Regional banking company Eastern Bankshares (NASDAQ: EBC) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 11% year on year to $234.3 million. Its non-GAAP profit of $0.37 per share was 6.9% below analysts’ consensus estimates.

Is now the time to buy EBC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Eastern Bank’s third quarter results did not meet Wall Street’s expectations, with both revenue and adjusted earnings per share coming in below consensus. Management attributed the underperformance to increased competition for deposits and lower net discount accretion, which affected net interest income and overall margins. CFO David Rosato cited heightened deposit costs in the region and a decline in fee income from certain non-core activities as contributing factors. While operating earnings improved year-on-year, the quarter’s results fell short of the strong performance seen earlier in the year, leading to a cautious outlook from management regarding ongoing cost pressures.

Looking forward, Eastern Bank’s outlook is centered on the successful integration of HarborOne, expanding its presence in Massachusetts and Rhode Island and creating new opportunities for organic growth. Management highlighted ongoing investments in commercial lending talent and the expansion of its wealth management business as strategic priorities. CEO Denis Sheahan noted, “Our focus is clearly on building organic growth and integrating HarborOne, with no immediate plans for additional mergers.” The company expects deposit costs to remain somewhat elevated in the near term but anticipates these pressures easing as the interest rate environment changes.

Key Insights from Management’s Remarks

Management pointed to a mix of strategic hiring, product focus, and integration activities as key influences on the quarter’s performance and near-term outlook.

• Commercial lending momentum: Eastern Bank’s commercial loan portfolio grew nearly 6% year-to-date, driven by the addition of experienced relationship managers and a robust pipeline of new business. Management emphasized that the bank’s scale and local expertise continue to attract both talent and customers in the highly competitive Boston market.

• Wealth management integration: The integration of Cambridge Trust’s wealth management business has resulted in record assets under management, supported by market appreciation and modest positive net flows. The bank’s retail branch network is now becoming a more significant source of referrals for wealth management services, marking a shift toward deeper cross-selling within its customer base.

• Deposit competition intensifies: Heightened competition for deposits in the region has led to upward pressure on deposit costs. Management described balancing the need for a strong funding base with the impact on net interest margin, noting that about half of deposits remain in low-cost checking accounts, which is a relative strength.

• HarborOne merger progress: Eastern Bank received regulatory approval and is on track to close the HarborOne merger, which will expand its branch network into Rhode Island. Management expects this combination to provide scale for future growth and to unlock efficiencies over time.

• Share buyback program resumed: The board authorized a new share repurchase program for up to 5% of shares outstanding, reflecting management’s continued focus on capital return. This move comes alongside a maintained quarterly dividend, signaling confidence in the bank’s capital position.

Drivers of Future Performance

Eastern Bank’s guidance is shaped by the integration of HarborOne, ongoing deposit cost pressures, and continued investment in growth initiatives.

• HarborOne integration priorities: Management’s key focus is the seamless integration of HarborOne, aiming to unlock cost savings and expand the customer base. The company reiterated that the original assumptions for margin expansion and cost synergies remain intact, with two months of HarborOne results expected in the next quarter.

• Deposit cost trajectory: Eastern Bank expects deposit costs to stay somewhat elevated in the near term due to regional competition. However, management plans to reduce these costs gradually as the Federal Reserve lowers rates, targeting deposit betas (the proportion of rate changes passed on to depositors) in line with historical averages of 45–50%.

• Organic growth and talent investments: The bank is prioritizing organic growth through additional hiring in commercial lending and expansion of wealth management services. Management believes these investments will drive long-term profitability, though near-term expenses may remain elevated due to ongoing incentive and technology costs.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace and quality of HarborOne integration and realization of projected cost savings, (2) stabilization or improvement in net interest margins as deposit costs fluctuate, and (3) continued momentum in commercial loan and wealth management growth. Execution on expanding into Rhode Island and the impact of resumed share buybacks on capital allocation will also be important indicators of progress.

Eastern Bank currently trades at $17.66, down from $18.38 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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