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  • Division of Banks

Decision Decision of December 17, 2019

Date: 12/17/2019
Organization: Division of Banks

Fidelity Co-operative Bank, Fitchburg, Massachusetts (Fidelity Co-operative) has applied to the Division of Banks (Division) to merge with Family Federal Savings, F.A., Fitchburg, Massachusetts (Family Federal) pursuant to the provisions of Massachusetts General Laws chapters 167H, section 7 and 167I, section 2.  Under the terms of the Merger Agreement and Plan of Merger dated as of June 17, 2019, Family Federal will merge with and into Fidelity Co-operative under the charter, by-laws, and name of Fidelity Co-operative (Continuing Institution).  The main offices of both banking institutions are currently located in Fitchburg, Massachusetts.  The main office of Fidelity Co-operative will remain the main office of the Continuing Institution immediately following consummation of the proposed merger, but Fidelity Co-operative has petitioned the Division through separate application for approval to close its main office location and in conjunction therewith, the Continuing Institution would designate Fidelity Co-operative’s existing branch location at 9 Leominster Connector, Leominster, Massachusetts as the main office of the Continuing Institution.  The operations of Fidelity Co-operative’s current main office would be consolidated into Family Federal’s main office location.  The remaining branch offices of Family Federal will be retained and operated as branch offices of the Continuing Institution. 

Fidelity Co-operative is a wholly-owned subsidiary of Life Design Holding Company (Life Design) and Life Design is a wholly-owned subsidiary of Fidelity Mutual Holding Company.  Although Family Federal is in mutual form and Fidelity Co-operative is in stock subsidiary form, the merger of the mutual and stock banks is permitted under Massachusetts General Laws chapter 167H, section 7, clause (2) because Fidelity Mutual Holding Company is authorized to acquire a federal savings bank in mutual form through the merger of the mutual bank with the mutual holding company’s subsidiary banking institution. 

Table of Contents

Notice of Fidelity Co-operative’s merger 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 Fidelity Co-operative 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” will be promoted by approval of the proposed transaction.  The Division considered both banks’ records of performance under the Community Reinvestment Act (CRA) as well as financial and managerial factors.  The Co-operative Central Bank confirmed by letter dated July 16, 2019, that satisfactory arrangements have been made relative to providing excess deposit insurance for the deposits of the Continuing Institution.  The Division reviewed all documents and materials related to this transaction according to applicable law.

The Parties

Fidelity Co-operative was chartered as a Massachusetts mutual co-operative bank in 1888.  It reorganized into the mutual holding company form of organization in 2006 after receiving the required approvals from the Division and the Massachusetts Board of Bank Incorporation.  In addition to its main office in Fitchburg, Massachusetts, Fidelity Co-operative operates 11 full-service branch offices in Massachusetts.  Ten of the branch offices are located in eight cities and towns in Worcester County and one branch office is located in the town of Shirley in Middlesex County.  As of September 30, 2019, Fidelity Co-operative reported total assets of approximately $1.0 billion and total deposits of approximately $854.7 million.  Fidelity Co-operative offers a broad range of loan and deposit products for consumer, commercial, and small business customers as well as cash management services for commercial clients.  Fidelity Co-operative’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC), and amounts in excess of FDIC deposit insurance limits are insured by the Share Insurance Fund of The Co-operative Central Bank. 

Family Federal is a mutual federal savings association that was chartered in 1877 and is supervised by the Office of the Comptroller of the Currency.  In addition to its main office in Fitchburg, Massachusetts, Family Federal operates two full-service branch offices in Stow and Needham, Massachusetts.  Similar to Fidelity Co-operative, Family Federal offers a range of loan and deposit products for consumer, commercial, and small business customers as well as small business cash management and related services.  Family Federal’s deposits are insured up to allowable 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 federal authorities to review bank mergers.  Essentially, these guidelines define relevant markets and measure concentration, which is considered an important indicator of competitiveness.  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 result in an undue concentration of banking resources in either of the geographic markets primarily served by the two banks. 

In addition to the HHI 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.  Fidelity Co-operative presented information that the proposed transaction will not have a significant adverse effect on competition nor result in an undue concentration of banking resources in the impacted communities.  Fitchburg is the only community in which both banks currently operate banking offices in the same city or town.  Based upon information reported as of June 30, 2019, the ranking of the Continuing Institution, when considering deposits as a percentage of market share among the state and federal banks with banking offices in Fitchburg, would be unchanged from the ranking held by Fidelity Co-operative prior to the merger.  Fidelity Co-operative also noted the many alternative sources of banking and financial services currently offered in the Fitchburg community by other state and federal banks, credit unions, non-depository lenders, and other non-depository financial institutions as a further indication that the proposed merger will not result in an undue concentration of banking resources in the communities to be served by the Continuing Institution following the merger.  Accordingly, the review of the transaction’s impact on competition supports its approval. 

Public Convenience and Advantage

In reviewing the application, the Division must determine whether public convenience and advantage will be promoted by the proposed transaction.  Fidelity Co-operative provided information to illustrate that the banking public will benefit as a result of the merger.  Family Federal’s current customers will gain access to the significantly larger branch and ATM network of the Continuing Institution and will be afforded excess deposit insurance coverage.  With no anticipated reductions or eliminations of the products and services currently offered by either bank, customers will continue to have access to all of the products and services currently offered by the two banks.  Fidelity Co-operative believes that the increased scale and resources of the Continuing Institution will also enable the bank to offer an enhanced offering of products and services supported by the higher lending limit of the Continuing Institution.   

In determining whether 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 forth in Massachusetts General Laws chapter 167I, section 2, includes initial capital investments, job creation plans, consumer and business services, commitments to maintain and open branch offices, and such other factors that the Division may deem necessary.  Following the merger, the Continuing Institution intends to make capital investments in new signage for the Family Federal office locations and branch improvements on an as needed basis.  With regard to employment, Fidelity Co-operative anticipates that the consolidation of operations and integration of banking functions will cause the elimination of some redundant positions, but all employees will be offered the opportunity to remain with the Continuing Institution in some capacity for compensation amounts equivalent to their current salary or wages.   In addition, Fidelity Co-operative projects that the continued growth resulting from the merger will, over time, create additional jobs and provide career advancement opportunities for employees of the Continuing Institution. 

Although Fidelity Co-operative anticipates consolidating the main office locations of the combining banks due to their proximity within three miles of each other, all employees of the former Fidelity Co-operative location would be offered the opportunity of continued employment.  Fidelity Co-operative indicated that this single office consolidation will better position the Continuing Institution without causing a material adverse impact on customer access and convenience.  Accordingly, the Division has reviewed the factors related to public convenience and advantage, including net new benefits, and has determined that they are consistent with approval of Fidelity Co-operative’s merger application.

Also related to the issue of public convenience and advantage is the record of CRA performance by the banks that are parties to this transaction.  Such review for Massachusetts-chartered banks includes examination by personnel of the Division.  Fidelity Co-operative received a “High Satisfactory” rating from the Division and a “Satisfactory” rating from the FDIC in its most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of November 26, 2018.  Family Federal received a “Satisfactory” rating in its most recent CRA performance evaluation conducted by the Office of the Comptroller of the Currency as of October 22, 2018.  The Continuing Institution’s CRA assessment area will be comprised of all of the current assessment areas of both Fidelity Co-operative and Family Federal. The Division’s consideration of the CRA performance of Fidelity Co-operative and Family Federal, respectively, also support the approval of the proposed merger.

Financial and Managerial Considerations

The Division has reviewed and considered the financial and managerial aspects of this transaction.  The merger of Family Federal, a mutual savings association, with and into Fidelity Co-operative does not include the exchange of any consideration and does not require any financing to complete the transaction.  Materials provided indicate that the Continuing Institution will continue to meet all regulatory capital requirements after the consummation of the proposed merger.    

According to the application materials, two directors currently serving on Family Federal’s board of directors will be appointed to the respective boards of directors of Life Design and the Continuing Institution in connection with the merger.  Three other individuals currently serving as senior executive officers of Family Federal will also become officers of the Continuing Institution.  Each of the current officers and directors of Fidelity Co-operative will continue in their respective roles with the Continuing Institution.  Accordingly, the financial and managerial considerations relative to this transaction 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 has concluded 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 Family Federal to merge with and into Fidelity Co-operative under the charter, by-laws and name of Fidelity Co-operative Bank pursuant to Massachusetts General Laws chapter 167I, section 2.  Approval is also granted for the Continuing Institution to maintain the main office and branch offices of Family Federal as banking offices of the Continuing Institution.  Fidelity Co-operative’s separate application to the Division for approval to both close its current main office location as of an effective date that would occur after the consummation of this merger and to designate Fidelity Co-operative’s existing branch location in Leominster, Massachusetts as the main office of the Continuing Institution (collectively, the “Branch Application”) currently remains pending.  A decision on the Branch Application will be issued separately on a later date following the date of this approval of the merger. 

The approval granted herein is 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 2 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.

Mary L. Gallagher

Commissioner of Banks

December 17, 2019


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