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): April 29, 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 April 29, 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 March 31, 2021. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
In connection with the press release announcing the Company's earnings for the quarter ended March 31, 2021, the Company posted an investor presentation in the “Presentations” section of the Company’s investor relations website at investor.easternbank.com on April 29, 2021. A copy of the presentation is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | Press release dated April 29, 2021 |
| 99.2 | Presentation titled "Q1 Earnings Presentation" dated April 29, 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: April 29, 2021 | By: | /s/ James B. Fitzgerald |
| James B. Fitzgerald | ||
| Chief Financial Officer |
Document
Exhibit 99.1
Eastern Bankshares, Inc. Reports First Quarter 2021 Financial Results
BOSTON, April 29, 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 2021 first quarter financial results. Net income for the first quarter of 2021 was $47.7 million, or $0.28 per share, compared to a net loss of $44.1 million, or $0.26 per share, reported for the fourth quarter of 2020. Operating net income* for the first quarter of 2021 was $46.5 million, or $0.27 per share, compared to $31.6 million, or $0.18 per share, reported for the fourth quarter of 2020.
The quarter over quarter increase in operating net income* of $14.9 million is attributed to a combination of seasonally high insurance revenues which increased $5.7 million, notably higher interest rate swap revenue driven by an increase in the fair value of these transactions which was due to higher longer term interest rates, higher salary and wage expense deferrals in part due to Paycheck Protection Program (“PPP”) lending activity, and lower incentive compensation expense. In addition to these items, which are expected to be specific to the first quarter, Eastern continued to make progress on improving its overall profitability and efficiency.
The release of the Company’s quarterly financial results follows its announcement of the pending merger with Century Bancorp, Inc. (“Century”). Eastern expects the merger will create a combined franchise with approximately $22 billion in total assets and solidify Eastern’s leading position in Boston and eastern Massachusetts. The merger is expected to close in the middle of the fourth quarter of 2021, subject to certain conditions, including the receipt of required regulatory approvals, shareholder approval, and other standard conditions. The Company also recently announced a 33% increase to its quarterly cash dividend to $0.08 per share.
“We’re off to a tremendous start in 2021 and I’d like to thank all of our employees for their contributions,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “Our financial results for the first quarter show strong organic growth, sound asset quality, and reflect our continued commitment to be a source of financial support to businesses in need during the pandemic with the origination of $453 million in PPP loans in the first quarter. As we look to the future, our recently announced agreement to merge with Century is the next step in our journey towards expanding our presence in the communities we serve, and we look forward to welcoming Century’s customers.”
HIGHLIGHTS FOR THE FIRST QUARTER OF 2021
•Net income was $47.7 million, or $0.28 per share, and operating net income* was $46.5 million, or $0.27 per share.
•Total revenue was $155.3 million and total operating revenue* was $153.6 million driven by seasonally high insurance revenues of $28.1 million.
•Release of loan loss reserves of $0.6 million, with $178.4 million in remaining COVID-19 modified loans.
•Originated $452.6 million in new PPP loans to approximately 4,700 borrowers.
•Book value and tangible book value per share* were $18.14 and $16.12, respectively.
BALANCE SHEET
Total assets were $16.7 billion at March 31, 2021, representing an increase of $0.8 billion or 5% from December 31, 2020.
•Available for sale securities increased $0.8 billion, or 25%, on a consecutive quarter basis, to $4.0 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined $0.2 billion to $1.9 billion.
•Total loans were $9.9 billion, representing an increase of $186.0 million or 2% from the prior quarter as originations, including $452.6 million in new PPP loans, outpaced PPP forgiveness and other loan paydowns. Total PPP loans were $1.2 billion at March 31, 2021.
•Deposits totaled $13.0 billion, representing an increase of $0.8 billion, or 7%, from December 31, 2020.
•Shareholders’ equity was $3.4 billion, representing a decrease of $41.0 million or 1% from the prior quarter. The increase in retained earnings of $37.3 million was more than offset by the after-tax market value decline of the available for sale investment portfolio, which drove the decrease in accumulated other comprehensive income of $80.4 million. The decline in market value can be attributed to the increase in medium and long-term rates during the quarter.
•At March 31, 2021, book value per share was $18.14 and tangible book value per share* was $16.12.
NET INTEREST INCOME
Net interest income was $100.1 million for the first quarter, compared to $103.6 million in the prior quarter, representing a decrease of $3.5 million on a consecutive quarter basis. There were two fewer days in the first quarter as compared to
the prior quarter. Included in net interest income was $8.3 million and $6.1 million of Small Business Administration (“SBA”) PPP fee accretion net of deferred cost amortization in the first quarter and prior quarter, respectively. Also included in prior quarter net interest income was a favorable nonrecurring item of $3.8 million. The increase in PPP fee recognition on a consecutive quarter basis was attributable primarily to an increase in PPP loan forgiveness rates in the first quarter. Between December 31, 2020 and March 31, 2021, $240.7 million in PPP loans were forgiven through the SBA or otherwise paid down.
The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.71% for the first quarter, representing a 13 basis points decrease from the prior quarter, primarily due to lower earning asset yields driven by the low rate environment coupled with higher average balances.
Please refer to Appendix E for a four-quarter trend analysis of the adjusted core margin*.
NONINTEREST INCOME
Noninterest income was $55.2 million for the first quarter, compared to $49.6 million for the prior quarter, representing an increase of $5.6 million.
•Insurance commissions increased $5.7 million to $28.1 million in the first quarter, compared to $22.4 million in the prior quarter, driven by seasonality. Compared to the prior year quarter, insurance commissions increased $0.7 million, or 2%.
•Trust and investment advisory fees increased $0.2 million on a consecutive quarter basis to $5.7 million due to higher equity values.
•Loan-level interest rate swap revenue was $5.4 million in the first quarter, compared to $2.5 million in the prior quarter, representing an increase of $2.9 million that was primarily driven by a $3.0 million increase in the fair value of such interest rate swap transactions due to higher market interest rates.
•Income on securities held in rabbi trust accounts was $1.8 million in the first quarter compared to $5.5 million in the prior quarter, a decrease of $3.7 million primarily due to lower equity market gains in the first quarter of 2021 as compared to the fourth quarter of 2020.
•Mortgage origination activity was lower in the first quarter as compared to the prior quarter with the gain on sale of loans totaling $1.5 million, down $1.9 million from the prior quarter. This was partially offset by a $1.5 million increase in the gain/loss on commitments to sell mortgage loans which is recorded in other income.
•The gain on sale of available for sale securities was $1.2 million in the first quarter, representing an increase of $1.2 million from the prior quarter, due to portfolio repositioning.
Please refer to Appendix B for a reconciliation of operating revenues and expenses*.
NONINTEREST EXPENSE
Noninterest expense was $94.0 million for the first quarter representing a decrease of $105.1 million, or 53%, from the prior quarter of $199.2 million. Prior quarter noninterest expense included costs associated with the Company’s mutual-to-stock conversion and initial public offering (“IPO”), including a $91.3 million donation of stock to the Eastern Bank Charitable Foundation (“EBCF”). Excluding this and other non-operating items for the respective quarters, noninterest expense on an operating basis* for the first quarter of 2021 was $92.5 million, compared to $101.8 million in the prior quarter.
•Salaries and benefits were $64.0 million in the first quarter, representing a decrease of $6.3 million from the prior quarter. The decline was driven by a reduction in incentive compensation expense of $3.9 million that was in part due to the decline in total shareholders’ equity attributable to higher market interest rates, a decrease in the defined contribution supplemental executive retirement plan (“DC SERP”) expense of $1.9 million associated with the lower market value increase in assets held in rabbi trust accounts, and higher expense deferrals of $1.8 million due in part to PPP lending activity. Partially offsetting these declines was an increase in payroll taxes of $2.3 million quarter over quarter.
•Other noninterest expense declined from $6.2 million in the prior quarter to $0.5 million in the first quarter, a decline of $5.7 million. The Company recorded impairment charges on tax credit investments of $3.2 million in the prior quarter, whereas no impairment was recorded in the first quarter. Included in other noninterest expense are components of the Company’s pension expense which were $2.3 million lower in the first quarter compared to the prior quarter. This was partially offset by an increase in pension service cost of $0.8 million which is included in salary and benefit expense.
•Professional services expenses were $4.1 million in the first quarter, representing a decrease of $1.2 million from the prior quarter.
•Marketing expenses were $1.7 million in the first quarter, representing a decrease of $1.1 million from the prior quarter.
Please refer to Appendix B for a reconciliation of operating revenues and expenses*.
ASSET QUALITY
The allowance for credit losses was $111.1 million at March 31, 2021, or 1.12% of total loans, compared to $113.0 million or 1.16% of total loans at December 31, 2020. The Company released loan loss reserves totaling $0.6 million in the first quarter, compared to a provision for credit losses of $0.9 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at March 31, 2021 and all preceding periods.
Non-performing loans totaled $44.0 million at March 31, 2021 compared to $43.3 million at the end of the prior quarter. During the first quarter of 2021, the Company recorded total net charge-offs of $1.4 million, or 0.06% of average total loans on an annualized basis compared to $3.3 million and 0.13% in the prior quarter, respectively.
At March 31, 2021, approximately $178.4 million in COVID-19 modified loans remained under modified payment terms, down from $332.7 million at December 31, 2020. Of the $178.4 million in COVID-19 modified loans at March 31, 2021, $86.4 million were loans that have been modified at least twice.
Please refer to Appendix F and Appendix G for detail on the Company’s lending exposure to industries which management believes are most likely to experience adverse effects of the COVID-19 pandemic, as well as a detailed breakout on COVID-19 related loan modifications.
CONFERENCE CALL INFORMATION
A conference call and webcast covering Eastern’s first quarter 2021 earnings will be held on Friday, April 30, 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 9757837. 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 March 31, 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 IPO, (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, and (ix) the stock donation to the EBCF in connection with the Company’s mutual-to-stock conversion and IPO. The Company does not provide an outlook for its total noninterest expense because it contains expense components, such as expense associated with rabbi trust accounts, which is market-driven, over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for its noninterest expense on an operating basis to an outlook for total noninterest expense 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 March 31, 2021 will be forgiven during 2021, 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 proposed 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 required regulatory, shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that the timing of completion of the proposed merger is dependent on various factors that cannot be predicted with precision at this point; 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. 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) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||||
| Earnings data | |||||||||||||||
| Net interest income | $ | 100,091 | $ | 103,608 | $ | 98,742 | $ | 98,755 | $ | 100,146 | |||||
| Noninterest income | 55,212 | 49,638 | 47,709 | 47,657 | 33,369 | ||||||||||
| Total revenue | 155,303 | 153,246 | 146,451 | 146,412 | 133,515 | ||||||||||
| Noninterest expense | 94,049 | 199,169 | 109,817 | 100,765 | 95,172 | ||||||||||
| Pre-tax, pre-provision income (loss) | 61,254 | (45,923) | 36,634 | 45,647 | 38,343 | ||||||||||
| Provision for credit losses | (580) | 900 | 700 | 8,600 | 28,600 | ||||||||||
| Pre-tax income (loss) | 61,834 | (46,823) | 35,934 | 37,047 | 9,743 | ||||||||||
| Net income (loss) | 47,663 | (44,062) | 28,505 | 29,850 | 8,445 | ||||||||||
| Operating net income (non-GAAP) | 46,537 | 31,612 | 32,322 | 27,301 | 10,858 | ||||||||||
| Per-share data | |||||||||||||||
| Earnings (loss) per share | $ | 0.28 | $ | (0.26) | n.a. | n.a. | n.a. | ||||||||
| Operating earnings per share (non-GAAP) | $ | 0.27 | $ | 0.18 | n.a. | n.a. | n.a. | ||||||||
| Book value per share | $ | 18.14 | $ | 18.36 | n.a. | n.a. | n.a. | ||||||||
| Tangible book value per share (non-GAAP) | $ | 16.12 | $ | 16.34 | n.a. | n.a. | n.a. | ||||||||
| Profitability | |||||||||||||||
| Return on average assets (1) | 1.19 | % | (1.11) | % | 0.80 | % | 0.88 | % | 0.29 | % | |||||
| Operating return on average assets (non-GAAP) (1) | 1.15 | % | 0.79 | % | 0.90 | % | 0.81 | % | 0.38 | % | |||||
| Return on average shareholders' equity (1) | 5.66 | % | (5.61) | % | 6.65 | % | 7.11 | % | 2.08 | % | |||||
| Operating return on average shareholders' equity (non-GAAP) (1) | 5.53 | % | 4.02 | % | 7.54 | % | 6.51 | % | 2.67 | % | |||||
| Net interest margin (FTE) (1) | 2.71 | % | 2.84 | % | 3.04 | % | 3.23 | % | 3.80 | % | |||||
| Cost of deposits (1) | 0.03 | % | 0.03 | % | 0.06 | % | 0.11 | % | 0.23 | % | |||||
| Fee income ratio | 35.55 | % | 32.39 | % | 32.58 | % | 32.55 | % | 24.99 | % | |||||
| Efficiency ratio | 60.56 | % | 129.97 | % | 74.99 | % | 68.82 | % | 71.28 | % | |||||
| Operating efficiency ratio (non-GAAP) | 60.22 | % | 68.33 | % | 69.95 | % | 68.90 | % | 69.54 | % | |||||
| Balance Sheet (end of period) | |||||||||||||||
| Total assets | $ | 16,726,795 | $ | 15,964,190 | $ | 15,460,594 | $ | 13,996,523 | $ | 12,343,754 | |||||
| Total loans | 9,916,475 | 9,730,525 | 9,944,241 | 10,014,338 | 9,087,103 | ||||||||||
| Total deposits | 12,980,875 | 12,155,784 | 13,332,585 | 11,846,765 | 10,309,011 | ||||||||||
| Total loans / total deposits | 76 | % | 80 | % | 75 | % | 85 | % | 88 | % | |||||
| PPP loans | $ | 1,238,053 | $ | 1,026,117 | $ | 1,123,493 | $ | 1,100,181 | $ | — | |||||
| Asset quality | |||||||||||||||
| Allowance for loan losses ("ALLL") | $ | 111,080 | $ | 113,031 | $ | 115,432 | $ | 116,636 | $ | 109,138 | |||||
| ALLL / total nonperforming loans ("NPLs") | 252.72 | % | 261.33 | % | 257.47 | % | 210.55 | % | 222.34 | % | |||||
| Total NPLs / total loans | 0.44 | % | 0.45 | % | 0.45 | % | 0.56 | % | 0.54 | % | |||||
| Total NPLs / total loans (excl. PPP loans) (non-GAAP) | 0.51 | % | 0.50 | % | 0.51 | % | 0.62 | % | 0.54 | % | |||||
| Net charge-offs (NCOs) / average total loans (1) | 0.06 | % | 0.13 | % | 0.08 | % | 0.04 | % | 0.08 | % | |||||
| NCOs / average total loans (excl. PPP loans) (non-GAAP) (1) | 0.06 | % | 0.15 | % | 0.09 | % | 0.05 | % | 0.08 | % | |||||
| Remaining COVID-19 loan modifications (2) | $ | 178,430 | $ | 332,682 | $ | 701,227 | $ | 945,995 | $ | — | |||||
| Capital adequacy | |||||||||||||||
| Shareholders' equity / assets | 20.25 | % | 21.47 | % | 11.08 | % | 12.10 | % | 13.47 | % | |||||
| Tangible shareholders' equity / tangible assets (non-GAAP) | 18.42 | % | 19.58 | % | 8.87 | % | 9.67 | % | 10.74 | % | |||||
| (1) Presented on an annualized basis. | |||||||||||||||
| (2) See Appendix G: COVID-19 Related Loan Modifications |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of | Mar 31, 2021 change from | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Dec 31, 2020 | Mar 31, 2020 | |||||||
| ASSETS | △ $ | △ % | △ $ | △ % | ||||||||
| Cash and due from banks | $ | 79,497 | $ | 116,591 | $ | 94,215 | (37,094) | (32) | % | (14,718) | (16) | % |
| Short-term investments | 1,780,835 | 1,937,479 | 672,234 | (156,644) | (8) | % | 1,108,601 | 165 | % | |||
| Cash and cash equivalents | 1,860,332 | 2,054,070 | 766,449 | (193,738) | (9) | % | 1,093,883 | 143 | % | |||
| Securities held for trading | — | — | 652 | — | — | % | (652) | (100) | % | |||
| Available for sale securities | 3,986,253 | 3,183,861 | 1,549,927 | 802,392 | 25 | % | 2,436,326 | 157 | % | |||
| Total securities | 3,986,253 | 3,183,861 | 1,550,579 | 802,392 | 25 | % | 2,435,674 | 157 | % | |||
| Loans held for sale | 2,022 | 1,140 | 2,843 | 882 | 77 | % | (821) | (29) | % | |||
| Loans: | ||||||||||||
| Commercial and industrial | 1,986,366 | 1,995,016 | 1,771,122 | (8,650) | — | % | 215,244 | 12 | % | |||
| Commercial real estate | 3,676,941 | 3,573,630 | 3,523,721 | 103,311 | 3 | % | 153,220 | 4 | % | |||
| Commercial construction | 249,416 | 305,708 | 293,135 | (56,292) | (18) | % | (43,719) | (15) | % | |||
| Business banking | 1,513,051 | 1,339,164 | 779,916 | 173,887 | 13 | % | 733,135 | 94 | % | |||
| Total commercial loans | 7,425,774 | 7,213,518 | 6,367,894 | 212,256 | 3 | % | 1,057,880 | 17 | % | |||
| Residential real estate | 1,406,510 | 1,370,957 | 1,420,003 | 35,553 | 3 | % | (13,493) | (1) | % | |||
| Consumer home equity | 832,466 | 868,270 | 929,554 | (35,804) | (4) | % | (97,088) | (10) | % | |||
| Other consumer | 251,725 | 277,780 | 369,652 | (26,055) | (9) | % | (117,927) | (32) | % | |||
| Total loans | 9,916,475 | 9,730,525 | 9,087,103 | 185,950 | 2 | % | 829,372 | 9 | % | |||
| Allowance for loan losses | (111,080) | (113,031) | (109,138) | 1,951 | (2) | % | (1,942) | 2 | % | |||
| Unamortized prem./disc. and def. fees | (32,673) | (23,536) | (6,360) | (9,137) | 39 | % | (26,313) | 414 | % | |||
| Net loans | 9,772,722 | 9,593,958 | 8,971,605 | 178,764 | 2 | % | 801,117 | 9 | % | |||
| Federal Home Loan Bank stock, at cost | 8,805 | 8,805 | 8,805 | — | — | % | — | — | % | |||
| Premises and equipment | 46,619 | 49,398 | 54,867 | (2,779) | (6) | % | (8,248) | (15) | % | |||
| Bank-owned life insurance | 79,110 | 78,561 | 78,170 | 549 | 1 | % | 940 | 1 | % | |||
| Goodwill and other intangibles, net | 376,002 | 376,534 | 377,033 | (532) | — | % | (1,031) | — | % | |||
| Deferred income taxes, net | 31,508 | 13,229 | 5,152 | 18,279 | 138 | % | 26,356 | 512 | % | |||
| Prepaid expenses | 150,453 | 148,680 | 87,960 | 1,773 | 1 | % | 62,493 | 71 | % | |||
| Other assets | 412,969 | 455,954 | 440,291 | (42,985) | (9) | % | (27,322) | (6) | % | |||
| Total assets | 16,726,795 | 15,964,190 | 12,343,754 | 762,605 | 5 | % | 4,383,041 | 36 | % | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Demand | 5,369,164 | 4,910,794 | 3,646,052 | 458,370 | 9 | % | 1,723,112 | 47 | % | |||
| Interest checking accounts | 2,482,731 | 2,380,497 | 2,318,609 | 102,234 | 4 | % | 164,122 | 7 | % | |||
| Savings accounts | 1,362,463 | 1,256,736 | 1,002,709 | 105,727 | 8 | % | 359,754 | 36 | % | |||
| Money market investment | 3,522,990 | 3,348,898 | 3,016,932 | 174,092 | 5 | % | 506,058 | 17 | % | |||
| Certificates of deposit | 243,527 | 258,859 | 324,709 | (15,332) | (6) | % | (81,182) | (25) | % | |||
| Total deposits | 12,980,875 | 12,155,784 | 10,309,011 | 825,091 | 7 | % | 2,671,864 | 26 | % | |||
| Borrowed funds: | ||||||||||||
| Federal Home Loan Bank advances | 14,473 | 14,624 | 15,070 | (151) | (1) | % | (597) | (4) | % | |||
| Escrow deposits of borrowers | 14,878 | 13,425 | 16,357 | 1,453 | 11 | % | (1,479) | (9) | % | |||
| Total borrowed funds | 29,351 | 28,049 | 31,427 | 1,302 | 5 | % | (2,076) | (7) | % | |||
| Other liabilities | 329,524 | 352,305 | 340,582 | (22,781) | (6) | % | (11,058) | (3) | % | |||
| Total liabilities | 13,339,750 | 12,536,138 | 10,681,020 | 803,612 | 6 | % | 2,658,730 | 25 | % | |||
| Shareholders' equity: | ||||||||||||
| Common shares | 1,868 | 1,868 | — | — | — | % | 1,868 | — | % | |||
| Additional paid-in capital | 1,854,895 | 1,854,068 | — | 827 | — | % | 1,854,895 | — | % | |||
| Unallocated common shares held by the employee stock ownership plan ("ESOP") | (146,472) | (147,725) | — | 1,253 | (1) | % | (146,472) | — | % | |||
| Retained earnings | 1,702,946 | 1,665,607 | 1,651,314 | 37,339 | 2 | % | 51,632 | 3 | % | |||
| Accumulated other comprehensive income (AOCI), net of tax | (26,192) | 54,234 | 11,420 | (80,426) | (148) | % | (37,612) | (329) | % | |||
| Total shareholders' equity | 3,387,045 | 3,428,052 | 1,662,734 | (41,007) | (1) | % | 1,724,311 | 104 | % | |||
| Total liabilities and shareholders' equity | 16,726,795 | 15,964,190 | 12,343,754 | 762,605 | 5 | % | 4,383,041 | 36 | % |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Three months ended | Three months ended Mar 31, 2021 change from three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited, dollars in thousands, except share data) | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Dec 31, 2020 | Mar 31, 2020 | |||||||
| Interest and dividend income: | △ $ | △ % | △ $ | △ % | ||||||||
| Interest and fees on loans | $ | 88,639 | $ | 93,767 | $ | 95,538 | (5,128) | (5) | % | (6,899) | (7) | % |
| Taxable interest and dividends on available for sale securities | 10,206 | 8,493 | 8,178 | 1,713 | 20 | % | 2,028 | 25 | % | |||
| Non-taxable interest and dividends on available for sale securities | 1,856 | 1,879 | 1,921 | (23) | (1) | % | (65) | (3) | % | |||
| Interest on federal funds sold and other short-term investments | 432 | 584 | 517 | (152) | (26) | % | (85) | (16) | % | |||
| Interest and dividends on trading securities | — | — | 5 | — | — | % | (5) | (100) | % | |||
| Total interest and dividend income | 101,133 | 104,723 | 106,159 | (3,590) | (3) | % | (5,026) | (5) | % | |||
| Interest expense: | ||||||||||||
| Interest on deposits | 1,002 | 1,070 | 5,414 | (68) | (6) | % | (4,412) | (81) | % | |||
| Interest on borrowings | 40 | 45 | 599 | (5) | (11) | % | (559) | (93) | % | |||
| Total interest expense | 1,042 | 1,115 | 6,013 | (73) | (7) | % | (4,971) | (83) | % | |||
| Net interest income | 100,091 | 103,608 | 100,146 | (3,517) | (3) | % | (55) | — | % | |||
| (Release of) provision for allowance for loan losses | (580) | 900 | 28,600 | (1,480) | (164) | % | (29,180) | (102) | % | |||
| Net interest income after provision for credit losses | 100,671 | 102,708 | 71,546 | (2,037) | (2) | % | 29,125 | 41 | % | |||
| Noninterest income: | ||||||||||||
| Insurance commissions | 28,147 | 22,437 | 27,477 | 5,710 | 25 | % | 670 | 2 | % | |||
| Service charges on deposit accounts | 5,367 | 6,046 | 6,098 | (679) | (11) | % | (731) | (12) | % | |||
| Trust and investment advisory fees | 5,663 | 5,502 | 5,095 | 161 | 3 | % | 568 | 11 | % | |||
| Debit card processing fees | 2,749 | 2,749 | 2,470 | — | — | % | 279 | 11 | % | |||
| Interest rate swap income (losses) | 5,405 | 2,538 | (6,009) | 2,867 | 113 | % | 11,414 | (190) | % | |||
| Income (losses) from investments held in rabbi trusts | 1,846 | 5,535 | (6,743) | (3,689) | (67) | % | 8,589 | (127) | % | |||
| Gains (losses) on trading securities, net | — | (1) | (2) | 1 | (100) | % | 2 | (100) | % | |||
| Gains on sales of mortgage loans held for sale, net | 1,479 | 3,334 | 93 | (1,855) | (56) | % | 1,386 | 1490 | % | |||
| Gains on sales of securities available for sale, net | 1,164 | 3 | 122 | 1,161 | 38700 | % | 1,042 | 854 | % | |||
| Other | 3,392 | 1,495 | 4,768 | 1,897 | 127 | % | (1,376) | (29) | % | |||
| Total noninterest income | 55,212 | 49,638 | 33,369 | 5,574 | 11 | % | 21,843 | 65 | % | |||
| Noninterest expense: | ||||||||||||
| Salaries and employee benefits | 64,040 | 70,310 | 61,589 | (6,270) | (9) | % | 2,451 | 4 | % | |||
| Office occupancy and equipment | 8,217 | 8,198 | 8,689 | 19 | — | % | (472) | (5) | % | |||
| Data processing | 12,129 | 11,354 | 10,004 | 775 | 7 | % | 2,125 | 21 | % | |||
| Professional services | 4,148 | 5,307 | 3,689 | (1,159) | (22) | % | 459 | 12 | % | |||
| Charitable contributions | — | 91,288 | 1,187 | (91,288) | (100) | % | (1,187) | (100) | % | |||
| Marketing | 1,691 | 2,823 | 2,468 | (1,132) | (40) | % | (777) | (31) | % | |||
| Loan expenses | 1,847 | 2,025 | 1,112 | (178) | (9) | % | 735 | 66 | % | |||
| FDIC insurance | 948 | 946 | 906 | 2 | — | % | 42 | 5 | % | |||
| Amortization of intangible assets | 532 | 755 | 702 | (223) | (30) | % | (170) | (24) | % | |||
| Other | 497 | 6,163 | 4,826 | (5,666) | (92) | % | (4,329) | (90) | % | |||
| Total noninterest expense | 94,049 | 199,169 | 95,172 | (105,120) | (53) | % | (1,123) | (1) | % | |||
| Income (loss) before income tax expense (benefit) | 61,834 | (46,823) | 9,743 | 108,657 | (232) | % | 52,091 | 535 | % | |||
| Income tax expense (benefit) | 14,171 | (2,761) | 1,298 | 16,932 | (613) | % | 12,873 | 992 | % | |||
| Net income (loss) | 47,663 | (44,062) | 8,445 | 91,725 | (208) | % | 39,218 | 464 | % | |||
| Share data: | ||||||||||||
| Weighted average common shares outstanding | 172,049,044 | 171,812,535 | n.a. | |||||||||
| Earnings (loss) per share | $ | 0.28 | $ | (0.26) | n.a. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
| As of and for the three months ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | Mar 31, 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 | $ | 7,317,951 | $ | 69,210 | 3.84 | % | $ | 7,265,156 | $ | 73,289 | 4.01 | % | $ | 6,275,057 | $ | 69,615 | 4.46 | % |
| Residential | 1,393,139 | 11,274 | 3.28 | % | 1,367,073 | 11,641 | 3.39 | % | 1,429,994 | 13,303 | 3.74 | % | ||||||
| Consumer | 1,105,698 | 8,937 | 3.28 | % | 1,164,468 | 9,621 | 3.29 | % | 1,311,172 | 13,407 | 4.11 | % | ||||||
| Total loans | 9,816,788 | 89,421 | 3.69 | % | 9,796,697 | 94,551 | 3.84 | % | 9,016,223 | 96,325 | 4.30 | % | ||||||
| Investment securities | 3,631,530 | 12,577 | 1.40 | % | 2,627,679 | 10,945 | 1.66 | % | 1,500,413 | 10,685 | 2.86 | % | ||||||
| Cash and other short-term investments | 1,740,561 | 432 | 0.10 | % | 2,291,118 | 584 | 0.10 | % | 240,440 | 517 | 0.86 | % | ||||||
| Total interest earning assets | 15,188,879 | 102,430 | 2.73 | % | 14,715,494 | 106,080 | 2.87 | % | 10,757,076 | 107,527 | 4.02 | % | ||||||
| Non-interest-earning assets | 1,120,603 | 1,123,550 | 1,022,216 | |||||||||||||||
| Total assets | $ | 16,309,482 | $ | 15,839,044 | $ | 11,779,292 | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Savings | $ | 1,300,057 | $ | 64 | 0.02 | % | $ | 1,232,669 | $ | 62 | 0.02 | % | $ | 976,881 | $ | 54 | 0.02 | % |
| Interest checking | 2,391,025 | 234 | 0.04 | % | 2,282,786 | 232 | 0.04 | % | 1,902,128 | 819 | 0.17 | % | ||||||
| Money market | 3,440,214 | 587 | 0.07 | % | 3,362,335 | 609 | 0.07 | % | 2,981,427 | 3,904 | 0.53 | % | ||||||
| Time deposits | 251,115 | 117 | 0.19 | % | 267,378 | 167 | 0.25 | % | 327,144 | 638 | 0.78 | % | ||||||
| Total interest-bearing deposits | 7,382,411 | 1,002 | 0.06 | % | 7,145,168 | 1,070 | 0.06 | % | 6,187,580 | 5,415 | 0.35 | % | ||||||
| Borrowings | 25,625 | 40 | 0.63 | % | 25,529 | 45 | 0.70 | % | 163,463 | 599 | 1.47 | % | ||||||
| Total interest-bearing liabilities | 7,408,036 | 1,042 | 0.06 | % | 7,170,697 | 1,115 | 0.06 | % | 6,351,043 | 6,014 | 0.38 | % | ||||||
| Demand deposit accounts | 5,125,831 | 5,167,221 | 3,477,377 | |||||||||||||||
| Other non-interest-bearing liabilities | 358,087 | 376,197 | 318,656 | |||||||||||||||
| Total liabilities | 12,891,954 | 12,714,115 | 10,147,076 | |||||||||||||||
| Shareholders' equity | 3,417,528 | 3,124,929 | 1,632,216 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 16,309,482 | $ | 15,839,044 | $ | 11,779,292 | ||||||||||||
| Net interest income - FTE | $ | 101,388 | $ | 104,965 | $ | 101,513 | ||||||||||||
| Net interest rate spread (2) | 2.67 | % | 2.81 | % | 3.64 | % | ||||||||||||
| Net interest-earning assets (3) | $ | 7,780,843 | $ | 7,544,797 | $ | 4,406,033 | ||||||||||||
| Net interest margin - FTE (4) | 2.71 | % | 2.84 | % | 3.80 | % | ||||||||||||
| (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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Non-accrual loans: | |||||||||||||||
| Commercial | $ | 30,275 | $ | 30,059 | $ | 28,968 | $ | 31,273 | $ | 38,054 | |||||
| Residential | 8,127 | 6,815 | 7,419 | 11,693 | 5,594 | ||||||||||
| Consumer | 3,873 | 4,131 | 4,727 | 9,374 | 4,085 | ||||||||||
| Total non-accrual loans | 42,275 | 41,005 | 41,114 | 52,340 | 47,733 | ||||||||||
| Accruing loans past due 90 days or more: | |||||||||||||||
| Commercial | 1,390 | 1,959 | 3,384 | 2,802 | 1,345 | ||||||||||
| Residential | 280 | 279 | 326 | 244 | — | ||||||||||
| Consumer | 9 | 9 | 9 | 9 | 9 | ||||||||||
| Total accruing loans past due 90 days or more | 1,679 | 2,247 | 3,719 | 3,055 | 1,354 | ||||||||||
| Total non-performing loans | 43,954 | 43,252 | 44,833 | 55,395 | 49,087 | ||||||||||
| Other real estate owned | — | — | 40 | 40 | 40 | ||||||||||
| Other non-performing assets: | — | — | — | — | — | ||||||||||
| Total non-performing assets | $ | 43,954 | $ | 43,252 | $ | 44,873 | $ | 55,435 | $ | 49,127 | |||||
| Total accruing troubled debt restructured loans | $ | 39,367 | $ | 41,095 | $ | 39,881 | $ | 40,691 | $ | 41,880 | |||||
| Total non-performing loans to total loans | 0.44 | % | 0.45 | % | 0.45 | % | 0.56 | % | 0.54 | % | |||||
| Total non-performing assets to total assets | 0.26 | % | 0.27 | % | 0.29 | % | 0.40 | % | 0.40 | % | |||||
| (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. These properties are recorded at the lower of cost or fair value less estimated costs to sell on the date the Company obtains control. |
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS
| Three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Average total loans | $ | 9,816,788 | $ | 9,796,697 | $ | 9,914,731 | $ | 9,875,110 | $ | 9,016,223 | |||||
| Allowance for loan losses, beginning of the period | $ | 113,031 | $ | 115,432 | $ | 116,636 | $ | 109,138 | $ | 82,297 | |||||
| Charged-off loans: | |||||||||||||||
| Commercial and industrial | — | 1,603 | 140 | 27 | — | ||||||||||
| Commercial real estate | 234 | — | — | 24 | — | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 1,384 | 1,433 | 1,179 | 1,198 | 1,337 | ||||||||||
| Residential real estate | — | — | — | — | — | ||||||||||
| Consumer home equity | — | 79 | 22 | — | 473 | ||||||||||
| Other consumer | 364 | 713 | 1,077 | 15 | 533 | ||||||||||
| Total charged-off loans | 1,982 | 3,828 | 2,418 | 1,264 | 2,343 | ||||||||||
| Recoveries on loans previously charged-off: | |||||||||||||||
| Commercial and industrial | 9 | 92 | 306 | 58 | 322 | ||||||||||
| Commercial real estate | — | 220 | 4 | 5 | 1 | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 365 | 47 | 91 | 27 | 127 | ||||||||||
| Residential real estate | 10 | 9 | 43 | 13 | 60 | ||||||||||
| Consumer home equity | 71 | 100 | 31 | 8 | 14 | ||||||||||
| Other consumer | 156 | 59 | 39 | 51 | 60 | ||||||||||
| Total recoveries | 611 | 527 | 514 | 162 | 584 | ||||||||||
| Net loans charged-off (recoveries): | |||||||||||||||
| Commercial and industrial | (9) | 1,511 | (166) | (31) | (322) | ||||||||||
| Commercial real estate | 234 | (220) | (4) | 19 | (1) | ||||||||||
| Commercial construction | — | — | — | — | — | ||||||||||
| Business banking | 1,019 | 1,386 | 1,088 | 1,171 | 1,210 | ||||||||||
| Residential real estate | (10) | (9) | (43) | (13) | (60) | ||||||||||
| Consumer home equity | (71) | (21) | (9) | (8) | 459 | ||||||||||
| Other consumer | 208 | 654 | 1,038 | (36) | 473 | ||||||||||
| Total net loans charged-off | 1,371 | 3,301 | 1,904 | 1,102 | 1,759 | ||||||||||
| (Release of) provision for loan losses | (580) | 900 | 700 | 8,600 | 28,600 | ||||||||||
| Total allowance for loan losses, end of period | $ | 111,080 | $ | 113,031 | $ | 115,432 | $ | 116,636 | $ | 109,138 | |||||
| Net charge-offs to average total loans outstanding during this period (1) | 0.06 | % | 0.13 | % | 0.08 | % | 0.04 | % | 0.08 | % | |||||
| Allowance for loan losses as a percent of total loans | 1.12 | % | 1.16 | % | 1.16 | % | 1.17 | % | 1.20 | % | |||||
| Allowance for loan losses as a percent of nonperforming loans | 252.72 | % | 261.33 | % | 257.47 | % | 210.55 | % | 222.34 | % | |||||
| (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) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||||
| Net income (GAAP) | $ | 47,663 | $ | (44,062) | $ | 28,505 | $ | 29,850 | $ | 8,445 | |||||
| Add: | |||||||||||||||
| Noninterest income components: | |||||||||||||||
| (Income) loss from investments held in rabbi trusts | (1,846) | (5,535) | (3,800) | (7,745) | 6,743 | ||||||||||
| (Gain) loss on sales of securities available for sale, net | (1,164) | (3) | — | (163) | (122) | ||||||||||
| (Gain) loss on sale of other assets | (18) | (49) | 71 | 27 | (29) | ||||||||||
| Noninterest expense components: | |||||||||||||||
| Rabbi trust employee benefit expense (income) | 986 | 2,838 | 1,445 | 3,985 | (3,479) | ||||||||||
| Impairment charge on tax credit investments | — | 3,189 | 7,590 | — | — | ||||||||||
| IPO costs (1) | — | — | 549 | 380 | 270 | ||||||||||
| (Gain) loss on sale of OREO | — | (61) | (546) | — | — | ||||||||||
| Merger and acquisition expenses | 589 | 90 | — | — | — | ||||||||||
| Stock donation to the EBCF | — | 91,287 | — | — | — | ||||||||||
| Total impact of non-GAAP adjustments | (1,453) | 91,756 | 5,309 | (3,516) | 3,383 | ||||||||||
| Less net tax (expense) benefit associated with non-GAAP adjustments (2) | (327) | 16,082 | 1,492 | (967) | 970 | ||||||||||
| Non-GAAP adjustments, net of tax | $ | (1,126) | $ | 75,674 | $ | 3,817 | $ | (2,549) | $ | 2,413 | |||||
| Operating net income (non-GAAP) | $ | 46,537 | $ | 31,612 | $ | 32,322 | $ | 27,301 | $ | 10,858 | |||||
| Weighted average common shares outstanding during the period: | |||||||||||||||
| Basic | 172,049,044 | 171,812,535 | — | — | — | ||||||||||
| Diluted | 172,049,044 | 171,812,535 | — | — | — | ||||||||||
| Earnings (loss) per share, basic | $ | 0.28 | $ | (0.26) | n.a. | n.a. | n.a. | ||||||||
| Earnings (loss) per share, diluted | $ | 0.28 | $ | (0.26) | n.a. | n.a. | n.a. | ||||||||
| Operating earnings per share, basic (non-GAAP) | $ | 0.27 | $ | 0.18 | n.a. | n.a. | n.a. | ||||||||
| Operating earnings per share, diluted (non-GAAP) | $ | 0.27 | $ | 0.18 | n.a. | n.a. | n.a. | ||||||||
| Return on average assets (3) | 1.19 | % | (1.11) | % | 0.80 | % | 0.88 | % | 0.29 | % | |||||
| Add: | |||||||||||||||
| (Income) loss from investments held in rabbi trusts (3) | (0.05)% | (0.14)% | (0.11)% | (0.23)% | 0.23% | ||||||||||
| (Gain) loss on sales of securities available for sale, net (3) | (0.03)% | —% | —% | —% | —% | ||||||||||
| (Gain) loss on sale of other assets (3) | —% | —% | —% | —% | —% | ||||||||||
| Rabbi trust employee benefit expense (income) (3) | 0.02% | 0.07% | 0.04% | 0.12% | (0.12)% | ||||||||||
| Impairment charge on tax credit investments (3) | —% | 0.08% | 0.21% | —% | —% | ||||||||||
| IPO costs (1) (3) | —% | —% | 0.02% | 0.01% | 0.01% | ||||||||||
| (Gain) loss on sale of OREO (3) | —% | —% | (0.02)% | —% | —% | ||||||||||
| Merger and acquisition expenses (3) | 0.01% | —% | —% | —% | —% | ||||||||||
| Stock donation to the EBCF (3) | —% | 2.29% | —% | —% | —% | ||||||||||
| Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3) | (0.01)% | 0.40% | 0.04% | (0.03)% | 0.03% | ||||||||||
| Operating return on average assets (non-GAAP) (3) | 1.15 | % | 0.79 | % | 0.90 | % | 0.81 | % | 0.38 | % | |||||
| Return on average shareholders' equity (3) | 5.66 | % | (5.61) | % | 6.65 | % | 7.11 | % | 2.08 | % | |||||
| Add: | |||||||||||||||
| (Income) loss from investments held in rabbi trusts (3) | (0.22)% | (0.70)% | (0.89)% | (1.84)% | 1.66% | ||||||||||
| (Gain) loss on sales of securities available for sale, net (3) | (0.14)% | —% | —% | (0.04)% | (0.03)% | ||||||||||
| (Gain) loss on sale of other assets (3) | —% | (0.01)% | 0.02% | 0.01% | (0.01)% | ||||||||||
| Rabbi trust employee benefit expense (income) (3) | 0.12% | 0.36% | 0.34% | 0.95% | (0.86)% | ||||||||||
| Impairment charge on tax credit investments (3) | —% | 0.41% | 1.77% | —% | —% | ||||||||||
| IPO costs (1) (3) | —% | —% | 0.13% | 0.09% | 0.07% | ||||||||||
| (Gain) loss on sale of OREO (3) | —% | (0.01)% | (0.13)% | —% | —% | ||||||||||
| Merger and acquisition expenses (3) | 0.07% | 0.01% | —% | —% | —% | ||||||||||
| Stock donation to the EBCF (3) | —% | 11.62% | —% | —% | —% | ||||||||||
| Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3) | (0.04)% | 2.05% | 0.35% | (0.23)% | 0.24% | ||||||||||
| Operating return on average shareholders' equity (non-GAAP) (3) | 5.53 | % | 4.02 | % | 7.54 | % | 6.51 | % | 2.67 | % | |||||
| (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) Ratios have been annualized. |
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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | |||||||||||||||
| Net interest income (GAAP) | $ | 100,091 | $ | 103,608 | $ | 98,742 | $ | 98,755 | $ | 100,146 | |||||
| Add: | |||||||||||||||
| Tax-equivalent adjustment (non-GAAP) | 1,297 | 1,357 | 1,353 | 1,378 | 1,368 | ||||||||||
| Fully-taxable equivalent net interest income (non-GAAP) | $ | 101,388 | $ | 104,965 | $ | 100,095 | $ | 100,133 | $ | 101,514 | |||||
| Noninterest income (GAAP) | $ | 55,212 | $ | 49,638 | $ | 47,709 | $ | 47,657 | $ | 33,369 | |||||
| Less: | |||||||||||||||
| Income (loss) from investments held in rabbi trusts | 1,846 | 5,535 | 3,800 | 7,745 | (6,743) | ||||||||||
| Gain (loss) on sales of securities available for sale, net | 1,164 | 3 | — | 163 | 122 | ||||||||||
| Gain (loss) on sale of other assets | 18 | 49 | (71) | (27) | 29 | ||||||||||
| Noninterest income on an operating basis (non-GAAP) | $ | 52,184 | $ | 44,051 | $ | 43,980 | $ | 39,776 | $ | 39,961 | |||||
| Noninterest expense (GAAP) | $ | 94,049 | $ | 199,169 | $ | 109,817 | $ | 100,765 | $ | 95,172 | |||||
| Less: | |||||||||||||||
| Rabbi trust employee benefit expense (income) | 986 | 2,838 | 1,445 | 3,985 | (3,479) | ||||||||||
| Impairment charge on tax credit investments | — | 3,189 | 7,590 | — | — | ||||||||||
| IPO costs (1) | — | — | 549 | 380 | 270 | ||||||||||
| (Gain) loss on sale of OREO | — | (61) | (546) | — | — | ||||||||||
| Merger and acquisition expenses | 589 | 90 | — | — | — | ||||||||||
| Stock donation to the EBCF | — | 91,287 | — | — | — | ||||||||||
| Noninterest expense on an operating basis (non-GAAP) | $ | 92,474 | $ | 101,826 | $ | 100,779 | $ | 96,400 | $ | 98,381 | |||||
| Total revenue (GAAP) | $ | 155,303 | $ | 153,246 | $ | 146,451 | $ | 146,412 | $ | 133,515 | |||||
| Total operating revenue (non-GAAP) | $ | 153,572 | $ | 149,016 | $ | 144,075 | $ | 139,909 | $ | 141,475 | |||||
| Efficiency ratio (GAAP) | 60.56 | % | 129.97 | % | 74.99 | % | 68.82 | % | 71.28 | % | |||||
| Operating efficiency ratio (non-GAAP) | 60.22 | % | 68.33 | % | 69.95 | % | 68.90 | % | 69.54 | % | |||||
| Noninterest income / total revenue (GAAP) | 35.55 | % | 32.39 | % | 32.58 | % | 32.55 | % | 24.99 | % | |||||
| Noninterest income / total revenue on an operating basis (non-GAAP) | 33.98 | % | 29.56 | % | 30.53 | % | 28.43 | % | 28.25 | % | |||||
| (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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||
| (Unaudited, dollars in thousands, except share data) | |||||||||||||||
| Tangible shareholders' equity: | |||||||||||||||
| Total shareholders' equity (GAAP) | $ | 3,387,045 | $ | 3,428,052 | $ | 1,713,372 | $ | 1,693,630 | $ | 1,662,734 | |||||
| Less: Goodwill and other intangibles | 376,002 | 376,534 | 375,632 | 376,331 | 377,033 | ||||||||||
| Tangible shareholders' equity (non-GAAP) | 3,011,043 | 3,051,518 | 1,337,740 | 1,317,299 | 1,285,701 | ||||||||||
| Tangible assets: | |||||||||||||||
| Total assets (GAAP) | 16,726,795 | 15,964,190 | 15,460,594 | 13,996,523 | 12,343,754 | ||||||||||
| Less: Goodwill and other intangibles | 376,002 | 376,534 | 375,632 | 376,331 | 377,033 | ||||||||||
| Tangible assets (non-GAAP) | $ | 16,350,793 | $ | 15,587,656 | $ | 15,084,962 | $ | 13,620,192 | $ | 11,966,721 | |||||
| Shareholders' equity to assets ratio (GAAP) | 20.25 | % | 21.47 | % | 11.08 | % | 12.10 | % | 13.47 | % | |||||
| Tangible shareholders' equity to tangible assets ratio (non-GAAP) | 18.42 | % | 19.58 | % | 8.87 | % | 9.67 | % | 10.74 | % | |||||
| Common shares outstanding | 186,758,154 | 186,758,154 | — | — | — | ||||||||||
| Book value per share (GAAP) | $ | 18.14 | $ | 18.36 | n.a. | n.a. | n.a. | ||||||||
| Tangible book value per share (non-GAAP) | $ | 16.12 | $ | 16.34 | n.a. | n.a. | 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) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||||
| Total loans excluding PPP loans: | |||||||||||||||
| Total loans (GAAP) (1) | $ | 9,883,802 | $ | 9,706,989 | $ | 9,911,494 | $ | 9,979,616 | $ | 9,080,743 | |||||
| Less: PPP loans (1) | 1,210,598 | 1,007,487 | 1,098,883 | 1,072,312 | — | ||||||||||
| Total loans excluding PPP loans (non-GAAP) | $ | 8,673,204 | $ | 8,699,502 | $ | 8,812,611 | $ | 8,907,304 | $ | 9,080,743 | |||||
| Total nonperforming loans (NPLs) (GAAP) | $ | 43,954 | $ | 43,252 | $ | 44,833 | $ | 55,395 | $ | 49,087 | |||||
| Total NPLs / total loans (GAAP) | 0.44 | % | 0.45 | % | 0.45 | % | 0.56 | % | 0.54 | % | |||||
| Total NPLs / total loans (excl. PPP loans) (non-GAAP) | 0.51 | % | 0.50 | % | 0.51 | % | 0.62 | % | 0.54 | % | |||||
| Allowance for loan losses (ALLL) (GAAP) | $ | 111,080 | $ | 113,031 | $ | 115,432 | $ | 116,636 | $ | 109,138 | |||||
| ALLL / total loans (GAAP) | 1.12 | % | 1.16 | % | 1.16 | % | 1.17 | % | 1.20 | % | |||||
| ALLL / total loans (excl. PPP loans) (non-GAAP) | 1.28 | % | 1.30 | % | 1.31 | % | 1.31 | % | 1.20 | % | |||||
| As of and for the three months ended | |||||||||||||||
| (Unaudited, dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||||
| Average total loans excluding PPP Loans: | |||||||||||||||
| Average total loans (GAAP) | $ | 9,816,788 | $ | 9,796,697 | $ | 9,914,731 | $ | 9,875,110 | $ | 9,016,223 | |||||
| Less: Average PPP loans | 1,131,516 | 1,076,155 | 1,091,464 | 818,665 | — | ||||||||||
| Average total loans excluding PPP loans (non-GAAP) | $ | 8,685,272 | $ | 8,720,542 | $ | 8,823,267 | $ | 9,056,445 | $ | 9,016,223 | |||||
| Total net loans charged-off (NCOs) (GAAP) | $ | 1,371 | $ | 3,301 | $ | 1,904 | $ | 1,102 | $ | 1,759 | |||||
| NCOs / Average total loans (GAAP) (2) | 0.06 | % | 0.13 | % | 0.08 | % | 0.04 | % | 0.08 | % | |||||
| NCOs / Average total loans (excl. PPP loans) (non-GAAP) (2) | 0.06 | % | 0.15 | % | 0.09 | % | 0.05 | % | 0.08 | % | |||||
| (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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2021 | Dec 31, 2020 | |||||||||||
| (Unaudited, dollars in thousands) | Volume | Interest | Margin Impact (1) | Volume | Interest | Margin Impact (1) | ||||||
| Reported total average interest earnings 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) | % | (0.28) | % | ||||||||
| Sep 30, 2020 | Jun 30, 2020 | |||||||||||
| Volume | Interest | Margin Impact (1) | Volume | Interest | Margin Impact (1) | |||||||
| Reported total average interest earnings assets, net interest income, and net interest margin (2) | $ | 13,089,839 | $ | 100,095 | 3.04 | % | $ | 12,479,343 | $ | 100,137 | 3.23 | % |
| Non-GAAP adjustments: | ||||||||||||
| PPP loan volume earning 1% | (1,091,464) | (2,795) | 0.18 | % | (818,665) | (2,175) | 0.15 | % | ||||
| SBA PPP loan fee accretion, net of deferred origination cost amortization | — | (4,125) | (0.13) | % | — | (3,655) | (0.12) | % | ||||
| Excess cash (3) | (1,200,250) | (302) | 0.30 | % | (898,745) | (223) | 0.24 | % | ||||
| Deferred loan fee income adjustment | — | — | — | % | — | — | — | % | ||||
| Core margin (Non-GAAP) (4) | $ | 10,798,125 | $ | 92,873 | 3.42 | % | $ | 10,761,933 | $ | 94,084 | 3.52 | % |
| Core margin change from prior quarter | (0.10) | % | ||||||||||
| (1) Presented on an annualized basis. | ||||||||||||
| (2) Presented on a fully taxable equivalent basis. | ||||||||||||
| (3) Cash above 2% of average total earning assets at yield of 10 basis points. | ||||||||||||
| (4) Core margin is the margin that results from the combined volume and interest adjustments taken together. |
APPENDIX F: Commercial Loan Portfolio Exposure to High-risk Industries
High-risk industries are those industries that the Company believes will likely experience the most adverse effects of COVID-19.
| As of March 31, 2021 | ||||||
|---|---|---|---|---|---|---|
| Industry | Loan balance (Dollars in thousands) | Balance as a percent of total loans | COVID-19<br>modification as a percent of loan type (2) | |||
| Retail (1) | $ | 491,210 | 5.0 | % | 1.0 | % |
| Restaurants | 199,239 | 2.0 | % | 10.7 | % | |
| Hotels | 178,094 | 1.8 | % | 51.6 | % | |
| Construction contractors financing | 83,112 | 0.8 | % | 0.9 | % | |
| Auto dealerships | 77,658 | 0.8 | % | — | % | |
| Other high risk | 81,529 | 0.8 | % | 0.8 | % | |
| All impacted industries total | 1,110,842 | 11.2 | % | 10.8 | % | |
| Remaining commercial and business banking | 6,314,932 | 63.7 | % | 0.7 | % | |
| Total Commercial and business banking | 7,425,774 | 74.9 | % | 2.2 | % | |
| All Other Loans | 2,490,701 | 25.1 | % | 0.7 | % | |
| Total | $ | 9,916,475 | 100.0 | % | 1.8 | % |
| (1) The retail segment contains all retail commercial real estate loans and non-essential commercial and industrial retail loans. | ||||||
| (2) 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. |
APPENDIX G: COVID-19 Related Loan Modifications
| Remaining COVID-19 Modifications as of September 30, 2020 (1) | Remaining COVID-19 Modifications as of December 31, 2020 (1) | Remaining COVID-19 Modifications as of March 31, 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 | $ | 99,630 | 4.6 | % | $ | 34,076 | 1.7 | % | $ | 22,776 | 1.1 | % |
| Commercial real estate | 414,233 | 11.3 | % | 231,794 | 6.5 | % | 127,683 | 3.5 | % | |||
| Commercial construction | 13,330 | 4.5 | % | 10,987 | 3.6 | % | — | — | % | |||
| Business banking | 64,369 | 5.1 | % | 23,434 | 1.8 | % | 11,681 | 0.8 | % | |||
| Residential real estate | 95,260 | 6.9 | % | 26,772 | 2.0 | % | 13,754 | 1.0 | % | |||
| Consumer home equity | 10,093 | 1.1 | % | 3,432 | 0.4 | % | 1,274 | 0.2 | % | |||
| Other consumer | 4,312 | 1.4 | % | 2,187 | 0.8 | % | 1,262 | 0.5 | % | |||
| Total | $ | 701,227 | 7.1 | % | $ | 332,682 | 3.4 | % | $ | 178,430 | 1.8 | % |
| (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. |
17
ebc-20210331xq12021earni
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 Q1 Earnings Presentation April 29 | 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 proposed merger with Century Bancorp, Inc., 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 required regulatory, shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that the timing of completion of the proposed merger is dependent on various factors that cannot be predicted with precision at this point; 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. For further discussion of such factors, please see the Company’s Annual Report on Form 10-K and subsequent filings filed 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 mutual-to-stock conversion and initial public offering ("IPO"), (vii) other real estate owned gains, (viii) merger and acquisition expenses, and (ix) the stock donation to the Eastern Bank Charitable Foundation ("EBCF") in connection with the Company’s mutual-to-stock conversion and IPO. The Company does not provide an outlook for its total noninterest income because it contains components, such as income from investments held in rabbi trusts, which is market-driven, over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for its noninterest income on an operating basis to an outlook for total noninterest income cannot be made available without unreasonable effort. The Company also does not provide an outlook for its total noninterest expense because it contains expense components, such as expense associated with rabbi trust accounts, which is market-driven, over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for its noninterest expense on an operating basis to an outlook for total noninterest expense 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 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 March 31, 2021 will be forgiven during 2021, 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 The next step in our journey Transaction update Combined Boston footprint ■ Announced the signing of an all-cash merger agreement on April 7, 2021 to acquire 100% of the outstanding shares of Century Bancorp, Inc. ("Century"). ■ Increases deposits in the Boston MSA by ~$5 billion to ~$16 billion and solidifies Eastern's position as the #1 community bank in the Boston MSA. ■ ~55% earnings per share accretion with ~17%+ internal rate of return. ■ Improved efficiency (~600 basis points decrease in efficiency ratio) with in-market transaction in familiar community markets. ■ Anticipate closing mid-Q4 2021 (subject to shareholder and regulatory approvals). ■ System conversion and integration planned to commence immediately post-close and be completed by Q1 2022. ■ Century announced first quarter net income of $10.8 million and total assets of $7.3 billion at quarter-end.
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 Q1 2021 financial highlights ■ Net income was $47.7 million or $0.28 per share for the first quarter, driven by seasonally high insurance revenues, favorable impacts to noninterest income and expense driven by higher market interest rates, and strong core results. ■ Operating net income* was $46.5 million, or $0.27 per share for the first quarter. ■ Asset quality remains stable with a release of loan loss reserves of $0.6 million for the first quarter, and $178.4 million in remaining COVID-19 modified loans, or 1.8% of total loans. ■ Paycheck Protection Program ("PPP") loan originations totaled $452.6 million for the first quarter, generating $19.9 million in SBA fees. ■ Book value per share and tangible book value per share* were at $18.14 and $16.12, respectively. ■ The Board of Directors has 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. Key Metrics Highlights $0.08 per share Dividend declared $47.7 million Net income $46.5 million Operating net income* $178.4 million Remaining COVID-19 loan modifications $0.28 $0.27 EPS Operating EPS* $18.14 $16.12 BV/Share TBV/Share*
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 income was $47.7 million in the first quarter. Excluding certain non-recurring items, operating net income* was $46.5 million. ■ Net interest income was $100.1 million in the first quarter, a decrease of $3.5 million due to a $3.8 million non-recurring favorable adjustment in the prior quarter partially offset by higher PPP fee income recognition in the first quarter. ■ Continued high levels of noninterest income, $55.2 million, anchored by $28.1 million of seasonally high insurance revenue. ■ Expenses benefited quarter over quarter from higher salary & wages expense deferrals by $1.8 million in part due to PPP loan origination volume and lower incentive compensation expense of $3.9 million. ■ Credit remains stable. Release of loan loss reserves of $0.6 million in the first quarter. $ in millions, except per share amounts Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Net interest income $ 100.1 $ 103.6 $ 98.7 $ 98.8 $ 100.1 Non-interest income 55.2 49.6 47.7 47.7 33.4 Total revenue 155.3 153.2 146.4 146.5 133.5 Non-interest expense 94.0 199.2 109.8 100.8 95.2 Pre-tax, pre-provision income (loss) 61.3 (45.9) 36.6 45.6 38.3 Provision for credit losses (0.6) 0.9 0.7 8.6 28.6 Pre-tax income (loss) 61.8 (46.8) 35.9 37.0 9.7 Net income (loss) $ 47.7 $ (44.1) $ 28.5 $ 29.9 $ 8.4 Operating net income* $ 46.5 $ 31.6 $ 32.3 $ 27.3 $ 10.9 EPS $ 0.28 $ (0.26) n.a. n.a. n.a. Operating EPS* $ 0.27 $ 0.18 n.a. n.a. n.a. ROA1 1.19 % (1.11) % 0.80 % 0.88 % 0.29 % Operating ROA*1 1.15 % 0.79 % 0.90 % 0.81 % 0.38 % Efficiency ratio 60.56 % 129.97 % 74.99 % 68.82 % 71.28 % Operating efficiency ratio* 60.22 % 68.33 % 69.95 % 68.90 % 69.54 % 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 8 Net interest income, net interest margin, and core net interest margin*1 Average interest earning assets composition $101,513 $100,137 $100,095 $104,965 $101,388 3.80% 3.23% 3.04% 2.84% 2.71% 3.52% 3.42% 3.14% 2.89% NII - FTE* NIM - FTE NIM - FTE Core* Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 ■ Net interest income has been relatively stable over several quarters as the effects of the lower rate environment have been offset by balance sheet growth and PPP fees. ■ PPP fees recognized were $8.3 million in the first quarter compared to $6.1 million in the prior quarter. ■ Net interest margin continues 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. ■ Excess cash has been gradually invested into U.S. Agency securities to gain incremental yield. ■ Earning assets continue to grow driven by deposit growth of $0.8 billion quarter over quarter and $2.7 billion year over year. Net interest margin trends $10,757 $12,479 $13,090 $14,715 $15,189 9,016 9,056 8,823 8,721 8,685 819 1,091 1,076 1,1321,500 1,456 1,713 2,628 3,632 1,148 1,462 2,291 1,741 Cash & other S.T. investments Investments SBA PPP Loans Net loans, excl. PPP Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 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.
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 64% 18% 3% 4% 2% 9% Net interest income Insurance commissions Deposit service charges Trust & investment adv. fees Debit card processing fees Other Noninterest income ■ Noninterest income was $55.2 million in the first quarter. ■ Insurance revenue of $28.1 million is a seasonal high and is $0.7 million, or 2% higher than the prior year quarter. ■ Wealth management revenues were 3% higher than the prior quarter and 11% higher than the prior year quarter. ■ Loan-level interest rate swap revenue was $5.4 million in the first quarter, compared to $2.5 million in the prior quarter, driven by a $3.0 million increase in the fair value of interest rate swap portfolio. ■ The gain on sale of available for sale securities was $1.2 million in the first quarter due to portfolio repositioning. $33.4 $47.7 $47.7 $49.6 $55.2 27.5 22.7 21.9 22.4 28.1 6.1 4.4 5.1 6.0 5.4 5.1 5.2 5.3 5.5 5.7 2.5 2.3 2.7 2.7 2.7 (7.8) 13.1 12.7 12.9 13.3 Insurance Commissions Deposit Service Charges Trust & Investment Adv. Fees Debit Card Processing Fees Other Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Noninterest income sources Fee income provides diverse revenue streams $ in millions $155.3 mm 2021 revenue Noninterest income 36%
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 Noninterest expense ■ Noninterest expense was $94.0 million for the first quarter and $92.5 million on an operating* basis. ■ Expenses benefited quarter over quarter from higher salary & wages expense deferrals by $1.8 million in part due to PPP loan origination volume and lower incentive compensation by $3.9 million. ■ Overall pension cost is lower. Pension service cost, recorded in the salaries and benefits line, was $800 thousand higher quarter over quarter, however this was more than offset by lower pension costs of $2.3 million recorded in other expense. $95.2 $100.8 $109.8 $107.9 $94.0 61.6 63.3 66.6 70.3 64.0 10.0 12.2 11.7 11.4 12.1 8.7 8.6 8.3 8.2 8.23.7 4.4 5.5 5.3 4.111.2 12.2 17.7 12.7 5.5 Salaries & benefits Data processing Occupancy & equipment Professional services Other Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Noninterest expense categories1 2021 noninterest expense $ in millions 68% 13% 9% 4% 6% Salaries & benefits Data processing Occupancy & equipment Professional services Other $94.0 mm 2021 noninterest expense *Non-GAAP Financial Measure. Please refer to Appendices A-E for the applicable reconciliation. 1Q4 '20 figures exclude EBCF stock donation expense of $91.3 million. *
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 Linked Quarter (LQ) Year Over Year (YoY) $ in millions 3/31/2021 12/31/2020 $ % 3/31/2020 $ % Cash and cash equivalents $ 1,860 $ 2,054 $ (194) (9) % $ 766 $ 1,094 143 % Securities 3,986 3,184 802 25 % 1,551 2,435 157 % Loans held for sale 2 1 1 100 % 3 (1) (33) % Total loans 9,916 9,731 185 2 % 9,087 829 9 % Allowance for loan losses (111) (113) 2 (2) % (109) (2) 2 % Deferred & unearned (32) (24) (8) 33 % (6) (26) 433 % Net Loans 9,773 9,594 179 2 % 8,972 801 9 % Goodwill 376 377 (1) — % 377 (1) — % Other assets 730 754 (24) (3) % 675 55 8 % Total Assets $ 16,727 $ 15,964 $ 763 5 % $ 12,344 4,383 36 % Deposits $ 12,981 $ 12,156 $ 825 7 % $ 10,309 $ 2,672 26 % Borrowings 29 28 1 4 % 31 (2) (6) % Other liabilities 330 352 (22) (6) % 341 (11) (3) % Total Liabilities 13,340 12,536 804 6 % 10,681 2,659 25 % Shareholders' Equity 3,387 3,428 (41) (1) % 1,663 1,724 104 % Total Liabilities & Equity $ 16,727 $ 15,964 $ 763 5 % $ 12,344 4,383 36 % Equity / assets 20.2 % 21.5 % 13.5 % Tangible equity / tangible assets* 18.4 % 19.6 % 10.7 % ■ Total assets were $16.7 billion at March 31, 2021 compared to $16.0 billion at end of prior quarter. ■ Securities increased $802 million to $4.0 billion as excess liquidity continues to be deployed. Cash levels declined by $194 million, but remain elevated at $1.9 billion. ■ Total loans were $9.9 billion, decreasing modestly quarter over quarter (excluding PPP loans). ■ Deposits increased $825 million, or 7%, to $13.0 billion. ■ Shareholders' equity declined $41 million, or 1%, due to a $80 million reduction in AOCI net of tax, driven by the market value decline of the available-for-sale investment portfolio, partially offset by retained earnings of $37 million. 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 12 Securities portfolio 3/31/2021 12/31/2020 03/31/2021 change from 12/31/2020 $ in millions Fair Value Percent of Portfolio Fair Value Percent of Portfolio Fair Value Percent of Portfolio Government sponsored residential MBS $ 2,691.7 68 % $ 2,148.8 67 % $ 542.9 1.0 % Government sponsored commercial MBS 116.3 3 % 17.1 1 % $ 99.2 2.0 % U.S. Agency bonds 831.7 21 % 666.7 21 % $ 165.0 — % U.S. Treasury securities 69.1 2 % 70.4 2 % $ (1.3) — % State and municipal bonds and obligations 277.5 7 % 280.9 9 % $ (3.4) (2.0) % Total $ 3,986.3 100 % $ 3,183.9 100 % $ 802.4 $2,692 $116 $832 $69 $278 $2,149 $17 $667 $70 $281 3/31/2021 12/31/2020 Government sponsored residential MBS Government sponsored commercial MBS U.S. Agency bonds U.S. Treasury securities State and municipal bonds and obligations Investment composition $ 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 13 ■ Average deposits of $12.5 billion in the first quarter represents a 29% increase from the prior year period. ■ Low cost of deposits was steady at 0.03% in the first 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 41% 19% 28% 10% 2% DDA DDAWI MMDA Sav CD $9,665 $11,465 $12,135 $12,312 $12,508 Avg. Total Deposits Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 0.23% 0.11% 0.06% 0.03% 0.03% 0.35% 0.18% 0.10% 0.06% 0.06% Total Deposit Cost I.B. Deposit Cost Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Deposits $ in millions 1Source: SNL as of 6/30/2020. 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 14 27% 50% 3% 20% Commercial and industrial Commercial real estate Commercial construction Business banking ■ Total loans were $9.9 billion at the end of the first quarter, and were modestly lower quarter over quarter (excluding PPP loans). ■ Residential loans experienced modest growth in the first quarter, offset by declines in consumer loans and commercial loans (excluding PPP loans). ■ 2020 PPP originations totaled approximately 8,900 loans or $1.2 billion, the third most among lenders in Massachusetts.1 ■ 2021 PPP originations totaled approximately 4,700 loans or $452.6 million as of March 31, 2021. Loan composition Commercial composition at 3/31/21 $9,087 $10,014 $9,944 $9,731 $9,916 6,368 6,273 6,255 6,187 6,188 1,100 1,123 1,026 1,2381,420 1,401 1,373 1,371 1,407930 905 891 868 832 Total commercial excl. PPP PPP loans Residential real estate Consumer home equity Other consumer Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Historical composition $ in millions 1Based on the Company's calculations using publicly-disclosed loan totals by lenders in Massachusetts.
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 Construction 16.2% Professional, scientific, & technical services 13.8% Health care & social assistance 13.4% Accommodation & food 12.4% Other services 8.8% Manufacturing 7.4% Administrative & support 6.7% Wholesale 5.4% Retail 4.5% Transport. & warehousing 2.6% Real estate, rental, & leasing 2.5% All other 6.5% PPP Update ($mm) Loans originated # Original balance2 Current balance2 SBA fees3 received total SBA fees3 recognized (as of 3/31/2021) SBA fees3 not yet recognized Typical loan term (months) 2020 PPP originations 8,902 $ 1,167.1 $ 785.4 $ 37.2 $ 24.7 $ 12.5 24 2021 PPP originations 4,693 $ 452.6 $ 452.6 $ 19.9 $ 0.7 $ 19.3 60 Total 13,595 $ 1,619.7 $ 1,238.0 $ 57.1 $ 25.4 $ 31.8 Industry segments1 ■ Eastern has originated approximately 13,600 thousand loans totaling $1.6 billion under the PPP in 2020 and 2021 combined. ■ As of March 31, 2021, Eastern had $1.2 billion in PPP loan balances still outstanding. ■ $25.4 million of SBA PPP fees have been recognized, $31.8 million yet to be recognized as of March 31, 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 $1.2bn 1Based on current loan principal balances as of March 31, 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 16 Net charge-offs (NCOs) / Avg. loans (excl. PPP loans)*1 Non-performing loans (NPLs) Allowance / Total loans (excl. PPP loans)* & NPLs 0.08% 0.05% 0.09% 0.15% 0.06% NCOs / Avg. loans (excl. PPP loans)* (1) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 1.20% 1.31% 1.31% 1.30% 1.28% 222.34% 210.55% 257.47% 261.33% 252.72% Allowance / Total loans (excl. PPP loans)* Allowance / NPLs Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 $49.1 $55.4 $44.8 $43.3 $44.0 Consumer Residential Commercial Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 $— $20.0 $40.0 $60.0 ■ The allowance for loan losses was $111.1 million at March 31, 2021, or 1.12% of total loans and 253% of non- performing loans. ■ Non-performing loans were $44.0 million at March 31, 2021 compared to $43.3 million at the end of the prior quarter. ■ Net charge-offs continue to be low, totaling 0.06%1 of average total loans (excluding PPP loans)* in the first quarter compared to 0.15%1 in the prior quarter. ■ Negative provision of $0.6 million in the first 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 17 COVID-19 modification update Remaining COVID-19 Modifications as of March 31, 2021 (1) $ in thousands Remaining Modifications % of Total Loan Balance Portfolio Commercial and industrial $ 22,776 1.1 % Commercial real estate 127,683 3.5 % Commercial construction — — % Business banking 11,681 0.8 % Residential real estate 13,754 1.0 % Consumer home equity 1,274 0.2 % Other consumer 1,262 0.5 % Total $ 178,430 1.8 % ■ At March 31, 2021, $178.4 million in COVID-19 modified loans remained under modified payment terms. ■ $92.1 million of loan modifications remain under their original modification and $86.4 million of loans have received an additional modification subsequent to their original modification, representing 48% of total remaining modifications. ■ Eastern has $178.1 million in loans to the hotel industry, of which 51.6% remained under modified payment terms due to the COVID-19 pandemic at March 31, 2021. (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. 52% 48% Original modification Two or more modifications Remaining COVID-19 mods1 at March 31, 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 18 Outlook Category Management's Outlook Net interest income Excluding PPP interest and net fees, net interest income is expected to be between $360-$370 million. Total PPP interest income is highly dependent on the pace of forgiveness and is expected to be between $30-$40 million. NCOs & Provision for loan losses Both net charge-offs and provision for loan losses are expected to be 0.10% - 0.15% of total loans excluding PPP.* Operating noninterest income* Operating noninterest income* is expected to be between $180 - $190 million. Operating noninterest expense* Operating noninterest expense* is expected to be $390 - $400 million. Effective Tax rate 22% - 23% The outlook below is for full year 2021 results, assumes the economic recovery continues and interest rates remain relatively unchanged, and excludes the anticipated impact of the pending Century acquisition. *Non-GAAP Financial Measure. See page 4 for additional information.
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 20 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. Three Months Ended (Unaudited, dollars in thousands, except share data) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Net income (GAAP) $ 47,663 $ (44,062) $ 28,505 $ 29,850 $ 8,445 Add: Noninterest income components: (Income) loss from investments held in rabbi trusts (1,846) (5,535) (3,800) (7,745) 6,743 (Gain) loss on sales of securities available for sale, net (1,164) (3) — (163) (122) (Gain) loss on sale of other assets (18) (49) 71 27 (29) Noninterest expense components: Rabbi trust employee benefit expense (income) 986 2,838 1,445 3,985 (3,479) Impairment charge on tax credit investments — 3,189 7,590 — — IPO costs (1) — — 549 380 270 (Gain) loss on sale of OREO — (61) (546) — — Merger and acquisition expenses 589 90 — — — Stock donation to the EBCF — 91,287 — — — Total impact of non-GAAP adjustments (1,453) 91,756 5,309 (3,516) 3,383 Less net tax (expense) benefit associated with non-GAAP adjustments (2) (327) 16,082 1,492 (967) 970 Non-GAAP adjustments, net of tax $ (1,126) $ 75,674 $ 3,817 $ (2,549) $ 2,413 Operating net income (non-GAAP) $ 46,537 $ 31,612 $ 32,322 $ 27,301 $ 10,858 Weighted average common shares outstanding during the period: Basic 172,049,044 171,812,535 — — — Diluted 172,049,044 171,812,535 — — — Earnings (loss) per share, basic $ 0.28 $ (0.26) n.a. n.a. n.a. Earnings (loss) per share, diluted $ 0.28 $ (0.26) n.a. n.a. n.a. Operating earnings per share, basic (non-GAAP) $ 0.27 $ 0.18 n.a. n.a. n.a. Operating earnings per share, diluted (non-GAAP) $ 0.27 $ 0.18 n.a. n.a. 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 21 Appendix A: Reconciliation of non-GAAP earnings metrics continued Three Months Ended (Unaudited, dollars in thousands, except share data) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Return on average assets (3) 1.19 % (1.11) % 0.80 % 0.88 % 0.29 % Add: (Income) loss from investments held in rabbi trusts (3) (0.05) % (0.14) % (0.11) % (0.23) % 0.23 % (Gain) loss on sales of securities available for sale, net (3) (0.03) % — % — % — % — % (Gain) loss on sale of other assets (3) — % — % — % — % — % Rabbi trust employee benefit expense (income) (3) 0.02 % 0.07 % 0.04 % 0.12 % (0.12) % Impairment charge on tax credit investments (3) — % 0.08 % 0.21 % — % — % IPO costs (1) (3) — % — % 0.02 % 0.01 % 0.01 % (Gain) loss on sale of OREO (3) — % — % (0.02) % — % — % Merger and acquisition expenses (3) 0.01 % — % — % — % — % Stock donation to the EBCF (3) — % 2.29 % — % — % — % Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3) (0.01) % 0.40 % 0.04 % (0.03) % 0.03 % Operating return on average assets (non-GAAP) (3) 1.15 % 0.79 % 0.90 % 0.81 % 0.38 % Return on average shareholders' equity (3) 5.66 % (5.61) % 6.65 % 7.11 % 2.08 % Add: (Income) loss from investments held in rabbi trusts (3) (0.22) % (0.70) % (0.89) % (1.84) % 1.66 % (Gain) loss on sales of securities available for sale, net (3) (0.14) % — % — % (0.04) % (0.03) % (Gain) loss on sale of other assets (3) — % (0.01) % 0.02 % 0.01 % (0.01) % Rabbi trust employee benefit expense (income) (3) 0.12 % 0.36 % 0.34 % 0.95 % (0.86) % Impairment charge on tax credit investments (3) — % 0.41 % 1.77 % — % — % IPO costs (1) (3) — % — % 0.13 % 0.09 % 0.07 % (Gain) loss on sale of OREO (3) — % (0.01) % (0.13) % — % — % Merger and acquisition expenses (3) 0.07 % 0.01 % — % — % — % Stock donation to the EBCF (3) — % 11.62 % — % — % — % Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3) (0.04) % 2.05 % 0.35 % (0.23) % 0.24 % Operating return on average shareholders' equity (non-GAAP) (3) 5.53 % 4.02 % 7.54 % 6.51 % 2.67 % (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) Ratios have been annualized.
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 B: Reconciliation of non-GAAP operating revenues and expenses Three Months Ended (Unaudited, dollars in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Net interest income (GAAP) $ 100,091 $ 103,608 $ 98,742 $ 98,755 $ 100,146 Add: Tax-equivalent adjustment (non-GAAP) 1,297 1,357 1,353 1,378 1,368 Fully-taxable equivalent net interest income (non-GAAP) $ 101,388 $ 104,965 $ 100,095 $ 100,133 $ 101,514 Noninterest income (GAAP) $ 55,212 $ 49,638 $ 47,709 $ 47,657 $ 33,369 Less: Income (loss) from investments held in rabbi trusts 1,846 5,535 3,800 7,745 (6,743) Gain (loss) on sales of securities available for sale, net 1,164 3 — 163 122 Gain (loss) on sale of other assets 18 49 (71) (27) 29 Noninterest income on an operating basis (non-GAAP) $ 52,184 $ 44,051 $ 43,980 $ 39,776 $ 39,961 Noninterest expense (GAAP) $ 94,049 $ 199,169 $ 109,817 $ 100,765 $ 95,172 Less: Rabbi trust employee benefit expense (income) 986 2,838 1,445 3,985 (3,479) Impairment charge on tax credit investments — 3,189 7,590 — — IPO costs (1) — — 549 380 270 (Gain) loss on sale of OREO — (61) (546) — — Merger and acquisition expenses 589 90 — — — Stock donation to the EBCF — 91,287 — — — Noninterest expense on an operating basis (non-GAAP) $ 92,474 $ 101,826 $ 100,779 $ 96,400 $ 98,381 Total revenue (GAAP) $ 155,303 $ 153,246 $ 146,451 $ 146,412 $ 133,515 Total operating revenue (non-GAAP) $ 153,572 $ 149,016 $ 144,075 $ 139,909 $ 141,475 Efficiency ratio (GAAP) 60.56 % 129.97 % 74.99 % 68.82 % 71.28 % Operating efficiency ratio (non-GAAP) 60.22 % 68.33 % 69.95 % 68.90 % 69.54 % Noninterest income / total revenue (GAAP) 35.55 % 32.39 % 32.58 % 32.55 % 24.99 % Noninterest income / total revenue on an operating basis (non-GAAP) 33.98 % 29.56 % 30.53 % 28.43 % 28.25 % (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 23 Appendix C: Reconciliation of non-GAAP capital metrics As of Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 (Unaudited, dollars in thousands, except share data) Tangible shareholders' equity: Total shareholders' equity (GAAP) $ 3,387,045 $ 3,428,052 $ 1,713,372 $ 1,693,630 $ 1,662,734 Less: Goodwill and other intangibles 376,002 376,534 375,632 376,331 377,033 Tangible shareholders' equity (non-GAAP) 3,011,043 3,051,518 1,337,740 1,317,299 1,285,701 Tangible assets: Total assets (GAAP) 16,726,795 15,964,190 15,460,594 13,996,523 12,343,754 Less: Goodwill and other intangibles 376,002 376,534 375,632 376,331 377,033 Tangible assets (non-GAAP) $ 16,350,793 $ 15,587,656 $ 15,084,962 $ 13,620,192 $ 11,966,721 Shareholders' equity to assets ratio (GAAP) 20.2 % 21.5 % 11.1 % 12.1 % 13.5 % Tangible shareholders' equity to tangible assets ratio (non-GAAP) 18.4 % 19.6 % 8.9 % 9.7 % 10.7 % Common shares outstanding 186,758,154 186,758,154 — — — Book value per share (GAAP) $ 18.14 $ 18.36 n.a. n.a. n.a. Tangible book value per share (non-GAAP) $ 16.12 $ 16.34 n.a. n.a. 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 24 Appendix D: Reconciliation of non-GAAP credit metrics As of (Unaudited, dollars in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Total loans excluding PPP loans: Total loans (GAAP) (1) $ 9,883,802 $ 9,706,989 $ 9,911,494 $ 9,979,616 $ 9,080,743 Less: PPP loans (1) 1,210,598 1,007,487 1,098,883 1,072,312 — Total loans excluding PPP loans (non-GAAP) $ 8,673,204 $ 8,699,502 $ 8,812,611 $ 8,907,304 $ 9,080,743 Total nonperforming loans (NPLs) (GAAP) $ 43,954 $ 43,252 $ 44,833 $ 55,395 $ 49,087 Total NPLs / total loans (GAAP) 0.44 % 0.45 % 0.45 % 0.56 % 0.54 % Total NPLs / total loans (excl. PPP loans) (non-GAAP) 0.51 % 0.50 % 0.51 % 0.62 % 0.54 % Allowance for loan losses (ALLL) (GAAP) $ 111,080 $ 113,031 $ 115,432 $ 116,636 $ 109,138 ALLL / total loans (GAAP) 1.12% 1.16% 1.16% 1.17% 1.20% ALLL / total loans (excl. PPP loans) (non-GAAP) 1.28% 1.30% 1.31% 1.31% 1.20% As of and for the three months ended (Unaudited, dollars in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Average total loans excluding PPP Loans: Average total loans (GAAP) $ 9,816,788 $ 9,796,697 $ 9,914,731 $ 9,875,110 $ 9,016,223 Less: Average PPP loans 1,131,516 1,076,155 1,091,464 818,665 — Average total loans excluding PPP loans (non-GAAP) $ 8,685,272 $ 8,720,542 $ 8,823,267 $ 9,056,445 $ 9,016,223 Total net loans charged-off (NCOs) (GAAP) $ 1,371 $ 3,301 $ 1,904 $ 1,102 $ 1,759 NCOs / Average total loans (GAAP) (2) 0.06 % 0.13 % 0.08 % 0.04 % 0.08 % NCOs / Average total loans (excl. PPP loans) (non-GAAP) (2) 0.06 % 0.15 % 0.09 % 0.05 % 0.08 % (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 25 Appendix E: Reconciliation of non-GAAP core margin As of and for the three months ended Mar 31, 2021 Dec 31, 2020 (Unaudited, dollars in thousands) Volume Interest Margin Impact (1) Volume Interest Margin Impact (1) Reported total average interest earnings 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) % (0.28) % Sep 30, 2020 Jun 30, 2020 Volume Interest Margin Impact (1) Volume Interest Margin Impact (1) Reported total average interest earnings assets, net interest income, and net interest margin (2) $ 13,089,839 $ 100,095 3.04 % $ 12,479,343 $ 100,137 3.23 % Non-GAAP adjustments: PPP loan volume earning 1% (1,091,464) (2,795) 0.18 % (818,665) (2,175) 0.15 % SBA PPP loan fee accretion, net of deferred origination cost amortization — (4,125) (0.13) % — (3,655) (0.12) % Excess cash (3) (1,200,250) (302) 0.30 % (898,745) (223) 0.24 % Deferred loan fee income adjustment — — — % — — — % Core margin (Non-GAAP) (4) $ 10,798,125 $ 92,873 3.42 % $ 10,761,933 $ 94,084 3.52 % Core margin change from prior quarter (0.10) % (1) Presented on an annualized basis. (2) Presented on a fully taxable equivalent basis. (3) Cash above 2% of average total earning assets at yield of 10 basis points. (4) Core margin is the margin that results from the combined volume and interest adjustments taken together.