Decision relative to the conversion of First Essex Bank, FSB, Lawrence, Massachusetts to a State Charter
By the Division of Banks
First Essex Bank, FSB (the "Bank" or "First Essex"), Lawrence, Massachusetts seeks to convert from a federally-chartered savings bank to a state-charter under the provisions of Massachusetts General Laws chapter 168, section 38. The Bank is a former state-chartered bank which operated under the name First Essex Savings Bank prior to its conversion to a federal charter in 1993. It is a wholly owned subsidiary of First Essex Bancorp, Inc. As a federally chartered savings bank, First Essex is regulated by the Office of Thrift Supervision ("OTS"), a federal agency.
Notice of the application has been posted and published as required by the Division of Banks (the "Division"). The time period for interested persons to submit comments has passed and a review of the application, supporting documents and all related materials has been completed. The analysis of this record considered the competitive effects of the proposed transaction, the financial and managerial resources of the Bank, the convenience and needs of the communities to be served by the Bank and other applicable statutory criteria.
As described in the submitted documents, First Essex is a retail financial institution which attracts deposits from a variety of sources, including both consumers and businesses. It uses those funds in its business in which it offers a wide range of residential, commercial and consumer loan products. One of the reasons stated for First Essex's submission of this application is the availability of additional lending powers under state law. Consistent with the federal Community Reinvestment Act ("CRA") Assessment Areas, identified in the Bank's "2000 Community Reinvestment Act Business Plan", First Essex's service area includes the Lawrence/Haverhill Metropolitan Statistical Area ("MSA"), the Lowell MSA, the Manchester, New Hampshire MSA, as well as certain communities in Merrimack County and Hillsborough County, New Hampshire. At the time of application, it served its market area from nineteen banking offices, nine of which are located in Essex County, Massachusetts; four of which are located in Rockingham County, New Hampshire; three of which are located in Hillsborough County, New Hampshire; two of which are located in Merrimack County, New Hampshire; and one of which is located in Middlesex County, Massachusetts. As of September 30, 2000, First Essex had assets of approximately $1.49 billion.
Section 38 sets out extensive provisions for the conversion of a federally-chartered savings bank to an institution chartered by the Commonwealth. One such requirement is that a savings bank become a member of the Depositors Insurance Fund (the "Fund") and thereby have its excess deposits insured through the Deposit Insurance Fund. The Division received notice on January 10, 2001 from the Fund that satisfactory arrangements have been made with it by First Essex for its conversion to a state-charter. The primary deposit insurer for First Essex will remain the Federal Deposit Insurance Corporation (the "FDIC") and the Division has received notice of continued coverage by the FDIC subsequent to the conversion.
As discussed in the application, the conversion of First Essex, in and of itself, will not result in any significant change in the operation of First Essex, the products and services offered or the locations from which it conducts business. Moreover, the financial characteristics of First Essex will not be impacted by the transaction. The by-laws of the Bank also have been reviewed and discussed relative to compliance with applicable provisions of Massachusetts law. Based upon these facts and the analysis of the record of this application, considerations relative to competition, public convenience and advantage, as well as financial and managerial resources, are found to be supportive of this application.
Another factor reviewed by the Division on each pending application is the record of performance under the CRA by parties to the transaction. Such review for state-chartered banks includes examination by personnel of the Division as well as analysis of concerns received from the bank's community and its response to those issues fairly raised. The Division will also consider a publicly available descriptive rating and evaluation by a federal bank regulatory agency. Upon review, the Division noted that First Essex received a rating of "Satisfactory" in its most recent evaluation by the OTS.
Upon review of the application with reference to the relevant statutory and regulatory requirements, approval is hereby granted pursuant to section 38 of said chapter 168 for First Essex Bank, FSB to convert to a state-charter under the name of First Essex Bank and to maintain and operate all existing banking offices under the provisions of Massachusetts General Laws chapter 167C.
The approvals granted herein are subject to the following conditions:
- that by-laws and an amended and restated charter of the Bank are filed in final form with the Division and that said amended charter is also filed with the Secretary of State;
- that all payments required by section 38 of said chapter 168 are made to the Fund; and
- that the proposed conversion be completed within one year of the date of this Decision.
|February 7, 2001 |
|Thomas J. Curry |
Commissioner of Banks