Eastern Bankshares, Inc. Reports Fourth Quarter 2023 Financial Results

~ Earnings, Capital, and Liquidity Enhancements Resulting from Eastern Insurance Group LLC Asset Sale ~ ~ Growth in Core Deposits and Reduction in Wholesale Funding ~

Eastern Bankshares, Inc. (the “Company,” or together with its subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2023 fourth quarter financial results and the declaration of a quarterly cash dividend.

On October 31, 2023, the Company completed the sale of the insurance operations of Eastern Insurance Group, LLC (“Eastern Insurance”), to Arthur J. Gallagher & Co. (“Gallagher”) for gross consideration of $515 million (“the insurance transaction”). The company recorded an after-tax gain of $294.5 million which is included in the fourth quarter results. The insurance transaction significantly improved the capital and funding position of the Company and will allow the Company to focus on the growth and strategic initiatives of its core banking business, including its pending merger with Cambridge Bancorp (“Cambridge”) (“the merger”), which was previously announced on September 19, 2023. The merger is expected to close early in the second quarter of 2024, subject to regulatory and shareholder approvals as previously disclosed.

"2023 was a year of strategic repositioning for Eastern,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We realized early in 2023 that all banks were going to face significant challenges due to higher interest rates, changing customer deposit preferences and a very difficult macroeconomic environment. We responded by repositioning our securities portfolio in the first quarter, which allowed us to improve both our liquidity and earnings outlook, and followed with the sale of Eastern Insurance in the second half of the year to capitalize on the valuation premium it commanded. The insurance transaction provided us additional liquidity and capital, and positioned us to announce our merger with Cambridge Bancorp, a highly attractive in-market merger partner with a valuable wealth management business. We are very confident that these transactions provide us with a greater financial foundation, stronger earnings for our shareholders, and a leading market share in our footprint. The upcoming merger is the next step in our journey and we all look forward to welcoming the colleagues and customers of Cambridge Trust to Eastern.”

FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER OF 2023

Completed the sale of Eastern Insurance to Gallagher for cash consideration of $515 million and for an after-tax gain of $294.5 million.
Net income of $318.5 million, or $1.95 per diluted share, compared to net income of $59.1 million, or $0.36 per diluted share, for the prior quarter.
Operating net income*, which excludes the revenues, expenses, and tax provision of discontinued operations, of $16.9 million, or $0.10 per diluted share. Operating net income* includes a $10.8 million special assessment from the Federal Deposit Insurance Corporation (“FDIC”).
Total deposits increased $172.0 million from the prior quarter, to $17.6 billion. Core deposits, which exclude brokered deposits, increased $516.2 million or 3.0% from the prior quarter.
Total loans increased $54.2 million from the prior quarter, to $14.0 billion.
The net interest margin on a fully tax equivalent (“FTE”) basis* of 2.69% was 8 basis points lower than the prior quarter but trend is stabilizing.
Borrowings and brokered deposits of less than 1% of total assets as of December 31, 2023.
Annualized net charge-offs ("NCOs") of 0.32% in the fourth quarter and 0.09% for full year 2023 and nonperforming loans ("NPLs") of $52.6 million, or 0.38% of total loans as of December 31, 2023.

BALANCE SHEET

Total assets were $21.1 billion at December 31, 2023, essentially unchanged from September 30, 2023.

Cash and equivalents increased $84.3 million from the prior quarter to $693.1 million.
Total securities increased $139.8 million, or 3%, from the prior quarter, to $4.9 billion, due to an increase in the market value of available for sale securities, partially offset by principal runoff.
Loans totaled $14.0 billion, representing an increase of $54.2 million, or 0.4%, from the prior quarter.
Deposits totaled $17.6 billion, representing an increase of $172.0 million, or 1.0%, from the prior quarter, driven primarily by an increase of $516.2 million, or 3.0%, in core deposits. This was partially offset by a decrease of $344.1 million in brokered deposits.
Borrowed funds decreased $667.2 million from the prior quarter to $48.2 million in the fourth quarter, as a combination of strong core deposit trends and the proceeds from the insurance transaction allowed for the paydown of Federal Home Loan Bank (“FHLB”) borrowings.
Shareholders’ equity was $3.0 billion, representing an increase of $528.3 million from the prior quarter primarily driven by increases in retained earnings and accumulated other comprehensive income. The increase in retained earnings was primarily due to the net gain on sale resulting from the insurance transaction.
At December 31, 2023, book value per share was $16.86 and tangible book value per share* was $13.65. Please refer to Appendix D to this press release for a roll-forward of tangible shareholders’ equity*.

NET INTEREST INCOME

Net interest income was $133.3 million for the fourth quarter of 2023, compared to $137.2 million in the prior quarter, representing a decrease of $3.9 million.

The decrease in net interest income on a consecutive quarter basis was primarily due to a decrease in the net interest margin, as increases in earning asset yields were more than offset by increased funding costs.
The net interest margin on a FTE basis* was 2.69% for the fourth quarter, representing an 8 basis point decrease from the prior quarter.
Total interest-earning asset yields increased 1 basis point from the prior quarter to 4.06%, due to increased residential loan, consumer loan and short-term investment yields as a result of higher interest rates throughout the quarter, partially offset by decreased commercial loan yield. The prior quarter’s commercial loan yield benefited from $2.6 million in commercial loan interest recoveries.
Total interest-bearing liabilities cost increased 20 basis points from the prior quarter to 2.19%, due primarily to higher deposit costs resulting from deposit pricing increases and deposit mix shifts.
The net interest margin for the fourth quarter included a partial quarter benefit from the proceeds of the insurance transaction, which was completed on October 31, 2023. The proceeds, in part, allowed the Company to reduce brokered deposits and borrowings to less than 1% of total assets.

NONINTEREST INCOME

Noninterest income, which excludes revenues from discontinued operations, was $26.7 million for the fourth quarter of 2023, compared to $19.2 million for the prior quarter, representing an increase of $7.6 million. Noninterest income on an operating basis* was $21.8 million for the fourth quarter of 2023, compared to $20.7 million for the prior quarter, an increase of $1.1 million.

Service charges on deposit accounts increased $0.1 million on a consecutive quarter basis to $7.5 million.
Trust and investment advisory fees decreased $0.1 million on a consecutive quarter basis to $6.1 million.
Debit card processing fees were unchanged at $3.4 million in the fourth quarter.
Loan-level interest rate swap income decreased $2.3 million from the prior quarter to a loss of $0.6 million. The decrease was driven primarily by a decrease in the fair value of such transactions.
Income from investments held in rabbi trust accounts was $5.0 million compared to losses of $1.5 million in the prior quarter due to an increase in the fair value of such investments.
In the fourth quarter, losses on the sale of commercial and industrial loans totaled $0.1 million, compared to losses of $2.7 million from the prior quarter.
Other noninterest income increased $0.8 million in the fourth quarter to $5.6 million.

NONINTEREST EXPENSE

Noninterest expense, which excludes expenses from discontinued operations, was $121.0 million for the fourth quarter of 2023, compared to $101.7 million in the prior quarter, representing an increase of $19.3 million. Noninterest expense on an operating basis* for the fourth quarter of 2023 was $117.4 million, compared to $98.7 million in the prior quarter, an increase of $18.7 million. The increase in operating noninterest expense* was driven primarily by the $10.8 million special assessment from the FDIC as well as a $4.5 million increase in the operating portion of salaries and employee benefits expense.

Salaries and employee benefits expense was $67.8 million, representing an increase of $6.9 million from the prior quarter. The increase was driven primarily by increases in incentive compensation costs and increases in supplemental executive retirement plan benefits expense.
Office occupancy and equipment expense was $9.2 million, an increase of $0.6 million from the prior quarter.
Data processing expense was $16.8 million, an increase of $3.3 million from the prior quarter, due in part to an increase in M&A related data processing costs of $1.4 million.
Professional services expense was $4.1 million in the fourth quarter, a decrease of $3.0 million from the prior quarter, primarily due to a decrease in M&A related professional services costs of $3.2 million.
Marketing expense was $2.7 million, an increase of $0.9 million from the prior quarter.
Loan expenses were $1.2 million, an increase of $0.1 million from the prior quarter.
Federal Deposit Insurance Corporation (“FDIC”) insurance expense was $13.5 million, an increase of $10.7 million from the prior quarter due to the special assessment charged by the FDIC to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of certain banks in 2023.
Other noninterest expense was $5.3 million, a decrease of $0.1 million from the prior quarter.

INCOME TAXES

The income tax expense for the fourth quarter was $2.3 million. The lower than expected tax expense in the fourth quarter of 2023 was primarily a result of a tax planning strategy to recognize a net state tax benefit of $9.2 million primarily due to capital losses resulting from the securities sale in the first quarter of 2023.

ASSET QUALITY

The allowance for loan losses was $149.0 million at December 31, 2023, or 1.07% of total loans, compared to $155.1 million, or 1.12% of total loans, at September 30, 2023. During the fourth quarter of 2023, the Company recorded total net charge-offs of $11.4 million, or 0.32% of average total loans on an annualized basis, compared to $0.1 million or less than 0.01% of average total loans in the prior quarter, respectively. The increase in total net charge-offs in the fourth quarter was primarily due to partial charge-offs of two credits secured by investor commercial real estate office properties, each of which had previously been placed on non-accrual and were reserved for during the third quarter. The Company recorded a provision for loan losses totaling $5.2 million in the fourth quarter of 2023 due primarily to increases in specific reserves on commercial loans.

Non-performing loans totaled $52.6 million at December 31, 2023 compared to $47.5 million at the end of the prior quarter.

Please refer to the investor presentation for a review of the Company’s office-related commercial real estate exposure.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors has declared a quarterly cash dividend of $0.11 per common share. The dividend will be payable on March 15, 2024 to shareholders of record as of the close of business on March 1, 2024.

The Company did not repurchase any shares of its common stock during the fourth quarter of 2023.

CONFERENCE CALL AND PRESENTATION INFORMATION

A conference call and webcast covering Eastern’s fourth quarter 2023 earnings will be held on Friday, January 26, 2024 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (888) 259-6580 from within the U.S. and reference conference ID 61093108. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website at investor.easternbank.com. A presentation providing additional information for the quarter is also available at investor.easternbank.com. A replay of the webcast will be made available on demand on this site.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. is the stock holding company for Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more than 120 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of December 31, 2023, Eastern Bank had approximately $21 billion in total assets. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes, and takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern is comprised of deeply committed professionals who value relationships with their customers, colleagues, and communities. For investor information, visit investor.easternbank.com.

NON-GAAP FINANCIAL MEASURES

*Denotes a non-GAAP financial measure used in this 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 to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).

The Company presents non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company’s core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures. Except as otherwise indicated, these non-GAAP financial measures presented in this press release exclude discontinued operations.

There are items in the Company’s financial statements that impact its financial results, but which management believes are unrelated to the Company’s core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders’ equity, operating return on average tangible shareholders’ equity (discussed further below), and the operating efficiency ratio. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) other real estate owned (“OREO”) gains, (vii) merger and acquisition expenses, (viii) the non-cash pension settlement charge recognized related to the Defined Benefit Plan, (ix) certain discrete tax items, and (x) net income from discontinued operations. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company’s outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense, respectively, cannot be made available without unreasonable effort.

Management also presents tangible assets, tangible shareholders’ equity, average tangible shareholders’ equity, tangible book value per share, the ratio of tangible shareholders’ equity to tangible assets including the impact of mark-to-market adjustments on held-to-maturity securities, return on average tangible shareholders’ equity, and operating return on average shareholders’ equity (discussed further above), each of which excludes the impact of goodwill and other intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company’s performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

These non-GAAP financial measures presented in this press release should not be considered an alternative or substitute for financial results or measures determined in accordance with GAAP or as an indication of the Company’s cash flows from operating activities, a measure of its liquidity position or an indication of funds available for its cash needs. An item which management considers to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period. In addition, management’s methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other banking companies to calculate the same or similar performance measures, and accordingly, the Company’s reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other banking companies. Please refer to Appendices A-E for reconciliations of the Company's GAAP financial measures to the non-GAAP financial measures in this press release.

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 future events and can be identified by the fact that they do not relate strictly to historical or current facts. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target”, “outlook” and similar expressions. Forward-looking statements, by their nature, are subject to risks and uncertainties. There are many factors that could cause actual results to differ materially from expected results described in the forward-looking statements.

Certain factors that could cause actual results to differ materially from expected results include; adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses; increased competitive pressures; changes in interest rates and resulting changes in competitor or customer behavior, mix or costs of sources of funding, and deposit amounts and composition; risks associated with the Company’s completion and/or implementation of the merger with Cambridge, including risks that required regulatory, shareholder or other approvals for the merger are not obtained or other closing conditions are not satisfied in a timely manner or at all and that the merger fails to occur in the timeframe expected or at all; prior to the completion of the merger or thereafter, Cambridge or the Company may not perform as expected due to transaction-related uncertainty or other factors; and revenue or expense synergies may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; adverse national or regional economic conditions or conditions within the securities markets or banking sector; legislative and regulatory changes and related compliance costs that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including inflationary or recessionary pressures, interest rate sensitivity, liquidity constraints, increased borrowing and funding costs, and fluctuations due to actual or anticipated changes to federal tax laws; the realizability of deferred tax assets; the Company’s ability to successfully implement its risk mitigation strategies; asset and credit quality deterioration, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; and operational risks such as cybersecurity incidents, natural disasters, and pandemics, including COVID-19. For further discussion of such factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), including the joint proxy statement/prospectus (as defined below), which are available on the SEC’s website at www.sec.gov.

You should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this press release. The Company does not undertake any obligation to update forward-looking statements.

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 (the “joint proxy statement/prospectus”), as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF THE COMPANY AND CAMBRIDGE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND EACH OTHER RELEVANT DOCUMENT FILED WITH THE SEC, AS WELL AS ANY AMENDMENT OR SUPPLEMENT TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and Cambridge, can be obtained without charge, at the SEC’s website (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to the Company’s Investor Relations team via email at InvestorRelations@easternbank.com or by telephone at (781) 598-7920, or to Cambridge Investor Relations via email at InvestorRelations@cambridgetrust.com or by telephone at (617) 520-5520.

PARTICIPANTS IN THE SOLICITATION

The Company, Cambridge, and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and/or Cambridge in connection with the proposed transaction under the rules of the SEC. Information regarding the Company’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2023, and its Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on February 24, 2023, and other documents filed by the Company with the SEC. Information regarding Cambridge’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 16, 2023, the joint proxy statement/prospectus and other documents filed by Cambridge with the SEC. Information regarding the participants in the proxy solicitation and a description of their interests included in the joint proxy statement/prospectus and other relevant materials filed with the SEC may be obtained free of charge as described in the preceding paragraph.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS

Certain information in this press release is presented as reviewed by the Company’s management and includes information derived from the Company’s Consolidated Statements of Income, non-GAAP financial measures, and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

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

Earnings data

Net interest income

133,307

137,205

141,588

138,309

149,994

Noninterest income (loss)

26,739

19,157

26,204

(309,853

)

22,425

Total revenue

160,046

156,362

167,792

(171,544

)

172,419

Noninterest expense

121,029

101,748

99,934

95,891

112,583

Pre-tax, pre-provision income (loss)

39,017

54,614

67,858

(267,435

)

59,836

Provision for allowance for loan losses

5,198

7,328

7,501

10,880

Pre-tax income (loss)

33,819

47,286

60,357

(267,460

)

48,956

Net income (loss) from continuing operations

31,509

63,464

44,419

(202,081

)

40,918

Net income (loss) from discontinued operations

286,994

(4,351

)

4,238

7,985

1,376

Net income (loss)

318,503

59,113

48,657

(194,096

)

42,294

Operating net income (non-GAAP)

16,875

52,085

41,092

53,134

48,570

Per-share data

Earnings (losses) per share, diluted

1.95

0.36

0.30

(1.20

)

0.26

Continuing operations

0.19

0.39

0.27

(1.25

)

0.25

Discontinued operations

1.76

(0.03

)

0.03

0.05

0.01

Operating earnings per share, diluted (non-GAAP)

0.10

0.32

0.25

0.33

0.30

Book value per share

16.86

13.87

14.33

14.63

14.03

Tangible book value per share (non-GAAP)

13.65

10.14

10.59

10.88

10.28

Profitability

Return on average assets (2)

0.59

1.18

0.81

(3.64

0.73

Operating return on average assets (non-GAAP) (2)

0.31

0.97

0.75

0.95

0.86

Return on average shareholders' equity (2)

4.66

9.91

6.85

(33.31

6.71

Operating return on average shareholders' equity (2)

2.51

8.14

6.34

8.76

7.96

Return on average tangible shareholders' equity (non-GAAP) (2)

5.99

13.38

9.19

(45.55

9.23

Operating return on average tangible shareholders' equity (non-GAAP) (2)

3.20

10.99

8.50

11.98

10.95

Net interest margin (FTE) (2)

2.69

2.77

2.80

2.66

2.81

Cost of deposits (2)

1.51

1.33

1.22

0.92

0.37

Efficiency ratio

75.62

65.07

59.56

(55.90

65.30

Operating efficiency ratio (non-GAAP)

73.59

60.83

58.47

57.97

57.26

Balance Sheet (end of period)

Total assets

21,133,278

21,146,292

21,583,493

22,720,530

22,646,858

Total loans

13,973,428

13,919,275

13,961,878

13,675,250

13,575,531

Total deposits

17,596,217

17,424,169

18,180,972

18,541,580

18,974,359

Total loans / total deposits

Asset quality

Allowance for loan losses ("ALLL")

148,993

155,146

147,955

140,938

142,211

ALLL / total nonperforming loans ("NPLs")

283.49

326.86

484.18

407.65

368.38

Total NPLs / total loans

0.38

0.34

0.22

0.25

0.28

Net charge-offs ("NCOs") / average total loans (2)

0.32

0.00

0.01

0.00

0.01

Capital adequacy

Shareholders' equity / assets

14.08

11.57

11.71

11.35

10.91

Tangible shareholders' equity / tangible assets (non-GAAP)

11.71

8.73

8.93

8.70

8.24

(1) Average assets, average shareholders' equity and average tangible shareholders' equity components presented in this table include discontinued operations.

(2) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of

Dec 31, 2023 change from

(Unaudited, dollars in thousands)

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

Sep 30, 2023

Dec 31, 2022

ASSETS

△ $

△ %

△ $

△ %

Cash and due from banks

87,233

72,689

106,040

14,544

(18,807

)

(18

Short-term investments

605,843

536,119

63,465

69,724

542,378

855

Cash and cash equivalents

693,076

608,808

169,505

84,268

523,571

309

Available for sale ("AFS") securities

4,407,521

4,261,518

6,690,778

146,003

(2,283,257

)

(34

Held to maturity ("HTM") securities

449,721

455,900

476,647

(6,179

)

(26,926

)

Total securities

4,857,242

4,717,418

7,167,425

139,824

(2,310,183

)

(32

Loans held for sale

1,124

23,892

4,543

(22,768

)

(95

(3,419

)

(75

Loans:

Commercial and industrial

3,034,068

3,087,509

3,150,946

(53,441

)

(116,878

)

Commercial real estate

5,457,349

5,396,912

5,155,323

60,437

302,026

Commercial construction

386,999

382,615

336,276

4,384

50,723

Business banking

1,085,763

1,087,799

1,090,492

(2,036

)

—

(4,729

)

—

Total commercial loans

9,964,179

9,954,835

9,733,037

9,344

—

231,142

Residential real estate

2,565,485

2,550,861

2,460,849

14,624

104,636

Consumer home equity

1,208,231

1,193,859

1,187,547

14,372

20,684

Other consumer

235,533

219,720

194,098

15,813

41,435

Total loans

13,973,428

13,919,275

13,575,531

54,153

—

397,897

Allowance for loan losses

(148,993

)

(155,146

)

(142,211

)

6,153

(6,782

)

Unamortized prem./disc. and def. fees

(25,068

)

(19,307

)

(13,003

)

(5,761

)

(12,065

)

Net loans

13,799,367

13,744,822

13,420,317

54,545

—

379,050

Federal Home Loan Bank stock, at cost

5,904

37,125

41,363

(31,221

)

(84

(35,459

)

(86

Premises and equipment

60,133

59,033

62,493

1,100

(2,360

)

Bank-owned life insurance

164,702

163,700

160,790

1,002

3,912

Goodwill and other intangibles, net

566,205

566,709

568,009

(504

)

—

(1,804

)

—

Deferred income taxes, net

266,185

416,081

331,963

(149,896

)

(36

(65,778

)

(20

Prepaid expenses

183,073

156,113

165,368

26,960

17,705

Other assets

536,267

527,873

426,863

8,394

109,404

Assets of discontinued operations

—

124,718

128,219

(124,718

)

(100

(128,219

)

(100

Total assets

21,133,278

21,146,292

22,646,858

(13,014

)

—

(1,513,580

)

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Demand

5,162,218

5,177,015

6,240,637

(14,797

)

—

(1,078,419

)

(17

Interest checking accounts

3,737,361

3,671,871

4,568,122

65,490

(830,761

)

(18

Savings accounts

1,323,126

1,393,545

1,831,123

(70,419

)

(507,997

)

(28

Money market investment

4,664,475

4,709,149

4,710,095

(44,674

)

(45,620

)

Certificates of deposit

2,709,037

2,472,589

1,624,382

236,448

1,084,655

Total deposits

17,596,217

17,424,169

18,974,359

172,048

(1,378,142

)

Borrowed funds:

Federal Home Loan Bank advances

17,738

673,525

704,084

(655,787

)

(97

(686,346

)

(97

Escrow deposits of borrowers

21,978

24,947

22,314

(2,969

)

(12

(336

)

Interest rate swap collateral funds

8,500

16,900

14,430

(8,400

)

(50

(5,930

)

(41

Total borrowed funds

48,216

715,372

740,828

(667,156

)

(93

(692,612

)

(93

Other liabilities

513,990

525,378

424,951

(11,388

)

89,039

Liabilities of discontinued operations

—

34,820

34,930

(34,820

)

(100

(34,930

)

(100

Total liabilities

18,158,423

18,699,739

20,175,068

(541,316

)

(2,016,645

)

(10

Shareholders' equity:

Common shares

1,767

1,766

1,762

—

Additional paid-in capital

1,666,441

1,661,136

1,649,141

5,305

—

17,300

Unallocated common shares held by the employee stock ownership plan ("ESOP")

(132,755

)

(133,992

)

(137,696

)

1,237

4,941

Retained earnings

2,047,754

1,747,225

1,881,775

300,529

165,979

Accumulated other comprehensive income ("AOCI"), net of tax

(608,352

)

(829,582

)

(923,192

)

221,230

(27

314,840

(34

Total shareholders' equity

2,974,855

2,446,553

2,471,790

528,302

503,065

Total liabilities and shareholders' equity

21,133,278

21,146,292

22,646,858

(13,014

)

—

(1,513,580

)

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Three months ended

Three months ended Dec 31, 2023 change from three months ended

(Unaudited, dollars in thousands, except per-share data)

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

Sep 30, 2023

Dec 31, 2022

Interest and dividend income:

△ $

△ %

△ $

△ %

Interest and fees on loans

168,419

169,274

142,446

(855

)

25,973

Taxable interest and dividends on securities

23,782

24,191

30,413

(409

)

(6,631

)

(22

Non-taxable interest and dividends on securities

1,434

1,594

—

(160

)

(10

Interest on federal funds sold and other short-term investments

10,011

7,269

545

2,742

9,466

1737

Total interest and dividend income

203,646

202,168

174,998

1,478

28,648

Interest expense:

Interest on deposits

67,389

59,607

17,457

7,782

49,932

286

Interest on borrowings

2,950

5,356

7,547

(2,406

)

(45

(4,597

)

(61

Total interest expense

70,339

64,963

25,004

5,376

45,335

181

Net interest income

133,307

137,205

149,994

(3,898

)

(16,687

)

(11

Provision for allowance for loan losses

5,198

7,328

10,880

(2,130

)

(29

(5,682

)

(52

Net interest income after provision for allowance for loan losses

128,109

129,877

139,114

(1,768

)

(11,005

)

Noninterest income:

Service charges on deposit accounts

7,514

7,403

6,834

111

680

Trust and investment advisory fees

6,128

6,235

5,626

(107

)

502

Debit card processing fees

3,398

3,388

3,227

—

171

Interest rate swap (losses) income

(576

)

1,695

(78

)

(2,271

)

(134

(498

)

638

Income (losses) from investments held in rabbi trusts

4,969

(1,523

)

3,235

6,492

(426

1,734

Losses on sales of commercial and industrial loans

(87

)

(2,651

)

—

2,564

(97

(87

)

—

(Losses) gains on sales of mortgage loans held for sale, net

(219

)

(164

)

(55

)

(227

)

(2838

Losses on sales of securities available for sale, net

—

(683

)

—

683

(100

Other

5,612

4,774

4,256

838

1,356

Total noninterest income

26,739

19,157

22,425

7,582

4,314

Noninterest expense:

Salaries and employee benefits

67,773

60,898

61,572

6,875

6,201

Office occupancy and equipment

9,195

8,641

554

Data processing

16,753

13,443

13,227

3,310

3,526

Professional services

4,108

7,125

4,295

(3,017

)

(42

(187

)

Marketing expenses

2,693

1,765

3,032

928

(339

)

(11

Loan expenses

1,174

1,082

627

547

Federal Deposit Insurance Corporation ("FDIC") insurance

13,486

2,808

1,540

10,678

380

11,946

776

Amortization of intangible assets

505

504

299

—

206

Other

5,342

5,482

19,350

(140

)

(14,008

)

(72

Total noninterest expense

121,029

101,748

112,583

19,281

8,446

Income before income tax expense

33,819

47,286

48,956

(13,467

)

(28

(15,137

)

(31

Income tax expense (benefit)

2,310

(16,178

)

8,038

18,488

(114

(5,728

)

(71

Net income from continuing operations

31,509

63,464

40,918

(31,955

)

(50

(9,409

)

(23

Net income (loss) from discontinued operations

286,994

(4,351

)

1,376

291,345

(6696

285,618

20757

Net income

318,503

59,113

42,294

259,390

439

276,209

653

Share data:

Weighted average common shares outstanding, basic

162,571,066

162,370,469

162,032,522

200,597

538,544

Weighted average common shares outstanding, diluted

162,724,398

162,469,887

162,263,547

254,511

460,851

Earnings (loss) per share, basic:

Continuing operations

0.19

0.39

0.25

(0.20

)

(51

(0.06

)

(24

Discontinued operations

1.77

(0.03

)

0.01

1.80

(6000

1.76

17600

Earnings per share, basic

1.96

0.36

0.26

1.60

444

1.70

654

Earnings (loss) per share, diluted:

Continuing operations

0.19

0.39

0.25

(0.20

)

(51

(0.06

)

(24

Discontinued operations

1.76

(0.03

)

0.01

1.79

(5967

1.75

17500

Earnings per share, diluted

1.95

0.36

0.26

1.59

442

1.69

650

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Twelve months ended

(Unaudited, dollars in thousands, except per-share data)

Dec 31, 2023

Dec 31, 2022

Change

Interest and dividend income:

△ $

△ %

Interest and fees on loans

652,095

476,041

176,054

Taxable interest and dividends on securities

101,233

118,690

(17,457

)

(15

Non-taxable interest and dividends on securities

5,736

7,179

(1,443

)

(20

Interest on federal funds sold and other short-term investments

37,395

3,271

34,124

1043

Total interest and dividend income

796,459

605,181

191,278

Interest expense:

Interest on deposits

226,075

28,621

197,454

690

Interest on borrowings

19,975

8,506

11,469

135

Total interest expense

246,050

37,127

208,923

563

Net interest income

550,409

568,054

(17,645

)

Provision for allowance for loan losses

20,052

17,925

2,127

Net interest income after provision for allowance for loan losses

530,357

550,129

(19,772

)

Noninterest income:

Service charges on deposit accounts

28,631

30,392

(1,761

)

Trust and investment advisory fees

24,264

23,593

671

Debit card processing fees

13,469

12,644

825

Interest rate swap income

1,536

6,009

(4,473

)

(74

Income (losses) from investments held in rabbi trusts

9,305

(10,762

)

20,067

(186

Losses on sales of commercial and industrial loans

(2,738

)

—

(2,738

)

—

(Losses) gains on sales of mortgage loans held for sale, net

(507

)

248

(755

)

(304

Losses on sales of securities available for sale, net

(333,170

)

(3,157

)

(330,013

)

10453

Other

21,457

17,783

3,674

Total noninterest (loss) income

(237,753

)

76,750

(314,503

)

(410

Noninterest expense:

Salaries and employee benefits

253,037

233,097

19,940

Office occupancy and equipment

35,992

37,445

(1,453

)

Data processing

55,308

52,938

2,370

Professional services

17,385

15,805

1,580

Marketing expenses

7,592

9,294

(1,702

)

(18

Loan expenses

4,466

6,384

(1,918

)

(30

Federal Deposit Insurance Corporation ("FDIC") insurance

21,874

6,250

15,624

250

Amortization of intangible assets

1,804

1,198

606

Other

21,144

26,238

(5,094

)

(19

Total noninterest expense

418,602

388,649

29,953

(Loss) income before income tax expense

(125,998

)

238,230

(364,228

)

(153

Income tax (benefit) expense

(63,309

)

51,719

(115,028

)

(222

Net (loss) income from continuing operations

(62,689

)

186,511

(249,200

)

(134

Net income from discontinued operations

294,866

13,248

281,618

2126

Net income

232,177

199,759

32,418

Share data:

Weighted average common shares outstanding, basic

162,293,020

165,510,357

(3,217,337

)

Weighted average common shares outstanding, diluted

162,403,097

165,648,571

(3,245,474

)

Earnings (loss) per share, basic:

Continuing operations

(0.39

)

1.13

(1.52

)

(135

Discontinued operations

1.82

0.08

1.74

2175

Earnings per share, basic

1.43

1.21

0.22

Earnings (loss) per share, diluted:

Continuing operations

(0.39

)

1.13

(1.52

)

(135

Discontinued operations

1.82

0.08

1.74

2175

Earnings per share, diluted

1.43

1.21

0.22

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

As of and for the three months ended

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

Avg. Balance

Interest

Yield / Cost (5)

Avg. Balance

Interest

Yield / Cost (5)

Avg. Balance

Interest

Yield / Cost (5)

Interest-earning assets:

Loans (1):

Commercial

9,978,154

126,128

5.01

9,988,712

128,051

5.09

9,528,386

108,015

4.50

Residential

2,573,032

23,546

3.63

2,553,150

22,988

3.57

2,313,810

18,837

3.23

Consumer

1,411,374

22,835

6.42

1,386,350

22,227

6.36

1,363,858

18,949

5.51

Total loans

13,962,560

172,509

4.90

13,928,212

173,266

4.94

13,206,054

145,801

4.38

Investment securities

5,670,742

25,609

1.79

5,777,173

26,009

1.79

8,422,385

32,432

1.53

Federal funds sold and other short-term investments

720,384

10,011

5.51

537,602

7,269

5.36

63,408

545

3.41

Total interest-earning assets

20,353,686

208,129

4.06

20,242,987

206,544

4.05

21,691,847

178,778

3.27

Non-interest-earning assets

834,391

1,033,879

653,158

Total assets

21,188,077

21,276,866

22,345,005

Interest-bearing liabilities:

Deposits:

Savings

1,352,239

0.01

1,441,636

0.01

1,924,840

0.01

Interest checking

3,753,352

7,080

0.75

3,903,062

6,302

0.64

4,871,089

4,897

0.40

Money market

4,735,917

29,390

2.46

4,836,895

27,695

2.27

4,778,694

9,919

0.82

Time deposits

2,656,313

30,874

4.61

2,341,684

25,567

4.33

563,735

2,584

1.82

Total interest-bearing deposits

12,497,821

67,389

2.14

12,523,277

59,607

1.89

12,138,358

17,457

0.57

Borrowings

242,437

2,950

4.83

414,252

5,356

5.13

795,527

7,547

3.76

Total interest-bearing liabilities

12,740,258

70,339

2.19

12,937,529

64,963

1.99

12,933,885

25,004

0.77

Demand deposit accounts

5,210,185

5,257,704

6,495,817

Other noninterest-bearing liabilities

555,034

541,827

495,129

Total liabilities

18,505,477

18,737,060

19,924,831

Shareholders' equity

2,682,600

2,539,806

2,420,174

Total liabilities and shareholders' equity

21,188,077

21,276,866

22,345,005

Net interest income - FTE

137,790

141,581

153,774

Net interest rate spread (2)

1.87

2.06

2.50

Net interest-earning assets (3)

7,613,428

7,305,458

8,757,962

Net interest margin - FTE (4)

2.69

2.77

2.81

(1) Includes non-accrual loans.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin - FTE represents fully-taxable equivalent net interest income* divided by average total interest-earning assets. Please refer to Appendix B to this press release for a reconciliation of fully-taxable equivalent net interest income.

(5) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

As of and for the twelve months ended

Dec 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

Avg. Balance

Interest

Yield / Cost

Avg. Balance

Interest

Yield / Cost

Interest-earning assets:

Loans (1):

Commercial

9,913,968

491,427

4.96

9,147,540

366,097

4.00

Residential

2,538,588

90,139

3.55

2,064,609

63,803

3.09

Consumer

1,381,745

86,167

6.24

1,327,417

56,965

4.29

Total loans

13,834,301

667,733

4.83

12,539,566

486,865

3.88

Non-taxable investment securities

197,682

7,279

3.68

253,651

9,091

3.58

Taxable investment securities

6,050,024

101,233

1.67

8,413,217

118,690

1.41

Total investment securities

6,247,706

108,512

1.74

8,666,868

127,781

1.47

Federal funds sold and other short-term investments

720,864

37,395

5.19

420,834

3,271

0.78

Total interest-earning assets

20,802,871

813,640

3.91

21,627,268

617,917

2.86

Non-interest-earning assets

921,622

986,865

Total assets

21,724,493

22,614,133

Interest-bearing liabilities:

Deposits:

Savings

1,515,713

217

0.01

2,015,651

209

0.01

Interest checking

4,070,585

24,235

0.60

4,890,709

11,675

0.24

Money market

4,918,343

104,002

2.11

5,057,445

13,479

0.27

Time deposits

2,303,520

97,621

4.24

463,261

3,258

0.70

Total interest-bearing deposits

12,808,161

226,075

1.77

12,427,066

28,621

0.23

Borrowings

418,884

19,975

4.77

256,632

8,506

3.31

Total interest-bearing liabilities

13,227,045

246,050

1.86

12,683,698

37,127

0.29

Demand deposit accounts

5,404,208

6,647,518

Other noninterest-bearing liabilities

522,239

451,384

Total liabilities

19,153,492

19,782,600

Shareholders' equity

2,571,001

2,831,533

Total liabilities and shareholders' equity

21,724,493

22,614,133

Net interest income - FTE

567,590

580,790

Net interest rate spread (2)

2.05

2.57

Net interest-earning assets (3)

7,575,826

8,943,570

Net interest margin - FTE (4)

2.73

2.69

(1) Includes non-accrual loans.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - NON-PERFORMING ASSETS (1)

As of

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

Non-accrual loans:

Commercial

35,107

31,703

14,178

17,271

21,474

Residential

8,725

8,075

8,796

9,603

9,750

Consumer

8,725

7,687

7,584

7,699

7,380

Total non-accrual loans

52,557

47,465

30,558

34,573

38,604

Total accruing loans past due 90 days or more:

—

Total non-performing loans

52,557

47,465

30,558

34,573

38,604

Other real estate owned

—

Other non-performing assets:

—

Total non-performing assets (1)

52,557

47,465

30,558

34,573

38,604

Total accruing troubled debt restructured ("TDR") (2)

—

28,834

Total non-performing loans to total loans

0.38

0.34

0.22

0.25

0.28

Total non-performing assets to total assets

0.25

0.22

0.14

0.15

0.17

(1) Non-performing assets are comprised of NPLs, other real estate owned ("OREO"), and non-performing securities. NPLs consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest. OREO consists of real estate properties, which primarily serve as collateral to secure the Company’s loans, that it controls due to foreclosure or acceptance of a deed in lieu of foreclosure.

(2) The Company adopted ASU 2022-02 on January 1, 2023 which eliminated the TDR recognition and measurement guidance. Accordingly, the Company had no TDRs to report as of March 31, 2023 and subsequent periods.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE-OFFS (RECOVERIES)

Three months ended

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

Average total loans

13,961,061

13,926,194

13,803,292

13,633,165

13,203,450

Allowance for loan losses, beginning of the period

155,146

147,955

140,938

142,211

131,663

Total cumulative effect of change in accounting principle (1):

—

(1,143

)

—

Charged-off loans:

Commercial and industrial

—

256

Commercial real estate

8,008

—

Commercial construction

—

Business banking

3,745

303

254

343

370

Residential real estate

—

Consumer home equity

—

Other consumer

536

731

591

561

515

Total charged-off loans

12,291

1,045

845

911

1,142

Recoveries on loans previously charged-off:

Commercial and industrial

120

139

248

Commercial real estate

190

Commercial construction

—

Business banking

573

609

204

481

391

Residential real estate

Consumer home equity

—

Other consumer

131

108

111

116

111

Total recoveries

940

908

361

756

810

Net loans charged-off (recoveries):

Commercial and industrial

)

(109

)

(26

)

(139

)

Commercial real estate

7,818

)

(38

)

Commercial construction

—

Business banking

3,172

(306

)

(138

)

(21

)

Residential real estate

(34

)

(30

)

(18

)

(15

)

(14

)

Consumer home equity

)

(39

)

—

)

Other consumer

405

623

480

445

404

Total net loans charged-off

11,351

137

484

155

332

Provision for allowance for loan losses

5,198

7,328

7,501

10,880

Total allowance for loan losses, end of period

148,993

155,146

147,955

140,938

142,211

Net charge-offs to average total loans outstanding during this period (2)

0.32

0.00

0.01

0.00

0.01

Allowance for loan losses as a percent of total loans

1.07

1.12

1.06

1.03

1.05

Allowance for loan losses as a percent of nonperforming loans

283.49

326.86

484.18

407.65

368.38

(1) For the quarter ended March 31, 2023, represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2022-02 (i.e., cumulative effect adjustment related to the adoption of ASU 2022-02 as of January 1, 2023). The adjustment represents a $1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard.

(2) Presented on an annualized basis.

APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics (1)

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

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

44,419

(202,081

)

40,918

Add:

Noninterest income components:

(Income) losses from investments held in rabbi trusts

(4,969

)

1,523

(3,002

)

(2,857

)

(3,235

)

Losses on sales of securities available for sale, net

—

333,170

683

(Gains) losses on sales of other assets

—

)

—

Noninterest expense components:

Rabbi trust employee benefit expense (income)

1,740

(586

)

1,314

1,274

1,103

Merger and acquisition expenses

1,865

3,630

—

Defined Benefit Plan settlement loss

—

12,045

Total impact of non-GAAP adjustments

(1,364

)

4,565

(1,688

)

331,592

10,606

Less net tax benefit associated with non-GAAP adjustments (2)

13,270

15,944

1,639

76,377

2,954

Non-GAAP adjustments, net of tax

(14,634

)

(11,379

)

(3,327

)

255,215

7,652

Operating net income (non-GAAP)

16,875

52,085

41,092

53,134

48,570

Weighted average common shares outstanding during the period:

Basic

162,571,066

162,370,469

162,232,236

161,991,373

162,032,522

Diluted

162,724,398

162,469,887

162,246,675

162,059,431

162,263,547

Earnings (losses) per share from continuing operations, basic:

0.19

0.39

0.27

(1.25

)

0.25

Earnings (losses) per share from continuing operations, diluted:

0.19

0.39

0.27

(1.25

)

0.25

Operating earnings per share, basic (non-GAAP)

0.10

0.32

0.25

0.33

0.30

Operating earnings per share, diluted (non-GAAP)

0.10

0.32

0.25

0.33

0.30

Return on average assets (3)

0.59

1.18

0.81

(3.64

0.73

Add:

(Income) losses from investments held in rabbi trusts (3)

(0.09

0.03

(0.05

(0.06

Losses on sales of securities available for sale, net (3)

0.00

6.00

0.01

(Gains) losses on sales of other assets (3)

0.00

Rabbi trust employee benefit expense (income) (3)

0.03

(0.01

0.02

Merger and acquisition expenses (3)

0.03

0.07

0.00

Defined Benefit Plan settlement loss (3)

0.00

0.21

Less net tax benefit associated with non-GAAP adjustments (2) (3)

0.25

0.30

0.03

1.38

0.05

Operating return on average assets (non-GAAP) (3)

0.31

0.97

0.75

0.95

0.86

Return on average shareholders' equity (3)

4.66

9.91

6.85

(33.31

6.71

Add:

(Income) losses from investments held in rabbi trusts (3)

(0.73

0.24

(0.46

(0.47

(0.53

Losses on sales of securities available for sale, net (3)

0.00

54.92

0.11

(Gains) losses on sales of other assets (3)

0.00

Rabbi trust employee benefit expense (income) (3)

0.26

(0.09

0.20

0.21

0.18

Merger and acquisition expenses (3)

0.28

0.57

0.00

Defined Benefit Plan settlement loss (3)

0.00

1.97

Less net tax benefit associated with non-GAAP adjustments (2) (3)

1.96

2.49

0.25

12.59

0.48

Operating return on average shareholders' equity (non-GAAP) (3)

2.51

8.14

6.34

8.76

7.96

Average tangible shareholders' equity:

Average total shareholders' equity (GAAP)

2,682,600

2,539,806

2,599,325

2,460,170

2,420,174

Less: Average goodwill and other intangibles

597,234

658,591

659,825

660,795

661,841

Average tangible shareholders' equity (non-GAAP)

2,085,366

1,881,215

1,939,500

1,799,375

1,758,333

Return on average tangible shareholders' equity (non-GAAP) (3)

5.99

13.38

9.19

(45.55

9.23

Add:

(Income) losses from investments held in rabbi trusts (3)

(0.95

0.32

(0.62

(0.64

(0.73

Losses on sales of securities available for sale, net (3)

0.00

75.09

0.15

(Gains) losses on sales of other assets (3)

0.00

Rabbi trust employee benefit expense (income) (3)

0.33

(0.12

0.27

0.29

0.25

Merger and acquisition expenses (3)

0.35

0.77

0.00

Defined Benefit Plan settlement loss (3)

0.00

2.72

Less net tax benefit associated with non-GAAP adjustments (2) (3)

2.52

3.36

0.34

17.21

0.67

Operating return on average tangible shareholders' equity (non-GAAP) (3)

3.20

10.99

8.50

11.98

10.95

(1) Average assets, average shareholders' equity, average goodwill and other intangibles, and average tangible shareholders' equity components presented in this table include discontinued operations.

(2) The net tax benefit (expense) associated with these items is generally determined by assessing whether each item is included or excluded from net taxable income and applying our combined statutory tax rate only to those items included in net taxable income. The net tax benefit for the three months ended December 31, 2023 was primarily due to the tax benefit from state tax strategies associated with the utilization of capital losses as a result of the sale of securities in the first quarter of 2023, described further below. Upon the sale of securities in the first quarter of 2023, we established a valuation allowance of $17.4 million, as it was determined at that time that it was not more-likely-than-not that the entirety of the deferred tax asset related to the loss on such securities would be realized. Included in that $17.4 million was $2.8 million in expected lost state tax benefits. Following the execution of the sale of our insurance agency business in October 2023 and the resulting capital gain, coupled with tax planning strategies, a state tax benefit of $13.6 million was realized on the security sale losses.

(3) Presented on an annualized basis.

APPENDIX B: Reconciliation of Non-GAAP Operating Revenues and Expenses

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

Three Months Ended

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

Net interest income (GAAP)

133,307

137,205

141,588

138,309

149,994

Add:

Tax-equivalent adjustment (non-GAAP) (1)

4,483

4,376

3,877

4,445

3,780

Fully-taxable equivalent net interest income (non-GAAP)

137,790

141,581

145,465

142,754

153,774

Noninterest income (loss) (GAAP)

26,739

19,157

26,204

(309,853

)

22,425

Less:

Income (losses) from investments held in rabbi trusts

4,969

(1,523

)

3,002

2,857

3,235

Losses on sales of securities available for sale, net

—

(333,170

)

(683

)

Gains (losses) on sales of other assets

—

)

(10

)

Noninterest income on an operating basis (non-GAAP)

21,770

20,678

23,202

20,465

19,883

Noninterest expense (GAAP)

121,029

101,748

99,934

95,891

112,583

Less:

Rabbi trust employee benefit expense (income)

1,740

(586

)

1,314

1,274

1,103

Merger and acquisition expenses

1,865

3,630

—

Defined Benefit Plan settlement loss

—

12,045

Noninterest expense on an operating basis (non-GAAP)

117,424

98,704

98,620

94,617

99,435

Total revenue (loss) (GAAP)

160,046

156,362

167,792

(171,544

)

172,419

Total operating revenue (non-GAAP)

159,560

162,259

168,667

163,219

173,657

Efficiency ratio (GAAP)

75.62

65.07

59.56

(55.90

65.30

Operating efficiency ratio (non-GAAP)

73.59

60.83

58.47

57.97

57.26

(1) Interest income on tax-exempt loans and investment securities has been adjusted to a FTE basis using a marginal tax rate of 21.9%, 21.7%, 21.8%, 21.7%, and 21.6% for the three months ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.

APPENDIX C: Reconciliation of Non-GAAP Capital Metrics

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

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

2,471,790

Less: Goodwill and other intangibles (1)

566,205

657,824

658,993

660,165

661,126

Tangible shareholders' equity (non-GAAP)

2,408,650

1,788,729

1,867,779

1,918,958

1,810,664

Tangible assets:

Total assets (GAAP)

21,133,278

21,146,292

21,583,493

22,720,530

22,646,858

Less: Goodwill and other intangibles (1)

566,205

657,824

658,993

660,165

661,126

Tangible assets (non-GAAP)

20,567,073

20,488,468

20,924,500

22,060,365

21,985,732

Shareholders' equity to assets ratio (GAAP)

14.08

11.57

11.71

11.35

10.91

Tangible shareholders' equity to tangible assets ratio (non-GAAP)

11.71

8.73

8.93

8.70

8.24

Common shares outstanding

176,426,993

176,376,675

176,328,426

176,172,073

Book value per share (GAAP)

16.86

13.87

14.33

14.63

14.03

Tangible book value per share (non-GAAP)

13.65

10.14

10.59

10.88

10.28

(1) Includes goodwill and other intangible assets of discontinued operations as of September 30, 2023 and preceding periods.

APPENDIX D: Tangible Shareholders’ Equity Roll Forward Analysis

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

As of

Change from

Dec 31, 2023

Sep 30, 2023

(Unaudited, dollars in thousands, except per-share data)

Common stock

1,767

1,766

Additional paid in capital

1,666,441

1,661,136

5,305

Unallocated ESOP common stock

(132,755

)

(133,992

)

1,237

Retained earnings

2,047,754

1,747,225

300,529

AOCI, net of tax - available for sale securities

(584,243

)

(763,871

)

179,628

AOCI, net of tax - pension

7,462

6,021

1,441

AOCI, net of tax - cash flow hedge

(31,571

)

(71,732

)

40,161

Total shareholders' equity:

2,974,855

2,446,553

528,302

Less: Goodwill and other intangibles (1)

566,205

657,824

(91,619

)

Tangible shareholders' equity (non-GAAP)

2,408,650

1,788,729

619,921

Common shares outstanding

176,426,993

176,376,675

50,318

Per share:

Common stock

0.01

—

Additional paid in capital

9.45

9.42

0.03

Unallocated ESOP common stock

(0.75

)

(0.76

)

0.01

Retained earnings

11.61

9.91

1.70

AOCI, net of tax - available for sale securities

(3.31

)

(4.33

)

1.02

AOCI, net of tax - pension

0.04

0.03

0.01

AOCI, net of tax - cash flow hedge

(0.18

)

(0.41

)

0.23

Total shareholders' equity:

16.86

13.87

2.99

Less: Goodwill and other intangibles (1)

3.21

3.73

(0.52

)

Tangible shareholders' equity (non-GAAP)

13.65

10.14

3.51

(1) Includes goodwill and other intangible assets of discontinued operations as of September 30, 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240125436910/en/

Investor Contact Jillian Belliveau Eastern Bankshares, Inc. InvestorRelations@easternbank.com 781-598-7920 Media Contact Andrea Goodman Eastern Bank a.goodman@easternbank.com 781-598-7847

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