Eastern Bankshares(US:EBC)2024-11-07 21:34Financial Performance - Net loss from continuing operations for Q3 2024 was $6.2 million, compared to net income of $63.5 million in Q3 2023, a decrease of 109.8%[229] - Operating net income for Q3 2024 was $49.7 million, down 4.6% from $52.1 million in Q3 2023[229] - Net income from continuing operations for the three months ended September 30, 2024, was $(6,188) thousand, compared to $63,464 thousand for the same period in 2023[245] - Non-GAAP operating net income for the three months ended September 30, 2024, was $49,665 thousand, down from $52,085 thousand in 2023[245] - Total revenue from continuing operations (GAAP) for the three months ended September 30, 2024, was $203,383 thousand, up from $156,362 thousand in 2023, reflecting a 30.1% increase[247] - Net interest income (GAAP) for the three months ended September 30, 2024, increased to $169,855 thousand from $137,205 thousand in 2023, representing a 23.8% increase[247] - Noninterest income (GAAP) for the three months ended September 30, 2024, was $33,528 thousand, compared to $19,157 thousand in 2023, marking a significant increase[247] - The company reported a net loss of $6.2 million for the three months ended September 30, 2024, compared to a net income of $63.5 million for the same period in 2023[288] Assets and Liabilities - Total assets increased to $25.5 billion as of September 30, 2024, up from $21.1 billion at December 31, 2023, representing a growth of 20.8%[228] - Total loans, net of allowance for loan losses, increased by $3,702,695 thousand, or 26.8%, to $17,502,062 thousand as of September 30, 2024, compared to $13,799,367 thousand at December 31, 2023[251] - Total deposits grew by $3,620,637 thousand, or 20.6%, to $21,216,854 thousand as of September 30, 2024, from $17,596,217 thousand at December 31, 2023[251] - Cash and cash equivalents rose by $196.4 million, or 28.3%, to $889.5 million at September 30, 2024, from $693.1 million at December 31, 2023[252] - Total interest-bearing liabilities increased to $15,281,179 thousand, compared to $12,937,529 thousand, reflecting a growth of 18.0%[299] Loan Portfolio - Total gross loans increased by $4.1 billion, or 29.3%, to $18.1 billion as of September 30, 2024, compared to $14.0 billion at December 31, 2023[261] - The delinquency rate of the total loan portfolio rose to 0.54% at September 30, 2024, up from 0.41% at December 31, 2023[263] - Non-performing loans (NPLs) increased by $71.9 million, or 136.9%, to $124.5 million at September 30, 2024, from $52.6 million at December 31, 2023[264] - The percentage of NPLs relative to total loans increased to 0.70% at September 30, 2024, compared to 0.38% at December 31, 2023[264] - The allowance for loan losses increased by $104.8 million, or 70.4%, to $253.8 million, representing 1.43% of total loans as of September 30, 2024, up from 1.07% at December 31, 2023[272] Merger and Acquisition - The merger with Cambridge Bancorp was completed on July 12, 2024, with a transaction value of approximately $580.6 million based on the exchange of 38.9 million shares[228] - The wealth management divisions now operate under the "Cambridge Trust Wealth Management" brand following the merger[228] - The company recorded a "day-2" provision of $40.9 million related to non-PCD loans from the merger with Cambridge, which closed on July 12, 2024[305] - The company recorded an allowance for acquired PCD loans of $55.8 million in connection with the merger with Cambridge[272] Noninterest Expenses - The company experienced higher noninterest expenses for both Q3 and the nine months ended September 30, 2024, compared to the same periods in 2023[229] - Noninterest expense rose by $58.0 million, or 57.0%, to $159.8 million for the three months ended September 30, 2024, compared to $101.7 million for the same period in 2023[288] - Salaries and employee benefits increased by $32.9 million, or 54.0%, primarily due to an increase in the number of employees from the merger with Cambridge[313] - Data processing expenses rose by $6.1 million, or 45.1%, primarily due to increased cybersecurity software expenses[313] Interest Rates and Economic Outlook - The Federal Open Market Committee lowered the federal funds rate target range to 4.50% to 4.75% as of November 7, 2024, down from 5.25% to 5.50% in July 2023[240] - The company anticipates a slight decline in U.S. GDP growth in 2025, with a forecasted unemployment rate increase impacting the allowance for loan losses[306] - The company expects to adjust the allowance for loan losses based on economic conditions, with potential increases or decreases depending on GDP growth scenarios[306] Regulatory Capital and Liquidity - The company maintained a total regulatory capital ratio of 16.58% as of September 30, 2024, down from 19.55% as of December 31, 2023[333] - The common equity Tier 1 capital ratio was 15.52% as of September 30, 2024, compared to 18.55% as of December 31, 2023[333] - As of September 30, 2024, the company had total liquidity sources of $6.2 billion, providing 92% coverage of all customer uninsured and uncollateralized deposits totaling $6.7 billion[329]