EBC - Eastern Bankshares: All Eyes On Merger With Cambridge Bancorp

2024-06-12 12:54:17 ET

Summary

• Despite initial market skepticism, I believe the merger is a positive move due to the complementary strengths of Eastern and Cambridge.
• The Eastern Bankshares stock price has been stagnant due to an upcoming merger with Cambridge Bancorp.
• The merger is set to close on July 12, 2024, creating a $27 billion franchise with different divisions operating under each bank's brand.

The price of Eastern Bankshares ( EBC ) has been sideways for several months now, and the reason is attributed to the upcoming merger with Cambridge Bancorp ( CATC ). Investors appear doubtful about the future of the resulting new bank and are not taking a position.

I have covered both banks in the past and did not go beyond a hold rating. As for Eastern , I was concerned about the high unrealized losses on AFS securities, as they are bringing down TBV per share. In the case of Cambridge , a deterioration in profitability was evident. In both cases, these problems remain, but the prospect of a merger between these two banks is a game changer....

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