Bank merger activity is heating up in Connecticut, where two out-of- state banking companies recently announced acquisition deals.
SIS Bancorp, Springfield, Mass., said Monday that it had agreed to buy Glastonbury Bank and Trust Co. for $41 million in stock, or about 2.26 times book value. SIS, which has $1.4 billion of assets, hasn't bought a bank since the recession of the late 1980s and early '90s, and has never bought one outside of Massachusetts.
Also on Monday, Mahwah, N.J.-based Hubco Inc. agreed to pay $26 million in stock for Bank of Southington. The purchase of the $130 million-asset community bank would bring Hubco's Connecticut assets to $1.4 billion; its New Jersey assets total $1.7 billion.
Both deals are subject to approval by shareholders and regulators and are expected to close by the end of the year.
Just a few weeks ago another out-of-state bank announced a Connecticut deal. In late July, $6.6 billion-asset North Fork Bancorp. of Mattituck, N.Y., agreed to buy $187 million-asset Branford Savings Bank for $38 million.
The two latest deals "confirm the attractiveness of the Connecticut banking marketplace and the belief that the state's economy has rejuvenated," said John Carusone, president of Bank Analysis Center, a Hartford investment bank.
Connecticut was the last New England state to pull out of the recession. Thirty-nine Connecticut banks failed in seven years.
"Connecticut is rebounding nicely," said Kenneth T. Neilson, Hubco's president and chief executive officer.
Buying $261 million-asset Glastonbury would give SIS access to a "very attractive" market outside western Massachusetts, said F. William Marshall, SIS' president and chief executive. Glastonbury has about 20% of its local market; SIS has doubled its own market share, to 40%, in the last two years.
"Expansion into Connecticut has been one of our strategic objectives," Mr. Marshall said in a statement. "Central Connecticut is a very attractive consumer and commercial banking market."
The transaction would also help SIS diversify its products and services. Glastonbury has been selling insurance in Connecticut since 1924 - recently under a grandfather clause - but other national and state-chartered banks are only now being allowed to sell insurance there. SIS officials hope eventually to use the smaller banks' operations and expertise to sell insurance to the 85,000 households that are SIS customers.
Bay State lawmakers are considering legislation to let Massachusetts- chartered banks sell insurance. Mr. Marshall said he expects action within two months.
Glastonbury also has a significant merchant processing operation, serving 5,000 merchants in the state; SIS wants to expand in that business. Finally, SIS would use the deal to leverage investments it has made in the past few years in technology and infrastructure.
Glastonbury would be an SIS subsidiary; J. Gilbert Soucie, the Connecticut company's president and chief executive officer, would keep his post, as would Glastonbury's directors. Officials at Glastonbury had sought to find a buyer that would protect the interests of the community and employees while still rewarding shareholders, Mr. Soucie said.
Bank of Southington would bring Hubco into the Southington and Bristol markets, just north of its Fairfield County base. Bank of Southington would be merged into Hubco's Lafayette American Bank.
The deal would bring Hubco's trust, international banking, and broker- dealer services to new markets. Hubco, which already sells insurance in New Jersey, also hopes to take advantage of the new Connecticut law to sell insurance there.