Release Date: March 17, 1997
Release Date: March 17, 1997
| For immediate release |
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The Federal Reserve Board today announced its approval of the application filed by AMCORE Financial, Inc., Rockford, Illinois, to acquire all the voting shares of First National Bancorp, Inc., and thereby indirectly acquire First National Bank & Trust, both of Monroe, Wisconsin. Attached is the Board's Order relating to this action. |
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AMCORE Financial, Inc. |
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AMCORE Financial, Inc., Rockford, Illinois ("AMCORE"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all the voting shares of First National Bancorp, Inc. ("Bancorp"), and thereby indirectly acquire its subsidiary bank, First National Bank & Trust ("First National"), both of Monroe, Wisconsin. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 68,756 (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. AMCORE, with total consolidated assets of approximately $2.8 billion, operates five banks in Illinois and engages in certain permissible nonbanking activities.1 AMCORE is the 12th largest commercial banking organization in Illinois, controlling approximately $1.8 billion in deposits, representing approximately 1percent of total deposits in commercial banks in the state. 2 Bancorp is the 23d largest commercial banking organization in Wisconsin, controlling approximately $187.7 million in deposits. Bancorp's deposits represent less than 1percent of total deposits in commercial banking organizations in the state.
Interstate Analysis |
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Competitive Considerations
AMCORE and Bancorp do not compete with each other in any relevant banking market. Based on all the facts of record, the Board concludes that the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. Accordingly, the Board concludes that competitive considerations are consistent with approval.
Other Factors Under the BHC Act
A. Financial, Managerial, and other Supervisory Factors The Board has carefully considered the financial and managerial resources and future prospects of AMCORE, Bancorp and their respective subsidiary banks and other supervisory factors in light of all the facts of record. The facts include supervisory reports of examination assessing the financial and managerial resources of the organizations and confidential financial information provided by AMCORE. Based on these and all other facts of record, the Board concludes that all the supervisory factors under the BHC Act, including financial and managerial resources, weigh in favor of approval of the proposal. B. Convenience and Needs Factor The Board also has carefully considered the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record. As part of the review of this factor, the Board has considered comments from the Wisconsin Rural Development Center, Inc. ("Protestant"), alleging that AMCORE has not taken adequate steps to assess the banking needs of low- and moderate-income ("LMI") rural or farm borrowers and rural community credit needs in Illinois where it currently operates, and has not demonstrated how it plans to serve the credit needs of the residents in rural and farm areas in Wisconsin after consummation of the proposal.5 |
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In reviewing the convenience and needs considerations in the proposal, the Board notes that AMCORE provides a full range of financial services through its banking subsidiaries, including a broad range of mortgage, consumer, agricultural, and small business loan products. AMCORE has stated that after consummation of the proposal, it would offer these services, some of which are not available through First National, in communities currently served by First National. In addition, AMCORE has stated that it would review First National's products and retain those that are unique to the local market. Products offered by AMCORE would include development and expansion of programs that serve rural and farm areas. The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act ("CRA"). The CRA requires the federal banking agencies to encourage depository institutions to help meet the credit needs of local communities, including LMI communities, but does not establish a statutory preference for any specific type of credit. Accordingly, in reviewing the proposal, the Board has focused on AMCORE's performance record in helping to meet the credit needs of all its communities through the products offered by AMCORE's subsidiary banks. As provided in the CRA, the Board evaluates this factor in light of examinations of the CRA performance records of the relevant institutions by the primary federal supervisor. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of an institution's overall record of performance under the CRA by its primary federal supervisor.6 |
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All of AMCORE's subsidiary banks received "outstanding" or "satisfactory" ratings for CRA performance in their most recent evaluations by their primary federal supervisor. AMCORE's lead subsidiary bank, AMCORE Bank, N.A., Rockford, Rockford, Illinois, which controls a majority of all the deposits in the AMCORE subsidiary banks, received an "outstanding" rating in its most recent CRA performance examination from the Office of the Comptroller of the Currency ("OCC"), as of August 1995 (the "Rockford Examination"). The Rockford Examination concluded that the bank's lending activities and loan originations reflected excellent responsiveness to meeting community credit needs and that the bank was a leader in a number of federal loan programs. Examiners also concluded that the bank's distribution of credit products was reasonable and significantly penetrated all segments of the delineated community, including LMI neighborhoods. The Rockford Examination also noted that the bank was very active in community development activities, including providing assistance to several community development organizations located in LMI areas. The four remaining AMCORE subsidiary banks received "satisfactory" ratings for CRA performance in their most recent evaluations.7 In addition, First National received a "satisfactory" rating for CRA performance from the OCC as of February 1992.8 The Board also has considered AMCORE's record of helping to meet the credit needs of rural and farming communities in light of Protestant's comments.9 The most recent CRA performance evaluation of AMCORE Bank, N.A., Mendota, Mendota, Illinois ("Mendota Bank"), for example, found that the bank's primary business focus was the agricultural and small business segments of the banking market and that the bank defined its delineated community as those portions where its agricultural customers resided.10 Mendota Bank also participates in government-guaranteed loan programs for farmers, including loans guaranteed by the Farmers Home Administration ("FmHA") and the Farm Service Agency. As of June 1995, the bank had 273 small farm loans outstanding, totalling more than $12 million.11 |
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Examiners also noted that AMCORE Bank, Aledo, Illinois ("Aledo Bank"), participated in government subsidized loan programs such as the FmHA and the Illinois Farm Development Association.12 Examiners found in Aledo Bank's most recent CRA evaluation that the bank had made approximately $7 million in operating loans at below prime interest rates to 65 farmers through the Illinois State Treasurer's Agriculture Loan Linked Deposit Program, and that the bank's agricultural-related lending comprised approximately 42 percent of its loan portfolio. AMCORE proposes to implement similar programs in Wisconsin through First National. As noted above, AMCORE recognizes that First National offers some products that are uniquely suited to its local community, and also proposes to expand products to include others offered currently through AMCORE subsidiary banks. AMCORE's record indicates that it has successfully helped serve the credit needs of a variety of communities, including rural and agricultural communities. Conclusion on the Convenience and Needs Factor
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Conclusion
The proposed acquisitions shall not be consummated before the fifteenth calendar day following the effective date of this order, and not 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 Chicago, acting pursuant to delegated authority. |
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By order of the Board of Governors,16 effective March 17, 1997.
(signed) Jennifer J. Johnson
Jennifer J. Johnson |
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Footnotes 1 Asset data are as of December 31, 1996. 2 Deposit data are as of June 30, 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). AMCORE is adequately capitalized and adequately managed. In addition, on consummation of the proposal, AMCORE and its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in Wisconsin. First National also has been in existence and continuously operated for at least the minimum period required under Wisconsin law. 5 Protestant also contends that AMCORE's subsidiary banks in rural Illinois invest a significant proportion of their assets in securities, thereby reducing funding for loans, and criticizes AMCORE for not providing assurances in the proposal that First National's ratio of securities investments to total assets would remain consistent with the average ratio for Wisconsin institutions serving similar communities. The loan-to-deposit ratios of AMCORE's banks serving rural and farm areas indicate that the banks engage in significant levels of lending, and the examinations indicated that the level of lending at AMCORE's subsidiary banks is adequate. 6 The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act (54 Federal Register13,742, 13,745 (1989)) provides that a CRA examination is an important and often controlling factor in consideration of an institution's CRA record and that reports of these examinations will be given great weight in the applications process. 7 Protestant contends that AMCORE has been unwilling to seek advice on services, products, and credit needs of the local community served by First National. AMCORE denies this assertion, and states that it has met with members of the community served by First National, including Protestant. The Board notes that AMCORE's subsidiary banks' efforts to ascertain the credit needs of their communities were found to be satisfactory in their most recent CRA evaluations. 8 Examiners found no evidence of prohibited discrimination or other illegal credit practices at any of AMCORE's subsidiary banks or First National, and concluded that the banks were in satisfactory compliance with the substantive provisions of the fair lending laws. Examiners also found no evidence of any practices by the banks that were intended to discourage applications for the types of credit listed in the institutions' CRA statements. |
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9 Protestant asserts that because AMCORE has agreed in principle to acquire another Wisconsin bank holding company, Country Bank Shares Corporation, Mt. Horeb, Wisconsin ("Country"), AMCORE will close some Wisconsin branch offices. The First National proposal represents the initial entry by AMCORE into Wisconsin and therefore creates no institutional overlap. In addition, AMCORE has represented that it will serve the convenience and needs of the community through an expanded branch network in the areas in which First National currently has branches. If AMCORE proposed to acquire Country, that proposal, including the effect of the proposal on the convenience and needs of the community, would be subject to review under the federal banking laws. 10 The bank formed an Agriculture Advisory Committee composed of members of the agricultural community to better ascertain the credit needs of farm areas within the community served by the bank. 11 A small farm loan is defined as a loan of $500,000 or less. 12 In addition, AMCORE Bank N.A., Rock River Valley, Dixon, and AMCORE Bank N.A., Northwest, Woodstock, both in Illinois, participate in government-guaranteed loan programs such as those sponsored by the FmHA. 13 Two individual commenters objected to the loss of local control of Bancorp that would result from its acquisition by AMCORE. The Board believes that an institution's performance should be assessed on the basis of the institution's actual record of assisting to meet the credit needs of its entire community and, accordingly, in reviewing the proposal the Board has focused on AMCORE's record as discussed above. 14 Protestant and individual commenters have requested that the Board hold a public hearing or public meeting on the application. Section 3(b) of the BHC Act does not require the Board to hold a public hearing or meeting on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial. In this case, the Board has not received such a recommendation from any state or federal supervisory authority. Under its rules, the Board may also, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered these requests in light of all the facts of record. In the Board's view, the requestors have had ample opportunity to submit their views, and have, in fact, provided substantive written submissions that have been considered by the Board in acting on the proposal. The requests fail to demonstrate why the written submissions do not adequately present their views. After a careful review of all the facts of record, the Board concludes that the requests dispute the weight that should be accorded to, and the conclusions that may be drawn from, the existing facts of record, but do not identify any genuine dispute about facts that are material to the Board's decision. Based on all the facts of record, the Board has determined that a public hearing or meeting is not necessary to clarify the factual record, and is not otherwise warranted in this case. Accordingly, the requests for a public hearing or meeting on the proposal are denied. 15 Protestant requests that the Board withhold approval of the proposal until AMCORE addresses the issues Protestant has raised, the OCC conducts another CRA performance evaluation of First National, and the public has had an opportunity to provide additional comments. The Board is required under applicable law and its regulations to act on applications under the BHC Act within specified time periods. The Board notes, moreover, that Protestant has had a reasonable opportunity to submit information as provided under the Board's application processing procedures and has, in fact, submitted substantive comments that have been carefully considered by the Board. Based on all the facts of record, and for the reasons discussed above, the Board concludes that the record is sufficient to act on the proposal at this time, and that delay or denial of the proposal on the grounds of informational insufficiency is not warranted. 16 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer. |
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1997 Orders on banking applications