Banker & Tradesman file photo
With the year 2025 already underway, Eastern Bank executives reflected on the Boston-based bank’s merger with Cambridge Trust last year – and said they were open to another deal this year..
“As we close out the fourth quarter and reflect on another successful year, our most significant milestone was the merger with Cambridge Trust,” said Bob Rivers, executive chair and chair of the board of directors of the company and Eastern Bank, told analysts in a call Friday. “This combination not only solidifies our position as a leading financial institution in our region but also allows us to deliver a broader suite of offerings to our customers, greater opportunities for our colleagues, and even stronger commitment to our communities.”
Noninterest expense was $137.5 million on the quarter, a decrease of $22.2 million. The decrease was primarily driven by the absence of $24 million in one-time expenses tied to the July 2024 deal with Cambridge Trust, Eastern executives noted.
Rivers noted that Eastern doesn’t feel any pressure to find a new merger or acquisition target after its main local rival Rockland Trust announced last month it was buying Enterprise Bank to create a $25 billion-asset institution. Brookline Bank and Berkshire Bank also announced a tie-up last month creating a $23.42 billion-asset lender. Eastern’s earnings report said it ended 2024 with $25.6 billion in assets, up $50.7 million over the fourth quarter.
Still, Rivers didn’t rule out merger activity in 2025.
“We don’t feel pressure to engage in mergers however from time to time organizations decide that they want to sell and were confident if they did decide to sell that we’d get a call,” he said in response to an analyst question.
Eastern’s fourth-quarter earnings eclipsed $60.8 million in net revenue. This was a hefty increase to a third quarter that saw Eastern have a net loss of $6.2 million. Deposits grew, with Eastern racking up $21.3 billion, an increase of $74.8 million.
The bank also announced that it will be repositioning its investment portfolio in 2025. Eastern stated that approximately $1.2 billion of low-yielding available-for-sale securities would be sold and reinvested at current market rates. The transaction is expected to be completed by the middle of the first quarter of 2025, and result in an after-tax non-operating loss of approximately $200 million.
Eastern’s non-performing loans totaled $135.8 million, or 0.76 percent of total loans a the end of 2024 compared to $124.5 million, or 0.7 percent of total loans, at the end of the third quarter.
The increase was driven primarily by commercial real estate office loans, partially offset by charge-off activity, according to the bank’s earnings presentation. Annualized net charge-offs of 0.71 percent of average total loans were primarily driven by problematic loans acquired in the Cambridge Trust merger
“Our fourth quarter financial results were very positive,” said CFO David Rosato. “Our margin expanded by 8 basis points, supported by a reduction in deposit costs. We continue to maintain a strong balance sheet with exceptional levels of liquidity, capital, and credit reserves. In early 2025, we are in the process of repositioning our investment portfolio which will accelerate improvement in our financial performance, adding approximately 18 basis points to the margin and $0.13 to operating earnings per share in 2025. Our CET1 capital ratio will decline by less than one percent, and we expect to rebuild approximately half of that capital position by the end of 2025 through stronger earnings.”
