Opinion ID: 2373765
Heading Depth: 2
Heading Rank: 2

Heading: The Maine Savings Bank Conversion

Text: On December 30, 1983, Maine Savings Bank filed an application with the Maine Bureau of Banking to convert to stock form under 9-B M.R.S.A. § 344. The plan provided that Maine Savings Bank would convert to stock form and issue all of its stock to The One Bancorp, a holding company formed for the purpose of acquiring and holding the newly issued stock of Maine Savings Bank. All of the stock of The One Bancorp would be offered for sale first to eligible account holders [8] in a subscription offering at a price equal to the fair market value of the stock, based upon an independent appraisal. Shares not subscribed for by eligible account holders would be offered, at that same price and in descending order of priority, to other account holders, bank personnel, and the public, at the same fair market value. The plan did not provide for the distribution of any cash, or any free or discounted stock, to account holders of the Bank. [9] In connection with the transfer of Maine Savings Bank stock to The One Bancorp, the plan also provided that The One Bancorp would allocate to Maine Savings Bank a portion of the conversion proceeds from the sale of stock of The One Bancorp sufficient to maintain the Bank's existing capital-to-asset ratio. The plan provided for the creation of a liquidation account, setting forth the priorities for the distribution of any net surplus of Maine Savings Bank in the event that Maine Savings Bank liquidated while solvent within ten years following the conversion. The liquidation account was not a separate pool of funds, but an accounting memo entry of a contingent liability against the Bank. Each eligible account holder's interest in the liquidation account (the account holder's sub-account balance) would decline as withdrawals were made from his or her deposit account. The liquidation account would terminate in any event ten years after the conversion. The plan also imposed restrictions on the dividends that could be paid by Maine Savings Bank to The One Bancorp. Dividends were limited for three years following the conversion to 50% of Maine Savings Bank's earnings, and further limited so as to prohibit dividends that would reduce the stated net worth of Maine Savings Bank to an amount below the balance of the liquidation account. The substantive terms of Maine Savings Bank's plan were essentially the same as those required by the FHLBB regulations governing the mutual-to-stock conversion of FHLBB-regulated savings and loan associations and federally chartered mutual savings banks, see 12 C.F.R. § 563b, with the exception that the liquidation account established by Maine Savings Bank's plan of conversion was limited to a term of ten years. No written comments or requests for hearing on the application were ever received by the Bureau of Banking, and no hearing on the application was held. On April 2, 1984, the Bureau of Banking issued an order conditionally approving Maine Saving's plan of conversion pursuant to 9-B M.R.S.A. § 344. On April 19 and 21, 1984, Maine Savings Bank mailed to each account holder a notice of a special meeting of account holders to take place on May 11, 1984, when account holders could vote for or against the plan of conversion. The mailing included both a summary description of and the full plan of conversion, and stated, in accordance with 9-B M.R.S.A. § 344(3), as amended by P.L. 1981, ch. 553, that unless the account holder personally appeared at the meeting to vote no, he or she would be deemed to have voted yes in favor of the plan. The notice also stated that the plan of conversion had been approved by the Bureau of Banking, and that any petition for judicial review of the Bureau's approval of the plan needed to be filed in the Superior Court no later than forty days after the decision was rendered. The mailing also included a prospectus offering subscriptions for shares of The One Bancorp, and a brochure describing the essential terms of the plan. The subscription offering period extended from April 17, 1984 to May 17, 1984. During that time, 627,295 of the 3.6 million shares to be offered by The One Bancorp were subscribed, approximately 17.4% of the offering. About 2500 account holders of the Maine Savings Bank subscribed for shares in The One Bancorp. Plaintiffs Lovell and Campbell did not subscribe for any shares. The trustees and executive officers of the Maine Savings Bank collectively subscribed for 90,208 of the 3.6 million shares offered, approximately 2.5% of the total offering. On May 11, 1984, Maine Savings Bank held the special meeting of account holders to vote on the plan of conversion. At the special meeting, 26 account holders in attendance voted for the plan of conversion, 9 of the account holders in attendance voted against the plan of conversion, and 2 of the account holders abstained from voting. The 88,867 account holders who were not present at the special meeting in person, including plaintiffs Lovell and Campbell, were deemed to have affirmatively voted for the plan of conversion. Thereafter, Maine Savings Bank certified to the Superintendent that the account holders had approved the plan of conversion by a majority vote, and on June 7, 1984, the Superintendent issued a Certificate of Conversion pursuant to 9-B M.R.S.A. §§ 343(4)(B), 344(4), reciting that Maine Savings Bank had been legally converted from mutual to stock form effective upon receipt of proceeds from the sale of its stock, and that the conversion was in compliance with Maine and federal law. On June 12, 1984, following notification of the receipt of proceeds from the sale of the remaining shares of stock in a public offering by The One Bancorp, [10] the Superintendent issued a certificate confirming the sale and the legal conversion of Maine Savings Bank. No petition for judicial review of the Bureau of Banking's actions, order, and certificates described above has ever been filed under the provisions of the Administrative Procedure Act. 9-B M.R.S.A. § 256; 5 M.R.S.A. §§ 11001-11008 (1989); M.R.Civ.P. 80C.