When two banks north of Boston combine their mutual holding companies next year, they’ll be taking a path already blazed by a trio of New Hampshire community banks. 

While the combination will see the banks, which have adjacent but not overlapping markets, consolidate back-office operations, the leaders of Newburyport Bank and Haverhill-based Pentucket Bank see the combination as providing opportunities for employees to develop and find new careers. 

No branches are expected to close, including both banks’ branches in New Hampshire.  

“There are going to be jobs at the holding company that don’t exist today,” said Lloyd Hamm, president and CEO of Newburyport Bank. “One of the things that Jon [Dowst, president and CEO of Pentucket Bank,] and I feel most strongly about is we will have to hire talent in some cases, but both of us are really committed to training and development and giving our employees this opportunity. I’d love to think that we can position this as an employer of choice and career development for our existing people for a long time to come.” 

The $1.5 billion-asset Newburyport Bank and Haverhill-based Pentucket Bank, which has $960 million in assets, announced in December plans to merge holding companies while continuing to operate independent banks with separate charters, joining just a few other mutual banks in the region held by multibank companies.  

A Way to Compete 

The banks operate in adjacent markets along the Atlantic Ocean and in the Merrimack Valley, and both banks have Massachusetts and New Hampshire branches. While less than 10 miles separate their footprints, Hamm and Dowst did not know each other before 2022.  

The leaders connected as each pursued strategies for their bank’s futures. Starting with their earliest conversations, Hamm and Dowst talked about how to compete with the four national banks and the larger Massachusetts-based banks – Eastern Bank, Rockland Trust and Salem Five – while maintaining the brand identities each bank has in its market, Hamm told Banker & Tradesman. 

They settled on merging holding companies as the solution to achieve the scale needed to compete while maintaining distinct community bank identities, Dowst said in a separate interview. He added that because Pentucket and Newburyport are mutual banks rather than stock companies obligated to create value for shareholders, the banks will be able to make decisions as the mutual holding companies merge that focus on the best interests of customers, communities and employees. 

“I’m an economist by education, and I scoff at the idea of being able to have your cake and eat it, too,” Dowst said. “This type of structure actually gives you the ability to have your cake and eat it, too.” 

A Rare Type of Combination 

While multibank mutual holding companies are not common in the region, Dowst said he knows the leaders of two of these types of organizations – Matthew Sosik of Hometown Financial Group and Gregg Tewksbury of New Hampshire Mutual Bancorp – and has reached out to both for guidance as Newburyport Bank and Pentucket Bank went through their due diligence processes.  

Based in Easthampton, Hometown Financial Group was created in 2016 as the holding company for bankESB and bankHometown. As part of the company’s most recent acquisition, Quincy-based Envision Bank was merged into Hometown Financial Group’s third bank, Abington Bank. 

New Hampshire Mutual Bancorp was formed a decade ago when Meredith Village Savings Bank in central New Hampshire and Merrimack County Savings Bank in Nashua combined under a single mutual holding company. The Savings Bank of Walpole, based in the southwest part of New Hampshire near Keene, was added later. 

Not all multibank holding companies end up keeping independent mutual banks. Connecticut Mutual Holding Co. in Northwest Connecticut operated for two decades, eventually holding three banks. The company decided in 2020 to combine the banks under one state charter and operate the former banks’ branches as divisions, while still maintaining their longtime brand identities. 

Stephen Reilly, president and CEO of the surviving bank and the holding company, told The Registry Review’s sister publication, The Commercial Record, in 2021 that upcoming senior executive retirements at two of the banks gave Connecticut Mutual Holding Co. an opportunity to evaluate their structure and settle on operating the bank with divisions. 

Long-Term Plans 

Newburyport Bank and Pentucket Bank both date to the 19th century, and Dowst and Hamm see combining mutual holding companies as key to long-term survival as mutual banks. 

“There’s no existential crisis at either Pentucket Bank or Newburyport Bank,” Dowst said. “But it’s our job as CEOs to look forward – we’re really stewards of these companies – and we’re not looking forward 10 or 20 years, we’re looking forward many decades.” 

Hamm will lead the mutual holding company as CEO with Dowst as president taking over as CEO when Hamm retires. Hamm said he is looking at retiring in about three years. Dowst said he had not settled on a retirement date. Both leaders have agreed to continue to co-chair the mutual holding company’s board after they retire, Hamm said. 

While the banks have not decided on a name or headquarters location for the mutual holding company, Hamm said the office will be about halfway between each bank’s own Haverhill and Newburyport headquarters. 

Work to Manage Employee Concerns 

While the banks’ leadership teams learned about the proposed combination during the due diligence process, most employees heard the news at separate events each bank hosted simultaneously in December.  

Several banks around the region have used the recent wave of mergers and acquisitions to land a range of new hires, including high-profile executives. Both Dowst and Hamm said they communicated from the outset that the transaction would involve no layoffs, but employees still had concerns.  

“There are many banking employees, myself among them, who have been through lots of mergers that were very different than this one, where people lost their jobs, and customers got jammed into banks they didn’t want to get jammed into, and they didn’t go all that well,” Dowst said. “People then go into any of these with that history and that memory.” 

Once the holding companies merge, combining the companies could take a couple of years to complete, particularly with each bank working with 75 to 100 vendors. The banks have created guiding principles, Dowst said, to focus decisions throughout that process on how they affect the banks’ customers, communities and employees. One of these principles encourages staff to have fun with the process. 

“Our employees should look back at this and see it as a positive and transformative point in their careers,” Dowst said. “We don’t want it to be all heavy.” 

Hamm said employees’ concerns about the merger have been alleviated, but they still had questions about who will do their jobs in the future. 

“We’ve assured them that we will spend the money on investment in training and development to make sure everyone gets chances and opportunities to take on more responsibility in this case,” Hamm said. “The employees right now I think are in a fabulous attitude and position.”