January 12, 1999
Board of Directors
Woronoco Savings Bank
31 Court Street
Westfield, Massachusetts 01086
Members of the Board:
The notice of proposed mutual-to-stock conversion and subsequent amendments thereto,
filed on behalf of Woronoco Savings Bank, Westfield, Massachusetts (Bank) have been
reviewed by the Federal Deposit Insurance Corporation (FDIC) pursuant to Section 303.160
of the FDIC Rules and Regulations. As described in the notice and amendments, the Bank
proposes to convert from a Massachusetts chartered mutual savings bank to a Massachusetts
chartered stock savings bank, which will be wholly owned by Woronoco Bancorp, Inc. (WBI),
a thrift holding company to be formed as a part of this transaction. As part of the
conversion, it is our understanding that the Bank and its holding company will create a
Charitable Foundation (Foundation) with common stock contributed by the holding company.
The FDIC has relied on information provided in the Bank's notice of conversion and the
accompanying business plan in reaching its decision. It is anticipated that notification
of any planned material deviations from the business plan, such as a return of capital,
will be provided to the FDIC in advance of the event. Based on the information presented
in the Bank's notice of conversion, as amended, the FDIC plans to issue a letter of
nonobjection to the proposed conversion transaction, provided that the Bank satisfies the
following conditions:
1. The Foundation's organizers committing to the following oversight provisions:
(a) Common stock of WBI held by the
Foundation shall be voted by the Foundation at the same ratio as
all other shares voted on each and every
proposal considered by the stockholders of WBI;
(b) The Foundation shall be subject to examination by the FDIC;
(c) The Foundation shall comply with all supervisory directives imposed by the
FDIC
(d) The Foundation shall operate in accordance with written policies adopted by the
Foundation's board of directors, including adopting a conflict of
interest policy acceptable to the FDIC; and
(e) The Foundation shall provide a proposed operating plan prior to conversion
and annual reports to the FDIC describing the grants made and grant
recipients.
2. The Bank must provide written evidence that its Plan of Conversion has been approved
by the affirmative vote of a majority of the Bank's independent corporators.
3. The Bank must receive final approval from the appropriate State of Massachusetts
officials (State Authority) for its establishment as a stock savings bank, final approval
must be received from the Office of Thrift Supervision (OTS) for the establishment of the
thrift holding company, and final approval must be received from the OTS and the State
Authority for WBI to acquire the resultant stock bank.
4. The Bank must submit final disclosure materials acceptable to the FDIC Division of
Supervision, Registration and Disclosure Section.
5. The Bank must advise this office of the results of the subscription offering and
deliver an updated appraisal that:
(a) takes the results of the subscription offering into account;
(b) discusses any material occurrences during the subscription period; and
(c) explains any orders that may have been rejected.
Provided the Bank meets the foregoing conditions and that the FDIC is satisfied with
the appraiser's determination in the updated appraisal that the results of the
subscription offering represent fair value for the Bank, and provided further that there
has been no significant alteration to the terms of the conversion transaction (by action
of other regulators or otherwise) subsequent to the date of this letter, the FDIC will
issue a letter of nonobjection to the proposed conversion transaction.
Sincerely,
James L. Sexton
Director
cc: Mr. Douglas P. Faucette, Esq.
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
December 21, 1998
Board of Directors
Woronoco Savings Bank
31 Court Street P. 0. Box 978
Westfield, Massachusetts 01086-0978
Dear Board of Directors:
By letter dated October 19, 1998, Woronoco Savings Bank's (Woronoco) requested a waiver
of the depositor voting requirement at 12 C.F.R. Section 333.4(d)(2) of the FDIC's
mutual-to-stock conversion regulations in connection with the Bank's proposed
mutual-to-stock conversion.
Woronoco's waiver request was determined appropriate for consideration by the FDIC's
Board of Directors under the "good cause" exception to the Conversion
Regulations, 12 C.F.R. Section 333.4(a), rather than the "conflicts with State
law" exception under 12 C.F.R. Section 333.4(b), since the depositor vote requirement
in the Conversion Regulations does not present a conflict with Massachusetts law, but
rather is supplemental to Massachusetts law and procedures for mutual-to-stock
conversions.
The FDIC's regulations are silent with respect to the standards under which a depositor
vote waiver will be granted; however, the preamble accompanying the final regulation
indicated the following:
"...on a case-by-case basis, the Board will consider waiving the depositor voting
requirement if it is demonstrated, to the Board's satisfaction, that the alternative
voting mechanism established under the applicable state law satisfies the concerns
expressed above about the need for a vote on the conversion by parties that are not
insiders and do not have a potential conflict of interest in reviewing the proposed
conversion." 59 Fed Reg. 61233, 61238 (November 30, 1994).
Applying this standard, the FDIC Board has determined that a sufficient number of the
Woronoco's corporators are not insiders and have no apparent potential for conflict of
interest.
Based on the information presented by Woronoco and representations made in connection
with the waiver request, the FDIC approves the waiver of the requirement for the depositor
vote provided Woronoco submits written evidence that a majority of the independent
corporators voted to approve the Plan of Conversion.
Please be advised that the FDIC's review of Woronoco's conversion materials submitted
with Woronoco's formal notice of its planned mutual-to-stock conversion in accordance with
Parts 303 and 333 of the FDIC's regulations is still pending. In addition, Woronoco must
satisfy the disclosure requirements for any offering materials currently under review by
the FDIC's Registration and Disclosure Unit.
Sincerely,
Mark S. Schmidt
Associate Director
Douglas P. Faucette
Muldoon, Murphy & Faucette
5 101 Wisconsin Avenue, N. W.
Washington, D.C. 20016
