Eastern Bank: Under one roof
by Glenn RittRichard E. Holbrook has become chairman and CEO of Eastern Bank more than two years after its ambitious merger with Plymouth Savings Bank and amid one of the most challenging eras in the history of banking in Massachusetts.
Under his predecessor, Stanley Lukowski, who retired at the end of 2006, the merged institutions underwent a demanding consolidation of branches, personnel and culture as Eastern held on to its No. 4 market share in deposits across Plymouth County.
During that time, deposits have remained virtually the same. Total assets did rise from $6.38 billion at the end of 2004 to $6.58 billion last year, while Eastern registered record net income of $72.4 million in 2006.
Company spokesman Joe Bartolotta points out that Eastern’s numbers would look even better, but Plymouth Savings Bank shrunk its assets by $200 million when its balance sheet was restructured prior to the merger.
Looking ahead, Holbrook voices confidence that Eastern Bank is well positioned for growth – despite a housing downturn and a loss of consumer deposits affecting the entire state’s banking community.
From his Franklin Street office in Boston, he has launched the bank’s new True Blue branding campaign – which emphasizes local roots – and is constructing a strategy squarely aimed at population and economic growth in Barnstable county – including second-home owners whose two residences are within Eastern’s total footprint.
As a regional bank, Eastern hopes to position itself squarely between the likes of Bank of America and the very local institutions. It sees itself as big enough to provide the identical services of a national bank, but small enough to offer the same personal attention as a community bank.
“We are mutually owned, not publicly owned,” said Holbrook. “We are lucky enough not to be concerned with quarterly results and shareholders. We can honestly say our No. 1 priority is to our customers, employees and communities.”
“It’s more and more difficult in the banking business to differentiate yourself in terms of product or service. The worst place is to go [into the market] based on price,” said Holbrook. “Wal-Mart did that for a long time, but then Target came along to provide better experience at a slightly higher price. It’s very hard to have the lowest price on loans or the highest rate on deposits. Instead of [marketing ourselves] by the most attractive rate on CDs, we are an attractive place to build a relationship over the long haul.”
One asset to reinforce that strategy is the bank’s $40 billion charitable foundation, which contributed more than $2 million to nonprofits last year, including 13 percent to affordable housing and 16 percent to health care across its footprint.
Eastern is working to integrate four assets – consumer banking, business banking, insurance and wealth management (which has grown from $1.3 billion to $1.8 billion) – under one branding umbrella. Now it is going one step further in Yarmouth, constructing a large office at Exit 8 of Route 6 for all four businesses under one roof. Executives will watch the success of this new operation as a model for elsewhere across its footprint.
Holbrook has held off on new branches during a period when profits of all banks are being pinched by an inverted interest rate yield curve and a housing downturn.
He questions the argument that the number of branches alone can measure a bank’s success. “Opening a traditional [isolated] branch with large costs has way too long a payback period,” he explained. “A huge lobby and 20 tellers do not add much value for a customer. That is not what they are looking for.”
The Yarmouth initiative not only integrates four business lines under one brand, but eventually saves money by integrating their physical plants – from management to computerization and phone lines.
This four-sided model of consumer banking, business banking, insurance and wealth management also reinforces Holbrook’s relationship strategy. “We are in a business to solve the needs of customers, from transactions and credit to investments and protecting their family and businesses. They can’t or shouldn’t be separated,” he said.
“How do we grow assets for our customers and then protect those assets? How do we assist them with their lives, beginning with that first passbook savings account? It can’t be with one product off the shelf. We have to know our customers enough as issues arise in their lives.”
Eastern has significantly increased its commercial business – doubling its number of business bankers serving this area. At the same time, some business bankers are receiving their insurance licenses to help execute the company’s four-pronged strategy. “They are not experts, but they are learning enough to know what to look for in helping their business clients on the insurance side,” said Holbrook.
“We don’t look at a business just from the loan volume aspect,” he said. “If a business approaches us for a $50,000 line of credit, we want to have them bring their business and personal accounts to us. The size of the loan is not as important as the entire relationship.”
Eastern Bank provides business loans into the tens of millions; a company with average sales up to $10 million will probably borrow between $275,000 to $300,000. Beyond the money, Holbrook – like so many of his counterparts – emphasizes the need to offer clients value-added business development advice.
Published in Cape Business May/June 2007
Glenn Ritt Glenn Ritt is editor and co-publisher of Cape Business Publishing LLC. He is the former publisher of Cape Cod Community Newspapers and editor of The Bergen Record in New Jersey. 
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