Decision relative to the petition of Seacoast Financial Services Corporation, New Bedford , Massachusetts to acquire Home Port Bancorp, Inc., Nantucket, Massachusetts
By the Division of Banks
Seacoast Financial Services Corporation (the "Petitioner" or "Seacoast"), New Bedford, Massachusetts has petitioned the Board of Bank Incorporation (the "Board") to acquire Home Port Bancorp, Inc. ("Home Port"), Nantucket, Massachusetts and indirectly Home Port's banking subsidiary, Nantucket Bank. The transaction involves the merger of a subsidiary of Seacoast into Home Port and the subsequent merger of Home Port with and into Seacoast. Subsequent to the merger of the holding companies, Nantucket Bank will operate as a direct subsidiary of Seacoast. Through the acquisition, Seacoast will control two banks and will become a bank holding company under Massachusetts' law. Seacoast is the holding company for Compass Bank for Savings ("Compass"), New Bedford, Massachusetts. The application was submitted pursuant to the provisions of sections 2 and 4 of chapter 167A of the General Laws.
Notice of the application was published and posted as directed by the Board, thereby affording opportunity for interested parties to submit comments. Other standard procedures informing the public of this matter before the Board were implemented. The Board held a public hearing on the petition of Seacoast on September 28, 2000. The Board extended the comment period after the public hearing from October 12, 2000 until October 20, 2000. The Board extended the comment period to cover the meeting of Home Port's stockholders to vote on the proposed transaction. The Board subsequently received notice that the shareholders of Homeport had voted in favor of the proposed transaction. Additionally, the Board directed that the Petitioner supplement its filing in several areas.
The Board has reviewed the application as well as the oral and written testimony received at the public hearing and the supplemental filing received during the open comment period which were applicable to matters within the Board's jurisdiction. That review focused on the statutory and administrative criteria which includes, among other things, whether competition among banking institutions will be unreasonably affected; whether public convenience and advantage would be promoted; and the record of performance under the Community Reinvestment Act ("CRA") by the involved banks. The additional statutory requirements set out in sections 2 and 4 of said chapter 167A were also significant factors in the Board's deliberations on the matters before it.
One such statutory provision requires the Board to have received notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory arrangements have been made by the Petitioner consistent with statute and the MHPF's various affordable housing loan programs. In the application documents and at the public hearing the Petitioner informed the Board of its discussions and filings with the MHPF in order to meet this requirement. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated November 2, 2000.
Seacoast had total consolidated assets of $2.3 billion at June 30, 2000. It reorganized from a mutual holding company to a stock holding company in November 1998 in conjunction with the acquisition of Sandwich Bancorp, Inc. Its principal activity is to act as a holding company for Compass Bank, a state-chartered savings bank in stock form. Compass Bank offers a full array of consumer and commercial banking services from thirty-seven banking offices. It operates several subsidiaries.
Home Port had total consolidated assets of $339.3 million at June 30, 2000. Its principal activity is to act as a holding company for Nantucket Bank, a state-chartered savings bank in stock form. Nantucket Bank operates three banking offices all on the island of Nantucket. It also provides a full range of banking services to its consumer and commercial customers.
The Petitioner has submitted materials to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Much of that analysis is detailed according to various tests used by federal agencies. That analysis demonstrates that consummation of the transaction will not result in undue concentration of banking resources in the specified banking markets in Massachusetts. The application documents analyzed the competitive impact of the transaction in the banking market affected by the proposed transaction. Traditionally, however, this Board has not limited its review to those previously cited federal standards in its consideration of whether competition will be unreasonably affected. Rather it is the position of this Board to consider a transaction in light of its impact on the citizens, communities and banking structure in the Commonwealth on a community by community basis instead of by variously grouped markets. The Board's review recognizes that there is no overlap in the banking office networks of Compass Bank and Nantucket Bank. The unique aspect of the Nantucket banking market is cited by the Petitioner as a reason for maintaining Nantucket Bank as a separate bank subsidiary after the proposed acquisition. Upon review, the Board does not believe the transaction will unreasonably affect competition since a number of diverse bank and financial institutions will continue to provide competitive deposit and credit services in the affected areas.
The Board has also considered whether public convenience and advantage will be promoted by the proposed transaction. As discussed above, Nantucket Bank will continue to operate as a bank subsidiary of the Petitioner under the transaction presented to the Board. The Petitioner's supplemental filing details several benefits from the transaction for the customers of Nantucket Bank. Specific mention is made of Seacoast's sophisticated commercial lenders whose expertise would benefit the business community in Nantucket. Additionally, as also discussed at the public hearing, opportunities for customers of Nantucket Bank and Compass Bank to conduct transaction at the other bank's offices is being explored. Other commercial products such as sweep accouts for business customers would also be made available to customers of Nantucket Bank if the acquisition by Seacoast is approved. Moreover, according to the application and submitted documents, Seacoast as a larger entity will be better able to respond to new and innovative products which would benefit both of its subsidiary banks.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are the parties to this transaction. Such a review for a state-chartered bank includes examination by personnel of the Board as well as analysis of concerns received by the bank's community and its response to those concerns fairly raised. For other institutions, the Board looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. The matter was specifically addressed at the public hearing by the Board. The Board has noted that Compass Bank has a "Satisfactory" rating and Nantucket Bank has a "High Satisfactory" in their most recent examinations of performance under CRA. The Board's review of factors related to public convenience and advantage are consistent with approval.
The Board has considered the Petitioner's analysis of the "net new benefits" that would result from the proposed acquisition of Home Port as required under section 4 of chapter 167A of the General Laws. The Petitioner's application and oral testimony as well as the supplementary filing address this issue in detail on matters of capital investments, job creation plans, consumer and business services and commitments to maintain and open branch offices. The financial structure of the transaction was also reviewed and addressed. The resulting capital ratios and projections for the Petitioner are satisfactory. Management factors reviewed in consideration of the proposed transaction before the Board are also supportive of its approval. Additionally, all other requirements of statute relating to a bank holding company acquisition have been met.
The application, supporting documents and the comments received at the public hearing as well as the supplemental filing have established an extensive record on this petition, which has been reviewed consistent with statutory provisions and the policies of the Board. Based on the record of this matter considered in light of all relevant statutory and administrative requirements, the Board finds that public convenience and advantage will be promoted and that competition among banking institutions will not be unreasonably affected and that the records of performance under CRA by the banks involved in this transaction are consistent with its approval. Having considered the record established on this application, the Board has found that the applicable statutory and administrative criteria have been met.
In accordance with the findings expressed herein and pursuant to statute, the Board hereby approves the petition and authorizes Seaport to acquire Home Port and its subsidiary bank, Nantucket Bank and to become a bank holding company, provided that the transaction is completed within one year of the date of this Decision.
| Thomas J. Curry Commissioner of Banks | |
| Frederick A. Laskey Commissioner of Revenue | Board |
| Shannon P. O'Brien Treasurer and Receiver-General | |
| November 29, 2000 Date |