Decision  Decision of May 9, 2014

Date: 05/09/2014
Organization: Division of Banks
  • Petitioner: North Brookfield Savings Bank
  • Respondent: Division of Banks

Table of Contents

Decision relative to the merger of Familyfirst Bank, Ware, Massachusetts with and into North Brookfield Savings Bank, North Brookfield, Massachusetts

North Brookfield Savings Bank (“North Brookfield” or the “Petitioner”), North Brookfield, Massachusetts has applied to the Division of Banks (the “Division”) for authority to merge with FamilyFirst Bank (“FamilyFirst”), Ware, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34A, and Massachusetts General Laws chapter 170, section 26A, and under the terms of a Consolidation Agreement dated December 26, 2013 (the “Agreement”). The Agreement provides for the merger of FamilyFirst with and into North Brookfield, under the charter, by-laws and name of North Brookfield (“Continuing Institution”). The main office of North Brookfield would remain the main office of the Continuing Institution and all the banking offices of FamilyFirst would be retained as branch offices of North Brookfield.

Notice of the bank merger application was published and 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 would 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 each bank 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. were also factors considered by the Division.

North Brookfield is a Massachusetts-chartered savings bank that was established in 1854.  Its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the maximum extent permitted by law, and, as a savings bank, by the Depositors Insurance Fund (“DIF”) for deposits in excess of FDIC coverage.  North Brookfield had consolidated assets of approximately $212 million as of December 31, 2013.  In addition to its main office in North Brookfield, the Petitioner operates three other full service branch offices in Belchertown, Palmer and West Brookfield.  Additionally, the Petitioner’s corporate office and loan center is located in North Brookfield.

FamilyFirst is a Massachusetts-chartered co-operative bank that was established in 1920.  As of December 31, 2013, FamilyFirst had total consolidated assets of approximately $51 million.  Its deposits are insured by the FDIC to the maximum extent permitted by law, and, as a co-operative bank, by the Share Insurance Fund (“SIF”) for deposits in excess of FDIC coverage limits.  FamilyFirst has three banking offices:  its main office in Ware, and two branch offices, one in East Brookfield and the other in Three Rivers.

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 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, the HHI would not change as a result of the proposed 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.       North Brookfield and FamilyFirst do not have any banking office located within the same city or town.  Accordingly, the review of the transaction’s impact on competition does not raise concerns which would preclude its approval.

The Division has also considered whether public convenience and advantage will be promoted by this proposed transaction.  According to the application, North Brookfield indicates that the banking public will benefit in several ways as a result of the merger.  The post consolidation 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.  All existing products and services currently offered by either bank will be retained. Further benefits include access to a larger branch office network and the added asset base will increase the Continuing Institution’s ability to expand the lending limits for individual loans. The application lists a number of additional benefits that North Brookfield cites in support of the merger. The Division considered these matters 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 section 34 of said chapter 168 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. North Brookfield has addressed this requirement of statute in the application.  As stated in the submitted documents, customers of both banks will have access to a larger network of banking offices which will be enhanced by capital investments in the form of signage and branch improvements, as may be necessary, following the consummation of the consolidation.  According to the Petitioner, it is anticipated that the merger should facilitate future job creation and provide opportunities for career advancement for employees.  It was also noted in the application that, other than certain individuals named in the consolidation agreement, there will be no job losses expected as a result of the proposed merger.  These and other factors are also cited as support for meeting such 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 North Brookfield received a "Satisfactory" rating on its most recent CRA performance evaluation.  The Division is also aware that FamilyFirst received a "Satisfactory" rating in its most recent CRA performance evaluation.

The Consolidation Agreement provides that the Board of Trustees of the Continuing Institution will consist of all the current trustees of North Brookfield and one director of FamilyFirst.  The management of the Continuing Institution 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 Institution will meet all required capital standards. In addition, 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 FamilyFirst Bank with and into North Brookfield Savings Bank under the charter, by-laws and name of North Brookfield Savings Bank under the provisions of said Massachusetts General Laws chapter 168, section 34A and Massachusetts General Laws chapter 170, section 26A.  

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 34A 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 filed with the Secretary of State;
  3. that prior to consummation of the merger, the Commissioner receives  evidence of satisfactory arrangements with The Co-operative Central Bank for the withdrawal from the Share Insurance Fund; and
  4. that the proposed merger shall be consummated within one year of the date of this Decision.


May 9, 2014

David J. Cotney
Commissioner of Banks

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