Decision relative to the petition of Compass Bank for Savings, New Bedford, Massachusetts to merge with Abington Savings Bank, Abington, Massachusetts
By the Division of Banks
Compass Bank for Savings (the "Petitioner" or "Compass Bank"), New Bedford, Massachusetts, has petitioned the Division of Banks (the "Division") for permission to merge with Abington Savings Bank ("Abington"), Abington, Massachusetts. The proposed merger is pursuant to an Agreement and Plan of Merger dated October 20, 2003 (the "Agreement") and is authorized under the provisions of Massachusetts General Laws chapter 168, section 34D. The agreement provides for the merger of Abington with and into Compass Bank, after which Abington will cease to exist and its banking offices will become the branch offices of Compass Bank. The proposed merger is part of a multi-step transaction involving a petition before the Board of Bank Incorporation (the "Board") by Petitioner's holding company, Seacoast Financial Services Corporation ("Seacoast"), New Bedford, Massachusetts, to acquire Abington Bancorp, Inc., ("Bancorp"). Bancorp is the holding company for Abington and is located in Weymouth, Massachusetts.
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. As required by General Laws chapter 167 ยง 14 and its implementing regulation 209 CMR 46.00 et seq., the Division's review of this matter must also take into consideration the involved banks' records of performance under the Community Reinvestment Act ("CRA").
Based in New Bedford, Massachusetts, Seacoast is a bank holding company with $4.5 billion in total consolidated assets as of September 30, 2003. It is the holding company for two Massachusetts chartered banks, Compass Bank and Nantucket Bank, Nantucket, Massachusetts. The deposits of these banks are insured through the Bank Insurance Fund administered by the Federal Deposit Insurance Corporation ("FDIC"). Additionally, as Massachusetts chartered savings banks, their deposits in excess of the FDIC coverage limits are insured through the Depositors Insurance Fund (the "DIF"), established by Chapter 43 of the Acts of 1934. Compass Bank's principal business is gathering deposits from customers within its market area and investing those funds in various types of consumer and commercial loans, and investment securities. Compass Bank maintains approximately forty-seven branch offices located throughout eastern Massachusetts. At September 30, 2003, Compass Bank's Tier 1 risk-based, total risk-based and Tier 1 leverage capital ratios were 10.06%, 11.34%, and 6.67%, respectively. Compass Bank is therefore considered "well-capitalized" pursuant to the guidelines established by federal law.
Bancorp is a bank holding company headquartered in Weymouth, Massachusetts. At September 30, 2003, Bancorp had total consolidated assets of $822.8 million. Bancorp's principal asset is all of the capital stock of Abington, a state-chartered stock savings bank. Abington itself owns and controls seven subsidiaries: Holt Park Place Development Corporation and Norroway Pond Development Corporation own properties being marketed for sale; Abington Securities Corporation, Mass Securities Corporation, and Mass SEC Corp. II, are investment companies; Old Colony Mortgage Corporation originates and sells residential mortgages; and 70 Quincy Ave. LLC, owns and operates a building in Quincy. Like Compass Bank and Nantucket Bank, the deposits of Abington are insured by the FDIC and the DIF. Abington's principal business consists of attracting deposits and borrowing funds, and investing those deposits in loans and securities. In addition to a main office in Abington, Massachusetts, Abington operates 16 full service banking offices, located along the South Shore and as far north as Dorchester.
The Division'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. Review 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 communities served by the resulting entity. In this regard, the Division notes that the only municipality in which Abington and Compass Bank have branch offices is Boston, and those branches are located in different neighborhoods of the city. The Division is also satisfied that the communities served by Abington will continue to be served by a number or diverse banks and financial institutions providing access to a variety of competitive deposit and credit services.
The Division 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 Division may deem necessary or advisable.
The Petitioner submitted a variety of materials relating to the public convenience and advantage it asserts would result from the proposed transaction. In addition to maintaining all of Abington's branch offices, the Petitioner has indicated that it will make several improvements to infrastructure and operations that will benefit Abington customers. These improvements include replacing and upgrading numerous ATMs, remodeling two branch offices, and enhancing Abington's telephone and internet banking platforms. Although consolidation of operations will result from the transaction, the Petitioner has indicated that it will be able to offer jobs to nearly all of Abington's employees who have day-to-day customer contact and absorb a number of administrative positions into the resulting organization.
As a result of the transaction, the Petitioner points out that Abington customers will have access to a Compass Bank's expanded branch network. Moreover, and unlike Abington, Compass Bank does not charge a monthly fee for its ATM and debit cards. In addition to these conveniences, the Petitioner maintains that the proposed transaction will provide Abington customers with access to a greater variety of banking products and services. These products and services include private banking, enhanced checking, free online bill payment, and telephone bill payment. Abington's business banking customers, the Petitioner asserts, will have access to several new products, and will be further advantaged by Compass Bank's increased lending limits.
The Petitioner contends that, like Abington, it has a strong commitment to the communities that it serves. In this regard, it advises that the Abington Savings Charitable Foundation will continue to operate after the acquisition, and will continue to provide funding to various non-profit organizations in the Abington community. More generally, Petitioner asserts that these communities will benefit from its greater resources, noting particularly its many programs designed to meet the needs of low and moderate income persons.
Based on all of the material submitted by the Petitioner and testimony at the hearing, the record demonstrates that, if the proposed transaction is approved, Abington customers will have expanded access to banking venues and services. The Division also finds that the Petitioner's various programs designed to address community needs will continue to benefit the Abington community. These factors, together with additional evidence contained in the record of this matter, support the conclusion that the proposed merger will promote the public convenience and advantage. Further, the criteria for net new benefits has been established.
Prior to approving this transaction, and as required by Massachusetts General Laws chapter 167, section 14, the Division must consider the involved banks' records 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. In this case, the Division obtained and reviewed the relevant evaluations for Compass Bank and Abington. In the most recent CRA examination of Compass Bank, performed by the FDIC, the bank received a "Satisfactory" rating. The most recent examination of Abington, also conducted by the FDIC, resulted in a "Satisfactory" rating. Based on its review of these evaluations, the Division concludes that the banks involved in this transaction are adequately meeting the credit needs of their respective communities.
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 would be in public interest. On the basis of these conclusions, and subject to the conditions set forth below, approval is granted for Abington to merge with and into Compass Bank in conformity with the Agreement and pursuant to Massachusetts General Laws chapter 168, section 34D.
The approval granted herein is subject to the following conditions:
- that the merger of Abington and Compass Bank 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, section 34D has been returned with my endorsement thereon;
- that such Certificate and Articles of Merger shall be filed with the Secretary of State of the Commonwealth of Massachusetts;
- that the proposed merger shall be consummated within one year of the date of this Decision.
| April 22, 2004 Date | Steven L. Antonakes Commissioner of Banks |