Banker & Tradesman file photo
As Eastern Bank moves through its first year as a publicly traded company and prepares for the upcoming acquisition of Century Bank, the bank saw second quarter earnings decline about 28 percent from the first quarter.
Eastern Bank had second quarter net income of $34.8 million, or $0.20 per share, compared to net income of $47.7 million, or $0.28 per share, in the first quarter.
“Our second quarter financial results continue to demonstrate our organic growth, strong fee income generation, sound asset quality, and focus on our long-term profitability,” Bob Rivers, Eastern’s CEO and board chair, said in a statement announcing second quarter earnings. “COVID-19 vaccination rates in our core markets are among the highest in the country, and we’re seeing significant progress in our local economy as businesses were able to reopen their doors and look to the future.”
The bank said in the earnings statement that an improving economic outlook and strong asset quality led to a $3.3 million release of loan loss reserves.
Eastern saw net interest income of $104.6 million in the second quarter, up $4.5 million from the previous quarter, due in part to growth in the company’s securities portfolio and higher Paycheck Protection Program fee recognition.
Fee income increased from the first quarter as well, with fees from Eastern’s insurance business up 4 percent and wealth management fees up 17 percent. Debit card revenues also increased in the second quarter, up 36 percent.
Expenses that affected Eastern’s results in the second quarter included $3.5 million in merger and acquisition expenses, primarily related to the Century Bank deal, and $3.3 million in expenses for a settlement the bank anticipates making related to class action litigation involving overdraft fees.
Eastern Bank’s total assets have now reached $17 billion, up 2 percent from the first quarter. Total deposits also increased by 2 percent in the second quarter to $13.3 billion, up $269.6 million from the first quarter.
Eastern had $9.6 billion in total loans, down 3 percent from the first quarter. The bank attributed the decrease to the accelerated pace of PPP forgiveness in the second quarter.
Jim Fitzgerald, Eastern Bank’s chief administrative officer, chief financial officer and treasurer, said during a conference call to discuss earnings that the bank currently has a pipeline of about $600 million in loans, more than what it had in the first quarter. Most of these potential loan deals are with existing customers, Fitzgerald said, and represent a mix of commercial real estate, commercial and industrial, and community development lending.
An analyst asked whether another upcoming merger in the market, Buffalo-based M&T Bank’s acquisition of Connecticut-based People’s United Bank, had led to loan growth or opportunities to hire additional commercial lenders.
Rivers said this type of bank combination always comes with some opportunities but that it was too early in the process to see results yet.
“We’re paying very, very close attention and looking for those opportunities, but nothing significant that we can see as yet,” Rivers said.
Another analyst asked about Eastern’s own future acquisition opportunities. Rivers said that the bank was focused on the Century transaction, the largest the bank has done, but added that his stance on acquiring more banks had not changed since Eastern went public last October, when it raised $1.7 billion in capital.
“We’re open to conversations with those who may be interested in partnering with us,” Rivers said. “We’re interested in those combinations as we continue to deploy our capital and scale our company.”
The Century deal is expected to close in mid-November.
Correction 5:25 p.m., July 30, 2021: An earlier version of this article misstated Eastern Bank’s total assets as of June 30. The total assets were $17 billion.
