Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Merger or Acquisition (September 2023)
30 slides from Eastern Bankshares's merger presentation, Sep 19, 2023
Slide 1: Merger with Cambridge Bancorp and sale of Eastern Insurance Group
Merger with and sale of September 19, 2023
Slide 2: 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 3: Non-GAAP financial measures
Non-GAAP financial measures *Denotes a non-GAAP financial measure used in this presentation. This presentation contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures. Management believes that providing ce
Slide 4: 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 5: Today’s presenters
Today’s presenters Presenter Bob Rivers Chief Executive Officer and Chair of the Board of Eastern Bankshares Denis Sheahan Chief Executive Officer, President and Chair of the Board of Cambridge Bancorp Jim Fitzgerald Chief Administrative Officer, Chief Financial Officer and Treasurer of Eastern Bank
Slide 6: The next step in our journey
The next step in our journey SALE TO TO MERGE WITH $510mm $528mm Opportunistically Strategically Bolsters premier Financially Low risk, in-market monetize value redeploy capital to Boston franchise attractive, creating transaction that created in insurance enhance core and expands wealth long-term i
Slide 7: Strategically compelling and financially attractive transactions
Strategically compelling and financially attractive transactions Opportunistically monetize value created Strategically redeploy capital to enhance Bolsters premier Boston franchise and in insurance brokerage core banking franchise expands wealth business ✓ Built leading insurance brokerage business
Slide 8: Eastern Insurance Group is a leading insurance agency in the Northeast
is a leading insurance agency with a strong regional presence in the Northeast ◼ Eastern acquired insurance brokerage unit in 2002 and grew it into the Contribution to Eastern Bankshares 3rd largest bank-affiliated insurance brokerage and top 50 overall Business % of total revenue % of operating net
Slide 9: Cambridge is the leading wealth-focused Boston bank
is the leading wealth-focused Boston bank Company overview Branch footprint ⚫ Founded in 1890 and headquartered in Harvard Square, Cambridge, MA Concord Winchester Dover ⚫ Differentiated Private Banking and Wealth Management focus Stratham Portsmouth Lexington Manchester North Hampton ⚫ Twenty-two b
Slide 10: Scales and enhances wealth management offering
Scales and enhances wealth management offering Wealth management – Key metrics Retaining the prominent Cambridge Trust brand for EBC CATC wealth management and private banking offerings AUM/A ($bn) Fee revenue (LTM, $mm) Cambridge executives to lead pro forma wealth segment $56 Meaningfully scales f
Slide 11: Bolsters premier Boston franchise with density in highly attractive market
Bolsters premier Boston franchise with density in highly attractive market Enhances presence in affluent Boston markets Solidifies position as largest Boston mid-sized bank by deposits² Deposits in the Boston MSA Beverly Lynnfield Bank of America $103.1 Peabody 93 Reading Salem Citizens $53.2 Woburn
Slide 12: Financially compelling
Financially compelling Fortress balance Strong returns Enhanced profitability sheet Meaningful EPS accretion with Increased earnings generation and Ample capital and liquidity with flexibility to manageable TBV dilution profitability restructure Cambridge’s balance sheet 20%+ ~3.05% ~50% ~14.5% 2024
Slide 13: Summary of transaction terms
Summary of transaction terms Sale Merger of with ⚫ Transaction value of $528mm ⚫ Transaction value of $510mm Consideration ⚫ Consideration: 100% stock ⚫ Consideration: 100% cash and structure ⚫ Fixed exchange ratio: 4.9560x of EBC stock ⚫ TSA agreement in place through early 2024 ⚫ Pro forma ownersh
Slide 14: Highly attractive relative pricing
Highly attractive relative pricing Sale of Merger with Deal Value $510mm $528mm For reference Premium (30-day VWAP) — 24%¹ Price / Revenue ~5.0x 3.3x Price / Earnings ~35.0x 14.7x Price / Fully-synergized earnings² — 5.3x 11.5x Price / TBV — 1.14x Price / Earnings 2024E net income $14mm $36mm⁴ 2024E
Slide 15: Strategic redeployment of capital
Strategic redeployment of capital CET1 transactions impacts / / Accretable fair value marks / With fair value marks ~2.5% ~17.0% ~5.0% ~16.0% (~1.5%) (~2.5%) ~2.5% ~12.0% ~11.0% ~$500mm+ Excess capital excluding ~14.5% capital from mark accretion Eastern standalone EIG sale¹ Cambridge Accretable rat
Slide 16: Unlocks earnings potential and enhances returns
Unlocks earnings potential and enhances returns Confident in ability to Transaction results in meaningful EPS accretion post-close deliver on financial targets 2024E fully-synergized net income, $mm B C A• Reset earnings / fair value marks A $29 ~$295 • Represents sustainable earnings in current rat
Slide 17: Enhanced profitability
Enhanced profitability (Standalone) (Pro forma)¹ Net interest margin ✓ Efficiency ratio ✓ ROAA ✓ ROATCE ✓ ~3.05% ~60% ~13.5% ~1.05% ~0.90% ~2.80% ~10.0% ~50% 2Q’23 2024E 2Q’23 2024E 2Q’23 2024E 2Q’23 2024E Source: FactSet, S&P Global Market Intelligence; Note: Financial data as of June 30, 2023; Mar
Slide 18: Summary highlights
Summary highlights Opportunistically monetize value created in insurance brokerage Strategically redeploy capital to enhance core banking franchise Bolsters premier Boston franchise and expands wealth business Financially attractive, creating long-term shareholder value Low risk, in-market transacti
Slide 19: Appendix
Appendix x c x E 5 © =) §
Slide 20: Key changes to executive leadership
Key changes to executive leadership Bob Rivers Denis Sheahan Quincy Miller Executive Chair Chief Executive Officer Vice Chair, President, & COO • Current Chair & Chief • Current Chief Executive • Current President & Vice Chair Executive Officer of Eastern Officer, President and Chair of of Eastern B
Slide 21: Supporting our communities, customers and employees
Supporting our communities, customers and employees Communities Customers Employees • Deep commitment to support our local • A customer-centric bank focused on • Shared values and vision communities, with a focus on: improving our communities, one • Affordable housing relationship at a time • Strong
Slide 22: Key transaction assumptions
Key transaction assumptions ⚫ 34% of Cambridge’s operating non-interest expense base ($37mm pre-tax) Synergies ⚫ Phase-in of 50% in 2024 and 100% thereafter ⚫ Revenue synergies have been identified, but not modeled ⚫ Gross credit mark equal to 1.09% of total loans ($44mm) Credit mark ⚫ 30% of the ma
Slide 23: Summary of fair value marks
Summary of fair value marks Impact to equity $mm Carrying value Fair value Pre-tax After-tax Amortization term Assets Total investment securities $1,152 $980 ($172) ($133) 7 years Net loans 3,987 3,574 (413) (320) 7 years Total $5,139 $4,554 ($585) ($454) Liabilities Deposits $4,443 $4,451 $8 $6 1 y
Slide 24: Purchase accounting summary
Purchase accounting summary Tangible book value per share impact Eastern $ millions Shares (mm) $ per share Standalone tangible book value (estimated at close) $1,938 176.4 $10.99 Pro form a Standalone Eastern tangible book value at close $1,938 176.4 (+) Impacts of Eastern Insurance Group sale incl
Slide 25: Cambridge historical financials
historical financials Fiscal year ended Fiscal quarter ended $mm 12/31/2019 12/31/2020 12/31/2021 12/31/2022 3/31/2023 6/30/2023 Total assets $2,856 $3,949 $4,892 $5,560 $5,529 $5,490 Gross loans 2,227 3,154 3,319 4,063 4,018 4,025 Balance sheet Total deposits 2,359 3,403 4,331 4,815 4,657 4,443 Sha
Slide 26: Comprehensive due diligence and integration plan
Comprehensive due diligence and integration plan Diligence focus areas Process and integration timeline ⚫ Due diligence Commercial Credit Banking ◼ 60+ employees, business leaders, advisors and specialists participated ◼ In-depth review of Lending and Credit: Review of over 45% of the commercial loa
Slide 27: Pro forma loans
Pro forma loans 1-4 family Other consumer C&I OOCRE NOOCRE Multifamily C&D 3% 4% 3% 9% 18% 11% 23% 19% 39% 23% 10% $14.0bn $4.0bn 23% $18.0bn¹ 9% 22% 6% 6% 32% 27% 9% 3% 4% Yield on loans: 4.78% Yield on loans: 4.80% Yield on loans: 4.78% Note: Financial data as of June 30, 2023; Figures may not tot
Slide 28: Pro forma deposits
Pro forma deposits Noninterest-bearing Interest-bearing checking Savings Money market Time 13% 14% 13% 29% 24% 28% 26% $18.2bn 22% $4.4bn 26% $22.6bn¹ 26% 24% 23% 8% 13% 9% Cost of deposits: 1.22% Cost of deposits: 1.78% Cost of deposits: 1.32% Note: Financial data as of June 30, 2023; Figures may n
Slide 29: Reconciliation of non-GAAP capital metrics
Reconciliation of non-GAAP capital metrics Cambridge Bancorp Fiscal year ended Fiscal quarter ended $000s 12/31/2019 12/31/2020 12/31/2021 12/31/2022 3/31/2023 6/30/2023 Tangible common equity Total Shareholders' equity (GAAP) $286,561 $401,732 $437,837 $517,552 $525,949 $527,004 Less: Goodwill and
Slide 30: Good invests. Good advises. Good lends.
GOOD INVESTS. GOOD ADVISES. GOOD LENDS. GOOD HELPS FEED HUNGRY KIDS. GOOD FUELS THE HUNGRY STARTUP. GOOD HELPS KIDS LEARN TO PAINT. AND DANCE. AND REALIZE HOW SPECIAL THEY ARE. GOOD BUILDS PLAYGROUNDS. AND REBUILDS LIVES. GOOD INSURES. GOOD ENDURES. GOOD FIGHTS DISCRIMINATION. GOOD STANDS UP FOR EQU
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