Decision Decision of April 4, 2019

Date: 04/04/2019
Organization: Division of Banks

Cambridge Trust Company, Cambridge, Massachusetts (Cambridge Trust) has applied to the Division of Banks (Division) for approval to merge with Optima Bank & Trust Company, Portsmouth, New Hampshire (Optima) pursuant to the provisions of Massachusetts General Laws chapter 167I, section 3.  Under the terms of an Agreement and Plan of Merger (Merger Agreement) dated as of December 5, 2018, Optima will merge with and into Cambridge Trust (Merger) under the charter, by-laws, and name of Cambridge Trust (Continuing Institution).  The main office of Cambridge Trust will remain the main office of the Continuing Institution after consummation of the proposed merger.  The merger application was filed in connection with a multi-step transaction in which Cambridge Bancorp, the parent holding company of Cambridge Trust, will acquire Optima pursuant to Massachusetts General Laws chapter 167A, section 2 simultaneously with the Merger.

Table of Contents

Notice of Cambridge Trust’s application was posted and published as directed by the Division thereby affording opportunity for interested parties to submit comments.  The period for filing comments has expired and no comments were received.  The Division reviewed the application and supplementary materials submitted by Cambridge Trust in accordance with applicable law, including 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,” will be promoted by approval of the proposed transaction.  The Division also considered both banks’ records of performance under the Community Reinvestment Act (CRA) as well as financial and managerial factors. 

Pursuant to Massachusetts General Laws chapter 167A, section 3, because Cambridge Bancorp will acquire Optima simultaneously with the Merger and such merger requires the approval of the Commissioner of Banks, Cambridge Bancorp was not required to file a separate application to become a bank holding company with the Commonwealth’s Board of Bank Incorporation to complete this transaction.  However, in reviewing the proposed transaction, the Division must receive notice from the Massachusetts Housing Partnership Fund (MHPF) that satisfactory arrangements have been made consistent with Massachusetts General Laws chapter 167A, section 4 and the MHPF’s affordable housing loan programs.  The Division received notice from the MHPF that satisfactory arrangements have been made for this transaction in a letter dated March 27, 2019.    


Cambridge Trust is a Massachusetts state-chartered trust company and is the sole banking subsidiary of Cambridge Bancorp.  In addition to two wholly-owned securities corporations, Cambridge Trust is also the parent company of Cambridge Trust Company of New Hampshire, Inc., a New Hampshire state-chartered non-depository trust company offering wealth management services in New Hampshire.   Cambridge Trust operates ten full-service offices in eastern Massachusetts.  As of December 31, 2018, Cambridge Trust had total assets of approximately $2.1 billion and total deposits of approximately $1.8 billion.  Cambridge Trust’s services are primarily focused on the areas of wealth management, personal and commercial banking, and residential lending.  Cambridge Trust’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (FDIC).   

Optima is a New Hampshire state-chartered bank with its main office located in Portsmouth, New Hampshire.  Optima also operates six branch offices in five cities and towns in southern New Hampshire.  As of December 31, 2018, Optima had total assets of approximately $531.6 million and total deposits of approximately $495.0 million.  Optima is a community bank offering customers a range of personal and business deposit and lending products and services.  The deposits of Optima are insured up to applicable limits by the FDIC.


Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction.  In analyzing the impact of a proposed transaction on banking competition, the Division considers, but does not rely exclusively upon, the guidelines used by the federal authorities to review bank mergers.  These guidelines define relevant geographic markets and measure market concentrations as indicators of competitiveness in the local banking markets.  The starting point in the federal analysis is the Herfindahl-Hirschman Index (HHI), an arithmetic measure of market concentration that synthesizes the distribution of market shares and the number of banks in the affected market into a single value.  In this case, the HHI analysis demonstrates that consummation of the transaction will not cause a substantial reduction in competition or result in an undue concentration of banking resources in the relevant markets.   

In addition to that analysis, the Division considers the competitive impact of the proposed transaction on a community-by-community basis, as well as on the overall banking structure of the Commonwealth.  Although Cambridge Trust’s non-bank subsidiary Cambridge Trust Company of New Hampshire, Inc. maintains three offices in New Hampshire, including an office in Portsmouth, New Hampshire, there are no communities in which Cambridge Trust and Optima both have banking offices.  Cambridge Trust states in the application that the Continuing Institution will maintain and operate each of the seven banking offices of Optima as branch offices of the Continuing Institution, expanding Cambridge Trust’s bank branch network into the southern New Hampshire market.  Accordingly, the Division’s analysis of the competitive impact of this transaction supports its approval.

Public Convenience and Advantage

The Division also considered information provided in the application addressing whether public convenience and advantage will be promoted by the proposed merger.  Cambridge Trust anticipates that the merger will produce a larger and more competitive banking institution that will be able to support higher lending limits for customers and allow the Continuing Institution to increase efficiencies in several areas, including operations and technology.  Cambridge Trust also states that the merger will enhance the commercial banking services offered by the Continuing Institution and will enable Optima customers to access Cambridge Trust’s wealth management services while maintaining their existing banking relationships.  With no branch office closings anticipated as a result of this transaction, customers of both banks will also benefit from access to the larger branch office and ATM network of the Continuing Institution.

In determining whether to approve a petition under the statutory criteria, the Division is required to consider a showing of “net new benefits” related to the transaction.  That term as set out in Massachusetts General Laws chapter 167I, section 3 includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors that the Division may deem necessary.  Based upon its evaluation of the existing Optima offices, Cambridge Trust has determined that capital investments for office improvements are unnecessary at this time and that the initial capital investments associated with the merger may be limited to improvements to customer services and office signage.  However, Cambridge Trust believes that the merger will facilitate additional growth in the New Hampshire market and may result in additional capital investments in the future in the form of new branch offices.  Similarly, while Cambridge Trust states that there will be some initial staffing reductions attributable to the merger, Cambridge Trust also states that the anticipated expansion of the Continuing Institution in the New Hampshire market, in particular, will produce future growth and create opportunities for additional employment.  Any modifications to the portfolio of products and services to be offered by the Continuing Institution would be designed to minimize or eliminate any impact on existing customers and the communities served.  The materials submitted as part of the application indicate that consumers and commercial customers will continue to have access to a full range of banking products and services following the proposed merger.  Accordingly, the factors related to public convenience and advantage, including net new benefits, are consistent with approval of the transaction.

Related to the issue of public convenience and advantage is the record of CRA performance by the respective banks.  Such review for Massachusetts-chartered banks includes examination by personnel of the Division.  A publicly available descriptive rating and evaluation by a federal bank regulatory agency may also be considered.  Cambridge Trust received a “Satisfactory” rating in its most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of August 14, 2017.  Optima also received a “Satisfactory” rating in its most recent CRA performance evaluation conducted by the FDIC as of March 14, 2016.  The Division’s consideration of the CRA performance of Cambridge Trust and Optima also support the approval of the proposed merger. 

Financial and Managerial Considerations

The Division also reviews and considers the financial and managerial aspects of the proposed transaction.  At the effective time of the merger, each share of issued and outstanding Optima common stock will be converted into the right to receive a number of shares of Cambridge Bancorp common stock, or cash, in accordance with the agreed upon exchange ratio and subject to the negotiated proration and allocation procedures.  No financing arrangements were reported as necessary to fund this transaction.  Materials provided also indicate that upon consummation of the transaction, the Continuing Institution will meet all applicable regulatory capital requirements.  

According to the application materials, one director currently serving on the Optima board of directors will be appointed to the respective boards of directors of Cambridge Bancorp and Cambridge Trust in connection with the merger.  The same individual will also become an executive officer of Cambridge Trust.  No changes in the senior management of Cambridge Bancorp were proposed in conjunction with the merger.  Accordingly, upon review, the financial and managerial considerations support approval of the application.


Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, the Division concludes that all such requirements have been met, and that consummation of the proposed transaction is in the public interest.  On the basis of these considerations, and subject to the conditions set forth below, approval is granted for Optima to merge with and into Cambridge Trust under the charter, by-laws, and name of Cambridge Trust pursuant to section 3 of chapter 167I of the General Laws.  Approval is also granted to maintain the former banking offices of Optima as branch offices of the Continuing Institution pursuant to Massachusetts General Laws chapter 167C, section 6

The approvals granted herein are subject to the following conditions:

  1. That the proposed merger shall not become effective until a Certificate signed by the Presidents      and Clerks, or other duly authorized officers of each bank, indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 167I, section 3 has been returned with my endorsement thereon;
  2. That the proposed merger shall not become effective unless the 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.


Merrily S. Gerrish
Acting Commissioner of Banks

April 4, 2019