Decision relative to the merger of Grove Bank, Brighton, Massachusetts with and into Citizens Bank of Massachusetts, Boston, Massachusetts and related transactions
By the Division of Banks
Citizens Bank of Massachusetts ("Citizens" or the "Petitioner"), Boston, Massachusetts has applied to the Division of Banks to merge with Grove Bank, ("Grove"), 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 November 4, 1996. The Agreement provides for the merger of Grove with and into Citizens under the name, charter and by-laws of Citizens. The banking offices of Grove will become branch offices of Citizens. In conjunction with and prior to this transaction, an application has also been made for a merger of Citizens Interim Trust Company, in organization, with and into Grove. Citizens Interim Trust Company is being formed as a wholly owned subsidiary of Citizens. 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.
Citizens is a state-chartered savings bank in stock form. At September 30, 1996 it had total assets of approximately $4.3 billion. Citizens has sixty-four banking offices in Massachusetts located in Metropolitan Boston, Framingham, New Bedford, Plymouth as well as on Cape Cod. Citizens is one of five bank subsidiaries of Citizens Financial Group, Inc., Providence, Rhode Island and its indirect owner the Royal Bank of Scotland Group, plc, Edinburgh, Scotland and other related entities of the Group as well as the Governor and Company of the Bank of Ireland, Dublin, Ireland.
Grove Bank is a state-chartered stock form savings bank. It has seven banking offices servicing the communities of Brighton, Brookline, Chestnut Hill, Newton (2), Framingham and Stoughton. Additionally, it has all required approvals to establish a new branch office in Newtonville. As of September 30, 1996, Grove Bank had total consolidated assets of approximately $598.5 million. It has four wholly owned subsidiaries: Grove Leasing Company, Inc; Grove Investment Company, Inc.; Grove Corporation; and Grove Security Corporation. All are currently inactive except Grove Security Corporation which was formed in late 1993 to take advantage of more beneficial state income rates on investment income. According to the application the other three subsidiaries may be dissolved before the consummation of this transaction. On January 2, 1997 Grove acquired Greater Boston Bank, A Co-operative Bank ("Greater Boston"). Brighton, Massachusetts and on that same day Greater Boston was merged with and into Grove. Greater Boston was a state-chartered bank. In addition to its main office in Brighton, Greater Boston had branch offices in Allston and Jamaica Plain. As of June 30, 1996, Greater Boston had total assets of approximately $167.2 million. Accordingly, subsequent to the merger Grove operates ten banking offices and has assets of approximately $766 million.
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. The Division's review has focused on the communities in which Grove operates banking offices. Particular analysis was given to the Brighton neighborhood in Boston due to the recent merger with Greater Boston which had its main office located there and the fact that Citizens also has a branch office located within the same business area. Upon review, the Division has noted that there are other banking offices in Brighton which will also remain available to both commercial and consumer customers. The Division's analysis of these facts and materials indicate that no significant adverse impact on competition within Grove's primary service area would result from this consolidation.
The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. The application documents provide examples of the benefits which will result from the merger of Citizens Interim Trust Company and Grove and Grove into Citizens. In general, Citizens cites benefits in the products and services which will become available to customers of Grove; a more comprehensive and convenient branch network; and a continued and strengthened commitment to community needs. The application also details certain loan products, investment services and business accounts among others not currently offered by Grove which will become available to its customers if the merger is approved. A branch office network with over seventy locations, several hundred affiliated automated teller machines; a twenty-four hour seven days a week customer service center; and agency powers for basic banking transactions among the subsidiary banks of Citizens Financial Group, Inc. are also offered as benefits to the public.
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 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 Citizens 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 Citizens Interim Trust Company into Citizens. The resulting capital ratios and projections for Citizen 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 Citizens Interim Trust Company and Grove was submitted under the same statute that governed the Citizens and Grove 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 Grove will be the continuing entity until its subsequent merger with and into Citizens, 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 Citizens Interim Trust Company to merge with and into Grove and subsequent to that consolidation, for Grove to merge with and into Citizens. Approval is also granted for Citizens to maintain the banking offices of Grove 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, Citizens 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.
| February 7, 1997 Date | Thomas J. Curry Commissioner of Banks |