FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Security Savings Bank
Monmouth, Warren County, Illinois
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 Security Savings Bank, Monmouth, Illinois ("SSB"), an Illinois chartered mutual savings bank for the FDIC's consent to merge with an interim Illinois-chartered stock savings bank ("Stock Bank"). SSB is a Savings Association Insurance Fund ("SAIF") member, with total assets of $103,391,000 and total deposits of $93,870,000 as of March 31, 1999.
These filings were made in connection with the "Security Savings Bank Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan" (the "Plan"). Pursuant to the Plan, SSB will: (i) merge with an interim stock savings bank, SSB Interim Two Savings Bank, which will own 100 percent of the stock of the stock savings bank, that will succeed to all the rights and obligations of SSB; and (ii) establish an Illinois mutual holding company, Security Bancorp, MHC ("MHC") which will own 100 percent of the stock of SSB. Presently there are no plans to offer for sale any portion of its stock. The proposed transaction per se will not alter the competitive structure of banking in the market currently served by SSB. SSB's principal office will remain at 220 East Broadway, Monmouth, Warren County, Illinois. 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 SSB discloses no inconsistencies with the purposes of the CRA. The bank is expected to continue to meet the credit needs of its entire community, consistent with 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 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 any 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 proposed transaction may not be consummated unless and until the FDIC issues a non-objection letter to the Notice filed on behalf of the applicant pursuant to section 303.161 of the FDIC's Rules and Regulations concerning the mutual-to-stock conversion portion of this transaction;
(2) That prior to a sale, transfer, or disposition of any shares of SSB by the MHC to any person (including any Employee Stock Ownership Plan), or a conversion of the mutual holding company to stock form, MHC 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;
(3) That, should any shares of the stock of SSB or the Stock Bank be issued to persons other than MHC, any dividends waived by MHC must be retained by SSB or the Stock Bank and segregated, earmarked, or otherwise identified on the books and records of SSB or the Stock 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 means including through dividend payments or at liquidation;
(4) That any changes in proposed management, including the board of directors or proposed ownership (10 percent or more of the stock and new acquisitions of or subscriptions to 10 percent 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 Chicago Regional Office prior to the consummation of the proposed transaction;
(5) The transaction being consummated not less than fifteen calendar days after the date of this Order or later than six months after the date of the Order, unless such period is extended for good cause by the FDIC;
(6) That the application by the mutual holding company to become a bank holding company is approved by the Board of Governors of the Federal Reserve System;
(7) Until the proposed transaction is consummated, the FDIC has the right to alter, suspend, or withdraw its approval should any interim development be deemed to warrant such action.
By Order of the Deputy Director of the Division of Supervision pursuant to the delegated authority of the Board of Directors.
Dated at Washington, D.C., this day of September, 1999.
____________________________
Michael J. Zamorski
Deputy Director
Board of Directors
Security Savings Bank
220 East Broadway
Monmouth, Illinois 61462
Board of Directors:
The notice of intent to convert from mutual to stock form and related application for approval of a merger transaction, filed on behalf of Security Savings Bank, Monmouth, Illinois ("SSB"), have been reviewed by the Federal Deposit Insurance Corporation ("FDIC") pursuant to section 303.161 of the FDIC Rules and Regulations and Section 18(c) of the Federal Deposit Insurance Act.
These filings were made in connection with the "Security Savings Bank Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan" (the "Plan"). Pursuant to the Plan, SSB will: (i) merge with an interim stock savings bank that will succeed to all the rights and obligations of SSB; (ii) establish an Illinois mutual holding company, Security Bancorp, MHC ("MHC") which will own 100 percent of the stock of SSB. MHC presently has no plans to offer for sale any of its SSB stock.
The FDIC has relied on information provided in SSB's notice of conversion and the accompanying business plan in reaching its decision regarding that notice. Management of the SSB and MHC have represented that the FDIC will be given prior notice before conversion of the Mutual Holding Company from the mutual to stock form.
Based on the information and representations presented, the FDIC plans to issue a letter of non-objection to the proposed conversion transaction provided that the bank satisfies the following conditions:
(1) SSB must provide written evidence that its Plan of conversion has been approved by the affirmative vote of a majority of the votes eligible to be cast at a special meeting of the Bank's voting participants;
(2) The mutual holding company must receive final approval from the appropriate Federal Reserve officials for the establishment of the bank holding company.
Provided SSB meets the foregoing conditions the FDIC will issue a letter of non-objection to the proposed conversion transaction.
Enclosed is the FDIC's Order and Basis for the merger application filed on behalf of SSB in connection with the conversion transaction. Please furnish the FDIC's Chicago Regional Office with satisfactory evidence of SSB's compliance with the conditions stated in the 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 necessary, please submit to the Chicago Regional Office a letter requesting a specific extension of the limitation, including the reasons for the requested extension.
Sincerely,
Michael J. Zamorski
Deputy Director
