First Savings Bank of Perkasie and First Federal of Bucks County have agreed to merge, forming a single, depositor-owned mutual savings bank with $1.8 billion in loans and other assets and 24 offices. Jeane Coyle, president of First Federal, will head the combined banks, which will have the second-largest branch network in the county, after Wells Fargo (check FDIC data here). First Savings boss Fred Schea plans to retire after the merger. They haven't decided on a new name.
Each company has 12 offices. Perkasie-based First Savings focuses on wealthy suburban central and upper Bucks, while First Federal is based in Bristol and covers blue-collar Lower Bucks. Since the branches serve different areas, the banks expect to keep all of them open; headquarters jobs will be combined.
"Being a mutual means we don't have to answer to stockholders. We answer only to our customers," said First Savings board chairman Bob Byers Jr in a statement. While First Federal remains an old-fashioned mutual, First Savings has set up a depositor-owned holding company, FSB Mutual Holdings Inc., that owns the bank and its insurance and investment affilaites. The banks will be part of the holding company.
Once a common form of neighborhood and small-town savings-and-loan institution, most former Pennsylvania mutuals have set up holding companies and eventually converted to stock ownership, enriching bank executives and other insiders and attracting takeover offers from larger out-of-town banks.
For example, Beneficial Bank, the largest bank still based in Philadelphia, has converted partly to stock ownership and plans to finish its conversion, giving insiders and depositors first crack at buying shares. Analysts expect that bank will attract merger offers from larger banks hoping to boost their Philadelphia-area presence.
"That won't happen here," First Savings CEO Schea told me. The by-laws won't allow it, for one thing, he added. "We didn't have to" merge, Schea said, adding that the banks will be stonger together.
While First Savings and First Federal have approved the deal, they still need permission from the Federal Reserve, the Pennsylvania Department of Banking and Securities, the Federal Deposit Insurance Corporation and the U.S. Treasury's Office of the Comptroller of the Currency. They hope to finish the deal by summer. First Federal chairman Bill Larkin Jr. says the combined banks "are excited about the growth opportunities this union presents."