Eastern Bankshares, Inc.
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
EBC$22.84+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001628280-24-046338
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001628280-25-023680
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 324 previous paragraphs and 268 current paragraphs.
175 unchanged; 76 reworded; 17 added; 63 removed; 10 previous and 0 current paragraphs rearranged.
Tables are not compared: 31 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
•a regulatory reform agenda implemented by the Trump administration that is significantly different from that of the Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies;
Current report
•risks related to the Trump administration’s increased focus on widespread implementation of stablecoins and other digital assets;
Current report
In the first quarter of 2025, we changed our computation of operating net income to exclude, as an adjustment to net (loss) income in arriving at operating net income, income from investments held in rabbi trust and rabbi trust employee benefit expense. Management believes these changes result in a more meaningful measure of our financial performance and allow for better comparability to peer companies. Prior period results have been recast for comparability purposes.
Current report
(2)Presented on an annualized basis.
Current report
Total cash and cash equivalents decreased by $638.1 million, or 63.4%, to $368.8 million at March 31, 2025 from $1.0 billion at December 31, 2024. This decrease was primarily due to a decrease in total deposits of $522.2 million and an increase in gross loans of $125.4 million. For further discussion of the change in deposits and loans, refer to the later“Deposits”and “Loans” sections in this Item 2.
Current report
Our securities portfolio decreased $2.5 million, or 0.1%, at December 31, 2024. This slight decrease was primarily due to the offsetting effect of sales of AFS securities of $1.3 billion and purchases of AFS and HTM securities of $1.3 billion.
Current report
NPLs decreased $44.2 million, or 32.5%, to $91.6 million at March 31, 2025 from $135.8 million at December 31, 2024. NPLs as a percentage of total loans decreased to 0.51% at March 31, 2025 from 0.76% at December 31, 2024. The decrease was primarily due to the sale of one non-performing commercial and industrial loan and the transfer of another commercial real estate loan to held for sale during the three months ended March 31, 2025.
Current report
The allowance for loan losses decreased by $4.6 million, or 2.0%, to $224.3 million, or 1.25% of total loans, at March 31, 2025 from $229.0 million, or 1.29% of total loans at December 31, 2024. The decrease in the allowance for loan losses for the three months ended March 31, 2025 was primarily due to a reduction in specific reserves that was driven by the transfer of a non-performing commercial real estate loan to held-for-sale classification and the sale of a non-performing commercial and industrial loan, both of which had previously been reserved for on a specific reserve basis.
Current report
Deposits decreased by $0.5 billion, or 2.4%, to $20.8 billion at March 31, 2025 from $21.3 billion at December 31, 2024. This decrease was primarily driven by regular deposit outflows during the three months ended March 31, 2025.
Current report
(1)Includes the reclassification of the escrow deposits of borrowers to deposit savings accounts recorded in the first quarter of 2025 for comparability purposes.
Current report
We recorded provisions for allowance for loan losses of $6.6 million and $7.5 million for the three months ended March 31, 2025 and 2024, respectively. For additional information regarding the change in the allowance for loan losses, including factors leading to the provision for allowance for loan losses recorded during the three months ended March 31, 2025, refer to Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.
Current report
Noninterest loss was $263.8 million for the three months ended March 31, 2025 compared to income of $27.7 million for the three months ended March 31, 2024. This decrease to a net loss was primarily due to $269.6 million of losses on sales of securities available for sale during the three months ended March 31, 2025 and a $5.6 million decrease in income from investments held in rabbi trusts. These items were partially offset by a $9.9 million increase in trust and investment advisory fees.
Current report
•Losses on sales of securities available for sale were $269.6 million for the three months ended March 31, 2025 due to an investment portfolio repositioning, which included the decision by management to sell certain available for sale securities. There were no sales of available for sale securities during the three months ended March 31, 2024.
Current report
Noninterest expense increased by $28.9 million, or 28.6%, to $130.1 million during the three months ended March 31, 2025 from $101.2 million during the three months ended March 31, 2024. The increase was primarily due a $15.4 million increase in salaries and employee benefits expense and a $7.3 million increase in amortization of intangible assets.
Current report
◦Salaries and wages expense increased $9.1 million primarily due to an increase in the number of employees as a result of our merger with Cambridge in addition to regular employee wage increases.
Current report
◦Incentives increased $3.8 million primarily due to an increase in the number employees participating in our incentive compensation plans which was primarily the result of our merger with Cambridge.
Current report
Income tax expense increased by $23.4 million to $33.7 million for the three months ended March 31, 2025 from $10.3 million for the three months ended March 31, 2024. We recorded net income tax expense during the three months ended March 31, 2025 despite a net loss recognized during the period. The loss on sale of securities recognized during the three months ended March 31, 2025 is not considered to be a discrete item for tax purposes and, therefore, the associated tax benefit of $67.9 million is realizable ratably over the full year. The increase in income tax expense for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to the previously discussed partial recognition of the tax benefit associated with the sale of securities during the three months ended March 31, 2025.
Removed paragraphs (63)
Previous report
•the risk that deferred tax assets will not be realized in full;
Previous report
In September 2023, following the approval of the sale of our insurance agency business by our board of directors, we reclassified our insurance agency business as held for sale in connection with a planned disposition of the business. Accordingly, the Consolidated Statements of Income for the three and nine months ended September 30, 2023 and Consolidated Statements of Cash flows for the nine months ended September 30, 2023 present discontinued operations. For further discussion, refer to Note 18, “Discontinued Operations”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.
Previous report
We completed our merger with Cambridge on July 12, 2024. In accordance with applicable accounting guidance, we recognize assets acquired and liabilities assumed at their respective fair values as of the date of acquisition, with the related transaction costs expensed in the period incurred. We used third party valuation specialists to assist in the determination of fair value of certain assets and liabilities at the merger date, including loans, core deposit intangible, trade name intangible, customer list intangible, premises and equipment, and certificates of deposit. While we used our best estimates and assumptions to accurately value assets acquired and liabilities assumed on the merger date, the estimates are inherently uncertain. The calculation of goodwill is subject to change for up to one year after the date of merger as additional information relative to the closing date estimates and uncertainties become available. As we finalize our review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required. The allowance for loan losses on PCD loans was recognized within business combination accounting. The allowance for loan losses on non-PCD loans was recognized as a provision expense in the same period as the business combination. For further discussion of our merger with Cambridge, refer to Note 3, “Mergers and Acquisitions” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.
Previous report
On July 12, 2024, we completed our previously announced merger with Cambridge Bancorp (“Cambridge”) and Cambridge Trust Company (“Cambridge Trust”). In accordance with the terms of the definitive merger agreement, through which we agreed to acquire Cambridge through a merger with the Company as the surviving entity, each share of Cambridge common stock was exchanged for 4.956 shares of our common stock. The transaction qualifies as a tax-free reorganization for federal income tax purposes and provided Cambridge shareholders with a tax-free exchange of their shares of Cambridge common stock in exchange for our common stock as the consideration they received in the merger. We issued 38.9 million shares of our common stock in the exchange which resulted in a transaction value of approximately $580.6 million based upon the closing price of our common stock on July 12, 2024 of $14.87 per share.
Previous report
Cambridge, a Massachusetts corporation, was a federally registered bank holding company headquartered in Cambridge, Massachusetts. Cambridge Trust, a Massachusetts-chartered trust company formed in 1890, was a wholly-owned subsidiary of Cambridge that operated through a network of 18 full-service banking offices in eastern Massachusetts and New Hampshire with $5.3 billion in total assets and $3.9 billion in deposits as of July 12, 2024. Cambridge’s core services also included wealth management. Through its wealth management group, which had offices in Massachusetts and New Hampshire, it offered comprehensive investment management, as well as trust administration, estate settlement, and financial planning services. Cambridge had assets under management and administration of approximately $5.0 billion as of July 12, 2024. Cambridge Trust’s wholly owned subsidiary, Cambridge Trust Company of New Hampshire Inc. (“CTCNH”), offered trust services pursuant to New Hampshire law and was regulated by the New Hampshire Banking Department. CTCNH is now a subsidiary of Eastern Bank.
Previous report
In recent years, we managed our business under two business segments: our banking business and our insurance agency business. On October 31, 2023, we sold substantially all of the assets and transferred certain liabilities of our insurance agency business. In the third quarter of 2023, following management’s decision to sell our insurance agency business, we reclassified the related assets and liabilities to assets and liabilities of discontinued operations, respectively, on our Consolidated Balance Sheets. Accordingly, the results of discontinued operations were reclassified to “net income from discontinued operations” on our Consolidated Statements of Income. For additional discussion of discontinued operations, refer to Note 18, “Discontinued Operations” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. The following discussion excludes amounts reported as discontinued operations.
Previous report
◦As of September 30, 2024 and December 31, 2023, our ABL Portfolio totaled $201.8 million and $203.1 million, respectively, or 6.0% and 6.7%, respectively, of our commercial and industrial portfolio.
Previous report
◦As of September 30, 2024 and December 31, 2023, our commercial and industrial IRB portfolio, which is comprised of municipal bonds issued to finance major capital projects, totaled $934.1 million and $934.5 million, respectively, or 28.0% and 30.8%, respectively, of our commercial and industrial portfolio.
Previous report
In the third quarter of 2024, we changed our (loss) return on average tangible shareholders' equity and operating return on average tangible shareholders’ equity computations to utilize tangible net (loss) income from continuing operations and tangible operating net income, respectively, in the numerators of the computations. Tangible net (loss) income from continuing operations excludes the amortization of intangible assets and the related tax effect and tangible operating net income excludes, in addition to the adjustments to derive operating net income, the amortization of intangible assets and related tax effect. In addition, in the third quarter of 2024, we changed the computation of our operating efficiency ratio to exclude, in addition to the adjustments made to operating net income, the amortization of intangible assets. Management believes the changes to such ratios result in a more meaningful measure of our financial performance and such measures are used by management when analyzing corporate performance.
Previous report
(2)Includes goodwill and other intangibles included in assets of discontinued operations within the Company’s Consolidated Balance Sheets for the three and nine months ended September 30, 2023.
Previous report
(3)Presented on an annualized basis.
Previous report
Total cash and cash equivalents increased by $196.4 million, or 28.3%, to $889.5 million at September 30, 2024 from $693.1 million at December 31, 2023. This increase was primarily due to proceeds from the sale of AFS securities of $955.3 million and proceeds from maturities and principal paydowns of AFS and HTM securities of $305.5 million. Partially offsetting these increases were net repayments of FHLB advances of $763.0 million, which includes repayment of advances assumed in connection with our merger with Cambridge, a net decrease in deposits, excluding deposits acquired from Cambridge, of $253.1 million, and a net increase in gross loans, excluding loans acquired from Cambridge, of $156.0 million during the nine months ended September 30, 2024. For further discussion of the change in securities, deposits, and loans, refer to the later“Securities,” “Borrowings,” “Deposits,” “Loans,” and “Deposits,” sections in this Item 2. For further information regarding our merger with Cambridge, refer to Note 3, “Mergers and Acquisitions” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.
Previous report
Our securities portfolio decreased $0.3 billion, or 5.5%, to $4.6 billion at September 30, 2024 from $4.9 billion at December 31, 2023. This decrease was primarily due to maturities and principal paydowns of AFS and HTM securities of $305.5 million and sales of AFS securities of $955.3 million. Included in this activity are principal paydowns and proceeds from the sale of securities acquired in connection with our merger with Cambridge of $883.0 million, representing all of the securities acquired at fair value. All acquired securities paid down or were sold immediately following the completion of the merger. No gain or loss was recognized upon the sale as the securities were marked to fair value in connection with our purchase accounting based upon quoted sale prices.
Previous report
•Excluding Cambridge-acquired loans, our business banking portfolio increased by $115.0 million, or 10.6%, from December 31, 2023 to September 30, 2024 which was primarily due to increased balances in our commercial real estate investment loan business banking category which reflects a continued focus by management on the growth of this portfolio.
Previous report
•Excluding Cambridge-acquired loans, our consumer home equity portfolio increased by $66.0 million, or 5.5%, from December 31, 2023 to September 30, 2024 which was primarily due to additional draws by borrowers on home equity lines of credit.
Previous report
NPLs increased $71.9 million, or 136.9%, to $124.5 million at September 30, 2024 from $52.6 million at December 31, 2023. NPLs as a percentage of total loans increased to 0.70% at September 30, 2024 from 0.38% at December 31, 2023. Refer to the later“Allowance for Loan Losses” section in this Item 2 for a discussion of the change in non-accrual loans which comprise our NPLs as of September 30, 2024 and December 31, 2023.
Previous report
The allowance for loan losses increased by $104.8 million, or 70.4%, to $253.8 million, or 1.43% of total loans, at September 30, 2024 from $149.0 million, or 1.07% of total loans at December 31, 2023. The increase in the allowance for loan losses was primarily due to our merger with Cambridge, which was completed on July 12, 2024. In connection with the merger, we recorded an allowance for acquired PCD loans of $55.8 million, as a gross-up of the corresponding loan balance, and a “day-2” allowance for acquired non-PCD loans of $40.9 million, recognized through the provision for allowance for loan losses. Excluding these amounts, the allowance for loan losses increased by $8.1 million from December 31, 2023 to September 30, 2024. Management determined a provision to be necessary for the nine months ended September 30, 2024 primarily due to $11.8 million in charge-offs of commercial real estate loans including one commercial real estate loan, of which $7.3 million was partially charged-off, collateralized by a property in the office risk segment which transitioned to non-accrual status during the three months ended March 31, 2024 and had not been previously reserved for on a specific reserve basis, and due to an increase in specific reserves for commercial real estate loans collateralized by a property in the office risk segment.
Previous report
For additional discussion of the change in allowance for loan losses, refer to the later “Provision for Loan Losses,” included in the“Results of Operations” section within this Item 2.
Previous report
Deposits increased by $3.6 billion, or 20.6%, to $21.2 billion at September 30, 2024 from $17.6 billion at December 31, 2023. This increase was primarily due to the addition of deposits acquired in connection with our merger with Cambridge, which was completed on July 12, 2024. Excluding the acquired deposit balances, deposits decreased $253.1 million, or 1.4%, at September 30, 2024 from December 31, 2023. This decrease was primarily driven by an early termination of an omnibus deposit contract which totaled $100.0 million and which contributed to the decrease in interest checking deposits at September 30, 2024 from December 31, 2023, excluding the impact of our merger with Cambridge. Further, the remaining changes, which taken together comprise an overall decrease, reflect organic deposit runoff and a continued shift in deposit mix from non-interest-bearing deposit accounts to interest-bearing deposit accounts during the nine months ended September 30, 2024. The shift in deposit mix was due primarily to increases in rates paid on money market investment deposits and certificates of deposit, which attracted depositors to such products.
Previous report
The information presented within this section excludes discontinued operations with respect to information related to the three and nine months ended September 30, 2023. Refer to Note 18, “Discontinued Operations”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item I in this Quarterly Report on Form 10-Q for further discussion regarding discontinued operations.
Previous report
Interest and dividend income increased by $83.2 million, or 14.0%, to $676.0 million during the nine months ended September 30, 2024 from $592.8 million during the nine months ended September 30, 2023. The increase was due to an increase in our average balance of our loan portfolio and our yields. The average balance of loans increased $1.4 billion, or 9.8%, to $15.1 billion during the nine months ended September 30, 2024. The overall yield on our loans increased 37 basis points during the nine months ended September 30, 2024 in comparison to the nine months ended September 30, 2023.
Previous report
•Interest income on loans increased $89.6 million, or 18.5%, to $573.3 million during the nine months ended September 30, 2024 from $483.7 million during the nine months ended September 30, 2023. The increase in interest income on our loans was primarily due to an increase in the average balance of our loans and an increase in the yield on our loans. The average balance of our loan portfolio increased $1.4 billion, or 9.8%, to $15.1 billion during the nine months ended September 30, 2024, which was primarily due to loans acquired in connection with our merger with Cambridge of $3.7 billion. The overall yield on our loans increased 37 basis points during the nine months ended September 30, 2024 in comparison to the nine months ended September 30, 2023. The increase in yield was primarily due to increases in market rates of interest which resulted in increased yields on variable rate loans which repriced, and new loans originated at higher rates of interest. Also contributing to the increase in yield was the accretion of the discount received on our loans acquired in our merger with Cambridge.
Previous report
•Interest income on securities and other short-term investments decreased by $6.5 million, or 5.9%, to $102.7 million during the nine months ended September 30, 2024 from $109.1 million during the nine months ended September 30, 2023. The decrease was primarily driven by a decrease in the average balance of our securities and other short-term investments, which decreased $1.0 billion, or 13.8%, to $6.2 billion for the nine months ended September 30, 2024 from $7.2 billion for the nine months ended September 30, 2023, which was primarily due to our sales of AFS securities in May 2024 and maturities and principal paydowns on AFS and HTM securities. Partially offsetting the decrease in the average balance of our securities and other short-term investments, and contributing to the overall increase in interest income during the nine months ended September 30, 2024, was an increase in our yield on our securities and other short-term investments which increased 19 basis points during the nine months ended September 30, 2024 in comparison to the nine months ended September 30, 2023 primarily due to an increase in the rate paid on our cash held at the Federal Reserve Bank of Boston from an average of 4.99% during the nine months ended September 30, 2023 to an average of 5.38% during the nine months ended September 30, 2024.
Previous report
During the nine months ended September 30, 2024, interest expense on our interest-bearing deposits increased by $87.6 million to $246.3 million from $158.7 million during the nine months ended September 30, 2023. This increase was due to an increase in the average balance of interest-bearing deposits. Also contributing to the increase was an increase in rates paid on deposits. During the nine months ended September 30, 2024, average interest-bearing deposits increased $0.6 billion, or 5.0%, to $13.6 billion, from $12.9 billion during the nine months ended September 30, 2023 primarily as a result of our merger with Cambridge which added approximately $2.9 billion in interest-bearing deposits. Rates paid on deposits increased by 79 basis points to 2.43% during the nine months ended September 30, 2024 from 1.64% during the nine months ended September 30, 2023. This was primarily due to our increasing overall deposit rates paid in response to an increase in market rates of interest and heightened industry-wide competition for deposits, as well as a shift in deposit mix from lower interest-bearing account types to higher interest-bearing account types.
Previous report
Interest expense related to our borrowings decreased by $15.7 million to $1.3 million during the nine months ended September 30, 2024 from $17.0 million during the nine months ended September 30, 2023. The decrease in borrowings interest expense during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to a decrease in our utilization of our FHLB borrowing capacity. Our utilization of FHLBB borrowings was greater during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2024 as we had bolstered our on-balance sheet liquidity in response to the bank failures in the first quarter of 2023. In addition, during the fourth quarter of 2023, we paid down our FHLB advances primarily with the proceeds from the sale of our insurance agency business, which occurred in the fourth quarter of 2023. Both of these factors resulted in a reduced average balance of borrowings during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous report
Net interest income increased by $11.3 million, or 2.7%, to $428.4 million during the nine months ended September 30, 2024 from $417.1 million for the nine months ended September 30, 2023. Net interest income increased due to an increase in the average balance of net interest-earning assets of $0.1 billion, or 1.7%, to $7.7 billion during the nine months ended September 30, 2024 from $7.6 billion during the nine months ended September 30, 2023, as well as an increase in our net interest margin during the nine months ended September 30, 2024.
Previous report
Net interest margin increased 3 basis points to 2.77% during the nine months ended September 30, 2024 from 2.74% during the nine months ended September 30, 2023. The increase in net interest margin for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 was primarily due to an increase in our average yield on interest-earning assets which exceeded the increase in the average cost of our interest-earning liabilities.
Previous report
(8)Includes noninterest expenses included in results of discontinued operations. Refer to Note 18, “Discontinued Operations”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q for such amounts.
Previous report
(6)Represents net income (loss), including net income from discontinued operations, divided by average total assets.
Previous report
(7)Represents net income (loss), including net income from discontinued operations, divided by average equity.
Previous report
(8)Includes noninterest expenses included in results of discontinued operations. Refer to Note 18, “Discontinued Operations”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q for such amounts.
Previous report
We recorded a provision for allowance for loan losses of $47.0 million for the three months ended September 30, 2024, compared to a provision of $7.3 million for the three months ended September 30, 2023 and a provision for allowance for loan losses of $60.6 million for the nine months ended September 30, 2024 compared to a provision of $14.9 million for the nine months ended September 30, 2023. During the three months ended September 30, 2024, we recorded a “day-2” provision for allowance for loan losses of $40.9 million related to non-PCD loans acquired in connection with our merger with Cambridge which closed on July 12, 2024. Excluding this amount, the provision for the three and nine months ended September 30, 2024 was $6.1 million and $19.7 million, respectively. Management determined a provision to be necessary for the three months ended September 30, 2024 primarily due to increased specific reserves for commercial real estate loans collateralized by a property in the office risk segment. Management determined a provision to be necessary for the nine months ended September 30, 2024 primarily due to $11.8 million in charge-offs of commercial real estate loans including one commercial real estate loan, of which $7.3 million was partially charged-off, collateralized by a property in the office risk segment which transitioned to non-accrual status during the three months ended March 31, 2024 and had not been previously reserved for on a specific reserve basis, and due to an increase in specific reserves for commercial real estate loans collateralized by a property in the office risk segment.
Previous report
Noninterest income increased $14.4 million, or 75.0%, to $33.5 million for the three months ended September 30, 2024 from $19.2 million for the three months ended September 30, 2023. This increase was primarily due to an $8.7 million increase in trust and investment advisory fees, an $5.1 million increase in income from investments held in rabbi trusts, and a $2.7 million decrease in losses on sales of commercial and industrial loans. These increases were partially offset by a $1.9 million decrease in other noninterest income.
Previous report
•Loss on sale of commercial loans decreased as no commercial loans were sold during the three months ended September 30, 2024. We realized a loss on sale of commercial and industrial loans of $2.7 million during the three months ended September 30, 2023. Management made the decision to sell a portion of our commercial and industrial loans included in the SNC Program in order to fund new loan originations and to provide additional liquidity to support ongoing operations.
Previous report
•Other noninterest income decreased primarily as a result of write-offs of certain property and equipment during the three months ended September 30, 2024 which was associated with our merger with Cambridge.
Previous report
Noninterest income increased $351.1 million, or 132.7%, to $86.6 million for the nine months ended September 30, 2024 from a net loss of $264.5 million for the nine months ended September 30, 2023. This increase was primarily due to a $325.6 million decrease in losses on sales of securities available for sale, an $10.0 million increase in trust and investment advisory fees, an $5.3 million increase in income from investments held in rabbi trusts, and an $5.2 million increase in other noninterest income.
Previous report
•We recorded losses of $7.6 million and $333.2 million on sales of securities available for sale, net, for the nine months ended September 30, 2024 and 2023, respectively. In May 2024, an early withdrawal of an omnibus deposit contract occurred which had a balance of $100.0 million at the time of the contract termination. Management made the decision to sell certain available for sale securities following the early termination in order to recoup liquidity. We recorded losses during the nine months ended September 30, 2023 as management made the decision to sell certain available for sale securities in connection with a balance sheet repositioning in March 2023. In July 2024, following our merger with Cambridge, we sold all securities that we had acquired through the merger. However, such securities had been adjusted to fair value in connection with our merger purchase accounting based upon the quoted sale price. As such, no gain or loss was recognized from the sale of such securities.
Previous report
•Other noninterest income increased primarily as a result of $7.8 million of fee income received as a result of the early withdrawal of an omnibus deposit contract which had a balance of $100.0 million, as described above. This increase was partially offset by write-offs of certain property and equipment during the three months ended September 30, 2024, which was associated with our merger with Cambridge.
Previous report
(1)We recorded merger and acquisition expenses of $27.6 million and $3.6 million during the three months ended September 30, 2024 and 2023, respectively, related to our merger with Cambridge. These columns display the period-over-period change in merger and acquisition expenses by financial statement line item and the change in account balances excluding such amounts.
Previous report
Noninterest expense increased by $58.0 million, or 57.0%, to $159.8 million during the three months ended September 30, 2024 from $101.7 million during the three months ended September 30, 2023. The increase was primarily due to increased merger and acquisition expenses of $24.0 million, and the following items which exclude merger and acquisition expenses: an $19.7 million increase in salaries and employee benefits expense, an $5.7 million increase in amortization of intangible assets, an $4.7 million increase in data processing, and an $3.2 million increase in office occupancy and equipment.
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Reworded paragraphs (76)
Previous wording
This section is intended to assist in the understanding of the financial performance of the Company and its subsidiaries through a discussion of our financial condition at September 30, 2024, and our results of operations for the three and nine months ended September 30, 2024 and 2023. This section should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto of the Company appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s 2023 Form 10-K.
Current wording
This section is intended to assist in the understanding of the financial performance of the Company and its subsidiaries through a discussion of our financial condition at March 31, 2025, and our results of operations for the three months ended March 31, 2025 and 2024. This section should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto of the Company appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s 2024 Form 10-K.
Previous wording
Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words
Current wording
Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.
Previous wording
•the possibility that future credit losses, loan defaults and charge-off rates are higher than expected due to changes in economic assumptions or adverse economic developments, including a reduction in demand for office space because of the prevalence of remote work practices;
Current wording
•the possibility that future credit losses, loan defaults and charge-off rates are higher than expected due to changes in economic assumptions or adverse economic developments;
Previous wording
•operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics, including a resurgence of COVID-19;
Current wording
•operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics, including COVID-19;
Previous wording
•changes in regulation, legislation, accounting standards and practices, and monetary policy;
Current wording
•changes in regulation, regulatory policy, legislation, accounting standards and practices, and fiscal monetary policy, particularly in light of the shift in presidential administrations and the potential for related shifts in agency policy and leadership;
Previous wording
•risks related to the implementation of acquisitions, dispositions, and restructurings;
Current wording
•risks related to the implementation of acquisitions, dispositions, and restructurings, including our 2024 merger with Cambridge Bancorp and Cambridge Trust Company, which is further described in Part I, Item 1 of our 2024 Annual Report on Form 10-K under “Recent Acquisitions – Bank Acquisitions” and pending merger with HarborOne Bancorp and HarborOne Bank which we announced on April 24, 2025, including the risk that acquisitions may not be timely completed or at all and may not produce results at levels or within time frames originally anticipated, including due to delays in obtaining regulatory approvals or to the conditions associated with such approvals;
Previous wording
•risks related to the integration of Cambridge Bancorp and Cambridge Trust Company, including that revenue and expense synergies or other expected benefits may not materialize or in the time frame originally anticipated or may be more costly to achieve than anticipated and that the combined businesses may not perform as expected;
Current wording
•potential risks related to the integration of our completed or pending acquisitions, including that revenue and expense synergies or other expected benefits may not materialize or may be more costly to achieve than anticipated and that the combined businesses may not perform as expected;
Previous wording
There have been no other material changes in critical accounting policies during the three and nine months ended September 30, 2024.
Current wording
There have been no other material changes in critical accounting policies during the three months ended March 31, 2025.
Previous wording
We are a bank holding company, and our principal subsidiary, Eastern Bank, is a Massachusetts-chartered bank that has served the banking needs of our customers since 1818. Our business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarily to retail, commercial and small business customers. We had total assets of $25.5 billion and $21.1 billion at September 30, 2024 and December 31, 2023, respectively. We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the New Hampshire Banking Department, the FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau. Our business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Cambridge Trust Wealth Management division. Previously, our wealth management and trust operations were conducted through Eastern Wealth Management. Following our merger with Cambridge Bancorp, described further below, the wealth management divisions of both banks now operate under the “Cambridge Trust Wealth Management, a division of Eastern Bank,” brand name.
Current wording
We are a bank holding company, and our principal subsidiary, Eastern Bank, is a Massachusetts-chartered bank that has served the banking needs of our customers since 1818. Our business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarily to retail, commercial and small business customers. We had total assets of $25.0 billion and $25.6 billion at March 31, 2025 and December 31, 2024, respectively. We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the New Hampshire Banking Department, the FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau. Our business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct under our “Cambridge Trust Wealth Management, a division of Eastern Bank” brand name (“Cambridge Trust Wealth Management division”).
Previous wording
Net loss and net income from continuing operations for the three and nine months ended September 30, 2024, respectively, computed in accordance with GAAP was $6.2 million and $58.8 million, respectively, as compared to net income and net loss from continuing operations of $63.5 million and $94.2 million for the three and nine months ended September 30, 2023, respectively, representing a decrease of 109.8% and an increase of 162.4%, respectively. The decrease in net income from continuing operations to a net loss for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to one-time expenses associated with our merger with Cambridge including the non-PCD loan “day-2” provision for the allowance for loan losses, which was recorded subsequent to the completion of the merger and is hereafter referred to as the “non-PCD loan “day-2” provision for the allowance for loan losses, and merger and acquisition expenses recorded during the three months ended September 30, 2024. Refer to the later sections titled“Results of Operations”within this Item 2 for additional discussion. The increase in net income from continuing operations for the nine months ended September 30, 2024 from a net loss from continuing operations for the nine months ended September 30, 2023 was primarily due to the sale of available for sale securities at a loss in connection with our balance sheet repositioning completed in March 2023 which resulted in a net loss for the nine months ended September 30, 2023 and was partially offset by the previously indicated one-time expenses associated with our merger with Cambridge including the non-PCD loan “day-2” provision for the allowance for loan losses and merger and acquisition expenses. Refer to the later section titled“Results of Operations” within this Item 2 for additional discussion.
Current wording
Net loss for the three months ended March 31, 2025 computed in accordance with GAAP was $217.7 million as compared to net income of $38.6 million for the three months ended March 31, 2024. The decrease in net income to a net loss for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to losses on sales of securities during the three months ended March 31, 2025. Refer to the later section titled“Results of Operations”within this Item 2 for additional discussion.
Previous wording
Net loss and income from continuing operations for the three and nine months ended September 30, 2024 and net income and net loss from continuing operations for the three and nine months ended September 30, 2023, respectively, included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure. Operating net income for the three and nine months ended September 30, 2024 was $49.7 million and $124.3 million, respectively, compared to operating net income for the three and nine months ended September 30, 2023 of $52.1 million and $146.3 million, respectively, representing decreases of 4.6% and 15.1%, respectively. These decreases were primarily due to higher noninterest expense on an operating basis for both the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. See“Non-GAAP Financial Measures”and“Results of Operations” within this Item 2 for a reconciliation of operating net income to net income on a GAAP basis and further discussion of noninterest income and noninterest expense.
Current wording
Net loss for the three months ended March 31, 2025 and net income for the three months ended March 31, 2024 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure. Operating net income for the three months ended March 31, 2025 was $67.5 million compared to operating net income for the three months ended March 31, 2024 of $40.0 million, representing a increase of 68.9%. This increase was primarily due to higher net interest income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 partially offset by higher noninterest expense on an operating basis for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. See“Non-GAAP Financial Measures”and“Results of Operations” within this Item 2 for a reconciliation of operating net income to net income on a GAAP basis and further discussion of noninterest income and noninterest expense.
Previous wording
•Commercial and industrial: Loans in this category consist of revolving and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions. As of September 30, 2024 and December 31, 2023, we had total commercial and industrial loans of $3.3 billion and $3.0 billion, respectively, representing 18.8% and 21.8%, respectively, of our total loans. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Our primary focus for commercial and industrial loans is middle-market companies located in the markets we serve. In addition, we participate in the syndicated loan market and the SNC Program. As of September 30, 2024 and December 31, 2023, commercial and industrial loans in our SNC Program portfolio totaled $673.7 million and $606.2 million, respectively, or 20.2% and 20.0%, respectively, of our commercial and industrial portfolio, and 51.3% and 45.1%, respectively, of our commercial and industrial SNC Program portfolio were loans to borrowers headquartered in our primary lending market. Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”) and industrial revenue bonds (“IRBs”), the balances of which are detailed below:
Current wording
•Commercial and industrial: Loans in this category consist of revolving and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions. As of March 31, 2025 and December 31, 2024, we had total commercial and industrial loans of $3.4 billion and $3.3 billion, respectively, representing 19.0% and 18.4%, respectively, of our total loans. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Our primary focus for commercial and industrial loans is middle-market companies located in the markets we serve. In addition, we participate in the syndicated loan market and the SNC Program. Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”) and industrial revenue bonds (“IRBs”) which are municipal bonds issued to finance major capital projects. The majority of our IRB portfolio is in educational and other non-profit sectors.
Previous wording
•Commercial real estate: Loans in this category include mortgage loans and lines of credit on commercial real estate, both investment and owner occupied. Property types financed include office, industrial, multi-family, affordable housing, retail, hotel, and other type properties. As of September 30, 2024 and December 31, 2023, we had total commercial real estate loans of $7.2 billion and $5.5 billion, representing 40.4% and 39.1%, respectively, of our total loans as of each period end. As of both September 30, 2024 and December 31, 2023, owner occupied loans totaled $1.0 billion, representing 13.8% and 18.2%, respectively, of our commercial real estate loans. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate. Our commercial real estate loan portfolio also includes loans included in our SNC Program portfolio described above. As of September 30, 2024 and December 31, 2023, commercial real estate loans in our SNC Program portfolio totaled $113.1 million and $86.3 million, respectively, or 1.6% of our commercial real estate loan portfolio at each period end. As of September 30, 2024 and December 31, 2023, 76.1% and 100.0%, respectively, of our commercial real estate SNC Program portfolio were loans to borrowers headquartered in our primary lending market. Our commercial real estate loan portfolio also included IRB loans of $643.9 million and $591.0 million as of September 30, 2024 and December 31, 2023, respectively, representing 9.0% and 10.8%, respectively, of our commercial real estate portfolio.
Current wording
•Commercial real estate: Loans in this category include mortgage loans and lines of credit on commercial real estate, both investment and owner occupied. Property types financed include office, industrial, multi-family, affordable housing, retail, hotel, and other type properties. As of March 31, 2025 and December 31, 2024, we had total commercial real estate loans of $7.1 billion and $7.0 billion, representing 39.7% and 39.6%, respectively, of our total loans as of each period end. As of March 31, 2025 and December 31, 2024, owner occupied loans totaled $929.1 million and $947.2 million, respectively, representing 13.1% and 13.4%, respectively, of our commercial real estate loans. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate. Our commercial real estate loan portfolio also includes loans included in our SNC Program portfolio described above and IRB loans.
Previous wording
•Commercial construction: Loans in this category include construction project financing and are comprised of commercial real estate, business banking and residential loans for the purpose of constructing and developing real estate. As of September 30, 2024 and December 31, 2023, we had total commercial construction loans of $513.5 million and $387.0 million, respectively, representing 2.9% and 2.8%, respectively, of our total loans. Our commercial construction loan portfolio also includes loans included in our SNC Program portfolio described above. As of September 30, 2024 and December 31, 2023, commercial construction loans in our SNC Program portfolio totaled $39.9 million and $10.2 million, respectively, or 7.8% and 2.6% respectively, of our commercial construction loan portfolio. As of both September 30, 2024 and December 31, 2023, 100.0% of our commercial construction SNC Program portfolio were loans to borrowers headquartered in our primary lending market. Our commercial construction loan portfolio also included IRB loans of $114.0 million and $63.8 million as of September 30, 2024 and December 31, 2023, respectively, representing 22.2% and 16.5% respectively, of our commercial construction portfolio.
Current wording
•Commercial construction: Loans in this category include construction project financing and are comprised of commercial real estate, business banking and residential loans for the purpose of constructing and developing real estate. As of March 31, 2025 and December 31, 2024, we had total commercial construction loans of $459.1 million and $491.6 million, respectively, representing 2.6% and 2.8%, respectively, of our total loans. Our commercial construction loan portfolio also includes loans included in our SNC Program portfolio described above and IRB loans.
Previous wording
•Business banking: Loans in this category are comprised of loans to small businesses with exposures of under $1.0 million and small investment real estate projects with exposures of under $3.0 million. These loans are separate and distinct from our commercial and industrial and commercial real estate portfolios described above due to the size of the loans. As of September 30, 2024 and December 31, 2023, we had total business banking loans of $1.3 billion and $1.1 billion, respectively, representing 7.4% and 7.8% of our total loans for each period end, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled $239.4 million and $1.1 billion, respectively, as of September 30, 2024, and $186.9 million and $898.9 million, respectively, as of December 31, 2023.
Current wording
•Business banking: Loans in this category are comprised of loans to small businesses with exposures of under $1.0 million and small investment real estate projects with exposures of under $3.0 million. These loans are separate and distinct from our commercial and industrial and commercial real estate portfolios described above due to the size of the loans. As of both March 31, 2025 and December 31, 2024, we had total business banking loans of $1.4 billion, representing 7.9% and 8.1% of our total loans for each period end, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled $238.8 million and $1.2 billion, respectively, as of March 31, 2025, and $244.4 million and $1.2 billion, respectively, as of December 31, 2024.
Previous wording
•Residential real estate: Loans in this category consist of mortgage loans on residential real estate. As of September 30, 2024 and December 31, 2023, we had total residential real estate loans of $4.1 billion and $2.6 billion, respectively, representing 23.0% and 18.4%, respectively, of our total loans. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral. We maintain policy standards for minimum credit scores and cash reserves and maximum loan-to-value consistent with a “prime” portfolio. Collateral consists of mortgage liens on residential dwellings. We do not originate or purchase sub-prime or other high-risk loans. Residential real estate loans are originated either for sale to investors or to retain in our loan portfolio. Decisions about whether to sell or retain residential real estate loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and our capital needs. During the three and nine months ended September 30, 2024, residential real estate mortgage loan originations were $117.3 million and $244.9 million, respectively, of which $30.9 million and $65.7 million, respectively, were sold on the secondary markets. Comparatively, during the three and nine months ended September 30, 2023, residential real estate mortgage loan originations were $115.3 million and $253.0 million, respectively, of which $14.7 million and $36.6 million, respectively, were sold on the secondary markets.
Current wording
•Residential real estate: Loans in this category consist of mortgage loans on residential real estate. As of both March 31, 2025 and December 31, 2024, we had total residential real estate loans of $3.9 billion, representing 21.8% and 22.1%, respectively, of our total loans. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral. We maintain policy standards for minimum credit scores and cash reserves and maximum loan-to-value consistent with a “prime” portfolio. Collateral consists of mortgage liens on residential dwellings. We do not originate or purchase sub-prime or other high-risk loans. Residential real estate loans are originated either for sale to investors or to retain in our loan portfolio. Decisions about whether to sell or retain residential real estate loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and our capital needs. During the three months ended March 31, 2025, residential real estate mortgage loan originations were $55.5 million, of which $13.1 million were sold on the secondary markets. Comparatively, during the three months ended March 31, 2024, residential real estate mortgage loan originations were $38.3 million, of which $19.9 million were sold on the secondary markets.
Previous wording
•Consumer home equity: Loans in this category consist of home equity lines of credit and home equity loans. As of September 30, 2024 and December 31, 2023, we had total consumer home equity loans of $1.4 billion and $1.2 billion, respectively, representing 7.7% and 8.7%, respectively, of our total loans. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity lines of credit can be converted to term loans that are fully amortized. Underwriting considerations are materially consistent with those utilized in the residential real estate category. Collateral consists of a senior or subordinate lien on owner-occupied residential property.
Current wording
•Consumer home equity: Loans in this category consist of home equity lines of credit and home equity loans. As of both March 31, 2025 and December 31, 2024, we had total consumer home equity loans of $1.4 billion, representing 7.8% of our total loans at each period end. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity lines of credit can be converted to term loans that are fully amortized. Underwriting considerations are materially consistent with those utilized in the residential real estate category. Collateral consists of a senior or subordinate lien on owner-occupied residential property.
Previous wording
•Other consumer: Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile and aircraft loans, home improvement loans and other personal loans. As of September 30, 2024 and December 31, 2023, we had total other consumer loans of $271.8 million and $235.5 million, respectively, representing 1.5% and 1.7%, respectively, of our total loans. Our policy and underwriting in this category include the following factors, among others: income sources and reliability, credit histories, term of repayment and collateral value, as applicable.
Current wording
•Other consumer: Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile and aircraft loans, home improvement loans and other personal loans. As of March 31, 2025 and December 31, 2024, we had total other consumer loans of $218.1 million and $227.2 million, respectively, representing 1.2% and 1.3%, respectively, of our total loans. Our policy and underwriting in this category include the following factors, among others: income sources and reliability, credit histories, term of repayment and collateral value, as applicable.
Previous wording
•Through our Cambridge Trust Wealth Management division, we provide a wide range of trust services, including (i) managing customer investments, (ii) serving as custodian for customer assets, and (iii) providing other fiduciary services, including serving as the trustee and personal representative of estates. As of September 30, 2024 and December 31, 2023, we held $8.7 billion and $3.3 billion, respectively, of assets in a fiduciary, custodial or agency capacity for customers, which are not our assets and therefore not included on the Consolidated Balance Sheets included in this Quarterly Report on Form 10-Q. For the three and nine months ended September 30, 2024, we had noninterest income of $14.9 million and $28.2 million, respectively, from providing these services compared to $6.2 million and $18.1 million for the three and nine months ended September 30, 2023, respectively.
Current wording
•Through our Cambridge Trust Wealth Management division, we provide a wide range of trust services, including (i) managing customer investments, (ii) serving as custodian for customer assets, and (iii) providing other fiduciary services, including serving as the trustee and personal representative of estates. As of March 31, 2025 and December 31, 2024, we held $8.9 billion and $8.7 billion, respectively, of assets in a fiduciary, custodial or agency capacity for customers, which are not our assets and therefore not included on the Consolidated Balance Sheets included in this Quarterly Report on Form 10-Q. For the three months ended March 31, 2025, we had noninterest income of $16.4 million from providing these services compared to $6.5 million for the three months ended March 31, 2024.
Previous wording
Beginning in March 2022, the Federal Open Market Committee (“FOMC”) voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy. At its meeting on September 18, 2024, the FOMC decided to lower the target range for the federal funds rate by 50 basis points from the range set at its July 26, 2023 meeting to a range of 4.75% to 5.00%. At its most recent meeting on November 7, 2024, the FOMC again decided to lower the target range for the federal funds rate by 25 basis points from the range set at its September 18, 2024 meeting to a range of 4.50% to 4.75% and indicated, in considering additional adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks. The FOMC further indicated it is strongly committed to supporting maximum employment and reducing the annual inflation rate to its 2 percent objective.
Current wording
Beginning in March 2022, the Federal Open Market Committee (“FOMC”) voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy. At its meeting on September 18, 2024, the FOMC decided to lower the target range for the federal funds rate by 50 basis points from the range set at its July 26, 2023 meeting to a range of 4.75% to 5.00%. At its meeting on November 7, 2024, the FOMC decided to lower the target range for the federal funds rate to a range of 4.50% to 4.75% and then again at its meeting on December 18, 2024 to a range of 4.25% to 4.50%. At its most recent meeting on May 7, 2025, the FOMC decided to maintain the target range for the federal funds rate at the range established following its December 18, 2024 meeting and indicated, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks. The FOMC further indicated it is strongly committed to supporting maximum employment and reducing the annual inflation rate to its 2 percent objective.
Previous wording
Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists. Management believes that several factors will affect the actual impact of interest rate changes on our balance sheet and operating results, including, but not limited to, actual changes in interest rates or expectations of future changes, the degree of volatility in the securities markets, inflation rates or expectations of inflation, and the slope of the interest rate yield curve. We attempt to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging our exposure. Approximately 33% of the outstanding principal balance of our loans, gross of outstanding interest rate swaps as described further below, as of September 30, 2024 was indexed to a market rate that is expected to reprice with similar magnitude and direction as the federal funds rate. A portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate. The notional amount of floating rate loans swapped totaled $2.4 billion on September 30, 2024, representing approximately 13.3% of the outstanding principal balance of our loans at that date. For more detail regarding such hedging financial instruments, refer to Note 13, “Derivative Financial Instruments”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. Refer to the section titled“Management of Market Risk” within this Item 2 for additional discussion including the estimated change to our net interest income under interest rate risk measurement methodologies that use a variety of hypothetical scenarios assuming immediate and parallel changes in interest rates that may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Current wording
Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists. Management believes that several factors will affect the actual impact of interest rate changes on our balance sheet and operating results, including, but not limited to, actual changes in interest rates or expectations of future changes, the degree of volatility in the securities markets, inflation rates or expectations of inflation, and the slope of the interest rate yield curve. We attempt to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging our exposure. Approximately 34% of the outstanding principal balance of our loans, gross of outstanding interest rate swaps as described further below, as of March 31, 2025 was indexed to a market rate that is expected to reprice with similar magnitude and direction as the federal funds rate. A portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate. The notional amount of floating rate loans swapped totaled $2.4 billion on March 31, 2025, representing approximately 13.2% of the outstanding principal balance of our loans at that date. For more detail regarding such hedging financial instruments, refer to Note 11, “Derivative Financial Instruments”within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. Refer to the section titled“Management of Market Risk” within this Item 2 for additional discussion including the estimated change to our net interest income under interest rate risk measurement methodologies that use a variety of hypothetical scenarios assuming immediate and parallel changes in interest rates that may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Previous wording
We present certain non-GAAP financial measures, which management uses to evaluate our performance, and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into our core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures. Except as otherwise indicated, the information presented for the three and nine months ended September 30, 2023 within this section excludes discontinued operations. Refer to Note 18, “Discontinued Operations” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q for further discussion regarding discontinued operations.
Current wording
We present certain non-GAAP financial measures, which management uses to evaluate our performance, and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into our core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.
Previous wording
There are items in our financial statements that impact our results but which we believe are unrelated to our core business. Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, tangible net income to average tangible shareholders’ equity, tangible operating net income to average tangible shareholders' equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends. Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits expense, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) OREO gains and losses, (vii) merger and acquisition expenses, including the “day-2” provision for allowance for loan losses for non-PCD acquired loans, and (viii) certain discrete tax items. There were no expenses indirectly associated with OREO gains or losses, or impairment charges on tax credit investments and associated tax credit benefits during the periods presented in this Quarterly Report on Form 10-Q.
Current wording
There are items in our financial statements that impact our results but which we believe are unrelated to our core business. Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, tangible net income to average tangible shareholders’ equity, tangible operating net income to average tangible shareholders' equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends. Such items that we do not consider to be core to our business include (i) gains and losses on sales of securities available for sale, net, (ii) gains and losses on the sale of other assets, (iii) impairment charges on tax credit investments and associated tax credit benefits, (iv) OREO gains and losses, (v) merger and acquisition expenses, and (vi) certain discrete tax items. There were no expenses indirectly associated with OREO gains or losses, impairment charges on tax credit investments and associated tax credit benefits, or merger and acquisition expenses during the periods presented in this Quarterly Report on Form 10-Q.
Previous wording
We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of tangible net (loss) income from continuing operations and tangible operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies. We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.
Current wording
We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of tangible net income (loss) and tangible operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies. We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.
Previous wording
(1)The net tax benefit associated with these items is generally determined by assessing whether each item is included or excluded from net taxable income and applying our combined statutory tax rate only to those items included in net taxable income. The net tax benefit amount for the nine months ended September 30, 2023 primarily resulted from the sale of securities classified as available for sale in the first quarter of 2023 and a $23.7 million tax benefit resulting from the transfer of certain securities from Market Street Securities Corp(“MSSC”), a wholly owned subsidiary which was liquidated during the first quarter of 2023, to Eastern Bank, and the net effect of establishing a valuation allowance and the subsequent reversal of the federal portion of such valuation allowance. Upon the sale of securities in the first quarter of 2023, we established a valuation allowance of $17.4 million, which is included in the net tax benefit amount, as it was determined at that time that it was not more-likely-than-not that the entirety of the deferred tax asset related to the loss on such securities would be realized. Following the execution of the agreement to sell our insurance agency business in September 2023 and our estimate of the resulting capital gain, we reversed the associated federal valuation allowance previously established as we had determined it was more-likely-than-not that the entirety of the federal deferred tax asset related to the loss on such securities would be realized. The net tax benefit for the three months ended September 30, 2023 was primarily due to the reversal of the remainder of the federal portion of the valuation allowance described above and a net tax benefit associated with a change in management’s estimate of annual pre-tax loss for purposes of determining our quarterly income tax provision.
Current wording
(1)The net tax (expense) benefit associated with these items is generally determined by assessing whether each item is included or excluded from net taxable income and applying our combined statutory tax rate only to those items included in net taxable income. For discussion regarding the net tax expense recognized for the three months ended March 31, 2025, refer to Note 8, “Income Taxes” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q
Previous wording
The following table summarizes the impact of non-core items with respect to our total revenue, noninterest income (loss), noninterest expense, and the efficiency ratio, which reconciles to the most directly comparable respective GAAP financial measure, for the periods indicated:
Current wording
The following table summarizes the impact of non-core items with respect to our total revenue, noninterest (loss) income, noninterest expense, and the efficiency ratio, which reconciles to the most directly comparable respective GAAP financial measure, for the periods indicated:
Previous wording
The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net (loss) income from continuing operations and operating net income to average tangible shareholders’ equity (“operating return on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:
Current wording
The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net (loss) income and operating net income to average tangible shareholders’ equity (“operating return on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:
Previous wording
(1)Refer to the table above within this “Non-GAAP Financial Measures” section for a reconciliation of operating net income to net (loss) income from continuing operations.
Current wording
(1)Refer to the table above within this “Non-GAAP Financial Measures” section for a reconciliation of operating net income to net (loss) income.
Previous wording
(4)The tax effect of amortization of intangible assets was calculated using our combined statutory tax rate of 27.7% for the three and nine months ended September 30, 2024 and 28.23% for the three and nine months ended September 30, 2023.
Current wording
(3)The tax effect of amortization of intangible assets was calculated using our combined statutory tax rate of 27.7% for the three months ended March 31, 2025 and 2024.
Previous wording
Our current investment policy authorizes us to invest in various types of investment securities and liquid assets, including U.S. Treasury obligations, securities of government-sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, corporate notes, asset-backed securities and municipal securities. The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk investment products. We typically invest in the following types of securities:
Current wording
Our current investment policy authorizes us to invest in various types of investment securities and liquid assets, including U.S. Treasury obligations, securities of government-sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, corporate debt obligations, asset-backed securities and municipal securities. The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk investment products. We typically invest in the following types of securities:
Previous wording
U.S. government securities: Our U.S. government securities consisted of U.S. Agency bonds and U.S. Treasury securities. We maintain these investments, to the extent appropriate, for liquidity purposes, at zero risk weighting for capital purposes, and as collateral for interest rate derivative positions. U.S. Agency bonds include securities issued by Fannie Mae, Freddie Mac, the FHLB, and the Federal Farm Credit Bureau.
Current wording
U.S. government securities: As of March 31, 2025, our U.S. government securities consisted of U.S. Treasury securities. As of December 31, 2024, our U.S. government securities consisted of U.S. Agency bonds and U.S. Treasury securities. We maintain these investments, to the extent appropriate, for liquidity purposes, at zero risk weighting for capital purposes, and as collateral for interest rate derivative positions. U.S. Agency bonds include securities issued by Fannie Mae, Freddie Mac, the FHLB, and the Federal Farm Credit Bureau.
Previous wording
A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled $190.6 million at September 30, 2024 compared to $191.1 million at December 31, 2023.
Current wording
A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled $186.7 million at March 31, 2025 compared to $183.1 million at December 31, 2024.
Previous wording
We consider our loan portfolio to be relatively diversified by borrower and industry. Our gross loans increased $4.1 billion, or 29.3%, to $18.1 billion at September 30, 2024 from $14.0 billion at December 31, 2023. The increase was primarily due to loans acquired in connection with our merger with Cambridge. Refer to Note 3, “Mergers and Acquisitions” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q for additional discussion. Excluding the addition of acquired loans, our gross loans increased $156.0 million, or 1.1%, which was primarily attributable to increased balances of business banking and consumer home equity loans.
Current wording
We consider our loan portfolio to be relatively diversified by borrower and industry. Our gross loans increased $0.1 billion, or 0.7%, to $18.2 billion at March 31, 2025 from $18.1 billion at December 31, 2024. The increase was primarily due to continued investment in resources targeted to grow our commercial and industrial loan portfolio.
Previous wording
We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties, and it is concentrated in the New England geographical area, with 84.0% of our commercial loans in Massachusetts and New Hampshire as of September 30, 2024.
Current wording
We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties, and it is concentrated in the New England geographical area, with 81.6% of our commercial loans in Massachusetts and New Hampshire as of March 31, 2025.
Previous wording
Special mention, substandard and doubtful loans totaled 6.8% and 4.1% of total commercial loans outstanding at September 30, 2024 and December 31, 2023, respectively. This increase was driven by several risk rating downgrades of loans in the commercial real estate and commercial and industrial portfolios.
Current wording
Special mention, substandard and doubtful loans totaled 4.8% and 4.9% of total commercial loans outstanding at March 31, 2025 and December 31, 2024, respectively.
Previous wording
The delinquency rate of our total loan portfolio increased to 0.54% at September 30, 2024, compared to 0.41% at December 31, 2023.
Current wording
The delinquency rate of our total loan portfolio was 0.62% at both March 31, 2025 and December 31, 2024.
Previous wording
The total amount of interest recorded on NPLs during both the nine months ended September 30, 2024 and 2023 was not significant. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $2.9 million and $3.8 million for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
The total amount of interest recorded on NPLs during both the three months ended March 31, 2025 and 2024 was not significant. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $2.3 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
In the course of resolving NPLs, we may choose to restructure the contractual terms of certain loans. We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions. The aggregate amortized cost balance as of September 30, 2024 of loans modified during the three and nine months ended September 30, 2024 which were determined to be modifications to borrowers experiencing financial difficulty was $13.2 million and $33.4 million, respectively. Included in such modifications during the nine months ended September 30, 2024, were four commercial real estate loans collateralized by properties in our office risk segment, one of which was modified during the three months ended September 30, 2024. The aggregate amortized cost balance as of September 30, 2023 of loans modified during the three and nine months ended September 30, 2023 which were determined to be modifications to borrowers experiencing financial difficulty was $2.9 million and $7.0 million, respectively.
Current wording
In the course of resolving NPLs, we may choose to restructure the contractual terms of certain loans. We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions. The aggregate amortized cost balance as of March 31, 2025 and March 31, 2024 of loans modified during the three months ended March 31, 2025 and 2024, respectively, which were determined to be modifications to borrowers experiencing financial difficulty was $4.4 million and $1.1 million, respectively.
Previous wording
As of September 30, 2024, there were two loans with an aggregate balance of $0.3 million that had been modified to borrowers experiencing financial difficulty during the during the twelve-month period then ended which had subsequently defaulted during the nine months ended September 30, 2024. As of September 30, 2023, there were no loans that had been modified to borrowers experiencing financial difficulty during the nine-month period then ended which had subsequently defaulted during the nine months ended September 30, 2023.
Current wording
As of March 31, 2025 and 2024, there were no loans that had been modified to borrowers experiencing financial difficulty during the during the twelve-month periods then ended which had subsequently defaulted during the three months ended March 31, 2025 or 2024, respectively.
Previous wording
Purchased credit deteriorated (“PCD”) loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the merger date. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the merger date. As of September 30, 2024 and December 31, 2023, the carrying amount of PCD loans was $373.8 million and $49.1 million, respectively. The increase in PCD loans was due to our acquisition of PCD loans during the three months ended September 30, 2024 in connection with our merger with Cambridge which was completed on July 12, 2024 and added $356.1 million in PCD loans on a gross amortized cost basis.
Current wording
Purchased credit deteriorated (“PCD”) loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the merger date. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the merger date. As of March 31, 2025 and December 31, 2024, the carrying amount of PCD loans was $288.6 million and $331.4 million, respectively.
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Previous report — wording carried elsewhere
“may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.
Previous report — wording carried elsewhere
(1)Non-accrual loans are included in loans.
Previous report — wording carried elsewhere
(2)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
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(3)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
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(4)Net interest margin - FTE represents fully-taxable equivalent net interest income divided by average total interest-earning assets. Refer to the earlier “Non-GAAP Financial Measures” section within this Item 2 for additional information.
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(5)Presented on an annualized basis.
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•Income from investments held in rabbi trusts increased primarily as a result of a more favorable mark-to-market adjustment on equity securities held in those accounts for the nine months ended September 30, 2024 resulting from an increase in the market value of equity securities held in the rabbi trusts.
Previous report — wording carried elsewhere
•Trust and investment advisory fees increased due to an increase in our assets under management, which increased due to an increase in our wealth management and trust operations as a result of our merger with Cambridge through which we acquired $5.0 billion in assets held in a fiduciary, custodial or agency capacity for customers.
Previous report — wording carried elsewhere
The following table sets forth information regarding noninterest expense for the periods shown:
Previous report — wording carried elsewhere
◦FICA expense, excluding merger and acquisition expenses, increased primarily due to an increase in the number of employees, which was primarily driven by our merger with Cambridge.