Eastern Bankshares : 2024 Q1 Earnings Call Presentation

Q1 Earnings Presentation

April 25, 2024

On the call

Presenter		Topic
	Bob Rivers	Opening Remarks
	Chief Executive Officer & Chair of the Board
	Jim Fitzgerald	Financials
	Chief Administrative Officer, Chief Financial
	Officer & Treasurer

2

Q1 2024 financial highlights

Key Metrics

$38.6 million

Net income

Highlights

Income Statement

• Net income of $38.6 million, or $0.24 per diluted share. Operating net income* of $38.1 million, or $0.23 per diluted share

$38.1 million

Operating net income*

$0.24	$0.23
Diluted EPS	Diluted operating EPS*
2.68%	1.66%
NIM*1	Total deposit cost1
0.27%	0.21%
NPAs / total assets	NCOs / avg. loans1

$0.11 per share

Dividend declared

$16.72 $13.51

BV/ShareTBV/Share*

Balance Sheet

• Deposits up $71 million, or 1.6%1. Core deposits up $121 million, or 2.8%1, which was partially offset by a $50 million decline in brokered deposits
• Loans increased $115 million, or 3.3%1

Net Interest Margin/Net Interest Income

• Net interest margin on a FTE basis*1 was stable at 2.68%
• Net interest income was $129.9 million, a decrease of $3.4 million from prior quarter

Expense

• Noninterest expense of $101.2 million. Operating noninterest expense* of $97.6 million

Asset Quality

• Modest increase in non-performing loans ("NPLs") from $52.6 million to $57.2 million or from 0.38% to 0.41% of total loans
• Net charge-offs ("NCOs")1 of 0.21% of average total loans, compared to 0.32% in the prior quarter
• Continued resolution of problem loans. 1 NPL resolved and collateral of 2 NPLs

under contract for sale. 1 new NPL in Q1 2024, the collateral of which is being
marketed for sale	3

*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on an annualized basis.

Balance sheet

Core deposits1

$17.9 $17.5 $17.0 $17.5 $17.7

3/23

6/23

9/23

12/23

3/24

Borrowings & brokered deposits

$1.7

$1.1 $1.1

$0.1 $0.1

3/23

6/23

9/23

12/23

3/24

Total loans

$13.7 $14.0 $13.9 $14.0 $14.1

3/23

6/23

9/23

12/23

3/24

Cash & investments

$7.3

$5.9 $5.3 $5.6 $5.5

3/23

6/23

9/23

12/23

3/24

• Core deposit1 growth of $120.5 million, or 2.8%2 from the prior quarter
• Loan growth of $115.3 million, or 3.3%2 from the prior quarter
• The company had no brokered deposits at March 31, 2024. Borrowings and brokered deposits down $45.5 million to under 0.5% of total assets
• Cash and equivalents increased $45.9 million
• Investments decreased $125.8 million, driven by principal runoff, as well as a decrease in the market value of available for sale securities
• Loan-to-depositratio of 80%

4

$ in billions. 1Core deposits are defined as total deposits less brokered deposits 2Presented on an annualized basis.

Capital

Common equity tier 1 ratio1		Tier 1 capital ratio1
		18.6%	18.5%				18.6%	18.5%
15.8%	15.7%	16.0%		15.8%	15.7%	16.0%

6.5%

8.0%

3/23

6/23

9/23

12/23

3/24

3/23

6/23

9/23

12/23

3/24

Total capital ratio1

Tangible common equity ratio*

19.6%

19.5%

11.7%

11.6%

16.8%

16.7%

17.0%

8.7%

8.9%

8.7%

10.0%

3/23

6/23

9/23

12/23

3/24

3/23

6/23

9/23

12/23

3/24

Capital ratio

Well-capitalized regulatory minimum

• Strong capital position provides significant support to the Company's growth and strategic initiatives as well as capital management strategies, including share repurchases
• Capital ratios are stable from the prior quarter. CET1 ratio and TCE ratio* of 18.5% and 11.6%, respectively

5

*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Regulatory capital ratios as of March 31, 2024 are preliminary estimates.

Income statement

$ in millions, except per share amounts		Q1 2024		Q4 2023		Q3 2023		Q2 2023		Q1 2023		•	Net income was $38.6
Net interest income	$	129.9	$	133.3	$	137.2	$	141.6	$	138.3
		million and operating net
Noninterest income (loss)		27.7		26.7		19.2		26.2		(309.9)
						income* was $38.1 million
Total revenue		157.6		160.0		156.4		167.8		(171.6)	•
					Net interest income was
Noninterest expense		101.2		121.0		101.7		99.9		95.9
Pre-tax,pre-provision income (loss)		56.4		39.0		54.6		67.9		(267.4)		$129.9 million, $3.4 million
Provision for allowance for loan losses		7.5		5.2		7.3		7.5		0.0			below prior quarter
Pre-tax income (loss)		48.9		33.8		47.3		60.4		(267.5)	•	Noninterest income was
Income tax expense (benefit)		10.3		2.3		(16.2)		16.0		(65.4)
						$27.7 million and $23.4
Net income (loss) from continuing operations		38.6		31.5		63.5		44.4		(202.1)		million on an operating*
Net income (loss) from discontinued operations		-		287.0		(4.4)		4.2		8.0			basis
Net income (loss)	$	38.6	$	318.5	$	59.1	$	48.7	$	(194.1)	•	Noninterest expense was
Operating net income*	$	38.1	$	16.9	$	52.1	$	41.1	$	53.1
EPS	$	0.24	$	1.95	$	0.36	$	0.30	$	(1.20)		$101.2 million and $97.6
	million on an operating*
Continuing operations	$	0.24	$	0.19	$	0.39	$	0.27	$	(1.25)
	basis
Discontinued operations	$	-	$	1.76	$	(0.03)	$	0.03	$	0.05		•	Provision for loan losses
Operating EPS*	$	0.23	$	0.10	$	0.32	$	0.25	$	0.33
ROA 1		0.74 %	0.59 %	1.18 %	0.81 %	(3.64)%		was $7.5 million
Operating ROA*1		0.72 %	0.31 %	0.97 %	0.75 %	0.95 %
Efficiency ratio		64.22 %	75.62	%	65.07	%	59.56	%	(55.90)%
Operating efficiency ratio*		61.89	%	73.59	%	60.83	%	58.47	%	57.97	%		6

*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on an annualized basis.

Net interest margin trends

Earning assets

		Q1 2024			Q4 2023					Change
		Avg. Balance		Yield1			Avg. Balance		Yield1				Avg. Balance		Yield1
Commercial loans	$ 10,024	5.09 %	$ 9,978	5.01 %		$	46	0.08 %
Residential loans	2,571	3.75	%	2,573	3.63	%				(2)	0.12	%
Consumer loans		1,420		6.58	%		1,411		6.42	%				9		0.16	%
Total loans	14,015	5.00	%	13,963	4.90	%				52	0.10	%
Securities	5,575	1.82	%	5,671	1.79	%				(96)	0.03	%
Cash		577		5.46	%		720		5.51	%				(143)		(0.05)%
Total I.E. assets	20,166	4.13	%	20,354	4.06	%				(188)	0.07	%

Funding sources

QoQ changes in FTE net interest income*

$137.8	$1.6				$2.7	$134.4
				$(2.6)	$(5.1)

Q4	Loans	Inv. & Deposits Borrowings Q1 2024
2023		Cash

FTE net interest income and margin trend*

		Q1 2024				Q4 2023
		Avg. Balance	Cost			Avg. Balance		Cost
Savings	$ 1,297			0.01	%	$ 1,352	0.01	%
DDAWI	3,745			0.88 %	3,753	0.75 %
MMDA	4,742			2.59 %	4,736	2.46 %
CD		2,785			4.87 %		2,656		4.61	%
Total I.B. deposits	12,569			2.32	%	12,498	2.14	%
Borrowings		51			2.00 %		242		4.83 %
Total I.B. liab.	12,620			2.32	%	12,740	2.19	%
DDA	4,989					5,210
Total deposits	17,558			1.66	%	17,708	1.51	%

Change

Avg. Balance

Cost

$ (55) - %

1. 0.13 %
   6 0.13 %

1. 0.26 %

1. 0.18 %

1. (2.83)%

1. 0.13 %

1. 0.15 %

$142.8	$145.5	$141.6	$137.8	$134.4
			2.80%		2.77%
	2.66%				2.69%		2.68%

Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024
			NII - FTE*		NIM - FTE*

7

$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on a fully tax equivalent ("FTE") basis.

Noninterest income1

Noninterest income

																	$27.7
					$26.2								$26.7
	$23.3					$23.2										$23.4
											$21.8
		$20.5					$19.2		$20.7

Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024
			Noninterest income			Operating noninterest income*

• Total noninterest income was $27.7 million for the first quarter
• Total operating noninterest income* was $23.4 million, an increase of $1.6 million from the prior quarter
• The increase in operating noninterest income was driven primarily by an increase in loan- level interest rate swap income of $1.2 million

		Q1 2024		Q4 2023		Q1 2023	QoQ		YoY
Service charges on deposit accounts		7.5		7.5		6.5	- %	15	%
Trust and investment advisory fees		6.5		6.1		5.8	7	%	12	%
Debit card processing fees		3.2		3.4		3.2	(6)%	- %
Interest rate swap income (losses)		0.7		(0.6)		(0.4)	NM	NM
Income from investments held in rabbi trusts		4.3		5.0		2.9	(14)%	48	%
Other1		5.4		5.3		5.5	2	%	(2)%
Total noninterest income	$	27.7	$	26.7	$	23.3	4	%	19	%
Total operating noninterest income*	$	23.4	$	21.8	$	20.5	7	%	14	%
										8

$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Excludes discontinued operations and gains/losses on AFS securities.

Noninterest expense1

Noninterest expense

													$121.0
														$117.4
	$95.9				$99.9		$98.6		$101.7		$98.7				$101.2		$97.6
		$94.6

Q1 2023	Q2 2023		Q3 2023		Q4 2023	Q1 2024
			Noninterest expense				Operating noninterest expense*
					Q1 2024			Q4 2023		Q1 2023	QoQ	YoY
Salaries and employee benefits		64.5			67.8		62.2	(5)%	4	%
Data processing				16.5			16.8		12.3	(1)%	34	%
Office occupancy and equipment		9.2			9.2		9.1	- %	1	%
Professional services				3.5			4.1		3.1	(15)%	12	%
FDIC Insurance				2.3			13.5		2.5	(83)%	(10)%
All other1				5.2			9.7		6.6	(46)%	(21)%
Total noninterest expense			$	101.2	$	121.1	$	95.8	(16)%	6	%
Total operating noninterest expense*	$	97.6	$	117.4	$	94.6	(16.9)%	3	%

• Total noninterest expense was $101.2 million, a decrease of $19.8 million from the prior quarter
• Operating noninterest expense was $97.6 million, a decrease of $19.8 million from the prior quarter
• • $11.2 million decrease in FDIC insurance. Prior quarter included the special assessment of $10.8 million
  • $1.6 million decrease in the operating portion of salaries and employee benefits
  • A decrease in marketing expense of $1.2 million
• One-timefavorable items in Q1 2024 include a reduction in incentive compensation and a reduction in provision for off-balance-sheetcommitments totaling approximately $3.2 million

9

$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Excludes Discontinued Operations.

Deposits

• Core deposits increased $121 million, or 2.8%2 from the prior quarter. Total deposits increased $71 million. The company had no brokered deposits as of March 31, 2024
• 49% of total deposits are in checking products, down from 51% in the prior quarter
• Total deposit cost2 was 1.66% in the first quarter, compared to 1.51% in the prior quarter

High quality deposit portfolio as of March 31, 2024

	16.5%
DDA		28.0%
DDAWI	7.3%
MMDA
Sav
CD	27.0%	21.2%

Funding betas & cost

Cycle beta (1)		Total I.B. liabilities cost

(includes borrowings)

2.15% 2.22% 2.13% 2.23% 2.27% 2.31% 2.37%

1.63% 1.80% 1.78% 1.77% 1.88% 1.95%

34%	36%	34%	33%	35%	35%	39%	40%	39%	41%	41%	42%	43%

Mar- Apr- May- Jun-	Jul-	Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar-
23	23	23	23	23	23	23	23	23	23	24	24	24

Cost of deposits2

		Interest-bearing deposit cost		Total deposit cost
				2.14%	2.32%
			1.89%
		1.71%
1.33%
			1.33%	1.51%	1.66%
		1.22%
0.92%
Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024

1Cycle beta calculated as the change in monthly average total interest-bearing liabilities cost in each respective month, divided by the respective change in the average monthly upper bound	10
of the Federal Funds target range during the same period. 2Presented on an annualized basis.