In the matter of the merger of East Bridgewater Co-Operative Bank, East Bridgewater, Massachusetts with and into South Shore Co-Operative Bank, Weymouth, Massachusetts

By the Division of Banks

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Pursuant to the provisions of Massachusetts General Laws chapter 170, section 25, South Shore Co-operative Bank ("South Shore" or the "Petitioner"), Weymouth, Massachusetts seeks approval to merge with East Bridgewater Co-operative Bank ("East Bridgewater"), East Bridgewater, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of May 7, 1999, East Bridgewater will merge with and into South Shore under the charter, by-laws and name of South Shore Co-operative Bank. The sole banking office of East Bridgewater will become a branch office of the continuing bank.

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.

South Shore is a state-chartered co-operative bank in mutual form. As of March 31, 1999, it had total assets of approximately $76.2 million. South Shore's main office is located in Weymouth. It has an approved but unopened branch office located in Quincy. It has two subsidiaries, South Shore Community Development Corporation and South Shore Security Corporation.

East Bridgewater is a state-chartered co-operative bank also in mutual form. As of March 31, 1999, it had total assets of $11.4 million. Its sole banking office is located in East Bridgewater. East Bridgewater has no subsidiaries.

South Shore identifies its primary service area as Weymouth and Quincy, the communities covering its main office and approved but unopened branch office. Additionally, South Shore includes in its primary service area these two communities and twenty-two adjoining communities, fifteen in Plymouth County and seven in Norfolk County, as specified in its CRA assessment area, an area located within the Boston Banking Market. Similarly, East Bridgewater's primary service area covers the location of its sole banking office, East Bridgewater, a town in Plymouth County also located within the Boston Banking Market. The combined bank's primary service area will continue to cover the communities where its banking facilities are located and others specified in its CRA assessment area.

Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Although East Bridgewater borders one of the communities in South Shore's primary service area, there is no city or town in which both banks maintain a banking office. Moreover, some of the petitioner's analysis on this issue of competition is detailed according to various tests relative to the size of each institution and its competitors within delineated markets used by federal agencies. That analysis demonstrates that consummation of the transaction will not result in undue concentration of banking resources in the Boston Banking Market, a large unconcentrated and competitive financial market. Additionally, the amount of deposit and loan activity from the other bank's service area for both banks appears to be minimal. Accordingly, the review of the transaction's impact on competition does not raise any concerns which would preclude its approval.

The application notes that the continuing institution's Board of Directors will consist of all of the persons occupying such positions with South Shore 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 economies and service capabilities. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.

The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. The application documents provide examples of the benefits which will result from the merger. The continuing bank will have an extended branch office network. In particular, customers of East Bridgewater will have access to banking offices in Weymouth and Quincy. Additionally, customers of South Shore will now have access to a banking office in East Bridgewater. Moreover, there are some products and services currently offered by South Shore to its customers that are not presently available to customers of East Bridgewater. As described in the application, such services include some types of commercial loans, "totally free" checking accounts, Money Market Deposit checking accounts, Treasury Tax and Loan deposits, safe deposit boxes, telephone banking and access to an ATM network. 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 25 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. The applicant bank has addressed this requirement of statute. As stated in the application, the resulting bank will retain all employees of East Bridgewater and East Bridgewater's sole banking office, a facility which may benefit from future improvements planned by the Petitioner. It is also noted that the merger would enable the continuing bank to expand both bank's efforts to meet customer and community credit needs.

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 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 South Shore and East Bridgewater each received a rating of "Satisfactory" in the most recent examinations of their performances under CRA. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval of the Petitioner's application.

As part of the review of this transaction, the continuing bank's year 2000 ("Y2K") readiness and compliance efforts were considered. The Division specifically requested information on this matter from the Petitioner. That analysis by the Division does not preclude approval of this transaction.

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 South Shore under the charter, by-laws and name of South Shore Co-operative Bank pursuant to the provisions of said section 25 of chapter 170 of the General Laws. In accordance with General Laws chapter 167C, section 3, approval is also granted for the continuing bank to maintain the sole banking office of East Bridgewater as a branch office.

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 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 be consummated within one year of the date of this Decision.

July 14, 1999 Date

Thomas J. Curry Commissioner of Banks