Decision relative to the petition of FleetBoston Financial Corporation, Boston, Massachusetts to acquire Progress Financial Corporation, Blue Bell, Pennsylvania
By the Division of Banks
FleetBoston Financial Corporation (the "Petitioner" or "FleetBoston"), Boston, Massachusetts has petitioned the Board of Bank Incorporation (the "Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire Progress Financial Corporation, ("Progress Corporation"), Blue Bell, Pennsylvania, and its subsidiary bank, Progress Bank, also located in Blue Bell, Pennsylvania. FleetBoston's application before the Board is part of a multi-step transaction. A subsequent merger of Progress Bank with and into FleetBoston's principal banking subsidiary, Fleet National Bank, Providence, Rhode Island will occur under federal law pursuant to an Agreement and Plan of Merger dated as of August 27, 2003.
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 of FleetBoston on December 11, 2003. The public comment period on the proposed transaction ended December 17, 2003.
The Board has reviewed the application as well as the oral testimony received at the public hearing. That review focused on the statutory and administrative criteria which include, 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 subsidiary 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 matters 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. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated October 24, 2003.
FleetBoston is the seventh largest financial holding company in the United States. As of June 30, 2003 it had total consolidated assets of $197.1 billion, total deposits of $130.2 billion and total stockholders' equity of $17.4 billion. Fleet offers a wide array of financial services to its customers. It is engaged in the retail and commercial banking and trust business throughout the states of Connecticut, Florida, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island through Fleet National Bank. FleetBoston also provides through its non-banking subsidiaries, a variety of financial services, including mortgage banking, nationwide discount and other brokerage services, credit cards, asset-based lending, consumer finance, real estate financing, mutual fund sales, equipment leasing, credit related life and accident/health insurance, investment banking, wealth management and investment services and investment advice and management. On November 20, 2003, Bank of America Corporation, Charlotte, North Carolina, filed an application with the Board to acquire FleetBoston.
Progress Financial is a financial service company registered as a unitary thrift holding company with the Office of Thrift Supervision. Progress Financial functions primarily as the stockholder of its subsidiaries by providing financial resources and management. As of June 30, 2003, Progress Financial had total assets of $1.1 billion, total deposits of $740.9 million, and total stockholders' equity of $64.5 million. Its banking subsidiary, Progress Bank, has 20 branches located in Pennsylvania and one branch in New Jersey. Progress offers a wide range of consumer and commercial deposit and loan products. Progress also offers, through its non-banking subsidiaries, a variety of financial services, including financial planning, life insurance, group employee benefits and investment services.
The Petitioner has submitted materials to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. That analysis states that consummation of the transaction will not have an adverse impact on competition in either of the relevant banking markets served by Fleet National Bank and Progress Bank based on federal standards. Further, the Petitioner provided an analysis of competition based on the five Pennsylvania counties and one New Jersey county in which Fleet National Bank and Progress Bank maintain branches. Progress Bank does not have any branches or operations in Massachusetts. Based on the analysis provided and other factors, the Board finds that competition among banking institutions will not be unreasonably affected.
Petitioner submitted a variety of materials relating to the public convenience and advantage that will result from the proposed transaction. It asserts that the introduction of its products and services to Progress Bank customers will provide those customers with a greater array of more sophisticated products and services then they currently enjoy. For example, Petitioner cites that Progress Bank customers will benefit from Fleet National Bank's strengths in discount brokerage and credit card and mortgage lending. Additional new products and services are also cited. Further, customers of both banks will access to a larger network of branch offices and ATMs. The Board has also considered the benefits asserted by Petitioner as to economies of scale resulting from operating efficiencies and the benefits of the resulting stronger financial institution. Other factors are also set out in the application filing. The Board's review weighs in favor of the finding that the public convenience and advantage will be promoted. The Board further concludes that the criteria for net new benefits has been established.
The Board's review of this transaction includes an assessment of the subsidiary banks' performance under the Community Reinvestment Act ("CRA"). Such assessment for a state-chartered bank includes examination by Division of Bank 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 such as in this transaction, the Board reviews the descriptive rating and evaluation by the applicable federal or state bank regulatory agency. Here, the relevant evaluations were submitted as part of Petitioner's application materials. In its most recent CRA examination, performed by the Office of the Comptroller of the Currency, Fleet National Bank received an "Outstanding" rating while Progress Bank received at its most recent CRA examination performed by the Office of Thrift Supervision a "Satisfactory" rating. Based on its review of these ratings, the Board concludes that the banks involved in this transaction are adequately meeting the credit needs of their respective communities.
As part of its inquiry, the Board reviews the financial structure, tax consequences, and the operational aspects of the transaction. The Board 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. Information regarding the tax consequences of the proposed transaction was provided by Petitioner and considered by the Board.
Conclusion
Based on the record of this matter and considered in light of all relevant statutory and administrative requirements, the Board concludes that the proposed transaction will not have a significant impact on competition among banking institutions in the Commonwealth and will promote the public convenience and advantage. Specifically, the Board finds that the transaction will benefit the customers of Progress Bank, and further finds that the banks involved in this transaction have a satisfactory record of performance under the CRA. In accordance with these findings and pursuant to the statutory authority cited herein, the Board approves the application and authorizes Petitioner to acquire Progress Financial Corporation and Progress Bank.
The approval granted herein is subject to the condition that all related transactions are completed within one year of the date of this Decision.
| Steven L. Antonakes ___________________________ Commissioner of Banks | |
| Alan L. LeBovidge ___________________________ Commissioner of Revenue | Board |
| Timothy P. Cahill ___________________________ Treasurer and Receiver General | |
| January 23, 2004 _____________________ Date |