Eastern swears off M&A amid activist investor’s pressure

• Key insight: Eastern Bankshares’ CEO hardened his stance against future bank M&A deals. The comments came three months after activist investor HoldCo Asset Management criticized the bank’s M&A strategy and urged it to consider selling itself.
• What’s at stake: Like other banks that HoldCo has recently scrutinized, Eastern has backed away from the idea of doing more bank acquisitions and has said it’s leaning into more share buyback activity.
• Forward look: Eastern executives said they expect to pursue another share repurchase program when the current one expires this year.

Three months after an activist investor hammered Eastern Bankshares’ bank acquisition strategy, the Boston-based company made its stance on pursuing future deals clear: It isn’t interested.

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Instead, Eastern plans to work with what’s on hand and use its excess capital for share buybacks. Three weeks into the new year, it has repurchased 635,000 shares for $12.3 million, and it plans to seek board authorization for an additional share repurchase program when the current one expires.

“Simply put, we are not focused” on mergers and acquisitions, CEO Denis Sheahan told analysts Friday during the bank’s fourth-quarter earnings call. “We believe that focusing on meaningful growth — organic growth opportunities we have in front of us and returning excess capital, not M&A — will deliver meaningful value to shareholders for the foreseeable future.”

Sheahan didn’t repeat one thing that he had said during the company’s  prior earnings call in October, after which the bank’s stock price fell by more than 3%. This time around, Sheahan made no mention of evaluating potential merger opportunities, should they arise.

Instead, he told one analyst: “Look, we’re not pursuing acquisitions.”

Eastern, which has completed three bank acquisitions since November 2021, is one of the banks targeted by HoldCo Asset Management, the South Florida-based activist investor that spent the second half of 2025 calling out certain regional banks for alleged mismanagement.

The highest-profile case was HoldCo’s criticism of Comerica in Dallas. In July, HoldCo urged the Dallas-based bank to sell, saying it had made years of poor financial choices and arguing that it had failed to address its long-lagging stock price. By early October, Comerica said it would sell itself to Fifth Third Bancorp in Cincinnati. The acquisition is expected to close on Feb. 1.

HoldCo has also scrutinized First Interstate BancSystem in Billings, Montana; Columbia Banking System in Tacoma, Washington; and KeyBank’s parent, Cleveland-based KeyCorp. All three banks have since eschewed the idea of bank M&A in favor of pursuing organic growth and talked about deploying excess capital into share repurchases.

In Eastern’s case, HoldCo has criticized the management for depleting nearly all of the $30.6 billion-asset bank’s excess capital, spending it on acquisitions and securities restructurings.

The investor group urged Eastern to sell itself to a larger bank and suggested it might find a buyer in M&T Bank in Buffalo. It also threatened to wage a proxy battle if Eastern did not swear off bank mergers and securities restructurings, and commit to returning capital via buybacks.

During the fourth quarter, Eastern repurchased 3.1 million shares of common stock for $55.4 million, reflecting 26% of the share repurchase program that its board authorized in October.

The bank is aiming to reduce its common equity Tier 1 capital ratio from 13.2% at the end of December to around 12%, Chief Financial Officer David Rosato said Friday on the call.

Sheahan called the 12% goal “a pretty significant decline from where it is today” and said it should leave the bank “with very comfortable and safe capital levels.”

Holdco could not be reached Friday for comment.

Analysts were generally positive about Eastern’s fourth-quarter results. The quarter included a partial impact from the bank’s acquisition of HarborOne Bancorp, which Eastern said added approximately $4.5 billion in loans and $4.3 billion in deposits to the balance sheet. 

The HarborOne deal closed in November.

Net income totaled $99.5 million, up more than 63% year over year as a result of higher net interest income and fee income. Earnings per share totaled 46 cents. Analysts polled by S&P Capital IQ had been predicting 39 cents. 

Revenue totaled $283.5 million, up by nearly 31% year over year.

Noninterest expenses for the quarter were $189.4 million, up 37.7% from the year-ago quarter. The uptick was at least partially the result of merger-related costs and additional salary, benefits and other costs related to bringing on HarborOne’s employees.

In a research note after Eastern’s earnings call, Mark Fitzgibbon, an analyst at Piper Sandler, wrote that “having an activist shareholder can be a headline distraction,” but it’s not always a bad thing. 

“We believe it also likely ensures [Eastern] will continue to aggressively drive operating performance in the right direction.”