Academic journal article Federal Reserve Bulletin

Order Approving the Acquisition of a Savings and Loan Holding Company and Acquisition of a Bank: FRB Order No. 2015-34 (November 18, 2015)

Academic journal article Federal Reserve Bulletin

Order Approving the Acquisition of a Savings and Loan Holding Company and Acquisition of a Bank: FRB Order No. 2015-34 (November 18, 2015)

Article excerpt

Community Bank System, Inc.

Dewitt, New York

Community Bank System, Inc. ("CBSI"), Dewitt, New York, a financial holding company within the meaning of the Bank Holding Company Act of 1956, as amended ("BHC Act"), has requested the Board's approval under sections 4(c)(8) and 4(j) of the BHC Act (1) to acquire Oneida Financial Corp. ("Oneida") and thereby indirectly acquire its subsidiary bank, Oneida Savings Bank, a state savings bank that has elected to be treated as a savings association pursuant to section 10(l) of the Home Owners' Loan Act, as amended, (2) both of Oneida, New York. CBSI has also requested the Board's prior approval under section 3 of the BHC Act (3) to acquire State Bank of Chittenango ("Bank of Chittenango"), Chittenango, New York, a limited purpose commercial bank wholly owned by Oneida Savings Bank. (4) Following the proposed acquisition, Oneida Savings Bank and Bank of Chittenango would be merged into CBSI's subsidiary bank, Community Bank, N.A., Canton, New York. (5)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (80 Federal Register 27,171 (2015)). (6) The time for submitting comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in the BHC Act.

CBSI, with consolidated assets of approximately $7.9 billion, is the 142nd largest insured depository organization in the United States, controlling approximately $6.1 billion in deposits. (7) CBSI controls Community Bank, which operates in New York and Pennsylvania. Community Bank is the 26th largest depository institution in New York, controlling deposits of approximately $4.9 billion, which represent less than 1 percent of the total deposits of insured depository institutions in that state. (8)

Oneida, with consolidated assets of approximately $850 million, is the 819th largest insured depository organization in the United States, controlling approximately $744 million in deposits. Oneida controls Oneida Savings Bank, which operates solely in New York. Oneida Savings Bank is the 73rd largest insured depository institution in New York, controlling deposits of approximately $676 million, which represent less than 1 percent of the total deposits of insured depository institutions in that state. (9)

On consummation of this proposal, CBSI would become the 126th largest insured depository organization in the United States, with consolidated assets of approximately $8.8 billion, which represent less than 1 percent of the total assets of insured depository institutions in the United States. CBSI would control total deposits of approximately $6.8 billion, which represent less than 1 percent of the total amount of deposits of insured depository institutions in the United States. In New York, CBSI would become the 23rd largest depository organization, controlling deposits of approximately $5.6 billion, which represent less than 1 percent of the total deposits of insured depository institutions in that state.

The Board previously has determined by regulation that the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act. (10) The Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4(c)(8) of the BHC Act. (11) CBSI has committed that all of the activities of Oneida and its subsidiaries will conform to those permissible under section 4 of the BHC Act and Regulation Y or be divested.

Factors Governing Board Review of the Transactions

Because this transaction involves the acquisition of a savings association and a bank, the Board has reviewed the transaction under both section 4 and section 3 of the BHC Act, respectively. Section 4 establishes the standards governing the acquisition of a savings association, and section 3 establishes the standards governing the acquisition of a bank. …

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