June 2 is ex-date for the 8 cent quarterly dividend.

Next stop, $23/share?

Certainly seems that way. The general realization that interest rates may go higher sooner than expected has Wall Street focused on banks as an undervalued investment class, and EBC benefits from that. It also has the added appeal of being the best Massachusetts-based bank IMHO.

More than $1B of IPO money still clogging the balance sheet, along with a bumper crop of deposits from Eastern's prosperous and loyal customer base.

When IPO cash is deployed for another acquisition, income will inevitably rise.

Acquisitions seem to be the only way banks can get loans on their balance sheet these days, and loans are worth more than surplus cash. Finding good credits to loan to is the main problem, because Eastern is conservative and does not give away cash.

I encourage you to read the latest 10Q and to explore the slides from the latest conference call. All in the investor section of the company's website.

Big earnings beat. This didn't reallly surprise me. I'm wondering how the analysts could not have anticipated obvious things, such as seasonally high insurance premium renewals and lower incentive compensation (because after 1 year from the IPO next fall they will obviously be issuing all sorts of incentives).

No secret knowledge. Just go to the website where you can read the release, and listen to the CC from a few days ago. Slide deck very informative. The CFO communicates well. https://s26.q4cdn.com/739241435/files/doc_financials/2021/q1/EBC-2021.03.31-Q1-2021-Earnings-Deck.pdf,

Earnings for the quarter a very respectable 28 cents.

They had some minor improvements in the efficiency ratio and there is more to come on that, I am sure, as they move from mutual bank culture to public company culture.

Main problem is loan growth (practically none) and the outsized deposit growth. (People love their Eastern Bank.) That cash is a drag on earnngs and various metrics until it can be put to work.

I continue to be very optimistic that we will see continued growth, in the business as well as share price. However, it's not the screaming bargain of a few months ago. Book value per share and tangible book value per share are now at $18.14 and $16.12, respectively.

Good luck. Just my opinion.

This is beautiful

Probably the easiest layup in the decades I've been investing. Century Bank, which it will acquire after regulator approval, just announced record earnings.

EBC now over 21. My target is at last 22 in near term, and any downside move will just be profit sharing, with plenty of demand.

The $1.8 B they raised in the IPO is just there to buy the earnings of other banks that fit their model. In other words, there is no need to take on debt or to issue stock for these cash pruchases. Over $1 B still available after the Century deal closes.

This stock keeps going up.

This stock keeps going up.

Big news. After just one quarter, the dividend will be raised from 6 cents to 8 cents. That means we are doing well and can afford the much bigger news.

EBC will acquire Century Bank. Nasdaq: CNBKA. This is a well known bank in New England, run by the Sloane family since it was founded in 1969.

All cash deal with cash on hand: $642M. We are putting some of the $1.8B raised in the IPO to good use. It's a little pricey at 1.75 x tangible book, but a fair price. Eastern projects this to be 55% accretive to earnings on a fully synergized basis and to have an IRR of approximately 17%.

This might be one of the rare situations when an acquirer's stock goes up the next day, but whatever happens tomorrow, the future is very bright.

I don't know AFBI. As for WMPN, it's awfully small to be public, and I don't know its market area.

WMPN has done this in two stages, starting in 2018. That's a more typical prcess with small mutuals (unlike EBC). It gives them time to manage expnses and improve their bottom line so that the eventual second stage will be more attractive to investors.

Simply because WMPN has had that lead time, I don't see the boost from expense management with WMPN that you will probably see with EBC, which went full IPO and was mutual until mid-October, 2020. Don't expect huge cuts at EBC; that's not the bank's culture, but there will undoubtedly be some improvements, based on the conference call and common sense. In addition, they have the insurance and employee benefits subsidiary, which keeps growing and is a great source for cross-selling EBC's banking services.

For WMPN, there must be demand for the shares, because the ESOP could not get shares through a subscription in this recent second round and has to buy through the open market. I haven't checked to see if it is sensibly diversified (like EBC with the insurance subsidiary) and suspect it is just straight banking.

Bottom line: I might check into WMPN a bit more, but wonder how such a small company can prosper as a public entity, and I doubt their market area comes close to the Boston region. Frankly, I would rather buy more EBC, even as the stock approaches 20. Thanks for calling WMPN to my attention.

What are your thoughts on buying in on other recent mutual thrift conversion IPOs soon after the IPO? Like WMPN or AFBI for example?

On December 27, 2020, I posted recommendations for portfolios with EBC as a cornerstone, and some unconventional ideas to lighten up on tech, avoid indices, and to take a position in Bitcoin (then at $27,600) rather than gold. Three months later, it's clear I clicked the right boxes. The nice thing about markets is that there can be many ways of being right. You need to think it through, and to not let mistakes psyche you out so that you start chasing longshots to try to get even.

From $20 to $23. Another analyst upgrade, this time from Compass Point, which specializes in the financial service area. (To my knowledge, no relationship with EBC except for coverage.)
http://www.compasspointllc.com/

I don't have a specific recommendation. I was very lucky with EBC because I had an account there, and when they went public they gave depositors the right to buy up to 200,000 shares at $10/each. That bargain is pretty typical when mutual banks decide to go public.

As a matter of practice, I am now opening small accounts at various mutuals which I think are attractive and possible IPO candidates, but none of them approach EBC.

The worst that happens when I open new accounts at various mutuals is I tie up a little money, which I would have kept in a bank account anyway.

By the way, even though EBC has performed greatly, with little risk, it's not a bad place to invest at prices below 18, if that happens again.

I've followed your posts on this. Do you have thoughts on other bank IPOs?

The stock went over $20 yesterday, then retreated a few cents. It's now a double since the IPO in October, and still conservatively priced. And we got our first quarterlydividend, just 6 cents to start, but it will grow.

Hello, self. It'$ me.

Another analyst, Seaport Global, now piling on board with JPM and the like with a $19 projection.

What's happened since the $10 subscription price in October? This BORING bank, the biggest in Massachusetts among demutualized peers, is now trading at $17.71/share, not a bad move for those who subscribed at $10, or who bought at $12 when I started this board.

Ho hum. Widows and orphans only. Hot money types need not apply.

FYI/ March 2 is the Ex-date for the inital quarterly dividend. Six cents not a big deal, but you know that will grow as they pare down the efficiency ratio of over 50%, a relic from mutual bank culture.

The insurance / benefit subsidiary is a nice compliment to a conservative banking operation, which hardly burped during COVID days.

Good luck to all. I'm not going to pursue this further on iHub unless there is interest and intelligent contribution from others.

Boring profits are no fun. That's the only conclusion I can reach as I "talk" to myself about EBC, now valued at over $3B after the IPO, and still trading less than book.

Now trading at $17.10. Not bad from the $10 subscription price customers were offered on demutualization, and a "conservative" profit since the $12 opening on the IPO date in mid October. Sorry for being such a drag on the FOMO party stampede for worthless companies.

Analysts all plugging this at $18.5 and up, and it will go higher. I see Hingham Savings tradng at close to 2 x book with a $500M cap. It's well-run, with an efficiency ratio of a mere 25%. EBC, coming from a mutual bank culture, has an efficiency ratio over 50%. Do you think they won't reduce that? Money in the bank for earnings increases.

You should listen to the conference call. We will have our first dividend in March. We will no longer contribute 10% of profits to charity (because the EBC Foundation was given an enormous 8% of the stock in the IPO - a huge endorsement for charity with the Foundation now having way over $100M), and no longer a drag on earnings. A Win-win for all, and I hate that expression, but it applies here.

I'll admit, my Bitcoin is doing better, but I sleep well with EBC and see at least $21 (conservatively) before year end with a dividend that will easily grow.

JMHO, of course. Buy Bitcoin.

So how are we doing on January 13 after my advice on December 27?

1. Raising some cash made sense. The dollar has been increasing in value and there will be bargains. Don't do a FOMO buy of something just to stay out of cash. There will be opporunities. Keep some cash.

2. EBC, my sleep well stock, has drifted down a bit from $16.57 to $16.25. Low volume trading. I expect the first quarterly call on January 29 (earnings after January 28 close) to be nothing special. Every possible expense has probably been thrown into 2020 so that 2021 starts with a low bar. EBC should benefit from a steepening yield curve, its conservative loan portfolio, and the overall better Boston economy than can be found elsewhere. Still priced below book.

3. Bitcoin has been a stellar performer. From $26,270 it is now over $35,000. In fact, it got as high as $41,000 a few days ago but did the necessary retracement. A year from now, whether you buy it at $35,000 or whatever, you will be in a very profitable position.

4. Next to last choice, Gold. It's just goofing around. That is what what gold does. Own enough for insurance and as a cash alternative. My advice is stick with what you have, but do not buy more. Bitcoin (or cash or stocks) all better.

5. Finally, stocks. Getting out of the indices makes sense. Resource based stocks (WYR and XOM) are doing well. FB is going down, as expected, because of politics. (Not concerned with noise on that one; growth rate is fabulous, and this is not a major portion of my "ideal" portfolio.)

Normal caveats - not to be relied on, etc., etc. Just for fun.

LordD

Bitcoin, the market, and EBC - some thoughts. A friend on another iHub board asked about Bitcoin because I've been recommending it for quite a while. It has blasted past the 2017 high of $20,000 and is over $27,600 as I type on this Sunday morning.

Like many, she is concerned about the market generally, and wonders what will best soothe the pain if there is another crash. This got me thinking. Bitcoin, EBC, gold, cash, or the market indices generally?

Cash is maligned by so many. It will lose value (1-5% per year based on who you believe about inflation). I will be raising more because the stampede away from it to overbid "inflation-resistant" assets is getting extreme, which buyers will discover when their low interest mortgages and margin debt has to be repaid.

EBC is my second choice for protection with upside. Best market area in the country and a conservavtive management. Little exposure to high risk borrowers, and priced below book. That's the cushion. Even if the stock price were to suffer short term, only an economic melt-down in the Boston area, with the country's best hospitals and schools, and a low level income tax (that cannot be graduated due to the state constitution) and real estate tax rates that cannot be raised more than 2 & 1/2 % except by 2/3 override, would cause permanent damage.

Bitcoin over gold, definitely. Only 21 million can be created, and 4 million are permanently lost due to owners losing their private keys, which cannot ever be recovered. Unlike the 2017 crash from $20,000, the market is now being dominated by institutions like MassMutual, Microstrategies, Guggenheim and numerous private wealth funds. PayPal and Square now allow Joe public to participate easily. The owner of the NYSE has developed a premier exchange for institutions to trade crypto futures, and Fidelity has adopted safe custody solutions for institutional ownership. Regulation is coming with enhanced KYC and tax reporting requirements. Although this hinders the libertarian purpose of Bitcoin (anonymity for transfers without intermediary banks) it is bullish for pricing and will be embraced by the growing institutional ownership which wants regulated Bitcoin legitimacy to support decisions to buy it. If the very wealthy deploy just 1% of their worth to Bitcoin, the price wil quadruple by some counts.

Gold is next to last. It's too expensive at $1,900/oz. when Barrick can extract it for an all-in cost of less than $1,000/oz. This high price will result in more production,which is what happened with oil. It could get a short term boost with a crisis, but it lacks the portability of Bitcoin, needs to be stored, is expensive to purchase and cannot be moved easily. If the price really took off, half of the world's supply is in jewelry, which will be melted down in spite of sentiment. Paper ETFs, which rely on counterparty contracts for ownership and concentrate storage in London have extreme risk.

Finally, we come to stocks, which are going up only because people are fleeing cash. The multiples against future earnings are stretched beyond belief. Still you have to own some stocks. At this stage, you need to pick a few and avoid indices, although indices drag down all stocks to some extent. Top on my list now, after EBC, is Weyerhauser (timber and land) Exxon (priced below book) and Facebook, which will have litigation risk, but fabulous future opportunities. I'm shedding my Russell indices which went up too fast, and may even sell some of my beloved (but overpriced) Costco and Microsoft, simply to have cash. If I miss the next leg(s) of a FOMO market, I can handle that a lot easier than a meltdown like 2008.

Anyway, now you have it, with EBC checking the boxes for future profits (and safety), Bitcoin for growth, cutting back the indices, and not buying more gold (but keep what you have, because you paid a lot to own it). Just an opinion, of course, which is worth what you are paying for it.

Cheers!

The official announcement about Friday's addition of EBC to the Russell indices:

Eastern Bankshares, Inc. Added To The Russell 2000® and Russell 3000® Indexes
5:25 PM ET, 12/21/2020 - Business Wire

BOSTON--(BUSINESS WIRE)--Dec. 21, 2020-- Eastern Bankshares, Inc. (the “Company”) (Nasdaq Global Select Market: EBC), a Massachusetts corporation and the holding company for Eastern Bank, today announced that the Company has been added to the U.S. small-cap Russell 2000® Index and the U.S. broad-market Russell 3000® Index, as well as the appropriate growth and value style indexes. The Russell index changes were effective upon the opening of the U.S. stock market today, December 21, 2020.

“Following our recent IPO just two months ago, we are very pleased to be added to these Russell indexes,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. “This inclusion is an important milestone, and we believe it will increase awareness of Eastern Bankshares within the investment community and help to broaden our shareholder base.” (My underlining.)

Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. According to Russell, approximately $9 trillion in assets are benchmarked against their U.S. indexes. Russell indexes are part of FTSE Russell, a leading global index provider. For more information on the Russell 2000® and 3000® Indexes, please visit the FTSE Russell website.

Back over $16/share. If you were wondering why it dipped below that last week, I think it was big players jockeying around EBC joining the Russell 2000 on Friday, with big purchases in advance and then some lightening of positions at the actual event.

Who knows? I didn't buy this to play short term swings. We now have analysts projecting from $17 to $19. It's the largest and best bank based in Massachusetts. In this wild market, I feel comfortable with this one.

JP Morgan raises its target to $18.5.
Their initial projection of $14 was way too conservative.

Now trading at all-time high - $16.50/share. Do I hear $17, as targeted by KBW a while ago, or $19, per Compass announcement?

IMHO, if the economy does well EBC will be in the 20s within a year.

Short term setback always possible if they announce a big acquisition, because the stock market usually penalizes acquirors.

EBC has been clear that it will use the new capital for acquisitions, although no specific target has been mentioned. I very much doubt they would use stock and dilute shareholders at this price.

$19/share. New EBC target set by Compass Point. http://www.compasspointllc.com/

Now $16.19/share, climbing toward the KBW target of $17. JPM, the junior underwriter, was ridiculous to have a $14 target. EBC still trading below book at today's price.

Who is KBW, you might ask? In the banking world, especially IPOs for banks which have demutualized, they are the key player, and know the industry inside out. It's a special niche that the big guys are not cracking. Their opinions count for a lot in my book.

For those of you who did not get in at $12.2o/share, when I started this folder recently, this is still a good price (IMHO), with a strong balance sheet to minimize market losses if there is another market shock. Think of EBC as something you want to own for at least three years.

15.84. Every day a little more. What's not to like with the largest Massachusetts-based Bank that has been in business since 1818 and public only since October.

Eastern is the first bank which allowed a woman to open an account in her own name, if I recall my early 19th century history correctly.

http://archive.fast-edgar.com/20201207/AEZ2W22COC22J26Z2C2Q2CZ2DRH9A22IZ222/

If you care about your investment in newly public Eastern Bank Corporation ("EBC"), you ought to read this report filed with the SEC today.

It demonstrates a key reason for my comfort with EBC: they do not make stupid loans.

What's today's lesson about COVID-19?

- Only 4.1% of the loan portfolio is in Covid-19 modification status.

- Only 11.4% of the loan portfolio is invested in at-risk industries, such as hotels, restaurants, and retail. Of that amount, only 10.6% (less than 2% of total loans) are in Covid-19 modification status.

Eastern Bank has a long tradition of not chasing risky loans to make quick premiums. When balanced with the dependable and growing revenues of its insurance subsidiary (property, casualty, and health insurance) it's a sleep well at night investment for me, and still at a great price because it has not yet attracted a full Wall Street following.

Now it's $15.60 / share, a nice progression from $12.2 when I opened this folder on November 6. Just a steady progression to the underwriter's near term target of $17. What follows is something I wrote on Seeking Alpha, explaining the unique qualities of EBC.

Here are my thoughts about EBC, with special insight as a Massachusetts resident knowing our tax laws:

The pluses are that EBC is so much bigger than its other demutalized competitors, and the management is focused. After 3 years, regulations would allow EBC, as a demutualized bank, to be acquired by one of the national banks. I trust the CEO's statement that this will not happen, and that the goal is to expand the franchise. It's WIN-WIN, whatever the result, but I hope EBC continues on its own path to excellence without Wall Street wanting to gobble it up.

Our pluses:

1. All banks have the tail wind of more monetary expansion, and the inevitable raising of rates.

2. For EBC, it is in the best market area of the country. In Massachusetts, our best employers (universities and hospitals) pay no taxes, so they can maintain high payrolls for employees, who buy houses and pay mortgages and do not default. In Massachusetts, in spite of its reputation as "Taxachusetts", the tax rate must be level (currently a mere 5%) and that is protected by the State constitution, and liberals have been unsuccesful over the years in getting voters to overturn it. In addition, no town can raise its real property tax rate by more than 2&1/2% without 2/3 local support, another great rule to protect mortgage lenders.

In sum, EBC is in the best market with great management, has tailwinds from federal support for banks in general, and has a valuation which is still not stretched, etc., etc. The "market" does not have to be risky if you buy the right stocks, and EBC continues to be my poster child.

I hope this works out for you, Brussel. I think you still have it at a great price.

The pluses are that EBC is so much bigger than its other demutalized compettors, and the management is focused. After 3 years, regulations would allow them, as a demutualized bank, to be acquired by one of the national banks. I trust the CEO's statement that this will not happen, and that the goal is to expand the franchise. It's WIN-WIN, whatever the result, but I hope EBC continues on its own path to excellence without Wall Street wanting to gobble it up.

Our pluses:

1. All banks have the tail wind of more monetary expansion, and the inevitable raising of rates.

2. For EBC, it is in the best market area of the country. In Massachusetts, our best employers (universities and hospitals) pay no taxes, so they can maintain high payrolls for employees, who buy houses and pay mortgages and do not default. In Massachusetts, in spite of its reputation as "Taxachusetts", the tax rate must be level (currently a mere 5%) and that is protected by the State constitution, and liberals have been unsuccesful over the years in getting voters to overturn it. In addition, no town can raise its real property tax rate by more than 2&1/2& without 2/3 local suppoet, another great rule to protect mortgage lenders.

In sum, EBC is in the best market with great management, has tailwinds from federal support for banks in general, and has a valuation which is still not stretched, etc., etc.

The "market" does not have to be risky if you buy the right stocks, and EBC continues to be my poster child.

Almost all in since Tuesday...

Price now at 15.2. The insurance subsidiary has bought another agency. They do this frequently. The insurance subsidiary is a powerhouse in Massachusetts, and is a strength which differentiates EBC from other banks in the state.

EBC will be in the Russell 2000. As expected, but C. Demuth at Seeking Alpha, who seems to know this company inside-out, advises the announcement will be after the close.

This will require purchases of EBC in December. $14.72 - price this instant - will be in the rear view mirror.

All my opinion, not to be relied on. Form your conclusions.

Now at 14.70. I'm still mystified at the $14 target set by JPM, a secondary underwriter on the deal. Talk about a low hurdle. More realistic (IMHO) is KBW, the lead underwriter. They have increased their initial target from $15 to $17.

A little profit taking today on low volume.

Understandable that some of the depositors who bought the full 200,000 shares @$10 each in October would lighten up a bit.

On the plus side, I see that the primary underwriter (KBW) has raised its target from 15 to 17.

Indeed...

ZZZZ. Ho hum. So boring to make money.

14.2 to 14.35, marching on to at least 15 in near term (IMHO-no promises).

Slow and steady progression from $10 subscription price (for depositors and employees) to mid October IPO opening at $12. $14.2 as I type. LadyDarley calls this a CD with high interest.

I have no idea how JPM, the junior underwriter on this deal, could have started coverage a few days ago with a 14 point target which is already history. The primary underwriter, the smaller KBW, projected a much more realistic $15.

Frankly, I'm more optimistic than either, because a weakening dollar will raise interest rates, regardless of (or because of) Fed printing. Regional banks like EBC with absurdly low discounted value to tangible book are in the sweet spot. My personal view (no promises) is that EBC is best in class in the best market area (Boston and suburbs, in many of which it does not even have a branch).

EBC ownership is not for bragging at parties. So much better to be in a hot tech or bio with a double or triple, if you want to throw the dice and say you are smarter than all in the room.

For investing, think of Lady Darley's wisdom.

LD

Jake, Over the years I have had taken my share of plunges. ANIP was the worst. EBC is not as sexxy, but seems pretty solid. 10-Q out today. Should be in the Russell in December. The Seeking Alpha poster, C. Demuth, who knows this very well, says that the index will absorb 9% of the EBC float and his calculations say we are still at only 75% of tangible book.
You won't be bragging at cocktail parties about this one, but it seems like a pretty straightforward path to 15 from here, and much higher over the years.

Thanks
I can see how this is a smarter risk / reward vs ANIP. Almost impossible to really “price” or value Ani. Generics business is endless competition, branded business is tailing off and needs néw blood, Cort is a total guess on success or numbers. That being said, ani is holding high 20’s - oddly.
Regards

For those interested in great analysis of EBC, I highly recommend the articles of Chris DeMuth, Jr. on Seeking Alpha. He fully understands the special strengths of EBC which differentiate it from the other Massachusetts-based banks.

Brussel, Glad to have you on board. Based on the prospectus, the $1.8B will be used for acquisitions and also for improvement of internet/mobil banking.

EBC is now the gorilla, by capitalization, of the demutualized banks in Massachusetts. I have no idea who they might want to court, but they have had great success in the past (as a mutual bank) in acquiring banks in Massachusetts and New Hampshire.

The CEO is smart, and came up under the previous CEO, who came up under the CEO before him. It's a good culture.

I don't see a quick takeover by some huge bank, but they would be attractive. FDIC rules would prohibit takeover for at least three years, but I'd like to think the young CEO meant what he said in an interview which was to expand the bank to a $40B institution.

EBC is a long term hold for me. No promises, of course.

13.61 a few hours later.

Says myself to me (hooray!)

With such a low stock price, every few pennies is real gain.

I have trouble seeing how this does not get to the modest JPM target of 14 in the near future. This well-managed bank, based in Boston with its high income suburbs, is better positioned than most to handle the COVID-19 downturn.

Fair disclosure: I'm fully invested (and more so).

LD,

Thanks for the headlights regarding EBC on ANIP board, I bought in earlier this week.

According to you, What's the real reason behind the IPO ? Looking at major acquisition(s) ? There's no need for an IPO to modernize your IT systems...

Any pronostics on short term appreciation potential ?

Thanks again

EBC stock is appreciating, as expected. Depositors and employees must be thrilled. They could subscribe for up to $2,000,000 each (200,000 shares) at $10.
Stock opened at 12 and is now at 13.33. More to come if you believe the analysts and can read a financial statement.

Happy to see that the stock price goes up a bit every day. The stock is now followed by JP Morgan and Keefe Bruyette and Woods, the underwriters.

JPM has a neutral rating and 14 target. KBW targets 15.

This is simply math. This is the leading Massachusetts-based bank, and it's still at a significant discount to the price at which the smaller demutualized banks trade in Massachusetts.

Probably too boring for those who want an instant double, but with the nearly $2B raised (all from depositors with no need for outside purchase) EBC has a war chest for acquisitions and organic expansion.

It's almost a month since the IPO. The largest mutual bank in the US (and the oldest) surprised Massachustts residents with the decision to go public. The decision made sense. With the $1.8B raised, it can now make more acquisitions and improve its technology.

Depositors have already done well. Each depositor was allowed to subscribe in August for up to 200,000 shares @ $10 each. There was such enthusiasm, the stock opened at $12, and is a bit higher now. Because it's not followed by analysts and is not yet in indices, it's trading at only 75-80% of tangible book.

The environment for banks is not exciting right now, and this is NOT a recommendation. It just seems like a nice stock to consider for the banking part of a balanced portfolio, rather than money center banks.