Vol. XXX No. 5

Bank Notes

May 2001 May 2001

May 1, 2001

Merger Completion

On March 31, PNC Advisors, NA, Boston, MA, merged with PNC Bank, NA, Pittsburgh, PA, under the charter and title of PNC Bank, NA. The transaction represents a merger between subsidiaries of PNC Financial Services Group, Inc., Pittsburgh, PA, neither of which had any deposits in New England as of June 30, 2000. As of the same date, PNC Financial Services Group, Inc., had total deposits of $10 million and ranked 396th among all commercial banking and thrift institutions in New England. (Internal Notice, 4/11/01)

On March 31, First Essex Bank, FSB, Lawrence, MA, converted from a federal savings bank to a state-chartered savings bank. The new title is First Essex Bank. (Internal Notice, 4/3/01)

On April 17, InsurBanc, Farmington, CT, a federally chartered savings bank, opened for business. Insurbanc, held by Peyton Street Independent Financial Services Corp, Alexandria, VA, will operate in Massachusetts, Connecticut, and New Jersey (IIAA Press Release, 3/15; Internal Notice, 4/23; SNL Bank , Thrift Weekly, 3/19/01)

On April 2, Stoneham Savings Bank, Stoneham, MA, opened a branch located at 2171 Main Street, Tewksbury, MA.

On April 18, The Guilford Savings Bank, Guilford, CT, opened a branch located at 61 North Main Street, Branford, CT. (Internal Notice, 4/2; 4/18/01)

On April 2, First Coastal Corp, Portland, ME, signed a definitive agreement to be acquired by Norway Bancorp, MHC, Norway, ME, in a $27 million transaction. Under terms of the agreement, Norway will pay $21 in cash for each share of First Coastal common stock held. First Coastal is the parent of Coastal Bank, Portland, ME. As of June 30, 2000, Norway Bancorp, MHC, had total deposits of $279.1 million and ranked tenth among all commercial banking and thrift institutions in Maine. As of the same date, First Coastal Corp had total deposits of $133 million and ranked 26th.

On April 27, Danvers Bancorp, Inc., Danvers, MA, signed a definitive agreement to buy Revere MHC, Revere, MA, and its units for approximately $20.1 million in cash. Danvers Bancorp, Inc., is the parent company of Danvers Savings Bank, Danvers, MA, and Revere MHC is the parent company of Revere Federal Savings , Loan Association, Revere, MA. Under terms of the agreement, the mutual holding company structure of Revere MHC will be eliminated. The public stockholders of RFS Bancorp, Revere, MA, a mid-tier holding company held by Revere MHC, will receive $22.75 in cash for each of their shares. The deal value is based on 885,000 shares outstanding.

As of June 30, 2000, Danvers Bancorp, Inc., had total deposits of $303.9 million and ranked 59th among all commercial banking and thrift institutions in Massachusetts. As of the same date, Revere MHC had total deposits of $83.2 million and ranked 162nd. (SNL Bank , Thrift Weekly, 4/9; 4/30/01)

On March 28, Salisbury Bancorp, Inc., Lakeville, CT, agreed to acquire the Canaan, CT, branch of People's Bank, Bridgeport, CT. The deal, subject to regulatory approval, is expected to close at mid-year 2001. Salisbury will pay a deposit premium of 12 percent, or $3.2 million, on approximately $27.5 million in deposits. In the transaction, Salisbury will acquire $23.5 million in cash, $130,000 in fixed assets, and $110,000 in loans,.

The People's branch will become a branch of Salisbury unit Salisbury Bank , Trust, Lakeville, CT. People's Bank is a subsidiary of People's Mutual Holdings, Bridgeport, CT. As of June 30, 2000, Salisbury Bancorp, Inc., had total deposits of $155.9 million and ranked 44th among all commercial banking and thrift institutions in Connecticut. As of the same date, People's Bank had total deposits of $7.5 billion and ranked third. (SNL Bank , Thrift Weekly, 4/2/01)

On April 19, Brookline Bancorp MHC, Brookline, MA, announced that it intends to sell online-only unit Lighthouse Bank, Waltham, MA, or to merge it into bricks-and-mortar unit Brookline Savings Bank, Brookline, MA. The company said the decision to pursue the sale of the unit had cost an additional $125,000 during first quarter 2001. Brookline said, "That decision was reached after determining the amount of additional operating losses Lighthouse would likely incur before achieving satisfactory profitability." (SNL Bank , Thrift Weekly, 4/23/01)

On April 2, Washington Mutual Inc., Seattle, WA ("WaMu"), signed a definitive agreement to acquire Fleet Mortgage Group Inc., Columbia, SC, from FleetBoston Financial Corp, Boston, MA, for approximately $660 million in cash, a premium of 10 percent, or $60 million. The move will increase the number of mortgages serviced by WaMu by 40 percent. Along with the recent acquisitions of Bank United Corp and the mortgage operations of PNC Financial Services Group, Inc., Pittsburgh, PA, the FleetBoston purchase will make WaMu the nation's second largest mortgage servicer, with a portfolio of approximately $451.5 billion.

On April 2, Independence Community Bank, Brooklyn, NY, a unit of Independence Community Bank Corp, Brooklyn, NY, signed a definitive agreement to acquire the assets and personnel of the mortgage banking finance group owned by Summit Bank, Hackensack, NJ, which has been a unit of FleetBoston since FleetBoston and Summit Bancorp, Princeton, NJ, merged on March 1. The mortgage banking group provides mortgage warehouse lines of credit to mortgage bankers in the New York, New Jersey, and Connecticut tri-state area. The transaction is expected to be completed in mid-April. (SNL Bank , Thrift Weekly, 4/9/01)

On April 18, Bank of New York Co., New York, NY, signed a definitive agreement to acquire the corporate trust business of U.S. Trust Corp, Greenwich, CT, a subsidiary of Charles Schwab Corp, San Francisco, CA. The transaction involves the transfer of bond trust and agency appointments representing more than $330 billion in outstanding debt securities. The deal, subject to regulatory approval, is expected to close in the second quarter, with conversion during the fourth quarter. (SNL Bank , Thrift Weekly, 4/23/01)

On April 6, Citibank International PLC, London, England, a subsidiary of Citigroup, Inc., New York, NY, acquired the U.K. credit card operations of People's Bank, Bridgeport, CT, for a cash consideration of $525.1 million. The People's U.K. unit has $425.2 million in managed consumer credit card receivables. Citigroup has acquired six credit card operations in the past three years. (SNL Bank , Thrift Weekly, 4/9/01)

On April 9, Webster Insurance, a subsidiary of Webster Financial Corp, Waterbury, CT, acquired insurance broker Wolff-Zackin , Associates and its sister company, Benefit Plans Design , Admin., both of Vernon, CT. Wolff-Zackin is primarily a P,C insurer, while Benefit Plans provides companies with pension and profit-sharing plans, individual retirement accounts, and 401(k) investment plans. Webster has acquired six insurance brokers since 1998. A company representative reported that the transaction makes Webster Insurance the largest Connecticut-based insurance agency. (SNL Bank , Thrift Weekly, 4/16;Webster Financial Corp Press Release, 4/9/01)

On March 30, the Office of Thrift Supervision (OTS) approved the application of CIGNA Corp, Philadelphia, PA, to charter a federal thrift, to be known as CIGNA Bank , Trust Co. and located in Hartford, CT. CIGNA Corp will then merge existing state-chartered trust subsidiary CG Trust Co., Chicago, IL, into CIGNA Bank , Trust. The charter only grants CIGNA Bank , Trust power to engage in trust activities. The bank will not be authorized to accept retail deposits or make loans.

On April 24, the OTS approved applications from Augusta Federal Savings Bank, Augusta, ME, and Gardiner Savings Institution, FSB, Gardiner, ME, to acquire a noncontrolling interest in Dirigo Reinsurance Co. Ltd., a service corporation to be organized under the laws of the British West Indies. Dirigo will reinsure private mortgage insurance on loans originated by Augusta, Gardiner, and other investors in Dirigo. (SNL Bank , Thrift Weekly, 4/16; 4/30/01)

On April 5, Federal Deposit Insurance Corp (FDIC) Chairwoman Donna Tanoue released the agency's report on recommendations to reform the deposit insurance system, following a comprehensive review.

The FDIC's first recommendation is that the Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF) be merged into a single fund. Before the SAIF was re-capitalized with a one-time assessment in 1996, SAIF members paid a higher premium than BIF members, encouraging institutions to seek ways to transfer deposits to the BIF.

The FDIC also recommended that the coverage level be indexed to inflation, using the Consumer Price Index (CPI). Inflation has effectively cut deposit insurance coverage almost in half since the last time that it was raised, in 1980.

The proposal incorporated three other recommendations, which together form a framework for pricing and funding deposit insurance. The intent of the proposals was to spread the cost of deposit insurance over the business cycle. (FDIC Press Release, 4/5; SNL Bank , Thrift Weekly, 4/9/01)

On April 12, the Federal Reserve Board of Governors (Fed) proposed an expansion of its prohibition against deposit-production offices, to include any branch of a bank controlled by an out-of-state holding company. The Fed issued the proposed rule as an amendment to its Regulation H, which governs membership of state banking institutions in the Federal Reserve System.

When Congress permitted interstate branching, it included a prohibition intended to prevent banks from using interstate branching to draw deposits out of a community without making reasonable attempts to invest the deposits in the community. Regulators typically use a loan-to-deposits test to measure the bank's commitment to the community.

Previously, the rule applied only to an interstate branch that was acquired or established by an out-of-state bank. The proposed change will subject all branches that are controlled by an out-of-state holding company, including a bank consisting only of a main office, to the loan-to-deposits test. Thus, the proposed rule applies to all branches of a bank when the bank and its controlling bank holding company have different home states. (SNL Bank , Thrift Weekly, 4/16/01)

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.