By the Division of Banks

DECISION
RELATIVE TO THE MERGER OF
EAST BRIDGEWATER SAVINGS BANK, EAST BRIDGEWATER, MASSACHUSETTS
WITH AND INTO
BRIDGEWATER SAVINGS BANK, RAYNHAM, MASSACHUSETTS


Bridgewater Savings Bank ("Bridgewater" or the "Petitioner"), Raynham, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with East Bridgewater Savings Bank ("East Bridgewater"), East Bridgewater, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 167H, section 7, clause (2), as well as General Laws chapter 168, section 34, and under the terms of an Agreement and Plan of Merger dated as of October 9, 2009 (the "Agreement"). The Agreement provides for the merger of East Bridgewater with and into Bridgewater under the name, charter and by-laws of Bridgewater Savings Bank. The main office of Bridgewater would remain the main office of the continuing institution and the banking offices of East Bridgewater would be retained as branch offices. Bridgewater's parent is Bridgewater Financial, MHC, Raynham, Massachusetts, a mutual holding company. Although East Bridgewater is in mutual form and Bridgewater is in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) since Bridgewater Financial, MHC is a mutual holding company and Bridgewater is its subsidiary banking institution.

Notice of the bank merger application was posted as directed by the Division thereby affording opportunity for interested parties to submit comments. The period for filing comments has expired. The record of this transaction reflects that the Petitioner submitted supplemental filings on November 23, 2009 and December 8, 2009 concerning various matters and issues raised by the Division. The Division reviewed the application and all related documents in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage and net new benefits would be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and the Division's regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.

Bridgewater was chartered as a mutual savings bank in 1872 and reorganized into the mutual holding company form of organization in 2002. Accordingly, Bridgewater is the subsidiary banking institution in stock form of a mutual holding company, Bridgewater Financial, MHC. As of September 30, 2009, Bridgewater had total consolidated assets of approximately $397 million. In conjunction with its reorganization into a mutual holding company, Bridgewater received the approval of the Commonwealth's Board of Bank Incorporation to redesignate its main office from 14 Main Street, Bridgewater to 756 Orchard Street, Raynham, Massachusetts in December 2002. In addition to its main office in Raynham, Bridgewater operates two branch offices in Bridgewater, as well as four branch offices in Carver, Lakeville, Taunton and West Bridgewater. Bridgewater's deposits are insured to allowable limits by Federal Deposit Insurance Corporation (the "FDIC") and deposits in excess of those are insured in full by the Depositors Insurance Fund (the "DIF").

East Bridgewater was chartered as a mutual savings bank in 1870. As of September 30, 2009, East Bridgewater had total consolidated assets of approximately $138.4 million. In addition to its main office in East Bridgewater, East Bridgewater operates one branch office in Hanson and one branch office in Pembroke. East Bridgewater's deposits are insured to allowable limits by the FDIC and deposits in excess of those limits are insured by the DIF.

The merger application summarizes the primary service areas of both banks. The communities within Bridgewater's primary service area are Bridgewater, Carver, East Bridgewater, Easton, Lakeville, Middleboro, Raynham, Taunton, and West Bridgewater. The communities within East Bridgewater's primary service area are Bridgewater, East Bridgewater, Hanson and Pembroke. Both banks have broader CRA assessment areas.

Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. In analyzing the impact of a proposed transaction on banking competition, 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 negligible and deminimis increase in the HHI for the geographical areas analyzed according to the application. 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. As stated above, the communities in the primary service area for the merging banks are different. Although Bridgewater main office is located Raynham in Bristol County and Bridgewater and East Bridgewater are neighboring communities in the same county, Plymouth County, Bridgewater and East Bridgewater do not have any banking offices located in the same city or town. The Division also has noted that there are numerous banks with banking offices located in the combined primary service area of the merging banks. Therefore, customers of East Bridgewater will continue to be able to choose from a variety of banking options. Accordingly, the Division's analysis of the competitive impact of the merger does not preclude approval of the proposed transaction.

The application states that, in connection with the merger, the continuing institution's Board of Directors will consist of all of the persons currently serving as directors of Bridgewater and five directors of East Bridgewater. The management of the combined bank is also detailed in the application documents. Economies and service capabilities which would result from the transaction are set out in the submitted documents. Upon consolidation, the continuing bank will meet all required capital standards. Overall, financial and managerial considerations support the application.

As a result of the merger, Bridgewater 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 to customers of Bridgewater and East Bridgewater. In particular, customers of East Bridgewater will benefit from a variety of Bridgewater's products not currently available to them from East Bridgewater including telephone and internet banking products, internet bill pay, remote deposit capture products for commercial accounts, as well as fiduciary services through Bridgewater's trust department including individualized asset management services and trust and estate administration. 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 34 of said chapter 168 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 and a subsequent filing, the Petitioner has addressed this requirement of statute including capital investments. The continuing bank intends to make available to customers of both banks the products and services presently offered by both banks. Additionally, the continuing institution will have a larger lending limit and believes that the merger should facilitate future job creation. Moreover, customers of both banks will have access to the banking offices of both banks which will be enhanced by capital investments in the form of improvements to branch facilities. 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 CRA by the banks which are parties to this transaction. Such review for a state-chartered bank includes examination by personnel of 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. The Division has noted that Bridgewater received a "Satisfactory" rating on its most recent CRA performance examination. The Division is also aware that East Bridgewater received a "Needs to Improve" rating in its most recent CRA performance examination by the Federal Deposit Insurance Corporation. However, since this transaction is for the merger of East Bridgewater with and into Bridgewater and Bridgewater has received a "Satisfactory" rating in its most recent CRA performance examination, the Division believes that the continuing institution will be better positioned to meet the CRA needs of the communities currently served by East Bridgewater and Bridgewater.

Other matters related to this transaction were the subject of telephone conversations or written communications. Certain of these matters were resolved by the supplemental filings submitted November 23, 2009 and December, 8, 2009.

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 East Bridgewater with and into Bridgewater under the charter, by-laws and name of Bridgewater Savings Bank under the provisions of said clause (2) of section 7 of chapter 167H and said section 34 of chapter 168 of the General Laws.

The approval granted herein is 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 34 or other applicable statute 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.

December 14, 2009
_____________
Date


Steven L. Antonakes
____________________
Commissioner of Banks