EBC - 1 Question I Have for One of My Favorite Mid-Cap Stocks
One of my favorite mid-cap stocks is the regional bank Eastern Bankshares (NASDAQ: EBC) based in Boston. Since going public in October of 2020, the stock is up more than 70% and I think there is a lot of runway left. This is a stock that can go slow and steady and generate strong returns long term. However, one question I have right now is how Eastern will continue to use all of the excess capital it raised in its $1.8 billion initial public offering. While it used a portion of the proceeds on the acquisition, it still has a good amount left. Let's take a look at how it could use the remaining capital.
The $1.8 billion in capital that Eastern raised in its IPO was a lot for a bank that at the time was only $14 billion in assets. CEO Bob Rivers did not hide his intentions, saying that he planned to use part of the capital to make the bank more competitive when pursuing acquisitions. He also told a local publication that he thinks the bank will grow to $40 billion in assets over the next decade.
The bank got off to a good start on that goal, announcing in April that it would acquire the neighboring Century Bancorp (NASDAQ: CNBKA) , adding more than $6 billion of assets to its balance sheet. That acquisition is expected to close before the end of the year and should be good for the bank as a whole. Eastern paid $642 million in cash for Century, meaning that it still has $1.1 billion in remaining proceeds from the IPO.
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1 Question I Have for One of My Favorite Mid-Cap Stocks