| For immediate release |
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The Federal Reserve Board today announced its approval of the application of Community First Bankshares, Inc., Fargo, North Dakota, to merge with Mountain Parks Financial Corp., and thereby indirectly acquire Mountain Parks Bank, both of Denver, Colorado. Attached is the Board's Order relating to this action. |
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Community First Bankshares, Inc. |
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Community First Bankshares, Inc., Fargo, North Dakota ("Applicant"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to merge with Mountain Parks Financial Corp. ("MPF"), and indirectly acquire MPF's wholly owned subsidiary bank, Mountain Parks Bank ("MP Bank"), both of Denver, Colorado. Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 46,650 (1996)). 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. |
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Applicant, with total consolidated assets of $2.3 billion, operates subsidiary banks in seven states.1 Applicant is the fourteenth largest banking or thrift organization ("depository institution") in Colorado, controlling $401.1 million in deposits, representing 1.2 percent of total deposits in depository institutions in the state.2 MPF is the sixteenth largest depository institution in Colorado, controlling $361.7 million in deposits, representing 1.1 percent of total deposits in depository institutions in Colorado. On consummation of this proposal, and taking into account proposed divestitures, Applicant would become the eighth largest depository institution in the state, controlling $644.2 million in deposits, representing 2 percent of total deposits in depository institutions in Colorado. Section 3(d) of the BHC Act, as amended by section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company, if certain conditions are met.3 For purposes of the BHC Act, the Applicant's home state is North Dakota, and Applicant would acquire a bank in Colorado. The conditions for an interstate acquisition under section 3(d) are met in this case.4 In view of all the facts of record, the Board is permitted to approve this proposal under section 3(d) of the BHC Act. |
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The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or if the proposal would substantially lessen competition in any relevant market, unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.5 Applicant and MPF compete in the Grand County banking market, the Summit County banking market, and the Denver-Boulder banking market, all in Colorado.6 On consummation of this proposal, concentration would not significantly increase in the Denver-Boulder banking market.7 The Herfindahl-Hirschman Index ("HHI"), for the Denver-Boulder banking market would increase by 1 point to a level of 1057.8 In order to mitigate the potential adverse competitive effects of the proposal in the Grand County and Summit County banking markets,9 Applicant has committed to make divestitures in each of these banking markets.10 In the Grand County banking market, Applicant proposes to divest the Grandby, Colorado, branch of MP Bank to an out-of-market acquirer. In the Summit County banking market, Applicant proposes to divest its controlling interest in Vail Banks, Inc., Vail, Colorado ("Vail Banks"), to Vail Banks or to an out-of-market acquirer. After the divestiture in the Grand County banking market, four competitors would remain in the market, including a new competitor controlling 24.8 percent of market deposits. The HHI would increase by no more than 53 points to a level of 3142. After the divestiture in the Summit County banking market, market concentration, as measured by the HHI, would remain unchanged.11 |
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In accordance with the BHC Act, the Board sought comments from the Department of Justice on the competitive effects of the proposal in the relevant banking markets. The Department of Justice has indicated that, subject to completion of the proposed divestitures, consummation of the proposal would not likely have any significantly adverse effect on competition in any relevant banking market, and has not objected to consummation of the proposal. The Office of the Comptroller of the Currency also has not objected to the proposal. Based on all the facts of record, and subject to Applicant's divestiture commitments, the Board concludes that consummation of this proposal would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market. |
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The Board has carefully reviewed the financial and managerial resources and future prospects of Applicant and MPF in light of all the facts of record, including relevant supervisory reports of examination. The Board also concludes that the financial and managerial resources and future prospects of the institutions involved in this proposal, and considerations relating to the convenience and needs of the communities to be served, are consistent with approval of this application. The other supervisory factors the Board must consider under section 3 of the BHC Act also are consistent with approval. Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is expressly conditioned on compliance by Applicant with its divestiture commitments and other commitments made in connection with this proposal. For purposes of this action, the commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. |
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The acquisition of MPF shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months following 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. |
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By order of the Board of Governors,12 effective December 2, 1996.
Deputy Secretary of the Board |
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Footnotes 1 Asset data are as of June 30, 1996. 2 State deposit data are as of June 30, 1995, but are adjusted to take into account mergers and acquisitions through October 31, 1996. 3 Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is the state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 4 See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Applicant is adequately capitalized and adequately managed. On consummation of this proposal, Applicant and its affiliates would not control more than 10 percent of the total amount of deposits of insured depository institutions in the United States or more than the state limit of 25 percent of the total amount of deposits in all federally insured financial institutions in Colorado. There is no minimum age requirement for subsidiary banks acquired as a result of the purchase of a Colorado bank holding company. Colo. Rev. Stats. § 11-6.4-103 (2), (4) (Supp. 1996). 5 12 U.S.C. § 1842(c). 6 The Grand County banking market is approximated by Grand County, Colorado, and the Summit County banking market is approximated by Summit County, Colorado. The Denver-Boulder banking market is approximated by the Denver RMA and the remaining portions of Adams and Arapahoe Counties, Boulder County, and the towns of Erie, Frederick, and Keensburg in Weld County. |
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7 Market data are as of June 30, 1995. Market deposit 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). 8 Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post- merger HHI is between 1000 and 1800 is considered moderately concentrated and a market in which the post-merger HHI is over 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 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. 9 Applicant would become the largest depository institution in both banking markets, and would control deposits of $50.9 million (representing 69.4 percent of market deposits) in the Grand County banking market, and $108.2 million of deposits (representing 55.9 percent of market deposits), in the Summit County banking market. The HHI would increase by 2261 points to a level of 5350 in the Grand County banking market and by 1085 points to a level of 5069 in the Summit County banking market 10 Applicant has committed to execute a sales agreement to accomplish the divestitures before consummation of the proposal and to complete the divestitures within 180 days of consummation. Applicant also has committed that, if it is unsuccessful in completing the divestitures within 180 days of consummation, it will transfer all interests necessary to effect the divestitures to an independent trustee that is acceptable to the Board and that will be instructed to sell the assets promptly. In addition, Applicant has committed to submit executed trust agreements acceptable to the Board stating the terms of the divestitures prior to consummation of the proposal. 11 Applicant currently owns 24.6 percent of the voting shares of Vail Banks. Applicant acknowledged that its ownership of these shares constituted a controlling interest for purposes of the BHC Act when it acquired them in 1994. 12 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not voting: Governor Yellen. |
1996 Orders on banking applications
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