|For immediate release|
The Federal Reserve Board today announced its approval of the application by WestStar Bank, Bartlesville, Oklahoma, to acquire the Nowata, Oklahoma, branch of Superior Federal Bank, F.S.B., Fort Smith, Arkansas.
Attached is the Board's Order relating to this action.
WestStar Bank ("WestStar"), a state member bank, has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act ("FDI Act") (12 U.S.C. § 1828(c)) ("Bank Merger Act") to acquire the assets and assume the liabilities of a branch office of Superior Federal Bank, F.S.B., Fort Smith, Arkansas ("Superior Federal"), located in Nowata, Oklahoma ("Nowata Branch").1
Notice of the proposal, affording interested persons an opportunity to submit comments, 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 merger 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 application and all comments received in light of the factors set forth in the Bank Merger Act.
WestStar is a wholly owned subsidiary of Arvest Bank Group, Bentonville, Arkansas ("Arvest"), which is the ninth largest commercial bank organization in Oklahoma, controlling deposits of approximately $798 million, representing 2.3 percent of total deposits in commercial banking organizations in the state ("state deposits").2 The branch of Superior Federal to be acquired controls deposits of approximately $6.2 million, representing less than 1 percent of state deposits. On consummation of the proposal, Arvest would remain the ninth largest commercial banking organization in the state.
The Bank Merger Act provides that the Board may not approve an application if the effect of the acquisition is to create a monopoly or substantially to lessen competition in any section of the country unless the Board finds the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community.3
WestStar and Superior Federal operate in the Bartlesville, Oklahoma, banking market.4 WestStar is the largest depository institution in the banking market, controlling deposits of approximately $359 million, representing 50.1 percent of the total deposits in depository institutions in the market ("market deposits").5 The Superior Federal branch that WestStar proposes to acquire is the 11th largest depository institution in the market, controlling deposits of approximately $3.1 million, representing less than 1 percent of market deposits. On consummation of the proposal, WestStar would remain the largest depository institution in the Bartlesville banking market, controlling deposits of approximately $365 million, representing 50.8 percent of market deposits. Concentration in the market, as measured by the Herfindahl-Hirschman Index ("HHI"), would increase 60 points to 3066.6
Several factors materially mitigate the competitive effects of a merger in the market as measured by the HHI. Ten competitors, including WestStar, would remain in the Bartlesville banking market, including the largest commercial banking organization in Oklahoma. In addition, a large credit union operates in the market, of which approximately 39 percent of the total population in the banking market are members.
Superior Federal is the smallest competitor in the Bartlesville banking market, and the Nowata Branch is not a full service branch and does not have a loan officer on its staff or offer ATM or drive-through services.7 Since 1995, deposits in the Nowata Branch have declined by 16 percent, and its market share has declined by more than 20 percent. The Board concludes that all the factors described above mitigate the potentially adverse competitive effects of the proposal.
The Department of Justice has reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Bartlesville banking market or any other relevant banking market. The OCC and the FDIC also have not objected to the proposal.
Based on all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in the Bartlesville banking market or any other relevant banking market.
The Bank Merger Act also requires the Board to consider the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served. The Board has carefully considered these factors in light of all the facts of record. Arvest and WestStar meet, and on consummation of the proposal will continue to meet, all applicable capital standards. The facts of record include supervisory reports of examination that assess the financial and managerial resources of the organizations and financial information provided by WestStar. Based on these and all other facts of record, the Board concludes that financial and managerial resources and future prospects of the institutions involved are consistent with approval, as are other supervisory factors.
WestStar plans to consolidate the Nowata Branch into WestStar's existing full service branch in Nowata and close the Nowata Branch. WestStar's branch in Nowata is located within 250 feet of the Nowata Branch and offers many products and services not offered at the Nowata Branch. WestStar's branch in Nowata is staffed full-time by loan officers, and the bank offers commercial checking accounts, corporate cash management services, discount brokerage services, and trust services that Superior Federal does not offer. WestStar also has a satisfactory record of performance under the Community Reinvestment Act in helping to meet the credit needs of all its communities, including low- and moderate-income areas.8 Based on all the facts of record, the Board concludes that considerations relating to convenience and needs are consistent with approval.
Based on the foregoing and all the facts of record, the Board has determined that the proposal should be, and hereby is, approved. The Board's approval of the proposal is specifically conditioned on compliance by WestStar with all the commitments made in connection with the application. For purposes of this action, the commitments and conditions relied on in reaching this decision are conditions imposed in writing by the Board, and, as such, may be enforced in proceedings under applicable law.
The proposed acquisition 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 Kansas City, acting pursuant to delegated authority.
By order of the Board of Governors,9 effective August 3 1998.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 The proposal involves the acquisition of assets of a Savings Association Insurance Fund member by a Bank Insurance Fund member. Approval of the proposal under the Bank Merger Act satisfies the requirements of section 5(d)(3) of the FDI Act (12 U.S.C. § 1815(d)(3)). The proposal also would comply with the interstate banking requirements of the Bank Holding Company Act if the Nowata Branch was a state bank that the parent holding company of WestStar Bank was applying to acquire directly.
2 State and market data are as of June 30, 1997.
3 12 U.S.C. § 1828(c)(5).
4 The Bartlesville, Oklahoma, banking market includes Nowata and Washington Counties, Oklahoma; the northeastern quadrant of Osage County, Oklahoma; and the town of Caney, Kansas.
5 In this context, depository institutions include commercial banks, savings banks, and savings associations. Market share data before consummation 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 WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of the Nowata Branch would be acquired by a commercial banking organization, the Nowata Branch's deposits are included at 100 percent in the calculation of the pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990).
6 Under the revised Department of Justice Merger Guidelines, 49 Federal Reserve Bulletin 26,823 (June 29, 1984) ("DOJ Guidelines"), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Justice Department 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 Justice Department 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.
7 The nearest full-service branch of Superior Federal where a customer could meet with a loan officer is 50 miles from the Nowata Branch.
8 12 U.S.C. § 2901 et seq. ("CRA"). WestStar and Superior Federal received satisfactory ratings under the CRA at their most recent performance examinations.
9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, and Ferguson. Absent and not voting: Governor Gramlich.
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1998 Orders on banking applications