FEDERAL DEPOSIT INSURANCE CORPORATION
RE: Plumas Bank
Quincy, California
Applications for Consent to Purchase Certain Assets and
Assume the Liability to Pay Deposits, to Establish One Branch,
and to Relocate a Branch
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act ("FDI
Act"), Plumas Bank, Quincy, California ("Plumas"), has filed an application for the Federal
Deposit Insurance Corporation's ("FDIC") consent to purchase certain assets of and to
assume the liability to pay deposits made in the Chester, California, and Fall River Mills,
California, branches of Bank of America, National Trust and Savings Association, San
Francisco, California ("BOA"). Plumas, an insured state nonmember bank, has total assets
of $153,122,000 and total deposits of $140,101,000 as of June 30, 1997. As a result of
the transaction, Plumas will acquire assets of approximately $902,000 and deposits of
approximately $27,400,000. BOA is an insured national bank with total assets of
$224,342,000,000 and total deposits of $111,413,000,000 as of June 30, 1997.
Additionally, Plumas has applied for the FDIC's consent to establish the Fall River Mills
office of BOA as a branch. Plumas has also requested consent to relocate its Chester
branch from 125 Main Street to 255 Main Street, Chester, California, the location of the
office acquired from BOA. Notice of the proposed transaction, in a form approved by the
Corporation, has been published pursuant to the FDI Act.
Competition
In considering this application, the FDIC defined two relevant geographic markets
("RGM"), otherwise known as the Chester and Fall River Mills markets. Five insured
depository institutions operate nine offices in the Chester market, which consists of the
towns of Chester, Westwood, and Susanville, California. Four depository institutions
operate six offices in the Fall River Mills market, which is comprised of the towns of Fall River
Mills, Burney, and Bieber, California. Two of Plumas' seven
branches are located in the Chester market. Plumas does not
currently operate in the Fall River Mills market. BOA operates two
branches in the Chester market and one branch in the Fall River
Mills market.
Based on June 30, 1997, Summary of Deposits data for banks, Plumas
and BOA controlled 34.0 and 33.8 percent of deposits,
respectively, in the Chester market. This transaction would
increase Plumas' market share to 43.24 percent and result in a 168-
point increase in the market's Herfindahl-Hirschman Index ("HHI'l)
to a post-merger level of 3,060.
BOA currently operates two branches in the Chester market, only
one of which is to be acquired by Plumas. BOA is to retain its
office in Susanville. Thus, the number of banks competing in
the market will remain the same after the sale. Moreover, it is
anticipated that some of BOA's deposits from its Chester branch
will be retained by BOA and will not transfer to Plumas.
Because it will retain an office in the Chester market, BOA can
continue to attract banking customers from throughout the market
area.
Based on June 30, 1997, Summary of Deposits data for banks, BOA
controlled 21.1 percent of deposits in the Fall River Mills market.
Plumas would simply be entering the Fall River Mills market and
assuming BOA's market share. The HHI would remain unchanged at
3,780.
The U.S. Department of Justice concluded that the proposed
transaction would not have a significantly adverse effect on
competition. The Federal Reserve Bank of San Francisco concluded
that the proposed transaction could have significant anti-
competitive effects, but advised that it did not consider all of
the economic factors that may be relevant to the competitive
effects of the transaction. Other federal regulatory authorities
offered no comments. The California State Department of Financial
Institutions approved the transaction on October 16, 1997.
After giving consideration to the factors cited above, the Board of
Directors concludes 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
Plumas is in generally satisfactory condition with adequate
capital and satisfactory management. Future prospects appear
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
transaction. The number of banking institutions will not change in
either market. Five banks in the Chester market, including BOA, and
four in the Fall River Mills market, will remain.
Absent the sale of the BOA branches, BOA has stated its intention to
close the branches and merge their operations into other BOA
operating facilities. The sale of the Fall River Mills branch will
be less disruptive to the communities than closing the branch.
Closure of BOA's Fall River Mills branch would require residents of
that town to travel to another town in the market to find an
alternative to the single bank left in Fall River Mills.
Plumas currently provides and will continue to provide similar
services offered by BOA. In Chester, Plumas will combine its
operations with and into BOA's branch. The two branches are within
one-half mile of each other. There have been no protests to the
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
communities, consistent with the safe and sound operation of the
institution.
Upon consideration of all relevant material, the Board of
Directors has concluded that the applications should be and
hereby are 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 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 10th day of February, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Feldman
Executive Secretary