Decision relative to the merger of Lenox Financial Services Corp., Lenox, Massachusetts with and into Mutual Bancorp of the Berkshires, Inc., Pittsfield, Massachusetts
By the Division of Banks
Mutual Bancorp of The Berkshires, Inc. ("Mutual Bancorp" or the "Petitioner"), Pittsfield, Massachusetts has petitioned the Division of Banks (the "Division") to merge with Lenox Financial Services Corp. ("Lenox Financial"), Lenox, Massachusetts under the provisions of General Laws chapter 167H, section 7, clause 3. Under the terms of an Affiliation and Merger Agreement (the "Agreement") dated as of June 24, 1998, Lenox Financial will merge with and into Mutual Bancorp. This multi-step transaction would result in Mutual Bancorp controlling two state-chartered savings banks, City Savings Bank ("City Savings"), Pittsfield, Massachusetts and Lenox Savings Bank ("Lenox Savings"), Lenox, Massachusetts. The applications for Mutual Bancorp and a mid-tier stock holding company being formed in connection with this transaction to become bank holding companies under General Laws chapter 167A are matters before the Commonwealth's Board of Bank Incorporation (the "Board").
Notice of the petition by Mutual Bancorp was published as directed thereby affording opportunity for interested parties to submit comments. The period for filing comments expired on October 14, 1998. The Division reviewed the application, comments received at the public hearing and all related documents to consider whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage including net new benefits would be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), General Laws chapter 167, section 14 and its implementing regulation 209 CMR 46.00 et seq. by the banks involved in the transaction also were factors considered by the Division.
Mutual Bancorp was organized in December 1997 upon the reorganization of City Savings into a mutual holding company structure. Mutual Bancorp's primary business is as the holding company of City Savings. It has no other direct subsidiary. City Savings operates from its main office and three branch offices in Pittsfield. It also has a branch office in the towns of Lee, Otis, North Adams and Great Barrington. At June 30, 1998 City Savings had assets of approximately $355 million. As the subsidiary banking institution of a mutual holding company, it is a stock savings bank.
Lenox Financial Services was organized in June of 1998 upon the reorganization of Lenox Savings Bank into a mutual holding company structure. It has no other direct subsidiaries and its business is as the holding company of Lenox Savings. Lenox Savings operates from its main office and one branch office in Lenox. At June 30, 1998 Lenox Savings had assets of approximately $105 million. As the subsidiary banking institution of a mutual holding company, it is a stock savings bank.
The proposed merger of the two mutual holding companies, Mutual Bancorp and Lenox Financial would be the first such transaction under chapter 167H of the General Laws. The multi-step transaction does not involve a merger of the two banks. Although a mid-tier stock bank holding company is being formed, no issuance of minority shares will be made in conjunction with this multi-step transaction.
The applications and supporting documents have established an extensive record on this petition which has been reviewed in light of the statutory provisions and policies of the Division. The Division considers whether the merger will promote public convenience and advantage, including a showing of net new benefits, and will it unreasonably affect competition among banking institutions.
The record of performance under CRA by the subsidiary banks in a holding company transaction is also a consideration by the Division. For financial institutions not directly under the jurisdiction of the Commonwealth, the Division initially looks to the publicly available descriptive rating and evaluation by a federal or another state's banking regulatory agency. Such review for state-chartered banks such as City Savings and Lenox Savings includes examination by personnel of the Division as well as analysis of concerns received from a bank's community and a bank's response to those concerns fairly raised. The Division has noted that Lenox Savings has a "Satisfactory" rating and City Savings has an "Outstanding" rating in their most recent examination of performance under CRA.
Based on the record on this matter considered in light of all relevant statutory and administrative requirements, the Division finds that competition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the merger, and that the records of performance under CRA by the banks involved in this transaction are consistent with its approval. Therefore, in accordance with these findings and pursuant to the statutory authority cited herein, the Division hereby approves the merger of Lenox Financial with and into Mutual Bancorp.
This approval is subject to the condition that all related transactions are completed within one year of the date of this Decision.
| December 7, 1998 Date | Thomas J. Curry Commissioner of Banks |