A handful of Massachusetts thrifts just north of Boston could be sitting ducks for expansion-minded Citizens Financial Group Inc. of Providence, R.I.
They've become likely targets since the December announcement that Citizens, owned by Royal Bank of Scotland, planned to merge with Bank of Ireland's First Holdings Inc. of New Hampshire, which owns First New Hampshire Bank. The merger is expected to close in the second quarter.
The thrifts would fill a crucial hole in Citizens' growing branch network. Takeover speculation has sent their stock surging in recent weeks.
"All of them are right in that line of fire," said Michael Cerato, a First Albany Corp. vice president in Nashua, N.H. "It's all speculation, but when you see a bank like Citizens say they're going to expand, you can expect them to do it in an orderly manner and connect the dots."
Since the December merger announcement, stock prices of Medford Savings Bank, Andover Bancorp, Massbank Corp. in Reading, and Haverhill-based Family Bancorp have all risen by as much as 30% to 52-week highs.
That's primarily because the four thrifts are situated in the Merrimac Valley area of northeastern Massachusetts, the one gap that would be created by the Citizens-First NH merger, analysts say. Citizens currently has significant market share in Rhode Island and the greater Boston area, and First NH has an attractive statewide franchise in New Hampshire.
"Obviously, this move makes those banks on the North Shore and in the Merrimac Valley more interesting from an investor's perspective," acknowledged David Hindle, president of Family. "We're an attractive bank - I'd have to agree with that."
And with the acquisitive record of Citizens' chairman and chief executive Lawrence K. Fish, analysts and other observers say the area won't be quiet for long.
"Is Larry Fish going to buy more banks? The answer is yes," said Gerard Cassidy, bank analyst at Hancock Institutional Equity Services. "Is Larry Fish going to buy them in the next 30 days? No one knows for sure. There are a lot of opportunities for Citizens Bank, and I think he's going to plan accordingly to maximize his franchise."
Medford rose to a high of $25.25 on Feb. 20, but has dropped 20% since then. Massbank, Andover, and Family hit highs of $34.50, $23.38, and $23.50, respectively, in mid-February, then dropped 10% to 15%.
Management of those institutions have unsuccessfully tried to dispel the speculation.
"The place is rampant with rumors suggesting that Larry needs to fill the gap between Boston and New Hampshire, and that he's going to go after one of the banks in the Merrimac Valley," said James Moynihan, senior vice president at Advest Group in Boston.
"Anytime they throw these rumors out, there's a certain degree of logic behind any one of them."
Citizens officials refused to respond to the rumors. Officials from the other thrifts could not be reached for comment.
But analysts questioned whether the thrifts are likely sellers, noting that the managements are all young and have only been there for a couple of years.
"What investors need to acknowledge is that most banks need to be willing sellers to consummate a deal," Mr. Cassidy said.