DECISION RELATIVE TO THE PETITION OF BOSTON PRIVATE FINANCIAL HOLDINGS, INC. BOSTON, MASSACHUSETTS TO ACQUIRE GIBRALTAR FINANCIAL CORPORATION, CORAL GABLES, FLORIDA
Boston Private Financial Holdings, Inc. ("Boston Private Financial" or the "Petitioner"), Boston, Massachusetts has petitioned the Board of Bank Incorporation (the "Board"), pursuant to General Laws chapter 167A, sections 2 and 4, to acquire Gibraltar Financial Corporation ("Gibraltar Financial") and its banking subsidiary Gibraltar Bank, FSB ("Gibraltar Bank"), Coral Gables, Florida. In the Commonwealth, Boston Private Financial is the holding company for Boston Private Bank & Trust Company ("Boston Private Bank"), Boston, Massachusetts.
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 Boston Private Financial on July 7, 2005. The comment period on the proposed transaction ended July 15, 2005.
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 includes, 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 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 matter 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. In the application documents, the Petitioner informed the Board of its contact with the MHPF in order to meet this requirement. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated July 5, 2005.
Boston Private Financial is a bank holding company with three banking subsidiaries, Boston Private Bank & Trust Company ("Boston Private Bank"), Boston, Massachusetts, Borel Private Bank & Trust Company ("Borel"), San Mateo, California, and First State Bank ("First State"), Granada Hills, California. It also holds a number of non-bank subsidiaries. As of March 31, 2005, Boston Private Financial had approximately $3.62 billion in consolidated assets. Boston Private Bank is a Massachusetts trust company offering banking products and services to customers located primarily in Massachusetts and New England. Borel, a California-chartered bank acquired by Boston Private Financial in 2001, provides a range of banking and trust services to individuals, families, and their businesses through 3 branches and 1 loan production office located in Northern California. Borel's total assets were approximately $784 million at March 31, 2005. First State, which was acquired by Boston Private Financial in 2003, serves the Southern California area through 5 branch banking offices. It also maintains 1 loan production office. On October 1, 2004 Encino State Bank merged with and into First State. As of March 31, 2005, First State Bank had approximately $440 million in consolidated assets.
Gibraltar Bank is a federally-chartered savings association, established in 1994, with its main office in Coral Gables, Florida. In addition, it maintains four other banking offices all located on the Southeast coast of Florida. As of March 31, 2005, Gibraltar Bank, whose principal federal regulator is the Office of Thrift Supervision, had approximately $970 million in assets. Gibraltar Bank represents substantially all of Gibraltar Financial's assets and income. Gibraltar Bank provides a broad range of financial services including: deposit services; residential and other consumer lending services; commercial lending services; and investment management 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 result in undue concentration of banking resources in banking markets in Massachusetts. It is the position of this Board to consider a transaction in light of its impact on the citizens, communities and banking structure in the Commonwealth on a community by community basis instead of by variously grouped markets. The Board's review recognizes that Boston Private Bank, Borel, First State and Gibraltar Bank operate in distinctly different geographic areas and there is no overlap in branch office network or service area. For that reason and other factors, the Board finds that competition among banking institutions will not be unreasonably affected.
The Board has considered whether public convenience and advantage will be promoted by the proposed transaction. As discussed above, Gibraltar Bank will continue to operate as a separate bank. At the public hearing, the Petitioner indicated that the proposed transaction would promote public convenience and advantage by enhancing the overall financial strength and the geographic diversification of the Petitioner's corporate family and should also provide new employment opportunities. Moreover, it was stated that Petitioner's growth and increase in financial strength will provide its subsidiaries, including its banking subsidiaries, with an increased ability to respond to changing market conditions and will enable Boston Private Financial to continue to offer innovative financial products and services to Massachusetts and to begin to offer such services in Florida. According to the application, Boston Private Financial's local focus promotes advantage for the public seeking among other services, banking, investment management and financial planning services. The Board's review of these and other factors set out in the application related to public convenience and advantage support approval of the application.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the subsidiary banks which are the parties to this transaction. Such a review for a state-chartered bank includes examination by personnel of the Board as well as analysis of concerns received by the bank's community and its response to those concerns fairly raised. For other institutions, the Board looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. The matter was specifically addressed at the public hearing. The Board has noted that the Petitioner's subsidiary bank, Boston Private Bank, has an "Outstanding" rating in its most recent examination of performance under CRA while Borel and First State each received "Satisfactory" CRA rating at their last examination performed by the FDIC. The most recent examination of Gibraltar Bank performed by the Office of Thrift Supervision resulted in its receiving a "Satisfactory" rating.
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. Finally, operational and compliance matters were considered.
The application, supporting documents, and the comments received at the public hearing have established an extensive record on this petition, which has been reviewed consistent with statutory provisions and the policies of the Board. Based on the record of this matter considered in light of all relevant statutory and administrative requirements, the Board finds that public convenience and advantage will be promoted and that competition among banking institutions will not be unreasonably affected and that the record of performance under CRA by the banks involved in this transaction are consistent with its approval. Having considered the record established on this application, the Board has found that the applicable statutory and administrative criteria have been met.
In accordance with the findings expressed herein and pursuant to statute, the Board hereby approves the petition and authorizes Boston Private Financial to acquire Gibraltar Financial Corporation and its subsidiary bank, Gibraltar Bank, FSB provided that the transaction is completed within one year of the date of this Decision.
|Steven L. Antonakes |
Commissioner of Banks
|Alan L. LeBovidge |
Commissioner of Revenue
|Timothy P. Cahill |
Treasurer and Receiver General
|August 17, 2005 |