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Decision  Decision of October 3, 2019

Date: 10/03/2019
Organization: Division of Banks

Hometown Bank (Petitioner or Hometown), Oxford, Massachusetts has applied to the Division of Banks (Division) to merge with Millbury Savings Bank (Millbury Savings), Millbury, Massachusetts pursuant to the provisions of Massachusetts General Laws chapter 167H, section 7, clause (2), as well as Massachusetts General Laws chapter 167I, section 4.  Under the terms of the Agreement and Plan of Merger dated as of February 14, 2019, as amended and restated on March 28, 2019, Millbury Savings will merge with and into Hometown under the charter, by-laws and name of Hometown (continuing institution).  The main office of Hometown would remain the main office of the continuing institution after consummation of the proposed merger and all the banking offices of Millbury will be retained as branch offices of the continuing institution.  Hometown is an indirect subsidiary of Hometown Financial Group, MHC (MHC), Easthampton, Massachusetts, and is a subsidiary of MHC’s wholly-owned subsidiary, Hometown Financial Group, Inc. (Hometown Financial).   Although Millbury Savings is in mutual form and Hometown is in stock form, the transaction is authorized under Massachusetts General Laws chapter 167H, section 7, clause (2) since MHC is a mutual holding company and Hometown is its subsidiary banking institution.

Table of Contents

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, and no comments were received.  The Division reviewed the application and supplementary 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.  Both banks’ records 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.  In addition, The Co-operative Central Bank confirmed by letter dated August 12, 2019 that satisfactory arrangements have been made in connection with the merger relative to providing excess deposit insurance for deposits of the continuing institution.  The Depositors Insurance Fund also confirmed by letter dated September 17, 2019 that satisfactory arrangements have been made with the Fund. 

The Parties

Hometown was founded in 1889 and is a Massachusetts stock co-operative bank with its main office in Oxford, Massachusetts, in Worcester County.  In addition to its main office, Hometown has 13 branch offices, eight in Worcester County, Massachusetts and five in Windham County, Connecticut. As mentioned above, Hometown is an indirect subsidiary of MHC and a subsidiary of MHC’s wholly-owned subsidiary, Hometown Financial.  Hometown is subject to supervision and examination by the Division and is a member of the Federal Reserve System.  At June 30, 2019, Hometown had total assets of approximately $792 million and total deposits of approximately $675 million.  Hometown has three wholly-owned subsidiaries: Hometown Securities I, Inc.; Hometown Securities II, Inc.; and WCB Realty, Inc.  Hometown’s deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC) and amounts in excess of FDIC insurance are insured by the Share Insurance Fund of The Co-operative Central Bank (Share Insurance Fund).   The Division notes that Hometown Financial is also the mid-tier holding company for Easthampton Savings Bank, Easthampton, Massachusetts and Abington Bank, Abington, Massachusetts. 

Millbury Savings was founded in 1888, and is a Massachusetts-chartered mutual savings bank.  As of June 30, 2019, it had total assets of approximately $224 million and total deposits of approximately $183 million.   In addition to its main office in Millbury, Massachusetts, Millbury Savings currently operates a branch office in Worcester, Massachusetts. During the pendency of this merger application, Millbury Savings submitted a notice to establish a second branch office in Worcester and the Division issued its non-objection to the establishment of this branch office in July, 2019.  Hometown intends to maintain this Worcester branch office location after consummation of the merger.  Millbury Savings has four wholly-owned subsidiaries: 109 Elms Street Securities Corporation; Millbury Properties, LLC; Gateway B, LLC; and Gateway M, LLC.  After consummation of the merger, Gateway B, LLC and Gateway M, LLC will be dissolved.  Millbury Savings’ deposits are insured up to allowable limits by the FDIC and by the Depositors Insurance Fund for amounts in excess of the FDIC’s insurance limits. 


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 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 minimal impact on 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 Hometown and Millbury Savings both have banking offices in Worcester County, it is noted in the materials submitted that there are many other offices of financial institutions for banking options in Worcester County.  Accordingly, the review of the transaction’s impact on competition does not raise concerns which would preclude its approval.  

Public Convenience and Advantage

The Division has also considered the record of this application to determine whether public convenience and advantage will be promoted.  As a result of the proposed merger, the Petitioner does not expect to eliminate or reduce any of the products, services or delivery channels currently operated by either bank.  In fact, the Petitioner has confirmed that the continuing institution will be able to offer a broader array of products and services with more robust features than those currently available to Millbury Savings’ customers.  These products and services include “positive pay” commercial checking accounts; health savings accounts; merchant services; instant issue debit and ATM cards; credit cards; a more robust commercial online banking system with wire transfer and ACH origination capabilities; commercial account reconciliation services; and government banking products and services.  To the extent that the continuing institution does not provide a specific product or service, customers will have access to expanded products and services at the Petitioner’s affiliated banks. Millbury Savings’ customers will also receive access to 30 additional no-fee ATMs due to the existing Hometown, Easthampton Savings Bank, and Abington Bank ATM locations.  Finally, customers of the continuing institution will have the convenience of additional branch locations in Worcester.  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.  The Petitioner has addressed this requirement of the statute.  Capital investments associated with the merger will include new bank signage, telecommunications equipment and other improvements as may be necessary. With regard to employment, the continuing institution expects to retain all of the employees of Millbury Savings.  The continuing institution anticipates future growth which may create additional jobs and provide opportunities for career advancement for current Hometown employees as well as Millbury Savings’ employees who will be joining the organization.   As described above, the continuing institution will offer a broader array of products and services to Millbury Savings’ customers.  Accordingly, the Division has reviewed factors related to public convenience and advantage, as well as net new benefits, and has determined that they are consistent with approval of the Petitioner's application.

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 review for state-chartered banks includes examination by personnel of the Division.  A publicly available descriptive rating and evaluation by a federal bank regulatory agency will also be considered.  Hometown received a “Highly Satisfactory” rating in the most recent CRA performance evaluation conducted by the Division as of June 11, 2018.  Concurrently, the FDIC issued a “Satisfactory” rating in its most recent CRA performance evaluation as of June 11, 2018.  Millbury Savings received a “Satisfactory” rating at its most recent CRA performance evaluation, dated December 3, 2018, conducted jointly by the Division and the FDIC. 

With regard to the branch offices of the continuing institution, no branches of either Hometown or Millbury Savings will close as a result of the merger, and Hometown intends to establish and maintain Millbury Savings’ previously approved branch office in Worcester, as mentioned above.

Financial and Managerial Considerations

The Division also reviews and considers the financial and managerial aspects of the proposed transaction.  Materials provided indicate that the continuing institution will meet all regulatory capital requirements upon consummation of the proposed merger. 

In terms of the Board of Directors and management, materials submitted to the Division indicate that after the proposed merger, the Board of Directors will consist of the current members of the Board of Hometown together with six members of Millbury Savings’ current Board of Trustees.  Senior management of the continuing institution will consist of the current senior management of Hometown and two officers of Millbury Savings’ current senior management.  The current President and CEO of Millbury Savings will become President and CEO of Hometown Bank after the merger is consummated.  Accordingly, upon review, financial and managerial considerations support the application


Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, this Division has concluded that all such requirements have been met, and that the consummation of the proposed transaction would be in the public interest.  On the basis of these considerations, and subject to the conditions set forth below, approval is granted to merge Millbury Savings Bank with and into Hometown Bank under the charter, by-laws and name of Hometown Bank under the provisions of said clause (2) of section 7 of chapter 167H, and said section 4 of chapter 167I of the General Laws.  Upon consummation of the merger, the charter of Millbury Savings Bank will cease to exist, and all rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Millbury Savings Bank shall be vested in and assumed by the continuing institution.  Approval is also granted for the continuing institution to maintain each of the banking offices of Millbury Savings Bank as branch offices of the continuing institution, including the approved but unopened branch office in Worcester.  


The approvals granted herein are 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 167H, section 7, clause (2) and chapter 167I, section 4 has been returned for my endorsement thereon;


(2)                That the proposed merger shall not become effective until 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.


Signed by:

Mary L. Gallagher
Commissioner of Banks

October 3, 2019

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