Eastern Bankshares, Inc. Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

Eastern Bankshares (NASDAQ: EBC) reported Q2 2022 net income of $51.2 million or $0.31 per diluted share, slightly down from the previous quarter. Operating net income was $52.5 million with a consistent $0.32 per share, reflecting strong net interest income growth of 8% to $137.8 million. The bank experienced double-digit growth in major lending categories while maintaining solid credit quality. It declared a quarterly cash dividend of $0.10 per share, payable on September 15, 2022. Total assets stood at $22.4 billion.

Positive

• Net interest income increased by 8% quarter-over-quarter.
• Operating net income of $52.5 million represents a 42% year-over-year increase.
• Achieved 10.5% annualized loan growth excluding PPP loans across major lending categories.
• Declared a quarterly cash dividend of $0.10 per share.

Negative

• Net income decreased by 0.6% compared to the prior quarter.
• Total assets decreased by $485.2 million or 2% from March 31, 2022.
• Noninterest income fell by $4.5 million quarter-over-quarter.

Company Declares Quarterly Cash Dividend

BOSTON--(BUSINESS WIRE)-- Eastern Bankshares, Inc. (the “Company,” or together with its affiliates and subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2022 second quarter financial results and the declaration of a quarterly cash dividend. Net income for the second quarter of 2022 was $51.2 million, or $0.31 per diluted share, compared to net income of $51.5 million, or $0.30 per diluted share, reported for the first quarter of 2022. Operating net income* for the second quarter of 2022 was $52.5 million, or $0.32 per diluted share, compared to $55.1 million, or $0.32 per diluted share, reported for the prior quarter.

“Our financial results for the second quarter were strong, with net interest income benefiting from the combination of the rising rate environment and our asset-sensitive balance sheet,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “Our net interest margin expanded by twenty-one basis points from the prior quarter, driving an eight percent increase in net interest income and record quarterly revenue. Loan growth was also strong, as we achieved double-digit annualized growth in each of our major lending categories while maintaining excellent credit quality and underwriting standards. We remain focused on achieving our strategic priorities and are optimistic about the strength and resiliency of our local economy."

HIGHLIGHTS FOR THE SECOND QUARTER OF 2022

• Operating net income* of $52.5 million, or $0.32 per diluted share, for the second quarter of 2022 was 42% higher than the comparable prior year quarter.
• Net interest income of $137.8 million for the second quarter of 2022 was 8% higher than the prior quarter and 32% higher than the comparable prior year quarter.
• The net interest margin on a fully tax equivalent (“FTE”) basis* of 2.63% for the second quarter was 21 basis points higher than the prior quarter.
• The cost of deposits was 6 basis points in the second quarter, a decrease of one basis point from the prior quarter.
• Loan growth excluding Paycheck Protection Program (“PPP”) loans was 10.5% on an annualized basis, and included double-digit annualized growth in commercial (excluding PPP loans), residential, and consumer lending.
• The Company repurchased 4,216,469 shares of its common stock during the second quarter of 2022 at a weighted average price of $19.24 excluding commissions, for an aggregate purchase price of $81.1 million.

The results for the comparable prior year quarter do not reflect the Company’s acquisition of Century Bancorp, Inc. (“Century”), which was completed on November 12, 2021.

BALANCE SHEET

Total assets were $22.4 billion at June 30, 2022, representing a decrease of $485.2 million, or 2%, from March 31, 2022.

• Total securities decreased $287.2 million, or 3%, from the prior quarter, to $8.0 billion, primarily due to a decline in the market value of available for sale securities driven by higher interest rates. Cash and equivalents declined $461.6 million from the prior quarter to $368.9 million.
• Total loans were $12.4 billion, representing an increase of $216.5 million, or 2%, from the prior quarter. The increase was driven by strong loan growth in all categories, partially offset by PPP loan paydowns of $98.7 million. Excluding PPP loans, commercial loans grew $218.6 million, residential loans grew $53.4 million and consumer loans grew $43.1 million, reflecting growth of 10.0%, 11.1%, and 13.3%, respectively, on an annualized basis.
• Deposits totaled $19.2 billion, representing a decrease of $229.0 million, or 1%, from the prior quarter. Deposits declined by approximately $300 million on April 1, 2022 in connection with the previously announced transfer to Needham Bank of the Company’s cannabis and money services business originally acquired through the Century transaction.
• Shareholders’ equity was $2.7 billion, representing a decrease of $290.0 million from the prior quarter driven primarily by decreases in accumulated other comprehensive income of $248.5 million and additional paid-in capital of $77.2 million and partially offset by an increase in retained earnings of $34.5 million. Please refer to Appendix D to this press release for a roll forward of tangible shareholders’ equity*.
• At June 30, 2022, book value per share was $15.17 and tangible book value per share* was $11.52.

NET INTEREST INCOME

Net interest income was $137.8 million for the second quarter of 2022, compared to $128.1 million in the prior quarter, representing an increase of $9.6 million from the prior quarter.

• The increase in net interest income on a consecutive quarter basis was primarily due to an increase in the net interest margin, which benefited primarily from higher short-term interest rates. This was partially offset by a decline in average interest-earning asset balances of $410.7 million from the prior quarter, attributable to a lower average cash balance for the period, which was driven by lower average deposits.
• The net interest margin on a FTE basis* was 2.63% for the second quarter, representing a 21 basis point increase from the prior quarter, as asset yields benefited from higher interest rates in the period, partially offset by lower net PPP fee accretion compared to the prior quarter.
• Included in net interest income in the second quarter and prior quarter, respectively, was $2.5 million and $5.8 million of PPP fee accretion net of deferred cost amortization. During the second quarter, $98.7 million in PPP loans were forgiven by the U.S. Small Business Administration or otherwise paid down, compared to $190.2 million in the prior quarter.

NONINTEREST INCOME

Noninterest income was $41.9 million for the second quarter of 2022, compared to $46.4 million for the prior quarter, representing a decrease of $4.5 million. Noninterest income on an operating basis* was $48.0 million for the second quarter of 2022, compared to $53.3 million for the prior quarter, a decrease of $5.2 million.

• Insurance commissions decreased $4.0 million to $24.7 million in the second quarter, compared to $28.7 million in the prior quarter, driven by lower annual incentive payments received. Compared to the comparable prior year quarter, insurance commissions increased $1.0 million, or 4%.
• Service charges on deposit accounts decreased $0.2 million on a consecutive quarter basis to $8.3 million.
• Trust and investment advisory fees decreased $0.1 million on a consecutive quarter basis to $6.0 million.
• Debit card processing fees increased $0.3 million on a consecutive quarter basis to $3.2 million.
• Loan-level interest rate swap income was $1.6 million in the second quarter, compared to $2.9 million in the prior quarter, representing a decrease of $1.3 million. The decrease was driven by a $0.8 million decrease in the fair value adjustment of such interest rate swap transactions and a $0.5 million decrease in cash income due to lower swap transaction volume.
• Losses from investments held in rabbi trust accounts were $7.3 million in the second quarter compared to losses of $4.4 million in the prior quarter due to weaker investment performance in the period as compared to the prior quarter.
• Realized losses on available for sale securities were $0.1 million in the second quarter compared to $2.2 million in the prior quarter.
• Other noninterest income increased $1.9 million in the second quarter to $5.4 million, due primarily to increases in income on bank owned life insurance policies, gains on the sale of fixed assets, and other miscellaneous fee income.

Please refer to Appendix B to this press release for a reconciliation of operating revenues and expenses*.

NONINTEREST EXPENSE

Noninterest expense was $111.1 million for the second quarter of 2022, compared to $108.9 million in the prior quarter, representing an increase of $2.3 million. Noninterest expense on an operating basis* for the second quarter of 2022 was $114.4 million, compared to $110.9 million in the prior quarter, an increase of $3.5 million.

• Salaries and employee benefits expense was $73.0 million in the second quarter, representing an increase of $3.5 million from the prior quarter, primarily due to an increase in equity award and incentive compensation expense which was partially offset by a decrease in benefits expense primarily attributable to the lower market value of investments held in rabbi trust accounts associated with the Company’s defined contribution supplemental executive retirement plan.
• Office occupancy and equipment expense was $9.9 million in the second quarter, a decrease of $1.7 million from the prior quarter, in part due to lower costs related to Century compared to the prior quarter.
• Data processing expenses were $14.3 million in the second quarter, a decrease of $1.0 million from the prior quarter, primarily due to lower core data processing expenses.
• Professional services expense was $4.0 million in the second quarter, a decrease of $0.7 million from the prior quarter due primarily to lower legal fees and other professional fees.
• Marketing expense was $2.7 million in the second quarter, an increase of $1.1 million from the prior quarter, primarily due to higher advertising expenses in the period.

Please refer to Appendix B to this press release for a reconciliation of operating revenues and expenses*.

ASSET QUALITY

The allowance for loan losses was $125.5 million at June 30, 2022, or 1.01% of total loans, compared to $124.2 million or 1.02% of total loans at March 31, 2022. The Company recorded a provision for the allowance for loan losses totaling $1.1 million in the second quarter of 2022.

Non-performing loans totaled $59.9 million at June 30, 2022 compared to $33.8 million at the end of the prior quarter. The increase from the prior quarter was primarily attributable to the migration to nonaccrual status of one syndicated credit facility which is in an active workout process. During the second quarter of 2022, the Company recorded total net recoveries of $0.3 million, or 0.01% of average total loans on an annualized basis, compared to net charge-offs of $0.2 million or 0.01% of average total loans in the prior quarter, respectively.

At June 30, 2022, approximately $19.9 million in COVID-19 modified loans remained under modified payment terms, down from $49.0 million at March 31, 2022. The commercial real estate portfolio contained $12.8 million of the remaining COVID-19 modifications at period end, all of which were in the hotel segment.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per common share. The dividend will be payable on September 15, 2022 to shareholders of record as of the close of business on September 2, 2022.

The Company repurchased 4,216,469 shares of its common stock during the second quarter of 2022 at a weighted average price of $19.24 excluding commissions, for an aggregate purchase price of $81.1 million. Beginning in the fourth quarter of 2021 and through June 30, 2022, the Company had repurchased 8,218,968 shares of its common stock in total under the Company’s current repurchase authorization at a weighted average price of $20.06 excluding commissions, for an aggregate purchase price of $164.9 million. At June 30, 2022, there were 1,118,932 shares available for repurchase and $60.1 million in total market value remaining under the Company’s current repurchase authorization, which expires on November 30, 2022 and is limited to $225.0 million in total market value.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s second quarter 2022 earnings will be held on Friday, July 29, 2022 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (888) 396-8049 from within the U.S. and reference conference ID 97071632. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website at investor.easternbank.com. A replay of the webcast will be made available on demand on this site.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. is the stock holding company for Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more than 120 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of June 30, 2022, Eastern Bank had approximately $22 billion in total assets. Eastern provides banking, investment and insurance products and services for consumers and businesses of all sizes, including through its Eastern Wealth Management division and its Eastern Insurance Group LLC subsidiary. Eastern takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern employs approximately 2,100 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, operating return on average tangible shareholders’ equity (discussed further below), 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) other real estate owned (“OREO”) gains, (vii) merger and acquisition expenses, and (viii) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company’s outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense, respectively, cannot be made available without unreasonable effort.

Management also presents tangible assets, tangible shareholders’ equity, average tangible shareholders’ equity, tangible book value per share, the ratio of tangible shareholders’ equity to tangible assets, 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-D for reconciliations of the Company's GAAP financial measures to the non-GAAP financial measures in this press release.

FORWARD-LOOKING STATEMENTS

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

Certain factors that could cause actual results to differ materially from expected results include developments in the Company’s market relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown; adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses; increased competitive pressures; changes in the interest rate environment; risks that revenue or expense synergies or the other expected benefits of the Company’s merger with Century (“Transaction”) may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; risks that the Company is unable to successfully implement integration strategies for the Transaction; reputational risks and the reaction of customers to the Transaction; and diversion of management time on Transaction-related issues; as well as general economic conditions or conditions within the securities markets; and 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 inflation, interest rates, interest rate sensitivity and liquidity, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including fluctuations due to actual or anticipated changes to federal tax laws; credit quality, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; and the failure of the Company to execute all of its planned share repurchases. For further discussion of such factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov.

Further, given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; reduced demand for office space in the Company’s markets due to remote and/or hybrid work arrangements; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely.

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

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

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

	As of and for the three months ended
(Unaudited, dollars in thousands, except per share amounts)	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
Earnings data
Net interest income	$	137,757		$	128,124		$	122,437		$	102,691		$	104,608
Noninterest income		41,877			46,415			49,001			43,209			45,733
Total revenue		179,634			174,539			171,438			145,900			150,341
Noninterest expense		111,139			108,866			143,602			98,970			107,335
Pre-tax, pre-provision income		68,495			65,673			27,836			46,930			43,006
Provision for (release of) allowance for loan losses		1,050			(485	)		(4,318	)		(1,488	)		(3,300	)
Pre-tax income		67,445			66,158			32,154			48,418			46,306
Net income		51,172			51,516			35,087			37,106			34,809
Operating net income (non-GAAP)		52,518			55,107			44,860			37,391			37,097
Per-share data
Earnings per share, basic	$	0.31		$	0.30		$	0.20		$	0.22		$	0.20
Earnings per share, diluted	$	0.31		$	0.30		$	0.20		$	0.22		$	0.20
Operating earnings per share, basic (non-GAAP)	$	0.32		$	0.32		$	0.26		$	0.22		$	0.22
Operating earnings per share, diluted (non-GAAP)	$	0.32		$	0.32		$	0.26		$	0.22		$	0.22
Book value per share	$	15.17		$	16.40		$	18.28		$	18.36		$	18.37
Tangible book value per share (non-GAAP)	$	11.52		$	12.83		$	14.80		$	16.33		$	16.33
Profitability
Return on average assets (1)		0.92	%		0.90	%		0.67	%		0.84	%		0.83	%
Operating return on average assets (non-GAAP) (1)		0.94	%		0.96	%		0.86	%		0.86	%		0.89	%
Return on average shareholders' equity (1)		7.16	%		6.38	%		4.07	%		4.27	%		4.10	%
Operating return on average shareholders' equity (1)		7.34	%		6.82	%		5.19	%		4.30	%		4.36	%
Return on average tangible shareholders' equity (non-GAAP) (1)		9.28	%		7.96	%		4.80	%		4.79	%		4.61	%
Operating return on average tangible shareholders' equity (non-GAAP) (1)		9.53	%		8.53	%		6.14	%		4.84	%		4.91	%
Net interest margin (FTE) (1)		2.63	%		2.42	%		2.54	%		2.53	%		2.69	%
Cost of deposits (1)		0.06	%		0.07	%		0.06	%		0.02	%		0.03	%
Fee income ratio		23.31	%		26.59	%		28.58	%		29.62	%		30.42	%
Efficiency ratio		61.87	%		62.37	%		83.76	%		67.83	%		71.39	%
Operating efficiency ratio (non-GAAP)		60.61	%		60.39	%		65.21	%		66.14	%		67.78	%
Balance Sheet (end of period)
Total assets	$	22,350,848		$	22,836,072		$	23,512,128		$	17,461,223		$	17,047,453
Total loans		12,398,694			12,182,203			12,281,510			9,504,562			9,621,075
Total deposits		19,163,801			19,392,816			19,628,311			13,649,964			13,250,433
Total loans / total deposits		65	%		63	%		63	%		70	%		73	%
PPP loans	$	42,463		$	141,166		$	331,385		$	533,965		$	825,784
Asset quality
Allowance for loan losses ("ALLL") (2)	$	125,531		$	124,166		$	97,787		$	103,398		$	105,637
ALLL / total nonperforming loans ("NPLs")		209.64	%		367.13	%		279.53	%		245.77	%		253.74	%
Total NPLs / total loans		0.48	%		0.28	%		0.29	%		0.44	%		0.43	%
Net (recoveries) charge-offs ("NCOs") / average total loans (1)		(0.01	) %		0.01	%		0.05	%		0.03	%		0.09	%
Remaining COVID-19 loan modifications	$	19,914		$	49,033		$	106,657		$	110,596		$	149,805
Capital adequacy
Shareholders' equity / assets		12.16	%		13.17	%		14.49	%		19.64	%		20.12	%
Tangible shareholders' equity / tangible assets (non-GAAP)		9.52	%		10.61	%		12.06	%		17.85	%		18.30	%

(1) Presented on an annualized basis.
(2) The Company adopted ASU 2016-13 on January 1, 2022 using the modified retrospective approach. Accordingly, at March 31, 2022 and thereafter, the allowance for loan losses was determined in accordance with ASC 326, “Financial Instruments-Credit Losses” and ASC 310, “Receivables,” as amended. At December 31, 2021 and prior, the allowance for loan losses was determined in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables.”

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	As of										Jun 30, 2022 change from
(Unaudited, dollars in thousands)	Jun 30, 2022			Mar 31, 2022			Jun 30, 2021				Mar 31, 2022						Jun 30, 2021
ASSETS											△ $			△ %			△ $			△ %
Cash and due from banks	$	100,309		$	118,362		$	58,490				(18,053	)	(15	) %			41,819		71	%
Short-term investments		268,605			712,132			1,505,757				(443,527	)	(62	) %			(1,237,152	)	(82	) %
Cash and cash equivalents		368,914			830,494			1,564,247				(461,580	)	(56	) %			(1,195,333	)	(76	) %
Available for sale ("AFS") securities		7,536,921			7,917,305			4,848,781				(380,384	)	(5	) %			2,688,140		55	%
Held to maturity ("HTM") securities		488,581			395,434			—				93,147		24	%			488,581		—	%
Total securities		8,025,502			8,312,739			4,848,781				(287,237	)	(3	) %			3,176,721		66	%
Loans held for sale		764			1,166			2,734				(402	)	(34	) %			(1,970	)	(72	) %
Loans:
Commercial and industrial		2,840,734			2,886,560			1,740,679				(45,826	)	(2	) %			1,100,055		63	%
Commercial real estate		4,792,345			4,609,824			3,775,771				182,521		4	%			1,016,574		27	%
Commercial construction		303,463			246,093			237,927				57,370		23	%			65,536		28	%
Business banking		1,126,853			1,201,007			1,339,852				(74,154	)	(6	) %			(212,999	)	(16	) %
Total commercial loans		9,063,395			8,943,484			7,094,229				119,911		1	%			1,969,166		28	%
Residential real estate		1,989,621			1,936,182			1,457,498				53,439		3	%			532,123		37	%
Consumer home equity		1,147,425			1,099,211			834,938				48,214		4	%			312,487		37	%
Other consumer		198,253			203,326			234,410				(5,073	)	(2	) %			(36,157	)	(15	) %
Total loans		12,398,694			12,182,203			9,621,075				216,491		2	%			2,777,619		29	%
Allowance for loan losses		(125,531	)		(124,166	)		(105,637	)			(1,365	)	1	%			(19,894	)	19	%
Unamortized prem./disc. and def. fees		(20,988	)		(24,434	)		(29,739	)			3,446		(14	) %			8,751		(29	) %
Net loans		12,252,175			12,033,603			9,485,699				218,572		2	%			2,766,476		29	%
Federal Home Loan Bank stock, at cost		5,714			10,904			10,601				(5,190	)	(48	) %			(4,887	)	(46	) %
Premises and equipment		69,019			73,180			44,733				(4,161	)	(6	) %			24,286		54	%
Bank-owned life insurance		158,890			157,954			79,634				936		1	%			79,256		100	%
Goodwill and other intangibles, net		653,853			654,759			380,402				(906	)	—	%			273,451		72	%
Deferred income taxes, net		244,153			183,137			26,161				61,016		33	%			217,992		833	%
Prepaid expenses		188,115			188,704			145,941				(589	)	—	%			42,174		29	%
Other assets		383,749			389,432			458,520				(5,683	)	(1	) %			(74,771	)	(16	) %
Total assets	$	22,350,848		$	22,836,072		$	17,047,453			$	(485,224	)	(2	) %		$	5,303,395		31	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand	$	6,604,154		$	6,788,742		$	5,399,297			$	(184,588	)	(3	) %		$	1,204,857		22	%
Interest checking accounts		5,348,181			4,662,134			2,656,610				686,047		15	%			2,691,571		101	%
Savings accounts		2,015,865			2,089,427			1,403,472				(73,562	)	(4	) %			612,393		44	%
Money market investment		4,787,603			5,406,198			3,544,897				(618,595	)	(11	) %			1,242,706		35	%
Certificates of deposit		407,998			446,315			246,157				(38,317	)	(9	) %			161,841		66	%
Total deposits		19,163,801			19,392,816			13,250,433				(229,015	)	(1	) %			5,913,368		45	%
Borrowed funds:
Federal Home Loan Bank advances		13,560			13,689			14,323				(129	)	(1	) %			(763	)	(5	) %
Escrow deposits of borrowers		19,456			21,233			14,119				(1,777	)	(8	) %			5,337		38	%
Interest rate swap collateral funds		10,100			—			—				10,100		—	%			10,100		—	%
Total borrowed funds		43,116			34,922			28,442				8,194		23	%			14,674		52	%
Other liabilities		425,535			399,942			337,956				25,593		6	%			87,579		26	%
Total liabilities		19,632,452			19,827,680			13,616,831				(195,228	)	(1	) %			6,015,621		44	%
Shareholders' equity:
Common shares		1,793			1,834			1,868				(41	)	(2	) %			(75	)	(4	) %
Additional paid-in capital		1,700,495			1,777,670			1,856,241				(77,175	)	(4	) %			(155,746	)	(8	) %
Unallocated common shares held by the employee stock ownership plan ("ESOP")		(140,203	)		(141,455	)		(145,219	)			1,252		(1	) %			5,016		(3	) %
Retained earnings		1,817,474			1,782,997			1,723,979				34,477		2	%			93,495		5	%
Accumulated other comprehensive income ("AOCI"), net of tax		(661,163	)		(412,654	)		(6,247	)			(248,509	)	60	%			(654,916	)	10484	%
Total shareholders' equity		2,718,396			3,008,392			3,430,622				(289,996	)	(10	) %			(712,226	)	(21	) %
Total liabilities and shareholders' equity	$	22,350,848		$	22,836,072		$	17,047,453			$	(485,224	)	(2	) %		$	5,303,395		31	%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
	Three months ended										Three months ended Jun 30, 2022 change from three months ended
(Unaudited, dollars in thousands, except per share data)	Jun 30, 2022			Mar 31, 2022			Jun 30, 2021				Mar 31, 2022						Jun 30, 2021
Interest and dividend income:											△ $			△ %			△ $			△ %
Interest and fees on loans	$	107,236		$	101,367		$	90,936			$	5,869		6	%		$	16,300		18	%
Taxable interest and dividends on securities		31,121			27,876			12,457				3,245		12	%			18,664		150	%
Non-taxable interest and dividends on securities		1,862			1,806			1,857				56		3	%			5		—	%
Interest on federal funds sold and other short-term investments		652			436			431				216		50	%			221		51	%
Total interest and dividend income		140,871			131,485			105,681				9,386		7	%			35,190		33	%
Interest expense:
Interest on deposits		3,061			3,322			1,031				(261	)	(8	) %			2,030		197	%
Interest on borrowings		53			39			42				14		36	%			11		26	%
Total interest expense		3,114			3,361			1,073				(247	)	(7	) %			2,041		190	%
Net interest income		137,757			128,124			104,608				9,633		8	%			33,149		32	%
Provision for (release of) allowance for loan losses		1,050			(485	)		(3,300	)			1,535		(316	) %			4,350		(132	) %
Net interest income after provision for (release of) allowance for loan losses		136,707			128,609			107,908				8,098		6	%			28,799		27	%
Noninterest income:
Insurance commissions		24,682			28,713			23,664				(4,031	)	(14	) %			1,018		4	%
Service charges on deposit accounts		8,313			8,537			5,708				(224	)	(3	) %			2,605		46	%
Trust and investment advisory fees		5,994			6,141			6,074				(147	)	(2	) %			(80	)	(1	) %
Debit card processing fees		3,223			2,945			3,170				278		9	%			53		2	%
Interest rate swap income (losses)		1,593			2,932			(1,164	)			(1,339	)	(46	) %			2,757		(237	) %
(Losses) income from investments held in rabbi trusts		(7,316	)		(4,433	)		4,216				(2,883	)	65	%			(11,532	)	(274	) %
Gains on sales of mortgage loans held for sale, net		49			169			848				(120	)	(71	) %			(799	)	(94	) %
(Losses) gains on sales of securities available for sale, net		(104	)		(2,172	)		1				2,068		(95	) %			(105	)	(10500	) %
Other		5,443			3,583			3,216				1,860		52	%			2,227		69	%
Total noninterest income		41,877			46,415			45,733				(4,538	)	(10	) %			(3,856	)	(8	) %
Noninterest expense:
Salaries and employee benefits		72,996			69,526			69,276				3,470		5	%			3,720		5	%
Office occupancy and equipment		9,888			11,614			8,094				(1,726	)	(15	) %			1,794		22	%
Data processing		14,345			15,320			13,572				(975	)	(6	) %			773		6	%
Professional services		4,034			4,701			6,439				(667	)	(14	) %			(2,405	)	(37	) %
Marketing		2,651			1,574			3,497				1,077		68	%			(846	)	(24	) %
Loan expenses		1,124			1,168			1,854				(44	)	(4	) %			(730	)	(39	) %
Federal Deposit Insurance Corporation ("FDIC") insurance		1,720			1,412			985				308		22	%			735		75	%
Amortization of intangible assets		907			827			625				80		10	%			282		45	%
Other		3,474			2,724			2,993				750		28	%			481		16	%
Total noninterest expense		111,139			108,866			107,335				2,273		2	%			3,804		4	%
Income before income tax expense		67,445			66,158			46,306				1,287		2	%			21,139		46	%
Income tax expense		16,273			14,642			11,497				1,631		11	%			4,776		42	%
Net income	$	51,172		$	51,516		$	34,809			$	(344	)	(1	) %		$	16,363		47	%
Share data:
Earnings per share, basic	$	0.31		$	0.30		$	0.20
Earnings per share, diluted	$	0.31		$	0.30		$	0.20

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
	Six months ended
(Unaudited, dollars in thousands, except per share data)	Jun 30, 2022			Jun 30, 2021				Change
Interest and dividend income:								△ $			△ %
Interest and fees on loans	$	208,603		$	179,575			$	29,028		16	%
Taxable interest and dividends on securities		58,997			22,663				36,334		160	%
Non-taxable interest and dividends on securities		3,668			3,713				(45	)	(1	) %
Interest on federal funds sold and other short-term investments		1,088			863				225		26	%
Total interest and dividend income		272,356			206,814				65,542		32	%
Interest expense:
Interest on deposits		6,383			2,033				4,350		214	%
Interest on borrowings		92			82				10		12	%
Total interest expense		6,475			2,115				4,360		206	%
Net interest income		265,881			204,699				61,182		30	%
Provision for (release of) allowance for loan losses		565			(3,880	)			4,445		(115	) %
Net interest income after release of allowance for loan losses		265,316			208,579				56,737		27	%
Noninterest income:
Insurance commissions		53,395			51,811				1,584		3	%
Service charges on deposit accounts		16,850			11,075				5,775		52	%
Trust and investment advisory fees		12,135			11,737				398		3	%
Debit card processing fees		6,168			5,919				249		4	%
Interest rate swap income		4,525			4,241				284		7	%
(Losses) income from investments held in rabbi trusts		(11,749	)		6,062				(17,811	)	(294	) %
Gains on sales of mortgage loans held for sale, net		218			2,327				(2,109	)	(91	) %
(Losses) gains on sales of securities available for sale, net		(2,276	)		1,165				(3,441	)	(295	) %
Other		9,026			6,608				2,418		37	%
Total noninterest income		88,292			100,945				(12,653	)	(13	) %
Noninterest expense:
Salaries and employee benefits		142,522			133,316				9,206		7	%
Office occupancy and equipment		21,502			16,311				5,191		32	%
Data processing		29,665			25,701				3,964		15	%
Professional services		8,735			10,587				(1,852	)	(17	) %
Marketing		4,225			5,188				(963	)	(19	) %
Loan expenses		2,292			3,701				(1,409	)	(38	) %
Federal Deposit Insurance Corporation ("FDIC") insurance		3,132			1,933				1,199		62	%
Amortization of intangible assets		1,734			1,157				577		50	%
Other		6,198			3,490				2,708		78	%
Total noninterest expense		220,005			201,384				18,621		9	%
Income before income tax expense		133,603			108,140				25,463		24	%
Income tax expense		30,915			25,668				5,247		20	%
Net income	$	102,688		$	82,472			$	20,216		25	%
Share data:
Weighted average common shares outstanding, basic (1)		168,184,528			172,111,372				(3,926,844	)	(2	) %
Weighted average common shares outstanding, diluted (1)		168,248,246			172,111,372				(3,863,126	)	(2	) %
Earnings per share, basic	$	0.61		$	0.48			$	0.13		27	%
Earnings per share, diluted	$	0.61		$	0.48			$	0.13		27	%

(1) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS
	As of and for the three months ended
	Jun 30, 2022									Mar 31, 2022									Jun 30, 2021
(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	$	8,944,652		$	83,586		3.75	%		$	8,973,094		$	78,226		3.54	%		$	7,301,745		$	71,747		3.94	%
Residential		1,960,014			14,683		3.00	%			1,937,494			14,471		3.03	%			1,433,056			11,397		3.19	%
Consumer		1,309,864			11,494		3.52	%			1,293,489			10,450		3.28	%			1,061,900			8,597		3.25	%
Total loans		12,214,530			109,763		3.60	%			12,204,077			103,147		3.43	%			9,796,701			91,741		3.76	%
Investment securities		8,883,710			33,479		1.51	%			8,647,200			30,163		1.41	%			4,344,690			14,778		1.36	%
Federal funds sold and other short-term investments		345,731			652		0.76	%			1,003,416			436		0.18	%			1,617,741			431		0.11	%
Total interest-earning assets		21,443,971			143,894		2.69	%			21,854,693			133,746		2.48	%			15,759,132			106,950		2.72	%
Non-interest-earning assets		962,734									1,436,702									1,061,121
Total assets	$	22,406,705								$	23,291,395								$	16,820,253
Interest-bearing liabilities:
Deposits:
Savings	$	2,041,495		$	51		0.01	%		$	2,076,754		$	51		0.01	%		$	1,385,735		$	69		0.02	%
Interest checking		4,877,256			2,061		0.17	%			4,596,026			2,032		0.18	%			2,541,862			253		0.04	%
Money market		5,069,609			745		0.06	%			5,568,264			920		0.07	%			3,523,330			605		0.07	%
Time deposits		426,923			204		0.19	%			481,833			319		0.27	%			246,801			104		0.17	%
Total interest-bearing deposits		12,415,283			3,061		0.10	%			12,722,877			3,322		0.11	%			7,697,728			1,031		0.05	%
Borrowings		35,330			53		0.60	%			30,669			39		0.52	%			25,042			42		0.67	%
Total interest-bearing liabilities		12,450,613			3,114		0.10	%			12,753,546			3,361		0.11	%			7,722,770			1,073		0.06	%
Demand deposit accounts		6,661,920									6,821,811									5,355,170
Other noninterest-bearing liabilities		428,373									442,591									335,816
Total liabilities		19,540,906									20,017,948									13,413,756
Shareholders' equity		2,865,799									3,273,447									3,406,497
Total liabilities and shareholders' equity	$	22,406,705								$	23,291,395								$	16,820,253
Net interest income - FTE				$	140,780								$	130,385								$	105,877
Net interest rate spread (2)							2.59	%								2.37	%								2.66	%
Net interest-earning assets (3)	$	8,993,358								$	9,101,147								$	8,036,362
Net interest margin - FTE (4)							2.63	%								2.42	%								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 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 EARNED/PAID, & AVERAGE YIELDS
	As of and for the six months ended
	Jun 30, 2022									Jun 30, 2021
(Unaudited, dollars in thousands)	Avg. Balance			Interest			Yield / Cost (5)			Avg. Balance			Interest			Yield / Cost (5)
Interest-earning assets:
Loans (1):
Commercial	$	8,958,795		$	161,811		3.64	%		$	7,309,803		$	140,952		3.89	%
Residential		1,948,816			29,155		3.02	%			1,413,208			22,671		3.24	%
Consumer		1,301,721			21,944		3.40	%			1,083,677			17,534		3.26	%
Total loans		12,209,332			212,910		3.52	%			9,806,688			181,157		3.73	%
Total investment securities		8,766,108			63,642		1.46	%			3,990,080			27,360		1.38	%
Federal funds sold and other short-term investments		672,757			1,088		0.33	%			1,678,812			863		0.10	%
Total interest-earning assets		21,648,197			277,640		2.59	%			15,475,580			209,380		2.73	%
Non-interest-earning assets		1,198,409									1,089,585
Total assets	$	22,846,606								$	16,565,165
Interest-bearing liabilities:
Deposits:
Savings	$	2,059,027		$	102		0.01	%		$	1,343,133		$	133		0.02	%
Interest checking		4,737,418			4,093		0.17	%			2,466,860			487		0.04	%
Money market		5,317,559			1,665		0.06	%			3,482,002			1,193		0.07	%
Time deposits		454,226			523		0.23	%			248,946			220		0.18	%
Total interest-bearing deposits		12,568,230			6,383		0.10	%			7,540,941			2,033		0.05	%
Borrowings		33,012			92		0.56	%			25,332			82		0.65	%
Total interest-bearing liabilities		12,601,242			6,475		0.10	%			7,566,273			2,115		0.06	%
Demand deposit accounts		6,741,424									5,241,134
Other noninterest-bearing liabilities		435,443									345,776
Total liabilities		19,778,109									13,153,183
Shareholders' equity		3,068,497									3,411,982
Total liabilities and shareholders' equity	$	22,846,606								$	16,565,165
Net interest income - FTE				$	271,165								$	207,265
Net interest rate spread (2)							2.49	%								2.67	%
Net interest-earning assets (3)	$	9,046,955								$	7,909,307
Net interest margin - FTE (4)							2.53	%								2.70	%

(1) Includes non-accrual loans.

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

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

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

(5) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING ASSETS (1)
	As of
	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial	$	43,628		$	17,919		$	20,630		$	29,166		$	29,356
Residential		9,486			8,256			6,681			7,185			6,445
Consumer		6,766			7,646			5,682			4,262			4,106
Total non-accrual loans		59,880			33,821			32,993			40,613			39,907
Total accruing loans past due 90 days or more (2):		—			—			1,990			1,458			1,725
Total non-performing loans		59,880			33,821			34,983			42,071			41,632
Other real estate owned		—			—			—			—			38
Other non-performing assets:		—			—			—			—			—
Total non-performing assets	$	59,880		$	33,821		$	34,983		$	42,071		$	41,670
Total accruing troubled debt restructured loans	$	33,518		$	32,016		$	33,336		$	34,723		$	38,316
Total non-performing loans to total loans		0.48	%		0.28	%		0.29	%		0.44	%		0.43	%
Total non-performing assets to total assets		0.27	%		0.15	%		0.15	%		0.24	%		0.24	%

(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) Loans that were past due 90 days or more and still accruing in prior quarters were comprised solely of purchased credit impaired ("PCI") loans. PCI loans were not subject to classification as nonaccrual in the same manner as originated loans as their interest income related to the accretable yield recognized and not to contractual interest payments at the loan level. In connection with the Company’s adoption on January 1, 2022 of the loan loss methodology commonly referred to as the "current expected credit losses methodology" ("CECL"), the Company's PCI loans are now considered purchased credit deteriorated ("PCD") loans. Interest income recognition for PCD loans is consistent with originated loans and, therefore, PCD loans cease accruing interest at 90 days past due unless management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest. There were no PCD or originated loans at June 30, 2022 or March 31, 2022 that were past due 90 days or more and still accruing.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET (RECOVERIES) CHARGE-OFFS
	Three months ended
	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
(Unaudited, dollars in thousands)
Average total loans (1)	$	12,213,706		$	12,203,212		$	10,944,091		$	9,526,766		$	9,794,045
Allowance for loan losses, beginning of the period		124,166			97,787			103,398			105,637			111,080
Total cumulative effect of change in accounting principle (2):		—			27,086			—			—			—
Charged-off loans:
Commercial and industrial		1			1			1,008			—			550
Commercial real estate		—			—			5			8			—
Commercial construction		—			—			—			—			—
Business banking		608			945			1,002			867			1,838
Residential real estate		—			—			35			—			—
Consumer home equity		—			—			24			—			—
Other consumer		490			661			666			742			275
Total charged-off loans		1,099			1,607			2,740			1,617			2,663
Recoveries on loans previously charged-off:
Commercial and industrial		698			250			873			40			13
Commercial real estate		36			14			—			—			4
Commercial construction		—			—			—			—			—
Business banking		464			928			399			469			291
Residential real estate		14			10			7			88			17
Consumer home equity		6			4			48			63			3
Other consumer		196			179			120			206			192
Total recoveries		1,414			1,385			1,447			866			520
Net loans charged-off (recoveries):
Commercial and industrial		(697	)		(249	)		135			(40	)		537
Commercial real estate		(36	)		(14	)		5			8			(4	)
Commercial construction		—			—			—			—			—
Business banking		144			17			603			398			1,547
Residential real estate		(14	)		(10	)		28			(88	)		(17	)
Consumer home equity		(6	)		(4	)		(24	)		(63	)		(3	)
Other consumer		294			482			546			536			83
Total net loans charged-off		(315	)		222			1,293			751			2,143
Provision for (release of) allowance for loan losses		1,050			(485	)		(4,318	)		(1,488	)		(3,300	)
Total allowance for loan losses, end of period	$	125,531		$	124,166		$	97,787		$	103,398		$	105,637
Net (recoveries) charge-offs to average total loans outstanding during this period (3)		(0.01	) %		0.01	%		0.05	%		0.03	%		0.09	%
Allowance for loan losses as a percent of total loans		1.01	%		1.02	%		0.80	%		1.09	%		1.10	%
Allowance for loan losses as a percent of nonperforming loans		209.64	%		367.13	%		279.53	%		245.77	%		253.74	%

(1) Average total loans at June 30, 2022 excludes the average balance of loans held for sale. Prior period amounts were adjusted to reflect this revision and accommodate comparability.

(2) Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2016-13 (i.e., cumulative effect adjustment related the adoption of ASU 2016-13 as of January 1, 2022). The adjustment represents a $27.1 million increase to the allowance for loan losses attributable to the change in accounting methodology which requires the estimation of the allowance for credit losses resulting from the Company’s adoption of the standard. The adjustment also includes the adjustment needed to reflect the day one reclassification of the Company’s financial assets that were previously classified as PCI financial assets as PCD financial assets and the associated gross-up of $0.1 million, pursuant to the Company’s adoption of ASU 2016-13.

(3) 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."

	As of and for the three Months Ended
(Unaudited, dollars in thousands, except per share data)	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
Net income (GAAP)	$	51,172		$	51,516		$	35,087		$	37,106		$	34,809
Add:
Noninterest income components:
Losses (income) from investments held in rabbi trusts		7,316			4,433			(4,444	)		289			(4,216	)
Losses (gains) on sales of securities available for sale, net		104			2,172			—			(1	)		(1	)
(Gains) losses on sales of other assets		(1,251	)		274			(34	)		(490	)		(29	)
Noninterest expense components:
Rabbi trust employee benefit (income) expense		(3,310	)		(2,087	)		2,519			(53	)		2,063
Impairment charge (reversal) on tax credit investments		—			—			116			1,133			(1,419	)
Gain on sale of OREO		—			—			—			(87	)		—
Merger and acquisition expenses		—			34			30,652			740			3,479
Settlement and expenses for putative consumer class action matters		—			—			—			—			3,325
Total impact of non-GAAP adjustments		2,859			4,826			28,809			1,531			3,202
Less net tax benefit associated with non-GAAP adjustments (1)		1,513			1,235			19,036			1,246			914
Non-GAAP adjustments, net of tax	$	1,346		$	3,591		$	9,773		$	285		$	2,288
Operating net income (non-GAAP)	$	52,518		$	55,107		$	44,860		$	37,391		$	37,097
Weighted average common shares outstanding during the period (2):
Basic		166,533,920			169,857,950			172,246,799			172,298,615			172,173,707
Diluted		166,573,627			169,968,156			172,481,829			172,298,615			172,173,707
Earnings per share, basic	$	0.31		$	0.30		$	0.20		$	0.22		$	0.20
Earnings per share, diluted	$	0.31		$	0.30		$	0.20		$	0.22		$	0.20
Operating earnings per share, basic (non-GAAP)	$	0.32		$	0.32		$	0.26		$	0.22		$	0.22
Operating earnings per share, diluted (non-GAAP)	$	0.32		$	0.32		$	0.26		$	0.22		$	0.22
Return on average assets (3)		0.92	%		0.90	%		0.67	%		0.84	%		0.83	%
Add:
Losses (income) from investments held in rabbi trusts (3)		0.13	%		0.08	%		(0.08	) %		0.01	%		(0.10	) %
Losses (gains) on sales of securities available for sale, net (3)		—	%		0.04	%		0.00	%		0.00	%		—	%
(Gains) losses on sales of other assets (3)		(0.02	) %		0.00	%		0.00	%		(0.01	) %		0.00	%
Rabbi trust employee benefit (income) expense (3)		(0.06	) %		(0.04	) %		0.05	%		0.00	%		0.05	%
Impairment charge (reversal) on tax credit investments (3)		—	%		0.00	%		0.00	%		0.03	%		(0.03	) %
Gain on sale of OREO (3)		—	%		—	%		0.00	%		—	%		—	%
Merger and acquisition expenses (3)		0.00	%		—	%		0.58	%		0.02	%		0.08	%
Settlement and expenses for putative consumer class action matters (3)		—	%		—	%		—	%		—	%		0.08	%
Less net tax benefit associated with non-GAAP adjustments (1) (3)		0.03	%		0.02	%		0.36	%		0.03	%		0.02	%
Operating return on average assets (non-GAAP) (3)		0.94	%		0.96	%		0.86	%		0.86	%		0.89	%
Return on average shareholders' equity (3)		7.16	%		6.38	%		4.07	%		4.27	%		4.10	%
Add:
Losses (income) from investments held in rabbi trusts (3)		1.02	%		0.55	%		(0.52	) %		0.03	%		(0.50	) %
Losses (gains) on sales of securities available for sale, net (3)		0.01	%		0.27	%		0.00	%		0.00	%		—	%
(Gains) losses on sales of other assets (3)		(0.18	) %		0.03	%		0.00	%		(0.06	) %		0.00	%
Rabbi trust employee benefit (income) expense (3)		(0.46	) %		(0.26	) %		0.29	%		(0.01	) %		0.24	%
Impairment charge (reversal) on tax credit investments (3)		0.00	%		0.00	%		0.01	%		0.13	%		(0.17	) %
Gain on sale of OREO (3)		—	%		—	%		—	%		(0.01	) %		—	%
Merger and acquisition expenses (3)		0.00	%		0.00	%		3.55	%		0.09	%		0.41	%
Settlement and expenses for putative consumer class action matters (3)		—	%		—	%		—	%		—	%		0.39	%
Less net tax benefit associated with non-GAAP adjustments (1) (3)		0.21	%		0.15	%		2.21	%		0.14	%		0.11	%
Operating return on average shareholders' equity (non-GAAP) (3)		7.34	%		6.82	%		5.19	%		4.30	%		4.36	%
Average tangible shareholders' equity:
Average total shareholders' equity (GAAP)	$	2,865,799		$	3,273,447		$	3,423,231		$	3,450,679		$	3,406,497
Less: Average goodwill and other intangibles		654,444			649,497			520,988			380,185			379,044
Average tangible shareholders' equity (non-GAAP)	$	2,211,355		$	2,623,950		$	2,902,243		$	3,070,494		$	3,027,453
Return on average tangible shareholders' equity (non-GAAP) (3)		9.28	%		7.96	%		4.80	%		4.79	%		4.61	%
Add:
Losses (income) from investments held in rabbi trusts (3)		1.33	%		0.69	%		(0.61	) %		0.04	%		(0.56	) %
Losses (gains) on sales of securities available for sale, net (3)		0.02	%		0.34	%		—	%		—	%		—	%
(Gains) losses on sales of other assets (3)		(0.23	) %		0.04	%		—	%		(0.06	) %		—	%
Rabbi trust employee benefit (income) expense (3)		(0.60	) %		(0.32	) %		0.34	%		(0.01	) %		0.27	%
Impairment charge (reversal) on tax credit investments (3)		—	%		—	%		0.02	%		0.15	%		(0.19	) %
Gain on sale of OREO (3)		—	%		—	%		—	%		(0.01	) %		—	%
Merger and acquisition expenses (3)		—	%		0.01	%		4.19	%		0.10	%		0.46	%
Settlement and expenses for putative consumer class action matters (3)		—	%		—	%		—	%		—	%		0.44	%
Less net tax benefit associated with non-GAAP adjustments (1) (3)		0.27	%		0.19	%		2.60	%		0.16	%		0.12	%
Operating return on average tangible shareholders' equity (non-GAAP) (3)		9.53	%		8.53	%		6.14	%		4.84	%		4.91	%

(1) The net tax benefit associated with these items is 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 amount for the quarters ended December 31, 2021 and June 30, 2022 reflect the impact of the release of $11.3 million and $0.7 million, respectively, of the $12.0 million valuation allowance associated with the Company's stock donation to the Eastern Bank Foundation made in the quarter ended December 31, 2020. There was no such release in other quarters.

(2) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations.

(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
	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
(Unaudited, dollars in thousands)
Net interest income (GAAP)	$	137,757		$	128,124		$	122,437		$	102,691		$	104,608
Add:
Tax-equivalent adjustment (non-GAAP)		3,023			2,261			2,211			1,316			1,269
Fully-taxable equivalent net interest income (non-GAAP)	$	140,780		$	130,385		$	124,648		$	104,007		$	105,877
Noninterest income (GAAP)	$	41,877		$	46,415		$	49,001		$	43,209		$	45,733
Less:
(Losses) income from investments held in rabbi trusts		(7,316	)		(4,433	)		4,444			(289	)		4,216
(Losses) gains on sales of securities available for sale, net		(104	)		(2,172	)		—			1			1
Gain (losses) on sales of other assets		1,251			(274	)		34			490			29
Noninterest income on an operating basis (non-GAAP)	$	48,046		$	53,294		$	44,523		$	43,007		$	41,487
Noninterest expense (GAAP)	$	111,139		$	108,866		$	143,602		$	98,970		$	107,335
Less:
Rabbi trust employee benefit (income) expense		(3,310	)		(2,087	)		2,519			(53	)		2,063
Impairment charge (reversal) on tax credit investments		—			—			116			1,133			(1,419	)
Gain on sale of OREO		—			—			—			(87	)		—
Merger and acquisition expenses		—			34			30,652			740			3,479
Settlement and expenses for putative consumer class action matters		—			—			—			—			3,325
Noninterest expense on an operating basis (non-GAAP)	$	114,449		$	110,919		$	110,315		$	97,237		$	99,887
Total revenue (GAAP)	$	179,634		$	174,539		$	171,438		$	145,900		$	150,341
Total operating revenue (non-GAAP)	$	188,826		$	183,679		$	169,171		$	147,014		$	147,364
Efficiency ratio (GAAP)		61.87	%		62.37	%		83.76	%		67.83	%		71.39	%
Operating efficiency ratio (non-GAAP)		60.61	%		60.39	%		65.21	%		66.14	%		67.78	%
Noninterest income / total revenue (GAAP)		23.31	%		26.59	%		28.58	%		29.62	%		30.42	%
Noninterest income / total revenue on an operating basis (non-GAAP)		25.44	%		29.01	%		26.32	%		29.25	%		28.15	%

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
	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021
(Unaudited, dollars in thousands, except per share data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)	$ 2,718,396	$ 3,008,392	$ 3,406,352	$ 3,429,292	$ 3,430,622
Less: Goodwill and other intangibles	653,853	654,759	649,703	379,772	380,402
Tangible shareholders' equity (non-GAAP)	2,064,543	2,353,633	2,756,649	3,049,520	3,050,220
Tangible assets:
Total assets (GAAP)	22,350,848	22,836,072	23,512,128	17,461,223	17,047,453
Less: Goodwill and other intangibles	653,853	654,759	649,703	379,772	380,402
Tangible assets (non-GAAP)	$ 21,696,995	$ 22,181,313	$ 22,862,425	$ 17,081,451	$ 16,667,051
Shareholders' equity to assets ratio (GAAP)	12.16 %	13.17 %	14.49 %	19.64 %	20.12 %
Tangible shareholders' equity to tangible assets ratio (non-GAAP)	9.52 %	10.61 %	12.06 %	17.85 %	18.30 %
Common shares outstanding	179,253,801	183,438,711	186,305,332	186,758,154	186,758,154
Book value per share (GAAP)	$ 15.17	$ 16.40	$ 18.28	$ 18.36	$ 18.37
Tangible book value per share (non-GAAP)	$ 11.52	$ 12.83	$ 14.80	$ 16.33	$ 16.33

APPENDIX D: Tangible Shareholders’ Equity Roll Forward Analysis

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

	As of							Jun 30, 2022 change from
	Jun 30, 2022			Mar 31, 2022				Mar 31, 2022
(Unaudited, dollars in thousands, except per share amounts)
Common stock	$	1,793		$	1,834			$	(41	)
Additional paid in capital		1,700,495			1,777,670				(77,175	)
Unallocated ESOP common stock		(140,203	)		(141,455	)			1,252
Retained earnings		1,817,474			1,782,997				34,477
AOCI, net of tax - available for sale securities		(657,386	)		(410,611	)			(246,775	)
AOCI, net of tax - pension		(5,718	)		(5,595	)			(123	)
AOCI, net of tax - cash flow hedge		1,941			3,552				(1,611	)
Total shareholders' equity:	$	2,718,396		$	3,008,392			$	(289,996	)
Less: Goodwill and other intangibles		653,853			654,759				(906	)
Tangible shareholders' equity (non-GAAP)	$	2,064,543		$	2,353,633			$	(289,090	)
Common shares outstanding		179,253,801			183,438,711				(4,184,910	)
Per share:
Common stock	$	0.01		$	0.01			$	—
Additional paid in capital		9.49			9.69				(0.20	)
Unallocated ESOP common stock		(0.78	)		(0.77	)			(0.01	)
Retained earnings		10.14			9.72				0.42
AOCI, net of tax - available for sale securities		(3.67	)		(2.24	)			(1.43	)
AOCI, net of tax - pension		(0.03	)		(0.03	)			—
AOCI, net of tax - cash flow hedge		0.01			0.02				(0.01	)
Total shareholders' equity:	$	15.17		$	16.40			$	(1.23	)
Less: Goodwill and other intangibles		3.65			3.57				0.08
Tangible shareholders' equity (non-GAAP)	$	11.52		$	12.83			$	(1.31	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005649/en/

Investors

Jillian Belliveau

Eastern Bankshares, Inc.

InvestorRelations@easternbank.com

781-598-7920

Media

Andrea Goodman

Eastern Bank

a.goodman@easternbank.com

781-598-7847

Source: Eastern Bank

FAQ

What were Eastern Bankshares' Q2 2022 earnings results?

Eastern Bankshares reported net income of $51.2 million, or $0.31 per diluted share, for Q2 2022.

What is the dividend declared by Eastern Bankshares for Q2 2022?

Eastern Bankshares declared a quarterly cash dividend of $0.10 per common share, payable on September 15, 2022.

How did Eastern Bankshares perform in terms of loan growth during Q2 2022?

The bank achieved 10.5% annualized loan growth in Q2 2022, excluding PPP loans.

What was the total net interest income reported by Eastern Bankshares for Q2 2022?

The total net interest income for Q2 2022 was $137.8 million, an 8% increase from the prior quarter.