There once was a bank on Nantucket.
Now it’s based in Hyde Park, well, what of it?
Yes, the lower-middle-class Boston neighborhood and exclusive vacation isle are 100 miles and a yacht’s nose apart. But the 178-year-old Nantucket Bank – most recently owned by Santander Group’s Sovereign Bank – is now under the helm of Blue Hills Bank, a small, mutual bank based in Hyde Park. The three-branch acquisition, announced in August, boosts Blue Hills’ branch count by a third, and increases total assets to more than $1.5 billion from $1.2 billion.
“For us, it was an opportunity to acquire a well-established brand with strong financial activity in a community we like,” said Blue Hills’ president and CEO William Parent. “The only thing that would be better if it were in a contiguous market.”
But as a capital-rich, community bank looking to grow, the Nantucket deal was too good to pass up.
“In this case, it isn’t a contiguous market, but we had the opportunity to acquire it and it did meet our financial and business profile very strongly,” Parent said.
While the Nantucket acquisition may be an anomaly, it exemplifies the creativity some community banks in Massachusetts are using to grow their business.s
Smart small- and mid-size banks that were supposed to disappear in the wake of regulatory and competitive pressures are instead finding ways to expand.
“I think everyone is looking for ways to be more competitive,” said Jon Skarin, senior vice president of the Massachusetts Bankers Association.
Mutually Beneficial
Maybe that’s why there have been three hearings so far this year before the Massachusetts Division of Banks on petitions from banks to reorganize into mutual holding companies.
“It’s a corporate structure that allows you to have multiple banks under that holding company, or financial firms under that holding company structure, and still retain your mutual bank governance form,” Skarin explained. “It’s a way for them to expand in some cases without having to convert to a stock institution.”
Savings Bank in Wakefield and East Cambridge Savings Bank got permission earlier this year to reorganize into mutual holding companies; Hometown Bank in Webster has an application pending; and Equitable Co-operative Bank in Lynn has a hearing scheduled in September.
Banks that convert to mutual holding companies may not immediately begin snapping up other banks, but at least it gives them some options – like leapfrogging out of their market areas across the state.
As Skarin said, “You may have a lot of capital and want to expand, but your market may not be expanding, so you have to look elsewhere.”
Comin’ Round The Mountain
MountainOne Bank is another Massachusetts mutual holding company on the move.
The bank has a strong presence in the Berkshires, where it operates MountainOne Bank and Williamstown Savings Bank, as well as separate insurance and investment businesses. It has loan production offices in southern Vermont and the North Shore of Massachusetts, and it owns South Coastal Bank, a three-branch bank on Boston’s South Shore.
As the bank continues to grow in Eastern Massachusetts, “We will be exploring responsible pathways to introduce the broader range of MountainOne capabilities in the South Coastal market,” said Thomas Leavitt, MountainOne’s president and CEO.
The nation’s biggest banks have been quiet on the M&A front recently as they sort their financial and regulatory woes. But several regional banks markets have been expanding. Pittsfield-based Berkshire Bank, Bridgeport, Conn.-based People’s United Bank and Buffalo, N.Y.-based First Niagara have established major footprints throughout New England, New York and Pennsylvania.
Hyper-Local Strategy
Blue Hills Bank’s Parent is aware of the regional competition. But he thinks a community bank offers something a larger bank lacks – a hometown passion.
“Part of the community bank strategy is that we have a hyper-local focus – sometimes through the Blue Hills brand, and other times, through brands like Nantucket Bank, which can remain as a division in and of itself with its own brand and management that’s focused on that specific community,” he said.
His strategy seems to be working. Since Parent became CEO three years ago, Blue Hills’ assets have increased to $1.2 billion from $900 million; the workforce has grown to 150 from 80 and the bank has diversified into commercial and small business lending.
“We look at opportunities where we can grow organically,” Parent said. “And on the M&A side, we feel there are opportunities to do targeted opportunities that tie into our overall strategy.”
Even if he has to cross Nantucket Sound to find them.
Email: noratooher92@gmail.com
