EBC - NASDAQ

Hello, and welcome to the Eastern Bankshares, Inc. Fourth Quarter 2024 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 today. 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. During the call, the company will also discuss both GAAP and certain non-GAAP financial measures. For a reconciliation of GAAP to the 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. After the speakers’ remark, there will be a question-and-answer session. [Operator Instructions] Thank you. Joining today's call are Eastern's Executive Chair and Chair of the Board, Bob Rivers; Chief Executive Officer, Denis Sheahan; and Chief Financial Officer, David Rosato. I'd now like to turn the call over to Bob Rivers, Executive Chair and Chair of the Board.

Thank you, Joelle. Good morning, everyone, and thank you for joining our fourth quarter earnings call. We hope your 2025 is off to a good start. As was mentioned, with me today is Eastern's CEO, Denis Sheahan, and our CFO, David Rosato. As we close out the fourth quarter and reflect another successful year, our most significant milestone was our merger with Cambridge Trust. This combination not only solidifies our position as the largest commercial bank headquartered in Greater Boston and a leading financial institution in New England, but also allows us to deliver a broader suite of offerings to our customers, greater opportunities for our colleagues, an even stronger commitment to the communities we serve. As always, I want to express my endless gratitude to our 2200 employees for all of their tremendous work and achievement in 2024. It's the values, talent and commitment of our team that truly sets us apart. And speaking of our people, we have a few important retirements to acknowledge. Barbara Heinemann, our Director of Consumer Banking, who has been an integral part of Eastern's growth and performance, has recently retired after 23 years of dedicated service. Kim Dee, joined Eastern as our new Consumer Banking Director, bringing to us over 20 years of retail banking experience from Citizens Bank. We also have two retiring Board members, Paul Connolly and Paul Spiess, whose valued insights have guided us well, particularly over the past five years of extraordinary transformation at Eastern. On behalf of all of us, we wish Barbara, Paul and Paul the very best in their well-deserved next chapters. I look forward to all we will achieve together in the year ahead. With that, I'll hand it over to Denis, who will discuss our business in more detail, before handing it off to David to discuss our financial results.

Thank you, Bob. We ended the year on a strong note with our fourth quarter earnings, bringing us to full year operating net income of $192.6 million, which is 18% higher than 2023. Net interest income of $607.6 million increased 10% from 2023, highlighted by a 12 basis point expansion in the net interest margin. Period end loans were up 29% from a year ago, benefiting from the addition of Cambridge Trust and organic growth. Our liquidity position remains strong with period-end deposits up 21% year-over-year, essentially no wholesale funding and a loan-to-deposit ratio of 85%. We continue to strategically deploy capital during the year, repurchasing $28.4 million worth of shares and increasing the dividend by 9%. We are now six months past the merger of Eastern and Cambridge and we remain focused on continuing to capitalize on synergies, growth opportunities and overall financial performance. The improvement in the company's performance ratios, namely return on average assets and return on average tangible common equity and the outlook for continued improvement is very satisfactory. I'm pleased to report Cambridge client and talent retention continues to be strong. This success reflects the thoughtful planning and seamless integration of Eastern and Cambridge, ensuring continuity and stability and creating a strong foundation for growth. Our branch network is well situated in and around Boston and Southern New Hampshire, the epicenter of New England's economy, and provides us with direct community connection to serve consumers and businesses. This branch network, combined with our talented staff has earned us the number one deposit market share among locally headquartered banks in the Boston MSA. We're hopeful that 2025 will bring renewed growth to our lending and deposit businesses, but also recognize that the overall economic and rate environment could be a headwind. We remain open for business with a highly capable team well positioned to continue to serve our customers as loan demand strengthens. In this regard, we added talent in 2024 to both commercial and industrial lending and our wealth management businesses. Our commercial and industrial lending capability grew by adding four experienced lenders and we added two seasoned members to business development in the wealth management division. Looking ahead, we will continue to add growth oriented talent in commercial banking, business banking, product gathering, private banking and wealth management. Our wealth management and private banking businesses are a key segment of our longer-term growth strategy. With over $8.3 billion in assets under management and $8.8 billion in assets under administration, we are the largest bank owned independent investment advisor in Massachusetts and 12th largest in the state overall. We're confident in our ability to deliver sustainable growth over time in wealth management, creating value for our clients and shareholders alike. To touch on the competitive landscape, there were two significant mergers announced in our footprint in the fourth quarter, creating even more consolidation here in Massachusetts. We are frequently asked about our interest in further acquisitions. Our answer remains the same. We're focused on organic growth and realizing the potential of our recent combinations. However, if an appropriate merger opportunity develops, we are interested, and will be disciplined. I have full confidence in our team's ability to execute on any acquisition opportunity. Most importantly, we remain committed to delivering on our financial objectives and we have positive momentum as we look into the year ahead. In 2025 we'll have the full year impact of the Cambridge merger, significant financial benefits from the investment restructure we just announced and continued very robust levels of capital and liquidity, that provide us with strategic and financial flexibility. David, I'll now hand it to you to review our fourth quarter results.

Thanks, Denis, and good morning, everyone. Please note, we have posted a slide presentation on our website, which we encourage you to review, as I will reference a number of those slides in my commentary. As a reminder, the Cambridge merger closed on July 12, providing a partial quarter impact to the third quarter. Beginning with highlights on Slide 2, and the income statement on Slide 3. Our fourth quarter financial performance was very positive and demonstrated the enhanced earnings power of the company with the addition of Cambridge. GAAP net income for the fourth quarter was $60.8 million or $0.30 per share. Operating net income was $68.3 million, up 37% linked quarter. On a per share basis, net operating income increased 36% to $0.34. These results were highlighted by an expanding net interest margin that increased 8 basis points in the quarter to 3.05% on an FTE basis. We are pleased with the continued improvement in returns. Operating ROA of 105 basis points increased 26 basis points linked quarter, while operating return on average tangible common equity of 11.3% was up from 8.5% in Q3. In addition, the operating efficiency ratio improved for the second consecutive quarter to 57.2%, driven by higher revenue. We continue to maintain a strong balance sheet with exceptional levels of capital and credit reserves as reflected by the year-end CET1 ratio of 15.7% and allowance for loan losses of 129 basis points. We continue to move through the credit cycle with investor office loans a primary focus. As we communicated last quarter, with the closing of the Cambridge merger, we took significant credit marks through merger accounting. Though our charge-offs were elevated in the quarter at 71 basis points, most of these were from PCD loans acquired from Cambridge that had specific reserves established last quarter. Importantly, we also announced this quarter that we are executing on a $1.2 billion repositioning of our investment portfolio, that will accelerate improvement in financial performance and is expected to be $0.13 accretive to operating EPS in 2025. More on that later. Moving to the margin on Slide 4, net interest income increased $9.3 million linked quarter due to improvement in the margin as well as a merger related increase in average earning assets. The margin expanded 8 basis points and is 41 basis points above the trial just two quarters ago. This demonstrates the positive financial impact of the Cambridge merger and our ability to manage funding costs lower with recent rate reductions from the Federal Reserve. Our asset yields declined 4 basis points compared to a decline in our liability costs of 17 basis points. Turning to Slide 5, total non-interest income of $37.3 million increased $3.8 million linked quarter. On an operating basis, total non-interest income of $36.9 million was up $4 million. The largest driver of the increase was our wealth business with fees of $18 million, up $3.1 million linked quarter. However, this included a one-time item of $1.2 million in the fourth quarter. Excluding this item, wealth management fees were up $1.9 million or 13% linked quarter. Included in other non-interest income was a $9.3 million non-operating gain due to Eastern's investment Numerated Growth Technologies, which sold to Moody's in November. As a reminder, Numerated was a fintech startup, that was originally developed within Eastern Bank and we are pleased to see this result. We leveraged this gain to execute on the sale of $116 million of low yielding securities in the quarter, which had a paired non-operating loss of $9.2 million. This sale will provide incremental margin benefit going forward. We saw a $600,000 increase in customer swap fees and a $300,000 increase in deposit service charges, as we reinstated fees for the Cambridge customer base, that were previously waived. On Slide 6, total non-interest expense was $137.5 million, a decrease of $22.2 million linked quarter due to lower non-operating merger related costs. Fourth quarter merger costs were $3.6 million, down from $27.6 million. On an operating basis, non-interest expense was $133.7 million, an increase of $2.9 million, driven by the partial quarter impact of Cambridge in the third quarter. Moving to the balance sheet, let's start with deposits on Slide 7. We saw stability in total deposits for the quarter as we balanced our excess liquidity position against deposit cost reductions. Our mix of deposits remained very favorable and improved in the quarter. Low cost checking accounts which comprise 50% of the total deposit balances, increased $180 million while CDs declined $209 million. We continue to be fully deposit funded with essentially no wholesale funding. We were able to reduce deposit costs by 13 basis points to 169 basis points in the quarter. As of year-end, our deposit costs were 155 basis points, demonstrating our ability to pass along the impact of Fed rate cuts to depositors. Looking ahead, the downward repricing of our CD book will continue to support lower deposit costs. If the Fed continues to ease, we will target deposit betas similar to our experience during the most recent tightening cycle or about 45% to 50% with modest lags relative to Fed actions, while monitoring balances and competition. On Slide 8, loans were essentially flat in the quarter as new business was offset with pay downs and maturities. Consumer home equity lines were the exception with growth of $23 million in the quarter. The commercial loan pipeline remains steady at approximately $400 million, demonstrating our commitment and ability to support both existing and new borrowers. As Denis mentioned in his opening remarks, there are headwinds to loan growth in the environment, so we remain ready and able to lend and will continue to explore new growth opportunities. We have an exceptional team of relationship managers and a deep understanding of our local communities, which differentiate Eastern within the markets we serve and positions us well to drive loan growth over time. Moving to the securities portfolio on Slide 9. We had some purchase and sale activity in the quarter that increased the portfolio yield 11 basis points to 1.95% as of year-end. Later in my remarks, I'll discuss the portfolio repositioning we're undertaking in the first quarter of this year. Turning to Slide 10, capital levels remain robust and we continue to return capital to shareholders. We purchased 908,000 shares in the quarter at an average price of $17.41, which was $0.09 below the VWAP for a total cost of $15.8 million. We have also repurchased an additional 761,000 shares through yesterday for a total cost of $13.1 million and now have 8.3 million shares remaining in our authorization that runs through the end of July. Our diluted common shares outstanding were 202.1 million as of December 31st. Additionally, our Board approved the $0.12 dividend first quarter. Looking at overall asset quality on Slide 11, our reserve levels remain strong as evidenced by an allowance for loan losses of $229 million or 129 basis points of total loss. These metrics are down modestly linked quarter to $254 million or 143 basis points, primarily due to charge-off activity in the fourth quarter. Charge-offs total $31.7 million or 71 basis points to average loans, compared to $5.1 million or 12 basis points in the third quarter. The increase was mostly driven by investor office loans, of which approximately $20 million were PCD loans acquired from Cambridge that were fully reserved at closing. It is important to note that approximately 81% of the charge-offs this quarter were from previously established specific reserves. As a reminder, with the closing of the Cambridge merger last quarter, we set aside a total of $97 million on PCD and non-PCD loans to provide coverage for potential future charge offs. Non-performing loans increased $11.3 million in the quarter to $136 million or 76 basis points of total loans. This was driven by the move to non-accrual status of two Eastern investor office loans partially offset by charge-off activity. Criticized and classified loans decreased $234 million in the quarter to $595 million or 4.9% of total loans. We are pleased with the reduction and great work by our credit team. However, as the credit environment evolves in the office space, it would not be unexpected to see quarterly fluctuations over the course of the year. Finally, we booked provision of $6.8 million in the quarter, in line with recent legacy Eastern Bank history. On Slides 12 and 13, we provide details on total CRE and CRE investor office exposures. Total commercial real estate loans were $7.1 billion. Our exposure is largely within our local markets that we know well and is diversified by sector. Total non-owner occupied CRE to risk-based capital is very well contained at approximately 200%. Our largest exposure is to the multi-family sector at $2.5 billion, which is a very strong asset class here in Metro Boston due to ongoing housing shortages. We have no multi-family non-performing loans and have had no charge-offs in this portfolio in the last decade. Our focus continues to be on investor office loans which we cover in detail on Slide 13. The investor office portfolio is $914 million or 5% of our total loan book. Criticized and classified loans ended the quarter at $184 million or about 20% of total investor office loans. Our reserve levels on this book declined in the quarter from 8% to 6.2%, due to Q4 charge-off activity. We continue to take a proactive approach to managing investor office exposures. Our credit teams perform thorough assessments of the portfolio on a quarterly basis and on larger lower risk rated credits, we conduct ongoing monthly reviews. This in-depth knowledge enables our credit team to make timely and decisive actions. Although we expect the credit cycle to continue to evolve, we are confident that our proactive approach allows us to deal with issues prudently, but quickly and will serve us well in the quarters ahead. Moving to Slide 14, we announced a $1.2 billion investment portfolio repositioning to be completed this quarter. We are in the process of selling low yielding available for sale securities and reinvesting at current rate levels which will improve financial performance. We have excess capital providing us with financial flexibility. We will rebuild roughly half of our CET1 capital ratio through stronger earnings by year end. The after tax non-operating loss on the sale will be approximately $200 million and will be fully completed by mid first quarter 2025. We expect the transaction to be $0.13 accretive to operating EPS for the full year and to add approximately 10 basis points to ROA and approximately 95 basis points to return on tangible common equity. Slide 15 highlights several factors that will provide support to our margin looking ahead. On the asset side of the balance sheet, as we just discussed, the investment portfolio repositioning will add approximately 1% to the total portfolio yield. We also have a hedge portfolio that will begin to amortize in Q3 of this year, at which point the loans will reset to market rates above the current strike rate based on the forward curve. On the liability side, we have $2.8 billion of CD maturities in Q1 and Q2 of this year, that will reprice lower as our current highest CD offer is approximately 4%. Our interest rate risk position is essentially neutral, when considering parallel shifts in the yield curve. However, we expect a steepening yield curve to be beneficial to our margin with a 25 basis point reduction from the Fed anticipated to add approximately $7 million to net interest income on an annual basis. On Slide 16, we provide our full year outlook for 2025. We expect modest balance sheet growth due to the economic and rate environments. Loan growth for '25 is anticipated to be 2% to 4%, deposit growth of 1% to 2% with a favorable mix shift from CDs to money markets. Based on market forwards as of year-end, we anticipate net interest income to be in the range of $815 million to $840 million with a full year FTE margin of 3.45% to 3.55%. While provision will be based on the evolution of credit trends, we currently expect $30 million to $40 million of provision expense. Operating non-interest income is expected to be between $130 million and $140 million. This assumes modest client inflows, but no market appreciation. Operating non-interest expense should be in the range of $535 million to $555 million. Finally, we expect the full year tax rate on an operating basis to be between 22% and 23%. Overall, we anticipate our 2025 financial performance as indicated by this outlook will drive meaningful year-over-year improvements in ROA, return on tangible common equity and the efficiency ratio. This concludes our comments for the quarter. And now, we'll open up the line for questions.

[Operator Instructions] Your first question comes from Mark Fitzgibbon with Piper Sandler. Your line is now open.

Hey, good morning, everyone. This is Greg

Hi, good morning, Greg.

Nice to speak with you guys again. First, could you share with us the average rate of the securities you were selling as part of the repositioning and the average rate and duration of the securities you were buying?

Sure. So, if you just go back and look at our Q3 materials, the average portfolio yield was about 1.82% to 1.84%. We're buying, as you can imagine, a mix of security asset classes, durations. The average yield on those buys, if you had to pick one number, it's about four and three quarters a range between that and up to just under 5%.

All right. And then you said the type securities were mixed.

Yeah. All I mean by that is, I mean, so agency securities, there'll be a combination of CMBS providing strong lockout protection, agency mortgage backed securities. In there you'll -- when all is said and done, there will be a mix of 15 and 30 years discounts -- discount bonds again looking for a little call protection and then some closer to current coupons. So not unlike -- Greg, just a little more color there, not unlike what we're selling. It's just substantially different price levels. Q - Greg

Yes. The earn back is longer than what you might see from some other banks that have done similar transactions. The earn back is really driven by the securities you're selling. The situation at Eastern happens to be, we became a public company four years ago, raised a lot of capital. That capital, or a majority of that capital was put into investment portfolio securities, which at the time the very low in interest rates. That's why that portfolio yields as I said in the mid-180s pre restructuring. So that's what we have to sell. It's an incredibly homogeneous portfolio put on at one price level essentially. So the math doesn't work any other way than when you sell those longer duration securities with a loss of, call-it 15% to 18% depending on the individual bonds. You're not going to be able to achieve, for example a three year payback. The math just is impossible. So your calculation is correct.

Okay, thank you. And then the last question I have for you on those two Eastern investor office loans. Could you share with us the loan size of each current occupancy and if there are any specific reserves against these credits at quarter end?

We'll share some of that information. This is legacy Eastern loans that were essentially long-time -- we've been ahead of these loans for a long-time. They had high level specific reserves and there's really nothing more that needs to be said about them. They were identified, reserved for, charged off. Q - Greg

You’re welcome, Greg.

Your next question comes from Damon DelMonte with KBW. Your line is now open.

Hey, good morning, guys. Thanks for taking my questions. Hope everybody's doing well today. So, first question on the margin, as we try to model this out on a quarterly basis going forward, David, since this is taking place, the restructuring is taking place here midway through the first quarter. Do you expect to kind of, split the benefit from the restructuring on the margin in the first quarter, so maybe 9 basis points of benefit here in the first quarter and then get the full run rate going into the second quarter? Is that a good way to look at it?

Yeah, I mean, we were specifically using mid first quarter. So, take it literally. It's a lot of securities and the selling is easier than the buying, right. We want to make sure we're looking for, and are repurchasing the security structure we want. So we're announcing it today, our Board recently approved the transaction. We're starting to execute on it. We're giving ourselves a couple weeks to complete execution. So, yes. So, the first half, January and half of February, we'll run a lower margin impact than the back half of the quarter.

Got it. Okay. And then the guidance for the full year of 3.45% to 3.55%. How should we think about kind of an exiting margin in the fourth quarter?

Tell me your rate forecast, right. That's a big driver. I think the more important issue there, Damon, so, 3.45% to 3.55%, it's -- and we're also calling out to parallel changes in the yield curve were basically interest rate neutral. The yield curve is steepening and it's basically upward sloping. That's why we called out the benefit to 25 basis points on the short end. That $7 million, just as a reminder, is annualized by 2025 depending when that might happen -- if and when that might happen. The -- over the course of the quarters, there's -- with no change in rates, there is incremental improvement as the year goes on, that has to do with forgetting the first quarter and the timing of the securities repositioning, right, halfway through. It has to do with, in Q1 and Q2, 80% of our CD book is going to roll and it's going to reprice lower as. So that's number one. Number two is, we called out the hedges that are starting to come off, right, that starts in July. So that's more of a back half issue. And then just the core business of the bank with no change in rates and that growth of money markets and DDA accounts relative to our loan growth, modest as it is, creates a little bit more positive margins.

Got it. Okay, that's helpful. Thank you. And then this is kind of like, two thoughts here. Number one, as you look at the deal that was announced in December between Brookline and Berkshire Hills and potential market disruption and opportunities to take some market share there, and you look at your loan growth outlook of 2% to 4%, I mean, do you think that there's opportunities from the disruption that could lead to the higher end of the growth outlook or do you just feel that the underlying conditions would only support a 2% to 4% type of loan growth for the year?

So, we are hopeful that we'll be able to capitalize on market disruption. There was the transaction you just referenced in our market and then there was an earlier transaction, that's more in the Northern part of our market. The -- but that opportunity, as hopeful as we are, is not embedded in the 2% to 4% guide. So, we would hope that there's incremental benefit over the course of the year, but we're not including it in our outlook.

Got it. Okay, great. Appreciate that. That's all that I have for now. Thank you very much.

Thanks, Damon.

[Operator Instructions] Your next question comes from a Laurie Hunsicker with Seaport Research Partners. Your line is now open.

Yeah, hi, Bob, Denis, and David, good morning. Just going back to the margin, can you share with us, David, where the spot margin was for December?

Sure. Laurie, good morning. So the spot margin in December was 3.13%. You can write that number down. But I would tell you a better number to work off of is probably 3.08%. We just -- there was one -- there was a little extra accretion income in the month that drove the margin up a touch, normalized, I'd call it a 3.08%.

Okay, great. And then you mentioned the buybacks that you had done, and I just didn't actually get the share count since the quarter end. What was that number?

So, we called out the -- we called out ending share count, hold on, $202.1 million. And then, I'm not sure if you caught it, but we also wanted to share what we've done this quarter to date. So, in this quarter we bought 761,000 shares.

Yeah. Okay, got it. Yeah, that was in your press. I thought you -- sorry, I missed it. I thought you had called out what you had done in January. Okay. And then just going back over...

Hey, Laurie. That 761,000 is what we did in January.

Is what you did. Okay, 7 -- okay, got it.

You said Q4 or say Q4 then January.

Yeah. So just to be clear, we bought 908,000 in Q4, and we additionally bought 761,000 in January.

Great. At [$13.1] (ph). Okay, great. Thank you. Okay. And then just going back over to office and I really appreciate all the extra details that you put in Slide 13. I love how you've laid it out super helpful. Just a couple things. So the charge offs that you had just the commercial real-estate charge off of $31 million. How much of that was actually office this quarter?

Yeah, essentially all of it. The non-office was just under $1 million.

Okay. And then can you share with us a little bit about the office charges? In other words, those are some big haircuts, which certainly is not different than what we've seen other banks taking, but, just to have some data points, do you have any details that you can share?

I mean, I think, that's the answer to the question. It's not much different than others are experiencing. It's just the nature of the market. It's -- when you're assessing these properties, you're looking at ultimately one's ability to exit. And so we're making significant haircuts on them that we think is appropriate.

Okay. Just didn't know if you had anything to share. Okay, the $184 million that you have that is listed as office criticized and classified. How much of that is coming due in 2025?

So, we've laid out the maturity. We don't have that number in front of us, Laurie. We can perhaps, put that in a future presentation. But we've laid out the maturity of the non-performing loans here over 2025, that you see on Slide 13.

Right, yeah, I see that. So just $3 million, but I just didn't know if anything was potentially going to be stressed. In other words, when you look to for example 2Q, the $67 million at all accruing. Are the vacancy rates there at the accruing properties running where you want them to be or how do you think about that?

Well, if they were stressed, we'd be looking at possibly placing those loans on non-accrual. So, our team, as we referenced before, does a very thorough review of our investor office portfolio on a constant basis. And as of year-end, we felt it was appropriate to keep -- those loans that are maturing to keep them accruing. If there was a stress point there, we would be looking to put them on non-accrual.

Just a little more color. So if you look at Q1, right, there's three loans maturing on that page. One is a non-accrual. It will be -- it's completely reserved for. It'll be resolved this quarter or next. All the other loans are accruing, no concerns on our part. If you look at the second quarter, every one of those loans is accruing. We don't think there's an issue at all on any of those loans.

Perfect. Super helpful. Okay, and then just going over to your merger charges, the one-time charges with CATC. Are those now wrapped or can you just remind us what we should expect there?

It's a wrap. Yeah. So we're through Cambridge. Yeah, we're through Cambridge Merger charges. And it was only $3.5 million in the quarter in Q4.

Perfect. Okay. Great. Okay, and then last question. Denis and Bob, as you're talking about two significant mergers of the fourth quarter, obviously, right in your market, Brooklyn, Berkshire Hills, that was referenced the INDB acquisition that they did. I guess your tone a little bit, I just want to understand this. I realize you're focused on organic growth. However you said however, right? So help us think a little bit about, suddenly now two banks have jumped and they're exactly your same size. Does that put pressure on you, like maybe just expand a little bit on the however, how you're looking at that. And if you were to see a deal, what's the sweet spot, acquisition wise, where it would make sense for you to really take a look at that? Thanks.

So, we don't feel pressure. Our focus is on maximizing the benefit of the recent combinations that we've entered into, both the Cambridge Trust merger, the Century Bank merger. Those are both very important, opportunities for us to capitalize on. And we've got a lot of work to do there. So we don't feel pressure to engage in mergers. However, from time-to-time organizations decide that they want to sell. And we're confident that if they did decide to sell that we'd get a call, and we'd consider that in a disciplined manner whether or not we would want to engage. So it's just, it's a consolidating market, as you know Laurie, we have a capability, we have a skill set, we have an attractive currency and attractive organization to partner with. So I put it in that characterization rather than saying that we sort of feel any pressure to do mergers.

Okay. And then just one last question. How small is too small? How big would you consider going as you sort of think about that band? Thanks.

So we never want to rule out anything. Depends on the opportunity and the financial circumstances of a particular opportunity. I mean, clearly the effort that's required, whether it's $1 billion bank or a $5 billion bank or a $10 billion bank, is generally the same. So you have to weigh that very carefully. But as when you think about our organization, there may be -- even with a smaller institution, there may be holes that we may want to fill. That's how we might think about it. But you have to weigh that against the effort, the distraction, et cetera, that happens whether it's a $1 billion bank or a $10 billion bank. So I'm not going to rule out anything.

Okay, great. Thanks for taking my question.

Sure. You're welcome.

There are no further questions at this time. I will now turn the call over to management for closing remarks.

Great. Well, thank you again for your interest in Eastern and for your questions this morning. We look forward to talking with you again in the spring.