Mergers and
Acquisitions
Boston Private Financial
Holdings Inc. of Boston, MA, completed its acquisition
of a majority interest (70 percent) in Davidson
Trust Company of Philadelphia, PA. Davidson Trust will continue
to operate under its own name as an affiliated partner
of Boston Private. (SNL Bank Mergers & Acquisitions
Weekly, 2/04/08; Boston Private press release, 2/01/08)
USI Holdings Corporation of Briarcliff Manor, NY,
announced on February 1, 2008, that it had completed
its acquisition of Webster Insurance,
Inc. from Webster
Financial Corporation of Waterbury, CT. In addition,
USI Holdings and Webster Financial announced a joint
marketing agreement between the two companies to provide
expanded products and services between their respective
customers. (SNL Financial Services Daily, 2/05/08;
USI Holdings press release, 2/01/08)
Walpole Co-operative
Bank of Walpole, MA, and Norwood
Co-operative Bank of Norwood, MA, announced
in late January that the two companies had terminated
their agreement to combine in a merger of equals. No
reason was provided for cancellation of
the deal, which was originally announced on January
3, 2008. (Norwood,
MA “Daily News Transcript,” 1/30/08)
De Novo Opens
Optima Bank and Trust officially opened for business in Portsmouth, NH, on
January 30, 2008. Serving as the New Hampshire seacoast’s
only locally owned commercial bank, Optima will offer
traditional banking products such as checking and savings
accounts, commercial loans, mortgages, IRAs, and a
24-hour on-site secure ATM. The bank’s goal is
to capitalize on local relationship banking. Optima
originally filed applications to open a state-chartered
bank in May 2007. (Internal sources,
2/01/08; “Seacoastonline.com,” 2/11/08)
Corporate Title Changes
Effective February 21, 2008, Fitchburg
Savings Bank changed
its corporate title to Rollstone
Bank & Trust.
Within two months, the bank’s email and web site
will be updated to reflect the new name. (Internal
sources, 2/21/08)
New Branches
Citizens Financial
Group, Inc. of Providence, RI, plans to open 50 additional
supermarket-based branches in New York over the next
two years. Most of the branches are expected to be
opened in New York’s Lower Hudson Valley or on
Long Island. (SNL Bank & Thrift
Daily, 2/12/08)
Leader Bank, NA of Arlington, MA, opened a branch
on Pleasant Street in Belmont, MA, on January 14, 2008.
The branch is Leader’s fourth since the bank
opened as community bank in May 2002. (Internal sources,
2/15/08)
Legacy Banks, a unit of Legacy Bancorp of
Pittsfield, MA, announced on February 4, 2008, that
it applied for federal and state regulatory approval
to open branches in Albany and Latham, NY. Pending
regulatory approval, the branches will open in the
third and fourth quarters of 2008, respectively. Legacy
Banks currently has 16 offices throughout Massachusetts’ Berkshire
County and eastern New York. (SNL
Bank & Thrift
Daily, 2/06/08; Legacy press release, 2/05/08)
Mechanics
Co-operative Bank of Taunton, MA, opened a
branch at 72 Main Street in Bridgewater, MA, on December
10, 2007. With the new branch, Mechanics has four
offices in Taunton and surrounding communities. (Internal
sources, 2/01/08)
Southbridge Savings Bank of Southbridge, MA, opened
a branch on Leicester Street in North Oxford on January
15, 2008. Southbridge now has 13 full service branches.
(Southbridge press release, 1/22/08)
United Financial Bancorp, Inc., holding company for
United Bank, both headquartered in West Springfield,
MA, announced on February 25, 2008, that it had opened
a new branch on Shaker Road in East Longmeadow, MA.
United Bank now has 14 full service branches located
throughout western Massachusetts. (SNL Bank and Thrift
Daily 02/26/2008; United Financial Bancorp press release,
2/25/08)
Wainwright Bank & Trust Company of Boston,
MA, opened a branch on Brattle Street, Cambridge, MA,
on January 2, 2008. (Internal sources, 2/15/08)
Webster
Bank, NA of Waterbury, CT, opened two separate branches
during December 2007. On December 17, 2007, Webster
opened a branch on North Main Street in East Longmeadow,
MA. A second branch was opened on Amity Road in Woodbridge,
CT, on December 19, 2007. (Internal sources, 2/01/08)
FFIEC Approves Revisions to Consolidated Reports of
Condition and Income for 2008
The Federal Financial
Institutions Examination Council (FFIEC) approved revisions
to the reporting requirements for the Consolidated
Reports of Condition and Income (Call Report). These
regulatory reporting revisions will be implemented
as of March 31, 2008. Reporting new items will be optional
for this initial report date and will be required beginning
June 30, 2008.
The revisions incorporate certain modifications
that were made in response to comments received on
proposed changes to the Call Report that the Office
of the Comptroller of the Currency (OCC), the Federal
Reserve Board (Board), and the Federal Deposit Insurance
Corporation (FDIC) published on September 11, 2007.
The FFIEC is providing advance notification to help
financial institutions plan for these changes. The
U.S. Office of Management and Budget (OMB) must approve
these changes before they become final. For more details
about the revisions, including information on obtaining
the Call Report forms and instructions, please view
the FDIC’s February 20, 2008, Financial Institution
Letter online at www.fdic.gov/news/news/financial/2008/fil08013.html.
 (FDIC
FIL-13-2008, 2/20/08)
Proposed Changes to Regulations D and I to Incorporate
Provisions of Financial Services Regulatory Relief
Act of 2006
The Federal Reserve Board, on February
7, 2007, requested public comment on proposed changes
to Regulation D (Reserve Requirements
of Depository Institutions) and Regulation I (Issue
and Cancellation of Federal Reserve Bank Stock) to
incorporate provisions of the Financial Services Regulatory
Relief Act of 2006. The proposed amendments would remove
certain restrictions on the way depository institutions
maintain required reserves and clarify and update other
provisions of the regulations.
The Federal Reserve
Act imposes reserve requirements on certain deposits
and other liabilities (primarily checking accounts)
of depository institutions, such as banks, thrift institutions,
and credit unions. Depository institutions must maintain
required reserves in the form of vault cash or as a
balance in an account at a Federal Reserve Bank.
Depository
institutions may maintain a balance directly with a
Federal Reserve Bank or with a correspondent institution
that, in turn, holds reserve balances for respondents
in a Federal Reserve account on a "pass-through" basis.
The proposal would implement revisions to current
pass-through rules, and clarify and modernize the regulations.
More information on the proposed changes is available
by viewing the Board of Governors’ February 12,
2008, press release at www.federalreserve.gov/newsevents/press/bcreg/20080207a.htm.
Public
comments on the proposed changes are due by March 28,
2008. Directions on submitting comments are available
at www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
(Federal
Reserve Board of Governors’ press
release, 2/12/08)
Reminder: FRB Boston is Updating our Postal Mailing
List for Bank Notes
The January and February paper
versions of Bank Notes included a subscription renewal
form for paper subscribers to complete, and to indicate
whether they wish to continue to receive Bank
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ACH Growth Brings Opportunities and Risks
ACH volume
grew over 12% in 2007. Over a third of these transactions
were checks converted to ACH payments. Currently, only
0.05 percent of all ACH transactions are returned as “unauthorized,” meaning
that ACH is one of the safest payment mechanisms.
While
growth is positive, increased product offerings mean
that more parties have access to the ACH network, increasing
financial institutions’ risk exposure. As with
any new technology, fraudsters continually seek out
and attempt to exploit any weakness. Institutions that
initiate ACH transactions (Originating Depository Financial
Institutions, or “ODFI’s”) are particularly
vulnerable to ACH losses.
In addition to fraud, institutions may experience
operational or transaction risks due to human error
or system malfunction. All ACH participants should
have internal audit programs specifically tailored
to the complexity and risks of their own retail payments
products and technologies.
There are many resources
available to help financial institutions reduce ACH
risk exposure. For example, both the FFIEC and the
OCC have issued guidance documents that can be downloaded
from www.ffiec.gov/ffiecinfobase/booklets/Retail/retail_03g.html and
www.occ.gov/ftp/bulletin/2006-39.pdf. 
In
February 2007, NACHA issued “A
Comprehensive Strategy for Risk Management in the ACH
Network.” The
document outlines NACHA’s goal to ensure “high-quality
ACH transactions and reduce the risk for financial
institutions, businesses, and consumers.” The
strategy addresses risk reduction in five categories:
1) network entry requirements; 2) ongoing requirements;
3) enforcement; 4) ACH Operator tools; and 5) cross-channel
risk.
The Federal Reserve Banks maintain ongoing relationships
with NACHA, EPN (the Electronics Payment Network),
and financial institutions on the industry's Risk Management
Advisory Group (RMAG) to continually improve NACHA
rules and processes to minimize ACH risk. (The Reserve
Banks and EPN are the nation’s two ACH Operators.)
The Reserve Banks also offer ACH risk management products
that can help institutions enhance their existing procedures
and help meet audit requirements. We urge all financial
institutions to review the resources mentioned in this
article, and to call their Reserve Bank Account Executive
with any questions on how the Boston Reserve Bank can
help with their ACH risk management efforts. (Internal
sources, www.NACHA.org , www.FFIEC.gov ,
www.OCC.gov )
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NOTE: Items in this publication focus
on developments affecting banking structure in New
England. The items are condensations of articles from
a selected group of daily newspapers and press releases
of federal and state financial regulatory agencies.
Their reproduction does not imply our endorsement
of the accuracy, opinions or policies reflected in
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