FEDERAL DEPOSIT INSURANCE CORPORATION
RE: Danvers Savings Bank, Danvers, Massachusetts
Applications for Federal Deposit Insurance and Consent to Merge
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Sections 5 and 18(c) and other provisions of the Federal Deposit Insurance
Act (FDI Act), applications have been filed on behalf of Danvers Interim Mutual Bank (New
Mutual), Danvers, Massachusetts, a newly-formed, Bank Insurance Fund member,
state-chartered mutual savings bank and Danvers Interim Stock Bank, Danvers, Massachusetts
(Subsidiary Stock Bank), a newly-formed, Bank Insurance Fund member, state-chartered stock
savings bank for federal deposit insurance and for the Corporation's consent to merge
Subsidiary Stock Bank with Danvers Savings Bank, Danvers, Massachusetts (DSB), a Bank
Insurance Fund member, state-chartered mutual savings bank with total resources of
$303,019,000 and total deposits of $264,219,000 as of June 30, 1998.
This transaction is the result of DSB's plan of reorganization which, solely to
facilitate this undertaking, includes:
1) the formation of a de novo mutual savings bank to be named Danvers Interim Mutual
Bank (New Mutual);
2) the immediate reorganization of New Mutual as a state-chartered mutual holding
company to be named Danvers Bancorp, Inc. (DBI);
3) the formation of a new stock savings bank, a subsidiary of DBI, which will be named
Danvers Interim Stock Bank (Subsidiary Stock Bank).
4) the merger of DSB and Subsidiary Stock Bank, with the resultant institution
retaining the charter and by-laws of Subsidiary Stock Bank and the name Danvers Savings
Bank (Resultant Bank).
Resultant Bank will be a wholly owned subsidiary of DBI. The principal office will be
at One Conant Street, Danvers, Massachusetts, the present location of DSB.
A review of available information, including the Community Reinvestment Act (CRA)
Statements of the proponent, discloses no inconsistencies with the purposes of the CRA.
The new institution is expected to continue to meet the credit needs of its entire
community, consistent with the safe and sound operation of the institution.
Favorable findings have been accorded to all factors considered pertinent to each
application. Accordingly, it is the Corporation's judgment that the applications should be
and hereby are approved subject to the following conditions:
1. That federal deposit insurance shall not become effective unless and until the
applicant has received all appropriate regulatory approvals for establishment of the stock
savings bank and the mutual savings bank by the State authority and DBI has been
established as a mutual holding company by the State authority.
2. That Resultant Bank shall not issue minority shares without prior written
notification to, and non-objection from, the FDIC.
3. That, prior to a sale, transfer or other disposition of any shares of Resultant Bank
by DBI to any person (including any Employee Stock Ownership Plan), or a conversion of the
mutual holding company to stock form, Resultant Bank will provide written notification to
the FDIC and provide the FDIC with copies of all documents filed with state and federal
banking and/or securities regulators in connection with any such sale, transfer,
disposition or conversion.
4. That, should any shares of stock be issued to persons other than DBI, any dividends
waived by DBI must be retained by the Resultant Bank and segregated, earmarked, or
otherwise identified on its books and records; such amounts must be taken into account in
any valuation of the Resultant Bank and DBI and factored into the calculation used in
establishing a fair and reasonable basis for exchanging Resultant Bank shares for holding
company shares in any subsequent conversion of DBI to stock form; such amounts shall not
be available for payment to or the value thereof transferred to minority shareholders of
the Resultant Bank, by any means including through dividend payments or at liquidation.
5. That the transaction shall not be
consummated sooner than fifteen calendar days after the date of this Order nor later than
six months after the date of this Order unless such period is extended for good cause by
the Corporation.
6. That until the conditional commitment herein granted becomes effective, the
Corporation shall have the right to alter, suspend, or withdraw the said commitment should
any interim development be deemed to warrant such action.
By Order of the Associate Director of the Division of Supervision pursuant to delegated
authority of the Board of Directors.
Dated at Washington, D.C., this 27th day of October, 1998.
Mark S. Schmidt
Associate Director
FDIC Federal Deposit Insurance Corporation
Washington, D.C. 20429
Division of Supervision
October 27, 1998
Board of Trustees Danvers Savings Bank
One Conant Street
Danvers, Massachusetts 01923
Members of the Board:
The Notice to effect a mutual holding company reorganization with the organization of a
mutual savings bank to be reorganized simultaneously into a mutual holding company, the
organization of a stock savings bank owned by the mutual holding company and the merger of
Danvers Savings Bank (DSB) with the stock savings bank has been reviewed by the Federal
Deposit Insurance Corporation (FDIC) pursuant to 12 C.F.R. Sections 303.160 - 303.164 and
other pertinent FDIC regulations.
As part of the Notice, DSB has requested, in accordance with 12 C.F.R. Section
333.4(a), waiver of a certain provision of the FDIC's regulations with respect to
mutual-to-stock conversions, specifically, the depositor vote requirement (12 C.F.R.
Section 333.4(d)(2)).
DSB's waiver request is appropriate for consideration by the FDIC's Board of Directors
under the "good cause" exception to the Conversion Regulations, 12 C.F.R.
Section 333.4(a), rather than the "conflicts with State law" exception under 12
C.F.R. Section 333.4(b). The FDIC Board has determined that the depositor vote requirement
in the Conversion Regulations does not present a conflict with Massachusetts law, but
rather is supplemental to Massachusetts law and procedures for mutual-to-stock
conversions.
The FDIC Board has considered the information provided by DSB with respect to the
commercial borrowings and commercial relationships of the respective corporators of the
Bank in light of the following standards presented in the preamble to the Conversion
Regulations with respect to the waiver of the depositor vote requirement:
"...on a case-by-case basis, the Board will consider waiving the depositor voting
requirement if it is demonstrated, to the Board's satisfaction, that the alternative
voting mechanism established under the applicable state law satisfies the concerns
expressed above about the need for a vote on the conversion by parties that are not
insiders and do not have a potential conflict of interest in reviewing the proposed
conversion." 59 Fed. Reg. 61233, 61238 (November 30, 1994).
Applying this standard, the FDIC Board has determined that a sufficient number of DSB's
corporators are not insiders and have no apparent potential for conflict of interest and
that a majority of the independent corporators voted to approve the Plan of
Reorganization.
Based on the information presented and representations made, the FDIC approves the
waiver of the requirement for the depositor vote and plans to issue a letter of
non-objection to the proposed conversion transaction, provided that DSB receives final
approval from the Massachusetts Department of Banking.
Enclosed is our Order and Basis for the applications filed on behalf of DSB in
conjunction with its Notice of Mutual Holding Company Reorganization. These include
considerations of deposit insurance and merger applications.
Please advise the Boston Regional Office in writing when you have consummated the
transactions. If an extension of the time limitation included in the Order is required, a
letter requesting a specific extension of the limitation including reasons therefore
should be submitted to the Boston Regional Office.
Sincerely,
Mark S. Schmidt
Associate Director
Enclosure
cc: Mr. James A. McDaniel
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109-2891