EBC - Earnings call transcript Q1 2022 | Eastern Bankshares, Inc.

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Operator

Hello and welcome to Eastern Bankshares, Inc.

First Quarter 2022 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

be financial non-GAAP please recorded. such note to the company's of press on figures, reconciliation I and a Thank to is to can Please [Operator All ahead, Instructions] now Please a measures comparable GAAP would Bob session. CEO. go been prevent the placed at mute refer background there earnings being sir. question For have this event investor.easternbank.com. Rivers, After any the answer call you. noise. to the to lines be like release which found turn speakers' and over Chairman will remarks,

Bob Rivers

you, thank and our and me thank With call. Fitzgerald, morning Patricia. is everyone, joining Jim earnings quarter Officer. Financial Chief today Administrative first Chief our you Officer for Good Great,

the we and grow results in Boston. first strong Our the community benefits Century as and leading solidify to business other bank our Greater of as were the realize of investments quarter we've to acquisition Bank, began made our position

period the in well-positioned operating year quarter to Our than rates higher XX% And same from interest ahead. the a first we earnings in we benefit the ago. higher quarters believe are were

for single-digit strong pipelines in portfolios still we growth growth believe organic are in prior our high than these track we that loan quarters, commercial Although on and are was slower XXXX. that

and market quarter. our during a continued talented first added the banks community have lending, half-dozen lending, development to middle we addition, real managers relationship local estate, In from and commercial in team build

the acquisition Agency, the addition, In with Michals the build Xst business, marking our Eastern XXth an Insurance, agency independent continue brokerage insurance acquisition XXXX. March of by to we of Insurance insurance since

our about cannabis quarter Needham we business announced. in Although X, of deposits not results, million the in reflected April on transfer previously completed fully as Bank, first and money to service $XXX

X,XXX and As all always, make my to more. am this happen, who of colleagues grateful I

customers Eastern. XXX,XXX and financial the continued our support. thank Once for for your And make I'll for community their joining almost, again, for who things to an to provide turn Our, performance. of our place our today in your our us serving shareholders, live, with who privilege a us partners better of review you and needs, region Jim over interest now, in-depth help

Jim Fitzgerald

Great, thank good everyone. you, morning, Bob, and

prior million And XXXX. XXXX. net significant or on Operating of GAAP on in outlook. in and As The We quarter solid last Bob completed that XX% for QX we're or impact very were above XXXX. no of million share. earnings share. to to milestones $XX.X quarter, were Operating earnings. that compared were rearview put for to per it were XX% $X.XX $X.XX results the growth mirror, compared per rate Century the up up earnings first and the earnings some and income, quarter. QX QX that on with our first expect increase produce a have mid-March, for pleased in and will our Fed $XX.X the came will the acquisition final in increases our I in later some do rates largely quarter mentioned, XXXX impact were has include and We interest comments earnings

growth basis, loan loans, an X.X% loan commercial PPP on Excluding and overall growth annualized. was was annualized X.X%

$XX.X loans. of million the offset CECL $XXX implemented we strategies Loans PPP have was a a lower primarily reduction continue January previously levels we in January. due after-tax mentioned $XX at in communicated to by continued to of optimistic strong, balance $XX end was repurchased at Shareholders' shares comprehensive quality funding impact lower release went $XX.X partially market and remained through million couple allowance adjustment a recorded to on We as all were reinvestment. decreased some average was retained QX million, for reduction for were although of the loan line experienced paydowns through for with reserve and we I'll CECL values from an what by in It decreased This and The approximately driven Total in the decreased of sheet portfolio were economy $XX growth as million back the excellent. of of had below next. $XXX commercial income, the retained million securities share billion repurchases, losses. due assets little the we Century this quarters, credit increase of We discussed. year. about by commercial $XXX adopted million local other $XXX,XXX growth. which equity in recorded $XX.XX. and focus that was loan as a by of $XXX activity deposits X/XX a in the earnings. X.X balance down as by securities, paydowns earnings. small sheet billion, Although very prior in QX growth in be our the our price We X, million This loans, $XXX of at we're previously in XXXX, primarily other sales million million

in the earnings X.XX% down was to the was net million sheet, QX quarter. from compared impact the incentive of due the quarter in revenues the recognition the $XXX.X in per outset, tax and had market margin we repositioning. prior on focus million statement, This XX% a quarter. in at $XXX.X sale due the QX basis portfolio $X.X to to our of quarter. the tables. quarter assets fee period down ahead and quarter, securities were time on the points of wealth million on interest a also most impact XX% closed the year. had a the that the of interest on trust which carriers million Century a like portfolio quarter fee we fully were $XX.X first expected interest cost the on million. make million per for income share. are We last fees. $XX.X the billion on insurance sure quarter, release than outlook acquisition. $X.X growth press revenues, with interest receive an tax net of discuss income or of rate changes primarily up people in losses last on in we QX the rates is seasonality growth in from plan expenses from $XXX.X earnings QX from full Net from Century our operating in the XXXX quarter PPP incur million announced quarter, million declines of and assets of million tax in card lower We due basis lower payments the prior due section. debit were income of in Comparisons impact Century to revenues, in million our insurance equivalent merger are incurred XXXX. reflected with at by stock the in good income annual the were and charges. quarter that is I'll the had than Expenses equivalent on the guidance Operating balance Century the of quarter, to $X.XX strong and was quarter-to-quarter sequential $XXX.X was in recognition higher $XXX.X run Century The part The $X.X XXXX. $X.X the was relatively Turning million service the acquisition, from from on QX basis fees savings to quarter, that line share. rates $XX.X of of management in XX.X%. expected were swaps to XX% margin interest a Average and our the last in rate earning QX fully of to in was interest and ahead prior November net that PPP or and we'd of interest deposit insurance basis which were mentioned increasing losses $XX.X Operating the strong earnings the Operating in One QX I reflect as million Eastern, the and for difficult charges and earnings. And minimal But item part XX were $X.XX

Just the of securities a on the of provide we a comments other on XX page portfolio QX, few presentation. review

$XXX at risk unrealized million $XXX in believe the there we the As The rates. noted is credit due million increase loss portfolio. in minimal was there, to

unrealized portfolio and this mature. expect throughout year, as We provides of to $XXX the a cash of we expect loss chance provide flow million which the all for this bonds rest strong of reinvestment. will flows recover cash The

million. We XX have of breakdown of page approximately provide portfolio $XXX housing portfolio We securities maturity deposit of small on presentation. a a our of the

approximately checking As will our see you XX% in accounts. of are deposits

seven We during but mix position company, We that deposit deposit short-term overall very featured periods strength cost is prominently interest short-term advantage good value a feel low allowing and funding tends to will strong rising provide our our rates rates. combination the over be basis our forward look expect competitive us to of time. spotlight long-term of with increase. of to us franchise We our deposit a of the not as the rates interest of as points

integration prospects. of some of said portfolio feel we but it very quarter, comfortable feel good We with portfolio the portfolio that last what Century we our the and continue are loan growth. will our to long-term growth Century long-term the with out enhance will payoffs pleased the that expect add time, Consistent over to

in both did payoffs Eastern we QX see are with noted, they consistent the normal activity portfolios, and some Century but As levels. in

continued as non-performing after percentage loan be million. is over were the CECL quarter implementation, of Asset the quality in at excellent. losses allowance one And offs low basis Loan were loans for XXX%. non-performing $XX loans to extremely our point, a charge

Our time modifications results see of our it has included XXXX, under easier compared Century in make million million noise down by included which the are at with $XX progress will it that XXXX, pleased the performance. financial to In think over end the $XXX over COVID in little the that year. which and our We're this and IPO. general, from acquisition quarter the

the forecasts for the The has remaining margin to each Turning in fed $XXX basis as goes is net forecast interest point internal expect update forecasts out interest net including point occurred that our XXXX. on. $XXX 'XX and at the of the hikes XX variety March. to basis a point year hike outlook, there we is to of assumption, additional and rate $XXX year. million target with increases a million from we million And be will this our six to XXX continue income million our we rate This basis in level discussed January. year hike meetings XX calendar moving With $XXX between up in

in we annual will receive impact increases 'XX have mentioned of rate in we from in than the they the impact full will last when As an benefit. will quarter, less 'XX,

advantage As rates. and that base rise should competitive our in strength funding a company I provide we with earlier, mentioned us of the feel is deposit strong our the

loan we've funding growth XXXX. this adding commercial runoff in mentioned, digits metrics growth going To follow lending and level as single PPP our both We for improve our performance up well commercial success expect as in commercial talent mid-to-high Bob loan expect good back as seen excluding forward. earnings advantage on the to

of we in which to fees implement to reduce will income $X to to million we an for XXXX. to outlook maintain million million expect our operating a the million $XXX in XXXX. anticipate We $XXX $X by change, million basis. our year, would Inclusive range annualized equate overdraft in on later million this change This $X.X non-interest $X practices that in

million. between to $XXX We continue non-interest expect expenses million be and $XXX to operating

in outlook the up be between expect to is and We which slightly from rate XX% January. our tax XX%,

the April. business from The million. on X.X our repurchases totaled equate deposits under of cannabis million XX% Bob approximately conditions. of XX, for at authorized authorization. April $XX.XX we These mentioned, total Future market we shares repurchased As early Patricia? a will Through we questions. to our of shares. and amount Thanks, depend Century $XXX in transferred price million we're ready in X.X repurchases current acquired

Operator

Thank comes line you. first Janet JP Morgan. question of Instructions] Your Lee, [Operator the from

line Your open. is

Janet Lee

morning. Good

Bob Rivers

Good morning, Janet.

Janet Lee

I So, better quarters. you But to it's that a just guys loans understand. the future in in expecting good stronger hear are to want rebound commercial

mean, flattish I that teens. [Ph], looks do with peers [CNI] like in -- seeing core general your to much that Does are that and the in spending excluding to small that quarter energy more PPP, closing came banking at business versus look was and you if back back markets the So, pace have you at around low-to-mid the was growth or versus first that just a it it slower and merger? loan coming pretty have middle or that do you're Century market, does integrated then with efforts businesses

Bob Rivers

Yes, Janet. thanks,

make I think, just question I way. you're But sure want think answering I to I'm answer it asking. would the this

we I segments as in business. three have think, four calls, our described we've in or prior commercial

very housing those call feel other you're -- in about estate We of a commercial right; group, growth commercial estate. In got a business good first CNI lending a does and We've development affordable have the real the what and segments. real commercial lending. community four we non-profit group. a banking was We got group, all we've which quarter,

very pretty payoffs We overall, normal, part time, on business. of peers, we those that really customer-oriented I feel this as single-digit that you of the we've did good quarter. a single-digit comfortable. that's much franchise in think, segments over expect, But we are growth. All guided sectors and had those mid-to-high good And backlogs though. describe from activity. Again, there. very past, comment Activity It's -- can't as we the

about. are done feel we growth direct is past ours, these good that feel something very -- the of have We we customers with so what very and consistent we've in rate

Janet Lee

Okay.

loan about down bit? optimistic your slow How quarter the payoff view you growth do that your saw about of in expect line that's function utilization later growing the a so in pipeline. and a the you quarters, first So, that

Bob Rivers

just -- real So, any good increase couple of line couple questions, utilization. in didn't of a we see a responses,

to activity benefit, you bit have Obviously, little impact basically levels it's wasn't a there, of the know, an of are it is, of factors so hard there. had predict. that where Payoff doing interest a business, rates at part So, same stayed been. it's there but a variety

positioned are and to we part well, it and described. activity here So, that deal feel very with, take they're everybody levels. But of try -- the teams business market the we talent, advantage to way obviously good excited and about very I get not We think something they're about local Again, the has about loan. pipelines payoffs, to of our is strong. we in we're I and to exercise the

Janet Lee

rest Okay, about in transfer, [Ph] And for cannabis the the [QT] the should XXXX? deposit place overall normalization see deposit deposits, aside rest turning great. deposit of growth taking think about to the we from deposits, XXXX? trajectory in we Fed's the deposit how your -- deposits should year, the of how given think Should your or of more we

Bob Rivers

Sure, good question.

Just making a I'm the sort to but again, make your stage specific of set sure, answering little question, sure bit. we

We end essentially of of A feel was quarter to their complete. deposits. in said, plus As that And the that about I deposits. acquisition, the of municipal at as some like, the we we cannabis talked expect deposits, the deposit. did cannabis through lot Century was reposition the

behind that's us. So,

makes had -- industry, it deposit bit I we really say. in think you growth. the and prior and about what a couple if I'm that little very the Eastern, to of look But across quarters, explosive certainly noisy,

very from stimulus, cause be to that you levels, hard that given those the as cetera. just factors would our think view et the was I it grow mentioned, deposits it,

in and forward. deposits good next very our to where going be about we capabilities. grow But our environment market more over the to we're think position -- I So, it's looking much an difficult feel

the compete the times, think has strength long-term, tried of couple to I We there. our deposit structure. say well deposit our we company, very been strength -- As a

Janet Lee

thanks. My you us deposit now balance Okay, on great, assumed, in last NII that is XXXX of Century guidance, can also you level tell Thanks. question, your have your data revised sheet? deposits the

Bob Rivers

They present many be just taken would sort calculated companies so Different I'm can we it's into a beta, it I got that way just little environment a is low to to that, be other something a assumptions do what it relative it'll we like that believe bit because banks. little there's that other guidance it, But the bit the expect think generally, than in apples, don't apples that feel we've gave. of into time, Yes, confident others, disclosed. we've with higher I it's differently. go is not differently, apples very different. this to a we tried just But we incorporate we

Janet Lee

cycles? Can you the us remind was in what rising prior it

Bob Rivers

as you said, calculates last No, came I depending down. Everybody if rate, I and on up it disclosed, comfortable differently, don't cycle about that. I slightly doing then am the went not rates think we've think they which

it different calculate time you you in periods, get different answers. If

in can would information it. So, that's that. how I public, was cost the of lead see I that funds to And I our you do all would period. change where wouldn't. That's you

Janet Lee

thanks. Okay,

Operator

And your comes Fitzgibbon from the line next Mark Sandler. Piper of from question

is line Your open.

Mark Fitzgibbon

good guys, morning. Hey,

Bob Rivers

Mark. Good morning,

Mark Fitzgibbon

we is a was assume looked little elevated that in it quarter? bit bit like should swap a to this it income Jim, be going XQ, lighter

Jim Fitzgerald

Sure.

been there's and has level where particular been area quarter. first was see quarter because first there did the shift, business new a return lot a can interest the a in because swap So, an a process We value. higher Mark, And that swap book. that the a a see just prior, fair value that. in rates mark, a is quarter, of component we And in was first fair creates of there's of as activity of year-ago, reminder, that were there uncertainty of that. a have up, strong. in reasonably low activity, It's LIBOR And our loan you been

rates that We continue. we go continue expect elements mark-to-market but wouldn't up, of to that continue don't to to unless that. the expect, We expect

Mark Fitzgibbon

certainly costs secondly, is side? have consumer up guess Or Are started they your curious. although the the are low, commercial you coming the deposit of And house? then quarters. I it pressure last side of couple seeing the to on creep from I'm Okay.

Jim Fitzgerald

I the sheet. cost same. The It's had No, higher that's think Mark. just combination which than deposits, adding Eastern, of a slightly is just Century Eastern cost balance the the the

Mark Fitzgibbon

to recently Okay. a deals of agency as is it attractive is been pricing could of environment if that You I a today? curious. front, there, little And sort maybe discuss quiet insurance guys M&A relates there out business, wondered pipeline on the then have you the just

Jim Fitzgerald

the when for Again, the been active deals, that as we dollars still be things as bit. smaller metrics the Mark. pricing pricing in pipeline favorable a we metrics revenue where are at now a as that's to it get end, focused, describe while the and Yes, higher has for continues over several very for to deteriorate example, start to would million little we've

that's smaller would kept year. what agencies that a expect would few That we the in or we insurance Michals. three with is, this a prior-years. we've within as So, focus really our million in couple this on and see activity of will be activity pipeline now with right And consistent the dollars agencies was acquire revenue of less, case year

Mark Fitzgibbon

you. Thank

Operator

your question from is from next And Damon the KBW. line of DelMonte

open. line Your is

Damon DelMonte

good Hey, Hope today? well, morning doing everybody's guys.

Jim Fitzgerald

Damon. morning, Good

Damon DelMonte

Good morning.

about have lenders, I Was prepared think was and individuals he to Eastern. little question, to more half there of dozen relationship bankers those about first a remarks, been So, mentioned a team a color hires? give a this it in added Bob's

Jim Fitzgerald

is, from They were weren't. evenly several estate, all lines that community all It competitors they And many distributed from market, lending, disruption. large competitors related acquisition across commercial ways. major And a they were they that wasn't so that in both and experiencing small. hires. our organizations commercial it were That were came banking came real from came development were team. middle individual Sure, different

quarters thing really you be commercial in online. good others come our which think follow So, the a reasons when folks it that it's optimistic so ways, loan many a was can as about one these acquiring And growth of feel about might we in that mix subsequent very them.

Damon DelMonte

think Century inclusive some commentary about And the the or Got the I it. loan commercial and of single-digits, runoff? mid was of regards of outlook, part with some to not that high I of to was the inclusive of runoff missed that growth

Jim Fitzgerald

so It inclusive yes. inclusive, run-off, is of

Damon DelMonte

Got it, got it.

you then about overdraft the to you I Okay. a on made Great When policy, certain adopting kick in? and income new you're think comment did fees. pretty going say that waiving fee much a was side, Jim,

Jim Fitzgerald

The of second-half Damon. the year,

Damon DelMonte

it. got Okay,

Jim Fitzgerald

of second-half particular, In XXXX.

Damon DelMonte

asked that been covers guess that has answered. I probably else everything Okay. and

So, much. you very thank

Jim Fitzgerald

Great, thank you.

Operator

from Instructions] the [Operator of Compass comes question Your Laurie from Point. line next Hunsicker

line open. Your is

Laurie Hunsicker

morning. Hi, thanks. Good

overdraft Just NSF $X.X and going total million detail and back XXXX, the for said the much on million XX. to quarter? to the where Page was this you in $X How overdraft appreciate was Damon NSF,

Jim Fitzgerald

reduction about the Laurie million we've XX%, at XX% annualized, million, about Yes, which be would $X outlined $X total. to

Laurie Hunsicker

insurance thinking million or higher; quarter, it's should Perfect, refreshed usually $X but fee And to first insurance realized how in Delta to revenue, then okay. I Is drop about Thanks. second? first income we the do that $X a there? was million higher that from number have be you

Bob Rivers

what you is do, to look Yes, just would year. at Laurie encourage I last

And a the look XXXX So, good the first top get would my year quarterly from last and higher this about it I XXXX. off and growth know than to judgment the it's versus to year there head, quarter again look at was last to X% there. year, try do QX, see X% but seasonality year and then we provide this of can don't you dropped of I

Laurie Hunsicker

And expenses, to XX into great. your your that's looking and on comments. Okay, again, at I'm then Slide just

thinking would if expense And we Can then did something. looking XXX back much hit add was benefits, help Just takes at the like I X.X, quarter, plan to us hit rabbi run And how missing you was? just quarter. it and And understanding also amount and it or I'm were that? you just It getting for rate that up maybe like obviously, this. where employee looks non-interest refresh benefit you looks the need that expense didn't this the are trust XXX. your I this you on

Bob Rivers

proxy included were in in the so issued at the plans, benefit are March. a high level which Sure,

of think quarter the your for I not So, to, there. point question the full

Laurie Hunsicker

rate Got will the run there? be then it. And full what

Bob Rivers

Yes.

would think sort the first year. expense incentive was is So, I million we this we've sort approximately that was a $XX and not year's this recreate a the grant, company, again things was long-term first as and of goal said one to had the past try of of, which in the mutual say year's grant

be going but plan, places replicate there'll about grants, said So, was forward, in prior to of disclosed I had additional expense with the itself grant this strategy year. was other was that which as and we the that that $XX million a

Laurie Hunsicker

Got it, it. okay, got

And you another XX sensitivity, you up a December XX, Okay. NII, asset of as then comparable there? that positive appreciate number XX, do comments, March as basis your X.X% points on have a have on refresh your do of words, if XXX in as December

Bob Rivers

about said bit, one things I in interest of last basis income at sheet some is points said we of for say the that is call we'd we that but basis the increase have was a the balance little that million restructuring, net XX that Laurie same, for a of point million time, incremental That every would rates, I with increase. XX quarter we down $X anticipate this think would in $X it's

Laurie Hunsicker

that's Okay, great.

you've bank terms you're then, question, of last in just now M&A? can thinking closed great. just refresh Century, about you Bob, Okay, that us And how

Bob Rivers

Sure.

comes one available. another for ready when partnership, we're So,

much positioned to so, So, overall organic on of generally, certainly so loan improve the focused our been growth more the book, aggressive full the opportunities better than future that and arise. our can in commercial and our for for even as to building those has deals, on focused open been we're multiples, very you acquisition the company when they trying hiring organic past, that growth, it's see on that, activity in

Laurie Hunsicker

on you of expanding think out as then another have there, focused question you that? from you what's or partnership, about Greater And sort at your Great. still around are one jumped and on Boston just and all, thoughts geographies that, last in

Bob Rivers

our as No, geographies, Laurie. was that adjacent so focus. focused immediate we're it's immediately again still the in same remains region on and that before, It

Laurie Hunsicker

my taking for questions. thanks Great,

Bob Rivers

Great, thank you.

Operator

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

Bob Rivers

everyone our again, quarter to you your joining look once we after us second interest and Well, thanks in you with today again forward really for appreciate release. talking

Operator

This concludes call. today's conference

You now disconnect. may

Eastern Bankshares (EBC) 29 Apr 222022 Q1 Earnings call transcript