Decision  Decision of April 24, 2009

Date:	04/24/2009
Organization:	Division of Banks

• Petitioner: Putnam Fiduciary Trust Company
• Respondent: Division of Banks

Decision relative to the application of Putnam Fiduciary Trust Company, New Hampshire to merge with Putnam Fiduciary Trust Company, Boston, Massachusetts in a multi-step transaction

Putnam Fiduciary Trust Company, New Hampshire ("Putnam NH"), a newly formed New Hampshire nondepository trust company, has applied to the Division of Banks (the "Division") for permission to merge with Putnam Fiduciary Trust Company Boston, Massachusetts ("Putnam MA"), pursuant to the provisions of Massachusetts General Laws chapter 167, section 39B and chapter 172, section 36 under the terms of a Bank Merger Agreement and Contract for Union (the "Agreement"). The Agreement provides for the merger of Putnam MA with and into Putnam NH under the charter, by-laws and name of Putnam NH. That transaction will result in Putnam NH succeeding to the business of Putnam MA. The business of Putnam NH will continue to be conducted at the present Boston office of Putnam MA. Power Corporation of Canada and Power Financial Corporation (collectively "Power"), both of Montreal, Quebec, Canada petitioned the Board of Bank Incorporation to acquire Putnam NH. That acquisition is part of a plan of reorganization by Power to reorganize Putnam MA which it acquired on August 3, 2007. The Board approved that transaction on this date.

Notice of the application has been posted and published. The time period for interested persons to submit documents has passed. Accordingly, all documents and materials related to this multi-step transaction have been reviewed. The record has been considered with regard to the financial and managerial resources of each bank, the competitive effects of the proposed transaction, the convenience and needs of the communities to be serviced by the continuing institution, the record of performance under the Community Reinvestment Act ("CRA") of the banks involved in the transaction and other applicable criteria.

As an interstate transaction, the reciprocity of the laws of the home state of Putnam NH must be reviewed. Under Massachusetts law, the determination of reciprocity of the laws of another state rests solely with the Commissioner of Banks . I have found that New Hampshire law is reciprocal and does expressly authorize a similar transaction by a Massachusetts bank under conditions no more restrictive than those imposed by Chapter 167, section 39B. Accordingly, the proposed transaction is permissible under the Commonwealth's Interstate Banking Act.

Putnam MA is a Massachusetts-chartered trust company. It maintains its sole office at One Post Office Square, Boston, Massachusetts. Its primary business is providing investment and trust services to institutions throughout the United States. As of December 31, 2008, Putnam MA had total assets of approximately $287 million. Putnam MA provides investment and trust services to institutions, including acting as trustee and administrator for retirement and college savings plans, provides investment management services through commingled funds maintained for qualified retirement plans, and serves as transfer agent for customers including a large family of registered investment companies, the "Putnam Funds". This transfer agent business has been or will be transferred to an affiliate of Putnam MA. Putnam MA accepts no deposits from the public and makes no loans but maintains deposit accounts of two affiliates in the aggregate amount of $500,000 which allows it to be FDIC insured. In connection with the merger, the deposits of the affiliates will be withdrawn and Putnam NH's FDIC insurance will be terminated as soon as authorized by the FDIC.

Putnam NH is a New Hampshire nondepository trust company. Its sole office will be the current headquarters of Putnam MA in Boston. Putnam NH will provide the same services as those that are presently being performed by Putnam MA with the exception of the planned proposed changed noted above.

The Division has reviewed the transaction to determine that competition among banks will not be unreasonably affected by the proposed acquisition. It is the position of the 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. As the proposed transaction involves a reorganization of banking operations, and not the acquisition of any new banking assets by the Petitioner, the transaction will have no direct competitive impact on banking competition within the Commonwealth.

The Petitioner submitted information relating to the public convenience and advantage that will result from the proposed transaction. As a general matter, the Petitioner states that public convenience and advantage will be served because Putnam NH will continue to engage in trust and investment management activities following the merger with Putnam MA, and because Putnam NH will benefit from the longstanding and substantial financial services management expertise of Putnam MA. Furthermore, the Petitioner believes that Putnam MA would most effectively and efficiently be organized as a non-FDIC insured depository trust company. The Petitioner believes such resulting efficiencies which include less burdensome regulatory requirements to benefit customers of Putnam NH. Moreover, although Putnam NH is expected to remain "well-capitalized" at all times, its level of capital is expected to be lower than the level currently maintained by Putnam MA. Putnam NH will be able to use the difference to provide improved services to its customers and to enhance its systems and technology as required. Over time, these efficiencies are expected to enable Putnam NH to provide enhanced products and services to the customers it serves. The Petitioner notes that Putnam NH's employees, premises and operations will all remain in Massachusetts and will continue Putnam MA's commitment to Massachusetts communities.

Based on the foregoing, and on the entire record of this matter, the Division finds that public convenience and advantage will be promoted by the proposed transaction, and that the criteria for net new benefits has been established.

Related to the issue of public convenience and advantage is the record of performance under CRA by the banks which are parties to this transaction. Such review for a state-chartered bank includes examination by Division personnel, as well as an analysis of the legitimate concerns raised by the community and the bank's response to those concerns. For other institutions, the Division reviews the descriptive rating and evaluation by the applicable federal or state bank regulatory agency. Because Putnam NH is a newly formed bank, it has not yet received a CRA evaluation. The Division, however, notes it will conduct business in the same manner as Putnam MA which has received an overall "Outstanding" rating from the Division in its most recent CRA Performance Evaluation.

The financial aspects and tax consequences from the structure of the transaction were also considered by the Division. Management factors reviewed were also found supportive of approval.

Upon review of this application with reference to all other relevant statutory and regulatory criteria, the Division has concluded that all such requirements have been met and that consummation of the proposed merger would be in the public interest. On the basis of these considerations, approval is granted for Putnam MA to merge with and into Putnam NH under the charter, by-laws and name of Putnam NH.

The approvals granted herein are subject to the following conditions:

1. that the merger of Putnam MA and Putnam NH shall not 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 167, section 39B, and chapter 172, section 36, have been returned;
2. that the proposed transaction shall not become effective until Articles of Merger are filed with the Secretary of State;
3. that all such mergers shall be consummated within one year of the date of this decision.

April 24, 2009
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Date


Steven L. Antonakes
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Commissioner of Banks