Decision relative to the application of Rockland Trust Company, Rockland, Massachusetts to merge with Falmouth Co-Operative Bank, Falmouth, Massachusetts
By the Division of Banks
Rockland Trust Company (the "Petitioner" or "Rockland"), Boston, Massachusetts, has applied to the Division of Banks (the "Division") for permission to merge with Falmouth Co-operative Bank, ("Falmouth"), Falmouth, Massachusetts. The proposed merger is pursuant to an Agreement and Plan of Merger dated January 8, 2004 (the "Agreement") and is authorized under the provisions of Massachusetts General Laws chapter 170, section 26D and Massachusetts General Laws chapter 172, section 36. The Agreement provides for the merger of Falmouth with and into Rockland, after which Falmouth will cease to exist. The proposed merger is part of a multi-step transaction involving a petition before the Board of Bank Incorporation by Petitioner's holding company, Independent Bank Corp. ("Independent"), Rockland, Massachusetts, and its wholly-owned subsidiary, INDB Sub, Inc., to acquire Falmouth Bancorp, Inc., Falmouth, Massachusetts. Falmouth Bancorp, Inc. ("Falmouth Bancorp") is the holding company of Falmouth.
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, materials and public comments 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"), section 14 of Chapter 167 of the General Laws and its implementing regulation 209 CMR 46.00.
Rockland has its main office in Rockland and operates 52 banking offices (including 49 full service branches), seven commercial lending centers, three investment management offices and three mortgage banking centers, all of which are located in Plymouth, Norfolk, Bristol and Barnstable Counties. As of December 31, 2003, Independent, Rockland's holding company, had consolidated assets of $2.44 billion. Rockland's deposits are insured by the Bank Insurance Fund administered through the Federal Deposit Insurance Corporation ("FDIC"). Rockland is principally engaged in the business of gathering deposits from customers within its market areas and investing those funds in residential and commercial real estate loans, private banking services to both individuals and businesses, investment management services, commercial loans, construction loans, home equity loans and other consumer loans and investment securities.
Falmouth has its main office in Falmouth and operates three branch offices in East Falmouth, North Falmouth and Bourne. As of December 31, 2003, Falmouth Bancorp, the bank's holding company, had consolidated assets of $158.11 million. Falmouth's deposits are insured through the Bank Insurance Fund administered by the FDIC. Additionally, as a Massachusetts-chartered co-operative bank, Falmouth's deposits in excess of the FDIC coverage are insured through the Share Insurance Fund of the Co-operative Central Bank, established by Chapter 73 of the Acts of 1934. Falmouth is principally engaged in the business of attracting deposits from the general public, borrowing funds and investing those deposits and funds.
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. Review of this material indicates that the merger would not significantly adversely affect competition in the communities served by the resulting entity nor result in an undue concentration of banking resources. Rather, the record demonstrates that the communities served by Falmouth 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. The Petitioner states that the enhanced financial strength of the combined banks will ensure that the resulting institution will be able to offer financial products and services at competitive rates. As a significantly larger financial institution, Rockland offers a greater variety of products and services than does Falmouth. Such products and services will include: investment management services; mutual funds and annuities; consumer and business credit cards; higher withdrawal limits on ATM and debit cards; telephone banking; more branches in a larger geographic area; and increased lending limits. The application and the testimony at the public hearing cited several benefits which will result from the transaction. Following the merger, the combined banks will continue to make available to its customers the many programs currently offered by each of them that are designed to meet the needs of low and moderate income persons, such as FHA Loans, FNMA 97% Program, First Time Home Buyer, MHFA General Lending Program, Municipal Loan Program, various Soft-Second Programs, Veteran's Administration loans and other lending programs.
The Petitioner states that subsequent to the transaction, Rockland intends to close two of its current branches because they are located in close proximity to current Falmouth branches. The Rockland branches proposed to be closed are located at 301 Barlows Landing Road, Pocasset, Massachusetts and 763 Main Street, Falmouth, Massachusetts. The deposits and loans from these two Rockland branches will be consolidated into, and the existing Rockland customers served from, the current Falmouth branches. Branch office closings require approval of the Division pursuant to G.L. c. 167C, ยง3.
Upon review and consideration of all the materials submitted on this issue by the Petitioner and other interested individuals, the Division concludes that the proposed merger will provide the customers of both entities with greater banking convenience in the form of more banking locations, and provide Falmouth customers with access to an expanded range of banking products and services. 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 have 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' 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. The Division notes that Rockland has an "Outstanding" rating in its most recent examination of performance under CRA by the Division of Banks in August 2003. Falmouth has a "Satisfactory" rating at its most recent FDIC examination of CRA performance in September 2003. 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 co-operative bank, the deposits in Falmouth in excess of the deposit insurance coverage provided by the FDIC are insured, in full, by the Share Insurance Fund of the Co-operative Central Bank . Upon consummation of the merger of Falmouth with and into Rockland, a trust company, the excess deposit insurance coverage for Falmouth's deposits will end. The Division was provided with the proposed disclosure materials to be provided to Falmouth's depositors informing them that the excess deposit insurance coverage will end if the merger is approved and finalized, while the FDIC coverage will continue.
The Division has also considered the financial aspects and management factors of the merger. Those reviews were also supportive of approval.
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 the public interest. On the basis of these conclusions, and subject to the conditions set forth below, approval is granted for Falmouth to merge with and into Rockland in conformity with the Agreement and pursuant to Massachusetts General Laws chapter 170, section 26D and chapter 172, section 36. In accordance with General Laws chapter 167C, section 3, approval is also granted for Rockland to close branches located at 301 Barlows Landing Road, Pocasset, Massachusetts and 763 Main Street, Falmouth, Massachusetts and for Rockland to maintain the existing banking offices of Falmouth as branch offices.
The approval granted herein is subject to the following conditions:
that the merger of Falmouth and Rockland 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 170, section 26D and chapter 172 section 36 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.
| June 16, 2004 __________________________ Date | Steven L. Antonakes ___________________________________ Commissioner of Banks |