8-K
Eastern Bankshares, Inc. (EBC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 28, 2021
EASTERN BANKSHARES, INC.
(Exact Name of Registrant as Specified in Charter)
| Massachusetts | 001-39610 | 84-4199750 | |||||
|---|---|---|---|---|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation or Organization) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) | 265 Franklin Street | 02110 | |||
| --- | --- | --- | --- | ||||
| Boston | , | MA | |||||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (800) 327-8376
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br>on which registered |
|---|---|---|
| Common Stock | EBC | Nasdaq Global Select Market |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 28, 2021, Eastern Bankshares, Inc., a Massachusetts corporation (the “Company”) and the stock holding company for Eastern Bank, issued a press release in which it announced its earnings for the quarter ended September 30, 2021. A copy of the press release is furnished herewith as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
In the press release announcing the Company's earnings for the quarter ended September 30, 2021, the Company announced the approval by its Board of Directors of a regular quarterly cash dividend of $0.08 per share payable on December 15, 2021 to shareholders of record on December 3, 2021.
In connection with issuing such press release, the Company posted an investor presentation in the “Presentations” section of the Company’s investor relations website at investor.easternbank.com on October 28, 2021. A copy of the presentation is furnished herewith as Exhibit 99.2.
Item 8.01 Other Events.
In the press release announcing the Company's earnings for the quarter ended September 30, 2021, the Company also announced that its Board of Directors has approved a share repurchase program that authorizes the Company to purchase up to 9,337,900 shares, or 5% of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent on the non-objection from the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company’s request for non-objection is pending. The Company is unable to predict whether the Federal Reserve will permit the Company to implement the proposed repurchase program in whole or part, whether the Federal Reserve will impose one or more related conditions on the Company, or the timing of such non-objection, if granted. Assuming receipt of approval or non-objection from the Federal Reserve, the Company does not expect the share repurchases to begin before December 2021.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | Press release dated October 28, 2021 |
| 99.2 | Presentation titled "Q3 Earnings Presentation" dated October 28, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| EASTERN BANKSHARES, INC. | ||
|---|---|---|
| DATE: October 28, 2021 | By: | /s/ James B. Fitzgerald |
| James B. Fitzgerald | ||
| Chief Financial Officer |
Document
Exhibit 99.1
Eastern Bankshares, Inc. Reports Third Quarter 2021 Financial Results
Company Announces Intent to Adopt Share Repurchase Program and Declares Quarterly Cash Dividend
BOSTON, October 28, 2021 (BUSINESS WIRE) — Eastern Bankshares, Inc. (the “Company,” or together with its affiliates and subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2021 third quarter financial results, the declaration of a quarterly cash dividend of $0.08 per share, and the intent to adopt a share repurchase program. Net income for the third quarter of 2021 was $37.1 million, or $0.22 per share, compared to net income of $34.8 million, or $0.20 per share, reported for the second quarter of 2021. Operating net income* for the third quarter of 2021 was $37.4 million, or $0.22 per share, compared to $37.1 million, or $0.22 per share, reported for the prior quarter.
“Our third quarter financial results continue to demonstrate strong financial performance, and as the economy continues to recover from the pandemic, we remain optimistic about our future and long-term profitability,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “In the third quarter, we saw strong loan growth of $175 million excluding PPP loans, or a growth rate of over 8% on an annualized basis, while continuing to demonstrate strong asset quality. As we look to the future, there’s much to be excited about. We believe the combination with Century will solidify our position as the leading community bank here in Boston, and we look forward to continuing the high level of service that Century customers have come to expect. We are especially appreciative of the tremendous commitment our employees have demonstrated to our customers and the communities we serve, and thank them for their extraordinary efforts as our two organizations combine to become one.”
The Company also announced that its Board of Directors has approved a share repurchase program to purchase up to 9,337,900 shares, which represents 5% of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent on receipt of approval or non-objection from the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company’s request for non-objection is pending. Assuming receipt of approval or non-objection from the Federal Reserve, the Company does not expect the share repurchases to begin before December 2021.
Rivers continued, “We remain committed to a thoughtful and holistic capital management strategy to deliver value for our shareholders. Our Board’s approval of a share repurchase program, together with our regular quarterly dividends, demonstrates our ability to continue to drive growth and effectively deploy capital while creating shareholder value.”
HIGHLIGHTS FOR THE THIRD QUARTER OF 2021
•Operating net income* was $37.4 million in the third quarter, compared to $37.1 million in the prior quarter, and represented a 16% increase from the prior year quarter.
•Loans, excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, grew $175.3 million, or 8% on an annualized basis from the prior quarter. Commercial loans, excluding PPP loans, and residential loans each grew 9% on an annualized basis from the prior quarter.
•An improving economic outlook coupled with strong asset quality led to a $1.5 million release of loan loss reserves. Nonperforming loans were $42.1 million, or 0.44% of total loans, at the end of the third quarter compared to $41.7 million, or 0.43% of total loans, at the end of the second quarter.
BALANCE SHEET
Total assets were $17.5 billion at September 30, 2021, representing an increase of $413.8 million, or 2%, from June 30, 2021.
•Available for sale securities increased $840.5 million, or 17%, on a consecutive quarter basis, to $5.7 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined $312.5 million to $1.3 billion.
•Total loans were $9.5 billion, representing a decrease of $116.5 million, or 1%, as PPP loan forgiveness outpaced new loan originations in the third quarter. Excluding PPP loans, total loans grew $175.3 million, or 2%, from the prior quarter, driven by growth in commercial loans, excluding PPP loans, of $143.9 million and in residential loans of $33.8 million.
•Deposits totaled $13.6 billion, representing an increase of $399.5 million, or 3%, from June 30, 2021.
•Shareholders’ equity was $3.4 billion, representing a decrease of $1.3 million from the prior quarter. The increase in retained earnings of $23.3 million was more than offset by the decrease in accumulated other comprehensive income of $26.8 million driven by a decrease in the market value of the available for sale investment portfolio.
•At September 30, 2021, book value per share was $18.36 and tangible book value per share* was $16.33.
NET INTEREST INCOME
Net interest income was $102.7 million for the third quarter, compared to $104.6 million in the prior quarter, representing a decrease of $1.9 million on a consecutive quarter basis.
•Included in net interest income was $5.9 million and $9.3 million of SBA PPP fee accretion net of deferred cost amortization in the third quarter and prior quarter, respectively. During the third quarter, $291.8 million in PPP loans were forgiven by the SBA or otherwise paid down compared to $502.9 million in the prior quarter.
•Interest income on available for sale securities increased $1.8 million to $16.2 million in the third quarter as excess cash continued to be deployed into securities. Investment securities averaged $5.2 billion for the third quarter compared to $4.3 billion for the prior quarter, an increase of $905.1 million.
•The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.53% for the third quarter, representing a 16 basis points decrease from the prior quarter. The net interest margin continued to be pressured by the low interest rate environment and excess liquidity. The core net interest margin* in Appendix E demonstrates the impact of excess cash and the PPP program.
NONINTEREST INCOME
Noninterest income was $43.2 million for the third quarter, compared to $45.7 million for the prior quarter, representing a decrease of $2.5 million. Noninterest income on an operating basis* was $43.0 million for the third quarter, compared to $41.5 million for the prior quarter, an increase of $1.5 million.
•Insurance commissions decreased $1.7 million to $22.0 million in the third quarter, compared to $23.7 million in the prior quarter.
•Trust and investment advisory fees increased $0.2 million on a consecutive quarter basis to $6.3 million.
•Loan-level interest rate swap income was $0.9 million in the third quarter, compared to losses of $1.2 million in the prior quarter, representing an increase of $2.0 million that was driven by an increase in the fair value of such interest rate swap transactions due to higher market interest rates.
•Losses on securities held in rabbi trust accounts were $0.3 million in the third quarter compared to income of $4.2 million in the prior quarter, representing a decrease of $4.5 million primarily due to weaker investment performance in the period as compared to the prior quarter.
•The gain on sale of loans held for sale totaled $0.7 million, down $0.1 million from the prior quarter.
•Other noninterest income increased $1.5 million in the third quarter, in part due to a $0.5 million gain on a bank owned life insurance policy, combined with other higher miscellaneous income.
Please refer to Appendix B for a reconciliation of operating revenues and expenses*.
NONINTEREST EXPENSE
Noninterest expense was $99.0 million for the third quarter representing a decrease of $8.4 million, primarily driven by lower non-operating expenses* in the third quarter of $5.7 million. Noninterest expense on an operating basis* for the third quarter of 2021 was $97.2 million, compared to $99.9 million in the prior quarter.
•Salaries and employee benefits expense was $66.2 million in the third quarter, representing a decrease of $3.0 million from the prior quarter. The decrease was primarily driven by the Company’s lower benefits expense which was $4.5 million lower than the prior quarter. The decrease in benefits expense was attributable to the decreased market value of investments held in rabbi trust accounts by the Company’s defined contribution supplemental executive retirement plan (“DC SERP”).
•Data processing expense was $12.2 million in the third quarter, a decrease of $1.4 million from the prior quarter. Professional services expense was $4.0 million, a decrease of $2.4 million from the prior quarter. These decreases were primarily attributed to lower costs associated with the pending acquisition of Century compared with such expenses in the prior quarter.
•Marketing expenses were $1.6 million in the third quarter, representing a decrease of $1.9 million from the prior quarter primarily due to a decrease in advertising expense of $1.4 million.
•Other noninterest expense increased $0.7 million in the third quarter to $3.7 million.
Please refer to Appendix B for a reconciliation of operating revenues and expenses*.
ASSET QUALITY
The allowance for loan losses was $103.4 million at September 30, 2021, or 1.09% of total loans, compared to $105.6 million or 1.10% of total loans at June 30, 2021. The Company released loan loss reserves totaling $1.5 million in the third quarter, compared to a release of $3.3 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at September 30, 2021 and all preceding periods.
Non-performing loans totaled $42.1 million at September 30, 2021 compared to $41.6 million at the end of the prior quarter. During the third quarter of 2021, the Company recorded total net charge-offs of $0.8 million, or 0.03% of average total loans on an annualized basis compared to $2.1 million and 0.09% in the prior quarter, respectively.
At September 30, 2021, approximately $110.6 million in COVID-19 modified loans remained under modified payment terms, down from $149.8 million at June 30, 2021. The commercial real estate portfolio contained $92.4 million of the remaining COVID-19 modifications at period end, of which $71.5 million or 77% were in the hotel segment.
Please refer to Appendix F for a detailed breakout on COVID-19 related loan modifications.
DIVIDENDS AND SHARE REPURCHASES
The Company’s Board of Directors declared a quarterly cash dividend of $0.08 per common share, payable on December 15, 2021, to shareholders of record as of the close of business on December 3, 2021.
The Company also announced that its Board of Directors has approved a share repurchase program to purchase up to 9,337,900 shares, which represents 5% of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent on receipt of approval or non-objection from the Federal Reserve. The Company’s request for non-objection is pending. The Company is unable to predict whether the Federal Reserve will permit the Company to implement the proposed repurchase program in whole or part, whether the Federal Reserve will impose one or more related conditions on the Company, or the timing of such non-objection, if granted. Assuming receipt of approval or non-objection from the Federal Reserve, the Company does not expect the share repurchases to begin before December 2021.
Under the authorization, share repurchases may occur in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchases will be made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and the Company’s financial performance. Repurchases under this authorization may be suspended, terminated or modified by the Company at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate by management in its discretion. There can be no assurance that the Company will receive the required approval or non-objection for its proposed share repurchase program. The Company is not obligated to repurchase any particular number of shares even if regulatory approval or non-objection is obtained. The proposed repurchase program would be authorized through November 30, 2022, although it may be modified or terminated by the Board of Directors at any time.
CONFERENCE CALL INFORMATION
A conference call and webcast covering Eastern’s third quarter 2021 earnings will be held on Friday, October 29, 2021 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (833) 233-4460 from within the U.S. or (647) 689-4543 if outside the U.S. and reference conference ID 1389147. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website 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 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of September 30, 2021, Eastern Bank had approximately $17 billion in total assets. Eastern provides banking, investment and insurance products and services for consumers and businesses of all sizes, including through its Eastern Wealth Management division and its Eastern Insurance Group LLC subsidiary. Eastern takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern employs approximately 1,900 deeply committed professionals who value relationships with their customers, colleagues, and communities. For investor information, visit investor.easternbank.com.
CONTACT
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
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 businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.
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, the operating efficiency ratio, and the ratio of noninterest income to total revenue on an operating basis. 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) expenses indirectly associated with the Company’s initial public offering (“IPO”), (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (“EBF”, formerly known as the Eastern Bank Charitable Foundation) in connection with the Company’s mutual-to-stock conversion and IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. 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 the Company’s core net interest margin which excludes the impact of items management determines as being one-time in nature or not indicative of its core operating results. Such items include the impact of excess liquidity in the form of excess cash volume, PPP loans originated in response to the COVID-19 pandemic, and material purchase accounting adjustments. Similarly, management presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolios. These metrics include the ratio of total nonperforming loans to total loans excluding PPP loans, the ratio of the allowance for loan losses to total loans excluding
PPP loans, and the ratio of annualized net charge-offs to average total loans excluding PPP loans. The Company anticipates that the vast majority of its PPP loans outstanding at September 30, 2021 will be forgiven, and to the extent not forgiven, a PPP loan is intended to be 100% guaranteed by the SBA.
Management also presents tangible assets, tangible shareholders’ equity, tangible book value per share, and the ratio of tangible shareholders’ equity to tangible assets, 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” 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 developments in the Company’s market relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown, 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 the interest rate environment, risks associated with its pending merger with Century, including the possibility that revenue or expense synergies or the other expected benefits of the transaction may not materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, the Company’s or Century’s businesses may not perform as expected due to transaction-related uncertainty or other factors; that the Company is unable to successfully implement integration strategies; that closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies’ customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; and diversion of management time on merger-related issues, as well as general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including inflation, interest rates, interest rate sensitivity and liquidity, 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 fluctuations due to actual or anticipated changes to federal tax laws; credit quality, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; the failure to obtain the approval or non-objection of the Federal Reserve for the initiation of share repurchases, delays in obtaining such approval or non-objection, or adverse conditions imposed in connection with such approval or non-objection; 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.
Further, given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's
products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely. 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. 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 amounts) | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||||||||||
| Earnings data | |||||||||||||||
| Net interest income | $ | 102,691 | $ | 104,608 | $ | 100,091 | $ | 103,608 | $ | 98,742 | |||||
| Noninterest income | 43,209 | 45,733 | 55,212 | 49,638 | 47,709 | ||||||||||
| Total revenue | 145,900 | 150,341 | 155,303 | 153,246 | 146,451 | ||||||||||
| Noninterest expense | 98,970 | 107,335 | 94,049 | 199,169 | 109,817 | ||||||||||
| Pre-tax, pre-provision income (loss) | 46,930 | 43,006 | 61,254 | (45,923) | 36,634 | ||||||||||
| (Release of) provision for allowance for loan losses | (1,488) | (3,300) | (580) | 900 | 700 | ||||||||||
| Pre-tax income (loss) | 48,418 | 46,306 | 61,834 | (46,823) | 35,934 | ||||||||||
| Net income (loss) | 37,106 | 34,809 | 47,663 | (44,062) | 28,505 | ||||||||||
| Operating net income (non-GAAP) | 37,391 | 37,097 | 46,537 | 31,612 | 32,322 | ||||||||||
| Per-share data | |||||||||||||||
| Earnings (loss) per share | $ | 0.22 | $ | 0.20 | $ | 0.28 | $ | (0.26) | n.a. | ||||||
| Operating earnings per share (non-GAAP) | $ | 0.22 | $ | 0.22 | $ | 0.27 | $ | 0.18 | n.a. | ||||||
| Book value per share | $ | 18.36 | $ | 18.37 | $ | 18.14 | $ | 18.36 | n.a. | ||||||
| Tangible book value per share (non-GAAP) | $ | 16.33 | $ | 16.33 | $ | 16.12 | $ | 16.34 | n.a. | ||||||
| Profitability | |||||||||||||||
| Return on average assets (1) | 0.84 | % | 0.83 | % | 1.19 | % | (1.11) | % | 0.80 | % | |||||
| Operating return on average assets (non-GAAP) (1) | 0.86 | % | 0.89 | % | 1.15 | % | 0.79 | % | 0.90 | % | |||||
| Return on average shareholders' equity (1) | 4.27 | % | 4.10 | % | 5.66 | % | (5.61) | % | 6.65 | % | |||||
| Operating return on average shareholders' equity (non-GAAP) (1) | 4.30 | % | 4.36 | % | 5.53 | % | 4.02 | % | 7.54 | % | |||||
| Net interest margin (FTE) (1) | 2.53 | % | 2.69 | % | 2.71 | % | 2.84 | % | 3.04 | % | |||||
| Cost of deposits (1) | 0.02 | % | 0.03 | % | 0.03 | % | 0.03 | % | 0.06 | % | |||||
| Fee income ratio | 29.62 | % | 30.42 | % | 35.55 | % | 32.39 | % | 32.58 | % | |||||
| Efficiency ratio | 67.83 | % | 71.39 | % | 60.56 | % | 129.97 | % | 74.99 | % | |||||
| Operating efficiency ratio (non-GAAP) | 66.14 | % | 67.78 | % | 60.22 | % | 68.33 | % | 69.95 | % | |||||
| Balance Sheet (end of period) | |||||||||||||||
| Total assets | $ | 17,461,223 | $ | 17,047,453 | $ | 16,726,795 | $ | 15,964,190 | $ | 15,460,594 | |||||
| Total loans | 9,504,562 | 9,621,075 | 9,916,475 | 9,730,525 | 9,944,241 | ||||||||||
| Total deposits | 13,649,964 | 13,250,433 | 12,980,875 | 12,155,784 | 13,332,585 | ||||||||||
| Total loans / total deposits | 70 | % | 73 | % | 76 | % | 80 | % | 75 | % | |||||
| PPP loans | $ | 533,965 | $ | 825,784 | $ | 1,238,053 | $ | 1,026,117 | $ | 1,123,493 | |||||
| Asset quality | |||||||||||||||
| Allowance for loan losses ("ALLL") | $ | 103,398 | $ | 105,637 | $ | 111,080 | $ | 113,031 | $ | 115,432 | |||||
| ALLL / total nonperforming loans ("NPLs") | 245.77 | % | 253.74 | % | 252.72 | % | 261.33 | % | 257.47 | % | |||||
| Total NPLs / total loans | 0.44 | % | 0.43 | % | 0.44 | % | 0.45 | % | 0.45 | % | |||||
| Total NPLs / total loans (excl. PPP loans) (non-GAAP) | 0.47 | % | 0.47 | % | 0.51 | % | 0.50 | % | 0.51 | % | |||||
| Net charge-offs (NCOs) / average total loans (1) | 0.03 | % | 0.09 | % | 0.06 | % | 0.13 | % | 0.08 | % | |||||
| NCOs / average total loans (excl. PPP loans) (non-GAAP) (1) | 0.03 | % | 0.10 | % | 0.06 | % | 0.15 | % | 0.09 | % | |||||
| Remaining COVID-19 loan modifications (2) | $ | 110,596 | $ | 149,805 | $ | 178,430 | $ | 332,682 | $ | 701,227 | |||||
| Capital adequacy | |||||||||||||||
| Shareholders' equity / assets | 19.64 | % | 20.12 | % | 20.25 | % | 21.47 | % | 11.08 | % | |||||
| Tangible shareholders' equity / tangible assets (non-GAAP) | 17.85 | % | 18.30 | % | 18.42 | % | 19.58 | % | 8.87 | % | |||||
| (1) Presented on an annualized basis. | |||||||||||||||
| (2) See Appendix F: COVID-19 Related Loan Modifications |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of | Sep 30, 2021 change from | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands) | Sep 30, 2021 | Jun 30, 2021 | Sep 30, 2020 | Jun 30, 2021 | Sep 30, 2020 | |||||||
| ASSETS | △ $ | △ % | △ $ | △ % | ||||||||
| Cash and due from banks | $ | 78,805 | $ | 58,490 | $ | 69,051 | 20,315 | 35 | % | 9,754 | 14 | % |
| Short-term investments | 1,172,956 | 1,505,757 | 2,259,033 | (332,801) | (22) | % | (1,086,077) | (48) | % | |||
| Cash and cash equivalents | 1,251,761 | 1,564,247 | 2,328,084 | (312,486) | (20) | % | (1,076,323) | (46) | % | |||
| Available for sale securities | 5,689,312 | 4,848,781 | 2,207,672 | 840,531 | 17 | % | 3,481,640 | 158 | % | |||
| Total securities | 5,689,312 | 4,848,781 | 2,207,672 | 840,531 | 17 | % | 3,481,640 | 158 | % | |||
| Loans held for sale | 1,757 | 2,734 | 4,649 | (977) | (36) | % | (2,892) | (62) | % | |||
| Loans: | ||||||||||||
| Commercial and industrial | 1,652,447 | 1,740,679 | 2,177,216 | (88,232) | (5) | % | (524,769) | (24) | % | |||
| Commercial real estate | 3,825,186 | 3,775,771 | 3,652,312 | 49,415 | 1 | % | 172,874 | 5 | % | |||
| Commercial construction | 243,146 | 237,927 | 297,508 | 5,219 | 2 | % | (54,362) | (18) | % | |||
| Business banking | 1,225,538 | 1,339,852 | 1,251,573 | (114,314) | (9) | % | (26,035) | (2) | % | |||
| Total commercial loans | 6,946,317 | 7,094,229 | 7,378,609 | (147,912) | (2) | % | (432,292) | (6) | % | |||
| Residential real estate | 1,491,269 | 1,457,498 | 1,373,237 | 33,771 | 2 | % | 118,032 | 9 | % | |||
| Consumer home equity | 848,570 | 834,938 | 890,771 | 13,632 | 2 | % | (42,201) | (5) | % | |||
| Other consumer | 218,406 | 234,410 | 301,624 | (16,004) | (7) | % | (83,218) | (28) | % | |||
| Total loans | 9,504,562 | 9,621,075 | 9,944,241 | (116,513) | (1) | % | (439,679) | (4) | % | |||
| Allowance for loan losses | (103,398) | (105,637) | (115,432) | 2,239 | (2) | % | 12,034 | (10) | % | |||
| Unamortized prem./disc. and def. fees | (23,104) | (29,739) | (32,747) | 6,635 | (22) | % | 9,643 | (29) | % | |||
| Net loans | 9,378,060 | 9,485,699 | 9,796,062 | (107,639) | (1) | % | (418,002) | (4) | % | |||
| Federal Home Loan Bank stock, at cost | 10,601 | 10,601 | 8,805 | — | — | % | 1,796 | 20 | % | |||
| Premises and equipment | 44,048 | 44,733 | 50,539 | (685) | (2) | % | (6,491) | (13) | % | |||
| Bank-owned life insurance | 79,259 | 79,634 | 78,058 | (375) | — | % | 1,201 | 2 | % | |||
| Goodwill and other intangibles, net | 379,772 | 380,402 | 375,632 | (630) | — | % | 4,140 | 1 | % | |||
| Deferred income taxes, net | 34,135 | 26,161 | 19,925 | 7,974 | 30 | % | 14,210 | 71 | % | |||
| Prepaid expenses | 148,180 | 145,941 | 92,473 | 2,239 | 2 | % | 55,707 | 60 | % | |||
| Other assets | 444,338 | 458,520 | 498,695 | (14,182) | (3) | % | (54,357) | (11) | % | |||
| Total assets | 17,461,223 | 17,047,453 | 15,460,594 | 413,770 | 2 | % | 2,000,629 | 13 | % | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Demand | 5,484,126 | 5,399,297 | 6,312,479 | 84,829 | 2 | % | (828,353) | (13) | % | |||
| Interest checking accounts | 2,693,276 | 2,656,610 | 2,207,266 | 36,666 | 1 | % | 486,010 | 22 | % | |||
| Savings accounts | 1,444,928 | 1,403,472 | 1,217,898 | 41,456 | 3 | % | 227,030 | 19 | % | |||
| Money market investment | 3,802,319 | 3,544,897 | 3,315,198 | 257,422 | 7 | % | 487,121 | 15 | % | |||
| Certificates of deposit | 225,315 | 246,157 | 279,744 | (20,842) | (8) | % | (54,429) | (19) | % | |||
| Total deposits | 13,649,964 | 13,250,433 | 13,332,585 | 399,531 | 3 | % | 317,379 | 2 | % | |||
| Borrowed funds: | ||||||||||||
| Federal Home Loan Bank advances | 14,172 | 14,323 | 14,773 | (151) | (1) | % | (601) | (4) | % | |||
| Escrow deposits of borrowers | 15,900 | 14,119 | 14,664 | 1,781 | 13 | % | 1,236 | 8 | % | |||
| Total borrowed funds | 30,072 | 28,442 | 29,437 | 1,630 | 6 | % | 635 | 2 | % | |||
| Other liabilities | 351,895 | 337,956 | 385,200 | 13,939 | 4 | % | (33,305) | (9) | % | |||
| Total liabilities | 14,031,931 | 13,616,831 | 13,747,222 | 415,100 | 3 | % | 284,709 | 2 | % | |||
| Shareholders' equity: | ||||||||||||
| Common shares | 1,868 | 1,868 | — | — | — | % | 1,868 | — | % | |||
| Additional paid-in capital | 1,857,165 | 1,856,241 | — | 924 | — | % | 1,857,165 | — | % | |||
| Unallocated common shares held by the employee stock ownership plan ("ESOP") | (143,966) | (145,219) | — | 1,253 | (1) | % | (143,966) | — | % | |||
| Retained earnings | 1,747,300 | 1,723,979 | 1,709,669 | 23,321 | 1 | % | 37,631 | 2 | % | |||
| Accumulated other comprehensive income ("AOCI"), net of tax | (33,075) | (6,247) | 3,703 | (26,828) | 429 | % | (36,778) | (993) | % | |||
| Total shareholders' equity | 3,429,292 | 3,430,622 | 1,713,372 | (1,330) | — | % | 1,715,920 | 100 | % | |||
| Total liabilities and shareholders' equity | 17,461,223 | 17,047,453 | 15,460,594 | 413,770 | 2 | % | 2,000,629 | 13 | % |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Three months ended | Three months ended Sep 30, 2021 change from three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands, except share data) | Sep 30, 2021 | Jun 30, 2021 | Sep 30, 2020 | Jun 30, 2021 | Sep 30, 2020 | |||||||
| Interest and dividend income: | △ $ | △ % | △ $ | △ % | ||||||||
| Interest and fees on loans | $ | 86,735 | $ | 90,936 | $ | 90,704 | (4,201) | (5) | % | (3,969) | (4) | % |
| Taxable interest and dividends on available for sale securities | 14,314 | 12,457 | 7,554 | 1,857 | 15 | % | 6,760 | 89 | % | |||
| Non-taxable interest and dividends on available for sale securities | 1,848 | 1,857 | 1,883 | (9) | — | % | (35) | (2) | % | |||
| Interest on federal funds sold and other short-term investments | 571 | 431 | 372 | 140 | 32 | % | 199 | 53 | % | |||
| Total interest and dividend income | 103,468 | 105,681 | 100,513 | (2,213) | (2) | % | 2,955 | 3 | % | |||
| Interest expense: | ||||||||||||
| Interest on deposits | 736 | 1,031 | 1,727 | (295) | (29) | % | (991) | (57) | % | |||
| Interest on borrowings | 41 | 42 | 44 | (1) | (2) | % | (3) | (7) | % | |||
| Total interest expense | 777 | 1,073 | 1,771 | (296) | (28) | % | (994) | (56) | % | |||
| Net interest income | 102,691 | 104,608 | 98,742 | (1,917) | (2) | % | 3,949 | 4 | % | |||
| (Release of) provision for allowance for loan losses | (1,488) | (3,300) | 700 | 1,812 | (55) | % | (2,188) | (313) | % | |||
| Net interest income after provision for loan losses | 104,179 | 107,908 | 98,042 | (3,729) | (3) | % | 6,137 | 6 | % | |||
| Noninterest income: | ||||||||||||
| Insurance commissions | 21,956 | 23,664 | 21,884 | (1,708) | (7) | % | 72 | — | % | |||
| Service charges on deposit accounts | 5,935 | 5,708 | 5,052 | 227 | 4 | % | 883 | 17 | % | |||
| Trust and investment advisory fees | 6,310 | 6,074 | 5,311 | 236 | 4 | % | 999 | 19 | % | |||
| Debit card processing fees | 3,030 | 3,170 | 2,721 | (140) | (4) | % | 309 | 11 | % | |||
| Interest rate swap income (losses) | 881 | (1,164) | 1,319 | 2,045 | (176) | % | (438) | (33) | % | |||
| (Losses) income from investments held in rabbi trusts | (289) | 4,216 | 3,800 | (4,505) | (107) | % | (4,089) | (108) | % | |||
| Gains on sales of mortgage loans held for sale, net | 717 | 848 | 2,219 | (131) | (15) | % | (1,502) | (68) | % | |||
| Gains on sales of securities available for sale, net | 1 | 1 | — | — | — | % | 1 | — | % | |||
| Other | 4,668 | 3,216 | 5,403 | 1,452 | 45 | % | (735) | (14) | % | |||
| Total noninterest income | 43,209 | 45,733 | 47,709 | (2,524) | (6) | % | (4,500) | (9) | % | |||
| Noninterest expense: | ||||||||||||
| Salaries and employee benefits | 66,238 | 69,276 | 66,593 | (3,038) | (4) | % | (355) | (1) | % | |||
| Office occupancy and equipment | 7,960 | 8,094 | 8,294 | (134) | (2) | % | (334) | (4) | % | |||
| Data processing | 12,191 | 13,572 | 11,721 | (1,381) | (10) | % | 470 | 4 | % | |||
| Professional services | 4,024 | 6,439 | 5,510 | (2,415) | (38) | % | (1,486) | (27) | % | |||
| Charitable contributions | — | — | — | — | — | % | — | — | % | |||
| Marketing | 1,598 | 3,497 | 1,943 | (1,899) | (54) | % | (345) | (18) | % | |||
| Loan expenses | 1,586 | 1,854 | 1,554 | (268) | (14) | % | 32 | 2 | % | |||
| Federal Deposit Insurance Corporation ("FDIC") insurance | 1,056 | 985 | 938 | 71 | 7 | % | 118 | 13 | % | |||
| Amortization of intangible assets | 629 | 625 | 699 | 4 | 1 | % | (70) | (10) | % | |||
| Other | 3,688 | 2,993 | 12,565 | 695 | 23 | % | (8,877) | (71) | % | |||
| Total noninterest expense | 98,970 | 107,335 | 109,817 | (8,365) | (8) | % | (10,847) | (10) | % | |||
| Income before income tax expense | 48,418 | 46,306 | 35,934 | 2,112 | 5 | % | 12,484 | 35 | % | |||
| Income tax expense | 11,312 | 11,497 | 7,429 | (185) | (2) | % | 3,883 | 52 | % | |||
| Net income | 37,106 | 34,809 | 28,505 | 2,297 | 7 | % | 8,601 | 30 | % | |||
| Share data: | ||||||||||||
| Weighted average common shares outstanding (1) | 172,298,615 | 172,173,707 | n.a. | |||||||||
| Earnings per share | $ | 0.22 | $ | 0.20 | n.a. | |||||||
| (1) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Nine months ended | |||||||
|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands, except share data) | Sep 30, 2021 | Sep 30, 2020 | Change | ||||
| Interest and dividend income: | △ $ | △ % | |||||
| Interest and fees on loans | $ | 266,310 | $ | 278,385 | (12,075) | (4) | % |
| Taxable interest and dividends on available for sale securities | 36,977 | 23,332 | 13,645 | 58 | % | ||
| Non-taxable interest and dividends on available for sale securities | 5,561 | 5,709 | (148) | (3) | % | ||
| Interest on federal funds sold and other short-term investments | 1,434 | 1,173 | 261 | 22 | % | ||
| Interest and dividends on trading securities | — | 6 | (6) | (100) | % | ||
| Total interest and dividend income | 310,282 | 308,605 | 1,677 | 1 | % | ||
| Interest expense: | |||||||
| Interest on deposits | 2,769 | 10,245 | (7,476) | (73) | % | ||
| Interest on borrowings | 123 | 717 | (594) | (83) | % | ||
| Total interest expense | 2,892 | 10,962 | (8,070) | (74) | % | ||
| Net interest income | 307,390 | 297,643 | 9,747 | 3 | % | ||
| (Release of) provision for allowance for loan losses | (5,368) | 37,900 | (43,268) | (114) | % | ||
| Net interest income after provision for loan losses | 312,758 | 259,743 | 53,015 | 20 | % | ||
| Noninterest income: | |||||||
| Insurance commissions | 73,767 | 72,058 | 1,709 | 2 | % | ||
| Service charges on deposit accounts | 17,010 | 15,514 | 1,496 | 10 | % | ||
| Trust and investment advisory fees | 18,047 | 15,600 | 2,447 | 16 | % | ||
| Debit card processing fees | 8,949 | 7,528 | 1,421 | 19 | % | ||
| Interest rate swap income (losses) | 5,122 | (3,919) | 9,041 | (231) | % | ||
| Income from investments held in rabbi trusts | 5,773 | 4,802 | 971 | 20 | % | ||
| Losses on trading securities, net | — | (3) | 3 | (100) | % | ||
| Gains on sales of mortgage loans held for sale, net | 3,044 | 3,732 | (688) | (18) | % | ||
| Gains on sales of securities available for sale, net | 1,166 | 285 | 881 | 309 | % | ||
| Other | 11,276 | 13,138 | (1,862) | (14) | % | ||
| Total noninterest income | 144,154 | 128,735 | 15,419 | 12 | % | ||
| Noninterest expense: | |||||||
| Salaries and employee benefits | 199,554 | 191,517 | 8,037 | 4 | % | ||
| Office occupancy and equipment | 24,271 | 25,598 | (1,327) | (5) | % | ||
| Data processing | 37,892 | 33,905 | 3,987 | 12 | % | ||
| Professional services | 14,611 | 13,595 | 1,016 | 7 | % | ||
| Charitable contributions | — | 3,984 | (3,984) | (100) | % | ||
| Marketing | 6,786 | 6,056 | 730 | 12 | % | ||
| Loan expenses | 5,287 | 4,702 | 585 | 12 | % | ||
| FDIC insurance | 2,989 | 2,788 | 201 | 7 | % | ||
| Amortization of intangible assets | 1,786 | 2,102 | (316) | (15) | % | ||
| Other | 7,178 | 21,507 | (14,329) | (67) | % | ||
| Total noninterest expense | 300,354 | 305,754 | (5,400) | (2) | % | ||
| Income before income tax expense | 156,558 | 82,724 | 73,834 | 89 | % | ||
| Income tax expense | 36,980 | 15,924 | 21,056 | 132 | % | ||
| Net income | 119,578 | 66,800 | 52,778 | 79 | % | ||
| Share data: | |||||||
| Weighted average common shares outstanding (1) | 172,174,469 | n.a. | |||||
| Earnings per share | $ | 0.69 | n.a. | ||||
| (1) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
| As of and for the three months ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Jun 30, 2021 | Sep 30, 2020 | ||||||||||||||||
| (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 | $ | 6,995,556 | $ | 67,276 | 3.82 | % | $ | 7,301,745 | $ | 71,747 | 3.94 | % | $ | 7,314,805 | $ | 69,127 | 3.76 | % |
| Residential | 1,477,891 | 11,479 | 3.08 | % | 1,433,056 | 11,397 | 3.19 | % | 1,390,719 | 12,269 | 3.51 | % | ||||||
| Consumer | 1,055,075 | 8,803 | 3.31 | % | 1,061,900 | 8,597 | 3.25 | % | 1,209,340 | 10,091 | 3.32 | % | ||||||
| Total loans | 9,528,522 | 87,558 | 3.65 | % | 9,796,701 | 91,741 | 3.76 | % | 9,914,864 | 91,487 | 3.67 | % | ||||||
| Investment securities | 5,249,742 | 16,656 | 1.26 | % | 4,344,690 | 14,778 | 1.36 | % | 1,712,928 | 10,007 | 2.32 | % | ||||||
| Federal funds sold and other short-term investments | 1,503,919 | 570 | 0.15 | % | 1,617,741 | 431 | 0.11 | % | 1,462,047 | 372 | 0.10 | % | ||||||
| Total interest-earning assets | 16,282,183 | 104,784 | 2.55 | % | 15,759,132 | 106,950 | 2.72 | % | 13,089,839 | 101,866 | 3.10 | % | ||||||
| Non-interest-earning assets | 1,141,168 | 1,061,121 | 1,139,440 | |||||||||||||||
| Total assets | $ | 17,423,351 | $ | 16,820,253 | $ | 14,229,279 | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Savings | $ | 1,441,385 | $ | 36 | 0.01 | % | $ | 1,385,735 | $ | 69 | 0.02 | % | $ | 1,187,083 | $ | 62 | 0.02 | % |
| Interest checking | 2,687,196 | 244 | 0.04 | % | 2,541,862 | 253 | 0.04 | % | 2,307,972 | 334 | 0.06 | % | ||||||
| Money market | 3,762,855 | 360 | 0.04 | % | 3,523,330 | 605 | 0.07 | % | 3,311,847 | 1,051 | 0.13 | % | ||||||
| Time deposits | 233,145 | 96 | 0.16 | % | 246,801 | 104 | 0.17 | % | 294,025 | 280 | 0.38 | % | ||||||
| Total interest-bearing deposits | 8,124,581 | 736 | 0.04 | % | 7,697,728 | 1,031 | 0.05 | % | 7,100,927 | 1,727 | 0.10 | % | ||||||
| Borrowings | 26,074 | 41 | 0.62 | % | 25,042 | 42 | 0.67 | % | 25,478 | 44 | 0.69 | % | ||||||
| Total interest-bearing liabilities | 8,150,655 | 777 | 0.04 | % | 7,722,770 | 1,073 | 0.06 | % | 7,126,405 | 1,771 | 0.10 | % | ||||||
| Demand deposit accounts | 5,471,906 | 5,355,170 | 5,034,474 | |||||||||||||||
| Other noninterest-bearing liabilities | 350,111 | 335,816 | 362,073 | |||||||||||||||
| Total liabilities | 13,972,672 | 13,413,756 | 12,522,952 | |||||||||||||||
| Shareholders' equity | 3,450,679 | 3,406,497 | 1,706,327 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 17,423,351 | $ | 16,820,253 | $ | 14,229,279 | ||||||||||||
| Net interest income - FTE | $ | 104,007 | $ | 105,877 | $ | 100,095 | ||||||||||||
| Net interest rate spread (2) | 2.51 | % | 2.66 | % | 3.00 | % | ||||||||||||
| Net interest-earning assets (3) | $ | 8,131,528 | $ | 8,036,362 | $ | 5,963,434 | ||||||||||||
| Net interest margin - FTE (4) | 2.53 | % | 2.69 | % | 3.04 | % | ||||||||||||
| (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 represents net interest income divided by average total interest-earning assets. | ||||||||||||||||||
| (5) Presented on an annualized basis. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
| As of and for the nine months ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Sep 30, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | Avg. Balance | Interest | Yield / Cost (5) | Avg. Balance | Interest | Yield / Cost (5) | ||||||
| Interest-earning assets: | ||||||||||||
| Loans (1): | ||||||||||||
| Commercial | $ | 7,203,903 | $ | 208,228 | 3.86 | % | $ | 6,929,729 | $ | 208,534 | 4.02 | % |
| Residential | 1,435,006 | 34,150 | 3.18 | % | 1,412,268 | 38,127 | 3.61 | % | ||||
| Consumer | 1,074,039 | 26,337 | 3.28 | % | 1,261,211 | 34,108 | 3.61 | % | ||||
| Total loans | 9,712,948 | 268,715 | 3.70 | % | 9,603,208 | 280,769 | 3.91 | % | ||||
| Investment securities | 4,414,582 | 44,015 | 1.33 | % | 1,556,985 | 30,782 | 2.64 | % | ||||
| Federal funds sold and other short-term investments | 1,619,873 | 1,434 | 0.12 | % | 952,141 | 1,173 | 0.16 | % | ||||
| Total interest earning assets | 15,747,403 | 314,164 | 2.67 | % | 12,112,334 | 312,724 | 3.45 | % | ||||
| Non-interest-earning assets | 1,106,967 | 1,089,473 | ||||||||||
| Total assets | $ | 16,854,370 | $ | 13,201,807 | ||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Savings | $ | 1,376,243 | $ | 169 | 0.02 | % | $ | 1,086,957 | $ | 181 | 0.02 | % |
| Interest checking | 2,541,113 | 730 | 0.04 | % | 2,208,517 | 1,801 | 0.11 | % | ||||
| Money market | 3,576,648 | 1,553 | 0.06 | % | 3,162,528 | 6,883 | 0.29 | % | ||||
| Time deposits | 243,621 | 317 | 0.17 | % | 311,462 | 1,380 | 0.59 | % | ||||
| Total interest-bearing deposits | 7,737,625 | 2,769 | 0.05 | % | 6,769,464 | 10,245 | 0.20 | % | ||||
| Borrowings | 25,582 | 123 | 0.64 | % | 87,738 | 717 | 1.09 | % | ||||
| Total interest-bearing liabilities | 7,763,207 | 2,892 | 0.05 | % | 6,857,202 | 10,962 | 0.21 | % | ||||
| Demand deposit accounts | 5,318,903 | 4,322,809 | ||||||||||
| Other noninterest-bearing liabilities | 347,237 | 345,869 | ||||||||||
| Total liabilities | 13,429,347 | 11,525,880 | ||||||||||
| Shareholders' equity | 3,425,023 | 1,675,927 | ||||||||||
| Total liabilities and shareholders' equity | $ | 16,854,370 | $ | 13,201,807 | ||||||||
| Net interest income - FTE | $ | 311,272 | $ | 301,762 | ||||||||
| Net interest rate spread (2) | 2.62 | % | 3.24 | % | ||||||||
| Net interest-earning assets (3) | $ | 7,984,196 | $ | 5,255,132 | ||||||||
| Net interest margin - FTE (4) | 2.64 | % | 3.33 | % | ||||||||
| (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 represents net interest income divided by average total interest-earning assets. | ||||||||||||
| (5) Presented on an annualized basis. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING ASSETS (1)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Non-accrual loans: | |||||||||||||||
| Commercial | $ | 29,166 | $ | 29,356 | $ | 30,275 | $ | 30,059 | $ | 28,968 | |||||
| Residential | 7,185 | 6,445 | 8,127 | 6,815 | 7,419 | ||||||||||
| Consumer | 4,262 | 4,106 | 3,873 | 4,131 | 4,727 | ||||||||||
| Total non-accrual loans | 40,613 | 39,907 | 42,275 | 41,005 | 41,114 | ||||||||||
| Accruing loans past due 90 days or more: | |||||||||||||||
| Commercial | 1,171 | 1,439 | 1,390 | 1,959 | 3,384 | ||||||||||
| Residential | 278 | 277 | 280 | 279 | 326 | ||||||||||
| Consumer | 9 | 9 | 9 | 9 | 9 | ||||||||||
| Total accruing loans past due 90 days or more | 1,458 | 1,725 | 1,679 | 2,247 | 3,719 | ||||||||||
| Total non-performing loans | 42,071 | 41,632 | 43,954 | 43,252 | 44,833 | ||||||||||
| Other real estate owned | — | 38 | — | — | 40 | ||||||||||
| Other non-performing assets: | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 42,071 | $ | 41,670 | $ | 43,954 | $ | 43,252 | $ | 44,873 | |||||
| Total accruing troubled debt restructured loans | $ | 34,723 | $ | 38,316 | $ | 39,367 | $ | 41,095 | $ | 39,881 | |||||
| Total non-performing loans to total loans | 0.44 | % | 0.43 | % | 0.44 | % | 0.45 | % | 0.45 | % | |||||
| Total non-performing assets to total assets | 0.24 | % | 0.24 | % | 0.26 | % | 0.27 | % | 0.29 | % | |||||
| (1) Non-performing assets are comprised of NPLs, 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. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS
| Three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Average total loans | $ | 9,528,522 | $ | 9,796,701 | $ | 9,816,788 | $ | 9,796,697 | $ | 9,914,864 | |||||
| Allowance for loan losses, beginning of the period | $ | 105,637 | $ | 111,080 | $ | 113,031 | $ | 115,432 | $ | 116,636 | |||||
| Charged-off loans: | |||||||||||||||
| Commercial and industrial | — | 550 | — | 1,603 | 140 | ||||||||||
| Commercial real estate | 8 | — | 234 | — | — | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 867 | 1,838 | 1,384 | 1,433 | 1,179 | ||||||||||
| Residential real estate | — | — | — | — | — | ||||||||||
| Consumer home equity | — | — | — | 79 | 22 | ||||||||||
| Other consumer | 742 | 275 | 364 | 713 | 1,077 | ||||||||||
| Total charged-off loans | 1,617 | 2,663 | 1,982 | 3,828 | 2,418 | ||||||||||
| Recoveries on loans previously charged-off: | |||||||||||||||
| Commercial and industrial | 40 | 13 | 9 | 92 | 306 | ||||||||||
| Commercial real estate | — | 4 | — | 220 | 4 | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 469 | 291 | 365 | 47 | 91 | ||||||||||
| Residential real estate | 88 | 17 | 10 | 9 | 43 | ||||||||||
| Consumer home equity | 63 | 3 | 71 | 100 | 31 | ||||||||||
| Other consumer | 206 | 192 | 156 | 59 | 39 | ||||||||||
| Total recoveries | 866 | 520 | 611 | 527 | 514 | ||||||||||
| Net loans charged-off (recoveries): | |||||||||||||||
| Commercial and industrial | (40) | 537 | (9) | 1,511 | (166) | ||||||||||
| Commercial real estate | 8 | (4) | 234 | (220) | (4) | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 398 | 1,547 | 1,019 | 1,386 | 1,088 | ||||||||||
| Residential real estate | (88) | (17) | (10) | (9) | (43) | ||||||||||
| Consumer home equity | (63) | (3) | (71) | (21) | (9) | ||||||||||
| Other consumer | 536 | 83 | 208 | 654 | 1,038 | ||||||||||
| Total net loans charged-off | 751 | 2,143 | 1,371 | 3,301 | 1,904 | ||||||||||
| (Release of) provision for loan losses | (1,488) | (3,300) | (580) | 900 | 700 | ||||||||||
| Total allowance for loan losses, end of period | $ | 103,398 | $ | 105,637 | $ | 111,080 | $ | 113,031 | $ | 115,432 | |||||
| Net charge-offs to average total loans outstanding during this period (1) | 0.03 | % | 0.09 | % | 0.06 | % | 0.13 | % | 0.08 | % | |||||
| Allowance for loan losses as a percent of total loans | 1.09 | % | 1.10 | % | 1.12 | % | 1.16 | % | 1.16 | % | |||||
| Allowance for loan losses as a percent of nonperforming loans | 245.77 | % | 253.74 | % | 252.72 | % | 261.33 | % | 257.47 | % | |||||
| (1) Presented on an annualized basis. |
APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands, except share data) | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||||||||||
| Net income (GAAP) | $ | 37,106 | $ | 34,809 | $ | 47,663 | $ | (44,062) | $ | 28,505 | |||||
| Add: | |||||||||||||||
| Noninterest income components: | |||||||||||||||
| Losses (income) from investments held in rabbi trusts | 289 | (4,216) | (1,846) | (5,535) | (3,800) | ||||||||||
| Gains on sales of securities available for sale, net | (1) | (1) | (1,164) | (3) | — | ||||||||||
| (Gains) losses on sale of other assets | (490) | (29) | (18) | (49) | 71 | ||||||||||
| Noninterest expense components: | |||||||||||||||
| Rabbi trust employee benefit (income) expense | (53) | 2,063 | 986 | 2,838 | 1,445 | ||||||||||
| Impairment charge (reversal) on tax credit investments | 1,133 | (1,419) | — | 3,189 | 7,590 | ||||||||||
| Indirect IPO costs (1) | — | — | — | — | 549 | ||||||||||
| Gain on sale of OREO | (87) | — | — | (61) | (546) | ||||||||||
| Merger and acquisition expenses | 740 | 3,479 | 589 | 90 | — | ||||||||||
| Settlement and expenses for putative consumer class action matters | — | 3,325 | — | — | — | ||||||||||
| Stock donation to the EBF | — | — | — | 91,287 | — | ||||||||||
| Total impact of non-GAAP adjustments | 1,531 | 3,202 | (1,453) | 91,756 | 5,309 | ||||||||||
| Less net tax benefit (expense) associated with non-GAAP adjustments (2) | 1,246 | 914 | (327) | 16,082 | 1,492 | ||||||||||
| Non-GAAP adjustments, net of tax | $ | 285 | $ | 2,288 | $ | (1,126) | $ | 75,674 | $ | 3,817 | |||||
| Operating net income (non-GAAP) | $ | 37,391 | $ | 37,097 | $ | 46,537 | $ | 31,612 | $ | 32,322 | |||||
| Weighted average common shares outstanding during the period (3): | |||||||||||||||
| Basic | 172,298,615 | 172,173,707 | 172,049,044 | 171,812,535 | — | ||||||||||
| Diluted | 172,298,615 | 172,173,707 | 172,049,044 | 171,812,535 | — | ||||||||||
| Earnings (loss) per share, basic | $ | 0.22 | $ | 0.20 | $ | 0.28 | $ | (0.26) | n.a. | ||||||
| Earnings (loss) per share, diluted | $ | 0.22 | $ | 0.20 | $ | 0.28 | $ | (0.26) | n.a. | ||||||
| Operating earnings per share, basic (non-GAAP) | $ | 0.22 | $ | 0.22 | $ | 0.27 | $ | 0.18 | n.a. | ||||||
| Operating earnings per share, diluted (non-GAAP) | $ | 0.22 | $ | 0.22 | $ | 0.27 | $ | 0.18 | n.a. | ||||||
| Return on average assets (4) | 0.84 | % | 0.83 | % | 1.19 | % | (1.11) | % | 0.80 | % | |||||
| Add: | |||||||||||||||
| Losses (income) from investments held in rabbi trusts (4) | 0.01% | (0.10)% | (0.05)% | (0.14)% | (0.11)% | ||||||||||
| Gains on sales of securities available for sale, net (4) | —% | —% | (0.03)% | —% | —% | ||||||||||
| (Gains) losses on sale of other assets (4) | (0.01)% | —% | —% | —% | —% | ||||||||||
| Rabbi trust employee benefit (income) expense (4) | —% | 0.05% | 0.02% | 0.07% | 0.04% | ||||||||||
| Impairment charge (reversal) on tax credit investments (4) | 0.03% | (0.03)% | —% | 0.08% | 0.21% | ||||||||||
| Indirect IPO costs (1) (4) | —% | —% | —% | —% | 0.02% | ||||||||||
| Gain on sale of OREO (4) | —% | —% | —% | —% | (0.02)% | ||||||||||
| Merger and acquisition expenses (4) | 0.02% | 0.08% | 0.01% | —% | —% | ||||||||||
| Settlement and expenses for putative consumer class action matters (4) | —% | 0.08% | —% | —% | —% | ||||||||||
| Stock donation to the EBF (4) | —% | —% | —% | 2.29% | —% | ||||||||||
| Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4) | 0.03% | 0.02% | (0.01)% | 0.40% | 0.04% | ||||||||||
| Operating return on average assets (non-GAAP) (4) | 0.86 | % | 0.89 | % | 1.15 | % | 0.79 | % | 0.90 | % | |||||
| Return on average shareholders' equity (4) | 4.27 | % | 4.10 | % | 5.66 | % | (5.61) | % | 6.65 | % | |||||
| Add: | |||||||||||||||
| Losses (income) from investments held in rabbi trusts (4) | 0.03% | (0.50)% | (0.22)% | (0.70)% | (0.89)% | ||||||||||
| Gains on sales of securities available for sale, net (4) | —% | —% | (0.14)% | —% | —% | ||||||||||
| (Gains) losses on sale of other assets (4) | (0.06)% | —% | —% | (0.01)% | 0.02% | ||||||||||
| Rabbi trust employee benefit (income) expense (4) | (0.01)% | 0.24% | 0.12% | 0.36% | 0.34% | ||||||||||
| Impairment charge (reversal) on tax credit investments (4) | 0.13% | (0.17)% | —% | 0.41% | 1.77% | ||||||||||
| Indirect IPO costs (1) (4) | —% | —% | —% | —% | 0.13% | ||||||||||
| Gain on sale of OREO (4) | (0.01)% | —% | —% | (0.01)% | (0.13)% | ||||||||||
| Merger and acquisition expenses (4) | 0.09% | 0.41% | 0.07% | 0.01% | —% | ||||||||||
| Settlement and expenses for putative consumer class action matters (4) | —% | 0.39% | —% | —% | —% | ||||||||||
| Stock donation to the EBF (4) | —% | —% | —% | 11.62% | —% | ||||||||||
| Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4) | 0.14% | 0.11% | (0.04)% | 2.05% | 0.35% | ||||||||||
| Operating return on average shareholders' equity (non-GAAP) (4) | 4.30 | % | 4.36 | % | 5.53 | % | 4.02 | % | 7.54 | % | |||||
| (1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital. | |||||||||||||||
| (2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits. | |||||||||||||||
| (3) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations. | |||||||||||||||
| (4) 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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Net interest income (GAAP) | $ | 102,691 | $ | 104,608 | $ | 100,091 | $ | 103,608 | $ | 98,742 | |||||
| Add: | |||||||||||||||
| Tax-equivalent adjustment (non-GAAP) | 1,316 | 1,269 | 1,297 | 1,357 | 1,353 | ||||||||||
| Fully-taxable equivalent net interest income (non-GAAP) | $ | 104,007 | $ | 105,877 | $ | 101,388 | $ | 104,965 | $ | 100,095 | |||||
| Noninterest income (GAAP) | $ | 43,209 | $ | 45,733 | $ | 55,212 | $ | 49,638 | $ | 47,709 | |||||
| Less: | |||||||||||||||
| (Losses) income from investments held in rabbi trusts | (289) | 4,216 | 1,846 | 5,535 | 3,800 | ||||||||||
| Gains on sales of securities available for sale, net | 1 | 1 | 1,164 | 3 | — | ||||||||||
| Gains (losses) on sale of other assets | 490 | 29 | 18 | 49 | (71) | ||||||||||
| Noninterest income on an operating basis (non-GAAP) | $ | 43,007 | $ | 41,487 | $ | 52,184 | $ | 44,051 | $ | 43,980 | |||||
| Noninterest expense (GAAP) | $ | 98,970 | $ | 107,335 | $ | 94,049 | $ | 199,169 | $ | 109,817 | |||||
| Less: | |||||||||||||||
| Rabbi trust employee benefit (income) expense | (53) | 2,063 | 986 | 2,838 | 1,445 | ||||||||||
| Impairment charge (reversal) on tax credit investments | 1,133 | (1,419) | — | 3,189 | 7,590 | ||||||||||
| Indirect IPO costs (1) | — | — | — | — | 549 | ||||||||||
| Gain on sale of OREO | (87) | — | — | (61) | (546) | ||||||||||
| Merger and acquisition expenses | 740 | 3,479 | 589 | 90 | — | ||||||||||
| Settlement and expenses for putative consumer class action matters | — | 3,325 | — | — | — | ||||||||||
| Stock donation to the EBF | — | — | — | 91,287 | — | ||||||||||
| Noninterest expense on an operating basis (non-GAAP) | $ | 97,237 | $ | 99,887 | $ | 92,474 | $ | 101,826 | $ | 100,779 | |||||
| Total revenue (GAAP) | $ | 145,900 | $ | 150,341 | $ | 155,303 | $ | 153,246 | $ | 146,451 | |||||
| Total operating revenue (non-GAAP) | $ | 147,014 | $ | 147,364 | $ | 153,572 | $ | 149,016 | $ | 144,075 | |||||
| Efficiency ratio (GAAP) | 67.83 | % | 71.39 | % | 60.56 | % | 129.97 | % | 74.99 | % | |||||
| Operating efficiency ratio (non-GAAP) | 66.14 | % | 67.78 | % | 60.22 | % | 68.33 | % | 69.95 | % | |||||
| Noninterest income / total revenue (GAAP) | 29.62 | % | 30.42 | % | 35.55 | % | 32.39 | % | 32.58 | % | |||||
| Noninterest income / total revenue on an operating basis (non-GAAP) | 29.25 | % | 28.15 | % | 33.98 | % | 29.56 | % | 30.53 | % | |||||
| (1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital. |
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, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | |||||||||||
| (Unaudited, dollars in thousands, except share data) | |||||||||||||||
| Tangible shareholders' equity: | |||||||||||||||
| Total shareholders' equity (GAAP) | $ | 3,429,292 | $ | 3,430,622 | $ | 3,387,045 | $ | 3,428,052 | $ | 1,713,372 | |||||
| Less: Goodwill and other intangibles | 379,772 | 380,402 | 376,002 | 376,534 | 375,632 | ||||||||||
| Tangible shareholders' equity (non-GAAP) | 3,049,520 | 3,050,220 | 3,011,043 | 3,051,518 | 1,337,740 | ||||||||||
| Tangible assets: | |||||||||||||||
| Total assets (GAAP) | 17,461,223 | 17,047,453 | 16,726,795 | 15,964,190 | 15,460,594 | ||||||||||
| Less: Goodwill and other intangibles | 379,772 | 380,402 | 376,002 | 376,534 | 375,632 | ||||||||||
| Tangible assets (non-GAAP) | $ | 17,081,451 | $ | 16,667,051 | $ | 16,350,793 | $ | 15,587,656 | $ | 15,084,962 | |||||
| Shareholders' equity to assets ratio (GAAP) | 19.64 | % | 20.12 | % | 20.25 | % | 21.47 | % | 11.08 | % | |||||
| Tangible shareholders' equity to tangible assets ratio (non-GAAP) | 17.85 | % | 18.30 | % | 18.42 | % | 19.58 | % | 8.87 | % | |||||
| Common shares outstanding | 186,758,154 | 186,758,154 | 186,758,154 | 186,758,154 | — | ||||||||||
| Book value per share (GAAP) | $ | 18.36 | $ | 18.37 | $ | 18.14 | $ | 18.36 | n.a. | ||||||
| Tangible book value per share (non-GAAP) | $ | 16.33 | $ | 16.33 | $ | 16.12 | $ | 16.34 | n.a. |
APPENDIX D: Reconciliation of Non-GAAP Credit Metrics
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands) | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||||||||||
| Total loans excluding PPP loans: | |||||||||||||||
| Total loans (GAAP) (1) | $ | 9,481,458 | $ | 9,591,336 | $ | 9,883,802 | $ | 9,706,989 | $ | 9,911,494 | |||||
| Less: PPP loans (1) | 514,018 | 799,964 | 1,210,598 | 1,007,487 | 1,098,883 | ||||||||||
| Total loans excluding PPP loans (non-GAAP) | $ | 8,967,440 | $ | 8,791,372 | $ | 8,673,204 | $ | 8,699,502 | $ | 8,812,611 | |||||
| Total nonperforming loans (NPLs) (GAAP) | $ | 42,071 | $ | 41,632 | $ | 43,954 | $ | 43,252 | $ | 44,833 | |||||
| Total NPLs / total loans (GAAP) | 0.44 | % | 0.43 | % | 0.44 | % | 0.45 | % | 0.45 | % | |||||
| Total NPLs / total loans (excl. PPP loans) (non-GAAP) | 0.47 | % | 0.47 | % | 0.51 | % | 0.50 | % | 0.51 | % | |||||
| Allowance for loan losses (ALLL) (GAAP) | $ | 103,398 | $ | 105,637 | $ | 111,080 | $ | 113,031 | $ | 115,432 | |||||
| ALLL / total loans (GAAP) | 1.09 | % | 1.10 | % | 1.12 | % | 1.16 | % | 1.16 | % | |||||
| ALLL / total loans (excl. PPP loans) (non-GAAP) | 1.15 | % | 1.20 | % | 1.28 | % | 1.30 | % | 1.31 | % | |||||
| As of and for the three months ended | |||||||||||||||
| (Unaudited, dollars in thousands) | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||||||||||
| Average total loans excluding PPP Loans: | |||||||||||||||
| Average total loans (GAAP) | $ | 9,528,522 | $ | 9,796,701 | $ | 9,816,788 | $ | 9,796,697 | $ | 9,914,864 | |||||
| Less: Average PPP loans | 649,443 | 1,073,688 | 1,131,516 | 1,076,155 | 1,091,464 | ||||||||||
| Average total loans excluding PPP loans (non-GAAP) | $ | 8,879,079 | $ | 8,723,013 | $ | 8,685,272 | $ | 8,720,542 | $ | 8,823,400 | |||||
| Total net loans charged-off (NCOs) (GAAP) | $ | 751 | $ | 2,143 | $ | 1,371 | $ | 3,301 | $ | 1,904 | |||||
| NCOs / Average total loans (GAAP) (2) | 0.03 | % | 0.09 | % | 0.06 | % | 0.13 | % | 0.08 | % | |||||
| NCOs / Average total loans (excl. PPP loans) (non-GAAP) (2) | 0.03 | % | 0.10 | % | 0.06 | % | 0.15 | % | 0.09 | % | |||||
| (1) Includes unamortized premiums, net of unearned discounts and deferred fees. | |||||||||||||||
| (2) Presented on an annualized basis. |
Appendix E: Reconciliation of Non-GAAP Core Margin
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."
| As of and for the three months ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2021 | Jun 30, 2021 | |||||||||||
| (Unaudited, dollars in thousands) | Volume | Interest | Margin Impact (1) | Volume | Interest | Margin Impact (1) | ||||||
| Reported total average interest-earning assets, net interest income, and net interest margin (2) | $ | 16,282,183 | $ | 104,007 | 2.53 | % | $ | 15,759,132 | $ | 105,877 | 2.69 | % |
| Non-GAAP adjustments: | ||||||||||||
| PPP loan volume earning 1% | (649,443) | (1,688) | 0.06 | % | (1,073,688) | (2,742) | 0.12 | % | ||||
| SBA PPP loan fee accretion, net of deferred origination cost amortization | — | (5,913) | (0.14) | % | — | (9,258) | (0.24) | % | ||||
| Excess cash (3) | (1,178,275) | (445) | 0.19 | % | (1,302,558) | (357) | 0.23 | % | ||||
| Deferred loan fee income adjustment | — | — | — | % | — | — | — | % | ||||
| Core margin (Non-GAAP) (4) | $ | 14,454,465 | $ | 95,961 | 2.63 | % | $ | 13,382,886 | $ | 93,520 | 2.80 | % |
| Core margin change from prior quarter | (0.17) | % | (0.09) | % | ||||||||
| Mar 31, 2021 | Dec 31, 2020 | |||||||||||
| Volume | Interest | Margin Impact (1) | Volume | Interest | Margin Impact (1) | |||||||
| Reported total average interest-earning assets, net interest income, and net interest margin (2) | $ | 15,188,879 | $ | 101,388 | 2.71 | % | $ | 14,715,494 | $ | 104,965 | 2.84 | % |
| Non-GAAP adjustments: | ||||||||||||
| PPP loan volume earning 1% | (1,131,516) | (2,887) | 0.13 | % | (1,076,155) | (2,741) | 0.14 | % | ||||
| SBA PPP loan fee accretion, net of deferred origination cost amortization | — | (8,339) | (0.22) | % | — | (6,102) | (0.16) | % | ||||
| Excess cash (3) | (1,436,783) | (354) | 0.27 | % | (1,996,808) | (502) | 0.43 | % | ||||
| Deferred loan fee income adjustment | — | — | — | % | — | (3,774) | (0.10) | % | ||||
| Core margin (Non-GAAP) (4) | $ | 12,620,580 | $ | 89,808 | 2.89 | % | $ | 11,642,531 | $ | 91,846 | 3.14 | % |
| Core margin change from prior quarter | (0.25) | % | ||||||||||
| (1) Presented on an annualized basis. | ||||||||||||
| (2) Presented on a fully taxable equivalent basis. | ||||||||||||
| (3) Consists of cash above 2% of average total earning assets at a yield of 0.15% for the three months ended September 30, 2021, 0.11% for the three months ended June 30, 2021 and 0.10% in prior quarters. | ||||||||||||
| (4) Core margin is the margin that results from the combined volume and interest adjustments taken together. |
APPENDIX F: COVID-19 Related Loan Modifications
| Remaining COVID-19 Modifications as of March 31, 2021 (1) | Remaining COVID-19 Modifications as of June 30, 2021 (1) | Remaining COVID-19 Modifications as of September 30, 2021 (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Remaining Modifications | % of Total Loan Balance | Remaining Modifications | % of Total Loan Balance | Remaining Modifications | % of Total Loan Balance | ||||||
| Portfolio | ||||||||||||
| Commercial and industrial | $ | 22,776 | 1.1 | % | $ | 18,850 | 1.1 | % | $ | 4,548 | 0.3 | % |
| Commercial real estate | 127,683 | 3.5 | % | 113,301 | 3.0 | % | 92,377 | 2.4 | % | |||
| Commercial construction | — | — | % | — | — | % | — | — | % | |||
| Business banking | 11,681 | 0.8 | % | 2,102 | 0.2 | % | 2,164 | 0.2 | % | |||
| Residential real estate | 13,754 | 1.0 | % | 13,428 | 0.9 | % | 9,947 | 0.7 | % | |||
| Consumer home equity | 1,274 | 0.2 | % | 1,124 | 0.1 | % | 875 | 0.1 | % | |||
| Other consumer | 1,262 | 0.5 | % | 999 | 0.4 | % | 685 | 0.3 | % | |||
| Total | $ | 178,430 | 1.8 | % | $ | 149,804 | 1.6 | % | $ | 110,596 | 1.2 | % |
| (1) Remaining COVID-19 modifications reflect those loans which underwent a modification and have not yet resumed payment. The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due. These modifications with active deferrals met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) and therefore are not deemed troubled debt restructurings. |
20
ebc-20210930xq32021earni
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 Q3 Earnings Presentation October 28 | 2021 Exhibit 99.2
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 2 On the call today Presenter Topic Bob Rivers Opening Remarks Chief Executive Officer & Chair of the Board Jim Fitzgerald FinancialsChief Administrative Officer, Chief Financial Officer & Treasurer
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 3 Forward-looking statements This presentation contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding anticipated 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” 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 developments in the Company’s market relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown, 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 the interest rate environment, risks associated with its pending merger with Century, including the possibility that revenue or expense synergies or the other expected benefits of the transaction may not materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, the Company’s or Century’s businesses may not perform as expected due to transaction-related uncertainty or other factors; that the Company is unable to successfully implement integration strategies; that closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies’ customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; and diversion of management time on merger-related issues, as well as general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including inflation, interest rates, interest rate sensitivity and liquidity, 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 fluctuations due to actual or anticipated changes to federal tax laws; and credit quality, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans, and the failure to obtain the approval or non-objection of the Federal Reserve for the initiation of share repurchases, delays in obtaining such approval or non-objection, or adverse conditions imposed in connection with such approval or non-objection. 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. Further, given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely. Accordingly, you should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this presentation. The Company does not undertake any obligation to update forward-looking statements.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 4 Non-GAAP financial measures used in this presentation are denoted by an asterisk. A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) 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 businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures. 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, the operating efficiency ratio, and the ratio of noninterest income to total revenue on an operating basis. 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) expenses indirectly associated with the Company’s initial public offering (“IPO”), (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (“EBF”), formerly known as the Eastern Bank Charitable Foundation) in connection with the Company’s mutual-to-stock conversion and IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. 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 the Company’s core net interest margin which excludes the impact of items management determines as being one-time in nature or not indicative of its core operating results. Such items include the impact of excess liquidity in the form of excess cash volume, Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans originated in response to the COVID-19 pandemic, and material purchase accounting adjustments. Similarly, management presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolios. These metrics include the ratio of total nonperforming loans to total loans excluding PPP loans, the ratio of the allowance for loan losses to total loans excluding PPP loans, and the ratio of annualized net charge-offs to average total loans excluding PPP loans. The Company does not provide an outlook for its ratio of the allowance for loan losses to total loans because it contains components, such as the volume of PPP loans which is market-driven, over which the Company cannot exercise control. Accordingly, a reconciliation of the Company’s outlook for its ratio of the allowance for loan losses to total loans to an outlook for its ratio of the allowance for loan losses to total loans excluding PPP loans cannot be made available without unreasonable effort. The Company does not provide an outlook for its ratio of annualized net charge-offs to average total loans because it contains components, such as the volume PPP loans which is market- driven, over which the Company cannot exercise control. Accordingly, a reconciliation of the Company’s outlook for its ratio of annualized net charge-offs to average total loans to an outlook for its ratio of annualized net charge-offs to average total loans excluding PPP loans cannot be made available without unreasonable effort. The Company anticipates that the vast majority of its PPP loans outstanding at September 30, 2021 will be forgiven, and to the extent not forgiven, a PPP loan is intended to be 100% guaranteed by the SBA. Management also presents tangible assets, tangible shareholders’ equity, tangible book value per share, and the ratio of tangible shareholders’ equity to tangible assets, 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 presentation 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 a reconciliations of the Company's GAAP financial measures to the non-GAAP financial measures in this presentation. Non-GAAP financial measures
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 5 Q3 2021 financial highlights ■ Operating net income* was $37.4 million in the third quarter, compared to $37.1 million in the prior quarter, and represented a 16% increase from the prior year quarter. ■ Loans excluding PPP grew $175.3 million, or 8% on an annualized basis from the prior quarter. Commercial loans excluding PPP and residential loans each grew 9% on an annualized basis from the prior quarter. ■ An improving economic outlook coupled with strong asset quality led to a $1.5 million release of loan loss reserves. Nonperforming loans were $42.1 million, or 0.44% of total loans at the end of the third quarter compared to $41.7 million, or 0.43% of total loans, at the end of the second quarter. ■ Merger with Century Bank is anticipated to occur on November 12, 2021, with systems integration to occur the weekend of November 13 and 14 of 2021. ■ The Board of Directors has approved a share repurchase program, pursuant to which the Company may repurchase up to 5% of its outstanding shares over a 12-month period. The repurchase program is contingent upon receipt of regulatory non-objection. The Board also declared a regular quarterly cash dividend of $0.08 per share. *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Presented on an annualized basis. Key Metrics Highlights $0.08 per share Dividend declared $37.1 million Net income $37.4 million Operating net income* $0.22 $0.22 EPS Operating EPS* $18.36 $16.33 BV/Share TBV/Share* 2.53% 0.02% NIM1 Cost of deposits1 30% 0.03% Fee income ratio NCOs / avg. loans1
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 6 ■ Net income was $37.1 million in the third quarter. Excluding certain non-recurring items, operating net income* was $37.4 million. ■ Net interest income was $102.7 million in the third quarter, a decrease of $1.9 million, primarily due to lower PPP fee income recognition partially offset by higher investment income. ■ Noninterest income was $43.2 million, anchored by $22.0 million of insurance revenue. ■ Noninterest expense was $99.0 million, and $97.2 million on an operating* basis. ■ Credit remained strong. Release of loan loss reserves of $1.5 million in the third quarter. $ in millions, except per share amounts Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Net interest income $ 102.7 $ 104.6 $ 100.1 $ 103.6 $ 98.7 Noninterest income 43.2 45.7 55.2 49.6 47.7 Total revenue 145.9 150.3 155.3 153.2 146.4 Noninterest expense 99.0 107.3 94.0 199.2 109.8 Pre-tax, pre-provision income (loss) 46.9 43.0 61.3 (45.9) 36.6 Provision for credit losses (1.5) (3.3) (0.6) 0.9 0.7 Pre-tax income (loss) 48.4 46.3 61.8 (46.8) 35.9 Net income (loss) $ 37.1 $ 34.8 $ 47.7 $ (44.1) $ 28.5 Operating net income* $ 37.4 $ 37.1 $ 46.5 $ 31.6 $ 32.3 EPS $ 0.22 $ 0.20 $ 0.28 $ (0.26) n.a. Operating EPS* $ 0.22 $ 0.22 $ 0.27 $ 0.18 n.a. ROA1 0.84 % 0.83 % 1.19 % (1.11) % 0.80 % Operating ROA*1 0.86 % 0.89 % 1.15 % 0.79 % 0.90 % Efficiency ratio 67.83 % 71.39 % 60.56 % 129.97 % 74.99 % Operating efficiency ratio* 66.14 % 67.78 % 60.22 % 68.33 % 69.95 % Income statement *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Presented on an annualized basis.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 7 Net interest income, net interest margin, and core net interest margin*1 Average interest earning assets composition $100,095 $104,965 $101,388 $105,877 $104,007 3.04% 2.84% 2.71% 2.69% 2.53% 3.14% 2.89% 2.80% 2.63% NII - FTE* NIM - FTE NIM - FTE Core* Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 ■ Net interest income1 declined in the third quarter by $1.9 million, driven by lower PPP fee income of $3.3 million, partially offset by higher investment income1 of $1.9 million and a $0.3 million reduction in funding costs. ■ PPP fees recognized2 were $5.9 million in the third quarter compared to $9.3 million in the prior quarter due to a slowdown in loan forgiveness. ■ The $1.9 million increase in investment income1 is due to portfolio growth as third quarter average securities increased $905.1 million from the prior quarter. ■ Net interest margin continued to be pressured by the low interest rate environment and excess liquidity. The core net interest margin*1 demonstrates the impact of excess cash and the PPP program. Net interest margin trends $13,090 $14,715 $15,189 $15,759 $16,282 8,823 8,721 8,685 8,723 8,879 1,091 1,076 1,132 1,074 649 1,713 2,628 3,632 4,345 5,2501,462 2,291 1,741 1,618 1,504 Cash & other S.T. investments Investments SBA PPP Loans Net loans, excl. PPP Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $ in thousands $ in millions *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Presented on a fully tax equivalent (FTE) basis. 2SBA fee accretion, net of deferred cost amortization
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 8 68% 16% 4% 4% 2% 6% Net interest income Insurance commissions Deposit service charges Trust & investment advisory fees Debit card processing fees Other Noninterest income Noninterest income Fee income provides diverse revenue streams $451.5 mm 2021 revenue Noninterest income 32% $47.7 $49.6 $55.2 $45.7 $43.2$44.0 $44.1 $52.2 $41.5 $43.0 Noninterest income Operating noninterest income* Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $ in millions *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. $ millions Q3 2021 Q2 2021 Q3 2020 QoQ YoY Insurance commissions 22.0 23.7 21.9 (7) % — % Deposit service charges 5.9 5.7 5.1 4 % 17 % Trust & investement advisory fees 6.3 6.1 5.3 4 % 19 % Debit card processing fees 3.0 3.2 2.7 (4) % 11 % Other 6.0 7.1 12.7 (15) % (53) % Total noninterest income $ 43.2 $ 45.7 $ 47.7 (6) % (9) %
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 9 Noninterest expense Noninterest expense1 2021 noninterest expense $ in millions 66% 13% 8% 5% 8% Salaries & benefits Data processing Occupancy & equipment Professional services Other $300.4 mm 2021 noninterest expense *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Q4 '20 figures exclude EBF stock donation expense of $91.3 million. $109.8 $107.9 $94.0 $107.3 $99.0$100.8 $101.8 $92.5 $99.9 $97.2 Noninterest expense Operating noninterest expense* Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 * $ millions Q3 2021 Q2 2021 Q3 2020 QoQ YoY Salaries & benefits 66.2 69.3 66.6 (4) % (1) % Data processing 12.2 13.6 11.7 (10) % 4 % Occupancy & equipment 8.0 8.1 8.3 (2) % (4) % Professional services 4.0 6.4 5.5 (38) % (27) % Other 8.6 10.0 17.7 (14) % (51) % Total noninterest expense $ 99.0 $ 107.3 $ 109.8 (8) % (10) %
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 10 Linked Quarter (LQ) Year Over Year (YoY) $ in millions 9/30/2021 6/30/2021 $ % 9/30/2020 $ % Cash and cash equivalents $ 1,252 $ 1,564 $ (312) (20) % $ 2,328 $ (1,076) (46) % Securities 5,689 4,849 840 17 % 2,208 3,481 158 % Loans held for sale 2 3 (1) (33) % 5 (3) (60) % Total loans 9,505 9,621 (116) (1) % 9,944 (439) (4) % Allowance for loan losses (103) (106) 3 (3) % (115) 12 (10) % Deferred & unearned (24) (30) 6 (20) % (33) 9 (27) % Net Loans 9,378 9,486 (108) (1) % 9,796 (418) (4) % Goodwill 380 380 — — % 376 4 1 % Other assets 760 765 (5) (1) % 748 12 2 % Total Assets $ 17,461 $ 17,047 $ 414 2 % $ 15,461 2,000 13 % Deposits $ 13,650 $ 13,250 $ 400 3 % $ 13,333 $ 317 2 % Borrowings 30 28 2 7 % 29 1 3 % Other liabilities 352 339 13 4 % 385 (33) (9) % Total Liabilities 14,032 13,617 415 3 % 13,747 285 2 % Shareholders' Equity 3,429 3,430 (1) — % 1,714 1,715 100 % Total Liabilities & Equity $ 17,461 $ 17,047 $ 414 2 % $ 15,461 2,000 13 % Equity / assets 19.6 % 20.1 % 11.1 % Tangible equity / tangible assets* 17.9 % 18.3 % 8.9 % ■ Total assets were $17.5 billion at September 30, 2021 compared to $17.0 billion at end of the prior quarter. ■ Securities increased $840 million to $5.7 billion as excess liquidity continued to be deployed. Cash levels declined by $312 million to $1.3 billion. ■ PPP loans declined by $292 million. Excluding PPP loans, total loans increased by $175 million or 2.0%. ■ Deposits increased $400 million, or 3%, to $13.6 billion. ■ Shareholders' equity decreased by $1 million from the prior quarter, as growth in retained earnings was more than offset by a decline in the value of the securities portfolio. Balance sheet *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 11 $4.5 $5.2 $5.8 $6.4 $6.9 $2.3 $2.1 $1.9 $1.6 $1.3 $2.2 $3.2 $4.0 $4.8 $5.7 Cash and cash equivalents AFS securities Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Securities portfolio Investment composition $ in billions Liquidity growth and deployment Investment yield ■ Excess cash continued to be deployed into investments in the third quarter. ■ 72% of the Company's portfolio is concentrated in Government sponsored residential mortgage-backed securities. ■ Purchases in the third quarter averaged a 1.0% yield. 72% 8% 15% 1% 5% Agency RMBS Agency CMBS Agency bonds Treasuries Munis 2.32% 1.66% 1.40% 1.36% 1.26% Yield Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 12 ■ Average deposits of $13.6 billion in the third quarter represents a 12% increase from the prior year period. ■ Low cost of deposits declined to 0.02% in the third quarter. ■ Deep client relationships, long-standing position in communities, and dense branch footprint with 94% of deposits in attractive Boston MSA.1 Stable deposit growth Low cost of deposits2High quality deposit portfolio 40% 20% 28% 11% 2% DDA DDAWI MMDA Sav CD $12,135 $12,312 $12,508 $13,053 $13,596 Avg. Total Deposits Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 0.06% 0.03% 0.03% 0.03% 0.02% 0.10% 0.06% 0.06% 0.05% 0.04% Total Deposit Cost I.B. Deposit Cost Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Deposits $ in millions 1Source: SNL as of 6/30/2021. 2Presented on an annualized basis.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 13 42% 58% Within one month Beyond one month ■ Total loans were $9.5 billion at the end of the third quarter. ■ Excluding PPP loans, total loans increased $175.3 million, or 2% from the prior quarter. ■ Residential loans increased $33.8 million during the third quarter and commercial loans excluding PPP loans increased $143.9 million. ■ A total of $292 million in PPP loans were forgiven by the SBA or otherwise paid down. Loan composition Repricing characteristics1 $9,944 $9,731 $9,916 $9,621 $9,505 6,255 6,187 6,188 6,268 6,412 1,123 1,026 1,238 826 534 1,373 1,371 1,407 1,457 1,491 891 868 832 835 849 Total commercial excl. PPP PPP loans Residential real estate Consumer home equity Other consumer Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Historical composition $ in millions 1Reflects percentages of the Company's loan composition, calculated as the sum of loan balances expected to reprice or mature plus the sum of estimated prepayment and contractual amortization cash flows.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 14 Accommodation & food services 19.1% Construction 15.0% Health care & social assistance 11.5%Professional, scientific & technical services 11.4% Other services 9.0% Manufacturing 6.9% Retail trade 4.6% Administrative & support 4.4% Wholesale trade 4.1% Transportation & warehousing 3.5% Real estate, rental & leasing 3.1% All other 7.3% PPP Update ($mm) Loans originated # Original balance2 Current balance2 SBA fees3 received total SBA fees3 recognized (as of 9/30/21) SBA fees3 not yet recognized Typical loan term (months) 2020 PPP originations 8,902 $ 1,167.1 $ 30.6 $ 37.2 $ 36.9 $ 0.3 24 2021 PPP originations 6,628 $ 543.2 $ 503.4 $ 28.7 $ 5.9 $ 22.8 60 Total 15,530 $ 1,710.3 $ 534.0 $ 65.9 $ 42.8 $ 23.1 Industry segments1 ■ Eastern has originated 15,530 loans totaling $1.7 billion under the PPP in 2020 and 2021 combined. ■ As of September 30, 2021, Eastern had $534.0 million in PPP loan balances still outstanding. ■ $42.8 million of SBA PPP fees have been recognized, with $23.1 million yet to be recognized as of September 30, 2021. ■ Eastern has provided loans to a diverse set of industries reflective of its customer base overall, enabled by a sound, efficient loan origination process and investments in technology. Overview $534.0mm 1Based on current loan principal balances as of September 30, 2021. 2Loan principal balances. 3Not inclusive of deferred origination costs which range between $500-600 per loan amortized through interest income over the life of the loan.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 15 Net charge-offs (NCOs) / Avg. loans (excl. PPP loans)*1 Non-performing loans (NPLs) Allowance / Total loans (excl. PPP loans)* & NPLs 0.09% 0.15% 0.06% 0.10% 0.03% NCOs / Avg. loans (excl. PPP loans)* (1) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 1.31% 1.30% 1.28% 1.20% 1.15% 257.47% 261.33% 252.72% 253.74% 245.77% Allowance / Total loans (excl. PPP loans)* Allowance / NPLs Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $44.8 $43.3 $44.0 $41.6 $42.1 Consumer Residential Commercial Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $— $20.0 $40.0 $60.0 ■ The allowance for loan losses was $103.4 million at September 30, 2021, or 1.15% of total loans (excluding PPP loans)* and 246% of non-performing loans. ■ Non-performing loans were $42.1 million at September 30, 2021 compared to $41.6 million at the end of the prior quarter. ■ Net charge-offs continued to be low, totaling 0.03%1 of average total loans (excluding PPP loans)* in the third quarter compared to 0.10%1 in the prior quarter. ■ Release of allowance for loan losses of $1.5 million in the third quarter. Asset quality *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Presented on an annualized basis. $ in millions
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 16 Outlook We expect the Century merger to close on November 12, 2021 and expect the systems integration to occur the weekend of November 13 and 14 of 2021. *Non-GAAP Financial Measure. See slide 4 for additional information. 1Assumes somewhat higher long-term interest rates and a 25bp rate hike in December 2022. 2Assumes no change to corporate tax rates. Category Management's Outlook Century one-time merger charges The merger charges are expected to be in line with initial announcement. A significant portion of the charges are expected to be recorded in the fourth quarter of 2021. Net interest income1 2022 is expected to be $490 - $510 million. Operating noninterest income* 2022 is expected to be $180 - $190 million. Operating noninterest expense* 2022 is expected to be $445 - $460 million inclusive of proposed equity plan and fully phased-in Century expense synergies of 45%. Effective tax rate2 20-21% CECL CECL adoption is planned for January 1, 2022.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 Appendix
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 18 Appendix A: Reconciliation of non-GAAP earnings metrics (1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital. (2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits. (3) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations. Three Months Ended (Unaudited, dollars in thousands, except share data) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Net income (GAAP) $ 37,106 $ 34,809 $ 47,663 $ (44,062) $ 28,505 Add: Noninterest income components: Losses (income) from investments held in rabbi trusts 289 (4,216) (1,846) (5,535) (3,800) Gains on sales of securities available for sale, net (1) (1) (1,164) (3) — (Gains) losses on sale of other assets (490) (29) (18) (49) 71 Noninterest expense components: Rabbi trust employee benefit (income) expense (53) 2,063 986 2,838 1,445 Impairment charge (reversal) on tax credit investments 1,133 (1,419) — 3,189 7,590 Indirect IPO costs (1) — — — — 549 Gain on sale of OREO (87) — — (61) (546) Merger and acquisition expenses 740 3,479 589 90 — Settlement and expenses for putative consumer class action matters — 3,325 — — — Stock donation to the EBF — — — 91,287 — Total impact of non-GAAP adjustments 1,531 3,202 (1,453) 91,756 5,309 Less net tax benefit (expense) associated with non-GAAP adjustments (2) 1,246 914 (327) 16,082 1,492 Non-GAAP adjustments, net of tax $ 285 $ 2,288 $ (1,126) $ 75,674 $ 3,817 Operating net income (non-GAAP) $ 37,391 $ 37,097 $ 46,537 $ 31,612 $ 32,322 Weighted average common shares outstanding during the period (3): Basic 172,298,615 172,173,707 172,049,044 171,812,535 — Diluted 172,298,615 172,173,707 172,049,044 171,812,535 — Earnings (loss) per share, basic $ 0.22 $ 0.20 $ 0.28 $ (0.26) n.a. Earnings (loss) per share, diluted $ 0.22 $ 0.20 $ 0.28 $ (0.26) n.a. Operating earnings per share, basic (non-GAAP) $ 0.22 $ 0.22 $ 0.27 $ 0.18 n.a. Operating earnings per share, diluted (non-GAAP) $ 0.22 $ 0.22 $ 0.27 $ 0.18 n.a.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 19 Appendix A: Reconciliation of non-GAAP earnings metrics continued Three Months Ended (Unaudited, dollars in thousands, except share data) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Return on average assets (4) 0.84 % 0.83 % 1.19 % (1.11) % 0.80 % Add: Losses (income) from investments held in rabbi trusts (4) 0.01 % (0.10) % (0.05) % (0.14) % (0.11) % Gains on sales of securities available for sale, net (4) — % — % (0.03) % — % — % (Gains) losses on sale of other assets (4) (0.01) % — % — % — % — % Rabbi trust employee benefit (income) expense (4) — % 0.05 % 0.02 % 0.07 % 0.04 % Impairment charge (reversal) on tax credit investments (4) 0.03 % (0.03) % — % 0.08 % 0.21 % Indirect IPO costs (1) (4) — % — % — % — % 0.02 % Gain on sale of OREO (4) — % — % — % — % (0.02) % Merger and acquisition expenses (4) 0.02 % 0.08 % 0.01 % — % — % Settlement and expenses for putative consumer class action matters (4) — % 0.08 % — % — % — % Stock donation to the EBF (4) — % — % — % 2.29 % — % Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4) 0.03 % 0.02 % (0.01) % 0.40 % 0.04 % Operating return on average assets (non-GAAP) (4) 0.86 % 0.89 % 1.15 % 0.79 % 0.90 % Return on average shareholders' equity (4) 4.27 % 4.10 % 5.66 % (5.61) % 6.65 % Add: Losses (income) from investments held in rabbi trusts (4) 0.03 % (0.50) % (0.22) % (0.70) % (0.89) % Gains on sales of securities available for sale, net (4) — % — % (0.14) % — % — % (Gains) losses on sale of other assets (4) (0.06) % — % — % (0.01) % 0.02 % Rabbi trust employee benefit (income) expense (4) (0.01) % 0.24 % 0.12 % 0.36 % 0.34 % Impairment charge (reversal) on tax credit investments (4) 0.13 % (0.17) % — % 0.41 % 1.77 % Indirect IPO costs (1) (4) — % — % — % — % 0.13 % Gain on sale of OREO (4) (0.01) % — % — % (0.01) % (0.13) % Merger and acquisition expenses (4) 0.09 % 0.41 % 0.07 % 0.01 % — % Settlement and expenses for putative consumer class action matters (4) — % 0.39 % — % — % — % Stock donation to the EBF (4) — % — % — % 11.62 % — % Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4) 0.14 % 0.11 % (0.04) % 2.05 % 0.35 % Operating return on average shareholders' equity (non-GAAP) (4) 4.30 % 4.36 % 5.53 % 4.02 % 7.54 % (1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital. (2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits. (4) Presented on an annualized basis.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 20 Appendix B: Reconciliation of non-GAAP operating revenues and expenses Three Months Ended (Unaudited, dollars in thousands) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Net interest income (GAAP) $ 102,691 $ 104,608 $ 100,091 $ 103,608 $ 98,742 Add: Tax-equivalent adjustment (non-GAAP) 1,316 1,269 1,297 1,357 1,353 Fully-taxable equivalent net interest income (non-GAAP) $ 104,007 $ 105,877 $ 101,388 $ 104,965 $ 100,095 Noninterest income (GAAP) $ 43,209 $ 45,733 $ 55,212 $ 49,638 $ 47,709 Less: (Losses) income from investments held in rabbi trusts (289) 4,216 1,846 5,535 3,800 Gains on sales of securities available for sale, net 1 1 1,164 3 — Gains (losses) on sale of other assets 490 29 18 49 (71) Noninterest income on an operating basis (non-GAAP) $ 43,007 $ 41,487 $ 52,184 $ 44,051 $ 43,980 Noninterest expense (GAAP) $ 98,970 $ 107,335 $ 94,049 $ 199,169 $ 109,817 Less: Rabbi trust employee benefit (income) expense (53) 2,063 986 2,838 1,445 Impairment charge (reversal) on tax credit investments 1,133 (1,419) — 3,189 7,590 Indirect IPO costs (1) — — — — 549 Gain on sale of OREO (87) — — (61) (546) Merger and acquisition expenses 740 3,479 589 90 — Settlement and expenses for putative consumer class action matters — 3,325 — — — Stock donation to the EBF — — — 91,287 — Noninterest expense on an operating basis (non-GAAP) $ 97,237 $ 99,887 $ 92,474 $ 101,826 $ 100,779 Total revenue (GAAP) $ 145,900 $ 150,341 $ 155,303 $ 153,246 $ 146,451 Total operating revenue (non-GAAP) $ 147,014 $ 147,364 $ 153,572 $ 149,016 $ 144,075 Efficiency ratio (GAAP) 67.83 % 71.39 % 60.56 % 129.97 % 74.99 % Operating efficiency ratio (non-GAAP) 66.14 % 67.78 % 60.22 % 68.33 % 69.95 % Noninterest income / total revenue (GAAP) 29.62 % 30.42 % 35.55 % 32.39 % 32.58 % Noninterest income / total revenue on an operating basis (non-GAAP) 29.25 % 28.15 % 33.98 % 29.56 % 30.53 % (1) Reflects costs associated with the Company's IPO that are indirectly related to the offering and were not recorded as a reduction of capital.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 21 Appendix C: Reconciliation of non-GAAP capital metrics As of Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 (Unaudited, dollars in thousands, except share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 3,429,292 $ 3,430,622 $ 3,387,045 $ 3,428,052 $ 1,713,372 Less: Goodwill and other intangibles 379,772 380,402 376,002 376,534 375,632 Tangible shareholders' equity (non-GAAP) 3,049,520 3,050,220 3,011,043 3,051,518 1,337,740 Tangible assets: Total assets (GAAP) 17,461,223 17,047,453 16,726,795 15,964,190 15,460,594 Less: Goodwill and other intangibles 379,772 380,402 376,002 376,534 375,632 Tangible assets (non-GAAP) $ 17,081,451 $ 16,667,051 $ 16,350,793 $ 15,587,656 $ 15,084,962 Shareholders' equity to assets ratio (GAAP) 19.6 % 20.1 % 20.2 % 21.5 % 11.1 % Tangible shareholders' equity to tangible assets ratio (non-GAAP) 17.9 % 18.3 % 18.4 % 19.6 % 8.9 % Common shares outstanding 186,758,154 186,758,154 186,758,154 186,758,154 — Book value per share (GAAP) $ 18.36 $ 18.37 $ 18.14 $ 18.36 n.a. Tangible book value per share (non-GAAP) $ 16.33 $ 16.33 $ 16.12 $ 16.34 n.a.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 22 Appendix D: Reconciliation of non-GAAP credit metrics As of (Unaudited, dollars in thousands) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Total loans excluding PPP loans: Total loans (GAAP) (1) $ 9,481,458 $ 9,591,336 $ 9,883,802 $ 9,706,989 $ 9,911,494 Less: PPP loans (1) 514,018 799,964 1,210,598 1,007,487 1,098,883 Total loans excluding PPP loans (non-GAAP) $ 8,967,440 $ 8,791,372 $ 8,673,204 $ 8,699,502 $ 8,812,611 Total nonperforming loans (NPLs) (GAAP) $ 42,071 $ 41,632 $ 43,954 $ 43,252 $ 44,833 Total NPLs / total loans (GAAP) 0.44 % 0.43 % 0.44 % 0.45 % 0.45 % Total NPLs / total loans (excl. PPP loans) (non-GAAP) 0.47 % 0.47 % 0.51 % 0.50 % 0.51 % Allowance for loan losses (ALLL) (GAAP) $ 103,398 $ 105,637 $ 111,080 $ 113,031 $ 115,432 ALLL / total loans (GAAP) 1.09% 1.10% 1.12% 1.16% 1.16% ALLL / total loans (excl. PPP loans) (non-GAAP) 1.15% 1.20% 1.28% 1.30% 1.31% As of and for the three months ended (Unaudited, dollars in thousands) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Average total loans excluding PPP Loans: Average total loans (GAAP) $ 9,528,522 $ 9,796,701 $ 9,816,788 $ 9,796,697 $ 9,914,864 Less: Average PPP loans 649,443 1,073,688 1,131,516 1,076,155 1,091,464 Average total loans excluding PPP loans (non-GAAP) $ 8,879,079 $ 8,723,013 $ 8,685,272 $ 8,720,542 $ 8,823,400 Total net loans charged-off (NCOs) (GAAP) $ 751 $ 2,143 $ 1,371 $ 3,301 $ 1,904 NCOs / Average total loans (GAAP) (2) 0.03 % 0.09 % 0.06 % 0.13 % 0.08 % NCOs / Average total loans (excl. PPP loans) (non-GAAP) (2) 0.03 % 0.10 % 0.06 % 0.15 % 0.09 % (1) Includes unamortized premiums, net of unearned discounts and deferred fees. (2) Presented on an annualized basis.
DO NOT REFRESH Color PaletteComplementary 000 / 000 / 051 Body text 074 / 075 / 076 030 / 152 / 213 185 / 197 / 212 023 / 061 / 110 119 / 139 / 154 255 / 107 / 000109 / 110 / 112 237 / 237 / 238 000 / 139 / 151 137 / 139 / 141 197 / 064 / 044 166 / 168 / 171 103 / 086 / 164 208 / 210 / 211 238 / 184 / 028 23 Appendix E: Reconciliation of non-GAAP core margin As of and for the three months ended Sep 30, 2021 Jun 30, 2021 (Unaudited, dollars in thousands) Volume Interest Margin Impact (1) Volume Interest Margin Impact (1) Reported total average interest-earning assets, net interest income, and net interest margin (2) $ 16,282,183 $ 104,007 2.53 % $ 15,759,132 $ 105,877 2.69 % Non-GAAP adjustments: PPP loan volume earning 1% (649,443) (1,688) 0.06 % (1,073,688) (2,742) 0.12 % SBA PPP loan fee accretion, net of deferred origination cost amortization — (5,913) (0.14) % — (9,258) (0.24) % Excess cash (3) (1,178,275) (445) 0.19 % (1,302,558) (357) 0.23 % Deferred loan fee income adjustment — — — % — — — % Core margin (Non-GAAP) (4) $ 14,454,465 $ 95,961 2.63 % $ 13,382,886 $ 93,520 2.80 % Core margin change from prior quarter (0.17) % (0.09) % Mar 31, 2021 Dec 31, 2020 Volume Interest Margin Impact (1) Volume Interest Margin Impact (1) Reported total average interest-earning assets, net interest income, and net interest margin (2) $ 15,188,879 $ 101,388 2.71 % $ 14,715,494 $ 104,965 2.84 % Non-GAAP adjustments: PPP loan volume earning 1% (1,131,516) (2,887) 0.13 % (1,076,155) (2,741) 0.14 % SBA PPP loan fee accretion, net of deferred origination cost amortization — (8,339) (0.22) % — (6,102) (0.16) % Excess cash (3) (1,436,783) (354) 0.27 % (1,996,808) (502) 0.43 % Deferred loan fee income adjustment — — — % — (3,774) (0.10) % Core margin (Non-GAAP) (4) $ 12,620,580 $ 89,808 2.89 % $ 11,642,531 $ 91,846 3.14 % Core margin change from prior quarter (0.25) % (1) Presented on an annualized basis. (2) Presented on a fully taxable equivalent basis. (3) Consists of cash above 2% of average total earning assets at a yield of 0.15% for the three months ended September 30, 2021, 0.11% for the three months ended June 30, 2021 and 0.10% in prior quarters. (4) Core margin is the margin that results from the combined volume and interest adjustments taken together.