Merger Announcement

On December 16, Chittenden Corporation, Burlington, VT, signed a definitive agreement to acquire Vermont Financial Services, Brattleboro, VT. Under terms of the agreement, Chittenden will exchange 1.07 shares of its common stock for each share of Vermont Financial held. The merger between Chittenden and Vermont Financial Services would create an institution with $4.2 billion in assets, the largest bank holding company in Vermont. The transaction, which is subject to regulatory and shareholder approval, is expected to be completed in the second quarter of 1999. As of June 30, 1998, Chittenden Corporation, parent company of Chittenden Trust Company, Burlington, VT, Flagship Bank and Trust Company, Worcester, MA, and Bank of Western Massachusetts, Springfield, MA, had total deposits of $1.7 billion and ranked 15th among all commercial banking and thrift organizations in New England. As of the same date, Vermont Financial Services, parent company of Vermont National Bank, Brattleboro, VT, and United Bank, Conway, MA, had total deposits of $1.7 billion and ranked 16th. (American Bkr., 12/17; Boston Globe, 12/17; SNL Weekly BankFax, 12/21/98)

On December 5, Sandwich Co-operative Bank, Sandwich, MA, a subsidiary of Sandwich Bancorp, Inc., Sandwich, MA, merged with Compass Bank for Savings, a subsidiary of Seacoast Financial Services Corporation, New Bedford, MA. As of June 30, 1998, Seacoast Financial Services Corporation had total deposits of $1.0 billion and ranked 12th among all commercial banking and thrift organizations in Massachusetts. As of the same date, Sandwich Bancorp, Inc. had total deposits of $444.7 million and ranked 36th. On December 5, The Federal Savings Bank, Waltham, MA merged with USTrust, Boston, MA, under the charter and title of USTrust. As of June 30, 1998, Affiliated Community Bancorp, Waltham, MA, parent company of Federal Savings Bank, Lexington Savings Bank, Lexington, MA, and Middlesex Bank and Trust Company, Newton, MA, had total deposits of $732.9 million and ranked 18th among all commercial banking and thrift organizations in Massachusetts. As of the same date, UST Corporation, Boston, MA, parent company of USTrust Boston, and United States Trust Company, Boston, MA, had total deposits of $3.0 billion and ranked sixth. (Internal Notice, 12/7; SNL Weekly BankFax, 12/7/98)

On December 4, shareholders of Cape Cod Bank & Trust Company, Hyannis, MA approved the formation of a holding company to be named CCBT Bancorp. As of June 30, 1998, Cape Cod Bank & Trust Company had total deposits of $720.9 million and ranked 19th among all commercial banking and thrift organizations in Massachusetts. (SNL Weekly BankFax, 12/7/98)

On November 18, Plymouth Bancorp, Inc., Wareham, MA, was formed through the reorganization of Plymouth Savings Bank, Wareham, MA. As of June 30, 1998, Plymouth Savings Bank had total deposits of $661.4 million and ranked 21st among all commercial banking and thrift organizations in Massachusetts. On November 18, Danvers Bancorp, Inc., Danvers, MA, was formed through the reorganization of Danvers Savings Bank, Danvers, MA. As of June 30, 1998, Danvers Savings Bank had total deposits of $264.2 million and ranked 65th among all commercial banking and thrift organizations in Massachusetts. (Internal Weekly List, 11/20, 12/18/98)

On December 3, Kennebunk Savings Bank, Kennebunk, ME, signed a definitive agreement to acquire the Kennebunk, ME, branch of Coastal Bank, Westbrook, ME, a subsidiary of First Coastal Corporation, Westbrook, ME, for an undisclosed amount. The transaction, which is subject to regulatory approval, is expected to be completed in the second quarter of 1999. Separately, First Coastal Corporation sold its residential mortgage servicing portfolio to Centura Bank, Rocky Mount, NC, for an undisclosed price. As of June 30, 1998, Kennebunk Savings Bank had total deposits of $234.5 million and ranked 11th among all commercial banking and thrift organizations in Maine. As of the same date, First Coastal Corporation had total deposits of $139.1 million and ranked 25th. (American Bkr., 12/9; SNL Weekly BankFax, 12/7/98)

On December 11, State Street Corporation, Boston, MA, signed a definitive agreement to sell its Unclaimed Property Services Division to Affiliated Computer Services, Inc., Dallas, TX. The unclaimed property unit helps companies deal with financial assets that have not been used by their owners for some time. Such assets include savings accounts, unpaid wages, stocks, uncashed dividends, and paid-up life insurance policies. Terms of the acquisition were not disclosed. Affiliated Computer Services, Inc. is the second-largest U.S. nonbank operator of automated teller machines. (Boston Globe, 12/12; SNL Weekly BankFax, 12/14/98)

PNC Bank Corporation, Pittsburgh, PA, is selling its credit card business, which includes 3.3 million accounts, to MBNA Corporation, Wilmington, DE. PNC will get a 15 percent premium on its $2.9 billion of card receivables and two operations centers. The transaction is expected to close in the first quarter of 1999. (American Bkr. 12/28/98)

On December 21, Fleet Financial Group, Boston, MA completed its acquisition of Merrill Lynch Specialists, Inc., New York, NY, the New York Stock Exchange specialist firm owned by Merrill Lynch & Co., Inc. Fleet will merge the management, staff, and listings of Merrill Lynch Specialists with its unit JJC Specialist. JJC Specialist, after the integration of Merrill Lynch Specialist, will service 426 securities for 333 NYSE-listed companies. (SNL Weekly BankFax, 12/28/98)

On December 17, USTrust, Boston, MA agreed to buy Brewer & Lord, Norwell, MA. Brewer & Lord is one of the largest independent insurance firms in New England. Terms of the all-cash deal were not disclosed. The transaction, which is expected to close by June 1999, will offer opportunities for both parties to cross-sell products to each other's clients. (Boston Globe, 12/18/98 )

First Data Corporation, Hackensack, NJ, has won a seven-year contract to process credit, debit, and commercial cards for People's Bank, Bridgeport, CT. First Data will take over the bank's two million card accounts in April 2000. Terms of the deal were not disclosed. (American Bkr., 12/29/98)

Massachusetts Mutual Life Insurance Company, Springfield, MA, has applied to the Office of Thrift Supervision (OTS) to open a thrift, to be named Blue Chip Trust Company. The new thrift would offer only trust services. MassMutual is the sixth largest mutual life insurance company in the country, with $61 billion in assets and 2.7 million policy holders. (American Bkr., 12/28/98)

On December 1, the Office of Thrift Supervision (OTS) adopted new comprehensive guidance to aid savings associations in the management of their risk. The guidance, covering interest rate risk, investment securities, and use of financial derivatives, is consolidated into Thrift Bulletin 13a, which replaces seven existing OTS thrift bulletins. The OTS also replaced with a single rule three outmoded regulations on forward commitments, futures transactions, and financial options transactions. The new rule establishes general requirements applicable to all derivatives instruments and is designed to work with the bulletin, which provides the kind of specific guidance formerly contained in the regulations. (American Bkr., 12/3; SNL Weekly BankFax, 12/7/98)

On November 30, the Office of Thrift Supervision (OTS) adopted a revised formula to bring assessments on savings institutions under its supervision more in line with the actual cost of regulating them. The new formula reduces the degree to which some thrifts, in effect, subsidize the cost of regulating other thrifts. The new formula will become effective with the first semiannual assessment of 1999. (American Bkr., 12/1; SNL Weekly BankFax, 12/7/98)

On November 30, the Office of Thrift Supervision (OTS) updated a final rule to require thrifts to operate in a safe and sound manner and abide by regulations governing all operations, including consumer protection rules, when providing electronic services, including those provided via the Internet. The rule also requires federally and state-chartered institutions to notify the OTS 30 days prior to the establishment of a transactional Web site. OTS said its updated electronic operations final rule will help thrift institutions keep pace with rapidly changing banking technology to serve their customers better and be more competitive in the financial services marketplace. (American Bkr., 12/1; SNL Weekly BankFax, 12/7/98 )

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.