|For immediate release|
The Federal Reserve Board today announced its approval of the application of Otto Bremer Foundation and its wholly owned subsidiary, Bremer Financial Corporation, both of St. Paul, Minnesota, to acquire all the outstanding voting stock of Dean Financial Services, Inc., St. Paul, Minnesota.
Attached is the Board's Order relating to this action.
Otto Bremer Foundation
Otto Bremer Foundation ("Foundation") and its wholly owned subsidiary, Bremer Financial Corporation ("BFC"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have requested the Board=s approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all the outstanding voting stock of Dean Financial Services, Inc., St. Paul, Minnesota ("Dean"), and thereby to acquire its subsidiary banks, First National Bank of Aitkin, Aitkin; State Bank of Edgerton, Edgerton; First State Bank of Eden Prairie, Eden Prairie; and Princeton Bank, St. Paul, all in Minnesota.
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 4873 (1999)). 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 section 3 of the BHC Act.
BFC is the fifth largest depository institution in Minnesota, controlling deposits of approximately $1.5 billion, representing 2.5 percent of total deposits in depository institutions in the state ("state deposits").1 Dean controls total deposits of $264.6 million, representing less than 1 percent of state deposits. On consummation of the proposal, BFC would remain the fifth largest depository institution in Minnesota, controlling deposits of $1.8 billion, representing approximately 2.9 percent of state deposits.
BFC and Dean compete in the Minneapolis-St. Paul, Minnesota, banking market ("Minneapolis banking market").3 BFC is the 14th largest depository institution in the Minneapolis banking market, controlling $268 million in deposits, representing less than 1 percent of market deposits.4 Dean is the 32nd largest depository institution in the market, controlling $104 million in deposits, representing less than 1 percent of market deposits. On consummation of the proposal, BFC would become the 12th largest depository institution in the market, controlling deposits of $372 million, representing approximately 1 percent of market deposits. The change in market concentration, as measured by the Herfindahl-Hirschman Index ("HHI"), would not exceed the threshold level set in the Department of Justice Merger Guidelines ("DOJ Guidelines").5
Based on all the facts of record, and for the reasons discussed above, 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 Minneapolis banking market or any other relevant banking market, and that competitive factors are consistent with approval of the proposal.
Based on all the facts of record, the Board concludes that the financial and managerial resources and future prospects of Foundation, BFC, Dean, and their subsidiary banks are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Considerations related to the convenience and needs of communities to be served, including the records of performance of the institutions involved under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), also are consistent with approval of the proposal.
The transaction 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 for good cause by the Board or by the Federal Reserve Bank of Minneapolis, acting pursuant to delegated authority.
By order of the Board of Governors,6 effective June 16, 1999.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 Deposit data are as of June 30, 1998. In this context, depository institutions include commercial banks, savings banks, and savings associations.
2 12 U.S.C. § 1842(c)(1).
3 The Minneapolis banking market is approximated by Anoka, Hennepin, Ramsey, Washington, Carver, Scott, and Dakota Counties in Minnesota; Lent, Chisago Lake, Shafer, Wyoming and Franconia Townships in Chisago County, Minnesota; Blue Hill, Baldwin, Orrock, Livonia, and Big Lake Townships and the City of Elk River in Sherburne County, Minnesota; Monticello, Otsego, Buffalo, Frankfort, Rockford, and Franklin Townships in Wright County, Minnesota; Lanesburgh Township in Le Sueur County, Minnesota; and the Town of Hudson in St. Croix County, Wisconsin.
4 Market share data are those compiled as of June 30, 1998. Market share data are based on calculations that include the deposits of thrift institutions 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, e.g., 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).
5 After consummation of the proposal, the HHI for the Minneapolis banking market would remain unchanged at 1888. Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI exceeds 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 nondepository financial entities.
6 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Ferguson and Gramlich. Absent and not voting: Governors Kelley and Meyer.
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1999 Orders on banking applications