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Commercial banks

Banknorth Group Inc. Acquires 13 Branches in Massachusetts from Shawmut Bank

Strategic Insights

— 1 min read

Banknorth Group Inc., a leading financial institution in New England, has announced a major expansion into the Massachusetts market with the acquisition of 13 branches from Shawmut Bank. The acquisition, valued at $33.2 million, is Banknorth's first in Massachusetts and marks a significant step in the company's strategy to expand in growth areas of New England and Upstate New York. The purchased branches will be rebranded as First Massachusetts Bank, N.A., a new community bank that will offer a range of commercial and retail banking services to customers in Central and Western Massachusetts.

Key Takeaways:

  • Banknorth Group Inc. acquired 13 branches from Shawmut Bank in Central and Western Massachusetts, bringing in initial deposits totaling approximately $634.3 million.
  • The purchase price was approximately $33.2 million, representing 5.23 percent of deposit and related liabilities assumed.
  • The acquisition includes approximately $400 million of loans, at par, meeting credit standards in use by Banknorth.
  • First Massachusetts Bank, N.A. will be formed to operate the acquired branches, with a local CEO and board of directors overseeing the new community bank.
  • The new bank will offer a comprehensive line of commercial and retail banking services, including automated cash management, telephone banking, and ATMs.
  • Banknorth will raise approximately $25 million of common equity to consummate the transaction, which is expected to close in the first quarter of 1996.
  • The acquisition will result in total assets of approximately $2.5 billion, up from $1.9 billion at June 30, 1995.

Statistics:

  • Initial deposits: approximately $634.3 million
  • Purchase price: approximately $33.2 million (5.23% of deposit and related liabilities assumed)
  • Loans: approximately $400 million (at par), meeting credit standards in use by Banknorth
  • Total assets: June 30, 1995: $1.9 billion; after acquisition: approximately $2.5 billion
  • Common equity raised: approximately $25 million
  • One-time costs: estimated at no more than $5 million

Sources:

  • Banknorth Group Inc. (NASDAQ: BKNG)
  • Business Wire, Oct. 2, 1995
  • Shawmut Bank, N.A.
  • Fleet Financial Group Inc.
  • Banknorth Group Inc. Contacts:

+ William H. Chadwick, president and chief executive officer

+ Thomas J. Pruitt, 802/860-5558

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