Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Q3 2024 Earnings Presentation
35 slides from Eastern Bankshares's earnings presentation, Oct 24, 2024
Slide 1: Q3 Earnings Presentation
Q3 Earnings Presentation October 24, 2024
Slide 2: On the call
On the call Presenter Topic Bob Rivers Opening Remarks Executive Chair & Chair of the Board Denis Sheahan Company Overview Chief Executive Officer David Rosato Financials Chief Financial Officer & Treasurer 2
Slide 3: Our Company
Our Company Company profile Branch footprint EBC Boston, MA Nasdaq Headquarters 1818 2020 Founded IPO 109 5 Branches Wealth Management Offices $3.6 billion $25.5 billion Market Cap Total Assets • Banking subsidiary: Eastern Bank • #1 independent Boston-based bank by deposits1 • Total loans: $18.1 bi
Slide 4: Deposit Market Share
Deposit Market Share Boston MSA Deposit Market Share1 Percent of Total Bank Asset Boston MSA Deposits in Boston Bank Name Size Deposits MSA Bank of America $88.8 Bank of America $ 2,550.6 $ 88.8 4.7 % Citizens $58.6 Citizens 219.6 58.6 32.6 % Santander $25.1 Santander 100.6 25.1 33.3 % $20.8 Eastern
Slide 5: Cambridge Trust Wealth Management
Cambridge Trust Wealth Management Key metrics Q3 2024 Wealth management office footprint AUM at 9/30/2024 $8.4 billion Retained the prominent Cambridge Trust brand for Fees in Q3 2024 $14.9 million wealth management and private banking offerings Fees as a % of total non- interest income 44% Full sui
Slide 6: Cambridge merger financials
Cambridge merger financials Announcement Actual Results & Metric September Updated Comments 2023 Expectations • Total merger consideration based on $14.87 EBC closing price on Deal value $528 $581 7/12/24, versus $13.41 at announcement Consideration Shares issued (mm) 39.4 38.9 • Each CATC share exc
Slide 7: Purchase accounting adjustments
Purchase accounting adjustments $ in millions Estimates at Announcement Actual or Estimates at Close September 19, 2023 July 12, 2024 Loans $(413) $(250) Securities (AFS and HTM) (172) (159) Fair value marks Time deposits (8) (2) Borrowings (2) — Non-PCD loans (31) (33) Credit mark 1 PCD loans (13)
Slide 8: CT Purchase accounting projections
CT Purchase accounting projections1 • Estimated accretion schedule of loan discounts based on anticipated contractual and prepayment cash flows assuming forward curve. Actuals Projected $ in thousands 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 3Q26 4Q26 Thereafter Accretion of loan marks 11,008 13,000
Slide 9: Q3 2024 financial highlights
Q3 2024 financial highlights Key Metrics Highlights Income Statement $(6.2) million • Net loss of $6.2 million, included the initial provision on non-purchased credit deteriorated Net loss ("non-PCD") loans* of $40.9 million and merger-related charges* of $30.5 million; Operating net income* of $49.
Slide 10: Income statement
Income statement $ in millions, except per share amounts Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 • Net loss was $6.2 million Net interest income $ 169.9 $ 128.6 $ 129.9 $ 133.3 $ 137.2 and operating net income* Noninterest income 33.5 25.3 27.7 26.7 19.2 was $49.7 million Total revenue 203.4 153.9 1
Slide 11: Net interest margin trends
Net interest margin trends Earning assets QoQ changes in FTE net interest income and margin* Q3 2024 Q2 2024 Change $47.5 $0.3 $10.8 $174.6 Avg. Balance Yield1 Avg. Balance Yield1 Avg. Balance Yield1 $133.2 Commercial loans $ 11,936 5.59 % $ 10,104 5.11 % $ 1,832 0.48 % $(17.3) Residential loans 3,7
Slide 12: Noninterest income
Noninterest income1 Noninterest income • Total noninterest income was $33.5 million • Total operating noninterest income* was $32.9 million, an increase of $1.8 million linked $31.1 $33.5 $32.9 quarter: $26.7 $27.7 $25.3 $20.7 $21.8 $23.4 • Increase in trust and $19.2 investment advisory fees of $8.
Slide 13: Noninterest expense
Noninterest expense1 Noninterest expense • Noninterest expense was $159.8 million • Operating noninterest expense was $130.9 million, an increase of $25.6 million linked quarter, due primarily to the merger: $159.8 $121.0 $117.4 $130.9 • $15.4 million increase in operating $109.9 $105.3 $101.7 $98.7
Slide 14: Balance sheet
Balance sheet Deposits Total loans $21.2 $18.1 • Deposits increased $3.7 $17.4 $17.6 $17.7 $17.5 billion, or 21% from the prior $13.9 $14.0 $14.1 $14.1 quarter • Loans increased $3.9 billion, or 28% from the prior quarter • Essentially no wholesale 9/23 12/23 3/24 6/24 9/24 9/23 12/23 3/24 6/24 9/24
Slide 15: Deposits
Deposits Funding betas & cost • Deposits increased $3.7 billion, or 21.0% linked quarter Cycle beta (1) Total I.B. liabilities cost • Excluding merger impact, deposits decreased $195 million, or 0.9% due primarily to seasonal declines in municipal 2.48% 2.47% 2.48% 2.52% 2.51% 2.38% deposits, partia
Slide 16: Loan composition
Loan composition Historical loan composition Commercial composition $18,064 1,634 $13,919 $13,973 $14,089 $14,146 4,081 1,414 1,444 1,452 1,503 11% 2,551 2,565 2,544 2,563 4% 27% 12,350 9,955 9,964 10,093 10,080 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Total commercial Residential real estate Total C
Slide 17: Securities portfolio
Securities portfolio Portfolio trends1 Investment composition as of September 30, 20241 $5.7 $5.6 $5.5 $5.3 $5.2 $0.5 $0.4 $0.4 $0.4 2% 4% $0.4 3% $5.3 $5.2 $5.1 $4.9 $4.8 28% Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 AFS securities HTM securities 63% • High quality portfolio with 96% in US Agency sec
Slide 18: Capital
Capital1 Regulatory capital ratios as of September 30, 2024 Capital metrics 9/30/2024 6/30/2024 9/30/2023 Tier 1 leverage ratio 12.6% 14.2% 12.3% 16.6% 15.5% 15.5% Common equity tier 1 ("CET1") 12.6% capital ratio 15.5% 18.6% 16.0% Tier 1 capital ratio 15.5% 18.6% 16.0% 10.0% Total risk-based capita
Slide 19: Allowance for Loan Losses
Allowance for Loan Losses $40,899 $6,084 $253,821 $(5,138) $55,830 $156,146 1.43% 1.11% June 30, 2024 Day 1 ALLL Gross-up Day 2 Provision on non- 3Q 2024 Provision for 3Q 2024 Net Charge- September 30, 2024 on PCD PCD loan losses offs • The allowance increased from 1.11% to 1.43% of total loans • Re
Slide 20: Acquired PCD Loans
Acquired PCD Loans1 PCD loan balances and credit marks Total Acquired PCD Loan PCD Loans / Total Credit Total Credit Mark / Loan Balance2 3 Balance Total Loans Mark3 PCD Loan Balance Commercial Real Estate $ 1,692.7 $ 203.7 12 % $ 45.7 22 % Commercial and Industrial 339.6 70.6 21 % 6.6 9 % Residenti
Slide 21: CRE exposure
CRE exposure1 CRE composition and LTV as of September 30, 2024 • CRE portfolio of $7.2 billion, or 40% of total Affordable housing loans All others 13.0% 5.7% • Non-owner occupied ("NOO") CRE to total Self storage 3.2% Industrial/ Warehouse risk-based capital ("RBC") ratio2 of 199% 10.4% Education •
Slide 22: CRE office exposure
CRE office exposure1 CRE office loan composition CRE investor office loans maturity schedule 9/30/24 6/30/24 71% Balance % of Total Loans Balance % of Total Loans Owner Occupied Office $ 132 1 % $ 113 1 % Investor Office 901 5 % 657 5 % Total CRE Office1 1,033 6 % 770 5 % $61 $74 12% 9% $22 8% $4 CR
Slide 23: Asset quality
Asset quality Non-performing loans ("NPLs") and NPL ratio • NPLs increased from $39.8 million to $124.5 0.70% million; NPL ratio increased from 0.28% to 0.38% 0.41% 0.34% 0.28% 0.70% of total loans, driven primarily by the non-accrual status designation of loans acquired $79 from Cambridge • Net cha
Slide 24: Outlook for 2024 Q4
Outlook for 2024 Q4 Category Management's outlook • Anticipate stable loan balances Loan and deposit growth • Expect low single digit deposit declines due to seasonal outflows and mid- November maturity of $185 million deposit acquired from Century Bank1 • Net interest income expected to be $175 - $
Slide 25: Non-GAAP financial measures
Non-GAAP financial measures *Denotes a non-GAAP financial measure used in the 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
Slide 26: 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 27: Appendix
Appendix @eEastern Bankshares, Inc.
Slide 28: 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, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Net (loss) income from continuing operations (GAAP) $ (6,188) $ 26,331 $
Slide 29: 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 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Return on average assets (3) (0.10)% 0.50 % 0.74 % 0.59 % 1.18 % Add: Provision for non-PCD acquired loans (3) 0.65% 0.00% 0.00%
Slide 30: 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) Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Tangible net income Net (loss) income (GAAP) $ (6,188) $ 26,331 $ 38,647 $ 31,509 $ 63,464 Add:
Slide 31: 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, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Net interest income (GAAP) $ 169,855 $ 128,649 $ 129,900 $ 133,307 $ 137,205 Add: Tax-equivalent adjustment (no
Slide 32: Appendix C: Reconciliation of non-GAAP capital metrics
Appendix C: Reconciliation of non-GAAP capital metrics As of Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 (Unaudited, dollars in thousands, except per-share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 3,671,138 $ 2,967,473 $ 2,952,831 $ 2,974,855 $ 2,
Slide 33: Appendix D: Cambridge merger-related charges
Appendix D: Cambridge merger-related charges As of and for the Three Months Ended (Unaudited, dollars in thousands) Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Noninterest income components: Other (1) $ (2,969) $ — $ — $ — $ — Total noninterest income $ (2,969) $ — $ — $ — $ — N
Slide 34: Appendix E: Organic loan & deposit growth
Appendix E: Organic loan & deposit growth As of Organic Growth From: Cambridge Trust Sep 30, 2024 Jun 30, 2024 Acquired Jun 30, 2024 Balance (1) (Unaudited, dollars in thousands) △$ △% Loans: Commercial and industrial 3,340,029 3,084,186 339,581 (83,738) (2.4) % Commercial real estate 7,174,861 5,44
Slide 35: Appendix F: Tangible shareholders' equity roll forward
Appendix F: Tangible shareholders' equity roll forward As of Change from Sep 30, 2024 Jun 30, 2024 Jun 30, 2024 (Unaudited, dollars in thousands, except per-share data) Common stock $ 2,150 $ 1,770 $ 380 Additional paid in capital 2,246,134 1,673,722 572,412 Unallocated ESOP common stock (129,077) (