Eastern Bankshares, Inc. · NASDAQ:EBC
Eastern Bankshares — Q2 2024 Earnings Presentation
26 slides from Eastern Bankshares's earnings presentation, Jul 25, 2024
Slide 1: Q2 Earnings Presentation
Q2 Earnings Presentation July 25, 2024
Slide 2: On the call
On the call Presenter Topic Bob Rivers Executive Chair & Chair of the Board Opening Remarks Denis Sheahan Chief Executive Officer Jim Fitzgerald Chief Administrative Officer, Chief Financial Financials Officer & Treasurer 2
Slide 3: Merger with Cambridge
Merger with Cambridge Pro forma branch footprint • Completed the merger with Cambridge Bancorp on July 12, 2024 • Pro forma assets greater than $25 billion, pro forma assets under management and administration (“AUM/A”) of $8.4 billion1 • Added 11 net new branch locations and 4 net new wealth office
Slide 4: Q2 2024 financial highlights
Q2 2024 financial highlights Key Metrics Highlights $26.3 million Share Repurchase Authorization • Company announces a new share repurchase program of up to 5% of shares Net income Income Statement $36.5 million • Net income of $26.3 million, or $0.16 per diluted share. Operating net income* of $36.
Slide 5: Balance sheet
Balance sheet Core deposits1 Total loans • Core deposit1 reduction of $17.5 $17.0 $17.5 $17.7 $17.5 $14.0 $13.9 $14.0 $14.1 $14.1 $128.9 million, or 2.9%2 from the prior quarter, driven by early withdrawal of $100 million omnibus deposit • Loan growth of $56.8 million, or 1.6%2 from the prior quarte
Slide 6: Capital
Capital Common equity tier 1 ratio1 Tier 1 capital ratio1 18.6% 18.5% 18.6% 18.6% 18.5% 18.6% • Strong capital position 15.7% 16.0% 15.7% 16.0% provides significant support to the Company's growth and strategic initiatives, as well as capital management strategies 8.0% 6.5% • In the second quarter,
Slide 7: Income statement
Income statement $ in millions, except per share amounts Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Net interest income $ 128.6 $ 129.9 $ 133.3 $ 137.2 $ 141.6 • Net income was $26.3 Noninterest income 25.3 27.7 26.7 19.2 26.2 million and operating net Total revenue 153.9 157.6 160.0 156.4 167.8 income
Slide 8: Net interest margin trends
Net interest margin trends Earning assets QoQ changes in FTE net interest income* Q2 2024 Q1 2024 Change Avg. Balance Yield1 Avg. Balance Yield1 Avg. Balance Yield1 $134.4 $2.6 $2.2 $133.2 Commercial loans $ 10,104 5.11 % $ 10,024 5.09 % $ 80 0.02 % Residential loans 2,564 3.81 % 2,571 3.75 % (7) 0.
Slide 9: Noninterest income
Noninterest income1 Noninterest income • Total noninterest income was $25.3 million • Total operating noninterest income* was $31.1 million, an $31.1 $26.2 $26.7 $27.7 increase of $7.8 million from the $25.3 $23.2 $19.2 $20.7 $21.8 $23.4 prior quarter: • Received a one-time early termination payment
Slide 10: Noninterest expense
Noninterest expense1 Noninterest expense • Noninterest expense was $109.9 million • Operating noninterest expense was $105.3 million, an increase of $7.6 million from the prior quarter but in line with prior quarter's guidance: • $2.2 million increase in FDIC $121.0 $117.4 insurance, due primarily t
Slide 11: Deposits
Deposits • Core deposits decreased $129 million, or 2.9%2 from the Funding betas & cost prior quarter. The decrease was driven primarily by the Cycle beta (1) Total I.B. liabilities cost omnibus deposit early withdrawal (includes borrowings) • The Company had no brokered deposits as of June 30, 2.38
Slide 12: Securities portfolio
Securities portfolio Portfolio trends1 Investment composition as of June 30, 20241 $5.8 $5.7 $5.6 $5.5 $5.3 $0.5 $0.5 $0.4 2% 4% $0.4 $0.4 3% $5.4 $5.3 $5.2 $5.1 $4.9 28% Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 AFS securities HTM securities 64% • High quality portfolio with 96% in US Agency securiti
Slide 13: Loan composition
Loan composition Historical loan composition Commercial composition as of June 30, 2024 $13,962 $13,919 $13,973 $14,089 $14,146 1,406 1,414 1,444 1,452 1,503 2,511 2,551 2,565 2,544 2,563 11% 4% 31% 10,045 9,955 9,964 10,093 10,080 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Total commercial Residential
Slide 14: Asset quality
Asset quality Non-performing loans ("NPLs") • NPLs reduction from $57.2 million to $39.8 million, $57.2 or from 0.41% to 0.28% of total loans. $52.6 $47.5 9.5 8.8 $39.8 • Two previously-disclosed NPLs were resolved 7.7 6.7 Consumer $30.6 8.7 6.9 in Q2 2024; one new office loan was moved 8.1 Resident
Slide 15: CRE exposure
CRE exposure1 CRE composition and LTV as of June 30, 2024 • CRE portfolio of $5.4 billion, or 38% of total All others Affordable housing loans 12.3% 7.0% Self storage • Non-owner occupied ("NOO") CRE to total 3.9% Industrial/ Warehouse risk-based capital ("RBC") ratio2 of 151% 11.3% Education 6.3% •
Slide 16: CRE office exposure
CRE office exposure1 CRE office loan composition CRE investor office maturity schedule 3/31/24 6/30/24 67% Balance % of Total Loans Balance % of Total Loans Owner Occupied Office $ 114 1 % $ 113 1 % Investor Office 668 5 % 657 5 % Total CRE Office1 782 6 % 770 5 % $72 16% $59 11% 6% $13 $2 CRE inves
Slide 17: Outlook
Outlook • In mid-July, the Cambridge investment portfolio was liquidated and the proceeds were used to pay off wholesale funding • Reiterating merger guidance from Q1: • Post-merger net interest margin expected to be 3.0%+ • EPS accretion expected to exceed original projections of 20%+ • Pro forma c
Slide 18: 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 19: 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 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) Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Net income from continuing operations (GAAP) $ 26,331 $ 38,647 $ 31,509
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 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Return on average assets (3) 0.50 % 0.74 % 0.59 % 1.18 % 0.81 % Add: (Income) losses from investments held in rabbi trusts (3) (0
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) Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Average tangible shareholders' equity: Average total shareholders' equity (GAAP) $ 2,928,101 $ 2
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) Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Net interest income (GAAP) $ 128,649 $ 129,900 $ 133,307 $ 137,205 $ 141,588 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 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 (Unaudited, dollars in thousands, except per-share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 2,967,473 $ 2,952,831 $ 2,974,855 $ 2,446,553 $ 2,
Slide 26: Appendix D: Tangible shareholders' equity roll forward
Appendix D: Tangible shareholders' equity roll forward As of Change from Jun 30, 2024 Mar 31, 2024 Mar 31, 2024 (Unaudited, dollars in thousands, except per-share data) Common stock $ 1,770 $ 1,769 $ 1 Additional paid in capital 1,673,722 1,669,133 4,589 Unallocated ESOP common stock (130,295) (131,