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Release Date: March 2, 1998


For immediate release

The Federal Reserve Board announced today its approval of the application of WesBanco, Inc., Wheeling, West Virginia ("WesBanco"), to acquire Commercial BancShares, Inc., Parkersburg, West Virginia ("Commercial"), and thereby acquire the banking and nonbanking subsidiaries of Commercial. The Board also approved the applications of WesBanco's lead bank, WesBanco Bank Wheeling, Wheeling, West Virginia, to merge with The Bank of Paden City, Paden City, West Virginia, and Bank of McMechen, McMechen, West Virginia, and to establish branches at the current offices of these banks.

Attached is the Board's Order relating to this action.


WesBanco, Inc.
Wheeling, West Virginia

Order Approving Acquisition of Bank Holding Companies, Merger of Banks and Establishment of Branches

WesBanco, Inc., Wheeling, West Virginia ("WesBanco"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under sections 3 and 4 of the BHC Act (12 U.S.C. 1842 and 1843(c)(8)) to acquire Commercial BancShares, Inc., Parkersburg, West Virginia ("Commercial"), and Gateway Bancshares, Inc., McMechen, West Virginia ("Gateway"), and thereby acquire their banking and nonbanking subsidiaries listed in the Appendix.1 WesBanco's lead bank, WesBanco Bank Wheeling, Wheeling, West Virginia ("WesBanco Wheeling"), also has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act (the "Bank Merger Act") (12 U.S.C. 1828(c)) to merge with Commercial's subsidiary bank, The Bank of Paden City, Paden City, West Virginia, and Gateway's subsidiary bank, Bank of McMechen, McMechen, West Virginia, and under section 9 of the Federal Reserve Act ("FRA") (12 U.S.C. 321) to establish branches at the current offices of these banks listed in the Appendix.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 2393 (1998)) and has been given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the bank mergers were requested from the United States Attorney General, the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation ("FDIC"). The time for filing 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, the Bank Merger Act, and the FRA.

WesBanco operates six banks in West Virginia and one bank in Ohio. WesBanco is the fifth largest commercial banking organization in West Virginia, controlling approximately $1.3 billion in deposits, representing approximately 6.7 percent of total deposits in depository institutions in the state ("state deposits").2 Commercial controls seven banks in West Virginia and one bank in Ohio.3 Commercial is the tenth largest depository institution in West Virginia, controlling approximately $348.7 million in deposits, representing approximately 1.8 percent of state deposits. On consummation of the proposal, and taking into account all proposed divestitures, WesBanco would remain the fifth largest commercial banking organization in West Virginia, controlling deposits of $1.6 billion, representing approximately 8.3 percent of state deposits.

WesBanco is the 107th largest commercial banking organization in Ohio, controlling approximately $129.9 million in deposits, representing less than 1 percent of total deposits in commercial banking organizations in the state. Commercial is the 88th largest commercial banking organization in Ohio, controlling approximately $166.7 million in deposits, representing less than 1 percent of state deposits. On consummation of the proposal, WesBanco would become the 54th largest depository institution in Ohio, controlling $296.6 million in deposits, representing less than 1 percent of deposits in Ohio.

Interstate Analysis
Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal Act"),4 allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company, if certain conditions are met. For purposes of the BHC Act, the home state of WesBanco is West Virginia, and it proposes to acquire a subsidiary bank of Commercial in Ohio.5 All of the conditions for an interstate acquisition enumerated in section 3(d) are met in this case.6 In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive Considerations
The BHC Act and the Bank Merger Act prohibit the Board from approving a proposal if it would result in a monopoly or if the effect of the proposal may be substantially to lessen competition in any relevant market unless the Board finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.7

WesBanco and Commercial compete directly in three West Virginia banking markets: Parkersburg/Marietta, Wheeling, and Tyler/Wetzel.8 Consummation of the proposal would be consistent with the Department of Justice Merger Guidelines ("DOJ Guidelines")9 and prior Board precedent in the Wheeling and Marietta/Parkersburg banking markets.10

In order to mitigate the potential anticompetitive effects in the Tyler/Wetzel banking market, WesBanco has committed to divest one of Commercial's subsidiary banks in the market, Union Bank of Tyler County, which controls approximately $33.3 million in deposits, to an out-of-market purchaser.11 After accounting for the proposed divestiture, WesBanco would become the largest depository institution in the Tyler/Wetzel banking market, controlling deposits of approximately $82.6 million, representing 36 percent of market deposits. Concentration in the market, as measured by the HHI, would increase by 225 points to 2077.

Several mitigating considerations offset the proposal's effect on competition in the Tyler/Wetzel banking market. The proposal would not reduce the number of competitors in the market, and nine competitors would remain in the market after consummation. Two of the nine institutions are large regional banking organizations, and three of the nine institutions, including WesBanco, each would have a market share of at least 10 percent. Although measures of attractiveness of the Tyler/Wetzel market are mixed, the Board notes that there recently has been de novo entry by a commercial bank. The Board believes that these factors mitigate the potentially adverse effects of the proposal.

The Justice Department reviewed the proposal and advised the Board that, in light of the proposed divestiture, consummation of the proposal would not likely have any significantly adverse competitive effects in the Tyler/Wetzel banking market or any other relevant banking market. The OCC and FDIC also have not objected to the proposal.

Based on all the facts of record, and for the reasons discussed in this order, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Tyler/Wetzel banking market or any other relevant banking market.

Other Considerations
The BHC Act and the Bank Merger Act require the Board, in acting on an application, to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed these factors in light of the record, including supervisory reports of examination assessing the financial and managerial resources of the organizations and financial information provided by WesBanco. Based on all the facts of record, the Board concludes that the financial and managerial resources and the future prospects of WesBanco, Commercial and their respective subsidiary banks are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. In addition, considerations related to the convenience and needs of the communities to be served, including the records of performance of the institutions under the Community Reinvestment Act, are consistent with approval of the proposal.

WesBanco also has filed notice under section 4(c)(8) of the BHC Act to acquire the nonbanking subsidiaries of Commercial listed in the Appendix. The Board previously has determined by regulation that each of the activities described in the Appendix is closely related to banking within the meaning of section 4(c)(8) of the BHC Act, and WesBanco proposes to conduct these activities in accordance with Regulation Y.12

In order to approve the proposal, the Board also must determine that the performance of the proposed activities is a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."13 As part of its evaluation of these factors, the Board considers the financial and managerial resources of the notificant and its subsidiaries, including any company to be acquired, and the effect the transaction would have on such resources.14 As noted above, based on all the facts of record, the Board has concluded that financial and managerial considerations are consistent with approval of the notice.

Each of the markets for the nonbanking services affected by the proposal is unconcentrated, and there are numerous providers of each service. As a result, consummation of the proposal is expected to have a de minimis effect on competition for the services.

The Board expects, moreover, that the acquisition of Commercial by WesBanco would provide added convenience to Commercial's customers, and to the public by increasing operating efficiencies, improving convenience, and expanding the services available to customers of Commercial. Additionally, there are public benefits to be derived from permitting capital markets to operate so that bank holding companies may make potentially profitable investments in nonbanking companies when those investments are consistent, as in this case, with the relevant considerations under the BHC Act, and from permitting banking organizations to allocate their resources in the manner they believe is most efficient. Accordingly, based on all the facts of record, the Board has determined that the proposal can reasonably be expected to produce public benefits that outweigh any adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act.

The Board also has considered the factors it is required to consider when reviewing applications for establishing branches under section 9 of the FRA and concludes that these factors are consistent with approval of WesBanco Wheeling's application to establish branches at the locations listed in the Appendix.

Conclusion
Based on the foregoing, and in light of all the facts of record, the Board has determined that the applications and notice should be, and hereby are, approved. The Board's approval is specifically conditioned on compliance by WesBanco with all the commitments made in connection with these applications. For the purpose of this action, the commitments and conditions relied on by the Board in reaching its decisions are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The acquisition of the banks shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.

By order of the Board of Governors,15 effective March 2, 1998.

(signed) Jennifer J. Johnson

Jennifer J. Johnson

Deputy Secretary of the Board


Appendix

A. Subsidiary Banks of Commercial

-- West Virginia
Commercial Banking and Trust Company, Parkersburg;
Jackson County Bank, Ravenswood;
Farmers & Mechanics Bank of Ritchie County, Harrisville;
Union Bank of Tyler County, Middlebourne;
Community Bank, Pennsboro; and
The Bank of Paden City, Paden City.
-- Ohio
The Dime Bank, Marietta.

B. Subsidiary Bank of Gateway

Bank of McMechen, McMechen, West Virginia.

C. Nonbanking Subsidiaries of Commercial

Commbanc Investment, Inc., Marietta, Ohio, engaging in financial and investment advisory activities pursuant to section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)) and securities brokerage activities pursuant to section 225.28(b)(7)(i) of Regulation Y (12 C.F.R. 225.28(b)(7)(i)); and

Hometown Financial Co., Inc., Parkersburg, West Virginia, engaging in consumer lending pursuant to section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)) and the sale of credit-related insurance pursuant to section 225.28(b)(11)(i) of Regulation Y (12 C.F.R. 225.28(b)(11)(i)).

D. New West Virginia Branches of WesBanco Wheeling

4th and Main Streets, Paden City;
285 N. State Route 2, New Martinsville;
700 Marshall Street, McMechen;
613 Marshall Street, McMechen; and
43 Marshall Street, Benwood.


Footnotes

1 WesBanco would merge Commercial and Gateway with and into its wholly owned subsidiary, CBI Holding Company ("CBI"), that would be formed solely for the purpose of effecting the acquisitions. In connection with this proposal CBI has applied to become a bank holding company.

2 State deposit data are as of June 30, 1997. In this context, depository institutions include commercial banks, savings banks, and savings associations.

3 In December 1997, the Federal Reserve Bank of Richmond, acting under delegated authority, approved Commercial's application to acquire Gateway. Although Commercial has not consummated the acquisition, the deposits of Gateway have been attributed to Commercial in the deposit data.

4 Pub. L. No. 103-328, 108 Stat. 2338 (1994).

5 A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. 1841(o)(4)(C).

6 See 12 U.S.C. 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). WesBanco is adequately capitalized and adequately managed, as defined by the Riegle-Neal Act. Ohio law imposes no minimum period of existence and operation for an acquired bank. See generally Ohio Rev. Ann. 1115.05 (Anderson 1996). On consummation of the proposal, WesBanco would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in West Virginia and Ohio. All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal.

7 12 U.S.C. 1842(c)(1)(B) and 1828(c)(5)(B). Market share data used to analyze the competitive effects of the proposal are as of June 30, 1996. These data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).

8 The Parkersburg/Marietta banking market is approximated by Wood, Pleasants, Ritchie, and Wirt Counties in West Virginia; and Washington County, Ohio. The Wheeling banking market is approximated by Marshall and Ohio Counties in West Virginia; and Colerain, Pease, Pultney, Mead, York townships and the eastern two-thirds of Richland township in Belmont County, in Ohio. The Tyler/Wetzel banking market is defined as Tyler and Wetzel Counties in West Virginia.

9 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger Herfindahl-Hirschman Index ("HHI") is above 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities.

10 On consummation of the proposal, WesBanco would become the largest depository institution in the Parkersburg/Marietta banking market and control $343.5 million in deposits, representing 18.7 percent of total deposits in depository institutions in the market ("market deposits"). The HHI would increase 145 points to 1122. WesBanco would remain the largest depository institution in the Wheeling banking market and control $362.4 million in deposits, representing 21.7 percent of market deposits. The HHI would increase 69 points to 1096.

11 WesBanco has committed to execute a sales agreement with an out-of-market commercial banking organization prior to consummation of the proposal and to complete the divestiture within 180 days after consummation of the proposal. WesBanco also has committed that, in the event it is unsuccessful in completing the divestiture within 180 days of consummation, WesBanco will transfer any unsold office(s) to an independent trustee that is acceptable to the Board and that will be instructed to sell the office(s) promptly. See BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992).

12 See 12 C.F.R. 225.28(b)(1), (6), (7) and (11).

13 12 U.S.C. 1843(c)(8).

14 See 12 C.F.R. 225.26.

15 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich.

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