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Decisions on Bank Applications

Untitled Document

The Monroe County Bank


RE: The Monroe County Bank Monroeville, Alabama

Application for Consent to Merge and to Establish One Branch


Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act ("FDI Act"), The Monroe County Bank, Monroeville, Alabama ("MCB"), an insured state nonmember bank with total resources of $93,472,000 and total deposits of $77,339,000 as of September 30, 1997, has filed an application for the Corporation's consent to merge, under its charter and title, with Peterman State Bank, Peterman, Alabama ("PSB"), an insured state nonmember bank with total resources of $18,745,000 and total deposits of $16,545,000, and to establish the main office of PSB as a branch of the resultant bank. Notice of the proposed transaction, in a form approved by the Corporation, has been published pursuant to the FDI Act.


Monroe County and the nearby town of Repton, Conecuh County, Alabama, have been identified as the relevant geographic market ("RGM"). Seven commercial banks operate 13 offices in the RGM. MCB's main office and branch and PSB's main office and branch are located within the RGM. Based on June 30, 1997 Summary of Deposits data for banks, MCB and PSB control 31.09 and 6.87 percent of RGM deposits, respectively. In contrast, MCB and PSB controlled 35.31 percent and 8.17 percent of RGM deposits, respectively, at June 30, 1996. The proposed transaction would increase MCB's share of RGM deposits to 37.96 percent and would result in a 427-point increase in the RGM's Herfindahl-Hirschman Index ("HHI") to a post-merger level of 2,294.

The Attorney General of the United States concluded that the proposed transaction would not have a significantly adverse effect on competition. The Federal Reserve Bank of Atlanta, based on deposits as of June 30, 1996, concluded that the proposed transaction would have significantly adverse competitive effects. The other federal regulatory authorities offered no comments. The State Banking Department of Alabama approved the proposed transaction on December 30, 1997.

The proposed transaction will increase concentration within the RGM. However, six banks operating out of 12 banking offices and four credit unions will remain within the RGM after consummation of the proposed transaction. Given the number and capacity of these institutions and the declining market share of MCB and PSB, 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

MCB is financially sound with solid capital, good asset quality, healthy earnings, 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 banks and four credit unions will remain within the RGM. MCB will expand banking services offered to PSB residents and maintain the same level of banking services throughout the remainder of the RGM. 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 24th day of February, 1998.


Robert E. Feldman
Executive Secretary