Eastern Bank’s third quarter results did not meet Wall Street’s expectations, with both revenue and adjusted earnings per share coming in below consensus. Management attributed the underperformance to increased competition for deposits and lower net discount accretion, which affected net interest income and overall margins. CFO David Rosato cited heightened deposit costs in the region and a decline in fee income from certain non-core activities as contributing factors. While operating earnings improved year-on-year, the quarter’s results fell short of the strong performance seen earlier in the year, leading to a cautious outlook from management regarding ongoing cost pressures.

Is now the time to buy EBC? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Eastern Bank’s Q3 Earnings Call

• Damon Del Monte (KBW): Sought clarity on the future trajectory of margins and expenses. CFO David Rosato explained that core margin should remain steady, with deposit cost pressures likely to persist but some expense items expected to normalize next quarter.

• Damon Del Monte (KBW): Asked about additional M&A appetite post-HarborOne. CEO Denis Sheahan reiterated that organic growth and integration are top priorities, with future deals only being considered if shareholder value is clear.

• Mark Fitzgibbon (Piper Sandler): Inquired about the drivers of wealth management asset growth and hiring plans. Management clarified growth was mainly market-driven, with ongoing talent acquisition efforts but no interest in acquiring other RIAs.

• Laura Havener Hunsicker (Seaport Research): Questioned the rise in nonperforming office loans. Sheahan clarified it was one well-monitored loan, mostly resolved, and stated overall credit trends remain positive.

• Sun Young Lee (TD Cowen): Asked about sustaining net interest margin as deposit costs rise. Rosato indicated margins should hold as deposit costs gradually normalize with rate cuts, though near-term pressures remain.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace and quality of HarborOne integration and realization of projected cost savings, (2) stabilization or improvement in net interest margins as deposit costs fluctuate, and (3) continued momentum in commercial loan and wealth management growth. Execution on expanding into Rhode Island and the impact of resumed share buybacks on capital allocation will also be important indicators of progress.

Eastern Bank currently trades at $17.27, down from $18.38 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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