Decision relative to the merger of Andover Bank NH, Salem, New Hampshire with and into Andover Bank, Andover, Massachusetts
By the Division of Banks
Andover Bank ("Andover Bank" or the "Petitioner"), Andover, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with its affiliate, Andover Bank NH, Salem, New Hampshire pursuant to the provisions of Massachusetts General Laws chapter 167C, section 7 and in accordance with the applicable provisions of the Massachusetts General Laws chapter 168 under the terms of a Merger Agreement (the "Agreement") dated as of November 20, 1998. The Agreement provides for the merger of Andover Bank NH with and into Andover Bank under the name, charter and by-laws of Andover Bank. The banking offices of Andover Bank NH will become branch offices of Andover Bank. Both banks are either direct or indirect subsidiaries of Andover Bancorp, Inc., a bank holding company.
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 and the convenience and needs of the communities to be served by the continuing institution and other applicable statutory criteria.
Andover Bank is a Massachusetts state-chartered savings bank in stock form. As of September 30, 1998 it had assets of approximately $1.28 billion. Andover Bank's main office is located in Andover, Massachusetts. Andover Bank operates three branch offices in Methuen, two branch offices in Lawrence, two branch offices in Tewksbury, one branch office in North Andover and another branch office in Andover. The deposits of Andover Bank are insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC") and deposits in the excess of the FDIC's limits are insured by the Deposit Insurance Fund of the Mutual Savings Central Fund, Inc.
Andover Bank NH is a New Hampshire chartered guaranty savings bank in stock form with its main office in Salem, New Hampshire and one branch office in Londonderry, New Hampshire. The deposits of Andover Bank NH are insured by the FDIC. As of September 30, 1998, Andover Bank NH had assets of approximately $91.3 million.
Both banks identify their market areas or primary service areas as their respective CRA assessment areas. Andover Bank's CRA assessment area covers Andover, Boxford, Georgetown, Groveland, Haverhill, Lawrence, Methuen, Middleton, North Andover, North Reading, Reading, Tewksbury and Wilmington, Massachusetts. Moreover, that assessment area includes seven southern New Hampshire communities, some contiguous to and immediately north of some of the aforementioned Massachusetts cities and towns. In addition to Pelham, New Hampshire, Andover Bank NH's CRA assessment area includes Atkinson, Derry, Londonderry, Salem and Windham, New Hampshire, all of which are also served by Andover Bank. The combined bank would continue to serve the areas currently served by both banks.
Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Although there is some overlap in the communities served by each bank, there is no city or town in which both banks maintain a banking office. Moreover, the Division's review noted that a diverse number of competing financial institutions operate in the overlapping area. Additionally, weight must be given to the fact that Andover Bancorp, Inc. could negate competition in any form between its bank subsidiaries. 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 Andover Bank 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 economies and service capabilities that may save costs. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.
As a result of this merger, Andover Bank indicates the banking public will benefit in several ways. According to the application, such benefits include a branch office network which extends interstate and enhanced access to products and services. The application also notes that the continuing bank expects to make available to all customers of both Andover Bank and Andover Bank NH the services and products of each bank. 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 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. According to the Petitioner, the merger will enhance the continuing bank's financial capability to invest in communities it serves and to develop new products and services for its customers. The maintenance of Andover Bank NH's banking offices as branch offices of the continuing bank as well as Andover Bank's ability to provide future employment opportunities for both Massachusetts and New Hampshire residents are also cited as support for meeting this criteria. Moreover, it is noted that excess deposit insurance through the DIF will be available for the first time to depositors of Andover Bank NH.
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 a Massachusetts state-chartered bank includes examination of personnel by the Division as well as analysis of concerns received from the banks'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 Andover Bank received a rating of "Outstanding" and Andover Bank NH a rating of "Satisfactory" 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, Andover Bank's year 2000 ("Y2K") readiness and compliance efforts were considered. The Division specifically requested information on the matter from the applicant. That analysis by the Division does not preclude the approval of this transaction.
Upon review of this application with reference to the relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of the proposed merger would be in the public interest. On the basis of these considerations, approval is granted for Andover Bank NH to merge with and into Andover Bank pursuant to General Laws chapter 167C, section 7 and the applicable provisions of chapter 168 of the General Laws. Approval is also granted for Andover Bank to maintain the two banking offices of Andover Bank NH as branch offices under said section 7.
The approvals granted herein are subject to the following conditions:
- that no merger shall become effective until a certificate signed by the Presidents and Clerks or other duly authorized officers of the banks involved in the merger indicating that each such institution has complied with the provisions of Massachusetts General Laws chapter 167C, section 7, or other applicable statute, 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, in accordance with said section 7, the banking offices of Andover Bank NH to be maintained as branch offices of Andover Bank shall be deemed to be out-of-state branches and subject to the supervision of the Division and the applicable laws of New Hampshire; and
- that the proposed merger shall be consummated within one year of the date of this decision.
| February 12, 1999 Date | Thomas J. Curry Commissioner of Banks |