A day after announcing a $116 million deal for Westbank Corp. in West Springfield, Mass., Peyton R. Patterson, the chairman, president, and chief executive officer of NewAlliance Bancshares Inc., promised more to come.
In a conference call Wednesday with analysts, Ms. Patterson said her $7 billion-asset New Haven, Conn., company is eyeing more acquisitions in Massachusetts, Rhode Island, and New York.
She called the Westbank deal "a jumping off point for us in Massachusetts" and this year's purchase of the $231 million-asset Cornerstone Bancorp Inc. of Stamford, Conn., "a stepping stone into the New York metro market."
Westbank's 13 Massachusetts branches would be the first for NewAlliance in that state. (The $822 million-asset Westbank also has four branches in northern Connecticut.)
The deal is expected to close early next year. A NewAlliance spokesman said it would continue to scout for deals while digesting Westbank but has no timetable for its next deal.
Alper M. Sungur, an analyst with Sidoti & Co. LLC in New York, said, "I would love to see them go into New York." He has a "buy" rating on the stock.
"They still have enough capital to bring another deal," Mr. Sungur said.
Collyn Gilbert, an analyst at BankAtlantic Bancorp Inc.'s Ryan Beck & Co. Inc., said NewAlliance should hold off from further acquisitions. "You don't want to bite off more than you can chew."
NewAlliance was formed in a mutual-to-stock conversion by New Haven Savings Bank in April 2004. It used $689 million of the $1 billion it raised from investors to buy two companies, the $2.5 billion-asset Connecticut Bancshares Inc. of Manchester and the $426 million-asset Alliance Bancorp of New England in Vernon.
Since then NewAlliance has made two more acquisitions; it paid $19.3 million for Trust Co. of Connecticut in Hartford and $48.2 million for Cornerstone.
"NewAlliance is becoming a regional powerhouse," Mr. Sungur said. "In two and a half years they've acquired four banks, so the momentum to do another deal is there."
Cornerstone's six branches in affluent Fairfield County, Conn., has positioned NewAlliance to enter neighboring Westchester County, N.Y., a goal Ms. Patterson has mentioned before.
She said Wednesday that NewAlliance plans to add start-up branches in Fairfield County to supplement Cornerstone's. She also mentioned NewAlliance's continued interest in New York, but she would not discuss the timing or asset size of any potential acquisitions there.
West Springfield, Mass., is nowhere near as affluent as Fairfield and Westchester counties, but Ms. Patterson pointed out that it ranks third among nearly 400 metropolitan markets in entrepreneurship and innovation, according to a Small Business Administration study.
Both Mr. Sungur and Ms. Gilbert said they think NewAlliance paid a reasonable price for Westbank.
The 15.3% premium to core deposits is less than the 28% average for New England acquisitions made with 50% stock and 50% cash during the past four years, Mr. Sungur said. (The Westbank deal is structured that way.)
Westbank has struggled with profitability lately. Its first-quarter return on assets in fell 30 basis points from a year earlier, to 0.55%. Its return on equity fell by nearly a third, to 7.15%.
Mr. Sungur said that given NewAlliance's track record at integrating acquisitions, he is confident the company will "turn things around" at Westbank.
But Ms. Gilbert said that NewAlliance has struggled to leverage opportunities from its previous purchases. She said that the Westbank deal makes sense geographically, but she questions the earnings potential.
