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Eastern Bankshares Inc. EBC announced the completion of its merger with Cambridge Bancorp. The deal, announced in September 2023 with a 100% stock consideration, aligns with the company’s inorganic growth strategy.

Per the terms of the deal, Cambridge shareholders received 4.956 shares of EBC common stock for each share of Cambridge common stock they own. Eastern Bankshares issued roughly 39.2 million shares of its common stock for the merger consideration.

The merged private banking and wealth management divisions will work under the brand and leadership of Cambridge Trust as it has a distinct presence in its peer local markets. Other areas of the merged bank, including Commercial, Business and Consumer Banking, will operate under the Eastern Bank brand name.

At the time of announcing the deal, it was noted that the combined company would have approximately $27.1 billion in total assets, $18 billion in total loans, $22.6 billion in deposits and $7.6 billion of assets under management and administration.

At the same time, EBC announced the divestiture of its insurance services business, Eastern Insurance Group LLC, to Arthur J. Gallagher & Co. This deal was closed in October 2023 with a sale price of $515 million.

On a combined basis, the merger and the insurance sale transaction were projected to increase EBC’s 2024 earnings per share by roughly 20% and reduce the tangible book value per share by approximately 7.5%. The anticipated earnback period is roughly 2.75 years, with an internal rate of return of roughly 20%.

These efforts indicate the strategic redeployment of the capital to strengthen the banking franchise.

Bob Rivers, CEO and chair of the board of Eastern Bankshares, stated, “We are excited to have successfully completed Eastern’s merger with Cambridge Trust and, in doing so, to strategically solidify Eastern’s position as Greater Boston’s leading local bank and Cambridge Trust Wealth Management as the largest bank-owned independent investment advisor in Massachusetts.”

The transition of Cambridge Trust’s banking products and services to EBC’s systems took place during the weekend of Jul 12, 2024. Further, the conversion of the customers of Eastern Wealth Management to Cambridge Trust’s systems is anticipated to take place later this year.

As part of the deal, Denis Sheahan, chairman, president, and CEO of Cambridge, became the CEO of Eastern and Eastern Bank and joined EBC’s board of directors. Additionally, Quincy Miller has been promoted to chief operating officer of Eastern Bank.

This move aligns with EBC’s objective to establish itself among the leading banking institutions in the market. The company has been engaged in opportunistic buyouts in the past as well. In November 2021, it acquired Century Bancorp Inc. to boost its offerings and deepen its presence within the market. Notably, the company has completed eight mergers & acquisitions of banking businesses since 1997.

Eastern Bankshares’ shares have risen 19.2% in the past year.

Eastern Bankshares, Inc. Price

Eastern Bankshares, Inc. price | Eastern Bankshares, Inc. Quote

Currently, EBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Expansion Efforts by Other Financial Services Firms

Last week, Victory Capital Holdings, Inc. VCTR signed a definitive agreement with Amundi to enter into mutual distribution agreements and combine the company with Amundi's US business.

Per the distribution agreements, on the one hand, Victory Capital will supply US-manufactured active asset management products to Amundi for global distribution, while on the other, it will distribute Amundi’s non-US manufactured products within the United States.

Similarly, Moody’s Corp. MCO fully acquired Global Credit Rating Company Limited (“GCR”). This move expands the company’s footprint in Africa’s domestic credit markets. The terms of the deal were kept under wraps.

Combining GCR’s solid footprint in the African market with MCO’s worldwide expertise will bolster the latter’s presence in the high-growth markets.

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