Eastern Bank Outperforms Merger Expectations

Banker & Tradesman file photo

In its third-quarter earnings call, Eastern Bank highlighted how it had outperformed merger expectations now that the Cambridge Trust merger is in the rearview mirror.

Merger-driven earnings-per-share growth and cost savings are on track to exceed Eastern’s original estimates. When the deal was announced, it was valued at $528 million and it has now been valued at $581 million.

“This quarter marked a transformational moment in Eastern’s history, as we closed on our merger with Cambridge Trust,” said Bob Rivers, executive chair and chair of the board of directors. “This combination represents a powerful step forward in achieving our strategic vision, positioning us as a stronger, more competitive institution and Greater Boston’s leading local bank. I want to acknowledge the hard work and dedication of our entire team.”

Additionally, the balance sheet saw a large increase in loans via Cambridge Trust’s $3.9 billion loan book. Eastern-originated loans declined modestly by $16.1 million, or 0.1 percent, in the quarter. While the bank’s balance sheet saw a growth in loans, Eastern did trim its balance sheet by selling the Cambridge Trust securities portfolio and paying off borrowings.

“I’m sure you can understand there are a number of differences in interest rates, the economy and otherwise, since the merger was announced in September 2023 and this is an important backdrop to the variances from the original merger model guidance,” Eastern CEO Denis Sheahan said. “In short, we outperformed the original guidance on deal charges, earnings per share, accretion, and cost savings. Importantly, capital in the form of either tangible book value or tangible common equity are significantly better than originally projected due to a combination of a smaller balance sheet and rate changes over the past year.”

Eastern saw a growth in deposits as deposits totaled $21.2 billion in the third quarter, representing an increase of $3.7 billion thanks to the merger.

After the conclusion of the Cambridge Trust deal, Eastern executives reiterated, on multiple occasions, that it is committed to its Eastern Massachusetts and New England.

“Whereas our larger competitors focus on a wider geography, our commitment is to Eastern Massachusetts and Southern New Hampshire, as well as other areas of New England which is demonstrated not only by a management team that lives and raises our families here but makes strategic lending and community investments entirely within the markets we serve,” Rivers told investors Friday. “Time and again, we hear from our customers that a point of differentiation is our deep understanding of local markets and communities. Although we have grown larger to have the talent and technology to better serve and compete for our customer’s business, we remain at our core a true community bank, understanding that we can only be as strong as our customers, our colleagues, and the communities we serve.”

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