Hometown Financial Group, an active acquirer in western Massachusetts, has set its sights on Boston.
The Easthampton, Mass., company has
The string of deals was a matter of timing, said Matthew Sosik, Hometown's president and CEO, adding that a pause should be expected.
"You have to hit the nail when it's right in front of you, but I think we have to be cognizant of our own internal resources and not overtax them," he said.
Hometown gained a presence in Boston's suburbs with the Abington acquisition. If it had branches in Boston it would be in a better position to compete for deposits with nearly 40 banks in the market. (Boston has over $207 billion in deposits, according to data from the Federal Deposit Insurance Corp.)
"We'd love the opportunity to be closer to the economic center of this entire region," Sosik said. "That doesn't frighten us at all."
Branches remain an important part of Hometown's strategy. It has 15 locations in central Massachusetts and northeastern Connecticut, with plans to open a branch in Worcester early next year.
"We do believe there are strategic opportunities [to add branches] but we have to be very smart about what we build," Sosik said. For a bank lacking physical operations in a market, "it's really hard to attract that core customer relationship."
Hometown isn't the only bank in western Massachusetts to home in on Boston. Berkshire Hills Bancorp
Beyond Boston, there are other parts of the state where Hometown could add business.
While the economy western Massachusetts has expanded slower than the Boston area — reflecting a lack of population growth — markets such as Worcester and Springfield have shown improvement, said Daniel Forte, president and CEO of the Massachusetts Bankers Association. Commercial real estate and small-business lending have been strong in western Massachusetts, and lower interest rates are spurring refinancing activity for mortgages, he added.
Credit unions provide significant competition in Massachusetts, particularly for deposits. Those competitors include the $9 billion-asset Digital Federal Credit Union in Marlborough and the $1.2 billion-asset Greylock Federal Credit Union in Pittsfield.
Hometown, as a result, is angling for more municipal deposits.
"Just hanging your shingle and expecting to gather core deposits at a reasonable cost ... those days are gone," Sosik said.
Hometown will likely revisit M&A once it absorbs the banks it recently bought.
Rising operations costs, a flattened yield curve and "massive" competitive pressures are leading more community banks in Massachusetts to sell, Sosik said. Hometown, which has 15 branches in central Massachusetts and northeastern Connecticut, has a diverse balance sheet, which allows it to focus more on geography when it pursues deals, he said.
"I think having a sensible, combined footprint is certainly important to us," Sosik said.
Eastern Massachusetts is home to plenty of attractive banks. For now, Sosik is evaluating targets on the basis of culture and financial impact.
"It really goes back to being nimble and agile," he said. "You have to be willing and able to look at any partnership on a case-to-case basis and, from there, create a structure that makes sense."
