Legal and Procedural Requirements
Notice of People’s United’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 People’s United 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 BSB Bancorp, Inc. would merge with and into People’s Financial simultaneously with the Merger and such merger requires the approval of the Commissioner of Banks, an application to the Commonwealth’s Board of Bank Incorporation was not required for the merger of the holding companies. 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 11, 2019.
The Parties
People’s United is a national bank. In addition to its main office in Bridgeport, Connecticut, People’s United operates 422 branches in Connecticut, New Hampshire, New York, Vermont, and Massachusetts, including nine branches in Middlesex County. As of December 31, 2018, People’s United had consolidated assets of approximately $47.6 billion and total deposits of approximately $36.5 billion. People’s United and its subsidiaries offer a full range of banking services including commercial, retail and small business banking, as well as wealth management services. People’s United’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC).
Belmont Savings is a Massachusetts-chartered stock savings bank with its main office located in Belmont, Massachusetts. Belmont Savings also operates six branch offices in Middlesex County, Massachusetts. As of December 31, 2018, Belmont Savings had total assets of approximately $3.0 billion and total deposits of approximately $2.0 billion. Belmont Savings offers a wide variety of checking and savings accounts for consumers and businesses. The bank also offers cash management services, lockbox and online and mobile banking. The deposits of Belmont Savings are insured up to allowable limits by the FDIC. Deposits over FDIC limits are insured by the Depositors Insurance Fund.
Competition
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. 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. People’s United has submitted materials indicating that upon consummation of the proposed merger, there would be only a 1-point increase in the post-merger HHI. In addition, the Boston market includes numerous large bank competitors including Bank of America and Citizen’s Bank. Therefore, for this transaction, the HHI calculations do not indicate that the Merger would have a significant adverse effect on competition because the relevant banking markets would continue to be considered competitive marketplaces following the Merger. 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. In this case, although People’s United and Belmont Savings both have branches in Waltham and Cambridge, Massachusetts, the significant presence of other banks, credit unions, and non-depository lenders in Waltham and Cambridge is a further indication that the proposed transaction will not result in an undue concentration of banking resources in the communities to be served by the Continuing Institution. In addition, People’s United does not plan to close any branch office at this time. Accordingly, the Division’s analysis of the competitive impact of this transaction does not raise concerns that would preclude 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. People’s United provided information to illustrate that the banking public will benefit as a result of the Merger. The application materials indicate that the customers of Belmont Savings will gain access to the larger portfolio of products and services offered by People’s United, and a broader branch office network.
In determining whether to approve a proposed merger, the Division is 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 3, 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. The Continuing Institution plans to make capital investments to modernize Belmont Savings’ branches including new computer equipment. With regard to employment, People’s United expects the consolidation of back office operations and the integration of banking functions will result in certain job losses. However, People’s United anticipates that the combined banks will produce a stronger, more competitive institution that will be able to create additional jobs in the future to offset the initial job losses attributable to the consolidation of operations resulting from the Merger. In addition, the Continuing Institution plans to retain virtually all customer facing employees.
In addition to expanded access to the broader banking office network operated by People’s United, Belmont Savings’ customers will also have access to a broader array of specialized commercial lending products and certain insurance products and services. Also, People’s United offers specialized wealth management services including financial planning and private banking, among other services. The Division considered the above reasons and others presented in the submitted documents in determining that public convenience and advantage will be promoted by an approval of this transaction.
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. A publicly available descriptive rating and evaluation by a federal bank regulatory agency may also be considered. People’s United received a “Satisfactory” rating in its most recent CRA performance evaluation conducted by the Office of the Comptroller of the Currency as of November 7, 2016. Belmont Savings also received a “Satisfactory” rating in its most recent CRA performance evaluation conducted by the Division and the FDIC as of April 3, 2017. The Division’s consideration of the CRA performances of People’s United and Belmont Savings, respectively, also supports the approval of the proposed merger.
In addition, People’s United has informed the Division that it will be notifying Belmont Savings’ customers that they will not receive excess deposit insurance from the Depositors Insurance Fund following consummation of the Merger.
Financial and Managerial Considerations
The Division also considered the financial and managerial aspects of the proposed transaction. At the effective time of the proposed transaction, each share of BSB Bancorp, Inc. issued and outstanding common stock will be converted into the right to receive a number of shares of People’s Financial common stock, plus cash in lieu of any fractional share, in accordance with the negotiated exchange ratio. No financing will be necessary to pay for the merger with Belmont Savings. Materials provided indicate that upon consummation of the transaction, the Continuing Institution will meet all regulatory capital requirements.
According to the application materials, the board of directors and senior executive officers of the Continuing Institution will be comprised of the same individuals currently serving as the directors and senior executive officers of People’s United. Based upon a review of the application materials and other information available to the Division, the Division has determined that the financial and managerial considerations support approval of the application.
Conclusion
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 Belmont Savings to merge with and into People’s United under the charter, by-laws, and name of People’s United Bank, National Association pursuant to section 3 of chapter 167I of the General Laws. Approval is also granted pursuant to General laws chapter 167C, section 13 for the Continuing Institution to maintain all the banking offices of Belmont Savings as branch offices.
The approval granted herein is subject to the following conditions:
- 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;
- That the proposed merger shall not become effective unless the Articles of Merger with my endorsement thereon are filed with the Secretary of State;
- That in accordance with Massachusetts General Laws chapter 167C, section 13, the banking offices of Belmont Savings being maintained as branch offices of the continuing institution must comply with all provisions of the Community Reinvestment Act and all other consumer protection and fair lending statutes in the Commonwealth; and
- That the proposed merger shall be consummated within one year of the date of this Decision.
Merrily S. Gerrish
Acting Commissioner of Banks
March 13, 2019
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