Eastern Bankshares, Inc. Reports Fourth Quarter 2020 Financial Results

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 2020 fourth quarter financial results and the initiation of a quarterly cash dividend.

Concurrent with its mutual-to-stock conversion and as described in the prospectus for its initial public offering (“IPO”), the Company made a one-time donation of 7.5 million shares of common stock to the Eastern Bank Charitable Foundation (“EBCF”) at a total market value of $91.3 million. This contribution resulted in a net loss of $44.1 million for the fourth quarter of 2020, or $0.26 per share, compared to net income of $28.5 million reported for the prior quarter. Operating net income* was $31.6 million for the quarter, or $0.18 per share, for the fourth quarter of 2020, compared to $32.3 million reported for the prior quarter.

“We are very pleased with our operating results for the fourth quarter as well as our dividend initiation, and thank our colleagues for their outstanding efforts,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We are thrilled to have completed our stock offering and to be trading publicly, which are major steps forward in building upon our more than 202-year history of providing competitive financial products and services and an outstanding customer experience. As I reflect on the year, I’m especially proud of the 8,800 Paycheck Protection Program (“PPP”) loans totaling $1.1 billion that we delivered to businesses in need, the third most among lenders in Massachusetts. This is all being accomplished during the COVID-19 pandemic which has had, and continues to have, an adverse effect on our customers, colleagues and the markets in which we operate. We continue to carefully monitor and adapt to it, while keeping the safety and well-being of our colleagues and customers a priority.”

“The transformative, one-time donation of $91.3 million of stock to the Eastern Bank Charitable Foundation, a condition of the stock offering, positions our Foundation to continue to support the communities we serve and address society’s most vexing challenges in a meaningful way,” added Rivers.

The Company also announced the initiation of a quarterly cash dividend of $0.06 per share as part of its capital management strategy.

Rivers continued, “Given our Company’s current strength and our history of generating strong cash flows, we believe that we can both invest in the business and return capital to shareholders. Our initiation of a quarterly dividend demonstrates our confidence in our ability to drive growth and effectively deploy capital while delivering value to our shareholders.”

SELECTED FINANCIAL HIGHLIGHTS

• Net loss was $44.1 million, or $0.26 per share, for the fourth quarter due to the stock contribution to the EBCF.
• Operating net income* was $31.6 million, or $0.18 per share, for the fourth quarter.
• Book value and tangible book value per share* were $18.36 and $16.34, respectively, at December 31, 2020.
• At December 31, 2020, $332.7 million in loan balances remained under modified payment terms due to the COVID-19 pandemic, down from $701.2 million at September 30, 2020. Provision for credit losses was $900 thousand in the fourth quarter compared to $700 thousand in the prior quarter.

BALANCE SHEET

Total assets were $16.0 billion at December 31, 2020, representing an increase of $503.6 million or 3% from September 30, 2020.

• Available-for-sale securities increased $976.2 million, or 44% on a consecutive quarter basis, to $3.2 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined to $2.1 billion from $2.3 billion, a $274.0 million quarter over quarter decline.
• Total loans were $9.7 billion, representing a decrease of $213.7 million or 2% from the prior quarter as paydowns outpaced new originations. The main contributing factor was the forgiveness or paydown of PPP loans which totaled $97.4 million for the fourth quarter, reducing total PPP loans to $1.0 billion.
• Deposits totaled $12.2 billion representing a decrease of $1.2 billion, or 9%, from September 30, 2020. The decline in deposits resulted primarily from the use of funds on deposit by certain deposit holders to satisfy their stock subscription orders during the Company’s IPO in the fourth quarter.
• Shareholders’ equity was $3.4 billion, representing an increase of $1.7 billion or 100% from the prior quarter. The increase was attributable to the capital raised during the Company’s mutual-to-stock conversion and IPO completed on October 14, 2020.
• As previously disclosed, the Company converted its defined benefit plan to a cash balance defined benefit plan during the period which resulted in a $54.9 million after-tax increase to other comprehensive income and shareholders’ equity.
• At December 31, 2020, book value per share was $18.36 and tangible book value per share* was $16.34. Please refer to Appendix H for a quarter over quarter comparison of equity accounts.

NET INTEREST INCOME

Net interest income was $103.6 million for the fourth quarter, compared to $98.7 million in the prior quarter, representing an increase of $4.9 million. Included in net interest income in the fourth quarter was a favorable $3.8 million nonrecurring item. Also included in net interest income was $4.1 million and $6.1 million of SBA PPP fee accretion net of deferred cost amortization in the third and fourth quarters, respectively. The increase in PPP fee recognition on a consecutive quarter basis was attributable to an increase in PPP loan forgiveness rates in the fourth quarter. Between September 30 and December 31, 2020, $97.4 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 2.84% for the fourth quarter, representing a 20 basis points decrease from the prior quarter primarily due to the Company’s excess liquidity.

Please refer to Appendix E for a four-quarter trend analysis of the adjusted core margin*.

NONINTEREST INCOME

Noninterest income was $49.6 million for the fourth quarter, compared to $47.7 million for the prior quarter, representing an increase of $1.9 million.

• Insurance commissions increased $0.6 million to $22.4 million in the fourth quarter, compared to $21.9 million in the prior quarter and included a $1.2 million nonrecurring item.
• Service charges on deposit accounts increased $1.0 million on a consecutive quarter basis to $6.0 million, primarily driven by higher account analysis service charges.
• Loan-level interest rate swap revenue was $2.5 million in the fourth quarter, compared to $1.3 million in the prior quarter, representing an increase of $1.2 million primarily driven by an increase in the fair value of these interest rate swap transactions.
• Income on securities held in rabbi trust accounts was $5.5 million in the fourth quarter compared to $3.8 million in the prior quarter, an increase of $1.7 million as strong equity market gains continued in the fourth quarter.
• Mortgage origination activity was strong in the fourth quarter with the gain on sale of loans totaling $3.3 million, up $1.1 million from the prior quarter. This was mostly offset by a $3.1 million reduction in the gain/loss on commitments to sell mortgage loans which is recorded in other income.

Please refer to Appendix B for a reconciliation of operating revenues and expenses.

NONINTEREST EXPENSE

Noninterest expense was $199.2 million for the fourth quarter representing an increase of $89.4 million, or 81%, from the prior quarter noninterest expense of $109.8 million. Fourth quarter noninterest expense included costs associated with the Company’s mutual-to-stock conversion. Excluding expenses related to the mutual-to-stock conversion and certain other non-operating items, noninterest expense on an operating basis* for the third and fourth quarters was $100.8 million and $101.8 million, respectively.

• Charitable contributions expense in the fourth quarter included $91.3 million in expense from the donation of shares of the Company to the EBCF in connection with the Company’s mutual-to-stock conversion and IPO. The Company established a $12.0 million deferred tax valuation allowance in connection with the contribution.
• Salaries and benefits were $70.3 million in the fourth quarter, representing an increase of $3.7 million from the prior quarter primarily due to employee stock ownership plan (“ESOP”) contribution expense of $2.4 million and higher defined contribution supplemental employee retirement plan expense associated with the mark-to-market increase in rabbi trust accounts of $1.4 million noted above.
• Other noninterest expense declined from $12.6 million in the prior quarter to $6.2 million in the fourth quarter, a decline of $6.4 million. The Company recorded impairment charges on tax credit investments of $7.6 million and $3.2 million in the third and fourth quarter, respectively. Included in other noninterest expense are components of the Company’s pension expense which were $1.3 million lower in the fourth quarter compared to the prior quarter. However, this was offset by an increase in pension service cost which is included in salary and benefit expense.

Please refer to Appendix B for a reconciliation of operating revenues and expenses.

ASSET QUALITY

The allowance for credit losses was $113.0 million at December 31, 2020, or 1.16% of total loans, compared to $115.4 million or 1.16% of total loans at September 30, 2020. The Company recorded a fourth quarter provision for credit losses of $0.9 million, compared to $0.7 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at December 31, 2020 and all preceding periods.

Non-performing loans totaled $43.3 million at December 31, 2020 compared to $44.8 million at the end of the prior quarter. The consecutive quarter decline was driven by reduction in nonperforming residential mortgage loans of $0.7 million, a reduction in nonperforming consumer loans of $0.6 million, and a reduction in nonperforming commercial loans of $0.3 million. During the fourth quarter of 2020, the Company recorded total net charge-offs of $3.3 million, or 0.13% of average total loans on an annualized basis compared to $1.9 million and 0.08% in the prior quarter, respectively.

Through June 30, 2020, approximately $946.0 million of loans had been modified due to COVID-19. Loans were modified on full or partial payment deferral pursuant to the criteria established in federal requirements for COVID-19-related loan relief. Most modifications were for a term of six months. At December 31, 2020, approximately $332.7 million in COVID-19 modified loans remained under modified payment terms, down from $701.2 million at September 30, 2020.

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 fourth quarter 2020 earnings will be held on Friday, January 29, 2021 at 9:00 a.m. Eastern Time. To register for the conference call, please visit the Company’s Investor Relations website at investor.easternbank.com. After registration, a confirmation will be sent through email, including dial in details and unique conference call codes to access the call. Participants are encouraged to register for the conference call at least one day in advance, although registration will be available through the conclusion of the call. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website. A replay of the webcast will be made available on demand on this site.

DIVIDEND INITIATED

The Company’s Board of Directors declared a quarterly cash dividend of $0.06 per common share, payable on March 15, 2021, to shareholders of record as of the close of business on March 3, 2021. The Company expects to continue paying quarterly dividends, the declaration, timing and amounts of which remain subject to the discretion of the Company’s Board of Directors.

ANNOUNCEMENT OF THE 2021 ANNUAL MEETING OF SHAREHOLDERS

The Company’s Board of Directors has set the date and time for its 2021 annual meeting of shareholders to be 12:00 p.m. Eastern Time on Monday, May 17, 2021. The annual meeting will be held at the Company’s offices at 265 Franklin Street, Boston, Massachusetts and over the Internet in a virtual meeting format. The record date for shareholders entitled to vote at the meeting will be Monday, March 12, 2021. Shareholders of record will receive additional details and instructions for meeting participation in the proxy materials that will be made available to them in early April.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. (NASDAQ Global Select Market: EBC) 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, and as of December 31, 2020, Eastern Bank had approximately $16.0 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 subsidiary. Eastern takes pride in its outspoken advocacy and community support that has exceeded $140 million in charitable giving since 1999. An inclusive company, Eastern employs 1,800+ 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 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 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 December 31, 2020 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 a 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, 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 reports on Forms S-1 and 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov.

Further, given its ongoing and dynamic nature, 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 document. The Company does not undertake any obligation to update forward-looking statements.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

Certain information in this 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)	Dec 31, 2020				Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019
Earnings data
Net interest income	$	103,608			$	98,742		$	98,755		$	100,146		$	100,921
Noninterest income	49,638				47,709			47,657			33,369			47,277
Total revenue	153,246				146,451			146,412			133,515			148,198
Noninterest expense	199,169				109,817			100,765			95,172			105,619
Pre-tax, pre-provision (loss) income	(45,923		)		36,634			45,647			38,343			42,579
Provision for credit losses	900				700			8,600			28,600			1,800
Pre-tax (loss) income	(46,823		)		35,934			37,047			9,743			40,779
Net (loss) income	(44,062		)		28,505			29,850			8,445			31,238
Operating net income (non-GAAP)	31,612				32,322			27,301			10,858			29,878
Per-share data
(Loss) earnings per share	$	(0.26	)		n.a.			n.a.			n.a.			n.a.
Operating earnings per share (non-GAAP)	$	0.18			n.a.			n.a.			n.a.			n.a.
Book value per share	$	18.36			n.a.			n.a.			n.a.			n.a.
Tangible book value per share (non-GAAP)	$	16.34			n.a.			n.a.			n.a.			n.a.
Profitability
Return on average assets (1)	(1.11		)	%	0.80		%	0.88		%	0.29		%	1.08		%
Operating return on average assets (non-GAAP) (1)	0.79			%	0.90		%	0.81		%	0.38		%	1.03		%
Return on average shareholders' equity (1)	(5.61		)	%	6.65		%	7.11		%	2.08		%	7.69		%
Operating return on average shareholders' equity (non-GAAP) (1)	4.02			%	7.54		%	6.51		%	2.67		%	7.35		%
Net interest margin (FTE) (1)	2.84			%	3.04		%	3.23		%	3.80		%	3.83		%
Cost of deposits	0.03			%	0.06		%	0.11		%	0.23		%	0.26		%
Fee income ratio	32.39			%	32.58		%	32.55		%	24.99		%	31.90		%
Efficiency ratio	129.97			%	74.99		%	68.82		%	71.28		%	71.27		%
Operating efficiency ratio (non-GAAP)	68.33			%	69.95		%	68.90		%	69.54		%	71.10		%
Balance Sheet (end of period)
Total assets	$	15,964,190			$	15,460,594		$	13,996,523		$	12,343,754		$	11,628,775
Total loans (2)	9,706,989				9,911,494			9,979,616			9,080,743			8,981,481
Total deposits	12,155,784				13,332,585			11,846,765			10,309,011			9,551,392
Total loans / total deposits	79.85			%	74.34		%	84.24		%	88.09		%	94.03		%
PPP loans (2)	$	1,007,487			$	1,098,883		$	1,072,312		$	—		$	—
Asset quality
Allowance for loan losses (ALLL)	$	113,031			$	115,432		$	116,636		$	109,138		$	82,297
ALLL / total nonperforming loans (NPLs)	261.33			%	257.47		%	210.55		%	222.34		%	188.00		%
Total NPLs / total loans	0.45			%	0.45		%	0.56		%	0.54		%	0.49		%
Total NPLs / total loans (excl. PPP loans) (non-GAAP)	0.50			%	0.51		%	0.62		%	0.54		%	0.49		%
Net charge-offs (NCOs) / average total loans (1)	0.13			%	0.08		%	0.04		%	0.08		%	0.11		%
NCOs / average total loans (excl. PPP loans) (non-GAAP) (1)	0.15			%	0.09		%	0.05		%	0.08		%	0.11		%
Remaining COVID-19 loan modifications (3)	$	332,682			$	701,227		$	945,995		$	—		$	—
Capital adequacy
Shareholders' equity / assets	21.47			%	11.08		%	12.10		%	13.47		%	13.76		%
Tangible shareholders' equity / tangible assets (non-GAAP)	19.58			%	8.87		%	9.67		%	10.74		%	10.86		%
(1) Presented on an annualized basis.
(2) Includes unamortized premiums, net of unearned discounts and deferred fees.
(3) See Appendix G: COVID-19 Related Loan Modifications

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	As of													Dec 31, 2020 change from
(Unaudited, dollars in thousands)	Dec 31, 2020				Sep 30, 2020				Dec 31, 2019					Sep 30, 2020							Dec 31, 2019
ASSETS														△ $			△ %				△ $			△ %
Cash and due from banks	$	116,591			$	69,051			$	135,503				47,540			69		%		(18,912	)		(14	)	%
Short-term investments	1,937,479				2,259,033				227,099					(321,554	)		(14	)	%		1,710,380			753		%
Cash and cash equivalents	2,054,070				2,328,084				362,602					(274,014	)		(12	)	%		1,691,468			466		%
Securities held for trading	—				—				961					—			—		%		(961	)		(100	)	%
Available for sale securities	3,183,861				2,207,672				1,508,236					976,189			44		%		1,675,625			111		%
Total securities	3,183,861				2,207,672				1,509,197					976,189			44		%		1,674,664			111		%
Loans held for sale	1,140				4,649				26					(3,509	)		(75	)	%		1,114			4285		%
Loans:
Commercial and industrial	1,995,016				2,177,216				1,642,184					(182,200	)		(8	)	%		352,832			21		%
Commercial real estate	3,573,630				3,652,312				3,535,441					(78,682	)		(2	)	%		38,189			1		%
Commercial construction	305,708				297,508				273,774					8,200			3		%		31,934			12		%
Business banking	1,339,164				1,251,573				771,498					87,591			7		%		567,666			74		%
Total commercial loans	7,213,518				7,378,609				6,222,897					(165,091	)		(2	)	%		990,621			16		%
Residential real estate	1,370,957				1,373,237				1,428,630					(2,280	)		—		%		(57,673	)		(4	)	%
Consumer home equity	868,270				890,771				933,088					(22,501	)		(3	)	%		(64,818	)		(7	)	%
Other consumer	277,780				301,624				402,431					(23,844	)		(8	)	%		(124,651	)		(31	)	%
Total Loans	9,730,525				9,944,241				8,987,046					(213,716	)		(2	)	%		743,479			8		%
Allowance for loan losses	(113,031		)		(115,432		)		(82,297		)			2,401			(2	)	%		(30,734	)		37		%
Unamortized prem./disc. and def. fees	(23,536		)		(32,747		)		(5,565		)			9,211			(28	)	%		(17,971	)		323		%
Net Loans	9,593,958				9,796,062				8,899,184					(202,104	)		(2	)	%		694,774			8		%
Federal Home Loan Bank stock, at cost	8,805				8,805				9,027					—			—		%		(222	)		(2	)	%
Premises and equipment	49,398				50,539				57,453					(1,141	)		(2	)	%		(8,055	)		(14	)	%
Bank-owned life insurance	78,561				78,058				77,546					503			1		%		1,015			1		%
Goodwill and other intangibles, net	376,534				375,632				377,734					902			—		%		(1,200	)		—		%
Deferred income taxes, net	13,229				19,925				28,207					(6,696	)		(34	)	%		(14,978	)		(53	)	%
Prepaid expenses	148,680				92,473				61,336					56,207			61		%		87,344			142		%
Other assets	455,954				498,695				246,463					(42,741	)		(9	)	%		209,491			85		%
Total Assets	15,964,190				15,460,594				11,628,775					503,596			3		%		4,335,415			37		%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand	4,910,794				6,312,479				3,517,447					(1,401,685	)		(22	)	%		1,393,347			40		%
Interest checking accounts	2,380,497				2,207,266				1,814,327					173,231			8		%		566,170			31		%
Savings accounts	1,256,736				1,217,898				971,119					38,838			3		%		285,617			29		%
Money market investment	3,348,898				3,315,198				2,919,360					33,700			1		%		429,538			15		%
Certificate of deposits	258,859				279,744				329,139					(20,885	)		(7	)	%		(70,280	)		(21	)	%
Total deposits	12,155,784				13,332,585				9,551,392					(1,176,801	)		(9	)	%		2,604,392			27		%
Borrowed funds:
Federal funds purchased	—				—				201,082					—			—		%		(201,082	)		(100	)	%
Federal Home Loan Bank advances	14,624				14,773				18,964					(149	)		(1	)	%		(4,340	)		(23	)	%
Escrow deposits of borrowers	13,425				14,664				15,349					(1,239	)		(8	)	%		(1,924	)		(13	)	%
Total borrowed funds	28,049				29,437				235,395					(1,388	)		(5	)	%		(207,346	)		(88	)	%
Other liabilities	352,305				385,200				241,835					(32,895	)		(9	)	%		110,470			46		%
Total Liabilities	12,536,138				13,747,222				10,028,622					(1,211,084	)		(9	)	%		2,507,516			25		%
Shareholders' equity:
Common stock	1,868				—				—					1,868			—		%		1,868			—		%
Additional paid-in capital	1,854,068				—				—					1,854,068			—		%		1,854,068			—		%
Unallocated ESOP common stock	(147,725		)		—				—					(147,725	)		—		%		(147,725	)		—		%
Retained earnings	1,665,607				1,709,669				1,644,000					(44,062	)		(3	)	%		21,607			1		%
Accumulated other comprehensive income (AOCI), net of tax	54,234				3,703				(43,847		)			50,531			1365		%		98,081			(224	)	%
Total shareholders' equity	3,428,052				1,713,372				1,600,153					1,714,680			100		%		1,827,899			114		%
Total liabilities and shareholders' equity	15,964,190				15,460,594				11,628,775					503,596			3		%		4,335,415			37		%

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
	Three months ended											Three months ended Dec 31, 2020 change from three months ended
(Unaudited, dollars in thousands, except share data)	Dec 31, 2020				Sep 30, 2020			Dec 31, 2019				Sep 30, 2020							Dec 31, 2019
Interest and dividend income:												△ $			△ %				△ $			△ %
Interest and fees on loans	$	93,767			$	90,704		$	97,364			3,063			3		%		(3,597	)		(4	)	%
Taxable interest and dividends on available for sale securities	8,493				7,554			7,932				939			12		%		561			7		%
Non-taxable interest and dividends on available for sale securities	1,879				1,883			1,951				(4	)		—		%		(72	)		(4	)	%
Interest on federal funds sold and other short-term investments	584				372			720				212			57		%		(136	)		(19	)	%
Interest and dividends on trading securities	—				—			6				—			—		%		(6	)		(100	)	%
Total interest and dividend income	104,723				100,513			107,973				4,210			4		%		(3,250	)		(3	)	%
Interest expense:
Interest on deposits	1,070				1,727			6,115				(657	)		(38	)	%		(5,045	)		(83	)	%
Interest on borrowings	45				44			937				1			2		%		(892	)		(95	)	%
Total interest expense	1,115				1,771			7,052				(656	)		(37	)	%		(5,937	)		(84	)	%
Net interest income	103,608				98,742			100,921				4,866			5		%		2,687			3		%
Provision for allowance for credit losses	900				700			1,800				200			29		%		(900	)		(50	)	%
Net interest income after provision for credit losses	102,708				98,042			99,121				4,666			5		%		3,587			4		%
Noninterest income:
Insurance commissions	22,437				21,884			20,168				553			3		%		2,269			11		%
Service charges on deposit accounts	6,046				5,052			6,853				994			20		%		(807	)		(12	)	%
Trust and investment advisory fees	5,502				5,311			5,058				191			4		%		444			9		%
Debit card processing fees	2,749				2,721			2,666				28			1		%		83			3		%
Interest rate swap income (losses)	2,538				1,319			4,691				1,219			92		%		(2,153	)		(46	)	%
Income (losses) from investments held in rabbi trusts	5,535				3,800			3,164				1,735			46		%		2,371			75		%
(Losses) gains on trading securities, net	(1		)		—			—				(1	)		—		%		(1	)		—		%
Gains on sales of mortgage loans held for sale, net	3,334				2,219			342				1,115			50		%		2,992			875		%
Gains on sales of securities available for sale, net	3				—			—				3			—		%		3			—		%
Other	1,495				5,403			4,335				(3,908	)		(72	)	%		(2,840	)		(66	)	%
Total noninterest income	49,638				47,709			47,277				1,929			4		%		2,361			5		%
Noninterest expense:
Salaries and employee benefits	70,310				66,593			61,317				3,717			6		%		8,993			15		%
Office occupancy and equipment	8,198				8,294			10,592				(96	)		(1	)	%		(2,394	)		(23	)	%
Data processing	11,354				11,721			12,806				(367	)		(3	)	%		(1,452	)		(11	)	%
Professional services	5,307				5,510			4,750				(203	)		(4	)	%		557			12		%
Charitable contributions	91,288				—			3,040				91,288			—		%		88,248			2903		%
Marketing	2,823				1,943			3,266				880			45		%		(443	)		(14	)	%
Loan expenses	2,025				1,554			1,436				471			30		%		589			41		%
FDIC insurance	946				938			78				8			1		%		868			1113		%
Amortization of intangible assets	755				699			885				56			8		%		(130	)		(15	)	%
Other	6,163				12,565			7,449				(6,402	)		(51	)	%		(1,286	)		(17	)	%
Total noninterest expense	199,169				109,817			105,619				89,352			81		%		93,550			89		%
(Loss) Income before income tax (benefit) expense	(46,823		)		35,934			40,779				(82,757	)		(230	)	%		(87,602	)		(215	)	%
Income tax (benefit) expense	(2,761		)		7,429			9,541				(10,190	)		(137	)	%		(12,302	)		(129	)	%
Net (loss) income	(44,062		)		28,505			31,238				(72,567	)		(255	)	%		(75,300	)		(241	)	%
Share data:
Weighted average common shares outstanding	171,812,535				n.a.			n.a.
(Loss) earnings per share	$	(0.26	)		n.a.			n.a.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
	Twelve months ended
(Unaudited, dollars in thousands, except share data)	Dec 31, 2020				Dec 31, 2019				Change
Interest and dividend income:									△ $			△ %
Interest and fees on loans	$	372,152			$	402,092			(29,940	)		(7	)	%
Taxable interest and dividends on available for sale securities	31,825				31,400				425			1		%
Non-taxable interest and dividends on available for sale securities	7,588				8,306				(718	)		(9	)	%
Interest on federal funds sold and other short-term investments	1,757				2,977				(1,220	)		(41	)	%
Interest and dividends on trading securities	6				242				(236	)		(98	)	%
Total interest and dividend income	413,328				445,017				(31,689	)		(7	)	%
Interest expense:
Interest on deposits	11,315				27,301				(15,986	)		(59	)	%
Interest on borrowings	762				6,452				(5,690	)		(88	)	%
Total interest expense	12,077				33,753				(21,676	)		(64	)	%
Net interest income	401,251				411,264				(10,013	)		(2	)	%
Provision for allowance for credit losses	38,800				6,300				32,500			516		%
Net interest income after provision for credit losses	362,451				404,964				(42,513	)		(10	)	%
Noninterest income:
Insurance commissions	94,495				90,587				3,908			4		%
Service charges on deposit accounts	21,560				27,043				(5,483	)		(20	)	%
Trust and investment advisory fees	21,102				19,653				1,449			7		%
Debit card processing fees	10,277				10,452				(175	)		(2	)	%
Interest rate swap (losses) income	(1,381		)		4,362				(5,743	)		(132	)	%
Income from investments held in rabbi trusts	10,337				9,866				471			5		%
(Losses) gains on trading securities, net	(4		)		1,297				(1,301	)		(100	)	%
Gains on sales of mortgage loans held for sale, net	7,066				795				6,271			789		%
Gains on sales of securities available for sale, net	288				2,016				(1,728	)		(86	)	%
Other	14,633				16,228				(1,595	)		(10	)	%
Total noninterest income	178,373				182,299				(3,926	)		(2	)	%
Noninterest expense:
Salaries and employee benefits	261,827				252,238				9,589			4		%
Office occupancy and equipment	33,796				36,458				(2,662	)		(7	)	%
Data processing	45,259				45,939				(680	)		(1	)	%
Professional services	18,902				15,958				2,944			18		%
Charitable contributions	95,272				12,905				82,367			638		%
Marketing	8,879				9,619				(740	)		(8	)	%
Loan expenses	6,727				4,593				2,134			46		%
FDIC insurance	3,734				1,878				1,856			99		%
Amortization of intangible assets	2,857				3,542				(685	)		(19	)	%
Other	27,670				29,554				(1,884	)		(6	)	%
Total noninterest expense	504,923				412,684				92,239			22		%
Income before income tax expense	35,901				174,579				(138,678	)		(79	)	%
Income tax expense	13,163				39,481				(26,318	)		(67	)	%
Net income	22,738				135,098				(112,360	)		(83	)	%
Share data:
Weighted average common shares outstanding	171,812,535				n.a.
Earnings per share	$	0.13			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
	Dec 31, 2020											Sep 30, 2020											Dec 31, 2019
(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	$	7,265,156			$	73,289			4.01	%		$	7,314,805			$	69,127			3.76	%		$	6,179,761			$	70,751			4.54	%
Residential	1,367,073				11,641				3.39	%		1,390,719				12,269				3.51	%		1,438,677				13,368				3.69	%
Consumer	1,164,468				9,621				3.29	%		1,209,340				10,091				3.32	%		1,360,677				14,021				4.09	%
Total loans	9,796,697				94,551				3.84	%		9,914,864				91,487				3.67	%		8,979,115				98,140				4.34	%
Investment securities	2,627,679				10,945				1.66	%		1,712,928				10,007				2.32	%		1,455,386				10,482				2.86	%
Cash and other short-term investments	2,291,118				584				0.10	%		1,462,047				372				0.10	%		173,906				720				1.64	%
Total interest earning assets	14,715,494				106,080				2.87	%		13,089,839				101,866				3.10	%		10,608,407				109,342				4.09	%
Non-interest-earning assets	1,123,550											1,139,440											897,539
Total assets	$	15,839,044										$	14,229,279										$	11,505,946
Interest-bearing liabilities:
Deposits:
Savings	$	1,232,669			$	62			0.02	%		$	1,187,083			$	62			0.02	%		$	970,019			$	53			0.02	%
Interest checking	2,282,786				232				0.04	%		2,307,972				334				0.06	%		1,722,176				727				0.17	%
Money market	3,362,335				609				0.07	%		3,311,847				1,051				0.13	%		2,941,944				4,655				0.63	%
Time deposits	267,378				167				0.25	%		294,025				280				0.38	%		326,741				680				0.83	%
Total interest-bearing deposits	7,145,168				1,070				0.06	%		7,100,927				1,727				0.10	%		5,960,880				6,115				0.41	%
Borrowings	25,529				45				0.70	%		25,478				44				0.69	%		231,668				937				1.60	%
Total interest-bearing liabilities	7,170,697				1,115				0.06	%		7,126,405				1,771				0.10	%		6,192,548				7,052				0.45	%
Demand deposit accounts	5,167,221											5,034,474											3,474,922
Other non-interest-bearing liabilities	376,197											362,073											226,909
Total liabilities	12,714,115											12,522,952											9,894,379
Shareholders' equity	3,124,929											1,706,327											1,611,567
Total liabilities and shareholders' equity	$	15,839,044										$	14,229,279										$	11,505,946
Net interest income - FTE					$	104,965										$	100,095										$	102,290
Net interest rate spread (2)									2.81	%										3.00	%										3.64	%
Net interest-earning assets (3)	$	7,544,797										$	5,963,434										$	4,415,859
Net interest margin - FTE (4)									2.84	%										3.04	%										3.83	%
(1) Non-accrual loans are included in Loans.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
(5) Presented on an annualized basis.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
	As of and for twelve months ended
	Dec 31, 2020											Dec 31, 2019
(Unaudited, dollars in thousands)	Avg. Balance				Interest				Yield / Cost			Avg. Balance				Interest				Yield / Cost
Interest-earning assets:
Loans (1):
Commercial	$	7,014,044			$	281,816			4.02	%		$	6,089,410			$	291,055			4.78	%
Residential	1,400,907				49,767				3.55	%		1,439,845				53,736				3.73	%
Consumer	1,236,893				43,729				3.54	%		1,419,692				60,009				4.23	%
Total loans	9,651,844				375,312				3.89	%		8,948,947				404,800				4.52	%
Investment securities	1,826,121				41,730				2.29	%		1,435,719				42,494				2.96	%
Cash and other short-term investments	1,288,714				1,758				0.14	%		144,856				2,977				2.06	%
Total interest earning assets	12,766,679				418,800				3.28	%		10,529,522				450,271				4.28	%
Non-interest-earning assets	1,097,064											874,588
Total assets	$	13,863,743										$	11,404,110
Interest-bearing liabilities:
Deposits:
Savings	$	1,123,584			$	242			0.02	%		$	991,244			$	210			0.02	%
Interest checking	2,227,185				2,033				0.09	%		1,842,993				3,947				0.21	%
Money market	3,212,752				7,492				0.23	%		2,769,934				19,150				0.69	%
Time deposits	300,381				1,548				0.52	%		392,035				3,994				1.02	%
Total interest-bearing deposits	6,863,902				11,315				0.16	%		5,996,206				27,301				0.46	%
Borrowings	72,101				762				1.06	%		291,413				6,452				2.21	%
Total interest-bearing liabilities	6,936,003				12,077				0.17	%		6,287,619				33,753				0.54	%
Demand deposit accounts	4,535,066											3,369,375
Other non-interest-bearing liabilities	352,518											203,925
Total liabilities	11,823,587											9,860,919
Shareholders' equity	2,040,156											1,543,191
Total liabilities and shareholders' equity	$	13,863,743										$	11,404,110
Net interest income - FTE					$	406,723										$	416,518
Net interest rate spread (2)									3.11	%										3.74	%
Net interest-earning assets (3)	$	5,830,676										$	4,241,903
Net interest margin - FTE (4)									3.19	%										3.96	%
(1) Non-accrual loans are included in 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.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING ASSETS (1)
	As of
	Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial	$	30,059		$	28,968		$	31,273		$	38,054		$	34,093
Residential	6,815			7,419			11,693			5,594			5,598
Consumer	4,131			4,727			9,374			4,085			2,760
Total non-accrual loans	41,005			41,114			52,340			47,733			42,451
Accruing loans past due 90 days or more:
Commercial	1,959			3,384			2,802			1,345			1,315
Residential	279			326			244			—			—
Consumer	9			9			9			9			9
Total accruing loans past due 90 days or more	2,247			3,719			3,055			1,354			1,324
Total non-performing loans	43,252			44,833			55,395			49,087			43,775
Other real estate owned	—			40			40			40			—
Other non-performing assets:	—			—			—			—			—
Total non-performing assets	$	43,252		$	44,873		$	55,435		$	49,127		$	43,775
Total accruing troubled debt restructured loans	$	41,095		$	39,881		$	40,691		$	41,880		$	48,623
Total non-performing loans to total loans	0.45		%	0.45		%	0.56		%	0.54		%	0.49		%
Total non-performing assets to total assets	0.27		%	0.29		%	0.40		%	0.40		%	0.38		%
(1) Non-performing assets are comprised of nonperforming loans (“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. 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
	Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020				Dec 31, 2019
(Unaudited, dollars in thousands)
Average total loans	$	9,796,697			$	9,914,731			$	9,875,110			$	9,016,223			$	8,979,115
Allowance for loan losses, beginning of the period	$	115,432			$	116,636			$	109,138			$	82,297			$	83,022
Charged-off loans:
Commercial and industrial	1,603				140				27				—				851
Commercial real estate	—				—				24				—				—
Commercial construction	—				—				—				—				—
Business banking	1,433				1,179				1,198				1,337				1,534
Residential real estate	—				—				—				—				—
Consumer home equity	79				22				—				473				14
Other consumer	713				1,077				15				533				541
Total charged-off loans	3,828				2,418				1,264				2,343				2,940
Recoveries on loans previously charged-off:
Commercial and industrial	92				306				58				322				210
Commercial real estate	220				4				5				1				2
Commercial construction	—				—				—				—				—
Business banking	47				91				27				127				112
Residential real estate	9				43				13				60				17
Consumer home equity	100				31				8				14				8
Other consumer	59				39				51				60				66
Total recoveries	527				514				162				584				415
Net loans charged-off (recoveries):
Commercial and industrial	1,511				(166		)		(31		)		(322		)		641
Commercial real estate	(220		)		(4		)		19				(1		)		(2		)
Commercial construction	—				—				—				—				—
Business banking	1,386				1,088				1,171				1,210				1,422
Residential real estate	(9		)		(43		)		(13		)		(60		)		(17		)
Consumer home equity	(21		)		(9		)		(8		)		459				6
Other consumer	654				1,038				(36		)		473				475
Total net loans charged-off	3,301				1,904				1,102				1,759				2,525
Provision for loan losses	900				700				8,600				28,600				1,800
Total allowance for loan losses, end of period	$	113,031			$	115,432			$	116,636			$	109,138			$	82,297
Net charge-offs to average total loans outstanding during this period (1)	0.13			%	0.08			%	0.04			%	0.08			%	0.11			%
Allowance for loan losses as a percent of total loans	1.16			%	1.16			%	1.17			%	1.20			%	0.92			%
Allowance for loan losses as a percent of nonperforming loans	261.33			%	257.47			%	210.55			%	222.34			%	188.00			%
(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)	Dec 31, 2020					Sep 30, 2020					Jun 30, 2020					Mar 31, 2020					Dec 31, 2019
Net income (GAAP)	$	(44,062	)			$	28,505				$	29,850				$	8,445				$	31,238
Add:
Noninterest income components:
(Income) loss from investments held in rabbi trusts	(5,535		)			(3,800		)			(7,745		)			6,743					(3,164		)
(Gain) loss on sales of securities available for sale, net	(3		)			—					(163		)			(122		)			—
(Gain) loss on sale of other assets	(49		)			71					27					(29		)			(29		)
Noninterest expense components:
Rabbi trust employee benefit expense (income)	2,838					1,445					3,985					(3,479		)			1,554
Impairment charge on tax credit investments	3,189					7,590					—					—					—
Indirect initial public offering costs (1)	—					549					380					270					—
(Gain) loss on sale of other real estate owned	(61		)			(546		)			—					—					—
Merger and acquisition expenses	90					—					—					—					—
Stock donation to the Eastern Bank Charitable Foundation	91,287					—					—					—					—
Total impact of non-GAAP adjustments	91,756					5,309					(3,516		)			3,383					(1,639		)
Less net tax benefit (expense) associated with non-GAAP adjustment (2)	16,082					1,492					(967		)			970					(279		)
Non-GAAP adjustments, net of tax	$	75,674				$	3,817				$	(2,549	)			$	2,413				$	(1,360	)
Operating net income (non-GAAP)	$	31,612				$	32,322				$	27,301				$	10,858				$	29,878
Weighted average common shares outstanding during the period:
Basic	171,812,535					—					—					—					—
Diluted	171,812,535					—					—					—					—
(Loss) earnings per share, basic	$	(0.26	)			n.a.					n.a.					n.a.					n.a.
(Loss) earnings per share, diluted	$	(0.26	)			n.a.					n.a.					n.a.					n.a.
Operating earnings per share, basic (non-GAAP)	$	0.18				n.a.					n.a.					n.a.					n.a.
Operating earnings per share, diluted (non-GAAP)	$	0.18				n.a.					n.a.					n.a.					n.a.
Return on average assets (3)	(1.11		)	%		0.80			%		0.88			%		0.29			%		1.08			%
Add:
(Income) loss from investments held in rabbi trusts (3)	(0.14				)%	(0.11				)%	(0.23				)%	0.23				%	(0.11				)%
(Gain) loss on sales of securities available for sale, net (3)	—				%	—				%	—				%	—				%	—				%
(Gain) loss on sale of other assets (3)	—				%	—				%	—				%	—				%	—				%
Rabbi trust employee benefit expense (income) (3)	0.07				%	0.04				%	0.12				%	(0.12				)%	0.05				%
Impairment charge on tax credit investments (3)	0.08				%	0.21				%	—				%	—				%	—				%
Indirect initial public offering costs (1) (3)	—				%	0.02				%	0.01				%	0.01				%	—				%
(Gain) loss on sale of other real estate owned (3)	—				%	(0.02				)%	—				%	—				%	—				%
Merger and acquisition expenses (3)	—				%	—				%	—				%	—				%	—				%
Stock donation to the EBCF (3)	2.29				%	—				%	—				%	—				%	—				%
Less net tax benefit (expense) associated with non-GAAP adjustment (2) (3)	0.40				%	0.04				%	(0.03				)%	0.03				%	(0.01				)%
Operating return on average assets (non-GAAP) (3)	0.79			%		0.90			%		0.81			%		0.38			%		1.03			%
Return on average shareholders' equity (3)	(5.61		)	%		6.65			%		7.11			%		2.08			%		7.69			%
Add:
(Income) loss from investments held in rabbi trusts (3)	(0.70				)%	(0.89				)%	(1.84				)%	1.66				%	(0.78				)%
(Gain) loss on sales of securities available for sale, net (3)	—				%	—				%	(0.04				)%	(0.03				)%	—				%
(Gain) loss on sale of other assets (3)	(0.01				)%	0.02				%	0.01				%	(0.01				)%	(0.01				)%
Rabbi trust employee benefit expense (income) (3)	0.36				%	0.34				%	0.95				%	(0.86				)%	0.38				%
Impairment charge on tax credit investments (3)	0.41				%	1.77				%	—				%	—				%	—				%
Indirect initial public offering costs (1) (3)	—				%	0.13				%	0.09				%	0.07				%	—				%
(Gain) loss on sale of other real estate owned (3)	(0.01				)%	(0.13				)%	—				%	—				%	—				%
Merger and acquisition expenses (3)	—				%	—				%	—				%	—				%	—				%
Stock donation to the EBCF (3)	11.62				%	—				%	—				%	—				%	—				%
Less net tax benefit (expense) associated with non-GAAP adjustment (2) (3)	2.05				%	0.35				%	(0.23				)%	0.24				%	(0.07				)%
Operating return on average shareholders' equity (non-GAAP) (3)	4.02			%		7.54			%		6.51			%		2.67			%		7.35			%

(1) Reflects costs associated with the Company's initial public offering 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
	Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020				Dec 31, 2019
(Unaudited, dollars in thousands)
Net interest income (GAAP)	$	103,608			$	98,742			$	98,755			$	100,146			$	100,921
Add:
Tax-equivalent adjustment (non-GAAP)	1,357				1,353				1,378				1,368				1,369
Fully-taxable equivalent net interest income (non-GAAP)	$	104,965			$	100,095			$	100,133			$	101,514			$	102,290
Noninterest income (GAAP)	$	49,638			$	47,709			$	47,657			$	33,369			$	47,277
Less:
Income (loss) from investments held in rabbi trusts	5,535				3,800				7,745				(6,743		)		3,164
Gain (loss) on sales of securities available for sale, net	3				—				163				122				—
Gain (loss) on sale of other assets	49				(71		)		(27		)		29				29
Noninterest income on an operating basis (non-GAAP)	$	44,051			$	43,980			$	39,776			$	39,961			$	44,084
Noninterest expense (GAAP)	$	199,169			$	109,817			$	100,765			$	95,172			$	105,619
Less:
Rabbi trust employee benefit expense (income)	2,838				1,445				3,985				(3,479		)		1,554
Impairment charge on tax credit investments	3,189				7,590				—				—				—
Indirect initial public offering costs (1)	—				549				380				270				—
(Gain) loss on sale of other real estate owned	(61		)		(546		)		—				—				—
Merger and acquisition expenses	90				—				—				—				—
Stock donation to the Eastern Bank Charitable Foundation	91,287				—				—				—				—
Noninterest expense on an operating basis (non-GAAP)	$	101,826			$	100,779			$	96,400			$	98,381			$	104,065
Total revenue (GAAP)	$	153,246			$	146,451			$	146,412			$	133,515			$	148,198
Total operating revenue (non-GAAP)	$	149,016			$	144,075			$	139,909			$	141,475			$	146,374
Efficiency ratio (GAAP)	129.97			%	74.99			%	68.82			%	71.28			%	71.27		%
Operating efficiency ratio (non-GAAP)	68.33			%	69.95			%	68.90			%	69.54			%	71.10		%
Noninterest income / total revenue (GAAP)	32.39			%	32.58			%	32.55			%	24.99			%	31.90		%
Noninterest income / total revenue on an operating basis (non- GAAP)	29.56			%	30.53			%	28.43			%	28.25			%	30.12		%
(1) Reflects costs associated with the Company's initial public offering 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
	Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019
(Unaudited, dollars in thousands, except share data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)	$	3,428,052		$	1,713,372		$	1,693,630		$	1,662,734		$	1,600,153
Less: Goodwill and other intangibles	376,534			375,632			376,331			377,033			377,734
Tangible shareholders' equity (non-GAAP)	3,051,518			1,337,740			1,317,299			1,285,701			1,222,419
Tangible assets:
Total assets (GAAP)	15,964,190			15,460,594			13,996,523			12,343,754			11,628,775
Less: Goodwill and other intangibles	376,534			375,632			376,331			377,033			377,734
Tangible assets (non-GAAP)	$	15,587,656		$	15,084,962		$	13,620,192		$	11,966,721		$	11,251,041
Shareholders' equity to assets ratio (GAAP)	21.5		%	11.1		%	12.1		%	13.5		%	13.8		%
Tangible shareholders' equity to tangible assets ratio (non-GAAP)	19.6		%	8.9		%	9.7		%	10.7		%	10.9		%
Common shares outstanding	186,758,154			—			—			—			—
Book value per share (GAAP)	$	18.36		n.a.			n.a.			n.a.			n.a.
Tangible book value per share (non-GAAP)	$	16.34		n.a.			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)	Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019
Total loans excluding PPP loans:
Total loans (GAAP)	$	9,706,989		$	9,911,494		$	9,979,616		$	9,080,743		$	8,981,481
Less: PPP loans	1,007,487			1,098,883			1,072,312			—			—
Total loans excluding PPP loans (non- GAAP)	$	8,699,502		$	8,812,611		$	8,907,304		$	9,080,743		$	8,981,481
Total nonperforming loans (NPLs) (GAAP)	$	43,252		$	44,833		$	55,395		$	49,087		$	43,775
Total NPLs / total loans (GAAP)	0.45		%	0.45		%	0.56		%	0.54		%	0.49		%
Total NPLs / total loans (excl. PPP loans) (non- GAAP)	0.50		%	0.51		%	0.62		%	0.54		%	0.49		%
Allowance for loan losses (ALLL) (GAAP)	$	113,031		$	115,432		$	116,636		$	109,138		$	82,297
ALLL / total loans (GAAP)	1.16		%	1.16		%	1.17		%	1.20		%	0.92		%
ALLL / total loans (excl. PPP loans) (non- GAAP)	1.30		%	1.31		%	1.31		%	1.20		%	0.92		%
	As of and for the three months ended
(Unaudited, dollars in thousands)	Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019
Average total loans excluding PPP Loans:
Average total loans (GAAP)	$	9,796,697		$	9,914,731		$	9,875,110		$	9,016,223		$	8,979,115
Less: Average PPP loans	1,076,155			1,091,464			818,665			—			—
Average total loans excluding PPP loans (non-GAAP)	$	8,720,542		$	8,823,267		$	9,056,445		$	9,016,223		$	8,979,115
Total net loans charged-off (NCOs) (GAAP)	$	3,301		$	1,904		$	1,102		$	1,759		$	2,525
NCOs / Average total loans (GAAP) (1)	0.13		%	0.08		%	0.04		%	0.08		%	0.11		%
NCOs / Average total loans (excl. PPP loans) (non-GAAP) (1)	0.15		%	0.09		%	0.05		%	0.08		%	0.11		%
(1) 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
	Dec 31, 2020												Sep 30, 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)	$	14,715,494			$	104,965			2.84		%		$	13,089,839			$	100,095			3.04		%
Non-GAAP adjustments:
PPP loan volume earning 1%	(1,076,155		)		(2,741		)		0.14		%		(1,091,464		)		(2,795		)		0.18		%
SBA PPP loan fee accretion, net of deferred origination cost amortization	—				(6,102		)		(0.16	)	%		—				(4,125		)		(0.13	)	%
Excess cash (3)	(1,996,808		)		(502		)		0.43		%		(1,200,250		)		(302		)		0.30		%
Deferred loan fee income adjustment	—				(3,774		)		(0.10	)	%		—				—				—		%
Core margin (Non-GAAP) (4)	$	11,642,531			$	91,846			3.14		%		$	10,798,125			$	92,873			3.42		%
Core margin change from prior quarter									(0.28	)	%										(0.09	)	%
	Jun 30, 2020												Mar 31, 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)	$	12,479,343			$	100,137			3.23		%		$	10,757,076			$	101,513			3.80		%
Non-GAAP adjustments:
PPP loan volume earning 1%	(818,665		)		(2,175		)		0.15		%		—				—				—		%
SBA PPP loan fee accretion, net of deferred origination cost amortization	—				(3,655		)		(0.12	)	%		—				—				—		%
Excess cash (3)	(898,745		)		(223		)		0.24		%		(25,298		)		(54		)		0.01		%
Deferred loan fee income adjustment	—				—				—		%		—				—				—		%
Core margin (Non-GAAP) (4)	$	10,761,933			$	94,084			3.52		%		$	10,731,778			$	101,459			3.80		%
Core margin change from prior quarter									(0.29	)	%
(1) Presented on an annualized basis.
(2) Presented on an fully taxable equivalent basis.
(3) Cash above 2% of average total earning assets at yield of 10, 10, 10, and 86 basis points in quarters four, three, two, and one, respectively.
(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 December 31, 2020
Industry	Loan balance (Dollars in thousands)			Balance as a percent of total loans		COVID-19 modification as a percent of loan type
Retail (1)	$	496,358		5.1	%	2.1	%
Restaurants	197,388			2.0	%	12.7	%
Hotels	178,696			1.8	%	51.4	%
Construction contractors financing	89,466			0.9	%	1.0	%
Auto dealerships	79,486			0.8	%	—	%
Other high risk	85,132			0.9	%	2.7	%
All impacted industries total	1,126,526			11.6	%	11.6	%
Remaining commercial and business banking	6,086,992			62.6	%	2.8	%
Total Commercial and business banking	7,213,518			74.1	%	4.2	%
All Other Loans	2,517,007			25.9	%	1.3	%
Total	$	9,730,525		100.0	%	3.4	%
(1) The retail segment contains all retail commercial real estate loans and non-essential commercial and industrial retail loans.

APPENDIX G: COVID-19 Related Loan Modifications

		Total COVID-19 Modifications as of June 30, 2020						Remaining COVID-19 Modifications as of September 30, 2020 (1)						Remaining COVID-19 Modifications as of December 31, 2020 (1)
(Dollars in thousands)		Total Modifications			% of Total Loan Balance			Remaining Modifications			% of Total Loan Balance			Remaining Modifications			% of Total Loan Balance
Portfolio
Commercial and industrial		$	157,384		6.9	%		$	99,630		4.6	%		$	34,076		1.7	%
Commercial real estate		546,002			15.2	%		414,233			11.3	%		231,794			6.5	%
Commercial construction		12,890			4.6	%		13,330			4.5	%		10,987			3.6	%
Business Banking		106,886			8.7	%		64,369			5.1	%		23,434			1.8	%
Residential real estate		92,775			6.6	%		95,260			6.9	%		26,772			2.0	%
Consumer home equity		18,603			2.1	%		10,093			1.1	%		3,432			0.4	%
Other Consumer		11,455			3.4	%		4,312			1.4	%		2,187			0.8	%
Total		$	945,995		9.5	%		$	701,227		7.1	%		$	332,682		3.4	%
(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.

APPENDIX H: Shareholders’ Equity Roll-forward Analysis

	As of									Dec 31, 2020 change from
	Dec 31, 2020				Sep 30, 2020					Sep 30, 2020
(Unaudited, dollars in thousands, except per share amounts)										△				△ per share
Common stock	$	1,868			$	—				$	1,868			$	0.01
Additional paid in capital	1,854,068				—					1,854,068				9.93
Unallocated ESOP common stock	(147,725		)		—					(147,725		)		(0.79		)
Retained earnings	1,665,607				1,709,669					(44,062		)		(0.24		)
AOCI, net of tax - available for sale securities	45,672				43,956					1,716				0.01
AOCI, net of tax - pension	(21,253		)		(76,164		)			54,911				0.29
AOCI, net of tax - cash flow hedge	29,815				35,911					(6,096		)		(0.03		)
Total shareholders' equity:	$	3,428,052			$	1,713,372				$	1,714,680			$	9.18
Less: Goodwill and other intangibles	376,534				375,632					902				—
Tangible shareholders' equity (non-GAAP)	$	3,051,518			$	1,337,740				$	1,713,778			$	9.18
Common shares outstanding	186,758,154				—
Per share:
Common stock	$	0.01			n.a.
Additional paid in capital	9.93				n.a.
Unallocated ESOP common stock	(0.79		)		n.a.
Retained earnings	8.92				n.a.
AOCI, net of tax - available for sale securities	0.24				n.a.
AOCI, net of tax - pension	(0.11		)		n.a.
AOCI, net of tax - cash flow hedge	0.16				n.a.
Total shareholders' equity:	$	18.36			n.a.
Less: Goodwill and other intangibles	2.02				n.a.
Tangible shareholders' equity (non-GAAP)	$	16.34			n.a.

 

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