Decision relative to the petition of Boston Private Financial Services, Inc. Boston, Massachusetts to acquire Borel Bank & Trust Company San Mateo, California and become a Bank Holding Company
By the Division of Banks
Boston Private Financial Holdings, Inc. ("Boston Private Financial" or the "Petitioner"), Boston, Massachusetts has petitioned the Board of Bank Incorporation (the "Board") to acquire Borel Bank & Trust Company ("Borel Bank"), San Mateo,California. Boston Private Financial is currently the holding company for Boston Private Bank & Trust Company ("Boston Private Bank"), Boston, Massachusetts. The acquisition of the California bank triggers the Commonwealth's bank holding company statute, chapter 167A of the General Laws since Boston Private Financial would own and control two banks if Borel Bank is acquired. Accordingly, the Petitioner has submitted the applicant pursuant to the provisions of sections 2 and 4 of said chapter 167A.
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 Boston Private Financial on October 10, 2001. The comment period on the proposed transaction ended October 19, 2001.
The Board has reviewed the application as well as the oral testimony received at the public hearing. 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. All such requirements are specifically addressed in the application documents.
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, the Petitioner informed the Board of its contact 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 September 13, 2001.
Boston Private Financial is the parent company for Boston Private Bank. Boston Private Financial conducts business through one bank subsidiary and four nonbank subsidiaries. As of June 30, 2001, it had over $1 billion in consolidated assets. Boston Private Financial has a subsidiary, Sand Hill Advisors, Inc., in Menlo Park, California. It is described as serving the investment needs of high net worth individuals and institutions in the Northern California area.
Boston Private Bank is a state-chartered trust company. At June 30, 2001, it had total assets of $1.08 billion and is well capitalized. Boston Private Bank operates main office in downtown Boston and has one branch office in Wellesley. It also has recently opened loan production offices in the Jamaica Plain neighborhood of Boston and in San Francisco, California. Boston Private Bank is described as pursuing a "private banking" business strategy and is principally engaged in providing banking investments and fiduciary products to high net worth individuals, their families and businesses in Boston, New England and to a lesser extent Europe and Latin America.
Borel Bank is a California chartered bank in San Mateo, California with its deposits insured by the Federal Deposit Insurance Corporation ("FDIC"). It does not have any branch offices. Borel Bank provides general commercial and individual banking and trust services. At June 30, 2001, Borel Bank had total assets of $372.5 million. As structured, Boston Private Financial will maintain Borel Bank as a separate subsidiary.
On May 3, 2001, the Board held a public hearing on an application by Boston Private Financial to establish a new bank in Menlo Park, California. That application was withdrawn in conjunction with the proposed acquisition of Borel Bank. In both of these applications before the Board, Boston Private Financial has stated that certain similarities in the areas and businesses as well as the geographic diversification have focused its attention in the San Francisco area of California.
The Petitioner has submitted materials to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. That analysis states that consummation of the transaction will not result in undue concentration of banking resources in the specified banking markets in Massachusetts. 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 Boston Private Bank and Borel Bank operate on different coasts and there is no overlap in branch office network or service area. For that reason and other factors, the Board finds that competition among banking institutions will not be unreasonably affected.
The Board has considered whether public convenience and advantage will be promoted by the proposed transaction. As discussed above, Borel Bank will continue to operate as a separate bank. At the public hearing, the Petitioner indicated that having bank subsidiaries on each coast may allow for certain business customers which operate in each area as well as their employees to conduct their banking business more easily. According to the application the acquisition of Borel Bank will enhance the Petitioner's performance which would benefit both of its subsidiary banks, their customers and the communities they serve. Boston Private Financial's local focus, it is stated, promotes advantage for the public seeking its banking, investment management and other products and services. The Board's review of these and other factors set out in the application related to pubic convenience and advantage support approval of the application.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the subsidiary 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. The Board has noted that the Petitioner's subsidiary bank, Boston Private Bank, has a "High Satisfactory" rating in its most recent examination of performance under CRA by the Division of Banks. Borel Bank has a "Satisfactory" CRA rating from its last examination by the FDIC. The Board's review of factors related to public convenience and advantage are consistent with approval.
The statutory requirement for net new benefits from the proposed transaction was also considered by the Board. The Petitioner has addressed this requirement in the submitted application and at the public hearing. Among other things the Petitioner states it anticipates additional management positions will be created at the holding company as well as an additional revenue stream which could also support additional job growth. Moreover, all banking offices will be maintained and consumer and business services will be enhanced.
The financial aspects and any tax consequences from the structure of the transaction were also considered by the Board. Management factors reviewed were also found supportive of approval. Additionally, all other requirements of statute relating to a bank holding company have been met.
The application, supporting documents, the supplemental filing and the comments received at the public hearing 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 record 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 Boston Private Financial to acquire Borel Bank & Trust Company and 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
|Bernard F. Crowley, Jr. |
Acting Commissioner of Revenue
|Shannon P. O'Brien |
Treasurer and Receiver-General
|October 25, 2001 |