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Berkshire Bank, Pittsfield, Massachusetts (the "Petitioner" or "Berkshire Bank") has applied to the Division of Banks (the "Division") for permission to merge with Beacon Federal, East Syracuse, New York pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D under the terms of an Agreement and Plan of Merger (the "Agreement") dated May 31, 2012. The Agreement provides for the merger of Beacon Federal with and into Berkshire Bank under the charter, by-laws and name of Berkshire Bank. The main office of Berkshire Bank would remain the main office of the continuing institution. All of the banking offices of Beacon Federal will become branch offices of Berkshire Bank. This transaction is part of a multi-step transaction which included an application before the Board of Bank Incorporation (the "Board") in which Berkshire Hills Bancorp, Inc., Pittsfield, Massachusetts will acquire Beacon Federal Bancorp, Inc., East Syracuse, New York. Berkshire Hills Bancorp, Inc. is the holding company for the Petitioner and Beacon Federal Bancorp, Inc. is the holding company for Beacon Federal. The Board approved the holding company transaction in its Decision of this same date.
Notice of the application has been posted and published. The time period for interested persons to submit comments ended on September 26, 2012 and no comments were received on this transaction. The Division reviewed the application and all documents and materials 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 its implementing regulation, 209 CMR 46.00 et seq. also were factors considered by the Division.
Berkshire Bank is a state-chartered stock savings bank, chartered as a mutual savings bank in 1846. It reorganized into a mutual holding company form of organization in 1996. The mutual holding company converted to a stock holding company in June of 2000. Berkshire Hills Bancorp, Inc. is a Delaware corporation, registered as a savings and loan holding company, and, as such, it is subject to supervision and regulation by the Federal Reserve Board. As of June 30, 2012, Berkshire Bank had total assets of approximately $4.5 billion. Petitioner operates 68 branch offices serving communities in Western Massachusetts, Northeastern and Central New York, Southern Vermont and Central Connecticut. Berkshire Bank's deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (the "FDIC") and all deposits in excess of FDIC deposit limits are insured by the Depositors Insurance Fund.
Beacon Federal is a federal savings association which commenced operations as such in 1999 after converting from a credit union to a federal mutual savings association charter. Beacon Federal subsequently converted to stock form in 2007. As of June 30, 2012, Beacon Federal had total assets of approximately $1 billion. In addition to its main office in East Syracuse, New York, Beacon Federal operates six branch offices: four in New York; one in Massachusetts; and two in Tennessee. Beacon Federal's deposits are insured up to allowable limits by the FDIC.
The Petitioner has submitted information to address the issue that competition among banks will not be unreasonably affected by the proposed transaction. It is the position of this Division to consider a transaction in light of its impact on the citizens, communities and banking structure in the Commonwealth on a community by community basis instead of by variously grouped markets. The two banks, Berkshire Bank and Beacon Federal, do not have branch offices in the same communities or CRA assessment areas. There will be no geographic overlap in banking operations. For these reasons and other factors, the Division finds that competition among banking institutions will not be unreasonably affected.
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 be able to offer several products and services that have not currently been available to Beacon Federal customers. Such products and services include various employee benefits and life insurance products offered through Berkshire Hills Bancorp, Inc.'s wholly-owned subsidiary, Berkshire Insurance Group, Inc.; the Express Credit program for commercial loans; commercial cash management services, including sweep accounts; deposit lockbox services; and asset-based lending. Customers of both banks will also benefit from a wider network of branches 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 section 34D 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. The Petitioner has addressed this requirement of statute in its filings. The Petitioner intends to maintain all of the New York and Massachusetts banking offices of Beacon Federal, but the two Tennessee branch offices which are outside of Berkshire’s natural market will be sold in the near future. The Petitioner indicated that continued growth in the size of Berkshire could lead to further growth in staff levels at Berkshire Bank, notwithstanding an anticipated immediate reduction in staff levels in connection with the merger, if approved. The Petitioner intends to utilize reasonable efforts to minimize staff reduction. The Petitioner stated in its application that it anticipates opening several de novo branches in New York, Central Connecticut, and possibly Central and Eastern Massachusetts over the next two to three years. The Petitioner stated further in its application that such occurrences will require hiring in those areas and will also necessitate hiring of additional office and support staff in Berkshire Bank’s home community in Berkshire County, Massachusetts. Customers would find additional convenience to conduct their banking business from a larger branch office network within the Springfield, Massachusetts; Hartford, Connecticut; and East Syracuse, New York corridor. Moreover, customers of both banks will benefit from a broad array of products and services including the aforementioned products and services of Berkshire Bank. 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 the CRA by the banks which are parties to this transaction. Such a review for a state-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 a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency. The Division has noted that Berkshire Bank has a "High Satisfactory" rating in its most recent examination of performance under CRA by the Division. The Division has noted that Beacon Federal has a "Satisfactory" rating at its most recent examination conducted by the Office of Thrift Supervision.
The application states that, in connection with the merger, the continuing institution's Board of Directors and senior management will consist of all of the persons currently serving as directors and senior management of Berkshire Bank, with the exception that one existing Beacon Federal Bancorp, Inc. director, to be determined at a later time, will be appointed to the boards of Berkshire Hills Bancorp, Inc. and Berkshire Bank. Economies and service capabilities which would result from the transaction are set out in the submitted documents. After consolidation, the continuing bank will meet all required capital standards. Accordingly, financial and managerial considerations support the application.
Upon review of the record of this application with reference to the relevant statutory and regulatory criteria, the Division has concluded 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 considerations, approval is granted for Beacon Federal to merge with and into Berkshire Bank under the charter, by-laws and name of Berkshire Bank pursuant to Massachusetts General Laws chapter 168, section 34D.
The approval granted herein is subject to the following conditions:
October 12, 2012
David J. Cotney
Commissioner of Banks