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North Abington Co-operative Bank

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: North Abington Co-operative Bank Abington, Plymouth County, Massachusetts

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Continue Activity That May Not Be Permissible for a National Bank.

STATEMENT

North Abington Co-operative Bank, Abington, Plymouth County, Massachusetts (Bank), has filed an application with the Federal Deposit Insurance Corporation pursuant to the provisions of Section 24 of the Federal Deposit Insurance Act. The Bank requests FDIC consent to retain a parcel of real estate acquired in 1988. The property consists of a building and a parking lot. The building has been continuously leased by the Bank since the acquisition of the property and is currently leased to the U.S. Postal Service. That lease expires in March, 2007. It is the Bank's intent to continue to lease the building until such time as the Bank may determine to use the building for its own use. The Bank proposes to form a wholly-owned subsidiary for the sole purpose of holding subject real estate. The Bank has no specific plan to convert the property to bank premises in the foreseeable future.

As of March 31, 2003, the Bank had total assets of $77,939,000. Its financial condition is considered satisfactory, and the. Bank meets the definition of "well-capitalized" pursuant to Part 325 of the FDIC's Rules and Regulations. The Bank has leased the property in question without incident since its acquisition and has adequate insurance on the property.

Neither insured state banks nor their subsidiaries may engage as principal in an activity prohibited for national banks unless consent has been 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 funds. National banks may hold real estate that is used as premises and may also hold property that is intended for use as premises in the future ("future premises"), but only for up to a maximum of ten years. National banks may not hold real estate for investment purposes. Given all of the facts and circumstances, it is the FDIC's conclusion that the property in question is being held for investment purposes and does not qualify as future premises. Therefore, the Bank must obtain FDIC consent to retain the property.

Based on a careful review of all available facts and information, the FDIC has concluded that the proposed activity, if conditioned as set forth in the Order, does not pose a significant risk to the Bank Insurance Fund. Therefore, approval of the application is warranted. In granting its consent, the FDIC is imposing conditions to ensure prudent operational safeguards including a number of requirements designed to ensure the corporate separateness of the Bank and the subsidiary. Conditions setting limitations and restrictions on transactions between the Bank and its subsidiary are also being imposed. The Bank must maintain its "well capitalized" status pursuant to Part 325 of the FDIC's Rules and Regulations after applying the appropriate capital charge for investments in a nonfinancial company as set forth in Part 325. The Bank's subsidiary may not purchase any additional real estate or engage in any additional real estate activity, subject to Part 362 of the FDIC's Rules and Regulations, without the prior written consent of the FDIC nor may the Bank make any additional equity investment in the subsidiary without the FDIC's consent.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION AND CONSUMER PROTECTION
FEDERAL DEPOSIT INSURANCE CORPORATION


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: North Abington Co-operative Bank Abington, Plymouth County, Massachusetts

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Continue Activity That May Not Be Permissible for a National Bank.

ORDER

The Federal Deposit Insurance Corporation ("FDIC") has fully considered all available facts and information relevant to the application by North Abington Co-operative Bank, Abington, Plymouth County, Massachusetts ("Bank"), pursuant to Section 24 of the Federal Deposit Insurance Act, 12 U.S.C. 1831a, and Part 362 of the FDIC's Rules and Regulations, for consent to continue to engage in real estate investment activities through a newly formed wholly-owned subsidiary ("Subsidiary").

Accordingly, it is hereby ORDERED, for the reasons set forth in the Statement attached, that the application filed on behalf of the Bank for consent to continue to engage in real- estate investment activities through the Subsidiary be and hereby is approved, subject to the following conditions:

1. The Bank shall form Subsidiary and immediately transfer the real estate located at 16 Harrison Avenue ("Property") to the Subsidiary.

2. The Subsidiary's real estate investment activity shall be limited to holding and leasing the transferred Property.

3. Neither the Bank nor the Subsidiary may not purchase any additional real estate or engage in any other real estate investment activity subject to Part 362 of the FDIC's Rules and Regulations without the prior written consent of FDIC as required by Part 362 nor may the Bank make any additional equity investment in the subsidiary without the FDIC's prior written consent.

4. The Subsidiary shall be operated in accordance with 362.4(c)(2) of the FDIC's Rules and Regulations except for 362.4(c)(2) (ii), (v), (vi), and (xi).

5. The Bank shall maintain a "well-capitalized" status pursuant to 12 CFR Part 325 of the FDIC's Rules and Regulations after deducting from its Tier I capital the appropriate capital charge, as reflected in the table shown in Section 11.13 of Appendix A to Part 325, for its investments in nonfinancial equities. This deduction shall be reflected on the appropriate schedule of the Bank's quarterly consolidated report of condition and income. The amount of capital as so determined will be used for the purposes of the Bank's assessment risk classification under 12 CFR Part 327 of the FDIC's Rules and Regulations, and its categorization as a "well-capitalized," or "adequately capitalized" institution as defined in Part 325, provided that the capital deduction shall not be used for the purposes of determining whether the Bank is critically undercapitalized.

6. The Bank and the Subsidiary shall comply with 362.4(d) of the FDIC's Rules and Regulations.

7. In the event that facts and circumstances presented or otherwise known to the FDIC in connection with this request change significantly, the FDIC retains the ability to alter, suspend, or withdraw its approval.

Dated at Washington, D.C., this 7th day of July, 2003.

FEDERAL DEPOSIT INSURANCE CORPORATION

Lisa K. Roy
Associate Director
Division of Supervision and Consumer Protection



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