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Decisions on Bank Applications

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Part 347
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Citizens Bank of Massachusetts

Board of Directors
Citizens Bank of Massachusetts
28 State Street
Boston, Massachusetts 02109

Members of the Board:

We have reviewed your request to indirectly continue holding, through a wholly-owned subsidiary, a limited partnership interest of 10% in D.A.D. Limited Partnership ("DAD"), an investment that may not be permissible for a national bank or its subsidiary. The application, dated November 26, 1997, was filed pursuant to Section 362.4(d)(4)(iii) of the Federal Deposit Insurance Corporation (FDIC) Rules and Regulations.

For the reasons set forth in the attached Statement, the application was approved today subject to the following conditions:

(1) That Citizens transfer its investment in DAD to a majority-owned subsidiary.

(2) That Citizens shall take the necessary steps to operate the subsidiary in a manner so as to ensure its separate corporate existence as a wholly-owned subsidiary.

(3) That Citizens' indirect investment in the limited partnership shall be limited to that currently held.

(4) That consent is granted based on the facts and circumstances presented or otherwise known to the FDIC in connection with this request. The Bank shall notify the FDIC of any significant change in facts or circumstances, and the FDIC shall have the right to alter, suspend, or withdraw its approval.

Questions relating to this matter may be referred to Patrick J. Rohan, Regional Director of the Boston Regional Once at (781) 794-5500

Sincerely,

Mark S. Schmidt
Associate Director


FEDERAL DEPOSIT INSURANCE CORPORATION

RE: Citizens Bank of Massachusetts Boston, Massachusetts

Application Pursuant to Section 24 of the Federal Deposit Insurance Act to Indirectly Hold an Investment that May Not Be Permissible for a National Bank

STATEMENT

Pursuant to the provisions of Section 24 of the Federal Deposit Insurance Act, an application has been filed with the Federal Deposit Insurance Corporation by Citizens Bank of Massachusetts, Boston, Massachusetts ("Citizens"). Citizens requests FDIC consent to continue to hold, indirectly through a wholly-owned subsidiary, a 10% limited partnership interest in D.A.D. Limited Partnership ("DAD"), which owns and manages a factory building which was converted into commercial condominium units.

In general, investment in a limited partnership interest which owns commercial condominiums may not be a permissible activity for a national bank or a subsidiary of a national bank. A subsidiary of a state-chartered, FDIC-insured bank may not hold an investment prohibited to a subsidiary of a nationally chartered bank unless consent is obtained from the FDIC. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund. Massachusetts banking statutes permit the holding of the subject investment.

Citizens acquired the limited partnership investment through a merger transaction and holds no other such investments.

Citizens meets the definition of "well capitalized" within the meaning of Part 325 of the FDIC's Rules and Regulations. The investment is negligible in relation to the bank's Tier 1 capital and the bank would continue to be "well capitalized" in the event its entire investment were deducted from capital. In connection with this application, the FDIC has also taken into consideration the favorable financial and managerial resources and future earnings prospects of Citizens.

As prudential limitations and restrictions addressing the risks posed by this type of investment will be imposed, the investment does not constitute a significant risk to the Bank Insurance Fund or present material safety and soundness concerns.

Based upon careful evaluation of all available facts and information, the Associate Director, acting under delegated authority, has concluded that approval of the application is appropriate, subject to the restrictions specified below.

(1) That Citizens transfer its investment in DAD to a majority-owned subsidiary.

(2) That Citizens shall take the necessary steps to operate the subsidiary in a manner so as to ensure its separate corporate existence as a wholly-owned subsidiary.

(3) That Citizens' indirect investment in the limited partnership shall be limited to that currently held.

(4) That consent is granted based on the facts and circumstances presented or otherwise known to the FDIC in connection with this request. The Bank shall notify the FDIC of any significant change in facts or circumstances, and the FDIC shall have the right to alter, suspend, or withdraw its approval.

Finally, FDIC notes that the foregoing approval is unique to this application, that it was significantly influenced by the acquisition of the subject investment as part of a merger transaction, and that its view of de novo acquisition of such interests might well be different.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION



Last Updated 03/24/2011 Legal@fdic.gov