By the Division of Banks

IN THE MATTER OF THE MERGER OF
IPSWICH CO-OPERATIVE BANK
IPSWICH, MASSACHUSETTS
WITH AND INTO
INSTITUTION FOR SAVINGS IN NEWBURYPORT
AND ITS VICINITY
NEWBURYPORT, MASSACHUSETTS


Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A and chapter 170, section 26A, Institution for Savings in Newburyport and its Vicinity (the "Petitioner" or "Institution for Savings"), Newburyport, Massachusetts has applied to the Division of Banks (the "Division") to merge with Ipswich Co-operative Bank ("Ipswich"), Ipswich, Massachusetts. Under the terms of the Consolidation Agreement dated January 30, 2007, Ipswich will merge with and into Institution for Savings in Newburyport and its Vicinity under the charter, by-laws and name of Institution for Savings in Newburyport and its Vicinity. All of the banking offices of Ipswich 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, issues raised in the one comment received, 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.

Institution for Savings is a state-chartered savings bank in mutual form. As of December 31, 2006, it had total assets of approximately $554 million. The main office of Institution for Savings is located in Newburyport. Additionally, Institution for Savings operates one branch office also in Newburyport, as well as one branch office in Salisbury. Its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund ("DIF") of the Depositors Insurance Fund for amounts in excess of the FDIC's insurance limits.

Ipswich is a state-chartered co-operative bank in mutual form. As of December 31, 2006, it had total assets of $240.2 million. Ipswich operates its main office and its only branch office in Ipswich. Ipswich also has an authorized but unopened branch office to be located in Rowley. Ipswich's deposits are insured by the FDIC and the Share Insurance Fund ("SIF") of The Co-operative Central Bank for amounts 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 de minimis 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. The communities in the CRA Assessment Areas for the merging banks are different. However, although those communities are in neighboring municipalities in Essex County and each bank makes loans and takes deposits from both CRA Assessment Areas. Moreover, Institution for Savings and Ipswich do not have any banking offices located in the same city or town. Additionally, it is noted that there are approximately twenty-five banking offices of other banks located in the combined CRA Assessment Areas of the merging banks. Therefore, customers will be able to choose from a variety of banking options. 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 Trustees will consist of all of the persons serving as trustees of Institution for Savings and directors of Ipswich. The management of the combined bank is also detailed in the application documents. The applicant bank argues that the combined institution will produce some financial economies and additional service capabilities. 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, Institution for Savings 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. It is the intent of the continuing bank to offer all of the products presently offered by Institution for Savings. These include a variety of types of loans, deposits, non-deposit products and related internet banking services. Institution for Savings believes that the products and services that it currently offers include all products and services currently available to customers of Ipswich. Customers also will benefit from the anticipated development of new products by the combined institution. 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 as set out in section 34A of said chapter 168 and section 26A of said chapter 170 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. In the application, the Petitioner has addressed this requirement of statute. The resulting bank intends to make available to customers of both banks the aforementioned products and services presently offered by Institution for Savings. Additionally, the continuing institution will have a larger lending limit, anticipates that it will develop new products and services and believes the merger will facilitate future job creation. Moreover, customers of both banks will have access to the banking offices of both banks including Ipswich's authorized but unopened branch office in Rowley, a facility which Institution for Savings is committed to opening. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval of the Petitioner's application.

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 state-chartered banks 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 Institution for Savings and Ipswich both received "Satisfactory" ratings in their most recent CRA performance examinations.

Upon review of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that the consummation of the proposed consolidation would be in the public interest. On the basis of these considerations and issues raised in the one comment received, approval is granted to merge Ipswich with and into Institution for Savings in Newburyport and its Vicinity under the charter, by-laws and name of Institution for Savings in Newburyport and its Vicinity under the provisions of said section 34A of chapter 168 and said section 26A of chapter 170 of the General Laws.

The approvals granted herein are subject to the following conditions:

  1. that the proposed merger shall not become effective until a Certificate signed by the Presidents and Clerks or other duly authorized officers of each bank indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34A and chapter 170, section 26A;
  2. that the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State;
  3. that the proposed merger be consummated within one year of the date of this Decision; and
  4. that the merger may not be consummated until the Division has received notice of satisfactory arrangements for this transaction from the DIF and the SIF.

April 12, 2007
_____________
Date


Steven L. Antonakes
____________________
Commissioner of Banks