Legal and Procedural Requirements
Notice of the Petitioner’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 in accordance with 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 would be promoted by approval of the proposed transaction. Both banks’ records of performance under the Commonwealth’s Community Reinvestment Act (CRA), Massachusetts General Laws chapter 167, section 14 and the Division's regulation, 209 CMR 46.00 et seq. also were factors considered by the Division. In addition, The Co-operative Central Bank confirmed by letter dated April 10, 2019 that satisfactory arrangements have been made in connection with the merger relative to providing excess deposit insurance for deposits of the continuing institution.
The Parties
Pilgrim was founded in 1916. It is a Massachusetts stock co-operative bank with its main office in Cohassset, Massachusetts, in Norfolk County and two branch offices located in Cohasset and Marion, in Plymouth County. As mentioned above, Pilgrim is an indirect subsidiary of MHC and a subsidiary of MHC’s wholly-owned subsidiary, Hometown Financial. Pilgrim is subject to supervision and examination by the Division and is a member of the Federal Reserve System. At March 31, 2019, Pilgrim had total assets of approximately $284 million and total deposits of approximately $201 million. Pilgrim has two wholly-owned subsidiaries, 48 South Main Street Corporation and 800 CJC Realty Corporation. Pilgrim’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC) and amounts in excess of FDIC insurance are insured by the Share Insurance Fund of The Co-operative Central Bank (Share Insurance Fund). The Division notes that Hometown Financial is also the mid-tier holding company for Easthampton Savings Bank, Easthampton, Massachusetts and Hometown Bank, Oxford, Massachusetts.
Abington was founded in 1888, and is a Massachusetts-chartered mutual co-operative bank. As of March 31, 2019, it had total assets of approximately $319 million and total deposits of approximately $272 million. In addition to its main office in Abington, Massachusetts, in Plymouth County, Abington also operates two full service branches in Avon and Holbrook, both of which are located in Norfolk County. Abington has two wholly-owned subsidiaries: NACB Securities Corporation and 16 Harrison Avenue Corporation. Abington’s deposits are insured up to allowable limits by the FDIC and by the Share Insurance Fund for amounts in excess of the FDIC’s insurance limits.
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 an affected market into a single value. In this case, there will be a negligible impact on the HHI for the geographical areas analyzed. 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 Pilgrim and Abington maintain three banking offices in Norfolk County, it is noted in the materials submitted that there are many other offices of financial institutions in Norfolk County. Accordingly, the review of the transaction’s impact on competition does not raise concerns which would preclude its approval.
Public Convenience and Advantage
The Division has also considered the record of this application to determine whether public convenience and advantage will be promoted. Under the proposed merger, the Petitioner states it does not expect to eliminate or reduce any of the products, services or delivery channels currently operated by either bank. The Petitioner also states that the continuing institution will be able to offer a broader array of products and services with more robust features than those currently available to Abington customers. These products and services include “positive pay” commercial checking accounts, health savings accounts; merchant services; instant issue debit and ATM cards; credit cards; a more robust commercial online banking system with wire transfer and ACH origination capabilities; commercial account reconciliation services; and government banking products and services. To the extent that the continuing institution does not provide a specific product or service, customers will have access to expanded products and services at the affiliated banks. Finally, Abington customers will receive access to 32 additional no-fee ATMs at the continuing institution, Easthampton Savings Bank and Hometown Bank locations. 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 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. The Petitioner has addressed this requirement of statute. Capital investments associated with the merger will include new signage, planned branch improvements, and equipment purchases or upgrades and related expenses in the amount of approximately $20,000. With regard to employment, the continuing institution expects to retain all of the employees of Abington as well as all of the customer-facing employees of Pilgrim. As described in the submitted materials, Abington’s merger into Pilgrim and the resulting affiliation with MHC and Hometown Financial will provide operational efficiencies and synergies, particularly through the sharing of back-office functions and administrative and support staff. The continuing institution anticipates future growth which may create additional jobs and provide opportunities for career advancement for current Pilgrim employees as well as Abington employees who will be joining the organization. As described above, the continuing institution will offer a broader array of products and services to Abington customers. Accordingly, the Division has reviewed factors related to public convenience and advantage, as well as net new benefits, and has determined that they are consistent with approval of the Petitioner's application.
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 by personnel of the Division. A publicly available descriptive rating and evaluation by a federal bank regulatory agency will also be considered. Pilgrim received a “Satisfactory” rating in the most recent CRA performance evaluation conducted jointly by the Division and the FDIC as of December 5, 2016, and Abington received a “Satisfactory” rating from the Division and from the Federal Reserve Bank (FRB) at its most recent CRA performance evaluations, dated August 26, 2013, conducted concurrently by the Division and the FRB.
With regard to the branch offices of the continuing institution, as mentioned above, no branches of either Pilgrim or Abington will close.
Financial and Managerial Considerations
The Division also reviews and considers the financial and managerial aspects of the proposed transaction. Materials provided indicate that the continuing institution will meet all regulatory capital requirements upon consummation of the proposed merger.
In terms of the Board of Directors and management, materials submitted to the Division state that after the proposed merger, the Board of Directors and senior executive officers of the continuing institution will consist of the current members of Abington’s Board of Directors and its senior executive officers. In addition, it is anticipated that upon completion of the proposed merger two members of Abington’s senior management team will be appointed to serve as members of the Board of Trustees of the MHC and the Board of Directors of Hometown Financial. Accordingly, upon review, financial and managerial considerations support the application.
Conclusion
Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that all such requirements have been met, and that the consummation of the proposed transaction would be in the public interest. On the basis of these considerations, and subject to the conditions set forth below, approval is granted to merge Abington Bank with and into Pilgrim Bank under the charter and by-laws of Pilgrim Bank and under the name Abington Bank under the provisions of said clause (2) of section 7 of chapter 167H, and said section 4 of chapter 167I of the General Laws. Upon consummation of the merger, the charter of former Abington Bank will cease to exist and all rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Abington Bank shall be vested in and assumed by the continuing institution. The petition to designate the banking office at 6 Harrison Avenue, Abington, Massachusetts as the main office of the continuing institution is also hereby approved. Approval is also granted for the continuing institution to maintain each of the branch offices of Abington Bank as branch offices of the continuing institution.
The approvals granted herein are 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 167H, section 7, clause (2) and chapter 167I, section 4 has been returned for my endorsement thereon;
- That the proposed merger shall not become effective until 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.
Mary L. Gallagher
Commissioner of Banks
May 14, 2019
Date
