EBC - Earnings call transcript Q4 2021 | Eastern Bankshares, Inc.

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Operator

Hello and welcome to Eastern Bankshares Inc. fourth quarter 2021 earnings conference call. Today’s call will include forward-looking statements, including statements about Eastern’s future financial and operating results, outlook, business strategies and plans, as well as other opportunities and potential risks that management foresees. Such forward-looking statements reflect management’s current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those expressed or implied in such forward-looking statements. Listeners are referred to the disclosures set forth under the caption, forward-looking statements in the earnings press release, as well as the risk factors and other disclosures contained in the company’s recent filings with the Securities and Exchange Commission for more information about such risks and uncertainties. during of represent today. made estimates views statements as only forward-looking this management’s call and Any

company obligation While as management’s forward-looking management’s not point to the rely statements subsequent company views of at disclaims the may and statements today. some any in elect or estimates on the date you even such do views so, to to change, update specifically if any should future, representing as

discuss the the measures. will non-GAAP During also certain call, financial company

financial non-GAAP please recorded. such note answer will there to After the company’s of press on figures, reconciliation question a is a can All be Please measures comparable GAAP been noise. placed the at mute refer earnings speakers’ being For have this session. and event investor.easternbank.com. the to remarks, to lines background be prevent release which found any

question like time, the one on a If your followed you press ask by keypad. during would star number this telephone to simply

key. press like would to Chairman you If go the and call CEO. to ahead, Bob pound to I’d over Rivers, Please your question, now like turn sir. the Thank withdraw you.

Bob Rivers

experience Administrative pandemic. Eastern remember another of company financial fourth the doing as strong this while the as milestone we help Officer. will believe latest Company, Great, the are is quarter resource year by our an an well of technology, customer Fitzgerald, possible and all to Trust me finished Bank as earnings products With our through families that a outstanding year acquisition you of public further better to our we and most ago, than asset and for our Patricia. commitment the today morning is We more our and a serving the and this Financial communities. times good which Officer expand to hope possible Chief customers. completion far serve and to the year you your safe fourth offering your for and us to four provide off made initial and Century will more our was XXXX any off prior services and acquisition grow call. our competitive only than award-winning Chief Good At capacity enhance slightly fiscal quickly thank amidst validating thank and largest and acquisition one you quarter by transaction, to commitment joining capping the results, Jim everyone new date start with size financial for of year deliver our our chapter important

new in eastern collectively Century, expanded Massachusetts headquartered while been in XX,XXX and fourth expertise and community and Massachusetts, the our suite customers online banking economy, some largest healthcare higher regional from tools, service joining For largest us these bank Massachusetts us locations full benefits Likewise, offerings. have insurance of through to these management enhanced Hampshire: solidify throughout enabled digital a and New have the immediately greater to wealth southern as of benefits capabilities, access realized department sectors Greater forming within the and total in $XX our relationships position to as adding our education. the dedicated share headquartered deposit to market Boston billion our attractive from and increasing of very such government fifth, and largest assets Eastern

business which Century cannabis-related entered into approximately deposit Eastern money bank. million $XXX local mutual of recently, Most XXX branch than Bank, from new XX% service to colleagues, our acquired XX transfer today. network workforce we We announced that and representing to has Needham were branch more to XX while expanding net also offices Eastern’s added locations, new relationships a agreement an in large welcoming

to and this Century it. business customers closed with fast landmark growing business making another aligned headline service The meeting Eastern support on was that important Group is our team think successful of capabilities needs which Needham seven are two provide and required Bank has serving handling the together extensive pandemic, ongoing amidst represented it they the of the sector, achievement concluded our businesses another to over with months; not required that the we solid and yet evaluated of in We to marijuana of cannabis-related however, insurance time. course this the Insurance acquisitions, this business due entered this commitment integration industry in represents in our to just virtually work XXrd which banking to COVID-XX entirely our at main strong XXth we applaud special year well Although since industry agency the landmark XXXX. this the a almost approach Massachusetts, to we

we as fiscal Insurance loans, Eastern the mortgage year along addition, XXXX In ranked both with Massachusetts. residential with sales, total largest PPP highs the a as wealth by strong well new benefits Eastern’s as volumes earnings Business growth in Journal Group, and employee broker excluding group, deposits, commercial organic benefits in ended of record Boston management second and was loans, division and in

investments us among multiple small analytical during customers customer for to continued year business nationwide. in digital accolades ratings among earned the highest banks Our continuing and service tools our the receive while for also

quarters, resources borrowing the twice Blend low to challenging largest loans the addition an of we address levels on in Commonwealth originated combined. the improved while increasing our our cost continued discuss commitment effort with continued equity housing, to will In X,XXX to outsized deliver make and in overall new were our by provides Massachusetts number fintech our increase of our later. has to line second than lender to the that the also X(a) company $XX totals to an SBA lack growth Protection million credit platform Housing home Eastern second the success of of Business by by simpler line generating service Massachusetts’ in These four single Eastern more over online As loans the the largest to ever Partnership, company for made to getting named contracted important of increase over improvement number launching rates a Mass affordable our a faster. one loan highest since XXXX, and It year, beginning Eastern by PPP our demonstrated ever was originated, the the bankers, over which XX%. Alliance’s line for the for to being over application that support and quarterly employees, XXth with Housing an the customers a Small We Foundation designed program. most provide to another the X(a) times. of greater focus be loans, in consecutive the these increasing communities in top originations the and through Jim with process four originations Eastern participant the Administration’s increase This to a we serve, in believe Paycheck example the banks we exceeding equity opportunity significant companies Mortgage as the In One us is online focus completion called driven of the Massachusetts, ranked improving again pandemic charitable to our dividend in in $XX XX,XXX Program allows total value loans. year total application Massachusetts, during XX, home Affordable an the in platforms, million. among Bank donations consecutive fifth we’ve platform the an technology digital and past experience provide integrated our our our continued greater shareholders, a customers, in

associations. $XX.X business Foundation XXX,XXX security, relief this our our continued of food for Eastern relief and the mobility to community the Eastern with establishment support representing support, Bank Although the employees, along most other non-profits increased million Business within culturally over those community support over and Childhood of a another two amount total Foundation years. Most addressing led of access wide an COVID-XX outreach in Massachusetts region. facilitate its contributions working the economic to invested to with at-risk greater COVID with companies XX array vaccine bringing In increasing and now needs, Education, our includes pandemic greater million most which addressing Coalition to Early XXXX, communities, the another past related local designated $X.X competent notably, inclusion XX

our and accountability transparency racial of our This includes and to implementation executive actions advancing Road talent, the products equity drive and initiative designed and management our diversity women recruitment to color in senior faster people to relationships within base, recipients. and and also enhance our within commitment charitable through progress to greater for gender designed and vendor services and the our particularly We grant among foster of ranks. and greater customer measures similar also to of increased our Equity diverse development plan and

Corporate the Eastern nation’s a the Rights For Human Equality ninth the equality. year, score workplace foremost of consecutive LGBTQ+ measure perfect Index, received on Campaign’s

result incredible public XXXX hard and acquisition the Of course, our work X,XXX work through those our also are company these the many of a the and brought subsequent Century commitment played Many role in employees. who of in central new of streams. achievements

customers they that our endured responsibilities. colleagues again, our value Those Jim care the our home, those overcome our thank also your review company, for critical of disappearing have Once separation working our shareholders. performance. and to our enough our child other especially health offices, work I’ll thank now functions from and over and all the the while hard other to and communities and at in front of our you for meeting in for customers, are interest between to an every our in We can day of have in-depth Eastern, percent financial Forty needs branches, working our risks. things insurance turn support while delivering amidst lines our bearing never home greatest colleagues and with we

Jim Fitzgerald

Bob, you everyone. morning good thank Great, and

$XX.X net for organic revenue growth especially capping for or loans, quarter, the commercial to in combining and earnings GAAP we our was very, had QX charges, It us so initial we including a very in Century and and lot As closing a transaction, the of great of entire we integrations confident in Century in growth Eastern. $X.XX larger with conversion good organic merger $X.XX a forward with shape. Century-related are QX, exclude were operating great quarter primarily Conversions through a year the team look this It million joined the loans We former strong share. of record or the integration mid-November. and financial income which off Bob in earnings by platform share, conversion milestone who continued effort and significant and per came our mentioned, with businesses. the colleagues, Century. our we per require our and all employees at fee-generating million were focus, Operating post-conversion. in in very results energy former pleased a the was was $XX.X

noisy those the Given a closing we everyone non-operating provide presentation, in the I’ll my and the of items release those the with would comments earnings. items incorporate also tables the review. disclosures detail in encourage Century to back was review on as quarter, we and of some press reconciliation non-GAAP on the the and expected, at

we On per going the our increase long end, increase level since in capital This transaction our To increase from of is XX% a management value. March the of reflects shareholder to $X.XX term and on dividend committed earnings approved Century our that higher second the front, to remain share very public. payable directors XX. enhancing board dividend quarterly

value the value value per an tangible prior the mid-November tangible income impact in commenced prior book a the average in changed book December sheet reductions per of $XX.XX. billion. those share per at those $XX.XX of quarter, billion, tangible was per At of securities being increased end was to in reduction assets share and by Century most million The the in the excluding Appendix QX $XX.XX by price transaction. plus was increased had repurchased by for X.X in comprehensive reflects share. other billion, increased $X offset our included The quarter. closed value book $XX.XX quarter transaction also repurchase the increase share accounted roll and and September $X.X share value program repurchases. our commissions. book per and in billion, was Book in earnings show Century equity the of book intangibles retained at $XX.XX XX shares The the by of and share XX, reduction Century items share, We the value and loans from increases. $X.X significantly. forward $X.X From in deposits balance We reflects I changes created goodwill tangible the by in

X% quarter happy results. the be annualized PPP business growth Acquisitions level we as same interruption to as see Excluding quarter. overall Century the annualized. with and commercial and growth usual, prior these the growth experienced was organic loan in We categories we in were organic runoff, were general and was from pleased an can loan of these organic X% very in

We organic and higher loan quarterly loan also added $X to we provide show growth runoff our Deposits of declines PPP G the municipal flows the on seasonal some billion increased including of experienced billion added in Century quarter. deposits Appendix Century cost impact the modest of deposits. to funds and post-acquisition, in some $X.X activity.

mix we some As our quarters of overall have improve and our optimize quarter repositioning in of XX% we as is fact reduction our presentation deposit overall on our fourth post We XX. deposits. the the plan and Page outlined the Century overall very few was were in strong to acquisition products, This and funding funds for performance. financial mentioned, pleased post the with always balance expect in acquisition our the increase of some the remained next over part that at checking nominal very sheet cost

Asset fourth increased $X by decreased from quarter coverage million, annualized XXX% reserve and quality to points, ratio charge-offs the non-performing through were basis continued to to five net XXX%. NPL loans as sound the be

especially All very after a were they very the prior, in of Many of outcome. stronger of the is very, were than Century strong, which measures loans. acquisition $X.X credit our adding billion statistics good of were light

continued from at the ended COVID-XX modifications XX. $XXX million, to million Our and quarter down at $XXX September reduce

no loans with customers all the terms and acquired on Century were modifications progress of We loan comfortable are their with modified the There the work within and COVID to portfolio. the modifications. continue

tangible increase well remained I’ll and XX% regulatory For strong $XXX.X tax-equivalent the ratio now $X.X interest The was quarter, to net some the an later was impact quarter add QX’s tax-equivalent earning above minimums. post with in of essentially or million the as net acquisition. purchase PPP interest the fourth increase income in the $XX.X the X.XX, acquisition was the interest the quarter a margin part assets an compared on very on third capitalized same of fully ratios above equity in basis transaction basis focus of recognition accounting fee over margin capital and assets to quarter. due on comments for in increase X.XX. Century million the a earnings. our a were with prior due primarily The overall I’ll presentation. my average capital tangible on far fully million Net to

to provide PPP to E the in out at look position. of We continue the a core margin and impact Appendix cash loans the strip excess

As the less was or margin. X.XX% see, basis you core X the than margin overall points will

a presentation. PPP margin $XX.X will reduction the additional loans the further At of year We included by of PPP of over of been the million in We recognized. expect runoff and Eastern and with less to be of the cash last totaled our and on portfolio our there and fees has XX, of December that the XXXX, there originated an XX a loans Page difference position million stated between core update $XXX half. remaining PPP be included outstanding than

fees to Deposit expect $XX.X in most expenses service third and million operating totaled Appendix up good loans million Non-interest H. and fees third million Insurance recognized to the million in Century The an We growth showed in fees, off the in quarter experienced from the non-interest expense on quarter card seasonal quarter. Operating run and in quarter. these to quarter. $XXX.X an growth all million, and debit in income decline basis. the to trust of $XX remaining and related are XXXX. $XX.X the were outlined good $XXX.X be charges, over quarter merger quarter was expected revenues compared the had

be XXXX. mentioned operating and look we leveraging post the acquisition are cost time last we the quarter, our realized As the outlined will savings XX% we in forward to acquisition of platform confident at

be release $X.X quarter release reserve the As mentioned of $X.X sound earlier, quarter. a continued million we fourth for compared third asset the a for to quality to and had million

CECL Eastern mentioned a that January which the XXXX, of tax previously, adopted as to created expense million for later have on the contribution Foundation. we valuation of We million the provide a our remarks. full reduction X, deferred valuation the tax after $X.X insights to of to and As in I’ll benefit in in expectations getting the in quarter in of allowance quarter into my We $XX.X the the uncertainty some created IPO had the deduction compared in a charitable due we XXXX QX. Bank allowance the

post including of to environment on the the reduce anticipated interest some the changed. outlook wanted allowed announcements. recent our I our Century has level higher comments provide earnings, of allowance. updates expectation and to last levels on Since call, higher valuation some Our our us rate some

XXXX. immediate will XX% rate of portfolio immediately the increases yields, the Our significant interest for most a in increases There This XXXX, these which tax is non-interest XXXX. providing recent be $XXX full improves outlook more our $XXX Fed interest XXXX $XX income, asset income income non-interest a quarter. half million our are between to to and net by our expecting of our forecast we hike, point and currently the but impact the outlook. for net loan last lift expects and second million change particularly from up in provided an from expect we to Approximately with prior three year, for outlook is outlook $XX felt XX-basis expense, adjust the rate from million million no Fed in

$XXX non-interest $XXX of million million to year. range be in income the million $XXX We and to non-interest full the to to be million the of for expense continue expense operating range to in $XXX

XXXX January we what the a the flow that per portfolio. includes $X.XX day expect CECL by adopted will earnings X, and as Century acquisition to generally will on tangible As and previously book value is The reduce through retained our $X.XX. to one adjustment for adjustment referred double count share mentioned,

X we’ve commenced repurchase in mentioned, $XX.XX. share Through XX, a average program purchased million our weighted January As approximately of we at QX. price shares

later new is The shares remaining granted of buy under plan, under the included grants effect awards were shares. priority of first is equity to in have the equity shares approval X million XXXX and our we our director in management expect to QX which offset approximately grant that QX. Our existing to dilutive we authority that shareholder-approved

We market be including compliance announced a deposits was activity that staff to business. is to dedicated Century’s It business. expect transaction to and team, future no the this based the for assume month deposit transaction. We Bank approximately premium on million conditions. with of earlier $XXX cannabis Needham the includes There

would for planning Our to that’s of regulatory customers We announced look were align didn’t concluded QX. a platform in the cannabis compliance larger are and very to The especially well, do we is pending and goals to returns. Century number the serve complexities we home has when acquisition Needham them, transaction the confident our team and overall with were our the to will that evaluated business that we risks join Bank, looking business leverage our with approval, a who and financial operating improve for The that. strategy. close

The the also are provided We’re accretion at required terms and with earlier The The very over the would portfolio out the this created due that income deposit additional discount on be the a at on portfolio, merger things beyond. swing originally to time $XX expect is very value A these $X they the a like and interest I $XX project the of At was the of a million. carrying will of on and small fair we impact filed to we million that and will mark modest Century very of forward additional going valuation was annual the securities There yield disclosure information of million. discount that acquisition related value. an loans XK modest we Century we marks comments. portfolio of XXXX the are accounting. our Century’s filing. expected additional had week which million. expected. few the of happy rates goodwill; lives premium We portfolio transaction. to a amended this of that point few the a the That net interest Also higher the very on have deposits, is in the in loan on announcement, in was included mark-to-market than $X.X and however, in

XX in to at includes X.X% the the out yield X.XX% point that we fourth As the market. average the was to This on of overall of compared quarter. presentation, year yield mark securities end the benefit of securities Page

The better customer penetration positive We footprint about than now it business it’s Century successful as when the quick return gives provided us complete are transaction in to that market the and we were us more a even and usual, opportunity. conversion announced we expanded a bigger back April. a

the to expect and platform organic growth that is ability strong to we’ve our technology continue We leverage and experienced loan enhanced. our

opportunities very at and will existing likely our on in these hard environment nature tailwinds capitalize the Century Eastern working to believe of The at some means back. create will the our improvements any changing earnings shareholders. acquisition solely all-cash benefit interest rate that We’re

one look prospect the to We of in quickly. to continued the see to success by the XXXX. results. XXXX, conclusion, a organic any platform, the on the puts combination organic we’d the and interest transaction, forward for great environment being this it excited rate expectations and higher all particularly The Thanks, that and questions. benefits these with opportunities. happy us strong and be transaction. realized of of fantastic was by of a We felt so our strongest acquisition continued larger results for very largest in position we complemented benefit capitalizing are company’s was history our finish for take growth, great believe QX we’re the strong to In We pleased aspect it’s of

Operator

from the [Operator question instructions] first Your Bishop of line David Research. from Seaport comes

open. is Your line

David Bishop

gentlemen. Hey, morning good

Bob Rivers

morning. Good

David Bishop

question. quick A

sheet know of maybe obviously maybe post loan size you quarters. sense maybe us, there deposit balance and of portfolio Thanks. sale, attrition over the deal, here takes the remind expect securities, but some Century the terms core cannabis had I the in puts a the of in their other just the maybe next Just and the and you might repositioning terms over just giving couple of

Jim Fitzgerald

and take certainly add can I’ll as David, Sure Bob in well. that,

I you one think there, time, because unpack if take there’s it one two to a lot the on a or side, there’s at areas. question deposit really your

first which mentioned, The we’ve about articulated $XXX off you which run is that in million cannabis, one later deposits, we see will year. this

we As in QX. that I said, expect

key on been their the variable side deposit business. in business had deposit as municipal other The Eastern the always is municipal well.

aligned basically more did, than forward basis, it’s we’ll the pricing way those ours. and we look and more collateral make as they things considerations so going offered and like going higher business the and did day-to-day try see the their ours. We’re ultimately on to sort to, rates look just of collateral it move They to a bring to we to paid to eliminate--reduce like conform eliminate again,

some As that don’t have We that happens expect expectation. that’s customers lot to we our but well, a and of do be expect material, in overlap as runoff. we

business are sectors side, quality credit earlier. the I were portfolio. loan issue On determination. us that done mentioned areas to on are is loans not loans out haven’t or see those we couple there very with basis, not, or happy haven’t geographic only we a of that we in, are and I business that where there core of there the think historically and a the market we’ll whether loan some done The case-by-case we’re make historically in, that areas

I style, that more forward business, we As Eastern as runoff want loan the said, that we be but to operate an in and very realistic we go much happen. just of could like

side, the I securities $X.X over. there’s mentioned, as On coming billion

over that. as quarters have place a assume initially of little I retained will bit expect repositioning go, we We the next do that that and modest of just consider but We wouldn’t couple significant. all of take

David Bishop

income some terms mentioned, the but have Noticed the on couple off. I’ll sequential color year-over-year weakness fees, Appreciate got you on in you fee decline? those acquisitions, any and what’s the agency I Then expenses. year-over-year and quarter that the operating in hop in guidance driving of guess Okay, insurance of done just fourth it. maybe and maybe preamble, a

Jim Fitzgerald

Thanks David.

look may reminder, little on or is the we on. different. year Profits--there’s and incentive a a factor bit is have is component included Just drop That’s just historically, couple about on business, profit going There underwriting drop based are so keep you you they’re those go volume on based one a and year-over-year depending of the and of little the in a used QX one not a actually see and to volatile, Those that paid. you’ll actually they’re statistics, call if technical seasonality A couple implicitly expected, front in the payments There’s accounting, payments bit revenue are based on very to back the similar from it’s there. sharing. question. it to to insurance on everybody. That’s the decline. a business. your things XX% QX things the of carrier, factors. Each really right It’s either

you That’s when revenue in articulated timing which would breather would year. and there’s from been took we’ve There We changes we those they’re paid as If year-to-year operating XXXX that decline, acquisitions there, when that been a would calls, prior there both have system other year, this a have have normally this none we the done differently each them, year, are back really of of what’s what’s few would implemented from were in happening also acquisitions have that. and year in the well. lot X, things in a sometimes as so new occurred, look driving the because a amount.

us. going a those very I long term, be and to over I confident going great it, fundamentally explain the for think that insurance is the success think business forward and we’re

Bob Rivers

David, acquisitions to just past. that, for continues that to pattern the have agency expect add Yes, very the in we pipeline be and to as to and continue would strong

David Bishop

color. it, Got the appreciate

Operator

Damon the next question of line from Your DelMonte comes from KBW.

is open. line Your

Damon DelMonte

everybody doing Hope guys. well morning Hey, is today. good

Bob Rivers

Hey Damon.

Damon DelMonte

basis perspective were of you the First on a I first ’XX, for operating question, a the an kind little full but quarter the full outlook. year that? range know the first combined guidance, expense at have the What’s this more of XXX.X to Jim, you the quarter. as starting wanted do bit gave operations, you you get of quarter just point on of for think

Jim Fitzgerald

We of annual Damon. spent crafting the time numbers. We don’t, a lot

in just a I we that branches, timing included would are there considerations But bit branches really second there timing and the and actually did I on in in that’s of and little focused there, think few a We to consolidating couple we’ve we clear the things say the on. be also plan lot until that time kick the number, doesn’t guidance you, so on what the are you, a gave equity there’s January, of are a spend month to some Eastern that’s annual that. of quarter.

Damon DelMonte

expected of it, Got quantified the equity what impact the going you okay. is Have be? publicly plan to

Jim Fitzgerald

essence the the in just approach, we think we’re plan. plans basically replace as it year, in is but differences plan to had to in that We of articulate $XX plan, a in I It a haven’t management. year, Cost provided pre-IPO, incentive to the million equity here you. expense. in about about a $XX of replace given was $XX a million cost our differences that would million Obviously and the there’s for looking long prior we’ve guidance thing and One we number. to $XX is million term timing, the was terms

Damon DelMonte

okay. it, helpful. That’s Got

What another decent feeling the look opportunities have? presenting seem for of going best at outlook some for XXXX? about your the expectations growth? that for your of commercial you now you As are quarter and are to trends What loan be guys. How you pipeline areas you the right growth, platform into

Jim Fitzgerald

commercial I very think, are They Damon, we’re have board. the great track and all proud record. of our across history positioned teams a really well and

strong lending, operate, a lender where in refer what of market in feel might like and in good. here specialty development which all market New southern has key and commercial, Massachusetts we very we lending community estate middle are The we a call sectors. strengths. those very Hampshire, those As non-profit then three to that you seems and is real eastern Demand as

place, grown three of good There’s it’s variability competitor, continue. units to that our those all quarter, it if to so time, expect We’re have and we look over that but you combination we of at quarter isn’t growth. a track expect the areas those record really one any very obviously

Bob Rivers

Jim’s didn’t numbers indicate Century. been and have integration of big really clean, As the they be to the team. as have is a very teams Century’s focused comments indicate, book throughout those able

we continue for add could market. in has to being the through Pipelines continue we result, a another as sectors, loan in that’s the to and what entirely with, team start acquisitions, fantastic do we’re focused long As as opportunity focus again to we so--and is are Jim drive to how and out continue commercial is our wait recruitment, team grow. good and all growth, on growth, for been to a the particularly for to continues on, mentioned, team time,

Damon DelMonte

in-- one more Thanks. okay, I Great, helpful. could that’s squeeze If

Jim Fitzgerald

by comment, know happen the team And them on no them. to way, like the just because bias and we

Damon DelMonte

I got it.

of more loan or to CECL? losses, Do for Just low maybe you’re your in adoption you are reversal. the going row quarters credit, provide with it one provision especially to could going on squeeze to start in keep of or thoughts had to What outlook really four even a the do into more you’ve with have release? you think you feel XXXX, maybe

Jim Fitzgerald

We just, We we’re now. CECL we and everything just tough to brag of completed--not loan been our and credit running. team just--sorry I’m a laughing, may but up bragged adopt That’s get about a second a work really--it and team our lot question. has ago, about commercial accounting

is it’s we to hard much that creates on very give strong, accounting very performance. credit of we any will I the to believe but that us that, us any the it’s guidance credit good a CECL. continues past, strong. don’t environment given continue for for that, longer, reserve believe generally in on releases different hard the think give so guidance to but and a that overall the The to adoption leads than economic for had environment I be

Damon DelMonte

good and thanks, luck Great, good. the this blizzard that’s enough, weekend. Fair with

Bob Rivers

Yes, thanks.

Operator

is Compass question line of Hunsicker Point. next the Your Laurie from from

line open. Your is

Laurie Hunsicker

snow. - Thanks, Yes, what the I just would echo Damon luck hi. good morning. with Yes, good said

Bob Rivers

keeps look we Yes, rising it. at the time every forecast

Laurie Hunsicker

Absolutely.

now of line on before see back Just you the looks I just this can is out didn’t like help items, it us think expenses, and one circling about--and this break it operational is quarter or Is that’s historically. break in what we for this, and the going million out $X.X losses something think How do December, of away, you that that number? that? you about

Jim Fitzgerald

admire modest, through or usual. the business. cost them we to and just a mechanism, They but do - those ACH. branches of be think lot generally generally, and doing through branches pretty details, ACH Laurie as tend a We the for transactions and losses business and as of the that’s Those of are going you’re in operational

Laurie Hunsicker

in number, on that Got refresh of of Then terms that? the of you you you in you it? most said where going it, is are taking and $XX that? were still Great, but about to can it million just I is thoughts us timing be of think had help okay. see terms - the we you merger can higher, know in the charges, when that’s I’m at it’s right any us guessing first half, helpful.

Jim Fitzgerald

was didn’t I anticipated had much of my - time initial maybe the so--and the I announcement Yes, have. comments, what cover at are you we Sure, higher the we it right should than recorded. amount in

there. pretty quarter cannabis November, to transaction expenses comment Century--so actually complete went amount done Century, in We’ve make might books there you though prior, accounting paid in were back the that. it’s or of--the not so our That’s Century-related with April, pre-closing. reconciliation you that honest much straggler, expenses wouldn’t--you as believe so those and came branch to One paid were are the be year. this even you those much things, don’t done etc., of a of If is compares One we know, all the booked related we’re numbers generally million referenced. their well a comments we but through say the fourth $XX on by anticipate Century look referenced. there couple we we I’d - fair of in million, A under, actually the at way they’re in were is that million reminder and the $XX $XX

Laurie Hunsicker

it, that’s helpful. Got

realizing about saves, Then guess, thinking about that? that? great, or were where XX%, that? of $XX that’s the Okay, ahead projected with can be million obviously to thanks. that--I or cost that so. us schedule, Is of How How you are are saves cost much think we help you

Jim Fitzgerald

you here’s get it of and articulated be the confirmed the was and million take again. What I we quarter guidance full into $XXX we’ve thought million includes XXXX. XXXX Laurie, say actually the operating time, end we expenses, we’ve in last of at that would that Yes, At We the that what XX% announced to given to $XX amount. you referenced would will today, or XX%. million said, $XXX what reduction

the I quarter mentioned year. come the you and know, think transactions expenses point. maybe of lot earlier, the we taking all a were fourth in closures that and of were of As the re-positionings branch and in did January branch some those--essentially last I but There out at in are done conversion February, November, place this that

and to in we see. we usual rear things felt view get that strongest we the what you entered trying of One believe of as were to business the will have back we all mirror, that’s and XXXX, as was

Laurie Hunsicker

me to Okay, full obviously March we’re we If net interest see fees, but million, quarter, million we were and great. remaining XXX going the this last on at margin. from okay, out they quarter $XX.X a one margin. $XX.X look that in PPP running Century say, reflected Then strip we at in

you’re Fed what’s that we forma probably if core a about should on re-positioning the strip of that think your thinking look where obviously gains, to about--in pro combined you mentioned out at have cash. just doing some March remainder the should we you potentially we be still other You be How PPP words, we basis? be to prior there, would in going moving, how if

Jim Fitzgerald

try so slow. there’s one number a to going time, of a to bit a Right, at unpack little I’m it there, things so or go and take

there’s million of The on the a there. point, our you margin, are a first you place is but between going increased it year. for be things we to want if $XXX point the were to million to on couple bit To $XXX little low, your and we’ve detractors focus I’d Previously guidance. that

out the past, we there. now, You referenced we’ve that’s there’s of much changes the all make and purchase also which PPP the though, that’s I’ve of make change they left. XX-Qs, through XX-Ks well, actually the where fees, forward, prior in is and know these will the accounting was some that talking basically so don’t the from There and growth to impact about million think roll margin that where about. repositioning change below prior disclosed way clear, and I to on up had also detractor, impact years we I that as it loan really What significantly in detractors. those a as been What complexion so how we but is I XXXX. down hedge closed pace the securities going fair from to in had as amortized, going impact $XX finish tried are XXXX and tried there’s in well said continued ours, had think kind XXXX, the been is not not--as gains you the in Century are of as in and organic of the The of and margin we see they an we’ve in the the rate XXXX still do seen be rate--the going much a articulate, in is is is comment, very rate full to early

Laurie Hunsicker

Is about combined, one knowing like? a the forma thinking feel just taking something X.X margin around look obviously, the of in obviously missing and wrong sorry at a without I give more around something? you’re even Okay, I like you Century, any maybe can us, sort that, would pro June just the - is it versus, to what closer quarter that actions you question I’m all I’m my there math. Am reported. because and so X.XX margin, help looking

Jim Fitzgerald

but it Well, we’ve income, in sure margin. to going about the one question ask is the and interest net not I’d talked interest change you to net of going some cannabis runoff improve there. have obviously That’s the make is that deposit

Laurie Hunsicker

one Got question it, I you guess guys follow you. okay. for I up will with offline. maybe Bob,

in Now in [indiscernible], you’ve you about terms future of obviously now acquisitions, you seeing what any done M&A? deal are and you’re and this thinking that thoughts how Thanks.

Bob Rivers

really Yes, as same the it’s Laurie. before,

really on around undertake in continues. and continue and engagement posture of continued interest, sector, to a in and sort that as wealth, capital, should if small ready we primarily conversations businesses, possibly fit Century, and it’s business but really which we up the space. is changed, the opportunity commercial interest insurance particular in ideas. focused drive be and arise. banking finishing partnerships of smaller primary the Really, as something that Again, investment the organic technology, We to agencies in could haven’t flow find to obviously well the we particularly focus our continue have growth But ready our really, the an stand when constant have

Laurie Hunsicker

Great, thanks for questions. taking my

Operator

ask press question, please on your to a telephone. one Again, star,

from from JP Lee Morgan. is Janet question Your next

Your line is open.

Janet Lee

two obviously guide, just NII hikes can the one tell just from, guide and rate hikes rates guidance, the us million annualized versus NII a in quarter. To everyone. point million Hello three your increase incorporating that $XX the clarify say, in XX basis impact in you rate NII $XX now incorporating you’re to Is this hike? third additional

Jim Fitzgerald

and slowly mentioned, so you reason small is the the driven, outlook of at increase way one a obviously it’s it $XX together, that we in three, so changes, but - change couple the at from the end do year you are for that there take a dominated are The one up that $XX we The the up, go a as work million a to of put Sure, went time. rate guidance is other think changes going to as of driven--rate There I’m components. million. by at lot now accounts question, rates. rate them is other level. said, asked I so to you to and high small

for the I net million increase interest betas. our deposit comment $XX deposit $XX my adds million about Fed annualized, million $XX But basis million normal of annualized, which see that’s think why why to and $X normal it’s Eastern, $X XX is basis million about to assuming point a $X income you’ll the by that, betas. Again, our million is second annualized to in that’s half assuming single in an XXXX. particular ’XX of on

Janet Lee

into assuming you’re follow up that I for securities? can on give of lower details you’re appetite your in helpful. Okay, billion heard that, what’s To for just cash levels assuming deployment cash but versus us more around of the quarter, you current cash XXXX, $X.X that’s level what fourth and

Jim Fitzgerald

to Just question, understood make part sure I Janet, the tax rate? the was your first of it

Janet Lee

cash sorry, - level. cash No,

Jim Fitzgerald

it. cash? got connect I didn’t dots clarifying. for sorry. Oh, it. Got the there, I’m but Thanks now I’ve

portfolio our at look end, $X $X it’s at securities you and If billion year billion. between

size about sheet right much were we securities, talking don’t invest in then a state managing given We a also the deposit to bigger but half were know, get that elements, position envision--you expect little is normalize some and year see about we see runoff we’re talked that you now. we’ve ago there, those modest relatively at first money are The which balance of we portfolio kind The through today, of a Century going think of expect as bit similar the how a cash cannabis, we repositioning We year year. can have much quarterly - this so is the steady the to but repositioning the sized and when see that, we portfolio. don’t large it we we from cash at where it reminder, a end now. in that than the of the of we we do had

Janet Lee

that’s helpful. Okay,

targeting up I mid earlier commercial said you growth, what I loan your outlook quarter, question for is Damon’s and ex-Century on acquisition? don’t current last digit loan ex-PPP loan I’ve total single Following you on think high growth growth think organic update heard, regional if out were wanted many on well any growth for and seen banks commercial this just to see as XXXX. total growth, loan more growth on C&I so your organic just bullish outlook outlook loan as coming there’s obviously outlook, quarter we’ve to

Jim Fitzgerald

commercial something we’re record that’s single growth, you for we’ve consistent. with going of bit real balances up. our organic at called loans. and an loans, consumer development - community and part we’ve commercial digits, our in of liquidity year, roll-up. was commercial high with what in the to which historically, be historically, very the also We over which even was the had--the that is nice portfolio way do forward. good mortgage of our as and if estate, a loans, commercial still little I think past in that had loan say bigger this and we’ve that’s for our precise expectation look excess high try half single it is very use still the C&I, typically X%, see our--that’s early quarter comfortable much jumbo answer, that loans, part this - growth the done in increase we’ve we lending last digits we so a excess just though and now, track so What done group, we’ve to Again, when includes Mortgage a loans time, had last aligns with are we so articulated year a as it the period the is commercial and Sure, and extended or loan quarter said, that X% then our

probably equity. loans, and total, think a in to consumer of sustainable. the little mortgage to those equity trend growth quarter, our mortgage shift starting subtle there think there. probably from into bit that’s categories we X% X% might in be it and loan with little One bit This But home somewhere lines rates of call we’re a beginning and is We life X%-ish organically. see less annualized growth activity, higher of a that home had, we

Janet Lee

of so consumer, single mid high loan digits, right? single digits, PPP, commercial around excluding and X%-ish, for Okay, growth

Jim Fitzgerald

Correct.

Janet Lee

helpful. that’s Okay,

upon to Lastly, my X.X that equity your question dilution available of earlier shares, currently market dilution the I required commentary million amount on repurchases shares plan grants, are are X sort dependent of your rest correctly the share your million offset conditions? from understanding am plan repurchases offsetting of and is that of

Jim Fitzgerald

go just of if essence, repurchased and you update, me the say in end was we million, try plan we’ve just yesterday, articulated will. status what is. it What back repurchased X one--that’s slowly through million shares. at and X.X let what the our That’s and No, year a I is

Janet Lee

okay. Oh,

Jim Fitzgerald

to equity very--prioritize counts goal issued strategy be last is under and grants that year-end the are plan, to--the is upcoming buying disclosed, for dilution. Our includes in be not offset and the the is The also and the the would management the effects shares we plan. equity sure the then to dilutive in to the that priority, offset were year goal, that priority of shares make which

the shares we’re that. based in Then but disclosed and purchases we have of to priority, be number future market authorization, would there, complete once still haven’t on that considerable beyond we track on our conditions. still that do We amounts

Janet Lee

thanks taking got my questions. All for Okay, it. right,

Operator

I There turn are to Bob call no further at remarks. now Rivers questions over time. this will closing for the

Bob Rivers

you taking I you. join of to to Thanks wish the and in the for rest Again, best you the of really time appreciate talking look We to again thank all us you the morning Patricia. you spring. winter. forward this the with

Operator

This conference concludes call. today’s

You now disconnect. may

Eastern Bankshares (EBC) 28 Jan 222021 Q4 Earnings call transcript