Portland, Maine-based Peoples Heritage Financial Group appears to be following a three-pronged acquisition plan.
The $5.5 billion-asset bank faces stiff competition in Maine from Fleet Financial Group, Boston, and KeyCorp, Cleveland.
Peoples has responded by pursuing three kinds of deals:
In-market Maine transactions, including its recent deal to buy Atlantic Bancorp, a $470.2 million-asset bank also based in Portland.
Expansion deals that add to its territory in Massachusetts and New Hampshire as well.
Purchases that diversify its revenue stream, such as its agreement early this month to buy Morse, Payson & Noyes, a privately owned Maine insurance company.
The combination with Atlantic will be "a strong addition to our banking presence in Maine," said Peoples Heritage's chairman, president, and chief executive officer William J. Ryan.
Bank analysts also approved of the price tag: $70.8 million, or 1.6 times Atlantic's book value.
Stanley Wells, an analyst with Keefe, Bruyette & Woods, said the purchase of Atlantic makes sense because it is right in Peoples' own backyard.
Assuming the deal closes as scheduled by Sept. 30, Atlantic would increase Peoples' asset size in Maine to $3 billion, lodging it firmly between first-place KeyCorp, which has $3.88 billion of assets in the state, and Fleet, with $2.92 billion.
The Atlantic deal is expected to add to earnings in 1998, Peoples spokesman Brian Arsenault said.
As for future acquisitions, Mr. Arsenault said Peoples is particularly interested in northern Massachusetts, although it hasn't ruled out takeover candidates in New Hampshire and Vermont.
Analysts said a number of small to midsize northern Massachusetts thrifts might interest Peoples, particularly those in Lowell, Lawrence, and Andover.
James Ackor, an analyst with Tucker Anthony Inc., mentioned First Essex Bank in Andover, Medford Savings Bank, and Affiliated Community Bancorp, Waltham."These candidates would make sense for Peoples Heritage," he said.
"The real challenge is to find anyone willing to sell," because many small banks and thrifts are enjoying record profits, Mr. Ackor said.
Peoples has 67 branches in Maine, 18 in Massachusetts, and 49 in New Hampshire.
