|For immediate release|
The Federal Reserve Board today announced its approval of the application of Valley View Bancshares, Inc., Overland Park, Kansas, to acquire Paola-Citizens Bancshares, Inc., and thereby acquire control of its banking subsidiary, Citizens State Bank, both of Paola, Kansas.
Attached is the Board's Order relating to this action.
Valley View Bancshares, Inc.
Valley View Bancshares, Inc. ("Valley View"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire Paola-Citizens Bancshares, Inc. ("Paola"), and thereby acquire control of its subsidiary bank, Citizens State Bank ("Citizens Bank"), both of Paola, Kansas.
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 53,672 (1998)). 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 section 3 of the BHC Act.
Valley View, with total consolidated assets of approximately $1.7 billion, operates four subsidiary banks in Kansas and one subsidiary bank in Missouri.1 Valley View is the sixth largest commercial banking organization in Kansas, controlling approximately $1.4 billion in deposits, representing approximately 3.5 percent of total deposits in commercial banking organizations in the state ("state deposits"). Paola is the 167th largest commercial banking organization in Kansas, controlling approximately $37 million in deposits, representing less than 1 percent of state deposits. On consummation of the proposal, Valley View would remain the sixth largest commercial banking organization in Kansas, controlling deposits of approximately $1.4 billion, representing approximately 3.6 percent of state deposits.
In reviewing the proposal under the BHC Act, the Board has considered 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 facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations, discussions with other federal financial supervisory agencies, and confidential information provided by Valley View. The Board notes that Valley View management has adequate procedures in place to address the limited risks associated with the current activities of the holding company and its subsidiary banks. The Board further notes that the proposal represents a relatively small acquisition by Valley View, that Valley View would not incur or assume any debt in connection with the proposal, and that Valley View would remain well capitalized on consummation of the proposal. Based on the specific facts of record in this case, the Board concludes that the financial and managerial resources of Valley View, Paola, and their respective subsidiary banks and other supervisory factors are consistent with approval of the proposal.
In considering the convenience and needs factor, the Board has reviewed the records of the relevant depository institutions under the Community Reinvestment Act ("CRA").2 As provided in the CRA, the Board has evaluated this factor in light of examinations of the CRA performance records of the relevant institutions by the Federal Deposit Insurance Corporation ("FDIC"), the institutions' appropriate federal banking supervisor. All the insured depository institutions controlled by Valley View received "satisfactory" CRA performance ratings at their most recent CRA examinations by the FDIC. Citizens Bank received an "outstanding" CRA performance rating at its most recent CRA examination by the FDIC. Based on all the facts of record, the Board concludes that convenience and needs considerations, including the CRA performance records of the relevant institutions, are consistent with approval of the proposal.
As required under the BHC Act, the Board also has considered the competitive effects of the proposal. Valley View and Paola do not compete with each other in any relevant banking market. Based on all the facts of record, the Board concludes that the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. Accordingly, the Board concludes that competitive considerations are consistent with approval.
The proposed acquisition shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended by the Board or by the Federal Reserve Bank of Kansas City, acting pursuant to delegated authority.
By order of the Board of Governors,4 effective November 30, 1998.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 State asset and deposit data are as of June 30, 1998.
2 12 U.S.C. § 2901 et seq.
3 A former shareholder of Paola has requested that the Board, as part of its review of the proposal, monitor a private undertaking by Paola's management to compensate former shareholders from the proceeds of the proposal. The limited jurisdiction of the Board to review applications under the specific statutory factors in the BHC Act does not authorize the Board to consider matters relating to general corporate governance, such as shareholder relations and the adequacy of shareholder compensation. See Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973).
4 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.
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1998 Orders on banking applications