Associated Bank would gain market share in Bank Mutual acquisition

Share of deposits would increase by as much as 36.9 percent

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If Green Bay-based Associated Banc-Corp takes on the deposits of Brown Deer-based Bank Mutual Corp., it will increase its market share in several important Wisconsin markets.

The Milwaukee offices of Associated Banc-Corp.

According to the banks’ application for merger, which is pending approval at the Office of the Comptroller of the Currency, Associated would have concentrations as high as 34 percent of deposits in the Green Bay market and 36.9 percent of deposits in the Shawano market.

The market deposit levels are defined by the OCC as the relative shares of total deposits in insured depository institutions in banking markets. Associated and Bank Mutual overlap operations in 15 markets.

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In Milwaukee, Associated would grow to 10.6 percent of deposit share. In their analysis of the Milwaukee market, the banks’ application says: “This market is highly competitive with more than 55 bank and thrift competitors. The market leaders are U.S. Bancorp and Bank of Montreal. Associated Bank is the third largest competitor, while Bank Mutual is the 12th largest competitor.”

Here are the post-merger deposit shares of Associated Bank for the remaining overlapping markets:

  • Appleton 5 percent
  • Beloit-Janesville 8 percent
  • Eau Claire 5 percent
  • Fond du Lac 2 percent
  • Madison 8 percent
  • Marinette 6 percent
  • Rice Lake 4 percent
  • Saint Croix Falls 5 percent
  • Sheboygan 5 percent
  • Sturgeon Bay 1 percent
  • Minneapolis/St. Paul, Minnesota 9 percent
  • Red Wing, Minnesota 1 percent

The banks were required to list the post-merger percentages to assure the OCC, which regulates banks, that they would not exceed safe harbor levels that aim to prevent the creation of monopolies or the lessening of competition in a market. The safe harbor limit is measured by the Herfindahl-Hirschman Index, which is found by summing the squares of the deposit market shares of all firms reporting deposits in the market. The HHI should be no greater than 1,800 and increase no more than 200 points as a result of the merger.

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In Shawano, the share of deposits does exceed the federal limit of 35 percent and the HHI threshold, but Associated argues in its application it will not have any material adverse effect on competition there, particularly if credit unions are included in the consideration.

Associated Banc-Corp’s $482 million acquisition of Bank Mutual Corp., announced in July, is expected to close in the first quarter of 2018. See the Dec. 11 issue of BizTimes Milwaukee for additional analysis of the deal.

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