By the Division of Banks

DECISION
ON THE APPLICATIONS RELATIVE TO THE
REORGANIZATION INTO A MUTUAL HOLDING COMPANY BY
MARLBOROUGH SAVINGS BANK,
MARLBOROUGH, MASSACHUSETTS


The Marlborough Savings Bank, (the "Petitioner"), Marlborough, Massachusetts, has petitioned to form Marlborough De Novo Savings Bank ("Interim Mutual Bank"), Marlborough, Massachusetts, as part of its reorganization into Marlborough Bancshares, MHC ("MHC"), a mutual holding company. MHC will have a mid-tier holding company, Marlborough Bancshares, Inc. ("Bancshares"), which will be the holding company for a subsidiary stock bank, Marlborough Interim Savings Bank ("Continuing Bank"). This reorganization has been structured as a multi-step transaction, requiring applications before the Division of Banks (the "Division") and the Board of Bank Incorporation (the "Board"), which held a public hearing on the matters before it on January 22, 2007.

The applications to the Division are made pursuant to General Laws chapter 167H, section 2, to form the MHC, and General Laws chapters 168, section 34, and 167H, section 7, for the subsequent merger of the Petitioner with and into the Continuing Bank under the charter and by-laws of the Continuing Bank. The Continuing Bank will operate under the name Marlborough Savings Bank. MHC, Bancshares, and the Continuing Bank will all be headquartered in Marlborough, Massachusetts.

In accordance with the provisions of said chapters 167H and 168, and the Division's implementing regulations 209 CMR 33.00 et seq., the Petitioner and its related entities have submitted the requisite documents and information relative to these transactions and appropriate notice has been given to its depositors and to the public. The deadline for filing comments expired on January 25, 2007.

The applications and supporting documents have established an extensive record on these petitions, which have been reviewed in light of the relevant statutory provisions and policies of the Division. Those statutory requirements necessitate that, among other things, the Division consider whether the reorganization will be unfair to the depositors and whether the public will be served by this transaction. Similarly, the merger must be found to promote public convenience and advantage, including a showing of net new benefits, and not to unreasonably affect competition among banking institutions. Having considered the record established in these applications, the Division has determined that the statutory and administrative considerations support approval of the reorganization and subsequent merger. In making those findings, the Division has noted that Petitioner received a "Satisfactory" rating on its most recent evaluation under the Commonwealth's Community Reinvestment Act, General Laws chapter 167, section 14 and its implementing regulations 209 CMR 46.00 et seq.

In accordance with these findings and pursuant to statute, I hereby approve the reorganization, including the merger of the Petitioner with and into the Continuing Bank subject to the following considerations:

  1. The reorganization shall not be consummated until all additional regulatory approvals have been obtained.
  2. Commencing with the transaction's effective date, the Division's minimum capital requirements for the resulting subsidiary bank and the MHC are as follows:
    1. the resulting subsidiary bank's Tier 1 leverage capital ratio must equal or exceed 4%, or any such higher amount as specified within any formal or informal regulatory action document required by the Division, the Federal Deposit Insurance Corporation or the Federal Reserve, based upon the resulting subsidiary bank's most recent Federal Deposit Insurance Corporation Report of Condition and Income and any amendments thereto. The amount of capital shall be calculated in accordance with 12 CFR Part 325.</<li>>
    2. the MHC's consolidated Tier 1 leverage capital ratio must equal or exceed 4%, or any such higher amount as specified within any formal or informal regulatory action document required by the Division, the Federal Deposit Insurance Corporation or the Federal Reserve, based upon its most recent call report or any amendment thereto as reported to the federal or state authority; and
    3. if the minimum capital ratios fall or would fall below those stated in clauses a and b, the Commissioner may impose further conditions or restrictions on the payment of dividends. There will be no dividend restrictions other than those found in Massachusetts General Laws chapter 172, section 28, so long as the minimum capital ratios set out herein are maintained.
  3. After the completion of the reorganization:
    1. the MHC may engage in only such activities as are now or may hereinafter be activities authorized for a mutual holding company under section 7 and other applicable provisions of chapter 167H;
    2. the resulting subsidiary bank may engage in any investment or activity which it may from time to time engage in as a state-chartered savings bank in stock form; and
    3. the MHC or any entity within its control shall give thirty days notice to the Division of any intention to issue any securities known generally as Trust Preferred Securities, either individually or on a pooled basis, prior to entering into any agreement relative to such issuance. This condition may be modified or rescinded at any time by the Division.
  4. That upon consummation of the reorganization into a mutual holding company structure, the subsidiary banking institution will be a state-chartered savings bank in stock form, subject to the provisions of Massachusetts General Laws chapter 172, sections 1, 11 through 16, inclusive, 19, 20, 22, 24 through 28, inclusive, 30 and 31 and such other sections as set out in 209 CMR 33.04(11), as it may be amended from time to time. Accordingly, the provisions of Massachusetts General Laws chapter 168, sections 8 through 17, inclusive, and 25 shall not apply.
  5. That the proposed merger shall not become effective until a Certificate of Consolidation signed by the Presidents and Clerks or other duly authorized officers of each bank indicating that each institution has complied with the provisions of Massachusetts General Laws chapter 168, section 34 and chapter 167H, section 7, clause (2) has been returned for my endorsement thereon.
  6. That Articles of Organization and/or Charter documents and Articles of Merger be placed on record with the Office of the Secretary of State.
  7. That the proposed reorganization and merger be consummated within one year of the date of this Decision.


March 2, 2007
_____________
Date


Steven L. Antonakes
____________________
Commissioner of Banks