The latest planned takeover of a New Hampshire bank by an out-of-state institution raises an obvious question: Can small state banks survive in the current era of relentless industry consolidation?

The answer from local bankers and an industry expert: Yes, due mostly to continued strong demand for more personalized services that only local banks can provide.

But the same sources stress that smaller banks across New Hampshire are indeed facing a number of major challenges, ranging from expensive regulatory requirements to new technologies driving up institutions’ operating costs.

For those and other reasons, it’s simply getting more difficult for smaller banks to go head-to-head with larger banks across the state and nation, officials say.

“Large banks have scale, they have sheer size,” said Brian Bozak, president and CEO of Franklin Savings Bank. “It’s sometimes hard to compete with that size and scale advantage.”

Recent Spate of Sales

The issue of smaller New Hampshire banks’ competitiveness is once again at the forefront of debate after the recent announcement that Bedford’s Primary Bank is being acquired by Massachusetts-based Hometown Financial, the holding company for bankESB, bankHometown and TruNorth Bank.

Assuming the deal goes through as planned, the Primary-Hometown merger would mark the third completed or proposed takeover of a state bank by an out-of-state institution since early 2025.

The other two deals include Maine-based Camden National Bank’s purchase last year of Northway Bank, and Massachusetts-based Cambridge Savings Bank’s pending acquisition of Dover’s First Seacoast Bank.

Meanwhile, two other banks with a traditionally strong New Hampshire presence – Enterprise Bank and BankProv, both headquartered just over the border in Massachusetts – were recently acquired by Bay State-based Rockland Trust and Needham Bank, respectively.

Arthur Loomis, president and CEO of community bank consultancy Loomis & Co. Inc., said the recent flurry of bank M&A activity in New Hampshire isn’t too surprising.

It’s normal to see the acquisition of 1 to 3 percent of U.S. banks in any given year, he said.

In the case of New Hampshire, recent bank mergers seem to have “come more in batches.” Still, the acquisitions fit a pattern of industry consolidation spanning decades now, Loomis said.

Indeed, according to Federal Deposit Insurance Corporation data, the number of deposit-insured banks have declined in New Hampshire from 54 in early 1995 to 43 in early 2025, before the recent spurt of M&A activity in the state.

And all five New Hampshire-associated banks that have been targeted for acquisitions of late have been publicly traded institutions, making them prime (and oftentimes self-desired) targets for takeovers, Loomis added.

Compliance Burdens Dragging Small Banks Down

But that still leaves the fact that smaller banks left in New Hampshire are increasingly going up against ever larger institutions in the state, including super-regional and national banks.

Today, the largest three banks in the state by deposits – TD Bank, Citizens Bank and Bank of America – handle about 52 percent of total deposits in New Hampshire, according to the latest FDIC data.

That leaves less than half of all deposits distributed among other banks, from Bank of New Hampshire (the largest state-based institution by deposits) to Delaware’s Wilmington Trust (the smallest institution by deposits), according to the FDIC.

G. Frank Teas, president and CEO of Millyard Bank in Nashua, said it’s indeed gotten hard to compete with large banks, if only because smaller banks have to comply with many of the same compliance regulations that big institutions are required to follow.

“All banks are held to the same standards,” said Teas, whose commercial bank has $320 million in assets.

“Whether you’re a $300 million bank or a $3 billion bank, you still have to comply with all the rules. As a result, we have to leverage our resources a little bit differently because, as a smaller bank, we have fewer members of the team to do all the work. Some of the larger banks have multiple people in the compliance area and multiple people doing all this work. But we have a total of only 30 employees. That’s it.”

Franklin Savings Bank’s Bozak, whose institution oversees about $930 million in assets, agreed that regulations are a major staffing and financial burden for smaller banks.

“It’s very expensive,” he said. ‘It’s not cheap. I think there’s got to be a more efficient way [to regulate] smaller banks.”

Small Lenders Claim Advantages

But both Bozak and Teas argued that small banks have clear advantages over larger banks.

“The smaller the bank, the more personalized the service,” Bozak said. “We’re observant of local industry needs. We’re much more responsive to our local customers. There’s too much broad-brush [services] offered by larger banks.”

He added his and other mutually-owed banks, unlike publicly traded banks, aren’t under constant pressure from Wall Street to produce positive quarterly financial results.

“We take more of a long-term view,” Bozak said. “We’re not under pressure from shareholders.”

Millyard’s Teas noted many business customers simply don’t want to deal with large bureaucratic banks, preferring smaller institutions’ ability to provide a “bit more concierge-like service” to clients.

Ultimately, Teas said, private banks are oftentimes in a better position to remain independent – if they so wish.

“When we opened in December 2019, we were 100 percent committed to independence,” he said. “Our goal is really well embedded in our boardroom, in our culture with our employees, and it’s to remain independent and serve the New Hampshire community.”

‘Difficult’ Hurdles to Starting New Bank

But Loomis, the bank consultant, questioned whether all mutual banks are thinking in a similar go-it-alone fashion. Many of them are concluding that they need to grow, and grow somewhat fast, if they’re going to remain competitive.

As a result, Loomis said he sees more mutual banks merging with one another in New Hampshire and other states in coming years, following in the lead of New Hampshire Mutual Bancorp’s member institutions: Merrimack County Savings Bank, Meredith Village Savings Bank, the Savings Bank of Walpole and NH Trust.

Is there a chance of new banks opening one day soon in New Hampshire, similar to Millyard’s de novo launch in 2019 and Primary Bank’s opening in 2015?

Technically, yes, say bankers and experts The Registry Review talked to. But it’s unlikely due to the tens of millions of dollars in capital required to start a new bank – and the regulatory requirements and competitive uncertainties accompanying the start-up process.

“The capital and regulatory environments make it difficult, but not impossible,” Loomis said of new banks emerging somewhat soon in the state.

Teas said the experience and determination of bank founders are key to any “de novo” effort.

“I think it boils down to finding the right group of individuals, meaning employees, shareholders and board members who understand the process, who have identified the need and who want to band together” to start a new bank, he said.

“Even so, it’s not easy. It is costly to go through the process and to get things rolling – and then not get approved. The last thing you want to do is expend a couple million dollars and not get that final approval.”