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Danversbank (the "Petitioner" or "Danversbank"), Danvers, Massachusetts, has applied to the Division of Banks (the "Division") for permission to merge with Beverly National Bank ("Beverly National"), Beverly, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 168, section 34D under the terms of an Bank Merger Agreement and Plan of Merger dated September 18, 2009 (the "Agreement"). The Agreement provides for the merger of Beverly National with and into Danversbank under the charter, by-laws and name of Danversbank. All but one of the banking offices of Beverly National will be retained as branch offices after the merger. The proposed merger is part of a multi-step transaction involving a petition before the Board of Bank Incorporation by the Petitioner's holding company, Danvers Bancorp, Inc., Danvers, Massachusetts, to acquire Beverly National Corporation, Beverly, Massachusetts, the stock holding company of Beverly National. The Board of Bank Incorporation approved the transaction before it in a Decision also dated today.
Notice of the Petitioner's application was published and posted, and the time period for interested parties to comment on the transaction has expired. The Petitioner submitted a supplemental filing on certain issues raised by the Division. All documents and materials related to this transaction have been reviewed. This record has been considered with regard to all applicable statutory standards, which require consideration of, among other things, whether competition among banking institutions will be unreasonably affected by the proposed transaction and whether public convenience and advantage will be promoted. The Division's review of this matter must also take into consideration the involved banks' records of performance under the Community Reinvestment Act ("CRA"), section 14 of Chapter 167 of the General Laws and its implementing regulation 209 CMR 46.00. et. seq.
Danversbank, a state-chartered stock savings bank, was established in 1850 as a mutual bank. It reorganized in 1998 into a mutual holding company with a subsidiary stock savings bank. The mutual holding company converted to a stock holding company in 2008 under the name Danvers Bancorp, Inc. In that stock conversion process, Danvers Bancorp, Inc. raised approximately $170 million. Danversbank accepts deposits and offers a full range of retail and commercial banking services to its customers. It has its main office in Danvers and operates through its network of 16 full-service branches, all of which are located in Essex, Middlesex and Suffolk counties. Danversbank has approval to open two additional full-service banking offices, one in Boston, and the other in Waltham, Massachusetts. Danversbank has one commercial lending office in Boston and has four wholly-owned subsidiaries, Conant Ventures, Inc., Conant Investment Corporation, Five Conant Street Investment Corporation, and One Conant Capital LLC. At June 30, 2009, Danversbank had consolidated assets of approximately $1.8 billion. Danversbank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") to the maximum extent allowed by law and for amounts in excess of FDIC coverage limits by the Depositors Insurance Fund.
Beverly National, a national bank headquartered in Beverly, Massachusetts and Beverly National Corporation's sole banking subsidiary, was established on June 23, 1802. Beverly National, as a national bank, is regulated by the Office of the Comptroller of the Currency, a federal agency. The deposits of Beverly National are insured by the FDIC to the maximum extent permitted by law. Beverly National has 10 full service banking offices, four of which, including the main banking office, are located in Beverly. The other offices are located in Danvers, Hamilton, Manchester-By-The-Sea, Salem, South Hamilton, and Topsfield. At June 30, 2009 Beverly National had consolidated assets of approximately $496 million. Beverly National has one wholly-owned subsidiary, Beverly National Securities Corporation.
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. The Division has considered that the subsidiary banks each have branch offices in three communities and that their CRA assessment areas, although not exact, do overlap in eleven communities. Upon review, the Division does not believe the transaction will unreasonably affect competition for the reasons cited as well as the fact that a number of diverse financial institutions will continue to provide competitive deposit and credit services throughout the affected areas and banking markets served by the continuing institution. Accordingly, the Division's analysis of the competitive impact of the merger weighs in favor of the proposed transaction.
As a result of the merger, Danversbank indicates that the banking public will benefit in several ways. According to the application, such benefits include an expanded branch office network and a broader range of products and services which will include all of the products presently offered by Danversbank. Customers of Beverly National will benefit from, among other things, the availability of enhanced on-line banking, cash management services, Small Business Administration loans as well as non-deposit investment products. The broader range of trust and investment management services currently offered by Beverly National will continue to be provided by the combined institution. 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 Division 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. According to the Petitioner, the merger will enhance the continuing bank's financial capability to invest in the communities it serves and to develop new products and services for its customers. The Petitioner has provided information indicating the merger's impact on employees of the combined institution. Job reductions will occur among officers and other personnel. Severance benefits and transitional assistance, in a variety of forms, will be provided to those employees impacted by the merger. In past Decisions, the Division has recognized that a combined, stronger institution can grow and expand with additional products and services which should also lead to the creation of new jobs. Danversbank estimates it will have higher staffing levels in the years ahead. 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 subsidiary banks which are the parties to this transaction. Such a review for a state-chartered bank includes examination by personnel of the Division of Banks 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. Danversbank, has a "High Satisfactory" rating in its most recent examination of performance under CRA by the Division. The Division has noted that Beverly National has a "Satisfactory" rating at its most recent examination conducted by the Office of the Comptroller of the Currency.
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 Danversbank and three directors of Beverly National. 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. As noted above, at the beginning of last year, Danversbank's parent company raised approximately $170 million in its conversion to stock. The financial consideration for this merge is an exchange of stock. Accordingly, upon review, financial and managerial considerations support the application.
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 Beverly National Bank to merge with and into Danversbank in conformity with the Agreement and pursuant to Massachusetts General Laws chapter 168, section 34D.
The approval granted herein is subject to the following conditions:
October 29, 2009
Steven L. Antonakes
Commissioner of Banks