Board of Governors of the Federal Reserve System

As noted in the Board order, the acquisition of Citizens National by Peoples Bancorp would materially increase concentration in the Pikeville, Kentucky area. As defined by U.S. Department of Justice and Federal Reserve standards, this is already a highly concentrated market, and the acquisition would increase the Herfindahl-Hirschman Index (HHI) measure of concentration by over 290 points to a level above 3100.  An increase in HHI of 290 in this market means the market is becoming much more concentrated, with fewer banks controlling a larger share of the market. I am perplexed why the Board did not request branch divestitures that would reduce concentration in the Pikeville area.  Requesting branch divestitures to reduce negative effects on competition is standard practice in bank merger reviews. For this reason, I do not approve.