In the matter of the merger of The Co-Operative Bank of Concord, Concord, Massachusetts and the Braintree Savings Bank, Braintree, Massachusetts with and into UStrust, Boston, Massachusetts
By the Division of Banks
Pursuant to the provisions of Massachusetts General Laws chapter 172, section 36, subsection A, paragraph 4, USTrust, Boston, Massachusetts seeks approval to merge with both The Co-operative Bank of Concord ("Concord"), Concord, Massachusetts and The Braintree Savings Bank ("Braintree"), Braintree, Massachusetts. Under the terms of the Agreement of Merger, Concord and Braintree will merge with and into USTrust under the charter, by-laws and name of USTrust. The main office of USTrust will remain the main office of the consolidated bank and all of the banking offices of Concord and Braintree will be maintained as branch offices. All of the banks are subsidiaries of UST Corp., Boston, Massachusetts, a bank holding company. UST Corp., which is also the holding company for United States Trust Company, Boston, Massachusetts, acquired Concord and Braintree, through its acquisition of Mosaic Corp., Acton, Massachusetts, formerly known as Walden Bancorp, Inc.
Notice of the application 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 transaction, the interests of the depositors of each bank, the future prospects of the institutions and the convenience and needs of the communities to be served by the consolidated entity as well as the performance of each bank under the Community Reinvestment Act ("CRA").
USTrust is a state-chartered trust company. As of December 31, 1996, it had total assets of approximately $2.6 billion. Currently, USTrust has forty-eight banking offices located in twenty-seven communities in Eastern Massachusetts, all east of Route 495. It has also recently received the Division's approval to establish a branch office in an additional community, Chelsea. It has seven wholly owned subsidiaries: UST Leasing Corp.; Court Street Holding, Inc.; UST Securities Corp.; Norfolk Holding Corp.; TABEB Corp.; Middlesex Realty Holding, Corp.; and UST Merchant Bancorp, Inc. All are currently active, except UST Merchant Bancorp, Inc. which was formed to provide merchant banking services. UST Securities Corp. buys, sells and holds securities on its own behalf. UST Leasing Corp. is engaged in the business of leasing equipment to small businesses. The four other active subsidiaries of USTrust own and manage foreclosed property formerly held by borrowers from USTrust.
Concord is a state-chartered co-operative bank in stock form. Its deposits are insured by the Share Insurance Fund of the Co-operative Central Bank in excess of Federal Deposit Insurance Corporation (the "FDIC") limits. As of December 31, 1996, it had total assets of $486.9 million. Concord operates eight banking offices in Arlington, Concord, Groton, Littleton, Lexington and Maynard. Concord owns three wholly owned subsidiaries. Walden Securities Corporation buys, sell and holds securities on its own behalf. Walden Financial Corporation owns and manages foreclosed property acquired by Concord. It also leases equipment and buildings to Concord. Building Collaborative Incorporated is involved in buying and holding securities on its own behalf and ownership and management of foreclosed property.
Braintree is a state-chartered savings bank in stock form. Its deposits are insured by the Deposit Insurance Fund of the Mutual Savings Central Fund, Inc., in excess of the FDIC limits. As of December 31, 1996, it had total assets of $528.3 million. Braintree operates nine banking offices in Braintree, Hanover, Norwell, Quincy and Randolph. Braintree has three wholly owned subsidiaries. Braintree Securities Corp. buys, sells and holds securities. Braintree Savings Corporation is engaged in real estate investment. BraProp Corporation is in the business of property management.
The primary service area of all three merging banks is the Boston banking market, a large unconcentrated and competitive financial market. Although all three banks operate within this market, there are only three municipalities, Braintree, Quincy and Randolph in which two or more of these banks each have a banking office. Based on certain documents, it appears that approximately 33% of the deposits in Braintree are held by Braintree; and about 8% by USTrust. USTrust would control roughly 12% of all deposits in Quincy; and around 22% of all deposits in Randolph as a result of this merger with Braintree. The Division has carefully considered the competitive effects of the transaction. The Division looked at the availability of other banking options to the public in the area, particularly in Braintree. The Division noted that ten other financial institutions maintain banking offices in that town. They include commercial banks, thrift institutions and two credit unions. Moreover, eight other institutions operate banking offices in Quincy and five other institutions have banking offices in Randolph. Accordingly, the review of the transaction's impact on competition, with emphasis on such impact on the communities of Braintree, Quincy and Randolph does not raise any concerns which would preclude its approval. The application notes that the continuing institution's Board of Directors will consist of all of the persons presently occupying such positions with USTrust. The principal officers of the continuing institution will consist of those currently serving as such for USTrust. The applicant bank argues that the combined entity will produce some economies and service capabilities that may save costs. Moreover, upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support approval of the application.
The application cites numerous benefits to the banking public resulting from the transaction. The continuing bank will have an extended branch office network through which it will offer the services and products of each bank. Thus, customers of the combined institution will have a broader selection of products than that of any one of the institutions alone. The Division's analysis indicates that there are certain types of services of USTrust that do not appear to be services of the other two merging banks. They include free checking accounts, "Prime Always" Home Equity Loans and some commercial loan products and programs. Additionally, USTrust will have a larger lending limit than it had prior to the mergers. The Division considered these reasons and others cited in the submitted documents in determining that public convenience and advantage will be promoted by approval of this transaction.
In determining whether or not to approve a petition under the statutory criteria, the Commissioner is also required to consider a showing of "net new benefits" related to the transaction. That term as set out in subsection A of section 36 of said chapter 172 includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices among other factors which the Commissioner may deem necessary. The applicant bank has addressed this requirement of statute. In particular, it states that its improved ability to meet demand for lending to small businesses will foster economic development and the creation of new jobs. The maintenance of Concord's and Braintree's banking offices as branch offices of the continuing bank as well as USTrust's intent not to engage in any significant employee terminations are also cited as support for meeting this criteria.
Another factor which must be considered in the review of this application is the compliance of each depository institution with the statutory provisions of CRA. Such review for state-chartered banks 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. A publicly available descriptive rating and evaluation by a federal or state bank regulatory agency will also be considered. Upon review, the Division has noted that USTrust received an "Outstanding" rating and Concord and Braintree each received "Satisfactory" ratings in the most recent examinations of their performances under CRA.
Upon review of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that the consummation of the proposed transaction would be in the public interest. On the basis of these considerations, approval is granted to merge Concord and Braintree with and into USTrust under the charter, by-laws and name of USTrust pursuant to the provisions of paragraph 4 of subsection A of section 36 of chapter 172 of the General Laws. Approval is also granted for USTrust to maintain the eight banking offices of Concord and the nine banking offices of Braintree as branch offices.
The approvals granted herein are subject to the following conditions:
- that all depositors of Concord or Braintree, as applicable, be notified that after the merger with USTrust any deposits in excess of federal deposit insurance coverage will no longer be insured by the applicable excess insurer.
- that no merger with USTrust shall become effective until a Certificate signed by the Presidents and Clerks or other duly authorized officers of each of the banks involved with the particular merger indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 172, section 36, subsection A, paragraph 4 has been returned with my endorsement thereon.
- that no merger with USTrust shall become effective until such Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
- that the mergers approved herein be consummated within one year of the date of this Decision.
| March 25, 1997 Date | Thomas J. Curry Commissioner of Banks |