Massachusetts mutuals to merge, create $3.5 billion bank

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A pair of depositor-owned banking companies in the northern suburbs of Boston agreed to combine their operations and build scale in the highly competitive Northeast.

River Run Bancorp in Newburyport, Massachusetts, said Rollstone Bancorp's Rollstone Bank and Trust in Fitchburg, Massachusetts, would merge into its network of mutual community banks. Rollstone would become the third bank under River Run's umbrella, joining Newburyport Bank and Pentucket Bank.

Should the deal close as planned in the first half of 2025, the combined bank would have more than $3.5 billion of assets. The boards of both companies approved the deal.

The $900 million-asset, five-branch Rollstone also provides the buyer with a wealth management and trust services division. River Run said its multibank mutual model allows its member banks to consolidate back-office operations and create efficiencies while also offering additional products and services.

Deals between depositor-owned banks customarily do not involve financial consideration. The companies did not disclose the terms of their merger in a joint release.

"As community banks face challenges that could impact their long-term sustainability, River Run provides the structure for them to not only survive but thrive," Lloyd Hamm, president and CEO of River Run, said in the release last week.

Small banks are increasingly merging to gain the size and resources needed to cover mounting regulatory and technology costs — and to compete with larger lenders.

The River Run-Rollstone combination marks the second Massachusetts mutual merger in recent months. In June, Holyoke-based PeoplesBancorp MHC, parent of PeoplesBank, and Worcester-based SSB Community Bancorp MHC, the holding company for Cornerstone Bank, said they would merge in a transaction slated to close in the first quarter of 2025.

In total, about 90 bank sales were announced through September with an aggregate deal value of around $11 billion, according to S&P Global Market Intelligence. That put volume on pace to easily surpass last year's total of 100 deals. Total transaction value for 2024 more than doubled the $4.15 billion for all of last year.

M&A activity has picked up this year alongside the Federal Reserve's well-telegraphed interest rate cut — it reduced its benchmark by 50 basis points last month. Lower rates could support economic growth and banks' credit quality. Reduced credit costs tend to ease concerns about vulnerable borrowers, and this helps bank buyers' to more confidently assess the health of sellers and finalize deals.

"While the cost of capital remains high, CEOs are going to be energized by the 50 basis points rate cut and the Fed's decision to embark on its easing cycle," said Mitch Berlin, Ernst & Young's Americas vice chair for strategy and transactions.

River Run said that, after it closes the Rollstone acquisition, each of its three bank units would retain its respective name, headquarters, management, board, retail and lending operation, and charitable foundation.

Upon completion, the combined company would operate more than 20 branches across northeastern and central Massachusetts as well as southern New Hampshire.

In connection with the planned transaction, Rollstone Bank & Trust President and CEO Martin Connors Jr. plans to retire in mid-2025 and then serve a two-year term as executive chairman of the bank's board. Connors will also become vice chair of River Run Bancorp and fill one of four board seats allocated to Rollstone Bank & Trust directors.

Rollstone's current chief operating officer, Mary Beth Jokela, would succeed Connors as president of Rollstone Bank & Trust.

"The banking industry has evolved greatly and is currently undergoing tremendous consolidation," Connors said in the release. "Joining forces with Newburyport Bank and Pentucket Bank, and becoming part of the River Run family, will afford us the opportunity to enhance our service offerings and build an even stronger bank for the future."