By Paul Davis
Despite scarcity, multibank structures are gaining some traction as mutuals look to gain scale, invest in technology and preserve local ownership amid mounting competitive pressures.
Multibank mutual holding companies sit at the edge of U.S. banking structures: rare, complex and often misunderstood.
Fewer than a dozen exist nationwide, based on the most recent FDIC data, yet a number of recent mergers suggest the model is quietly rising as mutuals grapple with growing technology costs, capital and talent constraints and competitive pressure. For banks determined to preserve mutuality while gaining scale, the multibank MHC offers an unconventional, but increasingly discussed, path forward.
At their core, multibank MHCs are designed to address a longstanding struggle within the mutual banking sector: how to remain locally focused and depositor-owned while achieving the scale needed to compete in a rapidly evolving industry.
What is a multibank MHC?
The structure lets multiple mutual banks combine under a single holding company while retaining separate charters, brands, boards and community identities. Rather than consolidating into one institution, they remain legally distinct but share governance and centralized services at the holding company level.
For Tom Fraser, CEO of First Mutual Holding Co. in Lakewood, Ohio, the model emerged a decade ago from a simple observation about the limits of scale facing standalone mutuals.
“We realized that there were about 55 mutuals in Ohio,” Fraser says. “The average size was about $100 million, so that gives you a sense of kind of scale and proportion.”
Fraser said many institutions were deeply committed to mutuality but concerned about their long-term ability to compete independently. The holding company structure, he said, was crafted to preserve local identity while addressing shared operational challenges.
First Mutual now has five mutuals under its umbrella with $3.3 billion of total assets. “Our thought was to create a structure where each bank could remain independent, keep its own name, its brand and identity, board of directors, connection with community,” Fraser says. “At the same time, we could aggregate back-office functions that don’t face customers.”
Those shared services include risk management, audit, compliance, marketing and information technology, as well as pooled investment in digital platforms — cost centers that have become increasingly burdensome for small institutions.
When the structure makes sense
Advocates of multibank MHCs often point first to operating efficiency. Fraser says First Mutual, which formed its holding company in 2015, has seen measurable results over time. Combined noninterest expense at its five banks has fallen from about 3% of assets, pre-pandemic, to 2.1% today.
Scale also benefits talent and capital. Fraser note that the combined organization can attract specialized professionals that individual community banks could not. “One of the benefits of our holding company structure is that we can attract talent that not one of our five banks on its own could have attracted,” he says.
Multibank MHCs are designed to address a longstanding struggle within the mutual banking sector: how to remain locally focused and depositor owned while achieving the scale needed to compete in a rapidly evolving industry.
Gregg Tewksbury, president and CEO of New Hampshire Mutual Bancorp in Concord, describes similar motivations for his organization’s multibank structure. What began nearly 15 years ago as a two-bank combination expanded in 2018 when Savings Bank of Walpole joined the collective. The MHC now has nearly $3.8 billion of assets.
“We came to the conclusion that scale was going to be eminently necessary in our minds to compete really in two areas: talent and technology,” Tewksbury says. That scale, he said, accelerated growth in ways that would not have been possible independently.
“It would have taken us a great deal longer” to grow without the multibank MHC structure, Tewksbury said. “Part of the growth has been the shared services being the accelerant … Secondly, the strength of the holding company allowed us to go out and get some subordinated debt.”
The model lets each bank president run his or her mutual and focus on growing the balance sheet and finding revenue opportunities instead of navigating operational issues, Tewksbury said. Savings Bank of Walpole, for instance, has doubled its assets since joining New Hampshire Mutual in 2018, and its earnings are five times greater.
Recent deals reflect similar logic
Though the number of multibank MHCs remains small, several mergers announced in recent years reflect similar thinking.
Mechanics Bancorp in Taunton, Massachusetts, and MountainOne Financial in North Adams, Massachusetts, will soon combine their holding companies but will operate their mutuals as separate entities.
“This partnership is … a commitment to enhancing our ability to serve our customers and communities, while ensuring both banks continue to operate as individual entities,” Joseph Baptista Jr., president and CEO of the holding company and Mechanics Cooperative, said when the merger was announced. “We believe this merger will create a stronger, more resilient financial organization.”
Mutual Bancorp in Hyannis, Massachusetts, agreed in November to absorb Bluestone Bank in Raynham, Massachusetts. The holding company was formed two years ago when Cape Cod Five Cents Savings Bank combined with Fidelity Bank in Leominster, Massachusetts.
“Welcoming Bluestone into our family of banks reinforces that vision and positions all of our banks for continued growth, innovation and long-term success,” Matt Burke, Mutual Bancorp’s chairman and CEO, said of the Bluestone deal. “Together, we are stronger and better equipped to serve our clients and communities, and to continue to invest in the growth of our colleagues.”
The deals underscore that while multibank MHCs remain uncommon, they continue to emerge as an alternative to outright mergers or stock conversions for mutuals seeking scale without sacrificing identity.
Preserving mutuality by design
For proponents, preserving mutual ownership is the central purpose of the strategy. Fraser says concerns about loss of control or a future conversion to stock form are among the most significant barriers to broader adoption.
“There’s a concern, rightfully, that could this be a slippery slope that would lead to the larger entity converting,” he explains. To address that risk, First Mutual embedded protections into its governance, including enhanced depositor voting requirements and explicit board obligations.
Tewksbury said the absence of shareholder pressure fundamentally changes how multibank MHC combinations are executed.
“There’s no consideration paid, so the sense of urgency to get the synergies quickly to be able to respond to the shareholder expectation are just not there,” Tewksbury said.
Why many mutuals still hesitate
Despite benefits cited by advocates, multibank MHCs have not become a dominant model. Beyond structural complexity, the approach requires what many in the industry describe as a “trust fall” by the institution being adopted the holding company.
While charters, brands and boards remain intact, the mutual effectively cedes certain decision-making authority to a centralized structure, relying on holding company leadership to safeguard its culture, independence and long-term commitment to mutuality. For many boards, that leap of faith, especially when no ownership consideration changes hands, can be more difficult than the deal’s legal mechanics.
“Usually there’s some loss of control and independence of each of the banks,” Fraser says. Tewksbury describes the choice as one that often hinges on whether boards think going it along remains a viable option.
“I think what’s preventing it is boards and leadership having the belief that they can remain independent and be relevant over longer periods of time in their own model,” he said.
For now, multibank MHCs remain rare. But their continued appearance in merger announcements suggests the structure remains a viable, if carefully considered, option for mutual institutions determined to preserve their ownership model while adapting to an increasingly demanding banking environment.
Contributing editor Paul Davis is founder and editor of The Bank Slate.
