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  • Division of Banks

Decision  Decision of October 19, 2016

Date: 10/19/2016
Organization: Division of Banks
  • Petitioner: Westfield Financial, Inc.
  • Respondent: Board of Bank Incorporation

Table of Contents

Decision relative to the application of Westfield Financial, Inc, Westfield, Massachusetts to acquire Chicopee Bancorp, Inc., Chicopee, Massachusetts

Westfield Financial, Inc. (“Westfield Financial” or “Petitioner”), Westfield, Massachusetts, has petitioned the Board of Bank Incorporation (“Board”) for approval to acquire Chicopee Bancorp, Inc. (“Chicopee Bancorp”), Chicopee, Massachusetts and its subsidiary bank, Chicopee Savings Bank (“Chicopee Bank”), Chicopee, Massachusetts pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4.  Westfield Financial is the holding company for Westfield Bank, Westfield, Massachusetts.  As set forth in an Agreement and Plan of Merger and a Plan of Bank Merger (together the “Merger Agreement”), this multi-step transaction would first merge Chicopee Bancorp with and into Westfield Financial.  Thereafter, Chicopee Bank will merge with and into Westfield Bank, with Westfield Bank as the surviving bank.  The surviving holding company will operate under the name “Western New England Bancorp, Inc.”  The subsequent merger of the banks will not require the approval of either the Board or the Division of Banks.

Petitioner published notice of the petition as directed by the Board, thereby affording opportunity for interested parties to submit comments.  The Board held a public hearing relative to this application on September 21, 2016.  The comment period on the proposed transaction ended on October 5, 2016 and no comments were received.  The Board reviewed the application, testimony received at the public hearing, and all related documents.  That review focused on the statutory and administrative criteria applicable to such transactions, which include, among other things, whether competition among banking institutions will be unreasonably affected; whether public convenience and advantage would be promoted; and the record of performance under the Community Reinvestment Act (“CRA”) by the respective subsidiary banks of the holding companies.  The financial and management components of the proposed transaction were also considered.  The additional statutory requirements set out in sections 2 and 4 of said chapter 167A were also notable factors in the Board’s deliberations on the matter. 

One such statutory provision requires the Board to receive notice from the Massachusetts Housing Partnership Fund (“MHPF”) that satisfactory arrangements have been made by the Petitioner consistent with statute and the MHPF’s various affordable housing loan programs.  The Board received notice from the MHPF that satisfactory arrangements had been made for this transaction in a letter dated September 13, 2016.

The Parties

Westfield Financial is a federal savings and loan holding company headquartered in Westfield, Massachusetts.  As of June 30, 2016, it had approximately $1.3 billion in total consolidated assets.  Westfield Bank, its sole subsidiary bank, operates thirteen banking offices.  Eleven offices are located in Hampden County in Massachusetts, and two are located in Hartford County, Connecticut.  Westfield Bank offers a range of consumer and business banking products and services, including various checking and savings accounts; certificates of deposit; commercial real estate and Small Business Administration loans; online and mobile banking; foreign currency exchange; wealth management; and referral services.  As of June 30, 2016, Westfield Bank had total assets of approximately $1.3 billion and total deposits of approximately $923 million. Westfield Bank has two subsidiaries: WB Real Estate Holdings LLC and Elm Street Securities Corporation, which were formed for the purposes of holding real property and qualified securities, respectively.  Westfield Bank is a member of the Federal Home Loan Bank of Boston and is supervised by the Office of the Comptroller of the Currency (“OCC”).  The deposits of Westfield Bank are insured to allowable limits by the Federal Deposit Insurance Corporation (“FDIC”).

Chicopee Bancorp is a Massachusetts corporation headquartered in Chicopee, Massachusetts.  As of June 30, 2016, it had approximately $702 million in total consolidated assets.  Chicopee Bank, its banking subsidiary, maintains nine banking offices located in Hampden and Hampshire Counties in Massachusetts, specifically in the cities or towns of Chicopee, Ludlow, South Hadley, Ware, and West Springfield.  Chicopee Bank offers a range of consumer and business banking products and services, including various checking, savings, and retirement accounts; municipal and consumer certificates of deposit; commercial and residential real estate loans; and online and mobile banking.  As of June 30, 2016, Chicopee Bank had total assets of approximately $701 million and total deposits of approximately $545 million. Chicopee Bank has four subsidiaries: CSB Colts, Inc., Cabot Realty LLC, CSB Investment Corp., and CABOT Management Corporation.  CSB Colts, Inc. was formed to purchase, sell, and hold securities.  Cabot Realty LLC was formed for the purpose of holding real property.  CSB Investment Corp. and Cabot Management Corporation are each inactive and will be dissolved prior to consummation of the proposed transaction.  Like Westfield Bank, the deposits of Chicopee Bank are insured, to allowable limits, by the FDIC.  In addition, as a Massachusetts chartered savings bank, Chicopee Bank’s deposits in excess of FDIC limits are insured, in full, by the Depositors Insurance Fund. 


The Petitioner has addressed the issue of whether competition among banks will be unreasonably affected by the proposed transaction.  Part of the analysis includes various guidelines utilized by the federal agencies.  The application contained an analysis under the Herfindahl-Herschmann Index (“HHI”), a key test utilized by federal agencies in assessing the competitive effects of a proposed bank merger.  In this case, the HHI analysis demonstrates that consummation of the transaction will not result in an undue concentration of banking resources in the Commonwealth.  The Board’s review, however, is not limited to such federal standards.  It is the practice of the Board 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.  In that regard, the Petitioner has presented information that the proposed transaction will not have a significant adverse effect on competition among banking institutions in any relevant market.  The application indicates that the relevant geographical market of Westfield Bank and Chicopee Banks overlap, to a degree.1 However, West Springfield is the only location where both banks have banking offices, and West Springfield hosts a  number of other banks and financial institutions, thereby minimizing any impact that the proposed transaction will have on the citizens and banking structure in that community.  Therefore, the Board does not believe the transaction will unreasonably affect competition. 

Public Convenience and Advantage

The Board also considered whether public convenience and advantage will be promoted by this transaction.  The application indicates that the proposed merger will promote public convenience and advantage by expanding Westfield Bank’s branch and ATM network and increasing its commercial lending limit without reducing the products and services offered by either bank.  The application states that the continuing institution’s increased size will result in operational and technological efficiencies that will benefit customers of both banks.    

The Board also considered the Petitioner’s analysis of “net new benefits” related to the transaction.  The term includes initial capital investments, job creation plans, consumer and business services, and commitments to maintain and open branch offices, among other factors. The Petitioner indicated at the hearing that there would be some initial staff reductions due to the fact that the banks operate in a similar geographic area; however, the Petitioner believes that initial reductions will be offset overtime by the growth of the combined bank.  In addition, transitional assistance will be provided to those employees impacted by the merger.  As noted, through its written submissions and testimony, the Petitioner confirmed that there will be no branch closures of either bank and no discontinuation of any products and services offered by either bank. 

Related to the issue of public convenience and advantage is the record of CRA performance by the subsidiary banks of Westfield Financial and Chicopee Bancorp.  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 Board looks to a publicly available descriptive rating and evaluation by a federal or state bank regulatory agency.  The Board has noted that the Petitioner’s subsidiary bank, Westfield Bank, received an “Outstanding” rating in its most recent performance evaluation conducted by the OCC, dated as of June 17, 2013.  Chicopee Bank received an “Outstanding” rating in its most recent CRA evaluation conducted jointly by the Division and the FDIC, dated as of March 4, 2013.  Accordingly, the Board’s review of factors related to public convenience and advantage are supportive of approval.

Financial and Managerial Considerations

The financial and managerial aspects of any transaction are also a significant consideration of the Board, as they may affect the continuing holding company’s ability to serve the banking public, to actively compete with other financial institutions, and to maintain its capital ratio standards for a safe and sound institution.  The Merger Agreement provides for the conversion of Chicopee Bancorp common stock issued and outstanding into the right to receive 2.425 shares of Westfield Financial common stock (the total value of which is equal to approximately $110 million as of April 4, 2016), plus cash in lieu of fractional shares.  Taking the financial aspects and other details of the proposed transaction into consideration, the Board has reviewed the consolidated financial statements of the parties and is satisfied with the Petitioner’s capital ratios and projections.  With regard to the managerial aspects of the proposed transaction, the executive officers and directors of Westfield Financial and Westfield Bank will continue to be officers and directors of the respective surviving institutions.  However, the boards of Westfield Financial and Westfield Bank will each expand by five members.  Each new member will be a current member of the board of directors of Chicopee Bancorp and Chicopee Bank.  Finally, the Board is satisfied with the Petitioner’s arrangements with respect to informing Chicopee Bank customers of the discontinuation of excess deposit insurance.  The Board, therefore, concludes that the financial and managerial aspects of the transaction also support its approval. 


 The application, supporting documents, the testimony received at the public hearing, as well as additional information submitted, have established a complete record on this petition, which has been reviewed in accordance with statutory provisions and policies of the Board.  Based on the record of this matter considered in light of all relevant statutory and administrative requirements, the Board finds that public convenience and advantage will be promoted, that competition among banking institutions will not be unreasonably affected, and that the record of CRA performance by the subsidiary banks involved in this transaction are consistent with its approval.  Having considered the record established on this application, the Board has found that the applicable statutory and administrative criteria have been met.  In accordance with these findings and pursuant to statute, the Board hereby approves the petition and authorizes Westfield Financial to acquire Chicopee Bancorp and its subsidiary bank, Chicopee Savings Bank. The approval granted herein is subject to the condition that the transaction is completed within one year of the date of this Decision.


Board of Bank

Terence A. McGinnis
Commissioner of Banks

Deborah B. Goldberg
Treasurer and Receiver-General

Donald Twomey
Designee of the Commissioner of Revenue


October 19, 2016

The application describes the primary service area of Westfield Bank as consisting of Hampden County and contiguous parts of Hampshire County.  The primary service area of Chicopee Bank is described as consisting of twenty-six cities and towns in Franklin, Hampden, Hampshire, and Worcester Counties.

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