A pair of Massachusetts community banks have come up with an innovative merger.

In the unusual transaction, Co-operative Bank of Concord will create a holding company to buy Bank of Braintree, but maintain it as a separate subsidiary. The new company will transfer Co-operative's seven-branch, $290 million-deposit South Shore operations to Braintree, more than doubling its size and making it the larger of the two units.

The merger will increase Braintree's assets to $570 million from $202 million, while reducing Co-operative's assets to $400 million from $780 million.

Under the deal, Co-operative and Braintree shareholders will receive one share of the new holding company's stock for each of their own shares in a tax-free transaction.

"We think for a community bank such as Braintree and lots of other community banks out there, this is an interesting structure for them to look at," said Halle J. Benett, vice president of Ryan Beck & Co., which advised Braintree in the transaction. He called the deal an "acquisition of equals."

The deal will give Braintree 10 branches in Norfolk and Plymouth counties, plus $465 million in deposits and $360 million in loans.

Co-operative will have nine Middlesex County branches, with $310 million in deposits and $259 million in loans.

The new holding company, with $982 million in assets and $773 million in deposits, will be based in Acton, Mass., Co-operative's home.

Both banks will retain separate management, with current officials remaining at their posts.

"Part of the hesitation of a transaction is the loss of the community banking identity," Mr. Benett said. "Braintree will not only maintain its name, its board, and its management, but it will be larger and better able to serve its community."

Bank officials plan to save $1.4 million by centralizing certain functions. They expect the deal to be accretive to earnings in 1996. The two banks will take a total of $1.7 million in one-time charges just before the deal closes at yearend.

As part of the agreement, Braintree granted Co-operative an option to buy up to 19.9% of Braintree stock at $12 per share if the deal is blocked, effectively giving Co-operative a stakeout on Braintree.

The deal is subject to stockholder and regulatory approval.

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