In the matter of the merger of Shirley Co-Operative Bank, Shirley, Massachusetts with and into Fidelity Co-Operative Bank, Fitchburg, Massachusetts
By the Division of Banks
Pursuant to the provisions of Massachusetts General Laws chapter 170, section 25, Fidelity Co-operative Bank ("Fidelity" or the "Petitioner"), Fitchburg, Massachusetts seeks approval to merge with Shirley Co-operative Bank ("Shirley"), Shirley, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of September 16, 1997, Shirley will merge with and into Fidelity under the charter, by-laws and name of Fidelity Co-operative Bank. The sole banking office of Shirley 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 Commonwealth's Community Reinvestment Act ("CRA"), General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq.
Fidelity is a state-chartered co-operative bank in mutual form. As of September 30, 1997, it had total assets of approximately $142.4 million. Fidelity has four banking offices located in Fitchburg, Gardner, Leominster and Millbury. It has one subsidiary, FCB Security Corporation.
Shirley is a state-chartered co-operative bank also in mutual form. As of September 30, 1997, it had total assets of $25.1 million. Its sole banking office is located in Shirley. Shirley has two subsidiaries: Shirley Securities, Inc. and Nashoba Investment Corporation.
The primary service area for Fidelity is Worcester County, the county in which all of its banking offices are located. Shirley's primary service area covers several communities north of Route I-495 within Middlesex County as well as a few municipalities in Worcester County. The continuing bank's primary service area remains entirely within the two above counties. There are no municipalities or counties in which both banks each have banking offices. Moreover, the amount of deposit and loan activity from the other bank's service area is for both banks, minimal. 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 Directors will consist of all of the persons occupying such positions with Fidelity immediately prior to the consummation of the merger and three persons currently serving as directors of Shirley. 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 Shirley will now have access to banking offices in Fitchburg, Gardner, Leominster and Millbury. Additionally, customers of Fidelity will have access to a banking office in Shirley. Moreover, there are some products and services currently offered by Fidelity to its customers that are not presently available to customers of Shirley. As described in the application, such services include some types of consumer loans, telephone banking services and expanded retirement plan programs. 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 25 of said chapter 170 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 will retain the sole banking office of Shirley and all employees from both merging banks. Moreover, the merger would enable the continuing bank to expand both Fidelity's and Shirley's efforts to meet customer and community credit needs. Also, in accordance with the Merger Agreement and in connection with this transaction, it is anticipated that a $500,000.00 donation from Fidelity will be made to form a charitable foundation (the "Foundation"). In recognition of Shirley's ninety year commitment to Shirley, the Foundation will provide a fund to benefit residents and civic organizations in Shirley. The Foundation's initial trustees will include, at a minimum, those current directors of Shirley who will not serve on the continuing bank's Board of Directors.
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 Fidelity and Shirley received a rating of "High 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 Shirley with and into Fidelity under the charter, by-laws and name of Fidelity Co-operative Bank pursuant to the provisions of said section 25 of chapter 170 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 Shirley as a branch office.
The approvals granted herein are subject to the following conditions:
- 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 170, section 25 has been returned with my endorsement thereon;
- that the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
- that the proposed merger be consummated within one year of the date of this Decision.
| February 6, 1998 Date | Thomas J. Curry Commissioner of Banks |