The stock of Eastern BankShares, the holding company which owns Eastern Bank, jumped more than 20 percent in its first day of trading Thursday on NASDAQ. The initial public offering was priced at $10 per share, and the stock (ticker: EBC) closed at $12.15.
Eastern, the oldest and largest mutual bank in the United States, took the unexpected step of offering shares to the public earlier this year in an effort to fuel future growth opportunities. As a mutual bank they first offered their shares privately to all of their depositors, employees, and officers. That offering, targeted at $1.4 to $1.7 billion worth of stock, was over-subscribed and attracted nearly $1.8 billion of orders.
The bank, which was founded in Salem and has its principal operations center in Lynn, recently received regulatory approval to begin public trading of their stock. In addition to the shares purchased by the depositors and insiders, the company also purchased $14.5 million, worth of stock for a newly formed employee stock ownership plan for its staff of more than 2,000 employees.
At current prices, Eastern Bankshares is valued at about $2.2 billion. The bank, which is more than 200 years old, has approximately $16 billion in assets, making it the largest Massachusetts based bank. In addition to its more than 100 branches, Eastern owns one of the largest independent insurance agencies in the United States, and has a wealth management subsidiary that manages more than $2 billion in client funds.
One big beneficiary of the offering and its strong initial performance will be the Eastern Bank Charitable Foundation. The bank made a donation of stock to the Foundation equal to 4% of the shares outstanding. Those shares are worth nearly $90 million at current prices. The Foundation will be able to sell those shares over time to further its charitable giving efforts in the bank’s market area.
Depositors who purchased shares in the offering are free to sell them in the public markets. Management team members and directors are required to hold their stock for at least one year before selling. And the bank itself effectively cannot sell out to a larger bank for at least three years.
