Editorial
A sensible combination
Posted June 7, 2007
Business mergers and acquisitions are common enough these days. They occur for a variety of reasons. Some for instances: to extinguish competition, to rescue a promising but troubled business, to expand the acquirer's reach into the marketplace, to give a private equity group a chance to reshape and then resell a company, to relieve a company of a business unit that no longer seems integral to the parent's changing objectives.
Rare, however, is the merger that combines sound business justifications, a near perfect congruence of business objectives, and an authentic determination to match the merged entity's business goals with the particular needs of its local market. Happily, the combination, announced Tuesday, of Martha's Vineyard Co-operative Bank and Dukes County Savings Bank appears to be just such an unusual business event.
The pluses. Here are two community institutions on which Islanders have depended for years, perfectly tuned to the changing nature of the Vineyard community, and knitted by long association into the Island's business and residential fabric. By their combination, they will strengthen themselves, ensuring that for the foreseeable future, Islanders will be able to rely on modern, expanding banking services delivered by neighbors steeped in an understanding of this community and its needs. The merged bank, to be known as Martha's Vineyard Savings Bank, will be more powerful financially, able to compete to offer services that some Islanders have been increasingly inclined to look for off-Island or online. The $460 million in assets - in bank accounting, assets are loans - on the balance sheet of Martha's Vineyard Savings will give the new entity a broader, sturdier platform on which to expand business and residential lending. In addition, though no efficiencies were discussed in the press statement or press conference announcing the merger, there will certainly be savings realized by the merged banks, and those savings will further strengthen the new bank.
Drawbacks. Well, yes, two familiar, like-minded banks will become one, so for Islanders, a choice and some variety is eliminated. The efficiencies which will certainly be reaped by the new bank will result in some dislocation and perhaps job losses over time, though the strengthened bank, as it grows, will likely offset such changes. Though the new bank will be significantly bigger than either of its business components, it will not be a banking juggernaut, and online banking as well as impersonal banking services offered electronically by national and even international institutions will continue to put competitive pressure on even medium-sized institutions. That's a struggle for the new bank, not necessarily a disadvantage for Islanders.
But, while it's not possible for Islanders to understand, relate to, or assess most national and international bank mergers and acquisitions, the combination of Dukes and MV Co-op is something we can understand and appreciate. When Richard Leonard, president of the Co-op bank says, as he did this week, "This merger is a terrific opportunity that also makes tremendous sense. It brings together two financially strong and deeply-rooted Island banks that share a common mission supported by consistent community values," Vineyarders understand that this is an accurate and authentic description of the nature of this transaction.
Christopher Wells, president of Dukes County Savings Bank and destined to be president of Martha's Vineyard Savings, is less familiar to Islanders than Mr. Leonard, but he and Mr. Leonard, and the boards of the two banks, appear to see the combination in similar terms, as a deal that makes business and community sense in a tumultuous, fast-moving, and increasingly competitive economic climate.
