The expected advent of interstate branching is driving part of a new wave of cross-border acquisitions in northern New England.

During the past 12 months, five community banks along the borders of Vermont, New Hampshire, and Massachusetts have crossed state lines to make acquisitions.

The most recent is Chittenden Corp. of Burlington, Vt., which announced on Aug. 17 that it was buying the Bank of Western Massachusetts, Springfield, Mass., for $25.5 million in stock and cash.

"Many local buyers have fished out their local pond, so they walked down the street to the next pond where they can offer a potentially more attractive package," said Fred Schluter, a financial adviser with BEI Golembe in Waltham, Mass., who worked on the two deals.

The action started about one year ago when Vermont Financial Services Corp. of Brattleboro announced it was buying West Mass Bancshares of Greenfield, Mass.

That deal was followed by Banknorth Group Inc. of Burlington, Vt., acquiring Farmington, N.H.-based North American Bank Corp.; Family Bancorp in Haverhill, Mass., buying Profile Financial Corp. of Plaistow, N.H.; and CFX Corp. of Keene, N.H., buying Orange (Mass.) Savings Bank.

This is not the first time midsize banks have bought out of state in New England. But the pace has picked up this year, partly in anticipation of the passage of the interstate branching bill in Congress, analysts and bankers say.

"Interstate banking is going to be a fact of life," said Vermont Financial Services president and chief executive John D. Hashagen Jr. "We're all thinking of that more than we would have a few years ago."

The bill would allow banks to consolidate management at out-of-state subsidiaries, operating them as branches instead of separate companies.

"With the interstate branching on the horizon, banks are looking down the road for the ability to consolidate these institutions when it is allowed," said Mark A. Gavin, chief financial officer of CFX.

But for many of these community institutions, the hop across the border is actually not noticeable since the new markets are geographically close and a natural extension of their existing markets.

"If you're in Brattleboro, Vt., you don't have to drive very far to get to Greenfield, Mass.," said Stan Walls, executive vice president of Keefe, Bruyette & Woods Inc., a brokerage firm in Hartford, referring to the Vermont Financial Services purchase of West Mass. "Other than a sign along the highway, how do you know when you go from Vermont to Massachusetts? You don't. They look the same. The state boundary lines are somewhat transparent."

For these banks, it's just business as usual, with the added bonus of consolidating and saving money.

"This acquisition is just part of the natural market. The state line just happens to be there," said David D. Hindle, president and chief executive of Family Bancorp. "We would have made this acquisition if there was an interstate banking bill or if there wasn't."

Analysts see the acquisition trend continuing if a national interstate bill passes, since states such as Vermont, which has long allowed statewide branching, have oversaturated markets with little room for its big banks to expand.

Meanwhile, some of the sellers, who straggled through the "debacle of the New England banking industry," see a chance to "exit an increasingly competitive business on financially attractive terms," Mr. Schluter said.

"Sometimes it's as simple as people throwing up their hands, saying the future is not attractive and I want to get out," he said.

Mr. Wells agreed, saying that small, recently converted banks have found competition in the public market to be tough. After looking at their options, he said, they feel that "maybe they better grab a deal now" while buyers are interested and before the price plummets.

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