Eastern Bankshares, Inc. Q1 FY2026 earnings call

• First quarter performance was solid and in line with expectations, with operating income and earnings per share increases. - Customer sentiment positive and commercial loan pipelines at record highs. - Wealth management had positive net flows approaching $400 million, wealth assets at record high. - Successful completion of HarborOne merger core system conversion. - AI focus on improving client delivery, anticipating customer needs and providing relevant recommendations. - Capital generation in excess of growth needs, with share repurchases and dividend increase. - Non-interest income impacted by loss on investments but benefited from miscellaneous income and fees.

Operating income increased 31% and operating earnings per share increased 18% from a year ago, generating an operating return on average tangible common equity of 12.8%. Wealth assets increased to a record high of $10.3 billion, including $9.8 billion in assets under management. Net interest income was $244.7 million or $250.8 million on an FTE basis, increasing 3%. Non-interest income was $43.6 million, a decrease of $2.5 million compared to the fourth quarter. Non-interest expense was $198.6 million, an increase of $9.2 million compared to the fourth quarter. Deposits finished the quarter at $25.1 billion, down $366 million. Total loans declined modestly from year end. Securities balances increased $171 million since year end. Capital position remains strong with CET1 and TCE ratios of 13.2% and 10.2% respectively. Asset quality remains excellent with net charge-offs to average total loans of 17 basis points.

• Not making changes to full-year guidance as first quarter performance was mostly in line with expectations. - May trend towards lower end of NII guidance range shared in January. - Plan to revisit outlook at mid-year as visibility improves.

• Economic and geopolitical environment evolution could impact business. - Competitive pressure on deposits. - Uncertainty around interest rates, inflation, and broader market volatility. - Potential impact of Basel III proposal on risk-based ratios. - Elevated competition in the market affecting deposit base and other aspects.

Q: Clarification on interest-earning asset repricing slide and wealth market competition.

A: Discussed repricing details and that new entrants in wealth market don't disturb as it's competitive.

Q: Margin impact with Fed on pause.

A: Interest rate risk neutral to NII, but concerned about lower end of NII guidance range due to loan growth and deposit pricing.

Q: Deposit side beta and competitive pressure.

A: Beta expected to be slower to come down, with incremental cost to deposits and competitive pressure from smaller and larger banks.

Q: Second quarter expense and marketing.

A: Salary and tech expenses to come down, marketing to tick up.

Q: Guidance and provision outlook.

A: Averages taking longer to catch up, provision with conservatism due to merger and macro economy.

Q: Credit details on non-performers.

A: Explained reclassification of loans and normal market activity.

Q: Deposit strategy and margin.

A: Guided 1%-2% deposit growth, core NIM expected to incrementally improve.

Q: Loan growth and deposit cost retention.

A: Record pipelines, deposit cost increase due to market and HarborOne retention