Eastern Bankshares Q2 2025 Earnings Report

Eastern Bankshares EPS Results

• Actual EPS: $0.41
• Consensus EPS: $0.38
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

Eastern Bankshares Revenue Results

• Actual Revenue: $249.10 million
• Expected Revenue: $241.32 million
• Beat/Miss: Beat by +$7.78 million
• YoY Revenue Growth: N/A

Eastern Bankshares Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: After Market Closes
• Conference Call Date: Friday, July 25, 2025
• Conference Call Time: 9:00AM ET

Eastern Bankshares (NASDAQ:EBC) operates as the bank holding company for Eastern Bank that provides banking products and services primarily to retail, commercial, and small business customers. The company provides deposit accounts, interest checking accounts, money market accounts, savings accounts, and time certificates of deposit accounts. It also offers commercial and industrial, commercial real estate and construction, small business, residential real estate, and home equity loans; lines of credit; and other consumer loans comprising unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans, and other personal loans. In addition, the company provides trust, financial planning and portfolio management, automated lock box collection, cash management, and account reconciliation services; personal, business, and employee benefits insurance products. Eastern Bankshares, Inc. was founded in 1818 and is headquartered in Boston, Massachusetts.

Eastern Bankshares Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q2 operating earnings of $81.7 million (up 21% QoQ), net interest margin expanded 21 bps to 3.59%, and operating efficiency improved to 50.8%, driving robust profitability metrics.
• Positive Sentiment: Annualized loan growth of 8% and deposit growth of 8%, with a $500 million commercial pipeline, underscore Eastern’s profitable organic growth and disciplined funding strategy.
• Positive Sentiment: Credit quality strengthened as nonperforming loans fell to 30 bps of total loans, net charge-offs remained at zero, and coverage ratio rose to 424%, despite ongoing caution around office lending.
• Neutral Sentiment: Full-year 2025 guidance was updated to 3–5% loan growth, 0–1% deposit growth, net interest income of $810–$820 million, and operating fee income of $145–$150 million, reflecting both opportunities and modest revisions.
• Positive Sentiment: The Harbor One merger remains on track for a Q4 close with 13 branch consolidations planned and integration well underway, reinforcing Eastern’s confidence in long-term value creation.

Presentation

[Operator]

Welcome to the Eastern Bancshares Inc. Second Quarter twenty twenty five Earnings Conference Call. Currently, all participant lines are in a listen only mode. Following the prepared remarks, there will be a question and answer session. Please note this event is being recorded for replay purposes.

[Operator]

Today's call will include forward looking statements. The company cautions investors that any forward looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors. These factors are described in the company's earnings press release and most recent 10 ks filed with the SEC. Any forward looking statements made represent management's views and estimates as of today, and the company undertakes no obligation to update these statements because of new information or future events.

[Operator]

The company will also discuss both GAAP and certain non GAAP financial measures. For reconciliations, please refer to the company's earnings press release, which can be found at investor.easternbank.com. I'd now like to turn the call over to Bob Rivers, Eastern Executive Chair and Chair of the Board of Directors. Please go ahead.

[Robert Rivers, Executive Chair & Chair of the Board of Directors at Eastern Bankshares]

Thank you, Dani. Good morning, everyone, and thank you for joining our call this morning. With me today is Eastern's CEO, Dennis Sheehan and our CFO, David Rosado. We believe our strong second quarter performance underscores the strength of the Eastern franchise and our leading position in the Greater Boston area. During the quarter, we've been able to spend more time with our future colleagues at Harbor One, and our confidence in the opportunities and long term value creation of our combination provides has only deepened.

[Robert Rivers, Executive Chair & Chair of the Board of Directors at Eastern Bankshares]

We are very excited about this partnership and look forward to welcoming Harbor One customers and employees to Eastern. Before turning the call over to Dennis, I wanted to recognize Nancy Huntington Steger, President and CEO of the Eastern Bank Foundation, who retired earlier this month after thirty years with our company. When Nancy joined Eastern in 1995 to lead our human resources team, she was the first woman to serve on our management committee and went on to actively shape our culture ever since. She served as a key collaborator and trusted partner, not only for me, but our entire management team, organization, and in the communities we serve. With much gratitude and appreciation, I congratulate Nancy on her retirement and wish her the best in her next chapter. With that, I'll hand it over to Dennis.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Thank you, Bob. We are pleased with our strong second quarter results as highlighted on Page two of the earnings presentation and the continuation of positive trends in many areas of the business. Operating earnings were $81,700,000 an increase of 21% from the first quarter. Second quarter performance included a 21 basis point expansion in the net interest margin to 3.59% and continued improvement in the operating efficiency ratio to 50.8% due to higher revenues and effective expense management. These results generated further improvement in profitability metrics.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Operating return on average assets was up 21 basis points to 1.3%, and operating return on average tangible equity increased from 11.7% at the end of the first quarter to 13.6%. As of quarter end, total assets reached $25,500,000,000 up 2% from March 31. Tangible book value per share increased 4% to 12.53 reflecting balance sheet growth and solid capital generation. Robust loan growth of 8% annualized this quarter reflects our ongoing focus on profitable organic growth and continued strategic investments in hiring talent. Our scale, combined with deep local knowledge of the communities we serve, is a competitive advantage that consistently builds meaningful relationships and new business opportunities.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Commercial loan pipelines are steady at approximately $500,000,000 and our customers remain resilient despite economic uncertainties. Deposits finished the quarter strong with 8% annualized growth. Importantly, deposit costs remained stable, highlighting our disciplined approach to pricing and favorable deposit mix. Momentum in our wealth management business continued this quarter with assets under management reaching a record high of $8,700,000,000 Credit trends continue to be positive, reflecting the quality of our underwriting and proactive risk management approach, addressing issues prudently and quickly. Nonperforming loans of 30 basis points improved for the second consecutive quarter, and we did not have any net charge offs.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

The level of nonperforming loans and classified assets peaked in the second quarter of last year and have continued to improve. Overall trends are positive and office loan problems are mostly behind us, but we remain cautious in our outlook. We continue to closely monitor evolving economic conditions and policies that could impact customers. David, I'll hand it over to you to review our second quarter financials.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Thank you, Dennis, and good morning, everyone. I'll begin on Slides three and four. We reported net income of $100,200,000 or $0.50 per diluted share for the second quarter. Included in net income is a GAAP tax benefit related to losses from the investment portfolio repositioning completed in Q1 that accrues over the course of 2025. On an operating basis, earnings of $0.41 per diluted share increased 21% linked quarter and increased 78% from a year ago, reflecting the enhanced earnings power of the company with the addition of Cambridge.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

The results were highlighted by net interest margin expansion, fee income growth, and further efficiency ratio improvement. Looking at slide four, we are encouraged by improving quarterly trends across several financial metrics, including operating ROA and operating return on average tangible common equity, reflecting stronger earnings performance and thoughtful balance sheet management. Operating ROA of 130 basis points for the second quarter is up 60 basis points from a year ago, while return on average tangible common equity of 13.6% increased from 6.4% over the same period. We continue to generate positive operating leverage as evidenced by an operating efficiency ratio of 50.8%, which improved for the fourth consecutive quarter, supported by higher revenues and effective expense management. Moving to the margin on slide five.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Net interest income of $2.00 $2,000,000 or $206,800,000 on an FTE basis, increased for the fourth consecutive quarter and grew $13,100,000 or 7% from Q1. The growth was driven by margin improvement attributable to higher asset yields. Net income included net discount accretion of $16,500,000 up $4,300,000 from the prior quarter due to early loan payoffs. The margin expanded 21 basis points to 3.59 Asset yields increased 21 basis points from the prior quarter, primarily driven by higher investment yields, reflecting a full quarter impact of the investment portfolio repositioning completed in early February. In addition, the margin was favorably impacted by higher loan yields at a modest reduction in interest bearing liability costs.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Net discount accretion contributed 29 basis points to the margin compared to 22 basis points in the prior quarter. Turning to slide six, non interest income was $42,900,000 compared to a non interest loss of $236,100,000 in Q1. The first quarter included pretax non operating losses on the sale of available for sale securities of $269,600,000 related to the investment portfolio repositioning. Operating noninterest income was $42,200,000 up $8,000,000 linked quarter, primarily driven by $7,000,000 increase in higher income from investments held in Rabbi Trust for employee retirement benefits. The increase was partially offset by $3,200,000 in higher Rabbi Trust benefit costs reported in noninterest expense.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

In addition, investment advisory fees and interest rate swap income grew 800,000 and $500,000 respectively. Turning to slide seven, we highlight our wealth management business, which is an important component of our long term strategy. Wealth management fees, account for nearly half of total operating non interest income, are less sensitive to interest rate fluctuations, helping to diversify our earnings. Wealth management posted a solid performance in the second quarter, with assets under management reaching a record high of 8,700,000,000 driven by market appreciation. Fees of $17,300,000 were up $800,000 linked quarter, primarily due to seasonal tax preparation fees.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

On Slide eight, non interest expense of $137,000,000 increased $6,800,000 from the first quarter due to higher operating non interest expense and merger related costs. Merger related costs related to the Harbor One transaction were $2,600,000 compared to no such expenses in the previous quarter. Operating non interest expense was $134,400,000 up $4,300,000 linked quarter. The increase was primarily driven by $3,200,000 in higher Rabbi Trust benefit costs I mentioned earlier. These expenses are reported in the salaries and employee benefits line.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

As anticipated, following better than expected Q1 expenses, we saw a modest uptick in costs across most line items in the second quarter. Moving to the balance sheet, starting with deposits on slide nine. Period end deposits totaled $21,200,000,000 an increase of $424,000,000 from the prior quarter. This growth was primarily driven by higher municipal balances, which we expect to be seasonally lower in the third quarter. A sizable portion of the period end growth occurred late in the quarter.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

As a result, average deposits were consistent with Q1. We continue to benefit from a favorable deposit mix with nearly 50% of deposits in checking accounts, providing a stable and low cost funding base. We remain fully deposit funded with essentially no wholesale funding, which further enhances our balance sheet strength. Total deposit costs of 148 basis points were consistent with the first quarter, while the cost of interest bearing deposits decreased one basis point, driven by lower CD costs. While we remain focused on growing deposits to support our funding strategy, and we are committed to doing so in a disciplined manner, Our approach to gathering deposits prioritizes balancing liquidity needs with margin protection.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

On slide 10, period end loans increased 385,000,000 linked quarter led by continued strength in commercial lending. Increased C and I activity drove $219,000,000 of growth, while momentum in CRE accelerated in June, resulting in a higher balance of $117,000,000 Consumer home equity lines continued its steady trajectory of quarterly growth, adding $53,000,000 of loans. Commercial delivered a strong 2025 with nearly $500,000,000 of loan growth from year end twenty twenty four. The performance reflects the impact of our of our opportunistic hiring of growth oriented talent, continued strength of the Eastern brand, and our long tenured relationship managers. Our combination of meaningful scale, which allows us to offer a broad suite of products and services and deep local expertise and presence differentiates us.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Our high quality investment portfolio, as shown on slide 11, benefited from a full quarter impact of the securities repositioning completed in early February. As a result, the second quarter portfolio yield was up 33 basis points to three zero two. Turning to Slide 12. Capital levels remain robust as evidenced by CET1 and TCE ratios of 14.410.8%, respectively. Consistent with our commitment of returning capital to shareholders, we repurchased $3,000,000 worth of shares at an average price of $16.36 prior to our merger announcement in April.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

In addition, the board approved a $0.13 dividend to be paid in September. Looking at overall asset quality on slide 13, reserve levels remain strong as evidenced by an allowance for loan losses of $232,000,000 or 127 basis points of total loans. These metrics are up from $224,000,000 or 125 basis points at the end of Q1. Credit trends continued to improve during the quarter. We did not have any net charge offs and non performing loans decreased 36,900,000 to $54,700,000 or 30 basis points of total loans.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

The reduction in NPLs, which increased the coverage ratio to 424% from 245% at the end of Q1, was driven by payoffs achieved through strong execution of our managed asset asset group. Criticized and classified loans of $460,000,000 or 3.6% of total loans improved from $596,000,000 or 4.82% of total loans at the end of Q1. Finally, we booked a provision of $7,600,000 up from $6,600,000 in the prior quarter, driven primarily by loan growth. On Slides fourteen and fifteen, we provide details on total CRE and CRE investor office exposures. Total commercial real estate loans are $7,300,000,000 Our exposure is largely within local markets we know well and is diversified by sector.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

The largest concentration is the multifamily at 2,600,000,000.0, which is a strong asset class in Greater Boston due to the ongoing housing shortages. We have no multifamily nonperforming loans and have had no charge offs in this portfolio for well over the past decade. We remain focused on investor office loans. The portfolio of $828,000,000 or 4% of the total loan book decreased $48,000,000 linked quarter. Criticized and classified loans of 118,000,000 or about 14% of total investor office loans improved from 163,000,000 or 19% total investor loans as of March 31.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

In addition, our reserve level of 4.9% remains very conservative. The investor office loan portfolio includes our relatively limited exposure to the lab and life science sector, which consists of four loans totaling $99,000,000 or less than 1% of total loans. Two of the loans are in Cambridge, one in Boston, and the other in Suburban Mass. None of these loans were originated as speculative construction transactions. All loans are accruing, and we continue to monitor these loans as part of our ongoing review of the office portfolio.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

We continue to take a proactive approach in managing investor office exposures. Our credit teams perform thorough assessments of the portfolio on a quarterly basis, and on larger, lower risk rated credits, we conduct ongoing monthly reviews. This in-depth knowledge enables our credit team to take timely and decisive actions as reflected in this quarter's performance. On slide 16, we provide updated full year 2025 outlook. Please note this outlook is for standalone Eastern and does not contemplate the impact of the Harbor One merger.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

We are raising our full year loan growth outlook to 3% to 5%, up from our previous guidance of 2% to 4%, reflecting strong results through the first six months. Deposit growth expectation of zero to one percent is lower than the previous range of one to 2%. We continue to anticipate a favorable mix shift from CDs to money markets. Based on lower average deposit balances, we now expect net interest income to be in the range of $810,000,000 to $820,000,000 a modest reduction from previous guidance with FTE margin expectations remaining at three forty five to three fifty five. While provision will be based on evolving credit trends, we currently anticipate the provision will end the year between $27,000,000 and $32,000,000 an improvement from our original projection of 30,000,000 to 40,000,000 We increased our forecast for operating fee income to a 145 to a $150,000,000, up from a 130 to a 140,000,000.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Operating non interest expense is now expected to end the year between $530,000,000 and $540,000,000, an improvement from our previous range of $5.35 to $5.55. Our expected full year operating tax rate has been revised to 21% to 22%, down from 22% to 23%. Finally, our current buyback authorization expires this month, and we plan to seek Redwood Cary approval for further share repurchases post the Harbor One close. We are committed to returning excess capital to shareholders through opportunistically repurchasing shares. Before opening up the call for questions, I'd like to take a moment and provide an update on our pending merger.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

In June, we filed all regulatory applications for our merger with Harbor One and are working closely with regulators to obtain the necessary approvals. We continue to expect to receive approval and close the transaction in the fourth quarter. We also submitted our branch consolidation plans in connection with the merger. Given significant overlap between the two branch networks, we plan to consolidate 13 locations, which includes six Eastern branches and seven from Harbor One. Pending regulatory approval, we anticipate beginning the consolidation process in q one twenty twenty six.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Integration planning is well underway, and we are very pleased with our progress. We remain focused on delivering a seamless transition for our customers, community partners, and employees. This concludes our comments. We will now open up the line for questions.

[Operator]

Your first question comes from the line of Mark Fitzgibbon, Piper Sandler. Your line is open.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

Hey guys, good morning.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Good morning, Good morning, Mark.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

Question I had, maybe for you David, is it likely that we'll see more securities portfolio restructurings in coming quarters sort of excluding the any things that you do related to the Harbor One deal?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Possibly, Mark. The when we think about the use of capital, we think about organic growth. We we think about share buybacks, and we obviously think about balance sheet management, which would include the portfolio repositioning. I would say, in the sequence of events, getting approval and getting back into the market to buy stock back comes first. With that said and based on, interest rates, we do have the capital to pursue another restructuring, but it's a little bit on the back burner right now just because of the merger and the fact that our current authorization expires at the end of the month.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

Okay. And then secondly, on the big drop you had in the NPLs this quarter was almost $40,000,000 Were there any loan sales? Or those were just payoffs or something else?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

What I would say is credit to our managed asset group. We worked through and did not sell, but worked through and resolved five credits in the quarter, and that was the driver.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

Okay. And then last question is sort of more strategic. I don't know for Bob or Dennis or both, but, following the completion of the Harbor One deal, you'll have this New this, Rhode Island franchise. And I guess I'm curious, is the plan to potentially use that as a springboard to move south into places like Southern Rhode Island or Connecticut or maybe even eventually New York? Because I know historically you've been a little more focused in sort of Eastern Massachusetts and concentrated there.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

But would you be open to sort of expanding the footprint to some new markets?

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Mark, this is Dennis. We certainly, are welcoming the opportunity to engage in the Rhode Island market, and we will look to build out in that market both in terms of our commercial, our consumer businesses, and our wealth management business. But we don't have plans to extend into Connecticut from a banking perspective. As you know, we already have a presence in Connecticut from a wealth management perspective. We're very happy with that.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

But beyond, beyond that, we don't currently have plans to expand banking services into Connecticut or down into New York. Certainly, would never say never, but it's not something that we're thinking about strategically at all at this point.

[Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies]

Great. Thank you.

[Robert Rivers, Executive Chair & Chair of the Board of Directors at Eastern Bankshares]

Sure.

[Operator]

Your next question comes from the line of Damon DelMonte, KBW. Your line is open.

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks for taking my question. Just wanted to talk a little bit about the strong C and I growth this quarter. Can you just give a little color as to what drove that kind of maybe what what type of customers, were taking on more credit? And, you know, were these new customers, or are these more of a, utilization of of lines that are currently in place?

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Damon, so it's a combination of both. And I what I would say is we're seeing you know, while there still is some concern about, economic volatility with tariffs and trade policy, etcetera, we're seeing increasing confidence from our customer base and in the market broadly. That, of course, is subject to change depending on what comes out of Washington. But, certainly, part of the impetus for this growth is we have been adding talent consistently over the past year in our commercial lending division. We're very happy, to do that.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

You know, the message that we've been delivering both to our commercial division and to our customers is we are open for business. We are ready to grow. We have the capital to grow. We have the expertise, and it's beginning to bear fruit. You'll note, I think I said in my comments that, the the loan pipeline at the end of the second quarter is just as good as it was at the end of the first quarter.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Summer is typically a little quieter, but but heading into these summer months, we feel very good about that that pipeline. So it's a combination of customer confidence and that we are investing more in growth within our commercial division.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Damon, it's it's David. The only thing I would add to that was it was broad based. In the first quarter, we did call out franchise in as as being a driver of growth. But in the second quarter, it was across what we would call all of our all of our verticals within C and I, which is which was great to see.

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

Got it. Great. Appreciate that color. And then secondly, on the on the margin and the outlook, appreciate the, the the reaffirmed guidance there. David, when we think about the the core margin, so this quarter, you know, if you take out the the fair value accretion, it was up about 13 basis points.

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

You know, kind of what what do you think about from a cadence standpoint going into the the back half of the year over the next couple quarters? Maybe a a few basis points of of kind of grinding higher. Is that fair?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Yeah. I I think the margin, honestly, is gonna be kind of flattish in the back half of the the year. I think about a lot of it is gonna be dependent on our ability on core deposit growth. Right? But away from that, we we called out all the way back in January the securities repositioning that's we now have a full margin impact of that.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

So that is tailwind. It it has has occurred. The we do have two 2 and a half billion swap book that is just gonna start amortizing in the back half of the year, relatively muted impact. So when I think about the third quarter impact of that, it's about $300,000 pretax. It'll be more in the fourth quarter.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

And then lastly, the deposit the competitive market for deposits is heated up a bit from our original thinking. So we've experienced probably the the the most repricing down in our CD book that we'll see for the year. The we're more neutral in the back half of the year from existing CDs versus market rates. So you put all that together, and fixed rate commercial lending will have a positive role, residential mortgage will have a positive role, but our our I do think the margin is roughly flattish rather than I don't wanna telegraph, you know, sequential increases each quarter at this point. The only caveat, and we benefited this quarter, was what's so hard to predict is accretion income.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

We had we had two large loans that paid off in in June and it juiced our margin in the quarter.

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

Got it. Okay. That's helpful. Thanks. And then just from, like, a modeling standpoint, is there any way we can any guidance on how to think about the Rabbi Trust income?

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

I I guess, actually, I should ask, the the guidance for the full year for for fee income and expenses, that's based off of what you've already realized in in Rabbi Trust income and expenses. Right? So would we imply, like, those are zero and they kinda net each other out when we look at, like, the full year?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Yeah. So from from a macro perspective, positive equity markets lead to positive rabbi trust income, meaning the the liability side is more fixed. The asset size, we have partial hedge on, and it's and most of that is equity based. So we had a strong q two for equity market returns, and that led to positive change for Rabbi Trust income. Not a perfect hedge.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

You know, One goes through fees. We have the offset in the in the comp line. But if if markets remain steady for the back half of the year, the Rabbi Trust income and expense isn't that much of a needle mover either way. But when you have equities up or down, up is a positive impact, down is a negative impact.

[Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)]

Got it. That's helpful. Okay. That's all that I had. Thank you very much.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Thanks, Damon.

[Operator]

Your next question comes from the line of Laurie Hunsicker, Seaport Research Partners. Your line is open.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Hi. Thanks. Good morning, Dennis and David. Just wanted to to go back to where Damon was. So on margin, do you have a June spot margin?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

I have a June spot margin for you, Laurie. What I would say is what I wanna give you is a normalized June spot margin because as I as I said to to Damon, we had two all the accretion income, not all of it, but the the positive differential linked quarter in accretion came in in June. So if you normalize that for the for the quarter, the spot margin in June is three fifty five. So that's four bps above the quarter average.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Okay. Okay. Great. Okay. And then going back to credit, and your credit just was so so good this quarter and office.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

You know, the drop in office non performers from 42,000,000 down to 10, and your criticized office going from a 163,000,000 down to a 118,000,000. I'm looking on page 15 at your maturities. Are are any of the 118,000,000 in criticized office maturing in those in those next four quarters that you saw on the maturity schedule?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Yes. I so we have, I believe, if I'm going from memory here, one criticized loan. It with that's in the neck has a maturity within the next year. It's accruing, but it's obviously it's office. There's some issues around it.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

So it is in there. That's why I was gonna call out when you look at that schedule, this is the first time since we've been showing that there's no NPLs and or non accruing loans in in that next year of maturities.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Yeah. It's exciting. Okay. Great work. Okay.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

And then maybe just if if you can sort of more broadly help us think about the FASB's recently proposed ASU with respect to the CECL double count. If you can just remind us in terms of, you know, what the tangible book pickup will look like, you know, just what the CECL double count is for past deal, current deal, pending, etcetera, and then what the earnings drop will be from the elimination of the non PCD? Just how to think about all of that. And then just you're you're gonna be an early adopter. Is that correct?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

That would be our plan. You know, this whole thing is subject to being finalized. So if it is finalized before the year's over, we would plan to early adopt. And that would just to be clear, that only applies to Harbor One. Right? It's not retroactive to prior acquisitions.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Okay. Okay. Thank you for that clarification. Okay.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

Yeah. So for Harbor One verse, what we originally announced around the deal, it's between one and one and a half percent less accretive. It's 1% reduction in tangible book value dilution. And from an earn back perspective, it's about two tenths of a year, so really not that material. For us on harbor one, that non PCD mark is about $42,000,000 was what we had was in the original deal announcement.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

42 okay. And sorry. That 42,000,000, that's an after tax number?

[David Rosato, CFO & Treasurer at Eastern Bankshares]

That's a pretax number.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Pretax. Okay. Okay.

[David Rosato, CFO & Treasurer at Eastern Bankshares]

And we you know, again, deal announcement, we assume five years.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Five years. Gotcha. That's super helpful. Okay. Gotcha.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

And then one last one last question, Dennis, going back to you, kinda back to where Mark was, exploring what potential geography. Can you help us think about, you know, what your appetite would be for something like a New Hampshire or a Maine? Would that would that be on the radar? Thanks.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

Well, we already are in New Hampshire, Laurie. That's a terrific market for us, both both banking and wealth management. We have sizable operations in New Hampshire. So so, certainly, it's a market that we're looking forward to growing in. We do not have any operations in Maine at this point.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

We we do some wealth management business in Maine just because our offices are so close, particularly to the Portland area, but we we don't have strategically plans to expand it to Maine at this point.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Okay. But would you I guess the question, would you consider an acquisition there at some point in the near medium term if if the opportunity presented? Would Maine be a a market of interest or or not so much?

[Denis Sheahan, CEO & Director at Eastern Bankshares]

So not at this point. You know, we again, you know, strategically, we're not planning to expand in into Maine.

[Laurie Hunsicker, Senior Analyst at Seaport Research Partners]

Okay. Great. Thanks for taking my questions.

[Denis Sheahan, CEO & Director at Eastern Bankshares]

You're welcome.

[Operator]

There are no further questions at this time. I will now turn the call over to Bob Rivers for closing remarks.

[Robert Rivers, Executive Chair & Chair of the Board of Directors at Eastern Bankshares]

Well, thank you everyone for your time and your interest this morning and for your questions. Best wishes for a great rest of summer.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Robert Rivers, Executive Chair & Chair of the Board of Directors
• Denis Sheahan, CEO & Director
• David Rosato, CFO & Treasurer

Analysts

• Mark Fitzgibbon, MD & Head - FSG Research at Piper Sandler Companies
• Damon Delmonte, Managing Director at Keefe, Bruyette & Woods (KBW)
• Laurie Hunsicker, Senior Analyst at Seaport Research Partners