Decisions on Bank Applications
Mutual to Stock Conversions
The Rahway Savings Institution
FEDERAL DEPOSIT INSURANCE CORPORATION
The Rahway Savings Institution Rahway, New Jersey
Application for Consent to Merge
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act ("FDI Act"). an application has been filed on behalf of The Rahway Savings Institution. Rahway. New Jersey ("Mutual Institution"). currently a state-chartered, mutually-owned Savings Association Insurance Fund ("SAIF") member, with total resources of $371.465,000 and total deposits of $332,158.000 as of March 31. 1998, for the FDIC's consent to merge with Rahway Interim Savings Bank, Rahway, New Jersey ("Interim Bank"). a proposed new interim state-chartered stock savings bank.
This transaction is the result of the Mutual Institution's Plan of Reorganization which includes the formation by Mutual Institution of a New Jersey -chartered mutual holding company. RSI Bancorp. M.H.C., Rahway, New Jersey ("MHC"). which will be capitalized with up to S25.000. MHC will organize and wholly own a stock holding company. RSI Bancorp. Inc.. Wilmington, Delaware ("Stock Holding Company"). which will also be capitalized with up to $25.000. MHC will also organize and wholly own Interim Bank. An application for the establishment of MHC and the Stock Holding Company as bank holding companies has been filed with the Federal Reserve Bank of New York. The Mutual Institution will exchange its charter for a New Jersey stock savings bank charter and will become a wholly-owned subsidiary of MHC after a merger with Interim. MHC will then transfer 100% of the stock of the merged bank into the Stock Holding Company, which will in turn be a wholly-owned subsidiary of MHC incident to the merger with Interim Bank. The resultant bank will operate with the title of The Rahway Savings Institution. Rahway, New Jersey. Following consummation of the merger, the resultant bank will operate the same banking business with the same management at the same location 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 office will be at 1500 Irving Street, Rahway, New Jersey. 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 ("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 institution.
In connection with the application. the FDIC has taken into consideration the financial and managerial resources and future prospects of the proponent banks arid the resultant bank, and the convenience and needs of the community to be served. Having found favorably on these 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. or the Attorney General of the United States, it is the FDIC's judgement that the application should be and hereby is approved. subject to the following conditions:
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 The Rahway Savings Institution shall not issue and, shares of its stock- to any persons other than RSI Bancorp. Inc., without prior written notification to and non-objection from the FDIC;
3. That, prior to a sale. transfer or other disposition of any shares of RSI Bancorp. Inc. by MHC to any person (including any Employee Stock Ownership Plan), or a conversion of the mutual holding company to stock form. The Rahway Savings Institution 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 The Rahway Savings Institution or RSI Bancorp. Inc. be issued to persons other than the MHC, any dividends waived by MHC must be retained by the Stock Holding Company or the savings bank and segregated. earmarked. or other-wise 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 MHC 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 the proposed transaction may not be consummated unless and until the resultant bank has authority to conduct a banking business. and that its establishment and operation as a stock savings bank have been fully approved by appropriate State of New Jersey officials and that its holding companies. RSI Bancorp, M.H.C. and RSI Bancorp, Inc. are granted approval to become bank holding companies by the Board of Governors of the Federal Reserve System;
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 alter, suspend. or withdraw its approval should any interim development be deemed to warrant such action.
Pursuant to delegated authority.
Dated at Washington, D.C.. this 31st day of July. 1998.
Mark S. Schmidt
Division of Supervision