By the Division of Banks


DECISION
RELATIVE TO THE MERGER OF
BARRE SAVINGS BANK, BARRE, MASSACHUSETTS
WITH AND INTO
FIDELITY CO-OPERATIVE BANK, FITCHBURG, MASSACHUSETTS


Fidelity Co-operative Bank (Petitioner or Fidelity), Fitchburg, Massachusetts has applied to the Division of Banks (Division) to merge with Barre Savings Bank, (Barre), Barre, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 167H, section 7, clause 2, as well as Massachusetts General Laws chapter 167I, section 4.  Under the terms of the Agreement and Plan of Merger (Merger Agreement) dated as of August 24, 2015, Barre will merge with and into Fidelity under the charter, by-laws and name of Fidelity (Continuing Institution).  All of the banking offices of Barre will be retained after the merger.   Life Design Holding Company is the stock holding company for Fidelity.  Life Design Holding Company’s parent is Fidelity Mutual Holding Company (Parent).   Although Barre is in mutual form and Fidelity is in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) since Parent is a mutual holding company and Fidelity is its subsidiary banking institution.

Notice of the Petitioner’s application was posted and published as directed by the Division thereby affording opportunity for interested parties to submit comments.  The period for filing comments has expired.  Accordingly, all documents and materials related to this transaction have been reviewed.  The Division reviewed the application and supplementary materials 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.  Both banks’ records of performance under the Commonwealth’s Community Reinvestment Act (CRA), Massachusetts General Laws chapter 167, section 14 and the Division's regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.

Fidelity was chartered as a Massachusetts mutual co-operative bank in 1888.  It reorganized into the mutual holding company form of organization in 2006 after receiving the required approvals from the Division and the Massachusetts Board of Bank Incorporation.  As mentioned above, Fidelity is a wholly-owned subsidiary of Life Design Holding Company, a Massachusetts corporation, which is a wholly-owned subsidiary of Fidelity Mutual Holding Company, a Massachusetts mutual holding company.  As of December 31, 2015, Fidelity had total assets of approximately $622.3 million and total deposits of approximately $519.6 million.  In addition to its main office in Fitchburg, Massachusetts, Fidelity operates six full-service branch offices in Gardner, Leominster, Millbury and Worcester in Worcester County, and in Shirley in Middlesex County.   Fidelity has eight wholly-owned subsidiaries, FDB Security Corporation, Inc., Shirley Securities Inc., Exchange Parking Series LLC, Exchange Authority LLC, Nashaway Realty LLC, M3S LLC, Hayes-Barrett Investments LLC and Hayes-Barrett Insurance LLC.   Fidelity’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC) and amounts in excess of FDIC insurance are insured by the Share Insurance Fund of The Co-operative Central Bank.

Barre is a Massachusetts mutual savings bank that was chartered in 1869.  As of December 31, 2015, it had total assets of approximately $149.7 million and total deposits of approximately $120.3 million.  In addition to its main office in Barre, Barre also operates also operates two branch offices in Princeton and Paxton, Massachusetts. Barre has two wholly-owned subsidiaries, Barre S.B. Investment Corp. and Barre S.B. Corporation. Barre’s deposits are insured up to allowable limits by the FDIC and by the Depositors Insurance Fund for amounts in excess of the FDIC’s insurance limits.

Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction.  In analyzing the impact of a proposed transaction on banking competition, the Division considers, but does not rely exclusively upon, the guidelines used by federal authorities to review bank mergers.  Essentially, these guidelines define relevant markets and measure concentration, which is considered an important indicator of competitiveness.  The starting point in the federal analysis is the Herfindahl-Hirschman Index (HHI), an arithmetic measure of market concentration that synthesizes the distribution of market shares and the number of banks in an affected market into a single value.  In this case, there will be a negligible impact on the HHI for the geographical areas analyzed.  In addition to that analysis, the Division considers the competitive impact of the proposed transaction on a community-by-community basis, as well as on the overall banking structure of the Commonwealth.  There is no city or town in which both banks maintain a banking office, even though both banks operate several banking offices in Worcester County.  Accordingly, the review of the transaction’s impact on competition does not raise concerns which would preclude its approval.

The Division has also considered the record of this application to determine whether public convenience and advantage will be promoted.  Under the proposed merger, the Petitioner states it does not expect to eliminate or reduce any of the products, services or delivery channels currently operated by either Bank.    The Petitioner also states that the Continuing Institution will be able to offer a broader array of products and services with more robust features than those currently available to Barre customers.  These products include enhanced business cash management services, business and consumer insurance and Fidelity’s “LifeDesign Banking” approach.  Additionally, customers of both banks will benefit from the larger lending limit available through the combined institution and through an expanded network of banking offices.  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 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.  The Continuing Institution intends to make initial capital investments of approximately $29,000 in branch improvements and new signage.  In addressing the effect of the transaction on Barre’s employees, the Petitioner noted that while there will be some staff reductions after a transition period, it is anticipated that future job creation would result from the Continuing Institution’s expanded operations going forward.  As described above, customers of both banks will benefit from a broader array of products and services to be offered by the combined bank than those which were previously offered by the two banks independently.  Accordingly, the Division has reviewed factors related to public convenience and advantage, as well as net new benefits, and has determined that they are consistent with approval of the Petitioner's application.

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 review for state-chartered banks includes examination by personnel of the Division as well as analysis of concerns received from the bank's community and its response to those concerns fairly raised.  A publicly available descriptive rating and evaluation by a federal bank regulatory agency will also be considered.  Fidelity received a “Satisfactory” rating in the most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of April 15, 2013, and Barre received a “Satisfactory” rating in its most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of May 29, 2013.  In addition, the Continuing Institution plans to establish a charitable foundation in the amount of $1,500,000 to support organizations in the Barre-Paxton-Princeton area.

In terms of the Board of Directors and management, the application states that the Continuing Institution’s Board of Directors will consist of all of the individuals serving as directors of Fidelity immediately prior to the consummation of the merger together with three Barre Trustees who will become directors of Fidelity as of the effective date of the merger.  In addition, twelve corporators of Barre are expected to be elected as corporators of Parent.  No consideration will be paid in connection with the transaction since it is a merger with a mutual bank.   Accordingly, upon review, financial and managerial considerations support the application.

Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that the consummation of the proposed consolidation would be in the public interest.  On the basis of these considerations, approval is granted to merge Barre with and into Fidelity under the charter, by-laws and name of Fidelity Co-operative Bank, under the provisions of said clause (2) of section 7 of chapter 167H, and said section 4 of chapter 167I of the General Laws.  Upon consummation of the merger, the charter of Barre will cease to exist and the separate existence of Barre shall cease and all of the rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Barre shall be vested in and assumed by Fidelity. 

The approval granted herein is subject to the following conditions:

  1. That the proposed merger shall not become effective until a Certificate signed by the Presidents and Clerks, or other duly authorized officers of each bank, indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 167H, section 7, clause (2) and chapter 167I, section 4 has been returned for my endorsement thereon;
  2. That the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
  3. That the proposed merger shall be consummated within one year of the date of this Decision.

February 5, 2016
_____________
Date


David J. Cotney
____________________
Commissioner of Banks