<PAGE>
As filed with the Securities and Exchange Commission on February 6, 1997
Registration No. 333-18841
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GS FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Articles of Incorporation)
Louisiana 6711 72-1341014
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(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
3798 Veterans Boulevard
Metairie, Louisiana 70002
(504) 457-6220
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(Address and Telephone Number of Principal Executive Offices and
Principal Place of Business)
Donald C. Scott
President and Chief Executive Officer
GS Financial Corp.
3798 Veterans Boulevard
Metairie, Louisiana 70002
(504) 457-6220
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(Name, Address, and Telephone Number of Agent for Service)
Copies to:
Hugh T. Wilkinson, Esq. Martin L. Meyrowitz, Esq.
Raymond A. Tiernan, Esq. Silver, Freedman & Taff, L.L.P.
Elias, Matz, Tiernan & Herrick L.L.P. and 1100 New York Avenue, N.W.
734 15th Street, N.W., 12th Floor Washington, D.C. 20005
Washington, D.C. 20005
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
<PAGE>
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
DOLLAR PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 3,438,500 shares(2) $10.00 $34,385,000 $10,419.70(3)
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- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes shares that may be issued in the event of a 15% increase in the
maximum size of the offering.
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
GS FINANCIAL CORP.
Cross Reference Sheet Showing Location in the Prospectus of Information
Required by Items of Form SB-2
<TABLE>
<CAPTION>
Registration Statement Item and Caption Prospectus Headings
--------------------------------------- ---------------------
<C> <S> <C>
1. Front of Registration Statement and Front Cover Page
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front and
of Prospectus Outside Back Cover Pages
3. Summary Information and Risk Factors Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price The Conversion -- Stock
Pricing and Number of
Shares to be Issued
6. Dilution Not applicable
7. Selling Security-Holders Not applicable
8. Plan of Distribution Front Cover Page; The Conversion -- Subscription Offering; -- Community
Offering; -- Syndicated Community Offering Prospectus
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers, Management of the Company;
Promoters and Control Persons Management of Guaranty Savings
11. Security Ownership of Certain Beneficial Proposed Management Purchases
Owners and Management
</TABLE>
3
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<TABLE>
<C> <S> <C>
12. Description of Securities Restrictions on Acquisition of the Company and
Guaranty Savings; Description of Capital Stock of the Company
13. Interests of Named Experts and Counsel Not applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Not applicable
15. Organization Within Last Five Years Management of Guaranty Savings
16. Description of Business Business; Regulation; Taxation
17. Management's Discussion and Analysis or Management's Discussion and Analysis
Plan of Operation of Financial Condition and Results of Operations
18. Description of Property Business - Properties
19. Certain Relationships and Related Transactions Management of Guaranty Savings
20. Market for Common Equity and Related Market for Common Stock
Stockholder Matters
21. Executive Compensation Management of the Company;
Management of Guaranty Savings
22. Financial Statements Statements of Income; Index to Financial Statements
23. Changes in and Disagreements With Accountants Experts
on Accounting and Financial Disclosure
</TABLE>
4
<PAGE>
PROSPECTUS
GS FINANCIAL CORP.
(Proposed Holding Company for Guaranty Savings and Homestead Association)
2,990,000 Shares (Anticipated Maximum) of Common Stock
$10.00 per Share
GS Financial Corp. (the "Company"), a Louisiana corporation, is offering
up to 2,990,000 shares of its common stock, par value $.01 per share (the
"Common Stock"), in connection with the conversion of Guaranty Savings and
Homestead Association ("Guaranty Savings" or the "Association") from a
Louisiana-chartered mutual association to a Louisiana-chartered stock
association pursuant to the Association's plan of conversion (the "Plan" or
"Plan of Conversion"). Under certain circumstances, the Company may increase
the amount of Common Stock offered hereby to up to 3,438,500 shares. The
simultaneous conversion of the Association to stock form, the issuance of the
Association's stock to the Company and the offer and sale of the Common Stock
by the Company are referred to herein as the "Conversion."
Nontransferable rights to subscribe for the Common Stock have been
granted, in order of priority, to (i) certain depositors of Guaranty Savings,
(ii) the Company's Employee Stock Ownership Plan ("ESOP"), (iii) certain
other depositors and borrowers of the Association, and (iv) directors,
officers and employees of the Association, subject to the limitations
described herein (the "Subscription Offering"). Commencing concurrently with
the Subscription Offering, and subject to the other limitations described
herein, the Company is offering the shares of Common Stock not subscribed for
in the Subscription Offering, if any, for sale in a community offering (the
"Community Offering"). If necessary, any shares of Common Stock not
subscribed for in the Subscription Offering or purchased in the Community
Offering will be offered to members of the general public on a best efforts
basis by a selling group of broker-dealers managed by Charles Webb & Company
("Webb"), a division of Keefe, Bruyette & Woods, Inc. ("Keefe, Bruyette"), in
a syndicated community offering (the "Syndicated Community Offering"). (The
Subscription Offering, Community Offering and Syndicated Community Offering
are referred to collectively as the "Offerings"). The purchase price in the
Offerings is $10.00 per share (the "Purchase Price").
With the exception of the ESOP, the maximum amount that any person may
purchase in any particular priority category in the Offerings is generally
limited to 25,000 shares of Common Stock (subject to adjustment). No person,
together with associates and persons acting in concert with such person, may
purchase in the aggregate more than 70,000 shares of Common Stock in the
Conversion (subject to adjustment). The minimum purchase is 25 shares. See
"The Conversion - Limitations on Common Stock Purchases."
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THE SUBSCRIPTION OFFERING WILL CLOSE AT 12:00 NOON, CENTRAL TIME, ON
_______ __, 199_ (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE COMPANY AND
THE ASSOCIATION, WITH REGULATORY APPROVAL IF NECESSARY, AS WILL THE
CONCURRENT COMMUNITY OFFERING UNLESS EXTENDED. THE COMMUNITY OFFERING OR ANY
SYNDICATED COMMUNITY OFFERING MUST BE COMPLETED WITHIN 45 DAYS AFTER THE
CLOSE OF THE SUBSCRIPTION OFFERING, OR _______ __, 199_, UNLESS EXTENDED BY
THE COMPANY AND THE ASSOCIATION, WITH REGULATORY APPROVAL IF NECESSARY. No
single extension can exceed 90 days, and the extensions may not go beyond
________ __, 1998. Orders submitted are irrevocable until the completion of
the Conversion; provided that, if the Conversion is not completed within the
45-day period referred to above, unless such period has been extended, all
subscribers will have their funds returned promptly with interest, and all
withdrawal authorizations will be cancelled. Any extension of the Offerings
will be conducted in accordance with the terms described herein. See
"The Conversion - Subscription Offering and Subscription Rights."
THE COMPANY HAS APPLIED TO THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. TO HAVE ITS COMMON STOCK QUOTED ON THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS AUTOMATED QUOTATIONS ("NASDAQ") NATIONAL MARKET UNDER THE
SYMBOL "___." PRIOR TO THE OFFERINGS, THERE HAS NOT BEEN A PUBLIC MARKET FOR
THE COMMON STOCK, AND THERE CAN BE NO ASSURANCE THAT AN ACTIVE AND LIQUID
TRADING MARKET FOR THE COMMON STOCK WILL DEVELOP OR THAT THE COMMON STOCK
WILL TRADE AT OR ABOVE THE PURCHASE PRICE IN THE OFFERINGS. SEE "MARKET FOR
COMMON STOCK."
FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK SALES CENTER AT
(504) ___-____. FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY EACH PROSPECTIVE INVESTOR, SEE "RISK FACTORS" AT PAGE 17
HEREOF.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, OR ANY OTHER FEDERAL AGENCY OR STATE SECUR-
ITIES COMMISSION, NOR HAS SUCH COMMISSION, OFFICE OR
OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
ii
<PAGE>
<TABLE>
<CAPTION>
Estimated
Underwriting Estimated
Subscription Fees and Other Net
Price(1) Expenses(2) Proceeds(3)
------------- ---------------- -------------
<S> <C> <C> <C>
Minimum Per Share $10.00 $0.33 $9.67
Midpoint Per Share $10.00 $0.30 $9.70
Maximum Per Share $10.00 $0.28 $9.72
Maximum Per Share, as adjusted $10.00 $0.24 $9.76
Total Minimum(1) $22,100,000 $727.815 $21,372,185
Total Midpoint(1) $26,000,000 $781,635 $25,218,365
Total Maximum(1) $29,900,000 $825,000 $29,075,000
Total Maximum, as adjusted(4) $34,385,000 $825,000 $33,560,000
</TABLE>
(1) Determined in accordance with an independent appraisal prepared
by RP Financial, LC ("RP Financial") dated December 20, 1996, which
states that the estimated pro forma market value of the Common Stock
ranged from $22,100,000 to $29,900,000 (the "Estimated Valuation
Range"), or between 2,210,000 and 2,990,000 shares of Common Stock
at the Purchase Price. See "The Conversion - Stock Pricing and
Number of Shares to be Issued."
(2) Consists of the estimated costs to the Association and the Company
arising from the Conversion, including estimated fixed expenses of
$450,000 and fees to be paid to Webb in connection with the
Subscription and Community Offerings, which fees are estimated to be
$277,815, $331,635, $375,000 and $375,000 at the minimum, mid-point,
maximum and maximum, as adjusted. Webb is not obligated to purchase any
shares of Common Stock in the Offerings. Such fees paid to Webb may be
deemed to be underwriting fees. See "The Conversion - Marketing
Arrangements." The actual fees and expenses may vary from the estimates.
(3) Actual net proceeds may vary substantially from estimated amounts.
Includes the purchase of shares of Common Stock by the ESOP, which
initially will be deducted from the Company's stockholders' equity. For
the effects of such purchase, see "Capitalization" and "Pro Forma Data."
(4) Reflects a 15% increase in the Estimated Valuation Range, which may
occur without a resolicitation of subscribers or any right of
cancellation, to reflect changes in market and financial conditions
prior to completion of the Conversion or to fill the order of the ESOP.
_________________________
CHARLES WEBB & COMPANY
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
_________________________
The date of this Prospectus is ______ __, 1997.
iii
<PAGE>
MAP of Registrant's market area produced here.
iv
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION REGARDING THE ASSOCIATION AND THE FINANCIAL STATEMENTS OF THE
ASSOCIATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
GS FINANCIAL CORP.
GS Financial Corp. is a Louisiana corporation organized in December 1996
by the Association for the purpose of becoming a unitary holding company of
the Association. The Company will purchase all of the capital stock of the
Association to be issued in the Conversion in exchange for 50% of the net
Conversion proceeds and will retain the remaining 50% of the net proceeds as
its initial capitalization. Immediately following the Conversion, the only
significant assets of the Company will be the capital stock of the
Association, the Company's loan to the ESOP, and the remainder of the net
Conversion proceeds retained by the Company. The business and management of
the Company initially will consist primarily of the business and management
of the Association. Initially, the Company will neither own nor lease any
property, but will instead use the premises, equipment and furniture of the
Association. At the present time, the Company does not intend to employ any
persons other than officers of the Association, and the Company will utilize
the support staff of the Association from time to time. Additional employees
will be hired as appropriate to the extent the Company expands or changes its
business in the future. See "Business" and "Management of the Company."
The Company's executive office is located at the home office of the
Association at 3798 Veterans Boulevard, Metairie, Louisiana 70002, and its
telephone number is (504) 457-6220.
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
Guaranty Savings is a Louisiana-chartered mutual savings and loan
association that was originally formed in 1937. Guaranty Savings conducts
business from its main office in Metairie, Louisiana and branch offices in
New Orleans and Mandeville, Louisiana. At September 30, 1996, Guaranty
Savings had $86.5 million of total assets, $62.0 million of total
liabilities, including $60.5 million of deposits, and $23.8 million of
retained earnings (representing 27.5% of total assets).
Guaranty Savings is primarily engaged in attracting deposits from the
general public through its offices and using those and other available
sources of funds to originate loans for portfolio secured primarily by one-to
four-family residences located in the New Orleans, Louisiana metropolitan
area. At September 30, 1996, Guaranty Savings' net loans receivable totalled
$43.1 million or 49.8% of total assets. Conventional first mortgage, one- to
four-family residential loans (excluding construction loans) amounted to
$41.4 million, or 95.4%, of the Association's total loan portfolio at
September 30, 1996. To a much lesser
2
<PAGE>
extent, Guaranty Savings also originates consumer loans and construction
loans and, on occasion, commercial real estate loans and consumer loans.
Guaranty Savings is a traditional, community-oriented savings
institution which emphasizes a conservative approach to its operations. The
Association generally has concentrated on building its capital base and
maintaining superior asset quality. In pursuit of these goals, Guaranty
Savings has adopted a business strategy that emphasizes offering a limited
array of loan and deposit products. In recent periods the Association has
experienced limited growth, with its net loans increasing by $2.4 million, or
5.8%, from December 31, 1993 to September 30, 1996. Certain aspects of the
Association's business strategy are briefly noted below.
- CAPITAL POSITION. As of September 30, 1996, the Association had
retained earnings of $23.8 million and exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 27.8%,
27.8% and 80.1%, respectively, as compared to the minimum requirements of
1.5%, 3.0% and 8.0%, respectively. As a result of its highly capitalized
position, the Association's return on average equity historically has been
below industry standards. The Association's return on average equity was
1.99% and 3.72%, respectively, for the nine months ended September 30, 1996
and year ended December 31, 1995. As a result of the Conversion, the
Association's capital will be further increased. See "Risk Factors -
Potential Low Return on Equity Following the Conversion: Uncertainty as to
Future Growth Opportunities," "Regulatory Capital" and "Regulation - The
Association - Regulatory Capital Requirements."
- PROFITABILITY. The Association reported net income of $365,000 for
the nine months ended September 30, 1996, compared to $858,000 for the
comparable period in 1995. The primary reason for the decline in net income
during the 1996 period compared to the 1995 period was $413,000, pre-tax, in
a one time assessment to recapitalize the Savings Association Insurance Fund
("SAIF"). The Association reported net income of $872,000, $994,000 and $1.3
million for 1995, 1994 and 1993, respectively. Subsequent to the Conversion,
the Association's profitability will be affected by, among other things, the
imposition of a shares tax and franchise tax by the state of Louisiana and
increased compensation expenses. See "Risk Factors - Potential Increased
Compensation Expense After the Conversion," "Pro Forma Data" and "Taxation -
State Taxation." See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
- ASSET QUALITY. Management believes that good asset quality is
important to the Association's long-term profitability. The Association's
total nonperforming assets, which consist of non-accruing loans and net real
estate owned ("REO"), amounted to $316,000, or .73%, of total assets at
September 30, 1996. At September 30, 1996, the Association's allowance for
loan losses amounted to $337,000 or 106.7% of total nonperforming loans. See
"Business - Asset Quality."
3
<PAGE>
- COMMUNITY ORIENTATION. The Association is committed to meeting the
financial needs of the communities in which it operates. Management believes
that the size of the Association permits it to be able to provide superior
customer service on a personalized and efficient basis. At September 30,
1996, substantially all of the Association's deposits and loans were to
residents of its primary market area. The Association intends to continue
its practice of investing in loans and obtaining deposits from residents of
its primary market area.
The Association is subject to examination and comprehensive regulation
by the Louisiana Office of Financial Institutions ("OFI"), which is the
Association's chartering authority, and by the Office of Thrift Supervision
("OTS"), which is the Association's primary federal regulator. The
Association is also regulated by the Federal Deposit Insurance Corporation
("FDIC"), the administrator of the SAIF. The Association is also subject to
certain reserve requirements established by the Board of Governors of the
Federal Reserve System ("FRB") and is a member of the Federal Home Loan Bank
("FHLB") of Dallas, which is one of the 12 regional banks comprising the FHLB
System.
Guaranty Savings' executive office is located at 3798 Veterans
Boulevard, Metairie, Louisiana 70002, and its telephone number is (504)
457-6220.
THE CONVERSION AND THE OFFERINGS
On October 10, 1996, the Board of Directors of the Association adopted
the Plan of Conversion pursuant to which the Association is converting from a
Louisiana-chartered mutual savings and loan association to a
Louisiana-chartered stock savings and loan association, all the common stock
of which will be acquired by the Company in exchange for 50% of the net
Conversion proceeds. The other 50% of the net Conversion proceeds will be
retained by the Company. The Conversion is subject to OTS and OFI approval,
which have been conditionally received, and is subject to approval of the
Association's members at a special meeting to be held for this purpose on
______ __, 199_. In addition, the Company has received the conditional
approval of the OTS and the OFI to become a savings and loan holding company
and as such will be subject to regulation by the OTS. See "Use of Proceeds"
and "The Conversion - General." By converting to the stock form of
organization, the Association will be structured in the form used by many
other savings institutions, commercial banks and other business entities.
See "The Conversion - Purposes of Conversion."
Pursuant to the Plan and in connection with the Conversion, the Company
is offering up to 2,990,000 shares of Common Stock in the Subscription
Offering, the concurrent Community Offering and, if necessary, in a
Syndicated Community Offering. The Common Stock is first being offered in
the Subscription Offering with nontransferable subscription rights being
granted, in the following order of priority, to (i) depositors of the
Association with account balances of $50.00 or more as of the close of
business on September 30, 1995 ("Eligible Account Holders"), (ii) the ESOP,
(iii) depositors of the Association with account
4
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balances of $50.00 or more as of the close of business on December 31, 1996
("Supplemental Eligible Account Holders"), (iv) depositors and borrowers of
the Association as of the close of business on ________ __, 199_ (other than
Eligible Account Holders and Supplemental Eligible Account Holders), ("Other
Members"), and (v) directors, officers and employees of the Association.
SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED BY 12:00 NOON, CENTRAL TIME,
ON ________ __, 199_, UNLESS EXTENDED.
Subject to the prior rights of holders of subscription rights, Common
Stock not subscribed for in the Subscription Offering is being offered
concurrently in the Community Offering to certain members of the general
public to whom a copy of this Prospectus is delivered, with preference given
to natural persons residing in Orleans, St. Tammany and Jefferson Parishes,
Louisiana. It is anticipated that shares not subscribed for in the
Subscription and Community Offerings will be offered to certain members of
the general public in a Syndicated Community Offering. The Company and the
Association reserve the absolute right to reject or accept any orders in the
Community Offering or the Syndicated Community Offering, in whole or in part,
either at the time of receipt of an order or as soon as practicable following
the Expiration Date or any extension thereof.
Payments for subscriptions made by cash, check or money order will be
placed in a segregated account at the Association and will earn interest at
the Association's passbook rate (______% as of the date of this Prospectus)
from the date of receipt until the Conversion is completed or terminated.
Payments authorized by withdrawal from deposit accounts at the Association
will continue to earn interest at the contractual rate until the Conversion
is completed or terminated; these funds will be otherwise unavailable to the
depositor until such time. If a withdrawal is authorized to fund the
purchase of Common Stock, the funds will be withdrawn upon consummation of
the Conversion without penalty.
The Company and the Association have retained Webb as consultant and
advisor in connection with the Offerings and to assist in soliciting
subscriptions in the Offerings. Webb may also manage a selling group of
broker-dealers in the Syndicated Community Offering to facilitate the
Offerings. Webb is not obligated to take or purchase any shares of Common
Stock in the Offerings. See "The Conversion - Subscription Offering and
Subscription Rights," "- Community Offering" and "- Marketing Arrangements."
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS
Prior to the completion of the Conversion, no person may transfer or
enter into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Plan or the shares of
Common Stock to be issued upon their exercise. Each person exercising
subscription rights will be required to certify that the purchase of Common
Stock is solely for the purchaser's own account and that there is no
agreement or understanding regarding the sale or transfer of such shares.
See "The Conversion - Restrictions on Transfer of Subscription Rights and
Shares." SUBSCRIPTION RIGHTS ARE NONTRANSFERABLE AND PERSONS FOUND TO BE
ATTEMPTING TO TRANSFER SUBSCRIPTION
5
<PAGE>
RIGHTS WILL BE SUBJECT TO THE FORFEITURE OF SUCH RIGHTS AND POSSIBLE FURTHER
SANCTIONS AND PENALTIES IMPOSED BY THE OTS. The Company and the Association
will refer to the OTS any situations that they believe may involve a transfer
of subscription rights and will not honor orders known by them to involve the
transfer of such rights.
PURCHASE LIMITATIONS
With the exception of the ESOP, which intends to purchase up to an
aggregate of 8% of the number of shares of Common Stock issued in the
Conversion, or 176,800 shares and 239,200 shares at the minimum and maximum
of the Estimated Valuation Range, respectively, the maximum amount that any
person may purchase in any priority category in the Subscription Offering, as
well as in the Community Offering and any Syndicated Community Offering, is
generally limited to 25,000 shares of Common Stock. No person, together with
associates of or persons acting in concert with such person, may purchase in
the aggregate more than 70,000 shares of Common Stock sold in the Conversion.
For a definition of the terms "associate" and "acting in concert," see "The
Conversion - Limitations on Common Stock Purchases." At any time during the
Offerings, and without further approval by the members of the Association,
the Company and the Association may, in their sole discretion, increase the
individual purchase limitations up to 5% of the shares offered (149,500
shares at the maximum of the Estimated Valuation Range). If a purchase
limitation is increased, persons who submitted an order for 25,000 shares of
Common Stock will be given the opportunity to increase their order. The
purchase limitations may also be decreased to as low as 1% of the shares
offered (22,100 shares at the minimum of the Estimated Valuation Range). In
the event of a decrease in the purchase limitation, any orders in excess of
the revised purchase limitation will be reduced to the extent necessary. The
minimum purchase is 25 shares. See "The Conversion - Limitations on Common
Stock Purchases." In the event of an oversubscription, shares will be
allocated in accordance with the Plan as described in "The Conversion -
Subscription Offering and Subscription Rights" and "- Community Offering."
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION
Federal regulations require the aggregate purchase price of the Common
Stock to be consistent with an independent appraisal of the estimated pro
forma market value of the Common Stock following the Conversion. RP
Financial, an independent appraiser, has advised the Association that, in its
opinion, dated December 20, 1996, the Estimated Valuation Range ranged from
$22,100,000 to $29,900,000, with a midpoint of $26,000,000. THIS APPRAISAL
OF THE COMMON STOCK IS NOT INTENDED AND SHOULD NOT BE CONSTRUED AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SUCH STOCK,
NOR CAN ANY ASSURANCE BE GIVEN THAT PURCHASERS OF THE COMMON STOCK WILL BE
ABLE TO SELL SUCH SHARES AFTER THE CONVERSION AT OR ABOVE THE PURCHASE PRICE.
All shares of Common Stock issued in the Conversion will be sold at the
Purchase Price of $10.00 per share, which was established by the Boards of
Directors of the Company
6
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and the Association. The actual number of shares to be issued in the
Conversion will be determined by the Company and the Association based upon
the final updated valuation of the estimated pro forma market value of the
Common Stock, giving effect to the Conversion, at the completion of the
Offerings. The number of shares of Common Stock to be issued is expected to
range from a minimum of 2,210,000 shares to a maximum of 2,990,000 shares.
Subject to approval of the OTS and the OFI, the Estimated Valuation Range may
be increased or decreased to reflect market and economic conditions prior to
the completion of the Conversion or to fill the order of the ESOP, and under
such circumstances the Company and the Association may increase or decrease
the number of shares of Common Stock to be issued in the Conversion. No
resolicitation of subscribers will be made and subscribers will not be
permitted to modify or cancel their subscriptions unless the gross proceeds
from the sale of the Common Stock are less than the minimum or more than 15%
above the maximum of the current Estimated Valuation Range. An affirmative
response to any resolicitation must be received by the Association in order
to confirm subscriptions. In connection with a resolicitation, to the extent
that subscriptions are cancelled, rescinded or reduced, all funds delivered
to the Company or the Association will be promptly returned with interest
earned from the date of receipt, and withdrawal authorizations will be
reduced or cancelled. See "Pro Forma Data," "Risk Factors - Possible
Dilutive Effect of Issuance of Additional Shares" and "The Conversion - Stock
Pricing and Number of Shares to be Issued."
BENEFITS OF CONVERSION TO OFFICERS AND DIRECTORS
GENERAL. In connection with the Conversion, the Company's directors and
executive officers as a group (11 persons) have proposed to purchase 181,100
shares of Common Stock, or 8.2% and 6.1% of the Common Stock at the minimum
and maximum of the Estimated Valuation Range, respectively.
THE ESOP. The Company has adopted the ESOP, a tax-qualified benefit
plan for officers and employees of the Company and the Association, which
intends to purchase 8% of the shares of Common Stock offered in the
Conversion, or 176,800 shares ($1,768,000) and 239,200 shares ($2,392,000) at
the minimum and maximum of the Estimated Valuation Range, respectively. The
Company intends to use a portion of the net proceeds retained by it to make a
loan directly to the ESOP to enable the ESOP to purchase such shares. See
"Management of the Company - Benefits - Employee Stock Ownership Plan."
STOCK OPTION PLAN. Following consummation of the Conversion, the
Company intends to adopt a stock option plan for the benefit of the
directors, officers and employees of the Company and the Association (the
"Stock Option Plan"), pursuant to which the Company intends to reserve a
number of shares of Common Stock equal to an aggregate of 10% of the Common
Stock issued in the Conversion (299,000 shares at the maximum of the
Estimated Valuation Range) for issuance pursuant to stock options and stock
appreciation rights. The Stock Option Plan will not be implemented prior to
the receipt of stockholder approval of the plan. It is currently expected
that 30% of the shares available under the Stock Option Plan will be granted
to non-employee directors. With each non-employee director receiving an
option for the same number of shares, in which event
7
<PAGE>
options for a total of approximately 12,814 shares would be granted to each
of the seven non-employee directors if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. In
addition, it is currently expected that stock options will be granted to
Messrs. Donald C. Scott, President and Chief Executive Officer of the
Company and the Association, Bruce A. Scott, Executive Vice President of the
Company and the Association, Ralph E. Weber, Vice President of the Company
and the Association, and Ms. Lettie Ruffin Moll, Vice President and Secretary
of the Company and the Association, although no determination has been made
at this time as to the amount of such stock options. The Stock Option Plan
will provide that no officer would be able to receive a stock option for more
than 25% of the shares available under the Stock Option Plan, or 74,750
shares if the amount of Common Stock sold in the Conversion is equal to the
maximum of the Estimated Valuation Range. See "Management of the Company -
Benefits -Stock Option Plan."
RECOGNITION AND RETENTION PLAN. Following consummation of the
Conversion, the Company intends to adopt a recognition and retention plan for
the benefit of the directors, officers and employees of the Company and the
Association (the "Recognition Plan" or "RRP"). The Recognition Plan will not
be implemented prior to the receipt of stockholder approval of the plan. It
is expected that the Recognition Plan will be submitted to stockholders for
approval at the same time as the Stock Option Plan. Upon the receipt of such
approval, the Recognition Plan is expected to purchase a number of shares of
Common Stock either from the Company or in the open market equal to an
aggregate of 4% of the Common Stock issued in the Conversion (119,600 shares
or $1,196,000 at the maximum of the Estimated Valuation Range). It is
currently expected that 30% of the shares available under the Recognition
Plan will be granted to non-employee directors with each non-employee
director receiving an award for the same number of shares, in which event
awards for a total of approximately 5,125 shares would be granted to each of
the seven non-employee directors if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. In
addition, it is currently expected that awards will be granted to Messrs.
Donald Scott, Bruce A. Scott, Ralph E. Weber and Ms. Lettie Ruffin Moll,
although no determination has been made at this time as to the amount of such
awards. The Recognition Plan will provide that no officer would be able to
receive an award for more than 25% of the shares available under the
Recognition Plan, or 29,900 shares ($299,000) if the amount of Common Stock
sold in the Conversion is equal to the maximum of the Estimated Valuation
Range. See "Management of the Company - Benefits - Recognition Plan."
Employment Agreements. Upon consummation of the Conversion, the Company
and the Association intend to enter into three-year employment agreements
with Messrs. Donald Scott and Bruce Scott. If the employment of such
officers is terminated as a result of a change in control of the Company,
Messrs. Donald Scott and Bruce Scott would each be entitled to a cash
severance amount equal to three times his average annual compensation over
his most recent five taxable years. At least 30 days prior to each annual
anniversary date of the employment agreement, the Boards of Directors of the
Company and the Association shall determine whether or not to extend the term
of the agreements for an additional one year. See "Management of the
Association - Employment Agreements."
8
<PAGE>
PROSPECTUS DELIVERY AND PROCEDURE FOR PURCHASING SHARES
To ensure that each purchaser receives a Prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), no Prospectus will be
mailed any later than five days prior to such date or hand delivered any
later than two days prior to such date. Execution of the order form will
confirm receipt or delivery of the Prospectus in accordance with Rule 15c2-8.
Order forms will only be distributed with a Prospectus. The Company and the
Association will accept for processing only orders submitted on original
order forms. Copies of order forms will not be accepted nor will order forms
unaccompanied by an executed certification form. Payment by check, money
order, cash or debit authorization to an existing account at Guaranty Savings
must accompany the order form. No wire transfers will be accepted.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priorities, depositors as of the close of business on the
Eligibility Record Date (September 30, 1995) or the Supplemental Eligibility
Record Date (December 31, 1996), and/or depositors and borrowers as of the
close of business on the Voting Record Date, _______ __, 1997, must list all
accounts on the stock order form giving all names on each account and the
account numbers. See "The Conversion - Procedure for Purchasing Shares in
the Offerings."
USE OF PROCEEDS
The net proceeds from the sale of Common Stock in the Conversion are
estimated to be between $21.4 million and $29.1 million ($33.6 million assuming
a 15% increase in the Estimated Valuation Range), depending on the number of
shares sold and the expenses of the Conversion. See "Pro Forma Data." The
Company will purchase all of the capital stock of the Association to be
issued in the Conversion in exchange for 50% of the net Conversion proceeds
and will retain the remaining 50% of the net proceeds as its initial
capitalization. The Company intends to use a portion of the net proceeds
retained by it to make a loan directly to the ESOP to enable the ESOP to
purchase up to 8% of the Common Stock. The amount of the loan is expected to
be between $1,768,000 and $2,392,000 at the minimum and maximum of the
Estimated Valuation Range, respectively. See "Management of the Company -
Benefits - Employee Stock Ownership Plan." The remaining net proceeds
retained by the Company initially may be used to invest in U.S. Government
and federal agency securities of various maturities, investment securities,
mortgage-backed securities, deposits in either the Association or other
financial institutions, or a combination thereof. Ultimately, the portion of
net proceeds retained by the Company may be used to support the Association's
lending activities, to support the future expansion of operations through
establishment of additional branch offices or other customer facilities,
acquisitions of other financial service organizations, such as other savings
institutions and commercial banks, or diversification into other related
businesses, including, possibly, the insurance business (although no such
transactions are specifically being considered at this time), and for other
business and investment purposes, including the payment of regular cash
dividends and possible repurchases of the Company's Common Stock. See
"Dividend Policy." Funds
9
<PAGE>
contributed to the Association from the Company will be used for general
business purposes. The proceeds will be used to support the Association's
lending and investment activities and thereby enhance the Association's
capabilities to serve the borrowing and other financial needs of the
communities it serves. See "Use of Proceeds."
DIVIDENDS
Following consummation of the Conversion, the Board of Directors of the
Company intends to consider implementation of a policy of paying quarterly
cash dividends on the Common Stock. However, there has been no determination
made at this point in time as to the initial rate of dividend, if any, to be
paid on the Common Stock. Declarations of dividends by the Company's Board
of Directors will depend upon a number of factors, including the amount of
the net proceeds retained by the Company in the Conversion, investment
opportunities available to the Company or the Association, capital
requirements, the Company's and the Association's financial condition and
results of operations, tax considerations, statutory and regulatory
limitations, and general economic conditions. There can be no assurances
that dividends will in fact be paid on the Common Stock or that, if paid,
such dividends will not be reduced or eliminated in future periods. For a
more detailed discussion of the factors that may affect the payment of
dividends, see "Dividend Policy."
MARKET FOR COMMON STOCK
The Company has never issued capital stock to the public and,
consequently, there is no existing market for the Common Stock. The Company
[HAS APPLIED] to have the Common Stock listed on the Nasdaq National Market
under the symbol "_______." Keefe, Bruyette has indicated its intention to
act as a market maker in the Common Stock following the consummation of the
Conversion, depending on trading volume and subject to compliance with
applicable laws and regulatory requirements. Furthermore, Webb has agreed to
use its best efforts to assist the Company in obtaining additional market
makers for the Common Stock. No assurance can be given that an active and
liquid trading market for the Common Stock will develop. Further, no
assurance can be given that purchasers will be able to sell their shares at
or above the Purchase Price after the Conversion. See "Risk Factors --
Absence of Market for the Common Stock" and "Market for Common Stock."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by prospective investors, including, among other factors, the
potential effects of changes in interest rates and the current interest rate
environment, the potential for a low return on equity following the
Conversion and the uncertainty as to future growth opportunities,
competition, the Association's geographic concentration of loans, certain
anti-takeover provisions, recent legislation affecting the deduction for bad
debt reserves, regulatory oversights, the absence of a market for the Common
Stock, a possible increase in the number of shares issued in the Conversion,
the possible dilutive effect of the issuance of additional shares of Common
Stock, potential increased compensation expenses after the Conversion and
possible adverse tax consequences of the distribution of subscription rights
to purchase the Common Stock.
10
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The selected financial and other data of Guaranty Savings set forth
below does not purport to be complete and should be read in conjunction with,
and is qualified in its entirety by, the more detailed information, including
the Financial Statements and related Notes, appearing elsewhere herein. The
data at December 31, 1995, 1994 and 1993 and for the years then ended has
been derived from audited consolidated financial statements of the
Association, including the audited Consolidated Financial Statements and
related Notes included elsewhere herein. The data at September 30, 1996 and
for the nine months ended September 30, 1996 and 1995 has been derived from
the unaudited Consolidated Financial Statements and the related Notes
included elsewhere herein. The results of operations and other data for the
nine months ended September 30, 1996, are not necessarily indicative of the
results of operations which may be expected for the fiscal year ending
December 31, 1996.
<TABLE>
<CAPTION>
At September 30, At December 31,
------------------------
1996 (1) 1995 1994 1993
---------------- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets $86,521 $86,040 $88,250 $90,100
Cash and cash equivalents 8,698 2,355 2,620 2,883
Investment securities 23,068 33,360 35,496 37,798
Mortgage-backed securities 7,299 6,367 6,063 6,112
Loans receivable, net 43,058 39,888 40,042 40,679
Deposits 60,495 60,945 64,642 67,432
Retained earnings,
substantially restricted 23,822 23,457 22,585 21,591
Full service offices 3 3 3 3
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- -------------------------
1996(1) 1995(1) 1995 1994 1993
------- ------- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Total interest income $4,560 $4,724 $6,260 $6,035 $6,327
Total interest expense 1,963 2,007 2,664 2,408 2,385
----- ----- ----- ----- -----
Net interest income 2,597 2,717 3,596 3,626 3,942
Provision for loan losses 14 -- 12 21 98
------ ------ ------ ------ ------
Net interest income after
provision for loan losses 2,583 2,717 3,584 3,606 3,844
Other income (35) 46 63 109 147
Other expenses 1,938(2) 1,465 2,295 2,191 1,994
----- ----- ----- ----- -----
Income before Federal
income tax expense 610 1,298 1,352 1,524 1,997
Income tax expense 245 440 480 529 722
----- ----- ----- ----- -----
Net income $ 365 $ 858 $ 872 $ 994 $1,275
------ ------ ------ ------ ------
------ ------ ------ ------ ------
SELECTED OPERATING RATIOS(3):
Average yield on
interest-earning assets 7.47% 7.54% 7.52% 6.97% 7.26%
Average rate on interest-
bearing liabilities 4.36 4.26 4.27 3.62 3.52
Average interest rate
spread(4) 3.11 3.28 3.25 3.35 3.74
Net interest margin(4) 4.26 4.34 4.32 4.19 4.52
Interest-earning assets
as a percent of interest-
bearing liabilities 135.61 132.92 133.39 130.39 128.78
Net interest income after
provision for loan losses
as a percent of noninterest
expense 133.28 185.46 156.17 164.58 192.77
Noninterest expense as a
percent of average assets 3.01(2) 2.23 2.63 2.43 2.21
Return on average assets 0.57 1.31 1.00 1.10 1.42
Return on average equity 1.99 4.88 3.70 4.41 6.02
Average equity as a percent
of average assets 28.50 26.76 26.99 25.02 23.54
</TABLE>
11
<PAGE>
<TABLE>
At or For the Nine Months At or For the
Ended September 30, Year Ended December 31,
------------------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ASSET QUALITY RATIOS(5):
Nonperforming loans as a
percent of total loans
receivable(6) 0.73% 0.57 0.51% 0.49% 1.23%
Nonperforming assets as a
percent of total assets(6) 0.37 0.27 0.27 0.27 0.60
Allowance for loan losses
as a percent of total
loans receivable 0.78 0.83 0.80 0.85 0.90
Allowance for loan losses as
a percent of nonperforming
loans 106.65 145.65 156.80 175.13 73.12
Net charge-offs as a percent
of average loans receivable -- 0.03 0.08 0.15 0.11
CAPITAL RATIOS(5):
Tangible capital ratio 27.79% 27.09% 27.35% 25.90% 24.30%
Core capital ratio 27.79 27.09 27.35 25.90 24.30
Risk-based capital ratio 80.10 91.72 93.60 90.00 89.40
</TABLE>
- ----------
(1) In the opinion of management, financial information at September 30,
1996 and for the nine months ended September 30, 1996 and 1995 reflects
all adjustments (consisting only of normal recurring accruals) which are
necessary to present fairly the results of such interim periods.
(2) Includes $413,000, pre-tax, of a one-time assessment to recapitalize the
SAIF. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Exclusive of such one-time assessment, the
ratio of noninterest expense to average assets would have been 2.37% for
the nine months ended September 30, 1996.
(3) With the exception of end of period ratios, all ratios are based on
average monthly balances during the indicated periods and are annualized
where appropriate.
(4) Average interest rate spread represents the difference between the
average yield on interest-earning assets and the average rate paid on
interest-bearing liabilities, and net interest margin represents net
interest income as a percent of average interest-earning assets.
(5) Asset Quality Ratios and Capital Ratios are end of period ratios, except
for net charge-offs to average loans receivable.
(6) Nonperforming assets consist of non-accruing loans, net REO and net
non-accruing investment securities. Non-accruing loans consist of loans
which are 90 days or more past due, while REO consists of real estate
acquired through foreclosure, real estate acquired by acceptance of a
deed-in-lieu of foreclosure and in-substance foreclosures.
Nonperforming assets totalled $316,093 at September 30, 1996. At
September 30, 1996, the Association had no troubled debt restructurings.
See "Business - Asset Quality."
12
<PAGE>
SUMMARY OF RECENT DEVELOPMENTS
The selected financial and other data of Guaranty Savings set forth below
does not purport to be complete and should be read in conjunction with, and is
qualified in its entirety by, the more detailed information, including the
Financial Statements and related Notes, appearing elsewhere herein.
At At
December 31, December 31,
1996(1) 1995
----------------- -----------------
(Dollars in Thousands)
Selected Financial Data:
Total assets $87,550 $86,040
Cash and cash equivalents 7,591 2,355
Investment securities 23,566 33,360
Mortgage-backed securities 7,520 6,367
Loans receivable, net 44,125 39,888
Deposits 61,421 60,945
Retained earnings, substantially
restricted 23,862 23,457
Full service offices 3 3
Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
1996 1995 1996(1) 1995(1)
------------------ -----------------
(Dollars in Thousands)
Selected Operating Data:
Total interest income $1,556 $1,536 $6,116 $6,260
Total interest expense 717 657 2,679 2,664
------- ------- ------- -------
Net interest income 839 879 3,437 3,596
Provision for loan losses 45 12 59 12
------- ------- ------- -------
Net interest income after
provision for loan losses 794 867 3,378 3,584
Other income 18 16 (18) 63
Other expenses 816 829 2,754(2) 2,295
------- ------- ------- -------
Income (loss) before Federal income
tax expense (4) 54 606 1,352
Income tax expense (benefit) (44) 40 201 480
------- ------- ------- -------
Net income $ 40 $ 14 $ 405 $ 872
------- ------- ------- -------
------- ------- ------- -------
Selected Operating Ratios(3):
Average yield on interest-earning
assets 7.56% 7.50% 7.49% 7.52%
Average rate on interest-bearing
liabilities 4.70 4.29 4.45 4.27
Average interest rate spread(4) 2.86 3.21 3.04 3.25
Net interest margin(4) 4.08 4.29 4.21 4.32
Interest-earning assets as a percent of
interest-bearing liabilities 134.97 133.65 135.55 133.40
Net interest income after provision
for loan losses as a percent of
noninterest expense 97.37 104.52 122.63 156.19
Noninterest expense as a percent of
average assets 3.75 3.83 3.20(2) 2.63
Return on average assets 0.18 0.07 0.47 1.00
Return on average equity 0.64 0.24 1.66 3.72
Average equity as a percent of average
assets 28.55 27.53 28.30 26.84
13
<PAGE>
At or For the Three Months At or For the Year Ended
Ended December 31, December 31,
--------------------------- -------------------------
1996 1995 1996(1) 1995(1)
------------ ------------ --------- ---------
Asset Quality Ratios(5):
Nonperforming loans as
a percent of total
loans receivable(6) 0.57% 0.52% 0.57% 0.52%
Nonperforming assets
as a percent of
total assets(6) 0.29 0.27 0.29 0.27
Allowance for loan
losses as a
percent of total
loans receivable 0.87 0.81 0.87 0.81
Allowance for loan
losses as a
percent of
nonperforming loans 151.17 156.69 151.17 156.69
Net charge-offs as a
percent of average
loans receivable -- 0.06 -- 0.08
Capital Ratios(5):
Tangible capital ratio 27.72 27.35 27.72 27.35
Core capital ratio 27.72 27.35 27.72 27.35
Risk-based capital ratio 79.19 93.60 79.19 93.60
__________________
(1) In the opinion of management, financial information at December 31, 1996
and for the twelve months ended December 31, 1996 and 1995 reflect all
adjustments (consisting only of normal recurring accruals) which are
necessary for a fair presentation of the information as of such date and
for such periods.
(2) Includes $413,000, pre-tax, of a one-time assessment to recapitalize the
SAIF. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Exclusive of such one-time assessment, the ratio
of noninterest expense to average assets would have been 2.72% for the
twelve months ended December 31.
(3) With the exception of end of period ratios, all ratios are based on average
monthly balances during the indicated periods and are annualized where
appropriate.
(4) Average interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities, and net interest margin represents net
interest income as a percent of average interest-earning assets.
(5) Asset Quality Ratios and Capital Ratios are end of period ratios, except
for net charge-offs to average loans.
(6) Nonperforming assets consist of non-accruing loans, net REO and net
non-accruing investment securities. Non-accruing loans consist of loans
which are 90 days or more past due, while REO consists of real estate
acquired through foreclosure, real estate acquired by acceptance of a
deed-in-lieu of foreclosure and in-substance foreclosures.
14
<PAGE>
The Association had $87.6 million of total assets at December 31, 1996
compared to $86.0 million of total assets at December 31, 1995. The primary
reasons for the $1.5 million, or 1.76%, increase in total assets during 1996
were increases in cash and cash equivalents and in net loans receivable. The
increase in cash and cash equivalents primarily reflects the proceeds from the
sale of certain investment securities during 1996, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations-Changes in
Financial Condition--September 30, 1996 and December 31, 1995 - General," while
the increase in net loans receivable primarily was the result of an increase in
new loan originations. At December 31, 1996, the Association's net loans
receivable amounted to $44.1 million compared to $43.1 million at September 30,
1996 and $39.9 million at December 31, 1995. During the three months ended
December 31, 1996, the Association redeployed certain of its cash and cash
equivalents by purchasing additional investment securities and mortgage-backed
securities, which amounted to $23.6 million and $7.5 million, respectively, at
December 31, 1996. At December 31, 1996, the Association's deposits amounted to
$61.4 million compared to $60.5 million at September 30, 1996 and $60.9 million
at December 31, 1995. The increase in deposits during 1996 was due primarily to
an increase in the balance of passbook savings accounts which management
attributes, in part, to an increase in the rate paid on such accounts commencing
in June 1996. See "Business - Sources of Funds - Deposits." The Association's
retained earnings amounted to $23.9 million at December 31, 1996 compared to
$23.5 million at December 31, 1995.
At December 31, 1996, the Association's non-performing assets amounted to
$253,000, or 0.29% of total assets, compared to $316,000, or 0.37% of total
assets, at September 30, 1996 and $230,000, or 0.27% of total assets, at
December 31, 1995. The Association's ratio of its allowances for loan losses as
a percentage of non-performing loans was 151.17% at December 31, 1996 compared
to 106.65% and 156.69%, respectively, at September 30, 1996 and December 31,
1995.
The Association's net income for the three months ended December 31, 1996
increased to $40,000 compared to net income of $14,000 for the three months
ended December 31, 1995. The primary reason for the increase in net income
during the fourth quarter of 1996 was an income tax benefit of $44,000 compared
to income tax expense of $40,000 during the fourth quarter of 1995. The primary
reason for the income tax benefit recorded in the 1996 period was management's
determination that, primarily as a result of the effect of the one-time SAIF
assessment on the Association's 1996 net income, the amount previously accrued
for taxes exceeded Guaranty Savings' 1996 tax liability. For the year ended
December 31, 1996, the Association reported net income of $405,000 compared to
net income of $872,000 for the year ended December 31, 1995. The primary reason
for the $467,000, or 53.6%, decrease in net income in 1996 compared to 1995 was
the one-time SAIF special assessment of $413,000 (pre-tax) recorded in the third
quarter of 1996 and a $100,000 (pre-tax) loss recognized on the sale of
investment securities.
Interest income increased slightly in the three months ended December 31,
1996 compared to the three months ended December 31, 1995 and decreased by
$144,000, or 2.3%, for the year ended December 31, 1996 compared to the year
ended December 31, 1995. The primary reason for the changes in interest income
during the quarter and year
15
<PAGE>
ended December 31, 1996 were primarily attributable to decreases in the
average balances of investment securities as the result of $7.0 million of
securities sales during 1996. In addition, decreases in the average yield
earned on the Association's loan portfolio during 1996, primarily as the
result of changes in market rates of interest, more than offset increases in
the average balances thereof.
Interest expense increased by $60,000, or 9.1%, during the three months
ended December 31, 1996 compared to the same period in 1995 and by $15,000 for
the year ended December 31, 1996 compared to 1995. Such increases primarily are
the result of the Association's determination in June 1996 to increase the rate
paid on its passbook accounts.
The Association's provision for loan losses amounted to $45,000 and
$59,000, respectively, for the three-months and year ended December 31, 1996
compared to $12,000 for the three-months and year ended December 31, 1995.
During the three months ended December 31, 1996, management of the Association
deemed it appropriate to increase the amount of the allowance for loan losses
based upon, among other factors, the increased level of new loan originations
during the year and upon consideration of certain loans in the Association's
portfolio. In particular, the Association made specific provisions of $25,000
and $14,000, respectively, during the fourth quarter of 1996 with respect to two
non-accruing loans with outstanding loan balances of $39,000 and $42,000,
respectively, at December 31, 1996.
Other income amounted to $17,000 during each of the three months ended
December 31, 1996 and 1995. For the year ended December 31, 1996 the
Association's other income amounted to a negative $18,000 compared to other
income of $63,000 for the year ended December 31, 1995. The primary difference
in other income in 1996 compared to 1995 was the $100,000 loss on the sale of
investment securities during 1996. Other expenses, which include bonuses and
other items of compensation accrued in the fourth quarter, were relatively
stable in the three months ended December 31, 1996 compared to the same period
in 1995. For the year ended December 31, 1996, other expenses increased to $2.8
million, primarily as the result of the one-time special SAIF assessment,
compared to $2.3 million for the year ended December 31, 1995.
16
<PAGE>
RISK FACTORS
THE FOLLOWING RISK FACTORS, IN ADDITION TO THOSE DISCUSSED ELSEWHERE IN
THIS PROSPECTUS, SHOULD BE CAREFULLY CONSIDERED BY INVESTORS IN DECIDING
WHETHER TO PURCHASE THE COMMON STOCK OFFERED HEREBY.
POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES AND THE CURRENT INTEREST RATE
ENVIRONMENT
The operations of the Association are substantially dependent on its net
interest income, which is the difference between the interest income earned
on its interest-earning assets and the interest expense paid on its
interest-bearing liabilities. Like most savings institutions, the
Association's earnings are affected by changes in market interest rates, and
other economic factors beyond its control. The Association's average
interest rate spread decreased from 3.35% for 1994 to 3.25% for 1995 to 3.11%
for the nine months ended September 30, 1996. Continued declines in the
Association's average interest rate spread could adversely affect the
Association's net interest income. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Results of Operations."
If an institution's interest-earning assets have longer effective
maturities than its interest-bearing liabilities, the yield on the
institution's interest-earning assets generally will adjust more slowly than
the cost of its interest-bearing liabilities and, as a result, the
institution's net interest income generally would be adversely affected by
material and prolonged increases in interest rates and positively affected by
comparable declines in interest rates. The Association attempts to reduce
the vulnerability of its operations to changes in interest rates by
maintaining significant amounts of capital and liquid assets. Based upon
certain repricing assumptions, the Association's interest-earning liabilities
repricing or maturing within one year exceeded its interest-bearing assets
with similar characteristics by $14.2 million or 16.5% of total assets.
Accordingly, a decrease in interest rates generally would result in a
decrease in the Association's average interest rate spread and net interest
income. During the first nine months of 1996, the average yield on the
Association's total interest-earning assets decreased by five basis points,
while the average rate paid on its total interest-bearing liabilities
increased by nine basis points. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Asset and Liability
Management."
In addition to affecting interest income and expense, changes in
interest rates also can affect the market value of the Association's
interest-earning assets. Generally, the market value of fixed-rate
instruments fluctuates inversely with changes in interest rates. The
Association's mortgage-backed securities held to maturity had an aggregate
carrying value and market value of $7.3 million and $7.0 million,
respectively, at September 30, 1996. The market value is less than the
carrying value due to the below market yields on the securities. While the
Association should ultimately receive the entire principal balance of these
securities by holding them to maturity, the below market yields will result
in the Association recognizing less interest income over the remaining life
of these securities than
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<PAGE>
would be recognized if these securities had yields at current market rates.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Asset and Liability Management."
The OTS has implemented an interest rate risk component into its
risk-based capital rules, which is designed to calculate on a quarterly basis
the extent to which the value of an institution's assets and liabilities
would change if interest rates increase or decrease. If the net portfolio
value of an institution would decline by more than 2% of the estimated market
value of the institution's assets in the event of a 200 basis point increase
or decrease in interest rates, then the institution is deemed to be subject
to a greater than "normal" interest rate risk and must deduct from its
capital 50% of the amount by which the decline in net portfolio value exceeds
2% of the estimated market value of the institution's assets, as of an
effective date to be determined. As of September 30, 1996, if interest rates
increased or decreased by 200 basis points, the Association's net portfolio
value would actually decrease by 10.82% and increase by 6.47%, respectively,
of the estimated market value of the Association's assets, as calculated by
the OTS. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Asset and Liability Management."
Changes in interest rates also can affect the average life of loans and
mortgage-related securities. Decreases in interest rates in recent periods
have resulted in increased prepayments of loans and mortgage-backed
securities, as borrowers refinanced to reduce borrowing costs. Under these
circumstances, the Association is subject to reinvestment risk to the extent
that it is not able to reinvest such prepayments at rates which are
comparable to the rates on the maturing loans or securities. See "Business -
Lending Activities."
POTENTIAL LOW RETURN ON EQUITY FOLLOWING THE CONVERSION; UNCERTAINTY AS TO
FUTURE GROWTH OPPORTUNITIES
At September 30, 1996, the Association's ratio of equity to assets was
28.3%. The Company's equity position will be significantly increased as a
result of the Conversion. On a pro forma basis as of September 30, 1996,
assuming the sale of Common Stock at the midpoint of the Estimated Valuation
Range, the Company's ratio of equity to assets would be 41.7%. The Company's
ability to leverage this capital will be significantly affected by industry
competition for loans and deposits. The Company currently anticipates that
it will take time to prudently deploy such capital. As a result, the
Company's return on equity initially is expected to be below the industry
average after the Conversion.
In an effort to fully deploy post-Conversion capital, in addition to
attempting to increase its loan and deposit growth, the Company may seek to
expand its banking franchise by acquiring other financial institutions or
branches in the Association's market area. The Company's ability to grow
through selective acquisitions of other financial institutions or branches of
such institutions will be dependent on successfully identifying, acquiring
and integrating such institutions or branches. There can be no assurance the
Company will be
18
<PAGE>
able to generate internal growth or to identify attractive acquisition
candidates, acquire such candidates on favorable terms or successfully
integrate any acquired institutions or branches into the Company. Neither
the Company nor the Association has any specific plans, arrangements or
understandings regarding any such expansions or acquisitions at this time,
nor have criteria been established to identify potential candidates for
acquisition.
STRONG COMPETITION WITHIN THE ASSOCIATION'S MARKET AREA
Competition in the banking and financial services industry is intense.
In its market area, the Association competes with commercial banks, savings
institutions, mortgage brokerage firms, credit unions, finance companies,
mutual funds, insurance companies, and brokerage and investment banking firms
operating locally and elsewhere. Many of these competitors have
substantially greater resources and lending limits than the Association and
may offer certain services that the Association does not or cannot provide.
The profitability of the Association depends upon its continued ability to
successfully compete in its market area.
GEOGRAPHIC CONCENTRATION OF LOANS
The Association's market area consists of Orleans, St. Tammany and
Jefferson Parishes in the New Orleans, Louisiana metropolitan statistical
area. The Association's real estate loans are primarily secured by
properties located in its market area, and all of the Association's loans are
primarily made to residents of its market area. Accordingly, the asset
quality of the Association's loan portfolio is highly dependent upon the
economy and the unemployment rate in its market area. While the local
economy has stabilized in recent years, there is still a significant degree
of volatility in the local economy due to a continued heavy reliance on the
petroleum industry and related industries. No assurance can be given that
downturns in the economy in the Association's market area, due to the oil and
gas industry or otherwise, may not adversely affect the Association's
operations in the future. See "Business - Market Area."
CERTAIN ANTI-TAKEOVER PROVISIONS
PROVISIONS IN THE COMPANY'S GOVERNING INSTRUMENTS AND LOUISIANA LAW.
Certain provisions of the Company's Articles of Incorporation and Bylaws, as
well as certain provisions in Louisiana law, will assist the Company in
maintaining its status as an independent publicly owned corporation.
Provisions in the Company's Articles of Incorporation and Bylaws provide for,
among other things, a 75% supermajority vote requirement to remove directors
without cause and to amend various provisions in the Articles of
Incorporation and Bylaws, a staggered board of directors, noncumulative
voting for directors, limits on the calling of special meetings and, for a
period of five years following the Conversion, limits on acquiring voting
shares in excess of 10% of the outstanding Common Stock. Provisions under
Louisiana law applicable to the Company, among other things, establish
certain uniform price provisions for certain business
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<PAGE>
combinations and provide that persons who acquire more than 20% of the
outstanding voting stock may not vote such shares unless the disinterested
stockholders approve such shares having voting rights. The above provisions
may discourage potential proxy contests and other potential takeover
attempts, particularly those which have not been negotiated with the Board of
Directors, and thus, generally may serve to perpetuate current management.
Based on the proposed purchases of directors and executive officers in the
Conversion, the shares to be acquired by the ESOP, and the proposed purchase
of shares by the Recognition Plan assuming stockholder approval is received,
the directors and officers may be in a position to block certain transactions
requiring a supermajority vote, even if a majority of the stockholders
believe such transactions are in their best interests. See "Restrictions on
Acquisition of the Company and the Association."
VOTING CONTROL OF OFFICERS AND DIRECTORS. Directors and executive
officers of the Company expect to purchase approximately 8.2% or 6.1% of the
shares of Common Stock outstanding based upon the minimum and the maximum of
the Estimated Valuation Range, respectively. See "Proposed Management
Purchases." The directors who act as trustees of the ESOP are also expected
to immediately control the voting of 8% of the shares of Common Stock issued
in the Conversion through the ESOP, at least until an allocation has been
made under the ESOP. Under the terms of the ESOP, after an allocation has
been made, the unallocated shares will be voted by the trustees in the same
proportion as the allocated shares are voted by the ESOP participants.
The Company intends to seek stockholder approval of the Company's
proposed Recognition Plan, which is a non-tax-qualified restricted stock plan
for the benefit of directors, officers and employees of the Company and the
Association. Assuming the receipt of stockholder approval, which stockholder
approval cannot be obtained earlier than six months following the Conversion
pursuant to regulations of the OTS, the Company expects to acquire Common
Stock on behalf of the Recognition Plan, in an amount equal to 4% of the
Common Stock issued in the Conversion, or 88,400 shares and 119,600 shares at
the minimum and maximum of the Estimated Valuation Range, respectively.
These shares will be acquired either through open market purchases, if
permissible, or from authorized but unissued Common Stock. Under the terms
of the Recognition Plan, recipients of awards will be entitled to instruct
the trustee of the Recognition Plan as to how the underlying shares should be
voted, and the trustee will be entitled to vote all unallocated shares in its
discretion. If the shares are purchased in the open market, directors and
executive officers would have effective control over 12.2% or 10.1% of the
Common Stock outstanding at such time based upon the minimum and the maximum
of the Estimated Valuation Range, respectively, before giving effect to the
potential exercise of additional stock options by directors and officers of
the Company and the Association and shares held by the ESOP. If approved by
stockholders at a meeting held no earlier than six months following the
Conversion, the Company intends to reserve for future issuance pursuant to
the Stock Option Plan a number of authorized shares of Common Stock equal to
an aggregate of 10% of the Common Stock issued in the Conversion (299,000
shares, based on the issuance of the maximum 2,990,000 shares). See
"Management of the Company -
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<PAGE>
Benefits." Management's potential voting control could, together with
additional stockholder support, preclude or make more difficult takeover
attempts that certain stockholders deem to be in their best interest and may
tend to perpetuate existing management.
PROVISIONS OF STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS. The ESOP
provides for accelerated vesting in the event of a change in control. In
addition, upon consummation of the Conversion, the Company and the
Association will enter into employment agreements with two executive
officers, which agreements will provide for severance pay in the event of a
change in control. These provisions may have the effect of increasing the
cost of acquiring the Company, thereby discouraging future attempts to take
over the Company or the Association. In addition, it is possible that the
Stock Option Plan and the Recognition Plan may not be implemented until more
than one year following completion of the Conversion, and, in such event,
such plans could provide for accelerated vesting in the event of a change in
control of the Company. See "Restrictions on Acquisition of the Company and
the Association - Restrictions in the Company's Articles of Incorporation and
Bylaws," "Management of the Company - Benefits" and "Management of the
Association - Employment Agreements."
LEGISLATION LIMITING DEDUCTION OF BAD DEBT RESERVES
Under Section 593 of the Code, until the first tax year beginning on or
after January 1, 1996, thrift institutions such as the Association generally
were permitted to establish a tax reserve for bad debts and to make annual
additions thereto, which additions, within specified limitations, could be
deducted in arriving at their taxable income. The Association's deduction
with respect to "qualifying loans" were computed using an amount based on the
Association's actual loss experience (the "Experience Method") or a
percentage equal to 8.0% of the Association's taxable income (the "PTI
Method"). Under recently enacted legislation, the PTI Method was repealed.
If an institution is not a "large" thrift institution, i.e., the quarterly
average of the institution's total assets or of the consolidated group of
which it is a member exceeds $500 million for the year, the institution will
continue to be permitted to use the Experience Method. In addition, the
institution is required to recapture (i.e., take into income) over a
multi-year period its "applicable excess reserves," i.e., the balance of its
reserve for losses on qualifying loans and nonqualifying loans, as of the
close of its last tax year beginning before January 1, 1996, over the greater
of (a) balance of such reserves as of December 31, 1987 or (b) in the case of
an institution which is not a "large" institution, an amount that would have
been the balance of such reserves as of the close of its last tax year
beginning before January 1, 1996, had the institution always computed the
additions to its reserves using the experience method. In addition, under
such legislation, the institution will not be required to recapture its
supplemental reserves or its pre-1988 reserves. Under the legislation, such
recapture requirement generally is suspended for each of two successive
taxable years beginning January 1, 1997 if certain lending thresholds are
satisfied. In any event, given the Association's previously established
reserves for taxes, such recapture is not expected to result in any
significant effect upon the Association's net income. See "Taxation -
Federal Taxation."
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<PAGE>
REGULATORY OVERSIGHT AND LEGISLATION
The Association is subject to extensive regulation, supervision and
examination by the OFI, as its chartering authority, by the OTS, its primary
federal regulator, and by the FDIC as insurer of its deposits up to
applicable limits. The Association is a member of the FHLB System and is
subject to certain limited regulations promulgated by the FRB. As the
holding company of the Association, the Company also will be subject to
regulation and oversight by the OTS. Such regulation and supervision govern
the activities in which an institution can engage and are intended primarily
for the protection of the insurance fund and depositors. Regulatory
authorities have been granted extensive discretion in connection with their
supervisory and enforcement activities which are intended to strengthen the
financial condition of the banking and thrift industries, including the
imposition of restrictions on the operation of an institution, the
classification of assets by the institution and the adequacy of an
institution's allowance for loan losses. Any change in such regulation and
oversight, whether by the OFI, the OTS, the FDIC or Congress, could have a
material impact on the Company, the Association and their respective
operations. See "Regulation."
On September 30, 1996, the Deposit Insurance Funds ("DIF") Act of 1996
was enacted into law. Among other things, the DIF Act authorizes the FDIC to
impose a special one-time assessment on each depository institution with
SAIF-assessable deposits so that the SAIF may achieve its designated reserve
ratio. The Association's assessment was $413,000 on a pre-tax basis, and was
accrued during the quarter ended September 30, 1996. In addition, the DIF
Act provides for the merger of the Bank Insurance Fund ("BIF") and the SAIF
on January 1, 1999, but only if no insured depository institution is a
savings association on that date. The DIF Act contemplates the development
of a common charter for all federally chartered depository institutions and
the abolition of separate charters for national banks and federal savings
associations. It is not known what form the common charter may take and what
effect, if any, the adoption of a new charter would have on the financial
condition or results of operations of the Association. See "Regulation - The
Association - Insurance of Accounts."
Legislation is proposed periodically providing for a comprehensive
reform of the banking and thrift industries, and has included provisions that
would (i) require federal savings associations to convert to a national bank
or a state-chartered bank or thrift, (ii) require all savings and loan
holding companies to become bank holding companies and (iii) abolish the OTS.
It is uncertain when or if any of this type of legislation will be passed,
and, if passed, in what form the legislation would be passed. As a result,
management cannot accurately predict the possible impact of such legislation
on the Association.
ABSENCE OF MARKET FOR THE COMMON STOCK
The Company and the Bank have never issued capital stock. Webb has been
retained to assist in the distribution of the Common Stock on a "best
efforts" basis and are
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<PAGE>
not obligated to purchase any shares of Common Stock in the Offerings. The
Company [HAS APPLIED] to have its Common Stock quoted on the NASDAQ National
Market, there must be, among other things, at least two market makers for the
Common Stock. Keefe, Bruyette has indicated its intention to make a market
on the Common Stock, and the Company anticipates that it will be able to
secure at least one additional market maker for the Common Stock. See
"Market for the Common Stock."
Making a market in securities involves maintaining bid and ask
quotations and being able, as principal, to effect transactions in reasonable
quantities at those quoted prices, subject to various securities laws and
other regulatory requirements. The development of a public trading market
depends upon the existence of willing buyers and sellers, the presence of
which is not within the control of the Company, the Association, or any
market maker. Because there can be no assurance that buyers and sellers of
the Company's Common Stock can be readily matched, investors may wish to
consider the potential illiquid and long-term nature of an investment in the
Common Stock. There can be no assurance that an active and liquid trading
market for the Common Stock will develop, or once developed, will continue,
nor any assurances that purchasers of the Common Stock will be able to sell
their shares at or above the Purchase Price. The absence of a liquid and
active trading market, or the discontinuance thereof, may have an adverse
effect on both the price and the liquidity of the Common Stock.
POSSIBLE INCREASE IN NUMBER OF SHARES ISSUED IN THE CONVERSION
The number of shares to be sold in the Conversion may be increased as a
result of an increase in the Estimated Valuation Range of up to 15% to
reflect changes in market and financial conditions prior to completion of the
Conversion or to fill the order of the ESOP. In the event that the Estimated
Valuation Range is so increased, it is expected that the Company will issue
up to 3,438,500 shares of Common Stock at the Purchase Price for an aggregate
price of up to $34,385,000. An increase in the number of shares will
decrease net income per share and stockholders' equity per share on a pro
forma basis and will increase the Company's consolidated stockholders' equity
and net income. Such an increase will also increase the Purchase Price as a
percentage of pro forma stockholders' equity per share and net income per
share.
The ESOP currently intends to purchase 8% of the Common Stock, which
purchase may be increased to up to 10% of the Common Stock. In the event
that the number of shares to be sold in the Conversion are increased as a
result of an increase in the Estimated Valuation Range, the ESOP shall have a
first priority to purchase all of such shares sold in the Conversion in
excess of 2,990,000 shares, up to a maximum of 10% of the total number of
shares issued in the Conversion. See "Pro Forma Data" and "The Conversion -
Stock Pricing and Number of Shares to be Issued."
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<PAGE>
POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES
If the Recognition Plan is approved by stockholders of the Company, the
Recognition Plan intends to acquire an amount of Common Stock equal to 4% of
the shares of Common Stock issued in the Conversion. If such shares are
acquired at a per share price equal to the Purchase Price, the cost of such
shares would be $1,196,000 , assuming the Common Stock sold in the Conversion
is equal to the maximum of the Estimated Valuation Range. Such shares of
Common Stock may be acquired in the open market with funds provided by the
Company, if permissible, or from authorized but unissued shares of Common
Stock. In the event that the Recognition Plan acquires authorized but
unissued shares of Common Stock from the Company, the interests of existing
stockholders will be diluted. The issuance of authorized but unissued shares
of Common Stock to such plan in an amount equal to 4% of the Common Stock
issued in the Conversion would dilute the voting interests of existing
stockholders by approximately 3.8%, and net income per share and
stockholders' equity per share would be decreased by a corresponding amount.
See "Pro Forma Data" and "Management of the Company - Benefits - Recognition
Plan."
If the Stock Option Plan is approved by stockholders of the Company, the
Company intends to reserve for future issuance pursuant to such plan a number
of shares of Common Stock equal to an aggregate of 10% of the Common Stock
issued in the Conversion (299,000 shares, based on the issuance of the
maximum 2,990,000 shares). Such shares may be authorized but previously
unissued shares, treasury shares or shares purchased by the Company in the
open market or from private sources. If only authorized but previously
unissued shares are used under such plan, the issuance of the total number of
shares available under such plan would dilute the voting interests of
existing stockholders by approximately 9.1%, and net income per share and
stockholders' equity per share would be decreased by a corresponding amount.
See "Pro Forma Data" and "Management of the Company - Benefits."
24
<PAGE>
POTENTIAL INCREASED COMPENSATION EXPENSE AFTER THE CONVERSION
In November 1993, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 93-6 entitled "Employers' Accounting
for Employee Stock Ownership Plans" ("SOP 93-6"). SOP 93-6 requires an
employer to record compensation expense in an amount equal to the fair value
of shares committed to be released to employees from an employee stock
ownership plan instead of an amount equal to the cost basis of such shares.
If the shares of Common Stock appreciate in value over time, SOP 93-6 will
result in increased compensation expense with respect to the ESOP as compared
with prior guidance which required the recognition of compensation expense
based on the cost of shares acquired by the ESOP. It is impossible to
determine at this time the extent of such impact on future net income. See
"Pro Forma Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Recent Accounting Developments." In
addition, after consummation of the Conversion, the Company intends to
implement, subject to stockholder approval (which approval cannot be obtained
earlier than six months subsequent to the Conversion), the Recognition Plan.
Upon implementation, the release of shares of Common Stock from the
Recognition Plan will result in additional compensation expense. See "Pro
Forma Data" and "Management of the Company - Recognition Plan."
POSSIBLE ADVERSE INCOME TAX CONSEQUENCES OF THE
DISTRIBUTION OF SUBSCRIPTION RIGHTS
The Company and the Association have received an opinion of RP Financial
that subscription rights granted to Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members have no value. However, this
opinion is not binding on the Internal Revenue Service ("IRS"). If the
subscription rights granted to Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are deemed to have an
ascertainable value, receipt of such rights would be taxable probably only to
those Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members who exercise the subscription rights (either as capital gain or
ordinary income) in an amount equal to such value. Whether subscription
rights are considered to have ascertainable value is an inherently factual
determination. See "The Conversion - Effects of Conversion" and "- Tax
Aspects."
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<PAGE>
PROPOSED MANAGEMENT PURCHASES
The following table sets forth, for each of the Company's directors and
executive officers and for all of the directors and executive officers as a
group, the proposed purchases of Common Stock, assuming sufficient shares are
available to satisfy their subscriptions. The amounts include shares that
may be purchased through individual retirement accounts.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES AMOUNT PERCENT (1)
---- --------- -------- -------------
<S> <C> <C> <C>
Kenneth B. Caldcleugh 20,000 $ 200,000 0.77%
Stephen L. Cory 20,000 200,000 0.77
Bradford Glazer 10,000 100,000 0.39
J. Scott Key 25,000 250,000 0.96
Victor Kirschman 25,000 250,000 0.96
Dr. M.D. Paine, Jr. 10,000 100,000 0.39
Bruce A. Scott 25,000 250,000 0.96
Donald C. Scott 25,000 250,000 0.96
Albert J. Zahn, Jr. 20,000 200,000 0.77
Ralph E. Weber 100 1,000 *
Lettie R. Moll 1,000 10,000 *
All directors and executive
officers as a group (11
persons) 181,100 $1,811,000 6.97%
</TABLE>
- ---------------------------
* Less than 0.01%.
(1) Based upon the midpoint of the Estimated Valuation Range.
In addition, the ESOP currently intends to purchase 8% of the Common
Stock issued in the Conversion for the benefit of officers and employees.
Stock options and stock grants may also be granted in the future to
directors, officers and employees upon the receipt of stockholder approval of
the Company's proposed stock benefit plans. See "Management of the Company -
Benefits" for a description of these plans.
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock
cannot be determined until the Conversion is completed, it is presently
anticipated that the net proceeds from the sale of the Common Stock will be
between $21.4 million and $29.1 million ($33.6 million assuming an increase
in the Estimated Valuation Range by 15%). See "Pro Forma Data" and "The
Conversion - Stock Pricing and Number of Shares to be Issued" as to the
assumptions used to arrive at such amounts.
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<PAGE>
The Company will purchase all of the capital stock of the Association to
be issued in the Conversion in exchange for 50% of the net Conversion
proceeds, and the Company will retain the remaining 50% of the net proceeds.
The Company intends to use a portion of the net proceeds to make a loan
directly to the ESOP to enable the ESOP to purchase up to 8% of the Common
Stock. Based upon the issuance of 2,210,000 shares or 2,990,000 shares at
the minimum and maximum of the Estimated Valuation Range, respectively, the
loan to the ESOP would be $1.8 million and $2.4 million, respectively. See
"Management of the Company - Benefits - Employee Stock Ownership Plan." The
remaining net proceeds retained by the Company initially may be used to
invest in investment securities, mortgage-backed securities, U.S. Government
and federal agency securities of various maturities, deposits in either the
Association or other financial institutions, or a combination thereof. The
portion of the net proceeds retained by the Company may ultimately be used to
support the Association's lending activities, to support the future expansion
of operations through acquisitions of other financial institutions or
diversification into other related businesses, including, possibly, the
insurance business (although no such transactions are specifically being
considered at this time), and for other business and investment purposes,
including the payment of regular or special cash dividends, possible
repurchases of the Common Stock or returns of capital. Management of the
Company may consider expanding or diversifying, should such opportunities
become available. Neither the Association nor the Company has any specific
plans, arrangements, or understandings regarding any acquisitions or
diversification of activities at this time, nor have criteria been
established to identify potential candidates for acquisition.
Following the six-month anniversary of the completion of the Conversion
(to the extent permitted by the OTS), and based upon then existing facts and
circumstances, the Company's Board of Directors may determine to repurchase
some shares of Common Stock, subject to any applicable statutory and
regulatory requirements. Such facts and circumstances may include but not be
limited to (i) market and economic factors such as the price at which the
stock is trading in the market, the volume of trading, the attractiveness of
other investment alternatives in terms of the rate of return and risk
involved in the investment, the ability to increase the book value and/or
earnings per share of the remaining outstanding shares, and an improvement in
the Company's return on equity; (ii) the avoidance of dilution to
stockholders by not having to issue additional shares to cover the exercise
of stock options or to fund employee stock benefit plans; and (iii) any other
circumstances in which repurchases would be in the best interests of the
Company and its stockholders. Any stock repurchases will be subject to the
determination of the Company's Board of Directors that the Association will
be capitalized in excess of all applicable regulatory requirements after any
such repurchases. The payment of dividends or repurchase of stock, however,
would be prohibited if the Association's net worth would be reduced below the
amount required for the liquidation account to be established for the benefit
of Eligible Account Holders and Supplemental Eligible Account Holders. As of
the date of this Prospectus, the initial balance of the liquidation account
would be $___ million. See "Dividend Policy," "The Conversion - Liquidation
Rights" and "The Conversion - Certain Restrictions on Purchase or Transfer of
Shares After the Conversion."
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<PAGE>
The Company will be a unitary savings and loan holding company which,
under existing laws, would generally not be restricted as to the types of
business activities in which it may engage, provided that the Association
continues to be a qualified thrift lender ("QTL"). See "Regulation -The
Company" for a description of certain regulations applicable to the Company.
The portion of the net proceeds used by the Company to purchase the
capital stock of the Association will be added to the Association's general
funds to be used for general corporate purposes, including increased lending
activities and purchases of investment and mortgage-backed securities. While
the amount of net proceeds received by the Association will further
strengthen the Association's capital position, which already substantially
exceeds all regulatory requirements, it should be noted that the Association
is not converting primarily to raise capital. After the Conversion, the
Association's tangible capital ratio will be 34.23% (based upon the midpoint
of the Estimated Valuation Range). As a result, the Association will be a
well-capitalized institution. After the Conversion, the Association intends
to emphasize capital strength and growth in assets and earnings.
THE NET PROCEEDS MAY VARY BECAUSE TOTAL EXPENSES OF THE CONVERSION MAY
BE MORE OR LESS THAN THOSE ESTIMATED. The net proceeds will also vary if the
number of shares to be issued in the Conversion is adjusted to reflect a
change in the estimated pro forma market value of the Association. Payments
for shares made through withdrawals from existing deposit accounts at the
Association will not result in the receipt of new funds for investment by the
Association but will result in a reduction of the Association's interest
expense and liabilities as funds are transferred from interest-bearing
certificates or other deposit accounts.
DIVIDEND POLICY
Upon completion of the Conversion, the Board of Directors of the Company
intends to consider implementation of a policy of paying dividends on the
Common Stock, subject to statutory and regulatory requirements. However,
there has been no determination made at this point in time as to the initial
rate of dividend, if any, to be paid on the Common Stock. The initial or
continued payment of dividends thereof will depend upon a number of factors,
including the amount of net proceeds retained by the Company in the
Conversion, investment opportunities available to the Company or the
Association, capital requirements, the Company's and the Association's
financial condition and results of operations, tax considerations, statutory
and regulatory limitations, and general economic conditions. No assurances
can be given that any dividends will be paid or that, if paid, will not be
reduced or eliminated in future periods. Special cash dividends, stock
dividends or returns of capital may be paid in addition to, or in lieu of,
regular cash dividends.
Dividends from the Company may eventually depend, in part, upon receipt
of dividends from the Association, because the Company initially will have no
source of income other than dividends from the Association, earnings from the
investment of proceeds from the sale of Common Stock retained by the Company,
and interest payments with respect to
28
<PAGE>
the Company's loan to the ESOP. A regulation of the OTS imposes limitations
on "capital distributions" by savings institutions, including cash dividends,
payments by a savings institution to repurchase or otherwise acquire its
stock, payments to stockholders of another savings institution in a cash-out
merger and other distributions charged against capital. See "Regulation -
The Association -Capital Distributions."
Any payment of dividends by the Association to the Company which would
be deemed to be drawn out of the Association's bad debt reserves would
require a payment of taxes at the then-current tax rate by the Association on
the amount of earnings deemed to be removed from the reserves for such
distribution. The Association does not intend to make any distribution to the
Company that would create such a federal tax liability. See "Taxation."
Unlike the Association, the Company is not subject to the aforementioned
regulatory restrictions on the payment of dividends to its stockholders,
although the source of such dividends may eventually be dependent, in part,
upon dividends from the Association in addition to the net proceeds retained
by the Company and earnings thereon. The Company is subject, however, to the
requirements of Louisiana law, which generally permits the payment of
dividends out of surplus, except when (1) the corporation is insolvent or
would thereby be made insolvent, or (2) the declaration or payment thereof
would be contrary to any restrictions contained in the articles of
incorporation. If there is no surplus available for dividends, a Louisiana
corporation may pay dividends out of its net profits for the then current or
the preceding fiscal year or both, except that no dividend may be paid if the
corporation's assets are exceeded by its liabilities or if its net assets are
less than the amount which would be needed, under certain circumstances, to
satisfy any preferential rights of stockholders.
MARKET FOR COMMON STOCK
The Company and the Association have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this
time. The Company [HAS APPLIED] to have its Common Stock quoted on the
NASDAQ National Market under the symbol "____." Making a market involves
maintaining bid and ask quotations and being able, as principal, to effect
transactions in reasonable quantities at these quoted prices, subject to
various securities laws and other regulatory requirements. Additionally, the
development of a liquid public market depends on the existence of willing
buyers and sellers, the presence of which is not within the control of the
Company, the Association or any market maker. Accordingly, the number of
active buyers and sellers of the Common Stock at any particular time may be
limited. Under such circumstances, investors in the Common Stock could have
difficulty disposing of their shares and should not view the Common Stock as
a short-term investment. Accordingly, there can be no assurance that an
active and liquid trading market for the Common Stock will develop or that,
if developed, it will continue, nor is there any assurance that persons
purchasing shares of Common Stock will be able to sell them at or above the
Purchase Price. In order to be quoted on the NASDAQ National Market, there
must be at least two market makers for the Common
29
<PAGE>
Stock, the Company must satisfy certain minimum capitalization requirements
and there must be at least 400 shareholders. Keefe, Bruyette has indicated
its intention to act as a market maker in the Common Stock following the
consummation of the Conversion, depending on trading volume and subject to
compliance with applicable laws and regulatory requirements. Furthermore,
Webb has agreed to use its best efforts to assist the Company in obtaining at
least one additional market maker for the Common Stock. There can be no
assurance there will be two or more market makers for the Common Stock.
There can be no assurance that purchasers will be able to sell their shares
at or above the Purchase Price.
REGULATORY CAPITAL
At September 30, 1996, the Association exceeded all of the regulatory
capital requirements applicable to it. The table on the following page sets
forth the Association's historical regulatory capital at September 30, 1996
and the pro forma regulatory capital of the Association after giving effect
to the Conversion, based upon the sale of the number of shares shown in the
table. The pro forma regulatory capital amounts reflect the receipt by the
Association of 50% of the net Conversion proceeds, minus the amounts to be
loaned to the ESOP and contributed to the RRP. The pro forma risk-based
capital amounts assume the investment of the net proceeds received by the
Association in assets which have a risk-weight of 50% under applicable
regulations, as if such net proceeds had been received and so applied at
September 30, 1996.
30
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
------------------------------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
Historical at at $10.00 at $10.00 at $10.00 at $10.00
September 30, 1996 Per Share Per Share Per Share Per Share
----------------------- -------------------- -------------------- ------------------- ------------------------
Percent of Percent of Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1)
-------- ----------- ------- ------------ --------- ----------- ------- ----------- -------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tangible capital:
Actual $23,822 27.79% $31,856 33.34% $33,311 34.23% $34,772 35.09% $36,476 36.06%
Requirement 1,298 1.50 1,433 1.50% 1,460 1.50 1,486 1.50% 1,517 1.50%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
Excess $22,524 26.29% $30,423 31.84% $31,851 32.73% $33,285 33.59% $34,959 34.56%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
Core capital(2):
Actual $23,822 27.79% $31,856 33.34% $30,311 34.23% $34,772 35.09% $36,476 36.06%
Requirement 2,596 3.00 2,866 3.00% 2,919 3.00% 2,972 3.00% 3,034 3.00%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
Excess $21,226 24.79% $28,991 30.34% $30,392 31.23% $31,799 32.09% $33,442 33.06%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
Risk-based
capital(2):
Actual $24,038 80.10% $32,072 91.87% $33,527 93.66% $34,988 95.38% $36,692 97.29%
Requirement 2,408 8.00 2,793 8.00% 2,864 8.00% 2,935 8.00% 3,017 8.00%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
Excess $21,630 72.10% $29,279 83.87% $30,664 85.66% $32,053 87.38% $33,675 89.29%
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
--------- ---------- --------- ----------- ----------- ---------- ------- -------- ------- ---------
</TABLE>
- ----------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an institution
to be "adequately capitalized" under applicable laws and regulations.
See "Regulation - The Association - Prompt Corrective Action."
31
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of Guaranty
Savings at September 30, 1996, and the pro forma consolidated capitalization
of the Company after giving effect to the Conversion, based upon the sale of
the number of shares shown below and the other assumptions set forth under
"Pro Forma Data."
<TABLE>
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
--------------------------------------------------------------
Guaranty 2,210,000 2,600,000 2,990,000 3,438,500
Savings- Shares Shares Shares Shares(1) (15%
Historical (Minimum of (Midpoint of (Maximum of above Maximum
Capitalization Range) Range) Range) of Range)
--------------- ----------- ------------- ------------- -----------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(2) $60,495 $60,495 $60,495 $60,495 $60,495
-------------- ------------- ------------ ------------- -----------------
-------------- ------------- ------------ ------------- -----------------
Stockholders' equity:
Preferred Stock, $.01 par
value, 5,000,000 shares
authorized; none to be
issued $ -- $ -- $ -- $ -- $ --
Common Stock, $.01
par value, 20,000,000
shares authorized;
shares to be issued as
reflected(3) -- 22 26 30 34
Additional paid-in
capital(3) -- 21,350 25,192 29,045 33,526
Retained earnings(4) 23,822 23,822 23,822 23,822 23,822
Net unrealied gain on
securities held for sale 678 678 678 678 678
Less:
Common Stock acquired
by the ESOP(5) -- (1,768) (2,080) (2,392) (2,751)
Common Stock to be
acquired by the
RRP(6) -- (884) (1,040) (1,196) (1,375)
--------- --------- ----------- ----------- ---------
Total stockholders' equity
(retained earnings
at September 30, 1996) $24,500 $43,220 $46,598 $49,987 $53,934
-------------- ------------- ------------ ------------- -----------------
-------------- ------------- ------------ ------------- -----------------
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
32
<PAGE>
- -----------------------------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% to reflect changes in market and financial conditions prior to the
completion of the Conversion or to fill the order of the ESOP.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) The sum of the par value and additional paid-in capital accounts equals
the net Conversion proceeds. No effect has been given to the issuance
of additional shares of Common Stock pursuant to the Company's proposed
Stock Option Plan. The Company intends to adopt a Stock Option Plan and
to submit such plan to stockholders at a meeting of stockholders to be
held at least six months following completion of the Conversion. If the
plan is approved by stockholders, an amount equal to 10% of the shares
of Common Stock will be reserved for issuance under such plan. See "Pro
Forma Data" and "Management of the Company - Benefits - Stock Option
Plan."
(4) The retained earnings of the Association will be substantially
restricted after the Conversion. See "The Conversion - Liquidation
Rights."
(5) Assumes that 8% of the Common Stock will be purchased by the ESOP. The
Common Stock acquired by the ESOP is reflected as a reduction of
stockholders' equity. Assumes the funds used to acquire the ESOP shares
will be borrowed from the Company. See Note 1 to the table set forth
under "Pro Forma Data" and "Management of the Company -Benefits -
Employee Stock Ownership Plan."
(6) Gives effect to the Recognition Plan which is expected to be adopted by
the Company following the Conversion and presented to stockholders for
approval at a meeting of stockholders to be held at least six months
following completion of the Conversion. No shares will be purchased by
the Recognition Plan in the Conversion, and such plan cannot purchase
any shares until stockholder approval has been obtained. If the
Recognition Plan is approved by stockholders, the plan intends to
acquire an amount of Common Stock equal to 4% of the shares of Common
Stock issued in the Conversion, or 88,400, 104,000, 119,600 and 137,540
shares at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Valuation Range, respectively. The table assumes that
stockholder approval has been obtained and that such shares are
purchased in the open market at the Purchase Price. The Common Stock so
acquired by the Recognition Plan is reflected as a reduction in
stockholders' equity. If the shares are purchased at prices higher or
lower than the Purchase Price, such purchases would have a greater or
lesser impact, respectively, on stockholders' equity. If the
Recognition Plan purchases authorized but unissued shares from the
Company, such issuance would dilute the voting interests of existing
stockholders by approximately 3.8%. See "Pro Forma Data" and
"Management of the Company - Benefits - Recognition Plan."
33
<PAGE>
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $21.4 million and $29.1 million (or $33.6
million in the event the Estimated Valuation Range is increased by 15%) based
upon the following assumptions: (i) 100% of the shares of Common Stock will
be sold in the Subscription and Community Offerings; and (ii) Conversion
expenses, including the marketing fees paid to Charles Webb, will be
between $728,000 and $825,000. Actual Conversion expenses may vary from
those estimated.
Pro forma net income and stockholders' equity have been calculated for
the year ended December 31, 1995 and the nine months ended September 30, 1996
as if the Common Stock to be issued in the Offerings had been sold at the
beginning of the period and the net proceeds had been invested at 5.69% and
5.14%, respectively, which represents the yield on one-year U.S. Government
securities at September 30, 1996 and December 31, 1995. The use of this
interest rate is viewed to be a more relevant alternative in the current rate
environment than the rate prescribed by OTS regulations, which regulations
call for the use of an arithmetic average of the weighted average yield
earned by the Association on its interest earning assets and the weighted
average rate paid on its deposits during such periods. The effect of
withdrawals from deposit accounts for the purchase of Common Stock has not
been reflected. A combined effective federal and state income tax rate of
34% has been assumed, resulting in an after-tax yield of 3.76% and 3.39%,
respectively, for the periods ending September 30, 1996 and December 31,
1995. Historical and pro forma per share amounts have been calculated by
dividing historical and pro forma amounts by the indicated number of shares
of Common Stock, as adjusted to give effect to the shares purchased by the
ESOP with respect to the net income per share calculations. See Notes 2 and
4 to the Pro Forma Data table. No effect has been given in the pro forma
stockholders' equity calculations for the assumed earnings on the net
proceeds. As discussed under "Use of Proceeds," the Company intends to
retain 50% of the net Conversion proceeds.
The following pro forma information may not be representative of the
financial effects of the Conversion at the date on which the Conversion
actually occurs and should not be taken as indicative of future results of
operations. Pro forma stockholders' equity represents the difference between
the stated amount of assets and liabilities of the Company computed in
accordance with generally accepted accounting principles ("GAAP"). The pro
forma stockholders' equity is not intended to represent the fair market value
of the Common Stock and may be different than amounts that would be available
for distribution to stockholders in the event of liquidation. No effect has
been given in the table to the possible issuance of additional shares equal
to 10% of the Common Stock to be reserved for future issuance pursuant to the
Stock Option Plan to be adopted by the Board of Directors of the Company, nor
does book value give any effect to the liquidation account to be established
for the benefit of Eligible Account Holders and Supplemental Eligible
34
<PAGE>
Account Holders or to the bad debt reserve. See "Management of the Company
- -Benefits" and "The Conversion - Liquidation Rights." The table below gives
effect to the Recognition Plan, which is expected to be adopted by the
Company following the Conversion and presented (together with the Stock
Option Plan) to stockholders for approval no earlier than six months
subsequent to consummation of the Conversion. If the Recognition Plan is
approved by stockholders, the Recognition Plan intends to acquire an amount
of Common Stock equal to 4% of the shares of Common Stock issued in the
Conversion, either through open market purchases, if permissible, or from
authorized but unissued shares of Common Stock. The table below assumes that
stockholder approval has been obtained and that the shares acquired by the
Recognition Plan are purchased in the open market at $10.00 per share. There
can be no assurance that stockholder approval of the Recognition Plan will be
obtained, that the shares will be purchased in the open market or that the
purchase price will be $10.00 per share.
The table on the following page summarizes historical consolidated data
of the Association and pro forma data of the Company at or for the date and
period indicated based on the assumptions set forth above and in the table
and should not be used as a basis for projections of the market value of the
Common Stock following the Conversion.
35
<PAGE>
<TABLE>
<CAPTION>
At or For the Nine Months Ended September 30, 1996
--------------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(9)
-------------------------------------------------------------
<S> <C> <C> <C> <C>
(Dollars in Thousands, Except Per Share Amounts)
Gross proceeds $ 22,100 $26,000 $29,900 $34,385
Less offering expenses 728 782 825 825
-------- ------ ------ ------
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired by
the ESOP 1,768 2,080 2,392 2,751
Common Stock to be acquired
by the RRP 884 1,040 1,196 1,375
-------- ------ ------ ------
Estimated adjusted net proceeds(1) $ 18,720 $22,098 $25,487 $29,434
-------- ------ ------ ------
-------- ------ ------ ------
Net income:
Historical $ 365 $ 365 $ 365 $ 365
Pro forma adjustments:
Income on adjusted net proceeds(1) 527 622 718 829
State shares tax/franchise tax (183) (190) (197) (205)
ESOP(2) (88) (103) (118) (136)
RRP(3) (88) (103) (118) (136)
-------- ------ ------ ------
Pro forma $ 533 $ 591 $ 650 $ 717
-------- ------ ------ ------
-------- ------ ------ ------
Net income per share(4):
Historical $ 0.18 $ 0.15 $ 0.13 $ 0.11
Pro forma adjustments:
Income on adjusted net proceeds(1) 0.25 0.26 0.25 0.26
State share tax/franchise tax (0.09) (0.08) (0.07) (0.06)
ESOP(2) (0.04) (0.04) (0.04) (0.04)
RRP(3) (0.04) (0.04) (0.04) (0.04)
-------- ------ ------ ------
Pro forma $ 0.26 $ 0.25 $ 0.23 $ 0.23
-------- ------ ------ ------
-------- ------ ------ ------
Pro forma price to earnings
(P/E ratio)(4)(5) 28.85x 30.00x 32.61x 32.61x
-------- ------ ------ ------
-------- ------ ------ ------
Number of shares used in net income
per share calculations(4) 2,046,460 2,407,600 2,768,740 3,184,051
--------- --------- --------- ---------
--------- --------- --------- ---------
Stockholders' equity:
Historical $24,500 $24,500 $24,500 $24,500
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired
by the ESOP(2) (1,768) (2,080) (2,392) (2,751)
Common Stock to be acquired
by the RRP(3) (884) (1,040) (1,196) (1,375)
-------- ------ ------ ------
Pro forma stockholders' equity(6)(7) $ 43,220 $46,598 $49,987 $53,934
-------- ------ ------ ------
-------- ------ ------ ------
Stockholders' equity per share(8):
Historical $ 11.09 $ 9.42 $ 8.19 $ 7.13
Estimated net Conversion proceeds 9.67 9.70 9.72 9.76
Less: Common Stock acquired
by the ESOP(2) (0.80) (0.80) (0.80) (0.80)
Common Stock to be acquired
by the RRP(3) (0.40) (0.40) (0.40) (0.40)
-------- ------ ------ ------
Pro forma stockholders' equity
per share(3)(6)(7) $ 19.56 $17.92 $16.71 $15.69
-------- ------ ------ ------
-------- ------ ------ ------
Pro forma price to book ratio(5)(8) 51.12% 55.80% 59.81% 63.73%
-------- ------ ------ ------
-------- ------ ------ ------
Number of shares used in book value
per share calculations(8) 2,210,000 2,600,000 2,990,000 3,438,500
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
36
<PAGE>
____________________
(1) Estimated adjusted net proceeds consist of the estimated net Conversion
proceeds, minus (i) the proceeds attributable to the purchase by the
ESOP and (ii) the value of the shares to be purchased by the Recognition
Plan after the Conversion, subject to stockholder approval, at an
assumed purchase price of $10.00 per share.
(2) It is assumed that 8% of the shares of Common Stock issued in the
Conversion will be purchased by the ESOP. For purposes of this table,
the funds used to acquire such shares are assumed to have been borrowed
by the ESOP from the Company. The Association intends to make quarterly
contributions to the ESOP over a ten-year period in an amount at least
equal to the principal and interest requirement of the debt. The pro
forma net income assumes (i) that the ESOP expense for the period is
equivalent to the principal payment for the period and was made at the
end of the period; (ii) that 13,260, 15,600, 17,940 and 20,631 shares
were committed to be released with respect to the nine months ended
September 30, 1996 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively; (iii) in
accordance with SOP 93-6 entitled "Employers' Accounting for Employee
Stock Ownership Plans," only the ESOP shares committed to be released
during the period were considered outstanding for purposes of the net
income per share calculations; and (iv) the effective tax rate was 34%
for the period. See "Risk Factors - Potential Increased Compensation
Expense Relating to the ESOP," "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Recent Accounting
Pronouncements" and "Management of the Company - Benefits - Employee
Stock Ownership Plan."
(3) The adjustment is based upon the assumed purchases by the Recognition
Plan of 88,400, 104,000, 119,600 and 137,540 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, assuming that: (i) stockholder approval of the Recognition Plan
has been received; (ii) the shares were acquired by the Recognition Plan
at the beginning of the period presented in open market purchases at the
Purchase Price; (iii) the amortized expense for the nine-months ended
September 30, 1996 was 15% of the amount contributed; and (iv) the effective
tax rate applicable to such employee compensation expense was 34%. If the
Recognition Plan purchases authorized but unissued shares instead of
making open market purchases, then (i) the voting interests of existing
stockholders would be diluted by approximately 3.8%, and (ii) the pro
forma net income per share for the nine months ended September 30, 1996
would be $0.26, $0.25, $0.24 and $0.23, and pro forma stockholders' equity
per share at September 30, 1996 would be $19.19, $17.62, $16.46 and
$15.47, in each case at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively. See "Management
of the Company - Benefits - Recognition Plan."
37
<PAGE>
(4) Net income per share computations are determined by taking the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, subtracting the ESOP shares which have not been committed for
release during the respective period. See Note 2 above. If SOP 93-6
was not required to be implemented with respect to the nine months ended
September 30, 1996, the pro forma P/E ratio would be 31.09x, 32.99x,
34.49x and 35.97x at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively.
(5) Annualized.
(6) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan, which is expected to be adopted
by the Company following the Conversion and presented to stockholders
for approval at a meeting of stockholders to be held at least six months
following completion of the Conversion. If the Stock Option Plan is
approved by stockholders, an amount equal to 10% of the Common Stock
issued in the Conversion, or 221,000, 260,000, 299,000 and 343,850
shares at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Valuation Range, respectively, will be reserved for future
issuance upon the exercise of options to be granted under the Stock
Option Plan. The issuance of authorized but previously unissued shares
of Common Stock pursuant to the exercise of options under such plan
would dilute existing stockholders' interests. Assuming stockholder
approval of the plan, that all the options were exercised at the end of
the period at an exercise price of $10.00 per share, and that the
Recognition Plan purchases shares in the open market at the Purchase
Price, pro forma net income per share for the nine months ended
September 30, 1996 would be $0.24, $0.22, $0.21 and $0.20, and pro forma
stockholders' equity per share at September 30, 1996 would be $18.69,
$17.20, $16.11, and $15.17, in each case at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range,
respectively.
(7) The retained earnings of Guaranty Savings will be substantially
restricted after the Conversion. See "Dividend Policy" and "The
Conversion - Liquidation Rights."
(8) Based on the number of shares sold in the Conversion.
(9) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% to reflect changes in market and financial conditions prior to
completion of the Conversion or to fill the order of the ESOP.
38
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended December 31, 1995
--------------------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(8)
------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
(Dollars in Thousands, Except Per Share Amounts)
Gross proceeds $22,100 $26,000 $29,900 $34,385
Less offering expenses 728 782 825 825
------ ------ ------ ------
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired by
the ESOP 1,768 2,080 2,392 2,751
Common Stock to be acquired
by the RRP 884 1,040 1,196 1,375
------ ------ ------ ------
Estimated adjusted net proceeds(1) $18,720 $22,098 $25,487 $29,434
------ ------ ------ ------
------ ------ ------ ------
Net income:
Historical $ 872 $ 872 $ 872 $ 872
Pro forma adjustments:
Income on adjusted net proceeds(1) 635 750 865 999
State share tax/franchise tax (187) (194) (202) (210)
ESOP(2) (117) (137) (158) (182)
RRP(3) (117) (137) (158) (182)
------ ------ ------ ------
Pro forma $ 1,086 $1,154 $1,219 $1,297
------ ------ ------ ------
------ ------ ------ ------
Net income per share(4):
Historical $ 0.43 $ 0.36 $ 0.32 $ 0.27
Pro forma adjustments:
Income on adjusted net proceeds(1) 0.31 0.31 0.31 0.31
State share tax/franchise tax (0.09) (0.08) (0.07) (0.07)
ESOP(2) (0.06) (0.06) (0.06) (0.06)
RRP(3) (0.06) (0.06) (0.06) (0.06)
------ ------ ------ ------
Pro forma $ 0.53 $ 0.47 $ 0.43 $ 0.39
------ ------ ------ ------
------ ------ ------ ------
Pro forma price to earnings
(P/E ratio)(4) 18.87x 21.28x 23.26x 25.64x
------ ------ ------ ------
------ ------ ------ ------
Number of shares used in net
income per share calculations(4)
Stockholders' equity: 2,050,880 2,412,800 2,744,720 3,190,928
--------- --------- --------- ---------
--------- --------- --------- ---------
Historical $23,946 $23,946 $23,946 $23,946
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired
by the ESOP(2) (1,768) (2,080) (2,392) (2,751)
Common Stock to be acquired
by the RRP(3) (884) (1,040) (1,196) (1,375)
------ ------ ------ ------
Pro forma stockholders'
equity(5)(6) $42,666 $46,044 $49,433 $53,380
------ ------ ------ ------
------ ------ ------ ------
Stockholders' equity per share(7):
Historical $ 10.84 $ 9.21 $ 8.01 $ 6.96
Estimated net Conversion proceeds 9.67 9.70 9.72 9.76
Less: Common Stock acquired
by the ESOP(2) (0.80) (0.80) (0.80) (0.80)
Common Stock to be acquired
by the RRP(3) (0.40) (0.40) (0.40) (0.40)
------ ------ ------ ------
Pro forma stockholders' equity
per share(3)(5)(6) $ 19.31 $ 17.71 $ 16.53 $ 15.52
------ ------ ------ ------
------ ------ ------ ------
Pro forma price to book ratio(7) 57.79% 56.47% 60.50% 64.43%
------ ------ ------ ------
------ ------ ------ ------
Number of shares used in book value
per share calculations(7) 2,210,000 2,600,000 2,990,000 3,438,500
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
39
<PAGE>
____________________
(1) Estimated adjusted net proceeds consist of the estimated net Conversion
proceeds, minus (i) the proceeds attributable to the purchase by the
ESOP and (ii) the value of the shares to be purchased by the Recognition
Plan after the Conversion, subject to stockholder approval, at an
assumed purchase price of $10.00 per share.
(2) It is assumed that 8% of the shares of Common Stock issued in the
Conversion will be purchased by the ESOP. For purposes of this table,
the funds used to acquire such shares are assumed to have been borrowed
by the ESOP from the Company. The Homestead intends to make quarterly
contributions to the ESOP over a ten-year period in an amount at least
equal to the principal and interest requirement of the debt. The pro
forma net income assumes (i) that the ESOP expense for the period is
equivalent to the principal payment for the period and was made at the
end of the period; (ii) that 17,680, 20,800, 23,920 and 27,508 shares
were committed to be released with respect to the year ended December
31, 1995 at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Valuation Range, respectively; (iii) in accordance with
SOP 93-6 entitled "Employers' Accounting for Employee Stock Ownership
Plans," only the ESOP shares committed to be released during the period
were considered outstanding for purposes of the net income per share
calculations; and (iv) the effective tax rate was 34% for the period.
See "Risk Factors - Potential Increased Compensation Expense Relating to
the ESOP," "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Recent Accounting Pronouncements" and
"Management of the Company - Benefits - Employee Stock Ownership Plan."
(3) The adjustment is based upon the assumed purchases by the Recognition
Plan of 88,400, 104,000, 119,600 and 137,540 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, assuming that: (i) stockholder approval of the Recognition Plan
has been received; (ii) the shares were acquired by the Recognition Plan
at the beginning of the period presented in open market purchases at the
Purchase Price; (iii) the amortized expense for the year ended December
31, 1995 was 20% of the amount contributed; and (iv) the effective tax
rate applicable to such employee compensation expense was 34%. If the
Recognition Plan purchases authorized but unissued shares instead of
making open market purchases, then (i) the voting interests of existing
stockholders would be diluted by approximately 3.8%, and (ii) the pro
forma net income per share for the year ended December 31, 1995 would be
$0.52, $0.47, $0.44 and $0.40, and pro forma stockholders' equity per share
at December 31, 1995 would be $18.95, $17.41, $16.28 and $15.31, in each
case at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Valuation Range, respectively. See "Management of the Company
- Benefits - Recognition Plan."
40
<PAGE>
(4) Net income per share computations are determined by taking the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, subtracting the ESOP shares which have not been committed for
release during the respective period. See Note 2 above. If SOP 93-6
was not required to be implemented with respect to the year ended
December 31, 1995, the pro forma P/E ratio would be 20.35x, 22.53x,
24.53x and 26.51x at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively.
(5) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan, which is expected to be adopted
by the Company following the Conversion and presented to stockholders
for approval at a meeting of stockholders to be held at least six months
following completion of the Conversion. If the Stock Option Plan is
approved by stockholders, an amount equal to 10% of the Common Stock
issued in the Conversion, or 221,000, 260,000, 299,000 and 343,850
shares at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Valuation Range, respectively, will be reserved for future
issuance upon the exercise of options to be granted under the Stock
Option Plan. The issuance of authorized but previously unissued shares
of Common Stock pursuant to the exercise of options under such plan
would dilute existing stockholders' interests. Assuming stockholder
approval of the plan, that all the options were exercised at the end of
the period at an exercise price of $10.00 per share, and that the
Recognition Plan purchases shares in the open market at the Purchase
Price, pro forma net income per share for the year ended December 31,
1995 would be $0.48, $0.43, $0.40 and $0.37, and pro forma stockholders'
equity per share at December 31, 1995 would be $18.46, $17.01, $15.94,
and $15.02, in each case at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Valuation Range, respectively.
(6) The retained earnings of Guaranty Savings will be substantially
restricted after the Conversion. See "Dividend Policy" and "The
Conversion - Liquidation Rights."
(7) Based on the number of shares sold in the Conversion.
(8) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% to reflect changes in market and financial conditions prior to
completion of the Conversion or to fill the order of the ESOP.
41
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF INCOME
The following Statements of Income of Guaranty Savings for each of the
years ended December 31, 1995 and 1994 have been audited by LaPorte, Sehrt,
Romig & Hand, independent certified public accountants, whose report thereon
appears elsewhere herein. The Statements of Income for the nine months ended
September 30, 1996 and 1995 have not been audited by independent certified
public accountants, but, in the opinion of management, reflect all
adjustments necessary for a fair presentation of the results of operations
for those periods. All adjustments consist of normal recurring accruals.
The results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results that may be expected for the entire
year ending December 31, 1996.
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, Year Ended December 31,
--------------------------- ---------------------------
1996 1995 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
(Unaudited)
Interest Income:
Loans receivable $2,770,844 $2,793,280 $3,702,893 $3,730,490
Investment securities 1,311,128 1,536,345 2,027,959 1,825,773
Mortgage-backed securities 327,103 287,839 379,700 389,268
Dividends on FHLB stock 30,873 31,786 42,776 29,647
Other interest income 119,897 75,052 106,767 59,557
--------- --------- --------- ---------
Total interest income 4,559,845 4,724,302 6,260,095 6,034,735
--------- --------- --------- ---------
Interest Expense:
Deposits 1,962,507 2,006,688 2,663,904 2,407,008
FHLB advances -- -- -- 1,336
--------- --------- --------- ---------
Total interest expense 1,962,507 2,006,688 2,663,904 2,408,344
--------- --------- --------- ---------
Net interest income before
provision for loan losses 2,597,338 2,717,614 3,596,191 3,626,391
Provision for loan losses 14,027 -- 12,107 20,785
--------- --------- --------- ---------
Net interest income after
provision for loan losses 2,583,311 2,717,614 3,584,084 3,605,606
--------- --------- --------- ---------
Non-Interest Income (Loss):
Late charges 29,170 28,557 38,334 44,395
Loan prepayment charges -- -- -- 36,922
(Loss) on disposal of fixed assets -- (6,168) (6,168) --
(Loss) on sale of loans (363) -- -- (10,168)
Loss on sale of investments (100,464) -- -- --
Gain on sale of foreclosed
real estate 7,325 11,006 11,181 10,065
Other income 29,072 12,776 19,393 27,373
--------- --------- --------- ---------
Total non-interest income (35,260) 46,171 62,740 108,587
--------- --------- --------- ---------
Non-Interest Expenses:
Compensation and employee benefits 945,399 917,344 1,556,906 1,439,178
Advertising 27,594 29,850 36,812 12,862
Office supplies, telephone and postage 62,993 58,501 79,423 85,820
Net occupancy expense 176,947 166,600 212,342 252,168
SAIF recapitalization premium 413,324 -- -- --
Federal insurance premiums 105,394 111,177 147,435 154,372
Data processing expense 50,750 48,607 68,873 57,961
Provision for losses on
foreclosed real estate -- -- -- 7,371
Real estate owned expense - net 3,934 500 85 (3,218)
Other 152,087 133,037 192,760 183,990
--------- --------- --------- ---------
Total non-interest expense 1,938,422 1,465,616 2,294,636 2,190,504
--------- --------- --------- ---------
Income before federal income
tax expense 609,629 1,298,169 1,352,188 1,523,689
Federal income tax expense 244,847 439,958 479,841 529,404
--------- --------- --------- ---------
Net income $ 364,782 $ 858,211 $ 872,347 $ 994,285
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the Financial Statements.
42
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Guaranty Savings is engaged in attracting deposits from the general
public and using those and other available sources of funds to originate
permanent loans for its portfolio secured by one-to four-family residences
located primarily in the New Orleans metropolitan area, which includes the
parishes of Orleans, Jefferson, and St. Tammany. To a much lesser extent,
the Association also originates consumer and other loans (primarily home
equity loans), residential construction loans and, occasionally, loans which
are secured by existing multi-family residential and nonresidential real
estate, as well as invests in interest-bearing deposits in other financial
institutions, U.S. Government and federal agency obligations and
mortgage-backed securities.
The Association's strategy is to operate as a conservative,
well-capitalized, profitable institution dedicated to financing home
ownership and other consumer needs and to provide quality service to all
customers. The Association believes that it has successfully implemented its
strategy by (i) maintaining very strong capital levels, (ii) achieving
profitability under various economic scenarios, (iii) restricting its lending
to local borrowers and emphasizing the origination of fixed-rate,
single-family mortgage loans, and (iv) emphasizing high-quality customer
service with a competitive fee structure.
The profitability of the Association depends primarily on its net
interest income, which is the difference between interest and dividend income
on interest-earning assets, principally loans, investment securities and
mortgage-backed securities and interest expense on savings deposits. The
Association's net income is also affected by the level of its non-interest
income, including prepayment and late charges and other fees, and its
non-interest expense, such as employee compensation and benefits, occupancy
and equipment expense, deposit insurance premiums and miscellaneous other
expenses, as well as federal income tax expense.
In general, financial institutions are vulnerable to an increase in
interest rates to the extent that interest-bearing liabilities mature or
reprice more rapidly than interest-earning assets. The lending activities of
financial institutions, including the Association, have historically
emphasized the origination of long-term, fixed-rate loans secured by
single-family residences, and the primary source of funds of such
institutions has been deposits, which largely mature or are subject to
repricing within a short period of time. This factor, in combination with
substantial investments in long-term, fixed-rate loans, has historically
caused the income earned by the Association on its loan portfolio to adjust
more slowly to changes in interest rates than its cost of funds. While
having liabilities that reprice more frequently than assets is generally
beneficial to net interest income in times of declining interest rates, such
an asset/liability mismatch is generally detrimental during periods of rising
interest rates. To reduce the effect of adverse changes in interest rates on
its operations, the Association has implemented the asset and liability
management policies described below.
43
<PAGE>
ASSET AND LIABILITY MANAGEMENT
Consistent net interest income is largely dependent upon the achievement
of a positive interest rate spread that can be sustained during periods of
fluctuating market interest rates. Interest rate sensitivity is a measure of
the difference between amounts of interest-earning assets and
interest-bearing liabilities which either reprice or mature within a given
period of time. The difference, or the interest rate repricing "gap,"
provides an indication of the extent to which an institution's interest rate
spread will be affected by changes in interest rates. A gap is considered
positive when the amount of interest-rate sensitive assets repricing or
maturing within a specified period exceeds the amount of interest-rate
sensitive liabilities repricing or maturing within such period, and is
considered negative when the amount of interest-rate sensitive liabilities
repricing or maturing within a specified period exceeds the amount of
interest-rate sensitive assets repricing or maturing within such period.
Generally, during a period of rising interest rates, a negative gap within
shorter maturities would adversely affect net interest income, while a
positive gap within shorter maturities would result in an increase in net
interest income, and during a period of falling interest rates, a negative
gap within shorter maturities would result in an increase in net interest
income while a positive gap within shorter maturities would have the opposite
effect. However, the effects of a positive or negative gap are impacted, to
a large extent, by consumer demand and by discretionary pricing by the
Association's management. In the nine months ended September 30, 1996 and
the years ended December 31, 1995, 1994 and 1993, the Association has
experienced net decreases in deposits. In order to address such net
reductions in deposits, in June 1996, the Association increased the rate paid
on its passbook accounts and, since taking such action, the amount of the
Assocation's deposits has increased slightly.
At September 30, 1996, the Association's one-year gap was a negative
16.5% of total assets, based upon certain repricing assumptions. At
September 30, 1996 the Association's interest-earning assets which are
scheduled to mature or reprice within one year totalled $19.8 million while
the Association's interest-bearing liabilities maturing or repricing within
one year totalled $34.0 million, resulting in a cumulative excess of
interest-bearing liabilities over interest-earning assets of $14.2 million.
At September 30, 1996, the percentage of the Association's interest-bearing
assets to interest-bearing liabilities maturing or repricing within one year
was 62.55%. The interest rate sensitivity of Guaranty Savings' assets and
liabilities in the table set forth below is based upon certain assumptions,
including assumed rates of withdrawal of its passbook accounts, and the
interest rate sensitivity reflected below could vary substantially if
different assumptions are used or if actual experience differs from the
assumptions used. Certain shortcomings are inherent in the repricing
assumptions table used to calculate the Association's gap, as shown in the
table below, as well as the method of calculating the effect of changes in
interest rates on the Association's net portfolio value, as discussed further
below. Although certain assets and liabilities may have similar maturities
or periods within which they will reprice, they may react differently to
changes in market interest rates. The interest rates on certain types of
assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates.
44
<PAGE>
The Association attempts to manage its interest rate risk by maintaining
its highly capitalized position and by retaining a significant investment in
liquid assets, such as investment securities available for sale,
mortgage-backed securities and cash and cash equivalents. While the
Association's operations have been profitable on a consistent basis in recent
periods, an increase in market rates of interest likely would have an adverse
impact on the Association's net interest income and net income. However,
management of the Association believes that by maintaining its high levels of
capital and liquidity, the Association believes it may be in a better
position to withstand changes in interest rates without any material adverse
effect upon its financial condition. In addition, management of the
Association believes that Guaranty Savings' interest rate spread and net
interest margin, which amounted to 3.11% and 4.26%, respectively, at
September 30, 1996, provide the Association with a degree of protection in a
rising interest rate environment. As of September 30, 1996, the
Association's investment securities, all of which were classified as
available-for-sale, amounted to $23.1 million, or 26.7% of total assets, and
its cash and cash equivalents amounted to $8.7 million, or 10.1% of total
assets. At such date, the Association's ratio of equity to assets was 28.3%
and its core capital exceeded minimum regulatory requirements by $21.2
million.
45
<PAGE>
The following table presents the difference between Guaranty Savings
interest-earning assets and interest-bearing liabilities within specified
maturities at September 30, 1996. This table does not necessarily indicate
the impact of general interest rate movements on Guaranty Savings' net
interest income, because the repricing of certain assets and liabilities is
subject to competitive and other limitations. As a result, certain assets
and liabilities indicated as maturing or otherwise repricing within a stated
period may in fact mature or reprice at different times and at different
volumes.
<TABLE>
<CAPTION>
September 30, 1996
---------------------------------------------------------------------------------------
Over Three Over One Over Three Over Five
Within Through Through Through Through Over Ten
Three Months 12 Months Three Years Five Years Ten Years Years Total
-------------- ---------- ----------- ---------- ----------- --------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
One-to four-family residential $ 15 $ 116 $ 493 $ 1,637 $ 8,320 $31,628 $42,209
Construction -- -- -- -- -- 412 412
Commercial real -- 2 21 -- 295 124 442
Consumer 173 -- -- -- -- -- 173
Other -- 5 9 2 94 44 154
Mortgage-backed securities: -- -- -- -- -- -- --
Adjustable-rate -- -- -- -- -- -- --
Fixed-rate -- 107 2,929 931 995 2,337 7,299
Investment securities 5,488 4,834 4,589 6,104 2,053 -- 23,068
FHLB stock 718 -- -- -- -- -- 718
Other interest-earning assets 8,303 -- -- -- -- -- 8,303
------ ------- ------- ------ ------ ------ ------
Total interest-earning assets 14,697 5,064 8,041 8,674 11,757 34,545 82,778
------ ------- ------- ------ ------ ------ ------
Interest-bearing liabilities:
Passbook accounts (2) 2,401 2,401 4,802 4,802 4,802 4,802 24,010
Certificates of deposit (3) 9,035 20,158 7,056 236 -- -- 36,485
------ ------- ------- ------ ------ ------ ------
Total interest-bearing liabilities 11,436 22,559 11,858 5.038 4.802 4,802 60,495
------ ------- ------- ------ ------ ------ ------
Interest rate sensitivity gap $ 3,261 $(17,495) $ (3,817) $ 3,636 $ 6,955 $29,743 $22,283
------ ------- ------- ------ ------ ------ ------
------ ------- ------- ------ ------ ------ ------
Cumulative interest rate
sensitivity gap $ 3,261 $ (14,234) $(15,051) $(14,415) $ (7,460) $22,283
------ ------- ------- ------ ------ ------
------ ------- ------- ------ ------ ------
Percentage of cumulative gap
to total assets 3.77% (16.45)% (20.86)% (16.66)% (8.62)% 25.68%
------ ------- ------- ------ ------ ------
------ ------- ------- ------ ------ ------
Cumulative ratio of interest-
earning assets to interest-
bearing liabilities 128.52% 58.13% 60.63% 71.67% 86.61% 136.83%
------ ------- ------- ------ ------ ------
------ ------- ------- ------ ------ ------
</TABLE>
(FOOTNOTES ARE ON FOLLOWING PAGE)
46
<PAGE>
- -----------------------
(1) Loans receivable are gross of loans in process, deferred fees, unearned
discounts, and allowance for loan losses.
(2) Guaranty Savings' passbook accounts are generally subject to immediate
withdrawal. However, management considers a significant portion of
these deposits to be core deposits having significantly longer effective
maturities based on Guaranty Savings' retention of such deposits in
changing interest rate environments. For purposes of the above table,
10% of its passbook accounts are assumed to be withdrawn within the
first three months, 10% of such passbook accounts are assumed to be
withdrawn in the period over three months through 12 months, and 20% of
such passbook accounts are assumed to be withdrawn in over one through
three years, over three through five years and over five through ten
year periods.
(3) It is assumed that certificates of deposit will not be withdrawn prior
to maturity.
Management presently monitors and evaluates the potential impact of
interest rate changes upon the market value of Guaranty Savings' portfolio
equity on a quarterly basis, in an attempt to ensure that interest rate risk
is maintained within limits established by the Board of Directors. As
discussed under "Regulation - The Association - Regulatory Capital
Requirements," the OTS adopted a final rule in August 1993 incorporating an
interest rate risk component into the risk-based capital rules. Under the
rule, an institution with a greater than "normal" level of interest rate risk
will be subject to a deduction of its interest rate risk component from total
capital for purposes of calculating the risk-based capital requirement. An
institution with a greater than "normal" interest rate risk is defined as an
institution that would suffer a loss of net portfolio value ("NPV") exceeding
2.0% of the estimated market value of its assets in the event of a 200 basis
point increase or decrease in interest rates. NPV is the difference between
incoming and outgoing discounted cash flows from assets, liabilities, and
off-balance sheet contracts. A resulting change in NPV of more than 2% of
the estimated market value of an institution's assets will require the
institution to deduct from its risk-based capital 50% of that excess change.
The rule provides that the OTS will calculate the interest rate risk
component quarterly for each institution. The OTS has recently indicated
that no institution will be required to deduct capital for interest rate risk
until further notice. See "Regulation - The Association - Regulatory Capital
Requirements." If the regulation had been effective as of September 30,
1996, the Association would have been subject to a capital deduction of $1.2
million. However, even if such deduction from capital was to be required,
the Association's risk-based capital would amount to $22.8 million, which
would still be well in excess of the minimum regulatory requirement of $2.4
million. The following table presents the Association's NPV as of September
30, 1996, as calculated by the OTS, based on information provided to the OTS
by the Association.
47
<PAGE>
<TABLE>
<CAPTION>
Change in Change in
Interest Rates Net Portfolio Value NPV as % of NPV as % of
in Basis Points ----------------------- Portfolio Value Portfolio Value
(Rate Shock) Amount $ Change % Change of Assets of Assets(1)
- --------------- ------ -------- --------- --------------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
400 $21,221 $(6,063) (22.22)% 25.84% (4.79)%
300 22,758 (4,526) (16.59) 27.13 (3.50)
200 24,332 (2,952) (10.82) 28.40 (2.23)
100 25,887 (1,398) (5.12) 29.60 (1.03)
Static 27,284 -- -- 30.63 --
(100) 28,347 1,062 3.89 31.37 0.74
(200) 29,049 1,765 6.47 31.81 1.18
(300) 29,960 2,676 9.81 32.39 1.76
(400) 30,987 3,703 13.57 33.04 2.41
</TABLE>
- -------------------
(1) Based on the portfolio value of the Association's assets assuming no
change in interest rates.
As shown by the table above, increases in interest rates will result in
declines in the Association's net portfolio value, while decreases in
interest rates will result in increases in the Association's net portfolio
value. See "Risk Factors - Potential Effects of Changes in Interest Rates
and the Current Interest Rate Environment."
CHANGES IN FINANCIAL CONDITION--SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
GENERAL. The Association had total assets of $86.5 million at September
30, 1996, an increase of $481,000, or 0.6%, from December 31, 1995. The
increase in assets primarily reflected increases in net loans receivable and
in cash and cash equivalents.
During the nine months ended September 30, 1996, the Association
re-examined its investment securities portfolio and determined to sell a
certain portion of its lower yielding investment securities. Management of
the Association was of the view that the anticipated loss on such sale would
be recouped in a relatively short period of time through the reinvestment of
the sales proceeds in higher yielding assets. In September 1996, the
Association sold $7.0 million of investment securities with a weighted
average yield of 5.21% at a loss of $100,000. As a result of management's
action, the Association's entire investment securities portfolio was
classified as available for sale.
CASH AND INTEREST BEARING DEPOSITS. Liquid assets (i.e., cash,
interest-bearing deposits in other banks and federal funds sold) increased by
$6.3 million during the three months ended September 30, 1996. The increase
in cash and cash equivalents was due to a $4.8 million increase in federal
funds sold together with a $2.1 million increase in deposits in other banks.
Such increase in cash and cash equivalents was due primarily to the cash
48
<PAGE>
proceeds from the sale of investment securities in September 1996, which
proceeds had not been fully reinvested as of September 30, 1996. At
September 30, 1996, the Association's regulatory liquidity amounted to 56.9%,
which exceeded the minimum OTS requirement of 5% by $31.5 million. See "-
Liquidity and Capital Resources."
NET LOANS RECEIVABLE. Net loans receivable increased by $3.2 million,
or 8.0%, to a total of $43.1 million at September 30, 1996, as compared to
$39.9 million at December 31, 1995. Loan originations of $7.5 million during
the nine-month period were partially offset by principal repayments of $4.3
million. The Association increased its originations of new loans to $7.5
million during the nine months ended September 30, 1996 compared to new loan
originations of $6.6 million and $6.6 million in 1995 and 1994, respectively.
The increase in net loans receivable also was due to a slowing of loan
principal repayments to $4.3 million during the nine months ended September
30, 1996 compared to $6.7 million and $7.2 million, respectively, in 1995 and
1996.
ALLOWANCE FOR LOAN LOSSES. As of September 30, 1996, the Association's
allowance for loan losses amounted to $337,000, which represented a $14,000
increase over the level maintained at December 31, 1995. The small increase
in the allowance was primarily related to the amount of growth in the loan
portfolio. As of September 30, 1996, the Association's allowance for loan
losses consisted primarily of a general loan loss allowance (which is
includible as a component of regulatory risked-based capital). As of such
date, the Association's allowance for loan losses amounted to .73% of total
loans and 106.7% of total non-performing loans. Management will continue to
monitor its allowance for loan losses and make additions to the allowance
through the provision for loan losses as economic conditions dictate.
Although the Association maintains its allowance for loan losses at a level
which it considers to be adequate to provide for loan losses, there can be no
assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in the future.
See Note D of Notes to Financial Statements and "Business - Asset Quality."
INVESTMENT SECURITIES. Investment securities (including securities
classified as available for sale) decreased by $10.3 million, or 30.9%,
during the nine months ended September 30, 1996. As previously discussed,
the Association sold $7.0 million of investment securities at a loss of
$100,000 during period. At September 30, 1996, the Association had
classified all of its investment securities as available for sale and had net
unrealized gains with respect to such investment securities of $678,000. See
Note B of the Notes to Financial Statements.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities increased by
$932,000, or 14.6%, during the nine months ended September 30, 1996. This
increase was due to purchases of $2.4 million of mortgage-backed securities
which were partially offset by principal repayments of $1.5 million. As of
September 30, 1996, all of the Association's mortgage-backed securities were
classified as held to maturity.
49
<PAGE>
All of the Association's mortgage-backed securities are either issued or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC") or the
Federal National Mortgage Association ("FNMA"). Mortgage-backed securities
increase the quality of the Association's assets by virtue of the guarantees
that support them, require fewer personnel and overhead costs than individual
residential mortgage loans, are more liquid than individual mortgage loans
and may be used to collateralize borrowings. However, mortgage-backed
securities typically yield less than individual residential mortgage loans.
DEPOSITS. Deposits totalled $60.5 million at September 30, 1996, a
decrease of $450,000 or 0.7% over the $60.9 million of deposits outstanding
at December 31, 1995. Deposits subject to daily repricing (passbook
accounts) decreased by $110,000, or 0.5%, from December 31, 1995 to September
30, 1996. Management attributes such decrease primarily to customers
withdrawing deposits in order to take advantage of higher rates being paid on
deposits by competing institutions. In an effort to stabilize its deposit
outflows, in June 1996, the Association increased the rate paid on its
passbook accounts from 2.75% to 4.00%. The amount of the Association's
deposits increased slightly from June 1996 to September 30, 1996, which
increase management attributes primarily to the increase in the rate paid on
passbook accounts.
EQUITY CAPITAL. Equity Capital increased by $554,000, or 2.3%, from
December 31, 1995 to September 30, 1996. This increase was due to net income
of $365,000 and an increase of $189,000 in unrealized gain on available for
sale securities (net of taxes).
CHANGES IN FINANCIAL CONDITION--DECEMBER, 1995 AND DECEMBER 31, 1994
GENERAL. The Association had total assets of $86.0 million at December
31, 1995, a decrease of approximately $2.2 million, or 2.5%, from December
31, 1994. The decrease in assets was primarily due to decreases in
investment securities and net loans.
CASH AND CASH EQUIVALENTS. Liquid assets (i.e., cash, interest-bearing
deposits in other institutions and federal funds sold) decreased by $265,000,
or 10.1%, during 1995. Cash and cash equivalents amounted to $2.4 million at
December 31, 1995 compared to $2.6 million at December 31, 1996.
NET LOANS RECEIVABLE. The Association's net loans receivable amounted
to $39.9 million at December 31, 1995 compared to $40.0 million at December
31, 1994. During 1995, new loan originations of $6.6 million were more than
offset by loan principal repayments of $6.7 million.
ALLOWANCE FOR LOAN LOSSES. At December 31, 1995, the Association's
allowance for loan losses amounted to $323,000 compared to $345,000 at
December 31, 1994. During 1995, the Association's provision for loan losses
was $12,000 and its net charge-offs to the allowance for loan losses was
$34,000. At December 31, 1995 the allowance for loan losses amounted to
0.80% of total loans and 156.8% of non-performing loans.
50
<PAGE>
INVESTMENT SECURITIES. The Association's total investment securities
decreased by $2.1 million, or 0.6%, to $33.4 million at December 31, 1995
compared to $35.5 million at December 31, 1994.
MORTGAGE-BACKED SECURITIES. The Association's mortgage-backed
securities increased by $304,000, or 5.0%, to $6.4 million at December 31,
1995 compared to $6.1 million at December 31,1994. During 1995, the
Association purchased $855,000 of mortgage-backed securities, which purchases
were partially offset by $552,000 in repayments.
DEPOSITS. Deposits at Guaranty Savings amounted to $60.9 million at
December 31, 1995 compared to $64.6 million at December 31, 1994. During
1995, deposits decreased by $5.7 million before the effect of $2.0 million of
interest credited to depositors' accounts.
EQUITY CAPITAL. The Association's equity capital amounted to $23.9
million at December 31, 1995, an increase of $1.1 million, or 4.8%, from the
$22.8 million of equity capital at December 31, 1994. Equity capital
increased during 1995 as the result of $872,000 of net income and a $235,000
increase in the unrealized gain on securities available for sale.
RESULTS OF OPERATIONS
GENERAL. The Association's net income amounted to $365,000 during the
nine months ended September 30, 1996 compared to $858,000 during the same
period in 1995. The primary reasons for the $493,000 or 57.5%, decrease in
net income during the 1996 period was a $413,000 (pre-tax) one-time SAIF
special assessment recorded in the third quarter of 1996 together with a
$100,000 (pre-tax) loss recognized on the sale of investment securities. Net
income for the year ended December 31, 1995 was $872,000 compared to $994,000
for the year ended December 31, 1994. The primary reasons for the $122,000
or 12.3% decrease in net income in 1995 compared to 1994 were a $104,000
increase in non-interest expense, a $30,000 decrease in net interest income
and a $46,000 decrease in non-interest income.
On October 16, 1996, the FDIC proposed to lower assessment rates for SAIF
members to reduce the disparity in the assessment rates paid by BIF and SAIF
members. Beginning October 1, 1996, effective SAIF members will pay an
assessment equal to 6.4 basis points on their deposits. The Association's
insurance premiums, which have amounted to 23 basis points will be reduced to
6.4 basis points. Based upon the $60.6 million of assessable deposits at
September 30, 1996, the Association would expect to pay $100,000 less as
insurance premiums per quarter during 1997.
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<PAGE>
AVERAGE BALANCES, NET INTEREST INCOME, AND YIELDS EARNED AND RATES PAID.
The following table presents for the periods indicated the total dollar
amount of interest income from average interest-earning assets and the
resultant yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates, and the net interest
margin. Tax-exempt income and yields have not been adjusted to a
tax-equivalent basis. All average balances are based on monthly balances.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------------------------------
1996(1) 1995
--------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Rate(2) Balance Interest Rate(2)
--------- -------- ------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(3) $41,031 $2,771 9.00% $40,114 $2,793 9.28%
Investment securities(4) 28,308 1,311 6.17 34,707 1,536 5.90
Mortgage-backed securities 7,311 327 5.96 6,313 288 6.08
Other interest-earning
assets 4,705 151 4.28 2,417 107 5.90
------- ------ ------- ------
Total interest-earning
assets 81,355 4,560 7.47 83,551 4,724 7.54
------ -------
Noninterest-earning assets 4,380 3,972
------- -------
Total assets $85,735 $87,523
------- -------
------- -------
Interest-bearing liabilities:
Passbook accounts $23,371 584 3.33 $25,275 680 3.59
Certificates of deposit 36,622 1,379 5.02 37,581 1,327 4.71
------- ------ ------- ------
Total interest-bearing
liabilities 59,993 1,963 4.36 62,856 2,007 4.26
Noninterest-bearing
liabilities(5) 1,309 1,244
------- -------
Total liabilities 61,302 64,100
Retained earnings 24,433 23,423
------- -------
Total liabilities and
retained earnings $85,735 $87,523
------- -------
------- -------
Net interest-earning assets $21,362 $20,695
------- -------
------- -------
Net interest income;
average interest
rate spread $2,597 3.11% $2,717 3.28%
-------- ------ -------- -------
-------- ------ -------- -------
Net interest margin(6) 4.26% 4.34%
------ ------
------ ------
Average interest-earning
assets to average
interest-bearing liabilities 135.61% 132.92%
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1995 1994
--------------------------- ---------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
--------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(3) $40,196 $3,703 9.21% $40,298 $3,730 9.26%
Investment securities(4) 34,227 2,028 5.93 37,983 1,826 4.81
Mortgage-backed securities 6,267 380 6.06 6,447 389 6.03
Other interest-earning
assets 2,561 149 5.82 1,897 90 4.74
-------- ------- ------- ------
Total interest-earning
assets 83,251 6,260 7.52 86,625 6,035 6.97
Noninterest-earning assets 4,096 ------ 3,489 ------
-------- --------
Total assets $87,347 $90,114
-------- --------
-------- --------
Interest-bearing liabilities:
Passbook accounts $25,013 880 3.52 $26,975 898 3.33
Certificates of deposit 37,397 1,784 4.77 39,462 1,510 3.83
-------- ------- ------- ------
Total interest-bearing
liabilities 62,410 2,664 4.27 66,437 2,408 3.62
------- -------
Noninterest-bearing
liabilities(5) 1,363 1,133
--------- --------
Total liabilities 63,773 67,570
Retained earnings 23,574 22,544
--------- ---------
Total liabilities and
retained earnings $87,347 $90,114
---------- ----------
---------- ----------
Net interest-earning
assets $20,841 $20,188
---------- ----------
---------- ----------
Net interest income;
average interest
rate spread $3,596 3.25% $3,626 3.35%
--------- ------ -------- -------
--------- ------ -------- -------
Net interest margin(6) 4.32% 4.19%
--------- ---------
--------- ---------
Average interest-earning
assets to average
interest-bearing liabilities 133.39% 130.39%
--------- ---------
--------- ---------
</TABLE>
- ----------------------------
(1) At September 30, 1996, the weighted average yields earned and rates paid
were as follows: loans receivable, 8.97%; mortgage-backed securities,
5.96%; investment securities, 5.95%; total interest-earning assets,
7.45%; deposits, 4.36%; and interest rate spread, 3.09%.
(2) Annualized.
(3) Includes nonaccrual loans during the respective periods. Calculated net
of deferred fees and discounts, loans in process and allowance for loan
losses.
(4) Includes non-accruing investment securities during the respective
periods.
(5) Includes noninterest-bearing deposits.
(6) Net interest margin is net interest income divided by average
interest-earning assets.
52
<PAGE>
RATE/VOLUME ANALYSIS. The following table describes the extent to which
changes in interest rates and changes in volume of interest-related assets
and liabilities have affected Guaranty Savings' interest income and expense
during the periods indicated. For each category of interest-earning assets
and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in rate (change in rate multiplied by prior year
volume), (ii) changes in volume (change in volume multiplied by prior year
rate), and (iii) total change in rate and volume. The combined effect of
changes in both rate and volume has been allocated proportionately to the
change due to rate and the change due to volume.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
Compared to Nine Months Ended
September 30, 1995 1995 vs. 1994
-------------------------------------- -------------------------------------
Increase Increase
(Decrease) (Decrease)
Due to Due to
------------------------------------- --------------------------------------
Total Total
Increase Increase
Rate Volume (Decrease) Rate Volume Decrease)
----------- ----------- ----------- -------- ---------- -------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans receivable $(110) $ 88 $ (22) $ (19) $ (8) $(28)
Mortgage-backed securities (15) 54 39 2 (11) (9)
Investment securities 124 (349) (225) 404 (202) 202
Other interest-earning
assets (65) 109 44 24 35 60
--------- ------------ ----------- --------- ----------- --------------
Total interest income (66) (98) (164) 411 (186) 225
--------- ------------ ----------- --------- ----------- --------------
Interest expense:
Passbook accounts (47) (49) (96) 49 (67) (19)
Certificates of deposit 106 (54) 52 362 (88) 274
---------- ----------- ----------- --------- ----------- --------------
Total interest expense 59 (103) (44) 411 (155) 255
--------- ------------ ----------- --------- ----------- --------------
Increase (decrease) in net
interest income $ (125) $ 5 $ (120) $ -- $ (31) $ (30)
--------- ------------ ----------- --------- ----------- --------------
--------- ------------ ----------- --------- ----------- --------------
</TABLE>
53
<PAGE>
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
GENERAL. Guaranty Savings reported $365,000 of net income for the nine
months ended September 30, 1996 compared to $858,000 for the same period in
1995. Net income decreased in the nine months ended September 30, 1996
compared to the nine months ended September 30, 1995 primarily as the result
of a $413,000 one-time SAIF special assessment during the 1996 period as well
as $100,000 loss recognized on the Association's sale of $7.0 million of
investment securities. The Association's return on average assets was 0.57%
and 1.31%, respectively, during the nine months ended September 30, 1996 and
1995, while its return on average equity was 1.99% and 4.88% during the
respective periods.
NET INTEREST INCOME. Total interest income amounted to $4.6 million
during the nine months ended September 30, 1996 compared to $4.7 million
during the same period in 1995. The primary reason for the $164,000, or
3.5%, decrease in total interest income during the first nine months of 1996
was a $225,000, or 14.6%, decrease in interest from investment securities as
the result of $6.4 million, or 18.4%, decrease in the average balance of
investment securities together with a 27 basis point (100 basis points being
equal to 1.0%) decrease in the average yield earned on investment securities.
The decrease in the average balance of investment securities was due
primarily to the sale of $7.0 million of investment securities during the
nine months ended September 30, 1996. Interest income from loans receivable
decreased by $22,000, or 0.8%, in the nine months ended September 30, 1996
compared to the same period in 1995. While the average balance of loans
receivable increased by $917,000, or 2.3%, such increase was more than offset
by a 28 basis point decline on the average yield earned on loans. Interest
income on mortgage-backed securities increased by $39,000, or 13.5%, in the
nine months ended September 30, 1996 compared to the same period in 1995 as
the result of a $998,000, or 15.8%, increase in the average balance to
mortgage-backed securities which offset a 12 basis point decline in the
average yield. Interest income on other interest-earning assets decreased by
$44,000 in the nine months ended September 30, 1996 compared to the nine
months ended September 30, 1995.
Total interest expense decreased by $44,000, or 2.2%, in the nine months
ended September 30, 1996 compared to the same period in 1995. During the
1996 period, the average balance of both the Association's passbook accounts
and its certificate of deposit accounts decreased due to deposit outflows
which management of the Association attributes primarily to customers' moving
deposits to competing depository institutions which were offering higher
rates on their deposits during the period. The average balance of the
Association's passbook accounts decreased by $1.9 million, or 7.5%, during
the nine months ended September 30, 1996 compared to the same period in 1995
and the average balance of its certificate of deposit accounts decreased by
$959,000, or 2.6%, during the same period. During the nine months ended
September 30, 1996, the average rate paid by Guaranty Savings on its passbook
accounts decreased by 26 basis points to 3.33% while the average rate paid on
its certificates of deposit increased by 31 basis points to 5.02%.
54
<PAGE>
As the result of the foregoing changes in interest income and interest
expense, net interest income decreased by $120,000, or 4.4%, during the nine
months ended September 30, 1996 compared to the nine months ended September
30, 1995. The Association's interest rate spread decreased from 3.28% to
3.11% during the nine months ended September 30, 1996, while the net interest
margin decreased from 4.34% to 4.26% during the same period. The decrease in
the Association's interest rate spread and net interest margin resulted from
a faster increase in the rates paid by the Association on its
interest-bearing liabilities than in the yields earned on its
interest-bearing assets partially due to the Association's negative gap
position. See" - Asset and Liability Management."
PROVISION FOR LOAN LOSSES. The Association made a $14,000 provision for
loan losses during the nine months ended September 30, 1996 compared to no
provision during the nine months ended September 30, 1995.
Provisions for loan losses are charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management
based on a methodology implemented by the Association, which is designed to
assess, among the things experience, the volume and type of lending conducted
by the Association, the amount of the Association's classified assets (see
"Business -Asset Quality") the status of past due principal and interest
payments, loan-to-value ratios of loans in the Association's loan portfolio,
general economical conditions, particularly as they relate to the
Association's market area, and other factors to the collectibility of the
Association's loan portfolio. Management of the Association assesses the
allowance for loan losses on a quarterly basis and will make provisions for
loan losses as deemed appropriate by management in order to maintain the
adequacy of the allowance for loan losses.
Although management of the Association believes that the Association's
allowance for loan losses was adequate at September 30, 1996, based on facts
and circumstances available to it, there can be no assurances that additions
to such allowance will not be necessary in future periods, which would
adversely affect the Association's results of operations. In addition,
various regulatory agencies, as an integral part of the examination process,
periodically review the Association's provision for loan losses and the
carrying value of its other non-performing assets based on their judgments
about information available to them at the time of their examination. No
assurance can be given whether any of such agencies might require that the
Association make additional provisions for loan losses in the future.
NON-INTEREST INCOME. During the nine months ended September 30, 1996,
Guaranty Savings recognized a loss of $35,000 from non-interest income
sources compared to non-interest income of $46,000 during the nine months
ended September 30, 1995. Such loss during the 1996 period primarily was the
result of the $100,000 loss on the sale of investment securities in June
1996. Such loss more than offset a $16,000 increase in other income and a
slight increase in late charges during the 1996 period. In addition, during
the nine months ended September 30, 1996, the Association's gain on the sale
of foreclosed real
55
<PAGE>
estate was $4,000 less than in the comparable period in 1995 and the
Association also recognized a minimal loss on the sale of loans during the
nine months ended September 30, 1996.
The ability to recognize gains from the sale of loans and investments is
dependent on market and economic conditions and, accordingly, there can be no
assurance that gains can be achieved in the future or that there will not be
significant inter-period variations in the results of such activities.
NON-INTEREST EXPENSE. Non-interest expense increased by $473,000, or
32.3% in the nine months ended September 30, 1996 compared to the same period
in 1995. The primary reason for the increase in non-interest expense during
the 1996 period was the one-time SAIF special assessment of $413,000. In
addition, during the nine months ended September 30, 1996, the Association's
compensation and employee benefits costs, the largest component of
non-interest expense, increased by $28,000, or 3.1%, to $945,000 compared to
$917,000 in the 1995 period. Compensation and employee benefit costs
increased during the 1996 period primarily as the result of normal merit
increases and cost-of-living salary adjustments. Upon consummation of the
Conversion, the Company and the Association will become subject to a
Louisiana share tax and franchise tax which, assuming the issuance of 2.6
million shares of Common Stock, will amount to approximately $194,000 on an
annual basis. See "Pro Forma Data" and "Taxation - State Taxation." In
addition, there is expected to be an increase in compensation expense
following the Conversion. See "Risk Factors - Potential Increased
Compensation Expense After the Conversion" and "Pro Forma Data."
FEDERAL INCOME TAXES. The provision for federal income taxes decreased
by $195,000, or 44.3%, during the nine months ended September 30, 1996 as
compared to the same period in the prior year. The decrease in income taxes
was due primarily to a reduction in income before taxes of 688,000, or 53.0%.
The Association's effective tax rates amounted to 34.0% during each of the
nine month periods ended September 30, 1996 and 1995.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1995 AND 1994.
GENERAL. Guaranty Savings reported $872,000 of net income for the year
ended December 31, 1995 compared to $994,000 in 1994. Net income decreased
in 1995 compared to 1994 primarily as the result of a $104,000 increase in
non-interest expenses, a $30,000 decrease in net interest income and a
$46,000 decrease in non-interest income in 1995. The Association's return on
average assets was 1.00% and 1.10%, respectively, during 1995 and 1994, while
its return on average equity was 3.70% and 4.41% during the respective
periods.
NET INTEREST INCOME. Total interest income amounted to $6.3 million
during the year ended December 31, 1995 compared to $6.0 million during 1994.
The primary reason for the $225,000, or 3.7%, increase in total interest
income during 1995 was a $202,000 increase in interest from investment
securities due to a 112 basis point increase in the average yield
56
<PAGE>
earned on investment securities which more than offset a $3.8 million
decrease in the average balance of investment securities during 1995.
Interest income on loans decreased by $27,000, or 0.7%, in 1995 as the result
of a 5 basis point decline in the average yield together with a $102,000
decrease in the average balance of loans outstanding. Interest income from
mortgage-backed securities decreased by $9,000 and interest income from other
interest-earning assets increased by $59,000 in 1995 compared to 1994.
Total interest expense increased by $256,000, or 10.6%, to $2.7 million
in 1995 compared to $2.4 million in 1994. The primary reason for the
increase in interest expense in 1995 was a $274,000 increase in interest paid
on certificates of deposit as the result of a 94 basis point increase in the
average rate paid which more than offset a $2.1 million decrease in the
average balance of the Association's certificates of deposit. During 1995,
interest paid on passbook accounts decreased by $18,000 as the result of a
$2.0 million decrease in the average balance of passbook accounts which more
than offset a 19 basis point increase in the rates paid thereon.
As a result of the foregoing changes in interest income and interest
expense, net interest income decrease by $30,000 in 1995 compared to 1994.
The Association's interest rate spread decreased from 3.35% in 1994 to 3.25%
in 1995 while its interest rate margin, given the decrease in average
interest earning assets and the increase in interest income, increased from
4.19% in 1994 to 4.32% in 1995.
PROVISION FOR LOAN LOSSES. The Association's provision for loan losses
was $12,000 in 1995 compared to $21,000 in 1994. Based upon its assessment
of the risk elements associated with the loan portfolio, and giving
consideration to the overall decrease in the amount of loans outstanding,
management of the Association determined that a provision of $12,000 was
appropriate during 1995.
NON-INTEREST INCOME. Non-interest income amounted to $63,000 in 1995
compared to $109,000 in 1994. The primary reason for the $46,000, or 42.2%,
decrease in non-interest income during 1995 was the absence of $37,000 of
loan prepayment charges recorded in 1994. In addition, during 1995, late
charges decreased by $6,000, the Association recognized a $6,000 loss on the
disposal of fixed assets and other income decreased by $8,000.
NON-INTEREST EXPENSE. Non-interest expenses increased by $104,000, or
4.7%, in 1995 compared to 1994. The primary reason for the increase in
non-interest expenses in 1995 was a $118,000 increase in employee
compensation and benefits.
FEDERAL INCOME TAXES. The Association's provision for federal income
taxes decreased by $49,000 in 1995 compared to 1994. The decrease in income
tax expense during 1995 was due to a $172,000 decrease in income before
taxes. The Association's effective tax rates amounted to 34.0% during the
years ended December 31, 1995 and 1994.
57
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Guaranty Savings is required under applicable federal regulations to
maintain specified levels of "liquid" investments in qualifying types of U.S.
Government, federal agency and other investments having maturities of five
years or less. Current OTS regulations require that a savings institution
maintain liquid assets of not less than 5% of its average daily balance of
net withdrawable deposit accounts and borrowings payable in one year or less,
of which short-term liquid assets must consist of not less than 1%. At
September 30, 1996, Guaranty Savings' liquidity was 56.9% or $31.5 million in
excess of the minimum OTS requirement.
The Association's liquidity, represented by cash and cash equivalents,
is a product of its operating, investing and financing activities. The
Association's primary sources of funds are deposits, amortization,
prepayments and maturities of outstanding loans and mortgage-backed
securities, maturities of investment securities and other short-term
investments and funds provided from operations. While scheduled payments
from the amortization of loans and mortgage-backed securities and maturing
investment securities and short-term investments are relatively predictable
sources of funds, deposits flows and loan prepayments are greatly influenced
by general interest rates, economic conditions and competition. In addition,
the Association invests excess funds in overnight deposits and other
short-term interest-earning assets which provide liquidity to meet lending
requirements. The Association has been able to generate sufficient cash
through its deposits and historically has had a very limited use of
borrowings as a source of funds.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits. On a longer-term basis, the Association
maintains a strategy of investing in various lending products as described in
greater detail under "Business - Lending Activities." The Association uses
its sources of funds primarily to meet its ongoing commitments, to pay
maturing savings certificates and savings withdrawals, fund loan commitments
and maintain a portfolio of mortgage-backed and investment securities.
At September 30, 1996, Guaranty Savings had outstanding commitments to
originate $967,000 of one- to four-family residential loans (including
undisbursed construction loans). At the same date, the total amount of
certificates of deposit which were scheduled to mature in the following 12
months was $29.2 million. Guaranty Savings believes that it has adequate
resources to fund all of its commitments and that it can adjust the rate on
certificates of deposit to retain deposits to the extent desired. If
Guaranty Savings requires funds beyond its internal funding capabilities,
advances from the FHLB of Dallas are available as an additional source of
funds.
Guaranty Savings is required to maintain regulatory capital sufficient
to meet tangible, core and risk-based capital ratios of 1.5%, 3.0% and 8.0%,
respectively. At September 30, 1996, Guaranty Savings exceeded each of its
capital requirements, with
58
<PAGE>
tangible, core and risk-based capital ratios of 27.79%, 27.79% and 80.10%,
respectively. See "Regulation - The Association -Regulatory Capital
Requirements" and Note M of Notes to Financial Statements.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related financial data presented herein
have been prepared in accordance with generally accepted accounting
principles, which generally require the measurement of financial position and
operating results in terms of historical dollars, without considering changes
in relative purchasing power over time due to inflation. Unlike most
industrial companies, virtually all of Guaranty Savings' assets and
liabilities are monetary in nature. As a result, interest rates generally
have a more significant impact on Guaranty Savings' performance than does
the effect of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services, since
such prices are affected by inflation to a larger extent than interest rates.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1990, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." SFAS No. 106 requires that certain postretirement benefits
provided to former employees, their beneficiaries, and covered dependents be
recognized over those employees' service period. Postretirement benefits
include health care, life insurance and other welfare benefits. This
statement became effective for the Association for fiscal years beginning
after December 15, 1994. The Association does not provide any of the
benefits covered by SFAS No. 106.
In December 1991, the FASB issued SFAS No. 107, "Disclosures About Fair
Value of Financial Investments." SFAS No. 107 requires all entities to
disclose, in financial statements or the notes thereto, the fair value of
financial instruments, both assets and liabilities recognized and not
recognized in the statement of financial condition, for which it is
practicable to estimate fair value. SFAS No. 107 is effective for financial
statements of institutions with assets greater than $150 million issued for
years ending after December 15, 1992 (December 15, 1995 for smaller
institutions). Substantially all of the assets and liabilities of the
Association are financial instruments and, as a result, SFAS No. 107 requires
the fair value of such assets and liabilities to be disclosed to the extent
the institution meets the size criteria specified in the statement. Because
such assets and liabilities are monetary in nature, their fair values may
fluctuate significantly over time.
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting
for Post-Employment Benefits." SFAS No. 112 requires accrual of the expected
cost of providing post-employment benefits to an employee and employee's
beneficiaries and covered dependents during the years that the employee
renders the necessary services. Such benefits include salary continuation,
supplemental unemployment benefits, severance benefits, job training and
counseling, and continuation of health care benefits. SFAS No. 112 is
effective
59
<PAGE>
for fiscal years beginning after December 15, 1993. The Association does not
provide any of the benefits covered by SFAS No. 112.
In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan." SFAS No. 114 is effective for years beginning after
December 15, 1994, and earlier adoption is encouraged. The Statement
establishes accounting measurement, recognition and reporting standards for
impaired loans. SFAS No. 114 provides that a loan is impaired when, based on
current information and events, it is probable that the creditor will be
unable to collect all amounts due according to the contractual terms (both
principal and interest). SFAS No. 114 requires that when a loan is impaired,
impairment should be measured based on the present value of the expected cash
flows, discounted at the loan's effective interest rate. If the loan is
collateral dependent, as a practical expedient, impairment can be based on a
loan's observable market price or the fair value of the collateral. The
value of the loan is adjusted through a valuation allowance created through a
charge against income. Residential mortgages, consumer installment
obligations and credit cards are excluded. Loans that were treated as
in-substance foreclosures under previous accounting pronouncements are
considered to be impaired loans and remain in the loan portfolio under SFAS
No. 114. SFAS No. 114 was amended in October 1994 by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." SFAS No. 118 amended SFAS No. 114 primarily to remove its
income recognition requirements and add some disclosure requirements. The
adoption of SFAS No. 114, as amended by SFAS No. 118, did not materially
affect the Association's financial condition or results of operations in
1995.
In November 1993, the AICPA issued SOP 93-6, Employers' Accounting for
Employee Stock Ownership Plans, which is effective for years beginning after
December 15, 1993. SOP 93-6 requires the application of its guidance for
shares acquired by ESOPs after December 31, 1992 but not yet committed to be
released as of the beginning of the year SOP 93-6 is adopted. SOP 93-6 will,
among other things, change the measure of compensation expense recorded by
employers for leveraged ESOPs from the cost of ESOP shares to the fair value
of ESOP shares. The Company and the Association have adopted an ESOP in
connection with the Conversion, which is expected to purchase 8% of the
Common Stock sold in the Conversion. Under SOP 93-6, the Company will
recognize compensation cost equal to the fair value of the ESOP shares during
the periods in which they become committed to be released. To the extent
that the fair value of the Company's ESOP shares differ from the cost of such
shares, this differential will be charged or credited to equity. Employers
with internally leveraged ESOPs such as the Company will not report the loan
receivable from the ESOP as an asset and will not report the ESOP debt from
the employer as a liability. For information on the pro forma effect of the
ESOP on the Company's results of operations and stockholders' equity, see
"Pro Forma Data." However, the effects of SOP 93-6 on future operating
results cannot be determined at this time. See "Risk Factors - Potential
Increased Compensation Expense Relating to the ESOP." For additional
information on the ESOP, see "Management of the Company - Benefits - Employee
Stock Ownership Plan."
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<PAGE>
In October 1994, the FASB issued SFAS No. 119, "Disclosure About
Derivative Financial Instruments and Fair Value of Financial Instruments,"
which is effective for years ending after December 15, 1994. SFAS No. 119
expands the disclosure requirements for derivative financial instruments,
which are defined to include futures, forwards, swaps or options contracts or
other instruments with similar characteristics. It excludes all such
instruments whose financial effects are recorded on the balance sheet. SFAS
No. 119 also makes certain modifications to SFAS No. 107. The Association
had no financial instruments which would require additional disclosure under
SFAS No. 119.
In December 1994, the AICPA issued SOP 94-6, "Disclosure of Certain
Significant Risks and Uncertainties," which addresses risk and uncertainties
that could significantly affect the amounts reported in the financial
statements in the near term or the near-term functioning of the reporting
entity. The risk and uncertainties the SOP addresses result from the nature
of the entity's operations, from the necessary use of estimates in the
preparation of the entity's financial statements and from significant
concentrations in certain aspects of the entity's operations. Near term is
defined as a period of time not to exceed one year from the date of the
financial statements. This SOP is effective for financial statements issued
for fiscal years ending after December 15, 1995 and for financial statements
for interim periods in fiscal years subsequent to the year for which this SOP
is to be first applied. Management has implemented the SOP in the financial
statement disclosures.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires that
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Measurement of an impairment loss for long-lived assets and
identifiable intangibles that an entity expects to hold and use should be
based on the fair value of the asset. This statement does not apply to
financial instruments, long-term customer relationships of a financial
institution (for example, core deposit intangibles), mortgage and other
servicing rights, deferred policy acquisition costs, or deferred tax assets.
This statement is effective for financial statements for fiscal years
beginning after December 15, 1995. Management anticipates that the effect of
the adoption of SFAS No. 121 will not have any significant impact on the
financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which is effective for transactions entered into
after December 15, 1995. This Statement establishes financial accounting and
reporting standards for stock-based employee compensation plans. This
Statement defines a fair value based method of accounting for an employee
stock option or similar equity instrument and encourages all entities to
adopt that method of accounting for all of their employee stock compensation
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<PAGE>
plans. However, it also allows an entity to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Bulletin Opinion No. 25. "Accounting for
Stock Issued to Employees." Under the fair value based method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period.
Under the intrinsic value based method, compensation cost is the excess, if
any, of the quoted market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock.
Management presently anticipates that it will elect to use the intrinsic
value based method if the Stock Option Plan is approved by stockholders
following the Conversion.
In June 1996, the Financial Accounting Standards
Board released Statement of Financial Accounting Standards No. 125 ("SFAS No.
125""), "Accounting for Transfers and Extinguishments of Liabilities." SFAS
No. 125 provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. SFAS No.
125 requires a consistent application of a financial-components approach that
focuses on control. Under that approach, after a transfer of financial
assets, an entity recognizes the financial and servicing assets it controls
and the liabilities it has incurred, and derecognizes liabilities when
extinguished. SFAS No. 125 also supersedes SFAS No. 122 and requires that
servicing assets and liabilities be subsequently measured by amortization in
proportion to and over the period of estimated net servicing income or loss
and requires assessment for asset impairment or obligation increases based on
their fair values. SFAS No. 125 applies to transfers and extinguishments
occurring after December 31, 1996 and early or retroactive application is
not permitted. Management anticipates that the adoption of SFAS No. 125 will
not have a material impact on the financial condition or operations of the
Association.
BUSINESS
MARKET AREA
The Association's market area consists of Orleans, Jefferson and St.
Tammany Parishes in the New Orleans, Louisiana metropolitan statistical area.
The traditional components of the area's economic base have consisted of
tourism, the port of New Orleans and related shipbuilding, and the petroleum
industry. Slowdowns in the petroleum industry had a material negative impact
on the area's economy in the early 1980s, which were compounded by
defense-related cutbacks in recent years. The area's economy has stabilized
in recent years due to development of tourism and convention activities and
related service-oriented companies, as well as the gaming industry. In
addition, the New Orleans economic base has diversified into areas such as
health services, the aerospace industry and research and technology.
However, there is still a significant degree of potential volatility in the
local economy due to a continued heavy reliance on the same industries that
led to the decline in the 1980s, and there has been a decline in the
population since the early 1980s. Competition for deposits and lending in
the greater New Orleans market is substantial.
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<PAGE>
LENDING ACTIVITIES
LOAN PORTFOLIO COMPOSITION. At September 30, 1996, Guaranty Savings'
net loan portfolio totalled $43.1 million, representing approximately 49.8%
of the Association's $86.5 million of total assets at that date. The
principal lending activity of Guaranty Savings is the origination of one- to
four-family, fixed-rate residential loans for retention in its portfolio. At
September 30, 1996, conventional first mortgage, one- to four-family
residential loans (excluding construction loans) amounted to $41.4 million or
95.4% of the total loan portfolio, before net items. To a much lesser
extent, the Association originates construction loans, pursuant to a program
initiated during 1996, and consumer loans. On occasion, the Association
originates loans secured by commercial real estate and loans secured by
improved residential lots. At September 30, 1996, construction loans
amounted to $412,000 or 0.95% of the total loan portfolio, commercial real
estate loans totalled $442,000 or 1.02% of the total loan portfolio, and
consumer loans amounted to $463,000 or 1.07% of the total loan portfolio, in
each case before net items.
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<PAGE>
LOAN PORTFOLIO COMPOSITION. The following table sets forth the
composition of Guaranty Savings' loan portfolio by type of loan at the dates
indicated.
<TABLE>
<CAPTION>
September 30, December 31,
-------------------------------------------------------
1996 1995 1994 1993
--------------- ----------------- ---------------- ----------------
Amount % Amount % Amount % Amount %
------ ------ ------ ------- ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family residential:
Conventional $41,378 95.36% $38,449 95.63% $38,236 94.68% $38,205 93.08%
FHA and VA 541 1.25 675 1.68 854 2.11 1,018 2.48
Construction 412 .95 -- -- -- -- -- --
Commercial real estate 442 1.02 484 1.20 601 1.49 654 1.59
Other real estate 154 0.35 146 0.36 182 0.45 418 1.02
------ ------ ------ ------ ------ ------ ------ ------
Total real estate loans 42,927 98.93 39,754 98.87 39,873 98.73 40,295 98.17
------ ------ ------ ------ ------ ------ ------ ------
Consumer loans:
Second mortgage 290 0.67 267 0.67 350 0.87 440 1.07
Loans on deposits 173 0.40 186 0.46 161 0.40 313 0.76
------ ------ ------ ------ ------ ------ ------ ------
Total consumer loans 463 1.07 453 1.13 511 1.27 753 1.83
------ ------ ------ ------ ------ ------ ------ ------
Total loans $43,390 100.00% $40,207 100.00% $40,384 100.00% $41,048 100.00%
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Less:
Deferred loan fees (costs) (6) (4) (3) (1)
Allowance for loan losses 337 323 345 370
------ ------ ------ ------
Net loans $43,058 $39,888 $40,042 $40,679
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
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<PAGE>
CONTRACTUAL TERMS TO FINAL MATURITIES. The following table sets forth
certain information as of September 30, 1996 regarding the dollar amount of
loans maturing in the Association's portfolio, based on the contractual date
of the loan's final maturity, before giving effect to net items. Demand
loans and loans having no stated schedule of repayments and no stated
maturity are reported as due in one year or less. The amounts shown below do
not reflect normal principal amortization; rather, the balance of each loan
outstanding at September 30, 1996 is shown in the appropriate year of the
loan's final maturity.
<TABLE>
<CAPTION>
One-to Other
four-family Commercial real
residential Construction real estate estate Consumer Total
----------- ------------ ----------- ------ -------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Amounts due after September 30, 1996 in:
One year or less $ 131 -- $ 2 $ 5 $173 $311
After one year through two years 318 -- -- 9 -- 327
After two years through three years 175 -- 21 2 -- 198
After three years through five years 1,637 -- -- -- -- 1,637
After five years through ten years 8,320 -- 295 94 -- 8,709
After ten years through fifteen years 15,611 -- 124 26 -- 15,761
After fifteen years 16,017 412 -- 18 -- 16,447
------ --- --- --- --- ------
Total(1) $42,209 $412 $442 $154 $173 $43,390
------ --- --- --- --- ------
------ --- --- --- --- ------
</TABLE>
- ----------
(1) Gross of loans in process, deferred fees, unearned discounts and interest,
and allowance for loan losses.
The following table sets forth the dollar amount of all loans, before
net items, due after one year from September 30, 1996 as shown in the
preceding table, which have fixed interest rates or which have floating or
adjustable interest rates.
<TABLE>
Floating or
Fixed-Rate Adjustable-Rate Total
---------- --------------- -----
(In Thousands)
<S> <C> <C> <C>
One- to four-family residential $42,621 $ -- $42,621
Commercial real estate 442 -- 442
Consumer -- 173 173
Other real estate 154 -- 154
------ ------- ------
Total $43,217 $ 173 $43,390
------ ------- ------
------ ------- ------
</TABLE>
65
<PAGE>
Scheduled contractual maturities of loans do not necessarily reflect the
actual term of Guaranty Savings' portfolio. The average life of mortgage
loans is substantially less than their average contractual terms because of
loan prepayments and enforcement of due-on-sale clauses, which give the
Association the right to declare a loan immediately due and payable in the
event, among other things, that the borrower sells the real property subject
to the mortgage and the loan is not repaid. The average life of mortgage
loans tends to increase, however, when current mortgage loan rates
substantially exceed rates on existing mortgage loans and, conversely,
decrease when rates on existing mortgage loans substantially exceed current
mortgage loan rates.
ORIGINATION OF LOANS. Guaranty Savings' lending efforts are
concentrated on the origination for portfolio of one-to four-family,
fixed-rate residential mortgage loans. It has not been the Association's
practice to either buy or sell loans. The lending activities of Guaranty
Savings are subject to the written underwriting standards and loan
origination procedures established by Guaranty Savings' Board of Directors
and management. Loan originations are obtained through a variety of sources,
including referrals from real estate brokers, builders and existing
customers. Written loan applications are taken by lending personnel, and the
loan department supervises the procurement of credit reports, appraisals and
other documentation involved with a loan. Property valuations are performed
by independent outside appraisers approved by the Association's Board of
Directors.
Under Guaranty Savings' real estate lending policy, a title opinion
signed by an approved attorney must be obtained for each real estate loan.
In certain cases, the Association also requires the borrower to obtain a
title insurance policy. Guaranty Savings also requires fire and extended
coverage casualty insurance, in order to protect the properties securing its
real estate loans. Borrowers must also obtain flood insurance policies when
the property is in a flood hazard area as designated by the Department of
Housing and Urban Development. Borrowers may be required to advance funds on
a monthly basis together with each payment of principal and interest to a
escrow account from which Guaranty Savings makes disbursements for items such
as real estate taxes, hazard insurance premiums and private mortgage
insurance premiums as they become due.
Guaranty Savings' loan approval process is intended to assess the
borrower's ability to repay the loan, the viability of the loan and the
adequacy of the value of the property that will secure the loan. The
Association's lending policies require that all mortgage loans to be
originated by the Association be approved in advance by the Association's
Loan Committee (which is comprised of directors Donald Scott and Zahn and
Vice President Weber) and thereafter ratified by the Board of Directors.
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<PAGE>
The following table shows total loans originated and repaid during
the periods indicated. No loans were purchased or sold during the periods
shown.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ --------------------------
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(In Thousands)
Loan originations:
One-to-four family residential $7,005 $4,729 $6,400 $6,467 $3,161
Construction 412 -- -- -- --
Commercial real estate -- -- -- -- --
Consumer 59 94 150 105 228
Other real estate -- -- -- -- --
----- ----- ----- ----- -----
Total loan originations 7,476 4,823 6,550 6,572 3,389
Loan principal repayments (4,294) (4,822) (6,727) (7,236) (9,887)
Increase (decrease) due to other
items, net(1) (12) (11) 23 27 49
----- ----- ----- ----- -----
Net increase (decrease) in
loan portfolio $3,170 $ (10) $ (154) $ (637) $(6,449)
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
____________________
(1) Other items consist of loans in process, deferred fees and discounts,
and allowance for loan losses.
REAL ESTATE LENDING STANDARDS AND UNDERWRITING POLICIES. Effective March
19, 1993, all financial institutions were required to adopt and maintain
comprehensive written real estate lending policies that are consistent with
safe and sound banking practices. These lending policies must reflect
consideration of the Interagency Guidelines for Real Estate Lending Policies
adopted by the federal banking agencies, including the OTS, in December 1992
("Guidelines"). The Guidelines set forth uniform regulations prescribing
standards for real estate lending. Real estate lending is defined as
extensions of credit secured by liens on interests in real estate or made for
the purpose of financing the construction of a building or other improvements
to real estate, regardless of whether a lien has been taken on the property.
An institution's lending policy must address certain lending
considerations set forth in the Guidelines, including loan-to-value ("LTV")
limits, loan administration procedures, underwriting standards, portfolio
diversification standards, and documentation, approval and reporting
requirements. The policy must also be appropriate to the size of the
institution and the nature and scope of its operations, and must be reviewed
and approved by the institution's board of directors at least annually. The
LTV ratio framework, with the LTV ratio being the total amount of credit to
be extended divided by the appraised value or purchase price of the property
at the time the credit is originated, must be established for each category
of real estate loans. If a loan is not secured by a first lien, the lender
must
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<PAGE>
combine all senior liens when calculating this ratio. The Guidelines,
among other things, establish the following supervisory LTV limits: raw land
(65%); land development (75%); construction (commercial, multi-family and
nonresidential) (80%); improved property and one- to four-family residential
construction (85%); and one- to four-family (owner occupied) and home equity
(no maximum ratio; however, any LTV ratio in excess of 90% should require
appropriate insurance or readily marketable collateral).
Certain institutions can make real estate loans that do not conform with
the established LTV ratio limits up to 100% of the institution's total
capital. Within this aggregate limit, total loans for all commercial,
agricultural, multi-family and other non-one-to-four family residential
properties should not exceed 30% of total capital. An institution will come
under increased supervisory scrutiny as the total of such loans approaches
these levels. Certain loans are exempt from the LTV ratios (e.g., those
guaranteed by a government agency, loans to facilitate the sale of real
estate owned, loans renewed, refinanced or restructured by the original
lender(s) to the same borrower(s) where there is no advancement of new funds,
etc.).
Guaranty Savings is in compliance with the above standards.
Although Louisiana laws and regulations permit state-chartered savings
institutions, such as Guaranty Savings, to originate and purchase loans
secured by real estate located throughout the United States, Guaranty
Savings' present lending is done primarily within Orleans, Jefferson and St.
Tammany Parishes in Louisiana, although it will make loans secured by
properties within a 100 mile radius of the Association's main office.
Subject to the Association's loans-to-one borrower limitation, Guaranty
Savings is permitted to invest without limitation in residential mortgage
loans and up to 400% of its capital in loans secured by non-residential or
commercial real estate. Guaranty Savings may also invest in secured and
unsecured consumer loans in an amount not exceeding 35% of the Association's
total assets. This 35% limitation may be exceeded for certain types of
consumer loans, such as home equity and property improvement loans secured by
residential real property. In addition, the Association may invest up to 10%
of its total assets in secured and unsecured loans for commercial, corporate,
business or agricultural purposes. At September 30, 1996, Guaranty Savings
was well within each of the above lending limits.
As required by the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA"), a savings institution generally may not
make loans to one borrower and related entities in an amount which exceeds
15% of its unimpaired capital and surplus, although loans in an amount equal
to an additional 10% of unimpaired capital and surplus may be made to a
borrower if the loans are fully secured by readily marketable securities. At
September 30, 1996, the Association's regulatory limit on loans-to-one
borrower was $3.6 million, however, the Board of Directors has determined to
implement a loan-to-one borrower limit of $1.5 million. The Association's
largest loan or largest group of loans-to-one borrower amounted to $1.4
million at September 30, 1996 and consisted of 13 loans to an investor
secured by residential fourplexes in the Association's market area. All of
such
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<PAGE>
loans were current at September 30, 1996. No other loan to one borrower
or group of loans to one borrower and related persons or entities exceeded
$300,000 at September 30, 1996.
LOANS ON EXISTING RESIDENTIAL PROPERTIES. The primary real estate
lending activity of Guaranty Savings is the origination of fixed-rate loans
secured by first mortgage liens on one- to four-family residences. At
September 30, 1996, $41.4 million or 95.4% of Guaranty Savings total loan
portfolio, before net items, consisted of conventional first mortgage, one-
to four-family residential loans (excluding construction loans).
The loan-to-value ratio, maturity and other provisions of the loans made
by Guaranty Savings generally have reflected the policy of making less than
the maximum loan permissible under applicable regulations, in accordance with
sound lending practices, market conditions and underwriting standards
established by the Association. Guaranty Savings' lending policies on one-
to four-family residential mortgage loans generally limit the maximum
loan-to-value ratio to 90% of the lesser of the appraised value or purchase
price of the property, and one- to four-family residential loans in excess of
an 80% loan-to-value ratio require private mortgage insurance. Prior to 1996
the maximum loan-to-value mortgage loan offered by the Association was 80%.
Residential mortgage loans are amortized on a monthly basis with principal
and interest due each month and customarily include "due-on-sale" clauses,
which are provisions giving the Association the right to declare a loan
immediately due and payable in the event the borrower sells or otherwise
disposes of the real property subject to the mortgage or the loan is not
repaid. Guaranty Savings enforces due-on-sale clauses to the extent
permitted under applicable laws.
Various legislative and regulatory changes have given Guaranty Savings
the authority to originate and purchase mortgage loans which provide for
periodic interest rate adjustments subject to certain limitations. To date,
Guaranty Savings has offered only fixed-rate mortgage loans and has not
offered adjustable-rate mortgage loans ("ARMs"). Guaranty Savings has no
current plan to originate ARMs.
CONSTRUCTION LOANS. At September 30, 1996, $412,000 or 0.95% of
Guaranty Savings' total loan portfolio, before net items, consisted of loans
for the construction of one- to four-family residences. In March 1996, the
Association commenced a program of offering loans for construction of
single-family residences. The Association's construction loans are
structured as construction/permanent loans whereby there is one closing for
both the construction loan and the permanent financing. During the
construction phase, which typically lasts for four to six months, officers of
the Association make periodic inspections of the construction site and loan
proceeds are disbursed directly to the contractors as construction
progresses. Typically, disbursements are made in four to six draws during
the construction period. The Association's construction loans require
payment of interest only during the construction phase and are structured to
be converted to fixed-rate permanent loans at the end of the construction
phase.
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<PAGE>
Construction lending is generally considered to involve a higher degree
of risk of loss than long-term financing on improved, owner-occupied real
estate because of the uncertainties of construction, including the
possibility of costs exceeding the initial estimates and the need to obtain a
tenant or purchaser if the property will not be owner-occupied. Guaranty
Savings generally attempts to mitigate the risks associated with construction
lending by, among other things, lending only in its market area, using
conservative underwriting guidelines, disbursing funds directly to the
contractors, and closely monitoring the construction process.
COMMERCIAL REAL ESTATE LOANS. The Association's commercial real estate
loan portfolio primarily consists of loans secured by multi-use properties,
small retail establishments and churches located within the Association's
primary market area. Commercial real estate loans amounted to $442,000 or
1.02% of the total loan portfolio at September 30, 1996. The largest
commercial real estate loan at September 30, 1996 was $82,000, and the
average balance of such loans at such date was $32,000.
Nonresidential real estate loans generally have terms not exceeding 15
years and have fixed-rates of interest. All loans are based on the appraised
value of the secured property and loans are generally not made in amounts in
excess of 70% of the appraised value of the secured property. All appraisals
are performed by an independent appraiser designated by the Association and
are reviewed by management. In originating nonresidential loans, the
Association considers the quality of the property, the credit of the
borrower, the historical and projected cash flow of the project, the location
of the real estate and the quality of the property management. Guaranty
Savings has not originated any commercial real estate loans in more than
three years.
Commercial real estate lending is generally considered to involve a
higher degree of risk than single-family residential lending. Such lending
typically involves large loan balances concentrated in a single borrower or
groups of related borrowers for rental or business properties. In addition,
the payment experience on loans secured by income-producing properties is
typically dependent on the success of the operation of the related project
and thus is typically affected by adverse conditions in the real estate
market and in the economy. Guaranty Savings generally attempts to mitigate
the risks associated with commercial real estate lending by, among other
things, lending primarily in its market area and using low LTV ratios in the
underwriting process.
OTHER REAL ESTATE LOANS. At September 30, 1996, the Association had
$154,000 of other real estate loans. Such other real estate loans primarily
consist of loans secured by residential lots in the Association's market
area. The Association limits its lot loans to a LTV of 70% and such loans
amortize over a period not exceeding 15 years. Land lending generally
involves additional risks compared to loans secured by improved single-family
properties. Loans on lots may run the risk of adverse zoning changes, or
environmental or other restrictions on future use.
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<PAGE>
CONSUMER LOANS. The Association's consumer loans consist of loans on
deposits and second mortgage loans. The consumer loans are not being
actively marketed and are offered primarily as a service to existing
customers. At September 30, 1996, loans on deposits amounted to $173,000,
representing 37.4% of total consumer loans and 0.4% of the total loan
portfolio, before net items. Loans secured by deposit accounts are generally
offered with an interest rate equal to 2.0% above the rate on the deposit
account.
The Association's second mortgage loans amounted to $290,000 or 0.67% of
the total loan portfolio at September 30, 1996. The second mortgages are
secured by one- to four-family residences, are for a fixed amount and a fixed
term, and are made to individuals for a variety of purposes. All of the
second mortgages at September 30, 1996 have fixed- interest rates and
amortize over a 10- or 15-year period. The Association limits its
originations of loans secured by second mortgages to properties upon which it
has an existing first lien. The maximum loan amount of the Association's
second mortgage loans is $50,000 and the combined amounts outstanding under
the first and second mortgage loans cannot exceed 80% of the appraised value
of the security property. In addition, the Association requires that the
borrower maintain at least 10% cash equity in the subject property.
LOAN FEES AND SERVICING INCOME. In addition to interest earned on
loans, Guaranty Savings receives income through loan fees charged in
connection with inspections of properties securing construction loans, late
payments, prepayments and for miscellaneous services related to its loans.
Income from these activities varies from period-to-period with the volume and
type of loans made.
Guaranty Savings does not charge loan origination fees or "points,"
which most lenders compute as a percentage of the principal amount of the
mortgage loan and charge to the borrower in connection with the origination
of the loan. The Association believes that not charging origination fees or
points provides it with a marketing advantage compared to other financial
institutions.
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<PAGE>
ASSET QUALITY
DELINQUENT LOANS. The following table sets forth information concerning
delinquent loans at September 30, 1996, in dollar amounts and as a
percentage of Guaranty Savings' total loan portfolio. The amounts presented
represent the total outstanding principal balances of the related loans,
rather than the actual payment amounts which are past due.
<TABLE>
<CAPTION>
September 30, 1996
-------------------------------------------------------------------
30-59 90 or More Days
Days Overdue 60-89 Days Overdue Overdue
------------------- ------------------- -------------------
Percent Percent Percent
of Total of Total of Total
Amount Loans Amount Loans Amount Loans
------ -------- ------ -------- ------ ---------
<S> <C> <C> <C> <C> <C>
(Dollars in Thousands)
One- to four-family
residential real estate
loans $267 0.62% $52 0.12% $316 0.73%
Commercial real estate
loans -- -- -- -- -- --
Consumer loans -- -- -- -- -- --
Other real estate -- -- -- -- -- --
--- ---- -- ---- --- ----
Total delinquent loans $267 0.62% $52 0.12% $316 0.73%
--- ---- -- ---- --- ----
--- ---- -- ---- --- ----
</TABLE>
NON-PERFORMING ASSETS. When a borrower fails to make a required loan
payment, Guaranty Savings attempts to cause the default to be cured by
contacting the borrower. In general, contacts are made after a payment is
more than 20 days past due. The Association's loans generally provide for a
15 day grace period, and no late charge is assessed on these loans until the
payment is 16 days past due. Typically, delinquencies are promptly brought
current after contact by the Association. If the delinquency on a mortgage
loan exceeds 90 days and is not cured through Guaranty Savings' normal
collection procedures, or an acceptable arrangement is not worked out with
the borrower, Guaranty Savings will commence foreclosure action.
Any property acquired by the Association as a result of foreclosure is
included in Guaranty Savings' "real estate owned" account until it is sold.
Guaranty Savings is permitted under applicable regulations to finance sales
of real estate owned by "loans to facilitate" which may involve more
favorable interest rates and terms than generally would be granted under
Guaranty Savings' underwriting guidelines. At September 30, 1996, Guaranty
Savings had $364,000 in loans to facilitate the sale of real estate owned.
The Association places loans on non-accrual status when the payment of
interest becomes 90 days past due or when interest payments are otherwise
deemed uncollectible.
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<PAGE>
The following table sets forth the amount of Guaranty Savings'
nonperforming assets at the dates indicated.
December 31,
September 30, ------------------------
1996 1995 1994 1993
------------- ---- ---- ----
(Dollars in Thousands)
Total nonperforming assets:
Non-accruing loans $316 $206 $197 $506
Real estate owned, net -- 24 37 38
--- --- --- ---
Total nonperforming assets $316 $230 $234 $544
--- --- --- ---
--- --- --- ---
Troubled debt restructurings $ -- $ -- $ -- $ --
--- --- --- ---
--- --- --- ---
Total nonperforming loans as a
percentage of total loans .73% .51% .49% 1.23%
--- --- --- ----
--- --- --- ----
Total nonperforming assets as a
percentage of total assets .37% .27% .27% .60%
--- --- --- ---
--- --- --- ---
CLASSIFIED ASSETS AND OTHER POTENTIAL PROBLEM ASSETS. Federal
regulations require that the Association classify its assets on a regular
basis. In addition, in connection with examinations of insured institutions,
federal examiners have authority to identify problem assets and, if
appropriate, classify them in their reports of examination. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized
by the distinct possibility that the insured institution will sustain some
loss if the deficiencies are not corrected. Doubtful assets have the
weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full, on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. An asset classified loss is considered uncollectible
and of such little value that continuance as an asset of the institution is
not warranted.All loans are reviewed on a regular basis under the
Association's asset classification policy. The Association's total
classified assets at September 30, 1996 (excluding loss assets specifically
reserved for) amounted to $1.8 million, all of which was classified as
substandard, and none of which was classified as doubtful or loss. In
addition to its classified assets, the Association designates certain assets
as "special mention," due primarily to such assets previously being
classified. As of September 30, 1996, $355,000 of the Association's assets
were designated as special mention and, as such, were closely monitored by
management of the Association.
ALLOWANCE FOR LOAN LOSSES. At September 30, 1996, Guaranty Savings'
allowance for loan losses amounted to $337,000 or 0.78% of the total loan
portfolio. Guaranty Savings' loan portfolio consists primarily of one- to
four-family residential loans and, to a lesser extent, commercial real estate
loans, construction loans and consumer loans. The loan loss
73
<PAGE>
allowance is maintained by management at a level considered adequate to cover
possible losses that are currently anticipated based on prior loan loss
experience, known and inherent risks in the portfolio, adverse situations
that may affect the borrower's ability to repay, the estimated value of any
underlying collateral, general economic conditions, and other factors and
estimates which are subject to change over time. Although management
believes that it uses the best information available to make such
determinations, future adjustments to allowances may be necessary, and net
income could be significantly affected, if circumstances differ substantially
from the assumptions used in making the initial determinations.
The following table summarizes changes in the allowance for loan losses
and other selected statistics for the periods presented. During all periods
presented, all loan charge-offs and recoveries were related to one-to
four-family residential mortgage loans. For a discussion of the reasons for
the credit for loan losses, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Results of Operations -
Provision for Loan Losses."
<TABLE>
<CAPTION>
At or
For the Nine Months At or For the Year Ended
Ended September 30, December 31,
------------------- -------------------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total loans outstanding $43,390 $40,479 $40,207 $40,384 $41,048
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Allowance for loan losses,
beginning of period $ 323 $ 345 $ 345 $ 370 $ 321
Provision (credit) for loan
losses 14 -- 12 21 98
Loans charged-off -- (10) (34) (48) (50)
Recoveries -- -- -- 2 1
------ ------ ------ ------ ------
Allowance for loan losses,
end of period $ 337 $ 335 $ 323 $ 345 $ 370
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Allowance for loan losses
as a percent of total
loans outstanding .78% .83% .80% .85% .90%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Allowance for loan losses
as a percent of
nonperforming loans 106.65% 145.65% 156.80% 175.13% 73.12%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Ratio of net charge-offs
during the period to
average loans outstanding
during the period N/A .03% .08% .15% .11%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
74
<PAGE>
The following table presents the allocation of Guaranty Savings'
allowance for loan losses by type of loan at each of the dates indicated.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------
September 30, 1996 1995 1994 1993
----------------------- ---------------------- ---------------------- ----------------------
Loan Loan Loan Loan
Category Category Category Category
Amount as a % Amount as a % Amount as a % Amount as a %
of of Total of of Total of of Total of of Total
Allowance Loans Allowance Loans Allowance Loans Allowance Loans
--------- --------- --------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands)
One- to four-family
residential $337 96.61% $323 97.31% $345 96.79% $370 95.56%
Construction -- .95 -- -- -- -- -- --
Commercial real
estate -- 1.02 -- 1.2 -- 1.49 -- 1.59
Consumer -- 1.07 -- 1.13 -- 1.27 -- 1.83
Other real estate -- .35 -- .36 -- .45 -- 1.02
--- ----- --- ---- --- ---- --- -----
Total $337 100% $323 100% $345 100% $370 100%
--- ----- --- ---- --- ---- --- -----
--- ----- --- ---- --- ---- --- -----
</TABLE>
75
<PAGE>
MORTGAGE-BACKED SECURITIES
Guaranty Savings has invested in a portfolio of fixed-rate,
mortgage-backed securities that are issued or guaranteed by the FHLMC or the
FNMA. Mortgage-backed securities (which also are known as mortgage
participation certificates or pass-through certificates) represent a
participation interest in a pool of one- to four-family or multi-family
residential mortgages, the principal and interest payments on which are
passed from the mortgage originators, through intermediaries (generally U.S.
government agencies and government sponsored enterprises) that pool and
repackage the participation interests in the form of securities, to investors
such as the Homestead. FHLMC is a public corporation chartered by the U.S.
government and guarantees the timely payment of interest and the ultimate
return of principal. FHLMC mortgage-backed securities are not backed by the
full faith and credit of the United States, but because FHLMC is a U.S.
government sponsored enterprise, these securities are considered high quality
investments with minimal credit risks. The FNMA guarantees the timely
payment of principal and interest, and FNMA securities are indirect
obligations of the U.S. government.
All of the $7.3 million of mortgage-backed securities at September 30,
1996 were accounted for as held to maturity and had an aggregate market value
of $7.0 million at such date. For additional information relating to the
Association's mortgage-backed securities, see Note C of Notes to Financial
Statements.
Mortgage-backed securities generally yield less than the loans that
underlie such securities, because of the cost of payment guarantees or credit
enhancements that result in nominal credit risk. In addition,
mortgage-backed securities are more liquid than individual mortgage loans and
may be used to collateralize obligations of the Association. In general,
mortgage-backed pass-through securities are weighted at no more than 20% for
risk-based capital purposes, compared to an assigned risk weighting of 50% to
100% for whole residential mortgage loans. As a result, these types of
securities allow the Association to optimize regulatory capital to a greater
extent than non-securitized whole loans. While mortgage-backed securities
carry a reduced credit risk as compared to whole loans, such securities
remain subject to the risk that a fluctuating interest rate environment,
along with other factors such as the geographic distribution of the
underlying mortgage loans, may alter the prepayment rate of such mortgage
loans and so affect both the prepayment speed, and value, of such securities.
76
<PAGE>
The following table sets forth the composition of Guaranty Savings'
mortgage-backed securities portfolio at each of the dates indicated.
December 31,
September 30, --------------------------
1996 1995 1994 1993
------------ ------ ------ ------
(In Thousands)
Mortgage-backed
securities:
FNMA $3,065 $1,772 $1,909 $1,067
FHLMC 4,234 4,595 4,154 5,045
----- ----- ----- -----
Total $7,299 $6,367 $6,063 $6,112
----- ----- ----- -----
----- ----- ----- -----
Information regarding the contractual maturities and weighted average
yield of Guaranty Savings' mortgage-backed securities portfolio at September
30, 1996 is presented below. Due to repayments of the underlying loans, the
actual maturities of mortgage-backed securities generally are substantially
less than the scheduled maturities.
<TABLE>
<CAPTION>
Amounts at September 30, 1996 Which Mature In
--------------------------------------------------------------
After Five
One Year After One to to Over 10
or Less Five Years 10 Years Years Total
-------- ------------ ----------- ------- -----
<S> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Total mortgage-backed
securities:
FNMA $ -- $1,030 $506 $1,525 $3,065
FHLMC 107 2,830 489 808 4,234
--- ----- --- ----- -----
Total $107 $3,860 $995 $2,337 $7,299
--- ----- --- ----- -----
--- ----- --- ----- -----
Weighted average
yield 7.0% 5.51% 6.75% 5.83% 5.80%
--- ----- --- ----- -----
--- ----- --- ----- -----
</TABLE>
77
<PAGE>
The following table sets forth the purchases, sales and principal
repayments of Guaranty Savings' mortgage-backed securities during the periods
indicated.
<TABLE>
<CAPTION>
At or For the Nine At or For the
Months Ended Year Ended December 31,
September 30, ---------------------------------
1996 1995 1994 1993
------------------- -------- -------- --------
<S> <C> <C> <C> <C>
(Dollars in Thousands)
Mortgage-backed securities
at beginning of period $6,367 $6,063 $6,112 $3,444
Purchases 2,436 855 980 4,472
Repayments (1,514) (552) (1,031) (1,814)
Amortization of premiums
and discounts, net 10 1 2 10
----- ----- ----- -----
Mortgage-backed securities at
end of period $7,299 $6,367 $6,063 $6,112
----- ----- ----- -----
----- ----- ----- -----
Weighted average yield at
end of period 5.80% 5.98% 5.97% 6.29%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
INVESTMENT SECURITIES
The investment policy of the Association, which is established by the
Board of Directors, is designed primarily to maintain liquidity within
regulatory limits, maintain a balance of high-quality investments to minimize
risk, provide collateral for pledging requirements, provide alternative
investments when loan demand is low, maximize returns while preserving
liquidity and safety, and manage interest rate risk. Guaranty Savings is
required to maintain certain liquidity ratios and does so by investing in
securities that qualify as liquid assets under OTS regulations. See
"Regulation - The Association - Liquidity Requirements" for a description of
such regulations. Such securities include obligations issued or fully
guaranteed by the United States government, certain federal agency
obligations and certificates of deposit.
Investment securities totalled $23.1 million or 26.7% of total assets at
September 30, 1996. At September 30, 1996, $21.2 million of the
Association's investment securities consisted of debt obligations of the U.S.
Government and Federal agencies, $1.0 million was invested in an adjustable
rate mortgage mutual fund and $900,000 was invested in FHLMC stock. While the
adjustable rate mortgage mutual fund securities owned by the association are
not insured or guaranteed by the U.S. government or any Federal agency,
management, based on its assessment of, among other things, the risk and
returns of such portfolio, believes its investment in such mutual fund is
prudent. At such date, all of the Association's investment securities were
classified as available-for-sale. Of the Association's investment securities
at September 30, 1996, $11.0 million were scheduled to mature in one year or
less and $10.7 million was scheduled to mature in more than one year and less
than five years.
78
<PAGE>
The following table sets forth certain information relating to Guaranty
Savings' investment securities and certain other assets at the dates
indicated.
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------
September 30, 1996 1995 1994 1993
-------------------- -------------------- -------------------- ---------------------
Carrying Market Carrying Market Carrying Market Carrying Market
Value Value Value Value Value Value Value Value
-------- ------ -------- ------ -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(In Thousands)
Available for sale:
U.S. Government and
Federal Agency
securities $21,153 $21,153 $ 2,207 $ 2,207 $ 2,735 $ 2,735 $ 3,321 $ 3,321
Other 1,915 1,915 1,053 1,053 454 454 448 448
------ ------ ------ ------ ------ ------ ------ ------
Total available for sale 23,068 23,068 3,260 3,260 3,189 3,189 3,769 3,769
------ ------ ------ ------ ------ ------ ------ ------
Held to maturity:
U.S. Government and
Federal Agency
securities -- -- 30,100 30,440 32,307 31,746 34,029 34,365
Other -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total held to maturity -- -- 30,100 30,440 32,307 31,746 34,029 34,365
------ ------ ------ ------ ------ ------ ------ ------
Total $23,068 $23,068 $33,360 $33,700 $35,496 $34,935 $37,798 $38,134
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
The following table sets forth the amount of investment securities and
certain other assets which mature during each of the periods indicated and
the weighted average yields for each range of maturities at September 30,
1996. No tax-exempt yields have been adjusted to a tax-equivalent basis.
<TABLE>
<CAPTION>
Amounts at September 30, 1996 Which Mature In
-------------------------------------------------------------------------------------
Over One
Weighted Year Weighted Over Weighted
One Year Average Through Average Five Average
or Less Yield Five Years Yield Years Yield
-------- --------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Bonds and other debt
securities available for
sale:
U.S. Government and
Federal Agency securities $8,407 6.27% $10,693 6.75% $2,053 7.38%
Other 1,915 6.87 -- -- -- --
Equity securities held to
maturity:
FHLB stock(1) 718 5.74 -- -- -- --
------ ---- ------ ---- ----- ----
Total $11,040 6.30% $10,693 6.75% $2,053 7.38%
------ ---- ------ ---- ----- ----
------ ---- ------ ---- ----- ----
</TABLE>
___________________________
(1) As a member of the FHLB of Dallas, Guaranty Savings is required to
maintain its investment in FHLB stock, which has no stated maturity.
79
<PAGE>
SOURCES OF FUNDS
GENERAL. Deposits are the primary source of the Guaranty Savings' funds
for lending and other investment purposes. In addition to deposits, the
Association derives funds primarily from principal repayments and interest on
loans and mortgage-backed securities. Loan repayments are a relatively
stable source of funds, while deposit inflows and outflows are significantly
influenced by general interest rates and money market conditions. Borrowings
may be used on a short-term basis to compensate for reductions in the
availability of funds from other sources. They may also be used on a
longer-term basis for general business purposes.
DEPOSITS. Guaranty Savings' deposits are attracted principally from
within its market area. Deposit account terms vary, with the principal
differences being the minimum balance required, the time periods the funds
must remain on deposit and the interest rate.
Guaranty Savings' ability to attract and maintain deposits is affected
by the rate consciousness of its customers and their willingness to move
funds into higher-yielding accounts. Guaranty Savings' cost of funds has
been, and will continue to be, affected by money market conditions.
80
<PAGE>
The following table shows the distribution of, and certain other
information relating to, Guaranty Savings' deposits by type of deposit, as of
the dates indicated.
<TABLE>
<CAPTION>
September 30, December 31,
----------------------------------------------------------------
1996 1995 1994 1993
---------------- ------------------ ---------------- ----------------
Amount % Amount % Amount % Amount %
------ ----- ------ ----- ------ ----- ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Certificate accounts:
2.00% - 2.99% $ -- --% $ -- --% $ -- --% $ 295 .44%
3.00% - 3.99% 15 .03 78 .13 8,409 13.01 27,043 40.10
4.00% - 4.99% 10,995 18.17 20,156 33.12 25,366 39.24 9,736 14.44
5.00% - 5.99% 24,494 35.53 12,602 20.71 3,600 5.57 2,257 3.35
6.00% - 6.99% 3,981 6.58 3,989 6.52 706 1.09 1,232 1.83
7.00% - 7.99% -- -- -- -- 110 .17 206 .31
8.00% or more -- -- -- -- 87 .13 275 .40
------ ----- ------ ----- ------ ----- ------ -----
Total certificate
accounts 36,485 60.31 36,825 60.42 38,277 59.21 41,044 60.87
------ ----- ------ ----- ------ ----- ------ -----
Passbook savings
accounts 24,010 39.69 24,120 39.58 26,365 40.79 26,388 39.13
------ ----- ------ ----- ------ ----- ------ -----
Total deposits $60,495 100.00% $60,945 100.00% $64,642 100.00% $67,432 100.00%
------ ----- ------ ----- ------ ----- ------ -----
------ ----- ------ ----- ------ ----- ------ -----
</TABLE>
The following table presents the average balance of each type of deposit
and the average rate paid on each type of deposit for the periods indicated.
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
---------------------------------------------------------------
1996 1995 1994 1993
------------------- ------------------- ------------------ ------------------
Average Average Average Average
Average Rate Average Rate Average Rate Average Rate
Balance Paid Balance Paid Balance Paid Balance Paid
------- ------- ------- ------- ------- ------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Passbook savings accounts $23,371 3.33% $25,013 3.52% $26,975 3.33% $26,188 3.02%
Certificates of deposit 36,622 5.02 37,397 4.77 39,462 3.83 41,513 3.84
------ ---- ------ ---- ------ ---- ------ ----
Total interest-bearing
deposits $59,993 4.36% $62,410 4.27% $66,437 3.62% $67,701 3.52%
------ ---- ------ ---- ------ ---- ------ ----
------ ---- ------ ---- ------ ---- ------ ----
</TABLE>
81
<PAGE>
The following table sets forth the savings flows of Guaranty Savings
during the periods indicated.
<TABLE>
Nine Months
Ended
September 30, Year Ended December 31,
------------------------
1996 1995 1994 1993
------------- ------ ------ ------
(In Thousands)
<S> <C> <C> <C> <C>
Increase (decrease) before
interest credited $(1,953) $(5,743) $(4,703) $(4,274)
Interest credited 1,503 2,046 1,913 2,225
------- ------- ------- -------
Net increase (decrease) in
deposits $ (450) $(3,697) $(2,790) $(2,049)
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Guaranty Savings attempts to control the flow of deposits by pricing its
accounts to remain generally competitive with other financial institutions in
its market area, but does not necessarily seek to match the highest rates
paid by competing institutions. Guaranty Savings has generally priced its
passbook accounts in the upper parameters among its competitors and, on
occasion, will take a position of price leadership in its markets with
respect to passbook accounts. The Association generally has been more
conservative in the pricing of its certificates of deposit, and generally has
not priced its certificates of deposit in the upper parameters among its
competitors. Deposits at Guaranty Savings decreased in the nine months ended
September 30, 1996 and during 1995 and 1994 partially due to the higher rates
offered by competitors, particularly with respect to certificates of deposit.
In June 1996, in an effort to stem the outflow of its deposits, the
Association increased the rate paid on its passbook accounts from 2.75% to
4.00%. The Association's deposits increased slightly from June 30, 1996 to
September 30, 1996, which increase management attributes to the increase in
the rate paid on passbook accounts.
The principal methods used by the Association to attract deposit include
its emphasis on personal services, competitive interest rates and convenient
office locations. Guaranty Savings does not advertise for deposits outside
of its primary market area. At September 30, 1995, the Association had no
deposits that were obtained through deposit brokers.
82
<PAGE>
The following table presents, by various interest rate categories, the
amount of certificates of deposit at September 30, 1996 and the amounts at
September 30, 1996 which mature during the periods indicated.
<TABLE>
Balance at September 30, 1996
Maturing in the 12 Months Ending September 30,
----------------------------------------------
Certificates of Deposit 1997 1998 1999 Thereafter Total
- ----------------------- ---- ---- ---- ---------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C>
2.00% - 2.99% $ -- $ -- $ -- $ -- $ --
3.00% - 3.99% 15 -- -- -- 15
4.00% - 4.99% 10,829 147 19 -- 10,995
5.00% - 5.99% 15,217 3,757 2,412 108 21,494
6.00% - 6.99% 3,132 721 -- 128 3,981
7.00% - 7.99% -- -- -- -- --
8.00% or more -- -- -- -- --
------ ------ ------ ----- ------
Total certificate
accounts $29,193 $4,625 $2,431 $236 $36,485
------ ----- ----- --- ------
------ ----- ----- --- ------
</TABLE>
The following table sets forth the maturities of Guaranty Savings'
certificates of deposit of $100,000 or more at September 30, 1996 by time
remaining to maturity.
<TABLE>
Maturing During Quarter Ending: Amounts
- ------------------------------- -----------------
(In Thousands)
<S> <C>
December 31, 1996 $326
March 31, 1997 100
June 30, 1997 401
September 30, 1997 536
After September 30, 1997 --
------
Total certificates of
deposit with balances of
$100,000 or more $1,363
------
------
</TABLE>
BORROWINGS. Guaranty Savings may obtain advances from the FHLB of
Dallas upon the security of the common stock it owns in that bank and certain
of its residential mortgage loans, investment securities and mortgage-backed
securities, provided certain standards related to credit worthiness have been
met. See "Regulation - The Association - Federal Home Loan Bank System."
Such advances are made pursuant to several credit programs, each of which has
its own interest rate and range of maturities. Such advances are generally
available to meet seasonal and other withdrawals of deposit accounts and to
permit
83
<PAGE>
increased lending. At September 30, 1996, Guaranty Savings had no
advances from the FHLB of Dallas.
SUBSIDIARY
At September 30, 1996, the Association had no subsidiaries. Under
Louisiana law, a state-chartered association may invest up to 10% of its
assets in service organizations or corporations.
COMPETITION
Guaranty Savings faces significant competition both in attracting
deposits and in originating loans. Its most direct competition for deposits
has come historically from commercial banks, credit unions, mortgage brokers
and other savings institutions located in its primary market area, including
many large financial institutions which have greater financial and marketing
resources available to them. In addition, Guaranty Savings faces additional
significant competition for investors' funds from short-term money market
mutual funds and issuers of corporate and government securities. Guaranty
Savings does not rely upon any individual group or entity for a material
portion of its deposits. The Association estimates that its market share of
total deposits in Orleans, St. Tammany and Jefferson Parishes, Louisiana is
less than 1%.
Guaranty Savings' competition for real estate loans comes principally
from mortgage banking companies, commercial banks, other savings institutions
and credit unions. Guaranty Savings competes for loan originations primarily
through the interest rates and loan fees it charges, and the efficiency and
quality of services it provides borrowers and real estate brokers. Factors
which affect competition include general and local economic conditions,
current interest rate levels and volatility in the mortgage markets.
EMPLOYEES
Guaranty Savings had 33 full-time employees at September 30, 1996. None
of these employees are represented by a collective bargaining agent, and
Guaranty Savings believes that it enjoys good relations with its personnel.
PROPERTIES
At September 30, 1996, Guaranty Savings conducted its business from its
main office in Metairie, Louisiana and two branch offices in Mandeville and
New Orleans, Louisiana. The following table sets forth the net book value
(including furnishings and equipment) and certain other information with
respect to the offices of Guaranty Savings at September 30, 1996.
84
<PAGE>
<TABLE>
Lease Net Book
Expiration Value of Amount of
Description/Address Leased/Owned Date Property Deposits
- ------------------- ------------ ---------- --------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Main Office:
3798 Veterans Blvd.
Metairie, LA 70002 Owned N/A $2,012 $55,502
Branch Offices:
2111 North Causeway
Blvd.
Mandeville, LA Owned N/A 379 116(1)
3915 Canal Street
New Orleans, LA Owned N/A 278 4,877
----- -----
Total(2) $2,669 $60,495
----- ------
----- ------
</TABLE>
- ----------
(1) Opened in May 1996.
(2) In addition, the Association continues to own the site of a former
branch office at 1700 Veterans Boulevard, Metairie, Louisiana, which
office had a net book value of $95,000 at September 30, 1996 and was
being leased to a third party.
LEGAL PROCEEDINGS
Guaranty Savings is involved in routine legal proceedings occurring in
the ordinary course of business which, in the aggregate, are believed by
management to be immaterial to the financial condition and results of
operations of Guaranty Savings.
REGULATION
SET FORTH BELOW IS A BRIEF DESCRIPTION OF CERTAIN LAWS AND REGULATIONS
WHICH ARE APPLICABLE TO THE COMPANY AND GUARANTY SAVINGS. THE DESCRIPTION OF
THE LAWS AND REGULATIONS HEREUNDER, AS WELL AS DESCRIPTIONS OF LAWS AND
REGULATIONS CONTAINED ELSEWHERE HEREIN, DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPLICABLE LAWS AND REGULATIONS.
THE COMPANY
GENERAL. The Company, as a savings and loan holding company within the
meaning of the Home Owners' Loan Act, as amended ("HOLA"), will be required
to register with the OTS and will be subject to OTS regulations,
examinations, supervision and reporting
85
<PAGE>
requirements. As a subsidiary of a savings and loan holding company,
Guaranty Savings will be subject to certain restrictions in its dealings with
the Company and affiliates thereof.
ACTIVITIES RESTRICTIONS. There are generally no restrictions on the
activities of a savings and loan holding company which holds only one
subsidiary savings institution. However, if the Director of the OTS
determines that there is reasonable cause to believe that the continuation by
a savings and loan holding company of an activity constitutes a serious risk
to the financial safety, soundness or stability of its subsidiary savings
institution, the Director may impose such restrictions as deemed necessary to
address such risk, including limiting (i) payment of dividends by the savings
institution; (ii) transactions between the savings institution and its
affiliates; and (iii) any activities of the savings institution that might
create a serious risk that the liabilities of the holding company and its
affiliates may be imposed on the savings institution. Notwithstanding the
above rules as to permissible business activities of unitary savings and loan
holding companies, if the savings institution subsidiary of such a holding
company fails to meet the qualified thrift lender ("QTL") test, as discussed
under "- The Association - Qualified Thrift Lender Test," then such unitary
holding company also shall become subject to the activities restrictions
applicable to multiple savings and loan holding companies and, unless the
savings institution requalifies as a QTL within one year thereafter, shall
register as, and become subject to the restrictions applicable to, a bank
holding company. See "- The Association - Qualified Thrift Lender Test."
If the Company were to acquire control of another savings institution,
other than through merger or other business combination with Guaranty
Savings, the Company would thereupon become a multiple savings and loan
holding company. Except where such acquisition is pursuant to the authority
to approve emergency thrift acquisitions and where each subsidiary savings
institution meets the QTL test, as set forth below, the activities of the
Company and any of its subsidiaries (other than Guaranty Savings or other
subsidiary savings institutions) would thereafter be subject to further
restrictions. Among other things, no multiple savings and loan holding
company or subsidiary thereof which is not a savings institution shall
commence or continue for a limited period of time after becoming a multiple
savings and loan holding company or subsidiary thereof any business activity,
other than: (i) furnishing or performing management services for a subsidiary
savings institution; (ii) conducting an insurance agency or escrow business;
(iii) holding, managing, or liquidating assets owned by or acquired from a
subsidiary savings institution; (iv) holding or managing properties used or
occupied by a subsidiary savings institution; (v) acting as trustee under
deeds of trust; (vi) those activities authorized by regulation as of March 5,
1987 to be engaged in by multiple savings and loan holding companies; or
(vii) unless the Director of the OTS by regulation prohibits or limits such
activities for savings and loan holding companies, those activities
authorized by the FRB as permissible for bank holding companies. Those
activities described in clause (vii) above also must be approved by the
Director of the OTS prior to being engaged in by a multiple savings and loan
holding company.
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LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. Transactions between
savings institutions and any affiliate are governed by Sections 23A and 23B
of the Federal Reserve Act. An affiliate of a savings institution is any
company or entity which controls, is controlled by or is under common control
with the savings institution. In a holding company context, the parent
holding company of a savings institution (such as the Company) and any
companies which are controlled by such parent holding company are affiliates
of the savings institution. Generally, Sections 23A and 23B (i) limit the
extent to which the savings institution or its subsidiaries may engage in
"covered transactions" with any one affiliate to an amount equal to 10% of
such institution's capital stock and surplus, and contain an aggregate limit
on all such transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus and (ii) require that all such transactions be
on terms substantially the same, or at least as favorable, to the institution
or subsidiary as those provided to a non-affiliate. The term "covered
transaction" includes the making of loans, purchase of assets, issuance of a
guarantee and other similar transactions. In addition to the restrictions
imposed by Sections 23A and 23B, no savings institution may (i) loan or
otherwise extend credit to an affiliate, except for any affiliate which
engages only in activities which are permissible for bank holding companies,
or (ii) purchase or invest in any stocks, bonds, debentures, notes or similar
obligations of any affiliate, except for affiliates which are subsidiaries of
the savings institution.
In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer
and to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires
that loans to directors, executive officers and principal stockholders be
made on terms substantially the same as offered in comparable transactions to
other persons unless the loans are made pursuant to a benefit or compensation
program that (i) is widely available to employees of the institution and (ii)
does not give preference to any director, executive officer or principal
stockholder, or certain affiliated interests of either, over other employees
of the savings institution. Section 22(h) also requires prior board
approval for certain loans. In addition, the aggregate amount of extensions
of credit by a savings institution to all insiders cannot exceed the
institution's unimpaired capital and surplus. Furthermore, Section 22(g)
places additional restrictions on loans to executive officers. At September
30, 1996, Guaranty Savings was in compliance with the above restrictions.
RESTRICTIONS ON ACQUISITIONS. Except under limited circumstances,
savings and loan holding companies are prohibited from acquiring, without
prior approval of the Director of the OTS, (i) control of any other savings
institution or savings and loan holding company or substantially all the
assets thereof or (ii) more than 5% of the voting shares of a savings
institution or holding company thereof which is not a subsidiary. Except
with the prior approval of the Director of the OTS, no director or officer of
a savings and loan holding
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company or person owning or controlling by proxy or otherwise more than 25%
of such company's stock, may acquire control of any savings institution,
other than a subsidiary savings institution, or of any other savings and loan
holding company.
The Director of the OTS may only approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls
savings institutions in more than one state if (i) the multiple savings and
loan holding company involved controls a savings institution which operated a
home or branch office located in the state of the institution to be acquired
as of March 5, 1987; (ii) the acquiror is authorized to acquire control of
the savings institution pursuant to the emergency acquisition provisions of
the Federal Deposit Insurance Act ("FDIA"); or (iii) the statutes of the
state in which the institution to be acquired is located specifically permit
institutions to be acquired by the state-chartered institutions or savings
and loan holding companies located in the state where the acquiring entity is
located (or by a holding company that controls such state-chartered savings
institutions).
Under the Bank Holding Company Act of 1956, the FRB is authorized to
approve an application by a bank holding company to acquire control of a
savings institution. In addition, a bank holding company that controls a
savings institution to merge or consolidate the assets and liabilities of the
savings institution with, or transfer assets and liabilities to, any
subsidiary bank which is a member of the BIF with the approval of the
appropriate federal banking agency and the FRB. As a result of these
provisions, there have been a number of acquisitions of savings institutions
by bank holding companies in recent years.
FEDERAL SECURITIES LAWS. The Company has filed with the SEC a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration of the Common Stock to be issued
pursuant to the Conversion. Upon completion of the Conversion, the Company's
Common Stock will be registered with the SEC under Section 12(g) of the
Exchange Act. The Company will then be subject to the proxy and tender offer
rules, insider trading reporting requirements and restrictions, and certain
other requirements under the Exchange Act.
The registration under the Securities Act of shares of the Common Stock
to be issued in the Conversion does not cover the resale of such shares.
Shares of Common Stock purchased by persons who are not affiliates of the
Company may be sold without registration. Shares purchased by an affiliate
of the Company will be subject to the resale restrictions of Rule 144 under
the Securities Act. If the Company meets the current public information
requirements of Rule 144 under the Securities Act, each affiliate of the
Company who complies with the other conditions of Rule 144 (including those
that require the affiliate's sale to be aggregated with those of certain
other persons) would be able to sell in the public market, without
registration, a number of shares not to exceed, in any three-month period,
the greater of (i) 1% of the outstanding shares of the Company or (ii) the
average weekly volume of trading in such shares during the preceding four
calendar weeks.
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THE ASSOCIATION
GENERAL. As part of the Conversion, the Association will convert from a
Louisiana-chartered mutual savings and loan association to a
Louisiana-chartered stock savings and loan association. The OFI will be the
Association's chartering authority, and the OTS will be the Association's
primary federal regulator. The OFI and the OTS have extensive authority over
the operations of Louisiana-chartered savings institutions. As part of this
authority, Louisiana-chartered savings institutions are required to file
periodic reports with the OFI and the OTS and are subject to periodic
examinations by the OFI, the OTS and the FDIC. The investment and lending
authority of savings institutions are prescribed by federal laws and
regulations, and such institutions are prohibited from engaging in any
activities not permitted by such laws and regulations. Such regulation and
supervision is primarily intended for the protection of depositors.
The OTS' enforcement authority over all savings institutions and their
holding companies includes, among other things, the ability to assess civil
money penalties, to issue cease and desist or removal orders and to initiate
injunctive actions. In general, these enforcement actions may be initiated
for violations of laws and regulations and unsafe or unsound practices.
Other actions or inactions may provide the basis for enforcement action,
including misleading or untimely reports filed with the OTS.
INSURANCE OF ACCOUNTS. The deposits of Guaranty Savings are insured to
the maximum extent permitted by the SAIF, which is administered by the FDIC,
and are backed by the full faith and credit of the U.S. Government. As
insurer, the FDIC is authorized to conduct examinations of, and to require
reporting by, FDIC-insured institutions. It also may prohibit any
FDIC-insured institution from engaging in any activity the FDIC determines by
regulation or order to pose a serious threat to the FDIC. The FDIC also has
the authority to initiate enforcement actions against savings institutions,
after giving the OTS an opportunity to take such action.
The FDIC may terminate the deposit insurance of any insured depository
institution, including Guaranty Savings, if it determines after a hearing
that the institution has engaged or is engaging in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations, or
has violated any applicable law, regulation, order or any condition imposed
by an agreement with the FDIC. It also may suspend deposit insurance
temporarily during the hearing process for the permanent termination of
insurance, if the institution has no tangible capital. If insurance of
accounts is terminated, the accounts at the institution at the time of the
termination, less subsequent withdrawals, shall continue to be insured for a
period of six months to two years, as determined by the FDIC. Management is
aware of no existing circumstances which would result in termination of the
Association's deposit insurance.
The FDIC is authorized to establish separate assessment rates for
deposit insurance for members of the BIF and the SAIF. The FDIC may increase
assessment rates for either
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fund to restore the fund's ratio of reserves to insured deposits to its
statutorily set target level within a reasonable time, and may decrease such
assessment rates if such target level has been met. Until the SAIF fund
meets its target level, savings associations may not transfer to the BIF
fund. Furthermore, any such transfers, when permitted, would be subject to
exit and entrance fees. Under current FDIC regulations, institutions are
assigned to one of three capital groups which are based solely on the level
of an institution's capital- "well capitalized," "adequately capitalized,"
and "undercapitalized" - which are defined in the same manner as the
regulations establishing the prompt corrective action system under Section 38
of the Federal Deposit Insurance Act ("FDIA") as discussed below. These
three groups are then divided into three subgroups which reflect varying
levels of supervisory concern, from those which are considered to be healthy
to those which are considered to be of substantial supervisory concern. The
matrix so created results in nine assessment risk classifications, with rates
ranging from .23% for well capitalized, healthy institutions to .31% for
undercapitalized institutions with substantial supervisory concerns. The
insurance premiums for the Association for the first semi-annual period in
calendar 1996 was .23%.
The BIF fund met its target reserve level in September 1995, but the
SAIF was not expected to meet its target reserve level until at least 2002.
Consequently, in late 1995, the FDIC approved a final rule regarding deposit
insurance premiums which, effective with respect to the semiannual premium
assessment beginning January 1, 1996, reduced deposit insurance premiums for
BIF member institutions to zero basis points (subject to an annual minimum of
$2,000) for institutions in the lowest risk category. Deposit insurance
premiums for SAIF members were maintained at their existing levels (23 basis
points for institutions in the lowest risk category).
On September 30, 1996, President Clinton signed into law legislation
which will eliminate the premium differential between SAIF-insured
institutions and BIF-insured institutions by recapitalizing the SAIF's
reserves to the required ratio. The legislation provides that all SAIF
member institutions pay a one-time special assessment to recapitalize the
SAIF, which in the aggregate will be sufficient to bring the reserve ratio in
the SAIF to 1.25% of insured deposits. The legislation also provides for the
merger of the BIF and the SAIF, with such merger being conditioned upon the
prior elimination of the thrift charter.
Effective October 8, 1996, FDIC regulations imposed a one-time special
assessment equal to 65.7 basis points for all SAIF-assessable deposits as of
March 31, 1995, which was collected on November 27, 1996. The Association's
one-time special assessment amounted to $413,000. Net of related tax
benefits, the one-time special assessment amounted to $273,000. The payment
of such special assessment will have the effect of immediately reducing the
Association's capital by such an amount. Nevertheless, management does not
believe that this one-time special assessment will have a material adverse
effect on the Association's consolidated financial condition or cause
non-compliance with the Association's regulatory capital requirements.
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On October 16, 1996, the FDIC proposed to lower assessment rates for
SAIF members to reduce the disparity in the assessment rates paid by BIF and
SAIF members. Beginning October 1, 1996, effective SAIF rates range from
zero basis points to 27 basis points. From 1997 through 1999, SAIF members
will pay 6.4 basis points to fund the Financing Corporation while BIF member
institutions will pay approximately 1.3 basis points. The Association's
insurance premiums, which have amounted to 23 basis points will be reduced to
6.4 basis points. Based upon the $60.5 million of assessable deposits at
September 30, 1996, the Association would expect to pay $100,000 less in
insurance premiums per quarter during 1997.
REGULATORY CAPITAL REQUIREMENTS. Federally insured savings institutions
are required to maintain minimum levels of regulatory capital. Pursuant to
FIRREA, the OTS has established capital standards applicable to all savings
institutions. These standards generally must be as stringent as the
comparable capital requirements imposed on national banks. The OTS also is
authorized to impose capital requirements in excess of these standards on
individual institutions on a case-by-case basis.
Current OTS capital standards require savings institutions to satisfy
three different capital requirements. Under these standards, savings
institutions must maintain "tangible" capital equal to at least 1.5% of
adjusted total assets, "core" capital equal to at least 3.0% of adjusted
total assets and "total" capital (a combination of core and "supplementary"
capital) equal to at least 8.0% of "risk-weighted" assets. For purposes of
the regulation, core capital generally consists of common stockholders'
equity (including retained earnings), noncumulative perpetual preferred stock
and related surplus, minority interests in the equity accounts of fully
consolidated subsidiaries, certain nonwithdrawable accounts and pledged
deposits and "qualifying supervisory goodwill." Tangible capital is given
the same definition as core capital but does not include qualifying
supervisory goodwill and is reduced by the amount of all the savings
institution's intangible assets, with only a limited exception for purchased
mortgage servicing rights. At September 30, 1996, Guaranty Savings had no
goodwill or other intangible assets which are deducted in computing its
tangible capital. Both core and tangible capital are further reduced by an
amount equal to a savings institution's debt and equity investments in
subsidiaries engaged in activities not permissible to national banks (other
than subsidiaries engaged in activities undertaken as agent for customers or
in mortgage banking activities and subsidiary depository institutions or
their holding companies). At September 30, 1996, the Association had no
subsidiaries.
In determining compliance with the risk-based capital requirement, a
savings institution is allowed to include both core capital and supplementary
capital in its total capital, provided that the amount of supplementary
capital included does not exceed the savings institution's core capital.
Supplementary capital generally consists of hybrid capital instruments;
perpetual preferred stock which is not eligible to be included as core
capital; subordinated debt and intermediate-term preferred stock; and general
allowances for loan losses up to a maximum of 1.25% of risk-weighted assets.
In determining the required amount of risk-based capital, total assets,
including certain off-balance sheet items, are
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multiplied by a risk weight based on the risks inherent in the type of
assets. The risk weights assigned by the OTS for principal categories of
assets are (i) 0% for cash and securities issued by the U.S. Government or
unconditionally backed by the full faith and credit of the U.S. Government;
(ii) 20% for securities (other than equity securities) issued by U.S.
Government-sponsored agencies and mortgage-backed securities issued by, or
fully guaranteed as to principal and interest by, the FNMA or the FHLMC,
except for those classes with residual characteristics or stripped
mortgage-related securities; (iii) 50% for prudently underwritten permanent
one- to four-family first lien mortgage loans not more than 90 days
delinquent and having a loan-to-value ratio of not more than 80% at
origination unless insured to such ratio by an insurer approved by the FNMA
or the FHLMC, qualifying residential bridge loans made directly for the
construction of one- to four-family residences and qualifying multi-family
residential loans; and (iv) 100% for all other loans and investments,
including consumer loans, commercial loans, and one- to four-family
residential real estate loans more than 90 days delinquent, and for
repossessed assets.
In August 1993, the OTS adopted a final rule incorporating an
interest-rate risk component into the risk-based capital regulation. Under
the rule, an institution with a greater than "normal" level of interest rate
risk will be subject to a deduction of its interest rate risk component from
total capital for purposes of calculating its risk-based capital requirement.
As a result, such an institution will be required to maintain additional
capital in order to comply with the risk-based capital requirement. An
institution with greater than "normal" interest rate risk is defined as an
institution that would suffer a loss of net portfolio value exceeding 2.0% of
the estimated market value of its assets in the event of a 200 basis point
increase or decrease (with certain minor exceptions) in interest rates. The
interest rate risk component will be calculated, on a quarterly basis, as
one-half of the difference between an institution's measured interest rate
risk and 2.0%, multiplied by the market value of its assets. The rule also
authorizes the Director of the OTS, or his designee, to waive or defer an
institution's interest rate risk component on a case-by-case basis. The
final rule was originally effective as of January 1, 1994, subject however to
a three quarter "lag" time between the reporting date of the data used to
calculate an institution's interest rate risk and the effective date of each
quarter's interest rate risk component. However, in October 1994 the
Director of the OTS indicated that it would waive the capital deductions for
associations with a greater than "normal" risk until the OTS publishes an
appeals process. The OTS has recently indicated that no savings association
will be required to deduct capital for interest rate risk until further
notice.
At September 30, 1996, Guaranty Savings exceeded all of its regulatory
capital requirements, with tangible, core and risk-based capital ratios of
27.79%, 27.79% and 80.10%, respectively. The following table sets forth
Guaranty Savings' compliance with each of the above-described capital
requirements as of September 30, 1996.
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Tangible Core Risk-Based
Capital Capital(1) Capital (2)
-------- ---------- -----------
(Dollars in Thousands)
Capital under GAAP $24,500 $24,500 $24,500
Less non-allowable assets
Additional capital items:
General valuation
allowances(3) -- -- 216
Net unrealized gain on
securities available for sale (678) (678) (678)
------ ------ ------
Regulatory capital 23,822 23,822 24,038
Minimum required
regulatory capital(4) 1,298 2,596 2,408
------ ------ ------
Excess regulatory capital $22,524 $21,226 $21,630
------ ------ ------
------ ------ ------
Regulatory capital as a
percentage(4) 27.79% 27.79% 80.10%
Minimum capital required
as a percentage(4) 1.50% 3.00% 8.00%
------ ------ ------
Regulatory capital as a
percentage in excess of
requirements 26.29% 24.79% 72.10%
------ ------ ------
------ ------ ------
______________________
(1) Does not reflect the 4.0% requirement to be met in order for an
institution to be "adequately capitalized." See "-Prompt Corrective
Action."
(2) Does not reflect the interest-rate risk component in the risk-based
capital requirement, the effective date of which has been postponed as
discussed above.
(3) General valuation allowances are only used in the calculation of
risk-based capital. Such allowances are limited to 1.25% of
risk-weighted assets.
(4) Tangible and core capital are computed as a percentage of adjusted total
assets of $86.5 million. Risk-based capital is computed as a percentage
of adjusted risk-weighted assets of $30.0 million.
Any savings institution that fails any of the capital requirements is
subject to possible enforcement actions by the OTS or the FDIC. Such actions
could include a capital directive, a cease and desist order, civil money
penalties, the establishment of restrictions on the institution's operations,
termination of federal deposit insurance and the appointment
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of a conservator or receiver. The OTS' capital regulation provides that such
actions, through enforcement proceedings or otherwise, could require one or
more of a variety of corrective actions.
LIQUIDITY REQUIREMENTS. All savings institutions are required to
maintain an average daily balance of liquid assets equal to a certain
percentage of the sum of its average daily balance of net withdrawable
deposit accounts and borrowings payable in one year or less. The liquidity
requirement may vary from time to time (between 4% and 10%) depending upon
economic conditions and savings flows of all savings institutions. At the
present time, the required minimum liquid asset ratio is 5%. At September
30, 1996, Guaranty Savings' liquidity ratio was 56.9%.
CAPITAL DISTRIBUTIONS. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt
and other transactions charged to the capital account of a savings
institution to make capital distributions. Generally, the regulation creates
a safe harbor for specified levels of capital distributions from institutions
meeting at least their minimum capital requirements, so long as such
institutions notify the OTS and receive no objection to the distribution from
the OTS. Savings institutions and distributions that do not qualify for the
safe harbor are required to obtain prior OTS approval before making any
capital distributions.
Generally, a savings institution that before and after the proposed
distribution meets or exceeds its fully phased-in capital requirements (Tier
1 institutions) may make capital distributions during any calendar year equal
to the higher of (i) 100% of net income for the calendar year-to-date plus
50% of its "surplus capital ratio" at the beginning of the calendar year or
(ii) 75% of net income over the most recent four-quarter period. The
"surplus capital ratio" is defined to mean the percentage by which the
institution's ratio of total capital to assets exceeds the ratio of its fully
phased-in capital requirement to assets. "Fully phased-in capital
requirement" is defined to mean an institution's capital requirement under
the statutory and regulatory standards applicable on December 31, 1994, as
modified to reflect any applicable individual minimum capital requirement
imposed upon the institution. Failure to meet fully phased-in or minimum
capital requirements will result in further restrictions on capital
distributions, including possible prohibition without explicit OTS approval.
See "- Regulatory Capital Requirements."
In order to make distributions under these safe harbors, Tier 1 and Tier
2 institutions must submit 30 days written notice to the OTS prior to making
the distribution. The OTS may object to the distribution during that 30-day
period based on safety and soundness concerns. At September 30, 1996,
Guaranty Savings was a Tier 1 institution for purposes of this regulation.
In December 1994, the OTS published a notice of proposed rulemaking to
amend its capital distribution regulation. Under the proposal, institutions
would be permitted to
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only make capital distributions that would not result in their capital
being reduced below the level required to remain "adequately capitalized."
Because the Association will be a subsidiary of a holding company, the
proposal would require the Association to provide notice to the OTS of its
intent to make a capital distribution. The Association does not believe that
the proposal will adversely affect its ability to make capital distributions
if it is adopted substantially as proposed.
LOANS TO ONE BORROWER. The permissible amount of loans-to-one borrower
now generally follows the national bank standard for all loans made by
savings institutions, as compared to the pre-FIRREA rule that applied that
standard only to commercial loans made by federally chartered savings
institutions. The national bank standard generally does not permit
loans-to-one borrower to exceed the greater of $500,000 or 15% of unimpaired
capital and surplus. Loans in an amount equal to an additional 10% of
unimpaired capital and surplus also may be made to a borrower if the loans
are fully secured by readily marketable securities. For information about
the largest borrowers from Guaranty Savings, see "Business - Lending
Activities - Real Estate Lending Standards and Underwriting Policies."
COMMUNITY REINVESTMENT. Under the Community Reinvestment Act of 1977,
as amended ("CRA"), as implemented by OTS regulations, a savings institution
has a continuing and affirmative obligation consistent with its safe and
sound operation to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial institutions nor does
it limit an institution's discretion to develop the types of products and
services that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires the OTS, in connection with its
examination of a savings institution, to assess the institution's record of
meeting the credit needs of its community and to take such record into
account in its evaluation of certain applications by such institution. The
CRA requires public disclosure of an institution's CRA rating and require the
OTS to provide a written evaluation of an institution's CRA performance
utilizing a rating system which identifies four levels of performance that
may describe an institution's record of meeting community needs:
outstanding, satisfactory, needs to improve and substantial noncompliance.
The CRA also requires all institutions to make public disclosure of their CRA
ratings.
QUALIFIED THRIFT LENDER TEST. Under Section 2303 of the Economic Growth
and regulatory Paperwork Reduction Act of 1996, a savings association can
comply with the QTL test by either meeting the QTL test set forth in the HOLA
and implementing regulations or qualifying as a domestic building and loan
association as defined in Section 7701(a)(19) of the Internal Revenue Code of
1986, as amended ("Code"). A savings institution that does not comply with
the QTL test must either convert to a bank charter or comply with the
following restrictions on its operations: (i) the institution may not engage
in any new activity or make any new investment, directly or indirectly,
unless such activity or investment is permissible for a national bank; (ii)
the branching powers of the institution shall be
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restricted to those of a national bank; (iii) the institution shall not be
eligible to obtain any advances from its FHLB; and (iv) payment of dividends
by the institution shall be subject to the rules regarding payment of
dividends by a national bank. Upon the expiration of three years from the
date the savings institution ceases to meet the QTL test, it must cease any
activity and not retain any investment not permissible for a national bank
and immediately repay any outstanding FHLB advances (subject to safety and
soundness considerations).
The QTL Test set forth in the HOLA requires that Qualified Thrift
Investments ("QTIs") represent 65% of portfolio assets. Portfolio assets are
defined as total assets less intangibles, property used by a savings
association in its business and liquidity investments in an amount not
exceeding 20% of assets. Generally, QTIs are residential housing related
assets. The 1996 amendments allow small business loans, credit card loans,
student loans and loans for personal, family and household purposes to be
included without limitation as qualified investments. At September 30, 1996,
approximately 77.5% of the Association's assets were invested in QTIs, which
was in excess of the percentage required to qualify the Association under the
QTL Test in effect at that time.
ACCOUNTING REQUIREMENTS. Applicable OTS accounting regulations and
reporting requirements apply the following standards: (i) regulatory reports
will incorporate GAAP when GAAP is used by federal banking agencies; (ii)
savings institution transactions, financial condition and regulatory capital
must be reported and disclosed in accordance with OTS regulatory reporting
requirements that will be at least as stringent as for national banks; and
(iii) the Director of the OTS may prescribe regulatory reporting requirements
more stringent than GAAP whenever the Director determines that such
requirements are necessary to ensure the safe and sound reporting and
operation of savings institutions.
The accounting principles for depository institutions are currently
undergoing review to determine whether the historical cost model or
market-based measure of valuation is the appropriate measure for reporting
the assets of such institutions in their financial statements. Such issue is
controversial because any change in applicable accounting principles which
requires depository institutions to carry mortgage-backed securities and
mortgage loans at fair market value could result in substantial losses to
such institutions and increased volatility in their liquidity and operations.
Currently, it cannot be predicted whether there may be any changes in the
accounting principles for depository institutions in this regard beyond those
imposed by SFAS No. 115 or when any such changes might become effective.
FEDERAL HOME LOAN BANK SYSTEM. Guaranty Savings is a member of the FHLB
of Dallas, which is one of 12 regional FHLBs that administers the home
financing credit function of savings institutions. Each FHLB serves as a
reserve or central bank for its members within its assigned region. It is
funded primarily from proceeds derived from the sale of consolidated
obligations of the FHLB System. It makes loans to members (i.e., advances)
in accordance with policies and procedures established by the Board of
Directors
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of the FHLB. The Association had no FHLB advances at September 30, 1996 and
has not utilized FHLB advances as a source of funds for several years.
As a member, Guaranty Savings is required to purchase and maintain stock
in the FHLB of Dallas in an amount equal to at least 1% of its aggregate
unpaid residential mortgage loans, home purchase contracts or similar
obligations at the beginning of each year or 5% of its advances from the FHLB
of Dallas, whichever is greater. At September 30, 1996, Guaranty Savings had
approximately $718,000 in FHLB stock, which was in compliance with this
requirement.
The FHLBs are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community
investment and low- and moderate-income housing projects. These
contributions have adversely affected the level of FHLB dividends paid in the
past and could continue to do so in the future. These contributions also
could have an adverse effect on the value of FHLB stock in the future.
FEDERAL RESERVE SYSTEM. The FRB requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super
NOW checking accounts) and non-personal time deposits. As of September 30,
1996, Guaranty Savings was in compliance with applicable requirements.
However, because required reserves must be maintained in the form of vault
cash or a noninterest-bearing account at a Federal Reserve Bank, the effect
of this reserve requirement is to reduce an institution's earning assets.
LOUISIANA REGULATION
As a Louisiana-chartered savings association, the Association also is
subject to regulation and supervision by the OFI. The Association is
required to file periodic reports with and is subject to periodic
examinations at least once every two years by the OFI. The lending and
investment authority of the Association is prescribed by Louisiana laws and
regulations, as well as applicable federal laws and regulations, and the
Association is prohibited from engaging in any activities not permitted by
such laws and regulations.
The Association is required by Louisiana law and regulations to comply
with certain reserve and capital requirements. At September 30, 1996, the
Association was in compliance with all applicable reserve and capital
requirements.
Louisiana law and regulations also restrict the lending and investment
authority of Louisiana-chartered savings institutions. Such laws and
regulations restrict the amount a Louisiana-chartered savings association can
lend to any one borrower to an amount which, in the aggregate, does not
exceed the lesser of (i) 10% of the association's savings deposits or (ii)
the sum of the association's paid-in capital, surplus, reserves for losses,
and undivided profits. FIRREA imposes more restrictive limitations. See
"Business - Lending Activities."
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Notwithstanding the foregoing, Louisiana and federal law permits any such
association to lend to any one borrower an aggregate amount of at least
$500,000.
In addition, Louisiana law restricts the ability of Louisiana-chartered
savings associations to invest in, among other things, (i) commercial real
estate loans (including commercial construction real estate loans) up to 40%
of total assets; (ii) real estate investments for other than the
association's offices up to 10% of total assets; (iii) consumer loans,
commercial paper and corporate debt securities up to 30% of total assets;
(iv) commercial, corporate, business or agricultural loans up to 10% of total
assets; and (v) capital stock, obligations and other securities of service
organizations up to 10% of total assets. Louisiana law also sets forth
maximum loan-to-value ratios with respect to various types of loans.
Applicable federal regulations impose more restrictive limitations in certain
instances. See "Business - Lending Activities - Real Estate Lending
Standards and Underwriting Policies."
The investment authority of Louisiana-chartered savings associations is
broader in many respects than that of federally-chartered savings and loan
associations. However, since the enactment of FIRREA, state-chartered
savings associations, such as the Association, are generally prohibited from
acquiring or retaining any equity investment, other than certain investments
in service corporations, of a type or in an amount that is not permitted for
a federally-chartered savings association. This prohibition applies to
equity investments in real estate, investments in equity securities and any
other investment or transaction that is in substance an equity investment,
even if the transaction is nominally a loan or other permissible transaction.
At September 30, 1996, the Association was in compliance with such
provisions.
Furthermore, effective January 1, 1990, a state-chartered savings
association may not engage as principal in any activity not permitted for
federal associations unless the FDIC has determined that such activity would
pose no significant risk to the affected deposit insurance fund and the
association is in compliance with the fully phased-in capital standards
prescribed under FIRREA. When certain activities are permissible for a
federal association, the state association may engage in the activity in a
higher amount if the FDIC has not determined that such activity would pose a
significant risk of loss to the affected deposit insurance fund and the
association meets the fully phased-in capital requirements. This increased
investment authority does not apply to investments in nonresidential real
estate loans. At September 30, 1996, the Association had NO investments
which were affected by the foregoing limitations.
Under Louisiana law, a Louisiana-chartered savings association may
establish or maintain a branch office anywhere in Louisiana with prior
regulatory approval. In addition, an out-of-state savings association or
holding company may acquire a Louisiana-chartered savings association or
holding company if the OFI determines that the laws of such other state
permit a Louisiana-chartered savings association or holding company to
acquire a
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savings association or holding company in such other state. Any
such acquisition would require the out-of-state entity to apply to the OFI
and receive OFI approval.
TAXATION
FEDERAL TAXATION
GENERAL. The Company and Guaranty Savings are subject to the generally
applicable corporate tax provisions of the Code, and Guaranty Savings is
subject to certain additional provisions of the Code which apply to thrift
and other types of financial institutions. The following discussion of
federal taxation is intended only to summarize certain pertinent federal
income tax matters relevant to the taxation of the Company and Guaranty
Savings and is not a comprehensive discussion of the tax rules applicable to
the Company and Guaranty Savings.
YEAR. Guaranty Savings files a federal income tax return on the basis
of a calendar year ending on December 31. Following the Conversion, the
Company and Guaranty Savings may elect to file a consolidated tax return.
BAD DEBT RESERVES. Savings institutions, such as Guaranty Savings,
which meet certain definitional tests primarily relating to their assets and
the nature of their businesses, are permitted to establish a reserve for bad
debts and to make annual additions to the reserve. These additions may,
within specified formula limits, be deducted in arriving at the institution's
taxable income. For purposes of computing the deductible addition to its bad
debt reserve, the institution's loans are separated into "qualifying real
property loans" (i.e., generally those loans secured by certain interests in
real property) and all other loans ("non-qualifying loans"). The deduction
with respect to non-qualifying loans must be completed under the experience
method as described below. The following formulas may be used to compute the
bad debt deduction with respect to qualifying real property loans: (i)
actual loss experience, or (ii) a percentage of taxable income. Reasonable
additions to the reserve for losses on non-qualifying loans must be based
upon actual loss experience and would reduce the current year's addition to
the reserve for losses on qualifying real property loans, unless that
addition is also determined under the experience method. The sum of the
additions to each reserve for each year is the institution's annual bad debt
deduction.
Under the experience method, the deductible annual addition to the
institution's bad debt reserves is the amount necessary to increase the
balance of the reserve at the close of the taxable year to the greater of (a)
the amount which bears the same ratio to loans outstanding at the close of
the taxable year as the total net bad debts sustained during the current and
five preceding taxable years bear to the sum of the loans outstanding at the
close of the six years, or (b) the lower of (i) the balance of the reserve
account at the close of the Association's "base year," which was its tax year
ended December 31, 1987, or (ii) if the amount of loans outstanding at the
close of the taxable year is less than the amount of
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loans outstanding at the close of the base year, the amount which bears the
same ratio to loans outstanding at the close of the taxable year as the
balance of the reserve at the close of the base year bears to the amount of
loans outstanding at the close of the base year.
Under the percentage of taxable income method, the bad debt deduction
equals 8% of taxable income determined without regard to that deduction and
with certain adjustments. The availability of the percentage of taxable
income method permits a qualifying savings institution to be taxed at a lower
effective federal income tax rate than that applicable to corporations in
general. This resulted generally in an effective federal income tax rate
payable by a qualifying savings institution fully able to use the maximum
deduction permitted under the percentage of taxable income method, in the
absence of other factors affecting taxable income, of 31.3% exclusive of any
minimum tax or environmental tax (as compared to 34% for corporations
generally). For tax years beginning on or after January 1, 1993, the maximum
corporate tax rate was increased to 35%, which increased the maximum
effective federal income tax rate payable by a qualifying savings institution
fully able to use the maximum deduction to 32.2%. Any savings institution at
least 60% of whose assets are qualifying assets, as described in the Code,
will generally be eligible for the full deduction of 8% of taxable income.
As of December 31, 1995, over 71% of the assets of Guaranty Savings were
"qualifying assets" as defined in the Code, and Guaranty Savings anticipates
that at least 60% of its assets will continue to be qualifying assets in the
immediate future. If this ceases to be the case, the institution may be
required to restore some portion of its bad debt reserve to taxable income in
the future.
Under the percentage of taxable income method, the bad debt deduction
for an addition to the reserve for qualifying real property loans cannot
exceed the amount necessary to increase the balance in this reserve to an
amount equal to 6% of such loans outstanding at the end of the taxable year.
The bad debt deduction is also limited to the amount which, when added to the
addition to the reserve for losses on non-qualifying loans, equals the amount
by which 12% of deposits at the close of the year exceeds the sum of surplus,
undivided profits and reserves at the beginning of the year. Based on
experience, it is not expected that these restrictions will be a limiting
factor for Guaranty Savings in the foreseeable future. In addition, the
deduction for qualifying real property loans is reduced by an amount equal to
all or part of the deduction for non-qualifying loans.
Pursuant to certain legislation which was recently enacted and which
will be effective for tax years beginning after 1995, a small thrift
institution (one with an adjusted basis of assets of less than $500 million),
such as Guaranty Savings, would no longer be permitted to make additions to
its tax bad debt reserve under the percentage of taxable income method. Such
institutions would be permitted to use the experience method in lieu of
deducting bad debts only as they occur. Such legislation will require
Guaranty Savings to realize increased tax liability over a period of at least
six years, beginning in 1996. Specifically, the legislation will require a
small thrift institution to recapture (i.e., take into income) over a
multi-year period the balance of its bad debt reserves in excess of the
lesser of (i) the balance of such reserves as of the end of its last taxable
year ending before 1988
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or (ii) an amount that would have been the balance of such reserves had the
institution always computed its additions to its reserves using the
experience method. The recapture requirement would be suspended for each of
two successive taxable years beginning January 1, 1996 in which Guaranty
Savings originates an amount of certain kinds of residential loans which in
the aggregate are equal to or greater than the average of the principal
amounts of such loans made by Guaranty Savings during its six taxable years
preceding 1996. It is anticipated that any recapture of Guaranty Savings'
bad debt reserves accumulated after 1987 would not have a material adverse
effect on Guaranty Savings' financial condition and results of operations.
At December 31, 1995, the federal income tax reserves of Guaranty
Savings included $5.5 million for which no federal income tax has been
provided. Because of these federal income tax reserves and the liquidation
account to be established for the benefit of certain depositors of Guaranty
Savings in connection with the conversion of the Association to stock form,
the retained earnings of Guaranty Savings are substantially restricted.
DISTRIBUTIONS. If Guaranty Savings were to distribute cash or property
to its sole stockholder, and the distribution was treated as being from its
accumulated bad debt reserves, the distribution would cause Guaranty Savings
to have additional taxable income. A distribution is deemed to have been
made from accumulated bad debt reserves to the extent that (a) the reserves
exceed the amount that would have been accumulated on the basis of actual
loss experience, and (b) the distribution is a "non-qualified distribution."
A distribution with respect to stock is a non-qualified distribution to the
extent that, for federal income tax purposes, (i) it is in redemption of
shares, (ii) it is pursuant to a liquidation of the institution, or (iii) in
the case of a current distribution, together with all other such
distributions during the taxable year, it exceeds the institution's current
and post-1951 accumulated earnings and profits. The amount of additional
taxable income created by a non-qualified distribution is an amount that when
reduced by the tax attributable to it is equal to the amount of the
distribution.
MINIMUM TAX. The Code imposes an alternative minimum tax at a rate of
20%. The alternative minimum tax generally applies to a base of regular
taxable income plus certain tax preferences ("alternative minimum taxable
income" or "AMTI") and is payable to the extent such AMTI is in excess of an
exemption amount. The Code provides that an item of tax preference is the
excess of the bad debt deduction allowable for a taxable year pursuant to the
percentage of taxable income method over the amount allowable under the
experience method. Other items of tax preference that constitute AMTI
include (a) tax-exempt interest on newly issued (generally, issued on or
after August 8, 1986) private activity bonds other than certain qualified
bonds and (b) 75% of the excess (if any) of (i) adjusted current earnings as
defined in the Code, over (ii) AMTI (determined without regard to this
preference and prior to reduction by net operating losses).
NET OPERATING LOSS CARRYOVERS. A financial institution may carry back
net operating losses ("NOLs") to the preceding three taxable years and
forward to the succeeding 15
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taxable years. This provision applies to losses incurred in taxable years
beginning after 1986. At December 31, 1995, Guaranty Savings had no NOL
carryforwards for federal income tax purposes.
CAPITAL GAINS AND CORPORATE DIVIDENDS-RECEIVED DEDUCTION. Corporate net
capital gains are taxed at a maximum rate of 35%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated
tax return, and corporations which own less than 20% of the stock of a
corporation distributing a dividend may deduct only 70% of dividends received
or accrued on their behalf. However, a corporation may deduct 100% of
dividends from a member of the same affiliated group of corporations.
OTHER MATTERS. Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on
consumer loans. Significant increases in tax rates or further restrictions
on the deductibility of mortgage interest could adversely affect Guaranty
Savings.
Guaranty Savings' federal income tax returns for the tax years ended
December 31, 1993 forward are open under the statute of limitations and are
subject to review by the IRS.
STATE TAXATION
Any nonbanking subsidiaries of the Association (as well as the Company)
are subject to the Louisiana Corporation Income Tax based on their Louisiana
taxable income, as well as franchise taxes. The Corporation Income Tax
applies at graduated rates from 4% upon the first $25,000 of Louisiana
taxable income to 8% on all Louisiana taxable income in excess of $200,000.
For these purposes, "Louisiana taxable income" means net income which is
earned within or derived from sources within the State of Louisiana, after
adjustments permitted under Louisiana law including a federal income tax
deduction and an allowance for net operating losses, if any. In addition,
following the Conversion the Association will be subject to the Louisiana
Shares Tax, which will be imposed on the assessed value of its stock. The
formula for deriving the assessed value is to calculate 15% of the sum of (a)
20% of the company's capitalized earnings, plus (b) 80% of the company's
taxable stockholders' equity, and to subtract from that figure 50% of the
company's real and personal property assessment. Various items may also be
subtracted in calculating a company's capitalized earnings.
MANAGEMENT OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The Bylaws of the Company authorize nine directors. The directors will
be elected by the stockholders of the Company for staggered three-year terms,
or until their successors
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are elected and qualified. One class of directors, consisting of Messrs.
Donald Scott, Kirschman and Paine, has a term of office expiring at the
first annual meeting of stockholders following the Conversion (which is
expected to be held in April 1998), a second class, consisting of Messrs.
Bruce Scott, Caldcleugh and Glazer, has a term of office expiring at the
second annual meeting of stockholders following the Conversion, and a third
class, consisting of Messrs. Key, Zahn and Cory, has a
term of office expiring at the third annual meeting of stockholders following
the Conversion. No director is related to any other director or executive
officer by first cousin or closer, except that Donald C. Scott and Bruce A.
Scott are brothers. Their names and biographical information are set forth
under "Management of the Association -Directors."
The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.
Name Position Held With Company
---------------- -----------------------------------
Donald C. Scott Chairman of the Board, President
and Chief Executive Officer
Bruce A. Scott Executive Vice President
Lettie Rufin Moll Vice President and Secretary
Ralph E. Weber Vice President
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, retirement, resignation or removal by the Board of Directors.
Since the formation of the Company, none of the executive officers,
directors or other personnel of the Company has received remuneration from
the Company. Information concerning the principal occupations and employment
of the directors and officers of the Company during the past five years is
set forth under "Management of Guaranty Savings - Directors" and "- Executive
Officers Who Are Not Directors." Following the Conversion, the directors of
the Company will be compensated by the Company in amounts to be determined,
and the Company will reimburse the Association for its pro rata share of the
compensation of their common officers and employees. The executive officers
of the Company initially will not be directly compensated by the Company but
will serve and be compensated by the Association. See "Management of
Guaranty Savings - Director Compensation" and " - Executive Compensation."
BENEFITS
EMPLOYEE STOCK OWNERSHIP PLAN. The Company has established the ESOP for
employees of the Company and the Association to become effective upon the
Conversion. Full-time employees of the Company and the Association who have
been credited with at
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least 1,000 hours of service during a twelve month period and who have
attained age 18 are eligible to participate in the ESOP.
As part of the Conversion, in order to fund the purchase of up to 8% of
the Common Stock to be issued in the Conversion, it is anticipated that the
ESOP will borrow funds from the Company. It is anticipated that such loan
will equal 100% of the aggregate purchase price of the Common Stock acquired
by the ESOP. The loan to the ESOP will be repaid principally from the
Company's and the Association's contributions to the ESOP over a period OF
10 YEARS, and the collateral for the loan will be the Common Stock purchased
by the ESOP. The interest rate for the ESOP loan is expected to be a fixed
rate of ____%. The Company may, in any plan year, make additional
discretionary contributions for the benefit of plan participants in either
cash or shares of Common Stock, which may be acquired through the purchase of
outstanding shares in the market or from individual stockholders, upon the
original issuance of additional shares by the Company or upon the sale of
treasury shares by the Company. Such purchases, if made, would be funded
through additional borrowings by the ESOP or additional contributions from
the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan will be held
in a suspense account and released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares
released from the suspense account will be allocated among participants on
the basis of compensation. Forfeitures will be reallocated among remaining
participating employees and may reduce any amount the Company might otherwise
have contributed to the ESOP. The account balances of participants within
the ESOP will become 20% vested at the end of one year of service, and the
vesting will increase by 20% per year so that participants are 100% vested
upon the completion of five years of service. Credit is given for years of
service with the Association prior to adoption of the ESOP. In the case of a
"change in control," as defined, however, participants will become
immediately fully vested in their account balances. Benefits may be payable
upon retirement or separation from service. The Company's contributions to
the ESOP are not fixed, so benefits payable under the ESOP cannot be
estimated.
Messrs. Bruce Scott and Ralph Weber, and Ms. Lettie R. Moll will serve
as trustees of the ESOP. Under the ESOP, the trustees must vote all
allocated shares held in the ESOP in accordance with the instructions of the
participating employees, and unallocated shares will be voted in the same
ratio on any matter as those allocated shares for which instructions are
given.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Recent Accounting Pronouncements" for a discussion of
SOP 93-6, which addresses the measure of compensation expense recorded by
employers for leveraged ESOPs from the cost of ESOP shares to the fair value
of ESOP shares.
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GAAP requires that any third party borrowing by the ESOP be reflected as
a liability on the Company's statement of financial condition. Since the
ESOP is borrowing from the Company, such obligation is not treated as a
liability, but will be excluded from stockholders' equity. If the ESOP
purchases newly issued shares from the Company, total stockholders' equity
would neither increase nor decrease, but per share stockholders' equity and
per share net earnings would decrease as the newly issued shares are
allocated to the ESOP participants.
The ESOP will be subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the regulations of the
IRS and the Department of Labor thereunder.
STOCK OPTION PLAN. Following consummation of the Conversion, the Board
of Directors of the Company intends to adopt a Stock Option Plan, which will
be designed to attract and retain qualified personnel in key positions,
provide directors, officers and key employees with a proprietary interest in
the Company as an incentive to contribute to the success of the Company and
reward key employees for outstanding performance. The Stock Option Plan will
provide for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options, and stock appreciation rights
(collectively "Awards"). Awards may be granted to key employees of the
Company and any subsidiaries. The Stock Option Plan will be administered and
interpreted by a committee of the Board of Directors ("Committee") which is
"disinterested" pursuant to applicable regulations under the federal
securities laws. Non-employee directors will only be entitled to receive
compensatory stock options pursuant to a formula governing the amount and
timing of such options. Unless sooner terminated, the Stock Option Plan
shall continue in effect for a period of 10 years from the date the Stock
Option Plan is adopted by the Board of Directors.
Under the Stock Option Plan, the Committee will determine which officers
and key employees will be granted Awards, whether options will be incentive
or compensatory options, the number of shares subject to each Award, the
exercise price of each option, whether options may be exercised by delivering
other shares of Common Stock and when such options become exercisable. The
per share exercise price of an incentive or compensatory stock option must at
least equal the fair market value of a share of Common Stock on the date the
option is granted.
Stock options will become exercisable in the manner specified by the
Committee, provided that all options will become fully exercisable in the
event of a change in control of the Company if the plan is implemented
following the one-year anniversary of the Conversion. If the plan is
implemented within the first year following the Conversion, current OTS
regulations would require the stock options to vest at a rate not in excess
of 20% per year and prohibit accelerated vesting except in the case of
disability or death. Each stock option or portion thereof will be
exercisable at any time on or after it vests and will be exercisable until 10
years after its date of grant or for periods of up to one year
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following the death, disability or other termination of the optionee's
employment. However, failure to exercise incentive stock options within three
months after the date on which the optionee's employment terminates may
result in adverse tax consequences to the optionee. Stock options are
non-transferable except by will or the laws of descent and distribution.
Under the Stock Option Plan, the Committee may grant rights to optionees
("stock appreciation rights") under which an optionee may surrender any
exercisable incentive stock option or compensatory stock option or part
thereof in return for payment by the Company to the optionee of cash or
Common Stock in an amount equal to the excess of the fair market value of the
shares of Common Stock subject to option at the time over the option price of
such shares, or a combination of cash and Common Stock. Stock appreciation
rights may be granted concurrently with the stock options to which they
relate or, for those which relate to compensatory stock options, at any time
thereafter which is prior to the exercise or expiration of such options.
At the time an Award is granted pursuant to the Stock Option Plan, the
recipient will not be required to make any payment in consideration for such
grant. With respect to incentive or compensatory stock options, the optionee
will be required to pay the applicable exercise price at the time of exercise
in order to receive the underlying shares of Common Stock. If a stock
appreciation right is exercised, the holder of the right is entitled to
receive an amount equal to the excess of the fair market value of the
underlying shares of Common Stock over the applicable exercise price, without
having to pay the exercise price.
A number of shares of Common Stock equal to an aggregate of 10% of the
Common Stock sold in the Conversion will be reserved for issuance pursuant to
the Stock Option Plan (299,000 shares, based on the sale of 2,990,000 shares
at the maximum of the Estimated Valuation Range). Such shares may be
authorized but previously unissued shares, treasury shares, or shares
purchased by the Company on the open market or from private sources. In the
event of a stock split, reverse stock split or stock dividend, the number of
shares of Common Stock under the Stock Option Plan, the number of shares to
which any Award relates and the exercise price per share under any option or
stock appreciation right shall be adjusted to reflect such increase or
decrease in the total number of shares of Common Stock outstanding. In the
event the Company declares a special cash dividend or return of capital
following the implementation of the Stock Option Plan in an amount per share
which exceeds 10% of the fair market value of a share of Common Stock as of
the date of declaration, the per share exercise price of all previously
granted options which remain unexercised as of the date of such declaration
shall be proportionately adjusted to give effect to such special cash
dividend or return of capital as of the date of payment of such special cash
dividend or return of capital; provided, however, that the per share exercise
price of outstanding incentive stock options shall not be adjusted if such
adjustment would result in new incentive stock options being deemed to be
granted under the Code.
Under current provisions of the Code, the federal income tax treatment
of incentive stock options and compensatory stock options is different. As
regards incentive stock
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options, an optionee who meets certain holding period requirements will not
recognize income at the time the option is granted or at the time the option
is exercised, and a federal income tax deduction generally will not be
available to the Company at any time as a result of such grant or exercise.
With respect to compensatory stock options, the difference between the fair
market value on the date of exercise and the option exercise price generally
will be treated as compensation income upon exercise, and the Company will be
entitled to a deduction in the amount of income so recognized by the
optionee. Upon the exercise of a stock appreciation right, the holder will
realize income for federal income tax purposes equal to the amount received
by him, whether in cash, shares of stock or both, and the Company will be
entitled to a deduction for federal income tax purposes in the same amount.
It is currently expected that 30% of the shares available under the
Stock Option Plan will be granted to non-employee directors, with each
non-employee director receiving an option for the same number of shares, in
which event options for a total of approximately 12,814 shares would be
granted to each of the seven non-employee directors if the amount of Common
Stock sold in the Conversion is equal to the maximum of the Estimated
Valuation Range. In addition, it is currently expected that stock options
will be granted to Messrs. Donald C. Scott and Bruce A. Scott, although no
determination has been made at this time as to the amount of such stock
options. The Stock Option Plan will provide that no officer would be able to
receive a stock option for more than 25% of the shares available under the
Stock Option Plan, or 74,750 shares if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. The
Company does not expect to grant any stock appreciation rights in the first
year following completion of the Conversion.
The Stock Option Plan will not be implemented prior to the receipt of
stockholder approval of the plan. The Company currently intends to submit
the Stock Option Plan to stockholders for approval following the one-year
anniversary of the Conversion. However, the Company reserves the right to
submit such plans to stockholders at a special meeting of stockholders,
provided that such meeting is at least six months following the Conversion.
In such event, the proposed Stock Option Plan would need to be revised to
include a mandatory five-year vesting schedule and a prohibition on
accelerated vesting in the event of retirement or a change in control, which
provisions are required by current OTS regulations for plans implemented
within one year following the Conversion, as well as any other revisions
necessary to comply with then applicable OTS regulations and policies.
RECOGNITION PLAN. Following consummation of the Conversion, the Board
of Directors of the Company intends to adopt a Recognition Plan for
directors, officers and employees. The objective of the Recognition Plan
will be to enable the Company to provide directors, officers and employees
with a proprietary interest in the Company as an incentive to contribute to
its success.
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The Recognition Plan will be administered by a committee of the Board of
Directors, which will have the responsibility to invest all funds contributed
to the trust created for the Recognition Plan (the "Trust"). The Company
will contribute sufficient funds to the Trust so that the Trust can purchase,
following the receipt of stockholder approval, a number of shares equal to an
aggregate of 4% of the Common Stock sold in the Conversion (119,600 shares,
based on the sale of 2,990,000 shares at the maximum of the Estimated
Valuation Range). Shares of Common Stock granted pursuant to the Recognition
Plan generally will be in the form of restricted stock and will vest at the
rate of 20% per year over the five years following the date of grant. For
accounting purposes, compensation expense in the amount of the fair market
value of the Common Stock at the date of the grant to the recipient will be
recognized pro rata over the period during which the shares are payable. A
recipient will be entitled to all voting and other stockholder rights, except
that the shares, while restricted, may not be sold, pledged or otherwise
disposed of and are required to be held in the Trust. Under the terms of the
Recognition Plan, recipients of awards will be entitled to instruct the
trustee of the Recognition Plan as to how the underlying shares should be
voted, and the trustee will be entitled to vote all unallocated shares in its
discretion. If a recipient terminates employment for reasons other than
death or disability, the recipient will forfeit all rights to the allocated
shares under restriction. If the recipient's termination is caused by death
or disability, all restrictions will expire and all allocated shares will
become unrestricted. All restrictions also will expire and all allocated
shares will become unrestricted in the event of retirement or a change in
control of the Company, as defined in the Recognition Plan. However, if the
plan is implemented within the first year following the Conversion, current
OTS regulations would prohibit accelerated vesting except in the event of
disability or death. The Board of Directors of the Company can terminate the
Recognition Plan at any time, and if it does so, any shares not allocated
will revert to the Company. Recipients of grants under the Recognition Plan
will not be required to make any payment at the time of grant or when the
underlying shares of Common Stock become vested, other than payment of
withholding taxes.
It is currently expected that 30% of the shares available under the
Recognition Plan will be granted to non-employee directors, with each
non-employee director receiving an award for the same number of shares, in
which event awards for a total of approximately 5,125 shares would be granted
to each of the seven non-employee directors if the amount of Common Stock
sold in the Conversion is equal to the maximum of the Estimated Valuation
Range. In addition, it is currently expected that awards will be granted to
Messrs. Donald C. Scott and Bruce A. Scott, although no determination has
been made at this time as to the amount of such awards. The Recognition Plan
will provide that no officer would be able to receive an award for more than
25% of the shares available under the Recognition Plan, or 29,900 shares if
the amount of Common Stock sold in the Conversion is equal to the maximum of
the Estimated Valuation Range.
The Recognition Plan will not be implemented prior to the receipt of
stockholder approval of the plan. The Company currently intends to submit
the Recognition Plan to stockholders for approval following the one-year
anniversary of the Conversion. However,
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the Company reserves the right to submit such plan to stockholders at a
special meeting following the Conversion, provided that such meeting is held
at least six months following the Conversion. In such event, the Recognition
Plan would need to be revised to include a prohibition on accelerated vesting
in the event of retirement or a change in control, since such accelerated
vesting is not permitted by current OTS regulations applicable to plans
implemented within one year following the Conversion. If the Recognition
Plan is implemented within one year of the Conversion, it would also need to
be revised to remove the provisions permitting recipients of grants to vote
the underlying shares of Common Stock and receive dividends on such shares
prior to the dates such shares vest, as well as any other revisions necessary
to comply with then applicable OTS regulations and policies.
MANAGEMENT OF THE ASSOCIATION
DIRECTORS
The direction and control of the Association is vested in its Board of
Directors, which currently consists of nine members. The Association's
mutual Articles of Incorporation require the Board of Directors to be elected
each year. Following the Conversion, the Association's stock Articles of
Incorporation will require the Board of Directors to be divided into three
classes as nearly equal in number as possible. The members of each class are
elected for a term of three years or until their successors are elected and
qualified, with one class of directors elected annually. No director is
related to any other director or executive officer by first cousin or closer,
except that Donald C. Scott and Bruce A. Scott are brothers and Bruce A.
Scott and Stephen L. Cory are brothers-in-law. The following table sets
forth certain information regarding the Board of Directors of the
Association.
Positions Held
With the Director
Name Age(1) Association Since
- ------------------------ ----- -------------------------- --------
Kenneth B. Caldcleugh 47 Director 1996
Stephen L. Cory 46 Director 1995
Bradford A. Glazer 40 Director 1991
J. Scott Key 44 Director 1991
Victor Kirschman 73 Director 1977
Mannie D. Paine, Jr., M.D. 79 Director 1976
Bruce A. Scott 43 Director and Executive Vice
President 1982
Donald C. Scott 45 Chairman, President and
Chief Executive Officer 1982
Albert J. Zahn, Jr. 45 Director 1992
____________________
(1) As of September 30, 1996.
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Set forth below is information with respect to the principal occupations
of the directors of the Association during the last five years.
KENNETH B. CALDCLEUGH. Mr. Caldcleugh is a Vice President and Regional
Manager of Glazer Wholesale Spirit & Wine Distributors.
STEPHEN L. CORY. Mr. Cory is an insurance agent and President of the
Cory, Tucker & Lorrowe Insurance Agency in Metairie, Louisiana.
BRADFORD A. GLAZER. Mr. Glazer is the Chairman of Glazer Steel
Corporation, a metal service center in New Orleans, Louisiana and Knoxville,
Tennessee. He is also Chairman and President of Glazer Enterprises,
Cincinnati, Ohio, an enterprise with diversified business management and
investment interests.
J. SCOTT KEY. Mr. Key is the President of Kencoil, Inc. (previously D&S
Industries), an electric motor coil manufacturer and its subsidiary Scott
Armature, a provider of sales and service of electrical apparatus, in Belle
Chasse, Louisiana.
VICTOR KIRSCHMAN. Mr. Kirschman is the Chairman of M. Kirschman & Co.,
Inc., a a retail furniture business with its main office in New Orleans,
Louisiana,
MANNIE D. PAINE. Dr. Paine is a retired physician. Dr. Paine has
provided consulting services to Blue Cross and Blue Shield of Louisiana since
1990 and Unisys.
BRUCE A. SCOTT. Mr. Scott is an attorney and Executive Vice President
of the Association. Mr. Scott is legal counsel and Personnel Manager for the
Association. Mr. Scott also performs certain legal services for the
Association and its borrowers in connection with real estate loan closings
and receives fees from the borrowers in connection therewith.
DONALD C. SCOTT. Mr. Scott has served as President of the Association
since 1985, prior thereto he served in various management and other
positions at Guaranty Savings.
ALBERT J. ZAHN, JR. Mr. Zahn is a certified public accountant and
partner in the firm of Zahn, Kenney & Bresette in Metairie, Louisiana.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to the
one executive officer of the Association who is not a director. There are no
arrangements or understandings between the Association and such person
pursuant to which such person was elected an executive officer of the
Association, and such officer is not related to any director or officer of
the Association by blood, marriage or adoption.
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Name Age(1) Position(s)
- ----------------- ------ -----------------------------
Lettie Rufin Moll 42 Vice President and Secretary
Ralph E. Weber 52 Vice President
____________________
(1) As of September 30, 1996.
Set forth below is information with respect to the principal occupations
of the above executive officer during the last five years.
LETTIE RUFIN MOLL. Ms. Moll currently is Vice President and corporate
Secretary of Guaranty Savings. She has been an employee of the Association
since 1975.
RALPH WEBER. Mr. Weber has primary responsibility for the Association's
data processing requirements and currently serves as Vice President. Mr.
Weber has been employed at Guaranty Savings since 1977.
BOARD MEETINGS AND COMMITTEES
Regular meetings of the Board of Directors of the Association are held
on at least a monthly basis and special meetings of the Board of Directors
are held from time-to-time as needed. There were 12 meetings of the Board of
Directors held during the year ended December 31, 1995. NO DIRECTOR
ATTENDED FEWER THAN 75% OF THE TOTAL NUMBER OF MEETINGS OF THE BOARD OF
DIRECTORS OF GUARANTY SAVINGS DURING 1995 AND THE TOTAL NUMBER OF MEETINGS
HELD BY ALL COMMITTEES OF THE BOARD ON WHICH THE DIRECTOR SERVED DURING SUCH
YEAR.
The Board of Directors of the Association has established various
committees, including Executive, Compensation, Real Estate, Nominating and
Audit Committees.
DIRECTOR COMPENSATION
During the year ended December 31, 1995, each member of the Board of
Directors of the Association was paid $700 per Board meeting and $__ per
committee meeting.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Association
for services rendered in all capacities during the year ended December 31,
1995 to the President and Chief Executive Officer of the Association and the
one other executive officer of the Association whose total cash compensation
during the year exceeded $100,000.
Annual Compensation
Name and Principal --------------------------------------
Position Year Salary Bonus Other(1)
-------------------------- ---- ------- ------- ----------
Donald C. Scott
President and Chief
Executive Officer 1995 $97,127 $16,552 $13,642
Bruce A. Scott
Executive Vice President 1995 $88,650 $15,106 $12,451
______________________
(1) Amounts reflect Association's contribution to its defined contributory
pension plan on behalf of the employee. See "- Defined Contributory
Pension Plan." Annual compensation does not include amounts
attributable to other miscellaneous benefits received by the executive
officers. The costs to the Association of providing such benefits
during 1995 did not exceed 10% of the total salary and bonus paid to
or accrued for the benefit of such individual executive officer.
EMPLOYMENT AGREEMENTS
The Company and the Association (collectively the "Employers") intend
to enter into employment agreements with Messrs. Donald Scott and Bruce Scott
effective upon consummation of the Conversion. The Employers have agreed to
employ Messrs. Donald Scott and Bruce Scott for a term of three years and
following consummation of the Conversion in their current position at their
current salary levels. At least 30 days prior to each annual anniversary
date of each of the employment agreements, the Boards of Directors of the
Company and the Association shall determine whether or not to extend the term
of each agreement for an additional one year. Any party may elect not to
extend the agreements for an additional year by providing written notice at
least 30 days prior to any annual anniversary date.
The employment agreements will be terminable with or without cause by
the Employers. The officers shall have no right to compensation or other
benefits pursuant to the employment agreements for any period after voluntary
termination or termination by the Employers for cause, disability, retirement
or death, provided, however, that (i) in the
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event that an officer terminates his employment because of failure of the
Employers to comply with any material provision of the employment agreement
or (ii) the employment agreement is terminated by the Employers other than
for cause, disability, retirement or death or by the officer as a result of
certain adverse actions which are taken with respect to the officer's
employment following a Change in Control of the Company, as defined, Messrs.
Donald Scott and Bruce Scott will each be entitled to a cash severance amount
equal to three times his average annual compensation over his most recent
five taxable years. In addition, the officer will be entitled to a
continuation of benefits similar to those he is receiving at the time of such
termination for the remaining term of the agreement or until the officer
obtains full-time employment with another employer, whichever occurs first.
A Change in Control is generally defined in the employment agreement
to include any change in control required to be reported under the federal
securities laws, as well as (i) the acquisition by any person of 25% or more
of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any two-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
The employment agreements will provide that in the event that any of
the payments to be made thereunder or otherwise upon termination of employment
are deemed to constitute a "parachute payment" within the meaning of Section
280G of the Code, then such payments and benefits received thereunder shall
be reduced, in the manner determined by the employee, by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits being non-deductible by the Employers for federal income tax
purposes. Parachute payments generally are payments equal to or exceeding
three times the base amount, which is defined to mean the recipient's average
annual compensation from the employer includable in the recipient's gross
income during the most recent five taxable years ending before the date on
which a change in control of the employer occurred. Recipients of parachute
payments are subject to a 20% excise tax on the amount by which such
payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as
compensation expense for federal income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant
anti-takeover effect.
DEFINED CONTRIBUTORY PENSION PLAN
The Association maintains a Simplified Employee Pension-Individual
Retirement Account Agreement (the "SEP-IRA") for its employees. Each
employee who (i) is at least age 18 and (ii) has performed services for the
Association in at least one year of the immediately preceding five years is
eligible to participate. Under the SEP-IRA, a participant may defer up to
15% of his compensation. The Association may make
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discretionary contributions to participants' accounts on an annual basis.
During 1995 and 1994, the Association made contributions to the SEP-IRA in
amounts equaling [12%] of participants' compensation. The Association's
contributions to the SEP-IRA amounted to $128,000 and $125,000 for 1995 and
1994, respectively. Participants are immediately vested in employer
contributions as well as their elective deferrals and may withdraw either at
any time. Amounts withdrawn, however, are includible in a participant's
income and may be subject to a 10% penalty tax.
INDEBTEDNESS OF MANAGEMENT
In the ordinary course of business, the Association makes loans
available to its directors, officers and employees. Such loans are made on
the same terms as comparable loans to other borrowers. It is the belief of
management that these loans neither involve more than the normal risk of
collectibility nor present other unfavorable features. At December 31, 1995,
the Association had four loans outstanding to directors and executive
officers of the Association, or members of their immediate families, all of
which were secured by their primary residences. These loans totalled
approximately $209,000 or less than 1% of the Association's total net worth
at September 30, 1996.
THE CONVERSION
THE BOARD OF DIRECTORS OF THE COMPANY AND THE ASSOCIATION HAVE APPROVED
THE PLAN OF CONVERSION, AS HAS THE OTS AND THE OFI, SUBJECT TO APPROVAL BY
THE MEMBERS OF GUARANTY SAVINGS ENTITLED TO VOTE ON THE MATTER AND THE
SATISFACTION OF CERTAIN OTHER CONDITIONS. SUCH OTS AND OFI APPROVALS,
HOWEVER, DO NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY
EITHER OF SUCH AGENCIES.
GENERAL
On October 10, 1996, the Board of Directors of the Association
unanimously adopted the Plan, pursuant to which the Association will be
converted from a Louisiana-chartered mutual savings and loan association to a
Louisiana-chartered stock savings and loan association to be known as
"Guaranty Savings and Homestead Association," and the Company will offer and
sell the Common Stock. It is intended that all of the common stock of the
Association following the Conversion will be held by the Company, which is
incorporated under Louisiana law. The Plan has been approved by the OTS and
the OFI, subject to, among other things, approval of the Plan by the members
of the Association. A Special Meeting has been called for this purpose to be
held on _____ __, 1996.
In adopting the Plan, the Board of Directors of the Association
determined that the Conversion was advisable and in the best interests of its
members and the Association and further determined that the interests of
certain holders of its deposit accounts in the net
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worth of the Association would be equitably provided for and that the
Conversion would not have any adverse impact on the reserves and net worth of
the Association.
The Company has received approval from the OTS and the OFI to become a
savings and loan holding company and to acquire all of the common stock of
the Association to be issued in connection with the Conversion. The Company
plans to retain 50% of the net proceeds from the sale of the Common Stock,
with all the remaining proceeds used to purchase all of the then to be issued
and outstanding capital stock of the Association. Based on the minimum and
maximum of the Estimated Valuation Range, approximately $1,768,000 and
$2,392,000, respectively, of the net proceeds retained by the Company are
intended to be used to loan funds to the ESOP to enable the ESOP to purchase
up to 8% of the Common Stock. The Conversion will be effected only upon
completion of the sale of all of the shares of Common Stock to be issued
pursuant to the Plan.
The Plan provides generally that, in connection with the Conversion, the
Company will offer shares of Common Stock for sale in the Subscription
Offering to the Association's Eligible Account Holders, ESOP, Supplemental
Eligible Account Holders, Other Members, officers, directors and employees of
the Association and in a concurrent Community Offering to certain members of
the general public, subject to the prior rights of holders of subscription
rights. See "- Subscription Offering and Subscription Rights" and
"- Community Offering." It is anticipated that all shares not subscribed for
in the Subscription and Community Offerings will be offered for sale by the
Company to the general public in a Syndicated Community Offering. See
"- Syndicated Community Offering." The Company and the Association have the
right to accept or reject, in whole or in part, any orders to purchase shares
of Common Stock received in the Community Offering or in the Syndicated
Community Offering.
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Valuation Range, currently estimated to be
between $22,100,000 and $29,900,000, will be determined based upon an
independent appraisal of the estimated pro forma market value of the Common
Stock. All shares of Common Stock to be issued and sold in the Conversion
will be sold at the same price. The independent appraisal will be affirmed
or, if necessary, updated at the completion of the Subscription and Community
Offerings, if all shares are subscribed for, or at the completion of the
Syndicated Community Offering. The appraisal has been performed by RP
Financial, a consulting firm experienced in the valuation and appraisal of
savings institutions. See "- Stock Pricing and Number of Shares to be
Issued" for more information as to the determination of the estimated pro
forma market value of the Common Stock.
The following is a brief summary of pertinent aspects of the Conversion.
The summary is qualified in its entirety by reference to the provisions of
the Plan. A copy of the Plan is available for inspection at the offices of
the Association and at the offices of the OTS. The Plan is also filed as an
exhibit to the Registration Statement of which this
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Prospectus is a part, copies of which may be obtained from the SEC. See
"Additional Information."
PURPOSES OF CONVERSION
The Association, as a Louisiana-chartered mutual savings and loan
association, does not have stockholders and has no authority to issue capital
stock. By converting to the capital stock form of organization, the
Association will be structured in the form used by commercial banks, most
business entities and a growing number of savings institutions. The
Conversion will result in an increase in the capital base of the Association
and the Company, which will support the operations of the Association and
Company.
The Conversion will permit the Association's customers and members of
the local community and of the general public to become equity owners and to
share in the future of the Company and the Association. The Conversion will
also provide additional funds for lending and investment activities,
facilitate future access to the capital markets, enhance the ability of the
Company to diversify and expand into other markets and enable the Association
to compete more effectively with other financial institutions.
The holding company form of organization will provide additional
flexibility to diversify the Company's and the Association's business
activities through existing or newly formed subsidiaries, or through
acquisition of or mergers with other financial institutions, as well as other
companies. Although there are no current arrangements, understandings or
agreements regarding any such opportunities, the Company will be in a
position after the Conversion, subject to regulatory limitations and the
Company's financial position, to take advantage of any such opportunities
that may arise.
After completion of the Conversion, the unissued common and preferred
stock authorized by the Company's Articles of Incorporation will permit the
Company, subject to market conditions and applicable regulatory approvals, to
raise additional equity capital through further sales of securities, and to
issue securities in connection with possible acquisitions. At the present
time, the Company has no plans with respect to additional offerings of
securities, other than the possible issuance of additional shares to the
Recognition Plan or upon exercise of stock options. Following the
Conversion, the Company will also be able to use stock-related incentive
programs to attract and retain executive and other personnel for itself and
its subsidiaries. See "Management of the Company - Benefits."
EFFECTS OF CONVERSION
GENERAL. Prior to the Conversion, each depositor in the Association has
both a deposit account in the institution and a pro rata ownership interest
in the net worth of the Association based upon the balance in his account,
which interest may only be realized in the event of a liquidation of the
Association. However, this ownership interest is tied to the
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depositor's account and has no tangible market value separate from such
deposit account. Any person who opens a deposit account obtains a pro rata
ownership interest in the net worth of the Association without any additional
payment beyond the amount of the deposit. A depositor who reduces or closes
his account receives a portion or all of the balance in the account but
nothing for his ownership interest in the net worth of the Association, which
is lost to the extent that the balance in the account is reduced.
Consequently, the depositors of the Association normally have no way to
realize the value of their ownership interest, which has realizable value
only in the unlikely event that the Association is liquidated. In such
event, the depositors of record at that time, as owners, would share pro rata
in any residual surplus and reserves of the Association after other claims,
including claims of depositors to the amount of their deposits, are paid.
When the Association converts to stock form, permanent nonwithdrawable
capital stock will be created to represent the ownership of the net worth of
the Association, and the Association will become a wholly owned subsidiary of
the Company. THE COMMON STOCK OF THE ASSOCIATION AND THE COMPANY IS SEPARATE
AND APART FROM DEPOSIT ACCOUNTS OF THE ASSOCIATION AND CANNOT BE AND IS NOT
INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. Certificates are
issued to evidence ownership of the permanent stock of the Association and
the Company. The stock certificates are transferable, and therefore the
stock may be sold or traded if a purchaser is available with no effect on any
account the seller may hold in the Association.
CONTINUITY. While the Conversion is being accomplished, the normal
business of the Association of accepting deposits and making loans will
continue without interruption. The Association will continue to be subject
to regulation by the OTS, the OFI and the FDIC. After the Conversion, the
Association will continue to provide services for depositors and borrowers
under current policies by its present management and staff.
The directors and officers of the Association at the time of the
Conversion will continue to serve as directors and officers of the
Association after the Conversion. The directors and officers of the Company
consist of individuals currently serving as directors and officers of the
Association, and they will retain their positions in the Association after
the Conversion.
EFFECT ON DEPOSIT ACCOUNTS. Under the Plan, each depositor in the
Association at the time of the Conversion will automatically continue as a
depositor after the Conversion, and each such deposit account will remain the
same with respect to deposit balance, interest rate and other terms, except
to the extent that funds in the account are withdrawn to purchase the Common
Stock and except with respect to voting and liquidation rights. Each such
account will be insured by the FDIC to the same extent as before the
Conversion. Depositors will continue to hold their existing certificates,
passbooks and other evidences of their accounts.
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EFFECT ON LOANS. No loan outstanding from the Association will be
affected by the Conversion, and the amount, interest rate, maturity and
security for each loan will remain as they were contractually fixed prior to
the Conversion.
EFFECT ON VOTING RIGHTS OF MEMBERS. At present, all depositors and
certain borrowers of the Association are members of, and have voting rights
in, the Association as to all matters requiring membership action. Upon
completion of the Conversion, depositors and borrowers will cease to be
members and will no longer be entitled to vote at meetings of the
Association. Upon completion of the Conversion, all voting rights in the
Association will be vested in the Company as the sole stockholder of the
Association. Exclusive voting rights with respect to the Company will be
vested in the holders of Common Stock. Depositors of and borrowers from the
Association will not have voting rights in the Company after the Conversion,
except to the extent that they become stockholders of the Company.
TAX EFFECTS. Consummation of the Conversion is conditioned on prior
receipt by the Company and the Association of rulings or opinions with regard
to federal and Louisiana income taxation which indicate that the adoption and
implementation of the Plan of Conversion described herein will not be taxable
for federal or Louisiana income tax purposes to the Company and the
Association or the Association's Eligible Account Holders or Supplemental
Eligible Account Holders, except as discussed below. The Association has
received favorable opinions regarding the federal and Louisiana income tax
consequences of the Conversion. See "- Tax Aspects."
EFFECT ON LIQUIDATION RIGHTS. Were the Association to liquidate, all
claims of the Association's creditors (including those of depositors, to the
extent of their deposit balances) would be paid first. Thereafter, if there
were any assets remaining, members of the Association would receive such
remaining assets, pro rata, based upon the deposit balances in their deposit
accounts at the Association immediately prior to liquidation. In the
unlikely event that the Association were to liquidate after the Conversion,
all claims of creditors (including those of depositors, to the extent of
their deposit balances) would also be paid first, followed by distribution of
the "liquidation account" to certain depositors (see "- Liquidation Rights"),
with any assets remaining thereafter distributed to the Company as the holder
of the Association's capital stock. Pursuant to the rules and regulations of
the OTS, a post-Conversion merger, consolidation, sale of bulk assets or
similar combination or transaction with another insured savings institution
would not be considered a liquidation and, in such a transaction, the
liquidation account would be required to be assumed by the surviving
institution.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED
The Plan of Conversion requires that the purchase price of the Common
Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation. The
Association has retained RP Financial to
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make such valuation. For its services in making such appraisal, RP
Financial's fees and out-of-pocket expenses are estimated to be $15,250. The
Association has agreed to indemnify RP Financial and any employees of RP
Financial who act for or on behalf of RP Financial in connection with the
appraisal against any and all loss, cost, damage, claim, liability or expense
of any kind (including claims under federal and state securities laws)
arising out of any misstatement or untrue statement of a material fact or an
omission to state a material fact in the information supplied by the
Association to RP Financial, unless RP Financial is determined to be
negligent or otherwise at fault.
An appraisal has been made by RP Financial in reliance upon the
information contained in this Prospectus, including the Financial Statements.
RP Financial also considered the following factors, among others: the
present and projected operating results and financial condition of the
Company and the Association and the economic and demographic conditions in
the Association's existing marketing area; certain historical, financial and
other information relating to the Association; a comparative evaluation of
the operating and financial statistics of the Association with those of other
similarly situated publicly traded savings institutions located in Louisiana
and other regions of the United States; the aggregate size of the offering of
the Common Stock; the impact of the Conversion on the Association's net worth
and earnings potential; the proposed dividend policy of the Company and the
Association; and the trading market for securities of comparable institutions
and general conditions in the market for such securities. In its review of
the appraisal provided by RP Financial, the Board of Directors reviewed the
methodologies and the appropriateness of the assumptions used by RP Financial
in addition to the factors enumerated above, and the Board of Directors
believes that such assumptions were reasonable.
On the basis of the foregoing, RP Financial has advised the Company and
the Association that in its opinion, dated December 20, 1996, the estimated
pro forma market value of the Common Stock ranged from a minimum of
$22,100,000 to a maximum of $29,900,000 with a midpoint of $26,000,000. The
Boards of Directors of the Company and the Association determined that the
Common Stock should be sold at $10.00 per share, resulting in a range of
2,210,000 to 2,990,000 shares of Common Stock being offered. The Estimated
Valuation Range may be amended with the approval of the OTS and the OFI, if
required, or if necessitated by subsequent developments in the financial
condition of the Company and the Association or market conditions generally,
or to fill the order of the ESOP. In the event the Estimated Valuation Range
is updated to amend the value of the Association below $22,100,000 or above
$34,385,000 (the maximum of the Estimated Valuation Range, as adjusted by
15%), the new appraisal will be filed with the SEC by post-effective
amendment.
Based upon current market and financial conditions and recent practices
and policies of the OTS, in the event the Company receives orders for Common
Stock in excess of $29,900,000 (the maximum of the Estimated Valuation Range)
and up to $34,385,000 (the maximum of the Estimated Valuation Range, as
adjusted by 15%), the Company may be
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required by the OTS to accept all such orders. No assurances, however, can
be made that the Company will receive orders for Common Stock in excess of
the maximum of the Estimated Valuation Range or that, if such orders are
received, that all such orders will be accepted because the Company's final
valuation and number of shares to be issued are subject to the receipt of an
updated appraisal from RP Financial which reflects such an increase in the
valuation and the approval of such increase by the OTS. In addition, an
increase in the number of shares above 2,990,000 shares will first be used,
if necessary, to fill the order of the ESOP. There is no obligation or
understanding on the part of management to take and/or pay for any shares in
order to complete the Conversion.
RP FINANCIAL'S VALUATION IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS
A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SUCH
SHARES. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS
AND OTHER INFORMATION PROVIDED BY THE ASSOCIATION, NOR DID RP FINANCIAL VALUE
INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE ASSOCIATION. THE VALUATION
CONSIDERS THE ASSOCIATION AS A GOING CONCERN AND SHOULD NOT BE CONSIDERED AS
AN INDICATION OF THE LIQUIDATION VALUE OF THE ASSOCIATION. MOREOVER, BECAUSE
SUCH VALUATION IS NECESSARILY BASED UPON ESTIMATES AND PROJECTIONS OF A
NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO CHANGE FROM TIME TO TIME, NO
ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING COMMON STOCK IN THE CONVERSION
WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT PRICES AT OR ABOVE THE
PURCHASE PRICE OR IN THE RANGE OF THE FOREGOING VALUATION OF THE PRO FORMA
MARKET VALUE THEREOF.
Prior to completion of the Conversion, the maximum of the Estimated
Valuation Range may be increased up to 15% and the number of shares of Common
Stock may be increased to up to 3,438,500 shares to reflect changes in market
and financial conditions or to fill the order of the ESOP, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases"
as to the method of distribution and allocation of additional shares that may
be issued in the event of an increase in the Estimated Valuation Range to
fill unfilled orders in the Subscription Offering.
No sale of shares of Common Stock in the Conversion may be consummated
unless prior to such consummation RP Financial confirms that nothing of a
material nature has occurred which, taking into account all relevant factors,
would cause it to conclude that the Purchase Price is materially incompatible
with the estimate of the pro forma market value of a share of Common Stock
upon consummation of the Conversion. If such is not the case, a new
Estimated Valuation Range may be set and a new Subscription and Community
Offering and/or Syndicated Community Offering may be held or such other
action may be taken as the Company and the Association shall determine and
the OTS and the OFI may permit or require.
Depending upon market or financial conditions following the commencement
of the Subscription Offering, the total number of shares of Common Stock may
be increased or decreased without a resolicitation of subscribers, provided
that the product of the total number of shares times the Purchase Price is
not below the minimum or more than 15%
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above the maximum of the Estimated Valuation Range. In the event market or
financial conditions change so as to cause the aggregate Purchase Price of
the shares to be below the minimum of the Estimated Valuation Range or more
than 15% above the maximum of such range, purchasers will be resolicited
(i.e., permitted to continue their orders, in which case they will need to
affirmatively reconfirm their subscriptions prior to the expiration of the
resolicitation offering or their subscription funds will be promptly refunded
with interest at the Association's passbook rate of interest, or be permitted
to modify or rescind their subscriptions). Any change in the Estimated
Valuation Range must be approved by the OTS. If the number of shares of
Common Stock issued in the Conversion is increased due to an increase of up
to 15% in the Estimated Valuation Range to reflect changes in market or
financial conditions or to fill the order of the ESOP, persons who subscribed
for the maximum number of shares will be given the opportunity to subscribe
for the adjusted maximum number of shares. See "- Limitations on Common
Stock Purchases."
An increase in the number of shares of Common Stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and the Company's pro forma net income and
stockholders' equity on a per share basis while increasing pro forma net
income and stockholders' equity on an aggregate basis. A decrease in the
number of shares of Common Stock would increase both a subscriber's ownership
interest and the Company's pro forma net income and stockholders' equity on a
per share basis while decreasing pro forma net income and stockholders'
equity on an aggregate basis. See "Risk Factors - Possible Increase in
Number of Shares Issued in the Conversion" and "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any amendments
thereto, and the detailed report of the appraiser setting forth the method
and assumptions for such appraisal are available for inspection at the main
office of the Association and the other locations specified under "Additional
Information."
SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to
the following persons in the following order of descending priority: (1)
Eligible Account Holders, (2) the ESOP, (3) Supplemental Eligible Account
Holders, (4) Other Members, and (5) directors, officers and employees of the
Association. All subscriptions received will be subject to the availability
of Common Stock after satisfaction of all subscriptions of all persons having
prior rights in the Subscription Offering and to the maximum and minimum
purchase limitations set forth in the Plan of Conversion and as described
below under "- Limitations on Common Stock Purchases."
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder
will receive, without payment therefor, first priority, nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of (i) $250,000 of Common Stock, (ii) one-
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tenth of one percent (0.10%) of the total offering of shares of Common Stock
or (iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to be
issued by a fraction, of which the numerator is the amount of the Eligible
Account Holder's qualifying deposit and the denominator of which is the total
amount of qualifying deposits of all Eligible Account Holders, in each case
as of the close of business on September 30, 1995 (the "Eligibility Record
Date"), subject to the overall purchase limitations. See "- Limitations on
Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated among subscribing Eligible
Account Holders so as to permit each such Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Thereafter, any shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares
subscribed for or 100 shares will be allocated among the subscribing Eligible
Account Holders whose subscriptions remain unfilled in the proportion that
the amounts of their respective eligible deposits bear to the total amount of
eligible deposits of all subscribing Eligible Account Holders whose
subscriptions remain unfilled, provided that no fractional shares shall be
issued. Subscription Rights of Eligible Account Holders will be subordinated
to the priority rights of Tax-Qualified Employee Stock Benefit Plans to
purchase shares in excess of the maximum of the Estimated Valuation Range.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in fewer shares being
allocated than if all accounts had been disclosed. The subscription rights
of Eligible Account Holders who are also directors or officers of the
Association or their associates will be subordinated to the subscription
rights of other Eligible Account Holders to the extent attributable to
increased deposits in the year preceding September 30, 1995.
PRIORITY 2: EMPLOYEE STOCK OWNERSHIP PLAN. The ESOP will receive,
without payment therefor, second priority, nontransferable subscription
rights to purchase, in the aggregate, up to 10% of the Common Stock,
including any increase in the number of shares of Common Stock after the date
hereof as a result of an increase of up to 15% in the maximum of the
Estimated Valuation Range. The ESOP intends to purchase 8% of the shares of
Common Stock, or 176,800 shares and 239,200 shares based on the minimum and
maximum of the Estimated Valuation Range, respectively. Subscriptions by the
ESOP will not be aggregated with shares of Common Stock purchased directly by
or which are otherwise attributable to any other participants in the
Subscription and Community Offerings, including subscriptions of any of the
Association's directors, officers, employees or associates thereof. In the
event that the total number of shares offered in the Conversion is increased
to an amount greater than the number of shares representing the maximum of
the Estimated Valuation Range ("Maximum Shares"), the ESOP will have a
priority right to purchase any such shares exceeding the Maximum Shares up to
an aggregate of 10% of
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the Common Stock. See "Management of the Company -Benefits - Employee Stock
Ownership Plan."
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent that
there are sufficient shares remaining after satisfaction of subscriptions by
Eligible Account Holders and the ESOP, each Supplemental Eligible Account
Holder will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of (i) $250,000 of Common Stock, (ii) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock or (iii)
15 times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction, of which the numerator is the amount of the Supplemental Eligible
Account Holder's qualifying deposit and the denominator of which is the total
amount of qualifying deposits of all Supplemental Eligible Account Holders,
in each case as of the close of business on December 31, 1996 (the
"Supplemental Eligibility Record Date"), subject to the overall purchase
limitations. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions of all Supplemental Eligible Account Holders, available shares
first will be allocated among subscribing Supplemental Eligible Account
Holders so as to permit each such Supplemental Eligible Account Holder, to
the extent possible, to purchase a number of shares sufficient to make his
total allocation equal to the lesser of the number of shares subscribed for
or 100 shares. Thereafter, any shares remaining available will be allocated
among the Supplemental Eligible Account Holders whose subscriptions remain
unfilled in the proportion that the amounts of their respective eligible
deposits bear to the total amount of eligible deposits of all subscribing
Supplemental Eligible Account Holders whose subscriptions remain unfilled,
provided that no fractional shares shall be issued.
PRIORITY 4: OTHER MEMBERS. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP and Supplemental Eligible Account Holders, each Other
Member will receive, without payment therefor, fourth priority,
nontransferable subscription rights to subscribe for Common Stock in the
Subscription Offering up to the greater of (i) $250,000 of Common Stock or
(ii) one-tenth of one percent (0.10%) of the total offering of shares of
Common Stock, subject to the overall purchase limitations. See
"- Limitations on Common Stock Purchases."
In the event the Other Members subscribe for a number of shares which,
when added to the shares subscribed for by Eligible Account Holders, the ESOP
and Supplemental Eligible Account Holders, is in excess of the total number
of shares of Common Stock offered in the Conversion, available shares first
will be allocated so as to permit each subscribing Other Member, to the
extent possible, to purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Thereafter, any remaining shares will be allocated among such
subscribing Other Members on a pro rata basis in the same proportion as each
Other Member's
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subscription bears to the total subscriptions of all subscribing Other
Members, provided that no fractional shares shall be issued.
PRIORITY 5: DIRECTORS, OFFICERS AND EMPLOYEES. To the extent that
there are sufficient shares remaining after satisfaction of all subscriptions
by Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders
and Other Members, then directors, officers and employees of the Association
will receive, without payment therefor, fifth priority, nontransferable
subscription rights to subscribe for, in this category, an aggregate of up to
20% of the shares of Common Stock offered in the Subscription Offering. The
ability of directors, officers and employees to purchase Common Stock under
this category is in addition to rights which are otherwise available to them
under the Plan as they may fall within higher priority categories, and the
Plan generally allows such persons to purchase in the aggregate up to 34% of
Common Stock sold in the Conversion. See "- Limitations on Common Stock
Purchases."
In the event of an oversubscription in this category, subscription
rights will be allocated among the individual directors, officers and
employees on a point system basis, whereby such individuals will receive
subscription rights in the proportion that the number of points assigned to
each of them bears to the total points assigned to all directors, officers
and employees, provided that no fractional shares shall be issued. One point
will be assigned for each year of service with the Association, one point for
each salary increment of $5,000 per annum and five points for each office
presently held in the Association, including directorships. For information
as to the number of shares proposed to be purchased by certain of the
directors and officers, see "Proposed Management Purchases."
EXPIRATION DATE FOR THE SUBSCRIPTION OFFERING. The Subscription
Offering will expire at 12:00 noon, Central Time, on _________ __, 199_ (the
"Subscription Expiration Date"), unless extended for up to 45 days or for
such additional periods by the Company and the Association as may be approved
by the OTS and the OFI. The Subscription Offering may not be extended beyond
_______ __, 199_. Subscription rights which have not been exercised prior to
the Subscription Expiration Date (unless extended) will become void.
The Company and the Association will not execute orders until at least
the minimum number of shares of Common Stock (2,210,000 shares) have been
subscribed for or otherwise sold. If all shares have not been subscribed for
or sold within 45 days after the Subscription Expiration Date, unless such
period is extended with the consent of the OTS and the OFI, all funds
delivered to the Association pursuant to the Subscription Offering will be
returned promptly to the subscribers with interest and all withdrawal
authorizations will be cancelled. If an extension beyond the 45-day period
following the Subscription Expiration Date is granted, the Company and the
Association will notify subscribers of the extension of time and of any
rights of subscribers to modify or rescind their subscriptions.
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COMMUNITY OFFERING
To the extent that shares remain available for purchase after
satisfaction of all subscriptions of Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders, Other Members and directors, officers
and employees of the Association, the Company and the Association have
determined to offer shares pursuant to the Plan to certain members of the
general public, with preference given to natural persons residing in Orleans,
St. Tammany and Jefferson Parishes, Louisiana (such natural persons referred
to as "Preferred Subscribers"). Such persons, together with associates of
and persons acting in concert with such persons, may purchase up to the
greater of (i) $250,000 or 25,000 shares of Common Stock, or (ii) one-tenth
of one percent (0.10%) of the total offering of shares of Common Stock,
subject to the maximum purchase limitations. See "- Limitations on Common
Stock Purchases." THIS AMOUNT MAY BE INCREASED AT THE SOLE DISCRETION OF THE
COMPANY AND THE ASSOCIATION UP TO 5% OR DECREASED TO AS LOW AS 1% OF THE
TOTAL OFFERING OF SHARES IN THE SUBSCRIPTION OFFERING. THE OPPORTUNITY TO
SUBSCRIBE FOR SHARES OF COMMON STOCK IN THE COMMUNITY OFFERING CATEGORY IS
SUBJECT TO THE RIGHT OF THE COMPANY AND THE ASSOCIATION, IN THEIR SOLE
DISCRETION, TO ACCEPT OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART EITHER AT
THE TIME OF RECEIPT OF AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING THE
SUBSCRIPTION EXPIRATION DATE.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Subscription and Community
Offerings, such stock will be allocated first to each Preferred Subscriber
whose order is accepted by the Company, in an amount equal to the lesser of
100 shares or the number of shares subscribed for by each such Preferred
Subscriber, if possible. Thereafter, unallocated shares will be allocated
among the Preferred Subscribers whose accepted orders remain unsatisfied in
the same proportion that the unfilled subscription of each (up to 2% of the
total offering) bears to the total unfilled subscriptions of all Preferred
Subscribers whose accepted orders remains unsatisfied, provided that no
fractional shares shall be issued. Orders for Common Stock in the Community
Offering will first be filled to a maximum of 2% of the total number of
shares of Common Stock sold in the Conversion and thereafter any remaining
shares shall be allocated on an equal number of shares basis per order until
all orders have been filled. If there are any shares remaining, shares will
be allocated to other members of the general public who subscribe in the
Community Offering applying the same allocation described above for Preferred
Subscribers.
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SYNDICATED COMMUNITY OFFERING
As a final step in the Conversion, the Plan provides that, if feasible,
all shares of Common Stock not purchased in the Subscription and Community
Offerings may be offered for sale to the general public in a Syndicated
Community Offering through a syndicate of registered broker-dealers to be
formed. The Company and the Association expect to market any shares which
remain unsubscribed after the Subscription and Community Offerings through a
Syndicated Community Offering. The Company and the Association have the
right to reject orders in whole or part in their sole discretion in the
Syndicated Community Offering. Neither Webb nor any registered broker-dealer
shall have any obligation to take or purchase any shares of Common Stock in
the Syndicated Community Offering; however, Webb has agreed to use its best
efforts in the sale of shares in the Syndicated Community Offering.
The price at which Common Stock is sold in the Syndicated Community
Offering will be the same price at which shares are offered and sold in the
Subscription and Community Offerings. No person will be permitted to
subscribe in the Syndicated Community Offering for more than $250,000 or
25,000 shares of Common Stock, subject to the maximum purchase limitations.
See "- Limitations on Common Stock Purchases." This amount may be increased
to up to 5% of the total offering of shares in the Subscription Offering,
provided that orders for Common Stock in the Syndicated Community Offering
will first be filled to a maximum of 2% of the total number of shares of
Common Stock sold in the Conversion. Thereafter, any remaining shares will
be allocated on an equal number of shares basis per order until all orders
have been filled. The purchase limit may also be decreased to as low as 1%
of the total offering of shares.
Webb may enter into agreements with broker-dealers ("Selected Dealers")
to assist in the sale of the shares in the Syndicated Community Offering,
although no such agreements exist as of the date of this Prospectus. No
orders may be placed or filled by or for a Selected Dealer during the
Subscription Offering. After the close of the Subscription Offering, Webb
will instruct Selected Dealers as to the number of shares to be allocated to
each Selected Dealer. Only after the close of the Subscription Offering and
upon allocation of shares to Selected Dealers may Selected Dealers take
orders from their customers. During the Subscription and Community
Offerings, Selected Dealers may only solicit indications of interest from
their customers to place orders with the Company as of a certain date ("Order
Date") for the purchase of shares of Common Stock. When and if Webb and the
Company believe that enough indications of interest and orders have not been
received in the Subscription and Community Offerings to consummate the
Conversion, Webb will request, as of the Order Date, Selected Dealers to
submit orders to purchase shares for which they have previously received
indications of interest from their customers. Selected Dealers will send
confirmations of the orders to such customers on the next business day after
the Order Date. Selected Dealers will debit the accounts of their customers
on the "Settlement Date" which date will be three business days from the
Order Date. Customers who authorize Selected Dealers to debit their
brokerage accounts are required to have the
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funds for payment in their account on but not before the Settlement Date. On
the Settlement Date, Selected Dealers will remit funds to the account
established by the Association for each Selected Dealer. Each customer's
funds so forwarded to the Association, along with all other accounts held in
the same title, will be insured by the FDIC up to $100,000 in accordance with
applicable FDIC regulations. After payment has been received by the
Association from Selected Dealers, funds will earn interest at the
Association's passbook rate until the consummation or termination of the
Conversion. Funds will be promptly returned, with interest, in the event the
Conversion is not consummated as described above.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company
and the Association with the approval of the OTS and the OFI. See "- Stock
Pricing and Number of Shares to be Issued in the Conversion" above for a
discussion of rights of subscribers, if any, in the event an extension is
granted.
PERSONS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES
The Company and the Association will make reasonable efforts to comply
with the securities laws of all states in the United States in which persons
entitled to subscribe for stock pursuant to the Plan reside. However, the
Company and the Association are not required to offer stock in the
Subscription Offering to any person who resides in a foreign country or
resides in a state of the United States with respect to which: (a) the
number of persons otherwise eligible to subscribe for shares under the Plan
who reside in such jurisdiction is small; (b) the granting of subscription
rights or the offer or sale of shares of Common Stock to such persons would
require any of the Company and the Association or their officers, directors
or employees, under the laws of such jurisdiction, to register as a broker,
dealer, salesman or selling agent or to register or otherwise qualify its
securities for sale in such jurisdiction or to qualify as a foreign
corporation or file a consent to service of process in such jurisdiction; and
(c) such registration, qualification or filing in the judgment of the Company
and the Association would be impracticable or unduly burdensome for reasons
of costs or otherwise. Where the number of persons eligible to subscribe for
shares in one state is small, the Company and the Association will base their
decision as to whether or not to offer the Common Stock in such state on a
number of factors, including but not limited to the size of accounts held by
account holders in the state, the cost of registering or qualifying the
shares or the need to register the Company, its officers, directors or
employees as brokers, dealers or salesmen.
LIMITATIONS ON COMMON STOCK PURCHASES
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased in the Conversion:
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(1) No fewer than 25 shares of Common Stock may be purchased, to
the extent such shares are available;
(2) Each Eligible Account Holder may subscribe for and purchase in
the Subscription Offering up to the greater of (i) $250,000 or 25,000
shares of Common Stock, (ii) one-tenth of one percent (0.10 %) of the
total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock to be issued by a fraction, of
which the numerator is the amount of the qualifying deposit of the
Eligible Account Holder and the denominator is the total amount of
qualifying deposits of all Eligible Account Holders, in each case as of
the close of business on the Eligibility Record Date, subject to the
overall limitation in clause (7) below;
(3) The ESOP may purchase in the aggregate up to 10% of the shares
of Common Stock, including any additional shares issued in the event of
an increase in the Estimated Valuation Range; although at this time it
intends to purchase only 8% of such shares;
(4) Each Supplemental Eligible Account Holder may subscribe for
and purchase in the Subscription Offering up to the greater of (i)
$250,000 or 25,000 shares of Common Stock, (ii) one-tenth of one percent
(0.10%) of the total offering of shares of Common Stock or (iii) 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction, of which the numerator is the amount of the qualifying deposit
of the Supplemental Eligible Account Holder and the denominator is the
total amount of qualifying deposits of all Supplemental Eligible Account
Holders, in each case as of the close of business on the Supplemental
Eligibility Record Date, subject to the overall limitation in clause (7)
below;
(5) Each Other Member or any Person purchasing shares of Common
Stock in the Community Offering may subscribe for and purchase in the
Subscription Offering or Community Offering, as the case may be, up to
the greater of (i) $250,000 or 25,000 shares of Common Stock or (ii)
one-tenth of one percent (0.10%) of the total offering of shares of
Common Stock, subject to the overall limitation in clause (7) below;
(6) Persons purchasing shares of Common Stock in the Community
offering or Syndicated Community Offering may purchase in the Community
Offering or Syndicated Community Offering up to $250,000 or 25,000
shares of Common Stock, subject to the overall limitation in clause
(7) below;
(7) Except for the ESOP and certain Eligible Account Holders and
Supplemental Eligible Account Holders whose subscription rights are
based upon the amount of their deposits, the maximum number of shares of
Common Stock
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subscribed for or purchased in all categories of the Conversion by any
person, together with associates of and groups of persons acting in
concert with such persons, shall not exceed $700,000 or 70,000 of
shares of Common Stock issued in the Conversion; and
(8) No more than 24% of the total number of shares offered for
sale in the Subscription Offering may be purchased by directors and
officers of the Association in the fourth priority category in the
Subscription Offering. No more than 34% of the total number of shares
offered for sale in the Conversion may be purchased by directors and
officers of the Association and their associates in the aggregate,
excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members
of the Association, the individual amount permitted to be subscribed for may
be increased up to a maximum of 5% of the number of shares sold in the
Conversion and both the individual and the overall purchase limitations may
be decreased to a minimum of 1% of the number of shares sold in the
Conversion at the sole discretion of the Company and the Association. If
such amount is increased, subscribers for the maximum amount will be, and
certain other large subscribers in the sole discretion of the Company and the
Association may be, given the opportunity to increase their subscriptions up
to the then applicable limit.
The term "associate" of a person is defined to mean (i) any corporation
or other organization (other than the Company and the Association or a
majority-owned subsidiary of the Association) of which such person is a
director, officer or partner or is directly or indirectly the beneficial
owner of 10% or more of any class of equity securities; (ii) any trust or
other estate in which such person has a substantial beneficial interest or as
to which such person serves as trustee or in a similar fiduciary capacity,
provided, however, that such term shall not include any tax-qualified
employee stock benefit plan of the Company and the Association in which such
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity; and (iii) any relative or spouse of such person,
or any relative of such spouse, who either has the same home as such person
or who is a director or officer of the Company and the Association or any of
their subsidiaries.
The term "acting in concert" is defined to mean (1) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement, or (2)
a combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
The Company and the Association may presume that certain persons are acting
in concert based upon, among other things, joint account relationships and
the fact that such persons have filed joint Schedules 13D with the SEC with
respect to other companies.
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MARKETING ARRANGEMENTS
The Company and the Association have retained Webb to consult with and
to advise the Association and the Company, and to assist the Company, on a
best efforts basis, in the distribution of the shares of Common Stock in the
Subscription and Community Offering. The services that Webb will provide
include, but are not limited to (i) training the employees of the Association
who will perform certain ministerial functions in the Subscription and
Community Offering regarding the mechanics and regulatory requirements of the
stock offering process, (ii) managing the Stock Information Center by
assisting interested stock subscribers and by keeping records of all stock
orders, (iii) preparing marketing materials, and (iv) assisting in the
solicitation of proxies from the Association's members for use at the Special
Meeting. For its services, Webb will receive a management fee of $30,000 and
a success fee of 1.5% of the aggregate Actual Purchase Price of the shares of
Common Stock sold in the Subscription Offering and Community Offering
excluding shares purchased by the ESOP and officers, directors and employees
of the Association and members of their immediate families. The success fee
paid to Webb will be reduced by the amount of the management fee and, in any
event, the success fee shall not exceed $375,000. In the event that selected
dealers are used to assist in the sale of shares of Common Stock in the
Community Offering, such dealers will be paid a fee of up to 5.5% of the
aggregate Purchase Price of the shares sold by such dealers. The Company and
the Association have agreed to reimburse Webb for its out-of-pocket expenses,
and its legal fees up to a total of $40,000, and to indemnify Webb against
certain claims or liabilities, including certain liabilities under the
Securities Act, and will contribute to payments Webb may be required to make
in connection with any such claims or liabilities.
Sales of shares of Common Stock will be made primarily by registered
representatives affiliated with Webb or by the broker-dealers managed by
Webb. A Stock Information Center will be established at the main office of
the Association. The Company will rely on Rule 3a4-1 of the Exchange Act and
sales of Common Stock will be conducted within the requirements of such Rule,
so as to permit officers, directors and employees to participate in the sale
of the Common Stock in those states where the law so permits. No officer,
director or employee of the Company or the Association will be compensated
directly or indirectly by the payment of commissions or other remuneration in
connection with his or her participation in the sale of Common Stock.
PROCEDURE FOR PURCHASING SHARES IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS
To ensure that each purchaser receives a prospectus at least 48 hours
before the Subscription Expiration Date (unless extended) in accordance with
Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than
five days prior to such date or hand delivered any later than two days prior
to such date. Execution of the order form will confirm receipt or delivery
in accordance with Rule 15c2-8. Order forms will only be distributed with a
prospectus.
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To purchase shares in the Subscription and Community Offerings, an
executed order form with the required payment for each share subscribed for,
or with appropriate authorization for withdrawal from a deposit account at
the Association (which may be given by completing the appropriate blanks in
the order form), must be received by the Association by 12:00 noon, Central
Time, on the Subscription Expiration Date (unless extended). In addition,
the Company and the Association will require a prospective purchaser to
execute a certification in the form required by applicable OTS regulations in
connection with any sale of Common Stock. Order forms which are not received
by such time or are executed defectively or are received without full payment
(or appropriate withdrawal instructions) are not required to be accepted. In
addition, the Association will not accept orders submitted on photocopied or
facsimilied order forms nor order forms unaccompanied by an executed
certification form. The Company and the Association have the right to waive
or permit the correction of incomplete or improperly executed forms, but do
not represent that they will do so. Once received, an executed order form
may not be modified, amended or rescinded without the consent of the Company
and the Association, unless the Conversion has not been completed within 45
days after the end of the Subscription Offering, unless such period has been
extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priority, depositors as of the close of business on the Eligibility
Record Date (September 30, 1995) or the Supplemental Eligibility Record Date
(December 31, 1996) and depositors and borrowers as of the close of business on
the Voting Record Date (______ __, 199_) must list all accounts on the stock
order form giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in person
at the main office of the Association, (ii) by check or money order, or (iii)
by authorization of withdrawal from deposit accounts maintained with the
Association. No wire transfers will be accepted. Interest will be paid on
payments made by cash, check or money order at the Association's passbook
rate of interest from the date payment is received until completion or
termination of the Conversion. If payment is made by authorization of
withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates
until completion or termination of the Conversion, but a hold will be placed
on such funds, thereby making them unavailable to the depositor until
completion or termination of the Conversion.
If a subscriber authorizes the Association to withdraw the amount of the
purchase price from his deposit account, the Association will do so as of the
effective date of the Conversion. The Association will waive any applicable
penalties for early withdrawal from certificate accounts. If the remaining
balance in a certificate account is reduced below the applicable minimum
balance requirement at the time that the funds actually are transferred under
the authorization, the certificate will be cancelled at the time of the
withdrawal, without penalty, and the remaining balance will earn interest at
the passbook rate.
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If the ESOP subscribes for shares during the Subscription Offering, the
ESOP will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed
for by it at the Purchase Price upon consummation of the Subscription and
Community Offerings, if all shares are sold, or upon consummation of the
Syndicated Community Offerings if shares remain to be sold in such offering,
provided that there is in force from the time of its subscription until such
time, a loan commitment from an unrelated financial institution or the
Company to lend to the ESOP, at such time, the aggregate Purchase Price of
the shares for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
shares of Common Stock in the Subscription and Community Offerings, provided
that such IRAs are not maintained at the Association. Persons with IRAs
maintained at the Association must have their accounts transferred to an
unaffiliated institution or broker to purchase shares of Common Stock in the
Subscription and Community Offerings. In addition, ERISA provisions and IRS
regulations require that officers, directors and 10% stockholders who use
self-directed IRA funds to purchase shares of Common Stock in the
Subscription and Community Offerings make such purchases for the exclusive
benefit of the IRAs. Any interested parties wishing to use IRA funds for
stock purchases are advised to contact the Stock Sales Center at (504)
___-____ for additional information.
Certificates representing shares of Common Stock purchased will be
mailed to purchasers at the last address of such persons appearing on the
records of the Association, or to such other address as may be specified in
properly completed order forms, as soon as practicable following consummation
of the Conversion. Any certificates returned as undeliverable will be
disposed of in accordance with applicable law.
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES
Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer or enter into any agreement or understanding
to transfer the legal or beneficial ownership of the subscription rights
issued under the Plan or the shares of Common Stock to be issued upon their
exercise. Such rights may be exercised only by the person to whom they are
granted and only for his account. Each person exercising such subscription
rights will be required to certify that he is purchasing shares solely for
his own account and that he has no agreement or understanding regarding the
sale or transfer of such shares. Federal regulations also prohibit any
person from offering or making an announcement of an offer or intent to make
an offer to purchase such subscription rights or shares of Common Stock prior
to the completion of the Conversion.
THE COMPANY AND THE ASSOCIATION WILL REFER TO THE OTS ANY SITUATIONS
THAT THEY BELIEVE MAY INVOLVE A TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT
HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF SUCH RIGHTS.
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LIQUIDATION RIGHTS
In the unlikely event of a complete liquidation of the Association in
its present mutual form, each depositor of the Association would receive his
pro rata share of any assets of the Association remaining after payment of
claims of all creditors (including the claims of all depositors to the
withdrawal value of their accounts). Each depositor's pro rata share of such
remaining assets would be in the same proportion as the value of his deposit
account was to the total value of all deposit accounts in the Association at
the time of liquidation. After the Conversion, each depositor, in the event
of a complete liquidation of the Association, would have a claim as a
creditor of the same general priority as the claims of all other general
creditors of the Association. However, except as described below, his claim
would be solely in the amount of the balance in his deposit account plus
accrued interest. He would not have an interest in the value or assets of
the Association above that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal
to the Association's net worth as of the date of its latest statement of
financial condition contained in the final prospectus utilized in the
Conversion. As of the date of this Prospectus, the initial balance of the
liquidation account would be $____ million. Each Eligible Account Holder and
Supplemental Eligible Account Holder, if he were to continue to maintain his
deposit account at the Association, would be entitled, upon a complete
liquidation of the Association after the Conversion, to an interest in the
liquidation account prior to any payment to the Company as the sole
stockholder of the Association. Each Eligible Account Holder and
Supplemental Eligible Account Holder would have an initial interest in such
liquidation account for each deposit account, including passbook accounts,
NOW accounts, money market deposit accounts, and certificates of deposit,
held in the Association at the close of business on September 30, 1995 or
December 31, 1996, as the case may be. Each Eligible Account Holder and
Supplemental Eligible Account Holder will have a pro rata interest in the
total liquidation account for each of his deposit accounts based on the
proportion that the balance of each such deposit account on the September 30,
1995 eligibility record date (or the December 31, 1996 supplemental eligibility
record date, as the case may be) bore to the balance of all deposit accounts
in the Association on such dates.
If, however, on any September 30 annual closing date of the Association,
commencing September 30, 1996, the amount in any deposit account is less than
the amount in such deposit account on September 30, 1995 or December 31, 1996,
as the case may be, or any other annual closing date, then the interest in
the liquidation account relating to such deposit account would be reduced by
the proportion of any such reduction, and such interest will cease to exist
if such deposit account is closed. In addition, no interest in the
liquidation account would ever be increased despite any subsequent increase
in the related deposit account. Any assets remaining after the claims of
general creditors (including the claims of all depositors to the withdrawal
value of their accounts) and the above liquidation
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rights of Eligible Account Holders and Supplemental Eligible Account Holders
are satisfied would be distributed to the Company as the sole stockholder of
the Association.
TAX ASPECTS
Consummation of the Conversion is expressly conditioned upon prior
receipt of either a ruling or an opinion of counsel with respect to federal
tax laws, and either a ruling or an opinion with respect to Louisiana tax
laws, to the effect that consummation of the transactions contemplated hereby
will not result in a taxable reorganization under the provisions of the
applicable codes or otherwise result in any adverse tax consequences to the
Association, the Company or to account holders receiving subscription rights,
except to the extent, if any, that subscription rights are deemed to have
fair market value on the date such rights are issued.
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., has issued an
opinion to the Company and the Association to the effect that, for federal
income tax purposes: (i) the Association's change in form from mutual to
stock ownership will constitute a reorganization under Section 368(a)(1)(F)
of the Code and neither the Association nor the Company will recognize any
gain or loss as a result of the Conversion; (ii) no gain or loss will be
recognized by the Association or the Company upon the purchase of the
Association's capital stock by the Company; (iii) no gain or loss will be
recognized by Eligible Account Holders and Supplemental Eligible Account
Holders upon the issuance to them of deposit accounts in the Association in
its stock form plus their interests in the liquidation account in exchange
for their deposit accounts in the mutual Association; (iv) assuming the
non-transferable subscription rights to purchase Common Stock have no value,
the tax basis of the depositors' deposit accounts in the Association
immediately after the Conversion will be the same as the basis of their
deposit accounts immediately prior to the Conversion; (v) assuming the
non-transferable subscription rights to purchase Common Stock have no value,
the tax basis of each Eligible Account Holder's and Supplemental Eligible
Account Holder's interest in the liquidation account will be zero; and (vi)
the tax basis to the stockholders of the Common Stock of the Company
purchased in the Conversion will be the amount paid therefor, and the holding
period for the shares of Common Stock purchased by such persons will begin on
the date of consummation of the Conversion if purchased through the exercise
of subscription rights and on the day after the date of purchase if purchased
in the Community Offering. LaPorte, Sehrt, Romig & Hand, Metairie,
Louisiana, has also rendered an opinion to the effect that the foregoing tax
effects of the Conversion under Louisiana law are substantially the same as
they are under federal law.
In the opinion of RP Financial, the subscription rights do not have any
value, based on the fact that such rights are acquired by the recipients
without cost, are nontransferable and of short duration, and afford the
recipients the right only to purchase the Common Stock at a price equal to
its estimated fair market value, which will be the same price as the Purchase
Price for the unsubscribed shares of Common Stock. If the subscription
rights granted to eligible subscribers are deemed to have an ascertainable
value, receipt of such
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rights would be taxable probably only to those eligible subscribers who
exercise the subscription rights (either as a capital gain or ordinary
income) in an amount equal to such value, and the Company and the Association
could recognize gain on such distribution. Eligible subscribers are
encouraged to consult with their own tax advisor as to the tax consequences
in the event that such subscription rights are deemed to have an
ascertainable value.
Unlike private rulings, an opinion is not binding on the IRS, and the
IRS could disagree with conclusions reached therein. In the event of such
disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding.
DELIVERY OF CERTIFICATES
Certificates representing Common Stock issued in the Conversion will be
mailed by the Company's transfer agent to the persons entitled thereto at the
addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Conversion. Any certificates
returned as undeliverable will be held by the Company until claimed by
persons legally entitled thereto or otherwise disposed of in accordance with
applicable law. Until certificates for Common Stock are available and
delivered to subscribers, such subscribers may not be able to sell the shares
of Common Stock for which they have subscribed, even though trading of the
Common Stock may have commenced.
REQUIRED APPROVALS
Various approvals of the OTS and OFI are required in order to consummate
the Conversion. The OTS and OFI have approved the Plan of Conversion,
subject to approval by the Association's members and other standard
conditions. The Company's holding company application is currently pending.
The Company is required to make certain filings with state securities
regulatory authorities in connection with the issuance of Common Stock in the
Conversion.
JUDICIAL REVIEW
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves a plan of conversion may obtain review
of such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located,
or in the United States Court of Appeals for the District of Columbia, a
written petition praying that the final action of the OTS be modified,
terminated or set aside. Such petition must be filed within 30 days after
the publication of notice of such final action in the Federal Register, or 30
days after the mailing by the applicant of the notice to members as provided
for in 12 C.F.R. Section 563b.6(c), whichever is later. The further
procedure for review is as follows: A copy of the petition is forthwith
transmitted to the OTS by the clerk of the court and thereupon the OTS files
in the court
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the record in proceeding, as provided in Section 2112 of Title 28 of the
United States Code. Upon the filing of the petition, the court has
jurisdiction, which upon the filing of the record is exclusive, to affirm,
modify, terminate, or set aside in whole or in part, the final action of the
OTS. Review of such proceedings is as provided in Chapter 7 of Title 5 of
the United States Code. The judgment and decree of the court is final,
except that they are subject to review by the Supreme Court upon certiorari
as provided in Section 1254 of Title 28 of the United States Code.
CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER THE CONVERSION
All shares of Common Stock purchased in connection with the Conversion
by a director or an executive officer of the Company and the Association will
be subject to a restriction that the shares not be sold for a period of one
year following the Conversion, except in the event of the death of such
director or executive officer or pursuant to a merger or similar transaction
approved by the OTS. Each certificate for restricted shares will bear a
legend giving notice of this restriction on transfer, and instructions will
be issued to the effect that any transfer within such time period of any
certificate or record ownership of such shares other than as provided above
is a violation of the restriction. Any shares of Common Stock issued at a
later date within this one year period as a stock dividend, stock split or
otherwise with respect to such restricted stock will be subject to the same
restrictions.
Purchases of Common Stock of the Company by directors, executive
officers and their associates during the three-year period following
completion of the Conversion may be made only through a broker or dealer
registered with the SEC, except with the prior written approval of the OTS.
This restriction does not apply, however, to negotiated transactions
involving more than 1% of the Company's outstanding Common Stock or to
certain purchases of stock pursuant to an employee stock benefit plan.
Pursuant to OTS regulations, the Company will generally be prohibited
from repurchasing any shares of the Common Stock within one year following
consummation of the Conversion, although the OTS under its current policies
may approve a request to repurchase shares of Common Stock following the
six-month anniversary of the Conversion. During the second and third years
following consummation of the Conversion, the Company may not repurchase any
shares of its Common Stock other than pursuant to (i) an offer to all
stockholders on a pro rata basis which is approved by the OTS; (ii) the
repurchase of qualifying shares of a director, if any; (iii) purchases in the
open market by a tax-qualified or non-tax-qualified employee stock benefit
plan in an amount reasonable and appropriate to fund the plan; or
(iv) purchases that are part of an open-market stock repurchase program not
involving more than 5% of its outstanding capital stock during a 12-month
period, if the repurchases do not cause the Association to become
undercapitalized and the Association provides to the Regional Director of the
OTS no later than 10 days prior to the commencement of a repurchase program
written notice containing a full description of the program to be undertaken
and such program is not disapproved by the Regional Director.
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The OTS may permit stock repurchases in excess of such amounts prior to the
third anniversary of the Conversion if exceptional circumstances are shown to
exist.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
AND THE ASSOCIATION
GENERAL
As described below, certain provisions in the Company's Articles of
Incorporation and Bylaws and in the Company's and the Association's proposed
benefit plans, together with provisions of Louisiana corporate law and OTS
regulations, may have anti-takeover effects. In addition, regulatory
restrictions may make it difficult for persons or companies to acquire
control of either the Company or the Association.
RESTRICTIONS IN THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
GENERAL. A number of provisions of the Company's Articles of
Incorporation and Bylaws deal with matters of corporate governance and
certain rights of stockholders. The following discussion is a general
summary of certain provisions of the Company's Articles of Incorporation and
Bylaws which might be deemed to have a potential "anti-takeover" effect.
These provisions may have the effect of discouraging a future takeover
attempt which is not approved by the Board of Directors but which individual
Company stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares over then
current market prices. As a result, stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. Such
provisions will also render the removal of the current Board of Directors or
management of the Company more difficult. The following description of
certain of the provisions of the Articles of Incorporation and Bylaws of the
Company is necessarily general and reference should be made in each case to
such Articles of Incorporation and Bylaws, which are incorporated herein by
reference. See "Additional Information" as to how to obtain a copy of these
documents.
LIMITATION ON VOTING RIGHTS. Article 10.A of the Company's Articles of
Incorporation provides that for a period of five years from the date of the
Conversion, no person shall directly or indirectly offer to acquire or
acquire the beneficial ownership of (i) more than 10% of the issued and
outstanding shares of any class of an equity security of the Company, or (ii)
any securities convertible into, or exercisable for, any equity securities of
the Company if, assuming conversion or exercise by such person of all
securities of which such person is the beneficial owner which are convertible
into, or exercisable for, such equity securities (but of no securities
convertible into, or exercisable for, such equity securities of which such
person is not the beneficial owner), such person would be the beneficial
owner of more than 10% of any class of an equity security of the Company.
The term "person" is broadly defined to prevent circumvention of this
restriction.
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The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Company by underwriters or a
selling group acting on its behalf, (ii) any tax-qualified employee benefit
plan or arrangement established by the Company or the Association and any
trustee of such a plan or arrangement, and (iii) any other offer or
acquisition approved in advance by the affirmative vote of two-thirds of the
Company's entire Board of Directors. In the event that shares are acquired
in violation of Article 10.A, all shares beneficially owned by any person in
excess of 10% shall be considered "Excess Shares" and shall not be counted as
shares entitled to vote and shall not be voted by any person or counted as
voting shares in connection with any matters submitted to stockholders for a
vote, and the Board of Directors may cause such Excess Shares to be
transferred to an independent trustee for sale on the open market or
otherwise, with the expenses of such trustee to be paid out of the proceeds
of sale.
BOARD OF DIRECTORS. Article 6.B of the Articles of Incorporation of the
Company contains provisions relating to the Board of Directors and provides,
among other things, that the Board of Directors shall be divided into three
classes as nearly equal in number as possible, with the term of office of one
class expiring each year. See "Management of the Company." The classified
Board is intended to provide for continuity of the Board of Directors and to
make it more difficult and time consuming for a stockholder group to fully
use its voting power to gain control of the Board of Directors without the
consent of the incumbent Board of Directors of the Company. Cumulative
voting in the election of directors is not permitted.
Directors may be removed without cause at a duly constituted meeting of
stockholders called expressly for that purpose upon the vote of the holders
of at least 75% of the total votes eligible to be cast by stockholders, and
with cause by the affirmative vote of a majority of the total votes eligible
to be cast by stockholders. Cause for removal shall exist only if the
director whose removal is proposed has been either declared of unsound mind
by an order of a court of competent jurisdiction, convicted of a felony or of
an offense punishable by imprisonment for a term of more than one year by a
court of competent jurisdiction, or deemed liable by a court of competent
jurisdiction for gross negligence or misconduct in the performance of such
director's duties to the Company. Any vacancy occurring in the Board of
Directors for any reason (including an increase in the number of authorized
directors) may be filled by the affirmative vote of a majority of the
remaining directors, whether or not a quorum of the Board of Directors is
present, and a director appointed to fill a vacancy shall serve until the
expiration of the term to which he was appointed.
Article 6.F of the Articles of Incorporation governs nominations for
election to the Board, and requires all nominations for election to the Board
of Directors other than those made by the Board to be made by a stockholder
eligible to vote at an annual meeting of stockholders who has complied with
the notice provisions in that section. Written notice of a stockholder
nomination must be delivered to, or mailed to and received at, the principal
executive offices of the Company not later than 60 days prior to the
anniversary date of the
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immediately preceding annual meeting, provided that, with respect to the
first scheduled annual meeting following completion of the Conversion, notice
must be received no later than the close of business on the 10th day
following the date on which notice of such meeting is mailed to stockholders,
and provided further that the notice by the stockholder must be delivered or
received no later than the close of business on the fifth day preceding the
date of the meeting. Each such notice shall set forth (a) as to each person
whom the stockholder proposes to nominate as a director, (i) the name, age,
business address and residence address of such person; (ii) the principal
occupation or employment of such person; (iii) the class and number of shares
of the Company's stock beneficially owned by such person on the date of the
stockholder notice; and (iv) such other information regarding such person as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the SEC; and (b) as to the stockholder giving the notice, (i)
such stockholder's name and address, as they appear on the Company's books,
and, to the extent known by the stockholder giving the notice, (ii) the name
and address of any other stockholders supporting such nominees; and (iii) the
class and number of shares of the Company's stock beneficially owned by any
other stockholders supporting such nominees, on the date of such stockholder
notice.
Article 8.A of the Articles of Incorporation provides that a director or
officer of the Company will not be personally liable for monetary damages for
any action taken, or any failure to take any action, as a director or officer
except to the extent that by law a director's or officer's liability for
monetary damages may not be limited. This provision does not eliminate or
limit the liability of the Company's directors and officers for (a) any
breach of the director's or officer's duty of loyalty to the Company or its
stockholders, (b) any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) any unlawful
dividend, stock repurchase or other distribution, payment or return of assets
to stockholders, or (d) any transaction from which the director or officer
derived an improper personal benefit. This provision may preclude
stockholder derivative actions and may be construed to preclude other
third-party claims against the directors and officers.
The Company's Articles of Incorporation also provide that the Company
shall indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
including actions by or in the right of the Company, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. Such indemnification is furnished to the full extent provided by
law against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding. The indemnification provisions also
permit the Company to pay reasonable expenses in advance of the final
disposition of any action, suit or proceeding as authorized by the Company's
Board of Directors, provided
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that the indemnified person undertakes to repay the Company if it is
ultimately determined that such person was not entitled to indemnification.
The rights of indemnification provided in the Company's Articles of
Incorporation are not exclusive of any other rights which may be available
under the Company's Bylaws, any insurance or other agreement, by vote of
stockholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof) or otherwise. In addition, the
Articles of Incorporation authorize the Company to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company, whether or not the Company would have the power to provide
indemnification to such person. By action of the Board of Directors, the
Company may create and fund a trust fund or other fund or form of
self-insurance arrangement of any nature, and may enter into agreements with
its officers, directors, employees and agents for the purpose of securing or
insuring in any manner its obligation to indemnify or advance expenses
provided for in the provisions in the Articles of Incorporation and Bylaws
regarding indemnification. These provisions are designed to reduce, in
appropriate cases, the risks incident to serving as a director, officer,
employee or agent and to enable the Company to attract and retain the best
personnel available.
The provisions regarding director elections and other provisions in the
Articles of Incorporation and Bylaws are generally designed to protect the
ability of the Board of Directors to negotiate with the proponent of an
unfriendly or unsolicited proposal to take over or restructure the Company by
making it more difficult and time-consuming to change majority control of the
Board, whether by proxy contest or otherwise. The effect of these provisions
will be to generally require at least two (and possibly three) annual
stockholders' meetings, instead of one, to effect a change in control of the
Board of Directors of the Company even if holders of a majority of the
Company's capital stock believed that a change in the composition of the
Board of Directors was desirable. Because a majority of the directors at any
given time will have prior experience as directors, these requirements will
help to ensure continuity and stability of the Company's management and
policies and facilitate long-range planning for the Company's business. The
provisions relating to removal of directors and filling of vacancies are
consistent with and supportive of a classified board of directors.
The procedures regarding stockholder nominations will provide the Board
of Directors with sufficient time and information to evaluate a stockholder
nominee to the Board and other relevant information, such as existing
stockholder support for the nominee. The proposed procedures, however, will
provide incumbent directors advance notice of a dissident slate of nominees
for directors, and will make it easier for the Board to solicit proxies
resisting such nominees. This may make it easier for the incumbent directors
to retain their status as directors, even when certain stockholders view the
stockholder nominations as in the best interests of the Company or its
stockholders.
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AUTHORIZED SHARES. Article 4 of the Articles of Incorporation
authorizes the issuance of 25,000,000 shares of stock, of which 5,000,000
shares shall be shares of serial Preferred Stock, and 20,000,000 shall be
Common Stock. The shares of Common Stock and Preferred Stock were authorized
in an amount greater than that to be issued in the Conversion to provide the
Company's Board of Directors with as much flexibility as possible to effect,
among other transactions, financings, acquisitions, stock dividends, stock
splits and employee stock options. However, these additional authorized
shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of the Company. The
Board of Directors also has sole authority to determine the terms of any one
or more series of Preferred Stock, including voting rights, conversion rates,
and liquidation preferences. As a result of the ability to fix voting rights
for a series of Preferred Stock, the Board has the power, to the extent
consistent with its fiduciary duty, to issue a series of Preferred Stock to
persons friendly to management in order to attempt to block a post-tender
offer merger or other transaction by which a third party seeks control, and
thereby assist management to retain its position. The Company's Board
currently has no plans for the issuance of additional shares, other than the
issuance of additional shares pursuant to stock benefit plans.
SPECIAL MEETINGS OF STOCKHOLDERS AND STOCKHOLDER PROPOSALS. Article 9.B
of the Articles of Incorporation provides that special meetings of the
Company's stockholders may only be called by (i) the President, (ii) a
majority of the Board of Directors, and (iii) by persons who beneficially own
an aggregate of at least 50% of the outstanding voting shares, except as may
otherwise be provided by law. The Articles of Incorporation also provide
that any action permitted to be taken at a meeting of stockholders may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is given by the holders of all outstanding shares entitled to vote and
filed with the Secretary of the Company.
Article 9.D of the Company's Articles of Incorporation provides that
only such business as shall have been properly brought before an annual
meeting of stockholders shall be conducted at the annual meeting. In order
to be properly brought before an annual meeting following completion of the
Conversion, business must be (a) brought before the meeting by or at the
direction of the Board of Directors or (b) otherwise properly brought before
the meeting by a stockholder who has given timely and complete notice thereof
in writing to the Company. For stockholder proposals to be included in the
Company's proxy materials, the stockholder must comply with all the timing
and informational requirements of Rule 14a-8 of the Exchange Act. With
respect to stockholder proposals to be considered at the annual meeting of
stockholders but not included in the Company's proxy materials, the
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting; provided,
however, that with respect to the first scheduled annual meeting following
completion of the Conversion, such written notice must be received by the
Company not later than the close of business on the 10th day following the
day on which notice of the meeting was first mailed to stockholders; and
provided further, that the written notice must be received by the Company not
later than the close
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of business on the fifth day preceding the date of the meeting. A
stockholder's notice shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
proposal desired to be brought before the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, and, to the extent known, any other stockholders known by such
stockholder to be supporting such proposal, (c) the class and number of
shares of the Company which are beneficially owned by the stockholder and, to
the extent known, by any other stockholders known by such stockholder to be
supporting such proposal on the date of such stockholder notice, and (d) any
financial interest of the stockholder in such proposal (other than interests
which all stockholders would have). Any stockholder proposal which is not
made in accordance with the provisions of Article 9.D shall not be acted upon
at the annual meeting.
The procedures regarding stockholder proposals are designed to provide
the Board with sufficient time and information to evaluate a stockholder
proposal and other relevant information, such as existing stockholder support
for the proposal. The proposed procedures, however, will give incumbent
directors advance notice of a stockholder proposal. This may make it easier
for the incumbent directors to defeat a stockholder proposal, even when
certain stockholders view such proposal as in the best interests of the
Company or its stockholders.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS. Article 11 of the
Company's Articles of Incorporation generally provides that any amendment of
the Articles of Incorporation must be first approved by a majority of the
Board of Directors and then by the holders of a majority of the shares of the
Company entitled to vote in an election of directors, except that the
approval of 75% of the shares of the Company entitled to vote in an election
of directors is required for any amendment to Articles 6 (directors), 7
(preemptive rights), 8 (indemnification), 9 (meetings of stockholders and
stockholder proposals), 10 (restrictions on acquisitions) and 11
(amendments).
The Bylaws of the Company may be amended by a majority of the Board of
Directors or by the affirmative vote of a majority of the total shares
entitled to vote in an election of directors, except that the affirmative
vote of at least 75% of the total shares entitled to vote in an election of
directors shall be required to amend, adopt, alter, change or repeal any
provision inconsistent with certain specified provisions of the Bylaws.
LOUISIANA CORPORATE LAW
In addition to the provisions contained in the Company's Articles of
Incorporation, the Louisiana Business Corporation Law ("BCL") includes
certain provisions applicable to Louisiana corporations, such as the Company,
which may be deemed to have an anti-takeover effect. Such provisions include
(i) rights of stockholders to receive the fair value of their shares of stock
following a control transaction from a controlling person or group and (ii)
requirements relating to certain business combinations.
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<PAGE>
The BCL provides that any person who acquires "control shares" will be
able to vote such shares only if the right to vote is approved by the
affirmative vote of at least a majority of both (1) all the votes entitled to
be cast by stockholders and (2) all the votes entitled to be cast by
stockholders excluding "interested shares". "Control shares" is defined to
include shares that would entitle the holder thereof, assuming the shares had
full voting rights, to exercise voting power within any of the following
ranges: (a) 20% or more but less than one-third of all voting power; (b)
one-third or more but less than a majority of all voting power; or (c) a
majority or more of all voting power. Any acquisition that would result in
the ownership of control shares in a higher range would require an additional
vote of stockholders. "Interested shares" includes control shares and any
shares held by an officer or employee director of the corporation. If the
control shares are provided full voting rights, all stockholders have
dissenters' rights entitling them to receive the "fair cash value" of their
shares, which shall not be less than the highest price paid per share to
acquire the control shares.
The BCL defines a "Business Combination" generally to include (a) any
merger, consolidation or share exchange of the corporation with an
"Interested Shareholder" or affiliate thereof, (b) any sale, lease, transfer
or other disposition, other than in the ordinary course of business, of
assets equal to 10% or more of the market value of the corporation's
outstanding stock or of the corporation's net worth to any Interested
Shareholder or affiliate thereof in any 12-month period, (c) the issuance or
transfer by the corporation of equity securities of the corporation with an
aggregate market value of 5% or more of the total market value of the
corporation's outstanding stock to any Interested Shareholder or affiliate
thereof, except in certain circumstances, (d) the adoption of any plan or
proposal for the liquidation or dissolution of the corporation in which
anything other than cash will be received by an Interested Shareholder or
affiliate thereof, or (e) any reclassification of the corporation's stock or
merger which increases by 5% or more the ownership interest of the Interested
Shareholder or any affiliate thereof. "Interested Shareholder" includes any
person who beneficially owns, directly or indirectly, 10% or more of the
corporation's outstanding voting stock, or any affiliate thereof who had such
beneficial ownership during the preceding two years, excluding in each case
the corporation, its subsidiaries and their benefit plans.
Under the BCL, a Business Combination must be approved by any vote
otherwise required by law or the articles of incorporation, and by the
affirmative vote of at least each of the following: (1) 80% of the total
outstanding voting stock of the corporation; and (2) two-thirds of the
outstanding voting stock held by persons other than the Interested
Shareholder. However, the supermajority vote requirement shall not be
applicable if the Business Combination meets certain minimum price
requirements and other procedural safeguards, or if the transaction is
approved by the Board of Directors prior to the time that the Interested
Shareholder first became an Interested Shareholder.
The BCL authorizes the board of directors of Louisiana business
corporations to create and issue (whether or not in connection with the
issuance of any of its shares or other securities) rights and options
granting to the holders thereof (1) the right to convert shares
143
<PAGE>
or obligations into shares of any class, or (2) the right or option to
purchase shares of any class, in each case upon such terms and conditions as
the Company may deem expedient.
ANTI-TAKEOVER EFFECTS OF THE ARTICLES OF INCORPORATION AND BYLAWS AND
MANAGEMENT REMUNERATION ADOPTED IN THE CONVERSION
The foregoing provisions of the Articles of Incorporation and Bylaws of
the Company and Louisiana law could have the effect of discouraging an
acquisition of the Company or stock purchases in furtherance of an
acquisition, and could accordingly, under certain circumstances, discourage
transactions which might otherwise have a favorable effect on the price of
the Company's Common Stock.
The Board of Directors believes that the provisions described above are
prudent and will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by the Board of
Directors of the Company. The Board of Directors believes that these
provisions are in the best interests of the Company and its future
stockholders. In the Board of Directors' judgment, the Board of Directors is
in the best position to determine the true value of the Company and to
negotiate more effectively for what may be in the best interests of its
stockholders. Accordingly, the Board of Directors believes that it is in the
best interests of the Company and its future stockholders to encourage
potential acquirors to negotiate directly with the Board of Directors and
that these provisions will encourage such negotiations and discourage hostile
takeover attempts. It is also the Board of Directors' view that these
provisions should not discourage persons from proposing a merger or other
transaction at prices reflective of the true value of the Company and where
the transaction is in the best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to the
Company's stockholders of the foregoing provisions, these provisions also may
have the effect of discouraging a future takeover attempt in which
stockholders might receive a substantial premium for their shares over then
current market prices and may tend to perpetuate existing management. As a
result, stockholders who might desire to participate in such a transaction
may not have an opportunity to do so. The Board of Directors, however, has
concluded that the potential benefits of these provisions outweigh their
possible disadvantages.
The Board of Directors of the Company and the Association are not aware
of any effort that might be made to acquire control of the Company or the
Association.
REGULATORY RESTRICTIONS
The Change in Bank Control Act provides that no person, acting directly
or indirectly or through or in concert with one or more other persons, may
acquire control of a savings institution unless the OTS has been given 60
days' prior written notice. The HOLA provides that no company may acquire
"control" of a savings institution without the prior
144
<PAGE>
approval of the OTS. Any company that acquires such control becomes a savings
and loan holding company subject to registration, examination and regulation
by the OTS. Pursuant to federal regulations, control of a savings institution
is conclusively deemed to have been acquired by, among other things, the
acquisition of more than 25% of any class of voting stock of the institution
or the ability to control the election of a majority of the directors of an
institution. Moreover, control is presumed to have been acquired, subject to
rebuttal, upon the acquisition of more than 10% of any class of voting stock,
or of more than 25% of any class of stock, of a savings institution where
certain enumerated "control factors" are also present in the acquisition. The
OTS may prohibit an acquisition if (i) it would result in a monopoly or
substantially lessen competition, (ii) the financial condition of the
acquiring person might jeopardize the financial stability of the institution,
or (iii) the competence, experience or integrity of the acquiring person
indicates that it would not be in the interest of the depositors or of the
public to permit the acquisition of control by such person. The foregoing
restrictions do not apply to the acquisition of a savings institution's
capital stock by one or more tax-qualified employee stock benefit plans,
provided that the plan or plans do not have beneficial ownership in the
aggregate of more than 25% of any class of equity security of the savings
institution.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The Company is authorized to issue 25,000,000 shares of capital stock,
of which 20,000,000 are shares of common stock, par value $.01 per share
(the "Common Stock") and 5,000,000 are shares of preferred stock, par value
$.01 per share (the "Preferred Stock"). The Company currently expects to
issue up to a maximum of 2,990,000 shares of Common Stock and no shares of
Preferred Stock in the Conversion. Each share of the Company's Common Stock
issued in the Conversion will have the same relative rights as, and will be
identical in all respects with, each other share of Common Stock issued in
the Conversion. Upon payment of the Purchase Price for the Common Stock in
accordance with the Plan of Conversion, all such stock will be duly
authorized, fully paid and nonassessable based on the laws and regulations in
effect as of the date of consummation of the Conversion.
THE COMMON STOCK OF THE COMPANY WILL REPRESENT NONWITHDRAWABLE CAPITAL,
WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED BY THE
FDIC.
145
<PAGE>
COMMON STOCK
DIVIDENDS. The Company can pay dividends if, as and when declared by
its Board of Directors, subject to compliance with limitations which are
imposed by law. See "Dividend Policy." The holders of Common Stock of the
Company will be entitled to receive and share equally in such dividends as
may be declared by the Board of Directors of the Company out of funds legally
available therefor. If the Company issues Preferred Stock, the holders
thereof may have a priority over the holders of the Common Stock with respect
to dividends.
VOTING RIGHTS. Upon completion of the Conversion, the holders of Common
Stock of the Company will possess exclusive voting rights in the Company.
They will elect the Company's Board of Directors and act on such other
matters as are required to be presented to them under Louisiana law or the
Company's Articles of Incorporation or as are otherwise presented to them by
the Board of Directors. Except as discussed in "Restrictions on Acquisition
of the Company and the Association," each holder of Common Stock will be
entitled to one vote per share and will not have any right to cumulate votes
in the election of directors. If the Company issues Preferred Stock, holders
of the Preferred Stock may also possess voting rights.
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of the Association, the Company, as the sole holder of the Association's
capital stock, would be entitled to receive, after payment or provision for
payment of all debts and liabilities of the Association (including all
deposit accounts and accrued interest thereon) and after distribution of the
balance in the special liquidation account to Eligible Account Holders and
Supplemental Eligible Account Holders (see "The Conversion - Liquidation
Rights"), all assets of the Association available for distribution. In the
event of any liquidation, dissolution or winding up of the Company, the
holders of its Common Stock would be entitled to receive, after payment or
provision for payment of all its debts and liabilities, all of the assets of
the Company available for distribution. If Preferred Stock is issued, the
holders thereof may have a priority over the holders of the Common Stock in
the event of liquidation or dissolution.
PREEMPTIVE RIGHTS. Holders of the Common Stock of the Company will not
be entitled to preemptive rights with respect to any shares which may be
issued in the future. The Common Stock is not subject to any required
redemption.
PREFERRED STOCK
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock
with voting, dividend, liquidation and conversion
146
<PAGE>
rights which could dilute the voting strength of the holders of the Common
Stock and may assist management in impeding an unfriendly takeover or
attempted change in control.
EXPERTS
The financial statements of the Association as of December 31, 1995 and
1994 and for each of the years ended December 31, 1995 and 1994 included in
this Prospectus have been included herein in reliance upon the report of
LaPorte, Sehrt, Romig & Hand, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
RP Financial has consented to the publication herein of the summary of
its report to the Association and the Company setting forth its opinion as to
the estimated pro forma market value of the Common Stock to be outstanding
upon completion of the Conversion and its opinion with respect to
subscription rights.
CHANGE IN AUDITORS
Prior to the fiscal year ended December 31, 1994, the Association's
financial statements were audited by Spilsbury, Hamilton, Legendre and
Paciera. The engagement of Spilsbury, Hamilton, Legendre and Paciera was
terminated and Laporte, Sehrt, Romig and Hand, was engaged in January 1994,
and remains as the independent auditors of the Association. The decision to
change auditors was approved by the Board of Directors of the Association.
The Bank's financial statements as of December 31, 1995 and 1994, and for
each of the years in the two-year period ended December 31, 1995, and
included in this Prospectus, were audited by Laporte, Sehrt, Romig and Hand.
During fiscal 1994 and 1993, there were no disagreements between the
Association and Spilsbury, Hamilton, Legendre and Paciera on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of
Spilsbury, Hamilton, Legendre and Paciera, would have caused it to make a
reference to the subject matter of the disagreement in connection with its
reports. During fiscal 1994 and 1993, Spilsbury, Hamilton, Legendre and
Paciera did not issue any adverse opinion with respect to the Association's
financial statements or any disclaimer of opinion or any opinion which was
qualified or modified as to uncertainty, audit scope or accounting
principles.
During 1994 and 1993, the Association did not consult Laporte, Sehrt,
Romig and Hand prior to such firm's engagement with respect to: the
application of accounting principles to a specified transaction, either
completed or proposed; the type of audit opinion that might be rendered on
the Association's financial statements; or, any matter that was the subject
of either a disagreement or a reportable event, in each case, as defined in
Item 304(a) of Regulation S-K under the Exchange Act.
147
<PAGE>
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the federal income tax consequences
of the Conversion will be passed upon for the Association and the Company by
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to
the Association and the Company. The Louisiana income tax consequences of
the Conversion will be passed upon for the Association and the Company by
LaPorte, Sehrt, Romig & Hand, Metairie, Louisiana. Certain legal matters
will be passed upon for Webb by Silver, Freedman & Taff, L.L.P., Washington,
D.C.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted
by the rules and regulations of the SEC, this Prospectus does not contain all
the information set forth in the Registration Statement. Such information,
including the appraisal report which is an exhibit to the Registration
Statement, can be examined without charge at the public reference facilities
of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material can be obtained from the SEC at prescribed rates.
The statements contained in this Prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement
are, of necessity, brief descriptions thereof and are not necessarily
complete; each such statement is qualified by reference to such contract or
document. This Prospectus contains a description of the material provisions
of such contracts or documents.
The Association has filed an Application for Conversion with the OTS and
OFI with respect to the Conversion. This Prospectus omits certain
information contained in that application. The application may be examined
at the principal office of the OTS, 1700 G Street, N.W., Washington, D.C.
20552 and at the Midwest Regional Office of the OTS located at 122 W. John
Carpenter Freeway, Suite 600, Irving, Texas 75039.
If the Company has more than 500 stockholders upon completion of the
Conversion, the Company will register its Common Stock with the SEC under
Section 12(g) of the Exchange Act, and, upon such registration, the Company
and the holders of its stock will become subject to the proxy and tender
offer rules, insider trading reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
and certain other requirements of the Exchange Act. If the Company has less
than 500 stockholders, it will be subject to certain annual and periodic
reporting requirements under Section 15(d) of the Exchange Act for so long as
it has 300 or more stockholders. Under the Plan, the Company has undertaken
that it will not terminate such registration for a period of at least three
years following the Conversion.
A copy of the Articles of Incorporation and the Bylaws of the Company
are available without charge from the Company.
148
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . F-1
Statements of Financial Condition as of September 30, 1996
and December 31, 1995 and 1994. . . . . . . . . . . . . . . . F-2
Statements of Income for the nine months ended
September 30, 1996 and 1995 and for the
years ended December 31, 1994 and 1995. . . . . . . . . . . . 42
Statements of Changes in Equity for the nine months
ended September 30, 1996 and 1995 and for
the years ended December 31, 1995 and 1994. . . . . . . . . . F-4
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 and for the
years ended December 31, 1995 and 1994. . . . . . . . . . . . F-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F-7
</TABLE>
All financial statement schedules are omitted because the required
information either is not applicable or is shown in the financial statements
or in the notes thereto.
Because GS Financial Corp. was incorporated in December 1996, has not
issued any shares of capital stock and has engaged in only minimal
activities, the financial statements of the Company have been omitted because
of their immateriality.
149
<PAGE>
GUARANTY SAVINGS AND
HOMESTEAD ASSOCIATION
SEPTEMBER 30, 1996
Audits of Financial Statements
September 30, 1996
and
December 31, 1995 and 1994
<PAGE>
C O N T E N T S
Independent Auditor's Report F-1
Statements of Financial Condition as of
September 30, 1996 (Unaudited) and December 31,
1995 and 1994 F-2 - F-3
Statements of Changes in Equity For The Nine Months
Ended September 30, 1996 (Unaudited) and the Years
Ended December 31, 1995 and 1994 F-4
Statements of Cash Flows For The Nine Months Ended
September 30, 1996 and 1995 (Unaudited) and the
Years Ended December 31, 1995 and 1994 F-5 - F-6
Notes to Financial Statements F-7 - F-29
<PAGE>
[LETTERHEAD OF LAPORTE SEHRT ROMIG & HAND]
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
The Board of Directors
Guaranty Savings and Homestead Association
Independent Auditor's Report
We have audited the accompanying statements of financial condition of
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION as of December 31, 1995 and 1994,
and the related statements of income, changes in equity capital and, cash
flows for the years then ended. These financial statements are the
responsibility of the Association's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a text basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by managment, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of GUARANTY SAVINGS
AND HOMESTEAD ASSOCIATION as of December 31, 1995 and 1994, and the results
of its operations and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
As discussed in Note D and Note Q to the financial statements, GUARANTY
SAVINGS AND HOMESTEAD ASSOCIATION, adopted Statement of Financial Accounting
Standard (SFAS) 107 and Statement of Financial Accounting Standard (SFAS) 114
in 1995.
/s/ LaPorte, Sehrt, Romig & Hand
--------------------------------
A Professional Accounting Corporation
January 12, 1996
F-1
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF FINANCIAL CONDITION
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
------------- -----------------------
1996 1995 1994
------------- -------- --------
(Unaudited)
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS
Cash and Amounts Due from Depository Institutions $ 395,538 $ 861,991 $ 1,276,556
Interest-Bearing Deposits in Other Banks 2,302,527 243,186 843,596
Federal Funds Sold 6,000,000 1,250,000 500,000
----------- ----------- -----------
Total Cash and Cash Equivalents 8,698,065 2,355,177 2,620,152
----------- ----------- -----------
Time Deposits - - 113,308
----------- ----------- -----------
INVESTMENT SECURITIES
Securities Held-to-Maturity (Fair Value of
$30,440,028 in 1995 and $31,745,816 in 1994) - 30,100,334 32,306,999
Securities Available-for-Sale, at Fair Value 23,068,105 3,259,475 3,189,116
----------- ---------- -----------
Total Investment Securities 23,068,105 33,359,809 35,496,115
----------- ---------- -----------
Mortgage-Backed Securities (Fair Value of
$7,008,606 (unaudited), $6,305,035 and $5,557,902 )
at September 30, 1996, December 31, 1995 and
December 31, 1994, respectively 7,298,654 6,367,347 6,063,250
Loans, Net 43,058,009 39,888,418 40,041,997
Accrued Interest Receivable 526,298 506,820 495,568
Premises and Equipment, Net 2,779,257 2,670,581 2,644,072
Foreclosed Real Estate, Net - 23,971 37,327
Real Estate Held-for-Investment 94,647 94,763 -
Stock in Federal Home Loan Bank, at Cost 717,600 686,900 644,300
Prepaid Income Tax - Current 157,122 22,346 23,976
Deferred Charges 78,186 22,630 27,125
Other Assets 45,282 40,983 42,800
----------- ----------- -----------
Total Assets $86,521,225 $86,039,745 $88,249,990
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
LIABILITIES AND EQUITY CAPITAL
<TABLE>
<CAPTION> September 30, December 31,
------------- ---------------------------
1996 1995 1994
------------- ------------ -------------
(Unaudited)
<S> <C> <C> <C>
LIABILITIES
Deposits $60,494,560 $60,945,112 $64,642,176
Advance Payments by Borrowers
for Taxes and Insurance 413,443 506,442 548,271
Deferred Income Tax 425,161 297,610 157,481
Other Liabilities 687,804 344,215 63,453
----------- ----------- -----------
Total Liabilities 62,020,968 62,093,379 65,411,381
----------- ----------- -----------
EQUITY CAPITAL
Retained Earnings 23,822,268 23,457,486 22,585,139
Unrealized Gain on Securities Available-for-Sale,
Net of Applicable Deferred Income Tax 677,989 488,880 253,470
----------- ----------- -----------
Total Equity Capital 24,500,257 23,946,366 22,838,609
----------- ----------- -----------
Total Liabilities and Equity Capital $86,521,225 $86,039,745 $88,249,990
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
F-3
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CHANGES IN EQUITY CAPITAL
Nine Months Ended September 30, 1996 (Unaudited) and
The Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Unrealized
Gain on Securities
Available-for-Sale,
Net of Applicable Total
Retained Deferred Equity
Earnings Income Tax Capital
----------- ------------------- -----------
<S> <C> <C> <C>
BALANCES AT DECEMBER 31, 1993 $21,590,854 $309,715 $21,900,569
Net Income -
Year Ended December 31, 1994 994,285 - 994,285
Reduction in Unrealized Gain
on Securities - (56,245) (56,245)
----------- -------- -----------
BALANCES AT DECEMBER 31, 1994 22,585,139 253,470 22,838,609
Net Income -
Year Ended December 31, 1995 872,347 - 872,347
Increase in Unrealized Gain
on Securities - 235,410 235,410
----------- -------- -----------
BALANCES AT DECEMBER 31, 1995 23,457,486 488,880 23,946,366
Net Income (Unaudited) 364,782 364,782
Increase in Unrealized Gain
on Securities - 189,109 189,109
----------- -------- -----------
BALANCE AT SEPTEMBER 30, 1996
(UNAUDITED ) $23,822,268 $677,989 $24,500,257
----------- -------- -----------
----------- -------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended For The Years Ended
September 30, December 31,
--------------------------- ---------------------------
1996 1995 1995 1994
---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 364,782 $ 858,211 $ 872,347 $ 994,285
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 91,491 92,749 128,009 107,559
Discounts Accretion Net of Premium Amortization (323,157) (666,032) (857,480) (753,117)
Provision for Losses 14,027 - 12,107 28,156
Gain on Sale of Real Estate Held-for-Investment - - - (14,237)
Loss on Sale of Loans - - - 10,168
Loss on Disposal of Fixed Assets - 6,168 6,168 -
(Gain) on Sale of Foreclosed Real Estate (7,325) (11,006) (11,181) (10,065)
Loss on Sale of Investments 100,464 - - -
(Increase) Decrease in Prepaid Income Taxes - Current (134,776) 46,605 1,630 45,563
Deferred Income Tax 29,861 - 18,829 26,858
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable (19,478) (7,182) (11,252) 7,625
(Increase) Decrease in Deferred Charges (55,556) (52,590) 4,495 (4,014)
Increase in Other Liabilities 343,589 388,385 280,762 2,328
(Increase) Decrease in Other Assets (4,299) (171,797) 1,817 34,945
---------- ---------- ---------- ----------
Net Cash Provided by Operating Activities 399,623 483,511 446,251 476,054
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Decrease (Increase) in Time Deposits - 113,308 113,308 (3,918)
Purchase of Held-to-Maturity Securities - (25,375,281) (31,810,501) (38,200,000)
Proceeds from Maturities of Held-to-Maturity Securities - 26,900,000 34,800,000 40,516,754
Proceeds from Sale of Held-to-Maturity Securities 6,888,437 - - -
Purchase of Available-for-Sale Securities (16,957,787) (1,457,710) (2,138,845) (1,800,000)
Proceeds from Maturities of Available-for-Sale Securities 21,600,000 2,300,000 2,800,000 2,453,444
Purchases of Mortgage-Backed Securities (2,435,822) (490,000) (865,769) (980,000)
Proceeds from Maturities of Mortgage-Backed Securities 1,513,328 417,396 563,427 1,028,302
(Purchase) of ARM Mutual Fund (738,267) - (301,942) -
Proceeds from Sales of Loans and Investment Securities - - - 26,917
Loan (Originations) or Principal Repayments - Net (3,183,618) (138,618) 141,472 578,932
Purchases of Premises and Equipment (195,751) (65,168) (255,449) (1,618,914)
Proceeds from Sales of Foreclosed Real Estate - - 82,605 245,428
Investment in Foreclosed Real Estate (15,161) - (58,069) (242,240)
Proceeds from Sale of Foreclosed Real Estate 46,457 67,188 - -
Non-Cash Dividend - FHLB (30,700) (31,700) (42,600) (29,400)
Investment in Real Estate Held-for-Investment (4,300) - - -
Proceeds from Sale of Real Estate Held-for-Investment - - - 73,794
---------- ---------- ---------- ----------
Net Cash Provided by Investing Activities 6,486,816 2,239,415 3,027,637 2,049,099
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended For The Years Ended
September 30, December 31,
-------------------------- ----------------------
1996 1995 1995 1994
----------- ------------ ---------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net (Decrease) in Deposits (450,552) (2,971,161) (3,697,034) (2,789,999)
Net Increase (Decrease) in
Advance Payments by Borrowers
for Taxes and Insurance (92,999) (38,273) (41,829) 1,965
---------- ------------ ---------- -----------
Net Cash (Used in)
Financing Activities (543,551) (3,009,434) (3,738,863) (2,788,034)
---------- ------------ ---------- -----------
NET CASH EQUIVALENTS 6,342,888 (286,508) (264,975) (262,881)
CASH AND CASH EQUIVALENTS -
Beginning of Year 2,355,177 2,620,152 2,620,152 2,883,033
---------- ------------ ---------- -----------
CASH AND CASH EQUIVALENTS -
End of Year $8,698,065 $ 2,333,644 $2,355,177 $2,620,152
========== =========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $1,962,507 $ 2,006,688 $2,663,904 $2,408,343
Income Taxes 379,623 393,353 459,353 469,265
Loans Transferred to Foreclosed
Real Estate During the Year - 32,820 68,957 13,700
Premises and Equipment (Former
Branch Location)
Transferred to Real Estate
Held-for-Investment
at Cost Net of Accumulated
Depreciation - - 94,763 -
Unrealized Gain on Securities
Available-for-Sale Credited to
Equity Capital as a Result of
the Adoption of SFAS 115 1,028,564 597,993 740,728 384,046
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Association provides financial services primarily to individuals,
and is subject to competition from other financial institutions. The
Association is also subject to the regulations of certain Federal and
State agencies and undergoes periodic examinations by those regulatory
authorities.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of
the statement of financial condition and revenues and expenses for the
year. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for losses on loans
and valuation of real estate acquired in connection with foreclosures or
in satisfaction of loans. Management independently determines the
allowance for losses on loans based on an evaluation of the loan history
and the condition of the underlying properties. In connection with the
determination of the allowances for losses on foreclosed real estate,
management obtains independent appraisals for all properties.
While management uses available information to recognize losses on
loans and foreclosed real estate, future additions to the allowances may be
necessary based on changes in local economic conditions. In addition,
regulatory agencies, an integral part of their examination process,
periodically review the Association's allowances for losses on loans and
foreclosed real estate. Such agencies may require the Association to
recognize additions to the allowances based on their judgments about
information available to them at the time of their examination.
INVESTMENT SECURITIES
At December 31, 1994, the Association adopted Statement of Financial
Accounting Standards (SFAS) 115, "Accounting for Certain Investments in
Debt and Equity Securities." SFAS 115 requires the classification of
securities into one of three categories: Trading, Available-for-Sale or
Held-to-Maturity. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates this classification
periodically.
Investment securities that management has the ability and intent to
hold to maturity are classified as held-to-maturity and carried at cost,
adjusted for amortization of premium and accretion of discounts using
the interest method. Marketable securities classified as
available-for-sale are carried at fair value in 1995 and 1994.
Unrealized gains and losses on securities available-for-sale are
recognized as direct increases or decreases in equity capital effective
December 31, 1994, in accordance with the adoption of SFAS 115. Cost of
securities sold is recognized using the specific identification method.
F-7
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities represent participating interests in
pools of first mortgage loans originated and serviced by issuers of the
securities. Mortgage-backed securities are carried at unpaid principal
balances, adjusted for unamortized premiums and unearned discounts.
Premiums and discounts are amortized using the interest method over the
remaining period to contractual maturity. Management intends and has the
ability to hold such securities to maturity. Should any be sold, cost of
securities sold is determined using the specific identification method.
LOANS
Loans are stated at unpaid principal balances, less the allowance for
loan losses and net deferred loan fees.
Loan origination and commitment fees, as well as certain direct
origination costs, are deferred and amortized as a yield adjustment over
the contractual lives of the related loans using the interest method.
Loans are placed on nonaccrual when principal or interest is
delinquent for 90 days or more. Any unpaid interest previously accrued on
those loans is reversed from income, and thereafter interest is recognized
only to the extent of payments received.
The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb probable losses inherent in
the loan portfolio. The amount of the allowance is based on management's
evaluation of the collectibility of the loan portfolio, including the
nature of the portfolio, credit concentrations, trends in historical loss
experience, specific impaired loans, and economic conditions. The
allowance is increased by a provision for loan losses, which is charged to
expense, and reduced by charge-offs, net of recoveries. Changes in the
allowance relating to impaired loans are charged or credited to the
provision for loan losses.
PROPERTY AND EQUIPMENT
Office property and equipment are carried at cost. Depreciation is
computed using the straight-line method, over the estimated useful lives of
those properties and equipment acquired prior to 1981.
Property and equipment acquired after 1986 are depreciated under
the Modified Accelerated Cost Recovery System. The depreciation under
these methods does not differ materially from that calculated in
accordance with generally accepted accounting principles.
When these assets are retired or otherwise disposed of, the cost and
related accumulated depreciation or amortization is removed from the
accounts, and any resulting gain or loss is reflected in income for the
period.
F-8
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FORECLOSED REAL ESTATE
Foreclosed real estate includes formally foreclosed property. At
the time of foreclosure, foreclosed real estate is recorded at the lower
of the Association's cost or the asset's fair value, less estimated
selling costs, which becomes the property's new basis. Costs incurred
in maintaining foreclosed real estate are included in income (loss) or
foreclosed real estate.
REAL ESTATE HELD-FOR-INVESTMENT
Real estate held-for-investment consists of a former branch location
and is carried at amortized costs.
INCOME TAXES
Effective January 1, 1994, the Association adopted SFAS 109,
"Accounting for Income Taxes." Under SFAS 109, the liability method is
used in accounting for income taxes.
Income taxes are provided for the tax effects of the transactions
reported in the financial statements and consist of taxes currently due
plus deferred taxes related to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax
assets and liabilities represent the future tax return consequences of
those differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled.
Financial Institutions are exempt from Louisiana income tax.
PENSION PLAN
The Association has a Simplified Employee Pension (SEP) plan covering
substantially all employees. It is the policy of the Association to fund
the plan at a percentage, based on annual profits, of total compensation of
plan participants, not to exceed the maximum allowable for Federal income
tax purposes.
STATEMENTS OF CASH FLOWS
The Association considers all cash and amounts due from depository
institutions, interest-bearing deposits in other banks and Federal funds
sold to be cash equivalents for purposes of the statements of cash flows.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
F-9
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTERIM FINANCIAL STATEMENTS
The balance sheet as of September 30, 1996, and the related
statements of income, changes in equity capital and cash flows for the
nine months period ended September 30, 1996 and all related footnote
information for that period are unaudited and reflect all normal and
recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the Association's results of operations and
cash flows.
NOTE B
INVESTMENT SECURITIES
As discussed in Note A, the Association adopted SFAS 115 December 31,
1994. Prior to December 31, 1994, the Association classified securities as
held-for-sale securities (available-for-sale) and investment securities
(held-to-maturity) based on criteria which did not differ significantly
from that required by SFAS 115.
Securities available-for-sale consist of the following:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- -----------
(Unaudited)
SEPTEMBER 30, 1996
U. S. Government
and Federal Agencies $20,964,083 $ 195,942 $ 7,221 $21,152,804
Adjustable Rate Mortgage
Mutual Fund 1,040,209 - 3,530 1,036,676
FHLMC Common Stock 35,250 843,375 - 878,625
----------- ---------- ---------- -----------
$22,039,542 $1,039,317 $10,752 $23,068,105
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
Securities held-to-maturity consist of the following:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- -----------
DECEMBER 31, 1995
U. S. Government
and Federal Agencies $30,100,334 $ 366,733 $ 27,039 $30,440,028
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
DECEMBER 31, 1994:
U. S. Government
and Federal Agencies $32,306,999 $ 22,727 $583,910 $31,745,816
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
F-10
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE B
INVESTMENT SECURITIES (CONTINUED)
Securities available-for-sale consist of the following:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995
U.S. Government
and Federal Agencies $ 2,181,555 $ 24,478 $ - $ 2,206,033
Adjustable Rate Mortgage
Mutual Fund 301,942 - - 301,942
FHLMC Common Stock 35,250 716,250 - 751,500
----------- ---------- ------------- -----------
$ 2,518,747 $ 740,728 $ - $ 3,259,475
----------- ---------- ------------- -----------
----------- ---------- ------------- -----------
DECEMBER 31, 1994:
U.S. Government
and Federal Agencies $ 2,769,820 $ 985 $ 36,188 $ 2,734,616
FHLMC Common Stock 35,250 419,250 - 454,500
----------- ---------- ------------- -----------
$ 2,805,070 $ 420,235 $ 36,188 $ 3,189,116
----------- ---------- ------------- -----------
----------- ---------- ------------- -----------
</TABLE>
The following is a summary of maturities of securities
held-to-maturity and available-for-sale.
<TABLE>
<CAPTION>
September 30, 1996
(Unaudited)
----------------------------------------------------------
Securities Securities
Held-to-Maturity Available-for-Sale
------------------------ ---------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Amounts Maturing in:
One Year or Less $ - $ - $ 9,451,772 $10,321,645
After One Year
Thru Five Years - - 10,586,760 10,693,366
After Five Years
Thru Ten Years - - 2,001,010 2,053,094
--------- ---------- ----------- -----------
$ - $ - $20,039,542 $23,068,105
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
</TABLE>
F-11
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE B
INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
December 31, 1995
-------------------------------------------------------------------
Securities Securities
Held-to-Maturity Available-for-Sale
------------------------------ -----------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Amounts Maturing in:
One Year or Less $17,617,589 $17,674,403 $1,520,466 $2,238,881
After One Year
Thru Five Years 11,184,051 11,357,438 799,131 811,844
After Five Years
Thru Ten Years 1,298,694 1,408,187 199,150 208,750
----------- ----------- ---------- ----------
$30,100,334 $30,440,028 $2,518,747 $3,259,475
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
December 31, 1994
-------------------------------------------------------------------
Securities Securities
Held-to-Maturity Available-for-Sale
------------------------------ -----------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Amounts maturing in:
One Year or Less $21,219,234 $21,131,997 $1,807,640 $2,227,678
After One Year
thru Five Years 10,588,394 10,130,631 798,396 780,625
After Five Years
thru Ten Years 499,371 483,188 199,034 180,813
----------- ----------- ---------- ----------
$32,306,999 $31,745,816 $2,805,070 $3,189,116
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
Accrued interest receivable on available-for-sale investment
securities at September 30, 1996 was $273,257. Accrued interest receivable
on available-for-sale and held-to-maturity investment securities at
December 31, 1995 was $23,180 and $262,300. Accrued interest receivable on
available-for-sale and held-to-maturity investment securities at December
31, 1994 was $23,180 and $238,040, respectively.
In September, 1996, the Association sold investment securities
held-to-maturity with a book value of $6,988,911 for $6,888,447. This
resulted in a loss of $100,464. During 1995 and 1994, the Association had
no sales of securities available-for-sale.
F-12
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE B
INVESTMENT SECURITIES (CONTINUED)
There were no securities transferred between classifications during
1995 and 1994.
Included in other assets are two equity securities being carried at
cost of $27,228. The fair market value for these securities approximate
cost.
NOTE C
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities consist of the following:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ----------- --------
(Unaudited)
<S> <C> <C> <C> <C>
SEPTEMBER 30, 1996:
FNMA $3,064,893 $ 1,211 $112,140 $2,953,964
FHLMC 4,233,761 6,429 185,548 4,054,642
---------- ------- -------- ----------
$7,298,654 $ 7,640 $297,688 $7,008,606
---------- ------- -------- ----------
---------- ------- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995:
FNMA $1,772,462 $ 3,480 $ 17,224 $1,758,718
FHLMC 4,594,885 12,588 61,156 4,546,317
---------- ------- -------- ----------
$6,367,347 $16,068 $ 78,380 $6,305,035
---------- ------- -------- ----------
---------- ------- -------- ----------
DECEMBER 31, 1994:
FNMA $1,909,550 $ - $195,322 $1,714,228
FHLMC 4,153,700 - 310,026 3,843,674
---------- ------- -------- ----------
$6,063,250 $ - $505,348 $5,557,902
---------- ------- -------- ----------
---------- ------- -------- ----------
</TABLE>
F-13
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE C
MORTGAGE-BACKED SECURITIES (CONTINUED)
The amortized cost and fair value of mortgage-backed securities at
September 30, 1996, December 31, 1995 and December 31, 1994 by contractual
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations without call or prepayment penalties.
Amortized Fair
Cost Value
--------- ---------
(Unaudited)
SEPTEMBER 30, 1996
Mortgage-Backed Securities Maturing:
In One Year or Less $ 106,499 $ 110,823
After One Year Thru Five Years 3,860,230 3,712,240
After Five Years Thru Ten Years 994,506 1,005,535
After Ten Years 2,337,419 2,219,834
----------- ----------
$7,298,654 $7,048,432
----------- ----------
----------- ----------
Amortized Fair
Cost Value
--------- ---------
DECEMBER 31,1995
Mortgage-Backed Securities Maturing:
In One Year or Less $ 704,440 $ 709,300
After One Year Thru Five Years 3,118,629 3,091,529
After Five Years Thru Ten Years - -
After Ten Years 2,544,278 2,504,206
----------- ----------
$6,367,347 $6,305,035
----------- ----------
----------- ----------
DECEMBER 31, 1994
Mortgage-Backed Securities Maturing:
In One Year or Less $ - $ -
After One Year Thru Five Years 3,311,340 3,119,596
After Five Years Thru Ten Years - -
After Ten Years 2,751,910 2,438,306
----------- ----------
$6,063,250 $5,557,902
----------- ----------
----------- ----------
There were no sales of mortgage-backed securities in 1996, 1995 or 1994.
F-14
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE D
LOANS
Loans at September 30, 1996, December 31, 1995 and 1994 are summarized
as follows:
<TABLE>
<CAPTION>
December 31,
September 30, --------------------------
1996 1995 1994
------------- ----------- ------------
(Unaudited)
<S> <C> <C> <C>
Loans Secured by First Mortgages
on Real Estate:
One to Four Family
Residential $41,378,072 $38,449,360 $38,236,565
FHA and VA 540,570 675,223 854,273
Construction 411,545 -- --
Commercial Real Estate 441,959 484,451 601,319
Other 154,282 145,631 181,500
----------- ----------- -----------
Total Real Estate Loans 42,926,428 39,754,665 39,873,657
Consumer Loans
Second Mortgage 289,974 266,530 349,573
Loans on Deposits 173,383 186,460 160,835
------------ ----------- -----------
43,389,785 40,207,655 40,384,065
------------ ----------- -----------
Allowance for Loan Losses (337,482) (323,455) (345,348)
Net Deferred Loan Origination Costs 5,706 4,218 3,280
------------ ----------- -----------
$43,058,009 $39,888,418 $40,041,997
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
An analysis of the allowance for loan losses as follows:
Nine Months Ended Years Ended
September 30, December 31,
--------------------- -------------------
1996 1995 1995 1994
-------- -------- ------- --------
(Unaudited)
Balance, Beginning of Year $323,455 $345,348 $345,348 $369,680
Provision for Losses 14,027 - 12,107 20,785
Loans Charged Off - (10,001) (34,000) (47,617)
Recoveries - - - 2,500
-------- --------- -------- --------
Balance, End of Year $337,482 $335,347 $323,455 $345,348
-------- --------- -------- --------
-------- --------- -------- --------
F-15
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE D
LOANS (CONTINUED)
The Financial Accounting Standards Board issued SFAS 114, "Accounting
by Creditors for Impairment of a Loan, as amended by SFAS 118, "Accounting
by Creditors for Impairment of a Loan -- Income Recognition and
Disclosures", which is effective for fiscal years beginning after December
15, 1994. This statement establishes standards, including the use of
discounted cash flow techniques, for measuring the impairment of a loan
when it is probable that the contractual terms will not be met.
The Association adopted SFAS 114 on January 1, 1995. Adoption of
this standard had no impact on the Association's net income, stockholders'
equity or total assets.
At September 30, 1996, December 31, 1995 and 1994, the Association had
loans totaling approximately $355,003, $337,867 and $378,600, respectively,
for which impairment had been recognized. The allowance for loan losses
related to these loans totaled $121,400, $123,400 and $143,000 at September
30, 1996, December 31, 1995 and 1994, respectively. During the year ended
December 31, 1995, the amount of interest income that would have been
recorded on loans in nonaccrual status at December 31, 1995, had such loans
performed in accordance with their terms, was approximately $16,881. The
actual interest income recorded on these loans during the year ended
December 31, 1995 was approximately $-0-. Such interest foregone during
the nine months ended September 30, 1996 was approximately $18,975.
In the ordinary course of business, the Association has and expects to
continue to have transactions, including borrowings, with its officers and
directors. In the opinion of management, such transactions were on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time of comparable transactions with other persons
and did not involve more than a normal risk of collectibility or present
any other unfavorable features to the Association. Loans to such borrowers
are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 -------------------
----------- 1995 1994
(Unaudited) -------- --------
<S> <C> <C> <C>
Balance, Beginning of Year $224,412 $383,069 $336,308
Net Decrease (15,203) (158,657) 46,761
----------- -------- --------
Balance, End of Year $209,209 $224,412 $383,069
---------- -------- --------
---------- -------- --------
</TABLE>
The Association's lending activity is concentrated within the
metropolitan New Orleans area. The economy in the area has been affected
because of the economic decline in oil and gas related businesses. The
Association's major emphasis in lending has been the origination of
permanent single-family dwelling loans, and such loans comprise the
majority of the Association's loan portfolio.
F-16
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE E
ACCRUED INTEREST RECEIVABLE
Accrued interest receivable at September 30, 1996, December 31, 1995
and 1994 consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 ------------------
------------- 1995 1994
(Unaudited) -------- -------
<S> <C> <C> <C>
Loans $218,094 $190,700 $202,197
Mortgage-Backed Securities 34,948 30,640 29,811
Investments and Other 273,256 285,480 263,560
--------- -------- --------
Totals $526,298 $506,820 $495,568
--------- -------- --------
--------- -------- --------
</TABLE>
NOTE F
PREMISES AND EQUIPMENT
A summary of premises and equipment follows:
<TABLE>
<CAPTION>
September 30, December 31,
-------------------
1996 1995 1994
------------- --------- -------
(Unaudited)
<S> <C> <C> <C>
Land $780,616 $780,616 $800,616
Buildings and Improvements 2,060,145 1,900,647 1,828,048
Furniture, Fixture and Equipment 382,131 345,880 378,503
Leasehold Improvements - - 43,683
-------------- --------- ---------
3,222,892 3,027,143 3,050,850
Accumulated Depreciation
and Amortization (443,635) (356,562) (406,778)
-------------- --------- ---------
$2,779,257 $2,670,581 $2,644,072
-------------- --------- ---------
-------------- --------- ---------
</TABLE>
Depreciation expense for the nine months ended September 30, 1996
and 1995 was $87,075 and $92,749, respectively. Depreciation expense for
the years ended December 31, 1995 and 1994 was $128,022 and $107,559,
respectively.
F-17
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE G
FORECLOSED REAL ESTATE
A comparative summary of foreclosed real estate is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
-------------------
1996 1995 1994
-------------- -------- ---------
(Unaudited)
<S> <C> <C> <C>
Acquired in Settlement of Loans $ - $23,971 $37,327
Less: Allowance for Losses on
Foreclosed Real Estate - - -
------------- --------- ---------
$ - $23,971 $37,327
------------- --------- ---------
------------- --------- ---------
</TABLE>
An analysis of the allowance for losses on foreclosed real estate is
as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
----------------- --------------
1996 1995 1995 1994
------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C>
Balance, Beginning of Year $ - $ - $ - $10,191
Provision for Losses - - - -
Charge-Offs, Net - - - (10,191)
------- ------- ------- --------
Balance, End of Year $ - $ - $ - $ -
------- ------- ------ --------
------- ------- ------ --------
</TABLE>
NOTE H
REAL ESTATE HELD-FOR-INVESTMENT
Real estate held-for-investment at December 31, 1995 consists of a
former branch location as summarized below.
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- --------------
(Unaudited)
<S> <C> <C>
Land $70,000 $70,000
Building and Improvements 117,528 113,228
------------ ---------------
187,528 183,228
Accumulated Depreciation (92,881) (88,465)
------------ ---------------
94,647 94,763
Allowance for Losses - -
------------ ---------------
$94,647 $94,763
------------ ---------------
------------ ---------------
</TABLE>
F-18
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE I
DEPOSITS
Deposit account balances at September 30, 1996, December 31, 1995 and
1994, are summarized as follows:
<TABLE>
<CAPTION>
Weighted Nine Months Ended Years Ended
Average September 30, December 31,
-------------------------------------
Rate at 1996 1995 1994
----------------- ----------------- -----------------
9/30/96 12/31/95 12/31/94 Amount Percent Amount Percent Amount Percent
------- -------- -------- ------ ------- ------ ------- ------ -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance by Interest Rate:
Regular Savings Accounts 4.00% 3.25% 3.75% $24,009,715 39.69% $24,119,701 39.58% $26,365,116 40.79%
Certificate of Deposit: 5.05% 4.94% 4.24% 36,484,845 60.31 36,825,411 60.42 38,277,060 59.21
----------- ------ ----------- ------ ----------- ------
$60,494,560 100.00 $60,945,112 100.00 $64,642,176 100.00
----------- ------ ----------- ------ ----------- ------
----------- ------ ----------- ------ ----------- ------
Certificate accounts maturing
Under 12 months 29,192,738 80.01 28,164,704 76.48 30,221,752 78.96
12 months to 24 months 4,624,821 12.68 5,994,982 16.28 6,290,857 16.44
24 months to 36 months 2,431,642 6.66 2,272,634 6.17 1,323,374 3.46
36 months to 48 months 235,644 .65 272,486 .74 156,452 .41
48 months to 60 months - 0 120,605 .33 284,625 .74
----------- ----- ------------ ----- ----------- -----
$36,484,845 100.00% $36,825,411 100.00% $38,277,060 100.00%
----------- ----- ------------ ----- ----------- -----
----------- ----- ------------ ----- ----------- -----
</TABLE>
F-19
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE I
DEPOSITS (CONTINUED)
The aggregate amount of certificates with a minimum balance of
$100,000 was approximately $1,362,915, $1,053,966 and $888,565 at September
30, 1996 and December 31, 1995 and 1994, respectively. Deposits in excess
of $100,000 are not federally insured.
Interest expense for each of the following periods is as follows:
Nine Months Ended Year Ended
September 30, December 31,
----------------- -----------------
1996 1995 1995 1994
------------------ -----------------
(Unaudited)
Certificates $1,378,123 $1,326,345 $1,784,221 $1,509,028
Passbook Savings 584,384 680,343 879,683 897,980
---------- ---------- ---------- ----------
$1,962,507 $2,006,688 $2,663,904 $2,407,008
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
The Association held deposits of approximately $948,700, $917,916 and
$1,188,882 for officers and directors at September 30, 1996, December 31,
1995 and 1994, respectively.
NOTE J
FEDERAL INCOME TAXES
As discussed in Note A, the Association adopted SFAS 109 effective
January 1, 1994. Prior year financial statements were restated with no
cumulative effect adjustment at adoption required.
The provision for income taxes for 1995 and 1994 consists of the
following:
Year Ended
December 31,
September 30, ---------------------
1996 1995 1994
------------- --------- ----------
(Unaudited)
Current Federal Tax Expense $ 184,477 $439,205 $502,545
Deferred Federal Tax Expense 60,370 40,636 26,859
------------- --------- ----------
$ 244,847 $479,841 $529,404
------------- --------- ----------
------------- --------- ----------
F-20
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE J
FEDERAL INCOME TAXES (CONTINUED)
The provision for Federal income taxes differs from that computed by
applying Federal statutory rates to income (loss) before Federal income
tax expense, as indicated in the following analysis:
<TABLE>
<CAPTION>
December 31,
September 30, ---------------------------
1996 1995 1995 1994
------------- ------------ ------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Expected Tax Provision
at a 34% Rate $ 207,274 $ 441,377 $ 459,740 $ 518,054
Effect of Tax-Exempt Income (2,249) (1,929) (2,570) (2,228)
Effect of Net Loan and R/E/O
Losses Charged
Directly to Tax Bad Debt
Reserve 35,053 27,227 36,303 35,609
(Decrease) in Deferred Tax
Asset Valuation Allowance 4,769 (26,717) (13,632) (22,031)
----------- ----------- ----------- ------------
$ 244,847 $ 439,958 $ 479,841 $ 529,404
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
Effective Tax Rate 40.16% 33.89% 35.49% 34.74%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Deferred tax liabilities have been provided for taxable or deductible
temporary differences related to unrealized gains on available-for-sale
securities, deferred loan costs, depreciation and non-cash Federal Home
Loan Bank dividends. Deferred tax assets have been provided for taxable or
deductible temporary differences related to the reserves for uncollected
interest and late charges, deferred loan fees, allowance for loan losses,
the allowance for losses on foreclosed real estate and the allowance for
losses on real estate held-for-investment. The net deferred tax assets or
liabilities in the accompanying statements of financial condition include
the following components:
<TABLE>
<CAPTION>
December 31,
September 30, ---------------------------
1996 1995 1994
------------ ----------- ----------
(Unaudited)
<S> <C> <C> <C>
Deferred Tax Liabilities $ (433,520) $ (305,310) $ (166,102)
Deferred Tax Assets 123,103 117,675 132,228
Deferred Tax Asset
Valuation Allowance (114,744) (109,975) (123,607)
-------------- ------------ -----------
Net Deferred Tax
Assets or (Liabilities) $ (425,161) $ (297,610) $ (157,481)
-------------- ------------ -----------
-------------- ------------ -----------
</TABLE>
F-21
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE J
FEDERAL INCOME TAXES (CONTINUED)
Included in retained earnings at September 30, 1996, December 31, 1995
and 1994 is approximately $4,944,337, $4,940,983 and $4,958,086,
respectively in bad debt reserves for which no deferred Federal income tax
liability has been recorded. These amounts represent allocations of income
to bad debt deductions for tax purposes only. Reduction of these reserves
for purposes other than tax bad-debt losses or adjustments arising from
carryback of net operating losses would create income for tax purposes,
which would be subject to the then-current corporate income tax rate. The
unrecorded deferred liability on these amounts was approximately
$1,681,075, $1,679,900 and $1,685,750 for September 30, 1996, December 31,
1995 and 1994.
NOTE K
PENSION PLAN
The Association established a Simplified Employee Pension (SEP) plan
in 1993, covering substantially all employees.
The present plan (SEP) was funded in 1995 and 1994 at 12% of total
compensation of plan participants. The total expense (contributions)
amounted to $127,566 and $125,361 for the years ended December 31, 1995
and 1994, respectively. There was no pension expense during the period
ended September 30, 1996, or September 30, 1995.
NOTE L
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 (FDICIA) AND
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989
(FIRREA)
FDICIA was signed into law on December 19, 1991. Regulations
implementing the prompt corrective action provisions of FDICIA became
effective on December 19, 1992. In addition to the prompt corrective
action requirements, FDICIA includes significant changes to the legal and
regulatory environment for insured depository institutions, including
reductions in insurance coverage for certain kinds of deposits, increased
supervision by the Federal regulatory agencies, increased reporting
requirements for insured institutions, and new regulations concerning
internal controls, accounting and operations.
FIRREA was signed into law on August 9, 1989. Regulations for savings
institutions' minimum capital requirements went into effect on December 7,
1989. In addition to its capital requirements, FIRREA includes provisions
for changes in the Federal regulatory structure for institutions, including
a new deposit insurance system, increased deposit insurance premiums, and
restricted investment activities with respect to noninvestments grade
corporate debt and certain other investments. FIRREA also increases the
required ration of housing-related assets in order to qualify as a savings
institution.
F-22
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE L
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991 (FDICIA)
AND FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989
(FIRREA) (CONTINUED)
The regulations require institutions to have a minimum regulatory
tangible capital equal to 1.5% of adjusted total assets, a minimum 4%
core/leverage capital ratio, a minimum 4% tier 1 risk-based ratio, and a
minimum 8% total risk-bases capital ratio to be considered "adequately
capitalized." An institution is deemed to be "critically
undercapitalized" if it has a tangible equity ratio of 2% or less. The
ability to include qualifying supervisory goodwill for purposes of the
core/leverage capital and tangible capital was phased out by July 1,
1995.
The following table sets out the Association's various regulatory
capital categories at September 30, 1996, December 31, 1995 and 1994.
<TABLE>
1996 1995 1994
----------------------- ---------------------- ----------------------
Dollars Percentage Dollars Percentage Dollars Percentage
------- ---------- ------- ---------- ------- ----------
(Thousands) (Thousands) (Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $23,822 27.79 $23,457 27.26% $22,839 25.9%
Tangible Equity $23,822 27.79 $23,457 27.26% $22,839 25.9%
Core/Leverage Capital $23,822 27.79 $23,457 27.26% $22,839 25.9%
Tier 1 Risk-Based Capital $23,822 78.38 $23,680 92.80% $22,585 90.3%
Total Risk-Bases Capital $24,038 80.10 $23,680 91.75% $22,499 90.0%
</TABLE>
NOTE M
REGULATORY CAPITAL
The following is a reconciliation of generally accepted accounting
principles (GAAP) net income and capital to regulatory capital for the
Association. The following reconciliation also compares the capital
requirements as computed to the minimum capital requirements for the
Association.
Net Income Capital
Nine Months Ended as of
September 30, 1996 September 30, 1996
------------------ ------------------
(In Thousands)
Per GAAP $365 $24,500
---- -------
---- -------
Total Assets $86,521
-------
-------
Capital Ratio 28.32%
-----
-----
F-23
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE M
REGULATORY CAPITAL (CONTINUED)
<TABLE>
<CAPTION>
Core/ Tier 1 Total
Tangible Tangible Leverage Risk-Based Risk-Based
Capital Equity Equity Capital Capital
-------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Per GAAP $24,500 $24,500 $24,500 $24,500 $24,500
Assets Required
to be Deducted
Unrealized Gain
on Securities
Available-for-Sale (678) (678) (678) (678) (678)
General Valuation
Allowance 216
------- ------- ------- ------- -------
Regulatory Capital
Measure $23,822 $23,822 $23,822 $23,822 $24,038
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Adjusted Total
Assets $86,521 $86,521 $86,521
------- ------- -------
------- ------- -------
Risk-Weighted
Assets $30,010 $30,010
------- -------
------- -------
Capital Ratio 27.79% 27.79% 27.79% 79.38% 80.10%
Required Ratio 1.50% 2.00% 3.00% 4.00% 8.00%
---- ---- ---- ---- ----
---- ---- ---- ---- ----
Required Capital $ 1,298 $ 2,596 $ 2,408
------- ------- -------
------- ------- -------
Excess Capital $22,524 $21,226 $21,630
------- ------- -------
------- ------- -------
</TABLE>
Net Income Capital
Year Ended as of
December 31, 1995 December 31, 1995
----------------- -----------------
(In Thousands)
Per GAAP $872 $23,946
--- -------
--- -------
Total Assets $86,040
-------
-------
Capital Ratio 27.83%
-------
-------
F-24
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE M
REGULATORY CAPITAL (CONTINUED)
<TABLE>
<CAPTION>
Core/ Tier 1 Total
Tangible Tangible Leverage Risk-Based Risk-Based
Capital Equity Equity Capital Capital
-------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Per GAAP $23,946 $23,946 $23,946 $23,946 $23,946
Assets Required
to be Deducted
Unrealized Loss
on Securities
Available-for-Sale (489) (489) (489) (489) (489)
Other (467)
General Valuation
Allowance 200
------- ------- ------- ------- -------
Regulatory Capital
Measure $23,457 $23,457 $23,457 $23,457 $23,190
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Adjusted Total
Assets $86,040 $86,040 $86,040
------- ------- -------
------- ------- -------
Risk-Weighted
Assets $25,275 $25,275
------- -------
------- -------
Capital Ratio 27.35% 27.35% 27.35% 92.81% 93.60%
Required Ratio 1.50% 2.00% 3.00% 4.00% 8.00%
---- ---- ---- ---- ----
---- ---- ---- ---- ----
Required Capital $ 1,291 $ 2,581 $ 2,022
------- ------- -------
------- ------- -------
Excess Capital $22,166 $20,876 $21,635
------- ------- -------
------- ------- -------
</TABLE>
NOTE N
COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Association has various
outstanding commitments and contingent liabilities that are not
reflected in the accompanying financial statements. The principal
commitments of the Association are as follows:
LOAN COMMITMENTS:
Outstanding mortgage loan commitments as of September 30, 1996,
December 31, 1995 and 1994 were approximately $967,055, $318,460 and
$756,500, respectively. These commitments, normally extended for thirty
days, are for first mortgage loans at a fixed rate, ranging from 7.75%
to 9%.
F-25
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE N
COMMITMENTS AND CONTINGENCIES (CONTINUED)
INVESTMENT COMMITMENTS:
Outstanding commitments to purchase investment securities as of
December 31, 1995 were approximately $300,000.
SAIF COMMITMENT
During 1995 legislation was proposed by Congress to recapitalize the
Savings Association Insurance Fund (SAIF). The Association has accrued
$413,324 toward this commitment at September 30, 1996. The charge was
paid in December, 1996.
NOTE O
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Association is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments consist of commitments to
extend credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
statements of financial condition.
The Association's exposure to credit loss in the event of
nonperformance by the other party to these financial instruments for
commitments to extend credit is represented by the contractual notional
amount of those instruments (see Note N). The Association uses the same
credit policies making commitments as it does for on-balance sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amount does not necessarily represent future cash requirements. The
Association evaluates each customer's creditworthiness on a case-by-case
basis. The amount and type of collateral obtained varies and is based on
management's credit evaluation of the counterparty.
NOTE P
CONCENTRATION OF CREDIT RISK
The Association has deposits in another financial institution for more
than the insured limit. The Association is required to keep a minimum
compensating balance of approximately $250,000.
F-26
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE Q
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
On January 1, 1995, the Association adopted SFAS 107, "Disclosures
about Fair Value of Financial Instruments", which requires the disclosure
of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate
the value. Quoted market prices, when available, are used as the measure
of fair value. In cases where quoted market prices are not available, fair
values are based on present value estimates or other valuation techniques.
These derived fair values are significantly affected by assumptions used,
principally the timing of future cash flows and the discount rates.
Because assumptions are inherently subjective in nature, the estimated fair
values cannot be substantiated by comparison to independent market quotes
and, in many cases, the estimated fair values would not necessarily be
realized in an immediate sale or settlement of the instrument. The
disclosure requirements of SFAS 107 exclude certain financial instruments
and all nonfinancial instruments. Accordingly, the aggregate fair value
amounts presented do not represent management's estimation of the
underlying value of the Association.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate the value:
The carrying amount of cash and short term investments approximate the
fair value.
For investment securities and mortgage-backed securities fair value
is based on quoted market prices.
For mortgage loan receivables the fair values is based on discounted
cash flows using current rates at which similar loans with similar
maturities would be made to borrowers with similar credit risk.
The fair value of savings deposits is equal to the amount payable at
the date of the financial statements.
For certificates of deposit, fair value is estimated based on current
rates for deposits of similar remaining maturities.
The fair value of loan commitments is estimated using fees that would
be charged to enter similar agreements, taking into account (1) the
remaining terms of the agreement, (2) the creditworthiness of the
borrowers, and (3) for fixed rate commitments, the difference between
current interest rates and committed rates.
F-27
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE Q
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Estimated fair values of the financial instruments are as follows:
<TABLE>
<CAPTION>
1995
------------------------------------------------------
September 30, December 31,
-------------------------- ---------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Financial Assets
Cash and Short-Term Investment $ 8,698,000 $ 8,698,000 $ 2,355,000 $ 2,355,000
Investment Securities 23,068,000 23,068,000 33,360,000 33,700,000
Mortgage-Backed Securities 7,299,000 7,009,000 6,367,000 6,305,000
Loans (Net of Loan Allowance) 43,058,000 45,040,000 39,888,000 42,907,000
Financial Liabilities
Deposits $60,495,000 $63,889,000 $60,873,000 $60,913,000
Unrecognized Financial
Instruments
Commitments to Extend Credit $ 967,000 $ 971,000 $ 318,000 $ 332,000
</TABLE>
NOTE R
ADOPTION OF PLAN OF CONVERSION
On October 10, 1996, the Board of Directors of GUARANTY SAVINGS AND
HOMESTEAD ASSOCIATION adopted a Plan of Conversion ("the Plan"), which
proposes the conversion of the Association from a Louisiana-chartered
mutual savings and loan association to a Louisiana-chartered stock savings
and loan association to be known as "Guaranty Savings and Homestead
Association" (the "Association", in its mutual or stock form, as the sense
of the reference requires) and the concurrent issuance of its capital stock
to G S Financial Corporation. ("the newly formed Holding Company").
F-28
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995 (Unaudited) and
The Years Ended December 31, 1995 and 1994
NOTE R
ADOPTION OF PLAN OF CONVERSION (CONTINUED)
The Plan provides that non-transferable subscription rights to
purchase Common Stock will be offered first to Eligible Account Holders of
record as of the Eligibility Record Date, then to Tax-Qualified Employee
Stock Benefit Plans, then to Supplemental Eligible Account Holders, if
applicable, then to Other Members, and then to Directors, Officers and
Employees. Shares of Common Stock remaining unsold after the Subscription
Offering, if any, will be offered for sale to the public through a
Community Offering and/or Syndicated Community Offering, as determined by
the Boards of Directors of the Holding Company and the Association in their
sole discretion.. The common stock will be offered at a price to be
determined by the Board of Directors based upon an appraisal to be made by
an independent appraisal firm. The exact number of shares to be offered
will be determined by the Board of Directors in conjunction with the
determination of the price at which the shares will be sold. The costs of
issuing the common stock will be deferred and deducted from the sale
proceeds. The Association had incurred no stock issuance costs as of
September 30, 1996. If the conversion is not completed, deferred costs
will be charged to operations.
In accordance with OTS Regulations, at the time that the Association
converts from a mutual savings and loan association to a stock savings and
loan association, the Association will establish a liquidation account with
an initial balance equal to the Association's retained earnings as of the
date of the latest balance sheet appearing in the prospectus. The
liquidation account will be maintained for the benefit of eligible holders
who continue to maintain their accounts at the Association after the
Conversion. The liquidation account will be reduced annually to the extent
that eligible account holders have reduced their qualifying deposits.
Subsequent increases will not restore an eligible account holder's interest
in the liquidation account. In the event of a complete liquidation of the
Association, and only in such event, each account holder will be entitled
to receive a distribution from the liquidation account in an amount
proportionate to the adjusted qualifying account balances then held. The
Association may not pay dividends if those dividends would reduce retained
earnings below the required liquidation account amount.
F-29
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE ASSOCIATION OR WEBB. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER FOR OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE ASSOCIATION SINCE ANY OF THE DATES AS OF WHICH
INFORMATION IS FURNISHED HEREIN OR SINCE THE DATE HEREOF.
_____________________
TABLE OF CONTENTS
_____________________
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial and Other Data. . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposed Management Purchases. . . . . . . . . . . . . . . . . . . .
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for Common Stock. . . . . . . . . . . . . . . . . . . . . . .
Regulatory Capital . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pro Forma Data . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Income . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management of the Company. . . . . . . . . . . . . . . . . . . . . .
Management of the Association. . . . . . . . . . . . . . . . . . . .
The Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions on Acquisition of the Company and the
Association. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Capital Stock of the Company. . . . . . . . . . . . .
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Auditors . . . . . . . . . . . . . . . . . . . . . . . . .
Legal and Tax Opinions . . . . . . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . .
Index to Financial Statements. . . . . . . . . . . . . . . . . . . .
</TABLE>
UNTIL _________ __, 1997 ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
2,990,000 Shares
(Anticipated Maximum)
GS FINANCIAL CORP.
(PROPOSED HOLDING COMPANY
GUARANTY SAVINGS AND HOMESTEAD
ASSOCIATION)
COMMON STOCK
_____________________
PROSPECTUS
_____________________
____ __, 1997
CHARLES WEBB & COMPANY
A Division of Keefe,
Bruyette & Woods, Inc.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the Louisiana Business Corporation Law, Article 8 of the
Registrant's Articles of Incorporation provides as follows:
A. PERSONAL LIABILITY OF DIRECTORS AND OFFICERS. A director or officer
of the Corporation shall not be personally liable for monetary damages for any
action taken, or any failure to take any action, as a director or officer except
to the extent that by law a director's or officer's liability for monetary
damages may not be limited.
B. INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, including actions by or in the right of
the Corporation, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under Louisiana law.
C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation in defending an action, suit or
proceeding described in Section B of this Article 8 may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding if authorized by the board of directors (without regard to whether
participating members thereof are parties to such action, suit or proceeding),
upon receipt of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that the person is not entitled to
be indemnified by the Corporation.
D. OTHER RIGHTS. The indemnification and advancement of expenses
provided by or pursuant to this Article 8 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, insurance or other agreement, vote of
stockholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof) or otherwise, both as to actions in
their official capacity and as to actions in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
E. INSURANCE. The Corporation shall have the power to purchase and
maintain insurance or other similar arrangement on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership,
<PAGE>
joint venture or other enterprise, against any liability asserted against or
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article 8.
F. SECURITY FUND; INDEMNITY AGREEMENTS. By action of the Board of
Directors (notwithstanding their interest in the transaction), the Corporation
may create and fund a trust fund or other fund or form of self-insurance
arrangement of any nature, and may enter into agreements with its officers,
directors, employees and agents for the purpose of securing or insuring in any
manner its obligation to indemnify or advance expenses provided for in this
Article 8.
G. MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to any person as provided in this Article 8 shall be in the
nature of a contract between the Corporation and each such person, and no
amendment or repeal of any provision of this Article 8, and no amendment or
termination of any trust or other fund or form of self-insurance arrangement
created pursuant to Section F of this Article 8, shall alter to the detriment of
such person the right of such person to the advance of expenses or
indemnification related to a claim based on an act or failure to act which took
place prior to such amendment, repeal or termination.
H. PROCEEDINGS INITIATED BY INDEMNIFIED PERSONS. Notwithstanding any
other provision of this Article 8, the Corporation shall not indemnify a
director, officer, employee or agent for any liability incurred in an action,
suit or proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
participation in the action, suit or proceeding is authorized, either before or
after its commencement, by the affirmative vote of a majority of the directors
in office.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC filing fees.................................................. $ 10,420
OTS filing fees.................................................. 8,400
OFI filing fees.................................................. 1,750
Printing, postage and mailing.................................... 115,000
Legal fees....................................................... 90,000
Blue Sky legal fees and expenses................................. 18,000
Agent's management fee........................................... 30,000
Accounting fees.................................................. 50,000
Agent's out-of-pocket expenses, including legal fees............. 40,000
Appraiser's fees and expenses.................................... 15,250
Conversion agent fees and expenses............................... 13,500
Transfer agent and stock certificates............................ 12,000
Miscellaneous.................................................... 45,680
--------
TOTAL............................................................ $450,000
--------
--------
</TABLE>
In addition to the foregoing expenses, Charles Webb & Company will receive
fees based on the number of shares of Common Stock sold in the Conversion, plus
expenses.
II-2
<PAGE>
Based upon the assumptions and the information set forth under "Pro Forma
Data" and "The Conversion - Marketing and Underwriting Arrangements" in the
Prospectus, it is estimated that such fees will amount to $277,815, $331,635,
$375,000 and $375,000 in the event that 2,210,000, 2,600,000, 2,990,000 and
3,428,500 shares of Common Stock are sold by the Association in the
Conversion, respectively.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Not Applicable.
ITEM 27. EXHIBITS
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
II-3
<PAGE>
LIST OF EXHIBITS (filed herewith unless otherwise noted)
<TABLE>
<C> <S>
1.1 Form of Agency Agreement with Charles Webb & Company
2.1* Plan of Conversion
3.1* Articles of Incorporation of GS Financial Corp.
3.2* Bylaws of GS Financial Corp.
4.1* Form of stock certificate of GS Financial Corp.
5.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding legality
of securities
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding federal
income tax consequences
8.2 Opinion of LaPorte, Sehrt, Romig & Hand regarding Louisiana income
tax consequences
8.3* Opinion of RP Financial, LC regarding subscription rights
10.1* Form of Employment Agreement to be entered into among GS Financial
Corp., Guaranty Savings and Homestead Association and Donald C.
Scott
10.2* Form of Employment Agreement to be entered into among GS Financial
Corp., Guaranty Savings and Homestead Association and Bruce A.
Scott
10.3* Form of 1997 Stock Option Plan
10.4* Form of 1997 Recognition and Retention Plan and Trust Agreement
16.1 Letter from former auditors regarding change in auditors
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in
Exhibits 5.1 and 8.1, respectively)
23.2 Consent of LaPorte, Sehrt, Romig & Hand
23.3 Consent of RP Financial, LC
24.1* Power of Attorney (included in Signature Page of this Registration
Statement)
27.1* Financial Data Schedule
99.1* Stock Order Form
99.2* Transmittal letters
99.3* Question and Answer Brochure
99.4 Form of Proxy
99.5 Proxy Statement
99.6 Appraisal Report of RP Financial, LC dated December 20, 1996
</TABLE>
_______________
*Previously filed.
II-4
<PAGE>
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in the
information in the registration statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
The undersigned Registrant hereby undertakes to furnish stock certificates
to or in accordance with the instructions of the respective purchasers of the
Common Stock, so as to make delivery to each purchaser promptly following the
closing under the Plan of Conversion.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act will be
governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Pre-effective
Amendment No. 1 to its registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Metairie, State of
Louisiana, on February 5, 1997.
GS FINANCIAL CORP.
By: /s/ Donald C. Scott
____________________________________________
Donald C. Scott, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Donald C. Scott President and Chief Executive Officer February 5, 1997
___________________________
Donald C. Scott
/s/ Kenneth B. Caldcleugh Director February 5, 1997
___________________________
Kenneth B. Caldcleugh
/s/ Stephen L. Cory Director February 5, 1997
___________________________
Stephen L. Cory
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Bradford A. Glazer* Director February 5, 1997
___________________________
Bradford A. Glazer
/s/ J. Scott Key* Director February 5, 1997
___________________________
J. Scott Key
/s/ Victor Kirschman* Director February 5, 1997
___________________________
Victor Kirschman
/s/ Mannie D. Paine, Jr. Director February 5, 1997
___________________________
Mannie D. Paine, Jr.
/s/ Bruce A. Scott Director and Executive Vice President February 5, 1997
___________________________
Bruce A. Scott
/s/ Albert J. Zahn Director February 5, 1997
___________________________
Albert J. Zahn
/s/ Glenn R. Bartels Controller (also principal financial February 5, 1997
___________________________ and accounting officer)
Glenn R. Bartels
</TABLE>
- ---------------------------------------
* By Donald C. Scott, attorney in fact.
II-7
<PAGE>
Exhibit 1.1
GS FINANCIAL CORP.
2,990,000 Shares
COMMON SHARES
(No Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
February __, 1997
Charles Webb & Company, a division of
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
GS Financial Corp., a Louisiana corporation (the "Company") and Guaranty
Savings and Homestead Association, a Louisiana chartered mutual savings
association (the "Association" references to the "Association" include the
Association in the mutual or stock form, as indicated by the context), with
its deposit accounts insured by the Savings Association Insurance Fund
("SAIF") administered by the Federal Deposit Insurance Corporation ("FDIC")),
hereby confirm their agreement with Charles Webb & Company, a division of
Keefe, Bruyette & Woods, Inc. ("Webb", "KBW" or "the Agent"), as follows:
Section 1. The Offering. The Association, in accordance with its plan
of conversion adopted by its Board of Directors (the "Plan"), intends to
convert from a Louisiana chartered mutual savings association to a Louisiana
chartered stock savings association, and will issue all of its issued and
outstanding capital stock to the Company. In addition, pursuant to the Plan,
the Company will offer and sell up to 2,990,000 shares of its common stock,
par value, $.01 per share (the "Shares" or "Common Shares"), in a
subscription offering (the "Subscription Offering") to (1) depositors of the
Association with Qualifying Deposits (as defined in the Association's Plan of
Conversion) as of September 30, 1995 ("Eligible Account Holders"), (2) the GS
Financial Corp. Employee Stock Ownership Plan (the "ESOP"), (3) depositors of
the Association with Qualifying Deposits as of December 31, 1996
("Supplemental Eligible Account Holders"), (4) the Association's Other
Eligible Members (as defined in the Association's Plan of Conversion) and (5)
employees, officers and directors of the Association. Subject to the prior
subscription rights of the above-listed parties, the Company is offering for
sale in a community offering (the "Community Offering" and when referred to
together with the Subscription Offering, the "Subscription and Community
Offering") conducted concurrently with the Subscription
<PAGE>
Offering, the Shares not so subscribed for or ordered in the Subscription
Offering to members of the general public to whom a copy of the Prospectus
(as hereinafter defined) is delivered ("Other Subscribers"), with a
preference given to natural persons who reside in Orleans, St. Tammany and
Jefferson Parishes, Louisiana (all such offerees being referred to in the
aggregate as "Eligible Offerees"). It is anticipated that shares not
subscribed for in the Subscription and Community Offering will be offered to
certain members of the general public on a best efforts basis through a
selected dealers arrangement (the "Syndicated Community Offering") (the
Subscription Offering, Community Offering and Syndicated Community Offering
are collectively referred to as the "Offering"). It is acknowledged that the
purchase of Shares in the Offering is subject to the maximum and minimum
purchase limitations as described in the Plan and that the Company and the
Association may reject, in whole or in part, any orders received in the
Community Offering or Syndicated Community Offering. Collectively, these
transactions are referred to herein as the "Conversion."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-18841) (the
"Registration Statement") containing a prospectus relating to the Offering
for the registration of the Shares under the Securities Act of 1933 (the
"1933 Act"), and has filed such amendments thereof and such amended
prospectuses as may have been required to the date hereof. The term
"Registration Statement" shall include any documents incorporated by
reference therein and all financial schedules and exhibits thereto, as
amended, including post-effective amendments. The prospectus, as amended, on
file with the Commission at the time the Registration Statement initially
became effective is hereinafter called the "Prospectus," except that if any
Prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the
Registration Statement initially becomes effective, the term "Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and
after the time said prospectus is filed with the Commission.
In accordance with Title 12, Part 563b of the Code of Federal Regulations
(the "Conversion Regulations"), the Association has filed with the Office of
Thrift Supervision (the "OTS") and the Office of Financial Institutions of
the State of Louisiana (the "OFI") an Application for Approval of Conversion
on Form AC (the "Conversion Application"), including the Prospectus and the
Conversion Valuation Appraisal Report prepared by RP Financial, LC (the
"Appraisal") and has filed such amendments thereto as may have been required
by the OTS and the OFI. The Conversion Application has been approved by the
OTS and the OFI and the related Prospectus has been authorized for use by the
OTS and the OFI. In addition, the Company has filed with the OTS its
application on Form H-(e)1-S (the "Holding Company Application") to become a
registered savings and loan holding company under the Home Owners' Loan Act,
as amended ("HOLA"); and it has been approved.
2
<PAGE>
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company and
the Association hereby appoint the Agent as their exclusive financial advisor
and marketing agent (i) to utilize its best efforts to solicit subscriptions
for Shares of the Company's Common Stock and to advise and assist the Company
and the Association with respect to the Company's sale of the Shares in the
Offering and (ii) to participate in the Offering in the areas of market
making, research coverage and in syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Agent accepts such appointment and agrees to consult with and advise the
Company and the Association as to the matters set forth in the letter
agreement ("Letter Agreement"), dated September 26, 1996 between the
Association and Webb (a copy of which is attached hereto as Exhibit A). It
is acknowledged by the Company and the Association that the Agent shall not
be required to purchase any Shares or be obligated to take any action which
is inconsistent with all applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than those
set forth in Sections 2(d) and (e) hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or
expenses due to the Agent but unpaid will be payable to the Agent in next day
funds at the earlier of the Closing Date (as hereinafter defined) or the End
Date. In the event the Offering is extended beyond the End Date, the
Company, the Association and the Agent may agree to renew this Agreement
under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 2,210,000 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the
Shares, the full amount which it may have received from them plus accrued
interest as set forth in the Prospectus; and none of the parties to this
Agreement shall have any obligation to the other parties hereunder, except as
set forth in this Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due
to the date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to
be sold, are satisfied, the Company agrees to issue, or have issued, the
Shares sold in the Offering and to release for delivery certificates for such
Shares on the Closing Date (as hereinafter defined) against payment to the
Company by any
3
<PAGE>
means authorized by the Plan; provided, however, that no funds shall be
released to the Company until the conditions specified in Section 7 hereof
shall have been complied with to the reasonable satisfaction of the Agent and
their counsel. The release of Shares against payment therefor shall be made
on a date and at a place acceptable to the Company, the Association and the
Agent. Certificates for shares shall be delivered directly to the purchasers
in accordance with their directions. The date upon which the Company shall
release or deliver the Shares sold in the Offering, in accordance with the
terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $30,000 payable in four consecutive monthly
installments of $7,500, the first of which was due on September 26,
1996. Such fees shall be deemed to have been earned when due.
Should the Conversion be terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall have earned
and be entitled to be paid fees accruing through the stage at which
the termination occurred.
(b) A Success Fee of 1.50% of the aggregate Purchase Price of Common
Shares sold in the Subscription Offering and Community Offering
excluding shares purchased by the Association's officers, directors,
or employees (or members of their immediate families) plus any ESOP,
tax-qualified or stock based compensation plans (except IRA's) or
similar plan created by the Association for some or all of its
directors or employees. The management fee described in (a) above
will be applied against the Success Fee. The Success Fee shall
exceed $375,000.
(c) If any of the shares remain available after the Subscription
Offering, at the request of the Association, Webb will seek to form
a syndicate of registered broker-dealers to assist in the sale of
such Common Shares on a best efforts basis, subject to the terms
and conditions set forth in the selected dealers agreement. Webb
will endeavor to distribute the Common Shares among dealers in a
fashion which best meets the distribution objectives of the
Association and the Plan of Conversion. Webb will be paid a fee not
to exceed 5.5% of the aggregate Purchase Price of the Shares sold by
them. Webb will pass onto selected broker-dealers, who assist in
the syndicated community, an amount competitive with gross
underwriting discounts charged at such time for comparable amounts
of stock sold at a comparable price per share in a similar market
environment. Fees with respect to purchases affected with the
assistance of a broker/dealer other than Webb shall be transmitted
by Webb to such broker/dealer. The decision to utilize selected
broker-
4
<PAGE>
dealers will be made by the Association upon consultation with Webb.
In the event, with respect to any purchases of Shares, fees paid
pursuant to this subparagraph 2(c), such fees shall be in lieu of,
and not in addition to, payment pursuant to subparagraph 2(a) and
2(b).
(d) The Association and the Company hereby agree to reimburse the Agent,
from time to time upon the Agent's request, for its reasonable
out-of-pocket expenses, which the Agent shall document, including
without limitation, accounting, legal counsel, and communication,
excluding travel, lodging and meal expenses. The Association will
bear the expenses of the Offering customarily borne by issuers
including, without limitation, OTS, SEC, "Blue Sky," and NASD
filings and registration fees; the fees of the Association's
accountants, conversion agent, attorneys, appraiser, transfer agent
and registrar, printing, mailing and marketing expenses associated
with the conversion; and the fees set forth under this Section 2.
Full payment of Agent's actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the
Closing Date or a determination by the Association to terminate or abandon
the Plan.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offering at the Purchase Price as defined and set forth on the cover
page of the Prospectus.
Section 4. Representations and Warranties of the Company and the
Association. The Company and the Association jointly and severally represent
and warrant to and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the
Company and the Association and filed with the Commission was
declared effective by the Commission on ________, 1997. At the
time the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement), became effective,
the Registration Statement contained all statements that were
required to be stated therein in accordance with the 1933 Act and
the 1933 Act Regulations, complied in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and
the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any
information regarding the Company or the Association contained in
Sales Information (as such term is defined in Section 8 hereof)
authorized by the Company or the Association for use in connection
with the Offering, did not contain an untrue statement of a
material fact or
5
<PAGE>
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the
time any Rule 424(b) or (c) Prospectus was filed with the Commission
and at the Closing Date referred to in Section 2, the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto), and any information regarding the
Company or the Association contained in Sales Information (as such
term is defined in Section 8 hereof) authorized by the Company or the
Association for use in connection with the Offering will contain all
statements that are required to be stated therein in accordance with
the 1933 Act and the 1933 Act Regulations and will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 4(a)
shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company or the
Association by the Agent or its counsel expressly regarding the Agent
for use in the Prospectus under the caption "The Conversion-Plan of
Distribution" or statements in or omissions from any Sales Information
or information filed pursuant to state securities or blue sky laws or
regulations regarding the Agent.
(b) The Conversion Application which was prepared by the Company and the
Association and filed with the OTS and the OFI was approved by the OTS
on _________, 1997 and approved by the OFI on _______, 1997 and the
related Prospectus has been authorized for use by the OTS and the OFI.
At the time of the approval of the Conversion Application, including
the Prospectus (including any amendment or supplement thereto), by the
OTS and the OFI and at all times subsequent thereto until the Closing
Date, the Conversion Application, including the Prospectus (including
any amendment or supplement thereto), will comply in all material
respects with the Conversion Regulations, except to the extent waived
in writing by the OTS and the OFI. The Conversion Application,
including the Prospectus (including any amendment or supplement
thereto), does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
6
<PAGE>
provided, however, that the representations and warranties in this
Section 4(b) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished
to the Company or the Association by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus contained
in the Conversion Application under the caption "The
Conversion-Plan of Distribution" or statements in or omissions from
any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent. The
Holding Company Application for approval pursuant to the HOLA and
the regulations promulgated thereunder (the "Control Act
Regulations"), has been prepared by the Association and the Company
in material conformity with the requirements of the Control Act
Regulations and has been filed with and approved by the OTS. A
conformed copy of the Holding Company Application has been
delivered to the Agent.
(c) The Company has filed with the OTS the Holding Company Application,
and such Application was deemed complete by the OTS. As of the
Closing Date, approval of the Company's acquisition of the Association
will have been obtained from the OTS.
(d) No order has been issued by the OTS or the FDIC (hereinafter any
reference to the FDIC shall include the SAIF) preventing or suspending
the use of the Prospectus, and no action by or before any such
government entity to revoke any approval, authorization or order of
effectiveness related to the Conversion is, to the best knowledge of
the Company or the Association, pending or threatened.
(e) At the Closing Date, the Plan will have been adopted by the Boards of
Directors of both the Company and the Association and approved by the
members of the Association, and the offer and sale of the Shares will
have been conducted in all material respects in accordance with the
Plan, the Conversion Regulations, and all other applicable laws,
regulations, decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Conversion imposed upon
the Company or the Association by the OTS, the Commission, or any
other regulatory authority and in the manner described in the
Prospectus. No person has sought to obtain review of the final action
of the OTS in approving the Plan or in approving the Conversion or the
Holding Company Application pursuant to the HOLA, or any other statute
or regulation.
7
<PAGE>
(f) The Association has been organized and is a validly existing Louisiana
chartered savings association in mutual form of organization and upon
the Conversion will become a duly organized and validly existing
Louisiana chartered savings association in capital stock form of
organization, in both instances duly authorized to conduct its
business and own its property as described in the Registration
Statement and the Prospectus; the Association has obtained all
material licenses, permits and other governmental authorizations
currently required for the conduct of its business; all such licenses,
permits and governmental authorizations are in full force and effect,
and the Association is in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its
business; the Association is existing under the laws of the federal
government and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which its
ownership of property or leasing of property or the conduct of its
business requires such qualification, unless the failure to be so
qualified in one or more of such jurisdictions would not have a
material adverse effect on the condition, financial or otherwise, or
the business, operations or income of the Association. Following the
Association does not own equity securities or any equity interest in
any other business enterprise except as described in the Prospectus or
as would not be material to the operations of the Association. Upon
completion of the sale by the Company of the Shares contemplated by
the Prospectus, (i) the Association will be converted pursuant to the
Plan to a Louisiana chartered stock savings association, (ii) all of
the authorized and outstanding capital stock of the Association will
be owned by the Company, and (iii) the Company will have no direct
subsidiaries other than the Association. The Conversion will have
been effected in all material respects in accordance with all
applicable statutes, regulations, decisions and orders; and, except
with respect to the filing of certain post-sale, post-Conversion
reports, and documents in compliance with the 1933 Act Regulations,
the OTS' resolutions or letters of approval, all terms, conditions,
requirements and provisions with respect to the Conversion imposed by
the Commission, the OTS, and the FDIC, if any, will have been complied
with by the Company and the Association in all material respects or
appropriate waivers will have been obtained and all material notice
and waiting periods will have been satisfied, waived or elapsed.
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(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Louisiana
with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and at the Closing Date the
Company will be qualified to do business as a foreign corporation in
each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the business, operations or income of the Company. The Company has
obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of its business; all
such licenses, permits and governmental authorizations are in full
force and effect, and the Company is in all material respects
complying with all laws, rules, regulations and orders applicable to
the operation of its business.
(h) The Association has no subsidiaries.
(i) The Association is a member of the Federal Home Loan Bank of Dallas
("FHLB-Dallas"). The deposit accounts of the Association are insured
by the FDIC up to the applicable limits; and no proceedings for the
termination or revocation of such insurance are pending or, to the
best knowledge of the Company or the Association, threatened. Upon
consummation of the Conversion, the liquidation account for the
benefit of Eligible Account Holders will be duly established in
accordance with the requirements of the Conversion Regulations.
(j) The Company and the Association have good and marketable title to all
real property and good title to all other assets material to the
business of the Company and the Association, taken as a whole, and to
those properties and assets described in the Registration Statement
and Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Registration Statement and Prospectus, or are not material to the
business of the Company and the Association, taken as a whole; and all
of the leases and subleases material to the business of the Company
and the Association, taken as a whole, under which the Company or the
Association hold properties, including those described in the
Registration Statement and Prospectus, are in full force and effect.
9
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(k) The Company and the Association have received an opinion of their
special counsel, Elias, Matz, Tiernan & Herrick, L.L.P. with respect
to the federal income tax consequences of the Conversion and an
opinion of LaPorte, Sehrt, Romig & Hand ("LaPorte") with respect to
Louisiana income tax consequences of the Conversion; all material
aspects of the opinions of Elias, Matz, Tiernan & Herrick, L.L.P. and
LaPorte are accurately summarized in the Registration Statement and
will be accurately summarized in the Prospectus; and further represent
and warrant that the facts upon which such opinions are based are
truthful, accurate and complete.
(l) The Company and the Association have all such power, authority,
authorizations, approvals and orders as may be required to enter into
this Agreement, to carry out the provisions and conditions hereof and
to issue and sell the Shares to be sold by the Company as provided
herein and as described in the Prospectus except approval or
confirmation by the OTS of the final appraisal of the Association.
The consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Company and the
Association and this Agreement has been validly executed and delivered
by the Company and the Association and is the valid, legal and binding
agreement of the Company and the Association enforceable in accordance
with its terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of savings and loan holding
companies, the accounts of whose subsidiaries are insured by the FDIC
or by general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(m) The Company and the Association are not in violation of any directive
received from the OTS, the FDIC, or any other agency to make any
material change in the method of conducting their businesses so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the OTS, and the FDIC)
10
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and, except as may be set forth in the Registration Statement and
the Prospectus, there is no suit or proceeding or charge or action
before or by any court, regulatory authority or governmental agency
or body, pending or, to the knowledge of the Company or the
Association, threatened, which might materially and adversely
affect the Conversion, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and as
described in the Registration Statement and the Prospectus or which
might result in any material adverse change in the condition
(financial or otherwise), earnings, capital or properties of the
Company or the Association, or which would materially affect their
properties and assets.
(n) The financial statements, schedules and notes related thereto which
are included in the Prospectus fairly present the consolidated balance
sheet, income statement, statement of changes in equity and cash flows
of the Association at the respective dates indicated and for the
respective periods covered thereby and comply as to form in all
material respects with the applicable accounting requirements of Title
12 of the Code of Federal Regulations and generally accepted
accounting principles (including those requiring the recording of
certain assets at their current market value). Such financial
statements, schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles consistently
applied through the periods involved, present fairly in all material
respects the information required to be stated therein and are
consistent with the most recent financial statements and other reports
filed by the Association with the OTS. The other financial,
statistical and pro forma information and related notes included in
the Prospectus present fairly the information shown therein on a basis
consistent with the audited and unaudited financial statements of the
Association included in the Prospectus, and as to the pro forma
adjustments, the adjustments made therein have been properly applied
on the basis described therein.
(o) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not
been any material adverse change, financial or otherwise, in the
condition of the Company or the Association and its subsidiaries
considered as one enterprise, or in the earnings, capital or
properties of the Company or the Association, whether or not arising
in the ordinary course of business; (ii) there has not
11
<PAGE>
been any material increase in the long-term debt of the Association or
in the principal amount of the Association's assets which are
classified by the Association as substandard, doubtful or loss or in
loans past due 90 days or more or real estate acquired by
foreclosure, by deed-in-lieu of foreclosure or deemed in-substance
foreclosure or any material decrease in retained earnings or total
assets of the Association nor has the Company or the Association
issued any securities (other than in connection with the
incorporation of the Company) or incurred any liability or
obligation for borrowing other than in the ordinary course of
business; (iii) there have not been any material transactions
entered into by the Company or the Association; (iv) there has not
been any material adverse change in the aggregate dollar amount of
the Association's deposits or its consolidated net worth or spread;
(v) there has been no material adverse change in the Company's or
the Association's relationship with its insurance carriers,
including, without limitation, cancellation or other termination of
the Company's or the Association's fidelity bond or any other type
of insurance coverage; (vi) except as disclosed in the Prospectus
there has been no material change in management of the Company or
the Association, neither of which has any material undisclosed
liability of any kind, contingent or otherwise; (vii) the Company or
the Association has not sustained any material loss or interference
with its respective business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not
covered by insurance; (viii) the Company or the Association is not
in default in the payment of principal or interest on any
outstanding debt obligations; (ix) the capitalization, liabilities,
assets, properties and business of the Company and the Association
conform in all material respects to the descriptions thereof
contained in the Prospectus; and (x) neither the Company, the
Association nor its wholly owned subsidiary has any material
contingent liabilities, except as set forth in the Prospectus. All
documents made available to or delivered or to be made available to
or delivered by the Association or the Company or their
representatives in connection with the issuance and sale of the
Shares, including records of account holders, depositors, borrowers
and other members of the Association, or in connection with the
Agent's exercise of due diligence, except for those documents which
were prepared by parties other than the Association, the Company or
their representatives, to the best knowledge of the
12
<PAGE>
Association and the Company, were on the dates on which they were
delivered, or will be on the dates on which they are to be
delivered, true, complete and correct in all material respects.
(p) As of the date hereof and as of the Closing Date, neither the Company
nor the Association is (i) in violation of its articles of
incorporation or code of regulations or charter or bylaws,
respectively (and the Association will not be in violation of its
charter or bylaws in capital stock form upon consummation of the
Conversion), or (ii) in default in the performance or observance of
any material obligation, agreement, covenant, or condition contained
in any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its
property may be bound; the consummation of the Conversion, the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated have been duly
and validly authorized by all necessary corporate action on the part
of the Company and the Association and this Agreement has been validly
executed and delivered by the Company and the Association and is a
valid, legal and binding Agreement of the Company and the Association
enforceable in accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership or other similar laws now or
hereafter in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of federal
savings institutions, (ii) general equitable principles, (iii) laws
relating to the safety and soundness of insured depository
institutions, and (iv) applicable law or public policy with respect to
the indemnification and/or contribution provisions contained herein,
and except that no representation or warranty need be made as to the
effect or availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). The consummation of the transactions
herein contemplated will not: (i) conflict with or constitute a breach
of, or default under, or result in the creation of any material lien,
charge or encumbrance (with the exception of the liquidation account
established in the Conversion) upon any of the assets of the Company
or the Association pursuant to the articles of incorporation and code
of regulations of the Company or the charter and bylaws of the
Association (in either mutual or capital stock form), or any material
contract, lease or other
13
<PAGE>
instrument to which the Company or the Association has a beneficial
interest, or any applicable law, rule, regulation or order; (ii)
violate any authorization, approval, judgement, decree, order,
statute, rule or regulation applicable to the Company or the
Association, except for such violations which would not have a
material adverse effect on the financial condition and results of
operations of the Company and the Association on a consolidated
basis; or (iii) with the exception of the liquidation account
established in the Conversion, result in the creation of any
material lien, charge or encumbrance upon any property of the
Company or the Association.
(q) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, on the part of the
Company, the Association in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other instrument or
agreement to which the Company or the Association is a party or by
which any of them or any of their property is bound or affected,
except such defaults which would not have a material adverse affect on
the financial condition or results of operations of the Company and
the Association on a consolidated basis; such agreements are in full
force and effect; and no other party to any such agreements has
instituted or, to the best knowledge of the Company and the
Association, threatened any action or proceeding wherein the Company
or the Association would or might be alleged to be in default
thereunder.
(r) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and no
Shares have been or will be issued and outstanding prior to the
Closing Date (other than in connection with the incorporation of the
Company); the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the
Plan against payment of the consideration calculated as set forth in
the Plan and in the Prospectus, will be duly and validly issued, fully
paid and non-assessable, except for shares purchased by the ESOP with
funds borrowed from the Company to the extent payment therefor in cash
has not been received by the Company; except to the extent that
subscription rights and priorities pursuant thereto exist pursuant to
the Plan, no preemptive rights
14
<PAGE>
exist with respect to the Shares; and the terms and provisions of
the Shares will conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus.
To the best knowledge of the Company and the Association, upon the
issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be asserted against
the purchasers thereof by third-party claimants.
(s) No approval of any regulatory or supervisory or other public authority
is required in connection with the execution and delivery of this
Agreement or the issuance of the Shares, except for the approval of
the Commission, the OTS, the OFI and any necessary qualification,
notification, registration or exemption under the securities or blue
sky laws of the various states in which the Shares are to be offered,
and except as may be required under the rules and regulations of the
NASD and/or The Nasdaq Stock Market ("Nasdaq").
(t) LaPorte, Sehrt, Romig & Hand, which has certified the consolidated
audited financial statements and schedules of the Association included
in the Prospectus, has advised the Company and the Association in
writing that they are, with respect to the Company and the
Association, independent public accountants within the meaning of the
Code of Professional Ethics of the American Institute of Certified
Public Accountants and Title 12 of the Code of Federal Regulations and
Section 571.2(c)(3).
(u) RP Financial LC, which has prepared the Association's Conversion
Valuation Appraisal Report as of December __ 1996 (as amended or
supplemented, if so amended or supplemented) (the "Appraisal"), has
advised the Company in writing that it is independent of the Company
and the Association within the meaning of the Conversion Regulations.
(v) The Company and the Association have timely filed all required
federal, state and local tax returns; the Company and the Association
have paid all taxes that have become due and payable in respect of
such returns, except where permitted to be extended, have made
adequate reserves for similar future tax liabilities and no deficiency
has been asserted with respect thereto by any taxing authority.
(w) The Association is in compliance in all material respects with the
applicable financial
15
<PAGE>
record-keeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended,
and the regulations and rules thereunder.
(x) To the knowledge of the Company and the Association, neither the
Company, the Association nor employees of the Company or the
Association have made any payment of funds of the Company or the
Association as a loan for the purchase of the Shares or made any other
payment of funds prohibited by law, and no funds have been set aside
to be used for any payment prohibited by law.
(y) Prior to the Conversion, neither the Company nor the Association has:
(i) issued any securities within the last 18 months (except for notes
to evidence other bank loans and reverse repurchase agreements or
other liabilities in the ordinary course of business or as described
in the Prospectus, and except for any shares issued in connection with
the incorporation of the Company); (ii) had any material dealings
within the 12 months prior to the date hereof with any member of the
NASD, or any person related to or associated with such member, other
than discussions and meetings relating to the proposed Offering and
routine purchases and sales of United States government and agency
securities; (iii) entered into a financial or management consulting
agreement except as contemplated hereunder; and (iv) engaged any
intermediary between the Agent and the Company and the Association in
connection with the offering of the Shares, and no person is being
compensated in any manner for such service. Appropriate arrangements
have been made for placing the funds received from subscriptions for
Shares in a special interest-bearing account with the Association
until all Shares are sold and paid for, with provision for refund to
the purchasers in the event that the Conversion is not completed for
whatever reason or for delivery to the Company if all Shares are sold.
(z) The Company and the Association have not relied upon the Agent or its
legal counsel or other advisors for any legal, tax or accounting
advice in connection with the Conversion.
(aa) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
(bb) Any certificates signed by an officer of the Company or the Association
pursuant to the conditions of this Agreement and delivered to the Agent
or their counsel that refers to this Agreement shall be deemed to be a
16
<PAGE>
representation and warranty by the Company or the Association to the
Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
Section 5. Representations and Warranties of the Agent.
KBW represents and warrants to the Company and the Association that:
(i) it is a corporation and is validly existing in good standing
under the laws of the State of New York and licensed to conduct business in
the State of Ohio and that Webb is an unincorporated division thereof with
full power and authority to provide the services to be furnished to the
Association and the Company hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Agent, and
this Agreement has been duly and validly executed and delivered by the
Agent and is a legal, valid and binding agreement of the Agent, enforceable
in accordance with its terms.
(iii) Each of the Agent and its employees, agent and
representatives who shall perform any of the services hereunder shall be
duly authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services.
(iv) The execution and delivery of this Agreement by the Agent,
the consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or result in a
breach of, any of the terms, provisions or conditions of, or constitute a
default (or an event which with notice or lapse of time or both would
constitute a default) under, the articles of incorporation of the Agent or
any agreement, indenture or other instrument to which the Agent is a party
or by which it or its property is bound.
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution and delivery
of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before or
by any court, regulatory authority or government agency or body or, to the
knowledge of the Agent, pending or threatened, which might materially
adversely affect the Agent's performance of this Agreement.
17
<PAGE>
Section 5.l Covenants of the Company and the Association. The Company
and the Association hereby jointly and severally covenant with KBW as follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to
the Registration Statement without providing the Agent and its counsel
an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent or
its counsel shall reasonably object.
(b) The Association will not, at any time after the Conversion Application
is approved by the OTS and the OFI, file any amendment or supplement
to such Conversion Application without providing the Agent and its
counsel an opportunity to review such amendment or supplement or file
any amendment or supplement to which amendment or supplement the Agent
or its counsel shall reasonably object.
(c) The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or supplement
to such Holding Company Application without providing the Agent and
its counsel an opportunity to review the nonconfidential portions of
such amendment or supplement or file any amendment or supplement to
which amendment or supplement the Agent or its counsel shall
reasonably object.
(d) The Company and the Association will use their best efforts to cause
any post-effective amendment to the Registration Statement to be
declared effective by the Commission and any post-effective amendment
to the Conversion Application to be approved by the OTS and will
immediately upon receipt of any information concerning the events
listed below notify the Agent: (i) when the Registration Statement, as
amended, has become effective; (ii) when the Conversion Application,
as amended, has been approved by the OTS and the OFI; (iii) any
comments from the Commission, the OTS, the OFI or any other
governmental entity with respect to the Conversion or the transactions
contemplated by this Agreement; (iv) of the request by the Commission,
the OTS, the OFI or any other governmental entity for any amendment or
supplement to the Registration Statement, the Conversion Application
or for additional information; (v) of the issuance by the Commission,
the OTS, the OFI or any other governmental entity of any order or
other action suspending the Offering or the use of the Registration
Statement or the Prospectus or any
18
<PAGE>
other filing of the Company or the Association under the Conversion
Regulations, or other applicable law, or the threat of any such action;
(vi) the issuance by the Commission, the OTS, the OFI or any authority
of any stop order suspending the effectiveness of the Registration
Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (vii) of the occurrence of any
event mentioned in paragraph (h) below. The Company and the
Association will make every reasonable effort (i) to prevent the
issuance by the Commission, the OTS, the OFI or any state authority
of any such order and, if any such order shall at any time be issued,
(ii) to obtain the lifting thereof at the earliest possible time.
(e) The Company and the Association will deliver to the Agent and to its
counsel two conformed copies of the Registration Statement, the
Conversion Application and the Holding Company Application, as
originally filed and of each amendment or supplement thereto,
including all exhibits. Further, the Company and the Association will
deliver such additional copies of the foregoing documents to counsel
to the Agent as may be required for any NASD and "blue sky" filings.
(f) The Company and the Association will furnish to the Agent, from time
to time during the period when the Prospectus (or any later prospectus
related to this offering) is required to be delivered under the 1933
Act or the Securities Exchange Act of 1934 (the "1934 Act"), such
number of copies of such Prospectus (as amended or supplemented) as
the Agent may reasonably request for the purposes contemplated by the
1933 Act, the 1933 Act Regulations, the 1934 Act or the rules and
regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the Prospectus
(as amended or supplemented, if amended or supplemented) in any lawful
manner contemplated by the Plan in connection with the sale of the
Shares by the Agent.
(g) The Company and the Association will comply with any and all material
terms, conditions, requirements and provisions with respect to the
Conversion and the transactions contemplated thereby imposed by the
Commission, the OTS, the OFI or the Conversion Regulations, and by the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations to be complied with prior to or subsequent to the Closing
Date and when the Prospectus is required to be delivered, and during
19
<PAGE>
such time period the Company and the Association will comply, at their
own expense, with all material requirements imposed upon them by the
Commission, the OTS, the OFI or the Conversion Regulations, and by the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations, including, without limitation, Rule 10b-5 under the 1934
Act, in each case as from time to time in force, so far as necessary
to permit the continuance of sales or dealing in the Common Shares
during such period in accordance with the provisions hereof and the
Prospectus.
(h) If, at any time during the period when the Prospectus relating to the
Shares is required to be delivered, any event relating to or affecting
the Company or the Association shall occur, as a result of which it is
necessary or appropriate, in the opinion of counsel for the Company
and the Association or in the reasonable opinion of the Agent's
counsel, to amend or supplement the Registration Statement or
Prospectus in order to make the Registration Statement or Prospectus
not misleading in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, the Company and the
Association will immediately so inform the Agent and prepare and file,
at their own expense, with the Commission, the OTS and OFI and
furnish to the Agent a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration
Statement or Prospectus (in form and substance reasonably satisfactory
to the Agent and its counsel after a reasonable time for review) which
will amend or supplement the Registration Statement or Prospectus so
that as amended or supplemented it will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading. For the purpose of this Agreement, the
Company and the Association each will timely furnish to the Agent such
information with respect to itself as the Agent may from time to time
reasonably request.
(i) The Company and the Association will take all necessary actions, in
cooperating with the Agent, and furnish to whomever the Agent may
direct, such information as may be required to qualify or register the
Shares for offering and sale by the Company or to exempt such Shares
from registration, or to exempt the Company as a broker-dealer and its
officers, directors and employees as broker-dealers
20
<PAGE>
or agents under the applicable securities or blue sky laws of such
jurisdictions in which the Shares are required under the Conversion
Regulations to be sold or as the Agent and the Company and the
Association may reasonably agree upon; provided, however, that the
Company shall not be obligated to file any general consent to service
of process, to qualify to do business in any jurisdiction in which it
is not so qualified, or to register its directors or officers as
brokers, dealers, salesmen or agents in any jurisdiction. In each
jurisdiction where any of the Shares shall have been qualified or
registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required
by the laws of such jurisdiction.
(j) The liquidation account for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders will be duly established and
maintained in accordance with the requirements of the OTS and the OFI,
and such Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their savings accounts in the
Association will have an inchoate interest in their pro rata portion
of the liquidation account which shall have a priority superior to
that of the holders of the Common Shares in the event of a complete
liquidation of the Association.
(k) The Company and the Association will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the
Closing Date, without the Agent's prior written consent, any common
shares other than the Shares or other than in connection with any plan
or arrangement described in the Prospectus, including existing stock
benefit plans.
(l) The Company shall register its Common Shares under Section 12(g) of
the 1934 Act concurrently with the Offering pursuant to the Plan and
shall request that such registration be effective prior to or upon
completion of the Conversion. The Company shall maintain the
effectiveness of such registration for not less than three years or
such shorter period as may be required by the OTS and the OFI.
(m) During the period during which the Company's Common Shares are
registered under the 1934 Act or for three (3) years from the date
hereof, whichever period is greater, the Company will furnish to its
shareholders as soon as practicable after the end of each fiscal year
an annual report of the Company
21
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(including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of the
Company and its subsidiaries as at the end of and for such year,
certified by independent public accountants in accordance with
Regulation S-X under the 1933 Act and the 1934 Act).
(n) During the period of three years from the date hereof, the Company
will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the
Company furnished to or filed with the Commission under the 1934 Act
or any national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not
limited to, reports on Forms 10-K, 10-Q and 8-K and all proxy
statements and annual reports to stockholders), (ii) a copy of each
other non-confidential report of the Company mailed to its
stockholders or filed with the Commission, the OTS or any other
supervisory or regulatory authority or any national securities
exchange or system on which any class of securities of the Company is
listed or quoted, each press release and material news items and
additional documents and information with respect to the Company or
the Association as the Agent may reasonably request; and (iii) from
time to time, such other nonconfidential information concerning the
Company or the Association as the Agent may reasonably request.
(o) The Company and the Association will use the net proceeds from the
sale of the Shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the HOLA, the
1933 Act, the 1933 Act Regulations, and the laws of any state in which
the Shares are registered or qualified for sale or exempt from
registration, neither the Company nor the Association will distribute
any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(q) The Company will use its best efforts to (i) encourage and assist a
market maker to establish and maintain a market for the Shares and
(ii) list and maintain quotation of the Shares on a national or
regional securities exchange or on Nasdaq effective on or prior to the
Closing Date.
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(r) The Association will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or orders to
purchase Shares in the Offering on an interest-bearing basis at the
rate described in the Prospectus until the Closing Date and
satisfaction of all conditions precedent to the release of the
Association's obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in accordance with
the Plan and as described in the Prospectus or until refunds of such
funds have been made to the persons entitled thereto or withdrawal
authorizations canceled in accordance with the Plan and as described
in the Prospectus. The Association will maintain such records of all
funds received to permit the funds of each subscriber to be separately
insured by the FDIC (to the maximum extent allowable) and to enable
the Association to make the appropriate refunds of such funds in the
event that such refunds are required to be made in accordance with the
Plan and as described in the Prospectus.
(s) The Company will promptly take all necessary action to register as a
savings and loan holding company under the HOLA within 90 days of the
Closing Date.
(t) The Company and the Association will take such actions and furnish
such information as are reasonably requested by the Agent in order for
the Agent to ensure compliance with the NASD's "Interpretation
Relating to Free Riding and Withholding."
(u) Neither the Company nor the Association will amend the Plan of
Conversion without notifying the Agent prior thereto.
(v) The Company shall assist the Agent, if necessary, in connection with
the allocation of the Shares in the event of an oversubscription and
shall provide the Agent with any information necessary to assist the
Company in allocating the Shares in such event and such information
shall be accurate and reliable.
(w) Prior to the Closing Date, the Company and the Association will inform
the Agent of any event or circumstances of which it is aware as a
result of which the Registration Statement and/or Prospectus, as then
amended or supplemented, would contain an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein not misleading.
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(x) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth in an
amendment or supplement thereto, neither the Company nor the
Association will have: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money,
except borrowings from the same or similar sources indicated in the
Prospectus in the ordinary course of its business, or (ii) entered
into any transaction which is material in light of the business and
properties of the Company and the Association, taken as a whole.
(y) The facts and representations provided to Elias, Matz, Tiernan &
Herrick L.L.P. by the Association and the Company and upon which
Elias, Matz, Tiernan & Herrick L.L.P. will base its opinion under
Section 7(c)(1) are and will be truthful, accurate and complete.
Section 6. Payment of Expenses. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the
Company and the Association jointly and severally agree to pay or reimburse
the Agent for: (a) all filing fees in connection with all filings related to
the Offering with the NASD; (b) any stock issue or transfer taxes which may
be payable with respect to the sale of the Shares; (c) all reasonable
expenses of the Conversion, including but not limited to the Company's and
the Association's, and the Agent's attorneys' fees and expenses, blue sky
fees, transfer agent, registrar and other agent charges, fees relating to
auditing and accounting or other advisors and costs of printing all documents
necessary in connection with the Conversion; and (d) all reasonable
out-of-pocket expenses incurred by the Agent not to exceed $10,000 (exclusive
of legal fees and expenses not to exceed $35,000). Such out-of-pocket
expenses include, but are not limited to, travel, lodging, meals,
communication and postage. However, such out-of-pocket expenses do not
include expenses incurred with respect to the matters set forth in (a) or (b)
above. In the event the Company is unable to sell a minimum of 2,210,000
Shares or the Conversion is terminated or otherwise abandoned, the Company
and the Association shall promptly reimburse the Agent in accordance with
Section 2 hereof.
Section 7. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date,
are subject, to the extent not waived in writing by the Agent, to the
condition that all representations and warranties of the Company and the
Association herein are, at and as of the commencement of the Offering and at
and as of the Closing Date, true and correct in all material respects, the
condition that the Company and the Association shall have performed all of
their obligations hereunder to be performed on or before such dates, and to
the following further conditions:
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(a) At the Closing Date, the Company and the Association shall have
conducted the Conversion in all material respects in accordance with
the Plan, the Conversion Regulations, and all other applicable laws,
regulations, decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Conversion imposed upon
them by the OTS.
(b) The Registration Statement shall have been declared effective by the
Commission and the Conversion Application approved by the OTS not
later than 5:30 p.m. on the date of this Agreement, or with the
Agent's consent at a later time and date; and at the Closing Date,
no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings
therefore initiated or threatened by the Commission or any state
authority, and no order or other action suspending the authorization
of the Prospectus or the consummation of the Conversion shall have
been issued or proceedings therefore initiated or, to the Company's
or the Association's knowledge, threatened by the Commission, the
OTS, the FDIC, or any state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Elias, Matz,
Tiernan & Herrick, L.L.P., special counsel for the Company and
the Association, in form and substance to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the state of Louisiana.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Registration Statement and the Prospectus.
(iii) The Association has been duly organized and is a
validly existing Louisiana chartered savings association in capital
stock form of organization, duly authorized to conduct its business
and own its property as described in the Registration Statement and
the Prospectus. All of the outstanding capital stock of the
Association upon completion of the Conversion will be duly authorized
and, upon payment therefor, will be validly issued, fully paid and
non-assessable and will be owned by the Company, free and clear of any
liens, encumbrances, claims or other restrictions.
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(iv) The Association has no subsidiaries.
(v) The Association is a member of the FHLB-Dallas. The deposit
accounts of the Association are insured by the FDIC up to the maximum
amount allowed under law and no proceedings for the termination or
revocation of such insurance are pending or, to such counsel's Actual
Knowledge, threatened; the description of the liquidation account as
set forth in the Prospectus under the captions "The Conversion and
Reorganization-Effect on Liquidation Rights" and "- Liquidation
Rights," to the extent that such information constitutes matters of
law and legal conclusions, has been reviewed by such counsel and is
accurately described in all material respects.
(vi) Upon consummation of the Conversion, the authorized, issued
and outstanding capital stock of the Company will be within the range
set forth in the Prospectus under the caption "Capitalization," and,
no shares of Common Stock have been issued prior to the Closing Date;
at the time of the Conversion, the Shares subscribed for pursuant to
the Offering will have been duly and validly authorized for issuance,
and when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the
Plan and Prospectus, will be duly and validly issued and fully paid
and non-assessable; the issuance of the Shares is not subject to
preemptive rights and the terms and provisions of the Shares conform
in all material respects to the description thereof contained in the
Prospectus. To such counsel's Actual Knowledge, upon the issuance of
the Shares, good title to the Shares will be transferred by the
Company to the purchasers thereof against payment therefor, subject to
such claims as may be asserted against the purchasers thereof by
third-party claimants.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of the
Company and the Association; and this Agreement is a valid and binding
obligation of the Company and the Association, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of creditors'
rights generally or the rights of
26
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creditors of federal savings institutions, (ii) general equitable
principles, (iii) laws relating to the safety and soundness of insured
depository institutions, and (iv) applicable law or public policy with
respect to the indemnification and/or contribution provisions contained
herein, including without limitation the provisions of Sections 23A and
23B of the Federal Reserve Act and except that no opinion need be
expressed as to the effect or availability of equitable remedies or
injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ix) The Conversion Application has been approved by the OTS and
the OFI and the Prospectus has been authorized for use by the OTS and
the OFI. The OTS has approved the Holding Company Application and
issued its order of approval under the savings and loan holding
company provisions of the HOLA, the purchase by the Company of all of
the issued and outstanding capital stock of the Association has been
authorized by the OTS and no action has been taken, and to such
counsel's Actual Knowledge none is pending or threatened, to revoke
any such authorization or approval.
(x) The Plan has been duly adopted by the required vote of the
directors of the Company and the Association, and based upon the
certificate of the inspector of election, by the stockholders of the
Association.
(xi) Subject to the satisfaction of the conditions to the OTS'
and the OFI's approval of the Conversion, no further approval,
registration, authorization, consent or other order of any federal
regulatory agency is required in connection with the execution and
delivery of this Agreement, the issuance of the Shares and the
consummation of the Conversion, except as may be required under the
securities or blue sky laws of various jurisdictions (as to which no
opinion need be rendered) and except as may be required under the
rules and regulations of the NASD and/or the Nasdaq National Market
(as to which no opinion need by rendered). To such counsel's Actual
Knowledge, the Conversion has been consummated in all material
respects in accordance with all applicable provisions of the HOLA and
the Conversion Regulations.
(xii) The Registration Statement is effective under the 1933
Act, and no stop order suspending the effectiveness has been issued
under the 1933 Act or proceedings therefor initiated or, to such
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counsel's Actual Knowledge, threatened by the Commission.
(xiii) At the time the Conversion Application, including the
Prospectus contained therein, was approved by the OTS and the OFI, the
Conversion Application, including the Prospectus contained therein,
complied as to form in all material respects with the requirements of
the Conversion Regulations, federal law and all applicable rules and
regulations promulgated thereunder (other than the financial
statements, the notes thereto, and other tabular, financial,
statistical and appraisal data included therein, as to which no
opinion need be rendered).
(xiv) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented,
if so amended or supplemented) (other than the financial statements,
the notes thereto, and other tabular, financial, statistical and
appraisal data included therein, as to which no opinion need be
rendered), complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, and (ii)
the Prospectus (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the 1933
Act, the 1933 Act Regulations, the Conversion Regulations and federal
law.
(xv) The terms and provisions of the Shares of the Company
conform, in all material respects, to the description thereof
contained in the Registration Statement and Prospectus, and the form
of certificate used to evidence the Shares is in due and proper form.
(xvi) There are no legal or governmental proceedings pending
or, to such counsel's Actual Knowledge, threatened which are required
to be disclosed in the Registration Statement and Prospectus, other
than those disclosed therein, and to such counsel's Actual Knowledge,
all pending legal and governmental proceedings to which the Company or
the Association is a party or of which any of their property is the
subject, which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the
Company's or the Association's business, are, considered in the
aggregate, not material.
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(xvii) To such counsel's Actual Knowledge, there are no
material contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Conversion Application, the Registration Statement or the
Prospectus or required to be filed as exhibits thereto other than
those described or referred to therein or filed as exhibits thereto in
the Conversion Application, the Registration Statement or the
Prospectus. The description in the Conversion Application, the
Registration Statement and the Prospectus of such documents and
exhibits is accurate in all material respects and fairly presents the
information required to be shown.
(xviii) To such counsel's Actual Knowledge, the Company and the
Association have conducted the Conversion, in all material respects,
in accordance with all applicable requirements of the Plan and
applicable federal law. The Plan complies in all material respects
with all applicable federal laws, rules, regulations, decisions and
orders including, but not limited to, the Conversion Regulations; no
order has been issued by the OTS, the OFI, the Commission, the FDIC,
or any state authority to suspend the Offering or the use of the
Prospectus, and no action for such purposes has been instituted or, to
such counsel's Actual Knowledge, threatened by the OTS, the OFI, the
Commission, the FDIC, or any state authority and, to such counsel's
Actual Knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the OTS, or the OFI, approving
the Plan, the Conversion Application, the Holding Company Application
or the Prospectus.
(xix) To such counsel's Actual Knowledge, the Company and the
Association have obtained all material licenses, permits and other
governmental authorizations currently required under federal and
Louisiana law for the conduct of their businesses and all such
licenses, permits and other governmental authorizations are in full
force and effect, and the Company and the Association are in all
material respects complying therewith, except where the failure to
have such licenses, permits and other governmental authorizations or
the failure to be in compliance therewith would not have a material
adverse effect on the business or operations of the Association and
the Company, taken as a whole.
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<PAGE>
(xx) To such counsel's Actual Knowledge, neither the Company nor
the Association is in violation of its articles of incorporation and
bylaws or its Charter and bylaws, as appropriate or, to such counsel's
Actual Knowledge, in default or violation of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or its property may be bound, except for
such defaults or violations which would not have a material adverse
impact on the financial condition or results of operations of the
Company or the Association on a consolidated basis; to such
counsel's Actual Knowledge, the execution and delivery of this
Agreement, the occurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Association pursuant to any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or the Association is a party or
by which any of them may be bound, or to which any of the property or
assets of the Company or the Association are subject (other than the
establishment of the liquidation account); and, such action will not
result in any violation of the provisions of the certificate of
incorporation or bylaws of the Company or the Charter or bylaws of the
Association or, to such counsel's Actual Knowledge, result in any
violation of any applicable federal law, act, regulation (except that
no opinion with respect to the securities and blue sky laws of various
jurisdictions or the rules or regulations of the NASD and/or the
Nasdaq Stock Market need be rendered) or order or court order, writ,
injunction or decree.
(xxi) The Company's articles of incorporation and bylaws
comply in all materials respects with the Business Corporation Law
("BCL") of the State of Louisiana. The Association's charter and
bylaws comply in all material respects with the rules and regulations
of the OTS and the OFI.
(xxii) To such counsel's Actual Knowledge, neither the Company
nor the Association is in violation of any directive from the OTS or
the FDIC to make any material change in the method of conducting its
respective business.
30
<PAGE>
(xxiii) The information in the Prospectus under the captions
"Regulation," "The Conversion," "Restrictions on Acquisition of the
Company and the Association" and "Description of Capital Stock of the
Company," to the extent that such information constitutes matters of
law, summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects. The description of the Conversion process under
the caption "The Conversion" in the Prospectus has been reviewed by
such counsel and fairly describes such process in all material
respects. The discussion of statutes or regulations described or
referred to in the Prospectus are accurate summaries and fairly
present the information required to be shown. The information under
the caption "The Conversion - Tax Aspects" has been reviewed by such
counsel and fairly describes the opinions rendered by Elias, Matz,
Tiernan & Herrick, L.L.P. and LaPorte, Sehrt, Romig & Hand to the
Company and the Association with respect to such matters.
In addition, such counsel shall state that during the preparation
of the Conversion Application, the Registration Statement and the
Prospectus, they participated in conferences with certain officers of,
the independent public and internal accountants for, and other
representatives of the Company and the Association, at which
conferences the contents of the Conversion Application, the
Registration Statement and the Prospectus and related matters were
discussed and, while such counsel have not confirmed the accuracy or
completeness of or otherwise verified the information contained in the
Conversion Application, the Registration Statement or the Prospectus,
and do not assume any responsibility for such information, based upon
such conferences and a review of documents deemed relevant for the
purpose of rendering their view (relying as to materiality as to
factual matters on certificates of officers and other factual
representations by the Company and the Association), nothing has come
to their attention that would lead them to believe that the Conversion
Application, the Registration Statement, the Prospectus, or any
amendment or supplement thereto (other than the financial statements,
the notes thereto, and other tabular, financial, statistical and
appraisal data included therein as to which no view need be rendered)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light
31
<PAGE>
of the circumstances under which they were made, not misleading.
In giving such opinion, such counsel may rely as to all matters
of fact on certificates of officers or directors of the Company and
the Association and certificates of public officials. Such counsel's
opinion shall be limited to matters governed by federal laws and by
the Louisiana Business Corporation Law. With respect to matters
involving the application of Louisiana law, such counsel may rely, to
the extent it deems proper and as specified in its opinion, solely
upon the opinion of local counsel. The opinion of Elias, Matz,
Tiernan & Herrick, L.L.P. shall be governed by the Legal Opinion
Accord ("Accord") of the American Bar Association Section of Business
Law (1991). The term "Actual Knowledge" as used herein shall have the
meaning set forth in the Accord. For purposes of such opinion, no
proceedings shall be deemed to be pending, no order or stop order
shall be deemed to be issued, and no action shall be deemed to be
instituted unless, in each case, a director or executive officer of
the Company, the Association shall have received a copy of such
proceedings, order, stop order or action. In addition, such opinion
may be limited to present statutes, regulations and judicial
interpretations and to facts as they presently exist; in rendering
such opinion, such counsel need assume no obligation to revise or
supplement it should the present laws be changed by legislative or
regulatory action, judicial decision or otherwise; and such counsel
need express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or
pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such legislation,
would affect the validity of the Conversion or any aspect thereof.
Such counsel may assume that any agreement is the valid and binding
obligation of any parties to such agreement other than the Company or
the Association.
The favorable opinion, dated as of the Closing Date and addressed
to the Agent and for their benefit, of the Association's local
counsel, in form and substance to the effect that, to the best of such
counsel's knowledge, (i) the Company and the Association have good and
marketable title to all properties and assets which are material to
the business of the Company and the Association and to those
properties and assets described in the Registration Statement and
Prospectus, as owned by
32
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them, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Registration Statement and
Prospectus, or are not material in relation to the business of the
Company and the Association considered as one enterprise; (ii) all of
the leases and subleases material to the business of the Company and
the Association under which the Company and the Association hold
properties, as described in the Registration Statement and Prospectus,
are in full force and effect; and (iii) the Association is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which its ownership of property
or leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more
of such jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations or income
of the Association.
(d) At the Closing Date, the Agent shall have received the favorable
opinion, dated as of the Closing Date, of Silver, Freedman & Taff,
L.L.P., the Agent's counsel, with respect to such matters as the Agent
may reasonably require. Such opinion may rely upon the opinions of
counsel to the Company and the Association, and as to matters of fact,
upon certificates of offers and directors of the Company and the
Association delivered pursuant hereto or as such counsel shall
reasonably request.
(e) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the Principal Accounting Officer of the
Company and the Association in form and substance reasonably
satisfactory to the Agent's Counsel, dated as of such Closing Date, to
the effect that: (i) they have carefully examined the Prospectus and,
in their opinion, at the time the Prospectus became authorized for
final use, the Prospectus did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; (ii) since the date the Prospectus
became authorized for final use, no event has occurred which should
have been set forth in an amendment or supplement to the Prospectus
which has not been so set forth, including specifically, but without
limitation, any material adverse change in the condition, financial or
otherwise, or in the earnings, capital, properties or business of the
Company or the Association, and the conditions set
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forth in this Section 7 have been satisfied; (iii) since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, capital or
properties of the Company or the Association, independently, or of the
Company and the Association, considered as one enterprise, whether or
not arising in the ordinary course of business; (iv) the
representations and warranties in Section 4 are true and correct with
the same force and effect as though expressly made at and as of the
Closing Date; (v) the Company and the Association have complied in all
material respects with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to the Closing
Date and will comply in all material respects with all obligations to
be satisfied by them after the Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has been
initiated or, to the best knowledge of the Company or the Association,
threatened by the Commission or any state authority; (vii) no order
suspending the Offering, the Conversion, the acquisition of all of the
shares of the Association by the Company or the effectiveness of the
Prospectus has been issued and no proceedings for that purpose are
pending or, to the best knowledge of the Company or the Association,
threatened by the OTS, the OFI, the Commission, the FDIC, or any state
authority; and (viii) to the best knowledge of the Company or the
Association, no person has sought to obtain review of the final action
of the OTS approving the Plan.
(f) Prior to and at the Closing Date: (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the
condition, financial or otherwise, or in the earnings or business of
the Company or the Association independently, or of the Company and
the Association, considered as one enterprise, from that as of the
latest dates as of which such condition is set forth in the Prospectus
other than transactions referred to or contemplated therein; (iii) the
Company or the Association shall not have received from the OTS, the
OFI or the FDIC any direction (oral or written) to make any material
change in the method of conducting their business with which it has
not complied (which direction, if any, shall have been disclosed to
the Agent) or which materially and adversely would affect the
business, operations or financial condition or income of the Company
and the Association taken as
34
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a whole; (iv) the Company and the Association shall not have been in
default (nor shall an event have occurred which, with notice or lapse
of time or both, would constitute a default) under any provision of
any agreement or instrument relating to any outstanding indebtedness;
(v) no action, suit or proceeding, at law or in equity or before or by
any federal or state commission, board or other administrative agency,
shall be pending or, to the knowledge of the Company or the Association,
threatened against the Company or the Association or affecting any of
their properties wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, operations,
financial condition or income of the Company and the Association taken
as a whole; and (vi) the Shares have been qualified or registered for
offering and sale or exempted therefrom under the securities or blue sky
laws of the jurisdictions as the Agent shall have reasonably requested
and as agreed to by the Company and the Association.
(g) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from LaPorte, Sehrt, Romig & Hand dated as of the
date of the Prospectus and addressed to the Agent: (i) confirming that
LaPorte, Sehrt, Romig & Hand is a firm of independent public accounts
within the meaning of Rule 101 of the Code of Professional Ethics of
the American Institute of Certified Public Accountants and applicable
regulations of the OTS and stating in effect that in its opinion the
consolidated financial statements, schedules and related notes of the
Association as of December 31, 1995 and 1994 and for each of the two
years in the period ended December 31, 1995, as are included in the
Prospectus and covered by their opinion included therein, comply as to
form in all material respects with the applicable accounting
requirements and related published rules and regulations of the OTS
and the 1933 Act; (ii) stating in effect that, on the basis of certain
agreed upon procedures (but not an audit in accordance with generally
accepted auditing standards) consisting of a reading of the latest
available unaudited interim consolidated financial statements of the
Association prepared by the Association, a reading of the minutes of
the meetings of the Board of Directors and members of the Association
and consultations with officers of the Association responsible for
financial and accounting matters, nothing came to their attention
which caused them to believe that: (A) the unaudited financial
statements included in the
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Prospectus are not in conformity with the 1933 Act, applicable
accounting requirements of the OTS and generally accepted accounting
principles applied on a basis substantially consistent with that of
the audited financial statements included in the Prospectus; or (B)
during the period from the date of the latest unaudited consolidated
financial statements included in the Prospectus to a specified date
not more than three business days prior to the date of the Prospectus,
except as has been described in the Prospectus, there was any increase
in borrowings, other than normal deposit fluctuations, by the
Association; or (c) there was any decrease in the consolidated net
assets of the Association at the date of such letter as compared
with amounts shown in the latest unaudited consolidated statement
of condition included in the Prospectus; and (iii) stating that,
in addition to the audit referred to in their opinion included in
the Prospectus and the performance of the procedures referred to
in clause (ii) of this subsection (f), they have compared with the
general accounting records of the Association, which are subject
to the internal controls of the Association, the accounting system
and other data prepared by the Association, directly from such
accounting records, to the extent specified in such letter, such
amounts and/or percentages set forth in the Prospectus as the
Agent may reasonably request; and they have reported on the results of
such comparisons.
(h) At the Closing Date, the Agent shall receive a letter dated the
Closing Date, addressed to the Agent, confirming the statements made
by LaPorte, Sehrt, Romig & Hand in the letter delivered by it pursuant
to subsection (f) of this Section 7, the "specified date" referred to
in clause (ii) of subsection (f) thereof to be a date specified in
such letter, which shall not be more than three business days prior to
the Closing Date.
(i) At the Closing Date, the Agent shall receive a letter from RP
Financial, dated the date thereof and addressed to counsel for the
Agent (i) confirming that said firm is independent of the Company and
the Association and is experienced and expert in the area of corporate
appraisals within the meaning of Title 12 of the Code of Federal
Regulations, Section 563b.7(f)(1)(i), (ii) stating in effect that the
Appraisal prepared by such firm complies in all material respects with
the applicable requirements of Title 12 of the Code of Federal
Regulations, and (iii) further stating that their opinion of the
aggregate pro forma market
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value of the Company and the Association expressed in their
Appraisal dated as of December __, 1996, and most recently updated,
remains in effect.
(j) The Company and the Association shall not have sustained since the
date of the latest financial statements included in the Prospectus
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Registration Statement and Prospectus and since the
respective dates as of which information is given in the
Registration Statement and Prospectus, there shall not have been any
change in the long-term debt of the Company or the Association other
than debt incurred in relation to the purchase of Shares by the
Association's Eligible Plans, or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company or the Association, otherwise than as set
forth or contemplated in the Registration Statement and Prospectus,
the effect of which, in any such case described above, is in Webb's
reasonable judgment sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Subscription
Offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.
(k) At or prior to the Closing Date, the Agent shall receive: (i) a copy
of the letters from the OTS and the OFI approving the Conversion
Application and authorizing the use of the Prospectus; (ii) a copy of
the order from the Commission declaring the Registration Statement
effective; (iii) a certificate from the OFI evidencing the existence
of the Association; (iv) certificate of good standing from the State
of Louisiana evidencing the good standing of the Company; (v) a
certificate from the FDIC evidencing the Association's insurance of
accounts; (vi) a certificate of the FHLB-Dallas evidencing the
Association's membership thereof; (vii) a copy of the letter from the
OTS approving the Company's Holding Company Application; and (viii) a
copy of the Association's Louisiana stock charter.
(l) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or in the
over-the-counter market, or quotations halted
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generally on the Nasdaq Stock Market, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices
for securities have been required by either of such exchanges or
the NASD or by order of the Commission or any other governmental
authority; (ii) a general moratorium on the operations of
commercial banks, Louisiana savings institutions or federal
savings institutions or a general moratorium on the withdrawal
of deposits from commercial banks, Louisiana savings
institutions or federal savings institutions declared by federal
or state authorities; (iii) the engagement by the United States
in hostilities which have resulted in the declaration, on or
after the date hereof, of a national emergency or war; or (iv) a
material decline in the price of equity or debt securities if
the effect of such a declaration or decline, in the Agent's
reasonable judgement, makes it impracticable or inadvisable to
proceed with the Offering or the delivery of the shares on the
terms and in the manner contemplated in the Registration Statement
and the Prospectus.
(m) At or prior to the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon
the sale of the Shares as herein contemplated and related
proceedings or in order to evidence the occurrence or completeness
of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken
by the Company or the Association in connection with the
Conversion and the sale of the Shares as herein contemplated shall
be satisfactory in form and substance to Webb and its counsel.
Section 8. Indemnification.
(a) The Company and the Association jointly and severally agree to
indemnify and hold harmless the Agent, its respective officers and
directors, employees and agents, and each person, if any, who
controls the Agent within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses), joint or several, that the Agent
or any of them may suffer or to which the Agent and any such
persons may become subject under all applicable federal or state
laws or otherwise, and to promptly reimburse the Agent and any
such persons upon
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written demand for any expense (including reasonable fees and
disbursements of counsel) incurred by the Agent or any of them in
connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions: (i)
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement thereto),
the Holding Company Application or any instrument or document
executed by the Company or the Association or based upon written
information supplied by the Company or the Association filed in
any state or jurisdiction to register or qualify any or all of the
Shares or to claim an exemption therefrom, or provided to any
state or jurisdiction to exempt the Company as a broker-dealer or
its officers, directors and employees as broker-dealers or agent,
under the securities laws thereof (collectively, the "Blue Sky
Application"), or any document, advertisement, oral statement or
communication ("Sales Information") prepared, made or executed by
or on behalf of the Company or the Association with their consent
or based upon written or oral information furnished by or on
behalf of the Company or the Association, whether or not filed in
any jurisdiction, in order to qualify or register the Shares or to
claim an exemption therefrom under the securities laws thereof;
(ii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or
information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii)
arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information or other documentation
distributed in connection with the Conversion; provided, however,
that no indemnification is
39
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required under this paragraph (a) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any
untrue material statement or alleged untrue material statement in,
or material omission or alleged material omission from, the
Registration Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or supplement
thereto), the Conversion Application, any Blue Sky Application or
Sales Information made in reliance upon and in conformity with
information furnished in writing to the Company or the Association
by the Agent or its counsel regarding the Agent provided, that it
is agreed and understood that the only information furnished in
writing to the Company or the Association by the Agent regarding
the Agent is set forth in the Prospectus under the caption "The
Conversion--Marketing Arrangements"; and, provided further, that
such indemnification shall be to the extent permitted by the
Commissioner, the OTS, the OFI, the FDIC and the Board of
Governors of the Federal Reserve.
(b) The Agent agrees to indemnify and hold harmless the Company and
the Association, their directors and officers and each person, if
any, who controls the Company or the Association within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses),
joint or several, which they, or any of them, may suffer or to
which they, or any of them may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the
Company, the Association, and any such persons upon written demand
for any expenses (including reasonable fees and disbursements of
counsel) incurred by them, or any of them, in connection with
investigating, preparing or defending any actions, proceedings or
claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions: (i) arise out of
or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment or supplement thereto), the Conversion Application (or
any amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement
40
<PAGE>
thereto), any Blue Sky Application or Sales Information, (ii) are
based upon the omission or alleged omission to state in any of the
foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (iii)
arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), or any Blue
Sky Application or Sales Information or other documentation
distributed in connection with the Conversion; provided, however,
that the Agent's obligations under this Section 8(b) shall exist
only if and only to the extent (i) that such untrue statement or
alleged untrue statement was made in, or such material fact or
alleged material fact was omitted from, the Registration Statement
(or any amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement thereto),
any Blue Sky Application or Sales Information in reliance upon and
in conformity with information furnished in writing to the Company
or the Association by the Agent or its counsel regarding the
Agent. Provided, that it is agreed and understood that the only
information furnished in writing to the Company or the Association
by the Agent regarding the Agent is set forth in the Prospectus
under the caption "The Conversion--Marketing Arrangements".
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether
commenced or threatened), or suit instituted against it in
respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve it from any
liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own
expense in the defense of such action. In addition, if it so
elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties
receiving such notice,
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may assume defense of such action with counsel chosen by it and
approved by the indemnified parties that are defendants in such
action, unless such indemnified parties reasonably object to such
assumption on the ground that there may be legal defenses available
to them that are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action, proceeding or
claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses
of more than one separate firm of attorneys (and any special
counsel that said firm may retain) for each indemnified party in
connection with any one action, proceeding or claim or separate
but similar or related actions, proceedings or claims in the same
jurisdiction arising out of the same general allegations or
circumstances.
(d) The agreements contained in this Section 8 and in Section 9
hereof and the representations and warranties of the Company and
the Association set forth in this Agreement shall remain
operative and in full force and effect regardless of: (i) any
investigation made by or on behalf of agent or their officers,
directors or controlling persons, agent or employees or by or on
behalf of the Company or the Association or any officers,
directors or controlling persons, agent or employees of the
Company or the Association; (ii) delivery of and payment
hereunder for the Shares; or (iii) any termination of this
Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Association or the Agent, the
Company, the Association and the Agent shall contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding of any claims asserted, but
after deducting any contribution received by the Company, the Association or
the Agent from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that the Agent is responsible
for that portion represented by the percentage that the fees paid to the
Agent pursuant to Section 2 of this Agreement (not including expenses)
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<PAGE>
bears to the gross proceeds received by the Company from the sale of the
Shares in the Offering, and the Company and the Association shall be
responsible for the balance. If, however, the allocation provided above is
not permitted by applicable law or if the indemnified party failed to give
the notice required under Section 8 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company and the Association on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereto), but also the relative benefits received by the Company and the
Association on the one hand and the Agent on the other from the Offering
(before deducting expenses). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and/or the
Association on the one hand or the Agent on the other and the parties'
relative intent, good faith, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the
Association and the Agent agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro-rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above in this Section 9.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof) referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or
claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any
amount which in the aggregate exceeds the amount paid (excluding reimbursable
expenses) to the Agent under this Agreement. It is understood that the above
stated limitation on the Agent's liability is essential to the Agent and that
the Agent would not have entered into this Agreement if such limitation had
not been agreed to by the parties to this Agreement. No person found guilty
of any fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation. The obligations of the
Company and the Association under this Section 9 and under Section 8 shall be
in addition to any liability which the Company and the Association may
otherwise have. For purposes of this Section 9, each of the Agent's, the
Company's or the Association's officers and directors and each person, if
any, who controls the Agent or the Company or the Association within the
meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Agent, the Company or the Association. Any party
entitled to contribution, promptly after receipt of notice of commencement of
any action, suit, claim or proceeding against such party in respect of which
a claim for contribution may be made against another party under this
43
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Section 9, will notify such party from whom contribution may be sought, but
the omission to so notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it may have hereunder or
otherwise than under this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the Association and the Agent and
the representations and warranties and other statements of the Company, the
Association and the Agent set forth in or made pursuant to this Agreement
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
the Agent, the Company, the Association or any controlling person referred to
in Section 8 hereof, and shall survive the issuance of the Shares, and any
successor or assign of the Agent, the Company, the Association, and any such
controlling person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
Section 11. Termination. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required minimum
number of the Shares by December 31, 1997, and in accordance with
the provisions of the Plan or as required by the Conversion
Regulations, and applicable law, this Agreement shall terminate
upon refund by the Company to each person who has subscribed for
or ordered any of the Shares the full amount which it may have
received from such person, together with interest as provided in
the Prospectus, and no party to this Agreement shall have any
obligation to the other hereunder, except for payment by the
Company and/or the Association as set forth in Sections 2(a), 6,
8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall not have
been fulfilled when and as required by this Agreement unless
waived in writing, or by the Closing Date, this Agreement and all
of the Agent's obligations hereunder may be cancelled by the
Agent by notifying the Company and the Association of such
cancellation in writing or by telegram at any time at or prior to
the Closing Date, and any such cancellation shall be without
liability of any party to any other party except as otherwise
provided in Sections 2(a), 6, 8 and 9 hereof.
44
<PAGE>
(c) If the Agent elects to terminate this Agreement as provided in
this Section, the Company and the Association shall be notified
promptly by telephone or telegram, confirmed by letter.
The Company and the Association may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Association have provided Webb with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to
the Agent shall be mailed, delivered or telegraphed and confirmed to Charles
Webb & Company, 211 Bradenton, Dublin, Ohio 43017-5034, Attention: Patricia
A. McJoynt (with a copy to Silver, Freedman & Taff, L.L.P., Attention:
Martin L. Meyrowitz, P.C. and, if sent to the Company and the Association,
shall be mailed, delivered or telegraphed and confirmed to the Company and
the Association at 3798 Veterans Boulevard, Metairie, Louisiana 70002,
Attention: Donald Scott, President (with a copy to Elias, Matz, Tiernan &
Herrick, L.L.P., Attention: Hugh T. Wilkinson, Esq.).
Section 13. Parties. The Company and the Association shall be entitled
to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Agent when the same shall have been given
by the undersigned. The Agent shall be entitled to act and rely on any
request, notice, consent, waiver or agreement purportedly given on behalf of
the Company or the Association, when the same shall have been given by the
undersigned or any other officer of the Company or the Association. This
Agreement shall inure solely to the benefit of, and shall be binding upon,
the Agent, the Company, the Association, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. It is understood and agreed
that this Agreement is the exclusive agreement among the parties hereto, and
supersedes any prior agreement among the parties and may not be varied except
in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the
Agent and the Company and the Association. At the closing, the Company and
the Association shall deliver to the Agent in next day funds the commissions,
fees and expenses due and owing to the Agent as set forth in Sections 2 and 6
hereof and the opinions and certificates required hereby and other documents
deemed reasonably necessary by the Agent shall be executed and
45
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delivered to effect the sale of the Shares as contemplated hereby and
pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or
situation shall be invalid or unenforceable, in whole or in part, the
remainder hereof and the application of said term, provision or covenant to
any other circumstances or situation shall not be affected thereby, and each
term, provision or covenant herein shall be valid and enforceable to the full
extent permitted by law.
Section 16. Construction. This Agreement shall be construed in accordance
with the laws of the State of New York.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the Company,
the Association and the Agent, please indicate acceptance thereof in the
space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though
set forth in full, constitutes the entire agreement between the parties
pertaining to the subject matter hereof superseding any and all prior or
contemporaneous oral or prior written agreements, proposals, letters of
intent and understandings, and cannot be modified, changed, waived or
terminated except by a writing which expressly states that it is an
46
<PAGE>
amendment, modification or waiver, refers to this Agreement and is signed by
the party to be charged. No course of conduct or dealing shall be construed
to modify, amend or otherwise affect any of the provisions hereof.
Very truly yours,
GS FINANCIAL CORP. GUARANTY SAVINGS AND HOMESTEAD
ASSOCIATION
By Its Authorized By Its Authorized
Representative: Representative:
- ---------------- ----------------
Donald C. Scott Donald C. Scott
President President
Accepted as of the date first above written
Keefe, Bruyette & Woods, Inc.
By Its Authorized
Representative:
- --------------------
Patricia A. McJoynt
Executive Vice President
47
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[LETERHEAD OF ELIAS, MATZ, TIERNAN & HERRICK L.L.P.]
February 5, 1997
Board of Directors
GS Financial Corp.
3798 Veterans Boulevard
Metairie, Louisiana 70002
Gentlemen:
We have acted as special counsel to GS Financial Corp. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, of the
Registration Statement on Form SB-2 (the "Registration Statement"), relating
to the issuance of up to 3,438,500 shares of the Company's common stock, par
value $.01 per share (the "Common Stock"), in connection with the conversion
of Guaranty Savings and Homestead Association, Metairie, Louisiana (the
"Association"), from a Louisiana-chartered mutual savings and loan
association to a Louisiana- chartered stock savings and loan association (the
"Conversion").
In this regard, we have examined the Articles of Incorporation and Bylaws
of the Company, resolutions of the Board of Directors, the Plan of Conversion
and such other documents and matters of fact and law as we deemed appropriate
for the purposes of rendering this opinion. The opinion is limited to
federal laws and regulations and the laws of the State of Louisiana which are
in effect on the date hereof.
Based upon the foregoing, we are of the opinion that the Common Stock has
been duly and validly authorized, and when issued in accordance with the
terms of the Plan of Conversion of the Association, will be legally issued,
fully paid and non-assessable.
<PAGE>
Board of Directors
GS Financial Corp.
February 5, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement and to the references to this firm under the
headings "The Conversion - Tax Aspects" and "Legal and Tax Opinions" in the
prospectus contained in the Registration Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /S/ HUGH T, WILKINSON
--------------------------------
Hugh T. Wilkinson, a Partner
<PAGE>
[Letterhead of Elias Matz, Tiernan & Herrick, L.L.P.]
January 29, 1997
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
3798 Veterans Memorial Boulevard
Metairie, Louisiana 70002
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the conversion of Guaranty Savings and Homestead Association
(the "Association," in its mutual or stock form, as the sense of the context
requires) a Louisiana-chartered savings and loan association, from mutual to
stock form (the "Conversion"). In the Conversion, all of the Association's
to-be-issued capital stock will be acquired by GS Financial Corp. (the
"Company"), a newly-organized Louisiana-chartered corporation. For the reasons
set forth below, and based on your representations in a letter dated January 22,
1997 ("Representation Letter"), it is our opinion that the proposed Conversion
will qualify as a reorganization within the meaning of Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended (the "Code"). Our opinion also
addresses other income tax consequences which follow from this conclusion.
This Opinion Letter, including the opinions contained herein, is governed
by, and should be interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the American Bar Association Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications, exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord, and herein, and this Opinion Letter should
be read in conjunction with the Accord. Our opinions herein are limited to the
Code and the regulations promulgated thereunder (the "Subject Laws"). We express
no opinion as to other federal or Louisiana laws and regulations or as to laws
and regulations of other jurisdictions or as to factual or legal matters other
than as set forth herein.
We have reviewed the Company's Registration Statement on Form SB-2 relating
to the proposed issuance of up to 3,438,500 shares of common stock, par value
$0.01 per share ("Common Stock"), subject to adjustment by the Company in
connection with the Conversion, the Prospectus contained therein, the Articles
of Incorporation and Bylaws of
<PAGE>
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
January 29, 1997
Page 2
the Company, the existing mutual Charter and proposed stock Articles of
Incorporation of the Association, the Plan of Conversion of the Association,
the Association's Application for Conversion and such other corporate records
and documents as we have deemed relevant and necessary for the purposes of
this opinion. In our examination of documents, we have assumed the
authenticity of those documents submitted to us as certified, conformed or
reproduced copies. As to matters of fact which are material to this opinion,
we have relied upon the accuracy of the factual matters set forth in the
Company's Registration Statement on Form SB-2 and the Association's Plan of
Conversion.
FACTS
The Association is a Louisiana-chartered mutual savings and loan
association which conducts business from its main office in Metairie, Louisiana
and branch offices in New Orleans and Mandeville, Louisiana. At September 30,
1996, the Association had total assets of approximately $86.5 million, deposits
of approximately $60.5 million and equity of approximately $23.8 million. The
Association is a member of the Federal Home Loan Bank ("FHLB") System, and its
deposits are insured by the Savings Association Insurance Fund ("SAIF"),
administered by the Federal Deposit Insurance Corporation.
As a mutual savings and loan association, the Association has no capital
stock. Each depositor has both a deposit account in the institution and a pro
rata ownership interest in the net worth of the institution based on the balance
in his or her deposit account. This ownership interest is tied directly to the
depositors' deposit accounts, and the depositors ordinarily cannot realize the
value of their ownership, except in the unlikely event that the Association were
to be liquidated. In such event, the depositors would share pro rata in any
residual net worth after other claims, including those of depositors for the
amount of their deposits, are paid.
The Company is a recently-formed Louisiana corporation which will acquire
all of the to-be-outstanding capital stock of the Association upon consummation
of the Conversion and, thereby, become a holding company. The Company shall
purchase all of the capital stock of the Association with a portion of the net
proceeds from the Conversion.
On October 10, 1996, the Board of Directors of the Association adopted a
Plan of Conversion. The purpose of the Conversion is to enable the Association
to issue and sell shares of its capital stock to the Company and thereby enhance
the equity capital base of the Association, which will support continuing
savings growth of the Association, possible acquisitions of other financial
institutions and further enhance the Association's capabilities to serve the
borrowing and other financial needs of the communities it serves. The use of
<PAGE>
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
January 29, 1997
Page 3
the holding company format will provide greater organizational flexibility
and possible diversification.
The Company has filed a Registration Statement on Form SB-2 to register its
Common Stock under the Securities Act of 1933 pursuant to which it will offer
for sale shares of its Common Stock. The Common Stock will be offered for sale
in a Subscription Offering pursuant to subscription rights which will not be
transferable and will be issued without payment therefor. The recipients will
not be entitled to receive cash or other property in lieu of such rights. It is
anticipated that any shares of Common Stock remaining unsold after the
Subscription Offering will be sold through a Community Offering. All shares of
Common Stock will be sold at a uniform price based upon an independent
valuation.
The Conversion will be effected only upon completion of the sale of all
shares of Common Stock of the Company to be issued pursuant to the Plan of
Conversion. The Company has no plan or intention to dispose of any shares of
the capital stock of the Association, to cause the Association to be merged with
any other corporation, or to liquidate the Association.
The Conversion will not affect the business of the Association. Mortgage
and other loans of the Association will remain unchanged and retain their same
characteristics after the Conversion. There is no plan or intention for the
Association to sell or otherwise dispose of any of its assets following the
Conversion, except for dispositions in the ordinary course of business.
Each deposit account in the Association at the time of the consummation of
the Conversion shall become, without any action by the account holder, a deposit
account in the converted Association equivalent in withdrawable amount, and
subject to the same terms and conditions (except as to voting and liquidation
rights), as the deposit account in the Association immediately prior to the
Conversion. In addition, at the time of the Conversion, the Association shall
establish a liquidation account in an amount equal to the Association's net
worth as reflected in the final prospectus utilized in the Conversion. The
liquidation account will be maintained for the benefit of all Eligible Account
Holders and Supplemental Eligible Account Holders who maintain their deposit
accounts in the Association after the Conversion. Each such account holder
will, with respect to each deposit account, have an inchoate interest in a
portion of the liquidation account which is the account holder's subaccount
balance. An account holder's subaccount balance in the liquidation account will
be determined at the time of the Conversion and can never increase thereafter.
It will, however, be decreased to reflect subsequent withdrawals that reduce, as
of annual closing dates, the amount in each depositor's account below the amount
in the account at the time
<PAGE>
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
January 29, 1997
Page 4
of the Conversion. In the event of a complete liquidation of the
Association, each Eligible Account Holder and Supplemental Eligible Account
Holder will be entitled to receive a liquidation distribution in the amount
of the balance of his or her subaccount in the liquidation account before any
distribution may be made with respect to the capital stock of the Association.
LAW AND ANALYSIS
Section 368(a)(1)(F) of the Code provides that a mere change in the
identity, form or place of organization of one corporation, however effected, is
a reorganization. If a transaction qualifies as an "F"-type reorganization, it
will generally be nontaxable to the corporation and its shareholders under
related provisions of the Code.
In Rev. Rul. 80-105, 1980-1 C.B. 78, the Internal Revenue Service
considered the federal income tax consequences of the conversion of a federal
mutual savings and loan association to a state stock savings and loan
association. The ruling concluded that the conversion qualified as a mere
change in identity, form or place of organization within the meaning of
Section 368(a)(1)(F). The rationale for this conclusion is not clearly
expressed in the ruling, but two factors are stressed. First, the changes at
the corporate level other than the place of organization and form of
organization were regarded as insubstantial. The converted association
continued its business in the same manner; it had the same savings accounts
and loans. The converted association continued its membership in the Federal
Savings and Loan Insurance Corporation (replaced subsequently by the SAIF)
and remained subject to the regulations of the Federal Home Loan Bank Board,
which was replaced subsequently by the Office of Thrift Supervision. Second,
the ruling states that the ownership rights of the depositors in the mutual
company are "more nominal than real." Although the ruling does not explain
the significance of this statement, subsequent administrative interpretations
have indicated that the Internal Revenue Service believes these nominal
rights are preserved in the liquidation account that is typically established
for the depositors' benefit. This approach enables the Internal Revenue
Service to distinguish the tax treatment of conversion transactions from the
tax treatment of acquisitive transactions in which mutual companies acquire
stock companies. See Paulsen v. Com'r, 469 U.S. 131 (1985); Rev. Rul. 69-6
1969-1 C.B. 104.
The Internal Revenue Service has extended the holding of Rev. Rul. 80-105
to transactions similar to the one contemplated by the Association and the
Company, in which a conversion from mutual to stock form occurs simultaneously
with the creation of a holding company. See e.g. private letter rulings
numbered 9140014 and 9144031. While these
<PAGE>
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
January 29, 1997
Page 5
rulings have no precedential value, they do indicate the current views of the
Internal Revenue Service on the issues presented. Hanover Bank v. U.S., 369
U.S. 672, 686 (1962).
In our opinion and based on your Representation Letter, the conversion of
the Association from a Louisiana-chartered mutual savings and loan
association to a Louisiana-chartered stock savings and loan association, and
the sale of its capital stock to the Company, will constitute a
reorganization within the meaning of Section 368(a)(1)(F) of the Code because
the transaction represents a mere change in the form of organization of a
single corporation. There will be no change in the Association's business or
operations, nor in its loans and deposits, all of which will become loans and
deposits of the converted savings and loan association. The only significant
difference between the assets of the Association before and after the
Conversion will be the infusion of new capital. An infusion of capital occurs
in all conversion transactions, however, and had no effect upon the Internal
Revenue Service's analysis in Rev. Rul. 80-105. The ownership rights of the
depositors of the mutual savings and loan association, which have nominal
value, will be preserved through their interests in the liquidation account
in the converted savings and loan association. This account will be
substantially the same as the liquidation account described in Rev. Rul.
80-105.
Because the Association's change in form from mutual to stock ownership
will constitute a reorganization under Section 368(a)(1)(F) of the Code, it is
also our opinion that (1) the Association will recognize no gain or loss as a
result of the Conversion pursuant to Section 361 of the Code and Rev. Rul.
80-105; (2) no gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders upon the issuance to them of deposit
accounts in the Association in its stock form plus their interests in the
liquidation account in exchange for their deposit accounts in the Association;
(3) assuming the nontransferable subscription rights to purchase Common Stock
have no value, the tax basis of the depositors' deposit accounts in the
Association immediately after the Conversion will be the same as the basis of
their deposit accounts immediately prior to the Conversion; (4) assuming the
nontransferable subscription rights to purchase Common Stock have no value, the
tax basis of each Eligible Account Holder's and Supplemental Eligible Account
Holder's interest in the liquidation account will be zero; (5) the tax basis to
the stockholders of the Common Stock of the Association purchased in the
Conversion will be the amount paid therefor; and (6) the holding period for such
shares will begin on the date of consummation of the Conversion if purchased
through the exercise of subscription rights and on the day after the date of
purchase if purchased in the Community Offering or Syndicated Community
Offering.
<PAGE>
Boards of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
January 29, 1997
Page 6
It is further our opinion that the Eligible Account Holders and
Supplemental Eligible Account Holders will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in the Association following
the Conversion, interests in the liquidation account and nontransferable
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Association, but only to the
extent of the value, if any, of the subscription rights.
The opinions expressed above are limited to the income tax consequences of
the Conversion under the Subject Laws. Further, our opinions are based on
research of the Code, applicable Treasury Regulations, current published
administrative decisions of the Internal Revenue Service, existing judicial
decisions as of the date hereof, and your Representation Letter. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and the Application for
Conversion.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ HUGH T. WILKINSON
-------------------------------
Hugh T. Wilkinson, a Partner
<PAGE>
January 29, 1997
[Letterhead of LaPorte Sehrt Romig & Hand]
Board of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
3798 Veterans Memorial Boulevard
Metairie, Louisiana 70002
Gentlemen:
You have requested our opinion regarding certain Louisiana state income tax
consequences of the conversion of Guaranty Savings and Homestead Association
(the "Association"), a Louisiana-chartered savings and loan association, from
mutual to stock form (the "Conversion"). In the Conversion, all of the
Association's to-be-issued capital stock will be acquired by GS Financial
Corp. (the "Company"), a newly-formed Louisiana-chartered corporation.
We have not reviewed all of the legal documents necessary to effectuate the
Conversion or the acquisition of the Association's capital stock by the
Company. An inherent assumption of this opinion is that all steps required by
federal and state law and regulatory authorities will be effectuated
consistent with the information submitted to us.
BACKGROUND
-----------
We have reviewed the federal income tax opinion (the "Opinion") prepared by
the firm of Elias, Matz, Tiernan & Herrick L.L.P. dated January 29, 1997
which was addressed and furnished to you. We have also reviewed the
representations of the managements of the Company and the Association dated
January 29, 1997 (the "Representations") and supplied to the aforementioned
authors of the Opinion. We have relied on the facts and representations
stated in the Opinion and Representations as to the manner in which the
proposed transactions will be accomplished and the federal income tax aspects
of the transactions as detailed in the Opinion. By this reference, such
federal tax opinion and its related references are incorporated herein.
<PAGE>
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 2
LOUISIANA LAW AND ANALYSIS
--------------------------
Louisiana income tax statutes are included in Title 47, Sub-Title II, Chapter
1,of the Louisiana Revised Statutes of 1950. Corporation income tax laws are
contained within Part II A. therein. Individual income tax statutes are
contained within Part III therein.
Pursuant to Louisiana Revised Statutes (La. R. S.) 47:287.501(B)(1), building
and loan associations (among others) are exempted from imposition of any and
all Louisiana income taxes.
Louisiana corporate gross income and allowable deductions are defined as
federal gross income and deductions, subject to certain modifications. La.
R. S. 287.61-.63. Modifications to federal taxable income are contained in
La. R. S. 287.71-.86 and 287.701-.785. Absent any specific modifications
contained within these sections, Louisiana corporate taxable income is
equivalent to federal taxable income. Since gains and losses realized by
parties to a reorganization, as defined by federal statutes, are not
specifically identified as modifications to federal gross income or
deductions, the State of Louisiana has effectively incorporated the corporate
reorganization provisions of the Internal Revenue Code of 1986, as amended
(the "Code") with respect to parties to a reorganization. Since gains and
losses realized by corporate shareholders in a reorganization are not
specifically identified as modifications to federal gross income or
deductions, nor are there any modifications with respect to the determination
of basis or the holding period of stock received in a reorganization, the
State of Louisiana has effectively incorporated the corporate reorganization
provisions of the Code with respect to corporate depositors and shareholders.
La. R. S. 47:290 provides that such part (Part III) is intended to conform
the Louisiana individual income tax law with the Code, except as otherwise
expressly provided. La. R. S. 47:293(1) defines Louisiana adjusted gross
income as adjusted gross income as reported for federal purposes. La. R. S.
47:293(6) defines Louisiana taxable income as Louisiana adjusted gross income
with specific modifications listed therein. None of the modifications listed
therein relate to the Louisiana taxation of realized gains or losses in
connection with corporate reorganizations, nor the determination of basis or
the holding period of stock received in a reorganization. The State of
Louisiana has, therefore, effectively adopted the corporate reorganization
provisions of the Code to the extent these provisions affect individual
depositors and shareholders.
<PAGE>
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 3
La. R. S. 47:300.10. states that such part (Part VI) is intended to conform
the Louisiana fiduciary income tax law with the Code, except as otherwise
expressly provided. La R. S. 47:300.1.F. and H. define Louisiana taxable
income of resident and non resident fiduciaries, respectively, as taxable
income determined in accordance with federal law, with specific modifications
listed therein. None of the modifications listed therein relate to the
Louisiana taxation of realized gains or losses in connection with corporate
reorganizations, nor the determination of basis or the holding period of
stock received in a reorganization. The State of Louisiana has, therefore,
effectively adopted the corporate reorganization provisions of the Code to
the extent these provisions affect fiduciary depositors and shareholders.
La. R. S. 47:203 states that partnerships shall compute taxable income in the
same manner as in the case of individuals, with certain listed modifications.
As none of the modifications relate to reorganization provisions of the Code,
and based upon the above analysis of individuals, the same conclusions would
apply with respect to depositors and shareholders which are partnerships.
Title 12, Chapter 22, Part X, Section 1368 of the Louisiana Revised Statutes
of 1950 states that, for Louisiana income tax purposes, limited liability
companies shall be treated and taxed in the same manner as treated and taxed
for federal purposes. Therefore, regardless of corporate or partnership
federal income tax treatment, based upon the above analysis of each, the same
conclusion would apply with respect to depositors and shareholders that are
limited liability companies.
OPINIONS
--------
In rendering our opinion herein, we have relied upon the Opinion prepared by
Elias, Matz, Tiernan & Herrick L.L.P.
Because savings and loans are not subject to Louisiana income taxes, no
income will be recognized for Louisiana income tax purposes by Guaranty
Savings and Homestead Association as a result of the Conversion and the sale
of its capital stock to the Company.
Because the Association's change in form from a mutual to stock ownership
will constitute a reorganization under Section 368(a)(1)(F) of the Code, and
neither the Association nor the Company will recognize any gain or loss as a
result of the
<PAGE>
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 4
Conversion pursuant to Section 361 of the Code and Revenue Ruling 80-105, it
is also our opinion that for Louisiana income tax purposes: (1) no gain or
loss will be recognized by the Association or the Company upon the purchase
of the Association's capital stock by the Company; (2) no gain or loss will
be recognized by Eligible Account Holders and Supplemental Eligible Account
Holders upon the issuance to them of deposit accounts in the Association (in
its stock form) plus their interest in the liquidation account in exchange
for the deposit accounts in the mutual Association; (3) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax bases of the depositors' deposit accounts in the Association
immediately after the Conversion will be the same as the bases of their
accounts immediately prior to the Conversion; (4) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax basis of each Eligible Account Holder's and Supplemental
Eligible Account Holder's interest in the liquidation account will be zero;
and (5) the tax basis to the holders of the Common Stock of the Company
purchased in the Conversion will be the amount paid therefor, and the holding
period of such shares will begin on the date of consummation of the
Conversion if purchased through the exercise of subscription rights and on
the day after the date of purchase if purchased through the Community
Offering.
It is further our opinion that the Eligible Account Holders and Supplemental
Eligible Account Holders will recognize gain, if any, upon the issuance to
them of withdrawable savings accounts in the Association following the
Conversion, interests in the liquidation account and non-transferable
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Association, but only to
the extent of the value, if any, of the subscription rights.
CONCLUSIONS
-----------
This opinion sets forth our views based upon the completeness and accuracy of
the information made available to us and any assumptions of fact that were
included. Our opinion relies upon the relevant provisions of the Internal
Revenue Code, the Louisiana Revised Statutes, the regulations thereunder, and
judicial and administrative interpretations thereof, which are subject to
change or modifications by subsequent legislative, regulatory, administrative
or judicial decisions. Any such changes could be retroactive in effect and,
therefore, could affect the validity of our opinions. We undertake no
responsibility to update our opinions in the event of any such change or
modifications.
<PAGE>
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 5
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement on Form SB-2 and the Association's
Application for Conversion, and we also consent to the references to us under
the headings "The Conversion - Tax Aspects" and "Legal and Tax Opinions" in
the Prospectus contained in such filings.
Sincerely,
LaPORTE, SEHRT, ROMIG & HAND
/s/ William T. Mason, III, CPA
- ------------------------------------
William T. Mason, III, CPA
Director
WTMiii/smw
<PAGE>
Letterhead of
SPILSBURY, HAMILTON, LEGENDRE & PACIERA
CERTIFIED PUBLIC ACCOUNTANTS
January 30, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have received a copy of the disclosures that GS Financial Corp., Inc. and
Guaranty Savings and Homestead Association are including in the change in
auditors section of the proposed prospectus for the conversion of the Homestead
to a stock association. We agree with the following statements as they relate
to our relationship with Guaranty Savings and Homestead Association during the
years 1993 and 1994:
1. We did not have any disagreements with the Association on any matter
of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure.
2. We did not issue any adverse opinion with respect to the Association's
financial statements or any disclaimer of opinion or any opinion which
was qualified or modified as to uncertainty, audit scope or accounting
principles.
We hereby consent to the filing of this letter as an exhibit to the registration
statement being filed by GS Financial Corp, Inc. with the Securities and
Exchange Commission and as an exhibit to the application for conversion being
filed by Guaranty Savings and Homestead Association with the Office of Thrift
Supervision and the Office of Financial Institutions.
Sincerely,
/S/ Spilsbury, Hamilton, Legendre & Paciera
-------------------------------------------
SPILSBURY, HAMILTON, LEGENDRE & PACIERA
Certified Public Accountants
<PAGE>
EXHIBIT 23.2
CONSENT OF LAPORTE, SEHRT, ROMIG & HAND
<PAGE>
[LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of our report on the financial statements of
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION (the "Association") dated January
12, 1996 in the Prospectus for G S Financial Corp. (the "Company")
constituting part of the Company's Registration Statement on Form SB-2 and
the Association's Application for Conversion. We also consent to the
reference to us under the heading "Experts" in the Prospectus contained in
the Form SB-2 and the Application for Conversion.
/s/ LaPorte, Sehrt, Romig & Hand
A Professional Accounting Corporation
Metairie, Louisiana
February 4, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF RP FINANCIAL, LC
<PAGE>
RP FINANCIAL, LC.
___________________________________________
FINANCIAL SERVICES INDUSTRY CONSULTANTS
February 4, 1997
Board of Directors
Guaranty Savings and Homestead Association
3798 Veterans Memorial Boulevard
Metairie, Louisiana 70002
Gentlemen:
We hereby consent to the use of our firm's name in the Application for
Conversion of Guaranty Savings and Homestead Association, Metairie, Louisiana,
and any amendments thereto, in the Form S-1 Registration Statement for GS
Financial Corp., and any amendments thereto, and in the Form AC for Guaranty
Savings and Homestead Association, and any amendments thereto. We also hereby
consent to the inclusion of, summary of and references to our Appraisal Report
and our statement concerning subscription rights in such filings including the
Prospectus of GS Financial Corp.
Very truly yours,
RP FINANCIAL, LC.
/S/ GREGORY E. DUNN
Gregory E. Dunn
Senior Vice President
_______________________________________________________________________________
WASHINGTON HEADQUARTERS
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
Exhibit 99.4
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GUARANTY
SAVINGS AND HOMESTEAD ASSOCIATION (THE "ASSOCIATION") FOR USE ONLY AT A SPECIAL
MEETING OF MEMBERS TO BE HELD ON _______ __, 1997 AND ANY ADJOURNMENT THEREOF.
The undersigned, being a member of the Association, hereby authorizes the
Board of Directors of the Association or any successors in their respective
positions, as proxy, with full powers of substitution, to represent the
undersigned at the Special Meeting of Members of the Association to be held at
the Association's main office located at 3798 Veterans Boulevard, Metairie,
Louisiana 70002 on ______ __, 1997, at __:00 a.m., Central Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as set
forth below:
(1) To vote FOR or AGAINST a Plan of Conversion pursuant to which the
Association would be converted from a Louisiana-chartered mutual savings and
loan association to a Louisiana-chartered stock savings and loan association and
issue all of its capital stock to a holding company, GS Financial Corp. and the
transactions provided for in such Plan of Conversion, including the adoption of
a new stock Articles of Incorporation and new Bylaws for the Association.
FOR / / AGAINST / /
(2) To vote, in its discretion, upon such other business as may properly
come before the Special Meeting or any adjournment thereof. Except with respect
to procedural matters incident to the conduct of the meeting, management is not
aware of any other such business.
This proxy, if executed, will be voted FOR adoption of the Plan of
Conversion if no choice is made herein. Please date and sign this proxy on the
reverse side and return it in the enclosed envelope.
(Continued and to be signed on other side)
<PAGE>
(Continued from other side)
Any Member giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Association either a written revocation of
the proxy, or a duly executed proxy bearing a later date, or by voting in person
at the Special Meeting.
The undersigned hereby acknowledges receipt of a Notice of Special Meeting
of the Members of the Association called for the __th day of ____, 1997 and a
Proxy Statement for the Special Meeting prior to the signing of this Proxy.
Date: , 1996
--------------------------
--------------------------
Signature
--------------------------
Signature
Note: Please sign exactly your name appears on
this Proxy. Only one signature is required in the
case of a joint account. When signing in a
representative capacity, please give title.
<PAGE>
Exhibit 99.5
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
3798 Veterans Boulevard
Metairie, Louisiana 70002
(504) 457-6220
NOTICE OF SPECIAL MEETING OF MEMBERS
To Be Held On ___________, 1997
NOTICE IS HEREBY GIVEN that a special meeting ("Special Meeting") of the
members of Guaranty Savings and Homestead Association ("Guaranty Savings" or
the "Association") will be held at the Association's main office located at
3798 Veterans Boulevard, Metairie, Louisiana 70002 on ___________, 1997, at
__:___.m., Central Time, to consider and vote upon:
1. The approval of a Plan of Conversion ("Plan of Conversion") pursuant
to which the Association would be converted from a Louisiana-chartered
mutual savings and loan association to a Louisiana-chartered stock
savings and loan association and issue all of its capital stock to a
holding company, GS Financial Corp., and the transactions provided for
in such Plan of Conversion, including the adoption of a new stock
Articles of Incorporation and new Bylaws of the Association; and
2. Such other business as may properly come before the Special Meeting or
any adjournment thereof. Except with respect to procedural matters
incident to the conduct of the meeting, management is not aware of any
other such business.
The Board of Directors has fixed ___________, 199_ as the voting record
date for the determination of members entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof. Only those members of the
Association of record as of the close of business on that date who continue to
be members on the date of the Special Meeting will be entitled to vote at the
Special Meeting or at any such adjournment.
By Order of the Board of Directors
Donald C. Scott, President and
Chief Executive Officer
Metairie, Louisiana
_______ __, 1996
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU SIGN, DATE AND MARK THE ENCLOSED
PROXY CARD IN FAVOR OF THE ADOPTION OF THE PLAN OF CONVERSION AND RETURN IT IN
THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING. PROXIES MUST BE
RECEIVED BY THE HOMESTEAD AT LEAST FIVE DAYS PRIOR TO THE SPECIAL MEETING IN
ORDER TO BE VOTED AT THE SPECIAL MEETING.
<PAGE>
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
--------
PROXY STATEMENT
--------
SPECIAL MEETING OF MEMBERS
To Be Held On ___________, 1997
INTRODUCTION
This Proxy Statement is being furnished to members of Guaranty Savings and
Homestead Association ("Guaranty Savings" or the "Association") as of the close
of business on ___________, 199_ in connection with the solicitation by the
Board of Directors of Guaranty Savings of proxies to be voted at the Special
Meeting of Members of the Association (the "Special Meeting") to be held on
___________, 1997, at the Association's main office located at 3798 Veterans
Boulevard, Metairie, Louisiana 70002 at __:__ _.m., Central Time, and at any
adjournments thereof. This Special Meeting is being held for the purpose of
considering and voting upon the Plan of Conversion under which the Association
would be converted from a Louisiana-chartered mutual savings and loan
association to a Louisiana-chartered stock savings and loan association, with
the concurrent sale of all of the Association's capital stock to GS Financial
Corp. (the "Company"), and the sale by the Company of shares of its Common Stock
to the public in a Subscription Offering and, if necessary, in a Community
Offering and a Syndicated Community Offering. The simultaneous conversion of
the Association to stock form, the issuance of the Association's capital stock
to the Company, and the offer and sale of the Common Stock by the Company, all
pursuant to the Plan, are referred to herein as the "Conversion." References to
the Association shall include the Association in either its mutual or stock form
as indicated by the context.
Voting in favor of or against the Plan of Conversion includes a vote for or
against the adoption of the new Stock Articles of Incorporation and Bylaws of
the Association.
Voting in favor of the Plan of Conversion will not obligate any person to
purchase Common Stock.
1
<PAGE>
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
Depositors and borrowers as of the close of business on ___________, 199_
("Voting Record Date") who continue to be depositors borrowers on the date of
the Special Meeting or any adjournment thereof ("Members") will be entitled to
vote on the Plan of Conversion. If there are not sufficient votes for approval
of the Plan at the time of the Special Meeting, the Special Meeting may be
adjourned to permit further solicitation of proxies.
At the Special Meeting, each depositor Member will be entitled to cast one
vote for every $100, or fraction thereof, of the total withdrawal value of all
of his or her accounts in the Association as of the Voting Record Date up to a
maximum of 100 votes, and each borrower Member will be entitled to cast one vote
in the aggregate for all loans as a borrower in addition to the votes such
Member may be entitled to cast as a depositor, up to an aggregate maximum of 100
votes. As of the Voting Record Date, the Association had approximately _____
Members who are entitled to cast a total of approximately _______ depositors'
votes and approximately ___ borrowers' votes, for a total of approximately
_______ votes at the Special Meeting.
This Proxy Statement and related materials are first being mailed to
Members on or about _____________, 1997.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE TOTAL OUTSTANDING VOTES ELIGIBLE
TO BE CAST AT THE SPECIAL MEETING IS REQUIRED FOR APPROVAL OF THE PLAN OF
CONVERSION.
PROXIES
The Board of Directors of the Association is soliciting the proxy which
accompanies this Proxy Statement furnished to Members for use at the Special
Meeting and any adjournment thereof. Each proxy solicited hereby, if properly
executed, duly returned before the Special Meeting and not revoked prior to or
at the Special Meeting, will be voted at the Special Meeting in accordance with
the Member's instructions indicated thereon. If no contrary instructions are
given, the executed proxy will be voted in favor of the Plan of Conversion. If
any other matters properly come before the Special Meeting, the persons named as
proxies will vote upon such matters according to their discretion. Except with
respect to procedural matters incident to the conduct of the meeting, no
additional matters are expected to come before the Special Meeting.
Any Member giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Association either a written revocation of
the proxy, or a duly executed proxy bearing a later date, or by voting in person
at the Special Meeting. Proxies are being solicited only for use at the Special
Meeting and any and all adjournments thereof and will not be used for any other
meeting.
Proxies may be solicited by officers, directors and employees of the
Association personally, by telephone or further correspondence without
additional compensation. In addition, the Association has engaged
________________ to assist in the solicitation of proxies. ______ will receive
a fee of $________ for its proxy solicitation services and its records
management services as conversion agent, plus out-of-pocket expenses.
Deposits held in a trust or other fiduciary capacity may be voted by the
trustee or other fiduciary to whom voting rights are delegated under the trust
instrument or other governing document or applicable law. In the case of
individual retirement accounts ("IRA") and Keogh trusts established at the
Association, the beneficiary may direct the trustee's vote on the Plan of
Conversion by returning a completed proxy card to the Association. If no proxy
card is returned, the trustee will vote in favor of approval of the Plan of
Conversion on behalf of such beneficiary.
2
<PAGE>
The Board of Directors urges each Member as of the close of business on
___________, 199_ to mark, sign, date and return the enclosed proxy card in the
enclosed postage-paid envelope as soon as possible, even if you do not intend to
purchase Common Stock. This will ensure that your vote will be counted.
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
Guaranty Savings is a Louisiana-chartered mutual savings and loan
association that was originally formed in 1937. Guaranty Savings conducts
business from its main office in Metairie, Louisiana and branch offices in New
Orleans and Mandeville, Louisiana. At September 30, 1996, Guaranty Savings had
$86.5 million of total assets, $62.0 million of total liabilities, including
$60.5 million of deposits, and $23.8 million of retained earnings (representing
27.5% of total assets).
Guaranty Savings is primarily engaged in attracting deposits from the
general public through its offices and using those and other available sources
of funds to originate loans for portfolio secured primarily by one-to
four-family residences located in the New Orleans, Louisiana metropolitan area.
At September 30, 1996, Guaranty Savings' net loans receivable totalled $43.1
million or 49.8% of total assets. Conventional first mortgage, one- to
four-family residential loans (excluding construction loans) amounted to $41.4
million, or 95.4%, of the Association's total loan portfolio at September 30,
1996. To a much lesser extent, Guaranty Savings also originates consumer loans
and construction loans and, on occasion, commercial real estate loans and
consumer loans.
Guaranty Savings is a traditional, community-oriented savings institution
which emphasizes a conservative approach to its operations. The Association
generally has concentrated on building its capital base and maintaining superior
asset quality. In pursuit of these goals, Guaranty Savings has adopted a
business strategy that emphasizes offering a limited array of loan and deposit
products. In recent periods the Association has experienced limited growth,
with its net loans increasing by $2.4 million, or 5.8%, from December 31, 1993
to September 30, 1996. Certain aspects of the Association's business strategy
are briefly noted below.
- Capital Position. As of September 30, 1996, the Association had retained
earnings of $23.8 million and exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 27.8%, 27.8%
and 80.1%, respectively, as compared to the minimum requirements of 1.5%, 3.0%
and 8.0%, respectively. As a result of its highly capitalized position, the
Association's return on average assets historically has been below industry
standards. The Association's return on average assets was 0.57% and 1.00%,
respectively, for the nine months ended September 30, 1996 and year ended
December 31, 1995. As a result of the Conversion, the Association's capital
will be further increased. See "Risk Factors - Potential Low Return on Equity
Following the Conversion: Uncertainty as to Future Growth Opportunities,"
"Regulatory Capital" and "Regulation - The Association -Regulatory Capital
Requirements."
- Profitability. The Association reported net income of $365,000 for
the nine months ended September 30, 1996, compared to $858,000 for the
comparable period in 1995. The primary reason for the decline in net income
during the 1996 period compared to the 1995 period was $413,000, pre-tax, in
a one time assessment to recapitalize the Savings Association Insurance Fund
("SAIF"). The Association reported net income of $872,000, $994,000 and $1.3
million for 1995, 1994 and 1993, respectively. Subsequent to the Conversion,
the Association's profitability will be affected by, among other things, the
imposition of a shares tax and franchise tax by the state of Louisiana and
increased compensation expenses. See "Risk Factors - Potential Increased
Compensation Expense After the Conversion," "Pro Forma Data" and "Taxation -
State Taxation." See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
- Asset Quality. Management believes that good asset quality is important
to the Association's long-term profitability. The Association's total
nonperforming assets, which consist of non-accruing loans and
3
<PAGE>
net real estate owned ("REO"), amounted to $316,000, or .73%, of total assets
at September 30, 1996. At September 30, 1996, the Association's allowance
for loan losses amounted to $337,000 or 106.7% of total nonperforming loans.
See "Business -Asset Quality."
- Community Orientation. The Association is committed to meeting the
financial needs of the communities in which it operates. Management believes
that the size of the Association permits it to be able to provide superior
customer service on a personalized and efficient basis. At September 30, 1996,
substantially all of the Association's deposits and loans were to residents of
its primary market area. The Association intends to continue its practice of
investing in loans and obtaining deposits from residents of its primary market
area.
The Association is subject to examination and comprehensive regulation by
the Louisiana Office of Financial Institutions ("OFI"), which is the
Association's chartering authority, and by the Office of Thrift Supervision
("OTS"), which is the Association's primary federal regulator. The Association
is also regulated by the Federal Deposit Insurance Corporation ("FDIC"), the
administrator of the SAIF. The Association is also subject to certain reserve
requirements established by the Board of Governors of the Federal Reserve System
("FRB") and is a member of the Federal Home Loan Bank ("FHLB") of Dallas, which
is one of the 12 regional banks comprising the FHLB System.
Guaranty Savings' executive office is located at 3798 Veterans Boulevard,
Metairie, Louisiana 70002, and its telephone number is (504) 457-6220.
GS FINANCIAL CORP.
GS Financial Corp. is a Louisiana corporation organized in December 1996 by
the Association for the purpose of becoming a unitary holding company of the
Association. The Company will purchase all of the capital stock of the
Association to be issued in the Conversion in exchange for 50% of the net
Conversion proceeds and will retain the remaining 50% of the net proceeds as its
initial capitalization. Immediately following the Conversion, the only
significant assets of the Company will be the capital stock of the Association,
the Company's loan to the ESOP, and the remainder of the net Conversion proceeds
retained by the Company. The business and management of the Company initially
will consist primarily of the business and management of the Association.
Initially, the Company will neither own nor lease any property, but will instead
use the premises, equipment and furniture of the Association. At the present
time, the Company does not intend to employ any persons other than officers of
the Association, and the Company will utilize the support staff of the
Association from time to time. Additional employees will be hired as
appropriate to the extent the Company expands or changes its business in the
future. See "Directors of the Company and the Association"
The Company's executive office is located at the home office of the
Association at 3798 Veterans Boulevard, Metairie, Louisiana 70002, and its
telephone number is (504) 457-6220.
4
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The data at December 31, 1995, 1994 and 1993 and for the years then ended
has been derived from audited consolidated financial statements of the
Association, including the audited Consolidated Financial Statements and related
Notes included elsewhere herein. The data at September 30, 1996 and for the
nine months ended September 30, 1996 and 1995 has been derived from the
unaudited Consolidated Financial Statements and the related Notes included
elsewhere herein. The results of operations and other data for the nine months
ended September 30, 1996, are not necessarily indicative of the results of
operations which may be expected for the fiscal year ending December 31, 1996.
<TABLE>
<CAPTION> At December 31,
At September 30, ------------------------------
1996 (1) 1995 1994 1993
---------------- -------- -------- --------
<S> <C> <C> <C> <C>
(Dollars in Thousands)
SELECTED FINANCIAL DATA:
Total assets $86,521 $86,040 $88,250 $90,100
Cash and cash equivalents 8,698 2,355 2,620 2,883
Investment securities 23,068 33,360 35,496 37,798
Mortgage-backed securities 7,299 6,367 6,063 6,112
Loans receivable, net 43,058 39,888 40,042 40,679
Deposits 60,495 60,945 64,642 67,432
Retained earnings, substantially restricted 23,822 23,457 22,585 21,591
Full service offices 3 3 3 3
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- ------------------------------
1996(1) 1995(1) 1995 1994 1993
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(Dollars in Thousands)
SELECTED OPERATING DATA:
Total interest income $4,560 $4,724 $6,260 $6,035 $6,327
Total interest expense 1,963 2,007 2,664 2,408 2,385
----- ----- ----- ----- -----
Net interest income 2,597 2,717 3,596 3,626 3,942
Provision for loan losses 14 -- 12 21 98
----- ----- ----- ----- -----
Net interest income after provision for
loan losses 2,583 2,717 3,584 3,606 3,844
Other income (35) 46 63 109 147
Other expenses 1,938 (2) 1,465 2,295 2,191 1,994
----- ----- ----- ----- -----
Income before Federal income tax expense 610 1,298 1,352 1,524 1,997
Income tax expense 245 440 480 529 722
----- ----- ----- ----- -----
Net income $ 365 $ 858 $ 872 $ 994 $1,275
===== ===== ===== ===== =====
SELECTED OPERATING RATIOS(2):
Average yield on interest-earning assets 7.47% 7.54% 7.52% 6.97% 7.26%
Average rate on interest-bearing liabilities 4.36 4.26 4.27 3.62 3.52
Average interest rate spread(3) 3.11 3.28 3.25 3.35 3.74
Net interest margin(3) 4.26 4.34 4.32 4.19 4.52
Interest-earning assets as a percent of
interest-bearing liabilities 135.61 132.92 133.39 130.39 128.78
Net interest income after provision for loan
losses as a percent of noninterest expense 133.28 185.46 156.17 164.58 192.77
Noninterest expense as a percent of
average assets 3.01(2) 2.23 2.63 2.43 2.21
Return on average assets 0.57 1.31 1.00 1.10 1.42
6
<PAGE>
Return on average equity 1.99 4.88 3.70 4.41 6.02
Average equity as a percent of average assets 28.50 26.76 26.99 25.02 23.54
</TABLE>
<TABLE>
<CAPTION>
At or For the Nine Months At or For the
Ended September 30, Year Ended December 31,
------------------------- ------------------------------
1996 1995 1995 1994 1993
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Asset Quality Ratios(4):
Nonperforming loans as a percent of total loans
receivable(5) 0.73% 0.57 0.51% 0.49% 1.23%
Nonperforming assets as a percent of total
assets(5) 0.37 0.27 0.27 0.27 0.60
Allowance for loan losses as a percent of
total loans receivable 0.78 0.83 0.80 0.85 0.90
Allowance for loan losses as a percent of
nonperforming loans 106.65 145.65 156.80 175.13 73.12
Net charge-offs as a percent of average loans
receivable -- 0.03 0.08 0.15 0.11
CAPITAL RATIOS(4):
Tangible capital ratio 27.79% 27.09% 27.35% 25.90% 24.30%
Core capital ratio 27.79 27.09 27.35 25.90 24.30
Risk-based capital ratio 80.10 91.72 93.60 90.00 89.40
</TABLE>
- -------------------
(1) In the opinion of management, financial information at September 30, 1996
and for the nine months ended September 30, 1996 and 1995 reflects all
adjustments (consisting only of normal recurring accruals) which are
necessary to present fairly the results of such interim periods.
(2) Includes $413,000, pre-tax, of a one-time assessment to recapitalize the
SAIF. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Exclusive of such one-time assessment, the ratio
of noninterest expense to average assets would have been 2.37% for the nine
months ended September 30, 1996.
(3) With the exception of end of period ratios, all ratios are based on average
monthly balances during the indicated periods and are annualized where
appropriate.
(4) Average interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities, and net interest margin represents net
interest income as a percent of average interest-earning assets.
(5) Asset Quality Ratios and Capital Ratios are end of period ratios, except
for net charge-offs to average loans receivable.
6
<PAGE>
(6) Nonperforming assets consist of non-accruing loans, net REO and net
non-accruing investment securities. Non-accruing loans consist of loans
which are 90 days or more past due, while REO consists of real estate
acquired through foreclosure, real estate acquired by acceptance of a
deed-in-lieu of foreclosure and in-substance foreclosures. Nonperforming
assets totalled $316,093 at September 30, 1996. At September 30, 1996, the
Association had no troubled debt restructurings. See "Business - Asset
Quality."
BUSINESS PURPOSES OF CONVERSION
The Association, as a Louisiana-chartered mutual savings and loan
association, does not have stockholders and has no authority to issue capital
stock. By converting to the capital stock form of organization, the Association
will be structured in the form used by commercial banks, most business entities
and a growing number of savings institutions. The Conversion will result in an
increase in the capital base of the Association and the Company, which will
support the operations of the Association and Company.
The Conversion will permit the Association's customers and members of the
local community and of the general public to become equity owners and to share
in the future of the Company and the Association. The Conversion will also
provide additional funds for lending and investment activities, facilitate
future access to the capital markets, enhance the ability of the Company to
diversify and expand into other markets and enable the Association to compete
more effectively with other financial institutions.
The holding company form of organization will provide additional
flexibility to diversify the Company's and the Association's business activities
through existing or newly formed subsidiaries, or through acquisition of or
mergers with other financial institutions, as well as other companies. Although
there are no current arrangements, understandings or agreements regarding any
such opportunities, the Company will be in a position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise.
After completion of the Conversion, the unissued common and preferred stock
authorized by the Company's Articles of Incorporation will permit the Company,
subject to market conditions and applicable regulatory approvals, to raise
additional equity capital through further sales of securities, and to issue
securities in connection with possible acquisitions. At the present time, the
Company has no plans with respect to additional offerings of securities, other
than the possible issuance of additional shares to the Recognition Plan or upon
exercise of stock options. Following the Conversion, the Company will also be
able to use stock-related incentive programs to attract and retain executive and
other personnel for itself and its subsidiaries.
In adopting the Plan, the Board of Directors of the Association determined
that the Conversion was advisable and in the best interests of its members and
the Association and further determined that the interests of certain holders of
its deposit accounts in the net worth of the Association would be equitably
provided for and that the Conversion would not have any adverse impact on the
reserves and net worth of the Association.
7
<PAGE>
THE CONVERSION
THE BOARD OF DIRECTORS OF THE COMPANY AND THE ASSOCIATION HAVE APPROVED THE
PLAN OF CONVERSION, AS HAS THE OTS AND THE OFI, SUBJECT TO APPROVAL BY THE
MEMBERS OF GUARANTY SAVINGS ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION
OF CERTAIN OTHER CONDITIONS. SUCH OTS AND OFI APPROVALS, HOWEVER, DO NOT
CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY EITHER OF SUCH
AGENCIES.
GENERAL
On October 10, 1996, the Board of Directors of the Association unanimously
adopted the Plan, pursuant to which the Association will be converted from a
Louisiana-chartered mutual savings and loan association to a Louisiana-chartered
stock savings and loan association to be known as "Guaranty Savings and
Association," and the Company will offer and sell the Common Stock. It is
intended that all of the common stock of the Association following the
Conversion will be held by the Company, which is incorporated under Louisiana
law. The Plan has been approved by the OTS and the OFI, subject to, among other
things, approval of the Plan by the members of the Association. A Special
Meeting has been called for this purpose to be held on _____ __, 1997.
In adopting the Plan, the Board of Directors of the Association determined
that the Conversion was advisable and in the best interests of its members and
the Association and further determined that the interests of certain holders of
its deposit accounts in the net worth of the Association would be equitably
provided for and that the Conversion would not have any adverse impact on the
reserves and net worth of the Association.
The Company has received approval from the OTS and the OFI to become a
savings and loan holding company and to acquire all of the common stock of the
Association to be issued in connection with the Conversion. The Company plans
to retain 50% of the net proceeds from the sale of the Common Stock, with all
the remaining proceeds used to purchase all of the then to be issued and
outstanding capital stock of the Association. Based on the minimum and maximum
of the Estimated Valuation Range, approximately $1,768,000 and $2,392,000,
respectively, of the net proceeds retained by the Company are intended to be
used to loan funds to the ESOP to enable the ESOP to purchase up to 8% of the
Common Stock. The Conversion will be effected only upon completion of the sale
of all of the shares of Common Stock to be issued pursuant to the Plan.
The Plan provides generally that, in connection with the Conversion, the
Company will offer shares of Common Stock for sale in the Subscription Offering
to the Association's Eligible Account Holders, ESOP, Supplemental Eligible
Account Holders, Other Members, officers, directors and employees of the
Association and in a concurrent Community Offering to certain members of the
general public, subject to the prior rights of holders of subscription rights.
See "- Subscription Offering and Subscription Rights" and "- Community
Offering." It is anticipated that all shares not subscribed for in the
Subscription and Community Offerings will be offered for sale by the Company to
the general public in a Syndicated Community Offering. See "- Syndicated
Community Offering." The Company and the Association have the right to accept
or reject, in whole or in part, any orders to purchase shares of Common Stock
received in the Community Offering or in the Syndicated Community Offering.
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Valuation Range, currently estimated to be
between $22,100,000 and $29,900,000, will be determined based upon an
independent appraisal of the estimated pro forma market value of the Common
Stock. All shares of Common Stock to be issued and sold in the Conversion will
be sold at the same price. The independent appraisal will be affirmed or, if
necessary, updated at the completion of the Subscription and Community
Offerings, if all shares are subscribed for, or at the completion of the
Syndicated Community Offering. The appraisal has been performed by RP
Financial, a consulting firm experienced in the valuation and appraisal of
savings institutions. See "- Stock Pricing and Number of Shares to be Issued"
for more information as to the determination of the estimated pro forma market
value of the Common Stock.
The following is a brief summary of pertinent aspects of the Conversion.
The summary is qualified in its entirety by reference to the provisions of the
Plan. A copy of the Plan is available for inspection at the offices
8
<PAGE>
of the Association and at the offices of the OTS. The Plan is also filed as
an exhibit to the Registration Statement of which this Prospectus is a part,
copies of which may be obtained from the SEC. See "Additional Information."
PURPOSES OF CONVERSION
The Association, as a Louisiana-chartered mutual savings and loan
association, does not have stockholders and has no authority to issue capital
stock. By converting to the capital stock form of organization, the Association
will be structured in the form used by commercial banks, most business entities
and a growing number of savings institutions. The Conversion will result in an
increase in the capital base of the Association and the Company, which will
support the operations of the Association and Company.
The Conversion will permit the Association's customers and members of the
local community and of the general public to become equity owners and to share
in the future of the Company and the Association. The Conversion will also
provide additional funds for lending and investment activities, facilitate
future access to the capital markets, enhance the ability of the Company to
diversify and expand into other markets and enable the Association to compete
more effectively with other financial institutions.
The holding company form of organization will provide additional
flexibility to diversify the Company's and the Association's business activities
through existing or newly formed subsidiaries, or through acquisition of or
mergers with other financial institutions, as well as other companies. Although
there are no current arrangements, understandings or agreements regarding any
such opportunities, the Company will be in a position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise.
After completion of the Conversion, the unissued common and preferred stock
authorized by the Company's Articles of Incorporation will permit the Company,
subject to market conditions and applicable regulatory approvals, to raise
additional equity capital through further sales of securities, and to issue
securities in connection with possible acquisitions. At the present time, the
Company has no plans with respect to additional offerings of securities, other
than the possible issuance of additional shares to the Recognition Plan or upon
exercise of stock options. Following the Conversion, the Company will also be
able to use stock-related incentive programs to attract and retain executive and
other personnel for itself and its subsidiaries.
EFFECTS OF CONVERSION
GENERAL. Prior to the Conversion, each depositor in the Association has
both a deposit account in the institution and a pro rata ownership interest in
the net worth of the Association based upon the balance in his account, which
interest may only be realized in the event of a liquidation of the Association.
However, this ownership interest is tied to the depositor's account and has no
tangible market value separate from such deposit account. Any person who opens
a deposit account obtains a pro rata ownership interest in the net worth of the
Association without any additional payment beyond the amount of the deposit. A
depositor who reduces or closes his account receives a portion or all of the
balance in the account but nothing for his ownership interest in the net worth
of the Association, which is lost to the extent that the balance in the account
is reduced.
Consequently, the depositors of the Association normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the Association is liquidated. In such event, the
depositors of record at that time, as owners, would share pro rata in any
residual surplus and reserves of the Association after other claims, including
claims of depositors to the amount of their deposits, are paid.
When the Association converts to stock form, permanent nonwithdrawable
capital stock will be created to represent the ownership of the net worth of the
Association, and the Association will become a wholly owned subsidiary of the
Company. The Common Stock of the Association and the Company is separate and
apart from deposit accounts of the Association and cannot be and is not insured
by the FDIC or any other governmental agency. Certificates are issued to
evidence ownership of the permanent stock of the Association and the Company.
The stock certificates are transferable, and therefore the stock may be sold or
traded if a purchaser is available with no effect on any account the seller may
hold in the Association.
9
<PAGE>
Continuity. While the Conversion is being accomplished, the normal
business of the Association of accepting deposits and making loans will continue
without interruption. The Association will continue to be subject to regulation
by the OTS, the OFI and the FDIC. After the Conversion, the Association will
continue to provide services for depositors and borrowers under current policies
by its present management and staff.
The directors and officers of the Association at the time of the Conversion
will continue to serve as directors and officers of the Association after the
Conversion. The directors and officers of the Company consist of individuals
currently serving as directors and officers of the Association, and they will
retain their positions in the Association after the Conversion.
Effect on Deposit Accounts. Under the Plan, each depositor in the
Association at the time of the Conversion will automatically continue as a
depositor after the Conversion, and each such deposit account will remain the
same with respect to deposit balance, interest rate and other terms, except to
the extent that funds in the account are withdrawn to purchase the Common Stock
and except with respect to voting and liquidation rights. Each such account
will be insured by the FDIC to the same extent as before the Conversion.
Depositors will continue to hold their existing certificates, passbooks and
other evidences of their accounts.
Effect on Loans. No loan outstanding from the Association will be affected
by the Conversion, and the amount, interest rate, maturity and security for each
loan will remain as they were contractually fixed prior to the Conversion.
Effect on Voting Rights of Members. At present, all depositors and certain
borrowers of the Association are members of, and have voting rights in, the
Association as to all matters requiring membership action. Upon completion of
the Conversion, depositors and borrowers will cease to be members and will no
longer be entitled to vote at meetings of the Association. Upon completion of
the Conversion, all voting rights in the Association will be vested in the
Company as the sole stockholder of the Association. Exclusive voting rights
with respect to the Company will be vested in the holders of Common Stock.
Depositors of and borrowers from the Association will not have voting rights in
the Company after the Conversion, except to the extent that they become
stockholders of the Company.
Tax Effects. Consummation of the Conversion is conditioned on prior
receipt by the Company and the Association of rulings or opinions with regard to
federal and Louisiana income taxation which indicate that the adoption and
implementation of the Plan of Conversion described herein will not be taxable
for federal or Louisiana income tax purposes to the Company and the Association
or the Association's Eligible Account Holders or Supplemental Eligible Account
Holders, except as discussed below. The Association has received favorable
opinions regarding the federal and Louisiana income tax consequences of the
Conversion. See "- Tax Aspects."
Effect on Liquidation Rights. Were the Association to liquidate, all
claims of the Association's creditors (including those of depositors, to the
extent of their deposit balances) would be paid first. Thereafter, if there
were any assets remaining, members of the Association would receive such
remaining assets, pro rata, based upon the deposit balances in their deposit
accounts at the Association immediately prior to liquidation. In the unlikely
event that the Association were to liquidate after the Conversion, all claims of
creditors (including those of depositors, to the extent of their deposit
balances) would also be paid first, followed by distribution of the "liquidation
account" to certain depositors (see "- Liquidation Rights"), with any assets
remaining thereafter distributed to the Company as the holder of the
Association's capital stock. Pursuant to the rules and regulations of the OTS,
a post-Conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be
considered a liquidation and, in such a transaction, the liquidation account
would be required to be assumed by the surviving institution.
Stock Pricing and Number of Shares to be Issued
The Plan of Conversion requires that the purchase price of the Common
Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation. The
Association has retained RP Financial to make such valuation. For its
services in making such appraisal, RP Financial's fees and out-of-pocket
expenses are estimated to be $15,250. The Association has agreed to
indemnify RP Financial and any employees of RP Financial who act for or on
behalf of RP Financial in connection with the appraisal against any and all
loss, cost, damage, claim, liability or expense of any kind
10
<PAGE>
(including claims under federal and state securities laws) arising out of any
misstatement or untrue statement of a material fact or an omission to state a
material fact in the information supplied by the Association to RP Financial,
unless RP Financial is determined to be negligent or otherwise at fault.
An appraisal has been made by RP Financial in reliance upon the information
contained in this Prospectus, including the Financial Statements. RP Financial
also considered the following factors, among others: the present and projected
operating results and financial condition of the Company and the Association and
the economic and demographic conditions in the Association's existing marketing
area; certain historical, financial and other information relating to the
Association; a comparative evaluation of the operating and financial statistics
of the Association with those of other similarly situated publicly traded
savings institutions located in Louisiana and other regions of the United
States; the aggregate size of the offering of the Common Stock; the impact of
the Conversion on the Association's net worth and earnings potential; the
proposed dividend policy of the Company and the Association; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities. In its review of the appraisal provided by RP
Financial, the Board of Directors reviewed the methodologies and the
appropriateness of the assumptions used by RP Financial in addition to the
factors enumerated above, and the Board of Directors believes that such
assumptions were reasonable.
On the basis of the foregoing, RP Financial has advised the Company and the
Association that in its opinion, dated December 20, 1996, the estimated pro
forma market value of the Common Stock ranged from a minimum of $22,100,000 to
a maximum of $29,900,000 with a midpoint of $26,000,000. The Boards of
Directors of the Company and the Association determined that the Common Stock
should be sold at $10.00 per share, resulting in a range of 2,210,000 to
2,990,000 shares of Common Stock being offered. The Estimated Valuation Range
may be amended with the approval of the OTS and the OFI, if required, or if
necessitated by subsequent developments in the financial condition of the
Company and the Association or market conditions generally, or to fill the order
of the ESOP. In the event the Estimated Valuation Range is updated to amend the
value of the Association below $22,100,000 or above $34,385,000 (the maximum
of the Estimated Valuation Range, as adjusted by 15%), the new appraisal will be
filed with the SEC by post-effective amendment.
Based upon current market and financial conditions and recent practices and
policies of the OTS, in the event the Company receives orders for Common Stock
in excess of $29,900,000 (the maximum of the Estimated Valuation Range) and up
to $34,385,000 (the maximum of the Estimated Valuation Range, as adjusted by
15%), the Company may be required by the OTS to accept all such orders. No
assurances, however, can be made that the Company will receive orders for Common
Stock in excess of the maximum of the Estimated Valuation Range or that, if such
orders are received, that all such orders will be accepted because the Company's
final valuation and number of shares to be issued are subject to the receipt of
an updated appraisal from RP Financial which reflects such an increase in the
valuation and the approval of such increase by the OTS. In addition, an
increase in the number of shares above 2,990,000 shares will first be used, if
necessary, to fill the order of the ESOP. There is no obligation or
understanding on the part of management to take and/or pay for any shares in
order to complete the Conversion.
RP Financial's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares. RP
Financial did not independently verify the Financial Statements and other
information provided by the Association, nor did RP Financial value
independently the assets or liabilities of the Association. The valuation
considers the Association as a going concern and should not be considered as an
indication of the liquidation value of the Association. Moreover, because such
valuation is necessarily based upon estimates and projections of a number of
matters, all of which are subject to change from time to time, no assurance can
be given that persons purchasing Common Stock in the Conversion will thereafter
be able to sell such shares at prices at or above the Purchase Price or in the
range of the foregoing valuation of the pro forma market value thereof.
Prior to completion of the Conversion, the maximum of the Estimated
Valuation Range may be increased up to 15% and the number of shares of Common
Stock may be increased to up to 3,438,500 shares to reflect changes in market
and financial conditions or to fill the order of the ESOP, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases" as
to the method of distribution and allocation of additional shares that may be
issued in the event of an increase in the Estimated Valuation Range to fill
unfilled orders in the Subscription Offering.
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No sale of shares of Common Stock in the Conversion may be consummated
unless prior to such consummation RP Financial confirms that nothing of a
material nature has occurred which, taking into account all relevant factors,
would cause it to conclude that the Purchase Price is materially incompatible
with the estimate of the pro forma market value of a share of Common Stock upon
consummation of the Conversion. If such is not the case, a new Estimated
Valuation Range may be set and a new Subscription and Community Offering and/or
Syndicated Community Offering may be held or such other action may be taken as
the Company and the Association shall determine and the OTS and the OFI may
permit or require.
Depending upon market or financial conditions following the commencement
of the Subscription Offering, the total number of shares of Common Stock may
be increased or decreased without a resolicitation of subscribers, provided
that the product of the total number of shares times the Purchase Price is
not below the minimum or more than 15% above the maximum of the Estimated
Valuation Range. In the event market or financial conditions change so as to
cause the aggregate Purchase Price of the shares to be below the minimum of
the Estimated Valuation Range or more than 15% above the maximum of such
range, purchasers will be resolicited (i.e., permitted to continue their
orders, in which case they will need to affirmatively reconfirm their
subscriptions prior to the expiration of the resolicitation offering or their
subscription funds will be promptly refunded with interest at the
Association's passbook rate of interest, or be permitted to modify or rescind
their subscriptions). Any change in the Estimated Valuation Range must be
approved by the OTS. If the number of shares of Common Stock issued in the
Conversion is increased due to an increase of up to 15% in the Estimated
Valuation Range to reflect changes in market or financial conditions or to
fill the order of the ESOP, persons who subscribed for the maximum number of
shares will be given the opportunity to subscribe for the adjusted maximum
number of shares. See "- Limitations on Common Stock Purchases."
An increase in the number of shares of Common Stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and the Company's pro forma net income and
stockholders' equity on a per share basis while increasing pro forma net income
and stockholders' equity on an aggregate basis. A decrease in the number of
shares of Common Stock would increase both a subscriber's ownership interest and
the Company's pro forma net income and stockholders' equity on a per share basis
while decreasing pro forma net income and stockholders' equity on an aggregate
basis. See "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any amendments
thereto, and the detailed report of the appraiser setting forth the method and
assumptions for such appraisal are available for inspection at the main office
of the Association and the other locations specified under "Additional
Information."
Subscription Offering and Subscription Rights
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) Eligible
Account Holders, (2) the ESOP, (3) Supplemental Eligible Account Holders, (4)
Other Members, and (5) directors, officers and employees of the Association.
All subscriptions received will be subject to the availability of Common Stock
after satisfaction of all subscriptions of all persons having prior rights in
the Subscription Offering and to the maximum and minimum purchase limitations
set forth in the Plan of Conversion and as described below under "- Limitations
on Common Stock Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (i)
$250,000 of Common Stock, (ii) one-tenth of one percent (0.10%) of the total
offering of shares of Common Stock or (iii) 15 times the product (rounded down
to the next whole number) obtained by multiplying the total number of shares of
Common Stock to be issued by a fraction, of which the numerator is the amount of
the Eligible Account Holder's qualifying deposit and the denominator of which is
the total amount of qualifying deposits of all Eligible Account Holders, in each
case as of the close of business on September 30, 1995 (the "Eligibility Record
Date"), subject to the overall purchase limitations. See "- Limitations on
Common Stock Purchases."
If there are not sufficient shares available to satisfy all subscriptions,
shares first will be allocated among subscribing Eligible Account Holders so as
to permit each such Eligible Account Holder, to the extent possible, to purchase
a number of shares sufficient to make his total allocation equal to the lesser
of the number of shares
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subscribed for or 100 shares. Thereafter, any shares remaining after each
subscribing Eligible Account Holder has been allocated the lesser of the
number of shares subscribed for or 100 shares will be allocated among the
subscribing Eligible Account Holders whose subscriptions remain unfilled in
the proportion that the amounts of their respective eligible deposits bear to
the total amount of eligible deposits of all subscribing Eligible Account
Holders whose subscriptions remain unfilled, provided that no fractional
shares shall be issued. Subscription Rights of Eligible Account Holders will
be subordinated to the priority rights of Tax-Qualified Employee Stock
Benefit Plans to purchase shares in excess of the maximum of the Estimated
Valuation Range.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in fewer shares being
allocated than if all accounts had been disclosed. The subscription rights of
Eligible Account Holders who are also directors or officers of the Association
or their associates will be subordinated to the subscription rights of other
Eligible Account Holders to the extent attributable to increased deposits in the
year preceding September 30, 1995.
Priority 2: Employee Stock Ownership Plan. The ESOP will receive, without
payment therefor, second priority, nontransferable subscription rights to
purchase, in the aggregate, up to 10% of the Common Stock, including any
increase in the number of shares of Common Stock after the date hereof as a
result of an increase of up to 15% in the maximum of the Estimated Valuation
Range. The ESOP intends to purchase 8% of the shares of Common Stock, or
176,800 shares and 239,200 shares based on the minimum and maximum of the
Estimated Valuation Range, respectively. Subscriptions by the ESOP will not be
aggregated with shares of Common Stock purchased directly by or which are
otherwise attributable to any other participants in the Subscription and
Community Offerings, including subscriptions of any of the Association's
directors, officers, employees or associates thereof. In the event that the
total number of shares offered in the Conversion is increased to an amount
greater than the number of shares representing the maximum of the Estimated
Valuation Range ("Maximum Shares"), the ESOP will have a priority right to
purchase any such shares exceeding the Maximum Shares up to an aggregate of 10%
of the Common Stock. See "Management of the Company - Benefits - Employee Stock
Ownership Plan."
Priority 3: Supplemental Eligible Account Holders. To the extent that
there are sufficient shares remaining after satisfaction of subscriptions by
Eligible Account Holders and the ESOP, each Supplemental Eligible Account Holder
will receive, without payment therefor, third priority, nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of (i) $250,000 of Common Stock, (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total number
of shares of Common Stock to be issued by a fraction, of which the numerator is
the amount of the Supplemental Eligible Account Holder's qualifying deposit and
the denominator of which is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders, in each case as of the close of business
on ___________, 199_ (the "Supplemental Eligibility Record Date"), subject to
the overall purchase limitations. See "- Limitations on Common Stock
Purchases."
If there are not sufficient shares available to satisfy all subscriptions
of all Supplemental Eligible Account Holders, available shares first will be
allocated among subscribing Supplemental Eligible Account Holders so as to
permit each such Supplemental Eligible Account Holder, to the extent possible,
to purchase a number of shares sufficient to make his total allocation equal to
the lesser of the number of shares subscribed for or 100 shares. Thereafter,
any shares remaining available will be allocated among the Supplemental Eligible
Account Holders whose subscriptions remain unfilled in the proportion that the
amounts of their respective eligible deposits bear to the total amount of
eligible deposits of all subscribing Supplemental Eligible Account Holders whose
subscriptions remain unfilled, provided that no fractional shares shall be
issued.
Priority 4: Other Members. To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
ESOP and Supplemental Eligible Account Holders, each Other Member will receive,
without payment therefor, fourth priority, nontransferable subscription rights
to subscribe for Common Stock in the Subscription Offering up to the greater of
(i) $250,000 of Common Stock or (ii) one-tenth of one percent (0.10%) of the
total offering of shares of Common Stock, subject to the overall purchase
limitations. See "- Limitations on Common Stock Purchases."
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In the event the Other Members subscribe for a number of shares which, when
added to the shares subscribed for by Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders, is in excess of the total number of
shares of Common Stock offered in the Conversion, available shares first will be
allocated so as to permit each subscribing Other Member, to the extent possible,
to purchase a number of shares sufficient to make his total allocation equal to
the lesser of the number of shares subscribed for or 100 shares. Thereafter,
any remaining shares will be allocated among such subscribing Other Members on a
pro rata basis in the same proportion as each Other Member's subscription bears
to the total subscriptions of all subscribing Other Members, provided that no
fractional shares shall be issued.
Priority 5: Directors, Officers and Employees. To the extent that there
are sufficient shares remaining after satisfaction of all subscriptions by
Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders and
Other Members, then directors, officers and employees of the Association will
receive, without payment therefor, fifth priority, nontransferable subscription
rights to subscribe for, in this category, an aggregate of up to 20% of the
shares of Common Stock offered in the Subscription Offering. The ability of
directors, officers and employees to purchase Common Stock under this category
is in addition to rights which are otherwise available to them under the Plan as
they may fall within higher priority categories, and the Plan generally allows
such persons to purchase in the aggregate up to 34% of Common Stock sold in the
Conversion. See "- Limitations on Common Stock Purchases."
In the event of an oversubscription in this category, subscription rights
will be allocated among the individual directors, officers and employees on a
point system basis, whereby such individuals will receive subscription rights in
the proportion that the number of points assigned to each of them bears to the
total points assigned to all directors, officers and employees, provided that no
fractional shares shall be issued. One point will be assigned for each year of
service with the Association, one point for each salary increment of $5,000 per
annum and five points for each office presently held in the Association,
including directorships. For information as to the number of shares proposed to
be purchased by certain of the directors and officers, see "Proposed Management
Purchases."
Expiration Date for the Subscription Offering. The Subscription Offering
will expire at 12:00 noon, Central Time, on _________ __, 199_ (the
"Subscription Expiration Date"), unless extended for up to 45 days or for such
additional periods by the Company and the Association as may be approved by the
OTS and the OFI. The Subscription Offering may not be extended beyond _______
__, 199_. Subscription rights which have not been exercised prior to the
Subscription Expiration Date (unless extended) will become void.
The Company and the Association will not execute orders until at least the
minimum number of shares of Common Stock (2,210,000 shares) have been subscribed
for or otherwise sold. If all shares have not been subscribed for or sold
within 45 days after the Subscription Expiration Date, unless such period is
extended with the consent of the OTS and the OFI, all funds delivered to the
Association pursuant to the Subscription Offering will be returned promptly to
the subscribers with interest and all withdrawal authorizations will be
cancelled. If an extension beyond the 45-day period following the Subscription
Expiration Date is granted, the Company and the Association will notify
subscribers of the extension of time and of any rights of subscribers to modify
or rescind their subscriptions.
Community Offering
To the extent that shares remain available for purchase after satisfaction
of all subscriptions of Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, Other Members and directors, officers and employees of
the Association, the Company and the Association have determined to offer shares
pursuant to the Plan to certain members of the general public, with preference
given to natural persons residing in Orleans, St. Tammany and Jefferson
Parishes, Louisiana (such natural persons referred to as "Preferred
Subscribers"). Such persons, together with associates of and persons acting in
concert with such persons, may purchase up to the greater of (i) $250,000 or
25,000 shares of Common Stock, or (ii) one-tenth of one percent (0.10%) of the
total offering of shares of Common Stock, subject to the maximum purchase
limitations. See "- Limitations on Common Stock Purchases." This amount may be
increased at the sole discretion of the Company and the Association up to 5% or
decreased to as low as 1% of the total offering of shares in the Subscription
Offering. The opportunity to subscribe for shares of Common Stock in the
Community Offering category is subject to the right of the Company and the
Association, in their sole discretion, to accept or reject
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any such orders in whole or in part either at the time of receipt of an order
or as soon as practicable following the Subscription Expiration Date.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Subscription and Community
Offerings, such stock will be allocated first to each Preferred Subscriber whose
order is accepted by the Company, in an amount equal to the lesser of 100 shares
or the number of shares subscribed for by each such Preferred Subscriber, if
possible. Thereafter, unallocated shares will be allocated among the Preferred
Subscribers whose accepted orders remain unsatisfied in the same proportion that
the unfilled subscription of each (up to 2% of the total offering) bears to the
total unfilled subscriptions of all Preferred Subscribers whose accepted orders
remains unsatisfied, provided that no fractional shares shall be issued. Orders
for Common Stock in the Community Offering will first be filled to a maximum of
2% of the total number of shares of Common Stock sold in the Conversion and
thereafter any remaining shares shall be allocated on an equal number of shares
basis per order until all orders have been filled. If there are any shares
remaining, shares will be allocated to other members of the general public who
subscribe in the Community Offering applying the same allocation described above
for Preferred Subscribers.
Syndicated Community Offering
As a final step in the Conversion, the Plan provides that, if feasible, all
shares of Common Stock not purchased in the Subscription and Community Offerings
may be offered for sale to the general public in a Syndicated Community Offering
through a syndicate of registered broker-dealers to be formed. The Company and
the Association expect to market any shares which remain unsubscribed after the
Subscription and Community Offerings through a Syndicated Community Offering.
The Company and the Association have the right to reject orders in whole or part
in their sole discretion in the Syndicated Community Offering. Neither Webb nor
any registered broker-dealer shall have any obligation to take or purchase any
shares of Common Stock in the Syndicated Community Offering; however, Webb has
agreed to use its best efforts in the sale of shares in the Syndicated Community
Offering.
The price at which Common Stock is sold in the Syndicated Community
Offering will be the same price at which shares are offered and sold in the
Subscription and Community Offerings. No person will be permitted to subscribe
in the Syndicated Community Offering for more than $250,000 or 25,000 shares
of Common Stock, subject to the maximum purchase limitations. See "-
Limitations on Common Stock Purchases." This amount may be increased to up to
5% of the total offering of shares in the Subscription Offering, provided that
orders for Common Stock in the Syndicated Community Offering will first be
filled to a maximum of 2% of the total number of shares of Common Stock sold in
the Conversion. Thereafter, any remaining shares will be allocated on an equal
number of shares basis per order until all orders have been filled. The
purchase limit may also be decreased to as low as 1% of the total offering of
shares.
Webb may enter into agreements with broker-dealers ("Selected Dealers") to
assist in the sale of the shares in the Syndicated Community Offering, although
no such agreements exist as of the date of this Prospectus. No orders may be
placed or filled by or for a Selected Dealer during the Subscription Offering.
After the close of the Subscription Offering, Webb will instruct Selected
Dealers as to the number of shares to be allocated to each Selected Dealer.
Only after the close of the Subscription Offering and upon allocation of shares
to Selected Dealers may Selected Dealers take orders from their customers.
During the Subscription and Community Offerings, Selected Dealers may only
solicit indications of interest from their customers to place orders with the
Company as of a certain date ("Order Date") for the purchase of shares of Common
Stock. When and if Webb and the Company believe that enough indications of
interest and orders have not been received in the Subscription and Community
Offerings to consummate the Conversion, Webb will request, as of the Order Date,
Selected Dealers to submit orders to purchase shares for which they have
previously received indications of interest from their customers. Selected
Dealers will send confirmations of the orders to such customers on the next
business day after the Order Date. Selected Dealers will debit the accounts of
their customers on the "Settlement Date" which date will be three business days
from the Order Date. Customers who authorize Selected Dealers to debit their
brokerage accounts are required to have the funds for payment in their account
on but not before the Settlement Date. On the Settlement Date, Selected Dealers
will remit funds to the account established by the Association for each Selected
Dealer. Each customer's funds so forwarded to the Association, along with all
other accounts held in the same title, will be insured by the FDIC up to
$100,000 in accordance with applicable FDIC regulations. After payment has
been received by the Association from Selected Dealers, funds will earn interest
at the Association's passbook rate until the consummation or termination of the
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Conversion. Funds will be promptly returned, with interest, in the event the
Conversion is not consummated as described above.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company and
the Association with the approval of the OTS and the OFI. See "- Stock Pricing
and Number of Shares to be Issued in the Conversion" above for a discussion of
rights of subscribers, if any, in the event an extension is granted.
Persons in Nonqualified States or Foreign Countries
The Company and the Association will make reasonable efforts to comply with
the securities laws of all states in the United States in which persons entitled
to subscribe for stock pursuant to the Plan reside. However, the Company and
the Association are not required to offer stock in the Subscription Offering to
any person who resides in a foreign country or resides in a state of the United
States with respect to which: (a) the number of persons otherwise eligible to
subscribe for shares under the Plan who reside in such jurisdiction is small;
(b) the granting of subscription rights or the offer or sale of shares of Common
Stock to such persons would require any of the Company and the Association or
their officers, directors or employees, under the laws of such jurisdiction, to
register as a broker, dealer, salesman or selling agent or to register or
otherwise qualify its securities for sale in such jurisdiction or to qualify as
a foreign corporation or file a consent to service of process in such
jurisdiction; and (c) such registration, qualification or filing in the judgment
of the Company and the Association would be impracticable or unduly burdensome
for reasons of costs or otherwise. Where the number of persons eligible to
subscribe for shares in one state is small, the Company and the Association will
base their decision as to whether or not to offer the Common Stock in such state
on a number of factors, including but not limited to the size of accounts held
by account holders in the state, the cost of registering or qualifying the
shares or the need to register the Company, its officers, directors or employees
as brokers, dealers or salesmen.
Limitations on Common Stock Purchases
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased in the Conversion:
(1) No fewer than 25 shares of Common Stock may be purchased, to the
extent such shares are available;
(2) Each Eligible Account Holder may subscribe for and purchase in
the Subscription Offering up to the greater of (i) $250,000 or 25,000
shares of Common Stock, (ii) one-tenth of one percent (0.10 %) of the total
offering of shares of Common Stock or (iii) 15 times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction, of which the numerator
is the amount of the qualifying deposit of the Eligible Account Holder and
the denominator is the total amount of qualifying deposits of all Eligible
Account Holders, in each case as of the close of business on the
Eligibility Record Date, subject to the overall limitation in clause (7)
below;
(3) The ESOP may purchase in the aggregate up to 10% of the shares of
Common Stock, including any additional shares issued in the event of an
increase in the Estimated Valuation Range; although at this time it intends
to purchase only 8% of such shares;
(4) Each Supplemental Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (i) $250,000 or
25,000 shares of Common Stock, (ii) one-tenth of one percent (0.10%) of
the total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of shares of Common Stock to be issued by a fraction, of which the
numerator is the amount of the qualifying deposit of the Supplemental
Eligible Account Holder and the denominator is the total amount of
qualifying deposits of all Supplemental Eligible Account Holders, in each
case as of the close of business on the Supplemental Eligibility Record
Date, subject to the overall limitation in clause (7) below;
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(5) Each Other Member or any Person purchasing shares of Common Stock
in the Community Offering may subscribe for and purchase in the
Subscription Offering or Community Offering, as the case may be, up to the
greater of (i) $250,000 or 25,000 shares of Common Stock or (ii)
one-tenth of one percent (0.10%) of the total offering of shares of Common
Stock, subject to the overall limitation in clause (7) below;
(6) Persons purchasing shares of Common Stock in the Community
offering or Syndicated Community Offering may purchase in the Community
Offering or Syndicated Community Offering up to $250,000 or 25,000 shares
of Common Stock, subject to the overall limitation in clause (7) below;
(7) Except for the ESOP and certain Eligible Account Holders and
Supplemental Eligible Account Holders whose subscription rights are based
upon the amount of their deposits, the maximum number of shares of Common
Stock subscribed for or purchased in all categories of the Conversion by
any person, together with associates of and groups of persons acting in
concert with such persons, shall not exceed $700,000 or 70,000 of shares
of Common Stock issued in the Conversion; and
(8) No more than 24% of the total number of shares offered for sale
in the Subscription Offering may be purchased by directors and officers of
the Association in the fourth priority category in the Subscription
Offering. No more than 34% of the total number of shares offered for sale
in the Conversion may be purchased by directors and officers of the
Association and their associates in the aggregate, excluding purchases by
the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Association, the individual amount permitted to be subscribed for may be
increased up to a maximum of 5% of the number of shares sold in the Conversion
and both the individual and the overall purchase limitations may be decreased to
a minimum of 1% of the number of shares sold in the Conversion at the sole
discretion of the Company and the Association. If such amount is increased,
subscribers for the maximum amount will be, and certain other large subscribers
in the sole discretion of the Company and the Association may be, given the
opportunity to increase their subscriptions up to the then applicable limit.
The term "associate" of a person is defined to mean (i) any corporation or
other organization (other than the Company and the Association or a
majority-owned subsidiary of the Association) of which such person is a
director, officer or partner or is directly or indirectly the beneficial owner
of 10% or more of any class of equity securities; (ii) any trust or other estate
in which such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity, provided, however,
that such term shall not include any tax-qualified employee stock benefit plan
of the Company and the Association in which such person has a substantial
beneficial interest or serves as a trustee or in a similar fiduciary capacity;
and (iii) any relative or spouse of such person, or any relative of such spouse,
who either has the same home as such person or who is a director or officer of
the Company and the Association or any of their subsidiaries.
The term "acting in concert" is defined to mean (1) knowing participation
in a joint activity or interdependent conscious parallel action towards a common
goal whether or not pursuant to an express agreement, or (2) a combination or
pooling of voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. The Company and the
Association may presume that certain persons are acting in concert based upon,
among other things, joint account relationships and the fact that such persons
have filed joint Schedules 13D with the SEC with respect to other companies.
Marketing Arrangements
The Company and the Association have retained Webb to consult with and to
advise the Association and the Company, and to assist the Company, on a best
efforts basis, in the distribution of the shares of Common Stock in the
Subscription and Community Offering. The services that Webb will provide
include, but are not limited to (i) training the employees of the Association
who will perform certain ministerial functions in the Subscription and Community
Offering regarding the mechanics and regulatory requirements of the stock
offering process, (ii) managing the Stock Information Center by assisting
interested stock subscribers and by keeping records of all stock orders, (iii)
preparing marketing materials, and (iv) assisting in the solicitation of
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proxies from the Association's members for use at the Special Meeting. For its
services, Webb will receive a management fee of $30,000 and a success fee of
1.5% of the aggregate Actual Purchase Price of the shares of Common Stock sold
in the Subscription Offering and Community Offering excluding shares purchased
by the ESOP and officers, directors and employees of the Association and members
of their immediate families. The success fee paid to Webb will be reduced by
the amount of the management fee and, in any event, the success fee shall not
exceed $375,000. In the event that selected dealers are used to assist in the
sale of shares of Common Stock in the Community Offering, such dealers will be
paid a fee of up to ___% of the aggregate Purchase Price of the shares sold by
such dealers. The Company and the Association have agreed to reimburse Webb for
its out-of-pocket expenses, and its legal fees up to a total of $________, and
to indemnify Webb against certain claims or liabilities, including certain
liabilities under the Securities Act, and will contribute to payments Webb may
be required to make in connection with any such claims or liabilities.
Sales of shares of Common Stock will be made primarily by registered
representatives affiliated with Webb or by the broker-dealers managed by Webb.
A Stock Information Center will be established at the main office of the
Association. The Company will rely on Rule 3a4-1 of the Exchange Act and sales
of Common Stock will be conducted within the requirements of such Rule, so as to
permit officers, directors and employees to participate in the sale of the
Common Stock in those states where the law so permits. No officer, director or
employee of the Company or the Association will be compensated directly or
indirectly by the payment of commissions or other remuneration in connection
with his or her participation in the sale of Common Stock.
Procedure for Purchasing Shares in the Subscription and Community Offerings
To ensure that each purchaser receives a prospectus at least 48 hours
before the Subscription Expiration Date (unless extended) in accordance with
Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than
five days prior to such date or hand delivered any later than two days prior to
such date. Execution of the order form will confirm receipt or delivery in
accordance with Rule 15c2-8. Order forms will only be distributed with a
prospectus.
To purchase shares in the Subscription and Community Offerings, an executed
order form with the required payment for each share subscribed for, or with
appropriate authorization for withdrawal from a deposit account at the
Association (which may be given by completing the appropriate blanks in the
order form), must be received by the Association by 12:00 noon, Central Time, on
the Subscription Expiration Date (unless extended). In addition, the Company
and the Association will require a prospective purchaser to execute a
certification in the form required by applicable OTS regulations in connection
with any sale of Common Stock. Order forms which are not received by such time
or are executed defectively or are received without full payment (or appropriate
withdrawal instructions) are not required to be accepted. In addition, the
Association will not accept orders submitted on photocopied or facsimilied order
forms nor order forms unaccompanied by an executed certification form. The
Company and the Association have the right to waive or permit the correction of
incomplete or improperly executed forms, but do not represent that they will do
so. Once received, an executed order form may not be modified, amended or
rescinded without the consent of the Company and the Association, unless the
Conversion has not been completed within 45 days after the end of the
Subscription Offering, unless such period has been extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priority, depositors as of the close of business on the Eligibility
Record Date (September 30, 1995) or the Supplemental Eligibility Record Date
(______ __, 199_) and depositors and borrowers as of the close of business on
the Voting Record Date (______ __, 199_) must list all accounts on the stock
order form giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in person at
the main office of the Association, (ii) by check or money order, or (iii) by
authorization of withdrawal from deposit accounts maintained with the
Association. No wire transfers will be accepted. Interest will be paid on
payments made by cash, check or money order at the Association's passbook rate
of interest from the date payment is received until completion or termination of
the Conversion. If payment is made by authorization of withdrawal from deposit
accounts, the funds authorized to be withdrawn from a deposit account will
continue to accrue interest at the contractual rates until completion or
termination of the Conversion, but a hold will be placed on such funds, thereby
making them unavailable to the depositor until completion or termination of the
Conversion.
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If a subscriber authorizes the Association to withdraw the amount of the
purchase price from his deposit account, the Association will do so as of the
effective date of the Conversion. The Association will waive any applicable
penalties for early withdrawal from certificate accounts. If the remaining
balance in a certificate account is reduced below the applicable minimum balance
requirement at the time that the funds actually are transferred under the
authorization, the certificate will be cancelled at the time of the withdrawal,
without penalty, and the remaining balance will earn interest at the passbook
rate.
If the ESOP subscribes for shares during the Subscription Offering, the
ESOP will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
by it at the Purchase Price upon consummation of the Subscription and Community
Offerings, if all shares are sold, or upon consummation of the Syndicated
Community Offerings if shares remain to be sold in such offering, provided that
there is in force from the time of its subscription until such time, a loan
commitment from an unrelated financial institution or the Company to lend to the
ESOP, at such time, the aggregate Purchase Price of the shares for which it
subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
shares of Common Stock in the Subscription and Community Offerings, provided
that such IRAs are not maintained at the Association. Persons with IRAs
maintained at the Association must have their accounts transferred to an
unaffiliated institution or broker to purchase shares of Common Stock in the
Subscription and Community Offerings. In addition, ERISA provisions and IRS
regulations require that officers, directors and 10% stockholders who use
self-directed IRA funds to purchase shares of Common Stock in the Subscription
and Community Offerings make such purchases for the exclusive benefit of the
IRAs. Any interested parties wishing to use IRA funds for stock purchases are
advised to contact the Stock Sales Center at (504) ___-____ for additional
information.
Certificates representing shares of Common Stock purchased will be mailed
to purchasers at the last address of such persons appearing on the records of
the Association, or to such other address as may be specified in properly
completed order forms, as soon as practicable following consummation of the
Conversion. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Plan or the shares of Common Stock to be issued upon their exercise.
Such rights may be exercised only by the person to whom they are granted and
only for his account. Each person exercising such subscription rights will be
required to certify that he is purchasing shares solely for his own account and
that he has no agreement or understanding regarding the sale or transfer of such
shares. Federal regulations also prohibit any person from offering or making an
announcement of an offer or intent to make an offer to purchase such
subscription rights or shares of Common Stock prior to the completion of the
Conversion.
The Company and the Association will refer to the OTS any situations that
they believe may involve a transfer of subscription rights and will not honor
orders known by them to involve the transfer of such rights.
Liquidation Rights
In the unlikely event of a complete liquidation of the Association in its
present mutual form, each depositor of the Association would receive his pro
rata share of any assets of the Association remaining after payment of claims of
all creditors (including the claims of all depositors to the withdrawal value of
their accounts). Each depositor's pro rata share of such remaining assets would
be in the same proportion as the value of his deposit account was to the total
value of all deposit accounts in the Association at the time of liquidation.
After the Conversion, each depositor, in the event of a complete liquidation of
the Association, would have a claim as a creditor of the same general priority
as the claims of all other general creditors of the Association. However,
except as described below, his claim would be solely in the amount of the
balance in his deposit account plus accrued interest. He would not have an
interest in the value or assets of the Association above that amount.
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The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the Association's net worth as of the date of its latest statement of financial
condition contained in the final prospectus utilized in the Conversion. As of
the date of this Prospectus, the initial balance of the liquidation account
would be $____ million. Each Eligible Account Holder and Supplemental Eligible
Account Holder, if he were to continue to maintain his deposit account at the
Association, would be entitled, upon a complete liquidation of the Association
after the Conversion, to an interest in the liquidation account prior to any
payment to the Company as the sole stockholder of the Association. Each
Eligible Account Holder and Supplemental Eligible Account Holder would have an
initial interest in such liquidation account for each deposit account, including
passbook accounts, NOW accounts, money market deposit accounts, and certificates
of deposit, held in the Association at the close of business on September 30,
1995 or ________ __, 199_, as the case may be. Each Eligible Account Holder and
Supplemental Eligible Account Holder will have a pro rata interest in the total
liquidation account for each of his deposit accounts based on the proportion
that the balance of each such deposit account on the September 30, 1995
eligibility record date (or the ______ __, 199_ supplemental eligibility record
date, as the case may be) bore to the balance of all deposit accounts in the
Association on such dates.
If, however, on any September 30 annual closing date of the Association,
commencing September 30, 1996, the amount in any deposit account is less than
the amount in such deposit account on September 30, 1995 or _____ __, 199_, as
the case may be, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced by the
proportion of any such reduction, and such interest will cease to exist if such
deposit account is closed. In addition, no interest in the liquidation account
would ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the claims of general creditors (including
the claims of all depositors to the withdrawal value of their accounts) and the
above liquidation rights of Eligible Account Holders and Supplemental Eligible
Account Holders are satisfied would be distributed to the Company as the sole
stockholder of the Association.
Tax Aspects
Consummation of the Conversion is expressly conditioned upon prior receipt
of either a ruling or an opinion of counsel with respect to federal tax laws,
and either a ruling or an opinion with respect to Louisiana tax laws, to the
effect that consummation of the transactions contemplated hereby will not result
in a taxable reorganization under the provisions of the applicable codes or
otherwise result in any adverse tax consequences to the Association, the Company
or to account holders receiving subscription rights, except to the extent, if
any, that subscription rights are deemed to have fair market value on the date
such rights are issued.
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., has issued an
opinion to the Company and the Association to the effect that, for federal
income tax purposes: (i) the Association's change in form from mutual to stock
ownership will constitute a reorganization under Section 368(a)(1)(F) of the
Code and neither the Association nor the Company will recognize any gain or loss
as a result of the Conversion; (ii) no gain or loss will be recognized by the
Association or the Company upon the purchase of the Association's capital stock
by the Company; (iii) no gain or loss will be recognized by Eligible Account
Holders and Supplemental Eligible Account Holders upon the issuance to them of
deposit accounts in the Association in its stock form plus their interests in
the liquidation account in exchange for their deposit accounts in the mutual
Association; (iv) assuming the non-transferable subscription rights to purchase
Common Stock have no value, the tax basis of the depositors' deposit accounts in
the Association immediately after the Conversion will be the same as the basis
of their deposit accounts immediately prior to the Conversion; (v) assuming the
non-transferable subscription rights to purchase Common Stock have no value, the
tax basis of each Eligible Account Holder's and Supplemental Eligible Account
Holder's interest in the liquidation account will be zero; and (vi) the tax
basis to the stockholders of the Common Stock of the Company purchased in the
Conversion will be the amount paid therefor, and the holding period for the
shares of Common Stock purchased by such persons will begin on the date of
consummation of the Conversion if purchased through the exercise of subscription
rights and on the day after the date of purchase if purchased in the Community
Offering. LaPorte, Sehrt, Romig & Hand, Metairie, Louisiana, has also rendered
an opinion to the effect that the foregoing tax effects of the Conversion under
Louisiana law are substantially the same as they are under federal law.
In the opinion of RP Financial, the subscription rights do not have any
value, based on the fact that such rights are acquired by the recipients without
cost, are nontransferable and of short duration, and afford the
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recipients the right only to purchase the Common Stock at a price equal to
its estimated fair market value, which will be the same price as the Purchase
Price for the unsubscribed shares of Common Stock. If the subscription
rights granted to eligible subscribers are deemed to have an ascertainable
value, receipt of such rights would be taxable probably only to those
eligible subscribers who exercise the subscription rights (either as a
capital gain or ordinary income) in an amount equal to such value, and the
Company and the Association could recognize gain on such distribution.
Eligible subscribers are encouraged to consult with their own tax advisor as
to the tax consequences in the event that such subscription rights are deemed
to have an ascertainable value.
Unlike private rulings, an opinion is not binding on the IRS, and the IRS
could disagree with conclusions reached therein. In the event of such
disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding.
Delivery of Certificates
Certificates representing Common Stock issued in the Conversion will be
mailed by the Company's transfer agent to the persons entitled thereto at the
addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Conversion. Any certificates returned
as undeliverable will be held by the Company until claimed by persons legally
entitled thereto or otherwise disposed of in accordance with applicable law.
Until certificates for Common Stock are available and delivered to subscribers,
such subscribers may not be able to sell the shares of Common Stock for which
they have subscribed, even though trading of the Common Stock may have
commenced.
Required Approvals
Various approvals of the OTS and OFI are required in order to consummate
the Conversion. The OTS and OFI have approved the Plan of Conversion, subject
to approval by the Association's members and other standard conditions. The
Company's holding company application is currently pending.
The Company is required to make certain filings with state securities
regulatory authorities in connection with the issuance of Common Stock in the
Conversion.
Judicial Review
Any person aggrieved by a final action of the OTS which approves, with or
without conditions, or disapproves a plan of conversion may obtain review of
such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located, or
in the United States Court of Appeals for the District of Columbia, a written
petition praying that the final action of the OTS be modified, terminated or set
aside. Such petition must be filed within 30 days after the publication of
notice of such final action in the Federal Register, or 30 days after the
mailing by the applicant of the notice to members as provided for in 12 C.F.R.
Section 563b.6(c), whichever is later. The further procedure for review is as
follows: A copy of the petition is forthwith transmitted to the OTS by the
clerk of the court and thereupon the OTS files in the court the record in
proceeding, as provided in Section 2112 of Title 28 of the United States Code.
Upon the filing of the petition, the court has jurisdiction, which upon the
filing of the record is exclusive, to affirm, modify, terminate, or set aside in
whole or in part, the final action of the OTS. Review of such proceedings is as
provided in Chapter 7 of Title 5 of the United States Code. The judgment and
decree of the court is final, except that they are subject to review by the
Supreme Court upon certiorari as provided in Section 1254 of Title 28 of the
United States Code.
Certain Restrictions on Purchase or Transfer of Shares After the Conversion
All shares of Common Stock purchased in connection with the Conversion by a
director or an executive officer of the Company and the Association will be
subject to a restriction that the shares not be sold for a period of one year
following the Conversion, except in the event of the death of such director or
executive officer or pursuant to a merger or similar transaction approved by the
OTS. Each certificate for restricted shares will bear a legend giving notice of
this restriction on transfer, and instructions will be issued to the effect that
any transfer within such time period of any certificate or record ownership of
such shares other than as provided above is a violation of the restriction. Any
shares of Common Stock issued at a later date within this one year
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period as a stock dividend, stock split or otherwise with respect to such
restricted stock will be subject to the same restrictions.
Purchases of Common Stock of the Company by directors, executive officers
and their associates during the three-year period following completion of the
Conversion may be made only through a broker or dealer registered with the SEC,
except with the prior written approval of the OTS. This restriction does not
apply, however, to negotiated transactions involving more than 1% of the
Company's outstanding Common Stock or to certain purchases of stock pursuant to
an employee stock benefit plan.
Pursuant to OTS regulations, the Company will generally be prohibited from
repurchasing any shares of the Common Stock within one year following
consummation of the Conversion, although the OTS under its current policies may
approve a request to repurchase shares of Common Stock following the six-month
anniversary of the Conversion. During the second and third years following
consummation of the Conversion, the Company may not repurchase any shares of its
Common Stock other than pursuant to (i) an offer to all stockholders on a pro
rata basis which is approved by the OTS; (ii) the repurchase of qualifying
shares of a director, if any; (iii) purchases in the open market by a
tax-qualified or non-tax-qualified employee stock benefit plan in an amount
reasonable and appropriate to fund the plan; or (iv) purchases that are part of
an open-market stock repurchase program not involving more than 5% of its
outstanding capital stock during a 12-month period, if the repurchases do not
cause the Association to become undercapitalized and the Association provides to
the Regional Director of the OTS no later than 10 days prior to the commencement
of a repurchase program written notice containing a full description of the
program to be undertaken and such program is not disapproved by the Regional
Director. The OTS may permit stock repurchases in excess of such amounts prior
to the third anniversary of the Conversion if exceptional circumstances are
shown to exist.
DIRECTORS OF THE COMPANY AND THE ASSOCIATION
The direction and control of the Association is vested in its Board of
Directors, which currently consists of nine members. The Association's mutual
Articles of Incorporation require the Board of Directors to be elected each
year. Following the Conversion, the Association's stock Articles of
Incorporation will require the Board of Directors to be divided into three
classes as nearly equal in number as possible. The members of each class are
elected for a term of three years or until their successors are elected and
qualified, with one class of directors elected annually. No director is related
to any other director or executive officer by first cousin or closer, except
that Donald C. Scott and Bruce A. Scott are brothers and Bruce A. Scott and
Stephen L. Cory are brothers-in-law. The following table sets forth certain
information regarding the Board of Directors of the Association.
Positions Held
With the Director
Name Age(1) Association Since
Kenneth B. Caldcleugh 47 Director 1996
Stephen L. Cory 46 Director 1995
Bradford A. Glazer 40 Director 1991
J. Scott Key 44 Director 1991
Victor Kirschman 73 Director 1977
Mannie D. Paine, Jr., M.D. 79 Director 1976
Bruce A. Scott 43 Director and Executive Vice
President 1982
Donald C. Scott 45 Chairman, President and
Chief Executive Officer 1982
Albert J. Zahn, Jr. 45 Director 1992
____________________
(1) As of September 30, 1996.
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BENEFITS OF CONVERSION TO DIRECTORS
General. In connection with the Conversion, the Company's directors as a
group (eleven persons) have proposed to purchase 181,000 shares of Common
Stock, or 6.97% of the Common Stock at the minimum and maximum of the Estimated
Valuation Range, respectively.
The following table sets forth, for each of the Company's directors and
executive officers and for all of the directors and executive officers as a
group, the proposed purchases of Common Stock, assuming sufficient shares are
available to satisfy their subscriptions. The amounts include shares that may
be purchased through individual retirement accounts.
Number of
Name Shares Amount Percent (1)
------- ---------- --------- -----------
Kenneth B. Caldcleugh 20,000 $ 200,000 0.77%
Stephen L. Cory 20,000 200,000 0.77
Bradford Glazer 10,000 100,000 0.39
J. Scott Key 25,000 250,000 0.96
Victor Kirschman 25,000 250,000 0.96
Dr. M.D. Paine, Jr. 10,000 100,000 0.39
Bruce A. Scott 25,000 250,000 0.96
Donald C. Scott 25,000 250,000 0.96
Albert J. Zahn, Jr. 20,000 200,000 0.77
Ralph E. Weber 100 1,000 *
Lettie R. Moll 1,000 10,000 *
All directors and executive
officers as a group (11 181,000 $1,811,000 6.97%
persons)
__________________
* Less than 0.01%.
(1) Based upon the midpoint of the Estimated Valuation Range.
In addition, the ESOP currently intends to purchase 8% of the Common Stock
issued in the Conversion for the benefit of officers and employees. Stock
options and stock grants may also be granted in the future to directors,
officers and employees upon the receipt of stockholder approval of the Company's
proposed stock benefit plans. See "Management of the Company - Benefits" for a
description of these plans.
The ESOP. The Company has adopted the ESOP, a tax-qualified benefit plan
for officers and employees of the Company and the Association, which intends to
purchase 8% of the shares of Common Stock offered in the Conversion, or 176,800
shares ($1,768,000) and 239,200 shares ($2,392,000) at the minimum and maximum
of the Estimated Valuation Range, respectively. The Company intends to use a
portion of the net proceeds retained by it to make a loan directly to the ESOP
to enable the ESOP to purchase such shares. See "Management of the Company
- - Benefits - Employee Stock Ownership Plan."
Stock Option Plan. Following consummation of the Conversion, the Company
intends to adopt a stock option plan for the benefit of the directors, officers
and employees of the Company and the Association (the "Stock Option Plan"),
pursuant to which the Company intends to reserve a number of shares of Common
Stock
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equal to an aggregate of 10% of the Common Stock issued in the Conversion
(299,000 shares at the maximum of the Estimated Valuation Range) for issuance
pursuant to stock options and stock appreciation rights. The Stock Option Plan
will not be implemented prior to the receipt of stockholder approval of the
plan. It is currently expected that 30% of the shares available under the Stock
Option Plan will be granted to non-employee directors. With each non-employee
director receiving an option for the same number of shares, in which event
options for a total of approximately 12,814 shares would be granted to each of
the seven non-employee directors if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. In
addition, it is currently expected that stock options will be granted to
Messrs. Donald C. Scott, Bruce A. Scott, Ralph E. Weber and Ms. Lettie Ruffin
Moll, although no determination has been made at this time as to the amount of
such stock options. The Stock Option Plan will provide that no officer would be
able to receive a stock option for more than 25% of the shares available under
the Stock Option Plan, or 74,750 shares if the amount of Common Stock sold in
the Conversion is equal to the maximum of the Estimated Valuation Range. The
Company currently anticipates that it will not implement the Stock Option Plan
prior to the receipt of stockholder approval of the plan. The Company currently
intends to submit the Stock Option Plan to stockholders for approval following
the one-year anniversary of the Conversion. However, the Company reserves the
right to submit such plans to stockholders at a special meeting of stockholders,
provided that such meeting is at least six months following the Conversion. In
such event, the proposed Stock Option Plan would need to be revised to include a
mandatory five-year vesting schedule and a prohibition on accelerated vesting in
the event of retirement or a change in control, which provisions are required by
current OTS regulations for plans implemented within one year following the
Conversion, as well as any other revisions necessary to comply with then
applicable OTS regulations and policies. See "Management of the Company -
Benefits - Stock Option Plan."
Recognition and Retention Plan. Following consummation of the Conversion,
the Company intends to adopt a recognition and retention plan for the benefit of
the directors, officers and employees of the Company and the Association (the
"Recognition Plan" or "RRP"). The Recognition Plan will not be implemented
prior to the receipt of stockholder approval of the plan. It is expected that
the Recognition Plan will be submitted to stockholders for approval at the same
time as the Stock Option Plan. Upon the receipt of such approval, the
Recognition Plan is expected to purchase a number of shares of Common Stock
either from the Company or in the open market equal to an aggregate of 4% of the
Common Stock issued in the Conversion (119,600 shares or $1,196,000 at the
maximum of the Estimated Valuation Range). It is currently expected that 30% of
the shares available under the Recognition Plan will be granted to non-employee
directors with each non-employee director receiving an award for the same number
of shares, in which event awards for a total of approximately 5,125 shares would
be granted to each of the seven non-employee directors if the amount of Common
Stock sold in the Conversion is equal to the maximum of the Estimated Valuation
Range. In addition, it is currently expected that awards will be granted to
Messrs. Donald Scott, Bruce A. Scott, Ralph E. Weber and Ms. Lettie Ruffin Moll,
although no determination has been made at this time as to the amount of such
awards. The Recognition Plan will provide that no officer would be able to
receive an award for more than 25% of the shares available under the Recognition
Plan, or 29,900 shares ($299,000) if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. See
"Management of the Company - Benefits - Recognition Plan."
Employment Agreements. Upon consummation of the Conversion, the Company
and the Association intend to enter into three-year employment agreements with
Messrs. Donald Scott and Bruce Scott. If the employment of such officers is
terminated as a result of a change in control of the Company, Messrs. Donald
Scott and Bruce Scott would each be entitled to a cash severance amount equal to
three times his average annual compensation over his most recent five taxable
years. At least 30 days prior to each annual anniversary date of the employment
agreement, the Boards of Directors of the Company and the Association shall
determine whether or not to extend the term of the agreements for an additional
one year. See "Management of the Association - Employment Agreements."
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USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock will be between $21.4
million and $29.1 million ($33.6 million assuming an increase in the Estimated
Valuation Range by 15%). See "Pro Forma Data" and "The Conversion - Stock
Pricing and Number of Shares to be Issued" as to the assumptions used to arrive
at such amounts.
The Company will purchase all of the capital stock of the Association to be
issued in the Conversion in exchange for 50% of the net Conversion proceeds, and
the Company will retain the remaining 50% of the net proceeds. The Company
intends to use a portion of the net proceeds to make a loan directly to the ESOP
to enable the ESOP to purchase up to 8% of the Common Stock. Based upon the
issuance of 2,210,000 shares or 2,990,000 shares at the minimum and maximum of
the Estimated Valuation Range, respectively, the loan to the ESOP would be $1.8
million and $2.4 million, respectively. The remaining net proceeds retained by
the Company initially may be used to invest in investment securities,
mortgage-backed securities, U.S. Government and federal agency securities of
various maturities, deposits in either the Association or other financial
institutions, or a combination thereof. The portion of the net proceeds
retained by the Company may ultimately be used to support the Association's
lending activities, to support the future expansion of operations through
acquisitions of other financial institutions or diversification into other
banking related businesses (although no such transactions are specifically being
considered at this time), and for other business and investment purposes,
including the payment of regular or special cash dividends, possible repurchases
of the Common Stock or returns of capital. Management of the Company may
consider expanding or diversifying, should such opportunities become available.
Neither the Association nor the Company has any specific plans, arrangements, or
understandings regarding any acquisitions or diversification of activities at
this time, nor have criteria been established to identify potential candidates
for acquisition.
Following the six-month anniversary of the completion of the Conversion (to
the extent permitted by the OTS), and based upon then existing facts and
circumstances, the Company's Board of Directors may determine to repurchase some
shares of Common Stock, subject to any applicable statutory and regulatory
requirements. Such facts and circumstances may include but not be limited to
(i) market and economic factors such as the price at which the stock is trading
in the market, the volume of trading, the attractiveness of other investment
alternatives in terms of the rate of return and risk involved in the investment,
the ability to increase the book value and/or earnings per share of the
remaining outstanding shares, and an improvement in the Company's return on
equity; (ii) the avoidance of dilution to stockholders by not having to issue
additional shares to cover the exercise of stock options or to fund employee
stock benefit plans; and (iii) any other circumstances in which repurchases
would be in the best interests of the Company and its stockholders. Any stock
repurchases will be subject to the determination of the Company's Board of
Directors that the Association will be capitalized in excess of all applicable
regulatory requirements after any such repurchases. The payment of dividends or
repurchase of stock, however, would be prohibited if the Association's net worth
would be reduced below the amount required for the liquidation account to be
established for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders. As of the date of this Prospectus, the initial
balance of the liquidation account would be $___ million. See "Dividend
Policy," "The Conversion - Liquidation Rights" and "The Conversion - Certain
Restrictions on Purchase or Transfer of Shares After the Conversion."
The Company will be a unitary savings and loan holding company which, under
existing laws, would generally not be restricted as to the types of business
activities in which it may engage, provided that the Association continues to be
a qualified thrift lender ("QTL").
The portion of the net proceeds used by the Company to purchase the capital
stock of the Association will be added to the Association's general funds to be
used for general corporate purposes, including increased lending activities and
purchases of investment and mortgage-backed securities. While the amount of net
proceeds received by the Association will further strengthen the Association's
capital position, which already substantially
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<PAGE>
exceeds all regulatory requirements, it should be noted that the Association
is not converting primarily to raise capital. After the Conversion, the
Association's tangible capital ratio will be 34.23% (based upon the midpoint
of the Estimated Valuation Range). As a result, the Association will be a
well-capitalized institution. After the Conversion, the Association intends
to emphasize capital strength and growth in assets and earnings.
The net proceeds may vary because total expenses of the Conversion may be
more or less than those estimated. The net proceeds will also vary if the
number of shares to be issued in the Conversion is adjusted to reflect a change
in the estimated pro forma market value of the Association. Payments for shares
made through withdrawals from existing deposit accounts at the Association will
not result in the receipt of new funds for investment by the Association but
will result in a reduction of the Association's interest expense and liabilities
as funds are transferred from interest-bearing certificates or other deposit
accounts.
MARKET FOR COMMON STOCK
The Company and the Association have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this time.
The Company [has applied] to have its Common Stock quoted on the NASDAQ National
Market under the symbol "____." Making a market involves maintaining bid and
ask quotations and being able, as principal, to effect transactions in
reasonable quantities at these quoted prices, subject to various securities laws
and other regulatory requirements. Additionally, the development of a liquid
public market depends on the existence of willing buyers and sellers, the
presence of which is not within the control of the Company, the Association or
any market maker. Accordingly, the number of active buyers and sellers of the
Common Stock at any particular time may be limited. Under such circumstances,
investors in the Common Stock could have difficulty disposing of their shares
and should not view the Common Stock as a short-term investment. Accordingly,
there can be no assurance that an active and liquid trading market for the
Common Stock will develop or that, if developed, it will continue, nor is there
any assurance that persons purchasing shares of Common Stock will be able to
sell them at or above the Purchase Price. In order to be quoted on the NASDAQ
National Market, there must be at least two market makers for the Common Stock,
the Company must satisfy certain minimum capitalization requirements and there
must be at least 400 shareholders. Keefe, Bruyette has indicated its intention
to act as a market maker in the Common Stock following the consummation of the
Conversion, depending on trading volume and subject to compliance with
applicable laws and regulatory requirements. Furthermore, Webb has agreed to
use its best efforts to assist the Company in obtaining at least one additional
market maker for the Common Stock. There can be no assurance there will be two
or more market makers for the Common Stock. There can be no assurance that
purchasers will be able to sell their shares at or above the Purchase Price.
REGULATORY CAPITAL
At September 30, 1996, the Association exceeded all of the regulatory
capital requirements applicable to it. The table on the following page sets
forth the Association's historical regulatory capital at September 30, 1996 and
the pro forma regulatory capital of the Association after giving effect to the
Conversion, based upon the sale of the number of shares shown in the table. The
pro forma regulatory capital amounts reflect the receipt by the Association of
50% of the net Conversion proceeds, minus the amounts to be loaned to the ESOP
and contributed to the RRP. The pro forma risk-based capital amounts assume the
investment of the net proceeds received by the Association in assets which have
a risk-weight of 50% under applicable regulations, as if such net proceeds had
been received and so applied at September 30, 1996.
26
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
--------------------------------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
Historical at at $10.00 at $10.00 at $10.00 at $10.00
September 30, 1996 Per Share Per Share Per Share Per Share
------------------- ------------------ ------------------ ------------------- -----------------
Percent of Percent of Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1)
------ ---------- ------ ---------- ------ --------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Tangible capital:
Actual $23,822 27.79% $31,856 33.34% $33,311 34.23% $34,772 35.09% $36,476 36.06%
Requirement 1,298 1.50 1,433 1.50 1,460 1.50 1,486 1.50 1,517 1.50
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Excess $22,524 26.29% $30,423 31.84% $31,851 32.73% $33,285 33.59% $34,959 34.56%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Core capital(2):
Actual $23,822 27.79% $31,856 33.34% $33,311 34.23% $34,772 35.09% $36,476 36.06%
Requirement 2,596 3.00 2,866 3.00 2,919 3.00 2,972 3.00 3,034 3.00
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Excess $21,226 24.79% $28,991 30.34% $30,392 31.23% $31,799 32.09% $33,442 33.06%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Risk-based capital(2):
Actual $24,038 80.10% $32,072 91.87% $33,527 93.66% $34,988 95.38% $36,692 97.29%
Requirement 2,408 8.00 2,793 8.00 2,864 8.00 2,935 8.00 3,017 8.00
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Excess $21,630 72.10% $29,279 83.87% $30,664 85.66% $32,053 87.38% $33,675 89.29%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
</TABLE>
- -----------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an institution to
be "adequately capitalized" under applicable laws and regulations. See
"Regulation - The Association - Prompt Corrective Action."
27
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of Guaranty
Savings at September 30, 1996, and the pro forma consolidated capitalization of
the Company after giving effect to the Conversion, based upon the sale of the
number of shares shown below and the other assumptions set forth under "Pro
Forma Data."
<TABLE>
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
--------------------------------------------------------------
Guaranty 2,210,000 2,600,000 2,990,000 3,438,500
Savings- Shares Shares Shares Shares(1) (15%
Historical (Minimum of (Midpoint of (Maximum of above Maximum
Capitalization Range) Range) Range) of Range)
--------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
(In Thousands)
Deposits(2) $60,495 $60,495 $60,495 $60,495 $60,495
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Stockholders' equity:
Preferred Stock, $.01 par
value, 5,000,000 shares
authorized; none to be
issued $ - $ - $ - $ - $ -
Common Stock, $.01
par value, 20,000,000
shares authorized;
shares to be issued as
reflected(3) - 22 26 30 34
Additional paid-in
capital(3) - 21,350 25,192 29,045 33,526
Retained earnings(4) 23,822 23,822 23,822 23,822 23,822
Net unrealized gain on
securities held for sale 678 678 678 678 678
Less:
Common Stock acquired
by the ESOP(5) - (1,768) (2,080) (2,392) (2,751)
Common Stock to be
acquired by the
RRP(6) - (884) (1,040) (1,196) (1,375)
------- ------- ------- ------- -------
Total stockholders' equity
(retained earnings
at September 30, 1996) $24,500 $43,220 $46,598 $49,987 $53,934
------- ------- ------- ------- -------
------- ------- ------- ------- -------
(Footnotes on following page)
</TABLE>
28
<PAGE>
- ---------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% to reflect changes in market and financial conditions prior to the
completion of the Conversion or to fill the order of the ESOP.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) The sum of the par value and additional paid-in capital accounts equals the
net Conversion proceeds. No effect has been given to the issuance of
additional shares of Common Stock pursuant to the Company's proposed Stock
Option Plan. The Company intends to adopt a Stock Option Plan and to
submit such plan to stockholders at a meeting of stockholders to be held
at least six months following completion of the Conversion. If the plan
is approved by stockholders, an amount equal to 10% of the shares of Common
Stock will be reserved for issuance under such plan. See "Pro Forma Data."
(4) The retained earnings of the Association will be substantially restricted
after the Conversion. See "The Conversion - Liquidation Rights."
(5) Assumes that 8% of the Common Stock will be purchased by the ESOP. The
Common Stock acquired by the ESOP is reflected as a reduction of
stockholders' equity. Assumes the funds used to acquire the ESOP shares
will be borrowed from the Company. See Note 1 to the table set forth under
"Pro Forma Data."
(6) Gives effect to the Recognition Plan which is expected to be adopted by the
Company following the Conversion and presented to stockholders for approval
at a meeting of stockholders to be held at least six months following
completion of the Conversion. No shares will be purchased by the
Recognition Plan in the Conversion, and such plan cannot purchase any
shares until stockholder approval has been obtained. If the Recognition
Plan is approved by stockholders, the plan intends to acquire an amount
of Common Stock equal to 4% of the shares of Common Stock issued in the
Conversion, or 88,400, 104,000, 119,600 and 137,540 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, respectively. The table assumes that stockholder approval has been
obtained and that such shares are purchased in the open market at the
Purchase Price. The Common Stock so acquired by the Recognition Plan is
reflected as a reduction in stockholders' equity. If the shares are
purchased at prices higher or lower than the Purchase Price, such purchases
would have a greater or lesser impact, respectively, on stockholders'
equity. If the Recognition Plan purchases authorized but unissued shares
from the Company, such issuance would dilute the voting interests of
existing stockholders by approximately 3.8%. See "Pro Forma Data."
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $21.4 million and $29.1 million (or $33.6
million in the event the Estimated Valuation Range is increased by 15%) based
upon the following assumptions: (i) 100% of the shares of Common Stock will
be sold in the Subscription and Community Offerings; and (ii) Conversion
expenses, including the marketing fees paid to Charles Webb, will be between
$728,000 and $825,000. Actual Conversion expenses may vary from those
estimated.
Pro forma net income and stockholders' equity have been calculated for
the year ended December 31, 1995 and the nine months ended September 30, 1996
as if the Common Stock to be issued in the Offerings had been sold at the
beginning of the period and the net proceeds had been invested at 5.69% and
5.14%, respectively, which represents the yield on one-year U.S. Government
securities at September 30, 1996 and December 31, 1995. The effect of
withdrawals from deposit accounts for the purchase of Common Stock has not
been reflected. A combined effective federal and state income tax rate of
34% has been assumed, resulting in an after-tax yield of 3.76% and 3.39%,
respectively, for the periods ending September 30, 1996 and December 31,
1995. Historical and pro forma per share amounts have been calculated by
dividing historical and pro forma amounts by the indicated number of shares
of Common Stock, as adjusted to give effect to the shares purchased
29
<PAGE>
by the ESOP with respect to the net income per share calculations. See Notes
2 and 4 to the Pro Forma Data table. No effect has been given in the pro
forma stockholders' equity calculations for the assumed earnings on the net
proceeds. As discussed under "Use of Proceeds," the Company intends to
retain 50% of the net Conversion proceeds.
The following pro forma information may not be representative of the
financial effects of the Conversion at the date on which the Conversion
actually occurs and should not be taken as indicative of future results of
operations. Pro forma stockholders' equity represents the difference between
the stated amount of assets and liabilities of the Company computed in
accordance with generally accepted accounting principles ("GAAP"). The pro
forma stockholders' equity is not intended to represent the fair market value
of the Common Stock and may be different than amounts that would be available
for distribution to stockholders in the event of liquidation. No effect has
been given in the table to the possible issuance of additional shares equal
to 10% of the Common Stock to be reserved for future issuance pursuant to the
Stock Option Plan to be adopted by the Board of Directors of the Company, nor
does book value give any effect to the liquidation account to be established
for the benefit of Eligible Account Holders and Supplemental Eligible Account
Holders or to the bad debt reserve. The table below gives effect to the
Recognition Plan, which is expected to be adopted by the Company following
the Conversion and presented (together with the Stock Option Plan) to
stockholders for approval no earlier than six months subsequent to
consummation of the Conversion. If the Recognition Plan is approved by
stockholders, the Recognition Plan intends to acquire an amount of Common
Stock equal to 4% of the shares of Common Stock issued in the Conversion,
either through open market purchases, if permissible, or from authorized but
unissued shares of Common Stock. The table below assumes that stockholder
approval has been obtained and that the shares acquired by the Recognition
Plan are purchased in the open market at $10.00 per share. There can be no
assurance that stockholder approval of the Recognition Plan will be obtained,
that the shares will be purchased in the open market or that the purchase
price will be $10.00 per share.
The table on the following page summarizes historical consolidated data
of the Association and pro forma data of the Company at or for the date and
period indicated based on the assumptions set forth above and in the table
and should not be used as a basis for projections of the market value of the
Common Stock following the Conversion.
30
<PAGE>
<TABLE>
<CAPTION>
At or For the Nine Months Ended September 30, 1996
--------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%)
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(9)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(Dollars in Thousands, Except Per Share Amounts)
Gross proceeds $ 22,100 $ 26,000 $ 29,900 $ 34,385
Less offering expenses 728 782 825 825
----------- ----------- ----------- -----------
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired by
the ESOP 1,768 2,080 2,392 2,751
Common Stock to be acquired
by the RRP 884 1,040 1,196 1,375
----------- ----------- ----------- -----------
Estimated adjusted net proceeds(1) $ 18,720 $ 22,098 $ 25,487 $ 29,434
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income:
Historical $ 365 $ 365 $ 365 $ 365
Pro forma adjustments:
Income on adjusted net proceeds(1) 527 622 718 829
State shares tax/franchise tax (183) (190) (197) (205)
ESOP(2) (88) (103) (118) (136)
RRP(3) (88) (103) (118) (136)
----------- ----------- ----------- -----------
Pro forma $ 533 $ 591 $ 650 $ 717
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share(4):
Historical $ 0.18 $ 0.15 $ 0.13 $ 0.11
Pro forma adjustments:
Income on adjusted net proceeds(1) 0.25 0.26 0.25 0.26
State share tax/franchise tax (0.09) (0.08) (0.07) (0.06)
ESOP(2) (0.04) (0.04) (0.04) (0.04)
RRP(3) (0.04) (0.04) (0.04) (0.04)
----------- ----------- ----------- -----------
Pro forma $ 0.26 $ 0.25 $ 0.23 $ 0.23
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Pro forma price to earnings
(P/E ratio)(4)(5) 28.85x 30.00x 32.61x 32.61x
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Number of shares used in net income
per share calculations(4) 2,046,460 2,407,600 2,768,740 3,184,051
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Stockholders' equity:
Historical $ 24,500 $ 24,500 $ 24,500 $ 24,500
Estimated net Conversion proceeds 21,372 25,218 29,075 33,560
Less: Common Stock acquired
by the ESOP(2) (1,768) (2,080) (2,392) (2,751)
Common Stock to be acquired
by the RRP(3) (884) (1,040) (1,196) (1,375)
----------- ----------- ----------- -----------
Pro forma stockholders' equity(6)(7) $ 43,220 $ 46,598 $ 49,987 $ 53,934
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Stockholders' equity per share(8):
Historical $ 11.09 $ 9.42 $ 8.19 $ 7.13
Estimated net Conversion proceeds 9.67 9.70 9.72 9.76
Less: Common Stock acquired
by the ESOP(2) (0.80) (0.80) (0.80) (0.80)
Common Stock to be acquired
by the RRP(3) (0.40) (0.40) (0.40) (0.40)
----------- ----------- ----------- -----------
Pro forma stockholders' equity
per share(3)(6)(7) $ 19.56 $ 17.92 $ 16.71 $ 15.69
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Pro forma price to book ratio(5)(8) 51.12% 55.80% 59.81% 63.73%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Number of shares used in book value
per share calculations(8) 2,210,000 2,600,000 2,990,000 3,438,500
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(Footnotes on following page)
</TABLE>
31
<PAGE>
____________________
(1) Estimated adjusted net proceeds consist of the estimated net Conversion
proceeds, minus (i) the proceeds attributable to the purchase by the ESOP
and (ii) the value of the shares to be purchased by the Recognition Plan
after the Conversion, subject to stockholder approval, at an assumed
purchase price of $10.00 per share.
(2) It is assumed that 8% of the shares of Common Stock issued in the
Conversion will be purchased by the ESOP. For purposes of this table,
the funds used to acquire such shares are assumed to have been borrowed
by the ESOP from the Company. The Association intends to make quarterly
contributions to the ESOP over a ten-year period in an amount at least
equal to the principal and interest requirement of the debt. The pro
forma net income assumes (i) that the ESOP expense for the period is
equivalent to the principal payment for the period and was made at the
end of the period; (ii) that 13,260, 15,600, 17,940 and 20,631 shares
were committed to be released with respect to the nine months ended
September 30, 1996 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively; (iii) in
accordance with SOP 93-6 entitled "Employers' Accounting for Employee
Stock Ownership Plans," only the ESOP shares committed to be released
during the period were considered outstanding for purposes of the net
income per share calculations; and (iv) the effective tax rate was 34%
for the period. See "Risk Factors - Potential Increased Compensation
Expense Relating to the ESOP," "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Recent Accounting
Pronouncements" and "Management of the Company - Benefits - Employee
Stock Ownership Plan."
(3) The adjustment is based upon the assumed purchases by the Recognition
Plan of 88,400, 104,000, 119,600 and 137,540 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, assuming that: (i) stockholder approval of the Recognition Plan
has been received; (ii) the shares were acquired by the Recognition Plan
at the beginning of the period presented in open market purchases at the
Purchase Price; (iii) the amortized expense for the year ended December
31, 1995 was 20% of the amount contributed; and (iv) the effective tax
rate applicable to such employee compensation expense was 34%. If the
Recognition Plan purchases authorized but unissued shares instead of
making open market purchases, then (i) the voting interests of existing
stockholders would be diluted by approximately 3.8%, and (ii) the pro
forma net income per share for the nine months ended September 30, 1996
would be $0.25, $0.24, $0.23 and $0.22, and pro forma stockholders'
equity per share at September 30, 1996 would be $18.80, $17.23, $15.48
and $15.08, in each case at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Valuation Range, respectively. See
"Management of the Company - Benefits - Recognition Plan."
(4) Net income per share computations are determined by taking the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, subtracting the ESOP shares which have not been committed for
release during the respective period. See Note 2 above. If SOP 93-6 was
not required to be implemented with respect to the nine months ended
September 30, 1996, the pro forma P/E ratio would be 31.09x, 32.99x,
34.49x and 35.97x at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range, respectively.
(5) Annualized.
(6) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan, which is expected to be adopted
by the Company following the Conversion and presented to stockholders for
approval at a meeting of stockholders to be held at least six months
following completion of the Conversion. If the Stock Option Plan is
approved by stockholders, an amount equal to 10% of the Common Stock
issued in the Conversion, or 221,000, 260,000, 299,000 and 343,850 shares
32
<PAGE>
at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Valuation Range, respectively, will be reserved for future
issuance upon the exercise of options to be granted under the Stock
Option Plan. The issuance of authorized but previously unissued shares
of Common Stock pursuant to the exercise of options under such plan would
dilute existing stockholders' interests. Assuming stockholder approval
of the plan, that all the options were exercised at the end of the period
at an exercise price of $10.00 per share, and that the Recognition Plan
purchases shares in the open market at the Purchase Price, pro forma net
income per share for the nine months ended September 30, 1996 would be
$0.24, $0.22, $0.21 and $0.20, and pro forma stockholders' equity per
share at September 30, 1996 would be $18.69, $17.20, $16.11, and $15.17,
in each case at the minimum, midpoint, maximum and 15% above the maximum
of the Estimated Valuation Range, respectively.
(7) The retained earnings of Guaranty Savings will be substantially
restricted after the Conversion. See "Dividend Policy" and "The
Conversion - Liquidation Rights."
(8) Based on the number of shares sold in the Conversion.
(9) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% to reflect changes in market and financial conditions prior to
completion of the Conversion or to fill the order of the ESOP.
33
<PAGE>
RESTRICTIONS ON ACQUISITION OF THE COMPANY
AND THE ASSOCIATION
General
As described below, certain provisions in the Company's Articles of
Incorporation and Bylaws and in the Company's and the Association's proposed
benefit plans, together with provisions of Louisiana corporate law and OTS
regulations, may have anti-takeover effects. In addition, regulatory
restrictions may make it difficult for persons or companies to acquire
control of either the Company or the Association.
Restrictions in the Company's Articles of Incorporation and Bylaws
General. A number of provisions of the Company's Articles of
Incorporation and Bylaws deal with matters of corporate governance and
certain rights of stockholders. The following discussion is a general
summary of certain provisions of the Company's Articles of Incorporation and
Bylaws which might be deemed to have a potential "anti-takeover" effect.
These provisions may have the effect of discouraging a future takeover
attempt which is not approved by the Board of Directors but which individual
Company stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares over then
current market prices. As a result, stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. Such
provisions will also render the removal of the current Board of Directors or
management of the Company more difficult. The following description of
certain of the provisions of the Articles of Incorporation and Bylaws of the
Company is necessarily general and reference should be made in each case to
such Articles of Incorporation and Bylaws, which are incorporated herein by
reference. See "Additional Information" as to how to obtain a copy of these
documents.
Limitation on Voting Rights. Article 10.A of the Company's Articles of
Incorporation provides that for a period of five years from the date of the
Conversion, no person shall directly or indirectly offer to acquire or
acquire the beneficial ownership of (i) more than 10% of the issued and
outstanding shares of any class of an equity security of the Company, or (ii)
any securities convertible into, or exercisable for, any equity securities of
the Company if, assuming conversion or exercise by such person of all
securities of which such person is the beneficial owner which are convertible
into, or exercisable for, such equity securities (but of no securities
convertible into, or exercisable for, such equity securities of which such
person is not the beneficial owner), such person would be the beneficial
owner of more than 10% of any class of an equity security of the Company.
The term "person" is broadly defined to prevent circumvention of this
restriction.
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Company by underwriters or a
selling group acting on its behalf, (ii) any tax-qualified employee benefit
plan or arrangement established by the Company or the Association and any
trustee of such a plan or arrangement, and (iii) any other offer or
acquisition approved in advance by the affirmative vote of two-thirds of the
Company's entire Board of Directors. In the event that shares are acquired
in violation of Article 10.A, all shares beneficially owned by any person in
excess of 10% shall be considered "Excess Shares" and shall not be counted as
shares entitled to vote and shall not be voted by any person or counted as
voting shares in connection with any matters submitted to stockholders for a
vote, and the Board of Directors may cause such Excess Shares to be
transferred to an independent trustee for sale on the open market or
otherwise, with the expenses of such trustee to be paid out of the proceeds
of sale.
Board of Directors. Article 6.B of the Articles of Incorporation of the
Company contains provisions relating to the Board of Directors and provides,
among other things, that the Board of Directors shall be divided into three
classes as nearly equal in number as possible, with the term of office of one
class expiring each year. See "Management of the Company." The classified
Board is intended to provide for continuity of the Board of Directors and to
make it more difficult and time consuming for a stockholder group to fully
use its voting power
34
<PAGE>
to gain control of the Board of Directors without the consent of the
incumbent Board of Directors of the Company. Cumulative voting in the
election of directors is not permitted.
Directors may be removed without cause at a duly constituted meeting of
stockholders called expressly for that purpose upon the vote of the holders
of at least 75% of the total votes eligible to be cast by stockholders, and
with cause by the affirmative vote of a majority of the total votes eligible
to be cast by stockholders. Cause for removal shall exist only if the
director whose removal is proposed has been either declared of unsound mind
by an order of a court of competent jurisdiction, convicted of a felony or of
an offense punishable by imprisonment for a term of more than one year by a
court of competent jurisdiction, or deemed liable by a court of competent
jurisdiction for gross negligence or misconduct in the performance of such
director's duties to the Company. Any vacancy occurring in the Board of
Directors for any reason (including an increase in the number of authorized
directors) may be filled by the affirmative vote of a majority of the
remaining directors, whether or not a quorum of the Board of Directors is
present, and a director appointed to fill a vacancy shall serve until the
expiration of the term to which he was appointed.
Article 6.F of the Articles of Incorporation governs nominations for
election to the Board, and requires all nominations for election to the Board
of Directors other than those made by the Board to be made by a stockholder
eligible to vote at an annual meeting of stockholders who has complied with
the notice provisions in that section. Written notice of a stockholder
nomination must be delivered to, or mailed to and received at, the principal
executive offices of the Company not later than 60 days prior to the
anniversary date of the immediately preceding annual meeting, provided that,
with respect to the first scheduled annual meeting following completion of
the Conversion, notice must be received no later than the close of business
on the 10th day following the date on which notice of such meeting is mailed
to stockholders, and provided further that the notice by the stockholder must
be delivered or received no later than the close of business on the fifth day
preceding the date of the meeting. Each such notice shall set forth (a) as
to each person whom the stockholder proposes to nominate as a director, (i)
the name, age, business address and residence address of such person; (ii)
the principal occupation or employment of such person; (iii) the class and
number of shares of the Company's stock beneficially owned by such person on
the date of the stockholder notice; and (iv) such other information regarding
such person as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC; and (b) as to the stockholder giving
the notice, (i) such stockholder's name and address, as they appear on the
Company's books, and, to the extent known by the stockholder giving the
notice, (ii) the name and address of any other stockholders supporting such
nominees; and (iii) the class and number of shares of the Company's stock
beneficially owned by any other stockholders supporting such nominees, on the
date of such stockholder notice.
Article 8.A of the Articles of Incorporation provides that a director or
officer of the Company will not be personally liable for monetary damages for
any action taken, or any failure to take any action, as a director or officer
except to the extent that by law a director's or officer's liability for
monetary damages may not be limited. This provision does not eliminate or
limit the liability of the Company's directors and officers for (a) any
breach of the director's or officer's duty of loyalty to the Company or its
stockholders, (b) any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) any unlawful
dividend, stock repurchase or other distribution, payment or return of assets
to stockholders, or (d) any transaction from which the director or officer
derived an improper personal benefit. This provision may preclude
stockholder derivative actions and may be construed to preclude other
third-party claims against the directors and officers.
The Company's Articles of Incorporation also provide that the Company
shall indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
including actions by or in the right of the Company, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. Such indemnification is furnished to the full
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extent provided by law against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding. The
indemnification provisions also permit the Company to pay reasonable expenses
in advance of the final disposition of any action, suit or proceeding as
authorized by the Company's Board of Directors, provided that the indemnified
person undertakes to repay the Company if it is ultimately determined that
such person was not entitled to indemnification.
The rights of indemnification provided in the Company's Articles of
Incorporation are not exclusive of any other rights which may be available
under the Company's Bylaws, any insurance or other agreement, by vote of
stockholders or directors (regardless of whether directors authorizing such
indemnification are beneficiaries thereof) or otherwise. In addition, the
Articles of Incorporation authorize the Company to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company, whether or not the Company would have the power to provide
indemnification to such person. By action of the Board of Directors, the
Company may create and fund a trust fund or other fund or form of
self-insurance arrangement of any nature, and may enter into agreements with
its officers, directors, employees and agents for the purpose of securing or
insuring in any manner its obligation to indemnify or advance expenses
provided for in the provisions in the Articles of Incorporation and Bylaws
regarding indemnification. These provisions are designed to reduce, in
appropriate cases, the risks incident to serving as a director, officer,
employee or agent and to enable the Company to attract and retain the best
personnel available.
The provisions regarding director elections and other provisions in the
Articles of Incorporation and Bylaws are generally designed to protect the
ability of the Board of Directors to negotiate with the proponent of an
unfriendly or unsolicited proposal to take over or restructure the Company by
making it more difficult and time-consuming to change majority control of the
Board, whether by proxy contest or otherwise. The effect of these provisions
will be to generally require at least two (and possibly three) annual
stockholders' meetings, instead of one, to effect a change in control of the
Board of Directors of the Company even if holders of a majority of the
Company's capital stock believed that a change in the composition of the
Board of Directors was desirable. Because a majority of the directors at any
given time will have prior experience as directors, these requirements will
help to ensure continuity and stability of the Company's management and
policies and facilitate long-range planning for the Company's business. The
provisions relating to removal of directors and filling of vacancies are
consistent with and supportive of a classified board of directors.
The procedures regarding stockholder nominations will provide the Board
of Directors with sufficient time and information to evaluate a stockholder
nominee to the Board and other relevant information, such as existing
stockholder support for the nominee. The proposed procedures, however, will
provide incumbent directors advance notice of a dissident slate of nominees
for directors, and will make it easier for the Board to solicit proxies
resisting such nominees. This may make it easier for the incumbent directors
to retain their status as directors, even when certain stockholders view the
stockholder nominations as in the best interests of the Company or its
stockholders.
Authorized Shares. Article 4 of the Articles of Incorporation authorizes
the issuance of 25,000,000 shares of stock, of which 5,000,000 shares shall
be shares of serial Preferred Stock, and 20,000,000 shall be Common Stock.
The shares of Common Stock and Preferred Stock were authorized in an amount
greater than that to be issued in the Conversion to provide the Company's
Board of Directors with as much flexibility as possible to effect, among
other transactions, financings, acquisitions, stock dividends, stock splits
and employee stock options. However, these additional authorized shares may
also be used by the Board of Directors consistent with its fiduciary duty to
deter future attempts to gain control of the Company. The Board of Directors
also has sole authority to determine the terms of any one or more series of
Preferred Stock, including voting rights, conversion rates, and liquidation
preferences. As a result of the ability to fix voting rights for a series of
Preferred Stock, the Board has the power, to the extent consistent with its
fiduciary duty, to issue a series of Preferred Stock to persons friendly to
management in order to attempt to block a post-tender offer merger or other
transaction by which a third party seeks control, and thereby assist
management to retain its
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position. The Company's Board currently has no plans for the issuance of
additional shares, other than the issuance of additional shares pursuant to
stock benefit plans.
Special Meetings of Stockholders and Stockholder Proposals. Article 9.B
of the Articles of Incorporation provides that special meetings of the
Company's stockholders may only be called by (i) the President, (ii) a
majority of the Board of Directors, and (iii) by persons who beneficially own
an aggregate of at least 50% of the outstanding voting shares, except as may
otherwise be provided by law. The Articles of Incorporation also provide
that any action permitted to be taken at a meeting of stockholders may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is given by the holders of all outstanding shares entitled to vote and
filed with the Secretary of the Company.
Article 9.D of the Company's Articles of Incorporation provides that only
such business as shall have been properly brought before an annual meeting of
stockholders shall be conducted at the annual meeting. In order to be
properly brought before an annual meeting following completion of the
Conversion, business must be (a) brought before the meeting by or at the
direction of the Board of Directors or (b) otherwise properly brought before
the meeting by a stockholder who has given timely and complete notice thereof
in writing to the Company. For stockholder proposals to be included in the
Company's proxy materials, the stockholder must comply with all the timing
and informational requirements of Rule 14a-8 of the Exchange Act. With
respect to stockholder proposals to be considered at the annual meeting of
stockholders but not included in the Company's proxy materials, the
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting; provided,
however, that with respect to the first scheduled annual meeting following
completion of the Conversion, such written notice must be received by the
Company not later than the close of business on the 10th day following the
day on which notice of the meeting was first mailed to stockholders; and
provided further, that the written notice must be received by the Company not
later than the close of business on the fifth day preceding the date of the
meeting. A stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the proposal desired to be brought before the annual meeting,
(b) the name and address, as they appear on the Company's books, of the
stockholder proposing such business, and, to the extent known, any other
stockholders known by such stockholder to be supporting such proposal, (c)
the class and number of shares of the Company which are beneficially owned by
the stockholder and, to the extent known, by any other stockholders known by
such stockholder to be supporting such proposal on the date of such
stockholder notice, and (d) any financial interest of the stockholder in such
proposal (other than interests which all stockholders would have). Any
stockholder proposal which is not made in accordance with the provisions of
Article 9.D shall not be acted upon at the annual meeting.
The procedures regarding stockholder proposals are designed to provide
the Board with sufficient time and information to evaluate a stockholder
proposal and other relevant information, such as existing stockholder support
for the proposal. The proposed procedures, however, will give incumbent
directors advance notice of a stockholder proposal. This may make it easier
for the incumbent directors to defeat a stockholder proposal, even when
certain stockholders view such proposal as in the best interests of the
Company or its stockholders.
Amendment of Articles of Incorporation and Bylaws. Article 11 of the
Company's Articles of Incorporation generally provides that any amendment of
the Articles of Incorporation must be first approved by a majority of the
Board of Directors and then by the holders of a majority of the shares of the
Company entitled to vote in an election of directors, except that the
approval of 75% of the shares of the Company entitled to vote in an election
of directors is required for any amendment to Articles 6 (directors), 7
(preemptive rights), 8 (indemnification), 9 (meetings of stockholders and
stockholder proposals), 10 (restrictions on acquisitions) and 11 (amendments).
The Bylaws of the Company may be amended by a majority of the Board of
Directors or by the affirmative vote of a majority of the total shares
entitled to vote in an election of directors, except that the
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affirmative vote of at least 75% of the total shares entitled to vote in an
election of directors shall be required to amend, adopt, alter, change or
repeal any provision inconsistent with certain specified provisions of the
Bylaws.
Louisiana Corporate Law
In addition to the provisions contained in the Company's Articles of
Incorporation, the Louisiana Business Corporation Law ("BCL") includes
certain provisions applicable to Louisiana corporations, such as the Company,
which may be deemed to have an anti-takeover effect. Such provisions include
(i) rights of stockholders to receive the fair value of their shares of stock
following a control transaction from a controlling person or group and (ii)
requirements relating to certain business combinations.
The BCL provides that any person who acquires "control shares" will be
able to vote such shares only if the right to vote is approved by the
affirmative vote of at least a majority of both (1) all the votes entitled to
be cast by stockholders and (2) all the votes entitled to be cast by
stockholders excluding "interested shares". "Control shares" is defined to
include shares that would entitle the holder thereof, assuming the shares had
full voting rights, to exercise voting power within any of the following
ranges: (a) 20% or more but less than one-third of all voting power; (b)
one-third or more but less than a majority of all voting power; or (c) a
majority or more of all voting power. Any acquisition that would result in
the ownership of control shares in a higher range would require an additional
vote of stockholders. "Interested shares" includes control shares and any
shares held by an officer or employee director of the corporation. If the
control shares are provided full voting rights, all stockholders have
dissenters' rights entitling them to receive the "fair cash value" of their
shares, which shall not be less than the highest price paid per share to
acquire the control shares.
The BCL defines a "Business Combination" generally to include (a) any
merger, consolidation or share exchange of the corporation with an
"Interested Shareholder" or affiliate thereof, (b) any sale, lease, transfer
or other disposition, other than in the ordinary course of business, of
assets equal to 10% or more of the market value of the corporation's
outstanding stock or of the corporation's net worth to any Interested
Shareholder or affiliate thereof in any 12-month period, (c) the issuance or
transfer by the corporation of equity securities of the corporation with an
aggregate market value of 5% or more of the total market value of the
corporation's outstanding stock to any Interested Shareholder or affiliate
thereof, except in certain circumstances, (d) the adoption of any plan or
proposal for the liquidation or dissolution of the corporation in which
anything other than cash will be received by an Interested Shareholder or
affiliate thereof, or (e) any reclassification of the corporation's stock or
merger which increases by 5% or more the ownership interest of the Interested
Shareholder or any affiliate thereof. "Interested Shareholder" includes any
person who beneficially owns, directly or indirectly, 10% or more of the
corporation's outstanding voting stock, or any affiliate thereof who had such
beneficial ownership during the preceding two years, excluding in each case
the corporation, its subsidiaries and their benefit plans.
Under the BCL, a Business Combination must be approved by any vote
otherwise required by law or the articles of incorporation, and by the
affirmative vote of at least each of the following: (1) 80% of the total
outstanding voting stock of the corporation; and (2) two-thirds of the
outstanding voting stock held by persons other than the Interested
Shareholder. However, the supermajority vote requirement shall not be
applicable if the Business Combination meets certain minimum price
requirements and other procedural safeguards, or if the transaction is
approved by the Board of Directors prior to the time that the Interested
Shareholder first became an Interested Shareholder.
The BCL authorizes the board of directors of Louisiana business
corporations to create and issue (whether or not in connection with the
issuance of any of its shares or other securities) rights and options
granting to the holders thereof (1) the right to convert shares or
obligations into shares of any class, or (2) the right or option to purchase
shares of any class, in each case upon such terms and conditions as the
Company may deem expedient.
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Anti-Takeover Effects of the Articles of Incorporation and Bylaws and
Management Remuneration Adopted in the Conversion
The foregoing provisions of the Articles of Incorporation and Bylaws of
the Company and Louisiana law could have the effect of discouraging an
acquisition of the Company or stock purchases in furtherance of an
acquisition, and could accordingly, under certain circumstances, discourage
transactions which might otherwise have a favorable effect on the price of
the Company's Common Stock.
The Board of Directors believes that the provisions described above are
prudent and will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by the Board of
Directors of the Company. The Board of Directors believes that these
provisions are in the best interests of the Company and its future
stockholders. In the Board of Directors' judgment, the Board of Directors is
in the best position to determine the true value of the Company and to
negotiate more effectively for what may be in the best interests of its
stockholders. Accordingly, the Board of Directors believes that it is in the
best interests of the Company and its future stockholders to encourage
potential acquirors to negotiate directly with the Board of Directors and
that these provisions will encourage such negotiations and discourage hostile
takeover attempts. It is also the Board of Directors' view that these
provisions should not discourage persons from proposing a merger or other
transaction at prices reflective of the true value of the Company and where
the transaction is in the best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to the
Company's stockholders of the foregoing provisions, these provisions also may
have the effect of discouraging a future takeover attempt in which
stockholders might receive a substantial premium for their shares over then
current market prices and may tend to perpetuate existing management. As a
result, stockholders who might desire to participate in such a transaction
may not have an opportunity to do so. The Board of Directors, however, has
concluded that the potential benefits of these provisions outweigh their
possible disadvantages.
The Board of Directors of the Company and the Association are not aware
of any effort that might be made to acquire control of the Company or the
Association.
Regulatory Restrictions
The Change in Bank Control Act provides that no person, acting directly
or indirectly or through or in concert with one or more other persons, may
acquire control of a savings institution unless the OTS has been given 60
days' prior written notice. The HOLA provides that no company may acquire
"control" of a savings institution without the prior approval of the OTS.
Any company that acquires such control becomes a savings and loan holding
company subject to registration, examination and regulation by the OTS.
Pursuant to federal regulations, control of a savings institution is
conclusively deemed to have been acquired by, among other things, the
acquisition of more than 25% of any class of voting stock of the institution
or the ability to control the election of a majority of the directors of an
institution. Moreover, control is presumed to have been acquired, subject to
rebuttal, upon the acquisition of more than 10% of any class of voting stock,
or of more than 25% of any class of stock, of a savings institution where
certain enumerated "control factors" are also present in the acquisition.
The OTS may prohibit an acquisition if (i) it would result in a monopoly or
substantially lessen competition, (ii) the financial condition of the
acquiring person might jeopardize the financial stability of the institution,
or (iii) the competence, experience or integrity of the acquiring person
indicates that it would not be in the interest of the depositors or of the
public to permit the acquisition of control by such person. The foregoing
restrictions do not apply to the acquisition of a savings institution's
capital stock by one or more tax-qualified employee stock benefit plans,
provided that the plan or plans do not have beneficial ownership in the
aggregate of more than 25% of any class of equity security of the savings
institution.
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DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
The Company is authorized to issue 25,000,000 shares of capital stock,
of which 20,000,000 are shares of common stock, par value $.01 per share
(the "Common Stock") and 5,000,000 are shares of preferred stock, par value
$.01 per share (the "Preferred Stock"). The Company currently expects to
issue up to a maximum of 2,990,000 shares of Common Stock and no shares of
Preferred Stock in the Conversion. Each share of the Company's Common Stock
issued in the Conversion will have the same relative rights as, and will be
identical in all respects with, each other share of Common Stock issued in
the Conversion. Upon payment of the Purchase Price for the Common Stock in
accordance with the Plan of Conversion, all such stock will be duly
authorized, fully paid and nonassessable based on the laws and regulations in
effect as of the date of consummation of the Conversion.
The Common Stock of the Company will represent nonwithdrawable capital,
will not be an account of an insurable type, and will not be insured by the
FDIC.
Common Stock
Dividends. The Company can pay dividends if, as and when declared by its
Board of Directors, subject to compliance with limitations which are imposed
by law. See "Dividend Policy." The holders of Common Stock of the Company
will be entitled to receive and share equally in such dividends as may be
declared by the Board of Directors of the Company out of funds legally
available therefor. If the Company issues Preferred Stock, the holders
thereof may have a priority over the holders of the Common Stock with respect
to dividends.
Voting Rights. Upon completion of the Conversion, the holders of Common
Stock of the Company will possess exclusive voting rights in the Company.
They will elect the Company's Board of Directors and act on such other
matters as are required to be presented to them under Louisiana law or the
Company's Articles of Incorporation or as are otherwise presented to them by
the Board of Directors. Except as discussed in "Restrictions on Acquisition
of the Company and the Association," each holder of Common Stock will be
entitled to one vote per share and will not have any right to cumulate votes
in the election of directors. If the Company issues Preferred Stock, holders
of the Preferred Stock may also possess voting rights.
Liquidation. In the event of any liquidation, dissolution or winding up
of the Association, the Company, as the sole holder of the Association's
capital stock, would be entitled to receive, after payment or provision for
payment of all debts and liabilities of the Association (including all
deposit accounts and accrued interest thereon) and after distribution of the
balance in the special liquidation account to Eligible Account Holders and
Supplemental Eligible Account Holders (see "The Conversion - Liquidation
Rights"), all assets of the Association available for distribution. In the
event of any liquidation, dissolution or winding up of the Company, the
holders of its Common Stock would be entitled to receive, after payment or
provision for payment of all its debts and liabilities, all of the assets of
the Company available for distribution. If Preferred Stock is issued, the
holders thereof may have a priority over the holders of the Common Stock in
the event of liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock of the Company will not
be entitled to preemptive rights with respect to any shares which may be
issued in the future. The Common Stock is not subject to any required
redemption.
Preferred Stock
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock
with voting,
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dividend, liquidation and conversion rights which could dilute the voting
strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control.
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the federal income tax consequences
of the Conversion will be passed upon for the Association and the Company by
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to
the Association and the Company. The Louisiana income tax consequences of
the Conversion will be passed upon for the Association and the Company by
LaPorte, Sehrt, Romig & Hand, Metairie, Louisiana. Certain legal matters
will be passed upon for Webb by Silver, Freedman & Taff, L.L.P., Washington,
D.C.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted
by the rules and regulations of the SEC, this Prospectus does not contain all
the information set forth in the Registration Statement. Such information,
including the appraisal report which is an exhibit to the Registration
Statement, can be examined without charge at the public reference facilities
of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material can be obtained from the SEC at prescribed rates.
The statements contained in this Prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement
are, of necessity, brief descriptions thereof and are not necessarily
complete; each such statement is qualified by reference to such contract or
document. This Prospectus contains a description of the material provisions
of such contracts or documents.
The Association has filed an Application for Conversion with the OTS and
OFI with respect to the Conversion. This Prospectus omits certain
information contained in that application. The application may be examined
at the principal office of the OTS, 1700 G Street, N.W., Washington, D.C.
20552 and at the Midwest Regional Office of the OTS located at 122 W. John
Carpenter Freeway, Suite 600, Irving, Texas 75039.
If the Company has more than 500 stockholders upon completion of the
Conversion, the Company will register its Common Stock with the SEC under
Section 12(g) of the Exchange Act, and, upon such registration, the Company
and the holders of its stock will become subject to the proxy and tender
offer rules, insider trading reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
and certain other requirements of the Exchange Act. If the Company has less
than 500 stockholders, it will be subject to certain annual and periodic
reporting requirements under Section 15(d) of the Exchange Act for so long as
it has 300 or more stockholders. Under the Plan, the Company has undertaken
that it will not terminate such registration for a period of at least three
years following the Conversion.
A copy of the Articles of Incorporation and the Bylaws of the Company are
available without charge from the Company.
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CONVERSION APPRAISAL REPORT
GS FINANCIAL CORP.
PROPOSED HOLDING COMPANY FOR
GUARANTY SAVINGS AND HOMESTEAD
ASSOCIATION
Metairie, Louisiana
Dated As Of:
December 13, 1996
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
December 13, 1996
Board of Directors
Guaranty Savings and Homestead Association
3798 Veterans Memorial Boulevard
Metairie, Louisiana 70002
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the
common stock which is to be issued in connection with the
mutual-to-stock conversion of Guaranty Savings and Homestead Association,
Metairie, Louisiana ("Guaranty Savings" or the "Association"). The common
stock issued in connection with the Association's conversion will
simultaneously be acquired by a holding company, GS Financial Corp.
("GS Financial" or the "Holding Company"). The conversion involves the
issuance of shares of common stock to depositors and borrowers, the
Holding Company's employee stock ownership plan ("ESOP"), Guaranty
Savings' employees, officers and directors, members of the local community
and the public at large.
This Appraisal is furnished pursuant to the conversion regulations
promulgated by the Office of Thrift Supervision ("OTS"). This
Appraisal has been prepared in accordance with the written valuation
guidelines promulgated by the OTS, most recently updated as of October
21, 1994. Specifically, this Appraisal has been prepared in accordance
with the "Guidelines for Appraisal Reports for the Valuation of Savings
and Loan Associations Converting from Mutual to Stock Form of
Organization" of the OTS, as successor to the Federal Home Loan Bank Board
("FHLBB"), dated as of October 21, 1994; and applicable regulatory
interpretations thereof.
Description of Reorganization
- -----------------------------
The Board of Directors of the Association has adopted a Plan of
Conversion pursuant to which the Association will convert from a Louisiana
chartered mutual savings and loan association to a Louisiana chartered
stock savings and loan association and issue all of its outstanding shares
to the Holding Company. The Holding Company will sell in Subscription
and Community Offerings Holding Company stock in the amount equal to the
appraised value of the Association. Immediately following the conversion,
the only significant assets of the Holding Company will be the capital
stock of the Association and the net conversion proceeds remaining after
purchase of the Association's common stock by the Holding Company. The
Holding Company will use 50 percent of the net conversion proceeds to
purchase the Association's common stock. A portion of the remaining
50 percent of the net conversion proceeds will be used to fund a loan to
the ESOP with the remainder to be used as general working capital.
RP Financial, LC.
- -----------------
RP Financial, LC. ("RP Financial") is a financial consulting firm
serving the financial services industry nationwide that, among other
things, specializes in financial valuations and analyses of business
enterprises and securities, including the pro forma valuation for savings
institutions converting from mutual-to-stock form. The background and
experience of RP Financial is detailed in Exhibit V-1. We believe
that, except for the fee we will receive for our appraisal, we are
independent of the Association and the other parties engaged by the
Association to assist in the stock conversion process.
<PAGE>
RP Financial, L.C.
Board of Directors
December 13, 1996
Page 2
Valuation Methodology
- ---------------------
In preparing our appraisal, we have reviewed Guaranty Savings'
application for Approval of Conversion, including the Proxy Statement, as
filed with the OTS, and the Holding Company's Form S-1 registration
statement as filed with the Securities Exchange Commission. We have
conducted a financial analysis of the Association that has included
due diligence related discussions with the Association's management;
LaPort, Sehrt, Romig & Hand, the Association's independent auditor; Elias,
Matz, Tiernan & Herrick L.L.P., the Association's conversion counsel; and
Charles Webb & Company, a division of Keefe, Bruyette & Woods, Inc.,
which has been retained by the Association as a financial and marketing
advisor in connection with the Holding Company's stock offering. All
conclusions set forth in the appraisal were reached independently from
such discussions. In addition, where appropriate, we have considered
information based on other available published sources that we
believe are reliable. While we believe the information and data
gathered from all these sources are reliable, we cannot guarantee the
accuracy and completeness of such information.
We have investigated the competitive environment within which the
Association operates and have assessed the Association's relative
strengths and weaknesses. We have kept abreast of the changing
regulatory and legislative environment and analyzed the potential impact
on the Association and the industry as a whole. We have analyzed the
potential effects of conversion on the Association's operating
characteristics and financial performance as they relate to the pro
forma market value of Guaranty Savings. We have reviewed the economy in
the Association's primary market area and have compared the
Association's financial performance and condition with selected
publicly-traded thrift institutions with similar characteristics as the
Association's, as well as all publicly-traded thrifts. We have reviewed
conditions in the securities markets in general and in the market for
thrift stocks in particular, including the market for existing thrift
issues and the market for initial public offerings by thrifts.
Our appraisal is based on the Association's representation that the
information contained in the regulatory applications and additional
information furnished to us by the Association and its independent auditors
are truthful, accurate and complete. We did not independently verify the
financial statements and other information provided by the Association
and its independent auditors, nor did we independently value the
assets or liabilities of the Association. The valuation considers the
Association only as a going concern and should not be considered as an
indication of the liquidation value of Guaranty Savings.
Our appraised value is predicated on a continuation of the current
operating environment for the Association and for all thrifts. Changes
in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external
forces (such as natural disasters or significant world events) may
occur from time to time, often with great unpredictability and may
materially impact the value of thrift stocks as a whole or the Association's
value alone. It is our understanding Guaranty Savings intends to
remain an independent institution and there are no current plans for
selling control of the Association as a converted institution.
To the extent that such factors can be foreseen, they have been factored
into our analysis.
Pro forma market value is defined as the price at which Guaranty
Savings' stock, immediately upon completion of the conversion offering,
would change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or sell and both having reasonable
knowledge of relevant facts.
<PAGE>
RP Financial, L.C.
Board of Directors
December 13, 1996
Page 3
Valuation Conclusion
- --------------------
It is our opinion that, as of December 13, 1996, the aggregate
pro forma market value of the shares to be issued was $26,000,000 at the
midpoint, equal to 2,600,000 shares offered at a per share value of
$10.00. Pursuant to OTS conversion guidelines, the 15 percent
offering range indicates a minimum value of $22,100,000 and a maximum
value of $29,900,000. Based on the $10.00 per share offering price, this
valuation range equates to an offering of 2,210,000 shares at the
minimum to 2,990,000 shares at the maximum. In the event that the
Association's appraised value is subject to an increase, up to 3,438,500
shares may be sold at an issue price of $10.00 per share, for an
aggregate market value of $34,385,000, without a resolicitation.
Limiting Factors and Considerations
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of
the common stock. Moreover, because such valuation is necessarily based
upon estimates and projections of a number of matters, all of which are
subject to change from time to time, no assurance can be given that persons
who purchase shares of common stock in the conversion will thereafter be
able to buy or sell such shares at prices related to the foregoing
valuation of the pro forma market value thereof.
RP Financial's valuation was determined based on the financial
condition and operations of the Association as of September 30, 1996,
the date of the financial data included in the Holding Company's prospectus.
RP Financial is not a seller of securities within the meaning of
any federal and state securities laws and any report prepared by RP
Financial shall not be used as an offer or solicitation with respect
to the purchase or sale of any securities. RP Financial maintains a
policy which prohibits the company, its principals or employees from
purchasing stock of its client institutions.
The valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other
things, any developments or changes in the Association's financial
performance and condition, management policies, and current conditions in
the equity markets for thrift shares. These updates may also consider
changes in other external factors which impact value including, but not
limited to: various changes in the legislative and regulatory
environment, the stock market and the market for thrift stocks, and
interest rates. Should any such new developments or changes be material,
in our opinion, to the valuation of the shares, appropriate adjustments
to the estimated pro forma market value will be made. The reasons for
any such adjustments will be explained in the update at the date of the
release of the update.
Respectfully submitted,
RP FINANCIAL, LC.
William E. Pommerening
Chief Executive Officer
Gregory E. Dunn
Senior Vice President
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
Metairie, Louisiana
PAGE
DESCRIPTION NUMBER
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction 1.1
Strategic Overview 1.1
Balance Sheet Trends 1.4
Income and Expense Trends 1.7
Interest Rate Risk Management 1.11
Lending Activities and Strategy 1.12
Asset Quality 1.14
Funding Composition and Strategy 1.15
Legal Proceedings 1.16
CHAPTER TWO MARKET AREA
Introduction 2.1
Market Area Demographics 2.2
National Economic Factors 2.4
Local Economy 2.6
Competition 2.7
CHAPTER THREE PEER GROUP ANALYSIS
Selection of Peer Group 3.1
Financial Condition 3.5
Income and Expense Components 3.8
Loan Composition 3.11
Interest Rate Risk 3.13
Credit Risk 3.15
Summary 3.15
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
Metairie, Louisiana
(continued)
PAGE
DESCRIPTION NUMBER
CHAPTER FOUR VALUATION ANALYSIS
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.6
4. Primary Market Area 4.6
5. Dividends 4.7
6. Liquidity of the Shares 4.9
7. Marketing of the Issue 4.9
A. The Public Market 4.9
B. The New Issue Market 4.13
C. The Acquisition Market 4.14
8. Management 4.17
9. Effect of Government Regulation and Regulatory Reform 4.17
Summary of Adjustments 4.18
Valuation Approaches 4.18
1. Price-to-Earnings ("P/E") 4.19
2. Price-to-Book ("P/B") 4.20
3. Price-to-Assets ("P/A") 4.21
Valuation Conclusion 4.21
<PAGE>
RP Financial, LC.
LIST OF TABLES
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
Metairie, Louisiana
TABLE
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
1.1 Summary Balance Sheet Data 1.5
1.2 Historical Income Statements 1.8
2.1 Summary Demographic Data 2.3
2.2 Major Employers 2.6
2.3 Unemployment Rates 2.7
2.4 Deposit Summary 2.8
3.1 Peer Group of Publicly-Traded Thrifts 3.3
3.2 Balance Sheet Composition and Growth Rates 3.6
3.3 Income as a Percent of Average Assets and Yields,
Costs, Spreads 3.9
3.4 Loan Portfolio Composition Comparative Analysis 3.12
3.5 Interest Rate Risk Comparative Analysis 3.14
3.6 Peer Group Credit Risk Comparative Analysis 3.16
4.1 Market Area Unemployment Rates 4.7
4.2 Conversion Pricing Characteristics 4.15
4.3 Market Pricing Comparatives 4.16
4.4 Public Market Pricing 4.22
<PAGE>
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
Guaranty Savings and Homestead Association ("Guaranty Savings" or the
"Association"), organized in 1937, is a Louisiana chartered mutual savings and
loan association headquartered in Metairie, Louisiana. In addition to its main
office facility, which includes a full service branch, the Association maintains
two other full service branches based in the Louisiana cities of New Orleans and
Mandeville. In general, the Association's maintains operations in the New
Orleans metropolitan area, while the substantial portion of the Association's
depositors reside in close proximity to one of its three branches. Guaranty
Savings' deposits are insured up to the maximum allowable amount by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC"). At September 30, 1996, Guaranty Savings had $86.5 million in assets,
$60.5 million in deposits and equity of $24.5 million or 28.3 percent of total
assets. A summary of Guaranty Savings' key operating ratios for the past three
and three-quarter fiscal years are presented in Exhibit I-3.
GS Financial Corp. ("GS Financial" or the "Holding Company"), a Louisiana
corporation, was recently organized to facilitate the conversion of Guaranty
Savings. In the course of the conversion, the Holding Company will acquire all
of the capital stock that the Association will issue upon its conversion from
the mutual to stock form of ownership. Going forward, GS Financial will own
100 percent of the Association's stock, and the Association will be GS
Financial's sole subsidiary. Approximately 50 percent of the net proceeds
received from the sale of common stock will be used to purchase all of the then
to be issued and outstanding capital stock of the Association, with the balance
of the proceeds being retained by the Holding Company. At this time, no other
activities are contemplated for GS Financial other than the ownership of the
Association, a loan to the newly-formed employee stock ownership plan ("ESOP")
and investment of the cash retained at the holding company in investment
securities. In the future GS Financial may acquire or organize other operating
subsidiaries.
Strategic Overview
Guaranty Savings is a community-oriented thrift, with a primary strategic
objective of meeting the borrowing and savings needs of its local customer base.
Prior to 1994, the Association maintained its headquarters and largest presence
in New Orleans. The relocation of the main office to Metairie was prompted by
the changing demographic characteristics of the New Orleans metropolitan area,
and, in particular, the migration of New Orleans residents to more suburban
markets such as Metairie. Following the relocation of the main office to
Metairie, the other Metairie branch maintained by Guaranty Savings was closed
<PAGE>
RP Financial, LC.
Page 1.2
and a new branch was recently opened in Mandeville (May 1996), an outlying and
relatively fast growing suburb of New Orleans.
Throughout its history, Guaranty Savings has pursued a traditional thrift
operating strategy and, thus, 1-4 family permanent mortgage loans and retail
deposits have consistently been the principal components of the Association's
assets and liabilities, respectively. While the Association's lending
activities include diversification into other types of lending, such lending has
typically been limited and, thus, higher risk types of loans constitute a very
minor portion of the Association's loan portfolio. Guaranty Savings' risk
averse strategy effectively served to abrogate the significant loan losses
experienced by many of its local thrift competitors, following the severe
downturn experienced in the oil and gas industries that caused the commercial
real estate markets in New Orleans and Louisiana in general to collapse during
the late-1980s. While the local market area economy has recovered somewhat from
the economic downturn of the late-1980s, the Association has maintained its
conservative operating posture of controlling asset growth, building capital and
emphasizing the origination of 1-4 family permanent mortgage loans in local and
familiar markets. Guaranty Savings' operating strategy has been effective in
limiting the Association's credit risk exposure, while, comparatively, the
Association maintains a greater degree of interest rate risk exposure. Guaranty
Savings' operating strategy of offering only fixed rate 1-4 family permanent
mortgage loans, which are all retained for portfolio, funded primarily by
short-term deposits has resulted in a balance sheet that is liability sensitive.
As a traditional thrift, Guaranty Savings' earnings base is largely
dependent upon net interest income and operating expense levels. Maintenance of
a liability sensitive balance sheet reflects the Association's philosophy that
earnings can be more fully maximized by incurring some interest rate risk, while
Guaranty Savings' strong capital position and resultant favorable
interest-earning assets to interest-bearing liabilities ("IEA/IBL") ratio will
sustain earnings at lower but profitable levels during periods of rising and
higher interest rates. Guaranty Savings' ability to take on a certain degree of
interest rate risk in the net margin is further enhanced by the limited risk
that earnings will be negatively impacted to any significant extent by credit
quality related losses. Interest rate risk associated with the net interest
margin is also somewhat negated by Guaranty Savings' relatively high
concentration of lower costing savings accounts, which tend to be less interest
sensitive than CDs. However, the Association recently increased the rate paid
on savings accounts to an above market rate (4.0 percent), in an effort to stem
the outflow of regular savings deposits. Overall, Guaranty Savings' operating
strategy has provided for a relatively strong net interest margin during the
past five and three-quarter fiscal years.
The other major component of Guaranty Savings' earnings, operating
expenses, has trended higher in recent years and are currently maintained at a
relatively high level for an institution which maintains a traditional thrift
operating strategy. Higher operating expenses combined with asset shrinkage
have resulted in
<PAGE>
RP Financial, LC.
Page 1.3
the Association's operating expense ratio trending higher, with
the increase in operating expenses being largely attributable to normal
compensation increases and higher expenses associated with depreciating a new
main office building which was built in 1994.
Retail deposits have consistently served as the sole interest-bearing
funding source for the Association. After experiencing strong deposit growth
during fiscal 1991, which was supported by disintermediation occurring at the
local thrifts that were failing due to asset quality problems, Guaranty Savings'
deposit balance has steadily declined in recent years. The decline in deposits
reflects the Association's general strategy of not paying above market rates for
CDs, during a period when deposit growth has been limited among all financial
institutions by the relatively low market rates being offered on CDs and the
more attractive returns that have been provided by other investment alternatives
such as stock mutual funds. The Association may also be at a competitive
disadvantage in terms of competing for deposits, as the result of offering only
a limited number of deposit products. Most notably, the Association's deposit
products do not include checking or money market deposit accounts.
Over the past five and three-quarter fiscal years, Guaranty Savings'
operating strategy has resulted in asset shrinkage, an increasing capital
position and healthy core earnings. An emphasis on originating 1-4 family fixed
rate loans for portfolio has served to limit the Association's credit risk
exposure, while the Association's interest rate exposure is more notable as
indicated by its negative short-term gap position. Earnings have been supported
by a generally favorable interest rate environment, in which the Association's
maintenance of a negative short-term gap position has been beneficial to the net
interest margin. Notwithstanding the favorable interest rate environment, the
Association in general has maintained a strong net interest margin as the result
of its high IEA/IBL ratio. Earnings were depressed for the most recent twelve
month period, primarily as the result of non-recurring items associated with
losses recorded on the sale of investments and the one time special assessment
to recapitalize the SAIF. However, the Association's core earnings have come
under pressure as well, due to a decline in the net interest margin and an
increase in the operating expense ratio. The Association's Board of Directors
has elected to convert to the stock form of ownership to improve the competitive
position of Guaranty Savings. The additional capital realized from conversion
proceeds will increase liquidity to support funding of future loan growth and
other interest-earning assets, and reduce interest rate risk by enhancing the
Association's IEA/IBL ratio, which, will in turn reduce the repricing mismatch
between the Association's interest-sensitive assets and interest-sensitive
liabilities. The additional funds realized from the stock offering will also
serve as an alternative funding source to deposits in meeting the Association's
future funding needs, which will allow for competitive pricing in the
Association's deposit rates. Additionally, Guaranty Savings' significant
equity-to-assets ratio will also better position the Association to take
advantage of expansion opportunities as they arise. Such expansion would most
likely occur through acquiring
<PAGE>
RP Financial, LC.
Page 1.4
branches or other financial institutions in areas that would provide for further
penetration in the markets currently served by the Association or nearby
surrounding markets. Expansion may also be pursued through acquiring financial
services that are not currently offered by the Association. At this time, the
Association has no specific plans for expansion other than internal growth. The
Association's projected internal use of proceeds are highlighted below.
o Holding Company. Approximately 50 percent of the net conversion
proceeds will be retained by GS Financial. Such funds will initially
be used to provide a loan to the Association's ESOP trust, and the
balance will be invested into short- and intermediate-term
investments. Over time, the Holding Company funds may be utilized for
various corporate purposes, including payment of dividends and
possible repurchase of common stock consistent with OTS limitations.
o Guaranty Savings. Approximately 50 percent of the net proceeds of the
conversion will be infused into the Association in exchange for all of
the Association's newly issued stock. Proceeds infused into the
Association will initially be invested into short- and
intermediate-term investments. Over time, the proceeds are expected
to be redeployed into the Association's loan growth and normal
investment activities.
Overall, it is the Association's objective to pursue growth that will serve
to increase returns, while, at the same time, growth will not be pursued that
compromises the credit quality or increases the overall risk associated with
Guaranty Savings' operations. The Association has acknowledged that it intends
to operate with excess capital in the near term, operating with a below market
return on equity, until such time as the new capital can be leveraged in a safe
and sound manner over an extended period of time.
Balance Sheet Trends
From December 31, 1991 through September 30, 1996, Guaranty Savings
exhibited annual asset growth of negative 1.5 percent (see Table 1.1). During
this period, the Association's interest-earning asset composition exhibited a
shift towards cash and investments, as the loans receivable balance declined
from 53.9 percent of assets at fiscal year end 1991 to 49.8 percent of assets at
September 30, 1996. Assets have been funded primarily with retail deposits and
retained earnings.
Guaranty Savings' loan portfolio declined at a 3.2 percent annual rate from
fiscal year end 1991 through September 30, 1996. Most of the decline in the
loan balance occurred during fiscal 1993, as net loans receivable declined from
$47.2 million at fiscal year end 1992 to $40.7 million at fiscal year end 1993.
The decline in the loan balance during fiscal 1993 was largely attributable to
the high volume of 1-4 family loans being refinanced during that period, which
resulted in the Association incurring significant repayments on 1-4 family
permanent mortgage loans. At the same time, the Association elected not to
actively pursue 1-4 family
<PAGE>
RP Financial, LC
Page 1.5
Table 1.1
Guaranty Savings and Homestead Association
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
Annual
For the Fiscal Year Ended December 31, Growth
--------------------------------------------------------------------------------
1991 1992 1993 1994 1995 Sept. 30, 1996 Rate
------------- ------------- ------------- ------------- ------------- ------------- -----
Amount Pct Amount Pct Amount Pct Amount Pct Amount Pct Amount Pct Pct
------- --- ------ --- ------ --- ------ --- ------ --- ------ --- ---
($000) (%) ($000) (%) ($000) (%) ($000) (%) ($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $93,076 100.0% $90,499 100.0% $90,100 100.0% $88,250 100.0% $86,040 100.0% $86,521 100.0% -1.53%
Cash and cash
equivalents $2,762 3.0% 2,294 2.5% 2,883 3.2% 2,620 3.0% 2,355 2.7% $8,698 10.1% 27.32%
Investment securities $34,915 37.5% 34,697 38.3% 37,798 42.0% 35,496 40.2% 33,360 38.8% $23,068 26.7% -8.36%
Mortgage-backed
securities $3,894 4.2% 3,444 3.8% 6,112 6.8% 6,063 6.9% 6,367 7.4% $7,299 8.4% 14.14%
Loans receivable, net $50,192 53.9% 47,128 52.1% 40,679 45.1% 40,042 45.4% 39,888 46.4% $43,058 49.8% -3.18%
Deposits $73,267 78.7% 69,482 76.8% 67,432 74.8% 64,642 73.2% 60,945 70.8% $60,495 69.9% -3.95%
Total equity $19,134 20.6% 20,315 22.4% 21,901 24.3% 22,839 25.9% 23,946 27.8% $24,500 28.3% 5.34%
</TABLE>
____________________________
(1) Ratios are as a percent of ending assets.
Sources: Guaranty Savings' prospectus and audited financial statements.
<PAGE>
RP Financial, LC.
Page 1.6
originations during the period of high refinancing activity, based on
management's belief that there was a high degree of interest rate risk
associated with retaining 1-4 family fixed rate loans at the market interest
rates that were prevailing for 1-4 family loans during that period.
Accordingly, most of the decline in the loan portfolio has consisted of 1-4
family permanent mortgage loans, as Guaranty Savings' diversification into other
types of lending has consistently been very limited in recent years. Subsequent
to fiscal 1993, the Association's loan portfolio declined slightly during fiscal
years 1994 and 1995, while the trend of loan shrinkage was reversed during the
first nine months of fiscal 1996. Consistent with the Association's traditional
emphasis on originating and retaining 1-4 family permanent mortgage loans, the
recent growth realized in the loan portfolio has been supported by growth in 1-4
family permanent mortgage loans. As of September 30, 1996, 1-4 family permanent
mortgage loans comprised 96.6 percent of the Association's loan portfolio. The
balance of the loan portfolio consists of minor balances of construction, land,
multi-family, commercial real estate and consumer loans.
Over the past five and three-quarter fiscal years, the Association has
maintained a relatively high level of cash and investments, ranging from a high
of 45.2 percent of assets at fiscal year end 1993 to a low of 36.8 percent of
assets at September 30, 1996. The peak balance of cash and investments
maintained at fiscal year end 1993 reflects the redeployment of cash flow
generated by accelerated loan repayments into the cash and investments
portfolio. Comparatively, the lower ratio of cash and investments maintained at
September 30, 1996 resulted from a portion of those funds being redeployed into
loans and mortgage-backed securities. The investment portfolio is substantially
comprised of U.S. Government and federal agency securities ($21.2 million), with
the balance of the portfolio consisting of an adjustable rate mortgage mutual
fund ($1.0 million) and FHLMC common stock ($879,000). Exhibit I-4 provides
historical detail of the Association's investment portfolio. The investment
portfolio consists primarily of securities with maturities of less than five
years, and to a much lesser extent securities with maturities ranging between
five and ten years. As of September 30, 1996, the entire investment portfolio
was classified as available for sale. Guaranty Savings maintained an unrealized
gain of $1.0 million on the available for sale portfolio at September 30, 1996.
In addition to investment securities, the Association held cash and cash
equivalents of $8.7 million at September 30, 1996, which was higher than the
level of liquidity that typically has been maintained by Guaranty Savings.
During fiscal years 1991 through 1995, Guaranty Savings' cash and cash
equivalents balance was maintained between 2.5 percent and 3.2 percent of
assets, well below the 10.1 percent ratio maintained at September 30, 1996. Not
reflected in Table 1.1 was the Association's investment in FHLB stock, which
amount to $718,000 at September 30, 1996.
Mortgage-backed securities comprise the balance of the Association's
interest-earning assets composition, serving as an investment alternative to 1-4
family permanent mortgage loans. Over the past five and three-quarter fiscal
years, the Association's mortgage-backed securities balance has generally
trended
<PAGE>
RP Financial, LC.
Page 1.7
higher increasing from $3.9 million, or 4.2 percent of assets, at fiscal
year end 1991 to $7.3 million, or 8.4 percent of assets, at September 30, 1996.
Mortgage-backed securities held by the Association consists of participation
certificates, which have been issued by FHLMC and FNMA. The mortgage-backed
securities portfolio is classified as held to maturity and consists entirely of
fixed rate securities. Most of the mortgage-backed securities portfolio has
scheduled maturities ranging between 1 and 10 years, with approximately
one-third of the portfolio having stated maturities of more than 10 years.
Over the past five and three-quarter fiscal years, Guaranty Savings'
funding needs have been substantially met through retail deposits, internal cash
flows and retained earnings. From fiscal year end 1991 through September 30,
1996, the Association's deposits declined at an annual rate of 4.0 percent. The
deposit run-off exhibited by the Association was somewhat overstated by the
influx of deposits received by the Association during fiscal 1991, reflecting
the impact of new deposit customers that were generated by the failure of other
Louisiana thrifts. After showing a fairly steady decline during fiscal years
1991 through 1995, the Association's deposit run-off slowed considerably during
the first nine months of fiscal 1996. Most of the decline in deposits has
consisted of CDs, resulting in the savings account balance increasing as a
percent of total deposits. As of September 30, 1996, CDs and savings accounts
comprised 60.3 percent and 39.7 percent of the Association's total deposits,
respectively, versus comparative ratios of 66.6 percent and 33.4 percent at
December 31, 1991. As noted previously, deposit products offered by the
Association are limited to CDs and regular savings accounts. Guaranty Savings
did not utilize borrowings during the past five and three-quarter fiscal years,
with the decline in deposits being funded by asset shrinkage and the retention
of earnings.
Positive earnings during the past five and three-quarter fiscal years
translated into an annual capital growth rate of 5.3 percent for the
Association. Capital growth combined with a decline in assets served to
increase Guaranty Savings' equity-to-assets ratio from 20.6 percent at the end
of fiscal 1991 to 28.3 percent at September 30, 1996. All of the Association's
capital is tangible capital, and the Association maintained significant capital
surpluses relative to all of its regulatory capital requirements at September
30, 1996. The addition of conversion proceeds will serve to further increase
Guaranty Savings' capital position to a level that is relatively unique within
the thrift industry and, as a result, the Association's return on equity ("ROE")
can be expected to be well below industry averages following its conversion.
Income and Expense Trends
The Association has reported positive earnings over the last five and
three-quarter fiscal years (see Table 1.2), ranging from a low of 0.44 percent
of average assets for the twelve months ended September 30, 1996 to a high of
1.41 percent of average assets in fiscal 1993. Earnings during the most recent
twelve month
<PAGE>
RP Financial, LC
Page 1.8
<TABLE>
<CAPTION>
Table 1.2
Guaranty Savings and Homestead Association
Historical Income Statements
(Amount and Percent of Avg. Assets)(1)
For the Fiscal Year Ended December 31,
-------------------------------------------------------------------------------------------
1991 1992 1993 1994
-------------------------------------------------------------------------------------------
Amount Pct Amount Pct Amount Pct Amount Pct
--------- ------- ---------- -------- ----------- ------- --------- -------
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $7,166 8.12% $7,198 7.84% $6,327 7.01% $6,035 6.77%
Interest Expense (3,296) -3.73% (3,296) -3.59% (2,385) -2.64% (2,408) -2.70%
--------- ------- -------- -------- -------- -------- -------- -------
Net Interest Income $3,870 4.38% $3,902 4.25% $3,942 4.37% $3,627 4.07%
Provision for Loan Losses (124) -0.14% (119) -0.13% (98) -0.11% (21) -0.02%
-------- ------- -------- -------- ------- -------- -------- -------
Net Interest Income
after Provisions $3,746 4.24% $3,783 4.12% $3,844 4.26% $3,606 4.04%
Other Income 137 0.16% 107 0.12% 134 0.15% 109 0.12%
Operating Expense (1,926) -2.18% (1,928) -2.10% (1,955) -2.17% (2,186) -2.45
------- ------ ------ ------ ------- ------ ------- ------
Net Operating Income $1,957 2.22% $1,962 2.14% $2,023 2.24% $1,529 1.71%
Non-Operating Income
Net gain(loss) on sale of
IEA $2 0.00% ($4) -0.00% $5 0.01% ($10) -0.01
Net gain(loss) on REO (72) -0.08% (72) -0.08% (30) -0.03% 5 0.01%
Other Non-Op.
Income/(Expense) 0 0.00% 0 0.00% 0 0.00% 0 0.00%
----- ------- ----- ------- ----- -------- ----- -------
Net Non-Operating Income (70) (76) -0.08% (25) -0.03% (5) -0.01%
Net Income Before Tax $1,887 2.14% $1,886 2.06% $1,998 2.21% $1,524 1.71%
Income Taxes (705) -0.80% (704) -0.77% (722) -0.80% (529) -0.59%
Change in Acctg.
Principle -- --- -- --- -- --- 0 0.00%
------- ------- -------- ------- ------- --------- --------- --------
Net Income (Loss) $1,182 1.34% $1,182 1.29% $1,276 1.41% $995 1.12%
Core Earnings
Net Income Before Ext.
Items $1,182 1.34% $1,182 1.29% $1,276 1.41% $995 1.12%
Addback:
Non-Operating Losses 72 0.08% 76 0.08% 30 0.03% 10 0.01%
Deduct:
Non-Operating Gains (2) -0.00% 0 0.00% (5) -0.01% (5) -0.01%
Tax Effect Non-Op. Items(2) (24) -0.03% (26) -0.03% (9) -0.01% (2) -0.00%
--------- ------- ------- ------- -------- -------- ------- --------
Core Net Income $1,228 1.39% $1,232 1.34% $1,293 1.43% $998 1.12%
For the 12 Months
-------------------------
1995 Ended 9/30/96
------------------------- -----------------------
Amount Pct Amount Pct
--------- -------- --------- --------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $6,260 7.18% $6,096 7.04%
Interest Expense (2,664) -3.06% (2,620) -3.03%
--------- ------- -------- ------
Net Interest Income $3,596 4.13% $3,476 4.02%
Provision for Loan Losses (12) -0.01% (26) -0.03%
-------- ------- -------- --------
Net Interest Income
after Provisions $3,584 4.11% $3,450 3.99%
Other Income 58 0.07% 75 0.09%
Operating Expense (2,295) -2.63% (2,351) -2.72%
-------- ------ ------- ------
Net Operating Income $1,347 1.55% $1,174 1.36%
Non-Operating Income
Net gain(loss) on sale of
IEA $0 0.00% ($100) -0.12%
Net gain(loss) on REO 11 0.01% 3 0.00%
Other Non-Op.
Income/(Expense) (6) -0.01% (413) -0.48%
------- -------- -------- -------
Net Non-Operating Income 5 0.01% (510) -0.59%
Net Income Before Tax $1,352 1.55% $664 0.77%
Income Taxes (480) -0.55% (285) -0.33%
Change in Acctg.
Principle -- --- -- ---
-------- --------- -------- ------
Net Income (Loss) $872 1.00% $379 0.44%
Core Earnings
Net Income Before Ext.
Items $872 1.00% $379 0.44%
Addback:
Non-Operating Losses 6 0.01% 513 0.59%
Deduct:
Non-Operating Gains (11) -0.01% (3) -0.00%
Tax Effect Non-Op. Items(2) 2 0.00% (173) -0.20%
------- -------- ------ -------
Core Net Income $869 1.00% $717 -0.83%
</TABLE>
____________________________
(1) Ratios are as a percent of average assets.
(2) Assumes tax rate of 34.0 percent.
Sources: Guaranty Savings' prospectus and audited financial statements.
<PAGE>
RP Financial, LC.
Page 1.9
period were depressed by non-recurring items, consisting of the one special
assessment to recapitalize the SAIF and a higher than normal loss recorded on
the sale of investment securities. Consistent with the Association's
traditional thrift operating mode, net interest income and operating expenses
have been the dominant factors in Guaranty Savings' earnings. Non-interest
operating income has been a limited contributor to the Association's earnings,
while credit quality related losses related to maintaining and disposing of real
estate owned and loan loss provisions were generally not a significant earnings
factor as well. With the exception of the loss on sale securities recorded
during fiscal 1996, gains and losses realized from the sale of loans and
investments have not had a significant impact on the Association's earnings
during the past five and three-quarter fiscal years.
Guaranty Savings' level of net interest income before provisions for loan
losses has been maintained above 4.00 percent of average assets throughout the
period shown in Table 1.2, ranging from a low of 4.02 percent for the twelve
months ended September 30, 1996 to a high of 4.38 percent in fiscal 1991. Peak
earnings recorded by the Association during fiscal 1993 were also supported by a
relatively high net interest margin of 4.37 percent, while during the past two
and three-quarter fiscal years Guaranty Savings' net interest margin has
generally trended lower. The stronger net interest margins exhibited by the
Association during fiscal years 1991 through 1993 were supported by a number of
factors, including the declining interest rate environment, an improving capital
position, and a shift in the Association's deposit composition towards lower
costing savings accounts. Comparatively, the lower net interest margins
recorded by the Association since fiscal 1993 have been attributable to such
factors as higher interest rates and a reduction in the level of
interest-earning assets comprising total assets. The reduction in the level of
interest-earning assets comprising total assets was largely attributable to the
building of a new main office, which was completed during 1994. From fiscal
year end 1993 to fiscal year end 1994, the Association's balance of premises and
equipment, net of depreciation, increased from $1.1 million, or 1.25 percent of
assets, to $2.6 million, or 3.00 percent of total assets. As of September 30,
1996, the Association's premises and equipment balance, net of depreciation,
equaled $2.8 million, or 3.21 percent of assets.
The impact of interest rates on Guaranty Savings' net interest margin is
further revealed through examination of the Association's historical net
interest rate spreads and yields and costs as set forth in Exhibits I-3 and I-5.
From fiscal 1993 to the nine months ended September 30, 1996, Guaranty Savings'
yield-cost spread narrowed from 3.74 percent to 3.11 percent. The reduction in
the yield-cost spread was attributable to a more significant increase in the
Association's funding costs relative to the yield earned on interest-earning
assets, reflecting the more immediate impact of higher interest rates on the
Association's interest-sensitive liabilities. The increase in Guaranty Savings'
deposit costs was largely the result of higher CD costs, as the rate paid on the
Association's passbook accounts exhibited little variance during the past three
and three-quarter fiscal years. While the yield earned on the Association's
interest-earning assets also increased since fiscal 1993,
<PAGE>
RP Financial, LC.
Page 1.10
the increase was more limited in light of the less interest-sensitive nature
of the interest-earning assets maintained by the Association. The increase
in yield earned on Guaranty Savings' interest-earning assets was supported by
higher yields earned on investments, which was partially negated by a decline
in the yield earned on the Association's loan portfolio. Guaranty Savings'
net interest margin will likely be enhanced by the stock offering, due to the
reinvestment of interest-free capital into interest-earning assets and the
higher IEA/IBL ratio that will result from the Association's increased
capital position.
Consistent with the Association's adherence to a traditional thrift
operating philosophy and resultant limited diversification, sources of
non-interest operating income have not been a significant contributor to the
Association's earnings. Throughout the period shown in Table 1.2, sources of
non-interest operating income ranged from 0.16 percent to 0.07 percent of
average assets, and for the twelve months ended September 30, 1996 non-interest
operating income equaled 0.09 percent of average assets. Sources of
non-interest operating income consist substantially of late charges and
miscellaneous sources of non-interest operating income. Beyond its limited
diversification in general, the absence of checking account products has been a
constraining factor with respect to the amount of non-interest operating income
generated by the Association. At this time, the Association has no plans to
further diversify into activities that would generate additional non-interest
operating income and, thus, Guaranty Savings' earnings can be expected to remain
highly dependent upon the net interest margin.
For a traditional thrift, the Association exhibited relatively high
operating expenses during the five and three-quarter period shown in Table 1.2,
particularly in recent years. After dropping to a low of 2.10 percent of
average assets during fiscal 1992, the Association's operating expense to
average assets ratio has trended steadily higher to equal 2.72 percent for the
twelve months ended September 30, 1996. The upward trend exhibited in the
operating expense ratio since fiscal 1992 has been the result of normalized
increases in operating expenses and a shrinking asset base. Further
contributing to the increase in the Association's operating expenses was the
building of a new main office facility, which was completed in 1994.
Notwithstanding the inflating impact the Association's asset shrinkage has had
on its operating expense ratio, Guaranty Savings' operating expense ratio is
considered to be relatively high in view of its highly non-diversified operating
strategy.
The recent trends in the Association's net interest margin and operating
expense ratio indicate that Guaranty Savings has been experiencing earnings
compression from the major two components of its core earnings, as highlighted
by the decline in the Association's expense coverage ratio (net interest income
divided by operating expenses). Guaranty Savings' expense coverage ratio
equaled 2.01 times during fiscal 1993, versus a comparative ratio of 1.48 times
during the twelve months ended September 30, 1996. While lower, Guaranty
Savings' expense coverage ratio of 1.48 times is still considered to be
indicative of favorable core earnings
<PAGE>
RP Financial, LC.
Page 1.11
strength. The Association's conversion to stock form will place further
upward pressure on operating expenses, due to increase costs associated with
operating as a publicly-traded institution and expenses related to the stock
benefit plans.
Gains and losses resulting from the sale of investments have typically not
been a significant factor in the Association's earnings, with the most notable
impact occurring during the twelve months ended September 30, 1996. For the
twelve months ended September 30, 1996, Guaranty Savings recorded a loss on the
sale of investments of $100,000, or 0.12 percent of average assets. The loss
was the result of the Association's decision to enhance the yield of the
investment portfolio through selling approximately $8.0 million of lower
yielding U.S. Treasury securities. Prior to fiscal 1996, gains and losses
resulting from the sale of loans and investments were not a material factor in
the Association's earnings and, thus, the loss on sale recorded during fiscal
1996 is viewed as a non-operating item.
Credit quality related losses have impacted the Association's earnings to
various degrees over the past five and three-quarter fiscal years, with such
losses consisting of loan loss provisions and real estate operations losses.
Loan loss provisions established by the Association were higher during fiscal
years 1991 through 1993, ranging from 0.11 percent of average assets in fiscal
1993 to 0.14 percent of average assets during fiscal 1991. The higher loan loss
provisions established during fiscal years 1991 through 1993 was consistent with
the higher level of non-performing assets maintained by the Association during
those years. Comparatively, over the past two and three-quarter years, loan
loss provisions established by the Association have been minimal. A low risk
lending strategy, favorable credit quality measures, and the build-up of loss
provisions to more conservative levels have served to contain the amount of loss
provisions established by the Association in recent years. As of September 30,
1996, the Association maintained valuation allowances of $337,000, equal to 0.78
percent of net loans receivable and 106.6 percent of non-performing assets.
Exhibit I-6 sets forth the Association's loan loss allowance activity during the
past three and three-quarter fiscal years. Real estate operations gains and
losses posted by Guaranty Savings primarily reflect losses incurred on
maintaining and disposing of real estate owned, with the most notable impact on
earnings occurring during fiscal years 1991 and 1992. In both fiscal years 1991
and 1992 the Association posted real estate operations losses amounting to 0.08
percent of average assets. Comparatively, Guaranty Savings has realized modest
gains on real estate operations during the past two and three quarter fiscal
years. As of September 30, 1996, the Association did not hold any real estate
owned.
Interest Rate Risk Management
Guaranty Savings' balance sheet is currently liability-sensitive, as
indicated by its one year cumulative gap to assets ratio of negative 16.5
percent (see Exhibit I-7). An almost exclusive emphasis on fixed rate
<PAGE>
RP Financial, LC.
Page 1.12
lending funded primarily by short- and intermediate-term deposits have been
the primary factors accounting for the repricing mismatch between Guaranty
Savings' interest-sensitive assets and interest-sensitive liabilities. As of
September 30, 1996, of the total loans due after one year from September 30,
1996, fixed rate loans comprised 99.6 percent of those loans (see Exhibit
I-8). Guaranty Savings pursues management of interest rate risk primarily
through maintaining a high balance of liquidity and a strong capital
position. Liquidity of the investment portfolio is enhanced by the
Association's classification of all investments as available for sale. To a
lesser extent, management of interest rate risk is conducted by offering
attractive rates on certain longer term CDs from time-to-time. Management of
interest rate risk is further supported by the Association's high
concentration of passbook savings accounts, given the lower cost and less
interest-sensitive characteristics of those accounts.
The short-term repricing mismatch between the Association's
interest-sensitive assets and liabilities indicates that net interest income
will be somewhat inconsistent in various interest rate environments, with
declining and low interest rate environments being more beneficial to Guaranty
Savings' net interest margin. Comparatively, the Association's net interest
margin is adversely impacted by rising and higher interest rates, as highlighted
by the narrowing of Guaranty Savings' yield-cost spread since fiscal 1993.
However, given the Association's current IEA/IBL ratio of 136.9 percent, which
will become stronger following the infusion of conversion proceeds, Guaranty
Savings has the capacity to take on a certain degree of interest rate risk and
sustain positive, although lower, core earnings during periods of moderately
rising interest rates.
Lending Activities and Strategy
The Association's lending activities have traditionally concentrated on the
origination and retention of 1-4 family permanent mortgage loans (see Exhibits
I-9 and I-10, which reflect loan composition and lending activity,
respectively). As of September 30, 1996, $41.9 million, or 96.6 percent, of
Guaranty Savings' total loan portfolio was comprised of loans secured by 1-4
family permanent mortgage loans. The Association has substantially
de-emphasized other types of lending in recent years, with multi-family and
commercial real estate loans, which totaled $475,000, or 1.1 percent of total
loans outstanding at September 30, 1996, comprising the second largest component
of Guaranty Savings' loan portfolio. The balance of the loan portfolio was
comprised of minor balances of construction, land and consumer loans. Exhibit
I-11 provides the contractual maturity of the Association's loan portfolio, by
loan type, as of September 30, 1996.
Guaranty Savings originates only fixed rate 1-4 family permanent mortgage
loans, retaining all originations for portfolio. Fixed rate loans offered by
the Association have terms ranging from 15 to 25 years, and are generally
underwritten in accordance with FNMA/FHLMC requirements. The Association will
<PAGE>
RP Financial, LC.
Page 1.13
originate 1-4 family permanent mortgage loans up to a maximum loan-to-value
("LTV") ratio of 90.0 percent, with private mortgage insurance ("PMI") being
required for loans with LTV ratios of more than 80.0 percent. All of the
Association's 1-4 family permanent mortgage loans are secured by local
properties, with the Association competing for loans primarily through offering
competitive rates and retention of servicing. While it is the Association's
policy not to charge any points on its loan 1-4 family loan originations, a 1.0
percent prepayment penalty of the outstanding loan balance is applied to loans
that are repaid in less than five years.
On a limited basis, the Association also originates construction loans to
finance the construction of 1-4 family residences. Prior to March 1996, the
Association did not offer construction loans. As of September 30, 1996,
Guaranty Savings' construction loan balance totaled $412,000, or 1.0 percent of
the total loan portfolio. The Association's construction lending activities
consist of loans to finance the construction of pre-sold single-family houses,
and are originated as construction/permanent loans to borrowers intending to
live in the properties upon completion of the construction.
Construction/permanent loans require payment of interest only during the
construction period and are structured to be converted to fixed rate permanent
loans at the end of the construction phase.
Land loans serve as a complement to the Association's 1-4 family lending
activities, as they consist of loans secured by residential lots. As of
September 30, 1996, the Association's land loan balance amounted to $121,000, or
0.3 percent of the loan balance. Terms of land loans offered by the Association
generally require an LTV ratio of 70.0 percent or less and are fixed rate loans
with terms of 15 years or less. Both construction and land lending are expected
to remain as very minor areas of lending diversification for the Association.
Commercial real estate and multi-family loans held by the Association are
collateralized by properties in its normal lending territory and totaled
$475,000, or 1.1 percent of the total loan portfolio. Commercial real estate
and multi-family loans are generally extended up to an LTV ratio of 70.0 percent
and are originated as fixed rate loans with terms of 15 years or less.
Consistent with the higher credit risk associated with commercial real estate
and multi-family loans, loan rates offered on those loans are at a premium to
the Association's 1-4 family loan rates. Properties securing the commercial
real estate and multi-family loan portfolio include churches, small retail
establishments and small apartment buildings. As of September 30, 1996, the
Association's largest commercial real estate/multi-family loan had an
outstanding balance of $82,000 and was performing in accordance with its terms.
In recent years, the Association has been inactive in originating commercial
real estate/multi-family loans.
The balance of the Association's loan portfolio consists of consumer loans,
which amounted to $463,000, or 1.1 percent of total loans outstanding at
September 30, 1996. Consumer loans held by the Association consist of loans
secured by deposits and second mortgage loans. Second mortgage loans originated
<PAGE>
RP Financial, LC.
Page 1.14
by the Association are fixed rate amortizing loans, with terms of up to 15
years. The Association will originate second mortgage loans up to an LTV ratio
of 80.0 percent of the combined loan balance of the first and second liens,
provided that the second mortgage loan amount does not exceed $50,000. In
addition, Guaranty Savings requires second mortgage loan borrowers to maintain
at least 10.0 percent cash equity in the subject property and the borrower must
hold the first mortgage with the Association as well. At this time, the
Association's consumer lending activities are expected to remain limited.
Exhibit I-10, which shows the Association's loan originations and
repayments over the past three and three-quarter fiscal years, further
highlights Guaranty Savings' emphasis on originating 1-4 family permanent
mortgage loans. Originations of 1-4 family permanent mortgage loans accounted
for 96.0 percent of the Association's total loan volume during the past three
and three-quarter fiscal years. Accelerated repayments associated with
refinancing activity was the primary factor contributing to the $6.4 million net
decrease in the Association's loan portfolio during fiscal 1993, as Guaranty
Savings elected not to pursue the refinancing activity on the origination side
in light of the low market interest rates that were being offered on 1-4 family
fixed rate loans during that period. Comparatively, more modest declines were
recorded in the loan portfolio during fiscal years 1994 and 1995, which was
attributable to both an increase in loan originations and a slow down in loan
repayments. After four consecutive years of loan portfolio shrinkage, the
Association posted an increase in loans during the first nine months of fiscal
1996. Loan growth during fiscal 1996 has been primarily realized through
increased originations of 1-4 family permanent mortgage loans and, to a lesser
extent, initiation of construction loan originations and a decline in loan
repayments. The increase in 1-4 family originations during fiscal 1996 was in
part supported by the Association's decision to increase the maximum LTV ratio
allowed on 1-4 family loan originations from 80.0 percent to 90.0 percent.
Guaranty Savings retains all loan originations for portfolio and has not
purchased any loans over the past three and three-quarter fiscal years.
Guaranty Savings' future lending strategy going forward is expected to remain
fairly consistent with recent historical trends, and, thus, the origination of
1-4 family permanent mortgage loans is expected to account for the substantial
portion of the Association's lending activities.
Asset Quality
The Association's historical 1-4 family lending emphasis has generally
supported favorable credit quality measures. Over the past three and
three-quarter fiscal years, Guaranty Savings' non-performing assets-to-assets
ratio has ranged from a high of 0.60 percent at fiscal year end 1993 to a low of
0.27 percent at fiscal year ends 1994 and 1995. As of September 30, 1996,
Guaranty Savings' balance of non-performing assets totaled $316,000, or 0.37
percent of total assets. As shown in Exhibit I-12, non-accruing loans accounted
for the
<PAGE>
RP Financial, LC.
Page 1.15
Association's entire non-performing assets balance. Non-accruing loans
held by the Association at September 30, 1996 consisted only of 1-4 family
permanent mortgage loans.
The Association reviews and classifies assets on a regular basis and
establishes loan loss provisions based on the overall quality, size and
composition of the loan portfolio, as well other factors such as historical loss
experience, industry trends and local real estate market and economic
conditions. At September 30, 1996, the Association had $355,000 of assets
classified as Special Mention and $1.8 million of assets classified as
Substandard. The Association maintained valuation allowances of $337,000 at
September 30, 1996, equal to 0.78 percent of net loans receivable and 106.6
percent of non-performing assets.
Funding Composition and Strategy
Deposits have consistently been the Association's primary source of funds,
and at September 30, 1996 deposits constituted 100 percent of Guaranty Savings'
interest-bearing liabilities. Exhibit I-13 sets forth the Association's
historical deposit composition and Exhibit I-14 reflects the interest rate and
maturity composition of the CD portfolio at September 30, 1996. The
Association's deposit composition has consistently reflected a relatively high
concentration of lower costing savings accounts, with such deposits accounting
for 39.7 percent of Guaranty Savings' total deposits at September 30, 1996.
Over the past three and three-quarter fiscal years, the mix between the
Association's savings accounts and CDs has been maintained at fairly consistent
levels, with both balances exhibiting declines since fiscal year end 1993.
As with most thrifts today, the concentration of the Association's CDs have
short-term maturities. As of September 30, 1996, the CD portfolio totaled
$36.5 million, with 80.0 percent of those CDs having maturities of one year or
less. Jumbo CDs (CD accounts with balances of $100,000 or more) amounted to
$1.4 million, or 3.7 percent of Guaranty Savings' total CDs at September 30,
1996. Guaranty Savings generally does not pay premium rates for higher balance
CDs. The Association does not utilize brokered CDs and typically offers CD
rates that are priced in the middle of the range of rates offered by its local
competitors. Comparatively, the Association recently increased the rate paid on
passbook accounts to an above market rate, in an effort to stem the outflow that
has been experienced in the savings account balance during recent years.
Guaranty Savings generally does not use borrowings as a funding source and
the Association maintained no borrowings at September 30, 1996. Guaranty
Savings' deposit growth, internal funding and conversion proceeds are expected
to be adequate enough to fund the substantial portion of the Association's
lending and investment activities for the intermediate-term. If borrowings are
needed, the Association has ample borrowing capacity with the FHLB of Dallas.
The Association is expected to borrow from the Holding Company to finance the
purchase of ESOP shares.
<PAGE>
RP Financial, LC.
Page 1.16
Legal Proceedings
Guaranty Savings is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition and results of operations of
Guaranty Savings.
<PAGE>
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
Guaranty Savings conducts operations out of its headquarters office in
Metairie, Jefferson Parish, Louisiana. The Association also maintains two other
branches in the New Orleans metropolitan area, one in New Orleans and the other
in Mandeville. The New Orleans branch is located in Orleans Parish, and the
Mandeville branch is located in St. Tammany Parish. Prior to moving its main
office to Metairie in October 1994, the Association maintained its main office
in New Orleans. At the end of 1995, Guaranty Savings closed another branch
maintained in Metairie and the Mandeville branch was opened in May 1996.
Metairie is located to the northwest of New Orleans. Exhibit II-1 provides
information on the Association's office facilities.
The Association has served the New Orleans metropolitan area since it was
established in 1937, and emerged intact from the severe economic recession that
occurred in Louisiana in the mid-and late-1980s. This recession ultimately led
to the failure of 48 savings institutions based in Louisiana, 22 of which were
headquartered in the New Orleans metropolitan area.
Management considers the New Orleans metropolitan area to be the
Association's primary market area for deposits and lending since most of the
Association's depositors live near the Association's branches and most of the
Association's loans are collateralized by homes or other property located in
these areas. The New Orleans metropolitan statistical area encompasses the
southeast tip of Louisiana, including the Parishes of Jefferson, Orleans,
Plaquemines, and St. Tammany.
The economy in the New Orleans metropolitan area is based on the oil and
gas industry, shipbuilding, and tourism, supplemented by a number of other
employment sectors, particularly service industries and construction. The
growth in non-manufacturing employment in the market area, such as service
industries and trade, have created an economy that is more insulated from the
type of economic setbacks that occurred in the past. Southern Louisiana's
relatively undiversified economic structure, particularly its dependence on the
oil and gas industry, led to a severe economic recession in the 1980s when oil
prices declined sharply. Despite the moderate economic growth and increased
economic diversification that has occurred since the economy bottomed out in the
late-1980s, the economy is still - heavily based in natural resources production
and thus remains somewhat exposed to future economic risk.
Future growth opportunities for Guaranty Savings depend on several
different indicators in the Association's market area such as demographic
growth trends, the strength of the local economy and the
<PAGE>
RP Financial, L.C.
Page 2.2
competitive environment. These factors have been briefly examined to help
determine the growth potential that exists for the Association and the relative
economic health of the Association's market area.
Market Area Demographics
Demographic and economic growth trends, measured by changes in population,
number of households, age distribution and median household income, provide key
insight into the health of the Association's market area (see Table 2.1). In
the 1990s, the Association market area has generally exhibited less favorable
growth characteristics than the comparative growth rates of Louisiana and the
U.S. Orleans Parish's population declined slightly from 1990 to 1996, while the
population of Jefferson Parish exhibited a modestly positive growth rate during
the same time period. Comparatively, strong population growth was recorded in
St. Tammany Parish, which is a more distant market to the City of New Orleans.
Growth in households mirrored the population growth rates, with only St. Tammany
Parish outpacing the comparative U.S. and Louisiana household growth measures.
Over the next five years, population and household growth trends are projected
to remain essentially the same for the three primary market area parishes served
by Guaranty Savings, although St. Tammany Parish's favorable growth rates are
projected to slow modestly from the growth rates posted from 1990 to 1996.
Income measures for the primary market area parishes generally exceeded the
comparative Louisiana measures, although falling below the median household and
per capital income measures exhibited by the U.S. Consistent with projected
household income for the U.S. and Louisiana, household income is projected to
decline in Orleans, Jefferson and St. Tammany Parishes over the next five years.
The smallest decline in household income is projected for St. Tammany Parish
(negative 0.3 percent), which is consistent with the stronger population and
household growth being recorded in St. Tammany Parish. Comparatively, over the
next five years median household income is projected to decline at an annual
rate of 1.4 percent for both Jefferson and Orleans Parishes, which exceeded the
comparative U.S. and Louisiana growth rates of negative 0.8 percent and negative
1.1 percent, respectively. The general decline exhibited in household income
levels reflects that most of the job growth is being realized in service related
jobs, which tend to be relatively low paying jobs. In summary, St. Tammany's
demographic characteristics appear to provide the best prospects for lending and
deposit growth, while Orleans Parish would seemingly offer the least promising
prospects for growth among the three primary market area parishes served by the
Association.
<PAGE>
RP Financial, LC.
Page 2.3
Table 2.1
Summary Demographic Data
State and County Data
<TABLE>
<CAPTION>
Year Growth Rate Growth Rate
------------------------------------
Population (000) 1990 1996 2001 1990-96 1996-2001
- ---------------- ---- ---- ---- ------- ---------
(%) (%)
<S> <C> <C> <C> <C> <C>
United States 248,710 265,295 278,802 1.1% 1.0%
Louisiana 4,220 4,368 4,493 0.6% 0.6%
Jefferson Parish 448 458 465 0.4% 0.3%
Orleans Parish 497 479 465 -0.6% -0.6%
St Tammany Parish 145 179 207 3.7% 2.9%
Households (000)
- ----------------
United States 91,947 98,239 103,293 1.1% 1.0%
Louisiana 1,499 1,549 1,592 0.5% 0.6%
Jefferson Parish 166 170 173 0.3% 0.3%
Orleans Parish 188 181 176 -0.6% -0.6%
St Tammany Parish 50 63 73 3.7% 3.0%
Median Household Income ($)
- ---------------------------
United States $29,199 $34,530 $33,189 2.8% -0.8%
Louisiana $22,777 $25,457 $24,087 1.9% -1.1%
Jefferson Parish $29,492 $29,575 $27,629 0.0% -1.4%
Orleans Parish $18,111 $21,481 $20,038 2.9% -1.4%
St Tammany Parish $29,534 $33,978 $33,437 2.4% -0.3%
Per Capita Income -1996 ($)
- ---------------------------
United States $13,179 $16,738 ---- 4.1% ----
Louisiana $10,150 $12,345 ---- 3.3% ----
Jefferson Parish $12,684 $13,905 ---- 1.5% ----
Orleans Parish $9,606 $13,904 ---- 6.4% ----
St Tammany Parish $12,416 $15,418 ---- 3.7% ----
1996 Age Distribution(%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Years Median Age
- ------------------------ ---------- ----------- ----------- ----------- --------- ----------
United States 22.0 13.7 31.6 19.9 12.8 34.3
Louisiana 24.1 15.2 30.4 18.8 11.5 32.4
Jefferson Parish 22.2 13.2 32.8 20.3 11.5 34.0
Orleans Parish 23.0 15.1 31.0 17.8 13.1 32.9
St Tammany Parish 25.1 13.6 30.9 21.0 9.4 33.7
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1996 HH Income Dist.(%) $15,000 24,999 $49,999 $99,999 $149,999 $150,000+
- ----------------------- --------- ---------- ---------- ---------- ----------- ---------
United States 19.7 15.6 34.0 24.4 4.3 2.1
Louisiana 31.2 17.9 31.0 16.3 2.3 1.2
Jefferson Parish 22.8 17.9 35.9 19.8 2.4 1.2
Orleans Parish 37.0 17.6 25.8 14.2 3.1 2.4
St Tammany Parish 20.5 15.4 33.3 24.1 4.3 2.3
</TABLE>
Sources: CACI, Inc. and U.S. Dept. of Commerce.
<PAGE>
RP Financial, L.C.
Page 2.4
National Economic Factors
Over the past year, national economic growth has been mixed. Economic data
through most of the fourth quarter of 1995 suggested that the economy was on
track for a soft landing, as indicated by modest retail sales growth and a
stable inflation picture. Weak retail sales during the holiday shopping season
and a slight increase in the November unemployment rate provided indications of
a slowing national economy at the end of the fourth quarter. Economic data
released in January 1996 continued to indicate a generally sluggish economy, as
highlighted by the Federal Reserve's mid-January "Beige Book" report which
indicated slowing economic growth in its latest nationwide survey of economic
conditions. Record-breaking winter weather conditions further slowed the
economy in January of 1996. Unemployment declined sharply in February, although
the January figures were skewed by the weather and by striking GM workers. A
stronger than expected March 1996 employment report served to rekindle inflation
fears, while other economic indicators suggested that the pace of economic
growth was moderate and inflation was under control.
Higher oil and commodity prices heightened inflation concerns in late-April
1996; however, wages, which account for most of the inflation measures, did not
signal that inflation was heating up. Unemployment data for both May and June
suggested a strong pace of economic growth, with the stronger than expected job
growth pushing interest rates higher. Second quarter GDP increased at a healthy
4.7 percent annual rate, however, other economic measures, such as consumer and
producer prices, reflected a more modest pace of economic growth.
The third quarter of 1996 started with a continuation of second quarter
trends, although mid-July Congressional testimony by the Federal Reserve
Chairman hinted of expectations that the economy would taper off slightly in the
second half of 1996. However, much of the economic data released during July
and August continued to indicate a fairly robust pace of economic growth. Such
economic data included a stronger than expected increase in July durable good
orders, the consumer confidence index hitting a six year high and a decline in
the August unemployment rate. Comparatively, for the balance of the third
quarter, economic data, such as a decline in August durable good orders and
smaller than expected increases in August retail sales and consumer prices,
suggested that the economy was cooling off. A slight increase in the September
unemployment rate further signaled a slowing economy.
Economic data released in the beginning of the fourth quarter generally
confirmed that the national economy was slowing. October unemployment remained
at 5.2 percent, although the number of new jobs being added to the economy was
lower compared to job growth recorded during the late-spring and the summer.
Third quarter GDP growth fell to a 2.2 percent annual rate, versus a comparative
4.7 percent rate in the second quarter. Wage data indicated that inflation was
under control, as wages remained flat for production and
<PAGE>
RP Financial, L.C.
Page 2.5
nonsupervisory workers in October, despite a $0.50 increase in the minimum wage
becoming effective on October 1, 1996. Modest increases in the October consumer
price index and October retail sales provided further indications that the
national economy was slowing. While the November unemployment rate climbed to
5.4 percent from 5.2 percent in October, inflation concerns were heightened
somewhat by an unexpectedly sharp $0.09 jump in average hourly earnings. Other
inflation measures, such as the November consumer price index, suggested that
the economy was sluggish and non-inflationary. Consistent with the mixed
economic activity, interest rate trends have been varied as well over the past
year. Interest rates generally trended lower in the fourth quarter of 1995,
due to the slowing of the economy. The sluggish economy and a 0.25 percent cut
in short-term interest rates by the Federal Reserve pushed the yield on 30-year
U.S. Government bond to slightly below 6.0 percent at year end 1995. Following
another 0.25 percent rate cut by the Federal Reserve in January 1996, interest
rates moved higher during the balance of the first quarter. The upward trend in
interest rates reflected generally improving economic conditions and indications
that the Fed would not cut interest rates further due to mixed inflation
signals.
Interest rates continued to edge higher during the second quarter and the
30-year U.S. Government bond yield climbed above 7.0 percent following the
stronger than expected May job growth reported in early-June. The favorable
June employment report had a more severe effect on bond prices, as the large
drop in unemployment provided for one of the largest one day declines in bond
prices with the yield on the 30-year benchmark bond increasing from 6.93 percent
to 7.18 percent. During the balance of third quarter, economic data which
contained mixed inflation signals provided for an uneven interest rate
environment. After trending lower for a brief period in July and August,
another spike in interest rates was experienced in late-August and
early-September as inflation concerns were raised by the stronger than expected
economic growth. Comparatively, aided by the Federal Reserve's decision not to
raise interest rates at its September and October meetings, along with economic
data providing indications of a cooling economy, interest rates declined in
late-September and through most of October. Interest rates continued to edge
lower through November, as the October economic data suggested that inflationary
pressures were non-threatening. Bond prices declined slightly in
early-December, as investors focused on weakness in the dollar and rising oil
prices. Concern over Japanese investors slowing their buying of Treasurys
caused bond prices to slide in mid-December, despite the economic statistics
which continued to reflect mild inflation. As of December 13, 1996, one- and
thirty-year U.S. Government bonds were yielding 5.43 percent and 6.57 percent,
respectively. Exhibit II-2 provides historical interest rate trends from 1991
through December 13, 1996.
<PAGE>
RP Financial, L.C.
Page 2.6
Local Economy
The southeastern Louisiana economy has its historical roots in agriculture
and seagoing trade, and is still a major international port. Agriculture
declined as a major industry in southeastern Louisiana as the area developed,
and southeastern Louisiana's economy today is founded on oil and natural gas
(and related industries), tourism, shipbuilding, and port-related industries.
Economic diversification in the market area has improved somewhat since the oil
and gas industry suffered a major setback with the decline in oil prices that
occurred in the mid-and late-1980s.
Economic diversification in the market area has been developed primarily
within the areas of health care, aerospace industries, and research and
technology. Retail trade is also a growing employment sector for the New Orleans
metropolitan area. Table 2.2 lists several of the largest private sector
employers in the New Orleans metropolitan area.
Table 2.2
Guaranty Savings & Homestead
Major Employers in New Orleans MSA
Employer Industry
-------- --------
Avondale Shipyards Shipbuilding
Freeport-McMoran, Inc Exploration, Mining
South Central Bell Telephone Telecommunications
Mercy Baptist Medical Health Care
Shell Oil Company Petroleum Refining
Tulane University Education
Chevron USA Co. Oil
Exxon Corp. Oil
National Supermarkets Food Retailer
Ochsner Foundation Hospital Health Care
Martin Marietta Aerospace Tech.
Hilton Hotels Hotel
I.E. Dupont Nemours & Co Chemical Manufact.
Source: New Orleans Chamber of Commerce
Comparative unemployment rates for the primary market area parishes, as
well as for the U.S. and Louisiana, are shown in Table 2.3. The unemployment
data for the market area further implies that the more favorable growth
opportunities exist in St. Tammany Parish, as St. Tammany Parish's September
1996 unemployment rate of 5.3 percent was the lowest among the three primary
market area parishes served by the Association. Similarly, Jefferson Parish's
slightly higher unemployment rate of 5.4 percent was also indicative
<PAGE>
RP Financial, L.C.
Page 2.7
of a fairly healthy economic environment. Comparatively, Orleans Parish
September 1996 unemployment rate of 8.1 percent was the highest among the three
primary market parishes served by the Association, and was also consistent with
the generally negative demographic trends that have prevailed for Orleans Parish
during the 1990s.
Table 2.3
Guaranty Savings & Homestead Association
Selected Unemployment Rates(1)
September 1995 September 1996
Region Unemployment Unemployment
------ -------------- --------------
United States 5.4% 5.0%
Louisiana 6.4 6.7
Jefferson Parish 5.4 5.4
Orleans Parish 7.6 8.1
St. Tammany 4.9 5.3
(1) Data is not seasonally adjusted.
Source: Bureau of Labor Statistics.
Competition
Competition among financial institutions in the Association's market is
significant, and, as larger institutions compete for market share to achieve
economies of scale, the market environment for the Association's products and
services is expected to become increasingly competitive in the future. Smaller
institutions such as Guaranty Savings will be forced to either compete with
larger institutions on pricing, or to identify and operate in a "niche" that
will allow for operating margins to be maintained at profitable levels.
The Association's retail deposit base is closely tied to the economic
fortunes of the New Orleans metropolitan area and, in particular, the three
parishes where branches are maintained. Table 2.4 displays deposit market
trends from June 30, 1993 through June 30, 1995 for Jefferson and Orleans
Parishes, the two parishes where the Association maintained branches during that
period. Additional data is also presented for the State of Louisiana. The data
indicates that deposit growth in the Association's primary market area between
1993 and 1995 was mixed, as indicated by 2.8 percent positive annual deposit
growth in Jefferson Parish and 3.0 percent negative annual deposit growth in
Orleans Parish. Jefferson Parish's deposit growth was realized through strong
growth in commercial bank and credit union deposits, which was partially negated
by a
<PAGE>
RP Financial, LC.
Page 2.8
Table 2.4
Guaranty Savings & Homestead Association
Deposit Summary
<TABLE>
<CAPTION>
As of June 30,
------------------------------------------------------
1993 1995
--------------------------- ------------------------- Deposit
Market Number of Market No. of Growth Rate
Deposits Share Branches Deposits Share Branches 1993-1995
-------- ------ --------- -------- ------ -------- -----------
(Dollars In Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
A. Deposit Summary
- ------------------
State of Louisiana $41,738,755 100.0% 1,720 $42,609,263 100.0% 1,738 1.0%
Commercial Banks 33,428,945 80.1% 1,224 35,640,178 83.6% 1,291 3.3%
Credit Unions 2,761,683 6.6% 337 2,953,998 6.9% 322 3.4%
Savings Institutions 5,548,127 13.3% 159 4,015,087 9.4% 125 -14.9%
Jefferson Parish $4,249,686 100.0% 142 $4,495,047 100.0% 145 2.8%
Commercial Banks 2,662,574 62.7% 82 3,325,519 74.0% 92 11.8%
Credit Unions 186,861 4.4% 27 218,324 4.9% 26 8.1%
Savings Institutions 1,400,251 32.9% 33 951,204 21.2% 27 -17.6%
Guaranty Savings 35,695 0.8% 1 59,278 1.3% 2 28.9%
Orleans Parish $7,840,526 100.0% 176 $7,381,379 100.0% 168 -3.0%
Commercial Banks 6,224,997 79.4% 82 6,267,311 84.9% 89 0.3%
Credit Unions 455,910 5.8% 65 457,761 6.2% 59 0.2%
Savings Institutions 1,159,619 14.8% 29 656,307 8.9% 20 -24.8%
Guaranty Savings 31,777 0.4% 2 3,481 0.0% 1 -66.9%
</TABLE>
Sources: SNL Securities and Thompson Credit Union Directory
<PAGE>
RP Financial, L.C.
Page 2.9
decline in savings institution deposits. Comparatively, in Orleans Parish,
modestly positive deposit growth was posted by commercial banks and credit
unions, which was more than offset by a notable decline in thrift deposits. The
notable drop in thrift deposits was attributable to a number of factors,
including disintermediation caused by the low interest rate environment, market
share expansion by commercial banks through acquisition and competitive forces,
and the implementation of limited growth strategies by undercapitalized thrift
institutions seeking to build capital levels.
Largely as the result of relocating the main office from Orleans Parish to
Jefferson Parish, the Association recorded notable increases and declines in the
amount of deposits maintained in those respective parishes during the period
covered in Table 2.4. Overall, the Association's deposit balance declined at a
3.6 percent annual rate from June 30, 1993 through June 30, 1995. The
Association's prospects for future deposit growth may be somewhat contained by
the slow growth nature of Jefferson and Orleans Parishes, and the generally
intense competition that exists for deposits throughout the markets served by
Guaranty Savings' branches. Accordingly, given the projected limited
demographic growth for Orleans and Jefferson Parishes, Guaranty Savings' future
deposit growth will be somewhat dependent upon increasing market share in those
markets or gaining a stronger market presence in St. Tammany Parish where the
demographic characteristics tend to be more supportive of deposit growth
opportunities. To augment the deposit growth that is possible internally, the
Association may seek deposit growth opportunities through acquiring branches or
other financial institutions, but, at this time, the Association has no definite
plans to acquire additional branches or other financial institutions. The
Association should also continue to benefit from its favorable image as a
locally-owned and community-oriented institution, as the trend of consolidation
among financial institutions is expected to provide Guaranty Savings with
opportunities to gain customers that become dissatisfied with their banking
relationship as the result of an acquisition.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Guaranty Savings' operations versus a
group of comparable savings institutions (the "Peer Group") selected from the
universe of all publicly-traded savings institutions. The basis of the pro
forma market valuation of Guaranty Savings is provided by these institutions.
Factors affecting the Association's pro forma value such as financial condition,
credit risk, interest rate risk, loan composition and recent operating results
can be readily assessed in relation to the Peer Group. Current market pricing
of the Peer Group, subject to appropriate adjustments to account for differences
between Guaranty Savings and the Peer Group, will then be used as a basis for
the pro forma valuation of Guaranty Savings' to-be-issued common stock.
Selection of Peer Group
We consider the appropriate Peer Group to be comprised of only those
publicly-traded savings institutions whose common stock is either listed on a
national exchange or is NASDAQ listed, since the market for companies trading in
this fashion is regular and reported. We believe non-listed institutions are
inappropriate since the trading activity for thinly-traded stocks is typically
highly irregular in terms of frequency and price and may not be a reliable
indicator of market value. We have also excluded from the Peer Group those
companies under acquisition, mutual holding companies and recent conversions,
since their pricing ratios are subject to distortion and/or do not have a
seasoned trading history.
From the universe of publicly-traded thrifts, we selected ten institutions
with characteristics similar to those of Guaranty Savings. In the selection
process, we applied two primary "screens" to the universe of all public
companies:
o Screen #1. Louisiana institutions with assets of $500 million or
less, equity-to-assets ratios of at least 8.0 percent, and positive
earnings. Two companies met the criteria for Screen #1 and both were
included for the Peer Group: Teche Holding Company and Citisave
Financial Corp. Exhibit III-2 details the financial characteristics
of all publicly-traded Louisiana thrifts.
o Screen #2. Southeast, Southwest and Mid-West institutions with assets
between $50 million and $300 million, equity-to-assets ratios of at
least 20.0 percent, core return on average assets ratios between 0.50
percent and 1.50 percent, non-performing assets to assets ratios of
less than 2.0 percent, and completed mutual-to-stock conversion prior
to 1996. Apart from the Louisiana institutions already selected, 12
institutions met the selection criteria for Screen #2 (see Exhibit
III-3), and eight were included as part of Guaranty Savings' Peer
Group: CCF Holding Company of GA, CKF Bancorp of Danville KY, Damen
Financial Corp. of Chicago IL, Fort Thomas Financial Corp. of KY,
Gateway Bancorp of Kentucky, Kentucky First Bancorp of Kentucky,
Marion Capital Holdings of IN, and NS & L Bancorp of Neosho MO.
<PAGE>
RP Financial, LC.
Page 3.2
The four institutions excluded from the Peer Group all exhibited not
meaningful core price-to-earnings ("P/E") multiples (core P/E
multiples above 25.0x); thereby, limiting their usefulness in deriving
the Association's pro forma market value. The Peer Group candidates
which exhibited not meaningful core P/E multiples were ASB Financial
Corp. of OH, Frankfort First Bancorp of KY, Great American Bancorp of
IL, and Harrodsburg First Financial Bancorp, Inc. of KY.
Table 3.1 on the following page shows the general characteristics of each
of the Peer Group companies and Exhibit III-4 provides summary demographic data
for the primary market areas served by each of the Peer Group companies. In
general, the Peer Group is comprised of relatively small institutions operating
with strong capital ratios that are facing the same leverage challenge that will
be faced by Guaranty Savings as a newly converted company. At the same time,
while the Peer Group companies have strong capital ratios, their capital levels
are nonetheless below the level reported by Guaranty Savings, even on a
pre-conversion basis. While there are some differences between the Peer Group
companies and Guaranty Savings, we believe that the Peer Group provides a good
representation of publicly-traded thrifts with operations comparable to those of
the Association and, thus, will provide a good basis for valuation. The
following sections present a comparison of Guaranty Savings' financial
condition, income and expense measures, loan composition, interest rate risk and
credit risk versus the Peer Group. The conclusions drawn from the comparative
analysis are then factored into the valuation analysis discussed in the final
chapter.
A summary description of the key characteristics of each of the Peer Group
companies, which we determined warranted their inclusion as a comparable
institution to Guaranty Savings, is detailed below.
o CCF Holding Company of GA. Selected due to traditional thrift operating
strategy, comparable asset size, same size of branch network, high level of
capital, comparable funding composition, strong net interest margin,
relatively high level of operating expenses for a traditional thrift, and
high concentration of MBS and 1-4 family permanent mortgage loans
comprising the MBS and loan portfolio.
o CKF Bancorp of Danville KY. Selected due to traditional thrift operating
strategy, high level of capital, comparable funding composition, strong net
interest margin, limited earnings contribution from sources of non-interest
operating income, and high concentration of 1-4 family permanent mortgage
loans comprising the MBS and loan portfolio.
o Citisave Financial Corp. of LA. Selected due to Louisiana market area,
traditional thrift operating strategy, comparable asset size, similar
composition of interest-earning assets, comparable funding composition,
strong net interest margin, high concentration of MBS and 1-4 family
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
o Damen Financial Corp of Chicago IL. Selected due to traditional thrift
operating strategy, same size of branch network, similar composition of
interest-earning assets, high level of capital, limited earnings
contribution from sources of non-interest operating income, high
concentration of MBS and 1-4 family
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
December 17, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ------------------------------ ------ ---------- --------- ------ ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) ($Mil)
TSH Teche Holding Company of LA AMEX Southern LA Thrift 380 8 09-30 04/95 13.25 47
DFIN Damen Fin. Corp. of Chicago IL OTC Chicago IL Thrift 235 3 11-30 10/95 12.87 49
MARN Marion Capital Holdings of IN OTC Central IN Thrift 175 2 06-30 03/93 20.37 38
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 89 J 2 09-30 06/95 14.25 22
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 86 2 06-30 08/95 11.50 16
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 79 J 3 09-30 07/95 15.00 17
CZF Citisave Fin. Corp. of LA AMEX Baton Rouge LA Thrift 76 5 12-31 07/95 14.00 13
GWBC Gateway Bancorp of KY OTC Eastern KY Thrift 69 2 06-30 01/95 14.50 16
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 60 1 12-31 01/95 19.75 19
NSLB NS&L Bancorp of Neosho MO OTC Southwest MO Thrift 57 J 2 09-30 06/95 13.75 12
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information published
in SNL Securities Quarterly Thrift Report, and financial reports of
publicly-traded thrifts.
Date of Last Update: 12/17/96
<PAGE>
RP Financial, LC.
Page 3.4
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
o Fort Thomas Financial Corp. of KY. Selected due to traditional thrift
operating strategy, similar size of branch network, comparable asset size,
high level of capital, similar funding composition, strong net interest
margin, relatively high level of operating expenses for a traditional
thrift, and high concentration of 1-4 family permanent mortgage loans
comprising the MBS and loan portfolio.
o Gateway Bancorp of KY. Selected due to traditional thrift operating
strategy, similar size of branch network, high level of capital, comparable
funding composition, limited earnings contribution from sources of
non-interest operating income, high concentration of MBS and 1-4 family
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
o Kentucky First Bancorp of KY. Selected due to traditional thrift operating
strategy, comparable asset size, similar size of branch network, high level
of capital, strong net interest margin, and favorable credit quality
measures.
o Marion Capital Holdings of IN. Selected due to traditional thrift
operating strategy, similar size of branch network, high level of capital,
similar funding composition, strong net interest margin, and limited
earnings contribution from sources of non-interest operating income.
o NS & L Bancorp of Neosho MO. Selected due to traditional thrift operating
strategy, similar size of branch network, high level of capital, similar
composition of interest-earning assets, similar funding composition, high
concentration of MBS and 1-4 family permanent mortgage loans comprising the
MBS and loan portfolio, and favorable credit quality measures.
o Teche Holding Company of LA. Selected due to Louisiana market area,
traditional thrift operating strategy, relatively high level of operating
expenses for a traditional thrift, high concentration of MBS and 1-4 family
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
In aggregate, the Peer Group companies are more highly capitalized than the
industry average (21.64 percent of assets versus 12.79 percent for the all SAIF
average), generate higher earnings (1.12 percent core ROAA versus 0.83 percent
for the all SAIF average), and generate a lower ROE (5.10 percent core ROE
versus 7.41 percent for the all SAIF average). Overall, the Peer Group's
average P/B ratio and core P/E multiple were below and above the respective
comparable SAIF averages (see next page). The Peer Group's below market P/B
ratio is viewed as being largely a function of the Peer Group's high capital
ratio and resulting low ROE. The higher core P/E multiple of the Peer Group
appears to reflect investor expectations of future earnings growth through
eventual leveraging of the excess capital. RP Financial concluded that the same
attributes will apply to Guaranty Savings' conversion stock, further confirming
the applicability of the Peer Group selection for deriving the Association's pro
forma market value.
<PAGE>
RP Financial, LC.
Page 3.5
As of December 13, 1996
-----------------------
Peer All SAIF
Group Insured
----- --------
Equity-to-Assets 21.64% 12.79%
Core Return on Assets ("ROA") 1.12 0.83
Core Return on Equity ("ROE") 5.10 7.41
Price-to-Book ratio ("P/B") 97.82% 116.52%
Core Price-to-Earnings multiple ("P/E") 19.23x 15.51x
Price-to-Assets ratio ("P/A") 21.21% 14.06%
Source: Table 4.4 - Chapter IV Valuation Analysis.
Ideally, the Peer Group companies would be comparable to Guaranty Savings
in terms of all of the selection criteria, but the universe of publicly-traded
thrifts does not provide for an appropriate number of such companies. However,
in general, the companies selected for the Peer Group were fairly comparable to
Guaranty Savings, as will be highlighted in the following comparative analysis.
Financial Condition
Table 3.2 shows comparative balance sheet measures for Guaranty Savings and
the Peer Group, reflecting the expected similarities and some differences given
the selection procedures outlined above. The Association's ratios reflect
balances as of September 30, 1996, while the Peer Group's ratios are based on
data as of June 30, 1996 or September 30, 1996. Guaranty Savings' net worth
base of 28.3 percent was above the Peer Group's average net worth ratio of 21.6
percent. Accordingly, with the consummation of the conversion and infusion of
the net conversion proceeds, the gap between the Association's and the Peer
Group's capital positions will widen, with Guaranty Savings' pro forma
equity-to-assets ratio expected to exceed 40.0 percent. All of Guaranty
Savings' and the Peer Group's capital consisted of tangible capital. Guaranty
Savings' higher pro forma capital position will be favorable from a risk
perspective and in terms of future earnings potential that could be realized
through leverage and lower funding costs. However, at the same time, the
Association's high pro forma capitalization will likely result in a relatively
low return on equity for an extended period of time. Both the Association's and
the Peer Group's capital ratios reflected significant capital surpluses with
respect to the regulatory capital requirements, with the Association's ratios
currently indicating slightly greater capital surpluses.
The interest-earning asset compositions for the Association and the Peer
Group were somewhat similar, with loans and mortgage-backed securities
constituting the bulk of interest-earning assets for Guaranty Savings and the
Peer Group. Guaranty Savings' combined level of loans and mortgage-backed
securities was
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of September 30, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
---------------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ----- --- -------- -------- ----- ----- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
September 30, 1996 37.5 49.8 8.4 69.9 0.0 0.0 28.3 0.0 28.3 0.0
SAIF-Insured Thrifts 18.1 66.2 12.4 71.4 14.1 0.1 12.7 0.2 12.5 0.0
State of LA 21.9 66.1 9.1 77.8 6.5 0.0 14.2 0.1 14.1 0.0
Comparable Group Average 22.0 62.9 12.4 69.6 7.2 0.0 21.6 0.0 21.6 0.0
Mid-West Companies 22.1 60.9 14.1 67.2 7.6 0.0 23.6 0.0 23.6 0.0
South-East Companies 21.7 67.4 8.4 75.1 6.1 0.0 17.0 0.0 17.0 0.0
`
Comparable Group
- ---------------
Mid-West Companies
- ------------------
CKFB CKF Bancorp of Danville KY 10.1 88.2 0.0 72.6 0.4 0.0 25.2 0.0 25.2 0.0
DFIN Damen Fin. Corp. of Chicago IL 38.8 38.9 19.8 50.7 25.4 0.0 22.5 0.0 22.5 0.0
FTSB Fort Thomas Fin. Corp. of KY(1) 10.7 85.4 1.0 69.7 5.1 0.0 24.3 0.0 24.3 0.0
GWBC Gateway Bancorp of KY 30.8 26.1 41.8 74.1 0.0 0.0 25.1 0.0 25.1 0.0
KYF Kentucky First Bancorp of KY 18.3 52.6 26.4 57.7 19.0 0.0 22.2 0.0 22.2 0.0
MARN Marion Capital Holdings of IN 9.9 83.1 0.0 70.8 3.4 0.0 22.7 0.0 22.7 0.0
NSLB NS&L Bancorp of Neosho MO(1) 35.9 51.9 9.8 75.1 0.0 0.0 23.3 0.0 23.3 0.0
South-East Companies
- --------------------
CFH CCF Holding Company of GA(1) 23.8 60.6 13.5 76.5 0.6 0.0 21.2 0.0 21.2 0.0
CZF Citisave Fin. Corp. of LA 34.9 58.4 3.1 81.8 0.0 0.0 16.0 0.0 16.0 0.0
TSH Teche Holding Company of LA 6.3 83.3 8.5 67.1 17.6 0.0 13.8 0.0 13.8 0.0
Balance Sheet Annual Growth Rates Regulatory Capital
---------------------------------------------------------------- --------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ----- -------- -------- ----- ------ -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
September 30, 1996 0.75 -14.35 11.82 -0.99 0.00 3.08 3.08 27.79 27.79 80.10
SAIF-Insured Thrifts 11.62 6.29 13.21 5.64 16.00 -0.21 -0.51 10.57 10.65 22.61
State of LA 11.58 -9.64 13.25 4.52 57.49 -7.37 -8.05 13.43 14.20 29.22
Comparable Group Average 4.78 -18.19 13.85 -0.25 -17.57 -7.37 -7.36 19.07 19.07 43.42
Mid-West Companies 5.48 -14.39 13.35 1.25 -17.57 -4.89 -4.89 19.82 19.82 45.33
South-East Companies 3.13 -27.06 15.01 -3.76 NM -14.84 -14.79 13.78 13.78 29.99
Comparable Group
- ---------------
Mid-West Companies
- ------------------
CKFB CKF Bancorp of Danville KY 6.86 13.33 6.38 10.84 -12.12 -4.49 -4.49 20.77 20.77 36.79
DFIN Damen Fin. Corp. of Chicago IL 13.51 12.04 14.39 -10.11 18.49 NM NM 16.48 16.48 48.97
FTSB Fort Thomas Fin. Corp. of KY(1) 2.57 -37.94 11.51 8.78 -39.53 0.38 0.38 19.50 19.50 30.80
GWBC Gateway Bancorp of KY -6.12 -24.04 4.75 -3.66 NM -14.43 -14.43 24.20 24.20 83.30
KYF Kentucky First Bancorp of KY 21.23 -17.30 36.89 -2.18 NM -2.00 -2.00 18.20 18.20 34.80
MARN Marion Capital Holdings of IN -1.01 -31.07 3.91 2.91 -37.11 -6.49 -6.49 21.00 21.00 33.07
NSLB NS&L Bancorp of Neosho MO(1) 1.33 -15.75 15.64 2.20 NM -2.28 -2.28 18.60 18.60 49.60
South-East Companies
- --------------------
CFH CCF Holding Company of GA(1) -2.96 -35.88 15.67 -17.83 NM NM NM NM NM NM
CZF Citisave Fin. Corp. of LA -4.86 -22.61 7.57 -2.40 NM -14.12 -14.02 13.78 13.78 29.99
TSH Teche Holding Company of LA 17.21 -22.70 21.79 8.95 NM -15.55 -15.55 NM NM NM
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.7
lower than the Peer Group's ratio (58.2 percent versus 75.3 percent for the Peer
Group), with the Association maintaining lower concentrations of both loans and
mortgage-backed securities relative to the comparative Peer Group ratios.
Comparatively, the Association's cash and investments to assets ratio was higher
than the comparable ratio for the Peer Group (37.5 percent versus 22.0 percent
for the Peer Group). Overall, Guaranty Savings' interest-earning assets
amounted to 95.7 percent of assets, which was below the comparable Peer Group
ratio of 97.3 percent. The Association's lower ratio was primarily the result
of maintaining a relatively high level of fixed assets, which was primarily
attributable to the increase in fixed assets associated with building a new main
office in 1994.
Guaranty Savings' funding liabilities reflect a funding strategy similar to
that of the Peer Group's funding composition. The Association's deposits
equaled 69.9 percent of assets, which was comparable to the Peer Group average
of 69.6 percent. Deposits accounted for all of Guaranty Savings'
interest-bearing liabilities, while the Peer Group maintained borrowings which
amounted to 7.2 percent of assets. Accordingly, both Guaranty Savings and the
Peer Group were considered to have ample borrowing capacity. Total
interest-bearing liabilities maintained by the Association and the Peer Group,
as a percent of assets, equaled 69.9 percent and 76.8 percent, respectively,
with the Association's lower ratio being supported by maintenance of a higher
capital position.
A key measure of balance sheet strength for a thrift institution is its
IEA/IBL ratio. Presently, the Association's IEA/IBL ratio is higher than the
Peer Group's ratio, based on respective ratios of 136.9 percent and 126.7
percent. The additional capital realized from stock proceeds will serve to
further increase the IEA/IBL ratio advantage currently maintained by the
Association, as the interest free capital realized in Guaranty Savings' stock
offering will be deployed into interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. Guaranty Savings' growth rates are based on annualized
growth for the nine months ended September 30, 1996, while the Peer Group's
growth rates are based on annual growth for the twelve months ended June 30,
1996 or September 30, 1996. Asset growth rates of positive 0.8 percent and
positive 4.8 percent were posted by the Association and the Peer Group,
respectively. Guaranty Savings' limited asset growth resulted from growth in
loans and mortgage-backed securities being largely funded by cash and
investments. Similarly, growth in loans and mortgage-backed securities
accounted for the Peer Group's asset growth, as a negative growth rate was also
realized in the Peer Group's balance of cash and investments. Overall, the Peer
Group's asset growth measures would tend to support greater earnings growth
relative to the Association's measures.
Retained earnings funded the Association's asset growth, as well as a
slight decline in Guaranty Savings' deposits. The Peer Group's asset growth was
funded by deposits and borrowings, notwithstanding the
<PAGE>
RP Financial, LC.
Page 3.8
negative borrowings growth rate shown for the Peer Group average. The Peer
Group's borrowings growth rate was understated by the Peer Group companies
with borrowings growth rates in excess of 100 percent, which accounted for
two out of the six "NM" borrowing growth rates shown for the Peer Group
companies in Table 3.2. The other four Peer Group companies with "NMs"
indicated as borrowings growth rates recorded no change in their balance of
balance of borrowings for the twelve month period. Despite recording a lower
return on average assets ratio, Guaranty Savings posted a stronger capital
growth rate than the Peer Group (positive 3.1 percent versus negative 7.4
percent for the Peer Group). Dividend payments and stock repurchases, as
well as possible negative SFAS 115 adjustments, were likely factors that
accounted for the Peer Group's negative capital growth rate. Following the
increase in capital realized from conversion proceeds, the Association's
capital growth rate will be depressed by its higher pro forma capital
position.
Income and Expense Components
Guaranty Savings and the Peer Group reported net income to average assets
ratios of 0.44 percent and 0.97 percent, respectively (see Table 3.3), based on
earnings for the twelve months ended September 30, 1996, or for the twelve
months ended June 30, 1996 for some of the Peer Group companies. Both the
Association's and the Peer Group's earnings were depressed by the one time
assessment to recapitalize the SAIF. With the exception of the SAIF assessment,
the Association's and the Peer Group's earnings were fairly representative of
their core earnings, as other non-recurring items were not significant factors
in their respective earnings. The Peer Group's higher earnings were realized
primarily through maintenance of a lower level of operating expenses and a
higher level of non-interest operating income, which was partially negated by
the Association's more favorable net interest margin. Further contributing to
the Peer Group's higher return was the absence of the special SAIF assessment
for the Peer Group companies which reported earnings for the twelve months ended
June 30, 1996.
The Association's stronger net interest margin resulted from a lower
interest expense ratio, which was partially negated by the Peer Group's higher
interest income ratio. As indicated in the yield-cost section of Table 3.3, the
Peer Group's higher interest income ratio was not realized through earning a
higher yield on interest-earning assets, with Guaranty Savings and the Peer
Group posting comparable yields on assets of 7.48 percent and 7.44 percent,
respectively. Accordingly, the Peer Group's higher interest income ratio was
attributable to maintaining a higher concentration of interest-earnings assets
as a percent of total assets (97.3 percent versus 95.7 percent for Guaranty
Savings). Comparatively, the Association's lower interest expense ratio was
realized through maintaining both a lower cost of funds (4.36 percent versus
4.80 percent for the Peer Group) and a lower level of interest-bearing
liabilities (69.9 percent versus 76.8 percent for the Peer Group). Guaranty
Savings' lower cost of funds was supported by its composition of
interest-bearing liabilities, which
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended September 30, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income
------------------------------- -----------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ---- ------- ------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
September 30, 1996 0.44 7.04 3.03 4.02 0.03 3.99 0.00 0.00 0.09 0.09
SAIF-Insured Thrifts 0.62 7.36 4.14 3.22 0.13 3.09 0.12 0.00 0.31 0.43
State of LA 0.48 8.35 4.48 3.87 0.14 3.73 0.15 -0.01 0.58 0.72
Comparable Group Average 0.97 7.23 3.66 3.58 0.04 3.54 0.07 0.00 0.29 0.35
Mid-West Companies 1.03 7.22 3.72 3.50 0.03 3.47 0.02 -0.01 0.15 0.16
South-East Companies 0.82 7.26 3.51 3.75 0.04 3.71 0.18 0.02 0.60 0.80
Comparable Group
- ----------------
Mid-West Companies
- ------------------
CKFB CKF Bancorp of Danville KY 1.28 7.35 3.63 3.72 0.04 3.68 0.08 0.00 0.00 0.09
DFIN Damen Fin. Corp. of Chicago IL 0.77 7.25 4.21 3.04 0.03 3.01 0.05 0.00 0.03 0.08
FTSB Fort Thomas Fin. Corp. of KY(1) 1.33 7.97 3.94 4.02 0.10 3.92 0.00 0.01 0.41 0.42
GWBC Gateway Bancorp of KY 0.84 6.71 3.79 2.92 0.01 2.91 0.00 0.01 0.02 0.04
KYF Kentucky First Bancorp of KY 0.89 7.09 3.38 3.71 0.01 3.69 0.00 0.00 0.15 0.15
MARN Marion Capital Holdings of IN 1.13 7.80 3.88 3.92 0.02 3.90 0.02 -0.11 0.13 0.04
NSLB NS&L Bancorp of Neosho MO(1) 0.97 6.39 3.21 3.18 0.02 3.16 0.01 0.00 0.33 0.34
South-East Companies
- --------------------
CCFH CCF Holding Company of GA(1) 0.97 7.03 3.24 3.78 0.03 3.75 0.10 0.04 0.36 0.50
CZF Citisave Fin. Corp. of LA 0.78 7.17 3.29 3.87 0.01 3.86 0.44 -0.03 0.96 1.37
TSH Teche Holding Company of LA 0.72 7.60 4.00 3.60 0.09 3.51 0.00 0.05 0.48 0.53
G&A/Other Exp. Non-Op. Items Yields, Costs, and Spreads
------------------ ---------------- ------------------------------
MEMO: MEMO:
G&A Goodwill Net Extrao. Yield Cost Yld-Cost Assets/ Effectiv
Expense Amort. Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- -------- ----- ------- --------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
September 30, 1996 2.72 0.00 -0.60 0.00 7.48 4.36 3.12 2,622 42.92
SAIF-Insured Thrifts 2.24 0.02 -0.33 0.00 7.63 4.83 2.80 4,113 35.24
State of LA 3.25 0.01 -0.39 0.00 8.59 5.31 3.28 2,679 35.43
Comparable Group Average 2.28 0.00 -0.23 0.00 7.44 4.80 2.64 4,773 28.60
Mid-West Companies 1.98 0.00 -0.22 0.00 7.45 5.00 2.45 5,855 26.66
South-East Companies 3.00 0.01 -0.27 0.00 7.44 4.34 3.09 2,249 33.13
Comparable Group
- ----------------
Mid-West Companies
- ------------------
CKFB CKF Bancorp of Danville KY 1.82 0.00 0.01 0.00 7.48 5.09 2.39 7,487 34.56
DFIN Damen Fin. Corp. of Chicago IL 1.91 0.00 -0.34 0.00 7.42 5.42 2.01 7,330 8.39
FTSB Fort Thomas Fin. Corp. of KY(1) 2.43 0.00 0.00 0.00 8.20 5.30 2.90 4,937 30.33
GWBC Gateway Bancorp of KY 1.23 0.00 -0.47 0.00 6.79 5.14 1.64 7,722 33.26
KYF Kentucky First Bancorp of KY 2.13 0.00 -0.44 0.00 7.31 4.51 2.80 3,910 30.22
MARN Marion Capital Holdings of IN 2.11 0.00 -0.44 0.00 8.36 5.24 3.12 6,021 18.41
NSLB NS&L Bancorp of Neosho MO(1) 2.23 0.00 0.14 0.00 6.56 4.29 2.27 3,581 31.46
South-East Companies
- --------------------
CCFH CCF Holding Company of GA(1) 2.86 0.00 0.07 0.00 7.17 4.07 3.10 2,479 33.82
CZF Citisave Fin. Corp. of LA 3.67 0.02 -0.39 0.00 7.39 4.09 3.29 1,576 32.06
TSH Teche Holding Company of LA 2.46 0.00 -0.50 0.00 7.76 4.87 2.88 2,692 33.50
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The
information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.10
reflected no borrowings and a relatively high concentration of lower costing
savings accounts. Overall, Guaranty Savings and the Peer Group reported net
interest income to average assets ratios of 4.02 percent and 3.58 percent,
respectively.
In another key area of core earnings strength, the Association maintained a
considerably higher level of operating expenses than the Peer Group. For the
period covered in Table 3.3, the Association and the Peer Group recorded
operating expense to average assets ratios of 2.72 percent and 2.28 percent,
respectively. It should be noted that the one time SAIF assessment expense has
been reflected as a non-operating item for the Association and the Peer Group
companies which reported earnings for the twelve months ended September 30,
1996. Guaranty Savings' higher operating expense ratio can in part be explained
by its less favorable proficiency, with respect to maintaining a relatively high
number of employees for its asset size. Assets per full time equivalent
employee equaled $2.6 million for the Association, versus a comparative measure
of $4.8 million for the Peer Group. Asset shrinkage recorded by the Association
over the past several years has also served to place upward pressure on Guaranty
Savings' operating expense ratio. On a post-conversion basis, the Association's
operating expenses can be expected to increase with the addition of public
company reporting expenses and stock benefit plans, with such expenses already
impacting the Peer Group's operating expenses.
When viewed together, net interest income and operating expenses provide
considerable insight into a thrift's earnings strength, since those sources of
income and expenses are typically the most prominent components of earnings and
are generally more predictable than losses and gains realized from the sale of
assets or other non-recurring activities. In this regard, as measured by their
expense coverage ratios (net interest income divided by operating expenses),
Guaranty Savings' earnings strength was less favorable than the Peer Group's.
Expense coverage ratios posted by Guaranty Savings and the Peer Group equaled
1.48x and 1.57x, respectively. An expense coverage ratio of greater than 1.0x
indicates that an institution is able to sustain pre-tax profitability without
having to rely on non-interest sources of income.
Sources of non-interest operating income made a higher contribution to the
Peer Group's earnings, with such income amounting to 0.09 percent and
0.35 percent of Guaranty Savings' and the Peer Group's average assets,
respectively. The Association's relatively low level of non-interest operating
income is consistent with a traditional thrift operating strategy, which
provides for limited diversification into services that generate non-interest
operating income. Further constraining non-interest operating for the
Association is a deposit base which contains no checking accounts, as Guaranty
Savings offers only CDs and regular savings accounts. Real estate operations
were not a material factor in either Guaranty Savings' or the Peer Group's
non-interest operating income, which was indicative of their favorable credit
quality measures and, in particular, relatively low levels of real estate owned.
The Peer Group's higher level of non-interest operating represented not only a
current earnings advantage, but was also considered to be more favorable in
terms of
<PAGE>
RP Financial, LC.
Page 3.11
limiting future interest rate risk exposure, as a higher level of
non-interest operating income indicates that the ability to sustain earnings is
less dependent upon the net interest margin. Overall, the Association's lower
level of non-interest operating income and higher level of operating expenses
translated into a less favorable efficiency ratio (operating expenses as a
percent of non-interest operating income and net interest income), which is
considered to be a key measure of core earnings strength. For the period shown
in Table 3.3, Guaranty Savings and the Peer Group posted efficiency ratios of
66.2 percent and 58.0 percent, respectively.
Favorable credit quality measures and low risk operating strategies
translated into minor loan loss provisions established by Guaranty Savings and
the Peer Group. Net gains were negative for both the Association and the Peer
Group, with such losses amounting to 0.60 percent and 0.23 percent of average
assets for Guaranty Savings and the Peer Group, respectively. The lower net
loss posted by the Peer Group was in part supported by the absence of the
special SAIF assessment for the Peer Group companies which reported earnings for
the twelve months ended June 30, 1996. Further contributing to the larger net
loss recorded by the Association was the loss recorded on the sale of
securities, which amounted to 0.12 percent of average assets. Gains and losses
resulting from the sale of loans and investments are generally viewed as being
non-recurring in nature, given that they are highly dependent upon interest rate
movements and typically do not represent a core earnings activity for a thrift.
Similarly, the special SAIF assessment is also viewed as a non-recurring item.
Accordingly, the Association's and the Peer Group's net losses will be
discounted in evaluating the relative strengths and weaknesses of their
respective earnings. Extraordinary items were not a factor in either the
Association's or the Peer Group's earnings.
Both the Association and the Peer Group exhibited effective tax rates which
indicated earnings were being fully taxed, with Guaranty Savings recording a
higher effective tax rate than the Peer Group (42.92 percent versus 28.60
percent for the Peer Group). Overall, net of the one time SAIF assessment
expense, the Association's and the Peer Group's reported earnings were
considered to be fairly representative of their core earnings.
Loan Composition
Table 3.4 presents data related to the loan composition of Guaranty Savings
and the Peer Group. An emphasis on low risk residential lending was apparent in
both the Association's and the Peer Group's loan compositions, with 1-4 family
permanent mortgage loans and mortgage-backed securities accounting for
97.1 percent and 82.8 percent of Guaranty Savings' and the Peer Group's loan and
MBS portfolios, respectively. Guaranty Savings' higher ratio was attributable
to its higher concentration of 1-4 family permanent mortgage loans, as the Peer
Group's ratio of mortgage-backed securities was above the
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of September 30, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ----- ------ ------- ------- -------- -------- ------ ---------- --------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings 14.40 82.70 1.05 0.94 0.00 0.91 34.69 0 0
SAIF-Insured Thrifts 15.74 61.48 5.15 11.54 1.61 6.34 51.08 431,340 3,100
State of LA 11.61 68.65 4.13 4.83 1.62 10.75 48.19 9,188 29
Comparable Group Average 17.46 65.32 4.34 11.34 0.51 3.13 46.64 4,460 0
Comparable Group
- ----------------
CCFH CCF Holding Company of GA(1) 18.01 72.17 12.29 2.69 0.00 1.58 40.69 8,883 0
CKFB CKF Bancorp of Danville KY 0.01 76.46 4.74 15.21 0.83 5.00 56.99 0 0
CZF Citisave Fin. Corp. of LA 5.05 76.27 7.69 8.30 1.22 5.39 45.61 1,333 0
DFIN Damen Fin. Corp. of Chicago IL 32.41 57.43 0.00 10.37 0.00 0.14 32.15 86 0
FTSB Fort Thomas Fin. Corp. of KY(1) 1.11 77.70 7.66 14.11 0.00 1.45 55.91 0 0
GWBC Gateway Bancorp of KY 63.23 34.26 0.00 1.10 0.00 1.42 28.78 0 0
KYF Kentucky First Bancorp of KY 28.86 40.20 0.49 24.27 3.03 3.44 53.54 0 0
MARN Marion Capital Holdings of IN 0.02 60.34 4.83 34.20 0.00 2.60 64.46 34,301 0
NSLB NS&L Bancorp of Neosho MO(1) 15.94 77.36 1.66 0.22 0.00 5.70 36.19 0 0
TSH Teche Holding Company of LA 9.96 81.04 4.04 2.91 0.00 4.57 52.06 0 0
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.13
Association's ratio. Given the Association's general philosophy of retaining
all originations for portfolio, loans serviced for others represented a more
significant off-balance sheet item for the Peer Group; however, the Peer Group's
average balance of loans serviced for others ($4.5 million) also indicated that
most of the Peer Group companies were originating loans primarily for portfolio.
Neither the Association or the Peer Group maintained any servicing intangibles.
As indicated by the higher percentage of 1-4 family loans maintained by the
Association, lending diversification was very limited for Guaranty Savings.
Comparatively, while not extensive, the Peer Group exhibited a greater degree of
lending diversification than Guaranty Savings. Multi-family/commercial real
estate loans accounted for the Peer Group's primary area of lending
diversification, amounting to 11.3 percent of the Peer Group's loan and MBS
portfolio. Other areas of lending diversification for the Peer Group consisted
mostly of construction/land and consumer loans, comprising 4.3 percent and 3.1
percent of the Peer Group's loan and MBS portfolio, respectively.
Comparatively, the Association's lending diversification reflected very minor
balances of multi-family/commercial real estate, construction/land and consumer
loans, with each loan type representing 1.1 percent or less of Guaranty
Savings' loan and MBS portfolio. Guaranty Savings does not holding any
commercial business loans, while commercial business loans constituted a very
modest area of lending diversification for the Peer Group. Consistent with the
Peer Group's greater diversification into higher risk types of lending, the
Association maintained a lower risk weighted assets-to-assets ratio than the
Peer Group (34.7 percent versus 46.6 percent for the Peer Group). Overall, both
the Association's and the Peer Group's risk weighted assets ratios were
indicative of relatively low risk operating strategies, as both ratios were
lower than the SAIF-insured average of 51.1 percent.
Interest Rate Risk
Table 3.5 reflects various key ratios highlighting the relative interest
rate risk exposure of the Association versus the Peer Group companies. The data
indicates a cumulative one year gap to assets ratios of negative 16.5 percent
for the Association, while only limited gap data was available for the Peer
Group companies. The two Peer Group companies which reported gap data exhibited
positive one year gap ratios of 11.9 percent and 16.2 percent, respectively.
Guaranty Savings' one year gap ratio indicates that net interest income is
exposed to a relatively high degree of volatility due to interest rate
movements; however, following the infusion of stock proceeds and the resulting
decline in the proportion of interest-sensitive liabilities meeting the
Association's funding needs, Guaranty Savings' one year gap should narrow
substantially.
<PAGE>
RP Financial, LC.
Page 3.14
Table 3.5
Guaranty Savings and Homestead Association and the Peer Group
Interest Rate Risk Comparative Analysis
<TABLE>
<CAPTION>
Interest-Earning Non Interest-
Assets/ Earning
One Year Equity/ Interest-Bearing Assets(3)/
Gap/Assets(1) Assets Liabilities(2) Assets
------------- ------- ---------------- --------------
(%) (%) (%) (%)
<S> <C> <C> <C> <C>
Guaranty Savings(4) -16.5% 28.3% 136.9% 4.6%
Peer Group Average 14.1% 21.6% 126.9% 3.1%
Peer Group(5)
- -------------
CCF Holding Company of GA NA 21.2% 127.0% 3.0%
CKF Bancorp of Danville KY NA 25.2% 134.7% 2.2%
Citisave Fin. Corp. of LA NA 16.0% 117.9% 3.5%
Damen Fin. Corp. of Chicago IL NA 22.5% 128.1% 2.6%
Fort Thomas Fin. Corp. of KY 11.9% (J95) 24.3% 129.8% 4.1%
Gateway Bancorp of KY NA 25.1% 133.2% 1.3%
Kentucky First Bancorp of KY NA 22.2% 126.9% 3.4%
Marion Capital Holdings of IN 16.2% (J96) 22.7% 125.3% 7.4%
NS & L Bancorp of Neosho MO NA 23.3% 130.0% 1.5%
Teche Holding Company of LA NA 13.8% 115.8% 2.0%
</TABLE>
(1) Latest date as of: M=March, J=June, S=September, D=December.
(2) Interest-earning assets includes cash; interest-bearing liabilities
includes non interest-bearing deposits but excludes escrows.
(3) Comprised of REO, non-accruing loans, and other non interest-earning
assets.
(4) Guaranty Savings' data is as of September 30, 1996.
(5) As of September 30, 1996 or most recent data available.
Sources: Guaranty Savings' prospectus and SNL Securities.
<PAGE>
RP Financial, LC.
Page 3.15
In terms of balance sheet composition, Guaranty Savings'' interest rate
risk characteristics were considered to be generally more favorable than the
Peer Group's. In particular, Guaranty Savings' higher capital position and
resulting higher IEA/IBL ratio indicate a lesser dependence on the yield-cost
spread to sustain the net interest margin. However, the Association's higher
level of non-interest earning assets indicates that the Peer Group has a
greater capacity to generate interest income in comparison to Guaranty
Savings. On a pro forma basis, the infusion of stock proceeds will serve to
further increase the IEA/IBL ratio advantage currently maintained by Guaranty
Savings.
Credit Risk
Overall, Guaranty Savings' credit risk exposure did not appear to be
materially different than the Peer Group's, with both the Association's and the
Peer Group's credit quality measures being representative of limited credit risk
exposure. As shown in Table 3.6, Guaranty Savings' ratio of non-performing
assets (REO, non-accruing loans and accruing loans more than 90 days past due)
to assets was lower than Peer Group's ratio (0.37 percent versus 0.62 percent
for the Peer Group). Similarly, Guaranty Savings' non-performing loans to loans
ratio was slightly lower than the Peer Group's ratio (0.73 percent versus 0.79
percent for the Peer Group). Loss reserve ratios as a percent of non-performing
assets also indicated limited credit risk exposure for the Association and Peer
Group, with the Association and the Peer Group maintaining loss reserves as a
percent of non-performing assets of 106.6 percent and 140.6 percent,
respectively. Net loan charge-offs were not a material factor for either the
Association or the Peer Group during the period covered in Table 3.6.
Summary
Based on the above analysis and the criteria employed by RP Financial in
the selection of the companies for the Peer Group, RP Financial concluded that
the Peer Group forms a reasonable basis for determining the pro forma market
value of Guaranty Savings. Such general characteristics as asset size, capital
position, interest-earning asset composition, funding composition, core earnings
measures and loan composition all tend to support the reasonability of the Peer
Group from a financial standpoint.
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of September 30, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------- ------ --------- -----
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings 0.00 0.37 0.73 0.78 106.64 106.64 24 0.06
SAIF-Insured Thrifts 0.19 0.87 0.94 0.85 177.70 125.59 263 0.10
State of LA 0.07 0.39 0.46 0.88 131.81 100.32 54 0.09
Comparable Group Average 0.02 0.62 0.79 0.58 80.68 140.59 3 0.02
Comparable Group
- -----------------
CCFH CCF Holding Company of GA(1) 0.00 0.92 1.50 0.89 59.37 59.37 0 0.00
CKFB CKF Bancorp of Danville KY 0.00 1.47 0.64 0.22 34.71 13.42 0 0.00
CZF Citisave Fin. Corp. of LA 0.10 0.22 0.21 0.15 73.63 40.85 14 0.13
DFIN Damen Fin. Corp. of Chicago IL 0.00 0.15 0.38 0.38 98.29 98.29 0 0.00
FTSB Fort Thomas Fin. Corp. of KY(1) 0.00 1.27 1.48 0.42 28.12 28.12 1 0.01
GWBC Gateway Bancorp of KY 0.00 0.45 0.33 0.44 135.00 25.80 0 0.00
KYF Kentucky First Bancorp of KY 0.00 0.09 NA 0.81 NA 486.84 1 0.01
MARN Marion Capital Holdings of IN 0.10 0.95 1.01 1.37 135.65 121.70 0 0.00
NSLB NS&L Bancorp of Neosho MO(1) 0.00 0.02 NA 0.14 NA 390.91 0 0.00
TSH Teche Holding Company of LA 0.01 NA NA 1.00 NA NA 14 0.00
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis, prepared pursuant to the
approved valuation methodology promulgated by the OTS, and valuation factors
used to determine the estimated pro forma market value of the common stock of
the Holding Company. The common stock will be issued in conjunction with the
conversion of Guaranty Savings from the mutual-to-stock form of ownership.
The valuation has been prepared utilizing the pro forma valuation methodology
promulgated by the OTS, most recently set forth in their 1994 valuation
guidelines.
Appraisal Guidelines
The OTS appraisal guidelines, originally released in October 1983,
specify the methodology for estimating the pro forma market value of an
institution. The methodology provides for: (1) selection of a peer group of
comparable publicly-traded institutions, subsequent guidance from the OTS
limited eligibility to only seasoned public companies in the peer group; (2)
a financial and operational comparison of the subject company to the peer
group; and (3) a valuation analysis in which the pro forma market value of
the subject company is determined based on the market pricing of the peer
group as of the date of valuation.
On October 21, 1994, the OTS released written revisions to the appraisal
guidelines, which had already been implemented in practice by the OTS. As
outlined in the guideline revisions, the basic appraisal methodology to be
followed is unchanged from the October 1983 guidelines. The revised
guidelines, however, limit the amount of a new issue discount which may be
incorporated into the valuation and thereby curtail the potential price
appreciation in the after-market.
RP Financial Approach to the Valuation
RP Financial's valuation analysis complies with the appraisal guidelines
as revised and issued as of October 21, 1994. Accordingly, the valuation
incorporates a detailed analysis based on the Peer Group discussed in Chapter
III, incorporating "fundamental analysis" techniques. Additionally, the
valuation incorporates a "technical analysis" of recently completed stock
conversions, given the significant weight in the valuation process of
limiting the new issue discount. The pricing characteristics of recent
conversions serve as the best proxy for near-term aftermarket trading
activity in newly issued thrift shares, and the pricing characteristics of
such recent conversions have been applied to Guaranty Savings' valuation in
order to evaluate
<PAGE>
RP Financial, LC.
Page 4.2
the Association's potential aftermarket trading characteristics. It should
be noted that such analysis cannot possibly fully account for all the market
forces which impact trading activity and pricing characteristics of a stock
on a given day.
The pro forma market value determined herein is a preliminary value for
the Holding Company's to-be-issued stock. Throughout the conversion process,
RP Financial will: (1) review changes in the Association's operations and
financial condition; (2) monitor the Association's operations and financial
condition relative to the Peer Group to identify any fundamental changes; (3)
monitor the external factors affecting value including, but not limited to,
local and national economic conditions, interest rates, and the stock market
environment, including the market for thrift stocks; and (4) monitor pending
conversion offerings (including those in the offering phase) both regionally
and nationally. If material changes should occur during the conversion
process, RP Financial will prepare updated valuation reports reflecting such
changes and their related impact on value, if any, over the course of the
conversion process. RP Financial will also prepare a final valuation update
at the closing of the conversion offering to determine if the preliminary
range of value continues to be appropriate.
The appraised value determined herein is based on the current market and
operating environment for the Association and for all thrifts. Subsequent
changes in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external forces
(such as natural disasters or major world events), which may occur from time
to time (often with great unpredictability) may materially impact the market
value of all thrift stocks, including Guaranty Savings, or Guaranty Savings'
value alone. To the extent a change in factors impacting the Association's
value can be reasonably anticipated and/or quantified, RP Financial has
incorporated the estimated impact into the valuation analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences relative
to the Peer Group was presented in Chapter III. The following sections focus
on differences between the Association and the Peer Group and how those
differences affect our pro forma valuation. Emphasis is placed on the
specific strengths and weaknesses of the Association relative to the Peer
Group in such key areas as financial condition, profitability, growth and
viability of earnings, asset growth, primary market area, dividends,
liquidity of the issue, marketing of the issue, management, and the effect of
government regulations and/or regulatory reform. We have also considered the
market for thrift stocks, and in particular new issues, to assess the impact
on value of Guaranty Savings coming to market at this time.
<PAGE>
RP Financial, LC.
Page 4.3
1. Financial Condition
The financial condition of an institution is an important determinant in
pro forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
Association's and the Peer Group's financial strengths are noted as follows:
o Overall A/L Composition. Residential assets, including 1-4 family
permanent mortgage loans and MBS, funded by retail deposits were the
primary components of both Guaranty Savings' and the Peer Group's
balance sheets. The Peer Group's interest-earning asset composition
exhibited a higher concentration of loans and greater diversification
into higher risk types of loans. Overall, the Association's and the
Peer Group's interest-earning compositions were fairly comparable in
terms of yield and credit risk exposure. The comparable yield earned
by the Association, despite the Peer Group's higher concentration of
loans, was supported by Guaranty Savings maintaining a relatively high
concentration of longer term fixed rate loans and investments. The
Association's and the Peer Group's credit risk exposure were
considered to be somewhat limited, as indicated by relatively low risk
weighted assets-to-assets ratios and generally favorable credit
quality measures. The Peer Group's higher concentration of loans and
greater diversification into higher risk types of lending translated
in a slightly higher level of non-performing asset than maintained by
Guaranty Savings. There were no material differences in Guaranty
Savings' and the Peer Group's funding compositions, with retail
deposits meeting the major portion of their respective funding needs.
Borrowings were utilized to a slightly greater degree by the Peer
Group, although both the Association and the Peer Group maintained
ample borrowing capacities. For valuation purposes, RP Financial
concluded no adjustment was warranted for the Association's
asset/liability composition.
o Credit Quality. Both the Association's and the Peer Group's credit
quality measures were indicative of limited credit risk exposure.
Guaranty Savings maintained a slightly lower non-performing
assets-to-assets ratio than the Peer Group, while the Peer Group
maintained higher reserves than Guaranty Savings as a percent of
non-performing assets. The low risk operating strategies maintained
by the Association and the Peer Group were further indicated by risk
weighted assets-to-assets ratios that were lower than the comparable
ratio for all publicly-traded SAIF-insured thrifts, with Guaranty
Savings maintaining a lower risk weighted assets-to-assets ratio than
the Peer Group. Overall, we concluded that no adjustment was
warranted for the Association's credit quality.
o Balance Sheet Liquidity. The Association operated with a higher
balance of cash and investment securities than the Peer Group (37.5
percent of assets versus 22.0 percent for the Peer Group). Guaranty
Savings and the Peer Group were considered to have ample borrowing
capacities, as Guaranty Savings did not maintain any borrowings and
the Peer Group's borrowings amounted to 7.2 percent of assets.
Overall, the Association's current balance sheet liquidity is
considered to be more favorable than Peer Group's, with the infusion
of conversion proceeds expected to further increase Guaranty Savings'
balance sheet liquidity as the proceeds will likely be initially
deployed into short-term investments. However, at the same time, the
Peer Group maintains significant balance sheet liquidity as well and,
thus, RP Financial concluded that a slight upward adjustment was
warranted for the Association's balance sheet liquidity.
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RP Financial, LC.
Page 4.4
o Funding Liabilities. Retail deposits served as the primary
interest-bearing source of funds for the Association and the Peer
Group, with borrowings being utilized to a slightly greater degree by
the Peer Group. Guaranty Savings' absence of borrowings was favorable
in terms of providing for lower funding costs and slightly greater
future borrowing capacity. For purposes of the valuation, RP
Financial concluded that Guaranty Savings' funding composition
warranted a slight upward adjustment.
o Capital. The Association operates with a higher pre-conversion
capital ratio than the Peer Group, 28.3 percent and 21.6 percent of
assets, respectively. The Association's capital advantage will be
increased further by the infusion of stock proceeds, providing
Guaranty Savings with greater leverage potential. At the same time,
the Association's more significant capital surplus will likely result
in a depressed ROE for an extended period of time. Overall, RP
Financial concluded that no valuation adjustment is warranted for the
Association's capital position.
On balance, the characteristics of the Association's and the Peer Group's
financial conditions were not materially different in most respects for
valuation purposes. Guaranty Savings' balance sheet liquidity and funding
composition represented positive valuation considerations, while the other
financial condition measures were considered to be fairly comparable for the
Association and the Peer Group. Overall, we concluded that a slight upward
valuation adjustment was warranted for the Association's financial strength.
2. Profitability, Growth and Viability of Earnings
Earnings are an important factor in determining pro forma market value,
as the level and risk characteristics of an institution's earnings stream and
the prospects and ability to generate future earnings are typically heavily
factored into an investment decision. The historical income statements of
Guaranty Savings and the Peer Group were generally reflective of traditional
thrift operating strategies, with net interest income and operating expenses
being the major determinants of their respective earnings. The specific
factors considered in the valuation include:
o Reported Earnings. The Association recorded lower earnings on a ROAA
basis (0.44 percent of average assets versus 0.97 percent for the Peer
Group). Both the Association's and the Peer Group's reported earnings
were depressed by the one time assessment to recapitalize the SAIF,
with the earnings advantage maintained by the Peer Group being in part
attributable to the fact that reported earnings for some of the Peer
Group companies were for the twelve months ended June 30, 1996 and,
thus, did not include the impact of the SAIF assessment. Absent the
SAIF assessment expense, Guaranty Savings'' reported earnings were
slightly lower than the Peer Group's. The Peer Group's more favorable
reported earnings stemmed largely from more favorable core earnings
measures of lower operating expenses and higher non-interest operating
income, with Guaranty Savings' stronger net interest margin somewhat
negating the Peer Group's core earnings advantage. However, after
taking into account the pro forma impact of conversion proceeds on
Guaranty Savings' earnings, the Association's and the Peer Group's
reported earnings indicated comparability in earnings strength on a
ROAA basis. However, the Association's pro forma ROE will be well
below the Peer Group average. Overall, no adjustment was warranted
for this factor.
<PAGE>
RP Financial, LC.
Page 4.5
o Core Earnings. Net of the SAIF assessment, both the Association's and
the Peer Group's earnings were derived largely from recurring sources,
including net interest income, operating expenses, and non-interest
operating income. In these measures, the Association operated with a
stronger net interest margin, a higher operating expense ratio and a
lower level of non-interest operating income. The Association's
stronger net interest margin and higher level of operating expenses
translated into a lower expense coverage ratio (1.48x versus 1.57x for
the Peer Group). The Peer Group's lower operating expense ratio and
higher level of non-interest operating income also supported a more
favorable efficiency ratio (58.0 percent versus 66.2 percent for the
Association). Consistent with the Association's and the Peer Group's
favorable credit quality measures, loss provisions had a minimal
impact on their respective earnings. Overall, the Association's
currently less favorable core earnings should be largely addressed by
the expected earnings benefits to be realized from the redeployment of
conversion proceeds into interest-earning assets, which will be
partially offset by expenses associated with the stock benefit plans
and operating as a publicly-traded company. Accordingly, we concluded
that no valuation adjustment was warranted for the Association's core
earnings.
o Interest Rate Risk. Exposure to interest rate risk is considered to
be somewhat limited for both the Association and the Peer Group, in
light of their strong capital positions and resulting favorable
IEA/IBL ratios. The current IEA/IBL ratio advantaged maintained by
Guaranty Savings will be strengthened by the redeployment of stock
proceeds into interest-earning assets. Likewise, the redeployment of
stock proceeds into short-term investments will serve to diminish the
negative short-term gap position currently maintained by the
Association Accordingly, RP Financial concluded that the interest
rate risk associated with the Association's and the Peer Group's
earnings was comparable.
o Credit Risk. Loan loss provisions were not a significant factor in
either Guaranty Savings' or the Peer Group's earnings. In terms of
future exposure to credit quality related losses, both the
Association's and the Peer Group's operating strategies and credit
quality measures indicated relatively limited credit risk exposure.
Lending diversification into higher risk types of loans was more
notable for the Peer Group, which along with the higher concentration
of loans maintained by the Peer Group translated into a higher risk
weighted assets-to-assets ratio for the Peer Group. However, both the
Association's and the Peer Group's risk weighted assets-to-assets
ratios were below the average for all publicly-traded SAIF-insured
thrifts and, thus, indicated low credit risk operating strategies.
Overall, RP Financial concluded that the credit risk exposure
associated with the Association's earnings was similar to the Peer
Group's and no adjustment was warranted for valuation purposes.
o Earnings Growth Potential. Several factors were considered in
assessing earnings growth potential. First, the Peer Group's
historical growth has been stronger than the Association's, even
though Guaranty Savings currently maintains greater leverage capacity
and higher liquidity than the Peer Group. Second, the infusion of
stock proceeds will further increase the Association's earnings growth
potential advantages with respect to leverage capacity and
availability of liquidity to fund loan growth. Lastly, as shown in
Exhibit III-4, opportunities for lending growth in the market area
where the Association maintains its largest presence (Jefferson
Parish) is considered to be less favorable than in the primary market
areas served by the Peer Group companies, as indicated by comparative
population growth rates. On balance, the Association's earnings
growth potential was considered to be comparable to the Peer Group's
for purposes of this valuation.
o Return on Equity. The Association's return on equity will be well
below the Peer Group and industry averages, owing to Guaranty Savings'
significant pro forma capitalization that will
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RP Financial, LC.
Page 4.6
provide an equity-to-assets ratio in excess of 40.0 percent. In
view of the limited capital growth rate that will be imposed by
Guaranty Savings' extremely high equity position, it is expected
that the market will consider the Association's stock to be less
attractive until the Association can demonstrate its ability to
profitably leverage its equity in a prudent manner. Therefore, RP
Financial concluded that a moderate downward adjustment was
warranted for the Association's ROE.
Overall, Guaranty Savings' earnings characteristics were considered to
be comparable to the Peer Group's, with the most distinguishing factor being
the Association's significantly lower pro forma return on equity.
Accordingly, RP Financial concluded that a moderate downward valuation
adjustment was warranted for profitability, growth and viability of the
Association's earnings relative to the Peer Group's.
3. Asset Growth
Guaranty Savings' asset growth was lower than the Peer Group's, during
the period covered in our comparative analysis (positive 0.8 percent versus
positive 4.8 percent for the Peer Group). While the Association's capital
position, both currently and on a pro forma basis, provides for greater
capacity to leverage relative to the Peer Group's equity-to-assets ratio, it
is not viewed as a material advantage for the Association. The Association's
greater leverage capacity is viewed to be negated by the limited growth
recorded by Guaranty Savings historically, despite maintaining a high level
of capital, and the comparatively less favorable loan and deposit growth
potential that is indicated by the Association's primary market area
demographic characteristics. On balance, we believe no adjustment is
warranted for this factor.
4. Primary Market Area
The general condition of a financial institution's market area has an
impact on value, as future success is in part dependent upon opportunities
for profitable activities in the local market area. The primary market area
served by Guaranty Savings, consisting of certain segments of the New Orleans
metropolitan area, has shown signs of sporadic recovery from the significant
economic downturn that occurred in the late-1980s. Jefferson Parish, where
the Association maintains its largest presence has exhibited modest
population and household growth rates which were below the comparative U.S.
and Louisiana growth rates. While St. Tammany Parish has recorded relatively
strong demographic growth, Guaranty Savings' presence in that market area is
somewhat limited, maintaining one branch in Mandeville which was opened
approximately six months ago. Orleans Parish, where the Association also
maintains a relatively small branch, has exhibited declines in population and
households and is considered to be the least favorable of the markets served
by Guaranty Savings in terms of supporting loan and deposit growth
opportunities.
<PAGE>
RP Financial, LC.
Page 4.7
In general, the Peer Group companies operate in healthier and faster
growing market areas than the Association's primary market area (see Exhibit
III-4). Population growth in the primary market areas served by the Peer
Group companies was generally more favorable than the comparative measure for
Jefferson Parish. As shown in Table 4.1, September 1996 unemployment rates
in the markets served by the Peer Group companies were generally not
dramatically different than Jefferson Parish's September 1996 unemployment
rate. Overall, the Peer Group companies appear to generally operate in
healthier and faster growing market environments compared to the primary
market area served by Guaranty Savings, which would tend to be more favorable
for the Peer Group companies with respect to limiting potential credit risk
exposure and providing opportunities for loan and deposit growth. Therefore,
we concluded a slight downward adjustment was appropriate for the
Association's market area.
Table 4.1
Market Area Unemployment Rates
Guaranty Savings and the Peer Group Companies (1)
September 1996
County Unemployment
Guaranty Savings - LA Jefferson 5.4%
The Peer Group
CCF Holding Company - GA Clayton 4.8%
CKF Bancorp of Danville - KY Boyle 3.6
Citisave Fin. Corp. - LA East Baton Rouge 5.5
Damen Fin. Corp. - IL Cook 5.3
Fort Thomas Fin. Corp. - KY Campbell 3.6
Gateway Bancorp - KY Boyd 3.6
Kentucky First Bancorp - KY Harrison 3.6
Marion Capital Holdings - IN Grant 5.4
NS & L Bancorp of Neosho - MO Newton 6.4
Tech Holding Company - LA St. Mary 8.1
(1) Unemployment rates are not seasonally adjusted.
Source: U.S. Bureau of Labor Statistics.
5. Dividends
The Holding Company presently has not established a dividend policy, but
will consider instituting a cash dividend policy at some point in the future,
based on numerous factors including growth objectives, financial condition,
the amount of net proceeds retained by the Holding Company in the conversion,
investment
<PAGE>
RP Financial, LC.
Page 4.8
opportunities available to the Holding Company and the Association,
profitability, tax considerations, minimum capital requirements, regulatory
limitations, stock market characteristics and general economic conditions.
Historically, thrifts typically have not established dividend policies
at the time of their conversion to stock ownership. Newly converted
institutions, in general, have preferred to gain market seasoning, establish
an earnings track record and fully invest the conversion proceeds before
establishing a dividend policy. However, during the late-1980s and
early-1990s, with negative publicity surrounding the thrift industry, there
was a tendency for more thrifts to initiate moderate dividend policies
concurrent with their conversion as a means of increasing the attractiveness
of the stock offering. Today, fewer institutions are compelled to initially
establish dividend policies at the time of their conversion offering to
increase the attractiveness of the stock issue as (1) industry profitability
has improved, (2) the number of problem thrift institutions has declined, and
(3) the stock market cycle for thrift stocks is generally more favorable than
in the early-1990s. At the same time, with ROE ratios under pressure, due to
high equity levels, well-capitalized institutions are subject to increased
competitive pressures to offer dividends.
As publicly-traded thrifts' capital levels and profitability have
improved and as weakened institutions have been resolved, the proportion of
institutions with cash dividend policies has increased. All ten of the
institutions in the Peer Group presently pay regular cash dividends, with
implied dividend yields ranging from 1.75 percent to 4.35 percent. The
average dividend yield on the stocks of the Peer Group institutions was 2.98
percent as of December 13, 1996, representing an average earnings payout
ratio of 60.09 percent (payout ratio is skewed upwards by the negative
earnings impact of the special SAIF assessment). As of December 13, 1996,
approximately 80 percent of all publicly-traded SAIF-insured thrifts had
adopted cash dividend policies (see Exhibit IV-1), exhibiting an average
yield of 2.34 percent and an average payout ratio of 41.72 percent. The
dividend paying thrifts generally maintain higher than average profitability
ratios, facilitating their ability to pay cash dividends, which supports a
slight market pricing premium on average relative to non-dividend paying
thrifts.
The Holding Company will have the capacity to pay a dividend that is
comparable to the Peer Group's average dividend yield, based on pro forma
profitability and capital. Accordingly, the Holding Company's decision to
forego establishing a dividend policy at the time of conversion is not
believed to represent a material impact on the attractiveness of its stock,
relative to the stocks of the Peer Group companies on average. Accordingly,
no adjustment has been applied for this factor.
<PAGE>
RP Financial, LC.
Page 4.9
6. Liquidity of the Shares
The Peer Group is by definition composed of companies that are traded in
the public markets, seven of which trade on the NASDAQ and three of which
trade on the AMEX. Typically, the number of shares outstanding and market
capitalization provides an indication of how much liquidity there will be in
a particular stock. The market capitalization of the Peer Group companies
ranged from $11.6 million to $48.5 million as of December 13, 1996, with an
average market value of $24.8 million. The shares outstanding of the Peer
Group members ranged from 843,000 to 3.8 million, with average shares
outstanding of approximately 1.7 million. The Association's conversion
offering will result in a market value and shares outstanding that are not
materially different in terms of providing for liquidity in the stock.
Accordingly, similar to the Peer Group companies, we anticipate that there
will be a liquid and efficient trading market for the Association's stock
and, thus, no adjustment was required for this factor.
7. Marketing of the Issue
We believe that three separate markets exists for thrift stocks coming
to market such as Guaranty Savings: (1) the after-market for public
companies, in which trading activity is regular and investment decisions are
made based upon financial condition, earnings, capital, ROE and dividends;
(2) the new issue market in which converting thrifts are evaluated on a pro
forma basis without the benefit of prior operations as a publicly-held
company and stock trading history; and (3) the acquisition market for thrift
franchises in Louisiana. All three of these markets were considered in the
valuation of the Association's to-be-issued stock.
A. The Public Market
The value of publicly-traded thrift stocks is easily measurable, and is
tracked by most investment houses and related organizations. In general,
thrift stock values react to market stimuli such as interest rates,
inflation, perceived industry health, projected rates of economic growth,
regulatory issues and stock market conditions in general. Exhibit IV-2
displays historical stock market trends for various indices and includes
historical stock price index values for thrifts and commercial banks.
Exhibit IV-3 displays historical stock price indices for thrifts only.
In terms of assessing general stock market conditions, the stock market
has generally trended higher over the past year. The Dow Jones Industrial
Average ("DJIA") rallied to new highs in early- and mid-November 1995, with
the rally being initially led by transportation issues, and continued
strength in the bond market. Investors poured into defensive issues during
the first budget impasse, with the DJIA posting several consecutive highs in
mid-November. The DJIA surged past the 5000 mark in late-November,
reflecting
<PAGE>
RP Financial, LC.
Page 4.10
strength in blue chip issues and a mild rebound in the technology sector amid
increasing expectations that the Federal Reserve would cut short-term
interest rates. Defensive issues sustained the rally through early-December,
while weakness in the technology sector provided for a slight pull-back in
the stock market in mid-December. At the close of 1995, market activity was
mixed. Favorable inflation data led to a 0.25 percent cut in short-term
interest rates by the Federal Reserve in late-December, which served to
initially lift stock prices. However, the second budget impasse and weak
holiday retail sales quickly erased the positive impact of the interest rate
cut, as the DJIA dropped sharply shortly after the Federal Reserve action.
Bond prices rallied on news of the sagging economy, as the 30-year bond yield
fell below 6.0 percent in late-December.
The stock market began 1996 on a down note, reflecting concern over the
budget stalemate in Washington. A sell-off in technology stocks further
sustained the decline in the stock market, as investors dumped technology
stocks on profit concerns. However, favorable inflation data and strong
fourth quarter earnings by some blue chip issues served to abbreviate the
decline in the stock market, with the DJIA posting several new highs in the
second half of January. Stock prices were further boosted by increasing
expectations of another rate cut by the Federal Reserve, which occurred at
the end of January. The stock market moved sharply higher in early-February,
as the cut in short-term interest rates and strong fourth quarter earnings
posted by some large technology companies served to renew investor interest
in technology stocks. Low inflation and modest economic growth translated
into renewed interest for cyclical stocks as well, with the DJIA posting five
consecutive all-time highs during the week ended February 9. Congressional
testimony by the Federal Reserve Chairman provided for significant swings in
the stock market in mid-February, reflecting changing investor sentiment
regarding the possibility of future rate cuts. The volatility continued
through the end of February, reflecting turbulence in the bond market and
general uncertainty over future interest rate trends. An unexpectedly large
drop in the February unemployment rate provided for a sharp one day sell-off
in the stock market on March 8, as bond prices plunged on news of the strong
job growth and the possibility that an accelerating economy may lead to
higher inflation. However, the stock market recovered the following week, as
inflation fears were somewhat alleviated by additional economic data which
indicated a more modest pace of economic growth than suggested by the
unemployment data, including a 0.2 percent drop in February wholesale prices.
After trading in a narrow range through the end of March, merger activity and
a jump in IBM's stock price propelled the DJIA to a new record in
early-April. The upturn was brief, as bond and stock prices slumped following
the stronger than expected March employment report which served to rekindle
inflation fears.
Earnings reports dominated the stock market in mid-April 1996, with
day-to-day fluctuations in the market reflecting changing investor sentiment
regarding the strength of first quarter earnings and future earnings
expectations. Favorable fourth quarter earnings among technology issues
pushed the NASDAQ
<PAGE>
RP Financial, LC.
Page 4.11
Composite Index to new highs in late-April and early-May, while blue chip
stocks lagged the overall market. Stronger than expected first quarter GDP
growth reported in early-May stirred major sell-offs in stocks and bonds,
resulting in the 30-year bond edging above 7.0 percent and a one day drop in
the DJIA of almost 77 points. Inflation concerns receded somewhat following
a mid-May report by the Federal Reserve, which indicated that inflation
remained in check and near term rate increases were not likely. The positive
reading on inflation by the Federal Reserve, along with the Federal Reserve's
decision to leave interest rates unchanged at its late-May meeting, served to
strengthen bond and stock prices, with the DJIA posting new highs in late-May
and the 30-year bond dropping below 7.0 percent. However, signs of an
accelerating economy and revised upward estimates of second quarter GDP
growth provided for a pullback in the stock market at the end of May.
Stronger than expected job growth in May further depressed bond prices in
early-June, which served to stall the stock market as well.
Expectations that the Federal Reserve would not tighten interest rates
at its July 1996 meeting provided for a rally in the bond market in
late-June, as the 30-year bond yield dropped below 7.0 percent. The positive
interest rate outlook also served to boost the stock market in early-July,
but the rally was cut short by a larger than expected drop in June
unemployment. Bond and stock prices tumbled following the June unemployment
report, as highlighted by a 115 point decline in the DJIA and an increase in
the 30-year bond yield to 7.18 percent. The release of second quarter
earnings reports provided for a volatile stock market in mid-July, especially
among the technology stocks. Overall, the stock market declined due to
earnings disappointments, with a more severe decline occurring in the
technology driven NASDAQ Composite Index. At the same time bond prices
recovered, as the 30-year bond yield dropped below 7.0 percent following
statements by the Federal Reserve Chairman which indicated he expected the
economy to slow down in the second half of 1996. Stocks and bonds rallied in
late-July and early-August, as economic data indicated a healthy but
moderating economy. However, higher interest rates pushed stocks lower in
late-August, reflecting increasing expectations that the Federal Reserve
would tighten interest rates in September. The decline in the stock market
was reversed in early-September, as investors reacted positively to the
inflation data contained in the August employment report. Oil stocks
sustained the upward trend in the stock market in early-September, as renewed
tension between the U.S. and Iraq pushed crude oil prices to their highest
level in five years. Both bond and stock prices surged higher in
mid-September, as most of the economic data for August indicated that economy
was moderating and investors became more optimistic that the Federal Reserve
would not raise interest rates in September.
The Federal Reserve's decision not to raise interest rates at its
September 1996 meeting, and generally healthy third quarter earnings results
sustained the upward momentum in the stock market during the beginning of the
fourth quarter. Favorable inflation data and lower interest rates further
spurred the upward
<PAGE>
RP Financial, LC.
Page 4.12
trend in the stock market prior to the election. Investors were cheered by
the "status quo" election results, as stocks rallied strongly immediately
following the election with the DJIA posting ten consecutive advances through
mid-November. Economic stability and a rising bond market sustained the
stock market rally through the end of November. For the entire month of
November, the DJIA increased 492.3 points, or 8.2 percent. Following the
rapid rise in the stock market during November, stocks retreated during the
first half of December. Profit taking, concern about speculative excesses in
the stock market and higher interest rates all contributed to the decline in
the stock market. On December 13, 1996, the DJIA closed at 6304.87,
translating into an increase of 23.2 percent from year end 1995.
Similar to the overall stock market, the market for thrift stocks has
generally been favorable during the past twelve months. Sustained by
acquisition activity and relatively low interest rates, thrift stocks edged
higher during the first half of November 1995. A tax law change in the new
congressional budget, which would provide for the elimination of back taxes
on bad-debt reserves taken before 1988, served to push thrift stocks higher
in late-November, as investors speculated that the removal of the potential
back taxes would accelerate the pace of mergers and acquisitions in the
thrift industry. Uncertainty regarding the Federal Reserve's intentions on
cutting short-term interest rates provided for a relatively narrow trading
range for thrift stocks during the first half of December. The rate cut by
the Fed and reports of sluggish retail sales led to a rally in the bond
market in late-December, which, in turn, bolstered prices for thrift and bank
issues.
Thrift stocks followed the stock market in general lower in early-1996,
reflecting concern that the absence of a budget agreement would lead to
higher interest rates. The downturn in thrift stocks was brief, as thrift
prices trended higher in the second half of January. Economic data which
indicated that inflation was low supported the recovery in thrift prices, as
the favorable inflation news served to calm the credit markets and increased
expectations that interest rates would remain low. Thrift prices were
further boosted by the Federal Reserve's move to cut short-term interest
rates at the end of January and generally favorable fourth quarter earnings.
Mixed indications on the future direction of interest rates translated into a
relatively narrow trading range for thrift stocks throughout February.
Interest sensitive issues were among the stocks most severely affected
by the sell-off precipitated by the decline in the February 1996 unemployment
rate, as prospects for further near-term rate cuts by the Federal Reserve
were substantially eliminated by the explosive job growth. However, thrift
prices rebounded in late-March and early-April as interest rates stabilized.
A bullish outlook on the financial institution sector in general served to
further bolster prices in early-April, as a number of analysts forecasted
healthy first quarter earnings for thrift and bank stocks and that the
financial institution sector would outperform the market in general during
the balance of 1996. However, thrift prices declined following the release
of the March employment report, as interest sensitive stocks were pulled
lower by the unfavorable
<PAGE>
RP Financial, LC.
Page 4.13
interest rate outlook. The downturn was abbreviated by the generally strong
first quarter earnings posted by bank and thrift issues, which provided for a
mild upward trend in thrift stocks in mid-April. Paralleling the stock
market in general, thrift prices dropped sharply in early-May following the
rise in interest rates caused by the strong first quarter GDP growth. Thrift
prices rebounded in mid-May, as interest rates declined slightly on the
strength of tame inflation news. At the end of May and through mid-June,
uncertainty over future interest rate trends provided for a flat thrift stock
market.
The Supreme Court's ruling in favor of thrifts seeking damages for
goodwill served to boost thrift prices in the beginning of July, but the
upturn was abbreviated by a sharp increase in interest rates in early-July.
The sharp rise in interest rates, which was prompted by the stronger than
expected June unemployment report, pushed interest-sensitive issues in
general lower. Generally favorable second quarter earnings and lower interest
rates supported a modest recovery in thrift prices in mid-July, although
concerns about future interest rate trends moderated the impact of the
healthy second quarter earnings. Lower interest rates and the announced
acquisitions of two large California thrifts, American Savings with $20
billion in assets and CalFed Bancorp with $14 billion in assets, pushed the
SNL Index higher in late-July and through mid-August. Thrift stocks settled
into a narrow trading range in late-August and early-September, as higher
interest rates dampened interest in the thrift sector. For the balance of
September, trading activity in thrift stocks was somewhat mixed. Higher
thrift prices were recorded in mid-September, as the yield on the 30-year
U.S. Treasury bond briefly dropped below 7.0 percent. However, the rally in
financial services stocks faltered in late-September, reflecting renewed
fears about higher interest rates and rising bad debt on credit cards.
Thrift prices generally moved higher during October and November 1996.
The upward trend in thrift prices was supported by lower interest rates, with
the slow down in economic growth pushing the 30-year U.S. bond rate below 6.5
percent during the second half of November. Investors also reacted
positively to the SAIF rescue legislation, in light of the reduction in
deposit insurance premiums to be paid by SAIF-insured thrifts following the
one time special assessment. Similar to the overall stock market, thrift
prices traded lower in early-December. Profit taking and expectations of
higher interest rates were factors contributing to the pull back in thrift
issues. The SNL Index for all publicly-traded thrifts closed at 473.6 on
December 13, 1996, an increase of 27.0 percent from one year ago.
B. The New Issue Market
In addition to thrift stock market conditions in general, the new
issue market for converting thrifts is also an important consideration in
determining the Association's pro forma market value. Demand for converting
issues was strong in the first quarter of 1996, with most offerings being
oversubscribed and posting healthy increases in near term aftermarket
trading. Comparatively, offerings completed in the second quarter
<PAGE>
RP Financial, LC.
Page 4.14
reflected a cooling interest in thrift IPOs, as indicated by fewer
oversubscriptions and generally weak aftermarket trading performance. The
most recently completed offerings, offerings which have closed during the
past three months, have generally been well received in the market place.
Fewer offerings, more attractive pricing, lower interest rates, and the
general positive trend in thrift prices have been among the most prominent
factors contributing to the renewed investor interest shown for converting
thrift issues. As shown in Table 4.2, the median one week change in price
for offerings completed during the latest three months equaled positive 25.0
percent.
In examining the current pricing characteristics of institutions
completing their conversions during the last three months (see Table 4.3), we
note there exists a considerable difference in pricing ratios compared to the
universe of all publicly-traded thrifts. Specifically, the current average
P/B ratio of the conversions completed in the most recent three month period
of 90.44 percent reflects a discount of 22.4 percent from the average P/B
ratio of all publicly-traded SAIF-insured thrifts (equal to 116.52 percent),
and the average core P/E ratio of 18.54 times reflects a premium of 19.5
percent from the all SAIF-insured public average core P/E ratio of 15.51
times. The pricing ratios of the better capitalized but lower earning (based
on return on equity measures) recently converted thrifts suggest that the
investment community has determined to discount their stocks on a book basis
until the earnings improve through redeployment and leveraging of the
proceeds over the longer term.
In determining our valuation adjustment for marketing of the issue,
we considered trends in both the overall thrift market and the new issue
market. The overall market for thrift stocks is considered to be healthy, as
thrift stocks are currently exhibiting pricing ratios that are approaching
historically high levels. Investor interest in the new issue market has been
favorable, as most of the recently completed offerings have been
oversubscribed and have recorded healthy price increases in initial
post-conversion trading activity.
C. The Acquisition Market
Also considered in the valuation was the potential impact on
Guaranty Savings' stock price of recently completed and pending acquisitions
of other thrifts operating in Guaranty Savings' market area. As shown in
Exhibit IV-4, there has been a fair amount of acquisition activity involving
Louisiana commercial banks over the past few years, while only one Louisiana
thrift has been acquired. The absence of thrift acquisitions is due, in
part, to the relatively limited number of publicly-owned thrifts based in
Louisiana. In light of the Association's extremely high pro forma capital
position, which would tend to make Guaranty Savings a less attractive
acquisition candidate, acquisition speculation is not expected to have a
material influence on the Association's initial trading price. However, at
the same time, the acquisition market for Louisiana bank stocks has been
fairly active, which may imply a certain degree of acquisition speculation
for
<PAGE>
RP Financial, LC.
Page 4.15
RP Financial, LC.
Table 4.2
Recent Conversions (Last Three Months)
Conversion Pricing Characteristics: Sorted Chronologically
<TABLE>
<CAPTION>
Institutional Information Pre-Conversion Data Insider Purchases
------------------------- ------------------- -----------------
Offering
Financial Info. Asset Quality Information
-------------- ------------- -----------
Benefit Plans
-------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./ Recog. Mgmt.
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc. ESOP Plans & Dirs.
- ----------- ----- ---- ------ ------ ------- ------ ---- ----- ---- ----- ---- ----- -------
($Mil) (%) (%)(2) (%) ($Mil) (%) (%) (%) (%) (%)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PS Financial IL 11/27/96 PSFI 55 22.48% 1.06% 32% 21.8 132% 2.7% 8.0% 4.0% 4.8%
Carolina Fincorp(1) NC 11/25/96 CFNC 94 9.18% 0.06% 659% 18.5 132% 4.8% 8.0% 4.0% 7.0%
Delphos Citizens
Bancorp OH 11/21/96 DCBI 92 12.65% 1.04% 10% 20.4 132% 2.7% 8.0% 4.0% 3.3%
Fulton Bancorp MO * 10/18/96 FTNB 90 10.33% 0.54% 276% 17.2 132% 3.2% 8.0% 4.0% 7.4%
Chester Bancorp IL * 10/08/96 CNBA 137 8.81% 0.16% 179% 21.8 132% 3.0% 8.0% 4.0% 18.2%
South Street Fin.
Corp.(1) NC 10/03/96 SSFC 168 12.33% 0.36% 73% 45.0 132% 3.1% 8.0% 4.0% 2.1%
AFSALA Bancorp NY 10/01/96 AFED 137 6.08% 0.56% 105% 14.5 132% 4.9% 8.0% 4.0% 4.7%
CBES Bancorp MO * 09/30/96 CBES 90 9.00% 0.73% 59% 10.3 98% 5.1% 8.0% 4.0% 10.3%
First Allen
Parish Bancorp LA 09/30/96 P. Sheet 30 7.30% 0.43% 242% 2.6 106% 13.2% 8.0% 4.0% 19.3%
Westwood Hmstd.(1) OH * 09/30/96 WEHO 98 14.59% 0.00% NM 28.4 132% 2.5% 8.0% 4.0% 11.9%
Home Bancorp
of Elgin IL * 09/27/96 HBEI 300 12.38% 0.49% 60% 70.1 132% 2.7% 8.0% 4.0% 2.0%
Foundation Bancorp OH 09/26/96 P. Sheet 31 9.06% 0.00% NA 4.6 132% 5.4% 8.0% 4.0% 16.0%
Midwest SB IL * 09/23/96 P. Sheet 36 4.33% 0.60% 83% 1.9 132% 19.8% 7.0% 3.0% 12.7%
Peoples Financial
Corp. OH 09/13/96 PFFC 78 12.88% 0.77% 32% 14.9 100% 3.9% 4.0% 4.0% 6.4%
Averages: $103 10.81% 0.49% 151% $20.9 126% 5.5% 7.6% 3.9% 9.0%
Medians: 91 9.76% 0.52% 78% 17.9 132% 3.5% 8.0% 4.0% 7.2%
Pro Forma Data Post-IPO Pricing Trends
-------------- ----------------------------------------------
Pricing Ratios(4) Fin. Characteristics Closing Price:
- ----------------- -------------------- ----------------------------------------------
First After After
IPO Trading % First % First %
P/TB P/E P/A ROA TE/A ROE Price Day Chg. Week(5) Chg. Month(6) Chg.
(%) (x) (%) (%) (%) (%) ($) ($) (%) ($) (%) ($) (%)
- ---- --- --- --- ---- --- ----- ------- ---- ------- ---- -------- ----
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
70.5% 14.2 29.7% 2.1% 42.1% 5.0% 10.00 11.64 16.4% 11.88 18.8% $11.94 19.4%
77.0% 19.3 16.9% 0.9% 22.0% 4.0% 10.00 13.00 30.0% 13.00 30.0% 13.75 37.5%
70.2% 13.6 18.6% 1.4% 26.5% 5.2% 10.00 12.13 21.3% 12.50 25.0% 11.75 17.5%
71.9% 15.0 16.4% 1.1% 22.8% 4.8% 10.00 12.50 25.0% 12.88 28.8% 14.75 47.5%
71.3% 15.7 14.1% 0.9% 19.7% 4.6% 10.00 12.94 29.4% 12.88 28.8% 12.88 28.8%
76.1% 16.2 21.6% 1.3% 28.4% 4.7% 10.00 12.75 27.5% 12.50 25.0% 12.25 22.5%
71.2% 16.3 9.7% 0.6% 13.7% 4.4% 10.00 11.38 13.8% 11.31 13.1% 12.13 21.3%
61.9% 13.3 10.4% 0.8% 16.9% 4.6% 10.00 12.63 26.3% 13.44 34.4% 13.50 35.0%
63.5% 8.4 8.3% 1.0% 13.0% 7.6% 10.00 NT NA NT NA NT NA
73.5% 36.5 23.2% 0.6% 31.5% 2.0% 10.00 10.75 7.5% 10.63 6.3% 10.63 6.3%
72.3% 24.0 19.5% 0.8% 26.9% 3.0% 10.00 11.81 18.1% 12.19 21.9% 12.63 26.3%
70.0% 28.2 13.4% 0.5% 19.1% 2.5% 10.00 NT NA NT NA NT NA
70.0% 28.2 13.4% 0.5% 19.1% 2.5% 10.00 NT NA NT NA NT NA
64.2% 27.6 16.3% 0.6% 25.4% 2.3% 10.00 10.88 8.7% 11.50 15.0% 12.75 27.5%
70.0% 19.0 15.9% 0.9% 22.6% 4.2% $10.00 $12.04 20.4% $12.24 22.4% $12.59 25.9%
70.8% 16.2 16.3% 0.8% 22.4% 4.5% 10.00 12.13 21.2% 12.50 25.0% 12.63 26.3%
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrifts. December 13, 1996
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Latest price if offering less than one week old.
(6) Latest price if offering more than one week but less than one month old.
(7) Second-step conversions.
<PAGE>
RP FINANCIAL, LC.
_______________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 4.3
Market Pricing Comparatives
Prices As of December 13, 1996
Market Per Share Data
Capitalization _________________ Pricing Ratios(3)
_________________ ________________________________________________
Book
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
_____________________ ________ _______ _______ _______ _______ ________ ______ ________ _______
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.72 142.09 0.87 16.03 17.22 116.52 14.06 119.53 15.51
Converted Last 3 Mths (no MHC) 12.96 34.15 0.47 14.41 19.88 90.44 21.73 90.44 18.54
Comparable Group
________________
Converted Last 3 Mths (no MHC)
______________________________
AFED AFSALA Bancorp of NY 11.50 16.73 0.61 14.05 18.85 81.85 11.20 81.85 18.85
CBES CBES Bancorp of MO 13.75 14.09 0.70 16.56 19.64 83.03 14.57 83.03 13.61
CFNC Carolina Fincorp of NC 13.12 24.30 0.52 12.99 NM 101.00 22.18 101.00 NM
DCBI Delphos Citizens Bancorp of OH 11.94 24.35 0.73 14.26 16.36 83.73 22.19 83.73 16.36
FTNB Fulton Bancorp of MO 14.87 25.56 0.67 13.92 22.19 106.82 24.36 106.82 22.88
HBEI Home Bancorp of Elgin IL 12.81 89.79 0.06 14.12 NM 90.72 24.23 90.72 NM
PFFC Peoples Fin. Corp. of OH 13.00 19.38 0.36 15.57 NM 83.49 21.21 83.49 NM
SSFC South Street Fin. Corp. of NC 13.87 62.37 0.62 13.15 22.37 105.48 29.99 105.48 21.02
WEHO Westwood Hmstd Fin Corp of OH 11.75 30.74 -0.03 15.10 NM 77.81 25.64 77.81 NM
Dividends(4) Financial Characteristics(6)
_______________________ ______________________________________________________
Amount/ Payout Total Equity/ NPAs/ Reported Core
Financial Institution ________________ ______________
_____________________ Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
_______ ______ _______ ______ _______ _______ _______ _______ _______ _______
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.98 33.16 1,353 12.79 0.87 0.62 5.36 0.83 7.41
Converted Last 3 Mths (no MHC) 0.00 0.00 0.00 151 24.00 0.46 0.75 3.68 0.91 4.74
Comparable Group
________________
Converted Last 3 Mths (no MHC)
______________________________
AFED AFSALA Bancorp of NY 0.00 0.00 0.00 149 13.68 0.59 0.59 4.34 0.59 4.34
CBES CBES Bancorp of MO 0.00 0.00 0.00 97 17.55 NA 0.80 7.42 1.15 10.70
CFNC Carolina Fincorp of NC 0.00 0.00 0.00 110 21.96 0.06 0.88 4.00 0.88 4.00
DCBI Delphos Citizens Bancorp of OH 0.00 0.00 0.00 110 26.51 0.40 1.36 5.12 1.36 5.12
FTNB Fulton Bancorp of MO 0.00 0.00 0.00 105 22.80 0.92 1.10 4.81 1.06 4.67
HBEI Home Bancorp of Elgin IL 0.00 0.00 0.00 371 26.71 0.49 0.13 0.80 0.68 4.14
PFFC Peoples Fin. Corp. of OH 0.00 0.00 0.00 91 25.40 0.76 0.59 2.31 0.67 2.63
SSFC South Street Fin. Corp. of NC 0.00 0.00 0.00 208 28.43 NA 1.34 4.71 1.43 5.02
WEHO Westwood Hmstd Fin Corp of OH 0.00 0.00 NM 120 32.96 0.03 -0.08 -0.38 0.41 2.03
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data
and is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB
= Price to tangible book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend
declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot
guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
RP Financial, L.C.
Page 4.17
Guaranty Savings' stock. To the extent that acquisition speculation may
impact the Association's offering, we have largely taken this into account in
selecting Peer Group companies which operate in markets that have experienced
a comparable, or, in some markets, a greater degree of consolidation among
financial institutions as has been experienced by Louisiana-based financial
institutions. Accordingly, the Peer Group companies are considered to be
subject to the same type of acquisition speculation that may influence
Guaranty Savings' trading price.
Taking these factors and trends into account, primarily recent
trends in the new issue market, market conditions overall, and recent trends
in the acquisition market, RP Financial concluded that no adjustment was
appropriate in the valuation analysis for purposes of marketing of the issue.
8. Management
Guaranty Savings' management team has experience and expertise in all of
the key areas of the Association's operations. Exhibit IV-5 provides summary
resumes of Guaranty Savings' Board of Directors and executive management.
While the Association does not have the resources to develop a great deal of
management depth, given its asset size and the impact it would have on
operating expenses, management and the Board have been effective in
implementing an operating strategy that can be well managed by the
Association's present management structure as indicated by Guaranty Savings'
solid core earnings and healthy capital position.
Similarly, the returns, capital positions, and other operating measures
of the Peer Group companies are indicative of well-managed financial
institutions, which have Boards and management teams that have been effective
in implementing conservative and competitive operating strategies.
Therefore, on balance, we concluded no valuation adjustment relative to the
Peer Group was appropriate for this factor.
9. Effect of Government Regulation and Regulatory Reform
The Association and the Peer Group companies were similarly impacted by
the recently enacted SAIF rescue legislation, as they are all SAIF-insured
institutions subject to the same one time assessment and their deposits will
be assessed at the same rate going forward. In summary, as a fully-converted
SAIF-insured savings bank, Guaranty Savings will operate in substantially the
same regulatory environment as the Peer Group members -- all of whom are
adequately capitalized institutions and are operating with no apparent
restrictions. Exhibit IV-6 reflects the Association's pro forma regulatory
capital ratios. On balance, RP Financial concluded that no adjustment to the
Association's value was warranted for this factor.
<PAGE>
RP Financial, L.C.
Page 4.18
Summary of Adjustments
Overall, we believe the Association's pro forma market value should be
discounted relative to the Peer Group as follows:
Key Valuation Parameters: Valuation Adjustment
------------------------ --------------------
Financial Condition Slight Upward
Profitability, Growth and Viability of Earnings Moderate Downward
Asset Growth No Adjustment
Primary Market Area Slight Downward
Dividends No Adjustment
Liquidity of the Shares No Adjustment
Marketing of the Issue No Adjustment
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
Valuation Approaches
In applying the accepted valuation methodology promulgated by the OTS
and adopted by the FDIC, i.e., the pro forma market value approach, we
considered the three key pricing ratios in valuing Guaranty Savings'
to-be-issued stock --price/earnings ("P/E"), price/book ("P/B"), and
price/assets ("P/A") approaches -- all performed on a pro forma basis
including the effects of the conversion proceeds. In computing the pro forma
impact of the conversion and the related pricing ratios, we have incorporated
the valuation parameters disclosed in Guaranty Savings' prospectus for
offering expenses, the effective tax rate, and stock benefit plan assumptions
(summarized in Exhibits IV-7 and IV-8). A reinvestment rate of 5.92 percent
was utilized, equal to the arithmetic average of the Association's average
yield on interest-earnings assets and cost of deposits for the nine months
ended September 30, 1996 (the reinvestment rate calculation specified by OTS
conversion guidelines). The 5.92 percent reinvestment rate is believed to be
representative of the blended rate reflecting the Association's business plan
as converted and incorporating the impact of deposit withdrawals to fund a
portion of the stock issued in conversion. In our estimate of value, we
assessed the relationship of the pro forma pricing ratios relative to the
Peer Group and the recent conversions.
RP Financial's valuation placed emphasis on the following:
o P/E Approach. The P/E approach is generally the best indicator of
long-term value for a stock. Given the similarities between the
Association's and the Peer Group's earnings and overall financial
condition, the P/E approach was carefully considered in this
valuation.
o P/B Approach. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks, with the greater determinant of
long term value being earnings. RP Financial
<PAGE>
RP Financial, L.C.
Page 4.19
considered the P/B approach to be a reliable indicator of value
given current market conditions, particularly the market for new
conversions which often exhibit P/E multiples that are well above
industry averages and, thus, are viewed as a less meaningful
indicator of value.
o P/A Approach. P/A ratios are generally a less reliable indicator of
market value, as investors do not place significant weight on total
assets as a determinant of market value. Investors place
significantly greater weight on book value and earnings -- which have
received greater weight in our valuation analysis.
The Association has adopted Statement of Position ("SOP") 93-6, which
will cause earnings per share computations to be based on shares issued and
outstanding excluding unreleased ESOP shares. For purposes of preparing the
pro forma pricing analyses, we have reflected all shares issued in the
offering, including all ESOP shares, to capture the full dilutive impact,
particularly since the ESOP shares are economically dilutive, receive
dividends and can be voted. However, we did consider the impact of the
adoption of SOP 93-6 in the valuation.
Based on the application of the three valuation approaches, taking into
consideration the valuation adjustments discussed above, and placing the
greatest weight on the P/E and P/B approaches, RP Financial concluded that
the pro forma market value of the Association's conversion stock is
$26,000,000 at the midpoint at this time.
1. Price-to-Earnings ("P/E"). The application of the P/E valuation
method requires calculating the Association's pro forma market value by
applying a valuation P/E multiple times the pro forma earnings base.
Ideally, the pro forma earnings base is composed principally of the
Association's recurring earnings base, that is, earnings adjusted to exclude
any one-time non-operating items, plus the estimated after-tax earnings
benefit of the reinvestment of net conversion proceeds. Guaranty Savings'
reported earnings equaled $379,000 for the twelve months ended September 30,
1996. In deriving Guaranty Savings' core earnings, two adjustments were made
to reported earnings. The first adjustment accounted for the one time
expense of the special SAIF assessment, and the second adjustment accounted
for the non-recurring loss on the sale of investment securities. The special
SAIF assessment recorded by the Association amounted to $413,000. On a tax
effected basis, assuming an effective tax rate of 34.0 percent, the
elimination of the SAIF assessment resulted in a $273,000 increase to the
Association's reported earnings. Guaranty Savings recorded a loss on the
sale of investments of $100,000 for the twelve months ended September 30,
1996, which was considered to be a non-recurring earnings item for the
Association. Comparatively, during fiscal years 1991 through 1995, gains and
losses on the sale of investments had a nominal impact on the Association's
earnings. On a tax effected basis, the elimination of the loss on the sale
of investments increased the Association's earnings by $66,000. As shown
below, after factoring in the two adjustments, Guaranty Savings' core
earnings were determined to equal
<PAGE>
RP Financial, L.C.
Page 4.20
$718,000 for the twelve months ended September 30, 1996. (Note: see Exhibit
IV-9 for the adjustments applied to the Peer Group's earnings in the
calculation of core earnings).
Amount
------
($000)
Net income $379
Adjustment for SAIF assessment(1) 273
Adjustment for loss on the sale of investments(1) 66
-----
Core earnings estimate $718
(1) Tax effected at 34.0 percent.
Based on Guaranty Savings' trailing twelve month earnings, and
incorporating the impact of the pro forma assumptions discussed previously,
the Association's pro forma core P/E multiple at the $26,000,000 midpoint
value was 23.27 times, resulting in a premium of 21.0 percent from the Peer
Group average of 19.23 times core earnings. The premium exhibited in the
Association's P/E multiple was accounted for in the discount reflected in its
pro forma P/B ratio. In comparison to all SAIF-insured and Louisiana
publicly-traded thrifts, the Association's core P/E ratio reflected premiums
of 50.0 percent and 58.0 percent, respectively.
2. Price-to-Book ("P/B"). The application of the P/B valuation method
requires calculating the Association's pro forma market value by applying a
valuation P/B ratio to Guaranty Savings' pro forma book value. Based on the
$26.0 million midpoint valuation, Guaranty Savings' pro forma P/B ratio was
55.80 percent. In comparison to the average P/B ratio for the Peer Group of
97.82 percent, Guaranty Saving' valuation reflected a 43.0 percent discount
relative to the Peer Group. RP Financial considered the discount under the
P/B approach to be reasonable, in light of the downward adjustments applied
to the Association's value for earnings and market area. Additionally, the
discounted P/B ratio is also warranted by the Association's very low pro
forma ROE (2.40 percent, based on core earnings, versus 5.10 percent for the
Peer Group) and resulting pro forma P/E multiple.
Given the emphasis in the revised appraisal guidelines on limiting near
term aftermarket price increases in the stocks of converting institutions, RP
Financial also considered the pro forma P/B ratios of recent conversions in
its valuation analysis. It is these companies that provide the best proxy
for aftermarket trading for a new issue such as Guaranty Savings' conversion
stock (as newly converted thrifts represent an "alternative investment" to
purchasing conversion stock), and it is the pro forma P/B ratio that
investors have recently tended to emphasize in evaluating the trading of new
issues. At the midpoint value of $26,000,000, Guaranty Savings' pro forma
P/B ratio of 55.80 percent was discounted by approximately 20.3 percent and
38.3
<PAGE>
RP Financial, L.C.
Page 4.20
percent from the average of the recently completed stock conversions of 70.0
percent at closing (see Table 4.2) and 90.44 percent currently in the
after-market (see Table 4.3). Guaranty Savings' lower pro forma pricing is
warranted by its lower pro forma ROE (2.40 percent, based on core earnings,
versus 4.74 percent for the recent conversions). As indicated at the
beginning of this chapter, RP Financial's analysis of recent conversion
pricing characteristics has been limited to a technical analysis and, thus,
the pricing characteristics of recent conversions is not the primary
determinate of valuation.
3. Price-to-Assets ("P/A"). The P/A valuation methodology determines
market value by applying a valuation P/A ratio to the Association's pro forma
asset base, conservatively assuming no deposit withdrawals are made to fund
stock purchases. In all likelihood there will be deposit withdrawals, which
results in understating the pro forma P/A ratio which is computed herein. At
the midpoint of the valuation range, Guaranty Savings' value equaled 23.94
percent of pro forma assets. Comparatively, the Peer Group companies
exhibited an average P/A ratio of 21.21 percent, which implies a 12.87
percent premium being applied to the Association's pro forma P/A ratio.
While generally emphasized less than the P/E and P/B approaches, the P/A
ratio is an indicator of franchise value and, thus, was a factor in deriving
the other pricing ratios. The premium pricing for the Association's franchise
value is further indicated by Guaranty Savings' price/deposits ("P/D") ratio
of 43.0 percent (assuming no deposit withdrawals), which implies a 39.2
percent premium relative to the Peer Group average's P/D ratio of 30.9
percent.
Valuation Conclusion
Based on the foregoing, it is our opinion that, as of December 13, 1996,
the aggregate pro forma market value of the Association was $26,000,000 at
the midpoint, equal to 2,600,000 shares offered at $10.00 per share.
Pursuant to the conversion guidelines, the 15 percent offering range includes
a minimum of $22,100,000 and a maximum of $29,900,000. Based on the $10.00
per share offering price, this valuation range equates to an offering of
2,210,000 shares at the minimum to 2,990,000 shares at the maximum. The
Holding Company's offering also includes a provision for a super maximum,
which if exercised, would result in an offering size of $34,385,000, equal to
3,438,500 shares at the $10.00 per share offering price. The comparative pro
forma valuation ratios relative to the Peer Group are shown in Table 4.4, and
the key valuation assumptions are detailed in Exhibit IV-7. The pro forma
calculations for the range are detailed in Exhibit IV-8.
<PAGE>
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.4
Public Market Pricing
Guaranty Savings and the Comparables
As of December 13, 1996
<TABLE>
<CAPTION>
Market
Capitalization Per Share Data Pricing Ratios(3)
---------------- --------------- ---------------------------------------
Book
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ------ ----- ----- ----- ------ --------
($) ($MIL) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
Superrange 10.00 34.39 0.28 15.69 35.75 63.75 29.65 63.75 26.43
Range Maximum 10.00 29.90 0.29 16.72 34.65 59.82 26.69 59.82 24.88
Range Midpoint 10.00 26.00 0.30 17.92 33.40 55.80 23.94 55.80 23.27
Range Minimum 10.00 22.10 0.31 19.56 31.82 51.13 21.00 51.13 21.38
SAIF-Insured Thrifts(7)
- -----------------------
Averages 18.72 142.09 0.87 16.03 17.22 116.52 14.06 119.53 15.51
Medians -- -- -- -- 18.61 111.11 12.43 113.24 15.29
All Non-MHC State of LA(7)
- --------------------------
Averages 18.12 49.43 0.65 16.39 21.19 108.10 14.69 108.80 14.73
Medians -- -- -- -- 21.05 109.86 14.68 111.38 14.77
Comparable Group Averages
- -------------------------
Averages 14.92 24.82 0.68 15.28 21.10 91.82 21.21 97.83 19.23
Medians -- -- -- -- 22.09 93.75 21.04 93.75 19.43
State of LA
- -----------
AHA Acadiana Bancshares of LA 14.25 38.92 -0.43 17.03 NM 83.68 14.68 83.68 NM
CZF Citisave Fin. corp. of LA 14.00 13.47 0.63 12.58 22.22 111.29 17.81 111.38 16.67
ISBF ISB Financial Corp. of LA 17.50 123.39 0.73 15.93 23.97 109.86 17.99 113.27 17.68
MERI Meritrust FSB of Thibodaux LA 31.62 24.47 1.59 21.67 19.89 145.92 10.59 145.92 11.71
TSH Teche Holding Company of LA 13.25 46.92 0.71 14.76 18.66 89.77 12.36 89.77 12.86
Comparable Group
- ----------------
CCFH CCF Holding Company of GA 15.00 16.97 0.68 14.86 22.06 100.94 21.39 100.94 23.08
CKFB CKF Bancorp of Danville KY 19.75 18.58 0.79 16.05 25.00 123.05 31.03 123.05 25.00
CZF Citisave Fin. Corp. of LA 14.00 13.47 0.63 12.58 22.22 111.29 17.81 111.38 16.67
DFIN Damen Fin. Corp. of Chicago IL 12.87 48.53 0.47 14.02 NM 91.80 20.69 91.80 21.10
FTSB Fort Thomas Fin. Corp. of KY 14.25 22.43 0.74 13.75 19.26 103.64 25.24 103.64 19.26
GWBC Gateway Cancorp of KY 14.50 16.15 0.54 15.64 NM 92.71 23.24 92.71 19.59
KYF Kentucky first Bancorp of KY 11.50 15.97 0.52 13.78 22.12 83.45 18.57 83.45 16.91
MARN Marion Capital Holdings of IN 20.37 37.54 1.09 21.49 18.69 94.79 21.50 94.79 14.87
NSLB NS&L Bancorp of Neosho MO 13.75 11.59 0.66 15.84 20.83 86.81 20.23 86.81 22.92
TSH Teche Holding Company of LA 13.25 46.92 0.71 14.76 18.66 89.77 12.36 89.77 12.86
Dividends(4) Financial Characteristics(6)
--------------------------- ----------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ------------- --------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ----- -------- ------ ------- ------ ----- ----- ----- ------
($) (%) (%) ($MIL) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guaranty Savings
- ----------------
Superrange 0.00 0.00 0.00 116 46.51 0.27 0.83 1.78 1.12 2.41
Range Maximum 0.00 0.00 0.00 112 44.63 0.28 0.77 1.73 1.07 2.40
Range Midpoint 0.00 0.00 0.00 109 42.90 0.29 0.72 1.67 1.03 2.40
Range Minimum 0.00 0.00 0.00 105 41.07 0.30 0.66 1.61 0.98 2.39
SAIF-Insured Thrifts(7)
- -----------------------
Averages 0.37 1.98 33.16 1,353 12.79 0.87 0.62 5.36 0.83 7.41
Medians -- -- -- -- -- -- -- -- -- --
All Non-MHC State of LA(7)
- --------------------------
Averages 0.39 2.16 56.13 327 14.19 0.39 0.48 3.16 0.73 5.26
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
- -------------------------
Averages 0.44 2.98 60.09 131 21.64 0.62 0.97 4.35 1.12 5.10
Medians -- -- -- -- -- -- -- -- -- --
State of LA
- -----------
AHA Acadiana Bancshares of LA 0.00 0.00 NM 265 17.55 0.56 -0.47 -4.71 -0.44 -4.39
CZF Citisave Fin. corp. of LA 0.40 2.86 63.49 76 16.00 0.22 0.78 4.47 1.04 5.97
ISBF ISB Financial Corp. of LA 0.34 1.94 46.58 686 16.38 NA 0.81 4.38 1.09 5.94
MERI Meritrust FSB of Thibodaux LA 0.70 2.21 44.03 231 7.26 NA 0.55 7.37 0.93 12.52
TSH Teche Holding Company of LA 0.50 3.77 70.42 380 13.77 NA 0.72 4.30 1.04 6.24
Comparable Group
- ----------------
CCFH CCF Holding Company of GA 0.40 2.67 58.82 79 21.19 0.92 0.96 5.14 0.92 4.92
CKFB CKF Bancorp of Danville KY 0.44 2.23 55.70 60 25.22 1.47 1.28 4.72 1.28 4.72
CZF Citisave Fin. Corp. of LA 0.40 2.86 63.49 76 16.00 0.22 0.78 4.47 1.04 5.97
DFIN Damen Fin. Corp. of Chicago IL 0.24 1.86 51.06 235 22.54 0.15 0.77 3.66 1.00 4.75
FTSB Fort Thomas Fin. Corp. of KY 0.25 1.75 33.78 89 24.35 1.27 1.33 5.37 1.33 5.37
GWBC Gateway Cancorp of KY 0.40 2.76 74.07 69 25.07 0.45 0.83 3.26 1.14 4.47
KYF Kentucky first Bancorp of KY 0.50 4.35 NM 86 22.25 0.09 0.90 3.71 1.17 4.85
MARN Marion Capital Holdings of IN 0.80 3.93 73.39 175 22.68 0.95 1.14 4.80 1.43 6.03
NSLB NS&L Bancorp of Neosho MO 0.50 3.64 NM 57 23.31 0.02 0.97 4.06 0.88 3.69
TSH Teche Holding Company of LA 0.50 3.77 70.42 380 13.77 NA 0.72 4.30 1.04 6.24
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (common earnings per share) is based on actual trailing twelve month
data and is shown on a pro forma basis.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book, and P/CORE = Price to Core Earnings
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve
month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated
ratios based on trailing twelve month common earnings and average common
equity and total assets balances.
(7) Excludes from averages and medians those companies the subject of actual
or rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accurance or completeness of such information.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, L.C.
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
I-1 Map of Office Locations
I-2 Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Loan Loss Allowance Activity
I-7 Gap Table
I-8 Fixed Rate and Adjustable Rate Loans
I-9 Loan Portfolio Composition
I-10 Loan Originations and Repayments
I-11 Contractual Maturity By Loan Type
I-12 Non-Performing Assets
I-13 Deposit Composition
I-14 Time Deposit Rate/Maturity
II-1 Description of Office Facilities
II-2 Historical Interest Rates
III-1 General Characteristics of Publicly-Traded
Instructions
III-2 Financial Analysis of Louisiana Institutions
<PAGE>
RP Financial, L.C.
LIST OF EXHIBITS(continued)
III-3 Financial Analysis of Peer Group Candidates
III-4 Peer Group Market Area Comparative Analysis
IV-1 Stock Prices: As of December 13, 1996
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Director and Senior Management Summary Resumes
IV-6 Pro Forma Regulatory Capital Ratios
IV-7 Pro Forma Analysis Sheet
IV-8 Pro Forma Effect of Conversion Proceeds
IV-9 Peer Group or Earnings Analysis
V-1 Film Qualifications Statement
<PAGE>
EXHIBIT I-1
Guaranty Savings and Homestead Association
Map of Office Locations
<PAGE>
Map of
Louisiana
<PAGE>
EXHIBIT I-2
Guaranty Savings and Homestead Association
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
<TABLE>
EXHIBIT I-3
Guaranty Savings and Homestead Association
Key Operating Ratios
<S> <C> <C> <C> <C> <C>
Selected Operating Ratios(3):
Average yield on interest-earning assets 7.47% 7.54% 7.52% 6.97% 7.26%
Average rate on interest-bearing liabilities 4.36 4.26 4.27 3.62 3.52
Average interest rate spread(4) 3.11 3.28 3.25 3.35 3.74
Net interest margin(4) 4.26 4.34 4.32 4.19 4.52
Interest-earning assets as a percent of
interest-bearing liabilities 135.61 132.92 133.39 130.39 128.78
Net interest income after provision for loan
losses as a percent of noninterest expense 133.28 185.46 156.17 164.58 192.77
Noninterest expense as a percent of
average assets 3.01 2.23 2.63 2.43 2.21
Return on average assets 0.57 1.31 1.00 1.10 1.42
Return on average equity 1.99 4.88 3.70 4.41 6.02
Average equity as a percent of average assets 28.50 26.76 26.99 25.02 23.54
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-3
Guaranty Savings and Homestead Association
Key Operating Ratios
(Continued)
<TABLE>
<CAPTION>
At or for the Nine Months At or For the
Ended September 30, Year Ended December 31,
------------------------- ---------------------------
1996 1995 1995 1994 1993
------------ ------------ -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Asset Quality Ratios(5):
Nonperforming loans as a percent of total loans
receivable(6) 0.73% 0.57 0.51% 0.49% 1.23%
Nonperforming assets as a percent of total
assets(6) 0.37 0.27 0.27 0.27 0.60
Allowance for loan losses as a percent of
total loans receivable 0.78 0.83 0.80 0.85 0.90
Allowance for loan losses as a percent of
nonperforming loans 106.65 145.65 156.80 175.13 73.12
Net charge-offs as a percent of average loans
receivable - 0.03 0.08 0.15 0.11
Capital Ratios(5):
Tangible capital ratio 27.79% 27.09% 27.35% 25.90% 24.30%
Core capital ratio 27.79 27.09 27.35 25.90 24.30
Risk-based capital ratio 80.10 91.72 93.60 90.00 89.40
</TABLE>
___________________
(1) In the opinion of management, financial information at
September 30, 1996 and for the nine months ended September 30, 1996
and 1995 reflects all adjustments (consisting only of normal
recurring accruals) which are necessary to present fairly the results
of such interim periods.
(2) Includes $413,000, pre-tax, of a one-time assessment to
recapitalize the SAIF. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(3) With the exception of end of period ratios, all ratios are based on
average monthly balances during the indicated periods and are
annualized where appropriate.
(4) Average interest rate spread represents the difference between the
average yield on interest-earning assets and the average rate paid on
interest-bearing liabilities, and net interest margin represents net
interest income as a percent of average interest-earning assets.
(5) Asset Quality Ratios and Capital Ratios are end of period ratios,
except for net charge-offs to average loans receivable.
(6) Nonperforming assets consist of non-accruing loans, net REO and net
non-accruing investment securities. Non-accruing loans consist of
loans which are 90 days or more past due, while REO consists of real
estate acquired through foreclosure, real estate acquired by
acceptance of a deed-in-lieu of foreclosure and in-substance
foreclosures. Nonperforming assets totalled $316,093 at
September 30, 1996. At September 30, 1996, the Association had no
troubled debt restructurings. See "Business - Asset Quality."
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-4
Guaranty Savings and Homestead Association
Investment Portfolio Composition
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------
September 30, 1996 1995 1994 1993
------------------ ----------------- ------------------ --------------------
Carrying Market Carrying Market Carrying Market Carrying Market
Value Value Value Value Value Value Value Value
--------- ------- --------- ------- --------- -------- --------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available for sale:
U.S. government and
Federal Agency securities $21,153 $21,153 $ 2,207 $ 2,207 $ 2,735 $ 2,735 $ 3,321 $ 3,321
Other 1,915 1,915 1,053 1,053 454 454 448 448
-------- ------- ------- ------- ------- -------- ------- --------
Total available for sale 23,068 23,068 3,260 3,260 3,189 3,189 3,769 3,769
-------- ------- ------- -------- ------- -------- ------- --------
Held to maturity:
U.S. Government and
Federal Agency securities - - 30,100 30,440 32,307 31,746 34,029 34,365
Other - - - - - - - -
-------- ------- -------- --------- ------- ------- ------- -------
Total held to maturity - - 30,100 30,440 32,307 31,746 34,029 34,365
-------- ------- -------- --------- ------- ------- ------- -------
Total $23,068 $23,068 $33,360 $33,700 $35,496 $34,935 $37,798 $38,134
-------- -------- -------- --------- ------- -------- -------- --------
-------- -------- -------- --------- ------- -------- -------- --------
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-5
Guaranty Savings and Homestead Association
Yields and Costs
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
------------------------------------------------------ ----------------------------------------------------
1996(1) 1995 1995 1994
-------------------------- -------------------------- -------------------------- -------------------------
Average Average Average Average
Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate(2) Balance Interest Rate(2) Balance Interest Rate Balance Interest Rate
------- -------- -------- ------- -------- ------- ------- -------- ------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earning
assets:
Loans receivable(1) $41,031 $2,771 9.00% $40,114 $2,793 9.28% $40,196 $3,703 9.21% $40,298 $3,730 9.26%
Investment
activities(4) 28,306 1,311 6.17 34,707 1,536 5.90 34,227 2,028 5.93 37,983 1,876 481
Mortgage backed
activities 7,311 327 5.96 6,313 288 6.08 6,267 380 6.06 6,447 389 601
Other interest
earning assets 4,705 151 4.28 2,417 107 5.90 2,561 149 5.82 1,897 90 474
------- -------- ------- -------- ------- -------- ------- --------
Total interest
earning assets 81,355 4,560 7.47 83,551 4,724 7.54 83,251 6,260 7.52 86,625 6,035 697
------- -------- -------- --------
Noninterest earning
assets 4,380 3,972 4,096 3,489
------- -------- -------- -------
Total assets $85,735 $87,523 $87,347 $90,114
------- -------- -------- -------
------- -------- -------- -------
Interest bearing
liabilities:
Passbook accounts $23,371 581 3.33 $25,275 680 3.59 $25,013 880 352 $26,935 898 333
Certificates of
deposit 36,622 1,374 5.02 37,581 1,327 4.71 37,397 1,781 477 39,462 1,510 383
------- -------- ------- -------- -------- -------- ------- --------
Total interest
bearing
liabilities 59,993 1,963 4.36 62,856 2,007 4.26 62,410 2,661 427 66,437 2,404 362
------- -------- -------- --------
Noninterest bearing
liabilities(5) 1,309 1,244 1,363 1,131
------- -------- -------- -------
Total
liabilities 61,302 61,100 63,773 67,570
Retained earnings 24,433 21,423 23,571 22,514
------- -------- -------- -------
Total
liabilities
and retained
earnings $85,735 $87,523 $87,347 $90,114
------- -------- -------- -------
------- -------- -------- -------
Total interest
earning assets $21,362 $30,695 $20,841 $20,188
------- -------- -------- -------
------- -------- -------- -------
Total interest
income; average
interest rate
spread $2,597 3.11% $2,717 3.28% $3,596 3.25% $1,626 3.35%
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Total interest
margin(6) 4.26% 4.31% 4.32% 4.19%
------ ------ ------ ------
------ ------ ------ ------
Average interest
earning assets
to average
interest bearing
liabilities 135.61% 132.92% 133.39% 130.39%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
- ------------------
(1) At September 30, 1996, the weighted average yields earned and rates paid
were as follows: loans receivable, 8.97%; mortgage-backed securities,
5.96%; investment securities, 5.95%; total interest-earning assets, 7.45%;
deposits, 4.36%; and interest rate spread, 3.09%.
(2) Annualized.
(3) Includes nonaccrual loans during the respective periods. Calculated net
of deferred fees and discounts, loans in process and allowance for loan
losses.
(4) Includes non-accruing investment securities during the respective periods.
(5) Includes noninterest-bearing deposits.
(6) Net interest margin is net interest income divided by average interest-
bearing assets.
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-6
Guaranty Savings and Homestead Association
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
At or For the Nine Months
Ended September 30, At or For the Year Ended December 31,
------------------------- --------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total loans outstanding $43,390 $40,479 $40,207 $40,384 $41,048
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Allowance for loan losses,
beginning of period $ 323 $ 345 $ 345 $ 370 $ 321
Provision (credit) for loan
losses 14 - 12 35 98
Net loans charged-off
(recovered) - 10 34 60 49
------------ ------------ ------------ ------------ ------------
Allowance for loan losses, end
of period $ 337 $ 335 $ 323 $ 345 $ 370
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Allowance for loan losses as a
percent of total loans
outstanding .78% .83% .80% .85% .90%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Allowance for loan losses as a
percent of nonperforming
loans 106.65% 145.65% 156.80% 175.13% 73.12%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratio of net charge-offs during
the period to average loans
outstanding during the period N/A .03% .08% .15% .11%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-7
Guaranty Savings and Homestead Association
Gap Table
<TABLE>
<CAPTION>
September 30, 1996
---------------------------------------------------------------------------------------------
Over Three Over One Over Three Over Five
Within Through Through Through Through Over Ten
Three Months 12 Months Three Years Five Years Ten Years Years Total
---------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
One-to four-family residential $ 15 $ 116 $ 493 $ 1,637 $ 8,320 $ 31,628 $42,209
Construction -- -- -- -- -- 412 412
Commercial real -- 2 21 -- 295 124 442
Consumer 173 -- -- -- -- -- 173
Other -- 5 9 2 94 44 154
Mortgage-backed securities: -- -- -- -- -- -- --
Adjustable-rate -- -- -- -- -- -- --
Fixed-rate -- 107 2,929 931 995 2,337 7,299
Investment Securities 5,488 4,834 4,589 6,104 2,053 -- 23,068
FHLB Stock 718 -- -- -- -- -- 718
Other interest-earning assets 8,303 -- -- -- -- -- 8,303
------- -------- -------- -------- -------- -------- -------
Total interest-earning assets 14,697 5,064 8,041 8,674 11,757 34,545 82,778
------- -------- -------- -------- -------- -------- -------
Interest bearing liabilities:
Passbook accounts (2) 2,401 1,401 4,802 4,802 4,802 4,802 24,010
Certificates of deposit (3) 9,035 20,158 7,056 236 -- -- 36,485
------- -------- -------- -------- -------- -------- -------
Total interest-bearing liabilities 11,436 22,559 11,858 5,038 4,802 4,802 60,495
------- -------- -------- -------- -------- -------- -------
Interest rate sensitivity gap $ 3,261 $(17,495) $ (3,817) $ 3,636 $ 6,955 $ 29,743 $22,283
------- -------- -------- -------- -------- -------- -------
------- -------- -------- -------- -------- -------- -------
Cumulative interest rate
sensitivity gap $ 3,261 $(14,234) $(15,051) $(14,415) $ (7,460) $ 22,283
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
Percentage of cumulative gap
to total assets $ 3.77% (16.45)% (20.86)% (16.66)% (8.62)% (25.68)%
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
Cumulative ratio of interest-
earning assets to interest-
bearing liabilities 128.52% 58.13% 60.63% 71.67% 86.61% 136.83%
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT I-8
Guaranty Savings and Homestead Association
Fixed Rate and Adjustable Rate Loans
Floating or
Fixed-Rate Adjustable-Rate Total
----------- --------------- -------
(In Thousands)
One- to four-family residential $42,621 $ -- $42,621
Commercial real estate 442 -- 442
Consumer -- 173 173
Other real estate 154 -- 154
------- ------- --------
Total $43,217 $ 173 $43,390
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-9
Guaranty Savings and Homestead Association
Loan Portfolio Composition
<TABLE>
<CAPTION>
December 31,
September 30, ----------------------------------------------------------------------
1996 1995 1994 1993
------------------- ------------------- ------------------ --------------------
Amount % Amount % Amount % Amount %
-------- ------- -------- ------- -------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loan:
One- to four-family
residential:
Conventional $41,378 95.36% $38,449 95.36% $38,236 94.68% $38,205 93.08%
FHA and VA 541 1.25 675 1.68 854 2.11 1,018 2.48
Construction 412 .95 - - - - - -
Commercial real estate 442 1.02 484 1.20 601 1.49 654 1.59
Other real estate 154 0.35 146 0.36 182 0.45 418 1.02
-------- ------- -------- ------- -------- ------- -------- -------
Total real estate
loans 42,927 98.93 39,754 98.87 39,873 98.73 40,295 98.17
-------- ------- -------- ------- -------- ------- -------- -------
Consumer loans:
Second Mortgage 290 0.67 267 0.67 350 0.87 440 1.07
Loans on deposits 173 0.40 186 0.46 161 0.40 313 0.76
-------- ------- -------- ------- -------- ------- -------- -------
Total consumer
loans 463 1.07 453 1.13 511 1.27 753 1.83
-------- ------- -------- ------- -------- ------- -------- -------
Total loans $43,390 100.00% $40,207 100.00% $40,384 100.00% $41,048 100.00%
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------
Less:
Deferred loan fees
(costs) (6) (6) (3) (1)
Allowance for loan
losses 337 323 345 370
Net loans $43,058 $39,888 $40,042 $40,679
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-10
Guaranty Savings and Homestead Association
Loan Originations and Repayments
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- -------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Loan originations:
One-to-four family residential $7,005 $4,729 $6,400 $6,467 $ 3,161
Construction 412 - - - -
Commercial real estate - - - - -
Consumer 59 94 150 105 228
Other real estate - - - - -
-------- -------- -------- -------- ---------
Total loan originations 7,476 4,823 6,550 6,572 3,389
Loan principal repayments (4,294) (4,822) (6,727) (7,236) (9,887)
Increase (decrease) due to other
items, net(1) (12) (11) 23 27 49
-------- -------- -------- -------- ---------
Net increase (decrease) in
loan portfolio $3,170 $ (10) $ (154) $ (637) $(6,449)
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
</TABLE>
____________________
(1) Other items consist of loans in process, deferred fees and discounts, and
allowance for loan losses.
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT 1-11
Guaranty Savings and Homestead Association
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
One- to Other
four-family Commercial real
residential Construction real estate estate Consumer Total
----------- ------------ ----------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
(In Thousands)
Amounts due after September 30, 1996 in:
One year or less $ 131 -- $ 2 $ 5 $173 $ 311
After one year through two years 318 -- -- 9 -- 327
After two years through three years 175 -- 21 2 -- 198
After three years through five years 1,637 -- -- -- -- 1,637
After five years through ten years 8,320 -- 295 94 -- 8,709
After ten years through fifteen years 15,611 -- 124 26 -- 15,761
After fifteen years 16,017 412 -- 18 -- 16,447
------- ---- ----- ---- ---- -------
Total(1) $42,209 $412 $442 $154 $173 $43,390
------- ---- ----- ---- ---- -------
------- ---- ----- ---- ---- -------
</TABLE>
-----------------------
(1) Gross of loans in process, deferred fees, unearned discounts and
interest, and allowance for loan losses.
Source: Guranty Savings' prospectus.
<PAGE>
EXHIBIT 1-12
Guaranty Savings and Homestead Association
Non-Performing Assets
December 31,
---------------------------
September 30,
1996 1995 1994 1993
------------- ----- ----- -----
(Dollars in Thousands)
Total nonperforming assets:
Non-accruing loans $316 $206 $197 $ 506
Real estate owned, net -- 24 37 38
--- --- --- ---
Total nonperforming assets $316 $230 $234 $ 544
--- --- --- ---
--- --- --- ---
Troubled debt restructurings $ -- $ -- $ -- $ --
--- --- --- ---
--- --- --- ---
Total nonperforming loans as a
percentage of total loans .73% .51% .49% 1.23%
--- --- --- ----
--- --- --- ----
Total nonperforming assets as a
percentage of total assets .37% .27% .27% .60%
--- --- --- ----
--- --- --- ----
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-13
Guaranty Savings and Homestead Association
Deposit Composition
<TABLE>
<CAPTION>
December 31,
September 30, ----------------------------------------------------------------------
1996 1995 1994 1993
------------------- ------------------- ------------------ --------------------
Amount % Amount % Amount % Amount %
-------- ------- -------- ------- -------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Certificate accounts:
2.00%-2.99% $ - -% $ - -% $ - -% $ 295 .44%
3.00%-3.99% 15 .03 78 .13 8,409 13.01 27,043 40.10
4.00%-4.99% 10,995 18.17 20,156 33.12 25,366 39.24 9,736 14.44
5.00%-5.99% 24,494 35.53 12,602 20.71 3,600 5.57 2,257 3.35
6.00%-6.99% 3,981 6.58 3,898 6.52 706 1.09 1,232 1.83
7.00%-7.99% - - - - 110 .17 206 .31
8.00% or more - - - - 87 .13 275 .40
-------- ------- -------- ------- -------- ------- -------- -------
Total certificate
accounts 36,485 60.31 36,825 60.42 38,277 59.21 41,044 60.87
-------- ------- -------- ------- -------- ------- -------- -------
Passbook savings
account 24,010 39.39 24,120 39.58 26,365 40.79 26,388 39.13
-------- ------- -------- ------- -------- ------- -------- -------
Total deposits $60,495 100.00% $60,945 100.00% $64,642 100.00% $67,432 100.00%
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT I-14
Guaranty Savings and Homestead Association
Time Deposit Rate/Maturity
Balance at September 30, 1996
Maturing in the 12 Months Ending September 30,
---------------------------------------------------
Certificates of Deposit 1997 1998 1999 Thereafter Total
- ----------------------- ------- ------- ------- ------------ --------
(In Thousands)
2.00% - 2.99% $ - $ - $ - $ - $ -
3.00% - 3.99% 15 - - - 15
4.00% - 4.99% 10,829 147 19 - 10,995
5.00% - 5.99% 15,217 3,757 2,412 108 21,494
6.00% - 6.99% 3,132 721 - 128 3,981
7.00% - 7.99% - - - - -
8.00% or more - - - - -
------- ------- ------- ---- ---------
Total certificate accounts $29,193 $4,625 $2,431 $236 $36,485
------- ------- ------- ---- ---------
------- ------- ------- ---- ---------
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT II-1
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
LIST OF BRANCH OFFICES
<TABLE>
<CAPTION>
LEASE NET BOOK
EXPIRATION VALUE OF AMOUNT OF
DESCRIPTION/ADDRESS LEASED/OWNED DATE PROPERTY DEPOSITS
- ------------------------- ------------ ---------- -------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Main Office:
3798 Veterans Blvd.
Metairie, LA 70002 Owned N/A $2,012 $55,502
Branch Offices:
2111 North Causeway Blvd.
Mandeville, LA Owned N/A 379 116(1)
3915 Canal Street
New Orleans, LA Owned N/A 278 4,877
----- ------
Total(2) $2,669 $60,495
===== ======
- ----------------------
(1) Opened in May 1996.
(2) In addition, the Association continues to own the site of a former branch office at
1700 Veterans Boulevard, Metairie, Louisiana, which office had a net book value of
$95,000 at September 30, 1996 and was being leased to a third party.
</TABLE>
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT II-2
Historical Interest Rates
<PAGE>
Historical Interest Rates(1)
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- --------------- ----- ------ -------- -------
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
1996: Quarter 2 8.25% 5.16% 5.68% 6.87%
1996: Quarter 3 8.25% 5.03% 5.69% 6.92%
December 13, 1996 8.25% 4.92% 5.43% 6.57%
(1) End of period data.
Source: SNL Securities.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Companies
- --------------------
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 50,588 345 12-31 10/72 31.50 3,323
GWF Great Western Fin. Corp. of CA NYSE CA,FL Div. 43,548 416 12-31 / 29.50 4,054
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 37,012 232 12-31 05/59 62.00 3,557
GLN Glendale Fed. Bk, FSB of CA NYSE CA Div. 15,104 150 06-30 10/83 22.25 1,049
CAL CalFed Inc. of Los Angeles CA NYSE CA,NV Div. 14,127 124 12-31 03/83 24.25 1,199
CSA Coast Savings Financial of CA NYSE California R.E. 8,549 89 12-31 12/85 35.50 660
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 4,954 52 12-31 01/71 18.87 480
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,197 25 12-31 12/83 22.25 234
BVFS Bay View Capital Corp. of CA OTC San Francisco CA M.B. 3,428 27 12-31 05/86 41.50 276
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 3,323 33 12-31 / 11.25 205
WES Westcorp Inc. of Orange CA NYSE California Div. 3,181 25 12-31 05/86 21.37 555
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,486 22 03-31 03/96 14.25 283
AFFFZ America First Fin. Fund of CA OTC San Francisco CA Div. 2,228 36 12-31 / 29.37 177
CENF CENFED Financial Corp. of CA OTC Los Angeles CA Thrift 2,161 18 12-31 10/91 28.00 143
FRC First Republic Bancorp of CA (3) NYSE CA,NV M.B. 2,122 11 12-31 / 17.00 125
CFHC California Fin. Hld. Co. of CA OTC Central CA Thrift 1,339 22 12-31 04/83 28.94 137
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 1,004 12 06-30 06/95 11.00 69
REDF RedFed Bancorp of Redlands CA OTC Southern CA Thrift 866 14 12-31 04/94 13.25 94
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 828 9 12-31 / 7.44 19
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 738 8 06-30 12/93 16.50 63
ITLA Imperial Thrift & Loan of CA (3) OTC Los Angeles CA R.E. 736 11 12-31 / 14.00 109
PROV Provident Fin. Holdings of CA OTC M.B. 580 0 06-30 06/96 14.25 73
HBNK Highland Federal Bank of CA OTC Los Angeles CA R.E. 469 11 12-31 / 17.12 39
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 345 6 06-30 06/95 11.00 29
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 327 6 12-31 02/95 14.87 48
PCCI Pacific Crest Capital of CA (3) OTC Southern CA R.E. 265 4 12-31 / 11.75 35
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 117 3 12-31 01/96 9.12 8
FSSB First FS&LA of San Bern. CA OTC San Bernard. CA Thrift 100 4 06-30 12/92 9.00 3
Florida Companies
- -----------------
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida Companies (continued)
- -----------------------------
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 2,170 43 12-31 11/83 13.00 191
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,490 31 09-30 09/93 23.00 117
HARB Harbor FSB, MHC of FL (45.7) OTC Eastern FL Thrift 1,057 22 09-30 01/94 32.00 158
FFFL Fidelity FSB, MHC of FL(47.2) OTC Southeast FL Thrift 857 20 12-31 01/94 17.25 116
BKUNA BankUnited SA of FL OTC Miami FL Thrift 824 7 09-30 12/85 8.75 50
CMSV Commty. Svgs, MHC of FL(47.6) OTC Southeast FL Thrift 626 J 17 09-30 10/94 18.25 89
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 336 8 12-31 01/94 20.25 51
FFFG F.F.O. Financial Group of FL OTC Central FL R.E. 311 11 12-31 10/88 2.75 23
FFPC Florida First Bancorp of FL OTC Northwestern FL Thrift 297 9 12-31 11/86 11.37 39
FFML First Family Fin. Corp. of FL OTC Central FL Thrift 156 5 06-30 10/92 22.00 12
Mid-Atlantic Companies
- ----------------------
DME Dime Savings Bank, FSB of NY (3) NYSE NY,NJ,FL M.B. 19,683 87 12-31 08/86 14.75 1,570
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,410 82 06-30 01/94 49.37 2,353
SVRN Sovereign Bancorp of PA OTC PA,NJ,DE M.B. 9,365 120 12-31 08/86 13.00 641
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 7,266 46 12-31 11/93 35.00 753
COFD Collective Bancorp Inc. of NJ OTC Southern NJ Thrift 5,253 79 06-30 02/84 34.00 693
LISB Long Island Bancorp of NY OTC Long Island NY M.B. 5,221 J 36 09-30 04/94 30.87 761
RCSB RCSB Financial, Inc. of NY (3) OTC NY M.B. 4,049 J 34 11-30 04/86 27.87 429
ALBK ALBANK Fin. Corp. of Albany NY OTC NY,MA Thrift 3,510 63 06-30 04/92 31.00 406
ROSE TR Financial Corp. of NY OTC New York, NY Thrift 3,141 15 12-31 06/93 31.62 283
NYB New York Bancorp, Inc. of NY AMEX Southeastern NY Thrift 2,941 29 09-30 01/88 33.87 376
GRTR Greater New York SB of NY (3) OTC New York NY Div. 2,567 14 12-31 06/87 13.50 181
BKCO Bankers Corp. of NJ (3) OTC Central NJ Thrift 2,330 15 12-31 03/90 20.00 248
CMSB Cmnwealth Bancorp of PA OTC Philadelphia PA M.B. 2,085 39 06-30 06/96 14.25 256
NWSB Northwest SB, MHC of PA(29.9) OTC Pennsylvania Thrift 1,902 53 06-30 11/94 13.25 310
MLBC ML Bancorp of Villanova PA OTC Philadelphia PA M.B. 1,889 18 03-31 08/94 14.56 173
RELY Reliance Bancorp of NY OTC NYC NY Thrift 1,829 28 06-30 03/94 18.75 167
HARS Harris SB, MHC of PA (23.1) OTC Southeast PA Thrift 1,724 31 12-31 01/94 18.12 203
NSBK Northside SB of Bronx NY (3) OTC New York NY Thrift 1,639 17 09-30 04/86 52.00 252
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,565 9 12-31 09/93 28.50 123
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
JSBF JSB Financial, Inc. of NY OTC New York City R.E. 1,519 13 12-31 06/90 36.50 356
QCSB Queens County SB of NY (3) OTC New York City NY R.E. 1,326 9 12-31 11/93 47.25 362
WSFS WSFS Financial Corp. of DE (3) OTC DE Div. 1,307 14 12-31 11/86 9.87 137
DIME Dime Community Bancorp of NY OTC Thrift 1,226 0 06-30 06/96 14.87 216
OCFC Ocean Fin. Corp. of NJ OTC Thrift 1,190 0 12-31 07/96 25.50 231
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,154 22 06-30 02/84 16.37 121
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,142 17 06-30 07/94 20.12 98
MFSL Maryland Fed. Bancorp of MD OTC MD Thrift 1,128 J 25 02-28 06/87 34.25 107
FSLA First SB, SLA MHC of NJ (37.6) OTC Eastern NJ Thrift 975 17 12-31 06/92 18.00 129
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 924 28 06-30 07/87 25.25 102
PSBK Progressive Bank, Inc. of NY (3) OTC Eastern NY Thrift 886 17 12-31 08/84 23.00 90
PKPS Poughkeepsie SB of NY OTC Poughkeepsie NY R.E. 861 9 12-31 11/85 5.25 66
MBB MSB Bancorp of Middletown NY (3) OTC Southeastern NY Thrift 848 17 09-30 08/92 19.12 54
FFIC Flushing Fin. Corp. of NY (3) OTC New York, NY Thrift 770 7 12-31 11/95 18.75 161
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 742 8 09-30 10/94 15.63 168
PWBC PennFirst Bancorp of PA OTC Western PA Thrift 701 9 12-31 06/90 13.50 53
PSAB Prime Bancorp, Inc. of PA OTC Southeastern PA Thrift 677 18 12-31 11/88 20.25 75
FCIT First Cit. Fin. Corp of MD OTC DC Metro Area Thrift 668 14 12-31 12/86 18.75 55
FSFI First State Fin. Serv. of NJ OTC Northeastern NJ Thrift 666 J 13 09-30 12/87 15.00 59
THRD TF Financial Corp. of PA OTC Philadelphia PA Thrift 663 11 06-30 07/94 16.00 69
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 662 16 03-31 10/95 13.87 69
FSNJ First SB of NJ, MHC (45.0) OTC Northern NJ Thrift 651 J 4 05-31 01/95 17.25 53
BFSI BFS Bankorp, Inc. of NY OTC New York NY R.E. 643 5 09-30 05/88 49.50 81
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 589 10 12-31 03/96 14.75 131
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 577 7 12-31 06/95 16.00 124
TSBS Trenton SB, FSB MHC of NJ(35.0 OTC Central NJ Thrift 524 10 12-31 08/95 16.00 145
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 519 16 12-31 12/88 17.37 43
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 502 4 09-30 09/86 15.75 48
AHCI Ambanc Holding Co. of NY (3) OTC East-Central NY Thrift 496 9 12-31 12/95 11.00 54
PBIX Patriot Bank Corp. of PA OTC Southeast PA Thrift 490 7 12-31 12/95 13.37 60
FSPG First Home SB, SLA of NJ OTC NJ,DE Thrift 487 10 12-31 04/87 19.50 40
ANBK American Nat'l Bancorp of MD OTC Baltimore MD R.E. 487 9 07-31 11/95 12.25 44
IROQ Iroquois Bancorp of Auburn NY (3) OTC Central NY Thrift 474 9 12-31 01/86 16.75 40
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
LVSB Lakeview SB of Paterson NJ OTC Northern NJ Thrift 473 8 07-31 12/93 23.50 58
CJFC Central Jersey Fin. Corp of NJ OTC Central NJ Thrift 464 6 03-31 09/84 37.50 100
CNSK Covenant Bank for Svgs. of NJ (3) OTC Southern NJ Thrift 387 12 12-31 / 12.00 33
SHEN First Shenango Bancorp of PA OTC Western PA Thrift 384 4 12-31 04/93 22.50 51
PFNC Progress Financial Corp. of PA OTC Southeastern PA M.B. 367 9 12-31 07/83 8.37 31
CARV Carver FSB of New York, NY OTC New York, NY Thrift 365 8 03-31 10/94 8.00 19
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 363 8 12-31 10/89 18.87 61
RARB Raritan Bancorp. of Raritan NJ (3) OTC Central NJ Thrift 354 5 12-31 03/87 23.25 36
FFWM First Fin. Corp of Western MD OTC Western MD Thrift 346 9 06-30 01/92 31.75 67
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 342 9 12-31 01/95 16.12 40
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 318 8 09-30 06/88 19.00 26
HARL Harleysville SA of PA OTC Southeastern PA Thrift 315 4 09-30 08/87 18.75 24
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 294 5 09-30 01/95 20.00 26
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 284 6 06-30 03/87 18.50 30
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 284 3 09-30 04/96 13.87 79
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 281 7 12-31 01/96 12.50 36
LFED Leeds FSB, MHC of MD (35.3) OTC Baltimore MD Thrift 275 1 06-30 03/94 16.00 55
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 268 J 4 09-30 09/93 26.75 16
FIBC Financial Bancorp of NY OTC New York, NY Thrift 267 5 09-30 08/94 14.50 26
WVFC WVS Financial Corp. of PA (3) OTC Pittsburgh PA Thrift 266 5 06-30 11/93 24.25 42
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 260 4 09-30 04/96 12.87 46
FBER First Bergen Bancorp of NJ OTC Northern NJ Thrift 250 2 09-30 04/96 12.00 38
IFSB Independence FSB of DC OTC Washington DC Ret. 248 2 12-31 06/85 7.62 10
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 247 J 3 07-31 / 4.94 21
CTBK Center Banks, Inc. of NY (3) OTC Central NY Thrift 242 7 12-31 05/86 16.12 15
WYNE Wayne Bancorp of NJ OTC Thrift 240 0 12-31 06/96 14.37 32
GDVS Greater DV SB,MHC of PA(19.9) (3) OTC Southeast PA Thrift 232 7 12-31 03/95 10.00 33
ESBK Elmira SB of Elmira NY (3) OTC NY,PA Ret. 221 6 12-31 03/85 17.00 12
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 214 6 03-31 08/94 15.12 27
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 202 6 06-30 02/87 15.87 24
SBFL SB Fing. Lakes MHC of NY(33.0) OTC Western NY Thrift 197 4 04-30 11/94 13.50 24
PHFC Pittsburgh Home Fin. of PA OTC Pittsburgh PA Thrift 195 6 09-30 04/96 13.12 29
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 186 3 06-30 12/95 13.44 51
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 166 3 12-31 06/95 14.87 19
TPNZ Tappan Zee Fin. Corp. of NY OTC Southeast NY Thrift 120 1 03-31 10/95 13.75 21
PRBC Prestige Bancorp of PA OTC Thrift 104 0 12-31 06/96 13.00 13
THBC Troy Hill Bancorp of PA OTC Pittsburgh PA Thrift 99 2 06-30 06/94 20.00 21
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 98 J 5 09-30 04/96 12.81 21
WWFC Westwood Fin. Corp. of NJ OTC Northern NJ Thrift 94 2 03-31 06/96 16.00 10
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 60 2 09-30 07/93 17.50 4
BRFC Bridgeville SB, FSB of PA OTC Western PA Thrift 55 1 12-31 10/94 16.00 18
PWBK Pennwood SB of PA (3) OTC Pittsburgh PA Thrift 46 3 12-31 07/96 12.62 8
Mid-West Companies
- ------------------
SFB Standard Fed. Bancorp of MI NYSE MI,IN,OH M.B. 15,354 166 12-31 01/87 56.50 1,762
COFI Charter One Financial of OH OTC OH,MI Div. 13,826 155 12-31 01/88 39.12 1,829
RFED Roosevelt Fin. Grp. Inc. of MO OTC MO,IL,KS Div. 9,048 79 12-31 01/87 18.94 798
TCB TCF Financial Corp. of MN NYSE MN,IL,MI,WI,OH Div. 7,115 184 12-31 06/86 41.75 1,456
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK M.B. 6,668 98 06-30 12/84 46.00 637
FFHC First Financial Corp. of WI OTC WI,IL Div. 5,596 129 12-31 12/80 28.50 853
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,276 52 12-31 05/87 27.62 499
SECP Security Capital Corp. of WI OTC Wisconsin Div. 3,494 42 06-30 01/94 73.25 674
MAFB MAF Bancorp of IL OTC Chicago IL Thrift 3,163 13 06-30 01/90 34.62 363
GTFN Great Financial Corp. of KY OTC Kentucky M.B. 2,831 41 12-31 03/94 29.12 413
CTZN CitFed Bancorp of Dayton OH OTC Dayton OH M.B. 2,748 33 03-31 01/92 29.75 255
STND Standard Fin. of Chicago IL OTC Chicago IL Thrift 2,340 13 12-31 08/94 21.00 340
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,892 33 03-31 07/92 34.75 161
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,485 28 12-31 08/83 25.50 211
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,469 44 12-31 11/89 24.00 148
DNFC D&N Financial Corp. of MI OTC MI,WI Ret. 1,408 35 12-31 02/85 15.37 117
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,404 13 09-30 06/93 26.50 145
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,128 21 12-31 04/93 22.87 96
FFSW First Fed Fin. Serv. of OH OTC Northeastern OH Thrift 1,111 18 12-31 04/87 39.00 141
AADV Advantage Bancorp of WI OTC WI,IL Thrift 1,016 15 09-30 03/92 31.87 108
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 827 26 12-31 08/94 16.75 87
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 812 18 12-31 06/90 19.25 93
IFSL Indiana Federal Corp. of IN OTC Northwestern IN Thrift 809 15 12-31 02/87 21.75 103
NASB North American SB of MO OTC KS,MO M.B. 740 J 8 09-30 09/85 33.75 77
FFEC First Fed. Bancshares of WI OTC Northwest WI Thrift 729 20 12-31 10/94 18.37 126
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 678 22 12-31 07/92 5.69 24
LBCI Liberty Bancorp of Chicago IL OTC Chicago IL Thrift 664 4 12-31 12/91 25.50 63
GSBC Great Southern Bancorp of MO OTC Southwest MO Div. 658 25 06-30 12/89 17.25 151
HNFC Hinsdale Financial Corp. of IL OTC Chicago IL M.B. 651 10 09-30 07/92 24.25 65
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 633 15 06-30 01/88 35.25 78
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 613 6 03-31 04/95 16.75 60
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 608 20 12-31 12/83 16.00 70
FFDP FirstFed Bancshares of IL OTC Chicago IL Thrift 603 3 12-31 07/92 16.75 55
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 603 10 06-30 06/93 25.87 132
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 600 13 03-31 01/88 16.62 83
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 565 7 12-31 06/94 18.25 85
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 554 19 06-30 04/92 16.50 48
SSBK Strongsville SB of OH OTC Cleveland OH Thrift 542 13 12-31 / 22.50 57
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 524 9 06-30 10/95 12.06 120
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 510 8 12-31 05/96 16.00 82
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 493 5 06-30 02/92 32.62 78
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 476 5 09-30 12/93 17.12 49
FFSX First FS&LA. MHC of IA (45.0) OTC Western IA Thrift 458 12 06-30 06/92 30.25 57
PERM Permanent Bancorp of IN OTC Southwest IN Thrift 422 11 03-31 04/94 20.25 43
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 400 8 12-31 02/87 15.63 51
PMFI Perpetual Midwest Fin. of IA OTC EastCentral IA Thrift 396 4 12-31 03/94 18.75 36
SFSB SuburbFed Fin. Corp. of IL OTC IL,IN Thrift 391 12 12-31 02/92 19.00 24
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 388 3 06-30 01/94 17.62 25
PFSL Pocahnts Fed, MHC of AR (46.4) OTC Northeast AR Thrift 382 5 09-30 04/94 17.25 28
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 378 7 12-31 / 16.25 34
SWBI Southwest Bancshares of IL OTC Chicago IL Thrift 376 5 12-31 06/92 18.25 48
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 371 5 12-31 09/96 12.81 90
CBSB Charter Financial Inc. of IL OTC Southern IL Thrift 367 J 6 09-30 12/95 12.50 61
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 357 7 06-30 07/87 19.25 81
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 355 11 09-30 10/94 14.87 52
KNK Kankakee Bancorp of IL AMEX Illinois Thrift 353 10 03-31 12/92 24.00 34
HVFD Haverfield Corp. of OH OTC Cleveland OH Thrift 351 10 12-31 03/85 18.50 35
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 345 9 06-30 12/92 15.00 35
CASH First Midwest Fin. Corp. of IA OTC IA,SD R.E. 342 J 9 09-30 09/93 24.75 44
HMCI Homecorp, Inc. of Rockford IL OTC Northern IL Thrift 340 9 12-31 06/90 17.75 20
MCBS Mid Continent Bancshares of KS OTC Central KS M.B. 340 7 09-30 06/94 23.75 48
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 333 J 6 12-31 07/94 21.00 46
INBI Industrial Bancorp of OH OTC Northern OH Thrift 320 10 12-31 08/95 12.37 69
FMBD First Mutual Bancorp of IL OTC Central IL Thrift 316 7 12-31 07/95 14.87 57
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 316 J 8 09-30 03/95 18.50 53
WCBI WestCo Bancorp of IL OTC Chicago IL Thrift 308 1 12-31 06/92 21.50 56
SMFC Sho-Me Fin. Corp. of MO OTC Southwest MO Thrift 292 7 12-31 06/94 21.62 36
WFCO Winton Financial Corp. of OH OTC Cincinnati OH R.E. 283 J 4 09-30 08/88 12.00 24
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 280 6 09-30 07/87 20.00 47
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 279 J 6 06-30 11/90 19.00 22
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 269 6 03-31 09/93 18.75 46
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 266 6 12-31 05/96 13.87 39
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 262 4 06-30 08/87 9.50 24
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 258 1 06-30 04/87 30.50 20
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 256 4 12-31 03/96 11.37 46
WAYN Wayne S&L Co., MHC of OH(46.7) OTC Central OH Thrift 251 6 03-31 06/93 23.00 34
OSBF OSB Fin. Corp. of Oshkosh WI OTC Eastern WI Thrift 250 7 12-31 06/92 27.25 32
CBIN Community Bank Shares of IN OTC Southeast IN Thrift 235 7 12-31 04/95 12.50 25
DFIN Damen Fin. Corp. of Chicago IL OTC Chicago IL Thrift 235 3 11-30 10/95 12.87 49
CAPS Capital Savings Bancorp of MO OTC Central MO Thrift 231 7 06-30 12/93 14.00 26
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 227 2 06-30 06/93 19.00 26
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 218 7 12-31 01/88 16.00 19
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 218 4 12-31 02/93 20.75 25
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 214 J 5 09-30 10/94 14.50 30
LARK Landmark Bancshares of KS OTC Central KS Thrift 214 5 09-30 03/94 17.00 32
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 211 J 4 09-30 03/94 16.50 33
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
SBCN Suburban Bancorp. of OH OTC Cincinnati OH Thrift 210 8 06-30 09/93 15.00 22
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 201 7 12-31 04/95 13.00 27
CBCO CB Bancorp of Michigan City IN OTC Northwest IN Thrift 200 3 03-31 12/92 24.25 28
FFFD North Central Bancshares of IA OTC Central IA Thrift 198 4 12-31 03/96 13.37 51
MWFD Midwest Fed. Fin. Corp of WI OTC Central WI Thrift 195 9 12-31 07/92 18.00 29
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 184 6 09-30 06/92 16.00 25
GFED Guaranty FS&LA,MHC of MO(31.1) OTC Southwest MO Thrift 183 4 06-30 04/95 11.37 36
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 181 2 09-30 10/94 14.12 32
PULB Pulaski SB, MHC of MO (29.0) OTC St. Louis MO Thrift 179 J 5 09-30 05/94 14.12 30
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 178 3 12-31 02/95 18.75 17
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 177 3 12-31 08/96 12.37 33
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 176 J 3 09-30 04/95 15.50 44
MARN Marion Capital Holdings of IN OTC Central IN Thrift 175 2 06-30 03/93 20.37 38
EGLB Eagle BancGroup of IL OTC Central IL Thrift 164 1 12-31 07/96 13.25 17
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 160 3 12-31 06/95 13.50 26
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 160 J 8 06-30 04/94 14.25 23
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 155 3 06-30 03/93 22.00 15
FBSI First Bancshares of MO OTC Southcentral MO Thrift 154 5 06-30 12/93 16.50 20
FFWD Wood Bancorp of OH OTC Northern OH Thrift 152 6 06-30 08/93 16.50 25
SJSB SJS Bancorp of St. Joseph MI OTC Southwest MI Thrift 152 4 06-30 02/95 25.50 23
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 148 2 06-30 04/95 17.69 25
JXSB Jcksnville SB,MHC of IL(43.3%) OTC Central IL Thrift 144 4 12-31 04/95 12.50 16
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 140 2 06-30 03/95 10.75 21
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 138 4 12-31 11/92 26.50 9
CLAS Classic Bancshares of KY OTC Eastern KY Thrift 136 1 03-31 12/95 11.62 15
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 129 3 06-30 07/95 11.37 39
PTRS The Potters S&L Co. of OH OTC Northeast OH Thrift 125 4 12-31 12/93 18.75 9
MFCX Marshalltown Fin. Corp. of IA OTC Central IA Thrift 124 3 09-30 03/94 14.50 20
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 120 2 12-31 09/96 11.75 31
GTPS Great American Bancorp of IL OTC East Central IL Thrift 120 J 3 09-30 06/95 14.50 28
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 117 2 06-30 12/93 15.75 17
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 115 J 6 09-30 10/92 6.25 11
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 114 1 06-30 04/95 17.50 30
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 110 P 1 09-30 11/96 11.94 24
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 110 J 2 09-30 10/95 18.50 40
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 109 1 09-30 10/93 19.62 11
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 107 5 09-30 04/95 18.00 13
FTNB Fulton Bancorp of MO OTC Central MO Thrift 105 P 2 04-30 10/96 14.87 26
CNSB CNS Bancorp of MO OTC Central MO Thrift 99 5 12-31 06/96 15.00 25
FFBI First Financial Bancorp of IL OTC Northern IL M.B. 97 2 12-31 10/93 15.87 7
CBES CBES Bancorp of MO OTC Western MO Thrift 97 2 06-30 09/96 13.75 14
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 96 3 03-31 10/94 12.25 11
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 95 3 06-30 02/95 16.75 11
WCFB Webster CityFSB,MHC of IA(45.2 OTC Central IA Thrift 95 1 12-31 08/94 13.06 27
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 91 P 2 09-30 09/96 13.00 19
INCB Indiana Comm. Bank, SB of IN OTC Central IN Ret. 91 3 06-30 12/94 16.50 15
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 89 J 2 09-30 06/95 14.25 22
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 88 3 03-31 09/95 12.37 12
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 87 4 06-30 08/95 13.62 12
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 86 2 06-30 08/95 11.50 16
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 85 1 06-30 04/96 13.12 19
GFSB GFS Bancorp of Grinnell IA OTC Central IA Thrift 85 1 06-30 01/94 20.75 10
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 84 4 12-31 04/96 12.87 14
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 81 2 06-30 01/94 16.50 13
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 81 3 06-30 03/95 14.25 13
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 80 J 1 09-30 02/95 17.00 15
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 80 1 12-31 06/95 11.75 16
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 77 3 06-30 06/94 14.50 6
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 76 J 3 09-30 10/94 9.87 9
ATSB AmTrust Capital Corp. of IN OTC Northcentral IN Thrift 72 J 3 06-30 03/95 10.12 5
GWBC Gateway Bancorp of KY OTC Eastern KY Thrift 69 2 06-30 01/95 14.50 16
MIVI Miss. View Hold. Co. of MN OTC Central MN Thrift 69 J 1 09-30 03/95 11.75 11
MSBF MSB Financial Corp. of MI OTC Southcentral MI Thrift 63 2 06-30 02/95 19.25 13
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 61 J 1 09-30 06/96 13.50 17
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 60 1 12-31 01/95 19.75 19
NSLB NS&L Bancorp of Neosho MO OTC Southwest MO Thrift 57 J 2 09-30 06/95 13.75 12
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
RELI Reliance Bancshares Inc of WI (3) OTC Milwaukee WI Thrift 48 1 June 04/96 6.75 17
HBBI Home Building Bancorp of IN OTC Southwest IN Thrift 43 2 09-30 02/95 18.00 6
CSBF CSB Financial Group Inc of IL OTC Centralia IL Thrift 42 J 1 09-30 10/95 10.56 11
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 39 0 06-30 07/96 13.00 7
FLKY First Lancaster Bncshrs of KY OTC Thrift 38 0 06-30 07/96 15.50 15
LONF London Financial Corp. of OH OTC Central OH Thrift 37 J 1 09-30 04/96 13.50 7
JOAC Joachim Bancorp of MO OTC Eastern MO Thrift 36 1 03-31 12/95 14.37 11
New England Companies
- ---------------------
PBCT Peoples Bank, MHC of CT(32.3) (3) OTC Southwestern CT Div. 7,237 84 12-31 07/88 27.25 1,104
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH Div. 4,456 82 12-31 12/86 25.75 649
WBST Webster Financial Corp. of CT OTC Central CT Thrift 3,984 64 12-31 12/86 37.75 306
CFX Cheshire Fin. Corp. of NH (3) AMEX S.W. NH,MA M.B. 1,521 23 12-31 02/87 16.25 199
EGFC Eagle Financial Corp. of CT OTC Western CT Thrift 1,407 19 09-30 02/87 28.75 130
SISB SIS Bank of Springfield MA (3) OTC Central MA Div. 1,285 21 12-31 02/95 23.25 133
DSBC DS Bancor Inc. of Derby CT (3) OTC Southwestern CT Thrift 1,259 22 12-31 12/85 42.50 129
ANDB Andover Bancorp, Inc. of MA (3) OTC Northeastern MA M.B. 1,199 11 12-31 05/86 25.75 132
WLDN Walden Bancorp of MA (3) OTC Eastern MA M.B. 1,049 17 04-30 12/85 34.81 178
MDBK Medford Savings Bank of MA (3) OTC Eastern MA Thrift 1,008 16 12-31 03/86 25.00 113
AFCB Affiliated Comm BC, Inc of MA OTC MA Thrift 1,005 10 12-31 / 22.62 115
FFES First FS&LA of E. Hartford CT OTC Central CT Thrift 943 12 12-31 06/87 23.00 60
FMLY Family Bancorp of Haverhill MA (3) OTC MA,NH Div. 918 21 12-31 11/86 34.38 148
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 879 14 12-31 05/86 37.37 100
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 869 10 12-31 08/87 13.37 81
EBCP Eastern Bancorp of NH OTC VT, NH M.B. 869 25 09-30 11/83 22.62 83
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 797 8 12-31 10/95 14.87 98
MECH Mechanics SB of Hartford CT (3) OTC Hartford CT Thrift 710 0 12-31 06/96 15.50 82
NSSB Norwich Financial Corp. of CT (3) OTC Southeastern CT Thrift 694 18 12-31 11/86 19.50 105
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 692 10 12-31 07/86 17.50 90
NSSY Norwalk Savings Society of CT (3) OTC Southwest CT Thrift 637 8 12-31 06/94 24.25 58
GROV GroveBank for Savings of MA (3) OTC Eastern MA Thrift 599 7 12-31 08/86 49.12 76
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
- ---------------------------------
CBNH Community Bankshares Inc of NH (3) OTC Southcentral NH M.B. 549 9 06-30 05/86 20.25 49
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 548 15 12-31 12/81 28.75 66
PBKB People's SB of Brockton MA (3) OTC Southeastern MA Thrift 513 14 12-31 10/86 10.62 36
SOSA Somerset Savings Bank of MA (3) OTC Eastern MA R.E. 511 5 12-31 07/86 2.00 33
MWBX Metro West of MA (3) OTC Eastern MA Thrift 499 9 12-31 10/86 4.87 68
ABBK Abington Savings Bank of MA (3) OTC Southeastern MA M.B. 484 7 12-31 06/86 19.62 37
SWCB Sandwich Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 461 11 04-30 07/86 29.62 56
PBNB Peoples Sav. Fin. Corp. of CT (3) OTC Central CT Thrift 460 8 12-31 08/86 27.75 53
PETE Primary Bank of NH (3) OTC Southern NH Ret. 414 8 12-31 10/93 14.62 29
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 402 3 12-31 07/86 22.25 59
EIRE Emerald Island Bancorp, MA (3) OTC Eastern MA R.E. 392 7 12-31 09/86 18.50 33
MIDC Midconn Bank of Kensington CT (3) OTC Central CT Thrift 358 10 09-30 09/86 19.31 37
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 354 6 12-31 07/86 15.63 57
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 330 6 12-31 05/86 8.25 35
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 326 11 04-30 10/86 18.37 36
NMSB Newmil Bancorp. of CT (3) OTC Eastern CT Thrift 306 12 06-30 02/86 8.75 35
POBS Portsmouth Bank Shrs Inc of NH (3) OTC Southeastern NH Thrift 269 3 12-31 02/88 13.62 78
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 264 10 12-31 05/86 11.75 20
NEBC Northeast Bancorp of ME (3) OTC Eastern ME Thrift 230 8 06-30 08/87 13.50 17
TBK Tolland Bank of CT (3) AMEX Northern CT Thrift 228 7 12-31 12/86 11.62 13
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 193 4 12-31 12/88 17.50 23
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 189 2 12-31 08/88 16.87 31
BSBC Branford SB of CT (3) OTC New Haven CT R.E. 176 5 12-31 11/86 3.87 25
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 158 4 12-31 05/93 11.62 14
AFED AFSALA Bancorp of NY OTC Central NY Thrift 149 P 4 09-30 10/96 11.50 17
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 133 J 8 12-31 06/93 23.00 9
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 116 4 04-30 12/87 14.75 13
NTMG Nutmeg FS&LA of CT OTC CT M.B. 94 3 12-31 / 7.25 5
FCB Falmouth Co-Op Bank of MA (3) AMEX Southeast MA Thrift 91 1 09-30 03/96 13.12 19
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 56 2 03-31 11/89 18.75 4
GLBK Glendale Co-op. Bank of MA (3) OTC Boston MA Thrift 37 J 1 04-30 01/94 20.00 5
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WAMU Washington Mutual Inc. of WA (3) OTC WA,OR,ID,UT,MT Div. 22,414 290 12-31 03/83 42.37 3,057
WFSL Washington FS&LA of Seattle WA OTC Western US Thrift 5,115 89 09-30 11/82 25.75 1,048
IWBK Interwest SB of Oak Harbor WA OTC Western WA Div. 1,712 31 12-31 / 32.25 255
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,531 41 06-30 / 13.75 76
FWWB First Savings Bancorp of WA (3) OTC Central WA Thrift 947 16 03-31 11/95 18.50 201
MSEA Metropolitan Bancorp of WA OTC Western WA R.E. 753 10 03-31 01/90 19.25 70
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 672 7 09-30 10/95 14.94 173
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 500 12 03-31 08/86 13.25 86
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 401 6 12-31 12/85 18.00 44
CASB Cascade SB of Everett WA OTC Seattle WA Thrift 340 6 06-30 08/92 13.00 27
RVSB Rvrview SB,FSB MHC of WA(40.3) OTC Southwest WA M.B. 219 9 03-31 10/93 16.75 37
South-East Companies
- --------------------
FFCH First Fin. Holdings Inc. of SC OTC CHARLESTON SC Div. 1,546 32 09-30 11/83 23.25 148
LIFB Life Bancorp of Norfolk VA OTC Southeast VA Thrift 1,405 20 12-31 10/94 18.37 181
AMFB American Federal Bank of SC OTC Northwest SC Thrift 1,395 41 12/31 01/89 19.00 208
MGNL Magna Bancorp of MS OTC MS,AL M.B. 1,302 62 06-30 03/91 18.00 247
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 991 J 29 9-30 12/83 18.50 111
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 845 8 06-30 12/95 17.87 307
VFFC Virginia First Savings of VA OTC Petersburg VA M.B. 781 23 06-30 01/78 12.87 74
ISBF ISB Financial Corp. of LA OTC SouthCentral LA Thrift 686 16 12-31 04/95 17.50 123
PALM Palfed, Inc. of Aiken SC OTC Southwest SC Thrift 660 19 12-31 12/85 14.50 76
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 656 J 15 12-31 08/92 39.25 64
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 642 10 03-31 04/86 13.62 62
VABF Va. Beach Fed. Fin. Corp of VA OTC Southeast VA M.B. 604 12 12-31 11/80 9.25 46
FFFC FFVA Financial Corp. of VA OTC Southern VA Thrift 530 11 12-31 10/94 21.25 107
CFCP Coastal Fin. Corp. of SC OTC SC Thrift 453 J 9 09-30 09/90 21.00 72
TSH Teche Holding Company of LA AMEX Southern LA Thrift 380 8 09-30 04/95 13.25 47
FSFC First So.east Fin. Corp. of SC OTC Northwest SC Thrift 329 11 06-30 10/93 9.50 42
FFRV Fid. Fin. Bkshrs. Corp. of VA OTC Southern VA Thrift 329 7 12-31 05/86 24.25 56
COOP Cooperative Bk.for Svgs. of NC OTC Eastern NC Thrift 327 17 03-31 08/91 20.50 31
ANA Acadiana Bancshares of LA (3) AMEX Southern LA Thrift 265 4 12-31 07/96 14.25 39
UFRM United FS&LA of Rocky Mount NC OTC Eastern NC M.B. 264 9 12-31 07/80 7.75 24
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
- --------------------------------
SOPN First SB, SSB, Moore Co. of NC OTC Central NC Thrift 263 5 06-30 01/94 18.00 67
MERI Meritrust FSB of Thibodaux LA OTC Southeast LA Thrift 231 8 12-31 / 31.62 24
FLAG Flag Financial Corp of GA OTC Western GA M.B. 229 4 12-31 12/86 11.00 22
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 208 P 2 09-30 10/96 13.87 62
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 204 1 09-30 03/96 17.12 73
PERT Perpetual of SC, MHC (46.8%) OTC Northwest SC Thrift 202 P 5 09-30 10/96 22.00 33
PLE Pinnacle Bank of AL AMEX Central AL Thrift 192 5 06-30 12/86 17.00 15
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 176 3 09-30 04/96 15.37 66
ESX Essex Bancorp of VA AMEX VA,NC M.B. 172 12 12-31 / 2.25 2
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 166 5 09-30 07/95 14.50 27
NFSL Newnan SB, FSB of Newnan GA OTC Western GA M.B. 162 J 8 03-31 03/86 25.25 40
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 161 3 03-31 03/88 21.00 27
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 144 J 7 09-30 02/87 8.62 17
PDB Piedmont Bancorp of NC AMEX Central NC Thrift 132 2 06-30 12/95 10.87 30
BFSB Bedford Bancshares of VA OTC Southern VA Thrift 127 3 09-30 08/94 18.00 21
FFBS FFBS Bancorp of Columbus MS OTC Columbus MS Thrift 126 3 06-30 06/93 23.00 36
GSLC Guaranty Svgs & Loan FA of VA OTC Charltsvl VA M.B. 115 3 06-30 / 8.25 8
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 110 P 4 06-30 11/96 13.12 24
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 108 4 06-30 10/95 13.37 18
TWIN Twin City Bancorp of TN OTC Northeast TN Thrift 107 3 12-31 01/95 17.25 15
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 106 2 12-31 04/96 19.62 36
KSAV KS Bancorp of Kenly NC OTC Central NC Thrift 96 3 12-31 12/93 20.87 14
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 91 J 2 09-30 02/95 12.50 11
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 79 J 3 09-30 07/95 15.00 17
CZF Citisave Fin. Corp. of LA AMEX Baton Rouge LA Thrift 76 5 12-31 07/95 14.00 13
SSB Scotland Bancorp of NC AMEX S. Central NC Thrift 69 2 09-30 04/96 14.25 26
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 43 1 06-30 07/94 15.00 11
MBSP Mitchell Bancorp of NC (3) OTC Western NC Thrift 35 1 12-31 07/96 14.25 14
South-West Companies
- --------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,859 40 12-31 / 22.62 112
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
December 18, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ --------------------------------- ------ ---------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-West Companies (continued)
- --------------------------------
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 282 5 03-31 06/93 24.25 20
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 218 6 09-30 04/96 14.50 38
LBFI L&B Financial of S. Springs TX OTC Northeast TX Thrift 145 6 06-30 09/94 17.00 27
LOAN Horizon Bancorp, Inc of TX (3) OTC Austin TX R.E. 141 J 8 04-30 / 19.00 26
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 115 J 2 09-30 01/95 16.25 18
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 109 3 12-31 08/86 5.63 4
GUPB GFSB Bancorp of Gallup NM OTC Northwest NM Thrift 80 1 06-30 06/95 15.87 14
Western Companies (Excl CA)
- ---------------------------
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,501 J 26 12-31 01/96 17.50 333
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 566 20 06-30 01/94 18.12 80
GBCI Glacier Bancorp of MT OTC Western MT Div. 412 13 06-30 03/84 23.37 79
SFBM Security Bancorp of MT OTC Southcentral MT Thrift 382 16 06-30 11/86 30.00 45
UBMT United SB, FA of MT OTC Central MT Thrift 108 4 12-31 09/86 18.75 23
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 79 2 12-31 09/93 19.00 12
MORG Morgan Financial Corp. of CO OTC Northeast CO Thrift 75 1 06-30 01/93 11.25 9
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 52 1 09-30 03/96 11.75 12
Other Areas
- -----------
NOTES: (1) Or most recent date available (M=March, S=September, D=December, J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report, and financial reports of publicly
Traded Thrifts.
Date of Last Update: 12/18/96
</TABLE>
<PAGE>
EXHIBIT III-2
Financial Analysis of Louisiana Institutions
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of December 13, 1996
<TABLE>
<CAPTION>
Per Share Data
Market --------------
Capitalization Book Pricing Ratios(3)
----------------- ----------------------------------------
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- -------- ------- ------- ------- ------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
SAIF-Insured Thrifts 18.72 142.09 0.87 16.03 17.22 116.52 14.06 119.53 15.51
State of LA 18.12 49.43 0.65 16.39 21.19 108.10 14.69 108.80 14.73
Comparable Group
- ----------------
State of LA
- -----------
ANA Acadiana Bancshares of LA 14.25 38.92 -0.43 17.03 NM 83.68 14.68 83.68 NM
CZF Citisave Fin. Corp. of LA 14.00 13.47 0.63 12.58 22.22 111.29 17.81 111.38 16.67
ISBF ISB Financial Corp. of LA 17.50 123.39 0.73 15.93 23.97 109.86 17.99 113.27 17.68
MERI Meritrust FSB of Thibodaux LA 31.62 24.47 1.59 21.67 19.89 145.92 10.59 145.92 11.71
TSH Teche Holding Company of LA 13.25 46.92 0.71 14.76 18.66 89.77 12.36 89.77 12.86
Dividends(4) Financial Characteristics(6)
------------------------ --------------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
-------------- -------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ----- -------- ------- ------- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
SAIF-Insured Thrifts 0.37 1.98 33.16 1,353 12.79 0.87 0.62 5.36 0.83 7.41
State of LA 0.39 2.16 56.13 327 14.19 0.39 0.48 3.16 0.73 5.26
Comparable Group
- ----------------
State of LA
- -----------
ANA Acadiana Bancshares of LA 0.00 0.00 NM 265 17.55 0.56 -0.47 -4.71 -0.44 -4.39
CZF Citisave Fin. Corp. of LA 0.40 2.86 63.49 76 16.00 0.22 0.78 4.47 1.04 5.97
ISBF ISB Financial Corp. of LA 0.34 1.94 46.58 686 16.38 NA 0.81 4.38 1.09 5.94
MERI Meritrust FSB of Thibodaux LA 0.70 2.21 44.03 231 7.26 NA 0.55 7.37 0.93 12.52
TSH Teche Holding Company of LA 0.50 3.77 70.42 380 13.77 NA 0.72 4.30 1.04 6.24
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data
and is not shown on a pro forma basis. (3) P/E = Price to earnings;
P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible
book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
EXHIBIT III-3
Financial Analysis of Peer Group Candidates
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-3
Financial Analysis of Peer Group Candidates
Market Pricing Comparatives
Prices As of December 13, 1996
<TABLE>
<CAPTION>
Per Share Data
Market --------------
Capitalization Pricing Ratios(3)
--------------- -------------------------------------
Book
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- -------- ------ ----- ------ ------ ------ ----- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.72 142.09 0.87 16.03 17.22 116.52 14.06 119.53 15.51
Comparable Group Average 15.32 27.09 0.60 15.12 21.33 102.12 24.88 102.12 20.34
Mid-West Companies 15.35 28.01 0.59 15.14 21.18 102.23 25.20 102.23 19.95
South-East Companies 15.00 16.97 0.68 14.86 22.06 100.94 21.39 100.94 23.08
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 17.50 30.00 0.37 14.79 NM 118.32 26.24 118.32 NM
CKFB CKF Bancorp of Danville KY 19.75 18.58 0.79 16.05 25.00 123.05 31.03 123.05 25.00
DFIN Damen Fin. Corp. of Chicago IL 12.87 48.53 0.47 14.02 NM 91.80 20.69 91.80 21.10
FTSB Fort Thomas Fin. Corp. of KY 14.25 22.43 0.74 13.75 19.26 103.64 25.24 103.64 19.26
FKKY Frankfort First Bancorp of KY 11.37 39.11 0.32 9.84 NM 115.55 30.38 115.55 NM
GWBC Gateway Bancorp of KY 14.50 16.15 0.54 15.64 NM 92.71 23.24 92.71 19.59
GTPS Great American Bancorp of IL 14.50 28.28 0.42 17.09 NM 84.84 23.63 84.84 NM
HFFB Harrodsburg 1st Fin Bcrp of KY 18.50 39.94 0.57 14.28 NM 129.55 36.45 129.55 NM
KYF Kentucky First Bancorp of KY 11.50 15.97 0.52 13.78 22.12 83.45 18.57 83.45 16.91
MARN Marion Capital Holdings of IN 20.37 37.54 1.09 21.49 18.69 94.79 21.50 94.79 14.87
NSLB NS&L Bancorp of Neosho MO 13.75 11.59 0.66 15.84 20.83 86.81 20.23 86.81 22.92
South-East Companies
- --------------------
CCFH CCF Holding Company of GA 15.00 16.97 0.68 14.86 22.06 100.94 21.39 100.94 23.08
Dividends(4) Financial Characteristics(6)
------------------------- ------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ------------ ------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ----- -------- ------ ------- ------ ----- ----- ----- -----
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.98 33.16 1,353 12.79 0.87 0.62 5.36 0.83 7.41
Comparable Group Average 0.42 2.80 59.57 110 24.26 0.67 0.95 3.89 1.08 4.42
Mid-West Companies 0.43 2.81 59.70 113 24.54 0.65 0.95 3.78 1.10 4.37
South-East Companies 0.40 2.67 58.82 79 21.19 0.92 0.96 5.14 0.92 4.92
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 0.40 2.29 NM 114 22.18 1.89 0.57 2.44 0.89 3.83
CKFB CKF Bancorp of Danville KY 0.44 2.23 55.70 60 25.22 1.47 1.28 4.72 1.28 4.72
DFIN Damen Fin. Corp. of Chicago IL 0.24 1.86 51.06 235 22.54 0.15 0.77 3.66 1.00 4.75
FTSB Fort Thomas Fin. Corp. of KY 0.25 1.75 33.78 89 24.35 1.27 1.33 5.37 1.33 5.37
FKKY Frankfort First Bancorp of KY 0.36 3.17 NM 129 26.30 0.16 0.81 2.52 1.09 3.39
GWBC Gateway Bancorp of KY 0.40 2.76 74.07 69 25.07 0.45 0.83 3.26 1.14 4.47
GTPS Great American Bancorp of IL 0.40 2.76 NM 120 27.85 0.13 0.69 2.42 0.68 2.36
HFFB Harrodsburg 1st Fin Bcrp of KY 0.40 2.16 70.18 110 28.14 0.58 1.17 4.61 1.17 4.61
KYF Kentucky First Bancorp of KY 0.50 4.35 NM 86 22.25 0.09 0.90 3.71 1.17 4.85
MARN Marion Capital Holdings of IN 0.80 3.93 73.39 175 22.68 0.95 1.14 4.80 1.43 6.03
NSLB NS&L Bancorp of Neosho MO 0.50 3.64 NM 57 23.31 0.02 0.97 4.06 0.88 3.69
South-East Companies
- --------------------
CCFH CCF Holding Company of GA 0.40 2.67 58.82 79 21.19 0.92 0.96 5.14 0.92 4.92
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data
and is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets;
P/TB = Price to tangible book value; and P/CORE = Price to estimated
core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
EXHIBIT III-4
Peer Group Market Area Comparative Analysis
<PAGE>
<TABLE>
<CAPTION>
Exhibit III-4
Peer Group Primary Market Area Demographic/Competition Trends
Per Capita Income
Population Proj. ----------------- Deposit
------------ Pop. 1990-96 1995-2001 % State Market
Institution County 1990 1996 2001 % Change % Change Median Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- --------- ---------- ------ ------- --------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CCF Holding Company of GA Clayton 182 202 219 11.0% 8.2% 31.7 15,670 93.8% 5.9%
CKF Bancorp of Danville KY Boyle 26 27 28 5.0% 3.8% 36.8 13,510 106.0% 12.1%
Citisave Fin. Corp. of LA E. Baton Rouge 380 398.9 414 5.0% 3.8% 31.3 15,519 125.7% 1.2%
Damen Fin. Corp. of Chicago IL Cook 5,105 5,136 5,161 0.6% 0.5% 34.1 18,013 103.9% 0.1%
Fort Thomas Fin. Corp. of KY Campbell 84 88 91 4.8% 3.6% 33.8 14,358 112.7% 5.7%
Gateway Bancorp of KY Boyd 51 50 50 -1.3% -1.0% 38.8 12,665 99.4% 4.9%
Kentucky First Bancorp of KY Harrison 16 17 18 5.3% 4.0% 36.3 12,462 97.8% 27.8%
Marion Capital Holdings of IN Grant 74 74 73 -0.8% -0.6% 36.3 13,601 89.0% 14.6%
NS & L Bancorp of Neosho MO Newton 44 48 51 8.3% 6.1% 35.9 13,365 86.0% 16.7%
Teche Holding Company of LA St. Mary 58 57 57 -1.0% -0.8% 31.1 9,461 76.6% 19.8%
----- ----- ----- ----- ----- ---- ------ ------ -----
Averages: 602.1 609.9 616.2 3.7% 2.8% 34.6 13,862 99.1% 10.9%
Medians: 66.13 65.55 65.08 4.9% 3.7% 35.0 13,556 98.6% 9.0%
Guaranty Savings Jefferson 448 458 465 2.1% 1.7% 34.0 13,905 112.6% 1.3%
(1) Total institution deposits in headquarters county as percent of total county deposits.
Sources: CACI, Inc; FDIC; OTS.
</TABLE>
<PAGE>
EXHIBIT IV-1
Stock Prices:
As of December 13, 1996
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
___________________________ __________________________________________________________
52 Week (1) % Change From
Shares Market _________________ ___________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured
Thrifts(no MHC)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(322) 18.76 6,033 149.0 19.98 14.87 18.76 0.06 154.89 13.68
NYSE Traded Companies(12) 35.23 46,176 1,615.4 37.27 25.34 35.44 -0.18 272.38 25.15
AMEX Traded Companies(17) 15.39 3,208 57.7 17.19 12.45 15.36 0.28 241.19 5.37
NASDAQ Listed OTC Companies(293) 18.30 4,586 95.5 19.44 14.59 18.28 0.06 139.87 13.58
California Companies(25) 21.67 21,784 649.1 22.94 15.84 21.63 0.37 84.73 21.78
Florida Companies(7) 13.55 7,295 86.5 14.50 11.14 13.85 -1.21 48.08 15.13
Mid-Atlantic Companies(66) 18.97 6,153 126.9 19.95 14.72 18.91 0.41 141.93 16.28
Mid-West Companies(151) 18.92 4,075 107.1 20.13 15.32 18.89 0.21 171.88 11.70
New England Companies(10) 19.58 3,449 84.0 20.44 15.22 19.69 -0.61 233.00 17.95
North-West Companies(6) 19.94 13,563 315.9 21.62 15.35 20.20 -1.81 87.95 15.05
South-East Companies(42) 17.05 3,794 64.5 18.79 13.78 17.08 -0.28 189.23 10.17
South-West Companies(7) 16.52 1,866 34.6 17.52 12.54 16.77 -0.99 -16.59 13.89
Western Companies (Excl CA)(8) 17.11 4,353 78.2 17.93 13.80 17.36 -1.23 297.58 17.92
Thrift Strategy(249) 17.45 3,541 69.2 18.63 14.07 17.45 0.03 121.25 11.82
Mortgage Banker Strategy(39) 22.50 12,295 379.2 23.96 17.32 22.52 -0.35 244.04 18.75
Real Estate Strategy(15) 20.40 7,577 148.7 21.41 15.33 20.18 1.32 130.65 19.13
Diversified Strategy(15) 30.56 30,284 898.4 32.11 22.39 30.62 -0.18 209.65 22.84
Retail Banking Strategy(4) 14.06 3,348 50.5 14.50 10.94 13.72 2.28 178.33 10.20
Companies Issuing Dividends(259) 19.48 6,340 164.9 20.78 15.45 19.48 0.03 170.87 13.62
Companies Without Dividends(63) 15.74 4,744 82.7 16.59 12.45 15.73 0.17 76.53 14.07
Equity/Assets LESS THAN6%(34) 22.14 17,981 494.6 23.50 16.17 22.04 -0.08 150.82 20.10
Equity/Assets 6-12%(152) 20.35 6,191 160.2 21.73 15.99 20.40 -0.11 160.68 15.45
Equity/Assets MORE THAN12%(136) 16.18 2,963 53.0 17.17 13.31 16.14 0.29 125.24 8.96
Converted Last 3 Mths (no MHC)(7) 12.80 2,479 31.5 13.14 11.62 12.77 0.24 0.00 0.00
Actively Traded Companies(51) 27.02 17,902 563.7 28.55 20.42 26.99 0.33 188.15 20.28
Market Value Below $20 Million(77) 14.48 954 12.9 15.56 12.31 14.50 -0.05 81.79 3.43
Holding Company Structure(279) 19.16 6,050 155.3 20.39 15.20 19.16 0.12 145.44 13.61
Assets Over $1 Billion(67) 27.61 18,350 537.0 28.99 20.40 27.54 0.33 197.51 24.84
Assets $500 Million-$1 Billion(54) 18.06 5,305 86.1 19.06 14.30 18.03 0.10 184.17 15.42
Assets $250-$500 Million(71) 17.49 2,688 42.6 18.83 14.19 17.56 -0.33 101.63 12.17
Assets less than $250 Million(130) 14.93 1,437 20.6 16.07 12.47 14.92 0.11 100.71 6.44
Goodwill Companies(133) 21.72 10,197 262.7 22.99 16.52 21.74 0.00 186.61 19.57
Non-Goodwill Companies(189) 16.74 3,194 71.6 17.92 13.75 16.72 0.10 97.23 8.93
Acquirors of FSLIC Cases(14) 29.81 33,382 1,146.1 31.40 22.21 29.84 0.63 267.48 14.59
Current Per Share Financials
_________________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured
Thrifts(no MHC)
____________________________
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(322) 0.88 1.19 16.19 15.77 163.46
NYSE Traded Companies(12) 1.73 2.63 20.88 19.42 374.11
AMEX Traded Companies(17) 0.71 0.95 14.71 14.55 109.18
NASDAQ Listed OTC Companies(293) 0.86 1.15 16.09 15.69 158.18
California Companies(25) 0.42 1.03 17.32 16.88 275.94
Florida Companies(7) 0.41 0.63 12.37 12.04 150.89
Mid-Atlantic Companies(66) 1.07 1.42 16.29 15.61 173.31
Mid-West Companies(151) 0.92 1.18 16.81 16.48 149.04
New England Companies(10) 1.20 1.41 17.31 16.00 234.86
North-West Companies(6) 0.94 1.28 12.45 11.85 168.46
South-East Companies(42) 0.76 1.05 13.98 13.79 119.40
South-West Companies(7) 0.54 1.01 15.88 15.07 223.55
Western Companies (Excl CA)(8) 0.86 1.06 15.68 15.65 99.11
Thrift Strategy(249) 0.78 1.07 16.11 15.76 143.75
Mortgage Banker Strategy(39) 1.41 1.60 16.21 15.26 245.01
Real Estate Strategy(15) 0.83 1.38 15.98 15.80 206.98
Diversified Strategy(15) 1.37 2.15 18.55 18.01 236.03
Retail Banking Strategy(4) 0.56 0.77 12.94 12.46 161.93
Companies Issuing Dividends(259) 1.00 1.31 16.39 15.89 163.17
Companies Without Dividends(63) 0.37 0.70 15.37 15.22 164.68
Equity/Assets LESS THAN6%(34) 0.81 1.41 15.26 14.12 306.43
Equity/Assets 6-12%(152) 1.11 1.47 16.38 15.80 198.33
Equity/Assets MORE THAN12%(136) 0.64 0.83 16.21 16.13 90.16
Converted Last 3 Mths (no MHC)(7) 0.44 0.55 14.80 14.80 67.41
Actively Traded Companies(51) 1.58 2.20 18.55 17.71 260.66
Market Value Below $20 Million(77) 0.55 0.79 15.67 15.53 132.28
Holding Company Structure(279) 0.89 1.20 16.62 16.18 162.08
Assets Over $1 Billion(67) 1.34 1.91 19.11 17.80 269.19
Assets $500 Million-$1 Billion(54) 1.02 1.31 15.01 14.67 164.15
Assets $250-$500 Million(71) 0.88 1.11 15.84 15.59 160.31
Assets less than $250 Million(130) 0.58 0.79 15.26 15.19 107.68
Goodwill Companies(133) 1.04 1.47 16.62 15.57 214.72
Non-Goodwill Companies(189) 0.77 1.00 15.90 15.90 128.53
Acquirors of FSLIC Cases(14) 1.61 2.46 18.37 17.09 307.80
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits,
etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated
ratios based on trailing twelve month common earnings and average
common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend
announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition
activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
__________________________ _________________________________________________________
52 Week (1) % Change From
Shares Market _________________ ___________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured
Thrifts(no MHC)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(75) 18.73 7,963 188.6 19.67 13.64 18.74 0.07 131.52 26.59
NYSE Traded Companies(3) 27.04 53,821 1,349.3 28.16 15.71 26.66 0.60 162.20 47.02
AMEX Traded Companies(5) 16.80 3,978 67.3 17.75 13.50 16.82 -0.20 50.05 10.60
NASDAQ Listed OTC Companies(67) 18.46 5,899 138.2 19.39 13.54 18.49 0.06 136.47 26.33
California Companies(3) 14.25 6,047 89.8 14.96 10.33 14.42 -1.15 277.78 35.31
Mid-Atlantic Companies(20) 20.54 13,333 310.6 21.48 14.95 20.49 0.22 89.09 20.58
New England Companies(42) 18.20 4,117 73.2 19.15 13.22 18.31 -0.30 148.40 28.40
North-West Companies(4) 23.03 22,995 847.2 24.38 15.46 22.25 3.46 86.40 30.66
South-East Companies(4) 13.87 2,515 34.9 14.34 11.75 13.87 0.05 0.00 0.00
Thrift Strategy(48) 18.23 4,563 111.7 19.02 13.43 18.16 0.49 127.57 27.10
Mortgage Banker Strategy(10) 20.36 18,983 319.7 21.81 14.93 20.74 -1.07 171.31 24.48
Real Estate Strategy(8) 18.50 5,072 103.6 19.23 12.48 18.54 -0.53 196.38 37.20
Diversified Strategy(7) 21.35 22,737 706.4 22.87 14.71 21.58 -1.98 80.09 23.62
Retail Banking Strategy(2) 15.81 1,341 20.4 16.69 13.25 15.31 3.45 18.30 3.26
Companies Issuing Dividends(55) 20.50 7,185 206.1 21.55 14.72 20.50 0.13 132.20 26.63
Companies Without Dividends(20) 14.11 9,994 142.9 14.76 10.82 14.15 -0.10 125.09 26.43
Equity/Assets LESS THAN6%(8 13.75 19,561 285.6 14.77 10.30 13.88 -0.96 117.50 19.44
Equity/Assets 6-12%(51) 19.85 7,327 206.9 20.89 14.23 19.89 -0.19 137.16 28.21
Equity/Assets MORE THAN12%(16) 17.72 4,164 82.6 18.27 13.44 17.54 1.37 -1.34 23.78
Converted Last 3 Mths (no MHC)(2) 13.50 3,175 43.3 14.00 12.56 13.50 0.00 0.00 0.00
Actively Traded Companies(28) 20.39 12,338 291.9 21.56 14.71 20.39 -0.05 163.99 28.63
Market Value Below $20 Million(12) 15.24 892 12.7 16.27 11.66 15.52 -1.12 67.00 19.76
Holding Company Structure(47) 19.25 7,175 180.7 20.22 14.18 19.22 0.37 138.29 28.23
Assets Over $1 Billion(17) 25.57 24,941 692.0 27.06 17.27 25.58 -0.23 125.60 30.82
Assets $500 Million-$1 Billion(18) 19.58 5,037 91.2 20.55 15.05 19.59 0.07 130.52 18.39
Assets $250-$500 Million(22) 16.65 3,351 44.9 17.24 11.94 16.46 1.42 155.76 31.75
Assets less than $250 Million(18) 14.55 1,616 19.1 15.41 11.26 14.80 -1.37 101.53 23.19
Goodwill Companies(38) 21.27 12,058 321.9 22.44 15.31 21.29 -0.09 134.71 24.87
Non-Goodwill Companies(37) 16.42 4,229 67.1 17.14 12.11 16.41 0.21 126.34 28.64
Current Per Share Financials
_________________________________________________
Tangible
Trailing 12 Mo. Book Book
Financial Institution 12 Mo. Core Value/ Value/ Assets
_____________________ EPS(3) EPS(3) Share Share(4) Share
________ _______ _______ _______ _______
($) ($) ($) ($) ($)
Market Averages. BIF-Insured
Thrifts(no MHC)
____________________________
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(75) 1.32 1.32 14.91 14.08 165.58
NYSE Traded Companies(3) 1.55 1.66 18.47 13.99 251.54
AMEX Traded Companies(5) 0.91 0.74 15.01 14.57 143.93
NASDAQ Listed OTC Companies(67) 1.35 1.36 14.71 14.04 162.95
California Companies(3) 1.23 1.15 11.73 11.73 157.31
Mid-Atlantic Companies(20) 1.29 1.37 16.26 14.63 184.96
New England Companies(42) 1.46 1.40 14.58 14.01 168.57
North-West Companies(4) 1.52 1.57 14.11 13.34 159.52
South-East Companies(4) 0.22 0.33 14.55 14.55 59.54
Thrift Strategy(48) 1.20 1.20 15.40 14.32 153.27
Mortgage Banker Strategy(10) 1.71 1.71 15.17 14.78 225.79
Real Estate Strategy(8) 1.38 1.37 12.10 12.10 117.06
Diversified Strategy(7) 2.00 2.03 13.24 12.66 190.13
Retail Banking Strategy(2) 0.27 0.25 16.69 16.24 261.20
Companies Issuing Dividends(55) 1.54 1.52 15.63 14.48 183.16
Companies Without Dividends(20) 0.77 0.82 13.02 13.01 119.65
Equity/Assets LESS THAN6%(8 1.01 1.07 10.43 10.17 184.41
Equity/Assets 6-12%(51) 1.55 1.53 15.15 13.99 186.69
Equity/Assets MORE THAN12%(16) 0.76 0.80 16.39 16.31 89.80
Converted Last 3 Mths (no MHC)(2) 0.57 0.59 13.07 13.07 52.70
Actively Traded Companies(28) 1.67 1.68 15.31 14.58 189.10
Market Value Below $20 Million(12) 1.03 0.99 15.82 15.35 169.30
Holding Company Structure(47) 1.41 1.44 15.09 14.32 160.44
Assets Over $1 Billion(17) 1.98 2.04 16.64 15.20 211.20
Assets $500 Million-$1 Billion(18) 1.44 1.30 15.81 14.52 175.09
Assets $250-$500 Million(22) 1.05 1.12 13.55 13.10 146.67
Assets less than $250 Million(18) 0.99 0.97 14.24 13.91 140.37
Goodwill Companies(38) 1.52 1.52 16.22 14.48 210.40
Non-Goodwill Companies(37) 1.14 1.14 13.71 13.71 124.71
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits,
etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated
ratios based on trailing twelve month common earnings and average
common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend
announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition
activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
__________________________ _________________________________________________________
52 Week (1) % Change From
Shares Market _________________ ___________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
_________________________________
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 18.00 4,661 25.8 19.11 14.60 17.87 0.65 141.25 4.88
BIF-Insured Thrifts(2) 18.63 21,894 164.2 21.06 13.94 19.00 -1.71 246.25 13.38
NASDAQ Listed OTC Companies(21) 18.06 6,384 39.6 19.31 14.53 17.99 0.41 176.25 5.77
Florida Companies(3) 22.50 5,512 56.6 23.87 16.67 22.87 -1.23 0.00 9.96
Mid-Atlantic Companies(8) 15.16 7,619 26.4 16.86 12.49 15.09 0.45 80.00 -0.20
Mid-West Companies(7) 17.36 1,942 12.5 18.30 14.32 17.07 1.15 202.50 3.23
New England Companies(1) 27.25 40,516 322.0 29.12 18.62 27.87 -2.22 246.25 43.42
North-West Companies(1) 16.75 2,196 13.2 17.25 14.09 16.75 0.00 0.00 15.20
South-East Companies(1) 22.00 1,505 15.5 22.00 20.25 21.37 2.95 0.00 0.00
Thrift Strategy(19) 17.62 4,721 25.4 18.87 14.33 17.51 0.58 141.25 3.00
Mortgage Banker Strategy(1) 16.75 2,196 13.2 17.25 14.09 16.75 0.00 0.00 15.20
Diversified Strategy(1) 27.25 40,516 322.0 29.12 18.62 27.87 -2.22 246.25 43.42
Companies Issuing Dividends(20) 17.85 6,641 40.9 19.16 14.23 17.81 0.28 176.25 5.77
Companies Without Dividends(1) 22.00 1,505 15.5 22.00 20.25 21.37 2.95 0.00 0.00
Equity/Assets LESS THAN6%(1) 17.25 1,625 12.9 17.25 14.25 17.25 0.00 0.00 8.70
Equity/Assets 6-12%(14) 19.10 8,127 51.1 20.54 14.93 19.04 0.32 176.25 6.74
Equity/Assets MORE THAN12%(6) 15.31 2,456 13.0 16.25 13.47 15.17 0.74 0.00 1.67
Actively Traded Companies(1) 18.00 7,166 36.0 18.50 13.18 18.00 0.00 80.00 20.00
Market Value Below $20 Million(1) 12.50 1,272 7.0 14.12 11.50 12.00 4.17 0.00 -9.88
Holding Company Structure(1) 18.00 7,166 36.0 18.50 13.18 18.00 0.00 80.00 20.00
Assets Over $1 Billion(4) 22.66 20,011 121.2 24.41 16.97 23.16 -1.83 246.25 14.93
Assets $500 Million-$1 Billion(5) 17.69 5,458 39.4 18.59 13.30 17.66 0.20 80.00 8.38
Assets $250-$500 Million(4) 21.63 2,115 17.7 22.06 16.90 20.88 3.24 202.50 12.58
Assets less than $250 Million(8) 14.16 2,169 10.0 15.73 12.75 14.12 0.22 0.00 -4.84
Goodwill Companies(10) 20.60 11,031 68.7 21.75 15.56 20.51 0.54 176.25 12.84
Non-Goodwill Companies(11) 15.98 2,582 15.9 17.31 13.69 15.92 0.30 0.00 -0.59
MHC Institutions(21) 18.06 6,384 39.6 19.31 14.53 17.99 0.41 176.25 5.77
MHC Converted Last 3 Months(1) 22.00 1,505 15.5 22.00 20.25 21.37 2.95 0.00 0.00
Current Per Share Financials
_________________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
_________________________________
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 0.64 0.96 13.30 12.95 134.77
BIF-Insured Thrifts(2) 0.88 0.80 11.53 11.52 124.80
NASDAQ Listed OTC Companies(21) 0.66 0.95 13.12 12.81 133.77
Florida Companies(3) 1.10 1.41 14.84 14.56 156.71
Mid-Atlantic Companies(8) 0.20 0.63 11.73 11.15 120.67
Mid-West Companies(7) 0.61 0.90 13.02 12.99 135.41
New England Companies(1) 1.91 1.53 14.76 14.74 178.61
North-West Companies(1) 0.95 1.11 10.73 9.60 99.83
South-East Companies(1) 1.36 1.36 19.18 19.18 134.33
Thrift Strategy(19) 0.58 0.91 13.16 12.88 133.17
Mortgage Banker Strategy(1) 0.95 1.11 10.73 9.60 99.83
Diversified Strategy(1) 1.91 1.53 14.76 14.74 178.61
Companies Issuing Dividends(20) 0.62 0.93 12.80 12.47 133.74
Companies Without Dividends(1) 1.36 1.36 19.18 19.18 134.33
Equity/Assets LESS THAN6%(1) 1.21 1.62 13.96 13.96 234.81
Equity/Assets 6-12%(14) 0.61 0.97 13.34 12.89 145.53
Equity/Assets MORE THAN12%(6) 0.69 0.75 12.34 12.34 80.63
Actively Traded Companies(1) 0.63 1.14 12.59 11.03 136.03
Market Value Below $20 Million(1) 0.21 0.52 13.01 12.98 112.98
Holding Company Structure(1) 0.63 1.14 12.59 11.03 136.03
Assets Over $1 Billion(4) 1.05 1.32 13.28 12.48 156.99
Assets $500 Million-$1 Billion(5) 0.64 0.97 13.98 13.56 151.09
Assets $250-$500 Million(4) 0.79 1.28 15.30 15.25 181.27
Assets less than $250 Million(8) 0.41 0.59 11.52 11.38 89.76
Goodwill Companies(10) 0.82 1.16 13.42 12.73 149.74
Non-Goodwill Companies(11) 0.53 0.77 12.87 12.87 120.71
MHC Institutions(21) 0.66 0.95 13.12 12.81 133.77
MHC Converted Last 3 Months(1) 1.36 1.36 19.18 19.18 134.33
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits,
etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated
ratios based on trailing twelve month common earnings and average
common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend
announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition
activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied
by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
___________________________ _________________________________________________________
52 Week (1) % Change From
Shares Market _______________ _________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NYSE Traded Companies
_____________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA 31.50 105,496 3,323.1 33.50 21.88 31.75 -0.79 68.00 18.87
CAL CalFed Inc. of Los Angeles CA(8) 24.25 49,427 1,198.6 24.37 14.87 24.25 0.00 20.11 53.97
CSA Coast Savings Financial of CA 35.50 18,584 659.7 36.37 26.50 34.75 2.16 207.09 2.54
CFB Commercial Federal Corp. of NE 46.00 13,857 637.4 48.50 35.00 45.75 0.55 ***.** 21.85
DME Dime Savings Bank, FSB of NY* 14.75 106,447 1,570.1 16.50 10.87 14.87 -0.81 46.62 26.94
DSL Downey Financial Corp. of CA 18.87 25,459 480.4 19.33 13.50 18.17 3.85 65.09 30.14
FRC First Republic Bancorp of CA* 17.00 7,361 125.1 17.87 12.25 17.00 0.00 277.78 29.57
FED FirstFed Fin. Corp. of CA 22.25 10,518 234.0 24.25 12.37 22.25 0.00 37.77 57.58
GLN Glendale Fed. Bk, FSB of CA 22.25 47,166 1,049.4 22.50 15.63 21.25 4.71 36.92 26.28
GDW Golden West Fin. Corp. of CA 62.00 57,376 3,557.3 67.50 49.50 64.25 -3.50 136.73 12.22
GWF Great Western Fin. Corp. of CA 29.50 137,432 4,054.2 31.12 21.12 30.00 -1.67 69.83 16.28
GPT GreenPoint Fin. Corp. of NY* 49.37 47,656 2,352.8 50.12 24.00 48.12 2.60 N.A. 84.56
SFB Standard Fed. Bancorp of MI 56.50 31,192 1,762.3 58.00 37.75 56.12 0.68 506.87 43.51
TCB TCF Financial Corp. of MN 41.75 34,870 1,455.8 45.00 29.25 43.00 -2.91 529.71 26.06
WES Westcorp Inc. of Orange CA 21.37 25,985 555.3 23.87 16.19 22.50 -5.02 191.54 21.28
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares of LA* 14.25 2,731 38.9 15.12 11.69 14.62 -2.53 N.A. N.A.
BKC American Bank of Waterbury CT* 28.75 2,291 65.9 29.87 24.00 29.00 -0.86 53.33 5.50
BFD BostonFed Bancorp of MA 14.87 6,590 98.0 15.12 11.50 14.75 0.81 N.A. 26.55
CFX Cheshire Fin. Corp. of NH* 16.25 12,257 199.2 16.50 12.50 15.25 6.56 36.55 3.97
CZF Citisave Fin. Corp. of LA 14.00 962 13.5 16.50 13.00 13.50 3.70 N.A. -5.08
CBK Citizens First Fin.Corp. of I 13.87 2,817 39.1 13.87 9.50 13.62 1.84 N.A. N.A.
ESX Essex Bancorp of VA(8) 2.25 1,053 2.4 4.75 1.62 2.00 12.50 -86.57 19.68
FCB Falmouth Co-Op Bank of MA* 13.12 1,455 19.1 14.00 10.25 13.25 -0.98 N.A. N.A.
GAF GA Financial Corp. of PA 14.75 8,900 131.3 15.37 10.25 14.75 0.00 N.A. N.A.
KNK Kankakee Bancorp of IL 24.00 1,415 34.0 26.37 18.37 24.75 -3.03 140.00 27.19
KYF Kentucky First Bancorp of KY 11.50 1,389 16.0 15.25 11.25 11.50 0.00 N.A. -7.03
NYB New York Bancorp, Inc. of NY 33.87 11,099 375.9 36.25 20.50 33.62 0.74 377.72 50.53
PDB Piedmont Bancorp of NC 10.87 2,751 29.9 19.12 10.37 10.87 0.00 N.A. -13.04
PLE Pinnacle Bank of AL 17.00 890 15.1 18.87 15.50 17.00 0.00 151.85 -5.56
SSB Scotland Bancorp of NC 14.25 1,840 26.2 14.25 11.62 14.00 1.79 N.A. N.A.
SZB SouthFirst Bancshares of AL 12.50 863 10.8 16.00 11.37 12.87 -2.87 N.A. -19.35
SRN Southern Banc Company of AL 13.37 1,382 18.5 13.75 11.37 13.50 -0.96 N.A. 3.89
SSM Stone Street Bancorp of NC 19.62 1,825 35.8 20.12 16.25 19.50 0.62 N.A. N.A.
TSH Teche Holding Company of LA 13.25 3,541 46.9 14.12 12.00 13.00 1.92 N.A. -3.64
FTF Texarkana Fst. Fin. Corp of AR 14.50 1,885 27.3 16.87 13.50 14.25 1.75 N.A. 2.69
THR Three Rivers Fin. Corp. of MI 13.62 851 11.6 14.37 12.00 13.62 0.00 N.A. 11.18
TBK Tolland Bank of CT* 11.62 1,157 13.4 13.25 9.06 12.00 -3.17 60.28 22.32
WSB Washington SB, FSB of MD 4.94 4,220 20.8 5.69 4.38 4.94 0.00 295.20 -1.20
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN 30.50 671 20.5 31.50 26.00 30.50 0.00 N.A. 4.56
AFED AFSALA Bancorp of NY 11.50 1,455 16.7 12.12 11.31 12.00 -4.17 N.A. N.A.
ALBK ALBANK Fin. Corp. of Albany NY 31.00 13,100 406.1 32.81 22.92 31.62 -1.96 33.33 24.00
AMFC AMB Financial Corp. of IN 12.87 1,124 14.5 12.94 9.75 12.50 2.96 N.A. N.A.
ASBP ASB Financial Corp. of OH 17.50 1,714 30.0 18.25 13.75 17.75 -1.41 N.A. 10.27
ABBK Abington Savings Bank of MA(8)* 19.62 1,887 37.0 21.25 14.50 19.25 1.92 196.37 13.74
AABC Access Anytime Bancorp of NM 5.63 732 4.1 7.00 5.25 5.75 -2.09 -16.59 -16.59
AADV Advantage Bancorp of WI 31.87 3,393 108.1 34.50 29.60 31.75 0.38 246.41 5.53
AFCB Affiliated Comm BC, Inc of MA 22.62 5,095 115.2 23.00 16.06 22.62 0.00 N.A. 30.22
Current Per Share Financials
________________________________________________
Financial Institution Tangible
_____________________ Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NYSE Traded Companies
_____________________
<S> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA 0.62 2.07 18.86 15.82 479.53
CAL CalFed Inc. of Los Angeles CA(8) 1.01 1.60 13.24 13.24 285.81
CSA Coast Savings Financial of CA 0.54 2.12 22.24 21.89 460.02
CFB Commercial Federal Corp. of NE 2.89 4.14 25.95 23.19 481.18
DME Dime Savings Bank, FSB of NY* 0.71 1.20 9.60 9.50 184.91
DSL Downey Financial Corp. of CA 0.80 1.28 15.07 14.82 194.60
FRC First Republic Bancorp of CA* 1.45 1.36 16.04 16.02 288.30
FED FirstFed Fin. Corp. of CA 0.23 1.15 17.49 17.21 399.00
GLN Glendale Fed. Bk, FSB of CA -0.14 1.14 16.87 15.65 320.24
GDW Golden West Fin. Corp. of CA 6.18 7.59 39.57 39.57 645.07
GWF Great Western Fin. Corp. of CA 1.35 2.18 17.84 15.69 316.87
GPT GreenPoint Fin. Corp. of NY* 2.48 2.42 29.76 16.44 281.40
SFB Standard Fed. Bancorp of MI 2.86 3.85 28.72 23.37 492.23
TCB TCF Financial Corp. of MN 2.40 2.84 14.98 14.35 204.03
WES Westcorp Inc. of Orange CA 1.30 0.52 12.10 12.06 122.43
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares of LA* -0.43 -0.40 17.03 17.03 97.06
BKC American Bank of Waterbury CT* 2.76 1.87 19.96 19.01 239.19
BFD BostonFed Bancorp of MA 0.34 0.55 13.48 13.48 120.92
CFX Cheshire Fin. Corp. of NH* 0.62 0.82 10.55 9.79 124.07
CZF Citisave Fin. Corp. of LA 0.63 0.84 12.58 12.57 78.62
CBK Citizens First Fin.Corp. of IL 0.21 0.44 14.32 14.32 94.57
ESX Essex Bancorp of VA(8) -7.61 -4.57 0.54 -0.23 162.87
FCB Falmouth Co-Op Bank of MA* 0.39 0.39 15.06 15.06 62.21
GAF GA Financial Corp. of PA 0.44 0.69 14.26 14.26 66.17
KNK Kankakee Bancorp of IL 1.05 1.49 24.99 23.25 249.42
KYF Kentucky First Bancorp of KY 0.52 0.68 13.78 13.78 61.92
NYB New York Bancorp, Inc. of NY 2.88 3.16 13.69 13.69 264.97
PDB Piedmont Bancorp of NC 0.57 0.70 13.54 13.54 48.01
PLE Pinnacle Bank of AL 1.08 1.70 16.65 16.07 215.35
SSB Scotland Bancorp of NC 0.41 0.53 13.47 13.47 37.29
SZB SouthFirst Bancshares of AL 0.57 0.76 15.12 15.12 104.92
SRN Southern Banc Company of AL 0.17 0.46 14.22 14.07 78.06
SSM Stone Street Bancorp of NC 0.67 0.83 20.48 20.48 58.29
TSH Teche Holding Company of LA 0.71 1.03 14.76 14.76 107.20
FTF Texarkana Fst. Fin. Corp of AR 1.27 1.57 14.02 14.02 87.93
THR Three Rivers Fin. Corp. of MI 0.52 0.78 14.87 14.80 102.67
TBK Tolland Bank of CT* 1.19 1.03 12.43 11.94 197.11
WSB Washington SB, FSB of MD 0.56 0.51 5.10 5.10 58.47
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN 6.92 -0.65 31.52 31.52 384.44
AFED AFSALA Bancorp of NY 0.61 0.61 14.05 14.05 102.70
ALBK ALBANK Fin. Corp. of Albany NY 1.89 2.41 23.97 20.58 267.92
AMFC AMB Financial Corp. of IN 0.33 0.52 14.40 14.40 74.33
ASBP ASB Financial Corp. of OH 0.37 0.58 14.79 14.79 66.68
ABBK Abington Savings Bank of MA(8)* 1.80 1.51 17.17 15.27 256.53
AABC Access Anytime Bancorp of NM -0.90 -0.34 6.82 6.82 148.79
AADV Advantage Bancorp of WI 0.89 2.34 26.19 24.16 299.55
AFCB Affiliated Comm BC, Inc of MA 1.17 1.69 19.25 19.11 197.33
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
________________________ ________________________________________________
52 Week (1) % Change From
Shares Market _______________ ________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
_______________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBC Albion Banc Corp. of Albion NY 17.50 250 4.4 18.00 15.87 17.37 0.75 34.62 6.06
ATSB AmTrust Capital Corp. of IN 10.12 528 5.3 11.25 8.50 10.37 -2.41 N.A. -1.27
AHCI Ambanc Holding Co. of NY* 11.00 4,880 53.7 11.00 9.38 10.62 3.58 N.A. 8.80
ASBI Ameriana Bancorp of IN 15.63 3,278 51.2 16.00 12.87 15.75 -0.76 69.34 9.68
AFFFZ America First Fin. Fund of CA 29.37 6,011 176.5 30.75 25.87 29.12 0.86 56.64 -1.28
AMFB American Federal Bank of SC 19.00 10,955 208.1 19.45 14.25 19.00 0.00 300.00 24.59
ANBK American Nat'l Bancorp of MD 12.25 3,604 44.1 12.62 9.50 12.12 1.07 N.A. 25.64
ABCW Anchor Bancorp Wisconsin of WI 34.75 4,629 160.9 36.25 30.25 34.87 -0.34 18.32 -3.12
ANDB Andover Bancorp, Inc. of MA* 25.75 5,118 131.8 27.87 17.08 25.37 1.50 139.53 46.31
ASFC Astoria Financial Corp. of NY 35.00 21,511 752.9 37.75 22.16 35.00 0.00 33.33 53.44
AVND Avondale Fin. Corp. of IL 16.75 3,603 60.4 17.12 12.50 16.87 -0.71 N.A. 15.52
BFSI BFS Bankorp, Inc. of NY 49.50 1,635 80.9 55.00 35.25 49.50 0.00 446.36 40.43
BKCT Bancorp Connecticut of CT* 22.25 2,665 59.3 23.75 14.17 22.50 -1.11 154.29 50.44
BPLS Bank Plus Corp. of CA 11.25 18,243 205.2 11.75 8.00 11.25 0.00 N.A. 25.00
BWFC Bank West Fin. Corp. of MI 10.75 1,981 21.3 12.25 8.94 11.00 -2.27 N.A. 6.23
BANC BankAtlantic Bancorp of FL 13.00 14,720 191.4 13.75 10.08 12.62 3.01 150.00 8.33
BKUNA BankUnited SA of FL 8.75 5,706 49.9 9.25 6.12 9.00 -2.78 61.14 42.97
BKCO Bankers Corp. of NJ* 20.00 12,378 247.6 20.37 16.25 19.50 2.56 220.00 23.08
BVFS Bay View Capital Corp. of CA 41.50 6,640 275.6 41.87 26.50 39.00 6.41 110.13 45.61
BFSB Bedford Bancshares of VA 18.00 1,144 20.6 18.25 16.00 17.75 1.41 71.43 3.63
BSBC Branford SB of CT* 3.87 6,559 25.4 4.25 2.62 4.12 -6.07 82.55 34.84
BRFC Bridgeville SB, FSB of PA(8) 16.00 1,124 18.0 16.00 13.00 16.00 0.00 12.28 10.34
BYFC Broadway Fin. Corp. of CA 9.12 893 8.1 11.00 9.00 9.25 -1.41 N.A. N.A.
CBCO CB Bancorp of Michigan City IN 24.25 1,162 28.2 25.50 16.25 23.00 5.43 120.45 34.72
CBES CBES Bancorp of MO 13.75 1,025 14.1 14.25 12.62 14.00 -1.79 N.A. N.A.
CCFH CCF Holding Company of GA 15.00 1,131 17.0 15.12 11.31 14.50 3.45 N.A. 17.65
CENF CENFED Financial Corp. of CA 28.00 5,101 142.8 30.37 20.45 28.75 -2.61 78.57 28.32
CFSB CFSB Bancorp of Lansing MI 19.25 4,826 92.9 21.82 17.73 18.25 5.48 113.89 -1.53
CKFB CKF Bancorp of Danville KY 19.75 941 18.6 20.75 18.00 19.75 0.00 N.A. 2.60
CNSB CNS Bancorp of MO 15.00 1,653 24.8 15.25 11.00 14.62 2.60 N.A. N.A.
CSBF CSB Financial Group Inc of IL 10.56 1,035 10.9 10.56 8.81 10.00 5.60 N.A. 11.16
CFHC California Fin. Hld. Co. of CA 28.94 4,721 136.6 29.00 18.87 29.00 -0.21 175.62 41.17
CBCI Calumet Bancorp of Chicago IL 32.62 2,377 77.5 33.87 27.50 32.75 -0.40 61.09 17.55
CAFI Camco Fin. Corp. of OH 16.25 2,076 33.7 19.29 15.75 16.00 1.56 N.A. -5.19
CMRN Cameron Fin. Corp. of MO 15.50 2,850 44.2 16.00 13.50 15.63 -0.83 N.A. 7.86
CAPS Capital Savings Bancorp of MO 14.00 1,876 26.3 14.75 8.87 13.50 3.70 5.66 51.35
CFNC Carolina Fincorp of NC* 13.12 1,852 24.3 13.37 13.00 13.00 0.92 N.A. N.A.
CARV Carver FSB of New York, NY 8.00 2,314 18.5 9.50 7.37 8.00 0.00 28.00 -11.11
CASB Cascade SB of Everett WA 13.00 2,051 26.7 17.50 12.40 14.37 -9.53 1.56 -2.26
CATB Catskill Fin. Corp. of NY* 13.87 5,687 78.9 14.37 9.87 13.87 0.00 N.A. N.A.
CNIT Cenit Bancorp of Norfolk VA 39.25 1,633 64.1 40.50 31.75 39.00 0.64 147.17 6.80
CTBK Center Banks, Inc. of NY* 16.12 946 15.2 16.75 13.12 16.25 -0.80 46.55 14.65
CEBK Central Co-Op. Bank of MA* 18.37 1,965 36.1 18.50 12.50 17.50 4.97 249.90 22.47
CJFC Central Jersey Fin. Corp of NJ(8) 37.50 2,668 100.1 39.25 22.50 37.50 0.00 302.36 50.00
CBSB Charter Financial Inc. of IL 12.50 4,874 60.9 13.00 10.68 13.00 -3.85 N.A. 15.63
COFI Charter One Financial of OH 39.12 46,765 1,829.4 44.00 27.14 41.00 -4.59 123.54 34.11
CVAL Chester Valley Bancorp of PA 18.50 1,636 30.3 20.00 17.26 18.50 0.00 63.28 0.93
CTZN CitFed Bancorp of Dayton OH 29.75 8,582 255.3 32.50 21.75 28.25 5.31 230.56 29.35
CLAS Classic Bancshares of KY 11.62 1,322 15.4 12.12 10.37 11.87 -2.11 N.A. -1.11
CMSB Cmnwealth Bancorp of PA 14.25 17,953 255.8 14.50 9.75 14.12 0.92 N.A. 27.12
CBSA Coastal Bancorp of Houston TX 22.62 4,964 112.3 24.75 16.50 23.75 -4.76 N.A. 29.26
CFCP Coastal Fin. Corp. of SC 21.00 3,436 72.2 22.00 12.48 20.00 5.00 110.00 66.14
COFD Collective Bancorp Inc. of NJ 34.00 20,372 692.6 36.37 22.50 33.37 1.89 346.19 34.02
CMSV Commty. Svgs, MHC of FL(47.6) 18.25 4,879 43.4 19.37 14.25 18.37 -0.65 N.A. 7.35
CBIN Community Bank Shares of IN 12.50 1,984 24.8 14.75 12.00 12.50 0.00 N.A. -12.28
Current Per Share Financials
________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
_______________________________________
<S> <C> <C> <C> <C> <C>
ALBC Albion Banc Corp. of Albion NY -0.24 0.47 23.07 23.07 239.44
ATSB AmTrust Capital Corp. of IN 0.63 0.04 13.66 13.66 136.16
AHCI Ambanc Holding Co. of NY* 0.23 0.22 14.42 14.42 101.74
ASBI Ameriana Bancorp of IN 0.71 1.06 13.27 13.25 121.94
AFFFZ America First Fin. Fund of CA 1.73 2.92 25.54 25.02 370.59
AMFB American Federal Bank of SC 1.29 1.61 9.88 9.13 127.33
ANBK American Nat'l Bancorp of MD 0.19 0.68 12.36 12.36 135.03
ABCW Anchor Bancorp Wisconsin of WI 2.57 3.54 23.88 23.24 408.64
ANDB Andover Bancorp, Inc. of MA* 2.31 2.38 18.10 18.10 234.23
ASFC Astoria Financial Corp. of NY 1.61 2.44 26.32 21.56 337.79
AVND Avondale Fin. Corp. of IL 0.64 0.67 16.31 16.31 170.09
BFSI BFS Bankorp, Inc. of NY 5.65 6.64 30.71 30.71 393.38
BKCT Bancorp Connecticut of CT* 1.74 1.72 16.38 16.38 150.99
BPLS Bank Plus Corp. of CA -3.71 -3.08 8.66 8.64 182.16
BWFC Bank West Fin. Corp. of MI 0.46 0.25 12.21 12.21 70.43
BANC BankAtlantic Bancorp of FL 0.95 0.96 9.49 8.82 147.45
BKUNA BankUnited SA of FL 0.08 0.38 7.85 7.42 144.47
BKCO Bankers Corp. of NJ* 1.74 1.98 15.15 14.87 188.25
BVFS Bay View Capital Corp. of CA -0.39 2.62 29.17 27.53 516.29
BFSB Bedford Bancshares of VA 1.14 1.46 15.93 15.93 111.33
BSBC Branford SB of CT* 0.26 0.26 2.45 2.45 26.83
BRFC Bridgeville SB, FSB of PA(8) 0.48 0.61 14.12 14.12 48.79
BYFC Broadway Fin. Corp. of CA -0.21 0.27 14.11 14.11 131.30
CBCO CB Bancorp of Michigan City IN 1.88 2.22 16.68 16.68 172.12
CBES CBES Bancorp of MO 0.70 1.01 16.56 16.56 94.36
CCFH CCF Holding Company of GA 0.68 0.65 14.86 14.86 70.14
CENF CENFED Financial Corp. of CA 2.14 2.68 21.35 21.31 423.64
CFSB CFSB Bancorp of Lansing MI 1.12 1.58 13.02 13.02 168.25
CKFB CKF Bancorp of Danville KY 0.79 0.79 16.05 16.05 63.65
CNSB CNS Bancorp of MO 0.20 0.35 14.60 14.60 59.83
CSBF CSB Financial Group Inc of IL 0.36 0.36 12.40 12.40 40.12
CFHC California Fin. Hld. Co. of CA 1.00 1.71 18.32 18.26 283.71
CBCI Calumet Bancorp of Chicago IL 2.07 2.71 33.48 33.48 207.31
CAFI Camco Fin. Corp. of OH 1.32 1.50 13.81 13.81 182.12
CMRN Cameron Fin. Corp. of MO 0.97 0.95 16.26 16.26 61.70
CAPS Capital Savings Bancorp of MO 0.69 1.03 10.41 10.41 123.26
CFNC Carolina Fincorp of NC* 0.52 0.52 12.99 12.99 59.15
CARV Carver FSB of New York, NY -0.05 0.38 14.96 14.28 157.76
CASB Cascade SB of Everett WA 0.77 0.77 10.04 10.04 165.96
CATB Catskill Fin. Corp. of NY* 0.58 0.58 14.49 14.49 49.90
CNIT Cenit Bancorp of Norfolk VA 1.91 2.13 29.22 28.18 401.57
CTBK Center Banks, Inc. of NY* 1.48 1.41 16.78 16.78 255.71
CEBK Central Co-Op. Bank of MA* 0.85 0.92 16.30 14.36 165.86
CJFC Central Jersey Fin. Corp of NJ(8) 1.41 1.94 21.04 19.69 174.09
CBSB Charter Financial Inc. of IL 0.74 0.73 13.09 12.17 75.29
COFI Charter One Financial of OH 0.56 3.34 19.48 17.99 295.65
CVAL Chester Valley Bancorp of PA 1.00 1.50 15.36 15.36 173.83
CTZN CitFed Bancorp of Dayton OH 1.38 2.12 20.39 17.86 320.16
CLAS Classic Bancshares of KY 0.23 0.39 14.22 11.89 103.04
CMSB Cmnwealth Bancorp of PA 0.43 0.62 12.67 9.72 116.13
CBSA Coastal Bancorp of Houston TX 1.32 2.23 18.26 15.04 576.04
CFCP Coastal Fin. Corp. of SC 1.29 1.13 8.04 8.04 131.78
COFD Collective Bancorp Inc. of NJ 2.24 2.77 17.87 16.73 257.83
CMSV Commty. Svgs, MHC of FL(47.6) 1.08 1.10 15.39 15.39 128.31
CBIN Community Bank Shares of IN 0.66 1.01 12.83 12.81 118.25
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
_______________________ ________________________________________________
52 Week (1) % Change From
Shares Market _______________ ________________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
_______________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CBNH Community Bankshares Inc of NH* 20.25 2,429 49.2 20.25 17.12 20.12 0.65 440.00 7.31
CFTP Community Fed. Bancorp of MS 17.12 4,282 73.3 17.25 12.25 17.25 -0.75 N.A. N.A.
CFFC Community Fin. Corp. of VA 21.00 1,272 26.7 22.50 16.00 21.25 -1.18 200.00 16.67
CIBI Community Inv. Bancorp of OH 16.75 666 11.2 18.25 14.25 16.50 1.52 N.A. 9.84
COOP Cooperative Bk.for Svgs. of NC 20.50 1,492 30.6 20.87 16.50 20.75 -1.20 105.00 0.00
CNSK Covenant Bank for Svgs. of NJ* 12.00 2,742 32.9 13.44 10.88 12.50 -4.00 N.A. -3.77
CRZY Crazy Woman Creek Bncorp of WY 11.75 1,058 12.4 12.00 10.00 11.50 2.17 N.A. N.A.
DNFC D&N Financial Corp. of MI 15.37 7,587 116.6 15.50 12.00 14.87 3.36 75.66 26.82
DSBC DS Bancor Inc. of Derby CT(8)* 42.50 3,032 128.9 42.56 24.00 42.44 0.14 158.36 66.67
DFIN Damen Fin. Corp. of Chicago IL 12.87 3,771 48.5 12.87 11.00 12.25 5.06 N.A. 13.19
DCBI Delphos Citizens Bancorp of OH 11.94 2,039 24.3 12.50 11.87 11.87 0.59 N.A. N.A.
DIME Dime Community Bancorp of NY 14.87 14,547 216.3 14.87 11.69 14.50 2.55 N.A. N.A.
DIBK Dime Financial Corp. of CT* 17.50 5,129 89.8 18.37 12.00 17.75 -1.41 66.67 29.63
EGLB Eagle BancGroup of IL 13.25 1,303 17.3 13.75 10.50 13.50 -1.85 N.A. N.A.
EBSI Eagle Bancshares of Tucker GA 13.62 4,552 62.0 19.00 13.62 15.00 -9.20 87.86 -28.32
EGFC Eagle Financial Corp. of CT 28.75 4,534 130.4 30.50 22.25 30.25 -4.96 228.57 9.52
ETFS East Texas Fin. Serv. of TX 16.25 1,134 18.4 16.75 14.25 16.12 0.81 N.A. 0.00
EBCP Eastern Bancorp of NH(8) 22.62 3,652 82.6 24.00 15.17 22.12 2.26 80.24 26.86
ESBK Elmira SB of Elmira NY* 17.00 706 12.0 18.75 14.75 16.75 1.49 18.30 -9.33
EIRE Emerald Island Bancorp, MA* 18.50 1,766 32.7 19.00 14.00 18.00 2.78 142.78 13.85
EFBI Enterprise Fed. Bancorp of OH 14.50 2,074 30.1 16.00 12.75 15.75 -7.94 N.A. -1.69
EQSB Equitable FSB of Wheaton MD 26.75 600 16.1 27.50 21.00 27.50 -2.73 N.A. 7.00
FFFG F.F.O. Financial Group of FL 2.75 8,430 23.2 3.13 2.31 2.75 0.00 -66.91 7.42
FCBF FCB Fin. Corp. of Neenah WI 18.75 2,460 46.1 19.50 17.00 19.25 -2.60 N.A. 1.35
FFBS FFBS Bancorp of Columbus MS 23.00 1,570 36.1 24.25 16.50 23.00 0.00 N.A. 35.29
FFDF FFD Financial Corp. of OH 13.12 1,455 19.1 13.75 10.00 13.50 -2.81 N.A. N.A.
FFLC FFLC Bancorp of Leesburg FL 20.25 2,525 51.1 20.87 17.25 20.00 1.25 N.A. 8.00
FFFC FFVA Financial Corp. of VA 21.25 5,023 106.7 21.75 13.37 20.50 3.66 N.A. 54.55
FFWC FFW Corporation of Wabash IN 22.00 702 15.4 22.00 16.50 20.75 6.02 N.A. 11.39
FFYF FFY Financial Corp. of OH 25.87 5,117 132.4 25.87 20.81 25.75 0.47 N.A. 23.19
FMCO FMS Financial Corp. of NJ 17.37 2,468 42.9 17.75 14.75 17.12 1.46 93.00 2.18
FFHH FSF Financial Corp. of MN 14.87 3,478 51.7 14.87 11.37 14.25 4.35 N.A. 14.38
FMLY Family Bancorp of Haverhill MA(8)* 34.38 4,310 148.2 35.50 17.25 34.38 0.00 559.88 92.39
FOBC Fed One Bancorp of Wheeling WV 16.12 2,493 40.2 16.62 13.25 15.87 1.58 61.20 6.61
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 24.25 2,299 55.8 25.25 12.00 24.56 -1.26 177.14 74.84
FBCI Fidelity Bancorp of Chicago IL 17.12 2,866 49.1 17.25 14.50 17.00 0.71 N.A. 11.39
FSBI Fidelity Bancorp, Inc. of PA 19.00 1,373 26.1 20.50 15.00 19.75 -3.80 145.80 26.67
FFFL Fidelity FSB, MHC of FL(47.2) 17.25 6,724 54.6 18.00 12.00 17.25 0.00 N.A. 6.15
FFED Fidelity Fed. Bancorp of IN 9.50 2,494 23.7 14.77 9.25 10.00 -5.00 34.75 -35.68
FFOH Fidelity Financial of OH 11.37 4,077 46.4 11.50 9.62 11.19 1.61 N.A. 4.41
FIBC Financial Bancorp of NY 14.50 1,791 26.0 16.25 12.37 14.50 0.00 N.A. 5.45
FBSI First Bancshares of MO 16.50 1,206 19.9 16.81 15.00 16.50 0.00 29.41 3.13
FBBC First Bell Bancorp of PA 16.00 7,758 124.1 17.37 13.12 17.06 -6.21 N.A. 19.67
FBER First Bergen Bancorp of NJ 12.00 3,174 38.1 12.12 9.00 12.00 0.00 N.A. N.A.
FCIT First Cit. Fin. Corp of MD 18.75 2,927 54.9 19.09 15.57 18.44 1.68 115.77 8.57
FFBA First Colorado Bancorp of Co 17.50 19,031 333.0 17.75 10.47 16.87 3.73 430.30 59.24
FDEF First Defiance Fin.Corp. of OH 12.06 9,912 119.5 12.50 9.87 12.25 -1.55 N.A. 19.17
FESX First Essex Bancorp of MA* 13.37 6,059 81.0 14.50 10.00 13.75 -2.76 122.83 17.59
FFES First FS&LA of E. Hartford CT 23.00 2,615 60.1 23.75 16.50 22.75 1.10 253.85 15.00
FSSB First FS&LA of San Bern. CA 9.00 328 3.0 12.50 9.00 9.00 0.00 -10.00 -28.00
FFSX First FS&LA. MHC of IA (45.0) 30.25 1,883 22.9 30.25 21.36 28.00 8.04 202.50 24.38
FFML First Family Fin. Corp. of FL(8) 22.00 545 12.0 23.00 19.00 22.50 -2.22 238.46 4.76
FFSW First Fed Fin. Serv. of OH 39.00 3,612 140.9 39.00 21.59 37.75 3.31 129.41 80.64
BDJI First Fed. Bancorp. of MN 18.00 701 12.6 18.00 12.25 17.87 0.73 N.A. 30.91
FFBH First Fed. Bancshares of AR 16.00 5,154 82.5 16.37 12.75 16.00 0.00 N.A. N.A.
Current Per Share Financials
____________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
_______________________________________
<S> <C> <C> <C> <C> <C>
CBNH Community Bankshares Inc of NH* 1.72 1.40 16.18 16.18 225.91
CFTP Community Fed. Bancorp of MS 0.50 0.63 15.68 15.68 47.65
CFFC Community Fin. Corp. of VA 1.28 1.62 17.59 17.59 126.41
CIBI Community Inv. Bancorp of OH 0.90 1.30 17.00 17.00 142.34
COOP Cooperative Bk.for Svgs. of NC -2.41 -0.16 16.89 16.89 219.30
CNSK Covenant Bank for Svgs. of NJ* 0.36 0.64 7.55 7.55 141.20
CRZY Crazy Woman Creek Bncorp of WY 0.34 0.44 14.62 14.62 48.69
DNFC D&N Financial Corp. of MI 1.19 1.55 10.30 10.16 185.60
DSBC DS Bancor Inc. of Derby CT(8)* 3.05 2.84 28.53 27.72 415.38
DFIN Damen Fin. Corp. of Chicago IL 0.47 0.61 14.02 14.02 62.20
DCBI Delphos Citizens Bancorp of OH 0.73 0.73 14.26 14.26 53.80
DIME Dime Community Bancorp of NY 0.46 0.58 14.79 12.86 84.25
DIBK Dime Financial Corp. of CT* 2.29 2.47 11.58 11.10 134.89
EGLB Eagle BancGroup of IL -0.52 -0.10 16.75 16.75 125.66
EBSI Eagle Bancshares of Tucker GA 0.85 1.13 12.62 12.62 141.07
EGFC Eagle Financial Corp. of CT 3.06 1.88 22.31 16.36 310.23
ETFS East Texas Fin. Serv. of TX 0.83 0.76 19.24 19.24 101.71
EBCP Eastern Bancorp of NH(8) 0.90 1.22 17.41 16.44 237.86
ESBK Elmira SB of Elmira NY* 0.58 0.54 19.93 19.06 312.61
EIRE Emerald Island Bancorp, MA* 1.19 1.28 15.18 15.18 222.19
EFBI Enterprise Fed. Bancorp of OH 0.90 0.62 15.23 15.21 103.12
EQSB Equitable FSB of Wheaton MD 3.30 3.28 23.64 23.64 446.29
FFFG F.F.O. Financial Group of FL 0.07 0.22 2.23 2.23 36.90
FCBF FCB Fin. Corp. of Neenah WI 0.95 1.17 18.92 18.92 109.47
FFBS FFBS Bancorp of Columbus MS 0.85 1.10 15.69 15.69 80.08
FFDF FFD Financial Corp. of OH 0.34 0.47 14.72 14.72 58.72
FFLC FFLC Bancorp of Leesburg FL 0.82 1.26 21.58 21.58 133.07
FFFC FFVA Financial Corp. of VA 1.06 1.34 15.68 15.35 105.53
FFWC FFW Corporation of Wabash IN 1.89 2.28 22.04 22.04 220.16
FFYF FFY Financial Corp. of OH 0.93 1.43 19.98 19.98 117.76
FMCO FMS Financial Corp. of NJ 1.07 1.79 13.71 13.40 210.11
FFHH FSF Financial Corp. of MN 0.48 0.67 13.70 13.70 101.97
FMLY Family Bancorp of Haverhill MA(8)* 1.78 1.86 16.92 15.65 212.95
FOBC Fed One Bancorp of Wheeling WV 0.95 1.35 15.99 15.18 136.99
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 0.92 1.31 12.07 12.06 143.21
FBCI Fidelity Bancorp of Chicago IL 0.75 1.12 17.04 16.98 166.04
FSBI Fidelity Bancorp, Inc. of PA 0.96 1.68 15.86 15.83 231.52
FFFL Fidelity FSB, MHC of FL(47.2) 0.47 0.77 11.94 11.82 127.51
FFED Fidelity Fed. Bancorp of IN 0.34 0.44 5.03 5.03 104.99
FFOH Fidelity Financial of OH 0.36 0.54 12.46 12.46 62.76
FIBC Financial Bancorp of NY 0.64 1.19 14.40 14.32 148.95
FBSI First Bancshares of MO 0.78 1.12 18.90 18.86 127.95
FBBC First Bell Bancorp of PA 0.99 1.14 13.71 13.71 74.37
FBER First Bergen Bancorp of NJ 0.09 0.45 13.41 13.41 78.76
FCIT First Cit. Fin. Corp of MD 0.99 1.41 13.51 13.51 228.38
FFBA First Colorado Bancorp of Co 0.83 0.83 12.88 12.72 78.89
FDEF First Defiance Fin.Corp. of OH 0.49 0.64 12.17 12.17 52.89
FESX First Essex Bancorp of MA* 1.34 1.15 10.67 10.67 143.45
FFES First FS&LA of E. Hartford CT 1.54 2.34 22.05 22.00 360.48
FSSB First FS&LA of San Bern. CA -3.34 -3.89 14.36 13.71 305.90
FFSX First FS&LA. MHC of IA (45.0) 0.94 1.63 19.39 19.21 243.31
FFML First Family Fin. Corp. of FL(8) 1.19 0.05 16.92 16.92 286.04
FFSW First Fed Fin. Serv. of OH 2.05 2.27 16.50 13.48 307.51
BDJI First Fed. Bancorp. of MN 0.45 1.00 17.58 17.58 153.00
FFBH First Fed. Bancshares of AR 0.58 0.88 16.17 16.17 98.88
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
_______________________ _______________________________________________
52 Week (1) % Change From
Shares Market _______________ _______________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC
Companies (continued)
_______________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFEC First Fed. Bancshares of WI(8) 18.37 6,855 125.9 18.37 13.62 18.37 0.00 N.A. 20.46
FTFC First Fed. Capital Corp. of WI 24.00 6,169 148.1 24.00 17.87 24.00 0.00 113.33 33.33
FFKY First Fed. Fin. Corp. of KY 19.25 4,197 80.8 22.00 15.25 20.25 -4.94 22.22 25.24
FFBZ First Federal Bancorp of OH 16.00 1,570 25.1 16.00 10.00 14.75 8.47 60.00 58.10
FFWM First Fin. Corp of Western MD 31.75 2,124 67.4 32.25 17.75 31.75 0.00 217.50 60.76
FFCH First Fin. Holdings Inc. of SC 23.25 6,358 147.8 24.25 17.50 23.00 1.09 89.80 20.78
FFBI First Financial Bancorp of IL 15.87 452 7.2 16.25 15.50 15.87 0.00 N.A. -0.81
FFHC First Financial Corp. of WI 28.50 29,915 852.6 30.25 19.50 28.00 1.79 80.95 23.91
FFHS First Franklin Corp. of OH 16.00 1,158 18.5 17.25 13.50 17.00 -5.88 21.95 0.82
FGHC First Georgia Hold. Corp of GA 8.62 2,024 17.4 9.25 6.00 8.00 7.75 125.07 12.39
FSPG First Home SB, SLA of NJ 19.50 2,030 39.6 19.50 17.50 18.25 6.85 225.00 2.63
FFSL First Independence Corp. of KS 19.62 583 11.4 21.25 17.62 19.62 0.00 N.A. 4.64
FISB First Indiana Corp. of IN 25.50 8,294 211.5 26.00 19.79 25.37 0.51 88.89 18.83
FKFS First Keystone Fin. Corp of PA 20.00 1,292 25.8 20.87 16.75 19.25 3.90 N.A. -4.17
FLKY First Lancaster Bncshrs of KY 15.50 959 14.9 16.25 13.12 16.00 -3.13 N.A. N.A.
FLFC First Liberty Fin. Corp. of GA 18.50 6,003 111.1 21.50 13.50 20.06 -7.78 264.17 30.56
CASH First Midwest Fin. Corp. of IA 24.75 1,779 44.0 24.75 21.75 24.75 0.00 N.A. 5.32
FMBD First Mutual Bancorp of IL 14.87 3,845 57.2 14.87 11.62 14.37 3.48 N.A. 9.18
FMSB First Mutual SB of Bellevue WA* 18.00 2,453 44.2 19.00 11.46 18.00 0.00 132.26 32.94
FNGB First Northern Cap. Corp of WI 16.00 4,381 70.1 18.62 15.25 16.00 0.00 9.89 -3.03
FFPB First Palm Beach Bancorp of FL 23.00 5,093 117.1 25.50 19.94 24.87 -7.52 N.A. 8.90
FSNJ First SB of NJ, MHC (45.0) 17.25 3,062 23.4 18.50 13.75 17.00 1.47 N.A. 0.00
FSLA First SB, SLA MHC of NJ (37.6) 18.00 7,166 36.0 18.50 13.18 18.00 0.00 80.00 20.00
SOPN First SB, SSB, Moore Co. of NC 18.00 3,744 67.4 19.25 16.75 18.50 -2.70 N.A. 1.07
FWWB First Savings Bancorp of WA* 18.50 10,878 201.2 19.00 12.37 18.37 0.71 N.A. 41.01
SHEN First Shenango Bancorp of PA 22.50 2,258 50.8 23.75 20.00 22.87 -1.62 N.A. 9.76
FSFC First So.east Fin. Corp. of SC 9.50 4,388 41.7 20.12 9.12 9.62 -1.25 N.A. -50.00
FSFI First State Fin. Serv. of NJ(8) 15.00 3,929 58.9 15.37 10.00 15.00 0.00 269.46 10.13
FFDP FirstFed Bancshares of IL 16.75 3,277 54.9 17.62 14.00 17.00 -1.47 151.50 18.21
FLAG Flag Financial Corp of GA 11.00 2,037 22.4 14.75 9.75 11.12 -1.08 12.24 -20.00
FFPC Florida First Bancorp of FL(8) 11.37 3,396 38.6 11.50 7.00 11.37 0.00 504.79 54.27
FFIC Flushing Fin. Corp. of NY* 18.75 8,575 160.8 18.87 14.12 18.25 2.74 N.A. 21.99
FBHC Fort Bend Holding Corp. of TX 24.25 819 19.9 25.75 16.87 25.25 -3.96 N.A. 34.72
FTSB Fort Thomas Fin. Corp. of KY 14.25 1,574 22.4 17.75 11.50 14.25 0.00 N.A. 17.57
FKKY Frankfort First Bancorp of KY 11.37 3,440 39.1 15.87 10.00 11.37 0.00 N.A. -14.19
FTNB Fulton Bancorp of MO 14.87 1,719 25.6 14.87 12.50 14.12 5.31 N.A. N.A.
GFSB GFS Bancorp of Grinnell IA 20.75 503 10.4 21.00 19.00 20.75 0.00 N.A. 3.75
GUPB GFSB Bancorp of Gallup NM 15.87 901 14.3 15.87 13.00 15.25 4.07 N.A. 11.37
GWBC Gateway Bancorp of KY 14.50 1,114 16.2 15.25 13.00 14.00 3.57 N.A. 1.75
GBCI Glacier Bancorp of MT 23.37 3,374 78.9 25.25 17.73 24.50 -4.61 383.85 26.94
GLBK Glendale Co-op. Bank of MA* 20.00 247 4.9 21.00 16.50 20.00 0.00 N.A. 6.67
GFCO Glenway Financial Corp. of OH 19.00 1,151 21.9 23.33 17.86 19.87 -4.38 N.A. -18.56
GTPS Great American Bancorp of IL 14.50 1,950 28.3 15.12 13.19 14.75 -1.69 N.A. -0.41
GTFN Great Financial Corp. of KY 29.12 14,184 413.0 29.87 22.62 29.30 -0.61 N.A. 23.91
GSBC Great Southern Bancorp of MO 17.25 8,730 150.6 17.75 11.50 16.75 2.99 490.75 39.45
GDVS Greater DV SB,MHC of PA(19.9)* 10.00 3,272 6.5 13.00 9.25 10.12 -1.19 N.A. -16.67
GRTR Greater New York SB of NY* 13.50 13,440 181.4 14.37 10.12 14.31 -5.66 45.01 12.50
GSFC Green Street Fin. Corp. of NC 15.37 4,298 66.1 16.12 12.12 15.50 -0.84 N.A. N.A.
GROV GroveBank for Savings of MA(8)* 49.12 1,542 75.7 49.12 24.25 49.12 0.00 453.78 98.46
GFED Guaranty FS&LA,MHC of MO(31.1) 11.37 3,125 8.8 12.50 9.75 11.00 3.36 N.A. -4.21
GSLC Guaranty Svgs & Loan FA of VA 8.25 919 7.6 9.50 7.12 8.75 -5.71 N.A. 6.45
HEMT HF Bancorp of Hemet CA 11.00 6,282 69.1 11.37 9.25 11.00 0.00 N.A. 11.45
HFFC HF Financial Corp. of SD 16.50 2,909 48.0 17.50 13.44 17.25 -4.35 230.00 8.20
HFNC HFNC Financial Corp. of NC 17.87 17,192 307.2 18.25 13.12 17.44 2.47 N.A. 36.20
HMNF HMN Financial, Inc. of MN 18.25 4,674 85.3 18.25 14.50 18.00 1.39 N.A. 14.06
Current Per Share Financials
_______________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC
Companies (continued)
_______________________
<S> <C> <C> <C> <C> <C>
FFEC First Fed. Bancshares of WI(8) 0.67 0.88 14.27 13.73 106.32
FTFC First Fed. Capital Corp. of WI 1.56 1.72 15.10 14.24 238.19
FFKY First Fed. Fin. Corp. of KY 1.03 1.17 11.75 10.98 85.13
FFBZ First Federal Bancorp of OH 0.91 1.23 8.92 8.90 117.49
FFWM First Fin. Corp of Western MD 1.34 1.86 19.01 19.01 162.67
FFCH First Fin. Holdings Inc. of SC 1.11 1.85 14.91 14.91 243.18
FFBI First Financial Bancorp of IL 0.22 0.70 16.62 16.62 214.92
FFHC First Financial Corp. of WI 1.66 2.33 13.41 12.95 187.05
FFHS First Franklin Corp. of OH 0.52 1.15 17.07 16.92 188.54
FGHC First Georgia Hold. Corp of GA 0.60 0.60 5.91 5.26 71.16
FSPG First Home SB, SLA of NJ 2.09 2.54 15.50 15.15 240.00
FFSL First Independence Corp. of KS 1.40 1.89 22.30 22.30 186.17
FISB First Indiana Corp. of IN 1.62 1.86 16.30 16.07 179.10
FKFS First Keystone Fin. Corp of PA 0.68 1.47 17.87 17.87 227.74
FLKY First Lancaster Bncshrs of KY 0.27 0.38 14.08 14.08 39.46
FLFC First Liberty Fin. Corp. of GA 1.60 1.28 11.39 9.65 165.12
CASH First Midwest Fin. Corp. of IA 1.76 1.74 21.94 20.49 192.30
FMBD First Mutual Bancorp of IL 0.35 0.54 16.40 16.40 82.28
FMSB First Mutual SB of Bellevue WA* 1.55 1.49 10.79 10.79 163.31
FNGB First Northern Cap. Corp of WI 0.70 1.08 15.84 15.84 138.78
FFPB First Palm Beach Bancorp of FL 0.11 0.32 20.70 20.15 292.56
FSNJ First SB of NJ, MHC (45.0) 0.38 0.85 16.01 16.01 212.49
FSLA First SB, SLA MHC of NJ (37.6) 0.63 1.14 12.59 11.03 136.03
SOPN First SB, SSB, Moore Co. of NC 0.87 1.08 17.90 17.90 70.30
FWWB First Savings Bancorp of WA* 0.66 0.66 13.73 12.60 87.06
SHEN First Shenango Bancorp of PA 1.18 1.60 20.42 20.42 170.10
FSFC First So.east Fin. Corp. of SC -0.03 0.67 7.55 7.55 75.05
FSFI First State Fin. Serv. of NJ(8) 0.02 -0.19 10.17 9.61 169.49
FFDP FirstFed Bancshares of IL 0.44 0.54 15.76 15.02 183.98
FLAG Flag Financial Corp of GA -0.08 0.12 9.89 9.89 112.38
FFPC Florida First Bancorp of FL(8) 0.52 0.77 6.12 6.12 87.53
FFIC Flushing Fin. Corp. of NY* 0.71 0.67 15.73 15.73 89.81
FBHC Fort Bend Holding Corp. of TX 0.82 1.78 21.24 19.62 343.95
FTSB Fort Thomas Fin. Corp. of KY 0.74 0.74 13.75 13.75 56.46
FKKY Frankfort First Bancorp of KY 0.32 0.43 9.84 9.84 37.42
FTNB Fulton Bancorp of MO 0.67 0.65 13.92 13.92 61.05
GFSB GFS Bancorp of Grinnell IA 1.47 1.94 19.59 19.59 169.40
GUPB GFSB Bancorp of Gallup NM 0.62 0.79 16.37 16.37 88.47
GWBC Gateway Bancorp of KY 0.54 0.74 15.64 15.64 62.38
GBCI Glacier Bancorp of MT 1.61 1.81 11.54 11.53 122.12
GLBK Glendale Co-op. Bank of MA* 1.16 0.97 23.71 23.71 149.55
GFCO Glenway Financial Corp. of OH 1.34 1.36 23.27 22.77 242.23
GTPS Great American Bancorp of IL 0.42 0.41 17.09 17.09 61.37
GTFN Great Financial Corp. of KY 1.27 1.29 19.27 18.48 199.57
GSBC Great Southern Bancorp of MO 1.02 1.16 7.62 7.62 75.33
GDVS Greater DV SB,MHC of PA(19.9)* -0.15 0.07 8.30 8.30 70.99
GRTR Greater New York SB of NY* 0.80 0.71 11.40 11.40 190.97
GSFC Green Street Fin. Corp. of NC 0.48 0.60 14.47 14.47 41.00
GROV GroveBank for Savings of MA(8)* 3.37 3.16 25.21 25.20 388.14
GFED Guaranty FS&LA,MHC of MO(31.1) 0.36 0.29 8.49 8.49 58.61
GSLC Guaranty Svgs & Loan FA of VA 0.50 0.58 6.90 6.90 125.39
HEMT HF Bancorp of Hemet CA -0.10 -0.13 12.70 12.70 159.88
HFFC HF Financial Corp. of SD 1.15 1.45 17.12 17.07 190.49
HFNC HFNC Financial Corp. of NC 0.46 0.58 14.41 14.41 49.16
HMNF HMN Financial, Inc. of MN 0.94 1.10 17.90 17.90 120.96
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
_______________________ _______________________________________________
52 Week (1) % Change From
Shares Market _______________ _______________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC
Companies (continued)
_______________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HALL Hallmark Capital Corp. of WI 17.62 1,443 25.4 17.75 14.50 17.50 0.69 N.A. 13.68
HARB Harbor FSB, MHC of FL (45.7) 32.00 4,934 71.7 34.25 23.75 33.00 -3.03 N.A. 16.36
HRBF Harbor Federal Bancorp of MD 15.12 1,754 26.5 15.87 12.37 15.50 -2.45 51.20 4.28
HFSA Hardin Bancorp of Hardin MO 12.37 1,005 12.4 12.75 11.00 12.00 3.08 N.A. -2.98
HARL Harleysville SA of PA 18.75 1,292 24.2 20.00 15.00 18.25 2.74 5.63 25.00
HARS Harris SB, MHC of PA (23.1) 18.12 11,216 45.3 20.50 14.75 18.50 -2.05 N.A. -9.40
HFFB Harrodsburg 1st Fin Bcrp of KY 18.50 2,159 39.9 19.00 13.25 18.25 1.37 N.A. 23.33
HHFC Harvest Home Fin. Corp. of OH 9.87 935 9.2 13.75 9.25 9.87 0.00 N.A. -19.43
HAVN Haven Bancorp of Woodhaven NY 28.50 4,323 123.2 29.12 21.88 28.69 -0.66 N.A. 20.66
HVFD Haverfield Corp. of OH 18.50 1,907 35.3 19.75 13.50 19.25 -3.90 19.35 37.04
HTHR Hawthorne Fin. Corp. of CA 7.44 2,599 19.3 9.25 4.38 7.37 0.95 -72.95 48.80
HBNK Highland Federal Bank of CA 17.12 2,296 39.3 17.50 12.00 17.25 -0.75 N.A. 10.45
HIFS Hingham Inst. for Sav. of MA* 17.50 1,297 22.7 18.25 13.00 18.25 -4.11 283.77 18.64
HNFC Hinsdale Financial Corp. of IL 24.25 2,695 65.4 27.75 21.00 25.87 -6.26 142.50 12.79
HBEI Home Bancorp of Elgin IL 12.81 7,009 89.8 13.12 11.81 12.87 -0.47 N.A. N.A.
HBFW Home Bancorp of Fort Wayne IN 18.50 2,887 53.4 19.00 13.75 18.50 0.00 N.A. 21.31
HBBI Home Building Bancorp of IN 18.00 312 5.6 21.25 16.25 18.00 0.00 N.A. 9.09
HOMF Home Fed Bancorp of Seymour IN 35.25 2,226 78.5 35.25 24.50 35.25 0.00 135.00 33.02
HWEN Home Financial Bancorp of IN 13.00 506 6.6 13.75 9.87 13.12 -0.91 N.A. N.A.
HPBC Home Port Bancorp, Inc. of MA* 16.87 1,842 31.1 17.00 11.25 16.75 0.72 110.88 43.57
HMCI Homecorp, Inc. of Rockford IL 17.75 1,129 20.0 19.87 16.50 18.00 -1.39 77.50 6.80
LOAN Horizon Bancorp, Inc of TX(8)* 19.00 1,387 26.4 19.50 8.25 18.50 2.70 N.A. 111.11
HZFS Horizon Fin'l. Services of IA 14.50 448 6.5 16.37 14.00 14.94 -2.95 N.A. -4.92
HRZB Horizon Financial Corp. of WA* 13.25 6,493 86.0 14.00 11.75 12.25 8.16 -1.34 1.92
IBSF IBS Financial Corp. of NJ 15.63 10,754 168.1 16.25 12.50 15.44 1.23 N.A. 14.59
ISBF ISB Financial Corp. of LA 17.50 7,051 123.4 18.50 13.62 17.12 2.22 N.A. 16.67
ITLA Imperial Thrift & Loan of CA* 14.00 7,820 109.5 15.25 11.75 14.50 -3.45 N.A. 14.29
IFSB Independence FSB of DC 7.62 1,280 9.8 8.62 6.75 7.62 0.00 281.00 -9.72
INCB Indiana Comm. Bank, SB of IN 16.50 922 15.2 16.75 12.50 15.50 6.45 N.A. 8.20
IFSL Indiana Federal Corp. of IN(8) 21.75 4,737 103.0 23.00 16.25 21.75 0.00 188.46 2.35
INBI Industrial Bancorp of OH 12.37 5,554 68.7 16.00 9.87 12.50 -1.04 N.A. -10.04
IWBK Interwest SB of Oak Harbor WA 32.25 7,918 255.4 33.00 19.37 32.25 0.00 222.50 58.32
IPSW Ipswich SB of Ipswich MA* 11.62 1,183 13.7 12.62 7.00 11.37 2.20 N.A. 40.85
IROQ Iroquois Bancorp of Auburn NY* 16.75 2,361 39.5 17.00 13.00 16.50 1.52 139.29 28.85
JSBF JSB Financial, Inc. of NY 36.50 9,764 356.4 37.12 31.62 36.25 0.69 217.39 15.43
JXVL Jacksonville Bancorp of TX 14.50 2,644 38.3 15.00 9.38 14.50 0.00 N.A. 24.57
JXSB Jcksnville SB,MHC of IL(43.3%) 12.50 1,272 7.0 14.12 11.50 12.00 4.17 N.A. -9.88
JSBA Jefferson Svgs Bancorp of MO 22.87 4,182 95.6 30.75 22.25 23.50 -2.68 N.A. -17.59
JOAC Joachim Bancorp of MO 14.37 760 10.9 15.25 11.50 14.50 -0.90 N.A. 6.44
KSAV KS Bancorp of Kenly NC 20.87 663 13.8 21.00 17.12 20.87 0.00 N.A. 19.26
KSBK KSB Bancorp of Kingfield ME* 23.00 411 9.5 26.00 16.59 26.00 -11.54 N.A. 31.43
KFBI Klamath First Bancorp of OR 14.94 11,612 173.5 15.12 12.56 14.87 0.47 N.A. 8.65
LBFI L&B Financial of S. Springs TX(8) 17.00 1,584 26.9 17.75 13.87 17.00 0.00 N.A. 19.30
LSBI LSB Fin. Corp. of Lafayette IN 18.75 918 17.2 19.50 14.50 19.50 -3.85 N.A. 8.70
LVSB Lakeview SB of Paterson NJ 23.50 2,487 58.4 24.32 15.19 23.25 1.08 N.A. 51.71
LARK Landmark Bancshares of KS 17.00 1,853 31.5 17.00 13.50 16.50 3.03 N.A. 23.64
LARL Laurel Capital Group of PA 15.87 1,514 24.0 16.25 14.50 16.00 -0.81 23.98 2.39
LSBX Lawrence Savings Bank of MA* 8.25 4,250 35.1 8.87 4.62 8.13 1.48 139.83 78.57
LFED Leeds FSB, MHC of MD (35.3) 16.00 3,455 20.0 16.75 13.00 15.25 4.92 N.A. 12.28
LXMO Lexington B&L Fin. Corp. of MO 13.50 1,265 17.1 13.50 9.50 12.87 4.90 N.A. N.A.
LBCI Liberty Bancorp of Chicago IL(8) 25.50 2,477 63.2 26.50 22.25 24.25 5.15 155.00 0.99
LIFB Life Bancorp of Norfolk VA 18.37 9,847 180.9 18.37 14.00 18.00 2.06 N.A. 22.47
LFBI Little Falls Bancorp of NJ 12.50 2,890 36.1 13.50 9.50 12.50 0.00 N.A. N.A.
LOGN Logansport Fin. Corp. of IN 11.75 1,322 15.5 14.75 11.25 11.75 0.00 N.A. -9.62
LONF London Financial Corp. of OH 13.50 529 7.1 13.50 9.75 13.00 3.85 N.A. N.A.
Current Per Share Financials
________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC
Companies (continued)
______________________
<S> <C> <C> <C> <C> <C>
HALL Hallmark Capital Corp. of WI 0.98 1.32 18.84 18.84 268.66
HARB Harbor FSB, MHC of FL (45.7) 1.75 2.36 17.19 16.47 214.32
HRBF Harbor Federal Bancorp of MD 0.28 0.59 15.67 15.67 121.90
HFSA Hardin Bancorp of Hardin MO 0.37 0.66 14.66 14.66 87.37
HARL Harleysville SA of PA 1.21 1.95 15.18 15.18 244.19
HARS Harris SB, MHC of PA (23.1) 0.03 0.61 13.15 11.09 153.68
HFFB Harrodsburg 1st Fin Bcrp of KY 0.57 0.57 14.28 14.28 50.75
HHFC Harvest Home Fin. Corp. of OH 0.57 0.57 13.66 13.66 81.71
HAVN Haven Bancorp of Woodhaven NY 1.99 3.01 21.73 21.60 361.95
HVFD Haverfield Corp. of OH 0.72 1.52 14.47 14.45 183.85
HTHR Hawthorne Fin. Corp. of CA 2.42 1.67 12.25 12.25 318.50
HBNK Highland Federal Bank of CA -0.18 0.43 14.57 14.57 204.34
HIFS Hingham Inst. for Sav. of MA* 1.49 1.49 14.45 14.45 148.95
HNFC Hinsdale Financial Corp. of IL 1.14 1.71 20.58 19.99 241.52
HBEI Home Bancorp of Elgin IL 0.06 0.31 14.12 14.12 52.87
HBFW Home Bancorp of Fort Wayne IN 0.91 0.91 16.96 16.96 109.42
HBBI Home Building Bancorp of IN -0.44 0.03 17.62 17.62 136.41
HOMF Home Fed Bancorp of Seymour IN 2.69 3.19 23.21 22.36 284.54
HWEN Home Financial Bancorp of IN 0.36 0.52 15.31 15.31 76.45
HPBC Home Port Bancorp, Inc. of MA* 1.64 1.65 10.66 10.66 102.41
HMCI Homecorp, Inc. of Rockford IL 0.29 0.99 18.09 18.09 301.55
LOAN Horizon Bancorp, Inc of TX(8)* 1.29 0.99 8.38 8.13 101.32
HZFS Horizon Fin'l. Services of IA 0.21 0.54 18.36 18.36 171.10
HRZB Horizon Financial Corp. of WA* 1.14 1.11 12.28 12.28 77.06
IBSF IBS Financial Corp. of NJ 0.42 0.68 13.42 13.42 69.00
ISBF ISB Financial Corp. of LA 0.73 0.99 15.93 15.45 97.27
ITLA Imperial Thrift & Loan of CA* 1.17 1.17 11.06 11.06 94.06
IFSB Independence FSB of DC 0.26 0.39 13.03 11.28 193.66
INCB Indiana Comm. Bank, SB of IN 0.15 0.48 12.10 12.10 98.37
IFSL Indiana Federal Corp. of IN(8) 1.07 1.50 14.77 13.78 170.81
INBI Industrial Bancorp of OH 0.42 0.78 10.92 10.92 57.68
IWBK Interwest SB of Oak Harbor WA 1.37 1.98 14.02 13.66 216.24
IPSW Ipswich SB of Ipswich MA* 1.56 1.29 7.90 7.90 133.66
IROQ Iroquois Bancorp of Auburn NY* 1.25 1.69 12.02 10.77 200.63
JSBF JSB Financial, Inc. of NY 2.60 2.60 33.60 33.60 155.55
JXVL Jacksonville Bancorp of TX 0.54 0.81 13.34 13.34 82.34
JXSB Jcksnville SB,MHC of IL(43.3%) 0.21 0.52 13.01 12.98 112.98
JSBA Jefferson Svgs Bancorp of MO 0.62 1.65 19.53 16.10 269.81
JOAC Joachim Bancorp of MO 0.19 0.33 14.05 14.05 47.54
KSAV KS Bancorp of Kenly NC 1.13 1.58 20.84 20.82 145.02
KSBK KSB Bancorp of Kingfield ME* 2.76 2.76 22.00 20.37 322.46
KFBI Klamath First Bancorp of OR 0.53 0.76 13.21 13.21 57.87
LBFI L&B Financial of S. Springs TX(8) 0.59 0.79 15.51 15.51 91.29
LSBI LSB Fin. Corp. of Lafayette IN 0.90 0.82 18.21 18.21 193.73
LVSB Lakeview SB of Paterson NJ 2.25 1.54 19.47 15.51 190.07
LARK Landmark Bancshares of KS 0.76 1.01 17.48 17.48 115.34
LARL Laurel Capital Group of PA 1.36 1.80 13.88 13.88 133.36
LSBX Lawrence Savings Bank of MA* 1.09 1.09 6.38 6.38 77.71
LFED Leeds FSB, MHC of MD (35.3) 0.59 0.85 12.80 12.80 79.51
LXMO Lexington B&L Fin. Corp. of MO 0.43 0.43 14.81 14.81 48.45
LBCI Liberty Bancorp of Chicago IL(8) 0.86 1.66 25.55 25.48 268.11
LIFB Life Bancorp of Norfolk VA 0.77 1.11 14.77 14.28 142.66
LFBI Little Falls Bancorp of NJ 0.16 0.43 14.45 13.31 97.09
LOGN Logansport Fin. Corp. of IN 0.71 0.89 12.05 12.05 60.31
LONF London Financial Corp. of OH 0.52 0.52 15.02 15.02 70.30<PAGE>
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
_______________________ _______________________________________________
52 Week (1) % Change From
Shares Market _______________ _______________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LISB Long Island Bancorp of NY 30.87 24,644 760.8 32.87 24.50 30.75 0.39 N.A. 17.06
MAFB MAF Bancorp of IL 34.62 10,485 363.0 35.25 22.25 34.75 -0.37 307.29 38.48
MBLF MBLA Financial Corp. of MO(8) 19.00 1,354 25.7 26.00 18.00 20.00 -5.00 N.A. -1.91
MFBC MFB Corp. of Mishawaka IN 16.50 1,974 32.6 19.25 13.75 17.00 -2.94 N.A. 11.86
MLBC ML Bancorp of Villanova PA 14.56 11,869 172.8 14.75 10.62 14.62 -0.41 N.A. 30.94
MBB MSB Bancorp of Middletown NY* 19.12 2,834 54.2 22.00 15.00 19.12 0.00 91.20 3.35
MSBF MSB Financial Corp. of MI 19.25 654 12.6 19.75 15.75 19.25 0.00 N.A. 1.32
MGNL Magna Bancorp of MS 18.00 13,741 247.3 22.50 14.25 18.50 -2.70 260.00 25.26
MARN Marion Capital Holdings of IN 20.37 1,843 37.5 21.50 19.25 20.50 -0.63 N.A. 1.85
MFCX Marshalltown Fin. Corp. of IA(8) 14.50 1,411 20.5 16.75 14.50 15.25 -4.92 N.A. -7.94
MFSL Maryland Fed. Bancorp of MD 34.25 3,137 107.4 34.87 26.91 33.50 2.24 226.19 19.88
MASB MassBank Corp. of Reading MA* 37.37 2,684 100.3 38.75 30.75 37.50 -0.35 203.08 17.70
MFLR Mayflower Co-Op. Bank of MA* 14.75 889 13.1 15.75 10.75 15.25 -3.28 195.00 34.09
MECH Mechanics SB of Hartford CT* 15.50 5,290 82.0 16.37 11.00 15.87 -2.33 N.A. N.A.
MDBK Medford Savings Bank of MA* 25.00 4,534 113.4 27.00 19.75 25.00 0.00 257.14 16.28
MERI Meritrust FSB of Thibodaux LA 31.62 774 24.5 34.00 29.25 31.50 0.38 N.A. 2.00
MWBX Metro West of MA* 4.87 13,889 67.6 4.87 3.50 4.62 5.41 18.20 18.20
MSEA Metropolitan Bancorp of WA(8) 19.25 3,634 70.0 19.50 12.50 19.25 0.00 164.79 48.08
MCBS Mid Continent Bancshares of KS 23.75 2,017 47.9 24.25 17.37 23.37 1.63 N.A. 28.38
MIFC Mid Iowa Financial Corp. of IA 6.25 1,683 10.5 7.87 6.00 6.37 -1.88 25.00 -19.35
MCBN Mid-Coast Bancorp of ME 18.75 230 4.3 20.25 17.12 18.75 0.00 228.37 9.52
MIDC Midconn Bank of Kensington CT* 19.31 1,936 37.4 20.25 13.50 20.25 -4.64 83.90 37.93
MWBI Midwest Bancshares, Inc. of IA 26.50 349 9.2 27.00 24.50 27.00 -1.85 165.00 2.91
MWFD Midwest Fed. Fin. Corp of WI 18.00 1,604 28.9 24.50 9.56 21.50 -16.28 260.00 67.44
MFFC Milton Fed. Fin. Corp. of OH 14.12 2,269 32.0 16.25 11.50 14.62 -3.42 N.A. -13.11
MIVI Miss. View Hold. Co. of MN 11.75 910 10.7 12.75 10.75 12.75 -7.84 N.A. 3.34
MBSP Mitchell Bancorp of NC* 14.25 980 14.0 14.25 10.19 13.87 2.74 N.A. N.A.
MBBC Monterey Bay Bancorp of CA 14.87 3,259 48.5 15.63 11.00 14.75 0.81 N.A. 27.97
MORG Morgan Financial Corp. of CO 11.25 778 8.8 13.00 10.50 12.00 -6.25 N.A. -10.00
MSBK Mutual SB, FSB of Bay City MI 5.69 4,274 24.3 6.81 5.12 5.75 -1.04 -34.97 -5.17
NHTB NH Thrift Bancshares of NH 11.75 1,698 20.0 13.37 9.25 11.75 0.00 154.33 16.11
NSLB NS&L Bancorp of Neosho MO 13.75 843 11.6 14.00 12.00 14.00 -1.79 N.A. 3.77
NMSB Newmil Bancorp. of CT* 8.75 4,042 35.4 9.25 6.37 8.50 2.94 37.36 25.00
NFSL Newnan SB, FSB of Newnan GA 25.25 1,587 40.1 26.75 15.37 25.25 0.00 102.00 46.38
NASB North American SB of MO 33.75 2,268 76.5 33.75 29.25 31.00 8.87 694.12 5.47
NBSI North Bancshares of Chicago IL 15.75 1,072 16.9 16.50 13.37 16.00 -1.56 N.A. 16.67
FFFD North Central Bancshares of IA 13.37 3,811 51.0 13.50 10.12 13.37 0.00 N.A. 26.73
NEBC Northeast Bancorp of ME* 13.50 1,231 16.6 14.00 11.00 13.50 0.00 14.89 17.39
NEIB Northeast Indiana Bncrp of IN 13.50 1,954 26.4 14.00 11.50 13.50 0.00 N.A. 12.50
NSBK Northside SB of Bronx NY(8)* 52.00 4,854 252.4 53.75 29.00 52.50 -0.95 226.02 70.49
NWEQ Northwest Equity Corp. of WI 12.25 929 11.4 12.25 9.87 11.25 8.89 N.A. 12.70
NWSB Northwest SB, MHC of PA(29.9) 13.25 23,376 45.7 13.75 10.75 13.25 0.00 N.A. 9.32
NSSY Norwalk Savings Society of CT* 24.25 2,392 58.0 24.87 18.50 24.25 0.00 N.A. 27.63
NSSB Norwich Financial Corp. of CT* 19.50 5,385 105.0 20.50 12.25 19.50 0.00 178.57 51.52
NTMG Nutmeg FS&LA of CT 7.25 712 5.2 8.00 6.25 7.25 0.00 N.A. 8.70
OHSL OHSL Financial Corp. of OH 20.75 1,223 25.4 22.00 19.25 20.37 1.87 N.A. -3.49
OSBF OSB Fin. Corp. of Oshkosh WI(8) 27.25 1,160 31.6 27.75 22.75 27.00 0.93 136.96 14.74
OCFC Ocean Fin. Corp. of NJ 25.50 9,059 231.0 26.50 19.62 25.87 -1.43 N.A. N.A.
OFCP Ottawa Financial Corp. of MI 16.75 5,179 86.7 16.75 15.37 16.75 0.00 N.A. 7.17
PFFB PFF Bancorp of Pomona CA 14.25 19,837 282.7 14.25 10.37 14.12 0.92 N.A. N.A.
PVFC PVF Capital Corp. of OH 15.00 2,323 34.8 15.75 11.17 14.50 3.45 240.91 23.25
PCCI Pacific Crest Capital of CA* 11.75 2,960 34.8 11.75 7.00 11.75 0.00 N.A. 62.07
PALM Palfed, Inc. of Aiken SC 14.50 5,228 75.8 14.75 11.37 14.50 0.00 -5.66 22.16
PBCI Pamrapo Bancorp, Inc. of NJ 18.87 3,231 61.0 22.50 18.25 18.87 0.00 235.17 -12.23
PFED Park Bancorp of Chicago IL 12.37 2,701 33.4 12.50 10.19 11.75 5.28 N.A. N.A.
Current Per Share Financials
_________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C>
LISB Long Island Bancorp of NY 1.87 1.70 21.17 21.17 211.86
MAFB MAF Bancorp of IL 1.21 2.11 23.07 19.73 301.63
MBLF MBLA Financial Corp. of MO(8) 0.85 1.12 20.67 20.67 167.94
MFBC MFB Corp. of Mishawaka IN 0.71 0.70 19.09 19.09 106.67
MLBC ML Bancorp of Villanova PA 1.11 1.04 11.63 11.26 159.14
MBB MSB Bancorp of Middletown NY* 0.44 0.49 19.59 7.70 299.31
MSBF MSB Financial Corp. of MI 1.22 1.50 19.26 19.26 96.07
MGNL Magna Bancorp of MS 1.25 1.54 9.16 8.72 94.77
MARN Marion Capital Holdings of IN 1.09 1.37 21.49 21.49 94.74
MFCX Marshalltown Fin. Corp. of IA(8) 0.05 0.36 13.71 13.71 88.01
MFSL Maryland Fed. Bancorp of MD 2.81 1.97 30.17 29.70 359.72
MASB MassBank Corp. of Reading MA* 3.46 3.26 32.59 32.59 327.55
MFLR Mayflower Co-Op. Bank of MA* 1.15 1.10 12.90 12.65 130.78
MECH Mechanics SB of Hartford CT* -0.44 -0.42 13.48 13.48 134.22
MDBK Medford Savings Bank of MA* 2.22 2.19 19.97 18.32 222.36
MERI Meritrust FSB of Thibodaux LA 1.59 2.70 21.67 21.67 298.52
MWBX Metro West of MA* 0.45 0.45 2.76 2.76 35.91
MSEA Metropolitan Bancorp of WA(8) 1.08 1.64 14.01 12.72 207.22
MCBS Mid Continent Bancshares of KS 1.55 1.78 18.25 18.24 168.43
MIFC Mid Iowa Financial Corp. of IA 0.62 0.62 6.42 6.41 68.48
MCBN Mid-Coast Bancorp of ME 0.82 1.39 21.37 21.37 243.29
MIDC Midconn Bank of Kensington CT* 0.96 1.20 18.00 15.16 185.14
MWBI Midwest Bancshares, Inc. of IA 2.58 3.86 25.98 25.98 394.58
MWFD Midwest Fed. Fin. Corp of WI 1.17 1.14 10.19 9.74 121.39
MFFC Milton Fed. Fin. Corp. of OH 0.50 0.65 14.75 14.75 79.70
MIVI Miss. View Hold. Co. of MN 0.99 0.93 14.01 14.01 76.18
MBSP Mitchell Bancorp of NC* 0.18 0.55 15.02 15.02 35.69
MBBC Monterey Bay Bancorp of CA 0.13 0.39 14.04 13.91 100.38
MORG Morgan Financial Corp. of CO 0.68 0.90 12.19 12.19 96.47
MSBK Mutual SB, FSB of Bay City MI 0.12 -0.08 9.23 9.23 158.53
NHTB NH Thrift Bancshares of NH 0.60 0.90 11.31 11.31 155.49
NSLB NS&L Bancorp of Neosho MO 0.66 0.60 15.84 15.84 67.96
NMSB Newmil Bancorp. of CT* 0.58 0.57 7.96 7.96 75.75
NFSL Newnan SB, FSB of Newnan GA 2.36 2.05 13.08 13.01 102.20
NASB North American SB of MO 3.68 3.48 22.21 21.37 326.41
NBSI North Bancshares of Chicago IL 0.36 0.66 16.50 16.50 109.03
FFFD North Central Bancshares of IA 0.74 0.88 14.71 14.71 51.93
NEBC Northeast Bancorp of ME* 0.66 0.63 13.16 11.14 186.76
NEIB Northeast Indiana Bncrp of IN 0.75 0.90 14.29 14.29 81.90
NSBK Northside SB of Bronx NY(8)* 3.99 3.49 26.27 26.05 337.68
NWEQ Northwest Equity Corp. of WI 0.66 0.86 12.48 12.48 102.80
NWSB Northwest SB, MHC of PA(29.9) 0.52 0.79 8.01 7.62 81.35
NSSY Norwalk Savings Society of CT* 1.90 1.56 19.21 18.43 266.37
NSSB Norwich Financial Corp. of CT* 1.12 1.09 13.90 12.59 128.96
NTMG Nutmeg FS&LA of CT 0.34 0.41 7.08 7.08 131.92
OHSL OHSL Financial Corp. of OH 0.96 1.44 20.58 20.58 177.95
OSBF OSB Fin. Corp. of Oshkosh WI(8) 0.08 1.01 26.76 26.76 215.92
OCFC Ocean Fin. Corp. of NJ -0.36 1.08 27.23 27.23 131.37
OFCP Ottawa Financial Corp. of MI 0.48 0.98 14.55 11.50 159.74
PFFB PFF Bancorp of Pomona CA -0.06 0.32 14.46 14.30 125.30
PVFC PVF Capital Corp. of OH 1.30 1.68 9.67 9.67 148.63
PCCI Pacific Crest Capital of CA* 1.08 0.92 8.10 8.10 89.57
PALM Palfed, Inc. of Aiken SC 0.45 0.73 10.10 9.63 126.22
PBCI Pamrapo Bancorp, Inc. of NJ 0.97 1.38 16.91 16.77 112.34
PFED Park Bancorp of Chicago IL 0.29 0.47 15.38 15.38 65.43
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
_______________________ _______________________________________________
52 Week (1) % Change From
Shares Market _______________ _______________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVSA Parkvale Financial Corp of PA 25.25 4,042 102.1 26.50 19.60 26.25 -3.81 204.95 14.77
PBIX Patriot Bank Corp. of PA 13.37 4,457 59.6 13.85 10.26 13.50 -0.96 N.A. 24.60
PEEK Peekskill Fin. Corp. of NY 13.44 3,820 51.3 14.50 11.12 13.37 0.52 N.A. 10.89
PFSB PennFed Fin. Services of NJ 20.12 4,853 97.6 20.75 14.50 20.12 0.00 N.A. 36.41
PWBC PennFirst Bancorp of PA 13.50 3,909 52.8 14.75 11.87 13.50 0.00 69.17 0.00
PWBK Pennwood SB of PA* 12.62 610 7.7 12.62 9.00 12.50 0.96 N.A. N.A.
PBKB People's SB of Brockton MA* 10.62 3,395 36.1 11.62 8.00 10.62 0.00 78.79 1.14
PFDC Peoples Bancorp of Auburn IN 20.00 2,325 46.5 21.50 18.75 20.50 -2.44 14.29 -3.01
PBCT Peoples Bank, MHC of CT(32.3)* 27.25 40,516 322.0 29.12 18.62 27.87 -2.22 246.25 43.42
PFFC Peoples Fin. Corp. of OH 13.00 1,491 19.4 13.25 10.87 13.00 0.00 N.A. N.A.
PHBK Peoples Heritage Fin Grp of ME* 25.75 25,200 648.9 28.25 19.00 27.25 -5.50 68.19 13.19
PBNB Peoples Sav. Fin. Corp. of CT* 27.75 1,905 52.9 30.19 19.00 27.50 0.91 181.16 44.16
PERM Permanent Bancorp of IN 20.25 2,130 43.1 20.25 14.00 18.50 9.46 N.A. 24.62
PMFI Perpetual Midwest Fin. of IA 18.75 1,917 35.9 22.00 16.00 19.06 -1.63 N.A. 13.64
PERT Perpetual of SC, MHC (46.8%) 22.00 1,505 15.5 22.00 20.25 21.37 2.95 N.A. N.A.
PCBC Perry Co. Fin. Corp. of MO 17.00 853 14.5 20.00 15.50 17.25 -1.45 N.A. -12.82
PHFC Pittsburgh Home Fin. of PA 13.12 2,182 28.6 13.62 9.50 13.25 -0.98 N.A. N.A.
PFSL Pocahnts Fed, MHC of AR (46.4) 17.25 1,625 12.9 17.25 14.25 17.25 0.00 N.A. 8.70
POBS Portsmouth Bank Shrs Inc of NH(8)* 13.62 5,740 78.2 15.20 12.62 14.00 -2.71 30.84 -9.62
PKPS Poughkeepsie SB of NY 5.25 12,552 65.9 5.63 4.75 5.12 2.54 -32.26 0.00
PRBC Prestige Bancorp of PA 13.00 963 12.5 13.75 9.75 12.87 1.01 N.A. N.A.
PETE Primary Bank of NH* 14.62 1,975 28.9 14.62 11.75 13.87 5.41 N.A. 15.85
PSAB Prime Bancorp, Inc. of PA 20.25 3,725 75.4 20.68 17.50 19.37 4.54 191.79 0.00
PFNC Progress Financial Corp. of PA 8.37 3,730 31.2 8.75 5.12 8.50 -1.53 -23.98 48.67
PSBK Progressive Bank, Inc. of NY* 23.00 3,899 89.7 24.00 17.17 23.02 -0.09 72.03 16.93
PROV Provident Fin. Holdings of CA 14.25 5,125 73.0 14.37 10.12 13.87 2.74 N.A. N.A.
PULB Pulaski SB, MHC of MO (29.0) 14.12 2,094 8.5 16.50 12.25 14.75 -4.27 N.A. -5.87
PULS Pulse Bancorp of S. River NJ 15.75 3,050 48.0 18.00 14.50 16.00 -1.56 27.32 -7.35
QCFB QCF Bancorp of Virginia MN 17.69 1,426 25.2 17.75 13.87 16.25 8.86 N.A. 19.93
QCBC Quaker City Bancorp of CA 16.50 3,801 62.7 17.50 12.62 16.37 0.79 120.00 18.96
QCSB Queens County SB of NY* 47.25 7,670 362.4 49.37 29.25 48.00 -1.56 N.A. 59.25
RCSB RCSB Financial, Inc. of NY* 27.87 15,386 428.8 30.50 21.56 29.31 -4.91 126.40 17.35
RARB Raritan Bancorp. of Raritan NJ* 23.25 1,531 35.6 23.50 20.25 23.00 1.09 138.46 8.14
REDF RedFed Bancorp of Redlands CA 13.25 7,083 93.8 13.50 8.37 13.16 0.68 N.A. 30.93
RELY Reliance Bancorp of NY 18.75 8,912 167.1 19.50 13.12 18.62 0.70 N.A. 28.25
RELI Reliance Bancshares Inc of WI(8)* 6.75 2,562 17.3 10.12 6.50 7.00 -3.57 N.A. N.A.
RFED Roosevelt Fin. Grp. Inc. of MO 18.94 42,158 798.5 19.75 15.63 18.62 1.72 385.64 -2.22
RVSB Rvrview SB,FSB MHC of WA(40.3) 16.75 2,196 13.2 17.25 14.09 16.75 0.00 N.A. 15.20
SCCB S. Carolina Comm. Bnshrs of SC 15.00 735 11.0 18.12 15.00 15.25 -1.64 N.A. -17.22
SBFL SB Fing. Lakes MHC of NY(33.0) 13.50 1,785 8.0 17.00 12.75 13.50 0.00 N.A. -16.92
SFED SFS Bancorp of Schenectady NY 14.87 1,278 19.0 16.00 11.50 15.00 -0.87 N.A. 14.38
SGVB SGV Bancorp of W. Covina CA 11.00 2,591 28.5 11.62 7.75 11.00 0.00 N.A. 12.82
SISB SIS Bank of Springfield MA* 23.25 5,723 133.1 24.25 16.12 23.94 -2.88 N.A. 42.03
SJSB SJS Bancorp of St. Joseph MI(8) 25.50 918 23.4 25.87 18.50 25.25 0.99 N.A. 29.11
SWCB Sandwich Co-Op. Bank of MA* 29.62 1,889 56.0 30.25 17.00 29.62 0.00 243.62 62.30
SFBM Security Bancorp of MT(8) 30.00 1,485 44.6 30.25 20.00 30.25 -0.83 287.10 42.86
SECP Security Capital Corp. of WI 73.25 9,205 674.3 73.25 54.75 71.00 3.17 N.A. 21.58
SFSL Security First Corp. of OH 16.62 4,972 82.6 17.00 11.50 15.50 7.23 5.52 16.63
SMFC Sho-Me Fin. Corp. of MO 21.62 1,646 35.6 22.00 14.50 21.62 0.00 N.A. 44.13
SOBI Sobieski Bancorp of S. Bend IN 14.25 884 12.6 16.00 11.75 15.00 -5.00 N.A. 9.62
SOSA Somerset Savings Bank of MA(8)* 2.00 16,652 33.3 2.12 1.12 1.97 1.52 -60.94 45.99
SSFC South Street Fin. Corp. of NC* 13.87 4,497 62.4 14.62 12.12 14.00 -0.93 N.A. N.A.
SMBC Southern Missouri Bncrp of MO 14.25 1,638 23.3 16.25 13.50 14.19 0.42 N.A. -5.00
SWBI Southwest Bancshares of IL 18.25 2,655 48.5 18.58 17.33 18.50 -1.35 82.50 3.28
SVRN Sovereign Bancorp of PA 13.00 49,334 641.3 13.62 9.29 12.75 1.96 190.83 34.85
Current Per Share Financials
_________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C>
PVSA Parkvale Financial Corp of PA 1.65 2.32 16.96 16.90 228.69
PBIX Patriot Bank Corp. of PA 0.31 0.52 11.53 11.53 109.84
PEEK Peekskill Fin. Corp. of NY 0.52 0.67 14.38 14.38 48.82
PFSB PennFed Fin. Services of NJ 1.12 1.76 18.58 14.91 235.42
PWBC PennFirst Bancorp of PA 0.73 1.11 12.52 11.35 179.28
PWBK Pennwood SB of PA* 0.24 0.24 15.17 15.17 75.78
PBKB People's SB of Brockton MA* 0.97 0.61 8.49 8.06 151.23
PFDC Peoples Bancorp of Auburn IN 1.38 1.81 18.36 18.36 120.44
PBCT Peoples Bank, MHC of CT(32.3)* 1.91 1.53 14.76 14.74 178.61
PFFC Peoples Fin. Corp. of OH 0.36 0.41 15.57 15.57 61.29
PHBK Peoples Heritage Fin Grp of ME* 1.72 1.88 14.96 13.46 176.84
PBNB Peoples Sav. Fin. Corp. of CT* 2.10 2.16 23.62 22.00 241.45
PERM Permanent Bancorp of IN 0.27 0.81 18.74 18.53 197.96
PMFI Perpetual Midwest Fin. of IA 0.36 0.76 17.68 17.68 206.42
PERT Perpetual of SC, MHC (46.8%) 1.36 1.36 19.18 19.18 134.33
PCBC Perry Co. Fin. Corp. of MO 0.80 0.90 17.69 17.69 94.25
PHFC Pittsburgh Home Fin. of PA 0.35 0.58 13.92 13.92 89.52
PFSL Pocahnts Fed, MHC of AR (46.4) 1.21 1.62 13.96 13.96 234.81
POBS Portsmouth Bank Shrs Inc of NH(8)* 1.06 0.86 11.66 11.66 46.80
PKPS Poughkeepsie SB of NY 0.98 1.56 5.59 5.59 68.58
PRBC Prestige Bancorp of PA 0.03 0.38 15.77 15.77 108.39
PETE Primary Bank of NH* -0.04 -0.05 13.45 13.41 209.79
PSAB Prime Bancorp, Inc. of PA 1.22 1.59 15.44 14.49 181.83
PFNC Progress Financial Corp. of PA 0.56 0.69 5.01 4.98 98.44
PSBK Progressive Bank, Inc. of NY* 2.36 2.43 18.65 16.33 227.25
PROV Provident Fin. Holdings of CA 0.23 -0.01 16.57 16.57 113.20
PULB Pulaski SB, MHC of MO (29.0) 0.76 0.70 10.93 10.93 85.70
PULS Pulse Bancorp of S. River NJ 1.14 1.73 12.61 12.61 164.75
QCFB QCF Bancorp of Virginia MN 1.32 1.32 18.35 18.35 104.01
QCBC Quaker City Bancorp of CA 0.40 0.91 17.54 17.48 194.16
QCSB Queens County SB of NY* 2.92 2.92 26.95 26.95 172.86
RCSB RCSB Financial, Inc. of NY* 2.56 2.25 18.08 17.47 263.14
RARB Raritan Bancorp. of Raritan NJ* 1.89 2.09 18.13 17.76 231.34
REDF RedFed Bancorp of Redlands CA -0.94 -0.57 9.86 9.86 122.30
RELY Reliance Bancorp of NY 0.89 1.46 16.78 11.33 205.28
RELI Reliance Bancshares Inc of WI(8)* 0.25 0.25 11.44 11.44 18.73
RFED Roosevelt Fin. Grp. Inc. of MO 0.83 1.79 10.46 9.91 214.61
RVSB Rvrview SB,FSB MHC of WA(40.3) 0.95 1.11 10.73 9.60 99.83
SCCB S. Carolina Comm. Bnshrs of SC 0.51 0.68 16.85 16.85 58.82
SBFL SB Fing. Lakes MHC of NY(33.0) -0.58 0.10 11.22 11.22 110.61
SFED SFS Bancorp of Schenectady NY 0.58 1.05 16.57 16.57 129.91
SGVB SGV Bancorp of W. Covina CA -0.01 0.33 12.07 12.07 133.10
SISB SIS Bank of Springfield MA* 4.06 4.07 16.96 16.96 224.46
SJSB SJS Bancorp of St. Joseph MI(8) 0.28 0.79 17.23 17.23 165.45
SWCB Sandwich Co-Op. Bank of MA* 2.09 2.04 19.93 18.82 243.98
SFBM Security Bancorp of MT(8) 1.32 1.57 20.83 17.94 257.45
SECP Security Capital Corp. of WI 3.07 4.14 60.32 60.32 379.62
SFSL Security First Corp. of OH 0.93 1.32 11.19 10.97 120.64
SMFC Sho-Me Fin. Corp. of MO 1.12 1.48 18.10 18.10 177.46
SOBI Sobieski Bancorp of S. Bend IN 0.10 0.41 15.62 15.62 91.23
SOSA Somerset Savings Bank of MA(8)* 0.14 0.14 1.74 1.74 30.67
SSFC South Street Fin. Corp. of NC* 0.62 0.66 13.15 13.15 46.25
SMBC Southern Missouri Bncrp of MO 0.90 0.84 16.01 16.01 97.59
SWBI Southwest Bancshares of IL 1.12 1.54 14.71 14.71 141.72
SVRN Sovereign Bancorp of PA 0.85 1.18 7.37 5.05 189.82
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of December 13, 1996
Market Capitalization Price Change Data
______________________ _______________________________________________
52 Week (1) % Change From
Shares Market _______________ _______________________
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
_____________________ ______ _______ _______ _______ _______ _______ _______ _______ ________
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STFR St. Francis Cap. Corp. of WI 26.50 5,476 145.1 28.00 22.25 26.50 0.00 N.A. 13.98
SPBC St. Paul Bancorp, Inc. of IL 27.62 18,082 499.4 28.75 22.25 27.62 0.00 63.72 8.31
STND Standard Fin. of Chicago IL 21.00 16,197 340.1 21.25 13.50 19.87 5.69 N.A. 43.64
SFFC StateFed Financial Corp. of IA 16.50 789 13.0 18.25 15.00 16.50 0.00 N.A. -8.94
SFIN Statewide Fin. Corp. of NJ 13.87 4,995 69.3 14.00 11.25 13.94 -0.50 N.A. 6.20
STSA Sterling Financial Corp. of WA 13.75 5,537 76.1 15.00 12.75 13.75 0.00 51.27 0.00
SSBK Strongsville SB of OH 22.50 2,531 56.9 22.50 18.50 22.50 0.00 N.A. 15.38
SFSB SuburbFed Fin. Corp. of IL 19.00 1,253 23.8 20.50 16.00 20.37 -6.73 184.86 15.15
SBCN Suburban Bancorp. of OH 15.00 1,475 22.1 18.50 14.25 15.25 -1.64 N.A. -18.92
THRD TF Financial Corp. of PA 16.00 4,288 68.6 16.25 13.75 15.87 0.82 N.A. 4.10
ROSE TR Financial Corp. of NY 31.62 8,957 283.2 31.62 23.37 30.25 4.53 N.A. 24.00
TPNZ Tappan Zee Fin. Corp. of NY 13.75 1,539 21.2 14.12 11.37 14.00 -1.79 N.A. 8.95
PTRS The Potters S&L Co. of OH 18.75 506 9.5 19.50 15.50 18.91 -0.85 N.A. 9.91
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 16.00 9,037 49.9 16.12 12.37 15.63 2.37 N.A. 23.08
TRIC Tri-County Bancorp of WY 19.00 609 11.6 19.00 16.50 18.25 4.11 N.A. 15.15
THBC Troy Hill Bancorp of PA(8) 20.00 1,068 21.4 20.12 12.75 20.00 0.00 N.A. 53.85
TWIN Twin City Bancorp of TN 17.25 861 14.9 18.25 16.00 17.50 -1.43 N.A. 1.47
UFRM United FS&LA of Rocky Mount NC 7.75 3,065 23.8 8.50 7.00 8.37 -7.41 138.46 3.33
UBMT United SB, FA of MT 18.75 1,223 22.9 19.75 17.50 19.75 -5.06 78.57 7.14
VABF Va. Beach Fed. Fin. Corp of VA 9.25 4,967 45.9 9.50 6.81 9.38 -1.39 97.23 19.35
VFFC Virginia First Savings of VA 12.87 5,743 73.9 14.62 10.75 12.75 0.94 ***.** 13.19
WHGB WHG Bancshares of MD 12.81 1,620 20.8 13.75 10.87 12.69 0.95 N.A. N.A.
WSFS WSFS Financial Corp. of DE* 9.87 13,842 136.6 10.37 6.75 9.87 0.00 36.14 9.67
WVFC WVS Financial Corp. of PA* 24.25 1,737 42.1 24.25 18.62 23.00 5.43 N.A. 26.83
WLDN Walden Bancorp of MA(8)* 34.81 5,115 178.1 35.50 18.00 34.50 0.90 388.90 83.21
WRNB Warren Bancorp of Peabody MA* 15.63 3,654 57.1 15.75 10.25 14.87 5.11 363.80 38.93
WFSL Washington FS&LA of Seattle WA 25.75 40,695 1,047.9 27.50 19.69 25.75 0.00 76.49 10.52
WAMU Washington Mutual Inc. of WA* 42.37 72,155 3,057.2 45.50 26.25 40.37 4.95 128.29 46.76
WYNE Wayne Bancorp of NJ 14.37 2,231 32.1 14.75 10.75 14.19 1.27 N.A. N.A.
WAYN Wayne S&L Co., MHC of OH(46.7) 23.00 1,498 15.2 24.00 19.00 23.00 0.00 N.A. 4.97
WCFB Webster CityFSB,MHC of IA(45.2 13.06 2,100 12.4 13.50 12.12 13.50 -3.26 N.A. 4.48
WBST Webster Financial Corp. of CT 37.75 8,108 306.1 37.87 26.75 37.12 1.70 299.89 27.97
WEFC Wells Fin. Corp. of Wells MN 13.00 2,078 27.0 13.25 10.00 12.56 3.50 N.A. 18.18
WCBI WestCo Bancorp of IL 21.50 2,601 55.9 22.25 17.83 21.50 0.00 115.00 20.58
WSTR WesterFed Fin. Corp. of MT 18.12 4,395 79.6 18.75 13.87 18.62 -2.69 N.A. 9.03
WOFC Western Ohio Fin. Corp. of OH 21.00 2,187 45.9 24.00 19.50 20.31 3.40 N.A. -9.68
WWFC Westwood Fin. Corp. of NJ 16.00 647 10.4 16.00 10.25 15.25 4.92 N.A. N.A.
WEHO Westwood Hmstd Fin Corp of OH 11.75 2,616 30.7 11.87 10.37 11.50 2.17 N.A. N.A.
WFCO Winton Financial Corp. of OH(8) 12.00 1,986 23.8 15.00 10.87 11.50 4.35 N.A. 10.40
FFWD Wood Bancorp of OH 16.50 1,498 24.7 17.25 11.83 16.37 0.79 N.A. 37.50
YFCB Yonkers Fin. Corp. of NY 12.87 3,571 46.0 13.00 9.31 12.12 6.19 N.A. N.A.
YFED York Financial Corp. of PA 16.37 7,416 121.4 18.41 14.54 16.75 -2.27 73.23 6.71
Current Per Share Financials
__________________________________________
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
_____________________ ________ _______ _______ _______ _______
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C>
STFR St. Francis Cap. Corp. of WI 1.91 1.88 22.86 21.79 256.41
SPBC St. Paul Bancorp, Inc. of IL 1.37 2.08 20.55 20.48 236.49
STND Standard Fin. of Chicago IL 0.74 1.01 16.26 16.23 144.45
SFFC StateFed Financial Corp. of IA 0.93 1.17 18.48 18.48 102.74
SFIN Statewide Fin. Corp. of NJ 0.47 1.09 13.08 13.05 132.55
STSA Sterling Financial Corp. of WA 0.05 0.69 10.78 8.83 276.56
SSBK Strongsville SB of OH 1.28 1.68 16.56 16.24 214.22
SFSB SuburbFed Fin. Corp. of IL 0.66 1.42 20.26 20.15 311.98
SBCN Suburban Bancorp. of OH 0.23 0.83 17.21 17.21 142.33
THRD TF Financial Corp. of PA 0.77 1.07 16.72 14.51 154.64
ROSE TR Financial Corp. of NY 3.24 2.60 22.26 22.26 350.62
TPNZ Tappan Zee Fin. Corp. of NY 0.52 0.48 13.96 13.96 77.88
PTRS The Potters S&L Co. of OH 0.06 0.89 20.36 20.36 248.02
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 0.95 0.74 11.24 11.00 57.99
TRIC Tri-County Bancorp of WY 0.78 1.08 20.80 20.80 130.50
THBC Troy Hill Bancorp of PA(8) 0.82 0.96 16.87 16.87 93.14
TWIN Twin City Bancorp of TN 0.94 1.19 15.58 15.58 124.35
UFRM United FS&LA of Rocky Mount NC 0.23 0.41 6.44 6.44 86.00
UBMT United SB, FA of MT 1.05 1.28 19.89 19.89 88.26
VABF Va. Beach Fed. Fin. Corp of VA 0.04 0.27 8.03 8.03 121.61
VFFC Virginia First Savings of VA 1.78 1.78 10.64 10.32 136.05
WHGB WHG Bancshares of MD 0.43 0.43 14.36 14.36 60.23
WSFS WSFS Financial Corp. of DE* 1.34 1.36 5.83 5.77 94.40
WVFC WVS Financial Corp. of PA* 1.76 2.16 19.72 19.72 153.03
WLDN Walden Bancorp of MA(8)* 2.09 2.32 18.58 16.00 205.16
WRNB Warren Bancorp of Peabody MA* 1.68 1.65 8.88 8.88 96.86
WFSL Washington FS&LA of Seattle WA 1.96 2.18 14.20 13.52 125.69
WAMU Washington Mutual Inc. of WA* 2.72 3.01 19.63 17.69 310.63
WYNE Wayne Bancorp of NJ 0.02 0.13 16.10 16.10 107.40
WAYN Wayne S&L Co., MHC of OH(46.7) 0.41 1.00 15.04 15.04 167.46
WCFB Webster CityFSB,MHC of IA(45.2 0.40 0.55 10.30 10.30 45.00
WBST Webster Financial Corp. of CT 2.33 2.88 24.86 19.24 491.42
WEFC Wells Fin. Corp. of Wells MN 0.52 0.88 13.36 13.36 96.88
WCBI WestCo Bancorp of IL 1.17 1.58 18.34 18.34 118.33
WSTR WesterFed Fin. Corp. of MT 0.75 1.10 17.81 17.81 128.81
WOFC Western Ohio Fin. Corp. of OH 1.05 0.86 25.44 23.93 152.05
WWFC Westwood Fin. Corp. of NJ 0.06 1.02 14.75 12.93 144.74
WEHO Westwood Hmstd Fin Corp of OH -0.03 0.16 15.10 15.10 45.82
WFCO Winton Financial Corp. of OH(8) 1.11 0.94 10.62 10.34 142.41
FFWD Wood Bancorp of OH 0.85 1.10 13.40 13.40 101.72
YFCB Yonkers Fin. Corp. of NY 0.43 0.64 13.72 13.72 72.68
YFED York Financial Corp. of PA 0.89 1.22 12.37 12.37 155.67
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured
Thrifts(no MHCs)
______________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(322) 12.89 12.70 0.63 5.40 4.52 0.84 7.42 0.89 123.90 0.85
NYSE Traded Companies(12) 6.03 5.67 0.51 7.43 4.17 0.70 11.28 1.43 65.78 1.26
AMEX Traded Companies(17) 17.38 17.30 0.73 5.36 4.56 0.97 6.98 0.63 110.41 0.65
NASDAQ Listed OTC Companies(293) 12.91 12.71 0.63 5.32 4.53 0.83 7.29 0.87 127.14 0.85
California Companies(25) 7.39 7.26 0.06 0.72 3.20 0.25 3.67 2.15 56.07 1.31
Florida Companies(7) 8.24 8.05 0.34 3.88 3.06 0.55 6.81 1.20 84.57 1.17
Mid-Atlantic Companies(66) 11.11 10.74 0.62 6.62 5.18 0.87 9.14 1.05 90.20 1.02
Mid-West Companies(151) 14.39 14.25 0.69 5.47 4.59 0.88 7.13 0.62 148.82 0.69
New England Companies(10) 8.26 7.91 0.51 6.49 5.60 0.61 7.75 0.75 86.86 0.98
North-West Companies(6) 10.11 9.83 0.78 7.35 4.34 1.01 10.10 0.49 148.74 0.70
South-East Companies(42) 15.05 14.91 0.78 6.15 4.37 1.02 8.02 0.98 122.95 0.89
South-West Companies(7) 11.26 11.09 0.37 1.90 0.99 0.59 5.22 0.79 74.50 0.83
Western Companies (Excl CA)(8) 17.25 17.22 0.92 6.28 4.92 1.12 7.55 0.42 244.04 0.61
Thrift Strategy(249) 14.39 14.21 0.64 4.85 4.28 0.86 6.70 0.78 131.60 0.78
Mortgage Banker Strategy(39) 7.39 7.04 0.63 8.22 5.70 0.70 9.52 1.20 91.45 0.99
Real Estate Strategy(15) 8.47 8.38 0.48 3.76 5.55 0.79 8.29 1.92 103.62 1.42
Diversified Strategy(15) 7.89 7.69 0.71 8.75 4.59 1.00 13.22 0.87 100.09 1.19
Retail Banking Strategy(4) 8.54 8.30 0.34 4.87 3.97 0.50 6.71 0.69 108.06 0.93
Companies Issuing Dividends(259) 12.93 12.70 0.71 6.22 4.91 0.92 8.16 0.78 123.52 0.83
Companies Without Dividends(63) 12.74 12.66 0.29 1.94 2.80 0.50 4.34 1.30 125.35 0.93
Equity/Assets LESS THAN6%(34) 5.03 4.72 0.24 4.67 4.78 0.43 8.21 1.63 80.42 1.05
Equity/Assets 6-12%(152) 8.58 8.30 0.58 6.75 5.09 0.79 9.09 0.99 127.59 0.99
Equity/Assets GREATER THAN12%(136) 19.58 19.50 0.77 4.08 3.82 0.99 5.38 0.58 130.76 0.65
Converted Last 3 Mths (no MHC)(7) 23.66 23.66 0.64 3.49 3.43 0.85 4.80 0.53 127.19 0.54
Actively Traded Companies(51) 8.35 8.08 0.72 8.76 6.15 0.97 12.15 1.31 89.29 0.95
Market Value Below $20 Million(77) 15.01 14.91 0.53 3.56 4.02 0.73 5.06 0.93 112.38 0.71
Holding Company Structure(279) 13.45 13.26 0.62 5.20 4.39 0.84 7.22 0.85 124.43 0.82
Assets Over $1 Billion(67) 7.97 7.47 0.56 6.95 4.89 0.78 10.11 1.03 85.87 1.01
Assets $500 Million-$1 Billion(54) 10.90 10.70 0.66 6.70 5.59 0.88 8.77 1.20 127.81 0.97
Assets $250-$500 Million(71) 11.22 11.07 0.58 5.46 4.50 0.80 7.44 0.82 156.15 0.84
Assets less than $250 Million(130) 17.23 17.18 0.67 4.02 3.90 0.87 5.43 0.70 125.48 0.72
Goodwill Companies(133) 8.88 8.39 0.59 6.46 5.01 0.79 9.03 0.95 103.99 0.94
Non-Goodwill Companies(189) 15.63 15.63 0.65 4.68 4.18 0.87 6.33 0.84 138.21 0.79
Acquirors of FSLIC Cases(14) 6.80 6.42 0.64 8.35 5.60 0.95 13.30 1.43 52.85 0.84
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured
Thrifts(no MHCs)
______________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(322) 17.23 115.38 14.01 118.28 15.33 0.35 1.89 33.60
NYSE Traded Companies(12) 17.85 158.36 10.40 172.21 14.78 0.46 1.33 25.08
AMEX Traded Companies(17) 18.13 105.48 17.10 106.26 15.62 0.40 2.68 51.99
NASDAQ Listed OTC Companies(293) 17.15 114.39 13.98 117.00 15.34 0.35 1.87 32.89
California Companies(25) 15.01 120.34 8.57 124.07 14.09 0.26 0.96 19.34
Florida Companies(7) 19.19 115.34 9.08 119.32 16.28 0.19 0.97 16.14
Mid-Atlantic Companies(66) 15.45 116.00 12.19 120.16 13.93 0.35 1.85 34.60
Mid-West Companies(151) 17.71 111.98 15.15 113.50 15.96 0.35 1.89 30.73
New England Companies(10) 17.81 109.86 8.78 120.12 14.34 0.47 2.31 39.70
North-West Companies(6) 17.85 156.30 14.80 164.97 16.91 0.34 1.41 27.55
South-East Companies(42) 17.71 122.14 17.45 124.84 15.42 0.42 2.48 47.07
South-West Companies(7) 18.36 101.78 11.05 107.77 16.63 0.30 1.69 38.27
Western Companies (Excl CA)(8) 19.75 114.06 18.14 114.33 15.87 0.49 2.82 45.67
Thrift Strategy(249) 17.75 108.33 14.94 110.46 15.70 0.35 2.00 36.29
Mortgage Banker Strategy(39) 14.79 136.13 9.95 143.82 14.25 0.33 1.49 22.65
Real Estate Strategy(15) 11.94 125.46 10.25 126.70 13.21 0.18 0.85 17.96
Diversified Strategy(15) 19.38 173.38 14.06 179.29 13.84 0.69 2.39 45.65
Retail Banking Strategy(4) 12.92 111.69 9.71 114.47 18.15 0.14 1.25 0.00
Companies Issuing Dividends(259) 17.37 118.64 14.42 121.94 15.17 0.44 2.34 41.72
Companies Without Dividends(63) 16.08 101.84 12.30 103.18 16.33 0.00 0.00 0.00
Equity/Assets LESS THAN6%(34) 15.68 141.12 7.13 145.94 14.12 0.28 1.18 17.82
Equity/Assets 6-12%(152) 16.22 123.95 10.64 128.92 13.90 0.40 1.94 33.33
Equity/Assets GREATER THAN12%(136) 19.23 99.78 19.41 100.37 17.68 0.33 2.02 38.09
Converted Last 3 Mths (no MHC)(7) 19.26 86.78 20.49 86.78 17.92 0.00 0.00 0.00
Actively Traded Companies(51) 15.84 144.24 11.80 150.95 12.96 0.53 2.04 29.22
Market Value Below $20 Million(77) 17.50 92.65 13.91 93.73 16.24 0.28 1.87 34.56
Holding Company Structure(279) 17.63 114.69 14.48 117.48 15.52 0.37 1.93 34.62
Assets Over $1 Billion(67) 17.00 145.98 11.31 155.25 14.41 0.49 1.75 33.05
Assets $500 Million-$1 Billion(54) 16.21 119.47 12.84 122.66 14.39 0.31 1.69 29.85
Assets $250-$500 Million(71) 17.11 112.72 12.37 114.38 15.21 0.33 1.94 30.93
Assets less than $250 Million(130) 17.95 98.87 16.80 99.51 16.53 0.31 2.02 37.06
Goodwill Companies(133) 17.01 131.21 11.32 138.70 14.47 0.41 1.86 33.30
Non-Goodwill Companies(189) 17.42 104.62 15.85 104.62 16.07 0.32 1.91 33.83
Acquirors of FSLIC Cases(14) 16.67 145.58 10.44 157.38 13.46 0.47 1.91 28.08
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common
equity and assets balances; ROI (return on investment) is current EPS
divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have
been adjusted for stock splits, stock dividends, and secondary
offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations.
The information provided in this report has been obtained from
sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured
Thrifts(no MHCs)
_____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(75) 10.75 10.39 0.89 9.89 6.96 0.90 9.92 1.36 114.68 1.41
NYSE Traded Companies(3) 7.11 5.51 0.58 8.33 6.12 0.65 9.83 2.53 29.93 1.19
AMEX Traded Companies(5) 12.98 12.73 0.56 6.17 4.72 0.52 5.54 1.37 94.31 1.46
NASDAQ Listed OTC Companies(67) 10.75 10.44 0.93 10.30 7.20 0.95 10.30 1.29 120.90 1.42
California Companies(3) 8.79 8.79 1.05 13.18 8.69 0.98 12.20 2.23 50.97 1.43
Mid-Atlantic Companies(20) 10.47 9.88 0.77 8.52 6.12 0.83 9.35 1.75 73.94 1.33
New England Companies(42) 9.11 8.81 0.95 11.19 7.89 0.92 10.76 1.23 103.68 1.58
North-West Companies(4) 11.16 10.68 1.11 11.18 6.80 1.12 11.36 0.23 383.36 0.99
South-East Companies(4) 27.51 27.51 0.56 1.30 1.67 0.85 2.07 1.06 278.93 0.72
Thrift Strategy(48) 12.28 11.81 0.85 8.55 6.45 0.87 8.54 1.24 108.51 1.37
Mortgage Banker Strategy(10) 6.81 6.63 0.81 11.42 8.05 0.83 11.83 1.17 165.59 1.16
Real Estate Strategy(8) 10.25 10.25 1.28 13.35 7.94 1.25 13.00 1.56 110.68 1.70
Diversified Strategy(7) 6.99 6.73 1.16 16.92 10.01 1.17 17.02 2.27 109.49 1.92
Retail Banking Strategy(2) 6.39 6.24 0.08 1.30 1.57 0.07 1.16 1.17 59.03 1.03
Companies Issuing Dividends(55) 9.24 8.74 0.95 10.70 7.59 0.94 10.53 1.26 115.61 1.40
Companies Without Dividends(20) 14.69 14.68 0.74 7.78 5.32 0.81 8.30 1.64 112.08 1.44
Equity/Assets LESS THAN6%(8) 5.66 5.52 0.62 10.90 7.47 0.64 11.35 2.56 47.53 1.32
Equity/Assets 6-12%(51) 8.37 7.88 0.95 11.43 7.89 0.94 11.31 1.31 111.09 1.53
Equity/Assets GREATER THAN12%(16) 20.79 20.69 0.85 4.56 3.79 0.94 4.82 0.81 177.52 1.08
Converted Last 3 Mths (no MHC)(2) 25.20 25.20 1.11 4.36 4.22 1.15 4.51 0.06 659.32 0.48
Actively Traded Companies(28) 8.44 8.08 0.99 11.85 8.38 1.00 11.88 1.13 93.85 1.45
Market Value Below $20 Million(12) 13.73 13.52 0.66 7.66 6.63 0.71 7.22 1.43 59.43 1.18
Holding Company Structure(47) 11.69 11.34 0.98 10.28 7.24 1.02 10.50 1.11 123.57 1.45
Assets Over $1 Billion(17) 7.97 7.39 1.03 12.89 8.15 1.07 13.59 1.85 84.38 1.48
Assets $500 Million-$1 Billion(18) 10.06 9.48 0.94 9.87 7.15 0.87 8.92 1.10 111.81 1.53
Assets $250-$500 Million(22) 10.28 10.05 0.80 9.19 6.25 0.84 9.71 1.26 128.14 1.44
Assets less than $250 Million(18) 14.42 14.27 0.83 8.17 6.64 0.87 7.89 1.26 129.71 1.21
Goodwill Companies(38) 7.97 7.21 0.81 10.17 7.21 0.81 10.27 1.35 89.01 1.38
Non-Goodwill Companies(37) 13.28 13.28 0.96 9.64 6.74 0.99 9.60 1.36 141.21 1.44
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured
Thrifts(no MHCs)
_____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(75) 13.16 127.62 12.99 133.38 13.53 0.37 1.82 24.11
NYSE Traded Companies(3) 17.47 141.84 10.47 130.69 15.06 0.27 0.54 10.75
AMEX Traded Companies(5) 10.09 112.47 13.36 117.07 15.49 0.52 2.59 36.88
NASDAQ Listed OTC Companies(67) 13.02 128.20 13.10 134.91 13.31 0.37 1.82 24.15
California Companies(3) 11.52 125.88 11.30 125.92 12.41 0.00 0.00 0.00
Mid-Atlantic Companies(20) 14.42 126.05 12.56 135.07 13.82 0.38 1.63 19.21
New England Companies(42) 12.52 128.93 11.49 133.76 13.35 0.44 2.29 30.71
North-West Companies(4) 12.94 156.33 15.78 165.26 12.70 0.44 1.87 28.40
South-East Companies(4) 22.37 96.26 26.69 96.26 21.02 0.00 0.00 0.00
Thrift Strategy(48) 13.62 119.86 13.88 126.64 14.04 0.38 1.88 26.64
Mortgage Banker Strategy(10) 12.32 138.32 9.46 141.76 12.84 0.40 1.91 15.25
Real Estate Strategy(8) 13.13 150.47 15.70 150.47 13.29 0.30 1.42 19.12
Diversified Strategy(7) 11.75 156.35 10.90 163.78 11.90 0.39 1.66 22.61
Retail Banking Strategy(2) 0.00 97.00 6.20 99.11 0.00 0.32 1.88 0.00
Companies Issuing Dividends(55) 12.97 132.37 12.10 140.40 13.40 0.52 2.52 32.33
Companies Without Dividends(20) 13.95 115.23 15.32 115.44 14.03 0.00 0.00 0.00
Equity/Assets LESS THAN6%(8) 13.53 135.50 7.64 139.02 14.13 0.15 1.16 13.77
Equity/Assets 6-12%(51) 12.44 133.53 11.18 141.39 12.83 0.47 2.24 28.39
Equity/Assets GREATER THAN12%(16) 17.52 105.13 21.36 105.99 17.48 0.20 0.85 16.84
Converted Last 3 Mths (no MHC)(2) 22.37 103.24 26.09 103.24 21.02 0.00 0.00 0.00
Actively Traded Companies(28) 12.85 135.22 11.28 141.70 12.69 0.50 2.36 29.97
Market Value Below $20 Million(12) 12.42 99.36 13.00 102.72 13.64 0.23 1.55 19.87
Holding Company Structure(47) 12.78 129.15 14.27 137.45 12.93 0.42 2.00 24.77
Assets Over $1 Billion(17) 13.38 151.52 12.24 156.37 13.26 0.51 1.87 21.78
Assets $500 Million-$1 Billion(18) 11.37 125.08 12.55 139.79 13.11 0.44 2.17 27.75
Assets $250-$500 Million(22) 14.13 128.06 12.36 131.66 13.75 0.34 1.69 26.47
Assets less than $250 Million(18) 13.30 108.55 14.86 110.86 13.94 0.24 1.62 20.16
Goodwill Companies(38) 13.49 131.56 10.52 143.98 13.71 0.50 2.28 29.77
Non-Goodwill Companies(37) 12.82 124.03 15.25 124.03 13.35 0.26 1.40 19.34
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common
equity and assets balances; ROI (return on investment) is current EPS
divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have
been adjusted for stock splits, stock dividends, and secondary
offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations.
The information provided in this report has been obtained from
sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
__________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 11.13 10.88 0.53 4.72 3.35 0.77 7.13 0.59 152.96 0.83
BIF-Insured Thrifts(2) 9.98 9.97 0.45 6.13 2.75 0.49 6.00 2.17 65.43 2.02
NASDAQ Listed OTC Companies(21) 11.02 10.78 0.52 4.86 3.29 0.75 7.01 0.76 143.74 0.95
Florida Companies(3) 9.79 9.65 0.73 7.20 4.70 0.92 9.30 0.48 114.11 0.79
Mid-Atlantic Companies(8) 10.45 10.02 0.20 1.71 1.10 0.59 5.30 1.05 186.31 1.11
Mid-West Companies(7) 12.08 12.06 0.53 4.77 3.60 0.71 6.62 0.57 119.04 0.76
New England Companies(1) 8.26 8.25 1.10 13.97 7.01 0.88 11.19 1.42 85.13 1.82
North-West Companies(1) 10.75 9.62 0.99 9.12 5.67 1.16 10.65 0.20 166.22 0.52
South-East Companies(1) 14.28 14.28 1.01 7.09 6.18 1.01 7.09 0.00 0.00 1.08
Thrift Strategy(19) 11.18 10.99 0.46 4.11 2.95 0.72 6.58 0.75 145.87 0.92
Mortgage Banker Strategy(1) 10.75 9.62 0.99 9.12 5.67 1.16 10.65 0.20 166.22 0.52
Diversified Strategy(1) 8.26 8.25 1.10 13.97 7.01 0.88 11.19 1.42 85.13 1.82
Companies Issuing Dividends(20) 10.85 10.60 0.49 4.74 3.14 0.73 7.01 0.76 143.74 0.94
Companies Without Dividends(1) 14.28 14.28 1.01 7.09 6.18 1.01 7.09 0.00 0.00 1.08
Equity/Assets LESS THAN6%(1) 5.95 5.95 0.54 9.00 7.01 0.72 12.04 0.32 141.55 1.25
Equity/Assets 6-12%(14) 9.56 9.23 0.41 4.37 2.67 0.69 7.08 0.82 102.35 0.99
Equity/Assets GREATER THAN12%(6) 16.10 16.10 0.83 5.40 4.30 0.92 5.83 0.64 289.16 0.77
Actively Traded Companies(1) 9.26 8.11 0.47 5.02 3.50 0.86 9.08 0.75 70.10 1.01
Market Value Below $20 Million(1) 11.52 11.49 0.19 1.60 1.68 0.47 3.96 0.37 131.69 0.59
Holding Company Structure(1) 9.26 8.11 0.47 5.02 3.50 0.86 9.08 0.75 70.10 1.01
Assets Over $1 Billion(4) 8.67 8.13 0.68 7.81 4.14 0.91 9.96 0.88 109.33 1.25
Assets $500 Million-$1 Billion(5) 9.54 9.23 0.49 4.59 3.59 0.71 6.97 0.65 64.01 0.81
Assets $250-$500 Million(4) 9.75 9.73 0.49 5.32 3.90 0.78 8.46 0.27 357.67 0.62
Assets less than $250 Million(8) 13.56 13.42 0.47 3.28 2.42 0.67 4.84 1.03 86.73 1.02
Goodwill Companies(10) 9.28 8.77 0.57 6.20 3.69 0.83 8.72 0.60 128.74 0.89
Non-Goodwill Companies(11) 12.44 12.44 0.48 3.76 2.96 0.68 5.62 0.90 157.25 0.99
MHC Institutions(21) 11.02 10.78 0.52 4.86 3.29 0.75 7.01 0.76 143.74 0.95
MHC Converted Last 3 Months(1) 14.28 14.28 1.01 7.09 6.18 1.01 7.09 0.00 0.00 1.08
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
__________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 16.97 135.43 14.84 140.09 18.38 0.61 3.48 50.56
BIF-Insured Thrifts(2) 14.27 152.55 14.67 152.68 17.81 0.62 3.41 46.07
NASDAQ Listed OTC Companies(21) 16.58 137.14 14.82 141.35 18.34 0.61 3.47 50.00
Florida Companies(3) 17.59 149.74 14.23 152.94 17.52 0.93 4.26 71.32
Mid-Atlantic Companies(8) 0.00 131.39 13.69 139.14 17.92 0.46 3.05 59.34
Mid-West Companies(7) 16.42 131.21 15.64 131.45 20.03 0.72 4.40 69.42
New England Companies(1) 14.27 184.62 15.26 184.87 17.81 0.88 3.23 46.07
North-West Companies(1) 17.63 156.10 16.78 174.48 15.09 0.22 1.31 23.16
South-East Companies(1) 16.18 114.70 16.38 114.70 16.18 0.00 0.00 0.00
Thrift Strategy(19) 16.84 133.45 14.69 137.09 18.61 0.61 3.61 55.12
Mortgage Banker Strategy(1) 17.63 156.10 16.78 174.48 15.09 0.22 1.31 23.16
Diversified Strategy(1) 14.27 184.62 15.26 184.87 17.81 0.88 3.23 46.07
Companies Issuing Dividends(20) 16.65 138.32 14.74 142.76 18.49 0.64 3.66 57.14
Companies Without Dividends(1) 16.18 114.70 16.38 114.70 16.18 0.00 0.00 0.00
Equity/Assets LESS THAN6%(1) 14.26 123.57 7.35 123.57 10.65 0.84 4.87 69.42
Equity/Assets 6-12%(14) 16.77 142.12 13.40 148.13 18.54 0.60 3.14 55.09
Equity/Assets GREATER THAN12%(6) 17.38 125.92 20.28 125.92 19.73 0.57 4.12 0.00
Actively Traded Companies(1) 0.00 142.97 13.23 163.19 15.79 0.36 2.00 57.14
Market Value Below $20 Million(1) 0.00 96.08 11.06 96.30 24.04 0.40 3.20 0.00
Holding Company Structure(1) 0.00 142.97 13.23 163.19 15.79 0.36 2.00 57.14
Assets Over $1 Billion(4) 16.28 168.50 14.57 179.11 16.05 0.75 3.15 58.73
Assets $500 Million-$1 Billion(5) 16.90 128.44 12.28 133.86 18.77 0.62 3.48 65.61
Assets $250-$500 Million(4) 14.26 139.38 13.41 139.74 17.76 0.79 3.87 69.42
Assets less than $250 Million(8) 17.46 124.70 16.93 127.02 19.84 0.44 3.43 11.58
Goodwill Companies(10) 16.73 152.18 13.92 161.54 18.00 0.61 2.90 51.30
Non-Goodwill Companies(11) 16.48 124.84 15.56 124.84 18.68 0.61 3.94 47.83
MHC Institutions(21) 16.58 137.14 14.82 141.35 18.34 0.61 3.47 50.00
MHC Converted Last 3 Months(1) 16.18 114.70 16.38 114.70 16.18 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month
data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common
equity and assets balances; ROI (return on investment) is current EPS
divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have
been adjusted for stock splits, stock dividends, and secondary
offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations.
The information provided in this report has been obtained from
sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
_____________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA 3.93 3.30 0.13 2.91 1.97 0.44 9.73 2.14 36.71 1.23
CAL CalFed Inc. of Los Angeles CA(8) 4.63 4.63 0.35 7.84 4.16 0.56 12.42 1.16 103.40 1.66
CSA Coast Savings Financial of CA 4.83 4.76 0.12 2.40 1.52 0.47 9.42 1.53 48.84 1.08
CFB Commercial Federal Corp. of NE 5.39 4.82 0.62 10.78 6.28 0.88 15.44 1.07 69.60 1.01
DME Dime Savings Bank, FSB of NY* 5.19 5.14 0.38 7.63 4.81 0.65 12.90 2.45 24.13 1.09
DSL Downey Financial Corp. of CA 7.74 7.62 0.43 5.30 4.24 0.69 8.48 1.36 44.87 0.68
FRC First Republic Bancorp of CA* 5.56 5.56 0.54 9.54 8.53 0.51 8.95 2.22 38.76 0.97
FED FirstFed Fin. Corp. of CA 4.38 4.31 0.06 1.27 1.03 0.29 6.34 2.15 83.45 2.42
GLN Glendale Fed. Bk, FSB of CA 5.27 4.89 -0.04 -0.86 -0.63 0.36 6.98 1.76 66.28 1.56
GDW Golden West Fin. Corp. of CA 6.13 6.13 1.00 15.50 9.97 1.23 19.03 1.37 35.24 0.59
GWF Great Western Fin. Corp. of CA 5.63 4.95 0.42 7.48 4.58 0.68 12.07 1.79 41.34 1.03
GPT GreenPoint Fin. Corp. of NY* 10.58 5.84 0.82 7.83 5.02 0.80 7.64 2.91 26.91 1.52
SFB Standard Fed. Bancorp of MI 5.83 4.75 0.63 9.71 5.06 0.85 13.07 0.59 53.01 0.43
TCB TCF Financial Corp. of MN 7.34 7.03 1.17 16.06 5.75 1.39 19.01 0.76 132.47 1.36
WES Westcorp Inc. of Orange CA 9.88 9.85 1.09 11.13 6.08 0.44 4.45 1.16 111.77 2.49
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares of LA* 17.55 17.55 -0.47 -4.71 -3.02 -0.44 -4.39 0.56 159.79 1.32
BKC American Bank of Waterbury CT* 8.34 7.95 1.24 14.18 9.60 0.84 9.61 2.39 38.52 1.42
BFD BostonFed Bancorp of MA 11.15 11.15 0.32 2.87 2.29 0.52 4.64 0.54 97.04 0.63
CFX Cheshire Fin. Corp. of NH* 8.50 7.89 0.72 7.72 3.82 0.95 10.21 0.74 140.78 1.47
CZF Citisave Fin. Corp. of LA 16.00 15.99 0.78 4.47 4.50 1.04 5.97 0.22 40.85 0.15
CBK Citizens First Fin.Corp. of IL 15.14 15.14 0.25 2.32 1.51 0.52 4.87 0.53 35.95 0.24
ESX Essex Bancorp of VA(8) 0.33 -0.14 -2.71 NM NM -1.63 -40.51 3.44 51.87 2.16
FCB Falmouth Co-Op Bank of MA* 24.21 24.21 0.68 3.44 2.97 0.68 3.44 0.02 NA 1.22
GAF GA Financial Corp. of PA 21.55 21.55 0.72 4.10 2.98 1.13 6.43 0.19 85.78 0.42
KNK Kankakee Bancorp of IL 10.02 9.32 0.42 4.14 4.38 0.60 5.87 0.90 74.47 0.99
KYF Kentucky First Bancorp of KY 22.25 22.25 0.90 3.71 4.52 1.17 4.85 0.09 486.84 0.81
NYB New York Bancorp, Inc. of NY 5.17 5.17 1.14 20.41 8.50 1.25 22.40 1.32 49.76 1.04
PDB Piedmont Bancorp of NC 28.20 28.20 1.28 4.82 5.24 1.57 5.92 0.76 62.96 0.66
PLE Pinnacle Bank of AL 7.73 7.46 0.50 6.42 6.35 0.79 10.11 0.83 82.73 1.01
SSB Scotland Bancorp of NC 36.12 36.12 1.16 4.04 2.88 1.50 5.22 NA NA 0.50
SZB SouthFirst Bancshares of AL 14.41 14.41 0.57 3.47 4.56 0.75 4.63 0.52 53.93 0.41
SRN Southern Banc Company of AL 18.22 18.02 0.22 1.24 1.27 0.58 3.36 NA NA 0.24
SSM Stone Street Bancorp of NC 35.13 35.13 1.22 4.38 3.41 1.51 5.42 0.17 272.78 0.61
TSH Teche Holding Company of LA 13.77 13.77 0.72 4.30 5.36 1.04 6.24 NA NA 1.00
FTF Texarkana Fst. Fin. Corp of AR 15.94 15.94 1.47 7.51 8.76 1.81 9.28 0.17 403.17 0.84
THR Three Rivers Fin. Corp. of MI 14.48 14.42 0.52 3.44 3.82 0.78 5.17 1.22 42.90 0.79
TBK Tolland Bank of CT* 6.31 6.06 0.63 10.20 10.24 0.54 8.83 3.16 38.16 1.87
WSB Washington SB, FSB of MD 8.72 8.72 0.91 11.57 11.34 0.83 10.54 0.95 49.34 0.96
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN 8.20 8.20 1.72 22.62 22.69 -0.16 -2.12 0.44 79.07 0.51
AFED AFSALA Bancorp of NY 13.68 13.68 0.59 4.34 5.30 0.59 4.34 0.59 96.04 1.10
ALBK ALBANK Fin. Corp. of Albany NY 8.95 7.68 0.77 7.76 6.10 0.98 9.90 1.15 69.91 1.12
AMFC AMB Financial Corp. of IN 19.37 19.37 0.49 3.04 2.56 0.76 4.79 0.43 98.60 0.56
ASBP ASB Financial Corp. of OH 22.18 22.18 0.57 2.44 2.11 0.89 3.83 1.89 40.89 1.25
ABBK Abington Savings Bank of MA(8)* 6.69 5.95 0.72 10.94 9.17 0.61 9.18 0.27 135.80 0.59
AABC Access Anytime Bancorp of NM 4.58 4.58 -0.57 -12.10 -15.99 -0.22 -4.57 1.58 24.19 0.97
AADV Advantage Bancorp of WI 8.74 8.07 0.31 3.22 2.79 0.80 8.47 0.47 119.85 1.02
AFCB Affiliated Comm BC, Inc of MA 9.76 9.68 0.64 6.09 5.17 0.93 8.80 0.62 119.38 1.19
ALBC Albion Banc Corp. of Albion NY 9.63 9.63 -0.10 -1.00 -1.37 0.20 1.96 0.37 139.82 0.65
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ ______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NYSE Traded Companies
_____________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA NM 167.02 6.57 199.12 15.22 0.88 2.79 NM
CAL CalFed Inc. of Los Angeles CA(8) 24.01 183.16 8.48 183.16 15.16 0.00 0.00 0.00
CSA Coast Savings Financial of CA NM 159.62 7.72 162.17 16.75 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 15.92 177.26 9.56 198.36 11.11 0.42 0.91 14.53
DME Dime Savings Bank, FSB of NY* 20.77 153.65 7.98 155.26 12.29 0.00 0.00 0.00
DSL Downey Financial Corp. of CA 23.59 125.22 9.70 127.33 14.74 0.32 1.70 40.00
FRC First Republic Bancorp of CA* 11.72 105.99 5.90 106.12 12.50 0.00 0.00 0.00
FED FirstFed Fin. Corp. of CA NM 127.22 5.58 129.29 19.35 0.00 0.00 0.00
GLN Glendale Fed. Bk, FSB of CA NM 131.89 6.95 142.17 19.52 0.00 0.00 NM
GDW Golden West Fin. Corp. of CA 10.03 156.68 9.61 156.68 8.17 0.44 0.71 7.12
GWF Great Western Fin. Corp. of CA 21.85 165.36 9.31 188.02 13.53 1.00 3.39 74.07
GPT GreenPoint Fin. Corp. of NY* 19.91 165.89 17.54 NM 20.40 0.80 1.62 32.26
SFB Standard Fed. Bancorp of MI 19.76 196.73 11.48 241.76 14.68 0.80 1.42 27.97
TCB TCF Financial Corp. of MN 17.40 NM 20.46 NM 14.70 0.75 1.80 31.25
WES Westcorp Inc. of Orange CA 16.44 176.61 17.45 177.20 NM 0.40 1.87 30.77
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares of LA* NM 83.68 14.68 83.68 NM 0.00 0.00 NM
BKC American Bank of Waterbury CT* 10.42 144.04 12.02 151.24 15.37 1.36 4.73 49.28
BFD BostonFed Bancorp of MA NM 110.31 12.30 110.31 NM 0.20 1.34 58.82
CFX Cheshire Fin. Corp. of NH* NM 154.03 13.10 165.99 19.82 0.92 5.66 NM
CZF Citisave Fin. Corp. of LA 22.22 111.29 17.81 111.38 16.67 0.40 2.86 63.49
CBK Citizens First Fin.Corp. of IL NM 96.86 14.67 96.86 NM 0.00 0.00 0.00
ESX Essex Bancorp of VA(8) NM NM 1.38 NM NM 0.00 0.00 NM
FCB Falmouth Co-Op Bank of MA* NM 87.12 21.09 87.12 NM 0.20 1.52 51.28
GAF GA Financial Corp. of PA NM 103.44 22.29 103.44 21.38 0.32 2.17 72.73
KNK Kankakee Bancorp of IL 22.86 96.04 9.62 103.23 16.11 0.40 1.67 38.10
KYF Kentucky First Bancorp of KY 22.12 83.45 18.57 83.45 16.91 0.50 4.35 NM
NYB New York Bancorp, Inc. of NY 11.76 247.41 12.78 247.41 10.72 0.80 2.36 27.78
PDB Piedmont Bancorp of NC 19.07 80.28 22.64 80.28 15.53 0.48 4.42 NM
PLE Pinnacle Bank of AL 15.74 102.10 7.89 105.79 10.00 0.72 4.24 66.67
SSB Scotland Bancorp of NC NM 105.79 38.21 105.79 NM 0.30 2.11 73.17
SZB SouthFirst Bancshares of AL 21.93 82.67 11.91 82.67 16.45 0.50 4.00 NM
SRN Southern Banc Company of AL NM 94.02 17.13 95.02 NM 0.35 2.62 NM
SSM Stone Street Bancorp of NC NM 95.80 33.66 95.80 23.64 0.44 2.24 65.67
TSH Teche Holding Company of LA 18.66 89.77 12.36 89.77 12.86 0.50 3.77 70.42
FTF Texarkana Fst. Fin. Corp of AR 11.42 103.42 16.49 103.42 9.24 0.45 3.10 35.43
THR Three Rivers Fin. Corp. of MI NM 91.59 13.27 92.03 17.46 0.36 2.64 69.23
TBK Tolland Bank of CT* 9.76 93.48 5.90 97.32 11.28 0.12 1.03 10.08
WSB Washington SB, FSB of MD 8.82 96.86 8.45 96.86 9.69 0.10 2.02 17.86
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN 4.41 96.76 7.93 96.76 NM 0.40 1.31 5.78
AFED AFSALA Bancorp of NY 18.85 81.85 11.20 81.85 18.85 0.00 0.00 0.00
ALBK ALBANK Fin. Corp. of Albany NY 16.40 129.33 11.57 150.63 12.86 0.60 1.94 31.75
AMFC AMB Financial Corp. of IN NM 89.38 17.31 89.38 24.75 0.24 1.86 72.73
ASBP ASB Financial Corp. of OH NM 118.32 26.24 118.32 NM 0.40 2.29 NM
ABBK Abington Savings Bank of MA(8)* 10.90 114.27 7.65 128.49 12.99 0.40 2.04 22.22
AABC Access Anytime Bancorp of NM NM 82.55 3.78 82.55 NM 0.00 0.00 NM
AADV Advantage Bancorp of WI NM 121.69 10.64 131.91 13.62 0.32 1.00 35.96
AFCB Affiliated Comm BC, Inc of MA 19.33 117.51 11.46 118.37 13.38 0.60 2.65 51.28
ALBC Albion Banc Corp. of Albion NY NM 75.86 7.31 75.86 NM 0.31 1.77 NM
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATSB AmTrust Capital Corp. of IN 10.03 10.03 0.47 4.40 6.23 0.03 0.28 2.58 26.59 0.95
AHCI Ambanc Holding Co. of NY* 14.17 14.17 0.26 1.73 2.09 0.25 1.66 3.63 26.16 1.70
ASBI Ameriana Bancorp of IN 10.88 10.87 0.61 5.14 4.54 0.91 7.67 0.48 58.85 0.39
AFFFZ America First Fin. Fund of CA 6.89 6.75 0.45 6.64 5.89 0.75 11.21 0.58 54.76 0.50
AMFB American Federal Bank of SC 7.76 7.17 1.04 13.07 6.79 1.30 16.31 0.51 150.52 1.25
ANBK American Nat'l Bancorp of MD 9.15 9.15 0.15 1.44 1.55 0.54 5.14 NA NA 1.59
ABCW Anchor Bancorp Wisconsin of WI 5.84 5.69 0.67 10.05 7.40 0.92 13.84 0.75 157.67 1.54
ANDB Andover Bancorp, Inc. of MA* 7.73 7.73 1.03 13.57 8.97 1.06 13.98 1.30 77.05 1.40
ASFC Astoria Financial Corp. of NY 7.79 6.38 0.51 6.06 4.60 0.77 9.18 0.66 29.39 0.55
AVND Avondale Fin. Corp. of IL 9.59 9.59 0.39 3.71 3.82 0.41 3.88 0.71 103.55 1.46
BFSI BFS Bankorp, Inc. of NY 7.81 7.81 1.57 20.19 11.41 1.84 23.72 1.04 90.39 1.03
BKCT Bancorp Connecticut of CT* 10.85 10.85 1.17 10.76 7.82 1.16 10.64 1.45 84.76 1.98
BPLS Bank Plus Corp. of CA 4.75 4.74 -2.04 -38.41 NM -1.69 -31.88 3.35 56.47 2.24
BWFC Bank West Fin. Corp. of MI 17.34 17.34 0.66 3.39 4.28 0.36 1.84 0.10 126.57 0.18
BANC BankAtlantic Bancorp of FL 6.44 5.98 0.75 10.73 7.31 0.76 10.85 0.76 118.19 1.52
BKUNA BankUnited SA of FL 5.43 5.14 0.06 1.28 0.91 0.30 6.07 0.85 30.71 0.33
BKCO Bankers Corp. of NJ* 8.05 7.90 1.05 11.58 8.70 1.20 13.18 1.20 25.55 0.43
BVFS Bay View Capital Corp. of CA 5.65 5.33 -0.08 -1.25 -0.94 0.55 8.38 0.72 157.67 1.49
BFSB Bedford Bancshares of VA 14.31 14.31 1.09 7.00 6.33 1.40 8.97 0.54 95.03 0.59
BSBC Branford SB of CT* 9.13 9.13 0.97 11.21 6.72 0.97 11.21 2.19 96.45 2.95
BRFC Bridgeville SB, FSB of PA(8) 28.94 28.94 0.98 3.41 3.00 1.25 4.33 0.21 128.21 0.74
BYFC Broadway Fin. Corp. of CA 10.75 10.75 -0.17 -1.88 -2.30 0.21 2.42 2.24 43.23 1.17
CBCO CB Bancorp of Michigan City IN 9.69 9.69 1.11 11.72 7.75 1.31 13.84 1.70 54.83 2.02
CBES CBES Bancorp of MO 17.55 17.55 0.80 7.42 5.09 1.15 10.70 NA NA NA
CCFH CCF Holding Company of GA 21.19 21.19 0.96 5.14 4.53 0.92 4.92 0.92 59.37 0.89
CENF CENFED Financial Corp. of CA 5.04 5.03 0.51 10.37 7.64 0.64 12.98 1.34 49.80 0.94
CFSB CFSB Bancorp of Lansing MI 7.74 7.74 0.70 8.57 5.82 0.98 12.09 0.20 271.42 0.64
CKFB CKF Bancorp of Danville KY 25.22 25.22 1.28 4.72 4.00 1.28 4.72 1.47 13.42 0.22
CNSB CNS Bancorp of MO 24.40 24.40 0.36 2.18 1.33 0.63 3.82 0.33 111.42 0.62
CSBF CSB Financial Group Inc of IL 30.91 30.91 0.92 3.77 3.41 0.92 3.77 0.70 37.37 0.47
CFHC California Fin. Hld. Co. of CA 6.46 6.44 0.37 5.50 3.46 0.62 9.40 1.21 45.60 0.76
CBCI Calumet Bancorp of Chicago IL 16.15 16.15 0.98 5.93 6.35 1.28 7.76 1.29 86.03 1.45
CAFI Camco Fin. Corp. of OH 7.58 7.58 0.78 9.70 8.12 0.88 11.02 0.57 50.44 0.34
CMRN Cameron Fin. Corp. of MO 26.35 26.35 1.60 5.81 6.26 1.56 5.69 0.96 74.48 0.85
CAPS Capital Savings Bancorp of MO 8.45 8.45 0.63 6.34 4.93 0.93 9.47 0.20 141.28 0.38
CFNC Carolina Fincorp of NC* 21.96 21.96 0.88 4.00 3.96 0.88 4.00 0.06 659.32 0.57
CARV Carver FSB of New York, NY 9.48 9.05 -0.03 -0.33 -0.63 0.24 2.52 1.54 16.92 1.03
CASB Cascade SB of Everett WA 6.05 6.05 0.49 7.79 5.92 0.49 7.79 0.51 168.34 1.19
CATB Catskill Fin. Corp. of NY* 29.04 29.04 1.18 6.57 4.18 1.18 6.57 0.61 106.20 1.47
CNIT Cenit Bancorp of Norfolk VA 7.28 7.02 0.50 6.96 4.87 0.55 7.76 0.82 71.39 1.03
CTBK Center Banks, Inc. of NY* 6.56 6.56 0.64 9.21 9.18 0.61 8.77 1.59 54.86 1.03
CEBK Central Co-Op. Bank of MA* 9.83 8.66 0.52 5.32 4.63 0.56 5.76 1.69 53.35 1.25
CJFC Central Jersey Fin. Corp of NJ(8)12.09 11.31 0.81 6.81 3.76 1.11 9.36 1.39 46.80 1.43
CBSB Charter Financial Inc. of IL 17.39 16.16 1.17 6.86 5.92 1.15 6.77 0.52 130.13 0.94
COFI Charter One Financial of OH 6.59 6.08 0.21 3.26 1.43 1.28 19.42 0.37 129.94 0.84
CVAL Chester Valley Bancorp of PA 8.84 8.84 0.60 6.54 5.41 0.90 9.81 0.76 127.23 1.14
CTZN CitFed Bancorp of Dayton OH 6.37 5.58 0.46 6.84 4.64 0.71 10.50 0.91 71.24 1.12
CLAS Classic Bancshares of KY 13.80 11.54 0.38 1.79 1.98 0.64 3.04 0.86 71.29 1.06
CMSB Cmnwealth Bancorp of PA 10.91 8.37 0.44 4.47 3.02 0.64 6.45 0.41 116.96 0.94
CBSA Coastal Bancorp of Houston TX 3.17 2.61 0.24 7.11 5.84 0.40 12.02 0.59 39.07 0.54
CFCP Coastal Fin. Corp. of SC 6.10 6.10 1.04 17.09 6.14 0.91 14.97 0.15 598.96 1.06
COFD Collective Bancorp Inc. of NJ 6.93 6.49 0.89 12.89 6.59 1.11 15.94 0.43 55.96 0.47
CMSV Commty. Svgs, MHC of FL(47.6) 11.99 11.99 0.89 7.13 5.92 0.90 7.27 0.53 68.77 0.63
CBIN Community Bank Shares of IN 10.85 10.83 0.59 5.15 5.28 0.90 7.88 0.22 117.84 0.46
CBNH Community Bankshares Inc of NH* 7.16 7.16 0.86 11.90 8.49 0.70 9.69 0.38 178.91 1.02
CFTP Community Fed. Bancorp of MS 32.91 32.91 1.14 4.32 2.92 1.44 5.44 0.35 80.00 0.48
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Financial Institution Price/ Price/ Price/ Tang. Core Div./ dend Payout
_____________________ Earning Book Assets Book Earnings Share Yield Ratio(7
_______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATSB AmTrust Capital Corp. of IN 16.06 74.08 7.43 74.08 NM 0.00 0.00 0.00
AHCI Ambanc Holding Co. of NY* NM 76.28 10.81 76.28 NM 0.00 0.00 0.00
ASBI Ameriana Bancorp of IN 22.01 117.78 12.82 117.96 14.75 0.60 3.84 NM
AFFFZ America First Fin. Fund of CA 16.98 115.00 7.93 117.39 10.06 1.60 5.45 NM
AMFB American Federal Bank of SC 14.73 192.31 14.92 208.11 11.80 0.40 2.11 31.01
ANBK American Nat'l Bancorp of MD NM 99.11 9.07 99.11 18.01 0.12 0.98 63.16
ABCW Anchor Bancorp Wisconsin of WI 13.52 145.52 8.50 149.53 9.82 0.50 1.44 19.46
ANDB Andover Bancorp, Inc. of MA* 11.15 142.27 10.99 142.27 10.82 0.60 2.33 25.97
ASFC Astoria Financial Corp. of NY 21.74 132.98 10.36 162.34 14.34 0.44 1.26 27.33
AVND Avondale Fin. Corp. of IL NM 102.70 9.85 102.70 25.00 0.00 0.00 0.00
BFSI BFS Bankorp, Inc. of NY 8.76 161.19 12.58 161.19 7.45 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 12.79 135.84 14.74 135.84 12.94 0.80 3.60 45.98
BPLS Bank Plus Corp. of CA NM 129.91 6.18 130.21 NM 0.00 0.00 NM
BWFC Bank West Fin. Corp. of MI 23.37 88.04 15.26 88.04 NM 0.28 2.60 60.87
BANC BankAtlantic Bancorp of FL 13.68 136.99 8.82 147.39 13.54 0.15 1.15 15.79
BKUNA BankUnited SA of FL NM 111.46 6.06 117.92 23.03 0.00 0.00 0.00
BKCO Bankers Corp. of NJ* 11.49 132.01 10.62 134.50 10.10 0.64 3.20 36.78
BVFS Bay View Capital Corp. of CA NM 142.27 8.04 150.74 15.84 0.60 1.45 NM
BFSB Bedford Bancshares of VA 15.79 112.99 16.17 112.99 12.33 0.44 2.44 38.60
BSBC Branford SB of CT* 14.88 157.96 14.42 157.96 14.88 0.08 2.07 30.77
BRFC Bridgeville SB, FSB of PA(8) NM 113.31 32.79 113.31 NM 0.32 2.00 66.67
BYFC Broadway Fin. Corp. of CA NM 64.64 6.95 64.64 NM 0.20 2.19 NM
CBCO CB Bancorp of Michigan City IN 12.90 145.38 14.09 145.38 10.92 1.30 5.36 69.15
CBES CBES Bancorp of MO 19.64 83.03 14.57 83.03 13.61 0.00 0.00 0.00
CCFH CCF Holding Company of GA 22.06 100.94 21.39 100.94 23.08 0.40 2.67 58.82
CENF CENFED Financial Corp. of CA 13.08 131.15 6.61 131.39 10.45 0.36 1.29 16.82
CFSB CFSB Bancorp of Lansing MI 17.19 147.85 11.44 147.85 12.18 0.48 2.49 42.86
CKFB CKF Bancorp of Danville KY 25.00 123.05 31.03 123.05 25.00 0.44 2.23 55.70
CNSB CNS Bancorp of MO NM 102.74 25.07 102.74 NM 0.20 1.33 NM
CSBF CSB Financial Group Inc of IL NM 85.16 26.32 85.16 NM 0.00 0.00 0.00
CFHC California Fin. Hld. Co. of CA NM 157.97 10.20 158.49 16.92 0.44 1.52 44.00
CBCI Calumet Bancorp of Chicago IL 15.76 97.43 15.73 97.43 12.04 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 12.31 117.67 8.92 117.67 10.83 0.46 2.83 34.85
CMRN Cameron Fin. Corp. of MO 15.98 95.33 25.12 95.33 16.32 0.28 1.81 28.87
CAPS Capital Savings Bancorp of MO 20.29 134.49 11.36 134.49 13.59 0.24 1.71 34.78
CFNC Carolina Fincorp of NC* NM 101.00 22.18 101.00 NM 0.00 0.00 0.00
CARV Carver FSB of New York, NY NM 53.48 5.07 56.02 21.05 0.00 0.00 NM
CASB Cascade SB of Everett WA 16.88 129.48 7.83 129.48 16.88 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 23.91 95.72 27.80 95.72 23.91 0.00 0.00 0.00
CNIT Cenit Bancorp of Norfolk VA 20.55 134.33 9.77 139.28 18.43 1.00 2.55 52.36
CTBK Center Banks, Inc. of NY* 10.89 96.07 6.30 96.07 11.43 0.40 2.48 27.03
CEBK Central Co-Op. Bank of MA* 21.61 112.70 11.08 127.92 19.97 0.32 1.74 37.65
CJFC Central Jersey Fin. Corp of NJ(8) NM 178.23 21.54 190.45 19.33 1.26 3.36 NM
CBSB Charter Financial Inc. of IL 16.89 95.49 16.60 102.71 17.12 0.24 1.92 32.43
COFI Charter One Financial of OH NM 200.82 13.23 217.45 11.71 0.92 2.35 NM
CVAL Chester Valley Bancorp of PA 18.50 120.44 10.64 120.44 12.33 0.44 2.38 44.00
CTZN CitFed Bancorp of Dayton OH 21.56 145.90 9.29 166.57 14.03 0.32 1.08 23.19
CLAS Classic Bancshares of KY NM 81.72 11.28 97.73 NM 0.24 2.07 NM
CMSB Cmnwealth Bancorp of PA NM 112.47 12.27 146.60 22.98 0.24 1.68 55.81
CBSA Coastal Bancorp of Houston TX 17.14 123.88 3.93 150.40 10.14 0.40 1.77 30.30
CFCP Coastal Fin. Corp. of SC 16.28 NM 15.94 NM 18.58 0.44 2.10 34.11
COFD Collective Bancorp Inc. of NJ 15.18 190.26 13.19 203.23 12.27 1.00 2.94 44.64
CMSV Commty. Svgs, MHC of FL(47.6) 16.90 118.58 14.22 118.58 16.59 0.80 4.38 74.07
CBIN Community Bank Shares of IN 18.94 97.43 10.57 97.58 12.38 0.34 2.72 51.52
CBNH Community Bankshares Inc of NH* 11.77 125.15 8.96 125.15 14.46 0.64 3.16 37.21
CFTP Community Fed. Bancorp of MS NM 109.18 35.93 109.18 NM 0.30 1.75 60.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFFC Community Fin. Corp. of VA 13.92 13.92 1.03 7.49 6.10 1.30 9.48 0.20 317.33 0.72
CIBI Community Inv. Bancorp of OH 11.94 11.94 0.68 5.05 5.37 0.98 7.29 0.88 53.98 0.64
COOP Cooperative Bk.for Svgs. of NC 7.70 7.70 -1.14 -12.66 -11.76 -0.08 -0.84 0.42 56.37 0.31
CNSK Covenant Bank for Svgs. of NJ* 5.35 5.35 0.29 5.54 3.00 0.52 9.85 1.62 48.97 1.35
CRZY Crazy Woman Creek Bncorp of WY 30.03 30.03 0.80 3.09 2.89 1.04 3.99 0.12 452.46 1.06
DNFC D&N Financial Corp. of MI 5.55 5.47 0.71 12.74 7.74 0.93 16.60 0.66 112.57 0.94
DSBC DS Bancor Inc. of Derby CT(8)* 6.87 6.67 0.74 11.24 7.18 0.69 10.46 2.02 28.99 0.83
DFIN Damen Fin. Corp. of Chicago IL 22.54 22.54 0.77 3.66 3.65 1.00 4.75 0.15 98.29 0.38
DCBI Delphos Citizens Bancorp of OH 26.51 26.51 1.36 5.12 6.11 1.36 5.12 0.40 25.92 0.14
DIME Dime Community Bancorp of NY 17.55 15.26 0.52 3.13 3.09 0.65 3.94 1.03 68.42 1.41
DIBK Dime Financial Corp. of CT* 8.58 8.23 1.76 21.77 13.09 1.89 23.48 1.01 197.32 3.33
EGLB Eagle BancGroup of IL 13.33 13.33 -0.44 -5.05 -3.92 -0.08 -0.97 1.76 31.80 0.87
EBSI Eagle Bancshares of Tucker GA 8.95 8.95 0.65 7.91 6.24 0.87 10.51 1.06 53.91 0.84
EGFC Eagle Financial Corp. of CT 7.19 5.27 1.03 14.06 10.64 0.63 8.64 1.22 50.16 1.04
ETFS East Texas Fin. Serv. of TX 18.92 18.92 0.81 4.18 5.11 0.74 3.82 0.23 106.64 0.62
EBCP Eastern Bancorp of NH(8) 7.32 6.91 0.39 5.21 3.98 0.53 7.06 1.38 23.81 0.58
ESBK Elmira SB of Elmira NY* 6.38 6.10 0.18 2.90 3.41 0.17 2.70 0.93 72.34 0.89
EIRE Emerald Island Bancorp, MA* 6.83 6.83 0.59 8.77 6.43 0.63 9.43 0.23 281.89 1.04
EFBI Enterprise Fed. Bancorp of OH 14.77 14.75 0.92 5.37 6.21 0.63 3.70 0.04 510.67 0.27
EQSB Equitable FSB of Wheaton MD 5.30 5.30 0.78 14.99 12.34 0.78 14.90 1.00 21.61 0.31
FFFG F.F.O. Financial Group of FL 6.04 6.04 0.20 3.17 2.55 0.62 9.95 2.94 55.67 2.35
FCBF FCB Fin. Corp. of Neenah WI 17.28 17.28 0.91 4.91 5.07 1.11 6.04 0.11 408.42 0.52
FFBS FFBS Bancorp of Columbus MS 19.59 19.59 1.08 5.51 3.70 1.40 7.13 0.63 83.16 0.77
FFDF FFD Financial Corp. of OH 25.07 25.07 0.68 3.69 2.59 0.95 5.10 0.15 116.80 0.29
FFLC FFLC Bancorp of Leesburg FL 16.22 16.22 0.63 3.72 4.05 0.97 5.72 0.23 133.73 0.48
FFFC FFVA Financial Corp. of VA 14.86 14.55 1.03 6.31 4.99 1.31 7.97 0.44 143.89 1.04
FFWC FFW Corporation of Wabash IN 10.01 10.01 0.90 8.36 8.59 1.08 10.09 0.10 312.66 0.48
FFYF FFY Financial Corp. of OH 16.97 16.97 0.82 4.56 3.59 1.26 7.01 0.84 69.96 0.78
FMCO FMS Financial Corp. of NJ 6.53 6.38 0.52 7.93 6.16 0.87 13.26 1.18 45.42 0.91
FFHH FSF Financial Corp. of MN 13.44 13.44 0.51 3.25 3.23 0.71 4.54 0.06 354.34 0.36
FMLY Family Bancorp of Haverhill MA(8)* 7.95 7.35 0.86 11.09 5.18 0.90 11.59 0.68 112.19 1.48
FOBC Fed One Bancorp of Wheeling WV 11.67 11.08 0.70 5.75 5.89 1.00 8.17 0.27 151.30 1.07
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 8.43 8.42 0.66 7.78 3.79 0.94 11.07 1.14 84.83 1.16
FBCI Fidelity Bancorp of Chicago IL 10.26 10.23 0.50 4.18 4.38 0.74 6.24 0.67 25.45 0.23
FSBI Fidelity Bancorp, Inc. of PA 6.85 6.84 0.44 5.99 5.05 0.77 10.47 0.53 90.64 1.00
FFFL Fidelity FSB, MHC of FL(47.2) 9.36 9.27 0.39 3.94 2.72 0.65 6.45 0.40 65.32 0.34
FFED Fidelity Fed. Bancorp of IN 4.79 4.79 0.31 6.17 3.58 0.40 7.99 0.17 415.56 0.83
FFOH Fidelity Financial of OH 19.85 19.85 0.60 3.45 3.17 0.91 5.18 0.42 77.55 0.43
FIBC Financial Bancorp of NY 9.67 9.61 0.46 4.29 4.41 0.85 7.98 3.44 17.16 1.11
FBSI First Bancshares of MO 14.77 14.74 0.66 3.98 4.73 0.95 5.72 0.65 52.74 0.43
FBBC First Bell Bancorp of PA 18.43 18.43 1.41 6.72 6.19 1.63 7.74 0.10 114.26 0.13
FBER First Bergen Bancorp of NJ 17.03 17.03 0.12 0.91 0.75 0.59 4.55 NA NA 2.71
FCIT First Cit. Fin. Corp of MD 5.92 5.92 0.46 7.45 5.28 0.66 10.62 2.58 41.67 1.50
FFBA First Colorado Bancorp of Co 16.33 16.12 1.09 8.24 4.74 1.09 8.24 0.22 102.47 0.32
FDEF First Defiance Fin.Corp. of OH 23.01 23.01 0.93 3.75 4.06 1.21 4.90 0.23 168.53 0.49
FESX First Essex Bancorp of MA* 7.44 7.44 0.97 13.15 10.02 0.84 11.29 0.55 140.92 1.18
FFES First FS&LA of E. Hartford CT 6.12 6.10 0.44 6.92 6.70 0.67 10.51 0.65 42.48 1.53
FSSB First FS&LA of San Bern. CA 4.69 4.48 -1.07 -20.30 NM -1.24 -23.65 3.02 35.25 1.49
FFSX First FS&LA. MHC of IA (45.0) 7.97 7.90 0.40 4.87 3.11 0.69 8.44 0.13 288.03 0.54
FFML First Family Fin. Corp. of FL(8) 5.92 5.92 0.41 7.44 5.41 0.02 0.31 0.46 95.51 0.63
FFSW First Fed Fin. Serv. of OH 5.37 4.38 0.74 13.47 5.26 0.82 14.91 0.16 155.53 0.35
BDJI First Fed. Bancorp. of MN 11.49 11.49 0.31 2.22 2.50 0.68 4.94 0.38 112.10 0.88
FFBH First Fed. Bancshares of AR 16.35 16.35 0.63 5.48 3.63 0.95 8.32 0.15 159.31 0.31
FFEC First Fed. Bancshares of WI(8) 13.42 12.91 0.69 4.76 3.65 0.91 6.25 0.03 398.60 0.16
FTFC First Fed. Capital Corp. of WI 6.34 5.98 0.70 10.32 6.50 0.77 11.38 0.12 467.72 0.76
FFKY First Fed. Fin. Corp. of KY 13.80 12.90 1.24 8.81 5.35 1.41 10.01 0.54 92.15 0.57
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CFFC Community Fin. Corp. of VA 16.41 119.39 16.61 119.39 12.96 0.52 2.48 40.63
CIBI Community Inv. Bancorp of OH 18.61 98.53 11.77 98.53 12.88 0.40 2.39 44.44
COOP Cooperative Bk.for Svgs. of NC NM 121.37 9.35 121.37 NM 0.00 0.00 NM
CNSK Covenant Bank for Svgs. of NJ* NM 158.94 8.50 158.94 18.75 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY NM 80.37 24.13 80.37 NM 0.40 3.40 NM
DNFC D&N Financial Corp. of MI 12.92 149.22 8.28 151.28 9.92 0.00 0.00 0.00
DSBC DS Bancor Inc. of Derby CT(8)* 13.93 148.97 10.23 153.32 14.96 0.24 0.56 7.87
DFIN Damen Fin. Corp. of Chicago IL NM 91.80 20.69 91.80 21.10 0.24 1.86 51.06
DCBI Delphos Citizens Bancorp of OH 16.36 83.73 22.19 83.73 16.36 0.00 0.00 0.00
DIME Dime Community Bancorp of NY NM 100.54 17.65 115.63 NM 0.00 0.00 0.00
DIBK Dime Financial Corp. of CT* 7.64 151.12 12.97 157.66 7.09 0.32 1.83 13.97
EGLB Eagle BancGroup of IL NM 79.10 10.54 79.10 NM 0.00 0.00 NM
EBSI Eagle Bancshares of Tucker GA 16.02 107.92 9.65 107.92 12.05 0.60 4.41 70.59
EGFC Eagle Financial Corp. of CT 9.40 128.87 9.27 175.73 15.29 0.92 3.20 30.07
ETFS East Texas Fin. Serv. of TX 19.58 84.46 15.98 84.46 21.38 0.20 1.23 24.10
EBCP Eastern Bancorp of NH(8) NM 129.93 9.51 137.59 18.54 0.56 2.48 62.22
ESBK Elmira SB of Elmira NY* NM 85.30 5.44 89.19 NM 0.64 3.76 NM
EIRE Emerald Island Bancorp, MA* 15.55 121.87 8.33 121.87 14.45 0.28 1.51 23.53
EFBI Enterprise Fed. Bancorp of OH 16.11 95.21 14.06 95.33 23.39 0.00 0.00 0.00
EQSB Equitable FSB of Wheaton MD 8.11 113.16 5.99 113.16 8.16 0.00 0.00 0.00
FFFG F.F.O. Financial Group of FL NM 123.32 7.45 123.32 12.50 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 19.74 99.10 17.13 99.10 16.03 0.72 3.84 NM
FFBS FFBS Bancorp of Columbus MS NM 146.59 28.72 146.59 20.91 0.50 2.17 58.82
FFDF FFD Financial Corp. of OH NM 89.13 22.34 89.13 NM 0.20 1.52 58.82
FFLC FFLC Bancorp of Leesburg FL 24.70 93.84 15.22 93.84 16.07 0.40 1.98 48.78
FFFC FFVA Financial Corp. of VA 20.05 135.52 20.14 138.44 15.86 0.40 1.88 37.74
FFWC FFW Corporation of Wabash IN 11.64 99.82 9.99 99.82 9.65 0.60 2.73 31.75
FFYF FFY Financial Corp. of OH NM 129.48 21.97 129.48 18.09 0.70 2.71 NM
FMCO FMS Financial Corp. of NJ 16.23 126.70 8.27 129.63 9.70 0.20 1.15 18.69
FFHH FSF Financial Corp. of MN NM 108.54 14.58 108.54 22.19 0.50 3.36 NM
FMLY Family Bancorp of Haverhill MA(8)* 19.31 203.19 16.14 219.68 18.48 0.48 1.40 26.97
FOBC Fed One Bancorp of Wheeling WV 16.97 100.81 11.77 106.19 11.94 0.58 3.60 61.05
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) NM 200.91 16.93 201.08 18.51 0.20 0.82 21.74
FBCI Fidelity Bancorp of Chicago IL 22.83 100.47 10.31 100.82 15.29 0.24 1.40 32.00
FSBI Fidelity Bancorp, Inc. of PA 19.79 119.80 8.21 120.03 11.31 0.32 1.68 33.33
FFFL Fidelity FSB, MHC of FL(47.2) NM 144.47 13.53 145.94 22.40 0.80 4.64 NM
FFED Fidelity Fed. Bancorp of IN NM 188.87 9.05 188.87 21.59 0.80 8.42 NM
FFOH Fidelity Financial of OH NM 91.25 18.12 91.25 21.06 0.20 1.76 55.56
FIBC Financial Bancorp of NY 22.66 100.69 9.73 101.26 12.18 0.30 2.07 46.88
FBSI First Bancshares of MO 21.15 87.30 12.90 87.49 14.73 0.20 1.21 25.64
FBBC First Bell Bancorp of PA 16.16 116.70 21.51 116.70 14.04 0.40 2.50 40.40
FBER First Bergen Bancorp of NJ NM 89.49 15.24 89.49 NM 0.12 1.00 NM
FCIT First Cit. Fin. Corp of MD 18.94 138.79 8.21 138.79 13.30 0.00 0.00 0.00
FFBA First Colorado Bancorp of Co 21.08 135.87 22.18 137.58 21.08 0.32 1.83 38.55
FDEF First Defiance Fin.Corp. of OH 24.61 99.10 22.80 99.10 18.84 0.28 2.32 57.14
FESX First Essex Bancorp of MA* 9.98 125.30 9.32 125.30 11.63 0.48 3.59 35.82
FFES First FS&LA of E. Hartford CT 14.94 104.31 6.38 104.55 9.83 0.60 2.61 38.96
FSSB First FS&LA of San Bern. CA NM 62.67 2.94 65.65 NM 0.00 0.00 NM
FFSX First FS&LA. MHC of IA (45.0) NM 156.01 12.43 157.47 18.56 0.72 2.38 NM
FFML First Family Fin. Corp. of FL(8) 18.49 130.02 7.69 130.02 NM 0.00 0.00 0.00
FFSW First Fed Fin. Serv. of OH 19.02 236.36 12.68 NM 17.18 0.48 1.23 23.41
BDJI First Fed. Bancorp. of MN NM 102.39 11.76 102.39 18.00 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR NM 98.95 16.18 98.95 18.18 0.00 0.00 0.00
FFEC First Fed. Bancshares of WI(8) NM 128.73 17.28 133.79 20.88 0.28 1.52 41.79
FTFC First Fed. Capital Corp. of WI 15.38 158.94 10.08 168.54 13.95 0.64 2.67 41.03
FFKY First Fed. Fin. Corp. of KY 18.69 163.83 22.61 175.32 16.45 0.48 2.49 46.60
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFBZ First Federal Bancorp of OH 7.59 7.58 0.81 10.59 5.69 1.10 14.32 0.50 174.92 1.00
FFWM First Fin. Corp of Western MD 11.69 11.69 0.86 7.04 4.22 1.19 9.77 1.75 129.77 2.82
FFCH First Fin. Holdings Inc. of SC 6.13 6.13 0.48 7.44 4.77 0.81 12.41 1.28 56.63 0.87
FFBI First Financial Bancorp of IL 7.73 7.73 0.12 1.27 1.39 0.37 4.03 0.43 106.97 0.61
FFHC First Financial Corp. of WI 7.17 6.92 0.90 12.68 5.82 1.27 17.80 0.29 147.30 0.67
FFHS First Franklin Corp. of OH 9.05 8.97 0.28 2.99 3.25 0.62 6.61 0.52 81.80 0.62
FGHC First Georgia Hold. Corp of GA 8.31 7.39 0.87 10.71 6.96 0.87 10.71 1.34 51.51 0.82
FSPG First Home SB, SLA of NJ 6.46 6.31 0.91 14.05 10.72 1.11 17.07 0.78 98.58 1.42
FFSL First Independence Corp. of KS 11.98 11.98 0.78 6.21 7.14 1.06 8.39 0.57 112.38 1.01
FISB First Indiana Corp. of IN 9.10 8.97 0.90 10.21 6.35 1.03 11.72 1.76 63.33 1.34
FKFS First Keystone Fin. Corp of PA 7.85 7.85 0.31 3.74 3.40 0.67 8.09 2.28 39.11 1.52
FLKY First Lancaster Bncshrs of KY 35.68 35.68 0.70 1.52 1.74 0.99 2.14 0.83 31.75 0.31
FLFC First Liberty Fin. Corp. of GA 6.90 5.84 1.03 15.28 8.65 0.83 12.23 1.22 66.75 1.09
CASH First Midwest Fin. Corp. of IA 11.41 10.66 1.05 8.17 7.11 1.03 8.07 0.20 268.44 0.81
FMBD First Mutual Bancorp of IL 19.93 19.93 0.47 1.94 2.35 0.72 2.99 0.14 275.66 0.46
FMSB First Mutual SB of Bellevue WA 6.61 6.61 1.02 15.36 8.61 0.98 14.77 0.12 723.09 1.07
FNGB First Northern Cap. Corp of WI 11.41 11.41 0.53 4.29 4.38 0.82 6.62 0.12 377.58 0.51
FFPB First Palm Beach Bancorp of FL 7.08 6.89 0.04 0.51 0.48 0.12 1.48 NA NA 1.16
FSNJ First SB of NJ, MHC (45.0) 7.53 7.53 0.19 2.28 2.20 0.43 5.10 0.91 51.83 1.27
FSLA First SB, SLA MHC of NJ (37.6) 9.26 8.11 0.47 5.02 3.50 0.86 9.08 0.75 70.10 1.01
SOPN First SB, SSB, Moore Co. of NC 25.46 25.46 1.26 4.87 4.83 1.57 6.05 0.10 224.72 0.33
FWWB First Savings Bancorp of WA* 15.77 14.47 1.01 5.45 3.57 1.01 5.45 0.21 311.17 1.08
SHEN First Shenango Bancorp of PA 12.00 12.00 0.75 5.69 5.24 1.02 7.72 0.50 140.23 1.04
FSFC First So.east Fin. Corp. of SC 10.06 10.06 -0.04 -0.24 -0.32 0.85 5.30 0.07 577.21 0.50
FSFI First State Fin. Serv. of NJ(8) 6.00 5.67 0.01 0.19 0.13 -0.12 -1.79 4.24 32.21 1.67
FFDP FirstFed Bancshares of IL 8.57 8.16 0.24 2.62 2.63 0.29 3.21 0.14 167.24 0.37
FLAG Flag Financial Corp of GA 8.80 8.80 -0.07 -0.77 -0.73 0.11 1.15 3.67 52.67 2.77
FFPC Florida First Bancorp of FL(8) 6.99 6.99 0.58 8.57 4.57 0.86 12.69 0.78 149.50 2.01
FFIC Flushing Fin. Corp. of NY* 17.51 17.51 0.85 5.06 3.79 0.80 4.78 0.71 95.82 1.46
FBHC Fort Bend Holding Corp. of TX 6.18 5.70 0.27 3.82 3.38 0.58 8.29 1.31 43.41 1.29
FTSB Fort Thomas Fin. Corp. of KY 24.35 24.35 1.33 5.37 5.19 1.33 5.37 1.27 28.12 0.42
FKKY Frankfort First Bancorp of KY 26.30 26.30 0.81 2.52 2.81 1.09 3.39 0.16 48.04 0.09
FTNB Fulton Bancorp of MO 22.80 22.80 1.10 4.81 4.51 1.06 4.67 0.92 99.36 1.02
GFSB GFS Bancorp of Grinnell IA 11.56 11.56 0.91 7.59 7.08 1.20 10.02 1.63 49.75 0.92
GUPB GFSB Bancorp of Gallup NM 18.50 18.50 0.81 3.56 3.91 1.03 4.53 0.25 159.18 0.75
GWBC Gateway Bancorp of KY 25.07 25.07 0.83 3.26 3.72 1.14 4.47 0.45 25.80 0.44
GBCI Glacier Bancorp of MT 9.45 9.44 1.37 14.32 6.89 1.54 16.10 0.29 173.40 0.70
GLBK Glendale Co-op. Bank of MA* 15.85 15.85 0.79 4.97 5.80 0.66 4.16 0.30 96.33 0.70
GFCO Glenway Financial Corp. of OH 9.61 9.40 0.56 5.90 7.05 0.57 5.99 0.41 52.03 0.27
GTPS Great American Bancorp of IL 27.85 27.85 0.69 2.42 2.90 0.68 2.36 0.13 192.81 0.35
GTFN Great Financial Corp. of KY 9.66 9.26 0.70 6.47 4.36 0.71 6.57 3.23 14.46 0.65
GSBC Great Southern Bancorp of MO 10.12 10.12 1.35 13.44 5.91 1.54 15.28 1.83 121.83 2.59
GDVS Greater DV SB,MHC of PA(19.9)* 11.69 11.69 -0.21 -1.72 -1.50 0.10 0.80 2.91 45.73 2.22
GRTR Greater New York SB of NY* 5.97 5.97 0.42 7.32 5.93 0.37 6.50 7.90 9.80 1.94
GSFC Green Street Fin. Corp. of NC 35.29 35.29 1.18 5.35 3.12 1.48 6.68 0.20 68.31 0.19
GROV GroveBank for Savings of MA(8)* 6.50 6.49 0.90 14.23 6.86 0.84 13.34 0.58 100.00 0.77
GFED Guaranty FS&LA,MHC of MO(31.1) 14.49 14.49 0.62 4.23 3.17 0.50 3.41 1.57 73.15 1.47
GSLC Guaranty Svgs & Loan FA of VA 5.50 5.50 0.44 7.28 6.06 0.51 8.44 NA NA 0.91
HEMT HF Bancorp of Hemet CA 7.94 7.94 -0.08 -0.74 -0.91 -0.10 -0.97 0.95 64.23 1.37
HFFC HF Financial Corp. of SD 8.99 8.96 0.60 6.61 6.97 0.75 8.33 0.59 127.45 0.96
HFNC HFNC Financial Corp. of NC 29.31 29.31 1.02 3.72 2.57 1.28 4.68 1.15 80.19 1.39
HMNF HMN Financial, Inc. of MN 14.80 14.80 0.80 4.93 5.15 0.94 5.77 0.08 531.92 0.65
HALL Hallmark Capital Corp. of WI 7.01 7.01 0.41 5.32 5.56 0.56 7.17 0.05 715.63 0.56
HARB Harbor FSB, MHC of FL (45.7) 8.02 7.68 0.90 10.52 5.47 1.21 14.19 0.50 208.24 1.41
HRBF Harbor Federal Bancorp of MD 12.85 12.85 0.27 1.71 1.85 0.56 3.60 0.43 41.21 0.28
HFSA Hardin Bancorp of Hardin MO 16.78 16.78 0.44 2.40 2.99 0.78 4.28 0.19 90.18 0.29
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFBZ First Federal Bancorp of OH 17.58 179.37 13.62 179.78 13.01 0.24 1.50 26.37
FFWM First Fin. Corp of Western MD 23.69 167.02 19.52 167.02 17.07 0.48 1.51 35.82
FFCH First Fin. Holdings Inc. of SC 20.95 155.94 9.56 155.94 12.57 0.72 3.10 64.86
FFBI First Financial Bancorp of IL NM 95.49 7.38 95.49 22.67 0.00 0.00 0.00
FFHC First Financial Corp. of WI 17.17 212.53 15.24 220.08 12.23 0.75 2.63 45.18
FFHS First Franklin Corp. of OH NM 93.73 8.49 94.56 13.91 0.32 2.00 61.54
FGHC First Georgia Hold. Corp of GA 14.37 145.85 12.11 163.88 14.37 0.08 0.93 13.33
FSPG First Home SB, SLA of NJ 9.33 125.81 8.13 128.71 7.68 0.48 2.46 22.97
FFSL First Independence Corp. of KS 14.01 87.98 10.54 87.98 10.38 0.40 2.04 28.57
FISB First Indiana Corp. of IN 15.74 156.44 14.24 158.68 13.71 0.56 2.20 34.57
FKFS First Keystone Fin. Corp of PA NM 111.92 8.78 111.92 13.61 0.20 1.00 29.41
FLKY First Lancaster Bncshrs of KY NM 110.09 39.28 110.09 NM 0.00 0.00 0.00
FLFC First Liberty Fin. Corp. of GA 11.56 162.42 11.20 191.71 14.45 0.40 2.16 25.00
CASH First Midwest Fin. Corp. of IA 14.06 112.81 12.87 120.79 14.22 0.54 2.18 30.68
FMBD First Mutual Bancorp of IL NM 90.67 18.07 90.67 NM 0.32 2.15 NM
FMSB First Mutual SB of Bellevue WA 11.61 166.82 11.02 166.82 12.08 0.20 1.11 12.90
FNGB First Northern Cap. Corp of WI 22.86 101.01 11.53 101.01 14.81 0.60 3.75 NM
FFPB First Palm Beach Bancorp of FL NM 111.11 7.86 114.14 NM 0.40 1.74 NM
FSNJ First SB of NJ, MHC (45.0) NM 107.75 8.12 107.75 20.29 0.50 2.90 NM
FSLA First SB, SLA MHC of NJ (37.6) NM 142.97 13.23 163.19 15.79 0.36 2.00 57.14
SOPN First SB, SSB, Moore Co. of NC 20.69 100.56 25.60 100.56 16.67 0.68 3.78 NM
FWWB First Savings Bancorp of WA* NM 134.74 21.25 146.83 NM 0.20 1.08 30.30
SHEN First Shenango Bancorp of PA 19.07 110.19 13.23 110.19 14.06 0.48 2.13 40.68
FSFC First So.east Fin. Corp. of SC NM 125.83 12.66 125.83 14.18 0.20 2.11 NM
FSFI First State Fin. Serv. of NJ(8) NM 147.49 8.85 156.09 NM 0.22 1.47 NM
FFDP FirstFed Bancshares of IL NM 106.28 9.10 111.52 NM 0.40 2.39 NM
FLAG Flag Financial Corp of GA NM 111.22 9.79 111.22 NM 0.34 3.09 NM
FFPC Florida First Bancorp of FL(8) 21.87 185.78 12.99 185.78 14.77 0.24 2.11 46.15
FFIC Flushing Fin. Corp. of NY* NM 119.20 20.88 119.20 NM 0.16 0.85 22.54
FBHC Fort Bend Holding Corp. of TX NM 114.17 7.05 123.60 13.62 0.28 1.15 34.15
FTSB Fort Thomas Fin. Corp. of KY 19.26 103.64 25.24 103.64 19.26 0.25 1.75 33.78
FKKY Frankfort First Bancorp of KY NM 115.55 30.38 115.55 NM 0.36 3.17 NM
FTNB Fulton Bancorp of MO 22.19 106.82 24.36 106.82 22.88 0.00 0.00 0.00
GFSB GFS Bancorp of Grinnell IA 14.12 105.92 12.25 105.92 10.70 0.40 1.93 27.21
GUPB GFSB Bancorp of Gallup NM NM 96.95 17.94 96.95 20.09 0.40 2.52 64.52
GWBC Gateway Bancorp of KY NM 92.71 23.24 92.71 19.59 0.40 2.76 74.07
GBCI Glacier Bancorp of MT 14.52 202.51 19.14 202.69 12.91 0.64 2.74 39.75
GLBK Glendale Co-op. Bank of MA* 17.24 84.35 13.37 84.35 20.62 0.00 0.00 0.00
GFCO Glenway Financial Corp. of OH 14.18 81.65 7.84 83.44 13.97 0.68 3.58 50.75
GTPS Great American Bancorp of IL NM 84.84 23.63 84.84 NM 0.40 2.76 NM
GTFN Great Financial Corp. of KY 22.93 151.12 14.59 157.58 22.57 0.48 1.65 37.80
GSBC Great Southern Bancorp of MO 16.91 226.38 22.90 226.38 14.87 0.40 2.32 39.22
GDVS Greater DV SB,MHC of PA(19.9)* NM 120.48 14.09 120.48 NM 0.36 3.60 NM
GRTR Greater New York SB of NY* 16.88 118.42 7.07 118.42 19.01 0.20 1.48 25.00
GSFC Green Street Fin. Corp. of NC NM 106.22 37.49 106.22 NM 0.40 2.60 NM
GROV GroveBank for Savings of MA(8)* 14.58 194.84 12.66 194.92 15.54 0.72 1.47 21.36
GFED Guaranty FS&LA,MHC of MO(31.1) NM 133.92 19.40 133.92 NM 0.36 3.17 NM
GSLC Guaranty Svgs & Loan FA of VA 16.50 119.57 6.58 119.57 14.22 0.10 1.21 20.00
HEMT HF Bancorp of Hemet CA NM 86.61 6.88 86.61 NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 14.35 96.38 8.66 96.66 11.38 0.36 2.18 31.30
HFNC HFNC Financial Corp. of NC NM 124.01 36.35 124.01 NM 0.28 1.57 60.87
HMNF HMN Financial, Inc. of MN 19.41 101.96 15.09 101.96 16.59 0.00 0.00 0.00
HALL Hallmark Capital Corp. of WI 17.98 93.52 6.56 93.52 13.35 0.00 0.00 0.00
HARB Harbor FSB, MHC of FL (45.7) 18.29 186.15 14.93 194.29 13.56 1.20 3.75 68.57
HRBF Harbor Federal Bancorp of MD NM 96.49 12.40 96.49 NM 0.40 2.65 NM
HFSA Hardin Bancorp of Hardin MO NM 84.38 14.16 84.38 18.74 0.40 3.23 NM
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HARL Harleysville SA of PA 6.22 6.22 0.54 8.12 6.45 0.88 13.09 0.09 602.74 0.75
HARS Harris SB, MHC of PA (23.1) 8.56 7.22 0.02 0.23 0.17 0.49 4.58 0.75 63.17 0.84
HFFB Harrodsburg 1st Fin Bcrp of KY 28.14 28.14 1.17 4.61 3.08 1.17 4.61 0.58 46.70 0.39
HHFC Harvest Home Fin. Corp. of OH 16.72 16.72 0.74 4.13 5.78 0.74 4.13 0.19 75.00 0.26
HAVN Haven Bancorp of Woodhaven NY 6.00 5.97 0.57 9.09 6.98 0.86 13.74 1.01 64.99 1.38
HVFD Haverfield Corp. of OH 7.87 7.86 0.40 4.91 3.89 0.84 10.36 0.28 276.81 0.94
HTHR Hawthorne Fin. Corp. of CA 3.85 3.85 0.82 21.28 32.53 0.57 14.69 10.58 17.32 2.16
HBNK Highland Federal Bank of CA 7.13 7.13 -0.09 -1.31 -1.05 0.22 3.12 3.30 46.96 2.00
HIFS Hingham Inst. for Sav. of MA* 9.70 9.70 1.07 10.69 8.51 1.07 10.69 0.78 88.21 0.90
HNFC Hinsdale Financial Corp. of IL 8.52 8.28 0.45 5.68 4.70 0.68 8.52 0.17 211.76 0.41
HBEI Home Bancorp of Elgin IL 26.71 26.71 0.13 0.80 0.47 0.68 4.14 0.49 50.03 0.35
HBFW Home Bancorp of Fort Wayne IN 15.50 15.50 0.84 5.00 4.92 0.84 5.00 0.04 NA 0.57
HBBI Home Building Bancorp of IN 12.92 12.92 -0.32 -2.31 -2.44 0.02 0.16 0.35 51.68 0.27
HOMF Home Fed Bancorp of Seymour IN 8.16 7.86 0.98 12.02 7.63 1.16 14.25 0.46 108.25 0.58
HWEN Home Financial Bancorp of IN 20.03 20.03 0.50 4.10 2.77 0.72 5.92 0.96 44.47 0.58
HPBC Home Port Bancorp, Inc. of MA* 10.41 10.41 1.73 15.77 9.72 1.74 15.87 0.40 307.31 1.54
HMCI Homecorp, Inc. of Rockford IL 6.00 6.00 0.10 1.59 1.63 0.33 5.44 3.64 11.70 0.53
LOAN Horizon Bancorp, Inc of TX(8)* 8.27 8.02 1.42 16.41 6.79 1.09 12.60 0.38 135.94 0.72
HZFS Horizon Fin'l. Services of IA 10.73 10.73 0.13 1.11 1.45 0.33 2.85 1.12 45.26 0.76
HRZB Horizon Financial Corp. of WA* 15.94 15.94 1.52 9.43 8.60 1.48 9.18 0.01 NA 0.81
IBSF IBS Financial Corp. of NJ 19.45 19.45 0.61 2.97 2.69 0.98 4.81 0.11 123.82 0.55
ISBF ISB Financial Corp. of LA 16.38 15.88 0.81 4.38 4.17 1.09 5.94 NA NA 1.03
ITLA Imperial Thrift & Loan of CA* 11.76 11.76 1.43 14.06 8.36 1.43 14.06 2.24 61.01 1.64
IFSB Independence FSB of DC 6.73 5.82 0.13 1.97 3.41 0.20 2.96 NA NA 0.38
INCB Indiana Comm. Bank, SB of IN 12.30 12.30 0.15 1.06 0.91 0.48 3.41 NA NA NA
IFSL Indiana Federal Corp. of IN(8) 8.65 8.07 0.68 7.23 4.92 0.96 10.14 1.32 64.27 1.12
INBI Industrial Bancorp of OH 18.93 18.93 0.73 3.38 3.40 1.36 6.27 0.46 101.75 0.54
IWBK Interwest SB of Oak Harbor WA 6.48 6.32 0.77 11.23 4.25 1.11 16.23 0.54 87.60 0.82
IPSW Ipswich SB of Ipswich MA* 5.91 5.91 1.33 21.97 13.43 1.10 18.17 1.81 47.96 1.19
IROQ Iroquois Bancorp of Auburn NY* 5.99 5.37 0.65 10.80 7.46 0.88 14.61 0.92 72.68 0.91
JSBF JSB Financial, Inc. of NY 21.60 21.60 1.66 7.56 7.12 1.66 7.56 1.37 24.80 0.61
JXVL Jacksonville Bancorp of TX 16.20 16.20 0.68 4.84 3.72 1.02 7.26 NA NA NA
JXSB Jcksnville SB,MHC of IL(43.3%) 11.52 11.49 0.19 1.60 1.68 0.47 3.96 0.37 131.69 0.59
JSBA Jefferson Svgs Bancorp of MO 7.24 5.97 0.23 3.21 2.71 0.61 8.55 1.02 48.29 0.67
JOAC Joachim Bancorp of MO 29.55 29.55 0.41 1.53 1.32 0.71 2.66 0.33 63.87 0.32
KSAV KS Bancorp of Kenly NC 14.37 14.36 0.82 5.34 5.41 1.15 7.47 0.55 55.53 0.37
KSBK KSB Bancorp of Kingfield ME* 6.82 6.32 0.89 13.40 12.00 0.89 13.40 1.38 47.56 0.90
KFBI Klamath First Bancorp of OR 22.83 22.83 0.98 3.78 3.55 1.40 5.42 0.04 356.92 0.20
LBFI L&B Financial of S. Springs TX(8) 16.99 16.99 0.65 3.72 3.47 0.87 4.98 0.51 103.00 1.08
LSBI LSB Fin. Corp. of Lafayette IN 9.40 9.40 0.50 4.76 4.80 0.46 4.33 1.37 70.21 1.09
LVSB Lakeview SB of Paterson NJ 10.24 8.16 1.24 11.79 9.57 0.85 8.07 1.21 55.15 1.73
LARK Landmark Bancshares of KS 15.16 15.16 0.69 4.20 4.47 0.92 5.58 0.19 193.45 0.59
LARL Laurel Capital Group of PA 10.41 10.41 1.06 10.06 8.57 1.40 13.31 0.64 148.64 1.27
LSBX Lawrence Savings Bank of MA* 8.21 8.21 1.46 18.83 13.21 1.46 18.83 0.85 129.65 2.42
LFED Leeds FSB, MHC of MD (35.3) 16.10 16.10 0.76 4.69 3.69 1.10 6.76 0.02 942.86 0.25
LXMO Lexington B&L Fin. Corp. of MO 30.57 30.57 1.04 5.72 3.19 1.04 5.72 0.98 33.39 0.49
LBCI Liberty Bancorp of Chicago IL(8) 9.53 9.50 0.32 3.31 3.37 0.62 6.40 0.10 508.37 0.72
LIFB Life Bancorp of Norfolk VA 10.35 10.01 0.63 4.95 4.19 0.91 7.14 0.38 196.63 1.76
LFBI Little Falls Bancorp of NJ 14.88 13.71 0.17 1.44 1.28 0.45 3.86 1.18 28.24 0.84
LOGN Logansport Fin. Corp. of IN 19.98 19.98 1.23 4.85 6.04 1.54 6.08 0.36 81.47 0.42
LONF London Financial Corp. of OH 21.37 21.37 0.78 5.39 3.85 0.78 5.39 0.21 242.86 0.68
LISB Long Island Bancorp of NY 9.99 9.99 0.93 8.80 6.06 0.85 8.00 NA NA 1.08
MAFB MAF Bancorp of IL 7.65 6.54 0.53 7.80 3.50 0.92 13.60 0.47 119.22 0.74
MBLF MBLA Financial Corp. of MO(8) 12.31 12.31 0.57 4.07 4.47 0.75 5.36 0.19 127.59 0.50
MFBC MFB Corp. of Mishawaka IN 17.90 17.90 0.72 3.67 4.30 0.71 3.62 0.06 258.14 0.24
MLBC ML Bancorp of Villanova PA 7.31 7.08 0.74 9.25 7.62 0.69 8.67 0.61 129.89 1.81
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ ______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
_______________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HARL Harleysville SA of PA 15.50 123.52 7.68 123.52 9.62 0.44 2.35 36.36
HARS Harris SB, MHC of PA (23.1) NM 137.79 11.79 163.39 NM 0.58 3.20 NM
HFFB Harrodsburg 1st Fin Bcrp of KY NM 129.55 36.45 129.55 NM 0.40 2.16 70.18
HHFC Harvest Home Fin. Corp. of OH 17.32 72.25 12.08 72.25 17.32 0.40 4.05 70.18
HAVN Haven Bancorp of Woodhaven NY 14.32 131.16 7.87 131.94 9.47 0.60 2.11 30.15
HVFD Haverfield Corp. of OH NM 127.85 10.06 128.03 12.17 0.54 2.92 NM
HTHR Hawthorne Fin. Corp. of CA 3.07 60.73 2.34 60.73 4.46 0.00 0.00 0.00
HBNK Highland Federal Bank of CA NM 117.50 8.38 117.50 NM 0.00 0.00 NM
HIFS Hingham Inst. for Sav. of MA* 11.74 121.11 11.75 121.11 11.74 0.36 2.06 24.16
HNFC Hinsdale Financial Corp. of IL 21.27 117.83 10.04 121.31 14.18 0.00 0.00 0.00
HBEI Home Bancorp of Elgin IL NM 90.72 24.23 90.72 NM 0.00 0.00 0.00
HBFW Home Bancorp of Fort Wayne IN 20.33 109.08 16.91 109.08 20.33 0.20 1.08 21.98
HBBI Home Building Bancorp of IN NM 102.16 13.20 102.16 NM 0.30 1.67 NM
HOMF Home Fed Bancorp of Seymour IN 13.10 151.87 12.39 157.65 11.05 0.60 1.70 22.30
HWEN Home Financial Bancorp of IN NM 84.91 17.00 84.91 25.00 0.20 1.54 55.56
HPBC Home Port Bancorp, Inc. of MA* 10.29 158.26 16.47 158.26 10.22 0.80 4.74 48.78
HMCI Homecorp, Inc. of Rockford IL NM 98.12 5.89 98.12 17.93 0.00 0.00 0.00
LOAN Horizon Bancorp, Inc of TX(8)* 14.73 226.73 18.75 233.70 19.19 0.16 0.84 12.40
HZFS Horizon Fin'l. Services of IA NM 78.98 8.47 78.98 NM 0.32 2.21 NM
HRZB Horizon Financial Corp. of WA* 11.62 107.90 17.19 107.90 11.94 0.40 3.02 35.09
IBSF IBS Financial Corp. of NJ NM 116.47 22.65 116.47 22.99 0.32 2.05 NM
ISBF ISB Financial Corp. of LA 23.97 109.86 17.99 113.27 17.68 0.34 1.94 46.58
ITLA Imperial Thrift & Loan of CA* 11.97 126.58 14.88 126.58 11.97 0.00 0.00 0.00
IFSB Independence FSB of DC NM 58.48 3.93 67.55 19.54 0.22 2.89 NM
INCB Indiana Comm. Bank, SB of IN NM 136.36 16.77 136.36 NM 0.35 2.12 NM
IFSL Indiana Federal Corp. of IN(8) 20.33 147.26 12.73 157.84 14.50 0.72 3.31 67.29
INBI Industrial Bancorp of OH NM 113.28 21.45 113.28 15.86 0.40 3.23 NM
IWBK Interwest SB of Oak Harbor WA 23.54 230.03 14.91 236.09 16.29 0.52 1.61 37.96
IPSW Ipswich SB of Ipswich MA* 7.45 147.09 8.69 147.09 9.01 0.20 1.72 12.82
IROQ Iroquois Bancorp of Auburn NY* 13.40 139.35 8.35 155.52 9.91 0.32 1.91 25.60
JSBF JSB Financial, Inc. of NY 14.04 108.63 23.47 108.63 14.04 1.20 3.29 46.15
JXVL Jacksonville Bancorp of TX NM 108.70 17.61 108.70 17.90 0.50 3.45 NM
JXSB Jcksnville SB,MHC of IL(43.3%) NM 96.08 11.06 96.30 24.04 0.40 3.20 NM
JSBA Jefferson Svgs Bancorp of MO NM 117.10 8.48 142.05 13.86 0.32 1.40 51.61
JOAC Joachim Bancorp of MO NM 102.28 30.23 102.28 NM 0.50 3.48 NM
KSAV KS Bancorp of Kenly NC 18.47 100.14 14.39 100.24 13.21 0.60 2.87 53.10
KSBK KSB Bancorp of Kingfield ME* 8.33 104.55 7.13 112.91 8.33 0.20 0.87 7.25
KFBI Klamath First Bancorp of OR NM 113.10 25.82 113.10 19.66 0.28 1.87 52.83
LBFI L&B Financial of S. Springs TX(8) NM 109.61 18.62 109.61 21.52 0.40 2.35 67.80
LSBI LSB Fin. Corp. of Lafayette IN 20.83 102.97 9.68 102.97 22.87 0.32 1.71 35.56
LVSB Lakeview SB of Paterson NJ 10.44 120.70 12.36 151.52 15.26 0.25 1.06 11.11
LARK Landmark Bancshares of KS 22.37 97.25 14.74 97.25 16.83 0.40 2.35 52.63
LARL Laurel Capital Group of PA 11.67 114.34 11.90 114.34 8.82 0.44 2.77 32.35
LSBX Lawrence Savings Bank of MA* 7.57 129.31 10.62 129.31 7.57 0.00 0.00 0.00
LFED Leeds FSB, MHC of MD (35.3) NM 125.00 20.12 125.00 18.82 0.68 4.25 NM
LXMO Lexington B&L Fin. Corp. of MO NM 91.15 27.86 91.15 NM 0.00 0.00 0.00
LBCI Liberty Bancorp of Chicago IL(8) NM 99.80 9.51 100.08 15.36 0.60 2.35 69.77
LIFB Life Bancorp of Norfolk VA 23.86 124.37 12.88 128.64 16.55 0.44 2.40 57.14
LFBI Little Falls Bancorp of NJ NM 86.51 12.87 93.91 NM 0.10 0.80 62.50
LOGN Logansport Fin. Corp. of IN 16.55 97.51 19.48 97.51 13.20 0.40 3.40 56.34
LONF London Financial Corp. of OH NM 89.88 19.20 89.88 NM 0.24 1.78 46.15
LISB Long Island Bancorp of NY 16.51 145.82 14.57 145.82 18.16 0.40 1.30 21.39
MAFB MAF Bancorp of IL NM 150.07 11.48 175.47 16.41 0.36 1.04 29.75
MBLF MBLA Financial Corp. of MO(8) 22.35 91.92 11.31 91.92 16.96 0.40 2.11 47.06
MFBC MFB Corp. of Mishawaka IN 23.24 86.43 15.47 86.43 23.57 0.32 1.94 45.07
MLBC ML Bancorp of Villanova PA 13.12 125.19 9.15 129.31 14.00 0.38 2.61 34.23
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MBB MSB Bancorp of Middletown NY* 6.55 2.57 0.18 2.32 2.30 0.20 2.58 0.78 26.77 0.54
MSBF MSB Financial Corp. of MI 20.05 20.05 1.40 6.17 6.34 1.72 7.59 0.78 72.91 0.61
MGNL Magna Bancorp of MS 9.67 9.20 1.36 13.84 6.94 1.67 17.05 3.81 19.52 1.09
MARN Marion Capital Holdings of IN 22.68 22.68 1.14 4.80 5.35 1.43 6.03 0.95 121.70 1.37
MFCX Marshalltown Fin. Corp. of IA(8) 15.58 15.58 0.06 0.36 0.34 0.41 2.63 NA NA 0.19
MFSL Maryland Fed. Bancorp of MD 8.39 8.26 0.79 9.63 8.20 0.56 6.75 0.48 84.24 0.46
MASB MassBank Corp. of Reading MA* 9.95 9.95 1.07 10.64 9.26 1.01 10.02 0.27 100.30 0.94
MFLR Mayflower Co-Op. Bank of MA* 9.86 9.67 0.92 9.28 7.80 0.88 8.88 1.16 80.27 1.50
MECH Mechanics SB of Hartford CT* 10.04 10.04 -0.34 -4.95 -2.84 -0.32 -4.73 2.06 56.89 1.71
MDBK Medford Savings Bank of MA* 8.98 8.24 1.03 11.54 8.88 1.02 11.38 0.53 139.29 1.34
MERI Meritrust FSB of Thibodaux LA 7.26 7.26 0.55 7.37 5.03 0.93 12.52 NA NA NA
MWBX Metro West of MA* 7.69 7.69 1.31 17.51 9.24 1.31 17.51 2.21 46.46 1.39
MSEA Metropolitan Bancorp of WA(8) 6.76 6.14 0.52 7.73 5.61 0.80 11.73 NA NA 1.76
MCBS Mid Continent Bancshares of KS 10.84 10.83 1.05 8.54 6.53 1.21 9.81 0.15 82.23 0.23
MIFC Mid Iowa Financial Corp. of IA 9.38 9.36 0.93 9.97 9.92 0.93 9.97 0.05 513.21 0.44
MCBN Mid-Coast Bancorp of ME 8.78 8.78 0.34 3.85 4.37 0.58 6.53 0.41 120.43 0.60
MIDC Midconn Bank of Kensington CT* 9.72 8.19 0.51 5.40 4.97 0.64 6.75 1.96 27.19 0.68
MWBI Midwest Bancshares, Inc. of IA 6.58 6.58 0.66 9.61 9.74 0.99 14.37 0.47 103.85 0.82
MWFD Midwest Fed. Fin. Corp of WI 8.39 8.02 1.04 11.36 6.50 1.01 11.07 0.24 322.17 1.04
MFFC Milton Fed. Fin. Corp. of OH 18.51 18.51 0.66 3.25 3.54 0.86 4.22 0.34 79.06 0.42
MIVI Miss. View Hold. Co. of MN 18.39 18.39 1.30 6.73 8.43 1.22 6.33 0.51 249.15 2.04
MBSP Mitchell Bancorp of NC* 42.08 42.08 0.50 1.20 1.26 1.54 3.66 2.56 17.67 0.60
MBBC Monterey Bay Bancorp of CA 13.99 13.86 0.13 0.89 0.87 0.39 2.68 0.48 83.49 0.56
MORG Morgan Financial Corp. of CO 12.64 12.64 0.74 5.16 6.04 0.97 6.83 1.29 12.36 0.22
MSBK Mutual SB, FSB of Bay City MI 5.82 5.82 0.07 1.30 2.11 -0.05 -0.87 0.13 208.44 0.73
NHTB NH Thrift Bancshares of NH 7.27 7.27 0.40 5.27 5.11 0.60 7.90 1.10 58.61 0.79
NSLB NS&L Bancorp of Neosho MO 23.31 23.31 0.97 4.06 4.80 0.88 3.69 0.02 390.91 0.14
NMSB Newmil Bancorp. of CT* 10.51 10.51 0.77 7.14 6.63 0.76 7.02 1.86 86.77 3.07
NFSL Newnan SB, FSB of Newnan GA 12.80 12.73 2.24 19.70 9.35 1.95 17.11 NA NA 1.41
NASB North American SB of MO 6.80 6.55 1.25 17.53 10.90 1.18 16.58 3.12 24.45 0.89
NBSI North Bancshares of Chicago IL 15.13 15.13 0.34 1.96 2.29 0.62 3.60 NA NA 0.30
FFFD North Central Bancshares of IA 28.33 28.33 1.50 6.26 5.53 1.79 7.44 0.21 474.69 1.19
NEBC Northeast Bancorp of ME* 7.05 5.96 0.37 4.96 4.89 0.35 4.73 1.36 79.76 1.43
NEIB Northeast Indiana Bncrp of IN 17.45 17.45 1.01 4.97 5.56 1.22 5.96 0.20 320.13 0.73
NSBK Northside SB of Bronx NY(8)* 7.78 7.71 1.21 15.88 7.67 1.05 13.89 0.41 85.58 1.02
NWEQ Northwest Equity Corp. of WI 12.14 12.14 0.70 5.17 5.39 0.91 6.73 1.19 39.21 0.58
NWSB Northwest SB, MHC of PA(29.9) 9.85 9.37 0.69 6.52 3.92 1.05 9.90 0.86 80.78 0.93
NSSY Norwalk Savings Society of CT* 7.21 6.92 0.81 10.33 7.84 0.67 8.48 2.21 38.08 1.18
NSSB Norwich Financial Corp. of CT* 10.78 9.76 0.87 8.07 5.74 0.85 7.86 1.66 134.62 3.29
NTMG Nutmeg FS&LA of CT 5.37 5.37 0.28 4.82 4.69 0.33 5.81 NA NA 0.51
OHSL OHSL Financial Corp. of OH 11.57 11.57 0.57 4.63 4.63 0.85 6.95 0.22 107.97 0.33
OSBF OSB Fin. Corp. of Oshkosh WI(8) 12.39 12.39 0.04 0.29 0.29 0.46 3.66 0.17 249.07 0.63
OCFC Ocean Fin. Corp. of NJ 20.73 20.73 -0.29 -2.66 -1.41 0.88 7.99 0.80 62.07 0.91
OFCP Ottawa Financial Corp. of MI 9.11 7.20 0.40 3.14 2.87 0.83 6.42 0.32 113.73 0.44
PFFB PFF Bancorp of Pomona CA 11.54 11.41 -0.06 -0.55 -0.42 0.30 2.92 1.93 53.40 1.42
PVFC PVF Capital Corp. of OH 6.51 6.51 0.93 14.19 8.67 1.21 18.34 0.68 107.66 0.82
PCCI Pacific Crest Capital of CA* 9.04 9.04 1.19 15.95 9.19 1.02 13.59 2.24 53.13 1.69
PALM Palfed, Inc. of Aiken SC 8.00 7.63 0.37 4.51 3.10 0.59 7.31 3.44 34.31 1.51
PBCI Pamrapo Bancorp, Inc. of NJ 15.05 14.93 0.85 5.46 5.14 1.21 7.77 3.45 23.22 1.35
PFED Park Bancorp of Chicago IL 23.51 23.51 0.50 3.51 2.34 0.81 5.69 0.15 188.68 0.76
PVSA Parkvale Financial Corp of PA 7.42 7.39 0.73 9.98 6.53 1.03 14.04 0.26 596.13 2.23
PBIX Patriot Bank Corp. of PA 10.50 10.50 0.40 2.96 2.32 0.67 4.97 0.15 247.00 0.70
PEEK Peekskill Fin. Corp. of NY 29.46 29.46 1.08 3.90 3.87 1.40 5.03 1.31 25.21 1.42
PFSB PennFed Fin. Services of NJ 7.89 6.33 0.53 5.88 5.57 0.84 9.24 0.86 28.23 0.38
PWBC PennFirst Bancorp of PA 6.98 6.33 0.42 5.51 5.41 0.64 8.38 0.59 75.76 1.46
PWBK Pennwood SB of PA* 20.02 20.02 0.33 2.73 1.90 0.33 2.73 NA NA 1.60
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MBB MSB Bancorp of Middletown NY* NM 97.60 6.39 248.31 NM 0.60 3.14 NM
MSBF MSB Financial Corp. of MI 15.78 99.95 20.04 99.95 12.83 0.50 2.60 40.98
MGNL Magna Bancorp of MS 14.40 196.51 18.99 206.42 11.69 0.60 3.33 48.00
MARN Marion Capital Holdings of IN 18.69 94.79 21.50 94.79 14.87 0.80 3.93 73.39
MFCX Marshalltown Fin. Corp. of IA(8) NM 105.76 16.48 105.76 NM 0.00 0.00 0.00
MFSL Maryland Fed. Bancorp of MD 12.19 113.52 9.52 115.32 17.39 0.66 1.93 23.49
MASB MassBank Corp. of Reading MA* 10.80 114.67 11.41 114.67 11.46 0.96 2.57 27.75
MFLR Mayflower Co-Op. Bank of MA* 12.83 114.34 11.28 116.60 13.41 0.48 3.25 41.74
MECH Mechanics SB of Hartford CT* NM 114.99 11.55 114.99 NM 0.00 0.00 NM
MDBK Medford Savings Bank of MA* 11.26 125.19 11.24 136.46 11.42 0.68 2.72 30.63
MERI Meritrust FSB of Thibodaux LA 19.89 145.92 10.59 145.92 11.71 0.70 2.21 44.03
MWBX Metro West of MA* 10.82 176.45 13.56 176.45 10.82 0.10 2.05 22.22
MSEA Metropolitan Bancorp of WA(8) 17.82 137.40 9.29 151.34 11.74 0.00 0.00 0.00
MCBS Mid Continent Bancshares of KS 15.32 130.14 14.10 130.21 13.34 0.40 1.68 25.81
MIFC Mid Iowa Financial Corp. of IA 10.08 97.35 9.13 97.50 10.08 0.08 1.28 12.90
MCBN Mid-Coast Bancorp of ME 22.87 87.74 7.71 87.74 13.49 0.52 2.77 63.41
MIDC Midconn Bank of Kensington CT* 20.11 107.28 10.43 127.37 16.09 0.60 3.11 62.50
MWBI Midwest Bancshares, Inc. of IA 10.27 102.00 6.72 102.00 6.87 0.60 2.26 23.26
MWFD Midwest Fed. Fin. Corp of WI 15.38 176.64 14.83 184.80 15.79 0.30 1.67 25.64
MFFC Milton Fed. Fin. Corp. of OH NM 95.73 17.72 95.73 21.72 0.56 3.97 NM
MIVI Miss. View Hold. Co. of MN 11.87 83.87 15.42 83.87 12.63 0.16 1.36 16.16
MBSP Mitchell Bancorp of NC* NM 94.87 39.93 94.87 NM 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 105.91 14.81 106.90 NM 0.10 0.67 NM
MORG Morgan Financial Corp. of CO 16.54 92.29 11.66 92.29 12.50 0.24 2.13 35.29
MSBK Mutual SB, FSB of Bay City MI NM 61.65 3.59 61.65 NM 0.00 0.00 0.00
NHTB NH Thrift Bancshares of NH 19.58 103.89 7.56 103.89 13.06 0.50 4.26 NM
NSLB NS&L Bancorp of Neosho MO 20.83 86.81 20.23 86.81 22.92 0.50 3.64 NM
NMSB Newmil Bancorp. of CT* 15.09 109.92 11.55 109.92 15.35 0.24 2.74 41.38
NFSL Newnan SB, FSB of Newnan GA 10.70 193.04 24.71 194.08 12.32 0.44 1.74 18.64
NASB North American SB of MO 9.17 151.96 10.34 157.93 9.70 0.63 1.87 17.12
NBSI North Bancshares of Chicago IL NM 95.45 14.45 95.45 23.86 0.40 2.54 NM
FFFD North Central Bancshares of IA 18.07 90.89 25.75 90.89 15.19 0.25 1.87 33.78
NEBC Northeast Bancorp of ME* 20.45 102.58 7.23 121.18 21.43 0.32 2.37 48.48
NEIB Northeast Indiana Bncrp of IN 18.00 94.47 16.48 94.47 15.00 0.32 2.37 42.67
NSBK Northside SB of Bronx NY(8)* 13.03 197.94 15.40 199.62 14.90 1.00 1.92 25.06
NWEQ Northwest Equity Corp. of WI 18.56 98.16 11.92 98.16 14.24 0.40 3.27 60.61
NWSB Northwest SB, MHC of PA(29.9) NM 165.42 16.29 173.88 16.77 0.32 2.42 61.54
NSSY Norwalk Savings Society of CT* 12.76 126.24 9.10 131.58 15.54 0.20 0.82 10.53
NSSB Norwich Financial Corp. of CT* 17.41 140.29 15.12 154.88 17.89 0.48 2.46 42.86
NTMG Nutmeg FS&LA of CT 21.32 102.40 5.50 102.40 17.68 0.15 2.07 44.12
OHSL OHSL Financial Corp. of OH 21.61 100.83 11.66 100.83 14.41 0.76 3.66 NM
OSBF OSB Fin. Corp. of Oshkosh WI(8) NM 101.83 12.62 101.83 NM 0.64 2.35 NM
OCFC Ocean Fin. Corp. of NJ NM 93.65 19.41 93.65 23.61 0.00 0.00 NM
OFCP Ottawa Financial Corp. of MI NM 115.12 10.49 145.65 17.09 0.36 2.15 NM
PFFB PFF Bancorp of Pomona CA NM 98.55 11.37 99.65 NM 0.00 0.00 NM
PVFC PVF Capital Corp. of OH 11.54 155.12 10.09 155.12 8.93 0.00 0.00 0.00
PCCI Pacific Crest Capital of CA* 10.88 145.06 13.12 145.06 12.77 0.00 0.00 0.00
PALM Palfed, Inc. of Aiken SC NM 143.56 11.49 150.57 19.86 0.08 0.55 17.78
PBCI Pamrapo Bancorp, Inc. of NJ 19.45 111.59 16.80 112.52 13.67 0.90 4.77 NM
PFED Park Bancorp of Chicago IL NM 80.43 18.91 80.43 NM 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 15.30 148.88 11.04 149.41 10.88 0.52 2.06 31.52
PBIX Patriot Bank Corp. of PA NM 115.96 12.17 115.96 NM 0.32 2.39 NM
PEEK Peekskill Fin. Corp. of NY NM 93.46 27.53 93.46 20.06 0.36 2.68 69.23
PFSB PennFed Fin. Services of NJ 17.96 108.29 8.55 134.94 11.43 0.28 1.39 25.00
PWBC PennFirst Bancorp of PA 18.49 107.83 7.53 118.94 12.16 0.36 2.67 49.32
PWBK Pennwood SB of PA* NM 83.19 16.65 83.19 NM 0.00 0.00 0.00<PAGE>
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PBKB People's SB of Brockton MA* 5.61 5.33 0.75 13.51 9.13 0.47 8.50 1.02 90.38 1.79
PFDC Peoples Bancorp of Auburn IN 15.24 15.24 1.15 7.54 6.90 1.51 9.89 0.40 79.14 0.40
PBCT Peoples Bank, MHC of CT(32.3)* 8.26 8.25 1.10 13.97 7.01 0.88 11.19 1.42 85.13 1.82
PFFC Peoples Fin. Corp. of OH 25.40 25.40 0.59 2.31 2.77 0.67 2.63 0.76 32.38 0.47
PHBK Peoples Heritage Fin Grp of ME* 8.46 7.61 1.19 13.96 6.68 1.30 15.26 1.14 120.91 1.89
PBNB Peoples Sav. Fin. Corp. of CT* 9.78 9.11 0.95 9.01 7.57 0.97 9.27 0.61 55.81 0.61
PERM Permanent Bancorp of IN 9.47 9.36 0.15 1.40 1.33 0.44 4.19 1.71 31.61 1.07
PMFI Perpetual Midwest Fin. of IA 8.57 8.57 0.18 1.94 1.92 0.39 4.11 0.46 147.80 0.88
PERT Perpetual of SC, MHC (46.8%) 14.28 14.28 1.01 7.09 6.18 1.01 7.09 NA NA 1.08
PCBC Perry Co. Fin. Corp. of MO 18.77 18.77 0.88 4.37 4.71 0.99 4.92 NA NA 0.09
PHFC Pittsburgh Home Fin. of PA 15.55 15.55 0.43 4.07 2.67 0.71 6.74 1.22 47.30 0.83
PFSL Pocahnts Fed, MHC of AR (46.4) 5.95 5.95 0.54 9.00 7.01 0.72 12.04 0.32 141.55 1.25
POBS Portsmouth Bank Shrs Inc of NH(8)* 24.91 24.91 2.27 9.02 7.78 1.85 7.32 0.29 89.58 0.76
PKPS Poughkeepsie SB of NY 8.15 8.15 1.48 18.01 18.67 2.36 28.68 4.49 21.98 1.33
PRBC Prestige Bancorp of PA 14.55 14.55 0.03 0.28 0.23 0.38 3.52 0.18 170.81 0.43
PETE Primary Bank of NH* 6.41 6.39 -0.02 -0.31 -0.27 -0.02 -0.39 1.40 45.71 1.16
PSAB Prime Bancorp, Inc. of PA 8.49 7.97 0.73 7.98 6.02 0.95 10.41 1.34 45.65 1.00
PFNC Progress Financial Corp. of PA 5.09 5.06 0.59 11.76 6.69 0.73 14.50 0.98 61.67 0.96
PSBK Progressive Bank, Inc. of NY* 8.21 7.19 1.14 13.10 10.26 1.17 13.49 1.05 94.69 1.53
PROV Provident Fin. Holdings of CA 14.64 14.64 0.21 2.06 1.61 -0.01 -0.09 1.95 46.19 1.08
PULB Pulaski SB, MHC of MO (29.0) 12.75 12.75 0.88 7.12 5.38 0.81 6.56 0.53 47.67 0.31
PULS Pulse Bancorp of S. River NJ 7.65 7.65 0.74 7.33 7.24 1.12 11.12 1.23 39.65 1.79
QCFB QCF Bancorp of Virginia MN 17.64 17.64 1.24 6.25 7.46 1.24 6.25 NA NA NA
QCBC Quaker City Bancorp of CA 9.03 9.00 0.22 2.25 2.42 0.49 5.11 1.81 61.38 1.30
QCSB Queens County SB of NY* 15.59 15.59 1.77 10.50 6.18 1.77 10.50 0.72 98.47 0.83
RCSB RCSB Financial, Inc. of NY* 6.87 6.64 1.01 12.24 9.19 0.88 10.76 0.74 94.44 1.37
RARB Raritan Bancorp. of Raritan NJ* 7.84 7.68 0.83 11.06 8.13 0.92 12.23 0.44 183.19 1.26
REDF RedFed Bancorp of Redlands CA 8.06 8.06 -0.77 -12.38 -7.09 -0.46 -7.51 3.94 29.77 1.40
RELY Reliance Bancorp of NY 8.17 5.52 0.52 5.16 4.75 0.85 8.46 0.97 25.31 0.54
RELI Reliance Bancshares Inc of WI(8)* 61.08 61.08 1.33 2.19 3.70 1.33 2.19 NA NA 0.56
RFED Roosevelt Fin. Grp. Inc. of MO 4.87 4.62 0.38 8.07 4.38 0.83 17.41 0.83 28.67 0.51
RVSB Rvrview SB,FSB MHC of WA(40.3) 10.75 9.62 0.99 9.12 5.67 1.16 10.65 0.20 166.22 0.52
SCCB S. Carolina Comm. Bnshrs of SC 28.65 28.65 0.85 2.94 3.40 1.14 3.92 NA NA 0.87
SBFL SB Fing. Lakes MHC of NY(33.0) 10.14 10.14 -0.57 -5.05 -4.30 0.10 0.87 1.15 49.69 1.27
SFED SFS Bancorp of Schenectady NY 12.75 12.75 0.45 3.23 3.90 0.81 5.85 0.66 59.05 0.55
SGVB SGV Bancorp of W. Covina CA 9.07 9.07 -0.01 -0.08 -0.09 0.27 2.64 0.92 31.65 0.39
SISB SIS Bank of Springfield MA* 7.56 7.56 2.02 27.49 17.46 2.03 27.56 0.59 203.71 2.55
SJSB SJS Bancorp of St. Joseph MI(8) 10.41 10.41 0.17 1.51 1.10 0.49 4.26 0.35 129.05 0.66
SWCB Sandwich Co-Op. Bank of MA* 8.17 7.71 0.90 10.86 7.06 0.88 10.60 0.77 100.59 1.13
SFBM Security Bancorp of MT(8) 8.09 6.97 0.53 6.24 4.40 0.63 7.42 0.39 86.91 0.61
SECP Security Capital Corp. of WI 15.89 15.89 0.84 5.04 4.19 1.13 6.79 0.10 NA 1.51
SFSL Security First Corp. of OH 9.28 9.09 0.90 9.98 5.60 1.28 14.16 0.21 377.44 0.89
SMFC Sho-Me Fin. Corp. of MO 10.20 10.20 0.69 5.99 5.18 0.92 7.91 0.06 980.22 0.70
SOBI Sobieski Bancorp of S. Bend IN 17.12 17.12 0.11 0.62 0.70 0.47 2.56 0.11 222.22 0.37
SOSA Somerset Savings Bank of MA(8)* 5.67 5.67 0.46 8.38 7.00 0.46 8.38 8.41 14.61 1.58
SSFC South Street Fin. Corp. of NC* 28.43 28.43 1.34 4.71 4.47 1.43 5.02 NA NA 0.39
SMBC Southern Missouri Bncrp of MO 16.41 16.41 0.94 5.51 6.32 0.88 5.15 0.71 56.68 0.64
SWBI Southwest Bancshares of IL 10.38 10.38 0.82 6.91 6.14 1.13 9.49 0.22 93.24 0.30
SVRN Sovereign Bancorp of PA 3.88 2.66 0.49 12.20 6.54 0.68 16.93 0.68 53.74 0.57
STFR St. Francis Cap. Corp. of WI 8.92 8.50 0.81 7.87 7.21 0.80 7.75 NA NA 0.82
SPBC St. Paul Bancorp, Inc. of IL 8.69 8.66 0.59 6.56 4.96 0.90 9.95 0.57 149.12 1.19
STND Standard Fin. of Chicago IL 11.26 11.24 0.55 4.41 3.52 0.75 6.02 0.16 176.36 0.47
SFFC StateFed Financial Corp. of IA 17.99 17.99 0.97 4.98 5.64 1.22 6.27 1.27 23.88 0.37
SFIN Statewide Fin. Corp. of NJ 9.87 9.85 0.38 3.40 3.39 0.89 7.89 0.92 57.17 1.09
STSA Sterling Financial Corp. of WA 3.90 3.19 0.02 0.44 0.36 0.25 6.02 0.58 93.09 0.88
SSBK Strongsville SB of OH 7.73 7.58 0.64 7.81 5.69 0.83 10.26 0.42 62.45 0.34
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
____________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PBKB People's SB of Brockton MA* 10.95 125.09 7.02 131.76 17.41 0.32 3.01 32.99
PFDC Peoples Bancorp of Auburn IN 14.49 108.93 16.61 108.93 11.05 0.60 3.00 43.48
PBCT Peoples Bank, MHC of CT(32.3)* 14.27 184.62 15.26 184.87 17.81 0.88 3.23 46.07
PFFC Peoples Fin. Corp. of OH NM 83.49 21.21 83.49 NM 0.00 0.00 0.00
PHBK Peoples Heritage Fin Grp of ME* 14.97 172.13 14.56 191.31 13.70 0.68 2.64 39.53
PBNB Peoples Sav. Fin. Corp. of CT* 13.21 117.49 11.49 126.14 12.85 0.92 3.32 43.81
PERM Permanent Bancorp of IN NM 108.06 10.23 109.28 25.00 0.30 1.48 NM
PMFI Perpetual Midwest Fin. of IA NM 106.05 9.08 106.05 24.67 0.30 1.60 NM
PERT Perpetual of SC, MHC (46.8%) 16.18 114.70 16.38 114.70 16.18 0.00 0.00 0.00
PCBC Perry Co. Fin. Corp. of MO 21.25 96.10 18.04 96.10 18.89 0.30 1.76 37.50
PHFC Pittsburgh Home Fin. of PA NM 94.25 14.66 94.25 22.62 0.20 1.52 57.14
PFSL Pocahnts Fed, MHC of AR (46.4) 14.26 123.57 7.35 123.57 10.65 0.84 4.87 69.42
POBS Portsmouth Bank Shrs Inc of NH(8)* 12.85 116.81 29.10 116.81 15.84 0.60 4.41 56.60
PKPS Poughkeepsie SB of NY 5.36 93.92 7.66 93.92 3.37 0.10 1.90 10.20
PRBC Prestige Bancorp of PA NM 82.44 11.99 82.44 NM 0.00 0.00 0.00
PETE Primary Bank of NH* NM 108.70 6.97 109.02 NM 0.00 0.00 NM
PSAB Prime Bancorp, Inc. of PA 16.60 131.15 11.14 139.75 12.74 0.68 3.36 55.74
PFNC Progress Financial Corp. of PA 14.95 167.07 8.50 168.07 12.13 0.08 0.96 14.29
PSBK Progressive Bank, Inc. of NY* 9.75 123.32 10.12 140.85 9.47 0.53 2.30 22.46
PROV Provident Fin. Holdings of CA NM 86.00 12.59 86.00 NM 0.00 0.00 0.00
PULB Pulaski SB, MHC of MO (29.0) 18.58 129.19 16.48 129.19 20.17 1.00 7.08 NM
PULS Pulse Bancorp of S. River NJ 13.82 124.90 9.56 124.90 9.10 0.70 4.44 61.40
QCFB QCF Bancorp of Virginia MN 13.40 96.40 17.01 96.40 13.40 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA NM 94.07 8.50 94.39 18.13 0.00 0.00 0.00
QCSB Queens County SB of NY* 16.18 175.32 27.33 175.32 16.18 1.00 2.12 34.25
RCSB RCSB Financial, Inc. of NY* 10.89 154.15 10.59 159.53 12.39 0.60 2.15 23.44
RARB Raritan Bancorp. of Raritan NJ* 12.30 128.24 10.05 130.91 11.12 0.60 2.58 31.75
REDF RedFed Bancorp of Redlands CA NM 134.38 10.83 134.38 NM 0.00 0.00 NM
RELY Reliance Bancorp of NY 21.07 111.74 9.13 165.49 12.84 0.56 2.99 62.92
RELI Reliance Bancshares Inc of WI(8)* NM 59.00 36.04 59.00 NM 0.00 0.00 0.00
RFED Roosevelt Fin. Grp. Inc. of MO 22.82 181.07 8.83 191.12 10.58 0.62 3.27 74.70
RVSB Rvrview SB,FSB MHC of WA(40.3) 17.63 156.10 16.78 174.48 15.09 0.22 1.31 23.16
SCCB S. Carolina Comm. Bnshrs of SC NM 89.02 25.50 89.02 22.06 0.60 4.00 NM
SBFL SB Fing. Lakes MHC of NY(33.0) NM 120.32 12.21 120.32 NM 0.40 2.96 NM
SFED SFS Bancorp of Schenectady NY NM 89.74 11.45 89.74 14.16 0.24 1.61 41.38
SGVB SGV Bancorp of W. Covina CA NM 91.14 8.26 91.14 NM 0.00 0.00 NM
SISB SIS Bank of Springfield MA* 5.73 137.09 10.36 137.09 5.71 0.00 0.00 0.00
SJSB SJS Bancorp of St. Joseph MI(8) NM 148.00 15.41 148.00 NM 0.44 1.73 NM
SWCB Sandwich Co-Op. Bank of MA* 14.17 148.62 12.14 157.39 14.52 1.20 4.05 57.42
SFBM Security Bancorp of MT(8) 22.73 144.02 11.65 167.22 19.11 0.68 2.27 51.52
SECP Security Capital Corp. of WI 23.86 121.44 19.30 121.44 17.69 0.90 1.23 29.32
SFSL Security First Corp. of OH 17.87 148.53 13.78 151.50 12.59 0.44 2.65 47.31
SMFC Sho-Me Fin. Corp. of MO 19.30 119.45 12.18 119.45 14.61 0.00 0.00 0.00
SOBI Sobieski Bancorp of S. Bend IN NM 91.23 15.62 91.23 NM 0.00 0.00 0.00
SOSA Somerset Savings Bank of MA(8)* 14.29 114.94 6.52 114.94 14.29 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* 22.37 105.48 29.99 105.48 21.02 0.00 0.00 0.00
SMBC Southern Missouri Bncrp of MO 15.83 89.01 14.60 89.01 16.96 0.50 3.51 55.56
SWBI Southwest Bancshares of IL 16.29 124.07 12.88 124.07 11.85 0.76 4.16 67.86
SVRN Sovereign Bancorp of PA 15.29 176.39 6.85 NM 11.02 0.08 0.62 9.41
STFR St. Francis Cap. Corp. of WI 13.87 115.92 10.34 121.62 14.10 0.48 1.81 25.13
SPBC St. Paul Bancorp, Inc. of IL 20.16 134.40 11.68 134.86 13.28 0.48 1.74 35.04
STND Standard Fin. of Chicago IL NM 129.15 14.54 129.39 20.79 0.32 1.52 43.24
SFFC StateFed Financial Corp. of IA 17.74 89.29 16.06 89.29 14.10 0.40 2.42 43.01
SFIN Statewide Fin. Corp. of NJ NM 106.04 10.46 106.28 12.72 0.40 2.88 NM
STSA Sterling Financial Corp. of WA NM 127.55 4.97 155.72 19.93 0.00 0.00 0.00
SSBK Strongsville SB of OH 17.58 135.87 10.50 138.55 13.39 0.48 2.13 37.50
</TABLE>
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of December 13, 1996
Key Financial Ratios Asset Quality Ratios
__________________________________________________________ _______________________
Tang.
Equity/ Equity/ Reported Earnings Core Earnings NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
_____________________ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFSB SuburbFed Fin. Corp. of IL 6.49 6.46 0.22 3.20 3.47 0.48 6.89 0.28 84.20 0.42
SBCN Suburban Bancorp. of OH 12.09 12.09 0.17 1.30 1.53 0.61 4.70 0.13 NA 1.84
THRD TF Financial Corp. of PA 10.81 9.38 0.62 4.46 4.81 0.87 6.19 0.32 79.91 0.57
ROSE TR Financial Corp. of NY 6.35 6.35 0.97 14.97 10.25 0.78 12.01 NA NA 0.86
TPNZ Tappan Zee Fin. Corp. of NY 17.93 17.93 0.69 4.16 3.78 0.64 3.84 2.12 26.73 1.22
PTRS The Potters S&L Co. of OH 8.21 8.21 0.03 0.28 0.32 0.39 4.17 2.20 76.26 3.61
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 19.38 18.97 1.66 8.70 5.94 1.29 6.78 0.36 91.15 0.52
TRIC Tri-County Bancorp of WY 15.94 15.94 0.66 3.67 4.11 0.92 5.08 0.07 801.92 1.19
THBC Troy Hill Bancorp of PA(8) 18.11 18.11 1.01 4.92 4.10 1.18 5.76 1.39 49.75 0.81
TWIN Twin City Bancorp of TN 12.53 12.53 0.78 5.80 5.45 0.99 7.34 0.53 37.63 0.27
UFRM United FS&LA of Rocky Mount NC 7.49 7.49 0.28 3.47 2.97 0.49 6.19 1.20 93.51 1.62
UBMT United SB, FA of MT 22.54 22.54 1.20 5.25 5.60 1.46 6.40 0.70 9.92 0.22
VABF Va. Beach Fed. Fin. Corp of VA 6.60 6.60 0.03 0.49 0.43 0.21 3.29 1.42 51.34 1.00
VFFC Virginia First Savings of VA 7.82 7.59 1.40 18.18 13.83 1.40 18.18 2.32 44.65 1.17
WHGB WHG Bancshares of MD 23.84 23.84 0.75 4.87 3.36 0.75 4.87 0.60 30.56 0.24
WSFS WSFS Financial Corp. of DE* 6.18 6.11 1.47 25.09 13.58 1.49 25.47 2.86 65.77 2.95
WVFC WVS Financial Corp. of PA* 12.89 12.89 1.24 8.73 7.26 1.52 10.71 0.36 204.24 1.31
WLDN Walden Bancorp of MA(8)* 9.06 7.80 1.09 11.91 6.00 1.21 13.22 0.89 120.99 1.79
WRNB Warren Bancorp of Peabody MA* 9.17 9.17 1.73 19.58 10.75 1.70 19.23 1.75 73.15 2.03
WFSL Washington FS&LA of Seattle WA 11.30 10.76 1.63 13.52 7.61 1.81 15.03 0.79 37.73 0.41
WAMU Washington Mutual Inc. of WA* 6.32 5.69 0.90 14.48 6.42 0.99 16.03 0.56 115.82 0.98
WYNE Wayne Bancorp of NJ 14.99 14.99 0.02 0.18 0.14 0.14 1.16 1.17 61.42 1.26
WAYN Wayne S&L Co., MHC of OH(46.7) 8.98 8.98 0.25 2.71 1.78 0.60 6.61 0.61 58.24 0.42
WCFB Webster CityFSB,MHC of IA(45.2 22.89 22.89 0.87 3.89 3.06 1.20 5.35 0.45 92.96 0.73
WBST Webster Financial Corp. of CT 5.06 3.92 0.53 10.21 6.17 0.65 12.61 0.85 110.74 1.45
WEFC Wells Fin. Corp. of Wells MN 13.79 13.79 0.55 3.80 4.00 0.93 6.44 0.34 87.34 0.33
WCBI WestCo Bancorp of IL 15.50 15.50 0.99 6.36 5.44 1.33 8.58 0.53 54.54 0.40
WSTR WesterFed Fin. Corp. of MT 13.83 13.83 0.57 4.24 4.14 0.84 6.23 0.23 155.72 0.54
WOFC Western Ohio Fin. Corp. of OH 16.73 15.74 0.89 3.89 5.00 0.73 3.19 NA NA 0.55
WWFC Westwood Fin. Corp. of NJ 10.19 8.93 0.04 0.40 0.38 0.71 6.86 0.14 155.97 0.54
WEHO Westwood Hmstd Fin Corp of OH 32.96 32.96 -0.08 -0.38 -0.26 0.41 2.03 0.03 459.38 0.18
WFCO Winton Financial Corp. of OH(8) 7.46 7.26 0.93 12.27 9.25 0.78 10.39 0.44 70.82 0.37
FFWD Wood Bancorp of OH 13.17 13.17 0.89 6.32 5.15 1.15 8.18 0.29 120.40 0.45
YFCB Yonkers Fin. Corp. of NY 18.88 18.88 0.68 5.24 3.34 1.01 7.80 1.30 27.74 1.07
YFED York Financial Corp. of PA 7.95 7.95 0.61 7.26 5.44 0.84 9.95 2.45 25.75 0.73
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
_____________________ _______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies
(continued)
___________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SFSB SuburbFed Fin. Corp. of IL NM 93.78 6.09 94.29 13.38 0.32 1.68 48.48
SBCN Suburban Bancorp. of OH NM 87.16 10.54 87.16 18.07 0.60 4.00 NM
THRD TF Financial Corp. of PA 20.78 95.69 10.35 110.27 14.95 0.32 2.00 41.56
ROSE TR Financial Corp. of NY 9.76 142.05 9.02 142.05 12.16 0.80 2.53 24.69
TPNZ Tappan Zee Fin. Corp. of NY NM 98.50 17.66 98.50 NM 0.20 1.45 38.46
PTRS The Potters S&L Co. of OH NM 92.09 7.56 92.09 21.07 0.28 1.49 NM
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 16.84 142.35 27.59 145.45 21.62 0.35 2.19 36.84
TRIC Tri-County Bancorp of WY 24.36 91.35 14.56 91.35 17.59 0.50 2.63 64.10
THBC Troy Hill Bancorp of PA(8) 24.39 118.55 21.47 118.55 20.83 0.40 2.00 48.78
TWIN Twin City Bancorp of TN 18.35 110.72 13.87 110.72 14.50 0.64 3.71 68.09
UFRM United FS&LA of Rocky Mount NC NM 120.34 9.01 120.34 18.90 0.20 2.58 NM
UBMT United SB, FA of MT 17.86 94.27 21.24 94.27 14.65 0.92 4.91 NM
VABF Va. Beach Fed. Fin. Corp of VA NM 115.19 7.61 115.19 NM 0.16 1.73 NM
VFFC Virginia First Savings of VA 7.23 120.96 9.46 124.71 7.23 0.10 0.78 5.62
WHGB WHG Bancshares of MD NM 89.21 21.27 89.21 NM 0.20 1.56 46.51
WSFS WSFS Financial Corp. of DE* 7.37 169.30 10.46 171.06 7.26 0.00 0.00 0.00
WVFC WVS Financial Corp. of PA* 13.78 122.97 15.85 122.97 11.23 0.80 3.30 45.45
WLDN Walden Bancorp of MA(8)* 16.66 187.35 16.97 217.56 15.00 0.64 1.84 30.62
WRNB Warren Bancorp of Peabody MA* 9.30 176.01 16.14 176.01 9.47 0.44 2.82 26.19
WFSL Washington FS&LA of Seattle WA 13.14 181.34 20.49 190.46 11.81 0.92 3.57 46.94
WAMU Washington Mutual Inc. of WA* 15.58 215.84 13.64 239.51 14.08 0.96 2.27 35.29
WYNE Wayne Bancorp of NJ NM 89.25 13.38 89.25 NM 0.00 0.00 0.00
WAYN Wayne S&L Co., MHC of OH(46.7) NM 152.93 13.73 152.93 23.00 0.92 4.00 NM
WCFB Webster CityFSB,MHC of IA(45.2 NM 126.80 29.02 126.80 23.75 0.80 6.13 NM
WBST Webster Financial Corp. of CT 16.20 151.85 7.68 196.21 13.11 0.72 1.91 30.90
WEFC Wells Fin. Corp. of Wells MN 25.00 97.31 13.42 97.31 14.77 0.00 0.00 0.00
WCBI WestCo Bancorp of IL 18.38 117.23 18.17 117.23 13.61 0.60 2.79 51.28
WSTR WesterFed Fin. Corp. of MT 24.16 101.74 14.07 101.74 16.47 0.38 2.10 50.67
WOFC Western Ohio Fin. Corp. of OH 20.00 82.55 13.81 87.76 24.42 1.00 4.76 NM
WWFC Westwood Fin. Corp. of NJ NM 108.47 11.05 123.74 15.69 0.20 1.25 NM
WEHO Westwood Hmstd Fin Corp of OH NM 77.81 25.64 77.81 NM 0.00 0.00 NM
WFCO Winton Financial Corp. of OH(8) 10.81 112.99 8.43 116.05 12.77 0.42 3.50 37.84
FFWD Wood Bancorp of OH 19.41 123.13 16.22 123.13 15.00 0.36 2.18 42.35
YFCB Yonkers Fin. Corp. of NY NM 93.80 17.71 93.80 20.11 0.20 1.55 46.51
YFED York Financial Corp. of PA 18.39 132.34 10.52 132.34 13.42 0.60 3.67 67.42<PAGE>
</TABLE>
<PAGE>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
Historical Stock Price Indices(1)
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ------ ------- --------- ------ -----
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
December 13, 1996 6304.9 728.6 1,284.9 473.6 271.9
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE>
MONTHLY MARKET REPORT
Index Values
<TABLE>
<CAPTION>
Index Values Percent Change
-------------------------------------- -----------------------
11/29/96 10/31/96 12/29/95 11/30/95 1 Month YTD 52 Week
-------- -------- -------- -------- ------- --- -------
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 485.8 456.7 376.5 370.2 6.4 29.0 31.2
MHC Index 520.4 476.5 458.5 479.4 9.2 13.5 8.6
Insurance Indices
- ----------------------------------------------------------------------------------------------------
SAIF Thrifts 441.9 414.5 356.4 349.9 6.6 24.0 26.3
BIF Thrifts 617.6 583.5 436.9 431.0 5.8 41.4 43.3
Stock Exchange Indices
- ----------------------------------------------------------------------------------------------------
AMEX Thrifts 156.5 148.5 137.7 136.0 5.4 13.7 15.1
NYSE Thrifts 285.1 265.9 257.6 249.4 7.2 10.7 14.3
OTC Thrifts 564.9 533.0 449.5 445.0 6.0 25.7 26.9
Geographical Indices
- ---------------------------------------------------------------------------------------------------
New England Thrifts 424.9 386.6 316.1 315.6 9.9 34.4 34.6
Mid-Atlantic Thrifts 967.8 911.9 720.1 715.1 6.1 34.4 35.3
Southwestern Thrifts 318.9 298.2 241.7 249.8 6.9 31.9 27.7
Midwestern Thrifts 1,149.0 1,085.4 951.5 927.5 5.9 20.8 23.9
Southeastern Thrifts 454.5 433.9 367.2 366.2 4.7 23.8 24.1
Western Thrifts 484.6 455.0 380.4 370.1 6.5 27.4 30.9
Asset Size Indices
- ---------------------------------------------------------------------------------------------------
Less than $250M 586.6 570.6 538.4 535.5 2.8 9.0 9.5
$250M to $500M 778.0 738.1 680.3 673.3 5.4 14.4 15.6
$500M to $1B 517.5 489.0 431.4 427.0 5.8 20.0 21.2
$1B to $5B 541.9 508.9 421.7 416.8 6.5 28.5 30.0
Over $5B 310.8 290.3 233.5 227.6 7.1 33.1 36.6
Comparative Indices
- ---------------------------------------------------------------------------------------------------
Dow Jones Industrials 6,521.7 6,029.4 5,117.1 5,074.5 8.2 27.4 28.5
S&P 500 757.0 705.3 615.9 605.4 7.3 22.9 25.0
</TABLE>
All SNL indices are market-value weighted; i.e., an institution's effect on
an index is proportionate to that institution's market capitalization. All
SNL thrift indices, except for the SNL MHC Index, began at 100 on March 30,
1994. The SNL MHC Index began at 201.082 on Dec. 31, 1992, the level of the
SNL Thrift Index on that date. On March 30, 1984, the S&P 500 closed at 159.2
and the Dow Jones Industrials stood at 1,164.9.
New England: CT, ME, MA, NH, RI, VT; Mid-Atlantic: DE, DC, PA, MD, NJ, NY,
PR; Southwest; CO, LA, NM, OK, TX, UT; Midwest: IA, IL, IN, KS, KY, MI, MN,
MO, ND, NE, OH, SD, WI; Southeast: AL, AR, FL, GA, MS, NC, SC, TN, VA, WV; West:
AZ, AK, CA, HI, ID, MT, NV, OR, WA, WY
<PAGE>
EXHIBIT IV-4
Market Area Acquisition Activity
<PAGE>
Exhibit IV-4
Pending Louisiana Mergers and Acquisisitons
(Banks and Thrifts)
<TABLE>
<CAPTION>
Seller Financials at Announcement
-----------------------------------------------
Announce Bank/ Seller/ Pooling/ Total Eqty/ YTD YTD NPAs/ Rsrvs/
Date Thrift Buyer ST Purchase Assets Assets ROAA ROAE Assets NPLs
- -------- ------ -------------------- -- -------- ------ ------ ---- ---- ------ ------
($000) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/11/96 Bank First National Bkshr LA Pooling 209,917 8.32 1.08 13.45 1.49 90.73
Whitney Holding Corp LA
09/27/96 Bank Gulf South Bancshrs LA Purchase 54,502 8.92 1.20 13.76 0.80 112.18
Regions Financial AL
08/23/96 Bank Assumption Bncshrs LA Purchase 107,946 8.64 1.26 14.75 0.72 165.12
ArgentBank LA
08/23/96 Bank Jefferson Guaranty LA Purchase 302,631 6.85 1.06 15.46 0.12 2705.91
Deposit Guaranty MS
07/31/96 Bank Southeast NB LA Purchase 36,441 10.22 1.36 13.06 0.85 1736.36
Hancock Holding Co MS
06/25/96 Bank West Carroll Bncshrs LA Pooling 117,069 10.68 2.43 23.78 0.20 278.50
Regions Financial AL
06/19/96 Bank Community Bancshares LA Purchase 93,496 11.26 1.03 8.67 1.02 63.22
Hancock Holding Co MS
04/01/96 Bank St. Bernard B&TC LA Purchase 254,950 9.38 0.99 10.88 0.00 NA
Hibernia Corporation LA
AVERAGE $147,119 9.28 1.30 14.23 0.65 736.00
MEDIAN 112,508 9.15 1.14 13.61 0.76 165.12
Deal Terms at Announcement Acquisition Pricing
---------------------------- -------------------------------------
Ann'd Ann'd Ann'd Ann'd Ann'd Ann'd
Deal Deal Deal Deal Pr/ Deal Pr/ Deal Pr/
Announce Value Price Per Consider Pr/Bk Tg Bk Assets 4-Qtr
Date ($M) Share ($) Type (%) (%) (%) EPS (x)
- -------- ----- --------- --------- ----- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
10/11/96 41.0 20.32 Com Stock 234.64 234.64 19.53 16.52
09/27/96 9.0 23.06 Com Stock 173.08 173.08 16.51 9.16
08/23/96 21.5 NA Mixture 230.41 230.41 19.92 18.55
08/23/96 50.6 NA Mixture 244.24 244.24 16.72 15.58
07/31/96 7.6 16.58 Mixture 203.97 203.97 20.86 11.52
06/25/96 30.6 186.00 Com Stock 244.70 244.70 26.14 11.87
06/19/96 22.0 251.28 Mixture 208.93 208.93 23.53 24.86
04/01/96 46.0 1226.67 Cash 192.39 192.39 18.04 17.79
28.5 215.49 216.55 216.55 20.16 15.73
26.3 104.53 219.67 219.67 19.73 16.05
</TABLE>
<PAGE>
Exhibit IV-4, continued
Completed Louisiana Mergers and Acquisitions, 1994-Present
(Banks and Thrifts)
<TABLE>
<CAPTION>
Seller Financials at Completion
--------------------------------------------------------
Date
Bank/ Completed/ Seller/ Pooling/ Total Eqty/ YTD YTD NPAs/ Rsrvs/
Thrift Announced Buyer ST Purchase Assets Assets ROAA ROAE Assets NPLs
- ------ ---------- -------------------- --- -------- -------- -------- ------- ------ ------- -------
($000) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 10/31/96 Tuscaloosa Bcshrs LA Purch. 41,292 9.21 1.75 18.72 0.33 709.76
07/22/96 Deposit Guaranty MS
Thrift 10/18/96 Jefferson Bancorp LA Purch. 265,870 13.09 1.01 8.35 0.54 47.79
03/29/96 ISB Financial Corp. LA
Bank 09/23/96 First American Bank LA Purch. 7,240 16.15 0.56 3.44 0.30 NA
07/23/96 One American Corp LA
Bank 09/12/96 American Bncshrs LA Purch. 86,300 9.52 1.25 13.47 1.64 97.91
03/01/96 Regions Financial AL
Bank 08/26/96 C M Bank Holding Co. LA Purch. 774,188 14.41 1.55 11.41 0.33 179.37
04/02/96 Hibernia Corporation LA
Bank 08/08/96 Delta B&TC LA Purch. 204,627 7.92 1.02 13.43 1.67 44.96
11/15/95 Regions Financial AL
Bank 06/28/96 Bank of Gonzales Hld LA Purch. 122,932 10.19 2.07 21.44 1.13 137.97
02/06/96 Deposit Guaranty MS
Bank 06/07/96 First Community Bshr LA Purch. 47,319 8.12 1.87 24.88 0.83 154.29
01/15/96 Sabine Bancshares LA
Bank 05/06/96 Royal BankGroup LA Purch. 60,922 12.43 0.73 5.49 1.29 NA
12/06/95 ISB Financial Corp. LA
Bank 03/08/96 First Citizens BncSt LA Pooling 231,697 10.83 1.58 14.89 0.27 491.79
09/29/95 Whitney Holding Corp LA
Bank 01/19/96 First State B&TC LA Purch. 43,237 13.93 1.09 8.14 0.40 297.54
07/07/95 Peoples Holding Corp LA
Bank 01/15/96 Bunkie Bancshares LA Pooling 105,979 8.18 1.02 12.85 0.44 268.57
09/07/95 Hibernia Corporation LA
Bank 01/03/96 FNB Bancshares, Inc. LA Pooling 57,705 7.02 1.16 15.25 0.00 NA
06/15/95 Hibernia Corporation LA
Acquisition Terms Final Deal Pricing
---------------------------------- ----------------------------------------
Date Deal
Bank/ Completed/ Seller/ Deal Price Per Consider Deal Deal Pr/ Deal Pr/ Deal Pr/
Thrift Announced Buyer Value Share ($) Type Pr/Bk Tg Bk Assets EPS
- ------ ---------- -------------------- ----- --------- --------- ------- --------- -------- ------
($M) ($) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 10/31/96 Tuscaloosa Bcshrs 10.4 2.921 Com Stock 256.22 256.22 25.42 15.09
07/22/96 Deposit Guaranty
Thrift 10/18/96 Jefferson Bancorp 51.5 23.000 Cash 140.07 140.07 19.39 19.17
03/29/96 ISB Financial Corp.
Bank 09/23/96 First American Bank NA NA Cash NA NA NA NA
07/23/96 One American Corp
Bank 09/12/96 American Bncshrs 18.1 79.058 Com Stock 210.39 210.39 20.41 14.70
03/01/96 Regions Financial
Bank 08/26/96 C M Bank Holding Co. 201.7 NA Cash 179.03 179.16 25.48 16.92
04/02/96 Hibernia Corporation
Bank 08/08/96 Delta B&TC 38.2 102.120 Com Stock 235.45 237.80 19.38 24.50
11/15/95 Regions Financial
Bank 06/28/96 Bank of Gonzales Hld 27.9 51.480 Com Stock 228.86 228.86 22.46 10.68
02/06/96 Deposit Guaranty
Bank 06/07/96 First Community Bshr NA NA Cash NA NA NA NA
01/15/96 Sabine Bancshares
Bank 05/06/96 Royal BankGroup 9.1 16.734 Cash 114.15 153.41 13.66 14.47
12/06/95 ISB Financial Corp.
Bank 03/08/96 First Citizens BncSt 68.1 50.144 Com Stock 238.55 238.55 28.07 19.66
09/29/95 Whitney Holding Corp
Bank 01/19/96 First State B&TC 8.2 NA Cash 140.00 140.00 19.36 12.37
07/07/95 Peoples Holding Corp
Bank 01/15/96 Bunkie Bancshares 19.2 1745.985 Com Stock 207.75 207.75 17.60 13.97
09/07/95 Hibernia Corporation
Bank 01/03/96 FNB Bancshares, Inc. 9.5 977.500 Com Stock 229.47 229.47 18.39 12.10
06/15/95 Hibernia Corporation
</TABLE>
<PAGE>
Exhibit IV-4, continued
Completed Louisiana Mergers and Acquisitions, 1994-Present
(Banks and Thrifts)
<TABLE>
<CAPTION>
Seller Financials at Completion
--------------------------------------------------------
Date
Bank/ Completed/ Seller/ Pooling/ Total Eqty/ YTD YTD NPAs/ Rsrvs/
Thrift Announced Buyer ST Purchase Assets Assets ROAA ROAE Assets NPLs
- ------ ---------- -------------------- --- -------- -------- -------- ------- ------ ------- -------
($000) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 01/02/96 Premier Bancorp LA Purch. 5,494,245 8.69 1.24 15.17 0.56 311.82
07/19/95 Banc One Corporation OH
Bank 11/30/95 HNB Corporation LA Purch. 93,452 5.51 1.23 21.18 1.94 NA
05/02/95 Premier Bancorp LA
Bank 10/23/95 Central Corporation LA Pooling 820,150 8.55 1.35 16.00 0.29 NA
05/16/95 First Commerce Corp LA
Bank 10/02/95 Peoples Bancshares LA Pooling 172,214 8.34 0.77 9.49 0.76 NA
05/02/95 First Commerce Corp LA
Bank 08/04/95 Lakeside Bancshares LA Pooling 172,362 9.65 0.76 8.38 1.58 NA
05/17/94 First Commerce Corp LA
Bank 07/31/95 Sugarland Bancshares LA Purch. 17,559 12.37 0.86 7.03 0.48 NA
12/28/94 MidSouth Bancorp LA
Bank 07/01/95 Bank of St John LA Pooling 113,341 10.62 2.82 28.76 0.47 NA
01/25/95 Hibernia Corporation LA
Bank 07/01/95 Progressive Bancorp LA Pooling 141,833 7.68 2.02 25.97 0.13 NA
12/01/94 Hibernia Corporation LA
Bank 05/19/95 Citizens Nat'l Bcshr LA Pooling 196,855 10.55 1.70 15.99 0.94 NA
12/02/94 Deposit Guaranty MS
Bank 05/02/95 STABA Bancshares LA Pooling 95,253 7.79 1.32 17.94 0.25 NA
11/04/94 Hibernia Corporation LA
Bank 04/03/95 Bayoulands Financial LA Purch. 25,150 6.02 0.84 13.99 NA NA
06/21/94 Iberville Trust LA
Bank 03/16/95 First Commercial Bsh LA Purch. 110,641 8.31 1.25 15.95 0.89 NA
10/20/94 Regions Financial AL
Bank 03/01/95 American Bank LA Pooling 97,246 7.91 1.44 18.13 1.59 NA
09/19/94 Hibernia Corporation LA
Acquisition Terms Final Deal Pricing
---------------------------------- ---------------------------------------
Date Deal
Bank/ Completed/ Seller/ Deal Price Per Consider Deal Deal Pr/ Deal Pr/ Deal Pr/
Thrift Announced Buyer Value Share ($) Type Pr/Bk Tg Bk Assets EPS
- ------ ---------- -------------------- ----- --------- --------- ------- --------- -------- --------
($M) ($) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 01/02/96 Premier Bancorp 802.7 23.243 Com Stock 162.09 176.35 14.58 11.51
07/19/95 Banc One Corporation
Bank 11/30/95 HNB Corporation 12.8 496.230 Mixture 209.15 209.15 13.07 11.06
05/02/95 Premier Bancorp
Bank 10/23/95 Central Corporation 227.5 55.945 Com Stock 301.27 304.55 27.56 20.05
05/16/95 First Commerce Corp
Bank 10/02/95 Peoples Bancshares 30.1 1286.813 Com Stock 197.31 202.57 17.08 20.74
05/02/95 First Commerce Corp
Bank 08/04/95 Lakeside Bancshares 29.8 59.545 Com Stock 177.36 177.36 16.83 19.08
05/17/94 First Commerce Corp
Bank 07/31/95 Sugarland Bancshares 2.7 14.250 Pref Stock 121.18 121.18 15.16 14.84
12/28/94 MidSouth Bancorp
Bank 07/01/95 Bank of St John 29.6 98.513 Com Stock 250.34 250.34 23.91 10.10
01/25/95 Hibernia Corporation
Bank 07/01/95 Progressive Bancorp 28.3 35.922 Mixture 242.05 242.05 19.93 8.19
12/01/94 Hibernia Corporation
Bank 05/19/95 Citizens Nat'l Bcshr 50.9 139.503 Com Stock 241.89 241.89 26.78 19.61
12/02/94 Deposit Guaranty
Bank 05/02/95 STABA Bancshares 18.0 151.223 Com Stock 234.71 234.71 19.51 12.77
11/04/94 Hibernia Corporation
Bank 04/03/95 Bayoulands Financial 2.7 18.000 Cash 162.31 162.31 11.02 16.07
06/21/94 Iberville Trust
Bank 03/16/95 First Commercial Bsh 20.8 NA Mixture 201.61 201.61 18.20 13.44
10/20/94 Regions Financial
Bank 03/01/95 American Bank 16.3 37.316 Com Stock 195.00 195.00 19.52 7.13
09/19/94 Hibernia Corporation
</TABLE>
<PAGE>
Exhibit IV-4, continued
Completed Louisiana Mergers and Acquisitions, 1994-Present
(Banks and Thrifts)
<TABLE>
<CAPTION>
Seller Financials at Completion
--------------------------------------------------------
Date
Bank/ Completed/ Seller/ Pooling/ Total Eqty/ YTD YTD NPAs/ Rsrvs/
Thrift Announced Buyer ST Purchase Assets Assets ROAA ROAE Assets NPLs
- ------ ---------- -------------------- --- -------- -------- -------- ------- ------ ------- -------
($000) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 02/16/95 First Bancshares Inc LA Pooling 245,337 8.01 2.35 38.31 0.55 NA
05/27/94 First Commerce Corp LA
Bank 02/16/95 City Bancorp Inc LA Purch. 80,194 9.50 1.29 14.89 0.52 NA
06/03/94 First Commerce Corp LA
Bank 01/31/95 Washington Bancorp LA Pooling 85,053 13.42 1.58 13.52 0.71 NA
07/07/94 Hancock Holding Co MS
Bank 01/13/95 First Denham Bncshrs LA Purch. 109,340 8.55 2.36 28.11 2.16 NA
08/22/94 Hancock Holding Co MS
Bank 12/31/94 LBO Bancorp Inc LA Pooling 94,534 7.95 1.63 22.14 0.60 NA
06/02/94 Deposit Guaranty MS
Bank 12/31/94 First State B & T LA Pooling 148,490 13.28 0.78 5.90 1.61 NA
08/16/94 Hibernia Corporation LA
Bank 12/31/94 Pioneer Bancshares LA Pooling 355,331 7.83 0.91 13.03 0.61 NA
06/01/94 Hibernia Corporation LA
Bank 11/10/94 American Bancshares LA Purch. 305,021 7.93 1.64 21.06 0.34 NA
06/02/94 Regions Financial AL
Bank 11/01/94 Springhill Bancshrs LA Purch. 57,530 12.02 2.03 16.97 1.22 NA
06/03/94 FDH Bancshares AR
Bank 09/23/94 Vernon Bancshares LA Purch. 37,638 9.55 0.44 4.59 2.03 NA
07/29/94 Investor Group LA
Bank 08/31/94 BNR Bancshares LA Pooling 136,717 11.27 1.75 16.76 1.12 NA
03/17/94 Regions Financial AL
Bank 08/25/94 Red River Valley Bk LA Pooling 139,487 9.72 1.55 16.62 2.44 NA
03/22/94 Premier Bancorp LA
Bank 08/01/94 First Continental LA Pooling 395,671 3.99 0.72 19.71 4.63 NA
12/06/93 Hibernia Corporation LA
Acquisition Terms Final Deal Pricing
---------------------------------- ---------------------------------------
Date Deal
Bank/ Completed/ Seller/ Deal Price Per Consider Deal Deal Pr/ Deal Pr/ Deal Pr/
Thrift Announced Buyer Value Share ($) Type Pr/Bk Tg Bk Assets EPS
- ------ ---------- -------------------- ----- --------- --------- ------- --------- -------- -------
($M) ($) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 02/16/95 First Bancshares Inc 70.3 82.940 Com Stock 320.85 320.85 28.56 21.54
05/27/94 First Commerce Corp
Bank 02/16/95 City Bancorp Inc 13.4 134.226 Com Stock 168.68 168.68 15.66 13.87
06/03/94 First Commerce Corp
Bank 01/31/95 Washington Bancorp 15.4 190.748 Com Stock 126.47 126.47 17.45 11.14
07/07/94 Hancock Holding Co
Bank 01/13/95 First Denham Bncshrs 27.2 NA Mixture 281.22 281.22 25.37 11.11
08/22/94 Hancock Holding Co
Bank 12/31/94 LBO Bancorp Inc 20.5 53.110 Com Stock 273.59 274.54 21.44 15.88
06/02/94 Deposit Guaranty
Bank 12/31/94 First State B & T 26.0 259.625 Com Stock 129.82 129.82 17.37 14.35
08/16/94 Hibernia Corporation
Bank 12/31/94 Pioneer Bancshares 64.9 236.375 Com Stock 217.41 228.69 17.93 16.24
06/01/94 Hibernia Corporation
Bank 11/10/94 American Bancshares 55.0 75.315 Com Stock 197.03 208.85 18.12 11.70
06/02/94 Regions Financial
Bank 11/01/94 Springhill Bancshrs 6.9 222.180 Cash 131.47 131.47 11.85 6.61
06/03/94 FDH Bancshares
Bank 09/23/94 Vernon Bancshares 2.9 25.000 Cash 124.46 124.46 11.91 26.20
07/29/94 Investor Group
Bank 08/31/94 BNR Bancshares 26.2 80.338 Com Stock 166.85 166.85 18.34 11.27
03/17/94 Regions Financial
Bank 08/25/94 Red River Valley Bk 25.5 90.950 Com Stock 180.14 180.14 17.59 13.49
03/22/94 Premier Bancorp
Bank 08/01/94 First Continental 58.6 12.250 Mixture 211.94 269.82 14.81 NA
12/06/93 Hibernia Corporation
</TABLE>
<PAGE>
Exhibit IV-4, continued
Completed Louisiana Mergers and Acquisitions, 1994-Present
(Banks and Thrifts)
<TABLE>
<CAPTION>
Seller Financials at Completion
--------------------------------------------------------
Date
Bank/ Completed/ Seller/ Pooling/ Total Eqty/ YTD YTD NPAs/ Rsrvs/
Thrift Announced Buyer ST Purchase Assets Assets ROAA ROAE Assets NPLs
- ------ ---------- -------------------- --- -------- -------- -------- ------- ------ ------- -------
($000) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 08/01/94 First Bancorp of LA LA Pooling 219,729 9.98 1.87 18.84 1.22 NA
11/04/93 Hibernia Corporation LA
Bank 07/01/94 Bastrop National Bk LA Pooling 126,763 11.14 1.74 16.12 0.36 NA
11/04/93 Hibernia Corporation LA
Bank 07/01/94 Commercial Bncshrs LA Pooling 175,316 7.46 1.88 29.65 1.89 NA
07/27/93 Hibernia Corporation LA
Bank 06/24/94 Heritage Fncl Corp LA Pooling 433,042 6.97 1.08 16.09 0.65 NA
02/23/94 Premier Bancorp LA
Bank 05/31/94 Guaranty Bancorp LA Pooling 181,313 6.23 1.38 23.97 1.75 NA
12/29/93 Regions Financial AL
Bank 04/30/94 NB of Commerce LA Pooling 85,809 8.75 1.07 11.84 0.79 NA
12/14/93 Premier Bancorp LA
Bank 04/29/94 First State B&T Co LA Pooling 73,411 14.98 1.34 9.69 0.53 NA
11/18/93 Hancock Holding Co MS
Average: 284,464 9.6 1.38 16.16 1.00 249.25
Median: 118,137 8.98 1.33 15.97 0.71 179.37
Acquisition Terms Final Deal Pricing
---------------------------------- ---------------------------------------
Date Deal
Bank/ Completed/ Seller/ Deal Price Per Consider Deal Deal Pr/ Deal Pr/ Deal Pr/
Thrift Announced Buyer Value Share ($) Type Pr/Bk Tg Bk Assets EPS
- ------ ---------- -------------------- ----- --------- --------- ------- --------- -------- -------
($M) ($) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bank 08/01/94 First Bancorp of LA 37.7 158.725 Com Stock 255.33 255.33 17.18 13.32
11/04/93 Hibernia Corporation
Bank 07/01/94 Bastrop National Bk 21.1 NA Com Stock 142.94 142.94 16.17 10.29
11/04/93 Hibernia Corporation
Bank 07/01/94 Commercial Bncshrs 20.4 NA Com Stock 145.37 155.37 12.07 9.77
07/27/93 Hibernia Corporation
Bank 06/24/94 Heritage Fncl Corp 75.0 NA Com Stock 248.34 256.96 17.32 16.42
02/23/94 Premier Bancorp
Bank 05/31/94 Guaranty Bancorp 28.3 37.324 Com Stock 225.01 225.01 15.64 11.22
12/29/93 Regions Financial
Bank 04/30/94 NB of Commerce 14.8 28.000 Com Stock 184.56 184.56 17.18 17.27
12/14/93 Premier Bancorp
Bank 04/29/94 First State B&T Co 17.3 NA Com Stock 150.00 150.00 21.07 13.83
11/18/93 Hancock Holding Co
53.7 198.682 199.04 202.79 18.77 14.51
25.8 77.187 199.49 205.16 18.03 13.87
</TABLE>
<PAGE>
EXHIBIT IV-5
Guaranty Savings and Homestead Association
Director and Senior Management Summary Resumes
<PAGE>
Guaranty Savings and Homestead Association
Summary Director Resumes
Kenneth B. Caldcleugh. Mr. Caldcleugh is a Vice President and Regional
Manager of Glazer Wholesale Spirit & Wine Distributors.
Stephen L. Cory. Mr. Cory is an insurance Agent and President of the
Cory, Tucker & Lorrowe Insurance Agency in Metairie, Louisiana.
Bradford A. Glazer. Mr. Glazer is the Chairman of Glazer Steel
Corporation, a metal service center in New Orleans, Louisiana and Knoxville,
Tennessee. He is also Chairman and President of Glazer Enterprises,
Cincinnati, Ohio, an enterprise with diversified business management and
investment interests.
J. Scott Key. Mr. Key is the President of Kencoil, Inc. (previously D&S
Industries), an electric motor coil manufacturer and its subsidiary Scott
Armature, a provider of sales and service of electric apparatus, In Belle
Chasse, Louisiana.
Victor Kirschman. Mr. Kirschman is the Chairman of M. Kirschman & Co.,
Inc., a retail furniture business with its main office in New Orleans,
Louisiana.
Mannie D. Paine. Dr. Paine is a retired physician. Dr. Paine has
provided consulting services to Blue Cross and Blue Shield of Louisiana since
1990 and Unisys.
Bruce A. Scott. Mr. Scott is an attorney and Executive Vice President of
the Association. Mr. Scott is legal counsel and Personnel Manager for the
Association. Mr. Scott also performs certain legal services for the
Association and its borrowers in connection with real estate loan closings
and receives fees from the borrowers in connection therewith.
Donald C. Scott. Mr. Scott has served as President of the Association
since 1985, prior thereto he served in various management and other positions
at Guaranty Savings.
Albert J. Zahn, Jr. Mr. Zahn is a certified public accountant and
partner in the firm of Zahn, Kenney & Bresette in Metairie, Louisiana.
Source: Guaranty Savings' prospectus
<PAGE>
Guaranty Savings and Homestead Association
Summary Senior Management Resumes
Donald C. Scott. Mr Scott has served as President of the Association
since 1985, prior thereto he served in various management and other positions
at Guaranty Savings.
Bruce A. Scott. Mr. Scott is an attorney and Executive Vice President of
the Association. Mr. Scott is legal counsel and Personnel Manager for the
Association. Mr. Scott also performs certain legal services for the
Association and its borrowers in connection with real estate loan closings
and receives fees from the borrowers in connection therewith.
Lettie Rufin Moll. Ms. Moll currently is Vice President and corporate
Secretary of Guaranty Savings. She has been an employee of the Association
since 1975.
Ralph Weber. Mr. Weber has primary responsibility for the Association's
data processing requirements and currently serves as Vice President. Mr.
Weber has been employed at Guaranty Savings since 1977.
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT IV-6
Guaranty Savings and Homestead Association
Pro Forma Regulatory Capital Ratios
<PAGE>
EXHIBIT IV-6
Guaranty Savings and Homestead Association
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
----------------------------------------------------------------------------------
2,210,000 2,600,000 2,990,000 3,438,500
Shares Sold Shares Sold Shares Sold Shares Sold
Historical at at $10.00 at $10.00 at $10.00 at $10.00
September 30, 1996 Per Share Per Share Per Share Per Share
------------------ ------------------ ------------------ ------------------ ------------------
Percent of Percent of Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1)
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tangible capital:
Actual $23,822 27.79% $31,856 33.34% $33,311 34.23% $34,722 35.09% $36,476 36.06%
Requirement 1,298 1.50 1,433 1.50 1,460 1.50 1,486 1.50 1,517 1.50
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess $22,524 26.29% $30,423 31.84% $31,851 32.73% $33,285 33.59% $34,959 34.56%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Core Capital(2):
Actual $23,822 27.79% $31,856 33.34% $33,311 34.23% $34,722 35.09% $36,476 36.06%
Requirement 2,596 3.00 2,866 3.00 2,919 3.00 2,972 3.00 3,034 3.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess $21,226 24.79% $28,991 30.34% $30,392 31.23% $31,799 32.09% $33,442 33.06%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Risk-based capital(2):
Actual $24,038 80.10% $32,072 91.87% $33,527 93.66% $34,988 95.38% $36,692 97.29%
Requirement 2,408 8.00 2,793 8.00 2,864 8.00 2,935 8.00 3,017 8.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess $21,630 72.10% $29,279 83.87% $30,664 85.66% $32,053 87.38% $33,675 89.29%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
</TABLE>
- ------------------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an institution
to be "adequately capitalized" under applicable laws and regulations. See
"Regulation--The Association--Prompt Corrective Action."
Source: Guaranty Savings' prospectus.
<PAGE>
EXHIBIT IV-7
Guaranty Savings and Homestead Association
Pro Forma Analysis Sheet
<PAGE>
EXHIBIT IV-7
PRO FORMA ANALYSIS SHEET
Guaranty Savings and Homestead Association
Prices as of December 13, 1996
Comparable All SAIF
Companies Companies
----------------- ----------------
Price Multiple Symbol Subject (1) Mean Median Mean Median
- -------------- ------ ----------- ---- ------ ---- ------
Price-earnings ratio = P/E 33.40 x 21.10x 22.09x 17.22x 18.61x
Price-book ratio = P/B 55.80% 97.82% 93.75% 116.52% 111.11%
Price-assets ratio = P/A 23.94% 21.21% 21.04% 14.06% 12.43%
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $379,000 ESOP Stock Purchases (E) 8.00%
Pre-Conversion Book Value (B) $24,500,000 Cost of ESOP Borrowings (S) 0.00%
Pre-Conversion Assets (A) $86,521,000 ESOP Amortization (T) 10.00 years
Reinvestment Rate (2)(R) 3.91% RRP Amount (M) 4.00%
Est. Conversion Expenses (3)(X) 3.01% (4) RRP Vesting (N) 5.00 years
Tax rate (TAX) 34.00% LA Share/Franchise Tax (L) $190,000
Capital Not Reinvested(C) 0.00% (5)
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V= P/E * (Y - L) V= $26,000,088
-----------------------------------------------------
1 - P/E * ((1-X-E-M-C)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * B V= $26,000,010
-----------------------------
1 - P/B * (1-X-E-M)
3. V= P/A * A V= $26,000,026
-----------------------------
1 - P/A * (1-X-E-M)
Gross Proceeds
Conclusion and Stock Issued
- ---------- -----------------
Minimum $22,100,000
Midpoint $26,000,000
Maximum $29,900,000
Supermaximum $34,385,000
_____________________________________________________________________
(1) Pricing ratios shown reflect the final value for conversion.
(2) Net return reflects a reinvestment rate of 5.92 percent, and a tax rate of
34.00 percent.
(3) Conversion expenses as set forth in the Bank's prospectus.
(4) "X" is calculated as $782,000 of offering expenses divided by $26,000,000
of gross proceeds.
<PAGE>
EXHIBIT IV-8
Guaranty Savings and Homestead Association
Pro Forma Effect of Conversion Proceeds
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Guaranty Savings and Homestead Association
At the Minimum of the Range
1. Pro Forma Market Value
Offering Proceeds and Stock Issuance $22,100,000
Less: Estimated Offering Expenses 728,000
-------
Net Increase to Capital $21,372,000
Less common stock acquired by ESOP 1,768,000
Less common stock acquired by Recognion Plan 884,000
-------
Net proceeds available for investment $18,720,000
2. Estimated Additional Income from Conversion
Net Increase to Capital $18,720,000
Less: Capital that will not be reinvested 0
-
Net Proceeds Reinvested $18,720,000
Estimated net incremental rate of return 3.91%
-----
Earnings Increase $731,952
Less: Impact of State Franchise/Share Taxes 183,000
Less: Estimated cost of ESOP borrowings(1) 0
Less: Amortization of ESOP borrowings(2) 116,688
Less: Recognition Plan Vesting(3) 116,688
-------
Net Earnings Increase $315,576
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
12 Months ended September 30, 1996 $379,000 $315,576 $694,576
12 Months ended September 30, 1996, (core) $718,000 $315,576 $1,033,576
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- -----------
September 30, 1996 $24,500,000 $18,720,000 $43,220,000
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- -----------
September 30, 1996 $86,521,000 $18,720,000 $105,241,000
(1) ESOP stock purchases are internally financed by a loan from the Holding
Company.
(2) ESOP borrowings are amortized over 10 years, amortization expense is tax
effected at a 34.0 percent rate.
(3) Recognition Plan is vested over a five year period and the amortization is
tax effected at a 34.0 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Guaranty Savings and Homestead Association
At the Midpoint of the Range
1. Pro Forma Market Value
Offering Proceeds and Stock Issuance $26,000,000
Less: Estimated Offering Expenses 782,000
-------
Net Increase to Capital $25,218,000
Less common stock acquired by ESOP 2,080,000
Less common stock acquired by Recognion Plan 1,040,000
-------
Net proceeds available for investment $22,098,000
2. Estimated Additional Income from Conversion Proceeds
Net Increase to Capital $22,098,000
Less: Capital that will not be reinvested 0
-
Net Proceeds Reinvested $22,098,000
Estimated net incremental rate of return 3.91%
-----
Earnings Increase $864,032
Less: Impact of State Franchise/Share Taxes 190,000
Less: Estimated cost of ESOP borrowings(1) 0
Less: Amortization of ESOP borrowings(2) 137,280
Less: Recognition Plan Vesting(3) 137,280
-------
Net Earnings Increase $399,472
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
12 Months ended September 30, 1996 $379,000 $399,472 $778,472
12 Months ended September 30, 1996, (core) $718,000 $399,472 $1,117,472
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
September 30, 1996 $24,500,000 $22,098,000 $46,598,000
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
September 30, 1996 $86,521,000 $22,098,000 $108,619,000
(1) ESOP stock purchases are internally financed by a loan from the Holding
Company.
(2) ESOP borrowings are amortized over 10 years, amortization expense is tax
effected at a 34.0 percent rate.
(3) Recognition Plan is vested over a five year period and the amortization is
tax effected at a 34.0 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Guaranty Savings and Homestead Association
At the Maximum of the Range
1. Pro Forma Market Value
Offering Proceeds and Stock Issuance $29,900,000
Less: Estimated Offering Expenses 825,000
-------
Net Increase to Capital $29,075,000
Less common stock acquired by ESOP 2,392,000
Less common stock acquired by Recognion Plan 1,196,000
---------
Net proceeds available for investment $25,487,000
2. Estimated Additional Income from Conversion
Net Increase to Capital $25,487,000
Less: Capital that will not be reinvested 0
-
Net Proceeds Reinvested $25,487,000
Estimated net incremental rate of return 3.91%
-----
Earnings Increase $996,542
Less: Impact of State Franchise/Share Taxes 197,000
Less: Estimated cost of ESOP borrowings(1) 0
Less: Amortization of ESOP borrowings(2) 157,872
Less: Recognition Plan Vesting(3) 157,872
-------
Net Earnings Increase $483,798
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
12 Months ended September 30, 1996 $379,000 $483,798 $862,798
12 Months ended September 30, 1996, (core) $718,000 $483,798 $1,201,798
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
September 30, 1996 $24,500,000 $25,487,000 $49,987,000
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
September 30, 1996 $86,521,000 $25,487,000 $112,008,000
(1) ESOP stock purchases are internally financed by a loan from the Holding
Company.
(2) ESOP borrowings are amortized over 10 years, amortization expense is tax
effected at a 34.0 percent rate.
(3) Recognition Plan is vested over a five year period and the amortization is
tax effected at a 34.0 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION AND REORGANIZATION
Guaranty Savings and Homestead Association
At the Superrange Maximum
1. Pro Forma Market Value
Offering Proceeds and Stock Issuance $34,385,000
Less: Estimated Offering Expenses 825,000
-------
Net Conversion Proceeds $33,560,000
Less common stock acquired by ESOP 2,750,800
Less common stock acquired by Recognion Plan 1,375,400
---------
Net proceeds available for investment $29,433,800
2. Estimated Additional Income from Conversion
Net Increase to Capital $29,433,800
Less: Capital that will not be reinvested 0
-
Net Proceeds Reinvested $29,433,800
Estimated net incremental rate of return 3.91%
-----
Earnings Increase $1,150,862
Less: Impact of State Franchise/Share Taxes 205,000
Less: Estimated cost of ESOP borrowings(1) 0
Less: Amortization of ESOP borrowings(2) 181,553
Less: Recognition Plan Vesting(3) 181,553
-------
Net Earnings Increase $582,756
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
12 Months ended September 30, 1996 $379,000 $582,756 $961,756
12 Months ended September 30, 1996, (core) $718,000 $582,756 $1,300,756
Before Net Increase After
4. Pro Forma Net Worth Conversion To Capital Conversion
---------- ------------ ----------
September 30, 1996 $24,500,000 $29,433,800 $53,933,800
Before Net Increase After
5. Pro Forma Assets Conversion To Assets Conversion
---------- ------------ ----------
September 30, 1996 $86,521,000 $29,433,800 $115,954,800
(1) ESOP stock purchases are internally financed by a loan from the Holding
Company.
(2) ESOP borrowings are amortized over 10 years, amortization expense is tax
effected at a 34.0 percent rate.
(3) Recognition Plan is vested over a five year period and the amortization is
tax effected at a 34.0 percent rate.
<PAGE>
EXHIBIT IV-9
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended September 30, 1996
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
__________ ___________ __________ __________ __________ __________ _________
($000) ($000) ($000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
________________
CCFH CCF Holding Company of GA(1) 773 -56 19 0 736 1,131 0.65
CKFB CKF Bancorp of Danville KY 744 -8 3 0 739 941 0.79
CZF Citisave Fin. Corp. of LA 606 302 -103 0 805 962 0.84
DFIN Damen Fin. Corp. of Chicago IL 1,780 776 -264 0 2,292 3,771 0.61
FTSB Fort Thomas Fin. Corp. of KY(1) 1,169 0 0 0 1,169 1,574 0.74
GWBC Gateway Bancorp of KY 606 337 -115 0 828 1,114 0.74
KYF Kentucky First Bancorp of KY 718 351 -119 0 950 1,389 0.68
MARN Marion Capital Holdings of IN 2,003 777 -264 0 2,516 1,843 1.37
NSLB NS&L Bancorp of Neosho MO(1) 560 -82 28 0 506 843 0.60
TSH Teche Holding Company of LA 2,521 1,733 -589 0 3,665 3,541 1.03
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws
from backgrounds in consulting, regulatory agencies and investment banking,
thereby providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program referred
to as SAFE, Strategic Alternatives Financial Evaluations, RP Financial analyzes
strategic options which will enhance shareholder value or otherwise achieve
desired results. Our planning services involve conducting situation analyses
and establishing mission statements, strategic goals and objectives, with
overall emphasis on enhancement of franchise value, capital management and
planning, earnings improvement and operational issues. Our planning services
include the development of strategies in the following areas: capital formation
and management, asset/liability targets, profitability and return on equity.
Our proprietary financial simulation model provides the basis for evaluating the
financial impact of alternative strategies as well as assessing the feasibility
and compatibility of such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary and related industry companies, mark-to-market transactions, loan and
servicing portfolios, non-traded securities, deposit portfolios and core
deposits. Our principals and staff are highly experienced in performing
valuation appraisals which conform with regulatory guidelines and appraisal
industry standards. RP Financial is the nation's leading valuation firm for
mutual-to-stock conversions of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (16)
William E. Pommerening, Managing Director (11)
Gregory E. Dunn, Senior Vice President (15)
James P. Hennessey, Senior Vice President (10)
James J. Oren, Vice President (9)
Timothy M. Biddle, Vice President (7)
Alan P. Carruthers, Director-Community Banking (15)
