third quarter 2026
Filed Oct 22, 2026Eastern Bankshares reported third quarter 2026 net income and operating net income of $111.0 million, or $0.51 per diluted share, alongside $89.1 million of capital returned to shareholders.
Net income increased 5% sequentially and 5% year over year, net interest income increased 2% sequentially and 29% year over year, operating efficiency improved, loan growth continued, and non-performing loans declined. The key offsets were a 4-basis-point sequential decline in net interest margin and lower noninterest income.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net income, three months ended September 30, 2026GAAP | $111M | 5.5 % | 5 % |
| Operating net income, three months ended September 30, 2026non-GAAP | $111M | 4.2 % | – |
| Earnings per share, diluted, three months ended September 30, 2026GAAP | $0.51 | 6.3 % | (4) % |
| Operating earnings per share, diluted, three months ended September 30, 2026non-GAAP | $0.51 | 4.1 % | – |
| Total revenue, three months ended September 30, 2026GAAP | $306.6M | – | – |
| Total operating revenue, three months ended September 30, 2026non-GAAP | $311.7M | – | – |
| Net interest income, three months ended September 30, 2026GAAP | $257.9M | 2 % | 29 % |
| Fully-taxable equivalent net interest income, three months ended September 30, 2026non-GAAP | $263M | – | – |
| Net interest margin, three months ended September 30, 2026non-GAAP | 3.62 % | (0.04) % | – |
| Noninterest income, three months ended September 30, 2026GAAP | $48.7M | (15.5) % | 18 % |
| Noninterest income on an operating basis, three months ended September 30, 2026non-GAAP | $48.7M | (15.9) % | – |
| Noninterest expense, three months ended September 30, 2026GAAP | $159.7M | (4.9) % | 14 % |
| Noninterest expense on an operating basis, three months ended September 30, 2026non-GAAP | $159.7M | (4.0) % | – |
| Income before income tax expense, three months ended September 30, 2026GAAP | $140.1M | 4 % | 49 % |
| Income tax expense, three months ended September 30, 2026GAAP | $29.1M | (2) % | NM |
| Provision for allowance for loan losses, three months ended September 30, 2026GAAP | $6.8M | — % | (5) % |
| Pre-tax, pre-provision income, three months ended September 30, 2026other | $146.9M | – | – |
| Return on average assets, three months ended September 30, 2026GAAP | 1.41 % | – | – |
| Return on average tangible shareholders' equity, three months ended September 30, 2026non-GAAP | 15.70 % | – | – |
| Efficiency ratio, three months ended September 30, 2026GAAP | 52.1 % | (2.2) % | – |
| Operating efficiency ratio, three months ended September 30, 2026non-GAAP | 47.5 % | (1.5) % | – |
| Total assets, end of periodGAAP | $31.70B | – | – |
| Total loans, end of periodGAAP | $23.97B | 1.1 % | – |
| Total deposits, end of periodGAAP | $26.02B | 0.4 % | – |
| Cash and cash equivalents, end of periodGAAP | $547.1M | – | – |
| Total securities, end of periodGAAP | $4.78B | – | – |
| Total borrowed funds, end of periodGAAP | $903.9M | – | – |
| Total shareholders' equity, end of periodGAAP | $4.20B | – | – |
| CET1 capital ratio, end of periodother | 13.02 % | 0.02 % | – |
| Tangible shareholders' equity to tangible assets ratio, end of periodnon-GAAP | 9.64 % | (0.42) % | – |
| Book value per share, end of periodGAAP | $18.56 | (0.9) % | – |
| Tangible book value per share, end of periodnon-GAAP | $12.96 | (1.3) % | – |
| Total non-performing loans, end of periodother | $84.8M | (22.5) % | – |
| Total non-performing loans to total loans, end of periodother | 0.36 % | (0.11) % | – |
| Total net loans charged-off, three months ended September 30, 2026other | $5.2M | – | – |
| Net charge-offs to average total loans, three months ended September 30, 2026other | 0.09 % | (0.08) % | – |
| Allowance for loan losses, end of periodother | $327.2M | – | – |
| Allowance for loan losses as a percent of total loans, end of periodother | 1.39 % | – | – |
Capital returns
- Returned $89.1 million in capital to shareholders, including $56.7 million in share repurchases.
- Repurchased 2.6 million shares of common stock at a weighted average price of $22.11, for an aggregate purchase price of $56.7 million.
- Paid $32.4 million in cash dividends during the third quarter.
- Declared a quarterly cash dividend of $0.15 per common share, payable on December 21, 2026 to shareholders of record as of the close of business on December 7, 2026.
- 10.1 million shares remained in the current share repurchase program, which expires on December 31, 2027.
What drove it
- Commercial Real Estate and Commercial & Industrial lending drove period-end loan growth.
- Higher net interest income was driven by balance sheet growth.
- Higher earning-asset yields were partially offset by increased deposit costs.
- Income from investments for employee retirement benefits decreased $6.3 million to $0.6 million due to weaker equity market performance.
- Miscellaneous income and fees decreased $3.1 million to $6.6 million, primarily because gains on the sale of commercial loans in the second quarter did not recur.
- Salaries and employee benefits decreased $2.2 million to $94.8 million, primarily due to lower employee retirement benefit costs.
- Wealth assets under administration increased to $11.6 billion, including $10.8 billion of assets under management, benefiting from positive net flows and market appreciation.
Concerns
- Net interest margin on an FTE basis decreased 4 basis points to 3.62% as increased funding costs more than offset higher earning asset yields.
- Cost of total interest-bearing liabilities increased 8 basis points to 2.09%, due to higher deposit costs.
- Commercial loan pipelines remained strong, but the pace of closings was slower than anticipated as some clients took a more measured approach to investment decisions amid interest rate uncertainty.
- CRE payoffs remained a headwind, although they moderated from the second quarter.
- Competition for deposits remained elevated.
- Tangible shareholders' equity to tangible assets declined to 9.64% from 10.06%, and tangible book value per share declined to $12.96 from $13.13 sequentially.
What to watch
- The trajectory of deposit costs and net interest margin following the 4-basis-point sequential margin decline.
- Commercial loan closing activity, CRE payoffs, and the stated strength of commercial loan pipelines.
- Deposit gathering amid seasonal municipal outflows and elevated competition.
- Sustainability of lower noninterest expense, including the release of unfunded commitment reserves.
- Credit performance after the third consecutive quarterly decline in non-performing loans following the HarborOne merger.
- The pace of share repurchases under the program with 10.1 million shares remaining.
Balance sheet and cash flow
- Total assets were $31,700 million at September 30, 2026, an increase of $558 million from June 30, 2026.
- Loans totaled $23,974 million, an increase of $261 million, or 1.1%, primarily due to Commercial Real Estate and Commercial & Industrial lending results.
- Deposits totaled $26,017 million, an increase of $98 million or 0.4%, despite seasonal municipal outflows.
- Cash and equivalents were $547 million, an increase of $291 million.
- Securities were $4,778 million, a decrease of $34 million.
- Federal Home Loan Bank advances were $821.5 million at September 30, 2026, compared to $364.4 million at June 30, 2026.
- No operating cash flow or free cash flow was reported.
Analysis
Eastern Bankshares produced $111.0 million of GAAP net income, up 5% from $106.1 million in the prior-year quarter and 5.5% from $105.2 million in the linked quarter. Diluted GAAP EPS was $0.51, compared with $0.53 a year earlier and $0.48 sequentially. Operating net income was also $111.0 million and operating diluted EPS was $0.51. Return on average assets was 1.41%, while return on average tangible shareholders' equity was 15.70%.
Net interest income was $257.9 million, up 29% year over year and 2% sequentially. Loans totaled $23,974.1 million at period end, compared with $23,713.1 million at June 30, 2026, with Commercial Real Estate and Commercial & Industrial lending identified as the primary source of growth. Deposits totaled $26,016.8 million, compared with $25,919.3 million in the prior quarter despite seasonal municipal outflows. Margin remained the central earnings pressure point: net interest margin on an FTE basis was 3.62%, down from 3.66%, as the yield on total interest-earning assets increased to 5.07% but the cost of total interest-bearing liabilities increased to 2.09%.
Noninterest income was $48.7 million, down 15% sequentially but up 18% from the prior-year quarter. The sequential decline reflected a $6.3 million reduction in income from investments for employee retirement benefits, lower miscellaneous income and fees following prior-quarter commercial loan sale gains, and seasonally lower tax preparation fees within investment advisory revenue. Noninterest expense declined 5% sequentially to $159.7 million, while operating noninterest expense declined 4.0% to $159.7 million. The resulting operating efficiency ratio improved to 47.5% from 49.0%, supported by lower employee retirement benefit costs, lower occupancy and equipment expense, the absence of prior-quarter shareholder advisory fees, and a release of unfunded commitment reserves.
Credit indicators improved sequentially. Non-performing loans declined $24.6 million to $84.8 million, or 0.36% of total loans, from $109.4 million, or 0.47% of total loans. Total net charge-offs were $5.2 million, or 0.09% of average total loans, versus $9.8 million, or 0.17%, in the prior quarter. Provision for allowance for loan losses was $6.8 million, consistent with the second quarter, and the allowance for loan losses ended at $327.2 million, or 1.39% of total loans.
Capital deployment was substantial, with $89.1 million returned to shareholders through $56.7 million of repurchases and $32.4 million of cash dividends. Repurchases reduced common shares outstanding to 226.3 million from 228.9 million at June 30, 2026. Total shareholders' equity was $4,199.7 million and tangible shareholders' equity was $2,933.7 million at period end; tangible book value per share was $12.96, compared with $13.13 in the prior quarter. The release did not provide forward financial guidance, leaving funding costs, loan closing timing, CRE payoffs, deposit competition, and the durability of expense benefits as the principal reported items to monitor.
Management, verbatim
“CRE and C&I lending drove solid total loan growth, while CRE payoffs continued to be a headwind, despite moderating from the second quarter.”
Denis Sheahan, Chief Executive Officer
“Our third quarter financial results were strong, highlighted by record operating income of $111.0 million, or $0.51 on a per share basis, and a return on average tangible common equity of 15.7%.”
David Rosato, Chief Financial Officer
“Net interest margin declined 4 basis points linked quarter, as higher earning asset yields were more than offset by increased deposit costs.”
David Rosato, Chief Financial Officer
Not in the filing
stated, not guessed- Forward revenue guidance, margin guidance, expense guidance, tax-rate guidance, and other quantitative outlook were not provided.
- Previous-period outlook was not provided, so no comparison of actual results with prior guidance is available.
- Gross margin was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- A cash-flow statement was not reported.
- Reportable business segment revenue was not reported.
- GAAP and non-GAAP tax rates were not reported.
- Year-over-year percentage changes for total revenue, operating net income, operating EPS, total assets, loans, deposits, capital ratios, and most balance-sheet metrics were not printed on their respective rows.
- Sequential percentage changes for total revenue and total operating revenue were not printed on their respective rows.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.