Eastern Bankshares (EBC) Financial Report Summaries

Risks

• Summary of Material Risk Factors
• Risks potentially affecting our business, financial condition, results of operations and cash flows
• The market price of the Company’s common stock after the prospective merger with Cambridge may be affected by factors different from those currently affecting shares of Company common stock.
• The Company may fail to realize all of the anticipated benefits of the merger, particularly if the integration of the Company’s and Cambridge’s businesses is more difficult than expected.
• The Company may be unable to retain Company and/or Cambridge personnel successfully while the merger is pending or after the merger is completed.
• The Company and Cambridge have incurred and expect to continue to incur significant costs related to the merger and integration.
• Regulatory approvals related to the merger may not be received, may take longer to receive than expected, or may impose burdensome conditions, which could impose additional costs and could delay or prevent completion of the merger.
• The merger agreement is subject to termination in accordance with its terms, and the pending merger may not be timely completed or at all.
• Shareholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of the Company and Cambridge.
• We may be unsuccessful identifying and competing for acquisitions.
• To the extent that we acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions.
• Changes in interest rates have impacted and may continue to impact our profitability.
• If our allowance for loan losses is insufficient to cover loan losses, our earnings and capital could decrease.
• The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the local economy.
• Our ability to manage reputational risk is critical to attracting and maintaining customers, investors and employees and to the success of our business, and the failure to do so may materially adversely affect our performance.
• We face continuing and growing security risks to our information data bases, including information we maintain relating to our customers.
• We rely on third-party vendors, which could expose us to additional cybersecurity risks.
• Industry competition may adversely affect our degree of success.
• Technology has lowered barriers to entry and made it possible for non-banks to offer products and services, that traditionally were banking products, and made it possible for technology companies to compete with financial institutions in providing electronic, internet-based, and mobile phone-based financial solutions.
• We may not be able to successfully execute our strategic plan or achieve our performance targets.
• Our business strategy includes projected growth in our core businesses, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.
• We could fail to attract, retain or motivate highly skilled and qualified personnel, including our senior management, other key employees or members of our Board, which could impair our ability to successfully execute our strategic plan and otherwise adversely affect our business.
• The fair value of Eastern Bank’s investments has declined and could decline further due to a variety of factors.
• Commercial loans, including those secured by commercial real estate, are generally riskier than other types of loans and constitute a significant portion of our loan portfolio.
• We are subject to environmental liability risk associated with real estate lending activities.
• Our business may be adversely affected by credit risks associated with residential property.
• A portion of our loan portfolio consists of loan participations, which may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited control over credit monitoring.
• Hedging against interest rate exposure may adversely affect our earnings.
• New lines of business or new products and services may subject us to additional risks.
• We may be required to write down goodwill and other acquisition-related identifiable intangible assets.
• We are subject to stringent capital requirements and may need to raise additional capital in the future, and that capital may not be available or its cost may be high.
• We face significant legal risks, both from regulatory investigations and proceedings and from private actions brought against us.
• Our insurance coverage may be inadequate or expensive.
• The loss of deposits or a change in deposit mix could increase our cost of funding and our funding sources may prove insufficient to replace deposits at maturity and support our future growth.
• Various factors beyond our control, including interest rate increases and competition from banks and other financial institutions, adversely affect our liquidity.
• Deterioration in the performance or financial position of the Federal Home Loan Bank of Boston might restrict the Federal Home Loan Bank of Boston’s ability to meet the funding needs of its members, cause a suspension of its dividend and cause its stock to be determined to be impaired.
• We may not be able to successfully implement future information technology system enhancements, or such implementations could be delayed materially, which could adversely affect our business operations and profitability.
• We rely on other companies to provide key components of our business infrastructure.
• Operational risks are inherent in our businesses.
• Changes in management’s estimates and assumptions may have a material impact on our Consolidated Financial Statements and our financial condition or operating results.
• Our internal controls, procedures and policies may fail or be circumvented, which could impact our results of operations and financial condition.
• We maintain a significant investment in projects that generate tax credits, which we may not be able to fully utilize, or, if utilized, may be subject to recapture or restructuring.
• We depend on the accuracy and completeness of information about clients and counterparties.
• We may not be able to successfully manage our intellectual property and may be subject to infringement claims.
• Our business may be adversely affected by conditions in the financial markets and by economic conditions generally.
• Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
• The financial weakness of other financial institutions could adversely affect us.
• Market changes may adversely affect demand for our services and impact results of operations.
• Changes in the equity markets could materially affect the level of assets under management and the demand for fee-based services.
• Climate change, natural disasters, public health crises, geopolitical developments, acts of terrorism and other external events could harm our business.
• Rising sea levels projected for the coastal regions of Massachusetts and New Hampshire could adversely affect our business.
• Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
• We are subject to environmental, social and governance risks that could adversely affect our reputation and the trading price of our common stock.
• The COVID-19 pandemic and the associated economic slowdown has impacted, and it or other widespread health emergencies could impact, our core business and the banking industry, including through remote and hybrid working arrangements that reduce demand for office space in our market.
• Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.
• Our business is highly regulated, which could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business.
• We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
• We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations.
• Non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions.
• An increase in FDIC insurance assessments could significantly increase our expenses.
• We may be unable to disclose some restrictions or limitations on our operations imposed by our regulators.
• We could be required to act as a “source of strength” to our banking subsidiaries, which would have a material adverse effect on our business, financial condition and results of operations.
• Laws and regulations regarding privacy and data protection could have a material impact on our results of operations.
• Changes in tax laws and regulations and differences in interpretation of tax laws and regulations may adversely affect our financial statements and our operating results.
• Due to Section 162(m) of the Internal Revenue Code, we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future.
• Regulatory developments could adversely affect our business by increasing our costs and thereby making our business less profitable.
• Our stock-based benefit plans have increased and will continue to increase our expenses and reduce our income.
• Various factors may make takeover attempts more difficult to achieve.
• The articles of organization of Eastern Bankshares, Inc. provide that state and federal courts located in Massachusetts will be the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
• The market price of our stock value may be negatively affected by applicable regulations that restrict stock repurchases by us.