William H. Ryan is on the acquisition warpath.
For several years the chairman of $4.4 billion-asset Peoples Heritage Financial Group Inc. has been buying up small community banks in neighboring New England states whose economies are growing faster than Maine's.
In one year the bank has used acquisitions to increase its assets by almost 40%. And that growth shows little sign of letting up.
But the feverish pace of this expansion and a series of modernization steps seem not to have made Mr. Ryan feel more secure about the future of his company.
"We opened up branches on Sundays, and we have supermarket banking," he said. "But as the industry changes, even in Maine, it is still not enough for the customer."
Many small-bank executives share Mr. Ryan's disquiet, and like him are searching for ways to bolster their competitiveness to remain independent as larger regional players crowd in.
But Peoples Heritage need not fear acquisition, at least not for another couple of years, analysts say.
"The four likely acquirers are not likely going to do it," said Gerard Cassidy, a bank equity analyst at Tucker Anthony in Portland. He named Fleet Financial Group, KeyCorp, Bank of Boston Corp., and Citizens Financial Group as the four. "Banks like CoreStates and First Union haven't picked it up on the radar screen yet," he added.
"It would cost a lot of money to buy us," Mr. Ryan pointed out.
Mr. Ryan, 52, whose downtown Portland headquarters is across the street from Fleet and KeyCorp offices, has acquired banks in New Hampshire and northern Massachusetts.
This year alone, Peoples Heritage has acquired five branches of Shawmut Bank of New Hampshire, with $172 million of deposits; and Manchester-based Bank of New Hampshire, with $1 billion of assets. It also expects to close a deal in December for Family Bancorp, Haverhill, Mass., which has $925 million of assets.
The holding company is expected to grow to $5.4 billion of assets by yearend, counting in the New Hampshire and Massachusetts deals.
Certainly, shareholders have little to complain about, given the company's impressive performance.
Peoples Heritage has grown not only through acquisitions in new markets but also by creating powerful lending niches in Maine.
The bank's loan portfolio grew 18.9% in the year through June 30. The home loan portfolio grew 32.6%, commercial loans and leases 17.5%, consumer loans and leases 13.9%, and commercial mortgages 9.6%
"We have done a good job of diversifying ourselves so that we are in different marketplaces," said Mr. Ryan. "We don't stress size, but rather profitability. Anybody could be big, but being profitable and big is the key here."
However, Fleet Bank of Maine and KeyBank of Maine have access to lower- cost funding through their superregional parent companies.
Though his competitors offer slightly lower rates thanks to their funding advantage, Mr. Ryan said, many Maine customers want to bank at a Maine-based company.
"There are many traditional Maine customers who want to know that their loan officer is from a Maine-based bank," he said, "and that continues to be to our advantage."
The company's local roots have helped its retail operations as well.
Peoples Heritage squeaked into the No. 2 position in deposit market share in Maine at yearend 1995; its $1.9 billion topped Fleet Bank of Maine's $1.81 billion. KeyBank of Maine was in the lead with $2.54 billion.
Mr. Ryan's closest competitors said his company demands watching because of its aggressive style. But each of the two big rivals claimed to have a niche that compensates it for the lack of home-state advantage.
"We are a strong competitor in the Maine market," said Paul McConnell, president and chief executive at Fleet Bank of Maine, "especially in the upper end of middle-market commercial lending and large corporations."
"What KeyBank brings to the table in Maine, and what helps us in sales, is our national presence," said Michael W. McNamara, president and chief executive of the KeyCorp unit.
But Maine customers aren't pleased by banking consolidation in their state. As it is, the top three banks in the state hold about 52% of the deposits.
Mr. Ryan said Peoples Heritage has benefited from this dissatisfaction. KeyBank's acquisition of Portland's Casco Northern Bank in late 1994 is a case in point, he said. When that deal closed in early 1995, a chunk of Casco Northern's $895.5 million of deposits fell into his lap.
Aggressive local marketing and the start-up of a telephone banking center in Portland last year have helped Peoples. The phone center has 38 employees answering questions and taking applications.
"In 1995," Mr. Ryan said, "we opened over 80,000 new accounts, which will be an all-time record in Maine, ever."
Certainly, Mr. Ryan's long career in banking has helped prepare him for the changes now rocking the Maine market.
During the early 1990s, Peoples Heritage weathered a recession that provoked several bank failures. In the 1980s, Mr. Ryan spent five years at Bank of New England, which collapsed in 1991 under the weight of deteriorating credit quality. The bank was later acquired by Fleet.
"Bank of New England was the traditional consolidation bank, and I was more familiar with the smaller community bank style," Mr. Ryan said. "Lucky for me, when I left Bank of New England in June of 1989, it was healthy."
Mr. Ryan added that the Bank of New England experience is a good reminder to all bankers about the need for checks and balances.
"Bankers may forget and go back to the old practices," Mr. Ryan said. "But there is always that worry of what may happen, where other banks have failed from poor credit quality and shoddy practices."
Mr. Ryan said he also uses a favorite quote as a guide to banking strategy. Now framed and hanging in his office, the maxim from an unnamed author reads: "Success is not measured by the position you are in, but the obstacles you overcome."
"Peoples Heritage lost $62 million in 1990, about $21 million in 1991, and our stock traded at a low of $1," Mr. Ryan said. "This slogan has helped us understand what we needed to do."