Decision  Decision of June 1, 2007

Date:	06/01/2007
Organization:	Division of Banks

• Petitioner: MountainOne Financial Partners, MHC
• Respondent: Board of Bank Incorporation

Decision relative to the application of MountainOne Financial Partners, MHC and its mid-tier subsidiary, North Adams, Massachusetts to acquire South Coastal Holdings, MHC and its subsidiary bank, South Coastal Bank, Rockland, Massachusetts

MountainOne Financial Partners, MHC, and its subsidiary, MountainOne Financial Partners, Inc. (collectively "MountainOne" or the "Petitioner"), North Adams, Massachusetts have petitioned the Board of Bank Incorporation (the "Board") to acquire South Coastal Holdings, MHC, ("South Coastal"), Rockland, Massachusetts and the indirect acquisition of South Coastal Bank, Rockland, Massachusetts under the provisions of General Laws chapter 167A, sections 2 and 4. The merger of two mutual holding companies is authorized under General Laws chapter 167H, section 7, paragraph (3). MountainOne Financial Partners, MHC is the mutual holding company for Hoosac Bank, North Adams, Massachusetts, a Massachusetts-chartered stock savings bank and Williamstown Savings Bank, Williamstown, Massachusetts, a Massachusetts-chartered stock savings bank. South Coastal's subsidiary bank is South Coastal Bank, formerly known as the "Rockland Savings Bank", a Massachusetts-chartered stock savings bank headquartered in Rockland, Massachusetts. The proposed transaction will result in MountainOne Financial, Inc. continuing as a wholly-owned subsidiary of MountainOne Financial Partners, MHC, and controlling three state-chartered savings banks, Hoosac Bank, Williamstown Savings Bank and South Coastal Bank.

Notice of the petition by MountainOne was published as directed by the Board thereby affording opportunity for interested parties to submit comments. A public hearing relative to this application was held by the Board on May 8, 2007 and the period for filing comments expired on May 11, 2007. The Board reviewed the application, testimony received at the public hearing, and all related documents in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether any net new benefits as well as public convenience and advantage would be promoted by approval of the proposed transaction. The record of performance under the Commonwealth's Community Reinvestment Act ("CRA") by the banks involved in the transaction was also a factor considered by the Board.

One provision of law requires the Board to have received notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory MHPF arrangements for the proposed transaction have been made by Butler pursuant to section 4 of chapter 167A of the General Laws and guidelines adopted by the MHPF. The Board has received notice from the MHPF, in a letter dated May 11, 2007 that arrangements satisfactory to it have been made for the transaction.

MountainOne and its subsidiaries, on a consolidated basis, had total assets of $650.1 million as of December 31, 2006. Hoosac Bank, one of Petitioner's two banking subsidiaries, was chartered as a mutual savings bank and reorganized into a mutual holding company form of organization in 1998. It merged with the mutual holding company for Williamstown Savings Bank in a transaction approved by the Board in 2002. At December 31, 2006, Hoosac Bank had total assets of $387.6 million. Hoosac Bank operates from its main office in North Adams and one branch office in Williamstown. Hoosac Bank's deposits are insured to allowable limits by the FDIC and deposits in excess of those limits are insured by the Depositors Insurance Fund ("DIF").

Williamstown Savings Bank, Petitioner's other banking subsidiary, was chartered as a mutual savings bank and reorganized into a mutual holding company form of organization in 2002 and merged with the mutual holding company for Hoosac Bank also in 2002. At December 31, 2006, Williamstown Savings Bank had total assets of $260.3 million. Williamstown Savings Bank operates from a single banking office in Williamstown. Its deposits are insured to allowable limits by the FDIC and deposits in excess of those limits are insured by the Depositors Insurance Fund ("DIF").

South Coastal's sole banking subsidiary is South Coastal Bank which was chartered as a mutual savings bank under the name "East Abington Savings Bank" in 1868. Its name was changed to "Rockland Savings Bank" in 1874 and then to "South Coastal Bank" in 2000. The bank reorganized into a mutual holding company form in 2002. As of December 31, 2006, South Coastal Bank had total assets of $221.1 million. South Coastal Bank has a main office in Rockland and operates branch banking offices in Quincy, Scituate and Braintree. South Coastal Bank's deposits are insured to allowable limits by the FDIC and deposits in excess of those limits are insured by the Depositors Insurance Fund.

The Petitioner has addressed the issue of whether competition among banks will be unreasonably affected by the proposed transaction. Part of that analysis is typically detailed according to various tests used by federal agencies. That analysis demonstrates that consummation of the transaction will not result in undue concentration of banking resources in the Commonwealth. The Board's review, however, is not limited to such federal standards. It is the position of the Board 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. The Petitioner states that South Coastal Bank does not presently compete with either of the banking subsidiaries of the Petitioner in any relevant market. South Coastal Bank has banking offices and competes only in Rockland, Braintree, Scituate and Quincy, Massachusetts. Neither of the Petitioner's subsidiary banks has a banking office or offers banking products or services in any of those communities. Also, South Coastal Bank does not have offices or offer banking products or services in either of the two communities where the MountainOne subsidiary banks have offices, North Adams and Williamstown, Massachusetts. Petitioner states that the proposed transaction will strengthen South Coastal Bank and enhance its ability to offer competitive banking products and services in its communities and compete with other financial institutions in its market area. Upon review, the Board does not find that the transaction will unreasonably affect competition.

The Board has also considered whether public convenience and advantage will be promoted by this transaction. The Petitioner commented on the benefits to maintaining three separate community banks following the transaction including the significance of retaining each bank's individual identity, local management, governing boards, and local decision making in the communities. The additional capital support of MountainOne will permit South Coastal Bank to make more and larger loans through participations with Petitioner's other subsidiary banks. In turn, MountainOne's current subsidiary banks will benefit by using their existing funds for such loan participations rather than investments in various securities. The transaction will also allow south Coastal Bank to maintain its existing banking facilities and staff, and to develop and introduce new and improved products and services to its customers. In addition, the affiliation with the insurance and securities brokerage subsidiaries of the Petitioner will enable South Coastal Bank to offer insurance and investments services to its customers in the future. The capital support the transaction will bring to South Coastal Bank will also enable it to maintain its existing branches and staff. Petitioner also stated there are no plans for employee layoffs as a result of the transaction. South Coastal Bank is located in a growing market and with its expertise in commercial lending will be able to make larger commercial loans following the transaction. The subsidiary banks anticipate substantial benefits from economies of scale resulting from shared resources including a larger investment in technology, enhanced training for employees, additional and enhanced products and services and the ability to attract and retain talented professionals. Petitioner emphasized the tremendous value in maintaining separate community banks focusing on the long legacies of each bank and recognizing a community's value for local hometown banks.

The financial aspects and tax consequences from the structure of the transaction were also considered by the Board. Management factors reviewed were also found supportive of approval. Additionally, all other requirements of statute relating to a bank holding company transaction have been met. Upon review, the Board's analysis of the public convenience and advantage as well as net new benefits, in addition to other factors considered by the Board, weigh in favor of the transaction.

The record of performance under CRA by the subsidiary banks in a bank holding company transaction is also a consideration by the Board. For financial institutions not directly under the jurisdiction of the Commonwealth, the Board initially looks to the publicly available descriptive rating and evaluation by a federal or another state's banking regulatory agency. Such review for state-chartered banks such as the subsidiary banks involved in this transaction, 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 Board has noted that Hoosac Bank, Williamstown Savings Bank, and South Coastal Bank each have a "Satisfactory" rating in its most recent examination of performance. Based on the information presented and available to the Board, the Board's view of this factor is consistent with approval.

CONCLUSION

Based on the record on this matter including the testimony received at the public hearing and subsequent filing on changes in the structure of the transaction considered in light of all relevant statutory and administrative requirements, the Board 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 and pursuant to the statutory authority cited herein, the Board hereby approves the application and authorizes MountainOne Financial Partners, MHC and MountainOne Financial Partners, Inc. to directly and indirectly own and control the stock of South Coastal Bank. The Petitioner will also continue to be subject to the provisions of chapter 167H of the General Laws and the applicable regulations within 209 CMR 33.00 et seq.

The approvals herein are subject to the condition that all related transactions are completed within one year of the date of this Decision.

June 1, 2007
______________________
Date

Board of Bank
Incorporation

Steven L. Antonakes
______________________
Commissioner of Banks


Alan L. LeBovidge
______________________
Commissioner of Revenue


Timothy P. Cahill
______________________
Treasurer and Receiver-General