Berkshire Bank, Pittsfield, Massachusetts (the "Petitioner" or "Berkshire") has applied to the Division of Banks (the "Division") for permission to merge with The Rome Savings Bank, Rome, New York ("Rome") pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D under the terms of an Agreement of Merger (the "Agreement"). The Agreement provides for the merger of Rome with and into Berkshire under the charter, by-laws and name of Berkshire Bank. The main office of Berkshire would remain the main office of the continuing institution. All of the banking offices of Rome will become branch offices of Berkshire. This transaction is part of a multi-step transaction which included an application before the Board of Bank Incorporation (the "Board") in which Berkshire Hills Bancorp, Inc., Pittsfield, Massachusetts will acquire Rome Bancorp, Inc., Rome, New York. Berkshire Hills Bancorp, Inc. is the holding company for the Petitioner and Rome Bancorp, Inc. is the holding company for Rome. The Board approved the holding company transaction in its Decision of this same date.
Notice of the application has been posted and published. The time period for interested persons to submit documents ended on March 11, 2011. The record of this transaction includes a supplemental filing submitted on January 21, 2011. The Division reviewed the application and all documents and materials related to this multi-step transaction in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage as well as net new benefits would be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.
Berkshire is a state-chartered stock savings bank. Berkshire was chartered as a mutual savings bank in 1846. It reorganized into a mutual holding company form of organization in 1996. The mutual holding company converted to a stock holding company in June of 2000. Berkshire Hills Bancorp, Inc. is a Delaware corporation, registered as a savings and loan holding company, and subject to the supervision of the Office of Thrift Supervision ("OTS"). The Dodd-Frank Wall Street Reform and Consumer Protection Act transfers the OTS's supervisory powers to the Office of the Comptroller of the Currency for federal savings associations and to the Federal Reserve for OTS holding companies such as Berkshire Hills Bancorp, Inc. in July of this year. As of December 31, 2010, Berkshire had total consolidated assets of approximately $2.8 billion. Berkshire operates approximately 42 branch offices serving communities in Western Massachusetts, Eastern New York and Vermont. Since Berkshire's initial entrance into New York in 2004, it has opened 11 other branches in the northeastern area of that state. Berkshire recently filed an application with the Division for approval to establish a branch office in Rotterdam, New York. Berkshire's deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation ("FDIC") and by the Depositors Insurance Fund ("DIF") for all amounts in excess of the allowable limits by the FDIC.
Rome was established as a New York state-chartered bank in 1851 and converted to a federally-chartered stock savings bank in 1999. Rome Bancorp, Inc., a savings and loan holding company and a Delaware corporation, was organized in 1999 as the stock holding company for The Rome Savings Bank, its sole bank subsidiary. Rome is presently regulated by the OTS. As of December 31, 2010, Rome had total assets of approximately $327.6 million. In addition to its main office in Rome, New York, Rome operates three other branch offices in Rome, as well as one branch office in New Hartford, New York. Rome's deposits are insured up to allowable limits by the FDIC.
The Petitioner has submitted information to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. It is the position of this Division to consider a transaction in light of its impact on the citizens, communities and banking structure in the Commonwealth on a community by community basis instead of by variously grouped markets. There are no communities within the Commonwealth or outside of the Commonwealth in which both banks maintain a banking office. Additionally, as stated in the supplemental filing, Berkshire and Rome do not derive loans and deposits from one another's service area in Massachusetts since Rome does not operate in Massachusetts. For these reasons and other factors, the Division finds that competition among banking institutions will not be unreasonably affected.
The Division has also considered the record of this application to determine whether public convenience and advantage will be promoted by this transaction. Under the proposed merger, the Petitioner states, it will be able to offer several products and services that have not currently been available to Rome customers. Such products and services include various benefits and life insurance products offered through Berkshire Hills Bancorp, Inc.'s wholly-owned subsidiary, Berkshire Insurance Group, Inc., as well as commercial cash management services including sweep accounts, remote deposit lockbox and electronic funds transfer services. Customers of both banks will also benefit from the larger lending limit available through the combined institution. Customers of Rome will benefit through a wider network of branches and ATMs which will increase with the addition of the 42 banking offices of Berkshire including twelve banking offices in New York, as well as several ATMs. The Division considered these reasons and others cited in the submitted documents in determining that public convenience and advantage will be promoted by approval of this transaction.
In determining whether or not to approve a petition under the statutory criteria, the Commissioner is also required to consider a showing of "net new benefits" related to the transaction. That term as set out in section 34D of said chapter 168 includes initial capital investments, job creation plans, consumer and business services and commitments to maintain and open branch offices, among other factors, which the Commissioner may deem necessary. The Petitioner has addressed this requirement of statute. As stated in the supplemental filing, the continuing bank anticipates that it will have a greater financial capacity to invest in technology, perhaps including initial capital investments in computer systems upgrades, as appropriate, for banking offices of the combined bank. It is also noted that Berkshire has an application pending for approval to establish a branch office in Rotterdam, New York. In testimony presented at the public hearing before the Board on February 16, 2011, Berkshire Hills Bancorp, Inc. indicated that growth in the size of Berkshire should lead to future growth in staff levels at the continuing bank including at its Pittsfield headquarters, notwithstanding an anticipated immediate reduction of staff levels in connection with the merger, if approved. The Petitioner intends to maintain all of the banking offices of Rome. Berkshire, with its stronger financial capacity as a combined bank may, in the future, apply to establish additional branch offices. Moreover, customers of both banks will benefit from a broad array of products and services including the aforementioned products and services of Berkshire. These and other factors are also cited as support for meeting such criteria.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are parties to this transaction. Such a review for a state-chartered bank includes examination by personnel of the Division as well as analysis of concerns received by the bank's community and its response to those concerns fairly raised. For other institutions, the Division looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. The Division has noted that Berkshire has a "High Satisfactory" rating in its most recent examination of performance under CRA by the Division. The Division has noted that Rome has a "Satisfactory" rating at its most recent examination conducted by the OTS.
The application states that, in connection with the merger, the continuing institution's Board of Directors and executive officers will consist of all of the persons currently serving as directors and executive officers of Berkshire. Economies and service capabilities which would result from the transaction are set out in the submitted documents. After consolidation, the continuing bank will meet all required capital standards. Accordingly, financial and managerial considerations support the application.
Upon review of the record of this application with reference to the relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of the proposed merger would be in the public interest. On the basis of these considerations, approval is granted for The Rome Savings Bank to merge with and into Berkshire Bank under the charter, by-laws and name of Berkshire Bank pursuant to Massachusetts General Laws chapter 168, section 34D.
The approval granted herein is subject to the following conditions:
(1) that the merger of The Rome Savings Bank and Berkshire Bank shall not become effective until a Certificate signed by the Presidents and Clerks or other duly authorized officers of the banks involved in the merger indicating that each such institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34D has been returned;
(2) that the proposed transaction shall not become effective until Articles of Merger are filed with the Secretary of State;
(3) that the proposed merger shall be consummated within one year of the date of this decision.
Dated at Boston, Massachusetts, this 28th day of March, 2011
By: David J. Cotney