Eastern Bankshares Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 27, 2023

There are 6 speakers on the call.

Operator

Hello, and welcome to Eastern Bancshares Inc. 3rd Quarter 2023 Earnings Conference Call. Today's call will include forward looking statements, including statements about Eastern's future financial and operating results, outlook, business strategies and plans, as well as other opportunities and potential risks that management foresees. Such forward looking statements reflect management's current estimates or beliefs and are subject to risks and uncertainties that may cause actual results or the timing of events to differ materially from the views expressed More information about such risks and uncertainties is set forth under the caption Forward Looking Statements in the earnings press release as well as in the Risk Factors section and other disclosures in the company's periodic filings with the Securities and Exchange Commission. Any forward looking statements made during this call represent management's views and estimates as of today, and the company undertakes No obligation to update these statements as a result of new information or future events.

Operator

During the call, the company We'll also discuss both GAAP and certain non GAAP financial measures. For a reconciliation of GAAP and non GAAP financial measures, Please refer to the company's earnings press release, which can be found at investor. Easternbank.com. Please note this event is being recorded. All lines have been placed on mute to prevent any background noise.

Operator

After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Bob Rivers, Chairs and CEO.

Speaker 1

Great. Thank you, Julie. Good morning, everyone, and thank you for joining our Q3 earnings call. I'm joined today by Jim Fitzgerald, our as we further advance our strategic initiatives with the simultaneous announcement on September 19 of the sale of Easton Insurance to A. J.

Speaker 1

Gallagher and the agreement to merge with Cambridge Trust. Both transactions are on track with the anticipated timelines communicated last month. We expect to close on the sale of eSUN Insurance next week and have filed all of the bank regulatory applications for the approvals required for the Cambridge Trust merger, which is expected to be completed in the Q1 of 2024. In addition, Both the teams at Eastern and Cambridge Trust are engaged in planning the integration and a seamless transition for affected customers. We are also very pleased to announce our Board approved a 10% increase in our dividend from $0.10 per share to $0.11 per share, which will be paid in December, demonstrating our confidence in both our strategic direction and our operating results.

Speaker 1

In the midst of these two significant transactions, we produced strong operating results during the quarter. As Jim mentioned on the September 19 call, The insurance sale required us to account for Eastern Insurance as a discontinued operation in Q3 and also helped us realize some and tax benefits that we weren't able to realize previously. Although these items cause our results to look different than earlier quarters, We have worked hard to provide transparency so that you can see the underlying results. We experienced a slower increase in our cost of funds in the 3rd quarter, Although like many banks, we continue to see the shift out of lower cost deposits into higher cost deposits, and we expect that to continue in Q4 and into 2024. In spite of the increasing costs, we continue to be confident that our lower cost deposit portfolio will be a long term competitive advantage.

Speaker 1

We have worked very hard to keep our wholesale funding levels at modest levels, and we think an efficient balance sheet is in our long in our shareholders' long term interest. Excluding the sale of the Shared National Credit Loans We described in the presentation, core commercial loan growth in Q3 was modest and we expect it to stay that way for the next few quarters. We are finding loan demand to be limited as our customers are being cautious, in part due to the higher level of interest rates. We also expect consumer and mortgage loan growth in the single digits over the next few quarters. With the pending sale of Eastern Insurance, there is more visibility into the expense profile of the bank on a stand alone basis.

Speaker 1

We believe that we have made significant progress on the efficiency goals we set at the time of our IPO in 2020. For both our efficiency ratio and expense to assets ratio and expect further improvements as we combine with Cambridge Trust. Our asset quality metrics continue to be very strong in Q3 with credit losses below 1 basis point and continuing low levels of non performing loans. We continue to manage our exposure to the office sector and provide details on the portfolio in the presentation. Our balance sheet strength continues to be a focus and a source of strength.

Speaker 1

Both our regulatory and GAAP capital levels are strong relative to requirements and as compared with many of our peers. Our loan deposit portfolios are of high quality and our wholesale funding levels at 5% of assets are low. We will continue to look for ways to future opportunities as we merge with Cambridge Trust. Our enhanced market position, increased scale and capabilities, along with significantly larger Wealth Management Private Banking Businesses will provide a stronger platform for future growth and earnings than we have historically had. We look forward to providing you additional details as we move through the regulatory approval process in closing.

Speaker 1

As I conclude my remarks, I express my thanks and deepest appreciation to all of our Eastern Insurance Group colleagues for their many contributions to Eastern's overall And as their planned transition to A. J. Gallagher approaches, We send our best wishes for continued success. I have every confidence they will continue to excel leveraging Gallagher's market leading capabilities, and we look forward to partnering with them in serving our mutual clients. And once again, I especially thank Eastern Insurance's President and CEO, Tim Lodge, and its executive team for their many contributions to Eastern and for leading the team through this process.

Speaker 1

Finally, I also want to thank our Chief Credit Officer, Dan Sullivan, for his 27 years of service to Eastern as he retires this month and wish him a very happy and healthy retirement. Dan was the architect of our credit process and culture at Eastern, a long time strength of our company with delinquency rates, levels of non performing loans and net credit losses regularly among the lowest of our peers. Dan joined us in 1996 as our very first Chief Credit Officer when Eastern had just $2,100,000,000 in assets with 28 branches, helping to lead our transformation from a savings bank to one with a loan portfolio that is now over 70% Commercial, quite a legacy. I'm delighted to share that Matthew Osborne, former Head of our Commercial Real Estate and Community Development Lending teams and a 25 year veteran at Eastern has assumed Dan's role as our Chief Credit Officer, creating a seamless transition for our teams. Each of these promotions is representative of long times thoughtful succession planning as well as the tremendous talent and bench strength within our organization.

Speaker 1

Once again, we are pleased with our results this quarter and feel very confident regarding Eastern's future growth and performance. As always, most of the credit for this goes to my 2,100 colleagues, who continue to ensure that Eastern remains the Strong and reliable financial and community partner we have been for the past 205 years as well as to our customers and community partners for their business support and partnership. And with that, I'll turn it over to Jim.

Speaker 2

Great. Thank you, Bob, and good morning, everyone. As Bob mentioned, it was a very busy Q3 for us with the insurance transaction and the merger with Cambridge announced together in mid September. Both are very important strategic transactions for us and combined will lead to a stronger balance sheet, enhanced market share and a platform for future earnings growth that we are very excited about. As I mentioned on the call in September, the transactions do create some short term noise in our results.

Speaker 2

The sale of the insurance operations requires us to account for Eastern Insurance as a discontinued operation and to restate our prior period results accordingly. In some ways, this is helpful as it provides an early view of what we will look like going forward without Eastern Insurance, although we recognize it's a change from what we've presented historically. We provide details on the results for Eastern Insurance that are contained in discontinued operations on Page 7 of the earnings presentation. In addition to the core results, there were $10,700,000 of transaction related charges that occurred in Q3. Excluding those costs, EIG's results were in line with expectations.

Speaker 2

One reminder is that discontinued operations are not included in our operating net income, which makes comparisons with the overall expectations difficult. In addition, the insurance transaction allowed us to eliminate a tax valuation allowance of approximately $15,000,000 that we set up as part of the security sale in Q1. Although this was very positive and an additional economic benefit of the transaction, it's a one time event. I'll provide some comments on our tax rate later in my remarks. As Bob mentioned, both transactions are progressing very well.

Speaker 2

We expect the sale of EIG to occur next week as anticipated and have submitted all the regulatory applications for approval for the Cambridge merger. I'll follow-up with some specific comments on both transactions when I discuss our outlook. We are very pleased to announce a 10% increase in our dividend from $0.10 to $0.11 per share, which is payable in December. We have a high degree of confidence in our strategic direction and our operating earnings and believe this dividend reflects that confidence. Starting with some highlights, Net income for the quarter was $59,100,000 or $0.36 per share.

Speaker 2

Operating earnings were $52,100,000 or $0.32 per share. Net income includes both a loss of $4,400,000 from discontinued operations and a tax benefit of $16,200,000 which was driven by the elimination of the $15,000,000 tax valuation allowance I mentioned. Also as I mentioned, the loss on discontinued Operations is due to transaction costs incurred in the sale of Eastern Insurance. The net interest margin of 2.77% was relatively stable quarter to Quarter down just 3 basis points from Q2. Deposit costs were well contained, up 11 basis points in the quarter from 1.22 to 1.33 percent and interest bearing deposit costs were up 18 basis points from 1.71 percent to 1.89 percent.

Speaker 2

Total assets declined approximately $400,000,000 from June 30 due primarily to declines in cash and securities. Capital levels remain very strong with a CET1 ratio of 16% and a fully marked tangible equity to tangible assets ratio, which includes unrealized losses on HTM Securities of 8.5%. In the quarter, core commercial loan growth, which excludes the sale of shared national credits I'll discuss shortly, was just under 2%, which was down from earlier in the year, but consistent with our expectations. Residential mortgage growth was 6% annualized in the quarter and consumer loan growth was 2%. Asset quality remained very strong with essentially no net loan charge offs and NPLs were up from Q2, but Still a very low 34 basis points of loans.

Speaker 2

I'll have more to add on the details behind these headlines as I go through my remarks. Starting with the balance sheet, assets declined by $400,000,000 during the quarter to $21,100,000,000 Cash declined $265,000,000 as we lowered the amount of on balance sheet cash we have been holding. Securities were lower by 268,000,000 due to runoff and lower market values and loans were down by $54,000,000 due to the sale of the Shared National Credit loans I just mentioned. Deposits were down $757,000,000 due to reductions in brokered deposits of 306,000,000 The maturity of a $230,000,000 non core term deposit from the Century acquisition and a seasonal decrease in municipal deposits of $375,000,000 borrowings increased by $364,000,000 to replace maturing brokered CDs. We made this shift to short term borrowings to more easily facilitate the pay down of wholesale funding when we receive the cash from the EIG sale next week.

Speaker 2

Shareholders' equity declined by $80,000,000 due to a decrease in AOCI, partially offset by retained earnings. And book value ended the quarter at $13.87 per share and tangible book value ended the quarter at $10.14 per share. Net income was $59,100,000 or $0.36 per diluted share and operating net income was $52,100,000 or $0.32 per diluted share. As I mentioned, there are significant number of items that created noise, and I will try to point them out in my review. Net interest income was $137,200,000 down $4,400,000 from the prior quarter.

Speaker 2

As I mentioned, The net interest margin was 2.77 percent, which was down 3 basis points from Q2. The decline Interest income was primarily due to the reduced size of the balance sheet. As we outlined on Page 8, loan yields were up 16 basis points on average in the quarter, while total interest earning assets were up 10 basis points, in part due to the reduction in cash I mentioned earlier. Interest bearing liability costs were up 20 basis points and deposit costs were up 11 basis points as well. We provided a waterfall chart on Page 8 to show the changes from Q2 to Q3, and we also show the 5 quarter trend for the net interest margin.

Speaker 2

The loan loss provision was $7,300,000 and included specific reserves for 3 non performing office loans that I will describe in more detail later in my remarks. Non interest income was 19,200,000 and $20,700,000 on an operating basis. This excludes the insurance revenue that's been reclassified to discontinued operations. As is outlined on Page 9, deposit service charges, trust, debit card and other fees are in line with last quarter and combined are up 8% from the prior year quarter. We took the opportunity to sell approximately 200,000,000 shared national credit loans out of our commercial loan portfolio at a $2,700,000 loss during the quarter.

Speaker 2

The sale of these loans triggered a release of associated reserves, bringing the economic loss close to breakeven. The reason for the sale was very straightforward. We expect funding conditions to remain tight for the foreseeable future and this preserves some balance sheet capacity for our core lending customers. One additional note on this is that the losses included in our operating results. As you can see on Page 9 of the presentation, excluding this loss, Operating non interest income was essentially the same as Q2.

Speaker 2

Non interest expense was $101,600,000 or 98 point which were moved to discontinued operations. Q3's operating expense of $98,700,000 is very similar to Q2 and an increase of 2% over the prior year as we continue to focus on efficiency. To repeat one of the comments Bob made, We have made significant progress on our expense efficiency since the IPO in 2020, and we look forward to creating more efficiencies as we merge with Cambridge in 2024. Our tax line includes several components from the securities loss on sale earlier in the year. As I mentioned, the insurance sale allows us to eliminate a $15,000,000 valuation allowance we had set up back in Q1.

Speaker 2

Also because year to date we are in a loss position, there are limited taxes on our overall results as well. When we record the insurance gain in Q4, we will be applying a higher tax rate both on the gain and our operating results. I'll add some more comments on our taxes when I go over our outlook. Switching gears to asset quality, We continue to be very focused on the challenges in commercial real estate in general and the office sector in particular, but we remain very confident our long term approach to dealing with customers will serve us well throughout the rest of this cycle and all economic cycles. Saw an increase in non performing loans from $31,000,000 to $48,000,000 in the quarter.

Speaker 2

As a percentage of loans, the increase was from 22 basis points to 34 basis points. These are very low levels that we expect to see normalized higher up over time. Included in the increase were 3 investor office properties that totaled $26,000,000 We are working with the borrowers and expect these loans to move through the sale process over the next several quarters. Included in the Provision for the quarter of $7,300,000 were specific reserves against these three loans to cover our expected losses from the sale process. Actual charge offs for the quarter were less than one basis point.

Speaker 2

Aside from the office portfolio, all other loan categories are performing well and our credit metrics are in a very strong position. We updated the office portfolio presentation and included as Page 15 in the presentation and added some data that we haven't provided previously. We have $96,000,000 of criticized and classified assets in the office portfolio, of which $26,000,000 are the 3 new NPLs I just mentioned. Additionally, we have $100,000,000 of loans that will mature before Q4 of 'twenty four or approximately 14% of all investor office CRE. The $100,000,000 of loan maturities is also a reasonable proxy for the annual maturities for the years after 2024 as well.

Speaker 2

Our expectations for the office portfolio remain the same. It's a challenging environment for all office properties, but especially those in urban markets and particularly those in the Boston Financial District. We will work with our borrowers as they work through the challenges and try and get to the other side. If they can't or won't do that, we'll protect our interest and manage to work out to optimize our proceeds. As I mentioned, we provided specific reserves for the 3 office properties this quarter and we'll report on the progress of those assets as we move through the next few quarters.

Speaker 2

We'll also continue to report on the level of criticized and classified assets in the office portfolio as well. Turning to our outlook, we are looking forward to closing the insurance transaction next week. It's a very significant milestone and we anticipate the gain to be approximately $260,000,000 or in line with our prior guidance. We expect to have a 28% tax rate against the gain and also for our Q4 results. Typically, Q4 is a seasonally low period for funding in our municipal business and leads to higher levels of wholesale funding requirements as we experienced in 2022.

Speaker 2

This will put additional pressure on our net interest margin and net interest income in Q4 in early 2024. We expect the net interest margin to decline in Q4 to the mid-260s and for net interest income to be between $127,000,000 $132,000,000 We expect operating non interest income to be very similar to Q3 and to be in a range between $22,000,000 $25,000,000 We expect operating non interest expenses to be $4,000,000 to $5,000,000 higher in Q4 due to higher marketing costs, some timing issues and some typical year end items. Similar to this quarter, we expect to prioritize the strength of the balance sheet as we move forward. We continue to expect modest loan growth in Q4, and we will seek to keep wholesale borrowings as low as practical and to keep our capital levels robust. We believe focusing on our balance sheet strength will position us well for when the environment improves.

Speaker 2

As noted in our earnings release, Our share repurchase authorization expired in the Q3 and there are restrictions on our ability to repurchase shares while the merger with Cambridge is pending. We look forward to seeking another repurchase authorization when allowable and also look forward to resuming our share repurchase activity. In closing, we believe we have a major opportunity in front of us with the Cambridge Trust merger. The combined company is expected to produce 20% earnings accretion in a very challenging environment, have significant levels of both regulatory and GAAP capital, a leading market share in some very attractive markets and a fully marked acquired balance sheet. The IRR for the transaction is 20%.

Speaker 2

We are very focused on the execution of the merger, including the required regulatory and shareholder approvals, and we'll report next quarter with an update as we approach the closing. Thank you very much. And Julie, you can open up the lines for questions.

Operator

Thank you. Your first question comes from Mark Fitzgibbon from Piper Sandler, please go ahead.

Speaker 3

Hey, guys. Good morning. Happy Friday.

Speaker 4

Good morning.

Speaker 2

Good morning, Mark. How are you?

Speaker 3

Good. Thanks. Maybe could start off with a couple of questions around the SNCs. I was impressed by the price that you were able to sell those at, if my math is correct, Sort of $0.985 on the dollar. I guess I was curious to whom did you sell them, maybe not specifically the buyer, but the type of buyer.

Speaker 3

And what do you have left in terms of the SNC portfolio?

Speaker 2

Sure. No, good question, Mark. And Without getting into precision, your assumption on the economics are pretty good. So good job on your part there. There's a pretty active market For that, I don't know who the buyer was or we think they were banks, but there's an active market for those assets.

Speaker 2

As we looked at the portfolio, those were the ones that made the most sense to us to sell. So I don't anticipate more of that. That's how I interpret part of your question. So we evaluated that pretty carefully and those are the assets that made the most sense to us.

Speaker 3

Roughly, how much do you have in remaining SNAX, Jim?

Speaker 2

I'm going to have to follow-up. Let me rather than off the seat of my pants, we can follow-up on that, Mark.

Speaker 3

Okay, fair enough. And then the $4,000,000 to $5,000,000 of year end expenses that you referenced in your guidance, what is in that exactly?

Speaker 2

Sure. So no, So it's a fair question. So if you break it down, marketing, we always do a lot of marketing in Q4. So we We expect our marketing expenses to be $2,000,000 higher than what they were in Q3. So that's a big component of it.

Speaker 2

Not to get too gritty, but our provision for off balance sheet commitments is pretty volatile. It was volatile high in the first half of the year. It was volatile, low and was actually negative in the Q3, and we expect it to kind of revert to the mean in the 4th quarter. So that's another factor. And then the residual couple of $1,000,000 is just year end sort of typical year end expenses that get recorded at year end.

Speaker 3

Okay. And then on those three office loans, I wondered if you could share with us what the vacancy rates look like on those and maybe LTVs and debt service at origination?

Speaker 2

Sure. So all 3 each one is a little bit different, but I think to answer your question, The characteristics are similar for all three. All three of the buildings were sold well before the pandemic. The loan the original LTVs were 60%. They are battling vacancies now and cash flow issues.

Speaker 2

And we are working as I said, we are working with the borrowers to try and execute sales in those. And as I also said, we Put some specific reserves up against all three of those to cover what we think will be the expected losses.

Speaker 4

Okay.

Speaker 3

And then last question, you all seem fairly confident that you'll be able to close the Cambridge deal at the end of the first quarter. Given that a lot of other banks have had an excruciatingly long approval process recently, what gives you confidence that you'll be able to Close it so

Speaker 2

quickly. Yes. No, it's a good question. I understand the question. Sometimes I get surprised because if you look at our Track record for deals, the Century 1 being the most recent.

Speaker 2

It's really the same timeline. So It's similar to Century. It's an in market transaction. We have very good regulatory relations As does Cambridge, as did Century. And as we have we're aware of the sort of slowness in some particular transactions, but we have For constant communication with our regulators and have set the dates and expect to complete on that timetable.

Speaker 2

As I said, if you go back and look at the Century, it's really a it's a different time of the year, but it's the same timeline. Thank you. Thanks, Mark.

Operator

Your next question comes from Damon DelMache from KBW. Please go ahead.

Speaker 4

Hey, good morning, everyone. Thanks for taking my questions. I hope everybody is doing well today. Just wanted to start off with a little bit on the topic of credit here and kind of looking at the reserve level. And I know the build was specific to These three office loans, but just kind of wondering what your thoughts are going forward with the provision line kind of given Pullback in loan growth and what you're seeing elsewhere in the portfolio and the potential need to build reserve further from here.

Speaker 2

Sure. No, fair question. And as we've talked previous quarters and certainly similar to others, Loan growth is a big factor in provisioning levels, right? If you look specifically at Eastern, if you look at when we had Much faster loan growth last year, we had much higher provisions and the correlation is pretty clear from that. We do expect modest loan growth over the quarter, The Q4 and into the Q1 of next year that will be a factor.

Speaker 2

Our CECL methodology is very consistent and It's the same quarter to quarter. It starts with an economic forecast. To date, the economic outlook continues to be reasonably good And that's a factor if that were to change then obviously the CECL calculations would change. But over the last couple of quarters and what we see through literally October Today's date is 27th. The economic outlook is still pretty strong.

Speaker 2

So we don't see The provision levels that we've seen both in 2022 and 2023 and the correlation with loan growth is what we would expect over the next quarter or 2.

Speaker 4

Okay. That's helpful. Thank you. And then with respect to the office portfolio and kind of the Probably like 38% is in the Boston Cambridge area. Are there any other properties or locations that are showing early signs of stress that Kind of popped up on the radar.

Speaker 4

Do you think these 3 loans were just unique situations and not indicative of a broader weakening?

Speaker 2

Yes. No, very good question, Damon. There's a lot there. Let me sort of unpack it a little bit at a time. So I think We do provide the statistics about Boston and Cambridge and not to get local here, but Cambridge is very different than Boston.

Speaker 2

There's a lot going on in Cambridge and we expect that to continue. If you look at the portfolio Generally, it is the Boston Financial District where these three assets were and where the issues we expect to be concentrated. That's not to say there won't be issues other places and we're carefully monitoring all of that. But The issues that were specific to these three loans that I described on Mark's question, we're very specific to the financial district. That said, we continue to monitor the entire portfolio very, very carefully.

Speaker 4

Got it. Okay.

Speaker 2

I guess that's all that

Speaker 4

I have for now. So I'll step back. Thank you very much.

Speaker 2

Thanks, Damon.

Operator

Your next question comes from Laurie Hunsicker from Seaport Research Partners. Please go ahead.

Speaker 5

Yes. Hi, thanks Bob and Jim.

Speaker 2

Good morning. Good morning Laurie.

Speaker 5

Hoping that I could just circle back where Damon was. So the 38% that you give on your $770,000,000 book, that's Boston and Cambridge. Do you have the split as to what's just Boston Financial District?

Speaker 2

We haven't provided that, Laurie, so we'd have to review that. I don't know it off that I don't know it this second. We are very focused on the financial district and that's where these three loans were from, As I mentioned, we can talk internally about providing a little bit more information on that specifically.

Speaker 5

Great. Okay. And then Just going back to the $26,000,000 in non performers, what was the split there on those three properties in terms of Class A, Class B, Class C?

Speaker 2

Yes. So I get a little worried about the Class A, Class B, Class C because different people have different definitions. But I think they would all be Class B types and they were all in the financial district in Boston.

Speaker 5

Okay, great. And then can you share with us what actually triggered the nonperforming status, I. E, did they hit a maturity wall or Was it just something else?

Speaker 2

Sure. So these are again, every loan, every Situation is slightly different. But I think in general, to answer the question the way you asked it, these are buildings that had lease issues, Leases had come up. They had vacancies in the building, which led to deteriorating cash flow. And they had the Borrowers have elected not to support the assets.

Speaker 2

Our strategy in that situation generally is to work with the borrowers to try and sell the buildings And as appropriate manner as possible to optimize price, but also timing. And that's what happened really in all three of these cases.

Speaker 5

Got it. Got it. And then just In terms of thoughts on selling some office, some of your peers sold office loans in the Q3, including one who took a 0.37 How do you think about selling these? Are you actively trying to sell them? Or what can you share with us there?

Speaker 2

Yes. So I would say, our managed asset team who does a very good job here, every time they get an asset and the same would be the true for these 3. And these issues just didn't appear late in Q3. They've been monitoring these loans for a period of time. But to answer the question, they do an asset by asset review and figure out the optimal strategy.

Speaker 2

They include things like note sales as you referenced, the benefits being it moves out quickly, sometimes price is less than one would like there. But for each individual asset based on the facts and circumstances that strategy is developed, in the cases of these three, it's to Take the buildings themselves through the sale process. That's how we felt we would optimize our proceeds.

Speaker 5

Got it. Got it. And then just sort of one last question on this. The $717,000,000 investor CRE book, what is the specific reserve you have Against that, is it just on the 3 loans by you, the $7,000,000 or is there more there?

Speaker 2

So we have Specific reserves against the 3 loans that we've been talking about and you just referenced. And in addition to that, the CECL calculation that we do Has a lot of risk factors for all commercial real estate and included in there are certain attributes that we think the office portfolio has, But it's included in the general reserve in that way. So I think the way you're asking the question, it's really just the specific reserves on these three assets.

Speaker 5

$7,000,000 Okay, great. That's helpful. And then, just going back to the SNC sale, can you help us think about, when in the quarter that occurred or Impact to margin in the quarter or how much in net interest income it did or didn't contribute, just trying to understand. And then if you also have a spot margin the month of September. That would be helpful.

Speaker 2

Thanks. Yes. So I'll probably start there because it's pretty consistent it's very consistent with our guidance for Q4. So the Closing margin was in the 260s, again consistent with our guidance. To answer your question, the SNC sales, it wasn't one loan, it was Multiple loans may happened over the quarter, tended to be a little bit earlier in the quarter.

Speaker 2

The one thing I always get worried about Doing one specific month on the margin, there's always lots of ins and outs and September happens to be a seasonally lower month for municipal deposits. So September has a little bit more in borrowings than the months of August July. And also there's a day count difference, not to get too great, but There's a day count July August of 31 days, which may not sound like much, but can have an impact as well. But to answer your question, the exit margin was in the 60% is very comparable to the guidance we gave for Q4.

Speaker 5

Okay. And then just any I don't know. Do you have a rate on where the checks were? Maybe that's a better way to ask it.

Speaker 2

I don't have it as I'm sitting here now. We can think about that and they were just One thing I can say is they were variable loans priced over SOFR. Variable loans priced over SOFR.

Speaker 5

Okay. Okay. And then last question on CATC, on their office. Can you provide us with any update on their book? I It gets around $285,000,000 If you have any new update or just any other color you could add on their office book and how you're thinking about it?

Speaker 5

Thanks.

Speaker 2

So sure, I think I'll probably repeat some of the things that we've said in the past. We're at a point in the process where Cambridge is still a very independent company. So I don't feel like we can say too much more than we said. But We did extensive due diligence on all their loans, but also the office portfolio. In many ways, it's similar to Eastern's, meaning it's concentrated in our markets.

Speaker 2

It does have some exposure to Boston, but it's got exposure outside of Boston as well. And in many ways, it looks a lot like the Eastern portfolio. I will say, we carefully reviewed it in due diligence, talked about at the time of the announcement, not just our due diligence process, but also some of the Generally, I'd be happy to include more on that subject as we get closer.

Speaker 5

Great. Thanks, Tim.

Speaker 2

Thank you, Laurie.

Operator

And there are no further questions at this time. I will turn the call back over to Bob Rivers for closing remarks.

Speaker 1

Great. So thanks everyone for your interest and your questions today and best wishes for the remainder of the year. Happy holidays.

Operator

This

Powered by Quartr
Earnings Conference Call
Eastern Bankshares Q3 2023
00:00 / 00:00