Decision on the applications relative to the reorganization into a mutual holding company by Cambridge Savings Bank, Cambridge, Massachusetts
By the Division of Banks
Cambridge Interim Mutual Bank (the "Petitioner"), Cambridge, Massachusetts, is being formed by Cambridge Savings Bank, Cambridge, Massachusetts as part of a multi-step reorganization which will result in the formation of a mutual holding company known as Cambridge Financial Group, Inc. (the "Holding Company"), headquartered at 1374 Massachusetts Avenue, Cambridge, Massachusetts and a subsidiary stock savings bank operating under the name of Cambridge Savings Bank with its main office located at that address. Certain parts of this multi-step transaction have required applications to the Board of Bank Incorporation which held a public hearing on the matters before it on May 28, 1998. Applications have been made to the Division for the formation of the mutual holding company pursuant to Massachusetts General Laws chapter 167H, section 3 and the merger of Cambridge Savings Bank into the subsidiary stock bank formed in the reorganization, Cambridge Interim Stock Bank, pursuant to Massachusetts General Laws chapter 168, section 34; chapter 167H, section 7, clause 2 and the Division's regulations implementing said chapter 167H, 209 CMR 33.00, Subpart C.
The reorganization will result in the Petitioner becoming a mutual holding company with a stock savings bank subsidiary. That subsidiary will be known as Cambridge Interim Stock Bank. Following the reorganization, Cambridge Savings Bank will merge with and into Cambridge
Interim Stock Bank under the charter and by-laws of Cambridge Interim Stock Bank ("Subsidiary Bank") and the name of Cambridge Savings Bank.
In accordance with the provisions of said chapter 167H and 168, the Petitioner and its related entity have submitted the requisite documents and information relative to these transactions. Notice has been given to its depositors and to the public. The deadline for filing comments ended on June 11, 1998. Consequently, the reorganization and merger have been considered in conformity with relevant statutory and regulatory provisions.
The applications and supporting documents, as amended, have established an extensive record on these petitions which have been reviewed in light of the 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 statutory and administrative considerations support approval of the reorganization and subsequent merger. In making those findings, the Division has noted that Cambridge Savings Bank has an "Outstanding" rating for its performance 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 Cambridge Savings Bank with and into Cambridge Interim Stock Bank subject to the submission to the Division of a favorable tax ruling, opinion of counsel or other opinion of recognized experts in the field of taxation no later than at the time of closing of the transaction and the following considerations:
- The reorganization shall not be consummated until all additional regulatory approvals have been obtained.
- Commencing with the transaction's effective date, the Division's minimum capital requirements for the Subsidiary Bank and the Holding Company are as follows:
- the 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 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.
- the Holding Company'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
- 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.
- After the completion of the reorganization
- the Holding Company 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 and
- the 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.
- 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 with my endorsement thereon.
- That Articles of Organization and/or Charter documents and Articles of Merger be placed on record with the Office of the Secretary of State.
- That the proposed merger be consummated within one year of the date of this Decision.
| July 21, 1998 Date | Thomas J. Curry Commissioner of Banks |