Eastern Bancshares: The insurance operations of Eastern Insurance Group, LLC were acquired by Arthur J. Announcement of agreement to sell the company created uproar
Eastern Bancshares, Inc. (“Eastern” or the “Company”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, announced that its wholly owned subsidiary Eastern Insurance Group, LLC (“Eastern Insurance”) Have made a definite agreement today. Arthur J. to sell Gallagher & Company (NYSE: AJG) (“Gallagher”) for approximately $510 million (the “Underwriting Transaction”). Today, Eastern and Cambridge Bancorp (NASDAQ: CATC) (“Cambridge”), parent company of Cambridge Trust Company, announced that they have entered into a definitive merger agreement, pursuant to which Cambridge will merge with Eastern in an all-stock . The transaction is valued at approximately $528 million (the “Merger”). Key Considerations:
The merger will create a combined franchise worth $27 billion and further strengthen Eastern’s position as the largest Boston-based community bank by deposits1.
The sale of Eastern Insurance, the third largest bank-affiliated insurance brokerage company in the country, will allow Eastern to benefit from valuation premiums and redeploy capital towards strategic growth opportunities in the market.
The combined transaction is financially attractive with expected 20% earnings per share, 7.5% tangible book value per share dilution and 2.75 year earnings.
The merger will create the largest bank-owned independent investment advisor in Massachusetts and the tenth-largest independent investment advisor overall in Massachusetts
Eastern plans to welcome Cambridge CEO Dennis Sheehan to its executive team as CEO
Investor call on September 20, 2023 at 9:00 am ET
Eastern and Cambridge merger
Under the terms of the merger agreement, which has been unanimously approved by both boards of directors, each share of Cambridge common stock will be exchanged for 4.956 shares of Eastern common stock. Eastern is anticipated to issue approximately 39.4 million shares of its common stock in the merger.Based on Eastern’s closing price of $13.41 per share on September 18, 2023, the transaction is valued at approximately $528 million and the total consideration represents 114% of Cambridge’s realized book value* and a 24% premium to Cambridge’s thirty-day volume weighted average price. represents.
Upon closing, Dennis Sheehan, Cambridge’s chairman, president and CEO, will become CEO of Eastern and join Eastern’s board of directors. Eastern’s president, Quincy Miller, will be promoted to vice president, president and chief operating officer. Both Mr. Sheehan and Mr. Miller will report directly to Bob Rivers, who will serve as Executive Chairman and Chairman of the Board of Directors. In connection with the closing, in addition to Mr. Sheehan, three Cambridge directors are expected to be elected to Eastern’s board of directors.
Given the distinctiveness of the Cambridge Trust brand in the banks’ shared local markets, the combined wealth management and private banking divisions will operate under the Cambridge Trust brand and leadership.
As of June 30, 2023, Cambridge had approximately $5.5 billion of total assets under management and administration, $4.0 billion of total loans, $4.4 billion of deposits and $4.4 billion of customer assets (“AUMA”). Upon completion of the merger, the combined company is expected to have total assets of approximately $27.1 billion, total loans of $18.0 billion, deposits of $22.6 billion and AUMA of $7.6 billion.
“I have long admired the success of Cambridge Trust under Dennis’ leadership, and I am excited to welcome Dennis and the Cambridge team to Eastern,” said Chairman of Eastern Bancshares, Inc. said Bob Rivers, CEO and Chairman of the Board. East Bank. “As we look to the future, the increased capabilities and financial strength created by this merger will allow us to further position Eastern as the region’s local financial partner of choice, delivering better value for our customers and shareholders and enhancing our community,“And increased opportunities for our partners.”Sheehan commented, “I am delighted to be a part of bringing together two fantastic companies that share similar values and vision. I know the Cambridge Trust team will enjoy the opportunities that lie ahead and I look forward to working with my colleagues at Eastern as we deliver an integrated and exceptional service to our clients.”
The merger is expected to be completed during the first quarter of 2024, subject to certain conditions, including the receipt of necessary regulatory approvals and approval by Eastern and Cambridge shareholders. All Cambridge directors and executive officers and their affiliates with voting power have agreed to vote in favor of the merger.
Sale of Eastern Insurance Group, LLC
Also today, Eastern announced that Eastern Insurance has transferred its insurance operations to Arthur J. Entered into a definitive agreement to sell Gallagher & Company for approximately $510 million in cash. On an after-tax basis, the net profit on the sale is expected to be approximately $260 million.
“For more than 20 years, Eastern Insurance’s dedicated team has grown the agency into the third largest bank-affiliated insurance brokerage in the country and a top 50 agency overall,” Rivers said. “Eastern Insurance’s growth and success was made possible by the leadership and dedicated team of CEO Tim Lodge, who has grown the agency into one of the nation’s premier insurance brokerage firms. Additionally, I am grateful to each of my colleagues at Eastern Insurance. On behalf of all his colleagues at Eastern, he will be greatly missed.”After careful consideration of Eastern’s long-term goals, this transaction is being undertaken to recognize Eastern Insurance’s valued premium while allowing Eastern to focus on the growth of its core banking business and strategic initiatives, including the announced merger with Cambridge. Permission has been given.
Rivers commented, “Gallagher is a proven insurance leader, and I have every confidence that he will continue to provide the strong level of service our insurance clients expect. We look forward to continuing our relationship with Gallagher as our insurance brokerage partner. Are.
Eastern anticipates that the insurance transaction, which is subject to standard closing conditions, will close in the fourth quarter of 2023. In connection with the sale, Eastern Insurance’s current leadership and employees are expected to join Gallagher.
Eastern Insurance serves as an agent in offering property and casualty as well as life and health insurance to both personal and commercial customers and operates through 22 non-branch offices located primarily in Eastern Massachusetts . Eastern Bank acquired Allied American Insurance Agency, Inc. in 2002. acquired Eastern Insurance Group, LLC, and has since acquired 36 insurance agencies, increasing revenues from approximately $28.2 million in 2003 to $99.2 million in 2022.
Financially attractive transactions
On a combined basis, the merger and underwriting transactions are expected to be approximately 20% accretive to Eastern’s 2024 earnings per share and approximately 7.5% accretive to realized book value per share with an expected earnings period of approximately 2.75 years and an internal rate of return of approximately 7.5%. . A return of approximately 20%.On a pro forma basis for December 31, 2023, Eastern is expected to maintain strong capital levels with an estimated common equity Tier 1 ratio of approximately 14.5%.
A presentation with additional information can be found on Eastern’s investor relations website investor.easternbank.Can be obtained by visiting com.
Consultant
In connection with the Eastern and Cambridge merger, J.P.Morgan Securities LLC acted as financial advisor and Nutter McLennan & Fish LLP provided legal advice to Eastern. BofA Securities, Inc. Acted as financial advisor and Hogan Lovells US LLP provided legal advice to Cambridge.
In connection with the Eastern Insurance transaction, Piper Sandler & Co. acted as financial advisor and Nutter McLennan & Fish LLP provided legal advice to Eastern.
Conference Call
Bob Rivers, Dennis Sheehan and Jim Fitzgerald, Eastern’s Chief Administrative Officer, Chief Financial Officer and Treasurer, will hold a conference call for investors on September 20, 2023 at 9:00 a.m. Eastern Time. The conference call will be webcast simultaneously. Investor Relations Website of Participating Company Investor.You can join the webcast on easternbank.com. A replay of the webcast will be made available on demand on this site.
To join by telephone, participants may call the toll-free dial-in number (888) 259-6580 and reference conference ID 02238000. Please dial five to ten minutes before the start time to allow time for registration. To avoid speaking to an operator on the day of the call (recommended), please pre-register here: https://emportal.ink/3Zrrp19. Pre-registration will be activated 1 hour before the start time.
Eastern Bancshares, Inc. And about Eastern Bank
Eastern Bancshares, Inc. It is the stock holding company of Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more than 120 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire and Rhode Island. As of June 30, 2023, Eastern Bank had total assets of approximately $22 billion. Eastern provides banking, investment and insurance products and services to consumers and businesses of all sizes, including its Eastern Wealth Management division and Eastern Insurance Group LLC subsidiary . Eastern is proud of its vocal advocacy and community support, including $240 million in charitable donations since 1994. An inclusive company, Eastern employs approximately 2,100 deeply committed professionals who value relationships with their customers, colleagues and communities. For investor information, visit investor.easternbank.com.
About Cambridge Bancorp
Cambridge Trust Company’s parent company, Cambridge Bancorp, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 133-year-old Massachusetts chartered commercial bank with approximately $5.49 billion in assets as of June 30, 2023, and a total of 22 Massachusetts and New Hampshire branches. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $4.4 billion of client assets under management and administration as of June 30, 2023 Wealth Management Group Boston and Wellesley, Massachusetts and Concord, Manchester and Portsmouth, New Hampshire Holds office in.
About Eastern Insurance Group LLC
Eastern Insurance Group LLC, headquartered in Natick, Massachusetts, is a wholly owned subsidiary of Eastern Bank. Licensed to do business in every state, Eastern Insurance serves more than 75,000 individuals and businesses and offers a full line of personal and commercial insurance products, as well as employee benefits services. Representing more than 50 national and regional insurance carriers, Eastern Insurance is recognized as one of the largest insurance agencies headquartered in Massachusetts.
Arthur J. About Gallagher & Company
Arthur J. Gallagher & Company (NYSE:AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its proprietary operations and its network of correspondent brokers and advisors.
Non-GAAP Financial Measures
Reflects non-GAAP financial measures used in this press release.
This press release includes both financial measures based on United States generally accepted accounting principles (“GAAP”) and non-GAAP based financial measures. Management believes that providing certain non-GAAP financial measures provides investors with useful information to understand their financial performance, performance trends and financial condition. Management uses these measures for internal planning and forecasting purposes, and management, as well as securities analysts, investors and other interested parties, also use these measures to compare the operating performance of a peer company. These non-GAAP measures should not be considered a substitute for GAAP-based measures and results. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures to non-GAAP financial measures of other companies with the same or similar names. The solution to the actual book value for Cambridge is included in a table at the end of the press release.
This press release also contains certain forward-looking modeled estimates and projections, including a pro forma estimate of the tangible book value per share of the combined company. These metrics are dependent on variable factors, including management assumptions and modeling inputs as well as market-driven factors such as interest rates, which the Company cannot control. Accordingly, a resolution of the Company’s outlook on these items may not be readily set forth in a format useful to investors and may not be readily available.
forward-looking statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements about anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. You can use the words “may,” “will,” “should,” “could,” “will,” “plan,” “potential,” “estimate,” “project,” “believe” Can recognize. “”intends,” “estimates,” “expects,” “targets” and similar expressions. Forward-looking statements, by their nature, are subject to risks and uncertaintiesThere are a number of factors that could cause actual results to differ materially from the expected results described in the forward-looking statements.
Factors related to the proposed transaction that could cause or contribute to actual results differing materially from expected results include, but are not limited to, the possibility that revenue or expense synergies or one or both of the transactions Other expected benefits may not be expectedIt may be more expensive to achieve, or in a timely manner, or at all; that one or both transactions may not be completed on time, if at all; Before or after the completion of the Transaction, Eastern or Cambridge may not perform as expected due to uncertainties related to the Transaction and other factors;Eastern is unable to successfully implement its integration or disposition strategies; necessary regulatory, shareholder or other approvals are not obtained or other closing conditions to one or both transactions are not satisfied on a timely basis or at all; The timing of completion of proposed mergers depends on various factorswhich cannot be predicted accurately at this point; reputational risks and the reaction of the Company’s customers to one or both transactions; inability to implement onboarding or transition plans and other merger-related consequences; Continued pressure in the banking industry and the Eastern and Cambridge markets andUncertainties, including changes in interest rates and deposits and composition, adverse developments in the level and direction of loan defaults, charge-offs, and estimates of the adequacy of allowances for loan losses, increased competitive pressures, deterioration in asset and credit quality, and legislative, regulatory and fiscal policy changes andassociated compliance costs; and management time wasted on issues related to the transaction These forward-looking statements are subject to risks and uncertainties generally applicable to our respective businesses, which are disclosed in Eastern & Cambridge’s 2022 Annual Report on Form 10-K Has gone. Eastern and Cambridge’s SEC filings are available on the SEC’s website at www.sec.gov and their respective corporate websites at investor.easternbank.com and ir.cambridgetrust.com. These web addresses are included only as passive text references. Information from these websites is not part of this document. For any forward-looking statements made in this press release, Eastern and Cambridge claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Except as required by law, each Company specifically states this press release. disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date.
Additional information and where to find it
In connection with the proposed Merger Transaction, the Company intends to file a registration statement on Form S-4 with the SEC that will include a joint proxy statement of the Company and Cambridge and a prospectus of the Company (the “Joint Proxy Statement/Prospectus”). ” “), and other relevant documents relating to the proposed transaction.This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or any such Also the securities laws of the jurisdictionQualification under.Investors and shareholders of the Company and Cambridge are urged to read the registration statement and the joint proxy statement/prospectus of the Transaction and each other relevant document filed with the SEC when they become available, as well as any amendments or supplements to those documents, Because important in themwill know.