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Decision

Decision Decision of November 8, 2018

Date: 11/08/2018
Organization: Division of Banks

Rockland Trust Company, Rockland, Massachusetts (Rockland Trust) has applied to the Division of Banks (Division) for authority to merge with The Milford National Bank and Trust Company, Milford, Massachusetts (Milford National) pursuant to the provisions of Massachusetts General Laws chapter 167I, section 3 and under the terms of an Agreement and Plan of Merger dated as of May 29, 2018 (Agreement).  The Agreement provides for the merger of Milford National with and into Rockland Trust under the name, charter, and by-laws of Rockland Trust (Continuing Institution).  The main office of Rockland Trust will remain the main office of the Continuing Institution after consummation of the proposed merger, and the Continuing Institution will retain the three banking offices of Milford National as branch offices.  The bank merger application was filed in connection with a multi-step transaction in which MNB Bancorp, the holding company for Milford National, will also merge with and into Independent Bank Corp. (Independent), the holding company for Rockland Trust.   

Table of Contents

Notice of Rockland Trust’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 submitted by Rockland Trust in accordance with applicable law, including 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” will be promoted by approval of the proposed transaction.  The Division considered both banks’ records of performance under the Community Reinvestment Act (CRA) as well as financial and managerial factors. 

Pursuant to Massachusetts General Laws chapter 167A, section 3, because MNB Bancorp would merge with and into Independent simultaneously with the merger of the subsidiary banks and the bank merger requires the Division’s approval, an application to the Commonwealth’s Board of Bank Incorporation was not required for the merger of the holding companies.  In reviewing the proposed transaction, 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 affordable housing loan programs.  The Division received notice in a letter dated August 29, 2018, from the MHPF that satisfactory arrangements have been made for this transaction. 

The parties

Rockland Trust is a Massachusetts state-chartered trust company and is the sole banking subsidiary of Independent.  In addition to its main office in Rockland, Massachusetts, Rockland Trust operates 85 branch offices in the Massachusetts counties of Barnstable, Bristol, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester.  As of June 30, 2018, Rockland Trust had total assets of approximately $8.4 billion and total deposits of approximately $7.1 billion.  Rockland Trust offers a full range of personal and business checking, deposit, and loan products and services, as well as investment and tax management services.  Rockland Trust’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC). 

Milford National, a national bank established in 1849, is regulated by the Office of the Comptroller of the Currency.  Milford National is the sole banking subsidiary of MNB Bancorp.  In addition to its main office, Milford National operates two branch offices, one of which is located in Milford and one that is located in Mendon, Massachusetts.  As of June 30, 2018, Milford National reported total assets of approximately $365.7 million and total deposits of approximately $294.9 million.  Milford National provides banking services to individuals and small businesses, offering a range of deposit products, residential and commercial mortgages, and commercial loans and lines of credit.   Milford National’s deposits are insured up to allowable limits by the FDIC.

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 market 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 analysis demonstrates that consummation of the transaction will have a minimal impact on the HHI index in a competitive market and will not result in an undue concentration of banking resources. 

In addition to the HHI 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.  Rockland Trust presented information that the proposed transaction will not have a significant adverse effect on competition nor result in an undue concentration of banking resources in the impacted communities.  Milford is the only community currently served by both Rockland Trust and Milford National.  Although Rockland Trust and Milford National both maintain banking offices in Milford, the significant presence of other banks, credit unions, and non-depository lenders in the relevant market is a further indication that the proposed transaction will not result in an undue concentration of banking resources in the communities to be served by Rockland Trust following the merger.  Accordingly, the Division’s analysis of the competitive impact of this transaction does not raise concerns that would preclude its approval.  

Public convenience and advantage

In reviewing the application, the Division must determine whether public convenience and advantage will be promoted by the proposed transaction.  Rockland Trust provided information to illustrate that the banking public will benefit as a result of the merger.  The application materials indicate that the customers of Milford National will gain access to the larger portfolio of products and services offered by Rockland Trust including, but not limited to, a broader branch office network, mobile banking, a significantly higher lending limit for commercial customers, and expanded cash management and investment management services.

In determining whether to approve a proposed merger, the Division is required to consider a showing of “net new benefits” related to the transaction.  That term, as set forth in Massachusetts General Laws chapter 167I, section 3, includes initial capital investments, job creation plans, consumer and business services, commitments to maintain and open branch offices, and such other factors that the Division may deem necessary.  Following the merger, the Continuing Institution intends to make capital investments in new signage and new equipment to be installed at the acquired branch locations.  With regard to employment, Rockland Trust anticipates that the consolidation of operations and integration of banking functions will cause the elimination of some Milford National positions.  However, Rockland Trust stated that the merger will support the continued growth of the bank, allowing Rockland Trust to create additional jobs in the future to offset the initial job losses attributable to the consolidation of operations resulting from the merger.    

Rockland Trust has stated that, should the proposed transaction receive regulatory approval, Rockland Trust intends to petition the Division for approval to close its existing branch office in Milford, Massachusetts.  Rockland Trust’s Milford branch office is located approximately 1.2 miles and 2.2 miles away, respectively, from the two Milford National banking offices in Milford that Rockland Trust intends to continue operating after the merger.  Customers of Milford National will gain access to the much broader branch network and mobile banking platform operated by Rockland Trust.  The Division considered the above reasons and others presented in the submitted documents in determining that public convenience and advantage will be promoted by an approval of this transaction.

Related to the issue of public convenience and advantage is the record of CRA performance by the banks that are parties to this transaction.  Such review for Massachusetts-chartered banks includes examination by personnel of the Division.  A publicly available descriptive rating and evaluation by a federal bank regulatory agency may also be considered.  Rockland Trust received a “Satisfactory” rating in its most recent CRA performance evaluation conducted by the Division as of May 30, 2017.  Milford National received an “Outstanding” rating in its most recent CRA performance evaluation conducted by the Office of the Comptroller of the Currency as of July 25, 2016.  The Division’s consideration of the CRA performances of Rockland Trust and Milford National, respectively, also supports the approval of the proposed merger.

Financial and managerial considerations

The Division also considered the financial and managerial aspects of the proposed transaction.  At the effective time of the proposed transaction, each share of MNB Bancorp issued and outstanding common stock will be converted into the right to receive a number of shares of Independent common stock, or cash, in accordance with the negotiated exchange ratio.  No financing will be necessary to pay for the acquisition of Milford National.  Materials provided indicate that upon consummation of the transaction, the Continuing Institution will meet all regulatory capital requirements. 

According to the application materials, the boards of directors and senior executive officers of Independent and Rockland Trust will be comprised of the same individuals currently serving as the directors and senior executive officers of the respective institutions.  Accordingly, upon review, the financial and managerial considerations support approval of the application.

Conclusion

Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, the Division concludes that all such requirements have been met, and that consummation of the proposed transaction is in the public interest.  On the basis of these considerations, and subject to the conditions set forth below, approval is granted for Milford National to merge with and into Rockland Trust under the charter, by-laws, and name of Rockland Trust pursuant to section 3 of chapter 167I of the General Laws.  Approval is also granted for Rockland Trust to maintain the main office and branch offices of Milford National as branch offices of Rockland Trust, noting that Rockland Trust intends to petition the Division for approval to close Rockland Trust’s existing Milford branch office following the consummation of the merger.

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 167I, section 3 has been returned with my endorsement thereon;
  2. That the proposed merger shall not become effective unless the Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
  3. That the proposed merger shall be consummated within one year of the date of this Decision.

Terence A. McGinnis
Commissioner of Banks
November 8, 2018

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