Eastern Bankshares(US:EBC)2026-01-23 15:02Financial Data and Key Metrics Changes - In Q4 2025, the company reported net income of $99.5 million, or $0.46 per diluted share, with operating earnings increasing by 28% to $94.7 million [12][13] - Operating return on assets (ROA) improved to 130 basis points, up 24 basis points year-over-year, while return on average tangible common equity rose to 13.8% from 11.3% [14] - The net interest income for Q4 was $237.4 million, an increase of $37.2 million from Q3, driven by margin improvement [14][15] Business Line Data and Key Metrics Changes - Total loans grew by $1 billion, or 5.6%, for the full year, primarily due to strong commercial lending results [9] - Wealth assets reached a record high of $10.1 billion at year-end, including $9.6 billion in assets under management, driven by market appreciation and positive net flows [9][16] - Non-interest income for Q4 was $46.1 million, an increase of $4.8 million from Q3, with mortgage banking income rising due to the addition of HarborOne's operations [15][16] Market Data and Key Metrics Changes - The company ended 2025 with total deposits of $25.5 billion, an increase of $4.4 billion, or 21% from Q3, largely due to the addition of HarborOne deposits [17] - Total loans increased by $4.7 billion, or 25% linked quarter, primarily due to the addition of HarborOne loans [19] - The company anticipates loan growth for 2026 to be in the range of 3%-5% and deposit growth of 1%-2% [29] Company Strategy and Development Direction - The company is focused on organic growth and returning capital to shareholders, stating it will not pursue any acquisitions in the foreseeable future [5][10] - Strategic investments in hiring talent have been emphasized as a key driver of growth, enhancing the company's competitive position [8] - The merger with HarborOne is seen as a significant milestone, strengthening the company's presence in key markets [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture growth opportunities in larger markets, with a healthy balance sheet and strong capital ratios [7][10] - There are no significant concerns regarding credit metrics or trends in the marketplace, with management maintaining a conservative approach to provisions [40][41] - The company expects to manage its CET1 ratio towards the median of its peers, currently targeting around 12% [11][29] Other Important Information - The company repurchased 3.1 million shares for $55.4 million in Q4, representing 26% of the total authorization announced in October [10][21] - The allowance for loan losses increased to $332 million, or 144 basis points of total loans, reflecting the initial allowance established for acquired HarborOne loans [23] - The company anticipates a non-cash expense of approximately $8 million-$9 million per quarter related to the amortization of core deposit intangibles from the HarborOne merger [28] Q&A Session Summary Question: Margin outlook and deposit growth - Management indicated that the core margin is expected to remain relatively flat in the near term as the company focuses on growing deposits [32] Question: Provision outlook and credit landscape - The provision for 2026 is expected to be $30 million-$40 million, with management not seeing any material shifts in credit metrics [39][40] Question: Non-performing loans and resolution plans - Non-performing loans were primarily driven by HarborOne, with management confident in their ability to resolve these loans without the need for a bulk portfolio sale [50][52] Question: Fee income potential from mortgage banking - The company sees potential upside in fee income from HarborOne's mortgage banking business, particularly if interest rates decline [88] Question: Capital return strategy - Management reiterated their commitment to returning capital to shareholders through buybacks and dividends, while managing the CET1 ratio down to 12% [90][78]