Q4 2024 Eastern Bankshares Inc Earnings Call
Eastern future financial and operating results outlook business strategy and plans.
Well as the other opportunities and potential investors that management foresees.
Such forward looking statements reflect management's current estimates or beliefs.
And are subject to risks and uncertainties that may.
Cause actual results.
Or the timing of events to differ materially from the views expressed today.
More information about such risks and uncertainties are set forth under the caption forward looking statements in the earnings press release as well as in the risk factors section and other disclosures in the company's periodic filings with the Securities and Exchange Commission.
Any forward looking statements made during this call represent management's current views and estimates.
Yeah.
And estimates as of today and the company undertakes no obligation to update these statements as a result of new information or future events.
During the call. The company will also discuss both GAAP and certain non-GAAP financial measures for conciliation of GAAP to the non-GAAP financial measures. Please refer to the company's earnings press release, which can be found at investor <unk> Eastern Bank Dot com.
Note. This event is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the one on your touch on phone. If you would like to draw. Your question Press Star two thank you joining todays call.
Bob Rivers: Our eastern Executive Chair and chair of the Board, Bob Rivers, Chief Executive Officer, Dennis Sheehan, and Chief Financial Officer, David Rosato, I'm not I'd now like to turn the call over to Bob Rivers Executive Chair and chair of the board.
Bob Rivers: Thank you Joelle good morning, everyone and thank you for joining our fourth quarter earnings call. We look through 2025 is off to a good start.
As was mentioned with me today is eastern CEO, Denis Sheahan, and our CFO David <unk>.
Bob Rivers: As we close out the fourth quarter and reflects another successful year. Our most significant milestone was our merger with Cambridge Trust.
Bob Rivers: This combination not only solidifies our position as the largest commercial bank headquartered in greater Boston, and a leading financial institution in new England.
Bob Rivers: It also allows us to deliver a broader suite of offerings to our customers.
Bob Rivers: Are there opportunities for our colleagues and even stronger commitment to the communities we serve.
Bob Rivers: As always I want to express my Atlas gratitude toward 2200 employees for all of their tremendous work and achievements in 2024.
Bob Rivers: The values talent and commitment of our team that truly sets us apart.
Bob Rivers: And speaking of our people we have a few important retirements to acknowledge Barbara <unk>, our director of consumer banking, who has been an integral part of <unk> growth and performance has recently retired after 23 years of dedicated service.
Bob Rivers: Kim D joined eastern as our new consumer banking Investor CRE.
Bob Rivers: And to us over 20 years of retail banking experience for citizens Bank.
Speaker Change: We also have two retiring board members, all Connolly and pulse Pease, who valued insights have guided us well, particularly over the past five years of extraordinary transformation at Easter.
Been an integral part of Houston's growth and performance as recently retired after 23 years of dedicated service.
Bob Rivers: On behalf of all of Us and wish Barbara.
Bob Rivers: All in all the very best in your well deserved next chapters.
Kim D joined eastern as our new consumer banking sector.
Kim D: Bringing to us over 20 years of retail banking experience for citizens Bank.
Bob Rivers: I look forward to all we will achieve together in the year ahead with that I'll hand, it over to Dennis.
Speaker Change: We also have two retiring board members all currently impulse Pease, who valued insights guided as well, particularly over the past five years of extraordinary transformation at Easter.
Bob Rivers: Thus our business in more detail before handing it off to David to discuss our financial results.
Bob Rivers: Thank you Bob.
David: We entered the year, we ended the year on a strong note with our fourth quarter earnings, bringing us to full year operating net income of $192 $6 million, which is 18% higher than 2023.
Speaker Change: On behalf of all of Us, which Barbara Paul Paul.
Speaker Change: Best in your well deserved next chapters.
Speaker Change: I look forward to all we will achieve together in the year ahead with that I'll hand, it over to Dennis who will discuss our business in more detail before handing it off to David to discuss our financial results.
David: Net interest income of $607 $6 million increased 10% from 2023 highlighted by a 12 basis point expansion in the net interest margin.
Speaker Change: Thank you Bob we entered the year, we ended the year on a strong note with our fourth quarter earnings, bringing us to full year operating net income of $192 $6 million, which is 18% higher in 2023.
David: Period end loans were up 29% from a year ago benefiting from the addition of Cambridge Trust and organic growth.
David: Our liquidity position remains strong with period end deposits up 20, 21% year over year, essentially no wholesale funding and our loan to deposit ratio of 85%.
Speaker Change: Net interest income of $607 $6 million increased 10% from 2023 highlighted by a 12 basis point expansion in the net interest margin.
David: We continue to strategically deploy capital during the year repurchasing $28 $4 million worth of shares and increasing the dividend by 9%.
Speaker Change: Period end loans were up 29% from a year ago benefiting from the addition of Cambridge Trust and organic growth.
David: We are now six months past the merger of eastern in Cambridge, and we remain focused on continuing to capitalize on synergies growth opportunities and overall financial performance.
Speaker Change: Our liquidity position remains strong.
Speaker Change: Period end deposits up 20%, 21% year over year, essentially no wholesale funding and the loan to deposit ratio of 85%.
David: Improvement in the company's performance ratios, mainly return on average assets and return on average tangible common equity and the outlook for continued improvement is very satisfactory.
Speaker Change: We continue to strategically deploy capital during the year repurchasing $28 $4 million worth of shares and increasing the dividend by 9%.
David: I am pleased to report, Cambridge client and talent retention continues to be strong. This success reflects the thoughtful planning and seamless integration of eastern and Cambridge, ensuring continuity and stability and creating a strong foundation for growth.
Speaker Change: We are now six months past the merger of eastern in Cambridge, and we remain focused on continuing to capitalize on synergies growth opportunities and overall financial performance.
Speaker Change: The improvement in the company's performance ratios, namely return on average assets and return on average tangible common equity and the outlook for continued improvement is very satisfactory.
David: Our branch network is well situated in and around Boston and Southern New Hampshire, Epicentre time, England's economy and provides us with direct community connection to serve consumers and businesses.
Speaker Change: I'm pleased to report, Cambridge client and talent retention continues to be strong. This success reflects the thoughtful planning and seamless integration of eastern and Cambridge, ensuring continuity and stability and creating a strong foundation for growth.
David: This branch network combined with our talented staff has earned us the number one deposit market share among locally headquartered bank in the Boston MSA.
David: We're hopeful that 2025 will bring renewed growth to our lending and deposit businesses, but also recognize that the overall economic and rate environment could be a headwind.
Speaker Change: Our branch network is well situated in and around Boston and Southern New Hampshire.
Speaker Change: Center maintenance economy, and provides us with direct community connection to serve consumers and businesses.
David: We remain open for business with a highly capable team well positioned to continue to serve our customers as loan demand strengthens.
Speaker Change: This branch network combined with our talented staff has earned us the number one deposit market share among locally headquartered banks in the Boston MSA.
David: In this regard we added talent in 2024 to both commercial and industrial lending and our wealth management businesses are.
Speaker Change: We're hopeful that 2025 will bring renewed growth to our lending and deposit businesses, but also recognize that the overall economic and rate environment could be a headwind.
David: Industrial lending capability grew by adding four experienced lenders and we added two seasoned members to business development in the wealth management Division.
Speaker Change: We remain open for business with a highly capable team well positioned to continue to serve our customers as loan demand strengthens.
David: Looking ahead, we will continue to add growth oriented talent and commercial banking business banking gathering private banking and wealth management.
Speaker Change: In this regard we added talent in 2024 to both commercial and industrial lending and our wealth management businesses.
David: Our wealth management and private banking businesses are a key segment.
David: Our longer term growth strategy.
Speaker Change: Our commercial industrial lending capability grew by adding four experienced lenders and we added two seasoned members to business development in the wealth management Division.
David: With over eight $3 billion in assets under management at $8 8 billion in assets under administration were the largest bank owned independent investment adviser in Massachusetts, and 12th largest in the state overall, we're confident in our ability to deliver sustainable growth over time in wealth management, creating value for our clients and share.
Speaker Change: Looking ahead, we will continue to add growth oriented talent.
Speaker Change: Commercial banking business banking gathering private banking and wealth management.
David: Holders alike.
Speaker Change: Our wealth management and private banking businesses are a key segment.
To touch on the competitive landscape there were two significant mergers announced in our footprint in the fourth quarter, creating even more consolidation here in Massachusetts.
Speaker Change: Our longer term growth strategy.
Speaker Change: With over eight 3 billion in assets under management at $8 8 billion in assets under administration were the largest bank owned independent investment adviser in Massachusetts, and 12th largest in the state overall, we're confident in our ability to deliver sustainable growth over time in wealth management, creating value for our clients and shareholders.
David: We are frequently asked about our interest in further acquisitions our answer remains the same.
David: We're focused on organic growth and realizing the potential of our recent combinations.
David: However, if an appropriate merger opportunity develops we are interested and we'll be disciplined.
Speaker Change: Holders of lunch.
Speaker Change: To touch on the competitive landscape there were two significant mergers announced in our footprint in the fourth quarter, creating even more consolidation here in Massachusetts.
David: I have full confidence in our team's ability to execute on any acquisition opportunity.
David: Most importantly, we remain committed to delivering on our financial objectives, and we have positive momentum as we look into the year ahead.
Speaker Change: We're frequently asked about our interest in further acquisitions our answer remains the same.
Speaker Change: We're focused on organic growth and realizing the potential of our recent combinations.
David: In 2025, we'll have the full year impact of the Cambridge merger significant financial benefits from the investment restructure we just announced and continued very robust levels of capital and liquidity that provides us with strategic and financial flexibility.
Speaker Change: However, if an appropriate merger opportunity develops we are interested and we'll be disciplined.
Speaker Change: I have full confidence in our team's ability to execute on any acquisition opportunity.
David: David I will now hand, it to you to review our fourth quarter results. Thanks, Dennis and good morning, everyone.
Speaker Change: Most importantly, we remain committed to delivering on our financial objectives, and we have positive momentum as we look into the year ahead.
David: Please note we have posted a slide presentation on our website, which we encourage you to review because I will reference a number of those slides in my commentary.
Speaker Change: In 2025, we'll have the full year impact of the Cambridge merger significant financial benefits from the investment restructure we just announced and continued very robust levels of capital and liquidity that provides us with strategic and financial flexibility.
David: As a reminder, the Cambridge merger closed on July 12, providing a partial quarter impact to the third quarter.
David: Beginning with highlights on slide two in the income statement on slide three.
David I'll now hand, it to you to review our fourth quarter results. Thanks, Dennis and good morning, everyone.
David: Our fourth quarter financial performance was very positive.
David: Demonstrated the enhanced earnings power of the company with the addition of Cambridge.
David: Please note we have posted a slide presentation on our website, which we encourage you to review.
David: GAAP net income for the fourth quarter was $68 million or <unk> 30 per share opt.
David: We will reference a number of those slides in my commentary.
David: As a reminder, the Cambridge merger closed on July 12, providing a partial quarter impact to the third quarter.
David: Operating net income was $68 3 million.
David: 37% linked quarter.
David: Beginning with highlights on slide two in the income statement on slide three.
David: On a per share basis, net operating income increased 36% to 34.
David: Our fourth quarter financial performance was very positive.
David: These results were highlighted by an expanding net interest margin increased eight basis points in the quarter to 305 on an FTE basis.
David: Demonstrated the enhanced earnings power of the company with the addition of Cambridge.
David: GAAP net income for the fourth quarter was $68 million or <unk> 30 per share Opra.
David: We are pleased with the continued improvement in returns.
David: Operating net income was $68 3 million.
David: Operating ROA of 105 basis points increased 26 basis points linked quarter, while operating return on average tangible common equity of 11, 3% was up from eight 5% in Q3.
David: 37% linked quarter.
David: On a per share basis, net operating income increased 36% to 34 cents.
David: These results were highlighted by an expanding net interest margin increased eight basis points in the quarter to 305 on an FTE basis.
David: In addition, the operating efficiency ratio improved for the second consecutive quarter to 57, 2% driven by higher revenue.
David: We are pleased with the continued improvement in returns.
David: We continue to maintain a strong balance sheet with exceptional levels of capital and credit reserves as reflected by our year end CET, one ratio of 15, 7% and the allowance for loan losses of 129 basis points.
David: Operating ROA of 105 basis points increased 26 basis points linked quarter.
David: Our operating return on average tangible common equity of 11, 3%.
David: Up from eight 5% in Q3.
David: In addition, the operating efficiency ratio improved for the second consecutive quarter to 57, 2% driven by higher revenue.
David: We continue to move through the credit cycle with Investor office loans, our primary focus.
David: As we communicated last quarter with the closing of the Cambridge merger, we took significant credit marks through merger accounting.
David: We continue to maintain a strong balance sheet with exceptional levels of capital and credit reserves as reflected by our year end CET, one ratio of 15, 7% and the allowance for loan losses of 129 basis points.
David: Though our charge offs were elevated in the quarter at 71 basis points. Most of these were from PCB loans acquired from Cambridge that had specific reserves established last quarter.
We continue to move through the credit cycle with Investor office loans, our primary focus.
David: Importantly, we also announced this quarter that we are executing on our $1 $2 billion repositioning of our investment portfolio that will accelerate improvement in financial performance and is expected to be 13 accretive to operating EPS in 2025.
David: As we communicated last quarter with the closing of the Cambridge merger, we took significant credit marks through merger accounting.
David: Though our charge offs were elevated in the quarter at 71 basis points.
David: Of these were from PCB loans acquired from Cambridge that had specific reserves established last quarter.
David: More on that later.
David: Moving to the margin on slide four net interest income increased $9 3 million.
David: Importantly, we also announced this quarter that we are executing on our $1 $2 billion repositioning of our investment portfolio that will accelerate improvement in financial performance.
David: Linked quarter due to improvement in the margin as well as merger a merger related increase in average earning assets.
David: The margin expanded eight basis points and is 41 basis points about the trial just two quarters ago.
David: And is expected to be 13 cents accretive to operating EPS in 2025.
David: This demonstrates the positive financial impact of the Cambridge merger and.
David: More on that later.
David: Moving to the margin on slide four net interest income increased $9 $3 million.
David: And our ability to manage funding costs lower with recent rate reductions from the federal reserve.
David: Quarter due to improvement in the margin as well as merger a merger related increase in average earning assets.
David: Our asset yields declined four basis points compared to a decline in our liability cost of 17 basis points.
David: The margin expanded eight basis points and is 41 basis points about the trial just two quarters ago.
David: Yeah.
David: Turning to slide five.
David: Total noninterest income of $37 3 million.
David: Increased $3 8 billion linked quarter.
David: This demonstrates the positive financial impact of the Cambridge merger.
David: On an operating basis total non interest income of $36 9 billion was up $4 million.
David: And our ability to manage funding costs lower with recent rate reductions from the federal reserve.
David: Our asset yields declined four basis points compared to a decline in our liability cost of 17 basis points.
David: The largest driver of the increase was our wealth business with fees of $18 million up $3 $1 million linked quarter.
David: Turning to slide five.
David: However, this included a one time item of $1 2 million in the fourth quarter.
David: Total noninterest income of $37 3 million.
David: Increased $3 8 billion linked quarter.
David: Excluding this item wealth management fees were up $1 9 billion or 13% linked quarter.
David: On an operating basis total non interest income of $36 $9 billion was up $4 million.
Included in other noninterest income was $9 3 million nonoperating gain due to eastern's investment and numerator growth technologies, which sold to Moody's in November.
David: The largest driver of the increase was our wealth business with fees of 18 million up $3 $1 million linked quarter.
David: However, this included a one time item of $1 2 million in the fourth quarter.
David: As a reminder, numerator was a fintech start up that was originally developed within the Eastern Bank and we are pleased to see this result.
David: Excluding this item wealth management fees were up $1 9 billion or 13% linked quarter.
David: We leveraged this gain to execute on the sale of $116 million of low yielding securities in the quarter.
David: Included in other noninterest income was $9 3 million non operating gain due to eastern's investment and numerator growth technologies, which sold to Moody's in November.
David: Which had a pared non operating loss of $9 2 million.
David: This sale will provide incremental margin benefit going forward.
David: As a reminder, numerator was a fintech start up that was originally developed within the Eastern Bank and we are pleased to see this result.
David: We saw a $600000 increase in customer swap fees and a $300000 increase in deposit service charges as we reinstated fees for the Cambridge customer base that were previously waived.
David: We leveraged this gain to execute on the sale of $116 million of low yielding securities in the quarter.
David: On slide six total noninterest expense was $137 5 million.
David: Which had a pared non operating loss of $9 2 million.
David: A decrease of $22 2 million linked quarter due to lower nonoperating merger related costs.
David: This sale will provide incremental margin benefit going forward.
David: We saw a $600000 increase in customer swap fees and a $300000 increase in deposit service charges as we reinstated fees for the Cambridge customer base that were previously waived.
David: Fourth quarter merger costs were 30 were $3 6 million down from 27 6 billion.
David: On an operating basis noninterest expense was $133 7 million, an increase of $2 9 million driven by the partial quarter impact of Cambridge in the third quarter.
David: On slide six total noninterest expense was $137 5 million.
David: A decrease of $22 2 million linked quarter due to lower nonoperating merger related costs.
David: Moving to the balance sheet, let's start with deposits on slide seven.
David: We saw stability in total deposits for the quarter as we balanced our excess liquidity position against deposit cost reductions.
David: Fourth quarter merger costs were 30 were $3 6 million down from 27 6 billion.
David: On an operating basis noninterest expense was $133 7 million, an increase of $2 9 million driven by the partial quarter impact of Cambridge in the third quarter.
David: Our mix of deposits remain very favorable and improved in the quarter.
David: Low cost checking accounts, which comprise 50% of the total deposit balances increased $180 million, while Cds declined $209 million.
David: Moving to the balance sheet, let's start with deposits on slide seven.
David: We continue to be fully deposit funded with essentially no wholesale funding.
David: We saw stability in total deposits for the quarter as we balanced our excess liquidity position against deposit cost reductions.
David: We were able to reduce deposit costs by 13 basis points to 169 basis points in the quarter.
David: Our mix of deposits remained very favorable and improved in the quarter.
David: As of year end, our deposit costs were 155 basis points, demonstrating our ability to pass along the impact of <unk>.
David: Low cost checking accounts, which comprise 50% of the total deposit balances increased $180 million, while Cds declined $209 million.
David: Ed rate cuts to deposits.
David: Looking ahead, the downward repricing of our CD book will continue to support lower deposit costs.
David: We continue to be fully deposit funded with essentially no wholesale funding.
David: If the fed continues to ease we will target deposit betas similar to our experience during the most recent tightening cycle.
David: We were able to reduce deposit costs by 13 basis points to 169 basis points in the quarter.
David: As of year end, our deposit costs were 155 basis points, demonstrating our ability to pass along the impact of fair.
David: We're about 45% to 50% with modest lags relative to fed actions.
David: Monitoring and balances and competition.
David: Rate cuts to depositors.
David: On slide eight loans were essentially flat in the quarter as new business was offset with Paydowns and maturities.
David: Looking ahead, the downward repricing of our CD book will continue to support lower deposit costs.
David: If the fed continues to ease we will target deposit betas similar to our experience during the most recent tightening cycle.
David: Consumer home equity lines were the exception with growth of $23 million in the quarter.
David: The commercial loan pipeline remains steady at approximately $400 million.
David: We're about 45% to 50% with modest lags relative to fed actions, while monitoring balances and competition.
David: Demonstrating our commitment and ability to support both existing and new borrowers.
Speaker Change: As Dennis mentioned in his opening remarks, there are headwinds to loan growth in the environment. So we remain ready and able to land and we will continue to explore new growth opportunities.
David: On slide eight loans were essentially flat in the quarter as new business was offset with Paydowns and maturities.
David: Consumer home equity lines were the exception with growth of $23 million in the quarter.
Speaker Change: We have an exceptional team of relationship managers and a deep understanding of our local communities, which differentiate eastern within the markets, we serve and positions us well to drive loan growth over time.
David: The commercial loan pipeline remains steady at approximately $400 million derma.
David: Demonstrating our commitment and ability to support both existing and new borrowers.
David: As Dennis mentioned in his opening remarks, there are headwinds to loan growth in the environment. So we remain ready and able to land and we will continue to explore new growth opportunities.
Speaker Change: Moving to the securities portfolio on slide nine we had some purchase and sale activity in the quarter.
Speaker Change: Increase the portfolio yield 11 basis points too.
Speaker Change: 195% as of year end.
David: We have an exceptional team of relationship managers and a deep understanding of our local communities.
Later in my remarks, I will discuss the portfolio repositioning we are undertaking in the first quarter of this year.
David: Each differentiate eastern within the markets, we serve and positions us well to drive loan growth overtime.
Speaker Change: Turning to slide 10 capital levels remain robust and we continue to return capital to shareholders.
David: Moving to the securities portfolio on slide nine we had some purchase and sale activity in the quarter.
Speaker Change: We purchased 908000 shares in the quarter at an average price of $17 41.
Increase the portfolio yield 11 basis points too.
Speaker Change: Which was <unk> <unk> below the <unk> for a total cost of $15 $8 billion.
David: 195% as the Brs.
David: Later in my remarks, I will discuss the portfolio repositioning we are undertaking in the first quarter of this year.
Speaker Change: We have also repurchased an additional 761000 shares through yesterday.
David: Turning to slide 10 capital levels remain robust and we continue to return capital to shareholders.
At a total cost of $13 1 million and now have eight 3 million shares remaining in our authorization that runs through the end of July.
David: We purchased 908000 shares in the quarter.
David: Average price of $17 41.
Our diluted common shares outstanding were $202 1 million as of December 31.
David: Which was <unk> <unk> below the Wap for a total cost of $15 $8 billion.
Speaker Change: Additionally, our board approved a 12% dividend first quarter.
David: We have also repurchased an additional 761000 shares through yesterday.
Okay.
Speaker Change: Looking at overall asset quality on slide 11, our reserve levels remained strong as evidenced by the allowance for loan losses of $229 million or 129 basis points of total funds.
David: For a total cost of $13 1 million and now have eight 3 million shares remaining in our authorization that runs through the end of July.
David: Our diluted common shares outstanding were $202 1 million as of December 31.
Speaker Change: Metrics are down modestly linked quarter and $254 million or honored 43 basis points, primarily due to charge off activity in the fourth quarter.
David: Additionally, our board approved a 12% dividend first quarter.
Okay.
Speaker Change: Charge offs totaled $31 7 million or 71 basis points to average loans compared to $5 1 million or 12 basis points in the third quarter.
David: Looking at overall asset quality on slide 11, our reserve levels remained strong as evidenced by the allowance for loan losses of $229 million or 129 basis points of total box.
Speaker Change: The increase was mostly driven by Investor office loans of which approximately $20 million for PCB loans acquired from Cambridge that were fully reserved at close.
David: Metrics are down modestly linked quarter to $254 million or honored 43 basis points, primarily due to charge off activity in the fourth quarter.
Speaker Change: It is important to note that approximately 81% of the charge offs. This quarter were from previously established specific reserves.
Charge offs totaled $31 7 million or 71 basis points to average loans compared to $5 1 billion or 12 basis points in the third quarter.
As a reminder, with the closing of the Cambridge merger last quarter, we set aside a total of $97 million.
David: The increase was mostly driven by Investor office loans of which approximately $20 million for PCB loans acquired from Cambridge that were fully reserved at close.
Speaker Change: On PCB and non PCI loans to provide coverage for potential future charge offs.
Speaker Change: Nonperforming loans increased $11 3 million in the quarter to $136 million or 76 basis points of total loans.
David: It is important to note that approximately 81% of the charge offs. This quarter were from previously established specific reserves.
Speaker Change: This was driven by the move to non accrual status of two eastern Investor office loans, partially offset by charge off activity.
David: As a reminder, with the closing of the Cambridge merger last quarter, we set aside a total of $97 million.
Speaker Change: Criticized and classified loans decreased $234 million in the quarter to $595 million or 44, 9% of total loans.
David: On PCB and non PCI loans to provide coverage for potential future charge offs.
David: Nonperforming loans increased $11 3 million in the quarter to $136 million or 76 basis points of total loans.
Speaker Change: We are pleased with the reduction and great work by our credit team.
Speaker Change: However, as the credit environment evolves in the office space It would not be unexpected to see quarterly fluctuations over the course of the year.
David: This was driven by the move to nonaccrual status of two eastern Investor office loans, partially offset by charge off activity.
David: Criticized and classified loans decreased $234 million in the quarter to 595 million or four 9% of total loans.
Speaker Change: Finally, we booked provision of $6 8 million in the quarter in line with recent legacy Eastern Bank history.
Speaker Change: Yeah.
Speaker Change: On slides 12, and 13, we provide details on total Cree and Cree Investor Office exposures.
David: We are pleased with the reduction and great work by our credit team.
David: However, as the credit environment evolves in the office space It would not be unexpected to see quarterly fluctuations over the course of the year.
Speaker Change: Total commercial real estate loans were $7 1 billion.
Speaker Change: Our exposure is largely within our local markets that we know well and is diversified by sector.
David: Finally, we booked provision of $6 8 million in the quarter in line with recent legacy Eastern Bank history.
Speaker Change: Total non owner occupied Cree to risk based capital is fairly well contained at approximately 200%.
David: Yeah.
Speaker Change: Our largest exposure is to the multifamily sector at $2 5 billion, which is a very strong asset class here in metro Boston due to ongoing housing shortages.
David: On slides 12, and 13, we provided details on total Cree and Cree Investor Office exposures.
David: Total commercial real estate loans were $7 1 billion.
David: Our exposure is largely within our local markets that we know well and is diversified by sector.
Speaker Change: We have no multifamily nonperforming loans and have had no charge offs in this portfolio in the last decade.
David: Total non owner occupied Cree to risk based capital is very well contained at approximately 200%.
Speaker Change: Our focus continues to be an investor office loans, which we cover in detail on slide 13.
David: Our largest exposure is to the multifamily sector at $2 5 billion, which is a very strong asset class here in metro Boston due to ongoing housing shortages.
Speaker Change: The Investor office portfolio is $914 million or 5% of our total loan book.
Speaker Change: Criticized and classified loans ended the quarter at $184 million or about 20% of total investor office loans.
David: You have no multifamily nonperforming loans and have had no charge offs in this portfolio in the last decade.
Speaker Change: Our reserve levels on this book declined in the quarter from 8% to six 2% due to Q4 charge off activity.
Yeah.
David: Our focus continues to be an investor office loans, which we cover in detail on slide 13.
Speaker Change: We continue to take a proactive approach to managing Investor office exposures.
David: The Investor office portfolio is $914 million or 5% of our total loan book.
Speaker Change: Our credit teams performed thorough assessment of the portfolio on a quarterly basis and on larger lower risk rated credits, we conduct ongoing monthly reviews.
David: Criticized and classified loans ended the quarter at $184 million or about 20% of total investor office loans.
David: Our reserve levels on this book declined in the quarter from 8% to six 2% due to Q4 charge off activity.
Speaker Change: This in depth knowledge enables our credit team to make timely and decisive actions.
Speaker Change: Although we expect the credit cycle to continue to evolve we are confident that our proactive approach allows us to deal with issues prudently but quickly.
David: We continue to take a proactive approach to managing Investor office exposures.
David: Our credit teams performed a thorough assessment of the portfolio on a quarterly basis and our larger lower risk rated credits we conduct ongoing monthly reviews.
Speaker Change: And we will serve us well in the quarters ahead.
Speaker Change: Moving to slide 14, we announced the $1 $2 billion investment portfolio repositioning to be completed this quarter.
David: This in depth knowledge enables our credit team to make timely and decisive actions.
Speaker Change: We are in the process of selling selling low yielding available for sale securities and reinvesting that current rate levels, which will improve financial performance.
Although we expect the credit cycle to continue to evolve we are confident that our proactive approach allows us to deal with issues prudently but quickly.
Speaker Change: We have access capital, providing us with financial flexibility.
David: And will serve us well in the quarters ahead.
Speaker Change: We will rebuild roughly half of our CET, one capital ratio through stronger earnings by year end.
David: Moving to slide 14, we announced the $1 $2 billion investment portfolio repositioning to be completed this quarter.
Speaker Change: The after tax non operating loss on the sale will be approximately $200 million.
David: We are in the process of selling selling low yielding available for sale securities and reinvesting that current rate levels, which will improve financial performance.
Speaker Change: We will be fully completed by mid first quarter 2025.
Speaker Change: We expect the transaction to be 13th accretive to operating EPS for the full year.
David: We have excess capital, providing us with financial flexibility.
Speaker Change: And to add approximately 10 basis points to ROA at approximately 95 basis points to return on tangible common equity.
David: We will rebuild roughly half of our CET, one capital ratio through stronger earnings by year end.
Speaker Change: Slide 15 highlights several factors that will provide support to our margins looking ahead.
David: The after tax non operating loss on the sale will be approximately $200 million.
Speaker Change: On the asset side of the balance sheet as we just discussed the investment portfolio repositioning will add approximately 1% to the total portfolio yield.
David: We will be fully completed by mid first quarter 2025.
We expect the transaction to be 13th accretive to operating EPS for the full year.
Speaker Change: We also have a hedged portfolio that will begin to amortize in Q3 of this year at which point the loans were reset to market rates above the current strike rate based on the forward curve.
David: And to add approximately 10 basis points to ROA and approximately 95 basis points to return on tangible common equity.
David: Slide 15 highlights several factors that will provide support to our margin looking ahead.
Speaker Change: On the liability side, we have $2 $8 billion of CD maturities in Q1, and Q2 of this year that will reprice lower as our current highest CD offer is approximately 4%.
On the asset side of the balance sheet as we just discussed.
David: <unk> portfolio repositioning will add approximately 1% to the total portfolio yield.
David: We also have a hedged portfolio that will begin to amortize in Q3 of this year at which point the loans were reset to market rates above the current strike rate based on the forward curve.
Speaker Change: Our interest rate risk position is essentially neutral when considering parallel shifts in the yield curve.
Speaker Change: However, we expect a steepening yield curve to be beneficial to our margin with a 25 basis point reduction from the fed anticipated to add approximately $7 million to net interest income on an annual basis.
On the liability side, we have $2 $8 billion of CD maturities in Q1, and Q2 of this year that will reprice lower as our current highest CD offer is approximately 4%.
Speaker Change: On slide 16, we provide our full year outlook for 2025.
Our interest rate risk position is essentially neutral when considering parallel shifts in the yield curve.
Speaker Change: We expect modest balance sheet growth due to the economic and rate environments loan growth for 'twenty five is anticipated to be 2% to 4%.
David: However, we expect a steepening yield curve to be beneficial to our margin with a 25 basis point reduction from the fed anticipated to add approximately $7 million to net interest income on an annual basis.
Speaker Change: Deposit growth of 1% to 2% with a favorable mix shift from Cds to money markets.
Speaker Change: Based on market for rents as of year end, we anticipate net interest income.
David: On slide 16, we provide our full year outlook for 2025.
Speaker Change: To be in the range of $815 million to $840 million with a full year FTE margin of $3 45 to $3 55.
David: We expect modest balance sheet growth due to the economic and rate environments loan growth for 'twenty five is anticipated to be 2% to 4%.
Speaker Change: While provision will be based on the evolution of credit trends.
David: Positive growth of 1% to 2% with a favorable mix shift from Cds to money markets.
Speaker Change: We currently expect $30 million to $40 million of provision expense.
Speaker Change: Operating noninterest income is expected to be between 130 at $140 million.
David: Based on market for its as of year end, we anticipate net interest income.
David: To be in the range of $815 million to $840 million with a full year FTE margin of $3 45 to $3 55.
Speaker Change: This assumes modest client inflows, but no market appreciation.
Speaker Change: Operating noninterest expense should be in the range of $535 million to $555 million.
David: While provision will be based on the evolution of credit trends.
Speaker Change: Finally, we expect the full year tax rate on an operating basis to be between 22% and 23%.
David: We currently expect $30 million to $40 million of provision expense.
Operating noninterest income is expected to be between 130 at $140 million.
Overall, we anticipate our 2025 financial performance as indicated by this outlook will drive meaningful year over year improvements in ROA return on tangible common equity and the efficiency ratio.
David: This assumes modest client inflows, but no market appreciation.
David: Operating noninterest expense should be in the range of $535 million to $555 million.
Speaker Change: This concludes our comments for the quarter and now we will open up the line for questions.
David: Finally, we expect the full year tax rate on an operating basis to be between 22 and 23%.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.
David: Overall, we anticipate our 2025 financial performance as indicated by this outlook will drive meaningful year over year improvements in ROA return on tangible common equity and the efficiency ratio.
Speaker Change: Should you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: Her prompts that Johan has been released.
Speaker Change: Arrested decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any keys one moment. Please for your first question.
David: This concludes our comments for the quarter and now we will open up the line for questions.
Speaker Change: Your first question comes from Mark Fitzgibbon with Piper Sandler Your line is now open.
David: Thank you ladies and gentlemen, we will now begin the question and answer session.
Greg: Hey, Good morning, everyone. This is Greg and go and step in for Mark how are you.
David: Should you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: Hi, Good morning go ahead Greg.
Speaker Change: Her prompt that your hand has been raised should you wish to decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any keys one moment. Please for your first question.
Let's stick with you guys again first could you share with us the average rate of the securities you were selling as part of the repositioning and the average rate and duration of the securities you are buying.
Speaker Change: Sure so yes.
Speaker Change: Your first question comes from Mark Fitzgibbon with Piper Sandler Your line is now open.
Can you just go back and look at our Q3 materials. The average portfolio yield was about $1 82 to $1 84.
Greg: Hey, Good morning, everyone. This is Greg and go and step in for Mark how are you.
Speaker Change: Hi, Good morning, Chris Good Greg.
Speaker Change: We're buying.
Speaker Change: Let's stick with you guys again first could you share with us the average rate of the securities you were selling as part of the repositioning and the average rate and duration of the securities you are buying.
Speaker Change: As you can imagine a mix of security asset classes.
Speaker Change: <unk> the average yield on that on those buys if you had to pick one numbers about four and three quarters a range.
Speaker Change: Sure so yes.
Speaker Change: Just go back and look at our Q3 materials. The average portfolio yield was about $1 82 to $1 84.
Speaker Change: That in.
Speaker Change: Upped up to just under 5%.
Yeah.
Speaker Change: Yes.
Speaker Change: Alright, and then you said the type of securities were mixed.
Speaker Change: We're buying.
Speaker Change: As you can imagine a mix.
Speaker Change: Yes, I mean by that is I mean, so agency securities.
Speaker Change: Security asset classes.
Speaker Change: Durations the average yield on that on those buys.
Speaker Change: Well there'll be a combination of <unk>, providing strong lockout protection.
Speaker Change: To pick one number is about 4% and three quarters a range.
Speaker Change: Between that and.
Speaker Change: Agency mortgage backed securities in there.
Speaker Change: Upped up to just under 5%.
Speaker Change: When all is said and done there will be a mix.
Speaker Change: Yeah.
Speaker Change: Alright, and then you said the type securities were mixed.
Speaker Change: 15% and 30 years.
Speaker Change: Discounts.
Speaker Change: Yes, I mean by that is I mean, so agency securities.
Speaker Change: Discount bonds again looking for a little.
Speaker Change: Call protection.
Speaker Change: So there'll be a combination of <unk>, providing strong lockout protection.
Speaker Change: And then some closer to current coupons.
Speaker Change: Yeah.
Speaker Change: So not unlike.
Agency mortgage backed securities.
Greg: Greg just just little more color there not unlike what we're selling it's just substantially different price levels.
Speaker Change: There youll.
Speaker Change: When all is said and done there will be a mix.
Speaker Change: 15% and 30 years.
Speaker Change: Okay.
Speaker Change: Discounts.
Speaker Change: And if our math is correct, you're taking the $200 million law in Europe, you'll pick up roughly $35 million in NII NII benefit per year. So is that roughly a five seven year earn back.
Speaker Change: Discount bonds again looking for a little.
Speaker Change: Call protection.
Speaker Change: And then some closer to current coupons.
Speaker Change: So not unlike.
Greg just just little more color there not unlike what we're selling it's just substantially different price levels.
Speaker Change: Yes, the yarn they earn back is longer than.
What you might see from some other banks that have done similar transactions. The earn back is really driven by the securities yourself.
Speaker Change: Okay.
Speaker Change: And if our math is correct, you're taking the $200 million law in Europe, you'll pick up roughly $35 million in NII NII benefit per year. So is that roughly a five seven year earn back.
Speaker Change: Situation at eastern happens to be.
Speaker Change: We became a public company four years ago raised a lot of capital that.
Speaker Change: Capital or a majority of that capital was put into investment portfolio securities, which at the time the very low end interest rates, that's why that portfolio yields as I said in the mid eighties pre restructuring.
Speaker Change: Yes.
Speaker Change: And the earn back is longer than.
Speaker Change: What you might see from some other banks that have done similar transactions. The earn back is really driven by the securities yourself.
The situation at eastern happens to be.
Speaker Change: So.
Speaker Change: That's what we have to sell its incredibly homogeneous portfolio put on at one price level essentially so that math doesn't work any other way.
Speaker Change: We became a public company four years ago raised a lot of capital that.
Speaker Change: Capital or a majority of that capital was put into investment portfolio securities, which at the time the very low end interest rates, that's why the portfolio yields as I said in the.
Speaker Change: When you sell those longer duration securities with a loss.
Speaker Change: Yes.
Speaker Change: All it 15% to 18% dependent on the individual bonds you is not going to be able to achieve for example, a three year payback the math just it's impossible.
Speaker Change: Mid <unk> pre restructuring.
Speaker Change: So.
Speaker Change: That's what we have to sell its incredibly homogeneous portfolio put on at one price level essentially so that math doesn't work any other way than when you sell those longer duration securities with a loss.
Speaker Change: Yeah.
Speaker Change: So your so your calculation is correct.
Speaker Change: Okay. Thank you.
Speaker Change: And then the last question I have for you on those two eastern Investor Office loans could you share with us the loan size of each current occupancy and if there are any specific reserves against these credits at quarter end.
Speaker Change: Yes.
Speaker Change: Call it 15% to 18% dependent on the individual bonds.
Speaker Change: He is not going to be able to achieve for example, a three year payback the math just it's impossible.
Speaker Change:
Speaker Change: We'll share some of that information.
Speaker Change: This is.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Legacy Sterne loans.
Speaker Change: So your so your calculation is correct.
Speaker Change: That were essentially.
Speaker Change: Okay.
Speaker Change: Long time, we've been ahead of these loans for a long time.
Speaker Change: Thank you and then the last question I have for you on those two eastern Investor Office loans could you share with us the loan size of each current occupancy and if there are any specific reserves against these credits at quarter end.
They had high level of specific reserves and there's variability.
Speaker Change: Yeah.
Speaker Change: Nothing more.
Speaker Change:
Speaker Change: That needs to be said about that they weren't they were identified reserved for charged off.
Speaker Change: We'll share some of that information.
Speaker Change:
Speaker Change: Legacy student loans.
Yeah.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Okay. Thank you.
Speaker Change: That or essentially.
Speaker Change: Yeah.
Speaker Change: Long time, we've been ahead of these loans for a long time.
Speaker Change: Youre welcome Brian.
Speaker Change: Your next question comes from Damon Delmonte with K DW. Your line is now open.
Speaker Change: They had high level of specific reserves.
Speaker Change: And there's really.
Damon Delmonte: Hey, good morning, guys. Thanks for taking my questions hope everybody's doing well today.
Speaker Change: Nothing more.
Damon Delmonte: So first question on the margin as we try to model this out.
Speaker Change: That needs to be said about that they weren't they were identified reserve for charged off.
Speaker Change: On a quarterly basis going forward David since this is taking place the restructuring taking place here midway through the first quarter do you expect to kind of split the benefit from the restructuring on the margin in the first quarter. So maybe.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Yeah.
Speaker Change: Youre welcome Brian.
Speaker Change: Your next question comes from Damon Delmonte with K DW. Your line is now open.
Speaker Change: <unk> nine basis points of benefit here in the first quarter and then get the full a full run rate going into the second quarter that a good way to look at it.
Damon Delmonte: Hey, good morning, guys. Thanks for taking my questions hope everybody's doing well today.
Damon Delmonte: So first question on the margin as we try to model this out.
Speaker Change: Yeah, I mean, we.
Speaker Change: Where specifically you're seeing that first quarter. So.
Damon Delmonte: On a quarterly basis going forward David since this is taking place the restructuring taking place here midway through the first quarter do you expect to kind of split.
Speaker Change: Take it take it literally.
Speaker Change: It's a lot of securities they.
Speaker Change: Selling is easier than the bi right, we want to make sure we're looking for.
Damon Delmonte: The benefit from the restructuring on the margin in the first quarter. So maybe.
Speaker Change: Our repurchasing the security structure, we want so we are announcing it today.
Damon Delmonte: Nine basis points of benefit here in the first quarter and then get the full the full run rate going into the second quarter is that a good way to look at it.
Speaker Change: Our board recently approved the transaction.
Damon Delmonte: Yeah.
Damon Delmonte: Where specifically you're seeing it first quarter so.
Speaker Change: Starting to execute on it we're giving ourselves a couple of weeks to.
Damon Delmonte: Take it take it literally.
Speaker Change: Fleet execution. So yes, so the first half January and half of February.
Damon Delmonte: It's a lot of securities they.
Damon Delmonte: Selling is easier than the buy rate, we want to make sure we're looking for and our repurchasing the security structure. We watch so we're announcing that today.
Speaker Change: <unk>.
Speaker Change: We'll run at lower margin.
Speaker Change: The impact that the back half of the quarter.
Speaker Change: Got it Okay, and then the guidance for the full year of $3 45 to $3 55.
Damon Delmonte: Our board recently approved the transaction, we're starting to execute on it we're giving ourselves a couple of weeks to complete execution. So yes. So the first half January and half of February well.
Speaker Change: How should we think about kind of a an exiting margin in the fourth quarter.
Speaker Change: Okay.
Speaker Change: Tell me tell me your rate forecast right, that's a big driver I think.
Damon Delmonte: We'll run at lower margin.
Speaker Change: <unk>.
Speaker Change: The more important issue than entertainment, so $3 45 to $3 55.
Damon Delmonte: Impact that the back half of the quarter.
Damon Delmonte: Got it Okay, and then the guidance for the full year of $3 45 to $3 55.
Speaker Change: And we're also calling out.
Speaker Change: Two parallel changes in the oil curve, where basically interest rate neutral that yield curve has steepened Ana it's basically upward sloping that's why we called out the benefit for 25 basis points on the short at that.
Damon Delmonte: How should we think about kind of a an exiting margin in the fourth quarter.
Okay.
Damon Delmonte: Tell me tell me your rate forecast right. That's a big driver I think the the.
Speaker Change: That $7 million just as a reminder is annualized at.
Damon Delmonte: A more important issue than entertainment, so $3 45 to $3 55.
Speaker Change: 2025 dependent when.
Speaker Change: Right.
Speaker Change: And when.
Speaker Change: That might happen.
Damon Delmonte: And we're also calling out.
<unk>.
Damon Delmonte: Two parallel changes in the old curve, where basically interest rate neutral that yield curve has steepened Ana it's basically upward sloping that's why we called out the benefit for 25 basis points on the short Ed.
Speaker Change: Over the course of the quarters.
Speaker Change: Ours.
Speaker Change: With no change in rates there.
Speaker Change: Is incremental improvement as the year goes on that has to do with.
Damon Delmonte: That $7 million just as a reminder is annualized.
Speaker Change: Forgetting the first quarter and the timing of the securities repositioning bright halfway through it has to do with in Q1 and Q2, 80% of our CD book is going to roll and its going to reprice lower.
Damon Delmonte: 2025, depending on when that might happen if and when.
Damon Delmonte: That might happen.
Damon Delmonte: <unk>.
Damon Delmonte: Over the course of the quarters.
Speaker Change: So that's number one number two is.
Damon Delmonte: Ours.
Damon Delmonte: With no change in rates there.
Speaker Change: The we called out the hedges that are starting to come off right that starts in July. So that's that's more of a back half issue.
Damon Delmonte: Is incremental improvement as the year goes on that has to do with.
Damon Delmonte: Forgetting the first quarter and the timing of the securities repositioning bright halfway through it has to do with in Q1 and Q2, 80% of our CD book is going to roll and its going to reprice slower.
Speaker Change: And then just the core business of the bank with no change in rates and that growth.
Speaker Change: Money market and spend.
Speaker Change: DDA accounts relative to our.
Damon Delmonte: So that's number one number two is.
Speaker Change: Loan growth modest asset this creates a little bit more positive margin.
Damon Delmonte: We called out the hedges that are starting to come off right that starts in July. So that's that's more of a back half issue.
Speaker Change: Got it okay. That's helpful. Thank you.
Speaker Change: And then.
Damon Delmonte: And then just the core business of the bank with no change in rates and that growth.
Speaker Change: It's kind of like.
Speaker Change: Two thoughts there number one as you look at the <unk>.
Speaker Change: The deal that was announced.
Damon Delmonte: Money markets and span.
Speaker Change: In December between Brooklyn, and Berkshire Hills and potential market.
Damon Delmonte: DDA accounts relative to our.
Speaker Change: The market disruption and opportunities.
Speaker Change: To take some market share there and you look at your loan growth outlook of 2% to 4% I mean do you think that.
Damon Delmonte: Loan growth modest asset this creates a little bit more positive margin.
Speaker Change: There's opportunities from the disruption that could be.
Damon Delmonte: Got it okay. That's helpful. Thank you.
Speaker Change: Lead to the higher end of the growth outlook or do you just feel that the underlying conditions would only in support of 2% to 4%.
Damon Delmonte: And then.
Damon Delmonte: It's kind of like.
Damon Delmonte: Two thoughts number one you know as you look at the <unk>.
Speaker Change: Loan growth for the year.
Damon Delmonte: The deal that was announced.
Damon Delmonte: In December between Brookline in Berkshire Hills and potential.
Speaker Change: So we are hopeful that we'll be able to catch.
Damon Delmonte: Market disruption and opportunities.
Capitalize on market disruption there was the transaction you just referenced in our market and then there was an earlier transaction that's more in the northern part of our market.
Damon Delmonte: To take some market share there and you look at your loan growth outlook of 2% to 4% I mean do you think that.
Damon Delmonte: There's opportunities from the disruption that could be.
Damon Delmonte: Lead to the higher end of the growth outlook or do you just feel that the underlying conditions would only support a 2% to 4% type of loan growth for the year.
Speaker Change: So but.
Speaker Change: That opportunity as hopeful as we are is not embedded in the 2% to 4% guide.
Damon Delmonte: So we are hopeful that we'll be able to.
Speaker Change: So we would hope that there is incremental benefit over the course of the year, but we're not.
Damon Delmonte: Capitalize on market disruption there was the transaction you just referenced in our market and then there was an earlier transaction that's more in the northern part of our market.
Speaker Change: We're not including that in our outlook.
Speaker Change: Got it okay, great I appreciate that.
Speaker Change: All that I had for now thank you very much.
Damon Delmonte: Thanks Damon.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one on your next question comes from Laurie Hunsicker with Seaport Research Partners. Your line is now open.
Damon Delmonte: So but.
Damon Delmonte: That opportunity as hopeful as we are is not embedded in the 2% to 4% guide. So we would hope that there is incremental benefit over the course of the year, but we're not.
Damon Delmonte: Yeah.
Laurie Hunsicker: Yeah, Hi, Bob Dennis and team.
Damon Delmonte: Hum.
Damon Delmonte: We're not including that in our outlook.
Damon Delmonte: Yes.
Damon Delmonte: I'm coming back to that.
Speaker Change: Got it okay, great I appreciate that.
Damon Delmonte: Going back to you Martin can you share with us.
Damon Delmonte: All that I had for now thank you very much.
Speaker Change: David with that margin was for December.
Thanks Damon.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one. Your next question comes from Laurie Hunsicker with Seaport Research Partners. Your line is now open.
David: Sure Laurie good morning.
David: So the spot margin in December was $3 13.
David: Brian you can write that number down, but I would tell you a better number to work off of is probably 308.
Damon Delmonte: Yeah.
Laurie Hunsicker: Yeah, Hi, Bob Dennis Good morning.
David: We just thought there was one.
Damon Delmonte: Okay.
Speaker Change: Coming back to the going back to you Martin can you share with us.
There was a low extra accretion income and the mindset that drove the margin up a touch normalized I would call it a $3.
Speaker Change: David with that margin was for December.
David: Okay, Great and then you mentioned the buybacks that you have done and I just didn't actually get the share count since the quarter end what was that what was that number.
David: Sure Laurie good morning.
David: So the spot margin in December was $3 13.
David: You can write that number down, but I would tell you a better number to work off of is probably 308.
David: So we called out the.
David:
David: Yes.
David: We just thought there was one.
David: We call it our ending share count.
David: There was a low extra accretion income and the mindset that drove the margin up a touch normalized I would call. It a three years away.
David: Ron.
David: $202 $1 million.
David: And then.
David: Im not sure if you caught it but we also wanted to share what we've done this quarter to date. So in this quarter, we bought 761000 shares.
David: Okay, Great and then you mentioned the buybacks that you have done and I just didn't actually get the share count since the quarter end what was that what was that number.
David: So we called out <unk>.
David: Okay.
David: Yeah, Okay got it yes that was that was in your question I thought you sorry, I missed that I thought you had called out what you had done in January Okay, and then just going back over alright.
David: Yes.
We call it our ending share count.
David: Ron.
David: $202 $1 million.
And then.
Laurie Hunsicker: Laurie that 761, what we did in January.
David: I'm not sure if you caught it but we also wanted to share what we've done this quarter today.
Laurie Hunsicker: Yes, you bet, Okay, Kevin Okay, Yeah got it so.
David: In this quarter, we bought 761000 shares.
Speaker Change: You said Q4 or Q4 than China, yes.
David: Okay.
Speaker Change: Just to be clear, we bought 908000 in Q4 and we Additionally bought 761000 in January.
David: Yeah, Okay got it yes that was that was in your question I thought you sorry, I missed that I thought you had called out like you had done in January.
David: And then just going back over alright.
Speaker Change: That's great at 13.1, Okay, great. Thank you, Okay, and then just going back over to Arthur when I really appreciate all the extra details that you put in slide 13, I Love, how you laid it out super helpful.
Damon Delmonte: Hey, Laurie that 761 is what we did in January.
Speaker Change: Yes, you bet, Okay, Kevin Okay, Yeah got it yeah. So.
Damon Delmonte: He said Q4 say Q4 than China, yes.
Speaker Change: Just a couple of things so that the charge offs that.
Speaker Change: Just to be clear we.
Speaker Change: 908000 in Q4, and we additionally bought 761000.
Speaker Change: But you had just the commercial real estate charge offs were $31 million, how much of that was actually on the corner.
Speaker Change: In January.
Speaker Change: Yes, essentially.
Speaker Change: All of that the non office was just under $1 million.
Laurie Hunsicker: Great at 13.1, Okay, great. Thank you, Okay, and then just going back over to Arthur and I really appreciate all the extra details that you put in slide 13, I Love, how you laid it out super helpful.
Speaker Change: Yep.
Speaker Change: Okay, and then can you share with us a little bit about.
Speaker Change: The office charges.
Speaker Change: Just a couple of things so that the charge offs that you had.
Speaker Change: In other words, there are some big haircuts, which certainly is not different than what we've seen other banks taking but.
Just the commercial real estate charge offs were $31 million, how much of that was actually on the corner.
Speaker Change: They have clients.
Speaker Change: Anything else that you can share.
Speaker Change: Pistol Sn.
Speaker Change: I mean I think that's good.
Speaker Change: Essentially all of that the non office was just under $1 million.
Speaker Change: Okay.
Speaker Change: I think that's the answer the question, it's not much different than others are experiencing it's just the nature of the market.
Speaker Change: Yep.
Speaker Change: And then can you share with us a little bit about.
Speaker Change: When you're when you're assessing these properties you are looking at ultimately.
Speaker Change: The office charges.
Speaker Change: In other words, there's some big haircuts.
Speaker Change: One's ability to exit and so we're making significant haircuts on them that we think is appropriate.
Speaker Change: It certainly is not different than what we've seen other banks taking but.
Speaker Change: Okay.
Speaker Change: They have clients.
Speaker Change: Okay.
Speaker Change: Do you have anything else that you can share.
Speaker Change: I just didn't know if it had anything to say, okay that the 184 million that you have that is.
I mean, I think that's yes.
Speaker Change: Okay.
Speaker Change: I think that's the answer the question, it's not much different than others are experiencing it's just the nature of the market.
With that as Arthur credits.
Speaker Change: Criticized and classified how much of that is coming due in 2025.
Speaker Change: When you're when you're assessing these properties you are looking at ultimately.
Speaker Change: So we've laid out the maturity.
Speaker Change: One's ability to exit and so we're making significant haircuts on them that we think is appropriate.
Bob Rivers: I don't we don't have that number in front of us Laurie we can perhaps.
Bob Rivers: With that in a future presentation, but we've laid out the maturity of the nonperforming loans here over 2025 that you see on slide 13.
Speaker Change: Okay.
Speaker Change: Now, let's just heading thing just start okay that the 184 million that you have that is.
Bob Rivers: Right, Yeah, I see that so just $3 million, but I just didn't know if anything with potentially.
Arthur: As Arthur.
Arthur: Criticized and classified how much of that is coming due in 2025.
Bob Rivers: In other words, when you look to for example to care that $67 million at solid Crewing.
Arthur: So we've laid out the maturity.
Bob Rivers: Are the other.
Damon Delmonte: I don't we don't have that number in front of us Laurie we can perhaps.
Bob Rivers: They can see rates there.
Bob Rivers: That'd be accruing properties, running where you want them to be or how do you think about that.
Damon Delmonte: With that in a future presentation, but we've laid out the maturity of the nonperforming loans here over 2025 that you see on slide 13.
Bob Rivers: Well if they if they were stressed we'd be looking at.
Laurie Hunsicker: Right, Yeah, I see that so that's $3 million, but I just didn't know if anything with potentially.
Bob Rivers: Possibly placing those loans on nonaccrual so our team as you know as we've referenced before it is a very thorough review.
Laurie Hunsicker: In other words when you looked at for example to care that $67 million at solid Crewing.
Bob Rivers: Our investor office portfolio on a constant basis and.
Bob Rivers: As of year end, we felt it was appropriate to keep those loans that are maturing.
Are the vacancy.
Laurie Hunsicker: They can see rates there.
Laurie Hunsicker: That'd be accruing properties, running where you want them to be or how do you think about that.
Bob Rivers: To keep them accruing because there was a stress point there we would be looking to put them on nonaccrual.
Laurie Hunsicker: Well if they if they were stressed we'd be looking at.
Bob Rivers: Just a little more color. So if you look at.
Laurie Hunsicker: Possibly placing those loans on non accrual so our team as you know as we've referenced before it is a very thorough review.
Bob Rivers: Q1, right there.
Bob Rivers: There's three loans maturing on that page one is in non accrual it will be.
Laurie Hunsicker: Our investor office portfolio on a constant basis and.
Bob Rivers: It's.
Laurie Hunsicker: As of year end, we felt it was appropriate to keep those loans that are maturing.
Bob Rivers: Completely reserved or it'll be resolved this quarter <unk> all the other allowance are accruing no concerns on our part if you look at.
Laurie Hunsicker: To keep them accruing because there was a stress point there we would be looking to put them on nonaccrual.
Laurie Hunsicker: Just a little more color. So if you look at.
Bob Rivers: The second quarter.
Bob Rivers: Every one of those loans is accruing we don't think there is an issue at all.
Laurie Hunsicker: Q1 right.
Laurie Hunsicker: <unk>.
Laurie Hunsicker: There is three loans maturing on that page one is in non accrual it will be.
Bob Rivers: On any of those slots.
Bob Rivers: Perfect perfect Super helpful. Okay.
Speaker Change: And then just just going over to your Mercury targets. The one time charges with the I T C. R.
Laurie Hunsicker: It's.
Laurie Hunsicker: Completely reserve or it'll be resolved this quarter <unk> all the other allowance are accruing no concerns on our part if you look at.
Speaker Change: Are those now wrapped or can you just remind us what we should expect there.
Speaker Change: It's a wrap.
Laurie Hunsicker: The second quarter.
Speaker Change: Yeah.
Through Cambridge, where we're through Cambridge merger charges and then it was only $3 $5 million.
Laurie Hunsicker: Every one of those loans is accruing we don't think there is an issue at all.
Laurie Hunsicker: On any of those slots.
Speaker Change: In the quarter and.
Speaker Change: Perfect perfect Super helpful. Okay.
Speaker Change: And Kent for perfect Okay great.
Speaker Change: Great. Okay, and then last question Dennis and Bob.
Speaker Change: And then just just going over to your merger target. The the one time charges with the I T C. R.
Speaker Change: As you are talking about.
Speaker Change: Two significant mergers that the fourth quarter, obviously right in your market.
Speaker Change: Are those now wrapped or can you just remind us what we should expect there.
Speaker Change: Brooklyn, Berkshire Hills that was referenced the Imdb.
Speaker Change: It's a wrap.
Speaker Change: Acquisition, that's a bad.
Speaker Change: Yes.
Through Cambridge, where we're through Cambridge merger charges and then it was only $3 $5 million.
Speaker Change: I guess.
Speaker Change: I guess your tone, a little bit I, just I just wanted to understand this I realize you're focused on organic growth.
Speaker Change: In the quarter and.
Speaker Change: However, you said however, right now.
Speaker Change: And Kent for perfect Okay great.
Speaker Change: Great. Okay, and then last question Dennis and Bob.
Speaker Change: Help us think a little bit about you know suddenly now to banks that have jumped in there exactly your same size does that put pressure on you like maybe just expand a little bit on the however, how youre looking at that and if you. If you were to see a deal what's the sweet spot acquisition wise, where it would make sense for you to really take a look at that.
Speaker Change: As you were talking about.
Speaker Change: Two significant mergers that the fourth quarter, obviously right in your market.
Speaker Change: Brooklyn, Berkshire Hills that was referenced the Imdb.
Speaker Change: Acquisition that they bad I guess.
Speaker Change: I guess your tone, a little bit I, just I just wanted to understand this I realize you're focused on organic growth.
Speaker Change: Yeah.
Speaker Change: So no we don't feel pressure our focus is on maximizing the benefit.
Speaker Change: However, you said however, right now.
Let's think a little bit about you know suddenly now two banks have jumped in there exactly your same size does that put pressure on you like maybe just expand a little bit on the however, how youre looking at that and if you. If you were to see a deal what's the sweet spot acquisition wise, where it would make sense for you to really take a look at that.
Speaker Change: The recent combinations that we've entered into both the Cambridge Trust merger the century bank merger those are both very important.
Speaker Change: You know.
Speaker Change: Opportunities for us to capitalize on and where we've got a lot of work to do that so we don't feel pressure to engage.
Speaker Change: In and mergers however, however.
Speaker Change: Yes.
Speaker Change: So no we don't feel pressure our focus is on maximizing the benefit.
Speaker Change: From time to time organizations decide that they want to sell and we're confident that if they if they did decide to sell that we'd like we'd get a call and we'd consider that in a disciplined manner, whether or not we would want to engage so.
Speaker Change: The recent combinations that we've entered into both the Cambridge Trust merger the century bank merger those are both very important.
Speaker Change: No.
Speaker Change: Opportunities for us to capitalize on the work we've got a lot of work to do that so we don't feel pressure to engage.
Speaker Change: It's just it's a consolidating market as you know Laurie.
Speaker Change: They have a capability we have the skill set with an attractive currency and attractive organization to partner with.
Speaker Change: In mergers however, and this is however.
Speaker Change: No.
Speaker Change: From time to time organizations decide that they want to sell and we're confident that if they if they did decide to sell that we'd like we get a call and we'd consider that in a disciplined manner, whether or not we would want to engage so it's just it's a consolidating market as you know Laurie.
Speaker Change: I put it in that.
Speaker Change: Characterization, rather than saying that we sort of feel any pressure to do mergers.
Speaker Change: Okay and then just one last question, how how small is too small.
Speaker Change: Would you consider calling is just try to think about that band.
Speaker Change: So it never we never want to rule out anything depends on the opportunity in the financial.
Speaker Change: We have a they have a capability we have the skill set with an attractive currency and attractive organization to partner with so.
Speaker Change: Circumstances.
Speaker Change: A particular opportunity I mean, clearly the effort that's required whether it's $1 billion bank or a $5 billion bank or a $10 billion bank is generally the same so you have to weigh that very carefully but as you know when do you think about our organization there may be.
Speaker Change: I put it in that.
Speaker Change: Characterization, rather than saying that we sort of feel any pressure to do mergers.
Speaker Change: Okay and then just one last question how how small is too small how big would you consider calling is just try to think about that band.
Speaker Change: Even with a smaller institution there may be holes, we may want to fill that.
Speaker Change: So it never we never want to rule out anything it depends on the opportunity in the financial.
Speaker Change: How we might think about it but you have to weigh that against the effort the distraction et cetera that happens, whether it's a $1 billion bank or a 10 billion dollar back so I'm not going to not going to rule out anything.
Speaker Change: Circumstances of a particular opportunity I mean, clearly the effort that's required whether it's $1 billion bank or a $5 billion bank or a $10 billion bank is generally the same so you have to weigh that very carefully but as you know when do you think about our organization there may be.
Speaker Change: Okay, great. Thanks for taking my question.
Speaker Change: Sure you're welcome.
Speaker Change: There are no further questions at this time I will now turn the call over to management for closing remarks.
Speaker Change: Even with a smaller institution there may be holes, we may want to fill that.
Speaker Change: Okay, well. Thank you again for your interest in eastern and for your questions. This morning, we look forward to talking with you again in the spring.
Speaker Change: That's how we might think about it but you have to weigh that against the effort the distraction et cetera that happens, whether it's a $1 billion bank or a 10 billion dollar back so I'm not going to we're not going to rule out anything.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Okay, great. Thanks for taking my question.
Speaker Change: Sure you're welcome.
Speaker Change: There are no further questions at this time I will now turn the call over to management for closing remarks.
Speaker Change: Okay, well. Thank you again for your interest in eastern and for your questions. This morning, we look forward to talking with you again in the spring.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: [noise].
Speaker Change: Yeah.
Speaker Change: [noise].