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Eastern Bank (the "Petitioner"), Boston, Massachusetts, has applied to the Division of Banks (the "Division") for permission to merge with Wainwright Bank & Trust Company ("Wainwright"), Boston, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 172, section 36 under the terms of an Agreement and Plan of Merger. The Agreement provides for the merger of Wainwright Bank & Trust Company with and into Eastern Bank under the charter, by-laws and name of Eastern Bank. The banking offices of Wainwright will be retained as branch offices after the merger. The proposed merger is part of a multi-step transaction involving an application before the Board of Bank Incorporation by Eastern Bank Corporation to acquire Wainwright and to establish an interim trust company, Eastern Merger Subsidiary Bank. Eastern Bank Corporation is the mutual holding company for Eastern Bank. The Board of Bank Incorporation approved the transaction in its Decision of this same date. As set out in the submitted documents, after the acquisition of Wainwright through the merger with the interim bank, Eastern Bank Corporation will operate Eastern Bank and Wainwright as separate banking institutions for a few months before they merge.
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 and all related documents 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. The record 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.
Eastern Bank is the subsidiary banking institution in stock form resulting from a 1989 reorganization into a mutual holding company, Eastern Bank Corporation. On July 31, 2004, Eastern Bank was converted, by operation of law, from a state-chartered savings bank to a state-chartered trust company. As of June 30, 2010, Eastern Bank had total assets of approximately $6.7 billion. Eastern Bank's main office is located in Boston, Massachusetts. According to its application, Eastern Bank operates approximately 81 banking offices, which are located primarily in Eastern Massachusetts, stretching from Newburyport on the North Shore to Cape Cod. Eastern Bank's deposits are insured to allowable limits by the Federal Deposit Insurance Corporation ("FDIC").
Wainwright was chartered as a trust company on April 24, 1987. Wainwright, as of June 30, 2010, had total assets of $ 1.1 billion. In addition to its main office in Boston, Wainwright operates 11 branch offices. Wainwright's branch office locations are in Brookline, Newton, Somerville and Watertown, as well as Cambridge which has four branch offices and Boston which has three branch offices. Wainwright's deposits are insured to allowable limits by the FDIC.
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 Eastern Bank and Wainwright have banking offices in the cities of Boston and Newton, it is noted that there are numerous banking offices of other banks located in those cities. Therefore, customers will continue to be able to choose, if they desire, from a variety of banking options. Accordingly, the review of the transaction's impact on competition does not raise concerns which would preclude its approval.
As a result of the merger, Eastern Bank indicates that the banking public will benefit in several ways. According to the application, such benefits include an expanded branch office and ATM network and a broader range of products and services to be offered by Eastern Bank to customers of the continuing bank. In addition to the enhanced branch office network, customers of Wainwright will benefit from the wider array of loans, deposits and investment services which will become available to them upon the merger. Such products and services include wealth management, cash management products, foreign exchange services, international trade services, treasury services, trust services, Small Business Administration loans, letters of credit, as well as competitive online banking services. 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. As set out in the application, the continuing bank intends to provide the aforementioned products and services to customers, as well as make capital investments in the form of improvements for its continuing banking offices including new signage for the Wainwright banking offices in connection with the merger. According to the Petitioner's oral and written testimony at the October 12, 2010 public hearing on the transaction, additional jobs will be created as Eastern Bank continues to grow, particularly in areas such as business banking and technology and operations, as well as through new employee positions for Eastern Bank's branch network such as the recently approved but unopened branch office in West Roxbury. The Division also notes that Eastern Bank will maintain the banking offices of Wainwright as branch offices. 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 of personnel by 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. Upon review, the Division has noted that both Eastern Bank and Wainwright received "Outstanding" ratings in their most recent CRA performance examinations.
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 Eastern with the addition of two directors of Wainwright. These individuals will also become trustees and corporators of Eastern Bank Corporation. The management of the combined bank 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 bank will meet all required capital standards. Accordingly, upon review, financial and managerial considerations support the application.
As part of this transaction, Eastern Bank has applied for approval to issue a cash dividend to Eastern Bank Corporation under the provisions of section 28 of chapter 172 of the General Laws. The acquisition of Wainwright is a cash transaction. The proposed dividend is in the aggregate amount of $165 million, to acquire Wainwright and an additional amount to cover all related expenses of the transaction. Eastern Bank will continue to operate as a well capitalized bank after the issuance of the requested dividend.
Based on the entire record of this matter and considered in light of all relevant statutory and administrative requirements, the Division concludes that all such requirements have been met and that consummation of the proposed merger would be in the public interest. On the basis of these conclusions, and subject to the conditions set forth below, approval is granted for Wainwright to merge with and into Eastern Bank in conformity with the Agreement and pursuant to Massachusetts General Laws chapter chapter 172, section 36. Approval is also hereby granted, as requested, for the payment by Eastern Bank of a cash dividend in the amount of $165 million to Eastern Bank Corporation under the provisions of said section 28 of chapter 172 of the General Laws. All necessary approvals are also granted hereby for the merger of Eastern Merger Subsidiary Bank with and into Wainwright as part of this multi-step transaction.
The approvals granted herein are subject to the following conditions:
November 9, 2010
Steven L. Antonakes
Commissioner of Banks