Eastern Bankshares (EBC) risk factors, FY2024 10-K

Other

1. 01Summary of Material Risk Factors
2. 02There are various risks associated with our acquisition growth strategy, any of which could have a material adverse effect on our business
3. 03Various risks, including risks associated with changes in interest rates, loan losses, cybersecurity and regulatory compliance, are inherent in our business and our industry generally
4. 04Certain provisions of our articles of organization, as well as state and federal banking laws, may make our stock a less attractive investment compared to the stock of peer companies
5. 05Risks potentially affecting our business, financial condition, results of operations and cash flows

Risks Related to Our Acquisition Strategy

1. 06The Company may fail to realize all of the anticipated benefits of Cambridge or other acquired businesses, particularly if the integration of the acquired businesses is more difficult than expected
2. 07The Company may be unsuccessful in retaining our personnel or the personnel of the company we acquire
3. 08The Company has incurred and expects to continue to incur costs related to the acquisition and integration of Cambridge and other businesses
4. 09Regulatory approvals related to proposed business acquisitions may not be received, may take longer to receive than expected, or may impose burdensome conditions, which could impose additional costs and could delay or prevent completion of the acquisition
5. 10To the extent that we acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions
6. 11We may be unsuccessful identifying and competing for acquisitions

Risks Related to Our Business and Our Industry Generally

1. 12Changes in interest rates have impacted and may continue to impact our profitability and financial condition
2. 13Although we have implemented risk management strategies, as well as policies and procedures designed to manage the risks associated with changes in market interest rates, changes in interest rates have from time to time had and may in the future have an adverse effect on our operating results and financial condition
3. 14If our allowance for loan losses is insufficient to cover loan losses, our earnings and capital could decrease
4. 15The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the local economy
5. 16Our ability to manage reputational risk is critical to attracting and maintaining customers, investors and employees and to the success of our business, and the failure to do so may materially adversely affect our performance
6. 17operations in a manner that is appealing to current or prospective customers, or by events beyond our control, our business and operating results may be adversely affected
7. 18We face continuing and growing security risks to our information data bases, including information we maintain relating to our customers
8. 19We rely on third-party vendors, which could expose us to additional cybersecurity risks
9. 20Industry competition may adversely affect our degree of success
10. 21Technology has lowered barriers to entry and made it possible for non-banks to offer products and services, that traditionally were banking products, and made it possible for technology companies to compete with financial institutions in providing electronic, internet-based, and mobile phone-based financial solutions
11. 22We may not be able to successfully execute our strategic plan or achieve our performance targets
12. 23Our business strategy includes projected growth in our core businesses, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively
13. 24We could fail to attract, retain or motivate highly skilled and qualified personnel, including our senior management, other key employees or members of our Board, which could impair our ability to successfully execute our strategic plan and otherwise adversely affect our business
14. 25The fair value of Eastern Bank’s investments has declined and could decline further due to a variety of factors
15. 26Commercial loans, including those secured by commercial real estate, are generally riskier than other types of loans and constitute a significant portion of our loan portfolio
16. 27We are subject to environmental liability risk associated with real estate lending activities
17. 28Our business may be adversely affected by credit risks associated with residential property
18. 29A portion of our loan portfolio consists of loan participations, which may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited control over credit monitoring
19. 30Hedging against interest rate exposure may adversely affect our earnings
20. 31New lines of business or new products and services may subject us to additional risks
21. 32We may be required to write down goodwill and other acquisition-related identifiable intangible assets
22. 33We are subject to stringent capital requirements and may need to raise additional capital in the future, and that capital may not be available or its cost may be high
23. 34We face significant legal risks, both from regulatory investigations and proceedings and from private actions brought against us
24. 35Our insurance coverage may be inadequate or expensive
25. 36The loss of deposits or a change in deposit mix could increase our cost of funding and our funding sources may prove insufficient to replace deposits at maturity and support our future growth
26. 37Various factors beyond our control, including interest rate increases and competition from banks and other financial institutions, adversely affect our liquidity
27. 38continue to include accessing alternative funding sources, such as FHLBB advances and brokered certificates of deposit, as noted above
28. 39Deterioration in the performance or financial position of the Federal Home Loan Bank of Boston might restrict the Federal Home Loan Bank of Boston’s ability to meet the funding needs of its members, cause a suspension of its dividend and cause its stock to be determined to be impaired
29. 40We may not be able to successfully implement future information technology system enhancements, or such implementations could be delayed materially, which could adversely affect our business operations and profitability
30. 41We rely on other companies to provide key components of our business infrastructure
31. 42Operational risks are inherent in our businesses
32. 43Changes in management’s estimates and assumptions may have a material impact on our Consolidated Financial Statements and our financial condition or operating results
33. 44Our internal controls, procedures and policies may fail or be circumvented, which could impact our results of operations and financial condition
34. 45We maintain a significant investment in projects that generate tax credits, which we may not be able to fully utilize, or, if utilized, may be subject to recapture or restructuring
35. 46We depend on the accuracy and completeness of information about clients and counterparties
36. 47We may not be able to successfully manage our intellectual property and may be subject to infringement claims
37. 48Our business may be adversely affected by conditions in the financial markets and by economic conditions generally
38. 49Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations
39. 50The financial weakness of other financial institutions could adversely affect us
40. 51Market changes may adversely affect demand for our services and impact results of operations
41. 52Changes in the equity markets could materially affect the level of assets under management and the demand for fee-based services
42. 53Climate change, natural disasters, public health crises, geopolitical developments, acts of terrorism and other external events could harm our business
43. 54Rising sea levels projected for the coastal regions of Massachusetts and New Hampshire could adversely affect our business
44. 55Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers
45. 56We are subject to a variety of environmental, social and governance risks (“ESG matters”). Risks arising from ESG matters may adversely affect, among other things, our reputation and the trading price of our common stock
46. 57The prevalence of remote and hybrid working arrangements has reduced demand for office space in our market

Risks Related to Regulations

1. 58Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations
2. 59Our business is highly regulated, which could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business
3. 60We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
4. 61We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations
5. 62Non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions
6. 63An increase in FDIC insurance assessments could significantly increase our expenses
7. 64We may be unable to disclose some restrictions or limitations on our operations imposed by our regulators
8. 65We could be required to act as a “source of strength” to our banking subsidiaries, which would have a material adverse effect on our business, financial condition and results of operations
9. 66Laws and regulations regarding privacy and data protection could have a material impact on our results of operations
10. 67Changes in tax laws and regulations and differences in interpretation of tax laws and regulations may adversely affect our financial statements and our operating results
11. 68Due to Section 162(m) of the Internal Revenue Code, we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future
12. 69Regulatory developments could adversely affect our business by increasing our costs and thereby making our business less profitable
13. 70Our business may be adversely affected by the public policy priorities of the Trump administration
14. 71Changes associated with the Trump administration’s emphasis on stablecoins and digital assets could have an adverse impact on our business

Risks Related to Stock-Based Benefit Plans

1. 72Our stock-based benefit plans have increased and will continue to increase our expenses and reduce our income

Risks Related to Our Articles of Organization and State and Federal Banking Laws

1. 73Various factors may make takeover attempts more difficult to achieve
2. 74organization could result in our being less attractive to a potential acquirer and thus could adversely affect the market price of our common stock
3. 75The market price of our stock value may be negatively affected by applicable regulations that restrict stock repurchases by us