Just four days after closing its purchase of a bank in Maine, Chittenden Corp. in Burlington, Vt., has struck another deal.
The $6.4 billion-asset multibank holding company announced late Monday that it is buying Community Bank and Trust Co. in Wolfeboro, N.H., for $124.1 million in cash and stock.
Paul A. Perrault, Chittenden's chairman, president, and chief executive officer, played down the deals' timing - after a four-year stretch without any acquisitions.
"It's a bit circumstantial that we happened to do two deals back to back," he said. "Perhaps the operating environment is creating more opportunities. I'll leave it to the pundits to decide whether that's a sign of the times, but we haven't done anything differently than we've done in the past."
Community has $426 million of assets and eight branches, primarily in two of the state's southernmost counties. It would be merged into Ocean National Bank in Portsmouth, one of Chittenden's six subsidiary banks.
The deal would strengthen Ocean's position as the No. 4 bank in New Hampshire ranked by deposits. Ocean has 4.92% of the state's $20.6 billion of deposits, and Community would boost it to a 6.65% deposit market share.
Several analysts noted that Community has $6.4 million of nonperforming loans. That is 1.6% of its loan portfolio, which is above average for its peers.
But Mr. Perrault said Chittenden is comfortable with that, particularly given Community's favorable chargeoff history.
"In commercial banking, nonperforming assets tend to be very lumpy," he said. "Having had an opportunity to take a close look at it, we're not unduly concerned."
Each Community share would be exchanged for 1.1293 Chittenden shares, or $33.37 in cash. The agreement calls for at least 75% of the deal price to be paid in stock.
Jared Shaw, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said he thinks Chittenden paid a "full" price, at 2.71 times book value and a 23.1% deposit premium. The deal price also is a 36% premium over Community's $24.60 closing price on Monday.
But Mr. Shaw said Community is a "decent" addition. It had a return on assets of 1.54% in the first quarter.
Chittenden expects to trim 25% of Community's expenses, after the deal closes in the fourth quarter.
The deal for Merrill Merchants Banchares Inc. in Bangor, Maine, closed on Thursday and Chittenden now has about 140 branches in Vermont, Massachusetts, New Hampshire, and Maine.
Community would be the fourth bank that Chittenden has bought with branches in New Hampshire. It entered the state in 1999 through the purchase of Vermont Financial Services in Brattleboro, which had a subsidiary bank in New Hampshire. It added Ocean in 2002 and Granite State Bankshares in 2003.
"They've really tried to develop the southern New Hampshire market," Mr. Shaw said. "That's a higher-growth market compared to the rest of New England."
Mr Shaw said many companies have been relocating to New Hampshire because it has no income tax and no sales tax, and the southern part of the state is particularly attractive because it borders Massachusetts.
Peter J. Winter, an analyst at Bank of Montreal's BMO Capital Markets, said Ocean gives Chittenden its best growth opportunity because southern New Hampshire is the most vibrant of all its markets.
Peter B. Alden, Community's president and CEO, is to stay on at Chittenden as a senior officer to help it grow in the Wolfeboro area.
