The Community Bank plans to merge into Eastern Bank by the end of the year, furthering Eastern’s expansion into southeastern Massachusetts.
The Community Bank President and CEO John J. O’Connor told Banker & Tradesman this morning that in order to survive, the bank needed "a partner."
Finding one with "lots of capital and lots of resources" certainly helps too, and O’Connor said The Community Bank’s "culture is compatible with Eastern, and frankly we’ll be better off."
The Community Bank has five branches, including two in Brockton and one each in Bridgewater, Lakeville and Sandwich. As of June 30, it had $323.9 million in assets and $278.3 million in deposits.
The Community Bank reported a $5.3 million net loss in its 2011 end-of-year Federal Deposit Insurance Corp. call report. It reported charge-offs of $2.2 million and a $4.7 million allowance for loan and lease losses. By the end of 2011, the bank had lost $277,000 on the sale of other real estate owned property and $238,000 on the sale of other assets. The bank closed three branches last year in an effort to restructure.
Eastern Bank has $8 billion in assets and $6.5 billion in deposits. It has 1,700 employees, 94 branches and 22 Eastern Insurance offices.
"The Community Bank has a long, distinguished history of serving its communities, but in recent years the economy has taken its toll on the bank," said Eastern Bank Chairman and CEO Richard E. Holbrook in a statement.
"This partnership will enable The Community Bank to continue to meet the needs of its customers under the Eastern Bank brand, while enabling Eastern to better serve southeastern Massachusetts and the Cape," said Holbroke.
O’Connor became president and CEO of The Community Bank in July 2010 with a mission to assess the troubled bank’s needs and form a plan for its future.
"It’s been a difficult operating environment since late 2007," O’Connor said, "and we have had significant asset quality issues. That’s no secret." Slumping housing prices, decreased deposits, bottom-dwelling interest rates and an increased regulatory burden all but pushed The Community Bank toward a merger.
"Our concern was with the employees, the customers and the community. To move forward, we needed a partner, and we chose Eastern," O’Connor said.
O’Connor wouldn’t comment on how many other banks may have expressed interest in merging with The Community Bank, but said he has competed and interacted with Eastern for the last 30 years and was comfortable with the match.
He said the banks haven’t decided yet what will happen to all of The Community Bank’s employees. He said "there will be consolidation" of some administrative staff and he himself will "evaporate following the merger."
State and federal regulators as well as the corporators of both banks have not yet approved the deal.
No money exchanged hands in the deal. Eastern has been involved in similar mutual mergers before, absorbing Sharon Co-operative Bank in 2007 and Plymouth Savings Bank in 2005.
