Abington Bancorp’s recently announced acquisition of Massachusetts Fincorp came as a surprise to some analysts, not so much to others, but most seem to agree it’s a good fit.

Officials announced an agreement two weeks ago whereby Abington Bancorp – the holding company of Abington Savings Bank – will acquire Massachusetts Fincorp, parent company of Massachusetts Co-Operative Bank in Quincy, for $17.3 million.

Abington Bancorp has current assets of $770 million and Massachusetts Fincorp has total assets of $121 million.

“We just thought this made perfect sense,” said James P. McDonough, president, chairman and chief executive officer of Abington Bancorp.

“It provides us with the ability to grow into contiguous markets where we can offer a broader range of products and services to more consumers and small-business customers,” he said.

Abington will be taking over Massachusetts Co-op’s three branches in Boston, East Milton and Quincy. It will mark Abington’s entrance into the urban Boston market.

“It’s where the people are just like the people we find here in Abington – hard-working, Middle American – and those are the people who’ve really grabbed onto the value proposition that we offer, which is good personal service and no fees,” said McDonough.

George Darling of Newburyport-based Darling Consulting said the match seems to be a good one where both parties benefited. “Mass. Co-Op got a pretty good price and I think Abington got some critical mass,” he said. Additionally, Darling said, Abington will be able to take a lot of the cost out of the deal by combining data processing, auditing and marketing immediately. The deal is expected to be completed within six months.

“Many of them [employees] will be kept, particularly in the customer service areas, but there will be some reductions in the redundant administrative areas,” said McDonough.

Also departing will be Paul C. Green, the chairman and chief executive officer of Massachusetts Fincorp.

“Paul is not being offered employment at Abington, so he will not be coming over,” said Massachusetts Fincorp Treasurer Eric L. Pearson.

As for the status of Pearson himself, the matter has not yet been decided, he said, adding that Abington already has a treasurer. “But I have also heard, through Paul, that they have expressed interest in my services. I would certainly welcome the opportunity to go work with them. If I do not, so be it. Everything happens for a reason, and I will end up landing on my feet somewhere else,” said Pearson.

The only other person that has definitely secured a position at Abington, said Pearson, is Anthony A. Paciulli, the senior executive vice president in charge of retail and mortgage at Massachusetts Fincorp.

The fate of other officers and staff members has yet to be resolved. “We’ve had the broad-brush strokes [implying that] retail people will be staying, the mortgage originators will be staying, the mortgage sales people will be staying,” said Pearson. However, the issue should be resolved rather quickly.

“Abington has made a commitment that within 30 days of the announcement that they will sit down and interview as many people as possible and make decisions … That will allow them to go out and get another job if need be,” he said.

‘Tremendous Fit’

The transaction is valued at 160 percent of Massachusetts Fincorp’s book value per share at Dec. 31 and 19.9 times earnings per share of the bank for 2001.

The deal came together rather quickly – in under a month – said McDonough, when Massachusetts Fincorp approached Abington for a bid. Pearson said in early January, the bank had an unsolicited offer on the table by another bank for $24 per share, compared with Abington’s $30.

“We couldn’t ignore it so we said, ‘Well, if someone’s willing [to pay] $24, why don’t we put it out to bid to see if someone’s willing to pay more?,'” said Pearson.

But in addition to the great deal shareholders are getting – most of them are going to get more than $18 per share premium because most had bought into the company in the $10-to-$12 price range – there was another reason to choose Abington, Pearson said.

“More importantly, the other underlying reason why we chose Abington is it was a fit for our customers and our employees,” said Pearson, including the promise for minimal staff reductions and commitment to retail and mortgage banking.

“So that was a tremendous fit for us. Obviously we don’t want to see people losing their jobs … but more importantly, it’s going to keep our customers. They’re keeping the three branches so it will widen the network our customers now have,” he said.

Darling said the acquisition wasn’t much of a surprise to people in the business because it was known Massachusetts Fincorp had been for sale. “My sense is they just had a situation where they felt they took it as far as it could go and decided they’d be better off looking to see if they could get a good price,” said Darling.

Massachusetts Fincorp had been a mutual institution since 1908 until late 1998 when it went public. In 1999, it entered the Quincy market, where it now houses its corporate headquarters.

According to Pearson, Massachusetts Fincorp’s entrance into Quincy was a hard deal to pass up. “We bought [a property] with environmental issues that we’ve been dealing with. We’ve had to clean up, but that was part of the discount on the land and building,” he said. Both the land and the building were purchased for about $2 million instead of $3 million, which it otherwise would have sold for, said Pearson.

McDonough said Abington plans to do a lot more small-business lending in the three branches it has acquired. “We are very aggressive in the area of [Small Business Administration] lending and it’s something we bring to the table and are very excited about in these markets,” said McDonough.

When asked about future acquisitions, McDonough said, “I think in the next few years we’ll be growing within these markets we’ve acquired and continue to grow in the markets we’re already in …We’re not out looking for acquisitions, we’re looking for customers.”

Darling said it’s likely acquisitions will continue among community banks in the Boston area. “Whether it’s Abington or somebody else, [banks] are going to probably have to acquire to get the growth that they want, so there are going to be bigger and fewer banks. I think that’s an irreversible trend,” he said.

As for the climate, Darling said it depends on whether the offer fits the institution’s needs. “Every situation’s going to be different, but I can tell you that I think everybody out there is looking to see if there’s something that could be acquired that could help them increase their franchise value and their stockholder value,” he said, adding that if a bank is not looking to buy, it’s usually amenable to selling.

Reaction to the sale was fair, with Abington’s stock rising 30 cents to close April 10 at $17.80. As of the close of April 18, the stock was $18.75, a rise over last year’s figure on the same day of $13.25.