Boston Private Bank & Trust Company, Boston, Massachusetts (the "Petitioner" or "Boston Private") has applied to the Division of Banks (the "Division") for permission to merge with its three affiliated banks: Borel Private Bank & Trust Company ("Borel Private"), San Mateo, California; First Private Bank & Trust ("First Private"), Encino, California; and Charter Private Bank ("Charter Private"), Bellevue, Washington. Borel Private, First Private and Charter Private will merge under the charter, by-laws and name of Boston Private Bank & Trust Company pursuant to the provisions of Massachusetts General Laws chapter 167C, section 6 and chapter 172, section 36 under the terms of an Agreement and Plan of Merger dated as of January 28, 2011 (the "Agreement"). All four banks are wholly-owned subsidiaries of Boston Private Financial Holdings, Inc., Boston, Massachusetts. The mergers of these banks are part of a multi-step transaction involving the internal reorganization of all subsidiary banks of the bank holding company. The main office of Boston Private would remain the main office of the continuing institution and the banking offices of Borel Private, First Private and Charter Private would be retained as branch offices.
Notice of the applications has been posted and published. The time period for interested persons to submit documents ended on March 11, 2011. The Division reviewed the applications in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage as well as net new benefits would be promoted by approvals of the proposed transactions. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.
In this multi-state transaction, Massachusetts is the home state for the continuing entity and the other states will be host states for the continuing branch offices. In conjunction with this multi-state transaction, the Division has co-ordinated the application process with the State of California Department of Financial Institutions and the Washington State Department of Financial Institutions. Each agency has received all of the application documents and neither agency has expressed any objections to the transactions.
Boston Private is a Massachusetts state-chartered trust company. Boston Private was chartered in 1983 under the name Trust Management Bank. Trust Management Bank changed its name to Boston Private Bank & Trust Company in 1986. As of December 31, 2010, Boston Private had total consolidated assets of approximately $3.4 billion. In addition to its main office in Boston, Boston Private operates two branch offices in Boston, as well as other branch offices in Beverly, Cambridge, Hingham, Lexington, Newton and Wellesley, Massachusetts. Boston Private's deposits are insured to allowable limits by the FDIC.
Borel Private is a California state-chartered bank in stock form. As of December 31, 2010, Borel Private had total assets of approximately $1.6 billion. In addition to its main office in San Mateo, California, Borel Private operates branch offices in Burlingame, Los Altos, Palo Alto, and San Francisco, California. Borel Private's deposits are insured up to allowable limits by the FDIC.
First Private is a California state-chartered bank in stock form. As of December 31, 2010, First Private had total assets of approximately $505 million. In addition to its main office in Encino, California, Borel operates branch offices in Burbank, Granada Hills, Santa Monica and Westlake Village, California. First Private's deposits are insured up to allowable limits by the FDIC.
Charter Private is a Washington state-chartered bank in stock form. As of December 31, 2010, Charter Private had total assets of approximately $366 million. In addition to its main office in Bellevue, Washington, Charter Private operates branch offices in Kent, Redmond, and Seattle, Washington. Charter Private's deposits are insured up to allowable limits by the FDIC.
The Petitioner has submitted information to address the issue that competition among banks will not be unreasonably affected by the proposed transactions. It is the position of this Division 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. There are no communities within the Commonwealth or outside of the Commonwealth in which two or more banks involved in these merger transactions maintain a banking office. Moreover, as stated in the applications, the affiliated banks generally do not derive loans and deposits from one another's service area within Massachusetts or outside of Massachusetts because these banks operate in different states or in distinct geographic areas. Additionally, weight must be given to the fact that Boston Private Financial Holdings, Inc. could negate competition in any form between its bank subsidiaries. For these reasons and other factors, the Division finds that competition among banking institutions will not be unreasonably affected.
The Division has also considered the record of these applications to determine whether public convenience and advantage will be promoted by these transactions. Under the proposed mergers, the Petitioner states, it will continue to offer the products and services of each bank involved in the mergers. Such products and services include residential lending, deposit and cash management, and trust and investment management services. Customers should benefit from enhanced product offerings and more efficient delivery of products and services by the continuing bank. For example, customers of the two California-chartered banks and the Washington-chartered bank will have access to additional jumbo mortgage options and enhanced trust and investment management services. The Division considered these reasons and others cited in the submitted documents in determining that public convenience and advantage will be promoted by approval of these transactions.
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 as set out in section 36 of said chapter 172 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. The Petitioner has addressed this requirement of statute. As stated in the applications, the continuing bank anticipates an initial capital investment of over $100,000 in connection with the mergers in the form of investments in infrastructure and information systems at the continuing bank's Boston facilities to accommodate its larger operation. It is also noted that Boston Private has an authorized but unopened branch office to be located in Boston, Massachusetts. Additionally, Boston Private has plans to establish a branch office in Brookline subject to regulatory approval. According to the submitted application documents, 27 new jobs are expected to be created in Massachusetts in connection with the integration of operations of the California and Washington banks with Boston Private's operations and the anticipated openings of the new Boston branch office and the proposed Brookline branch office, if approved and opened after application filing. All of the banking offices of the four banks involved in the mergers will become branch offices of Boston Private. The application documents note a possible subsequent transaction involving an out-of-state branch office. Moreover, customers of these banks will benefit from the more efficient delivery of a broad array of products and services by the continuing bank. These and other factors are also cited as support for meeting such criteria.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are parties to these transactions. Such a review for a Massachusetts state-chartered bank includes examination by personnel of the Division of Banks as well as analysis of concerns received by the bank's community and its response to those concerns fairly raised. For other institutions, the Division looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. The Division has noted that Boston Private has an "Outstanding" rating in its most recent examination of performance under CRA by the Division of Banks. The Division has noted that the other three banks involved in the mergers have a "Satisfactory" rating at their most recent CRA examinations.
The application documents state that eleven of the fifteen current members of Boston Private's Board of Directors will remain on the continuing institution's Board. As indicated in the Petitioner's filing, four individuals from the other three banks also will serve on the continuing institution's Board including one from Borel Private, two from First Private and one from Charter Private. The executive officers will consist of all of the persons currently serving in those positions at Boston Private, as well as four other individuals including one from Borel Private, one from First Private, one from Charter Private and one from Boston Private Financial Holdings, Inc. Economies and service capabilities which would result from these merger transactions are set out in the submitted documents. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the applications.
Upon review of these applications with reference to the relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of the proposed mergers would be in the public interest. On the basis of these considerations, approvals are granted for Borel Private, First Private, and Charter Private to merge with and into Boston Private under the charter, by-laws and name of Boston Private Bank & Trust Company pursuant to Massachusetts General Laws chapter 167C, section 6 and chapter 172, section 36. Approval is also granted for Boston Private to maintain the banking offices of Borel Private, First Private, and Charter Private as branch offices under said section 6.
The approvals granted herein are subject to the following conditions:
(1) that the mergers of Borel Private, First Private, Charter Private and Boston Private shall not become effective until Certificates signed by the Presidents and Clerks or other duly authorized officers of the banks involved in the mergers indicating that each such institution has complied with the provisions of Massachusetts General Laws chapter 167C, section 6 and chapter 172, section 36 have been returned;
(2) that the proposed transactions shall not become effective until Articles of Merger are filed with the Secretary of State;
(3) that, in accordance with said section 6, the banking offices of Borel Private, First Private and Charter Private to be maintained as branch offices of the continuing bank shall be deemed to be out-of-state branches and subject to the supervision of the Division and the applicable laws of California and Washington; and
(4) that the proposed mergers shall be consummated within one year of the date of this decision.
Dated at Boston, Massachusetts, this 25th day of March, 2011
By: David J. Cotney