It is probably the oldest conventional wisdom in the industry: Any deal where a bank sells itself to a big out-of-state company is bound to send customers running off to smaller, local competitors.
It is an argument that Bank-north Group Inc. chairman and chief executive William J. Ryan has been advancing since October, when Bank of America Corp. announced it was buying FleetBoston Financial Corp., which had been New England's largest banking until the sale closed in April. Mr. Ryan told American Banker in February that the $29 billion-asset Banknorth was already benefiting from Fleet's sale because New England businesses prefer to do business with a New England bank.
Now community bankers in and around New England are preparing to try to do the same thing to Banknorth, nowhere more so than in Maine. They say Banknorth Group Inc.'s decision to sell a 51% stake to Toronto-Dominion Bank is their chance to take a good chunk of market share away from the state's largest banking company.
"It changes the landscape," said Suzanne Brightbill, a spokeswoman for the $1.4 billion-asset Camden National Corp. "It provides an opportunity for" Camden "as a locally based and independent community bank."
Banknorth's Peoples Heritage Bank controlled 19% of Maine's deposit market as of June 30, 2003 (the latest available data), according to the Federal Deposit Insurance Corp. KeyCorp, which is based in Cleveland, had the second-largest share, 14.3%.
Another banker, who asked that his name not be published, said of the deal, "Any community banker would look at this and say this is good for community banking."
The community bankers' argument boils down to location. Customers, particularly small-business owners, want a bank's decision makers to be nearby.
So, how does Mr. Ryan think his Portland company will fare after it sells more than half of its stock to the $312 billion-asset Toronto-Dominion and becomes TD Banknorth? Just fine, he said. Comparing that deal to the B of A-Fleet deal or any other whole-bank acquisition, he said, is comparing apples to oranges.
"We're going to have the same management, same name, and same board of directors," Mr. Ryan said. "And there aren't going to be any layoffs, or a systems conversion. We're going to be more competitive than ever."
And just as acquisitive. Banknorth (which was Peoples Heritage Financial Group. until its 2000 merger with Banknorth, then of Vermont) has bought 20 banks in New York, Vermont, New Hampshire, Massachusetts, and Connecticut in the past decade. Mr. Ryan said the deep pockets of the Toronto company would make maintaining that pace easier, and that he plans to continue to focus on making acquisitions and making sure they are profitable.
"This is not the only deal in the U.S. that TD wants to do," Mr. Ryan said.
Banknorth's ability to convince sellers that it does not have a big-bank mentality has helped it buy so prolifically.
"They sort of tout themselves as a big community bank," said Edwin N. Clift, the chairman and CEO of the $360 million-asset Merrill Merchants Bancshares Inc. of Bangor.
Mr. Clift said he believes Banknorth would still be able to buy community banks - as long as Mr. Ryan and his team are the ones doing the buying.
"If the characters began to change, that would send a different message. If I were the guys in Toronto, I'd leave him alone," Mr. Clift said of Mr. Ryan.
Daniel R. Daigneault, the president of First National Lincoln Co. in Damariscotta, said Banknorth, whose Maine lineage dates to 1852, has done a good job of holding on to customers gained by acquisition - better, he said than Fleet, which bought several Maine community banks before being bought by Bank of America.
"We saw a tremendous shift of business" from Fleet," he said, and he hopes to see a similar result from the Banknorth deal.
"We expected" Banknorth to be sold "sometime in the next three to five years, and we've positioned ourselves" to take advantage, he said.
Mr. Clift said he foresees no large-scale customer movement because of the deal, but, "Some people are going to say, 'There goes my local bank,' " he said.
