A struggling mutual thrift in Massachusetts has given up its bid to stay independent and will instead merge with the state's largest financial institution.
The Community Bank, a $327 million-asset thrift in Brockton, announced Friday that it has struck a deal with Eastern Bank in Boston under which its branches, assets and deposits would be absorbed by Eastern.
Because both are mutual thrifts no money would change hands. The deal is expected to close by the end of this year.
The Community Bank has suffered steep losses over the last few years stemming from defaults on real estate loans, and its problem loans remain elevated. At March 31, more than 10% of its loans were at least 90 days past due, according to the Federal Deposit Insurance Corp.
The thrift last year brought in a new chief executive, John J. O'Connor 3rd, who put in a restructuring plan that included closing three branches.
"We made several important decisions that improved the bank's financial position," O'Connor said in a news release Friday. "In the end, however, it was clear that we needed a partner in order to meet the needs of our communities. With its financial strength and nearly 200-year history of serving Massachusetts, Eastern was by far the best choice for our customers."
Eastern is the largest bank or thrift based in the Bay State, with $8 billion of assets and 90 branches stretching from the New Hampshire border to Cape Cod. The company earned nearly $18 million in the first quarter and $84 million in 2011, according to the FDIC.
In a news release, Eastern Chairman and CEO Richard E. Holbrook said that Community Bank has a distinguished history of serving its communities, "but in recent years the economy has taken its toll on the bank. 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."
The merger with Community would be Eastern's fifth takeover of a mutual thrift over the last three decades and third since 2005. Last year it also acquired the $1.1 billion-asset Wainwright Bank & Trust in Boston.