Harris Financial, Inc.
and
York Financial Corp.
A New Force in Pennsylvania Banking
March 28, 2000
<PAGE>
Forward Looking Statements
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. This presentation contains
estimates of future operating results for 2000 and beyond for Harris Financial,
Inc. and York Financial Corp. on a stand-alone and pro forma combined basis and
estimates of financial condition, merger-related expenses and cost savings on a
combined basis. These statements are not historical facts and include
expressions about management's confidence and strategies and management's
expectations about new and existing programs, products, relationships,
opportunities, technology and market conditions. Such forward looking statements
involve certain risks and uncertainties. Actual results may differ materially
from the results discussed in these forward looking statements. Factors that
might cause such a difference include, but are not limited to, movements in
interest rates, the possibility of disruption in credit markets, successful
implementation and integration of Harris Financial, Inc.'s acquisition and the
impact of legal and regulatory barriers and structures. Harris Financial, Inc.
assumes no obligation for updating such forward-looking statements at any time.
<PAGE>
Additional Information
A proxy statement soliciting votes of stockholders of York Financial and Harris
Financial will be sent by York Financial and Harris Financial to their
stockholders at a later date. The proxy statement will contain important
information regarding the transaction, and stockholders should read it carefully
when it becomes available. The proxy statement, the merger agreement, and
registration statement relating to the stock offering will be filed with the
Securities and Exchange Commission, and will be available to be examined without
charge at the public reference facilities of the Securities and Exchange
Commission 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. In addition,
the SEC maintains a web site (http://www.sec.gov) that contains reports, proxy
and information statements, and registration statements and other information
regarding registrants that file electronically with the SEC, including Harris
Financial and York Financial. The statements contained in this document as to
the contents of the merger agreement and the transaction are, of necessity,
brief descriptions of the material terms of, and should be read in conjunction
with, the merger agreement, the proxy statement, and the registration statement.
The proxy statement will also describe any material interests of officers and
directors of Harris Financial and York Financial in the transaction, by security
holdings or otherwise.
<PAGE>
Table of Contents
1) Transaction Summary
2) Strategic Rationale
3) Transaction Economics
4) Conclusion
<PAGE>
Transaction Summary
[GRAPHIC OMITTED]
[ORGANIZATION CHART OF HARRIS FINANCIAL AND YORK FINANCIAL APPEARS HERE]
<PAGE>
Transaction Summary
>> Merger Shares Based on Harris' Conversion Appraisal and York's Resulting
Ownership:
Appraisal* Consideration
- ------------------------------ --------------------------------------------
$290 - $342 Million Fixed Exchange Ratio of 1.725 : 1.0, or
$17.25 per share
Greater than $342 Million Floating Exchange resulting in 33.8% ownership,
and Shares and Value of more than $17.25 per
share
Less than $290 Million Floating Exchange resulting in 37.6% ownership,
and Shares and Value of less than $17.25 per
share
* For purposes of this table, the Appraisal relates to the appraised value of
Harris Financial on a stand-alone basis, and does not include shares issued
to York shareholders as merger consideration.
<PAGE>
Transaction Summary
York Financial Corp.
------------------------------------
Aggregate Transaction Value: $174.35
Price to LTM Earnings: 17.6x
Price to Stated Book Value: 158.84%
Premium to Market (30 Day Average): 46.8%
Accounting Method: Pooling (1)
Structure: 100% Stock (1)
Lock-Up Option: 19.9%
Expected Closing: 4th Quarter, 2000
Due Diligence: Completed
Note: Pricing ratios assume York shareholders receive $17.25 per share. As
described on the previous page, the actual price received may be less than
$17.25 per share.
(1) Under certain circumstances the transaction will utilize purchase
accounting and include a cash component.
<PAGE>
Harris "Second Step" Conversion
>> To facilitate the transaction, Harris will undergo a "second step"
conversion
>> Harris will sell to the public the 76% (before dividend waiver adjustment)
ownership stake held by Harris Financial, MHC
>> Shares will be offered to the depositors via a subscription offering
>> Any remaining shares from subscription offering will be sold through a
community offering, syndicated community offering and/or underwriting.
>> Harris' current shareholders will receive shares in the New Holding Company
in exchange for the shares they currently own
<PAGE>
Timing Considerations
>> Pooling of interests accounting may be eliminated after this year
>> Management believes that the weak thrift equity market allows Harris to
offer their MHC shares at a value with upside potential, although there can
be no assurances in this regard
<PAGE>
Strategic Rationale
>> Extends Harris' Franchise into Attractive Market Area
>> Significant cost savings opportunities are available
>> Like Harris, York has shifted to a commercial banking operating philosophy
>> Creates a $4.5 billion asset, strongly capitalized bank holding company
with the scale and capacity to participate in further industry
consolidation
<PAGE>
Strategic Reasons for the Combination
Attractive Market Area
>> A merger with York would enhance Harris' franchise in the York Market with
significant market share.
>> The demographics for the primary county (York) in which York operates is
compatible with those in which Harris presently operates
Historical population growth ('90-'99) significantly exceeds that of
Harris' primary Pennsylvania counties.
York is in close proximity to Baltimore and shares in its growth and
prosperity.
<PAGE>
Strategic Reason for the Combination
Attractive Market Area
[MAP OF MARKET AREA APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
Strategic Reason for the Combination
Attractive Market Area
Pennsylvania
------------------------------------------------------------------------------------
Cumberland Dauphin Lancaster Lebanon York
------------------- ----------------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Median Household Income 46,869 43,797 44,912 41,018 41,395
5 Year Projected Growth 14.46% 16.13% 11.69% 13.97% 8.12%
5 Year Projected Growth 21.40% 22.71% 18.29% 22.61% 15.71%
in Per Capita Income
HARS Market Share/(Rank in County) 13.34% (3) 14.46% (2) 3.33% (11) 8.65% (5) 1.39% (12)
YFED Market Share/(Rank in County) 5.89% (7) 1.53% (12) 0.55% (16) NA 18.47% (2)
Pro Forma Market Share/(Rank in County) 19.23% (2) 15.99% (2) 3.88% (9) 8.65% (5) 19.86% (2)
Pro Forma Branches 16 11 7 2 19
Maryland
----------------------------------------------
Harford Washington
------------------------ --------------------
Median Household Income 50,191 36,175
5 Year Projected Growth 5.08% 6.58%
5 Year Projected Growth 14.46% 15.80%
in Per Capita Income
HARS Market Share/(Rank in County) NA 8.72% (6)
YFED Market Share/(Rank in County) 2.98% (10) NA
Pro Forma Market Share/(Rank in County) 2.98% (10) 8.72% (6)
Pro Forma Branches 2 4
</TABLE>
<PAGE>
Strategic Reasons for the Combination
Strong Market Share in 5 County Market Area
<TABLE>
<CAPTION>
Total Market
Deposits Share
Rank Holding Company State Branches ($000s) (%)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 ALLIED IRISH BANKS FO 76 3,152,877 18.44
-----------------------------------------------------------------------------------------------------------
HARRIS FINANCIAL / YORK FINANCIAL PA 56 2,270,587 13.27
-----------------------------------------------------------------------------------------------------------
2 FULTON FINANCIAL CORP. PA 58 2,018,937 11.81
3 FIRST UNION CORP. NC 38 1,193,119 6.98
4 HARRIS FINANCIAL MHC PA 33 1,178,890 6.89
5 STERLING FINANCIAL CORP. PA 36 1,099,961 6.43
6 YORK FINANCIAL CORP. PA 23 1,091,697 6.38
7 MELLON FINANCIAL CORP. PA 32 927,558 5.42
8 SUSQUEHANNA BANCSHARES INC. PA 37 869,725 5.09
9 PNC BANK CORP. PA 25 867,052 5.07
10 KEYSTONE FINANCIAL INC. PA 29 580,030 3.39
</TABLE>
Note: Deposits as of June 30, 1999. Includes all pending and completed
transactions through March 23, 2000.
<PAGE>
Transaction Economics
>> Management believes that the Merger, exclusive of the "second step"
offering, is accretive to Harris' minority shareholders earnings based on
conservative, achievable cost savings and no revenue enhancements
>> Management believes that on a Per Share Equivalent Basis, York shareholders
will incur significant accretion in earnings and book value.
>> Substantial Revenue Enhancement Opportunities Exist but are not factored
into our Synergies
>> Cost Saving of $10.4 million pre-tax, or 35% of latest twelve months
operating expenses are anticipated
>> Merger Related Charges of $9.0 Million pre-tax are anticipated
<PAGE>
Revenue Enhancement Opportunities
>> Increased capability to generate higher yielding commercial bank type
earning assets through York's experienced lending personnel and loan
generating capabilities;
>> Expand on York's strong presence in mortgage banking:
Originates loans in 11 states in the Mid-Atlantic region (primarily
PA, MD and VA);
Services $500 million of loans for others.
>> Expand on Combined Company's Non-Interest Income Businesses:
Title Insurance Agency;
Discount Brokerage;
Life Insurance Agency;
Venture Capital/Small Business Investment Company.
<PAGE>
Expected Pre-Tax Cost Savings
($ in Millions)
Pre-Tax
Cost Savings
-------------------------
Personnel $6.8
PP&E 0.6
Data Processing 1.5
Marketing 1.0
Other 0.5
----------------
Total Expected Cost Savings $10.4
<PAGE>
Expected One-Time Charges
($ in Millions)
Pre-Tax
Charge
-----------------------
Severance, SERP & Stay Bonuses $2.4
Deconversion & Residual Write-Off 2.3
Professional & Investment Banking Fees 3.0
Other 1.4
-----------------------
Total Expected Restructuring Charge $9.0
<PAGE>
Pro Forma Balance Sheet
December 31, 1999
------------------------------------------------------------
Estimated Pro Forma
Harris York Net Proceeds* Combined
----------- ------------ ----------------- ---------------
Total Assets $2,691 $1,651 $208 $4,512
Securities 1,258 369 208 1,834
Loans 1,270 1,160 2,430
Total Deposits 1,374 1,103 2,477
Total Capital 169 109 208 479
* Actual proceeds will vary significantly based upon final valuation.
Management makes no representations as to the final valuation, which will
be based on an independent appraisal. Additional information regarding the
appraisal will be included in the proxy statement and registration
statement that will be filed at a later date (See "Additional Information"
on earlier page).
<PAGE>
Pro Forma Management
Board of Directors
- ------------------
>> 17 Members (10 Harris, 7 York)
>> Co-Chairman of the Boards: Charles Pearson and Robert W. Pullo
Management
- ----------
>> President & CEO: Charles Pearson
>> The remainder of the combined management team to be announced
<PAGE>
Advisors
>> Harris Financial, Inc.
Ryan, Beck & Co., Inc. - Financial Advisor in connection with the
merger and lead manager for second step conversion offering
Luse Lehman Gorman Pomerenk & Schick, P.C. - Legal Advisor
>> York Financial Corp.
Advest Inc. - Financial Advisor in connection with the merger
Breyer & Associates PC - Legal Advisor
<PAGE>
Conclusion
>> Attractive Combined Banking Franchise
Attractive Markets
Creates $4.5 billion asset, strongly capitalized bank holding company
with scale and capacity to participate in further industry
consolidation
>> Management believes the Merger is attractive to Shareholders of Both
Companies
Accretive to Earnings and Book Value
Attractive Pricing
Management believes that the combined Company should out-perform
Harris on a stand-alone second-step basis - which management believes
will enhance shareholder value
