Eastern Bankshares plans new 5% share repurchase amid merger integration and commercial lending growth

Earnings Call Insights: Eastern Bankshares, Inc. (EBC) Q3 2025

MANAGEMENT VIEW

* Robert Rivers, Executive Chairman, highlighted the milestone of Eastern’s fifth anniversary as a public company, noting that "today, Eastern is a $25.5 billion organization with the fourth largest deposit market share in Greater Boston, and we are the largest independent bank headquartered in Massachusetts." He emphasized intentional market expansion, community engagement, and consistent investment in talent as key drivers of improved earnings and shareholder returns.
* CEO Denis Sheahan announced, "We are very pleased to have received the required regulatory approvals for our merger with HarborOne which is on track for a November 1 close." He described this as strengthening Eastern’s presence in Greater Boston and expanding into Rhode Island. Sheahan also announced the resumption of the share buyback program, stating, "Third quarter operating earnings of $74.1 million increased 44% from a year ago and generated solid returns." He cited a 1.16% operating return on assets and an 11.7% operating return on average tangible common equity, both up year-over-year. He reported commercial loan growth and an approximate 10% increase in relationship managers over the past year.
* Sheahan also noted, "Assets under management reached a record high of $9.2 billion in the third quarter driven by market appreciation and modest positive net flows." The Board authorized a new 5% share repurchase program of up to 11.9 million shares.
* CFO R. Rosato stated, "We reported net income of $106.1 million or $0.53 per diluted share for the third quarter." He added, "Operating return on assets of 116 basis points and return on average tangible common equity of 11.7% were down from second quarter metrics, both meaningfully improved from a year ago."

OUTLOOK

* The merger with HarborOne is expected to close November 1, and management reiterated that "the original margin expansion and numbers that we put out back in April for the combined institution are still good numbers." CFO Rosato commented on deposit costs, stating, "as the Fed eases, we will work deposit costs down and target deposit betas like our experience during the most recent tightening cycle or about 45% to 50%, with lags relative to Fed actions."
* Management confirmed the resumption of the share buyback program and emphasized focus on organic growth and return of capital to shareholders. There were no significant changes in strategic direction compared to prior guidance.

FINANCIAL RESULTS

* CFO Rosato reported, "Net income of $106.1 million or $0.53 per diluted share for the third quarter." Operating earnings were $74.1 million or $0.37 per diluted share. Net interest income was $200.2 million, with margin at 3.47%. Excluding net discount accretion, net interest income would have increased approximately 3% quarter-over-quarter.
* Noninterest income of $41.3 million declined from the prior quarter, primarily due to lower retirement benefit investment income and miscellaneous income. Wealth management fees contributed nearly half of noninterest income, with assets under management reaching $9.2 billion.
* Noninterest expense rose to $140.4 million, with $3.2 million in merger-related costs. Deposits ended at $21.1 billion, down slightly from Q2, while loans grew 1.3% linked quarter, driven by commercial lending.
* Asset quality remained strong, with net charge-offs to average loans at 13 basis points and allowance for loan losses at $233 million. One office loan accounted for a rise in nonperforming loans, but management stated, "we continue to believe the worst of the office loan problems is mostly behind us."

Q&A

* Damon Del Monte, KBW: Asked about margin outlook and deposit cost pressures. CFO Rosato responded, "the competition has heated up here... I think that pressure remains in Q4. So that leads me to roughly flat deposit costs with a little bit of a wildcard on the asset side."
* Del Monte questioned expense trends. Rosato replied, "I think we were a little inflated on the comp line this quarter. I think that will tend to settle down in Q4."
* Del Monte inquired about M&A appetite. CEO Sheahan responded, "We have no plans in terms of additional mergers in the near term. But... if a merger opportunity were to arise, it's in our shareholders' best interest for us to evaluate the opportunity."
* Mark Fitzgibbon, Piper Sandler: Asked for a breakdown of wealth management AUM growth. Rosato answered, "it was predominantly market-driven... net flows in the quarter were a little over $50 million positive."
* Fitzgibbon asked about RIA acquisitions. Sheahan replied, "no, we're not interested at this point in any kind of M&A there."
* Fitzgibbon mentioned a Holdco presentation. Sheahan stated, "we welcome that dialogue from whomever. But... we're excited about the future of the company."
* Laura Havener Hunsicker, Seaport Research: Asked about office loan nonperformers. Sheahan explained, "It's one loan... we started building reserves that will mature next year."
* Sun Young Lee, TD Cowen: Asked about NIM sustainability. Rosato noted, "competition in our market remains intense... Our message is, in the near term, a little slow, a little slower to maintain and eventually grow market share, but longer term... we should expect us to achieve our full betas."

SENTIMENT ANALYSIS

* Analysts pressed on margin sustainability, expense management, and strategic direction, with a neutral to slightly cautious tone as they sought clarity on deposit costs, M&A priorities, and credit quality.
* Management maintained a generally confident tone in prepared remarks, highlighting strategic progress and capital strength. In Q&A, management was measured and occasionally defensive, emphasizing focus on organic growth and prudent capital allocation, as seen in responses like "we have no plans in terms of additional mergers in the near term."
* Compared to the previous quarter, both analysts and management maintained a consistent tone, with analysts continuing to probe for potential risks and management reiterating confidence in the company’s strategy and risk controls.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language was consistent with the previous quarter, reiterating a focus on organic growth and margin management. The share buyback was resumed, and no new M&A initiatives were announced, marking continuity in strategic direction.
* Loan growth continued, with commercial lending remaining the key driver. Wealth management AUM increased further to a new record. Deposit costs rose modestly, and margin declined slightly, primarily due to lower discount accretion.
* Analysts maintained focus on margin, expense trends, and credit quality, similar to the prior quarter. Management’s confidence in the commercial lending and wealth management strategy remained strong.
* There were no significant shifts in management or analysts’ sentiment compared to the previous quarter. Management reiterated that the worst of the office loan issues is likely over, similar to prior reassurances.

RISKS AND CONCERNS

* Management cited heightened competition for deposits in the region as a key challenge, with CFO Rosato stating, "the competition has heated up here."
* Slightly elevated noninterest expense, driven by higher compensation and merger costs, was acknowledged. Management expects compensation expenses to moderate in the next quarter.
* Office loan exposure remains under scrutiny, but management reported that the primary increase in nonperforming loans was due to a single, long-monitored loan.
* Integration of the HarborOne merger was mentioned as a significant ongoing initiative, with management reiterating focus on a smooth transition and delivery of anticipated synergies.

FINAL TAKEAWAY

Eastern Bankshares management emphasized the successful regulatory approval for the HarborOne merger, continued commercial lending momentum, and a record in wealth management assets as critical drivers of future growth. The resumption of the share buyback and strong capital metrics signal management’s confidence in continued shareholder value creation, while discipline in expense control and deposit pricing remains a priority as competitive pressures persist. The company’s ongoing strategic investments and organic growth orientation are positioned to support sustained profitability and market leadership in the quarters ahead.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ebc/earnings/transcripts]

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