A Massachusetts savings bank is forming a holding company for the second time in nine years. But this time, officials say, they see more use for it.

Officials of $1 billion-asset Medford Bank now say they're planning to take advantage of some of the benefits of the holding company structure. That's a departure from 1993, when Medford dissolved its holding company because officials saw no strategic advantage or cost savings in keeping it intact.

"We believe that it can add flexibility to an acquisition strategy," said Arthur H. Meehan, chairman and chief executive officer. "We'll be in a position, if we choose, to consider a purchase of our own stock." He added that he is not in acquisition talks.

Like Medford, many small banks and thrifts nationwide are reexamining the holding company structure and recognizing its benefits. Experts say growing numbers are taking the same step as Medford, but for the first time.

In this era of consolidation, the holding company structure has become increasingly important for community banks that want to acquire other banks to grow, said Thomas E. Hitselberger, managing director of Professional Consulting Associates, a Timonium, Md., firm that specializes in banks.

Using a holding company, a community bank can buy another small bank but operate it as a subsidiary-with its image intact.

"You can do it without changing the bank's name," Mr. Hitselberger said. "It's important for a bank's identity."

Setting up a holding company now, even if there are no immediate plans to use it, can help a bank take advantage of future opportunities. "It seems like when something becomes available those things happen very quickly," said Greg Benson, president of First Bank of Bayport, Minn. "We wouldn't be in the game if we didn't have a holding company in place."

In addition to helping with acquisitions, holding companies also offer benefits including the ability to repurchase stock and to create subsidiaries in related fields, such as mortgage banking or even insurance.

"There's no downside to them," said Jeffrey C. Gerrish, a Memphis attorney who helps banks form holding companies. It's just lack of knowledge that his kept many banks from doing so, said Mr. Gerrish, a partner at Gerrish & McCreary.

Also, noted John Carusone, president of the Bank Analysis Center in Hartford, Conn., holding companies carry extra costs and regulatory burdens. Forming one cost $103 million-asset First Bank of Bayport about $35,000 and could cost other banks even more.

There are also ongoing costs, Mr. Carusone pointed out-for example, multiple sets of books and boards of directors.

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