Decision relative to the merger of Cargill Bank, Putnam, Connecticut with and into Park West Bank and Trust Company, West Springfield, Massachusetts
By the Division of Banks
Park West Bank and Trust Company ("Park West" or the "Petitioner"), West Springfield, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Cargill Bank ("Cargill"), Putnam, Connecticut pursuant to the provisions of Massachusetts General Laws chapter 167C, section 7 and in accordance with the applicable provisions of Massachusetts General Laws chapter 172 under the terms of the Amended and Restated Agreement and Plan of Merger (the "Agreement") dated as of June 6, 2001. The Agreement provides for the merger of Cargill with and into Park West under the charter and by-laws of Park West and name of Westbank. The main office of Park West would remain the main office of the continuing institution and all of the banking offices of Cargill will become branch offices of the continuing bank. Park West and Cargill are both subsidiaries of Westbank Corporation, West Springfield, Massachusetts, 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, including supplemental filings, 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 convenience and needs of the communities to be served by the continuing institution; the record of performance under the Community Reinvestment Act ("CRA") of the banks involved in the transaction and other applicable statutory criteria.
Park West is a Massachusetts state-chartered trust company. As of April 30, 2001 it had assets of approximately $414.3 million. Park West's main office is located in West Springfield, Massachusetts. Park West operates thirteen branch offices. The branch offices are located in Chicopee, East Longmeadow, Feeding Hills, Holyoke, Ludlow, Southwick, Westfield and West Springfield, Massachusetts. The deposits of Park West are insured by the Federal Deposit Insurance Corporation ("FDIC"). It operates as a full-service commercial bank with a trust department.
Cargill is a Connecticut-chartered savings and loan association with its main office in Putnam, Connecticut and three branch offices. These branch offices are located in Danielson, Putnam and Woodstock, Connecticut. The deposits of Cargill are insured by the FDIC. As of April 30, 2001, Cargill Bank had assets of approximately $154.9 million. It was acquired by Westbank Corporation in 1999. Cargill offers a full range of retail banking services to its customers.
Both banks generally identify their market areas or primary service areas as their respective CRA assessment areas. Park West's CRA assessment area covers twenty-six communities in the Springfield, Massachusetts Metropolitan Statistical Area. Cargill=s assessment area is a region encompassing seven communities in Windham County, Connecticut. 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. Since the banks operate in different states, there is no overlap in the communities served by each bank. Moreover, the Petitioner states that there are a variety of competing financial institutions that operate in the separate market areas of each bank. Additionally, weight must be given to the fact that Westbank Corporation 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 merger is viewed by Westbank Corporation as an internal corporate reorganization. After operating Park West and Cargill as separate entities for over two years, it has determined that there are several advantages to merging its bank subsidiaries. Among other things, the merger would streamline regulatory oversight and reduce regulatory assessments, eliminate duplicate management activities, including audits, and will increase Park West's, as the continuing institution, legal lending limit by four million dollars.
The application notes that the continuing institution's Board of Directors will consist of all of the persons occupying such positions at Park West immediately prior to 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, Park West 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 banks all of the current services and products of each bank. Moreover, there are some products and services currently offered by Park West to its customers that are not presently available to customers of Cargill. As described in the application and a supplemental filing of July 30, 2001, such services, among others, include SBA loans, business savings accounts, tenant accounts, trust services, non-deposit investment products, investment management services, and on-line banking services. 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 the communities it serves and to develop new products and services for its customers. The maintenance of Cargill=s banking offices as branch offices of the continuing bank as well as Park West's ability to provide future employment opportunities for Massachusetts and Connecticut residents are also cited as support for meeting such criteria.
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 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 Park West received a rating of "Satisfactory" and Cargill Bank also a rating of "Satisfactory" in their most recent CRA performance examinations. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval of the Petitioner's application.
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 Cargill to merge with and into Park West under the charter and by-laws of Park West and name of Westbank pursuant to Massachusetts General Laws chapter 167C, section 7 and the applicable provisions of chapter 172 of the Massachusetts General Laws. Approval is also granted for Park West to maintain the four banking offices of Cargill 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 Cargill to be maintained as branch offices of the continuing bank shall be deemed to be out-of-state branches and subject to the supervision of the Division and the applicable laws of Connecticut; and
- that the proposed merger shall be consummated within one year of the date of this decision.
| August 20, 2001 Date | Thomas J. Curry Commissioner of Banks |