Decision relative to the merger of Eastern Bank & Trust Company, Salem, Massachusetts with and into Eastern Bank, Lynn, Massachusetts
By the Division of Banks
Eastern Bank ("Eastern" or the "Petitioner"), Lynn, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Eastern Bank & Trust Company ("Eastern Trust"), Salem, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D and Massachusetts General Laws chapter 172, section 36 under the terms of the Agreement of Merger (the "Agreement") dated as of August 15, 2002. The Agreement provides for the merger of Eastern Trust with and into Eastern under the charter, by-laws and name of Eastern Bank. The main office of Eastern would remain the main office of the continuing institution and all of the banking offices of Eastern Trust will become branch offices of the continuing bank. Eastern and Eastern Trust are both subsidiaries of Eastern Bank Corporation, Lynn, Massachusetts, a mutual holding company.
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, including supplemental filings, 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 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.
Eastern is a Massachusetts state-chartered savings bank in stock form. As of June 30, 2002 it had assets of approximately $4.1 billion. Eastern's main office is located in Lynn, Massachusetts. Eastern operates approximately forty-three branch offices north, as well as south of Boston, and one branch office in Boston, Massachusetts. Its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund for amounts in excess of the FDIC's insurance limits. Eastern generally offers its customers commercial and retail banking products and services.
Eastern Trust is a state-chartered trust company with its main office in Salem, Massachusetts and three branch offices. Eastern Trust=s branch offices are located in Boston, Malden and Quincy, Massachusetts. The deposits of Eastern Trust are insured by the FDIC. As of June 30, 2002, Eastern Trust had assets of approximately $12 million. Eastern Trust primarily provides trust services to its customers.
Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Even though Eastern has at least one banking office in each of the communities in which Eastern Trust maintains a banking office, there are a variety of competing financial institutions that operate in these four cities. It is also noted that Eastern Trust and Eastern generally compete for different customers since Eastern Trust provides almost exclusively trust services. Additionally, weight must be given to the fact that Eastern Bank Corporation could negate competition in any form between its bank subsidiaries. Accordingly, the review of the transaction's impact on competition does not raise any concerns which would preclude its approval.
The merger is viewed by Eastern Bank Corporation as an internal corporate reorganization which has several advantages. Among other things, the merger of its bank subsidiaries would streamline regulatory oversight and reduce regulatory assessments and eliminate duplicate management activities.
The application notes that the continuing institution's Board of Directors will consist of all of the persons occupying such positions at Eastern. 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 this merger, Eastern indicates the banking public will benefit in a number of ways. According to the application, such benefits include a branch office network extended by four branch offices. 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, as described in the application, there are several lending and deposit products and services currently offered by Eastern to its customers that are not presently available to customers of Eastern Trust. Additionally, the trust business of Eastern Trust, as a result of the merger, will be provided by the Petitioner. 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, as a result of the merger, among other things, the continuing bank will be able to more competitively and efficiently deliver products and services to its customers. The maintenance of Eastern Trust's banking offices as branch offices of the continuing bank is also cited by the Petitioner.
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. Upon review, the Division has noted that Eastern and Eastern Trust received ratings of "Outstanding" and "Satisfactory" respectively in their most recent CRA performance examinations by the Division. Accordingly, the Division's review of factors related to public convenience and advantage is 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 Eastern Trust to merge with and into Eastern under the charter, by-laws name of Eastern Bank pursuant to Massachusetts General Laws chapter 168, section 34D and the applicable provisions of Massachusetts General Laws chapter 172, section 36. Approval is also granted for Eastern to maintain the four banking offices of Eastern Trust as branch offices under Massachusetts General Laws chapter 167C, 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 and Massachusetts General Laws chapter 172, section 36, 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; and
- that the proposed merger shall be consummated within one year of the date of this decision.
| October 8, 2002 Date | Thomas J. Curry Commissioner of Banks |