EBC

• Overall Financial Performance

  • Q2 2026 delivered record operating net income, which increased 20% linked quarter and 30% year-over-year, driving an operating return on average tangible common equity (ROTCE) of 15.3%.
  • GAAP net income was $105.2 million ($0.48 per diluted share), while operating net income was $106.5 million ($0.49 per diluted share) after excluding remaining HarborOne merger-related non-operating costs.
  • Positive operating leverage was achieved, with the operating efficiency ratio improving to 49% and operating return on assets (ROA) rising 21 basis points to 138 basis points.

• Strategic Execution & Core Franchise Strength

  • The firm maintains its core priorities of organic growth in banking and fee-based businesses, and consistent capital return to shareholders. Q2 results demonstrated successful execution of these priorities.
  • Eastern Bank's differentiation combines local decision-making with a full range of large-bank products and services, supported by prior talent investments that are now driving growth.
  • Wealth management is a core long-term growth strategy, providing recurring fee revenue, earnings diversification, and stronger cross-franchise customer relationships. Growing connectivity between wealth and banking teams (including private banking) is driving higher client engagement and new business opportunities.

• Balance Sheet & Capital Management

  • Asset quality remains a core strength, with net charge-offs stable at 17 basis points of average total loans, and non-performing loans (NPLs) falling $29 million linked quarter to $109 million (47 basis points of total loans) for the second consecutive quarter of improvement post-HarborOne merger.
  • All office loans over $5 million are re-underwritten annually, and the office portfolio continues to perform in line with expectations. Exposure to high-scrutiny sectors like life science is limited, and management expresses high confidence in the firm's credit profile.
  • Capital levels remain strong, with CET1 ratio of 13% and tangible common equity (TCE) ratio of 10.1% at quarter end. Management is targeting a CET1 ratio aligned with the KRX peer median of 12% via organic growth, dividends, and share repurchases.
  • The firm returned $106 million in capital to shareholders in Q2, including $33.1 million in dividends and $72.7 million in share repurchases. Tangible book value per share grew at a 7% annualized rate even after this capital return.
  • The board of directors approved a new 5% share repurchase program (up to 11.3 million shares, expiring December 31, 2027) and a 15-cent per share dividend increase to be paid in September.

• Post-Merger Integration

  • The HarborOne merger core system conversion completed in February 2026, and all targeted cost synergies have now been fully realized, driving lower operating expenses in Q2. 40% of projected cost savings are fully baked into the current run rate.

• Loan growth: Revised downward to a 3% to 4% full-year 2026 range, from the prior 3% to 5% range, reflecting slower-than-expected Q1 2026 growth. Management maintains confidence in continued growth momentum supported by the record Q2 end commercial pipeline.
• Deposit growth: Revised upward to a 2% to 3% full-year 2026 range, from the prior 1% to 2% range, reflecting stronger-than-expected Q2 deposit growth.
• Net interest income (NII): Revised downward to a $1.15 billion to $1.2 billion full-year 2026 range, with a fully tax-equivalent (FTE) net interest margin guidance of 360 to 365 basis points. The downward revision reflects slower Q1 loan growth, lower-than-expected discount accretion year-to-date, and ongoing competitive deposit pressure. Management still expects solid profitability in H2 2026.
• Credit provision: Revised downward to a $25 million to $30 million full-year 2026 range, from the prior $30 million to $40 million range, reflecting stronger-than-expected credit performance through the first half of the year.
• Operating fee income: Narrowed to a $195 million to $200 million full-year 2026 range, from the prior 190 million to 200 million range.
• Operating non-interest expense: Tightened to a $655 million to $665 million full-year 2026 range, from the prior $655 million to $675 million range, reflecting successful HarborOne integration and realized cost synergies.
• Operating tax rate and capital level guidance remain unchanged from prior periods.

1. Commercial & Industrial (CNI) Lending: Period-end loan balances grew $300+ million linked quarter, driving total period-end loan growth of $325 million (1.4% linked quarter). Ended Q2 with a record $1 billion commercial pipeline, contributing strongly to overall loan growth. CNI growth also increased the floating rate share of the total loan portfolio. 2. Commercial Real Estate (CRE): Continued elevated payoffs partially offset CNI growth in Q2, with half of Q2 payoffs coming from the acquired HarborOne portfolio as the firm works out acquired non-performing loans. CRE payoff activity was abnormally high in Q2, and management expects moderation in H2 2026. 3. Consumer Lending: Home equity balances increased $59 million linked quarter on strong underlying demand, and management identifies home equity as an attractive growth segment. Residential mortgage balances were slightly down quarter-over-quarter, and management expects the residential mortgage portfolio to remain relatively flat in 2026 as the firm prioritizes HELOC and commercial loan growth. 4. Deposits: Total deposit balances increased $814 million (3.2% linked quarter), driven by seasonal municipal inflows and broad-based growth across business lines. Management expects seasonal municipal deposit outflows in Q3. The loan-to-deposit ratio improved to 91% at quarter end, down from 93% at the end of Q1. Total deposit costs rose 1 basis point to 147 basis points in Q2. 5. Wealth Management: Wealth management assets reached a new record high of $11.5 billion, with strong year-over-year fee growth. Investment advisory fees grew, driven by higher record wealth assets and seasonal tax preparation fees, contributing to strong diversified growth in operating non-interest income. 6. Overall Revenue: Net interest income grew 3% linked quarter, with net interest margin expanding 3 basis points to 366 basis points. Operating non-interest income increased $12.8 million (28% linked quarter), driven by an $8.9 million increase in income on investments for employee retirement benefits, higher investment advisory fees, and higher interest rate swap income. Non-interest expense decreased $30.7 million (15% linked quarter), with operating non-interest expense down $1.5 million linked quarter from realized HarborOne merger cost synergies.

• Ongoing intense competition for deposits in the New England market, which continues to put gradual upward pressure on deposit costs. If deposit costs rise faster than expected, they could offset positive tailwinds from asset repricing and compress net interest margin.
• Commercial real estate (CRE) payoff activity remains elevated, partially offsetting new loan growth and creating uncertainty around net loan growth projections.
• Income from investments for employee retirement benefits is volatile and tied directly to equity market performance, creating unpredictability for non-interest income results.
• Discount accretion from acquired loans has come in slightly below original projections, driven by slower prepayment speeds in the residential mortgage portfolio, which modestly reduces expected net interest income for the full year.
• While the office loan portfolio is performing in line with expectations, broader macroeconomic weakness could still impact commercial property valuations and credit performance.

Q: Deposit competition held up better than expected this quarter — has competition eased, or should we expect faster deposit cost growth in H2? / A: Management states competition has remained relatively constant, with only modest acceleration in Q2. Given current market expectations for higher interest rates, there is no indication competition will lessen in the near term, so gradual upward pressure on deposit costs will continue.

Q: The commercial loan pipeline is at a record high — can you share detail on the industry diversification and composition of the pipeline? / A: Management confirms the pipeline is broadly diversified across industries, with no meaningful concentration in any single sector. The pipeline also includes strong activity in CRE and community development lending. Strong pipeline growth reflects the impact of recent talent investments hitting their stride, and overall customer optimism in the market.

Q: With the new 5% share repurchase program approved and a CET1 target of 12% (currently 13%), what cadence should we expect for buybacks over coming quarters? / A: Management says buybacks will follow a two-part framework: a steady core component to return all excess capital generated each quarter, and an opportunistic component scaled to current stock trading valuations. The pace of reaching the 12% CET1 target will depend on market valuations, but hitting the target remains a clear priority.

Q: Increased competition from both new and existing bank entrants in the Boston market — how is the market evolving, and how is Eastern positioned? / A: Management notes Boston has always been an attractive, competitive market, with new entrants coming in repeatedly over time. On the commercial side, large out-of-market entrants have been present for over a decade, so the competitive environment is not new. Most recent increased pressure is on the consumer side. As a local, $30 billion home-grown bank, Eastern has strong customer loyalty and a differentiated value proposition that allows it to compete effectively.

Q: How will net interest margin balance asset repricing versus ongoing deposit cost pressure? Is the outlook for flat to down margin correct? / A: Management confirms there is ongoing fixed-rate loan and securities portfolio repricing that will boost asset yields regardless of future rate moves. Deposit pressure will add 1-2 basis points of cost per quarter, slightly more than previously guided. These two counteracting forces will largely offset each other, with deposit costs expected to eat a few basis points of net interest margin off the asset repricing benefit.