Decisions on Bank Applications
Bangor Savings Bank
FEDERAL DEPOSIT INSURANCE CORPORATION
RE: Bangor Savings Bank Bangor, Maine
Application for Consent to Purchase Certain Assets and Assume the Liability to Pay Deposits, and for Consent to Establish Four Branches
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act ("FDI Act"), Bangor Savings Bank ("BSB"), Bangor, Penobscot County, Maine, an insured mutual savings bank with total resources of $883,316,000 and total deposits of $658,626,000 as of March 31, 1998, has filed an application for the Corporation's consent to purchase certain assets of and to assume the liability to pay deposits made in the Dexter, Castine, Bucksport, Searsport, and Belfast, Maine, branches of Fleet Bank of Maine ("Fleet"), Portland, Cumberland County, Maine, and for consent to establish the Dexter, Castine, Bucksport, and Searsport, Maine, branches of Fleet as branches of BSB. Fleet is an insured state member bank with total resources of $2,149,645,000 and total deposits of $1,608,226,000 as of March 31, 1998. Fleet is wholly owned by Fleet Financial Group, Inc., Boston, Suffolk County, Massachusetts. Incident to the transaction, the branch located at Belfast, Maine, will be consolidated into the existing BSB office on Route 3, Belmont Avenue, Belfast, Maine. The offices are approximately 4,000 feet apart and are in the same immediate neighborhood. Neither the customers served by the branch, nor the nature of business conducted by the branch, will be adversely affected by the consolidation. Notice of the proposed transaction, in a form approved by the Corporation, has been published pursuant to the FDI Act.
For market definition purposes, these five branches are located in three relevant geographic markets ("RGMs"): the Bangor, Belfast, and Pittsfield markets. Competition will increase in the Pittsfield market because BSB is not presently operating in that market and Fleet will retain a presence. Should the transaction be consummated, BSB's market share will exceed 25 percent in both the Bangor (41.28 percent) and Belfast (46.98 percent) markets. Fleet will maintain a 14.92 percent share of the Bangor market, but is divesting its entire share of the Belfast market. Six commercial banks and two savings banks currently operate in the Bangor RGM, and three commercial banks and two savings banks operate in the Belfast RGM. The proposed transaction would result in a 94-point increase in the Herfindahl-Hirschman Index ("HHI") in the Bangor RGM and a 632 point increase in the Belfast RGM HHI to a post-merger levels of 2,432 and 3,253, respectively.
On July 23, 1998, the U.S. Department of Justice concluded that the proposed transaction would not have a significantly adverse effect on competition. The Federal Reserve Bank of Boston ("FRB"), based on deposits as of June 30, 1997, concluded that the proposed transaction could have significantly adverse competitive effects in the Bangor and Belfast RGMs. However, the FRB advised that it did not consider all economic factors that may be relevant to the competitive effects of the proposed transaction. The other federal regulatory authorities offered no comments. The Maine Bureau of Banking approved the proposed transaction effective June 26, 1998.
The proposed transaction will increase concentration within the RGM; however, there are other important factors that should be considered when assessing the competitive effect of the proposed transaction. The elevated pre- and post-merger PT-lIs are reflective of the general market conditions within the state of Maine. An analysis of market concentration revealed 13 of the 16 Maine counties, or 81.25 percent had an HHI above 1,800 as of June 30, 1997. Six commercial banks, two savings banks, and nine credit unions will continue to operate in the Bangor RGM after consummation of the proposed transaction. Two commercial banks, two savings banks, and one credit union will continue to operate in the Belfast RGM after this transaction. In addition, one commercial bank and one federal savings bank are in the process of establishing branches in the Belfast RGM . Given the number and capacity of these institutions, it is believed competition will not be significantly reduced within the RGM.
After giving consideration to the aforementioned factors, the Board of Directors is of the opinion that the proposed transaction will not substantially lessen competition, tend to create a monopoly, or in any other manner restrain trade or otherwise have an adverse competitive impact that would require disapproval under the Bank Merger Act.
Financial and Managerial Resources; Future Prospects
BSB is financially sound with adequate capital and liquidity, healthy earnings, strong asset quality, and strong management. Future prospects are favorable.
Convenience and Needs of the Community to be Served
The scope and convenience of banking services offered to the general public should not be significantly affected by the proposal. Six financially sound commercial banks, two savings banks, and nine credit unions will continue to operate in the Bangor RGM after consummation of the proposed transaction. Two financially sound commercial banks, two savings banks, and one credit union will continue to operate in the Belfast RGM after this transaction. BSB intends to continue to provide a broad range of services to the consumer and commercial customers now served by Fleet. There have been no protests to the proposed transaction from either the public or the banking community. A review of available information revealed no inconsistencies with the purposes of the Community Reinvestment Act. The resultant institution is expected to continue to meet the credit needs of its entire community, consistent with the safe and sound operation of the institution.
Upon consideration of all relevant material, the Board of Directors has concluded that the application should be and hereby is approved subject to the following conditions:
1. That the transaction shall not be consummated before the fifteenth calendar day following the date of this order or no later than six months after the date of this Order unless such period is extended for good cause by the Corporation;
2. That all necessary and final approvals be received from other regulatory authorities; and
3. That, until the proposed transaction becomes effective, the Corporation shall have the right to alter, suspend, or withdraw its approval should any interim development be deemed by the Board of Directors to warrant such action.
Dated at Washington, D.C., this 3rd day of August 1998.
BY ORDER OF THE BOARD OF DIRECTORS
James D. LaPierre
Deputy Executive Secretary