Preferred Issues: New England Community Banks Are Looking Hot

By Rieker, Matthias | American Banker, April 29, 2002 | Go to article overview

Preferred Issues: New England Community Banks Are Looking Hot


Rieker, Matthias, American Banker


New England is crowded with small banks catering to an attractive wealthy population. On that much observers agree. But whether it is on the brink of a heated round of consolidation is a matter of debate.

Though the economic downturn has discouraged banking mergers nationwide, interest in small bank and thrift companies is reviving as regional players look for acquisitions.

Meanwhile, said Anthony R. Davis, an analyst with Ryan Beck & Co. LLC in Livingston, N.J., the prices of small-cap New England banks have risen so high that some bankers are thinking about selling while the price is right.

Mr. Davis has compiled a list of 45 New England banking companies that he says could become targets. The largest is $11.9 billion People's Bank of Bridgeport, Conn. The smallest is Wilton Bank in Connecticut, at $99.2 million.

Mr. Davis said he is not ready to call just where and when the next deal will happen. "We did not take the temperature in board rooms," he said, but he added that several banking companies have made it clear that they are ready to sell.

The number of New England banks clearly presents an opportunity -- and so does its prosperity, as an opportunity to pick up an attractive deposit base. Among the buyers most frequently mentioned is $21.1 billion-asset Banknorth Group of Portland, Maine, which has already announced two deals this year -- on April 11 for $663 million-asset Bancorp Connecticut of Southington and on Feb. 27 for $32.1 million-asset Ipswich Bancshares Inc. in Massachusetts.

And Banknorth has an appetite for more.

"We certainly could do a little more this year," said Brian Arsenault, a spokesman, on Friday. Banknorth is looking for companies with assets of around $1.5 billion to $3 billion, Mr. Arsenault said. There are a number of opportunities out there, he added, despite high-flying share prices and issues such as management compensation and integration.

Brian R. Sterling, a co-head of investment banking at Sandler O'Neill & Co., agreed that Banknorth's announcements show some signs of life in the region. But Mr. Sterling is not convinced that M&A activity is ready to take off again.

"The M&A dialogues are building up at high pace, but the dam is not broken," he said. …

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