Decision relative to the application of CFX Corporation, Keene, New Hampshire to acquire in a multi-step transaction Safety Fund National Bank, Fitchburg, Massachusetts
By the Division of Banks
CFX Corporation ("CFX" or the "Petitioner"), Keene, New Hampshire has petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire all of the shares of the Safety Fund National Bank (the "Bank"), Fitchburg, Massachusetts in a multi-step transaction, whereby the Petitioner will acquire the Bank's holding company, The Safety Fund Corporation which is also located in Fitchburg, Massachusetts.
Notice of the petition was published as directed by the Board thereby affording opportunity for interested persons to submit comments. A public hearing relative to this application was held by the Board of April 25, 1996 and the period for filing material and comments has ended. The Board reviewed the application, comments received and all related documents in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage would be promoted by approval of the proposed transaction. 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 considered by the Board.
This matter was filed with the Board in the March of 1996 application cycle. However, it remains the general position of the Board that any required vote of shareholders should be submitted with the application or at least scheduled to occur within the Board's open comment period on the application. The Board's position is based not only on the completeness of the filing but also on theories of judicial economy as well as preventing any approval from being used as a means of support for or justification for shareholder approval. If necessary, the Board may deem an application without a required vote incomplete or adjust the hearing schedule based on the above stated position. In this matter, the Board extended the open comment period since the vote of the shareholders of the Bank was delayed until this month.
As an interstate transaction, the reciprocity of the laws of CFX's home state must be reviewed. CFX's home state for determination of applicable law is New Hampshire. Under Massachusetts law, the determination of the reciprocity of the laws of another state rests solely with the Commissioner. After analysis of the applicable provisions of New Hampshire law, the Commissioner determined that the proposed transaction is permissible under the Commonwealth's Nationwide Banking Act and, therefore, the Board will proceed to consider whether other statutory requirements are met by this application.
One of the provisions added in 1990 requires the Board to have received notice from the Massachusetts Housing Partnership Fund ("MHPF") that satisfactory arrangements have been made by the Petitioner for a specific amount of money to be available for call by MHPF for its various affordable housing loan programs. In the application, the Petitioner informed the Board that it had ongoing discussions with MHPF in order to meet the statutory requirements. In a letter dated June 12, 1996, the Board received notice from MHPF that arrangements satisfactory to it had been made for this transaction.
CFX is a bank holding company under federal law and has two subsidiary banks, CFX Bank, a New Hampshire guaranty savings bank, also headquartered in Keene and Orange Savings Bank, a Massachusetts chartered savings bank headquartered in Orange, Massachusetts. As of December 31, 1995, CFX had total assets of approximately $900 million.
Safety Fund National Bank is a national banking association, chartered by the Office of the Comptroller of the Currency (the "OCC"). As of December 31, 1995, the Bank had deposits of approximately $253 million. It operated branches in Fitchburg, Gardner, Leominster, Lunenberg, Westborough and Worcester.
In its testimony, the Bank, among other reasons, indicated that by the acquisition it will provide expanded services to its local communities. As a subsidiary of CFX, the Bank with its existing management and greater resources, such as expanded mortgage products and CFX's expertise in indirect lending, believes it will be in a stronger position to better serve its customers and communities.
The Petitioner has submitted materials addressing the issue of whether competition in any applicable markets would be unreasonably affected by the proposed transaction. The Petitioner's subsidiary, Orange Savings Bank, maintains branch offices in Orange and Athol. Petitioner submits that there is no significant overlap in the markets served by Orange Savings Bank, CFX Bank and the Bank. The Board, however, views competition on the municipalities served and not banking markets. The Board has reviewed the record of this transaction on this issue and found it supportive of a determination that competition on any level would not be unreasonably affected by its approval.
The Board has also considered whether public convenience and advantage will be promoted by this transaction. The transaction is expected to result in cost savings through integration of operations and greater access to capital and funding. As described in the filed documents and at the public hearing, the Petitioner believes that public convenience and advantages will be served through enhanced product lines that will become available to the Bank's customers after its acquisition by CFX. Those products not currently available to customers of the Bank include a wider range of mortgage products, telebanking, debit cards as well as other technological based products. The ability to maintain its current services while adding those specified herein as well as others set out in the application, is cited by the Petitioner and the Bank as providing benefits to both its customers and the market it services.
Related to the issue of public convenience and advantage is the record of performance under the Community Reinvestment Act ("CRA"). For financial institutions not directly under the jurisdiction of the Commonwealth, the Board initially looks to the publicly available descriptive rating and evaluation by a federal or another state's banking regulatory agency. This matter was specifically discussed at the public hearing. Based on the record of the application the Board is aware of CFX Bank's Outstanding and Orange Savings Bank's Satisfactory rating under CRA. It is the policy of the Board in all cases not covered by law, to hold a holding company responsible for the actions of its subsidiaries. The Board has also noted that the Bank has also received a Satisfactory CRA rating from the OCC. The Board's review of all such matters relative to public convenience and advantage are consistent with approval of this transaction as are the factors related to financial and managerial considerations.
Having considered this petition with reference to relevant statutory and regulatory requirements, this Board finds that competition among banking institutions will not be unreasonably affected and that public convenience and advantage will be promoted by consummation of the proposed acquisition. In accordance with its findings expressed herein, the Board authorizes the Petitioner to acquire ownership of and control of up to 100 per centum of the voting stock of The Safety Fund Corporation and Safety Fund National Bank.
The approval contained herein remains in effect for one year from the date of this Decision.
| Thomas J. Curry Commissioner of Banks | |
| Mitchell Adams Commissioner of Revenue | Board |
| Joseph D. Malone Treasurer and Receiver-General | |
| June 28, 1996 Date |