Ending nearly a decade on the sidelines, Bangor Savings Bank in Maine is bulking up in the southern part of its home state.
The $2 billion-asset mutual thrift said Monday that it has agreed to buy Pepperell Bancshares Financial Group Inc. in Biddeford. Pepperell is the parent company of the $100 million-asset Pepperell Bank and Trust, which has five branches in York County.
One of Bangor Savings' 46 branches is in the county, and the Pepperell deal would give it the No. 9 market share in York, with 3.7% of its deposits, according to Federal Deposit Insurance Corp. data.
Yellow Light Breen, a senior vice president at Bangor Savings, said the thrift devised a strategic plan two years ago identifying York and Cumberland as the two counties where it most wanted to expand.
These two southernmost counties are more populous, have higher growth rates, and boast more economic activity than many other parts of the state, he said. Their proximity to major New England commercial hubs probably helps. Biddeford is less than a two-hour drive from Boston.
Mr. Breen said that Bangor Savings has "achieved a lot of success as a bank despite having virtually no presence in the southern third of the state." However. he added, it expects its expansion into the area to fuel faster growth by helping attract small- and midsize business customers.
The thrift opened a start-up branch in Cumberland County in January 2005, then added three more last quarter. Mr. Breen said all four branches are in or near Portland, Maine's largest city.
New branches, though, can take a while to become profitable, he said, and the Pepperell deal would help achieve growth in York County more quickly.
George Giovanis, the chairman and chief executive officer of the 100-year-old Pepperell, said that it had been looking to sell itself.
"We're small by today's standards, and we couldn't offer the full array of products and services that our customers really need," he said.
Pepperell mainly does boutique banking for family businesses and entrepreneurs.
Mr. Breen said this fits perfectly with Bangor Savings' growth strategy. "We really think the small- to midsize business market is our best entree into southern Maine."
Bangor Savings has an in-house payroll company, an insurance subsidiary, and a trust department that can help it build deeper relationships with the customers it would gain from Pepperell, he added.
The deal is expected to close within 60 days.
Mr. Breen would not disclose the deal price because, he said, Pepperell is a closely held company. Many of Pepperell's 40 shareholders are members of Mr. Giovanis' immediate or extended family.
Bangor Savings' last acquisition was in 1998, when it bought about one-third of Fleet Financial Group's branches in Maine. Fleet, which has since been acquired by Bank of America Corp., had decided to leave Maine's rural markets and sold 31 of its 85 branches in the state. Bangor Savings bought 28 of them.
Before the deal, Bangor Savings had 15 branches, Mr. Breen said.
Now Bangor Savings is actively scouting for banks and branches to buy, particularly in southern Maine, he said.
"We've been on a deliberate trajectory to grow in southern Maine," he said. "We will do it by de novo if we have to — which we did in Portland — but obviously it's a lot more efficient and gives you a much faster launching pad if you can work with customers who are already in the fold."
The 154-year-old Bangor Savings formed a mutual holding company late last year, but Mr. Breen said there is no plan to issue stock.
