Photo by James Sanna | Banker & Tradesman Staff
Eastern Bank executives said the bank’s bottom line aided by improved asset quality and fee generation from its wealth management sector in the second quarter.
Executives told investors and stock analysts at last week’s second-quarter earnings call that a drive to convert a string of mergers in recent years into organic growth was continuing. The bank’s leadership team survived a pressure campaign by an activist investor this winter critical of, among other things, the bank’s M&A activity in recent years.
Net income rose to $105.2 million from $65.3 million in the first quarter, and the bank’s net interest margin rose to 3.66 percent, up from 3.63 percent on the same basis, while he bank’s efficiency ratio fell from 6.89 percent to 54.3 percent as noninterest expenses fell $30.7 million thanks to lower operating and non-operating costs.
“Eastern’s second-quarter performance reflects our focus on organically growing both banking and fee based businesses and consistently returning capital to shareholders,” CEO Denis Sheahan said during the Jul 23 call. “Customers remain resilient, as commercial loan pipelines finished June at a record quarter-end level of nearly $1 billion. Deposit balances grew meaningfully during the quarter with a modest rise in costs. While the deposit environment is highly competitive, we are committed to balancing growth with margin performance. Momentum in our wealth business continued as assets increased to another record high and fees had strong growth year-over-year. We are encouraged by the strengthening partnership between our wealth and banking businesses, which continues to create more new business opportunities.”
Net charge-offs were flat quarter-over-quarter (0.17 percent) while slightly increased from the third quarter of 2025 (0.13 percent) prior to Eastern’s 2025 acquisition of HarborOne Bank. Non-performing commercial real estate loans dropped quarter-over-quarter to 0.8 percent. Year-over-year, these troubled loans increased from 0.4 percent.
Additionally, commercial criticized and classified loans declined quarter-over-quarter, while it increased from 3.6 percent in the second quarter of 2025 to 4.92 percent in the second quarter of 2026.
Wealth assets increased to a record high of $11.5 billion, including $10.6 billion in assets under management. In the second quarter of 2025, assets under management sat at $8.7 billion. Wealth management fees also saw gains as it increased from $17.3 million in the second quarter of 2025 to $19.7 million in the second quarter of 2026. According to the bank, wealth management is now its primary fee business.
Executives said that Eastern’s growth in commercial lending was well diversified. The current loan portfolio is largely made up by multifamily (34 percent), while retail and industrial/warehouse properties made up 13 percent of the portfolio.
“If we look at growth that we had in the second quarter, it really was well diversified,” Sheahan said. “It’s really a testament to the team in commercial, the talent that we brought in that is now beginning to hit its stride. It’s not concentrated in any one particular industry. Our pipeline in commercial real estate and community development lending is also very strong. We certainly didn’t experience growth in CRE in the last quarter, but we’re working through a lot of acquired loans and, beyond that, just payoffs in the marketplace.”
