Because their footprints don’t overlap, executives at Bristol County Savings Bank and Randolph Savings Bank say the merger of the two institutions makes sense.

When two mutual banks south of Boston announced last week they would merge, it didn’t come as a surprise to banking experts in the area. With increased competition across Massachusetts and regulatory compliance becoming more of an issue for small banks, merging is becoming a more attractive option to mutual banks.

“I think the [latest] merger is a trend that has been gathering steam for mutual banks in the last six to 12 months,” said William Kozak, president of WTK Assoc., a management consulting firm in Rockport.

Bristol County Savings Bank in Taunton and Randolph Savings Bank of Randolph announced last Wednesday that the two banks would merge and take the name Bristol County Savings Bank. The banks need state and federal regulatory approvals, and the votes of their corporators before the merger can go through, but it would create a mutual savings bank with assets over $1.4 billion and a footprint that extends from Randolph to Coventry, R.I. with 17 full-service branches, two educational branches, seven lending centers and 26 ATMs. The combined bank would be the sixth-largest mutual savings bank in the state.

The extension of the banks’ geographic reach was a big factor in the decision to merge, said Dennis Kelly, president and chief executive officer of Bristol Savings Bank. Ronald Grant, the president and CEO of Randolph Savings Bank, approached Kelly and asked if Bristol Savings Bank would be interested in merging.

“He had done his homework and he had a map that showed all our offices,” Kelly said.

There was no overlap; Bristol County’s 10 branches and Randolph’s seven were all in different locations, so all the branches will stay open.

“It made all the sense in the world,” Kelly said. “[Grant] was enthralled with what the new footprint would be.”

The combined capital base will be $180 million, another factor in the decision.

“A lot of the stuff seems to make sense,” Kelly said. “It pushes us years ahead of where we are now.”

The merger does appear to be a sound move for the two institutions, according to industry watchers.

“It seems to me it makes business sense,” said Stanley Ragalevsky, an attorney at the Boston-based law firm Kirkpatrick &Lockhart Nicholson Graham who specializes in the banking area.

Kozak, who has done consulting work for Randolph Savings Bank, agreed.

“It seems like a good fit from a geographic perspective,” he said.

Each of the banks has a branch in Rhode Island, so the merger expands their footprint there. And topping $1 billion in assets is a goal of many smaller banks.

“That’s certainly a size a lot of community banks aspire to,” Ragalevsky said.

That kind of size assures a bank’s ability to offer services at a premier level, he said.

Just a year ago, the thought of merging was not on the mind of most mutual bank executives. The merger of Randolph and Bristol is only the second in recent history in the Bay State; Mutual Federal of Whitman and Security Federal Savings Bank of Brockton announced in July they would merge. Several years ago, two holding companies of mutual banks in Western Massachusetts joined forces, but the practice of mutual banks merging has not been common.

That is probably about to change.

‘Strategic Options’
Leaders at many mutual banks are talking about merging these days, according to both Ragalevsky and Kozak.

“I think everyone is seriously reassessing their strategic options,” Kozak said.

The increased competition from national and regional banks and the increased difficulty and cost of regulatory compliance are pushing mutual banks toward the concept of merging.

“What that portends is that banks need to add additional size,” Kozak said.

Profitability is down, and the boards of mutual banks are having to make tough decisions, Ragalevsky said.

“Deposit growth is stagnant,” he said. “Size and scale do become an issue.”

He predicts that, in the next 18 months, the number of mutual banks merging could rival the numbers that have merged in the last 15 years. Most mutuals will not be able to wait long, either. With so many banks in talks to merge, the number of potential partners is decreasing.

For Bristol County Savings Bank and Randolph Savings Bank, the benefits will be many, the banks’ presidents say.

“This merger brings together two financially strong mutual savings banks that share a common commitment to their customers and communities,” Kelly said in a prepared statement. “By combining our substantial resources we will be in an even better position to serve our customers while also competing more effectively in a changing market.

“Geographically and philosophically this is a perfect match. We are a growing, full-service financial institution with a strong foundation in terms of resources, people, products and services serving both Massachusetts and Rhode Island.”

Kelly will serve as president and CEO after the merger, while Grant will become the executive vice president and serve on the board of directors.

“Combined, our two banks have over 300 years of community banking experience,” Grant said in a prepared statement. “We could not envision a better partner to insure that our customers will continue to be provided with the products and personal service that epitomize true community banking.”