Application for Consent to Purchase Certain Assets and Assume the Liability to Pay Deposits, and for Consent to Establish
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act
("FDI Act"), Bangor Savings Bank ("BSB"), Bangor, Penobscot County,
Maine, an insured mutual savings bank with total resources of $883,316,000 and total
deposits of $658,626,000 as of March 31, 1998, has filed an application for the
Corporation's consent to purchase certain assets of and to assume the liability to pay
deposits made in the Dexter, Castine, Bucksport, Searsport, and Belfast, Maine, branches
of Fleet Bank of Maine ("Fleet"), Portland, Cumberland County, Maine, and for
consent to establish the Dexter, Castine, Bucksport, and Searsport, Maine, branches of
Fleet as branches of BSB. Fleet is an insured state member bank with total resources of
$2,149,645,000 and total deposits of $1,608,226,000 as of March 31, 1998. Fleet is wholly
owned by Fleet Financial Group, Inc., Boston, Suffolk County, Massachusetts. Incident to
the transaction, the branch located at Belfast, Maine, will be consolidated into the
existing BSB office on Route 3, Belmont Avenue, Belfast, Maine. The offices are
approximately 4,000 feet apart and are in the same immediate neighborhood. Neither the
customers served by the branch, nor the nature of business conducted by the branch, will
be adversely affected by the consolidation. Notice of the proposed transaction, in a form
approved by the Corporation, has been published pursuant to the FDI Act.
For market definition purposes, these five branches are located in three relevant
geographic markets ("RGMs"): the Bangor, Belfast, and Pittsfield markets.
Competition will increase in the Pittsfield market because BSB is not presently operating
in that market and Fleet will retain a presence. Should the transaction be consummated,
BSB's market share will exceed 25 percent in both the Bangor (41.28 percent) and Belfast
(46.98 percent) markets. Fleet will maintain a 14.92 percent share of the Bangor market,
but is divesting its entire share of the Belfast market. Six commercial banks and two
savings banks currently operate in the Bangor RGM, and three commercial banks and two savings banks
operate in the Belfast RGM. The proposed transaction would result in a 94-point increase
in the Herfindahl-Hirschman Index ("HHI") in the Bangor RGM and a 632 point
increase in the Belfast RGM HHI to a post-merger levels of 2,432 and 3,253, respectively.
On July 23, 1998, the U.S. Department of Justice concluded that the proposed
transaction would not have a significantly adverse effect on competition. The Federal
Reserve Bank of Boston ("FRB"), based on deposits as of June 30, 1997, concluded
that the proposed transaction could have significantly adverse competitive effects in the
Bangor and Belfast RGMs. However, the FRB advised that it did not consider all economic
factors that may be relevant to the competitive effects of the proposed transaction. The
other federal regulatory authorities offered no comments. The Maine Bureau of Banking
approved the proposed transaction effective June 26, 1998.
The proposed transaction will increase concentration within the RGM; however, there are
other important factors that should be considered when assessing the competitive effect of
the proposed transaction. The elevated pre- and post-merger PT-lIs are reflective of the
general market conditions within the state of Maine. An analysis of market concentration
revealed 13 of the 16 Maine counties, or 81.25 percent had an HHI above 1,800 as of June
30, 1997. Six commercial banks, two savings banks, and nine credit unions will continue to
operate in the Bangor RGM after consummation of the proposed transaction. Two commercial
banks, two savings banks, and one credit union will continue to operate in the Belfast RGM
after this transaction. In addition, one commercial bank and one federal savings bank are
in the process of establishing branches in the Belfast RGM . Given the
number and capacity of these institutions, it is believed competition will not be
significantly reduced within the RGM.
After giving consideration to the aforementioned factors, the Board of Directors is of
the opinion that the proposed transaction will not substantially lessen competition, tend
to create a monopoly, or in any other manner restrain trade or otherwise have an
adverse competitive impact that would require disapproval under the Bank Merger Act.
Financial and Managerial Resources; Future Prospects
BSB is financially sound with adequate capital and liquidity, healthy earnings, strong
asset quality, and strong management. Future prospects are favorable.
Convenience and Needs of the Community to be Served
The scope and convenience of banking services offered to the general public should not
be significantly affected by the proposal. Six financially sound commercial banks, two
savings banks, and nine credit unions will continue to operate in the Bangor RGM after
consummation of the proposed transaction. Two financially sound commercial banks, two
savings banks, and one credit union will continue to operate in the Belfast RGM after this
transaction. BSB intends to continue to provide a broad range of services to the consumer
and commercial customers now served by Fleet. There have been no protests to the proposed
transaction from either the public or the banking community. A review of available
information revealed no inconsistencies with the purposes of the Community Reinvestment
Act. The resultant institution is expected to continue to meet the credit needs of its
entire community, consistent with the safe and sound operation of the institution.
Upon consideration of all relevant material, the Board of Directors has concluded that
the application should be and hereby is approved subject to the following conditions:
1. That the transaction shall not be consummated before the fifteenth calendar day
following the date of this order or no later than six months after the date of this Order
unless such period is extended for good cause by the Corporation;
2. That all necessary and final approvals be received from other regulatory
3. That, until the proposed transaction becomes effective, the Corporation shall have
the right to alter, suspend, or withdraw its approval should any interim
development be deemed by the Board of Directors to warrant such action.
Dated at Washington, D.C., this 3rd day of August 1998.