As the banking industry consolidates, some Central Mass. CEOs see M&A as the path forward, while others prefer organic growth
Hanscom Federal Credit Union's Peter Rice (far left) and Hometown Financial's Matt Sosik (middle left) have led their institutions through recent mergers while Dana Neshe of Middlesex Savings Bank (middle right) and Brian Westerlind (far right) of Webster Five have focused on organic growth. ADOBE STOCK | YALCINSONAT AND COURTESY
While M&A activity is now a fact of life in the banking industry, Central Massachusetts banking and credit union leaders are still carefully weighing whether joining forces with others is the right move.
Mergers and acquisitions in the banking industry are hardly a new phenomenon.Between 1984 and 2020, the number of U.S. banks decreased by 70%, according to the Federal Reserve Bank of St. Louis. Both bank failures and the creation of new financial institutions have dwindled, with the main reason for the decline being M&A.Through October, 133 bank M&A deals were announced across the country in 2025, matching the entire number of announced deals seen in the entirety of 2024, according to data from Angel Oak Capital Advisors in Atlanta. In Central Massachusetts, the past three years have seen a number of high-profile mergers featuring a wide variety of banks and credit unions. The deals range from the now completed $29-billion merger between Marlborough-based Digital Federal Credit Union and California-based First Tech Federal Credit Union to Marlborough-based St. Mary Credit Union announcing in August its intent to join forces with MetroWest Community Federal Credit Union, a Framingham-based firm with 12 employees and a single branch.“It becomes out of necessity, not just a desire to achieve scale,” said Matt Sosik, CEO at Hometown Financial, the Easthampton‑based holding company of Oxford‑based bankHometown. “Organic growth is so difficult in a low-growth or no-growth environment like Massachusetts. That's kind of an underplayed part of the story is what drives M&A from the highest of levels.”While M&A activity is now a fact of life in the banking industry, it may not be right for every financial institution. Central Massachusetts banking and credit union leaders aren’t just doing deals for deals’ sake, and are still carefully weighing whether joining forces with others is the right move for their clients and employees.“Increased M&A activity will have mixed results for the industry,” Dana Neshe, chair, president and CEO of Middlesex Savings Bank, wrote in an email to WBJ. “Mergers may provide very small banks, which are burdened with increased expenses, the ability to come together and continue to operate in their communities. However, there are communities that are losing their local institutions to mergers.”
Growth through mergers
Hometown Financial Group has completed eight strategic mergers over the past decade. Its latest, the acquisition of CFSB Bancorp, the holding company of Quincy‑based Colonial Federal Savings Bank, brings the company to $6.9 billion in assets.Banking is a low-margin business, and growth usually comes hand-in-hand with growth of the local economy, Sosik said. With Massachusetts’ GDP and the country’s GDP both slowing, according to research from the Mass Donahue Institute, M&A activity allows for financial institutions to grow.The most challenging part of making deals happen is figuring out who gets what title and how power is shared post-merger.Expanding their geographic reach and growing their deposit base are two reasons why bank executives are turning to M&A.“A lot of these transactions, on paper, look like a Harvard business case study. They look wonderful,” he said. “But there's often what we call the social issues of: How do we put these boards of directors together efficiently? How do we merge officer groups? Who's going to be the CEO of the combined company? “They're not necessarily financial decisions. They can be the most difficult, because there's emotion involved, sometimes politics and those are the hard ones,” he said.Littleton-based Hanscom Federal Credit Union wrapped up a merger with Maryland-based The People’s Bank in January, and then the credit union announced its intent to merge with Alden Credit Union, a financial institution with locations in Chicopee and Belchertown.With its roots in serving U.S. Air Force personnel, Hanscom CEO and President Peter Rice sees the organization as driven by its mission, not geography. Its membership is all over the country, and Rice saw the People’s Bank deal as a chance to expand the credit union’s physical footprint and the services it offers in one move, as the Maryland-based firm had its own insurance agency subsidiary.“The People's Bank [has] a very successful insurance company called Fleetwood Insurance, who also do boat insurance,” Rice said. “We have about 4,000 members in Florida and 10,000 members in New Hampshire, and that kind of fits in with a lot of our members' lifestyles.”The rising cost and complexity of regulation and compliance is a key structural reason behind M&A activity, Rice and Sosik said.
Organic growth
While not ruling out future M&A activity, Webster Five CEO and President Brian Westerlind is focused on internal operations, especially since most of the executive suite has turned over in the last year. Westerlind was promoted from CFO to CEO on July 1, Kate Gallo Megraw was promoted from chief information officer to chief operating officer in February 2025, and Michael Reid joined the bank to replace Westerlind as CFO.“Keeping that internal culture has been very important to us,” Westerlind said.“We've really transformed the bank and in ways that allow us to compete.”Webster Five is focused on strengthening its presence in Central Massachusetts, which has been a core mission since its founding in 1868, Westerlind said. Webster Five has grown its local deposits from $569 million in 2017 to $1 billion in 2025.Just under half of WBJ readers say their bank has undergone a merger in the past five years.“A good part of our identity is Central Massachusetts and Worcester County,” he said. “It's important that to us in any partnership that we would consider, that's still the focus.”Webster Five has managed to grow its talent pool and its technological offerings without combining forces with competitors, he said.Middlesex Savings Bank has also seen a large amount of organic growth. The Natick-based bank is the third largest in Central Massachusetts by local deposits, according to information compiled by the WBJ Research Department, trailing only Bank of America and TD Bank. It’s grown its local deposits from $2.93 billion in 2019 to $3.9 billion in 2024.“We place emphasis on not only great service but also being a place where customers can come in for sound advice and assistance,” CEO Neshe said. “Over the 190 years that we’ve been in business, this approach has worked well for us and continues to be the core of our strategy.”Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the real estate and banking & finance industries.
