By the Division of Banks

DECISION ON THE PETITION TO ESTABLISH PATRIOT COMMUNITY BANK IN WOBURN, MASSACHUSETTS

The Incorporators (or the "Petitioners") of the proposed Patriot Community Bank (the "Bank" or "Patriot") have submitted an application with related documents to the Board of Bank Incorporation (the "Board") for the issuance of a certificate that public convenience and advantage will be promoted by the establishment of the proposed Bank in Woburn, Massachusetts. The Petitioners seek to establish the Bank as a stock co-operative bank under the provisions of Massachusetts General Laws chapter 170. The Bank's deposits will be insured by the Federal Deposit Insurance Corporation ("FDIC") and the Share Insurance Fund of the Co-operative Central Bank ("SIF"), for deposits in excess of the FDIC coverage limits.

Notice of the application, affording opportunity for interested persons to submit comments, has been published and posted in accordance with the requirements of section 4 of said chapter 170 of the General Laws and procedures of the Board. A public hearing was held on the application pursuant to chapter 170 of the General Laws on Thursday, July 7, 2005 to receive comments from interested parties. The time for filing comments and supplementary materials after the hearing has passed. The Board reviewed the application and the testimony received at the public hearing. The application and testimony have been considered in accordance with the statutory criteria, set forth in section 4 of said chapter 170, of whether public convenience and advantage will be promoted by the establishment of the proposed banking institution. The requirements of said chapter 170 relative to the formation of the Bank, as described herein, have also been considered by the Board. The Petitioners' proposal for compliance with the Commonwealth's Community Reinvestment Act ("CRA") is also a factor considered by the Board.

The establishment of a state-chartered co-operative bank by statute involves a two-step procedure before the Board. The first is the petition now pending while the second step is the issuance of a certificate to transact business. In determining whether to issue a certificate that public convenience and advantage will be promoted by the establishment of a new co-operative bank, the Board has reviewed the statutory criteria of the adequacy of banking facilities in the area, the general character of the Bank's management, the adequacy of its proposed capital structure and the convenience and needs of the community to be served. The Petitioners' written and oral testimony at the public hearing have addressed each of these matters in conjunction with the application to establish Patriot.

In order to receive the second certificate from the Board authorizing the corporation to transact banking business, a proposed bank must, among other things, comply with the provisions of section 9 of chapter 172 of the General Laws, made applicable to a stock co-operative bank by section 2 of said chapter 170. Those requirements include raising the required capital, identifying satisfactory members of its Board of Directors and operating management, complying with all requirements of law, and submitting other documentation. The proposed bank must also obtain deposit insurance from the FDIC and the SIF. As set out in section 4 of said chapter 170, the proposed bank has one year from the issuance of the certificate of public convenience and advantage to complete its organization and obtain the second certificate.

Patriot will be established as a stock co-operative bank with its proposed main office in Woburn, Massachusetts. The Bank's primary service area will be Woburn and Lexington, Massachusetts, and will also serve the surrounding communities of Arlington, Bedford and Medford. According to the application, the Bank also expects to draw customers from the communities of Burlington and Malden. The Petitioner asserts that the primary service area has undergone significant consolidation in the banking industry during the last decade. This trend has resulted in a considerable decline in the number of locally owned and operated banking institutions and the emergence in their place of branch offices of a smaller number of large institutions headquartered outside of the local community. The Petitioner asserts that from 1995 through 2004, nine banks were replaced with five larger acquiring banks. In Woburn, from 1995 through 2004, six banks were replaced with three larger acquiring banks. In all communities of the primary service areas, except Woburn and Bedford, the number of banking offices decreased, even as the total deposit base increased in all communities. Petitioner also stated in submitted testimony that these communities have a large number of high technology companies and a significant number of manufacturing and service companies in need of a locally owned and operated bank with a commercial and retail focus. Furthermore, Petitioner's testimony proclaims that many small businesses in the area strongly prefer the ability to speak directly with locally based decision makers at a locally based financial institution.

For purposes of the Community Reinvestment Act ("CRA"), the Bank's assessment area is designated as Woburn and Lexington. The Bank will have a goal of originating between 70% and 80% of all consumer loans within its assessment area. The Bank's strategic services focus will be three pronged: First, offering a diverse retail service package and delivery channels; second, offering a full range of commercial services and loans; and third, providing a competitive residential mortgage service with highly trained loan originators. The Petitioners argue a need exists for the Bank for several reasons. There exists a need for a local full service community bank in this primary service area given there is only one such bank at the present time. The Petitioners cite the importance of local bank loan officers with an understanding of the local market and the creation of jobs in the community with an initial employment level identified as approximately twelve staff members. The Board's analysis of the adequacy of banking facilities in the area weighs in support of this application to establish a new bank.

The proposed Bank's President and Chief Executive Officer, Chief Financial Officer, and other senior officers have been identified to the Board. The four most senior officer positions identified will be held by individuals who have previously held senior positions at state-chartered financial institutions. The application offers that the character and experience of the incorporators will further assist the Bank in identifying and fulfilling the needs of the community to be served by the proposed Bank. Several of the Bank's incorporators have prior experience serving on bank boards of directors. As part of the process to establish a new bank, the Board reviews the general character of all the incorporators and the qualifications of the proposed management since proper management is vital to the organization and initial operation of a new bank. It is a factor reviewed by the Board as part of the process to establish a bank. The information on the proposed management structure of Patriot submitted by the Petitioners is sufficient for the Board to make a determination on this petition.

Another statutory criteria to be considered by the Board is the adequacy of the capital structure of the proposed Bank. The Board has determined, as policy, that a minimum initial capitalization of $8 million, net of organizational expenses, must be attained. The Petitioners state that they intend to raise initial capital of $8 million to $9.5 million, net of organizational expenses. It is anticipated the capital will be raised primarily through a private placement with some of the incorporators who will become directors of the proposed bank and, if necessary, a small outside group from within the community. Of particular interest during the review process were the growth projections and pro forma financial statements, which were subject to revisions during the review process. These issues and others will also be the subject of extensive review during the regulatory examination process by both the Commonwealth's Division of Banks (the "Division") and federal bank regulators if the Bank completes its organization. The Petitioners' growth projections indicate that the proposed Bank would meet all regulatory capital requirements from their initial capital contribution.

A major factor to be considered by the Board in its analysis of an application to establish a new bank is the public convenience and advantage that will be served by its operation. That review included the products and services to be offered as well as the means by which such banking business will be provided. As set out in the application and stated in oral testimony, the proposed Bank intends to offer a wide range of products and services including a full range of commercial and small business and consumer deposit products such as checking and savings products, money market, certificate of deposit and IRA accounts. The Banks will also offer a full range of commercial loan and consumer loan products including commercial real estate loans, working capital lines of credit, asset-based loans, and letters of credit. Consumer loan products will include fixed and variable rate mortgage loans, home equity lines of credit and secured and unsecured installment loans. The Bank's products will be provided through a variety of channels in additional to its main office facility including ATM access, debit card access, automated clearing house channels, telephone and internet banking, and commercial courier service. The Board's analysis supports a finding that public convenience and advantage would be promoted by the transaction.

Another important factor reviewed by the Board is the Petitioners' compliance with the provisions of CRA. The application contains the information on the proposed lending activities of the Bank. The application adequately cites the Bank's intentions for meeting local credit needs and promoting community involvement by the Bank. The proposed areas to be served are determined to be reasonable.

Having considered the record established by the Petitioners on the adequacy of the banking facilities in the area, the general character of its management, the adequacy of its capital structure and the convenience and needs of the community to be served, the Board has found that the applicable statutory and administrative criteria have been fulfilled and that the establishment of the proposed bank is in the public interest. In accordance with the Board's findings, this application is approved and a certificate that public convenience and advantage will be promoted by the establishment of Patriot Community Bank is hereby issued.

Both the Petitioners and the general public are advised that the proposed Bank must fulfill its statutory obligations to obtain a certificate to transact business according to the provisions of Massachusetts General Laws chapter 172, section 9. These preconditions for initiating transactions at this new Bank must be completed within one year from this approval date. If the proposed Bank does not complete its organization within that period then, by operation of law, as set out in section 4 of said chapter 170, this certificate of public convenience and advantage is revoked.

The approval granted herein is subject to the following additional conditions:

  1. During the organization period the proposed Bank shall be referred to in all public materials as "in organization".
  2. All organization documents, including Articles of Organization and all proposed Bank policies, must be submitted to the Board for review.
  3. All materials related to any stock offering, or a private placement, including the prospectus and marketing materials, must be submitted to the Board for review.
  4. No material change in the business plan submitted to the Board may occur within the organization period and for a period of three years commencing on the date the Bank opens to transact business without the prior written approval of the Division of Banks.

The Commonwealth of Massachusetts
Board of Bank Incorporation

CERTIFICATE OF PUBLIC CONVENIENCE AND ADVANTAGE

The Board of Bank Incorporation constituted under the provisions of Massachusetts General Laws chapter 26, section 5, and acting under the powers conferred upon it by chapter 170, section 4 of said General Laws, hereby certifies that public convenience and advantage will be promoted by the establishment of a co-operative bank in the City of Woburn, in the Commonwealth to be known as

PATRIOT COMMUNITY BANK

The Certificate shall be deemed to be revoked if the applicants therefore do not become incorporated and begin business, in accordance with the provisions of section 4 of said chapter 170, within one year after the date of the issuance of this Certificate.

IN TESTIMONY WHEREOF the members of the Board hereby affix their names at Boston this 17th day of August, Two Thousand and Five.

Steven L. Antonakes
Commissioner of Banks

Alan L. LeBovidge
Commissioner of Revenue

Board
of Bank
Incorporation

Timothy P. Cahill
Treasurer and Receiver General

August 17, 2005
Date

CERTIFICATE TO TRANSACT BUSINESS

The Board of Bank Incorporation constituted under the provisions of Massachusetts General Laws chapter 26, section 5, and acting under the powers conferred upon it by Massachusetts General Laws, chapter 172, section 9, made applicable by the provisions of section 2 of chapter 170 of the General Laws, hereby certifies that

PATRIOT COMMUNITY BANK

Woburn, in said Commonwealth, has filed with the Board the list of stockholders required by said section 9 and an examination has been made from which it appears that the Bank's capital stock, capital surplus and its undivided profits have been fully paid in cash and the Bank has complied with all other requirements of section 9. Patriot Community Bank is hereby authorized to begin the transaction of business, provided that business commences within one year as stipulated in the Certificate of Public Convenience and Advantage issued by the Board pursuant to section 4 of said chapter 170.

IN TESTIMONY WHEREOF the members of the Board hereby affix their name at Boston this twenty-eighth day of March, 2006.

Steven L. Antonakes
Commissioner of Banks

Alan L. LeBovidge
Commissioner of Revenue

Board
of Bank
Incorporation

Timothy P. Cahill
Treasurer and Receiver General

March 28, 2006
Date