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Eastern Bankshares, Inc. Reports Fourth Quarter 2023 Financial Results

~ Earnings, Capital, and Liquidity Enhancements Resulting from Eastern Insurance Group LLC Asset Sale ~

~ Growth in Core Deposits and Reduction in Wholesale Funding ~

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

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

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

FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER OF 2023

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

BALANCE SHEET

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

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

NET INTEREST INCOME

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

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

NONINTEREST INCOME

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

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

NONINTEREST EXPENSE

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

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

INCOME TAXES

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

ASSET QUALITY

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

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

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

DIVIDENDS AND SHARE REPURCHASES

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

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

CONFERENCE CALL AND PRESENTATION INFORMATION

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

ABOUT EASTERN BANKSHARES, INC.

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

NON-GAAP FINANCIAL MEASURES

*Denotes a non-GAAP financial measure used in this press release.

A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).

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

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

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

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

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target”, “outlook” and similar expressions. Forward-looking statements, by their nature, are subject to risks and uncertainties. There are many factors that could cause actual results to differ materially from expected results described in the forward-looking statements.

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

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

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed merger transaction, on January 16, 2024, the Company filed with the SEC a Registration Statement on Form S-4 and a Joint Proxy Statement of the Company and Cambridge and a Prospectus of the Company (the “joint proxy statement/prospectus”), as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF THE COMPANY AND CAMBRIDGE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND EACH OTHER RELEVANT DOCUMENT FILED WITH THE SEC, AS WELL AS ANY AMENDMENT OR SUPPLEMENT TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and Cambridge, can be obtained without charge, at the SEC’s website (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to the Company’s Investor Relations team via email at InvestorRelations@easternbank.com or by telephone at (781) 598-7920, or to Cambridge Investor Relations via email at InvestorRelations@cambridgetrust.com or by telephone at (617) 520-5520.

PARTICIPANTS IN THE SOLICITATION

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

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

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

 

As of and for the three months ended

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

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

133,307

 

$

137,205

 

$

141,588

 

$

138,309

 

$

149,994

 

Noninterest income (loss)

 

26,739

 

 

19,157

 

 

26,204

 

 

(309,853

)

 

22,425

 

Total revenue

 

160,046

 

 

156,362

 

 

167,792

 

 

(171,544

)

 

172,419

 

Noninterest expense

 

121,029

 

 

101,748

 

 

99,934

 

 

95,891

 

 

112,583

 

Pre-tax, pre-provision income (loss)

 

39,017

 

 

54,614

 

 

67,858

 

 

(267,435

)

 

59,836

 

Provision for allowance for loan losses

 

5,198

 

 

7,328

 

 

7,501

 

 

25

 

 

10,880

 

Pre-tax income (loss)

 

33,819

 

 

47,286

 

 

60,357

 

 

(267,460

)

 

48,956

 

Net income (loss) from continuing operations

 

31,509

 

 

63,464

 

 

44,419

 

 

(202,081

)

 

40,918

 

Net income (loss) from discontinued operations

 

286,994

 

 

(4,351

)

 

4,238

 

 

7,985

 

 

1,376

 

Net income (loss)

 

318,503

 

 

59,113

 

 

48,657

 

 

(194,096

)

 

42,294

 

Operating net income (non-GAAP)

 

16,875

 

 

52,085

 

 

41,092

 

 

53,134

 

 

48,570

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings (losses) per share, diluted

$

1.95

 

$

0.36

 

$

0.30

 

$

(1.20

)

$

0.26

 

Continuing operations

$

0.19

 

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

Discontinued operations

$

1.76

 

$

(0.03

)

$

0.03

 

$

0.05

 

$

0.01

 

Operating earnings per share, diluted (non-GAAP)

$

0.10

 

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

Book value per share

$

16.86

 

$

13.87

 

$

14.33

 

$

14.63

 

$

14.03

 

Tangible book value per share (non-GAAP)

$

13.65

 

$

10.14

 

$

10.59

 

$

10.88

 

$

10.28

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (2)

 

0.59

%

 

1.18

%

 

0.81

%

 

(3.64

)%

 

0.73

%

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

 

0.31

%

 

0.97

%

 

0.75

%

 

0.95

%

 

0.86

%

Return on average shareholders' equity (2)

 

4.66

%

 

9.91

%

 

6.85

%

 

(33.31

)%

 

6.71

%

Operating return on average shareholders' equity (2)

 

2.51

%

 

8.14

%

 

6.34

%

 

8.76

%

 

7.96

%

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

 

5.99

%

 

13.38

%

 

9.19

%

 

(45.55

)%

 

9.23

%

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

 

3.20

%

 

10.99

%

 

8.50

%

 

11.98

%

 

10.95

%

Net interest margin (FTE) (2)

 

2.69

%

 

2.77

%

 

2.80

%

 

2.66

%

 

2.81

%

Cost of deposits (2)

 

1.51

%

 

1.33

%

 

1.22

%

 

0.92

%

 

0.37

%

Efficiency ratio

 

75.62

%

 

65.07

%

 

59.56

%

 

(55.90

)%

 

65.30

%

Operating efficiency ratio (non-GAAP)

 

73.59

%

 

60.83

%

 

58.47

%

 

57.97

%

 

57.26

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

21,133,278

 

$

21,146,292

 

$

21,583,493

 

$

22,720,530

 

$

22,646,858

 

Total loans

 

13,973,428

 

 

13,919,275

 

 

13,961,878

 

 

13,675,250

 

 

13,575,531

 

Total deposits

 

17,596,217

 

 

17,424,169

 

 

18,180,972

 

 

18,541,580

 

 

18,974,359

 

Total loans / total deposits

 

79

%

 

80

%

 

77

%

 

74

%

 

72

%

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL")

$

148,993

 

$

155,146

 

$

147,955

 

$

140,938

 

$

142,211

 

ALLL / total nonperforming loans ("NPLs")

 

283.49

%

 

326.86

%

 

484.18

%

 

407.65

%

 

368.38

%

Total NPLs / total loans

 

0.38

%

 

0.34

%

 

0.22

%

 

0.25

%

 

0.28

%

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

 

0.32

%

 

0.00

%

 

0.01

%

 

0.00

%

 

0.01

%

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

14.08

%

 

11.57

%

 

11.71

%

 

11.35

%

 

10.91

%

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

 

11.71

%

 

8.73

%

 

8.93

%

 

8.70

%

 

8.24

%

 

 

 

 

 

 

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

(2) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

 

Dec 31, 2023 change from

(Unaudited, dollars in thousands)

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

 

Sep 30, 2023

 

Dec 31, 2022

ASSETS

 

 

 

 

△ $

△ %

 

△ $

△ %

Cash and due from banks

$

87,233

 

$

72,689

 

$

106,040

 

 

$

14,544

 

20

%

 

$

(18,807

)

(18

)%

Short-term investments

 

605,843

 

 

536,119

 

 

63,465

 

 

 

69,724

 

13

%

 

 

542,378

 

855

%

Cash and cash equivalents

 

693,076

 

 

608,808

 

 

169,505

 

 

 

84,268

 

14

%

 

 

523,571

 

309

%

Available for sale ("AFS") securities

 

4,407,521

 

 

4,261,518

 

 

6,690,778

 

 

 

146,003

 

3

%

 

 

(2,283,257

)

(34

)%

Held to maturity ("HTM") securities

 

449,721

 

 

455,900

 

 

476,647

 

 

 

(6,179

)

(1

)%

 

 

(26,926

)

(6

)%

Total securities

 

4,857,242

 

 

4,717,418

 

 

7,167,425

 

 

 

139,824

 

3

%

 

 

(2,310,183

)

(32

)%

Loans held for sale

 

1,124

 

 

23,892

 

 

4,543

 

 

 

(22,768

)

(95

)%

 

 

(3,419

)

(75

)%

Loans:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

3,034,068

 

 

3,087,509

 

 

3,150,946

 

 

 

(53,441

)

(2

)%

 

 

(116,878

)

(4

)%

Commercial real estate

 

5,457,349

 

 

5,396,912

 

 

5,155,323

 

 

 

60,437

 

1

%

 

 

302,026

 

6

%

Commercial construction

 

386,999

 

 

382,615

 

 

336,276

 

 

 

4,384

 

1

%

 

 

50,723

 

15

%

Business banking

 

1,085,763

 

 

1,087,799

 

 

1,090,492

 

 

 

(2,036

)

%

 

 

(4,729

)

%

Total commercial loans

 

9,964,179

 

 

9,954,835

 

 

9,733,037

 

 

 

9,344

 

%

 

 

231,142

 

2

%

Residential real estate

 

2,565,485

 

 

2,550,861

 

 

2,460,849

 

 

 

14,624

 

1

%

 

 

104,636

 

4

%

Consumer home equity

 

1,208,231

 

 

1,193,859

 

 

1,187,547

 

 

 

14,372

 

1

%

 

 

20,684

 

2

%

Other consumer

 

235,533

 

 

219,720

 

 

194,098

 

 

 

15,813

 

7

%

 

 

41,435

 

21

%

Total loans

 

13,973,428

 

 

13,919,275

 

 

13,575,531

 

 

 

54,153

 

%

 

 

397,897

 

3

%

Allowance for loan losses

 

(148,993

)

 

(155,146

)

 

(142,211

)

 

 

6,153

 

(4

)%

 

 

(6,782

)

5

%

Unamortized prem./disc. and def. fees

 

(25,068

)

 

(19,307

)

 

(13,003

)

 

 

(5,761

)

30

%

 

 

(12,065

)

93

%

Net loans

 

13,799,367

 

 

13,744,822

 

 

13,420,317

 

 

 

54,545

 

%

 

 

379,050

 

3

%

Federal Home Loan Bank stock, at cost

 

5,904

 

 

37,125

 

 

41,363

 

 

 

(31,221

)

(84

)%

 

 

(35,459

)

(86

)%

Premises and equipment

 

60,133

 

 

59,033

 

 

62,493

 

 

 

1,100

 

2

%

 

 

(2,360

)

(4

)%

Bank-owned life insurance

 

164,702

 

 

163,700

 

 

160,790

 

 

 

1,002

 

1

%

 

 

3,912

 

2

%

Goodwill and other intangibles, net

 

566,205

 

 

566,709

 

 

568,009

 

 

 

(504

)

%

 

 

(1,804

)

%

Deferred income taxes, net

 

266,185

 

 

416,081

 

 

331,963

 

 

 

(149,896

)

(36

)%

 

 

(65,778

)

(20

)%

Prepaid expenses

 

183,073

 

 

156,113

 

 

165,368

 

 

 

26,960

 

17

%

 

 

17,705

 

11

%

Other assets

 

536,267

 

 

527,873

 

 

426,863

 

 

 

8,394

 

2

%

 

 

109,404

 

26

%

Assets of discontinued operations

 

 

 

124,718

 

 

128,219

 

 

 

(124,718

)

(100

)%

 

 

(128,219

)

(100

)%

Total assets

$

21,133,278

 

$

21,146,292

 

$

22,646,858

 

 

$

(13,014

)

%

 

$

(1,513,580

)

(7

)%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Demand

$

5,162,218

 

$

5,177,015

 

$

6,240,637

 

 

$

(14,797

)

%

 

$

(1,078,419

)

(17

)%

Interest checking accounts

 

3,737,361

 

 

3,671,871

 

 

4,568,122

 

 

 

65,490

 

2

%

 

 

(830,761

)

(18

)%

Savings accounts

 

1,323,126

 

 

1,393,545

 

 

1,831,123

 

 

 

(70,419

)

(5

)%

 

 

(507,997

)

(28

)%

Money market investment

 

4,664,475

 

 

4,709,149

 

 

4,710,095

 

 

 

(44,674

)

(1

)%

 

 

(45,620

)

(1

)%

Certificates of deposit

 

2,709,037

 

 

2,472,589

 

 

1,624,382

 

 

 

236,448

 

10

%

 

 

1,084,655

 

67

%

Total deposits

 

17,596,217

 

 

17,424,169

 

 

18,974,359

 

 

 

172,048

 

1

%

 

 

(1,378,142

)

(7

)%

Borrowed funds:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

17,738

 

 

673,525

 

 

704,084

 

 

 

(655,787

)

(97

)%

 

 

(686,346

)

(97

)%

Escrow deposits of borrowers

 

21,978

 

 

24,947

 

 

22,314

 

 

 

(2,969

)

(12

)%

 

 

(336

)

(2

)%

Interest rate swap collateral funds

 

8,500

 

 

16,900

 

 

14,430

 

 

 

(8,400

)

(50

)%

 

 

(5,930

)

(41

)%

Total borrowed funds

 

48,216

 

 

715,372

 

 

740,828

 

 

 

(667,156

)

(93

)%

 

 

(692,612

)

(93

)%

Other liabilities

 

513,990

 

 

525,378

 

 

424,951

 

 

 

(11,388

)

(2

)%

 

 

89,039

 

21

%

Liabilities of discontinued operations

 

 

 

34,820

 

 

34,930

 

 

 

(34,820

)

(100

)%

 

 

(34,930

)

(100

)%

Total liabilities

 

18,158,423

 

 

18,699,739

 

 

20,175,068

 

 

 

(541,316

)

(3

)%

 

 

(2,016,645

)

(10

)%

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Common shares

 

1,767

 

 

1,766

 

 

1,762

 

 

 

1

 

%

 

 

5

 

%

Additional paid-in capital

 

1,666,441

 

 

1,661,136

 

 

1,649,141

 

 

 

5,305

 

%

 

 

17,300

 

1

%

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

 

(132,755

)

 

(133,992

)

 

(137,696

)

 

 

1,237

 

(1

)%

 

 

4,941

 

(4

)%

Retained earnings

 

2,047,754

 

 

1,747,225

 

 

1,881,775

 

 

 

300,529

 

17

%

 

 

165,979

 

9

%

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

 

(608,352

)

 

(829,582

)

 

(923,192

)

 

 

221,230

 

(27

)%

 

 

314,840

 

(34

)%

Total shareholders' equity

 

2,974,855

 

 

2,446,553

 

 

2,471,790

 

 

 

528,302

 

22

%

 

 

503,065

 

20

%

Total liabilities and shareholders' equity

$

21,133,278

 

$

21,146,292

 

$

22,646,858

 

 

$

(13,014

)

%

 

$

(1,513,580

)

(7

)%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Three months ended

 

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

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

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

 

Sep 30, 2023

 

Dec 31, 2022

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

168,419

 

$

169,274

 

$

142,446

 

 

$

(855

)

(1

)%

 

$

25,973

 

18

%

Taxable interest and dividends on securities

 

23,782

 

 

24,191

 

 

30,413

 

 

 

(409

)

(2

)%

 

 

(6,631

)

(22

)%

Non-taxable interest and dividends on securities

 

1,434

 

 

1,434

 

 

1,594

 

 

 

 

%

 

 

(160

)

(10

)%

Interest on federal funds sold and other short-term investments

 

10,011

 

 

7,269

 

 

545

 

 

 

2,742

 

38

%

 

 

9,466

 

1737

%

Total interest and dividend income

 

203,646

 

 

202,168

 

 

174,998

 

 

 

1,478

 

1

%

 

 

28,648

 

16

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

67,389

 

 

59,607

 

 

17,457

 

 

 

7,782

 

13

%

 

 

49,932

 

286

%

Interest on borrowings

 

2,950

 

 

5,356

 

 

7,547

 

 

 

(2,406

)

(45

)%

 

 

(4,597

)

(61

)%

Total interest expense

 

70,339

 

 

64,963

 

 

25,004

 

 

 

5,376

 

8

%

 

 

45,335

 

181

%

Net interest income

 

133,307

 

 

137,205

 

 

149,994

 

 

 

(3,898

)

(3

)%

 

 

(16,687

)

(11

)%

Provision for allowance for loan losses

 

5,198

 

 

7,328

 

 

10,880

 

 

 

(2,130

)

(29

)%

 

 

(5,682

)

(52

)%

Net interest income after provision for allowance for loan losses

 

128,109

 

 

129,877

 

 

139,114

 

 

 

(1,768

)

(1

)%

 

 

(11,005

)

(8

)%

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

7,514

 

 

7,403

 

 

6,834

 

 

 

111

 

1

%

 

 

680

 

10

%

Trust and investment advisory fees

 

6,128

 

 

6,235

 

 

5,626

 

 

 

(107

)

(2

)%

 

 

502

 

9

%

Debit card processing fees

 

3,398

 

 

3,388

 

 

3,227

 

 

 

10

 

%

 

 

171

 

5

%

Interest rate swap (losses) income

 

(576

)

 

1,695

 

 

(78

)

 

 

(2,271

)

(134

)%

 

 

(498

)

638

%

Income (losses) from investments held in rabbi trusts

 

4,969

 

 

(1,523

)

 

3,235

 

 

 

6,492

 

(426

)%

 

 

1,734

 

54

%

Losses on sales of commercial and industrial loans

 

(87

)

 

(2,651

)

 

 

 

 

2,564

 

(97

)%

 

 

(87

)

%

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

 

(219

)

 

(164

)

 

8

 

 

 

(55

)

34

%

 

 

(227

)

(2838

)%

Losses on sales of securities available for sale, net

 

 

 

 

 

(683

)

 

 

 

%

 

 

683

 

(100

)%

Other

 

5,612

 

 

4,774

 

 

4,256

 

 

 

838

 

18

%

 

 

1,356

 

32

%

Total noninterest income

 

26,739

 

 

19,157

 

 

22,425

 

 

 

7,582

 

40

%

 

 

4,314

 

19

%

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

67,773

 

 

60,898

 

 

61,572

 

 

 

6,875

 

11

%

 

 

6,201

 

10

%

Office occupancy and equipment

 

9,195

 

 

8,641

 

 

8,641

 

 

 

554

 

6

%

 

 

554

 

6

%

Data processing

 

16,753

 

 

13,443

 

 

13,227

 

 

 

3,310

 

25

%

 

 

3,526

 

27

%

Professional services

 

4,108

 

 

7,125

 

 

4,295

 

 

 

(3,017

)

(42

)%

 

 

(187

)

(4

)%

Marketing expenses

 

2,693

 

 

1,765

 

 

3,032

 

 

 

928

 

53

%

 

 

(339

)

(11

)%

Loan expenses

 

1,174

 

 

1,082

 

 

627

 

 

 

92

 

9

%

 

 

547

 

87

%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

13,486

 

 

2,808

 

 

1,540

 

 

 

10,678

 

380

%

 

 

11,946

 

776

%

Amortization of intangible assets

 

505

 

 

504

 

 

299

 

 

 

1

 

%

 

 

206

 

69

%

Other

 

5,342

 

 

5,482

 

 

19,350

 

 

 

(140

)

(3

)%

 

 

(14,008

)

(72

)%

Total noninterest expense

 

121,029

 

 

101,748

 

 

112,583

 

 

 

19,281

 

19

%

 

 

8,446

 

8

%

Income before income tax expense

 

33,819

 

 

47,286

 

 

48,956

 

 

 

(13,467

)

(28

)%

 

 

(15,137

)

(31

)%

Income tax expense (benefit)

 

2,310

 

 

(16,178

)

 

8,038

 

 

 

18,488

 

(114

)%

 

 

(5,728

)

(71

)%

Net income from continuing operations

$

31,509

 

$

63,464

 

$

40,918

 

 

$

(31,955

)

(50

)%

 

$

(9,409

)

(23

)%

Net income (loss) from discontinued operations

$

286,994

 

$

(4,351

)

$

1,376

 

 

$

291,345

 

(6696

)%

 

$

285,618

 

20757

%

Net income

$

318,503

 

$

59,113

 

$

42,294

 

 

$

259,390

 

439

%

 

$

276,209

 

653

%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

162,571,066

 

 

162,370,469

 

 

162,032,522

 

 

 

200,597

 

0

%

 

 

538,544

 

0

%

Weighted average common shares outstanding, diluted

 

162,724,398

 

 

162,469,887

 

 

162,263,547

 

 

 

254,511

 

0

%

 

 

460,851

 

0

%

Earnings (loss) per share, basic:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.19

 

$

0.39

 

$

0.25

 

 

$

(0.20

)

(51

)%

 

$

(0.06

)

(24

)%

Discontinued operations

$

1.77

 

$

(0.03

)

$

0.01

 

 

$

1.80

 

(6000

)%

 

$

1.76

 

17600

%

Earnings per share, basic

$

1.96

 

$

0.36

 

$

0.26

 

 

$

1.60

 

444

%

 

$

1.70

 

654

%

Earnings (loss) per share, diluted:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.19

 

$

0.39

 

$

0.25

 

 

$

(0.20

)

(51

)%

 

$

(0.06

)

(24

)%

Discontinued operations

$

1.76

 

$

(0.03

)

$

0.01

 

 

$

1.79

 

(5967

)%

 

$

1.75

 

17500

%

Earnings per share, diluted

$

1.95

 

$

0.36

 

$

0.26

 

 

$

1.59

 

442

%

 

$

1.69

 

650

%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Twelve months ended

 

 

 

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

Dec 31, 2023

Dec 31, 2022

 

Change

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

Interest and fees on loans

$

652,095

 

$

476,041

 

 

$

176,054

 

37

%

Taxable interest and dividends on securities

 

101,233

 

 

118,690

 

 

 

(17,457

)

(15

)%

Non-taxable interest and dividends on securities

 

5,736

 

 

7,179

 

 

 

(1,443

)

(20

)%

Interest on federal funds sold and other short-term investments

 

37,395

 

 

3,271

 

 

 

34,124

 

1043

%

Total interest and dividend income

 

796,459

 

 

605,181

 

 

 

191,278

 

32

%

Interest expense:

 

 

 

 

 

Interest on deposits

 

226,075

 

 

28,621

 

 

 

197,454

 

690

%

Interest on borrowings

 

19,975

 

 

8,506

 

 

 

11,469

 

135

%

Total interest expense

 

246,050

 

 

37,127

 

 

 

208,923

 

563

%

Net interest income

 

550,409

 

 

568,054

 

 

 

(17,645

)

(3

)%

Provision for allowance for loan losses

 

20,052

 

 

17,925

 

 

 

2,127

 

12

%

Net interest income after provision for allowance for loan losses

 

530,357

 

 

550,129

 

 

 

(19,772

)

(4

)%

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

28,631

 

 

30,392

 

 

 

(1,761

)

(6

)%

Trust and investment advisory fees

 

24,264

 

 

23,593

 

 

 

671

 

3

%

Debit card processing fees

 

13,469

 

 

12,644

 

 

 

825

 

7

%

Interest rate swap income

 

1,536

 

 

6,009

 

 

 

(4,473

)

(74

)%

Income (losses) from investments held in rabbi trusts

 

9,305

 

 

(10,762

)

 

 

20,067

 

(186

)%

Losses on sales of commercial and industrial loans

 

(2,738

)

 

 

 

 

(2,738

)

%

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

 

(507

)

 

248

 

 

 

(755

)

(304

)%

Losses on sales of securities available for sale, net

 

(333,170

)

 

(3,157

)

 

 

(330,013

)

10453

%

Other

 

21,457

 

 

17,783

 

 

 

3,674

 

21

%

Total noninterest (loss) income

 

(237,753

)

 

76,750

 

 

 

(314,503

)

(410

)%

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

253,037

 

 

233,097

 

 

 

19,940

 

9

%

Office occupancy and equipment

 

35,992

 

 

37,445

 

 

 

(1,453

)

(4

)%

Data processing

 

55,308

 

 

52,938

 

 

 

2,370

 

4

%

Professional services

 

17,385

 

 

15,805

 

 

 

1,580

 

10

%

Marketing expenses

 

7,592

 

 

9,294

 

 

 

(1,702

)

(18

)%

Loan expenses

 

4,466

 

 

6,384

 

 

 

(1,918

)

(30

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

21,874

 

 

6,250

 

 

 

15,624

 

250

%

Amortization of intangible assets

 

1,804

 

 

1,198

 

 

 

606

 

51

%

Other

 

21,144

 

 

26,238

 

 

 

(5,094

)

(19

)%

Total noninterest expense

 

418,602

 

 

388,649

 

 

 

29,953

 

8

%

(Loss) income before income tax expense

 

(125,998

)

 

238,230

 

 

 

(364,228

)

(153

)%

Income tax (benefit) expense

 

(63,309

)

 

51,719

 

 

 

(115,028

)

(222

)%

Net (loss) income from continuing operations

 

(62,689

)

 

186,511

 

 

 

(249,200

)

(134

)%

Net income from discontinued operations

 

294,866

 

 

13,248

 

 

 

281,618

 

2126

%

Net income

$

232,177

 

$

199,759

 

 

$

32,418

 

16

%

 

 

 

 

 

 

Share data:

 

 

 

 

 

Weighted average common shares outstanding, basic

 

162,293,020

 

 

165,510,357

 

 

 

(3,217,337

)

(2

)%

Weighted average common shares outstanding, diluted

 

162,403,097

 

 

165,648,571

 

 

 

(3,245,474

)

(2

)%

Earnings (loss) per share, basic:

 

 

 

 

 

Continuing operations

$

(0.39

)

$

1.13

 

 

$

(1.52

)

(135

)%

Discontinued operations

$

1.82

 

$

0.08

 

 

$

1.74

 

2175

%

Earnings per share, basic

$

1.43

 

$

1.21

 

 

$

0.22

 

18

%

Earnings (loss) per share, diluted:

 

 

 

 

 

Continuing operations

$

(0.39

)

$

1.13

 

 

$

(1.52

)

(135

)%

Discontinued operations

$

1.82

 

$

0.08

 

 

$

1.74

 

2175

%

Earnings per share, diluted

$

1.43

 

$

1.21

 

 

$

0.22

 

18

%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the three months ended

 

Dec 31, 2023

 

Sep 30, 2023

 

Dec 31, 2022

(Unaudited, dollars in thousands)

Avg. Balance

 

Interest

 

Yield /

Cost (5)

 

Avg. Balance

 

Interest

 

Yield /

Cost (5)

 

Avg. Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,978,154

 

$

126,128

 

5.01

%

 

$

9,988,712

 

$

128,051

 

5.09

%

 

$

9,528,386

 

$

108,015

 

4.50

%

Residential

 

2,573,032

 

 

23,546

 

3.63

%

 

 

2,553,150

 

 

22,988

 

3.57

%

 

 

2,313,810

 

 

18,837

 

3.23

%

Consumer

 

1,411,374

 

 

22,835

 

6.42

%

 

 

1,386,350

 

 

22,227

 

6.36

%

 

 

1,363,858

 

 

18,949

 

5.51

%

Total loans

 

13,962,560

 

 

172,509

 

4.90

%

 

 

13,928,212

 

 

173,266

 

4.94

%

 

 

13,206,054

 

 

145,801

 

4.38

%

Investment securities

 

5,670,742

 

 

25,609

 

1.79

%

 

 

5,777,173

 

 

26,009

 

1.79

%

 

 

8,422,385

 

 

32,432

 

1.53

%

Federal funds sold and other short-term investments

 

720,384

 

 

10,011

 

5.51

%

 

 

537,602

 

 

7,269

 

5.36

%

 

 

63,408

 

 

545

 

3.41

%

Total interest-earning assets

 

20,353,686

 

 

208,129

 

4.06

%

 

 

20,242,987

 

 

206,544

 

4.05

%

 

 

21,691,847

 

 

178,778

 

3.27

%

Non-interest-earning assets

 

834,391

 

 

 

 

 

 

1,033,879

 

 

 

 

 

 

653,158

 

 

 

 

Total assets

$

21,188,077

 

 

 

 

 

$

21,276,866

 

 

 

 

 

$

22,345,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,352,239

 

$

45

 

0.01

%

 

$

1,441,636

 

$

43

 

0.01

%

 

$

1,924,840

 

$

57

 

0.01

%

Interest checking

 

3,753,352

 

 

7,080

 

0.75

%

 

 

3,903,062

 

 

6,302

 

0.64

%

 

 

4,871,089

 

 

4,897

 

0.40

%

Money market

 

4,735,917

 

 

29,390

 

2.46

%

 

 

4,836,895

 

 

27,695

 

2.27

%

 

 

4,778,694

 

 

9,919

 

0.82

%

Time deposits

 

2,656,313

 

 

30,874

 

4.61

%

 

 

2,341,684

 

 

25,567

 

4.33

%

 

 

563,735

 

 

2,584

 

1.82

%

Total interest-bearing deposits

 

12,497,821

 

 

67,389

 

2.14

%

 

 

12,523,277

 

 

59,607

 

1.89

%

 

 

12,138,358

 

 

17,457

 

0.57

%

Borrowings

 

242,437

 

 

2,950

 

4.83

%

 

 

414,252

 

 

5,356

 

5.13

%

 

 

795,527

 

 

7,547

 

3.76

%

Total interest-bearing liabilities

 

12,740,258

 

 

70,339

 

2.19

%

 

 

12,937,529

 

 

64,963

 

1.99

%

 

 

12,933,885

 

 

25,004

 

0.77

%

Demand deposit accounts

 

5,210,185

 

 

 

 

 

 

5,257,704

 

 

 

 

 

 

6,495,817

 

 

 

 

Other noninterest-bearing liabilities

 

555,034

 

 

 

 

 

 

541,827

 

 

 

 

 

 

495,129

 

 

 

 

Total liabilities

 

18,505,477

 

 

 

 

 

 

18,737,060

 

 

 

 

 

 

19,924,831

 

 

 

 

Shareholders' equity

 

2,682,600

 

 

 

 

 

 

2,539,806

 

 

 

 

 

 

2,420,174

 

 

 

 

Total liabilities and shareholders' equity

$

21,188,077

 

 

 

 

 

$

21,276,866

 

 

 

 

 

$

22,345,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

137,790

 

 

 

 

 

$

141,581

 

 

 

 

 

$

153,774

 

 

Net interest rate spread (2)

 

 

 

 

1.87

%

 

 

 

 

 

2.06

%

 

 

 

 

 

2.50

%

Net interest-earning assets (3)

$

7,613,428

 

 

 

 

 

$

7,305,458

 

 

 

 

 

$

8,757,962

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.69

%

 

 

 

 

 

2.77

%

 

 

 

 

 

2.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loans.

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

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

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

(5) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the twelve months ended

 

Dec 31, 2023

 

Dec 31, 2022

(Unaudited, dollars in thousands)

Avg. Balance

 

Interest

 

Yield / Cost

 

Avg. Balance

 

Interest

 

Yield / Cost

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,913,968

 

$

491,427

 

4.96

%

 

$

9,147,540

 

$

366,097

 

4.00

%

Residential

 

2,538,588

 

 

90,139

 

3.55

%

 

 

2,064,609

 

 

63,803

 

3.09

%

Consumer

 

1,381,745

 

 

86,167

 

6.24

%

 

 

1,327,417

 

 

56,965

 

4.29

%

Total loans

 

13,834,301

 

 

667,733

 

4.83

%

 

 

12,539,566

 

 

486,865

 

3.88

%

Non-taxable investment securities

 

197,682

 

 

7,279

 

3.68

%

 

 

253,651

 

 

9,091

 

3.58

%

Taxable investment securities

 

6,050,024

 

 

101,233

 

1.67

%

 

 

8,413,217

 

 

118,690

 

1.41

%

Total investment securities

 

6,247,706

 

 

108,512

 

1.74

%

 

 

8,666,868

 

 

127,781

 

1.47

%

Federal funds sold and other short-term investments

 

720,864

 

 

37,395

 

5.19

%

 

 

420,834

 

 

3,271

 

0.78

%

Total interest-earning assets

 

20,802,871

 

 

813,640

 

3.91

%

 

 

21,627,268

 

 

617,917

 

2.86

%

Non-interest-earning assets

 

921,622

 

 

 

 

 

 

986,865

 

 

 

 

Total assets

$

21,724,493

 

 

 

 

 

$

22,614,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,515,713

 

$

217

 

0.01

%

 

$

2,015,651

 

$

209

 

0.01

%

Interest checking

 

4,070,585

 

 

24,235

 

0.60

%

 

 

4,890,709

 

 

11,675

 

0.24

%

Money market

 

4,918,343

 

 

104,002

 

2.11

%

 

 

5,057,445

 

 

13,479

 

0.27

%

Time deposits

 

2,303,520

 

 

97,621

 

4.24

%

 

 

463,261

 

 

3,258

 

0.70

%

Total interest-bearing deposits

 

12,808,161

 

 

226,075

 

1.77

%

 

 

12,427,066

 

 

28,621

 

0.23

%

Borrowings

 

418,884

 

 

19,975

 

4.77

%

 

 

256,632

 

 

8,506

 

3.31

%

Total interest-bearing liabilities

 

13,227,045

 

 

246,050

 

1.86

%

 

 

12,683,698

 

 

37,127

 

0.29

%

Demand deposit accounts

 

5,404,208

 

 

 

 

 

 

6,647,518

 

 

 

 

Other noninterest-bearing liabilities

 

522,239

 

 

 

 

 

 

451,384

 

 

 

 

Total liabilities

 

19,153,492

 

 

 

 

 

 

19,782,600

 

 

 

 

Shareholders' equity

 

2,571,001

 

 

 

 

 

 

2,831,533

 

 

 

 

Total liabilities and shareholders' equity

$

21,724,493

 

 

 

 

 

$

22,614,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

567,590

 

 

 

 

 

$

580,790

 

 

Net interest rate spread (2)

 

 

 

 

2.05

%

 

 

 

 

 

2.57

%

Net interest-earning assets (3)

$

7,575,826

 

 

 

 

 

$

8,943,570

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.73

%

 

 

 

 

 

2.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loans.

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

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

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

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - NON-PERFORMING ASSETS (1)

 

 

As of

 

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

35,107

 

$

31,703

 

$

14,178

 

$

17,271

 

$

21,474

 

Residential

 

8,725

 

 

8,075

 

 

8,796

 

 

9,603

 

 

9,750

 

Consumer

 

8,725

 

 

7,687

 

 

7,584

 

 

7,699

 

 

7,380

 

Total non-accrual loans

 

52,557

 

 

47,465

 

 

30,558

 

 

34,573

 

 

38,604

 

Total accruing loans past due 90 days or more:

 

 

 

 

 

 

 

 

 

 

Total non-performing loans

 

52,557

 

 

47,465

 

 

30,558

 

 

34,573

 

 

38,604

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets (1)

$

52,557

 

$

47,465

 

$

30,558

 

$

34,573

 

$

38,604

 

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

$

 

$

 

$

 

$

 

$

28,834

 

Total non-performing loans to total loans

 

0.38

%

 

0.34

%

 

0.22

%

 

0.25

%

 

0.28

%

Total non-performing assets to total assets

 

0.25

%

 

0.22

%

 

0.14

%

 

0.15

%

 

0.17

%

 

 

 

 

 

 

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

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

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

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

 

Three months ended

 

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

13,961,061

 

$

13,926,194

 

$

13,803,292

 

$

13,633,165

 

$

13,203,450

 

Allowance for loan losses, beginning of the period

 

155,146

 

 

147,955

 

 

140,938

 

 

142,211

 

 

131,663

 

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

 

 

 

 

 

 

 

(1,143

)

 

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

2

 

 

11

 

 

 

 

 

 

256

 

Commercial real estate

 

8,008

 

 

 

 

 

 

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

3,745

 

 

303

 

 

254

 

 

343

 

 

370

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

 

 

 

 

 

 

7

 

 

1

 

Other consumer

 

536

 

 

731

 

 

591

 

 

561

 

 

515

 

Total charged-off loans

 

12,291

 

 

1,045

 

 

845

 

 

911

 

 

1,142

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

11

 

 

120

 

 

26

 

 

139

 

 

248

 

Commercial real estate

 

190

 

 

2

 

 

2

 

 

4

 

 

38

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

573

 

 

609

 

 

204

 

 

481

 

 

391

 

Residential real estate

 

34

 

 

30

 

 

18

 

 

15

 

 

14

 

Consumer home equity

 

1

 

 

39

 

 

 

 

1

 

 

8

 

Other consumer

 

131

 

 

108

 

 

111

 

 

116

 

 

111

 

Total recoveries

 

940

 

 

908

 

 

361

 

 

756

 

 

810

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(9

)

 

(109

)

 

(26

)

 

(139

)

 

8

 

Commercial real estate

 

7,818

 

 

(2

)

 

(2

)

 

(4

)

 

(38

)

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

3,172

 

 

(306

)

 

50

 

 

(138

)

 

(21

)

Residential real estate

 

(34

)

 

(30

)

 

(18

)

 

(15

)

 

(14

)

Consumer home equity

 

(1

)

 

(39

)

 

 

 

6

 

 

(7

)

Other consumer

 

405

 

 

623

 

 

480

 

 

445

 

 

404

 

Total net loans charged-off

 

11,351

 

 

137

 

 

484

 

 

155

 

 

332

 

Provision for allowance for loan losses

 

5,198

 

 

7,328

 

 

7,501

 

 

25

 

 

10,880

 

Total allowance for loan losses, end of period

$

148,993

 

$

155,146

 

$

147,955

 

$

140,938

 

$

142,211

 

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

 

0.32

%

 

0.00

%

 

0.01

%

 

0.00

%

 

0.01

%

Allowance for loan losses as a percent of total loans

 

1.07

%

 

1.12

%

 

1.06

%

 

1.03

%

 

1.05

%

Allowance for loan losses as a percent of nonperforming loans

 

283.49

%

 

326.86

%

 

484.18

%

 

407.65

%

 

368.38

%

 

 

 

 

 

 

 

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

(2) Presented on an annualized basis.

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

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

 

As of and for the Three Months Ended

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

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

 

 

 

 

 

 

Net income (loss) from continuing operations (GAAP)

$

31,509

 

$

63,464

 

$

44,419

 

$

(202,081

)

$

40,918

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

(Income) losses from investments held in rabbi trusts

 

(4,969

)

 

1,523

 

 

(3,002

)

 

(2,857

)

 

(3,235

)

Losses on sales of securities available for sale, net

 

 

 

 

 

 

 

333,170

 

 

683

 

(Gains) losses on sales of other assets

 

 

 

(2

)

 

 

 

5

 

 

10

 

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

1,740

 

 

(586

)

 

1,314

 

 

1,274

 

 

1,103

 

Merger and acquisition expenses

 

1,865

 

 

3,630

 

 

 

 

 

 

 

Defined Benefit Plan settlement loss

 

 

 

 

 

 

 

 

 

12,045

 

Total impact of non-GAAP adjustments

 

(1,364

)

 

4,565

 

 

(1,688

)

 

331,592

 

 

10,606

 

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

 

13,270

 

 

15,944

 

 

1,639

 

 

76,377

 

 

2,954

 

Non-GAAP adjustments, net of tax

$

(14,634

)

$

(11,379

)

$

(3,327

)

$

255,215

 

$

7,652

 

Operating net income (non-GAAP)

$

16,875

 

$

52,085

 

$

41,092

 

$

53,134

 

$

48,570

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period:

 

 

 

 

 

Basic

 

162,571,066

 

 

162,370,469

 

 

162,232,236

 

 

161,991,373

 

 

162,032,522

 

Diluted

 

162,724,398

 

 

162,469,887

 

 

162,246,675

 

 

162,059,431

 

 

162,263,547

 

 

 

 

 

 

 

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

$

0.19

 

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

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

$

0.19

 

$

0.39

 

$

0.27

 

$

(1.25

)

$

0.25

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.10

 

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

Operating earnings per share, diluted (non-GAAP)

$

0.10

 

$

0.32

 

$

0.25

 

$

0.33

 

$

0.30

 

 

 

 

 

 

 

Return on average assets (3)

 

0.59

%

 

1.18

%

 

0.81

%

 

(3.64

)%

 

0.73

%

Add:

 

 

 

 

 

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

 

(0.09

)%

 

0.03

%

 

(0.05

)%

 

(0.05

)%

 

(0.06

)%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

6.00

%

 

0.01

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Rabbi trust employee benefit expense (income) (3)

 

0.03

%

 

(0.01

)%

 

0.02

%

 

0.02

%

 

0.02

%

Merger and acquisition expenses (3)

 

0.03

%

 

0.07

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.21

%

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

 

0.25

%

 

0.30

%

 

0.03

%

 

1.38

%

 

0.05

%

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

 

0.31

%

 

0.97

%

 

0.75

%

 

0.95

%

 

0.86

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

4.66

%

 

9.91

%

 

6.85

%

 

(33.31

)%

 

6.71

%

Add:

 

 

 

 

 

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

 

(0.73

)%

 

0.24

%

 

(0.46

)%

 

(0.47

)%

 

(0.53

)%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

54.92

%

 

0.11

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Rabbi trust employee benefit expense (income) (3)

 

0.26

%

 

(0.09

)%

 

0.20

%

 

0.21

%

 

0.18

%

Merger and acquisition expenses (3)

 

0.28

%

 

0.57

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

1.97

%

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

 

1.96

%

 

2.49

%

 

0.25

%

 

12.59

%

 

0.48

%

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

 

2.51

%

 

8.14

%

 

6.34

%

 

8.76

%

 

7.96

%

 

 

 

 

 

 

Average tangible shareholders' equity:

 

 

 

 

 

Average total shareholders' equity (GAAP)

$

2,682,600

 

$

2,539,806

 

$

2,599,325

 

$

2,460,170

 

$

2,420,174

 

Less: Average goodwill and other intangibles

 

597,234

 

 

658,591

 

 

659,825

 

 

660,795

 

 

661,841

 

Average tangible shareholders' equity (non-GAAP)

$

2,085,366

 

$

1,881,215

 

$

1,939,500

 

$

1,799,375

 

$

1,758,333

 

 

 

 

 

 

 

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

 

5.99

%

 

13.38

%

 

9.19

%

 

(45.55

)%

 

9.23

%

Add:

 

 

 

 

 

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

 

(0.95

)%

 

0.32

%

 

(0.62

)%

 

(0.64

)%

 

(0.73

)%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

75.09

%

 

0.15

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Rabbi trust employee benefit expense (income) (3)

 

0.33

%

 

(0.12

)%

 

0.27

%

 

0.29

%

 

0.25

%

Merger and acquisition expenses (3)

 

0.35

%

 

0.77

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

2.72

%

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

 

2.52

%

 

3.36

%

 

0.34

%

 

17.21

%

 

0.67

%

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

 

3.20

%

 

10.99

%

 

8.50

%

 

11.98

%

 

10.95

%

 

 

 

 

 

 

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

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

(3) Presented on an annualized basis.

 

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

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

 

Three Months Ended

 

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

133,307

 

$

137,205

 

$

141,588

 

$

138,309

 

$

149,994

 

Add:

 

 

 

 

 

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

 

4,483

 

 

4,376

 

 

3,877

 

 

4,445

 

 

3,780

 

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

$

137,790

 

$

141,581

 

$

145,465

 

$

142,754

 

$

153,774

 

 

 

 

 

 

 

Noninterest income (loss) (GAAP)

$

26,739

 

$

19,157

 

$

26,204

 

$

(309,853

)

$

22,425

 

Less:

 

 

 

 

 

Income (losses) from investments held in rabbi trusts

 

4,969

 

 

(1,523

)

 

3,002

 

 

2,857

 

 

3,235

 

Losses on sales of securities available for sale, net

 

 

 

 

 

 

 

(333,170

)

 

(683

)

Gains (losses) on sales of other assets

 

 

 

2

 

 

 

 

(5

)

 

(10

)

Noninterest income on an operating basis (non-GAAP)

$

21,770

 

$

20,678

 

$

23,202

 

$

20,465

 

$

19,883

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

121,029

 

$

101,748

 

$

99,934

 

$

95,891

 

$

112,583

 

Less:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

1,740

 

 

(586

)

 

1,314

 

 

1,274

 

 

1,103

 

Merger and acquisition expenses

 

1,865

 

 

3,630

 

 

 

 

 

 

 

Defined Benefit Plan settlement loss

 

 

 

 

 

 

 

 

 

12,045

 

Noninterest expense on an operating basis (non-GAAP)

$

117,424

 

$

98,704

 

$

98,620

 

$

94,617

 

$

99,435

 

 

 

 

 

 

 

Total revenue (loss) (GAAP)

$

160,046

 

$

156,362

 

$

167,792

 

$

(171,544

)

$

172,419

 

Total operating revenue (non-GAAP)

$

159,560

 

$

162,259

 

$

168,667

 

$

163,219

 

$

173,657

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

75.62

%

 

65.07

%

 

59.56

%

 

(55.90

)%

 

65.30

%

Operating efficiency ratio (non-GAAP)

 

73.59

%

 

60.83

%

 

58.47

%

 

57.97

%

 

57.26

%

 

 

 

 

 

 

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

 

APPENDIX C: Reconciliation of Non-GAAP Capital Metrics

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

 

As of

 

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Dec 31, 2022

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

 

 

 

 

 

Tangible shareholders' equity:

 

 

 

 

 

Total shareholders' equity (GAAP)

$

2,974,855

 

$

2,446,553

 

$

2,526,772

 

$

2,579,123

 

$

2,471,790

 

Less: Goodwill and other intangibles (1)

 

566,205

 

 

657,824

 

 

658,993

 

 

660,165

 

 

661,126

 

Tangible shareholders' equity (non-GAAP)