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Berkshire Hills Bancorp, Inc., Pittsfield, Massachusetts ("Berkshire" or the "Petitioner") has petitioned the Board of Bank Incorporation (the "Board") pursuant to the provisions of Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire in a multi-step transaction Factory Point Bancorp, Inc ("Factory Point Bancorp") and its subsidiary bank, The Factory Point National Bank of Manchester Center, ("Factory Point Bank"), each of which is located in Manchester Center,Vermont. In the Commonwealth, Berkshire is the holding company for Berkshire Bank, Pittsfield, Massachusetts. The final step in this multi-step transaction will result in Factory Point Bank merging with and into Berkshire Bank. That merger transaction is an application pending before the Commonwealth's Division of Banks.
Notice of the application was published and posted as directed by the Board, thereby affording opportunity for interested parties to submit comments. Other standard procedures informing the public of this matter before the Board were implemented. The Board held a public hearing on the petition on August 22, 2007. At the hearing, testimony was presented by representatives of Berkshire and Factory Point Bancorp who also responded to questions from members of the Board. The public comment period on the application ended August 30, 2007. The Board received no additional comments.
Petitioner is a holding company headquartered in Pittsfield, Massachusetts. Berkshire Bank, Petitioner's sole banking subsidiary, was chartered as a mutual savings bank in 1846. It reorganized into the mutual holding company form of organization in 1996. The mutual holding company converted to a stock holding company in June of 2000. As of March 31, 2007, Berkshire Bank had total consolidated assets of approximately $ 2.2 billion. Berkshire Bank operates approximately 30 branch offices serving communities in Western Massachusetts and Eastern New York. Since Berkshire Bank's initial entrance into New York in 2004, it has opened several other branches in the northeastern area of that state. Through its banking offices, Berkshire Bank offers a range of financial products and services for consumers and business. It also provides trust and investment management services as well as financial planning services. Berkshire Bank has a number of subsidiaries including subsidiaries which are engaged in financial planning and securities. Additionally, Petitioner owns directly or indirectly subsidiaries engaged in insurance. Berkshire Bank's deposits are insured to allowable limits by the FDIC and deposits in excess of those are insured by the DIF.
Factory Point Bancorp is a holding company headquartered in Manchester Center, Vermont. Factory Point Bancorp's sole banking subsidiary is Factory Point Bank. As of March 31, 2007, Factory Point Bank had total consolidated assets of approximately $339 million. Factory Point Bank operates 7 full service community banking offices in the Vermont towns of Arlington, Dorset, Ludlow, Manchester and Rutland. Factory Point Bank's primary lines of business include residential real estate lending and small business loans, as well as a variety of consumer loan and deposit services. Factory Point Bank also offers trust and investment services in the markets it serves. Factory Point Bank's deposits are insured to allowable limits by the FDIC.
The Board has reviewed the application and oral testimony received at the public hearing. That review focused on the statutory and administrative criteria 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") of the subsidiary banks of the parties involved in the transaction. The additional statutory requirements set out in sections 2 and 4 of said chapter 167A were also significant factors in the Board's deliberations on the matter before it. All such requirements are specifically addressed in the record of this transaction.
One such statutory provision requires the Board to have received notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory arrangements have been made by Berkshire consistent with statute and the MHPF's various affordable housing loan programs. The Board received notice from the MHPF that arrangements satisfactory to it had been made for this transaction in a letter dated August 3, 2007.
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 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 instead of by variously grouped markets. The Board's review recognizes that there is no overlap in the banking office networks of Berkshire Bank with Factory Point Bank or the existing operations of the Petitioner. The Board's review also recognizes that the transaction will occur outside of the Commonwealth. For that reason and other factors, the Board finds that competition among banking institutions will not be unreasonably affected.
The Board has also considered the record of this application to determine whether public convenience and advantage will be promoted by this transaction. The proposed acquisition, the Petitioner states, will permit it to offer several new products and services, including insurance products to customers of Factory Point Bank, certain indirect consumer loans, as well as cash management and other related services. Factory Point Bank's customers as well as customers of Berkshire Bank will also benefit from the larger lending limit available through the combined institution. Customers of both banks will benefit through a larger network of branches and ATMs which cover the continuing bank's service area in Western Massachusetts, Eastern New York and if this application is approved, Southern Vermont. Noteworthy is the fact that no branches of either bank are anticipated to be closed as a result of the merger. The Petitioner also emphasized its increase in jobs over the last two years. It recognized some job loss resulting from the transaction, but indicated its continued growth will result in job growth in Massachusetts since its headquarters will remain in Pittsfield. Additionally, Petitioner states that the larger combined institution will reduce its vulnerability to local economic cycles. Finally, Petitioner states that the larger combined institution will allow for economies of scale in such areas as operations and technology, which should result in greater efficiencies and superior service. Based on the foregoing, and on the entire record of this matter, the Board finds that the public convenience and advantage will be promoted by the proposed transaction, and that the criteria for net new benefits has been established.
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 Massachusetts state-chartered bank includes examination by personnel of the Division of Banks as well as analysis of concerns received from the bank's community and its response to those concerns fairly raised. The public CRA rating for the subsidiary banks of Berkshire and Factory Point Bancorp was discussed at the public hearing. Both Berkshire Bank and Factory Point Bank have received "Outstanding" ratings at their last examinations of performance under CRA.
The financial aspects and tax consequences from the structure of the transaction were also considered by the Board. Plans for integration of the systems of the subsidiary banks involved in the transaction were the subject of questions by the Board at the public hearing. Management factors reviewed were also found supportive of approval. Additionally, all other requirements of statute relating to a bank holding company transaction have been met.
The application and testimony presented at the public hearing have established the record on this petition, which has been reviewed consistent with statutory provisions and the 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 and that competition among banking institutions will not be unreasonably affected and that the records of performance under CRA 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 the findings expressed herein and pursuant to statute, the Board hereby approves the application and authorizes Berkshire to acquire Factory Point Bancorp and its subsidiary bank, Factory Point Bank, provided that all such action is completed within one year of the date of this Decision.
September 19, 2007
Steven L. Antonakes
Commissioner of Banks
Commissioner of Revenue
Timothy P. Cahill
Treasurer and Receiver-General