Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Q4 2023 Earnings Presentation
29 slides from Eastern Bankshares's earnings presentation, Jan 25, 2024
Slide 1: Q4 Earnings Presentation
Q4 Earnings Presentation January 25, 2024
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 • Completed asset sale of Eastern Insurance Group, LLC ("the insurance transaction") on October 31, 2023 • Sale price of $515 million, or ~35x earnings • S-4 Registration Statement effective January 12, 2024; joint proxy statement/prospectus mailed on or about January 19
Slide 4: Q4 2023 financial highlights
Q4 2023 financial highlights Key Metrics Highlights Insurance Transaction $318.5 million • Sale completed for $515 million in cash; after-tax gain of $294.5 million Net income1 • Improved equity to assets to 14.1% and TCE ratio* to 11.7% • Cash from sale helped reduce wholesale funding in the quarte
Slide 5: Balance sheet
Balance sheet Core deposits1 Total loans $18.0 $17.9 • Core deposits1 increased $17.5 $17.0 $17.5 $13.6 $13.7 $14.0 $13.9 $14.0 $516.2 million, or 3% from the prior quarter • Modest loan growth of $54.2 million, or 1.5% on an annualized basis • Borrowings and brokered 12/22 3/23 6/23 9/23 12/23 12/2
Slide 6: Capital
Capital Common equity tier 1 ratio1 Tier 1 capital ratio1 • Capital growth driven by the 16.9% 18.6% 18.6% insurance transaction as 15.8% 15.7% 16.0% 16.9% 16.0% 15.8% 15.7% anticipated in the fourth quarter • CET1 ratio and TCE 6.5% 8.0% ratio* of 18.6% and 11.7%, respectively 12/22 3/23 6/23 9/23
Slide 7: Income statement
Income statement Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 • Net income was $318.5 million or $ in millions, except per share amounts $1.95 per diluted share Net interest income $ 133.3 $ 137.2 $ 141.6 $ 138.3 $ 150.0 Noninterest income 26.7 19.2 26.2 (309.9) 22.4 • Operating net income* was $16.9 Tot
Slide 8: Net interest margin trends
Net interest margin trends Earning assets QoQ changes in FTE net interest income* Q4 2023 Q3 2023 Change Avg. Balance Yield1 Avg. Balance Yield1 Avg. Balance Yield1 $141.6 $2.3 $2.4 $137.8 Commercial loans $ 9,978 5.01 % $ 9,989 5.09 % $ (11) (0.08)% $(0.8) $(7.8) Residential loans 2,573 3.63 % 2,55
Slide 9: Noninterest income
Noninterest income1 Noninterest income • Total noninterest income was $26.7 million for the fourth quarter • Total operating noninterest income* was $21.8 million, an $26.2 $26.7 increase of $1.1 million from the $23.1 $23.3 $23.2 $21.8 $19.9 $20.5 $19.2 $20.7 prior quarter • The increase in operati
Slide 10: Noninterest expense
Noninterest expense1 Noninterest expense • Total noninterest expense was $121.0 million for the fourth quarter, an increase of $19.3 million from the prior quarter $112.6 $121.0 $117.4 • Operating noninterest $99.4 $95.9 $94.6 $99.9 $98.6 $101.7 $98.7 expense was $117.4 million, an increase of $18.7
Slide 11: Deposits
Deposits Funding betas & cost • Deposits increased $172 million, or 1% from the prior quarter driven by an increase in core deposits of $516 Cycle beta (1) Total I.B. liabilities cost (includes borrowings) million, partially offset by a decrease in brokered deposits of $344 million 2.15% 2.22% 2.13%
Slide 12: Securities portfolio
Securities portfolio Portfolio trends1 Investment composition1,2 $8.3 $0.5 2%4% $5.9 $5.8 $5.7 $5.6 4% $0.5 $0.5 $0.5 $0.4 Agency RMBS $7.8 Agency CMBS 27% $5.5 $5.4 Agency bonds $5.3 $5.2 Treasuries 63% Munis Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 AFS securities HTM securities Total securities yie
Slide 13: Loan composition
Loan composition Historical loan composition Commercial composition as of 12/31/23 $13,576 $13,675 $13,962 $13,919 $13,973 1,382 1,371 1,406 1,414 1,444 2,461 2,497 2,511 2,551 2,565 11% 4% 30% 9,733 9,806 10,045 9,955 9,964 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Total commercial Residential real e
Slide 14: Asset quality
Asset quality Non-performing loans (NPLs) • Non-performing loans increased modestly $52.6 from $47.5 million to $52.6 million, or from $47.5 8.8 0.34% to 0.38% of total loans $38.5 7.7 $34.6 8.7 Consumer 7.3 $30.6 8.1 • Provision of $5.2 million for the fourth Residential 7.7 9.8 7.6 quarter, driven
Slide 15: CRE office exposure
CRE office exposure1 Loan composition • Office related CRE of $819 million includes investor office, Percent of owner occupied office and mixed use office Portfolio 12/31/23 total loans • The investor office CRE2 portfolio of $706 million is actively Total Loans $ 13,973 100 % managed given market c
Slide 16: Multifamily loans
Multifamily loans Rental Vacancy Rates for Major Metro Areas Q3 20231 • Multifamily loans within the CRE and Boston 1.9% Construction portfolios total $2.3 billion2 or 23.0% of Total Commercial Loans New York City 4.0% • 92% of multifamily loans are in MA and Los Angeles 4.6% NH Washington, D.C. 5.6
Slide 17: Shared National Credit portfolio
Shared National Credit portfolio Loan composition • Shared National Credit ("SNC")1 portfolio totaled $703 million, or 5% of total loans, and provides industry, borrower and geographical diversification REIT (C&I) $194 Asset Based Lending $243 • REITs and Asset Based Lending loans CRE comprise 50% o
Slide 18: Eastern outlook
Eastern outlook Category Management's outlook • Net interest income in Q1 2024 expected to be similar to Q4 2023 • Q4 deposit performance was better than expected and supports Net interest income margin stabilization • Net interest income expected to benefit with Fed rate reductions • Expect resolut
Slide 19: Cambridge merger outlook
Cambridge merger outlook • Reiterate financial projections from September merger announcement • Highly confident in financial and strategic direction Assumption at Category Current Outlook Announcement TBVPS at close • ~$10.16 ☑ Meet or exceed, excluding benefit of AOCI accretion EPS accretion • 20%
Slide 20: 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 21: 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 22: Additional information
Additional information Additional Information and Where to Find It In connection with the proposed merger transaction, on January 16, 2024, the Company filed with the SEC a Registration Statement on Form S-4 and a Joint Proxy Statement of the Company and Cambridge and a Prospectus of the Company (th
Slide 23: Appendix
Appendix @eEastern Bankshares, Inc.
Slide 24: 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) Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Net income (loss) from continuing operations (GAAP) $ 31,509 $ 63,464 $
Slide 25: 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) Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Return on average assets (3) 0.59 % 1.18 % 0.81 % (3.64)% 0.73 % Add: (I
Slide 26: 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) Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Average tangible shareholders' equity: Average total shareholders' equity
Slide 27: 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) Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Net interest income (GAAP) $ 133,307 $ 137,205 $ 141,588 $ 138,309 $ 149,994 Add: Tax-equivalent adjustment (no
Slide 28: Appendix C: Reconciliation of non-GAAP capital metrics
Appendix C: Reconciliation of non-GAAP capital metrics As of Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 (Unaudited, dollars in thousands, except per-share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,974,855 $ 2,446,553 $ 2,526,772 $ 2,579,123 $ 2,
Slide 29: Appendix D: Tangible shareholders' equity roll forward
Appendix D: Tangible shareholders' equity roll forward As of Change from Dec 31, 2023 Sep 30, 2023 Sep 30, 2023 (Unaudited, dollars in thousands, except per-share data) Common stock $ 1,767 $ 1,766 $ 1 Additional paid in capital 1,666,441 1,661,136 5,305 Unallocated ESOP common stock (132,755) (133,