

%

 

 

 

 

 

 

(1) Interest income on tax-exempt loans and investment securities has been adjusted to an FTE basis using a marginal tax rate of 21.7%, 21.8%, 21.7%, 21.6%, and 21.5% for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively.

(2) Noninterest income and expense components presented in this table exclude discontinued op