Eastern Bank had a first quarter net loss of $194.1 million after selling a portion of its securities portfolio for a loss.
The bank said in its first-quarter earnings statement that it sold $1.9 billion in lower-yielding, available-for-sale investment securities during the first quarter for an after-tax loss of $280 million. The bank said the move repositioned its balance sheet to improve its financial profile.
“We have taken important steps to further strengthen our already strong balance sheet to provide additional safety and security for our depositors while enhancing Eastern’s future earnings and long-term success,” Eastern’s CEO and Board Chair Bob Rivers said in the earnings statement.
Rivers said Eastern had decided in early March – before the failures of Silicon Valley Bank and Signature Bank – to sell part of the bond portfolio after “careful consideration of all our options.”
The portfolio included U.S. government and government agency bonds that the bank had purchased with excess liquidity during the pandemic when interest rates were historically low, Rivers said. The bonds had declined in value amid the rise in interest rates, he said.
Eastern used the proceeds from the sale to increase cash levels, which ended the quarter at $2.1 billion. Combined with cash generated by pledging securities to the Federal Reserve’s Bank Term Funding Program and $5 billion in secured borrowing capacity at the Federal Reserve Bank and Federal Home Loan Bank, the bank had $7 billion in various liquidity sources equal to 107 percent of all customer uninsured and uncollateralized deposits.
Deposits totaled $18.5 billion at the end of the first quarter, down $432.8 million or 2 percent from the fourth quarter of 2022.
“Eastern remains committed to serving the needs of our customers and communities and growing our market share over the long term,” Rivers said. “We believe this repositioning will allow us to better execute on those strategic objectives.”