Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Q1 2023 Earnings Presentation
31 slides from Eastern Bankshares's earnings presentation, Apr 27, 2023
Slide 1: Q1 Earnings Presentation
Q1 Earnings Presentation April 27 | 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: Forward-looking statements
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 fut
Slide 4: 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 5: Q1 2023 financial highlights
Q1 2023 financial highlights Key Metrics Highlights $(194.1) million • Net loss of $194.1 million due to the sale of $1.9 billion in available Net loss for sale ("AFS") securities to improve liquidity, strengthen the balance sheet and enhance future earnings ("the repositioning"). $61.1 million Oper
Slide 6: Balance sheet update
Balance sheet update We have taken multiple steps to enhance the strength and flexibility of our balance sheet • Increased on-balance sheet liquidity primarily through investment sales Enhanced liquidity • Simultaneously added additional backup sources of liquidity • Achieved 107% coverage of uninsu
Slide 7: Liquidity coverage
Liquidity coverage • Strong on-balance sheet and backup liquidity to withstand uncertain environment and industry challenges • $2.1 billion in cash & equivalents, with $5.0 billion in available, unused borrowing capacity Uninsured1 and uncollateralized coverage Cash + available and unused sources2 $
Slide 8: Uninsured deposits
Uninsured deposits • $6.7 billion, or 36% of total deposits are uninsured1 and uncollateralized • $863 million in deposits participate in reciprocal Insured Cash Sweep ("ICS") network for full FDIC coverage, an increase of $198 million from the prior quarter Uninsured1 and uncollateralized deposits
Slide 9: Investment sales
Investment sales $ in millions 12/31/22 3/31/23 • Sold lower yielding AFS securities totaling $1.9 billion in Balance Sheet market value creating a non- Total assets $22,647 $22,721 operating after-tax loss of $280 million Cash & equivalents $170 $2,138 • Transaction boosts liquidity and 1 Non-core
Slide 10: Diversified deposit base
Diversified deposit base Core deposit mix1 • Well-diversified deposit base comprised of consumers, small businesses, large commercial businesses, non-profits and municipalities located throughout our footprint with an average account age of 11 years • 200+ year history as a relationship-based and fu
Slide 11: Leading capital position
Leading capital position Regulatory capital ratios1,2 • Eastern has a capital position that provides a source EBC Well-capitalized Amount > of strength requirement3 minimum $ millions • Capital ratios greatly exceed regulatory requirements Tier 1 leverage ratio 11.1 % 5.0 % $ 1,398 • Balance sheet r
Slide 12: Balance sheet
Balance sheet Linked Quarter Year Over Year • Total assets were $22.7 billion $ in millions 3/31/2023 12/31/2022 △$ △% 3/31/2022 △$ △% at March 31, 2023 compared to $22.6 billion at the end of the Cash and cash equivalents $ 2,138 $ 170 $ 1,968 1158 % $ 830 $ 1,308 158 % prior quarter. Securities 5,
Slide 13: Income statement
Income statement $ in millions, except per share amounts Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 • The net loss in the first quarter Net interest income $ 138.3 $ 150.0 $ 152.2 $ 137.8 $ 128.1 was $194.1 million due to the Noninterest income (278.3) 44.5 43.4 41.9 46.4 repositioning. Excluding certa
Slide 14: Net interest margin trends
Net interest margin trends Earning assets QoQ changes in FTE net interest income* $ in millions Q1 2023 Q4 2022 Change $11.8 $2.7 Avg. Balance Yield1 Avg. Balance Yield1 Avg. Balance Yield1 $153.8 $142.8 Commercial loans $ 9,765 4.81 % $ 9,528 4.50 % $ 237 0.31 % $(25.5) $(0.1) Residential loans 2,5
Slide 15: Noninterest income
Noninterest income Noninterest income1 Fee income provides diverse revenue stream1 Noninterest income1 28% 4% 3% 2% 3% $53.3 $54.8 $52.0 $48.6 $48.0 $45.3 $45.2 $42.0 $43.6 $42.0 16% $193.1mm Q1 2023 revenue1 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Noninterest income (excluding AFS securities gain/l
Slide 16: Noninterest expense
Noninterest expense Noninterest expense1 Q1 2023 noninterest expense 10% 3% $132.8 8% $110.9 $111.1 $114.4 $116.8 $117.4 $119.6 $116.3 $115.0 $108.9 $116mm Q1 2023 noninterest 12% expense Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 67% $ in millions Noninterest expense Operating noninterest expense* $ m
Slide 17: Deposits
Deposits Funding betas & cost • Total deposit cost was 92 basis points in Q1. Cycle beta (1) Total I.B. liabilities cost (includes borrowings) 1.63% • 53% of total deposits are in checking products, down 1.49% 1.36% from 57% the prior quarter. 1.05% 0.71% • Brokered CDs were $610 million at quarter
Slide 18: Securities portfolio
Securities portfolio Portfolio trends1 Investment composition1,2 $ in billions 0% $8.9 $8.9 $8.5 $8.3 $0.4 $0.5 $0.5 $0.5 3% $5.9 4% $0.5 Agency RMBS $8.5 $8.4 $8.0 $7.8 Agency CMBS 26% $5.5 Agency bonds Treasuries 65% Munis Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 AFS securities HTM securities Total
Slide 19: Loan composition
Loan composition Historical composition Loan repricing characteristics3,4 $13,576 $13,675 18% swapped $12,904 $12,182 $12,399 to a fixed rate 1,382 1,371 1,346 1,365 1,303 2,461 2,497 1,990 2,119 1,936 34% 8,943 9,063 9,420 9,733 9,806 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Total commercial Residen
Slide 20: Asset quality
Asset quality Non-performing loans (NPLs) $59.9 • Non-performing loans were $34.6 million, or 0.25% of total 6.8 loans. 9.5 $38.5 • Net charge-offs were less than 0.01% of average total loans $33.8 $34.0 $34.6 on an annualized basis. Consumer 7.3 7.6 5.6 7.7 • The allowance for loan losses was $140.
Slide 21: Commercial real estate
Commercial real estate1 CRE portfolio property types • The commercial real estate ("CRE") 11% portfolio, totaling $5.2 billion, is 23% collateralized by diverse property 10% types within our local markets and to core relationship customers 9% • Top 3 segments make up 44% of portfolio: • Multi-family
Slide 22: CRE office exposure
CRE office exposure1 Loan composition • Office related CRE of $1.2 billion includes Percent of investor office, owner occupied office and mixed Portfolio 3/31/23 total loans use retail/office Total Loans $ 13,675 100 % • The investor office CRE2 portfolio of Total Commercial Loans 9,806 72 % approxi
Slide 23: Outlook for 2023
Outlook for 2023 The outlook below is subject to a high degree of overall economic and interest rate uncertainty. Category Management's outlook Net interest income for the full year 2023 expected to be in line with 2022 Net interest income levels with a margin on a fully tax equivalent basis of 2.75
Slide 24: Appendix - non-GAAP reconciliations
Appendix - non-GAAP reconciliations
Slide 25: Appendix A: Reconciliation of non-GAAP earnings metrics (1 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (1 of 3) As of and for the Three Months Ended (Unaudited, dollars in thousands, except per-share data) Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Net (loss) income (GAAP) $ (194,096) $ 42,294 $ 54,777 $ 51,172 $ 51,516 Add
Slide 26: Appendix A: Reconciliation of non-GAAP earnings metrics (2 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (2 of 3) As of and for the Three Months Ended (Unaudited, dollars in thousands, except per-share data) Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Return on average assets (3) (3.50)% 0.75 % 0.97 % 0.92 % 0.90 % Add: (Incom
Slide 27: Appendix A: Reconciliation of non-GAAP earnings metrics (3 of 3)
Appendix A: Reconciliation of non-GAAP earnings metrics (3 of 3) As of and for the Three Months Ended (Unaudited, dollars in thousands, except per-share data) Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Average tangible shareholders' equity: Average total shareholders' equity (G
Slide 28: Appendix B: Reconciliation of non-GAAP operating revenues and expenses
Appendix B: Reconciliation of non-GAAP operating revenues and expenses Three Months Ended Sep 30, Jun 30, Mar 31, 2023 Dec 31, 2022 Mar 31, 2022 (Unaudited, dollars in thousands) 2022 2022 Net interest income (GAAP) $ 138,309 $ 149,994 $ 152,179 $ 137,757 $ 128,124 Add: Tax-equivalent adjustment (no
Slide 29: Appendix C: Reconciliation of non-GAAP capital metrics
Appendix C: Reconciliation of non-GAAP capital metrics As of Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 (Unaudited, dollars in thousands, except per-share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,579,123 $ 2,471,790 $ 2,416,163 $ 2,718,396 $ 3,
Slide 30: Appendix D: Tangible shareholders' equity roll forward
Appendix D: Tangible shareholders' equity roll forward As of Change from Mar 31, 2023 Dec 31, 2022 Dec 31, 2022 (Unaudited, dollars in thousands, except per-share data) Common stock $ 1,764 $ 1,762 $ 2 Additional paid in capital 1,651,524 1,649,141 2,383 Unallocated ESOP common stock (136,470) (137,
Slide 31: Appendix E: HTM-Marked Tangible Common Equity Ratio
Appendix E: HTM-Marked Tangible Common Equity Ratio As of Mar 31, 2023 (Unaudited, dollars in thousands, except per-share data) HTM-marked tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,579,123 Less: Goodwill and other intangibles 660,165 Less: After-tax fair value mark on HTM