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Eastern Bankshares(EBC) - 2024 Q3 - Earnings Call Transcript
EBCEastern Bankshares(EBC)2024-10-25 14:10
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Financial Data and Key Metrics Changes - The company reported a GAAP net loss of 6millioninQ32024duetonon−recurringmergeritems,whileoperatingnetincomewas6 million in Q3 2024 due to non-recurring merger items, while operating net income was 49.7 million or 0.25pershare,a360.25 per share, a 36% increase from the prior quarter [15][16] - The net interest margin increased by 33 basis points to 2.97% during the quarter [15] - Tangible book value per share ended the quarter at 12.17 [15] Business Line Data and Key Metrics Changes - Wealth revenues more than doubled to 14.9millioninQ32024,drivenbyanincreaseinassetsundermanagementfromthemerger[15][18]−Thecompanyaddedapproximately14.9 million in Q3 2024, driven by an increase in assets under management from the merger [15][18] - The company added approximately 3.9 billion in loans and 3.7billionindepositsfromtheCambridgemerger[19]−Non−interestincometotaled3.7 billion in deposits from the Cambridge merger [19] - Non-interest income totaled 33.5 million in Q3 2024, with a notable increase in wealth management fees [18] Market Data and Key Metrics Changes - The company is positioned as the largest community bank in the Greater Boston area, with the fourth largest deposit market share [7] - The combined wealth management business has over 8billioninassetsundermanagement,makingitthelargestbank−ownedinvestmentadviserinMassachusetts[7]CompanyStrategyandDevelopmentDirection−ThemergerwithCambridgeTrustisseenasatransformationalmoment,enhancingthecompany′scompetitivepositioninthelocalmarket[3][4]−ThecompanyaimstofocusonorganicgrowthwhilecapitalizingontheintegrationoftheCambridgemerger[53]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutthelocaleconomyandthepotentialforgrowthmovinginto2025,despiteexpectingflatloanbalancesinQ42024[19][24]−Thecompanyanticipatesnetinterestincomeof8 billion in assets under management, making it the largest bank-owned investment adviser in Massachusetts [7] Company Strategy and Development Direction - The merger with Cambridge Trust is seen as a transformational moment, enhancing the company's competitive position in the local market [3][4] - The company aims to focus on organic growth while capitalizing on the integration of the Cambridge merger [53] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the local economy and the potential for growth moving into 2025, despite expecting flat loan balances in Q4 2024 [19][24] - The company anticipates net interest income of 175 million to 180millionforQ4,withanetinterestmarginbetween3180 million for Q4, with a net interest margin between 3% and 3.05% [24] Other Important Information - The company was named the number one SBA lender in Massachusetts for the 16th consecutive year and recognized for its charitable contributions [5] - A 9% dividend increase to 0.12 per share was approved by the Board [10] Q&A Session Summary Question: Can you share the size and composition of the loan pipeline? - The commercial loan pipeline is at 438million,upfrom438 million, up from 228 million at the end of June, indicating a positive trend [27] Question: What is the breakdown of non-performing loans? - The increase in non-performing loans was primarily due to office loans from the Cambridge portfolio, with a thorough review conducted on these loans [32] Question: Are there additional opportunities for cost savings? - There may be opportunities for further savings, but clarity will come after the budget cycle is completed [35] Question: What are the thoughts on capital and buybacks? - The company remains active in buybacks and is considering securities restructuring, with discussions ongoing [36] Question: How will cash balances be managed going forward? - Cash balances are expected to be utilized for organic loan growth and potential security purchases [38] Question: What is the outlook for the tax rate next year? - The expected tax rate for next year is projected to be in the range of 22% to 23% [51] Question: What is the company's stance on future M&A? - The primary focus remains on organic growth, but the company is open to future M&A opportunities if they arise [53]