Eastern Bankshares, Inc. Reports Second Quarter 2024 Financial Results

~ Company Announces Authorization of Share Repurchase Program ~

Eastern Bankshares, Inc. (the "Company," or together with its subsidiaries, "Eastern") (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2024 second quarter financial results, the declaration of a quarterly cash dividend, and the authorization of a share repurchase program.

On July 12, 2024, the Company completed its merger ("the merger") with Cambridge Bancorp ("Cambridge") and surpassed $25 billion in assets. The merger also added approximately $4.8 billion in assets under management and administration ("AUM/A"), 11 net new branch locations, and 4 net new wealth management offices to the Company. The Company plans to provide an update on the financial impact of the merger with the third quarter earnings release.

"I'm very pleased with our second quarter financial results, which demonstrate the continued strength and stability of our franchise," said Bob Rivers, Executive Chair and Chair of the Board of the Company and Eastern Bank. "Shortly after the close of the second quarter, we joined forces with Cambridge. The complementary strengths of each bank will allow us to better serve our customers with a full suite of commercial and consumer banking products and services, as well as wealth management offerings, supported by strong digital capabilities. This enhanced ability to serve our customers – combined with our financial strength and community focus – will continue to drive value for all our stakeholders and further solidify Eastern as Greater Boston's leading local bank."

Mr. Rivers continued, "Our Board's approval of a new share repurchase program is a testament to the Company's strong capital and liquidity position, and our commitment to creating shareholder value."

FINANCIAL HIGHLIGHTS FOR THE SECOND QUARTER OF 2024

• Net income of $26.3 million, or $0.16 per diluted share. Operating net income* of $36.5 million, or $0.22 per diluted share.
• The net interest margin on a fully tax equivalent ("FTE") basis* declined modestly to 2.64% as compared to 2.68% in the prior quarter.
• Total loans increased $56.8 million, or 1.6% on an annualized basis, from the prior quarter, to $14.1 billion.
• Deposits declined $129 million, or 2.9% on an annualized basis, driven by the early withdrawal of a $100 million omnibus deposit contract for which the bank received an early termination payment of $7.8 million. Excluding this early withdrawal, deposits were relatively stable from the prior quarter.
• Average deposits increased $192.9 million in the second quarter, or 1.1%.
• Eastern sold securities totaling $85 million in the quarter at a loss of $7.6 million.
• Non-performing loans ("NPLs") reduced from $57.2 million to $39.8 million or from 0.41% to 0.28% of total loans. The reduction was driven by the resolution of two NPLs in the second quarter.
• Net recoveries of 0.02% of average total loans, compared to net charge-offs of 0.21% in the prior quarter, both on an annualized basis.

BALANCE SHEET

Total assets were $21.0 billion at June 30, 2024, representing a decrease of $130.6 million, or 0.6% from March 31, 2024.

• Cash and equivalents increased $11.8 million from the prior quarter to $750.8 million.
• Total securities decreased $196.9 million, or 4.2%, from the prior quarter, to $4.5 billion, due to the sale of approximately $85 million in available for sale securities ("AFS securities") and principal runoff.
• Loans totaled $14.1 billion, representing an increase of $56.8 million, or 0.4%, from the prior quarter, driven primarily by consumer loan growth of $51.3 million.
• Deposits totaled $17.5 billion, representing a decrease of $128.9 million, or 0.7%, from the prior quarter, driven primarily by the early withdrawal of a $100 million omnibus deposit contract, which was inherited from Eastern's acquisition of Century Bank and Trust Company in 2021. Average deposits increased $192.9 million in the second quarter, or 1.1%. The Company had no brokered deposits at June 30, 2024 and March 31, 2024.
• Federal Home Loan Bank advances decreased $0.2 million from the prior quarter to $17.4 million.
• Shareholders' equity was $3.0 billion, representing an increase of $14.6 million from the prior quarter, driven primarily by an increase in retained earnings.
• At June 30, 2024, book value per share was $16.80 and tangible book value per share* was $13.60. Please refer to Appendix D to this press release for a roll-forward of tangible shareholders' equity*.

NET INTEREST INCOME

Net interest income was $128.6 million for the second quarter of 2024, compared to $129.9 million for the prior quarter, representing a decrease of $1.3 million.

• The net interest margin on a FTE basis* was 2.64% for the second quarter, representing a 4 basis point decrease from the prior quarter, as higher funding costs more than offset increases in interest-earning asset yields.
• Total interest-earning assets yield increased 6 basis points from the prior quarter to 4.19%, due primarily to an increase in loan yields of 3 basis points, as well as higher other short-term investments volume.
• Total interest-bearing liabilities cost increased 12 basis points from the prior quarter to 2.44%, due primarily to higher deposit costs resulting from deposit mix shifts.

NONINTEREST INCOME

Noninterest income was $25.3 million for the second quarter of 2024, compared to $27.7 million for the prior quarter, representing a decrease of $2.3 million. Noninterest income on an operating basis* was $31.1 million for the second quarter of 2024, compared to $23.4 million for the prior quarter, representing an increase of $7.8 million.

• Service charges on deposit accounts increased $0.4 million from the prior quarter to $7.9 million.
• Trust and investment advisory fees increased $0.2 million from the prior quarter to $6.7 million.
• Debit card processing fees increased $0.3 million from the prior quarter to $3.5 million.
• Loan-level interest rate swap income decreased $0.2 million from the prior quarter to $0.4 million.
• Income from investments held in rabbi trust accounts decreased $2.6 million from the prior quarter to $1.8 million. The quarter over quarter change was driven by investment performance.
• Losses on sales of mortgage loans held for sale were $0.2 million, compared to losses of $0.1 million in the prior quarter.
• Losses on sales of AFS securities were $7.6 million due to the sale of approximately $85 million of AFS securities. There were no losses on sales of AFS securities in the prior quarter.
• Other noninterest income increased $7.2 million in the second quarter to $12.7 million. The increase was driven primarily by the early termination payment of $7.8 million received from the aforementioned omnibus deposit early withdrawal.

NONINTEREST EXPENSE

Noninterest expense was $109.9 million for the second quarter of 2024, compared to $101.2 million in the prior quarter, representing an increase of $8.7 million. Noninterest expense on an operating basis* for the second quarter of 2024 was $105.3 million, compared to $97.6 million in the prior quarter, representing an increase of $7.6 million.

• Salaries and employee benefits expense was $65.2 million, an increase of $0.7 million from the prior quarter.
• Office occupancy and equipment expense was $10.1 million, an increase of $0.9 million from the prior quarter, due primarily to the move to the Company's new corporate headquarters.
• Data processing expense was $18.0 million, an increase of $1.5 million from the prior quarter, due primarily to an increase of $1.4 million in merger related data processing expenses from the prior quarter.
• Professional services expense was $4.3 million in the second quarter, an increase of $0.7 million from the prior quarter.
• Marketing expense was $1.9 million, an increase of $0.4 million from the prior quarter, due primarily to higher advertising expenses.
• Federal Deposit Insurance Corporation ("FDIC") insurance expense was $4.5 million, an increase of $2.2 million from the prior quarter, primarily due to an increase of $1.9 million to the FDIC special assessment first incurred in the fourth quarter of 2023.
• Other noninterest expense was $5.4 million, an increase of $2.2 million from the prior quarter, due primarily to a lower level of provision release for off balance sheet exposures of $1.5 million.

Please refer to Appendix E for additional detail on M&A expenses*.

ASSET QUALITY

Non-performing loans ("NPLs") totaled $39.8 million at June 30, 2024 compared to $57.2 million at the end of the prior quarter. The reduction was driven primarily by the resolution of two NPLs in the second quarter.

During the second quarter of 2024, the Company recorded total net recoveries of $0.8 million, or 0.02% of average total loans on an annualized basis, compared to total net charge-offs of $7.3 million, or 0.21% of average total loans on an annualized basis, in the prior quarter, respectively. The net recoveries were driven by the partial recoveries of $2.0 million on the aforementioned two NPLs resolved in the second quarter.

The Company recorded a provision for loan losses totaling $6.1 million in the second quarter of 2024 driven primarily by an increase in individual loan reserves on commercial real estate loans in the second quarter. The allowance for loan losses was $156.1 million at June 30, 2024, or 1.11% of total loans, compared to $149.2 million, or 1.06% of total loans, at March 31, 2024.

DIVIDENDS AND SHARE REPURCHASES

The Company's Board of Directors has declared a quarterly cash dividend of $0.11 per common share. The dividend will be payable on September 16, 2024 to shareholders of record as of the close of business on September 3, 2024.

The Company's Board of Directors has authorized a share repurchase program of up to 10.8 million shares, representing 5% of the Company's outstanding shares of common stock. The repurchase program, which is limited to $200 million through July 31, 2025, may be modified or terminated by the Board of Directors of the Company at any time.

CONFERENCE CALL AND PRESENTATION INFORMATION

A conference call and webcast covering Eastern's second quarter 2024 earnings will be held on Friday, July 26, 2024 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (800) 549-8228 from within the U.S. and reference conference ID 26729. The conference call will be simultaneously webcast. Participants may join the webcast on the Company's Investor Relations website at investor.easternbank.com. A presentation providing additional information for the quarter is also available at investor.easternbank.com. A replay of the webcast will be made available on demand on this site.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. is the stock holding company for Eastern Bank. Founded in 1818, Boston-based Eastern Bank is Greater Boston's leading local bank and the largest bank-owned independent investment advisor in Massachusetts with approximately 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, Rhode Island and Connecticut. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes including through its Cambridge Trust Wealth Management and Private Banking divisions, and takes pride in its outspoken advocacy and community support that includes more than $240 million in charitable giving since 1994. An inclusive company, Eastern is comprised of deeply committed professionals who value relationships with their customers, colleagues and communities. For investor information, visit investor.easternbank.com.

NON-GAAP FINANCIAL MEASURES

*Denotes a non-GAAP financial measure used in this press release.

A non-GAAP financial measure is defined as a numerical measure of the Company's historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") in the Company's statement of income, balance sheet or statement of cash flows (or equivalent statements).

The Company presents non-GAAP financial measures, which management uses to evaluate the Company's performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company's 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, these non-GAAP financial measures presented in this press release exclude discontinued operations.

There are items in the Company's financial statements that impact its financial results, but which management believes are unrelated to the Company's core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders' equity, operating return on average tangible shareholders' equity (discussed further below), and the operating efficiency ratio. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company's core business and underlying trends. Such items that management does not consider to be core to the Company's 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, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) other real estate owned ("OREO") gains, (vii) merger and acquisition expenses, (viii) the non-cash pension settlement charge recognized related to the Defined Benefit Plan, (ix) certain discrete tax items, and (x) net income from discontinued operations. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company's outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense, respectively, cannot be made available without unreasonable effort.

Management also presents tangible assets, tangible shareholders' equity, average tangible shareholders' equity, tangible book value per share, the ratio of tangible shareholders' equity to tangible assets including the impact of mark-to-market adjustments on held-to-maturity securities, return on average tangible shareholders' equity, and operating return on average shareholders' equity (discussed further above), each of which excludes the impact of goodwill and other intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company's performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company 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.

These non-GAAP financial measures presented in this press release should not be considered an alternative or substitute for financial results or measures determined in accordance with GAAP or as an indication of the Company's cash flows from operating activities, a measure of its liquidity position or an indication of funds available for its cash needs. An item which management considers to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company's results for any particular period. In addition, management's methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other banking companies to calculate the same or similar performance measures, and accordingly, the Company's reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other banking companies. Please refer to Appendices A-E for reconciliations of the Company's GAAP financial measures to the non-GAAP financial measures in this press release.

FORWARD-LOOKING STATEMENTS

This press release contains "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. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. You can identify these statements from the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target", "outlook" and similar expressions. Forward-looking statements, by their nature, are subject to risks and uncertainties. There are many factors that could cause actual results to differ materially from expected results described in the forward-looking statements.

Certain factors that could cause actual results to differ materially from expected results include; adverse developments in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses; increased competitive pressures; changes in interest rates and resulting changes in competitor or customer behavior, mix or costs of sources of funding, and deposit amounts and composition; risks associated with the Company's implementation of the merger with Cambridge Bancorp, including that the combined companies may not perform as expected due to transaction-related uncertainty or other factors; that revenue or expense synergies may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that following completion of the transaction, Eastern's business may not perform as expected due to transaction-related uncertainty or other factors; that Eastern is unable to successfully implement integration strategies; that Eastern's expansion of services or capabilities resulting from the merger may be more challenging than anticipated; reputational risks and the reaction of customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; the diversion of management time and Company resources on merger-related issues; and disruptions arising from transitions in management personnel; adverse national or regional economic conditions or conditions within the securities markets or banking sector; legislative and regulatory changes and related compliance costs that could adversely affect the business in which the Company and its subsidiaries, including Eastern Bank, are engaged, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including inflationary or recessionary pressures, interest rate sensitivity, liquidity constraints, increased borrowing and funding costs, and fluctuations due to actual or anticipated changes to federal tax laws; the realizability of deferred tax assets; the Company's ability to successfully implement its risk mitigation strategies; asset and credit quality deterioration, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; operational risks such as cybersecurity incidents, natural disasters, and pandemics, including COVID-19 and the failure of the Company to execute its planned share repurchases. For further discussion of such factors, please see the Company's most recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (the "SEC"), which are available on the SEC's website at www.sec.gov.

You should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this press release. The Company does not undertake any obligation to update forward-looking statements.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS (1)

Certain information in this press release is presented as reviewed by the Company's management and includes information derived from the Company's Consolidated Statements of Income, non-GAAP financial measures, and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."