Decision relative to the application of Weetamoe Bancorp, Somerset, Massachusetts to acquire Fairbank, Inc., Fairhaven, Massachusetts
By the Division of Banks
Weetamoe Bancorp ("Weetamoe") and its wholly-owned subsidiary bank, Slade's Ferry Trust Company ("Slade's Ferry") (or collectively Weetamoe and Slade's Ferry as the "Petitioners"), Somerset, Massachusetts have petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire Fairbank, Inc. and its wholly-owned bank subsidiary, the National Bank of Fairhaven ("Fairhaven"), Fairhaven, Massachusetts. As set out in the various filings, the acquisition is part of a multi-step transaction in which Fairhaven will merge with and into Slade's Ferry. That merger transaction, by statute, is subject to application and approval by the Commissioner of Banks. Upon consummation of the merger, Slade's Ferry will operate the banking offices of Fairhaven as its branch offices.
The Board held a public hearing on the matter before it on June 27, 1996. Notice of the petition and hearing thereby affording the opportunity for interested persons to submit comments has been posted and published in accordance with procedures of the Board. The time for filing comments and supplementary materials passed on July 10, 1996. The Board has reviewed the application, the testimony received at the public hearing by both the Petitioners and Fairbanks, Inc. and all related documents. That review focused on the statutory and administrative criteria which includes, among other things, whether competition among banking institutions will be unreasonably affected; whether public convenience and advantage will be promoted; as well as the record of performance under the Community Reinvestment Act ("CRA") by the bank subsidiaries of Weetamoe and Fairbanks, Inc. The additional requirements of the Commonwealth's 1990 Nationwide Banking Act, which were added to sections 2 and 4 of said chapter 167A, were also significant factors in the Board's deliberations on the application.
One such statutory provision added in 1990 requires the Board to have received notice from the Massachusetts Housing Partnership Fund ("MHPF") that satisfactory arrangements to it have been made by the Petitioners consistent with MHPF's various affordable housing loan programs. At the public hearing, the Petitioners' compliance with the statutory requirement was specifically discussed. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated July 26, 1996. The Board's receipt of that notice completes the Petitioners' required filings with the Board under the laws of the Commonwealth.
As described in the record of this application, Weetamoe is the holding company for Slade's Ferry. It has no other subsidiaries. As of March 31, 1996, Slade's Ferry had consolidated assets of approximately $232 million. Slade's Ferry operates from seven banking offices with two each in Somerset, Fall River and Swansea with its remaining branch office in Seekonk. Slade's Ferry also operates two subsidiaries which hold real estate and certain securities of the bank. Slade's Ferry is a state-chartered trust company which provides full banking services to consumers and small businesses.
Fairbank, Inc. is the holding company for Fairhaven which is its only subsidiary. As of March 31, 1996, Fairhaven had total assets of $64 million. In addition to its main office, Fairhaven operates one branch office in New Bedford. It provides a wide array of deposit and credit products to consumers and businesses within the communities it serves.
The Petitioners have submitted materials to address the statutory criteria of whether competition among banks will not be unreasonably affected by the proposed transaction. The Board has noted, that although Slade's Ferry and Fairhaven do have some deposit and credit customers from each other's service area, those banks do not have banking offices in the same community. Moreover, submitted documents indicate a number of financial institutions will continue to provide competitive banking services in the areas where both Slade's Ferry and Fairhaven derive customers. The Board's review with particular emphasis on the communities served by the banking offices of Slade's Ferry and Fairhaven does not raise any concerns relative to the transactions impact on competition.
The Petitioners indicate that the banking public will benefit in several ways by the acquisition and subsequent merger of Fairhaven into Slade's Ferry. Those benefits include, among other things, an extended branch network and higher lending limit for the combined bank. The applications also details the wider array of products now offered by Slade's Ferry that will become available to Fairhaven's current customers. Among those products are mortgage loans, adjustable rate mortgage loans, student loans and recreational vehicle loans. Slade's Ferry, as the continuing bank, will also now offer the fishing vessel mortgage product currently offered by Fairhaven. The Petitioners also state that the combined bank will be a larger more active competitor in Southeastern Massachusetts and particularly in the areas now served by Fairhaven.
In determining whether or not to approve a petition under the statutory criteria, the Board is also required to consider a showing of "net new benefits" related to the transaction. That term as set out in section 4 of said chapter 167A includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices among other factors which the Board may deem necessary. The Petitioners have addressed this requirement of statute. In particular they state that all employees of Fairhaven have been offered continued employment at their present compensation levels with Slade's Ferry after the acquisition and merger. The maintenance of Fairhaven's two banking offices as branch offices of the continuing bank as well as certain new deposit and credit products to be offered after the acquisition are also cited by the Petitioners as support for meeting this criteria.
Related to this issue of public convenience and advantage is the record of performance under the Community Reinvestment Act by the parties to a transaction or their bank subsidiaries. Such review for state-chartered banks includes examination by personnel of the Commonwealth's Division of Banks as well as analysis of concerns received from the bank's delineated community or assessment area and its response to those concerns fairly raised. For other institutions, the Board initially looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. This matter was specifically discussed at the public hearing and the Board is aware of the "Satisfactory" ratings for both Slade's Ferry and Fairhaven.
The Board's review of all such considerations relative to public convenience and advantage as well as CRA are consistent with approval of this transaction.
The Board has also reviewed and considered the financial and managerial aspects of the proposed transaction. The financial structure of the acquisition was also discussed at the hearing. The Petitioners will acquire all of the outstanding capital stock of Fairbank, Inc. and each such share will be converted into the right to receive a cash payment. In response to the Board's questions, the Petitioners detailed the resulting impact to capital ratios and their plans and projections for increasing those ratios subsequent to the acquisition. The areas whereby cost savings from the transaction would be generated were also discussed. The submitted documents also addressed the continuing management of the combined organization. The Board's analysis of these financial and managerial factors are supportive of the transaction.
Based on the record of this matter, considered in light of all relevant statutory and administrative requirements, the Board finds that competition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the proposed acquisition, and that the performance under CRA by the bank subsidiaries involved in the transaction are satisfactory. Therefore, in accordance with its findings and pursuant to the statutes cited herein, the Board approves the application of Weetamoe Bancorp and Slade's Ferry Trust Company to acquire Fairbank, Inc. and its subsidiary, the National Bank of Fairhaven, subject to the condition that this transaction shall be consummated within one year from the date of this approval.
|Thomas J. Curry |
Commissioner of Banks
|Frederick A. Laskey |
Senior Deputy Commissioner of Revenue
|Joseph D. Malone |
Treasurer and Receiver-General
|August 5, 1996 |