In the matter of the merger of Bank of Easthamptom, A Co-Operative Bank, Easthampton, Massachusetts with and into Florence Savings Bank, Northhampton, Massachusetts
By the Division of Banks
Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A and Massachusetts General Laws chapter 170, section 26A, Florence Savings Bank ("Florence" or the "Petitioner"), Northampton, Massachusetts seeks approval to merge with Bank of Easthampton, A Co-operative Bank ("Easthampton "), Easthampton, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of June 9, 1999, Easthampton will merge with and into Florence under the charter, by-laws and name of Florence Savings Bank. The sole banking office of Easthampton 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.
Florence is a state-chartered savings bank in mutual form. As of March 31, 1999, it had total assets of approximately $392.8 million. Florence's main office is located in the Florence neighborhood of Northampton. It has two branch offices also in Northampton, one branch office in Amherst and another branch office in Williamsburg. It has three subsidiaries, Blue Devil Security Corporation, Florence Security Corporation and Golden Hawk Security Corporation. Its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund ("DIF") of the Depositors Insurance Fund in excess of the FDIC's insurance limits.
Easthampton is a state-chartered co-operative bank also in mutual form. As of March 31, 1999, it had total assets of $11.4 million. Its sole banking office is located in Easthampton. Easthampton has no subsidiaries. Its deposits are insured by the FDIC and the Share Insurance Fund of The Co-operative Central Bank in excess of the FDIC's insurance limits.
Florence identifies its primary service area as Hampshire County. Easthampton's primary service area covers the location of its sole banking office, Easthampton, as well as Southampton and Westhampton, all towns located within Hampshire County. The combined bank's primary service area will continue to cover Hampshire County.
Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Although Easthampton's primary service area borders one of the communities in Florence's primary service area; there is no city or town in which both banks maintain a banking office. Additionally, the amount of deposit and loan activity from the other bank's service area for both banks appears to be 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 Trustees will consist of two members of the Board of Directors of Easthampton along with all of the trustees of Florence immediately prior to the consummation of the merger. The management of the combined bank is also detailed in the application documents. The applicant bank argues that the combined institution will produce some financial economies and additional service capabilities. 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 additional branch office in its network. In particular, customers of Easthampton will have access to banking offices in Northampton, Amherst and Williamsburg. Additionally, customers of Florence will now have access to a banking office in Easthampton. Moreover, there are some products and services currently offered by Florence to its customers that are not presently available to customers of Easthampton. As described in the application, such services include some types of commercial deposits and loans, jumbo mortgage loans, home equity loans, MHFA loans, soft second loans, a variety of IRAs, safe deposit boxes and debit cards. 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 34A of said chapter 168 and section 26A 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. As stated in the application, the resulting bank will retain all employees of Easthampton and Easthampton's sole banking office, a facility which may benefit from future improvements planned by the Petitioner.
Related to the issue of public convenience and advantage is the record of performance under CRA by the banks which are parties to this transaction. Such review for state-chartered banks includes examination of personnel by 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 Florence and Easthampton received ratings of "Outstanding" and "Satisfactory", respectively, in the most recent examinations of their performances under CRA. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval of the Petitioner's application.
As part of the review of this transaction, the continuing bank's year 2000 ("Y2K") readiness and compliance efforts were considered. The Division specifically requested information on this matter from the Petitioner. That analysis by the Division does not preclude approval of this transaction.
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 Easthampton with and into Florence under the charter, by-laws and name of Florence Savings Bank pursuant to the provisions of said section 34A of chapter 168 and said section 26A 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 Easthampton 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 168, section 34A and chapter 170, section 26A 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;
- that the proposed merger be consummated within one year of the date of this Decision; and
- that the merger may not be consummated until the Division has received notice of satisfactory arrangements for this transaction from the DIF.
| August 31, 1999 Date | Thomas J. Curry Commissioner of Banks |