Eastern Bankshares (EBC) AI Stock Analysis

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Eastern Bankshares

(NASDAQ:EBC)

58Neutral

Eastern Bankshares presents a mixed investment case. Strengths include a solid balance sheet and positive strategic initiatives, but these are offset by declining revenue and cash flow issues. Technical indicators show bearish sentiment, and the stock's high P/E ratio makes it relatively expensive. Despite positive developments from recent earnings, the concerns over profitability and liquidity persist, resulting in a moderately low overall score.

Eastern Bankshares (EBC) vs. S&P 500 (SPY)

Market Cap

$3.25B

Dividend Yield3.22%

Average Volume (3M)1.42M

Price to Earnings (P/E)23.2

Beta (1Y)1.28

Revenue Growth73.24%

EPS Growth-53.04%

CountryUS

Employees1,998

SectorFinancial

Sector Strength79

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.67

Shares Outstanding213,500,240

10 Day Avg. Volume1,279,030

30 Day Avg. Volume1,417,479

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)5.27

Price to Cash Flow (P/CF)10.00

P/FCF Ratio4.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$21.50

Price Target Upside41.45% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Eastern Bankshares Business Overview & Revenue Model

Company DescriptionEastern Bankshares, Inc. (EBC) is a bank holding company that operates through its wholly owned subsidiary, Eastern Bank. Headquartered in Boston, Massachusetts, Eastern Bank is one of the largest and oldest mutual banks in the United States, providing a range of financial products and services. The bank serves individuals, businesses, and nonprofit organizations with offerings that include personal and business banking, insurance, wealth management, and investment services.

How the Company Makes MoneyEastern Bankshares generates revenue primarily through interest income earned on loans and securities, as well as non-interest income from fees and services. The bank offers a variety of loan products, such as commercial real estate loans, residential mortgages, and consumer loans, which provide stable interest income. Additionally, Eastern Bank earns non-interest income from service charges, insurance services, wealth management fees, and investment advisory services. Strategic partnerships with financial service providers further enhance its revenue potential by offering expanded products and services to its customer base. The combination of diversified financial services and regional market presence helps drive the company's earnings.

Eastern Bankshares Financial Statement Overview

Summary

Eastern Bankshares displays a mixed financial performance. The income statement reveals significant challenges, with zero revenue reported in 2024, affecting profitability and indicating potential sustainability issues. However, the balance sheet is robust with strong equity and no debt reliance, and the cash flow statement shows positive operating cash flow despite a concerning decline in free cash flow.

Income Statement

Neutral

Eastern Bankshares has experienced fluctuations in revenue with a significant decline to zero in 2024. The Net Profit Margin and Revenue Growth Rate are not meaningful due to the zero revenue in the latest period. EBIT and EBITDA margins have been inconsistent, reflecting volatility in profitability. The company showed strong net income in 2023, but the lack of revenue in 2024 raises concerns about sustainability.

Balance Sheet

Positive

The balance sheet shows a strong equity position with an increasing Stockholders' Equity and a Debt-to-Equity Ratio of zero in 2024, indicating no reliance on debt. The Equity Ratio is healthy, indicating financial stability. However, the substantial drop in Total Revenue could affect asset utilization and future equity returns.

Cash Flow

Positive

The company demonstrates strong operating cash flow relative to net income in 2023, but a significant drop in 2024. Free Cash Flow has seen a major decrease, indicating potential challenges in generating cash from operations. The cash flow from operations is positive, but the decline in free cash flow is concerning.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
731.51M	308.19M	737.83M	616.47M	572.90M
	Gross Profit
731.51M	308.19M	737.83M	616.47M	572.90M
	EBIT
119.56M	-71.27M	317.92M	188.71M	35.90M
	EBITDA
0.00	0.00	261.65M	211.59M	63.81M
	Net Income Common Stockholders
119.56M	232.18M	199.76M	154.66M	22.74M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.01B	693.08M	6.86B	9.74B	5.24B
	Total Assets
25.56B	21.13B	22.65B	23.51B	15.96B
	Total Debt
93.90M	48.22M	740.83M	34.28M	28.05M
	Net Debt
-92.59M	-644.86M	571.32M	-1.20B	-2.03B
	Total Liabilities
21.95B	18.16B	20.18B	34.28M	28.05M
	Stockholders Equity
3.61B	2.97B	2.47B	3.41B	3.43B
Cash Flow		Free Cash Flow
20.79M	253.55M	221.31M	168.76M	64.71M
	Operating Cash Flow
20.79M	261.69M	229.94M	174.49M	69.85M
	Investing Cash Flow
158.71M	2.40B	-1.08B	-1.99B	-2.39B
	Financing Cash Flow
-111.17M	-2.14B	-215.57M	988.98M	4.01B

Eastern Bankshares Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.20

Price Trends

50DMA

16.97

Negative

100DMA

17.32

Negative

200DMA

16.57

Negative

Market Momentum

MACD

-0.21

Negative

RSI

43.62

Neutral

STOCH

31.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EBC, the sentiment is Negative. The current price of 15.2 is below the 20-day moving average (MA) of 15.96, below the 50-day MA of 16.97, and below the 200-day MA of 16.57, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 43.62 is Neutral, neither overbought nor oversold. The STOCH value of 31.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EBC.

Eastern Bankshares Risk Analysis

Eastern Bankshares disclosed 67 risk factors in its most recent earnings report. Eastern Bankshares reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Eastern Bankshares Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UCB	74 Outperform	$3.05B	12.51	7.50%	4.00%	12.52%	31.97%
AX	69 Neutral	$3.50B	7.68	18.81%	―	26.87%	10.56%
TCBI	67 Neutral	$3.06B	48.13	2.36%	―	8.15%	-64.06%
Sector *	64 Neutral	$13.46B	9.44	9.34%	4.72%	16.14%	-8.80%
ASB	63 Neutral	$3.41B	28.48	2.79%	4.37%	4.88%	-30.04%
TFSL	63 Neutral	$3.42B	42.52	4.23%	9.72%	14.25%	10.46%
EBC	58 Neutral	$3.25B	23.16	3.63%	3.22%	73.24%	-53.04%

* Financial Sector Average

Performance Comparison

EBC

Eastern Bankshares

14.27

1.94

15.73%

ASB

Associated Banc-Corp

19.29

-0.50

-2.53%

Axos Financial

57.17

7.10

14.18%

TCBI

Texas Capital Bancshares

61.24

4.16

7.29%

TFSL

TFS Financial

11.73

0.63

5.68%

UCB

United Community Banks

23.70

-0.40

-1.66%

Eastern Bankshares Earnings Call Summary

Earnings Call Date: Jan 23, 2025 | % Change Since: -13.04% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call was largely positive, highlighting the successful merger with Cambridge Trust, strong financial performance, and strategic growth initiatives. However, there were concerns regarding elevated charge-offs and the investor office loan portfolio.

Highlights

Merger with Cambridge Trust

The merger with Cambridge Trust solidified Eastern Bankshares' position as the largest commercial bank headquartered in Greater Boston, providing broader offerings and growth opportunities.

Strong Financial Performance

Full year operating net income increased by 18% to $192.6 million, and net interest income rose by 10% to $607.6 million compared to 2023. Net interest margin expanded by 12 basis points.

Growth in Loans and Deposits

Period-end loans increased by 29% year-over-year, with a 21% rise in deposits. The loan-to-deposit ratio stands at 85%.

Wealth Management Expansion

The wealth management business reported a 13% increase in fees linked quarter, with assets under management at $8.3 billion and assets under administration at $8.8 billion.

Investment Portfolio Repositioning

Announced a $1.2 billion repositioning of the investment portfolio, expected to be $0.13 accretive to operating EPS in 2025.

Lowlights

Elevated Charge-Offs

Charge-offs were elevated at 71 basis points, primarily from PCD loans acquired from Cambridge with specific reserves established.

Investor Office Loan Concerns

Investor office loans were a primary focus due to credit cycle evolution, with charge-offs mostly from this sector.

Company Guidance

During Eastern Bankshares Inc.'s fourth quarter 2024 earnings call, the executive team provided comprehensive guidance on the company's financial outlook. Key metrics included a full-year operating net income of $192.6 million, marking an 18% increase from 2023, and net interest income of $607.6 million, up by 10% year-over-year. The company reported a 12 basis point expansion in net interest margin and a loan-to-deposit ratio of 85%. Period-end loans surged by 29%, fueled by the Cambridge Trust merger and organic growth, while deposits rose by 21%. Eastern Bankshares also executed a $1.2 billion investment portfolio repositioning, expected to be $0.13 accretive to 2025 operating EPS. Their 2025 outlook anticipates modest growth, with loans and deposits projected to increase by 2%-4% and 1%-2%, respectively. The company expects net interest income to range from $815 million to $840 million, with a net interest margin of 3.45%-3.55%. Additionally, Eastern Bankshares aims to maintain strong capital and liquidity levels, as evidenced by a CET1 ratio of 15.7%.

Eastern Bankshares Corporate Events

M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures

Eastern Bankshares Reports Strong Q4 Results and Strategic Moves

Positive

Jan 23, 2025

Eastern Bankshares, Inc. reported its fourth-quarter 2024 financial results, highlighting a net income of $60.8 million and an operating net income of $68.3 million. The Board has approved a regular quarterly cash dividend of $0.12 per share, payable in March 2025. The company is set to undergo a significant $1.2 billion investment portfolio repositioning in Q1 2025, expected to increase operating earnings per share by $0.13. The merger with Cambridge Trust has bolstered the company’s position in the region, allowing for enhanced customer offerings and financial performance improvements, with a full-year operating net income increase of 18% over 2023.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.