Weymouth-based South Shore Savings Bank has gone through a variety of changes since it began doing business 170 years ago, and despite that long evolutionary period, the institution continues to adapt as it grows. Most recently, mergers, marketing and an increased focus on commercial clients have played a large part in the process.

South Shore Savings, originally chartered as a mutual savings bank in 1833, now operates 11 branches in Norfolk and Plymouth counties, and had approximately $760 million in total assets as of June 30, 2003.

But it was not until 1998 when the bank took on its current name and form following the merger of two mutual institutions, South Weymouth Savings Bank and Weymouth Savings Bank, doubling in size in the process.

“The smaller banks benefited greatly by the consolidation of big banks, and during that time we made the strategic decision to expand our marketplace … we enlarged our world as South Shore Savings Bank,” said John R. Boucher, president and chief operating officer of the bank and a bank employee since 1973. “One of the first things we did was open in a new office in Quincy and it became an immediate success – that gave us a signal that there was a big void in the city of Quincy so we opened a second office in Quincy. Those two banks alone generated in excess of $100 million in loan growth.”

Boucher’s partner, Arthur R. Connolly, said after opening the Quincy branches, the bank bought the deposits from a Cambridgeport Savings Bank supermarket branch and those deposits, plus the two new branches, helped the bank grow to double its assets.

“Based on the record of success, the mutual model works well and we are going to stick with this … it’s been exciting for us to be part of the bank,” said Connolly, chairman of the board and chief executive officer at SSSB.

Connelly joined the bank in 1966 when the institution had approximately $27 million in assets, and after Boucher joined in 1973, the two have formed a partnership that has lasted over 30 years and watched the bank grow to its current level of more than $750 million in assets.

According to both men, the success of the community bank has been a result of careful strategy and sound business decisions.

Last week, South Shore Savings Bank and Braintree-based Horizon Bank & Trust Co. announced a definitive merger agreement pursuant to which SSSB will acquire Horizon for $16.75 per share in cash, or aggregate cash consideration of about $20 million.

In accordance with Massachusetts’ banking laws and regulations, South Shore Savings Bank must reorganize into the mutual holding company structure to facilitate the merger. Initially, no shares of common stock will be sold to the public in the mutual holding company reorganization. The transaction is expected to be completed during the first quarter of 2004.

“We had many opportunities to take the company public, but we had no business reason to do it,” said Boucher of the bank’s decision to remain a mutual.

‘Good Neighbor’

And since the announcement of a new merger, leading to additional assets and increased revenue, the bank has beefed up its customer awareness initiatives and invested in more marketing and advertising to generate interest among individuals, small businesses and other commercial accounts.

While advertising does not come cheap, advertising on television during sports games and creating the easy to remember slogan, “Good Bank. Good Neighbor.” has helped the bank capture more market share on the South Shore, according to Connelly. The spots are running during Boston Red Sox baseball games.

According to a New England Sports Network spokesman, advertisers pay $6,000 for a 30-second in-game spot, and on average, a company advertises 2-3 times during a single game. While Citizens Bank is the only bank that has featured advertising during Red Sox games through NESN, South Shore Saving’s ads run on designated local cable spots during the games.

“The part of any viable business plan is dynamic advertising and a good marketing plan,” said Connelly. “For many years, we took deposits and made loans, and while that is still a big part of our bank plan, we promote our services aggressively in the media these days.”

But the real challenge for a bank to remain profitable is predicting the future trends in the industry, and Connelly and Boucher said their plans are to the lead the South Shore community banking industry by expanding their products and services while retaining the same personal attention to each customer.

“The [banking] industry has changed so much in the past 10 years,” said Boucher. “The industry has shrunk in half with the amount of banks in the past 10 years … we’re going to end up with two to three monstrous national banks that will just compete on a larger level, or we will soon have people in our marketplace that are national banks. In between that, you are going to have a couple of good strong regional banks that don’t see themselves as statewide organizations, and then there are the co-op banks and thrift banks … it will be increasingly difficult for the co-op and thrift banks to compete mainly because of compliance requirements to operate.”

Connelly said smaller banks would face heavy competition in the future because of increased legislative and regulatory compliance requirements and the need for technological advancements. In that sense, growth is a good business practice, making more resources available to deal with compliance issues.

“The real issue for smaller banks is dealing with the myriad and redundancy of legislative issues … and all the inherent requirements of Truth in Lending, Sarbanes-Oxley and the Community Reinvestment [Act]. Every one of these banks, ourselves included, have multiple regulators … [South Shore Savings] is blessed with the resources we can dedicate to compliance and, thankfully, we are able to departmentalize many of these functions. My hat goes off to the smaller banks that have made it work.”

But for South Shore Savings, the plan is to engage in new commercial business, a goal enhanced by the acquisition of Horizon.

“The new business has been to engage in the commercial banking industry. We brought in some bright and mature experienced lenders, we’ve built a retail investment capacity and we’ve continued to expand our ATM network and the increased lending [capabilities] has enabled us to roll up our sleeves and get involved in larger projects,” said Connelly.

Those projects include bank sponsorships in building shopping malls, golf courses, financing a number of office buildings, senior housing complexes, medical office buildings, affordable housing and conversion housing.

“This acquisition of Horizon is a perfect mix. They are exclusively a commercial bank for small business and that’s a natural tie-in for us,” said Boucher.

“The consolidation of our resources, including the human talent, which is the greatest of assets, and the combination with Horizon Bank allows us to do much more significantly larger deals and brings to our balance sheet $90 million in commercial loans and small business loans,” said Connelly. “We recently created a small-business operation, so this is a great opportunity for us to expand even quicker than our original plan called for. All these new services require aggressive marketing – ads and promotion – and that is what it is all about.”

Boucher said the bank’s game plan for now is to remain focused on the customer while at the same time adopting new business strategies to keep in step with evolving industry trends.

“Part of our game plan is having a philosophy, and that philosophy is being focused on the customer,” said Boucher. “The manner in which we handle the interface [with a customer] is critical.”

And part of that traditional interface with the customer involves Boucher and Connelly being at the customer’s disposal, something that ensures the institution keeps its community roots and separates SSSB from larger banks.

“John and I both answer our own phones,” said Connelly. “John and I have been blessed to work together for over 30 years and we have formed and forged a partnership where we share the common interest of our community and our bank and we are blessed to work with some terrific people. We play off each others strengths and weaknesses – we’ve been able to build a team between ourselves and expand that team throughout the company.”