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Exhibit 99.9
THE COMMONWEALTH OF MASSACHUSETTS
DIVISION OF BANKS
LEVERETT SALTONSTALL BUILDING
100 CAMBRIDGE STREET, BOSTON, MASSACHUSETTS 02202
APPLICATION FOR ACQUISITION OF A BANK BY A COMPANY
PURSUANT TO MASSACHUSETTS GENERAL LAWS CHAPTER 172, SECTION
26B, APPLICATION IS HEREBY MADE BY
APPLICANT: Medford Bancorp, Inc.
ADDRESS: 29 High Street
Medford, MA 02155
MAILING ADDRESS,
IF DIFFERENT: N/A
TELEPHONE: (617) 395-7700
FOR WRITTEN APPROVAL OF THE COMMISSIONER OF BANKS TO ACQUIRE THE
FOLLOWING BANK.
BANK TO BE
ACQUIRED: Medford Savings Bank
ADDRESS: 29 High Street
Medford, MA 02155
TELEPHONE: (617) 395-7700
THREE COPIES OF THIS APPLICATION MUST BE FILED WITH AN
APPLICATION FEE IN THE AMOUNT OF $1,500.00 PAYABLE TO THE DIVISION OF
BANKS.
APPLICATION
COORDINATOR: Gregory J. Lyons, Esq. and Josefina R.
Childress, Esq.
TITLE: Attorneys
ADDRESS: Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
TELEPHONE: (617) 570-1000
DATE: September 15, 1997
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INTRODUCTORY STATEMENT
Medford Bancorp, Inc., a corporation organized under the laws of the
Commonwealth of Massachusetts ("Bancorp"), hereby applies to the Massachusetts
Commissioner of Banks ("Commissioner of Banks") pursuant to Massachusetts
General Laws, Chapter 172, Section 26B ("Section 26B") for approval of its
acquisition of all of the capital stock of Medford Savings Bank, a
Massachusetts-chartered savings bank in stock form ("Medford") (such acquisition
hereinafter referred to as the "Proposed Reorganization"). All factual
information stated herein has been provided by Medford.
As is discussed more fully below, Medford believes a holding company
structure provides more flexibility to respond to market demands and thus will
enable it to compete more effectively against the much larger competitors in its
market.
Description of the Parties
A. Bancorp
Bancorp was organized as a Massachusetts corporate subsidiary of
Medford, in July, 1997, for the sole purpose of becoming the holding company of
Medford in accordance with Massachusetts law. Upon completion of the Proposed
Reorganization, Medford will be a wholly owned subsidiary of Bancorp, and
Bancorp will thereby become a bank holding company.
Bancorp currently is a shell subsidiary. When Bancorp becomes the
holding company of Medford, its principal activities will be related to its
holding of Medford stock. In the future, upon receipt of all necessary
regulatory approvals, Bancorp may acquire banks or companies engaged in
bank-related activities and may engage in such activities as may be permitted by
applicable law, although no such activities or acquisitions are contemplated at
this time. In any event, in accordance with Section 26B, Bancorp will engage
directly or indirectly only in such activities as are now or may hereafter be
proper activities for bank holding companies registered under the Federal Bank
Holding Company Act of 1956.
B. Medford
Medford was organized in 1869 as a Massachusetts mutual savings bank.
Medford converted from mutual to stock form on March 18, 1986 and issued
3,680,000 shares of common stock.
Until January, 1996, Medford had two wholly-owned subsidiaries: Medco
Realty, Inc. ("Medco") and Medford Securities Corporation ("MSC"). Medco engaged
in the ownership and maintenance of certain buildings leased to Medford and, to
the extent excess space was available, third parties. Medford elected to
dissolve Medco in January, 1996, and acquired all
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of its assets and liabilities. MSC was established as a wholly owned subsidiary
of Medford in February, 1995, and became operational on March 1, 1995. MSC is a
securities corporation engaged exclusively in bank-permissible buying and
selling of securities.
Medford is principally engaged in the business of attracting deposits
from the general public, originating residential and commercial real estate
mortgages and consumer and commercial loans, and investing in securities.
Medford is headquartered in Medford, Massachusetts, which is located
approximately seven miles north of downtown Boston. It has a network of sixteen
banking offices located in Medford, Malden, Arlington, Belmont, Burlington,
North Reading, Waltham, and Wilmington. Medford's primary market area includes
these communities as well as other cities and towns in Middlesex County and the
surrounding area north of Boston.
Medford also offers savings bank life insurance ("SBLI") in accordance
with Massachusetts law. Medford intends to continue offering SBLI after the
Proposed Reorganization, a permissible activity pursuant to Section 3(f) of the
Bank Holding Company Act of 1956, as amended.
At June 30, 1997, Medford had total assets of $1,072,557,000, total
deposits of $824,611,000, and total stockholders' equity of $96,458,000. For the
fiscal year ended December 31, 1996 and the six month period ended June 30,
1997, Medford had net income of $10,429,000 and $5,923,000, respectively. On
June 30, 1997, Medford's leverage ratio was 8.49% and its Tier 1 risk-based and
total risk-based capital ratios were 14.89% and 16.03%, respectively. As a
result, Medford is considered "well-capitalized" under applicable prompt
corrective action regulations. Copies of Medford's most recent financial
statements are attached hereto as Appendix H.
Description of the Transaction
The Proposed Reorganization will be effected pursuant to a Plan of
Reorganization and Acquisition dated as of July 29, 1997, by and between Bancorp
and Medford (the "Plan of Reorganization"), a copy of which is included in
Appendix A hereto, in accordance with Section 26B.(1)
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(1) The Plan of Reorganization provides that it shall not become
effective until all of the following first shall have occurred: (i) the Plan of
Reorganization shall have been approved by the affirmative vote of the holders
of two-thirds of the outstanding common stock of Medford at a meeting of such
stockholders called for such purpose, (ii) the Plan of Reorganization shall have
been approved by the Commissioner of Banks and a copy of the Plan of
Reorganization with his approval endorsed thereon shall have been filed in his
office, all as provided in Section 26B, (iii) any approval, consent or waiver
required by the Board of Governors of the Federal Reserve System shall have been
received and any waiting period imposed by applicable law shall have expired,
(continued...)
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In accordance with Section 26B, the Plan of Reorganization was approved
by the Board of Directors of Bancorp and Medford on July 29, 1997. The Plan of
Reorganization is anticipated to be approved by the holders of more than
two-thirds of the outstanding shares of Medford's common stock entitled to vote
at a special meeting of Medford's stockholders to be held on September 16, 1997.
A copy of the proxy statement delivered to the stockholders in connection with
the Proposed Reorganization (the "Proxy Statement") is attached hereto as
Exhibit 2.
Under the Plan of Reorganization, Bancorp will become the owner of all
the outstanding shares of the common stock of Medford, and each stockholder of
Medford who does not exercise dissenters' rights with respect to the Plan of
Reorganization will become the owner of one share of Bancorp common stock for
each share of common stock of Medford held immediately prior to the consummation
of the Proposed Reorganization, together with certain associated preferred stock
purchase rights issued pursuant to Medford's Shareholder Rights Plan (see below
in this section for a discussion of the Shareholder Rights Plan). On the
effective date of the Proposed Reorganization, each share of common stock of
Medford will be automatically converted into and exchanged for one share of
Bancorp common stock (together with associated preferred stock purchase rights).
The number of shares of Bancorp common stock to be issued at the
effective time of the Proposed Reorganization will equal the number of shares of
common stock of Medford issued and outstanding immediately prior thereto, less
the number of shares of common stock of Medford held by dissenting
stockholders.(2) Shares of Bancorp common stock that would have been issued had
dissenting stockholders not dissented will remain as authorized but unissued
shares of Bancorp common stock. The shares of Bancorp common stock that are
outstanding prior to the effective time of the Proposed Reorganization, all of
which are presently held by Medford, will be cancelled as part of the Proposed
Reorganization.
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(1)(continued...)
(iv) Medford shall have received a favorable opinion from its counsel,
satisfactory in form and substance to Medford, with respect to the federal
income tax consequences of the Plan of Reorganization and the acquisition
contemplated thereby, (v) the shares of Bancorp common stock (together with
associated preferred stock purchase rights) to be issued to the holders of
common stock of Medford pursuant to the Proposed Reorganization shall have been
registered or qualified for such issuance to the extent required under all
applicable state securities laws, and (vi) Medford and Bancorp shall have
obtained all other consents, permissions and approvals and taken all actions
required by law or agreement, or deemed necessary by Medford or Bancorp, prior
to the consummation of the acquisition provided for by the Plan of
Reorganization and to Bancorp's having and exercising all rights of ownership
with respect to all of the outstanding shares of common stock of Medford
acquired by it thereunder.
(2) As of the date of this filing, Bancorp is not aware of any
dissenting stockholders. In the event Bancorp becomes aware of any dissenting
stockholders, it will promptly inform the Commissioner of Banks of the fact.
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After consummation of the Proposed Reorganization, Medford, as a
subsidiary of Bancorp, will continue to serve the communities it presently
serves from its existing office locations. In connection with the Proposed
Reorganization, Medford currently intends, to transfer up to approximately $7
million to Bancorp, which amount does not exceed the accumulated earnings and
profits for tax purposes of Medford as of June 30, 1997. As detailed below, if
such a transfer to Bancorp had been made on June 30, 1997, Medford would have
been still considered "well-capitalized" under the applicable prompt corrective
action regulations.
The Charter and By-laws of Medford will not be affected by consummation
of the Proposed Reorganization, and the Articles of Organization and By-laws of
Bancorp are substantially identical to those of Medford. The Medford Savings
Bank 1993 Stock Option Plan and the Medford Savings Bank 1986 Stock Option Plan
(collectively, the "Stock Option Plans") will become stock option plans of
Bancorp. All other stock related benefit plans of Medford will be unchanged by
the Proposed Reorganization, except that any plan which refers to the common
stock of Medford, such as the Employee Stock Ownership Plan, will, following the
completion of the Proposed Reorganization, be deemed to refer instead to Bancorp
common stock.
Medford's Shareholder Rights Plan, pursuant to which the preferred
stock purchase rights were provided to shareholders, will be amended so that it
will be assumed by Bancorp following the Proposed Reorganization. Accordingly,
the outstanding rights issued pursuant to the Shareholder Rights Plan will be
assumed by, and deemed to be rights issued by, Bancorp. The Shareholder Rights
Plan, as amended, will be substantially similar to the plan as currently in
effect. The Shareholder Rights Plan is more fully described on page 13 of the
Proxy Statement.
The Directors, officers and other employees of Medford will be
unchanged by the Proposed Reorganization. The Directors of Bancorp will
initially consist of the ten persons currently serving as members of the Board
of Directors of Medford. The President and Chief Executive Officer, Chief
Financial Officer and the Clerk of Bancorp will initially be the persons serving
identical roles with respect to Medford.
In accordance with Section 26B, the expenses in connection with the
Proposed Reorganization and the development of the Plan of Reorganization, in
the aggregate, will not exceed 2% of the capital stock, surplus account and
undivided profits of Medford.
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APPLICATION FOR ACQUISITION OF A BANK BY A COMPANY
UNDER MASSACHUSETTS GENERAL LAWS CHAPTER 172, SECTION 26B
PART A
1. A written plan of acquisition.
A copy of the Plan of Reorganization is included in Appendix A attached
hereto.
2. A statement addressing the issues of whether competition among banking
institutions will be unreasonably affected and whether public advantage
will be promoted.
Effect on Competition
The Proposed Reorganization does not raise any competitive issues. The
Proposed Reorganization will not result in the addition of a new banking
presence to the markets presently served by Medford or in the consolidation of
existing bank operations. Medford's relative market share will not be altered by
the Proposed Reorganization. Following consummation of the Proposed
Reorganization, Medford will continue to serve the same markets as it did prior
to the Proposed Reorganization and each of those markets will continue to be
served by a variety of significant financial institutions and will remain highly
competitive. Indeed, the town of Medford is within seven miles of Boston,
Massachusetts, the largest city in and financial services focal point of New
England.
Rather than raising competitive concerns, it is expected that the
Proposed Reorganization will promote healthy competition in the geographic
market areas now served by Medford. As in the remainder of the United States,
the banking industry in the area serviced by Medford has experienced substantial
consolidation, with Medford now facing significant competition from several
competitors much larger in asset size and deposits. The bank holding company
structure will provide flexibility for meeting the future financial needs of
Medford and adequately responding to the increasing demands of the financial
services market.
Public Advantage
The Proposed Reorganization is expected to promote public advantage and
result in net new benefits in several respects. First, as a bank holding
company, Bancorp will not be subject to the same regulatory restrictions as
Medford, and will be able to acquire and invest more freely in certain bank and
bank-related activities as well as such other activities as might be permitted
by regulatory authorities. Second, although no new consumer and business
services are currently contemplated, it is anticipated that the bank holding
company structure will facilitate the provision of new, wide ranging financial
services to consumers and businesses in Medford's market areas in response to
market demands.
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The anticipated operating efficiencies, financial strength and
flexibility gained by the Proposed Reorganization should over time result in the
following other "net new benefits": (1) capital investments; (2) job creation
for Massachusetts citizens; and (3) a continued commitment by Medford to
maintain and open branches in its delineated local community, as market
conditions warrant.
As to capital investments, although no significant capital investments
are currently contemplated in connection with the Proposed Reorganization,
Medford and Bancorp believe that the expanded business opportunities that will
result from the bank holding company structure and any operating efficiencies
gained thereby will lead to increased profits and retained earnings. This
strengthened financial position will help meet the lending demands of Medford's
communities and enhance Medford's ability to service the needs of both the
citizens and the businesses of its communities.
As to job creation, Bancorp's ability to invest in certain bank and
bank-related activities may result in the expansion of its business which could
translate into more job opportunities for Massachusetts citizens. Furthermore,
in addition to the potential for internal capital investments and job creation,
Medford's contemplated enhanced ability to act as a source of financial services
for the communities it serves should assist the businesses and citizens in those
communities to expand and create jobs in their markets. This community benefit
is even further augmented by Medford's commitment to the low and middle income
residents in those areas as demonstrated by its most recent satisfactory
Community Reinvestment Act rating. A copy of Medford's CRA Statement and Notice
is attached hereto as Appendix E.
Finally, as to branch issues, Medford has historically demonstrated its
commitment to maintain and open branches in its communities. No branch closings
are expected to result from the Proposed Reorganization. Instead, it is
anticipated that the flexibility and financial strength that will result from
the Proposed Reorganization will enable Medford to continue to open or acquire
additional branches within its communities, as market conditions warrant.
As the foregoing demonstrates, the Proposed Reorganization is
anticipated to have a positive effect on competition and is also anticipated to
result in public advantage, including net new benefits. More generally, the
proposed holding company structure is anticipated to permit Bancorp and Medford
to effectively compete against competitors having a substantially larger
percentage of deposits in its markets.
3. A statement on the financing plans for the company.
As mentioned in the Introductory Statement, in connection with the
Proposed Reorganization and in accordance with applicable law, Medford currently
contemplates to transfer up to approximately $7 million to Bancorp, which amount
does not exceed the accumulated earnings and profits for tax purposes of Medford
as of June 30, 1997. A transfer
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of $7 million to Bancorp would reduce Medford's stockholders' equity as of June
30, 1997, to approximately $89.5 million. If such a transfer to Bancorp had been
made on June 30, 1997, the leverage, Tier 1 risk-based, and total risk-based
capital ratios of Medford would have been approximately 7.88%, 13.90% and
15.06%, respectively, resulting in its still being considered "well-capitalized"
under applicable prompt corrective action regulations.(3)
Attached as Exhibit 1 hereto is a table which sets forth (i) the
consolidated capitalization of Medford as of June 30, 1997; (ii) the pro forma
consolidated capitalization of Medford as of June 30, 1997 after giving effect
to the Proposed Reorganization (which reflects the proposed transfer of $7
million from Medford's retained earnings to Bancorp); and (iii) the pro forma
capitalization of Bancorp on a consolidated basis after giving effect to the
Proposed Reorganization. Neither Medford nor Bancorp plans to incur any debt in
connection with the Proposed Reorganization.
4. A statement on the business objectives of the company.
The Board of Directors of Medford believes that a holding company
structure will provide flexibility for meeting the future financial needs of
Medford and responding to competitive conditions in the financial services
market. For example, although no transactions are presently contemplated, the
holding company structure will facilitate the acquisition of other banks as well
as other companies engaged in bank-related activities if and when opportunities
arise. In this regard, a holding company structure would permit an acquired
entity to operate on a more autonomous basis as a wholly owned subsidiary of
Bancorp rather than as a division of Medford. This more autonomous operation may
be decisive in acquisition negotiations. In addition, the stock of Bancorp might
serve as appropriate consideration in any such acquisition.
Moreover, as a bank holding company, Bancorp will not be subject to the
same regulatory restrictions as Medford, and will be able to acquire and invest
more freely in certain bank and bank-related activities as well as such other
activities as might be permitted by regulatory authorities. In addition, Bancorp
will not be subject to the same regulatory limitations on the amounts which it
can invest in its subsidiaries and other businesses and will not be required to
obtain regulatory approval before issuing shares of its capital stock, except
under certain circumstances. Moreover, providing even further operational
flexibility, the repurchase of stock by Bancorp will not be subject to the same
significant adverse tax consequences as a repurchase of stock by Medford, and
except under certain circumstances, no regulatory approval is required for such
repurchase by Bancorp.
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(3) Due to a recent update of financial information regarding Medford,
these pro forma capital ratios differ immaterially from those stated in the
Proxy Statement. As already mentioned, however, Medford will remain
"well-capitalized" pursuant to applicable prompt corrective action regulations
under the revised numbers.
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5. Provide a copy of a prospectus and any other information describing the
transaction.
A copy of the Proxy Statement, which includes a description of the
Proposed Reorganization, is attached hereto as Exhibit 2.
6. Provide a corporate structure chart for the company and the bank which
includes any subsidiaries. Indicate the relational structure of the
corporate entities including all subsidiaries.
A copy of an organizational chart for Bancorp and Medford, including
Medford's only subsidiary, MSC, is attached hereto as Exhibit 3.
7. Provide information on all required regulatory approvals necessary to
complete the transaction; include information on the status of each
application and include a copy of any approvals received.
In connection with the Proposed Reorganization, Bancorp is concurrently
filing a notice with the Federal Reserve Bank of Boston pursuant to Section
225.17 of Regulation Y (12 C.F.R. Section 225.17) to form a bank holding company
(the "FRB Notice"). A copy of the FRB Notice, excluding any confidential
sections, is attached hereto as Appendix F.
PART B
If applicable, submit a request for approval to acquire more than ten
percent of a savings bank or a co-operative bank in stock form pursuant
to 209 CMR 33.08(6)(c) and include the date of such conversion.
This item is not applicable. Medford converted from mutual form to
stock form in 1986. Since more than three years have elapsed since the
conversion, Bancorp's acquisition of more than ten percent of any class of
common stock of Medford does not implicate 209 C.M.R. 33.08(6)(c).
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LIST OF EXHIBITS
1. Pro Forma Capitalization Table.
2. Proxy Statement furnished in connection with the special meeting of the
stockholders of Medford to be held on September 16, 1997.
3. An organizational chart for Bancorp, Medford and Medford's only
subsidiary.
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APPENDICES
A. A CERTIFICATE OF THE PRESIDENT, SECRETARY OR CLERK OF THE
COMPANY, CERTIFYING THAT THE PLAN WAS APPROVED BY A MAJORITY
OF THE BOARD OF DIRECTORS OF THE COMPANY.
B. A CERTIFICATE OF THE PRESIDENT, SECRETARY OR TREASURER OF THE
BANK, CERTIFYING THAT THE PLAN WAS APPROVED BY A MAJORITY OF
THE BOARD OF DIRECTORS AT THE BANK AND BY A 2/3 VOTE OF THE
SHAREHOLDERS.
C. A COPY OF NOTICE OF THE SHAREHOLDER MEETING THAT WAS
PUBLISHED TWICE, ONE WEEK APART IN LOCAL NEWSPAPER.
D. A COPY OF NOTICE OF THE SHAREHOLDER MEETING THAT WAS MAILED
TO INDIVIDUAL SHAREHOLDERS.
E. COMMUNITY REINVESTMENT ACT STATEMENT AND NOTICE OF THE BANK.
F. COPIES OF ANY APPLICATION, EXCLUDING CONFIDENTIAL SECTION,
SUBMITTED TO A FEDERAL AGENCY.
G. IDENTIFY THE DAILY NEWSPAPER OR NEWSPAPERS OF GENERAL
CIRCULATION PUBLISHING IN THE AREA OF THE BANK'S MAIN OFFICE. IF
THERE IS MORE THAN ONE SUCH NEWSPAPER, LIST THE LATEST AUDIT
BUREAU OF CIRCULATION'S STATEMENT FOR EACH NEWSPAPER.
H. PROVIDE THE MOST RECENT INCOME STATEMENT AND BALANCE SHEET
OF THE BANK.