Legal and Procedural Requirements
Notice of Rockland Trust’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 Rockland Trust 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 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 BHB would merge with and into Independent simultaneously with the merger of the subsidiary banks and the bank merger requires the Division’s approval, an application to the Commonwealth’s Board of Bank Incorporation was not required for the merger of the holding companies. 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
Rockland Trust is a Massachusetts trust company and is the sole banking subsidiary of Independent. In addition to its main office in Rockland, Massachusetts, Rockland Trust operates 85 branch offices in the Massachusetts counties of Barnstable, Bristol, Dukes, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester. As of December 31, 2018, Rockland Trust had total assets of approximately $8.8 billion and total deposits of approximately $7.5 billion. Rockland Trust offers a full range of personal and business checking, deposit, and loan products and services, as well as investment management services. Rockland Trust’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC).
Blue Hills was chartered as a Massachusetts savings bank in 1871 under the name Hyde Park Savings Bank and is the sole banking subsidiary of BHB. In addition to its main office, Blue Hills operates 11 branch offices located in Boston, Dedham, Hyde Park, Milton, Nantucket, Norwood, West Roxbury and Westwood, Massachusetts. As of December 31, 2018, Blue Hills had total assets of approximately $2.8 billion and total deposits of approximately $2.2 billion. Blue Hills offers a full range of personal and business checking, deposit, and loan products and services. Blue Hills’ deposits are insured up to allowable limits by the FDIC. Deposits in excess of the 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 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 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. Although Rockland Trust will be closing its offices in West Roxbury and Westwood in conjunction with the merger, these locations will be served by nearby Blue Hills’ locations in West Roxbury and Westwood. In addition, Rockland Trust will close Blue Hills’ Norwood branch office. The former Blue Hills’ Norwood location will be served by Rockland Trust’s Norwood branch at 61 Lenox Street, Norwood. Also, Rockland Trust has provided information indicating that the merger will not have an adverse effect on the communities in which both banks operate because of the large amount of competition from other financial institutions in the areas where both banks conduct business. The only exception to this analysis is on Nantucket Island where competition is necessarily limited due to the size and location of the island. Rockland Trust explained, however, that the market in Nantucket will not change as a result of the merger because Rockland Trust will be retaining the former Blue Hills’ branch offices on Nantucket. The Nantucket branch offices will operate as Nantucket Bank, a division of Rockland Trust Company. Accordingly, the review of the transaction’s impact on competition supports its approval.
Public Convenience and Advantage
The Division next considered the record of the application to determine whether public convenience and advantage will be promoted. Rockland Trust indicates that the banking public will benefit as a result of the proposed merger. As discussed further below, the customers of both banks will have increased access to certain products and services that Blue Hills does not currently offer.
In determining whether to approve a petition under the statutory criteria, the Division is required to consider a showing of “net new benefits” related to the transaction. That term as set out in section 3 of said chapter 167I includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors that the Division may deem necessary. Rockland Trust addressed this requirement of the statute. The Continuing Institution plans to make capital investments of approximately $3.1 million in new automated teller machines, computer equipment and signage. With regard to employment, supplemental materials indicate that there will be some initial staff reductions, but Rockland Trust anticipates that the Continuing Institution’s future growth and expansion will create new jobs. In addition, the materials submitted as part of the application indicate that consumers of Blue Hills will benefit from a higher lending limit and expanded and enhanced products and services, including specialized cash management and foreign exchange services, investment management services and “Like-Kind Exchange” services. Also, as mentioned above, Rockland Trust is retaining all Blue Hills’ branches except the one located in Norwood. Accordingly, the factors related to public convenience and advantage, including net new benefits, are consistent with approval of Rockland Trust’s application.
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. Rockland Trust received a “Satisfactory” rating in its most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of May 31, 2017. Blue Hills also received a “Satisfactory” rating in its most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of September 28, 2015. The Division’s consideration of the CRA performance of Rockland Trust and Blue Hills also supports the approval of the proposed merger.
In addition, Rockland Trust has informed the Division that it will be notifying Blue Hills’ customers that the excess deposit insurance from the Depositors Insurance Fund will end following consummation of the merger.
Financial and Managerial Considerations
The Division also reviews and considers the financial and managerial aspects of the proposed transaction. The consideration for this transaction will be a combination of cash and an exchange of BHB common stock for Independent common stock in accordance with a negotiated exchange ratio. No financing arrangements were reported as necessary to complete this transaction. Materials provided indicate that upon consummation of the transaction, the Continuing Institution will continue to meet all regulatory capital requirements.
According to the application, the Board of Directors of Rockland Trust will consist of those individuals currently serving as directors of Rockland Trust with the addition of three members of the current Board of Directors of BHB. There will be no change to senior management of Rockland Trust due to the proposed transaction. Accordingly, upon review, 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 Blue Hills to merge with and into Rockland Trust under the charter, by-laws, and name of Rockland Trust Company pursuant to section 3 of chapter 167I of the General Laws. Approval is also granted for Rockland Trust to close branch offices located at 1905 Centre Street, West Roxbury; 670 High Street, Westwood; and 111 Lenox Street, Norwood in accordance with General Laws chapter 167C, section 3 and to maintain the remaining existing banking offices of Blue Hills 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; 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 26, 2019
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