G. Frank Teas, as a bat boy, left, and today, as president and CEO of Millyard Bank, right. (Courtesy of G. Frank Teas)
The most fun G. Frank Teas ever had at work was as a 15-year-old bat boy for a minor-league team in Nashua. But the next summer, his mother decided he needed a real job. So, in 1985, he went to work at Nashua Trust Co., a local community bank where his grandfather was chairman, filing cleared checks. “It was tedious and repetitious for sure, but it certainly gave me a good appreciation for the folks in the back room of the bank,” he says.
Today, Teas is still in community banking in Nashua—he leads Millyard Bank, which opened in 2019. While Millyard Bank is one of the few NH-based banks to launch in recent years, his grandfather’s bank, Nashua Trust, is a distant memory, folded into First NH Bank, which later became part of Citizens Bank, based in Rhode Island.
It is that trend toward consolidation and interstate expansion, rather than new locally based banks, that continue to shape NH’s banking landscape. In 1994, NH-based banks controlled slightly more than half of deposits in the state. Today, their market share has fallen to around 24%, while a handful of large regional and national banks hold about two-thirds of deposits.
At the same time, banks from elsewhere in New England are moving in. Community banks based in Massachusetts, Maine and Vermont now control about 10% of NH deposits.
“I think banks are recognizing that New Hampshire’s got some growth that maybe their own markets don’t have, and seeing it as an opportunity,” says Gregg Tewksbury, president and CEO of NH Mutual Bancorp. (Pictured Above Left)
Maine, Mass. Banks Eye NH
One of those is Bangor Savings Bank, which expanded into Portsmouth with a loan-production office in 2017 before acquiring Granite Bank the following year. It now has eight full-service branches around the state, including in Concord, Manchester, Amherst and Colebrook, with plans to open two more in the coming years.
Senior Vice President Michael O’Reilly, who oversees NH development for the bank, says it was a natural extension after establishing a presence in southern Maine.
“The market in New Hampshire is similar in some respects to the market in Maine,” he says. “You’ve got a couple larger cities, you’ve got some mill towns, you’ve got some rural areas, very similar to what we’re used to banking in Maine.”
O’Reilly says consolidation in NH’s banking market has created opportunities for community banks like Bangor Savings, which has 72 branch offices across three states and about $7.2 billion in assets. “We know that New Hampshire people, like Maine people, like to bank with partners that are invested in their local communities and that are local folks,” he says. “A bank of our size can come in and fill that niche between the really large banks and the smaller local banks.”
Bangor Savings is one of at least 11 banks that have expanded into NH from Maine or Massachusetts since the 2008 financial crisis, either by opening branches or acquiring existing institutions, according to FDIC data. They include Maine’s Kennebunk Savings Bank, which has opened multiple Seacoast branches since 2011; Boston’s Eastern Bank, which bought Bedford-based Centrix in 2014; and Cambridge Trust Company’s 2019 acquisition of Optima Bank & Trust.
Many of those have been in Rockingham and Hillsborough counties, where NH bankers say the density, population growth and economic activity make for attractive markets—particularly for banks in sparsely populated Maine.“Maine really has no place else to go, because they only border one state,” says Teas. “So it makes sense that they would come into New Hampshire.”
The biggest recent move into NH from a bordering state was Bar Harbor Bank & Trust, which acquired Lake Sunapee Bank in 2017. The $143 million deal gave the Maine-based bank 35 branches in NH and Vermont. President and CEO Curtis Simard says the bank, based in a tourism-heavy part of coastal Maine, wanted to diversify economically and geographically, and expand into more population-dense areas than Central and Downeast Maine.
“They’re terrific markets, and we’re really excited that we’re in them,” he says. “But they might be $150 million to $200 million deposit markets,” compared to $4.5 billion markets in some parts of southern NH.
Capturing a small slice of one of those bigger markets “is way more feasible than going into a $150 million market and saying, ‘Geez, we’d like to have $100 million, we’ve got to get 67% of the market.’” To Simard, a bank spanning northern New England makes sense, as the three states have communities with similar needs. He says Bar Harbor wants to have an active presence in those markets, noting that the bank’s chief lending officer is based in Manchester.
“That’s another statement that we understand the market,” he says. “We want to have leadership there. We don’t all just sit in Bar Harbor. We’re spread around our footprint so that we can make sure we understand what’s going on around us.”
Economies of Scale
One factor driving growth and consolidation, bankers say, is the increasing cost of keeping up with regulations and investments in technology. That can have an outsize burden on smaller banks, who have fewer resources for compliance and IT but are still expected to offer sophisticated online and mobile banking products. “It’s created kind of a difficult operating environment, one in which smaller banks have worked harder to get bigger, to get some size, economies of scale,” says Ronald Magoon, CEO of Franklin Savings Bank.
Marie Pelletier, commercial lender with Bar Harbor Bank, with John Tauriello, president of Wallace Building products in Danbury. (Courtesy of Bar Harbor Bank)
He says the bank is committed to remaining independent and mutually owned, opening branches in Merrimack and Goffstown in the last half-decade. “We’re all struggling with, what is it going to take for small banks to continue to be able to compete?”
A few big players continue to hold the lion’s share of deposits. As of June, TD Bank claimed roughly the same market share as all NH-based banks combined. This year, Buffalo-based M&T Bank completed a merger with People’s United in an $8.3 billion deal that made M&T the 11th largest bank nationwide. The combined bank now has more than 1,000 branches in 12 states from Maine to Virginia, including two dozen branches in NH with more than $2 billion in deposits.
But Tewksbury says that consolidation can create opportunities for smaller local banks. “Our business model doesn’t require the same level of deposit concentration,” he says, making it possible to maintain a presence in towns that “are probably underserved with the consolidation of some of the larger banks.”
New Local Banks Emerge
New Hampshire has also seen the formation of three new banks in the past decade. Primary Bank launched in Bedford in 2015, out of frustration that local banks were being swallowed up, says President and CEO Bill Stone.
“We saw the continued consolidation, acquisition by the larger out-of-state banks, and … the void of the smaller community banks,” he says. “And we thought that was a need that needs to be filled.” Primary Bank had almost $700 million in assets as of the end of the third quarter, he says.
Similarly, Teas, the Nashua banker, says Millyard Bank was founded in 2019 with a focus on small businesses that he felt were underserved. It’s since grown to about $180 million in assets, according to Teas.
In 2022, Concord-based Walden Mutual Bank received approval from the FDIC and the NH Banking Department to launch what it says will be the country’s first new mutual bank in 50 years (see sidebar).
If the economy slows, it could make it harder for some banks to maintain the growth they need to keep up with costs, O’Reilly of Bangor Savings Bank says. “As things start to slow, will that potentially force consolidation?” New Hampshire bankers say consolidation and expansion by out-of-state banks will likely continue, but homegrown community banks will still have a role to play.