ABA Banking Journal - November/December 2017 - 33

"Banks today are choosing to merge for many reasons-from macroeconomic
pressures such as compressed earnings, rising expenses and scarcity of
capital, to the regulatory burden that's been placed on them in recent years."
-Brittany Kleinpaste, ABA director of economic policy research

banks in the future, and the second is, 'my bank will be a
survivor,'" observes Charles Petersen, president and CEO of
Biddeford Savings Bank, a 150-year-old mutual that serves
what was historically one of the state's many textile towns.
Seeking a way to reduce some of Biddeford's operating
expenses, such as information technology costs (Biddeford
at the time was relying on a third-party vendor for most
IT needs), Petersen found himself speaking to Rick Vail,
president and CEO of Mechanics Savings Bank, another
mutual institution headquartered about an hour north
in Auburn.
As it happened, Mechanics Savings Bank had invested in
building a strong IT team that was looking to branch out
and partner with other mutual banks to provide technology
services. What began as a conversation about sharing tech
soon turned into an opportunity to share much more, as
Vail and Petersen saw other ways that the two banks could
benefit one another.
After several meetings between the CEOs, management
teams and boards, the decision was made to join together
and create a shared holding company, Maine Community
Bancorp, which allowed both institutions to streamline
their back office operations while continuing to serve their
customers under their respective names.
"We serve distinct markets geographically," Petersen notes.
"We both have very strong brands in our markets, so there
was a great interest in maintaining those separate brands.
That was feasible under a holding company structure."
Both Petersen and Vail have been through a few mergers
throughout their careers in banking, but Petersen notes that
this was the first "merger of equals" he's been a part of. "In
an acquisition, the acquirer walks in and hands you their
policy manual and procedures and says, 'this is how we're
going to do things'. In a merger of equals, you sit down...
and you figure out what's the best way for us on a combined
basis to do things going forward," he explains. "The plus is,
you can really make improvements on how you do things.
The down side is, it takes a lot of work to get to consensus
on those things."

Adds Vail: "Our transaction wouldn't have happened if we
weren't equals."
Without laying off a single staff member at either bank,
Vail and Petersen have shifted 67 employees to work for
the new holding company and successfully re-negotiated
certain third-party contracts and consolidated vendors.
The result was a 10 percent decrease in net operating
expense, which they expect to stabilize at 12 or 13 percent
over the next few years. In addition, the two banks are now
participating $20 million in loans to one another, which has
allowed them to better support the credit needs of new and
existing customers.
From a financial perspective, both CEOs say their
partnership-the "alliance," as they call it-has been very
successful. As the combination was finalized, the two banks
targeted combined savings over $2.1 million over the first
three years. As of today, Vail says they're on track to more
than double that figure.
While Biddeford and Mechanics Savings were the first
institutions in Maine to pursue such a structure, it's a
concept that has worked successfully for banks in other
states. Vail and Petersen say that throughout the process,
they were periodically in touch with executives from two
New Hampshire banks that came together in 2013. But for
the most part, Vail says, "it has been a process where we're
learning it as we're living it."
Both CEOs expect to see more consolidations in the future,
both in Maine and across the country. And both agree that
their decision to come together has made them stronger in
the long run. "Both banks were in good places financially
[coming in]," notes Vail. "Neither bank really needed to do
this. Both banks in the immediate term would have been
fine, but this is really playing out very well for the longterm interests of both bank employee groups, both bank
customer bases, and the communities both banks serve.
Long term, we're in a much better place together than we
were separately."
MONICA C. MEINERT is associate editor of the ABA Banking Journal and
a member of ABA's Bank Consolidation Task Force.
aba.com/BankingJournal | ABA BANKING JOURNAL

33


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Table of Contents for the Digital Edition of ABA Banking Journal - November/December 2017

Chairman’s View
Upfront
Legal Briefs
Economic Outlook
Power Up Profile
Pitching In
Choices and Options Down on the Farm
Eager or Not, Every Board Needs an M&A Strategy
Adapting to Survive
More Than Just a Drink
Operations
Payments
Small Business Lending
Human Resources
ABA Compliance Center Inbox
From the States
Corporate Social Responsibility
Index of Advertisers
From the Vault
ABA Banking Journal - November/December 2017 - Intro
ABA Banking Journal - November/December 2017 - ebelly1
ABA Banking Journal - November/December 2017 - ebelly2
ABA Banking Journal - November/December 2017 - cover1
ABA Banking Journal - November/December 2017 - cover2
ABA Banking Journal - November/December 2017 - 3
ABA Banking Journal - November/December 2017 - 4
ABA Banking Journal - November/December 2017 - 5
ABA Banking Journal - November/December 2017 - 6
ABA Banking Journal - November/December 2017 - 7
ABA Banking Journal - November/December 2017 - Chairman’s View
ABA Banking Journal - November/December 2017 - 9
ABA Banking Journal - November/December 2017 - Upfront
ABA Banking Journal - November/December 2017 - 11
ABA Banking Journal - November/December 2017 - 12
ABA Banking Journal - November/December 2017 - 13
ABA Banking Journal - November/December 2017 - 14
ABA Banking Journal - November/December 2017 - 15
ABA Banking Journal - November/December 2017 - Legal Briefs
ABA Banking Journal - November/December 2017 - 17
ABA Banking Journal - November/December 2017 - Economic Outlook
ABA Banking Journal - November/December 2017 - Power Up Profile
ABA Banking Journal - November/December 2017 - Pitching In
ABA Banking Journal - November/December 2017 - 21
ABA Banking Journal - November/December 2017 - 22
ABA Banking Journal - November/December 2017 - 23
ABA Banking Journal - November/December 2017 - 24
ABA Banking Journal - November/December 2017 - 25
ABA Banking Journal - November/December 2017 - Choices and Options Down on the Farm
ABA Banking Journal - November/December 2017 - 27
ABA Banking Journal - November/December 2017 - Eager or Not, Every Board Needs an M&A Strategy
ABA Banking Journal - November/December 2017 - 29
ABA Banking Journal - November/December 2017 - Adapting to Survive
ABA Banking Journal - November/December 2017 - 31
ABA Banking Journal - November/December 2017 - 32
ABA Banking Journal - November/December 2017 - 33
ABA Banking Journal - November/December 2017 - More Than Just a Drink
ABA Banking Journal - November/December 2017 - 35
ABA Banking Journal - November/December 2017 - Operations
ABA Banking Journal - November/December 2017 - 37
ABA Banking Journal - November/December 2017 - Payments
ABA Banking Journal - November/December 2017 - 39
ABA Banking Journal - November/December 2017 - Small Business Lending
ABA Banking Journal - November/December 2017 - 41
ABA Banking Journal - November/December 2017 - Human Resources
ABA Banking Journal - November/December 2017 - 43
ABA Banking Journal - November/December 2017 - 44
ABA Banking Journal - November/December 2017 - ABA Compliance Center Inbox
ABA Banking Journal - November/December 2017 - From the States
ABA Banking Journal - November/December 2017 - 47
ABA Banking Journal - November/December 2017 - Corporate Social Responsibility
ABA Banking Journal - November/December 2017 - Index of Advertisers
ABA Banking Journal - November/December 2017 - From the Vault
ABA Banking Journal - November/December 2017 - cover3
ABA Banking Journal - November/December 2017 - cover4
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