September 30, 1998
Board of Trustees
Androscoggin Savings Bank
30 Lisbon Street
Lewiston, Maine 04243
Dear Board of Trustees:
The applications for approval of federal deposit insurance for two interim institutions
and a merger to facilitate a conversion from a mutual to stock form, and notice of intent
to convert from mutual to stock form filed on behalf of Androscoggin Savings Bank,
Lewiston, Maine ("Androscoggin") have been reviewed by the Federal Deposit
Insurance Corporation (the "FDIC") pursuant to 12 C.F.R. § 303.15 and other
pertinent FDIC regulations. Based on the information and representations presented, we do
not object to the proposal.
Enclosed is our Order and Basis for Corporation Approval for the applications filed on
behalf of Androscoggin in connection with the conversion transaction, including
considerations of deposit insurance and the proposed merger.
Please furnish the FDIC's Boston Regional Office with satisfactory evidence of the
bank's compliance with the conditions stated in the enclosed Order, and notify that office
in writing when the proposed transaction has been consummated. If an extension of the time
limitation included in the Order is required, a letter requesting a specific extension of
the limitation, including reasons therefore, should be submitted to the Boston Regional
Mark S. Schmidt
cc: Robert B. Pomerenk, Esquire
Luse, Lehman, Gorman, Pomerenk & Schick, P.C.
Washington, D.C. 20015
FEDERAL DEPOSIT INSURANCE CORPORATION
Androscoggin Savings Bank
Lewiston, Androscoggin County, Maine
for Federal Deposit Insurance and Consent to Merge
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to sections 5 and 18(c) and other provisions of the Federal Deposit Insurance
Act (the "FDI Act"), an application has been filed on behalf of Androscoggin
Savings Bank, Lewiston, Maine ("Mutual Institution"), currently a
mutually-owned, Bank Insurance Fund ("BIT") member, state-chartered institution
with total resources of $279,775,000 and total deposits of $222,912,000 as of June 30,
1998, for the FDIC's consent to merge with Androscoggin Interim Two Savings Bank,
Lewiston, Maine ("Interim Two"), a proposed new, interim, investor-owned, Maine
universal bank. Also, applications for federal deposit insurance for Interim Two and for
Androscoggin Interim One Savings Bank, Lewiston, Maine have been filed.
This transaction is the result of Mutual Institution's plan of reorganization which,
solely to facilitate this undertaking, includes:
1) Mutual Institution will organize Androscoggin Interim One Savings Bank, and interim
investor-owned universal bank ("Interim One"), as a wholly-owned subsidiary and
will transfer a substantial part of its assets and liabilities to Interim One.
2) Interim One will organize Androscoggin Bancorp, Inc., a. Delaware stock corporation
("Stock Holding Company") as a wholly-owned subsidiary.
3) Interim One will organize Interim Two as a separate wholly-owned Maine universal
bank subsidiary and will transfer the former assets and liabilities of the Mutual
Institution to Interim Two.
4) Mutual Institution will convert to the capital stock form of organization by
exchanging its charter for that of a Maine investor-owned universal bank (the "Stock
5) Interim Two will merge with the Stock Bank, with the Stock Bank charter surviving.
The assets and liabilities that were transferred to Interim Two will become the assets and
liabilities of the Stock Bank by virtue of the merger. Simultaneously, Interim One will
exchange its charter for a mutual holding company charter to become Androscoggin Bancorp,
MHC ("Mutual Holding Company"). The Mutual Holding Company will become the sole
stockholder of the Stock Bank by virtue of the merger.
6) The Mutual Holding Company will contribute the capital stock of the Stock Bank to
the Stock Holding Company, and the Stock Bank will become a wholly-owned subsidiary of the
Stock Holding Company.
At the conclusion of the transactions, Mutual Holding Company will wholly own the Stock
Holding Company, which in turn will wholly own the Stock Bank. Due to the structure of the
transaction, specifically the transfer of assets and deposit liabilities, federal deposit
insurance is required by statute for Interim One and Interim Two.
Mutual Holding Company and Stock Holding Company will each be capitalized with up to
$91,250. Applications for the establishment of Mutual Holding Company and Stock Holding
Company have been filed and conditionally approved by the Federal Reserve Bank of Boston.
The resultant bank will operate with the title of Androscoggin Savings Bank, Lewiston,
Maine. Following consummation of the merger, the resultant bank will operate the same
banking business, with the same management, at the same locations now being served by
Mutual Institution. The proposed transaction, per se, will not alter the competitive
structure of banking in the market served by Mutual Institution. The resultant bank's
principal office will be at 30 Lisbon Street, Lewiston, Maine. Notice of the proposed
transaction, in a form approved by the FDIC, has been published pursuant to the FDI Act.
A review of available information, including the Community Reinvestment Act (the
"CRA") Statement of Mutual Institution discloses no inconsistencies with the
purposes of the CRA. The resultant institution is expected to continue to meet the credit
needs of its entire community, consistent with the safe and sound operation of the
In connection with the applications, the FDIC has taken into consideration the
financial and managerial resources and future prospects of the proponent banks and the
resultant bank, and the convenience and needs of the community to be served. Having found
favorably on all statutory factors and having considered other relevant information,
including all reports on the competitive factors furnished by the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift
Supervision, and the Attorney General of the United States, it is the FDIC's judgement
that the applications should be and hereby are approved, subject to the following
1. That the transaction may not be consummated unless the Plan of Reorganization
receives prior approval by an affirmative vote of at least a majority of the total votes
eligible to be cast by the Mutual Institution's depositors;
2. That, unless prior notice is provided to and non-objection is received from the
FDIC, no shares of the stock of Androscoggin Savings Bank shall be sold, transferred or
otherwise disposed of, to any persons (including any Employee Stock Ownership Plan) other
than Androscoggin Bancorp, Inc., nor shall Androscoggin Savings Bank issue any equity
securities or any securities that would accord the holder the right to acquire equity
securities or that would bestow upon the holder an interest in the retained earnings of
the issuer to any persons other that Androscoggin Bancorp, Inc.;
3. That, prior to a sale, transfer or other disposition of any shares of Androscoggin
Bancorp, Inc. by Mutual Holding Company to any person> (including any Employee Stock
Ownership Plan), or a conversion of the Mutual Holding Company to stock form, Androscoggin
Savings Bank will provide written notification to the FDIC and provide the FDIC with
copies of all documents filed with state and federal banking and/or securities regulators
in connection with any such sale, transfer, disposition, or conversion;
4. That, should any shares of the stock of Androscoggin Savings Bank or Androscoggin
Bancorp, Inc. be issued to any persons other than the Mutual Holding Company, any
dividends waived by Mutual Holding Company must be retained by the Stock Holding Company
or the savings bank and segregated, earmarked, or otherwise identified on the books and
records of the Stock Holding Company or the savings bank; such amounts must be taken into
account in any valuation of the institution and factored into the calculation used in
establishing a fair and reasonable basis for exchanging shares in any subsequent
conversion of Mutual Holding Company to stock form; such amounts shall not be available
for payment to or the value thereof transferred to minority shareholders, by any means
including through dividend payments or at liquidation;
5. That any changes in proposed management, including the board of directors or
proposed ownership (ten per cent or more of the stock and new acquisitions of or
subscriptions to ten per cent or more of the stock), will render this approval null and
void unless such proposal is approved by the Regional Director (Supervision) of the FDIC's
Boston Regional Office prior to the consummation of the proposed transaction;
6. That the transaction shall not be consummated less than fifteen calendar days after
the date of this Order or later than six months after the date of this Order, unless such'
period is extended for good cause by the FDIC; and
7. That until the proposed transaction is consummated, the FDIC shall have the right to
alter, suspend, or withdraw its approval should any interim development be deemed to
warrant such action.
By Order of the Associate Director of the Division of Supervision, pursuant to
authority delegated by the Board of the Federal Deposit Insurance Corporation.
Dated at Washington, D.C., this 30th of September, 1998.
Mark S. Schmidt
Division of Supervision