After a seeming feint westward, People”™s United Financial Inc. used its first big acquisition as a public company to make a push farther north into New England with plans to purchase Vermont-based Chittenden Corp. for $1.9 billion.
People”™s will finance 45 percent of the deal in stock, having completed the second step of its initial public offering of stock this spring, raising $3.4 billion in capital.
If completed next winter as planned, the Chittenden deal would increase Bridgeport-based People”™s size by half and vault it ahead of Waterbury-based Webster Financial Corp. as the largest independently owned bank in New England, with more than $16 billion in deposits. Bank of America Corp. is the overall market leader with nearly $60 billion in New England deposits, followed by Royal Bank of Scotland subsidiary Citizens Bank at $48 billion.
People”™s opened last week in Scarsdale, N.Y., the first of 15 branches planned in the next two years for Westchester County, which shares Fairfield County”™s economic profile. While the company had indicated it would consider New England for an acquisition with its IPO proceeds, particularly Massachusetts, it also had specified New York or New Jersey as possible territories for a deal. In a conference call following the Chittenden deal, chairman and chief executive officer John Klein did not rule out a deal in the tri-state area.
“We are still going to have the flexibility to be able to do other transactions,” Klein said. “The Northeast includes New England, obviously, (but) it also includes the tri-state area ”¦ Sometimes it is nice not to be in a market that everybody wants to be in.”
Chittenden is the largest bank in Vermont with $2.9 billion in deposits there, a 30 percent market share. The company also runs two banks in western Massachusetts that have $1.1 billion in deposits; and two more banks whose deposits in Maine and New Hampshire total $2.2 billion.
Chittenden focuses 70 percent of its lending in the commercial sector.
People”™s gains more than 140 branches in Vermont, western Massachusetts, New Hampshire and Maine. Chittenden operates several subsidiaries, including:
Ӣ Chittenden Bank, based in Burlington, Vt.
Ӣ Bank of Western Massachusetts in Springfield, Mass.
Ӣ Flagship Bank & Trust in Worcester, Mass.
Ӣ Ocean National Bank in Portsmouth, N.H.
Ӣ Maine Bank & Trust Co. in Portland, Maine
Ӣ Merrill Bank in Bangor, Maine.
People”™s also gains Chittenden”™s insurance, securities and mortgage operations in Vermont, as well as a commercial credit unit run in Montreal. Chittenden itself is in the process of acquiring Community Bank & Trust Co. of Wolfeboro, N.H., whose branches will adopt the Ocean National Bank brand. The deal is valued at $124 million.
Klein said the Chittenden”™s remaining bank brands will remain unchanged, terming such a community-based approach “uniquely New England” in character.
“If you think of New England in terms of town meetings (being) the norm of government, and where traditions are time-honored, it is a model that ”¦ we believe clearly does work,” Klein said.
People”™s United would likely promulgate its own brand for any additional expansion into New York or parts west or south, Klein said.
