Boston-based Eastern Bank expects to close its acquisition of Cambridge Trust early in the second quarter, executives said during the bank’s Jan. 26 conference call.
The deal had earlier been expected to close this quarter.
If the closing happens on the hoped-for timeline, the bank will focus on integrating the banking division in the second quarter, while the wealth division will be integrated in the third quarter.
When complete, Eastern’s acquisition of Cambridge Trust will give it eight new branches in New Hampshire in addition to the six that it already has in Concord, Manchester, Bedford, Nashua, Dover and Portsmouth. Eastern has said it will close eight of its own branches and three Cambridge Trust ones where their networks overlap, but it’s not clear which specific branches in their combined footprint will shutter.
Bank leaders also revealed during last month’s earnings call that they are resolving Eastern Bank’s three troubled office loans from the third quarter of last year, plus a new non-performing real estate loan that cropped up in the fourth quarter, by selling them back to the market with some losses incurred.
The bank’s dollar volume of non-performing loans increased to $52.6 million in the fourth quarter of 2023, from $47.5 million the quarter before, while net charge-offs increased to $11.4 million in the quarter, which executives said were in line with expectations.
Eastern executives said the bank is actively managing its $706 million investor-owned office loan portfolio, which is equivalent to 5 percent of its total loans. It also has $92 million criticized and classified loans, meaning the borrowers are showing weakness in repayment ability given current market conditions, the bank said.
The bank’s net profit jumped quarter-on-quarter as the bank recorded the $515 million sale of its Eastern Insurance Group to Arthur J. Gallagher & Co. in September.
Net income surged to $318.5 million from $59.1 million in the third quarter primarily due to the $294.5 million after-tax gain from the insurance group sale.
Net interest income was down $133.3 million from $137.2 million in the prior quarter, while net interest margin also declined to 2.69 percent from 2.77 percent. This is due to the 20-basis-point increase in cost of interest-bearing liabilities outpacing the 1-basis-point increase in asset yields as more depositors shift to higher-yielding accounts.
Excluding brokered deposits, core deposits increased by $516.2 million to $17.5 billion compared to $17 billion in the previous quarter.
Eastern CFO Jim Fitzgerald told investors Friday that the cash from the insurance business sale plus the increase in deposits were used to pay down $1 billion worth of borrowings and brokered deposits, reducing it to around $100,000 from $1.1 billion a quarter ago.
Total loans increased to $14 billion from $13.9 billion as all segments of consumer, residential, and commercial recorded modest growth.
Executives said that for Eastern’s side of the business, the upcoming Federal Reserve interest rate cuts this year will have an impact on income and margins late this year and in the full year of 2025. It is expecting non-performing loans to “increase but to be contained” this year as trends normalize.
Eastern executives also noted two projects costing $6 million that are set to be completed in the first half of this year, including the move of its corporate office in downtown Boston ($3 million in costs), and the update of its online and mobile banking platforms ($3 million).
