Decision relative to the application of GBC Bancorp, Inc and its wholly owned subsidiary General Bank, Los Angeles, California to acquire Liberty Bank and Trust Company, Boston, Massachusetts
By the Division of Banks
GBC Bancorp, Inc. ("GBC") and its wholly owned subsidiary, General Bank (collectively, the "Petitioner"), Los Angeles, California have petitioned the Board of Bank Incorporation (the "Board") pursuant to the provisions of Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire Liberty Bank and Trust Company, ("Liberty") Boston, Massachusetts. The application before the Board is part of a multi-step transaction involving the merger of Liberty with and into General Bank. Following the merger, the banking offices of Liberty will become branches of General Bank.
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 on December 5, 2001. The comment period on the proposed transaction ended December 14, 2001.
The Board has reviewed the application and 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 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 December 28, 2001.
As an interstate transaction, the reciprocity of Petitioner's home state must be reviewed. Under Massachusetts law, the determination of reciprocity of the laws of another state rests solely with the Commissioner of Banks. The Commissioner has ruled that California law is reciprocal and does expressly authorize a similar transaction by a Massachusetts bank holding company under conditions no more restrictive than those imposed by Chapter 167A. Moreover, the Board is aware that last year it approved a holding company in Massachusetts to acquire a bank in California and the Commissioner approved a state-chartered bank to merge with a bank in California and retain those offices in California as branches. Accordingly, the proposed transaction is permissible under the Commonwealth's Interstate Banking Act and therefore, the Board will proceed to consider whether the other statutory requirements are met by this application.
GBC is a Delaware corporation and a registered financial holding company under the Bank Holding Company Act. It had total assets on a consolidated basis of approximately $2.205 billion at September 30, 2001. GBC owns all of the outstanding stock of General Bank (the "Bank"), a California state-chartered bank. GBC functions primarily as a holding company for the Bank. The Bank operates 18 branches in the greater Los Angeles, San Diego and Silicon Valley areas of California and one branch in the State of Washington. The Bank also operates a loan production office in New York City and engages in loan production activities that operates as a licensed representative office in Taipei, Taiwan. The Bank had total assets of approximately $2.192 billion, total loans (net of unearned income and fees and allowance for loan losses) of approximately $1.093 billion, and total deposits of approximately $1.756 billion at September 30, 2001.
Liberty is a Massachusetts state-chartered trust company with full commercial banking powers. It conducts all of its business through two banking offices located in Boston. Liberty had total assets of approximately $37.377 million, total loans (net of unearned income and fees and allowance for total losses) of approximately $21.477 million and total deposits of approximately $30.586 million at September 30, 2001.
The Board has reviewed the transaction to determine that competition among banks will not be unreasonably affected by the proposed acquisition. It is the position of the 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. As set out in the application there is no overlap in the banking offices of General Bank and Liberty since they conduct business in different states. It is the first acquisition of a bank by GBC. It represents the further expansion of operations on the East Coast. Upon review the Board does not find that the transaction will unreasonably affect competition.
The Board has considered whether public convenience and advantage will be promoted by this proposed transaction. The Petitioner's application and testimony at the public hearing offered reasons why this criteria is met. The acquisition of Liberty by General Bank, and subsequent merger of Liberty into it if the application before the Commissioner of Banks is approved, will result in additional products and services being available to customers of Liberty. General Bank's expertise in international trade has been noted in its application and in testimony as well as its expertise in lending to companies in the high technology market. Additionally, the application states that General Bank has developed internet banking products and services which would allow both retail and business customers of Liberty to access their accounts and conduct banking transactions through the internet.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are 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 General Bank has received a "Satisfactory" rating in its most recent examination of performance under CRA by the Federal Deposit Insurance Corporation while Liberty also received a "Satisfactory" rating at its most recent examination conducted by the Commonwealth's Division of Banks . 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 Liberty's banking offices as branch offices of the continuing bank as well as the General Bank's ability to provide future employment opportunities for Massachusetts residents are also cited as support meeting such criteria. The acquisition will greatly increase the financial resources available to customers of Liberty and banking customers within the Commonwealth.
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 and supporting documents 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 and hereby approves the acquisition of Liberty by the Petitioner.
The approval herein is subject to the condition that all related transactions are completed within one year of date of this Decision.
|Thomas J. Curry |
Commissioner of Banks
|Alan L. LeBovidge |
Commissioner of Revenue
|Shannon P. O'Brien |
Treasurer and Receiver-General
|February 19, 2002 |