The Federal Reserve Board on Wednesday announced its approval of the application by Bank First Corporation, Manitowoc, Wisconsin, to merge with Denmark Bancshares, Inc., and thereby indirectly acquire its subsidiary bank, Denmark State Bank, both of Denmark, Wisconsin.
Attached is the Board's order relating to these actions.
Order Approving the Merger of Bank Holding Companies
Bank First Corporation (“BFC”), Manitowoc, Wisconsin, a bank holding
company within the meaning of the Bank Holding Company Act of 1956 (“BHC Act”),1
has requested the Board’s approval under section 3 of the BHC Act2 to merge with
Denmark Bancshares, Inc. (“DBI”), a bank holding company, and thereby indirectly
acquire Denmark State Bank (“Denmark Bank”), both of Denmark, Wisconsin.
Following the proposed acquisition, Denmark Bank would be merged with and into
BFC’s subsidiary, Bank First, N.A. (“Bank First”), Manitowoc, Wisconsin.
3
Notice of the proposal, affording interested persons an opportunity to
submit comments, has been published (87 Federal Register 19687 (April 5, 2022)).4
The
time for submitting comments has expired, and the Board did not receive any public
comments on the proposal.
BFC, with consolidated assets of approximately $2.9 billion, is the
391st largest insured depository organization in the United States.5
BFC controls
approximately $2.5 billion in consolidated deposits, which represent less than 1 percent
12 U.S.C. § 1841 et seq.
12 U.S.C. § 1842.
The merger of Denmark Bank with and into Bank First was approved by the Office of
the Comptroller of the Currency (“OCC”) on May 11, 2022, under section 18(c) of the
Federal Deposit Insurance Act (“Bank Merger Act”). 12 U.S.C. § 1828(c).
12 CFR 262.3(b).
Consolidated asset and national ranking data are as of December 31, 2021.
of the total amount of deposits of insured depository institutions in the United States.
BFC controls Bank First, which operates only in Wisconsin. Bank First is the 9th largest
insured depository institution in Wisconsin, controlling deposits of approximately
$2.4 billion, which represent approximately 1.2 percent of the total deposits of insured
depository institutions in Wisconsin.
DBI, with total assets of approximately $688 million, is the 1,389th largest
insured depository organization in the United States. DBI controls approximately
$621.1 million in consolidated deposits, which represent less than 1 percent of the total
amount of deposits of insured depository institutions in the United States. DBI controls
Denmark Bank, which operates only in Wisconsin.
Denmark Bank is the 47th largest
insured depository institution in Wisconsin, controlling deposits of approximately
$592.0 million, which represent approximately 0.3 percent of the total deposits of insured
depository institutions in Wisconsin.
On consummation of this proposal, BFC would become the 338th largest
insured depository organization in the United States, with consolidated assets of
approximately $3.6 billion, which would represent less than 1 percent of the total assets
of insured depository organizations in the United States. Bank First would control total
consolidated deposits of approximately $3.2 billion, which would represent less than
1 percent of the total amount of deposits of insured depository institutions in the United
States. In Wisconsin, Bank First would become the 8th largest insured depository
institution, controlling deposits of approximately $3.0 billion, which would represent
Consolidated national deposit and market share data are as of December 31, 2021. In
this context, insured depository institutions include commercial banks, savings
associations, and savings banks.
State deposit ranking and deposit data are as of June 30, 2021.
The proposal does not raise interstate issues under section 3(d) of the BHC Act because
Wisconsin is the home state of BFC, and Denmark Bank operates only in Wisconsin. See
12 U.S.C. §§ 1841(o)(4)-(7) & 1842(d).
approximately 1.5 percent of the total deposits of insured depository institutions in that
state.
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.9
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.10
BFC and DBI compete directly in the Green Bay, Wisconsin (“Green
Bay”); Sheboygan, Wisconsin (“Sheboygan”); and Manitowoc-Two Rivers, Wisconsin
(“Manitowoc-Two Rivers”), banking markets.
11 The Board has considered the
competitive effects of the proposal in these banking markets. In particular, the Board has
considered the relative share of total deposits in insured depository institutions in the
market (“market deposits”) that BFC would control;12 the concentration level of market
9
12 U.S.C. § 1842(c)(1)(A).
10 12 U.S.C. § 1842(c)(1)(B).
11 The Green Bay banking market is defined as Brown, Kewaunee, and Oconto counties;
Angelica and Maple Grove townships in Shawano County; Oneida township in
Outagamie County; and Cooperstown township in Manitowoc County, all in Wisconsin.
The Sheboygan banking market is defined as Sheboygan County; Calumet township in
Fond du Lac County; Schleswig township in Manitowoc County; and New Holstein
township in Calumet County, all in Wisconsin. The Manitowoc-Two Rivers banking
market is defined as Manitowoc County, Wisconsin, except Schleswig and Cooperstown
townships.
12 Local deposit and market share data are as of June 30, 2021, and are based on
calculations in which the deposits of thrift institutions are included at 50 percent. The
Board previously has indicated that thrift institutions have become, or have the potential
to become, significant competitors to commercial banks. See, e.g., Midwest Financial
Group, 75 Federal Reserve Bulletin 386 (1989); and National City Corporation,
deposits and the increase in this level, as measured by the Herfindahl-Hirschman Index
(“HHI”) under the Department of Justice (“DOJ”) Bank Merger Competitive Review
guidelines (“DOJ Bank Merger Guidelines”);13 the number of competitors that would
remain in the market; and other characteristics of the market.
Consummation of the proposal would be consistent with Board precedent
and within the thresholds in the DOJ Bank Merger Guidelines in the Green Bay and
Sheboygan banking markets. On consummation, the Green Bay market would remain
highly concentrated as measured by the HHI, according to the DOJ Bank Merger
Guidelines, and numerous competitors would remain in the market.
14 On consummation,
70 Federal Reserve Bulletin 743 (1984). Thus, the Board regularly has included thrift
deposits in the market share calculation on a 50 percent weighted basis. See, e.g., First
Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).
13 In applying the DOJ Bank Merger Guidelines issued in 1995 (see
https://www.justice.gov/atr/bank-merger-competitive-review-introduction-and-overview1995), the Board looks to the DOJ’s Horizontal Merger Guidelines, issued in 1992 and
amended in 1997, for the characterization of a market’s concentration. See
https://www.justice.gov/atr/horizontal-merger-guidelines-0. Under these Horizontal
Merger Guidelines, which were in effect prior to 2010, a market is considered
unconcentrated if the post-merger HHI is under 1000, moderately concentrated if the
post-merger HHI is between 1000 and 1800, and highly concentrated if the post-merger
HHI exceeds 1800. The DOJ has informed the Board that a bank merger or acquisition
generally would not be challenged (in the absence of other factors indicating
anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. Although the DOJ and the Federal Trade
Commission issued revised Horizontal Merger Guidelines in 2010 (see
https://www.justice.gov/atr/horizontal-merger-guidelines-08192010), the DOJ has
confirmed that its Bank Merger Guidelines, which were issued in 1995, were not
modified. See Press Release, Department of Justice (August 19, 2010), available at
www.justice.gov/opa/pr/2010/August/10-at-938.html.
14 BFC is the 10th largest depository organization in the Green Bay banking market,
controlling approximately $207.3 million in deposits, which represent 1.9 percent of
market deposits. DBI is the sixth largest depository organization in the market,
controlling deposits of approximately $460.1 million, which represent 4.3 percent of
market deposits. On consummation of the proposed transaction, BFC would become the
4th largest depository organization in the market, controlling deposits of approximately
$667.5 million, which would represent 6.2 percent of market deposits. The HHI for the
the Sheboygan market would remain moderately concentrated as measured by the HHI,
according to the DOJ Bank Merger Guidelines, and numerous competitors would remain
in the market.
In the Manitowoc-Two Rivers banking market, the concentration levels on
consummation would exceed the thresholds in the DOJ Bank Merger Guidelines when
using initial competitive screening data. BFC is the largest insured depository
organization in the Manitowoc-Two Rivers market, controlling approximately
$655.1 million in deposits, which represent 33.7 percent of market deposits. DBI is the
5th largest insured depository organization in the market, controlling approximately
$103.0 million in deposits, which represent 5.3 percent of market deposits. On
consummation, BFC would remain the largest insured depository organization in the
market, controlling approximately $758.0 million in deposits, which would represent
39.0 percent of market deposits. The HHI in the market would increase 357 points, from
2438 to 2795.
The Board has considered whether there are any factors that would either
mitigate the competitive effects of the proposal or indicate that the proposal would not
have a significantly adverse effect on competition in the Manitowoc-Two Rivers banking
market.16 The Board specifically has considered whether seven credit unions in the
Green Bay market would increase 17 points, from 1990 to 2007, and 20 competitors
would remain in the market.
15 BFC is the largest depository organization in the Sheboygan banking market,
controlling approximately $633.0 million in deposits, which represent 20.9 percent of
market deposits. DBI is the 15th largest depository organization in the market,
controlling deposits of approximately $2.3 million, which represent less than 1 percent of
market deposits. On consummation of the proposed transaction, BFC would remain the
largest depository organization in the market, controlling deposits of approximately
$635.0 million, which would represent 21.0 percent of market deposits. The HHI for the
Sheboygan market would increase 3 points, from 1091 to 1094, and 14 competitors
would remain in the market.
16 The number and strength of factors necessary to mitigate the competitive effects of a
proposal depend on the size of the increase in, and the resulting level of, concentration in
market would merit inclusion at higher weights. Each of these credit unions is open to at
least 75 percent of residents in the market, maintains street-level branches, and offers a
broad range of banking products.
17 The Board finds that the deposits of each credit union
with these characteristics should be included at a 50 percent weight in estimating the
credit union’s market influence (each a “qualifying credit union”). This weighting takes
into account the limited lending by credit unions to small businesses relative to
commercial banks’ lending levels.
This adjustment suggests that the level of concentration in the ManitowocTwo Rivers banking market following the proposed transaction would be less significant
than would appear from the initial competitive screening data. After consummation and
adjusting to reflect competition from the qualifying credit unions in the market, the level
of concentration in the Manitowoc-Two Rivers banking market as measured by the HHI
would increase by 240 points, from 1700 to 1940, and the market share of BFC would
increase to 32.0 percent. Eight banks, including the pro forma institution, and one
depository institution with a market share of approximately 27.2 percent, and seven credit
unions would remain as competitors in the market.
Conclusion Regarding Competitive Effects
The DOJ conducted a review of the potential competitive effects of the
proposal and has advised the Board that consummation of the proposal would not likely
have a significantly adverse effect on competition in the Green Bay, Sheboygan, and
Manitowoc-Two Rivers banking markets or in any other relevant banking market. In
addition, the appropriate banking agencies have been afforded an opportunity to comment
and have not objected to the proposal.
a banking market. See NationsBank Corporation, 84 Federal Reserve Bulletin 129
(1998).
17 The Board has previously considered competition from certain active credit unions
with these features as a mitigating factor. See, e.g., Huntington Bancshares Incorporated,
FRB Order No. 2021-07 (May 25, 2021); Huntington Bancshares Incorporated, FRB
Order No. 2016-13 (July 29, 2016); BB&T Corporation, FRB Order No. 2015-18
(July 7, 2015); and Wachovia Corporation, 92 Federal Reserve Bulletin C183 (2006).
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 the Green Bay, Sheboygan, and Manitowoc-Two Rivers
banking markets, or in any other relevant banking market. Accordingly, the Board
determines that competitive considerations are consistent with approval.
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.18 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 effectively complete the proposed
integration of the operations of the institutions. 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.
BFC, DBI, and their subsidiary depository institutions are well capitalized,
and the combined organization would remain so upon consummation of the proposal.
18 12 U.S.C. § 1842(c)(2), (5), and (6).
The proposed transaction is a bank holding company merger that is structured as a share
and cash exchange, with a subsequent merger of the subsidiary depository institutions.
19
The capital, asset quality, earnings, and liquidity of BFC, DBI, and their subsidiary
depository institutions are consistent with approval, and BFC appears to have adequate
resources to absorb the related costs of the proposal and to complete the integration of the
institutions’ operations. In addition, future prospects 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 BFC, DBI, and their subsidiary depository
institutions, including assessments of their management, risk-management systems, and
operations. In addition, the Board has considered information provided by BFC; the
Board’s supervisory experiences and those of other relevant bank supervisory agencies
with the organizations; and the organizations’ records of compliance with applicable
banking, consumer protection, and anti-money-laundering laws.
BFC, DBI, and their subsidiary depository institutions are each considered
to be well managed. BFC’s directors and senior executive officers have knowledge of
and experience in the banking and financial services sectors, and BFC’s risk-management
program appears consistent with approval of this expansionary proposal.
The Board also has considered BFC’s plans for implementing the proposal.
BFC has conducted comprehensive due diligence and is devoting significant financial
and other resources to address all aspects of the post-acquisition integration process for
this proposal. In addition, BFC’s management has the experience and resources to
operate the resulting organization in a safe and sound manner.
Based on all the facts of record, including BFC’s supervisory record,
managerial and operational resources, and plans for operating the combined organization
19 At the time of the merger of DBI with and into BFC, each share of DBI common stock
would be converted into a right to receive BFC common stock or cash, based on an
exchange ratio. BFC has the financial resources to effect the proposed transaction.
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 BFC and DBI in combatting moneylaundering 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.20 In its evaluation, the Board considers whether the relevant institutions are
helping to meet the credit needs of the communities they serve, as well as other potential
effects of the proposal on the convenience and needs of these communities. The Board
considers and places particular emphasis on the records of the relevant depository
institutions under the Community Reinvestment Act of 1977 (“CRA”).
21 The CRA
requires the federal financial supervisory agencies to encourage 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.
22 The CRA also requires the
appropriate federal financial supervisory agency to assess a depository institution’s
record of helping to meet the credit needs of its entire community, including low- and
moderate-income (“LMI”) neighborhoods, in evaluating bank expansionary proposals.23
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, or
certain other characteristics. The Board also considers assessments of the involved
institutions by other relevant supervisors, the supervisory views of examiners, other
20 12 U.S.C. § 1842(c)(2).
21 12 U.S.C. § 2901 et seq.
22 12 U.S.C. § 2901(b).
23 12 U.S.C. § 2903.
supervisory information, information provided by the applicant, and any public
comments on the proposal. The Board also may consider the acquiring institution’s
business model, marketing and outreach plans, 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 Bank First and Denmark Bank; the fair lending and compliance records
of both banks; the supervisory views of the OCC with respect to Bank First and the
Federal Deposit Insurance Corporation (“FDIC”) with respect to Denmark Bank;
confidential supervisory information; and information provided by BFC.
Records of Performance under the CRA
In evaluating the convenience and needs factor and the CRA performance
of an institution, the Board generally considers the institution’s most recent CRA
evaluation, as well as information and views provided by the appropriate federal financial
supervisors. In this case, the Board considered the supervisory views of the OCC with
respect to Bank First and FDIC with respect to Denmark Bank.
24 In addition, the Board
considers information provided by the applicant and by any public commenters.
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.25 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 by the institution’s primary federal supervisor of the institution’s overall
record of lending in its communities.
24 See Interagency Questions and Answers Regarding Community Reinvestment,
81 Federal Register 48,506, 48,548 (July 25, 2016).
25 12 U.S.C. § 2906.
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 Bank First, 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
Home Mortgage Disclosure Act of 1975 (“HMDA”),
26 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 upperincome 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;27 (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 lending practices to address the credit needs of LMI individuals and
26 12 U.S.C. § 2801 et seq.
27 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).
geographies.28 The Investment Test evaluates the number and amounts of qualified
investments that benefit the institution’s AAs. 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.29
Federal financial supervisors apply a Lending Test and a community
development test (“Community Development Test”) to evaluate the performance of an
intermediate small bank, such as Denmark Bank, in helping to meet the credit needs of
the communities it serves. The Community Development Test evaluates the number and
amounts of the institution’s community development loans and qualified investments; the
extent to which the institution provides community development services; and the
institution’s responsiveness through such activities to community development lending,
investment, and service needs.30
CRA Performance of Bank First
Bank First was assigned an overall rating of “Satisfactory” at its most
recent CRA performance evaluation by the OCC, as of May 27, 2020 (“Bank First
Evaluation”).31 The bank received “High Satisfactory” ratings for the Lending Test and
the Service Test, and a “Low Satisfactory” rating for the Investment Test.
32
Examiners found that Bank First’s lending levels reflected good
responsiveness to the credit needs in its AAs and that a substantial majority of the bank’s
28 See 12 CFR 228.22(b).
29 See 12 CFR 228.23 & .24.
30 See 12 CFR 228.26(c).
31 The Bank First Evaluation was conducted using Interagency Large Institution CRA
Examination Procedures. Examiners reviewed home mortgage, small business, small
farm, and community development loans; qualified investments; and community
development services from January 1, 2017, through December 31, 2019.
32 The Bank First Evaluation involved full-scope reviews of the following AAs: the nonMetropolitan Statistical Area (“MSA”) consisting of Manitowoc, Waupaca, and Barron
counties, all of Wisconsin; and the Sheboygan, Wisconsin MSA. The Bank First
Evaluation involved limited-scope reviews of the following AAs: the Appleton,
loans were made in its AAs. Examiners also found that Bank First had an adequate level
of qualified investments, particularly those that were not routinely provided by private
investors. Examiners noted that Bank First exhibited adequate responsiveness to credit
and community development needs. Examiners found that the bank’s service delivery
systems were accessible to geographies and individuals of different income levels in the
bank’s AAs. Examiners also 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.
CRA Performance of Denmark Bank
Denmark Bank received an overall rating of “Satisfactory” at its most
recent CRA performance evaluation by the FDIC, as of May 4, 2020 (“Denmark Bank
Evaluation”).33 The bank received “Satisfactory” ratings for both the Lending Test and
the Community Development Test.34
Examiners found that Denmark Bank demonstrated reasonable lending
performance. Examiners noted that the bank’s geographic distribution of loans reflected
reasonable dispersion of lending throughout the bank’s AAs and that the bank’s
distribution of loans to borrowers reflected reasonable penetration among individuals of
different income levels, including LMI individuals, and businesses and farms of different
Wisconsin MSA; the Green Bay, Wisconsin MSA; and the Oshkosh-Neenah, Wisconsin
MSA.
33 The Denmark Bank Evaluation was conducted using Interagency Intermediate Small
Institution Examination Procedures. Examiners reviewed home mortgage loans that the
bank reported from 2017 through 2019, and small business and small farm loans
originated in 2019. Examiners also reviewed the bank’s community development loans,
qualified investments, and community development services from March 27, 2017,
through May 4, 2020.
34 The Denmark Bank Evaluation involved a full-scope review of the Green Bay,
Wisconsin MSA AA, and a limited scope review of the bank’s non-MSA AA, consisting
of census tracts within Manitowoc County, Wisconsin, and Shawano county, Wisconsin.
The bank’s Sheboygan, Wisconsin MSA AA was designated in February 2020 and was
not included within the scope of the evaluation.
sizes. Examiners found that the bank demonstrated adequate responsiveness to
community development needs in its AAs through loans, qualified investments, and
services.
Additional Supervisory Views
In its review of the proposal, the Board consulted with and considered the
views of the OCC, as the primary federal supervisor of Bank First, and the FDIC, as the
primary federal supervisor of Denmark Bank. The Board also considered the results of
the most recent consumer compliance examinations of Bank First and Denmark Bank,
which included reviews of the banks’ compliance management programs and compliance
with consumer protection laws and regulations.
The Board has taken the foregoing consultations and examinations into
account in evaluating the proposal, including in considering whether BFC has the
experience and resources to ensure that the combined bank would help meet the credit
needs of the communities to be served 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. BFC represents that the
combined bank would benefit from certain operational efficiencies that would enable the
bank to better serve its communities. BFC represents that, while the proposed merger is
not expected to result in any significant changes to the products and services currently
offered by Bank First or Denmark Bank, it has identified opportunities to enhance access
by Denmark Bank’s customers to services related to personal and business credit cards,
consumer credit, and mortgage loan applications; larger commercial loans; and a full
suite of treasury management products for business customers.
Branch Closures
The Board considers 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.
Particular attention is paid to the effect of any closures, consolidations, or relocations on
LMI, distressed or underserved nonmetropolitan middle-income, and majority-minority
communities. Federal banking law also 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.35 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.36
BFC expects to close two branches of the resulting bank in connection with
the proposal.
37 BFC represents that the decision to close these branches was made in
accordance with Bank First’s Branch Closings Policy, which BFC asserts takes into
account, among other things, if the market where a branch is located is a distressed or
underserved nonmetropolitan middle-income census tract, majority-minority census tract,
or rural area.38 Neither one of the branches that would be closed is located in LMI,
distressed or underserved nonmetropolitan middle-income, or majority-minority census
tracts. In addition, BFC represents that Denmark Bank has provided prior notice of
35 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.
36 See, e.g., 12 CFR 228.24(d)(2). In addition, the Board notes that the OCC, as the
primary federal supervisor of Bank First, reviews branch closures in evaluating the CRA
performance of the combined organization.
37 The branches that are expected to be closed are the Denmark Bank branches located at
2646 Noel Drive, Green Bay, Wisconsin (“Bellevue branch”), and 1740 Scheuring Road,
De Pere, Wisconsin (“Lawrence branch”).
38 BFC represents that one of the branches is located less than one mile from an existing
Bank First branch and that the other branch is located in an industrial area that is not
easily accessible for customers.
branch closures to the applicable regulators and customers in accordance with applicable
law, regulations, and regulatory guidance.
The Board has considered all the facts of record relating to the expected
branch closures, including the records of the relevant depository institutions under the
CRA and fair lending laws in relation to branch closures; the institutions’ policies and
procedures on and records of compliance with federal banking law regarding branch
closures; the views of the OCC; confidential supervisory information; and information
provided by BFC. Based on that review, the Board concludes that the anticipated impact
of the proposed branch closures in connection with the proposal on the relevant
communities is consistent with approval.
Conclusion on Convenience and Needs Considerations
The Board has considered all the facts of record, including the records of
the relevant depository institutions under the CRA, the institutions’ records of
compliance with fair lending and other consumer protection laws, confidential
supervisory information, information provided by BFC, 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 considerations are
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.”39
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
39 12 U.S.C. § 1842(c)(7).
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.40 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.41
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
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.42
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 of less than
$100 billion in total assets. Both the acquirer and the target are predominantly engaged
40 Many of the metrics considered by the Board measure an institution’s activities
relative to the United States financial system.
41 For further discussion of the financial stability standard, see Capital One Financial
Corporation, FRB Order No. 2012-2 (Feb. 14, 2012).
42 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.
in retail and commercial banking activities.
43 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.
Conclusion
Based on the foregoing and all the facts of record, the Board determines
that the application should be, and hereby is, approved. 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 BFC 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 BFC 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
43 BFC and DBI offer a range of retail and commercial banking products and services.
BFC 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.
extended for good cause by the Board or the Federal Reserve Bank of Chicago, acting
under delegated authority.
By order of the Board of Governors,44 effective June 22, 2022.
Michele Taylor Fennell (signed)
Michele Taylor Fennell
Deputy Associate Secretary of the Board
44 Voting for this action: Chair Powell, Vice Chair Brainard, Governors Bowman,
Waller, Cook and Jefferson.
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