Vol. XXIX No. 7

Bank Notes

July 2000 July 2000

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July 1, 2000

FleetBoston Branch Sales

On June 17, Sovereign Bank, Wyomissing, PA, acquired 80 branches in eastern Massachusetts and two branches in Rhode Island, with approximately $4.0 billion in deposits, from Fleet National Bank, Providence, RI. The converted branches opened for business on June 19. The transfer is the second phase of Sovereign's acquisition of approximately 280 branches from Fleet in a deal originally announced in September. On March 25, Sovereign acquired 90 branches in Connecticut, Massachusetts, and Rhode Island. The final phase of the transaction, which will occur on July 21, will include the purchase of 109 branches in central Massachusetts and New Hampshire. As of June 30, 1999, Fleet Financial Group, Boston, MA, had total deposits of $42.2 billion and ranked first among all commercial banking and thrift institutions in New England. As of the same date, BankBoston Corporation, Boston, MA, had total deposits of $34.6 billion and ranked second. On June 24, Eastern Bank, Lynn, MA, purchased four Massachusetts branches from Fleet National Bank, Providence, RI. As of June 30, 1999, Eastern Bank Corporation, Lynn, MA, the parent company of Eastern Bank, had total deposits of $2.3 billion and ranked fourteenth among all commercial banking and thrift institutions in New England. On June 24, Cape Cod Bank & Trust Company, N.A., Hyannis, MA, purchased two branches from Fleet National Bank, Providence, RI. As of June 30, 1999, CCBT Financial Companies, Inc., Hyannis, MA, the parent company of Cape Cod Bank & Trust Company, N.A., had total deposits of $740.6 million and ranked 21st among all commercial banking and thrift institutions in Massachusetts. (American Bkr., 6/20; Internal Notice, 6/19; 6/26; SNL Weekly BankFax, 6/19; SNL Weekly BankFax, 6/26/00)

On May 31, NewMil Bancorp Inc., New Milford, CT, signed a definitive agreement to acquire Nutmeg Federal S&LA, Danbury, CT. As of June 30, 1999, NewMil Bancorp Inc. had total deposits of $303 million and ranked 31st among all commercial banking and thrift institutions in Connecticut. As of the same date, Nutmeg Federal S&LA had total deposits of $88.5 million and ranked 65th. The transaction, which is subject to regulatory and shareholder approval, is expected to be completed in the third or fourth quarter. (SNL Weekly BankFax, 6/5/00)

On June 21, shareholders of MECH Financial Inc., Hartford, CT, approved the thrift's pending acquisition by Webster Financial Corporation, Waterbury, CT. The transaction, announced on December 2, 1999, also received approval from the OTS and the Connecticut Department of Banking. The deal is expected to be completed by the end of June. As of June 30, 1999, Webster Financial Corporation had total deposits of $5.7 billion and ranked third among all commercial banking and thrift institutions in Connecticut. As of the same date, MECH Financial Inc. had total deposits of $694.6 million and ranked 13th. (SNL Weekly BankFax, 6/26/00)

On June 24, Granite Savings Bank & Trust Company, Barre, VT, merged with The Howard Bank, National Association. The institutions are subsidiaries of Banknorth Group, Inc., Portland, ME, a company created by the acquisition of Banknorth Group, Inc., Burlington, VT, by Peoples Heritage Financial Group, Portland, ME . As of June 30, 1999, Peoples Heritage Financial Group, Portland, ME, had total deposits of $8.4 billion and ranked fifth among all commercial banking and thrift institutions in New England. As of the same date, Banknorth Group Inc., Burlington, VT, had total deposits of $2.6 billion and ranked 13th. On June 24, Webster Bank, Waterbury, CT, acquired Mechanics Savings Bank, Hartford, CT. (Internal Notice, 6/26/00)

On June 1, Charles Schwab Corp. completed its acquisition of U.S. Trust Corp., New York, NY. The proposed union of brokerage and specialty banking is noteworthy from a regulatory perspective, in that it represents the first major transaction to take advantage of the Gramm-Leach-Bliley Act, the financial modernization legislation passed in 1999. (SNL Weekly BankFax, 5/1; 5/8; 6/5/00)

On June 1, Peoples Heritage Savings Bank, Portland, ME, a subsidiary of Banknorth Group Inc., Portland, ME, converted from a state chartered savings bank to a nationally chartered bank. The new title is Peoples Heritage Bank, National Association. On June 19, Summit Bank, Medway, MA, changed its title to Strata Bank. On June 24, First Vermont Bank & Trust Company, Brattleboro, VT, a state-chartered bank, converted to a nationally chartered bank. On June 24, Franklin Lamoille Bank, St. Albans, VT, a state-chartered bank, converted to a nationally chartered bank. (Internal Notice, 6/1; 6/19; 6/26/00)

On June 14, North Fork Bancorporation, Inc., Melville, NY, received Office of the Comptroller of the Currency (OCC) approval to convert its subsidiary thrift, Superior Savings of New England, Branford, CT, to a national bank. The conversion is expected to be completed by July 3. (SNL Weekly BankFax, 6/19/00)

On June 19, Banknorth Group Inc., Portland, ME, signed a definitive agreement to acquire Palmer Goodell Insurance Agency Inc., Springfield, MA, for an undisclosed amount. The insurer, which has annual revenues of more than $175 million, specializes in employee payroll deduction programs and disability management services for schools and nonprofit groups. On May 10, Peoples Heritage Financial Group, Portland, ME, completed its acquisition of Banknorth Group Inc., Burlington, VT. (Boston Globe, 6/20; SNL Weekly BankFax, 6/26/00)

On June 7, PNC Mortgage, Pittsburgh, PA, a unit of PNC Financial Services Group, Pittsburgh, PA, agreed to acquire the servicing rights to more than 53,000 fixed-rate residential home loans from Fleet Mortgage Corp., Columbia, SC, a unit of FleetBoston Financial Corporation, Boston, MA, for an undisclosed amount. The transfer of rights is expected to be completed in October. (Boston Globe, 6/8/00; SNL Weekly BankFax, 6/12/00)

On June 8, Troy Financial Corp., Troy, NY, agreed to acquire Catskill Financial Corp., Catskill, NY, in a $90 million cash transaction. Troy Financial is the parent company of Troy Savings Bank, Troy, NY, while Catskill Financial is the parent company of Catskill Savings Bank, Catskill, NY. The merger will create a bank with 21 branches in upstate New York. The transaction, which is subject to regulatory and shareholder approval, is expected to be completed by the end of 2000. (American Bkr., 6/9; NY Times, 6/9; SNL Weekly BankFax, 6/12/00)

On June 6, TrustCo Bank Corp. Of NY, Schenectady, NY, received OTS approval to acquire Landmark Financial Corp., Canajoharie, NY. The transaction, which is subject to shareholder approval, is expected to be completed in the third quarter. (SNL Weekly BankFax, 6/12/00)

On May 30, the OCC warned national bank CEOs of the potential dangers in using computer modeling programs to evaluate risk. The regulator told banks in a guidance letter that it had observed several instances where banks relied on the erroneous results of the models "with serious consequences for their banks' reputations and profitability." The guidance focused primarily on the general concept of risk modeling with computers and how to establish risk model validation policies. The bulletin outlined six basic expectations for these policies when banks are undergoing supervisory examinations, including that results be tested against the actual outcomes over the life of a model's use, that model validation be independent from model construction, and that the data entered into the model be regularly audited. (SNL Weekly BankFax, 6/5/00)

On June 22, the FDIC announced that it has raised deposit insurance payments for 318 banks and thrifts, 273 of whom had not been charged in the past for insurance. The regulator also lowered or eliminated payments for 201 institutions. FDIC Chairman Donna Tanoue in March launched a high-profile campaign to reform deposit insurance, and said in a speech last month that banks and thrifts with risky practices have not been paying their fair share of premiums. (American Bkr., 6/22; SNL Weekly BankFax, 6/26/00)

On June 21, Federal Reserve Board of Governors (Fed) Chairman Alan Greenspan and Treasury Secretary Lawrence Summers both indicated, in response to unrelated questioning, that they oppose a proposal to increase the level of federal deposit insurance. Representative Marge Roukema, R-NJ, has introduced legislation in the house that would double the deposit insurance limit to $200,000 and index future increases to inflation. Greenspan called the proposal a "major policy mistake" that would result in "increased subsidies to upper-income individuals." (American Bkr., 6/22; SNL Weekly BankFax, 6/26/00)

Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.