Eastern Bank announced it will not pursue any further mergers or acquisitions (M&A). This decision comes despite pressure from activist investor HoldCo Asset Management. The Boston-based bank emphasized its focus on organic growth. CEO Denis Sheahan explained that the bank’s priority is growing earnings naturally and returning capital to shareholders.
“We are frequently asked about M&A. Simply put, we are not focused on M&A,” Sheahan said during the earnings call. He confirmed the bank would direct capital toward organic growth and maintaining appropriate capital levels.
HoldCo Asset Management Calls for Sale
HoldCo Asset Management, which holds a 3.1% stake in Eastern Bank, called for the bank to sell itself to a larger regional entity, such as M&T Bank. This plea came as Eastern prepared to finalize its $490 million acquisition of HarborOne, expanding its footprint into Rhode Island with 30 new branches. HoldCo criticized the bank’s acquisitions and its failure to prioritize shareholders.
Focus on Organic Growth
In response to the pressure, Eastern Bank executives emphasized their commitment to organic growth. Executive Chair Bob Rivers stated the bank has achieved enough size and scale to compete effectively. “Now is the time for us to realize the full potential of what we have built to deliver organic growth and solid financial returns,” Rivers said.
The bank sees significant opportunities in both established and newer markets. Sheahan highlighted plans to expand its commercial banking and wealth management businesses while improving deposit growth.
Returning Capital to Shareholders
Eastern Bank also plans to return excess capital to shareholders through share repurchases. Sheahan noted the bank would generate more capital than it can use through organic growth. As a result, the buyback program will continue once the current one ends.
“We believe that focusing on meaningful organic growth opportunities and returning excess capital—not M&A—will deliver meaningful value to shareholders,” Sheahan added.
Industry Outlook on Bank M&A
HoldCo Asset Management has urged other banks to either sell themselves or refrain from pursuing acquisitions. The firm has called for management to be more rigorous in defending their M&A decisions. HoldCo founders Vik Ghei and Misha Zaitzeff did not immediately comment.
Laurie Havener Hunsicker, an analyst with Seaport Research Partners, noted that Eastern’s decision to avoid M&A was “more definitive” than in previous quarters, signaling a clear shift in strategy.
