Bank consolidation in the Northeast has been a snore compared to other hot markets.

The Census Bureau identifies the Northeast as nine states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Only 16 bank deals have been announced in those states this year, based on data compiled by Keefe, Bruyette & Woods and S&P Global Market Intelligence.

The region has lagged behind much of the nation in terms of merger activity since 2011. The Northeast’s 211 bank deals over that period are about a third of the volume reported in both the Midwest and South, and trail the 251 acquisitions announced in the West.

The circumstances behind the lull show no signs of letting up, industry experts said.

The Northeast had a fair amount of consolidation prior to the financial crisis. An abundance of mutuals, particularly in New England, has also stymied activity.

Balance sheet dynamics are another factor. There is a dearth of deposit-rich banks; the ratio of loans to core deposits in the Northeast is 104%, which is much higher than the 89% national average, according to the Federal Deposit Insurance Corp. Such banks become popular targets as interest rates rise.

“The M&A activity in the Northeast has been minimal,” said Collyn Gilbert, a KBW analyst. “What banks are truly seeking are more low-cost deposit options.”

“What these banks need … is not easily found within their existing markets,” said William Hickey, co-head of the investment banking group at Sandler O’Neill. “In a perfect world, a bank that had a 115% loan-to-deposit ratio could find a bank with a 60% ratio but there aren’t any of those banks in [the Northeast]. That presents a little bit of an issue.”

While it isn’t easy, those types deals can be found in the region.

ConnectOne Bancorp in Englewood Cliffs, N.J., recently agreed to buy Greater Hudson Bank, a Bardonia, N.Y., institution with an 85% loan-to-deposit ratio. ConnectOne’s ratio stood at 112%, based on a presentation tied to the $76 million acquisition.

“It is a challenge” to gather cheap deposits, said Frank Sorrentino, the $5.2 billion-asset ConnectOne’s chairman and CEO. “We came out of a period where we were in a zero interest rate environment. The world was awash in liquidity. That isn’t true anymore.”

High concentrations of commercial real estate are another complication. Real estate loans, on average, comprised nearly three-fourths of total loans at Northeastern banks, compared to 49% nationally, based on FDIC data. Banks where commercial real estate loans represent more than 300% of total risk-based capital tend to get more attention from regulators. And loans to real estate clients seldom include large deposit relationships, industry experts said.

For those reasons, acquirers with high CRE concentrations may be disinclined to buy a bank with a similar focus. It often makes more sense to try and find banks that offer a buyer an opportunity to diversify.

The $501 million-asset Greater Hudson will provide ConnectOne with the expertise it has long wanted to make Small Business Administration loans, Sorrentino said. At the bank level, ConnectOne has a 509% CRE concentration compared to 336% at Greater Hudson. About 85% of ConnectOne’s loans involve real estate, according to the FDIC.

“If you’re a traditional real estate lender, it’s hard to turn into a C&I lender,” Hickey said. “It’s a different mentality and requires different talent. It’s not like there are an abundance of C&I lenders waiting around for a job. Most of them are fully employed.”

Another limitation is the high percentage of mutuals headquartered in the Northeast. More than half of the nation’s mutuals are based in the region, according to FDIC data. In Massachusetts, three-fourths of the banks with $500 million or less in assets are mutuals.

While mutuals can merge with each other, fully stock-owned banks are barred from buying them.

“There are a lot of smaller institutions that … aren’t targets for stock banks,” said Richard Schaberg, head of the U.S financial institutions practice group at Hogan Lovells. “In New England, you have that space that stock banks can’t acquire. That’s sometimes why there is lower deal flow.”

While impediments exist, several prevalent pressures will force consolidation in the Northeast just that they will in other regions. Those challenges include the increased need to improve technology, succession issues and regulatory burden.

With rising interest rates, all bankers are mulling over the issue of independence, said Christopher Maher, president and CEO of OceanFirst Financial in Toms River, N.J. The $7.5 billion-asset company has been active acquirer, buying four banks since early 2015, including its recent purchase of Sun Bancorp.

“You have banks that have healthy net interest margins, good core deposits and continue to grow without a lot of barriers,” Maher said.

“Then you have banks that have more deposit pressure and compressing margins with business models that maybe strategically need products and services that they could get by combining with someone like an OceanFirst,” Maher added.