Decision relative to the merger of Greater Boston Bank, a co-operative bank, Brighton, Massachusetts with and into Grove Bank, Brighton, Massachusetts and related transactions
By the Division of Banks
Grove Bank ("Grove" or the "Petitioner"), Brighton, Massachusetts has applied to the Division of Banks to merge with Greater Boston Bank, A Co-operative Bank ("Greater Boston"), Brighton, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D and under the terms of an Agreement and Plan of Merger (the "Agreement") dated as of August 26, 1996. The Agreement provides for the merger of Greater Boston with and into Grove under the name, charter and by-laws of Grove Bank. The three banking offices of Greater Boston will become branch offices of Grove. In conjunction with and prior to this transaction, an application has also been made for a merger of Grove Interim Trust Company, in organization, with and into Greater Boston. Grove Interim Trust Company is being formed as a wholly owned subsidiary of Grove. It has received a Certificate of Public Convenience and Advantage, under General Laws chapter 172, section 6 from the Massachusetts Board of Bank Incorporation as part of this multi-step transaction.
Notice of the applications has been posted and published. The time period for interested parties to submit comments has passed. Accordingly, all documents and materials related to this transaction have been reviewed. That record has been considered with regard to the financial and managerial resources of each bank, the competitive effects of the proposed transactions and the convenience and needs of the communities to be served by the continuing institution and other applicable statutory criteria.
Grove is a state-chartered stock form savings bank. As of the date of application it had seven banking offices located in the communities of Brighton, Brookline, Chestnut Hill, Framingham and Stoughton with two offices in Newton. It has also received all required approvals to establish a branch office in Newtonville. As of June 30, 1996, Grove had total consolidated assets of approximately $590.4 million. Its executive offices are located in Chestnut Hill.
Greater Boston is a state-chartered co-operative bank in stock form. It received an infusion of capital under a supervisory conversion that became effective on June 30, 1993. As part of that conversion, Greater Boston's excess deposit insurer, the Co-operative Central Bank, advanced certain funds and received preferred non-voting stock in Greater Boston. Prior to this transaction, the Co-operative Central Bank's remaining preferred stock holdings will be purchased by Greater Boston, thereby paying back the funds so advanced. In addition to its main office in Brighton, Greater Boston has branch offices in Allston and Jamaica Plain. As of June 30, 1996, Greater Boston has total consolidated assets of approximately $167.2 million. This represents a significant increase from the approximately $120 million in assets at the time of conversion.
The Petitioner has submitted materials to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Much of that analysis is detailed according to various tests relative to the size of each institution and its competitors within delineated markets used by federal agencies. That analysis demonstrates that consummation of the transaction will not result in undue concentration of banking resources in the specified banking markets in Massachusetts.
The Division, however, also looks to the primary service area of the bank which is being merged with and into another financial institution to analyze the banking options which will remain for the public in those communities. Although Greater Boston provides services to customers in Boston's neighborhoods and numerous municipalities within the vicinity, the Division's review has focused on the communities in which it operates banking offices. As noted previously Greater Boston's offices are located in three of Boston's neighborhoods, with its main office in Brighton and its branch offices in Allston and Jamaica Plain. Overlap in the office network of both banks exists in Brighton where Grove also has its main office. However, there are also branch offices of five other banks located there. In Jamaica Plain there are branch offices of four other banks while in Allston there are also four other banking options available to customers. The other banks located in these neighborhoods consist of diverse institutions including large regional banks, a trust company, a federal thrift institution, savings banks and a co-operative bank. Other nonbank financial institutions and sources of banking services are also available within these neighborhoods. Accordingly, the Division's analysis of these facts and materials indicate that no significant adverse impact on competition within the cited service area of Greater Boston would result from this consolidation.
The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. The Petitioner's application documents provide examples of the benefits which will result from the merger of the Interim Trust and Greater Boston and Greater Boston into Grove. The retention of Greater Boston's three banking offices added to the seven existing banking offices of Grove are cited as an example of such convenience and advantage, particularly in light of the greater geographic area covered by such branch offices. Additionally, a broader selection of products and services will become available to Greater Boston's customers. In particular, the Petitioner cites a no fee, no minimum balance checking account; a sweep account for business customers; and a premium money market variable rate account. Although Grove and Greater Boston each have both different primary and excess deposit insurers, customer accounts will not be affected and excess insurance will be maintained.
Related to the issue of public convenience and advantage is the record of performance under the Community Reinvestment Act ("CRA") by the banks which are the parties to this multi-step transaction. Such review for a state-chartered bank 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. The records of the Division reflect that Greater Boston has an "Outstanding" rating and Grove a "Satisfactory" in their most recent examinations of performance under CRA. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval.
The financial structure of the transaction was reviewed and addressed. The financial aspects as impacted by the tax consequences on the proposed corporate structure of the transaction were also considered in light of the merger of Grove Interim Trust Company into Greater Boston. The resulting capital ratios and projections for the Petitioner are satisfactory. Management factors reviewed in consideration of the proposed transaction are also supportive of its approval. Additionally, all other requirements of statute relating to a merger have been met.
The application filed concerning the merger of Grove Interim Trust Company and Greater Boston was submitted under a statute similar to that governing the Grove and Greater Boston consolidation. A record has also been established relative to that part of this multi-step transaction. Pursuant to those same provisions of law and policies of the Division, this merger, in which Greater Boston will be the continuing entity until its subsequent merger with and into Grove, has been reviewed under the same considerations detailed previously herein.
Upon review of these applications with reference to the relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of these proposed mergers would be in the public interest. On the basis of these considerations approval is granted for Grove Interim Trust Company to merge with and into Greater Boston and subsequent to that consolidation, for Greater Boston to merge with and into Grove. Approval is also granted for Grove to maintain the three banking offices of Greater Boston as branch offices under General Laws chapter 167C, section 3.
The approvals granted herein are subject to the following conditions:
- that prior to any merger, Grove Interim Trust Company obtain a certificate to transact business from the Board of Bank Incorporation;
- that no merger shall become effective until a certificate signed by the Presidents and Clerks or other duly authorized officers of the banks involved in each particular merger indicating that each such institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34D or other applicable statute has been returned with my endorsement thereon;
- that the proposed mergers shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
- that all such mergers shall be consummated within one year of the date of this decision.
| December 27, 1996 Date | Thomas J. Curry Commissioner of Banks |