Eastern Bankshares Inc (NASDAQ: EBC) reported a mixed set of results for the fourth quarter of fiscal 2025, with earnings per share beating Wall Street estimates while total revenue and key expense metrics highlighted ongoing integration challenges following its recent acquisition of HarborOne Bank.
Net income for the quarter ended Dec. 31, 2025, was $99.5 million, or $0.46 per diluted share, compared with $106.1 million, or $0.53 per diluted share, in the linked quarter. On an operating basis – a non-GAAP measure that excludes certain merger-related and one-time items – the company generated operating net income of $94.7 million, or $0.44 per diluted share, up sharply from $74.1 million in the third quarter.
The earnings per share figure beat analyst expectations, with forecasts centered around approximately $0.41 per share, driven in part by stronger interest income and cost management, according to earnings call transcripts. However, total revenue came in at $283.5 million, slightly below consensus forecasts, reflecting continued pressure in non-interest income and elevated expense items tied to the HarborOne integration.
Merger Impact and Balance Sheet Expansion
Eastern’s fourth-quarter results were shaped by the partial quarter impact of its merger with HarborOne, which closed on Nov. 1, 2025. The transaction added roughly $4.5 billion in loans and $4.3 billion in deposits, boosting the bank’s total balance sheet and lending capacity. Total loans at quarter-end stood at $23.6 billion, up about 25% from the prior quarter, while deposits reached $25.5 billion.
The enlarged balance sheet supported a net interest income of $237.4 million, up from $200.2 million in the prior quarter, as the bank benefitted from higher yields on interest-earning assets and greater loan volume. Fully taxable equivalent net interest margin (NIM) rose to 3.61%, reflecting favorable asset yields relative to funding costs.
Wealth assets under management, a key driver of fee income, also reached record levels of $10.1 billion, underscoring growth in Eastern’s advisory and private banking segments.
Asset Quality and Expenses
Asset quality metrics showed expected deterioration tied to the merger. Non-performing loans climbed to $172.3 million, or 0.75% of total loans, from 0.37% at the end of the prior quarter, largely reflecting acquired HarborOne assets that were thoroughly reviewed and reserved at closing. The allowance for loan losses amounted to about $332 million, or 1.44% of total loans.
Noninterest expense rose sharply to $189.4 million, from $140.4 million in the prior quarter, as Eastern incurred elevated costs related to merger integration and transition activities. On an operating basis, noninterest expense was $156.1 million, up approximately 14% from the previous quarter. The company reported an efficiency ratio of 66.8% on a GAAP basis and 50.1% on an operating basis, indicating persistent cost pressures even as operating leverage improved modestly.
Profitability and Capital Metrics
Profitability measures were generally higher when viewed on an operating basis. Return on average tangible common equity (operating) rose to 13.8%, compared to 11.7% in the third quarter, while operating return on average assets reached 1.30%. However, GAAP returns moderated due to one-time items and higher expense loads.
Capital ratios remained strong, with a preliminary common equity tier 1 (CET1) capital ratio of 13.22%, although this marked a modest decline from the prior quarter due to balance sheet expansion and intangible goodwill from the merger. Book value per share increased slightly to $18.42 from $17.99 as tangible book value edged down to $12.90.
Dividend and Share Repurchases
In conjunction with the earnings announcement, Eastern said its board approved a regular quarterly cash dividend of $0.13 per share, payable on March 20, 2026, to shareholders of record on March 6. The bank also repurchased approximately 3.1 million shares during the quarter for about $55.4 million, representing roughly 26% of its previously authorized share buyback program.
Outlook
Management framed the quarter as a solid finish to a transformative year. CEO, Denis Sheahan, highlighted a 62% full-year increase in operating net income, robust organic loan growth, and record wealth management assets as key drivers of progress. Eastern signaled continued focus on integrating merger operations, expanding commercial lending, and returning capital to shareholders. Long-term targets include incremental organic growth and balanced capital deployment, though the near-term outlook emphasizes efficiency gains and margin stabilization.
Reasons to pass on EBC
- GAAP EPS Down: $0.46 vs. $0.53 prior quarter on merger hits.
- Revenue Miss: $283.5M below estimates; weak non-interest income.
- NPLs Doubled: 0.75% of loans ($172.3M) from HarborOne assets.
- Expenses Surged: +35% to $189.4M; GAAP efficiency 66.8%.
- CET1 Dip: 13.22% post-expansion/goodwill drag.
- Merger Drag Persists: Integration costs into 2026.
