Legal and Procedural Requirements
Notice of Bridgewater Savings’ application was posted and published as directed by the Division thereby affording opportunity for interested parties to submit comments. Both before and during the Division’s comment period, several comments were received from Mansfield Co-op depositors. The comments raised concerns about the sufficiency of the notice provided to Mansfield’s depositors for the special meeting to vote on the Merger. The Division considered the issues raised and requested additional materials from Mansfield Co-op. The Division determined that Mansfield Co-op followed its by-laws and applicable law with regard to the notice to depositors of the special meeting. The Division reviewed the application and supplementary materials submitted by Bridgewater Savings in accordance with applicable law, including 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,” will be promoted by approval of the proposed transaction. The Division also considered both banks’ records of performance under the Community Reinvestment Act (CRA) as well as financial and managerial factors.
In reviewing the proposed transaction, the Division must receive notice that satisfactory arrangements have been made with the excess deposit insurer of each bank. The Co-operative Central Bank confirmed by letter dated January 7, 2020 that satisfactory arrangements have been made relative to the Merger. The Depositors Insurance Fund confirmed by letter dated February 7, 2020 that satisfactory arrangements have been made with it relative to the Merger.
Bridgewater Savings is a Massachusetts-chartered savings bank and is a wholly-owned subsidiary of Bridgewater Financial, MHC. In addition to its main office in Raynham, Massachusetts, Bridgewater Savings operates seven banking offices located in Plymouth County and Bristol County, Massachusetts. As of December 31, 2019, Bridgewater Savings had consolidated assets of approximately $632 million and total deposits of approximately $543 million. Bridgewater Savings’ deposits are insured up to allowable limits by the Federal Deposit Insurance Corporation (FDIC). Deposits in excess of the FDIC limits are insured by the Depositors Insurance Fund.
Mansfield Co-op is a Massachusetts-chartered cooperative bank with its main office located in Mansfield, Massachusetts. Mansfield Co-op has three full-service branches located in Norton, Plainville and West Bridgewater, Massachusetts. As of December 31, 2019, Bridgewater Savings had consolidated assets of approximately $519 million and total deposits of approximately $424 million. The deposits of Mansfield Co-op are insured up to allowable limits by the FDIC. Deposits in excess of the FDIC limits at the time of application were insured by the Co-operative Central Bank. The Co-operative Central Bank merged with and into the Depositors Insurance Fund effective March 17, 2020.
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 the federal banking regulators 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 the affected market into a single value. In this case, the HHI analysis demonstrates that consummation of the transaction will not result in an undue concentration of banking resources. In addition to any federal HHI analysis, the Division also 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 Application states that the Merger will not affect any of the communities in which the two banks do business in a negative way since the Continuing Institution is maintaining all of the banking offices currently operated by Bridgewater Savings and Mansfield Co-op. Also, the significant presence of other banks, credit unions, and non-depository lenders in the relevant markets is a further indication that the proposed transaction will not result in an undue concentration of banking resources in the communities to be served by the Continuing Institution. Accordingly, the Division’s analysis of the competitive impact of this transaction does not raise concerns that would preclude its approval.
Public Convenience and Advantage
In reviewing the application, the Division must determine whether public convenience and advantage will be promoted by the proposed transaction. Bridgewater Savings provided information to illustrate that the Merger will help the banking public. The application materials indicate that the customers of Bridgewater Savings and Mansfield Co-op will both benefit from an expanded banking network, as the Continuing Institution will have 12 locations throughout Plymouth, Bristol, and Norfolk Counties. The application materials further state that the Merger would increase the financial strength, marketing visibility, capacity, and prospects of the Continuing Institution. As a result of its increased asset size, the Continuing Institution will be able to compete more effectively against larger financial institutions.
In determining whether to approve a proposed transaction, the Division is required to consider a showing of “net new benefits” related to the transaction. That term, as set forth in Massachusetts General Laws chapter 167I, section 4, includes initial capital investments, job creation plans, consumer and business services, commitments to maintain and open branch offices, and such other factors that the Division may deem necessary. The application materials provide that all of the banking offices of Bridgewater Savings and Mansfield Co-op will be retained as banking offices of the Continuing Institution. With regard to employment, the plan is to retain all employees of Bridgewater Savings and Mansfield Co-op in their current or comparable positions. The Continuing Institution intends to make initial capital investments in signage and business equipment, including networks, computer systems and telephone systems in connection with the Merger. Furthermore, the total amount of these initial capital investments is estimated at $825,000. Other improvements to facilities and equipment may occur over time.
With more complete integration of Bridgewater Savings’ and Mansfield Co-op’s respective systems, the Continuing Institution will operate more efficiently and better utilize the capital and liquidity sources currently available. This operational efficiency will allow the Continuing Institution to compete more effectively against larger national and regional competitors. As a result, the Merger will increase the financial strength, resources and capacity of the Continuing Institution, which will help meet the convenience and needs of the community. There is not expected to be any elimination of any of the types of products or services currently offered by Bridgewater Savings. The Continuing Institution expects to offer the same types of products and services currently offered by Mansfield Co-op, which, in some cases, will be enhanced as a result of selecting the better option of a particular product or service that is offered by each bank.
Related to the issue of public convenience and advantage is the record of CRA performance by the banks that are parties to this transaction. Such review for Massachusetts-chartered banks includes examination by personnel of the Division. A publicly available descriptive rating and evaluation by a federal bank regulatory agency may also be considered. Bridgewater Savings received a “Satisfactory” rating in its most recent CRA performance evaluations conducted concurrently with the Division and the Federal Reserve Bank of Boston, both as of May 1, 2017. Mansfield Co-op also received a “Satisfactory” rating in its most recent CRA performance evaluations conducted concurrently by the Division and the Federal Reserve Bank of Boston, both as of February 26, 2018. The Division’s consideration of the CRA performances of Bridgewater Savings and Mansfield Co-op, respectively, also supports the approval of the proposed transaction.
Financial and Managerial Considerations
The Division also considered the financial and managerial aspects of the proposed transaction. As noted above, Bridgewater Savings is a wholly-owned subsidiary of Bridgewater Financial, a Massachusetts mutual holding company, and Mansfield Co-op is a Massachusetts chartered co-operative bank; therefore, no additional financing will be necessary in order to complete the Merger. The materials provided indicate that upon consummation of the Merger, the Continuing Institution will meet all regulatory capital requirements.
According to the application materials, the President and Chief Executive Officer (CEO) of Bridgewater Savings will serve as the CEO of the Continuing Institution. The President and CEO of Mansfield Co-op will serve as the President of the Continuing Institution. All other individuals serving as an officer of Bridgewater Savings and Mansfield Co-op immediately prior to the Merger will continue to be employed at the Continuing Institution with such titles and responsibilities as the CEO and President determine. Two of the 12 current directors of Bridgewater will resign from the board of directors of Bridgewater immediately prior to the Consolidation. The remaining ten directors of Bridgewater will serve alongside the ten current directors of Mansfield Co-op as directors of the Continuing Institution. Accordingly, upon the Division’s review, the financial and managerial considerations support approval of the proposed transaction.
Upon review of the complete record of the application with reference to the relevant statutory and regulatory requirements, the Division concludes that all such requirements have been met, and that consummation of the proposed transaction is in the public interest. On the basis of these considerations, and subject to the conditions set forth below, approval is granted for Mansfield Co-op to merge with and into Bridgewater Savings under the charter and by-laws of Bridgewater Savings and name of “Bluestone Bank” pursuant to section 4 of chapter 167I of the General Laws. Upon consummation of the merger, the charter of Mansfield Co-op will cease to exist, and all rights, privileges, powers, franchises, properties, assets, liabilities, and obligations of Mansfield Co-op shall be vested in and assumed by the Continuing Institution. Approval is also granted for the Continuing Institution to maintain the banking offices of Mansfield Co-op as branch offices.
The approvals granted herein are subject to the following conditions:
- 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 167I, section 4 has been returned with my endorsement thereon;
- That the proposed merger shall not become effective unless the Articles of Merger with my endorsement thereon are filed with the Secretary of State; and
- That the proposed merger shall be consummated within one year of the date of this Decision.
Mary L. Gallagher
Commissioner of Banks
April 22, 2020