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Decision

Decision Decision of April 27, 2008

Date: 04/27/2008
Organization: Division of Banks
  • Petitioner: The Incorporators
  • Respondent: Board of Bank Incorporation

Decision on the petition to establish Veritas bank in Lawrence, Massachusetts

The Incorporators (or the "Petitioners") of the proposed Veritas Bank (the "Bank" or "Veritas") 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 Lawrence, Massachusetts. The Petitioners seek to establish the Bank as a stock savings bank under the provisions of Massachusetts General Laws chapter 168. The Bank's deposits will be insured by the Federal Deposit Insurance Corporation ("FDIC") and the Depositors Insurance Fund ("DIF"), 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 5 of said chapter 168 of the General Laws and procedures of the Board. A public hearing was held on the application pursuant to chapter 168 of the General Laws on April 17, 2008 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 5 of said chapter 168, of whether public convenience and advantage will be promoted by the establishment of the proposed banking institution. The requirements of said chapter 168 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"), General Laws chapter 167, section 14 is also a factor considered by the Board.

The establishment of a state-chartered savings 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 savings 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' application and oral testimony at the public hearing have addressed each of these matters in conjunction with the application to establish Veritas.

This matter is before the Board for the second time. The original application was heard by the Board on February 14, 2007. The Certificate of Public Convenience and Advantage was issued by the Board on April 27, 2007 in conjunction with its written findings that applicable provisions of law had been met. The Petitioners have been in the process of completing the necessary organizational requirements during the past year including efforts as described to the Board to raise the required amount of capital. The Board's staff was previously notified of the possibility that the proposed Bank would not be able to complete its organization within one year from the date of the first certificate issued by the Board. By operation of law, the first certificate is deemed to be revoked on April 27, 2008. Accordingly, it became necessary for the Petitioners to file this application for consideration by the Board. The Bank's application for deposit insurance was approved by the Federal Deposit Insurance Corporation ("FDIC") on May 7, 2007 with certain conditions. At this time, the Petitioners are also seeking an extension of the one year condition for completion imposed by the FDIC. In response to the Board's inquiry at the recent public hearing, the Petitioners provided explanatory information to the Board as to the FDIC's application process to obtain deposit insurance. The actual total amount raised, the manner by which all such funds were obtained, as well as the shareholders of the Bank are all matters to be analyzed by the Board during the next stage of this two-step process to form a stock savings bank.

The submitted application is substantially similar to the original filing in 2007 and arguments in support of this petition closely align with those previously offered. The Petitioners updated the Board as to their efforts to raise the minimum initial capital required and discussed the methods being used to raise such funds. Petitioners stated it remains the intention of the Bank to raise total capital in the amount of $10 million. The Board inquired as to the circumstances behind recent changes in the composition of the proposed Board members of the Bank and also a change in one of its proposed key officers. Due to personal time constraints, certain of the original directors determined they were unable to continue with their commitments to the Bank. These director candidates were recently replaced with other candidates and a candidate has been selected, subject to regulatory approval, to fill the recently vacated position of Chief Financial Officer. The Board also heard testimony from one of the proposed directors of the Bank, who is also a local business owner, commenting on the continued need for a local community bank in Lawrence.

As described in the Board's prior decision and reiterated in this application, Veritas continues to assert the need for a community bank based in the City of Lawrence. The Bank's primary market area will be the city of Lawrence and its CRA assessment area will include the surrounding cities and towns of Methuen, Haverhill, Boxford, Andover and North Andover. There are currently no banks headquartered in Lawrence. Petitioner stated that it remains the intention of Veritas to focus on the needs of the community, in particular, its large Latino and Asian communities. The Petitioners intend to build a full service community bank that makes decisions locally, with a local board and management, local ownership, and local knowledge. The Bank will emphasize the promotion of financial literacy in collaboration with local colleges, Community Development Corporations and other non-profits. The Petitioner seeks to make available and promote more cost efficient banking services to its customers in order to provide alternatives to more costly financial service providers, such as entities providing foreign country wire transfer services.

The proposed Bank's President and Chief Executive Officer was identified to the Board in the initial process and remains the lead proponent in this second filing. Individuals selected to serve in certain senior officer positions of the Bank were also identified to the Board. The Board of Directors would consist of eleven individuals identified in the filing, the large majority of which are also Incorporators.

The Board again reviewed the Bank's proposal to comply with the Community Reinvestment Act ("CRA"). The petition contains the information on the proposed lending activities of the Bank. It 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.

The Bank intends to provide a full range of business banking products and related financial services to small to medium size businesses and professionals as well as to consumers. The proposed Bank will offer business related products such as commercial real estate loans, construction loans, commercial business loans and commercial cash management services. The Bank will also offer a competitive line of retail deposit and loan products, including checking accounts, online banking, ATM/debit cards, money market accounts, certificates of deposit, IRAs, 1-4 family mortgages, home equity loans and consumer loans. The on-line banking and telephone banking services will be available in a variety of languages. The Bank intends to staff the banking offices with professional and bilingual employees who live or have worked in the Greater Lawrence community, understand the market, and will be sensitive to the different cultures there. The Bank's main office will be located in Lawrence and will include a drive-through teller and ATM next to the building. The Bank plans to open additional branch offices in the future depending on various factors including property availability, initial capital raised, and the Bank's ongoing financial capacity. The Board's analysis of the adequacy of banking facilities in the area to be served by the proposed Bank weighs in support of this application to establish a new bank.

The Board's consideration of this matter has included the record established by the Bank's initial application; the Board's prior decision; the current application and testimony at the public hearing. Based on this record, the Board finds that the applicable statutory criteria as to the adequacy of banking facilities in the area, the general character of management, the adequacy of capital structure and the convenience and needs of the communities to be served have been fulfilled and that the establishment of the proposed bank is in the public interest and the facts that warranted the Board's previous determination remain. In accordance with these findings, the petition is approved and a certificate that public convenience and advantage will be promoted by the establishment of Veritas 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, which is applicable to a proposed savings bank in stock form pursuant to section 4 of chapter 168 of the Massachusetts General Laws. The Bank must complete these preconditions and obtain a certificate to transact business by October 27, 2008, which time period may be extended upon petition at the sole discretion of the Board. Additionally, all statutory requirements applicable to Veritas must be completed within this period.

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, 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.

April 27, 2008
______________________
Date

Board of Bank
Incorporation

Steven L. Antonakes
______________________
Commissioner of Banks


Navjeet Bal
______________________
Commissioner of Revenue


Timothy P. Cahill
______________________
Treasurer and Receiver-General

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 168, section 5 of said General Laws, hereby certifies that public convenience and advantage will be promoted by the establishment of a savings bank in the City of Lawrence, in the Commonwealth to be known as

VERITAS BANK

This Certificate requires that the applicant become incorporated and begin business by October 27, 2008, which time period may be extended upon petition at the sole discretion of the Board.

IN TESTIMONY WHEREOF the members of the Board hereby affix their names at Boston this 27 th day of April, Two Thousand and Eight.

Board of Bank
Incorporation

Steven L. Antonakes
______________________
Commissioner of Banks


Navjeet Bal
______________________
Commissioner of Revenue


Timothy P. Cahill
______________________
Treasurer and Receiver-General

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