EBC - Earnings call 4 2023 | Eastern Bankshares, Inc.

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Operator

Hello, and welcome to the Eastern Bankshares, Inc. Fourth Quarter 2023 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 risks and uncertainties that may cause actual results or the timing of events to differ materially from the views expressed today. More information about such risks and uncertainties is set forth under the caption forward-looking statements in the earnings press release as well as in the Risk Factors section and other disclosures in the company's periodic filings with the Securities and Exchange Commission. Any forward-looking statements made during this call represent management's views and estimates as of today, and the company undertakes no obligation to update these statements as a result of new information or future events.

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

reconciliation GAAP release, Rivers, to a event now to go found For like of Please investor.easternbank.com. Chair is the please financial at the Instructions]. ahead. company's and refer being measures, to recorded CEO. earnings I note, turn Bob press Please which [Operator be to can this the would non-GAAP over conference

Robert Rivers

quarter you you, start. I a earnings who Morning, in Jim few financials fourth and Administrative joining Thank Officer, off With good Chief review Chief and is call. thank your a for minutes. is Julie. today XXXX Fitzgerald, hope our our will Financial our everyone, to me

a in for to our year of As in on navigating strategic I remaining reflect strategic remain priorities. Eastern was the focused nimble environment it year while uncertain on repositioning XXXX,

success and year's We are well have all despite emerged for the 'XX stronger from better we believe and in and challenges XXXX positioned beyond.

XXXX, entered banks changing big with placed Eastern all we liquidity general As a economic a rates, preferences, which and headwinds. higher customer emphasis were challenge on interest facing greater and

decision Eastern repositioning, and our our the a to the of we was exceeded valuation Eastern are When piece glad The transaction the us we insurance allowed outcomes the as Eastern you part early both outlook. very further to transaction also first a of fourth few tumultuous restructuring funding the with apparent. After expectations. to our the difficult banks, and Insurance our earnings strengthened portfolio which Insurance allowed it conditions these restructuring very became a securities us quickly, significant, sell when very sale The very foundation position look all improve did industry. our opportunistically in time marking our we agency this failures and a our quarter. been with this We back forward immediately core we our pleased has very capital. The environment transaction, too the by This premium the was know, a think U.S. for responded As Group. business, to industry transaction, at securities closed led significant and evolving in first -- headwinds financial moved about The to quarter, culture. and liquidity future. of enhanced our

position an in with banking that While acquisition position strong working The we the well leading Boston more core Board agreement Denis market long with is were Cambridge financial in-market than area, and doubles able management merger banks metrics. have among insurance merger powerful partner know and Cambridge in we franchise strengthens respected we on ways. attractive our Sheahan our wealth an their extremely significantly and September. all to The our leading enhances to performance platform. combination business in and solidifies markets, headquartered wealth for Greater our meets of the sale, an announced It we on merger were the in Bancorp our come with the criteria

and As transactions, our result optimism, great strategic a future. entered these strength excitement of with XXXX we for

for the we second and to shareholder the we finish both for and merger, we to forward approval on we are early in job Although closing recognize the regulatory obtain track believe and need quarter. both look

to allow deploy in the results of the second the first the conversion clear transaction a half Boston independent and the returns of settles in franchise. very and ways down. goal exciting generate is This public half would preparation focused to banking Cambridge. raised build us. to that benefits for will banking our Jim As XXXX, detail, on our When will in But competitive when very leading of the we strategic closing us XXXX went noise be be we capital was expect

on will very will our are We and between much vivid the communicating contrast. The look plans ] of confident ambitions, are XXXX both confident demonstrate we are these partner detail targets those back of as financial XXXX along will [ XXXX a the the forward look through in in in out to our start to that Cambridge that all half way. September. second executing of and we our shortly. forward differences more of with updates and we success achieve the laid We Jim and results go

putting our gratitude Jim As of and I but all we former of persevering financially what colleagues discuss repeatedly and extraordinary to more one economic customers at partners be our stressful nonetheless, our offer a the like appreciation us position unfailing a Insurance one and strategically. in we recognize very most at their company also of of efforts for Through the dedicated community Eastern many turn it each for Eastern most colleagues. busiest position ways, so believe years in while our for better successful and humblest to over support again they Eastern other for through in challenging through successful demonstrated often I XXXX. I'd my will circumstances, as careers to this and detail, the

long value business a you for work an in hard financial by of was our As over their shareholders. resulted from created for that see the gain can period our valuation time and exceptional results, their

We former that Jim. over now it and A.J. And them a very turn the great colleagues wish our is we for at are to I'll best. Insurance, confident Gallagher Eastern employer

James Fitzgerald

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

a position to with expectations. All in announcement be of closed $XXX in all, late Insurance the with impact As Bob impact with $XXX to Eastern well. of which the in gain very had of of positive we September. Sale year XXXX, The Insurance large the a of quarter our Eastern after proceeds million the the which in continue our fourth million is It very led liquidity ratios. of pleased improved sale positive the of cash in tax, had all and mentioned, and quarter the and a repositioning execution capital in transaction, for the on closed Cambridge net merger with fourth results. about a the included early year busy securities exceeded as us our

addition QX to some noise expenses. compensation and will through had the some to of gain my go special through discontinued higher and movement the the Insurance remarks. of additional results million operations, FDIC with In assessment $XX.X I those

The $XXX.X the projected of September. by highlights time the million, back our our by higher transaction slightly points $X.XX to of of which quarter. reduce our of touch and quarter driven combination ended income advances brokered or X $XXX gain for quarter percentage over The FHLB and nominal the insurance deposit of percentage million First, ratio we announcement diluted funding. ratio the from and points proceeds cash the the and performance in allowed share transaction strong per in from wholesale was deposits and by I'll is QX. $X the sale the by amount was X.X on the the some us on CETX at improved than we a quarter Net billion, with TCE

quarter better was than As deposit and than in quarters. prior expected had the of couple the stronger I performance we mentioned,

by increased deposits core $XXX the over our deposits, brokered million Excluding in quarter.

although slower cost an primarily while lower-cost market at be was has of we see the in out slow to approach but higher basis. growth into stabilized. to the migration a to a X.X% accounts continue have conditions, due cautious Loan than the growth prior on rate We quarter had environment continues annualized quarters. Loan

We've under QX the be part sales our quarter, up. we An provision in been new is contract results, is sale, modest. with sold, and loans our and line currently of one levels quarter, in prices The with Of our charge-offs levels that property and in Although a had status very problems in fourth collateral the being resolving office one come under is as in QX sales of is X contract the which the one in nonperforming increase continue in moved overall quarters. as the an sale. has NPL also experienced additional expectations, line NPL and mentioned process in to loans for for are to good success had and third third marketed. undergoing we they

per dividend record on $X.XX X, Our share to Board XXXX. March shareholders on March payable of a XX that's approved of

the sheet. to balance Turning

Loans were up deposits unchanged third billion. essentially at the were by overall quarter $XX.X $XXX to from slightly up $XX and billion. million were $XX.X Assets by $XX billion to million

$XXX balance mentioned, $XXX million. and cash As Securities impact the we billion, reduce earnings our liquidity to and equity offset by is the sheet wholesale to up up of and the us funds due was year partially competitive pleased by in were Shareholders' the in our over provide able $XXX advantage rates $X with runoff. quarter increased million, capital AOCI. We're with to improvement where time. to million valuation very position the gain, principal a lower ended improved $XX which and by the due million should think was over by our primarily insurance

as expected, tax. operations or income after recorded The net was $XXX This million in per mentioned, discontinued was $X.XX had share. gain As to Insurance diluted was lot of fourth quarter the and earnings a of million noise. and led $XXX.X

our loan margin to assets cover up loss million quarter. down quarter. was net only and point. commercial funding quarter. quarter-to-quarter reserve quarter-to-quarter the income $XX.X year, the $X.X levels from X.X%, million were year and recoveries million The the prior sorry, recorded X.XX% income securities QX the shortly the earlier last was The XX noninterest up expense. down $XXX.X reduction points, point $X.X loan per of fourth in -- earning was to was million in higher for would with FTE was third X interest due or asset were from net from some year, cost loss faster decline the were reduction $XX.X million The a it offset primary The in in due was of interest the that quarter the yields I share. Net yield I'm $X.XX I'll was while slightly increase have the overall and otherwise reason gain X.XX% above in the the $XXX.X offset Insurance interest the net Insurance the The quarter, loan basis gain in $XXX.X third interest guidance. For basis to quarter's income and X quality. Operating been. million in the in million, get diluted quarter margin in up when The made was in interest provision basis was than higher income

discussed we losses loans. included commercial the quarter call, the of As on on sales third last some small

line Included million that million benefits I'll employee $X.X operating expenses higher we were operating comments and on and $XX.X in be the going line an are in million assessment FDIC outlook. of of the in the on going Noninterest operating were prior and portion basis. $XXX that, quarter to provide Excluding the from to with was items quarter. forward. all the I expense $XXX.X them the operating than forward million when more expenses where salary expect get our special

loss quarters, from $XX.X expense tax I The gain. increase As to million million. prior $XX.X nonperforming rate million. in $X.X in the results experienced the by our in was loans and operating mentioned in a was the Insurance impacted We on slight quarter the tax securities quarter the

a problem the nearly modestly XX at to the Of X been office net NPLs first by allowance loans covered basis XX year, being NPLs $XXX were one bringing X loans. is via of charge-offs were essentially and $X.X active final or resolved from million charge-offs basis to end full sell being allowance With for marketed. Provision to expense was As X the of Net are percentage this third quarter losses sold from points. contract points. the of quarter the loans, loans quarters no basis year moved in the the One all basis quarter resolving $XX.X quarter, of fourth the points. and loan was or is Xx. We've in under very property million, total and in the net sales. nonperforming the charge-offs million points the expected X.XX% quarter, one XX in

in we via NPL also non-office property new quarter expect one to sale. the had fourth quarter resolve this that we Additionally,

sales is helpful. and and in received in with line been portfolios of and hope national the the the on our of the and Cambridge. in office we investors in one outlook for analysts input from the to updated added the that expectations All QX a then prices line Eastern our We information provide with pre-merger, presentation. more portfolio disclosure a pages, X and page variety added specific appreciate We provisions have on multifamily or page our charge-offs shared credit QX. We and recorded some and we

Eastern QX we of but better levels. be we modest are than stabilize XXXX. quarters We current on the QX first deposit performance margin anticipated, stand-alone help For as in a some basis, and of declines income believe could we around expect net to margin to in levels experienced and expect second similar the well. see to that We interest stabilizing early XXXX XXXX

Fed will in and we and reductions impact XXXX. have If will net XXXX, that interest some rate benefit do year XXXX see that income but late the the margin, greater both full a in

We expect that this to credit of QX XXXX. QX similar picture will be year the and

last like lead our vulnerable seen We quarters. We to these active of management have the will help but to X start expect will to to increases loans, in the believe and we they trends work us resolution over loans nonperforming process more become expect through contained. we normalize, that be as

expenses On the not going forward. and QX elevated will I were certain expense in mentioned, front, recur as

the $XXX in We of of start with run between million, rate $XXX million guidance expenses a the first expect line with which and quarter last operating to is quarter.

have expenses are the create we but completing elevated and first long-term quarter. cause the major in addition in that to we that half XXXX, second benefits projects first of will However, Cambridge X will in

expense First in lower are, also what space moving we have. would corporate of to space, a are and lease the in move with quarter, we aggregate currently QX have than you headquarters and working moving as the these we'll with cost and is The occupancy aligned for designed costs hybrid early we're moving our modern and expect, will Boston. The well less as is elevated overlap. themes in pay model. more QX be and our We we second

million. platforms mobile customers gradually be are we will overlap very QX the but upgrade as costs about transition We QX. some and also banking transitioning of have online and the will the our excited updating to and We're be in expected $X the will approximately million end is total by second completed these be each Both of a X of quarter. impact of $X product. The for quarters in first XXXX the of projects

will projects costs cause we benefits. these expect short provide elevated to Although long-term both term, some in the

tax XX% We in to XX% in expect normalize range. to the XXXX the rate

the Cambridge. to outlook with Turning

franchise excited be about the combined be We market respects. continue very and leader a opportunity to confident all the in will

As are a our SEC set the effective January shareholder meetings S-X reminder, for February on XX. the declared XX, and

the for we and we've provide planning with forward. wealth team, in work made is the move Banking and significant to the well. believe are continue tracking expect planned both regulators We integration our integrations. the for progress to updates as conversion scheduled with for Along plans QX. We Cambridge very is quarter second integration

We at we spent the and we on Slide September, announcement updating all financial of and reviewing considerable update outlined XX. an last time the information have provide

management are about to As confidence capital planning. key see, ability meet our you can have or just the in exceed metrics we all financial and our working of through still

of combination to mix us with about with operating a larger the forma earnings us that accelerate the more financial Cambridge interest In to business very for the financial we you. to stand-alone confident Thank when are our the comfortable open we're pro of put number as And execute went and will allow improvements Our ready that years platform questions. of take to strategic these will public Cambridge and stand-alone improvement a a Julie, XXXX. particular, with improvements that half profitable but the our metrics up taken richer, significant results, in realize XXXX and second a in operating the we entity. We start need have and to talked margin until to in would will end a Eastern and we projections are with and the delivering we metrics. We're significant in confident at net year the it rate run expected are that position very deliver financial provide direction. well

Operator

Instructions] Mark question from from Piper first [Operator comes Your Fitzgibbon Sandler.

Mark Fitzgibbon

on in second early what you like longer much sounds have you'll waiting the confident confidence? that given level for get that been of deal you guys approval that gives Cambridge other quarter approvals, It are banks pretty

James Fitzgerald

to you're laugh anticipated your Mark. I I'm first you. sort that hopefully, me. with so question, thank and joking of Sure, be

think job we have the with both obviously relationships follow-ups. all job and information, but strong I have to note, application all in very do, continue we'll communications understand serious to that a the with we And a on They we've do, and initial the regulators. supplied they a have our to them. communicate

in what is to the comparable experienced transaction. them. As very I previous timeline calls, as Century we And we'll in further similar we said this updates, have provide and

Mark Fitzgibbon

you had possibly estimate much be the And value could given there? would comments value we've you Okay. the the that with original if updated Obviously, I announcement, rates Any book give Cambridge. estimate? tangible tangible that us since think $XX.XX an would then wondered higher in than book movement

James Fitzgerald

this, Sure. I would Mark. say

not how back out over provide we but don't interpreted. But could makes you of it some in As have September. since way on liabilities. of anticipate marking let a Spent closing. expect point, help know, of using and with do come year-end to that, this would the understand to various both it think all change. rates then, that now nervous also and be best for I and We all of think we're and and assets At loans on the sure between continuously since sense it. to market because the interest to rates updates to would a that along a will little this updated XX/XX, time going data, is, we've lot question way. think I'm continue our are the things analysis what And provide that changed makes and in say to provide we let's want us because We certain we bit about Again, the numbers sense. how some change

Mark Fitzgibbon

then I any Okay. excluding could around if also wondered of and growth sort for of impact loans, And Cambridge share thoughts the you fees?

James Fitzgerald

Sure.

about start think challenging X. lending at a be that be our combine confident very It Eastern -- with changing market are to in We're leaders next here the positioned going couple Cambridge growth of it, couple for the be that a continues out I in see and was, both when quarter, for as but anticipate. that now, levels line market in I we which loan look with think the had single or loan well been I'll last loans. quarters should call that much from to low quarter digits teams, on the the We don't And we X.X%, very with talking we'd it's fourth we growth. the of same quarters. we've that's and

jobs we financially of I we're there. feel strides good very And balance position to making here our the as get think is good possible. in as one sheet a like

But turn, the very when this that at does what we we'll single So strong teams. said, lending we would continue capable of have market point, as And be I guide to digits is low very going. to.

Mark Fitzgibbon

fees, anything? And then

James Fitzgerald

question, Fees. cetera. line wealth, there from positive Cambridge in big way. going very statement and our growth that which wealth other low Away really on coming those are in Obviously, the from that items. -- over very a services, I Away I et from what wealth, is there's story was specific deposit accounts, fees changes those would in not single-digit consider a there's other income much your the think

Operator

from question Partners. from Seaport Hunsicker Research Laurie next Your comes

Laura Havener Hunsicker

it way sort back could about ask to to help forma can forma, us a maybe intangibles. we is, you go If just deal, of think different pro pro just the

James Fitzgerald

Sure.

So I did Mark. give similar I to think I as a may

September XX. the So as was you know, Laurie, announcement

every than that things in the lower. that used are happen process at September. to there. the you of right? were I and were a they XX, mark-to-market something at very little for bit something involved expect since There's rates reduced period intangibles. September lower not did Rates were close time a Rates that that think lower would little XX/XX Obviously, the you to that it's day. then, And moved that. a happen, rates can The were up was the amount track have bit,

I to going change you get the to the want understand sharing and things I between there, I and out then to is to said closing the very a further and we and helpful. about put that be even stale to it little information now providing open be information but spirit -- would be it ] and thinking question, we'd similar [ with think time that's be we by reluctant Mark, helpful

make to I'm sure it you afraid unintended want bit sort Just said, case if which we the a get time information, to consequences, -- giving be would as be by going little you it's I by stale, the create doesn't were time we of numbers. XX/XX the

within So see that but about a and come to -- do. period of time back short to we think very can happy what

Laura Havener Hunsicker

Okay.

in interest answer of you're So probably then and I net have on accretion guess, going to margin. similar a thinking impact income terms about

James Fitzgerald

interest I all appreciate And mean we want different it's on we are that. really we all that. ultimately your of Yes. to -- and how through questions disclose thinking

helpful are So that your way your questions very and insights.

That thinking we're as that well. be of total the back would and on answer. we'll that through come part So

Laura Havener Hunsicker

just Okay. income. obviously margin first comments your when to modest XXXX, you that was of then talked accretion for in that decline And correct? about half of Is exclusive the clarify,

James Fitzgerald

That was Eastern. at

net margin -- at making yes, Eastern there interest pre-closing. were was stabilizing was So so, comments I stable definitely and -- Laurie, income the that

Laura Havener Hunsicker

Okay. about the margin the of month us maybe think December? That's helpful. or just And then help spot what's can for you

James Fitzgerald

Same as X.XX% quarter, the ]. [

Laura Havener Hunsicker

and was that was on then Brokered in quarter -- And in in win timing the the Okay. the borrowings the quarter... reduction FHLB? of what a in terms

James Fitzgerald

million. Yes. but The obviously, it, -- $XXX proceeds X, was approximately the not lumpy a that EIG is item one lumpy were, November call technical term,

So that a was of component it.

other deposit took throughout the really reductions The to were inflows that place due quarter.

Laura Havener Hunsicker

one to balance? going is through us was your just break new the could ended the then thing, so we ultimately it. you what just that the same that you was can just marketed, one? being those just one the B credits, have the what the -- -- then balance? If one that came one there? And then office new the Can out up What's X And Class Class sold, Okay. under write-down nonperformers. in, the contract, And Great. the back being that take X The also B? you what's

James Fitzgerald

Yes.

So a there. -- let me there's lot

Let and through slowly. go me try

So Boston. that on I'm office last from the quarter they X financial first were in in were all focus going nonperformers the to district and

is one sold when there. The It memory can charge-off the the quarter. is one your The the the closes. provide one a good and the was we'll closed details and I for million sale that's smaller that very bit So under loan, that's provide on of $X it information. $X that contract was in fourth million a actually is a little loan,

the portfolio, the X. quarter. office balance to the it's don't third third The it loan. do largest the nonperformer remember loan. and but an office of approximately expect property. a is the we a not loan, larger That's -- commercial nonperforming marketed. million larger, was head, loan from top my of slightly off it's just that quarter new number I $XX resolve being a The It this It QX was in real estate was loan

Laura Havener Hunsicker

you. Got

And the guess, Was gave Okay. X, I charge-offs? net that $X of million million. then million $XX quarter, $XX us last you in the

James Fitzgerald

At that was it growth. time,

million charge-offs principal the came balance, $XX was the later. yes. So The

Operator

from comes question Damon next DelMonte KBW. from Your

Damon Del Monte

the $X like commentary base, off underlying you you have X million, question year, million. a the $XXX going that of growth it expenses. look have your quarters at was for kind the projects additional $XXX those an base? on I X on on. got What said each But when of think Just you'll are expecting you I of we million first

James Fitzgerald

aside, items, X the putting Damon. Again, $X million, $X million the items

million, So the quarters pretty start from at million, growth level, there. modest X first be would $XXX $XXX that

for be Obviously, really that coming if bit. very the confuse $XXX those close to -- to very fact, a going million, and Cambridge expect number that you you'd annualize is run But the would $XXX the quarter. Cambridge. the close in, that's annualized In without -- million, to be rates pretty year-end full would to the little

Damon Del Monte

Got it.

outlook more How guys? characterize kind net commentary for of the you then you helpful. Okay. for of and That's around normalization. And charge-off a credit year a the would normalized

James Fitzgerald

I'm laughing.

Damon Del Monte

it a You years back got for dial probably, that, right? to few

James Fitzgerald

We you would just for think a expect both and we Yes. up of is time. charge-offs levels in at at levels We're but at X to way. they low let's look we internally. for environment our levels touch low very higher a changing, points. those for the is we long call industry, XX period again, that very what of believe current were points, here nonperformers, we period it, little to call And But know, basis move a right? of low maybe large the to No, time. XX-ish it I year those And contained the -- contained than we When and again, at basis bit, very as long we very that. clearly but a see migrate them, don't is a and in We would word increases upward. expect the were metrics use of,

hard more you but I to number, increases big one it's would time. there, say a give So word, see contained as don't a we

Operator

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

Robert Rivers

our your questions, more to during and of April. and interest with you sharing earnings forward your at for you a look Have next end the thank we Well, great day. call

Operator

conference today's concludes call. This

may You Thank now disconnect. you.

Eastern Bankshares (EBC) 26 Jan 242023 Q4 Earnings call transcript