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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
November 16, 1998
AMBANC HOLDING CO., INC.
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-27306 14-1783770
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification
incorporation) Number)
11 Division Street, Amsterdam, New York 12010-4303
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 842-7200
N/A
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(Former name or former address, if changed since last Report)
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Item 2. Other Events
As previously reported, on November 16, 1998, Ambanc Holding Co., Inc.,
a Delaware corporation ("Ambanc"), completed its acquisition of AFSALA Bancorp,
Inc., a Delaware corporation ("AFSALA"), pursuant to the Reorganization and
Merger Agreement, dated April 23, 1998 and amended as of June 26, 1998, by and
among Ambanc and its wholly owned subsidiary, Amsterdam Savings Bank, FSB (the
"Bank") and AFSALA and its wholly owned subsidiary, Amsterdam Federal Bank
("AFB"). Pursuant to the Agreement, AFSALA was merged with and into Ambanc, with
Ambanc as the surviving corporation (the "Merger"), and thereafter, AFB was
merged with and into the Bank, with the Bank as the surviving entity. Ambanc
plans to integrate the businesses of the Bank and AFB, which now operate as one
institution under the name "Mohawk Community Bank."
Upon consummation of the Merger, each share of the common stock, par
value $.10 per share, of AFSALA ("AFSALA") converted into the right to receive
1.07 shares of the common stock, par value $.01 per share, of Ambanc ("Ambanc").
Based on the 1,249,727 shares of AFSALA common stock issued and outstanding
immediately prior to the Merger, Ambanc will issue 1,337,207 shares of Ambanc
Common Stock in the Merger. In addition, under the Merger Agreement, Ambanc
assumed unexercised options to purchase 145,475 shares of AFSALA common stock
(which converted into options to purchase 155,658 shares of Ambanc common stock)
held by AFSALA's directors, officers and employees.
Ambanc's Registration Statement (the "Registration Statement") on Form
S-4 (File No. 333-59721), which was declared effective by the Securities and
Exchange Commission (the "Commission") on July 28, 1998, contains additional
information regarding the Merger and the parties involved, including among other
things the terms of the Merger Agreement and a description of AFSALA's business.
The Agreement was included as an exhibit to the Registration Statement.
Forward-Looking Statements
When used in this Current Report on Form 8-K and in future filings by
Ambanc with the Securities and Exchange Commission, in Ambanc's press releases
or other public or shareholder communications, and in oral statements made with
the approval of an authorized executive officer, the words or phrases "pro
forma," "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties, including, among other things, the possibility that
expected cost savings from the acquisition of AFSALA cannot be fully realized or
realized within the expected time frame, the possibility that revenues following
the acquisition of AFSALA may be lower than expected, changes in economic
conditions in Ambanc's market area, changes in policies by regulatory agencies,
fluctuations in
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interest rates, demand for loans in Ambanc's market area and competition, that
could cause actual results to differ materially from historical results and
those presently anticipated or projected. Ambanc wishes to caution readers not
to place undue reliance on any such forward-looking statements, which speak only
as of the date made. Ambanc wishes to advise readers that the factors listed
above could affect Ambanc's financial performance and could cause Ambanc's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
Ambanc does not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The consolidated financial statements of AFSALA (Commission File No.
0-21113) required by this item have been previously reported with the Commission
and are contained in AFSALA's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1997 and Quarterly Report on Form 10-QSB for the Quarterly
Period Ended June 30, 1998.
(b) Pro forma financial information.
The following unaudited pro forma condensed combined financial
statements ("pro forma financial statements") are based on the historical
financial statements of Ambanc Holding Co., Inc. and subsidiaries ("Ambanc") and
AFSALA Bancorp, Inc. and subsidiary ("AFSALA") and have been prepared to
illustrate the effect of the Merger.
The following unaudited pro forma condensed combined balance sheet as
of September 30, 1998 is based on the unaudited historical consolidated balance
sheets of Ambanc and AFSALA at that date, assuming that the Merger had been
consummated on September 30, 1998 (using the fair value of AFSALA common stock
immediately prior to the Merger date of November 16, 1998) and accounted for
using the purchase method of accounting.
The unaudited pro forma condensed combined statements of income reflect
the combination of the historical results of operations of Ambanc and AFSALA for
the year ended December 31, 1997 and for the nine months ended September 30,
1998. The unaudited pro forma condensed combined statements of income give
effect to the Merger using the purchase method of accounting and assume that (1)
the Merger occurred as of the beginning of the respective periods presented, and
(2) the amount of initial
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goodwill equaled the amount reflected in the unaudited pro forma condensed
combined balance sheet as of September 30, 1998.
These pro forma financial statements should be read in conjunction with
the historical consolidated financial statements and related notes contained in
Ambanc's September 30, 1998 Form 10- Q and December 31, 1997 Form 10-K; and in
AFSALA's June 30, 1998 Form 10-QSB and September 30, 1997 Form 10-KSB, which are
incorporated by reference in Ambanc's Current Report on Form 8-K filed November
25, 1998.
As noted above, the Merger will be accounted for using the purchase
method of accounting. Accordingly, the pro forma adjustments made for the
purpose of preparing the pro forma financial statements are based upon current
estimates regarding the amount of goodwill (which represents the excess of the
total acquisition cost over the fair value of the net assets acquired) which
will arise from the Merger and the period over which such goodwill will be
amortized. The amount of goodwill to be recorded as of the Merger date is
expected to be approximately $7.2 million and represents the current estimate of
the excess of the total acquisition cost over the fair value of the net assets
acquired based on information available as of this date. In the opinion of
Ambanc's management, the estimates used in the preparation of these pro forma
financial statements are reasonable under the circumstances.
The combined company expects to achieve benefits from the Merger
including operating cost savings and revenue enhancements. These pro forma
financial statements do not reflect any potential cost savings or revenue
enhancements which are expected to result from the combination of operations of
Ambanc and AFSALA and, accordingly, may not be indicative of the results of
future operations. No assurances can be given with respect to the ultimate level
of cost savings or revenue enhancements to be realized. As a result, these pro
forma financial statements are not necessarily indicative of either the results
of operations or financial condition that would have been achieved had the
Merger in fact occurred on the dates indicated, nor do they purport to be
indicative of the results of operations or financial condition that may be
achieved in the future by the combined company.
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AMBANC HOLDING CO., INC. AND AFSALA BANCORP, INC.
At September 30, 1998
---------------------------------------------------------
Pro Forma Pro Forma
Ambanc AFSALA Adjustments Notes(s) Combined
------ ------ ----------- -------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 5,985 $ 3,732 $ (520) 1I $ 9,197
Federal funds sold 8,100 17,900 26,000
-------- -------- -------- --------
Cash and cash equivalents 14,085 21,632 (520) 35,197
-------- -------- -------- --------
Securities available for sale, at fair value 193,991 46,435 13,691 1J,4 254,117
Investment securities held to maturity --- 13,536 (13,536) 4 ---
Loans receivable, net of unamortized fees 334,573 82,142 1,459 1J 418,174
Allowance for loan losses (4,199) (1,110) (5,309)
-------- -------- -------- --------
Loan receivable, net 330,374 81,032 1,459 412,865
-------- -------- -------- --------
Accrued interest receivable 3,260 1,382 4,642
Premises and equipment, net 2,752 1,708 4,460
Federal Home Loan Bank of New York stock, at cost 6,650 565 7,215
Other assets 3,142 422 447 1G, 1H 4,011
Goodwill --- --- 7,165 1K 7,165
-------- -------- -------- --------
Total assets $554,254 $166,712 $ 8,706 $729,672
======== ======== ======== ========
Liabilities and Shareholders' Equity
Liabilities:
Deposits $314,233 $144,144 651 1J $459,028
Advances from borrowers for taxes and
insurance 900 367 1,267
Advances from FHLB 20,000 1,492 26 1J 21,518
Other borrowed funds 155,450 --- 155,450
Accrued expenses and other liabilities 3,573 1,240 4,813
-------- -------- -------- --------
Total liabilities 494,156 147,243 677 642,076
-------- -------- -------- --------
Shareholders' equity:
Preferred stock --- --- ---
Common stock 54 145 --- 2C 54
(145) 3
Additional paid-in capital 52,735 13,557 715 1G, 1H 63,723
1,549 1E
9,439 2E
(14,272) 3
Retained earnings, substantially restricted 26,731 9,622 (844) 1G, 1H 26,731
(8,778) 3
Treasury stock, at cost (16,510) (2,562) 16,510 2D ---
2,562 3
Common stock acquired by ESOP (2,937) (969) 969 1G (2,937)
Unearned RRP shares issued (1,195) (576) 576 1H (1,195)
Accumulated other comprehensive income 1,220 252 (252) 3 1,220
-------- -------- -------- --------
Total shareholders' equity 60,098 19,469 8,029 87,596
-------- -------- -------- --------
Total liabilities and shareholders' equity $554,254 $166,712 $ 8,706 $729,672
======== ======== ======== ========
</TABLE>
See "Notes to the Unaudited Pro Forma Condensed Combined Financial Statements."
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
AMBANC HOLDING CO., INC. AND AFSALA BANCORP, INC.
Nine Months Ended September 30, 1998
---------------------------------------------------------
Pro Forma Pro Forma
Ambanc AFSALA Adjustments Notes(s) Combined
------ ------ ----------- -------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Interest and dividend income $28,059 $8,500 $36,559
Interest expense 16,264 4,537 20,801
------- ------ -------
Net interest income 11,795 3,963 15,758
Provision for loan losses 675 35 710
------- ------ -------
Net interest income after provision for
loan losses 11,120 3,928 15,048
Non-interest income 772 274 1,046
------- ------ -------
Non-interest expenses:
Compensation and benefits 4,713 1,493 (269) 5 5,937
Occupancy and equipment 1,197 426 1,623
Other 4,226 1,210 358 6 5,794
------- ------ -------
Total non-interest expenses 10,136 3,129 8 13,354
------- ------ -------
Income before taxes 1,756 1,073 2,740
Income tax expense 735 484 80 5 1,299
------- ------ -------
Net income $ 1,021 $ 589 9 $ 1,441
======= ====== =======
Earnings per share:
Basic $ 0.27 $ 0.49 9 $ 0.28
======= ====== =======
Diluted $ 0.27 $ 0.47 9 $ 0.27
======= ====== =======
Average shares outstanding:
Basic 3,762 1,200 244 7 5,206
Diluted 3,845 1,245 231 7 5,321
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Financial Statements."
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
AMBANC HOLDING CO., INC. AND AFSALA BANCORP, INC.
Year Ended December 31, 1997
---------------------------------------------------------
Pro Forma Pro Forma
Ambanc AFSALA Adjustments Notes(s) Combined
------ ------ ----------- -------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Interest and dividend income $35,566 $10,937 $46,503
Interest expense 19,654 5,640 25,294
------- ------- -------
Net interest income 15,912 5,297 21,209
Provision for loan losses 1,088 205 1,293
------- ------- -------
Net interest income after
provision for loan losses 14,824 5,092 19,916
------- ------- -------
Non-interest income 1,826 375 2,201
------- ------- -------
Non-interest expenses:
Compensation and benefits 6,086 1,668 (263) 5 7,491
Occupancy and equipment 1,539 524 2,063
Other 4,572 1,400 478 6 6,450
------- ------- -------
Total non-interest expenses 12,197 3,592 8 16,004
------- ------- -------
Income before taxes 4,453 1,875 6,113
Income tax expense 1,693 645 81 5 2,419
------- ------- -------
Net income $ 2,760 $ 1,230 9 $ 3,694
======= ======= =======
Earnings per share:
Basic $ 0.70 $ 0.94 9 $ 0.67
======= ======= =======
Diluted $ 0.69 $ 0.92 9 $ 0.67
======= ======= =======
Average shares outstanding:
Basic 3,941 1,311 229 7 5,481
Diluted 3,982 1,331 224 7 5,537
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Financial Statements."
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
Note 1: The adjustments to estimate the amount of goodwill used in the
preparation of the unaudited pro forma condensed combined balance sheet are
summarized below (in thousands, except share data):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares of AFSALA common stock outstanding 1,261,148 (A)
Exchange ratio 1.07
------------
Equivalent number of Ambanc common shares 1,349,428
Per share price of Ambanc common stock $ 19.23 (B)
------------
Consideration for AFSALA common stock $ 25,949
Outstanding AFSALA stock options 145,475 (C)
Exchange ratio 1.07
------------
Equivalent number of Ambanc stock options 155,658
Estimated fair value of an Ambanc stock option $ 9.95 (D)
Estimated fair value of stock options exchanged ------------ $ 1,549 (E)
------------
Total estimated consideration $ 27,498
Historical net assets acquired $ (19,469) (F)
Effect of AFSALA's ESOP termination $ (156) (G)
Effect of vesting of AFSALA's Restricted
Stock Plan shares $ (291) (H)
Estimated direct costs of acquisition $ 520 (I)
Estimated net fair value adjustments $ (937) (J)
------------
Estimated goodwill (excess of the total
acquisition cost over the estimated fair value
of the net assets acquired) $ 7,165 (K)
===========
</TABLE>
(A) The number of shares of outstanding AFSALA common stock exchanged were
those shares outstanding immediately prior to the Merger. The number of
AFSALA shares outstanding on September 30, 1998 (1,319,018 shares) ,
adjusted for the pro forma ESOP adjustment noted in (G) below, has been
used in the pro forma computations.
(B) Represents the average closing price of Ambanc common stock for the
period three days before, after and including the announcement date of
April 23, 1998.
(C) Represents the number of AFSALA stock options outstanding as of the
Merger date and exchanged for equivalent Ambanc stock options. In
accordance with the AFSALA Stock Option Plan and the Merger Agreement,
all AFSALA stock options immediately vested at the time of the Merger.
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS, CONTINUED
(D) The estimated fair value of an Ambanc stock option was estimated as of
the announcement date (April 23, 1998) using the Black-Scholes
option-pricing model with the following assumptions: expected life of 5
years; expected volatility of 40%; dividend yield of 1.20%; and
risk-free interest rate of 5.66%.
(E) Represents the estimated fair value of the Ambanc stock options issued
to AFSALA stock option holders as part of the Merger. See also (D).
(F) Represents AFSALA's total shareholders' equity as of September 30,
1998.
(G) In accordance with the Merger Agreement, AFSALA's ESOP terminated at
the time of the Merger. The AFSALA ESOP returned to AFSALA a
sufficient number of unallocated shares to satisfy the debt
outstanding to AFSALA based on the price of AFSALA common stock
immediately prior to the Merger. The remaining unallocated shares held
by the AFSALA ESOP were allocated to plan participants, for which
AFSALA recorded an expense equal to the fair value of the shares
allocated. AFSALA will receive a tax deduction for the shares
allocated based on the original cost to the AFSALA ESOP of $10.00 per
share. The shares returned to AFSALA by the AFSALA ESOP to satisfy the
ESOP debt outstanding to AFSALA were not considered outstanding for
purposes of the issuance of Ambanc common stock.
The following entry would have been recorded by AFSALA to reflect the
AFSALA ESOP termination if the Merger had been completed on September
30, 1998, using the fair value of AFSALA common stock immediately prior
to the Merger of $16.75 per share. The income tax benefit is computed
at an assumed marginal effective tax rate of 40%. The net result is an
increase in AFSALA's shareholders' equity of $156 as of September 30,
1998, as follows:
Treasury stock $ 969
Compensation expense, net of
tax (retained earnings) 498
Current tax refund (other assets) 156
Common stock acquired by ESOP $969
Additional paid-in capital 654
(H) Immediately prior to the Merger, the unearned AFSALA Restricted Stock Plan
(RSP) shares at AFSALA immediately vested, in accordance with the
provisions of the RSP. AFSALA recorded the remaining unearned compensation
as an expense in the period of the vesting, net of the related tax effects.
In addition, AFSALA will receive a tax deduction (recorded directly to
equity) equal to the excess of the market price of the shares at the
vesting date over the market price of the shares on the grant date
($13.50).
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS, CONTINUED
The following entry would have been recorded by AFSALA to reflect the
immediate vesting of the unearned RSP shares if the Merger had been
completed on September 30, 1998, using the fair value of AFSALA common
stock immediately prior to the Merger of $16.75 per share. The income
tax benefit is computed at an assumed marginal effective tax rate of
40%. The net result is an increase in AFSALA's shareholders' equity of
$291 as of September 30, 1998, as follows:
Compensation expense, net of
tax (retained earnings) $ 346
Current tax refund (other assets) 291
Unearned RSP shares issued $ 576
Additional paid-in capital 61
(I) Represents the estimated direct acquisition costs for investment
banking, legal and accounting fees. As these costs were paid out in cash
prior to or within a short period of time following consummation of the
Merger, the pro forma financial statements reflect the cash outlay.
(J) Represents the adjustment of the assets and liabilities acquired from
AFSALA to estimated fair value.
(K) Represents the current estimate of the excess of the total acquisition
cost over the estimated fair value of the net assets acquired based on
information available as of this date. Goodwill is expected to be
amortized on a straight-line basis over 15 years.
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS, CONTINUED
Note 2: As stated in Note 1, had the Merger occurred as of September 30, 1998,
and after giving effect to the pro forma adjustment related to AFSALA ESOP
termination noted in Note 1, (G) above, Ambanc would have issued 1,349,428
shares of common stock in exchange for all outstanding shares of AFSALA common
stock. In connection with the Merger, Ambanc plans to issue shares out of
treasury stock, to the extent possible, in exchange for the outstanding AFSALA
shares. The following shows the impact on Ambanc's equity accounts had the
Merger taken place as of September 30, 1998 (in thousands, except share data):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total shares of Ambanc to be issued (see Note 1) 1,349,428
Ambanc shares held in its treasury stock portfolio 1,317,086 (A)
---------
Shares of Ambanc to be issued from
authorized and unissued shares 32,342
Price of Ambanc common stock $ 19.23 (B)
---------
Fair value of new common shares to be issued $ 622
Less: par value of Ambanc common stock $ 0 (C)
---------
Increase to additional paid-in capital $ 622
Ambanc shares held in its treasury stock portfolio 1,317,086 (A)
Price of Ambanc common stock $ 19.23 (B)
----------
Increase in Ambanc equity $ 25,327
Less: cost basis of treasury shares $ 16,510 (D)
Increase to additional paid-in capital ---------- $ 8,817
---------
Total increase to additional paid-in capital $ 9,439 (E)
</TABLE>
(A) The number of Ambanc treasury shares issued in exchange for
outstanding AFSALA shares were those held immediately prior to the
Merger, up to a maximum equal to the amount of shares required to
be issued by Ambanc to AFSALA stockholders in accordance with the
Merger Agreement. The number of Ambanc treasury shares held as of
September 30, 1998 has been used in the pro forma computations.
(B) See Note 1, (B).
(C) Represents 32,342 new shares of Ambanc common stock to be issued,
with a par value of $.01 per share (rounds to $0).
(D) Represents the cost basis of the Ambanc treasury shares held as of
September 30, 1998.
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS, CONTINUED
(E) Costs related to the registration and offering of securities were
recorded as a direct reduction of additional paid-in capital and
were not material to the total value of the offering.
Note 3: Represents the elimination of AFSALA's equity accounts as of September
30, 1998, after giving effect to the pro forma adjustments in Note 1.
Note 4: Represents the reclassification of the securities acquired from AFSALA
from investment securities held to maturity to securities available for sale.
Note 5: Represents the elimination of the expense related to AFSALA's ESOP and
RSP, net of the related tax effects. See also Note 1, (G) and (H).
Note 6: This adjustment reflects the amortization of goodwill, computed in Note
1, on a straight-line basis over a period of 15 years. The goodwill computed in
Note 1 represents the current estimate of the excess of the total acquisition
cost over the estimated fair value of the net assets acquired based on available
information. See also Note 1, (K).
Note 7: The adjustments to average shares outstanding (both basic and diluted)
reflect the termination of AFSALA's ESOP, the accelerated vesting of AFSALA's
RSP awards, and the adjustment of AFSALA's average shares outstanding and common
stock equivalents (stock options) to equivalent Ambanc average shares
outstanding and common stock equivalents using the exchange ratio of 1.07.
Note 8: No pro forma adjustments have been made to non-interest expenses for
one-time costs associated with facilitating the Merger, or for expected cost
savings which Ambanc and AFSALA believe will be derived from the elimination of
duplicative administrative functions and other operating efficiencies. However,
there can be no assurance that any such cost savings will in fact be realized.
Note 9: The net income and earnings per share amounts reflected herein do not
purport to be indicative of actual results that would have been realized had the
Merger in fact occurred on the dates indicated, nor do they purport to be
indicative of results of operations that may be achieved in the future. In
addition, no adjustments have been made to non-interest expenses for expected
cost savings, or one-time costs associated with facilitating the Merger as
described in Note 8 above, or for revenue enhancements expected to result from
the Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMBANC HOLDING CO., INC.
Date: January 29, 1999 By: /s/ John M. Lisicki
-------------------- -------------------------------
John M. Lisicki, President
and Chief Executive Officer
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