PEABODY — North Shore Bank and Saugusbank said yesterday they have agreed to merge in a deal that combines 11 branches and $675 million in assets under the North Shore Bank name.
Saugusbank employees and directors will join those of North Shore Bank, for a total of 150 employees. Heads of both banks said there will be no layoffs or downsizing.
Officials at both banks said the deal brings together two community-oriented banks, giving the new, larger bank the opportunity to expand. The territories of both banks do not overlap.
“Together, we are greater than the sum of our parts,” said North Shore Bank President and CEO David LaFlamme.
“We can do more together than either of us can do individually,” said Saugusbank President and CEO Kevin Tierney Sr. The bank presidents said in a statement they anticipate the merger to be “a seamless transition.”
The deal did not come with any financial terms, making the agreement unique, LaFlamme said.
“There is no real money changing hands,” he said.
North Shore Bank, which has a focus on commercial lending, was established in 1888 as Peabody Cooperative Bank. It has eight branches in Beverly, Danvers, Middleton, Peabody and Salem and assets of about $475 million. Saugusbank, founded in 1911, has three branches and a loan center in Saugus with more than $200 million in assets.
“For banks to stay strong in this day and age, they have to grow their assets,” said Robert Bradford, president of the North Shore Chamber of Commerce, who viewed the deal as a positive move.
The merger will give current customers more places to bank and a larger network of ATMs, along with commercial lending services. LaFlamme said the directors of both banks are committed to the communities where the banks serve.
This merger is one of several in recent years — Beverly National Bank and Danversbank in 2010, then Danversbank and People’s United Bank in 2011 — that have reduced the number of local banks based on the North Shore.
LaFlamme said this transaction is different from one involving stock-based banks because it preserves a bank that is local to the North Shore.
Bradford said both LaFlamme and Tierney have deep local ties and are community leaders.
“We are just delighted that North Shore Bank and Saugusbank will be staying on the North Shore,” he said.
LaFlamme, a Newburyport resident, is past chairman of the North Shore Chamber of Commerce and serves as chairman of the board of Anna Jaques Hospital in Newburyport. Tierney is the past president of the Essex National Heritage Area Commission, Bradford said. Tierney was raised in Peabody and lives in Danvers, he said.
Tierney said this bank merger involved two banking institutions that are both mutual, compatible and have similar philosophies.
“To be able to grow our business base, we have to grow geographically,” said Tierney, who said the bank looked at opening branches elsewhere, but prime retail locations proved to have a lot of competition for them. The merger with North Shore Bank provided a way to grow.
The North Shore Bank name “more accurately reflects the market we serve,” Tierney said.
Saugusbank began to attract business outside of Saugus when it opened a branch on Route 1 seven years ago, Tierney said.
Over the next several months, the banks will merge into one, which will maintain a co-operative bank status. LaFlamme’s new title will be CEO of North Shore Bank and its parent holding company, North Shore Bancorp. Saugusbank’s Tierney will become the president and chief operating officer of both the bank and the bank holding company.
LaFlamme said that in a difficult economic climate, so-called “organic growth,” where the bank grows naturally, can be difficult.
“Size is important in this environment,” LaFlamme said. Banks are dealing with an increasing regulatory environment, and it can be expensive to meet these new banking rules.
Staff writer Ethan Forman can be reached at 978-338-2673, by email at firstname.lastname@example.org or on Twitter at @DanverSalemNews.