Eastern Bankshares, Inc. Reports Fourth Quarter 2024 Net Income of $60.8 Million, or $0.30 per Diluted Share

•Operating net income* of $68.3 million, or $0.34 per diluted share.

•$1.2 billion investment portfolio repositioning in Q1 2025 anticipated to add approximately $0.13 to 2025 operating EPS.

•Net interest margin on a fully tax equivalent basis* expanded 8 basis points to 3.05%, primarily due to lower cost of funds.

•Annualized net charge-offs of 0.71% of average total loans primarily driven by purchased credit deteriorated loans acquired from Cambridge Trust.

•Strong balance sheet with robust capital and reserve levels. Year-end CET1 ratio of 15.73%(1) and allowance coverage of total loans of 1.29%.

BOSTON, January 23, 2025 (BUSINESS WIRE) — Eastern Bankshares, Inc. (the “Company”) (NASDAQ: EBC), the holding company of Eastern Bank, today announced its fourth quarter 2024 financial results.

The Company’s fourth quarter results reflect the first full quarter impact of the merger with Cambridge Bancorp (“Cambridge”) (“the merger”). The Company’s third quarter financial results included a partial quarter impact of the merger, which closed on July 12, 2024.

“As we close out the fourth quarter and reflect on another successful year, our most significant milestone was the merger with Cambridge Trust,” said Bob Rivers, Executive Chair and Chair of the Board of Directors of the Company and Eastern Bank. “This combination not only solidifies our position as a leading financial institution in our region but also allows us to deliver a broader suite of offerings to our customers, greater opportunities for our colleagues, and even stronger commitment to our communities.”

Denis Sheahan, Chief Executive Officer, added, “We remain focused on continuing to capitalize on merger synergies, long-term growth opportunities, and our overall financial performance. After meeting or exceeding our merger related financial targets, we posted full year operating net income of $192.6 million, 18% higher than 2023. We are well positioned to continue to deepen and expand customer relationships in our retail, commercial and wealth divisions as we continue to leverage our market presence in and around Boston.“

“Our fourth quarter financial results were very positive,” said David Rosato, Chief Financial Officer. “Our margin expanded by 8 basis points, supported by a reduction in deposit costs. We continue to maintain a strong balance sheet with exceptional levels of liquidity, capital, and credit reserves. In early 2025, we are in the process of repositioning our investment portfolio which will accelerate improvement in our financial performance, adding approximately 18 basis points to the margin and $0.13 to operating earnings per share in 2025. Our CET1 capital ratio will decline by less than one percent, and we expect to rebuild approximately half of that capital position by the end of 2025 through stronger earnings.”

Total assets were $25.6 billion at December 31, 2024, an increase of $50.7 million, or 0.2% from September 30, 2024.

•Cash and equivalents increased $117.4 million to $1.0 billion.

•Securities decreased $148.5 million, or 3.2%, to $4.4 billion, due to a decline in the market value of available for sale securities (“AFS securities”) driven by higher interest rates, sale of $116 million in AFS securities, and principal runoff, partially offset by the purchase of $200 million in AFS securities.

•Loans totaled $18.1 billion, an increase of $15.0 million.

Deposits totaled $21.3 billion, an increase of $74.8 million, primarily driven by growth in business checking deposits, as well as a seasonal growth in municipal deposits, partially offset by a decrease in time deposits.

Shareholders’ equity was $3.6 billion, a decrease of $59.2 million, due primarily to decreases in accumulated other comprehensive income, partially offset by an increase in retained earnings.

•Book value per share and tangible book value per share* ended the quarter at $16.89 and $11.98, respectively.

Please refer to Appendix D for a roll-forward of tangible shareholders’ equity*.

Net interest income was $179.2 million for the fourth quarter, an increase of $9.3 million, due to an increase in the net interest margin and average earning assets.

•The net interest margin on a FTE basis* was 3.05%, an 8 basis point increase, as funding costs declined faster than asset yields.

•The yield on total interest-earning assets decreased 4 basis points from the prior quarter to 4.56%, due primarily to decreases in loan yields of 8 basis points and average securities volume, partially offset by higher short-term investments volume.

•Total interest-bearing liabilities cost decreased 17 basis points to 2.33%, due primarily to deposit pricing decreases.

•Net interest income included net discount accretion of $12.9 million from purchase accounting adjustments in connection with the Cambridge merger, compared to $10.8 million in the prior quarter.

Noninterest income was $37.3 million for the fourth quarter, an increase of $3.8 million. Operating noninterest income* was $36.9 million, an increase of $4.0 million.

•Trust and investment advisory fees increased $3.1 million to $18.0 million, which included a one-time item of $1.2 million.

•Service charges on deposit accounts increased $0.3 million to $8.4 million.

•Customer swap income increased $0.6 million to $1.2 million, driven primarily by higher transaction volume.

•Non-operating income from investments held in rabbi trust accounts were less than $0.1 million, compared to $3.6 million in the prior quarter due to investment performance.

•Non-operating losses on sales of AFS securities were $9.2 million due to the sale of approximately $116 million of AFS securities. There were no losses on sales of AFS securities in the prior quarter.

•Other noninterest income increased $12.8 million to $15.8 million, due primarily to the non-operating gain of $9.3 million from the sale of an equity investment. The prior quarter included a non-operating loss on merger-related disposal of fixed assets totaling $3.0 million.

Noninterest expense was $137.5 million, a decrease of $22.2 million. The decrease was primarily driven by a reduction in merger-related expenses of $24.0 million. Operating noninterest expense* was $133.7 million, an increase of $2.9 million.

•Salaries and employee benefits expense was $78.9 million, a decrease of $14.9 million, due primarily to a decrease in merger-related expenses of $12.0 million, as well as decreases in operating incentive compensation costs of $1.4 million, operating federal payroll tax expense of $0.7 million, and non-operating rabbi trust employee benefit expense of $1.1 million.

•Occupancy and equipment expense was $12.8 million, a decrease of $1.7 million, due primarily to a reduction in merger-related expenses.

•Data processing expense was $21.4 million, an increase of $1.9 million.

•Professional services expense was $3.3 million, a decrease of $5.7 million, due primarily to a reduction in merger-related expenses of $5.4 million.

•Marketing expense was $2.8 million, an increase of $1.2 million.

•Federal Deposit Insurance Corporation insurance expense was $3.9 million, an increase of $0.7 million.

•Amortization of intangible assets was $7.4 million, an increase of $1.1 million.

•Other noninterest expense was $7.1 million, a decrease of $4.9 million, due primarily to decreases in provision for off balance sheet credit exposures of $1.4 million, and merger-related costs.

Please refer to Appendix E for additional detail on merger charges*.

Non-performing loans totaled $135.8 million, or 0.76% of total loans, at December 31, 2024 compared to $124.5 million, or 0.70% of total loans, at the end of the prior quarter. The increase was driven primarily by commercial real estate office loans, partially offset by charge-off activity.

During the fourth quarter 2024, the Company recorded total net charge-offs of $31.7 million, or 0.71% of average total loans, compared to $5.1 million, or 0.12% in the prior quarter. The increase in total net charge-offs was due primarily to partial charge-offs of the purchased credit deteriorated (“PCD”) loans acquired from Cambridge.

The Company recorded a provision for loan losses totaling $6.8 million in the quarter.

The allowance for loan losses was $229.0 million at December 31, 2024, or 1.29% of total loans, compared to $253.8 million, or 1.43% of total loans, at September 30, 2024.

The Company announced an investment portfolio repositioning was underway in 2025 whereby approximately $1.2 billion of low yielding available-for-sale securities would be sold and reinvested at current market rates. The transaction is expected to be completed by the middle of the first quarter of 2025, and result in an after-tax non-operating loss of approximately $200 million. The after-tax losses are already reflected in shareholders’ equity.

The Company’s Board of Directors declared a quarterly cash dividend of $0.12 per common share. The dividend will be payable on March 14, 2025 to shareholders of record as of the close of business on March 3, 2025.

The Company repurchased 908,425 shares of common stock during the fourth quarter at a weighted average price of $17.41, for an aggregate purchase price of $15.8 million.

A conference call and webcast covering Eastern’s fourth quarter 2024 earnings will be held on Friday, January 24, 2025 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (800) 549-8228 from within the U.S. and reference conference ID 65981. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website at investor.easternbank.com. A presentation providing additional information for the quarter is also available at investor.easternbank.com. A replay of the webcast will be available on this site.

Eastern Bankshares, Inc. is the holding company for Eastern Bank. Founded in 1818, Eastern Bank is Greater Boston’s leading local bank with more than 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, Rhode Island and Connecticut. As of December 31, 2024, Eastern Bank had approximately $25.6 billion in assets. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes including through its Cambridge Trust Wealth Management division, the largest bank-owned independent investment advisor in Massachusetts with approximately $8.3 billion in assets under management, and takes pride in its outspoken advocacy and community support that includes more than $240 million in charitable giving since 1994. An inclusive company, Eastern is comprised of deeply committed professionals who value relationships with their customers, colleagues and communities. For investor information, visit investor.easternbank.com.

Eastern Bankshares, Inc.

a.hersom@easternbank.com

860-707-4432

Eastern Bank

a.goodman@easternbank.com

781-598-7847

*Denotes a non-GAAP financial measure used in the press release.

A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).

The Company presents non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company’s core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures. Except as otherwise indicated, these non-GAAP financial measures presented in this press release exclude discontinued operations.

There are items in the Company’s financial statements that impact its financial results, but which management believes are unrelated to the Company’s core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders’ equity, operating return on average tangible shareholders’ equity (discussed further below), and the operating efficiency ratio. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) other real estate owned (“OREO”) gains, (vii) merger and acquisition expenses, including the “day-2” provision for allowance for loan losses for non-PCD acquired loans, (viii) the non-cash pension settlement charge recognized related to the defined benefit plan, (ix) certain discrete tax items, and (x) net income from discontinued operations. Return on average tangible shareholders’ equity, operating return on average tangible shareholders’ equity as well as the operating efficiency ratio also further exclude the effect of amortization of intangible assets. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company’s outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense are not provided.

Management also presents tangible assets, tangible shareholders’ equity, average tangible shareholders’ equity, tangible book value per share, the ratio of tangible shareholders’ equity to tangible assets, return on average tangible shareholders’ equity, and operating return on average shareholders’ equity (discussed further above), each of which excludes the impact of goodwill and other intangible assets and in the case of tangible net income (loss), return on average tangible shareholders’ equity and operating return on average tangible shareholders’ equity excludes the after-tax impact of amortization of intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company’s performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company includes the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

In the third quarter of 2024, we changed our (loss) return on average tangible shareholders' equity and operating return on average tangible shareholders’ equity computations to utilize tangible net (loss) income from continuing operations and tangible operating net income, respectively, in the numerators of the computations. Tangible net (loss) income from continuing operations excludes the amortization of intangible assets and the related tax effect and tangible operating net income excludes, in addition to the adjustments to derive operating net income, the amortization of intangible assets and related tax effect. In addition, in the third quarter of 2024, we changed the computation of our operating efficiency ratio to exclude, in addition to the adjustments made to operating net income, the amortization of intangible assets.

Management believes the changes to such ratios result in a more meaningful measure of our financial performance and such measures are used by management when analyzing corporate performance.

These non-GAAP financial measures presented in this press release should not be considered an alternative or substitute for financial results or measures determined in accordance with GAAP or as an indication of the Company’s cash flows from operating activities, a measure of its liquidity position or an indication of funds available for its cash needs. An item which management considers to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period. In addition, management’s methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other banking companies to calculate the same or similar performance measures, and accordingly, the Company’s reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other banking companies. Please refer to Appendices A-E for reconciliations of the Company's GAAP financial measures to the non-GAAP financial measures in this press release.

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

Certain factors that could cause actual results to differ materially from expected results include; adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses; increased competitive pressures; changes in interest rates and resulting changes in competitor or customer behavior, mix or costs of sources of funding, and deposit amounts and composition; risks associated with the Company’s implementation of the merger, including that revenue or expense synergies may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that Eastern’s business may not perform as expected in the years following the merger; that Eastern’s expansion of services or capabilities resulting from the merger may be more challenging than anticipated; and disruptions arising from transitions in management personnel; adverse national or regional economic conditions or conditions within the securities markets or banking sector; legislative and regulatory changes and related compliance costs that could adversely affect the business in which the Company and its subsidiaries, including Eastern Bank, are engaged, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including inflationary or recessionary pressures, interest rate sensitivity, liquidity constraints, increased borrowing and funding costs, and fluctuations due to actual or anticipated changes to federal tax laws; the realizability of deferred tax assets; the Company’s ability to successfully implement its risk mitigation strategies; asset and credit quality deterioration, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; operational risks such as cybersecurity incidents, natural disasters, and pandemics and the failure of the Company to execute its planned share repurchases. For further discussion of such factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov.

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

ASSET QUALITY - NON-PERFORMING ASSETS (1)

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE-OFFS (RECOVERIES)

			Three Months Ended																		Twelve Months Ended
			Dec 31, 2024			Sep 30, 2024			Jun 30, 2024			Mar 31, 2024			Dec 31, 2023						Dec 31, 2024			Dec 31, 2023
(Unaudited, dollars in thousands)
Net interest income (GAAP)			$	179,193		$	169,855		$	128,649		$	129,900		$	133,307					$	607,597		$	550,409
Add:
Tax-equivalent adjustment (non-GAAP) (1)			4,792			4,792			4,553			4,483			4,483						18,620			17,181
Fully-taxable equivalent net interest income (non-GAAP)			$	183,985		$	174,647		$	133,202		$	134,383		$	137,790					$	626,217		$	567,590
Noninterest income (GAAP)			$	37,349		$	33,528		$	25,348		$	27,692		$	26,739					$	123,917		$	(237,753)
Less:
Income from investments held in rabbi trusts			5			3,591			1,761			4,318			4,969						9,675			9,305
Losses on sales of securities available for sale, net			(9,241)			—			(7,557)			—			—						(16,798)			(333,170)
Gain on sale of other equity investment			9,291			—			—			—			—						9,291			—
Gains (losses) on sales of other assets			352			(2,970)			(2)			—			—						(2,620)			(3)
Noninterest income on an operating basis (non-GAAP)			$	36,942		$	32,907		$	31,146		$	23,374		$	21,770					$	124,369		$	86,115
Noninterest expense (GAAP)			$	137,544		$	159,753		$	109,869		$	101,202		$	121,029					$	508,368		$	418,602
Less:
Rabbi trust employee benefit expense			239			1,326			930			1,746			1,740						4,241			3,742
Merger and acquisition expenses			3,587			27,577			3,684			1,816			1,865						36,664			5,495
Noninterest expense on an operating basis (non-GAAP)			$	133,718		$	130,850		$	105,255		$	97,640		$	117,424					$	467,463		$	409,365
Less: Amortization of intangible assets			$	7,351		$	6,210		$	504		$	504		$	505					$	14,569		$	1,804
Noninterest expense for calculating the operating efficiency ratio (non-GAAP) (2)			$	126,367		$	124,640		$	104,751		$	97,136		$	116,919					$	452,894		$	407,561
Total revenue (GAAP)			$	216,542		$	203,383		$	153,997		$	157,592		$	160,046					$	731,514		$	312,656
Total operating revenue (non-GAAP)			$	220,927		$	207,554		$	164,348		$	157,757		$	159,560					$	750,586		$	653,705
Efficiency ratio (GAAP)			63.5		%	78.5		%	71.3		%	64.2		%	75.6		%				69.5		%	133.9		%
Operating efficiency ratio (non-GAAP) (2)			57.2		%	60.1		%	63.7		%	61.6		%	73.3		%				60.3		%	62.3		%
(1) Interest income on tax-exempt loans and investment securities has been adjusted to a FTE basis using a marginal tax rate of 22.0%, 21.8%, 21.7%, 21.7%, and 21.9% for the three months ended December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024, and December 31, 2023, respectively, and of 21.8% for the twelve months ended December 31, 2024 and December 31, 2023.
(2) The operating efficiency ratio excludes, in addition to the adjustments made to operating net income, the amortization of intangible assets. This measure is used by the Company when analyzing corporate performance and the Company believes that investors may find it useful.