Vol. XXXI • No. 5
Bank Notes
May 2002
Merger Completions
On April 16, Washington Trust Bancorp, Inc., Westerly, RI, acquired First Financial Corp, Providence, RI. The conversion of the seller's deposit and loan accounts will take place at the close of business on May 10. On April 17, First Bank , Trust Company, Providence, RI, a subsidiary of First Financial Corp, merged with The Washington Trust Company of Westerly, Westerly, RI, a subsidiary of Washington Trust Bancorp, under the charter and title of The Washington Trust Company of Westerly.
As of June 30, 2001, Washington Trust Bancorp had total deposits of $720.5 million and ranked fourth among all commercial banking and thrift institutions in Rhode Island. As of the same date, First Financial Corp had total deposits of $125.7 million and ranked 11th. (Internal Notice, 4/17; SNL Bank , Thrift Weekly, 4/22/02)
Branch Acquisition
On April 1, Ocean National Bank, Kennebunk, ME, purchased 11 New Hampshire branches from Chittenden Trust Company, Burlington, VT. As of June 30, 2001, Ocean National Corp, Kennebunk, ME, parent company of Ocean National Bank, had total deposits of $8.4 million and ranked 41st among all commercial banking and thrift institutions in New Hampshire. As of the same date, Chittenden Corp, Burlington, VT, parent company of Chittenden Trust Company, had total deposits of $236.5 million and ranked 14th. (Internal Notice, 4/4/02)
Branch Closings
On April 6, Fleet National Bank, Providence, RI, closed four Massachusetts branches. The branches were located in Bedford, Mansfield, New Bedford, and Stoneham. (Internal Notice, 4/8/02)
Branch Openings
On April 1, Commonwealth National Bank, Worcester, MA, opened a branch at 9 West Boylston Street, Worcester, MA.
On April 3, Liberty Bank, Middletown, CT, opened a branch at 160 Highland Avenue, Cheshire, CT.
On April 15, Pilgrim Co-operative Bank, Cohasset, MA, opened a branch at 800 Chief Justice Cushing Way, Route 3A, Cohasset, MA. (Internal Notice, 4/16; 4/17; 4/23/02)
Branch Address Changes
On April 1, Ware Co-operative Bank, Ware, MA, relocated a branch from 2024 Main Street to 2060 Main Street, Three Rivers, MA.
On April 17, Chelsea Groton Savings Bank, Norwich, CT, relocated a branch from 42 Town Street to 50 Town Street, Norwich, CT. (Internal Notice, 4/17; 4/22/02)
Bank Opening
On April 22, The Bank of New Canaan, New Canaan, CT, a state-chartered commercial bank, opened for business. (State of CT DOB News, 4/22/02)
Charter Conversion
On April 1, Windsor Locks Savings , Loan Association, Inc., Windsor Locks, CT, converted from a state chartered mutual savings and loan association to a federally chartered mutual savings and loan association. The new title is Windsor Locks Community Bank, FSL. (Internal Notice, 4/1/02)
Fed Approves Transactions
On March 29, the Secretary of the Federal Reserve Board of Governors (Fed) approved the proposal by Guaranty Bancorp, Inc., Woodsville, NH, to acquire a one-third interest, through Community Financial Services Partners LLC, Derby, VT, in Community Financial Services Group LLC, Newport, VT, and thereby engage in trust company functions.
On April 15, the Federal Reserve Bank of Boston approved the application by Hoosac Financial Services, Inc., North Adams, MA, to be renamed MountainOne Financial Partners, MHC, and to merge with Williamstown MHC, Williamstown, MA. Hoosac Financial Services is the parent company of Hoosac Bank, North Adams, MA, and Williamstown MHC is currently in formation as the parent company of Williamstown Savings Bank, Williamstown, MA.
As of June 30, 2001, Hoosac Financial Services had total deposits of $181.5 million and ranked 113th among all commercial banking and thrift institutions in Massachusetts. As of the same date, Williamstown Savings Bank had total deposits of $100.5 million and ranked 154th. (Actions by the Board, 4/20; Internal Notice, 3/29; 4/19/02)
Shareholders Approve Atlantic-Yonkers Merger
On March 26, shareholders of Yonkers Financial Corp, Yonkers, NY, approved the sale of the thrift to Atlantic Bank of New York, New York, NY. Pending regulatory approval, Yonkers expects the sale to close in the second quarter. (SNL Bank , Thrift Weekly, 4/1/02)
First Bancorp to Acquire Morgan Operations
On April 19, First Bancorp, Santurce, PR, signed a definitive agreement with J.P. Morgan Chase , Co., New York, NY, to acquire the bank's "eastern Caribbean region business" in the U.S. Virgin Islands, British Virgin Islands, and Barbados. The bank said the transaction includes the acquisition of the assets of Chase Trade, Inc. and the purchase of Chase Agency Services, Inc. J.P. Morgan Chase signed a letter of intent to sell the operations to First Bancorp on February 28. (SNL Bank , Thrift Weekly, 4/29/02)
OTS Proposes Changes to Thrift Charter
On April 8, the Office of Thrift Supervision (OTS) proposed rule changes governing mutual thrifts, mutual holding companies and mutual-to-stock conversions. Mutuals are cooperative institutions and tend to be community-based. Initially, the entire thrift industry was made up of mutual institutions. Currently, there are approximately 400 OTS-regulated mutuals, plus approximately 60 OTS-regulated mutual holding companies, about half of which have publicly traded subsidiaries. Mutual institutions make up almost 40 percent of all OTS thrifts, and control approximately 7 percent of the industry's assets.
The new proposal includes significant changes to the initial proposal relating to business plans. It eliminates the requirement for thrifts to obtain an OTS "non-objection" letter for a business plan before applying to convert from mutual to stock format. It permits stock repurchases to be included in business plans and clarifies how the standards for approval of a business plan are applied. OTS continues to encourage mutual associations seeking new capital to consider the mutual holding company form of organization as an alternative to a full conversion.
The current proposal also addresses the issue of "remutualization," in which a mutual holding company with a publicly traded subsidiary is taken over by a mutual institution. OTS's proposal would allow subsidiaries of mutual holding companies to adopt similar post-conversion, anti-takeover provisions to those stipulated for standard conversions, thus allowing newly-converted mutual holding companies time to implement their business plans before becoming takeover targets. (OTS Press Release, 4/8/02)
Agencies Issue Risk-Based Capital Rule
On April 9, the federal bank and thrift regulatory agencies (The Fed, the Federal Deposit Insurance Corp (FDIC), the Office of the Comptroller of the Currency (OCC), and the OTS) issued a final rule amending their risk-based capital standards for banks, bank holding companies, and savings associations (institutions) to reduce the risk weight applied to claims on, or guaranteed by, qualifying securities firms.
The final rule lowers the risk weight applied to certain claims on qualifying securities firms from 100 percent to 20 percent. This change is consistent with the treatment of claims on securities firms under an April 1998 amendment to the Basel Accord. The Accord is an international framework for assessing the capital adequacy of depository institutions by risk weighting their assets and off-balance-sheet exposures and serves as a basis for the banking agencies' risk-based capital standards.
Consistent with the existing rules of the Board and the OCC, the FDIC and the OTS also are amending their risk-based capital standards to permit a 0 percent risk weight for certain claims on qualifying securities firms that are collateralized by cash or by securities issued or guaranteed by the U.S. or Organization for Economic Co-Operation and Development (OECD) central governments.
The rule will become effective on July 1. However, institutions may choose to immediately apply the provisions of the final rule, including in the risk-based capital calculations for the March 31, 2002, Reports of Condition and Income (Call Reports) filed by banks; the March 2002 Thrift Financial Reports filed by savings associations; and the March 31, 2002, Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) filed by bank holding companies. (Actions by the Board, 4/20; FDIC Press Release, 4/9/02)
Agencies Issue Guidance on Parallel-Owned Banks
On April 23, the federal bank and thrift regulatory agencies issued guidance that reviews the risks of parallel-owned banking organizations. The guidance sets forth an approach for supervising those risks. A parallel-owned banking organization consists of a U.S. depository institution and a foreign bank that are both controlled directly or indirectly by one person or group of persons who are closely associated in their business dealings or act in concert. It does not include an organization controlled by a company subject to the Bank Holding Company Act or the Savings and Loan Holding Company Act or where one institution is a subsidiary of the other. Control may exist if a person or group of persons control 10 percent or more of any class of voting shares of the depository institutions.
The guidance describes various risks that may be increased because of the structure of parallel-owned banking organizations, including engaging in transactions that prefer the foreign bank member of the group over the U.S. depository institution. The agencies will address these risks by coordinating their supervision of the U.S. operations of parallel-owned banking organizations. Enhanced communication and cooperation with foreign bank supervisors is also important to this process.
When an applicant proposes to acquire or establish a U.S. depository institution that will be part of a parallel-owned banking organization, the application will be reviewed on a case-by-case basis. In appropriate circumstances, special conditions may be imposed in a regulatory decision, including restrictions on the ability of the U.S. depository institution to engage in transactions with its foreign affiliates.
In cases where a parallel-owned banking organization is formed in a way that does not require review by the banking agencies, today's guidance recommends that a U.S. depository institution inform the appropriate federal banking agency prior to becoming part of a parallel-owned banking organization. (Actions by the Board, 4/20; FDIC Press Release, 4/23/02)
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.