FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: South Shore Community Bank and Trust
Company
Braintree, Massachusetts
Application for Federal Deposit Insurance
(Bank Insurance Fund)
ORDER
The Board of Directors has fully considered all available facts and information
relevant to the factors of Section 6 of the Federal Deposit Insurance Act and relating to
the application for Federal deposit insurance, with membership in the Bank Insurance Fund,
for South Shore Community Bank and Trust Company, Braintree, Norfolk County,
Massachusetts, a proposed new state nonmember bank to be located at a yet to be
constructed building located on the John Mahar Highway between Pearl Street and Plain
Street, Braintree, Massachusetts, and has concluded that the application should be
approved. The bank will operate out of temporary facilities at the same location as its
proposed permanent facilities and will relocate to its permanent facilities once
construction is complete.
Accordingly, it is hereby ORDERED, that the application submitted by South Shore
Community Bank and Trust Company, Braintree, Norfolk County, Massachusetts, for Federal
deposit insurance be and the same hereby is approved subject to the following conditions.
1. That beginning paid-in capital funds of not less than $8,569,000 shall be provided,
including common stock of $856,900 and surplus of $7,393,225, and that a ratio of Tier 1
Capital to total assets of not less than eight percent, in addition to a fully funded loan
loss reserve, shall be maintained during the first three years of operation;
2. That any changes in proposed management or proposed ownership (10 percent or more of
stock), including new acquisitions of or subscriptions to 10 percent or more of the stock,
shall render this commitment null and void unless such proposal is approved by the Federal
Deposit Insurance Corporation (FDIC) prior to opening of the bank;
3. That an accrual accounting system shall be adopted for maintaining the bank's books;
4. That the bank shall obtain an audit of its financial statements by an independent
public accountant annually for at least the first three years after deposit insurance is
effective, shall furnish a copy of any reports by the independent auditor (including any
management letters) to the Boston Regional Office within 15 days after their receipt by
the bank, and shall notify the Regional Office within 15 days when a change in its
independent auditor occurs;
5. That adequate fidelity bond coverage shall be obtained prior to opening the bank;
6. That Federal deposit insurance shall not become effective unless and until the
applicant has been established as a state nonmember bank, that it has authority to conduct
a banking business, and that its establishment and operation as a bank have been fully
approved by the State authority;
7. That, until the bank commences business, if the FDIC revises its Policy Statement on
"Applications For Deposit Insurance" so as to differ in content with any
conditions imposed herein, the FDIC shall have the right to alter said conditions to
conform to such revised Policy Statement;
8. That, until the date this conditional commitment for deposit insurance becomes
effective, the FDIC shall have the right to alter, suspend, or withdraw the said
commitment should any interim development be deemed to warrant such action; and
9. That, if deposit insurance has not become effective within twelve months from the
date of this order, or unless, in the meantime, the FDIC has approved a request for an
extension of time, the consent granted shall expire at the end of said twelve-month
period.
Dated at Washington, D. C., this 17th day of March, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Feldman
Executive Secretary
FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: South Shore Community Bank and Trust Company
Braintree, Massachusetts
Application for Federal Deposit Insurance
(Bank Insurance Fund)
STATEMENT
Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C.
1815), an application for Federal deposit insurance has been filed on behalf of the South
Shore Community Bank and Trust Company, Braintree, Norfolk County, Massachusetts, a
proposed new state nonmember bank to be located in a yet to be constructed building on the
John Mahar Highway between Pearl Street and Plain Street, Braintree, Massachusetts. The
bank will operate out of temporary facilities located at the same location as its proposed
permanent facilities and will relocate to its permanent facilities once construction is
complete.
The bank will offer full service, community oriented banking in a primary service area,
which includes Braintree, Quincy, Weymouth, and Hingham, and the surrounding South Shore
communities. Economic activity and growth projections for the area support the addition of
a new bank. The proponents believe that the recent consolidation of the banking industry
has created opportunities for independent, locally owned and managed banks. A review of
the information submitted by the applicant relating to the convenience and needs statutory
factor revealed no inconsistencies with the purposes of the Community Reinvestment Act.
Initial capitalization is adequate, and acceptable deposit growth and operating profits
within a reasonable period of time are projected. Proposed management is acceptable and
approval of the proposal would not create an undue risk to the Bank Insurance Fund.
The application as submitted included the proposed issuance of stock benefits to
founders to compensate for financial support provided in the initial stages of
establishing the bank and to attract and retain qualified key personnel. There is no
provision in the Statement of Policy to accommodate the granting of stock benefits to
reward founders for their financial support in the initial stages of establishing a bank. The issuance of stock benefits to
founders who will not be involved in the active management of the institution is also a
contravention of existing policy.
While the stock benefits proposed to be issued will not be tied to specific performance
by active management as provided in the FDIC's current Statement of Policy regarding
applications for deposit insurance, such stock benefits would appear to be acceptable
under the FDIC's proposed revisions to that Statement of Policy. The Board, in the
proposed revisions to the Statement of Policy and in recent cases involving stock benefit
plans, has concluded that such plans are not objectionable if such plans represent
reasonable compensation for the time and expertise or financial commitment of the outside
incorporators. In this particular case, the stock benefits are not considered
objectionable in that the stock benefits represent reasonable compensation for the risk
arising from the significant financial commitment of the out-side incorporators.
Accordingly, based on a careful evaluation of all available relevant facts and
information, the Board of Directors has concluded that approval of the application is
warranted subject to conditions listed in the order.
THE BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION
