In a deal that would more than double its size, one of New Hampshire's few remaining independent banks plans to merge with neighboring thrift.

Granite State Bankshares in Keene said this week that it was acquiring Primary Bank, a $420 million-asset thrift based in Peterborough, in a stock deal valued at $57.8 million.

Granite State, which has $380 million of assets, would exchange stock valued at $25.25 for each share of Primary. Though smaller in asset size, Granite State has much more capital than Primary.

Granite State's chief executive officer said the two companies decided that they could compete with others better if they combined forces. "It's just an opportunity for two New Hampshire banks to have a lot of horsepower, rather than have banks from out of state purchase us," said CEO and president Charles W. Smith, who will lead the combined company. "We can create a little economic powerhouse."

"It creates a very powerful independent bank with a strong management team," said Martin Friedman, vice president of Friedman, Billings, Ramsay & Co. in Arlington, Va.

Analysts looked favorably on the proposed merger because savings are estimated at 35%. The two companies are located within 30 miles of each other, and consolidation of operations and administration is inevitable, Mr. Smith said.

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