Decision Relative to the Merger of Plymouth Savings Bank, Wareham, Massachusetts With and Into Eastern Bank, Boston, Massachusetts
Eastern Bank ("Eastern" or the "Petitioner"), Boston, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Plymouth Savings Bank ("Plymouth"), Wareham, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D and under the terms of an Agreement and Plan of Merger (the "Agreement") dated as of July 7, 2004. The Agreement provides for the merger of Plymouth with and into Eastern under the name, charter and by-laws of Eastern Bank. The banking offices of Plymouth will become branch offices of Eastern. The merger application was filed in connection with the multi-step transaction in which, Eastern Bank Corporation, the mutual holding company for Eastern acquired the stock of Plymouth through a merger with Plymouth's mutual holding company, Plymouth Bancorp, Inc. The acquisition application of Eastern Bank Corporation was approved by the Commonwealth's Board of Bank Incorporation on December 10, 2004.
Notice of the application was posted as directed by the Division thereby affording opportunity for interested parties to submit comments. The period for filing comments has expired. Only one comment was submitted and was addressed in a response from the Petitioner, as requested by the Division. The Division reviewed the application and all related documents in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether net new benefits as well as public convenience and advantage would be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and the Division's regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.
Eastern is the subsidiary banking institution in stock form resulting from a 1989 reorganization into a mutual holding company, Eastern Bank Corporation. The deposits of Eastern are insured to allowable limits by the Bank Insurance Fund (the "BIF") administered by the Federal Deposit Insurance Corporation ("FDIC"). On July 31, 2004, Eastern Bank was converted, by operation of law, from a state-chartered savings bank to a state-chartered trust company and new deposits in excess of the FDIC limits are no longer insured by the Depositors Insurance Fund ("DIF"). Excess deposits at the time of the conversion are covered to the extent provided in section 17 of chapter 43 of the Acts of 1934. According to its application, Eastern operates 53 banking offices, which are located primarily in Eastern Massachusetts in Bristol, Essex, Middlesex, Plymouth and Suffolk counties. Eastern generally offers its customers a diverse array of commercial and retail banking products and services, particularly in the commercial lending and investment management areas. As of December 31, 2004, it had total assets of approximately $5.1 billion.
Plymouth is a savings bank in stock form. It reorganized into a mutual holding company form of organization in 1998. Plymouth become a wholly owned subsidiary of Eastern Bank Corporation on January 1, 2005 through the merger of its parent, Plymouth Bancorp, Inc. with and into Eastern Bank Corporation. Plymouth Savings Bank's deposits are insured by the BIF to maximum extent permitted by law and by the DIF for amounts in excess of FDIC's limits. Plymouth operates 18 banking offices in Barnstable, Bristol and Plymouth counties in Southeastern Massachusetts. According to the application documents submitted, Plymouth has a substantial mortgage banking organization through which it offers a number of mortgage products and services. As of December 31, 2004, Plymouth had total assets of approximately $1.3 billion.
Materials have been submitted to address the issue of whether competition among banks will be unreasonably affected by the proposed transaction. Some of that analysis is detailed according to various tests relative to the size of each institution and its competitors within delineated markets used by federal agencies. According to the Petitioner, there is very little overlap and the proposed merger will have a de minimis effect on competition. In fact, there are no cities or towns in which both banks have a banking office. Upon review, the Division's analysis of the competitive impact of this transaction does not preclude its approval.
The Division has also considered whether public convenience and advantage will be promoted by this transaction. As described in the filed documents, Eastern believes the statutory test is met in a number of ways. The combined bank will offer all of the products and services currently offered by both Eastern and Plymouth. New services to be offered by Eastern to Plymouth customers are commercial lending products for the middle market, on-line treasury and cash management products. Additionally, according to the application documents, Eastern provides expertise in large complex lending transactions, as well as international services such as letters of credit, collections, foreign currencies, and capital equipment leasing. The combined branch office network of 71 branches will also allow business to be conducted over a significantly larger geographic area. Additional services and proposed programs are set out in the application and provide the basis for determining that this statutory test has been met.
In determining whether or not to approve a petition under the statutory criteria, the Commissioner is also required to consider a showing of "net new benefits" related to the transaction. That term includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors, which the Commissioner may deem necessary. Eastern has addressed this requirement. According to the Petitioner, as a result of the merger, among other things, the continuing bank will be able to compete more effectively in delivering products and services to its customers. The maintenance of Plymouth's banking offices as branch offices of the continuing bank, as well as plans to open additional branch offices of Eastern, is also cited by the Petitioner. Additionally, as stated in the application, it is anticipated that a significant number of jobs, particularly in Plymouth Savings Bank's current service area, will be created as new products and services are made available to current customers of Plymouth.
Related to the issue of net new benefits and public convenience and advantage is the record of performance under CRA by the banks which are parties to this transaction. For financial institutions not directly under the jurisdiction of the Commonwealth, the Division initially looks to the publicly available descriptive rating and evaluation by a federal or another state's banking regulatory agency. Such review for state-chartered banks such as Eastern and Plymouth includes examination by personnel of the Division as well as analysis of concerns received from a bank's community and a bank's response to those concerns fairly raised. The Division is aware that both Eastern and Plymouth have "Outstanding" ratings in their most recent examination of performance under CRA. Accordingly, the Division's view of this factor is consistent with approval.
The application states that upon consummation of the transaction, the current directors of Eastern will continue to serve on the Board of Directors of Eastern. As indicated in the application, the current directors of Eastern now include the former members of the Executive Committee of Plymouth Bancorp, Inc. as a result of the recent merger of the two mutual holding companies. Economies and service capabilities which would result from the transaction are set out in the submitted documents. Following consummation of this transaction, all regulatory capital standards will continue to be met. Upon review, financial and managerial considerations support the petition.
Based on the record on this matter considered in light of all relevant statutory and administrative requirements, the Division 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 records of performance under CRA by the banks involved in this transaction are consistent with its approval. Therefore, in accordance with these findings, consideration of comments received and pursuant to the statutory authority cited herein, the Division hereby approves the application and authorizes Plymouth to merge with and into Eastern. Approval is also granted for Eastern to maintain the eighteen banking offices of Plymouth as branch offices under General Laws chapter 167C, section 3.
The approvals granted herein are subject to the following conditions:
(1) That no merger shall 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 each such institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34D or other applicable statute has been returned with my endorsement thereon;
(2) that the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
(3) that the proposed merger shall be consummated within one year of the date of this decision.
|April 7, 2005 |
|Steven L. Antonakes |
Commissioner of Banks