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Decision Decision of November 26, 2018

Date: 11/26/2018
Organization: Division of Banks

PeoplesBank, Holyoke, Massachusetts (PeoplesBank) has applied to the Division of Banks (Division) for authority to merge with The First National Bank of Suffield (FNB Suffield), Suffield, Connecticut pursuant to the provisions of Massachusetts General Laws chapter 167H, section 7 and chapter 167I, section 3.  Under the terms of an Agreement and Plan of Merger dated as of July 16, 2018, FNB Suffield will merge with and into PeoplesBank under the charter and by-laws of PeoplesBank (Continuing Institution).  The banking offices of FNB Suffield will become branch offices of PeoplesBank.  The merger application was filed in connection with a multi-step transaction in which, PeoplesBancorp, MHC (PeoplesBancorp), the mutual holding company for PeoplesBank will acquire the stock of FNB Suffield through a merger with FNB Suffield’s holding company, First Suffield Financial, Inc. (First Suffield).    

Table of Contents

PeoplesBancorp will form a Connecticut corporation (Merger Subsidiary), as a wholly-owned subsidiary of PeoplesBancorp to facilitate this multi-step transaction.  At the effective time of the merger, Merger Subsidiary will merge into First Suffield with First Suffield then becoming a subsidiary of PeoplesBancorp and FNB Suffield becoming an indirect subsidiary of PeoplesBancorp (Holding Company Merger).  First Suffield will be then be dissolved.  At virtually the same time as the Holding Company Merger, FNB Suffield will merge with and into PeoplesBank

Notice of PeoplesBank’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.  Accordingly, all documents and materials related to this transaction have been reviewed.  The Division reviewed the application in accordance with the statutory criteria of whether competition among banking institutions would 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 Community Reinvestment Act (CRA) were also considered by the Division.

Pursuant to Massachusetts General Laws chapter 167A, section 3, because PeoplesBancorp will merge with First Suffield simultaneously with the merger of FNB Suffield into PeoplesBank and because the bank 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, 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 various affordable housing loan programs.  The Division received notice from the MHPF that satisfactory arrangements had been made for this transaction in a letter dated September 26, 2018

The parties

PeoplesBank is a Massachusetts-chartered savings bank that was established in 1885.  PeoplesBank is the subsidiary banking institution in stock form of PeoplesBancorp, a mutual holding company. As a state-chartered savings bank, the deposits in PeoplesBank in excess of the deposit insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC) are insured, in full, by the Depositors Insurance Fund (DIF), established by Chapter 43 of the Acts of 1934.  PeoplesBank operates twenty banking offices in Massachusetts located largely in the Springfield, Massachusetts and Pioneer Valley area.  PeoplesBank offers a wide range of deposit, lending and wealth management products and services.  As of September 30, 2018, PeoplesBank had total assets of approximately $2.5 billion.

FNB Suffield, a national bank headquartered in Suffield, Connecticut, was established in 1864 and is the sole banking subsidiary of First Suffield.  FNB Suffield operates four banking offices located in the Connecticut communities of Suffield, West Suffield, East Granby and Windsor Locks and offers a range of deposit and lending products to families and businesses in Northern Connecticut.   As of September 30, 2018, FNB Suffield had total assets of approximately $277 million. 


Materials have also been submitted to address the issue of whether competition among banks will 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 demonstrates that consummation of the transaction will not result in an undue concentration of banking resources.  In addition, the Division considers the competitive impact of the proposed merger on a community-by-community basis as well as on the overall banking structure of the Commonwealth.  As articulated in the merger application, there is minimal overlap in the markets and customers served by the banks and the proposed merger will have a de minimis effect on competition.  In fact, there are no cities or towns in which both banks have a banking office.  Upon review, the Division’s analysis of the competitive impact of this transaction does not preclude its approval.

Public convenience and advantage

The Division has also considered whether public convenience and advantage will be promoted by the proposed transaction.  As described in the submitted application, PeoplesBank indicates that the proposed transaction will provide for increased financial strength and the capacity to more efficiently offer its community banking products to a broader market area.  The combined bank will also have increased asset and core deposit bases and an increased lending limit.   Furthermore, the combined bank will have a larger ATM network.   The Division considered these factors 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 Division 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, commitments to maintain and open branch offices, and such other factors which the Division may deem necessary.  PeoplesBank has addressed this requirement of the statute in the application.  PeoplesBank intends to invest in new signage and branch improvements. According to PeoplesBank, as a result of the merger, the Continuing Institution will be able to compete more effectively in delivering enhanced and expanded products and services to its customers.  In addressing the effect of the transaction on FNB Suffield’s employees, PeoplesBank stated that while there would be a small reduction in staff levels, it was anticipated that the majority of FNB Suffield employees will join the Continuing Institution either on a permanent or temporary basis.  In addition, PeoplesBank believes that future job creation will result from the Continuing Institution’s expanded operations.  The submitted materials describe PeoplesBank’s intent to continue to operate all of FNB Suffield’s banking offices as branch offices of the Continuing Institution.   The FNB Suffield branches may be operated as “First Suffield Bank, a division of PeoplesBank.”  These and other factors are also provided as support for satisfying the standard of “net new benefits” under the statute. 

Related to the issue of net new benefits and public convenience and advantage is the record of CRA performance by the banks which are parties to this transaction.  Such a review for a Massachusetts-chartered bank includes examination by personnel of the Division as well as analysis of concerns received by the bank’s community and its response to those concerns fairly raised.  For other institutions, the Division looks to the publicly available descriptive rating and evaluation by a federal or state bank regulatory agency.  The Division notes that both PeoplesBank and FNB Suffield received a “Satisfactory” rating on their most recent CRA performance evaluations.  PeoplesBank’s evaluation was conducted jointly by the Division and the FDIC as of April 25, 2018.  FNB Suffield’s evaluation was conducted by the Office of the Comptroller of the Currency as of March 27, 2017.  Accordingly, the Division’s view of this factor is consistent with approval. 

The application states that upon consummation of the transaction, one current member of the Boards of Directors of First Suffield and FNB Suffield will be appointed as a member of the Board of Trustees of PeoplesBancorp and the Board of Directors of PeoplesBank.  Any directors not appointed as a trustee or director of PeoplesBancorp and PeoplesBank will have the opportunity to serve as a corporator of PeoplesBancorp.  Economies and service capabilities which would result from the transaction are also set out in the submitted documents.  The transaction will be financed by a $40 million subordinated debt offering that has already closed and by a dividend from PeoplesBank to PeoplesBancorp.  Following consummation of this transaction, all regulatory capital standards will continue to be met.  Therefore, financial and managerial considerations support approval of this transaction.


Upon review of the application with reference to the relevant statutory and regulatory requirements, the Division finds that competition among banking institutions will not be unreasonably affected, that public convenience and advantage will be promoted by consummation of the proposed transaction, and that records of performance under CRA by the banks involved in this transaction are consistent with its approval.  On the basis of these considerations, approval is granted to merge FNB Suffield with and into PeoplesBank under the charter and by-laws of PeoplesBank under the provisions of Massachusetts General Laws chapter 167I, section 3 Approval is also granted for PeoplesBank to maintain the four banking offices of FNB Suffield as branch offices pursuant to Massachusetts General Laws chapter 167C, section 6.

The approvals granted herein are subject to the following conditions:

  1. That the proposed merger shall not be consummated until arrangements satisfactory to the DIF have been made and notice thereof has been received by the Division;
  2. 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 such institution has complied with the provisions of Massachusetts General Laws chapter 167I, section 3 or other applicable statute has been returned with my endorsement thereon;
  3. That the proposed merger shall not become effective until Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
  4. That the proposed merger shall be consummated within one year of the date of this Decision.

Terence A. McGinnis
Commissioner of Banks

November 26, 2018

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