After cleaning up the mess he inherited at Peoples Heritage Financial Group Inc., William J. Ryan set an ambitious goal: double the company's assets, to $5 billion.

That was in 1993. Today Peoples Heritage is nearing $18 billion of assets, making it the third-largest retail banking company in New England.

"Never in my wildest dreams did I think we could grow so much so fast," said Mr. Ryan, chairman and chief executive officer.

Mr. Ryan, 55, joined Peoples Heritage in 1990, just as the company was heading into a two-year tailspin in which it lost $100 million. Struggling under a mountain of bad loans and with its stock trading at a split- adjusted $2 per share, few gave the then $2 billion-asset thrift much chance of surviving.

"We weren't worried about joining banking's elite back then," Mr. Ryan said. "We were the 135th-largest bank in New England, two months away from failing."

He replaced 25 of the company's top 30 managers and began writing off troubled assets. And though many of its Maine rivals failed, Peoples Heritage survived. Analysts say Mr. Ryan deserves a lot of the credit.

"Bill Ryan is an impressive salesman and a wonderful CEO," said Thomas A. Marsilio, director of research at Midwood Securities Inc. in New York. "He has the ability to get people behind him, which is an important part of this company's story."

Mr. Ryan credits the thrift's recovery, in part, to its historic lack of success in lending.

"There were other banks in the area that were much more aggressive and did a much better job putting on loans when times were good," Mr. Ryan said. "If we had won that business from them, and had those assets on our books, we would have failed instead of them."

A string of nine deals across the so-called Snow Belt of northern New England has established Peoples Heritage as the market leader in its home state and in New Hampshire as well.

In March it announced a $781 million deal for Banknorth Group Inc. in Burlington, Vt. The purchase would double Peoples Heritage's size in Massachusetts and stretch it across Vermont into upstate New York. The holding company will adopt the Banknorth name.

"This has become a large, very well positioned New England company," said James Ackor, an analyst at Tucker Cleary Capital Markets, also in Portland. "It is a franchise that will be garnering a lot of attention, both from investors and from potential buyers."

The expansion has paid off for investors.

The company's market capitalization is expected to reach $2.8 billion when the Banknorth deal is completed this year. It was $16 million earlier this decade.

Mr. Ryan, a straight-talking New York native who cut his teeth in the 1980s at Bank of New England in Boston, discussed his company's strategy and its prospects in a recent interview at his headquarters.

He acknowledges that consolidation has helped Peoples Heritage. Some large rivals, such as Shawmut National Corp., Maine Savings Bank, and Maine National Bank, have sold. And some acquirers, such as KeyCorp and Fleet Financial Group, have been dumping their small-town branches.

"I used to have Shawmut, Maine Savings, and others to be scared of, and they were very good competitors," Mr. Ryan said. "Right now, though, we feel confident as ever. With so few midsize companies remaining, it is easy for us to differentiate ourselves."

The lack of competition also allows Peoples Heritage to charge higher rates on loans. The company's interest margin spread is 3.74%, at a time when many urban community banks are struggling to hit 3%.

"If the competition out here was like the competition in Boston or New York, we wouldn't make any money," Mr. Ryan said. "We are the big fish in our small pond up here. There isn't a bank on every corner."

For that reason, Peoples Heritage will continue to avoid urban centers such as Boston, Hartford, Conn., and New York City, he said.

Mr. Ryan insists that despite his company's size, it is still a community bank. Even after the merger, the new Banknorth will keep separate affiliates in each of the six states where it does business. Lending decisions will be made at each bank, and affiliates will not need to contact headquarters to set a rate or launch a special.

It's the super community banking strategy that has distinguished Peoples Heritage in its markets, he said.

"We are the classic case of a bank too big to be small, but too small to be big," Mr. Ryan explained. "We didn't invent the niche of offering more products than smaller banks but better service than the big ones, but we are taking advantage of it."

Still, Mr. Ryan acknowledges that if the big banks wanted to, they could drive Peoples Heritage out of business.

"If Fleet or Key or anyone like that decided they wanted to dominate this area, they could do us in very easily," Mr. Ryan said. "But they have the ability to invest their capital anywhere in the world, and I don't think rural New England is a very high priority for them."

On the other end of the spectrum, smaller community banks in his markets "are more nimble than us and do a better job than we do in their hometowns," he said. Peoples Heritage competes with them on the number of products it can offer and the convenience of having branches throughout the region.

"There will always be customers for the small community bank," he said. The few companies left in the middle give Peoples Heritage the most trouble. That is one of the reasons the thrift went after Banknorth.

Peoples Heritage first looked beyond Maine to keep from being reliant on one state's economy. At the same time, and for a similar reason, Banknorth was buying its way out of Vermont. As Peoples Heritage moved west into New Hampshire and eventually into Massachusetts, Banknorth was moving east into the same markets.

"We had come to the point where we could either compete with each other, and hurt both banks, or get together and beat the bejesus out of everyone else," he explained. "And I had always coveted the franchise Banknorth was building."

Now that he has Banknorth, Mr. Ryan said he is unsure what is company's next move will be. He said he wants to remain a community banking organization, with separate banks and boards of directors, but acknowledges it will be difficult as the holding company grows.

"It is hard to be a community banker at our size right now," he said, noting that he put 55,000 miles on his company car last year, visiting branches.

Still, Mr. Ryan said, there are other acquisition targets on the horizon, though probably none as big as $6 billion-asset Banknorth. There are many banks with assets of $1 billion or less that could fill in market share in Massachusetts, or extend the franchise further in upstate New York, he said.

How long Peoples Heritage can continue to grow remains a question, though. There is no guarantee that what works today for the company will work in the future.

"I would like to think we will continue to have our niche, and could continue to make the profit we need to justify our independence," he said. "But then you see that Bank of Boston has to sell itself, and you say, 'My God, where does it stop?'"

Though his company has grown well beyond his original goal of $5 billion, Mr. Ryan is not waving a white flag.

"I always said we could grow to $15 billion or $20 billion and still be a community bank," he said. "I will let you know in a year if I was right."

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