DECISION AND ORDER

IN RE:

APPLICATION OF BANKNEWPORT

TO ESTABLISH A BRANCH OFFICE AT 1423 HARTFORD AVENUE, JOHNSTON, RHODE ISLAND 02919

I. JURISDICTIONAL STATEMENT AND TRAVEL OF THE CASE

This matter came before the Department of Business Regulation ("Department"), Division of Banking ("Division") upon the application of BankNewport, a regulated institution with a principal office at 10 Washington Square, Newport, Rhode Island 02840 (the "Applicant"), for approval to establish a full service branch office to be located at 1423 Hartford Avenue, Johnston, Rhode Island 02919 (the "Application"), pursuant to R. I. Gen. Laws §§ 19-1-3 and 19-2-11 and for the issuance of a certificate of public convenience and advantage in connection therewith.

The Application was filed on March 7, 2019. The Division published a notice of the filing of the Application on its website on March 12, 2019. The Application was available for public inspection and comment in the office of the Division from March 12, 2019 to March 27, 2019. The Division did not receive any written comments or objections regarding the Application during the comment period.

Evidence was submitted to the Division in support of the Application, which included responses to questions contained in the Application and various documents attached as exhibits to the Application.

Specifically, information was provided on the Applicant and the proposed branches. The Applicant provided a statement, which described the means by which the proposed branch would promote the public convenience and advantage of the communities to be served as well as information on the benefits of the proposed branches to the communities to be served and the impact on the safety and soundness of the Applicant.

II. APPLICABLE LAW

a. Public Convenience and Advantage Standard

The Director of the Department (the "Director"), or the Director's designee, is expressly authorized by R. I. Gen. Laws §§ 19-2-3 and 19-2-11 to issue a certificate of public convenience and advantage with respect to the establishment of a branch for a Rhode Island regulated institution upon consideration of factors consistent with the creation of a regulated institution and upon compliance with other applicable provisions of R. I. Gen. Laws Title 19. Although R. I. Gen. Laws Title 19 does not expressly delineate the factors that must be considered by the Director with respect to the standard of public convenience and advantage, it is the policy of the Director, and the Division under the supervision of the Director, to consider such factors as (a) the benefits to the community or communities to be served, such as the products and services to be provided by the proposed branch, and (b) the effects of the proposal on the public interest, such as the effect on employment, the economy and the tax base of the State. In addition, the Director considers the safety and soundness of the regulated institution making application and the effect of the proposal on the strength and stability of the financial community as a whole.

Under applicable law, therefore, the Director may issue a certificate upon a finding that the benefits flowing from the applicant's proposed activities will run to the public, that the applicant's proposed activities are fitting or suited to the public and will result in a gain or benefit to the public, that the proposed activity will not materially adversely affect the safety and soundness of the regulated institution, and that the application is in conformance with applicable law.

b. Community Reinvestment Act Standard

It has been the policy of the Director, in reviewing applications from state chartered institutions, to determine whether an applicant will adhere to Community Reinvestment Act ("CRA") standards. The principles inherent in CRA require institutions to address the credit needs of the communities they serve. Both the federal CRA, 12 U.S.C. § 2901 et seq, and the state CRA, R. I. Gen. Laws §19-9-4, are applicable. The Director believes that CRA factors are relevant and important in determining whether a certificate of public convenience and advantage should be issued. The Applicant received a "Satisfactory" CRA performance evaluation rating from the Federal Deposit Insurance Corporation ("FDIC") on April 25, 2016, when the last CRA Performance review was performed.

c. Insurance of Deposits

R. I. Gen. Laws § 19-4-10 requires that any regulated institution permitted by law to receive deposits, except a regulated institution prevented from accepting deposits by its by-laws or agreement to form, must maintain federal deposit insurance.

III. FINDINGS OF FACT

Evidence was submitted to the Division in support of the Application that included responses to questions contained in the Application and various documents attached as exhibits to the Application.

Specifically, information was provided on the Applicant and the proposed branch. The Applicant provided a statement that described the means by which the proposed branch would promote the public convenience and advantage of the community to be served as well as information on the benefits of the proposed branch to the communities to be served and the impact on the safety and soundness of the Applicant. Based upon the documentary evidence filed with the Division, the Director hereby makes the following findings of fact:

1. The Division received from BankNewport the Application pursuant to R. I. Gen. Laws § 19-2-11 on March 7, 2019.
2. The Notice of Application Filed was posted on the Department's website from March 12, 2019 through March 27, 2019 in accordance with R. I. Gen. Laws § 19-1-3.
3. The public inspection and comment period for the Application extended from March 12, 2019 through March 27, 2019 during which time the Application was available for public inspection and comment in the office of the Division. No letters of comment or objection were received by the Division in connection with the Application during the comment period, therefore no public hearing was held.
4. Applicant is both a Rhode Island financial institution and a regulated institution as defined in R. I. Gen. Laws § 19-1-1.
5. The service area for the Applicant's proposed branch will be residents, businesses, and all customers working within or visiting Johnston, Cranston or Providence neighborhoods.
6. Approval of the Application will offer to existing and prospective customers an array of retail banking services including depository services, consumer loans and mortgage loans, as well as business depository banking services for the bank's commercial and small business lending activity in the proposed service area.
7. The Division has reviewed the Applicants latest CRA Performance Evaluation which evidences its intent to comply with CRA and non-discrimination laws and regulations and to address the communities' credit needs consistent with its past performance, which was last rated by the FDIC on April 25, 2016, as "Satisfactory".
8. Financial information provided by the Applicant adequately demonstrates the financial strength of the Applicant with respect to safety and soundness issues. The Applicant has the management capability required to operate the proposed branch.
9. The Federal Reserve Bank of Boston ("FRBB") was notified of the filing of the Application. By letter dated April 26, 2019, the FRBB notified the Applicant of its approval of the establishment of the proposed branch.

IV. CONCLUSIONS OF LAW

Based upon the documentary evidence filed with the Division, the Director hereby makes the following conclusions of law:

1. R. I. Gen. Laws §§ 19-2-3 and 19-2-11 authorize the Director to issue the certificates of public convenience and advantage in connection with the Application.
2. The Notice of Application Filed satisfies the requirements of R. I. Gen. Laws § 19-1-3 with respect to the publication of notice for the proposed branch.
3. The proposed branch is in the public interest, will promote the convenience and advantage of the communities to be served by the proposed branch and will have a beneficial effect on the economy and on the citizens of the communities to be served by the branch, all consistent with safe and sound banking practices consistent with the requirements of R.I. Gen. Laws § 19-2-3, 19-2-11, and 19-9-4.
4. The evidence presented in the Application complies with the criteria in R.I. Gen. Laws § 19-9-4 regarding credit needs of local communities.
5. The Applicant's deposits at the proposed branch will have federal deposit insurance as required by R.I. Gen. Laws § 19-4-10.

V. DECISION AND ORDER

Upon review and consideration of the documentary evidence in the record presented in this matter, it is hereby ORDERED:

That the Application of BankNewport to establish a full service branch office to be located at 1423 Hartford Avenue, Johnston, Rhode Island 02919 and for the issuance of a certificate of public convenience and advantage in connection therewith is hereby approved in accordance with, and with the general effect provided for in R. I. Gen. Laws § 19-2-11, subject to the condition that the Applicant opens the proposed branch within one (1) year of the date of this Decision and Order; if it has not opened the branch within one (1) year, it must promptly return the certificate of public convenience and advantage to the Division for cancellation unless good cause is demonstrated for an extension.