In the matter of the merger of Leicester Savings Bank, Leicester, Massachusetts with and into Country Bank For Savings, Ware, Massachusetts

By the Division of Banks

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Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34, Country Bank for Savings ("Country" or the "Petitioner"), Ware, Massachusetts seeks approval to merge with Leicester Savings Bank ("Leicester"), Leicester, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of August 13, 1997, Leicester will merge with and into Country under the charter, by-laws and name of Country Bank for Savings. The sole banking office of Leicester will become a branch office of the continuing bank.

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").

Country is a state-chartered savings bank in mutual form. As of June 30, 1997, it had total assets of approximately $473.7 million. Country has two existing banking offices located in Ware, two in Palmer and one each in West Brookfield, Brimfield and Belchertown; and an approved but unopened branch office in Wilbraham. It has four subsidiaries: WSB Development Corporation; REMLAB; CBS Capital Corporation and CBS Security Corporation.

Leicester is a state-chartered savings bank also in mutual form. As of June 30, 1997, it had total assets of $31.2 million. Its sole banking office is located in Leicester. Leicester has no subsidiaries.

The primary service area for Country includes fourteen communities located in Hampden County, Hampshire County and Worcester County. Leicester's primary service area covers the communities of Leicester and Spencer in Worcester County. The continuing bank's primary service area remains entirely within all of the above counties. Although both banks each operate a banking office within Worcester County, there are no municipalities in which both banks have banking offices. The Division's review noted that the combined entity would not control a significant percentage of deposits in Worcester County. According to analysis by the Petitioner, the combined bank would be the twenty-seventh largest depository institution in Worcester County by deposits. It would control under one percent of the total bank and thrift deposits in that county. That analysis indicates that the transaction would have no significant adverse competitive effect according to federal guideline analysis. The Division has also independently reviewed the banking competition within the affected area, including the availability of other banking options for the public in that area. That review notes that a diverse number of competing financial institutions operate in Worcester County. They include commercial banks as well as thrift institutions and credit unions and represent such institutions and banking offices. Accordingly, the review of the transaction's impact on competition does not raise any concerns which would preclude its approval.

The application notes that the continuing institution's Board of Trustees will consist of all of the persons occupying such positions with Country immediately prior to the consummation of the merger and three persons currently serving as trustees of Leicester. The management of the combined bank is also detailed in the application documents. The applicant bank argues that the combined institution 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 the application.

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. The continuing bank will have an extended branch office network. In particular, customers of Leicester will now have access to banking offices in Belchertown, Brimfield, Palmer, Ware, West Brookfield and Wilbraham. Additionally, customers of Country will have access to a banking office in Leicester. The application also indicates that there are some products and services currently offered by Country to its customers that are not presently available to customers of Leicester. Such deposit products include free checking accounts, commercial checking accounts and retirement accounts. Such lending services include home mortgage loans, business loans and some types of consumer loans. Conversely, there is only one product of Leicester that is not at this time provided through Country's banking offices: boat loans. However, the continuing bank intends to continue offering boat loans to all of its customers. 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 section 34 of said chapter 168 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, the application states that the resulting bank's ability to meet the credit needs of businesses will foster economic development and creation of new jobs. Moreover, the merger would enable the continuing bank to expand both Country's and Leicester's community outreach efforts and affordable housing programs. Also, in connection with this transaction, it is anticipated that a $1,000,000.00 donation from Country will be made to form the "Leicester Savings Bank Fund" (the "Fund"). In accordance with the Merger Agreement, the Fund will be administered by the Greater Worcester Community Foundation under the guidance of an "Advisory Committee" whose members will be appointed by Leicester. As described in the application, the Fund will provide annual grants to programs and projects in Leicester as well as potentially stimulate development of new services to benefit that community.

Another factor which must be considered in the review of this application is the compliance of each depository institution with the statutory provisions of the CRA. Such review for state-chartered banks includes examination of 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 bank regulatory agency will also be considered. Upon review, the Division has noted that both Country and Leicester received a rating of "Satisfactory" 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 consolidation would be in the public interest. On the basis of these considerations, approval is granted to merge Leicester with and into Country under the charter, by-laws and name of Country Bank for Savings pursuant to the provisions of said section 34 of chapter 168 of the General Laws. In accordance with General Laws chapter 167C, section 3, approval is also granted for the continuing bank to maintain the sole banking office of Leicester as a branch office.

The approvals granted herein are subject to the following conditions:

1. that the proposed merger shall not become effective until a Certificate signed by the Presidents and Clerks or other duly authorized officers of each bank indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34 has been returned with my endorsement thereon;
2. that the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
3. that the proposed merger be consummated within one year of the date of this Decision.

4. November 26, 1997 Date

   Thomas J. Curry Commissioner of Banks