For immediate release

The Federal Reserve Board today announced its approval of the applications of Citizens Commercial Bank & Trust Company, Celina, Ohio, to acquire 11 branches from KeyBank, N.A., Cleveland, Ohio ("KeyBank"), and to establish branches at the locations of the former KeyBank branches. Attached is the Board's Order relating to this action. A Concurring Statement of Governor Meyer will be released later.

Citizens Commercial Bank & Trust Company Celina, Ohio Order Approving Acquisition and Establishment of Branches

Citizens Commercial Bank & Trust Company, Celina ("Citizens"), a state member bank, has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to acquire 11 branches from KeyBank, N.A., Cleveland ("KeyBank"), both in Ohio, and under section 9 of the Federal Reserve Act (12 U.S.C. § 321) to establish branches at the locations of the former KeyBank branches.1 Notice of the applications, 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 proposal were requested from the United States Attorney General ("Justice Department"), 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 the facts of record in light of the factors set forth in the Bank Merger Act and section 9 of the Federal Reserve Act. First Financial is the 11th largest commercial banking organization in Ohio, controlling deposits of $1.1 billion, representing 1.1 percent of the total deposits in commercial banking organizations in Ohio.2 The KeyBank branches to be acquired control deposits of $230.8 million, representing less than 1 percent of the total deposits in commercial banking organizations in Ohio. On consummation of the proposal, First Financial would remain the 11th largest commercial banking organization in Ohio, controlling deposits of $1.3 billion, representing 1.3 percent of the total deposits in commercial banking organizations in the state. Competitive Considerations The Bank Merger Act prohibits the Board from approving an application if the proposal would result in a monopoly or if the effect of the proposal may be to substantially lessen competition in any relevant market, unless the Board finds that 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 to be served.3 Citizens and KeyBank compete in the Celina-St. Mary's, Ohio, banking market.4 Citizens is the largest depository institution in the market, controlling $178.3 million in deposits, representing 18.7 percent of total deposits in depository institutions in the market ("market deposits").5 Citizens proposes to acquire eight KeyBank branches in the banking market that control deposits of $164.9 million, representing 17.2 percent of market deposits. On consummation, Citizens would remain the largest depository institution in the Celina-St. Mary's banking market, controlling $343.3 million in deposits, representing 35.9 percent of market deposits. Concentration in the banking market, as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"), would increase 645 points to 1908.6 In evaluating the effect on competition, the Board also has considered that the Celina-St. Mary's banking market is a relatively small rural banking market near the Ohio and Indiana border and would continue to be served by ten depository institutions after consummation of the proposal. Five competitors, not including Citizens, would each control a market share of more than 5 percent, and three of these competitors would each control a market share of more than 10 percent. Two competitors, including a competitor that controls a market share of more than 10 percent, are large multistate bank holding companies. In addition, two other competitors have announced plans to open branches in the banking market in the near future. Commercial banks in Ohio, moreover, may branch de novo statewide.7 As in other cases, the Board has sought comments from the Justice Department, the OCC, and the FDIC on the competitive effects of the proposal. The Justice Department has advised the Board that consummation of the proposal would not be likely to have any significantly adverse competitive effects in the Celina-St. Mary's banking market or in any other relevant banking markets. The OCC and FDIC did not object to consummation of the proposal or indicate it would have any significantly adverse competitive effects in the Celina-St. Mary's banking market or in any other relevant banking markets. Based on these and all 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 any relevant banking market. Other Considerations The Bank Merger Act also requires the Board to consider the financial and managerial resources and future prospects of the institutions involved in the proposal, and the convenience and needs of the communities to be served. Based on all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations and financial information provided by Citizens, the Board concludes that financial and managerial resources and future prospects considerations are consistent with approval as are considerations relating to the convenience and needs of the communities to be served. The Board also concludes that factors required to be considered under the Federal Reserve Act are consistent with approval. Conclusion Based on the foregoing and all the facts of record, the Board has determined that the applications should be, and hereby are, approved. The Board's approval of the applications is conditioned on compliance by Citizens with all the commitments made in connection with the applications. For purposes of this action, the commitments and conditions relied on in reaching this decision are both conditions imposed in writing by the Board and, as such, may be enforced in proceedings under applicable law. The acquisition of the KeyBank branches may not be consummated before the fifteenth day following the 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 Cleveland, acting pursuant to delegated authority.

By order of the Board of Governors,8 effective September 9, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Appendix Locations of KeyBank Branches to be Acquired and Established as Branches of Citizens, all in Ohio 327 South Main Street, Bryan 128 West Market, Celina 810 North Main Street, Celina 730 East Main Street, Coldwater 202 North Main Street, Delphos Jackson and Main Street, Paulding 166 South Main Street, Rockford 1210 Celina Road, St. Mary's 153 East Spring Street, St. Mary's 11230 State Route 364, St. Mary's 228 East South Street, St. Mary's

Footnotes 1 Citizens is a wholly owned subsidiary bank of First Financial Bancorp, Hamilton, Ohio ("First Financial"). The locations of the KeyBank branches to be acquired are set forth in the appendix. 2 All data are as of June 30, 1996. 3 12 U.S.C. § 1828(c)(5) 4 The Celina-St. Mary's banking market is approximated by Mercer County; the townships of German, Jackson, Noble, St. Mary's and Washington in Auglaize County; and the townships of Allen, Mississinawa, Patterson, Wabash, and York in Darke County, all in Ohio. 5 In this context, depository institution includes commercial banks, savings banks and savings associations. Market share 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). 6 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered 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 institutions. 7 Ohio Rev. Code Ann. § 1117.01 (Anderson 1996). 12 U.S.C. § 36(c). 8 Voting for this action: Chairman Greenspan and Governors Kelley, Phillips, and Meyer. Absent and not voting: Vice Chair Rivlin.

Return to top

1997 Orders on banking applications