Eastern Bankshares, Inc. Reports Third Quarter 2024 Financial Results

~ Company Announces a 9% Increase to Quarterly Dividend ~

Eastern Bankshares, Inc. (the “Company”) (NASDAQ: EBC), the holding company of Eastern Bank, today announced its 2024 third quarter financial results.

FINANCIAL HIGHLIGHTS

Net loss of $6.2 million included the initial provision on non-purchased credit deteriorated (“non-PCD”) loans of $40.9 million and merger-related charges of $30.5 million. Operating net income of $49.7 million, or 0.25 per diluted share.
Merger EPS accretion and cost saves on track to exceed original estimates.
Net interest margin on a fully tax equivalent (“FTE”) basis of 2.97%, an increase of 0.33%, including net discount accretion from the Cambridge merger of 0.18%.
Trust and investment advisory fees increased $8.2 million, or 122%, from the prior quarter to $14.9 million, due primarily to increased assets under management (“AUM”) as a result of the merger.
Book value per share and tangible book value per share ended the quarter at $17.09 and $12.17, respectively.
Non-performing loans ("NPLs") increased by $84.7 million to $124.5 million, or 0.70% of total loans, due primarily to purchased credit deteriorated (“PCD”) loans acquired from Cambridge that were thoroughly assessed by the Credit teams and adequately reserved.
The Board declared a 9% increase in the quarterly cash dividend to $0.12 per share.

As of and for three months ended

Linked quarter Change

(Unaudited, $ in thousands, except per share data)

Sep 30, 2024

Jun 30, 2024

△ $

△ %

Earnings

Net (loss) income

(6,188

)

26,331

(32,519

)

(124

Per share, diluted

(0.03

)

0.16

(0.19

)

(119

Operating net income*

49,665

36,519

13,146

Per share, diluted*

0.25

0.22

0.03

Net interest income

169,855

128,649

41,206

NIM - FTE (1)*

2.97

2.64

0.33

Noninterest income

33,528

25,348

8,180

Operating noninterest income*

32,907

31,146

1,761

Noninterest expense

159,753

109,869

49,884

Operating noninterest expense*

130,850

105,255

25,595

Efficiency ratio

78.5

71.3

7.2

Operating efficiency ratio*

60.1

63.7

(3.6

Balance sheet

Period-end balances

Loans

18,064,126

14,145,520

3,918,606

Deposits

21,216,854

17,537,809

3,679,045

Average balances

Loans

17,274,903

14,113,343

3,161,560

Deposits

20,858,252

17,751,502

3,106,750

Capital

Tangible shareholders’ equity / tangible assets*

10.69

11.73

(1.04

CET1 capital ratio (2)

15.52

18.63

(3.11

Book value per share

17.09

16.80

0.29

Tangible book value per share*

12.17

13.60

(1.43

)

(11

Asset quality

Non-performing loans

124,503

39,771

84,732

213

Total non-performing loans to total loans

0.70

0.28

0.42

Net charge-offs (recoveries) to average total loans (1)

0.12

(0.02

0.14

(1) Presented on an annualized basis.

(2) CET1 capital ratio as of September 30, 2024 is a preliminary estimate.

*Non-GAAP

On July 12, 2024, the Company completed its merger (“the merger”) with Cambridge Bancorp (“Cambridge”), the parent company of Cambridge Trust Company, and therefore the third quarter financial results reflect the partial quarter impact of the merger. The merger added approximately $3.7 billion in loans, $3.9 billion in deposits, each at fair value, and $4.7 billion in AUM.

“This quarter marked a transformational moment in Eastern’s history, as we closed on our merger with Cambridge Trust,” said Bob Rivers, Executive Chair and Chair of the Board of Directors of the Company and Eastern Bank. “This combination represents a powerful step forward in achieving our strategic vision, positioning us as a stronger, more competitive institution and Greater Boston’s leading local bank. I want to acknowledge the hard work and dedication of our entire team.”

Denis Sheahan, Chief Executive Officer, added, “While we’ve grown, our focus remains deeply rooted in the Greater Boston community. Our expanded capabilities allow us to better serve the consumers and businesses that drive this region’s economy, by providing comprehensive, one-stop banking and wealth management solutions, ensuring that we remain a committed resource in their success.”

“Following successful bank and wealth system conversions, we are on track to achieve the merger-related financial targets that were set forth at the time of our announcement just over a year ago,” said David Rosato, Chief Financial Officer. “This accomplishment underscores the strength of our integration strategy and our commitment to deliver shareholder value.”

BALANCE SHEET

Total assets were $25.5 billion at September 30, 2024, representing an increase of $4.5 billion, or 21.2% from June 30, 2024.

Cash and equivalents increased $138.6 million to $889.5 million.
Securities increased $56.3 million, or 1.2%, to $4.6 billion, due to an increase in the market value of available for sale securities (“AFS securities”) driven by lower interest rates, partially offset by principal runoff. Acquired securities totaling $883.0 million were sold following completion of the merger.
Loans totaled $18.1 billion, representing an increase of $3.9 billion, or 27.7%, due to the addition of Cambridge. Eastern-originated loans declined modestly by $16.1 million, or 0.1%, in the quarter.
Deposits totaled $21.2 billion, representing an increase of $3.7 billion, or 21.0%. The merger added $3.9 billion of deposits. Legacy Eastern deposits decreased $195 million, or 0.9%, due primarily to a seasonal decline in municipal deposits, partially offset by an increase in time deposits.
FHLB advances decreased $0.1 million to $17.3 million. Proceeds from the securities sale were used to pay off FHLB advances of $782.0 million that the Company assumed through the merger.
Shareholders’ equity was $3.7 billion, representing an increase of $703.7 million, due primarily to the common shares issued in the merger, as well as an increase in AOCI, partially offset by a decrease in retained earnings.

Please refer to Appendix E for more information on organic loan and deposit growth and the impact of the Cambridge merger, and Appendix F for a roll-forward of tangible shareholders’ equity.

NET INTEREST INCOME

Net interest income was $169.9 million for the third quarter, compared to $128.6 million, representing an increase of $41.2 million, due to an increase in the net interest margin and increased average earning assets.

Net interest income included net accretion income of $10.8 million from purchase accounting adjustments in connection with the merger.
The net interest margin on a FTE basis was 2.97%, representing a 33 basis point increase and included net discount accretion of 18 basis points from the Cambridge merger.
Total interest-earning assets yield increased 41 basis points from the prior quarter to 4.60%, due primarily to an increase in loan yields of 39 basis points, as well as higher other short-term investment balances.
Total interest-bearing liabilities cost increased 6 basis points to 2.50%.

NONINTEREST INCOME

Noninterest income was $33.5 million for the third quarter, compared to $25.3 million, representing an increase of $8.2 million. Operating noninterest income was $32.9 million, compared to $31.1 million, representing an increase of $1.8 million.

Trust and investment advisory fees increased $8.2 million to $14.9 million, due primarily to increased AUM as a result of the merger.
Service charges on deposit accounts increased $0.2 million to $8.1 million.
Debit card processing fees increased $0.3 million to $3.8 million.
Customer swap income increased $0.1 million to $0.6 million.
Income from investments held in rabbi trust accounts increased $1.8 million to $3.6 million.
Losses on sales of mortgage loans held for sale were $0.4 million, compared to losses of $0.2 million in the prior quarter.
There were no losses on sales of AFS securities in the third quarter, compared to losses of $7.6 million in the prior quarter.
Other noninterest income decreased $9.8 million to $2.9 million, due in part to the merger-related disposal of fixed assets totaling $3.0 million. The prior quarter included an early termination payment of $7.8 million received from the early withdrawal of a $100 million deposit contract.

NONINTEREST EXPENSE

Noninterest expense was $159.8 million, compared to $109.9 million, an increase of $49.9 million. The increase was primarily driven by the increase in merger-related expenses of $23.9 million. Operating noninterest expense was $130.9 million, compared to $105.3 million, representing an increase of $25.6 million.

Salaries and employee benefits expense was $93.8 million, an increase of $28.5 million. The increase in salaries expense of $24.6 million was due primarily to the addition of colleagues, and an increase in merger-related expenses of $11.8 million, including retention bonuses and severance payments. The increase in employee benefits expense of $3.9 million was attributable to an increase in federal payroll tax expense of $1.4 million, as well as the addition of colleagues and the increased market value of investments held in rabbi trust accounts by the Company’s defined contribution supplemental executive retirement plan (“DC SERP”).
Office occupancy and equipment expense was $14.5 million, an increase of $4.4 million, due primarily to merger-related expenses of $2.6 million, as well as the addition of leases and equipment from the merger.
Data processing expense was $19.5 million, an increase of $1.5 million.
Professional services expense was $9.0 million, an increase of $4.7 million, due primarily to merger-related expenses of $4.5 million.
Marketing expense was $1.6 million, a decrease of $0.3 million.
Federal Deposit Insurance Corporation (“FDIC”) insurance expense was $3.2 million, a decrease of $1.3 million. The prior quarter included a FDIC special assessment of $1.9 million.
Amortization of intangible assets was $6.2 million, an increase of $5.7 million, driven primarily by the amortization of core deposit intangibles and wealth management intangibles in connection with the merger.
Other noninterest expense was $12.1 million, an increase of $6.7 million, due primarily to an increase in provision for off balance sheet credit exposures of $2.9 million, including a $1.9 million initial provision on off balance sheet credit exposures acquired from Cambridge, as well as merger-related contract termination fees of $2.6 million.

Please refer to Appendix D for additional detail on merger-related charges.

ASSET QUALITY

Non-performing loans (“NPLs”) totaled $124.5 million, or 0.70% of total loans, at September 30, 2024 compared to $39.8 million, or 0.28% of total loans, at the end of the prior quarter. The increase in NPLs was driven primarily by purchased credit deteriorated (“PCD”) loans acquired from Cambridge that were on non-accrual status at September 30, 2024.

During the third quarter of 2024, the Company recorded total net charge-offs of $5.1 million, or 0.12% of average total loans on an annualized basis, compared to total net recoveries of $0.8 million, or 0.02% of average total loans on an annualized basis, in the prior quarter, respectively.

The Company recorded a provision for loan losses totaling $47.0 million, including a $40.9 million initial provision on non-PCD loans acquired from Cambridge. The remaining provision was primarily associated with individual reserves on commercial real estate loans during the quarter.

The allowance for loan losses was $253.8 million at September 30, 2024, or 1.43% of total loans, compared to $156.1 million, or 1.11% of total loans, at June 30, 2024. The allowance in the third quarter included a $55.8 million initial allowance on PCD loans and a $40.9 million allowance established via the aforementioned initial provision on non-PCD loans, both related to the merger.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors declared a quarterly cash dividend of $0.12 per common share, representing a $0.01, or 9%, increase. The dividend will be payable on December 16, 2024 to shareholders of record as of the close of business on December 3, 2024.

The Company repurchased 836,399 shares of common stock during the third quarter at a weighted average price of $15.08, for an aggregate purchase price of $12.6 million.

CONFERENCE CALL AND PRESENTATION INFORMATION

A conference call and webcast covering Eastern’s third quarter 2024 earnings will be held on Friday, October 25, 2024 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (800) 549-8228 from within the U.S. and reference conference ID 35193. 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 available on this site.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. is the holding company for Eastern Bank. Founded in 1818, Eastern Bank is Greater Boston’s leading local bank with more than 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, Rhode Island and Connecticut. As of September 30, 2024, Eastern Bank had approximately $25.5 billion in assets. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes including through its Cambridge Trust Wealth Management division, the largest bank-owned investment advisor in Massachusetts with approximately $8.4 billion in assets under management, and takes pride in its outspoken advocacy and community support that includes more than $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 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 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. Return on average tangible shareholders’ equity, operating return on average tangible shareholders’ equity as well as the operating efficiency ratio also further exclude the effect of amortization of intangible assets. 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 are not provided.

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, 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 and in the case of tangible net income (loss), return on average tangible shareholders’ equity and operating return on average tangible shareholders’ equity excludes the after-tax impact of amortization of 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 includes 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 implementation of the merger, including that 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; that following completion of the merger, Eastern’s business may not perform as expected due to transaction-related uncertainty or other factors; that Eastern is unable to successfully implement integration strategies; that Eastern’s expansion of services or capabilities resulting from the merger may be more challenging than anticipated; reputational risks and the reaction of customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; the diversion of management time and Company resources on merger-related issues; and disruptions arising from transitions in management personnel; 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 subsidiaries, including 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; operational risks such as cybersecurity incidents, natural disasters, and pandemics, including COVID-19 and the failure of the Company to execute its planned share repurchases. 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”), 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.

EASTERN BANKSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS (1)

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)

Sep 30, 2024

Jun 30, 2024

Mar 31, 2024

Dec 31, 2023

Sep 30, 2023

Earnings data

Net interest income

169,855

128,649

129,900

133,307

137,205

Noninterest income

33,528

25,348

27,692

26,739

19,157

Total revenue

203,383

153,997

157,592

160,046

156,362

Noninterest expense

159,753

109,869

101,202

121,029

101,748

Pre-tax, pre-provision income

43,630

44,128

56,390

39,017

54,614

Provision for allowance for loan losses

46,983

6,126

7,451

5,198

7,328

Pre-tax (loss) income

(3,353

)

38,002

48,939

33,819

47,286

Net (loss) income from continuing operations

(6,188

)

26,331

38,647

31,509

63,464

Net income (loss) from discontinued operations

—

286,994

(4,351

)

Net (loss) income

(6,188

)

26,331

38,647

318,503

59,113

Operating net income (non-GAAP)

49,665

36,519

38,081

16,875

52,085

Per-share data

(Loss) earnings per share, diluted

(0.03

)

0.16

0.24

1.95

0.36

Continuing operations

(0.03

)

0.16

0.24

0.19

0.39

Discontinued operations

—

1.76

(0.03

)

Operating earnings per share, diluted (non-GAAP)

0.25

0.22

0.23

0.10

0.32

Book value per share

17.09

16.80

16.72

16.86

13.87

Tangible book value per share (non-GAAP)

12.17

13.60

13.51

13.65

10.14

Profitability

Return on average assets (2)

(0.10

0.50

0.74

0.59

1.18

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

0.79

0.70

0.72

0.31

0.97

Return on average shareholders' equity (2)

(0.70

3.62

5.23

4.66

9.91

Operating return on average shareholders' equity (2)

5.60

5.03

5.17

2.51

8.14

Return on average tangible shareholders' equity (non-GAAP) (2) (3)

(0.26

4.54

6.52

6.06

13.46

Operating return on average tangible shareholders' equity (non-GAAP) (2) (3)

8.45

6.28

6.42

3.27

11.07

Net interest margin (FTE) (2)

2.97

2.64

2.68

2.69

2.77

Cost of deposits (2)

1.82

1.78

1.66

1.51

1.33

Efficiency ratio

78.5

71.3

64.2

75.6

65.1

Operating efficiency ratio (non-GAAP) (4)

60.1

63.7

61.6

73.3

60.5

Balance Sheet (end of period)

Total assets

25,507,187

21,044,169

21,174,804

21,133,278

21,146,292

Total loans

18,064,126

14,145,520

14,088,747

13,973,428

13,919,275

Total deposits

21,216,854

17,537,809

17,666,733

17,596,217

17,424,169

Total loans / total deposits

Asset quality

Allowance for loan losses ("ALLL")

253,821

156,146

149,190

148,993

155,146

ALLL / total nonperforming loans ("NPLs")

203.87

392.61

260.94

283.49

326.86

Total NPLs / total loans

0.70

0.28

0.41

0.38

0.34

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

0.12

(0.02

0.21

0.32

0.00

Capital adequacy

Shareholders' equity / assets

14.39

14.10

13.95

14.08

11.57

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

10.69

11.73

11.58

11.71

8.73

(1) Total assets, average assets and average tangible shareholders' equity components as of and for the three months ended Sep 30, 2023 and Dec 31, 2023 presented in this table include discontinued operations.

(2) Presented on an annualized basis.

(3) The return on average tangible shareholders' equity ratio and operating return on average tangible shareholders' equity ratio exclude the amortization of intangible assets, net of tax.

(4) The operating efficiency ratio excludes the amortization of intangible assets.

EASTERN BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

As of

Sep 30, 2024 change from

(Unaudited, dollars in thousands)

Sep 30, 2024

Jun 30, 2024

Sep 30, 2023

Jun 30, 2024

Sep 30, 2023

ASSETS

△ $

△ %

△ $

△ %

Cash and due from banks

98,299

72,890

72,689

25,409

25,610

Short-term investments

791,177

677,958

536,119

113,219

255,058

Cash and cash equivalents

889,476

750,848

608,808

138,628

280,668

Available for sale ("AFS") securities

4,163,352

4,097,842

4,261,518

65,510

(98,166

)

Held to maturity ("HTM") securities

427,459

436,712

455,900

(9,253

)

(28,441

)

Total securities

4,590,811

4,534,554

4,717,418

56,257

(126,607

)

Loans held for sale

1,993

1,308

23,892

685

(21,899

)

(92

Loans:

Commercial and industrial

3,340,029

3,084,186

3,087,509

255,843

252,520

Commercial real estate

7,174,861

5,440,411

5,396,912

1,734,450

1,777,949

Commercial construction

513,519

447,157

382,615

66,362

130,904

Business banking

1,321,179

1,108,163

1,087,799

213,016

233,380

Total commercial loans

12,349,588

10,079,917

9,954,835

2,269,671

2,394,753

Residential real estate

4,080,736

2,562,808

2,550,861

1,517,928

1,529,875

Consumer home equity

1,361,971

1,254,105

1,193,859

107,866

168,112

Other consumer

271,831

248,690

219,720

23,141

52,111

Total loans

18,064,126

14,145,520

13,919,275

3,918,606

4,144,851

Allowance for loan losses

(253,821

)

(156,146

)

(155,146

)

(97,675

)

(98,675

)

Unamortized prem./disc. and def. fees

(308,243

)

(35,601

)

(19,307

)

(272,642

)

766

(288,936

)

1497

Net loans

17,502,062

13,953,773

13,744,822

3,548,289

3,757,240

Federal Home Loan Bank stock, at cost

5,865

5,879

37,125

(14

)

—

(31,260

)

(84

Premises and equipment

78,776

60,910

59,033

17,866

19,743

Bank-owned life insurance

203,635

166,710

163,700

36,925

39,935

Goodwill and other intangibles, net

1,057,509

565,196

566,709

492,313

490,800

Deferred income taxes, net

319,206

276,064

416,081

43,142

(96,875

)

(23

Prepaid expenses

201,285

183,245

156,113

18,040

45,172

Other assets

656,569

545,682

527,873

110,887

128,696

Assets of discontinued operations

—

124,718

—

(124,718

)

(100

Total assets

25,507,187

21,044,169

21,146,292

4,463,018

4,360,895

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Demand

5,856,171

4,808,938

5,177,015

1,047,233

679,156

Interest checking accounts

4,562,226

3,532,811

3,671,871

1,029,415

890,355

Savings accounts

1,681,093

1,238,009

1,393,545

443,084

287,548

Money market investment

5,572,277

5,014,900

4,709,149

557,377

863,128

Certificates of deposit

3,545,087

2,943,151

2,472,589

601,936

1,072,498

Total deposits

21,216,854

17,537,809

17,424,169

3,679,045

3,792,685

Borrowed funds:

Federal Home Loan Bank advances

17,342

17,415

673,525

(73

)

—

(656,183

)

(97

Escrow deposits of borrowers

29,405

20,155

24,947

9,250

4,458

Interest rate swap collateral funds

24,070

11,370

16,900

12,700

112

7,170

Total borrowed funds

70,817

48,940

715,372

21,877

(644,555

)

(90

Other liabilities

548,378

489,947

525,378

58,431

23,000

Liabilities of discontinued operations

—

34,820

—

(34,820

)

(100

Total liabilities

21,836,049

18,076,696

18,699,739

3,759,353

3,136,310

Shareholders' equity:

Common shares

2,150

1,770

1,766

380

384

Additional paid-in capital

2,246,134

1,673,722

1,661,136

572,412

584,998

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

(129,077

)

(130,295

)

(133,992

)

1,218

4,915

Retained earnings

2,048,042

2,076,566

1,747,225

(28,524

)

300,817

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

(496,111

)

(654,290

)

(829,582

)

158,179

(24

333,471

(40

Total shareholders' equity

3,671,138

2,967,473

2,446,553

703,665

1,224,585

Total liabilities and shareholders' equity

25,507,187

21,044,169

21,146,292

4,463,018

4,360,895

EASTERN BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

Three months ended

Three months ended Sep 30, 2024 change from three months ended

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

Sep 30, 2024

Jun 30, 2024

Sep 30, 2023

Jun 30, 2024

Sep 30, 2023

Interest and dividend income:

△ $

△ %

△ $

△ %

Interest and fees on loans

230,824

172,514

169,274

58,310

61,550

Taxable interest and dividends on securities

22,421

22,724

24,191

(303

)

(1,770

)

Non-taxable interest and dividends on securities

1,444

1,439

1,434

—

Interest on federal funds sold and other short-term investments

11,329

10,699

7,269

630

4,060

Total interest and dividend income

266,018

207,376

202,168

58,642

63,850

Interest expense:

Interest on deposits

95,334

78,473

59,607

16,861

35,727

Interest on borrowings

829

254

5,356

575

226

(4,527

)

(85

Total interest expense

96,163

78,727

64,963

17,436

31,200

Net interest income

169,855

128,649

137,205

41,206

32,650

Provision for allowance for loan losses

46,983

6,126

7,328

40,857

667

39,655

541

Net interest income after provision for allowance for loan losses

122,872

122,523

129,877

349

—

(7,005

)

Noninterest income:

Trust and investment advisory fees

14,909

6,711

6,235

8,198

122

8,674

139

Service charges on deposit accounts

8,140

7,930

7,403

210

737

Debit card processing fees

3,806

3,522

3,388

284

418

Interest rate swap income

565

418

1,695

147

(1,130

)

(67

Income (losses) from investments held in rabbi trusts

3,591

1,761

(1,523

)

1,830

104

5,114

(336

Losses on sales of commercial and industrial loans

—

(2,651

)

—

2,651

(100

Losses on sales of mortgage loans held for sale, net

(385

)

(152

)

(164

)

(233

)

153

(221

)

135

Losses on sales of securities available for sale, net

—

(7,557

)

—

7,557

(100

—

Other

2,902

12,715

4,774

(9,813

)

(77

(1,872

)

(39

Total noninterest income

33,528

25,348

19,157

8,180

14,371

Noninterest expense:

Salaries and employee benefits

93,759

65,218

60,898

28,541

32,861

Office occupancy and equipment

14,470

10,109

8,641

4,361

5,829

Data processing

19,504

17,990

13,443

1,514

6,061

Professional services

8,982

4,250

7,125

4,732

111

1,857

Marketing expenses

1,576

1,910

1,765

(334

)

(17

(189

)

(11

Federal Deposit Insurance Corporation ("FDIC") insurance

3,200

4,508

2,808

(1,308

)

(29

392

Amortization of intangible assets

6,210

504

5,706

1132

5,706

1132

Other

12,052

5,380

6,564

6,672

124

5,488

Total noninterest expense

159,753

109,869

101,748

49,884

58,005

(Loss) income before income tax expense (benefit)

(3,353

)

38,002

47,286

(41,355

)

(109

(50,639

)

(107

Income tax expense (benefit)

2,835

11,671

(16,178

)

(8,836

)

(76

19,013

(118

Net (loss) income from continuing operations

(6,188

)

26,331

63,464

(32,519

)

(124

(69,652

)

(110

Net loss from discontinued operations

—

(4,351

)

—

4,351

(100

Net (loss) income

(6,188

)

26,331

59,113

(32,519

)

(124

(65,301

)

(110

Share data:

Weighted average common shares outstanding, basic

196,700,222

163,145,255

162,370,469

33,554,967

34,329,753

Weighted average common shares outstanding, diluted

197,706,644

163,499,296

162,469,887

34,207,348

35,236,757

(Loss) earnings per share, basic:

Continuing operations

(0.03

)

0.16

0.39

(0.19

)

(119

(0.42

)

(108

Discontinued operations

—

(0.03

)

—

0.03

(100

(Loss) earnings per share, basic

(0.03

)

0.16

0.36

(0.19

)

(119

(0.39

)

(108

(Loss) earnings per share, diluted:

Continuing operations

(0.03

)

0.16

0.39

(0.19

)

(119

(0.42

)

(108

Discontinued operations

—

(0.03

)

—

0.03

(100

(Loss) earnings per share, diluted

(0.03

)

0.16

0.36

(0.19

)

(119

(0.39

)

(108

EASTERN BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

Nine months ended

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

Sep 30, 2024

Sep 30, 2023

Change

Interest and dividend income:

△ $

△ %

Interest and fees on loans

573,319

483,676

89,643

Taxable interest and dividends on securities

68,518

77,451

(8,933

)

(12

Non-taxable interest and dividends on securities

4,320

4,302

—

Interest on federal funds sold and other short-term investments

29,848

27,384

2,464

Total interest and dividend income

676,005

592,813

83,192

Interest expense:

Interest on deposits

246,265

158,686

87,579

Interest on borrowings

1,336

17,025

(15,689

)

(92

Total interest expense

247,601

175,711

71,890

Net interest income

428,404

417,102

11,302

Provision for allowance for loan losses

60,560

14,854

45,706

308

Net interest income after provision for allowance for loan losses

367,844

402,248

(34,404

)

Noninterest income:

Trust and investment advisory fees

28,164

18,136

10,028

Service charges on deposit accounts

23,578

21,117

2,461

Debit card processing fees

10,575

10,071

504

Interest rate swap income

1,650

2,112

(462

)

(22

Income from investments held in rabbi trusts

9,670

4,336

5,334

123

Losses on sales of commercial and industrial loans

—

(2,651

)

2,651

(100

Losses on sales of mortgage loans held for sale, net

(595

)

(288

)

(307

)

107

Losses on sales of securities available for sale, net

(7,557

)

(333,170

)

325,613

(98

Other

21,083

15,845

5,238

Total noninterest income (loss)

86,568

(264,492

)

351,060

(133

Noninterest expense:

Salaries and employee benefits

223,448

185,264

38,184

Office occupancy and equipment

33,763

26,797

6,966

Data processing

54,003

38,555

15,448

Professional services

16,744

13,277

3,467

Marketing expenses

5,001

4,899

102

Federal Deposit Insurance Corporation ("FDIC") insurance

9,993

8,388

1,605

Amortization of intangible assets

7,218

1,299

5,919

456

Other

20,654

19,094

1,560

Total noninterest expense

370,824

297,573

73,251

Income (loss) before income tax expense

83,588

(159,817

)

243,405

(152

Income tax expense (benefit)

24,798

(65,619

)

90,417

(138

Net income (loss) from continuing operations

58,790

(94,198

)

152,988

(162

Net income from discontinued operations

—

7,872

(7,872

)

(100

Net income (loss)

58,790

(86,326

)

145,116

(168

Share data:

Weighted average common shares outstanding, basic

174,398,692

162,199,158

12,199,534

Weighted average common shares outstanding, diluted

175,270,559

162,260,503

13,010,056

Earnings (loss) per share, basic:

Continuing operations

0.34

(0.58

)

0.92

(159

Discontinued operations

—

0.05

(0.05

)

(100

Earnings (loss) per share, basic

0.34

(0.53

)

0.87

(164

Earnings (loss) per share, diluted:

Continuing operations

0.34

(0.58

)

0.92

(159

Discontinued operations

—

0.05

(0.05

)

(100

Earnings (loss) per share, diluted

0.34

(0.53

)

0.87

(164

EASTERN BANKSHARES, INC.

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

As of and for the three months ended

Sep 30, 2024

Jun 30, 2024

Sep 30, 2023

(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

11,935,922

167,712

5.59

10,103,674

128,402

5.11

9,988,712

128,051

5.09

Residential

3,772,420

40,484

4.27

2,563,646

24,313

3.81

2,553,150

22,988

3.57

Consumer

1,568,372

27,026

6.86

1,446,543

23,960

6.66

1,386,350

22,227

6.36

Total loans

17,276,714

235,222

5.42

14,113,863

176,675

5.03

13,928,212

173,266

4.94

Total investment securities

5,322,650

24,259

1.81

5,428,583

24,555

1.82

5,777,173

26,009

1.79

Federal funds sold and other short-term investments

833,184

11,329

5.41

787,387

10,699

5.47

537,602

7,269

5.36

Total interest-earning assets

23,432,548

270,810

4.60

20,329,833

211,929

4.19

20,242,987

206,544

4.05

Non-interest-earning assets

1,606,357

912,302

1,033,879

Total assets

25,038,905

21,242,135

21,276,866

Interest-bearing liabilities:

Deposits:

Savings

1,646,532

1,526

0.37

1,259,573

0.01

1,441,636

0.01

Interest checking

4,548,231

13,428

1.17

3,739,590

8,827

0.95

3,903,062

6,302

0.64

Money market

5,631,626

39,994

2.83

4,975,843

34,022

2.75

4,836,895

27,695

2.27

Time deposits

3,365,392

40,386

4.77

2,933,160

35,582

4.88

2,341,684

25,567

4.33

Total interest-bearing deposits

15,191,781

95,334

2.50

12,908,166

78,473

2.45

12,523,277

59,607

1.89

Borrowings

89,398

829

3.69

49,536

254

2.06

414,252

5,356

5.13

Total interest-bearing liabilities

15,281,179

96,163

2.50

12,957,702

78,727

2.44

12,937,529

64,963

1.99

Demand deposit accounts

5,666,471

4,843,336

5,257,704

Other noninterest-bearing liabilities

564,961

512,996

541,827

Total liabilities

21,512,611

18,314,034

18,737,060

Shareholders' equity

3,526,294

2,928,101

2,539,806

Total liabilities and shareholders' equity

25,038,905

21,242,135

21,276,866

Net interest income - FTE

174,647

133,202

141,581

Net interest rate spread (2)

2.10

1.75

2.06

Net interest-earning assets (3)

8,151,369

7,372,131

7,305,458

Net interest margin - FTE (4)

2.97

2.64

2.77

(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.

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

As of and for the nine months ended

Sep 30, 2024

Sep 30, 2023

(Unaudited, dollars in thousands)

Avg. Balance

Interest

Yield / Cost (5)

Avg. Balance

Interest

Yield / Cost (5)

Interest-earning assets:

Loans (1):

Commercial

10,692,519

422,955

5.28

9,892,337

365,298

4.94

Residential

2,971,889

88,791

3.99

2,526,980

66,593

3.52

Consumer

1,478,664

74,224

6.71

1,371,761

63,333

6.17

Total loans

15,143,072

585,970

5.17

13,791,078

495,224

4.80

Total investment securities

5,441,498

74,015

1.82

6,442,141

82,903

1.72

Federal funds sold and other short-term investments

732,738

29,848

5.44

721,025

27,384

5.08

Total interest-earning assets

21,317,308

689,833

4.32

20,954,244

605,511

3.86

Non-interest-earning assets

1,157,155

952,378

Total assets

22,474,463

21,906,622

Interest-bearing liabilities:

Deposits:

Savings

1,402,050

1,609

0.15

1,570,803

172

0.01

Interest checking

4,012,872

30,442

1.01

4,177,492

17,155

0.55

Money market

5,118,366

104,512

2.73

4,979,820

74,612

2.00

Time deposits

3,029,125

109,702

4.84

2,184,631

66,747

4.08

Total interest-bearing deposits

13,562,413

246,265

2.43

12,912,746

158,686

1.64

Borrowings

63,334

1,336

2.82

478,347

17,025

4.76

Total interest-bearing liabilities

13,625,747

247,601

2.43

13,391,093

175,711

1.75

Demand deposit accounts

5,168,176

5,469,593

Other noninterest-bearing liabilities

537,418

512,546

Total liabilities

19,331,341

19,373,232

Shareholders' equity

3,143,122

2,533,390

Total liabilities and shareholders' equity

22,474,463

21,906,622

Net interest income - FTE

442,232

429,800

Net interest rate spread (2)

1.89

2.11

Net interest-earning assets (3)

7,691,561

7,563,151

Net interest margin - FTE (4)

2.77

2.74

(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.

(5) Presented on an annualized basis.

EASTERN BANKSHARES, INC.

ASSET QUALITY - NON-PERFORMING ASSETS (1)

As of

Sep 30, 2024

Jun 30, 2024

Mar 31, 2024

Dec 31, 2023

Sep 30, 2023

(Unaudited, dollars in thousands)

Non-accrual loans:

Commercial

105,099

26,139

40,986

35,107

31,703

Residential

10,450

6,789

6,697

8,725

8,075

Consumer

8,954

6,843

9,490

8,725

7,687

Total non-accrual loans

124,503

39,771

57,173

52,557

47,465

Total accruing loans past due 90 days or more:

—

Total non-performing loans

124,503

39,771

57,173

52,557

47,465

Other real estate owned

—

Other non-performing assets:

—

Total non-performing assets (1)

124,503

39,771

57,173

52,557

47,465

Total non-performing loans to total loans

0.70

0.28

0.41

0.38

0.34

Total non-performing assets to total assets

0.49

0.19

0.27

0.25

0.22

(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.

EASTERN BANKSHARES, INC.

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

Three months ended

Sep 30, 2024

Jun 30, 2024

Mar 31, 2024

Dec 31, 2023

Sep 30, 2023

(Unaudited, dollars in thousands)

Average total loans

17,274,903

14,113,343

14,013,714

13,961,061

13,926,194

Allowance for loan losses, beginning of the period

156,146

149,190

148,993

155,146

147,955

Charged-off loans:

Commercial and industrial

—

Commercial real estate

4,520

—

7,250

8,008

—

Commercial construction

—

Business banking

675

1,002

102

3,745

303

Residential real estate

—

Consumer home equity

—

Other consumer

561

658

651

536

731

Total charged-off loans

5,774

1,692

8,015

12,291

1,045

Recoveries on loans previously charged-off:

Commercial and industrial

120

Commercial real estate

2,011

132

190

Commercial construction

—

Business banking

319

199

410

573

609

Residential real estate

Consumer home equity

—

Other consumer

166

138

163

131

108

Total recoveries

636

2,522

761

940

908

Net loans charged-off (recovered):

Commercial and industrial

)

(56

)

(25

)

(109

)

Commercial real estate

4,456

(2,011

)

7,118

7,818

)

Commercial construction

—

Business banking

356

803

(308

)

3,172

(306

)

Residential real estate

(43

)

(27

)

(21

)

(34

)

(30

)

Consumer home equity

(19

)

(59

)

(39

)

Other consumer

395

520

488

405

623

Total net loans charged-off (recovered)

5,138

(830

)

7,254

11,351

137

Initial allowance established for Cambridge's PCD loans

55,830

—

Provision for allowance for loan losses (2)

46,983

6,126

7,451

5,198

7,328

Total allowance for loan losses, end of period

253,821

156,146

149,190

148,993

155,146

Net charge-offs (recoveries) to average total loans outstanding during this period (1)

0.12

(0.02

0.21

0.32

0.00

Allowance for loan losses as a percent of total loans

1.43

1.11

1.06

1.07

1.12

Allowance for loan losses as a percent of nonperforming loans

203.87

392.61

260.94

283.49

326.86

(1) Presented on an annualized basis.

(2) Includes the initial provision on non-PCD loans acquired from Cambridge.

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)

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

38,647

31,509

63,464

Add:

Provision for non-PCD acquired loans

40,899

—

Noninterest income components:

(Income) losses from investments held in rabbi trusts

(3,591

)

(1,761

)

(4,318

)

(4,969

)

1,523

Losses on sales of securities available for sale, net

—

7,557

—

Losses (gains) on sales of other assets

2,970

—

)

Noninterest expense components:

Rabbi trust employee benefit expense (income)

1,326

930

1,746

1,740

(586

)

Merger and acquisition expenses

27,577

3,684

1,816

1,865

3,630

Total impact of non-GAAP adjustments

69,181

10,412

(756

)

(1,364

)

4,565

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

13,328

224

(190

)

13,270

15,944

Non-GAAP adjustments, net of tax

55,853

10,188

(566

)

(14,634

)

(11,379

)

Operating net income (non-GAAP)

49,665

36,519

38,081

16,875

52,085

Weighted average common shares outstanding during the period:

Basic

196,700,222

163,145,255

162,863,540

162,571,066

162,370,469

Diluted

197,706,644

163,499,296

163,188,410

162,724,398

162,469,887

(Loss) earnings per share from continuing operations, basic:

(0.03

)

0.16

0.24

0.19

0.39

(Loss) earnings per share from continuing operations, diluted:

(0.03

)

0.16

0.24

0.19

0.39

Operating earnings per share, basic (non-GAAP)

0.25

0.22

0.23

0.10

0.32

Operating earnings per share, diluted (non-GAAP)

0.25

0.22

0.23

0.10

0.32

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

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

(0.06

(0.03

(0.08

(0.09

0.03

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

0.00

0.14

0.00

Losses (gains) on sales of other assets (3)

0.05

0.00

Rabbi trust employee benefit expense (income) (3)

0.02

0.03

(0.01

Merger and acquisition expenses (3)

0.44

0.07

0.03

0.07

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

0.21

0.00

0.25

0.30

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

0.79

0.70

0.72

0.31

0.97

Return on average shareholders' equity (3)

(0.70

3.62

5.23

4.66

9.91

Add:

Provision for non-PCD acquired loans (3)

4.61

0.00

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

(0.41

(0.24

(0.58

(0.73

0.24

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

0.00

1.04

0.00

Losses (gains) on sales of other assets (3)

0.34

0.00

Rabbi trust employee benefit expense (income) (3)

0.15

0.13

0.24

0.26

(0.09

Merger and acquisition expenses (3)

3.11

0.51

0.25

0.28

0.57

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

1.50

0.03

(0.03

1.96

2.49

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

5.60

5.03

5.17

2.51

8.14

Tangible net income

Net (loss) income (GAAP)

(6,188

)

26,331

38,647

31,509

63,464

Add: Amortization of intangible assets

6,210

504

505

504

Less: Tax effect of amortization of intangible assets (4)

1,720

140

142

Tangible net (loss) income (non-GAAP) (5)

(1,698

)

26,695

39,011

31,874

63,826

Average tangible shareholders' equity:

Average total shareholders' equity (GAAP)

3,526,294

2,928,101

2,970,759

2,682,600

2,539,806

Less: Average goodwill and other intangibles

974,546

565,523

566,027

597,234

658,591

Average tangible shareholders' equity (non-GAAP)

2,551,748

2,362,578

2,404,732

2,085,366

1,881,215

Return on average tangible shareholders' equity (non-GAAP) (3) (5)

(0.26

4.54

6.52

6.06

13.46

Add:

Provision for non-PCD acquired loans (3)

6.38

0.00

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

(0.56

(0.30

(0.72

(0.95

0.32

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

0.00

1.29

0.00

Losses (gains) on sales of other assets (3)

0.46

0.00

Rabbi trust employee benefit expense (income) (3)

0.21

0.16

0.29

0.33

(0.12

Merger and acquisition expenses (3)

4.30

0.63

0.30

0.35

0.77

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

2.08

0.04

(0.03

2.52

3.36

Operating return on average tangible shareholders' equity (non-GAAP) (3) (5)

8.45

6.28

6.42

3.27

11.07

(1) Average assets, average goodwill and other intangibles, and average tangible shareholders' equity components for the three months ended Sep 30, 2023 and Dec 31, 2023 presented in this section 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. 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.

(4) The tax effect of amortization of intangible assets is calculated using the Company's combined statutory tax rate of 27.7% for the three months ended Dec 31, 2023 and the following periods, and 28.23% for the three months ended Sep 30, 2023.

(5) The tangible net income (loss), return on average tangible shareholders' equity ratio and operating return on average tangible shareholders' equity ratio exclude the amortization of intangible assets, net of tax.

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

Sep 30, 2024

Jun 30, 2024

Mar 31, 2024

Dec 31, 2023

Sep 30, 2023

(Unaudited, dollars in thousands)

Net interest income (GAAP)

169,855

128,649

129,900

133,307

137,205

Add:

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

4,792

4,553

4,483

4,376

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

174,647

133,202

134,383

137,790

141,581

Noninterest income (GAAP)

33,528

25,348

27,692

26,739

19,157

Less:

Income (losses) from investments held in rabbi trusts

3,591

1,761

4,318

4,969

(1,523

)

Losses on sales of securities available for sale, net

—

(7,557

)

—

(Losses) gains on sales of other assets

(2,970

)

—

Noninterest income on an operating basis (non-GAAP)

32,907

31,146

23,374

21,770

20,678

Noninterest expense (GAAP)

159,753

109,869

101,202

121,029

101,748

Less:

Rabbi trust employee benefit expense (income)

1,326

930

1,746

1,740

(586

)

Merger and acquisition expenses

27,577

3,684

1,816

1,865

3,630

Noninterest expense on an operating basis (non-GAAP)

130,850

105,255

97,640

117,424

98,704

Less: Amortization of intangible assets

6,210

504

505

504

Noninterest expense for calculating the operating efficiency ratio (non-GAAP) (2)

124,640

104,751

97,136

116,919

98,200

Total revenue (GAAP)

203,383

153,997

157,592

160,046

156,362

Total operating revenue (non-GAAP)

207,554

164,348

157,757

159,560

162,259

Efficiency ratio (GAAP)

78.5

71.3

64.2

75.6

65.1

Operating efficiency ratio (non-GAAP) (2)

60.1

63.7

61.6

73.3

60.5

(1) Interest income on tax-exempt loans and investment securities has been adjusted to a FTE basis using a marginal tax rate of 21.8%, 21.7%, 21.7%, 21.9%, and 21.7% for the three months ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.

(2) The operating efficiency ratio excludes, in addition to the adjustments made to operating net income, the amortization of intangible assets. This measure is used by the Company when analyzing corporate performance and the Company believes that investors may find it useful.

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

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

2,446,553

Less: Goodwill and other intangibles (1)

1,057,509

565,196

565,701

566,205

657,824

Tangible shareholders' equity (non-GAAP)

2,613,629

2,402,277

2,387,130

2,408,650

1,788,729

Tangible assets:

Total assets (GAAP)

25,507,187

21,044,169

21,174,804

21,133,278

21,146,292

Less: Goodwill and other intangibles (1)

1,057,509

565,196

565,701

566,205

657,824

Tangible assets (non-GAAP)

24,449,678

20,478,973

20,609,103

20,567,073

20,488,468

Shareholders' equity to assets ratio (GAAP)

14.39

14.10

13.95

14.08

11.57

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

10.69

11.73

11.58

11.71

8.73

Common shares outstanding

214,802,602

176,687,829

176,631,477

176,426,993

176,376,675

Book value per share (GAAP)

17.09

16.80

16.72

16.86

13.87

Tangible book value per share (non-GAAP)

12.17

13.60

13.51

13.65

10.14

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

APPENDIX D: 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

)

—

Noninterest expense components:

Salaries and employee benefits

13,147

383

—

Office occupancy and equipment

2,630

—

Data processing

1,384

2,249

865

1,357

—

Professional services

5,490

944

787

450

3,630

Other

4,926

155

—

Total noninterest expense

27,577

3,684

1,816

1,865

3,630

Total merger-related charges

30,546

3,684

1,816

1,865

3,630

(1) Disposal of acquired fixed assets.

APPENDIX E: Organic Loan & Deposit Growth

As of

Organic Growth From:

Sep 30, 2024

Jun 30, 2024

Cambridge Trust Acquired Balance (1)

Jun 30, 2024

(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

5,440,411

1,692,705

41,745

0.6

Commercial construction

513,519

447,157

141,420

(75,058

)

(12.8

Business banking

1,321,179

1,108,163

120,454

92,562

7.5

Total commercial loans

12,349,588

10,079,917

2,294,160

(24,489

)

(0.2

Residential real estate

4,080,736

2,562,808

1,528,534

(10,606

)

(0.3

Consumer home equity

1,361,971

1,254,105

87,785

20,081

1.5

Other consumer

271,831

248,690

24,196

(1,055

)

(0.4

Total loans

18,064,126

14,145,520

3,934,675

(16,069

)

(0.1

Deposits:

Demand

5,856,171

4,808,938

979,895

67,338

1.2

Interest checking accounts

4,562,226

3,532,811

1,149,097

(119,682

)

(2.6

Savings accounts

1,681,093

1,238,009

471,340

(28,256

)

(1.7

Money market investment

5,572,277

5,014,900

854,614

(297,237

)

(5.1

Certificates of deposit

3,545,087

2,943,151

418,771

183,165

5.4

Total deposits

21,216,854

17,537,809

3,873,717

(194,672

)

(0.9

(1) For loans, represents the unpaid principal balance of Cambridge acquired loans at time of merger. For deposits, represents the book value of Cambridge acquired deposits at time of merger, except for time deposits which are shown at fair value.

APPENDIX F: 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

Sep 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

)

(130,295

)

1,218

Retained earnings

2,048,042

2,076,566

(28,524

)

AOCI, net of tax - available for sale securities

(490,698

)

(612,196

)

121,498

AOCI, net of tax - pension

5,914

6,430

(516

)

AOCI, net of tax - cash flow hedge

(11,327

)

(48,524

)

37,197

Total shareholders' equity:

3,671,138

2,967,473

703,665

Less: Goodwill and other intangibles

1,057,509

565,196

492,313

Tangible shareholders' equity (non-GAAP)

2,613,629

2,402,277

211,352

Common shares outstanding

214,802,602

176,687,829

38,114,773

Per share:

Common stock

0.01

—

Additional paid in capital

10.46

9.47

0.98

Unallocated ESOP common stock

(0.60

)

(0.74

)

0.14

Retained earnings

9.53

11.75

(2.22

)

AOCI, net of tax - available for sale securities

(2.28

)

(3.46

)

1.18

AOCI, net of tax - pension

0.03

0.04

(0.01

)

AOCI, net of tax - cash flow hedge

(0.05

)

(0.27

)

0.22

Total shareholders' equity:

17.09

16.80

0.30

Less: Goodwill and other intangibles

4.92

3.20

1.72

Tangible shareholders' equity (non-GAAP)

12.17

13.60

(1.43

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20241024681054/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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