Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Q3 2023 Earnings Presentation
30 slides from Eastern Bankshares's earnings presentation, Oct 26, 2023
Slide 1: Q3 Earnings Presentation
Q3 Earnings Presentation October 26, 2023
Slide 2: On the call
On the call Presenter Topic Bob Rivers Opening Remarks Chief Executive Officer & Chair of the Board Jim Fitzgerald Chief Administrative Officer, Chief Financial Financials Officer & Treasurer 2
Slide 3: The next step in our journey
The next step in our journey Merger with and sale of Update on transactions Combined Boston footprint • Announced on September 19, 2023 the sale of the operations of Eastern Insurance Group, LLC ("Eastern Insurance") for cash consideration ("the insurance transaction") and the pending all-stock merg
Slide 4: Q3 2023 financial highlights
Q3 2023 financial highlights Key Metrics Highlights $59.1 million • Net income of $59.1 million. Operating net income*1 of $52.1 million. Net income • The insurance transaction triggered the elimination of a $14.6 million tax valuation allowance that was established as part of the sale of available-
Slide 5: Balance sheet
Balance sheet Linked Quarter Year Over Year • Total assets were $21.1 billion at $ in millions 9/30/2023 6/30/2023 △$ △% 9/30/2022 △$ △% September 30, 2023 compared to $21.6 billion at the end of the prior Cash and cash equivalents $ 609 $ 874 $ (265) (30)% $ 158 $ 451 285 % quarter Securities 4,717
Slide 6: Income statement
Income statement $ in millions, except per share amounts Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 • Net income in the third quarter was Net interest income $ 137.2 $ 141.6 $ 138.3 $ 150.0 $ 152.2 $59.1 million and operating net income*1 was $52.1 million Noninterest income1 19.2 26.2 (309.9) 22.4 19.
Slide 7: Discontinued operations
Discontinued operations • Net loss from discontinued operations in the third quarter of $4.4 million • Net (loss) income from discontinued operations is excluded from operating net income* • In the third quarter, there were approximately $10.7 million of expenses associated with the insurance transa
Slide 8: Net interest margin trends
Net interest margin trends Earning assets QoQ changes in FTE net interest income* $ in millions Q3 2023 Q2 2023 Change Yield1 Yield1 Yield1 $145.5 $8.9 Avg. Balance Avg. Balance Avg. Balance $141.6 Commercial loans $ 9,989 5.09 % $ 9,921 4.91 % $ 68 0.18 % $(8.0) $(3.5) $(1.3) Residential loans 2,55
Slide 9: Noninterest income
Noninterest income1 Noninterest income • Total noninterest income was $19.2 million for the third quarter, and $20.7 million on an operating basis • In the third quarter, the Company incurred losses on sales of SNC $26.2 loans within the C&I loan $21.5 $23.1 $23.3 $23.2 $19.7 $19.9 $20.5 $19.2 $20.7
Slide 10: Noninterest expense
Noninterest expense1 Noninterest expense • Total noninterest expense was $101.7 million for the third quarter • Total operating noninterest expense* of $98.7 million was $112.6 $95.8 $96.6 $99.4 $95.9 $99.9 $98.6 $101.7 $98.7 essentially flat in the third $94.6 quarter, and up 2% from the year- ago
Slide 11: Deposits
Deposits Funding betas & cost • Total deposit cost was 1.33% in the third quarter, Cycle beta (1) Total I.B. liabilities cost compared to 1.22% in the prior quarter (includes borrowings) 2.15% 1.95% 1.80% 1.78% 1.77% 1.88% • Deposits decreased $757 million, or 4% from the prior 1.49% 1.63% 1.36% qua
Slide 12: Securities portfolio
Securities portfolio Portfolio trends1 Investment composition1,2 $ in billions $8.5 $8.3 $0.5 $0.5 3% $5.9 $5.8 $5.7 4% $0.5 $0.5 $0.5 Agency RMBS $8.0 $7.8 Agency CMBS 27% $5.5 $5.4 $5.3 Agency bonds Treasuries 64% Munis Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 AFS securities HTM securities Total se
Slide 13: Loan composition
Loan composition Historical composition Loan repricing characteristics2,3 $13,576 $13,675 $13,962 $13,919 17% swapped $12,904 to a fixed rate 1,382 1,371 1,406 1,414 1,365 2,461 2,497 2,511 2,551 2,119 33% 9,420 9,733 9,806 10,045 9,955 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Total commercial Reside
Slide 14: Asset quality
Asset quality Non-performing loans (NPLs) • Non-performing loans were $47.5 million, or 0.34% of total loans. The increase is primarily related to three CRE loans $47.5 collateralized by investor office real estate located in $38.5 7.7 Boston's financial district $34.0 $34.6 Consumer 7.3 $30.6 8.1 R
Slide 15: CRE office exposure
CRE office exposure1 Loan composition • Office related CRE of $832 million includes investor Percent of office, owner occupied office and mixed use office Portfolio 9/30/23 total loans Total Loans $ 13,919 100 % • The investor office CRE2 portfolio of $717 million is Total Commercial Loans 9,955 72
Slide 16: Outlook for Q4 2023
Outlook for Q4 2023 The outlook below is subject to a high degree of overall economic and interest rate uncertainty Category Management's outlook • Expect to complete the sale next week with an expected net gain of The insurance transaction approximately $260 million. Gain taxed at 28%, which will l
Slide 17: Non-GAAP financial measures
Non-GAAP financial measures Non-GAAP financial measures used in this presentation are denoted by an asterisk. 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) amoun
Slide 18: Forward-looking statements
Forward-looking statements This presentation 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 futu
Slide 19: Additional information
Additional information 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
Slide 20: Appendix
Appendix @eEastern Bankshares, Inc.
Slide 21: Appendix A: Reconciliation of non-GAAP earnings metrics (1 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (1 of 3) (1) 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 $
Slide 22: Appendix A: Reconciliation of non-GAAP earnings metrics (2 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (2 of 3) (1) 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 Return on average assets (3) 1.18 % 0.81 % (3.64)% 0.73 % 0.93 % Add: Lo
Slide 23: Appendix A: Reconciliation of non-GAAP earnings metrics (3 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (3 of 3)(1) 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 Average tangible shareholders' equity: Average total shareholders' equity
Slide 24: Appendix B: Reconciliation of non-GAAP operating revenues and expenses
Appendix B: Reconciliation of non-GAAP operating revenues and expenses Three Months Ended (Unaudited, dollars in thousands) Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Net interest income (GAAP) $ 137,205 $ 141,588 $ 138,309 $ 149,994 $ 152,179 Add: Tax-equivalent adjustment (no
Slide 25: Appendix C: Reconciliation of non-GAAP capital metrics
Appendix C: Reconciliation of non-GAAP capital metrics As of Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 (Unaudited, dollars in thousands, except per-share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,446,553 $ 2,526,772 $ 2,579,123 $ 2,471,790 $ 2,
Slide 26: Appendix D: Tangible shareholders' equity roll forward
Appendix D: Tangible shareholders' equity roll forward As of Change from Sep 30, 2023 Jun 30, 2023 Jun 30, 2023 (Unaudited, dollars in thousands, except per-share data) Common stock $ 1,766 $ 1,766 $ — Additional paid in capital 1,661,136 1,656,750 4,386 Unallocated ESOP common stock (133,992) (135,
Slide 27: Appendix E: HTM-Marked Tangible Common Equity Ratio
Appendix E: HTM-Marked Tangible Common Equity Ratio As of Sep 30, 2023 Jun 30, 2023 (Unaudited, dollars in thousands, except per-share data) HTM-marked tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,446,553 $ 2,526,772 Less: Goodwill and other intangibles (1) 657,824 658,993 Le
Slide 28: Appendix F: Discontinued Operations (1 of 2)
Appendix F: Discontinued Operations (1 of 2) ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS As of and for the three months ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 (Unaudited, dollars in thousands) Assets Premises and equipment $ 50 $ 80 $ 99 $ 163 $ 239 Goodwill and intangibles,
Slide 29: Appendix F: Discontinued Operations (2 of 2)
Appendix F: Discontinued Operations (2 of 2) OPERATING RESULTS OF DISCONTINUED OPERATIONS Three Months Ended Nine Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 (Unaudited, dollars in thousands) Noninterest income: Insurance commissions $ 25,897 $ 27,609 $ 31,671
Slide 30: Appendix G: Liquidity & Capital Update
Appendix G: Liquidity & Capital Update $ in millions 9/30/2023 6/30/2023 Change Uninsured deposits Uninsured and uncollateralized deposits $ 5,651 $ 5,907 $ (256) % of total deposits 32.4 % 32.5 % (0.1)% Available liquidity sources Cash $ 609 $ 874 $ (265) Discount Window 879 878 2 BTFP 2,493 2,536