Eastern Bankshares (NASDAQ:EBC) executives used the company’s fourth-quarter 2025 earnings call to highlight a stronger year-over-year earnings profile, solid organic loan growth, record wealth assets, and an intensified focus on capital returns and organic expansion following the closing of its HarborOne merger.
Management emphasizes organic growth and capital returns
Executive Chair Bob Rivers called 2025 “a terrific year,” citing a 62% increase in operating earnings, strong organic loan growth, and record wealth assets under management. Rivers said the HarborOne merger, which closed on Nov. 1, strengthened Eastern’s presence in markets south of Boston and provided entry into Rhode Island. He also characterized the combined company as having $31 billion in assets with a concentrated footprint, and said Eastern is the largest independent bank headquartered in Massachusetts with the fourth-largest deposit market share in Greater Boston.
Sheahan said Eastern sees opportunities to take share in commercial banking and wealth management and to improve deposit growth, with talent investments cited as a driver. He also said Eastern’s commercial platform offers large-bank capabilities with local decision-making and “certainty of execution.”
Fourth-quarter results reflect merger impact and margin improvement
CFO David Rosato said Eastern reported fourth-quarter net income of $99.5 million, or $0.46 per diluted share. Results included a GAAP tax benefit related to losses from an investment portfolio repositioning completed in the first quarter that accrued through 2025, as well as non-operating merger-related costs in the fourth quarter. Operating earnings were $94.7 million, up 28% from the prior quarter, and operating EPS was $0.44, up 19%.
Rosato highlighted improvements in profitability and efficiency metrics, including operating return on assets of 1.30% (up 24 basis points year over year) and operating return on average tangible common equity of 13.8% (up from 11.3%). The operating efficiency ratio improved to 50.1% from more than 57% a year earlier, which management attributed to stronger earnings performance and balance sheet management.
Net interest income was $237.4 million (or $243.4 million on an FTE basis), up $37.2 million from the third quarter, driven by higher interest-earning asset yields and merger-related accretion. Net discount accretion was $22.6 million versus $10.0 million in the prior quarter, reflecting the HarborOne transaction. The reported net interest margin was 3.61%, up 14 basis points from 3.47%, with accretion contributing 34 basis points of margin in the quarter compared with 17 basis points in the third quarter.
In Q&A, Rosato said the company expects the core margin to be relatively flat near term as it focuses on deposit growth and retaining HarborOne deposits, with a gradual ramp and more expansion in the back half of 2026. He said the outlook assumes market forwards of two rate cuts in June and September, which could support a steeper yield curve and margin expansion. Rosato also provided an adjusted December “spot” margin of 3.64% after accounting for elevated accretion in that month.
Fees, wealth, and expenses
Non-interest income was $46.1 million, up $4.8 million from the third quarter. Rosato cited higher mortgage banking income (up $2.9 million to $3.0 million) tied to the addition of HarborOne’s mortgage operations, as well as investment advisory fees (up $1.1 million to $18.6 million) due to higher asset values. Interest rate swap income rose $0.5 million to $1.4 million, which Rosato linked to hiring an experienced leader to head foreign exchange and derivative sales.
Wealth assets reached a record $10.1 billion at year-end, including $9.6 billion in assets under management, driven by market appreciation and positive net flows. In Q&A, Sheahan said net flows were about $200 million in the fourth quarter and credited integration progress and bank referral activity. Rosato noted wealth fees represented 40% of total operating non-interest income in the fourth quarter, lower than recent quarters because HarborOne did not have a wealth management business.
Expenses increased with the merger. Non-interest expense was $189.4 million, up $49.0 million from the third quarter. Non-operating expenses were $33.4 million, up $30.2 million, driven by a $26.7 million increase in merger-related costs and a $3.5 million lease impairment, which Rosato said ran through the non-operating expense line. Operating non-interest expense was $156.1 million, up $18.9 million, primarily due to HarborOne’s addition.
Balance sheet growth, deposits, and asset quality
Period-end deposits totaled $25.5 billion, up $4.4 billion, or 21%, from the third quarter, with $4.3 billion coming from HarborOne. Rosato said $163 million of HarborOne brokered deposits matured during the quarter and the remaining $85 million was expected to run off in the first quarter. Excluding the merger impact, deposits increased $20 million. Management said it had not seen material drawdowns of HarborOne deposits, though Rosato noted deposit costs could remain “slightly elevated” as integration proceeds and said Eastern is targeting deposit betas similar to the last tightening cycle (about 45% to 50%) with lags relative to Fed actions.
Loans increased $4.7 billion, or 25%, from the third quarter, primarily due to the addition of $4.5 billion of HarborOne loans. Excluding the merger, loans grew $255 million, or 1.4%, driven by commercial lending. Sheahan said that on a standalone basis (excluding merger impact), total loans grew $1 billion, or 5.6%, in 2025, supported by commercial growth and steady home equity line expansion. He added Eastern originated $2.5 billion of commercial loans in 2025, split roughly evenly between commercial and industrial lending and commercial real estate.
Asset quality commentary focused on the acquired portfolio. Rosato said net charge-offs were 18 basis points of average loans and called overall asset quality “excellent.” Non-performing loans rose $103 million from the prior quarter, largely due to $94 million of non-performing loans acquired from HarborOne that were “thoroughly assessed and adequately reserved,” with reserve coverage of 35%. Management said the HarborOne non-performers were largely tied to a handful of larger CRE loans across property types and one C&I loan, and Sheahan said they were not located in downtown Boston. The company expects resolution of several credits in the first half of 2026 and said its Managed Asset Group has experience working through acquired non-accrual loans. The allowance for loan losses ended at $332 million, or 1.44% of total loans, up from $233 million, or 1.26%, at the end of the third quarter due to the initial allowance for acquired HarborOne loans.
On commercial real estate, management said total CRE loans were $9.5 billion, with the largest concentration in multifamily at $3.1 billion. Rosato said the investor office portfolio totaled $1.1 billion, or 5% of total loans, with criticized and classified investor office loans of $178 million, or about 16% of that segment, and reserve levels of 5%.
HarborOne accounting marks, accretion, and 2026 outlook
Rosato said the company is on track to achieve the merger-related financial targets provided when the deal was announced. He noted Eastern early adopted ASU 2025-08, which “marginally reduced accretion and marginally helped tangible book value” by eliminating the day-two credit reserve. Final purchase accounting adjustments were described as consistent with estimates, with an interest rate fair value mark on loans of $246 million modestly higher than estimated and a credit mark of $104 million at closing in line with expectations.
Eastern expects accretion from acquired HarborOne loans to contribute approximately $12 million to $13 million per quarter of net interest income for the next year, with accretion from prior acquisitions expected to contribute about $9 million to $10 million per quarter in 2026. Management also said amortization of the HarborOne core deposit intangible is expected to be about $8 million to $9 million per quarter over the next year and will be recorded in non-interest expense. The core system conversion is scheduled for February.
For 2026, management provided the following outlook:
- Loan growth: 3% to 5%
- Deposit growth: 1% to 2%
- Net interest income: $1.2 billion to $1.5 billion
- FTE net interest margin: 3.65% to 3.75%
- Provision expense: $30 million to $40 million
- Operating non-interest income: $190 million to $200 million (assuming no market appreciation impacting wealth)
- Operating non-interest expense: $655 million to $675 million
- Operating tax rate: about 23%
In Q&A, management said provision guidance was similar to what it had given the prior year and reflected a conservative posture rather than heightened concern, noting no material shift in credit trends. Management also reiterated that residential mortgage balances are expected to be “basically flat” in 2026, with growth coming from commercial and HELOCs.
On capital, Eastern ended 2025 with a CET1 ratio of 13.2% and tangible common equity ratio of 10.4%. Sheahan said the company expects to generate excess capital beyond what can be deployed through organic growth and plans to return capital “primarily through share repurchases.” In the fourth quarter, Eastern repurchased 3.1 million shares for $55.4 million at an average price of $17.79 and also approved a $0.13 first-quarter dividend. Rosato said the company repurchased an additional 635,000 shares early in 2026 for $12.3 million and had 8.1 million shares remaining under its authorization, which it anticipates completing around mid-year. Management said it intends to manage CET1 toward the median of the KRX index, cited as about 12%, and expects to seek additional repurchase authorization subject to regulatory approval.
About Eastern Bankshares (NASDAQ:EBC)
Eastern Bankshares, Inc is the bank holding company for Eastern Bank, one of the oldest and largest mutual banks in the United States. Founded in 1818 as Salem Savings Bank and later rebranded as Eastern Bank in 1989, the company preserved its mutual ownership structure for more than two centuries. In March 2020, it completed an initial public offering and began trading on the Nasdaq under the ticker EBC, while continuing to emphasize its community-focused heritage.
Through its primary subsidiary, Eastern Bank, the company delivers a broad range of commercial and consumer banking products.
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