Decision  Decision of December 28, 2007

Date:	12/28/2007
Organization:	Division of Banks

• Petitioner: Bank of Western Massachusetts
• Respondent: Division of Banks

Decision relative to the merger of the Bank of Western Massachusetts, Springfield, Massachusetts with and into Western Massachusetts Interim, FSB, Springfield, Massachusetts

The Bank of Western Massachusetts ("Petitioner"), Springfield, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Western Massachusetts Interim, fsb, Springfield, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 172, section 36 and under the terms of a Merger Agreement (the "Agreement"). The Agreement provides for the merger of The Bank of Western Massachusetts with and into an interim federal savings bank under the charter and by-laws of the interim federal savings bank to operate under the name of The Bank of Western Massachusetts. The banking offices of The Bank of Western Massachusetts will become branch offices of the continuing federal savings bank. The merger application was filed in connection with the multi-step transaction in which People's United Financial, Inc. and People's United Bank will acquire Chittenden Corporation, Burlington, Vermont ("Chittenden"). In the Commonwealth, Chittenden is the holding company for The Bank of Western Massachusetts and Flagship Bank and Trust Company, Worcester, Massachusetts. A similar merger transaction involving Flagship Bank and Trust Company is addressed in a separate decision. The federal savings banks involved in these mergers are being formed directly by People's United Bank and indirectly by People's United Financial, Inc. Chittenden also operates banks in Vermont, Maine and New Hampshire. The related holding company acquisition application was approved by the Commonwealth's Board of Bank Incorporation on December 28, 2007.

Notice of the application was posted as directed by the Division thereby affording opportunity for interested parties to submit comments. The period for filing comments has expired. Comments were received from one financial institution. The Division reviewed the application and all related documents 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 approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and the Division's regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.

The Bank of Western Massachusetts has its main office in Springfield and operates eleven branch offices in the greater Springfield area and one branch office in Enfield, Connecticut. As of June 30, 2007, The Bank of Western Massachusetts had total assets of approximately $780 million. It is a well capitalized institution. It operates one subsidiary which holds its investment portfolio.

Information has been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction and states that the proposed transaction, a reorganization of The Bank of Western Massachusetts, will have no effect on competition. 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 instead of by variously grouped markets. The transaction is structured as a merger between affiliates, one of which is newly organized or soon to be organized, and as such will not unreasonably affect competition. The Division is also aware that People's United Bank does not operate banking offices in the Commonwealth. For that reason and other factors, the Division finds that competition among banking institutions will not be unreasonably affected.

The Division has also considered whether public convenience and advantage will be promoted by this transaction. The application states that it is expected that the continuing institution will offer the same broad array of products and services currently available to customers of The Bank of Western Massachusetts. In addition, the continuing institution will operate all of the branches currently operated by The Bank of Western Massachusetts. However, customers will have broader access to no-fee ATMs at the continuing bank's affiliates. Further, the proposed transaction is expected to generate certain operational advantages. The application notes for example that pursuant to certain provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, banks affiliated under a single holding company may act as agent for one another. Ultimately, customers of the continuing bank may be able to use any affiliated bank branch to conduct their business in five New England states. In addition, the resulting strengthened financial condition of the continuing bank, and the potential future expansion of its holding companies' geographic scope will produce net new benefits in the Commonwealth. Based on the foregoing, and on the entire record of this matter, the Division finds that the 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 and net new benefits is the record of performance under CRA by the banks which are parties to this transaction. Such review for Massachusetts-chartered banks such as The Bank of Western Massachusetts includes examination by personnel of the Division as well as analysis of concerns received from a bank's community and a bank's response to those concerns fairly raised. The Division is aware that The Bank of Western Massachusetts has an "Outstanding" rating in its most recent examination of performance under CRA. Accordingly, the Division's view of this factor is consistent with approval. The Division is also aware that People's United Bank also has an "Outstanding" CRA rating.

Following consummation of this transaction, all regulatory capital standards will continue to be met. Upon review, financial and managerial considerations support the petition.

During the public comment period the Division received one submission by a state-chartered bank in opposition to this merger. The Board of Bank Incorporation was aware of that filing. The opposition was not based on the impact on competition but was focused on the potential name of the continuing bank both as a subsidiary of People's United Bank or in the future if those banking offices would become branch offices of People's United Bank. The commenter was concerned as to the similarity in bank names, product branding as well as the fact that People's United Bank includes words used in the name of two banks currently operating in Western Massachusetts.

The Division has reviewed the submitted comment and the response thereto by the Application Coordinator. As reflected in this Decision, the name of the continuing bank, if the merger is consummated, will be The Bank of Western Massachusetts. In the related transaction in the Commonwealth, the continuing bank will also operate under its existing name, Flagship Bank and Trust company. This aspect of the transaction was discussed extensively during the application process. The Division is aware that on June 6, 2007, People's Bank, Bridgeport, Connecticut changed its name to People's United Bank. If that change now or in the future creates increased confusion for customers, all affected institutions will have other and more appropriate forums in which to address the matter.

Based on the record on this matter considered in light of all relevant statutory and administrative requirements, the Division finds that competition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the proposed transaction and that records of performance under CRA by the banks involved in this transaction are consistent with its approval. Therefore, in accordance with these findings, consideration of comments received and pursuant to the statutory authority cited herein, the Division hereby approves the application and authorizes The Bank of Western Massachusetts to merge with and into Western Massachusetts Interim, fsb.

The approvals granted herein are subject to the following conditions:

1. That no merger shall 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 172, section 36 or other applicable statute has been returned with my endorsement thereon;
2. that the proposed merger shall not become effective until 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.

December 28, 2007
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Date


Steven L. Antonakes
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Commissioner of Banks