|For immediate release|
The Federal Reserve Board today announced its approval of the notice by Associated Banc-Corp, Green Bay, to acquire First Financial Corporation, and its wholly owned subsidiary, First Financial Bank, F.S.B., both in Stevens Point, and all in Wisconsin.
Attached is the Board's Order relating to this action.
Associated Banc-Corp, Green Bay ("Associated"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire First Financial Corporation ("FFC"),1 and its wholly owned subsidiary, First Financial Bank, F.S.B. ("Thrift"), both in Stevens Point, and all in Wisconsin, and engage in operating a savings association pursuant to section 225.28(b)(4) of Regulation Y (12 C.F.R. 225.28 (b)(4)). Associated also has requested the Board's approval under section 4(c)(8) of the BHC Act to acquire two wholly owned subsidiaries of Thrift and engage in performing appraisals of real estate and tangible personal property pursuant to section 225.28(b)(2)(i) of Regulation Y (12 C.F.R. 225.28 (b)(2)), and operating a credit card bank pursuant to section 225.28(b)(1) and (2) of Regulation Y (12 C.F.R. 225.28(b)(1) and (2)).2
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 39,243 (1997)). 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 4 of the BHC Act.
Associated, with total consolidated assets of approximately $4.5 billion operates 12 subsidiary banks in Wisconsin and Illinois. Associated is the fourth largest depository institution in Wisconsin, controlling deposits of $3.1 billion, representing approximately 4.9 percent of total deposits in depository institutions in Wisconsin.3 FFC is the fifth largest depository institution in Wisconsin, controlling deposits of $2.4 billion in Wisconsin. On consummation of the proposal, Associated would become the third largest depository institution in Wisconsin, controlling total deposits of $5.5 billion, representing approximately 8.8 percent of the total deposits in depository institutions in Wisconsin.
As noted, the Board previously has determined by regulation that operating a savings association, providing real estate and tangible personal property appraisals, and operating a credit card bank are closely related to banking for purposes of section 4(c)(8) of the BHC Act. The Board requires savings associations acquired by bank holding companies to conform their direct and indirect activities to those permissible for bank holding companies under section 4 of the BHC Act and Regulation Y.4 Associated has committed to conform all activities of Thrift with those requirements and to conduct all the proposed activities in accordance with Regulation Y.
Associated and FFC compete directly in 12 banking markets in Wisconsin. The Board has carefully reviewed the competitive effects of the proposal in these banking markets in light of all the facts of record, including the number of competitors that would remain in the markets, the characteristics of the markets, the projected increase in the concentration of total deposits in depository institutions in the markets ("market deposits"),6 as measured by the Herfindahl-Hirschman Index ("HHI"), under the Department of Justice Merger Guidelines ("DOJ Guidelines").7 Consummation of the proposal would not exceed the DOJ Guidelines in 11 of the 12 banking markets in which Associated and FFC compete and a number of competitors would remain in the markets.8 In the remaining banking market of Manitowoc-Two Rivers ("Manitowoc-Two Rivers banking market"),9 consummation of the proposal would increase the HHI by 305 points to 2144, and Associated would control 33 percent of the market deposits.
In considering the competitive effects of the proposal, the Board also has considered that, after consummation of the proposal, 12 depository institutions would remain in the Manitowoc-Two Rivers banking market. Two competitors, not including Associated, would each have market shares of approximately 22 percent. The banking market also has characteristics that make it attractive for entry for out-of-market firms. For example, the number of residents per banking office, the average amount of deposits per banking office, and the per capita income in the Manitowoc-Two Rivers banking market substantially exceed the state average for these statistics in non-MSA markets in Wisconsin. Two banking organizations have entered the banking market de novo since August 1994. Wisconsin law, moreover, authorizes banks to branch statewide.10
Based on these and all of the other facts of record, 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 Manitowoc-Two Rivers banking market or in any other relevant banking market.
The record also indicates that the proposal would result in public benefits. Consummation of the proposal would result in a broader financial network through which Associated could serve its customers and the customers of Thrift. Associated also would offer new financial services to customers of Thrift, including assistance in managing funds in IRA and Keogh accounts, specialized lending services to corporate customers, and comprehensive trust administration and investment management services. Associated's customers also would have access to a variety of mortgage, consumer loan, and credit card services offered by FFC. Based on all the facts of record, the Board has determined that the proposal by Associated can reasonably be expected to produce public benefits that outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Accordingly, the Board has determined that the balance of public interest factors it must consider under section 4(c)(8) of the BHC Act is favorable and consistent with approval.
This proposal shall not be consummated 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 Chicago, acting pursuant to delegated authority.
By order of the Board of Governors,11 effective September 8, 1997.
(signed) Jennifer J. Johnson
Jennifer J. Johnson
Banking markets where the depository institution subsidiaries of Associated and FFC compete, all in Wisconsin unless indicated otherwise:
1 Associated proposes to charter a wholly owned subsidiary, Badger Merger Corporation, Green Bay, Wisconsin, that would merge with and into FFC with FFC as the surviving corporation.
2 The subsidiaries are: (1) Appraisal Services, Inc., Milwaukee (real estate and personal property appraisals); and (2) First Financial Card Services Bank, N.A., Stevens Point (credit card bank), both in Wisconsin.
3 State and market data are as of June 30, 1996. In this context, the term depository institutions includes commercial banks, savings banks, and savings associations.
4 Associated has committed that all impermissible real estate activities will be divested or terminated within two years of consummation of the proposal, that no new impermissible projects or investments will be undertaken during this period, and that capital adequacy guidelines will be met, excluding impermissible real estate investments. Associated also has committed that all impermissible insurance activities conducted by FFC or its subsidiaries will cease within six months of consummation of the proposal, and Associated has indicated that the activities will be divested to an unaffiliated third party or transferred to an affiliated bank subsidiary that is authorized under relevant state law to engage in the activities.
5 12 U.S.C. § 1843(c)(8).
6 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 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). Because the deposits of Thrift would be acquired by a commercial banking organization under the proposal, those deposits are included at 100 percent in the calculation of Associated's pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992). First Banks, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990).
7 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is more than 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 threshold for an increase in the HHI when screening bank mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effects of limited-purpose lenders and other non-depository financial entities.
8 The banking markets are discussed in the Appendix.
9 The Manitowoc-Two Rivers banking market is approximated by Manitowoc County, except for Schleswig, Eaton, and Cooperstown townships, all in Wisconsin.
10 See Wis. Stat. Ann. § 221.032(1) (1995).
11 Voting for this action: Chairman Greenspan and Governors Kelley, Phillips, and Meyer. Absent and not voting: Vice Chair Rivlin.
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1997 Orders on banking applications