Bridgehampton bank buying Hamptons State

Bridgehampton National Bank, which has grown and prospered throughout the recession and its aftermath, has agreed to acquire Hamptons State Bank of Southampton for about $6.3 million in stock.

The acquisition could be a sign of things to come. Analysts have said 2011 will be a year of consolidation in the banking industry, as smaller and weaker banks struggle in a more stringent regulatory atmosphere.

Although Hamptons State, which opened in 1998, was profitable, officials realized it would be increasingly difficult to operate successfully and sought buyers, said bank president Ronald Krawczyk. Regulators want banks to raise or retain more capital to protect against losses, and like many small banks, Hamptons State found it difficult to do that. "The regulatory expenses are just phenomenal," he said.

Bridgehampton was an obvious buyer, Krawczyk said. It operates in the same market and shares the same dedication to customer service and community focus as Hamptons State, he added. The deal is good for Hamptons State investors and gives customers access to a bank able to make bigger loans.

Bridgehampton chief executive Kevin O'Connor sympathized with Krawczyk's plight, although he was pleased to benefit from it. "It's difficult to make money at a certain size," O'Connor said Wednesday. "We're excited about the opportunity. . . . I'm excited that we're growing when other banks are pulling back." O'Connor also said he was pleased to be able to take over a healthy bank, rather than one saddled with bad loans.

Bridgehampton has two branches in Southampton, but O'Connor said there was no rush to decide whether to close either of them or the Hamptons State location. It's possible all three will remain open, he added.

"The customers will make the decision for us" by where they bank, he said.

Bridgehampton now has 19 branches in Suffolk County and assets of $1 billion. Hamptons State has assets of $68 million.