By the Division of Banks

DECISION
RELATIVE TO THE MERGER OF
DEDHAM CO-OPERATIVE BANK, DEDHAM, MASSACHUSETTS
WITH AND INTO
NEEDHAM CO-OPERATIVE BANK, NEEDHAM, MASSACHUSETTS


Needham Co-operative Bank ("Needham"), Needham, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Dedham Co-operative Bank ("Dedham"), Dedham, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 170, section 25 under the terms of an Agreement and Plan of Merger (the "Agreement") dated as of November 3, 2006. The Agreement provides for the merger of Dedham with and into Needham under the charter and by-laws of Needham and under the name of Needham Bank. The sole banking office of Dedham will be retained after the merger.

Notice of the application has been posted and published. The time period for interested parties to submit comments has passed. Accordingly, all documents and materials related to this transaction have been reviewed. That record has been considered with regard to the financial and managerial resources of each bank, the competitive effects of the proposed transaction, the interests of the depositors of each bank, the future prospects of the institutions and the convenience and needs of the communities to be served by the consolidated entity as well as the performance of each bank under the Commonwealth's Community Reinvestment Act ("CRA"), General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq.

Needham is a state-chartered co-operative bank in mutual form. As of December 31, 2006, it had total assets of approximately $595.1 million. Needham's main office is located in Needham, Massachusetts and it operates three branch offices in Medfield, Wellesley and Westwood. The deposits of Needham are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Share Insurance Fund of The Co-operative Central Bank in excess of the FDIC's insurance limits.

Dedham is a state-chartered co-operative bank in mutual form with its sole banking office in Dedham. As of December 31, 2006, Dedham had assets of approximately $85.3 million. The deposits of Dedham are insured by the FDIC and the Share Insurance Fund of The Co-operative Central Bank in excess of the FDIC's insurance limits.

Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. On the issue of whether banking competition will be unreasonably affected by the proposed transaction, the Division considers, but does not rely exclusively on, the guidelines used by federal authorities to review bank mergers. Essentially, these guidelines define relevant markets and measure concentration, which is considered an important indicator of competitiveness. The starting point in the federal analysis is the Herfindahl-Hirschman Index ("HHI"), an arithmetic measure of market concentration that synthesizes the distribution of market shares and the number of banks in an affected market into a single value. In this case, there will be a minimal increase in the HHI. In addition to that analysis, the Division considers the competitive impact of the proposed transaction on a community-by-community basis, as well as on the overall banking structure of the

Commonwealth. Although the merging banks generally serve some of the same municipalities, they do not have any banking offices located in the same city or town. Accordingly, the review of the transaction's impact on competition does not raise concerns which would preclude its approval.

The application notes that, at the time of the merger, the continuing institution's Board of

Directors will consist of all of the persons serving as directors of Needham and one director of Dedham. The management of the combined bank is also detailed in the application documents. The applicant bank argues that the combined institution will produce greater efficiencies and achieve higher earnings to allow for steady and sound growth. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.

As a result of the merger, Needham indicates that the banking public will benefit in several ways. According to the application, such benefits include an expanded branch office network and a broader range of products and services. All of the products presently offered by Needham and Dedham will be offered by the combined institution. The application documents provide examples of products and services currently offered by Needham to its customers that are not presently available to customers of Dedham. Such products and services include home equity loans, jumbo loans, land loans, 24 hour a day telephone banking, as well as overdraft protection services. Moreover, customers will benefit from a proposed renovation of the Dedham banking office which will include an ATM. The Division considered these reasons and others cited in the submitted documents in determining that public convenience and advantage will be promoted by approval of this transaction.

In determining whether or not to approve a petition under the statutory criteria, the Commissioner is also required to consider a showing of "net new benefits" related to the transaction. That term includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors, which the Commissioner may deem necessary. The applicant bank has addressed this requirement based upon its intent to provide the aforementioned products and services to customers, as well as its plan to renovate the Dedham office. According to the Petitioner, the merger will enhance the continuing bank's financial capability to invest in the communities it serves and to develop new products and services for its customers. Also noted is the statement by the continuing bank that there will be no jobs eliminated as a result of the proposed transaction and that the combined bank has the ability to provide future employment opportunities for Massachusetts residents. These and other factors are also cited as support for meeting such criteria.

Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are parties to this transaction. Such review for a state-chartered bank includes examination of personnel by the Division as well as analysis of concerns received from the bank's community and its response to those concerns fairly raised. A publicly available descriptive rating and evaluation by a federal bank regulatory agency will also be considered. Upon review, the Division has noted that Needham and Dedham both received "Satisfactory" ratings in their most recent CRA performance examinations.

Upon review of this application with reference to the relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of the proposed merger would be in the public interest. On the basis of these considerations, approval is granted for Dedham to merge with and into Needham under the charter and by-laws of Needham and under the name Needham Bank pursuant to Massachusetts General Laws chapter 170, section 25. Approval is also granted for Needham to maintain the sole banking office of Dedham as a branch office. The approvals granted herein are subject to the following conditions:

  1. that no merger shall become effective until a certificate signed by the Presidents and Clerks or other duly authorized officers of the banks involved in the merger indicating that each such institution has complied with the provisions of Massachusetts General Laws chapter 170, section 25 has been returned with my endorsement thereon;
  2. that the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
  3. that the proposed merger shall be consummated within one year of the date of this decision.


March 21, 2007
_____________
Date


Steven L. Antonakes
____________________
Commissioner of Banks