Decision relative to the applications of Holyoke Credit Union, Holyoke, Massachusetts
By the Division of Banks
Holyoke Credit Union (the "Applicant" or the "Credit Union"), Holyoke, Massachusetts has petitioned the Division of Banks (the "Division") to redesignate the location of its main office from its current site at 235 Maple Street to an approved but unopened office at 490 Westfield Road (the "Westfield Road Office"), Holyoke, Massachusetts; and in conjunction therewith close its current main office at 235 Maple Street (the "Maple Street Office"). The applications were submitted pursuant to the provisions of Massachusetts General Laws chapter 171, section 8. Under said statute both the redesignation of the main office and the closing of an office are subject to the written consent of the Commissioner of Banks.
The applications submitted by the Credit Union were complete in their compliance with the administrative mandates of the Division. Accordingly, notice of the applications were posted and published in accordance with the Division's standard procedures. Based on the public comments and requests received during the initial comment period, a public hearing on the applications was scheduled by the Division. The hearing was held at 3:00 p.m. on July 19, 2000 at the Holyoke Heritage State Park Visitor's Center. It was very well attended by approximately seventy-five people. Extensive oral testimony was received at the hearing from nineteen people. At the hearing and during the pendency of these matters the Division has received comments from elected municipal and state public officials. The period for submitting comments after the hearing ended on July 26, 2000.
The Division has reviewed the applications and the entire record of these transactions on matters which are applicable within the Division's jurisdiction. As noted above, the record reflects comments received during the initial comment period, oral and written comments at the public hearing as well as comments received during the supplemental filing period.
The statutory and administrative factors on which the merits of the Credit Union's applications have been analyzed by Division are well settled. Those factors were read into the record by the Division's presiding officer at the opening of the public hearing for the benefit of the people in attendance. Since the applications were submitted under section 8 of said chapter 171, the provisions of that law and related application items were considered. Those factors include whether competition will be unreasonably affected and whether public convenience and advantage will be promoted. The financial and managerial resources of the Credit Union and its record of the performance under the Commonwealth's Community Reinvestment Act ("ACT"), section 14 of chapter 167 of the General Laws and its implementing regulation, 209 CMR 46.00 et seq are also applicable. The record of these matters was considered in the light of the foregoing factors.
The Applicant is a state-chartered credit union subject to the provisions of said chapter 171 and other related provisions of the General Laws. It had total assets at December 31, 1999 of approximately forty-four million dollars. The Credit Union is the resulting entity from the merger of Holyoke Municipal Credit Union ("Holyoke Municipal"). That merger was consummated in June of 1997 under the charter and by-laws of Holyoke Municipal and the name of the Applicant. The main office of Holyoke Municipal located at 337 High Street in downtown Holyoke was closed as part of that transaction. The Maple Street office of the Applicant, located less than a half mile from Holyoke Municipal's main office, became the main office of the merged credit unions. The continuing credit union also retained the two branch offices of Holyoke Municipal which it acquired from a merger with Hampden County Employees Federal Credit Union in August of 1995. Those branch offices are located at the Hampden County Hall of Justice in Springfield and the Hampden County Correctional Center in Ludlow.
The continuing credit union's by-law provision on qualification for membership was also amended as part of the merger of Holyoke Municipal with and into the Applicant. The amendment combined the membership by-law provisions of both credit unions. In general, membership in the Applicant is available, including but not limited to, residents of Holyoke and its vicinity, public employees of Hampden or Hampshire Counties as well as employees of healthcare industries in those same counties.
Subsequent to the merger, the Credit Union, in the spring of 1998, applied for permission to establish the Westfield Road office and to spend the money for its construction. The application discussed the fact that the site was intended to become, subject to regulatory approval, the future main office of the Credit Union. That application stated that the Maple Street Office would be retained as a branch office. The Division granted approval for the investment in and the establishment of the Westfield Road Office on August 25, 1998. Prior to the filing of the Westfield Road Office application, the Division had approved on March 25, 1998 the Credit Union's request to purchase property adjacent to the Maple Street Office and make it a parking lot. The pending applications now state that the Credit Union will sell the Maple Street Office and the adjacent parking lot.
Prior to the public hearing, the Division's presiding officer and General Counsel visited both office sites of the Credit Union in Holyoke. The distance between the two facilities, approximately 2.5 miles, was noted as well as the physical structure of each office. The downtown area of Holyoke, in general, was also traveled several times to observe, among other things, the other banking offices available in the area. The distance of those offices from the Maple Street Office was also noted. The Westfield Road Office is a convenient modern facility. It is located at the end of a residential area, but immediately adjacent to a small multi-store shopping area. It is within one mile and one and one half miles from the areas two largest shopping malls. The site is also located at the intersection of a state highway. It appears to be a very accessible site.
The Maple Street Office appeared to be extremely limited as to its space for conducting credit union business. The only additional space at that site was the adjacent parking lot. The applications and testimony of the Credit Union addresses numerous specific details about the two sites, some of which are referenced later in the Decision. These general observations of the two sites are also part of the Division's analysis of the pending applications.
The decision to close an office is made initially by a credit union. If the credit union is chartered by the Commonwealth, as is the Petitioner, it must seek the approval of this Division under the procedures detailed herein and consistent with applicable statute. In rendering a decision, the Division attempts to balance the needs of the petitioning financial institution and the community being served by the office. The Division looks to see not only that all financial and statutory requirements are met, but also that adequate banking facilities and services remain available to the public.
The task before this Division thus becomes to analyze this proposed office closing in light of the statutory test. Such analysis must be based upon a case by case review of any unique factors and circumstances affecting the customers and area served by the office. The Division considers, among other factors, the availability of credit as well as the convenience and necessity of deposit services. The Division has reviewed and considered all such matters.
As noted above, the Division's analysis of competition among financial institutions in the Commonwealth is a factor for consideration. In simplest terms, the Credit Union operates from one office in Holyoke and at the end of the proposed transactions, if approved, it would continue to operate from a single office located in Holyoke since the Westfield Road Office remains unopened. Neither the application to establish the Westfield Road Office nor these pending applications have been challenged in any way as adversely impacting competition among financial institutions in the impacted area. The Division's review also has found no adverse competitive effects. Accordingly, the analysis of the competitive effects of the proposed transactions does not preclude their approval.
The standard test of whether a transaction will promote public convenience and advantage has also been considered by the Division. There are, however, many facets to such an analysis. The distance between the nearest continuing office and the proposed office to be closed by a petitioner is a factor to be reviewed. That distance will impact customers of a financial institution in different ways. For some it could have a negative impact if the office proposed to be closed is in the area where they live, work, shop or conveniently pass by in the regular course of their travels. Such is the case at hand. For those credit union members who work in downtown Holyoke, as is the situation for many former members of Holyoke Municipal, the closing of the Maple Street Office would be less convenient than if it were to remain open.
The Credit Union's view is that all of its members will benefit as a result of the proposed transactions. It notes that for the first time members will, at the Westfield Road Office, have ample lobby space in which to conduct their financial business. Moreover, that site will also have better off-street parking and two drive-through teller lanes. The Credit Union emphasizes that the site is in Holyoke and only 2.5 miles from the downtown office. The Credit Union also states that reducing operating expenses by the closing of the Maple Street Office will strengthen its financial position and allow for enhanced services for all members. Such services will involve not only lower interest rates on loans but also higher deposit rates, Additionally, the Credit Union indicates operating from one office in Holyoke is only one component of several initiatives to provide services to its members. Those other initiatives involve adaptation of various remote service delivery channels, including but not limited to, telephone and home banking as well as remote wireless account access. These various actions according to the Credit Union will help it meet the evolving product requests of its membership both now and in the future.
The Division's determination of whether the test of whether public convenience and advantage will be promoted is not limited to the distance between convenient banking office locations of a petitioner. In those cases where it is an issue, the Division looks to see if alternative banking services are available in the area where a banking office is proposed to close. The applications filed with the Division are required to provide information on offices of other financial institutions and the Credit Union provided such information. Moreover, as noted above, personnel of the Division noted other available banking facilities while driving in Holyoke prior to the public hearing. The record reflects and the Division observed that banking offices of commercial banks and a savings bank are within walking distance of the Maple Street Office. Accordingly, the Division finds that credit and deposit services from financial institutions will remain available in the immediate vicinity of the Maple Street Office.
Related to the issue of public convenience and advantage is the record of performance under CRA by the Credit Union. Such review for a state-chartered credit union includes examination by personnel of the Division as well as analysis of concerns received by the Credit Union's membership and its response to those concerns fairly raised. It should be noted that Massachusetts remains the only state which applies CRA and its examination process to credit unions. This aspect of review was specifically addressed by the Division at the public hearing. Records of the Division reflect that the Credit Union received a "Satisfactory" rating at its most recent examination of performance under CRA.
The financial and managerial resources of the Credit Union were also considered by the Division. The prior approval of the applications to invest in and establish the Westfield Road Office reflect the Division's then satisfactory analysis of these two factors. Although it has been two years since those approvals, the Division's current review has not resulted in any substantive change. The Division recognizes that the petition to close the Maple Street Office is a change in management's previous plan. These pending applications and testimony indicate the Credit Union's deliberations on this matter and that this recent change reflects the ongoing review of the business strategy of the Credit Union. The record of these transactions detail the involvement of the Credit Union's Board of Directors in these decisions. Upon review, the Division's consideration of the financial and managerial factors is supportive of approving these transactions.
The Division has reviewed the applications consistent with the applicable statutory and administrative criteria. The Division has also recognized the several other corporate changes which have been applied for by the Applicant and Holyoke Municipal in the last several years. The include, among other things, two mergers, the approval for the addition of three branch offices, and by-law changes to expand membership eligibility. Clearly such actions have been made to advance the operations of each credit union and now the continuing credit union. Such action should be part of an overall business plan which is continually reviewed in light of ongoing developments. The Division would be critical of a financial institution which did not alter its business plan due to significant changed circumstances. On the other hand, the Division expects a board and management of any financial institution to have developed a business plan which anticipates various contingencies.
Based on the extensive 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 this transaction and that the performance under CRA by the Credit Union are consistent with its approval. Therefore, in accordance with these findings and pursuant to statutory authority cited herein, the Division approves the applications and authorizes the Credit Union to redesignate the location of its main office from its current site at 235 Maple Street to an approved but unopened office at 490 Westfield Road, Holyoke; and in conjunction therewith close its current main office at 235 Maple Street. The approvals granted herein are subject to the condition that these office transactions are completed within one year of the date of this Decision.
| September 7, 2000 Date | Thomas J. Curry Commissioner of Banks |