Vol. XXVI No. 25

Bank Notes

December 1997 December 1997

December 1, 1997

Merger Announcement

First Union Corporation, Charlotte, NC has entered into a definitive agreement to acquire CoreStates Financial Corporation, Philadelphia, PA for approximately $16.1 billion. The transaction, which is the biggest U.S. bank merger to date, is subject to shareholder and regulatory approvals. As of June 30, 1997, First Union Bank of Connecticut, Stamford, CT, the only New England-based subsidiary of First Union Corporation, had total deposits of $4.2 billion and ranked seventh among all commercial banking and thrift organizations in New England. (American Bkr., 11/19, 11/20; Boston Globe, 11/19; N.Y. Times, 11/19; SNL Weekly BankFax, 11/24/97)

On October 31, BankBoston, National Association, Boston, MA merged with Pacific National Bank of Nantucket, Nantucket, MA under the charter and title of BankBoston, National Association. As of June 30, 1997, BankBoston Corporation, Boston, MA, parent company of BankBoston, National Association, had total deposits of $25.7 billion and ranked first among all commercial banking and thrift organizations in Massachusetts. As of the same date, Pacific National Corporation, Nantucket, MA, parent company of Pacific National Bank, had total deposits of $96.0 million and ranked 146th.

On November 1, First New London Savings , Loan Association, New London, CT merged with Liberty Bank, Middletown, CT under the charter and title of Liberty Bank. As of June 30, 1997, Liberty Bank had total deposits of $1.2 billion and ranked tenth among all commercial banking and thrift organizations in Connecticut. As of the same date, First New London Savings , Loan Association had total deposits of $26.0 million and ranked 84th.

On November 1, Primary Bank, Peterborough, NH merged with Granite Bank, Keene, NH under the charter and title of Granite Bank. As of June 30, 1997, Granite State Bankshares, Granite, NH, the parent company of Granite Bank, had total deposits of $330.0 million and ranked seventh among all commercial banking and thrift organizations in New Hampshire. As of the same date, Primary Bank had total deposits of $312.1 million and ranked eighth. (Internal Notice, 11/3, 11/5; SNL Weekly BankFax, 11/3, 11/10/97)

People's Bank, Bridgeport, CT has agreed to acquire Olson Mobeck , Associates Inc., Rocky Hill, CT, an investment management company. The transaction is expected to be completed in the first quarter of 1998. As of June 30, 1997, People's Mutual Holdings, Bridgeport, CT, parent company of People's Bank, had total deposits of $5.6 billion and ranked second among all commercial banking and thrift organizations in Connecticut. (SNL Weekly BankFax, 11/10/97)

Brookline Savings Bank, Brookline, MA has announced that it will form a bank holding company, Brookline Bancorp, and Brookline Savings Bank will become a wholly-owned subsidiary of the newly-formed holding company. The reorganization also involves the formation of a mutual holding company, entitled Brookline Bancorp MHC, that will own 53 percent of Brookline Bancorp. The transaction is subject to shareholder and regulatory approvals. As of June 30, 1997, Brookline Savings Bank had total deposits of $487.2 million and ranked 30th among all commercial banking and thrift organizations in Massachusetts. (SNL Weekly BankFax, 11/24/97)

State Street Global Advisors, Boston, MA, a subsidiary of State Street Corporation, Boston, MA, has entered into a definitive agreement to acquire a majority interest in Advanced Investment Technology, Clearwater, FL. Advanced Investment Technology is a developer of investment strategies based on artificial intelligence techniques. As of June 30, 1997, State Street Corporation had total deposits of $11.1 billion and ranked fourth among all commercial banking and thrift organizations in New England. (SNL Weekly BankFax, 11/3/97)

Boston Private Investment Management, Boston, MA, a subsidiary of Boston Private Bancorp, Boston, MA, has completed its acquisition of Westfield Capital Management, Boston, MA, an investment management company. The resulting company will retain the Westfield Capital name and will operate as an independent subsidiary. As of June 30, 1997, Boston Private Bancorp, parent company of Boston Private Bank and Trust Company, Boston, MA, had total deposits of $197.8 million and ranked 84th among all commercial banking and thrift organizations in Massachusetts. (SNL Weekly BankFax, 11/10/97)

Chevy Chase Bank FSB, Chevy Chase, MD has acquired the credit card portfolio of Cape Cod Bank and Trust Company, Hyannis, MA. Cape Cod will continue to offer credit cards to customers through a partnership agreement. As of June 30, 1997, Cape Cod Bank and Trust Company had total deposits of $678.5 million and ranked 17th among all commercial banking and thrift organizations in Massachusetts. (SNL Weekly BankFax, 11/3/97)

BankBoston Corporation, Boston, MA stated that it would close 12 additional branches in Massachusetts and New Hampshire as part of an extensive examination of its retail banking operations. Last month, BankBoston announced similar closings in those states. In Massachusetts, branches in Acton, Beverly, East Milton, Framingham, Greenfield, North Attleborough, Quincy, Stoughton, Taunton, and Westport, with combined deposits of approximately $341.6 million, will be closed. In New Hampshire, offices in Derry and Nashua, with deposits of approximately $17.7 million, will be closed. The closings will occur in February 1998. (Boston Globe, 11/22; SNL Weekly BankFax, 11/24/97)

The Federal Reserve Board of Governors (Fed) has changed the review process for "shell" bank holding companies. Shell companies are defined as those that do not engage in significant nonbank activities, hold assets of less than $1 billion, and have insignificant outstanding debt. Under the new rules, examinations of shell companies will be off-site, unless the company is having significant problems. The rule will take effect November 30. (American Bkr., 11/7/97)

The Federal Deposit Insurance Corporation (FDIC) voted to keep bank and thrift deposit insurance premiums unchanged in the first half of 1998. The rates range from $100 of insured deposits, depending on the amount of risk an institution poses. The Bank Insurance Fund and Savings Association Insurance Fund have both reported strong earnings in 1997. Ninety-five percent of banks and ninety percent of thrifts are in the lowest risk category and will continue to pay no premiums. (American Bkr., 11/13; SNL Weekly BankFax, 11/17/97)

The Federal Reserve Board of Governors (Fed) has proposed a plan to assist banks in meeting reserve requirements and reduce the volatility of short-term interest rates. Under the new plan, banks would use 17-day-old deposit levels, instead of current figures, to compute their required reserves. The plan aims to decrease the excess overnight demand by allowing banks to know their reserve requirements at least two weeks in advance. If approved, the proposal would take effect on July 1998 and apply to 6,100 banking institutions. Banks and thrifts with less than $75 million would be exempted. The proposal is expected to be published shortly in the Federal Register; comments will be due 60 days later. (SNL Weekly BankFax, 11/10/97)

The Office of Thrift Supervision (OTS) has reduced the amount of cash that savings associations are required to keep on hand. The new rule requires liquid assets to be four percent of deposits and borrowing with less than a one-year maturity. Before the change, the requirement was five percent. (American Bkr., 11/25/97)

The Office of the Comptroller of the Currency (OCC) issued new risk-based exam guidelines for national banks that securitize loans. The new handbook breaks down the risks posed by asset securitization into six categories and suggest how banks should manage these risks. In addition, the handbook includes a guide for banks that want to securitize assets for the first time. (American Bkr., 11/13/97)

The Federal Reserve Board of Governors (Fed) has eased the disclosure requirements for adjustable rate mortgages. Under the new rule, creditors must notify borrowers that their periodic payment may substantially change. They must also disclose the maximum interest rate and payment based on a $10,000 loan. Previously, banks were required to provide a 15-year historical example of how changes in interest rates would have affected payments on a $10,000 loan. The revisions to Truth-in-Lending took effect November 21, but compliance is optional until December 22. (American Bkr., 11/25/97)

The Office of the Comptroller of the Currency (OCC) has taken steps to make its assessment schedule more equitable and ensure that fees better reflect supervision costs. The agency proposed a rule which would make banks who receive poor CAMELS ratings pay a 25% assessment surcharge. The proposal would reward banks in good standing who subsidize supervision they don't need. The agency also finalized two proposals that would match assessment revenue more closely with OCC supervisory expenses. The rule took effect October 21. (SNL Weekly BankFax, 10/27/97)

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.