Eastern Bank has decided not to keep the cannabis banking business that it inherited in November with the acquisition of Century Bank.
Eastern Bank’s parent company, Eastern Bankshares Inc., has entered into an asset purchase agreement to transfer cannabis-related and money service business deposit relationships to Needham Bank, the banks said in a joint statement this morning.
The banks said they expect the transaction to close in the first half of 2022, subject to regulatory approval and other customary closing conditions. Terms of the transaction were not disclosed.
Century had been one of only a handful of lenders offering banking services to marijuana producers, retailers and distributors in the years since Massachusetts legalized the sale and recreational use of marijuana. Medical marijuana had become legal in the state in 2013, and Century Bank, which launched its cannabis banking business nine years ago, reportedly had Massachusetts’ largest cannabis banking operation.
When the merger with Century Bank was announced last April, Eastern Bank Chairman and CEO Bob Rivers had said the bank was excited to learn about Century’s cannabis banking business.
Rivers in today’s statement said the special handling required to meet the banking needs of cannabis-related businesses did not align well with Eastern’s approach to serving business customers.
“We have spent considerable time reviewing the cannabis banking operation and remain very impressed with how these businesses have been served,” Rivers said. “However, we have determined the business is not well-aligned with our approach to serving our business customers due to the special handling required with meeting the banking needs of cannabis-related businesses at this time. Needham Bank has solid capabilities to provide extensive service to this important business sector, and we applaud the strong commitment they are making to support the industry.”
Needham Bank is a $2.9 billion-asset mutual bank with 11 branches.
“The cannabis industry is rapidly growing, and this transaction presents an exciting opportunity and excellent entry into this evolving and dynamic segment,” Joseph Campanelli, Needham Bank’s president and CEO, said in the statement. “Our entire Needham team looks forward to welcoming these customers and the team servicing them, and to ensuring their smooth transition to our organization.”
As part of the deal, Paul Evangelista, who launched and led the cannabis banking strategy at Century Bank, will join Needham Bank. Evangelista and his team will continue working with customers during the transition period, the statement said, and the team plans to join Needham Bank when the transaction closes.