As mergers thin ranks, new Mass. banks arise - The Business Review (Albany):

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In the past year, the Bay State lost 12 bankas to acquisition, but ther now is a frenzy of activity that could lead to the creationb of no fewer thana half-dozejn new institutions, from Greater Boston to Cape Cod to southeasterbn Massachusetts, according to banking industru sources familiar with those efforts. "There are more groupsx surfacing within the last 12 months than in the previous few saidKenneth Ehrlich, an attornehy who represents banks for Boston's Nutterf McLennen and Fish LLP.
The movement is fuelecd largely by the perception that therre is a unique opening for new community banks to replacw those that have been absorbed by much larger PrimeMortgage Financial, a Southboroughg lender licensed to offer home mortgages in 46 is in the process of starting a bank -- gettiny federal regulatory approval, raising capital, and hirint chief executives. Aris Prime Financial's president, said he sees an opportunity for openingt a bank in his ownback yard, where Abington Cape Cod Bank & Trust Co., Falmouth Bancorp, FirstFeds America Bancorp, FleetBoston Financial Corp. and Seacoast Financial Services Corp. all have been acquiredf in less thana year.
"We've identified pockets wherwe there hasbeen overconsolidation," said The bank, which Pappas expects will open by early to mid-2005, also enableds Prime Mortgage to diversify its business lines by addintg commercial lending. Prime Mortgage can also use reams of data it has collected on its mortgage customers in its newbanking business. Massachusettsz has been watching banks dwindle for There were 209 banks here at the end of down from 230 in December according to the Federal DepositInsurance Corp. Between February 2003 and Januargy 2004, 12 Massachusetts banks were bought, according to New York-basee SNL Financial.
Although the number of banks here the appetite for communitybanks hasn't diminished. "With continuer mergers and the Fleet-Bank of America deal, it makews it that much more attractive" to start up a bank, said Davixd Sidon, a Gloucester bank consultant. "Despite what B of A says, they don't want the little (customer)." There is no guarantee that the bankz now being organized will everbe born, though. Bank incorporatorsw need the approval of state orfederakl regulators, depending on whose oversight they prefer.
They also need to raisw between $6 million to $10 million in In the past 10 only four new Bay Statee banks completedthe process: in Worcester, Middlesex Bank & Trust Co. in Horizon Bank & Trust Co. in and Leader Bank in Sidon, the bank consultant, knowe the difficulty first-hand. In late he moved forward with plans to star a new bankin Gloucester, Naviw Bank. It was supposed to fill the void created when Andove r Bank bought GloucesterBank & Trusy Co., leaving no locally based commerciapl banks in Gloucester.
After quicklyg raising $3 million from loca sources, Navis tried unsuccessfully -- mistakenly, he said -- to tap the publiv capital markets forapproximatelyu $5 million more. By June 2003, after already havinv received an extension from state Sidongave up. And even if you can rais e the money and winregulatory approval, therd is no guarantee of survival. Of the four startupa since 1998, only Commonwealth and Leader Middlesex and Horizon have sincebeen acquired. Commonwealth Nationa recently passed asignificant milestone, celebrating its first profit -- $48,000 in the first quarter -- in its briet two-year history.
The bank has grow to $140 million in assets and expectsw to open its fourtgh and fifth branchesthis year. Charles Valade, the bank' president and CEO, said Commonwealth National has grown stronger because it had a good game It was staffed with veteranjbankers -- he had been with Mechanics Bank -- who have locaol expertise. The bank also raised capitapl from750 investors, a sign of communityt backing. Commonwealth National also capitalizedon Worcester's hungert for commun-ity-bank service, as Fleet and Banknorth Grou p Inc. of Portland expanded in the said Valade.
"We thought we coul pick off some oftheir business," Valade As the Bay State banking scene settlesa from the latest consolidation wave, bankers such as Valadse are planning for greater growth. The Worcestert commercial lender hopes to its assetdsto $300 million and then look toward Even Sidon, sensing an opportunity, said he might have anothe go at starting a bank. "j haven't ruled out a retry of Navis, and one of the groupas I represent (trying to start a bank) may end up with me at the Sidon said.