FRB Approves Merger of Bank Holding Companies

The Federal Reserve Board (the FRB) recently approved the merger of two bank holding companies that hold branches in Ohio and Pennsylvania.  Under Section 3 of the Bank Holding Company Act, the FRB 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 if certain conditions are met.

When considering whether to approve a merger of two bank holding companies, the FRB analyzes the following seven factors:

• competitive factors;
• banking and community factors;
• supervisory factors;
• treatment of certain bank stock loans;
• managerial resources;
• money laundering; and
• financial stability.

In this case, the FRB focused on: (i) competitive factors; (ii) banking and community factors; (iii) managerial resources; (iv) money laundering; and (v) financial stability.

Because the FRB found that the merger satisfies the above factors, the FRB permitted the merger to go forward.