Decision relative to the application of Banknorth N.A., Portland, Maine for permission to merge Foxborough Savings Bank, Foxborough, Massachusetts, with Foxborough Savings Bank, N.A., a newly formed interim National Bank, as part of a series of transactions, with the resulting institution being merged with and into Banknorth, N.A.
By the Division of BanksBanknorth N.A., (the "Petitioner" or "Banknorth"), Portland, Maine, has applied to the Division of Banks (the "Division") for permission to acquire by merger Foxborough Savings Bank ("Foxborough"), Foxborough, Massachusetts, in a multi-step transaction. The proposed merger is pursuant to an Agreement and Plan of Merger (the "Agreement") dated November 25, 2003, and authorized by General Laws chapter 168, section 34D. Pursuant to the Agreement, Foxborough will merge with and into a newly-established national bank, Foxborough Savings Bank, N.A., Foxborough, Massachusetts ("Foxborough Interim"). Thereafter, a second interim national bank (Banknorth Interim) formed by Banknorth will merge with and into Foxborough Interim, which will be merged with and into Banknorth. Following the transaction, Foxborough will cease to exist and its banking offices will become branch offices of Banknorth.
Notice of Petitioner's application was published and posted, and the time period for interested parties to comment on the transaction has expired. Accordingly, all documents and materials related to this transaction have been received and reviewed. This record has been considered with regard to all applicable statutory standards, which require consideration of, among other things, whether competition among banking institutions will be unreasonably affected by the proposed transaction and whether the public convenience and advantage will be promoted. The Commissioner's review of this matter must also take into consideration the involved banks' record of performance under the Community Reinvestment Act ("CRA").
Petitioner is a national bank headquartered in Portland, Maine, the resulting entity of a series of acquisitions and mergers. It is a subsidiary of Banknorth Group, one of the fifty largest commercial banking companies in the United States. At September 30, 2003, Banknorth Group had $25.7 billion in total consolidated assets. Petitioner is a member of the Bank Insurance Fund administered by the Federal Deposit Insurance Corporation ("FDIC"). With over 300 offices located in Maine, New Hampshire, Massachusetts, Connecticut, Vermont, and New York, Banknorth and its affiliates offer a range of commercial and consumer banking services and products, trust, investment advisory, and insurance brokerage services.
Foxborough is a Massachusetts-chartered stock savings bank. Foxborough is engaged primarily in attracting deposits from the general public and using those deposits to make various kinds of consumer and commercial loans. At September 30, 2003, Foxborough held $248.8 million in total consolidated assets. Like Banknorth, Foxborough's deposits are insured by the FDIC. Additionally, as a Massachusetts savings bank, deposits in excess of FDIC coverage are insured through the Depositors Insurance Fund ("DIF"), established by Chapter 43 of the Acts of 1934. In addition to a main office in Foxborough, Foxborough operates three additional full-service branches in North Attleborough, Walpole, and Wrentham.
As an interstate transaction and pursuant to the requirements of chapter 167, section 39B, the reciprocity laws of Petitioner's home state are subject to the review of the Commissioner of Banks. Specifically, the Commissioner must determine whether the transaction being proposed by the Petitioner is authorized under the laws of Maine for a Massachusetts-chartered bank, under conditions no more restrictive than those imposed by Massachusetts. Accordingly, a review of these laws indicates that they are reciprocal and would authorize the proposed transaction under conditions no more restrictive than those imposed by the above-referenced statute. Based on this review, and consistent with previous rulings regarding the Petitioner and Maine's reciprocity laws, the proposed transaction is permissible under the Commonwealth's Interstate Bank Act.
As noted above, the Commissioner's review of this matter takes into consideration whether competition among banks will be unreasonably affected by the proposed transaction. Materials addressing this issue were submitted by the Petitioner and reviewed by the Division. An analysis of this material indicates that the merger would not result in an undue concentration of banking resources or have a significant impact on banking competition in the relevant banking markets. Furthermore, there is no community in the Commonwealth in which Foxborough and Banknorth both have banking offices. Finally, the record demonstrates that the communities served by Foxborough will continue to be served by a number of diverse banks and financial institutions providing access to a variety of competitive deposit and credit services.
The Commissioner must also consider whether the proposed transaction promotes the public convenience and advantage, as well as whether there has been a showing of net new benefits in relation to the transaction. Net new benefits are defined as initial capital investments, job creation plans, consumer and business services, commitment to maintain and open branch offices within a bank's delineated local community, and such other matters as the Commissioner may deem necessary or advisable.
Petitioner has submitted a variety of materials relating to the proposed merger's positive impact on the public convenience and advantage. It contends that the proposed merger will provide more access to banking resources to all of its customers, and significantly greater access to the customers of Foxborough. It also points out that Foxborough customers will have access to an expanded array of banking products and services. Specifically, Petitioner asserts that Foxborough customers will benefit from having access to the large number of Banknorth branch offices located throughout the Commonwealth and New England. Petitioner further asserts that Foxborough customers will be advantaged by the increased convenience of free ATM use at 200 proprietary ATMs located in Massachusetts, as well as at 500 proprietary ATMs located throughout New England and upstate New York. In addition to the much larger service area, the Petitioner maintains that Foxborough customers will benefit from Banknorth's expanded deposit products, small business products, commercial lending capabilities, and free internet banking services. Foxborough customers will also have access to the diverse range of non-traditional banking products and services offered by Banknorth, it asserts, which include financial planning and investment services and insurance products. Finally, the Petitioner points out that the community currently served by Foxborough will benefit from its many community development programs and services.
Prior to approving this transaction, and as required by Massachusetts General Laws chapter 167, section 14, the Division must consider the involved banks' record of performance under the CRA. Such assessment for a state-chartered bank involves examination by Division personnel, as well as an analysis of the legitimate concerns raised by the community and the bank's response to those concerns. For other institutions, the Division reviews the descriptive rating and evaluation by the applicable federal or state bank regulatory agency. The relevant evaluations were also submitted as part of Petitioner's application materials. In its most recent CRA examination, performed by the Federal Deposit Insurance Corporation ("FDIC"), Foxborough received a "Satisfactory" rating. The Office of the Comptroller of the Currency performed the most recent examination of Banknorth, N.A., formerly known as People's Heritage Savings Bank, of Portland, Maine, and it received an "Outstanding" rating. The CRA rating of First Massachusetts Bank, N.A., of Worcester, Massachusetts, Petitioner's previous subsidiary bank in the Commonwealth, was also submitted. Its most recent CRA examination, performed by the Office of the Comptroller of the Currency, resulted in a "Satisfactory" rating. These ratings, as well as other materials submitted on this issue, sufficiently demonstrate that the banks involved in this transaction are adequately meeting the credit needs of their respective communities.
As a state-chartered savings bank, the deposits of Foxborough in excess of the deposit insurance coverage provided by the FDIC are insured, in full, by the DIF. Upon consummation of the merger of Foxborough with and into Banknorth, a national bank, the excess deposit insurance coverage for Foxborough's deposits by DIF will end. In such transactions, the Division requires that depositors of the merging bank receive disclosure materials advising of the loss of DIF coverage, and continuance of FDIC coverage, if the proposed merger is approved. These materials were provided in advance to the Division, and the Division is satisfied that such depositors were adequately informed about the change in their deposit insurance coverage.
Finally, the Division reviews the financial and operational aspects of the transaction. In this regard, it has reviewed the consolidated financial statements of the parties and the details of the proposed transaction, and is satisfied with the Petitioner's capital ratios and projections. Additionally, the Division is satisfied that the Petitioner's managerial and operational resources are sufficient to ensure a smooth integration of systems.
Based on the entire record of this matter and considered in light of all relevant statutory and administrative requirements, the Division concludes that all such requirements have been met and that consummation of the proposed merger is in the public interest. On the basis of these conclusions, and subject to the conditions set forth below, approval is granted for Foxborough to merge with and into Banknorth in conformity with the Agreement.
The approval granted herein is subject to the following conditions:
that the merger involving Foxborough shall not 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 the institution has complied with the provisions of Massachusetts General Laws chapter 168, 34D, has been returned with my endorsement thereon;
that the proposed merger shall be consummated within one year of the date of this Decision.
| April 20, 2004 __________________________ Date | Steven L. Antonakes ___________________________________ Commissioner of Banks |