A growing number of Maine-based banks are looking beyond their borders into neighboring states for expansion, either by purchasing existing banks or opening their own offices and branches.

Leaders in Maine’s banking industry say nearby states such as New Hampshire offer opportunities for growth because those markets provide potential access to more high-dollar commercial customer relationships. Banks of all sizes rely heavily on business clients for growth.

“Banks make decisions about branches and locations based on where they see business opportunity,” said Chris Pinkham, president and CEO of the Maine Bankers Association. “It’s hard to prove or demonstrate, but clearly a number of very successful Maine banks … have all identified that there’s business opportunity in New Hampshire.”

The latest to take the plunge is Bangor Savings Bank, which completed its $45 million acquisition of Colebrook, New Hampshire-based First Colebrook Bancorp Inc., parent company of the former Granite Bank, in April 2018.

Bangor Savings acquired four retail branches in New Hampshire and recently opened a fifth, in Portsmouth, with one more planned for the near future, in Concord, according to its president and CEO, Bob Montgomery-Rice. The bank also has opened separate offices for lending and other commercial business in New Hampshire.

Bangor Savings President and CEO Bob Montgomery-Rice says Maine banks are expanding into New Hampshire because of business opportunities. Shawn Patrick Ouellette/Staff Ph

Montgomery-Rice said that with 53 branches in Maine, Bangor Savings doesn’t have that much more room to grow in its home state and is seeking opportunities in locations where it makes sense to expand.

“There’s not as much territory to cover but we still have a full handful of locations we’re looking at in Maine,” he said. “The grow into New Hampshire is mainly because our customers, especially on the business side, have come here.”

Montgomery-Rice said the day Bangor Savings opened its first New Hampshire branch, there were already customers getting in line to cash their Bangor Savings checks. Maine businesses that have expanded into New Hampshire also had expressed a desire to make commercial deposits at a local Bangor Savings branch, he said.

The Bangor Savings cross-border expansion was preceded by a much more aggressive regional push by one of its top competitors, Bar Harbor Bank & Trust.

In January 2017, its parent company, Bar Harbor Bankshares, completed a $143 million deal making it the only New England-based community bank with operations in Maine, New Hampshire and Vermont.

Bar Harbor acquired Lake Sunapee Bank Group, a publicly traded bank based in Newport, New Hampshire, with $1.6 billion in assets. As part of the deal, Bar Harbor acquired a total of 35 branches, 21 in New Hampshire and 14 in Vermont.

At the time, Bar Harbor President and CEO Curtis Simard said the deal brought the bank up into the ranks of Maine’s largest community banks and gave it a regional presence unlike any other bank based in the state.

“We believe together, with our increased scale, expanded geographic footprint and investments in technology, we are well positioned to serve the marketplace and continue to be the bank of choice,” Simard said.

Bangor Savings ended its fiscal year on March 31 with total assets of $4.44 billion, making it the largest Maine-based bank. Bar Harbor reported total assets of $3.61 billion as of Dec. 31.

The other top-tier Maine-chartered bank in terms of assets is Camden National Bank, which ended its fiscal year on March 31 with total assets of $4.42 billion, just behind Bangor Savings. Camden National has been exploring its own push beyond Maine but has been doing so more cautiously.

The bank opened its third out-of-state loan office in March 2018, in Portsmouth, New Hampshire. Camden National now has three loan offices outside of Maine, two in New Hampshire and one in Massachusetts. While the bank does not have any retail branches outside Maine, Pinkham said opening loan offices in a new market is often seen as a likely precursor to opening branches there.

Two other Maine-based banks have branches in New Hampshire: Sanford-based SIS Bank, which is in the process of changing its name to Partners Bank, and Kennebunk Savings Bank.

Kennebunk Savings was the first Maine-chartered bank to cross over into New Hampshire, opening its first branch in that state in 2011. It has since opened four more, roughly one every two years. SIS opened its sole New Hampshire branch in Portsmouth in 2013.

As of June 30, 2018, there were 31 retail banks with a physical presence in Maine – including five based outside the state – totaling 472 branches and deposits of $29.42 billion in Maine, according to the Federal Deposit Insurance Corp. About two-thirds of those deposits were held by Maine-based banks.

Pinkham said southern New Hampshire in particular is an attractive target for expansion because it has a growing economy, close proximity to Boston-area businesses and seems to offer more opportunities to acquire an existing bank, with no behemoth New Hampshire-based banks really dominating the market.

“Massachusetts banks have been creeping over the southern New Hampshire border for years and putting branches there,” he said.