FEDERAL DEPOSIT INSURANCE CORPORATION
RE: The Monroe County Bank
Monroeville, Alabama
Application for Consent to Merge and to Establish One Branch
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal
Deposit Insurance Act ("FDI Act"), The Monroe County Bank,
Monroeville, Alabama ("MCB"), an insured state nonmember bank with
total resources of $93,472,000 and total deposits of $77,339,000 as
of September 30, 1997, has filed an application for the
Corporation's consent to merge, under its charter and title, with
Peterman State Bank, Peterman, Alabama ("PSB"), an insured state
nonmember bank with total resources of $18,745,000 and total
deposits of $16,545,000, and to establish the main office of PSB as
a branch of the resultant bank. Notice of the proposed transaction,
in a form approved by the Corporation, has been published pursuant
to the FDI Act.
Competition
Monroe County and the nearby town of Repton, Conecuh County, Alabama,
have been identified as the relevant geographic market ("RGM"). Seven
commercial banks operate 13 offices in the RGM. MCB's main office and
branch and PSB's main office and branch are located within the RGM.
Based on June 30, 1997 Summary of Deposits data for banks, MCB and
PSB control 31.09 and 6.87 percent of RGM deposits, respectively. In
contrast, MCB and PSB controlled 35.31 percent and 8.17 percent of
RGM deposits, respectively, at June 30, 1996. The proposed
transaction would increase MCB's share of RGM deposits to 37.96
percent and would result in a 427-point increase in the RGM's
Herfindahl-Hirschman Index ("HHI") to a post-merger level of 2,294.
The Attorney General of the United States concluded that the
proposed transaction would not have a significantly adverse effect
on competition. The Federal Reserve Bank of Atlanta, based on
deposits as of June 30, 1996, concluded that the proposed
transaction would have significantly adverse competitive effects.
The other federal regulatory authorities offered no comments. The
State Banking Department of Alabama approved the proposed
transaction on December 30, 1997.
The proposed transaction will increase concentration within the RGM.
However, six banks operating out of 12 banking offices and four
credit unions will remain within the RGM after consummation of the
proposed transaction. Given the number and capacity of these
institutions and the declining market share of MCB and PSB, it is
believed competition will not be significantly reduced within the
RGM.
After giving consideration to the aforementioned factors, the Board
of Directors is of the opinion that the proposed transaction will
not substantially lessen competition, tend to create a monopoly, or
in any other manner restrain trade or otherwise have an adverse
competitive impact that would require disapproval under the Bank
Merger Act.
Financial and Managerial Resources; Future Prospects
MCB is financially sound with solid capital, good asset quality,
healthy earnings, and strong management. Future prospects are
favorable.
Convenience and Needs of the Community to be Served
The scope and convenience of banking services offered to the general
public should not be significantly affected by the proposal. Six
financially sound banks and four credit unions will remain within the
RGM. MCB will expand banking services offered to PSB residents and
maintain the same level of banking services throughout the remainder
of the RGM. There have been no protests to the proposed transaction
from either the public or the banking community. A review of
available information revealed no inconsistencies with the purposes
of the Community Reinvestment Act. The resultant institution is
expected to continue to meet the credit needs of its entire
community, consistent with the safe and sound operation of the
institution.
Upon consideration of all relevant material, the Board of
Directors has concluded that the application should be and
hereby is approved subject to the following conditions:
1. That the transaction shall not be consummated before the
fifteenth calendar day following the date of this Order or
no later than six months after the date of this order unless
such period is extended for good cause by the Corporation;
2. That all necessary and final approvals be received from
other regulatory authorities; and
3. That, until the proposed transaction becomes effective, the
Corporation shall have the right to alter, suspend, or
withdraw its approval should any interim development be
deemed by the Board of Directors to warrant such action.
Dated at Washington, D.C., this 24th day of February, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Feldman
Executive Secretary