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Eastern Bankshares, Inc. (EBC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 operating EPS of $0.41 beat Wall Street consensus of $0.38; GAAP EPS was $0.50 aided by a GAAP tax benefit linked to Q1 portfolio repositioning . EPS Consensus values marked with *; Values retrieved from S&P Global.
  • Total revenue rose to $244.9M; against S&P consensus of $241.3M, actual S&P revenue was $237.3M,* implying a slight mixed picture depending on definition, while company-reported “total revenue” increased sequentially . Revenue Consensus values marked with *; Values retrieved from S&P Global.
  • Net interest margin (FTE) expanded 21 bps to 3.59% on higher asset yields; period‑end loans grew 2% linked quarter with strength in C&I, and non‑performing loans fell to 0.30% of loans .
  • FY25 guidance updated: loan growth raised to 3–5% (from 2–4%), deposit growth trimmed to 0–1% (from 1–2%), NII guided to $810–$820M, provision cut to $27–$32M (from $30–$40M), operating fee income raised to $145–$150M, and opex trimmed to $530–$540M; operating tax rate revised to 21–22% (from 22–23%) .
  • Potential stock catalysts: sustained NIM stability, improved credit metrics, and capital return plans post‑HarborOne close (buyback plan contingent on regulatory approval) .

What Went Well and What Went Wrong

What Went Well

  • NIM inflected higher: Net interest margin (FTE) expanded to 3.59% (+21 bps QoQ), driven by higher investment and loan yields; net discount accretion contributed 29 bps .
  • Credit improvement: NPLs declined to $54.7M (0.30% of loans) with no net charge‑offs; management cited resolutions of five credits via the Managed Asset Group .
  • Fee momentum and AUM: Investment advisory fees increased to $17.3M; wealth AUM reached a record $8.7B, diversifying earnings mix .

Selected quote:

  • “Operating earnings were $81.7 million… NIM… 3.59% and operating efficiency ratio to 50.8% due to higher revenues and effective expense management.” — CEO Denis Sheahan .

What Went Wrong

  • Expenses up: Noninterest expense climbed to $137.0M (+$6.8M QoQ) on operating opex and $2.6M merger‑related costs; salaries/benefits and technology/data processing rose .
  • Provision higher on growth: Provision increased to $7.6M from $6.6M, reflecting loan growth .
  • Deposit competition: Management highlighted a more competitive deposit market and expects seasonally lower municipal balances in Q3, pressuring pace of margin gains .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total Revenue ($USD Millions)$154.0 $216.5 $(47.2) $244.9
Net Interest Income ($USD Millions)$128.6 $179.2 $188.9 $202.0
Noninterest Income ($USD Millions)$25.3 $37.3 $(236.1) $42.9
Noninterest Expense ($USD Millions)$109.9 $137.5 $130.1 $137.0
Operating Net Income ($USD Millions)$37.1 $68.3 $67.5 $81.7
Diluted EPS (GAAP) ($)$0.16 $0.30 $(1.08) $0.50
Operating Diluted EPS ($)$0.23 $0.34 $0.34 $0.41
Margins & ProfitabilityQ2 2024Q4 2024Q1 2025Q2 2025
NIM (FTE) (%)2.64 3.05 3.38 3.59
Efficiency Ratio (%)71.3 63.5 (275.6) 55.9
Operating Efficiency Ratio (%)63.6 57.2 53.7 50.8
ROA (%) (GAAP)0.50 0.94 (3.52) 1.60
Operating ROA (%)0.70 1.05 1.09 1.30
Balance Sheet & Credit KPIsQ2 2024Q4 2024Q1 2025Q2 2025
Period‑End Loans ($B)$14.15 $18.08 $18.205 $18.590
Period‑End Deposits ($B)$17.558 $21.292 $20.797 $21.221
Cost of Deposits (%)1.78 1.69 1.48 1.48
NPLs ($M)$39.8 $135.8 $91.6 $54.7
NPLs / Loans (%)0.28 0.76 0.51 0.30
Allowance for Loan Losses ($M)$156.1 $229.0 $224.3 $232.1
Book Value per Share ($)$16.80 $16.89 $17.42 $17.42
Tangible BV per Share ($)$13.60 $11.98 $12.53 $12.53

Segment breakdown (Noninterest income components – Q2 2025):

ComponentQ2 2025 ($M)
Investment advisory fees$17.3
Service charges on deposit accounts$8.2
Card income$4.2
Interest rate swap income$1.0
Income from investments held in rabbi trusts$5.7
Miscellaneous income & fees$5.9
Other non‑operating income$0.6
Total noninterest income$42.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan growthFY 20252%–4% 3%–5% Raised
Deposit growthFY 20251%–2% 0%–1% Lowered
Net Interest Income (GAAP)FY 2025Prior higher level (not quantified) $810–$820M Modest reduction
NIM (FTE)FY 20253.45%–3.55% (unchanged) 3.45%–3.55% Maintained
Provision for loan lossesFY 2025$30–$40M $27–$32M Lowered
Operating fee incomeFY 2025$130–$140M $145–$150M Raised
Operating noninterest expenseFY 2025$535–$555M $530–$540M Lowered
Operating tax rateFY 202522%–23% 21%–22% Lowered
DividendQ3 payout$0.13 per share $0.13 per share (approved) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prior)Q1 2025 (Prior)Q2 2025 (Current)Trend
NIM trajectoryNIM rose to 3.05% on lower funding costs NIM expanded 33 bps to 3.38% post repositioning NIM expanded to 3.59%; management expects “flattish” H2 Improving, stabilizing
Investment portfolio repositioningAnnounced $1.2B repositioning to boost 2025 EPS/NIM Executed; large non‑operating loss recognized Full quarter yield uplift; tailwind realized Completed; benefit ongoing
Deposits/costsDeposit costs down QoQ Costs fell; deposit outflows seasonally Costs stable; competition heating; municipal balances seasonal Stable costs; competitive market
Credit/CRE officeCharge‑offs elevated on PCD; NPLs up NPLs improved to 0.51% NPLs 0.30%; criticized office down; strong coverage Improving risk profile
Capital returnQ4 buybacks $15.8M Q1 buybacks $48.7M; dividend raised to $0.13 $3M buyback pre‑merger; $0.13 dividend; plan to seek buyback approval post‑close Continuing, post‑merger focus
HarborOne mergerPlanned; Q4 setup Applications filed, integration planning Approvals underway; branch consolidation plan; close expected Q4 On track

Management Commentary

  • “Operating earnings were $81.7 million… NIM… 3.59% and continued improvement in the operating efficiency ratio to 50.8%….” — Denis Sheahan, CEO .
  • “Net interest income… increased for the fourth consecutive quarter… asset yields increased… full quarter impact of the investment portfolio repositioning.” — David Rosato, CFO .
  • “Reserve levels remain strong… allowance… 127 bps of total loans… NPLs decreased $36.9 million to $54.7 million.” — David Rosato, CFO .

Q&A Highlights

  • Securities portfolio restructuring: Capital could support another restructuring, but buybacks likely take priority given merger timing .
  • Credit resolution: NPL drop driven by resolving five credits; no sales involved .
  • Margin outlook: “Flattish” in H2; deposit market more competitive; swap book amortization impact minimal; accretion unpredictable .
  • Rabbi trust income/expense: Equity markets drive variability; largely offsets in comp line; limited needle‑moving effect if markets steady .
  • Footprint/expansion: Focus on RI via HarborOne; no near‑term plans to expand banking into CT/NY/Maine; grow NH presence .
  • CECL ASU (double count) adoption: Plan to early adopt if finalized; modest impact on HarborOne deal metrics (≈1% less accretive TBV dilution; ≈0.2 years earnback) .

Estimates Context

MetricConsensus*Actual
Primary EPS (Q2 2025)$0.38*$0.41 (Operating EPS)
Revenue (Q2 2025)$241.3M*$237.3M* (S&P “actual”) vs Company “total revenue” $244.9M

Notes: Values marked with * retrieved from S&P Global. S&P’s “revenue” definition for banks may differ from company‑reported “total revenue,” explaining the discrepancy .

Consensus detail (counts & targets):

  • EPS estimates count: 4*; Revenue estimates count: 1*; FY25 EPS consensus: $1.54*; Target price consensus mean: $21.75* (4 estimates)* Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality improved: Operating EPS beat and NIM expanded to 3.59%, supported by full benefits from the Q1 portfolio repositioning and higher asset yields .
  • Credit normalization: NPLs fell to 0.30% of loans with no net charge‑offs; coverage strengthened to 424% of NPLs, reducing downside credit risk .
  • Growth with discipline: Loans grew $385M QoQ (C&I +$219M; CRE +$117M), while deposit costs held at 1.48%, supporting margin durability .
  • FY25 guidance more favorable: Loan growth raised; provision, opex, and tax rate lowered; fee income raised—collectively supportive of EPS trajectory .
  • Watch H2 margin path: Management guides to “flattish” margins amid deposit competition; core deposit growth and accretion timing are key swing factors .
  • Capital return post‑merger: Expect pursuit of renewed buyback authorization after HarborOne close; dividend maintained at $0.13 .
  • Narrative evolution: Diversified fee base (record wealth AUM), improving office CRE exposures, and strong capital ratios bolster the medium‑term thesis .

Appendix: Prior Quarter Results (for trend analysis)

Selected highlights from prior quarters:

  • Q1 2025: Operating EPS $0.34; NIM (FTE) 3.38%; NPLs $91.6M (0.51%); portfolio repositioning loss drove GAAP results .
  • Q4 2024: Operating EPS $0.34; NIM (FTE) 3.05%; announced $1.2B repositioning expected to add ≈$0.13 to 2025 operating EPS and ~18 bps to margin .

Other relevant Q2 2025 press releases:

  • Earnings release date & call details (July 24/25) .