Decision relative to the transaction involving Revere Federal Savings Bank, Revere, Massachusetts merging with and into Danvers Savings Bank, Danvers, Massachusetts
By the Division of Banks
Danvers Savings Bank ("Danvers" or the "Petitioner"), Danvers, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Revere Federal Savings Bank ("Revere"), Revere, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D under the terms of the Amended Agreement and Plan of Merger (the "Agreement") dated as of June 5, 2001. The Agreement provides for the merger of Revere with and into Danvers under the charter and by-laws of Danvers. The main office of Danvers would remain the main office of the continuing institution and both of the banking offices of Revere will become branch offices of the continuing bank. Danvers and Revere are both subsidiaries of Danvers Bancorp Inc., Danvers, Massachusetts, a bank holding company. This transaction is part of a multi-step transaction which included an application before the Board of Bank Incorporation in which Danvers Bancorp Inc., the mutual holding company for Danvers, will acquire Revere MHC, the mutual holding company for Revere.
In conjunction with the merger of Danvers and Revere, Danvers Bancorp, Inc. ("Danvers Bancorp"), Danvers, Massachusetts has petitioned the Division to merge with Revere MHC, Revere, Massachusetts under the provisions of General Laws chapter 167H, section 7. Under the terms of the Amended Agreement and Plan of Merger dated June 5, 2001, Revere MHC will merge with and into Danvers Bancorp.
Notice of the applications have been posted and published. The time period for interested parties to submit comments has passed. Accordingly, all documents and materials related to this multi-step transaction, including supplemental filings, have been reviewed. That record has been considered with regard to the financial and managerial resources of each bank and mutual holding company, 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.
Danvers is a Massachusetts state-chartered stock savings bank. At March 31, 2001 it had total assets of approximately $485.4 million. Danvers' main office is located in Danvers, Massachusetts. Danvers operates five branch offices. The branch offices are located in Danvers, Peabody, Middleton, Beverly and Reading and the bank has two approved but unopened branches in Salem and Wilmington, and a loan production office in Newburyport. The deposits of Danvers are insured by the Federal Deposit Insurance Corporation ("FDIC") and its excess deposits are insured by the Depositors Insurance Fund. It operates as a full-service savings bank.
Revere is a federally-chartered stock savings bank with its main office in Revere, Massachusetts and one branch office in Chelsea, Massachusetts. The deposits of Revere are insured by the FDIC. At March 31, 2001, Revere had assets of approximately $154.4 million. Its primary focus is to provide residential mortgage loans and small business loans.
Danvers Bancorp is a state-chartered mutual holding company with a wholly owned stock subsidiary, Danvers. As of March 31, 2001, Danvers Bancorp had total assets of $486.3 million. Revere MHC is a federally-chartered mutual holding company with a mid-tier subsidiary holding company, RFS Bancorp, Inc., which is the direct parent of Revere. RFS Bancorp, Inc. is owned fifty-six percent by Revere MHC and forty-four percent by public shareholders. As part of this multi-step transaction, RFS Bancorp will effect a reverse stock split and thereby cash out its minority shareholders. The reorganization into a mutual holding structure occurred for each entity in late 1998.
Both banks generally identify their market areas or primary service areas as their CRA assessment areas. Danvers' CRA assessment area covers twenty communities in the Essex and Eastern Middlesex Counties. Revere's assessment area is a region encompassing the communities of Revere, Chelsea, Everett, Malden, Saugus and Winthrop which is based on the location of the bank's offices and surrounding areas. 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. Presently, according to those documents, Danvers is the 37 th largest depository institution in the Boston Banking Market, as defined by The Federal Reserve Bank of Boston. After the merger, the combined institution will only be the 33 rd largest depository institution in the Boston market. The merged entity would only represent .21% of total banks and thrift deposits in the market. Moreover, the Petitioner states that there are a variety of competing financial institutions that operate in the market areas of each bank.
The application notes that the continuing institution's Board of Directors will consist of all of the persons occupying such positions at Danvers immediately prior to the merger in addition to two members of the Board of Directors of Revere. Two members of Revere MHC will become trustees of Danvers Bancorp. The current directors of Revere who will not become directors of Danvers will become members of an Advisory Board for one year following the closing date. 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 the merger of the banks, Danvers indicates the banking public will benefit in several ways. According to the application, such benefits include an expanded branch office network, additional ATM's 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 Danvers to its customers that are not presently available to customers of Revere. As described in the application, such services include, among others, higher loan-to-one-borrower limit, small business and commercial lending and enhanced home mortgage lending. The customers of Revere will now have deposit insurance on deposits in excess of federal coverage. 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 Revere's two banking offices as branch offices of the continuing bank as well as Danvers' ability to provide future employment opportunities for Massachusetts residents are also cited as support for meeting such criteria. The larger institution will have the financial resources available to develop new products, services and branch locations as conditions warrant.
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 Danvers received a rating of "Outstanding" and Revere 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 Revere to merge with and into Danvers under the charter and by-laws of Danvers pursuant to Massachusetts General Laws chapter 168, section 34D and the applicable provisions of chapter 168 of the Massachusetts General Laws. Approval is also granted for Danvers to maintain the two banking offices of Revere as branch offices. The application indicates that the banking offices of Revere will operate as a division of Danvers for up to one year from the date of consummation of the transaction. Since the charter of Revere will terminate upon consummation, Danvers should take all necessary steps to ensure customers know the bank with which they are doing business. Danvers must comply with the requirements of the 1998 federal Interagency Statement on the use of branch office names.
For the reasons stated above, approval is also hereby granted Revere MHC to merge with and into Danvers Bancorp pursuant the provisions of General Laws chapter 167H, section 3.
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 168, section 34D, 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 34D, the banking offices of Revere to be maintained as branch offices of the continuing bank shall be subject to the supervision of the Division; and
- that the proposed merger shall be consummated within one year of the date of this decision.
| September 21, 2001 Date | Thomas J. Curry Commissioner of Banks |