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
Associate Director
Division of Supervision
