By Patrick Donges
http://stream.publicbroadcasting.net/production/mp3/wamc/local-wamc-986171.mp3
Adams, MA – Board members and executives gathered at the town hall in Adams on Wednesday for an announcement of historic proportions; two of the county's oldest banking institutions are now ready to become one.
"The Adams Co-Operative Bank and South Adams Savings Bank have agreed to merge our two institutions to form a new community bank serving Berkshire County."
"Each of our institutions is strong on its own, faithfully serving customers since the 1800s, and together we'll be even stronger for future generations."
That was Joe Truskoswki, currently president and CEO of Adams Co-Operative, and slated to become president of the new bank, with South Adams Savings president and CEO Charles O'Brien to become the new bank's CEO.
The combined bank will consist of seven full-service offices across northern and central Berkshire County and combined assets of about $400 million. Here O'Brien answers the question of why now, in the midst of what some analysts are predicting will become a, "double-dip recession," is the right time for the merger.
"We really fully embrace a mutual charter, which means that we are owned by our depositors, not by stockholders."
"The fact is, at $200 million it's harder to maintain that charter, but at $400 million your chances of long term survival and continuing to serve the community are very much improved."
This merger is the second local banking deal announced this year; in July the long awaited merger between Berkshire Bank parent company Berkshire Hills Bancorp, Inc. and Legacy Bank parent Legacy Bancorp, Inc. was completed.
As a result of that merger, Berkshire Bank now holds more than $4 billion in assets with 60 branches in Massachusetts, New York and Vermont.
While that merger included the closure of branches to comply with federal regulations, the selling of branches to other institutions and some layoffs, Truskoswki said this latest merger would maintain the staff and branches currently in place at the two institutions.
"No jobs will be eliminated as a result of this merger; in fact there may be new opportunities for some of our staff for personal growth."
"Customers can expect to receive the same exceptional service from the people they have grown to know and trust at their local community bank."
While these types of local mergers may be good for community bankers, they may also be indicative of future financial trouble, that's according to State University of New York at Albany economics professor Adrian Masters.
"If you merge two banks then it gives people less choice, so sometimes it's bad for the consumers, but it might be good for the banks. The lack of competition could well slow progress."
Masters said that while some banks feel they need to merge in order to stay viable, others may be taking advantage of what he described as a lax regulatory climate that exists as a result of the down economy.
"The scary thing about these kinds of things, the kind of undercurrent to this is that organizations always have incentives to try and merge like that because they can increase their market power in any one location."
"Typically, not necessarily with small banks in the Berkshires, but with big organizations, there are anti-trust laws that prevent that from happening too much; but in a downturn like this we tend to turn a blind eye to those kinds of issues.
"So I think that those types of anti-trust regulations aren't being enforced as heavily as they might otherwise be which might well lead to problems down the road when we see that come companies are wielding too much power within any particular markets."
Masters said banking is among those industries hardest hit by the recession, and it was unclear at this point what a growing trend in local mergers may mean for the overall health of the U.S. economy.
For the Adams Co-Operative/South Adams Savings merger to be completed, the banks must now receive approval from their depositors and corperators, respectively, and from regulatory agencies. The merger is expected to be finalized by early next year.