Decision relative to the applications of United Co-Operative Bank, West Springfield, Massachusetts to close its branch office At 14 Main Street, Chester and to establish a branch office at 14 Russell Street, Huntington
By the Division of Banks
The United Co-operative Bank ("United"), West Springfield, Massachusetts has petitioned the Division of Banks (the "Division") to close its branch office at 14 Main Street, Chester (the "Closing") and to establish a branch office at 14 Russell Street, Huntington (the "Opening"). The applications were submitted pursuant to the provisions of General Laws chapter 167C, section 3. Under that statute the closing or establishment of a branch office by a state-chartered bank, such as United, is subject to such notice and hearing as the Commissioner of Banks (the "Commissioner") may require and is subject to the written permission and any conditions which the Commissioner may impose.
The applications submitted were complete in their compliance with the administrative mandates of the Division. Accordingly, notice of the applications was posted and published in accordance with the Division's standard procedures thereby affording interested parties the opportunity to submit comments. The initial public comment period on the applications ended on March 15, 1996. During the open comment period the Division received numerous statements and petitions from individuals, businesses, community and business associations, as well as public officials. Those comments were divided in opposition to the Closing and in support of the Opening. Separate petitions submitted included several hundred signatures opposed to the Closing and in support of the Opening. As a result of the significant comments received, the Division ordered a public hearing so that it could receive additional facts on the issues raised.
The hearing was held on Wednesday, April 24, 1996 in the auditorium in Chester's Town Hall. The Division scheduled the hearing at 5:00 P.M. and in Chester for the convenience of those most impacted by the proposed Closing, the residents of Chester. The Division took oral testimony from United and other individuals supporting the movement of the branch office to Huntington as well as the concerned people opposed to the Closing. In total, twenty-two individuals made public statements during the hearing which lasted two hours. By direction of the Division, the supplemental comment period after the hearing extended to May 3, 1996. Additional comments have been received in writing during the supplemental filing period which has now ended. All of this information in addition to internal research and examination documents provided the Division with an ample record on which to review the applications relative to the Closing and the Opening.
As part of this process, the Division took additional steps to become more familiar with the area involved in the transactions. The area, including the branch office in Chester, was visited twice. On the day of the hearing, the distance as well as travel time between the two locations were marked and the general activity at each location was noted. On March 29, 1996 while returning from Berkshire County, I also visited the branch office and travelled through the business areas of the several surrounding towns which lie at the foothills of the Berkshires and are referred to as the "Hilltowns". Additionally, the Division acquired and reviewed the publications prepared by the Executive Office of Communities & Development and published by the Secretary of State entitled " A Community Profile" on certain of the Hilltowns. The profiles include information from various identified sources on the government; geography; demographics; housing characteristics; educational information; economic development; municipal finance; cultural and recreational opportunities as well as other miscellaneous information. The narrative portion is supplied by each community. According to the Profile of Chester it is known as "The Gem of the Valley". It was also noted in Huntington's Profile that it is referred to locally as the gateway to the Berkshires. According to information available to it the Division has noted that population in the Hilltowns ranges from 412 people in Middlefield to 2095 in Huntington. The rugged terrain in the area provides many natural resources and outdoor activities while serving as residential communities. Over 70% of the workers in the various towns commute to jobs outside the Hilltowns.
As stated at the beginning of the public hearing there are several factors that the Division considers in conjunction with an application filed relative to a branch office. Both by statute and procedure the Division examines the financial and managerial resources of the institution; the convenience and needs of the community or communities served by the branch office; competition among financial institutions; and the applicants record of performance under the Massachusetts Community Reinvestment Act ("CRA"). In the case of an application to close a branch office, the Division considers the reasons the specific closing is being sought; the affect on the areas served by the branch office as well as the continued availability of credit and deposit services. The decision to close a branch office is made initially by a bank. If the bank is chartered by the Commonwealth, as is United, it must seek the approval of the Division under the procedure detailed herein and consistent with the applicable statute. In deciding upon an application to close a branch office, the Commissioner reviews all pertinent information to determine that the area served by the branch office will not be adversely affected by the transaction.
Information submitted with the application reflects that as of December 31, 1995, United had assets of approximately $313 million. United offers a wide range of credit and deposit services to its consumer and commercial customers. It serves its customers from its main office and seven branch offices. Ten years ago United moved its main office from Springfield to West Springfield.
The banking office in Chester is located at the beginning of the business district. It consists of a teller area to the rear of the entrance and shares space with an insurance company which occupies the left side of the building. The branch office is open seven hours on Monday and Tuesday; eight hours on Thursday and Friday; three hours on Saturday; and closed on Wednesday. It is staffed with two full time equivalent teller positions. Deposit balances attributed to the branch office in Chester have remained at just over $4 million for the last three years. United has acknowledged that another $4 million in deposits are received from Hilltown residents but booked at other offices for a variety of reasons including but not limited to being opened at a United branch office close to their work or for privacy reasons.
The branch office is the last remaining vestige of the former Chester Co-operative Bank which was incorporated in 1923 by local residents and began to transact business on January 10, 1924. The pride and respect for that institution and the many townspeople who served it faithfully over the years was clearly evident from the comments submitted and the testimony received on the proposed Closing. Those fond memories are captured forever in the Chester Co-operative Bank patch included on the quilt which serves as the backdrop to the auditorium stage in the Town Hall. The Chester Co-operative Bank, with assets of less than $1.5 million, ended its independent existence in 1976 when it merged with and into Westfield Co-operative Bank which had assets of approximately $28 million. At that time it became a branch office of the Westfield Co-operative Bank which was located approximately twenty miles away in Westfield. Five and a half years later it became a branch office of United when Westfield Co-operative Bank discontinued operations through a merger with and into United which at that time had its main office located in Springfield.
Although the Division's procedures implementing the statute governing branch offices requires the filing of two applications for the proposed actions of United, one to close and one to establish a branch office, United views its request as one transaction, relocating its branch office serving the Hilltowns (the "Hilltown Branch") to Huntington. As set out in the application, the primary service area for the banking office will remain exactly the same consisting of the towns of Chester, Huntington, Montgomery, Russell, Blandford, Becket, Middlefield, Worthington and Chesterfield. Those towns are located in parts of three counties. The Hilltown Branch will remain the only banking office in any of those communities. According to the application documents the nearest banking offices from the branch office in Chester are approximately 17.5 miles to the west in the town of Lee and 16.5 miles to the east in the city of Easthampton. United's nearest location is twenty miles away in Westfield at the site of the former main office of the Westfield Co-operative Bank.
From a siting standpoint, United points out that Huntington is at the intersection of the two most heavily traveled roads in the Hilltowns, Routes 20 and 112. The proposed branch office will be located on Route 20 less than 1/4 mile from the intersection of Route 112. United cites as further evidence of the convenience of the relocation of the Hilltown Branch to Huntington the fact that both the regional middle and high school as well as the medical center are located in Huntington. At the public hearing United's President and Chief Executive Officer explained that the decision to relocate the Hilltown Branch was not made as a choice between towns but as a choice for a more central location from which to serve the entire area.
In addition to the more convenient location United offers several other reasons why the transaction would benefit its Hilltowns customers. It notes that the proposed facility is almost four times as large of the current branch office and this will allow it to offer expanded customer service. Specifically, United states that if the relocation is approved, it plans to offer a drive-up window, night depository and an automated teller machine ("ATM"). United also has submitted information that it would expand hours at the relocated Hilltown Branch by opening on Wednesdays from 9:00 A.M. to 4:00 P.M. and expanding staffing. The proposed larger office will also allow customers privacy during loan interviews and the opening of deposit accounts. Although United acknowledges that some customers will be inconvenienced by the relocation, it emphasizes the fact that the proposed site is only about seven miles from its current branch office, which is not a long trip, it states, by Hilltowns standards.
The banking public served by the current location of United's Hilltowns Branch in Chester stated numerous reasons for their opposition to the Closing. It was offered that many people would be inconvenienced by the relocation to Huntington since a round trip would consist of about a fourteen mile and twenty minute ride. Such cost of time and travel are significant, it was stated. The availability of an ATM, night drop and drive-thru did not, in their view, offset the inconvenience factor. Moreover, the difficulty of parking and use of a shared driveway with the United States Post Office at the proposed Huntington site were noted as negative features to be considered. Those factors and usual commuting patterns were suggested as resulting in many people continuing on through Huntington and Russell into Westfield to do their banking business either at United's branch office on Elm Street or at the several other banks and credit unions located there.
Objections were also raised to United's failed efforts to pursue other options for commercial space in Chester. Its own actions in having reduced its office space at the current leased site were mentioned as creating the loss of privacy for certain banking transactions which results in less activity at the banking office. Comments were also received on the lack of notice about the proposed relocation to the town agencies in Chester which deposit municipal funds with United in an effort to further support the branch office. It was frequently noted that the Closing would eliminate the remaining physical tie to the former Chester Co-operative Bank which was founded by local individuals.
The task before this Division thus becomes to analyze the closing in light of the statutory test that the area served, as viewed, will not be adversely affected by the transaction. Such analysis must be based upon a case by case review of any unique factors and circumstances affecting the customers and area serviced by the branch office. The statute directs the Division to consider, among other factors, the availability of credit as well as the convenience and necessity of deposit services. The Division has reviewed each such statutory requirement in turn.
On the issue of the availability of credit, the Division has found the Petitioner's record of performance under the Community Reinvestment Act is "Satisfactory" under its most recent evaluation. The documents filed contain further information on the Petitioner's intent to maintain or enhance that level of performance in the Hilltowns. Its CRA commitment to make credit available would remain to the entire area including the town of Chester.
Factors related to convenience and necessity for deposit services, present a similar analysis particularly when viewed in context of the service area considered by United. In such an analysis, the fact that the primary service area of the Hilltown branch remains exactly the same is significant.
The Division's knowledge and familiarity with the Hilltowns obviously pales in comparison to that of the people who live in those several communities. Two visitations, a public hearing and research on the profile of certain towns, is helpful but cannot substitute for the years of knowledge and insight held by the residents of the area. The Division's position is not to negate the comments offered in opposition to the Closing.
In considering the test of whether the area served by United's existing branch office would be adversely affected by the Closing, the Division has focused on the primary service area designated in the application and supplemental filings. The primary service area of a bank or a branch office is not defined in statute or by regulation or in the application materials of this Division. Initially, the boundaries of the service area are detailed by the bank in its application. The reasonableness of any such delineation, however, is reviewed by the Division in its analysis of any transaction. As set out in those documents and referenced previously herein, United considers the primary service area to be the several communities which make up the Hilltowns. Information on the demographics of those towns have been submitted as well as obtained independently by the Division. The availability of alternative banking facilities have also been carefully analyzed as it relates to the proposed transaction.
The analysis shows what is well known to the residents of the Hilltowns. Their various communities remain separate and distinct in many ways but due to their size participate in various social, recreational, economic and educational entities on a regional or program basis that a single town alone may not be able to provide. The various communities are referred to collectively as the Hilltowns and distinguish themselves, at times, between "northern" and "southern" Hilltowns. The most significant evidence of their collaborative efforts is reflected in the educational facilities. Both the Gateway Regional Middle School and the Gateway Regional High School serve the student population of seven of the communities which make up the Hilltowns. It is also clear that United's branch office, in its own way, is reflective of the area since it provides the only source of banking in the Hilltowns and is used, to varying degrees, by residents and commercial enterprises in the several towns.
Upon review of the extensive record on these applications, I find that the designation of the Hilltowns as the primary service area of United's branch office to be reasonable. The relocation by United of its Hilltown Branch seven miles to Huntington retains the branch office in the primary service area. It will remain the only banking office in the Hilltowns. That branch office will still be 12.5 miles from the nearest banking office in Westfield and 24.5 miles from the closest banking location in Lee.
Based upon this record and a finding that the primary service area for the Hilltown Branch is reasonable in that it includes several similarly situated towns within one distinct area of the Commonwealth; that United's branch office will remain the only banking facility offering deposit and credit services from a location in the Hilltowns; and that the primary service area for the branch office remains the same; I determine that the area served by the branch office will not be adversely affected by the relocation to a site seven miles away in Huntington. This determination also reflects the fact that the site is near the intersection of the major roads through the Hilltowns and is in the town where both the regional middle school and the regional high school serving these several towns are located. There are no financial, managerial or competitive aspects of the transactions which would preclude approval. Accordingly, pursuant to the provisions of General Laws chapter 167C, section 3, I hereby grant United Co-operative Bank approval
- to establish a branch office at 14 Russell Street, Route 20, Huntington; and
- close its branch office located at 14 Main Street, Chester.
The transactions approved herein must be completed within one year of the date of this Decision.
| May 21, 1996 Date | Thomas J. Curry Commissioner of Banks |