Decision relative to the petition of Bank Of America Corporation, Charlotte, North Carolina to acquire Fleetboston Financial Corporation, Boston, Massachusetts
By the Division of Banks
Bank of America Corporation (the "Petitioner" or "Bank of America"), a bank holding company, headquartered in Charlotte, North Carolina has petitioned the Board of Bank Incorporation (the "Board") under sections 2 and 4 of chapter 167A of the General Laws, for permission to acquire FleetBoston Financial Corporation ("FleetBoston"), a bank holding company, headquartered in Boston, Massachusetts. Petitioner and FleetBoston intend to effect the proposed transaction by merging FleetBoston with and into Bank of America. Bank of America and FleetBoston also each request approval pursuant to section 2 of chapter 167A of the General Laws to exercise options to purchase up to 19.9% of each other's outstanding common stock under certain terms and conditions set forth in reciprocal stock option agreements between the Petitioner and FleetBoston.
Notice of the petition, which was filed on November 21, 2003, was posted and published as directed by the Board thereby affording interested parties an opportunity to submit comments. A public hearing on the petition was held on January 27, 2004, in Boston, Massachusetts. The period for submitting comments after the hearing expired at 5 o'clock P.M. on February 10, 2004. The public hearing was well attended and lasted approximately three hours.
The Board has reviewed the application and other submissions of the Petitioner, the extensive oral and written testimony received at the public hearing, and the open comment period, as well as oral testimony provided to the Board of Governors of the Federal Reserve System (the "Federal Reserve"). Numerous comments and lengthy testimony on the petition were received from state and federal public officials, community organizations and individuals. Bank of America also submitted a supplementary filing dated February 10, 2004 addressing questions posed by Board members and those commenting on the petition at the public hearing. Subsequent filings were made by the Petitioner in response to additional inquiries from members of the Board.
The Petitioner is a bank holding company and financial holding company whose primary banking subsidiary is Bank of America, National Association, a federally-chartered bank subject to the supervision of the Office of the Comptroller of the Currency (the "OCC"). Bank of America, National Association operates in the states of Arizona, Arkansas, California, the District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Missouri, Nevada, New Mexico, New York, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, and Washington. Bank of America, National Association (USA), also a subsidiary of Petitioner, is a limited purpose credit card bank based in Arizona. In addition, Petitioner's subsidiaries Bank of America Oregon, National Association; Bank of America California, National Association; and Bank of America, Georgia, National Association are limited purpose bankers banks that do not have retail operations. At September 30, 2003, Bank of America had total assets of $737.1 billion and total deposits of $408.5 billion. Based on total assets at June 30, 2003, Bank of America was the third largest bank holding company in the United States.
FleetBoston is a bank holding company and financial holding company whose primary banking subsidiary is Fleet National Bank, a federally-chartered bank with its main office in Providence, Rhode Island and subject to the supervision of the OCC. Fleet National Bank and its affiliated banks operate in the states of Connecticut, Florida, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. Fleet Maine, National Association is a national bank whose sole office is located in Portland, Maine. Fleet Bank (RI), National Association, a wholly-owned subsidiary of Fleet National Bank, is a limited purpose credit card bank based in Rhode Island. At September 30, 2003, FleetBoston had total assets of $196.4 billion and total deposits of $132.5 billion. Both Bank of America and FleetBoston are "well capitalized" institutions under applicable capital standards. The resulting entity will remain well capitalized. Bank of America's and FleetBoston's lead bank subsidiaries are each rated "Outstanding" under the Community Reinvestment Act of 1977.
Board approval is required under section 2 of chapter 167A of the General Laws in order for a bank holding company or out of state bank holding company "... to merge or consolidate with any other bank holding company ... ." (G. L.c.167A, §2 cl. (4).) As described above, Petitioner and FleetBoston also seek approval, pursuant to said section 2 of chapter 167A of the General Laws, to acquire up to 19.9% of each others outstanding common stock upon the occurrence of certain events. These reciprocal stock option agreements may have the effect of making an acquisition or other business combination of FleetBoston by a third party more costly and, thus may discourage certain third parties from proposing an alternative transaction to the merger with Bank of America. Bank of America and FleetBoston could exercise its option if the other party takes certain actions in connection with a merger or acquisition with a third party, subject to obtaining any required regulatory approvals.
In reviewing petitions under section 2 of chapter 167A of the General Laws, the Board is required to apply the review standards found in that section and section 4 of said chapter 167A. This section provides in pertinent part: "In determining whether or not to approve said petition [under section 2], the decision of the board shall be based on a finding whether or not competition among banking institutions will be unreasonably affected and whether public convenience and advantage will be promoted. In making such determination, the board shall consider, but not be limited to a showing of net new benefits." (Emphasis supplied.) The statute then proceeds to define the term 'net new benefits'. ("Net new benefits" is defined to mean "... initial capital investments, job creation plans, consumer and business services, commitments to maintain and open branches within the bank's delineated local community as such term is defined within section fourteen of chapter one hundred sixty-seven, and such other matters as the board may deem necessary or advisable." G. L. c. 167A, §4.) Said sections 2 and 4 prescribe additional requirements relative to reciprocity; deposit concentration limitations; a minimum age requirement for a bank to be acquired; the affordable housing loan programs of the Massachusetts Housing Partnership Fund; executive officer residency requirements; and, a two-year asset retention requirement. The Board also considers the record of performance under the state or federal Community Reinvestment Act of the bank subsidiaries of holding companies involved in a proposed transaction as well as the financial and managerial resources of the parties.
The proposed transaction before the Board is the largest transaction to come before it under the Commonwealth's interstate banking laws. Massachusetts passed the first regional interstate banking act in 1982 (St. 1982, c. 626.) (the "Act"). As signed into law, the Act provided for a regional compact among the New England states for holding company transactions on a reciprocal basis. It was used as a model for laws enacted in several other states for interstate holding company acquisitions within specified geographic regions. Upon challenge, the Massachusetts Act was held constitutional by the United States Supreme Court. ( Northeast Bancorp v. Board of Governors, FRS, 472 U.S. 159 (1985).)
Various arguments were made for such regional or limited interstate authority. As is often the case under the dual banking system which exists in the United States, such laws allowed the states to experiment with interstate banking. The results of the experiment could then serve as a basis for any broadening or expansion to nationwide banking. Additionally, if not more importantly, regional compacts would allow for the growth of regional multi-state bank holding companies to be more able to compete with money center holding companies.
After a number of regional transactions, Massachusetts eliminated the regional restriction and passed a nationwide interstate holding company law in 1990. (St. 1990, c. 102.) A number of requirements were added to the statute in consideration of the nationwide authority. Those provisions included the net new benefits test; the two-year asset based/retention requirements; the requirement for an executive officer to be a resident of the Commonwealth; and the affordable housing loan call requirement with the Massachusetts Housing Partnership Fund. A cap of 15% on the amount of deposits in the Commonwealth which could be controlled by one bank holding company was also added in the 1990 nationwide law. To reflect past regional transactions and to allow for additional regional acquisition, the deposit cap was increased from 15% to 25% in 1993. (St. 1993, c. 110, s. 199.) Four years after Massachusetts passed its nationwide interstate law, Congress passed the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal") providing for nationwide banking. Massachusetts adjusted its law in 1996 (St. 1996, c. 238.) to establish a three-year minimum existence for a bank to be acquired by a holding company as well as to increase the deposit cap limit in increments from 25% to 28% and then 30% as provided for in Riegle-Neal.
This brief history of the development of Massachusetts interstate banking laws establishes that the rules for nationwide holding company acquisitions have essentially been well settled since 1990. Moreover, the history of transactions over this period of time reflects that the four largest bank holding companies operating within the Commonwealth, BankBoston Corporation; Fleet Financial Group, Inc.; Shawmut National Corporation; and BayBank, Inc. ( See Decision of Board of Bank Incorporation relative to the Petition of Fleet Financial Group, Inc. to acquire Shawmut National Association (November 27, 1995) and Decision of Board of Bank Incorporation relative to the Petition of Bank of Boston Corporation to acquire BayBanks, Inc. (July 24, 1996).) consolidated into two organizations and ultimately one in 1999 with Fleet Financial Group, Inc.'s acquisition of BankBoston Corporation. ( See Decision of the Board of Bank Incorporation relative to the Petition of Fleet Financial Group, Inc. to acquire BankBoston Corporation (September 30, 1999).)
Some commenters raised concerns that the proposed transaction will eliminate the largest holding company operating in the Commonwealth and result, after the merger of the lead banking subsidiaries, in only branch offices in Massachusetts of a bank with its headquarters, and perhaps decision making, a thousand miles away. Those facts should, according to those commenters, lead to additional requirements and considerations by the Board. The statutory requirements as set out above do not reflect such additional restrictive scrutiny. To the contrary, the history of interstate banking in Massachusetts is significant on this point and reflects the Commonwealth's ultimate vision of acquisitions and consolidations by bank holding companies. Accordingly, the Board will consider the proposed transaction before it under the longstanding criteria and the Board's past decisions.
The Petitioner has submitted material to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. Petitioner notes that it does not operate any branches within the Commonwealth and accordingly, there is no overlap with FleetBoston. Petitioner indicates nevertheless that Bank of America does have some customers located within the Commonwealth. These customers purchase both loan and deposit products. Loan products include credit cards, consumer mortgages, and commercial loans. Deposit accounts consist of checking, savings, and certificates of deposit. Upon review, the Board believes that both the number and volume of such accounts are de minimis to a consideration of the competitive impact of the transaction. The Board has also noted that this lack of overlap in banking operations in the Commonwealth resulted in the various indices used by federal regulatory agencies in measuring competition in a given banking market not having to be calculated with respect to the Commonwealth. Although the transaction will result in the third largest bank holding company in the country operating in Massachusetts, the Board recognizes that there remains a significant number of bank holding companies as well as independent community banks within the Commonwealth that will continue to provide competitive banking products and services. Accordingly, the Board finds that competition among banking institutions will not be unreasonably affected.
Public Convenience and Advantage
The Board has also considered the record of this application to determine whether public convenience and advantage will be promoted by this transaction. In the filed application, public testimony and supplemental filings, the Petitioner details how it believes the public will benefit by the proposed transaction. The Petitioner acknowledges that the services of Bank of America and FleetBoston are largely similar but that there are some unique products offered by each institution that remain under review on being offered by the combined entity. It notes however that as a market expansion transaction, a banking organization will be created that better serves the customers and communities served by both entities. Moreover, it argues that provisions of the merger agreement relative to business location provisions, board composition, and charitable giving reflect the interests of the communities served by FleetBoston.
As set out in the submitted documents, the combined entity would have approximately 5,600 retail banking offices as well as over 16,000 ATMs. Online banking, bill paying services as well as 24-hour telephone banking are part of the convenient delivery network resulting from the proposed transaction. After the merger of the lead subsidiary banks, the consolidated bank would have retail banking operations in 29 states. Additionally the combined banking institution would have a significantly larger lending limitation to one borrower which would benefit all customers seeking substantial credit from the combined entity. The Board recognizes that these advantages often result from any acquisition and particularly, as in this case, a market expansion transaction. However, the Petitioner emphasizes that the extent of the resulting service delivery network is unparalleled to the convenience and advantages that will be available to customers of the combined company.
In its several filings and oral testimony at the public hearing, the Petitioner cites the advantages that will result from the proposed acquisition. The submitted documents, oral testimony and comments received describe the various lending programs of the Petitioner which favorably serve the communities within its service areas. Those programs will be extended to and enhanced within the markets served by FleetBoston. Of particular interest to the Board is the small business lending of the combined lead subsidiary banks of the proposed merged holding company. As set out in the record of the transaction, the resulting entity would be the number one Small Business Administration lender in the country. As noted during the Board's questioning, 95% of the entities that pay wages in Massachusetts employ less than one hundred people so loans to very small businesses are important. In response the Petitioner stated it serves the smallest of small businesses. The average loan size within its small business area is approximately $35,000 and 90% of its client base are companies with sales of less than one million dollars and with employees of 100 or less. One aspect of the program allows a business owner who has been in operation for at least three months to apply for a $10,000 Small Business Administration loan. The Petitioner also reminded the Board that the national small business division of the combined company would be headquartered in Boston and run by an executive of FleetBoston.
The Board has also given significant review to the Petitioner's residential real estate lending and affordable housing programs. The Petitioner emphasizes its intent to be a leading home mortgage originator in all the markets it serves. Many of its loan programs are described in submitted documents or outlined in oral testimony. During this process the Petitioner has determined it will expand the number of loans to be made under the soft-second mortgage program and maintain membership in the Federal Home Loan Bank of Boston. Additionally, the Board is aware that arrangements with the Massachusetts Housing Partnership Fund will provide over $500 million being available for loans on affordable housing in the Commonwealth.
The record reflects other services and operations of the Petitioner which would be extended to Massachusetts if the transaction is approved. They include a variety of credit and other card products which customers find convenient and useful. The petitioner also cites its innovations in ATM technology with ATM's which better serve the visually impaired and bilingual talking ATMs for Spanish speaking customers. Bank of America's financial literacy initiatives would also be extended to Massachusetts under its program. The Petitioner is committed to developing methods to provide basic money management training and financial skills that foster savings for children and adults. The Board has considered numerous other programs of the Petitioner as set out below.
In determining whether or not to approve a bank holding company transaction under the statutory criteria, the Board is also required to assess the applicant's arguments and submissions that the acquisition will or likely will result in net new benefits. As set out previously herein, that term includes a showing of initial capital investments, job creation plans, consumer business services as well as commitments to maintain and open branch offices. The statute also allows the Board to consider such other matters as it may deem necessary or advisable. Net new benefits is a subset of the public convenience and advantage test. The Board's past consideration of this statutory criteria makes clear that such benefits may be immediate or prospective. Moreover, the Board's review is not a mathematical exercise of addition and subtraction. "The Board is empowered to weigh each net new benefits criterion and determine on balance within the broader public convenience and advantage standard is met based upon the totality of the circumstances, including other unenumerated factors deemed relevant by the Board." ( Decision of the Board of Bank Incorporation relative to the Petition of Fleet Financial Group, Inc. to acquire BankBoston Corporation (September 30, 1999) at 9.)
The Petitioner has addressed this statutory provision in its application, in oral testimony as well as in response to questions from the Board at the public hearing and within its supplemental filings on certain factors. The Board has scrutinized the information in these various documents and statements. The Board is satisfied that each of the components have been addressed. As with any transaction and particularly larger transactions such as this one, the specificity of detail differs among the components.
As a market expansion transaction, the Petitioner offers that capital investments will be made in the Commonwealth and that FleetBoston's branch office network will be maintained. Since Bank of America has no banking offices in Massachusetts, there is no overlap of branches that would lead to closures or require divestiture. The Petitioner asserts that the financial strength of the combined holding company will enable it to open new branch offices.
The Petitioner's application details the greater products and conveniences that will become available to consumers and businesses in the Commonwealth as a result of the proposed transaction. Additionally, it states that the product strengths of each company will be combined resulting in a greater range of superior products becoming available. The Petitioner also states that the transaction will bring to Massachusetts its strong customer service efforts as well as its strong focus on providing products and services targeted at ethnic and immigrant markets. A separate division of the Petitioner which would be extended to cover the FleetBoston markets, operates over two hundred banking centers on or near military installations worldwide to provide services to active and retired military personnel and others.
The application also describes innovative mortgage products and services it believes greatly benefit customers of Bank of America. It particularly notes programs with underwriting flexibility for low and moderate-income applicants purchasing real estate in low-income census tracts as well as a mortgage loan with greatly reduced documentation for qualified applicants. In addition to its small business loan program described previously, the Petitioner provides a vast array of lending products and services to small, middle market and large corporate customers. A separate division of the Petitioner providing retail brokerage, investment advising, trust and fiduciary services and operations will be integrated with FleetBoston's wealth management services group which, if the transaction is approved, would be headquartered in Boston.
The Petitioner has addressed the issue of job creation plans in submitted documents and oral testimony. It again stresses that the lack of overlap in banking offices in Massachusetts distinguishes it from other recent large transactions which have come before the Board. For that reason it states that all "customer facing positions", which is a significant number, will be retained. Bank of America acknowledges that there will be some reduction in the workforce in the short term from redundancy of other operations.
The Board addressed concerns on employment in the Commonwealth beyond tellers and customer service representatives in questions to the Petitioner in light of its statements and projections for after tax savings of $1.1 billion through 2005 if the merger is approved. The Petitioner approached the concerns raised by responding on several different fronts how employment levels will be maintained. In testimony to the Board it was emphasized that by the Petitioner's word as well as the signed Agreement and Plan of Merger (the "Merger Agreement"), Bank of America is committed to maintaining FleetBoston's current level of employment. ( See Agreement and Plan of Merger, Article I, section 1.11(b)(ii) (October 27, 2003).) Moreover, Bank of America states its intention over time to increase such employment consistent with the growth of Bank of America's workforce in the United States. The fact that seven of the nineteen directors of the combined entity will be from FleetBoston, as well as several high ranking executive officers from FleetBoston will hold significant responsibilities in the combined company and oversee some key units which will be headquartered in Boston, are also offered as evidence of commitment to maintaining employment in the Commonwealth. According to the Merger Agreement the combined company's Wealth Management, Latin American, Asset Based Lending, Small Business, Premier Banking and Leasing businesses will all be located in Massachusetts. In response to direct questioning from the Board, the Petitioner emphasized that any short-term job loss would come not only from FleetBoston but also Bank of America staff positions. Moreover it was stated that as much as 25% of projected savings would result from not filling existing open positions. The Petitioner further states that, if approved, the transaction will create jobs. Internally, the financial strength of the combined company will result in expanded operations and employee base as well. Externally, job creation will result from the significant loan programs and commercial lending business of the combined company, especially from its position as the leading Small Business Administration lender in the country. Past decisions of the Board have accepted that this component can be met by a prospective direct and indirect increase in employment. ( Decision of Board of Bank Incorporation relative to the Petition of Fleet Financial Group, Inc. to acquire BankBoston Corporation (September 30, 1999) at 11 n. 26 citing Decision on the Petition of Fleet Financial Group, Inc. to acquire Shawmut National Corporation (November 27, 1995) and Decision on the Petition of Bank of Boston Corporation to acquire BayBanks, Inc. (July 24, 1996).) For all of these reasons the Petitioner believes it has met the statutory criteria of net new benefits.
The Board has carefully considered and scrutinized all of the information provided to it on the criteria of public convenience and advantage as well as net new benefits. All of the documents submitted by the Petitioner and all other interested parties both in favor and against the proposed transaction have been read and all oral testimony presented at the public hearing has been considered and reviewed by the Board. Its analysis has been concluded.
In its deliberations on this application the Board has also given weight to a unique fact presented by this transaction. As further described herein, federal law caps the amount of deposits a bank holding company can control in the country at 10%. If approved, this transaction would result in Bank of America controlling slightly in excess of 9.9% of such deposits. As discussed at the Board's public hearing, it is clear that the Petitioner cannot make any acquisition, other than a de minimis one, under the existing federal cap. Therefore the Petitioner can only grow through expanded business within the areas of the combined company, if allowed to merge. The Petitioner clearly recognizes this fact and asserts that since all of its efforts would be focused on internal growth the result will be increased convenience, activities and benefits to FleetBoston's customers in the Commonwealth. The Board has considered this unique factor and all others discussed herein and finds that consideration of public convenience and advantage including net new benefits weigh in favor of approving the proposed transaction.
Community Reinvestment Act
Related to the issue of public convenience and advantage is the record of performance under the Community Reinvestment Act ("CRA") by Bank of America and FleetBoston and their subsidiaries. For financial institutions not directly under the jurisdiction of the Commonwealth, the Board initially looks to the publicly available descriptive rating and evaluation by a federal or another state's banking regulatory agency. The CRA activities of Bank of America's lead bank subsidiary were specifically discussed at the public hearing. The Board is aware that Bank of America, National Association received a CRA rating of "Outstanding" at its most recent evaluation conducted by the OCC as of December 31, 2001. Fleet National Bank also received an "Outstanding" rating at its evaluation conducted by the OCC as of July 23, 2001. All other subsidiary banks of Bank of America and FleetBoston that are subject to the CRA received either an "Outstanding" or "Satisfactory" rating at their most recent evaluations conducted by the OCC. The Board notes the statements of Petitioner related to its establishment of a $750 billion goal for community economic development over the next 10 years. Petitioner also states that this goal represents an expansion of the previous community development pledges of both Bank of America and FleetBoston. According to Petitioner, more that $100 billion of this goal will be achieved through lending and investment in FleetBoston markets, including Massachusetts. Petitioner has pledged to honor all existing FleetBoston community development commitments. The Board has reviewed the historical commitments in this area of Bank of America and FleetBoston and finds that each has a demonstrated a satisfactory track record of meeting their respective community needs. A key indicator of such performance is the "Outstanding" CRA evaluation ratings of both lead bank subsidiaries. It remains the position of the Board "that planned or future CRA related activities or loan and investment commitments do not substitute for a record of past performance in meeting the needs of an applicant's community or service area. It is to that record and available performance ratings from regulatory agencies that this Board will give the greatest weight in its consideration of a proposed transaction." ( Decision of the Board of Bank Incorporation relative to the Petition of Fleet Financial Group, Inc. to acquire Shawmut National Corporation (November 27, 1995) at 14.)
Additional Statutory Requirements and Other Considerations
By law, the Board must receive notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory arrangements for the proposed transaction have been made pursuant to section 4 of said chapter 167A. The Board has received notice from the MHPF, in a letter dated February 27, 2004, that satisfactory arrangements have been made regarding Bank of America's affordable housing loan call obligations stemming from this transaction. In light of testimony at the public hearing, the Board has confirmed that the satisfactory arrangements made are for the loan call provisions of the MHPF.
The matter now before the Board involves an interstate transaction in which an out-of-state bank holding company seeks to acquire control of more than 5% of the voting stock of a bank holding company located in Massachusetts. Accordingly, the reciprocity laws of Petitioner's home state are subject, pursuant to the requirements of chapter 167A, to the review of the Commissioner of Banks (the "Commissioner"). Specifically the Commissioner must determine whether the proposed transaction is authorized under the laws of North Carolina for a Massachusetts-based company, under conditions no more restrictive than those imposed by Massachusetts. Based on a review of North Carolina law, the Commissioner has concluded that it is reciprocal and that the proposed transaction is permissible under the Commonwealth's Interstate Bank Act.
The Board reviewed the concentration of deposits, which would be owned by the Petitioner in the Commonwealth following the transaction. Such review is dictated by General Laws chapter 167A, section 2 which provides that no approval shall be given for a bank holding company acquisition if such acquisition would result in a 30% deposit limitation, subject to certain limited exceptions. According to information supplied by Petitioner as well as through independent review, the Board has concluded that Petitioner is within this limitation. Related to this is the limitation under federal law, Section 3(d) of the Bank Holding Company Act of 1956, as amended, which provides that an interstate application may not be approved if, upon consummation, the applicant would control "more than 10 percent of the total amount of deposits of insured depository institutions in the United States." It is the Board's understanding that Petitioner will be within this limitation as evidenced by the approval by the Federal Reserve on March 8, 2004 of Petitioner's application to that agency.
The two remaining statutory requirements have also been met by the Petitioner. In the initial application document filed, the Petitioner agreed to comply with the two year asset base retention requirement. In that same document, the Petitioner provided assurance that it would comply with the requirement that an executive officer of the continuing entity be a resident of Massachusetts. As set out previously herein and specifically named in the submitted documents, several executive officers of FleetBoston will continue to lead a number of major divisions of the combined company and some of those divisions will be headquartered in Massachusetts. Moreover, the current Chairman and Chief Executive Officer of FleetBoston will become the Chairman of the combined company. The Board has also noted that the Board of Directors of the combined company will meet eight times a year, three times in Boston and five times in Charlotte. Five officers of FleetBoston will also serve on Bank of America's Risk and Capital Committee, the highest executive authority within the company.
The resulting capital ratios and projections for the Petitioner are satisfactory. Management factors reviewed in consideration of the proposed transaction before the Board are also supportive of its approval. Bank of America and FleetBoston have each been involved in large merger transactions and would have the necessary resources to manage the integration of the two institutions. Additionally, all other requirements of statute relating to a bank holding company acquisition have been met.
The full record of this transaction reflects a number of issues being raised as to Bank of America, FleetBoston or their products services and operations. Those matters included but were not limited to basic banking programs, ATM fees, terminations of accounts held by certain individuals, market timing issues with mutual fund subsidiaries of both entities as well as compliance with the abandoned property laws of the Commonwealth. The Petitioner addressed some of these matters at the public hearing and in a supplemental filing. Other issues remain under review by the Petitioner for determination on products and services to be provided by the combined company. The Board is aware that certain activities within the mutual fund subsidiaries have resulted in remedial actions by both entities as well as in fines and settlements with other regulatory agencies. In supplemental filing the Petitioner has affirmed its previous comments and agreed in writing to comply with the Commonwealth's abandoned property statute particularly as to abandoned money orders, cashier's checks, treasurer's checks and certified checks. The Board also received updated information from commenters on matters which were the subject of oral testimony at the public hearing.
Based on the record of this matter including the testimony received at the public hearing considered in light of all relevant statutory and administrative requirements, the Board finds that competition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the proposed transaction, and that the records of performance under CRA by the banks involved in this transaction are consistent with its approval. Therefore, in accordance with these findings and pursuant to the statutory authority cited herein, the Board approves the application and authorizes Bank of America to directly acquire up to 100% of the stock of FleetBoston. The Board hereby additionally approves the requests of Petitioner and FleetBoston to acquire up to 19.9% of each others common stock upon the occurrence of certain events in accordance with the reciprocal stock option agreements submitted with the Petitioner's filing with the Board.
The approvals granted herein are subject to the condition that all related transactions are completed within one year of the date of this Decision and that Bank of America adhere to the commitments and representations it made to the Board during the application process.
Therefore, in accordance with its findings above and pursuant to sections 2 and 4 of chapter 167A of the General Laws, the Board hereby approves Bank of America Corporation's application to merge and consolidate with FleetBoston Financial Corporation.
|Steven L. Antonakes|
Commissioner of Banks
Commissioner of Revenue
|Timothy P. Cahill|
Treasurer and Receiver General
|March 31, 2004|