A Maine start-up that recently acquired Citicorp's entire operations in the state is doubling in size by purchasing 11 branches from Keycorp.
Under terms of the deal, Atlantic Bancorp of Portland will buy $255 million in deposits and $193 million in loans from the Cleveland-based superregional. Officials did not disclose the price.
Atlantic's bold step will double its assets to $460 million, making it the fifth-largest financial institution in Maine when the deal closes in May.
Only Keycorp, Providence, R.I.-based Fleet Financial Group, Portland rival Peoples Heritage Financial Group, and Bangor Savings Bank would be larger.
"It does change the framework a bit of the banking in Maine," said Frank Barkocy, senior vice president of Advest Inc. " For an entity that's just three months old to be able to move and be able to double their size through one acquisition is pretty meaningful."
Atlantic will promptly spin off two of the branches, with $50 million in deposits and $20 million in loans, to Gardiner Savings Institution.
"It moves us really into a different tier of operations in the state," said Lawrence Connell, Atlantic Bancorp's president and chief executive. "It fills out our franchise in southern Maine very nicely and when we complete the consolidation, it'll enable us to have the capacity to serve most Maine commercial customers."
The deal fulfills requirements by the U.S. Justice Department and state attorney general's office that Keycorp divest branches. The government agencies were concerned about the Cleveland bank's market concentration in southern Maine following its purchase of Casco Northern Bank from Bank of Boston Corp.
Overnight, that deal had propelled Keycorp into first place in market share in Maine, with $3.6 billion of assets.
The Atlantic deal also satisfies the government's goal of creating another midsize institution to compete with Key, Fleet, and Peoples Heritage.
"It's a great result which we think is going to be of significant benefit to businesses that receive banking services," said Stephen L. Wessler, assistant state attorney general for antitrust issues.