Banker & Tradesman file photo
Eastern Bank closed its merger with Cambridge Trust earlier this month, and executives spent part of the bank’s second-quarter earnings call looking ahead to the deal’s benefits while not expressing any immediate desire to continue expansion.
With the merger also came change in some leadership roles. Quincy Miller added the title of chief operating officer to his current roles of vice chair and president. Cambridge Trust CEO Denis Sheahan also joined the Eastern executive team as Eastern’s CEO. And former Eastern CEO and board chair Bob Rivers became the bank’s executive chair. Three other unspecified Cambridge Trust executives joined Eastern’s senior ranks, bank executives said during Friday’s call.
The merger closed July 12 and the main bank systems conversion was complete by July 15. A systems conversion for both banks’ wealth management customers will happen later this year. Post-merger, Eastern will market its wealth management service under the Cambridge Trust brand.
“As you know, mergers and conversions are a long and challenging process,” Sheahan said. “We were very happy with how successful the transition was, and the attention and care we were able to collectively provide our customers. I especially want to thank my Cambridge Trust colleagues for all their hard work and effort during this time of uncertainty. Now that we have the bank conversion completed, we all look forward to getting back on offense, focusing on growth opportunities in all business clients and in realizing the synergies and potential of the combination and I’m very confident we can do that.”
Net interest income has been on a slight decline for Eastern Bank. In the second quarter of 2023, Eastern reported $145.5 million in net interest income and a net interest margin of 2.80 percent. In 2024, second quarter net interest income fell to $133.2 million and a net interest margin of 2.64 percent. Net income was $26.3 million while loans increased 1.6 percent to $57 million and deposits dropped 2.9 percent driven by the early withdrawal of a $100 million deposit by a customer that was being acquired. The bank’s non-performing loans dropped from $57.2 million to $39.8 million. The bank’s
Eastern Chief Administrative Officer, Chief Financial Officer and Treasurer Jim Fitzgerald expressed hope that post-merger, NIM will be at 3 percent.
Following the merger, Eastern is now by far the largest locally-headquartered bank by deposits in New England, at $17.5 billion. The bank ended the quarter with assets of over $25 billion and $8.4 billion in assets under management in its wealth unit. The merger will increase the bank’s net branch count by 11 and its wealth offices by four.
Eastern has over 100 branches throughout Massachusetts and its foothold on the market is strong, executives said, The potential for expansion outside of New England might seem promising to some, but Sheahan said that isn’t on the cards for Eastern.
“So we haven’t spent a lot of time talking through that in terms of geographic expansion,” Sheahan said in response to a question from a stock analyst. “We love the markets that we’re in. The preference would be if we were to do merger, it would be contiguous in nature, it’s easier to integrate. But if your question is would we expand out of the New England region that’s not in our in our thought process at all.”
Sheahan also added that with Eastern’s current stature, some mergers are not appetizing due to being too small but the bank hasn’t formulated a dollar figure threshold that would need to be reached for it to consider a future acquisition.
In contrast, executives at Eastern’s direct competitor and fellow serial acquirer Rockland Trust Co. said during their bank’s recent earnings call that Rockland would prefer a larger bank as its next acquisition target.
“And with respect to size, I think there’s a balance, right? I mean if we had our operations folks here, they’d tell you it takes just as much work to do a $1 billion deal,” CEO Jeffrey Tengel said in response to a stock analyst’s question. “It’s a $10 billion deal. So let’s do the $10 billion deal. But that is also balanced by what’s the integration risk, how does it change the complexity of our balance sheet and the culture of our company, etc. So I would think we’re going to be pretty measured in terms of size of things that we would find attractive. As we go forward measured, meaning something probably less than 50 percent of our balance sheet or our size would be, I guess, a good place to start, and then we just go from there.”
