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FHB Formation LLC, Boston, Massachusetts (“FHB”) filed an application, pursuant to Title 9-B M.R.S.A. Chapter 101, to acquire control of Northeast Bancorp, Lewiston, Maine (“Bancorp”) and thereby acquire indirect control of Northeast Bank, Lewiston, Maine (“Bank”). Public notice, as required by Title 9-B M.R.S.A. 252.2(B), was provided by publication, posting on the Bureau’s website and mail to interested parties affording them an opportunity to either submit written comments or request a hearing. The Bureau received no comments during the public comment period ending June 19, 2010. Action on the application has been postponed twice at the applicant’s request: first, on August 18, 2010 for up to sixty days, or no later than October 18, 2010, and again on October 18 for up to sixty days, or no later than December 17, 2010.
A Principal Bank Examiner of the Maine Bureau of Financial Institutions conducted an investigation of this transaction. All evidence and pertinent material which were considered by the Examiner were also considered by the Superintendent in reaching his decision.
Bancorp is a registered bank holding company whose principal asset is 100% of the stock of Bank, a Maine state-chartered universal bank. Bank, with assets of $610 million and deposits of $382 million, operates ten banking offices in western and south central Maine, a financial center (offering investment, insurance and financial planning services) in Falmouth, Maine, and a loan production office in Portsmouth, New Hampshire. Bank also has a wholly-owned subsidiary, Northeast Bank Insurance Group Inc., which operates 11 insurance offices in Maine and one in New Hampshire.
FHB was formed in early 2009 to raise third-party capital to be invested in a financial institution.1 Richard Wayne, Claire Bean and Heather Campion (the “Management Group”) are FHB’s sole members and officers; they also will become the executive officers of Bancorp with Mr. Wayne serving as the CEO and President. FHB has equity commitments totaling $30.1 million from a limited number of accredited investors (the “FHB investors”).2 FHB will purchase for cash, from existing Bancorp shareholders, approximately 40% of Bancorp’s outstanding shares and will also purchase for $16 million in cash additional newly issued Bancorp shares. As a result, after the merger the FHB investors will hold, in the aggregate, 60% of Bancorp’s common stock and current Bancorp shareholders will hold, in the aggregate, 40% of Bancorp’s common stock. The transaction is structured as a merger of FHB with and into Bancorp with Bancorp as the surviving entity; after the merger FHB will cease to exist. No FHB investor will hold more than 9.99% of any class of voting securities or more than 9.99% of the equity of Bancorp.
The Merger Agreement includes a three-year commitment by FHB to support Bancorp’s existing local communities, preserve local loan authority of Bank’s officers and employees, preserve and use the name “Northeast Bank” for community bank operations in Maine, preserve Bancorp’s status as a Maine chartered financial institution with headquarters in its current geographic footprint, and to pursue the business plan using Bancorp as the platform company.
These conditions are a “condition, imposed in writing, in connection with the approval of any application by the superintendent” within the meaning of Title 9-B M.R.S.A. §231.1(a). As such, the conditions are enforceable under Title 9-B M.R.S.A. §231.1(a).
The transaction shall be completed within one year of the effective date of this Order, unless a written extension is granted by the Superintendent. Any person aggrieved by this Order shall be entitled to a judicial review of the Order in accordance with the Maine Administrative Procedure Act, Title 5, Chapter 375, subchapter VII.
By order of the Superintendent, effective December 17, 2010.
/s/ Lloyd P. LaFountain III
1 At the time FHB was formed, a target had not been identified. In addition to the three members of the Management Group, two other individuals, Matthew Anestis and Matthew Botein, have been involved with FHB since its inception. While neither is a FHB investor, Mr. Botein is a proposed director and Mr. Anestis will be an advisor to Bancorp.
2 While the FHB investors were solicited by FHB (either the Management Group and/or Messrs. Anestis and Botein) and some of the investors have a relationship with another investor, the investors are distinct and independent of one another and each has made an independent decision to invest; they are not acting in concert. Accordingly, the FHB investors are not considered a “group” nor should an individual FHB investor’s ownership be attributed to, or aggregated with, the interests of any other FHB investor. Therefore, after the merger no individual or group of individuals will control Bancorp.
Last Updated: October 21, 2010
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