Merger Completion Effective July 26, 2002, Banknorth Group Inc, Portland, ME, completed its acquisition of Ipswich Bankshares, Ipswich, MA. Banknorth Group reported July 18 that it had received all necessary regulatory approval to proceed with the acquisition. Shareholders of Ipswich Bankshares previously approved the sale on June 27. Banknorth Group paid approximately $41.3 million in cash and stock to acquire Ipswich's seven branches. As of June 30, 2001, Banknorth Group had total deposits of $3.1 billion and ranked sixth among all commercial banking and thrift institutions in Massachusetts. As of the same date, Ipswich Bancshares had total deposits of $247.1 million and ranked 81st. (SNL Bank , Thrift Weekly, 7/1/02; 7/22/02; 7/29/02)

Bank Closing Hudson United was to pay $17.3 million for the right to receive the insured deposits and certain other assets. The bank has a 30-day option to return the assets, which are valued at approximately $30.6 million. As of June 30, 2001, Hudson United had total deposits of $1.5 billion and ranked ninth among all commercial banking and thrift institutions in Connecticut. As of the same date, CBC had total deposits of $123 million and ranked 55th. The closure marks the seventh failure of an FDIC-insured institution in 2002. (FDIC Press Release, 6/26/02; 6/28/02; SNL Bank , Thrift Weekly, 7/1/02)

Branch Openings Effective at the opening of business on June 3, Medford Co-operative Bank, Medford, MA, opened a branch located at 164 Great Road, Bedford, MA. On June 17, Fleet National Bank, Providence, RI, opened a branch at 684 Fellsway Road, Medford, MA. On July 2, Farmington Savings Bank, Farmington, CT, opened a limited service branch at 88 Swamp Road, Farmington, CT. On July 15, Compass Bank for Savings, New Bedford, MA, opened a branch located at 39 Home Depot Drive, Plymouth, MA. (Internal Notice, 7/16/02; 7/29/02)

Branch Address Change On July 29, Quincy Municipal Credit Union, Quincy, MA, relocated from 380 Washington Street to 100 Quincy Avenue, Quincy, MA. (Internal Notice, 7/29/02)

Merger Approved On July 25, 2002, Banknorth Group Inc, Portland, ME, received approval from the State of Connecticut Department of Banking to acquire Bancorp Connecticut Inc, Southington, CT. As part of the acquisition, the Department also approved the merger of Bancorp Connecticut subsidiary Southington Savings Bank with and into Banknorth Group subsidiary Banknorth, National Association. As of June 30, 2001, Banknorth Group had total deposits of $260.4 million and ranked 36th among all commercial banking and thrift institutions in Connecticut. As of the same date, Bancorp Connecticut had total deposits of $394.2 million and ranked 25th. (Connecticut Department of Banking Bulletin #2005, 7/26/02)

Thrift Expansion InsurBanc, Farmington, CT, a unit of Peyton Street Independent Financial Services Corp, Alexandria, VA, announced July 10, 2002, that the Office of Thrift Supervision had given regulatory approval for the thrift to expand its operations in 15 additional states. InsurBanc will expand its commercial and consumer banking services on a full-service basis to Maine, Rhode Island, and Delaware, adding to its current operations in Connecticut, Massachusetts, and New Jersey. Limited-service operations are planned for 12 more states throughout the U.S. As of June 30, 2001, Peyton Street Independent Financial Services Corp had total deposits of $1.22 million and ranked 77th among all commercial banking and thrift institutions in Connecticut. (InsurBanc Press Release, 7/10/02; SNL Bank , Thrift Weekly, 7/22/02)

FleetBoston Reorganizes, Closes Investment Banking Unit In a July 8 memo to employees, FleetBoston Financial Corp, Boston, MA, announced that the company is reorganizing its commercial banking unit. In order to reduce exposure to risk, the unit will focus on the primary businesses of large, national corporate lending and regional small- and medium-sized firms. In addition, there will be three other units providing capital market, cash management, and specialized niche business services to corporate customers.

On July 12, FleetBoston announced that it would close its investment-banking unit, Robertson Stephens. The company tried to arrange a management-led buyout of the firm, however talks failed, and the decision was made to layoff Robertson Stephens' 950 employees and sell the firm's holdings.

FleetBoston gained control of the investment-banking firm as a part of its 1999 merger with BankBoston, which had bought Robertson Stephens for $800 million in 1998. The firm's role in the technology boom of the late '90s made it a very profitable venture in 1999 and 2000; however, Robertson Stevens lost more than $80 million over the last five quarters, prompting FleetBoston to try to sell the firm in April. After having little success finding a buyer, the management-led buyout was pursued. FleetBoston announced July 10 that it had entered an agreement with office supply retailer Staples Inc, Framingham, MA, to create "Fleet Small Business Zones" in 10 Staples stores throughout the Northeast. The zones will allow customers to learn about Fleet's small business products and services as well as apply for loans and open special accounts. Fleet's CFO, Eugene McQuade, commented, "this alliance enables Fleet to reach out to small business prospects through an exciting new opportunity." (Boston Globe, 7/11/02; 7/12/02; 7/13/02; 7/15/02; SNL Bank , Thrift Weekly, 7/15/02)

State Street in Nonbanking Activity On July 2, State Street Corp, Boston, MA, announced that it has entered into a definitive agreement to acquire International Fund Services (IFS), New York, NY. IFS provides front office technology, trade and operations support, fund accounting, and administration services for "alternative investment portfolios." State Street did not disclose the terms of the deal, but expects the transaction, which is subject to regulatory approval, to be completed in the third quarter of this year. (SNL Bank , Thrift Weekly, 7/8/02; State Street Press Release, 7/2/02)

New York Merger Announced First Niagara Financial Group, Lockport, NY, announced July 22 that it will undergo a second step conversion, converting from a mutual holding company structure to a fully public company, while simultaneously acquiring Finger Lakes Bancorp Inc, Geneva, NY. Under the terms of the deal, First Niagara will pay Finger Lakes shareholders $20 per share in cash and stock, for a total of approximately $67 million. First Niagara expects to complete both the merger and conversion in the first quarter of 2003. (SNL Bank , Thrift Weekly, 7/29/02)

FDIC Proposes New Rule At a July 12 open agency meeting, the FDIC Board voted 3 to 1 to propose a new rule that would allow state-chartered FDIC-insured banks to form limited liability companies and keep their deposit insurance coverage. Limited liability companies pay fewer taxes than regular bank companies because they do not pay corporate taxes; rather the shareholders are taxed on the company's income. Passage of the proposal will not guarantee lower tax burdens, because the Internal Revenue Service does not recognize the right of a bank to become an LLC. That fact prompted Comptroller of the Currency John D. Hawke Jr. to cast a dissenting vote and urge the Board to allow the IRS to rule on the proposal first. The proposal was presented in response to two banks that requested a resolution to the issue. There is a 90-day public comment period, which will be followed by a final vote on the proposal. (SNL Bank , Thrift Weekly, 7/15/02; American Banker, 7/15/02)

Treasury Proposes New Regulations On July 17, the Department of the Treasury and seven federal financial regulators, including the Board of Governors of the Federal Reserve, proposed new regulations concerning identifying and verifying the identity of new customers. The proposed rules would create minimum procedures for verifying the identity of any person seeking to open a new account, maintaining records of the documents used as proof of identity, and determining whether the person is on any list of known or suspected terrorists or terrorist organizations. The financial institutions that would be subject to the proposed requirements are banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers. These changes implement Section 326 of the USA Patriot Act, and are meant to protect the U.S. financial system from money laundering and terrorist activity. The Treasury also stated that the new rules could lessen various types of fraud, including identity theft. There is a 45-day comment period prior to final approval of the rules. (Department of the Treasury PO-3263, 7/17/02)

Agencies Draft New Credit Card Guidance On July 22, the Federal Financial Institutions Examination Council, comprised of the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision, released a draft of new rules addressing account management and loss allowance related to credit card lending. The guidelines are in response to inappropriate account management, risk management, and loss allowance practices that the agencies have discovered in recent examinations of credit card issuers. The draft urges lenders to carefully consider individual borrower's repayment capacity and creditworthiness when determining offers of credit limits and new cards. The agencies discourage the practice of negative amortization and stress the importance of prudent workout programs "designed to maximize principal reduction." Additionally, the draft calls for institutions to carefully examine accrued interest and fees, loan-loss allowances, allowances for over-limit accounts, and recovery practices. The agencies expect to issue the guidance August 16. Institutions and other interested parties have until August 9 to submit comments. (FFIEC Release, 7/22/02; SNL Bank , Thrift Weekly, 7/29/02)

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.