By Evan Sparks
In 2013, the Merrimack County Savings Bank and Meredith Village Savings Bank came together to form a mutual holding company—a move several mutual banks, especially in New England, have taken in recent years to streamline operations while retaining high-value local brands.
For the Merrimack and MVSB, however, New Hampshire Mutual Bancorp was not just a vehicle for a merger of equals—it was an expression of hope for a future that enables New Hampshire’s many small mutual community banks to thrive through the power of alliance and provide a platform for growth.
In 2015, the holding company welcomed a wealth management subsidiary, and last summer, it welcomed its third affiliated bank: the Savings Bank of Walpole. The move validated the strategy of being “stewards of mutual banking in a state where small banks may need an alternative,” says Gregg Tewksbury, who led the Walpole bank before becoming president and CEO of NHMB after the affiliation deal was completed.
The mutual holding company structure creates “efficiencies [that]are necessary for us to fuel earnings, to fuel capital for us to remain competitive long-term,” Tewksbury says. “We’ll need those savings to plow back into technology.”
Rather than describing NHMB as a parent company, Tewksbury calls it a “support structure.” With a combined $2.2 billion in assets, the holding company provides economies in back-office functions like IT, security, risk management and regulatory compliance. Retail banking and lending are handled at the individually chartered banks.
Prior to 2013, both the Merrimack and MVSB had aging CEOs and, like all banks, were dealing with growing back-office costs. “We were looking at basically the cost savings, the synergies, the lending abilities between the two banks in participations, the regulatory burdens that we were all struggling with at that point,” says Philip Emma, who until late in 2018 was president of the Merrimack and who is now COO of NHMB. Earnings came in beyond projections, he adds, which has allowed each individual bank access to “things we might not have had the money to do on our own.”
The efficiencies the banks have realized through their partnership allowed them to make some moves that aligned with their mutual character. “We didn’t let any employee go throughout the whole process,” says Emma. Some duplication was removed through attrition, he notes, but increased growth provided the rest of the opportunities.
That’s one of the reasons NHMB was attractive to the Walpole bank and vice versa. “There were key places in their organization that would be a perfect fit for individuals in the Savings Bank of Walpole to fill,” Tewksbury explains, which would “allow growth to absorb the duplication of employees.” Moreover, being part of a larger and growing organization provides more promotion opportunities for employees—Linda Lorden, for example. The longtime Merrimack executive was named bank president after Emma was appointed COO at NHMB.
In addition to a practice of no layoffs, NHMB’s member banks retain their own local boards of directors and charters. “The brand matters to local residents,” says Tewksbury—but “there’s a cost to that” governance model. However, maintaining those individual local brands has provided the “stable funding [that]is really the differentiator that pays for some of that inefficiency.”
But, as Emma notes, the mutual identity for savings banks in New England is a key part of their success. “We’re a mutual,” he says. “We can do things a little differently, look a little longer in the process and keep that identity.”
Listen to Gregg Tewksbury and Phil Emma discuss the New Hampshire Mutual Bancorp model on the ABA Banking Journal Podcast.
Evan Sparks is editor-in-chief of the ABA Banking Journal.