Dive Brief:
- Eastern Bankshares will merge with Brockton, Massachusetts-based HarborOne in a $490 million stock-and-cash deal that would push the Boston-based lender’s brick-and-mortar footprint into Rhode Island for the first time, the banks said Thursday.
- The transaction, set to close in the fourth quarter, will add 30 locations to Eastern’s 109-branch presence and bolster the $25 billion-asset bank with a further $5.7 billion in assets.
- HarborOne shareholders will receive a choice of either 0.765 Eastern shares or $12 cash for each HarborOne share they own, as long as 75% to 85% of the overall payout is in stock. The deal’s $490 million value is based on an 80% stock-to-cash ratio – meaning Eastern would issue $99 million in cash, along with 25.2 million shares at $15.48 each, the stock’s closing price from Wednesday.
Dive Insight:
The deal announcement comes just one day after Columbia Banking System said it would buy Pacific Premier Bank in a $2 billion transaction meant to boost its presence in Southern California. Taken together, the Columbia and Eastern deals lend credence to the idea that an expected surge in banking mergers and acquisitions following President Donald Trump’s reelection may just have needed the right trigger. The Federal Reserve and Office of the Comptroller of the Currency last Friday gave a green light to Capital One’s $35.3 billion proposed acquisition of Discover, the largest banking merger in at least six years.
Capital One and Columbia mergers notwithstanding, Eastern has shown a particular cadence with its acquisitions: It has tended to expand through purchases roughly every other year. The Boston bank announced it would buy Cambridge Bank for $528 million in 2023, and Century Bank for $642 million in 2021.
Bob Rivers, Eastern’s chair, called HarborOne a “highly recognized institution in our local market.”
“We share a deep commitment to customers, colleagues and communities,” Rivers said.
Once the transaction closes, HarborOne directors will get two seats on Eastern’s board, including one to be occupied by CEO Joseph Casey.
“Today’s announcement is a testament to the strength of our franchise and dedication of our team,” Casey said. “Partnering with Eastern brings further scale, resources and innovation to deliver long-term value and enhanced banking experiences to our customers and local communities. We look forward to building upon the legacy forged by HarborOne for over a century.”
Eastern CEO Denis Sheahan touted the deal’s 16% earnings accretion, noting that Eastern would earn back its tangible book value in 2.8 years.
Sheahan called HarborOne “a natural strategic fit with shared values, vision and focus on customer-centric banking.”
“We look forward to introducing HarborOne customers to an enhanced array of products and services,” he said.
That includes Eastern’s wealth business, which manages $8.4 billion in assets – largely inherited through the Cambridge acquisition.
HarborOne, for its part, counts a sizable mortgage-lending business. Additionally, its HarborOne U program offers educational resources such as free digital content, webinars and recordings aimed at small-business owners and clients seeking personal-finance help.
