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Pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A and chapter 170, section 26A, Danversbank (the "Petitioner"), Danvers, Massachusetts has applied to the Division of Banks (the "Division") to merge with BankMalden, A Co-operative Bank ("BankMalden"), Malden, Massachusetts. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of October 27, 2006, BankMalden will merge with and into Danversbank under the charter, by-laws and name of Danversbank. The sole banking office of BankMalden will be retained after the merger. Although BankMalden is in mutual form and Danversbank in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) and related laws since Danvers Bancorp, Inc. is a mutual holding company and Danversbank is its subsidiary banking institution. Therefore, upon consummation of such merger, any liquidation rights of the depositors of BankMalden will continue and succeed to such rights in Danvers Bancorp, Inc. to the same extent as existing depositors of Danversbank under General Laws chapter 167H, section 2 and 209 CMR 33.25, its implementing regulation.
Notice of the application has been posted and published. The time period for interested parties to submit comments has passed. Accordingly, all documents and materials related to this transaction have been reviewed. That record has been considered with regard to the financial and managerial resources of each bank, the competitive effects of the proposed transaction, the interests of the depositors of each bank, the future prospects of the institutions and the convenience and needs of the communities to be served by the consolidated entity as well as the performance of each bank under the Commonwealth's Community Reinvestment Act ("CRA"), General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq.
Danversbank is a state-chartered savings bank in stock form. As of September 30, 2006, it had total assets of approximately $1.24 billion. Danversbank's main office is located in Danvers. Additionally, Danversbank operates a branch office also in Danvers, as well as eleven other branch offices in Andover, Beverly, Boston, Chelsea, Middleton, Peabody, Reading, Revere, Salem, Wilmington and Woburn. Moreover, Danversbank has an authorized but unopened branch office to be located in Saugus. According to the merger application, Danverbank has four wholly-owned subsidiaries which generally buy, sell and hold securities, as well as originate and hold loans. Its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance Fund ("DIF") of the Depositors Insurance Fund for amounts in excess of the FDIC's insurance limits.
BankMalden is a state-chartered co-operative bank in mutual form. As of September 30, 2006, it had total assets of $46.7 million. BankMalden's main office is located in Malden. BankMalden has no branch offices. BankMalden has one wholly owned subsidiary, Televest Corp., a securities corporation which buys, sells and holds securities on BankMalden's own behalf. BankMalden's deposits are insured by the FDIC and the Share Insurance Fund ("SIF") of The Co-operative Central Bank for amounts in excess of the FDIC's insurance limits.
Materials have been submitted to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. On the issue of whether banking competition will be unreasonably affected by the proposed transaction, the Division considers, but does not rely exclusively on, 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 an affected market into a single value. In this case, the HHI calculations do not indicate that the proposed transaction will result in an undue concentration of banking resources. 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. As stated above, BankMalden has its sole banking office in Malden, a community in which Danversbank does not have a banking office. The merging banks do not have any banking offices located in the same city or town. Accordingly, the review of the transaction's impact on competition does not raise concerns which would preclude its approval.
The application notes that the continuing institution's Board of Directors will consist of one member of the Board of Directors of BankMalden and all of the directors of Danversbank immediately prior to the consummation of the merger. The management of the combined bank is also detailed in the application documents. The applicant bank argues that the combined institution will produce some financial economies and additional service capabilities. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.
The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction. As the continuing bank, Danversbank will offer its broad range of deposit and credit products as well as other financial services. The application documents provide examples of products and services currently offered by Danversbank to its customers that are not presently available to customers of BankMalden. As described in the application, such products and services include cash management services, as well as SBA loans (from a preferred SBA preferred lender) and mutual funds. Additionally, according to the application documents, customers of BankMalden will benefit from access to more sophisticated commercial loan products and on-line banking services provided by Danversbank. In addition, the combined institution's lending limits will be higher than either bank's lending limit. 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 this transaction.
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 34A of said chapter 168 and section 26A of said chapter 170 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. In the application, the Petitioner has addressed this requirement of statute. As stated in the application, the resulting bank will offer employment to all persons who are, immediately prior to the merger, employees of BankMalden and provide the aforementioned products and services and other benefits to its customers. Moreover, customers of both banks will have access to the banking offices of both banks.
Related to the issue of public convenience and advantage is the record of performance under the CRA by the banks which are parties to this transaction. Such review for state-chartered banks includes examination of personnel by the Division as well as analysis of concerns received from the bank's community and its response to those concerns fairly raised. A publicly available descriptive rating and evaluation by a federal bank regulatory agency will also be considered. Upon review, the Division has noted that Danversbank and BankMalden received ratings of "Outstanding" and "Satisfactory" respectively in the most recent examinations of their performances under CRA. Accordingly, the Division's review of factors related to public convenience and advantage are consistent with approval of the Petitioner's application.
Upon review of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that the consummation of the proposed consolidation would be in the public interest. On the basis of these considerations, approval is granted to merge BankMalden with and into Danversbank under the charter, by-laws and name of Danversbank pursuant to the provisions of said clause (2) of section 7 of chapter 167H of the General Laws and under the provisions of said section 34A of chapter 168 and said section 26A of chapter 170 of the General Laws.
The approvals granted herein are subject to the following conditions:
January 18, 2007
Steven L. Antonakes
Commissioner of Banks