By the Division of Banks

IN THE MATTER OF THE MERGER OF
MARTHA'S VINEYARD CO-OPERATIVE BANK
VINEYARD HAVEN, MASSACHUSETTS
WITH AND INTO
DUKES COUNTY SAVINGS BANK, EDGARTOWN, MASSACHUSETTS


Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A and chapter 170, section 26A, Dukes County Savings Bank (the "Petitioner"), Edgartown, Massachusetts has applied to the Division of Banks (the "Division") to merge with Martha's Vineyard Co-operative Bank, Vineyard Haven, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of May 31, 2007, Martha's Vineyard Co-operative Bank will merge with and into Dukes County Savings Bank under the charter and by-laws of Dukes County Savings Bank and name of Martha's Vineyard Savings Bank. The main office of Dukes County Savings Bank would remain the main office of the continuing institution and all of the banking offices of both banks would be retained with the exception of the branch office of Dukes County Savings Bank, located at Vineyard Haven State Road and Indian Road, West Tisbury, which would be closed.

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 prospect of the combined institution 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.

Dukes County Savings Bank is a state-chartered savings bank in mutual form. As of March 31, 2007, it had total assets of approximately $294.6 million. The main office of Dukes County Savings Bank is located in Edgartown, Massachusetts. Additionally, Dukes County Savings Bank operates a branch office also in Edgartown, as well as four other branch offices in Chilmark, Oak Bluffs, West Tisbury and Vineyard Haven. All of its banking offices are located on the island of Martha's Vineyard. The deposits of Duke's County Savings Bank are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund ("DIF") of the Depositors Insurance Fund for deposits in excess of the FDIC's insurance limits.

Martha's Vineyard Co-operative Bank is a state-chartered co-operative bank in mutual form. As of March 31, 2007, it had total assets of $159.9 million. The main office of Martha's Vineyard Co-operative Bank is located in Vineyard Haven. Martha's Vineyard Co-operative Bank has a branch office in Oak Bluffs, as well as a branch office in West Tisbury. All of its banking offices are located on the island of Martha's Vineyard. Martha's Vineyard's deposits are insured by the FDIC and the Share Insurance Fund ("SIF") of The Co-operative Central Bank for deposits in excess of the FDIC's insurance limits.

The merging banks describe their primary service area as the Martha's Vineyard/Buzzards Bay Market. The communities within this market are the communities on the island of Martha's Vineyard, as well as Hyannis and Falmouth. It is noted that the island of Martha's Vineyard has a very close nexus with the off-island Cape Cod communities of Hyannis and Falmouth because of their geographic proximity, as well as the frequent ferry service from that island to Hyannis and Falmouth, daily air travel from that island to Hyannis and related factors providing daily opportunities for residents of the island of Martha's Vineyard to avail themselves of work, school and other necessities they may obtain from those off-island communities. Also, as described in the application, such travel from the island of Martha's Vineyard to Hyannis and Falmouth provides opportunities for shopping, as well as the receipt of healthcare, financial, legal and other services for both consumer and business purposes. Consequently, such frequent off-island travel has resulted in banking relationships other than with those institutions on the island of Martha's Vineyard. The combined bank's primary service area will continue to be the Martha's Vineyard/Buzzard's Bay Market.

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, the HHI calculations do not indicate that the proposed transaction will result in an undue concentration of banking resources even though Dukes County Savings Bank has the 3 rd largest market share and Martha's Vineyard Cooperative Bank has the 7 th largest market share of deposits in the Martha's Vineyard/Buzzards Bay Market, according to the FDIC Summary of Deposits Market Share, as of June 30, 2006. According to the Petitioner, the Martha's Vineyard area is the heaviest banked area in New England with one bank branch for every 353 households. Although both Dukes County Savings Bank and Martha's Vineyard Co-operative Bank operate all of their banking offices on the island of Martha's Vineyard, it is noted that there are five banking offices of a federal savings bank and four banking offices of a national bank located on that island. Additionally, several mortgage companies and other non-depository financial institutions have offices on the island of Martha's Vineyard. Also noted are the approximately twenty-six banking offices of competing banks located in Hyannis and Falmouth including banking offices of savings banks, co-operative banks, trust companies, national banks and federal savings banks. Therefore, customers will be able to continue to choose and have chosen from a variety of banking options, both on the island of Martha's Vineyard and the off-island communities of Hyannis and Falmouth. Accordingly, the review of the transaction's impact on competition does not raise concerns which would preclude its approval.

The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. As the continuing bank, Dukes County Savings Bank plans to offer the products and services of both banks including Dukes County Savings Bank's broad range of deposit and credit products as well as other financial services. Trust and investment management services are identified in the application as products and services currently offered by Dukes County Savings Bank to its customers that are not presently available to customers of Martha's Vineyard Co-operative Bank. In addition, the combined institution's lending limits will be higher than either bank's lending limit.

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. As stated in the application, the resulting bank intends to make initial capital investments related to new signage, documentation, brochures and supplies using the proposed new name of the continuing bank, "Martha's Vineyard Savings Bank." Additionally, Dukes County Savings Banks intends to invest in bank premises improvements and offer employment to the employees of Martha's Vineyard Co-operative Bank. It is also anticipated that the combined bank will offer such additional services as insurance and financial planning, as well as expanded on-line banking capabilities and new and enhanced financial software packages. Moreover, customers of both banks will have access to the banking offices of both banks.

One other aspect of this transaction is the proposed closing of the branch office of Dukes County Savings bank located in West Tisbury. In deciding upon an application to close a branch office, the Division must consider applicable statutory factors relative to the potential adverse effect, if any, of the closing on the area served by the branch office. Two such factors, among others, to be considered are the availability of credit and the convenience and necessity of deposit services. The later factor weighs in the combined bank's favor based on the proposed maintenance of the West Tisbury branch office of Martha's Vineyard Co-operative Bank. Additionally, it is noted that the West Tisbury branch offices of the merging bank are less than 200 yards away from each other. This transaction will promote convenience of services to its customers since the continuing bank will be able to conduct its banking operations more efficiently from just one banking office in West Tisbury. Also noted are the approximately twenty banks with locations on the island Martha's Vineyard or in the Falmouth/Hyannis area. Based upon these factors, the Division determines that the area served by the banking office at Vineyard Haven State Road and Indian Road, West Tisbury will not be adversely affected by the closing of that office after the merger, if approved.

Based on the totality of the reasons discussed and others cited in the submitted documents, the Division has determined that public convenience and advantage including net new benefits will be promoted by approval of this transaction.

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 Dukes County Savings Bank and Martha's Vineyard Co-operative Bank both received ratings of "Outstanding" in the most recent examinations of their performances under CRA.

The application notes that the continuing institution's Board of Directors will consist of the non-officer directors of Martha's Vineyard Co-operative Bank and all of the directors of Dukes County Savings Bank immediately prior to the consummation of the merger. 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.

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, approval is granted to merge Martha's Vineyard Co-operative Bank with and into Dukes County Savings Bank under the charter and by-laws of Dukes County Savings Bank and name of Martha's Vineyard Savings Bank pursuant to the provisions of said section 34A of chapter 168 and said section 26A of chapter 170 of the General Laws. In accordance with General Laws chapter 167C, section 3, approval is also granted for the closing of the West Tisbury branch office of Dukes County Saving Bank which, according to the application, is to occur shortly after the consummation of the merger.

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.

October 12, 2007
_____________
Date


Steven L. Antonakes
____________________
Commissioner of Banks