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Eastern Bankshares, Inc. (EBC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was solid operationally but softer sequentially on “core” profitability: operating EPS of $0.37 vs $0.41 in Q2 as higher deposit costs and lower discount accretion compressed NIM to 3.47% (down 12 bps q/q). GAAP EPS rose to $0.53 on a continuing tax benefit from the Q1 portfolio repositioning .
  • Against S&P Global consensus, EBC modestly missed on operating EPS ($0.37 vs $0.398*) and revenue ($234.4M* vs $245.9M*), with management attributing q/q pressure to heightened deposit competition and lower accretion; ex‑accretion, NIM was flat q/q* .
  • Credit remained resilient: NCOs were 13 bps; NPLs rose 7 bps to 0.37% largely due to a single mixed‑use office credit already reserved, which management expects to resolve around Q1 2026 .
  • Strategic catalysts: all approvals received for the HarborOne merger (closed Nov 1), board authorized a 5% buyback (up to 11.9M shares) through Oct 31, 2026, and a $0.13 dividend payable Dec 15—supporting capital return and the post‑deal earnings trajectory .

Note: Asterisked values are from S&P Global Market Intelligence (SPGI). Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Commercial-led loan growth and strong pipelines: period‑end loans +1.3% q/q (+$239M), with ~6% YTD commercial growth and a ~$575M pipeline; management emphasized successful talent hires and scale advantages .
  • Wealth momentum and cross‑sell: AUM hit a record $9.2B (up from $8.7B in Q2), aided by market appreciation and positive flows; wealth fees rose 2% q/q and the retail network drove record referrals in 1H25 .
  • Capital strength and returns: CET1 14.7% (preliminary), TBV/share up 5% q/q to $13.14; board approved a 5% buyback and $0.13 dividend, underscoring balance‑sheet capacity for returns alongside the HarborOne close .

What Went Wrong

  • Net interest margin pressure: NIM fell to 3.47% (‑12 bps q/q) as money market pricing lifted deposit costs (+7–8 bps) and discount accretion declined ($10M vs $16.5M in Q2); GAAP net interest income dipped 1% q/q .
  • Fee headwinds in “other” lines: Operating noninterest income fell $2.5M q/q on lower rabbi‑trust income (‑$1.9M) and miscellaneous income (‑$1.2M), partially offset by modest increases in deposit service charges and wealth fees .
  • Slight uptick in credit metrics: NPLs/loans rose 7 bps to 0.37%, driven by a single office loan; criticized/classified loans rose modestly to 3.82% of loans, though reserves remained stable at 1.26% .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Consensus (Q3 2025)
Net Interest Income ($M)$169.9 $202.0 $200.2 —
Noninterest Income ($M)$33.5 $42.9 $41.3 —
Total Revenue ($M, GAAP)$203.4 $244.9 $241.5 $245.9*
Total Operating Revenue ($M, non‑GAAP)$211.1 $249.1 $245.1 —
Diluted EPS (GAAP)$(0.03) $0.50 $0.53 —
Operating Diluted EPS (non‑GAAP)$0.26 $0.41 $0.37 $0.398*
NIM (FTE)2.97% 3.59% 3.47% —
Efficiency Ratio (GAAP)78.5% 55.9% 58.2% —
Operating Efficiency Ratio59.7% 50.8% 52.8% —
Operating ROA0.82% 1.30% 1.16% —
Operating ROTCE8.71% 13.56% 11.71% —

Note: Asterisked values are from S&P Global Market Intelligence (SPGI). Values retrieved from S&P Global.

Balance sheet and credit KPIs

KPIQ3 2024Q2 2025Q3 2025
Loans (period‑end, $B)$18.06 $18.59 $18.83
Deposits (period‑end, $B)$21.25 $21.22 $21.12
CET1 Ratio (%)—14.38% 14.71% (prelim.)
Book Value / Share$17.09 $17.42 $17.99
Tangible BV / Share$12.17 $12.53 $13.14
NPLs ($M)$124.5 $54.7 $69.2
NPLs / Loans (%)0.70% 0.30% 0.37%
Net Charge‑offs / Avg Loans (%)0.12% 0.00% 0.13%
Allowance / Loans (%)1.43% 1.27% 1.26%
Cost of Deposits (%)1.82% 1.48% 1.55%
Wealth AUM ($B)—$8.7 $9.2

Noninterest income detail

Noninterest Income ($M)Q3 2024Q2 2025Q3 2025
Investment Advisory Fees$14.9 $17.3 $17.6
Service Charges on Deposits$8.1 $8.2 $8.6
Card Income$4.4 $4.2 $4.2
Interest Rate Swap Income$0.6 $1.0 $0.9
Rabbi Trust Income$3.6 $5.7 $3.8
Miscellaneous and Fees$5.3 $5.9 $4.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM (ex‑accretion)Q4 2025Not guidedRoughly flat q/q; deposit costs roughly flat; accretion is the wild card New qualitative outlook
Deposit Costs/BetaThrough cycleHistorical beta ~45–50% with lags Reiterated plan to price down as Fed eases; target ~45–50% through cycle Maintained
Operating Noninterest ExpenseQ4 2025Not guided“Roughly flat… overall to down a touch” q/q New qualitative outlook
Share RepurchaseThrough Oct 31, 2026Small repurchases in Q2 ($3.0M) New 5% authorization up to 11.9M shares; Federal Reserve non‑objection received Raised
DividendQ4 2025$0.13 declared for Sep 15, 2025 $0.13 declared, payable Dec 15, 2025 Maintained
HarborOne MergerClose/IntegrationApprovals pending; integration planning underway All regulatory approvals received; close Nov 1; assumptions (cost saves, charges, credit mark) reiterated Advanced/confirmed
CECL UpdatePost‑closeNot discussedIntend to early adopt CECL change removing double counting of expected losses, if approved New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
NIM trajectoryQ1: +33 bps to 3.38% on higher asset yields and lower funding costs; Q2: +21 bps to 3.59% on higher asset yields 3.47% (‑12 bps q/q) on higher deposit costs and lower accretion; core NIM flat q/q ex‑accretion Peaked in Q2; stabilizing ex‑accretion
Deposit competitionQ1: cost of interest‑bearing liabilities fell; Q2: deposit costs stable Competition “heightened” in region, especially money market; pricing discipline continues More intense near term
Loan growthQ1: +0.7% q/q; Q2: +2.0% q/q, C&I-led +1.3% q/q; commercial up ~6% YTD; pipeline ~$575M Steady growth
Wealth managementAUM $8.4B (Q1) to $8.7B (Q2) Record $9.2B; retail referrals strong; positive net flows Strengthening
Office/CRE riskNPLs fell Q1→Q2 to 0.30% NPLs up to 0.37% on one office loan; 85% occupied; reserves conservative; “worst… mostly behind us” Manageable uptick
Capital returnsQ1 buybacks $48.7M; dividend increased to $0.13 New 5% buyback authorization; dividend declared Accelerating
M&A/integrationHarborOne integration planning in Q2 All approvals; close Nov 1; assumptions reiterated Moving to execution
Regulatory/accounting—Plan to early adopt CECL change (if approved) New
Shareholder engagement—Addressed investor presentation by HoldCo; emphasized focus on performance and engagement New development

Management Commentary

  • “Our third quarter performance reflects this focus, with robust loan growth, significantly improved year‑over‑year profitability metrics, and record Wealth Management assets under management. We also received all required regulatory approvals for our merger with HarborOne, creating the leading $30 billion community bank in Greater Boston…” — CEO Denis Sheahan .
  • “Net interest margin of 3.47% was down 12 basis points from the prior quarter reflecting higher deposit costs… and lower net discount accretion… Importantly, we remain fully deposit funded with no wholesale funding.” — CFO David Rosato .
  • “Assets under management reached a record high of $9.2 billion… driven by market appreciation and modest positive net flows.” — CFO David Rosato .
  • “We are reiterating the key assumptions we announced earlier this year [for HarborOne]… cost savings, one‑time charges, and gross credit mark… intend to early adopt the changes to the CECL accounting standard… if approved.” — CFO David Rosato .

Q&A Highlights

  • Core NIM outlook: management expects deposit costs to be roughly flat in Q4 and core NIM to be roughly flat q/q; accretion remains the wildcard; September spot margin 3.48% (up 1 bp vs Q3 average) .
  • Expenses: Q3 comp was “a little inflated”; overall operating expenses expected roughly flat to down slightly in Q4 .
  • Deposit betas: through‑cycle target ~45–50% with lags; plan to price down as Fed eases while balancing growth and margin .
  • Office credit: NPL increase tied largely to one mixed‑use office loan (85% occupied); previously reserved; expecting resolution by Q1 2026 .
  • Capital allocation and M&A: priority order remains organic growth, share repurchases, dividend; further M&A is lower priority near‑term post HarborOne .
  • Activism: in response to HoldCo’s presentation, management emphasized ongoing shareholder engagement and focus on top‑quartile performance (no specifics on proposals) .

Estimates Context

  • S&P Global consensus for Q3 2025: EPS $0.398* (4 ests) vs actual operating EPS $0.37 (miss), revenue $245.9M* (2 ests) vs S&P actual $234.4M* (miss). Management cited higher deposit costs and lower accretion as primary drivers of q/q pressure .
  • Implications: modest estimate revisions likely to reflect lower accretion run‑rate and elevated deposit competition into Q4; HarborOne accretion and cost saves may support 2026 trajectory post close .

Note: Asterisked values are from S&P Global Market Intelligence (SPGI). Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core operating miss vs SPGI on EPS and revenue amid deposit competition and lower accretion; ex‑accretion NIM is stabilizing, setting a base into Q4 .
  • Credit remains a differentiator: low NCOs (13 bps), manageable NPL uptick tied to one office loan with existing reserves; office risk contained with conservative marks .
  • Wealth and commercial engines are working: loan growth continues, AUM at a record $9.2B, and cross‑sell momentum supports fee durability .
  • Capital return accelerates: new 5% buyback plus dividend, underpinned by robust CET1 and TBV growth; a positive technical for the stock into 2026 .
  • HarborOne close (Nov 1) is the key near‑term catalyst; execution on cost saves, deposit mix optimization, and potential CECL early adoption could lift combined profitability .
  • Watch list for Q4: deposit pricing dynamics in a potentially easing Fed regime, accretion trajectory, integration updates, and resolution of the single office credit .
  • Shareholder engagement/activism is elevated but management’s stance is performance‑first; any strategic shifts would be evaluated vs organic and capital return priorities .