RELATIVE TO THE PETITION OF
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
CHARTER FINANCIAL CORPORATION
Boston Private Financial Holdings, Inc. ("Boston Private Financial" or the "Petitioner"), Boston, Massachusetts has petitioned the Board of Bank Incorporation (the "Board") to acquire Charter Financial Corporation ("Charter Corporation") and its banking subsidiary, Charter Bank, Bellevue, Washington. In the Commonwealth, Boston Private Financial is the holding company for Boston Private Bank & Trust Company ("Boston Private Bank"), Boston, Massachusetts. Accordingly, the Petitioner has submitted the application pursuant to the provisions of sections 2 and 4 of said chapter 167A.
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 May 8, 2007. The comment period on the proposed transaction ended June 11, 2007.
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 May 23, 2007.
Boston Private Financial is the parent company for Boston Private Bank. Boston Private Financial conducts business through four bank subsidiaries and a number of nonbank subsidiaries which are set out in the application. As of December 31, 2006, it had approximately $5.76 billion in consolidated assets. In addition to Boston Private Bank, Boston Private Financial has the following banking subsidiaries: Borel Private Bank & Trust Company ("Borel"), San Mateo, California; First Private Bank & Trust Company("First Private"), Encino, California; and Gibraltar Private Bank & Trust Company ("Gibraltar"), Coral Gables, Florida. Borel and First Private provide banking and investment management services to individual, families and their businesses in California. Gibraltar provides a broad range of banking and investment management services to individuals, families and their businesses in Florida and New York City.
Boston Private Bank is a state-chartered trust company. At December 31, 2006, it had total assets of approximately $2.46 billion, and is well capitalized. Boston Private Bank pursues a "private banking" business strategy and is principally engaged in providing banking, investment and fiduciary products and services to high net worth individuals, their families and businesses primarily in the Greater Boston area and New England. Boston Private Bank operates from its main office in Boston and has seven branch offices and one loan production office, all in the Greater Boston area, offering its clients a broad range of banking services, as well as financial planning, trust and estate administration and IRA and Keogh accounts. It also offers cash management services through sweep accounts and repurchase agreements, and provides a broad range of investment advisory and asset management services.
Charter Corporation, a Washington corporation, is a bank holding company that conducts its business through its wholly-owned, direct bank subsidiary, Charter Bank which is chartered by the State of Washington. As of December 31, 2006 Charter Corporation had approximately $322 million in consolidated assets. At that date, Charter Bank represented substantially all of Charter Corporation's assets and was the source of substantially all of its income. Charter Bank has four banking offices, all located within King County in the Seattle, Washington area. It provides a broad range of financial products and services including: deposit products; residential and other consumer lending services; and commercial lending 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 and Charter Bank operate on different coasts 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, Charter Bank will continue to operate as a separate bank. At the public hearing, the Petitioner indicated that the proposed transaction will provide positive benefits to Massachusetts customers by further strengthening and diversifying the overall capital position of Boston Private Financial, thereby enabling Boston Private Bank to be even more responsive to the deposit, lending and community investment needs of the Massachusetts communities it serves. Further, the increased size of Boston Private Financial will allow it to continue to develop and offer innovative services to all its customers. The Application notes additional products and services anticipated to be offered at Charter Bank. The Board's review of these and other factors set out in the application related to pubic convenience and advantage support approval of the application.
The statutory requirement for net new benefits from the proposed transaction was also considered by the Board. The Petitioner has addressed this requirement in the submitted application and at the public hearing. Among other things the Petitioner states that the financial strength of Boston Private Financial will be enhanced and will provide all of its banking subsidiaries with an increased ability to respond to changing market conditions and the ability to offer innovative products and services. Such growth Petitioners avers should also provide new employment opportunities including management positions in Massachusetts. Additionally, it is noted that all branches will be retained.
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 a "Outstanding" in its most recent examination of performance under CRA by the FDIC while each of its other subsidiary banks has a "Satisfactory" rating. Charter Bank has a "Satisfactory" CRA rating from its last examination by the FDIC.
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 Charter Financial Corporation and its subsidiary bank, Charter Bank provided that the transaction is completed within one year of the date of this Decision.
June 21, 2007
Board of Bank
Steven L. Antonakes
Commissioner of Banks
Alan L. LeBovidge
Commissioner of Revenue
Timothy P. Cahill
Treasurer and Receiver-General