In a deal that would strengthen its position as Boston's number-one locally based bank, Eastern Bankshares has agreed to pay $490 million in stock and cash for HarborOne Bancorp.
Both the $5.7 billion-asset HarborOne, a former credit union, and Eastern, one of the country's oldest banks, are headquartered in Massachusetts' capital city. Combined, they would hold $24 billion of deposits in the Boston area.
"We are very excited about this partnership, which bolsters our already strong and long-standing presence in Greater Boston," Eastern Executive Chairman Bob Rivers said Friday on a conference call with analysts. "HarborOne is a highly recognized institution in our local market, and we share a deep commitment to customers, colleagues and communities."
The deal would also expand the $25 billion-asset Eastern's franchise to Rhode Island, where HarborOne operates nine branches.
Eastern separately reported its first-quarter earnings Thursday, posting a $217 million loss due to the sale of a $1.3 billion securities portfolio, which generated an after-tax loss totaling $269.6 million. The sale's proceeds were reinvested in higher-yielding investments, which should boost Eastern's profitability going forward, according to Chief Financial Officer David Rosato.
The HarborOne transaction, which was announced late Thursday, marks Eastern's third acquisition of a Boston-area community bank since its
Eastern CEO Denis Sheahan described the HarborOne deal as "financially compelling." Though the terms result in tangible book value dilution of 7% for Eastern, the earn-back period is less than three years, and Eastern expects 16% accretion to its 2026 earnings. The $55 million estimated cost savings total about 42% of HarborOne's 2024 operating expense base.
Laurie Havener Hunsicker, an analyst at Seaport Research Partners, described the combination as a "win-win for both banks" in a research note Friday.
Hunsicker, who follows merger-and-acquisition activity closely, noted in a separate research note Monday that 2025 had gotten off to a "sluggish start," with 39 bank transactions reported through April 18. The pace may be picking up. The $51.5 billion-asset Columbia Banking System in Tacoma, Washington,
Eastern is forecasting that the HarborOne deal will close in October. It expects the combined institution to start with $31 billion of assets, $26.2 billion of deposits and $8.5 billion of assets under management. HarborOne CEO Joseph Casey and one other company director are slated to join the Eastern board once the deal closes.
"This is an in-market, low-execution-risk merger," Sheahan said on the conference call. "HarborOne and its seasoned management team are well-known to us, and we have modeled conservative merger assumptions."
In recent years, HarborOne has sought to shift its focus from residential and commercial real estate lending to commercial and small-business lending. It grew commercial-and-industrial and small-business loans by 27% in 2024, but those portfolios still accounted for just 12% of the bank's total loan portfolio.
Eastern, which operated as a thrift throughout most of its 207-year history, has traveled much further down the commercial-banking path. Commercial loans comprised more than two-thirds of its $18.2 billion loan portfolio on March 31.
Eastern said it has no plans to sell off HarborOne's mortgage-lending subsidiary, which closed more than $114 million of loans in the three months ending March 31. HarborOne sold most of its home loan production on the secondary market, producing first-quarter gain-on-sale revenue of $2.7 million.
"It's a very well-run operation," Eastern's Rosato said of the HarborOne mortgage unit. "Our plan is to think through our business and their business, and optimize what we think the combined entity should look like for Eastern."
Eastern is an active mortgage lender, but its operation is about one-third the size of HarborOne's, according to Rosato.
"There's a real fee opportunity that we need to think about that's available to us," Rosato said. "We have to work through this with their team. We have to right-size or optimize it for our vision, and that will take a bit of time."
Eastern is also hoping to generate additional wealth management and commercial banking opportunities in HarborOne's markets and among its client base. "Partnering with Eastern brings further scale, resources, and innovation to deliver long-term value and enhanced banking experiences to our customers and local communities," Casey said in a press release.
The deal came together quickly. "We entered into negotiations with them over the last few months. It's resulted in a merger that we're very pleased about," Sheahan said.
"Both Bob [Rivers] and I maintain contact with a number of other bank CEOs throughout our marketplace, and we had a very good relationship with Joe Casey and HarborOne," Sheahan added.
HarborOne was founded in 1917 as Brockton Credit Union. It converted to a bank in 2013 and followed up with a
