Community banks in Maine are anxiously awaiting a ruling from federal regulators about whether a pending sale of Bank of Boston Corp.'s Maine subsidiary to Keycorp may put some branches on the auction block.
The sale will cause a sharp jump in Keycorp's market share in Maine, spurring speculation that the Cleveland-based concern may be forced to divest some of its branches.
And the state is full of eager buyers.
"We'd be very interested in bidding on the branches that have been spoken of possibly being divested," said Lawrence Connell, president of Atlantic Bancorp, a new South Portland-based holding company that is set to buy Citicorp's $220 million-asset Maine operations at the end of September.
"If we can gain some market share or fill in some communities, we'd be foolish not to take a look at it," said Brian Arsenault, a spokesman for $2.5 billion-asset People's Heritage Financial Group. Portland, the third-largest bank in the state.
In late June, Bank of Boston announced the $198.5 million sale of Casco Northern Bank, of Portland, as well as Bank of Vermont of Burlington, to Keycorp.
Keycorp already has 92 branches in Maine, while Casco has 34. This is the company,s first foray into Vermont, however.
Under federal antitrust law, banks must relinquish market share if regulators determine that they have monopoly control of deposits in a given community. Federal regulators and the U.S. Justice Department use the Herfindahl-Hirschman index to determine the change in each institution's market share after a merger.
The purchase of Casco will make Keycorp the largest bank in Maine, with 24.5% of the statewide market share, compared with Fleet Financial Group of Providence with 19% and People's with 15%, according to estimates by Keefe, Bruyette & Woods.
In an unrelated development, Fleet announced Friday that it will sell four western Maine branches, with $22 million in deposits and $9 million in loans, to Kingfield Bank, Kingfield.
"There will be some divestitures required" of Keycorp, said Robert B. Studley, principal bank examiner for the Maine Bureau of Banking. "What they are at this point is premature, [but] I fully expect that there will be something."
Maine's banking superintendent, H. Donald DeMatteis, told the Portland Press Herald that he was particularly concerned that Keycorp could monopolize the greater Portland and Bath-Brunswick areas, both in southern Maine.
Mr. Studley said the state expects to reach a decision by early November.
According to a Maine banker familiar with government antitrust policy, Keycorp may have to get rid of about $200 million to $250 million of deposits. He said Keycorp and Casco have about 27 branches overlapping in 23 communities, but the bank would only have to give up those branches where the combine market share is too large.
"There is a fair amount of overlap in certain markets," said Gerard Cassidy, a banking analyst with Tucker Anthony's Hancock Institutional Equity Services. Mr. Cassidy estimated Keycorp would give up about $175 million to $200 million.
Stanley T. Wells, executive vice president of Keefe, expects Keycorp to divest about $100 million in five communities.
Bankers expect a decision from Washington by the end of the year.
Even banking newcomers are anxious to pick up a branch.
"Depending on geography and competitiveness, we might have some interest," said Wayne C. McGarvey, president and chief executive of Maine Bank Corp., a start-up based in Portland.
But even if Keycorp doesn't have to give up market share now, future expansion may be difficult in Maine, as well as in Chittenden County, Vermont, where Bank of Vermont has a large share, said William H. Chadwick, president and chief executive of $1.7 billion-asset Banknorth Group Inc., of Burlington.
"It's one less big competitor," Mr. Arsenault said.