FRB Order No. 2022-24
December 15, 2022
FEDERAL RESERVE SYSTEM
Brookline Bancorp, Inc.
Boston, Massachusetts
Order Approving the Merger of Bank Holding Companies
Brookline Bancorp, Inc. (“Brookline”), Boston, Massachusetts, a bank
holding company within the meaning of the Bank Holding Company Act (“BHC Act”),
1
has requested the Board’s approval under section 3 of the BHC Act
2
to merge with PCSB
Financial Corporation (“PCSB”), a bank holding company, and thereby indirectly acquire
PCSB’s state-chartered bank subsidiary, PCSB Bank, both of Yorktown Heights, New
York.
3
Notice of the proposal, affording interested persons an opportunity to
submit comments, has been published (87 Federal Register 42178 (July 14, 2022)), in
accordance with the Board’s Rules of Procedure.
4
The time for submitting comments has
expired, and the Board has considered the proposal and the comment received in light of
the factors set forth in section 3 of the BHC Act.
Brookline, with consolidated assets of approximately $8.6 billion, is the
169th largest insured depository organization in the United States.
5
Brookline controls
approximately $7.0 billion in consolidated deposits, which represent less than 1 percent
1
12 U.S.C. § 1841 et seq.
2
12 U.S.C. § 1842.
3
In connection with the proposal, PCSB Bank has applied for membership in the Federal
Reserve System.
4
12 CFR 262.3(b).
5
Consolidated asset and national ranking data are as of June 30, 2022.
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of the total amount of deposits of insured depository institutions in the United States.
6
Brookline controls Brookline Bank, Brookline, Massachusetts, a state member bank,
which operates only in Massachusetts, and Bank Rhode Island (“BankRI”), Providence,
Rhode Island, a state member bank, which operates only in Rhode Island.
PCSB, with consolidated assets of approximately $2.0 billion, is the 526th
largest insured depository organization in the United States. PCSB controls
approximately $1.7 billion in consolidated deposits, which represent less than 1 percent
of the total amount of deposits of insured depository institutions in the United States.
PCSB controls PCSB Bank, which operates only in New York.
On consummation of this proposal, Brookline would become the 153rd
largest insured depository organization in the United States, with consolidated assets of
approximately $10.4 billion, which would represent less than 1 percent of the total assets
of insured depository organizations in the United States. Brookline would control total
consolidated deposits of approximately $8.6 billion, which would represent less than
1 percent of the total amount of deposits of insured depository institutions in the United
States.
Interstate Analysis
Section 3(d) of the BHC Act generally provides that, if certain conditions
are met, the Board may approve an application by a bank holding company that is well
capitalized and well managed to acquire control of a bank located in a state other than the
home state of the bank holding company without regard to whether the transaction is
prohibited under state law.
7
The Board may not approve under this provision an
application that would permit an out-of-state bank holding company to acquire a bank in
a host state if the target bank has not been in existence for the lesser of the state statutory
6
Consolidated national deposit and market share data are as of June 30, 2022. In this
context, insured depository institutions include commercial banks, savings associations,
and savings banks.
7
12 U.S.C. § 1842(d)(1)(A).
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minimum period of time or five years.
8
When determining whether to approve an
application under this provision, the Board must take into account the record of the
applicant’s depository institution under the Community Reinvestment Act of 1977
(“CRA”)
9
and the applicant’s record of compliance with applicable state community
reinvestment laws.
10
In addition, the Board may not approve an interstate application
under this provision if the bank holding company controls or, upon consummation of the
proposed transaction, would control more than 10 percent of the total deposits of insured
depository institutions in the United States or, in certain circumstances, if the bank
holding company, upon consummation, would control 30 percent or more of the total
deposits of insured depository institutions in any state in which the acquirer and target
have overlapping banking operations.
11
For purposes of this provision, the home state of Brookline is
Massachusetts.
12
PCBS is located in New York. Brookline is well capitalized and well
managed under applicable law. PCBS Bank has been in existence for more than five
years, and Brookline Bank and BankRI both have a “Satisfactory” rating under the
CRA.
13
8
12 U.S.C. § 1842(d)(1)(B).
9
12 U.S.C. § 2901 et seq.
10
12 U.S.C. § 1842(d)(3).
11
12 U.S.C. § 1842(d)(2)(A) and (B). Under section 3(d) of the BHC Act, the acquiring
and target organizations have overlapping banking operations in any state in which any
bank to be acquired is located and the acquiring bank holding company controls any
insured depository institution or a branch. For purposes of section 3(d) of the BHC Act,
the Board considers a bank to be located in the states in which the bank is chartered or
headquartered or operates a branch.
12
12 U.S.C. § 1841(o)(4). A bank holding company’s home state is the state in which
the total deposits of all banking subsidiaries of such company were the largest on
July 1, 1966, or the date on which the company became a bank holding company,
whichever is later.
13
Both of the jurisdictions in which Brookline operates—Massachusetts and Rhode
Island—have state community reinvestment laws. See Mass. Gen. Laws ch. 167, § 14;
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On consummation of the proposed transaction, Brookline would control
less than 1 percent of the total amount of consolidated deposits in insured depository
institutions in the United States. Brookline and PCSB do not have overlapping banking
operations. Accordingly, in light of all the facts of record, the Board is not precluded
from approving the proposal under section 3(d) of the BHC Act.
Competitive Considerations
Section 3 of the BHC Act prohibits the Board from approving a proposal
that would result in a monopoly or would be in furtherance of an attempt to monopolize
the business of banking in any relevant market.
14
The BHC Act also prohibits the Board
from approving a proposal that would substantially lessen competition or tend to create a
monopoly in any banking market, unless 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 communities to be served.
15
Brookline and PCSB do not compete directly in any banking market. The
Department of Justice conducted a review of the potential competitive effects of the
proposal and has advised the Board that it has not concluded that the proposal would
have a significantly adverse effect on competition. In addition, the appropriate banking
agencies have been afforded an opportunity to comment and have not objected to the
proposal.
Based on all the 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 resources in any relevant banking market. Accordingly, the Board
determines that competitive considerations are consistent with approval.
209 CMR 46.00; R.I. Stat. § 19-9-4. Brookline represents that Brookline Bank and
BankRI are in compliance with these state community reinvestment laws.
14
12 U.S.C. § 1842(c)(1)(A).
15
12 U.S.C. § 1842(c)(1)(B).
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Financial, Managerial, and Other Supervisory Considerations
In reviewing a proposal under section 3 of the BHC Act, the Board
considers the financial and managerial resources and the future prospects of the
institutions involved, the effectiveness of the institutions in combatting money
laundering, and any public comments on the proposal.
16
In its evaluation of financial
factors, the Board reviews information regarding the financial condition of the
organizations involved on both parent-only and consolidated bases, as well as
information regarding the financial condition of the subsidiary depository institutions and
the organizations’ significant nonbanking operations. In this evaluation, the Board
considers a variety of public and supervisory information regarding capital adequacy,
asset quality, liquidity, and earnings performance, as well as any public comments on the
proposal. The Board evaluates the financial condition of the combined organization,
including its capital position, asset quality, liquidity, earnings prospects, and the impact
of the proposed funding of the transaction. The Board also considers the ability of the
organization to absorb the costs of the proposal and to complete the proposed integration
of the operations of the institutions effectively. In assessing financial factors, the Board
considers capital adequacy to be especially important. The Board considers the future
prospects of the organizations involved in the proposal in light of their financial and
managerial resources and the proposed business plan.
Brookline, PCSB, and their subsidiary depository institutions are well
capitalized, and the combined organization would remain so upon consummation of the
proposal. The proposed transaction is a bank holding company merger that is structured
as a share or cash exchange.
17
The capital, asset quality, earnings, and liquidity of
Brookline and PCSB are consistent with approval, and Brookline and PCSB Bank appear
16
12 U.S.C. § 1842(c)(2), (5), and (6).
17
To effect the transaction, each share of PCSB common stock would be converted into
a right to receive cash or shares of Brookline common stock. Following the merger,
Brookline would operate PCSB Bank as a separate standalone bank. Brookline has the
financial resources to effect the proposed transaction.
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to have adequate resources to absorb the related costs of the proposal and to complete the
integration of the institutions’ operations effectively. In addition, the future prospects of
the institutions are considered consistent with approval.
The Board also has considered the managerial resources of the
organizations involved and of the proposed combined organization. The Board has
reviewed the examination records of Brookline, PCSB, and their subsidiary depository
institutions, including assessments of their management, risk-management systems, and
operations. In addition, the Board has considered information provided by Brookline; the
Board’s supervisory experiences and those of other relevant bank supervisory agencies
with the organizations; the organizations’ records of compliance with applicable banking,
consumer protection, and anti-money-laundering laws; and the public comment on the
proposal.
Brookline, PCSB, and their subsidiary depository institutions are each
considered to be well managed. The combined organization’s proposed directors and
senior executive officers have knowledge of and experience in the banking and financial
services sectors, and Brookline’s risk-management program appears consistent with
approval of this expansionary proposal.
The Board also has considered Brookline’s plans for implementing the
proposal. Brookline has conducted comprehensive due diligence and is devoting
sufficient financial and other resources to address all aspects of the post-acquisition
integration process for this proposal. In addition, Brookline’s management has the
experience and resources to operate the resulting organization in a safe and sound
manner, and Brookline plans to integrate PCSB Bank’s existing management and
personnel in a manner that augments Brookline’s management.
Based on all the facts of record, including Brookline’s and PCSB’s
supervisory records, managerial and operational resources, and plans for operating the
combined organization after consummation, the Board determines that considerations
relating to the financial and managerial resources and the future prospects of the
organizations involved in the proposal, as well as the records of effectiveness of
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Brookline and PCSB in combatting money-laundering activities, are consistent with
approval.
Convenience and Needs Considerations
In acting on a proposal under section 3 of the BHC Act, the Board
considers the effects of the proposal on the convenience and needs of the communities to
be served.
18
In evaluating whether the proposal satisfies the convenience and needs
statutory factor, the Board considers the impact that the proposal will or is likely to have
on the communities served by the combined organization. The Board reviews a variety
of information to determine whether the relevant institutions’ records demonstrate a
history of helping to meet the needs of their customers and communities. The Board also
reviews the combined institution’s post-consummation plans and the expected impact of
those plans on the communities served by the combined institution, including on low- and
moderate-income (“LMI”) individuals and communities. The Board considers whether
the relevant institutions are helping to meet the credit needs of the communities they
serve, and are providing access to banking products and services that meet the needs of
customers and communities, including the potential impact of branch closures,
consolidations, and relocations on that access. In addition, the Board reviews the records
of the relevant depository institutions under the CRA.
19
The Board strongly encourages
insured depository institutions to help meet the credit needs of the local communities in
which they operate, consistent with the institutions’ safe and sound operation and their
obligations under the CRA.
20
In addition, the Board considers the banks’ overall compliance records and
recent fair lending examinations. Fair lending laws require all lending institutions to
provide applicants with equal access to credit, regardless of their race, ethnicity, gender,
or certain other characteristics. The Board also considers assessments of other relevant
18
12 U.S.C. § 1842(c)(2).
19
12 U.S.C. § 2901 et seq.
20
See 12 U.S.C. § 2901(b).
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supervisors, the supervisory views of examiners, other supervisory information,
information provided by the applicant, and public comments on the proposal. The Board
also may consider the acquiring institution’s business model and intended marketing and
outreach, the combined organization’s plans after consummation, and any other
information the Board deems relevant.
In assessing the convenience and needs factor in this case, the Board has
considered all the facts of record, including reports of examination of the CRA
performance of Brookline Bank, BankRI, and PCSB Bank; the fair lending and
compliance records of these banks; the supervisory views of the Federal Reserve Bank of
Boston (“Reserve Bank”) and the Federal Deposit Insurance Corporation (“FDIC”);
confidential supervisory information; information provided by Brookline; and the public
comment received on the proposal.
Public Comment on the Proposal
The Board received one adverse comment on the proposal. The commenter
objected to the proposal, alleging that in 2021, Brookline Bank made fewer home loans to
African American individuals as compared to white individuals.
21
Businesses of the Involved Institutions and Response to the Public Comment
Through Brookline Bank, BankRI, and their subsidiaries, Brookline offers
consumer and commercial banking, retirement, benefits, investment, insurance, wealth
management, and mortgage products and services. Through PCSB Bank, PCSB offers
consumer and commercial banking and originates and purchases commercial, business,
and real estate loans and purchases investment securities.
In response to the comment, Brookline asserts that the comment focuses
only on certain data points without explaining why or how those data points reflect any
form of discrimination or discernable pattern of lending. For example, Brookline
maintains that the comment does not claim that unqualified white applicants were
The commenter cited publicly available data from 2021 reported by Brookline Bank
under the Home Mortgage Disclosure Act of 1975 (“HMDA”), 12 U.S.C. § 2801 et seq.
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21
approved, qualified minority applicants were denied, or similarly situated white and
minority applicants were treated differently in any way.
In addition, Brookline asserts its record of meeting the needs of the
communities it serves supports approval of the application. Brookline notes that both
Brookline Bank and BankRI received overall “Satisfactory” CRA ratings, and Brookline
Bank received a “High Satisfactory” rating on the Lending Test, in the CRA performance
evaluations dated February 10, 2020. Brookline also notes that Brookline Bank’s 2020
CRA performance evaluation did not indicate that examiners had found any evidence of
lending discrimination or disparate lending practices. Brookline represents that
Brookline Bank offers specialized lending and educational programs that assist LMI
borrowers and small businesses in obtaining credit, including programs and services
focused on financial literacy, first-time homebuyers, and underserved and underbanked
communities.
Records of Performance under the CRA
In evaluating the CRA performance of the involved institutions, the Board
generally considers each institution’s most recent CRA evaluation and the supervisory
views of relevant federal supervisors, which in this case is the Reserve Bank with respect
to both Brookline Bank and BankRI and the FDIC with respect to PCSB Bank.
22
In
addition, the Board considers information provided by the applicant and public
commenter.
The CRA requires that the appropriate federal financial supervisor for a
depository institution prepare a written evaluation of the institution’s record of helping to
meet the credit needs of its entire community, including LMI neighborhoods.
23
An
institution’s most recent CRA performance evaluation is a particularly important
consideration in the applications process because it represents a detailed, on-site
22
See Interagency Questions and Answers Regarding Community Reinvestment,
81 Federal Register 48,506, 48,548 (July 25, 2016).
23
12 U.S.C. § 2906.
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evaluation by the institution’s primary federal supervisor of the institution’s overall
record of lending in its communities.
In general, federal financial supervisors apply a lending test (“Lending
Test”), an investment test (“Investment Test”), and a service test (“Service Test”) to
evaluate the performance of large banks, such as Brookline Bank, BankRI, and PCSB
Bank, in helping to meet the credit needs of the communities they serve. The Lending
Test specifically evaluates an institution’s lending-related activities to determine whether
the institution is helping to meet the credit needs of individuals and geographies of all
income levels. As part of the Lending Test, examiners review and analyze an
institution’s data reported under the HMDA, in addition to small business, small farm,
and community development loan data collected and reported under the CRA regulations,
to assess an institution’s lending activities with respect to borrowers and geographies of
different income levels. The institution’s lending performance is evaluated based on a
variety of factors, including (1) the number and amounts of home mortgage, small
business, small farm, and consumer loans (as applicable) in the institution’s CRA
assessment areas (“AAs”); (2) the geographic distribution of the institution’s lending,
including the proportion and dispersion of the institution’s lending in its AAs and the
number and amounts of loans in low-, moderate-, middle-, and upper-income
geographies; (3) the distribution of loans based on borrower characteristics, including, for
home mortgage loans, the number and amounts of loans to low-, moderate-, middle-, and
upper-income individuals;
24
(4) the institution’s community development lending,
including the number and amounts of community development loans and their
complexity and innovativeness; and (5) the institution’s use of innovative or flexible
Examiners also consider the number and amounts of small business and small farm
loans made to businesses and farms with gross annual revenues of $1 million or less,
small business and small farm loans by loan amount at origination, and consumer loans,
if applicable, to low-, moderate-, middle-, and upper-income individuals. See, e.g.,
12 CFR 228.22(b)(3).
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24
lending practices to address the credit needs of LMI individuals and geographies.
25
The
Investment Test evaluates the number and amounts of qualified investments that benefit
the institution’s AAs, and the Service Test evaluates the availability and effectiveness of
the institution’s systems for delivering retail banking services and the extent and
innovativeness of the institution’s community development services.
26
The Board is concerned when HMDA data reflect disparities in the rates of
loan applications, originations, and denials among members of different racial, ethnic, or
gender groups in local areas. These types of disparities may indicate weaknesses in the
adequacy of policies and programs at an institution for meeting its obligations to extend
credit fairly. However, other information critical to an institution’s credit decisions may
not be available from public HMDA data.
27
Consequently, the Board requests additional
information not available to the public that may be needed from the institution and
evaluates disparities in the context of the additional information obtained regarding the
lending and compliance record of an institution.
CRA Performance of Brookline Bank
Brookline Bank was assigned an overall rating of “Satisfactory” at its most
recent CRA performance evaluation by the Reserve Bank, as of May 16, 2022
25
See 12 CFR 228.22(b).
26
See 12 CFR 228.23 & .24.
27
Importantly, credit scores are not available in the public HMDA data. Accordingly,
when conducting fair lending examinations, examiners analyze additional information not
available to the public, such as credit scores, before reaching a determination regarding
an institution’s compliance with fair lending laws.
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(“Brookline Bank Evaluation”).
28
The bank received “High Satisfactory” ratings for both
the Lending and Investment Tests and a “Low Satisfactory” rating for the Service Test.
29
With respect to the Lending Test, examiners found that Brookline Bank’s
lending levels reflected good responsiveness to the credit needs in the bank’s AA, taking
into account the number and amount of home mortgage and small business loans in the
bank’s AA. Examiners also found that the geographic distribution of loans reflected
adequate penetration throughout the bank’s AA and that the distribution of loans to
borrowers of different income levels and businesses of different sizes was good, given the
product lines offered by the bank. Examiners noted that Brookline Bank exhibited a
good record of serving the credit needs of highly economically disadvantaged areas, low-
income individuals, and businesses with gross annual revenues of $1 million or less in its
AA, consistent with safe and sound operations. Examiners also noted that Brookline
Bank made use of innovative or flexible lending practices in order to serve the credit
needs of LMI individuals or geographies and demonstrated leadership in making
28
The Brookline Bank Evaluation was conducted using Large Institution CRA
Examination Procedures. Examiners reviewed small business and HMDA-reportable
loan data from January 1, 2019, through December 31, 2020. Examiners also reviewed
community development activities from February 10, 2020, through May 16, 2022.
29
The Brookline Bank Evaluation involved a full-scope review of the bank’s activities in
its sole AA, consisting of Essex and Suffolk counties; the cities and towns of Acton,
Arlington, Ashland, Bedford, Belmont, Billerica, Burlington, Cambridge, Carlisle,
Concord, Everett, Framingham, Lexington, Lincoln, Malden, Maynard, Medford,
Melrose, Natick, Newton, North Reading, Reading, Sherborn, Somerville, Stoneham,
Sudbury, Wakefield, Waltham, Watertown, Wayland, Weston, Wilmington, Winchester,
and Woburn in Middlesex county; and the cities and towns of Avon, Braintree,
Brookline, Canton, Dedham, Dover, Holbrook, Medfield, Millis, Milton, Needham,
Norfolk, Norwood, Quincy, Randolph, Sharon, Stoughton, Walpole, Wellesley,
Westwood, and Weymouth in Norfolk county, all in the Boston-Cambridge-Newton,
Massachusetts-New Hampshire Metropolitan Statistical Area (“MSA”).
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community development loans. Examiners observed that a substantial majority of
Brookline Bank’s loans were made in the bank’s AA.
With respect to the Investment Test, examiners found that Brookline Bank
made a significant level of qualified community development investments, particularly
those not routinely provided by private investors, occasionally in a leadership position.
Examiners also found that the bank made significant use of innovative or complex
qualified investments. Examiners characterized Brookline Bank as having exhibited
good responsiveness to credit and community development needs.
With respect to the Service Test, examiners determined that Brookline
Bank’s delivery systems were reasonably accessible to geographies and individuals of
different income levels in the bank’s AA. Examiners found that the bank’s record of
opening and closing branches had not adversely affected the accessibility of the bank’s
delivery systems, particularly to LMI geographies and individuals. Examiners noted that
Brookline Bank’s hours of operation did not vary in a way that inconvenienced the
bank’s AA, particularly LMI geographies and individuals. Examiners also noted that
Brookline Bank provided an adequate level of community development services.
CRA Performance of BankRI
BankRI was assigned an overall rating of “Satisfactory” at its most recent
CRA performance evaluation by the Reserve Bank, as of May 16, 2022 (“BankRI
Evaluation”).
30
The bank received “High Satisfactory” ratings for both the Lending and
Service Tests and a “Low Satisfactory” rating for the Investment Test.
31
30
The BankRI Evaluation was conducted using Large Institution CRA Examination
Procedures. Examiners reviewed HMDA residential and small business loan data from
January 1, 2019, through December 31, 2020. Examiners also reviewed community
development activities from February 10, 2020, through May 16, 2022.
31
The BankRI Evaluation involved full-scope reviews of the bank’s activities in its sole
AA, consisting of Kent and Newport counties; the cities and towns of Central Falls,
Cranston, Cumberland, East Providence, Johnston, Lincoln, North Providence, North
Smithfield, Pawtucket, Providence, Scituate, Smithfield, and Woonsocket in Providence
County; and the towns of Narragansett, North Kingstown, and South Kingstown in
Washington County, all in the Providence-Warwick, Rhode Island-Massachusetts MSA.
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With respect to the Lending Test, examiners found that BankRI’s lending
levels reflected good responsiveness to the credit needs in the bank’s AA, taking into
account the number and amount of home mortgage and small business loans in the bank’s
AA. Examiners also found that the geographic distribution of loans reflected excellent
penetration throughout the bank’s AA and that the distribution of loans to borrowers of
different income levels and businesses of different sizes was good. Examiners noted that
BankRI exhibited a good record of serving the credit needs of highly economically
disadvantaged areas, low-income individuals, and businesses with gross annual revenues
of $1 million or less in its AA, consistent with safe and sound operations. Examiners also
noted that the bank used innovative or flexible lending practices in a safe and sound
manner to address the credit needs of LMI individuals or geographies. Examiners found
that BankRI was a leader in making community development loans. Examiners also
found that a high percentage of BankRI’s loans were made in the bank’s AA.
With respect to the Investment Test, examiners found that BankRI made an
adequate level of qualified community development investments, particularly
investments not routinely provided by private investors, although rarely in a leadership
position. Examiners also found that the bank demonstrated occasional use of innovative
or complex qualified investments. Examiners characterized BankRI as having exhibited
adequate responsiveness to credit and community development needs.
With respect to the Service Test, examiners determined that BankRI’s
service-delivery systems were accessible to geographies and individuals of different
income levels in the bank’s AA. Examiners noted that BankRI’s record of opening and
closing branches did not adversely affect the accessibility of the bank’s delivery systems,
particularly in LMI geographies and to LMI individuals, and that the bank’s hours of
operation did not vary in a way that inconvenienced the bank’s AA, particularly LMI
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geographies and individuals. Examiners also noted that BankRI provided a relatively
high level of community development services.
CRA Performance of PCSB Bank
PCSB Bank was assigned an overall rating of “Satisfactory” at its most
recent CRA performance evaluation by the FDIC, as of January 19, 2021 (“PCSB Bank
Evaluation”).
32
PCSB Bank received “Low Satisfactory” ratings for both the Lending
and Service Tests and a “High Satisfactory” for the Investment Test.
33
With respect to the Lending Test, examiners found that PCSB Bank’s
lending levels reflected good responsiveness to the credit needs in the bank’s AA.
Examiners also found that the geographic distribution of loans reflected adequate
penetration throughout the bank’s AA and that the distribution of loans to retail
borrowers of different income levels and businesses of different sizes was adequate,
given the demographics of the AA. Examiners noted that PCSB Bank had a relatively
high level of community development loans and that an adequate percentage of PCSB
Bank’s loans were made in the bank’s AA. Examiners also noted that PCSB Bank used
innovative and/or flexible lending practices to serve the credit needs of its AA.
With respect to the Investment Test, examiners found that PCSB Bank
made a significant level of qualified community development investments. Examiners
also found that the bank rarely used innovative and/or complex qualified investments.
32
The PCSB Bank Evaluation was conducted using Large Institution CRA Examination
Procedures. Examiners reviewed home mortgage and small business loan data from
January 1, 2018, through December 31, 2019. Examiners also reviewed community
development activities from May 7, 2018, through January 19, 2021.
33
The PCSB Bank Evaluation involved full-scope reviews of the bank’s activities in the
bank’s sole AA, consisting of Putnam, Rockland, and Westchester counties in the New
York-Newark-Jersey City, New York-New Jersey-Pennsylvania MSA, and Dutchess
County in the Poughkeepsie-Newburgh-Middletown, New York MSA.
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Examiners characterized PCSB Bank as having exhibited good responsiveness to credit
and community economic development needs.
With respect to the Service Test, examiners determined that PCSB Bank’s
delivery systems were reasonably accessible to essentially all portions of the bank’s AA,
including LMI areas. Examiners noted that PCSB Bank’s opening and closing of
branches did not adversely affect the accessibility of delivery systems, particularly in
LMI census tracts or to LMI individuals, and the bank’s hours of operation did not vary
in a way that inconvenienced certain portions of the bank’s AA. Examiners also noted
that PCSB Bank provided an adequate level of community development services.
Additional Supervisory Views
In its review of the proposal, the Board consulted with and considered the
views of the Reserve Bank, which supervises Brookline Bank and BankRI, and the FDIC
as the primary federal regulator of PCSB Bank. The Board also considered the results of
the most recent consumer compliance examinations of Brookline Bank, BankRI, and
PCSB Bank, which included reviews of the banks’ compliance management programs
and their compliance with consumer protection laws and regulations, including fair
lending.
The Board has taken this information, as well as the CRA performance
records of Brookline Bank, BankRI, and PCSB Bank, into account in evaluating the
proposal, including considering whether Brookline has the experience and resources to
ensure that the pro forma organization would help meet the credit needs of the
communities to be served by its subsidiary banks following consummation of the
proposed transaction.
Additional Convenience and Needs Considerations
The Board also considers other potential effects of the proposal on the
convenience and needs of the communities to be served. This includes, for example, the
combined organization’s business model and intended marketing and outreach and
existing and anticipated product and service offerings in the communities to be served by
the organization; any additional plans the combined organization has for meeting the
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needs of its communities following consummation; and any other information the Board
deems relevant. Brookline represents that, following consummation of the proposal,
none of PCSB Bank’s existing products and services would be eliminated, and PCSB
Bank’s commercial and consumer customers also would have access to expanded
technological services, including online wires, account aggregation, and Zelle payments,
as well as enhanced access to Brookline’s 1031 exchange services, foreign exchange
services, and enhanced cash management services and support. Brookline further
represents that, as a result of the transaction, PCSB Bank’s commercial banking clients
would have access to larger, more complex commercial loans and cash management
products. Brookline asserts that consummation of the proposal would enhance the CRA
loan products, programs, services, and investments offered by all of Brookline’s bank
subsidiaries, including PCSB Bank, due to the collective ability to pool resources.
Brookline represents that its subsidiary banks offer specialized lending and
educational programs that assist LMI borrowers and small businesses in obtaining credit,
including programs and services focused on financial literacy, first-time homebuyers, and
underserved and underbanked communities. Brookline Bank and Bank RI offer
incentives to first-time homebuyers through a reduction in the interest rate or the fees
required at closing and also provide technical assistance to community development and
similar organizations submitting Federal Home Loan Bank Affordable Housing Program
applications. Brookline asserts that these programs and services would be offered to
communities served by PCSB Bank.
Brookline represents that it provides support to community and community
development groups to provide financial literacy and related training and first-time
homebuyer education in LMI geographies. With respect to community development
investments, Brookline represents that it is an active provider of equity in the affordable
housing market. Brookline asserts that it would offer these services and community
development investments to communities served by PCSB Bank.
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Branch Closures
Physical branches remain important to many banking organizations’ ability
to meet the credit needs of the local communities in which they operate. When banking
organizations combine, whether through acquisitions, mergers, or consolidations, the
combination has the potential to increase or to reduce consumers’ and small businesses’
access to available credit and other banking services. Although the Board does not have
the authority to prohibit a bank from closing a branch, the Board focuses on the impact of
expected branch closures, consolidations, and relocations that occur in connection with a
proposal on the convenience and needs of the communities to be served by the resulting
institution. In particular, the Board considers the effect of any closures, consolidations,
or relocations on LMI communities.
Federal banking law provides a specific mechanism for addressing branch
closings, including requiring that a bank provide notice to the public and the appropriate
federal supervisory agency before a branch is closed.
34
In addition, the federal banking
supervisory agencies evaluate a bank’s record of opening and closing branches,
particularly branches located in LMI geographies or primarily serving LMI individuals,
as part of the CRA examination process.
35
Brookline represents that it does not anticipate that any existing branches of
Brookline Bank, BankRI, or PCSB Bank would be closed, consolidated, or relocated in
connection with the proposal.
Conclusion on Convenience and Needs Considerations
The Board has considered all the facts of record, including the records of
Brookline Bank, BankRI, and PCSB Bank under the CRA, the institutions’ records of
compliance with fair lending and other consumer protection laws, supervisory
information provided by the Reserve Bank and the FDIC, information provided by
34
See 12 U.S.C. § 1831r-1. The bank also is required to provide reasons and other
supporting data for the closure, consistent with the institution’s written policy for branch
closings.
35
See, e.g., 12 CFR 228.24(d)(2).
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Brookline, the public comment on the proposal, and other potential effects of the
proposal on the convenience and needs of the communities to be served. Based on that
review, the Board determines that the convenience and needs factor is consistent with
approval.
Financial Stability Considerations
Section 3 of the BHC Act requires the Board to consider “the extent to
which a proposed acquisition, merger, or consolidation would result in greater or more
concentrated risks to the stability of the United States banking or financial system.”
36
To assess the likely effect of a proposed transaction on the stability of the
United States banking or financial system, the Board considers a variety of metrics that
capture the systemic “footprint” of the resulting firm and the incremental effect of the
transaction on the systemic footprint of the acquiring firm. These metrics include
measures of the size of the resulting firm, the availability of substitute providers for any
critical products and services offered by the resulting firm, the interconnectedness of the
resulting firm with the banking or financial system, the extent to which the resulting firm
contributes to the complexity of the financial system, and the extent of the cross-border
activities of the resulting firm.
37
These categories are not exhaustive, and additional
categories could inform the Board’s decision. In addition to these quantitative measures,
the Board considers qualitative factors, such as the opacity and complexity of an
institution’s internal organization, that are indicative of the relative degree of difficulty of
resolving the resulting firm. A financial institution that can be resolved in an orderly
manner is less likely to inflict material damage on the broader economy.
38
The Board’s experience has shown that proposals involving an acquisition
of less than $10 billion in total assets, or that result in a firm with less than $100 billion in
36
12 U.S.C. § 1842(c)(7).
37
Many of the metrics considered by the Board measure an institution’s activities
relative to the United States financial system.
38
For further discussion of the financial stability standard, see Capital One Financial
Corporation, FRB Order No. 2012-2 (Feb. 14, 2012).
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total assets, generally are not likely to pose systemic risks. Accordingly, the Board
presumes that a proposal does not raise material financial stability concerns if the assets
involved fall below either of these size thresholds, absent evidence that the transaction
would result in a significant increase in interconnectedness, complexity, cross-border
activities, or other risk factors.
39
In this case, the Board has considered information relevant to risks to the
stability of the United States banking or financial system. The proposal involves a target
with less than $10 billion in total assets and a pro forma organization with less than
$100 billion in total assets. Both the acquirer and the target are predominantly engaged
in retail and commercial banking activities.
40
The pro forma organization would not
exhibit an organizational structure, complex interrelationships, or unique characteristics
that would complicate resolution of the firm in the event of financial distress. In
addition, the organization would not be a critical services provider or so interconnected
with other firms or the markets that it would pose a significant risk to the financial system
in the event of financial distress.
In light of all the facts and circumstances, this transaction would not appear
to result in meaningfully greater or more concentrated risks to the stability of the United
States banking or financial system. Based on these and all other facts of record, the
Board determines that considerations relating to financial stability are consistent with
approval.
39
See People’s United Financial, Inc., FRB Order No. 2017-08 at 25-26
(March 16, 2017). Notwithstanding this presumption, the Board has the authority to
review the financial stability implications of any proposal. For example, an acquisition
involving a global systemically important bank could warrant a financial stability review
by the Board, regardless of the size of the acquisition.
40
Brookline and PCSB offer a range of retail and commercial banking products and
services. Brookline has, and as a result of the proposal would continue to have, a small
market share in these products and services on a nationwide basis.
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Conclusion
Based on the foregoing and all the facts of record, the Board determines
that the application should be, and hereby is, approved.
41
In reaching its conclusion, the
Board has considered all the facts of record in light of the factors that it is required to
consider under the BHC Act and other applicable statutes. The Board’s approval is
specifically conditioned on compliance by Brookline with all the conditions imposed in
this order and on any commitments made to the Board in connection with the proposal.
The Board’s approval also is conditioned on receipt by Brookline of all required
regulatory approvals. For purposes of this action, the conditions and commitments are
deemed to be conditions imposed in writing by the Board in connection with its findings
and decision herein and, as such, may be enforced in proceedings under applicable law.
The proposal may not be consummated before the 15th calendar day after
the effective date of this order or later than three months thereafter, unless such period is
41
The commenter requested that the Board hold public hearings on the proposal. Under
section 3(b) of the BHC Act, the Board must hold a public hearing on a proposal if the
appropriate supervisory authorities for the acquiring bank or the bank to be acquired
make a timely written recommendation of disapproval of the proposal.
12 U.S.C. § 1842(b); see also 12 CFR 225.16(e). The Board has not received such a
recommendation from the appropriate supervisory authorities. Under its rules, the Board,
in its discretion, may hold a public hearing if appropriate to allow interested persons an
opportunity to provide relevant testimony when written comments would not adequately
present their views. The Board has considered the commenter’s request in light of all the
facts of record. In the Board’s view, the commenter has had ample opportunity to submit
comments on the proposal and, in fact, submitted a written comment that the Board has
considered in acting on the proposal. The commenter’s request does not identify disputed
issues of fact that are material to the Board’s decision and would be clarified by a public
hearing. In addition, the request does not demonstrate why written comments do not
present the commenter’s views adequately or why a hearing otherwise would be
necessary or appropriate. For these reasons, and based on all the facts of record, the
Board has determined that a public hearing is not required or warranted in this case.
Accordingly, the request for public hearings on the proposal is denied.
The commenter also requested an extension of the comment period for the
application. The commenter’s request for additional time to comment did not identify
circumstances that would warrant an extension of the public comment period for this
proposal. Accordingly, the Board has determined not to extend the comment period.
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extended for good cause by the Board or the Reserve Bank, acting under delegated
authority.
By order of the Board of Governors,
42
effective December 15, 2022.
Michele Taylor Fennell (signed)
Michele Taylor Fennell
Deputy Associate Secretary of the Board
Voting for this action: Chair Powell, Vice Chair Brainard, Vice Chair for Supervision
Barr, Governors Bowman, Waller, Cook and Jefferson.
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