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Item 5. Market for Registrant’s Common Equity

2022-02-25 compared with 2021-03-29 · 32 added, 81 removed, 36 unchanged (76% of the section changed)

2 unchanged sentences

Eastern Bankshares, Inc.’s common stock trades on the Nasdaq Global Select Market under the symbol EBC.

As of March 9, 2021, there were 9,135 common shareholders of record based on information provided by our transfer agent.

As of February 9, 2022, there were 8,464 common shareholders of record based on information provided by our transfer agent.

The number of record-holders may not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms and other nominees.

Comparative Stock Performance Graph

The stock performance graph below and associated table compare the cumulative total shareholder return of the Company's common stock from October 15, 2020 to December 31, 2020 to the cumulative total return of the OMX NASDAQ Bank Index and the Russell 2000 Index.

The stock performance graph below and associated table compare the cumulative total shareholder return of the Company's common stock from October 15, 2020 to December 31, 2021 to the cumulative total return of the OMX NASDAQ Bank Index, the Russell 2000 Index and the KBW Regional Banking Index.

The Company selected the KBW Regional Banking Index, to which it was added in March 2021, for the stock performance graph in this Annual Report on Form 10-K because management believes its performance provides a more meaningful comparison with the Company’s performance than does the OMX NASDAQ Bank Index, of which the Company is not a member.

The lines in the graph and the numbers in the table below represent monthly index levels derived from the compounded daily returns that include reinvestment or retention of all dividends.

4 unchanged sentences

Information used in the graph and table was obtained from a third party provider, a source believed to be reliable, but the Company is not responsible for any errors or omission in such information.

Period Ending

Index 10/15/2020 10/31/2020 11/30/2020 12/31/2020 1/31/2021 2/28/2021 3/31/2021 4/30/2021

Eastern Bankshares, Inc.

100.00 98.35 121.81 134.24 131.19 144.94 159.29 176.14

OMX NASDAQ Bank 100.00 103.43 118.23 128.80 134.18 155.75 164.64 169.51

Russell 2000 100.00 93.89 111.20 120.82 126.89 134.80 136.16 139.02

KBW Regional Banks 100.00 104.27 121.51 134.82 142.32 166.48 174.87 179.55

5/31/2021 6/30/2021 7/31/2021 8/31/2021 9/30/2021 10/31/2021 11/30/2021 12/31/2021

Eastern Bankshares, Inc.

184.97 170.48 151.25 163.93 168.94 172.85 167.53 168.53

OMX NASDAQ Bank 174.28 163.64 158.16 165.38 171.30 178.49 174.59 179.92

Russell 2000 139.30 142.00 136.87 139.94 135.81 141.59 135.69 138.72

KBW Regional Banks 184.48 172.39 164.74 172.50 177.93 183.17 178.48 184.23

Zacks Investment Research, Inc.

The Company did not repurchase any of its common stock in 2020.

Applicable regulations prohibit us from repurchasing shares of our common stock through October 14, 2021 and further limit our ability to repurchase shares of our common stock through October 14, 2023.

On January 28, 2021, we announced the initiation of a quarterly cash dividend of $0.06 per share.

We intend to pay regular cash dividends to shareholders of our common stock;

On April 7, 2021, we announced an increase to the quarterly cash dividend to $0.08 per share and on January 28, 2022, we announced an increase to the quarterly cash dividend to $0.10 per share.

We intend to continue to pay regular cash dividends to shareholders of our common stock;

however, any future determination to declare and pay cash dividends, if any, will be made at the discretion of our Board of Directors and will depend on a variety of factors, including applicable laws, our financial condition, results of operations, business prospects, general business or financial market conditions, regulatory environment and other factors our Board of Directors may deem relevant.

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333-239251), which the SEC declared effective on August 11, 2020.

We registered a total of 210,084,636 shares of common stock, which included the 7,470,326 shares of common stock that we donated to the Eastern Bank Charitable Foundation promptly following the completion of the IPO.

We registered a total of 210,084,636 shares of common stock, which included the 7,470,326 shares of common stock that we donated to the Eastern Bank Foundation promptly following the completion of the IPO.

We do not intend to issue any of the remaining 23,326,482 shares that we registered for the IPO.

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From those net proceeds, we contributed $882.0 million to Eastern Bank, representing 50% of our net proceeds, and loaned $149.4 million to our ESOP, enabling the ESOP to purchase 14,940,652 shares of our common stock in the IPO.

On November 12, 2021, we completed our previously announced merger with Century for $641.9 million in cash.

Eastern Bankshares, Inc.

has invested the remaining net proceeds in various investment securities and liquid assets, including U.S.

Agency securities, government-sponsored residential mortgage-backed securities and government-sponsored commercial mortgage-backed securities.

Agency securities,

government-sponsored residential mortgage-backed securities and government-sponsored commercial mortgage-backed securities.

Eastern Bankshares, Inc.

and Eastern Bank, respectively, generally intend that over time the net proceeds from the IPO will be used for the range of possible purposes specified in our IPO prospectus, dated August 11, 2020, under the caption “How We Intend to Use the Proceeds From the Offering.”

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The ESOP purchased 14,940,652 shares of our common stock in the IPO at the subscription price of $10.00 per share.

Consistent with the disclosure in our prospectus dated August 11, 2020, the ESOP shares represent 8% of the sum of the shares of common stock sold in our IPO plus the number of shares we donated to the Eastern Bank Charitable Foundation.

The ESOP’s decision to purchase shares in our IPO was made by its trustee, which at that time, was a committee comprised of Eastern Bank executives, acting in its fiduciary capacity with respect to the ESOP.

SELECTED FINANCIAL DATA

The selected consolidated financial and other data of the Company set forth below should be read in conjunction with more detailed information, including the Consolidated Financial Statements and related Notes, appearing elsewhere in this Annual Report on Form 10-K.

As of December 31,

2020 2019 2018 2017 2016

(In thousands)

Selected Financial Position Data:

Total assets $ 15,964,190 $ 11,628,775 $ 11,378,287 $ 10,873,073 $ 9,801,109

Cash and cash equivalents (1)

2,054,070 362,602 259,708 311,153 104,750

Trading securities — 961 52,899 46,791 51,663

Securities available for sale 3,183,861 1,508,236 1,455,898 1,504,810 1,207,596

Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees

9,593,958 8,899,184 8,774,913 8,153,986 7,635,838

Federal Home Loan Bank stock, at cost 8,805 9,027 17,959 24,270 15,342

Goodwill and other intangibles, net 376,534 377,734 381,276 373,042 362,980

Total liabilities 12,536,138 10,028,622 9,945,146 9,542,559 8,546,182

Total deposits 12,155,784 9,551,392 9,399,493 8,815,452 8,188,950

Total borrowings 28,049 235,395 334,287 526,505 154,331

Total equity 3,428,052 1,600,153 1,433,141 1,330,514 1,254,927

Non-performing loans 43,252 43,775 26,591 18,645 22,787

Non-performing assets 43,252 43,775 26,626 18,680 37,274

(1) Increase in 2020 is partially due to proceeds received from investors in our IPO.

For the Year Ended December 31,

2020 2019 2018 2017 2016

(In thousands)

Selected Operating Data:

Interest and dividend income $ 413,328 $ 445,017 $ 415,166 $ 345,406 $ 299,194

Interest expense 12,077 33,753 25,122 6,892 5,620

Net interest income 401,251 411,264 390,044 338,514 293,574

Provision for loan losses 38,800 6,300 15,100 5,800 7,900

Net interest income after provision for loan losses 362,451 404,964 374,944 332,714 285,674

Noninterest income 178,373 182,299 180,595 197,727 169,128

Noninterest expense 504,923 412,684 397,928 389,413 367,643

Income before income taxes 35,901 174,579 157,611 141,028 87,159

Provision for income taxes 13,163 39,481 34,884 54,331 24,445

Net income $ 22,738 $ 135,098 $ 122,727 $ 86,697 $ 62,714

As of and for the Year Ended December 31,

2020 2019 2018 2017 2016

Performance Ratios:

Return on average assets (1)

0.16 % 1.18 % 1.10 % 0.83 % 0.63 %

Return on average equity (2)

1.11 % 8.75 % 9.02 % 6.62 % 5.06 %

Interest rate spread (FTE) (3)

3.11 % 3.74 % 3.68 % 3.59 % 3.28 %

Net interest margin (FTE) (4)

3.19 % 3.96 % 3.84 % 3.65 % 3.33 %

Noninterest expenses to average assets 3.64 % 3.62 % 3.57 % 3.75 % 3.71 %

Efficiency ratio (5)

87.11 % 69.53 % 69.73 % 72.62 % 79.46 %

Average interest-earning assets to average interest-bearing liabilities 184.06 % 167.46 % 167.29 % 174.98 % 174.87 %

Capital Ratios:

Average equity to average assets 14.72 % 13.53 % 12.22 % 12.60 % 12.51 %

Total capital to risk weighted assets 29.61 % 13.56 % 12.41 % 12.04 % 11.63 %

Tier 1 capital to risk weighted assets 28.46 % 12.66 % 11.51 % 11.15 % 10.76 %

Common equity tier 1 capital to risk weighted assets 28.46 % 12.66 % 11.51 % 11.15 % 10.76 %

Tier 1 capital to average assets 19.53 % 11.47 % 10.39 % 9.85 % 9.87 %

Asset Quality Ratios:

Allowance for loan losses as a percentage of total loans 1.16 % 0.92 % 0.91 % 0.90 % 0.91 %

Allowance for loan losses as a percentage of non-performing loans 261.33 % 188.00 % 303.32 % 397.48 % 308.02 %

Net charge-offs (recoveries) to average outstanding loans during the period 0.08 % 0.05 % 0.10 % 0.02 % 0.04 %

Non-performing loans as a percentage of total loans 0.45 % 0.49 % 0.30 % 0.23 % 0.30 %

Non-performing loans as a percentage of total assets 0.27 % 0.38 % 0.23 % 0.17 % 0.23 %

Total non-performing assets as a percentage of total assets 0.27 % 0.38 % 0.23 % 0.17 % 0.38 %

(1) Represents net income divided by average total assets.

(2) Represents net income divided by average equity.

(3) Represents the difference between average yield on average interest-earning assets and the average cost of interest-bearing liabilities for the periods on a fully tax-equivalent (“FTE”) basis.

(4) Represents net interest income as a percentage of average interest-earning assets adjusted on an FTE basis.

(5) Represents noninterest expenses divided by the sum of net interest income and noninterest income.

and Eastern Bank, respectively, generally intend that over time the remaining net proceeds from the IPO will be used for the range of possible purposes specified in our IPO prospectus, dated August 11, 2020, under the caption “How We Intend to Use the Proceeds From the Offering.” Although the Century acquisition reduced the net proceeds from the IPO, we continue to expect that, due to the increase in equity resulting from the net proceeds raised in our IPO, our return on equity has been and will continue to be adversely affected until we can effectively employ the remaining proceeds of the IPO.

Repurchases of Common Shares

On November 12, 2021, we announced receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System to its previously announced share repurchase program which was approved by the our Board of Directors on October 1, 2021.

The program authorizes the purchase of up to 9,337,900 shares, or 5% of our outstanding shares of common stock over a 12-month period.

Repurchases are made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both us and our shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and its financial performance.

Repurchases may be suspended, terminated or modified by us at any time for any reason.

The program is limited to $225 million through November 30, 2022.

Information regarding the shares repurchased under the plan is presented in the following table:

Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of the Share Repurchase Program Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Program

December 1, 2021 – December 31, 2021 1,135,878 $ 20.42 1,135,878 8,202,022

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity