Peoples Heritage Financial Group Inc., a Portland, Maine, bank holding company, said Monday it would acquire Keene, N.H.-based CFX Corp. for $703 million in stock, or 2.8 times book value.
The deal would vault $6.5 billion-asset Peoples to No. 1, from No. 3, in market share among New Hampshire banks.
Also Monday, $6.8 billion-asset Webster Financial Corp., Waterbury, Conn., said it would acquire Eagle Financial Corp., Bristol, Conn., in a stock swap deal valued at $362 million, or 2.5 times Eagle's book value.
"Consolidation is alive and well in New England," said Frank J. Barkocy, managing director of Josephthal, Lyon & Ross Inc., New York. He and other analysts predicted that the region's smaller banks will continue to pair off, particularly in Vermont and Massachusetts.
Peoples Heritage and Webster Financial have announced a total of 20 bank deals since 1990, according to company reports. "These two banks have been among the more aggressive acquirers in New England," Mr. Barkocy said.
With their latest deals, both banks would significantly strengthen their positions in markets where they already have a presence.
By buying $2.8 billion-asset CFX, a holding company for five commercial banks and thrifts, Peoples Heritage would extend its presence in neighboring New Hampshire and Massachusetts, said William J. Ryan, Peoples' chairman, president, and chief executive officer.
"We will be No. 1 in New Hampshire and No. 10 in Massachusetts," Mr. Ryan said in an analyst conference call. The bank was already neck-and-neck with Cleveland-based KeyCorp for the top position in Maine, he said.
When the CFX deal is complete, Peoples Heritage will have $9.4 billion of assets, making it the fourth-largest banking company in New England, Mr. Ryan said. Peoples Heritage plans to realize cost savings of 25% by merging the two operations.
"This builds them a solid franchise in New Hampshire," said Chad Yonker, analyst with Fox-Pitt, Kelton, New York. It also makes Peoples an attractive acquisition target for a regional bank looking to enter New England, he added.
But Mr. Yonker and others said they expect Peoples Heritage to stay independent. Mr. Ryan said Peoples is likely to remain a buyer.
The CFX deal is expected to close by April 1. The bank will "continue to look for opportunities" in Massachusetts and Vermont after the deal is complete, Mr. Ryan said.
Brian Arsenault, a Peoples Heritage spokesman, said the 2.8 times book value price is the highest the bank has paid since it began acquiring in 1994. But that is just a sign of the times, he said.
"Currencies are valued higher," he said.
Webster's deal for Eagle Financial, parent of Eagle Bank, a thrift, would make it the No. 2 bank in Hartford and New Haven counties. It would be the No. 1 banking company in Litchfield County, according to Jeffrey N. Brown, Webster's executive vice president.
The combined bank would have $8.9 billion of assets and 110 branches, all in Connecticut.
"Webster is paying a very rich price for Eagle," said Gerard S. Cassidy, analyst at Tucker Anthony Inc., Portland, Maine. Mr. Cassidy said he expects significant operating savings at $2.1 billion-asset Eagle.
Also this year Webster announced plans to acquire People's Savings Financial Corp., New Britain, and Sachem Trust, Guilford.
There are not many targets left in New Hampshire after Peoples Heritage's deal, said Jeffrey L. Cohn, bank equity analyst at M. Kraus & Co., Burlington, Vt. But the market is still ripe in other parts of New England.
Analysts said New England takeover candidates can be found in Vermont, where Chittenden Corp. and Banknorth Group, both of Burlington, remain, and in Massachusetts, including Andover Bancorp and Massbank Corp., Reading.
