Decision  Decision of November 30, 2010

Date:	11/30/2010
Organization:	Division of Banks

• Petitioner: Citizens-Union Savings Bank
• Respondent: Division of Banks

Decision relative to the merger of Bank of Fall River, a Co-operative Bank, Fall River Massachusetts with and into Citizens-Union Savings Bank, Fall River, Massachusetts

Citizens-Union Savings Bank (the "Petitioner" or "Citizens-Union"), Fall River, Massachusetts has applied to the Division of Banks (the "Division") to merge with Bank of Fall River, A Co-operative Bank ("Bank of Fall River"), Fall River, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 167H, section 7, clause (2), as well as General Laws chapter 168, section 34A and chapter 170, section 26A. Under the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of August 20, 2010, Bank of Fall River will merge with and into Citizens-Union under the charter, by-laws and name of Citizens-Union Savings Bank. All of the banking offices of Bank of Fall River will be retained after the merger. Citizens-Union's parent is Narragansett Financial Corp., Fall River, Massachusetts, a mutual holding company. Although Bank of Fall River is in mutual form and Citizens-Union is in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) since Narragansett Financial Corp. is a mutual holding company and Citizens-Union is its subsidiary banking institution.

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. No comments have been received on the application. The Division reviewed the application including supplemental filings submitted on October 12, 2010 and October 28, 2010 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.

Citizens-Union was chartered as a mutual savings bank in 1851. It reorganized into the mutual holding company form of organization in 1998 after receiving required approvals from the Division and the Massachusetts Board of Bank Incorporation. Accordingly, Citizens-Union is the subsidiary banking institution in stock form of a mutual holding company, Narragansett Financial Corp., which owns all of the stock of Citizens-Union. As of September 30, 2010, Citizens-Union had total assets of approximately $721 million. In addition to its main office in Fall River, Massachusetts, Citizens-Union operates eight branch offices in Massachusetts, as well as one branch office in Rhode Island. The Massachusetts branch office locations are in Seekonk, Somerset, and Swansea, as well as New Bedford which has two branch offices and Fall River which has three branch offices. The Rhode Island branch office of Citizens-Union is located in Tiverton. Citizens Union's deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation ("FDIC") and by the Depositors Insurance Fund for amounts in excess of the FDIC's insurance limits.

Bank of Fall River was chartered as a mutual co-operative bank in 1888. As of September 30, 2010, it had total assets of approximately $164.5 million. In addition to its main office in Fall River, Bank of Fall River operates three branch offices. Bank of Fall River's branch office locations are in Fairhaven, Fall River, and North Dighton. Bank of Fall River's deposits are insured up to allowable limits by the FDIC and the Share Insurance Fund of The Co-operative Central Bank for amounts in excess of the FDIC's insurance limits.

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 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, there will be a de minimis increase in 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 both Citizens-Union and Bank of Fall River have banking offices in the city of Fall River, it is noted that there are numerous banking offices of other banks located in that city. Therefore, customers will continue to be able to choose, if they desire, from a variety of competing banking institutions. Accordingly, the review of the transaction's impact on competition does not raise concerns which would preclude its approval.

The Division has also considered the record of this application to determine whether public convenience and advantage will be promoted by this transaction. Under the proposed merger, the Petitioner states it will continue to offer all of its deposit and credit products that are generally also offered by Bank of Fall River. It also states that it will be able to offer several products and services that have not currently been directly available to Bank of Fall River customers. Such products and services include remote deposit capture services, enhanced online business banking, and trust and investment management product and services, as well as investment and insurance products through its wholly-owned subsidiaries Citizens-Union Financial Services LLC and Citizens-Union Insurance Agency, LLC. Additionally, customers of both banks will benefit from the larger lending limit available through the combined institution, as well as greater commercial lending ability. Customers of both banks also will benefit through an expanded network of banking offices and ATMs. 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 said section 34A of chapter 168 and said section 26A of chapter 170 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. As stated in the supplemental filing submitted October 12, 2010, the continuing bank intends to make initial capital investments of $200,000 in banking office renovations, new signage and information systems improvements. According to the supplemental filing on October 28, 2010, Citizens-Union proposes to establish a branch office in Westport, Massachusetts, subject to regulatory approval, in 2011 which will result in the creation of 6 new jobs. That supplemental filing also indicates that the Petitioner added 6 new jobs upon opening its second branch office in New Bedford in September 2010. It is noted that all banking offices of Bank of Fall River will be maintained by Citizens-Union. Moreover, as described in the later supplemental filing, customers of both banks will benefit from a broader array of products and services which will include proposed enhanced financial products and services to be offered to municipalities. These and other factors are also cited as support for meeting the criteria of this statutory requirement.

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 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. Both banks have received "Outstanding" ratings at their last examinations of performance under CRA.

The application states that, in connection with the merger, the continuing institution's Board of Directors will consist of all of the persons currently serving as directors of Citizens-Union and eight directors of Bank of Fall River. These individuals will also become trustees and corporators of Narragansett Financial Corp. In connection with the merger, changes are being made to the by-laws of Citizens-Union governing its Board of Directors as incorporated in the Merger Agreement. The management of the combined bank is also detailed in the application documents and includes personnel from the Bank of Fall River. Other than fees and expenses related to the merger, there is no financing of the transaction since it is a merger with a mutual bank. Capital ratios of the combined institution have been considered in the review of this transaction. Reduced corporate expenses and increased operating efficiencies resulting from the transaction are set out in the submitted documents. Upon consolidation, the continuing bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.

Upon review of the complete record 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 Bank of Fall River with and into Citizens-Union under the charter, by-laws and name of Citizens-Union Savings Bank under the provisions of said clause (2) of section 7 of chapter 167H, said section 34A of chapter 168 and said section 26A of chapter 170 of the General Laws.

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 and chapter 170, section 26A or other applicable statute has been returned for 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 the proposed merger shall be consummated within one year of the date of this Decision; and
4. that, by statute, the merger may not be consummated until the Division has received notice of satisfactory arrangements for this transaction from the excess deposit insurer for each institution.

November 9, 2010
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Date


David J. Cotney
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Acting Commissioner of Banks