In the matter of the merger of The Amesbury Co-operative Bank, Amesbury, Massachusetts with and into The Provident Bank, Amesbury, Massachusetts
By the Division of Banks
Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A, The Provident Bank ("Provident" or the "Petitioner"), Amesbury, Massachusetts seeks approval from the Division of Banks (the "Division") to merge with The Amesbury Co-operative Bank ("Amesbury"), Amesbury, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of September 12, 2000, Amesbury will merge with and into Provident under the charter, by-laws and name of The Provident Bank. The sole banking office of Amesbury will be closed after the merger, if the merger application is approved. Although Amesbury is in mutual form and Provident in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) and related laws since Provident Bancorp is a mutual holding company and Provident is the subsidiary banking institution resulting from that reorganization. Therefore, upon consummation of such merger, any liquidation rights of the depositors of Amesbury will continue and succeed to such rights in Provident Bancorp to the same extent as existing depositors of Provident under General Laws chapter 167H, section 2 and 209 CMR 33.25, its implementing regulation.
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, the interests of the depositors of each bank, the future prospects of the institutions and the convenience and needs of the communities to be served by the consolidated entity as well as the performance of each bank under the Commonwealth's Community Reinvestment Act ("CRA"), General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq.
Provident is a state-chartered savings bank in stock form. As of June 30, 2000, it had total assets of approximately $157 million. Provident's main office and its two branch offices are located in Amesbury. One of the branch offices in Amesbury opened in December 2000. Provident also has an application to establish a branch office in Newburyport which was recently approved by the Division. According to the merger application, Provident has two subsidiaries, Provident Security Corp. and 5 Market Street Security Corp. Its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund ("DIF") of the Depositors Insurance Fund for amounts in excess of the FDIC's insurance limits.
Amesbury is a state-chartered co-operative bank in mutual form. As of June 30, 2000, it had total assets of $21.3 million. Its sole banking office is located in Amesbury. Amesbury has no subsidiaries. Its deposits are insured by the FDIC and the Share Insurance Fund ("SIF") of The Co-operative Central Bank for amounts in excess of the FDIC's insurance limits.
Provident identifies its primary service area as the Massachusetts communities of Amesbury, Salisbury and Newburyport and the New Hampshire community of South Hampton. Amesbury's primary service area covers the location of its sole banking office, Amesbury, as well as Salisbury which is also located in Essex County. The combined bank's primary service area will continue to cover the communities presently served by each bank.
The decision to close a branch office is made initially by a bank. If the bank is chartered by the Commonwealth, as is Amesbury, it must seek the approval of this Division under a procedure detailed herein and consistent with the applicable statute. In deciding upon an application to close a branch office, the Division, pursuant to Massachusetts General Laws chapter 167C, section 3 must determine that the area served by the branch office will not be adversely affected by the transaction. The statute further states, that in addition to other factors, the availability of credit as well as the convenience and necessity of deposit services must be considered. In rendering a decision, the Division attempts to balance the needs of the petitioning institution and the community being served by the branch office. In making a decision, 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 the closing in light of the statutory test that the area served, as viewed, will not be adversely affected by the transaction. Such analysis must be based upon a case by case review of any unique factors and circumstances affecting the customers and area serviced by the branch office. The statute directs the Division to consider, among other factors, the availability of credit as well as the convenience and necessity of deposit services. The Division has reviewed each statutory requirement in turn.
On the issue of the availability of credit, the Division has found that the Petitioner's record of performance under the CRA is "Satisfactory" under its most recent evaluation. As Provident serves and will continue to serve the same communities as those served by Amesbury as indicated in Provident's CRA performance evaluation and the merger application, the CRA commitment to those communities will continue. The factor of the convenience and necessity of deposit services also weighs in the Petitioner's favor based on the delivery of deposit services from its banking offices within its primary service area, an area which already includes Amesbury's primary service area. Additionally, as indicated in the application, the sole banking office of Amesbury is located directly across the street from Provident's main office. As cited in the application and consistent with the Division's analysis, this transaction will promote convenience of services to the other bank's customers since Provident will be able to conduct its banking operations more efficiently from just one banking office instead of two such offices in that immediate area. As Provident currently has and will maintain three banking offices in Amesbury, the overall result of this transaction will be the availability of two additional banking offices to customers of Amesbury. It is also noted in the application that a number of other financial institutions also operate in that community. Based upon these factors, I determine that the area served by the banking office at One Market Square, Amesbury will not be adversely affected by the closing of that office after the merger, if approved.
Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Although the primary service areas of both banks overlap, it is noted in the application that a number of other financial institutions operate banking offices in the overlapping area. Additionally, the overlapping area comprises only two communities, Salisbury and Amesbury. 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 two members of the Board of Directors of Amesbury along with all of the directors of Provident 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 financial economies and additional service capabilities. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.
The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. The application documents provide examples of the benefits which will result from the merger. In particular, customers of Amesbury will have access to two additional banking offices in Amesbury and the recently approved branch office in Newburyport, upon its opening. Moreover, there are some products and services currently offered by Provident to its customers that are not presently available to customers of Amesbury. As described in the application, such services include statement savings accounts, internet banking, certain types of non-deposit investment products, drive-up ATMs, participation in the surcharge-free ATM network, SUM, and a twenty-four hour a day telephone (voice response) service, as well as other services noted in the application. 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 as set out in section 34A of said chapter 168 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 of statute. As stated in the application, the resulting bank will offer employment to all employees of Amesbury and provide the aforementioned products and services and other benefits to its customers. Although the sole banking office of Amesbury is seeking to be closed as part of this transaction due to its being across the street from the main office of the Petitioner, Provident will maintain its other offices and, as noted herein, has recently obtained approval to open a branch office in Newburyport.
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 state-chartered banks 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 both banks each received 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.
The Division has also reviewed the additional materials submitted to the FDIC and the Division relative to this transaction. A meeting with representatives of the Petitioner was held at the Division to discuss the supplementary filing with the FDIC and other aspects of the transaction. The additional documents filed and the full record of this transaction reflect that changes were made to the proposals described in the application concerning a community trust fund and matters relating to the directors of Amesbury.
Upon review of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that the consummation of the proposed consolidation would be in the public interest. On the basis of these considerations, approval is granted to merge Amesbury with and into Provident under the charter, by-laws and name of The Provident Bank pursuant to the provisions of said section 34A of chapter 168 and said section 7 of clause (2) of chapter 167H of the General Laws. In accordance with General Laws chapter 167C, section 3, approval is also granted for the closing of the sole banking office of Amesbury.
The approvals granted herein are subject to the following conditions:
- that the proposed merger shall not become effective until a Certificate signed by the Presidents and Clerks or other duly authorized officers of each bank indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34A and chapter 167H, section 7, clause (2) 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 the proposed merger and branch office closing be consummated within one year of the date of this Decision; and
- that the merger may not be consummated until the Division has received notice of satisfactory arrangements for this transaction from the SIF.
| February 7, 2001 Date | Thomas J. Curry Commissioner of Banks |