Meridian Interstate Bancorp Inc. in Boston said Monday it has agreed to acquire the struggling Mt. Washington Co-operative Bank in South Boston.
The deal is an unusual one: the $1.1 billion-asset Meridian has a mutual holding company structure, with a minority of its shares publicly held. Because Mt. Washington is a mutual, no money would change hands in the transaction.
Meridians East Boston Savings Bank would absorb Mt. Washington, which has $516 million of assets and seven offices in Suffolk County.
Trouble with asset quality has left Mt. Washington undercapitalized; it had a total risk-based capital ratio of 6.06% at March 31, down from 11.50% the year earlier, according to data from the Federal Deposit Insurance Corp.
Meridian said it would contribute capital to East Boston Savings following the merger, should the thrifts capital ratios dip below the regulatory minimums.
Absorbing Mt. Washington would increase deposits at East Boston Savings by 40%, to $1.2 billion. It would rank fifth in deposit market share for Suffolk, up from ninth, Meridian said.
The Mt. Washington branches would retain their own name, but operate as a division of East Boston Savings, which has a dozen branches of its own. None would be closed or consolidated.
Edward J. Merritt, Mt. Washingtons president and chief executive officer, would join East Boston Savings as president of the Mt. Washington division after the deal closes.
The closing is expected to occur by November.