Eastern Bankshares(US:EBC)2022-10-28 19:26Financial Data and Key Metrics Changes - Operating net income in Q3 2022 was 49% higher than the comparable prior year quarter, driven by a record quarterly revenue increase of 34% year-over-year [7] - Net income for the quarter was $54.8 million or $0.33 per diluted share, while operating net income was $55.7 million or $0.34 per diluted share [15] - Net interest income rose 10% from the prior quarter to $152.2 million, with net interest margin increasing by 24 basis points from 2.63% to 2.87% [21] - Shareholder equity decreased by $303 million due to lower AOCI and share purchases, partially offset by an increase in retained earnings [20] Business Line Data and Key Metrics Changes - Loan outstandings increased by 16% overall on an annualized basis, with commercial loans up 16%, organic residential mortgage growth at 10%, and consumer loans up 6% [9][16] - Non-interest income on an operating basis was $45.3 million, with insurance revenues at $23.8 million, up 8% from the same quarter of 2021 [23] Market Data and Key Metrics Changes - Deposits decreased by $430 million in the quarter, while borrowings increased by $380 million [17] - The securities portfolio decreased by $700 million primarily due to reductions in market value [17] Company Strategy and Development Direction - The company is focused on expanding its commercial lending teams and has seen record commercial loan originations [11] - Significant investments in technology are aimed at enhancing digital capabilities and improving process workflows to reduce expenses [12] - The company plans to discontinue its flow arrangement for residential mortgages due to a challenging liquidity outlook [32] Management's Comments on Operating Environment and Future Outlook - The management expects continued increases in rates to improve net interest income for Q4 and into 2023, projecting net interest income for 2022 in the range of $570 million to $580 million [29] - The company anticipates slower loan growth in 2023 compared to 2022 due to a challenging environment [31] - Management remains confident in the long-term growth potential in Eastern Massachusetts and Southern New Hampshire despite expected challenges in 2023 [42] Other Important Information - The company repurchased 1.5 million shares at an average price of $19.52 during the third quarter [16] - A non-cash charge related to pension settlement accounting is expected in Q4, estimated to be in the range of $10 million to $15 million [39][41] Q&A Session Summary Question: Loan pipeline and mix - Management indicated that the loan pipeline is about the same size as it was at the end of Q2, with expectations for a good quarter for closings in Q4 [45][46] Question: Securities portfolio yield decrease - The decrease was attributed to premium amortization due to payoffs of the securities [48] Question: Termination of relationship with Embrace Home Loans - The decision was based on a change in liquidity outlook, leading to a reduced appetite for the program [53] Question: Margin and credit trends - Management noted that while credit trends remain strong, the provision for loan losses was primarily due to loan growth [58] Question: Expense guidance for 2023 - The primary increase in expenses is expected in salaries and benefits, with modest growth in other categories [60][61] Question: Future share repurchase plans - Future repurchases will depend on market conditions and capital liquidity considerations [64][66]