Eastern Bankshares Under Pressure to Sell
Eastern Bankshares, a Boston-based bank, finds itself under scrutiny from HoldCo Asset Management, an activist investor. The investor argues that Eastern Bankshares mismanaged most of its excess capital after going public in 2020, thus diluting shareholder value. Therefore, HoldCo is pushing for the bank’s sale.
HoldCo’s Argument for Selling Eastern Bankshares
HoldCo Asset Management has previously pushed Dallas-based Comerica to sell, and it is now training its sights on Eastern Bankshares. The asset management company has published an 83-page report, accusing Eastern Bankshares’ leaders of overpaying for three acquisitions and pursuing securities restructurings that have destroyed capital to boost earnings. It argues that the bank should sell itself to a larger bank such as M&T Bank in Buffalo, New York.
HoldCo plans to communicate with Eastern’s board of directors regarding this matter but also warns that it is prepared to launch a proxy battle. The activist investor believes that a sale should be seriously explored given Eastern’s exceptional deposit franchise.
Eastern Bankshares’ Response and Market Reaction
As of this writing, Eastern Bankshares, which became a public company in 2020, has not responded to the proposal. M&T Bank has also declined to comment on the matter. However, Eastern’s shares were up more than 3% as of mid-afternoon Monday, indicating investors’ support for HoldCo’s proposal.
HoldCo’s Previous Success with Comerica
HoldCo’s pressure on Eastern Bankshares comes on the heels of Comerica’s agreement to sell itself to Fifth Third Bancorp in Cincinnati. Although Comerica’s CEO Curtis Farmer insists that external pressure did not influence the bank’s decision to sell, many analysts believe it played a significant role in the transaction. The deal, which is set to close in the first quarter of 2026, is the largest bank merger-and-acquisition transaction announced this year.
HoldCo’s Concerns with Eastern Bankshares
HoldCo’s primary concern with Eastern Bankshares is the large amount of capital that the bank generated when it went public. Eastern raised $1.8 billion through an initial public offering. Despite having a strong and low-cost deposit franchise and robust capital ratios, Eastern’s Executive Chairman Bob Rivers has been criticized by HoldCo for using nearly all of the excess capital for acquisitions and securities restructurings.
Eastern Bankshares’ Acquisitions
Eastern Bankshares has made several acquisitions in recent years, including Century Bancorp in 2021 for $642 million and Cambridge Trust in 2024 for $528 million. They also announced plans to sell their insurance division on the same day they declared their intention to buy Cambridge. Furthermore, the bank is set to close a $490 million acquisition of HarborOne Bancorp in Boston. These acquisitions have pushed Eastern’s assets to $25 billion, and with the HarborOne acquisition, the assets are expected to hit $30 billion.
Analyst’s View on Eastern Bankshares
Despite HoldCo’s pressure, some analysts believe Eastern might resist the push to sell. Mark Fitzgibbon of Piper Sandler, who covers Eastern, noted that the company is starting to make progress in driving financial performance metrics higher. He also mentioned that with the HarborOne deal lined up, Eastern now has the scale necessary to successfully compete and drive acceptable results.
Potential Buyer: M&T Bank
M&T Bank, known for its active acquisition history, remains open to another bank deal focused on building density in existing markets. M&T’s most recent purchase was the $7.6 billion acquisition of Peoples United Financial in Bridgeport, Connecticut, which closed in April 2022. The deal extended M&T’s reach into the greater Boston and New England markets.
It remains to be seen how these developments unfold. HoldCo’s push for Eastern Bankshares to sell itself adds another layer of intrigue in the banking sector, where mergers and acquisitions are becoming increasingly common.
Contributions from Catherine Leffert.
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