Q1 Earnings Presentation
April 25, 2024
On the call
Presenter | Topic | |
Bob Rivers | Opening Remarks | |
Chief Executive Officer & Chair of the Board | ||
Jim Fitzgerald | Financials | |
Chief Administrative Officer, Chief Financial | ||
Officer & Treasurer |
2
Q1 2024 financial highlights
Key Metrics
$38.6 million
Net income
Highlights
Income Statement
- Net income of $38.6 million, or $0.24 per diluted share. Operating net income* of $38.1 million, or $0.23 per diluted share
$38.1 million
Operating net income*
$0.24 | $0.23 |
Diluted EPS | Diluted operating EPS* |
2.68% | 1.66% |
NIM*1 | Total deposit cost1 |
0.27% | 0.21% |
NPAs / total assets | NCOs / avg. loans1 |
$0.11 per share
Dividend declared
$16.72 $13.51
BV/ShareTBV/Share*
Balance Sheet
- Deposits up $71 million, or 1.6%1. Core deposits up $121 million, or 2.8%1, which was partially offset by a $50 million decline in brokered deposits
- Loans increased $115 million, or 3.3%1
Net Interest Margin/Net Interest Income
- Net interest margin on a FTE basis*1 was stable at 2.68%
- Net interest income was $129.9 million, a decrease of $3.4 million from prior quarter
Expense
- Noninterest expense of $101.2 million. Operating noninterest expense* of $97.6 million
Asset Quality
- Modest increase in non-performing loans ("NPLs") from $52.6 million to $57.2 million or from 0.38% to 0.41% of total loans
- Net charge-offs ("NCOs")1 of 0.21% of average total loans, compared to 0.32% in the prior quarter
- Continued resolution of problem loans. 1 NPL resolved and collateral of 2 NPLs
under contract for sale. 1 new NPL in Q1 2024, the collateral of which is being | |
marketed for sale | 3 |
*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on an annualized basis.
Balance sheet
Core deposits1
$17.9 $17.5 $17.0 $17.5 $17.7
3/23 | 6/23 | 9/23 | 12/23 | 3/24 |
Borrowings & brokered deposits
$1.7
$1.1 $1.1
$0.1 $0.1
3/23 | 6/23 | 9/23 | 12/23 | 3/24 |
Total loans
$13.7 $14.0 $13.9 $14.0 $14.1
3/23 | 6/23 | 9/23 | 12/23 | 3/24 |
Cash & investments
$7.3
$5.9 $5.3 $5.6 $5.5
3/23 | 6/23 | 9/23 | 12/23 | 3/24 |
- Core deposit1 growth of $120.5 million, or 2.8%2 from the prior quarter
- Loan growth of $115.3 million, or 3.3%2 from the prior quarter
- The company had no brokered deposits at March 31, 2024. Borrowings and brokered deposits down $45.5 million to under 0.5% of total assets
- Cash and equivalents increased $45.9 million
- Investments decreased $125.8 million, driven by principal runoff, as well as a decrease in the market value of available for sale securities
- Loan-to-depositratio of 80%
4
$ in billions. 1Core deposits are defined as total deposits less brokered deposits 2Presented on an annualized basis.
Capital
Common equity tier 1 ratio1 | Tier 1 capital ratio1 | |||||||
18.6% | 18.5% | 18.6% | 18.5% | |||||
15.8% | 15.7% | 16.0% | 15.8% | 15.7% | 16.0% |
6.5% | 8.0% | ||||||||||||||||||
3/23 | 6/23 | 9/23 | 12/23 | 3/24 | |||||||||||||||
3/23 | 6/23 | 9/23 | 12/23 | 3/24 | |||||||||||||||
Total capital ratio1 | Tangible common equity ratio* | ||||||||||||||||||
19.6% | 19.5% | 11.7% | 11.6% | ||||||||||||||||
16.8% | 16.7% | 17.0% | |||||||||||||||||
8.7% | 8.9% | 8.7% | |||||||||||||||||
10.0% | |||||||||||||||||||
3/23 | 6/23 | 9/23 | 12/23 | 3/24 | 3/23 | 6/23 | 9/23 | 12/23 | 3/24 | ||||||||||
Capital ratio | Well-capitalized regulatory minimum | ||||||||||||||||||
- Strong capital position provides significant support to the Company's growth and strategic initiatives as well as capital management strategies, including share repurchases
- Capital ratios are stable from the prior quarter. CET1 ratio and TCE ratio* of 18.5% and 11.6%, respectively
5
*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Regulatory capital ratios as of March 31, 2024 are preliminary estimates.
Income statement
$ in millions, except per share amounts | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | • | Net income was $38.6 | ||||||
Net interest income | $ | 129.9 | $ | 133.3 | $ | 137.2 | $ | 141.6 | $ | 138.3 | |||
million and operating net | |||||||||||||
Noninterest income (loss) | 27.7 | 26.7 | 19.2 | 26.2 | (309.9) | ||||||||
income* was $38.1 million | |||||||||||||
Total revenue | 157.6 | 160.0 | 156.4 | 167.8 | (171.6) | • | |||||||
Net interest income was | |||||||||||||
Noninterest expense | 101.2 | 121.0 | 101.7 | 99.9 | 95.9 | ||||||||
Pre-tax,pre-provision income (loss) | 56.4 | 39.0 | 54.6 | 67.9 | (267.4) | $129.9 million, $3.4 million | |||||||
Provision for allowance for loan losses | 7.5 | 5.2 | 7.3 | 7.5 | 0.0 | below prior quarter | |||||||
Pre-tax income (loss) | 48.9 | 33.8 | 47.3 | 60.4 | (267.5) | • | Noninterest income was | ||||||
Income tax expense (benefit) | 10.3 | 2.3 | (16.2) | 16.0 | (65.4) | ||||||||
$27.7 million and $23.4 | |||||||||||||
Net income (loss) from continuing operations | 38.6 | 31.5 | 63.5 | 44.4 | (202.1) | million on an operating* | |||||||
Net income (loss) from discontinued operations | - | 287.0 | (4.4) | 4.2 | 8.0 | basis | |||||||
Net income (loss) | $ | 38.6 | $ | 318.5 | $ | 59.1 | $ | 48.7 | $ | (194.1) | • | Noninterest expense was | |
Operating net income* | $ | 38.1 | $ | 16.9 | $ | 52.1 | $ | 41.1 | $ | 53.1 | |||
EPS | $ | 0.24 | $ | 1.95 | $ | 0.36 | $ | 0.30 | $ | (1.20) | $101.2 million and $97.6 | ||
million on an operating* | |||||||||||||
Continuing operations | $ | 0.24 | $ | 0.19 | $ | 0.39 | $ | 0.27 | $ | (1.25) | |||
basis | |||||||||||||
Discontinued operations | $ | - | $ | 1.76 | $ | (0.03) | $ | 0.03 | $ | 0.05 | • | Provision for loan losses | |
Operating EPS* | $ | 0.23 | $ | 0.10 | $ | 0.32 | $ | 0.25 | $ | 0.33 | |||
ROA 1 | 0.74 % | 0.59 % | 1.18 % | 0.81 % | (3.64)% | was $7.5 million | |||||||
Operating ROA*1 | 0.72 % | 0.31 % | 0.97 % | 0.75 % | 0.95 % | ||||||||
Efficiency ratio | 64.22 % | 75.62 | % | 65.07 | % | 59.56 | % | (55.90)% | |||||
Operating efficiency ratio* | 61.89 | % | 73.59 | % | 60.83 | % | 58.47 | % | 57.97 | % | 6 | ||
*Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on an annualized basis.
Net interest margin trends
Earning assets
Q1 2024 | Q4 2023 | Change | |||||||||||||||
Avg. Balance | Yield1 | Avg. Balance | Yield1 | Avg. Balance | Yield1 | ||||||||||||
Commercial loans | $ 10,024 | 5.09 % | $ 9,978 | 5.01 % | $ | 46 | 0.08 % | ||||||||||
Residential loans | 2,571 | 3.75 | % | 2,573 | 3.63 | % | (2) | 0.12 | % | ||||||||
Consumer loans | 1,420 | 6.58 | % | 1,411 | 6.42 | % | 9 | 0.16 | % | ||||||||
Total loans | 14,015 | 5.00 | % | 13,963 | 4.90 | % | 52 | 0.10 | % | ||||||||
Securities | 5,575 | 1.82 | % | 5,671 | 1.79 | % | (96) | 0.03 | % | ||||||||
Cash | 577 | 5.46 | % | 720 | 5.51 | % | (143) | (0.05)% | |||||||||
Total I.E. assets | 20,166 | 4.13 | % | 20,354 | 4.06 | % | (188) | 0.07 | % | ||||||||
Funding sources
QoQ changes in FTE net interest income*
$137.8 | $1.6 | $2.7 | $134.4 | ||||||||||||
$(2.6) | $(5.1) | ||||||||||||||
Q4 | Loans | Inv. & Deposits Borrowings Q1 2024 |
2023 | Cash |
FTE net interest income and margin trend*
Q1 2024 | Q4 2023 | |||||||||
Avg. Balance | Cost | Avg. Balance | Cost | |||||||
Savings | $ 1,297 | 0.01 | % | $ 1,352 | 0.01 | % | ||||
DDAWI | 3,745 | 0.88 % | 3,753 | 0.75 % | ||||||
MMDA | 4,742 | 2.59 % | 4,736 | 2.46 % | ||||||
CD | 2,785 | 4.87 % | 2,656 | 4.61 | % | |||||
Total I.B. deposits | 12,569 | 2.32 | % | 12,498 | 2.14 | % | ||||
Borrowings | 51 | 2.00 % | 242 | 4.83 % | ||||||
Total I.B. liab. | 12,620 | 2.32 | % | 12,740 | 2.19 | % | ||||
DDA | 4,989 | 5,210 | ||||||||
Total deposits | 17,558 | 1.66 | % | 17,708 | 1.51 | % |
Change
Avg. Balance | Cost |
$ (55) - %
-
0.13 %
6 0.13 %
- 0.26 %
- 0.18 %
- (2.83)%
- 0.13 %
- 0.15 %
$142.8 | $145.5 | $141.6 | $137.8 | $134.4 | ||||||
2.80% | 2.77% | |||||||||
2.66% | 2.69% | 2.68% | ||||||||
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||
NII - FTE* | NIM - FTE* | ||||||
7
$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Presented on a fully tax equivalent ("FTE") basis.
Noninterest income1
Noninterest income
$27.7 | ||||||||||||||||||||
$26.2 | $26.7 | |||||||||||||||||||
$23.3 | $23.2 | $23.4 | ||||||||||||||||||
$21.8 | ||||||||||||||||||||
$20.5 | $19.2 | $20.7 | ||||||||||||||||||
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||
Noninterest income | Operating noninterest income* | ||||||
- Total noninterest income was $27.7 million for the first quarter
- Total operating noninterest income* was $23.4 million, an increase of $1.6 million from the prior quarter
- The increase in operating noninterest income was driven primarily by an increase in loan- level interest rate swap income of $1.2 million
Q1 2024 | Q4 2023 | Q1 2023 | QoQ | YoY | ||||||
Service charges on deposit accounts | 7.5 | 7.5 | 6.5 | - % | 15 | % | ||||
Trust and investment advisory fees | 6.5 | 6.1 | 5.8 | 7 | % | 12 | % | |||
Debit card processing fees | 3.2 | 3.4 | 3.2 | (6)% | - % | |||||
Interest rate swap income (losses) | 0.7 | (0.6) | (0.4) | NM | NM | |||||
Income from investments held in rabbi trusts | 4.3 | 5.0 | 2.9 | (14)% | 48 | % | ||||
Other1 | 5.4 | 5.3 | 5.5 | 2 | % | (2)% | ||||
Total noninterest income | $ | 27.7 | $ | 26.7 | $ | 23.3 | 4 | % | 19 | % |
Total operating noninterest income* | $ | 23.4 | $ | 21.8 | $ | 20.5 | 7 | % | 14 | % |
8 |
$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Excludes discontinued operations and gains/losses on AFS securities.
Noninterest expense1
Noninterest expense
$121.0 | ||||||||||||||||||||
$117.4 | ||||||||||||||||||||
$95.9 | $99.9 | $98.6 | $101.7 | $98.7 | $101.2 | $97.6 | ||||||||||||||
$94.6 | ||||||||||||||||||||
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||
Noninterest expense | Operating noninterest expense* | |||||||||||||
Q1 2024 | Q4 2023 | Q1 2023 | QoQ | YoY | ||||||||||
Salaries and employee benefits | 64.5 | 67.8 | 62.2 | (5)% | 4 | % | ||||||||
Data processing | 16.5 | 16.8 | 12.3 | (1)% | 34 | % | ||||||||
Office occupancy and equipment | 9.2 | 9.2 | 9.1 | - % | 1 | % | ||||||||
Professional services | 3.5 | 4.1 | 3.1 | (15)% | 12 | % | ||||||||
FDIC Insurance | 2.3 | 13.5 | 2.5 | (83)% | (10)% | |||||||||
All other1 | 5.2 | 9.7 | 6.6 | (46)% | (21)% | |||||||||
Total noninterest expense | $ | 101.2 | $ | 121.1 | $ | 95.8 | (16)% | 6 | % | |||||
Total operating noninterest expense* | $ | 97.6 | $ | 117.4 | $ | 94.6 | (16.9)% | 3 | % | |||||
- Total noninterest expense was $101.2 million, a decrease of $19.8 million from the prior quarter
- Operating noninterest expense was $97.6 million, a decrease of $19.8 million from the prior quarter
- $11.2 million decrease in FDIC insurance. Prior quarter included the special assessment of $10.8 million
- $1.6 million decrease in the operating portion of salaries and employee benefits
- A decrease in marketing expense of $1.2 million
- One-timefavorable items in Q1 2024 include a reduction in incentive compensation and a reduction in provision for off-balance-sheetcommitments totaling approximately $3.2 million
9
$ in millions. *Non-GAAP Financial Measure. Please refer to Appendices A-D for the applicable reconciliation. 1Excludes Discontinued Operations.
Deposits
- Core deposits increased $121 million, or 2.8%2 from the prior quarter. Total deposits increased $71 million. The company had no brokered deposits as of March 31, 2024
- 49% of total deposits are in checking products, down from 51% in the prior quarter
- Total deposit cost2 was 1.66% in the first quarter, compared to 1.51% in the prior quarter
High quality deposit portfolio as of March 31, 2024
16.5% | ||
DDA | 28.0% | |
DDAWI | 7.3% | |
MMDA | ||
Sav | ||
CD | 27.0% | 21.2% |
Funding betas & cost
Cycle beta (1) | Total I.B. liabilities cost | |
(includes borrowings)
2.15% 2.22% 2.13% 2.23% 2.27% 2.31% 2.37%
1.63% 1.80% 1.78% 1.77% 1.88% 1.95%
34% | 36% | 34% | 33% | 35% | 35% | 39% | 40% | 39% | 41% | 41% | 42% | 43% |
Mar- Apr- May- Jun- | Jul- | Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- | ||||||||||
23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 24 | 24 | 24 |
Cost of deposits2
Interest-bearing deposit cost | Total deposit cost | |||||
2.14% | 2.32% | |||||
1.89% | ||||||
1.71% | ||||||
1.33% | ||||||
1.33% | 1.51% | 1.66% | ||||
1.22% | ||||||
0.92% | ||||||
Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 |
1Cycle beta calculated as the change in monthly average total interest-bearing liabilities cost in each respective month, divided by the respective change in the average monthly upper bound | 10 |
of the Federal Funds target range during the same period. 2Presented on an annualized basis. |
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Disclaimer
Eastern Bankshares Inc. published this content on 24 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2024 14:56:10 UTC.