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    EBC
    Earnings call· Mar 2026(Q1 FY26)

    Eastern Bankshares Q1 FY26 earnings call EBC

    Apr 24, 2026 Source

    Executive summary

    Eastern Bankshares Q1 FY26 — Solid Performance with Strong Capital Return and Pipeline Growth

    Eastern Bankshares delivered solid Q1 FY26 results, meeting expectations despite typical seasonal trends and modest declines in loan and deposit balances. The company highlighted strong capital returns, including a 15% dividend increase and significant share repurchases, alongside record commercial loan pipelines. Management remains confident in its full-year outlook, though NII may trend towards the lower end of guidance due to Q1 loan volumes and competitive deposit pricing.

    Highlights

    5

    • Operating income increased 31% and operating EPS increased 18% from a year ago.

    • Wealth assets increased to a record high of $10.3 billion, including $9.8 billion in AUM, driven by strong positive net flows approaching $400 million.

    • Commercial loan pipelines ended the quarter at record high levels of approximately $800 million.

    • Repurchased 3.9 million shares for $75.1 million, completing 59% of the current authorization, and announced a 15% dividend increase.

    • Net charge-offs were 17 basis points, and nonperforming loans improved by nearly $35 million linked quarter.

    Concerns

    5

    • Period-end loan and deposit balances were down modestly from year-end, with deposits declining $366 million (1.4%) and loans down $187 million (less than 1%).

    • Net interest income guidance may trend towards the lower end of the $1.02 billion to $1.05 billion range due to weaker Q1 loan growth and higher deposit costs.

    • Noninterest income decreased $2.5 million compared to Q4, primarily due to a $1.9 million loss on investments related to employee retirement benefits.

    • AFS unrealized losses totaled $277 million at quarter end, up from $259 million at year-end.

    • The New England deposit environment remains competitive, with expected upward pressure on costs, translating to 2-3 bps incremental cost to deposits.

    Guidance & targets

    8
    CategoryTargetConfidence
    Net Interest Income (NII)
    Lower end of $1.02 billion to $1.05 billion
    high materiality
    Medium
    Merger Cost Savings
    On track to achieve projected savings
    medium materiality
    High
    Merger One-Time Charges
    $2 million
    low materiality
    High
    CET1 Ratio Target
    12%
    high materiality
    High
    New Share Buyback Authorization
    New authorization anticipated
    high materiality
    High
    Deposit Growth
    1% to 2%
    medium materiality
    Medium
    Loan Growth
    Original range (not specified in transcript, but implied as positive)
    medium materiality
    Medium
    Provision for Credit Losses
    Low end of $30 million to $40 million
    high materiality
    Medium

    Operational metrics

    61
    Operating income
    $88.6 millionup 31% YoY
    Q1 FY26

    On an operating basis.

    Operating EPS
    $0.40up 18% YoY
    Q1 FY26

    On an operating basis.

    Operating Return on Average Assets (ROA)
    117 bpsdown from Q4, up from 109 bps YoY
    Q1 FY26

    Operating ROA.

    Operating Return on Average Tangible Common Equity (ROTCE)
    12.8%down from Q4, up from 11.7% YoY
    Q1 FY26

    Operating ROTCE.

    Net Discount Accretion
    $19.5 milliondown $3.1 million QoQ from $22.6 million
    Q1 FY26

    Contributed 28 bps to NIM.

    Average Net Discount Accretion (expected)
    $21 million to $22 million
    Per quarter

    Expected average for future quarters.

    Noninterest Income (operating basis)
    $45.1 milliondown $1.6 million QoQ
    Q1 FY26

    On an operating basis.

    Loss on Investments (employee retirement benefits)
    $1.9 millionvs $1.7 million income in prior quarter
    Q1 FY26

    Reflecting weaker equity market performance.

    Gain on Sale of Commercial Loans
    $1.7 million
    Q1 FY26

    Related to a HarborOne loan workout.

    Noninterest Expense (operating basis)
    $167.9 millionup $11.8 million QoQ
    Q1 FY26

    On an operating basis, reflecting seasonal costs and full quarter of HarborOne.

    Salaries and Benefits Expense Increase
    $10.6 millionQoQ
    Q1 FY26

    Largest contributor to expense increase.

    Occupancy and Equipment Costs Increase
    $2.1 millionQoQ
    Q1 FY26
    Technology and Data Processing Expenses Increase
    $1.2 millionQoQ
    Q1 FY26
    Professional Services Expense Reduction
    $2.2 millionQoQ
    Q1 FY26
    Nonoperating Noninterest Expense
    $30.8 milliondown $2.6 million QoQ
    Q1 FY26

    Primarily due to lower merger-related costs.

    Merger-Related Costs (remaining)
    $2 million
    Q2 FY26

    Expected in Q2, bringing total to $67 million.

    Wealth Assets
    $10.3 billion
    Q1 FY26

    Record high, including $9.8 billion AUM.

    Assets Under Management (AUM)
    $9.8 billion
    Q1 FY26

    Driven by strong positive net flows.

    Wealth Management Net Flows
    approaching $400 million
    Q1 FY26

    Strong positive net flows.

    Wealth Management Fees Growth
    nearly 12%YoY
    Q1 FY26

    Primarily driven by strong growth in assets.

    Deposits
    $25.1 billiondown $366 million (1.4%) from year-end
    Q1 FY26

    Primarily due to seasonal outflows and elevated competition.

    Deposit Costs
    1.46%down 13 bps QoQ
    Q1 FY26

    Primarily driven by lower costs in time deposits and money market accounts.

    Spot Deposit Rate
    1.42%
    March 31, 2026

    Spot rate at quarter end.

    Broker Deposits Matured (HarborOne)
    $81 million
    Q1 FY26
    Total Loans
    down $187 millionless than 1% from year-end
    Q1 FY26

    Consistent with expectations, driven by NPL resolutions and commercial real estate payoffs.

    C&I Loan Growth
    $49 million1.1% from year-end
    Q1 FY26

    C&I continued to be a source of growth.

    Commercial Loan Pipeline
    approximately $800 million
    Q1 FY26 end

    Record high levels, giving confidence for strong origination activity.

    Securities Portfolio Balance
    up $171 millionsince year-end
    Q1 FY26
    Securities Portfolio Yield
    3.18%up 14 bps QoQ
    Q1 FY26

    Supported by recent purchases.

    AFS Unrealized Losses
    $277 millionup from $259 million at year-end
    Q1 FY26
    CET1 Ratio
    13.2%
    Q1 FY26
    TCE Ratio
    10.2%
    Q1 FY26
    Shares Repurchased (Q1)
    3.9 million
    Q1 FY26

    For $75.1 million.

    Share Buyback Amount (Q1)
    $75.1 million
    Q1 FY26

    For 3.9 million shares.

    Share Buyback Average Price (Q1)
    $19.33
    Q1 FY26

    $0.68 below VWAP for the quarter.

    Current Buyback Authorization Completion
    59%
    Q1 FY26
    Diluted Common Shares Outstanding
    220.8 million
    March 31, 2026
    Shares Repurchased (Q2 YTD)
    740,000
    Q2 FY26 YTD (as of April 23)

    For $14.4 million.

    Share Buyback Amount (Q2 YTD)
    $14.4 million
    Q2 FY26 YTD (as of April 23)

    For 740,000 shares.

    Remaining Shares on Buyback Authorization
    4.2 million
    As of April 23, 2026
    Total Buyback Authorization Completion
    65%
    As of April 23, 2026
    Basel III Impact on Risk-Based Ratios
    approximately 1%
    Future

    Preliminary estimate of increase to risk-based ratios if proposal adopted.

    Net Charge-Offs to Average Total Loans
    17 bps
    Q1 FY26
    Nonperforming Loans (NPLs)
    $138 milliondown nearly $35 million QoQ
    Q1 FY26

    60 bps of total loans.

    Allowance for Loan Losses
    $327.9 million
    Q1 FY26

    143 bps of total loans.

    Criticized and Classified Loans
    $801 millionup modestly from $793 million QoQ
    Q1 FY26

    5.1% of total loans, driven by higher criticized balances on HarborOne portfolio.

    Provision for Credit Losses
    $5.8 millionup from $4.9 million QoQ
    Q1 FY26
    Investor Office Portfolio
    $1 billion
    Q1 FY26

    4% of total loans.

    Investor Office Criticized and Classified Loans
    $160 millionimprovement from over $170 million at year-end
    Q1 FY26
    Investor Office Reserve Level
    6%
    Q1 FY26

    Remains conservative.

    FICA Expense Increase
    $3.1 millionQoQ
    Q1 FY26
    Spot Net Interest Margin (NIM)
    3.65%up 2 bps from quarter average
    March 31, 2026
    Private Credit / NBFI Exposure
    less than 3%
    Q1 FY26

    Low risk, largely centered on affordable housing, REITs, and asset-based lending.

    Interest-bearing liability costs reduction
    16 bpsQoQ
    Q1 FY26

    Driver of NIM improvement.

    Yield on interest-earning assets decline
    7 bpsQoQ
    Q1 FY26

    Primarily due to lower loan yields, partially offset by higher security yields.

    Floating Loan Portfolio
    $8.1 billion
    Q1 FY26

    Approximately 35% of total loan portfolio, excluding cash flow hedges.

    Fixed and Variable Loan Portfolio
    $14.9 billion
    Q1 FY26
    Loan Origination Yields (Commercial)
    5.75% to 6%
    Current
    Loan Origination Yields (Residential)
    5.5% to 6%
    Current
    Loan Repricing/Turnover (expected)
    $2.8 billion
    Next 3 years

    Expected to be accretive to NII and margin.

    Securities Principal Cash Flow (expected)
    $1.5 billion
    Next 3 years

    At weighted average book yield of 2.86%, expected to be accretive to NII and margin.

    Industry KPIs

    13
    MetricValueDetails
    Loansdown $187 millionUSD
    Deposits$25.1 billionUSD
    Rotce ROE12.8%%
    Cet1 ratio13.2%%
    Capital returns$75.1 millionUSD
    Fee income lines$43.6 millionUSD
    Allowance reserves$327.9 millionUSD
    Net interest income$244.7 millionUSD
    Net interest margin3.63%%
    Net charge offs npls17 bpsbps
    Total operating expenses$198.6 millionUSD
    Provision for credit losses$5.8 millionUSD
    Efficiency ratio operating leverage—

    Product announcements

    1
    ProductTypeDetails
    New Home Equity Origination Platformlaunch

    Deals & partnerships

    1
    HarborOneCore system conversion completed

    The core system conversion for the HarborOne merger was successfully completed in February, reflecting significant employee effort, even amidst a snowstorm.

    Risks & headwinds

    4
    Weaker equity market performanceQ1 FY26

    Resulted in $1.9 million loss on investments related to employee retirement benefits.

    Mitigation: Wealth management still delivered growth due to strong client relationships and full-service capabilities.

    Competitive deposit environmentOngoing

    Deposits down $366 million (1.4%) QoQ; expected 2-3 bps incremental cost to deposits, translating to 1-2 bps to overall margin.

    Mitigation: Taking targeted actions to ensure offerings are appropriately positioned to defend and grow share; balancing growth of high-quality deposit base with margin.

    Macro and geopolitical environment uncertaintyOngoing

    None explicitly quantified for future impact, but noted as a factor for NII guidance caution.

    Mitigation: Remain vigilant and closely engage with customers; proactive risk management approach to address emerging issues prudently and quickly.

    Investor office portfolio issuesOngoing

    Portfolio totals $1 billion (4% of total loans); criticized and classified loans are $160 million (improvement from over $170 million at year-end); reserve level of 6%.

    Mitigation: Re-underwrite all investor office loans of $5 million or more annually; recently completed Q1 process with no unexpected findings; believe worst of issues are behind us but remain realistic.

    What to watch in Q2 FY26

    5

    NII Guidance Trend

    Midyear
    CurrentMay trend towards the lower end of $1.02 billion to $1.05 billion
    TargetConfirmation of full-year NII range or revised guidance.

    Why it matters

    NII is a primary driver of bank profitability, and any revision impacts earnings forecasts.

    Based on Q1 results, we may trend towards the lower end of the NII guidance range we shared in January. In addition, we are mindful of that the economic environment remains fluid. We continue to closely monitor conditions impacting our business, our customers and the communities we serve. Given the ongoing uncertainty around geopolitical developments, interest rates, inflation and broader market volatility🌐, we plan to revisit our outlook at midyear as visibility improves.

    Q&A highlights

    6

    Clarification on the new repricing slide, specifically if 'projected yield' refers to roll-off yield or reprice yield, and the opportunity from fixed loan repricing over the next year.

    The projected yield is the roll-off yield. The floating bucket (prime/SOFR) reprices within 3 months, while intermediate-term fixed loans represent the repricing opportunity beyond that.

    “The time buckets reflect the dollar value of any repricing or cash flow events for the portfolio, including projected prepayments based on the forward yield curve.”

    asked by Feddie Strickland · answered by R. Rosato

    2 min read6 chapters

    Detailed Narrative

    01

    Wealth Management Momentum

    Eastern's wealth management segment achieved record assets of $10.3 billion, including $9.8 billion in AUM, driven by strong positive net flows approaching $400 million despite weaker equity markets. The integration of Eastern and Cambridge wealth teams is progressing well, enhancing client engagement and referral activity, with significant opportunity identified to expand relationships within the existing client base.

    02

    Asset Quality Strength

    The company maintains strong asset quality with net charge-offs at 17 basis points and a significant improvement in nonperforming loans, which fell nearly $35 million linked quarter to $138 million. Exposure to higher-risk sectors like private credit, software, life sciences, and clean tech is limited, and lending to NDFIs is less than 3% of total loans and considered low risk.

    03

    Capital Management and Return

    Eastern continues to generate capital in excess of growth needs, repurchasing 3.9 million shares for $75.1 million in Q1, completing 59% of the current authorization. A 15% dividend increase was announced, marking the sixth consecutive year of dividend growth. The company plans to manage its CET1 ratio towards a 12% target, with potential for additional buybacks if Basel III proposals reduce risk weights.

    04

    HarborOne Merger Integration

    The core system conversion for the HarborOne merger was successfully completed in February, reflecting significant employee effort, even amidst a snowstorm. The company remains on track to achieve projected cost savings from the merger, with one-time📎 charges largely complete, and only approximately $2 million remaining in Q2.

    05

    AI Strategy for Customer Engagement

    Eastern views AI as both an efficiency tool and a revenue driver, focusing on enhancing client relationships and personalization. The strategy aims to leverage AI to better anticipate customer needs, provide relevant product recommendations, and engage customers more effectively, scaling the company's long-standing strength in client relationships.

    06

    Loan and Deposit Dynamics

    Period-end loan and deposit balances saw modest declines from year-end, with deposits down $366 million and loans down $187 million. However, commercial loan pipelines reached a record high of approximately $800 million, indicating strong origination activity ahead. The New England deposit environment remains competitive, leading to expected upward pressure on deposit costs.

    AI-generated summary of the company’s earnings call. Not investment advice.