Decision relative to the petition of Danvers Bancorp, Inc., Danvers, Massachusetts to acquire Revere MHC, Revere, Massachusetts
By the Division of Banks
Danvers Bancorp, Inc. (the "Petitioner" or "Danvers Bancorp"), Danvers, Massachusetts has petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire Revere MHC and its subsidiary banking institution, Revere Federal Savings Bank ("Revere Federal"), Revere, Massachusetts. Danvers Bancorp, Inc. and Revere MHC are both mutual holding companies. The Petitioner is the holding company for Danvers Savings Bank ("Danvers Savings"), Danvers, Massachusetts. The application before the Board is part of a multi-step transaction involving the merger of the mutual holding companies and the subsequent merger of Revere Federal with and into Danvers Savings. The merger transactions, by statute, are subject to the approval of the Division of Banks (the "Division").
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 Danvers Bancorp on August 29, 2001. The comment period on the proposed transaction ended September 14, 2001.
The Board has reviewed the application, oral testimony received at the public hearing and the Petitioner's supplemental filing dated September 5, 2001. 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 subsidiary 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 matter 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.
Danvers Bancorp is the mutual holding company for Danvers Savings, a state-chartered savings bank. The primary activity of Danvers Bancorp is to serve as the mutual holding company for Danvers Savings.
Danvers Savings has its main office in Danvers with full service branch offices in Danvers, Peabody, Middleton, Beverly and Reading as well as approved but unopened branch offices in Salem and Wilimington. It has also a loan production office in Newburyport. Danvers Savings reorganized into a mutual holding company structure in 1998. All of its stock is owned by Danvers Bancorp. Danvers Savings conducts a general banking business. At March 31, 2001, it had total assets of $485.4 million. Danvers Savings operates four wholly owned subsidiaries.
Revere Federal is a federally-chartered stock savings association with its main office in Revere and a branch office in Chelsea. On December 1, 1998, Revere Federal reorganized into a two-tiered mutual holding company. RFS Bancorp is a federally-chartered mid-tier holding company and direct parent of Revere Federal. RFS Bancorp is fifty-six percent owned by Revere MHC and forty-four percent owned by public shareholders. As part of this multi-step transaction RFS Bancorp will effectuate a reverse stock split and thereby cash out its minority shareholders. At March 31, 2001, Revere Federal had total assets of $154.4 million. Its primary focus is to provide residential mortgage loans and small business loans.
The Petitioner has submitted materials to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Much of that analysis is detailed according to various tests used by federal agencies. The analysis demonstrates that consummation of the transaction will not result in undue concentration of banking resources in the specified banking markets in Massachusetts. Traditionally, however, this Board has not limited its review to those previously cited federal standards in its consideration of whether competition will be unreasonably affected. Rather 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 has noted that there is no overlap in the banking office networks of the subsidiary banks involved in this transaction. Upon review, the Board does not believe the transaction will unreasonably affect competition for the reasons cited as well as the fact that a number of diverse bank and financial institutions will continue to provide competitive deposit and credit services in the affected areas.
The Board has considered whether public convenience and advantage will be promoted by this proposed transaction. The acquisition of Revere Federal and the subsequent merger of its subsidiary banks will, according to the application, enhance the ability of the Petitioner's continuing bank subsidiary to better serve the public and the communities in which it operates. The application and the testimony at the public hearing cited several benefits which will result from the transaction. Such benefits include, among other things, additional convenience through increased branch offices and ATM machines, a higher loan to one borrower limit and a wider variety of competitive and innovative products and services set out in the submitted documents. It was also stated that the commercial lending business conducted by Danvers Savings will be available in the communities now served by Revere Federal. Moreover, the mortgage lending services of Revere Federal combined with that of Danvers Savings will place the continuing bank in a strong position to meet the residential mortgage needs of consumers throughout the service area. The Board's review of factors related to public 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, Danvers Savings, has an "Outstanding" rating in its most recent examination of performance under CRA by the Division. The Board has noted that Revere Federal has a "Satisfactory" rating. The Board's review of factors related to public convenience and advantage are consistent with approval.
The Board has considered the Petitioner's analysis of "net new benefits" related to the transaction. The term includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors. The Petitioner has addressed this requirement. According to the Petitioner, the acquisition will enhance the continuing bank's financial capability to invest in the community it serves and to develop new products and services for its customers. The maintenance of Revere Federal's two banking offices as branch offices of the continuing bank as well as Danvers Bancorp's ability to provide future employment opportunities for Massachusetts residents are also cited as support for meeting such criteria. Moreover, the larger subsidiary banking institution will have the financial resources available to develop new products, services and branch office locations as conditions warrant.
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 subsidiary 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 Danvers Bancorp to acquire Revere MHC and Revere Federal 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 | Board |
| Shannon P. O'Brien Treasurer and Receiver-General | |
| September 21, 2001 Date |