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Decision

Decision Decision of March 29, 2012

Date: 03/29/2012
Organization: Division of Banks
  • Petitioner: Hoosac Bank
  • Respondent: Division of Banks

Decision relative to the merger of Williamstown Savings Bank, Williamstown, Massachusetts with and into Hoosac Bank, North Adams, Massachusetts

Hoosac Bank ("Hoosac"), North Adams, Massachusetts has applied to the Division of Banks (the "Division") for authority to merge with Williamstown Savings Bank ("Williamstown"), Williamstown, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34, and Massachusetts General Laws chapter 172, section 36, and under the terms of an Agreement and Plan of Merger dated February 15, 2012 ("the Agreement").  The Agreement provides for the merger of Williamstown with and into Hoosac, under the name, charter and by-laws of Hoosac.  The main office of Hoosac would remain the main office of the continuing institution and the sole banking office of Williamstown would be retained as a branch office of Hoosac. 

Notice of the bank merger application was posted as directed by the Division thereby affording opportunity for interested parties to submit comments. The period for filing comments has expired. 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 and net new benefits would be promoted by approval of the proposed transaction.  The record of performance of the two banks under the Commonwealth's Community Reinvestment Act ("CRA"), Massachusetts General Laws chapter 167, section 14 and its implementing regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.

Hoosac is a Massachusetts savings bank.  Hoosac dates it charter back to 1848.  Its deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by federal law, and by the Depositors Insurance Fund ("DIF") for all deposits in excess of FDIC coverage.  Hoosac had consolidated assets of approximately $349 million as of December 31, 2011.  In addition to its main office in North Adams, Hoosac operates a full service branch office in Williamstown and loan offices in Adams and Pittsfield.

Williamstown is a Massachusetts savings bank that was chartered in 1892.  As of December 31, 2011, Williamstown had total assets of approximately $219 million.  In addition to its main office in Williamstown, it has a mortgage loan office in Bennington, Vermont.  Williamstown’s deposits are insured by the FDIC to the maximum extent permitted by federal law, and the DIF for all deposits in excess of FDIC coverage.

Both Hoosac and Williamstown as well as South Coastal Bank, Rockland, Massachusetts are subsidiary banking institutions of MountainOne Financial Partners, MHC, ("MountainOne"), a Massachusetts mutual holding company.  The corporate structure also includes a mid-tier stock holding company which owns all of the stock of the three banks.  In analyzing the impact of a proposed transaction on banking competition, 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 Division also considers a proposed transaction on its impact on affected communities.  In this case, the proposed transaction will not unreasonably affect competition as the Banks are already affiliates as indirect, wholly owned subsidiaries of MountainOne.  Accordingly, the Division's analysis of the competitive impact of the merger does not preclude approval of the proposed transaction.

As a result of the proposed merger, the applicant states that the communities served by the banks will benefit by the establishment of a larger, full-service local community bank with greater operating efficiency and greater lending capability.  According to the application, customers of both banks benefit from the combined institution, with resources to expand the delivery channel base beyond that available to either bank individually.  The applicant states additionally that the post-merger increase in size and resources will provide the continuing institution with the ability to offer its products and services in a more efficient manner, spreading fixed costs over a larger asset base, and that the combined talent and expertise of bank personnel will allow the continuing institution the opportunity to develop and market new products and variations of existing products.  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 the cited sections of law 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.  All current employees of both Hoosac and Williamstown will become employees of the continuing institution.   Specifically, the merger is not expected to result in the loss of any jobs; no terminations of employment are planned in connection with the merger.  Hoosac anticipates, furthermore, that the merger should facilitate future job creation and career advancement for current Hoosac and Williamstown employees.  No offices of either institution will be closed as a result of the merger.  The lending limit of the continuing institution will be significantly higher than either bank’s current lending limit, allowing the continuing institution to offer loans at higher amounts than each individual bank’s current capital base allows.  Additional factors in support of the transaction cited by the applicant, include: the continuing bank’s ability to maintain continued local management and staff with a strong understanding of and participation in the local market; the maintenance of a "well capitalized" bank, able and willing to support the community, providing economic support for the local area, and the addition of a highly competitive bank into a market and region which might benefit considerably by such an enhancement.  These and other factors are also cited as support for meeting such statutory criteria.

Related to the issue of public convenience and advantage is the record of performance under CRA by the banks which are parties to this transaction. Such review for a state-chartered bank includes examination by personnel of 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. The Division has noted that Hoosac received a "Satisfactory" rating on its most recent CRA performance examination. The Division is also aware that Williamstown received a "Satisfactory" rating in its most recent CRA examination, as well.  Petitioner states that Hoosac and Williamstown both have a strong commitment to serving the needs of all segments of the communities they serve, including low-and moderate-income persons.  Following the merger the continuing institution will make available to its customers many programs currently offered by Hoosac and Williamstown that are designed to meet the needs of low- and moderate income persons, such as the HEAT loan, which is to be offered as a special program in partnership with MassSave, and which program offers qualified customers no-interest and low interest loans for installing energy efficient products that will cut the amount of fuel needed for winter use.

The management of the combined bank is also detailed in the application documents.  Economies and service capabilities which would result from the transaction are set out in the submitted documents. Upon consolidation, the continuing bank will meet all required capital standards.  Overall, financial and managerial considerations support the 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 Williamstown Savings Bank with and into Hoosac Bank under the charter, by-laws and name of Hoosac Bank under the provisions of said Massachusetts General Laws chapter 168, section 34 and chapter 172, section 36.

The approval granted herein is subject to the following conditions:

  1. 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 168, section 34 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 submitted to the Secretary of State; and
  3. that the proposed merger shall be consummated within one year of the date of this Decision.


 

March 29, 2012
_____________
Date


David J. Cotney
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Commissioner of Banks

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