Decision relative to the petition of Eastern Bank to re-designate its main office
By the Division of Banks
Eastern Bank (the "Petitioner" or "Eastern") has petitioned the Board of Bank Incorporation (the "Board") under section 2 of chapter 167C of the General Laws, for permission to change the location of its main office from 112 Market Street in Lynn, Massachusetts to 265 Franklin Street, in Boston. The Petitioner is also seeking a related approval from the Division of Banks (the "Division") to maintain its current main office as a branch office pursuant to section 3 of chapter 167C of the General Laws.
Notice of the petition was posted and published as directed by the Board, and a public hearing was scheduled, thereby affording interested parties the opportunity to attend or submit comments. The public hearing was held March 25, 2003. Representatives of the Petitioner offered testimony and responded to questions from the Board. Following the hearing, the public comment period remained open until March 31, 2003.
The Petitioner is a state-chartered savings bank in stock form and, as a consequence of a 1989 reorganization into a mutual holding company, a subsidiary bank of Eastern Bank Corporation ("EBC"). As of December 31, 2002, Petitioner had assets of approximately $4.4 billion and deposits of $3.5 billion. Its main office is located in Lynn, and it maintains approximately forty-six additional branch offices north and south of Boston. The distance from its current main office to the proposed main office is approximately 10.4 miles.
Petitioner has been an active participant in the economic and community affairs of Lynn since 1826. Its current main office, 112 Market Street, has been maintained as a banking office by a state-chartered bank since the 1850s. In addition to that location, it maintains two additional branches that serve the Lynn community, as well as a recently purchased and renovated operations and administrative center, which is located at 195 Market Street. Following a $7.5 million renovation of this building, Petitioner was able to consolidate staff from remote processing sites into this facility, which now accommodates 475 employees.
The Petitioner is very active in Lynn and according to recent Federal Deposit Insurance Corporation ("FDIC") statistics, currently has approximately 62% of Lynn's household market. Within the Lynn community, Petitioner services 1,078 residential mortgages and has originated approximately 500 mortgages in the past three years with total balances in excess of $100 million. On its most recent Community Reinvestment Act examination, Petitioner received a rating of "Outstanding."
Since the 1989 reorganization, Petitioner's parent company, EBC, has changed the location of its corporate headquarters from time to time. It moved to Boston several years ago and is now located at 265 Franklin Street. The first level of this building houses a branch office, and the corporate offices are on the second and third floors. It is located near Post Office Square in the financial district and is adjacent to International Place and State Street Bank.
In the documents submitted in support of the application, Petitioner indicated that it was seeking to re-designate the 265 Franklin Street location as its main office in order to have its main office in the same building as the corporate headquarters of its parent company. In addition, it notes that Boston is more central to its branch network, which now extends from Marshfield and Brockton on the South Shore, to Newburyport on the North Shore. A more central main office location and one located in the same building as its holding company, Petitioner asserts, will be more convenient for its overall customer base and the general public. Petitioner further contends that there will be no additional expense or operating costs associated with this transaction because the Franklin Street branch office is already in operation.
With respect to its Lynn operations, Petitioner has indicated that the Lynn location will continue to be operated as a branch office and therefore no balances or relationships will be disturbed. It states that it has no intention to reduce its Lynn operations and that it remains committed to serving the residents and businesses of Lynn. At the hearing, Petitioner noted that its commitment to Lynn is reflected in its recent investments, the $150,000 renovation of the 125 Market Street branch, and its $20 million investment in the operations and administrative Center at 195 Market Street. Also at the hearing, Petitioner indicated that it has had discussions with elected representatives of Lynn regarding this transaction, and none have expressed opposition to the petition.
The Board has carefully reviewed the Petitioner's arguments and submissions. As noted in previous Board Decisions on petitions to relocate a branch office, General Laws chapter 167C, section 2 does not recite a specific standard for the Board's review. In this situation, the Board and Division will consider whether the proposed transaction will unreasonably affect competition among banking institutions and whether it will promote the public convenience and advantage. This is the standard specified under chapter 167C, section 3, applicable to Petitioner's related application to the Division to maintain its current main office as a branch office, and it is the review standard provided in a number of the Commonwealth's banking statutes. In addition, and as required by General Laws chapter 167, section 14 and 209 C.M.R. 46.00 et seq., an applicant's performance under the CRA is also an element of review in a bank's application to re-designate its main office.
Under the circumstances of this petition, where the bank is re-designating but not relocating or closing a branch office, and where there is no opposition to the transaction, the Board's analysis is necessarily abbreviated. As a general matter, the re-designation of a branch office without a corresponding relocation or closure will have no impact on banking competition in the Commonwealth. Likewise, where the branch office to be designated as the new main office is already in operation as a banking office, and no relocation or closure is involved, there is generally little impact on public convenience.
As discussed above, the Petitioner's Lynn customers and operations will be generally unaffected by the proposed transaction. The re-designation will not result in any reduction in banking or credit services to these customers, nor will the Petitioner's Lynn operations be reduced. Some of Petitioner's management staff, including its President and Chief Operating Officer, will continue to have offices in Lynn and, as noted at the hearing, the new Lynn facility has room for any needed expansion. Finally, there has been no opposition to the transaction submitted to the Board, and no one appeared at the hearing to testify in opposition. As discussed at the hearing, the beneficiaries of this transaction are the Petitioner and its corporate parent, as it will be more convenient to have its main office and its corporate office located in the same building, and in a location more central to its overall operations. The central, financial district location is also likely to be more convenient for some of the Petitioner's corporate customers.
Based upon all the information submitted, the Board concludes that the proposed transaction will not unreasonably affect banking competition in the Commonwealth and will promote public convenience and advantage. As required, the Board notes the Petitioner's record of performance under the CRA.
Conclusion
Based upon the Petitioner's application and the full record before the Board, approval is hereby granted pursuant to section 2 of Chapter 167C of the General Laws for Eastern Bank to re-designate the location of its main office from 112 Market Street, Lynn to 265 Franklin Street, Boston.
| Thomas J. Curry Commissioner of Banks | |
| Alan L. LeBovidge Commissioner of Revenue | Board of Bank Incorporation |
| Timothy P. Cahill Treasurer and Receiver General | |
| May 5, 2003 Date |