Photo by James Sanna | Banker & Tradesman Staff
In its third-quarter earnings call, Eastern Bank responded to an activist investor calling for the bank to be sold.
HoldCo Asset Management, which reportedly has a 3 percent stake in the bank, is pushing for the sale, possibly to M&T Bank. The company argues that Eastern’s purchases of Century Bank, Cambridge Trust, and its pending acquisition of HarborOne Bank have hurt shareholders and spent much of the cash it built up during its IPO. Reuters first reported HoldCo’s campaign.
“We’re very open to engaging with our shareholders,” Dennis Sheahan, Eastern Bank CEO said in response to an investment analyst’s question. “We’re happy to engage with any of our investors and what we believe is a shared goal. We and our investors are driving the performance of the company even higher than we’ve already done, and to build long term value creation for our shareholders. So we welcome that dialogue from whomever.”
Sheahan then went on to turn the attention to the future of Eastern Bank, including its merger with HarborOne.
“We’re excited about the future of the company,” he said. “We feel very well positioned here today, and even more so with the combination with HarborOne to execute the strategy that we’ve built to really drive that top quartile financial performance. That’s the mantra at the company, that’s what we’re aiming for. That’s our aspiration. We think that’s going to deliver very attractive shareholder returns. So that’s our focus.”
In his opening remarks, Executive Chair Bob Rivers, Sheahan’s predecessor as CEO, didn’t directly address HoldCo’s calls for a sale and its threat of a proxy fight in the upcoming board of directors election. However, he touted improvement in the bank’s earnings, share price and other metrics that he said were driven by the bank’s three mergers since its 2020 IPO.
“Since our IPO, we have very intentionally expanded our footprint across attractive markets and built the scale we need to invest in the business while maintaining the understanding, accessibility and engagement that makes us our region’s hometown bank. This strategy, most importantly, our people, our culture and our extensive community involvement, are what enable us to expand and deepen customer relationships, attract top talent and capture growth opportunities. This has driven meaningful improvement in earnings, profitability, and shareholder returns,” Rivers said in prepared remarks.
The second slide in the bank’s earnings presentation noted assets had increased from $16 billion as of the bank’s IPO to $31.1 billion once the HarborOne deal is completed. Deposit market share in Greater Boston has doubled from 3.7 percent to 7.2 percent once the HarborOne merger takes place. Operating earnings per share has grown 10 percent, from $0.18 to $0.37. And Eastern’s share price has risen from $10 at its IPO to $18.17 today.
Eastern Bank executives also announced a share repurchase program worth up to 5 percent of the company’s outstanding stock, without setting a dollar limit on the program. The repurchase program expires on October 31, 2026
Eastern previously announced year-long share repurchase programs in the fall of 2021, the fall of 2022 and the summer of 2024. Two were worth $200 million. One was worth $225 million.
