As filed with the Securities and Exchange Commission on February 5, 1998
Registration No. 333-42889
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PEOPLES BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 6712 (To be applied for)
(State or other jurisdiction of (Primary standard (I.R.S. Employer
incorporation or organization) industrial classification)identification number)
134 Franklin Corner Road
Lawrenceville, New Jersey 08648
(609) 844-3100
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Wendell T. Breithaupt
President and Chief Executive Officer
Peoples Bancorp, Inc.
134 Franklin Corner Road
Lawrenceville, New Jersey 08648
(609) 844-3100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
John J. Gorman, Esq.
Kenneth R. Lehman, Esq.
Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
Approximate date of commencement 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 of 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, 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. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed maximum
Title of each class of Amount to be maximum offering aggregate Amount of
securities to be registered registered price per share offering price(1) registration fee
<S> <C> <C> <C> <C>
Common Stock, $.01 36,236,500 $10.00 $362,365,000 $106,898(2)
par value per share shares
Participation Interests(3) 200,000 interests --- --- ---
</TABLE>
- ------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
(2) A fee of $105,338 was paid with the original filing.
(3) The securities of Peoples Bancorp, Inc. to be purchased by the Trenton
Savings Bank FSB 401(k) Profit Sharing Plan are included in the amount
shown for Common Stock. Accordingly, pursuant to Rule 457(h) of the
Securities Act of 1933, as amended, no separate fee is required for the
participation interests. Pursuant to such rule, the amount being
registered has been calculated on the basis of the number of shares of
Common Stock that may be purchased with the current assets of such
Plan.
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 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 Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
Prospectus Supplement
TRENTON SAVINGS BANK FSB
TRENTON SAVINGS BANK FSB
401(K) PROFIT SHARING PLAN
(Participation Interests in up to 200,000 shares of Common Stock)
This Prospectus Supplement relates to the offer and sale to
participants (the "Participants") in the Trenton Savings Bank FSB 401(k) Profit
Sharing Plan (the "Plan") of participation interests and shares of common stock,
par value $.01 per share (the "Common Stock"), of Peoples Bancorp, Inc. (the
"Company"), in connection with the proposed conversion of the Company from a
federally chartered mutual holding company to a Delaware stock corporation
pursuant to a Plan of Conversion and Reorganization (the "Conversion") and the
related subscription and community offering (collectively, the "Offering").
The Plan permits Participants to direct the trustee of the Plan (the
"Trustee") to purchase Common Stock with amounts in the Plan attributable to
such Participants. This Prospectus Supplement relates to the election of a
Participant to direct the purchase of Common Stock in connection with the
Conversion. A Participant will be able to provide alternative investment
instructions to the Trustee in the event that the Offering is oversubscribed and
the total amount allocated by a Participant cannot be used by the Trustee to
purchase Common Stock.
The Prospectus of the Company dated February ___, 1998 (the
"Prospectus") which is attached to this Prospectus Supplement includes detailed
information with respect to the Conversion, the Common Stock and the financial
condition, results of operations and business of Trenton Savings Bank FSB (the
"Bank"). This Prospectus Supplement, which provides detailed information with
respect to the Plan, should be read only in conjunction with the Prospectus.
THESE PARTICIPATION INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, SECURITIES AND EXCHANGE COMMISSION,
OR BY ANY OTHER FEDERAL AGENCY, OR BY ANY STATE SECURITIES BUREAU OR OTHER STATE
AGENCY, NOR HAS ANY SUCH OFFICE, CORPORATION, COMMISSION, BUREAU OR OTHER AGENCY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE PARTICIPATION
INTERESTS ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT OF
1933 AND HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION.
No person has been authorized to give any information or to make any
representations other than those contained in the Prospectus or this Prospectus
Supplement, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Bank or the Plan. This
Prospectus Supplement does not constitute an offer to sell or solicitation of an
offer to buy
<PAGE>
any securities in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus Supplement and the Prospectus nor any sale made hereunder shall under
any circumstances create any implication that there has been no change in the
affairs of the Bank or the Plan since the date hereof, or that the information
herein contained or incorporated by reference is correct as of any time
subsequent to the date hereof. This Prospectus Supplement should be read only in
conjunction with the Prospectus that is attached hereto and should be retained
for future reference.
The date of this Prospectus Supplement is February __, 1998.
<PAGE>
NOTICE TO PARTICIPANTS IN
THE TRENTON SAVINGS BANK FSB
401(K) PROFIT SHARING PLAN
Attached to this Notice is a copy of the Prospectus and Prospectus
Supplement relating to the offer and sale of participation interests and shares
of common stock, par value $.01 per share (the "Common Stock"), of Peoples
Bancorp, Inc. (the "Company").
The Trenton Savings Bank FSB 401(k) Profit Sharing Plan (the "Plan")
enables you to direct the investment of all or a portion of your account balance
into one of eight alternative investment funds, including an Employer Stock
Fund. The Prospectus Supplement has been prepared and distributed to you so that
you can make an informed decision regarding your opportunity to invest all or a
portion of your account balance in the Plan in the Employer Stock Fund
established as an investment option under the Plan. You are also provided the
opportunity to invest all or a portion of your account balance in the other
funds selected by the trustees of the Plan. The other funds in which you may
invest include: A. Core Equity Fund, B. Emerging Growth Equity Fund, C. Value
Equity Fund, D. Actively Managed Bond Fund, E. Intermediate-Term Bond Fund, F.
Short-Term Investment Fund, and G. International Equity Fund. The trustees of
the RSI Retirement Trust established by Retirement System Group Inc. ("RSI")
serve as trustees for the Plan, other than the Employer Stock Fund, for which
Marine Midland Bank serves as trustee (the "Employer Stock Fund Trustee").
The Plan's feature which allows participants the opportunity to direct
the investment of their account balances is intended to satisfy the requirements
of Section 404(c) of the Employee Retirement Income Security Act of 1974
("ERISA"). The effect of this is two-fold. First, you will not be deemed a
'fiduciary' by virtue of your exercise of investment discretion. Second, no
person who otherwise is a fiduciary (for example, the employer, the Plan
administrator, or the Plan's trustee) is liable under the fiduciary
responsibility provision of ERISA for any loss which results from your exercise
of control over the assets in your Plan account.
Because you are entitled to invest all or a portion of your account
balance in the Plan in the Employer Stock Fund which is invested in Common Stock
of the Company, the regulations under Section 404(c) of ERISA require that the
Plan establish procedures that ensure the confidentiality of your decision to
purchase, hold, or sell employer securities, except to the extent that
disclosure of such information is necessary to comply with federal or state laws
not preempted by ERISA. These regulations also require that your exercise of
voting and similar rights with respect to the Employer Stock Fund be conducted
pursuant to procedures that ensure the confidentiality of your exercise of these
rights. Accordingly, the Plan committee designates the person designated from
time to time (the "Designee") by the Employer Stock Fund Trustee as the person
to whom your sealed voting instructions should be returned. The Designee will
transfer your sealed instructions to an independent third party to be designated
by the Bank, to tally such instructions. In the case of an event that involves a
potential for undue employer influence, you will be instructed to return your
instructions directly to the independent third party. The independent third
party will then inform the Employer Stock Fund Trustee as to the appropriate
manner in which to vote the shares in the Employer Stock Fund.
<PAGE>
TABLE OF CONTENTS
THE OFFERING..................................................................1
Securities Offered.........................................................1
Election to Purchase Common Stock in the Conversion; Priorities............1
Value of Participation Interests...........................................2
Method of Director Transfer................................................2
Time for Directing Transfer................................................3
Irrevocability of Transfer Direction.......................................3
Direction to Purchase Common Stock After the Conversion....................3
Purchase Price of Common Stock.............................................4
Nature of a Participant's Interest in Common Stock.........................4
Voting Rights of Common Stock..............................................5
DESCRIPTION OF THE PLAN.......................................................5
Introduction...............................................................5
Eligibility and Participation..............................................6
Contributions Under the Plan...............................................7
Limitations on Contributions...............................................8
Investment of Contributions and Account Balances...........................11
Benefits Under the Plan....................................................15
Withdrawals and Distributions From the Plan................................16
Administration of the Plan a...............................................17
Reports to Plan Participants...............................................18
Plan Administrator.........................................................18
Amendment and Termination..................................................18
Merger, Consolidation or Transfer..........................................19
Federal Income Tax Consequences............................................19
ERISA and Other Qualifications.............................................24
SEC Reporting and Short-Swing Profit Liability.............................24
Financial Information Regarding Plan Assets................................25
LEGAL OPINION.................................................................25
<PAGE>
THE OFFERING
Securities Offered
The securities offered hereby are participation interests in the Plan
and up to 200,000 shares (assuming a purchase price of $10 per share) of Common
Stock may be acquired by the Plan to be held in the Employer Stock Fund. The
Company is the issuer of the Common Stock. Only employees of the Bank may
participate in the Plan. The Common Stock to be issued hereby is conditioned on
the consummation of the Conversion. A Participant's investment in units in the
Employer Stock Fund in the Conversion is subject to the priority set forth in
the Plan of Conversion. Information with regard to the Plan is contained in this
Prospectus Supplement and information with regard to the Conversion and the
financial condition, results of operation and business of the Bank is contained
in the attached Prospectus. The address of the principal executive office of the
Bank is 134 Franklin Corner Road, Lawrenceville, NJ 08648-0950. The Bank's
telephone number is (609) 844-3100.
Election to Purchase Common Stock in the Conversion; Priorities
The Plan permits each Participant to direct the investment of his or
her account balance among eight investment alternatives which include an
employer stock fund (the "Employer Stock Fund"). The Trustee of the Plan will
purchase Common Stock offered for sale in connection with the Conversion in
accordance with each Participant's directions. Participants will be provided the
opportunity to elect alternative investments from among the Funds offered, which
alternative selection will be used in the event the Prospectus is oversubscribed
and the Trustee is unable to use the full amount allocated by a Participant to
purchase Common Stock in the Offering. If a Participant fails to direct the
investment of his or her account balance, the Participant's account balance will
remain in the other investment funds of the Plan as previously directed by the
Participant. If a Participant has never made an investment election, the
Participant's account balance will be invested in the Trenton Savings Bank FSB
401(k) Short-Term Investment Fund.
The shares of Common Stock to be sold in the Offering are being offered
in accordance with the following priorities: (i) depositors of the Bank with
account balances of $50 or more as of August 31, 1996 ("Eligible Account
Holders"); (ii) the Employee Stock Ownership Plan and related trust ("ESOP") in
an amount up to 4% of the shares sold in the Offering and the Bank's 401(k) Plan
in an amount up to 200,000 shares sold in the Offering; (iii) depositors of the
Bank with account balances of $50 or more as of December 31, 1997 who are not
Eligible Account Holders ("Supplemental Eligible Account Holders"); (iv)
depositors of the Bank as of January __, 1998 who are not Eligible Account
Holders or Supplemental Eligible Account Holders; (v) certain members of the
general public, with preference given to Minority Stockholders and then to
natural persons residing in Mercer, Burlington and Ocean Counties, New Jersey.
To the extent that Participants fall into one of these categories, they
are being permitted to use funds in their Plan account to subscribe or pay for
the Common Stock being acquired. Common
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<PAGE>
Stock so purchased will be placed in a Participant's Employer Stock Fund account
within his or her 401(k) account. Funds not transferred to the Employer Stock
Fund will remain in the other investment funds of the Plan as directed by the
Participant.
Purchase of Common Stock by Participants is subject to the same
purchase limitations applicable to other purchases. No person, together with
associates of and persons acting in concert with such person, may purchase more
than 60,000 Subscription shares in the Subscription Offering, which limitation
may be increased or decreased by the Company and/or the Bank in its sole
discretion. No person may purchase fewer than 25 shares. Reference is made to
the Prospectus for a complete description of purchase limitations.
Value of Participation Interests
The assets of the Plan were valued at approximately $2,992,373.42 as of
September 30, 1997. Each Participant was informed of the value of his or her
beneficial interest in the Plan as of September 30,1997. The $2,992,373.42 value
represents the aggregate market value as of September 30,1997, of all
Participants accounts and earnings thereon, less previous withdrawals.
Method of Directing Transfer
Each Participant shall receive a form which provides for a Participant
to direct that all or a portion of his or her beneficial interest in the Plan
(but not less than 10% of such interest) be transferred to the Employer Stock
Fund (the "Contribution and Investment Form") or to the other investment options
established under the Plan. The Participant's investment in the other investment
options set forth in the Plan may be in any whole percentage from 10% to 100%.
If a Participant wishes to invest all or part of his or her beneficial interest
in the assets of the Plan to the purchase of Common Stock issued in connection
with the Conversion, he or she should indicate that decision on the Contribution
and Investment Form.
Time for Directing Transfer
Directions to transfer amounts to the Employer Stock Fund in order to
purchase Common Stock issued in connection with the Offering must be returned to
the Bank no later than _:00 p.m.
on March __, 1998.
Irrevocability of Transfer Direction
A Participant's direction to transfer amounts credited to such
Participant's account in the Plan to the Employer Stock Fund in order to
purchase shares of Common Stock in connection with the Offering is irrevocable.
Participants, however, will be able to direct the investment of their accounts
under the Plan as explained below.
2
<PAGE>
Direction to Purchase Common Stock After the Offering
After the Offering, a Participant will continue to be able to direct
that a certain percentage of his or her interest in the Plan (but not less than
10%) be transferred to the Employer Stock Fund and invested in Common Stock or
to the other investment funds available under the Plan (amounts invested in the
investment funds may be invested in any whole percentage from 10% to 100%).
Alternatively, a Participant may direct that all or any portion of such
Participant's interest in the Plan be transferred to the Trenton Savings Bank
FSB 401(k): A. Core Equity Fund, B. Emerging Growth Equity Fund, C. Value Equity
Fund, D. Actively Managed Bond Fund, E. Intermediate-Term Bond Fund, F.
Short-Term Investment Fund, or G. International Equity Fund (said funds,
together with the Employer Stock Fund being hereinafter referred to as the "Plan
Funds"), in accordance with the terms of the Plan. Participants are permitted to
direct that future contributions (in any whole percentage from 10% to 100%) made
to the Plan by or on their behalf will be invested among any of the Trenton
Savings Bank FSB 401(k) Plan Funds. The allocation of a Participant's interest
in a Plan Fund may be changed not more often than once per quarter. Special
restrictions may apply to transfers directed to and from the Employer Stock Fund
by those Participants who are officers, directors and principal shareholders of
the Company who are subject to the provisions of Section 16(b) of the Securities
and Exchange Act of 1934 (the "Exchange Act"), as amended.
Purchase Price of Common Stock
The funds transferred to the Employer Stock Fund for the purchase of
Common Stock in connection with the Offering will be used by the Employer Stock
Fund Trustee to purchase shares of Common Stock, except in the event of an
oversubscription, as discussed above. The price paid for such shares of Common
Stock will be the same price as is paid by all other persons who purchase shares
of Common Stock in the Offering.
Subsequent to the Offering, Common Stock purchased by the Employer
Stock Fund Trustee will be acquired in open market transactions. The prices paid
by the Trustee for shares of Common Stock will not exceed "adequate
consideration" as defined in Section 3(18) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
Nature of a Participant's Interest in the Common Stock
The Common Stock will be held in the name of the Employer Stock Fund
Trustee, as Trustee. Shares of Common Stock acquired at the direction of a
Participant will be allocated to the Participant's account under the Plan.
Therefore, earnings with respect to a Participant's account should not be
affected by the investment designations (including investments in Common Stock)
of other Participants. The Employer Stock Fund Trustee as record holder will
vote such allocated and unallocated shares, if any, as directed by Participants.
Voting Rights of Common Stock
The Employer Stock Fund Trustee generally will exercise voting rights
attributable to all
3
<PAGE>
Common Stock held by the Trust as directed by Participants with interests in the
Employer Stock Fund. With respect to each matter as to which holders of Common
Stock have a right to vote, each Participant will be allocated voting
instruction rights reflecting such Participant's proportionate interest in the
Employer Stock Fund. The number of shares of Common Stock held in the Employer
Stock Fund that are voted in the affirmative and negative on each matter shall
be proportionate to the number of voting instruction rights exercised by
participants in the affirmative and negative respectively.
DESCRIPTION OF THE PLAN
Introduction
The Plan was adopted effective January 1, 1979 and was amended and
restated effective July 1, 1993. Amendment Number Two, permitting investment in
the Employer Stock Fund, was adopted on May 24, 1995. The Plan is a profit
sharing plan with a cash or deferred compensation feature established in
accordance with the requirements under Section 401(a) and Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan is qualified
under Section 401(a) of the Code, and its related trust is qualified under
Section 501(a) of the Code.
The Bank intends that the Plan, in operation, will comply with the
requirements under Section 401(a) and Section 401(k) of the Code. The Bank will
adopt any amendments to the Plan that may be necessary to ensure the qualified
status of the Plan under the Code and applicable Treasury Regulations.
Employee Retirement Income Security Act. The Plan is an "individual
account plan" other than a "money purchase pension plan" within the meaning of
ERISA. As such, the Plan is subject to all of the provisions of Title I
(Protection of Employee Benefit Rights) and Title II (Amendments to the Internal
Revenue Code Relating to Retirement Plans) of ERISA, except the funding
requirements contained in Part 3 of Title I of ERISA which by their terms do not
apply to an individual account plan (other than a money purchase plan). The Plan
is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding
requirements contained in Title IV of ERISA are not applicable to Participants
(as defined below) or beneficiaries under the Plan.
Reference to full Text of Plan. The following statements are summaries
of certain provisions of the Plan. They are not complete and are qualified in
their entirety by the full text of the Plan. Words capitalized but not defined
in the following discussion have the same meaning as set forth in the Plan.
Copies of the Plan are available to all employees by filing a request with the
Plan Administrator, c/o Trenton Savings Bank FSB, Attention: Ms. Judy G. Olsen,
Assistant Vice President, 134 Franklin Corner Road, Lawrenceville, NJ
08648-0950. Each employee is urged to read carefully the full text of the Plan.
4
<PAGE>
Eligibility and Participation
Any salaried employee of the Employer is eligible to participate in the
Plan on the Entry Date following completion of one (1 ) year of Eligibility
Service, as defined, with the Bank, provided he or she has reached age 21 at
such time. A year of Eligibility Service is defined as the 12 month period
following the employee's commencement date or first plan year during which an
employee completes at least 870 hours of service with the Bank, whichever occurs
first. The plan year is January 1 to December 31 (the "Plan Year"). The entry
dates are January 1 and July 1 (the "Entry Dates").
As of December 31, 1996, there were approximately 124 employees
eligible to participate in the Plan, and 101 employees participating by making
salary deferral contributions.
Contributions Under the Plan
401(k) Plan Contributions. Each Participant in the Plan is permitted to
elect to defer such Participant's compensation (as defined below) on a pre-tax
basis up to the lesser of 11% of annual compensation (expressed in terms of
whole percentages) or the applicable limit under the Code (for 1998, the
applicable limit is $10,000) and subject to certain other restrictions imposed
by the Code, and to have that amount contributed to the Plan on such
participant's behalf. (Under the Code, the pre-tax basis could be increased to
the lesser of 25% of annual compensation or the $10,000 applicable limit). For
purposes of the Plan, "Compensation" means, generally, a Participant's total
compensation received from the Bank, including amounts the Participant elects to
defer as salary contributions to the Plan. In 1998, the annual Compensation of
each Participant taken into account under the Plan was and is limited to
$160,000. (Limits established by the IRS are subject to increase pursuant to an
annual cost of living adjustment, as permitted by the Code). A Participant may
elect to modify the amount contributed to the Plan not more often than once per
quarter by providing written notice to the Plan Administrator at least thirty
(30) days prior to the effective date of the modification, unless another period
is designated by the Plan Administrator. However, special restrictions apply to
persons subject to Section 16 of the Exchange Act.
Employer Contributions. The Bank may make, but is not required to make,
discretionary matching contributions to the Plan. If the Bank makes matching
contributions to participants accounts, it will contribute an amount to be
determined annually, provided the participant has worked at least 870 hours
during the Plan Year and is employed by the Bank on the last day of the Plan
Year. In no case may the Bank's matching contribution exceed 5.4% of a
Participant's annual base Compensation. The Bank may, at its discretion, match
such lesser percentage, such as 1%, 2% or 3%, or a percentage thereof, as it
determines appropriate, or may make no matching contribution at all.
The Bank may also make discretionary Qualified Non-Elective
Contributions on behalf of Participants equal to a percentage of each eligible
Participant's Compensation, to be determined each year by the Bank.
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<PAGE>
Finally, the Bank may make discretionary profit sharing contributions
("Non-elective Contributions") to the accounts of Participants who work at least
870 hours in the Plan Year and are employed on the last day of the Plan Year.
Such Non-elective Contributions, if made, will be integrated with the Bank's
social security tax payments on behalf of each Participant. In effect, the
Bank's Non-elective Contribution will be allocated to each Participant's account
in the same proportion that such Participant's Compensation in excess of the
social security taxable wage base (also called "excess compensation") plus
Compensation bears to the total "excess compensation" plus Compensation of all
eligible participants. However, the maximum amount which can be allocated in the
first step is 5.7% of a Participant's "excess compensation" plus Compensation.
If after the first step, a portion of the Bank's Non-elective Contribution has
not yet been allocated, then the remainder will be allocated among Participants
in the same proportion that each Participant's Compensation bears to the total
Compensation of all Participants.
Limitations on Contributions
Limitation on Employee Salary Deferrals. The annual amount of deferred
Compensation of a Participant (when aggregated with any elective deferrals of
the Participant under a simplified employee pension plan or a tax-deferred
annuity) may not exceed the limitation contained in Section 402(g) of the Code,
adjusted for increases in the cost of living as permitted by the Code (the
limitation for 1998 is $10,000). Contributions in excess of this limitation
("excess deferrals") will be included in the Participant's gross income for
federal income tax purposes in the year they are made. In addition, any such
excess deferral will again be subject to federal income tax when distributed by
the Plan to the Participant, unless the excess deferral (together with any
income allocable thereto) is distributed to the Participant not later than the
first April 15th following the close of the taxable year in which the excess
deferral is made. Any income on the excess deferral that is distributed not
later than such date shall be treated, for federal income tax purposes, as
earned and received by the Participant in the taxable year in which the
distribution is made.
Limitations on Annual Additions and Benefits. Pursuant to the
requirements of the Code, the Plan provides that the amount of contributions and
forfeitures allocated to each Participant's Salary Deferral Account and Employer
Contribution Account during any Plan Year may not exceed the lesser of $30,000
or 25% of the Participant's Compensation for the Plan Year (as defined). In
addition, annual additions are limited to the extent necessary to prevent
contributions on behalf of any employee from exceeding the employee's combined
plan limit, i.e., a limit that takes into account the contributions and benefits
made on behalf of an employee to all plans of the Bank. To the extent that these
limitations have been exceeded with respect to a Participant, the Plan
Administrator shall:
(i) return any voluntary after-tax employee contributions to the extent
that the return would reduce the excess amount in the Participant's accounts;
(ii) hold any excess amount remaining after the application of
paragraph (i), in a suspense account;
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<PAGE>
(iii) use the suspense account in the next limitation year (and
succeeding limitation years, if necessary) to reduce Employer contributions for
that Participant if such Participant is covered by the Plan at the end of the
limitation year, or if the Participant is not covered, allocate and reallocate
the suspense account in the next limitation year (and succeeding limitation
years, if necessary) to all Participants before any Employer contribution or
employee contributions which would be "annual additions" are made to the Plan
for such limitation year; and
(iv) reduce Employer contributions to the Plan for the limitation year
by the amount of the suspense account allocated and reallocated during such
limitation year.
Limitation on Plan Contributions for Highly Compensated Employees.
Sections 401(k) and 401(m) of the Code limits the amount of salary deferral
contributions and matching contributions that may be made to the Plan in any
Plan Year on behalf of Highly Compensated Employees (defined below) in relation
to the amount of salary deferral contributions made by or on behalf of all other
employees eligible to participate in the Plan. Specifically, the "actual
deferral percentage" ("ADP") (i.e., the average of the actual deferral ratios,
expressed as a percentage, of each eligible employee's salary deferral
contribution if any, for the Plan Year over the employee's Compensation), of the
Highly Compensated Employees must meet either of the following tests: (i) the
ADP of the eligible Highly Compensated Employees is not more than 125% of the
ADP of all other eligible employees, or (ii) the ADP of the eligible Highly
Compensated Employees is not more than 200% of the ADP of all other eligible
employees, and the excess of the ADP for the eligible Highly Compensated
Employees over the ADP of all other eligible employees is not more than two
percentage points. Similarly, the actual contribution percentage ("ACP") (i.e.,
the average of the actual contribution ratios, expressed as a percentage, of
each eligible employee's matching contributions, if any, for the Plan Year over
the employees Compensation) of the Highly Compensated Employees must meet either
of the following tests: (i) the ACP of the eligible Highly Compensated Employees
is not more than 125% of the ACP of all other eligible employees, or (ii) the
ACP of the eligible Highly Compensated Employees is not more than 200% of the
ACP of all other eligible employees, and the excess of the ACP for the eligible
Highly Compensated Employees over the ACP of all other employees is not more
than two percentage points.
In general, for Plan Years beginning in 1998, a Highly Compensated
Employee includes any employee, who, (1) during the Plan Year or the preceding
Plan Year, was at any time a 5% owner (i.e., owns directly or indirectly more
than 5% of the stock of an employer, or stock possessing more than 5% of the
total combined voting power of all stock of an employer), or (2) for the
preceding Plan Year, received Compensation from an employer in excess of $80,000
(in 1998), and (if the employer elects for a Plan Year) was in the group
consisting of the top 20% of employees when ranked on the basis of Compensation
paid during the Plan Year. The dollar amounts set forth above are adjusted
annually to reflect increases in the cost of living.
In order to prevent the disqualification of the Plan, any amount
contributed by Highly Compensated Employees that exceed the ADP limitation in
any Plan Year ("excess contributions"), together with any income allocable
thereto, must be distributed to such Highly Compensated Employees before the
close of the following Plan Year. Moreover, the Bank will be subject to a
7
<PAGE>
10% excise tax on any excess contributions unless such excess contributions,
together with any income allocable thereto, either are re-characterized or are
distributed before the close of the first 2- 1/2 months following the Plan Year
to which such excess contributions relate. In addition, in order to avoid
disqualification of the Plan, any contributions by Highly Compensated Employees
that exceed the average contribution limitation in any Plan Year ("excess
aggregate contributions") together with any income allocable thereto, must be
distributed to such Highly Compensated Employees before the close of the
following Plan Year. However, the 10% excise tax will be imposed on the Bank
with respect to any excess aggregate contributions, unless such amounts, plus
any income allocable thereto, are distributed within 2-1/2 months following the
close of the Plan Year in which they arose.
Investment of Contributions and Account Balances
All amounts credited to Participants' accounts under the Plan are held
in the Plan Trust (the "Trust") which is administered by the Trustee appointed
by the Bank's Board of Directors.
Prior to the Offering, Participants have been provided the opportunity
to direct the investment of their accounts into one of the following funds (the
"Funds"):
A. Core Equity Fund
B. Emerging Growth Equity Fund
C. Value Equity Fund
D. Actively Managed Bond Fund
E. Intermediate-Term Bond Fund
F. Short-Term Investment Fund
G. International Equity Fund
H. Employer Stock Fund
A Participant may elect to have both past contributions (and earnings),
as well as future contributions to the Participant's accounts invested in the
Funds listed above. Transfers of past contributions (and the earnings thereon)
do not affect the investment mix of future contributions. These elections will
be effective on the effective date of the Participant's written notice to the
Plan Administrator, provided such notice is filed with the Plan Administrator at
least 15 days before it is to become effective. Alternatively, a Participant's
investment elections will be effective if made in any other manner deemed
appropriate by the Plan Administrator if such manner is communicated in writing
to the Participants by the Plan Administrator. Any amounts credited to a
Participant's accounts for which investment directions are not given will be
invested in the Trenton Savings Bank FSB 401(k) Short-Term Investment Fund.
The net gain (or loss) of the Funds from investments (including
interest payments, dividends, realized and unrealized gains and losses on
securities, and expenses paid from the Trust) will be allocated at least four
times during the Plan Year. For purposes of such allocations, all assets of the
Trust are valued at fair market value.
8
<PAGE>
Account H (The Employer Stock Fund). Account H (The Employer Stock
Fund) consists of investments in Common Stock. Cash dividends paid on Common
Stock held in the Employer Stock Fund are credited to a cash dividend subaccount
for each Participant investing in the Employer Stock Fund. After the Offering,
the Trustee will use all amounts held by it in the Employer Stock Fund (except
the amounts credited to cash dividend subaccounts) to purchase shares of Common
Stock of the Company. All purchases will be made at prevailing market prices.
Under certain circumstances, the Trustee may be required to limit the daily
volume of shares purchased. Pending investment in Common Stock, assets held in
the Employer Stock Fund may be placed in the bank deposits and other short-term
investments.
When Common Stock is purchased or sold, the cost or net proceeds are
charged or credited to the accounts of Participants affected by the purchase or
sale. Except for Common Stock purchased in the Offering, the Participant will
pay any brokerage commissions, transfer fees and other expenses incurred in the
sale and purchase of securities attributable to him or her in all the investment
alternatives, including the Common Stock for the Employer Stock Fund. At the
Bank's election, however, the Bank may pay such brokerage commissions transfer
fees, and other expenses. A Participant's account will be adjusted to reflect
changes in the value of shares of Common Stock resulting from stock dividends,
stock splits and similar changes.
Investments in the Employer Stock Fund may involve certain special
risks in investments in Common Stock of the Company. For a discussion of these
risk factors, see the Prospectus. Neither the Bank nor the Plan guarantee the
performance of the Employer Stock Fund nor are the amounts in the Employer Stock
Fund or any of the Plan Funds insured by the Federal Deposit Insurance
Corporation.
The following is a description of each of the Plan's seven other
investment funds.
Account A (Core Equity Fund). This fund seeks capital appreciation and
income and invests in a broadly diversified group of high quality, large
capitalization companies exhibiting sustainable growth in earnings and
dividends.
Account B (Emerging Growth Equity Fund). This fund seeks capital
appreciation and income by investing primarily in stocks of smaller companies
with higher-than-average earnings and dividend growth potential. The fund will
generally have a higher degree of risk and price volatility than the portfolios
of the Core Equity Fund and the Value Equity Fund.
Account C (Value Equity Fund). This fund seeks capital appreciation and
income and invests heavily in out-of-favor stocks of financially sound companies
that are selling at unjustifiably low market valuations based on price/earnings
ratios, price-to-book ratios, etc.
Account D (Active Managed Bond Fund). This fund invests in high quality
fixed income securities and seeks both principal appreciation and income. The
maturity structure of this fund is expected to vary substantially based on the
perceived relative attractiveness of different areas of the fixed income market.
At least 65% of its assets must be invested in securities issued or backed by
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<PAGE>
the United States government, or its agencies or instrumentalities.
Account E (Intermediate-Term Bond Fund). This fund seeks principal
appreciation and income and invests in high quality fixed-income vehicles that
mature within 10 years or have expected average lives of 10 years or less. At
least 65% of its assets must be invested in securities issued or backed by the
United States government, or its agencies or instrumentalities.
Account F (Short-Term Investment Fund). This fund is invested in high
quality, money market instruments with a maximum average maturity of one year.
This fund focuses on preservation of principal will producing a competitive
money market return.
Account G (International Equity Fund). This fund seeks capital
appreciation and income by investing in stocks of companies headquartered in
foreign countries. Each selection is based on companies whose current prices do
not reflect the true earnings potential and for companies that are misperceived
by investors, and therefore, are selling at "undervalued" prices (unjustifiably
low price- to-book ratios, price/earnings ratios, etc). Investments in foreign
markets with unacceptable political or economic risks are avoided. Holdings are
concentrated in the larger markets of Europe, Australia and the Far East. In
addition, the portfolio manager will invest in emerging markets, as
opportunities arise. The fund generally carries a higher degree of risk and
price volatility than the Core Equity Fund and the Value Equity Fund, but less
than the Emerging Growth Equity Fund.
The annual percentage total returns for the above funds for the most
recent quarter, the past year and the past three years is given in the following
table:
Net Investment Performance
(After Investment Expense)
<TABLE>
<CAPTION>
Quarter Annualized
Ended -----------------------
Fund 9/30/97 12 Months 3 Years
---- ------- --------- -------
<S> <C> <C> <C>
A. Core Equity Fund(1) 6.69% 34.54% 28.86%
B. Emerging Growth Equity Fund(1) 20.91% 25.94% 32.93%
C. Value Equity Fund(1) 10.67% 44.59% 28.47%
D. Actively Managed Bond Fund(1) 3.93% 10.07% 9.15%
E. Intermediate-Term Bond Fund(1) 2.47% 7.68% 7.50%
F. Short-Term Investment Fund(1) 1.24% 4.89% 4.96%
G. International Equity Fund(1) -1.22% 12.91% 10.29%
</TABLE>
- --------------
(1) Source, RSI Retirement Trust
Benefits Under the Plan
Vesting. A Participant, at all times, has a fully vested,
nonforfeitable interest in his or her
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<PAGE>
salary deferral contribution and the earnings thereon under the Plan. The
Participant's Employer Contribution Account (consisting of matching
contributions and forfeitures) vests in the Participant in accordance with the
following schedule:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
A Participant will also be 100% vested in Employer contributions and
forfeitures, regardless of his or her years of vesting service, upon attainment
of normal retirement age under the Plan, death or disability. Any non-vested
contributions which are forfeited shall be used to reduce the Bank's future
contributions to the Plan.
Withdrawals and Distributions From the Plan
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL
RESTRICTIONS ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR HIS
OR HER BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF
EMPLOYMENT WITH THE BANK. A SUBSTANTIAL FEDERAL TAX PENALTY MAY ALSO BE IMPOSED
ON WITHDRAWALS MADE PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59-1/2,
REGARDLESS OF WHETHER SUCH A WITHDRAWAL OCCURS DURING HIS OR HER EMPLOYMENT WITH
THE BANK OR AFTER TERMINATION OF EMPLOYMENT.
Withdrawals Prior to Termination of Employment. A Participant may make
a withdrawal from his or her accounts prior to termination of employment only in
the event of financial hardship, subject to the hardship distribution rules
under the Plan. These requirements insure that Participants have a true
financial need before a withdrawal may be made.
Distribution Upon Retirement or Disability. Payment of benefits to a
Participant who retires, incurs a disability, or otherwise terminates employment
shall be made in a lump-sum payment or in installments, over a period that does
not extend beyond the life expectancy of the Participant (or the Participant and
his designated beneficiary). Benefit payments ordinarily shall commence as soon
as practicable following termination of service upon (i) retirement on or after
attainment of normal retirement age; (ii) retirement due to disability; or (iii)
death of the Participant. With respect of a 5% owner, benefit payments must
commence no event later than April 1 following the calendar year in which the
Participant attains age 70-1/2.
Distribution Upon Death. A Participant who dies prior to the benefit
commencement date for retirement, disability or termination of employment, and
who has a surviving spouse shall have
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<PAGE>
his or her benefits valued as of the valuation date immediately following the
Participant's death and paid to the surviving spouse. With respect to an
unmarried Participant, and in the case of a married Participant with spousal
consent to the designation of another beneficiary, payment of benefits to the
beneficiary, payment of benefits to the beneficiary of a deceased Participant
shall be made in accordance with the Participant's election, in the form and
manner specified above.
Distribution Upon Termination for Any Other Reason. Distribution of
benefits to a Participant who terminates employment for any other reason will
not be made to the Participant at the time of termination but shall be made on
the occurrence of an event which would result in a distribution had the
Participant remained in the employ of the Bank (i.e., upon the Participant's
death, disability, or attainment of early or normal retirement age).
Alternatively, at the Participant's election, a Participant may receive a
distribution of his accounts after he has incurred a one year break in service.
Nonalienation of Benefits. Except with respect to federal income tax
withholding and as provided with respect to a qualified domestic relations order
(as defined in the Code), benefits payable under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to
benefits payable under the Plan shall be void.
Administration of the Plan
The trustee with respect to the Plan is the named fiduciary of the Plan for
purposes of Section 402 of ERISA.
Trustee. The trustee is appointed by the Board of Directors of the Bank
to serve at its pleasure. The trustees of the RSI Retirement Trust are the
trustees of the Plan, other than of the Employer Stock Fund, for which Marine
Midland Bank serves as trustee. The trustees are referred to collectively herein
as the Trustee.
The Trustee receives and holds the contributions to the Plan in trust
and distributes the account balances to Participants and beneficiaries in
accordance with the terms of the Plan and the directions of the Plan
Administrator. The Trustee is responsible for investment of the assets of the
Trust.
Reports to Plan Participants
The Trustee will furnish to each Participant a statement at least
annually showing (i) the balance in the Participant's accounts as of the end of
that period, (ii) the amount of contributions allocated to such Participant's
accounts for that period, and (iii) the adjustments to such Participant's
accounts to reflect earnings or losses (if any).
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<PAGE>
Plan Administrator
Pursuant to the terms of the Plan, the Plan is administered by the plan
administrator (the "Plan Administrator"). The Bank is the Plan Administrator and
has designated a committee consisting of Wendell T. Breithaupt, President and
Chief Executive Officer, Leo J. Bellarmino, Executive Vice President, Robert
Russo, Vice President and Treasurer and Judy G. Olsen, Assistant Vice President,
to supervise its responsibilities as such. The address and telephone number of
the Plan Administrator is c/o Trenton Savings Bank FSB, Attention: Ms. Judy G.
Olsen, Assistant Vice President, 134 Franklin Corner Road, Lawrenceville, NJ
08648-0950, Telephone number (609) 844- 3100. The Plan Administrator is
responsible for the administration of the Plan, interpretation of the provisions
of the Plan, prescribing procedures for filing applications for benefits,
preparation and distribution of information explaining the Plan, maintenance of
plan records, books of account and all other data necessary for the proper
administration of the Plan, and preparation and filing of all returns and
reports relating to the Plan which are required to be filed with the U.S.
Department of Labor and the IRS, and for all disclosures required to be made to
Participants, beneficiaries, and others under Sections 104 and 105 of ERISA.
Amendment and Termination
It is the intention of the Bank to continue the Plan indefinitely.
Nevertheless, the Bank may terminate the Plan at any time. If the Plan is
terminated in whole or in part, then regardless of other provisions in the Plan,
each employee affected by such termination shall have a fully vested interest in
his or her accounts. The Bank reserves the right to make, from time to time, any
amendment or amendments to the Plan which do not cause any part of the Trust to
be used for, or diverted to, any purpose other than the exclusive benefit of
Participants or their beneficiaries; provided, however, that the Bank may make
any amendment it determines necessary or desirable, with or without retroactive
effect, to comply with ERISA.
Merger, Consolidation or Transfer
In the event of the merger or consolidation of the Plan with another
plan, or the transfer of the Trust assets to another plan, the Plan requires
that each Participant would (if either the Plan or the other plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he or she would have been
entitled to receive immediately before the merger, consolidation or transfer (if
the Plan had then terminated).
Federal Income Tax Consequences
The following is only a brief summary of certain federal income tax
aspects of the Plan which are of general application under the Code and is not
intended to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan. The
summary is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state
13
<PAGE>
and local income tax laws may not be the same as under the federal income tax
laws. Participants are urged to consult their tax advisors with respect to any
distribution from the Plan and transactions involving the Plan.
The Plan is qualified under Section 401(a) and 401(k) of the Code and
the related Trust is exempt from tax under Section 501(a) of the Code. A plan
that is qualified. under these sections of the Code is afforded special tax
treatment which include the following: (1) the Bank is allowed an immediate tax
deduction for the amount contributed to the Plan each year; (2) Participants pay
no current income tax on amounts contributed by the Bank on their behalf; and
(3) Earnings of the plan are tax-exempt thereby permitting the tax-free
accumulation of income and gains on investments. The Plan will be administered
to comply in operation with the requirements of the Code as of the applicable
effective date of any change in the law. The Bank expects to timely adopt any
amendments to the Plan that may be necessary to maintain the qualified status of
the Plan under the Code.
Assuming that the Plan is administered in accordance with the
requirements of the Code, participation in the Plan under existing federal
income tax laws will have the following effects:
(a) Amounts contributed to a Participant's account and the investment
earnings on the account are not includable in a Participant's federal taxable
income until such contributions or earnings are actually distributed or
withdrawn from the Plan. Special tax treatment may apply to the taxable portion
of any distribution that includes Common Stock or qualifies as a Lump Sum
Distribution (as described below).
(b) Income earned on assets held by the Trust will not be taxable to
the Trust.
Lump Sum Distribution. A distribution from the Plan to a Participant or
the beneficiary of a Participant will qualify as a lump sum distribution ("Lump
Sum Distribution") if it is made: (i) within one taxable year of the Participant
or beneficiary; (ii) on account of the Participant's death, disability or
separation from service, or after the Participant attains age 59-1/2; and (ii)
consists of the balance to the credit of the Participant under this Plan and all
other profit sharing plans, if any, maintained by the Bank. The portion of any
Lump Sum Distribution that is required to be included in the Participant's or
beneficiary's taxable income for federal income tax purposes (the"total taxable
amount") consists of the entire amount of such Lump Sum Distribution less the
amount of after-tax contributions, if any, made by the Participant to any other
profit sharing plan maintained by the Bank which is included in such
distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
Distribution that is attributable to participation after 1973 in the Plan or in
any other profit-sharing plan maintained by the Bank (the "ordinary income
portion") will be taxable generally as ordinary income for federal income tax
purposes. However, a Participant who has completed at least five years of
participation in the Plan before the taxable year in which the distribution is
made, or a beneficiary who receives a Lump Sum Distribution on account of the
Participant's death (regardless of the period of the Participant's participation
in the Plan or any other profit-sharing plan maintained by the Bank), may
14
<PAGE>
elect to have the ordinary income portion of such Lump Sum Distribution taxed
according to a special averaging rule ("five-year averaging"). The election of
the special averaging rules may apply only to one Lump Sum Distribution received
by the Participant or beneficiary, provided such amount is received on or after
the Participant turns 59-1/2 and the recipient elects to have any other Lump Sum
Distribution from a qualified plan received in the same taxable year taxed under
the special averaging rule. Under a special grandfather rule, individuals who
turned 50 by 1985 may elect to have their Lump Sum Distribution taxed under
either the five-year averaging rule or under the prior law ten-year averaging
rule. Such individuals also may elect to have that portion of the Lump Sum
Distribution attributable to the Participant's pre-1974 participation in the
Plan taxed at a flat 20% rate as gain from the sale of a capital asset.
Common Stock Included in Lump Sum Distribution. If a Lump Sum
Distribution includes Common Stock, the distribution generally will be taxed in
the manner described above, except that the total taxable amount will be reduced
by the amount of any net unrealized appreciation with respect to such Common
Stock, i.e., the excess of the value of such Common Stock at the time of the
distribution over its cost to the Plan. The tax basis of such Common Stock to
the Participant or beneficiary for purposes of computing gain or loss on its
subsequent sale will be the value of the Common Stock at the time of
distribution less the amount of net unrealized appreciation. Any gain on a
subsequent sale or other taxable disposition of such Common Stock, to the extent
of the amount of net unrealized appreciation at the time of distribution, will
be considered long-term capital gain regardless of the holding period of such
Common Stock. Any gain on a subsequent or other taxable disposition of the
Common Stock in excess of the amount of net unrealized appreciation at the time
of distribution will be considered either short-term capital gain or long-term
capital gain depending upon the length of the holding period of the Common
Stock. The recipient of a distribution may elect to include the amount of any
net unrealized appreciation in the total taxable amount of such distribution to
the extent allowed by the regulations to be issued by the IRS.
Contribution to Another Qualified Plan or to an IRA. A Participant may
defer federal income taxation of all or any portion of the total taxable amount
of a Lump Sum Distribution (including the proceeds from the sale of any Common
Stock included in the Lump Sum Distribution) to the extent that such amount, or
a portion thereof, is contributed, within 60 days after the date of its receipt
by the Participant, to another qualified plan or to an individual retirement
account ("IRA"). If less than the total taxable amount of a Lump Sum
Distribution is contributed to another qualified plan or to an IRA within the
applicable 60-day period, the amount not so contributed must be included in the
Participant's income for federal income tax purposes and will not be eligible
for the special averaging rules or for capital gains treatment. Additionally, a
Participant may defer the federal income taxation of any portion of an amount
distributed from the Plan on account of the Participant's disability or
separation from service, generally, if the amount is distributed within one
taxable year of the Participant, and such amount is contributed, within 60 days
after the date of its receipt by the Participant, to an IRA. Prior to 1993,
following the partial distribution of a Participant's account, any remaining
balance under the Plan (and the balance to the credit of the Participant under
any other profit sharing plan sponsored by the Bank) would not be eligible for
the special averaging rules or for capital gains treatment. For these purposes,
a "partial distribution" is a distribution within one taxable year of the
Participant equal to at least 50% of the balance of a Participant's account
("Partial
15
<PAGE>
Distribution").
Pursuant to a change in the law, effective January 1, 1993, virtually
all distributions from the Plan may be rolled over to another qualified Plan or
to an IRA without regard to whether the distribution is a Lump Sum Distribution
or a Partial Distribution. Effective January 1, 1993, Participants have the
right to elect to have the Trustee transfer all or any portion of an "eligible
rollover distribution" directly to another plan qualified under Section 401(a)
of the Code or to an IRA. If the Participant does not elect to have an "eligible
rollover distribution" transferred directly to another qualified plan or to an
IRA, the distribution will be subject to a mandatory federal withholding tax
equal to 20% of the taxable distribution. An "eligible rollover distribution"
means any amount distributed from the Plan except: (1) a distribution that is
(a) one of a series of substantially equal periodic payments made (not less
frequently than annually ) over the Participant's life or the joint life of the
Participant and the Participant's designated beneficiary, or (b) for a specified
period of ten years or more; (2) any amount that is required to be distributed
under the minimum distribution rules; and (3) any other distributions excepted
under applicable federal law.
The beneficiary of a Participant who is the Participant's surviving
spouse also may defer federal income taxation of all or any portion of a
distribution from the Plan to the extent that such amount, or a portion thereof,
is contributed within 60 days after the date of its receipt by the surviving
spouse, to an IRA. If all or any portion of the total taxable amount of a Lump
Sum Distribution is contributed by the surviving spouse of a Participant to an
IRA within the applicable 60-day period, any subsequent distribution from the
IRA will not be eligible for the special averaging rules or for capital gains
treatment. Any amount received by the Participant's surviving spouse that is not
contributed to another qualified plan or to an IRA within the applicable 60-day
period, and any amount received by a nonspouse beneficiary will be included in
such beneficiary's income for federal tax purposes in the year in which it is
received.
Additional Tax on Early Distributions. A Participant who receives a
distribution from the Plan prior to attaining age 59-1/2 will be subject to an
additional income tax equal to 10% of the taxable amount of the distribution.
The 10% additional income tax will not apply, however, to the extent the
distribution is rolled over into an IRA or another qualified plan or the
distribution is (i) made to a beneficiary (or to the estate or a Participant) on
or after the death of the Participant, (ii) attributable to the Participant's
being disabled within the meaning of Section 72(m)(7) of the Code, (iii) part of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Participant or the joint
lives (or joint life expectancies) of the Participant and his beneficiary, (iv)
made to the Participant after separation from service on account of early
retirement under the Plan after attainment of age 55, (v) made to pay medical
expenses to the extent deductible for federal income tax purposes, (vi) payments
made to an alternate payee pursuant to a qualified domestic relations order, or
(vii) made to effect the distribution of excess contributions or excess
deferrals.
ERISA and Other Qualifications
As noted above, the Plan is subject to certain provisions of the ERISA
and has received a
16
<PAGE>
favorable determination that it is qualified under Section 401(a) of the Code.
The foregoing is only a brief summary of certain federal income tax
aspects of the Plan which are of general application under the Code and is not
intended to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan.
Accordingly, each Participant is urged to consult a tax advisor concerning the
federal, state and local tax consequences of participating in and receiving
distributions from the Plan.
SEC Reporting and Short-Swing Profit Liability
Section 16 of the Exchange Act imposes reporting and liability
requirements on officers, directors, and persons beneficially owning more than
10% of public companies such as the Company. Section 16(a) of the Exchange Act
requires the filing of reports of beneficial ownership. Within 10 days of
becoming a person subject to the reporting requirements of Section 16(a), a Form
3 reporting initial beneficial ownership must be filed with the Securities and
Exchange Commission ("SEC") . Certain changes in beneficial ownership, such as
purchases, sales and gifts must be reported periodically, either on a Form 4
within 10 days after the end of the month in which a change occurs, or annually
on a Form 5 within 45 days after the close of the Company's fiscal year. Certain
discretionary transactions in and beneficial ownership of the Common Stock
through the Employer Stock Fund of the Plan by officers, directors and persons
beneficially owning more than 10% of the Common Stock of the Company must be
reported to the SEC by such individuals.
In addition to the reporting requirements described above, Section
16(b) of the Exchange Act as provides for the recovery by the Company of profits
realized by an officer, director or any person beneficially owning more than 10%
of the Company's Common Stock ("Section 16(b) Persons") resulting from
non-exempt purchases and sales of the Company's Common Stock within any
six-month period.
The SEC has adopted rules that provide exemption from the profit
recovery provisions of Section 16(b) for participant-directed employer security
transactions within an employee benefit plan, such as the Plan, provided certain
requirements are met. These requirements generally involve restrictions upon the
timing of elections to acquire or dispose of employer securities for the
accounts of Section 16(b) Persons.
Except for distributions of Common Stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order, under the Plan, Section 16(b) Persons are required to hold shares of
Common Stock distributed from the Plan for six months following such
distribution and are prohibited from directing additional purchases of units
within the Employer Stock Fund for six months after receiving such a
distribution.
Financial Information Regarding Plan Assets
Financial statements for the Plan for the year ending December 31,
1996, are attached to the Prospectus. The financial statements were prepared by
RSI.
17
<PAGE>
LEGAL OPINION
The validity of the issuance of the Common Stock will be passed upon by
Luse Lehman Gorman Pomerenk & Schick, A Professional Corporation, Washington,
D.C., which firm acted as special counsel to the Bank in connection with the
Company's Conversion from a mutual holding company to a stock corporation.
18
<PAGE>
PROSPECTUS
Peoples Bancorp, Inc.
(Proposed Holding Company for Trenton Savings Bank FSB)
36,236,500 Shares of Common Stock
Peoples Bancorp, Inc., a Delaware corporation (the "Company"), is
offering up to 31,510,000 shares (subject to adjustment to up to 36,236,500
shares as described herein) of its common stock, par value $.01 per share (the
"Common Stock"), in connection with the conversion of Peoples Bancorp, M.H.C.
(the "Mutual Holding Company"), from a federally chartered mutual holding
company to a Delaware stock corporation pursuant to a Plan of Conversion and
Reorganization (the "Plan of Conversion"). As of December 1, 1997, the Mutual
Holding Company held no material assets except for 5,796,000 shares, or
approximately 64.1%, of the common stock ("Mid-Tier Common Stock") of Peoples
Bancorp, Inc. (the "Mid-Tier Holding Company"), a federal savings and loan
holding company, which owns 100% of the common stock of Trenton Savings Bank FSB
(the "Bank"), a federal stock savings bank. The remaining 3,250,444 shares, or
approximately 35.9%, of the Mid-Tier Common Stock (the "Minority Shares") were
publicly owned by stockholders including the Bank's employees, directors, and
stock benefit plans (together, the "Minority Stockholders"). After the
Conversion (as defined herein), the Mutual Holding Company and the Mid-Tier
Holding Company will cease to exist, and the Company will be the sole
stockholder of the Bank.
(continued on next page)
FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK CENTER AT (609) ________
--------------------------------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PROSPECTIVE INVESTOR, SEE "RISK FACTORS" BEGINNING ON PAGE ______.
--------------------------------------------
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 ANY STATE SECURITIES COMMISSION, NOR
HAS SUCH COMMISSION, OFFICE OR OTHER AGENCY OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
<TABLE>
<CAPTION>
Estimated Underwriting Estimated
Commissions and Other Net Cash
Subscription Price (1) Fees and Expenses (2) Proceeds (3)
---------------------- --------------------- ------------
<S> <C> <C> <C>
Minimum Per Share........................ $10.00 $.13 $9.87
Midpoint Per Share....................... $10.00 $.11 $9.89
Maximum Per Share........................ $10.00 $.10 $9.90
Maximum Per Share (as adjusted).......... $10.00 $.08 $9.92
Minimum Total............................ $153,004,080 $1,935,000 $151,069,080
Midpoint Total........................... $180,006,910 $1,935,000 $178,071,910
Maximum Total............................ $207,006,480 $1,935,000 $205,071,480
Maximum Total, as adjusted (4)........... $238,058,270 $1,935,000 $236,123,270
</TABLE>
================================================================================
(1) Based on (i) the independent appraisal prepared by FinPro, Inc. ("FinPro")
dated December 17, 1997, which states that the estimated pro forma market
value of the Common Stock ranged from $232,900,000 to $315,100,000 (subject
to adjustment to $362,365,000), and (ii) the Adjusted Majority Ownership
Percentage (as defined herein), pursuant to which 65.7% of the to-be
outstanding shares of Common Stock will be offered as Subscription Shares
in the Offering. See "The Conversion--Share Exchange Ratio," and "--Stock
Pricing and Number of Shares to be Issued."
(2) Consists of the estimated costs of the Conversion, including estimated
fixed expenses of $935,000 and marketing fees to be paid to Friedman,
Billings, Ramsey & Co., Inc. Actual expenses may vary from these estimates.
See "Pro Forma Data" for the assumptions used in arriving at these
estimates.
(3) Includes proceeds from the sale of shares of Common Stock in the Offering
to the Bank's employee stock ownership plan and trust (the "ESOP"). The
ESOP intends to purchase 4% of the shares sold in the Offering. Funds to
purchase such shares will be loaned to the ESOP by the Company, which may
fund such loan with offering proceeds. The Bank intends to repay the ESOP
loan with funds from future operations. See "The Conversion--Plan of
Distribution and Selling Commissions" and "Management of the Bank--Benefit
Plans."
(4) As adjusted to give effect to the sale of up to an additional 15% of the
shares that may be offered without a resolicitation of subscribers or any
right of cancellation. See "The Conversion--Stock Pricing and Number of
Shares to be Issued."
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
The date of this Prospectus is February ____, 1998
<PAGE>
Of the shares of Common Stock offered hereby, (i) up to 20,700,648
shares (subject to adjustment to up to 23,805,827 shares) of Common Stock (the
"Subscription Shares") are being offered for a subscription price of $10.00 per
share (the "Subscription Price") in a subscription and community offering as
described below, and (ii) up to 10,809,352 shares (subject to adjustment to up
to 12,430,675 shares) of Common Stock (the "Exchange Shares") will be issued to
Minority Stockholders pursuant to an Agreement of Merger, whereby Minority
Shares shall automatically, without further action by the holder thereof, be
converted into and become a right to receive shares of Common Stock (the "Share
Exchange"). See "The Conversion--Share Exchange Ratio." The simultaneous
conversion of the Mutual Holding Company to stock form pursuant to the Plan of
Conversion, the exchange of all of the Minority Shares for Common Stock, and the
offer and sale of Subscription Shares pursuant to the Plan of Conversion are
herein referred to collectively as the "Conversion."
Non-transferable rights to subscribe for Common Stock in a subscription
offering (the "Subscription Offering") have been granted, in order of priority,
to the following: (i) depositors of the Bank with account balances of $50 or
more as of August 31, 1996 (the "Eligibility Record Date," and such account
holders "Eligible Account Holders"); (ii) the Bank's employee stock ownership
plan and related trust (the "ESOP") in an amount up to 4% of the shares sold in
the Offering and the Bank's 401(k) Plan in an amount up to 200,000 of the shares
sold in the Offering; (iii) depositors with aggregate account balances of $50 or
more as of December 31, 1997 (the "Supplemental Eligibility Record Date") who
are not Eligible Account Holders ("Supplemental Eligible Account Holders"); and
(iv) depositors of the Bank as of February 6, 1998 (the "Voting Record Date")
who are not Eligible Account Holders or Supplemental Eligible Account Holders
("Other Members"). Subscription rights are nontransferable; persons found to be
transferring subscription rights will be subject to the forfeiture of such
rights and possible further sanctions and penalties imposed by the OTS. Subject
to the prior rights of holders of subscription rights, the Company is offering
the shares of Common Stock not subscribed for in the Subscription Offering for
sale in a concurrent community offering (the "Community Offering") to certain
members of the general public with preference given to Minority Stockholders and
then to natural persons residing in the New Jersey counties of Burlington,
Mercer and Ocean (the "Community"). The Company retains the right, in its
discretion, to accept or reject any order in the Community Offering. The
Subscription Offering and Community Offering are referred to collectively as the
"Offering." Unless otherwise specifically provided, the term "Offering" does not
include the shares of Common Stock that will be issued in the Share Exchange.
The minimum number of shares that may be purchased is 25 shares. Except
for the ESOP and the 401(k) Plan, no Eligible Account Holder, Supplemental
Eligible Account Holder or Other Member may in their capacities as such purchase
in the Subscription Offering more than 100,000 Subscription Shares; no person,
together with associates of and persons acting in concert with such person, may
purchase in the Offering more than 100,000 Subscription Shares; and no person
together with associates of and persons acting in concert with such person may
purchase in the aggregate more than the number of Subscription Shares that when
combined with Exchange Shares received by such person together with associates
of and persons acting in concert with such person exceeds 5.0% of the shares
sold in the Offering, provided, however, that the maximum purchase limitation
may be increased or decreased at the sole discretion of the Company and the
Bank. See "The Conversion--Subscription Offering and Subscription Rights,"
"--Community Offering" and "--Limitations on Common Stock Purchases."
The Subscription Offering and Community Offering will terminate at
______ p.m. local time, on March ____, 1998 (the "Expiration Date") unless
extended by the Bank and the Company, with the approval of the OTS, if
necessary. The Bank and the Company may determine to extend the Community
Offering for any reason, whether or not subscriptions have been received for
shares at the minimum, midpoint, or maximum of the Offering Range, and are not
required to give subscribers notice of any such extension. The Community
Offering must be completed within 45 days after the expiration of the
Subscription Offering unless extended by the Bank and the Company with the
approval of the OTS, if necessary. Orders submitted are irrevocable until the
completion or termination of the Conversion; provided that all subscribers will
have their funds returned promptly, with interest, and all withdrawal
authorizations will be canceled if the Conversion is not completed within 45
days after the expiration of the Subscription Offering, unless such period has
been extended with the consent of the OTS, if necessary. See "The
Conversion--Subscription Offering and Subscription Rights" and "--Procedure for
Purchasing Shares in Subscription and Community Offerings."
The Mid-Tier Common Stock is currently traded on the Nasdaq National
Market. The Company has received conditional approval to have its Common Stock
listed on the Nasdaq National Market under the Mid-Tier Holding Company's
previous symbol "TSBS." Friedman, Billings, Ramsey & Co., Inc. ("FBR") has
advised the Company
3
<PAGE>
that upon completion of the Conversion, it intends to act as a market maker in
the Common Stock. See "Market for Common Stock."
4
<PAGE>
[INSERT MAP]
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE
BANK INSURANCE FUND ("BIF"), THE SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") OR
ANY OTHER GOVERNMENT AGENCY.
5
<PAGE>
SUMMARY
The following summary does not purport to be complete, and is qualified
in its entirety by the more detailed information including the "Recent
Developments" section and Consolidated Financial Statements and Notes thereto of
the Bank appearing elsewhere in this Prospectus.
The Company
The Company was organized in December 1997 by the Bank for the purpose
of owning all of the capital stock of the Bank upon completion of the
Conversion. Immediately following the Conversion, the only significant assets of
the Company will be the capital stock of the Bank and that percentage of the
Offering proceeds retained by the Company and the loan to fund the proposed
ESOP. The Company will succeed to the Mid-Tier Holding Company's name: "Peoples
Bancorp, Inc." See "The Company" and "Regulation and Supervision--Holding
Company Regulation."
The Mutual Holding Company
The Mutual Holding Company is a federal mutual holding company that was
organized on August 3, 1995 in connection with the mutual holding company
reorganization of the Bank's mutual savings bank predecessor. The Mutual Holding
Company has no material assets other than Mid-Tier Common Stock. Accordingly,
all financial and other information contained in this Prospectus relates to the
business, financial condition, and results of operations of the Mid-Tier Holding
Company and/or its wholly-owned subsidiary, the Bank. Upon consummation of the
Conversion, the Mutual Holding Company will convert from mutual to stock form
and simultaneously merge with and into the Mid-Tier Holding Company. See "The
Conversion"
The Mid-Tier Holding Company
The Mid-Tier Holding Company was formed to become the stock holding
company of the Bank in the two-tier reorganization (the "Two-Tier
Reorganization") of the Bank and the Mutual Holding Company, which was completed
in July 1997. In the Two-Tier Reorganization, all of the outstanding shares of
the Bank's common stock ("Bank Common Stock"), including shares held by the
Mutual Holding Company and Minority Stockholders, were converted into shares of
Mid-Tier Common Stock, and the Bank became the wholly-owned subsidiary of the
Mid-Tier Holding Company. As of September 30, 1997, the Mid-Tier Holding
Company's only material asset consisted of 100% of the outstanding shares of
common stock of the Bank.
The Bank
The Bank conducts its business from a corporate center located in
Lawrenceville, New Jersey, 14 branch offices located in Mercer, Burlington and
Ocean Counties, New Jersey, and a trust services subsidiary with an office
located in Ocean County, New Jersey. On January 1, 1995, the Bank completed a
charter change from a New Jersey chartered mutual savings bank to a federally
chartered mutual savings bank, permitting expansion of branch offices into
adjacent market areas in Pennsylvania. On August 3, 1995, the Bank's mutual
predecessor reorganized from a federally chartered mutual savings bank into the
Mutual Holding Company and concurrently formed the Bank, which succeeded to the
name and operations of the Bank's mutual predecessor (the "Reorganization"). At
the time of the Reorganization, the Bank conducted a stock offering (the
"Minority Stock Offering") in which it raised approximately $30.0 million of net
proceeds
The Bank has traditionally operated as a community-oriented savings
institution providing mortgage loans and other traditional financial services to
its local community. The Bank is primarily engaged in attracting deposits from
the general public through its offices and using those funds to originate loans
secured by one- to four-family residences primarily located in Mercer and
Burlington Counties where the Bank's offices are located, as well as in
6
<PAGE>
neighboring Bucks County, Pennsylvania. Loans secured by one- to four-family
residences amounted to $242.4 million, or 60.4%, of the Bank's total loan
portfolio at September 30, 1997. In recent years the Bank has substantially
increased its portfolio of mortgage loans secured by multi-family and commercial
real estate, commercial business loans, consumer loans and home equity and
property improvement loans, which, in the aggregate, amounted to $158.7 million,
or 39.6%, of the total loan portfolio at September 30, 1997. The Bank also has a
securities portfolio primarily consisting of U.S. Treasury and federal
government agency obligations, corporate and municipal bonds and mortgage-backed
securities issued by federal agencies, which portfolio amounted to $198.4
million, or 31.1%, of the Bank's assets at September 30, 1997.
The Bank's executive offices are located at 134 Franklin Corner Road,
Lawrenceville, New Jersey, and its telephone number at that location is (609)
844-3100.
The Conversion
General. On September 24, 1997, the Board of Directors of the Mutual
Holding Company unanimously adopted the Plan of Conversion and Reorganization
(the "Plan of Conversion"), pursuant to which the Mutual Holding Company is
converting from a federally chartered mutual holding company to a Delaware
chartered stock corporation. As part of the Conversion each of the issued and
outstanding Minority Shares shall automatically, without further action by the
holder thereof, be converted into and become a right to receive a number of
shares of Common Stock determined pursuant to the Exchange Ratio. See "The
Conversion--Share Exchange Ratio".
The following diagrams outline (i) the current organization structure
of the Mutual Holding Company, the Mid-Tier Holding Company, and the Bank and
(ii) the organizational structure of the Company and the Bank following the
Conversion.
Current organizational structure:
Mutual Holding Company Minority Stockholders
- ---------------------- ---------------------
64.1% 35.9%
Mid-Tier
Holding Company
---------------
100%
Bank
7
<PAGE>
Organizational structure following the conversion:
Public Stockholders
-------------------
100%
Company
-------
100%
Bank
Reasons for the Conversion. The Board of Directors unanimously
determined to conduct the Conversion because it believed that the market for
equity securities in financial services companies was at an unprecedented level
and that the Bank (together with the Company, the "Converted Institution") could
raise substantial funds from such a transaction. The Board of Directors believed
that maximizing such proceeds is in the best interests of the Converted
Institution because such proceeds can be used to increase the net income of the
Converted Institution though investment and eventual leveraging of the proceeds,
and support the possible expansion of the Bank's existing franchise through
internal growth or the acquisition of branch offices or other financial
institutions. Management believed that acquisition opportunities would increase
as a result of the Conversion because the Converted Institution would have
substantially more capital following the Conversion. The Bank has acquired two
financial institutions since September 30, 1996, and intends to actively explore
additional acquisitions, although neither the Company nor the Bank has any
specific plans, arrangements or understandings regarding any additional
expansions or acquisitions at this time. In addition, the Board considered that
there was no assurance that the pricing for financial services stocks would
continue at such favorable levels, and that if the market were to become less
favorable, the amount of capital that could be raised in the Conversion might be
substantially reduced. See "Risk Factors--Potential Low Return on Equity" and "
Uncertainty as to Future Growth Opportunities." See "The Conversion--Purposes of
Conversion."
Approvals Required. The Plan of Conversion and the transactions
incident to the Conversion must be approved by the affirmative vote of: (i) a
majority of the total eligible votes of the members of the Mutual Holding
Company at the Special Meeting of Members to be held on March ___, 1998 (the
"Special Meeting of Members"); (ii) the holders of at least two-thirds of the
outstanding common stock of the Mid-Tier Holding Company; and (iii) the holders
of a majority of the Minority Shares cast at a special meeting of stockholders
of the Mid-Tier Holding Company to be held on March ___, 1998 (the "Special
Meeting of Stockholders"). Consummation of the Conversion is also subject to the
approval of the OTS.
Effective Date. The Effective Date is the date upon which the
Conversion is consummated, which is expected to be during the fiscal quarter
ended June 30, 1998.
Share Exchange Ratio. OTS regulations and policy provide that in a
conversion of a mutual holding company to stock form, stockholders other than
the mutual holding company will be entitled to exchange their shares of
subsidiary savings bank (or mid-tier holding company) common stock for common
stock of the converted holding company, provided that the bank and the mutual
holding company demonstrate to the satisfaction of the OTS that the basis for
the exchange is fair and reasonable. The Boards of Directors of the Bank and the
Company have determined that each Minority Share will on the Effective Date be
automatically converted into and become the right to receive a number of
Exchange Shares determined pursuant to an exchange ratio (the "Exchange Ratio")
which was established as the ratio that ensures that after the Conversion,
subject to the Dividend Waiver Adjustment described in "The Conversion Share
Exchange Ratio" and a slight adjustment to reflect the receipt of cash in lieu
of fractional shares
8
<PAGE>
(both of which will slightly decrease the percentage of shares to be issued to
Minority Stockholders), the percentage of the to-be outstanding shares of Common
Stock issued to Minority Stockholders in exchange for their Minority Shares will
be equal to the percentage of the Mid-Tier Common Stock held by Minority
Stockholders immediately prior to the Conversion. The total number of shares
held by Minority Stockholders after the Conversion would also be affected by any
purchases by such persons in the Offering.
Based on the 35.9% of the outstanding shares of the Mid-Tier Common
Stock held by Minority Stockholders as of December 1, 1997, the $4.9 million of
dividends waived and projected to be waived by the Mutual Holding Company
through the Effective Date, the $21,000 of assets other than Mid-Tier Common
Stock held by the Mutual Holding Company as of December 1, 1997, and the
Independent Valuation, the following table sets forth, at the minimum, midpoint,
maximum, and adjusted maximum of the Offering Range, the following: (i) the
total number of Subscription Shares and Exchange Shares to be issued in the
Conversion, (ii) the percentage of Common Stock outstanding after the Conversion
that will be sold in the Offering and issued in the Share Exchange, and (iii)
the Exchange Ratio.
Subscription Shares Exchange Shares Total Shares
to be Issued to be Issued of Common
------------------- ----------------- Stock to be Exchange
Amount Percent Amount Percent Outstanding Ratio
------ ------- ------ ------- ----------- -----
Minimum.......... 15,300,408 65.7% 7,989,592 34.3% 23,290,000 2.4580
Midpoint......... 18,000,691 65.7% 9,399,309 34.3% 27,400,000 2.8917
Maximum.......... 20,700,648 65.7% 10,809,352 34.3% 31,510,000 3.3255
Adjusted maximum. 23,805,827 65.7% 12,430,673 34.3% 36,236,500 3.8243
The final Exchange Ratio will be calculated at the conclusion of the
Conversion and will be affected by any additional waivers of dividends by the
Mutual Holding Company, any change in the Mutual Holding Company's assets other
than Mid-Tier Common Stock, and any options exercised subsequent to December 1,
1997.
Effect on Stockholders' Equity per Share of the Shares Exchanged. The
Conversion will increase the stockholders' equity of Minority Stockholders. At
September 30, 1997, the stockholders' equity per share was $11.97 for each share
of Mid-Tier Common Stock outstanding, including shares held by the Mutual
Holding Company. Based on the pro forma information set forth in "Pro Forma
Data," assuming the sale of 18,000,691 shares of Common Stock at the midpoint of
the Offering Range, the pro forma stockholders' equity per share of Common Stock
was $9.93, and the aggregate pro forma stockholders' equity for the number of
Exchange Shares to be received for each Minority Share was $28.71. The pro forma
stockholders' equity for the aggregate number of Exchange Shares to be received
for each Minority Share was $26.10, $31.36 and $34.38 at the minimum, maximum,
and adjusted maximum of the Offering Range.
Effect on Earnings per Share of the Shares Exchanged. The Conversion
will also affect Minority Stockholders' pro forma earnings per share. For the
nine months ended September 30, 1997, and the fiscal year ended December 31,
1996, the earnings per share were $.66 and $.94, respectively, for each share of
Mid-Tier Common Stock outstanding, including shares held by the Mutual Holding
Company. Based on the pro forma information set forth in "Pro Forma Data,"
assuming the sale of 18,000,691 shares of Common Stock at the midpoint of the
Offering Range, the pro forma earnings per share of Common Stock was $.34 and
$.49, respectively, for such periods, and the aggregate pro forma earnings for
the number of Exchange Shares to be received for each Minority Share was $.98
and $1.42, respectively. For the nine months ended September 30, 1997, the
aggregate pro forma earnings for the number of Exchange Shares to be received
for each Minority Share was $.93, $1.03 and $1.11 at the minimum, maximum, and
adjusted maximum of the Offering Range. For the fiscal year ended December 31,
1996, the aggregate pro forma earnings for the number of Exchange Shares to be
received for each Minority Share was $1.35, $1.50 and $1.61 at the minimum,
maximum, and adjusted maximum of the Offering Range.
9
<PAGE>
Effect on Dividends per Share. The Company's Board of Directors
anticipates declaring and paying quarterly cash dividends of $.025, or $.10 per
share of Common Stock on an annual basis, or an aggregate annual dividend of
$.246, $.289, $.333 and $.382 for the number of Exchange Shares received for
each Minority Share, at the minimum, midpoint, maximum and adjusted maximum of
the Offering Range, respectively. The Bank, or the Mid-Tier Holding Company, has
paid quarterly cash dividends of $.0875 per Minority Share, or $.35 per Minority
Share on an annual basis, for each of the full fiscal quarters since the
Minority Stock Offering in August 1995. Accordingly, if a Minority Stockholder
does not purchase shares in the Offering, his aggregate dividends will initially
increase if shares are sold at the adjusted maximum of the Offering Range, and
will decrease if shares are sold at the minimum, midpoint, and maximum of the
Offering Range. See "Market for Common Stock." The Mid-Tier Holding Company
intends to continue to pay a quarterly cash dividend of $.0875 per share through
the fiscal quarter ended March 31, 1998. Dividends, when and if paid, will be
subject to determination and declaration by the Board of Directors in its
discretion, which will take into account the Company's consolidated financial
condition and results of operations, tax considerations, industry standards,
economic conditions, regulatory restrictions on dividend payments by the Bank to
the Company, general business practices and other factors. See "Dividend
Policy."
Effect on the Market and Appraised Value of the Shares Exchanged. The
aggregate Subscription Price of the shares of Common Stock received in exchange
for each Minority Share is $24.58, $28.92, $33.26, and $38.24 at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range. The last trade of
Mid-Tier Stock on August 7, 1997, the day preceding the announcement of the
Conversion, was $22 per share, and the price at which Mid-Tier Common Stock last
traded on February ____, 1998, was $________ per share.
Dissenters' and Appraisal Rights. Under OTS regulations, Minority
Stockholders will not have dissenters' rights or appraisal rights in connection
with the exchange of Minority Shares for shares of Common Stock of the Company.
Tax Consequences of Conversion. The Bank will receive an opinion of
counsel with regard to federal income taxation and written advice from its tax
advisor with regard to New Jersey taxation, which will indicate that the
adoption and implementation of the Plan of Conversion will not be taxable for
federal or New Jersey income tax purposes to the Bank, the Mutual Holding
Company, the Mid-Tier Holding Company, the Minority Stockholders, the Interim
Savings Bank, members of the Mutual Holding Company or eligible account holders
or the Company. Consummation of the Conversion is conditioned upon prior receipt
by the Bank of such opinions. See "The Conversion--Tax Aspects."
Exchange of Mid-Tier Holding Company Stock Certificates. Until the
Effective Date, the Minority Shares will continue to be available for trading on
the Nasdaq National Market. The exchange and conversion of Minority Shares for
shares of the Common Stock will occur automatically on the Effective Date. After
the Effective Date, former holders of the Mid-Tier Common Stock will have no
further equity interest in the Bank (other than as stockholders of the Company)
and there will be no further transfers of the Mid-Tier Common Stock on its stock
transfer records. For persons holding Minority Shares in street name, the
conversion of Minority Shares into shares of Common Stock will occur without any
action on the part of such stockholder. For persons holding certificated shares,
as soon as practicable after the Effective Date, the Company, or a transfer
agent, bank or trust company designated by the Company, in the capacity of
exchange agent (the "Exchange Agent"), will send a transmittal form to each
Minority Stockholder of record as of the Effective Date. The transmittal forms
are expected to be mailed within five business days after the Effective Date and
will contain instructions with respect to the surrender of certificates
representing the Mid-Tier Common Stock or Certificates formerly representing
shares of Bank Common Stock that were not replaced with Certificates
representing Mid-Tier Common Stock into which such shares were converted in the
Two-Tier Reorganization ("Converted Bank Common Stock Certificates"). It is
expected that certificates for shares of the Company's Common Stock will be
distributed within five business days after the receipt of properly executed
transmittal forms and other required documents. See "The Conversion--Exchange of
Certificates." MID-TIER HOLDING COMPANY STOCKHOLDERS SHOULD NOT FORWARD STOCK
CERTIFICATES TO THE MID-TIER HOLDING COMPANY, THE BANK OR THE EXCHANGE AGENT
UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS.
10
<PAGE>
The Subscription and Community Offerings
Up to 20,700,648 Subscription Shares (subject to adjustment to up to
23,805,827 shares) will be offered for a subscription price of $10.00 per share
(the "Subscription Price") in the Subscription Offering and, to the extent
shares remain available for sale, in the Community Offering which is being
conducted concurrently with, and/or following the conclusion of the Subscription
Offering (together, the "Offering"). Common Stock offered in the Subscription
Offering shall be offered in the following order of priority to: (i) Eligible
Account Holders; (ii) the Bank's ESOP in an amount up to 4% of the shares sold
in the Offering and the Bank's 401(k) Plan in an amount up to 200,000 of the
shares sold in the Offering; (iii) Supplemental Eligible Account Holders; and
(iv) Other Members.
Common Stock not subscribed for in the Subscription Offering may be
offered in the Community Offering to certain members of the general public, with
preference given, , to Minority Stockholders and then in the Bank's discretion
to natural persons residing in the Community. The Company and the Bank reserve
the absolute right to reject or accept any orders in the 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. The Bank and the Company have hired
FBR as consultant and advisor in the Conversion and to assist in soliciting
subscriptions in the Offering. See "The Conversion--Subscription Offering and
Subscription Rights" and "--Community Offering."
The Offering will terminate at ______ p.m. local time, on March ___,
1998 (the "Expiration Date") unless the Community Offering is extended by the
Bank and the Company, with the approval of the OTS, if necessary. The Bank and
the Company may determine to extend the Community Offering for any reason,
whether or not subscriptions have been received for the minimum, midpoint, or
maximum of the number of shares offered in the Offering, and the Bank and the
Company are not required to give subscribers notice of any such extension. The
Community Offering must be completed within 45 days after the expiration of the
Subscription Offering unless extended by the Bank and the Company with the
approval of the OTS, if necessary.
Prospectus Delivery and Procedure for Purchasing Shares
To ensure that each purchaser receives a Prospectus at least 48 hours
prior to the Expiration Date, Prospectuses may not be mailed later than five
days prior to such date or be hand delivered later than two days prior to such
date. Order forms that include certain certifications ("Order Forms") may only
be distributed with a Prospectus. Execution of an Order Form will confirm
receipt or delivery of the Prospectus. The Bank will accept for processing only
properly completed Order Forms. The Bank will not be required to accept orders
submitted on photocopied or facsimilied Order Forms. Payment by check, bank
draft, certified or teller's check, money order, or debit authorization to an
existing passbook or certificate of deposit account at the Bank must accompany
each stock order form. See "The Conversion--Procedure for Purchasing Shares."
To ensure that each prospective purchaser is properly identified as to
his stock purchase priority, depositors as of the Eligibility Record Date and
Supplemental Eligibility Record Date must list all accounts on the stock order
form giving all names in each account and the account number, and shareholders
of the Mid-Tier Holding Company must list the number of shares of Mid-Tier
Common Stock held as of February _____, 1997. Failure to list all accounts or
share holdings may result in a subscriber's loss of subscription rights, receipt
of lower priority subscription rights or loss of preference in the Community
Offering. The priority of any order submitted by two or more persons will be
based on the priority of the person with the lowest priority subscription
rights.
Restrictions on Transfer of Subscription Rights and Shares
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 of Conversion or the shares of Common Stock to be issued upon
their exercise. Each person exercising subscription rights will be required to
certify that a purchase of Common Stock is solely for the purchaser's own
account and that there is no agreement or understanding regarding the sale or
11
<PAGE>
transfer of such shares. See "The Conversion--Restrictions on Transfer of
Subscription Rights and Shares." The Company and the Bank will pursue any and
all legal and equitable remedies in the event they become aware of the transfer
of subscription rights and will not honor orders known by them to involve the
transfer of such rights.
Purchase Limitations
The minimum number of shares that may be purchased is 25 shares. Except
for the ESOP and the 401(k) Plan, no Eligible Account Holder, Supplemental
Eligible Account Holder or Other Member may in their capacities as such purchase
in the Subscription Offering more than 100,000 Subscription Shares; no person,
together with associates of and persons acting in concert with such person, may
purchase in the Offering more than 100,000 Subscription Shares; and no person
together with associates of and persons acting in concert with such person may
purchase in the aggregate more than the number of Subscription Shares that when
combined with Exchange Shares received by such person together with associates
of and persons acting in concert with such person exceeds 1.5% of the shares of
Common Stock issued in the Conversion, provided, however, that at any time
during the Offering and without further approval by the members of the Mutual
Holding Company or stockholders of the Mid-Tier Holding Company and without
further notice to subscribers, the Company and the Bank, in their sole
discretion, may increase the maximum purchase limitation to up to 5% of the
aggregate number of shares of Common Stock issued in the Conversion. Under
certain circumstances, subscribers for the maximum number of shares will, and
certain large subscribers may, be resolicited to increase their subscriptions in
the event of any such increase. The Company and the Bank may determine to
increase the maximum purchase limitation in their sole discretion whether or not
subscriptions have been received for shares at the minimum, midpoint or maximum
of the Offering Range, subject to any necessary regulatory approval, for any
reason, including to sell the minimum number of shares offered, and to raise
more capital. See "The Conversion--Limitations on Common Stock Purchases." In
the event of an oversubscription, shares will be allocated as described in "The
Conversion--Subscription Offering and Subscription Rights" and "--Community
Offering," and in accordance with the Plan of Conversion. In the event of a 15%
increase in the total number of shares to be offered, the additional shares will
be distributed and allocated as described herein without the resolicitation of
subscribers as described in "The Conversion--Subscription Offering and
Subscription Rights" and "--Limitation on Common Stock Purchases."
Stock Pricing and Number of Shares to be Issued
The Plan of Conversion and Federal regulations require that the
aggregate purchase price of the Common Stock in the Offering must be based on
the appraised aggregate pro forma market value of the Common Stock, as
determined by an independent valuation. The Bank and the Company have retained
FinPro, Inc. ("FinPro") to make such valuation (the "Independent Valuation").
The Independent Valuation was prepared based on the assumption that the
aggregate amount of Common Stock sold in the Offering would be equal to the
estimated pro forma market value of the Company multiplied by the Adjusted
Majority Ownership Percentage (as defined in " The Conversion--Share Exchange
Ratio"). The Independent Valuation states that as of December 17, 1997, the
estimated pro forma market value of the Company ranged from a minimum of
$232,900,000 to a maximum of $315,100,000 with a midpoint of $274,000,000 (the
"Valuation Range"). The aggregate offering price of the Subscription Shares
offered in the Offering will be equal to the Valuation Range multiplied by the
Adjusted Majority Ownership Percentage (as defined in "the Conversion--Share
Exchange Ratio"). The number of Subscription Shares offered in the Offering will
be equal to the aggregate offering price of the Subscription Shares divided by
the Subscription Price. The number of Subscription Shares offered in the
Offering and/or the aggregate of the offering price of the Subscription Shares
are referred to herein as the "Offering Range." Based on the Valuation Range,
the Adjusted Majority Ownership Percentage and the Subscription Price, the
minimum of the Offering Range will be 15,300,408 Subscription Shares, the
midpoint of the Offering Range will be 18,000,691 Subscription Shares, and the
maximum of the Offering Range will be 20,700,648 Subscription Shares.
The Board of Directors reviewed the Independent Valuation and, in
particular, considered (i) the Mid-Tier Holding Company's financial condition
and results of operations, (ii) financial comparisons of the Mid-Tier Holding
Company in relation to holding company's of financial institutions of similar
size and asset quality, (iii) stock market conditions generally and in
particular for financial institutions, and (iv) the historical trading price of
the Minority
12
<PAGE>
Shares, all of which are set forth in the Independent Valuation. The Board also
reviewed the methodology and the assumptions used by FinPro in preparing its
appraisal. The Independent Valuation of the Common Stock is not intended and
should not be construed as a recommendation of any kind as to the advisability
of purchasing the Common Stock in the Offering, nor can any assurance be given
that those who purchase or receive Common Stock in the Conversion will be able
to sell such shares after the Conversion at or above the Subscription Price.
Further, the pro forma stockholders' equity is not intended to represent the
fair market value of the Common Stock and may be greater than amounts that would
be available for distribution to stockholders in the event of liquidation. See
"Pro Forma Data" and "The Conversion--Stock Pricing and Number of Shares to be
Issued."
There is no obligation or understanding on the part of management or
the Board of Directors to take and/or pay for any shares in order to complete
the Conversion. Following commencement of the Subscription Offering, the maximum
of the Valuation Range may be increased by up to 15% to up to $362,365,000,
which will result in a corresponding increase of up to 15% in the maximum of the
Offering Range to $238,058,270, or 23,805,827 shares, to reflect changes in the
market and financial conditions, without the resolicitation of subscribers. The
minimum of the Valuation Range and the minimum of the Offering Range may not be
decreased without a 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 Offering Range to
fill unfilled orders in the Subscription and Community Offerings. See "The
Conversion--Stock Pricing" and --Number of Shares to be Issued."
Use of Proceeds
Net proceeds from the sale of the Common Stock are estimated to be
between $151.1 million and $205.1 million, based on the assumptions set forth in
"Pro Forma Data." Actual net cash proceeds cannot be determined until the
Conversion is completed, and will depend on the number of shares sold in the
Offering and the expenses of the Conversion. See "Pro Forma Data." The Company
will contribute at least 50% of the estimated adjusted net Offering proceeds to
the Bank.
The Company will be unable to utilize any of the net proceeds of the
Offering until the Effective Date. The Company and the Bank intend to initially
use funds from the Offering for general business purposes including investment
in one- to four-family residential mortgage loans and other loans, and
investment in short-term and intermediate-term securities and mortgage-backed
securities. In addition, the Bank and the Company intend in the future to
utilize net proceeds to expand current operations through internal growth or
acquisitions, or for diversification into other banking-related businesses and
for other business and investment purposes. The Bank has acquired two financial
institutions since September 30, 1996, and the Company and the Bank actively
intend to explore additional acquisitions, although neither the Company nor the
Bank has any specific plans, arrangements or understandings regarding any
additional expansions or acquisitions at this time. Net proceeds retained by the
Company may be used for general business activities including, subject to
applicable limitations, the possible payment of dividends and repurchases of
Common Stock. See "Use of Proceeds."
Dividends
The Company intends to pay a quarterly cash dividend of $.025 per share
of Common Stock, or $.10 per share of Common Stock on an annual basis. The first
dividend is expected to be declared for the fiscal quarter ended June 30, 1998.
Dividends, when and if paid, will be subject to determination and declaration by
the Board of Directors in its discretion, which will take into account the
Company's consolidated financial condition and results of operations, tax
considerations, industry standards, economic conditions, regulatory restrictions
on dividend payments by the Bank to the Company, general business practices and
other factors. See "Dividend Policy."
13
<PAGE>
Market for Common Stock
There is an established market for the Mid-Tier Common Stock which is
currently listed on the Nasdaq National Market under the symbol "TSBS," and the
Mid-Tier Holding Company had 12 market makers as of September 30, 1997. As a
newly formed company, however, the Company has never issued capital stock and
consequently there is no established market for its Common Stock. It is expected
that the Company's Common Stock may be more liquid than the Minority Shares
because there will be significantly more outstanding shares owned by the public.
However, there can be no assurance that an active and liquid trading market for
the Common Stock will develop, or if developed, will be maintained. The Minority
Shares will automatically on the Effective Date, without further action by the
holder thereof, be converted into and become a right to receive shares of Common
Stock based on the Exchange Ratio.
The Company has received conditional approval to have its Common Stock
listed on the Nasdaq National Market under the Mid-Tier Holding Company's
previous symbol "TSBS." FBR has advised the Company that upon completion of the
Conversion, it intends to act as a market maker in the Common Stock.
Benefit Plans
The Bank's ESOP is expected to purchase up to 4% of the shares sold in
the Offering, or 720,028 shares assuming the sale of 18,000,691 shares, after
satisfaction of purchase orders of Eligible Account Holders. The shares
purchased by the ESOP will be allocated to the accounts of employees (except for
Messrs. Breithaupt , Bellarmino, and three other employees of the Bank's
subsidiaries who will not participate in the ESOP) without payment by such
persons of additional cash consideration. Subject to participant direction of
the plan's investment, the Bank's 401(k) Plan may purchase up to 200,000 of the
shares sold in the Offering, after satisfaction of purchase orders of Eligible
Account Holders. In addition, subject to stockholder approval, the Bank or the
Company intends to adopt (i) a recognition and retention plan (the "1998
Recognition Plan") pursuant to which the Bank or the Company intends to award to
employees and directors of the Bank a number of shares of Common Stock equal to
up to 4% of the number of shares sold in the Offering, and (ii) a stock option
plan (the "1998 Stock Option Plan") pursuant to which the Company intends to
award options to purchase a number of shares of Common Stock equal to up to 10%
of the number of shares sold in the Offering at an exercise price equal to the
fair market value of the Common Stock at the time of the award. Shares awarded
pursuant to the 1998 Recognition Plan or the 1998 Stock Option Plan may be
authorized but unissued shares, or shares of Common Stock acquired by the Bank,
the Company, or such plans in the open market. The exercise of such options may,
and such awards of Recognition Plan shares and ESOP shares from authorized but
unissued shares of the Company would, dilute the interests of stockholders by
approximately 8,4%. The Company intends to submit the 1998 Recognition Plan and
1998 Stock Option Plan to stockholders for approval. In addition, the Bank or
the Company intend to adopt employment contracts for additional senior officers.
See "Management of the Bank--Benefit Plans."
Risk Factors
Attention should be given to the matters discussed under "Risk Factors"
which include, among others, discussions of low returns on equity that may
follow the Conversion, uncertainty as to future growth opportunities and ability
to successfully deploy Offering proceeds, the Independent Valuation and its
impact on the trading price of the Common Stock, absence of future securities
gains, the possible increase in the Offering Range and number of shares issued
in the Offering, the potential impact of changes in interest rates, risks
related to an increased portfolio of higher yielding loans, certain
anti-takeover considerations, the possible dilutive effect of the issuance of
additional shares, expected higher compensation expenses in future periods,
regulatory oversight and legislation, and capability of the Bank's data
processing systems to accommodate the year 2000.
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL
AND OTHER DATA OF THE BANK AND SUBSIDIARIES
The following tables set forth selected consolidated historical
financial and other data of the Mid-Tier Holding Company (including its
subsidiaries) for the periods and at the dates indicated. The information is
derived in part from and should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of the Mid-Tier Holding Company contained
elsewhere herein. The Selected Consolidated Financial Condition and Operating
Data at and for the nine month periods ended September 30, 1997 and 1996 are
derived from unaudited consolidated financial statements and, in the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation of the results for the unaudited periods have been made.
The results of operations data presented below for the nine months ended
September 30, 1997, are not necessarily indicative of the results that may be
expected for any future period.
<TABLE>
<CAPTION>
At At December 31,
September 30, ----------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- -------- -------- -------- -------- ---------
(In Thousands)
Selected Financial Condition Data:
<S> <C> <C> <C> <C> <C> <C>
Total assets............................ $638,942 $601,016 $514,218 $441,019 $435,746 $409,227
Cash and cash equivalents............... 13,209 20,938 16,253 12,665 15,763 11,983
Securities available for sale........... 127,651 87,648 83,776 64,961 -- --
Securities held to maturity:
Debt securities....................... 31,158 37,935 36,945 27,017 121,814 161,923
Mortgage-backed securities............ 39,603 48,618 54,316 35,087 33,169 23,800
Federal Home Loan Bank stock.......... 3,386 3,089 2,864 2,495 -- --
Loans, net.............................. 397,866 380,288 306,093 289,504 255,656 201,889
Deposits................................ 493,334 491,246 410,770 377,559 383,840 366,069
Stockholders' equity.................... 108,239 103,352 97,542 58,769 49,123 40,624
Intangible assets....................... 10,834 9,164 2,325 -- -- --
Borrowings.............................. 30,000 -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
------------------ ------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- ------
(In Thousands)
Selected Operating Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income.................... $32,616 $26,662 $36,903 $33,518 $29,468 $30,754 $31,440
Total interest expense................... 16,223 12,865 17,941 17,010 12,851 13,253 16,179
------- ------- ------- ------- ------- ------- -------
Net interest income.................... 16,393 13,797 18,962 16,508 16,617 17,501 15,261
Provision for loan losses................ 1,488 -- -- 150 180 880 520
------- ------- ------- ------- ------- ------- -------
Net interest income after provision
for loan losses...................... 14,905 13,797 18,962 16,358 16,437 16,621 14,741
Other income............................. 4,169 2,711 3,818 4,946 3,150 3,819 1,172
Operating expenses....................... 9,844 6,434 9,669 7,792 7,475 6,536 6,010
------- ------- ------- ------- ------- ------- -------
Income before income taxes and
cumulative effect of accounting change 9,230 10,074 13,111 13,512 12,112 13,904 9,903
Income taxes............................. 3,332 3,626 4,720 4,864 4,437 4,876 3,369
------- ------- ------- ------- ------- ------- -------
Income before cumulative effect of
accounting change...................... 5,898 6,448 8,391 8,648 7,675 9,028 6,534
Cumulative effect of accounting change -- -- -- -- -- (529) --
------- ------- ------- ------- ------- -------- -------
Net income......................... $ 5,898 $ 6,448 $8,391 $ 8,648 $ 7,675 $ 8,499 $ 6,534
======= ======= ======= ======= ======= ======= =======
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
At or for the
Nine Months Ended
September 30, (5) At or for the Years Ended December 31,
------------------ --------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------ ------ ------ ------ -----
Selected Operating Ratios and Other Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average assets............. 1.25% 1.66% 1.56% 1.73% 1.72% 2.00% 1.64%
Return on average equity............. 7.57% 8.61% 8.34% 11.33% 13.45% 18.75% 17.52%
Interest rate spread (1)............. 3.06% 2.96% 2.98% 2.96% 3.49% 3.94% 3.62%
Net interest margin (1).............. 3.65% 3.69% 3.66% 3.47% 3.87% 4.26% 3.97%
Net interest income after provision
for loan losses to total operating
expense............................ 151.41% 214.44% 196.11% 209.93% 219.89% 254.30% 245.27%
Operating expenses to average total
assets............................. 2.09% 1.66% 1.80% 1.56% 1.67% 1.54% 1.51%
Efficiency ratio (2)................. 52.54% 42.34% 46.53% 43.84% 42.95% 45.15% 43.07%
Asset Quality Ratios:
Nonperforming loans to net loans at
end of period...................... 1.43% 0.47% 1.03% 0.71% 0.87% 0.71% 0.82%
Nonperforming assets to total assets
at end of period................... 0.91% 0.33% 0.69% 0.43% 0.59% 0.42% 0.40%
Allowance for loan losses to
nonperforming loans at end of period 56.25% 109.15% 74.19% 80.91% 65.24% 80.65% 38.35%
Average interest-earning assets to
average interest-bearing liabilities 116.06% 120.96% 119.80% 114.32% 112.72% 109.92% 108.36%
Capital and Equity Ratios:
Average equity to average assets 16.52% 19.26% 18.67% 15.27% 12.78% 10.67% 9.38%
Equity to assets at end of period 16.94% 19.38% 17.20% 18.97% 13.33% 11.27% 9.93%
Per Share Data:
Book value per share................. $ 11.97 $ 11.24 $ 11.44 $ 10.94 N/A N/A N/A
Earnings per share
Basic (6)......................... $ 0.66 $ 0.72 $ 0.94 N/A N/A N/A N/A
Diluted (6)....................... $ 0.66 $ 0.72 $ 0.94 N/A N/A N/A N/A
Other Data:
Full service offices................. 14 11 14 10 9 9 9
</TABLE>
- ----------
(1) Interest rate spread represents the difference between the weighted average
yield on average interest-earning assets and the weighted average costs of
average interest-bearing liabilities, and net interest margin represents
net interest income as a percentage of average interest-earning assets.
(2) The efficiency ratio is calculated by dividing non-interest expense, net of
nonrecurring items and amortization of intangible assets into net interest
income before provision for loan losses plus non-interest income, net of
non-recurring items.
(3) The Minority Stock Offering, which raised net proceeds of $30.0 million,
was completed on August 3, 1995.
(4) During the nine month periods ended September 30, 1997 and 1996, and the
fiscal years ended December 31, 1996, 1995 and 1994, the Bank recorded net
securities gains of $2.9 million, $2.2 million, $2.8 million, $4.1 million
and $2.4 million, respectively. The Bank's portfolio of equity securities
was completely divested as of September 30, 1997 and management believes
that the Company's earnings after the Conversion will not be enhanced by
net securities gains in the amounts recently experienced by the Bank. See
"Risk Factors--Absence of Securities Gains."
(5) Annualized where appropriate.
(6) In 1997, the Bank adopted SFAS No. 128. Per share amounts for prior periods
have been restated. The adoption of SFAS 128 did not have a material effect
on the Bank's reported earnings per share. See "Impact of New Accounting
Standards."
16
<PAGE>
RECENT DEVELOPMENTS
The following tables set forth selected consolidated financial
condition data for the Bank at December 31, 1997 and 1996, and September 30,
1997, and selected consolidated operating data for the Bank for the three months
and years ended December 31, 1997 and 1996. The Selected Consolidated Financial
Condition Data and the Selected Consolidated Operating Data at and for the three
months and twelve months ended December 31, 1997 and 1996, are derived from the
unaudited consolidated financial statements of the Bank, which in the opinion of
management, reflect all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. This information should be read in
conjunction with the Consolidated Financial Statements of the Bank presented
elsewhere in this Prospectus.
At At At
December 31, September 30, December 31,
1997 1997 1996
---------- ---------- -------
(In Thousands)
Selected Financial Condition Data:
Total assets......................... $ 640,419 $ 638,942 $ 601,016
Cash and cash equivalents............ 15,546 13,209 20,938
Securities available for sale........ 137,218 127,651 87,648
Securities held to maturity:
Investment securities.............. 25,857 31,158 37,935
Mortgage-backed securities......... 35,098 39,603 48,618
Federal Home Loan Bank stock....... 3,386 3,386 3,089
Loans, net........................... 396,448 397,866 380,288
Real estate owned, net............... 284 123 253
Deposits............................. 493,400 493,334 491,246
Stockholders' equity................. 110,038 108,239 103,352
For the Three Months For the Years
Ended December 31, Ended December 31,
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(In Thousands)
Selected Operating Data:
Total interest income.......... $ 11,241 $ 10,241 $ 43,857 $ 36,903
Total interest expense......... 5,608 5,076 21,831 17,941
--------- --------- --------- --------
Net interest income.......... 5,633 5,165 22,026 18,962
Provision for loan losses...... 186 -- 1,674 --
--------- --------- --------- --------
Net interest income after
provision for loan losses.. 5,447 5,165 20,352 18,962
Other income................... 735 1,107 4,904 3,818
Operating expenses............. 3,623 3,235 13,467 9,669
--------- --------- --------- --------
Income before income taxes..... 2,559 3,037 11,789 13,111
Income taxes................... 995 1,094 4,327 4,720
--------- --------- --------- --------
Net income................... $ 1,564 $ 1,943 $ 7,462 $ 8,391
========= ========= ========= ========
17
<PAGE>
<TABLE>
<CAPTION>
At or At or
For the Three Months For the Years
Ended December 31, Ended December 31,
------------------- -------------------
1997 1996 1997 1996
------- ------ ------ ------
(In Thousands)
Selected Operating Ratios and Other Data:
Performance Ratios:
<S> <C> <C> <C> <C>
Return on average assets.................... 0.98% 1.30% 1.18% 1.56%
Return on average equity.................... 5.72% 7.56% 6.99% 8.34%
Interest rate spread (1).................... 3.15% 3.08% 3.09% 2.98%
Net interest margin (1)..................... 3.71% 3.64% 3.66% 3.66%
Net interest income after provision for
loan losses to total operating expense.... 150.35% 159.66% 151.12% 196.11%
Operating expenses to average total assets.. 2.26% 2.16% 2.16% 1.80%
Asset Quality Ratios:
Nonperforming loans to net loans at
end of period............................. 1.41% 1.03% 1.41% 1.03%
Nonperforming assets to total assets
at end of period.......................... .92% 0.69% .92% 0.69%
Allowance for loan losses to
nonperforming loans at end of period...... 60.92% 74.19% 60.92% 74.19%
Average interest-earning assets to
average interest-bearing liabilities...... 115.62% 115.63% 115.23% 119.80%
Capital and Equity Ratios:
Average equity to average assets............ 16.89% 17.13% 17.06% 18.67%
Equity to assets at end of period........... 17.18% 17.20% 17.18% 17.20%
Per Share Data:
Book value per share........................ $ 12.16 $ 11.44 $ 12.16 $11.44
Earnings per share:
Basic.................................... 0.83 $ 0.22 0.17 $ 0.94
Diluted.................................. 0.83 0.22 0.17 0.94
Other Data:
Full service offices........................ 14 14 14 14
</TABLE>
- --------
(1) Interest rate spread represents the difference between the weighted
average yield on average interest-earning assets and the weighted
average costs of average interest-bearing liabilities, and net interest
margin represents net interest income as a percentage of average
interest-earning assets.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Condition
Stockholders' equity increased by $6.7 million, or 6.5%, to $110.0
million at December 31, 1997 from $103.4 million at December 31, 1996. The
increase in stockholders' equity was due to net income of $7.5 million for the
year ended December 31, 1997 which offset a net after tax decrease of $700,000
in the market value of the Bank's portfolio of available for sale investments.
The decrease was primarily attributed to the Bank's sale of equity securities to
comply with OTS regulations that require the Bank to divest its portfolio of
equity securities. The Bank completed the divestiture in the third quarter of
1997. At December 31, 1997 the Bancorp's tangible, core and risk based capital
ratios were 15.76%, 15.76%, and 26.48%, respectively.
Total assets increased $39.4 million, or 6.6%, to $640.4 million at
December 31, 1997 from $601.0 million at December 31, 1996. Deposits increased
by $2.2 million, or .44%, to $493.4 million at December 31, 1997 from $491.2
million at December 31, 1996. Cash and cash equivalents decreased by $5.4
million, or 25.8%, to $15.6 million at December 31, 1997 from $20.9 million at
December 31, 1996. Securities available for sale increased $49.6 million, or
56.6%, to $137.2 million at December 31, 1997 from $87.6 million at December 31,
1996. On January 4, 1997, the Bank instituted an investment leverage program by
borrowing $30 million for reinvestment in federal agency securities which were
designated as available for sale. Securities held to maturity decreased $25.5
million or 29.4% to $61.1 million at December 31, 1997 from $86.7 million at
December 31, 1996. Net loans increased $16.2 million, or 4.2%, to $396.4 million
at December 31, 1997 from $380.3 million at December 31, 1996. The loan
portfolios increased as the result of the reinvestment of mortgage-backed
securities principal payment and the investment of deposit flows. The Bank's
investment in Federal Home Loan Bank ("FHLB") stock increased $297,000, or 9.6%,
to $3.4 million at December 31, 1997 from $3.1 million at December 31, 1996, as
the Bank's larger mortgage loan portfolio permitted additional investment in
FHLB stock.
Comparison of Results of Operations
The return on average assets and return on average equity were 1.18%
and 6.99% respectively for the year ended December 31, 1997 compared to 1.56%
and 8.34% respectively for the year ended December 31, 1996.
Net income, including security gains of $2.9 million, was $7.5 million
for the year 1997 compared to $8.4 million for the year 1996, including net
securities gains of $2.8 million.
Net Interest and Dividend Income. Total interest income increased $1.0
million, or 9.8%, to $11.2 million for the three months ended December 31, 1997
from $10.2 million for the three months ended December 31, 1996, as the Bank
increased its interest income from loans, and securities which increases were
partially offset by a decrease in interest income from federal funds sold. The
increase in interest income resulted primarily from a $40.6 million, or 7.2%,
increase in average interest-earning assets to $607.6 million from $567.0
million combined with a 18 basis point increase in yield on the Bank's average
interest-earning assets to 7.40% from 7.22%. The increase in average
interest-earning assets resulted primarily from the $30 million leverage
program, and loan growth.
Interest income from mortgage loans increased by $83,000, or 1.7%, to
$5.1 million for the three months ended December 31, 1997, from $5.0 million for
the three months ended December 31, 1996. This increase was due to a $3.4
million, or 1.3% increase in average mortgage loans to $273.1 million from
$269.7 million, combined with an increase in the yield on average mortgage loans
to 7.43% from 7.40%. Interest income from consumer loans increased by $119,000,
or 11.3%, to $1.2 million from $1.0 million as a result of a $4.5 million
increase in average consumer loans to $55.8 million from $51.3 million, combined
with a 19 basis point increase in the yield on average consumer loans. Interest
income from commercial business loans increased by $358,000 or 26.1%, to $1.7
million for the three months ended December 31, 1997 from $1.4 million for the
three months ended December 31, 1996. This increase was due to a $15.1 million,
or a 25.8% increase in average commercial business loans to $73.5 million from
$58.4 million combined with a 2 basis point increase in the yield on average
commercial business loans to 9.42%
19
<PAGE>
from 9.40%. The increase in average commercial business loan balances was due to
increased commercial business loan activity. The Bank intends to focus its
efforts in increasing its portfolio of commercial business loans in the future.
Interest income from debt securities available for sale increased by $700,000,
or 53.2%, to $1.9 million from $1.2 million, this increase was due to a $38.5
million, or 47.2%, increase in average debt securities available for sale to
$120.2 million from $81.7 million, combined with a 24 basis point increase in
the yield on average debt securities available for sale to 6.28% from 6.04%. The
increase in average debt securities available for sale was attributable to the
investment of funds for the $30 million leverage program. Interest income from
mortgage-backed securities held to maturity declined $156,000, or 21.2%, for the
three months ended December 31, 1997, from $737,000, for the three months ended
December 31, 996. The decrease in income was primarily attributed to a $10.3
million decrease in the average balance of mortgage-backed securities to $36.9
million from $47.1 million which offset a 5 basis point increase in the yield on
average mortgage-backed securities to 6.30% from 6.25%. Interest income from
mortgage-backed securities available for sale was $277,000 resulting in a yield
of 7.40% on average mortgage-backed securities of $15.0 million for the three
months ended December 31, 1997. There were no holdings of mortgage-backed
securities available for sale during the three months ended December 31, 1996.
The decrease in average equity securities available for sale resulted
from the bank's liquidation of this portfolio, as required by OTS regulation in
connection with the Bank's conversion to a federally-chartered savings bank. The
liquidation of the portfolio eliminated income for the investment category for
the three months ended December 31, 1997, compared to $29,000 for the three
months ended December 31, 1996.
Interest income from debt securities held to maturity and FHLB stock
decreased by $72,000, or 12.6%, to $500,000 for the three months ended December
31, 1997 from $572,000 for the three months ended December 31, 1996 due to a
$7.1 million, or 18.3% decrease in the average balance of debt securities held
to maturity to $31.6 million for the three months ended December 31, 1997 from
$38.7 million for the three months ended December 31, 1996. The decrease in
income was offset by a 41 basis point increase in yield to 6.33% from 5.92%.
Interest income from federal funds sold decreased $236,000 to $22,000 from
$258,000 due to a $17.5 million decrease in average federal funds sold to $1.7
million from $19.2 million, combined with a 14 basis point decrease in the yield
on average federal funds sold to 5.23% from 5.37%. The decrease in amount of
federal funds sold reflects the investment of available cash flow in higher
yielding investments and the Bank's utilization of a leverage strategy.
The increase in the Bank's average balance of mortgage, commercial
loans, consumer loans, and debt securities available for sale, resulted from the
bank's leverage program, and internal loan growth. The changes in yields on
mortgage loans, consumer loans, commercial loans, investment securities and
federal funds sold resulted primarily from the purchase of interest-earning
assets at 1997 market yields.
Total interest income increased by $7.0 million, or 18.8%, to $43.9
million for the year ended December 31, 1997 from $36.9 million for the year
ended December 31, 1996, as the Bank increased its interest income from all loan
categories, and debt and mortgage-backed securities available for sale, which
increases were partially offset by decreases in interest income from equity
securities available for sale, federal funds sold, investment securities and
FHLB stock, and mortgage-backed securities. The increase in interest income
resulted primarily from a $84.6 million, or 16.3%, increase in average
interest-earning assets to $602.0 million from $517.5 million and a 15 basis
point increase in yield on the Bank's average interest-earning assets to 7.28%
from 7.13%. The increase in average interest-earning assets resulted from the
bank's acquisition of BCB, the $30 million leverage program, and deposit
inflows.
Interest income from mortgage loans increased by $395,000, or 2.0%, to
$19.9 million for the year ended December 31, 1997, from $19.5 million for the
year ended December 31, 1996. This increase was due to a $4.7 million, or 1.8%,
increase in average mortgage loans to $269.6 million from $265.0 million,
combined with an increase in the yield on average mortgage loans to 7.38% from
7.35%. Interest income from consumer loans increased by $768,000, or 20.6%, to
$4.5 million from $3.7 million as a result of a $8.8 million increase in average
consumer loans to $56.7 million from $47.8 million, combined with a 14 basis
point increase in the yield on average consumer loans. Interest income from
commercial business loans increased by $3.7 million or 161.8%, to $6.0 million
for the year ended December 31, 1997 from $2.3 million for the year ended
December 31, 1996. This
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increase was due to a $40.5 million, or a 162.4% increase in average commercial
business loans to 9.14% from 9.16%. The increase in average commercial business
loan balances was due to the acquisition of Burlington County Bank ("BCB") and
increased commercial business loan activity. The Bank intends to focus its
efforts in increasing its portfolio of commercial business loans in the future.
Interest income from debt securities available for sale increased by $2.7
million, or 58.9% to $7.3 million from $4.6 million due to a 14 point increase
in the yield on average debt securities available to sale to 6.29%, from 6.15%,
and a $412 million, or 55.1% increase in average debt securities available for
sale to $116.0 million from $74.8 million. The increase in average debt
securities available for sale was primarily attributable to the investment of
funds for the $30 million leverage program. Interest income from mortgage-backed
securities available for sale was $404,000 for the year ended December 31, 1997
with an average balance of $6.3 million. There were no mortgage-backed
securities available for sale in 1996. Interest income from the mortgage-backed
securities held to maturity declined $423,000 or 13.1%, to $2.8 million for the
year ended December 31, 1997, from $3.2 million, for the year ended December 31,
1996. The decrease in income was primarily attributable to $6.1 million decrease
in the average balance of mortgage-backed securities held to maturity to $41.9
million from $48.0 million combined with a decrease in the yield on average
mortgage-backed securities held to maturity to 6.71% from 6.74%.
Income from equity securities available for sale decreased by $100,000,
or 62.1%, to $61,000 from $161,000 due to the previously discussed liquidation
of the stock portfolio.
Interest income from debt securities held to maturity and FHLB stock
decreased by $153,000, or 5.8%, to $2.5 million for the year ended December 31,
1997 from $2.6 million for the year ended December 31, 1996 due to a $3.3
million, or 8.0% decrease in the average balance of debt securities to $37.6
million for the year ended December 31, 1997 from $40.9 million for the year
ended December 31, 1996. The decrease in income was offset by a 15 basis point
increase in yield to 6.58% from 6.43%. Interest income from federal funds sold
decreased $349,000 to $428,000 from $777,000 due to a $6.5 million decrease in
average federal funds sold to $8.1 million from $14.7 million, combined with a 2
basis point decrease in the yield on average federal funds sold to 5.28% from
5.30%. The decrease in amount of federal funds sold reflects the investment of
available cash flow in higher yielding investments and the Bank's utilization of
a leverage strategy.
The increase in the Bank's average balance of mortgage, commercial
loans, consumer loans, and debt securities available for sale, resulted from the
bank's leverage program, the acquisition of BCB and internal loan growth. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Business Strategy." The changes in yields on mortgage loans,
consumer loans, commercial loans, investment securities and federal funds sold
resulted primarily from the purchase of interest-earning assets at 1997 market
yields.
Total Interest Expense. Total interest expense increased by $.5
million, or 10.5%, to $5.6 million for the three months ended December 31, 1997,
from $5.1 million for the three months ended December 31, 1996. The increase was
due to a $36.9 million, or 7.5%, increase in average interest-bearing
liabilities to $527.3 million from $490.4 million and a 11 basis point increase
in the average cost of the bank's interest-bearing liabilities to 4.25% from
4.14%. The increase in the average rate paid for funds was partially attributed
to the higher cost of monies for the bank's leverage program. The interest rates
on certificates of deposit increased 10 basis points to 5.41% for the quarter
ended December 31, 1997, from 5.31% for the quarter ended December 31, 1996. The
increase in rates was attributed to the effect of paying higher market rates for
certificates of deposit. The interest rates on interest bearing savings deposits
decreased 8 basis points to 2.27% for the three months ended December 31, 1997
compared to 2.35% for the three months ended December 31, 1996.
As a result of the foregoing, the Bank's net interest income was $5.6
million for the three months ended December 31, 1997 compared to $5.2 million
for the three months ended December 31, 1996. The Bank's interest rate spread
was 3.15% for the three months ended December 31, 1997 compared to 3.08% for the
three months ended December 31, 1996, as the yield on the Bank's
interest-earning assets increased more rapidly than the Bank's cost of
interest-bearing liabilities. The Bank's net interest margin was 3.71% for three
months ended 1997 compared to 3.64% for the three months ended December 31,
1996.
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Total interest expense increased by $3.9 million, or 21.7%, to $21.8
million for the year ended December 31, 1997, from $17.9 million for the year
ended December 31, 1996. The increase was due to $88.8 million, or 20.6%
increase in average interest-bearing liabilities to $520.7 million from $431.9
million, and a 4 basis point increase in the average cost of the Bank's
interest-bearing liabilities to 4.19% from 4.15%. The increase in average
interest-bearing liabilities resulted from the $30 million borrowing in January
1997 for the bank's leverage investment program combined with a 18 basis point
increase in the cost of average certificates of deposit from 5.18% for the year
ending December 31, 1996 to 5.36% for the year ending December 31, 1997 and a 28
basis point decrease in the cost of average core deposits from 2.43% for the
year ending December 31, 1996 to 2.15% for the year ending December 31, 1997.
The increase in interest-bearing liabilities was largely the result of the
acquisition of BCB and the leverage program. The increase in rates paid on
certificates of deposit was attributed to the effect of paying higher market
rates on these deposits. The increase in the average rate paid for funds was
also attributed to the higher cost of monies for the bank's leverage program.
As a result of the foregoing, the Bank's net interest income was $22.0
million for the year ended December 31, 1997 compared to $19.0 million for the
year ended December 31, 1996. The Bank's interest rate spread was 3.09% for the
year ended December 31, 1997 compared to 2.98% for the year ended December 31,
1996, as the yield on the Bank's interest-earning assets increased more rapidly
than the Bank's cost of interest-bearing liabilities. The Bank's net interest
margin was 3.66% for both years.
Provision for Loan Losses. The provision for loan losses was $186,000
and $1.7 million, respectively for the three months and year ended December 31,
1997. There was no provision for loan losses during the comparable 1996 periods.
The provision for 1997 was primarily attributable to a niche line of business
that was acquired through the acquisition of BCB, modest loan growth and an
increase in non-performing small commercial loans. Management has made the
decision to exit the automobile dealer floorplan financing business and has made
provisions for the deterioration of the portfolio. Management has taken steps to
expeditiously address the credit risk in these loans and any potential losses
associated with exiting this line of business. As of December 31, 1997, the
Bank's total non-performing loans and foreclosed assets amounted to $5.9
million, or .92% of total assets compared to $4.2 million, or .69% of total
assets at December 31, 1996.
Management believes that the allowance for loan losses is adequate
based on historical experience, the volume and type of lending conducted by the
Bank, the amount of non-performing loans, general economic conditions and other
factors relating to the Bank's loan portfolio. At December 31, 1997, the Bank
had $2.1 million of loans criticized as special mention, $6.6 million classified
as substandard, $571,000 as doubtful and $0 classified as loss. However, there
can be no assurances that actual losses will not exceed estimated amounts.
Other Income
For the three months ended December 31, 1997, there were no gains on
security sales compared to $.7 million of gains on sales of securities for the
three months ended December 31, 1996. Service fees and other income increased
$278,000 or 60.8% for the three months ended December 31, 1997 to $735,000 from
$457,000 for the three months ended December 31, 1996.
For the year ended December 31, 1997, the net gain on security sales
increased $84,000, or 3.0%, to $2.9 million, compared to a net gain of $2.8
million for the year ended December 31,1996. Service fees and other income
increased $1.0 million or 107.2% for the year ended December 31, 1997 to $2.0
million from $1.0 million for the year ended December 31, 1996. The increase in
fees is primarily attributable to the acquisition of BCB deposits which have
higher fee generating characteristics and the activities of the Bank's two
subsidiaries, TS Business Financial and Manchester Trust Bank.
Operating Expense
Total operating expenses increased by $400,000, or 12%, to $3.6 million
for the three months ended December 31, 1997 as compared to $3.2 million for the
three months ended December 31, 1996. During the same
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period the amortization of intangible assets increased $38,000 from $185,000 to
$223,000, reflecting the amortization of goodwill from the acquisition of
Manchester Trust Bank on September 8, 1997. Salaries and employee benefits
increased by $269,000, or 15.4%, to $2.0 million for the three months ended
December 31, 1997 from $1.7 million for the three months ended December 31,
1996, reflecting normal salary increases, and management incentive awards. Net
occupancy expenses of $403,000 was the same in both three month periods. Other
operating expenses increased $57,000, or 6.3%, to $1.0 million for the three
months ended December 31, 1997 as compared to $900,000 for the three months
ended December 31, 1996.
Total operating expenses increased by $3.8 million, or 39.3%, to $13.5
million for the year ended December 31, 1997 as compared to $9.7 million for the
year ended December 31, 1996. During the same period the amortization of
intangible assets increased by $411,000 or 105.7% to $.8 million from $.4
million, reflecting the amortization of goodwill from the acquisition of BCB and
Manchester Trust Bank. Salaries and employee benefits increased $2.3 million, or
44.4%, to $7.4 million for the year ended December 31, 1997 from $5.1 million
for the year ended December 31, 1996, reflecting normal salary increases,
management incentive awards, and nine months of additional salaries from the
acquisition of BCB. Net occupancy expenses increased $268,000, or 20.5%, due the
additional of two branches as well as the acquisition of three BCB branches.
Other operating expenses increased $800,000, or 28.9%, to $3.7 million for the
year ended December 31, 1997 as compared to $2.9 million for the year ended
December 31, 1996, reflecting routine expense increases and nine months of
additional expenses from the acquisition of BCB.
Capital
The OTS requires that the Bank meet minimum tangible, core and
risk-based capital requirements. As of December 31, 1997, the Bank exceeded all
regulatory capital requirements. The Bank's required, actual, and excess capital
levels as of December 31, 1997, are as follows:
Excess of
Actual Over
Regulatory
Required Actual Requirement
-------------- ---------------- ----------------
% of % of % of
Amount Assets Amount Assets Amount Assets
------ ------ ------ ------ ------ ------
Tangible Capital .... $ 9,449 1.50% $ 99,260 15.76% $89,811 14.26%
Core Capital ........ 18,900 3.00 99,260 15.76 80,360 12.26
Risk-based Capital .. 31,019 8.00 102,675 26.48 71,656 18.48
Liquidity
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which varies from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term borrowings. The required ratio currently is 4%. The
Bank's liquidity ratio averaged 28.32% during the fourth quarter of 1997 and
equaled 28.48% at December 31, 1997. The Bank adjusts liquidity as appropriate
to meet its asset and liability management objectives.
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RISK FACTORS
The following risk factors, in addition to the other information
presented in this Prospectus, should be considered by prospective investors in
deciding whether to purchase the Common Stock offered hereby.
Low Return on Equity Following the Conversion
At September 30, 1997, the Mid-Tier Holding Company's equity as a
percentage of assets was 16.9% and for the nine months ended September 30, 1997,
its return on average equity was 7.57%. The Company's equity position will be
significantly increased as a result of the Conversion. On a pro forma basis as
of September 30, 1997, assuming the sale of Common Stock at the midpoint of the
Offering Range, the Company's ratio of equity to assets would be approximately
33.6% and, assuming the sale of Common Stock at the adjusted maximum of the
Offering Range, the Company's ratio of equity to assets would be approximately
37.7%. The Company's ability to invest the Offering proceeds in loans and
ultimately leverage the capital raised in the Offering will be significantly
affected by industry competition for loans and deposits. In addition, future
income is likely to be adversely affected by the absence of securities gains
(see "--Absence of Securities Gains") and higher compensation expenses (see
"--Higher Compensation Expenses in Future Periods"). The Company currently
anticipates that it will take time to deploy prudently such capital, and, as a
result, the Company's return on equity initially is expected to be below the
industry average immediately after the Conversion.
Uncertainty as to Future Growth Opportunities and Ability to Successfully Deploy
Offering Proceeds
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. 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 able to generate
internal growth or to identify attractive acquisition candidates, acquire such
candidates on favorable terms, successfully integrate any acquired institutions
or branches into the Company, or increase profits sufficiently to offset the
increase in expenses that will result from an acquisition.
The Bank has acquired two financial institutions since September 30,
1996, and the Company and the Bank intend to continue to actively explore
additional acquisitions, engage in discussions or negotiations from time to
time, and conduct business investigations of prospective target institutions.
Acquisitions typically involve the payment of a premium over book and market
values, and therefore, some dilution of the Company's book value and net income
per share may occur in connection with a future acquisition. Neither the Company
nor the Bank has any specific plans, arrangements or understandings regarding
any additional expansions or acquisitions at this time.
Independent Valuation of the Company and its Impact on the Trading Price of the
Common Stock
The offering price as a percentage of pro forma tangible book value of
the Common Stock sold in the Offering ranges from 98.5% at the minimum of the
Offering Range to 115.1% at the adjusted maximum of the Offering Range. For the
nine months ended September 30, 1997, on an annualized basis, the price to pro
forma earnings per share of the Common Stock sold in the Offering ranges from
19.7x at the minimum of the Offering Range to 25.9x at the adjusted maximum of
the Offering Range. The price to pro forma tangible book value at which the
Common Stock is being sold in the Offering substantially exceeds the price to
pro forma tangible book value of common stock sold in most mutual-to-stock
conversions that do not involve a mutual holding company conversion or
reorganization. Moreover, the Bank and the Company may determine to extend the
Community Offering for any reason, whether or not subscriptions have been
received for shares at the minimum, midpoint, or maximum of the Offering Range.
Prospective investors should be aware that as a result of the relatively high
valuation and any extension of the Community Offering to increase the number of
shares sold in the Offering, the after-market performance of the Common Stock is
likely to be less favorable during the period immediately following the
Conversion than the price performance of common stock sold in recent
mutual-to-stock conversions that do not involve a mutual-to-stock conversion of
a mutual holding company, and the price performance of common stock sold in the
Minority Stock Offering.
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<PAGE>
Absence of Securities Gains
At the time it converted to a federal savings bank charter in January
1995, the Bank had a portfolio of equity securities that the OTS required to be
divested over a period of time. Such securities had appreciated in value, and
the Bank has recorded substantial gains on their sale. Due in large part to such
divestiture, the Bank recorded net securities gains of $2.9 million and $2.2
million, and $2.8 million, $4.2 million, and $2.4 million, for the nine months
ended September 30, 1997 and 1996, and the fiscal years ended December 31, 1996,
1995 and 1994, respectively. The Bank's portfolio of equity securities was
completely divested as of September 30, 1997, therefore the Company's earnings
after the Conversion will not be enhanced by net securities gains in the amounts
recently experienced by the Bank.
Possible Increase in Offering Range and Number of Shares Issued
The number of Subscription Shares to be sold in the Conversion may be
increased as a result of an increase in the Offering Range of up to 15% to
reflect changes in market and financial conditions following the commencement of
the Subscription and Community Offerings. In the event that the Offering Range
is so increased, it is expected that the Company will issue up to 23,805,827
shares of Common Stock at the Subscription Price. Based upon various
assumptions, such an increase in the number of shares issued in the Offering
will decrease a subscriber's pro forma annualized net earnings per share and pro
forma stockholders' equity per share, but will increase the Company's
consolidated pro forma stockholders' equity and pro forma net income. See "Pro
Forma Data."
Potential Effects of Changes in Interest Rates and the Current Interest Rate
Environment
The operations of the Bank 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 Bank's
earnings are affected by changes in market interest rates, and other economic
factors beyond its control. 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 and interest rate spread generally would be adversely
affected by material and prolonged increases in interest rates and positively
affected by comparable declines in interest rates. Based upon certain repricing
assumptions, the Bank's interest-earning liabilities repricing or maturing
within one year exceeded its interest-bearing assets with similar
characteristics by $17.3 million or 2.7 % of total assets. Accordingly, an
increase in interest rates generally would result in a decrease in the Bank's
average interest rate spread and net interest income. The Bank's average
interest rate spread remained relatively stable at 3.06%, 2.98% and 2.96% for
the nine months ended September 30, 1997 and the fiscal years ended December 31,
1996 and 1995, although no assurance can be given that the Bank's average
interest rate spread will not decrease in future periods. Any such decrease in
the Bank's average interest rate spread could adversely affect the Bank's net
interest income. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Assets and Liability Management."
In addition to affecting interest income and expense, changes in
interest rates also can affect the value of the Bank's interest-earning assets,
which comprise fixed- and adjustable-rate instruments, and the ability to
realize gains from the sale of such assets. Generally, the value of fixed-rate
instruments fluctuates inversely with changes in interest rates. At September
30, 1997, the Bank had $127.7 million of securities available for sale and the
Bank had $0.6 million of net unrealized gains with respect to such securities,
which were included as a separate component in the Bank's total stockholders'
equity, net of tax, as of such date.
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
Bank 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 of the Bank--Lending Activities."
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<PAGE>
Risks Related to Increased Portfolio of Higher-Yielding Loans
To complement the Bank's traditional emphasis on one- to four-family
residential real estate lending, the Bank has recently increased its portfolio
of higher-yielding loans. During the 21 months ended September 30, 1997, the
Bank's portfolio of commercial business loans increased by $50.7 million, or
438%, to $62.2 million from $11.6 million, the Bank's portfolio of commercial
real estate and multi-family residential real estate loans increased by $12.5
million, or 44.8%, to $40.3 million from $27.8 million, and the Bank's portfolio
of home equity loans increased by $12.1 million, or 55.3%, to $33.9 million from
$21.8 million. Management's goal is to continue to increase the Bank's portfolio
of these loans.
Commercial and multi-family residential real estate and commercial
business lending generally are considered to involve a higher degree of risk
than single-family residential lending due to a variety of factors, including
generally larger loan balances to single borrowers or groups of related
borrowers, the dependency for repayment on successful development and operation
of the project or business and income stream of the borrower, and loan terms
which often do not require full amortization of the loan over its term.
Commercial business loans are generally considered to involve a higher degree of
risk because, in addition to the factors described above, the collateral may be
in the form of intangible assets and/or inventory subject to market
obsolescence. Such risks can be significantly affected by economic conditions.
In addition, commercial real estate and commercial business lending generally
requires substantially greater oversight efforts compared to other lending.
Moreover, such lending frequently necessitates greater allowances for loan
losses to address these increased risks, and larger provisions for loan losses
that are charged to earnings. See "Business--Lending Activities." As of
September 30, 1997, the Bank had $3.0 million of non-performing real estate
loans, and $2.5 of non-performing commercial business loans. See
"Business--Asset Quality--Non-Performing Assets."
Certain Anti-Takeover Considerations
Provisions in the Company's and the Bank's Governing Documents.
Provisions in the Company's Certificate of Incorporation and the Bank's Charter
and their respective Bylaws provide for limitations on stockholder voting
rights. In addition, the Bank's Federal Stock Charter and Bylaws, as well as
certain federal regulations, assist the Company in maintaining its status as an
independent publicly owned corporation. These provisions may prevent a change of
control of the Company even if desired by a majority of stockholders. These
provisions provide for, among other things, supermajority voting, staggered
boards of directors, noncumulative voting for directors, limits on the calling
of special meetings, and certain uniform price provisions for certain business
combinations. In particular, the Company's Certificate of Incorporation provides
that beneficial owners of more than 10% of the Company's outstanding Common
Stock may not vote the shares owned in excess of the 10% limit. The Bank's
amended Federal Stock Charter also prohibits, for a period of five years from
the closing of the Conversion, the acquisition of, or offer to, acquire,
directly or indirectly, the beneficial ownership of more than 10% of the Bank's
voting securities. Any person violating this restriction, except for the
Company, may not vote any of the Bank's securities held in excess of the 10%
limitation. In the event that holders of revocable proxies for more than 10% of
the shares of Common Stock of the Company acting as a group or in concert with
other proxy holders attempt actions that could indirectly result in a change in
control of the Bank, management of the Bank will be able to assert this
provision of the Bank's Federal Stock Charter against such holders if it deems
such assertion to be in the best interests of the Bank, the Company and its
stockholders. It is uncertain, however, whether the Bank would be successful in
asserting such provision against such persons.
Provisions of Compensation Plans and Employment Agreements. Moreover,
the Bank's current and proposed employment agreements provide for benefits and
cash payments in the event of a change in control of the Company or the Bank.
Additionally, the Bank's current stock benefit plans, and the 1998 Recognition
Plan and 1998 Stock Option Plan (if adopted more than one year following the
Conversion) may provide for accelerated vesting 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 acquire control
of the Company or the Bank. See "Restrictions on the Acquisition of the Company
and the Bank--Restrictions in the Company's Certificate of Incorporation and
Bylaws," and "Management of the Bank--Benefits."
26
<PAGE>
Implementation of Proposed Stock Benefit Plans
Following the Conversion, the Company intends to seek stockholder
approval of the 1998 Recognition Plan and the 1998 Stock Option Plan at a
meeting of stockholders which, under current OTS regulation, may be held no
earlier than six months after Completion of the Conversion. If the 1998
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 sold in the Offering. Such shares would be granted to officers and
directors of the Bank at no cost to these recipients. If such shares are
acquired at a per share price equal to the Subscription Price, the cost of such
shares to the Company would be $8.0 million, assuming the Common Stock is sold
in the Offering at the maximum of the Offering Range. 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 10% of the Common Stock sold in the Offering (2,070,064 shares, based on the
issuance of the maximum 20,700,648 shares). Options to purchase these shares of
Common Stock will be granted to officers and directors of the Bank and the
Company at no cost to them.
Possible Dilutive Effective of Issuance of Additional Shares
Shares of Common Stock to be acquired by the 1998 Recognition Plan or
issued upon exercise of stock options may be acquired in the open market with
funds provided by the Company, or from authorized but unissued shares of Common
Stock. In the event that such shares are issued from authorized but unissued
shares of Common Stock , the voting interests of stockholders will be diluted by
approximately 8.4% and net earnings per share and stockholders' equity per share
would be decreased.
As of December 1, 1997, there were options outstanding to purchase
294,637 Minority Shares at an average exercise price of approximately $15.47 per
share. On the Effective Date these options will be converted into and become
options to purchase Common Stock of the Company. The number of shares of Common
Stock to be received upon exercise of such options will be determined pursuant
to the Exchange Ratio. The exercise of such currently existing stock options
will result in dilution of the Common Stock holdings of the existing
stockholders.
Higher Compensation Expenses in Future Periods
Management believes that the Company's compensation expenses will
increase substantially in the future due to the additional stock benefit plans
that the Company intends to implement, and the additional employees that the
Bank and its subsidiaries have recently hired and expect to hire in the future
to assist the Company in executing its strategy of growing the Company's
operations.
Among the benefit plans that the Company intends to establish are the
1998 Recognition Plan and the ESOP. Generally accepted accounting principles
will require the Company to record compensation expense upon the vesting of
shares of restricted stock awarded pursuant to the 1998 Recognition Plan and
upon the commitment to release shares under the ESOP. As regards the ESOP, the
compensation expense will be equal to the fair value of the shares at the time
the shares are committed to be released, and future increases and decreases in
fair value of Common Stock committed to be released will have a corresponding
effect on compensation expense related to the ESOP. To the extent that the fair
value of the Bank's ESOP shares differ from the cost of such shares, the
differential will be charged or credited to equity.
27
<PAGE>
Regulatory Oversight and Legislation
The Bank is subject to extensive regulation, supervision and
examination by the OTS, as its chartering authority, and by the FDIC as insurer
of its deposits up to applicable limits. The Bank is a member of the FHLB System
and is subject to certain limited regulations promulgated by the FRB. As the
holding company of the Bank, 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 OTS, the FDIC or Congress, could have a
material impact on the Company, the Bank and their respective operations. See
"Regulation."
On September 30, 1996, the Deposit Insurance Funds ("DIF") Act of 1996
was enacted into law. 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 Bank. See "Regulation--Federal Regulation of Savings
Institutions."
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 Bank.
Possible Risk of Delay in the Completion of the Offering
The Offering will terminate at ____ p.m. local time, on March ___, 1998
(the "Expiration Date"). The Bank and the Company may extend the Offering for
any reason for up to 45 days past the Expiration Date. Subscriptions are
irrevocable unless and until an extension beyond the 45 day period following the
Expiration Date is granted to the Bank and the Company by the OTS, at which time
the Bank will notify subscribers of their rights to modify or rescind their
subscriptions. See "The Conversion--Subscription Offering and Subscription
Rights" and "--Community Offering."
Capability of the Bank's Data Processing Hardware to Accommodate the Year 2000
Like many financial institutions the Bank relies upon computers for the
daily conduct of its business and for data processing generally. There is
concern among industry experts that on January 1, 2000 computers will be unable
to "read" the new year and there may be widespread computer malfunctions. The
Bank generally relies on independent third parties to provide data processing
services to the Bank, and has been advised by its data processing service center
that the issue has been addressed. Based on these representations, management
does not believe that significant additional costs will be incurred in
connection with the year 2000 issue.
THE COMPANY
The Company was organized in December 1997 for the purpose of acquiring
all of the outstanding shares of capital stock of the Bank. The Company has
applied to the OTS to become a savings and loan holding company and as such will
be subject to regulation by the OTS. After completion of the Conversion, the
Company will conduct business initially as a unitary savings and loan holding
company. See "Regulation--Holding Company Regulation." Upon consummation of the
Conversion, the Company's assets will be primarily the shares of the Bank's
capital stock acquired in the Conversion, the portion of the net proceeds of the
Conversion permitted by the OTS to be retained by the Company, and the ESOP
loan. The Company initially will have no significant liabilities. See "Use of
Proceeds." The management of the Company is set forth under "Management of the
Company." Initially, the
28
<PAGE>
Company will neither own nor lease any property, but instead will use the
premises, equipment and furniture of the Bank. At the present time, the Company
does not intend to employ any persons other than officers but will utilize the
support staff of the Bank from time to time. Additional employees will be hired
as appropriate to the extent the Company expands its business.
The Conversion will provide the Bank with additional capital to support
future growth and enhance results of operations. Management believes that the
holding company structure will provide the Company with additional flexibility
to diversify its business activities through existing or newly formed
subsidiaries, or through acquisitions of or mergers with other financial
institutions and financial services related companies or for other business or
investment purposes, including the possible repurchase Common Stock as permitted
by the OTS. Although there are no current arrangements, understandings or
agreements, written or oral, regarding any such opportunities or transactions,
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
acquisition and expansion opportunities that may arise. The initial activities
of the Company are anticipated to be funded by the proceeds permitted to be
retained by the Company and earnings thereon or, alternatively, through
dividends received from the Bank.
The Company's executive office is located at 134 Franklin Corner Road,
Lawrenceville, New Jersey, and its telephone number is (609) 844-3100.
THE BANK
Chartered by the New Jersey State Legislature on March 7, 1844, the
Trenton Savings Fund Society was founded to promote thrift in the area of
Trenton, New Jersey. It adopted the name "Trenton Savings Bank" in early 1990.
Throughout its history, the Bank has been engaged in lending funds to home
buyers, consumers, and businesses within its local community. The Bank has
maintained a commitment to conservative lending practices, community service and
control of operating expenses, resulting in a strong capital position.
Management believes that this philosophy enabled the Bank to survive the Civil
War, the Great Depression, two World Wars, two stock market crashes and the
1980s crisis in the banking and thrift industries. At September 30, 1997, the
Bank had $638.9 million of total assets, $493.3 million of total deposits, and
$108.2 million of total stockholders' equity.
The Bank conducts its business from a corporate center located in
Lawrenceville, New Jersey, 14 branch offices located in Mercer, Burlington and
Ocean Counties, New Jersey, and a trust services subsidiary with an office in
Ocean County, New Jersey. On January 1, 1995, the Bank completed a charter
change from a New Jersey chartered mutual savings bank to a federally chartered
mutual savings bank, permitting expansion of branch offices into adjacent market
areas in Pennsylvania, and the OTS has recently approved, and the Bank intends
to establish, a branch office in Bucks County, Pennsylvania. In the
Reorganization on August 3, 1995, the Bank's mutual predecessor reorganized from
a federally chartered mutual savings bank into the Mutual Holding Company and
concurrently formed the Bank, which succeeded to the name and operations of the
Bank's mutual predecessor. At the time of the Reorganization, the Bank conducted
the Minority Stock Offering in which it raised approximately $30.0 million of
net proceeds.
The Bank has traditionally operated as a community-oriented savings
institution providing mortgage loans and other traditional financial services to
its local community. The Bank is primarily engaged in attracting deposits from
the general public through its offices and using those funds to originate
mortgage and commercial loans primarily located in Mercer and Burlington
Counties where the Bank's offices are located, as well as in neighboring Bucks
County, Pennsylvania. Loans secured by one- to four-family residences amounted
to $242.4 million, or 60.4%, of the Bank's total loan portfolio at September 30,
1997. The Bank also originates other mortgage loans secured by multi-family and
commercial real estate, commercial business loans, consumer loans and home
equity and property improvement loans, which, in the aggregate, amounted to
$158.7 million, or 39.6%, of the total loan portfolio at September 30, 1997. The
Bank also has a securities portfolio primarily consisting of U.S. Treasury and
federal government agency obligations, corporate and municipal bonds and
mortgage-backed securities which are insured by federal agencies, which
portfolio amounted to $201.8 million, or 31.6%, of the Bank's assets at
September 30, 1997. In addition, as of that same date, aggregate cash and cash
equivalents totaled $13.2 million, or 2.07%, of total assets.
29
<PAGE>
The Bank's executive offices are located at 134 Franklin Corner Road,
Lawrenceville, New Jersey, and its telephone number at that location is (609)
844-3100.
HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE
At September 30, 1997, the Bank exceeded all OTS regulatory capital
requirements. Set forth below is a summary of the Bank's compliance with the OTS
capital standards as of September 30, 1997, on a historical and pro forma basis
assuming that the indicated number of shares were sold as of such date, and that
the Company contributes to the Bank 50% of the estimated net proceeds of the
Offering. See "Pro Forma Data" for the assumptions used to determine the net
proceeds of the Offerings. For purposes of the table below, the amount expected
to be borrowed by the ESOP and the cost of the shares expected to be acquired by
the 1998 Recognition Plan are deducted from pro forma regulatory capital.
<TABLE>
<CAPTION>
Pro Forma at September 30, 1997, Based Upon the Sale of
Historical at ---------------------------------------------------------------------------------
September 30, 1997 15,300,404 Shares 18,000,691 Shares 20,700,648 Shares 23,805,827 Shares
------------------ ----------------- ----------------- ----------------- ------------------
Percent Percent Percent Percent Percent
of of of of of
Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(1)(2)
------ --------- ------ --------- ------ --------- ------ --------- ------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital............. $108,239 16.94% $171,534 24.43% $182,875 25.63% $194,215 26.79% $207,257 28.09%
Tangible capital:
Capital level (3)....... $ 97,203 15.48% $160,498 23.22% $171,839 24.46% $183,179 25.66% $196,221 27.00%
Requirement............. 9,418 1.50 10,367 1.50 10,537 1.50 10,707 1.50 10,903 1.50
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Excess............. $ 87,785 13.98% $150,131 21.72% $161,302 22.96% $172,471 24.16% $185,318 25.50%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
Core capital:
Capital level (3)....... $ 97,203 15.48% $160,498 23.22% $171,839 24.46% $183,179 25.66% $196,221 27.00%
Requirement (4)......... 18,835 3.00 20,734 3.00 21,074 3.00 21,414 3.00 21,806 3.00
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Excess............. $ 78,368 12.48% $139,764 20.22% $150,765 21.46% $161,764 22.66% $174,415 24.00%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
Risk-based capital:
Capital level (3)(5).... $100,405 26.48% $163,700 40.46% $175,041 42.78% $186,381 45.04% $199,423 47.59%
Requirement............. 30,324 8.00 32,367 8.00 32,734 8.00 33,101 8.00 33,523 8.00
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Excess............. $ 70,081 18.48% $131,333 32.46% $142,307 34.78% $153,279 37.04% $165,899 39.59%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
- ---------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Offering Range to reflect changes
in market or general financial conditions following the commencement of the
Offering.
(2) Tangible and core capital levels are shown as a percentage of total
adjusted assets. Risk-based capital levels are shown as a percentage of
risk-weighted assets. Pro forma total adjusted and risk-weighted assets
used for the capital calculations include the proceeds of the ESOP's
purchase of 4% of the Subscription Shares.
(3) Regulatory capital levels exclude $.2 million of net unrealized gains on
securities and intangible assets of $10.8 million.
(4) The current OTS core capital requirement for savings banks is 3% of total
adjusted assets. The OTS has proposed core capital requirements which would
require a core capital ratio of 3% of total adjusted assets for savings
banks that receive the highest supervisory rating for safety and soundness,
and a 4% to 5% core capital ratio requirement for all other savings banks.
See "Regulation--Federal Regulation of Savings Institution--Capital
Requirements."
(5) Pro forma amounts and percentages assume net proceeds are invested in
assets that carry a 20% risk-weighting.
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Subscription
Shares cannot be determined until the Offering is completed, it is presently
anticipated that the net proceeds will be between $151.1 million and $205.1
million (or $236.1 million if the Offering Range is increased by 15%), based
upon the assumptions set forth in "Pro
30
<PAGE>
Forma Data." The Company will be unable to utilize any of the net proceeds of
the Offering until the consummation of the Conversion.
The Company will contribute to the Bank 50% of the net proceeds of the
Offering, which will be added to the Bank's general funds that management
currently intends to initially utilize for general corporate purposes, including
investment in one-to-four family residential real estate loans and other loans
and investment in short-term and intermediate-term securities and
mortgage-backed securities. The Company intends to use a portion of the net
proceeds to loan funds to the ESOP to enable the ESOP to purchase 4% of the
Subscription Shares issued in the Offering. To the extent the 1998 Recognition
Plan is not funded with authorized but unissued common stock of the Company, the
Company or Bank may use net proceeds from the Offering to fund the purchase of
stock to be awarded under such plan. See "Management of the Bank--Benefit
Plans".
Net Offering Proceeds, including proceeds retained by the Company and
proceeds contributed to the Bank, may also used to support the future expansion
of operations through branch acquisitions, the establishment of new branch
offices, and the acquisition of other financial institutions or diversification
into other banking related businesses. The Bank has acquired two financial
institutions since September 30, 1996, and the Company and the Bank intend to
actively explore additional acquisitions, although neither the Company nor the
Bank has any specific plans, arrangements or understandings regarding any
additional expansions or acquisitions at this time.
Upon completion of the Conversion, the Board of Directors of the
Company will have the authority to repurchase stock, subject to statutory and
regulatory requirements. Unless approved by the OTS, the Company, pursuant to
OTS policy, will be prohibited from repurchasing any shares of the Common Stock
for three years except (i) for an offer to all stockholders on a pro rata basis,
or (ii) for the repurchase of qualifying shares of a director. Notwithstanding
the foregoing and except as provided below, beginning one year following
completion of the Conversion, the Company may repurchase its Common Stock so
long as: (i) the repurchases within the following two years are part of an
open-market program not involving greater than 5% of its outstanding capital
stock during a twelve-month period; (ii) the repurchases do not cause the Bank
to become "undercapitalized" within the meaning of the OTS prompt corrective
action regulation; and (iii) the Company provides to the Regional Director of
the OTS no later than ten 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. However, the Regional
Director has authority to permit repurchases during the first year following
consummation of the Conversion and to permit repurchases in excess of 5% during
the second and third years upon the establishment of exceptional circumstances,
as determined by the Regional Director.
Based upon facts and circumstances following the Conversion and subject
to applicable regulatory requirements, the Board of Directors may determine to
repurchase stock in the future. Such facts and circumstances may include but
will 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 the
opportunity to improve 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 shareholders. In the event the Company determines to repurchase
stock, such repurchases may be made at market prices which may be in excess of
the Subscription Price in the Offering. To the extent that the Company
repurchases stock at market prices in excess of the per share book value, such
repurchases may have a dilutive effect upon the interests of existing
stockholders.
DIVIDEND POLICY
The Company intends to pay a quarterly cash dividend of $.025 per
share, or $.10 per share on an annual basis. The first dividend is expected to
be declared for the fiscal quarter ended June 30, 1998. Declarations of
dividends by the Company's Board of Directors will depend upon a number of
factors, including the amount of the net proceeds from the Offerings retained by
the Company, investment opportunities available to the Company or the Bank,
capital requirements, regulatory limitations, the Company's and the Bank's
financial condition and results of operation, tax considerations and general
economic conditions. Consequently, there can be no assurance that
31
<PAGE>
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. See "Market for
the Common Stock."
The Bank will not be permitted to pay dividends to the Company on its
capital stock if its stockholders' equity would be reduced below the amount
required for the liquidation account. See "The Conversion and
Reorganization--Liquidation Rights." For information concerning federal and
state law and regulations which apply to the Bank in determining the amount of
proceeds which may be retained by the Company and regarding a savings
institution's ability to make capital distributions including payment of
dividends to its holding company, see "Federal and State Taxation--Federal
Taxation--Distributions" and "Regulation--Federal Regulation of Savings
Institutions--Limitation on Capital Distributions."
Unlike the Bank, the Company is not subject to OTS regulatory
restrictions on the payment of dividends to its stockholders, although the
source of such dividends will be dependent on the net proceeds retained by the
Company and earnings thereon and may be dependent, in part, upon dividends from
the Bank. The Company is subject, however, to the requirements of Delaware law,
which generally limit dividends to an amount equal to the excess of the net
assets of the Company (the amount by which total assets exceed total
liabilities) over its statutory capital (generally defined as the aggregate par
value of the outstanding shares of the Company's capital stock without par
value) or, if there is no such excess, to its net profits for the current and/or
immediately preceding fiscal year.
Additionally, in connection with the Conversion, the Company and the
Bank have committed to the OTS that during the one-year period following the
consummation of the Conversion and the Reorganization, the Company will not take
any action to declare an extraordinary dividend to stockholders which would be
treated by recipient stockholders as a tax-free return of capital for federal
income tax purposes without prior approval of the OTS.
Since the completion of the first full fiscal quarter following the
August 1995 Reorganization and Minority Stock Offering, the Bank or the Mid-Tier
Holding Company have paid, in the aggregate, annual cash dividends of $.35 per
common share, which amounts to a quarterly dividend of $.0875 per share. The
Mid-Tier Holding Company intends to continue to pay regular quarterly dividends
through the fiscal quarter ended March 31, 1997.
MARKET FOR THE COMMON STOCK
There is an established market for Mid-Tier Common Stock which is
currently listed on the Nasdaq National Market under the symbol, "TSBS," and the
Mid-Tier Holding Company had 12 market makers as of September 30, 1997. As a
newly formed company, however, the Company has never issued capital stock and
consequently there is no established market for its Common Stock. It is expected
that the Common Stock will be more liquid than the Mid-Tier Common Stock since
there will be significantly more outstanding shares owned by the public.
Minority Shares will automatically, without further action by the holders
thereof, be converted into and become a right to receive a number of shares of
Company Common Stock that is determined pursuant to the Exchange Ratio. See "The
Conversion and Reorganization--Share Exchange Ratio."
The Company has received conditional approval to have its Common Stock
listed on the Nasdaq National Market under the Mid-Tier Holding Company's
previous symbol "TSBS." There are various requirements for qualification and
continued quotation of the Common Stock on the Nasdaq National Market including
a minimum number of market makers for the Common Stock. The Company will seek to
encourage and assist market makers to make a market in its Common Stock, and,
based upon the number of market markers for the Mid-Tier Common Stock, believes
that enough market markers will make a market in the Common Stock in order to
continue listing the Common Stock on the Nasdaq National Market. Making a market
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. Although not legally
or contractually required to do so, FBR has advised the Company that upon
completion of the Conversion, it intends to act as a market maker in the Common
Stock.
Additionally, the development of a public market having the desirable
characteristics of depth, liquidity and orderliness depends on the existence of
willing buyers and sellers, the presence of which is not within the control of
the Company, the Bank or any market maker. In the event that institutional
investors buy a relatively large proportion
32
<PAGE>
of the Offering, the number of active buyers and sellers of the Common Stock at
any particular time may be limited. There can be no assurance that persons
purchasing the Common Stock will be able to sell their shares at or above the
Subscription Price. Therefore, purchasers of the Common Stock should have a
long-term investment intent and should recognize that a possibly limited trading
market may make it difficult to sell the Common Stock after the Conversion and
may have an adverse effect on the price of the Common Stock.
The following table sets forth the high and low bid quotes for the
Minority Shares since the completion of the Minority Stock Offering in which the
Minority Shares were sold for $10.00 per share, together with the cash dividends
declared subsequent thereto.
Cash
Fiscal Year Ended Dividends
December 31, 1995 High Low Declared
- ----------------- ------- ------- --------
Third quarter.......... $ 141/8 $ 11 $ .0575
Fourth quarter......... 133/4 127/8 .0875
Fiscal Year Ended
December 31, 1996
- -----------------
First quarter.......... 15 127/8 .0875
Second quarter......... 15 131/4 .0875
Third quarter.......... 151/8 131/4 .0875
Fourth quarter......... 163/8 14 .0875
Fiscal Year Ended
December 31, 1997
- -----------------
First quarter.......... 185/8 153/4 .0875
Second quarter......... 205/8 177/8 .0875
Third quarter.......... 331/2 191/8 .0875
Fourth quarter......... 453/4 28 .0875
At August 7, 1997 (the day immediately preceding the public
announcement of the Conversion) and at February __, 1998, the last sale of
Minority Shares as reported on the Nasdaq National Market was at a price of $22
per share and $_____ per share, respectively. All Minority Shares, including
shares held by the Bank's officers and directors, will on the Effective Date be
automatically converted into and become the right to receive a number of shares
of Common Stock of the Company determined pursuant to the Exchange Ratio, and
options to purchase Minority Shares will be converted into options to purchase a
number of shares of Common Stock determined pursuant to the Exchange Ratio, for
the same aggregate exercise price. See "Beneficial Ownership of Common Stock.
33
<PAGE>
CAPITALIZATION
The following table presents the historical consolidated capitalization
of the Mid-Tier Holding Company at September 30, 1997, and the pro forma
consolidated capitalization of the Company after giving effect to the
Conversion, based upon the assumptions set forth in the "Pro Forma Data"
section.
<TABLE>
<CAPTION>
Pro Forma Consolidated Capitalization
Based Upon the Sale for $10.00 Per Share of
-------------------------------------------------------
Historical 15,300,408 18,000,691 20,700,648 23,805,827
Capitalization Shares Shares Shares Shares(1)
-------------- ---------- ----------- ----------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Deposits ................................ $493,334 $493,334 $493,334 $493,334 $493,334
Borrowed funds........................... 30,000 30,000 30,000 30,000 30,000
-------- -------- -------- -------- --------
Total deposits and borrowed funds........ 523,334 523,334 523,334 523,334 523,334
Stockholders' equity:
Preferred Stock, $.01 par value,
70,000,000 shares authorized;
none to be issued(3) .................. -- -- -- -- --
Common Stock, $.01 par value, 1,000,000
shares authorized; shares to be issued
as reflected(3)........................ 904 233 274 315 362
Additional paid-in capital(4) ......... 30,495 182,256 209,218 236,176 267,181
Retained income (5).................... 77,592 77,592 77,592 77,592 77,592
Net unrealized holding gain on securities 202 202 202 202 202
Less:
Unearned Common Stock held by
1996 Recognition Plan.............. 954 954 954 954 954
Common Stock acquired by ESOP........ -- 6,120 7,200 8,280 9,522
Common Stock acquired by 1998
Recognition Plan .................. -- 6,120 7,200 8,280 9,522
-------- -------- -------- -------- --------
Total stockholders' equity......... $108,239 $247,089 $271,932 $296,771 $325,339
======== ======== ======== ======== ========
Total stockholders' equity as a percentage
of pro forma total assets.............. 16.9% 31.5% 33.6% 35.5% 37.7%
======== ======== ======== ======== ========
</TABLE>
- ---------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Offering Range to reflect changes
in market or general financial conditions following the commencement of the
Subscription and Community Offerings.
(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 Mid-Tier Holding Company has 30,000,000 authorized shares of Mid-Tier
Common Stock, par value $.10 per share, and 10,000,000 authorized shares of
preferred stock, par value $.10 per share.
(4) Does not include proceeds from the Offering that the Company intends to
lend to the ESOP to enable it to purchase shares of Common Stock in the
Offering. No effect has been given to the issuance of additional shares of
Common Stock pursuant to the 1998 Stock Option Plan and 1998 Recognition
Plan expected to be adopted by the Company. If such plans are approved by
stockholders, an amount equal to 10% of the shares of Common Stock issued
in the Offering will be reserved for issuance upon the exercise of options
under the 1998 Stock Option Plan, and the 1998 Recognition Plan will
acquire an amount of Common Stock equal to 4% of the number of shares sold
in the Offering, either through open market purchases or from authorized
but unissued shares. No effect has been given to the exercise of options
currently outstanding. See "Management of the Bank--Benefits."
(5) The retained income of the Bank will be substantially restricted after the
Conversion, see "The Conversion--Liquidation Rights" and "Regulation and
Supervision--Federal Regulations of Savings Institutions--Limitations on
Capital Distributions."
(6) Assumes that, subsequent to the Conversion, an amount equal to 4% of the
Subscription Shares is purchased by the 1998 Recognition Plan through open
market purchases. If the issuance of these shares were to come from
authorized but unissued shares of the Company's Common Stock instead of
open market purchases, the dilutive effect of the voting interest of
stockholders would be approximately 2.6%. The common stock to be purchased
by the 1998 Recognition Plan is reflected as a reduction of stockholders'
equity. See "Risk Factors--Possible Dilutive Effect of Issuance of
Additional Shares," "Pro Forma Data" and "Management of the Bank--Benefit
Plans."
PRO FORMA DATA
The actual net offering proceeds from the sale of the Common Stock in
the Offering cannot be determined until the Conversion is completed. However,
net offering proceeds are currently estimated to be between $147.7
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<PAGE>
million and $200.5 million based upon the assumption that FBR receives a
marketing fee of $1.0 million and that Conversion expenses, excluding FBR's
marketing fee, are $935,000.
Actual Conversion expenses may vary from those estimated, because the
fees paid will depend upon the percentages and total number of the shares sold
in the Offering and other factors. Under the Plan of Conversion, the Common
Stock must be sold in the Offering at an aggregate Subscription Price not less
than nor greater than the Offering Range, which is subject to adjustment. The
Offering Range, as established by the Board of Directors is between a minimum of
$153.0 million and a maximum of $207.0 million, with a midpoint of $180.0
million. This represents a range between a minimum of 15,300,408 shares and a
maximum of 20,700,648 shares, based upon the Subscription Price of $10.00 per
share. If the Offering Range is increased by up to 15% to reflect market or
general financial conditions following the commencement of the Offering, the
adjusted maximum number of shares of Common Stock to be issued would be
23,805,827, for estimated gross proceeds of $238.1 million.
Pro forma consolidated net income of the Company for the nine months
ended September 30, 1997 and for the fiscal year ended December 31, 1996 has
been calculated as if the Company had been in existence and estimated net
proceeds received by the Company and the Bank had been invested at an assumed
interest rate of 5.52% for the nine months ended September 30, 1997, and the
fiscal year ended December 31, 1996. The reinvestment rate was calculated based
on the one year U.S. Treasury bill rate (which, in light of changes in interest
rates in recent periods are deemed by the Company and the Bank to more
accurately reflect pro forma reinvestment rates than the arithmetic average
method). The effect of withdrawals from deposit accounts for the purchase of
Common Stock has not been reflected. The pro forma after-tax yield on the
estimated net proceeds is assumed to be 3.53% for the nine months ended
September 30, 1997, and 3.53% for the fiscal year ended December 31, 1996, based
on an effective tax rate of 36.0%. 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. No effect has been given in the pro
forma stockholders' equity calculations for the assumed earnings on the net
proceeds. It is assumed that the Company will retain 50% of the estimated
adjusted net Conversion proceeds.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma consolidated 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 greater than amounts that would
be available for distribution to stockholders in the event of liquidation.
35
<PAGE>
The following table summarizes historical data of the Bank and pro
forma data of the Company at or for the nine months ended September 30, 1997 and
at or for the year ended December 31, 1996, based on assumptions set forth above
and in the table and should not be used as a basis for projections of market
value of the Common Stock following the Conversion. No effect has been given in
the tables to the possible issuance of additional shares reserved for future
issuance pursuant to currently outstanding stock options or the 1998 Stock
Option Plan, nor does book value give any effect to the liquidation account to
be established in the Conversion or the bad debt reserve in liquidation. See
"The Conversion--Liquidation Rights," and "Management of the Bank--Directors'
Compensation," and "--Executive Compensation."
<TABLE>
<CAPTION>
At or For the Nine Months Ended September 30, 1997
Based upon the Sale for $10.00 of
15,300,408 18,000,691 20,700,648 23,805,827
Shares Shares Shares Shares (1)
----------- ----------- ----------- -----------
(Dollars and Number of Shares in Thousands)
<S> <C> <C> <C> <C>
Gross proceeds...................................... $ 153,004 $ 180,007 $ 207,006 $ 238,058
Expenses............................................ (1,935) (1,935) (1,935) (1,935)
--------- --------- --------- ---------
Estimated net proceeds............................ 151,069 178,072 205,071 236,123
Common stock purchased by ESOP (2)................ (6,120) (7,200) (8,280) (9,522)
Common stock purchased by 1998 Recognition Plan (3) (6,120) (7,200) (8,280) (9,522)
Estimated net cash proceeds..................... $ 138,829 $ 163,672 $ 188,511 $ 217,079
For the nine months ended September 30, 1997:
Net income:
Historical........................................ $ 5,898 $ 5,898 $ 5,898 $ 5,898
Pro forma adjustments:
Income on net proceeds............................ 3,675 4,333 4,991 5,747
ESOP (2)........................................ (245) (288) (331) (381)
1998 Recognition Plan (3)......................... (588) (691) (795) (914)
Pro forma net income............................ $ 8,740 $ 9,252 $ 9,763 $ 10,350
========== ========= ========= =========
Net income per share (4):
Historical........................................ $ 0.26 $ 0.22 $ 0.19 $ 0.17
Pro forma adjustments:
Income on net proceeds............................ 0.16 0.16 0.16 0.16
ESOP (2).......................................... (0.01) (0.01) (0.01) (0.01)
1998 Recognition Plan (3)......................... (0.03) (0.03) (0.03) (0.03)
Pro forma net income per share (4)(5)........... $ 0.38 $ 0.34 $ 0.31 $ 0.29
========= ========= ========= =========
Pro forma price to annualized earnings.............. 19.74 22.06x 24.19x 25.86x
Number of shares used in calculating pro forma price
to net income per share......................... 22,716 26,725 30,734 35,345
At September 30, 1997:
Stockholders' equity:
Historical........................................ $ 108,239 $ 108,239 $ 108,239 $ 108,239
Mutual Holding Company assets..................... 21 21 21 21
Estimated net proceeds............................ 151,069 178,072 205,071 236,123
Less: Common stock acquired by ESOP (2)........... (6,120) (7,200) (8,280) (9,522)
Common Stock acquired by 1998 Recognition
Plan (3)................................... (6,120) (7,200) (8,280) (9,522)
Pro forma stockholders' equity (6)............... 247,089 271,932 296,771 325,339
Intangible assets................................ (10,834) (10,834) (10,834) (10,834)
--------- --------- --------- ---------
Pro form tangible stockholders' equity........... $ 236,255 $ 261,098 $ 285,937 $ 314,505
Stockholders' equity per share (7):
Historical........................................ $ 4.64 $ 3.95 $ 3.43 $ 2.99
==== ==== ==== ====
Estimated net proceeds............................ 6.49 6.50 6.51 6.51
Less: Common stock acquired by ESOP (2)........... (0.26) (0.26) (0.26) (0.26)
Common Stock acquired by 1998
Recognition Plan (3)........................ (0.26) (0.26) (0.26) (0.26)
--------- --------- --------- ---------
Pro forma stockholders' equity per share (6) (7) 10.61 9.93 9.42 8.98
Intangible assets per share..................... (0.47) (0.40) (0.34) (0.30)
Pro forma tangible stockholders' equity per share $ 10.14 $ 9.53 $ 9.07 $ 8.68
========= ========= ========= =========
Number of shares used in calculating stockholders'
equity per share.................................. 23,290 27,400 31,510 36,237
Offering prices as a percentage of pro forma stockholders'
equity per share.................................. 94.25% 100.70% 106.16% 111.36%
Offering price as a percentage of pro forma tangible
stockholders' equity per share.................... 98.62% 104.93% 110.25% 115.21%
========== ========= ========= =========
(Footnotes begin on next page)
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended December 31, 1996
Based upon the Sale for $10.00 of
15,300,408 18,000,691 20,700,648 23,805,827
Shares Shares Shares Shares (1)
----------- ----------- ----------- -----------
(Dollars and Shares in Thousands)
<S> <C> <C> <C> <C>
Gross proceeds...................................... $ 153,004 $ 180,007 $ 207,006 $ 238,058
Expenses............................................ (1,935) (1,935) (1,935) (1,935)
--------- --------- --------- ---------
Estimated net proceeds............................ 151,069 178,072 205,071 236,123
Common stock purchased by ESOP (2)................ (6,120) (7,200) (8,280) (9,522)
Common stock purchased by 1998 Recognition Plan (3) (6,120) (7,200) (8,280) (9,522)
Estimated net proceeds........................ $ 138,829 $ 163,672 $ 188,511 $ 217,079
For the twelve months ended December 31, 1996:
Net income:
Historical........................................ $ 8,391 $ 8,391 $ 8,391 $ 8,391
Pro forma adjustments:
Income on adjusted net proceeds................... 4,901 5,778 6,654 7,663
ESOP (2)........................................ (326) (384) (442) (508)
1998 Recognition Plan (3)......................... (783) (922) (1,060) (1,219)
Pro forma net income.......................... $ 12,183 $ 12,863 $ 13,543 $ 14,327
Net income per share (4):
Historical........................................ $ 0.37 $ 0.31 $ 0.27 $ 0.24
==== ====
Pro forma adjustments:
Income on net proceeds............................ 0.22 0.22 0.22 0.22
ESOP (2).......................................... (0.01) (0.01) (0.01) (0.01)
1998 Recognition Plan (3)......................... (0.03) (0.03) (0.03) (0.03)
Pro forma net income per share (4) (5).......... $ 0.55 $ 0.49 $ 0.45 $ 0.42
========= ========= ========= =========
Pro forma price to earnings......................... 18.18x 20.41x 22.22x 23.81x
========= ========= ========= ==========
Number of shares used in calculating pro forma price
net income per share............................. 22,729 26,740 30,751 35,364
At December 31, 1996:
Stockholders' equity:
Historical........................................ $ 103,352 $ 103,352 $ 103,352 $ 103,352
Mutual Holding Company assets..................... 21 21 21 21
Estimated net proceeds............................ 151,069 178,072 205,071 236,123
Less: Common stock acquired by ESOP (2)........... (6,120) (7,200) (8,280) (9,522)
Common Stock acquired by 1998
Recognition Plan (3)....................... (6,120) (7,200) (8,280) (9,522)
Pro forma stockholders' equity (6).................. 242,202 267,045 291,884 320,452
Intangible assets................................. (9,164) (9,164) (9,164) (9,164)
--------- --------- --------- ---------
Pro forma tangible stockholders' equity........... $233,038 $ 257,881 $ 282,720 $ 311,288
Stockholders' equity per share (7):
Historical........................................ $ 4.44 $ 3.77 $ 3.28 $ 2.85
Estimated net proceeds............................ 6.48 6.49 6.50 6.51
Less: Common stock acquired by ESOP (2)........... (0.26) (0.26) (0.26) (0.26)
Common Stock acquired by 1998
Recognition Plan (3)........................ (0.26) (0.26) (0.26) (0.26)
--------- ---------- ---------- ----------
Pro forma stockholders' equity per share (6)(7) 10.40 9.74 9.26 8.84
Intangible assets per share....................... (0.39) (.33) (.29) (.25)
Pro forma tangible stockholders' equity per share $ 10.01 $ 9.41 $ 8.97 $ 8.59
========= ========= ========= =========
Number of shares used in calculating stockholders'
equity per share.................................. 23,290 27,400 31,510 36,237
Offering price as a percentage of pro forma stockholders'
equity per share.................................. 96.15% 102.67% 107.99% 113.12%
Offering price as a percentage of pro forma tangible
stockholders' equity per share.................... 99.90% 106.27% 111.48% 116.41%
</TABLE>
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Offering Range to reflect changes
in market and financial conditions following the commencement of the
Offering.
(2) Assumes that 4% of shares of Common Stock sold in the Offering 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
net proceeds of the Offering retained by the Company. The Bank intends to
make annual contributions to the ESOP in an amount at least equal to the
principal of the debt. The Bank's total annual payments on the ESOP debt is
based upon 12 equal annual installments of principal. SOP 93-6 requires
that an employer record compensation expense in an amount equal to the fair
value of the shares
37
<PAGE>
(footnotes continued)
committed to be released to employees. The pro forma adjustments assume
that the ESOP shares are allocated in equal annual installments based on
the number of loan repayment installments assumed to be paid by the Bank,
and the fair value of the Common Stock remains at the Subscription Price.
The unallocated ESOP shares are reflected as a reduction of stockholders'
equity. No reinvestment is assumed on proceeds contributed to fund the
ESOP. The pro forma net income further assumes (i) that 38,000, 45,000,
52,000 and 60,000 shares were committed to be released with respect to the
nine months ended September 30, 1997, and 51,000, 60,000, 69,000 and 79,000
shares were committed to be released with respect to the fiscal year ended
December 31, 1996, in each case at the minimum, midpoint, maximum, and
adjusted maximum of the Offering Range, respectively, and (ii) in
accordance with SOP 93-6, only the ESOP shares committed to be released
during the respective period were considered outstanding for purposes of
net income per share calculations. See "Management of the Bank--Benefit
Plans--Employee Stock Ownership Plan and Trust."
(3) Subject to the approval of the Company's stockholders, the 1998 Recognition
Plan intends to purchase an aggregate number of shares of Common Stock
equal to 4.0% of the shares to be sold in the Offering. The shares may be
acquired directly from the Company, or through open market purchases. The
funds to be used by the 1998 Recognition Plan to purchase the shares will
be provided by the Bank or the Company. If these shares were issued from
authorized but unissued Common Stock instead of open market purchases, the
dilutive effect of the voting interest of shareholders would be
approximately 2.6%. See "Management of the Bank--Benefit Plans--1998
Recognition Plan." Assumes that the 1998 Recognition Plan acquires the
shares through open market purchases at the Subscription Price with funds
contributed by the Bank, and that 15% of the amount contributed to the 1998
Recognition Plan is amortized as an expense during the nine months ended
September 30, 1997, and 20% during the fiscal year ended December 31, 1996.
(4) Per share figures include shares of Common Stock that will be exchanged for
Minority Shares in the Share Exchange. Net income per share computations
are determined by taking the number of subscription shares assumed to be
sold in the Offering and the number of Exchange Shares assumed to be issued
in the Share Exchange 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. The number of shares of Common Stock actually
sold and the corresponding number of Exchange Shares may be more or less
than the assumed amounts.
(5) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the 1998 Stock Option Plan, which is expected to be
adopted by the Company following the Offering and presented to stockholders
for approval. If the 1998 Stock Option Plan is approved by stockholders, an
amount equal to 10% of the Common Stock sold in the Offerings will be
reserved for future issuance upon the exercise of options to be granted
under the 1998 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 stockholders' voting interest by approximately 6.2%
interests. Assuming stockholder approval of the plan, that all the options
were exercised at the end of the period at an exercise price equal to the
Subscription Price, and that the 1998 Recognition Plan purchases shares in
the open market at the Subscription Price, (i) pro forma net income per
share for the nine months ended September 30, 1997 would be $0.38, $0.35,
$0.32, and $0.29, and pro forma stockholders' equity per share at September
30, 1997 would be $10.57, $9.93, $9.45 and $9.04, in each case at the
minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, and (ii) pro forma net income per share for the fiscal year
ended December 31, 1996 would be $0.54, $0.48, $0.44 and $0.41, and the pro
forma stockholders' equity per share at December 31, 1996 would be $10.37,
$9.76, $9.31, and $8.91, in each case at the minimum, midpoint, maximum and
adjusted maximum of the Offering Range, respectively.
(6) The retained income of the Bank will be substantially restricted after the
Conversion. See "Dividend Policy," "The Conversion--Liquidation Rights" and
"Regulation and Supervision--Federal Regulation of Savings
Institutions--Limitation on Capital Distributions."
(7) Per share figures include shares of Common Stock that will be exchanged for
Minority Shares in the Share Exchange. Stockholders' equity per share
calculations are based upon the sum of (i) the number of Subscription
Shares assumed to be sold in the Offering, and (ii) Exchange Shares equal
to the minimum, midpoint, maximum and adjusted maximum of the Offering
Range, respectively. The Exchange Shares reflect an Exchange Ratio of
2.4580, 2.8917, 3.3255, and 3.8243, respectively, at the minimum, midpoint,
maximum, and adjusted maximum of the Offering Range, respectively. The
number of Subscription Shares actually sold and the corresponding number of
Exchange Shares may be more or less than the assumed amounts.
38
<PAGE>
PEOPLES BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income of the Mid-Tier Holding
Company for each of the years in the three-year period ended December 31, 1996
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants whose report appears elsewhere herein. The Consolidated Statements
of Income for the nine month periods ended September 30, 1997 and 1996 are
unaudited and, in the opinion of management, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the results for
the unaudited periods have been made. All such adjustments are of a normal
recurring nature. The results of operations for the nine month period ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the entire year or any other subsequent period. These Consolidated
Statements of Income should be read in conjunction with the Consolidated
Financial Statements and related Notes included elsewhere herein.
<TABLE>
<CAPTION>
September 30, December 31,
------------------ ------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(unaudited)
(In Thousands except per share data)
Interest and dividend income:
<S> <C> <C> <C> <C> <C>
Interest and fees on loans........................ $ 22,393 $ 18,085 $ 25,503 $ 22,347 $ 20,569
Interest on securities available for sale......... 5,825 3,594 4,762 4,484 5,058
Interest and dividends on investment securities
held to maturity................................ 3,992 4,464 5,861 5,183 3,485
Interest on federal funds sold.................... 406 519 777 1,504 355
-------- -------- -------- -------- --------
Total interest income......................... 32,616 26,662 36,903 33,518 29,467
Interest expense on deposits (note 11)............... 14,734 12,865 17,941 17,010 12,851
Interest expense on borrowings (note 12)............. 1,489 -- -- -- --
-------- -------- -------- -------- --------
Total interest expense........................ 16,223 12,865 17,941 17,010 12,851
-------- -------- -------- -------- --------
Net interest income........................... 16,393 13,797 18,962 16,508 16,616
Provision for loan losses (note 8)................... 1,488 -- -- 150 180
-------- -------- -------- -------- --------
Net interest income after provision for loan
losses...................................... 14,905 13,797 18,962 16,358 16,436
-------- -------- -------- -------- --------
Other income:
Service fees on deposit accounts.................. 651 259 485 361 346
Fees and other income............................. 595 240 471 390 394
Net gain on sale of other real estate............. -- 23 23 2 3
Net gain on sale of securities (note 5)........... 2,923 2,189 2,839 4,193 2,406
-------- -------- -------- -------- --------
Total other income............................ 4,169 2,711 3,818 4,946 3,151
-------- -------- -------- -------- --------
Operating expense:
Salaries and employee benefits (note 15).......... 5,357 3,361 5,104 3,959 3,626
Net occupancy expense (note 9).................... 1,171 903 1,306 1,131 1,033
Equipment expense................................. 84 53 88 58 71
Data processing fees.............................. 392 302 416 346 334
Amortization of intangible assets................. 577 204 389 226 21
FDIC insurance premium (note 18).................. 39 232 233 492 873
FDIC special assessment........................... -- 177 177 -- --
Other operating expense........................... 2,224 1,202 1,956 1,580 1,517
-------- -------- -------- -------- --------
Total operating expense....................... 9,844 6,434 9,669 7,792 7,475
-------- -------- -------- -------- --------
Income before income taxes.................... 9,230 10,074 13,111 13,512 12,112
Income taxes (note 13)............................... 3,332 3,626 4,720 4,864 4,437
-------- -------- -------- -------- --------
Net income.................................... $ 5,898 $ 6,448 $ 8,391 $ 8,648 $ 7,675
======== ======== ======== ======== ========
Earnings per common share
Basic......................................... $ .66 $ .72 $ 0.94 -- --
======== ======== ======== ======== ========
Diluted....................................... $ .66 $ .72 $ 0.94 -- --
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to Consolidated Financial Statements
39
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The profitability of the Bank depends primarily on its net interest
income, which is the difference between interest and dividend income on
interest-earning assets, principally loans and investment securities and
interest expense on interest-bearing deposits and borrowed funds. Recognizing
that sole reliance upon net interest income for earnings is becoming an
increasing matter of concern the Bank has formed an asset-based lending arm and
acquired a trust company as the first steps towards increasing off-balance sheet
income. The Bank's net income also is dependent, to a lesser extent, on the
level of its other operating income (including service charges and, when
available, gains on sales of securities) and operating expenses, such as
salaries and employee benefits, net occupancy expense, deposit insurance
premiums, professional fees, goodwill amortization, data processing and
miscellaneous other expenses, as well as federal and state income tax expenses.
Business Strategy
The Bank's current business strategy is to continue to serve its market
area as a community-oriented financial institution dedicated to financing home
ownership and commercial activity and providing financial services to its
customers in an efficient manner. The principal components of its strategy are
discussed below.
o Emphasizing Traditional Lending and Investment Activities. The Bank is a
community-oriented savings institution operating primarily in Mercer, Burlington
and Ocean counties, New Jersey. The Bank's current lending emphasis is the
origination of one- to four-family residential mortgage loans, multi-family and
commercial mortgage loans, home equity and property improvement loans,
commercial business loans and consumer loans. The Bank generally originates
loans for its own portfolio and, with limited exceptions, has not engaged in the
purchase or sale of loans. The Bank generally limits its lending activities to
Mercer and Burlington Counties, New Jersey, and Bucks County, Pennsylvania.
However, the Bank's asset-based lending subsidiary, TSBusiness Finance ("TSBF"),
provides funds to corporations located throughout the State of New Jersey and
the greater Delaware Valley. The Bank does not engage in securities trading and
limits its investments to U.S. Treasury and federal government agency
obligations, mortgage-backed securities issued by federal government agencies or
sponsored corporations, municipal securities and corporate obligations which are
rated A or higher by a national rating agency. By investing in these types of
assets, the Bank's objective has been to supplement its loan portfolio and
reduce significantly the credit and interest rate risk of its asset base in
exchange for lower rates of return than would typically be available through
lending activities. In addition, the Bank in January 1997 instituted an
investment leverage program by borrowing $30 million for reinvestment in federal
agency securities which are designated as available for sale.
o Complementing the Bank's Traditional Lending by Growing the Portfolio of
High-Yielding Loans. To complement the Bank's traditional emphasis on one- to
four-family residential real estate lending, the Bank has recently increased its
portfolio of higher-yielding loans. During the 21 months ended September 30,
1997, the Bank's portfolio of commercial business loans increased by $50.7
million, or 438%, to $62.2 million from $11.6 million, the Bank's portfolio of
commercial real estate and multi-family residential real estate loans increased
by $12.5 million, or 44.8%, to $40.3 million from $27.8 million, and the Bank's
portfolio of home equity loans increased by $12.1 million, or 55.3%, to $33.9
million from $21.8 million. This growth has resulted primarily from the Bank's
acquisition of Burlington County Bank, discussed below, and its establishment of
TSBF. Because the yields on these types of loans are generally higher than the
yields on one- to four-family residential real estate loans, the Bank's goal
over the next several years is to continue to increase its portfolio of such
loans in a controlled, safe and sound manner. Although management believes that
it can safely originate, service and monitor these loans, such loans generally
expose lenders to greater risk of loss than one- to four-family residential real
estate loans.
o Increasing the Bank's Fee Income. On September 8, 1997, the Bank completed the
acquisition of Manchester Trust Bank ("Manchester Trust"), Ocean County, New
Jersey, a trust services company . Manchester Trust was acquired at a purchase
price of $4.0 million. As of September 30, 1997, Manchester Trust had $140.1
million of assets under management. Manchester Trust, which is operated as a
subsidiary of the Bank, provides trust services
40
<PAGE>
primarily to retirees in Ocean County, New Jersey. Management views this
acquisition as the first step in a strategic growth into the trust services
business, and its goal over the next several years is to increase its total
assets under management, and its level of noninterest income derived from
providing such services, by offering similar services in the other counties in
the Bank's market area.
o Strong Retail Deposit Base. The Bank has 12 full-service offices located in
Mercer and Burlington County and two full service offices located in limited
access retirement communities located in Ocean County, New Jersey. The Bank
believes it has a stable community retail deposit base. The Bank believes its
market share of deposits is approximately 4.7% in Mercer County, New Jersey and
3.4% in Burlington County, New Jersey. The Bank has recently introduced several
new products and services as part of a strategy of increasing its transaction
accounts and decreasing its reliance on certificates of deposit. As of September
30, 1997, transaction and savings accounts totaled $290.2 million, or 41.1% of
the Bank's total deposit. The Bank does not solicit for deposits outside its
primary market area and does not utilize the services of deposit brokers.
o Growth Through Acquisitions. A component of the Bank's operating strategy has
recently been and continues to be growth through acquisitions. The Bank believes
that assets and expertise acquired in whole-bank acquisitions can supplement the
Bank's internal growth in areas that have not traditionally been emphasized by
the Bank. Accordingly, the Bank's growth in its portfolio of higher yielding
loans was supplemented by its acquisition on October 1, 1996 of Burlington
County Bank ("BCB"), an $80.2 million commercial bank located in Burlington
Township, New Jersey, at a purchase price of $12.5 million, and the Bank's
development of its trust services business was the result of its acquisition of
Manchester Trust with $140.1 million of assets under management, and BCB with
approximately $10 million of assets under management at the time of the
acquisition. Management's strategy is to continue to grow these lines of
business, as well as the Bank's deposits and portfolio of other loans, through
additional acquisitions and internal development. The Company's ability to grow
through selective acquisitions of other financial institutions or branches of
such institutions will depend on successfully identifying, acquiring and
integrating such institutions or branches. There can be no assurance the Company
will be 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 Bank has any specific plans, arrangements or understandings regarding any
additional expansions or acquisitions at this time. In addition, the Bank
intends to grow internally through de novo branching, and has received OTS
approval to open a branch office in Bucks County, Pennsylvania.
Market Risk and Asset and Liability Management
General. The Bank's most significant form of market risk is interest
rate risk, as the majority of the Bank's assets and liabilities are sensitive to
interest rate changes. It is the objective of the Bank to minimize, to the
degree prudently possible, its exposure to interest rate risk, while maintaining
an acceptable interest rate spread. Interest rate spread is the difference
between the Bank's yield on its interest-earning assets and its cost of
interest-bearing liabilities. Interest rate risk is generally understood to be
the sensitivity of the Bank's earnings, net asset values, and stockholders'
equity to changes in market interest rates.
Changes in interest rates affect the Bank's earnings. The effect on
earnings of changes in interest rates generally depends on how quickly the
Bank's yield on interest-earning assets and cost of interest-bearing liabilities
react to the changes in market rates of interest. If the Bank's cost of deposit
accounts reacts more quickly to changes in market interest rates than the yield
on the Bank's mortgage loans and other interest-earnings assets, then an
increasing interest rate environment is likely to adversely affect the Bank's
earnings and a decreasing interest rate environment is likely to favorably
affect the Bank's earnings. On the other hand, if the Bank's yield on its
mortgage loans and other interest-earnings assets reacts more quickly to changes
in market interest rates than the Bank's cost of deposit accounts, then an
increasing interest rate environment is likely to favorably affect the Bank's
earnings and a decreasing interest rate environment is likely to adversely
affect the Bank's earnings. Interest rate sensitivity is managed by the
Asset/Liability Management Committee ("ALCO"). The principal objective of ALCO
is to maximize income within acceptable levels of established risk policy.
41
<PAGE>
The table set forth below shows that the Bank's interest-bearing
liabilities which mature or reprice within short periods exceed its
interest-earning assets with similar characteristics. Accordingly, a material
and prolonged increasing interest rate environment generally would adversely
affect net interest income, while a material and prolonged decreasing interest
rate environment generally would have a positive effect on net interest income.
The Bank's current investment strategy is to maintain an overall
securities portfolio that provides a source of liquidity and that contributes to
the Bank's overall profitability and asset mix within given quality and maturity
considerations. The securities portfolio is concentrated in U.S. Treasury and
federal government agency securities providing high asset quality to the overall
balance sheet mix. Most securities recently purchased by the Bank have been
classified as available for sale to provide management with the flexibility to
make adjustments to the portfolio given changes in the economic or interest rate
environment, to fulfill unanticipated liquidity needs, or to take advantage of
alternative investment opportunities.
The following table presents the difference between the Bank's
interest-earning assets and interest-bearing liabilities at September 30, 1997
expected to reprice or mature, based on certain assumptions, in each of the
future time periods shown. This table does not necessarily indicate the impact
of general interest rate movements on the Bank's 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>
Within One to Three to Over
One Year Three Years Five Years Five Years Total
-------- ----------- ---------- ---------- -----
Interest-earning assets:
Mortgage loans:
<S> <C> <C> <C> <C> <C>
Fixed-rate......................... $ 13,384 $ 22,639 $ 14,401 $57,148 $107,572
Adjustable-rate.................... 81,249 56,105 33,460 4,293 175,107
Non-mortgage loans:
Fixed-rate......................... 9,230 18,444 9,193 13,504 50,371
Adjustable rate.................... 62,521 4,540 794 128 67,983
Securities available for sale: (1)
Debt securities.................... 41,853 65,890 3,511 680 111,934
Equity securities.................. 10 -- -- -- 10
Mortgage-backed securities......... 1,809 2,993 2,317 7,953 15,072
Securities held to maturity:
Debt securities.................... 25,234 3,349 235 2,340 31,158
Mortgage-backed securities......... 18,926 13,789 6,278 610 39,603
Federal Home Loan Bank stock....... -- -- -- 3,386 3,386
Federal funds sold..................... 2,300 -- -- -- 2,300
-------- -------- -------- ------- --------
Total interest-earning assets.......... $256,516 $187,749 $ 70,189 $90,042 $604,496
-------- -------- -------- ------- --------
Interest-bearing liabilities:
Deposits:
Demand accounts.................... 39,285 21,405 7,732 37,753 106,175
Savings accounts................... 16,478 13,677 10,684 56,091 96,930
Certificates of deposit............ 218,046 68,098 4,078 7 290,229
Borrowings........................ -- 30,000 -- -- 30,000
-------- -------- -------- ------- --------
Total interest-bearing liabilities $273,809 $133,180 $ 22,494 $93,851 $523,334
Excess (deficiency) of interest-
earning assets over interest-
bearing liabilities .................. $(17,293) $ 54,569 $ 47,695 $(3,809)
======== ======== ======== =======
Cumulative excess (deficiency) of
interest- earning assets over
interest-bearing liabilities ........ $(17,293) $ 37,276 $ 84,971 $81,162
======== ======== ======== =======
Cumulative ratio of excess (deficiency)
of interest-earning assets as a
percentage of total assets........... (2.7%) 5.8% 13.3% 12.7%
==== ==== ===== ====
</TABLE>
- ---------
(1) Debt securities available for sale are reflected in this table at amortized
cost, equity securities are reflected at estimated market value.
42
<PAGE>
In preparing the table above, it has been assumed, in assessing the
interest rate sensitivity of the Bank, that: (i) mortgage loans will prepay at a
rate of 12.0% per year, (ii) fixed maturity deposits will not be withdrawn prior
to maturity; and (iii) Demand and Savings accounts will decay at the following
rates:
Over 1 Over 3
1 Year Through Through Over 5
or Less 3 Years 5 Years Years
------- ------- ------- -----
Demand accounts .... 37.0% 32.0% 17.0% 17.0%
Savings accounts ... 17.0% 17.0% 16.0% 14.0%
Certain shortcomings are inherent in the method of analysis presented
in the preceding table. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. In addition, 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. Certain assets, such as adjustable-rate mortgage loans,
have features which restrict changes in interest rates on a short-term basis and
over the life of the assets. Further, in the event of a change in interest
rates, prepayment and early withdrawal levels would likely deviate significantly
from those assumed in calculating the table. Finally, the ability of many
borrowers to make payments on their adjustable-rate debt may decrease in the
event of an interest rate increase.
Net Portfolio Value. The OTS has adopted a final rule that incorporates
an interest rate risk ("IRR") component into the risk-based capital rules. The
IRR component is a dollar amount that will be deducted from total capital for
the purpose of calculating an institution's risk-based capital requirement and
is measured in terms of the sensitivity of its net portfolio value ("NPV") to
changes in interest rates. NPV is the difference between discounted incoming and
outgoing cash flows from assets, liabilities, and off-balance sheet contracts.
An institution's IRR is measured as the change to its NPV as a result of a
hypothetical 200 basis point change in market interest rates. A resulting change
in NPV of more than 2% of the estimated market value of its assets will require
the institution to deduct from its capital 50% of that excess change. The rule
provides that the OTS will calculate the IRR component quarterly for each
institution from the institution's Thrift Financial Reports. The following table
presents the Bank's NPV as of September 30, 1997, as calculated by the OTS,
based on information provided to the OTS by the Bank.
Change in Change in NPV
Interest Rates as a percentage of
in Basis Points Net Portfolio Value Estimated Market
(Rate Shock) Amount $ Change % Change Value of Assets
- -------------- ------- -------- -------- -----------------
(Dollars in Thousands)
400 $ 70,771 $ 37,887 34.90% (6.0)%
200 91,206 17,452 16.01 (2.8)%
Stat 108,658 -- -- --
(200) 121,742 13,084 12.00 2.1 %
(400) 133,351 24,693 22.70 3.9 %
As shown by the table above, increases in interest rates will result in
net decreases in the Bank's NPV, while decreases in interest rates will result
in smaller net increases in the Bank's NPV. The table suggests that in the event
of a 200 basis point change in interest rates, the Bank would experience a 2.8%
decrease in NPV in a rising interest rate environment, and a 2.1% increase in
NPV in a decreasing interest rate environment.
Certain shortcomings are inherent in the methodology used in the above
table. Modeling changes in NPV requires the making of certain assumptions that
may tend to oversimplify the manner in which actual yields and costs respond to
changes in market interest rates. First, the models assume that the composition
of the Bank's interest
43
<PAGE>
sensitive assets and liabilities existing at the beginning of a period remains
constant over the period being measured. Second, the models assume that a
particular change in interest rates is reflected uniformly across the yield
curve regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the NPV measurements do provide an indication
of the Bank's interest rate risk exposure at a particular point in time, such
measurements are not intended to provide a precise forecast of the effect of
changes in market interest rates on the Bank's net interest income.
Comparison of Financial Condition
Total assets increased $37.9 million, or 6.3%, to $638.9 million at
September 30, 1997 from $601.0 million at December 31, 1996. Deposit growth from
the branch system and net earnings after dividend payments generated $7.1
million of asset growth. Deposits increased by $2.1 million, or .4%, to $493.3
million at September 30, 1997 from $491.2 million at December 31, 1996. Cash and
cash equivalents decreased by $7.7 million, or 36.9%, to $13.2 million on
September 30, 1997 from $20.9 million at December 31, 1996. Primarily as the
result of the investment leverage program described below, securities available
for sale increased $40.0 million, or 45.6%, to $127.7 million at September 30,
1997 from $87.6 million at December 31, 1996. Securities and mortgage-backed
securities held to maturity decreased by $15.8 million from $86.6 million at
December 31, 1996 to $70.8 million at September 30, 1997 due to maturities of
securities and principal payments on mortgage-backed securities during the nine
month period ended September 30, 1997. Securities held to maturity decreased
$15.8 million or 18.2% to $70.8 million at September 30, 1997 from $86.6 million
at December 31, 1996 due to maturities and principal payments on mortgage-backed
securities of securities during 1997. On January 4, 1997, the Bank instituted an
investment leverage program by borrowing $30 million for reinvestment in federal
agency securities which were designated as available for sale. Included in
securities and mortgage-backed securities held to maturity and securities
available for sale are corporate bonds that the Bank invests in from time to
time. All of the corporate bonds are rated A or greater by nationally recognized
rating agencies. Corporate bonds generally offer the Bank higher returns then
government issued instruments with minimal risk due to the bonds' high credit
rating. Net loans increased $17.6 million, or 4.6%, to $397.9 million at
September 30, 1997 from $380.3 million at December 31, 1996. The Bank's
investment in Federal Home Loan Bank ("FHLB") stock increased $297,000, or 9.6%,
to $3.4 million at September 30, 1997 from $3.1 million at December 31, 1996, as
the Bank's larger mortgage loan portfolio required additional investment in FHLB
stock.
Total assets increased $86.8 million, or 16.9%, to $601.0 million at
December 31, 1996 from $514.2 million at December 31, 1995. Deposit growth from
the branch system and net earnings after dividend payments generated $12.0
million of asset growth. The acquisition of BCB added an additional $74.8
million in assets. Deposits increased by $80.5 million, or 19.6%, to $491.2
million at December 31, 1996 from $410.8 million at December 31, 1995. Deposit
growth consisted of $7.3 million from the Bank's branch system and $73.2 million
from the acquisition of BCB. Cash and cash equivalents increased by $4.7
million, or 28.8%, to $20.9 million on December 31, 1996 from $16.3 million at
December 31, 1995. Securities and mortgage-backed securities held to maturity
decreased by $4.7 million from $91.3 at December 31, 1995 to $86.6 million at
December 31, 1996 due to maturities and principal payments on mortgage-backed
securities during 1996. Securities available for sale increased $3.9 million, or
4.6%, to $87.6 million at December 31, 1996 from $83.8 million at December 31,
1995. Securities held to maturity decreased $4.6 million, or 5.0%, to $86.6
million at December 31, 1996 from $91.2 million at December 31, 1995. Net loans
increased $74.2 million, or 24.2%, to $380.3 million at December 31, 1996 from
$306.1 million at December 31, 1995. These portfolios also increased as loan and
mortgage-backed securities principal payments, and deposit flows were reinvested
in these asset categories and as a result of the acquisition of BCB. The Bank's
investment in FHLB stock increased $225,000, or 7.9%, to $3.1 million at
December 31, 1996 from $2.9 million at December 31, 1995, as the Bank's larger
mortgage loan portfolio permitted additional investment in FHLB stock.
Stockholders' equity increased by $4.9 million, or 4.7%, to $108.2
million at September 30, 1997 from $103.4 million at December 31, 1996. The
increase was due to $5.9 million of net income combined with a $.7 million
amortization of unearned shares of Mid-Tier Common Stock under a restricted
stock plan, offset by a $.9 million decrease in unrealized gains on sales of
investments and $.9 million in dividends. The decrease in unrealized gains was
primarily attributable to the Bank's sale of equity securities to comply with
OTS requirements that the Bank divest its portfolio of equity securities.
Stockholders' equity increased by $5.8 million, or 6.0%, to $103.4 million
44
<PAGE>
at December 31, 1996 from $97.5 million at December 31, 1995. The increase in
stockholders' equity was due to net income of $8.4 million, offset by $1.1
million of dividends and a decline in the net unrealized gain on sale of
securities of $1.6 million.
Average Balance Sheet
The following table sets forth certain information relating to the
Bank's average balance sheet and reflects the average yield on assets and
average cost of liabilities for the periods indicated and the average yields
earned and rates paid. Such yields and costs are derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods presented. Average balances are derived from daily average balances.
<TABLE>
<CAPTION>
At September 30, For the Nine Months Ended September 30,
1997 1997 1996
---------------- -------------------------- --------------------------
Average Average
Actual Yield/ Average Yield/ Average Yield/
Balance Cost Balance Interest Cost(6) Balance Interest Cost(6)
------- ---- ------- -------- -------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets: (1)
Interest-earning assets:
Mortgage loans.................... $282,679 7.43% $268,505 14,810 7.35% $263,421 $14,503 7.34%
Consumer loans.................... 56,109 8.10 56,946 3,335 7.81 45,012 2,669 7.91
Commercial business loans......... 62,245 8.54 62,867 4,248 9.01 13,497 913 9.02
Securities available for sale: (2)
Debt securities................... 127,006 6.55 117,810 5,764 6.51 72,540 3,462 6.36
Equity securities................. 10 -- 485 61 16.77 1,478 132 11.91
Investments held to maturity:
Debt securities and Federal Home Loan
Bank stock...................... 34,544 6.06 39,562 1,787 6.02 40,924 1,967 6.41
Mortgage-backed securities........ 39,603 5.72 44,085 2,205 6.67 48,942 2,497 6.80
Federal funds sold.................. 2,300 6.25 9,181 406 5.90 13,035 519 5.31
------- ------- ------ -------- -------
Total interest-earning assets 604,496 7.14 599,441 32,616 7.25 498,849 26,662 7.12
------ ------
Noninterest-earning assets (3) 34,446 29,750 19,293
------ ------ -------
Total assets.................. $638,942 $629,191 $518,142
======== ======== ========
Liabilities and Stockholders' equity:
Certificates of deposits.......... $290,229 5.40 $289,656 11,611 5.34 262,765 10,304 5.23
Transaction and savings deposits 203,105 2.16 196,854 3,123 2.12 149,635 2,561 2.28
Borrowed funds.................... 30,000 6.03 31,950 1,489 6.21 -- -- --
------- ------- ------ -------- ------- -----
Total interest-bearing liabilities 523,334 4.18 518,460 16,223 4.19 412,400 12,865 4.16
------ ------
Non-interest-bearing liabilities 7,369 6,809 5,924
----- ------ -------
Total liabilities............. 530,703 525,269 418,324
------- ------- --------
Stockholders' equity................ 108,239 103,922 99,818
------- ------- --------
Total liabilities and stockholders'
equity $638,942 $629,191 $518,142
======== ======== ========
Net interest income................. $16,393 $13,797
======= =======
Net interest spread (4)............. 2.96% 3.06% 2.96%
===== ====== =====
Net interest margin (5)............. 3.61% 3.65% 3.69%
===== ====== =====
Interest-earning assets as a percentage of
interest-bearing liabilities...... 115.63% 115.62% 120.96%
====== ====== ======
</TABLE>
(1) Average balances and rates include non-accrual loans.
(2) Securities available for sale are reflected in this table at amortized
cost.
(3) Includes market value adjustment on securities available for sale.
(4) Net interest spread represents the difference between the weighted average
rates earned on interest-earning assets and the weighted average rates paid
on interest-bearing liabilities.
(5) Net yield on average interest-earning assets represents net interest income
as a percentage of average interest-earning assets.
(6) Average Yields and cost have been reflected on an annualized basis.
45
<PAGE>
Average Balance Sheet (continued)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------------
1996 1995 1994
------------------------ ------------------------ ------------------------
Average Average Average
Average Yield/ Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ---- ------- -------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets: (1)
Interest-earning assets:
Mortgage loans........................... $264,984 $19,489 7.35% $251,520 $18,558 7.38% $247,697 $17,926 7.24%
Consumer loans........................... 47,823 3,727 7.79 35,662 2,866 8.04 23,885 1,789 7.49
Commercial business loans................ 24,973 2,287 9.16 9,861 922 9.35 10,486 854 8.14
Securities available for sale: (2)
Debt securities........................ 74,817 4,601 6.15 67,938 4,076 6.00 51,438 2,849 5.54
Equity securities...................... 1,367 161 11.78 4,944 409 8.27 9,861 684 6.94
Investments held to maturity:
Investment securities and Federal Home
Loan Bank stock....................... 40,858 2,627 6.43 29,331 1,910 6.51 42,994 2,849 6.63
Mortgage-backed securities............. 47,990 3,234 6.74 51,323 3,273 6.38 34,707 2,162 6.23
Federal funds sold....................... 14,650 777 5.30 25,175 1,504 5.97 8,533 355 4.16
------- ------- ------ ------- ------- ------
Total interest-earning assets 517,462 36,903 7.13 475,754 33,518 7.05 429,601 29,468 6.86
------ ------ ------
Noninterest-earning assets (3)......... 21,195 24,175 16,863
------- ------ -------
Total assets..................... $538,657 $499,929 $446,464
======== ======== ========
Interest-bearing liabilities and retained earnings:
Certificates of deposits............. $271,362 14,045 5.18 $251,932 13,006 5.16 $220,873 8,918 4.04
Transaction and savings deposits 160,576 3,896 2.43 164,213 4,004 2.44 160,265 3,933 2.45
--------- ----- ------- ----- ------- -----
Total interest-bearing liabilities 431,938 17,941 4.15 416,145 17,010 4.09 381,138 12,851 3.37
------ ------ ------
Noninterest-bearing liabilities........ 6,166 7,437 8,279
------- ------ -------
Total liabilities................ 438,104 423,582 389,417
------- ------- -------
Stockholders' equity..................... 100,553 76,347 57,047
------- ------ -------
Total liabilities and stockholders' equity $538,657 $499,929 $446,464
======== ======== ========
Net interest income...................... $18,962 $16,508 $16,617
======= ======= =======
Net interest spread (4).................. 2.98% 2.96% 3.49%
==== ===== ====
Net interest margin (5).................. 3.66% 3.47% 3.87%
==== ===== ====
Interest-earning assets as a percentage of
interest-bearing liabilities.......... 119.80% 114.32% 112.72%
====== ====== ======
</TABLE>
- ---------------------------
(1) Average balances and rates include non-accrual loans.
(2) Securities available for sale are reflected in this table at amortized
cost.
(3) Includes market value adjustment on securities available for sale.
(4) Interest rate spread represents the difference between the weighted average
rates earned on interest-earning assets and the weighted average rates paid
on interest-bearing liabilities.
(5) Net yield on average interest-earning assets represents net interest income
as a percentage of average interest-earning assets.
46
<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 the Bank's 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 volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by prior year volume), and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume has been allocated to the change due to volume.
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
------------------------------- --------------------------------------------------------------
1997 vs. 1996 1996 vs. 1995 1995 vs. 1994
------------------------------- ------------------------------ ---------------------------
Increase/(Decrease) Due to Increase/(Decrease) Due to Increase/(Decrease) Due to
------------------------------- ------------------------------ ---------------------------
Volume Rate Net Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- --- ------ ---- ---
(In Thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans............ $ 281 $ 26 $ 307 $ 1,006 $ (75) $ 931 $ 285 $ 347 $ 632
Consumer loans............ 711 (45) 666 950 (89) 861 946 131 1,077
Commercial business loans 3,336 (1) 3,335 1,384 (19) 1,365 (59) 127 68
Securities available for sale:
Debt securities........ 2,193 109 2,302 423 102 525 990 237 1,227
Equity securities...... (143) 72 (71) (422) 174 (248) (406) 131 (275)
Securities held to maturity:
Debt securities and Federal
Home Loan Bank stock (20) (160) (180) 740 (23) 717 (887) (52) (939)
Mortgage-backed securities (228) (64) (292) (224) 185 (39) 1,059 52 1,111
Federal funds sold........ (190) 77 (113) (558) (169) (727) 995 154 1,149
------ ------- ------- -------- -------- -------- ------- ------ ------
Total................ 5,940 14 5,954 3,299 86 3,385 2,923 1,127 4,050
------ ------- ------- ------- ------- ------- ------- ------ ------
Interest-bearing liabilities:
Certificates of deposit 995 315 1,310 989 50 1,039 1,614 2,474 4,088
Interest-bearing savings
deposits 801 (239) 562 (92) (16) (108) 87 (16) 71
Borrowed funds............ 1,486 0 1,486 -- -- -- -- -- --
------ ------- ------- ------- ------- ------- ------- ------ ------
Total................ 3,282 76 3,358 897 34 931 1,701 2,458 4,159
------ ------- ------- ------- ------- ------- ------- ------ ------
Net change in net interest
income $ 2,658 $ (62) $ 2,596 $ 2,402 $ 52 $ 2,454 $1,222 $(1,331) $ (109)
======= ======= ======= ======= ======= ======= ====== ======= ======
</TABLE>
Comparison of Result of Operations
General. The Bank reported net income of $5.9 million and $6.4 million
for the nine months ended September 30, 1997 and 1996, respectively, and $8.4
million, $8.6 million and $7.7 million for the years ended December 31, 1996,
1995 and 1994, respectively. Net income includes net gains from the sale of
equity securities of $2.9 million and $2.2 million for the nine months ended
September 30, 1997 and 1996, respectively, and $2.8 million, $4.2 million and
$2.4 million for the fiscal years ended December 31, 1996, 1995 and 1994,
respectively. Net income net of securities gains was $4.0 million and $5.0
million for the nine months ended September 30, 1997 and 1996, and $6.6 million,
$6.0 million and $6.2 million for the fiscal years ended December 31, 1996, 1995
and 1994, respectively. Net income net of securities gains decreased for the
nine months ended September 30, 1997 compared to the nine months ended September
30, 1996 primarily due to a $1.5 million increase in the provision for loan
losses.
Interest and Dividend Income. The Bank's net interest income is
determined by its interest rate spread (i.e., the difference between the yields
earned on its interest-earning assets and the rates paid on its interest-bearing
liabilities , including borrowings) and the relative amounts of interest-earning
assets and interest-bearing liabilities . Total interest income increased by
$6.0 million, or 22.3%, to $32.6 million for the nine months ended September 30,
1997 from $26.7 million for the nine months ended September 30, 1996, as the
Bank increased its interest income from all loan categories, debt securities
available for sale, investment securities and FHLB stock, which increases were
partially offset by decreases in interest income from equity securities
available for sale, federal funds sold, and mortgage-backed securities. The
increase in interest income resulted primarily from a $100.6 million, or 20.2%,
increase in average interest-earning assets to $599.4 million from $498.8
million and a 13 basis point increase in yield
47
<PAGE>
on the Bank's average interest-earning assets to 7.25% from 7.12%. The increase
in average interest-earning assets resulted from the Bank's acquisition of BCB,
the $30 million leverage program, and deposit inflows.
Interest income from mortgage loans increased by $307,000, or 2.1%, to
$14.8 million for the nine months ended September 30, 1997, from $14.5 million
for the nine months ended September 30, 1996. This increase was due to a $5.1
million, or 1.9%, increase in average mortgage loans to $268.5 million from
$263.4 million, combined with an increase in the yield on average mortgage loans
to 7.35% from 7.34%. Interest income from consumer loan increased by $666,000,
or 25.0%, to $3.3 million from $2.7 million as a result of a $11.9 million
increase in average consumer loans to $56.9 million from $45.0 million, which
was partially offset by a 10 basis point decrease in the yield on average
consumer loans. Interest income from commercial business loans increased by $3.3
million or 365.3%, to $4.2 million for the nine months ended September 30, 1997
from $913,000 for the nine months ended September 30, 1996. This increase was
due to a $49.4 million or a 365.8%, increase in average commercial business
loans to $62.9 million from $13.5 million which offset a 1 basis point decrease
in the yield on average commercial business loans to 9.01% from 9.02%. The
increase in average commercial business loan balances was due to the acquisition
of BCB and increased commercial business loan activity. Interest income from
debt securities available for sale increased by $2.3 million, or 66.49%, to $5.8
million from $3.5 million due to a 15 basis point increase in the yield on
average debt securities available for sale to 6.51% from 6.36%, and a $45.3
million, or 62.4%, increase in average debt securities available for sale to
$117.8 million from 72.5 million. The increase in average debt securities
available for sale was primarily attributable to the investment of funds for the
$30 million leverage program. Interest income from the mortgage-backed
securities held to maturity declined to $2.2 million, from $2.5 million or 11.7%
for the nine months ended September 30, 1996. The decrease in income was
primarily attributed to $4.9 million decrease in the average balance of
mortgage-backed securities to $44.1 million from $48.9 million combined with a
decrease in the yield on average mortgage-backed securities to 6.67% from 6.80%.
Income from equity securities available for sale decreased by $71,000,
or 53.8%, to $61,000 from $132,000 due to a $1.0 million, or 67.2%, decrease in
the average balance of equity securities available for sale to $.5 million from
$1.5 million which was partially offset by a 486 basis point increase in the
yield on average equity securities available for sale to 16.77% from 11.91%. The
decrease in the average balance of equity securities available for sale resulted
from the Bank's liquidation of this portfolio, as required in connection with
the Bank's conversion to a federally-chartered savings bank, while the increase
in yield resulted from the favorable market conditions for equity securities
that existed during 1997.
Interest income from debt securities held to maturity and FHLB stock
decreased by $180,000, or 9.2%, to $1.8 million for the nine months ended
September 30, 1997 from $2.0 million for the nine months ended September 30,
1996 due to a $1.4 million, or 3.3%, decrease in the average balance of debt
securities to $39.6 million for the nine months ended September 30, 1997 from
$40.9 million for the nine months ended September 30, 1996. The decrease in
income was also attributed to a 39 basis point decrease in yield to 6.02% from
6.41%. Interest income from federal funds sold decreased $113,000 to $406,000
from $519,000 due to a $3.9 million decrease in average federal funds sold to
$9.2 million from $13.0 million, which offset a 59 basis point increase in the
yield on average federal funds sold to 5.90% from 5.31%.
The increase in the Bank's average balance of mortgage loan, commercial
loans, consumer loans, and debt securities available for sale, resulted from the
Bank's leverage program, the acquisition of BCB and internal loan growth. The
changes in yields on mortgage loans, consumer loans, commercial loans,
investment securities and federal funds sold resulted from the purchase of
interest-earning assets at 1997 market yields.
Total interest income increased by $3.4 million, or 10.1%, to $36.9
million for the year ended December 31, 1996 from $33.5 million for the year
ended December 31, 1995, as the Bank increased its interest income from all loan
categories, debt securities available for sale, investment securities and FHLB
stock, which increases were partially offset by decreases in interest income
from equity securities available for sale, federal funds sold, and
mortgage-backed securities. The increase in interest income resulted primarily
from a $41.7 million, or 8.8%, increase in average interest-earning assets to
$517.5 million from $475.8 million and an eight basis point increase in yield on
the Bank's average interest-earnings assets to 7.13% from 7.05%. The increase in
average interest-earning assets resulted from the Bank's acquisition of BCB and
deposit inflows.
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Interest income from mortgage loans increased by $931,000, or 5.0%, to
$19.5 million for the year ended December 31, 1996, from $18.6 million for the
year ended December 31, 1995. This increase was due to a $13.5 million, or 5.4%,
increase in average mortgage loans to $265.0 million from $251.5 million, which
offset a decrease in the yield on average mortgage loans to 7.35% from 7.38%.
Interest income from consumer loans increased by $861,000, or 30.0%, to $3.7
million from $2.9 million as a result of a $12.2 million increase in average
consumer loans to $47.8 million from $35.7 million, which was partially offset
by a 25 basis point decrease in the yield on average consumer loans. Interest
income from commercial business loans increased by $1.4 million, or 148.0%, to
$2.3 million for the year ended December 31, 1996, from $922,000 for the year
ended December 31, 1995. This increase was due to a $15.1 million, or 153.3%
increase in average commercial business loans to $25.0 million from $9.9 million
which offset a 19 basis point decrease in the yield on average commercial
business loans to 9.16% from 9.35%. The increase in average commercial business
loan balances was due to the acquisition of BCB and increased commercial
business loan activity. Interest income from debt securities available for sale
increased by $525,000, or 12.9%, to $4.6 million from $4.1 million due to a 15
basis point increase in the yield on average debt securities available for sale
to 6.15% from 6.00%, and a $6.9 million, or 10.1%, increase in average debt
securities available for sale to $74.8 million from $67.9 million. Interest
income from mortgage-backed securities remained at $3.2 million, as a $3.3
million, or 6.5%, decrease in the average balance of mortgage-backed securities
to $48.0 million from $51.3 million was offset by an increase in the yield on
average mortgage-backed securities to 6.74% from 6.38%.
Income from equity securities available for sale decreased by $248,000,
or 60.6%, to $161,000 from $409,000 due to a $3.6 million, or 72.4%, decrease in
average equity securities available for sale to $1.4 million from $4.9 million,
partially offset by a 351 basis point increase in the yield on average equity
securities available for sale to 11.78% from 8.27%. The decrease in average
equity securities available for sale resulted from the Bank's continuing
strategy of liquidating such securities, as required in connection with the
Bank's conversion to a federally-chartered savings bank, while the increase in
yield resulted from the favorable market conditions for equities that existed
during 1996.
Interest income from debt securities held to maturity and FHLB stock
increased by $717,000, or 37.5%, to $2.6 million from $1.9 million due to an
$11.5 million, or 39.3% increase in the average balance of debt securities to
$40.9 million for 1996 from $29.3 million for 1995. This increase offset an 8
basis point decrease in yield to 6.43% from 6.51%. Interest income from federal
funds sold decreased $727,000 to $777,000 from $1.5 million due to a $10.5
million decrease in average federal funds sold to $14.7 million from $25.2
million, and a 67 basis point decrease in the yield on average federal funds
sold to 5.30% from 5.97%.
The increase in the Bank's average balance of mortgage, commercial
loans, consumer loans, debt securities available for sale, and investment
securities resulted from the acquisition of BCB and internal loan growth. The
decrease in yields on mortgage loan, consumer loans, commercial loans,
investment securities and federal funds sold resulted from the purchase of
interest-earning assets at market yields which were lower in 1996 than in 1995.
Total interest income increased by $4.1 million, or 13.7%, to $33.5
million for the year ended December 31, 1995 from $29.5 million for the year
ended December 31, 1994, as the Bank increased its interest income from mortgage
and consumer loans, debt securities available for sale, mortgage-backed
securities, and federal funds sold, which increases were partially offset by
decreases in interest income from equity securities available for sale, and
investment securities and FHLB stock. The increase in interest income resulted
primarily from a $46.2 million, or 10.7%, increase in average interest-earning
assets to $475.8 million from $429.6 million and a 19 basis point increase in
the yield on the Bank's average interest-earnings assets to 7.05% from 6.86%.
The increase in average interest-earning assets resulted from the Bank's
deployment of the $29.6 million of net proceeds from the Bank's August 1995
stock offering (the "Stock Offering"), assumption of $34.0 million of deposits
from the Resolution Trust Corporation (the "RTC"), and retained earnings over
the period.
Interest income from investment securities and FHLB stock decreased by
$939,000, or 33.0%, to $1.9 million in 1995 from $2.8 million in 1994 primarily
due to a decrease in average investment securities as a result of maturities of
such securities and the Bank's strategy of deploying the proceeds of such
maturities into higher-yielding assets. Interest income from federal funds sold
increased by $1.1 million, to $1.5 million in 1995 from $355,000
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in 1994 due to a $16.6 million increase in average federal funds sold to $25.2
million from $8.5 million, and a 181 basis point increase in the yield on
average federal funds sold to 5.97% from 4.16%. The increase in federal funds
sold resulted from excess funds received from the oversubscription of the
initial public offering, which were invested in Federal funds awaiting refund to
subscribers.
Total Interest Expense. Total interest expense increased by $3.4
million, or 26.1%, to $16.2 million for the nine months ended September 30,
1997, from $12.9 million for the nine months ended September 30, 1996. The
increase was due to a $104.1 million, or 25.21%, increase in average
interest-bearing liabilities to $516.5 million from $412.4 million, and a 3
basis point increase in the average cost of the Bank's interest bearing
liabilities to 4.19% from 4.16%. The increase in average interest-bearing
liabilities resulted from the $30 million borrowing in January 1997 for the
Bank's leverage investment program combined with a $26.9 million, or 10.2%,
increase in average certificates of deposit and a $47.2 million, or 31.6
increase in average core deposits. The increase in interest-bearing liabilities
was largely the result of the acquisition of BCB. The increase in the average
rate paid for funds was attributable to the higher cost of monies for the Bank's
leverage program and the increased cost of certificates of deposit during 1997.
As a result of the foregoing, the Bank's net interest income was $16.4
million for the nine months ended September 30, 1997 compared to $13.8 million
for the nine months ended September 30, 1996. The Bank's interest rate spread
was 3.06% for the nine months ended September 30, 1997 compared to 2.96% for the
nine months ended September 30, 1996, as the yield on the Bank's
interest-earning assets increased more rapidly than the Bank's cost of
interest-bearing liabilities.
Total interest expense increased by $931,000, or 5.5%, to $17.9 million
for the year ended December 31, 1996, from $17.0 million for the year ended
December 31, 1995. The increase was due to a $15.8 million, or 3.8%, increase in
average interest-bearing liabilities to $431.9 million from $416.1 million, and
a 6 basis point increase in the average cost of the Bank's interest-bearing
liabilities to 4.15% from 4.09%. The increase in average interest-bearing
liabilities resulted from a $19.4 million, or 7.7%, increase in average
certificates of deposit which offset a $3.6 million, or 2.2% decrease in average
core deposits. The increase in interest-bearing liabilities was largely the
result of the acquisition of BCB. The increase in rates paid on deposits was
attributable to the effect of paying higher market rates on certificates of
deposit in 1996 and a slight decline in rates paid on less expensive core
deposits.
As a result of the foregoing, the Bank's net interest income was $19.0
million for 1996 compared to $16.5 million for 1995. The Bank's interest rate
spread was 2.98% for 1996 compared to 2.96% for 1995, as the yield on the Bank's
interest-earning assets increased more rapidly than the Bank's cost of
interest-bearing liabilities.
Total interest expense increased by $4.2 million, or 32.4%, to $17.0
million for the year ended December 31, 1995, from $12.9 million for the year
ended December 31, 1994. The increase was due to a $35.0 million, or 9.2%,
increase in average interest-bearing liabilities to $416.1 million from $381.1
million, and a 72 basis point increase in the average cost of the Bank's
interest-bearing liabilities to 4.09% from 3.37%. The increase in average
interest-bearing liabilities resulted from a $31.1 million, or 14.1%, increase
in average certificates of deposit, and a $3.9 million, or 2.5% increase in
average core deposits. The increase in interest-bearings liabilities was largely
the result of the assumption of $34.0 million of deposits form the RTC. The
increase in rates paid on deposits was attributable to the higher average cost
of the certificates of deposit purchased from the RTC, and the effect of paying
higher market rates on certificates of deposit in 1994 which continue until the
maturity of the certificates after 1995.
Provision for Loan Losses. The Bank's provision for loan losses
amounted to $1.5 million, $0, $0, $150,000 and $180,000 for the nine months
ended September 30, 1997 and 1996, and the years ended December 31, 1996, 1995
and 1994, respectively. Provisions for loan losses represent charges to income
in order to maintain the allowance for loan losses at a level deemed appropriate
by management based on historical experience, the volume and type of lending
conducted by the Bank, the amount of non-performing loans, general economic
conditions (particularly as they relate to the Bank's market area), and other
factors relating to the Bank's loan portfolio. During the third quarter of 1997
the bank increased its loan loss provision by $1.3 million, as compared to no
provision in the third quarter of 1996. This increase was primarily attributable
to a niche line of business that was acquired through the acquisition of
Burlington County Bank, an increase in other non-performing loans and modest
loan growth. Management has
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made the decision to exit the automobile dealer floorplan financing business and
has made provisions for the deterioration of this portfolio. Of the $1.3 million
provision, $687,000 was immediately charged-off as the Bank expeditiously
addressed the credit risk in these loans and any potential losses associated
with exiting this line of business. No further losses or additional reserves on
the portfolio are anticipated at this time. Total charge offs during the nine
month period ended September 30, 1997 were $1.3 million. The total amount of
automobile dealer floorplan loans outstanding at September 30, 1997 was $1.3
million. The remaining balance of these loans after the $687,000 charge off was
approximately $600,000. Management does not anticipate any restructuring costs
as a result of the decision to exit this line of business. The charge offs
comprised $1.1 million of loans acquired from Burlington County Bank and
$200,000 from loans originated by the Bank. Non-performing loans totaled $5.7
million at September 30, 1997 compared to $3.9 million at December 31, 1996.
Non-performing assets as a percentage of total assets increased to .91% at
September 30, 1997 from .69% at December 31, 1996. The increase in
non-performing loans was due principally to the automobile dealer floorplan
financing loans which represented 252,400, or 5.04% of total non-performing
assets as of September 30, 1997, and further deterioration in small balance
commercial loans, mostly part of the BCB portfolio. Based upon management's
evaluation of the factors listed above, management believes that the Bank's
asset quality remains strong, and that the allowance for loan losses as of
September 30, 1997 is adequate to provide for loan losses, although there can be
no assurance that such losses will not exceed estimated amounts. The Bank's
allowance for loan losses as a percentage of total loans outstanding increased
to.80% at September 30,1997 from .76% at December 31, 1996.
The decrease in the provisions to $0 in 1996 from $150,000 and $180,000
in 1995 and 1994, respectively, was based upon the Bank's analysis of the loan
portfolio, history of charge-offs, and strength of the Bank's coverage ratios.
The acquisition of BCB added $1.2 million, or 67.1%, to the Bank's loan loss
reserves, increasing the total loan loss reserves at December 31, 1996 to $2.9
million. Nonperforming loans totaled $3.9 million at December 31, 1996 compared
to $2.2 million at December 31, 1995, primarily as the result of the acquisition
of BCB's substantial commercial loan portfolio. Nonperforming assets as a
percentage of total assets increased from .43% at December 31, 1995 to .69% at
December 31, 1996.
Other Income. For the nine months ended September 30, 1997, the net
gain on securities sales increased $.7 million, or 33.5%, to $2.9 million,
compared to a net gain of $2.2 million for the nine months ended September 30,
1996. Service fees and other income increased $.7 million or 149.7% for the nine
months ended September 30, 1997 to $1.2 million from $.5 million for the nine
months ended September 30, 1996. The increase in fees is primarily attributable
to the acquisition of BCB deposits and loans which have higher fee generating
characteristics.
In 1996, the net gain on security sales decreased $1.4 million, or
32.3%, to $2.8 million, compared to a net gain in 1995 of $4.2 million.
Consequently, other income decreased $1.1 million for the year ended December
31, 1996 compared to the year ended December 31, 1995. Service fees and other
income increased $206,000 for fiscal 1996 compared to fiscal 1995.
Other income increased by $1.7 million, or 57.0%, to $4.9 million for
1995 compared to $3.2 million for 1994. The increase resulted primarily from a
$1.8 million increase in gain on sale of securities. In 1995, the Bank realized
a net gain on security sales of $4.2 million as compared to a net gain in 1994
of $2.4 million.
Operating Expenses. Total operating expenses increased by $3.4 million,
or 53.0%, to $9.8 million for the nine months ended September 30, 1997 as
compared to $6.4 million for the nine months ended September 30, 1996. Salaries
and employee benefits increased $2.0 million, or 59.4%, to $5.4 million for the
nine months ended September 30, 1997 from $3.4 million for the nine months ended
September 30, 1996. This increase is primarily from additional salaries of
former BCB employees, an increase in management incentive awards of $454,000 and
to a lesser degree normal salary increases. The Bank retained 20 former BCB
employees as of September 30, 1997. During the same period the amortization of
intangible assets increased from $204,000 to $577,000, reflecting the
amortization of nine months of goodwill from the acquisition of BCB. Net
occupancy expenses increased $268,000, or 29.7%, due to the addition of one
branch as well as the acquisition of two BCB branches. Other operating expenses
increased $1.0 million, or 85.0%, to $2.2 million for the nine months ended
September 30, 1997 as compared to $1.2 million for the nine months ended
September 30, 1996, reflecting routine expense increases and nine months of
expenses from the acquisition of BCB. These expense increases were offset by a
$193,000 reduction in FDIC insurance premiums
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to $39,000 from $232,000 for the nine months ended September 30, 1996. Included
in the FDIC premiums for the nine months ended September 30, 1996 was a special
FDIC assessment of $177,000 a result of legislation, enacted in September 1996,
to recapitalize the Savings Association Insurance Fund (the "SAIF") by a
one-time assessment on all SAIF-insured deposits held as of March 31, 1995.
Although the majority of the Bank's deposits are BIF-insured, in 1995 the Bank
assumed approximately $34.0 million of SAIF-insured deposits from the RTC. The
assessment was 65.7 basis points per $100 in deposits, payable on November 30,
1996. In addition, beginning January 1, 1997, interest payments on FICO bonds
issued in the late 1980's by the Financing Corporation to recapitalize the now
defunct Federal Savings and Loan Insurance Corporation will be paid jointly by
institutions such as the Bank that are insured by the BIF or the SAIF. The FICO
assessment will be 1.29 basis points per $100 in BIF deposits and 6.44 basis
points per $100 in SAIF deposits. Beginning January 1, 2000, the FICO interest
payments will be paid pro-rata by banks and thrifts based on deposits
(approximately 2.4 basis points per $100 in deposits). The BIF and SAIF will be
merged on January 1, 1999, provided the bank and saving association charters are
merged by that date. In that event, pro-rata FICO sharing will begin on January
1, 1999.
Total operating expenses increased by $1.9 million, or 24.0%, to $9.7
million in 1996 as compared to $7.8 million in 1995. Salaries and employee
benefits increased $1.1 million, or 28.9%, to $5.1 million in 1996 from $4.0
million in 1995, reflecting normal salary increases, management incentive
awards, and three months of additional salaries from the acquisition of BCB.
Amortization of intangible assets increased from $226,000 in 1995 to $389,000 in
1996, reflecting the amortization of three months of goodwill from the
acquisition of BCB. Net occupancy expenses increased $175,000, or 15.5%, due to
the addition of one branch as well as the acquisition of three BCB branches.
Other operating expenses increased $553,000, or 35.0%, to $2.1 million in 1996
as compared to $1.6 million in 1995, reflecting routine expense increases and
three months of expenses from the acquisition of BCB. These expense increases
were offset by a $259,000 reduction in FDIC insurance premiums.
Total operating expenses increased by $317,000, or 4.2%, to $7.8
million in 1995 as compared to $7.5 million in 1994. Salaries and employee
benefits increased $333,000, or 9.2%, to $4.0 million in 1995 from $3.6 million
in 1994 reflecting normal salary increases and staff enhancements. Amortization
of intangible assets increased from $21,000 in 1994 to $226,000 in 1995,
reflecting the amortization of the premium paid for the assumption of $34.0
million in deposits from the RTC in March 1995. Net occupancy expenses and other
operating expense increased $98,000, or 9.5%, and $75,000 or 4.1%, respectively,
reflecting routine expense increases. These expense increases were offset by a
$13,000 equipment expense reduction and a $381,000 reduction in FDIC insurance
premiums.
Income Taxes. For the nine months ended September 30, 1997, the income
tax expense amounted to $3.3 million compared to $3.6 million for the nine
months ended September 30, 1996, reflecting primarily the differences in income
before taxes. The effective tax rate remained consistent at 36.1% in 1997
compared to 36.0% in 1996.
Income tax expense amounted to $4.7 million, $4.9 million, and $4.4
million in 1996, 1995, and 1994, reflecting primarily the differences in income
before income taxes for such periods. The effective income tax rate remained
consistent in 1996, 1995 and 1994 at 36.0%, 36.0% and 36.6%, respectively.
Liquidity and Capital Resources
The Bank is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of United States
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 4% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less.
Monetary penalties may be imposed for failure to meet applicable liquidity
requirements. At September 30, 1997, the Bank's liquidity, as measured for
regulatory purposes, was 28.83%, or $115.0 million in excess of the minimum OTS
requirement.
Cash was generated by the Bank's operating activities during the nine
months ended September 30, 1997 and 1996, and the years ended December 31, 1996,
1995 and 1994, primarily as a result of the acquisition of BCB, the assumption
of deposits, proceeds from the conversion, borrowings for a leverage program and
retained earnings. The
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adjustments to reconcile net income to net cash provided by operations during
the years presented consisted primarily of net gains from sale of securities,
the provision for loan losses, depreciation and amortization expense, increases
or decreases in accrued interest payable or receivable, and increases or
decreases in other assets and other liabilities. The primary investing activity
of the Bank is lending, which is funded with cash provided from operations and
financing activities including deposits, as well as proceeds from amortization
and prepayments on existing loans and proceeds from maturities of
mortgage-backed securities and other investment securities. For additional
information about cash flows from the Bank's operating, financing and investing
activities, see the Consolidated Statements of Cash Flows included in the
Consolidated Financial Statements.
At September 30, 1997, the Bank had outstanding $19.4 million in
commitments to originate and purchase loans, $5.5 million to purchase investment
securities and $28.3 million in commitments under unused lines of credit for
commercial business loans. At the same date, the total amount of certificates of
deposit which are scheduled to mature by September 30, 1998 was $218.0 million.
The Bank believes that it has adequate resources to fund commitments as they
arise and that it can adjust the rate on savings certificates to retain deposits
in changing interest rate environments. If the Bank requires funds beyond its
internal funding capabilities, advances from the FHLB of New York and borrowings
from correspondent banks are available as an additional source of funds. At
September 30, 1997, the Bank had $30.0 million of borrowings, which mature in
January 2000. See "Business of the Bank- Sources of Funds Borrowings".
The Bank is required to maintain specified amounts of capital pursuant
to federal law and regulations promulgated thereunder by the OTS. The capital
standards generally require the maintenance of regulatory capital sufficient to
meet a tangible capital requirement, a core capital requirement and a risk-based
capital requirement. At September 30, 1997, the Bank's tangible and core capital
totaled $97.2 million, or 15.5%, of adjusted total assets, which exceeded the
minimum requirements at that date by approximately $87.8 million and $78.4
million, respectively, or 14.0% and 12.5%, respectively, of adjusted total
assets. The Bank's risk-based capital totaled $100.4 million at September 30,
1997, or 26.5%, of risk-weighted assets, which exceeded the current requirement
of 8% by approximately $70.1 million, or 18.5%, of risk-weighted assets. See
"Historical and Pro Forma Capital Compliance."
Impact of New Accounting Standards
In June 1996, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities," SFAS 125 provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities. These standards are based on consistent application of a
financial-component approach and focuses on control. Under this approach, after
a transfer of financial assets, an entity recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. SFAS 125 provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. SFAS is effective for transfers occurring after December 31, 1996
and has been applied prospectively.
In December 1996, the FASB issued SFAS No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125," an amendment of
SFAS 125. SFAS 127 defers for one year the effective date of portions of SFAS
125 that address secured borrowings and collateral for all transactions.
Additionally, SFAS 127b defers for one year the effective date of transfers of
financial assets that are part of repurchase agreements, securities lending and
similar transactions. The adoption of SFAS 125 and SFAS 127 is not expected to
have a material effect on the Mid-Tier Holding Company's consolidated financial
statements.
Statement of Financial Accounting Standards No. 128, "Earnings per
share" (SFAS 128) establishes standards for computing and presenting earnings
per share (EPS) and applies to entities with publicly held common stock or
potential common stock. SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures. SFAS 128 requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the dilute EPS
computation. SFAS 128 is effective for financial statements issued for periods
ending after December 14, 1997, including interim periods, earlier application
is not permitted.
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SFAS 128 also requires restatement of all prior period EPS data presented. SFAS
128 is not expected to have a material effect on the Mid-Tier Holding Company's
reported earnings per share. The Bank adopted SFAS 128 in 1997. Per share
amounts for prior periods have been restated. The adoption of SFAS 128 did not
have a material effect on the Bank's reported earnings per share.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general-purpose financial statements. This Statement is
effective for fiscal years beginning after December 15, 1997. Reclassification
of financial statements for earlier periods provided for comparative purposes is
required. The Mid-Tier Holding Company has not determined the impact that this
Statement will have on its reporting of operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This Statement established standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also established standards for related
disclosures about products and services, geographic areas, and major customers.
This Statement is effective for financial statements for periods beginning after
December 15, 1997. In the initial year of application, comparative information
for earlier years is to be restated. This Statement need not be applied to
interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second year
of application. This Statement is not expected to change the reporting
requirements of the Mid-Tier Holding Company.
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein
have been prepared in accordance with GAAP, which requires 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 the Bank's assets
and liabilities are monetary in nature. As a result, interest rates generally
have a more significant impact on a financial institution's performance than
does the effect of inflation.
Capability of the Bank's Data Processing Hardware to Accommodate the Year 2000
Like many financial institutions the Bank relies upon computers for the
daily conduct of its business and for data processing generally. There is
concern among industry experts that on January 1, 2000 computers will be unable
to "read" the new year and there may be widespread computer malfunctions. The
Bank generally relies on independent third parties to provide data processing
services to the Bank, and has been advised by its data processing service center
that the issue has been addressed. The Bank recognized that a comprehensive and
coordinated plan of action was needed to ensure 100% readiness to perform Year
2000 processing. A Year 2000 Committee has been formed to imitate and implement
the year 2000 project, policies, document readiness of TSB to accommodate year
2000 processing, and to track and test progress towards full compliance. The
Bank contracts with service bureaus to provide the majority of its data
processing and is dependent upon purchased application software. In house
applications are limited to wordprocessing and spreadsheet functions. The Bank
is in the process of ensuring that external vendors and servicers are adequately
addressing the system and software issues related to the year 2000 by obtaining
written system certifications that the system are fully Year 200 compliant or
that the vendor has a plan to become fully compliant in the very near future.
Beginning in the 3rd quarter of 1998, the Bank will coordinate with primary
servicer end-to-end tests which allow the bank to simulate daily processing on
sensitive century dates. In the evaluation, the bank will ensure that critical
operations will continue if servicers or vendors are unable to achieve the year
2000 requirements. Upon the completion of the system inventory and vendor
certification, the committee will identify critical applications and develop
detailed plans for hardware/system upgrades and system replacements where
necessary. All upgrades are scheduled to be implemented by December 31, 1998 to
allow a full year for system testing.
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BUSINESS OF THE BANK
General
The Bank has traditionally operated as a community-oriented savings
institution providing mortgage loans and other traditional financial services to
its local community. The Bank is primarily engaged in attracting deposits from
the general public through its offices and using those funds to originate loans
secured by one- to four-family residences primarily located in Mercer and
Burlington Counties where the Bank's offices are located, as well as in
neighboring Bucks County, Pennsylvania. In recent years the Bank has
substantially increased its portfolio of mortgage loans secured by multi-family
and commercial real estate, commercial business loans, consumer loans and home
equity and property improvement loans. The Bank also has a securities portfolio
primarily consisting of U.S. Treasury and federal government agency obligations,
corporate and municipal bonds and mortgage-backed securities issued by federal
agencies.
Market Area
The Bank conducts business through its 14 branch offices located in the
central New Jersey counties of Mercer, Burlington and Ocean, and a trust
services subsidiary located in Ocean County, New Jersey. The Bank's market area
for loans includes neighboring Bucks County, Pennsylvania which borders to the
west of Mercer County, New Jersey. Lawrenceville, New Jersey, where the Bank is
headquartered, is located in Mercer County which had a population of
approximately 326,000 according to the 1990 Census. Population is forecasted to
be 368,000 by 1999. Ocean County, which is located along the central New Jersey
shore, is among the fastest growing population areas in New Jersey. Ocean
County's population is comprised of a significant number of retired residents.
The Bank's market area is both urban and suburban. Trenton, which is in
Mercer County, is the capital of the State of New Jersey. The two largest
employers in Mercer County are the State of New Jersey and Princeton University.
Other large employers in the Bank's market area include Lockheed Martin,
Princeton Medical Center, Bristol-Myers Squibb, N.J. Manufacturer, Helene Fuld
Medical and Educational Testing Services.
The economy in the Bank's market area economy has remained relatively
stable in recent years. The unemployment rates in Mercer and Burlington Counties
were 5.7% and 5.2%, respectively during 1996.
Lending Activities
Loan Portfolio Composition. The principal components of the Bank's loan
portfolio are mortgage loans secured by one- to four-family residential,
commercial, and multi-family residential real estate. In addition, the Bank's
loan portfolio includes non-mortgage loans which include home equity loans,
commercial business loans, and other consumer loans. At September 30, 1997, the
Bank's total loans receivable totaled $401.0 million, of which $242.4 million,
or 60.4%, were one- to four-family residential real estate mortgage loans, $40.3
million, or 10.1%, were commercial and multi-family residential real estate
loans, $33.9 million, or 8.5%, were home equity loans, $62.2 million, or 15.5%,
were commercial business loans, and $22.2 million, or 5.5%, were other consumer
loans.
As a federally chartered savings bank, the Bank has general authority
to originate and purchase loans secured by real estate located throughout the
United States. Notwithstanding this nationwide lending authority, the mortgage
loans of the Bank are primarily secured by properties located in Mercer,
Burlington and Ocean Counties, New Jersey, and Bucks County, Pennsylvania.
55
<PAGE>
Loan Portfolio Composition. The following table sets forth information
regarding the composition of the Bank's loan portfolio by type of loan at the
dates indicated.
<TABLE>
<CAPTION>
At December 31,
At September 30, ---------------------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
Amount Percent Amount Percent Amount Percent Amount Percent
(Dollars In Thousands)
Mortgage loans:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One- to four-family real estate.................... $242,374 60.4% $239,470 62.5% $227,717 74.0% $228,133 78.3%
Commercial and multi-family residential real estate 40,305 10.1 53,415 14.0 27,827 9.0 23,833 8.2
------ ---- -------- ------ ------ ----- -------- -----
Total mortgage loans........................... 282,679 70.5 292,885 76.5 255,544 83.0 251,966 86.5
-------- ----- ------- ---- -------- ----- -------- ----
Non-mortgage loans:
Home equity loans (1).............................. 33,914 8.5% 28,138 7.3 21,833 7.1 22,043 7.6
Commercial business loans.......................... 62,245 15.5 34,486 9.0 11,573 3.8 8,998 3.1
Other consumer loans (2)........................... 22,195 5.5 27,478 7.2 18,783 6.1 8,256 2.8
-------- --- ------- ---- -------- ----- -------- ----
Total non-mortgage loans......................... 118,354 29.5 90,102 23.5 52,189 17.0 39,297 13.5
-------- ---- ------- ---- -------- ----- -------- ----
Total loans.................................. 401,033 100.00% 382,987 100.0% 307,733 100.0% 291,263 100.0%
====== ===== ===== =====
Net deferred costs (fees).......................... 18 226 104 (117)
Premiums (discounts)............................... 17 (24) 23 --
Allowance for possible loan losses................. (3,202) (2,901) (1,767) (1,642)
------- -------- --------
Net loans........................................ $397,866 $380,288 $306,093 $289,504
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------------------
1993 1992
---- ----
Amount Percent Amount Percent
(Dollars In Thousands)
Mortgage loans:
<S> <C> <C> <C> <C>
One- to four-family real estate.................... $206,585 80.2% $163,322 80.3%
Commercial and multi-family residential real estate 18,972 7.4 12,732 6.3
-------- ----- -------- ----
Total mortgage loans........................... 225,557 87.6 176,054 86.6
-------- ----- -------- ----
Non-mortgage loans:
Home equity loans (1).............................. 19,117 7.4 16,673 8.2
Commercial business loans.......................... 7,300 2.9 8,023 4.0
Other consumer loans (2)........................... 5,513 2.1 2,488 1.2
-------- ----- -------- ----
Total non-mortgage loans......................... 31,930 12.4 27,184 13.4
-------- ----- -------- ----
Total loans.................................. 257,487 100.0% 203,328 100.0%
===== =====
Net deferred costs (fees).......................... 360 715
Premiums (discounts)............................... -- --
Allowance for possible loan losses................. 1,471 634
-------- --------
Net loans........................................ $255,656 $201,889
======== ========
</TABLE>
- ------------------------------------
(1) Includes home equity credit lines and second mortgages. (2) Includes student
loans, installment loans and auto loans.
56
<PAGE>
Contractual Principal Repayments and Interest Rates. The following
table sets forth the maturity of the Bank's loan portfolio at September 30,
1997. Demand loans, loans having no stated schedule of repayments and no stated
maturity, and overdrafts are reported as due in one year or less.
<TABLE>
<CAPTION>
Due Within Due 1-3 Due 3-5 Due 5-10 Due 10+
One Year Years Years Years Years Total
-------- ----- ----- ----- ----- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Total mortgage loans......... $12,602 $14,354 $44,479 $68,862 $142,382 $282,679
Total non-mortgage loans..... 53,025 13,747 32,359 10,754 8,469 118,354
------- ------- ------- ------- -------- --------
Total loans.................. $65,627 $28,101 $76,838 $79,616 $150,851 $401,033
======= ======= ======= ======= ======== ========
</TABLE>
Fixed- and Adjustable-Rate Loan Schedule. The following table sets
forth the dollar amount of total loans due after one year from September 30,
1997 which have fixed interest rates or which have floating or adjustable
interest rates.
Fixed Adjustable
Rates Rates Total
----- ----- -----
(In Thousands)
Mortgage loans...... $ 102,287 $ 167,790 $ 270,077
Non-mortgage loans.. 49,179 16,150 65,329
----------- --------- ----------
Total loans......... $ 151,466 $ 183,940 $ 335,406
=========== ========= ==========
Scheduled contractual amortization of loans does not reflect the
anticipated actual term of the Bank's loan portfolio. The average life of loans
is substantially less than their contractual terms because of prepayments and
due on sale clauses, which give the Bank the right to declare a conventional
loan immediately due and payable in the event, among other things, that borrower
sells the real property subject to the mortgage.
Loan Originations and Underwriting. The lending activities of the Bank
are subject to written, non-discriminatory, underwriting standards and the loan
origination procedures established by the Bank's Board of Directors. Loan
originations are obtained by a variety of sources, including referrals from real
estate brokers, developers, builders, existing customers, newspaper, radio,
periodical advertising and walk-in customers. Loan applications are taken by
lending personnel, and the loan department supervises the obtainment of credit
reports, appraisals and other documentation involved with a loan. Property
valuations are performed by one of a list of licensed independent certified
appraisers approved annually by the Board of Directors. The Bank requires title
insurance on nearly all first mortgage loans secured by real estate. Hazard
insurance is also required on all secured property and flood insurance is
required if the property is within a designated flood plain.
The Bank's loan approval process assesses the borrower's ability to
repay the loan and the adequacy of the value of the property that will secure
the loan. A loan application file is first reviewed by a loan officer of the
Bank and then is submitted for approval to an officer with specific delegated
authority from the Board of Directors to approve that type of loan up to a
certain amount. The legal lending limit of the Bank at September 30, 1997 was
$16.2 million. In March of 1996, the Board of Directors approved an increase in
the internal lending limit to one borrower to $5.0 million from $2.5 million,
and an increase in the maximum non-commercial mortgage loan limit to $1.0
million from $500,000. In general, the maximum home equity loan the Bank will
make is $100,000 and the maximum installment (automobile) loan the Bank will
make is $50,000. The Bank can exceed these limitations on a case-by-case basis
and intends to reevaluate the limitations after the completion of the
Conversion.
57
<PAGE>
The following table shows loans originated, purchased, loan reductions
and the net change in the Bank's loan portfolio during the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
----------------------- ----------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Loans receivable at beginning of period..... $ 382,987 $ 307,733 $ 307,733 $ 291,263 $257,487
Originations:
Residential............................... 16,875 36,159 42,318 23,363 54,777
Commercial real estate and multi-family .. 11,610 2,585 4,142 8,811 8,025
Commercial business loans................. 25,311 11,142 14,474 5,307 6,131
Home equity............................... 9,290 8,321 11,578 6,662 10,055
Other..................................... 9,903 14,238 16,787 16,375 6,555
---------- ---------- ---------- ---------- --------
Total originations...................... 72,989 72,445 89,299 60,518 85,543
Purchased residential mortgage loans........ -- 1,534 1,534 5,038 --
Loans acquired.............................. -- -- 48,229 -- --
Transfer of mortgage loans to foreclosed
real estate............................... (274) (89) (682) -- (77)
Repossession of assets in lieu of loans..... (100) (21) (41) (34) --
Net charge offs............................. (1,187) (26) (52) (25) (9)
Repayments.................................. (53,382) (44,280) (63,033) (49,027) (51,681)
---------- ---------- ---------- ---------- --------
Net loan activity........................... 18,046 29,563 75,254 16,470 33,776
---------- ---------- ---------- ---------- --------
Total loans receivable at end of period $ 401,033 $ 337,296 $ 382,987 $307,733 $291,263
========== ========== ========== ======== ========
</TABLE>
One- to Four-Family Real Estate Loans. The primary lending activity of
the Bank is the origination of loans secured by first mortgage liens on one- to
four-family residences. At September 30, 1997, $242.4 million, or 60.4%, of the
Bank's total loan portfolio consisted of one- to four-family real estate loans.
The loan-to-value ratio, maturity and other provisions of the loans
made by the Bank generally have reflected the policy of making less than the
maximum loan permissible under regulations in accordance with sound practices,
market conditions and underwriting standards established by the Bank. The Bank's
lending policies on one- to four-family owner occupied real estate loans
generally limit the maximum loan-to-value ratio to 80% of the lesser of the
appraised value or purchase price of the property and 75% of the appraised value
or purchase price on condominiums.
As of September 30, 1997, the Bank offered 30-year fixed and adjustable
rate mortgage loans on one- to four-family residences. The Bank began to
originate 30-year fixed-rate mortgage loans in early 1996. All residential
mortgage loans are amortized on a monthly basis with principal and interest due
each month. These loans include "due on sale" clauses, which are provisions
giving the Bank 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. The Bank enforces due on sale clauses to the extent permitted
under applicable laws. Substantially all of the Bank's residential mortgage loan
portfolio consists of conventional loans.
The Bank offers adjustable rate one- to four-family real estate loans,
originated directly, which are fully amortizing loans with contractual
maturities of up to 30 years. These loans have interest rates which are
scheduled to adjust in accordance with designated indices. Initial rates are
fixed for one, three, five or seven years before adjusting annually. The Bank
currently offers its adjustable rate mortgage loans with a 2% cap on the rate
adjustment per year and a 6% rate adjustment cap over the life of the loan. The
Bank's underwriting standards for one year adjustable rate mortgages requires
that it assess a potential borrower's ability to make principal and interest
payments based on the initial note rate or the current index rate, whichever is
greater at the time of application. Adjustable rate mortgages with initial
payment periods greater than one year utilize the initial note rate. The Bank's
adjustable rate mortgage loans are not convertible by their terms into fixed
rate loans, do not contain prepayment penalties and do not produce negative
amortization. The Bank's loans are frequently underwritten according to criteria
which do not conform to those established by Fannie Mae or Freddie Mac. Although
this may prohibit the sale of loans in the secondary market to these entities,
management still considers the Bank's portfolio very salable to other investors,
and
58
<PAGE>
may consider selling loans in the secondary market in the future. However, the
Bank has historically originated loans for its own portfolio.
Commercial and Multi-family Residential Real Estate Mortgage Loans. At
September 30, 1997, $40.3 million, or 10.1%, of the Bank's total loan portfolio
consisted of loans secured by multi-family and commercial real estate. The
Bank's multi-family and commercial mortgage loans include primarily loans
secured by apartment buildings, small office buildings and small retail
establishments. Substantially all of the Bank's multi-family and commercial
mortgage loans are secured by properties located in the Bank's primary market
area. Management believes that multi-family and commercial mortgage loans will
continue to be an integral component of the Bank's loan portfolio. Originations
of multi-family and commercial mortgage loans amounted to $11.6 million, $4.1
million, $8.8 million and $8.0 million, or 12.0%, 4.6%, 14.6% and 9.4% of total
loan originations during the nine months ended September 30, 1997 and during
fiscal 1996, 1995 and 1994, respectively.
The Bank originates both fixed and adjustable rate multi-family and
commercial mortgage loans. The Bank currently offers multi-family and commercial
mortgage loans with terms generally up to ten years amortizing over no more than
a 20-year period, with no more than five years at a fixed rate of interest.
Pursuant to the Bank's underwriting standards, it offers multi-family and
commercial mortgage loans with loan-to-value ratios generally up to 70% of the
lower of the purchase price or an independent appraisal. Those standards also
require that the cash flow from the collateral, after consideration of expense
and vacancy assumptions, be generally at least 120% of the debt service.
The Bank requires appraisals of substantially all properties securing
multi-family and commercial real estate loans. All appraisals are performed by
an independent licensed appraiser from a list of appraisers approved by the
Bank. In originating multi-family and commercial mortgage loans, the Bank
considers the value of the property, the credit history of the borrower, cash
flow of the project, location of the real estate and the quality of management
involved with the property. Multi-family and commercial mortgage loans to
corporations are generally guaranteed by the principals. The Bank may also
require an environmental audit on such loans.
Multi-family and commercial mortgage lending is generally considered to
involve a higher degree of credit risk than one- to four-family residential
lending. Such lending typically involves large loan balances concentrated in a
single borrower or groups of related borrowers. In addition, the payment
experience on loans secured by income-producing properties is typically
dependent on the successful operation of the related real estate project and
thus may be subject to a greater extent to adverse conditions in the real estate
market or in the economy generally.
The Bank also offers construction loans on commercial real estate
properties. Construction financing is generally considered to involve a higher
degree of credit risk 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. Construction lending is generally
limited to the Bank's primary lending area. Construction loans are structured to
be converted to permanent loans at the end of the construction phase, which
typically is no more than nine months. Construction loans have terms which
generally match the non-construction loans then offered by the Bank except that
during the construction phase the borrower only pays interest on the loan.
Home Equity Loans. The Bank offers home equity fixed rate, home equity
credit line and FHA Title I property improvement loans. The home equity
portfolio amounted to $33.9 million, or 8.5%, of the total loan portfolio as of
September 30, 1997. Of this amount, $24.2 million, or 71.3%, were in the form of
home equity fixed rate loans; $8.2 million, or 24.3% were in the form of home
equity credit lines; and $1.5 million, or 4.4% were in the form of second
mortgages. FHA Title I property improvement loans amounted to $217,000.
The home equity fixed rate loan is available on any owner-occupied one-
to four-family home, townhouse, or condominium in the Bank's lending area. It is
a fixed-rate mortgage which is based on the equity in the home, and is generally
secured by a first or second mortgage on the residence. Loan amounts generally
range from $5,000 to $100,000 (up to 75% of the appraised value of the home less
any outstanding senior mortgage/lien). The current maximum term is 180 months.
59
<PAGE>
The home equity credit line is available on any owner-occupied one- to
four-family home, townhouse, or condominium in the Bank's lending area. It is a
variable rate mortgage which is based on the equity in the home, and is
generally secured by a first or second mortgage on the residence. Loan amounts
generally range from $5,000 to $100,000 (up to 75% of the appraised value of the
home less any outstanding senior mortgage/lien).
The FHA Title I property improvement loan is a fixed-rate installment
loan available on any owner-occupied one- to four-family home in the Bank's
lending area. Under the Title I program, the Bank makes loans from their own
funds to eligible borrowers to finance property improvements, and the U.S.
Department of Housing and Urban Development ("HUD") insures the Bank against
loss if the borrower(s) defaults. Title I loans are not government loans or
grants, and are not low interest-rate loans. HUD does not lend money or regulate
interest rates. Currently, the maximum loan amount is $25,000, and the maximum
term is 180 months. Any loan amount over $7,500 is secured by a mortgage on the
property. The Bank conducts an on-site inspection on any property improvement
loan where the principal obligation is $7,500 or more, and where the borrower(s)
fails to submit a completion certificate.
The second mortgage portfolio consists of purchased notes secured by
second mortgages on real estate located throughout New Jersey. The purchases
occurred between 1983 and 1991; however, the consumer lender is still servicing
the portfolio, pursuant to the original agreement. The portfolio is 100%
guaranteed by the consumer lender.
Other Consumer Loans. Subject to the restrictions contained in federal
laws and regulations, the Bank also is authorized to make loans for a wide
variety of personal or consumer purposes. As of September 30, 1997, $22.2
million, or 5.5%, of the Bank's total loan portfolio, consisted of consumer
loans (this figure does not include home equity fixed-rate, home equity credit
line, FHA Title I home improvement loans and second mortgage loans). The primary
component of the Bank's consumer loan portfolio was $20.3 million of indirect
and direct automobile loans which are no longer being originated and are being
allowed to mature. The servicer of these loans established dealer agreements,
application processing and credit underwriting, documentation and legal support,
loan billing and accounting, customer service, full collection support, and
management reporting. The servicer made preliminary underwriting decisions and
made recommendations according to the Bank's underwriting criteria and the final
credit decision was made by the Bank.
Automobile loans generally involve more credit risk than mortgage loans
because of the type and nature of the collateral. In addition, consumer lending
collections are dependent on the borrower's continuing financial stability, and
thus are more likely to be adversely affected by job loss, divorce, illness, and
personal bankruptcy. In many cases, any repossessed collateral resulting from a
defaulted consumer loan will not provide an adequate source of repayment of the
outstanding loan balance because of depreciation and improper repair and
maintenance of the underlying security. See "Management's Discussion and
Analysis of Results of Operations--Comparison of Results of Operation--Provision
for Loan Losses."
The Bank also has collateral loans secured by deposits, which as of
September 30, 1997 amounted to $1.1 million. The collateral deposit loans are
originated through the branches. The minimum loan amount is $1,000, and the
maximum loan-to-value is 90% of the principal deposit balance. The loan is
priced at 3% over the savings instrument rate. Deposit loans are payable on
demand. However, payment of interest is due quarterly and payment to the loan
principal can be made at any time provided the quarterly interest has been paid.
The Bank also has personal loans (secured and unsecured) and overdraft
protection accounts, which as of September 30, 1997 totaled $321,000.
Commercial Business Loans. Commercial business loans are generally
provided to various types of closely held businesses located principally in the
Bank's primary market area. The Bank's commercial business loans may be
structured as short-term self-liquidating time notes, revolving credits, and
term loans. Time notes generally have terms of less than one year to accommodate
seasonal peaks and valleys in the borrower's business cycle. Commercial business
term loans generally have terms of seven years or less and interest rates which
float in accordance with the prime rate, although the Bank also originates
commercial business loans with fixed rates of interest. The Bank's commercial
loans generally are secured by equipment, machinery or other corporate assets
including real estate and
60
<PAGE>
receivables but may be unsecured. The Bank generally obtains personal guarantees
from the principals of the borrower with respect to all commercial business
loans.
The Bank, through its subsidiary, TSBusiness Finance Corporation
("TSBF"), provides secured lines of credit for businesses where conventional
financing is unavailable or inadequate. TSBF's borrowing relationships include
companies involved in manufacturing, wholesaling, distribution and service
companies. Credit accommodations range from $500,000 to $5,000,000 for
businesses in New Jersey and the greater Delaware Valley.
Commercial business loans generally are deemed to entail significantly
greater credit risk than that which is involved with residential real estate
lending. The repayment of commercial business loans typically is dependent on
the successful operations and income of the borrower. Such risks can be
significantly affected by economic conditions. In addition, commercial business
lending generally requires substantially greater oversight efforts compared to
residential real estate lending.
As of September 30, 1997, the Bank had $62.2 million or 15.5% of the
total loan portfolio secured by commercial business loans outstanding.
Loan Origination and Other Fees. In addition to interest earned on
loans, the Bank generally receives loan origination fees or "points" for
originating loans. Loan points are a percentage of the principal amount of the
mortgage loan and are charged to the borrower in connection with the origination
of the loan. In accordance with SFAS No. 91, which deals with the accounting for
non-refundable fees and costs associated with originating or acquiring loans,
the Bank's loan origination fees and certain related direct loan origination
costs are offset, and the resulting net amount is deferred and amortized as an
adjustment to the yield of such loans over their contractual life. The increase
in net deferred costs is a result of substantial originations of auto loans
which have a net cost associated with their origination and minimal loan points
being generated from mortgage loans.
Trust Services
The Bank recently began providing trust services through its
wholly-owned subsidiary, Manchester Trust. Manchester Trust currently offers
trust services through its main office in Manchester Township, a fully-staffed
branch office in the Bank's corporate headquarters in Lawrenceville, New Jersey
and a mini branch in Tinton Falls, New Jersey. Manchester Trust provides a full
line of trust and investment services, including living trusts, investment
advisory and investment management accounts, estate settlement services, 401(k)
and other retirement plan services and estate planning. As of September 30,
1997, Manchester Trust managed funds totaling more than $165.0 million.
Asset Quality
Delinquent Loans. The following table sets forth information regarding
number and total balance of loans delinquent 30 days to 59 days, 60 days to 89
days and 90 days or more as of September 30, 1997.
<TABLE>
<CAPTION>
Commercial
Mortgage Business Consumer Total Loans
-------------- -------------- -------------- --------------
Number Amount Number Amount Number Amount Number Amount
(Dollars in Thousands)
Loans delinquent for:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-59 days................... 26 $1,774 51 $1,382 74 $ 360 151 $3,516
60-89 days................... 7 500 15 660 18 61 40 1,221
90 days and over............. 48 2,788 38 1,166 7 109 93 4,063
----- ------ ----- ------ ------ ------ ----- ------
Total delinquent loans..... 81 $5,062 104 $3,208 99 $ 530 284 $8,800
===== ====== ===== ====== ====== ====== ===== ======
</TABLE>
Non-Performing Assets. The loan portfolio is reviewed on a regular
basis by management and, in addition, the commercial business loan portfolio is
reviewed periodically by an independent loan review consulting firm. The loans
are placed on a non-accrual status when, in the opinion of management, there is
reasonable probability of loss or principal or the collection of additional
interest is deemed insufficient to warrant further accrual. Generally, the
Bank's loans are placed on a non-accrual status when a default of principal or
interest has existed for a period of 90
61
<PAGE>
days except when, in the opinion of management, the collection of the principal
or interest is reasonably anticipated or adequate collateral exists. In
addition, the Bank places any loan on non-accrual if any part of it is
classified as doubtful or loss or if any part has been charged to the allowance
for loan losses. When a loan is placed on non-accruing status, total interest
accrued and unpaid to date is reversed.
Real estate owned consists of property acquired through formal
foreclosures and acquired by deed in lieu of foreclosure, and is recorded at the
lower of cost or fair value. Write-downs from cost to fair value which are
required at the time of foreclosure are charged to the allowance for loan
losses. After transfer, the property is carried at the lower of cost or fair
value as determined by an independent appraisal, less estimated selling
expenses. Adjustments to the carrying value of such properties that result from
subsequent declines in value are charged to operations in the period in which
the declines occur. At September 30, 1997, the Bank had one property classified
as real estate owned.
As part of the acquisition of BCB on October 1, 1996, the Bank acquired
BCB's loan portfolio. BCB's underwriting standards and related risk
characteristics of the loan portfolio differed from those of the Bank. The
addition of this portfolio has increased the Bank's non-performing loan
portfolio and negatively effected certain coverage ratios. However, management
believes that the Bank's overall asset quality remains strong. The Bank
continually reviews the quality of the loan portfolio and engages an outside
consultant to perform routine reviews of the portfolio on a quarterly basis.
Management believes that any further negative effects of the BCB merger on
non-performing loans will be in the ordinary course of business, and will be
consistent with the operation of a normal commercial loan portfolio. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Provision for Loan Losses." Management believes that the allowance
for loan losses is adequate based on historical experience, the volume and type
of lending conducted by the Bank, the amount of non-performing loans, general
economic conditions and other factors relating to the Bank's loan portfolio.
However, there can be no assurance that actual losses will not exceed estimated
amounts.
The following table sets forth information as of September 30, 1997,
December 31, 1996, 1995 and 1994 concerning non-performing assets in dollar
amounts and as a percentage of the Bank's net loans and total assets.
<TABLE>
<CAPTION>
At September At December 31,
------------ ------------------------------
1997 1996 1995 1994
---- ---- ---- ----
(Dollars In Thousands)
Non-accruing loans less than 90 days delinquent
<S> <C> <C> <C> <C>
Mortgage.................................................. $ 200 $ -- $ -- $ --
Non-mortgage.............................................. 1,237 -- -- --
Non-accruing loans 90 days or more delinquent:
Mortgage.................................................. 2,055 1,756 1,008 994
Non-mortgage.............................................. 985 1,195 114 31
Troubled debt restructured loans............................ 192 206 1,052 1,044
Accruing loans 90 days or more delinquent:
Mortgage loans............................................ 733 602 10 448
Commercial business loans................................. 287 151 -- --
Consumer loans............................................ 3 -- -- --
--------- --------- --------- --------
Total non-performing loans.................................. 5,692 3,910 2,184 2,517
Foreclosed assets........................................... 142 253 34 77
--------- --------- --------- --------
Total non-performing assets................................. $ 5,834 $ 4,163 $ 2,218 $ 2,594
========= ========= ========= ========
Total non-performing loans as a percentage
of net loans.............................................. 1.43% 1.03% 0.71% 0.87%
========= ========= ========= ========
Total non-performing assets as a percentage
of total assets........................................... 0.91% 0.69% 0.43% 0.59%
========= ========= ========= ========
</TABLE>
Classified Assets. Federal regulations require that each insured
savings institution classify its assets on a regular basis. 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 some
loss. An asset classified loss
62
<PAGE>
is considered uncollectible and of such little value that continuance as an
asset of the institution is not warranted. Another category designated "special
mention," although not a "classification," also must be established and
maintained for assets which do not currently expose an insured institution to a
sufficient degree of risk to warrant classification as substandard, doubtful or
loss. Assets classified as substandard or doubtful require the institution to
establish general allowances for loan losses. If an asset or portion thereof is
classified loss, the insured institution must either establish specific loan
losses in the amount of 100% of the portion of the asset classified loss, or
charge-off such amount. General loss allowances established to cover possible
losses related to assets classified substandard or doubtful may be included in
determining an institution's regulatory capital, while specific valuation
allowances for loan losses do not qualify as regulatory capital. Federal
examiners may disagree with an insured institution's classifications and amounts
reserved and have the authority to require a savings institution to classify
additional assets, or to change the classification of existing classified
assets, and, if appropriate, to establish additional reserves. At September 30,
1997, the Bank had $3.3 million of loans criticized as special mention, $6.4
million classified as substandard and $.6 million classified as doubtful or
loss. As of September 30, 1997, total classified assets, which includes
repossessed assets, amounted to $7.1 million or 1.09% of total assets.
Allowance for Loan Losses. It is management's policy to maintain an
allowance for estimated loan losses based upon an assessment (1) in the case of
residential loans, management's review of delinquent loans, loans in foreclosure
and market conditions, (2) in the case of commercial business loans and
commercial mortgage loans, when a significant decline in value can be identified
and (3) in the case of consumer loans, based on the assessment of risks inherent
in the loan portfolio. Although management uses available information to make
such determinations, future adjustments to allowances may be necessary based on
economic and market conditions and as a result of future examinations by
regulatory authorities, and net earnings could be significantly affected, if
circumstances differ substantially from the assumptions used in making the
initial determinations. At September 30, 1997, the Bank's allowance for loan
losses, which includes a general valuation allowance, amounted to $3.2 million
compared to $2.9 million at December 31, 1996.
The following table sets forth an analysis of the Bank's allowance for
loan losses during the periods indicated.
<TABLE>
<CAPTION>
At and for the Nine At and for
Months Ended September 30, the Year Ended December 31,
-------------------------- -------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- -------- -------- -------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total loans outstanding $ 401,033 $ 337,296 $ 382,987 $307,733 $291,263 $ 257,487 $203,238
========= ========= ========= ======== ======== ========= ========
Average loans outstanding $ 388,318 $ 321,930 $ 337,780 $297,043 $282,068 $ 231,375 $187,839
========= ========= ========= ======== ======== ========= ========
Balance at beginning
of period 2,901 $ 1,767 $ 1,767 $ 1,642 $ 1,471 $ 634 $ 100
Charge-offs:
Mortgage loans........ (80) (57) (67) -- -- -- --
Consumer loans........ (164) (9) (34) (32) (23) -- --
Commercial business loans (1,069) (9) (9) -- -- (43) --
Recoveries.............. 126 49 58 7 14 -- 14
--------- --------- --------- --------- -------- -------- --------
Net charge-offs......... (1,187) (26) (52) (25) (9) (43) 14
Provision for loan losses 1,488 -- -- 150 180 880 520
Acquired allowance...... -- -- 1,186 -- -- -- --
--------- --------- --------- --------- -------- ======== ========
Balance at end of period $ 3,202 $ 1,741 $ 2,901 $ 1,767 $ 1,642 $ 1,471 634
========= ========= ========= ======== ======== ========= ========
Allowance for loan losses
as a percentage of total
loans outstanding 0.80% 0.52% 0.76% 0.57% 0.56% 0.57% 0.31%
======== ======== ======== ========= ========= ========= ========
Net charge-offs as a
percentage of average
loans outstanding..... 0.41% 0.01% 0.02% 0.01% 0.00% 0.02% 0.00%
========= ========= ======== ========= ======== ======== ========
Allowance for loan losses to
non-performing loans 56.25% 109.15% 74.19% 80.91% 65.24% 80.65% 38.35%
========= ========= ======== ======== ======== ======== ========
</TABLE>
63
<PAGE>
The following table sets forth the allocation of allowance for loan
losses by loan category for the periods indicated.
<TABLE>
<CAPTION>
At September 30, At December 31,
---------------- ----------------------------------------------------
1997 1996 1995 1994
---------------- --------------- ---------------- ---------------
% of % of % of % of
Total Total Total Total
Amount Loans(1) Amount Loans(1) Amount Loans(1) Amount Loans(1)
------ -------- --------------- ------ -------- ---------------
(Dollars in Thousands)
Balance at end of period applicable to:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans.................................... $ 758 70.5% $ 906 76.5% $ 591 83.0% $ 593 86.5%
Consumer loans.................................... 959 14.0 877 14.5 610 13.2 453 10.4
Commercial business loans......................... 1,260 15.5 813 9.0 116 3.80 90 3.1
Unallocated....................................... 225 -- 305 -- 450 -- 506 --
------ ------ ----- ----- ------ ------ ------ -----
Total allowance for loan losses................. $3,202 100.0% $2,901 100.0% $1,767 100.0% $1,642 100.0%
====== ====== ====== ===== ====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------------------
1993 1992
--------------- -----------------
% of % of
Total Total
Amount Loans(1) Amount Loans(1)
--------------- ------ --------
(Dollars in Thousands)
Balance at end of period applicable to:
<S> <C> <C> <C> <C>
Mortgage loans.................................... $ 519 87.6% $ 223 86.6%
Consumer loans.................................... 369 9.5 159 9.4
Commercial business loans......................... 73 2.9 32 4.0
Unallocated....................................... 510 -- 220 --
----- ------ ------ -----
Total allowance for loan losses................. $1,471 100.0% $ 634 100.0
====== ====== ====== =====
</TABLE>
- ------------------------------------
(1) Represents percentage of loans in each category to total loans.
64
<PAGE>
Investment Activities
Federally chartered savings institutions have authority to invest in
various types of liquid assets, including United States Treasury obligations,
securities of various federal agencies and of state and municipal governments,
certificates of deposit at federally insured banks and savings institutions,
certain bankers' acceptances and federal funds. Subject to various restrictions,
federally chartered savings institutions may also invest a portion of their
assets in commercial paper, corporate debt securities and mutual funds, the
assets of which conform to the investments that federally chartered savings
institutions are otherwise authorized to make directly. In addition, the Bank
has certain additional investment authority under OTS regulations as a result of
certain grandfathered powers permitted under the terms of the approval of its
conversion from state to federal charter.
The following table sets forth certain information relating to the
Bank's investment securities and mortgage-backed securities held to maturity and
securities available for sale at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
At September 30, -----------------------------------------------------------
1997 1996 1995 1994
------------------ ------------------ ------------------- --------------------
Amortized Market Amortized Market Amortized Market Amortized Market
Cost Value Cost Value Cost Value Cost Value
---- ----- ---- ----- ---- ----- ---- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments and mortgage-backed securities
held to maturity:
United States Government Agency
obligations ............................$ 14,350 $14,321 $17,042 $16,907 $24,934 $24,928 $ 5,826 $ 5,666
Obligations of State and political
subdivisions ........................... 2,293 2,412 3,400 3,497 1,055 1,156 1,055 1,081
Federal Home Loan Bank stock.............. 3,386 3,386 3,089 3,089 2,864 2,864 2,495 2,495
Mortgage-backed securities................ 39,603 39,650 48,618 48,587 54,316 55,032 35,087 34,096
Other corporate bonds..................... 14,515 14,539 17,493 17,521 10,955 11,041 20,136 19,991
------- ------- ------- ------ ------ ------- ------- ------
Total investments held to maturity including
Federal Home Loan Bank stock........... 74,147 74,308 89,642 89,601 94,124 95,021 64,599 63,329
------- ------- ------- ------ ------ ------- ------- ------
Securities available for sale: (1)
United States Treasury securities......... 51,320 51,444 65,336 65,507 -- -- -- --
United States Government and Agency
obligations 46,067 46,386 9,924 9,767 75,955 76,653 51,958 50,866
Equity securities......................... 10 10 894 3,201 2,536 7,123 8,375 14,095
Mortgage-backed securities................ 15,072 15,221 -- -- -- -- -- --
Other bonds............................... 14,547 14,590 9,151 9,172 -- -- -- --
------- ------- ------- ------ ------ ------- ------- ------
Total securities available for sale 127,016 127,651 85,305 87,647 78,491 83,776 60,333 64,961
-------- ------- ------ ------ ------- ------- ------- -------
Total investments......................... $201,163 $201,959 $174,947 $177,248 $172,615 $178,797 $124,932 $128,290
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(1) The Bank adopted FASB No. 115 "Accounting for Investments" as of January 1,
1994 and transferred certain securities held to maturity to available for
sale. See the notes to the audited financial statements.
As of September 30, 1997, the Bank's investment securities held to maturity
portfolio had a carrying value of $74.1 million, of which $14.4 million were
securities issued by U.S. Agencies and other governmental subdivisions and $16.8
million were corporate and municipal bonds. As of that same date, the Bank's
securities available for sale portfolio had an estimated market value of $127.7
million, of which $97.8 million were securities issued by the U.S.
Treasury and federal government agencies, and $14.6 million were other bonds.
At September 30, 1997, $16.8 million, or 22.7%, of the $74.1 million of
total securities held to maturity by the Bank were scheduled to mature within
one year and had a weighted average yield of 5.79%. At September 30, 1997, $32.5
million, or 25.5%, of the $127.7 million of securities available for sale by the
Bank were scheduled to mature within one year and had a weighted average yield
of 5.85%.
65
<PAGE>
The following table sets forth the scheduled maturities, carrying values,
amortized cost, market values and weighted average yields for the Bank's
investment portfolio at September 30, 1997.
<TABLE>
<CAPTION>
At September 30, 1997
-----------------------------------------------------------------------------------------
Within One Year One to Five Years Five to Ten Years More than Ten Years
-------------------- --------------------- --------------------- ---------------------
Weighted Weighted Weighted Weighted
Amortized Average Amortized Average Amortized Average Amortized Average
Cost Yield Cost Yield Cost Yield Cost Yield
---- ----- ---- ----- ---- ----- ---- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments and mortgage-backed
securities held to maturity:
Mortgage-backed securities.......... $ 5,540 5.6% $ 21,884 6.7% $ -- --% $ 12,179 7.4%
Federal Home Loan Bank stock........ -- -- -- -- -- -- 3,386 --
United States Agency obligations 350 4.7 14,000 6.0 -- -- -- --
Obligations of State and political
subdivisions...................... 909 6.2 418 6.7 199 6.9 766 10.5
Other bonds......................... 10,009 5.9 3,156 6.3 1,349 7.5 -- --
------- -------- ------- --------
Total investments held to maturity $16,808 $39,458 $1,548 $16,331
======= ======= ====== =======
Securities available for sale:
Mortgage-backed securities.......... $ -- --% $ -- --% $ -- --% $ 15,071 7.4%
United States Treasury
securities........................ 26,186 5.8 25,134 6.0 -- -- -- --
United States agency obligations 300 5.1 299 7.4 45,468 7.2 -- --
Equity securities................... -- -- -- -- -- -- 10 --
Other bonds......................... 6,011 6.1 7,659 6.3 877 6.6 -- --
------- -------- ------- --------
Total securities available for sale $32,497 $33,092 $46,345 $15,081
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
At September 30, 1997
--------------------------------
Total
--------------------------------
Weighted
Amortized Market Average
Cost Value Yield
---- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C>
Investments and mortgage-backed
securities held to maturity:
Mortgage-backed securities.......... $39,603 $ 39,650 6.72%
Federal Home Loan Bank stock........ 3,386 3,386 --
United States Agency obligations 14,350 14,320 5.97
Obligations of State and political
subdivisions...................... 2,292 2,411 7.81
Other bonds......................... 14,514 14,539 6.12
------- --------
Total investments held to maturity $ 74,145 $74,308
======== =======
Securities available for sale:
Mortgage-backed securities.......... $15,071 $ 15,221 7.40%
United States Treasury
securities........................ 51,320 51,444 5.91
United States agency obligations 46,067 46,386 7.14
Equity securities................... 10 10 --
Other bonds......................... 14,547 14,589 6.24
------- --------
Total securities available for sale $127,015 $127,651
======== ========
</TABLE>
66
<PAGE>
Cash and Cash Equivalents. The Bank also had cash and cash equivalents
consisting primarily of cash due from banks and federal funds sold totaling
$20.9 million, and $13.2 million at December 31, 1996 and September 30, 1997,
respectively.
Mortgage-Backed Securities
The Bank has invested in a portfolio of mortgage-backed securities
which are insured or guaranteed by Freddie Mac, the Government National Mortgage
Association ("Ginnie Mae") or Fannie Mae. Mortgage-backed securities increase
the liquidity and the quality of the Bank's assets by virtue of their greater
liquidity compared to individual mortgage loans, the guarantees that back the
securities themselves and their ability to be used to collateralize borrowings
or other obligations of the Bank, including repurchase agreements. In addition,
at September 30, 1997, 20.3% of the Bank's mortgage-backed securities portfolio
consisted of pools of adjustable rate mortgages. Mortgage-backed securities of
this type serve to reduce the interest rate risk associated with changes in
interest rates. Also, 48.2% of the Bank's mortgage-backed securities consist of
five- to seven-year balloon maturities, providing further protection against
interest rate increases.
At September 30, 1997, the Bank's mortgage-backed securities in the
held to maturity category had a carrying value and estimated market value of
$39.6 million. Of the entire $53.8 million portfolio (including mortgage-backed
securities held to maturity and available for sale), $27.4 million was scheduled
to mature in five years or less and $27.3 million was scheduled to mature after
ten years. Due to prepayments of the underlying loan, the actual maturities of
mortgage-backed securities generally are substantially less than the scheduled
maturities. The mortgage-backed securities held to maturity include a valuation
allowance of $169,000 at September 30, 1997. These securities were designated as
available for sale portfolio on January 1, 1994 upon the adoption of SFAS No.
115 and were subsequently transferred to held to maturity on October 1, 1994.
The October 1, 1994 transfer was designed to more accurately reflect the Bank's
then current intent to hold these securities to maturity. The unrealized loss at
the time of the October 1, 1994 transfer is being amortized to equity over the
estimated life of the related mortgage-backed securities.
The $27.4 million of mortgage-backed securities held to maturity which
were scheduled to mature in five years or less at September 30, 1997 qualify for
regulatory liquidity and have fixed interest rates. Of the Bank's total
investment in mortgage-backed securities at September 30, 1997, $38.1 million
consisted of Freddie Mac certificates, $1.5 million consisted of Ginnie Mae
certificates and $15.2 million consisted of Fannie Mae certificates.
Sources of Funds
General. Deposits are the primary source of the Bank's funds for
lending and other investment purposes. In addition to deposits, the Bank derives
funds from loan principal repayments. 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
specific leverage investment programs.
Deposits. The Bank's deposits are attracted principally from within the
Bank's primary market area through the offering of a broad selection of deposit
instruments, money market accounts, regular savings accounts, and term
certificate accounts. 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.
Interest rates paid, maturity terms, service fees and withdrawal
penalties are established by the Bank on a periodic basis. Determination of
rates and terms are predicated on funds acquisition and liquidity requirements,
rates paid by competitors, growth goals and federal regulations. The Bank does
not advertise for deposits outside its primary market area and does not utilize
the services of deposit brokers.
67
<PAGE>
The following table sets forth the amount, percentage of total deposits
and the change in dollar amounts of the various types of deposit accounts
offered by the Bank between the dates indicated.
<TABLE>
<CAPTION>
At At December 31,
September 30, ------------------------------------------------------------------------
1997 1996 1995 1994
-------------------------- -------------------------- ------------------------- --------------
Amount Percent $ Change Amount Percent $ Change Amount Percent $ Change Amount Percent
------ ------- -------- ------ ------- -------- ------ ---------------- --------------
(Dollars in Thousands)
Certificates of deposit:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maturing within 12 months 218,046 44.2% $ 29,302 $188,744 38.4% $ 5,086 $183,658 44.7% $57,884 $125,774 33.3%
Maturing within 13-24 months 47,621 9.6 7,818 39,803 8.2 11,883 27,920 6.7 (8,517) 36,437 9.7
Maturing within 25-36 months 20,474 4.2 176 20,298 4.1 (7,455) 27,753 6.8 (2,341) 30,094 8.0
Maturing beyond 36 months 4,088 0.8 (43,613) 47,701 9.7 25,235 22,466 5.5 (9,747) 32,213 8.5
----- ------ -------- ------ ------ ------ ------- ------ ------ ------- ----
Total certificates of deposit 290,229 58.8 (6,317) 296,546 60.4 34,749 261,797 63.7 37,279 224,518 59.5
--------- ------ -------- ------- ------ -------- ------- ------ ------ ------- ----
Transaction accounts:
NOW......................... 14,955 3.0% (1,476) 16,431 3.3 6,876 9,555 2.3 38 9,517 2.5
Noninterest-bearing demand 27,982 5.7 2,616 25,366 5.2 14,566 10,800 2.6 1,405 9,395 2.5
Passbook statement.......... 95,132 19.3 (9,078) 104,210 21.2 11,464 92,746 22.6 (6,694) 99,440 26.3
Club accounts............... 1,069 0.2 800 269 0.1 50 219 0.1 7 212 0.1
Money market demand deposits 58,394 11.8 13,600 44,794 9.1 11,899 32,895 8.0 1,349 31,546 8.3
Other....................... 5,573 1.2 1,943 3,630 0.7 872 2,758 0.7 (173) 2,931 0.8
------- ---- ------- ------- ----- ------ ------ ---- ------- ------- ----
Total transaction accounts 203,105 41.2 8,405 194,700 39.6 45,727 148,973 36.3 (4,068) 153,041 40.5
-------- ----- ------- ------ ------ ------- ------- ------ -------
Total deposits.......... $493,334 100.0% $ 2,088 $491,246 100.0% $80,476 $410,770 100.0% $33,211 $377,559 100.0%
======== ===== ======= ======== ===== ======= ======== ===== ======= ======== =====
</TABLE>
The following table shows the interest rate and maturity information
for the Bank's certificates of deposit at September 30, 1997.
<TABLE>
<CAPTION>
Over 1 Over 2
1 Year Through Through Over 3
Interest Rate or Less 2 Years 3 Years Years Total
--------- --------- --------- --------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C>
3.01-4%........................... $ 3,624 $ 46 $ -- $ --$
3,670
4.01-5%............................. 40,463 3,366 5 7 43,841
5.01-6%............................. 166,700 42,069 7,107 4,053 219,929
6% and above........................ 7,259 2,140 13,362 28 22,789
-------- ------- -------- -------- --------
Total............................. $218,046 $47,621 $ 20,474 $ 4,088 $290,229
======== ======= ======== ======== ========
</TABLE>
The following table sets forth the scheduled maturities of the Bank's
certificates of deposit having principal amounts of $100,000 or more at
September 30, 1997.
Certificates
Maturity Period of Deposit
(In Thousands)
Three months or less...................... $ 7,183
Over three through six months............. 6,576
Over six through twelve months............ 6,802
Over twelve months........................ 6,137
----------
Total................................... $ 26,698
==========
68
<PAGE>
The following table sets forth the savings activities of the Bank
during the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
September 30, ------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Net decrease before
interest credited and assumption of liabilities ........ $ (10,460) $ (10,642) $ (17,773) $ (19,132)
Deposit liabilities acquired.............................. -- 73,177 33,974 --
Interest credited......................................... 12,548 17,941 17,010 12,851
--------- --------- --------- ---------
Net increase (decrease) in deposits....................... $ 2,088 $ 80,476 $ 33,211 $ (6,281)
========= ========= ========= ==========
</TABLE>
The following table sets out the average balances in the main
categories of the Bank's deposit base, for the periods indicated.
<TABLE>
<CAPTION>
December 31,
September 30, ---------------------------------------------------------
1997 1996 1995 1994
------------------ ----------------- ------------------- -------------------
Average Average Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate Balance Rate
------- ---- ------- ---- ------- ---- ------- ----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average certificates of deposit........... $289,656 5.35% $271,362 5.18% $251,932 5.16% $220,873 4.04%
-------- -------- -------- --------
Interest-bearing savings deposits......... 99,857 2.20 94,569 2.54 112,269 2.59 106,435 2.50
Money market accounts..................... 50,134 3.29 33,841 3.54 28,162 3.09 32,466 3.26
Demand deposit accounts................... 27,387 1.23 16,971 1.74 12,479 1.85 12,221 1.50
Other deposit accounts.................... 19,476 0.00 15,195 -- 11,303 -- 9,143 --
------- ------- ------ -------
Average core deposits..................... 196,854 2.12 160,576 2.43 164,213 2.44 160,265 2.44
------- ------- ------- -------
Total average deposits.................. $486,510 4.05% $431,938 4.15% $416,145 4.09% $381,138 3.37%
======== ======== ======== ========
</TABLE>
Borrowings. The Bank may obtain advances from the FHLB of New York upon
the security of the common stock it owns in that bank and certain of its
residential mortgage loans, provided certain standards related to
creditworthiness have been met. 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 increased lending and investment.
In January of 1997, the Board of Directors approved a borrowing agreement with
Morgan Stanley & Co., Inc. Pursuant to the borrowing agreement, the Bank
borrowed $30.0 million at an interest rate of approximately 6.0% and for a term
of three years, and purchased a FNMA security that yields approximately 7.2%,
matures approximately ten years after the date of the purchase and is callable
after three years. Management may periodically recommend to the Board similar
borrowing opportunities.
Competition
The Bank faces strong competition both in attracting deposits and
making real estate and other loans. Its most direct competition for deposits has
historically come from other savings institutions, commercial banks and credit
unions located in central New Jersey, including many large financial
institutions which have greater financial and marketing resources available to
them. The Bank has eight branches in Mercer County, four in Burlington County
and two in Ocean County. In addition, the Bank has faced additional competition
for investors' funds from short-term money market securities and corporate
stocks and bonds. The ability of the Bank to attract and retain savings deposits
depends on its ability to generally provide a rate of return, liquidity and risk
comparable to that offered by competing investment opportunities.
The Bank competes for loans principally from other savings
institutions, commercial banks, and mortgage banking companies. The Bank
competes for loans principally through the interest rates and loan fees it
charges and the efficiency and quality of services it provides borrowers. TSBF
also markets asset-based lending products within the same geographic areas.
Competition may increase as a result of the continuing reduction of restrictions
on the interstate operations of financial institutions.
69
<PAGE>
As of June 30, 1996, 27 commercial banks, 69 credit unions, and 59
savings institutions maintained 568 branch offices in the Bank's market area.
The Bank encounters strong competition both in attracting deposits and in
originating real estate and other loans. Its most direct competition for
deposits has historically come from commercial and savings banks, other savings
associations, and credit unions in its market area. The Bank expects continued
strong competition from such financial institutions in the foreseeable future,
including increased competition from "super-regional" banks entering the market
by purchasing large banks and savings banks, as well as institutions marketing
"non-traditional" investments. Many of these regional institutions have greater
financial and marketing resources available to them than does the Bank. As of
June 30, 1996, the Bank held approximately 1.4% of all deposits held by
commercial banks, credit unions, and savings associations in the Bank's market
area. The Bank competes for savings deposits by offering depositors a high level
of personal service and a wide range of competitively priced financial services.
The competition for real estate and other loans comes principally from
commercial banks, other savings institutions, and mortgage banking companies.
The Bank is one of a large number of institutions that compete for real estate
loans in the Bank's market area. This competition for loans has increased
substantially in recent years. Many of the Bank's competitors have substantially
greater financial and marketing resources available to them than does the Bank.
The Bank competes for real estate loans primarily through the interest rates and
loan fees it charges and advertising.
Properties
At September 30, 1997, the Bank conducted its business from its
corporate center in Lawrenceville, New Jersey, 14 full service branch offices
located in Mercer, Burlington and Ocean Counties, New Jersey and a trust office
in Ocean County, New Jersey. The aggregate net book value of the Bank's premises
and equipment was $6.8 million as of September 30, 1997. The following table
sets forth certain information regarding such offices at September 30, 1997.
Year Leased Lease Expiration Description/Address Opened Owned Date
<TABLE>
<CAPTION>
Description/Address Year Opened Leased/Owned Lease Expiration Date
- ------------------- ----------- ------------ ---------------------
<S> <C> <C> <C>
Administrative Office
134 Franklin Corner Road 1993 Owned
Lawrenceville, New Jersey
Branch Offices
Trenton Branch 1994 Leased July 31, 1999
33 West State Street Three 5-year options
Trenton, New Jersey
Ewing Branch 1976 Leased August 31, 2006
1980 North Olden Avenue One 10-year option
Trenton, New Jersey
Hamilton Branch 1977 Leased April 30, 2007
2465 South Broad Street One 10-year option
Trenton, New Jersey
Robbinsville Branch 1980 Owned
2371 Route 33 & 526
Robbinsville, New Jersey
Lawrenceville Branch 1990 Leased January 31, 2000
2495 Brunswick Avenue Two 5-year options
Lawrenceville, New Jersey
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Pennington Branch 1991 Owned
2583 Pennington Road
Pennington, New Jersey
Burlington Branch 1983 Owned
332 High Street
Burlington, New Jersey
Mt. Holly Branch 1989 Leased December 20, 2004
501 High Street Three 5-year options
Mt. Holly, New Jersey
Mercerville Branch 1991 Leased March 31, 2001
1750 Whitehorse-Mercerville Road One 5-year option
Mercerville, New Jersey
Leisure Village East 1995 Leased June 30, 2005
1 Dumbarton Drive Two 5-year options
Lakewood, NJ 08701
West Windsor Branch 1996 Leased August 31, 2006
1349 Princeton-Highstown Road Three 5-year options
Cranbury, NJ 08512
Burlington Branch 1988 Owned
1660 Beverly Road
Burlington, NJ 08016
Delanco Branch 1989 Leased August 31, 1999
Burlington Avenue & Coopertown Road Three 5-year options
Delanco, NJ 08075
Leisure Village West Branch 1997 Leased February 28, 2007
3--C Buckingham Drive Two 5-year options
Lakehurst, NJ 08733
Manchester Trust 1997 Leased May 31, 2000
2002 Route 70
Lakehurst, NJ 08733
</TABLE>
Legal Proceedings
There are various claims and lawsuits in which the Bank is
periodically involved incident to the Bank's business. In the opinion of
management, no material loss is expected from any of such pending claims or
lawsuits.
Personnel
The Bank and its subsidiaries, TSBF and Manchester Trust had 128
full-time employees and 27 part-time employees at September 30, 1997. None of
these employees is party to a collective bargaining agreement, and the Bank
believes that it enjoys good relations with its personnel.
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REGULATION
As a federally chartered BIF-insured savings association, the Bank is
subject to examination, supervision and extensive regulation by the OTS and the
FDIC. The Bank is a member of the Federal Home Loan Bank ("FHLB") system. This
regulation and supervision establishes a comprehensive framework of activities
in which an institution can engage and is intended primarily for the protection
of the insurance fund and depositors. The Bank also is subject to regulation by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") governing reserves to be maintained against deposits and certain other
matters. The OTS examines the Bank and prepares reports for the consideration of
the Bank's Board of Directors on any deficiencies that they may find in the
Bank's operations. The FDIC also examines the Bank in its role as the
administrator of the BIF. The Bank's relationship with its depositors and
borrowers also is regulated to a great extent by both federal and state laws
especially in such matters as the ownership of savings accounts and the form and
content of the Bank's mortgage documents. Any change in such regulation, whether
by the FDIC, OTS, or Congress, could have a material adverse impact on the
Holding Company and the Bank and their operations.
Federal Regulation of Savings Institutions
Business Activities. The activities of savings institutions are
governed by the Home Owners' Loan Act, as amended (the "HOLA") and, in certain
respects, the Federal Deposit Insurance Act (the "FDI Act") and the regulations
issued by the agencies to implement these statutes. These laws and regulations
delineate the nature and extent of the activities in which savings association
may engage. The description of statutory provisions and regulations applicable
to savings associations set forth herein does not purport to be a complete
description of such statutes and regulations and their effect on the Bank.
Loans to One Borrower. Under the HOLA, savings institutions are
generally subject to the national bank limits on loans to a single or related
group of borrowers. Generally, this limit is 15% of the Bank's unimpaired
capital and surplus , and an additional 10% of unimpaired capital and surplus if
such loan is fully secured by readily-marketable collateral, which is defined to
include certain financial instruments and bullion. The OTS by regulation has
amended the loans to one borrower rule to permit savings associations meeting
certain requirements to extend loans to one borrower in additional amounts under
circumstances limited essentially to loans to develop or complete residential
housing units.
Qualified Thrift Lender Test. In general, savings associations are
required to maintain at least 65% of their portfolio assets in certain qualified
thrift investments (which consist primarily of loans and other investments
related to residential real estate and certain other assets). A savings
association that fails the qualified thrift lender test is subject to
substantial restrictions on activities and to other significant penalties.
Recent legislation permits a savings association to qualify as a qualified
thrift lender not only by maintaining 65% of portfolio assets in qualified
thrift investments (the "QTL test") but also, in the alternative, by qualifying
under the Code as a "domestic building and loan association." The Bank qualifies
as a domestic building and loan association as defined in the Code.
Recent legislation also expands the QTL test to provide savings
associations with greater authority to lend and diversify their portfolios. In
particular, credit card and education loans may now be made by savings
associations without regard to any percentage-of-assets limit, and commercial
loans may be made in an amount up to 10 percent of total assets, plus an
additional 10 percent for small business loans. Loans for personal, family and
household purposes (other than credit card, small business and educational
loans) are now included without limit with other assets that, in the aggregate,
may account for up to 20% of total assets. At September 30, 1997, under the
expanded QTL test, approximately 73.6% of the Bank's portfolio assets were
qualified thrift investments.
Limitation on Capital Distributions. OTS regulations impose limitations
upon all capital distributions by savings institutions, such as cash dividends,
payments to repurchase or otherwise acquire its shares, payments to stockholders
of another institution in a cash-out merger and other distributions charged
against capital. The rule establishes three tiers of institutions, which are
based primarily on an institution's capital level. An institution, such as the
Bank, that exceeds all fully phased-in capital requirements before and after a
proposed capital distribution ("Tier 1 Association") and has not been advised by
the OTS that it is in need of more than normal supervision, could,
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after prior notice but without the approval of the OTS, make capital
distributions during a calendar year equal to the greater of: (i) 100% of its
net earnings to date during the calendar year plus the amount that would reduce
by one-half its "surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar year; or (ii)
75% of its net earnings for the previous four quarters; provided that the
institution would not be undercapitalized, as that term is defined in the OTS
Prompt Corrective Action regulations, following the capital distribution. Any
additional capital distributions would require prior regulatory approval. In the
event the Bank's capital fell below its fully-phased in requirement or the OTS
notified it that it was in need of more than normal s supervision, the Bank's
ability to make capital distributions could be restricted. In addition, the OTS
could prohibit a proposed capital distribution by any institution, which would
otherwise be permitted by the regulation, if the OTS determines that such
distribution would constitute an unsafe or unsound practice.
Liquidity. The Bank is required to maintain an average daily balance of
specified liquid assets equal to a monthly average of not less than a specified
percentage (currently 4%) of its net withdrawable deposit accounts plus
borrowings payable in one year or less. Monetary penalties may be imposed for
failure to meet these liquidity requirements. The Bank's average liquidity ratio
for the quarter ended September 30, 1997 was 28.8%, which exceeded the then
applicable requirements. The Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.
Community Reinvestment Act and Fair Lending Laws. Savings association
share a responsibility under the Community Reinvestment Act ("CRA") and related
regulations of the OTS to help meet the credit needs of their communities,
including low- and moderate-income neighborhoods. In addition, the Equal Credit
Opportunity Act and the Fair Housing Act (together, the "Fair Lending Laws")
prohibit lenders from discriminating in their lending practices on the basis of
characteristics specified in those statutes. An institution's failure to comply
with the provisions of CRA could, at a minimum, result in regulatory
restrictions on its activities, and failure to complete with the Fair Lending
Laws could result in enforcement actions by the OTS, as well as other federal
regulatory agencies and the Department of Justice. The Bank received an
outstanding CRA rating under the current CRA regulations in its most recent
federal examination by the OTS.
Transactions with Related Parties. The Bank's authority to engage in
transactions with related parties or "affiliates" (i.e., any company that
controls or is under common control with an institution, including the Holding
Company and any non-savings institution subsidiaries) or to make loans to
certain insiders, is limited by Sections 23A and 23B of the Federal Reserve Act
("FRA"). Section 23A limits the aggregate amount of transactions with any
individual affiliate to 10% of the capital and surplus of the savings
institution and also limits the aggregate amount of transactions with all
affiliates to 20% of the savings institution's capital and surplus. Certain
transactions with affiliates are required to be secured by collateral in an
amount and of a type described in Section 23A and the purchase of low quality
assets from affiliates is generally prohibited. Section 23B provides that
certain transactions with affiliates, including loans and asset purchases, must
be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies.
Enforcement. Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring
enforcement action against all "institution-related parties," including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors of the institutions, receivership, conservatorship or the termination
of deposit insurance. Civil penalties cover a wide range of violations and
actions, and range up to $25,000 per day, unless a finding of reckless disregard
is made, in which case penalties may be as high as $1 million per day. Under the
FDI Act, the FDIC has the authority to recommend to the Director of OTS that
enforcement action be taken with respect to a particular savings institution. If
action is not taken by the Director, the FDIC has authority to take such action
under certain circumstances.
Standards for Safety and Soundness. The FDI Act requires each federal
banking agency to prescribe for all insured depository institutions standards
relating to, among other things, internal controls, information systems and
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, and compensation
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fees and benefits and such other operational and managerial standards as the
agency deems appropriate. The federal banking agencies adopted a final
regulation and Interagency Guidelines Prescribing Standards for Safety and
Soundness ("Guidelines") to implement the safety and soundness standards
required under the FDI Act. The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. The
Guidelines address internal controls and information systems; internal audit
system; credit underwriting; loan documentation; interest rate risk exposure;
asset growth; and compensation, fees and benefits. If the appropriate federal
banking agency determines that an institution fails to meet any standard
prescribed by the Guidelines, the agency may require the institution to submit
to the agency an acceptable plan to achieve compliance with the standard, as
required by the FDI Act. The final regulations establish deadlines for the
submission and review of such safety and soundness compliance plans.
Capital Requirements. The OTS capital regulations require savings
institutions to meet three capital standards: a 1.5% tangible capital standard,
a 3% leverage (core capital) ratio and an 8% risk based capital standard. Core
capital is defined as common stockholder's equity (including retained earnings),
certain non-cumulative perpetual preferred stock and related surplus, minority
interests in equity accounts of consolidated subsidiaries less intangibles other
than certain mortgage servicing rights ("MSRs") and credit card relationships.
The OTS regulations require that, in meeting the leverage ratio, tangible and
risk-based capital standards institutions generally must deduct investments in
and loans to subsidiaries engaged in activities not permissible for a national
bank. In addition, the OTS prompt corrective action regulation provides that a
savings institution that has a leverage capital ratio of less than 4% (3% for
institutions receiving the highest CAMEL examination rating) will be deemed to
be "undercapitalized" and may be subject to certain restrictions. See "--Prompt
Corrective Regulatory Action."
The risk-based capital standard for savings institutions requires the
maintenance of total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of 8%. In determining the amount of
risk-weighted assets, all assets, including certain off-balance sheet assets,
are multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
The components of core capital are equivalent to those discussed earlier under
the 3% leverage standard. The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred stock,
mandatory convertible securities, subordinated debt and intermediate preferred
stock and, within specified limits, the allowance for loan and lease losses.
Overall, the amount of supplementary capital included as part of total capital
cannot exceed 100% of core capital.
The OTS has incorporated an interest rate risk component into its
regulatory capital rule. The final interest rate risk rule also adjusts the
risk-weighting for certain mortgage derivative securities. Under the rule,
savings associations with "above normal" interest rate risk exposure would be
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. A savings association's interest that risk is
measured by the decline in the net portfolio value of its assets (i.e., the
difference between incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) that would result from a
hypothetical 200-basis point increase or decrease in market interest rates
divided by the estimated economic value of the association's assets, as
calculated in accordance with guidelines set forth by the OTS. A savings
association whose measured interest rate risk exposure exceeds 2% must deduct an
interest rate component in calculating its total capital under the risk-based
capital rule. The interest rate risk component is an amount equal to one-half of
the difference between the institution's measured interest rate risk and 2%,
multiplied by the estimated economic value of the association's assets. That
dollar amount is deducted from an association's total capital in calculating
compliance with its risk-based capital requirement. Under the rule, there is a
two quarter lag between the reporting date of an institution's financial data
and the effective date for the new capital requirement based on that data. A
savings association with assets of less than $300 million and a risk-based
capital ratio in excess of 12% is not subject to the interest rate risk
component, unless the OTS determines otherwise. The rule also provides that the
Director of the OTS may waive or defer an association's interest rate risk
component on a case-by-case basis. The OTS has postponed the date that the
component will first be deducted from an institution's total capital to provide
it with an opportunity to review the interest rate risk approaches taken by the
other federal banking agencies.
At September 1997, the Bank met each of its capital requirements, in
each case on a fully phased-in basis. See "Historical and Pro Forma Capital
Compliance" for a table which sets forth in terms of dollars and percentages
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the OTS tangible, leverage and risk-based capital requirements, the Bank's
historical amounts and percentages at September 30, 1997, and pro forma amounts
and percentages based upon the issuance of the shares within the Offering Range
and assuming that a portion of the net proceeds are retained by the Company.
Thrift Charter. Congress has been considering legislation in various
forms that would require federal thrifts, such as the Bank, to convert their
charters to national or state bank charters. Recent legislation required the
Treasury Department to prepare for Congress a comprehensive study on development
of a common charter for federal savings association and commercial banks; and,
in the event that the thrift charter was eliminated by January 1, 1999, would
require the merger of the BIF and the SAIF into a single deposit insurance fund
on that date. The Bank cannot determine whether, or in what form, such
legislation may eventually be enacted and there can be no assurance that any
legislation that is enacted would not adversely affect the Bank and the Company.
Prompt Corrective Regulatory Action
Under the OTS Prompt Corrective Action regulations, the OTS is required
to take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Generally, a savings institution that has total risk-based capital of less than
8.0% or a leverage ratio or a Tier 1 core capital ratio that is less than 4.0%
is considered to be undercapitalized. A savings institution that has the total
risk-based capital less than 6.0%, a Tier 1 core risk-based capital ratio of
less than 3.0% or a leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized" and a savings institution that has a tangible
capital to assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." Subject to a narrow exception, the banking regulator is
required to appoint a receiver or conservator for an institution that is
"critically undercapitalized." The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date an
institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." In addition, numerous
mandatory supervisory actions become immediately applicable to the institution,
including, but not limited to, restrictions on growth, investment activities,
capital distributions, and affiliate transactions. The OTS could also take any
one of a number of discretionary supervisory actions, including the issuance of
a capital directive and the replacement of senior executive officers and
directors.
As of September 30, 1997, the Bank was considered "well capitalized."
See "Historical and Pro Forma Capital Compliance."
Insurance of Deposit Accounts
The FDIC has adopted a risk-based insurance assessment system. The FDIC
assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, consisting of (1) well capitalized, (2)
adequately capitalized or (3) undercapitalized, and one of three supervisory
subcategories within each capital group. The supervisory subgroup to which an
institution is assigned is based on a supervisory evaluation provided to the
FDIC by the institution's primary federal regulator and information which the
FDIC determines to be relevant to the institution's financial condition and the
risk posed to the deposit insurance funds. An institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned. The FDIC is authorized to raise the assessment rates in certain
circumstances. The FDIC has exercised this authority several times in the past
and may raise insurance premiums in the future. If such e action is taken by the
FDIC, it could have an adverse effect on the earnings of the Bank.
Federal Home Loan Bank System
The Bank is a member of the FHLB System, which consists of 12 regional
FHLBs. The FHLBs provide a central credit facility primarily for member
institutions. The Bank, as a member of the FHLB-New York, is required to acquire
and hold shares of capital stock in that FHLB in an amount at least equal to 1%
of the aggregate principal amount of its unpaid residential mortgage loans and
similar obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB, whichever is greater. As of September 30, 1997, the
Bank was in compliance with this requirement.
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The FHLBs are required to provide funds for the resolution of insolvent
thrifts and to contribute funds for affordable housing programs. These
requirements could reduce the amount of dividends that the FHLBs pay to their
members and could also result in the FHLBs imposing a higher rate of interest on
advances to their members.
Federal Reserve System
The Federal Reserve Board regulations require savings institutions to
maintain non-interest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally require that reserves be maintained against aggregate
transaction accounts as follows: for accounts aggregating $49.3 million or less
(subject to adjustment by the Federal Reserve Board) the reserve requirement is
3%; and for accounts greater than $49.3 million, the reserve requirement is $1.5
million plus 10% (subject to adjustment by the Federal Reserve Board between 8%
and 14%) of the portion of total transaction accounts in excess of $49.3
million. The first $4.4 million of otherwise reservable balances (subject to
adjustments by the Federal Reserve Board) are exempted from the reserve
requirements. The Bank is in compliance with the foregoing requirements. The
balances maintained to meet the reserve requirements imposed by the Federal
Reserve Board may be used to satisfy liquidity requirements imposed by the OTS.
Holding Company Regulation
The Company. The Company will be a non-diversified unitary savings and
loan holding company within the meaning of the HOLA. As such, the Company will
be required to register with the OTS and will be subject to OTS regulations,
examinations, supervision and reporting requirements. In addition, the OTS has
enforcement authority over the Company and its non-savings institution
subsidiaries. Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings institution. The Bank must notify the OTS 30 days before declaring any
dividend to the Company.
As a unitary savings and loan holding company, the Company generally
will not be restricted under existing laws as to the types of business
activities in which it may engage, provided that the Bank continues to be a QTL.
See "--Federal Regulation of Savings Institutions--Qualified Thrift Lender Test"
for a discussion of the QTL requirements. Upon any non-supervisory acquisition
by the Company of another savings association, the Company would become a
multiple savings and loan holding company (if the acquired institution is held
as a separate subsidiary) and would be subject to extensive limitations on the
types of business activities in which it could engage. The HOLA limits the
activities of a multiple savings and loan holding company and its non-insured
institution subsidiaries primarily to activities permissible for bank holding
companies under Section 4(c)(8) of the Bank Holding Company ("BHC") Act, subject
to the prior approval of the OTS, and to other activities authorized by OTS
regulation. Recently proposed legislation would treat all savings and loan
holding companies as bank holding companies and limit the activities of such
companies to those permissible for bank holding companies. See "Risk
Factors--Regulatory Oversight and Possible Legislation."
The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring another savings
institution or holding company thereof, without prior written approval of the
OTS. It also prohibits the acquisition or retention of, with certain exceptions,
more than 5% of a non-subsidiary savings institution, a non-subsidiary holding
company, or a non-subsidiary company engaged in activities other than those
permitted by the HOLA; or acquiring or retaining control of an institution that
is not federally insured. In evaluating applications by holding companies to
acquire savings institutions, the OTS must consider the financial and managerial
resources, future prospects of the company and institution involved, the effect
of the acquisition on the risk to the insurance fund, the convenience and needs
of the community and competitive factors.
The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, subject to two exceptions: (i) the approval of
interstate supervisory acquisitions by savings and loan holding companies, and
(ii) the acquisition of a savings institution in another state if the laws of
the state of the target savings institution specifically permit such
acquisitions. The states vary in the extent to which they permit interstate
savings and loan holding company acquisitions.
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The Mid-Tier Holding Company and the Mutual Holding Company. The Mutual
Holding Company and the Mid-Tier Holding Company are non-diversified mutual
savings and loan holding companies within the meaning of the HOLA, as amended.
As such, the Mutual Holding Company and the Mid-Tier Holding Company are
registered with the OTS and are subject to OTS regulations, examinations,
supervision and reporting requirements. In addition, the OTS has enforcement
authority over the Mutual Holding Company and the Mid-Tier Holding Company and
any non-savings institution subsidiaries. Among other things, this authority
permits the OTS to restrict or prohibit activities that are determined to be a
serious risk to the subsidiary savings institution.
Pursuant to Section 10(o) of the HOLA and OTS regulations and policy, a
mutual holding company and a federally chartered mid-tier holding company may
engage in the following activities: (i) investing in the stock of a savings
association; (ii) acquiring a mutual association through the merger of such
association into a savings association subsidiary of such holding company or an
interim savings association subsidiary of such holding company; (iii) merging
with or acquiring another holding company; one of whose subsidiaries is a
savings association; (iv) investing in a corporation, the capital stock of which
is available for purchase by a savings association under federal law or under
the law of any state where the subsidiary savings association or associations
share their home offices; (v) furnishing or performing management services for a
savings association subsidiary of such company; (vi) holding, managing or
liquidating assets owned or acquired from a savings subsidiary of such company;
(vii) holding or managing properties used or occupied by a savings association
subsidiary of such company properties used or occupied by a savings association
subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix)
any other activity (A) that the Federal Reserve Board, by regulation, has
determined to be permissible for bank holding companies under Section 4(c) of
the Bank Holding Company Act of 1956, unless the Director, by regulation,
prohibits or limits any such activity for savings and loan holding companies; or
(B) in which multiple savings and loan holding companies were authorized (by
regulation) to directly engage on March 5, 1987; and (x) purchasing, holding, or
disposing of stock acquired in connection with a qualified stock issuance if the
purchase of such stock by such savings and loan holding company is approved by
the Director. If a mutual holding company acquires or merges with another
holding company, the holding company acquired or the holding company resulting
from such merger or acquisition may only invest in assets and engage in
activities listed in (i) through (x) above, and has a period of two years to
cease any non-conforming activities and divest of any non-conforming
investments.
The HOLA prohibits a savings and loan holding company, including the
Mid-Tier Holding Company and the Mutual Holding Company, directly or indirectly,
or through one or more subsidiaries, from acquiring another savings institution
or holding company thereof, without prior written approval of the OTS. It also
prohibits the acquisition or retention of, with certain exceptions, more than 5%
of a non-subsidiary savings institution, a non-subsidiary holding company, or a
non-subsidiary company engaged in activities other than those permitted by the
HOLA; or acquiring or retaining control of an institution that is not federally
insured. In evaluating applications by holding companies to acquire savings
institutions, the OTS must consider the financial and managerial resources,
future prospects of the company and institution involved, the effect of the
acquisition on the risk to the insurance fund, the convenience and needs of the
community and competitive factors.
The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, subject to two exceptions: (i) the approval of
interstate supervisory acquisitions by savings and loan holding companies, and
(ii) the acquisition of a savings institution in another state if the laws of
the state of the target savings institution specifically permit such
acquisitions. The states vary in the extent to which they permit interstate
savings and loan holding company acquisitions.
In addition, OTS regulations require the Mutual Holding Company to
notify the OTS of any proposed waiver of its right to receive dividends. It is
the OTS' recent practice to review dividend waiver notices on a case-by-case
basis, and, in general, not object to any such waiver if: (i) the mutual holding
company's board of directors determines that such waiver is consistent with such
directors' fiduciary duties to the mutual holding company's members; (ii) for as
long as the savings association subsidiary is controlled by the mutual holding
company, the dollar amount of dividends waived by the mutual holding company are
considered as a restriction on the retained earnings of the savings association,
which restriction, if material, is disclosed in the public financial statements
of the savings association as a note to the financial statements; (iii) the
amount of any dividend waived by the mutual holding company is available for
declaration as a dividend solely to the mutual holding company, and, in
accordance with SFAS 5, where the
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savings association determines that the payment of such dividend to the mutual
holding company is probable, an appropriate dollar amount is recorded as a
liability; (iv) the amount of any waived dividend is considered as having been
paid by the savings association in evaluating any proposed dividend under OTS
capital distribution regulations; and (v) in the event the mutual holding
company converts to stock form, the appraisal submitted to the OTS in connection
with the conversion application takes into account the aggregate amount of the
dividends waived by the mutual holding company.
Federal Securities Laws
The Company has filed with the SEC a registration statement under the
Securities Act of 1933, as amended ("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 the
Exchange Act. The Company will then be subject to the information, proxy
solicitation, insider trading restrictions and 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 the Common Stock purchased by persons who are not affiliates of the Company
may be resold 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. Provision may be made in the
future by the Company to permit affiliates to have their shares registered for
sale under the Securities Act under certain circumstances.
TAXATION
Federal Income Taxes
General. The Mid-Tier Holding Company and the Bank are, and the Company
will be subject to federal income taxation in the same general manner as other
corporations, with some exceptions discussed below. The following discussion of
federal taxation is intended only to summarize certain pertinent federal income
tax matters and is not a comprehensive description of the tax rules applicable
to the Bank.
Method of Accounting. For federal income tax purposes, the Bank
currently reports its income and expenses on the accrual method of accounting
and uses a tax year ending December 31 for filing its federal income tax
returns. The Small Business Protection Act of 1996 (the "1996 Act") eliminated
the use of the reserve method of accounting for bad debt reserves by savings
institutions, effective for taxable years beginning after 1995.
Bad Debt Reserves. Prior to the 1996 Act, the Bank was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in arriving
at the Bank's taxable income. As a result of the 1996 Act, the Bank must use the
specific charge off method in computing its bad debt deduction beginning with
its 1996 Federal tax return. In addition, the federal legislation requires the
recapture (over a six year period) of the excess of tax bad debt reserves at
December 31, 1995 over those established as of December 31, 1987. The amount of
such reserve subject to recapture as of September 30, 1997, was approximately
$2.5 million
Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable
income should the Bank fail to meet certain thrift asset and definitional tests.
New federal legislation eliminated these thrift related recapture rules.
However, under current law, pre-1988 reserves remain subject to recapture should
the Bank make certain non-dividend distributions or cease to maintain a 8 bank
charter.
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At September 30, 1997, the Bank's total federal pre-1988 reserve was
approximately $3.5 million. This reserve reflects the cumulative effects of
federal tax deductions by the Bank for which no Federal income tax provision has
been made.
Minimum Tax. The Code imposes an alternative minimum tax ("AMT") at a
rate of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable to the
extent such AMTI is in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative minimum tax may
be used as credits against regular tax liabilities in future years. The Bank has
not been subject to the alternative minimum tax and has no such amounts
available as credits for carryover.
Net Operating Loss Carryovers. A financial institution may carry back
net operating losses to the preceding two taxable years and forward to the
succeeding 20 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At September 30, 1997, the Bank had no net
operating loss carryforwards for federal income tax purposes.
Corporate Dividends-Received Deduction. The Company may exclude from
its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. 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 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.
The Bank's federal tax return has not been audited by the Internal
Revenue Service for any of the last ten years.
State and Local Taxation
State of New Jersey. The Bank files New Jersey income tax returns. For
New Jersey income tax purposes, savings institutions are presented taxed at a
rate equal to 3% of taxable income. For this purpose, "taxable income" generally
means federal taxable income, subject to certain adjustments (including the
addition of net interest income on state and municipal obligations). The Bank is
not currently under audit with respect to its New Jersey income tax returns.
The Company will be required to file a New Jersey income tax return
because it will be doing business in New Jersey. For New Jersey tax purposes,
regular corporations are presently taxed at a rate equal to 9% of taxable
income. For this purpose, "taxable income" generally means Federal taxable
income subject to certain adjustments (including addition of interest income on
state and municipal obligation). However, if the Company meets certain
requirements, it may be eligible to elect to be taxed as a New Jersey Investment
Company at a tax rate presently equal to 2.25% (25% of 9%) of taxable income.
Delaware Taxation. As a Delaware holding company not earning income in
Delaware, the Company is exempt from Delaware corporate income tax but is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware.
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<PAGE>
MANAGEMENT OF THE COMPANY
The Boards of Directors of the Company and the Mid-Tier Holding Company
are divided into three classes and are elected by the stockholders of the
Mid-Tier Holding Company and the Company, respectively, for staggered three year
terms, or until their successors are elected and qualified. One class of
directors, consisting of directors Breithaupt, Longstreth, Stokes and Truesdell
have terms of office expiring in 1998; a second class, consisting of directors
Pruitt, Reinhard and Trainer have terms of office expiring in 1999; and a third
class, consisting of director Sill has a term of office expiring in 2000. Their
names and biographical information are set forth under "Management of the
Bank--Directors."
The following individuals hold positions as executive officers of the
Company and the Mid-Tier Holding Company, or its subsidiary TSBusiness Finance,
as is set forth below opposite their names.
Name Position With the Company, the
Mid-Tier Holding Company of TS
Business Finance
Wendell T. Breithaupt........... Director, President and Chief
Executive Officer
Leo J. Bellarmino............... Executive Vice President Officer
Richard L. Gallaudet............ Vice President
Dean H. Lippincott.............. Vice President
Robert Russo.................... Vice President and Treasurer
Robert C. Hollenbeck............ Vice President and Corporate Secretary
Frank Sannella, Jr.............. President and Chief Executive Officer,
TSBusiness Finance
The executive officers of the Mid-Tier Holding Company and the Company
are elected annually and hold office until their respective successors have been
elected and qualified or until death, resignation or removal by the Board of
Directors.
Since the formation of the Mid-Tier Holding Company and the Company,
none of the executive officers, directors or other personnel has received
remuneration from the Mid-Tier Holding Company or the Company. Information
concerning the principal occupations, employment and compensation of the
directors and officers of the Mid-Tier Holding Company and the Company during
the past five years is set forth under "Management of the Bank."
MANAGEMENT OF THE BANK
Directors
The Bank's Board of Directors is composed of eight members. Directors
of the Bank are generally elected to serve for a three year period or until
their respective successors shall have been elected and shall qualify. The
following table sets forth certain information regarding the composition of the
Bank's Board of Directors as of September 30, 1997, including the terms of
office of Board members.
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<PAGE>
<TABLE>
<CAPTION>
Positions
Held in the Director Current Term
Name Age Bank Since (1) to Expire
---- --- ------------ --------- ---------
<S> <C> <C> <C> <C>
John B. Sill, Jr. 75 Chairman 1977 2000
Wendell T. Breithaupt 64 Director, President and 1979 1998
Chief Executive Officer
Peter S. Longstreth 53 Director 1992 1998
George A. Pruitt 51 Director 1991 1999
George W. Reinhard 65 Director 1983 1999
Charles E. Stokes, III 67 Director 1978 1998
Raymond E. Trainer 50 Director 1986 1999
Miles W. Truesdell, Jr. 54 Director 1992 1998
</TABLE>
(1) Reflects initial appointment to the Board of Directors of the Bank's mutual
predecessor.
Executive Officers Who Are Not Directors
The following table sets forth information regarding the executive
officers of the Bank who are not also directors.
<TABLE>
<CAPTION>
Positions
Held in the
Name Age Bank
---- --- --------
<S> <C> <C>
Leo J. Bellarmino 49 Executive Vice President
Richard L. Gallaudet 53 Vice President and Senior Lending Officer
Dean H. Lippincott 45 Vice President
Robert Russo 43 Vice President and Treasurer
Robert C. Hollenbeck 52 Vice President and Corporate Secretary
Frank Sannella, Jr. 60 President and Chief Executive Officer, TS Business Finance
</TABLE>
The principal occupation during the past five years of each director
and executive officer of the Bank is set forth below. All directors have held
their present positions for five years unless otherwise stated.
John B. Sill, Jr. is President of Ivins & Taylor, Inc., funeral
directors located in Trenton, New Jersey.
Wendell T. Breithaupt is President and Chief Executive Officer of the
Bank and serves also as a Director. He has served as President since 1981 and as
Chief Executive Officer since 1982. He has been a Director since 1979. He is a
Director, Chairman of the Executive Committee, and Chairman of the Mercer County
Chamber of Commerce. He is a member of the Mercer County Economic Development
Commission and serves as a trustee of the Drumthwacket Foundation, Inc. and
serves as a member of the Banking Advisory Board of the State of New Jersey. Mr.
Breithaupt serves as a director of RSI Retirement Systems, a New York
corporation.
Peter S. Longstreth is Managing Partner of Aegis Property Group, Ltd.,
a real estate development and project management company.
George A. Pruitt is President of Thomas A. Edison State College.
George W. Reinhard is President of Lester Fellows Co., Inc., an
interstate trucking firm.
Charles E. Stokes, III is the retired President of The Home Rubber
Company, which manufactures mechanical rubber goods, hoses, etc.
Raymond E. Trainer is Chairman of General Sullivan Group, which is an
industrial distribution holding company. He also is a director and secretary of
the TRAF Group which owns a medical collection agency.
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<PAGE>
Miles W. Truesdell, Jr. is a Director and Partner of Truetech Controls,
Inc., which operates as a specialty distributor that services the industrial
market with process control instrumentation.
Executive Officers Who Are Not Directors. Set forth below is a brief
description of the background of each person who serves as an executive officer
of the Bank and who is not a director of the Bank. Unless otherwise noted, all
executive officers who are not directors have held their present position for
five years.
Leo J. Bellarmino is Executive Vice President, responsible for the
Bank's Human Resources, Marketing, Branch Network, Project Planning, Information
Services, Loan Operations, Staff Services and Corporate Finance. He joined the
Bank in October of 1995 and has 27 years of banking experience. Prior to joining
the Bank, Mr. Bellarmino served as Senior Vice President and Retail Franchise
Manager for CoreStates New Jersey National Bank's 140 branch network. Mr.
Bellarmino also serves as a Director of the non-profit Trenton Roebling
Community Development Corporation.
Richard L. Gallaudet is Vice President and Senior Lending Officer,
responsible for the direct management of all the Bank's lending activities. He
joined the Bank in 1990, prior to which he held a number of management positions
with other banks, including three years of service (1986-1989) as President and
Chief Executive Officer of Cherry Hill National Bank and thirteen years of
service (1973-1986) as a Senior Vice President with MidLantic National
Bank/South (formerly Heritage Bank).
Dean H. Lippincott has been Vice President in charge of the Bank's
Mortgage Department since 1988 and has served the Bank in a number of other
capacities since joining it in 1970. His responsibilities include home mortgage
loan originations. He participates as a member of The West Ward Community
Partnership Corp.
Robert Russo is Vice President and Treasurer, responsible for all bank
operations, financial reporting, and accounting systems. He joined the Bank in
1985 as an Assistant Vice President. He has held other positions in the thrift
industry since 1978.
Robert C. Hollenbeck is Vice President and Corporate Secretary
responsible for investor relations, bank investments, budgeting and corporate
regulatory matters. He joined the Bank in November 1994. He has 28 years of
banking experience including 11 years as Executive Vice President and Director
of New Brunswick Savings Bank and five years as Executive Vice President of
Constellation Bank.
Frank Sannella, Jr. is President and Chief Executive Officer of
TSBusiness Finance Corporation, the wholly- owned subsidiary of the Bank. Mr.
Sannella previously held several senior management positions including Executive
Vice President and Senior Loan Officer of Midlantic Bank South and 1st National
Bank of Toms River, President of Heritage Commercial Finance Company and
Executive Vice President of Meridian Commercial Finance Corporation.
Directors Compensation
Fees. During 1997, each member of the Board of Directors of the Bank,
except Mr. Breithaupt, was paid a fee of $650 per Board meeting attended and
$500 for attending meetings of the Executive, Examining (Audit) and Emergency
Operations Committees. Directors attending Loan Committee meetings received $300
per meeting, directors attending Benefits and Compensation Committee meetings
received $250 per meeting. The Chairman of the Board received $900 per meeting
of the Board of Directors and Executive Committee, and the Chairman of the
Examining (Audit) Committee received $700 per meeting of the Examining (Audit)
Committee. In addition, non- officer directors other than the Chairman were paid
an annual retainer of $5,650, and the Chairman was paid an annual retainer of
$12,650.
1996 Option Plan. During 1996 the Bank and the Mutual Holding Company
adopted the Trenton Savings Bank and Peoples Bancorp, MHC 1996 Stock Option Plan
(the "1996 Option Plan"), which was approved by the Bank's stockholders. Under
the 1996 Option Plan, during 1996, Directors Sill, Stokes, Reinhard, Trainer,
Pruitt, Longstreth and Truesdell each received options to purchase 12,000 shares
of Bank Common Stock with an exercise price equal to the fair market value of
the Bank Common Stock on the date the option was granted, or $13.50 per
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<PAGE>
share, of which 4,800 options for each Director vested during 1997 and 4,800
options will vest upon consummation of the Conversion. During 1997, each such
Director received additional options to purchase 3,500 shares of Bank Common
Stock with a exercise price equal to the fair market value of the stock on the
date of grant, or $21.00 per share, of which 1,400 options for each Director
vested in January 1998 and 1,400 will vest upon consummation of the Conversion.
The awards become fully vested upon a director's disability, death, retirement
or following termination of service in connection with a change in control of
the Bank or the Mutual Holding Company. All options granted under the 1996
Option Plan expire upon the earlier of ten years following the date of grant or,
generally, nine years following the date the optionee ceases to be a director.
1996 Recognition Plan. During 1996 the Bank adopted the Trenton Savings
Bank and Peoples Bancorp, MHC 1996 Recognition and Retention Plan (the "1996
Recognition Plan"), which was approved by the Bank's stockholders. During 1996,
9,364 shares of Bank Common Stock were awarded under the 1996 Recognition Plan
to Directors Sill, Stokes, Reinhard and Trainer, 7,491 shares were awarded to
Director Pruitt, and 7,257 shares were awarded to Directors Longstreth and
Truesdell. Such participants vested in 3,746, 2,996, and 2,903 of such shares of
Restricted Stock, respectively, during 1997 and will vest in a like amount upon
consummation of the Conversion. Awards become fully vested upon a director's
disability, death, retirement or following termination of service in connection
with a change in control of the Bank or the Mutual Holding Company. Unvested
shares of Restricted Stock are forfeited by a non-employee director upon failure
to seek reelection, failure to be reelected, or resignation from the Board.
Prior to vesting, recipients of awards under the 1996 Recognition Plan receive
dividends and may direct the voting of the shares of Restricted Stock allocated
to them.
Executive Compensation
Summary Compensation Table. The following table sets forth for the
years ended December 31, 1997, 1996 and 1995, certain information as to the
total remuneration paid by the Bank to the Chief Executive Officer and executive
officers whose salary and bonuses exceeded $100,000 in 1997 ("Named Executive
Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------
Annual Compensation Awards
------------------------------------ ----------------------
Year Other Restricted Shares All
Name and Ended Annual Stock Underlying LTIP Other
Principal Position (1) Dec. 31, Salary(2) Bonus(3) Compensation(4) Awards(5) Options(6) Payouts Compensation(7)
- ---------------------- -------- --------- ------------------------ --------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt.. 1997 196,796 $50,000 -- -- 25,000 -- $80,712
President and Chief 1996 187,425 50,000 -- 560,426 78,000 -- 80,712
Executive Officer 1995 178,500 50,000 -- -- -- -- 80,231
Leo J. Bellarmino...... 1997 $140,000 $10,273 -- -- 10,000 -- $ 8,151
1996 140,000 10,000 -- -- 34,000 -- 1,713
1995 25,846 -- -- -- -- -- --
Frank Sannella, Jr..... 1997 $120,000 -- -- -- -- -- $ 3,333
1996 47,077 -- -- -- -- -- 99
</TABLE>
(1) No other executive officer received salary and bonuses that in the
aggregate exceeded $100,000.
(2) Includes amounts deferred at the election of the named executive officer
pursuant to the Bank's 401(k) Plan.
(3) Includes amounts earned during the year and awarded pursuant to the Bank's
Profit Sharing Plan. Payments pursuant to the Profit Sharing Plan are
reflected in the year earned, rather than the year in which the payment is
received.
(4) The Bank provides certain members of senior management with the use of an
automobile and other personal benefits which have not been included in the
table. The aggregate amount of such other benefits did not exceed the
lesser of $50,000 or 10% of each Named Executive Officer's cash
compensation.
(5) Includes awards of 41,513 shares of restricted stock to Mr. Breithaupt,
16,605 shares of which vested during the year ended December 31, 1997 and
16,605 shares of which will vest upon consummation of the Conversion. The
value of the awards is based on the last sale price of the Bank Common
Stock on the date of the award. Dividends are paid to the holder of the
restricted stock. As of December 31, 1997, the fair market value of the
shares of restricted stock held by Mr. Breithaupt was $1.1 million.
(6) Of such options held by Mr. Breithaupt and Bellarmino, 31,200 and 13,600
options, respectively, vested during the year ended December 31, 1997, and
an equal amount will vest upon consummation of the Conversion.
(7) Includes the Bank's contribution to the 401(k) Plan and the Bank's
Supplemental Executive Retirement Plan, and insurance premiums paid by the
Bank on behalf of Named Executive Officers.
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<PAGE>
Benefit Plans
1996 Stock Option Plan. The Bank's 1996 Option Plan is available to
directors and officers and other employees of the Bank and its affiliates. The
plan is administered by a committee of outside directors. The plan authorizes
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), "non-statutory options," which do
not qualify as incentive stock options, and certain "Limited Rights,"
exercisable only upon a change in control of the Bank or the Mutual Holding
Company. The Conversion does not represent a change in control of the Bank or
the Mutual Holding Company as described in the 1996 Stock Option Plan. The
following table sets forth certain information regarding awards under the 1996
Option Plan and information regarding the shares acquired and the value realized
during 1997 by Named Executive Officers upon exercise of options and the number
of shares of Bank Common Stock underlying options and the value of options held
by Named Executive Officers at December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
Individual Grants of Stock Price Appreciation
for Option Term
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options Granted to
Underlying Employees in FY Exercise or Expiration
Name Options(1) 1997 Base Price Date 5 10
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 25,000 47.2% $21.00 August 2006 $313,000 $711,000
Leo J. Bellarmino 10,000 18.9% $21.00 August 2006 $125,000 $285,000
</TABLE>
(1) Of such options, 10,000 and 4,000, respectively, vested in January 1998,
and 10,000 and 4,000 will vest upon consummation of the Conversion
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised In-
Name Acquired Realized Options at The-Money Options at
Upon Exercise Fiscal Year-End Fiscal Year-End (1)
-----------------------------------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wendell T. Breithaupt 7,407 108,327 23,793/71,800 $755,428/2,092,150
Leo J. Bellarmino 2,056 38,454 11,544/30,400 $366,522/890,200
</TABLE>
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Bank Common Stock that
would be received upon exercise, assuming such exercise occurred on
December 31, 1997, on which date the last sale of the Bank Common Stock was
at a price of $45.25.
Employment Memoranda. Mr. Breithaupt is a party to a memorandum
relating to compensation authorized by the Board of Directors and executed by
the then members of the Compensation Committee and Mr. Breithaupt dated August
27, 1994. The memorandum provides for employment by Mr. Breithaupt at the Bank
through December 31, 1999, with compensation continued through that date.
Pursuant to that memorandum, provided performance is satisfactory, Mr.
Breithaupt is guaranteed a base salary of at least $170,000 per annum during
this period plus an annual payment, intended to be invested by him to supplement
his retirement income, of $70,000 per annum payable prior to each January 30
following the completion of each year of service or, at his option, in monthly
installments. In addition, the memorandum also contemplates eligibility for an
annual bonus of up to $50,000 depending on obtaining strategic and operational
goals. Bonuses, if earned and awarded, are to be paid no later than ninety days
following conclusion of each fiscal year during this period. See "--Employment
Agreements."
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<PAGE>
Retirement Plan. The Bank maintains a defined benefit pension plan
("Retirement Plan") for all employees who have attained the age of 21 and have
completed one year of service with the Bank. In general, the Retirement Plan
provides for annual benefits payable monthly upon retirement at age 65 in an
amount equal to 1.65% of the "Average Compensation" of the employee (which is
equal to the average of the total compensation paid to him or her during the 60
consecutive calendar months within the final 120 consecutive calendar months of
service affording the highest average), for each year of service, plus, if
applicable, 0.65% of Average Compensation in excess of an employee's average
social security taxable wage base for each year of the 35 year period ending
with the employee's social security retirement age, multiplied by his or her
years of service, not in excess of 25 years.
Under the Retirement Plan, an employee's benefits are unvested prior to
the completion of five years of service and are fully vested after five years of
service. A year of service is any year in which an employee works a minimum of
1,000 hours. The Retirement Plan provides for an early retirement option with
reduced benefits for participants who are age 55 and who have 15 years of
service. The Bank's contribution for the Retirement Plan for 1996 was $188,285,
1995 was $168,308, and for 1994 was $115,000.
The following table illustrates annual pension benefits for retirement
at age 65 under various levels of compensation and years of service. The figures
in the table assume that the Retirement Plan continues in its present form, that
the participants retire at age 65 and that the participants elect a straight
life annuity form of benefit.
Five Year
Average 10 Years of 15 Years of 20 Years of 25 Years of
Compensation Service Service Service Service
- ------------ ------- ------- ------- -------
$ 40,000 $ 7,295 $ 10,942 $ 14,590 $ 18,238
50,000 9,595 14,392 19,190 23,988
60,000 11,895 17,842 23,790 29,738
70,000 14,195 21,292 28,390 35,488
80,000 16,495 24,742 32,990 41,238
90,000 18,795 28,192 37,590 46,988
100,000 21,095 31,642 42,190 52,738
110,000 23,395 35,092 46,790 58,488
120,000 25,695 38,542 51,390 64,238
130,000 27,995 41,992 55,990 69,988
140,000 30,295 45,442 60,590 75,738
150,000 32,595 48,892 65,190 81,488
160,000 34,895 52,342 69,780 87,238
The maximum annual compensation which may be taken into account under
the Code (as adjusted from time to time by the IRS) for calculating
contributions under qualified defined benefit plans is currently $160,000, and
the maximum annual benefit permitted under such plan is currently $125,000.
At September 30, 1997, Mr. Breithaupt had 18 years of service under the
Retirement Plan, and his five-year average compensation was $160,000 (as limited
by the tax law requirements).
Employee Stock Ownership Plan and Trust. The Bank has established an
Employee Stock Ownership Plan and Related Trust ("ESOP") for eligible employees
in connection with the Offering. Messrs. Breithaupt , Bellarmino and three other
employees of the Bank's subsidiaries will not participate in the ESOP. The ESOP
is a tax-qualified plan subject to the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the Code. Employees with a 12-month
period of employment with the Bank during which they worked at least 1,000 hours
and who have attained age 21 are eligible to participate. As part of the
Offering, the ESOP plans to borrow funds from the Company and use the funds to
purchase up to 4% of the Common Stock to be issued in the Offering. Collateral
for the loan will be the Common Stock purchased by the ESOP. The loan will be
repaid principally from the Bank's contributions to the ESOP over a period of at
least twelve years. The interest rate for the loan will be the prime rate.
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<PAGE>
Shares purchased by the ESOP will be held in a suspense account for allocation
among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account
in an amount proportionate to the repayment of the ESOP loan will be allocated
among participants on the basis of compensation in the year of allocation, up to
an annual adjusted maximum level of compensation. Benefits generally become 100%
vested after five years of credited service or upon death, retirement, early
retirement, disability or in the event of a change in control of the Bank or the
Company. A participant will vest in 20% of his or her account balance after one
year of credited service and will vest in an additional 20% for each subsequent
year of credited service until a participant is 100% vested after five years.
Participants will receive credit under the ESOP service with the Bank prior to
adoption of the ESOP. A participant who terminates employment before becoming
fully vested will forfeit the nonvested portion of their account balance.
Forfeitures will be reallocated among remaining participating employees in the
same proportion as contributions. The Bank's contributions to the ESOP are
discretionary, subject to the loan terms and tax law limits and, therefore,
benefits payable under the ESOP cannot be estimated.
In connection with the establishment of the ESOP, a committee will be
selected by the Bank to administer the ESOP (the "ESOP Committee"). In addition,
a trustee for the ESOP will be appointed. The Bank will appoint Manchester Trust
as trustee of the ESOP. The ESOP trustee will vote all allocated shares held in
the ESOP in accordance with the instructions of the participating employees, and
unallocated shares and shares held in the suspense account in a manner
calculated to most accurately reflect the instructions the ESOP trustee has
received from participants regarding the allocated stock, subject to and in
accordance with the fiduciary duties under ERISA owed by the ESOP trustee to the
ESOP participants. Under ERISA, the Secretary of Labor is authorized to bring an
action against the ESOP trustee for the failure of the ESOP trustee to comply
with its fiduciary responsibilities. Such a suit could seek to enjoin the ESOP
trustee from violating its fiduciary responsibilities and could result in the
imposition of civil penalties or criminal penalties if the breach is found to be
willful.
1998 Stock Option Plan. At a meeting of the Company's shareholders to
be held at least six months after the completion of the Offering, the Board of
Directors intends to submit for shareholder approval the 1998 Stock Option Plan
for directors and officers of the Bank and of the Company. If approved by the
shareholders, Common Stock in an aggregate amount equal to 10% of the shares
sold in the Offering would be reserved for issuance by the Company upon the
exercise of the stock options granted under the 1998 Stock Option Plan. Ten
percent of the shares sold in the Offering would amount to 1,530,041 shares,
1,800,069 shares, 2,070,065 shares or 2,380,583 shares at the minimum, midpoint,
maximum and adjusted maximum of the Offering Range, respectively. No options
would be granted under the 1998 Stock Option Plan until the date on which
shareholder approval is received.
The exercise price of the options granted under the 1998 Stock Option
Plan will be equal to the fair market value of the shares on the date of grant
of the stock options. If the 1998 Stock Option Plan is adopted within one year
following the Offering, options will become exercisable at a rate of 20% at the
end of each twelve months of service with the Bank after the date of grant,
subject to early vesting in the event of death or disability. Options granted
under the 1998 Stock Option Plan would be adjusted for capital changes such as
stock splits and stock dividends. Notwithstanding the foregoing, awards will be
100% vested upon termination of employment due to death or disability, and if
the 1998 Stock Option Plan is adopted more than 12 months after the Offering,
awards would be 100% vested upon normal retirement or a change in control of the
Bank or the Company. Under OTS rules, if the 1998 Stock Option Plan is adopted
within the first 12 months after the Offering, no individual officer can receive
more than 25% of the awards under the plan, no non-employee director can receive
more than 5% of the awards under the plan, and all outside non-employee
directors as a group can receive no more than 30% of the awards under the plan
in the aggregate.
The 1998 Stock Option Plan would be administered by a Committee of
non-employee members of the Company's Board of Directors. Options granted under
the 1998 Stock Option Plan to employees could be "incentive" stock options
designed to result in a beneficial tax treatment to the employee but no tax
deduction to the Company. Non-qualified stock options could also be granted
under the 1998 Stock Option Plan, and will be granted to the non-employee
directors who receive grants of stock options. In the event an option recipient
terminated his employment or service as an employee or director, the options
would terminate during certain specified periods.
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<PAGE>
1998 Recognition Plan. At a meeting of the Company's shareholders to be
held at least six months after the completion of the Offering, the Board of
Directors also intends to submit a Recognition and Retention Plan (the "1998
Recognition Plan") for shareholder approval. The 1998 Recognition Plan will
provide the Bank's directors and officers an ownership interest in the Company
in a manner designed to encourage them to continue his or her service with the
Bank. The Bank will contribute funds to the 1998 Recognition Plan from time to
time to enable it to acquire an aggregate amount of Common Stock equal to up to
4% of the shares of Common Stock sold in the Offering, either directly from the
Company or in open market purchases. Four percent of the shares sold in the
Offering would amount to 612,016 shares, 20,028 shares, 828,026 shares and
952,233 shares at the minimum, midpoint, maximum and adjusted maximum of the
Offering Range, respectively. In the event that additional authorized but
unissued shares would be acquired by the 1998 Recognition Plan after the
Offering, the interests of existing shareholders would be diluted. The executive
officers and directors will be awarded Common Stock under the 1998 Recognition
Plan without having to pay cash for the shares. No awards under the 1998
Recognition Plan would be made until the date the 1998 Recognition Plan is
approved by the Company's shareholders.
Awards under the 1998 Recognition Plan would be nontransferable and
nonassignable, and during the lifetime of the recipient could only be earned by
him. If the 1998 Recognition Plan is adopted within one year following the
Offering, the shares which are subject to an award would vest and be earned by
the recipient at a rate of 20% of the shares awarded at the end of each full 12
months of service with the Bank after the date of grant of the award. Awards
would be adjusted for capital changes such as stock dividends and stock splits.
Notwithstanding the foregoing, awards would be 100% vested upon termination of
employment or service due to death or disability, and if the 1998 Recognition
Plan is adopted more than 12 months after the Offering, awards would be 100%
vested upon normal retirement or a change in control of the Bank or the Company.
If employment or service were to terminate for other reasons, the award
recipient would forfeit any nonvested award. If employment or service is
terminated for cause (as would be defined in the 1998 Recognition Plan), shares
not already delivered under the 1998 Recognition Plan would be forfeited. Under
OTS rules, if the 1998 Recognition Plan is adopted within the first 12 months
after the Offering, no individual officer can receive more than 25% of the
awards under the plan, no non-employee director can receive more than 5% of the
awards under the plan, and all non-employee directors as a group can receive no
more than 30% of the awards under the plan in the aggregate.
When shares become vested under the 1998 Recognition Plan, the
participant will recognize income equal to the fair market value of the Common
Stock earned, determined as of the date of vesting, unless the recipient makes
an election under ss. 83(b) of the Code to be taxed earlier. The amount of
income recognized by the participant would be a deductible expense for tax
purposes for the Company. If the 1998 Recognition Plan is adopted within one
year following the Offering, dividends and other earnings will accrue and be
payable to the award recipient when the shares vest. If the 1998 Recognition
Plan is adopted within one year following the Offering, shares not yet vested
under the 1998 Recognition Plan will be voted by the trustee of the 1998
Recognition Plan, taking into account the best interests of the recipients of
the 1998 Recognition Plan awards. If the 1998 Recognition Plan is adopted more
than one year following the Offering, dividends declared on unvested shares will
be distributed to the participant when paid, and the participant will be
entitled to vote the unvested shares.
Employment Agreements. Upon completion of the Offering, it is
anticipated that the Bank will enter into an employment agreement with Mr.
Bellarmino (the "Executive"). The agreement will have a term of 36 months. On
each anniversary date, the agreement may be extended for an additional twelve
months, so that the remaining term shall be 36 months. If the agreement is not
renewed, the agreement will expire 24 months following the anniversary date.
Under the agreement, the current Base Salary for Mr. Bellarmino will be
$140,000. The Base Salary may be increased but not decreased. In addition to the
Base Salary, the agreement provides for, among other things, participation in
retirement plans and other employee and fringe benefits applicable to executive
personnel. The agreement provides for termination by the Bank for cause at any
time. In the event the Bank terminates the Executive's employment for reasons
other than for cause, or in the event of the Executive's resignation from the
Bank upon (i) failure to re-elect the executive to his current offices, (ii) a
material change in the Executive's functions, duties or responsibilities, or
relocation of his principal place of employment by more than 30 miles, (iii)
liquidation or dissolution of the Bank, (iv) a breach of the agreement by the
Bank, or (v) following a change in control of the Bank or the Company, the
Executive, or in the event of death, his beneficiary, would be entitled to
severance pay in an amount equal to three times (or, in the event of a change in
control, 2.99 times) the average of the five
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<PAGE>
preceding years Base Salary, including bonuses and any other taxable
compensation and the amount of any contributions made to any employee benefit
plan. The Bank would also continue the Executive's life, health, dental and
disability coverage for 36 months from the date of termination. In the event the
payments to the executive would include an "excess parachute payment" as defined
by Code Section 280G (relating to payments made in connection with a change in
control), the payments would be reduced by that amount necessary in order to
avoid having an excess parachute payment.
Upon the Executive's retirement, he will be entitled to all benefits
available to him under any retirement or other benefit plan maintained by the
Bank. In the event of the Executive's disability for a period of six months, the
Bank may terminate the agreement provided that the Bank will be obligated to pay
him his Base Salary, including bonuses and other cash compensation paid to the
Executive during such period, for the remaining term of the agreement or one
year, whichever is longer, reduced by any benefits paid to the executive
pursuant to any disability insurance policy or similar arrangement maintained by
the Bank. In the event of the Executive's death, the Bank will pay his Base
Salary to his named beneficiaries for one year following his death, and will
also continue medical, dental, and other benefits to his family for one year.
The employment agreement provides that, following his termination of employment
for reasons unrelated to a change in control, the Executive will not compete
with the Bank for a period of one year.
Severance Agreements. Upon completion of the Offering, it is
anticipated that the Bank will enter into Severance Agreements (the "Severance
Agreements") with certain executives of the Bank which would provide certain
benefits in the event of a change in control of the Bank or the Company. The
Severance Agreements would provide for up to an 18 month term. Commencing on
each anniversary date, the Board of Directors may extend any Severance Agreement
for an additional 18 months. The Severance Agreements would enable the Bank to
offer to designated officers certain protections against termination without
cause in the event of a change in control. These protections against termination
without cause in the event of a change in control are frequently offered by
other financial institutions, and the Bank may be at a competitive disadvantage
in attracting and retaining key employees if it does not offer similar
protections. Although the Severance Agreements may have the effect of making a
takeover more expensive to an acquiror, the Bank believes that the benefits of
enhancing the Bank's ability to attract and retain qualified management persons
by offering the Severance Agreements outweighs any disadvantage of such
agreements.
Following a change in control of the Company or the Bank, an officer
would be entitled to a payment under the Severance Agreement if the officer
voluntarily or involuntarily terminates employment during the term of such
agreement, other than for cause, as defined. In the event that an officer who is
a party to a Severance Agreement is entitled to receive payments pursuant to the
Severance Agreement, he would receive a cash payment up to a maximum of three
times the average of the three preceding years' annual base salary and bonuses.
In addition to the severance payment, each covered officer would be entitled to
receive life, health, dental and disability coverage for a period of up to 18
months from the date of termination. Notwithstanding any provision to the
contrary in the Severance Agreement, payments under the Severance Agreements are
limited so that they will not constitute an excess parachute payment under
Section 280G of the Internal Revenue Code.
Indebtedness of Management
All loans made by the Bank to the Bank's directors, executive officers,
and members of such persons' families were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of collectibility or
present other unfavorable factors. All such loans comply with federal
regulations relating to loans to such persons.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Beneficial Ownership of Mid-Tier Common Stock
The following table includes, as of December 1, 1997, certain
information as to the Mid-Tier Common Stock beneficially owned by (i) the only
persons or entities, including any "group" as that term issued in Section
13(d)(3)
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<PAGE>
of the Exchange Act, who or which was known to the Mid-Tier Holding Company to
be the beneficial owner of more than 5% of the issued and outstanding Mid-Tier
Common Stock, (ii) the directors of the Mid-Tier Holding Company and the Bank,
(iii) certain executive officers of the Mid-Tier Holding Company and the Bank,
and (iv) all directors and executive officers of the Bank as a group. For
information concerning proposed subscriptions by directors and executive
officers and the anticipated ownership of Common Stock by such persons upon
consummation of the Conversion, see "--Subscriptions by Executive Officers and
Directors."
Name of Beneficial Amount and Nature Percent of
Ownership or Number of Beneficial Ownership Mid-Tier
------------------- ----------------------- --------
of Persons in Group (1)(2)(3)(4)(5) Common Stock
Peoples Bancorp, MHC.................. 5,796,000 64.1%
134 Franklin Corner Road
Trenton, New Jersey
John B. Sill, Jr...................... 21,664 *
Wendell T. Breithaupt................. 72,389 *
Peter S. Longstreth................... 35,057 *
George A. Pruitt...................... 12,547 *
George W. Reinhard.................... 120,864 1.3
Charles E. Stokes, III................ 18,164 *
Raymond E. Trainer.................... 44,770 *
Miles W. Truesdell, Jr................ 32,057 *
Leo J. Bellarmino..................... 13,870 *
Richard L. Gallaudet.................. 15,146 *
Dean H. Lippincott.................... 16,169 *
Robert Russo.......................... 9,094 *
Robert C. Hollenbeck.................. 10,532 *
Frank Sannella, Jr.................... 75 *
All directors and executive officers
as a group (13 persons) 422,398 4.7%
* Less than 1%
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. In accordance with Rule 13d-3
under the Exchange Act, a person is deemed to be the beneficial owner for
purposes of this table, of any shares of common stock if he has shared
voting or investment power with respect to such security, or has a right to
acquire beneficial ownership at any time within 60 days from the date as to
which beneficial ownership is being determined. As used herein, "voting
power" is the power to vote or direct the voting of shares and "investment
power" is the power to dispose or direct the disposition of shares.
Includes all shares held directly as well as by spouses and minor children,
in trust and other indirect ownership, over which shares the named
individuals effectively exercise sole or shared voting and investment
power.
(2) The executive officers and directors of the Bank and the Mid-Tier Holding
Company are also executive officers and directors of Peoples Bancorp,
M.H.C.
(3) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Mid-Tier Common Stock which may be acquired
within 60 days of the date as of which beneficial ownership is being
determined pursuant to the exercise of outstanding stock options. Shares of
Mid-Tier Common Stock which are subject to stock options are deemed to be
outstanding for the purpose of computing the percentage of outstanding
Mid-Tier Common Stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of Mid-Tier Common
Stock owned by any other person or group.
(4) Includes the following amounts of unvested shares of restricted stock
awarded under the 1996 Recognition Plan which may be voted by the recipient
pending vesting and distribution: Mr. Sill 5,618 shares; Mr. Breithaupt
24,907 shares; Mr. Longstreth 4,353 shares; Mr. Pruitt 4,494 shares; Mr.
Reinhard 5,618 shares; Mr. Stokes 5,618 shares; Mr. Trainer 5,618 shares;
Mr. Truesdell 4,353 shares; Mr. Gallaudet 2,931 shares; Mr. Lippincott
3,019 shares; Mr. Russo 2,664 shares; and Mr. Hollenbeck 2,399 shares.
Includes the following number of shares of Mid-Tier Common Stock underlying
options that are exercisable within 60 days of the date of which beneficial
ownership is being determined: Mr. Sill 4,800 shares; Mr. Breithaupt 23,793
shares; Mr. Longstreth 4,800 shares; Mr. Pruitt 4,800 shares; Mr. Reinhard
4,800 shares; Mr. Stokes 4,800 shares; Mr. Trainer 4,800 shares; Mr.
Truesdell 4,800 shares; Mr. Bellarmino 11,544 shares; Mr. Gallaudet 4,000
shares; and Mr. Russo 3,200 shares.
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Subscriptions by Executive Officers and Directors
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, (i) the number of Exchange Shares to be held upon consummation of the
Conversion, based upon their beneficial ownership of the Mid-Tier Common Stock
as of December 31, 1997, (ii) the proposed purchases of Subscription Shares,
assuming sufficient shares are available to satisfy their subscriptions, and
(iii) the total amount of Common Stock to be held upon consummation of the
Conversion in each case assuming that Subscription Shares are sold at the
midpoint of the Offering Range.
<TABLE>
<CAPTION>
Proposed Purchases of Total Common Stock
Conversion Stock (1) To Be Held
Number of -------------------- ----------
Exchange Shares Number Number Percentage
To be Held (2)(3) Amount of Shares of Shares of Total
----------------- ------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
John B. Sill, Jr............... 62,646 $ 60,000 6,000 68,646 0.3%
Wendell T. Breithaupt.......... 209,327 -- -- 209,327 0.8
Peter S. Longstreth............ 101,374 -- -- 101,374 0.4
George A. Pruitt............... 36,282 -- -- 36,282 0.1
George W. Reinhard............. 349,502 400,000 50,000 389,502 1.4
Charles E. Stokes, III......... 52,525 -- -- 52,525 0.2
Raymond E. Trainer............. 129,461 180,000 18,000 147,461 0.6
Miles W. Truesdell, Jr......... 92,699 100,000 10,000 102,699 0.4
Leo J. Bellarmino.............. 40,108 -- -- 40,108 0.2
Richard L. Gallaudet........... 43,798 10,000 1,000 44,798 0.2
Dean H. Lippincott............. 46,756 -- -- 46,756 0.2
Robert Russo................... 26,297 10,000 1,000 27,297 0.1
Robert C. Hollenbeck........... 30,455 -- -- 30,455 0.1
Frank Sannella, Jr............. 217 -- -- 217 0.0
Total..................... 1,221,447 $760,000 76,000 1,297,447 4.8%
</TABLE>
(1) Includes proposed subscriptions, if any, by associates. Does not include
subscription order by the ESOP. Intended purchases by the ESOP are expected
to be 4% of the shares issued in the Offering. P
(2) Includes shares underlying options that may be exercised within 60 days of
the date as of which ownership is being determined, and vested and unvested
shares of restricted stock. See "--Beneficial Ownership of Mid-Tier Common
Stock."
(3) Does not include stock options and awards that may be granted under the
Company's 1998 Stock Option Plan and 1998 Recognition Plan if such plans
are approved by stockholders at an annual meeting or special meeting of
shareholders at least six months following the Conversion. See "Management
of the Bank--New Benefits Plans."
THE CONVERSION
THE BOARD OF DIRECTORS OF THE MUTUAL HOLDING COMPANY, AND THE OTS, HAVE
APPROVED THE PLAN OF CONVERSION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE
MUTUAL HOLDING COMPANY ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION OF
CERTAIN OTHER CONDITIONS. SUCH OTS APPROVAL, HOWEVER, DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY SUCH AGENCY.
General
On September 24, 1997, the Board of Directors of the Mutual Holding
Company adopted the Plan of Conversion, pursuant to which the Mutual Holding
Company will be converted from a federally chartered mutual holding company to
the Company, a Delaware stock corporation. It is currently intended that all of
the capital stock of the Bank will be held by the Company. The Plan was approved
by the OTS, subject to, among other things, approval of the Plan by the Mutual
Holding Company's members. The Special Meeting of Members has been called for
this purpose.
As part of the Conversion each of the Minority Shares shall
automatically, without further action by the holder thereof, be converted into
and become a right to receive a number of shares of Common Stock determined
pursuant
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<PAGE>
to the Exchange Ratio described herein. See "--Share Exchange Ratio." Pursuant
to the Plan of Conversion, the Conversion will be effected as follows or in any
other manner that is consistent with applicable federal law and regulations and
the intent of the Plan of Conversion. Except for step (i), each of the following
steps in the Conversion will be completed contemporaneously on the Effective
Date.
(i) The Bank will establish the Company as a first-tier Delaware chartered
stock holding company subsidiary.
(ii) The Company will charter an interim federal association ("Interim I").
(iii)The Mutual Holding Company will merge with and into the Mid-Tier
Holding Company (the "MHC Merger"), shares of Mid-Tier Common Stock
held by the Mutual Holding Company will be canceled and each Eligible
Account Holder and Supplemental Eligible Account Holder will receive
an interest in a Liquidation Account of the Mid-Tier Holding Company
in exchange for such person's interest in the Mutual Holding Company.
(iv) The Mid-Tier Holding Company will convert into an interim federal
association, which will then merge with and into the Bank (the
"Mid-Tier Merger") with the Bank as the resulting entity and (i)
Minority Stockholders will constructively receive shares of Bank
Common Stock in exchange for their Mid-Tier Common Stock and (ii) each
Eligible Account Holder and Supplemental Eligible Account Holder will
receive an interest in a Liquidation Account of the Bank in exchange
for such person's interest in the Mid-Tier Holding Company.
(v) Contemporaneously with the Mid-Tier Merger, Interim I will merge with
and into the Bank with the Bank as the surviving entity (the "Bank
Merger"). Constructive shareholders of the Bank (i.e., Minority
Stockholders immediately prior to the Conversion) will exchange the
shares of Bank Common Stock that they constructively received in the
Mid-Tier Merger for Common Stock pursuant to the Exchange Ratio.
(vi) Contemporaneously with the Bank Merger, the Company will sell the
Subscription Shares in the Offering.
The Company expects to receive the approval of the OTS to become a
savings and loan holding company and to own all of the common stock of the Bank.
The Company intends to contribute at least 50% of the net proceeds of the
Offering to the Bank. 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 for consummation of the Conversion in
accordance with the steps set forth above. As part of the Conversion the Company
will offer shares of Common Stock for sale in the Subscription Offering to
Eligible Account Holders, the Bank's ESOP and 401(k) Plan. Supplemental Eligible
Account Holders and Other Members. Subject to the prior rights of these holders
of subscription rights, the Company will offer Common Stock for sale in a
concurrent Community Offering to certain members of the general public, with a
preference given to Minority Stockholders and then to natural persons residing
in the Community. The Bank has the right to accept or reject, in whole or in
part, any orders to purchase shares of the Common Stock received in the
Community Offering. The Community Offering must be completed within 45 days
after the completion of the Subscription Offering unless otherwise extended by
the OTS. See "--Community Offering."
The number of shares of Common Stock to be issued in the Offering will
be determined based upon an independent appraisal of the estimated pro forma
market value of the Common Stock of the Company. All shares of Common Stock to
be issued and sold in the Offering will be sold at the same price. The
Independent Valuation will be updated and the final number of the shares to be
issued in the Offering will be determined at the completion of the Offering. 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.
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<PAGE>
This summary of the Conversion is qualified in its entirety by
reference to the provisions of the Plan of Conversion. A copy of the Plan of
Conversion is available for inspection at each branch of the Bank and at the
Northeast Region and Washington, D.C. offices of the OTS. The Plan of Conversion
is also filed as an Exhibit to the Application to Convert from Mutual to Stock
Form of which this Prospectus is a part, copies of which may be obtained from
the OTS. See "Additional Information."
Purposes of Conversion
The Board of Directors unanimously determined to conduct the Conversion
because it believed that the market for equity securities in financial services
companies was at an unprecedented level and that the Bank (together with the
Company, the "Converted Institution") could raise substantial funds from such a
transaction. The Board of Directors believed that maximizing such proceeds is in
the best interests of the Converted Institution because such proceeds can be
used to increase the net income of the Converted Institution though investment
and eventual leveraging of the proceeds, and support the possible expansion of
the Bank's existing franchise through internal growth or the acquisition of
branch offices or other financial institutions. Management believed that
acquisition opportunities would increase as a result of the Conversion because
the Converted Institution would have substantially more capital following the
Conversion. The Bank has acquired two financial institutions since September 30,
1996, and the Company and the Bank intend to actively explore additional
acquisitions, although neither the Company nor the Bank has any specific plans,
arrangements or understandings regarding any additional expansions or
acquisitions at this time, nor have criteria been established to identify
potential candidates for acquisition. In addition, the Board considered that
there was no assurance that the pricing for financial services stocks would
continue at such favorable levels, and that if the market were to become less
favorable, the amount of capital that could be raised in the Conversion might be
substantially reduced. See "Risk Factors--Potential Low Return on Equity" and
"Uncertainty as to Future Growth Opportunities."
After completion of the Conversion, the unissued common and preferred
stock authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and regulatory approval of an offering, 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 issuance of additional shares 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.
Approvals Required
The affirmative vote of a majority of the total eligible votes of the
members of the Mutual Holding Company at the Special Meeting of Members is
required to approve the Plan of Conversion. By their approval of the Plan of
Conversion the members of the Mutual Holding Company will also be deemed to
approve the mergers that are incident to the Conversion. The affirmative vote of
the holders of (i) at least two-thirds of the outstanding common stock of the
Mid-Tier Holding Company and (ii) a majority of the Minority Shares voting at
the Special Meeting of Stockholders is required to approve the Plan of
Conversion. Consummation of the Conversion is also subject to the approval of
the OTS.
Share Exchange Ratio
OTS regulations and policy provide that in a conversion of a mutual
holding company to stock form, stockholders other than the mutual holding
company will be entitled to exchange their shares of subsidiary savings bank (or
mid-tier holding company) common stock for common stock of the converted holding
company, provided that the bank and the mutual holding company demonstrate to
the satisfaction of the OTS that the basis for the exchange is fair and
reasonable. The Boards of Directors of the Bank and the Company have determined
that each Minority Share will on the Effective Date be automatically converted
into and become the right to receive a number of Exchange Shares determined
pursuant an exchange ratio (the "Exchange Ratio") which was established as the
ratio that ensures that after the Conversion, subject to the Dividend Waiver
Adjustment described below and a slight adjustment to reflect the receipt of
cash in lieu of fractional shares (both of which will slightly decrease the
percentage of shares to be issued
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<PAGE>
to Minority Stockholders), the percentage of the to-be outstanding shares of
Common Stock issued to Minority Stockholders in exchange for their Minority
Shares will be equal to the percentage of the Mid-Tier Common Stock held by
Minority Stockholders immediately prior to the Conversion. The total number of
shares held by Minority Stockholders after the Conversion would also be affected
by any purchases by such persons in the Offering.
The Dividend Waiver Adjustment affects the percentage of the to-be
outstanding shares of Common Stock issued in exchange for Minority Shares to
reflect (i) the aggregate amount of dividends waived by the Mutual Holding
Company and (ii) assets other than Mid-Tier Common Stock held by the Mutual
Holding Company. Pursuant to the Dividend Waiver Adjustment, the percentage of
the to-be outstanding shares of Common Stock issued to Minority Stockholders in
exchange for their Minority Shares (the "Adjusted Minority Ownership
Percentage") is equal to the percentage of the Mid-Tier Common Stock held by
Minority Stockholders multiplied by the Dividend Waiver Fraction. Thepercentage
of the to-be outstanding shares of Common Stock that are sold in the Offering is
referred to herein as the "Adjusted Majority Ownership Percentage ." The
Dividend Waiver Fraction is equal to the product of (a) a fraction, of which the
numerator is equal to the Mid-Tier Holding Company's stockholders' equity at the
time of the Conversion less the aggregate amount of dividends waived by the
Mutual Holding Company and the denominator is equal to the Mid-Tier Holding
Company's stockholders' equity at the time of the Conversion, and (b) a
fraction, of which the numerator is equal to the appraised pro forma market
value of the Common Stock minus the value of the Mutual Holding Company's assets
other than Mid-Tier Common Stock and the denominator is equal to the pro forma
market value of the Common Stock. FinPro determined the value of the Mutual
Holding Company's assets other Mid- Tier Common Stock to be insignificant and
not to require an adjustment.
Based on the 35.9% of the outstanding shares of the Mid-Tier Common
Stock held by Minority Stockholders as of December 1, 1997, the $4.9 million of
dividends waived and projected to be waived by the Mutual Holding Company
through the Effective Date, the $21,000 of assets other than Mid-Tier Common
Stock held by the Mutual Holding Company as of December 1, 1997, and the
Independent Valuation, the following table sets forth, at the minimum, midpoint,
maximum, and adjusted maximum of the Offering Range, the following: (i) the
total number of Subscription Shares and Exchange Shares to be issued in the
Conversion, (ii) the percentage of Common Stock outstanding after the Conversion
that will be sold in the Offering and issued in the Share Exchange, and (iii)
the Exchange Ratio.
<TABLE>
<CAPTION>
Subscription Shares Exchange Shares Total Shares
to be Issued to be Issued of Common
---------------------- ---------------------- Stock to be Exchange
Amount Percent Amount Percent Outstanding Ratio
------ ------- ------ ------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Minimum ................. 15,300,408 65.7% 7,989,592 34.3% 23,290,000 2.4580
Midpoint................. 18,000,691 65.7% 9,399,309 34.3% 27,400,000 2.8917
Maximum.................. 20,700,648 65.7% 10,809,352 34.3% 31,510,000 3.3255
Adjusted maximum ........ 23,805,827 65.7% 12,430,673 34.3% 36,236,500 3.8243
</TABLE>
Options to purchase Minority Shares will also be converted into and
become options to purchase Common Stock. As of December 1, 1997, there were
outstanding options to purchase 294,637 Minority Shares. The number of shares of
Common Stock to be received upon exercise of such options will be determined
pursuant to the Exchange Ratio. The aggregate exercise price, duration, and
vesting schedule of such options will not be affected. If all such options to
purchase Minority Shares are exercised prior to the Effective Date, then there
will be an increase in the number of shares of Common Stock issued to Minority
Stockholders in the Share Exchange, and a decrease in the Exchange Ratio.
Executive officers and directors of the Bank do not intend to exercise options
prior to the Effective Date. The Bank has no plans to grant additional stock
options prior to the Effective Date.
The final Exchange Ratio will be calculated at the conclusion of the
Conversion and will be affected by any additional waivers of dividends by the
Mutual Holding Company, any change in the Mutual Holding Company's assets other
than Mid-Tier Common Stock, and any options exercised subsequent to December 1,
1997.
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Effect of the Conversion on Minority Stockholders
Effect on Stockholders' Equity per Share of the Shares Exchanged. The
Conversion will increase the stockholders' equity of Minority Stockholders. At
September 30, 1997, the stockholders' equity per share was $11.97 for each share
of the Mid-Tier Common Stock outstanding, including shares held by the Mutual
Holding Company. 7 Based on the pro forma information set forth in "Pro Forma
Data," assuming the sale of 18,000,691 shares of 7 Common Stock at the midpoint
of the Offering Range, the pro forma stockholders' equity per share of Common
Stock 7 was $9.93, and the aggregate pro forma stockholders' equity for the
Exchange Shares to be received for each 7 Minority Share was $28.71. The pro
forma stockholders' equity for the aggregate number of Exchange Shares to 7 be
received for each Minority Share was $26.10, $31.36 and $34.38 at the minimum,
maximum, and adjusted maximum of the Offering Range. 7
Effect on Earnings per Share of the Shares Exchanged. The Conversion
will also affect Minority 7 Stockholders' pro forma earnings per share. For the
nine months ended September 30, 1997, and the fiscal year ended7 December 31,
1996, the earnings per share were $.65 and $.94, respectively, for each share of
Mid-Tier Common Stock outstanding, including shares held by the Mutual Holding
Company. Based on the pro forma information set forth in "Pro Forma Data,"
assuming the sale of 18,000,691 shares of Common Stock at the midpoint of the
Offering Range, the pro forma earnings per share of Common Stock were $.34 and
$.49, respectively, for such periods, and the aggregate pro forma earnings for
the number of Exchange Shares to be received for each Minority Share were $.98
and $1.42, respectively. For the nine months ended September 30, 1997, the
aggregate pro forma earnings for the number of Exchange Shares to be received
for each Minority Share were $0.93, $1.03 and $1.11 at the minimum, maximum, and
adjusted maximum of the Offering Range. For the fiscal year ended December 31,
1996, the aggregate pro forma earnings for the number of Exchange Shares to be
received for each Minority Share were $1.35, $1.50 and $1.61 at the minimum,
maximum, and adjusted maximum of the Offering Range.
Effect on Dividends per Share. The Company's Board of Directors
anticipates declaring and paying quarterly cash dividends of $.025, or $.10 per
share of Common Stock on an annual basis, or an aggregate annual dividend of
$.25, $.29, $.34 and $.38 for the number of Exchange Shares received for each
Minority Share, at the minimum, midpoint, maximum and adjusted maximum of the
Offering Range, respectively. The Bank, or the Mid-Tier Holding Company, have
paid quarterly cash dividends of $.0875 per Minority Share, or $.35 per Minority
Share on an annual basis, for each of the full fiscal quarters since the
Minority Stock Offering in August 1995. See "Market for Common Stock." The
Mid-Tier Holding Company intends to continue to pay a quarterly cash dividend of
$.0875 per share through the fiscal quarter ended March 31, 1998. Dividends,
when and if paid, will be subject to determination and declaration by the Board
of Directors in its discretion, which will take into account the Company's
consolidated financial condition and results of operations, tax considerations,
industry standards, economic conditions, regulatory restrictions on dividend
payments by the Bank to the Company, general business practices and other
factors. See "Dividend Policy."
Effect on the Market and Appraised Value of the Shares Exchanged. The
aggregate Subscription Price of the shares of Common Stock received in exchange
for each Minority Share is $24.58, $28.92, $33.26, and $38.24 at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range. The last trade of
the Bank's common stock on August 7, 1997, the day preceding the announcement of
the Conversion, was $22 per share, and the price at which the Common Stock last
traded on February __, 1998, was $__________ per share.
Dissenters' and Appraisal Rights. Under OTS regulations, Minority
Stockholders will not have dissenters' rights or appraisal rights in connection
with the exchange of Minority Shares for shares of Common Stock of the Company.
Effects of Conversion on Depositors, Borrowers and Members
General. Each depositor in the Bank has both a deposit account in the
Bank and a pro rata ownership interest in the net worth of the Mutual Holding
Company based upon the balance in his or her account, which interest may only be
realized in the event of a liquidation of the Mutual Holding Company and the
Bank. However, this ownership interest is tied to the depositor's account and
has no tangible market value separate from such deposit account. Any
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depositor who opens a deposit account obtains a pro rata ownership interest in
the Mutual Holding Company which owns a majority of the common stock of the Bank
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 Mutual
Holding Company, which is lost to the extent that the balance in the account is
reduced or closed.
Consequently, depositors in a stock subsidiary of a mutual holding
company normally have no way of realizing the value of their ownership interest,
which has realizable value only in the unlikely event that the Mutual Holding
Company and the Bank are 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 Mutual Holding Company after other claims, including claims of depositors
to the amounts of their deposits, are paid.
When a mutual holding company converts to stock form, permanent
nonwithdrawable capital stock is created in the stock holding company to
represent the ownership of the subsidiary institution's net worth. The Common
Stock is separate and apart from deposit accounts and cannot be and is not
insured by the FDIC or any other governmental agency. Certificates are issued to
evidence ownership of the capital stock. 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 Bank.
Continuity. While the Conversion is being accomplished, the normal
business of the Bank of accepting deposits and making loans will continue
without interruption. The Bank will continue to be subject to regulation by the
OTS and the FDIC. After the Conversion, the Bank will continue to provide
services for depositors and borrowers under current policies by its present
management and staff. The Directors serving the Bank at the time of the
Conversion will serve as Directors of the Bank after the Conversion. The
Directors of the Company will consist of individuals currently serving on the
Board of Directors of the Mid-Tier Holding Company.
Effect on Deposit Accounts. Under the Plan of Conversion, each
depositor in the Bank 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. 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 Bank 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 of the
Bank are members of, and have voting rights in, the Mutual Holding Company as to
all matters requiring membership action. Upon completion of the Conversion,
depositors will cease to be members of the Mutual Holding Company and will no
longer be entitled to vote at meetings of the Mutual Holding Company. Upon
completion of the Conversion, all voting rights in the Bank will be vested in
the Company as the sole shareholder of the Bank. Exclusive voting rights with
respect to the Company will be vested in the holders of Common Stock. Depositors
of the Bank will not have voting rights after the Conversion except to the
extent that they become stockholders of the Company through the purchase of
Common Stock.
Tax Effects. The Bank will receive an opinion of counsel with regard to
federal and state income taxation to the effect that the adoption and
implementation of the Plan of Conversion will not be taxable for federal or
state income tax purposes to the Bank, the Mid-Tier Holding Company, the Mutual
Holding Company, the Minority Stockholders, members of the Mutual Holding
Company, eligible account holders or the Company. See "--Tax Aspects."
Effect on Liquidation Rights. Were the Bank to liquidate prior to the
Conversion, all claims of creditors of the Bank, including those of depositors
to the extent of their deposit balances, would be paid first. Thereafter, if
there were any assets of the Bank remaining, such assets would be distributed to
the Mid-Tier Holding Company, to the extent of its stock ownership interest in
the Bank. Were the Mutual Holding Company to liquidate, all claims of
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creditors would be paid first. Thereafter, if there were any assets of the
Mutual Holding Company remaining, members of the Mutual Holding Company would
receive such remaining assets, pro rata, based upon the deposit balances in
their deposit account in the Bank immediately prior to liquidation. In the
unlikely event that the Bank were to liquidate after 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 Bank'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 assumed by the surviving institution.
Stock Pricing and Number of Shares to be Issued
The Plan of Conversion and Federal regulations require that the
aggregate purchase price of the Common Stock in the Offering must be based on
the appraised pro forma market value of the Common Stock, as determined by an
independent valuation (the "Independent Valuation"). The Bank and the Company
have retained FinPro, Inc. ("FinPro") to make such valuation. For its services
in making such appraisal, FinPro will receive a fee of $13,500 (which amount
does not include a fee of $11,000 to be paid to FinPro for assistance in
preparation of a business plan). The Bank, the Mid-Tier Holding Company, the
Mutual Holding Company and the Company have agreed to indemnify FinPro and its
employees and affiliates against certain losses (including any losses in
connection with claims under the federal securities laws) arising out of its
services as appraiser, except where FinPro's liability results from its
negligence or bad faith.
The Independent Valuation was prepared by FinPro in reliance upon the
information contained in the Prospectus, including the Consolidated Financial
Statements. FinPro also considered the following factors, among others: the
present and projected operating results and financial condition of the Company
and the Bank and the economic and demographic conditions in the Bank's existing
marketing area; certain historical, financial and other information relating to
the Bank; a comparative evaluation of the operating and financial statistics of
the Bank with those of other publicly traded savings institutions located in the
mid-Atlantic region and on a national basis; the aggregate size of the Offering;
the impact of the Conversion on the consolidated stockholders' equity and
earnings potential; the proposed dividend policy of the Company; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities.
The Independent Valuation was prepared based on the assumption that the
aggregate amount of Common Stock sold in the Offering would be equal to the
estimated pro forma market value of the Company multiplied by the Adjusted
Majority Ownership Percentage. The Independent Valuation states that as of
December 17, 1997, the estimated pro forma market value of the Company ranged
from a minimum of $232,9000,000 to a maximum of $315,100,000 with a midpoint of
$274,000,000 (the "Valuation Range"). The Board of Directors determined to offer
the Subscription Shares for $10.00 per share (the "Subscription Price"). The
aggregate offering price of the Subscription Shares offered in the Offering will
be equal to the Valuation Range multiplied by the Adjusted Majority Ownership
Percentage. The number of Subscription Shares offered in the Offering will be
equal to the aggregate offering price of the Subscription Shares divided by the
Subscription Price. The number of Subscription Shares offered in the Offering
and/or the aggregate of the offering price of the Subscription Shares are
referred to herein as the "Offering Range." Based on the Valuation Range, the
Adjusted Majority Ownership Percentage and the Subscription Price, the minimum
of the Offering Range will be 15,300,408 Subscription Shares, the midpoint of
the Offering Range will be 18,000,691 Subscription Shares, and the maximum of
the Offering Range will be 20,700,648 Subscription Shares.
The Board of Directors reviewed the Independent Valuation and, in
particular, considered (i) the Mid-Tier Holding Company financial condition and
results of operations for the months ended September 30, 1997, and the year
ended December 31, 1996, (ii) financial comparisons of the Mid-Tier Holding
Company in relation to financial institutions of similar size and asset quality,
(iii) stock market conditions generally and in particular for financial
institutions, and (iv) the historical trading price of the Minority Shares, all
of which are set forth in the Independent Valuation. The Board also reviewed the
methodology and the assumptions used by FinPro in preparing the Independent
Valuation. The Valuation Range may be amended with the approval of the OTS (if
required), if
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necessitated by subsequent developments in the financial condition of the
Company or the Bank or market conditions generally. In the event the Independent
Valuation is updated to amend the pro forma market value of the Company to less
than $232,900,000 or more than $362,365,000, such appraisal will be filed with
the Securities and Exchange Commission by post-effective amendment.
The Independent Valuation, however, is not intended, and must not be
construed, as a recommendation of any kind as to the advisability of purchasing
such shares. FinPro did not independently verify the Consolidated Financial
Statements and other information provided by the Bank, nor did FinPro value
independently the assets or liabilities of the Bank. The Independent Valuation
considers the Bank as a going concern and should not be considered as an
indication of the liquidation value of the Bank. 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 such shares in the Offering will thereafter be
able to sell such shares at prices at or above the Subscription Price.
Following commencement of the Subscription Offering, the maximum of the
Valuation Range may be increased by up to 15% to up to $362,365,000, which will
result in a corresponding increase of up to 15% in the maximum of the Offering
Range to 23,805,827 shares, to reflect changes in the market and financial
conditions, without the resolicitation of subscribers. The minimum of the
Valuation Range and the minimum of the Offering Range may not be decreased
without a resolicitation of subscribers. The Subscription Price of $10.00 per
share will remain fixed. 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 Offering Range to fill unfilled orders in the
Subscription and Community Offerings.
If the update to the Independent Valuation at the conclusion of the
Offering results in an increase in the maximum of the Valuation Range to more
than $362,365,000 and a corresponding increase in the Offering Range tomore than
23,805,827 shares, or a decrease in the minimum of the Valuation Range to less
than $232,900,000 and a corresponding decrease in the Offering Range to fewer
than 15,300,408 shares, then the Company, after consulting with the OTS, may
terminate the Plan of Conversion and return all funds promptly with interest at
the Bank's passbook rate of interest on payments made by check, certified or
teller's check, bank draft or money order, extend or hold a new Subscription
Offering, Community Offering, or both, establish a new Offering Range, commence
a resolicitation of subscribers or take such other actions as permitted by the
OTS in order to complete the Conversion. In the event that a resolicitation is
commenced, unless an affirmative response is received within a reasonable period
of time, all funds will be promptly returned to investors as described above. A
resolicitation, if any, following the conclusion of the Subscription and
Community Offerings would not exceed 45 days unless further extended by the OTS
for periods of up to 90 days not to extend beyond March __, 2000.
An increase in the number of shares to be issued in the Offering would
decrease both a subscriber's ownership interest and the Company's pro forma
earnings and stockholders equity on a per share basis while increasing pro forma
earnings and stockholder's equity on an aggregate basis. A decrease in the
number of shares to be issued in the Offering would increase both a subscriber's
ownership interest and the Company's pro forma earnings and stockholder's equity
on a per share basis while decreasing pro forma net income and stockholder's
equity on an aggregate basis. For a presentation of the effects of such changes,
see "Pro Forma Data."
Copies of the appraisal report of FinPro and the detailed memorandum of
the appraiser setting forth the method and assumptions for such appraisal are
available for inspection at the main office of the Bank and the other locations
specified under "Additional Information."
Exchange of Stock Certificates
Until the Effective Date, Minority Shares will continue to be available
for trading on the Nasdaq National Market. The conversion of the Mid-Tier Common
Stock into Common Stock will occur automatically on the Effective Date. After
the Effective Date, former holders of the Mid-Tier Common Stock will have no
further equity interest in the Mid-Tier Holding Company or the Bank (other than
as stockholders of the Company) and there
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will be no further transfers of the Mid-Tier Common Stock on the stock transfer
records of the Mid-Tier Holding Company.
As soon as practicable after the Effective Date, the Company, or a bank
or trust company designated by the Company, in the capacity of exchange agent
(the "Exchange Agent"), will send a transmittal form to each Minority
Stockholder. The transmittal forms are expected to be mailed within five
business days after the Effective Date and will contain instructions with
respect to the surrender of certificates representing the Mid-Tier Common Stock,
or Certificates formerly representing shares of Bank Common Stock that were not
replaced with Certificates representing the Mid-Tier Common Stock into which
such shares were converted in the Two-Tier Reorganization ("Converted Bank
Common Stock Certificates"). It is expected that certificates for shares of the
Company's Common Stock will be distributed within five business days after the
receipt of properly executed transmittal forms and other required documents.
THE MID-TIER HOLDING COMPANY'S STOCKHOLDERS SHOULD NOT FORWARD STOCK
CERTIFICATES TO THE BANK OR THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED
TRANSMITTAL FORMS.
Until the certificates representing the Mid-Tier Common Stock and/or
Converted Bank Common Stock Certificates are surrendered for exchange after
consummation of the Conversion, upon compliance with the terms of the
transmittal form, holders of such certificates will not receive the shares of
the Company's Common Stock and will not be paid dividends on the Common Stock
into which such shares have been converted. When such certificates are
surrendered, any unpaid dividends will be paid without interest. For all other
purposes, however, each certificate which represents shares of the Mid-Tier
Common Stock outstanding at the Effective Date and/or Converted Bank Common
Stock Certificates will be deemed to evidence ownership of the shares of the
Company's Common Stock into which those shares have been converted by virtue of
the Conversion.
All shares of Common Stock issued upon conversion of shares of the
Mid-Tier Common Stock shall be deemed to have been issued in full satisfaction
of all rights pertaining to Common Stock, subject, however, to the Company's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Date which may have been declared or made by the
Mid-Tier Holding Company on or prior to the Effective Date and which remain
unpaid at the Effective Date.
No fractional shares of the Common Stock will be issued to any Minority
Stockholder upon consummation of the Conversion. For each fractional share that
would otherwise be issued, the Company will pay by check an amount equal to the
product obtained by multiplying the fractional share interest to which such
holder would otherwise be entitled by the Subscription Price. Payment for
fractional shares will be made as soon as practicable after the receipt by the
Exchange Agent of surrendered stock certificates.
If a certificate for the Mid-Tier Common Stock and/or Converted Bank
Common Stock Certificates has been lost, stolen or destroyed, the Exchange Agent
will issue the consideration properly payable upon receipt of appropriate
evidence as to such loss, theft or destruction, appropriate evidence as to the
ownership of such certificate by the claimant, and appropriate and customary
indemnification.
Subscription Offering and Subscription Rights
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock in the Subscription Offering have been granted under
the Plan of Conversion in the following order of descending priority. 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, minimum, and overall 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 depositor with aggregate
savings account balances of $50 or more (a "Qualifying Deposit") as of August
31, 1996 (the "Eligibility Record Date," and such account holders, "Eligible
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Account Holders") will receive, without payment therefor, nontransferable
subscription rights to subscribe in the Subscription Offering for a number of
Subscription Shares equal to up to the greater of 100,000 shares, .10% of the
total offering of shares, or fifteen times the product (rounded down to the next
whole number) obtained by multiplying the aggregate number of Exchange Shares
and Subscription Shares issued in the Conversion by a fraction of which the
numerator is the amount of the Eligible Account Holder's Qualifying Deposit and
the denominator is the total amount of Qualifying Deposits of all Eligible
Account Holders, in each case on the Eligibility Record Date, subject to the
overall purchase limitation and exclusive of shares purchased by the ESOP from
any increase in the shares offered pursuant to an increase in the maximum of the
Offering Range. See "--Limitations on Common Stock Purchases." If there are not
sufficient shares available to satisfy all subscriptions, shares first will be
allocated so as to permit each subscribing Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares for which he subscribed. Thereafter,
unallocated shares (except for additional shares issued to the ESOP upon an
increase in the maximum of the Offering Range) will be allocated to each
subscribing Eligible Account Holder whose subscription remains unfilled in the
proportion that the amount of his aggregate Qualifying Deposit bears to the
total amount of Qualifying Deposits of all subscribing Eligible Account Holders
whose subscriptions remain unfilled. If an amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated among those Eligible Account Holders whose subscriptions
are not fully satisfied until all available shares have been allocated.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his Order Form all deposit accounts in which he has an ownership
interest on the Eligibility Record Date. 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 Bank or their associates will be subordinated to the
subscription rights of other Eligible Account Holders to the extent attributable
to increased deposits in the twelve months preceding the Eligibility Record
Date.
Priority 2: Employee Plans. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP and 401(K) Plan will receive, without payment therefor,
nontransferable subscription rights to purchase Common Stock in the Offering on
behalf of ESOP and 401(K) participants subject to the purchase limitations
described herein. The ESOP intends to subscribe for up to 4% of the Common Stock
issued in the Offering, including 4% of the total number of shares, if any,
issued if the maximum of the Offering Range is increased. The 401(K) Plan may
purchase up to 200,000 shares of the Common Stock issued in the Offering. The
401(k) will purchase shares only at the direction of individual Participants.
Additional shares issued in the event the maximum of the Offering Range is
increased will be sold first to the ESOP and the 401(K) 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 depositor with a Qualifying Deposit
as of December 31, 1997 (the "Supplemental Eligibility Record Date") who is not
an Eligible Account Holder ("Supplemental Eligible Account Holder") will
receive, without payment therefor, nontransferable subscription rights to
subscribe in the Subscription Offering for a number of Subscription Shares equal
to the greater of 100,000 shares, .10% of the total offering of shares, or
fifteen times the product (rounded down to the next whole number) obtained by
multiplying the aggregate number of Exchange Shares and Subscription Shares
issued in the Conversion, by a fraction of which the numerator is the amount of
the Supplemental Eligible Account Holder's Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Supplemental
Eligible Account Holders, in each case on the Supplemental Eligibility Record
Date, subject to the overall purchase limitation. See "--Limitations on Common
Stock Purchases." If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated so as to permit each subscribing
Supplemental Eligible Account Holder to purchase a number of shares sufficient
to make his total allocation equal to the lesser of 100 shares or the number of
shares for which he subscribed. Thereafter, unallocated shares will be allocated
to each subscribing Supplemental Eligible Account Holder and whose subscription
remains unfilled in the proportion that the amount of his Qualifying Deposit
bears to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
To ensure proper allocation of stock, each Supplemental Eligible
Account Holder must list on his Order Form all deposit accounts in which he has
an ownership interest on the Supplemental Eligibility Record Date. Failure to
list an account could result in less shares being allocated than if all accounts
had been disclosed.
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Priority 4: Other Members. To the extent that there are shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
Employee Plans, and Supplemental Eligible Account Holders, each depositor with s
a Qualifying Deposit on the Voting Record Date ("Other Members") will receive,
without payment therefor, s nontransferable subscription rights to subscribe in
the Subscription Offering for a number of Subscription Shares equal to up to the
greater of 100,000 shares, or .10% of the total offering of shares, subject to
the overall purchase limitation. See "--Limitations on Stock Purchases." If
there are not sufficient shares available to satisfy all subscriptions,
available shares will be allocated in proportion to the amounts of the
subscriptions.
Expiration Date for the Subscription Offering. The Subscription
Offering will expire on March __, 1998, unless extended for up to 45 days or
such additional periods by the Bank (as extended, the "Expiration Date") with
the approval of the OTS, if necessary. The Bank and the Company may determine to
extend the Subscription Offering and/or the Community Offering for any reason,
whether or not subscriptions have been received for shares at the minimum,
midpoint, or maximum of the Offering Range, and are not required to give
subscribers notice of any such extension. Subscription rights which have not
been exercised prior to the Expiration Date will become void.
The Company will not execute orders until all shares of Common Stock
have been subscribed for or otherwise sold. If 14,961,058 shares have not been
subscribed for or sold within 45 days after the Expiration Date, unless such
period is extended with the consent of the OTS, all funds delivered to the Bank
pursuant to the Subscription Offering will be returned promptly to the
subscribers with interest and all withdrawal authorizations will be canceled. If
an extension beyond the 45 day period following the Expiration Date is granted,
the Bank will notify subscribers of the extension of time and of any rights of
subscribers to modify or rescind their subscriptions. Such extensions may not go
beyond March __, 2000.
Persons in Nonqualified States or Foreign Countries. The Company 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 of Conversion reside. However, the Company is not required to offer stock
in the Offering to any person who resides in a foreign country or resides in a
state of the United States with respect to which (i) a small number of persons
otherwise eligible to subscribe for shares of Common Stock reside in such state;
or (ii) the Company determines that compliance with the securities laws of such
state would be impracticable for reasons of cost or otherwise, including but not
limited to a request that the Company or its officers or directors, under the
securities laws of such state, register as a broker, dealer, salesman or selling
agent or to register or otherwise qualify the subscription rights or Common
Stock for sale or subject any filing with respect thereto in such state. Where
the number of persons eligible to subscribe for shares in one state is small,
the Company will base its decision as to whether or not to offer the Common
Stock in such state on a number of factors, including the size of accounts being
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.
Community Offering
To the extent that shares remain available for purchase after
satisfaction of all subscriptions of the Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders and Other Members, the Company has
determined to offer shares pursuant to the Plan of Conversion to certain members
of the general public in a direct community offering (the "Community Offering")
with preference given first to Minority Stockholders and then to natural persons
residing in the Community (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 100,000 Subscription Shares,
subject to the overall purchase limitation. See "--Limitations on Common Stock
Purchases." The opportunity to subscribe for shares of Common Stock in the
Community Offering category is subject to the right of the Company, in its 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
Expiration Date.
Subject to the foregoing, if the amount of stock remaining is
insufficient to fill the orders of Preferred Subscribers, such stock will be
allocated among the Preferred Subscribers in the manner that first permits each
Minority Stockholder, to the extent possible, to purchase the number of shares
necessary to make his total allocation of Common Stock equal to the lesser of 2%
of the shares offered in the Offering or the number of shares subscribed
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for by each such Minority Stockholder; provided that if there are insufficient
shares available for such allocation, then shares will be allocated among
Minority Stockholders whose orders remain unsatisfied in the proportion that the
unfilled subscription of each bears to the total unfilled subscriptions of all
Minority Stockholders whose subscription remain unsatisfied. Remaining shares
will be allocated on an equal number of shares basis up to an aggregate of
100,000 shares, subject to the overall purchase limitation. If all orders of
Minority Stockholders are filled, any shares remaining will be allocated to
natural persons residing in the Community in the Community Offering applying the
same allocation described above for Minority Stockholders, and then to other
members of the general public.
The Community Offering will terminate no more than 45 days following
the Expiration Date, unless extended by the Bank and the Company with the
approval of the OTS if necessary. The Bank and the Company may determine to
extend the Community Offering for any reason, whether or not subscriptions have
been received for shares at the minimum, midpoint, or maximum of the Offering
Range, and are not required to give subscribers notice of any such extension.
The Company will not execute orders until all shares of Common Stock have been
subscribed for or otherwise sold. If 14,961,058 shares have not been subscribed
for or sold within 45 days after the Expiration Date, unless such period is
extended with the consent of the OTS, all funds delivered to the Bank pursuant
to the Subscription Offering will be returned promptly to the subscribers with
interest and all withdrawal authorizations will be canceled. If an extension
beyond the 45 day period following the Expiration Date is granted, the Bank will
notify subscribers of the extension of time and of any rights of subscribers to
modify or rescind their subscriptions. Such extensions may not go beyond March
__, 2000.
The term "resided" or "residing" as used herein shall mean any person
who occupies a dwelling within the Community, has a present intent to remain
within the Community for a period of time, and manifests the genuineness of that
intent by establishing an ongoing physical presence within the Community
together with an indication that such presence within the Community is something
other than merely transitory in nature. To the extent the person is a
corporation or other business entity, the principal place of business or
headquarters shall be in the Community. To the extent a person is a personal
benefit plan, the circumstances of the beneficiary shall apply with respect to
this definition. In the case of all other benefit plans, circumstances of the
trustee shall be examined for purposes of this definition. The Bank may utilize
deposit or loan records or such other evidence provided to it to make a
determination as to whether a person is a resident. In all cases, however, such
a determination shall be in the sole discretion of the Bank.
The Board of Directors has the right to reject any order submitted in
the Offering by a person whose representations the Board of Directors believes
to be false or who it otherwise believes, either alone or acting in concert with
others, is violating, evading, circumventing, or intends to violate, evade or
circumvent the terms and conditions of the Plan of Conversion.
Plan of Distribution and Selling Commissions
Offering materials for the Offering initially have been distributed to
certain persons by mail, with additional copies made available at the Bank's
office and from FBR. All prospective purchasers are to send payment along with a
completed Order Form directly to the Bank, where such funds will be held in a
segregated special escrow account and not released until the Offering is
completed or terminated.
To assist in the marketing of the Common Stock, the Bank has retained
FBR, a broker-dealer registered with the National Association of Securities
Dealers, Inc. (the "NASD"). FBR will assist the Bank in the Offering as follows:
(i) in training and educating the Bank's employees regarding the mechanics and
regulatory requirements of the Conversion; (ii) in conducting any informational
meetings for employees, customers and the general public; (iii) in coordinating
the selling efforts in the Bank's local communities; and (iv) keeping records of
all orders for Common Stock. For these services, the Agent will receive (i) a
management fee of $50,000; and (ii) a marketing fee of .75% of the total dollar
amount of the Common Stock sold in the Subscription and Community Offerings,
reduced by the management fee, not to exceed $1.0 million. No fee shall be
payable by the Bank in connection with the sale of Common Stock to the ESOP or
the 401(k) Plan, or to the Bank's directors, officers, employees, and such
persons' immediate family members.
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The Bank also will reimburse the Agent for its reasonable out-of-pocket
expenses associated with its marketing effort, the estimated maximum of which
are $70,000. The Bank has made an advance payment to the Agent in the amount of
$50,000. The Bank will indemnify FBR against liabilities and expenses (including
legal fees) incurred in connection with certain claims or litigation arising out
of or based upon untrue statements or omissions contained in the offering
material for the Common Stock, including liabilities under the Securities Act of
1933.
Certain directors and executive officers of the Company and Bank may
participate in the solicitation of offers to purchase Common Stock. Such persons
will be reimbursed by the Mutual Holding Company and/or the Bank for their
reasonable out-of-pocket expenses, including, but not limited to, de minimis
telephone and postage expenses, incurred in connection with such solicitation.
Other regular, full-time employees of the Bank may participate in the Offering
but only in ministerial capacities, providing clerical work in effecting a sales
transaction or answering questions of a potential purchaser provided that the
content of the employee's responses is limited to information contained in the
Prospectus or other offering documents, and no offers or sales may be made by
tellers or at the teller counter. All sales activity will be conducted in a
segregated or separately identifiable area of the Bank's offices apart from the
area accessible to the general public for the purpose of making deposits or
withdrawals. Other questions of prospective purchasers will be directed to
executive officers or registered representatives. Such other employees have been
instructed not to solicit offers to purchase Common Stock or provide advice
regarding the purchase of Common Stock. The Company will rely on Rule 3a4-1
under the Securities Exchange Act of 1934 (the "Exchange Act"), and sales of
Common Stock will be conducted within the requirements of Rule 3a4-1, so as to
permit officers, directors and employees to participate in the sale of Common
Stock. No officer, director or employee of the Company or the Bank will be
compensated in connection with his participation by the payment of commissions
or other remuneration based either directly or indirectly on the transactions in
the Common Stock.
Procedure for Purchasing Shares
Expiration Date. The Offering will terminate at _____ p.m., local time,
on March __, 1998, unless extended by the Company, with prior approval of the
OTS, if required, for up to an additional 45 days (as so extended, the "
Expiration Date). Such extension may be granted by the Company, in its sole
discretion, without further approval or additional notice to purchasers in the
Offering. Any extension of the Offering beyond the Expiration Date would be
subject to OTS approval and potential purchasers would be given the right to
increase, decrease, or rescind their orders for Common Stock. If the minimum
number of shares offered in the Offering is not sold by the Expiration Date the
Company may terminate the Offering and promptly refund all orders for Common
Stock. A reduction in the number of shares to the minimum of the Offering Range
will not require the approval of the Mutual Holding Company's members or the
Mid-Tier Holding Company's stockholders, or an amendment to the Independent
Valuation. If the number of shares is reduced below the minimum of the Offering
Range, purchasers will be given an opportunity to increase, decrease, or rescind
their orders.
To ensure that each purchaser receives a Prospectus at least 48 hours
before the Expiration Date 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 an Order Form
will confirm receipt or delivery in accordance with Rule 15c2-8. Order Forms
will be distributed only with a Prospectus.
The Company reserves the right in its sole discretion to terminate the
Offering at any time and for any reason, in which case the Company will return
all purchase orders, plus interest at its current passbook rate from the date of
receipt.
Use of Order Forms. In order to purchase the Common Stock, each
purchaser must complete an Order Form. Incomplete Order Forms will not be
accepted. Any person receiving an Order Form who desires to purchase Common
Stock must do so prior to the Expiration Date by delivering (by mail or in
person) to the Company a properly executed and completed Order Form, together
with full payment for the shares purchased. Once tendered, an Order Form cannot
be modified or revoked without the consent of the Company. The Company reserves
the absolute right, in its sole discretion, to reject orders received in the
Community Offering, in whole or in part, at the time of receipt or at any time
prior to completion of the Offering. Each person ordering shares is required to
represent that he is purchasing such shares for his own account and that he has
no agreement or understanding with any person for the sale
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or transfer of such shares. The interpretation by the Company of the terms and
conditions of the Plan of Conversion and of the acceptability of the Order Forms
will be final.
Payment for Shares. Payment for all shares will be required to
accompany all completed Order Forms for the purchase to be valid. Payment for
shares may be made by (i) cash, (ii) check or money order made payable to
Peoples Bancorp, Inc., or (iii) authorization of withdrawal from savings
accounts (including certificates of deposit) maintained with the Bank.
Appropriate means by which such withdrawals may be authorized are provided in
the Order Forms. Once such a withdrawal amount has been authorized, a hold will
be placed on such funds, making them unavailable to the depositor until the
Offering has been completed or terminated. In the case of payments authorized to
be made through withdrawal from deposit accounts, all funds authorized for
withdrawal will continue to earn interest at the contract rate until the
Offering is completed or terminated. Interest penalties for early withdrawal
applicable to certificate accounts will not apply to withdrawals authorized for
the purchase of shares; however, if a withdrawal results in a certificate
account with a balance less than the applicable minimum balance requirement, the
certificate shall be canceled at the time of withdrawal without penalty, and the
remaining balance will earn interest at the passbook rate subsequent to the
withdrawal. In the case of payments made by cash, check or money order, such
funds will be placed in a segregated savings account and interest will be paid
by the Bank at the current passbook rate per annum from the date payment is
received until the Offering is completed or terminated. An executed Order Form,
once received by the Bank, may not be modified, amended or rescinded without the
consent of the Bank, unless the Offering is not completed by the Expiration
Date, in which event purchasers may be given the opportunity to increase,
decrease, or rescind their orders for a specified period of time.
Tax-qualified employee stock benefit plans may order shares by
submitting an Order Form, along with evidence, if applicable, of a loan
commitment from a financial institution (or the Company) for the purchase of
shares of Common Stock during the Offering and by making payment for shares of
Common Stock on the date of the closing of the Offering.
A depositor interested in using his or her IRA funds to purchase Common
Stock must do so through a self-directed IRA. Since the Bank does not offer such
accounts, it will allow a depositor to make a trustee-to-trustee transfer of the
IRA funds to a trustee offering a self-directed IRA program with the agreement
that such funds will be used to purchase the Common Stock in the Offering. There
will be no early withdrawal or IRS interest penalties for such transfers. The
new trustee would hold the Common Stock in a self-directed account in the same
manner as the Bank now holds the depositor's IRS funds. An annual administrative
fee may be payable to the new trustee. Depositors interested in using funds in a
Bank IRA to purchase Common Stock should contact the Stock Center at the Bank no
later than __________________, 1998 so that the necessary forms may be forwarded
for execution and returned prior to the Expiration Date.
Individuals who are participants in self-directed tax qualified plans
maintained by self-employed individuals ("Keogh Plans") at the Bank may use the
assets in their self-directed Keogh Plan accounts to purchase shares of Common
Stock in the Offering, provided that such Keogh Plans maintained at the Bank
must have their accounts transferred to an unaffiliated institution or broker to
purchase shares of Common Stock in the Offering.
In addition, the provisions of ERISA and IRS regulations require that
executive officers, directors and 10% stockholders who use self-directed IRA
funds and/or Keogh Plan accounts to purchase shares of Common Stock in the
Offering, make such purchase for the exclusive benefit of the IRA and/or Keogh
Plan participant.
The ESOP will not be required to pay for shares purchased until
consummation of the Offering, provided that there is in force from the time the
order is received a loan commitment from an unrelated financial institution or
the Company to lend to the ESOP the necessary amount to fund the purchase.
Delivery of Stock Certificates. Certificates representing Common Stock
issued in the Offering and Bank checks representing interest paid on
subscriptions made by cash, check, or money order will be mailed by the Bank to
the persons entitled thereto at the address noted on the Order Form, as soon as
practicable following consummation of the Offering and receipt of all necessary
regulatory approvals. Any certificates returned as undeliverable will be held by
the Bank until claimed by persons legally entitled thereto or otherwise disposed
of in accordance with
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applicable law. Until certificates for the Common Stock are available and
delivered to purchasers, purchasers may not be able to sell the shares of stock
which they ordered. Regulations prohibit the Bank from lending funds or
extending credit to any persons to purchase Common Stock in the Offering.
Other Restrictions. Notwithstanding any other provision of the Plan of
Conversion, no person is entitled to purchase any Common Stock to the extent
such purchase would be illegal under any federal or state law or regulation
(including state "blue-sky" registrations), or would violate regulations or
policies of the NASD, particularly those regarding free riding and withholding.
The Bank and/or its agents may require any subscriber to obtain and submit to
the Bank an acceptable legal opinion as to the legality of such person's
purchase and may refuse to honor any such purchase order if the legal opinion is
not timely furnished.
Restrictions on Transfer of Subscription Rights and Shares
Prior to the completion of the Conversion, the OTS conversion
regulations prohibit any person with subscription rights from transferring or
entering into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Plan of Conversion 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. The 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 Bank and the Company will pursue any and all legal and equitable
remedies in the event they become aware of the transfer of subscription rights
and will not honor orders known by them to involve the transfer of such rights.
Limitations on Common Stock Purchases
The Plan includes the following limitations, which are in addition to
other limitations described herein, on the number of shares of Common Stock
which may be purchased in the Offering:
(1) No person may purchase less than 25 shares of Common Stock;
(2) The ESOP may purchase in the aggregate up to 4% of the Subscription
Shares issued in the Offering and the 401(K) Plan may purchase up to
150,000 of the Subscription Shares issued in the Offering, including
shares issued in the event of an increase in the Offering Range of
15%;
(3) No person, together with associates of and groups of persons acting in
concert with such person, may purchase in the Offering a number of
Subscription Shares that when combined with Exchange Shares received
by any such person, together with associates of and persons acting in
concert with such person exceeds 1.5% of the shares of Conversion
Stock issued in the Conversion issued in the Offering provided that
Minority Stockholders who receive more than 1.5% of the shares issued
in the Conversion shall not be requires to divest any shares;
(4) Directors and officers of the Bank and their associates may not
purchase Subscription Shares in an amount that when combined with
Exchange Shares received by such directors and officers and their
associates exceeds 25% of the aggregate number of Subscription Shares
and Exchange Shares issued in the Conversion, excluding purchases by
the ESOP.
Depending upon market or financial conditions, the Board of Directors
of the Bank and Company, with the approval of the OTS and without further
approval of the Mid-Tier Holding Company's stockholders or the Mutual Holding
Company's members, may increase or decrease the purchase limitations. Subject to
any required regulatory approval and the requirements of applicable laws and
regulations, but without further approval of the members of the Company, both
the individual amount permitted to be subscribed for and the overall purchase
limitation in the
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Subscription Offering and the Community Offering may be increased to up to a
maximum of 5% of the shares issued in the Conversion at the sole discretion of
the Company and the Bank. If such amount is increased, subscribers for the
maximum amount will be, and certain other large subscribers who through their
subscriptions evidence a desire to purchase the maximum allowable number of
shares in the sole discretion of the Bank may be, given the opportunity to
increase their subscriptions up to the then applicable limit. The effect of such
a resolicitation will be an increase in the number of shares owned by
subscribers who choose to increase their subscriptions. In addition, the Boards
of Directors of the Company and the Bank may, in their sole discretion, increase
the maximum purchase limitation referred to above up to 9.99%, provided that
orders for shares exceeding 5% of the shares issued in the Conversion shall not
exceed, in the aggregate, 10% of the total. Requests to purchase additional
shares under this provision will be determined by the respective Boards of
Directors in their sole discretion. Notice of an increase in the maximum
limitations may be given orally or in writing. If given in writing, notice may
be mailed to the address on a deposit account or the stock order form.
Subscribers will not receive notice if the maximum purchase limitations are
decreased. The factors that may be considered in determining whether to change
the maximum purchase limitations include the amount of stock for which
subscriptions are received, the results of the Offering, and market conditions
at the time of the consummation of the Conversion.
In the event of an increase in the total number of shares offered in
the Offering due to an increase in the Offering Range of up to 15%, the maximum
number of shares that may be purchased as restricted by the purchase limitations
shall not be increased proportionately (except for the ESOP), and the additional
shares sold will be allocated in the following order of priority in accordance
with the Plan: (i) to fill the ESOP's subscription for 4% of the total number of
shares sold; (ii) in the event that there is an oversubscription at the Eligible
Account Holder, Supplemental Eligible Account Holder or Other Member category,
to fill unfulfilled subscriptions of such subscribers according to such
respective priorities; and (iii) to fill unfulfilled subscriptions in the
Community Offering with preference given first to Minority Stockholders and then
to natural persons residing in the Community.
The term "associate" of a person is defined to mean: (i) any
corporation (other than the Bank or a majority-owned subsidiary of the Bank) of
which such person is an officer, partner or 10% stockholder; (ii) any trust or
other estate in which such person has a substantial beneficial interest or
serves as a director or in a similar fiduciary capacity; provided, however, such
term shall not include any employee stock benefit plan of the Bank in which such
person serves as director or in a similar fiduciary capacity; and (iii) any
relative or spouse of such persons, or any relative of such spouse, who either
has the same home as such person or who is a director or officer of the Bank.
Directors are not treated as associates solely because of their Board
membership. For a further discussion of limitations on purchases of a converting
institution's stock at the time of Conversion and subsequent to Conversion, see
"Management of the Bank--Subscriptions by Management and Directors," and "The
Conversion--Certain Restrictions on Purchase or Transfer of Shares After
Conversion" and "Restrictions on Acquisition of the Company and the Bank."
Liquidation Rights
In the unlikely event of a complete liquidation of the Bank prior to
the Conversion, all claims of creditors of the Bank, including those of
depositors to the extent of their deposit balances, would be paid first.
Thereafter, if there were any assets of the Bank remaining, such assets would be
distributed to stockholders, including the Mutual Holding Company. Were the
Mutual Holding Company and the Bank to liquidate prior to the Conversion, all
claims of creditors would be paid first. Thereafter, if there were any assets of
the Mutual Holding Company remaining, members of the Mutual Holding Company
would receive such remaining assets, pro rata, based upon the deposit balances
in their deposit account in the Bank immediately prior to liquidation. In the
unlikely event that the Bank were to liquidate after 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, with any assets remaining thereafter distributed
to the Company as the holder of the Bank'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 assumed by the surviving institution.
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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 greater of: (a) the sum of: (i) the Mutual Holding Company's ownership
interest in the surplus and reserves of the Bank as of the date of its latest
balance sheet contained in the final Prospectus used in connection with
Conversion, and (ii) the restricted retained income account that reflects
certain dividends waived by the Mutual Holding Company; or (b) the retained
earnings of the Bank at the time that the Bank reorganized into the Mutual
Holding Company on August 3, 1995. The purpose of the liquidation account is to
provide Eligible Account Holders and Supplemental Eligible Account Holders who
maintain their deposit accounts with the Bank after the conversion with a
distribution upon complete liquidation of the Bank after Conversion. Each
Eligible Account Holder and Supplemental Eligible Account Holder, if he were to
continue to maintain his deposit account at the Bank, would be entitled, on a
complete liquidation of the Bank after Conversion to an interest in the
liquidation account prior to any payment to the stockholders of the Bank. Each
Eligible Account Holder and Supplemental Eligible Account Holder would have an
initial interest in such liquidation account for each deposit account, including
regular accounts, transaction accounts such as NOW accounts, money market
deposit accounts, and certificates of deposit, with a balance of $50 or more
held in the Bank on the Eligibility Record Date, or Supplemental Eligibility
Record Date, respectively ("Deposit Accounts"). 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 Eligibility Record Date, or
Supplemental Eligibility Record Date, respectively, bore to the balance of all
Deposit Accounts in the Bank on such dates.
If, however, on any December 31, annual closing date of the Bank,
commencing after December 31, 1998, the amount in any Deposit Account is less
than the amount in such Deposit Account on the Eligibility Record Date, or
Supplemental Eligibility Record Date, respectively, or any other annual closing
date, then the interest in the liquidation account relating to such Deposit
Account would be reduced from time to time 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.
Payment pursuant to liquidation rights of Eligible Account Holders and
Supplemental Eligible Account Holders would be separate and apart from any
insured deposit accounts to such depositor. Any assets remaining after the above
liquidation rights of Eligible Account Holders and Supplemental Eligible Account
Holders are satisfied would be distributed to the Company as the sole
shareholder of the Bank.
Tax Aspects
The Conversion will be effected as: (i) a merger of the Mutual Holding
Company into the Mid-Tier Holding Company in a tax-free reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"); and (ii) an exchange of the Mid-Tier Holding Company's Charter for
interim stock charter and simultaneous merger of the Mid-Tier Holding Company
into the Bank in a tax-free reorganization under Section 368(a)(1)(A) of the
Code; and (iii) a merger of the Interim Savings Bank into the Bank with the
Bank's shareholders exchanging their Bank common stock for Common Stock of the
Company in a tax-free reorganization under Code Section 368(a)(1)(A) by reason
of Code Section 368(a)(2)(E). Consummation of the Conversion is expressly
conditioned upon the prior receipt of an opinion of counsel with respect to
federal income taxation, and an opinion or letter of advice from counsel or tax
advisor with respect to New Jersey income taxation, that indicates that the
Conversion will not be a taxable transaction to the Mutual Holding Company, the
Mid-Tier Holding Company, the Bank, the Company, Interim Savings Bank, Eligible
Account Holders, Supplemental Eligible Account Holders, or Members of the Mutual
Holding Company. Unlike private letter rulings, opinions of counsel or tax
advisors are not binding on the IRS or the New Jersey Department of Treasury,
and either agency could disagree with such opinions. In the event of such
disagreement, there can be no assurance that the Company or Bank would prevail
in a judicial proceeding.
Pursuant to Revenue Procedure 94-3, the IRS has stated that it will not
rule on whether a transaction qualifies as a tax-free reorganization under Code
Section 368(a)(1)(A), including a transaction that qualifies under Code Section
368(a)(1)(A) by reason of Code Section 368(a)(2)(E), or whether the taxpayer is
subject to the consequences of qualification under that section (such as
nonrecognition and basis issues) but that it would rule on significant
sub-issues that must be resolved to determine whether the transaction qualifies
under the above sections. In several instances over
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the last two years, the IRS ruled favorably on certain significant sub-issues
associated with downstream mergers of mutual holding companies into their less
than 80 percent owned subsidiary savings associations. In such cases, the IRS
has ruled that (i) the exchange of the member's equity interests in the mutual
holding company for interests in a liquidation account established at the
savings association will satisfy the continuity of interest requirement with
respect to the merger of mutual holding company into the savings association;
(ii) pursuant to the merger of an interim savings association into the savings
association, the stock holding company will acquire control of the savings
association (as defined in Code Section 368(c)) as the interests in the
liquidation account and the shares of savings association stock previously held
by the mutual holding company will be disregarded; and (iii) the continuity of
interest requirement will not be violated by the exchange of stock holding
company stock for savings association stock in the merger of an interim savings
association into the savings association.
In December 1996, the IRS issued Revenue Procedure 94-76 which states
that the IRS will not issue private letter rulings with respect to downstream
mergers of a corporation into a "less than 80 percent distributee", i.e., a
corporation, such as the Mid-Tier Holding Company, in which the merging
corporation (i.e., the Mutual Holding Company) possesses less than 80 percent of
the total voting power of the stock of such corporation and less than 80 percent
of the total value of the stock of such corporation. The IRS has assumed this
"no-rule" position to study whether such downstream mergers circumvent the
purpose behind the repeal of General Utilities & Operating Co. v. Helvering, 296
U.S. 200 (1935). Counsel to the Company is of a view that the downstream merger
to effect the Conversion of the Mutual Holding Company to stock form, where
after consummation of the Conversion, the Company holds 100% of the shares of
the Bank and the untaxed appreciation of the Bank remains in corporate solution,
is not the type of downstream merger which can be considered as circumventing
the repeal of General Utilities. If, however, the IRS were to conclude that such
mergers circumvent the repeal of General Utilities, the IRS could issue
correcting regulations which could have the effect of taxing to the merging
corporation, as of the effective time of the merger, the fair market value of
the assets of such corporation over its basis in such assets. If such
regulations are issued, it is expected that they would apply on a prospective
basis and would have no effect on transactions consummated before their
issuance. The Company will receive an opinion of counsel that, in the absence of
a change in the regulations, and based on current law and regulations, the
merger of the Mutual Holding Company into the Mid-Tier Holding Company will
qualify as a tax-free merger under Code Section 368(a)(1)(A), as more fully
discussed below.
On the Effective Date, the Mutual Holding Company, the Mid-Tier Holding
Company and the Bank will receive an opinion of counsel, Luse Lehman Gorman
Pomerenk & Schick, A Professional Corporation, which will indicate that the
federal income tax consequences of the Conversion will be as follows: (i) the
merger of the Mutual Holding Company with and into the Mid-Tier Holding Company
will qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Code, (ii) the exchange of the members' equity interests in the Mutual
Holding Company for interests in a liquidation account established at the
Mid-Tier Holding Company will satisfy the continuity of interest requirement
with respect to the merger of the Mutual Holding Company into the Mid-Tier
Holding Company; (iii) the Mutual Holding Company will not recognize any gain or
loss on the transfer of its assets to the Mid-Tier Holding Company in exchange
for a liquidation account in the Mid-Tier Holding Company, and the Mid-Tier
Holding Company's assumption of the liabilities of Mutual Holding Company, if
any; (iv) no gain or loss will be recognized by the Mid-Tier Holding Company
upon the receipt of the assets of the Mutual Holding Company in exchange for a
liquidation account in the Mid-Tier Holding Company; (v) the basis of the assets
of Mutual Holding Company to be received by the Mid-Tier Holding Company will be
the same as the basis of such assets in the hands ofthe Mutual Holding Company
immediately prior to the transfer; (vi) the holding period of the assets of the
Mutual Holding Company to be received by the Mid-Tier Holding Company will
include the holding period of those assets in the hands of the Mutual Holding
Company immediately prior to the transfer; (vii) Mutual Holding Company members
will recognize no gain or loss upon the receipt of an interest in the
liquidation account in the Bank in exchange for their membership interest in the
Mutual Holding Company; (viii) the merger of the Mid-Tier Holding Company with
and into the Bank will qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Code, (ix) the exchange of the members' equity interests in
the Mid-Tier Holding Company for interests in a liquidation account established
at the Bank will satisfy the continuity of interest requirement with respect to
the merger of the Mid-Tier Holding Company into the Bank; (x) the Mid-Tier
Holding Company will not recognize any gain or loss on the transfer of its
assets to the Bank in exchange for a liquidation account in Bank, and the Bank's
assumption of the liabilities of Mid-Tier Holding Company, if any; (xi) no gain
or loss will be recognized by the Bank upon the
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receipt of the assets of the Mid-Tier Holding Company in exchange for a
liquidation account in Bank; (xii) the basis of the assets of Mid-Tier Holding
Company to be received by Bank will be the same as the basis of such assets in
the hands of the Mid-Tier Holding Company immediately prior to the transfer;
(xiii) the holding period of the assets of the Mid-Tier Holding Company to be
received by the Bank will include the holding period of those assets in the
hands of the Mid-Tier Holding Company immediately prior to the transfer; (xiv)
persons who have an interest in the liquidation account established in the
Mid-Tier Holding Company (i.e., former members of the Mutual Holding Company)
will recognize no gain or loss upon the receipt of an interest in the
liquidation account in the Bank in exchange for their interest in the Mid-Tier
Holding Company liquidation account; (xv) the Mid-Tier Holding Company
shareholders will not recognize any gain or loss upon their constructive
exchange of Mid-Tier Holding Company Common Stock for Bank Common Stock; (xvi)
the merger of Interim Savings Bank into Bank with Bank as the surviving
institution qualifies as a reorganization within the meaning of Section
368(a)(1)(A) of the Code, pursuant to Section 368(a)(2)(E) of the Code; (xvii)
interests in the liquidation account established at the Bank, and the shares of
Bank common stock held by the Mid-Tier Holding Company prior to consummation of
the merger of Mid-Tier Holding Company and Bank, will be disregarded for the
purposes of determining that an amount of stock in the Bank which constitutes
"control" was acquired by the Company pursuant to the merger of the Interim
Savings Bank into Bank; (xviii) the exchange of shares of Company Common Stock
for common stock of the Bank in the merger of Interim Savings Bank into the
Bank, following the merger of the Mid-Tier Holding Company into the Bank, will
not violate the continuity of interest requirement of the income tax
regulations; (xix) Interim Savings Bank will not recognize any gain or loss on
the transfer of its assets to Bank in exchange for Bank stock and the assumption
by the Bank of the liabilities, if any, of Interim Savings Bank; (xx) the Bank
will not recognize any gain or loss on the receipt of the assets of Interim
Savings Bank in exchange for Bank stock; (xxi) the Bank's basis in the assets
received from Interim Savings Bank in the proposed transaction will, in each
case, be the same as the basis of such assets in the hands of Interim Savings
Bank immediately prior to the transaction; (xxii) the Company will not recognize
any gain or loss upon its receipt of Bank stock solely in exchange for Company
Common Stock; (xxiii) the Bank's holding period for the assets received from
Interim Savings Bank in the proposed transaction will, in each instance, include
the period during which such assets were held by Interim Savings Bank; (xxiv)
Bank shareholders will not recognize any gain or loss upon their exchange of
Bank stock (which they constructively received) solely for shares of Company
Common Stock; (xxv) each Bank shareholder's aggregate basis in his or her
Company Common Stock received in the exchange will be the same as the aggregate
basis of the Bank stock surrendered in exchange therefor; (xxvi) each Bank
shareholder's holding period in his or her Company Common Stock received in the
exchange will include the period during which the Bank stock surrendered was
held, provided that the Bank stock surrendered is a capital asset in the hands
of the Bank shareholder on the date of the exchange; and (xxvii) the Eligible
Account Holders and Supplemental Eligible Account Holders will recognize gain,
if any, upon the issuance to them of withdrawable savings accounts, an interest
in the liquidation account and nontransferable subscription rights to purchase
Company stock, but only to the extent of the value, if any, of the subscription
rights. The form of such opinion has been filed with the SEC as an exhibit to
the Company's registration statement.
In the opinion of FinPro, which opinion is not binding on the IRS, 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 Account Holders and Supplemental
Eligible Account Holders are deemed to have an ascertainable value, receipt of
such rights could result in taxable gain to those Eligible Account Holders and
Supplemental Eligible Account Holders who exercise the subscription rights in an
amount equal to such value and the Bank could recognize gain on such
distribution. Eligible Account Holders and Supplemental Eligible Account Holders
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 of counsel is not binding on the IRS
and the IRS could disagree with the conclusions reached therein. Depending on
the conclusion or conclusions with which the IRS disagrees, the IRS may take the
position that the transaction is taxable to any one or more of the Mutual
Holding Company, the Mid-Tier Holding Company and/or the members of the Mutual
Holding Company, the Bank, the Minority Stockholders of the Bank and/or the
Eligible Account Holders and Supplemental Eligible Account Holders who exercise
their subscription
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rights. In the event of such disagreement, there can be no assurance that the
IRS would not prevail in a judicial or administrative proceeding.
Certain Restrictions on Purchase or Transfer of Shares After Conversion
All Subscription Shares purchased in the Offering by a director or an
executive officer of the Bank will be subject to a restriction (required by the
OTS) 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. 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 as a stock dividend, stock
split, or otherwise, with respect to such restricted stock will be subject to
the same restrictions. The directors and executive officers of the Bank and
certain other persons in receipt of material non-public information will also be
subject to the insider trading rules promulgated pursuant to the Exchange Act.
In certain circumstances officers and directors of the Company could be deemed
to be engaged in the distribution of the Common Stock, and be restricted in
their ability to sell their shares of Common Stock under SEC regulations.
Purchases of outstanding shares of Common Stock of the Company by
directors, executive officers (or any person who was an executive officer or
director of the Bank after adoption of the Plan of Conversion) and their
associates during the three-year period following 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 the purchase of stock pursuant to a stock option plan or any
tax qualified employee stock benefit plan of or non-tax qualified employee stock
benefit plan of the Bank or Company (including any employee plan, recognition
plan or restricted stock plan).
Unless approved by the OTS, the Company will not be permitted to
repurchase shares of its Common Stock for three years, except for: (i) an offer
to all stockholders on a pro rata basis; or (ii) for the repurchase of
qualifying shares of a director. Notwithstanding the foregoing, beginning one
year following completion of the Conversion the Company may repurchase its
Common Stock so long as (i) the repurchases within the following two years are
part of an open-market program not involving greater than 5% of its outstanding
capital stock during a twelve-month period; (ii) the repurchases do not cause
the Bank to become undercapitalized; and (iii) the Company provides to the
Regional Director of the OTS no later than ten 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.
RESTRICTIONS ON THE ACQUISITION OF THE COMPANY AND THE BANK
General
The Plan of Conversion provides for the Conversion of the Mutual
Holding Company from the mutual to the stock form of organization and in
connection therewith, the Company, as a new Delaware stock corporation has been
organized which will become the sole stockholder of the Bank following the
Conversion. Provisions in the Company's Certificate of Incorporation and Bylaws
together with provisions of Delaware corporate law, may have anti-takeover
effects. In addition, certain provisions of the Company's and Bank's
compensation plans contain provisions which may discourage or make it more
difficult for persons or companies to acquire control of either the Company or
the Bank. Also, the Bank's Stock Charter and Bylaws and compensation plans
entered into in connection with the Conversion may have anti-takeover effects as
described below. In addition, regulatory restrictions may make it difficult for
persons or companies to acquire control of either the Company or the Bank.
Restrictions in the Company's Certificate of Incorporation and Bylaws
A number of provisions of the Company's Certificate 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 Certificate of Incorporation and Bylaws and certain
other statutory and regulatory
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provisions relating to stock ownership and transfers, and business combinations,
which might be deemed to have a potential "anti-takeover" effect. These
provisions may have the effect of discouraging a future takeover attempt or
change of control which is not approved by the Board of Directors but which a
majority of 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 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 Certificate of Incorporation and Bylaws of the Company
is necessarily general and reference should be made in each case to such
Certificate of Incorporation and Bylaws, which are incorporated herein by
reference.
Limitation on Voting Rights. The Certificate of Incorporation of the
Company provides that in no event shall any record owner of any outstanding
Common Stock which is beneficially owned, directly or indirectly, by a person
who beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the "Limit") be entitled or permitted to any vote in respect of the
shares held in excess of the Limit. Beneficial ownership is determined pursuant
to Rule 13d-3 of the General Rules and Regulations promulgated pursuant to the
Securities Exchange Act of 1934, and includes shares beneficially owned by such
person or any of his affiliates (as defined in the Certificate of
Incorporation), shares which such person or his affiliates have the right to
acquire upon the exercise of conversion rights or options and shares as to which
such person and his affiliates have or share investment or voting power, but
shall not include shares beneficially owned by the ESOP or directors, officers
and employees of the Bank or Company or shares that are subject to a revocable
proxy and that are not otherwise beneficially owned, or deemed by the Company to
be beneficially owned, by such person and his affiliates. The Certificate of
Incorporation of the Company further provides that the provision limiting voting
rights may only be amended upon the vote of 80% of the outstanding shares of
voting stock.
Board of Directors. The Board of Directors of the Company is divided
into three classes. Each class shall serve a staggered term. The Company's
Certificate of Incorporation and Bylaws provide that the size of the Board l
shall be determined by a majority of the directors. The Certificate of
Incorporation and the Bylaws provide that any vacancy occurring in the Board,
including a vacancy created by an increase in the number of directors or
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, shall be filled for the remainder of the unexpired term
exclusively by a majority vote of the directors then in office. 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 shareholder 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. The Certificate of
Incorporation of the Company provides that a director may be removed from the
Board of Directors prior to the expiration of his term only for cause, upon the
vote of 80% of the outstanding shares of voting stock.
The Company will have a Nominating Committee which will be responsible
for nominations of directors. Stockholders who wish to nominate persons for
election to the Board of Directors may do so if the stockholder makes timely
written notice to the Company's Secretary. Generally, to be timely, such notice,
which must include all information required to be disclosed pursuant to
Regulation 14A under the Securities Exchange Act of 1934, must be received at
the Company's principal executive offices no later than ninety (90) days prior
to the date of the meeting.
In the absence of these provisions, the vote of the holders of a
majority of the shares could remove the entire Board, with or without cause, and
replace it with persons of such holders' choice.
Cumulative Voting, Special Meetings and Action by Written Consent. The
Certificate of Incorporation does not provide for cumulative voting for any
purpose. Moreover, special meetings of shareholders of the Company may be called
only by the Board of Directors of the Company. The Certificate of Incorporation
also provides that any action required or permitted to be taken by the
shareholders of the Company may be taken only at an annual or special meeting
and prohibits shareholder action by written consent in lieu of a meeting.
Authorized Shares. The Certificate of Incorporation authorizes the
issuance of 70.0 million shares of Common Stock and 1.0 million shares of
Preferred 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
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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 rating 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 upon exercise of stock options and to permit
the 1998 Retention Plan to obtain the equivalent of 4% of the shares sold in the
Offering.
Shareholder Vote Required to Approve Business Combinations with
Principal Stockholders. The Certificate of Incorporation requires the approval
of the holders of at least 80% of the Company's outstanding shares of voting
stock to approve certain "Business Combinations," as defined therein, and
related transactions. Under Delaware law, absent this provision, Business
Combinations, including mergers, consolidations and sales of all or
substantially all of the assets of a corporation must, subject to exceptions, be
approved by the vote of the holders of only a majority of the outstanding shares
of Common Stock of the Company and any other affected class of stock. Under the
Certificate of Incorporation, at least 80% approval of stockholders is required
in connection with any Business Combination involving an Interested Stockholder
(as defined below) except (i) in cases where the proposed transaction has been
approved in advance by a majority of those members of the Company's Board of
Directors who are unaffiliated with the Interested Stockholder and were
directors prior to the time when the shareholder became an Interested
Stockholder or (ii) if the proposed transaction met certain conditions set forth
therein which are designed to afford the shareholders a fair price in
consideration for their shares, in which cases approval of only a majority of
the outstanding shares of voting stock is required. The term "Interested
Stockholder" is defined to include any individual, corporation, partnership or
other entity (other than the Company or its subsidiary) which owns beneficially
or controls, directly or indirectly, 10% or more of the outstanding shares of
voting stock of the Company. This provision of the Certificate of Incorporation
applies to any "Business Combination," which is defined to include (i) any
merger or consolidation of the Company or any of its subsidiaries with or into
any Interested Stockholder or Affiliate (as defined in the Certificate of
Incorporation) of an Interested Stockholder; (ii) any sale, lease, exchange,
mortgage, transfer, pledge or other disposition to or with any Interested
Stockholder or Affiliate of an Interested Stockholder of 25% or more of the
assets of the Company or combined assets of the Company and its subsidiary;
(iii) the issuance or transfer to any Interested Stockholder or its Affiliate by
the Company (or any subsidiary) of any securities of the Company in exchange for
any assets, cash or securities the value of which equals or exceeds 25% of the
fair market value of the Common Stock of the Company; (iv) the adoption of any
plan for the liquidation or dissolution of the Company proposed by or on behalf
of any Interested Stockholder or Affiliate thereof; and (v) any reclassification
of securities, recapitalization, merger or consolidation of the Company which
has the effect of increasing the proportionate share of Common Stock or any
class of equity or convertible securities of the Company owned directly or
indirectly, by an Interested shareholder or Affiliate thereof.
Evaluation of Offers. The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating any
offer of another "Person" (as defined therein), to (i) make a tender or exchange
offer for any equity security of the Company, (ii) merge or consolidate the
Company with another corporation or entity or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
may, in connection with the exercise of its judgment in determining what is in
the best interest of the Company, the Bank and the stockholders of the Company,
give due consideration to all relevant factors, including, without limitation,
the social and economic effects of acceptance of such offer on the Company's
customers and the Bank's present and future account holders, borrowers and
employees; on the communities in which the Company and the Bank operate or are
located; and on the ability of the Company to fulfill its corporate objectives
as a savings and loan holding company and on the ability of the Bank to fulfill
the objectives of a federally chartered stock savings association under
applicable statutes and regulations. By having these standards in the
Certificate of Incorporation of the Company, the Board of Directors may be in a
stronger position to oppose such a transaction if the Board concludes that the
transaction would not be in the best interest of the Company, even if the price
offered is significantly greater than the then market price of any equity
security of the Company.
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Amendment of Certificate of Incorporation and Bylaws. Amendments to the
Company's Certificate of Incorporation must be approved by a majority vote of
its Board of Directors and also by a majority of the outstanding shares of its
voting stock, provided, however, that an affirmative vote of at least 80% of the
outstanding voting stock entitled to vote (after giving effect to the provision
limiting voting rights) is required to amend or repeal certain provisions of the
Certificate of Incorporation, including the provision limiting voting rights,
the provisions relating to approval of certain business combinations, calling
special meetings, the number and classification of directors, director and
officer indemnification by the Company and amendment of the Company's Bylaws and
Certificate of Incorporation. The Company's Bylaws may be amended by its Board
of Directors, or by a vote of 80% of the total votes eligible to be voted at a
duly constituted meeting of stockholders.
Certain Bylaw Provisions. The Bylaws of the Company also require a
shareholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at a shareholder meeting to have at least 90
days advance notice to the Secretary of the Company. The notice provision
requires a shareholder who desires to raise new business to provide certain
information to the Company concerning the nature of the new business, the
shareholder and the stockholder's interest in the business matter. Similarly, a
shareholder wishing to nominate any person for election as a director must
provide the Company with certain information concerning the nominee and the
proposing stockholder.
Anti-Takeover Effects of the Company's Certificate of Incorporation, Bylaws and
Compensation Plans Adopted in the Conversion
The provisions described above are intended to reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its Board of Directors. The
provisions of the Bank's current and proposed employment agreements and stock
benefit plans may also discourage takeover attempts by increasing the costs to
be incurred by the Bank and Company in the event of a takeover. See "Management
of the Bank."
The foregoing provisions and limitations may make it more difficult for
companies or persons to acquire control of the Bank. Additionally, the
provisions could deter offers to the shareholders which might be viewed by such
shareholders to be in their best interests.
The Company's Board of Directors believes that the provisions of the
Certificate of Incorporation, Bylaws and compensation plans are in the best
interests of the Company and its stockholders. An unsolicited non-negotiated
proposal can seriously disrupt the business and management of a corporation and
cause it great expense. Accordingly, the Board of Directors believes it is in
the best interests of the Company and its stockholders to encourage potential
acquirors to negotiate directly with management and that these provisions will
encourage such negotiations and discourage non-negotiated 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 a price that reflects
the true value of the Company and that otherwise is in the best interest of all
stockholders.
Delaware Corporate Law
In 1988, Delaware enacted a statute designed to provide Delaware
corporations with additional protection against hostile takeovers. The takeover
statute, which is codified in Section 203 of the Delaware General Corporate Law
("Section 203"), is intended to discourage certain takeover practices by
impeding the ability of a hostile acquiror to engage in transactions with the
target company.
In general, Section 203 provides that a "Person" (as defined therein)
who owns 15% or more of the outstanding voting stock of a Delaware corporation
(an "Interested Stockholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such "Person" became an Interested Stockholder. The
term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.
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The statute exempts the following transactions from the requirements of
Section 203: (i) any business combination if, prior to the date a person became
an Interested Stockholder, the Board of Directors approved either the business
combination or the transaction which resulted in the shareholder becoming an
Interested Stockholder; (ii) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he became an Interested Stockholder, calculated without regard to those
shares owned by the corporation's directors who are also officers or certain
employee stock plans; (iii) any business combination with an Interested
Stockholder that is approved by the Board of Directors and by a two-thirds vote
of the outstanding voting stock not owned by the Interested Stockholder; and
(iv) certain business combinations that are proposed after the corporation had
received other acquisition proposals and which are approved or not opposed by a
majority of certain continuing members of the Board of Directors. A corporation
may exempt itself from the requirements of the statute by adopting an amendment
to its Certificate of Incorporation or Bylaws electing not to be governed by
Section 203. At the present time, the Board of Directors of the Company does not
intend to propose any such amendment.
Restrictions in the Bank's Federal Stock Charter and Bylaws
The Bank's Charter contains a provision whereby the acquisition of or
offer to acquire beneficial ownership of more than 10% of the issued and
outstanding shares of any class of equity securities of the Bank by any person
(i.e., any individual, corporation, group acting in concert, trust, partnership,
joint stock company or similar organization), either directly or through an
affiliate thereof, will be prohibited until August 3, 2000 (five years from the
date of consummation of the Reorganization). Any stock beneficially owned in
excess of 10% of the stock outstanding will be deemed to be acquired in
violation of the Charter provision and will not be counted as outstanding for
voting purposes. This limitation shall not apply to any transaction in which the
Bank forms a stock holding company without a change in the respective beneficial
ownership interests of its stockholders, other than pursuant to the exercise of
any dissenter or appraisal rights, the purchase of shares by underwriters in
connection with a public offering, or the purchase of shares by a tax qualified
employee stock benefit plan. In the event that holders of revocable proxies for
more than 10% of the shares of the Common Stock of the Company seek, among other
things, to elect one-third or more of the Company's Board of Directors, to cause
the Company's stockholders to approve the acquisition or corporate
reorganization of the Company, or to exert a continuing influence on a material
aspect of the business operations of the Company, which actions could indirectly
result in a change in control of the Bank, the Board of Directors of the Bank
will be able to assert this provision of the Bank's Charter against such
holders. Although the Board of Directors of the Bank is not currently able to
determine when and if it would assert this provision of the Bank's Charter, the
Board of Directors, in exercising its fiduciary duty, may assert this provision
if it were deemed to be in the best interests of the Bank, the Company and its
stockholders. It is unclear, however whether this provision, if asserted, would
be successful against such persons in a proxy contest which could result in a
change in control of the Bank indirectly through a change in control of the
Company. For a period of five years from the effective date of the
Reorganization, shareholders will not be permitted to call a special meeting of
shareholders relating to a change of control of the Bank or a Charter amendment
or to cumulate their votes in the election of directors. The staggered terms of
the Board of Directors could have an anti-takeover effect by making it more
difficult for a majority of shares to force an immediate change in the Board of
Directors since only one-third of the Board is elected each year. The purpose of
the provisions is to assure stability and continuity of management of the Bank
in the years immediately following the Conversion.
Although the Bank has no arrangements, understandings or plans at the
present time for the issuance or use of the shares of undesignated preferred
stock proposed to be authorized, the Board of Directors believes that the
availability of such shares will provide the Bank with increased flexibility in
structuring possible future financing and acquisitions and in meeting other
corporate needs which may arise. In the event of a proposed merger, tender offer
or other attempt to gain control of the Bank of which management does not
approve, it might be possible for the Board of Directors to authorize the
issuance of one or more series of preferred stock with rights and preferences
which could impede the completion of such a transaction. An effect of the
possible issuance of such preferred stock, therefore, may be to deter or render
more difficult a future takeover attempt. The Board of Directors of the Bank
does not intend to issue any preferred stock except on terms which the Board
deems to be in the best interests of the Bank and its then existing
stockholders.
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Regulatory Restrictions
The Plan of Conversion prohibits any person, prior to the completion of
the Conversion, from transferring, or from entering into any agreement or
understanding to transfer, to the account of another, legal or beneficial
ownership of the subscription rights issued under the Plan or the Common Stock
to be issued upon their exercise. The Plan also prohibits any person, prior to
the completion of the Conversion, from offering, or making an announcement of an
offer or intent to make an offer, to purchase such subscription rights or Common
Stock.
For three years following the Conversion, OTS regulations prohibit any
person from acquiring, either directly or indirectly, or making an offer to
acquire more than 10% of the stock of any converted savings institution, without
the prior written approval of the OTS, except for (i) offers that if
consummated, would not result in the acquisition by such person during the
preceding 12-month period of more than 1% of such stock, (ii) offers in the
aggregate for up to 24.99% by the ESOP or other tax-qualified plans of the
Company or the Bank, and (iii) offers which are not offered by recently
converted savings associations and which receive prior OTS approval. Such
prohibition is also applicable to the acquisition of the Common Stock of the
Company. In the event that any person, directly or indirectly, violates this
regulation, the securities beneficially owned by such person in excess of 10%
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 a
vote of shareholders. The definition of beneficial ownership for this regulation
extends to persons holding revocable or irrevocable proxies for the Company's
stock under circumstances that give rise to a conclusive or rebuttable
determination of control under the OTS regulations.
In addition, any proposal to acquire 10% of any class of equity
security of the Company generally would be subject to approval by the OTS under
the Savings and Loan Holding Company Act (the "SLHCA"). The OTS requires all
persons seeking control of a savings institution, and, therefore, indirectly its
holding company, to obtain regulatory approval prior to offering to obtain
control. Such change in control restrictions on the acquisition of holding
company stock are not limited to three years after conversion but will apply for
as long as the regulations are in effect. Persons holding revocable or
irrevocable proxies may be deemed to be beneficial owners of such securities
under OTS regulations and therefore prohibited from voting all or the portion of
such proxies in excess of the 10% aggregate beneficial ownership limit. Such
regulatory restrictions may prevent or inhibit proxy contests for control of the
Company or the Bank which have not received prior regulatory approval.
Additional Anti-takeover Effects
Assuming executive officers and directors (i) purchase 76,000
Subscription Shares in the Offering, (ii) receive Exchange Shares in the Share
Exchange as described above, (iii) receive a number of shares of Common Stock
equal to 4% and 10% of the number of Subscription Shares sold in the Offering
pursuant to the 1998 Recognition Plan and 1998 Stock Option Plan, respectively
(assuming such plans are approved by stockholders, that all awards are vested
and all options exercised, and the 1998 Recognition Plan shares are purchased in
the open market); and (iv) receive all stock benefits that were not vested as of
December 1, 1997, and exercised all such stock options; then executive officers
and directors will own between _____% and _____% of the Common Stock at the
minimum and adjusted maximum of the Offering Range, respectively. Such amount
does not include the 2.6% of the Company's Common Stock that will be owned by
the ESOP at the conclusion of the Conversion, assuming it purchases 8.0% of the
Subscription Shares sold in the Offering, and assuming that all participants
vote the shares allocated to their ESOP account in accordance with management's
recommendations. Under the terms of the ESOP, the unallocated shares will be
voted by the independent ESOP trustee in the same proportion as the allocated
shares. Accordingly, directors and officers will have effective voting control
over a substantial amount of Common Stock issued and outstanding at the
completion of the Conversion. The potential voting control by directors and
officers could, together with additional stockholder support or upon exercise of
their options, defeat stockholder proposals requiring an 80% supermajority vote.
As a result, these provisions may preclude takeover attempts that certain
stockholders deem to be in their best interest and may tend to perpetuate
existing management.
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DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
At the Effective Date, the Company will be authorized to issue 75.0
million shares of Common Stock having a par value of $.01 per share and 5.0
million shares of preferred stock having a par value of $.01 per share (the
"Preferred Stock"). The Company currently expects to issue up to 20,700,648
(subject to adjustment) shares of Common Stock in the Offering, and up to
10,809,352 shares (subject to adjustment) in exchange for Minority Shares in the
Conversion. The Company does not intend to issue shares of Preferred Stock in
the Conversion. Each share of the Company's Common Stock will have the same
relative rights as, and will be identical in all respects with, each other share
of Common Stock. 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.
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
or any other government agency.
Common Stock
Dividends. The Company can pay dividends out of statutory surplus or
from certain net profits if, as and when declared by its Board of Directors. The
payment of dividends by the Company is subject to limitations which are imposed
by law and applicable regulation. 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 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 Delaware law or as are otherwise presented to them by
the Board of Directors. Except as discussed in "Restrictions on Acquisition of
the Company and the Bank," 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. Certain matters require an 80% shareholder vote.
See "Restrictions on Acquisition of the Company and the Bank."
As a federal stock savings association, corporate powers and control of
the Bank are vested in its Board of Directors, who elect the officers of the
Bank and who fill any vacancies on the Board of Directors as it exists upon
Conversion. Voting rights of the Bank are vested exclusively in the owners of
the shares of capital stock of the Bank, which will be the Company, and voted at
the direction of the Company's Board of Directors. Consequently, the holders of
the Common Stock will not have direct control of the Bank.
Liquidation. In the event of any liquidation, dissolution or winding up
of the Bank, the Company, as holder of the Bank's capital stock would be
entitled to receive, after payment or provision for payment of all debts and
liabilities of the Bank (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 Bank available for
distribution. In the event of 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.
The Common Stock is not subject to redemption.
115
<PAGE>
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 shareholder approval, issue Preferred Stock with
voting, 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.
DESCRIPTION OF CAPITAL STOCK OF THE BANK
General. The Charter of the Bank authorizes the issuance of capital
stock consisting of 20,000,000 shares of common stock, par value $10.00 per
share, and 10,000,000 shares of preferred stock, which preferred stock may be
issued in series and classes having such rights, preferences, privileges and
restrictions as the Board of Directors may determine. Each share of common stock
of the Bank has the same relative rights as, and is identical in all respects
with, each other share of common stock. The Board of Directors of the Bank is
authorized to approve the issuance of common stock up to the amount authorized
by the Charter without the approval of the Bank's stockholders. All of the
issued and outstanding Common Stock of the Bank will be held by the Company as
the Bank's sole stockholder.
Dividends. The holders of the Bank's common stock are entitled to
receive and to share equally in such dividends as may be declared by the Board
of Directors of the Bank out of funds legally available therefore. See "Dividend
Policy" for certain restrictions on the payment of dividends.
Voting Rights. The holders of the Bank's common stock possess exclusive
voting rights in the Bank. Each holder of shares of common stock is entitled to
one vote for each share held, subject to any right of shareholders to cumulate
their votes for the election of directors. The holders of the Bank's common
stock are not be permitted to cumulate their votes for the election of
directors. See "Restrictions on Acquisition of the Company and the
Bank--Antitakeover Effects of the Company's Certificate of Incorporation, Bylaws
and Compensation Plans Adopted in the Conversion."
Liquidation. In the event of any liquidation, dissolution, or winding
up of the Bank, the holders of the Bank's common stock will be entitled to
receive, after payment of all debts and liabilities of the Bank (including all
deposit accounts and accrued interest thereon), and distribution of the balance
in the special liquidation account to Eligible Account Holders, all assets of
the Bank available for distribution in cash or in kind. If additional preferred
stock is issued subsequent to the Conversion, the holders thereof may also have
priority over the holders of common stock in the event of liquidation or
dissolution.
Preemptive Rights; Redemption. Holders of the common stock of the Bank
will not be entitled to preemptive rights with respect to any shares of the Bank
which may be issued. The common stock will not be subject to redemption. Upon
receipt by the Bank of the full specified purchase price thereon, the common
stock will be fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Chase Mellon
Shareholder Services.
EXPERTS
The consolidated financial statements of Peoples Bancorp, Inc. as of
December 31, 1996 and 1995 and for each of the years in the three year period
ended December 31, 1996, have been included herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
116
<PAGE>
FinPro has consented to the publication herein of the summary of its
report to the Bank and Company setting forth its opinion as to the estimated pro
forma market value of the Common Stock upon Conversion and its opinion with
respect to subscription rights.
LEGAL OPINIONS
The legality of the Common Stock and the federal income tax
consequences of the Conversion will be passed upon for the Bank and Company by
Luse Lehman Gorman Pomerenk & Schick, A Professional Corporation, Washington,
D.C., special counsel to the Bank and Company. Certain legal matters will be
passed upon for FBR by Malizia, Spidi, Sloane & Fisch, P.C., 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 Conversion Valuation 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 SEC maintains a web site (http://www.sec.gov) that contains reports, proxy
and information statements and other information regarding registrants,
including the Company, that file electronically. 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.
The Bank has filed an application for conversion with the OTS with
respect to the Conversion. Pursuant to the rules and regulations of the OTS,
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 Office of the District Director of the
OTS located at 10 Exchange Place, 18th Floor, Jersey City, New Jersey 07302.
In connection with 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 solicitation rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
the annual and periodic reporting and certain other requirements of the Exchange
Act. Under the Plan of Conversion, 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 Certificate of Incorporation and the Bylaws of the
Company and the Federal Stock Charter and Bylaws of the Bank are available
without charge from the Bank.
117
<PAGE>
PEOPLES BANCORP, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INDEPENDENT AUDITORS' REPORT................................................................ F-2
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CONDITION
(As of September 30, 1997 (unaudited) and December 31, 1996 and 1995) .................... F-3
CONSOLIDATED STATEMENTS OF INCOME
(For the nine months ended September 30, 1997 and 1996
(unaudited) and the years ended December 31, 1996, 1995 and 1994)....................... 37
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(For the nine months ended September 30, 1997 (unaudited) and the years
ended December 31, 1996, 1995 and 1994)................................................. F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(For the nine months ended September 30, 1997 and 1996 (unaudited) and
the years ended December 31, 1996, 1995 and 1994)....................................... F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(For the nine months ended September 30, 1997 and 1996 (unaudited) and
the years ended December 31, 1996, 1995 and 1994)....................................... F-10
</TABLE>
All schedules are omitted as the required information is not applicable or the
information is presented in the consolidated financial statements.
Financial statements of Peoples Bancorp, Inc. (the "Company") are not presented
herein because the Company has not yet issued any stock, has no assets and no
liabilities, and has not conducted any business other than of an organizational
nature.
Financial statements of Peoples Bancorp, M.H.C. (the "Mutual Holding Company")
are not presented herein because the Mutual Holding Company's assets other than
Mid-Tier Common Stock are insignificant and it has no liabilities and does not
conduct any business.
F-1
<PAGE>
PEOPLES BANCORP, INC.
Consolidated Financial Statements
September 30, 1997 and 1996 (Unaudited)
and December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
<PAGE>
[GRAPHIC OMITTED]
Independent Auditors' Report
The Board of Directors and Stockholders
Peoples Bancorp, Inc.:
We have audited the accompanying consolidated financial statements of Peoples
Bancorp, Inc. (holding company for Trenton Savings Bank FSB) as listed on the
accompanying index. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 test 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
management, 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Peoples Bancorp,
Inc. as of December 31, 1996 and 1995, and the results of its operations and
cash flows for each of the years in the three-year period ended December 31,
1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Short Hills, N.J.
January 21, 1997, except as to note 21,
which is as of December 31, 1997
F-2
<PAGE>
PEOPLES BANCORP, INC.
Consolidated Statements of Condition
September 30, 1997 (unaudited) and
December 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
December 31,
September 30, -----------------
Assets 1997 1996 1995
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Cash and due from banks (note 14) $ 10,909 12,938 6,253
Federal funds sold 2,300 8,000 10,000
--------- --------- -------
Total cash and cash equivalents 13,209 20,938 16,253
Securities available for sale (note 5) 127,651 87,648 83,776
Securities and mortgage-backed securities held to
maturity (market value of $70,922 in 1997, $86,512
in 1996 and $92,158 in 1995) (notes 6 and 7) 70,761 86,553 91,261
Federal Home Loan Bank stock, at cost 3,386 3,089 2,864
Loans, net (note 8) 397,866 380,288 306,093
Bank premises and equipment, net (note 9) 6,800 6,982 5,867
Accrued interest receivable (note 10) 4,823 3,602 3,765
Prepaid expenses 1,822 1,471 767
Intangible assets (note 2) 10,834 9,164 2,325
Other assets 1,790 1,281 1,247
--------- --------- ---------
Total assets $ 638,942 601,016 514,218
========= ========= =========
Liabilities and Stockholders' Equity
Liabilities:
Deposits (note 11) 493,334 491,246 410,770
Borrowing (note 12) 30,000 - -
Accrued expenses and other liabilities 7,369 6,418 5,906
--------- --------- ---------
Total liabilities 530,703 497,664 416,676
--------- --------- ---------
Stockholders' equity:
Common stock. $.10 par value. Authorized
20,000,000 shares; issued and outstanding
9,045,795 shares at September 30, 1997,
9,037,160 shares at December 31, 1996 and
8,912,500 shares at December 31, 1995 904 904 891
Additional paid-in capital 30,495 30,357 28,687
Retained earnings - substantially restricted 77,592 72,545 65,267
Unearned Management Recognition Plan shares (954) (1,543) -
Net unrealized gain on securities available for sale,
net of taxes 202 1,089 2,697
---------- --------- ---------
Total stockholders' equity (notes 13 and 14) 108,239 103,352 97,542
---------- --------- ---------
Commitments and contingencies (notes 9 and 16)
Total liabilities and stockholders' equity $ 638,942 601,016 514,218
========== ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
PEOPLES BANCORP, INC.
Consolidated Statements of Stockholders' Equity
For the nine months ended September 30, 1997 (unaudited)
and the years ended December 31, 1996, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
Net
unrealized
gain on
Retained Unearned securities
Additional earnings Management available Total
Number Common paid-in (substantially Recognition for sale, stockholders'
of shares stock capital restricted) Plan shares net of taxes equity
--------- ------ --------- ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 --$ -- -- 49,123 -- -- 49,123
Net income for the year -- -- -- 7,675 -- -- 7,675
Cumulative effect of accounting change - net
unrealized gain in securities designated as
available for sale, net of income tax
expense of $3,019 -- -- -- -- -- 5,371 5,371
Net change in net unrealized gain on securities
available for sale, net of income tax
benefit of $1,861 -- -- -- -- -- (3,401) (3,401)
--------- ----- --------- ---------- -------- ----- ---------
Balance at December 31, 1994 -- -- -- 56,798 -- 1,970 58,768
Proceeds of the stock offering, net of issuance
expenses of $1,387, and mutual holding
company capitalization, $200 8,912,500 891 28,687 -- -- -- 29,578
Net income for the year -- -- -- 8,648 -- -- 8,648
Dividends declared -- -- -- (179) -- -- (179)
Net change in net unrealized gain on securities
available for sale, net of tax expense of $360 -- -- -- -- -- 727 727
--------- ----- --------- ---------- -------- ------ ----------
Balance at December 31, 1995 8,912,500 891 28,687 65,267 -- 2,697 97,542
Net income for the year -- -- -- 8,391 -- -- 8,391
Dividends declared -- -- -- (1,113) -- -- (1,113)
Establishment of Management Recognition Plan 124,660 13 1,670 -- (1,683) -- --
Amortization on unearned Management Recognition
Plan shares -- -- -- -- 140 -- 140
Net change in net unrealized gain on securities
available for sale, net of tax expense of $905 -- -- -- -- -- (1,608) (1,608)
--------- ----- --------- ---------- -------- ----- ---------
Balance at December 31, 1996 9,037,160 904 30,357 72,545 (1,543) 1,089 103,352
Net income for the nine month period (unaudited) -- -- -- 5,898 -- -- 5,898
Dividends declared -- -- -- (851) -- -- (851)
Proceeds from exercise of stock options 8,635 -- 13 -- -- -- 13
Amortization on unearned Management Recognition
Plan shares -- -- 125 -- 589 -- 714
Net change in net unrealized gain on securities
available for sale, net of tax expense of $499 -- -- -- -- -- (887) (887)
--------- ----- --------- ---------- -------- ------ ----------
Balance at September 30, 1997 (unaudited) 9,045,795 $ 904 30,495 77,592 (954) 202 108,239
========= ===== ========= ========== ======== ====== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
PEOPLES BANCORP, INC.
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 (unaudited)
and the years ended December 31, 1996, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,898 6,448 8,391 8,648 7,675
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 1,488 - - 150 181
Depreciation and amortization expense 579 147 507 433 389
Amortization of Management Recognition Plan shares 714 56 140 - -
Amortization of intangible assets 577 204 389 226 21
Net accretion of premiums and discounts on securities (64) (126) (586) (204) (81)
(Increase) decrease in accrued interest receivable
and other assets (4,340) 361 602 (4,997) 124
Increase (decrease) in accrued interest payable and
other liabilities 826 (565) 863 855 750
Net gain on sale of securities (2,923) (2,189) (2,839) (4,193) (2,408)
Net gain on sale of other real estate -- (23) (23) (2) (3)
------- ------- ------- ------- -------
Net cash provided by operating activities 2,755 4,313 7,444 916 6,648
------- ------- ------- ------- -------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale
and held to maturity 39,940 44,055 51,756 44,850 56,960
Purchase of securities held to maturity -- (11,522) (11,759) (34,016) (6,491)
Purchase of securities available for sale (73,046) (16,997) (40,281) (44,949) (29,127)
Proceeds from sales of securities available for sale 3,816 3,583 9,368 10,054 12,661
Purchase of Federal Home Loan Bank Stock (297) (225) - - -
Maturities and repayments of mortgage-backed securities 9,337 11,042 12,176 6,699 6,576
Purchase of mortgage-backed securities held to maturity -- - (6,065) (25,495) (9,540)
Net increase in loans (17,578) (29,715) (26,266) (16,773) (34,106)
Net additions to bank premises, furniture and equipment (398) (478) (742) (387) (402)
Proceeds from sale of bank premises, furniture and equipment 312 - - - -
Proceeds from sales of other real estate owned - 105 105 79 3
Payment for purchase of Burlington County Bank, net
of cash acquired - - 3,363 - -
Payment for purchase of Manchester Trust Bank, net
of cash acquired (3,807) - - - -
------- ------- ------- ------- -------
Net cash used in investing activities (41,721) (152) (8,345) (59,938) (3,466)
------- ------- ------- ------- -------
Cash flows from financing activities:
Net proceeds received from stock offering - - - 29,778 -
Dividends paid (851) (828) (1,113) (179) -
Capitalization of mutual holding company - - - (200) -
Net cash received from assumption of deposit liabilities - - - 31,468 -
Net increase in demand deposits 16,475 3,688 4,856 1,405 929
Net (decrease) increase in savings and time deposits (14,387) 2,671 2,443 338 (7,209)
Repayment of subordinated note - - (600) - -
Net increase in borrowings 30,000 - - - -
------- ------- ------- ------- -------
Net cash provided by (used in) financing activities 31,237 5,531 5,586 62,610 (6,280)
------- ------- ------- ------- -------
Net (decrease) increase in cash and cash equivalents (7,729) 9,692 4,685 3,588 (3,098)
Cash and cash equivalents as of beginning of period 20,938 16,253 16,253 12,665 15,763
------- ------- ------- ------- -------
Cash and cash equivalents as of end of period $ 13,209 25,945 20,938 16,253 12,665
======= ======= ======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid:
Interest $ 16,112 10,829 15,577 16,394 12,673
======= ======= ======= ======= =======
Income taxes $ 3,351 3,975 4,875 5,805 4,320
======= ======= ======= ======= =======
Noncash investing activities:
Transfer of securities to securities available for sale $ - - - - 93,872
======= ======= ======= ======= =======
Transfer of securities available for sale to securities
held to maturity $ - - - - 37,112
======= ======= ======= ======= =======
Assets acquired in settlement of loans $ 374 110 723 34 77
======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements
September 30, 1997 and 1996 (unaudited) and
December 31, 1996 and 1995
(1) Organization and Summary of Significant Accounting Policies
Peoples Bancorp, Inc. (the Bancorp) is the holding company for its
wholly-owned subsidiary , Trenton Savings Bank FSB (the Bank). The Bank
provides banking services to individual and corporate customers primarily
in Mercer and Burlington counties in New Jersey and Bucks county in
Pennsylvania. The Bank is subject to competition from other financial
institutions and the regulations of certain Federal and state agencies
and undergoes periodic examinations by those regulatory authorities.
Basis of Financial Statement Presentation
The accompanying consolidated financial statements include the accounts
of the Bancorp, the Bank, Manchester Trust Bank, and TSBusiness Finance
Corporation. Significant intercompany accounts and transactions have been
eliminated in consolidation.
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 dates of the
financial statements and the reported amounts of revenues and expenses
during the periods presented. Actual results could differ significantly
from those estimates.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance for
loan losses. In connection with the determination of the allowance for
loan losses, management obtains independent appraisals for significant
properties.
The unaudited consolidated financial statements as of September 30, 1997
and the nine month periods ended September 30, 1997 and 1996 have been
prepared in accordance with generally accepted accounting principles. In
the opinion of management, all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of such interim
periods have been made. The results of operations for the nine months
ended September 30, 1997 are not necessarily indicative of results that
may be expected for the year ending December 31, 1997.
Loans
Loans are stated at the principal amount outstanding, net of deferred
loan origination fees, costs and unearned discounts, and the allowance
for loan losses.
Interest income on commercial, real estate mortgage and installment loans
is credited to operations based upon the principal amount outstanding.
Loans are placed on a nonaccrual status when a default of principal or
interest has existed for a period of 90 days, except when, in the opinion
of management, the collection of the principal and interest is reasonably
anticipated or adequate collateral exists. Previously accrued and
uncollected interest is reversed when a loan is placed on nonaccrual
status. Interest income is recognized subsequently only in the period
collected. Loans are returned to an accrual status when factors
indicating doubtful collectibility on a timely basis no longer exist.
F-6
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements Continued
(1) Organization and Summary of Significant Accounting Policies, cont.
Management, considering current information and events regarding the
borrowers ability to repay their obligations, considers a loan to be
impaired when it is probable that the Bank will be unable to collect all
amounts due according to the contractual terms of the loan agreement.
When a loan is considered to be impaired, the amount of impairment is
measured based on the fair value of the collateral. Impairment losses are
included in the allowance for loan losses through provisions charged to
operations.
The Bank has defined the population of impaired loans to be all
nonaccrual commercial loans. Impaired loans are individually assessed to
determine that the loan's carrying value is not in excess of the fair
value of the collateral or the present value of the loan's expected cash
flows. Smaller balance homogeneous loans that are collectively evaluated
for impairment, including mortgage and consumer loans, are specifically
excluded from the impaired loan portfolio.
Loan origination and commitment fees less certain costs have been
deferred, and the net amount amortized as an adjustment to the related
loan's yield over the contractual life of the related loan.
Allowance for Loan Losses
An allowance for loan losses is charged to operations based on
management's evaluation of the credit risk in its portfolio. Such
evaluation includes a review of all loans for which full collectibility
may not be reasonably assured and considers, among other matters, the
estimated net realizable value of the underlying collateral, economic
conditions and other matters which warrant consideration. All losses are
charged to the allowance when the loss actually occurs or when a
determination is made that a loss is probable. Subsequent recoveries, if
any, are added back to the allowance.
A substantial portion of the Bank's loans are secured by real estate in
the New Jersey market. Accordingly, the ultimate collectibility of a
substantial portion of the Bank's loan portfolio is susceptible to
changes in market conditions in New Jersey and the Bank's market area.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans,
future additions to the allowance may be necessary based on changes in
economic conditions, particularly in New Jersey. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on
their judgments about information available to them at the time of their
examination.
Debt, Equity and Mortgage-Backed Securities
Effective January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards No. 115 (SFAS 115) "Accounting for Certain
Investments in Debt and Equity Securities". Under SFAS 115, the Bank is
required to report debt, readily-marketable equity and
F-7
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements Continued
(1) Organization and Summary of Significant Accounting Policies, cont.
mortgage-backed securities in one of the following categories (i)
"held-to-maturity" (management has a positive intent and ability to hold
to maturity) which are to be reported at amortized cost; (ii) "trading"
(held for current resale) which are to be reported at fair value, with
unrealized gains and losses included in earnings and (iii)
"available-for-sale" (all other debt, readily marketable equity and
mortgage-backed securities) which are to be reported at fair value, with
unrealized gains and losses excluded from earnings and reported, net of
tax, as a separate component of stockholders' equity. Accordingly, in
adopting SFAS 115, the Bank classified all of its holdings of debt,
readily-marketable equity and mortgage-backed securities at January 1,
1994 as either "held-to-maturity" or "available-for-sale." The adoption
of SFAS 115 had no impact on 1994 net income but resulted in a net credit
of $5,371,298 in stockholders' equity due to unrealized gains at January
1, 1994, on securities classified as "available-for-sale."
Premiums and discounts on debt and mortgage-backed securities are
amortized to expense and accreted to income over the estimated life
of the respective security using the level-yield method.
Gains and losses on the sale of securities are based upon the amortized
cost of the security using the specific identification method.
Bank Premises and Equipment
Bank premises and equipment are carried at cost less accumulated
depreciation and amortization. Depreciation is provided for on a
straight-line basis over the estimated useful lives of the respective
assets. Amortization of leasehold improvements is provided for on a
straight-line basis over the shorter of the useful life or the lease term
plus one renewal period.
Intangible Assets
Intangible assets consist primarily of premiums paid upon the 1995
assumption of deposits and goodwill arising from the 1996 acquisition of
the net assets of Burlington County Bank and the 1997 acquisition of the
net assets of Manchester Trust Bank. Premiums on deposits are amortized
on a straight-line basis over a period of ten years. Goodwill is being
amortized on a straight-line basis over 15 years which represents the
estimated periods to be benefited from the net assets acquired. On a
periodic basis, the Bank reviews its intangible assets for the events or
changes in circumstances that may indicate that the carrying amount of
the assets may not be recoverable.
Income Taxes
The Bank records income taxes utilizing the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled.
F-8
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(1) Organization and Summary of Significant Accounting Policies, cont.
Pension Plan
The Bank has a pension plan covering employees and officers meeting
service and age requirements. The Bank's policy is to fund pension
costs accrued.
Other Postretirement Benefit Plans
In addition to the Bank's defined benefit plan, the Bank provides a
postretirement medical and life insurance plan to its retirees. The
benefits available under the plan depend on the years of service to the
Bank and the age of the retiree. The Bank's policy is to accrue for such
cost in the period which the benefit is earned.
Stock Option Plan
The Bank applies the "intrinsic value based method" as described in APB
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for its stock-based compensation.
Accordingly, no compensation cost has been recognized for the stock
option plan.
Management Recognition Plan
Compensation cost is incurred by the Bank over the vesting period based
upon the fair value of the shares at the date of allocation.
Statements of Cash Flows
The Bank considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
Earnings Per Share (See Note 21)
Basic earnings per common share is calculated by dividing net income, by
the average number of common shares outstanding during the period. Common
stock equivalents are not included in the calculation.
Diluted EPS is computed similar to that of basic EPS except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if all potential dilutive common
shares were issued.
Earnings per share data for 1995 and 1994 are not presented as the Bank
completed its initial public offering on August 3, 1995 and such data
is not deemed meaningful by management.
Reclassifications
Certain reclassifications have been made to prior years amounts to
conform to the September 1997 presentation.
F-9
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(2) Acquisitions
Intangible assets consist primarily of premium paid upon the assumption
of deposits and goodwill arising from the acquisitions of Burlington
County Bank and Manchester Trust Bank.
On September 8, 1997, the Bancorp completed the acquisition of Manchester
Trust Bank, a trust services company with $140.1 million of assets under
management. Under terms of the agreement, Manchester will be operated as
a wholly-owned subsidiary of the Bank.
The following summarizes completed acquisitions of Peoples Bancorp, Inc.
as of September 30, 1997 (in thousands):
<TABLE>
<CAPTION>
Total as of the date acquired
------------------------------------------- Method
Year Net Cash of
acquired Assets Loans Deposits assets paid accounting
-------- ------ ----- -------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assumption of deposits
from the RTC 1995 $ - - 33,974 - 2,506 Purchase
Burlington County Bank 1996 80,249 48,200 73,200 5,245 12,473 Purchase
Manchester Trust Bank 1997 2,013 - - 1,894 4,134 Purchase
</TABLE>
The above transactions resulted in the following goodwill (in thousands):
Goodwill balance as of:
----------------------------
December 31,
Sept. 30, ---------------- Original Amortization
1997 1996 1995 amount period
-------- ------ ------ -------- ------------
Assumption of deposits
from the RTC $ 1,850 2,054 2,325 2,506 10 years
Burlington County Bank 6,750 7,110 - 7,228 15 years
Manchester Trust Bank 2,234 - - 2,240 15 years
------- ------ ------ -------
$ 10,834 9,164 2,325 11,974
======= ====== ====== =======
The following supplemental schedule presents the pro forma results of
operations for the periods ended September 30, 1997 and 1996 and for the
years ended December 31, 1996 and 1995 as though the companies had
combined on January 1, 1995. The pro forma results of operations do not
necessarily reflect the results of operations that would have occurred
had the Bank, Manchester and Burlington been combined during such
periods.
September 30, December 31,
----------------- ----------------
1997 1996 1996 1995
---- ---- ---- ----
(in thousands)
Net interest income $ 16,458 16,410 21,599 20,126
Net income 5,991 6,665 8,633 9,219
Basic earnings per common share .67 .74 .96 -
Diluted earnings per common share .67 .74 .96 -
Pro forma earnings per common share as of December 31, 1995 is not
presented as its presentation would not be meaningful due to the Bank's
initial stock offering as of August 3, 1995.
F-10
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(3) Charter Conversion, Reorganization to a Mutual Holding Company and
Conversion to Stock Form of Ownership
On January 1, 1995 the Bank converted from a state chartered mutual
savings bank to a federally chartered mutual savings bank called Trenton
Savings Bank FSB.
On February 8, 1995, the Board of Directors of the Bank unanimously
adopted the Plan of Reorganization from a Federal Mutual Savings Bank to
a Federal Mutual Holding Company and Stock Issuance Plan, which plan was
subsequently amended (as amended, the Plan). Pursuant to the Plan, the
Bank reorganized from a Federally-chartered mutual savings bank into a
Federal mutual holding company, Peoples Bancorp, MHC and concurrently
formed a Federally-chartered capital stock savings subsidiary, which took
the name Trenton Savings Bank FSB. Each deposit account of the Bank at
the time of the reorganization became a deposit account in the
newly-formed bank in the same amount and upon the same terms and
conditions, except that the holder of each such deposit account has
voting and liquidation rights with respect to the holding company rather
than the Bank.
As part of the reorganization, the Bank was authorized to offer stock in
one or more offerings, up to a maximum of 49.9% of the issued and
outstanding shares of its common stock. On May 15, 1995, the Bank
received initial approval from the Office of Thrift Supervision (OTS) to
solicit subscribers for stock.
On August 3, 1995, the Bank completed its minority stock offering whereby
the Bank issued 3,116,500 shares at $10 per share for a total of
$31,165,000, which represents a minority ownership of 35.0% of the Bank
based upon its valuation by an independent appraiser. The net proceeds of
the stock offering, after reflecting offering expenses of $1.387 million
and costs to capitalize the mutual holding of $200,000, were $29.578
million. The net proceeds were added to the Bank's general funds to be
used for general corporate purposes.
Following the completion of the reorganization, all depositors who had
membership or liquidation rights with respect to the Bank as of the
effective date of the reorganization will continue to have such rights
solely with respect to the holding company so long as they continue to
hold deposit accounts with the Bank. In addition, all persons who become
depositors of the Bank subsequent to the reorganization will have such
membership and liquidation rights with respect to the holding company.
Borrower members of the Bank at the time of the reorganization will have
the same membership rights in the holding company that they had in the
Bank immediately prior to the reorganization so long as their existing
borrowings remain outstanding. Borrowers will not receive membership
rights in connection with any new borrowings made after the
reorganization.
In 1996 and 1995, the Bank declared cash dividends of $0.35 and $0.0575,
respectively, per common share to holders of common stock of the Bank.
The Bank's Federal mutual holding company, Peoples Bancorp, MHC, waived
the receipt of the cash dividends paid by the Bank, and it currently
intends to continue this policy. There can be no assurance that the
Bank's regulators will permit future dividend waivers, or the terms of
such waivers.
(4) Reorganization to a Two-Tiered Mutual Holding Company and Subsequent Plan
of Conversion to Full Stock Ownership Structure
On November 26, 1996 the Bank and Peoples Bancorp, Mutual Holding Company
(MHC) filed an application with the Office of Thrift Supervision (OTS),
their primary regulator, to reorganize into a two-tiered holding company.
Pursuant to the reorganization, which was approved by the OTS and
stockholders, and became effective in July 1997, the Bancorp was formed
and became the majority-owned subsidiary of Peoples Bancorp, MHC, and the
Bank became the wholly-owned subsidiary of the Bancorp. The relative
ownership interests of all stockholders of the Bank remained unchanged as
a result of the reorganization. After the reorganization, the Bank
continued its current business and operations as a Federally-chartered
savings bank under its existing name.
F-11
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(4) Reorganization to a Two-Tiered Mutual Holding Company and Subsequent Plan
of Conversion to Full Stock Ownership Structure, cont.
On September 24, 1997, the Board of Directors of the MHC unanimously
adopted the Plan of Conversion and Reorganization, pursuant to which the
MHC is converting from a federally charted mutual holding company to a
Delaware chartered stock corporation. As part of the Conversion each of
the issued and outstanding Minority Shares shall automatically, without
further action by the holder thereof, be converted into and become a
right to receive a number of shares of Common Stock of Peoples Bancorp,
Inc. (the new holding company) determined pursuant to the Exchange Ratio
based upon an independent appraisal.
Pursuant to the Plan, the MHC's majority interests in the Mid-Tier
Holding Company will be converted into shares at the Exchange Ratio, and
sold in a subscription offering.
The affirmative vote of a majority of the total eligible votes of the
members of the MHC at the Special Meeting of Members is required to
approve the Plan of Conversion and the transactions incident to the
Conversion. The affirmative vote of the holders of at least (i)
two-thirds of the outstanding common stock of the Mid-Tier Holding
Company, and (ii) a majority of the Minority Shares at a special meeting
of stockholders of the Mid-Tier Holding Company is required to approve
the Plan of Conversion. Consummation of the Conversion is also subject to
the approval of the OTS.
At the time of the conversion, the Bank will establish a liquidation
account in an amount equal to its equity as reflected in the
statement of financial condition used in the final conversion
prospectus. The liquidation account will be maintained for the benefit of
eligible account holders and supplemental eligible account holders who
continue to maintain their accounts at the Bank after the conversion. The
liquidation account will be reduced annually, to the extent that eligible
account holders and supplemental eligible account holders have reduced
their qualifying deposits as of each anniversary date. Subsequent
increases will not restore an eligible account holder's or supplemental
eligible account holder's interest in the liquidation account. In the
event of a complete liquidation of the Bank, each eligible account holder
and supplemental eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to
the current adjusted qualifying balances for accounts then held.
Subsequent to the conversion, the Bank may not declare or pay cash
dividends on or repurchase any of its shares of common stock if the
effect thereof would cause equity to be reduced below applicable
regulatory capital maintenance requirements or if such declaration and
payment would otherwise violate regulatory requirement.
Conversion costs will be deferred and reduce the proceeds from the shares
sold in the conversion. If the conversion is not completed, all costs
will be charged as an expense. There were approximately $300,000 of
capitalized conversion costs as of September 30, 1997.
As of September 30, 1997, the MHC had waived $3.9 million of dividends.
Upon completion of the conversion, restrictions on waived dividends will
no longer exist. Additionally, the restrictions and availability of
waived dividends will cease as the Bank's commom stock will be 100%
publicly owned.
(5) Securities Available for Sale
As discussed in note 1, the Bank adopted SFAS 115 as of January 1, 1994.
The cumulative effect of this change in accounting for the net unrealized
appreciation in securities designated as available for sale was an
increase to securities of $8,390,032 and to stockholders' equity of
$5,371,298, net of income tax expense of $3,018,734.
The amortized cost and estimated market value of securities available for
sale as of September 30, 1997 and December 31, 1996 and 1995 are as
follows:
<PAGE>
<TABLE>
<CAPTION>
September 30, 1997
-------------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
Debt securities:
United States Treasury securities $ 51,320 124 - 51,444
United States Agencies securities 46,067 322 3 46,386
Corporate bonds 14,547 43 - 14,590
Government National Mortgage
Association - mortgage-backed
securities 15,072 149 - 15,221
-------- ---- ---- --------
127,006 638 3 127,641
Equity securities 10 - - 10
-------- ---- ---- --------
$ 127,016 638 3 127,651
======== ==== ==== --------
</TABLE>
F-12
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(5) Securities Available for Sale, cont.
<TABLE>
<CAPTION>
1996
-----------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
Debt securities:
United States
Treasury securities $ 65,336 204 33 65,507
United States Agencies
securities 9,924 10 167 9,767
Corporate bonds 9,151 21 - 9,172
------- ------ ---- -------
84,411 235 200 84,446
Equity securities 894 2,308 - 3,202
------- ------ ---- -------
$ 85,305 2,543 200 87,648
======= ====== ==== =======
</TABLE>
<TABLE>
<CAPTION>
1995
-----------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
<S> <C> <C> <C> <C>
Debt securities:
United States
Treasury securities $ 70,944 728 30 71,642
United States Agencies
securities 5,011 - - 5,011
------- ------ ---- -------
75,955 728 30 76,653
Equity securities 2,536 4,587 - 7,123
------- ------ ---- -------
$ 78,491 5,315 30 83,776
======= ====== ==== =======
</TABLE>
On October 1, 1994, the Bank transferred $29,704,943 and $5,799,679 of
mortgage-backed securities and United States Agencies securities from
available for sale to held to maturity at fair value. The unrealized loss
at the date of the transfer was $1,607,055 ($641,346 and $1,070,550 at
December 31, 1996 and 1995, respectively) and is being amortized over the
estimated remaining life of the related securities.
The amortized cost and estimated market value of securities available for
sale at September 30, 1997 and December 31, 1996 by contractual maturity
are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without penalties.
F-13
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(5) Securities Available for Sale, cont.
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
-------------------- --------------------
Estimated Estimated
Amortized market Amortized market
cost value cost value
---- ----- ---- -----
(in thousands)
<S> <C> <C> <C> <C>
Due within one year $ 32,497 32,538 39,530 39,649
Due after one year through five years 33,093 33,218 34,633 34,706
Due after five years through ten years 46,344 46,664 10,248 10,091
Due after ten years 15,072 15,221 - -
-------- -------- ------- -------
127,006 127,641 84,411 84,446
Equity securities 10 10 894 3,202
-------- -------- ------- -------
$127,016 127,651 85,305 87,648
======== ======== ======= =======
</TABLE>
During the nine month period ended September 30, 1997, and years ended
December 31, 1996, 1995 and 1994, proceeds from sales of securities
available for sale resulted in gross gains and gross losses as follows:
December 31, 1997
Sept 30, -------------------------
1997 1996 1995 1994
---- ---- ---- ----
(in thousands)
Proceeds from sales of
securities available for sale $ 3,816 9,368 10,054 12,661
Gross realized gains 2,923 2,839 4,264 2,559
Gross realized losses - - 71 151
====== ====== ======= =======
As of September 30, 1997 United States Agency and Treasury securities
with a fair value of $32,270,000 were pledged to secure a borrowing
agreement entered into during 1997.
F-14
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(6) Securities Held to Maturity
The amortized cost and estimated market value of securities held to
maturity as of September 30, 1997 and December 31, 1996 and 1995 are as follows:
September 30, 1997
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Debt securities:
United States Agencies $ 14,350 - 29 14,321
Obligations of state and
political subdivisions 2,293 119 - 2,412
Corporate bonds 14,515 36 12 14,539
------- ---- ---- -------
$ 31,158 155 41 31,272
======= ==== ==== =======
1996
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Debt securities:
United States Agencies $ 17,042 - 135 16,907
Obligations of state and
political subdivisions 3,400 98 - 3,498
Corporate bonds 17,493 55 28 17,520
------- ---- ---- -------
$ 37,935 153 163 37,925
======= ==== ==== =======
1995
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Debt securities:
United States Agencies $ 24,934 71 77 24,928
Obligations of state and
political subdivisions 1,056 100 - 1,156
Corporate bonds 10,955 100 13 11,042
------- ---- ---- -------
$ 36,945 271 90 37,126
======= ==== ==== =======
F-15
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(6) Securities Held to Maturity, cont.
The amortized cost and estimated market value of securities held to
maturity as of September 30, 1997 and December 31, 1996 by contractual
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
September 30, 1997 December 31, 1996
------------------- ------------------
Estimated Estimated
Amortized market Amortized market
cost value cost value
---- ----- ---- -----
(in thousands)
Due in one year or less $ 11,268 11,261 6,202 6,229
Due after one year through five years 17,576 17,558 29,354 29,196
Due five years through ten years 1,548 1,578 1,578 1,604
Due after ten years 766 875 801 896
------- ------- ------- -------
$ 31,158 31,272 37,935 37,925
======= ======= ======= =======
As of September 30, 1997 and December 31, 1996 and 1995, United States
Treasury securities with a face value of $900,000, $3,900,000 and
$100,000, respectively were held in trust to secure deposits of public
funds.
(7) Mortgage-Backed Securities Held to Maturity
The amortized cost and estimated market value of mortgage-backed
securities held to maturity as of September 30, 1997, December 31, 1996
and 1995 are as follows:
September 30, 1997
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Government National
Mortgage Association $ 1,459 - - 1,459
Federal Home Loan
Mortgage Corporation 38,144 208 161 38,191
------- ---- ---- -------
$ 39,603 208 161 39,650
======= ==== ==== =======
F-16
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(7) Mortgage-Backed Securities Held to Maturity, cont.
1996
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Government National
Mortgage Association $ 1,614 38 8 1,644
Federal Home Loan
Mortgage Corporation 47,004 431 492 46,943
------- ---- ---- -------
$ 48,618 469 500 48,587
======= ==== ==== =======
1995
---------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
---- ----- ------ -----
(in thousands)
Government National
Mortgage Association $ 2,056 112 5 2,163
Federal Home Loan
Mortgage Corporation 52,260 748 139 52,869
------- ---- ---- -------
$ 54,316 860 144 55,032
======= ==== ==== =======
The amortized cost and market value of mortgage-backed securities held to
maturity as of September 30, 1997 and December 31, 1996, by contractual
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
September 30, 1997 December 31, 1996
-------------------- ------------------
Estimated Estimated
Amortized market Aortized market
cost value cost value
---- ----- ---- -----
(in thousands)
Due in one year or less $ 5,540 5,521 3,014 2,990
Due after one year through five years 21,885 22,304 28,776 28,401
Due five years through ten years - - 1,405 1,434
Due after ten years 12,178 11,825 15,423 15,762
------- ------- ------- -------
$ 39,603 39,650 48,618 48,587
======= ======= ======= =======
F-17
<PAGE>
PEOPLES BANCORP, INC.
Notes to Statements of Condition, Continued
(8) Loans
A summary of loans as of September 30, 1997, December 31, 1996 and 1995
follows:
Sept. 30,
1997 1996 1995
---- ---- ----
(in thousands)
Mortgage loans:
One to four family $ 242,374 239,470 227,717
Commercial real estate and
multi-family 40,305 53,415 27,827
-------- -------- --------
Total mortgage loans 282,679 292,885 255,544
Commercial 62,245 34,486 11,573
Home equity 33,914 28,138 21,833
Other consumer loans 22,195 27,478 18,783
-------- -------- --------
Total other loans 118,354 90,102 52,189
-------- -------- --------
Total loans 401,033 382,987 307,733
Allowance for loan loss (3,202) (2,901) (1,767)
Premiums (discounts) 17 (24) 23
Net deferred costs 18 226 104
-------- -------- --------
Total loans, net $ 397,866 380,288 306,093
======== ======== ========
A summary of the activity in the allowance for loan losses for the nine
month periods ended September 30, 1997 and 1996 and the years ended
December 31, 1996, 1995 and 1994 is as follows:
September 30, December 31,
------------- -------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
Allowance for loan losses
at beginning of period $ 2,901 1,767 1,767 1,642 1,471
Acquired allowance - - 1,186 - -
Provision for loan losses 1,488 - - 150 180
Chargeoffs (1,313) (26) (110) (32) (23)
Recoveries 126 - 58 7 14
------ ------- ------ ------ ------
Allowance for loan losses
at end of period $ 3,202 1,741 2,901 1,767 1,642
====== ======= ====== ====== ======
F-18
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(8) Loans, cont.
Loans contractually in arrears by three months or more at September 30,
1997, December 31, 1996 and 1995 were as follows:
1997
-------------------------------------
Carrying Number % of
value of loans category
----- -------- --------
(in thousands)
Mortgage $ 2,788 48 0.99%
Commercial 1,166 38 1.87
Consumer 109 7 0.19
------ ---
$ 4,063 93 1.01%
====== === =====
1996
------------------------------------
Carrying Number % of
value of loans category
----- -------- --------
(in thousands)
Mortgage $ 2,277 37 0.78%
Commercial 1,183 19 2.01
Consumer 244 20 0.44
------ ---
$ 3,704 76 0.97%
====== === =====
1995
-----------------------------------
Carrying Number % of
value of loans category
----- -------- --------
(in thousands)
Mortgage $ 1,017 18 0.40%
Commercial 75 1 0.65
Consumer 40 3 0.10
------ ---
$ 1,132 22 0.37%
====== === ====
Nonaccrual loans totalled $4,477,000, $1,109,000, $2,951,000, $1,122,000
and $1,025,000 at September 30, 1997 and 1996, and December 31, 1996,
1995 and 1994, respectively. Nonaccrual loans as of September 30, 1997
include $1,437,000 of loans that are current but are classified as
doubtful as management believes the ultimate collection of principal and
interest is uncertain. Nonaccrual loans do not include certain loans
contractually in arrears by three months or more for which adequate
collateral exists or the collection of principal and interest is
reasonably anticipated. These loans totalled $1,023,000, $753,000,
$10,000 and $448,000 as of September 30, 1997, December 31, 1996, 1995
and 1994, respectively. The amount of interest income on nonaccrual
loans, which would have been recorded had these loans continued to pay
interest at the original contract rate, was approximately $381,000,
$95,000, $249,000, $87,000 and $98,000 for the nine months ended
September 30, 1997 and 1996 and the years ended December 31, 1996, 1995
and
F-19
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(8) Loans, cont.
1994, respectively. Interest income on nonaccrual loans included in net
income amounted to $116,000, $30,000, $76,000, $14,000 and $55,000 for
the nine months ended September 30, 1997 and 1996 and the years ended
December 31, 1996, 1995 and 1994, respectively. There is no commitment to
lend additional funds to borrowers whose loans have been placed on
nonaccrual.
Restructured loans totalled $192,000, $206,000, $206,000, $1,052,000 and
$1,044,000 at September 30, 1997 and 1996, December 31, 1996, 1995 and
1994. The amount of interest income on restructured loans, which would
have been recorded had these loans continued to pay interest at the
original contract rate, was approximately $16,000, $16,000, $21,000,
$87,000 and $90,000 for the nine months ended September 30, 1997 and 1996
and the years ended December 31, 1996, 1995 and 1994, respectively.
Interest income on restructured loans included in net income was
approximately $15,000, $15,000, $20,000, $80,000 and $80,000 for the nine
months ended September 30, 1997 and 1996 and the years ended December 31,
1996, 1995 and 1994, respectively. There is no commitment to lend
additional funds to borrowers whose loans have been restructured.
The recorded investment in loans receivable considered impaired and the
related allowance for loan losses at September 30, 1997 was $1,166,000
and $292,000, respectively. The balances at December 31, 1996 were
$1,183,000 and $448,000, respectively and $75,000 and $4,000,
respectively, at December 31, 1995.
At September 30, 1997 and December 31, 1996 and 1995, loans to officers
and directors amounted to $772,000, $784,000 and $515,000, respectively.
All such loans were performing according to their original terms.
(9) Bank Premises and Equipment
Bank premises and equipment consists of the following as of September 30,
1997, December 31, 1996 and 1995:
Sept. 30,
1997 1996 1995
---- ---- ----
(in thousands)
Land $ 1,008 867 667
Buildings and improvements 4,848 5,166 4,661
Furniture and equipment 2,441 2,521 1,917
Leasehold improvements 1,318 1,214 901
----- ----- ------
9,615 9,768 8,146
Less accumulated depreciation
and amortization 2,815 2,786 2,279
----- ----- -----
$ 6,800 6,982 5,867
======== ===== =====
F-20
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(9) Bank Premises and Equipment, cont.
In the normal course of business, the Bank has entered into leases for
its branch locations. The lease terms range from five to twenty years and
expire at various times through the year 2007. The agreements provide for
renewal options and all but one require the Bank to pay common area
costs.
The following is a schedule of future minimum lease payments for
operating leases (with initial or remaining terms in excess of one year)
as of September 30, 1997 and December 31, 1996:
September 30, December 31,
- ------------- ------------
1998 $ 396 1997 $ 404
1999 359 1998 424
2000 261 1999 395
2001 229 2000 281
2002 196 2001 252
2003 181 2002 250
Thereafter 436 Thereafter 1,038
------- ------
Total minimum Total minimum
lease payments $ 2,058 lease payments $ 3,044
====== ======
The annual rental expense amounted to $303,000 and $183,000 for the nine
month periods ended September 30, 1997 and 1996, respectively, and
$304,000, $226,000 and $164,000 for the years ended December 31, 1996,
1995 and 1994, respectively.
(10) Accrued Interest Receivable
A summary of accrued interest receivable at September 30, 1997, December
31, 1996 and 1995 is as follows:
Sept. 30,
1997 1996 1995
---- ---- ----
(in thousands)
Loans $ 2,091 1,654 1,427
Securities available for sale 1,916 1,114 1,334
Mortgage-backed securities held
to maturity 274 350 387
Securities held to maturity 542 484 538
Federal funds sold - - 79
-------- ------ ------
$ 4,823 3,602 3,765
======== ====== ======
F-21
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(11) Deposits
Deposit balances as of September 30, 1997, December 31, 1996 and 1995 are
summarized as follows:
<TABLE>
<CAPTION>
Weighted
average
rate at 1997 1996 1995
Sept.30, ----------------- ---------------- -----------------
1997 Amount % Amount % Amount %
---- ------ - ------ - ------ -
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Types of deposit:
Noninterest
bearing demand
deposit accounts - $ 27,982 5.7 $ 25,366 5.2 $ 10,800 2.6
N.O.W. 1.24 14,955 3.1 16,431 3.3 9,555 2.3
Money market
demand accounts 3.39 58,394 11.8 44,794 9.1 32,894 8.0
Passbook 2.26 95,132 19.3 104,210 21.2 92,747 22.6
Club accounts - 1,069 0.2 269 .1 219 0.1
Other - 5,573 1.1 3,630 .7 2,758 0.7
------- ------ ------- ----- ------- -----
203,105 41.2 194,700 39.6 148,973 36.3
------- ------ ------- ----- ------- -----
Certificates of
deposit 5.25 247,158 50.1 248,396 50.6 209,488 51.0
Retirement
accounts 5.50 43,071 8.7 48,150 9.8 52,309 12.7
------- ------ ------- ------ ------- ------
290,229 58.8 296,546 60.4 261,797 63.7
------- ------ ------- ------ ------- ------
$493,334 100.0 $491,246 100.0 $410,770 100.0
======= ====== ======= ====== ======= ======
</TABLE>
As of September 30, 1997, December 31, 1996 and 1995, certificates of
deposit, regular and retirement accounts have scheduled maturities as
follows:
1997 1996 1995
---- ---- ----
(in thousands)
Within one year $ 218,046 188,744 183,658
One to two years 47,621 39,803 27,920
Two to three years 20,474 20,298 27,753
Thereafter 4,088 47,701 22,466
-------- -------- --------
$ 290,229 296,546 261,797
======== ======== ========
F-22
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(11) Deposits, cont.
An analysis of the interest expense for the nine month periods ended
September 30, 1997 and 1996 and for the years ended December 31, 1996,
1995 and 1994 by deposit category is as follows:
September 30, December 31,
------------- ----------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
NOW, passbook and other
accounts $ 1,756 1,722 2,402 2,671 2,821
Money market demand accounts 1,366 837 1,233 1,066 1,099
Club accounts 1 - 15 13 13
Regular certificates of deposit 9,626 8,532 11,836 11,125 7,490
Retirement accounts 1,985 1,774 2,456 2,134 1,428
------- ------ ------ ------- ------
Total interest $ 14,734 12,865 17,942 17,009 12,851
Certificates of deposit greater than $100,000 amounted to $26,698,000,
$26,093,000 and $14,837,000 at September 30, 1997, December 31, 1996 and
1995, respectively. The deposits of the Bank are insured up to $100,000
by the BIF and SAIF, which is administered by the FDIC and is backed by
the full faith and credit of the U.S. Government.
(12) Borrowed Funds
On January 3, 1997, the Bank entered into an agreement to borrow $30
million at a fixed interest rate of 6.02%. The debt matures on January 3,
2000. The funds provided were used to fund a leveraging program whereby
proceeds from the borrowing were used to fund the purchase of Federal
agency securities designated as available for sale. The note is secured
by United States Agency and Treasury securities designated as available
for sale and having a fair value of $32,270,000 as of September 30, 1997.
The collateral fulfills the security agreement requirement that
collateral with a market value of 107% secure the note.
(13) Income Taxes
The Federal tax bad debt reserve method available to thrift institutions
was repealed in 1996 for tax years beginning after 1995. As a result, the
Bank must change from the reserve method to the specific charge-off
method to compute its bad debt deduction. In addition, the Bank is
required generally to recapture into income the portion of its bad debt
reserves (other than the supplemental reserve) that exceeds its base year
reserves, approximately $2,500,000.
The recapture amount resulting from the change in a thrift's method of
accounting for its bad debt reserves generally will be taken into taxable
income ratably (on a straight-line basis) over a six-year period. If the
Bank meets a "residential loan requirement" for a tax year beginning in
1996 or 1997, the recapture of the reserves will be suspended for such
tax year. Thus, recapture can potentially be deferred for up to two
years. The residential loan requirement is met if the principal amount of
housing loans made by the Bank during the year at issue (1996 and 1997)
is at least as much as the average of the principal amount of loans made
during the six most recent tax years prior to 1996. Refinancings and home
equity loans are excluded.
For 1996 the Bank has met the residential loan requirement and expects to
meet it for 1997.
F-23
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(13) Income Taxes, cont.
Retained earnings as of December 31, 1996 includes approximately
$3,500,000 for which no provision for Federal income tax has been made.
This reserve (base year and supplemental) is frozen not forgiven as
certain events could trigger a recapture.
Income tax expense for the nine month periods ended September 30,
1997 and 1996 and for the years ended December 31, 1996, 1995 and 1994
is comprised of the following components:
September 30, December 31,
------------- ----------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
Current income tax expense:
Federal $ 3,624 3,590 4,728 4,796 3,929
State 311 317 415 382 338
------ ------ ------ ------ ------
3,935 3,907 5,143 5,178 4,267
------ ------ ------ ------ ------
Deferred income tax (benefit)
expense:
Federal (571) (266) (401) (297) 161
State (32) (15) (22) (17) 9
------ ------ ------ ------ ------
(603) (281) (423) (314) 170
------ ------ ------ ------ ------
Total income tax expense $ 3,332 3,626 4,720 4,864 4,437
====== ====== ====== ====== ======
A reconciliation between the effective income tax expense and the
expected amount computed using the applicable statutory Federal income
tax rate for the nine month periods ended September 30, 1997 and 1996 and
for the years ended December 31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ---------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 9,230 10,074 13,111 13,512 12,112
Applicable statutory Federal tax rate 35% 35% 35% 35% 35%
Expected Federal income tax expense 3,230 3,526 4,589 4,729 4,239
State tax net of Federal benefit 181 196 256 249 226
Increase (Decrease) in Federal income
tax resulting from:
Tax-exempt income (32) (18) (24) (25) (25)
Other (178) (78) (101) (89) (3)
Goodwill 131 - - - -
------ ------ ------ ------ ------
$ 3,332 3,626 4,720 4,864 4,437
====== ====== ====== ====== ======
Effective tax rate 36.1% 36.0% 36.0% 36.0% 36.6%
</TABLE>
F-24
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(13) Income Taxes, cont.
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset (liability) at September 30, 1997,
December 31, 1996 and 1995 are as follows:
Sept. 30,
1997 1996 1995
---- ---- ----
(in thousands)
Deferred tax assets:
Loan fees $ 26 49 48
Other 352 256 91
Postretirement benefits 507 506 411
Pension 191 117 67
Supplemental Employee Retire ment Plan 305 211 -
Allowance for loan loss - book 1,405 980 653
------ ------ ------
2,786 2,119 1,270
------ ------ ------
Deferred tax liabilities:
Shareholders' equity - unrealized gain
on securities available for sale 114 613 1,517
Allowance for loan losses - tax 1,031 930 928
Other 28 65 33
------ ------ ------
1,173 1,608 2,478
------ ------ -----
Net deferred tax asset (liability) $ 1,613 511 (1,208)
====== ====== =====
Management believes that it is more likely than not that the deferred tax
asset will be realized based upon taxable income in the carryback period
and the probability of future operations to generate sufficient taxable
income.
Total deferred tax benefits for the nine month periods ended September 30,
1997 and 1996 and the years ended December 31, 1996, 1995 and 1994 were
allocated as follows:
September 30, December 31,
------------- --------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
Income from operations $ (603) (281) (423) (314) 170
Shareholders' equity - unrealized
gains on securities available
for sale (499) - (905) 360 1,861
Business combination - - (391) - -
------ ----- ----- ---- -----
$(1,102) (281) (1,719) 46 2,031
====== ===== ===== ==== =====
F-25
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(14) Regulatory Matters
Office of Thrift Supervision (OTS) regulations require banks to maintain
minimum levels of regulatory capital. Under the regulations in effect at
December 31, 1996, the Bank was required to maintain (i) a minimum
tangible capital ratio of 1.50%, (ii) a minimum leverage ratio of Tier I
capital to total adjusted assets of 3.0%, and (iii) a minimum ratio of
total capital to risk-weighted assets of 8.0%.
Under its prompt corrective action regulations, the OTS is required to
take certain supervisory actions (and may take additional discretionary
actions) with respect to an undercapitalized institution. Such actions
could have a direct material effect on the institution's financial
statements. The regulations establish a framework for the classification
of savings institutions into five categories: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized,
and critically undercapitalized. Generally, an institution is considered
well capitalized if it has a leverage (Tier I) capital ratio of at least
5.0%; a Tier 1 risk-based capital ratio of at least 6.0%; and a total
risk-based capital ratio of at least 10.0%.
The foregoing capital ratios are based in part on specific quantitative
measures of assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by the OTS
about capital components, risk weightings and other factors.
Management believes that, as of September 30, 1997 and December 31, 1996
and 1995, the Bank meets all capital adequacy requirements to which it is
subject. Further, the most recent OTS notification categorized the Bank
as a well-capitalized institution under the prompt corrective action
regulations. There have been no conditions or events since that
notification that management believes have changed the Bank's capital
classification.
The following is a reconciliation of the Bank stockholders' equity to
regulatory capital at September 30, 1997 (in thousands):
Tier 1 Total
Tangible Core risk-based risk-based
capital capital capital capital
------- ------- ------- -------
Stockholders' equity per the
consolidated financial
statements $ 108,239 108,239 108,239 108,239
Intangible assets (10,834) (10,834) (10,834) (10,834)
Net unrealized gain on
securities (202) (202) (202) (202)
General valuation allowance - - - 3,202
-------- ------- ------- --------
Total regulatory capital $ 97,203 97,203 97,203 100,405
======== ======= ======= ========
F-26
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(14) Regulatory Matters, cont.
The following is a summary of the Bank's actual capital amounts and
ratios as of September 30, 1997 and December 31, 1996 and 1995, compared
to the OTS minimum capital adequacy requirements and classification as a
well-capitalized institution:
<TABLE>
<CAPTION>
OTS Requirements
------------------------------------------
For Classification
Minimum as Well
Actual Capital Adequacy Capitalized
------------------- ------------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
September 30, 1997
Tangible capital $ 97,203 15.48% $ 9,418 1.50% $ - -%
Tier I (core) capital 97,203 15.48 18,835 3.00 31,392 5.00
Risk-based capital:
Tier I 97,203 25.64 - - 22,743 6.00
Total 100,405 26.48 30,324 8.00 37,906 10.00
December 31, 1996:
Tangible capital 92,302 15.6 8,860 1.50 - -
Tier I (core) capital 92,302 15.6 17,721 3.00 29,534 5.00
Risk-based capital:
Tier I 92,302 27.5 - - 20,119 6.00
Total 95,200 28.4 26,825 8.00 33,531 10.00
December 31, 1995:
Tangible capital 91,838 18.1 7,627 1.50 - -
Tier I (core) capital 91,838 18.1 15,253 3.00 25,422 5.00
Risk-based capital:
Tier I 91,838 35.5 - - 15,528 6.00
Total 93,605 36.2 20,704 8.00 25,880 10.00
</TABLE>
As of September 30, 1997, December 31, 1996 and 1995, the Federal Reserve
Bank required the Bank to maintain an average reserve balance of $0, $0
and approximately $564,000, respectively, to meet regulatory
requirements.
F-27
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(15) Benefit Plans
Pension Plan
The Bank has a pension plan covering officers and employees meeting
certain eligibility requirements including the attainment of age 21 and
completion of one thousand hours of service during the twelve consecutive
months commencing on the Employee Commencement Date. Prior service costs
are amortized over a forty-year period, changes in the unfunded liability
due to a prior year change in actuarial assumptions are amortized over
thirty years and pension costs are funded as accrued.
A comparison of the most recent available accumulated plan benefits and
plan net assets for the pension plan, as determined by the plan actuaries
as of January 1, 1997, 1996 (as amended October 1, 1996 for the
acquisition of Burlington County Bank) and 1995, follows:
1997 1996 1995
---- ---- ----
(in thousands)
Actuarial present value of accumulated
plan benefits:
Vested participants $ 2,584 2,082 2,030
Non-vested participants 123 87 82
------ ------ ------
$ 2,707 2,169 2,112
Projected benefit obligation for
services rendered 3,306 3,081 2,653
Plan assets at fair value 2,987 2,807 2,387
------ ------ ------
Projected benefit obligation
in excess of plan assets 319 274 266
Unrecognized gain 225 322 149
Unrecognized prior service cost (178) (182) (215)
------ ------ ------
Accrued pension expense $ 366 414 200
====== ====== ======
The components of net pension expense for the periods ended September 30,
1997 and 1996 and the years ended December 31, 1996, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
Sept. 30, December 31,
------------ --------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Service cost-benefits earned during the year $ 174 116 155 117 130
Interest cost on projected benefit obligation 194 149 199 214 188
Actual return on plan assets (175) (137) (183) (182) (189)
Net amortization and deferral 14 13 17 19 (14)
---- ---- ---- ---- ----
Net pension expense $ 207 141 188 168 115
===== === === === ===
</TABLE>
F-28
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(15) Benefit Plans, cont.
Assumptions used to develop the net periodic pension cost for the periods
ended September 30, 1997 and 1996 and for the years ended December 31,
1996, 1995 and 1994 are as follows:
September 30, December 31,
------------- -----------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
Discount rate 7.5% 7.75% 7.75% 8.25% 7.0%
Expected long-term rate of return 7.5 7.5 7.5 7.5 7.5
Rate of increase in compensation
levels 5.5 5.5 5.5 6.0 5.5
=== === === === ===
Postretirement Benefits
The Bank has established a postretirement medical and life insurance plan
for the benefit of substantially all employees. The Bank utilizes the
accrual method of accounting for postretirement benefits.
The following table sets forth the net periodic postretirement benefit
cost and accumulated postretirement benefit obligation (APBO) as
determined by the plan actuaries as of January 1, 1997, 1996 (as amended
October 1, 1996 for the acquisition of Burlington County Bank) and 1995,
follows:
1997 1996 1995
---- ---- ----
(in thousands)
Accumulated postretirement benefit
obligation (APBO) $ (1,195) (1,177) (980)
Fair value of assets - - -
-------- ------- ------
Projected benefit obligation funded status (1,195) (1,177) (980)
Accumulated net unrecognized gain (107) (109) (98)
-------- ------- ------
Net postretirement accrued benefit cost $ (1,302) (1,286) (1,078)
======== ======= ======
Net postretirement benefit costs for the periods ended September 30,
1997 and 1996 and the years ended December 31, 1996, 1995 and 1994 are
as follows:
Sept. 30, December 31,
------------- ---------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
Service cost $ 35 23 30 26 23
Interest cost on accumulated post-
retirement benefit obligation 65 59 79 80 64
-- -- ---- ---- --
$ 100 82 109 106 87
==== === ==== ==== ===
F-29
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(15) Benefit Plans, cont.
For measurement purposes, the cost of medical benefits was projected to
increase at a rate of 9.50% and 10.00% in 1997 and 1996, respectively,
thereafter grading to a stable 5.5% medical inflation rate in 2005. The
present value of the accumulated benefit obligation assumed a 7.50% and
7.75% discount rate compounded annually for 1997 and 1996, respectively.
The plan is unfunded as of September 30, 1997, as the Bank funds the plan
on a cash basis.
Stock Option Plan
During 1996, the Bank's stockholders approved a stock option plan
authorizing 311,650 shares available to be granted to certain directors,
officers and employees of the Bank. Options granted under the plan
amounted to 77,500 during 1997 and 234,000 at during 1996 and are
exercisable at the fair value of the stock as of the grant date. The
options vest over a five-year term, and expire after 10 years from the
date of the grant. For the nine month period ended September 30, 1997,
8,635 options were exercised and no options were forfeited or had
expired. No options were exercised, forfeited or had expired during 1996.
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123). This Statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. SFAS 123 encourages all entities to adopt the "fair
value based method" of accounting for employee stock compensation plans.
However, SFAS 123 also allows an entity to continue to measure
compensation cost under such plans using the "intrinsic value based
method" as described in APB No. 25. 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, usually the vesting
period. Fair value is determined using an option pricing model that takes
into account the stock price at the grant date, the exercise price, the
expected life of the option, the volatility of the underlying stock and
the expected dividends on it, and the risk-free interest rate over the
expected life of the option.
The Bank continues to recognize compensation expense using the method
prescribed in APB No. 25. Had compensation cost been determined
consistent with SFAS 123 for options granted during 1997 and 1996,
additional compensation cost for the nine month periods ended September
30, 1997 and 1996 and the year ended December 31, 1996 would have been
$134,000, $20,000 and $61,000, respectively. As a result, net income and
diluted earnings per share for the nine month periods ended September 30,
1997 and 1996 and for the year ended December 31, 1996 would have been
reduced to $5,812,000 and $0.65, $6,435,000 and $0.72, and $8,352,000 and
$0.94, respectively. The stock option plan's fair value of options
granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions used for the grants
issued during 1997 and 1996: dividend yield of 1.67% and 2.59%,
respectively, expected volatility of 23.79%; risk-free interest rate of
6.1% and 6.7%, respectively, and expected lives of 5 years.
The weighted average exercise price of options granted in 1997 was
$21.00. The weighted average grant date fair value for the stock option
plan's options granted during 1997 was $5.84.
F-30
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(15) Benefit Plans, cont.
The weighted average exercise price of options granted in 1996 and
outstanding as of December 31, 1996 was $13.50. The weighted average
grant date fair value for the stock option plan's options granted during
1996 was $3.49.
Management Recognition Plan
During 1996, the Bank's stockholders approved the Trenton Savings Bank
Management Recognition Plan and authorized the issuance of 124,660 shares
from unissued common stock to the Management Recognition Plan. As of
September 30, 1997 and December 31, 1996, 124,660 shares have been
allocated to employees and directors of the Bank with a weighted average
grant date fair value of $13.50 per share.
The shares vest over a five-year period.
(16) Commitments and Contingencies
The Bank is party to commitments to extend credit in the normal course of
business to meet the financial needs of its customers. Commitments to
extend credit are agreements to lend money to a customer as long as there
is no violation of any condition established in the contract. Commitments
to fund mortgage loans generally have fixed expiration dates or other
termination clauses, whereas home equity lines of credit have no
expiration date. Since some commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. Collateral is not required by
the Bank for loan commitments. The Bank's loans are located primarily in
the State of New Jersey and Bucks county in Pennsylvania.
At September 30, 1997 and December 31, 1996 and 1995, the Bank had loan
commitments (including unused lines of credit) of $47,712,000,
$27,697,000 and $18,843,000, respectively, consisting primarily of fixed
rate loans which are not included in the accompanying financial
statements. The commitments at December 31, 1996 have commitment periods
that range from 30 to 90 days and interest rates ranging from 5.5% to
12.0%. There is no exposure to credit loss in the event the other party
to commitments to extend credit does not exercise its right to borrow
under the commitment.
In the normal course of business, the Bank may be a party to various
outstanding legal proceedings and claims. In the opinion of management,
the financial position of the Bank will not be materially affected by the
outcome of such legal proceedings and claims.
(17) Disclosures about Fair Value of Financial Instruments
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 that value.
Cash and Cash Equivalents
The carrying amount is a reasonable estimate of the fair value of these
instruments.
F-31
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(17) Disclosures about Fair Value of Financial Instruments, cont.
Debt, Equity and Mortgage-Backed Securities
Fair values are based on quoted market prices or dealer quotes.
Loan Receivables
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial,
residential mortgage and other consumer. Each loan category is further
segmented into fixed and adjustable rate interest terms.
The fair value is estimated using an estimate of current rates at which
similar loans would be made to borrowers with similar credit ratings and
for the same remaining maturities.
Deposit Liabilities
The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand as of September 30, 1997
and December 31, 1996 and 1995. The fair value of certificates of deposit
was estimated using the rates currently offered for deposits of similar
remaining maturities.
Commitments to Extend Credit
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. The outstanding commitment balance is a reasonable
estimate of fair value.
Limitations: The following fair value estimates were made as of September
30, 1997 and December 31, 1996 and 1995, based on pertinent market data
and relevant information on the financial instrument. These estimates do
not include any premium or discount that could result from an offer to
sell at one time the Bank's entire holdings of a particular financial
instrument or category thereof. Since no market exists for a substantial
portion of the Bank's financial instruments, fair value estimates were
necessarily based on judgments with respect to future expected loss
experience, current economic conditions, risk assessments of various
financial instruments involving a myriad of individual borrowers, and
other factors. Given the inherently subjective nature of these estimates,
the uncertainties surrounding them and the matters of significant
judgement that must be applied, these fair value estimations cannot be
calculated with precision. Modifications in such assumptions could
meaningfully alter these estimates.
Since these fair value approximations were made solely for on and off
balance sheet financial instruments as of September 30, 1997 and December
31, 1996 and 1995, no attempt was made to estimate the value of
anticipated future business or the value of
F-32
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(17) Disclosures about Fair Value of Financial Instruments, cont.
nonfinancial statement assets and liabilities. Furthermore, certain tax
implications related to the realization of the unrealized gains and
losses could have a substantial impact on these fair value estimates and
have not been incorporated into many of the estimates.
The estimated fair values of the Bank's financial instruments as of
September 30, 1997, December 31, 1996 and 1995 are as follows:
September 30, 1997
------------------------
Carrying Fair
amount value
------ -----
(in thousands)
Financial assets:
Cash and cash equivalents $ 13,209 13,209
Securities available for sale 127,651 127,651
Securities and mortgage-backed securities
held to maturity 70,761 70,922
Loans, net 397,866 395,786
======= =======
Financial liabilities:
Deposits $ 493,334 493,327
Borrowed funds 30,000 30,096
====== ======
Off balance sheet financial instruments:
Commitments to extend credit $ 47,712 47,712
========= ======
1996
------------------------
Carrying Fair
amount value
------ -----
(in thousands)
Financial assets:
Cash and cash equivalents $ 20,938 20,938
Securities and mortgage-backed securities
held to maturity 87,648 87,648
Securities held to maturity 86,553 86,512
Loans, net 380,288 377,976
======= =======
Financial liabilities:
Deposits $ 491,246 493,654
========= =======
Off balance sheet financial instruments:
Commitments to extend credit $ 27,697 27,697
========= ======
F-33
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(17) Disclosures about Fair Value of Financial Instruments, cont.
1995
-----------------------
Carrying Fair
amount value
------ -----
(in thousands)
Financial assets:
Cash and cash equivalents $ 16,253 16,253
Securities available for sale 83,776 83,776
Securities and mortgage-backed securities
held to maturity 91,261 92,158
Loans, net 306,093 307,927
======= =======
Financial liabilities:
Deposits $ 410,770 416,705
========= =======
Off balance sheet financial instruments:
Commitments to extend credit $ 18,843 18,843
========= ======
(18) Insurance Funds Legislation
On September 30, 1996, legislation was enacted which, among other things,
imposed a special one-time assessment on SAIF-insured deposits to
recapitalize Savings Associations Insurance Fund (SAIF) and spread the
obligations for payment of Financing Corporation (FICO) bonds across all
SAIF and Bank Insurance Fund (BIF) members. The Federal Deposit Insurance
Corporation (FDIC) special assessment being levied amounts to 65.7 basis
points on SAIF assessable deposits held as of March 31, 1995. The Bank
recorded a $177,000 charge (before tax-effect) as a result of the FDIC
special assessment. This legislation will eliminate the substantial
disparity between the amount that BIF and SAIF member institutions had
been paying for deposit insurance premiums. As of December 31, 1996, the
Bank's deposits are primarily BIF-insured except for $34 million of
deposits which were acquired from a SAIF-insured institution.
Beginning on January 1, 1997, BIF members will pay a portion of the FICO
payment equal to 1.29 basis points per $100 in BIF-insured deposits
compared to 6.44 basis points per $100 in SAIF-insured deposits, and will
pay a pro rata share (approximately 2.4 basis points per $100 in
deposits) of the FICO payment on the earlier of January 1, 2000, or the
date upon which the last savings association ceases to exist. The
legislation also requires BIF and SAIF to be merged by January 1, 1999,
provided that subsequent legislation is adopted to eliminate the savings
association charter and no savings associations remain as of that time.
The FDIC has recently lowered SAIF assessments to a range comparable to
that of BIF members, although SAIF members must also make the FICO
payments described above. Management cannot predict the level of FDIC
insurance assessments on an on-going basis or whether the BIF and SAIF
will eventually be merged.
F-34
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(19) Recent Accounting Pronouncements
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125 (SFAS No. 125),
Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities". SFAS No. 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishment of liabilities. These standards are based on consistent
application of a financial-component approach and focuses on control.
Under this approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control
has been surrendered, and derecognizes liabilities when extinguished.
SFAS No. 125 provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured
borrowings. SFAS No. 125 is effective for transfers occurring after
December 31, 1996 and has been applied prospectively.
In December 1996, the FASB issued Statement of Financial Accounting
Standards No. 127 (SFAS No. 127), "Deferral of the Effective Date of
Certain Provisions of FASB Statement No. 125", an amendment of SFAS No.
125. SFAS No. 127 defers for one year the effective date of portions of
SFAS No. 125 that address secured borrowings and collateral for all
transactions. Additionally, SFAS No. 127 defers for one year the
effective date of transfers of financial assets that are part of
repurchase agreements, securities lending and similar transactions. The
adoption of SFAS No. 125 and SFAS No. 127 is not expected to have a
material effect on the Bank's consolidated financial statements
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128 (SFAS No. 128), "Earnings per share" establishes
standards for computing and presenting earnings per share (EPS) and
applies to entities with publicly held common stock or potential common
stock. SFAS No. 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with
complex capital structures. SFAS No. 128 requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. SFAS No. 128 is effective
for financial statements issued for periods ending after December 15,
1997, including interim periods, earlier application is not permitted.
SFAS No. 128 also requires restatement of all prior period EPS data
presented. The Bank adopted SFAS No. 128 in 1997. Per share amounts for
prior periods have been restated. The adoption of SFAS 128 did not have a
material effect on the Bank's reported earnings per share.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 (SFAS No. 130), "Reporting Comprehensive Income". This Statement
establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This Statement is effective for
fiscal years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods provided for comparative
purposes is required. The Bank has not determined the impact that this
Statement will have on its reporting of operations.
F-35
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(19) Recent Accounting Pronouncements, cont.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131 (SFAS No. 131), "Disclosures about Segments of an Enterprise and
Related Information". This Statement establishes standards for the way
that public business enterprises report information about operating
segments in annual financial statements and requires that those
enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic
areas, and major customers. This Statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial
year of application, comparative information for earlier years is to be
restated. This Statement need not be applied to interim financial
statements in the initial year of its application, but comparative
information for interim periods in the initial year of application is to
be reported in financial statements for interim periods in the second
year of application. The adoption of this Statement is not expected to
change the Bank's reporting requirements.
(20) Quarterly Financial Data (unaudited)
The following tables summarizes certain 1997, 1996 and 1995 quarterly
financial data.
Quarter Ended
-----------------------------------------
Sept. 30 June 30, Mar. 31
1997 1997 1997
---- ---- ----
(in thousands)
Interest income $ 11,009 10,827 10,646
Interest expense 5,571 5,324 5,328
Net interest income 5,438 5,503 5,318
Provision for loan losses 1,274 204 10
Gain (loss) on security transaction 1,676 913 334
Operating expenses 3,751 3,073 3,019
Income before tax expense 2,619 3,558 3,052
Net income for the quarter 1,668 2,276 1,953
Earnings per share - Basic 0.19 0.25 0.22
Earnings per share -Diluted 0.19 0.25 0.22
Quarter Ended
--------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31,
1996 1996 1996 1996
---- ---- ---- ----
(in thousands)
Interest income $ 10,241 8,970 8,850 8,842
Interest expense 5,076 4,356 4,217 4,292
Net interest income 5,165 4,614 4,633 4,550
Provision for loan losses - - - -
Gain (loss) on security transaction 650 - 617 1,572
Operating expenses 3,235 2,369 2,002 2,063
Income before tax expense 3,037 2,430 3,410 4,234
Net income for the quarter 1,943 1,556 2,183 2,709
Earnings per share - Basic 0.22 0.17 0.25 0.30
Earnings per share - Diluted 0.22 0.17 0.25 0.30
F-36
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(20) Quarterly Financial Data, cont.
Quarter Ended
-------------------------------------------
Dec. 31 Sept. 30 June 30, Mar. 31
1995 1995 1995 1995
---- ---- ---- ----
(in thousands)
Interest income $ 8,852 8,898 8,185 7,583
Interest expense 4,420 4,593 4,301 3,696
Net interest income 4,432 4,305 3,884 3,887
Provision for loan losses 15 45 45 45
Gain (loss) on security transaction 884 937 1,525 847
Operating expenses 2,085 1,843 2,017 1,847
Income before tax expense 3,402 3,546 3,505 3,059
Net income for the quarter 2,178 2,269 2,244 1,957
(21) Earnings per Common Share
The Bank adopted Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings Per Share" on December 31, 1997. All earnings per
share data for previous periods have been restated to conform with the
provisions of SFAS 128.
The following table summarizes the computation of basic earnings and
diluted earnings per common share for the nine months ended September 30,
1997 and 1996 and for the year ended December 31, 1996:
September 30,
--------------------- Dec. 31,
1997 1996 1996
---- ---- ----
(in thousands, except per share data)
Earnings available to common
shareholders $ 5,898 6,448 8,391
Weighted-average common
shares outstanding 8,923 8,913 8,913
Plus common stock equivalent 80 3 10
------- -------- -------
Diluted weighted-average
shares outstanding $ 9,003 8,916 8,923
======= ===== =====
Earnings per common share:
Basic $ 0.66 0.72 0.94
Diluted 0.66 0.72 0.94
==== ==== ====
F-37
<PAGE>
PEOPLES BANCORP, INC.
Notes to Consolidated Financial Statements, Continued
(21) Earnings per Common Share, cont.
Earnings per common share for 1995 and 1994 are not presented as the Bank
completed its initial public offering on August 3, 1995 and such data is
net deemed meaningful by management.
F-38
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made,
such other information or representation must not be relied upon as having been
authorized by the Company, the Bank or the Agent. 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 or
solicitation is not qualified to do so, or to any person 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
Bank since any of the dates as of which information is furnished herein or since
the date hereof.
SUMMARY......................................................................4
SELECTED CONSOLIDATED FINANCIAL
AND OTHER DATA OF THE BANK AND SUBSIDIARIES.................................12
RISK FACTORS................................................................14
THE COMPANY.................................................................18
THE BANK....................................................................18
HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE.................................20
USE OF PROCEEDS.............................................................20
DIVIDEND POLICY.............................................................21
MARKET FOR THE COMMON STOCK.................................................22
CAPITALIZATION..............................................................24
PRO FORMA DATA..............................................................24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............................30
BUSINESS OF THE BANK........................................................44
REGULATION..................................................................62
TAXATION....................................................................68
MANAGEMENT OF THE COMPANY...................................................70
MANAGEMENT OF THE BANK......................................................70
THE CONVERSION..............................................................80
RESTRICTIONS ON THE ACQUISITION OF THE COMPANY
AND THE BANK..............................................................99
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY................................104
DESCRIPTION OF CAPITAL STOCK OF THE BANK...................................106
TRANSFER AGENT AND REGISTRAR...............................................106
EXPERTS....................................................................106
LEGAL OPINIONS.............................................................107
ADDITIONAL INFORMATION.....................................................107
Until March __, 1998 or 25 days after commencement of the Syndicated
Community Offering, if any, whichever is later, all dealers effecting
transactions inthe registered securities, whether or not participating in this
distribution, may be required to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments of subscriptions.
36,236,500 Shares
Peoples
Bancorp, Inc.
(Proposed Holding Company for
Trenton Savings Bank FSB)
COMMON STOCK
Par Value $.01 per share
PROSPECTUS
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
February __, 1998
- --------------------------------------------------------------------------------
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Amount
* Legal Fees and Expenses........................................$ 160,000
* Printing, Postage and Mailing.................................. 220,000
* Appraisal and Business Plan Fees and Expenses.................. 25,000
* Accounting Fees and Expenses................................... 140,000
* Conversion Data Processing..................................... 47,000
** Marketing Fees and Expenses.................................... 1,045,000
* Filing Fees (NASD, OTS and SEC)................................ 170,000
* Other Expenses................................................. 128,000
--------------
* Total .........................................................$ 1,935,000
==============
- ---------------
* Estimated
** The Bank and the Company have retained Friedman, Billings, Ramsey & Co,
Inc. ("FBR") to assist in the sale of common stock on a best efforts
basis in the Subscription and Community Offerings. For purposes of
computing estimated expenses, it has been assumed that FBR will receive
fees of approximately $1,000,000, exclusive of attorneys' fees of
$45,000.
Item 14. Indemnification of Directors and Officers
Indemnification of Directors and Officers of Peoples Bancorp, Inc.
Article TENTH of the Certificate of Incorporation of Peoples Bancorp, Inc.
(the "Corporation") sets forth circumstances under which directors, officers,
employees and agents of the Corporation may be insured or indemnified against
liability which they incur in their capacities as such:
TENTH:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
<PAGE>
disposition (hereinafter an "advancement of expenses"); provided, however, that,
if the Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a Director or Officer (and
not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise. The rights to indemnification and to
the advancement of expenses conferred in Sections A and B of this Article TENTH
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
Item 15. Recent Sales of Unregistered Securities.
Not Applicable.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules:
The exhibits and financial statement schedules filed as part of this
registration statement are as follows:
(a) List of Exhibits
1.1 Engagement Letter between Peoples Bancorp, Inc. and Friedman, Billings,
Ramsey & Co., Inc.*
1.2 Form of Agency Agreement among Peoples Bancorp, Inc., Trenton Savings Bank,
FSB, and Friedman, Billings, Ramsey & Co., Inc.
2 Plan of Conversion and Reorganization
3.1 Certificate of Incorporation of Peoples Bancorp, Inc. (Included as Exhibit
D of the Plan of Conversion and Reorganization)*
3.2 Bylaws of Peoples Bancorp, Inc. (Included as Exhibit E of the Plan of
Conversion and Reorganization)*
4 Form of Common Stock Certificate of Peoples Bancorp, Inc.*
5 Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. regarding legality of
securities being registered*
8.1 Federal Tax Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C.
8.3 Letter from FinPro, Inc. with respect to Subscription Rights*
10.1 Amended Employment Agreement between Trenton Savings Bank FSB and Wendell
T. Breithaupt*
10.2 Supplemental Executive Retirement Plan*
10.3 Trenton Savings Bank FSB and Peoples Bancorp, MHC 1996 Stock Option Plan*
10.4 Trenton Savings Bank FSB and Peoples Bancorp, M.H.C. 1996 Recognition and
Retention Plan*
10.5 Form of Employment Agreement*
10.6 Form of Severance Agreement*
10.7 Employee Stock Ownership Plan* 21 Subsidiaries of the Registrant*
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick, P.C. (contained in opinion
filed as Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of FinPro, Inc.
24 Power of Attorney (set forth on Signature Page)
27 EDGAR Financial Data Schedule*
99.1 Appraisal Agreement between Peoples Bancorp, Inc. and FinPro, Inc.*
<PAGE>
99.2 Appraisal Report of FinPro, Inc.
99.3 Proxy Statement to be furnished to Members of Peoples Bancorp, M.H.C.*
99.4 Proxy Statement to be furnished to Stockholders of Peoples Bancorp, Inc.*
99.5 Marketing Materials
99.6 Order and Acknowledgment Form
- ------------------------------------
*Previously filed
**To be filed supplementally or by amendment.
(b) Financial Statement Schedules
No financial statement schedules are filed because the
required information is not applicable or is included in the consolidated
financial statements or related notes.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) To provide to the underwriter at the closing specified in the
underwriting agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 questions whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Lawrenceville, New Jersey on February
2, 1998.
Peoples Bancorp, Inc.
By: /s/ Wendell T. Breithaupt
-------------------------
Wendell T. Breithaupt
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Peoples Bancorp, Inc. (the
"Company") hereby severally constitute and appoint Wendell T. Breithaupt as our
true and lawful attorney and agent, to do any and all things in our names in the
capacities indicated below which said Wendell T. Breithaupt may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933,
and any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with the registration statement on Form S-1 relating
to the offering of the Company's Common Stock, including specifically, but not
limited to, power and authority to sign for us in our names in the capacities
indicated below the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby approve, ratify and confirm
all that said Wendell T. Breithaupt shall do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and as of the dates indicated.
Signatures Title Date
/s/ Wendell T. Breithaupt President, Chief Executive February 2, 1998
Wendell T. Breithaupt Officer and Director (Principal
Executive Officer)
/s/ Robert Russo Vice President and Treasurer February 2, 1998
Robert Russo (Principal Financial and
Accounting Officer
/s/ John B. Sill, Jr. Chairman February 2, 1998
John B. Sill, Jr.
/s/ Miles W. Truesdell, Jr. Director February 2, 1998
Miles W. Truesdell, Jr.
/s/ Peter S. Longstreth Director February 2, 1998
Peter S. Longstreth
<PAGE>
/s/ George A. Pruitt Director February 2, 1998
George A. Pruitt
/s/ George W. Reinhard Director February 2, 1998
George W. Reinhard
/s/ Charles E. Stokes Director February 2, 1998
Charles E. Stokes
/s/ Raymond E. Trainer Director February 2, 1998
Raymond E. Trainer
<PAGE>
As filed with the Securities and Exchange Commission on February 5, 1998
Registration No. 333-42889
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
ON
FORM S-1
------------------------------------
PEOPLES BANCORP, INC.
<PAGE>
EXHIBIT INDEX
1.1 Engagement Letter between Peoples Bancorp, Inc. and Friedman, Billings,
Ramsey & Co., Inc.*
1.2 Form of Agency Agreement among Peoples Bancorp, Inc., Trenton Savings Bank,
FSB, and Friedman, Billings, Ramsey & Co., Inc.
2 Plan of Conversion and Reorganization
3.1 Certificate of Incorporation of Peoples Bancorp, Inc. (Included as Exhibit
D of the Plan of Conversion and Reorganization)*
3.2 Bylaws of Peoples Bancorp, Inc. (Included as Exhibit E of the Plan of
Conversion and Reorganization)*
4 Form of Common Stock Certificate of Peoples Bancorp, Inc.*
5 Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. regarding legality of
securities being registered*
8.1 Federal Tax Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C.
8.3 Letter from FinPro, Inc. with respect to Subscription Rights*
10.1 Amended Employment Agreement between Trenton Savings Bank FSB and Wendell
T. Breithaupt*
10.2 Supplemental Executive Retirement Plan*
10.3 Trenton Savings Bank FSB and Peoples Bancorp, MHC 1996 Stock Option Plan*
10.4 Trenton Savings Bank FSB and Peoples Bancorp, M.H.C. 1996 Recognition and
Retention Plan*
10.5 Form of Employment Agreement*
10.6 Form of Severance Agreement*
10.7 Employee Stock Ownership Plan*
21 Subsidiaries of the Registrant*
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick, P.C. (contained in opinion
filed as Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of FinPro, Inc.
24 Power of Attorney (set forth on Signature Page)
27 EDGAR Financial Data Schedule*
99.1 Appraisal Agreement between Peoples Bancorp, Inc. and FinPro, Inc.*
99.2 Appraisal Report of FinPro, Inc.
99.3 Proxy Statement to be furnished to Members of Peoples Bancorp, M.H.C.*
<PAGE>
99.4 Proxy Statement to be furnished to Stockholders of Peoples Bancorp, Inc.*
99.5 Marketing Materials
99.6 Order and Acknowledgment Form
- ------------------------------------
*Previously filed
**To be filed supplementally or by amendment.
Exhibit 1.2
PEOPLES BANCORP, INC.
Up to 35,707,500 Shares
COMMON STOCK
($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
February __, 1998
Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22209
Ladies and Gentlemen:
Peoples Bancorp, Inc., a Delaware corporation (the "Company"), Peoples
Bancorp, M.H.C. (the "MHC"), Peoples Bancorp, Inc., a federal corporation (the
"Mid-Tier Holding Company"), and Trenton Savings Bank, FSB, Trenton, New Jersey,
a federal stock savings bank (the "Bank"), 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
Friedman, Billings, Ramsey & Co., Inc. (the "Agent") as follows (defined terms
used herein shall have the same definition given in the Prospectus dated
February __, 1998 unless otherwise defined herein):
Section 1. The Offering. The Bank will establish the Company as a
first-tier Delaware chartered corporation subsidiary; (ii) the Company will
charter an interim federal association ("Interim"); (iii) the MHC will merge
with and into the Mid-Tier Holding Company, shares of Mid-Tier Common Stock held
by the MHC will be canceled and certain depositors of the Bank will receive an
interest in a liquidation account of the Mid-Tier Holding Company in exchange
for such persons' interest in the MHC; (iv) the Mid-Tier Holding Company will
merge with and into the Bank (the "Mid-Tier Merger") with the Bank as the
resulting entity and stockholders of the Mid-Tier Holding Company other than the
MHC ("Minority Stockholders") will constructively receive shares of Bank Common
Stock in exchange for their Mid-Tier Common Stock and each Eligible Account
Holder and Supplemental Eligible Account Holder will receive an interest in a
Liquidation Account of the Bank in exchange for such person's interest in the
Mid-Tier Holding Company; (v) contemporaneously with the Mid-Tier Merger,
Interim will merge with and into the Bank with the Bank as the surviving entity
(the "Bank Merger") and Minority Stockholders will exchange the shares of
Company Common Stock that they constructively received in the Mid-Tier Merger
for the Company's Common Stock (the
<PAGE>
"Exchange") pursuant to the "Exchange Ratio" as defined in the Prospectus
("Exchange Stock"); and (vi) contemporaneously with the Bank Merger, the Company
will offer for sale shares of common stock in a subscription offering.
Pursuant to the Plan and in connection with the Conversion, the Company
is offering up to 20,241,600 shares of its common stock (the "Conversion Stock")
in a subscription and community offering (the "Offerings"). Conversion Stock is
first being offered in a subscription offering with nontransferable subscription
rights being granted, in the following order of priority, to (i) depositors of
the Bank with account balances of $50.00 or more as of the close of business on
August 31, 1996 ("Eligible Account Holders"); (ii) the Bank's ESOP; (iii)
depositors of the Bank with account balances of $50.00 or more as of the close
of business on December 31, 1997 ("Supplemental Eligible Account Holders"); and
(iv) depositors of the Bank as of the close of business on January ___, 1998
(other than Eligible Account Holders and Supplemental Eligible Account Holders)
("Other Members"). Subscription rights will expire if not exercised by _____
p.m., local time, on March ___, 1998, unless extended.
Subject to the prior rights of holders of subscription rights,
Conversion Stock not subscribed for in the Subscription Offering is being
offered for sale in a concurrent community offering (the "Community Offering")
to certain members of the general public with preference given to stockholders
of the Mid-Tier Holding Company, other than the Mutual Holding Company ("Public
Stockholders") and then to natural persons residing in the New Jersey Counties
of Burlington, Mercer and Ocean (the "Communities"). The Primary Parties reserve
the absolute right to reject or accept any orders in the 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.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-_______) (the
"Registration Statement") containing a prospectus relating to the Offerings and
the Exchange for the registration of the Exchange Stock and Conversion Stock
(collectively, the "Shares") under the Securities Act of 1933 (the "1933 Act"),
and has filed such amendments thereof, if any, and such amended prospectuses as
may have been required to the date hereof. 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 the regulations of the Office of Thrift Supervision
("OTS") governing the conversions of savings associations (the "Conversion
Regulations"), the MHC has filed with the OTS an Application for Conversion on
Form AC (the "Conversion Application"), including the prospectus, and has filed
such amendments thereto, if any, as may have been required by the OTS. The
Conversion Application has been approved by the OTS and the related Prospectus
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has been authorized for use by the OTS. The Company has also filed an
Application H-(e)1-S ("Holding Company Application") with the OTS to become the
saving and loan holding company of the Bank, which has been approved.
Section 2. Retention of the Agent; Compensation; Sale and Delivery of
the Shares. Subject to the terms and conditions herein set forth, the Company,
the MHC, the Mid-Tier Holding Company, and the Bank hereby appoint the Agent as
their financial advisor and marketing agent 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 Bank with respect to the Company's sale of the
Conversion Stock and in the areas of market making and research coverage.
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, the
MHC, the Mid-Tier Holding Company, and the Bank as to the matters set forth in
the letter agreement ("Letter Agreement"), dated October 15, 1997, between the
Bank and the Agent (a copy of which is attached hereto as Exhibit A). It is
acknowledged by the Company, the MHC, the Mid-Tier Holding Company, and the Bank
that the Agent shall not be required to purchase any Shares and shall not 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 shall terminate
upon the completion or termination or abandonment of the Plan by the Company or
upon termination of the Offerings, 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 Offerings are extended beyond the End Date, the Company, the MHC, the
Mid-Tier Holding Company, the Bank 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 14,961,100
shares of Conversion Stock within the period herein provided, this Agreement
shall terminate and the Company shall refund to any persons who have subscribed
for any of the Conversation Stock, 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 Offerings are 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 (b)
below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of a minimum of number of shares of
Conversion Stock required by the Plan to be sold, are satisfied, the Company
agrees to issue, or have issued, the Shares sold in the Offering and the
Exchange and to release for delivery certificates for such Shares on the Closing
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Date (as hereinafter defined) against payment to the Company or surrender of
Mid-Tier Holding Company stock certificates by any 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
Conversion Stock against payment therefor shall be made on a date and at a place
acceptable to the Company, the MHC, the Mid-Tier Holding Company, the Bank and
the Agent (it being understood that such date shall not be more than ten
business days after the later of the termination of the Offering or receipt of
all necessary regulatory approvals) or such other time or place as shall be
agreed upon by the Company, the MHC, the Mid-Tier Holding Company, the Bank 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 or issued pursuant to the
Exchange, 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 to the Agent in the amount of $50,000, of which
$25,000 has been paid and of which $25,000 will be paid upon OTS
approval of the Plan. Such fees shall be deemed to be 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 point the termination occurred,
including any accrued legal fees expanded by the Agent.
(b) A Marketing Fee of $.75% of the total dollar amount of Conversion
Stock sold in the Subscription and Community Offerings not to
exceed $1,000,000, payable to the Agent on the Closing Date. No
Marketing Fee shall be payable in connection with the sale of
Conversion Stock to the ESOP or to the Bank's directors,
officers, employees, and such persons immediate family members.
(c) With respect to paragraphs (a) and (b) above, the total
Marketing/Management Fee will not exceed $1,000,000.
(d) The Bank 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, including without limitation, accounting,
communication, travel expenses, and legal fees and expenses, for
amounts not to exceed $70,000. The Bank will bear the expenses of
the Offerings customarily borne by issuers including, without
limitation, OTS, SEC, "Blue Sky," and NASD filing and
registration fees; the fees of the Bank's accountants, conversion
agent, data processor, attorneys, appraiser, transfer agent and
registrar, printing, mailing and marketing expenses associated
with the Conversion; and the fees set forth under this Section 2.
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Full payment of the 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 Bank to terminate or abandon the Plan.
In the event of an oversubscription or other event, which causes the
Offerings to continue beyond the original expiration date or a resolicitation of
subscribers, the parties agree to renegotiate the expense cap on legal fees
applicable to the Agent.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offerings at the Purchase Price or Exchange Ratio as defined and set
forth on the cover page of the Prospectus.
Section 4. Representations and Warranties. The Company, the MHC, the
Mid-Tier Holding Company, and the Bank jointly and severally represent and
warrant to the Agent on the date hereof as follows:
(a) The Registration Statement was declared effective by the
Commission on February __, 1998. At the time the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto), became effective, the Registration
Statement 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 Bank contained in Sales Information (as such term is
defined in Section 8 hereof) authorized by the Company or the Bank for
use in connection with the Offerings, did not contain an 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,
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), any information
regarding the Company or the Bank contained in Sales Information (as
such term is defined in Section 8 hereof) authorized by the Company or
the Bank for use in connection with the Offerings 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
Bank by the Agent expressly regarding the Agent for use in the
Prospectus under the caption "The Conversion-Plan of Distribution and
Selling Commissions" 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 was approved by the OTS on
__________ ___, 1998 and the related Prospectus has been authorized for
use by the OTS. At the
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time of the approval of the Conversion Application, including the
Prospectus (including any amendment or supplement thereto), by the OTS
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 by the OTS.
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; 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, the MHC,
the Mid-Tier Holding Company, or the Bank by the Agent expressly
regarding the Agent for use in the Prospectus contained in the
Conversion Application under the caption "The Conversion-Plan of
Distribution and Selling Commissions" 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.
(c) The Company filed with the OTS the Holding Company
Application which has been approved by the OTS, subject to such
conditions set forth in the approved letter.
(d) No order has been issued by the OTS 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, the MHC, the Mid-Tier Holding Company, or the Bank,
pending or threatened.
(e) At the Closing Date referred to in Section 2, the Plan
will have been adopted by the Boards of Directors of the Company, the
MHC, the Mid-Tier Holding Company, and the Bank 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, the MHC, the Mid-Tier Holding
Company, or the Bank by the OTS, the Commission or any other regulatory
authority and in the manner described in the Prospectus. To the best
knowledge of the Company, no person has sought to obtain review of the
final action of the OTS in approving or taking no objection to the Plan
or in approving or taking no objection to the Conversion or the Holding
Company Application pursuant to the Conversion Regulations or any other
statute or regulation.
(f) The Bank has been organized and is a validly existing
federally chartered savings and loan association in stock form of
organization and upon the Conversion will continue as such, is duly
authorized to conduct its business and own its property as described in
the Registration Statement and the Prospectus and all of the
outstanding stock of the Bank has been duly authorized and is fully
paid and non-assessable, and such stock is owned directly by the
Mid-Tier Holding Company free and clear of any liens,
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encumbrances, claims or other restrictions. The Bank 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 Bank is in all material respects complying with all laws,
rules, regulations and orders applicable to the operation of its
business. The Bank is existing under the laws of the United States 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 or 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 Bank. (The term "Bank" used in this Agreement shall
include the Bank and its subsidiaries, Manchester Trust Bank ("MTB")
and TSBusiness Finance Corporation ("TSB") (collectively, the
"Subsidiaries"), except where the context otherwise requires). The Bank
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 Bank. Upon completion of the
sale by the Company of the Shares contemplated by the Prospectus, (i)
the MHC and the Mid-Tier Holding Company will be succeeded by the
Company, a Delaware corporation, as the holding company of the Bank,
(ii) all of the authorized and outstanding capital stock of the Bank
will be owned by the Company, and (iii) the Company will have no direct
subsidiaries other than the Bank. 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 or the OTS's
letters of approval or no objection taken, all terms, conditions,
requirements and provisions with respect to the Conversion (except
those that are conditions subsequent) imposed by the Commission or the
OTS, if any, will have been complied with by the Company, the MHC, the
Mid-Tier Holding Company, and the Bank 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.
(g) The Subsidiaries are duly organized and are in good
standing under the laws of the State of _____________ with full
corporate power and authority to own their properties and to conduct
their businesses, as are described in the Prospectus, and all of the
outstanding stock of the Subsidiaries has been duly authorized and is
fully paid and non-assessable, and such stock is owned directly and
beneficially by the Bank, free and clear of any liens, encumbrances,
claims or other restrictions. The Subsidiaries are duly qualified to
transact business and are in good standing in each jurisdiction in
which they conduct business, except where the failure to be qualified
would not, either individually or in the aggregate, have a material
adverse effect on the operations of the Bank. The activities of the
Subsidiaries are permitted to subsidiaries of a federally chartered
savings association by the rules, regulations, policies, and practices
of the OTS, and the activities of the Bank and the Subsidiaries are
permitted under federal and _____________ law and any other
jurisdiction in which the Subsidiaries conduct business. The Bank's
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investments in the Subsidiaries has been approved by the OTS to the
extent required by applicable laws and regulations.
(h) The Mid-Tier Holding Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the United States 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 the
Mid-Tier Holding Company is 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 Mid-Tier
Holding Company. The Mid-Tier Holding 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
Mid-Tier Holding Company is in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its
business.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware 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 the Company is 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.
(j) The MHC has been duly organized and is a validly existing
federally chartered mutual holding company, 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 the MHC is 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 MHC. The MHC 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 MHC is in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business.
(k) The Bank is a member of the Federal Home Loan Bank of New
York ("FHLB-New York"). The deposit accounts of the Bank are insured by
the FDIC up to
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the applicable limits; and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of
the Company, the MHC, the Mid-Tier Holding Company, or the Bank,
threatened. Upon consummation of the Conversion, the liquidation
account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders will be duly established in accordance with
the requirements of the Conversion Regulations.
(l) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank have good and marketable title to all real property and other
assets material to the business of the Company, the MHC, the Mid-Tier
Holding Company, and the Bank 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, the MHC, the Mid-Tier Holding Company, and the Bank taken as a
whole; and all of the leases and subleases material to the business of
the Company, the MHC, the Mid-Tier Holding Company, and the Bank under
which the Company, the MHC, the Mid-Tier Holding Company, or the Bank
hold properties, including those described in the Registration
Statement and Prospectus, are in full force and effect.
(m) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank have received an opinion of their special counsel, Luse,
Lehman, Gorman, Pomerenk & Schick, P.C., with respect to the federal
income tax consequences of the conversion of the MHC from mutual to
stock form, the acquisition of the capital stock of the Bank by the
Company and the sale of the Shares as described in the Registration
Statement and the Prospectus, and an opinion from
_______________________________________ ("LOCAL") with respect to the
New Jersey state income tax consequences of the proposed transaction;
all material aspects of the opinions of Luse, Lehman, Gorman, Pomerenk
& Schick, P.C. and LOCAL are accurately summarized in the Prospectus;
and the facts and representations upon which such opinions are based
are truthful, accurate and complete.
(n) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank 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 (i) the
capital stock of the Bank to the Company and (ii) the Shares to be sold
by the Company as provided herein and as described in the Prospectus.
(o) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank 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) and, except as 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
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or governmental agency or body, pending or, to the knowledge of the
Company, the MHC, the Mid-Tier Holding Company, and the Bank,
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, the MHC, the Mid-Tier
Holding Company, or the Bank, or which would materially affect their
properties and assets.
(p) The consolidated financial statements which are included
in the Prospectus fairly present the financial condition, results of
operations, retained earnings and cash flows of the Mid-Tier Holding
Company or the Bank, as the case may be, at the respective dates
thereof 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 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 Mid-Tier Holding
Company with the Commission, except that accounting principles employed
in such regulatory filings conform to the requirements of such
authorities and not necessarily to generally accepted accounting
principles. 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 Mid-Tier Holding Company or the
Bank, as the case may be, included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly
applied on the basis described therein.
(q) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus; (i) there has
not been any material adverse change, financial or otherwise, in the
condition of the Company, the MHC, the Bank or in the earnings, capital
or properties of the Company, the MHC, the Mid-Tier Holding Company, or
the Bank, whether or not arising in the ordinary course of business;
(ii) there has not been any material increase in the long-term debt of
the Bank 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 surplus and reserves or total
assets of the Mid-Tier Holding Company or the Bank, nor has the
Company, the Mid-Tier Holding Company, or the Bank issued any
securities 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, the MHC, the
Mid-Tier Holding Company, or the Bank, except with respect to those
transactions entered into in the ordinary course of business; (iv) the
capitalization, liabilities, assets, properties and business of the
Company, the MHC, the Mid-Tier Holding Company, and the Bank conform in
all material respects to the descriptions
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thereof contained in the Prospectus; and (v) the Company, the MHC, the
Mid-Tier Holding Company, and the Bank do not have any material
contingent liabilities, except as set forth in the Prospectus.
(r) As of the date hereof and as of the Closing Date, the
Company, the MHC, the Mid-Tier Holding Company, and the Bank are not in
violation of its articles of incorporation or bylaws or charter or
bylaws, as applicable, or 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, the MHC,
the Mid-Tier Holding Company, and the Bank and this Agreement has been
validly executed and delivered by the Company, the MHC, the Mid-Tier
Holding Company, and the Bank and is the valid, legal and binding
Agreement of the Company, the MHC, the Mid-Tier Holding Company, and
the Bank 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 and their holding companies, (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, the
articles of incorporation and bylaws of the Company or the charters and
bylaws of the Bank, the Mid-Tier Holding Company, or the MHC (in either
mutual or capital stock form), or any material contract, lease or other
instrument to which the Company, the MHC, the Mid-Tier Holding Company,
or the Bank has a beneficial interest, or any applicable law, rule,
regulation or order; (ii) violate any authorization, approval,
judgment, decree, order, statute, rule or regulation applicable to the
Company, the MHC, the Mid-Tier Holding Company, or the Bank, except for
such violations which would not have a material adverse effect on the
financial condition and results of operations of the Company, the MHC,
the Mid-Tier Holding Company, and the Bank 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, the MHC, the Mid-Tier
Holding Company, or the Bank.
(s) 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 MHC, the Mid-Tier Holding Company, or the
Bank, in the due performance and observance of any
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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, the MHC, the Mid-Tier Holding Company,
or the Bank 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 effect on the financial condition or results of
operations of the Company, the MHC, the Mid-Tier Holding Company, and
the Bank 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, the MHC, the Mid-Tier Holding
Company, or the Bank, threatened any action or proceeding wherein the
Company, the Bank, the Mid-Tier Holding Company, or the MHC would or
might be alleged to be in default thereunder under circumstances where
such action or proceeding, if determined adversely to the Company, the
MHC, the Mid-Tier Holding Company, or the Bank, would have a material
adverse effect on the Company, the MHC, the Mid-Tier Holding Company,
and the Bank, taken as a whole.
(t) 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, other than shares issued to the Bank which shall be canceled on
the Closing Date, no shares of Common Stock have been or will be issued
and outstanding prior to the Closing Date referred to in Section 2; 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; no preemptive rights 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, the
MHC, the Mid-Tier Holding Company, and the Bank, 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.
(u) 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 or non-objection, as applicable, of the Commission, the
OTS, 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 National
Market.
(v) KPMG Peat Marwick LLP ("KPMG"), which has certified the
financial statements of the Mid-Tier Holding Company included in the
Prospectus as of September 30, 1997 and 1996 and for each of the years
in the three year period ended September 30, 1997, has advised the
Company, the MHC, the Mid-Tier Holding Company, and the Bank in writing
that they are, with respect to the Company, the MHC, the Mid-Tier
Holding Company, and the Bank, independent public accountants within
the meaning of
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the Code of Professional Ethics of the American Institute of Certified
Public Accountants, Title 121 of the Code of Federal Regulations and
Section 571.2(c)(3) and the 1933 Act.
(w) FinPro, Inc. which has prepared the Bank's Conversion
Valuation Appraisal Report as of December 17, 1997 (as amended or
supplemented, if so amended or supplemented) (the "Appraisal"), has
advised the Company in writing that it is independent of the Company,
the MHC, the Mid-Tier Holding Company, and the Bank within the meaning
of the Conversion Regulations.
(x) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank have timely filed all required federal, state and local tax
returns; the Company, the MHC, the Mid-Tier Holding Company, and the
Bank 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.
(y) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank are in compliance in all material respects with the applicable
financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, and the
regulations and rules thereunder.
(z) To the knowledge of the Company, the MHC, the Mid-Tier
Holding Company, and the Bank, neither the Company, the MHC, the
Mid-Tier Holding Company, the Bank, nor employees of the Company, the
MHC, the Mid-Tier Holding Company, or the Bank have made any payment of
funds of the Company, the MHC, the Mid-Tier Holding Company, or the
Bank as a loan for the purchase of the Conversion Stock (other than a
loan by the Company to the ESOP) 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.
(aa) Prior to the Conversion: the Bank had __________ shares
of authorized common stock of which __________ shares were issued and
outstanding and __________ shares of preferred stock, none of which
were outstanding; the Mid-Tier Holding Company had __________ shares of
authorized common stock, of which ___________ shares were issued and
outstanding and __________ shares of preferred stock, none of which
were outstanding; and the MHC was not authorized to issue shares. The
Bank, the Mid-Tier Holding Company, the Company or the MHC have not:
(i) other than as described in the Prospectus 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); (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
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consulting agreement except as contemplated hereunder and except for
the Letter Agreement set forth in Exhibit A; and (iv) engaged any
intermediary between the Agent and the Company, the MHC, the Mid-Tier
Holding Company, and the Bank in connection with the offering of the
Shares, and no person is being compensated in any manner for such
service.
(bb) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank have not relied upon the Agent or the Agent's counsel for any
legal, tax or accounting advice in connection with the Conversion.
(cc) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
Any certificates signed by an officer of the Company, the MHC, the
Mid-Tier Holding Company, or the Bank pursuant to the conditions of this
Agreement and delivered to the Agent or its counsel that refers to this
Agreement shall be deemed to be a representation and warranty by the Company,
the MHC, the Mid-Tier Holding Company, or the Bank 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. The Agent
represents and warrants to the Company, the MHC, the Mid-Tier Holding Company,
and the Bank that:
(a) The Agent is a corporation and is validly existing in good
standing under the laws of the State of Delaware with full
power and authority to provide the services to be furnished to
the Bank, the Mid-Tier Holding Company, the MHC and the
Company hereunder.
(b) 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 the legal,
valid and binding agreement of the Agent, enforceable in
accordance with its terms.
(c) Each of the Agent and its employees, agents 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.
(d) 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 event
which with notice or lapse of time or both would constitute a
default) under, the articles
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<PAGE>
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.
(e) 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.
(f) There is no suit or proceeding or charge of 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.
Section 5.1 Covenants of the Company, the MHC, the Mid-Tier Holding
Company, and the Bank. The Company, the MHC, the Mid-Tier Holding Company, and
the Bank hereby jointly and severally covenant with the Agent as follows:
(a) The Company has filed the Registration Statement with the
Commission. 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 MHC has filed the Conversion Application with the OTS.
The MHC will not, at any time after the Conversion Application is
approved by the OTS, 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 has filed the Holding Company Application with
the OTS. 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 Bank 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; (iii) when the Holding Company
Application, as amended, has been approved by the OTS; (iv) of any
comments from the Commission, the OTS
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<PAGE>
or any other governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (v) of the request by the
Commission, the OTS or any other governmental entity for any amendment
or supplement to the Registration Statement, the Conversion Application
or the Holding Company Application or for additional information; (vi)
of the issuance by the Commission, the OTS 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 other filing of
the MHC, the Company or the Bank under the Conversion Regulations, or
other applicable law, or the threat of any such action; (vii) the
issuance by the Commission, the OTS or any state authority of any stop
order suspending the effectiveness of the Registration Statement or the
approval of the Conversion Application or Holding Company Application,
or of the initiation or threat of initiation or threat of any
proceedings for any such purpose; or (viii) of the occurrence of any
event mentioned in paragraph (h) below. The Company, the MHC, the
Mid-Tier Holding Company, and the Bank will make every reasonable
effort (i) to prevent the issuance by the Commission, the OTS 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, the MHC, the Mid-Tier Holding Company, and
the Bank 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, the MHC, the Mid-Tier Holding Company, and the Bank 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 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, the MHC, the Mid-Tier Holding Company, and
the Bank 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 Conversion Regulations or the OTS, 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, the Company, the MHC, the
Mid-Tier Holding Company, and the Bank will comply, at their own
expense, with all material requirements imposed upon them by the
Commission, the OTS, the Conversion Regulations or the OTS, and by the
1933 Act, the
16
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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 shares of Common Stock 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, the MHC, the Mid-Tier Holding Company, or
the Bank shall occur, as a result of which it is necessary or
appropriate, in the opinion of counsel for the Company, the MHC, the
Mid-Tier Holding Company, and the Bank 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 Bank will
at their expense, prepare and file with the Commission and the OTS 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 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, the MHC, the Mid-Tier
Holding Company, and the Bank 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, the MHC, the Mid-Tier Holding Company, and
the Bank 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 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, the MHC, the Mid-Tier Holding Company, and the Bank may
reasonably agree upon; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to
qualify to do business in any jurisdiction in which it is not so
qualified. 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 such Eligible Account Holders and Supplemental Eligible
Account Holders who continue to maintain their savings accounts
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<PAGE>
in the Bank 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 shares of Common Stock in the event of a complete
liquidation of the Bank.
(k) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank 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 shares of Common Stock other than the Shares
or other than in connection with any plan or arrangement described in
the Prospectus.
(l) The Company shall register its Common Stock under Section
12(g) of the 1934 Act concurrent with the Offerings pursuant to the
Plan and shall request that such registration be effective upon
completion of the Conversion. The Company shall maintain the
effectiveness of such registration for not less than three (3) years or
such shorter period as may be required by the OTS.
(m) During the period during which the Company's Common Stock
is registered under the 1934 Act or for three years from the date
hereof, whichever period is greater, the Company will furnish to its
stockholders as soon as practicable after the end of each fiscal year
an annual report of the Company (including a consolidated balance sheet
and statements of consolidated income, stockholders' 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 Bank as the Agent may
reasonably request; and (iii) from time to time, such other
nonconfidential information concerning the Company or the Bank as the
Agent may reasonably request.
(o) The Company and the Bank 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, the Company, the MHC, the
18
<PAGE>
Mid-Tier Holding Company, and the Bank will not 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 two market makers to establish and maintain a market for the
Shares and (ii) list the Shares on a national or regional securities
exchange or on the Nasdaq National Market effective on or prior to the
Closing Date.
(r) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or
orders to purchase Shares in the Offerings 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 Bank's
obligation to refund payments received from persons subscribing for or
ordering Shares in the Offerings 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 Bank 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 Bank 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 Bank 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 Bank nor the MHC 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, the MHC, the
Mid-Tier Holding Company, and the Bank will inform the Agent of any
event or circumstances of which it is aware as a result of which the
Registration Statement, the Conversion Application 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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<PAGE>
(x) Prior to the Closing Date, the Company will have received
approval of the OTS to acquire the Bank.
Section 5.2 Covenants of the Agent. The Agent hereby covenants with the
Company, the MHC, the Mid-Tier Holding Company, and the Bank as follows:
(a) During the period when the Prospectus is used, the Agent
will comply, in all material respects and at its own expense, with all
requirements imposed upon it by the OTS and, to the extent applicable,
by the 1933 Act and the 1934 Act and the rules and regulations
promulgated thereunder.
(b) The Agent shall return unused prospectuses, if any, to the
Company promptly upon the completion of the Conversion.
(c) The Agent will distribute the Prospectuses or offering
materials in connection with the sales of the common stock only in
accordance with OTS regulations, the 1933 Act and the rules and
regulations promulgated thereunder.
(d) The Agent shall assist the Bank in maintaining
arrangements for the deposit of funds and the making of refunds, as
appropriate (as described in Section 5.1(r)), and shall perform the
allocation of shares in the event of an oversubscription, in
conformance with the Plan and applicable regulations and based upon
information furnished to the Agent by the Bank (as described in Section
5.1(v)).
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,
the MHC, the Mid-Tier Holding Company, and the Bank jointly and severally agree
to pay or reimburse the Agent for: (a) all filing fees in connection with all
filings 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, the MHC, the Mid-Tier
Holding Company, and the Bank's attorneys' 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 $70,000 (including legal fees and expenses). Such out-of-pocket expenses
include, but are not limited to, travel, communications 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 14,961,100 Shares or the Conversion is terminated or otherwise
abandoned, the Company, the MHC, the Mid-Tier Holding Company, and the Bank
shall reimburse the Agent in accordance with Section 2 hereof.
Section 7. Conditions to the Agent's Obligations. The Agent's
obligations hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived by the Agent, to the condition that all
representations and warranties of the Company, the MHC, the Mid-Tier Holding
Company, and the Bank herein are, at and as of the
20
<PAGE>
commencement of the Offerings and at and as of the Closing Date, true and
correct in all material respects, the condition that the Company, the MHC, the
Mid-Tier Holding Company, and the Bank shall have performed all of their
obligations hereunder to be performed on or before such dates, and to the
following further conditions:
(a) At the Closing Date, the Company, the MHC, the Mid-Tier
Holding Company, and the Bank 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, the Conversion Application approved by the
OTS, and the Holding Company 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, the MHC's, the Mid-Tier
Holding Company's, or the Bank's knowledge, threatened by the
Commission, the OTS 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 Luse,
Lehman, Gorman, Pomerenk & Schick, P.C., special counsel for
the Company, the MHC, the Mid-Tier Holding Company, and the
Bank, 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 Delaware and 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.
(ii) The Mid-Tier Holding Company has been
duly incorporated and is validly existing as a corporation
under the laws of the State of Delaware and 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. All of the outstanding capital
stock of the Mid-Tier Holding Company is duly authorized and
validly issued, fully paid, and non-assessable and __________
shares of such stock are directly owned and of record by the
MHC, free and clear of any liens, encumbrances, claims, or
other restrictions.
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(iii) The Bank has been organized and is a
validly existing federal savings association in capital stock
form of organization, authorized to conduct its business and
own its property as described in the Registration Statement
and Prospectus. All of the outstanding capital stock of the
Bank 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.
(iv) The MHC has been organized and is a
validly existing federal mutual holding company duly
authorized to conduct its business and own its property as
described in the Registration Statement and Prospectus.
(v) The Bank is a member of the FHLB-New
York. The deposit accounts of the Bank 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 caption "The Conversion-Liquidation
Rights" to the extent that such information constitutes
matters of law and legal conclusions has been reviewed by such
counsel and is accurate in all material respects.
(vi) The Subsidiaries are duly incorporated
and validly existing as corporations in good standing under
the laws of the State of ______________________ with full
corporate authority to own their properties and conduct their
businesses substantially as described in the Prospectus. To
such counsel's knowledge, the Subsidiaries have obtained all
material licenses, permits, and other governmental
authorizations currently required for the conduct of their
businesses, and all such material licenses, permits, and other
governmental authorizations are in full force and effect, and
the Subsidiaries are in all material respects complying
therewith. To such counsel's knowledge, the Subsidiaries are
not in violation of their respective certificates of
incorporation or bylaws. The activities of the Subsidiaries as
described in the Prospectus are permitted by the Savings
Institution Regulations. All of the outstanding stock of the
Subsidiaries have been duly authorized and are validly issued,
fully paid, and nonassessable and such stock is owned of
record by the Bank, free and clear of any liens encumbrances,
claims, or other restrictions.
(vii) 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 except for shares
issued upon incorporation of the Company, no shares of Common
Stock have been issued prior to the Closing Date; at the time
of the Conversion, the Conversion Stock subscribed for
pursuant to the Offerings 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
22
<PAGE>
set forth in the Plan and the 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 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.
(viii) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been validly authorized by all
necessary action on the part of the Company, the MHC, the
Mid-Tier Holding Company, and the Bank; and this Agreement is
a valid and binding obligation of the Company, the MHC, the
Mid-Tier Holding Company, and the Bank, enforceable in
accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, 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 savings institutions and their
holding companies, (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 Section 23A and 23B of the Federal Reserve
Act, and except that no opinion need to 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 Prospectus has been authorized for
use by the OTS. The OTS has approved the Holding Company
Application, and the purchase by the Company of all of the
issued and outstanding capital stock of the Bank 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 adopted by the
required vote of the directors of the Company, the MHC, the
Mid-Tier Holding Company, and the Bank and, based upon the
certificate of the inspector of election, by the members of
the MHC and the stockholders of the Mid-Tier Holding Company
and the Bank.
(xi) Subject to the satisfaction of the
conditions to the OTS's approval of the Conversion, no further
approval, registration, authorization, consent or other order
of or notice to any federal or Delaware regulatory agency is
required in connection with the execution and delivery of this
Agreement, the
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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 be rendered).
(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 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, 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 and accounting information
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 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, the MHC, the Mid-Tier Holding Company, or the Bank 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, the MHC's, the
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Mid-Tier Holding Company's, or the Bank's business, are,
considered in the aggregate, not material.
(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, the MHC, the Mid-Tier Holding Company, and the
Bank have conducted the Conversion, in all material respects,
in accordance with all applicable requirements of the Plan and
applicable federal law, and the Plan complies in all material
respects with all applicable Delaware and federal laws, rules
and regulations, including, but not limited to, the Conversion
Regulations (except where a written waiver has been received);
no order has been issued by the OTS, the Commission or any
state authority to suspend the Offerings 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 or the Commission 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 approving the Plan, the Conversion Application, the
Holding Company Application or the Prospectus.
(xix) To such counsel's Actual Knowledge,
the Company, the MHC, the Mid-Tier Holding Company, and the
Bank have obtained all material federal and Delaware licenses,
permits and other governmental authorizations currently
required for the conduct of their businesses and all such
licenses, permits and other governmental authorizations are in
full force and effect, and the Company, the MHC, the Mid-Tier
Holding Company, and the Bank 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 affect on the business or operations of the
Bank, the MHC and the Company, taken as a whole.
(xx) To such counsel's Actual Knowledge, the
Company, the MHC, the Mid-Tier Holding Company, and the Bank
are not in violation of their articles of incorporation,
bylaws, or charter, as applicable, 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
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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, the MHC,
the Mid-Tier Holding Company, or the Bank 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, the MHC, the Mid-Tier
Holding Company, or the Bank pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company, the MHC, the Mid-Tier
Holding Company, or the Bank is a party or by which any of
them may be bound, or to which any of the property or assets
of the Company, the MHC, the Mid-Tier Holding Company, or the
Bank is subject (other than the establishment of a liquidation
account), and such action will not result in any violation of
the provisions of the articles of incorporation, bylaws or
charter, as applicable, of the Company, the MHC, the Mid-Tier
Holding Company, or the Bank, or any applicable federal or
Delaware law, act, regulation (except that no opinion need be
rendered with respect to the securities or blue sky laws of
various jurisdictions or the rules and regulations of the NASD
and/or the Nasdaq National Market) or order or court order,
writ, injunction or decree.
(xxi) The Company's articles of
incorporation and bylaws comply in all material respects with
the General Corporation Law ("GCL") of the State of Delaware.
The Bank's, the Mid-Tier Holding Company's, and the MHC's
charter and bylaws comply in all material respects with the
HOLA and the rules and regulations of the OTS.
(xxii) To such counsel's Actual Knowledge,
neither the Company, the MHC, the Mid-Tier Holding Company,
nor the Bank 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.
(xxiii) The information in the Prospectus
under the captions "Regulation," "The Conversion,"
"Restrictions on Acquisition of the Company and the Bank,"
"Description of Capital Stock of the Company," and
"Description of Capital Stock of the Bank," 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 is in all material respects
correct. 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 constitutes a
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correct summary of the opinions rendered by Luse, Lehman,
Gorman, Pomerenk & Schick, P.C. and [KPMG] to the Company, the
MHC, the Mid-Tier Holding Company, and the Bank with respect
to such matters.
In giving such opinion, such counsel may rely as to
all matters of fact on certificates of officers or directors
of the Company, the MHC, the Mid-Tier Holding Company, and the
Bank and certificates of public officials. Such counsel's
opinion shall be limited to matters governed by federal laws,
the State of Delaware General Corporation Law and the Sate of
[New Jersey] General Corporation Law. With respect to matters
involving the application of Delaware and New Jersey laws,
such counsel may rely, to the extent it deems proper and as
specified in its opinion, upon the opinion of local counsel
(providing that such counsel states that it believes the Agent
is justified in relying upon such specified opinion or
opinions). The opinion of Luse, Lehman, Gorman, Pomerenk &
Schick, P.C. 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 MHC, the
Mid-Tier Holding Company, or the Bank 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, the MHC, the
Mid-Tier Holding Company, or the Bank.
In addition, such counsel shall provide a letter
stating 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, the MHC, the Mid-Tier Holding
Company, and the Bank, at which conferences the contents of
the Conversion Application, the Registration Statement and the
Prospectus and related matters were discussed and, while such
counsel has not confirmed the accuracy or completeness of or
otherwise verified the information contained in the Conversion
Application, the Registration Statement or the Prospectus, and
does not assume any responsibility for such information, based
upon such conferences and a review of documents deemed
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<PAGE>
relevant for the purpose of rendering their opinion (relying
as to materiality as to factual matters on certificates of
officers and other factual representations by the Company, the
MHC, the Mid-Tier Holding Company, and the Bank), 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, accounting
information and other tabular, financial, statistical and
appraisal data included therein as to which no opinion 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 of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing
Date and addressed to the Agent and for its benefit, of the
Bank's local counsel, in form and substance to the effect
that, to the best of such counsel's knowledge, (i) the
Company, the MHC, the Mid-Tier Holding Company, and the Bank
have good and marketable title to all properties and assets
which are material to the business of the Company, the MHC,
the Mid-Tier Holding Company, and the Bank 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 in relation to the business of the Company, the
MHC, the Mid-Tier Holding Company, and the Bank considered as
one enterprise; and (ii) all of the leases and subleases
material to the business of the Company, the MHC, the Mid-Tier
Holding Company, and the Bank under which the Company, the
MHC, the Mid-Tier Holding Company, and the Bank hold
properties, as described in the Registration Statement and
Prospectus, are in full force and effect; (iii) the Company
and the Bank are duly qualified as foreign corporations to
transact business and are in good standing in each
jurisdiction in which their ownership of property or leasing
of property or the conduct of their 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 Company or the Bank; and
(iv) the MHC and the Mid-Tier Holding Company are duly
qualified as foreign corporations to transact business and are
in good standing in each jurisdiction in which their ownership
of property or leasing of property or the conduct of their
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 MHC or
the Mid-Tier Holding Company.
(3) The favorable opinion, dated as of the Closing
Date, of Malizia, Spidi, Sloane & Fisch, P.C., the Agent's
counsel, with respect to such matters as the Agent may
reasonably require. Such opinion may rely as to matters of
fact, upon certificates of officers and directors of the
Company, the MHC, the
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Mid-Tier Holding Company, and the Bank delivered pursuant
hereto or as such counsel shall reasonably request.
(d) At the Closing Date, the Agents shall receive a
certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company and a certificate of the Chief Executive Officer
and the Chief Financial Officer of the MHC, the Mid-Tier Holding
Company, and the Bank, both dated as of such Closing Date, to the
effect that: (i) they have reviewed 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 material adverse change in the condition,
financial or otherwise, or in the earnings, capital, properties or
business of the Company, the MHC, the Mid-Tier Holding Company, and the
Bank has occurred and, to their knowledge, no other event has occurred,
which should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, and the conditions set
forth in this Section 7 have been satisfied; (iii) since the respective
dates as of which information is given in the Registration Statement
and Prospectus, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, capital or
properties of the Company, the MHC, the Mid-Tier Holding Company, or
the Bank, independently, or of the Company, the MHC, the Mid-Tier
Holding Company, and the Bank 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 although expressly made at and as of the
Closing Date; (v) the Company, the MHC, the Mid-Tier Holding Company,
and the Bank 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; (vi) no stop order suspending the
effectiveness of the Registration Statement has been initiated or, to
the best knowledge of the Company, the MHC, the Mid-Tier Holding
Company, or the Bank, threatened by the Commission or any state
authority; (vii) no order suspending the Offerings, the Conversion, the
acquisition of all of the shares of the Bank 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, the
MHC, the Mid-Tier Holding Company, or the Bank, threatened by the OTS,
the Commission or any state authority; and (viii) to the best knowledge
or the Company or the Bank, no person has sought to obtain review of
the final action of the OTS approving the Plan.
(e) 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 (other than as a result of a
change in law or regulation and affecting the savings association
industry as a whole), or in the earnings or business of the Company,
the MHC, the Mid-Tier Holding Company, or the Bank independently, or of
the Company, the MHC, the Mid-Tier Holding Company, and the Bank
considered as one enterprise, from that as of the latest dates as of
which such condition is set forth in the
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Prospectus other than transactions referred to or contemplated therein;
(iii) the Company, the MHC, the Mid-Tier Holding Company, or the Bank
shall not have received from the OTS 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 Agents) or which materially and adversely
would affect the business, operations or financial condition or income
of the Company, the MHC, the Mid-Tier Holding Company, and the Bank
considered as one enterprise; (iv) the Company, the MHC, the Mid-Tier
Holding Company, and the Bank shall not have been in default (nor shall
any 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 proceedings, 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, the MHC, the Mid-Tier
Holding Company, or the Bank, threatened against the Company, the MHC,
the Mid-Tier Holding Company, or the Bank 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, the MHC, the Mid-Tier Holding
Company, and the Bank considered as one enterprise; 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 Agents shall have requested and as agreed to by the Company and the
Bank.
(f) Concurrently with the execution of this Agreement, the
Agents shall receive a letter from KPMG dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that KPMG is a
firm of independent public accountants 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 1933 Act
and the 33 Act Regulations and stating in effect that in KPMG's opinion
the consolidated financial statements of the Mid-Tier Holding Company
as of September 30, 1997 and 1996 and for each of the three years in
the period ended September 30, 1997, 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 Commission, the
Securities Exchange Act of 1934, as amended, and the 1933 Act; (ii) a
statement from KPMG 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 Mid-Tier
Holding Company prepared by the Mid-Tier Holding Company, a reading of
the minutes of the meetings of the Board of Directors and stockholders
of the Mid-Tier Holding Company and consultations with officers of the
Mid-Tier Holding Company responsible for financial and accounting
matters, nothing came to their attention which caused them to believe
that: (A) the unaudited consolidated financial statements included in
the Prospectus, are not in conformity with the 1933 Act, applicable
accounting requirements of the Commission 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
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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 material increase in borrowings, other than normal
deposit fluctuations, by the Bank or the Mid-Tier Holding Company; or
(C) there was any decrease in consolidated net assets of the Mid-Tier
Holding Company 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) a statement from KPMG 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 Mid-Tier Holding Company, which are subject
to the internal controls of the Mid-Tier Holding Company, the
accounting system and other data prepared by the Mid-Tier Holding
Company, 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.
(g) At the Closing Date, the Agent shall receive a letter from
KPMG dated the Closing Date, addressed to the Agent, confirming the
statements made by them in the letter delivered by them 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.
(h) At the Closing Date, the Agent shall receive a letter from
FinPro Inc., dated the date thereof and addressed to counsel for the
Agent (i) confirming that said firm is independent of the Company, the
MHC, the Mid-Tier Holding Company, and the Bank and is experienced and
expert in the area of corporate appraisals within the meaning of Title
12 of the Code of Federal Regulations, Part 303, (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 estimated aggregate pro forma market value of the Company, the MHC,
the Mid-Tier Holding Company, and the Bank expressed in their Appraisal
dated as of December 17, 1997, and most recently updated, remains in
effect.
(i) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank shall not have sustained since the date of the latest audited
financial statements included in the Prospectus any material loss or
interference with their businesses 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.
(j) At or prior to the Closing Date, the Agent shall receive:
(i) a copy of the letter from the OTS 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) certificates from the OTS evidencing the existence of
the Bank, the Mid-Tier Holding Company and the MHC; (iv) certificates
of good standing from the
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State of Delaware evidencing the good standing of the Company; (v) a
certificate from the FDIC evidencing the Bank's insurance of accounts,
(vi) a certificate of the FHLB-New York evidencing the Bank's
membership thereof; and (vii) a copy of the letter from the OTS
approving the Company's Holding Company Application.
(k) As soon as available after the Closing Date, the Agent
shall receive, upon request, a copy of the Company's Delaware
Certificate of Incorporation.
(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 generally on the
Nasdaq National 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 or federal savings
associations or a general moratorium on the withdrawal of deposits from
commercial banks or federal savings associations 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 judgment, makes it
impracticable or inadvisable to proceed with the Offerings or the
delivery of the shares on the terms and in the manner contemplated in
the Registration Statement and Prospectus.
Section 8. Indemnification.
(a) The Company, the MHC, the Mid-Tier Holding Company, and
the Bank jointly and severally agree to indemnify and hold harmless the
Agent, its officers, directors, agents, servants and employees 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 written
demand for any expense (including 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 blue sky application
or other instrument or document executed by the Company, the MHC, the
Mid-Tier Holding Company, or the Bank based upon written information
supplied by the Company, the MHC, the Mid-Tier Holding
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Company, or the Bank 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 agents, under the securities laws thereof
(collectively, the "Blue Sky Application"), or any application or other
document, advertisement, oral statement or communication ("Sales
Information") prepared, made or executed by or on behalf of the
Company, the MHC, the Mid-Tier Holding Company, or the Bank with their
consent or based upon written or oral information furnished by or on
behalf of the Company, the MHC, the Mid-Tier Holding Company, or the
Bank, 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 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 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 statements 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
Bank by the Agent regarding the Agent and provided further that such
indemnification shall be to the extent permitted by the OTS and the
FDIC. The Bank will not be liable to any indemnified party under the
foregoing indemnification and reimbursement provisions, (i) for any
settlement by an indemnified party effected without its prior written
consent; or (ii) to the extent that any loss, claim, damage or
liability is found in a final judgement by a court to have resulted
primarily from the Agent's gross negligence or willful misconduct. The
Agent shall repay to the Bank any amounts paid by the Bank for
reimbursement of the Agent's and any indemnified party's expenses in
the event that such expenses were incurred in relation to an act or
omission with respect to which it is finally determined that the Agent
has acted in gross negligence or with willful misconduct. The Bank also
agrees that no indemnified party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Bank or
its security holders or creditors related to or arising out of the
engagement of the Agent pursuant to, or the performance by the Agent of
the services contemplated by, this Agreement except to the extent that
any loss, claim, damage or liability is found in a final judgement by a
court to have resulted primarily from the Agent's gross negligence or
willful misconduct.
(b) The Agent agrees to indemnify and hold harmless the
Company, the MHC, the Mid-Tier Holding Company, and the Bank, their
directors and officers and each
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<PAGE>
person, if any, who controls the Company, the MHC, the Mid-Tier Holding
Company, or the Bank 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 MHC, the Bank, 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 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) or the preliminary or final Prospectus (or any
amendment or supplement thereto), or 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; 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) or 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 Bank by the Agent regarding the Agent. In no case shall
the Agent be liable or responsible for any amount in excess of the fees
received by the Agent pursuant to Section 2 of this Agreement.
(c) Each indemnified party shall given 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, 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
34
<PAGE>
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, the
MHC, the Mid-Tier Holding Company, and the Bank 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 the Agent
or its officers, directors or controlling persons, agents or employees
or by or on behalf of the Company, the MHC, the Mid-Tier Holding
Company, or the Bank or any officers, directors or controlling persons,
agents or employees of the Company, the MHC, the Mid-Tier Holding
Company, or the Bank; (ii) deliver of and payment hereunder for the
Shares; or (iii) any termination of this Agreement.
(e) To the extent required by law, this Section 8 is subject
to and limited by the provisions of Sections 23A and 23B of the Federal
Reserve Act, 12 U.S.C. Sections 371c and 371c-1 ("Sections 23A and
23B").
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 Mid-Tier Holding Company, the Bank
or the Agent, the Company, the Bank 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 Mid-Tier Holding
Company, the Bank 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
are 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) bears to the gross proceeds received by the Company from the sale of
the Shares in the Offerings and the Company, the Mid-Tier Holding Company, and
the Bank 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, the Mid-Tier Holding Company, and the Bank 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, the Mid-Tier Holding Company, and the Bank on the one hand and the
Agent on the other from the Offerings (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, the Mid-Tier Holding Company, and/or the Bank 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
35
<PAGE>
Company, the Mid-Tier Holding Company, the Bank 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, the
Mid-Tier Holding Company, and the Bank under this Section 9 and under Section 8
shall be in addition to any liability which the Company, the Mid-Tier Holding
Company, and the Bank may otherwise have. For purposes of this Section 9, each
of the Agent's, the Company's or the Bank's officers and directors and each
person, if any, who controls the Agent or the Company or the Bank within the
meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Agent, the Company, the Mid-Tier Holding Company, or the
Bank. 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 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. To the extent required by law,
this Section 9 is subject to and limited by the provisions of Sections 23A and
23B.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the MHC, the Mid-Tier Holding
Company, the Bank and the Agent and the representations and warranties and other
statements of the Company and the Bank 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 MHC, the Mid-Tier Holding Company, the Bank or any
controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of the
Agent, the MHC, the Mid-Tier Holding Company, the Company, the Bank, 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 its obligations under
this Agreement by giving the notice indicated below in this Section 11 at any
time after this Agreement becomes effective as follows:
36
<PAGE>
(a) In the event the Company fails to sell a minimum number of
shares of the Conversion Stock by _________ ___, 1998, 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 Bank to each person who has subscribed for
or ordered any of the Conversion Stock 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 Bank as set forth in Sections 2(a) and (d), 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 canceled by the Agent by
notifying the Company, the MHC, the Mid-Tier Holding Company, and the
Bank 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, 6, 8 and 9 hereof.
(c) If the Agent elects to terminate this Agreement as
provided in this Section, the Company, the MHC, the Mid-Tier Holding
Company, and the Bank shall be notified promptly by the Agent by
telephone or telegram, confirmed by letter.
The Company, the MHC, the Mid-Tier Holding Company, and the Bank 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 Bank have provided the Agent
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 Friedman,
Billings, Ramsey & Co., Inc., 1001 19th Street North, Arlington, Virginia
22209-1710, Attention: Richard A. Buckner (with a copy to to Malizia, Spidi,
Sloane & Fisch, P.C., Attention: Charles E. Sloane, Esq.) and, if sent to the
Company, the MHC, the Mid-Tier Holding Company, and the Bank, shall be mailed,
delivered or telegraphed and confirmed to the Company, the MHC, the Mid-Tier
Holding Company, and the Bank at 134 Franklin Corner Road, Trenton, New Jersey
08648, Attention: Wendell T. Breithaupt, President and Chief Executive Officer
(Luse, Lehman, Gorman, & Schick, P.C., Attention: John J. Gorman, Esq.)
Section 13. Parties. The Company, the MHC, the Mid-Tier Holding
Company, and the Bank 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, the MHC, the Mid-Tier Holding Company, or the
Bank, when the same shall have been given by the undersigned or any other
37
<PAGE>
officer of the Company, the MHC, the Mid-Tier Holding Company, or the Bank. This
Agreement shall inure solely to the benefit of, and shall be binding upon, the
Agent, the Company, the MHC, the Bank, and their respective successors, legal
representatives 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 Conversion Stock
shall take place on the Closing Date at such location as mutually agreed upon by
the Agent and the Company, the MHC, the Mid-Tier Holding Company, and the Bank.
At the closing, the Company, the MHC, the Mid-Tier Holding Company, and the Bank
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 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 Delaware.
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.
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<PAGE>
If the foregoing correctly sets forth the arrangement among the
Company, the MHC, the Mid-Tier Holding Company, the Bank, 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.
Very truly yours,
PEOPLES BANCORP, INC. TRENTON SAVINGS BANK, FSB
a Delaware corporation
By:________________________________ By:________________________________
Wendell T. Breithaupt Wendell T. Breithaupt
President and Chief Executive President and Chief Executive
Officer Officer
PEOPLES BANCORP, M.H.C. PEOPLES BANCORP, INC.
a Federal corporation
By:________________________________ By:________________________________
Wendell T. Breithaupt Wendell T. Breithaupt
President and Chief Executive President and Chief Executive
Officer Officer
Accepted as of the date first above written
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:_________________________
Emanuel J. Friedman
Chairman
39
Exhibit 2
PLAN OF CONVERSION AND REORGANIZATION
OF
PEOPLES BANCORP, MHC
1
<PAGE>
TABLE OF CONTENTS
1. INTRODUCTION.........................................................1
2. DEFINITIONS..........................................................1
3. PROCEDURES FOR CONVERSION............................................6
4. HOLDING COMPANY APPLICATIONS AND APPROVALS...........................7
5. SALE OF SUBSCRIPTION SHARES..........................................8
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES.....................8
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY..............9
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY).....9
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)..............9
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS
(THIRD PRIORITY)...........................................10
11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)..............10
12. COMMUNITY OFFERING (FIFTH PRIORITY).................................10
13. SYNDICATED COMMUNITY OFFERING.......................................11
14. LIMITATION ON PURCHASES.............................................11
15. PAYMENT FOR CONVERSION STOCK........................................13
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS........13
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT.....14
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES...................15
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT................................15
20. VOTING RIGHTS OF STOCKHOLDERS.......................................16
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION....................16
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS
FOLLOWING THE CONVERSION...................................16
23. TRANSFER OF DEPOSIT ACCOUNTS........................................17
24. REGISTRATION AND MARKETING..........................................17
(i)
<PAGE>
25. TAX RULINGS OR OPINIONS.............................................17
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS.......................17
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY.............18
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK........................19
29. CHARTER AND BYLAWS..................................................19
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE.......................19
31. EXPENSES OF CONVERSION..............................................19
32. AMENDMENT OR TERMINATION OF PLAN....................................19
33. CONDITIONS TO CONVERSION............................................20
34. INTERPRETATION......................................................20
EXHIBIT A AGREEMENT OF MERGER BETWEEN PEOPLES BANCORP, MHC AND
PEOPLES BANCORP, INC.
EXHIBIT B AGREEMENT OF MERGER BETWEEN PEOPLES BANCORP, INC. AND
TRENTON SAVINGS BANK FSB
EXHIBIT C AGREEMENT OF MERGER BETWEEN TRENTON SAVINGS BANK FSB
AND TRENTON INTERIM SAVINGS BANK
EXHIBIT D CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
EXHIBIT E BYLAWS OF HOLDING COMPANY
(ii)
<PAGE>
PLAN OF CONVERSION AND REORGANIZATION OF
Peoples Bancorp, MHC
1. INTRODUCTION
This Plan of Conversion and Reorganization (the "Plan") provides for
the conversion of Peoples Bancorp, MHC, a federal mutual holding company (the
"Mutual Holding Company") into the capital stock form of organization (as
converted, the "Holding Company"). The Mutual Holding Company currently owns a
majority of the common stock of Peoples Bancorp, Inc., a federally-chartered
stock holding company (the "Mid-Tier Holding Company") that owns 100% of the
common stock of Trenton Savings Bank FSB (the "Bank"), a federal stock savings
bank which is headquartered in Lawrenceville, New Jersey. The purpose of the
Conversion is to convert the Mutual Holding Company to the capital stock form of
organization, which will provide the Holding Company and the Bank with greater
flexibility and capital resources to respond to changing regulatory and market
conditions and to effect corporate transactions, including mergers and
acquisitions. The Holding Company will offer Holding Company Common Stock upon
the terms and conditions set forth herein to Eligible Account Holders, the
Employee Plans established by the Bank or the Holding Company, Supplemental
Eligible Account Holders, Other Members and other persons according to the
respective priorities set forth in this Plan. Any shares not subscribed for by
the foregoing classes of persons will be offered for sale to certain members of
the public directly by the Holding Company through a Community Offering or a
Syndicated Community Offering or through an underwritten firm commitment public
offering, or through a combination thereof. As part of the Conversion, each
Minority Stockholder will receive Holding Company Common Stock in exchange for
Minority Shares. The Conversion will result in the voting interests of the
Mutual Holding Company's members being transferred to persons who purchase
Conversion Stock in the Offering. The Conversion will have no impact on
depositors, borrowers or customers of the Bank. After the Conversion, the Bank
will continue to be regulated by the OTS as its chartering authority. The Bank
also will continue to be a member of the Federal Home Loan Bank System and all
its insured savings deposits will continue to be insured by the FDIC to the
extent provided by applicable law.
This Plan has been adopted by the Board of Directors of the Mutual
Holding Company, and must also be approved by (i) a majority of the total number
of votes entitled to be cast by Voting Members of the Mutual Holding Company at
a Special Meeting of Members to be called for that purpose, and (ii) at least
two-thirds of the outstanding common stock of the Mid-Tier Holding Company at
the Special Meeting of Stockholders, including at least a majority of the votes
cast, in person or by proxy, by Minority Stockholders. Prior to the submission
of this Plan to the Voting Members and stockholders of the Mid-Tier Holding
Company for consideration, the Plan must be approved by the OTS.
2. DEFINITIONS
For the purposes of this Plan, the following terms have the following
meanings:
Account Holder - Any Person holding a Deposit Account in the Bank.
Acting in Concert - The term Acting in Concert means (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) 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. A
person or company which acts in concert with another person or company ("other
party") shall also be deemed to be acting in concert with any person or company
who is also acting in concert with that other party, except that any
tax-qualified employee stock benefit plan will not be deemed to be acting in
concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated.
1
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Adjusted Majority Ownership Interest - The percentage of the Common
Stock of the Mid-Tier Holding Company held by the Mutual Holding Company, as
adjusted to reflect the Dividend Waiver Adjustment.
Adjusted Minority Ownership Interest - The Minority Ownership Interest
as adjusted by the Dividend Waiver Adjustment.
Affiliate - Any person that controls, is controlled by, or is under
common control with another person.
Appraised Value Range - The range of the estimated consolidated pro
forma market value of the Holding Company, which shall also be equal to the
estimated pro forma market value of the total number of shares of Conversion
Stock to be issued in the Conversion, as determined by the Independent Appraiser
prior to the Subscription Offering and as it may be amended from time to time
thereafter. The maximum and minimum of the Appraised Value Range will vary
within 15% above and 15% below, respectively, the midpoint of the Appraised
Value Range.
Associate - The term Associate when used to indicate a relationship
with any person, means (i) any corporation or organization (other than the
Mid-Tier Holding Company, the Bank or a majority-owned subsidiary of the Bank)
of which such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent 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 except that for the purposes of this Plan relating to subscriptions in
the offering, the term "Associate" does not include any Non-Tax-Qualified
Employee Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan in
which a person has a substantial beneficial interest or serves as a trustee or
in a similar fiduciary capacity, and except that, for purposes of aggregating
total shares that may be held by Officers and Directors the term "Associate"
does not include any Tax-Qualified Employee Stock Benefit Plan, and (iii) any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a Director or Officer of the Mid-Tier Holding
Company, the Bank or the Holding Company, if utilized, or any of its parents or
subsidiaries.
Bank - Trenton Savings Bank FSB, Lawrenceville, New Jersey.
Bank Merger - The merger of Interim with the Bank as set forth in this
Plan.
Code - The Internal Revenue Code of 1986, as amended.
Community - The New Jersey Counties of Mercer, Ocean and Burlington.
Community Offering - The offering for sale to certain members of the
general public directly by the Holding Company of any shares not subscribed for
in the Subscription Offering.
Control - (including the terms "controlled by", "controlling" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
Conversion - The conversion and reorganization of the Mutual Holding
Company to stock form pursuant to this Plan, and all steps incident or necessary
thereto.
Conversion Stock - The Subscription Shares and the Exchange Shares
issued in the Conversion.
Deposit Account - The term Deposit Account means any withdrawable
account as defined in Section 561.42 of the Rules and Regulations of the OTS,
and shall include all demand deposit accounts and certificates of deposit.
Director - A member of the Board of Directors of the Bank, the Mid-Tier
Holding Company, the Holding Company or the Mutual Holding Company, as
appropriate in the context.
Dividend Waiver Adjustment - The adjustment to the number of shares of
Holding Company Common Stock issued in the Conversion to Minority Stockholders
to reflect (i) the cumulative effect of the aggregate amount
2
<PAGE>
of dividends waived by the Mutual Holding Company, and (ii) the market value of
assets of the Mutual Holding Company other than common stock of the Mid-Tier
Holding Company.
The adjustment referred to in (i) above requires that the Minority
Ownership Interest be adjusted by multiplying it by a fraction, the numerator of
which is the Mid-Tier Holding Company stockholders' equity at the time of the
Conversion less the aggregate amount of dividends waived by the Mutual Holding
Company and the denominator of which is the Mid-Tier Holding Company
stockholders' equity at the time of the Conversion.
The adjustment referred to in (ii) above would further adjust the
Minority Ownership Interest by multiplying the results obtained in (i) above by
a fraction, the numerator of which is the pro forma market value of the Holding
Company less the market value of assets of the Mutual Holding Company other than
Mid-Tier Holding Company common stock and the denominator of which is the pro
forma market value of the Holding Company.
Eligible Account Holder - Any Person holding a Qualifying Deposit on
the Eligibility Record Date for purposes of determining subscription rights and
establishing subaccount balances in the Liquidation Account.
Eligibility Record Date - The date for determining Eligible Account
Holders of the Bank which is August 31, 1996.
Employees - All Persons who are employed by the Bank, the Mid-Tier
Holding Company or the Mutual Holding Company.
Employee Plans - Any Tax-Qualified Employee Stock Benefit Plan of the
Bank, including any ESOP and 401(k) Plan.
ESOP - An Employee Stock Ownership Plan and related trust established
by the Bank or the Holding Company.
Exchange Ratio - The rate at which shares of Holding Company Common
Stock are exchanged for Minority Shares upon consummation of the Conversion. The
Exchange Ratio shall be determined as of the closing of the Conversion and shall
be the rate that will result in the Minority Stockholders owning in the
aggregate the same percentage of the outstanding shares of Holding Company
Common Stock immediately upon completion of the Conversion as the percentage of
Mid-Tier Holding Company common stock owned by them in the aggregate immediately
prior to the consummation of the Conversion, before giving effect to (i) the
Dividend Waiver Adjustment, (ii) the payment of cash in lieu of issuing
fractional shares of Holding Company Common Stock, and (iii) any shares of
Holding Company Common Stock purchased by the Minority Stockholders in the
Conversion.
Exchange Shares - Shares of Holding Company Common Stock issued to
Minority Stockholders in exchange for Minority Shares.
FDIC - The Federal Deposit Insurance Corporation.
Holding Company - The Delaware (or other state) corporation formed for
the purpose of acquiring all of the shares of capital stock of the Bank in
connection with the Conversion. Shares of Holding Company Common Stock will be
issued in the Conversion to Participants and others in the Conversion.
Holding Company Common Stock - The common stock, par value $.01 per
share, of the Holding Company.
Independent Appraiser - The appraiser retained by the Mutual Holding
Company and the Bank to prepare an appraisal of the pro forma market value of
the Conversion Stock.
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Interim - The interim federal savings bank subsidiary of the Holding
Company established to effect the Conversion.
Liquidation Account - One or more accounts established in accordance
with 12 C.F.R. 563b.3(f) and OTS policy.
Member - Any Person or entity who qualifies as a member of the Mutual
Holding Company pursuant to its charter and bylaws.
MHC Merger - The merger of the Mutual Holding Company with the Mid-Tier
Holding Company as set forth in this Plan.
Mid-Tier Holding Company - Peoples Bancorp, Inc., the federal holding
company that owns 100% of the Bank's Common Stock.
Mid-Tier Merger - The conversion of the Mid-Tier Holding Company into
an interim federal stock savings bank and subsequent merger with and into the
Bank as set forth in this Plan.
Minority Shares - Any outstanding common stock of the Mid-Tier Holding
Company, or shares of common stock of the Mid-Tier Holding Company issuable upon
the exercise of options or grant of stock awards, held by persons other than the
Mutual Holding Company.
Minority Ownership Interest - The percentage of the Mid-Tier Holding
Company's common stock held by stockholders other than the Mutual Holding
Company immediately prior to the completion of the Conversion.
Minority Stockholder - Any owner of Minority Shares immediately prior
to the closing of the Conversion.
Mutual Holding Company - Peoples Bancorp, MHC, the mutual holding
company of the Bank.
OTS - The Office of Thrift Supervision of the Department of the
Treasury or any successor thereto.
Offering - The offering for sale, pursuant to this Plan, of Holding
Company Common Stock in a Subscription Offering, Community Offering, and
Syndicated Community Offering (or underwritten public offering), as the case may
be. The term "Offering" does not include the Holding Company Common Stock issued
in exchange for Minority Shares pursuant to this Plan.
Offering Range - The number of shares of Holding Company Stock offered
for sale in the Offering multiplied by the subscription price. The Offering
Range shall be equal to the Appraised Value Range multiplied by the Adjusted
Majority Ownership Percentage.
Officer - An executive officer of the Bank, the Mid-Tier Holding
Company, the Holding Company or the Mutual Holding Company as appropriate in the
context, which includes the Chief Executive Officer, President, Senior Vice
Presidents, Executive Vice President in charge of principal business functions,
Secretary and Controller and any Person performing functions similar to those
performed by the foregoing persons.
Order Form - Any form (together with any attached cover letter and/or
certifications or acknowledgments), sent by the Bank to any Participant or
Person containing among other things a description of the alternatives available
to such Person under the Plan and by which any such Person may make elections
regarding subscriptions for Conversion Stock in the Subscription Offering.
Other Member - Any Member on the Voting Record Date who is not an
Eligible Account Holder or Supplemental Account Holder.
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Participant - Any Eligible Account Holder, Employee Plan, Supplemental
Eligible Account Holder, or Other Member.
Person - An individual, a corporation, a partnership, an association, a
joint-stock company, a trust (including Individual Retirement Accounts and KEOGH
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
Plan - This Plan of Conversion and Reorganization of the Mutual Holding
Company as it exists on the date hereof and as it may hereafter be amended in
accordance with its terms.
Prospectus - The one or more documents used in offering the Conversion
Stock in the Offering and the Exchange Shares.
Qualifying Deposit - The aggregate balance of all Deposit Accounts in
the Bank of (i) an Eligible Account Holder at the close of business on the
Eligibility Record Date, provided such aggregate balance is not less than $50,
and (ii) a Supplemental Eligible Account Holder at the close of business on the
Supplemental Eligibility Record Date, provided such aggregate balance is not
less than $50.
Resident - Any person who occupies a dwelling within the Community, has
a present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Mutual Holding Company and the Bank may utilize deposit or loan records or
such other evidence provided to it to make a determination as to whether a
person is a resident. In all cases, however, such a determination shall be in
the sole discretion of the Mutual Holding Company and the Bank. A Participant
must be a "Resident" for purposes of determining whether such person "resides"
in the Community as such term is used in this Plan.
SEC - The Securities and Exchange Commission.
Share Exchange - The Exchange of Minority Shares for Holding Company
Common Stock in the Conversion.
Special Meeting of Members - The special meeting of members of the
Mutual Holding Company and any adjournments thereof held to consider and vote
upon this Plan.
Special Meeting of Stockholders - The special meeting of stockholders
of the Mid-Tier Holding Company and any adjournments thereof held to consider
and vote upon the Plan.
Subscription Offering - The offering of Subscription Shares to
Participants.
Subscription Price - The price per Subscription Share to be paid by
Participants in the Subscription Offering and Persons in the Community Offering.
The Subscription Price will be determined by the Board of Directors of the
Mutual Holding Company and fixed prior to the commencement of the Subscription
Offering.
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Subscription Shares - Shares of Holding Company Common Stock issued in
the Offering. Subscription Shares do not include shares of Holding Company
Common Stock issued in exchange for Minority Shares in the Share Exchange.
Supplemental Eligible Account Holder - Any Person, other than Directors
and Officers of the Bank and their Associates, holding a Qualifying Deposit on
the Supplemental Eligibility Record Date, who is not an Eligible Account Holder.
Supplemental Eligibility Record Date - The date for determining
Supplemental Eligible Account Holders, which shall be the last day of the
calendar quarter preceding OTS approval of the application for conversion.
Syndicated Community Offering - The offering of Conversion Stock
following the Subscription and Community Offerings through a syndicate of
broker-dealers.
Tax-Qualified Employee Stock Benefit Plan - Any defined benefit plan or
defined contribution plan, such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan, which, with its related trust, meets
the requirements to be "qualified" under Section 401 of the Internal Revenue
Code. The Bank may make scheduled discretionary contributions to a tax-qualified
employee stock benefit plan, provided such contributions do not cause the Bank
to fail to meet its regulatory capital requirement. A "Non-Tax-Qualified
Employee Stock Benefit Plan" is any defined benefit plan or defined contribution
plan which is not so qualified.
Voting Member - Any Person who at the close of business on the Voting
Record Date is entitled to vote as a member of the Mutual Holding Company
pursuant to its charter and bylaws.
Voting Record Date - The date fixed by the Directors in accordance with
OTS regulations for determining eligibility to vote at the Special Meeting of
Members and/or the Special Meeting of Stockholders.
3. PROCEDURES FOR CONVERSION
A. After approval of the Plan by the Board of Directors of the Bank and
the Mutual Holding Company, the Plan shall be submitted together with all other
requisite material to the OTS for its approval. Notice of the adoption of the
Plan by the Board of Directors of the Bank and the Mutual Holding Company and
the submission of the Plan to the OTS for its approval will be published in a
newspaper having general circulation in each community in which an office of the
Bank is located and copies of the Plan will be made available at each office of
the Bank for inspection by the Members. Upon receipt of notice from the OTS to
do so, the Mutual Holding Company also will cause to be published a notice of
the filing with the OTS of an application to convert in accordance with the
provisions of the Plan.
B. Promptly following approval by the OTS, the Plan will be submitted
to a vote of (i) the Voting Members, at the Special Meeting of Members, and (ii)
the Stockholders of the Mid-Tier Holding Company at the Special Meeting of
Stockholders. The Mutual Holding Company will mail to all Members as of the
Voting Record Date, at their last known address appearing on the records of the
Bank, a proxy statement in either long or summary form describing the Plan which
will be submitted to a vote of the Members at the Special Meeting of Members.
The Holding Company will also mail to all Participants either a Prospectus and
Order Form for the purchase of Subscription Shares or a letter informing them of
their right to receive a Prospectus and Order Form and a postage prepaid card to
request such materials, subject to other provisions of this Plan. In addition,
all Participants will receive, or be given the opportunity to request by either
returning a postage prepaid card which will be distributed with the proxy
statement or by letter addressed to the Bank's Secretary, a copy of the Plan as
well as the certificate of incorporation or bylaws of the Holding Company. Upon
approval of the Plan by (i) a majority of the total number of votes entitled to
be cast by the Voting Members, (ii) at least two-thirds of the outstanding
common stock of the Mid-Tier Holding Company, and (iii) a majority vote of
Minority Stockholders present in person or by proxy, the Mutual Holding Company,
the Holding Company and the Bank will take all other necessary steps pursuant to
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applicable laws and regulations to consummate the Conversion and Offering. The
Conversion must be completed within 24 months of the approval of the Plan by the
Voting Members, unless a longer time period is permitted by governing laws and
regulations.
C. The Conversion will be effected as follows, or in any other manner
which is consistent with the purposes of this Plan and applicable laws and
regulations. The choice of which method to use to effect the Conversion will be
made by the Board of Directors of the Mutual Holding Company immediately prior
to the closing of the Conversion. Each of the steps set forth below shall be
deemed to occur in such order as is necessary to consummate the Conversion
pursuant to the Plan, the intent of the Board of Directors of the Mutual Holding
Company and the Bank, and OTS regulations. Approval of the Plan by the Members
and stockholders of the Mid-Tier Holding Company shall also constitute approval
of each of the transactions necessary to implement the Plan.
(1) The Bank will establish the Holding Company as a
first-tier Delaware chartered stock holding company subsidiary.
(2) Holding Company will charter Interim.
(3) The Mutual Holding Company will merge with and into the
Mid-Tier Holding Company (the "MHC Merger") pursuant to the Agreement
of Merger attached hereto as Exhibit A between the Mutual Holding
Company and the Mid-Tier Holding Company whereby the shares of Mid-Tier
Holding Company common stock held by the Mutual Holding Company will be
canceled and each Eligible Account Holder and Supplemental Eligible
Account Holder will receive an interest in a Liquidation Account of the
Mid-Tier Holding Company in exchange for such person's interest in the
Mutual Holding Company.
(4) The Mid-Tier Holding Company will convert into an interim
federal stock savings bank (which shall continue to be referred to as
the "Mid-Tier Holding Company") merge with and into the Bank (the
"Mid-Tier Merger") with the Bank as the resulting entity pursuant to
the Agreement of Merger attached hereto as Exhibit B between the
Mid-Tier Holding Company and the Bank whereby (i) the Mid-Tier Holding
Company stockholders other than the Mutual Holding Company ("Minority
Stockholders") will constructively receive shares of Bank common stock
in exchange for their Mid-Tier Holding Company common stock and (ii)
each Eligible Account Holder and Supplemental Eligible Account Holder
will receive an interest in a Liquidation Account of the Bank in
exchange for such person's interest in the Mid-Tier Holding Company.
(5) Contemporaneously with the Mid-Tier Merger, Interim will
merge with and into the Bank with the Bank as the surviving entity (the
"Bank Merger") pursuant to the Agreement of Merger attached hereto as
Exhibit C between the Bank and Interim. Constructive shareholders of
the Bank (i.e., Minority Stockholders immediately prior to the
Conversion) will exchange the shares of Bank common stock that they
constructively received in the Mid-Tier Merger for Holding Company
Common Stock.
(6) Contemporaneously with the Bank Merger, the Holding
Company will sell the Subscription Shares in the Offering.
D. As part of the Conversion, each of the Minority Shares shall
automatically, without further action of the holder thereof, be converted into
and become the right to receive Holding Company Common Stock based upon the
Exchange Ratio. The basis for exchange of Minority Shares for Holding Company
Common Stock shall be fair and reasonable. Options to purchase shares of
Mid-Tier Holding Company common stock which are outstanding immediately prior to
the consummation of the conversion shall be converted into options to purchase
shares of Holding Company Common Stock, with the number of shares subject to the
option and the exercise price per share to be adjusted based upon the Exchange
Ratio so that the aggregate exercise price remains unchanged, and with the
duration of the option remaining unchanged.
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E. Concurrently with the filing of the Conversion Application with the
OTS, the Holding Company shall also seek to register the Conversion Stock with
the SEC and any appropriate state securities authorities. In addition, if
required by applicable law and regulations, the Board of Directors of the Bank
and the Mid-Tier Holding Company shall prepare preliminary proxy materials as
well as other applications and information for review by the SEC and the OTS in
connection with the solicitation of stockholder approval of the Plan.
F. The Certificate of Incorporation of the Holding Company (the
"Certificate") shall read in the form of Exhibit D.
G. The home office and branch offices of the Bank shall be unaffected
by the Conversion. The executive offices of the Holding Company shall be located
at the current offices of the Mutual Holding Company.
4. HOLDING COMPANY APPLICATIONS AND APPROVALS
The Board of Directors of the Holding Company and the Mutual Holding
Company will take all necessary steps to convert the Mutual Holding Company to
stock form, form the Holding Company and complete the Offering. The Holding
Company shall make timely applications for any requisite regulatory approvals,
including an Application on Form AC and a Holding Company Application on Form
H-(e)1 or H-(e)1-S, to be filed with the OTS and a Registration Statement to be
filed with the SEC.
5. SALE OF SUBSCRIPTION SHARES
The Subscription Shares will be offered simultaneously in the
Subscription Offering to the Participants in the respective priorities set forth
in this Plan. The Subscription Offering may be commenced as early as the mailing
of the Proxy Statement for the Special Meeting of Members. The Holding Company
Common Stock will not be insured by the FDIC. The Bank will not knowingly lend
funds or otherwise extend credit to any Person to purchase shares of Holding
Company Common Stock.
Any shares of Holding Company Common Stock not subscribed for in the
Subscription Offering will be offered for sale in the Community Offering. The
Subscription Offering may be commenced prior to the Special Meeting of Members
and, in that event, the Community Offering may also be commenced prior to the
Special Meeting of Members. The offer and sale of Holding Company Common Stock
prior to the Special Meeting of Members shall, however, be conditioned upon
approval of the Plan by the Voting Members and stockholders of the Mid-Tier
Holding Company.
If feasible, any shares of Holding Company Common Stock remaining after
the Subscription and Community Offerings, will be sold in a Syndicated Community
Offering in a manner that will achieve the widest distribution of the Holding
Company Common Stock. The sale of all Holding Company Common Stock subscribed
for in the Subscription and Community Offerings will be consummated
simultaneously on the date the sale of Holding Company Common Stock in the
Syndicated Community Offering is consummated and only if all unsubscribed for
Holding Company Common Stock is sold.
6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
The total number of shares (or a range thereof) of Holding Company
Common Stock to be offered in the Conversion will be determined jointly by the
Boards of Directors of the Bank, the Mid-Tier Holding Company and the Holding
Company immediately prior to the commencement of the Subscription and Community
Offerings, and will be based on the Appraised Value Range divided by the
Subscription Price. The Offering Range will be equal to the Appraised Value
Range multiplied by the Adjusted Majority Ownership Percentage. The estimated
pro forma consolidated market value of the Holding Company will be subject to
adjustment within the Appraised Value Range if necessitated by market or
financial conditions, with the approval of the OTS, if necessary, and the
maximum of the Appraised Value Range may be increased by up to 15% subsequent to
the commencement of the Subscription and
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Community Offerings to reflect changes in market and financial conditions. The
number of shares of Conversion Stock issued in the Conversion will be equal to
the estimated pro forma consolidated market value of the Holding Company, as may
be amended, divided by the Subscription Price, and the number of Subscription
Shares sold in the Offering will be equal to the product of (i) the estimated
pro forma consolidated market value of the Holding Company, as may be amended,
divided by the Subscription Price, and (ii) the Adjusted Majority Ownership
Percentage.
In the event that the Subscription Price multiplied by the number of
shares of Conversion Stock to be issued in the Conversion is below the minimum
of the Appraised Value Range, or materially above the maximum of the Appraised
Value Range, resolicitation of purchasers may be required, provided that up to a
15% increase above the maximum of the Appraised Value Range will not be deemed
material so as to require a resolicitation. Any such resolicitation shall be
effected in such manner and within such time as the Bank and the Mutual Holding
Company shall establish, with the approval of the OTS if required.
Notwithstanding the foregoing, shares of Conversion Stock will not be
issued unless, prior to the consummation of the Conversion, the Independent
Appraiser confirms to the Bank, the Mutual Holding Company, the Holding Company
and to the OTS that, to the best knowledge of the Independent Appraiser, nothing
of a material nature has occurred which, taking into account all relevant
factors, would cause the Independent Appraiser to conclude that the number of
shares of Conversion Stock issued in the Conversion multiplied by the
Subscription Price is incompatible with its estimate of the aggregate
consolidated pro forma market value of the Holding Company. An increase in the
aggregate value of the Conversion Stock by up to 15% above the maximum of the
Appraised Value Range, would not be deemed to be material. If such confirmation
is not received, the Holding Company may cancel the Subscription and Community
Offerings and/or the Syndicated Community Offering, extend the Conversion,
establish a new Subscription Price and/or Appraised Value Range, extend, reopen
or hold new Subscription and Community Offerings and/or Syndicated Community
Offering or take such other action as the OTS may permit.
The Holding Company Common Stock to be issued in the Conversion shall
be fully paid and nonassessable.
7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY
The Holding Company will apply to the OTS to retain up to 50% of the
proceeds of the Offering. The Holding Company believes that the Offering
proceeds will provide economic strength to the Holding Company and the Bank for
the future in a highly competitive and regulated environment and would
facilitate the possible expansion through acquisitions of financial service
organizations, possible diversification into other related businesses and for
other business and investment purposes, including the possible payment of
dividends and possible future repurchases of the Holding Company Common Stock as
permitted by the OTS.
8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
A. Each Eligible Account Holder shall receive, without payment,
nontransferable subscription rights to subscribe in the Subscription Offering
for a number of Subscription Shares equal to up to the greater of 100,000
shares, .10% of the total offering of shares, or fifteen times the product
(rounded down to the next whole number) obtained by multiplying the number of
shares of Conversion Stock issued in the Conversion by a fraction of which the
numerator is the amount of the Eligible Account Holder's Qualifying Deposit and
the denominator is the total amount of Qualifying Deposits of all Eligible
Account Holders, in each case on the Eligibility Record Date, subject to the
provisions of Section 14.
B. In the event that Eligible Account Holders exercise subscription
rights for a number of Subscription Shares in excess of the total number of such
shares eligible for subscription, the Subscription Shares shall be allocated
among the subscribing Eligible Account Holders so as to permit each subscribing
Eligible Account Holder to purchase a number of shares sufficient to make his or
her total allocation of Subscription Shares equal to the lesser of 100 shares or
the number of shares for which such Eligible Account Holder has subscribed. Any
remaining shares will
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be allocated among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion that the amount of the Qualifying Deposit
of each Eligible Account Holder whose subscription remains unsatisfied bears to
the total amount of the Qualifying Deposits of all Eligible Account Holders
whose subscriptions remain unsatisfied. If the amount so allocated exceeds the
amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated (one or more times as necessary) among those Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated.
C. Subscription rights as Eligible Account Holders received by
Directors and Officers and their Associates which are based on deposits made by
such persons during the twelve (12) months preceding the Eligibility Record Date
shall be subordinated to the subscription rights of all other Eligible Account
Holders.
9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
The Employee Plans of the Holding Company and the Bank shall receive,
without payment, subscription rights to purchase in the aggregate up to 8% of
the Holding Company Common Stock offered in the Subscription Offering, including
any shares of Holding Company Common Stock to be issued in the Subscription
Offering as a result of an increase in the maximum of the Offering Range after
commencement of the Subscription Offering and prior to completion of the
Conversion. Consistent with applicable laws and regulations and practices and
policies of the OTS, the Employee Plans may use funds contributed by the Holding
Company or the Bank and/or borrowed from an independent financial institution to
exercise such subscription rights, and the Holding Company and the Bank may make
scheduled discretionary contributions thereto, provided that such contributions
do not cause the Holding Company or the Bank to fail to meet any applicable
regulatory capital requirements. The Employee Plans shall not be deemed to be
Associates or Affiliates of or Persons Acting in Concert with any Director or
Officer of the Holding Company or the Bank.
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD
PRIORITY)
A. Each Supplemental Eligible Account Holder shall receive, without
payment, nontransferable subscription rights to subscribe in the Subscription
Offering for a number of Subscription Shares equal to up to the greater of
100,000 shares, or fifteen times the product (rounded down to the next whole
number) obtained by multiplying the number of shares of Conversion Stock issued
in the Conversion by a fraction of which the numerator is the amount of the
Supplemental Eligible Account Holder's Qualifying Deposit and the denominator is
the total amount of Qualifying Deposits of all Supplemental Eligible Account
Holders, in each case on the Supplemental Eligibility Record Date, subject to
the availability of sufficient shares after filling in full all subscription
orders of the Eligible Account Holders and Employee Plans and to the purchase
limitations specified in Section 14.
B. In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall
be allocated among the subscribing Supplemental Eligible Account Holders so as
to permit each such subscribing Supplemental Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his or her
total allocation of Subscription Shares equal to the lesser of 100 shares or the
number of shares for which each such Supplemental Eligible Account Holder has
subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in
the proportion that the amount of the Qualifying Deposit of each such
Supplemental Eligible Account Holder bears to the total amount of the Qualifying
Deposits of all Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied. If the amount so allocated exceeds the amount subscribed for by any
one or more Supplemental Eligible Account Holders, the excess shall be
reallocated (one or more times as necessary) among those Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied.
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11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
A. Each Other Member shall receive, without payment, nontransferable
subscription rights to subscribe in the Subscription Offering for a number of
Subscription Shares is equal to up to the greater of 100,000 shares, or .10% of
the total offering of shares, subject to the purchase limitation specified in
Section 14.
B. In the event that such Other Members subscribe for a number of
Subscription Shares which, when added to the Subscription Shares subscribed for
by the Eligible Account Holders, Employee Plans and Supplemental Eligible
Account Holders, is in excess of the total number of Subscription Shares to be
issued, the subscriptions of such Other Members will be allocated to Other
Members in proportion to the amounts of their relative subscriptions.
12. COMMUNITY OFFERING (FIFTH PRIORITY)
If less than the total number of shares of Holding Company Common Stock
to be subscribed for in the Offering are sold in the Subscription Offering,
shares remaining unsubscribed for may be made available for purchase in the
Community Offering to certain members of the general public, which may subscribe
together with any Associate or group of persons Acting in Concert for a number
of Subscription Shares equal to up to 100,000 shares, subject to the purchase
limitations specified herein. The shares may be made available in the Community
Offering through a direct community marketing program which may provide for
utilization of a broker, dealer, consultant or investment banking firm
experienced and expert in the sale of savings institutions securities. Such
entities may be compensated on a fixed fee basis or on a commission basis, or a
combination thereof. Shares offered in the Community Offering will be available
for purchase by the general public with preference given first to Minority
Stockholders and then to natural persons residing in the Community in each case
in proportion to the amounts of the subscriptions. Any excess of shares may be
made available for purchase by the general public. The Holding Company shall
make the distribution of the Conversion Stock to be sold in the Community
Offering in such a manner as to promote a wide distribution of Conversion Stock.
The Holding Company reserves the right to reject any or all orders in whole or
in part, which are received in the Community Offering. The number of shares of
Conversion Stock that any person may purchase in the Community Offering shall be
subject to the purchase limitations specified in Section 14.
13. SYNDICATED COMMUNITY OFFERING
If feasible, the Board of Directors may determine to offer Subscription
Shares not subscribed for in the Subscription and Community Offerings in a
Syndicated Community Offering, subject to such terms, conditions and procedures
as may be determined by the Holding Company, in a manner that will achieve the
widest distribution of the Holding Company Common Stock subject to the right of
the Bank to accept or reject in whole or in part any subscriptions in the
Syndicated Community Offering. In the Syndicated Community Offering, any person
together with any Associate or group of Persons acting in concert may purchase a
number of Subscription Shares that is equal to 100,000 shares, subject to the
purchase limitations specified in Section 14; provided, however, that the shares
purchased in the Subscription Offering by any Person together with an Associate
or group of Persons acting in concert shall be counted toward meeting the
maximum purchase limitation found in this Section. Provided that the
Subscription Offering has commenced, the Bank may commence the Syndicated
Community Offering at any time after the mailing to the Members of the Proxy
Statement to be used in connection with the Special Meeting of Members, provided
that the completion of the offer and sale of the Conversion Stock shall be
conditioned upon the approval of this Plan by the Voting Members. If the
Syndicated Community Offering is not sooner commenced pursuant to the provisions
of the preceding sentence, the Syndicated Community Offering will be commenced
as soon as practicable following the date upon which the Subscription and
Community Offerings terminate.
Alternatively, if a Syndicated Community Offering is not held, the Bank
shall have the right to sell any Subscription Shares remaining following the
Subscription and Community Offerings in an underwritten firm commitment public
offering. The provisions of Section 14 shall not be applicable to sales to
underwriters for purposes of such an offering but shall be applicable to the
sales by the underwriters to the public. The price to be paid by the
underwriters in such an offering shall be equal to the Subscription Price less
an underwriting discount to be negotiated
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among such underwriters and the Bank, which will in no event exceed an amount
deemed to be acceptable by the OTS.
If for any reason a Syndicated Community Offering or an underwritten
firm commitment public offering of shares of Conversion Stock not sold in the
Subscription and Community Offerings cannot be effected, or in the event that
any insignificant residue of shares of Conversion Stock is not sold in the
Subscription and Community Offerings or in the Syndicated Community or
underwritten firm commitment public offering, other arrangements will be made
for the disposition of unsubscribed shares by the Bank, if possible. Such other
purchase arrangements will be subject to the approval of the OTS.
14. LIMITATION ON PURCHASES
The following limitations shall apply to all purchases of shares of
Conversion Stock:
A. The maximum number of Subscription Shares which may be subscribed
for or purchased in all categories in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert shall not
exceed 100,000 shares, except for the Employee Plans which may subscribe for up
to 8% of the Holding Company Common Stock offered in the Subscription Offering
(including shares issued in the event of an increase in the maximum of the
Offering Range of 15%); provided, however, that, in the event the maximum
purchase limitation is increased, orders for Subscription Shares in the
Community Offering and in the Syndicated Offering (or, alternatively, an
underwritten firm commitment public offering), if any, shall, as determined by
the Bank, first be filled to a maximum of 1,000 shares and thereafter remaining
shares shall be allocated, on an equal number of shares basis per order until
all orders have been filled.
B. The maximum number of shares of Holding Company Common Stock which
may be purchased in all categories of the Offering by Officers and Directors of
the Bank and their Associates in the aggregate, when combined with Exchange
Shares received by such persons, shall not exceed 25% of the Conversion Stock
offered in the Conversion.
C. The maximum number of Subscription Shares which may be subscribed
for or purchased in all categories in the Offering by any Person or Participant
together with any Associate or group of Persons Acting in Concert together with
Exchange Shares received in the Share Exchange by any such Person, or
Participant together with any Associate or group of Persons Acting in Concert
shall not exceed 1.5% of the shares issued in the Conversion, except for the
Employee Plans which may subscribe for up to 8% of the Holding Company Common
Stock offered in the Subscription Offering (including shares issued in the event
of an increase in the maximum of the Offering Range of 15%). Notwithstanding
this limitation, Minority Stockholders who receive more than 1.5% of the shares
issued on the Conversion shall not be required to divest any such shares.
D. A minimum of 25 shares of Holding Company Common Stock must be
purchased by each Person purchasing shares in the Offering to the extent those
shares are available; provided, however, that in the event the minimum number of
shares of Holding Company Common Stock purchased times the price per share
exceeds $500, then such minimum purchase requirement shall be reduced to such
number of shares which when multiplied by the price per share shall not exceed
$500, as determined by the Board.
If the number of shares of Holding Company Common Stock otherwise
allocable pursuant to Sections 8 through 13, inclusive, to any Person or that
Person's Associates would be in excess of the maximum number of shares permitted
as set forth above, the number of shares of Holding Company Common Stock
allocated to each such person shall be reduced to the lowest limitation
applicable to that Person, and then the number of shares allocated to each group
consisting of a Person and that Person's Associates shall be reduced so that the
aggregate allocation to that Person and his or her Associates complies with the
above limits, and such maximum number of shares shall be reallocated among that
Person and his or her Associates as they may agree, or in the absence of an
agreement, in proportion to the shares subscribed by each (after first applying
the maximums applicable to each Person, separately).
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<PAGE>
Depending upon market or financial conditions, the Board of Directors
of the Holding Company, with the approval of the OTS and without further
approval of the Members, may decrease or further increase the purchase
limitations in this Plan, provided that the maximum purchase limitations may not
be increased to a percentage in excess of 5% of the shares issued in the
Conversion except as provided below. If the Holding Company increases the
maximum purchase limitations, the Holding Company is only required to resolicit
Persons who subscribed for the maximum purchase amount and may, in the sole
discretion of the Holding Company resolicit certain other large subscribers. In
the event that the maximum purchase limitation is increased to 5% of the shares
issued in the Conversion, such limitation may be further increased to 9.99%,
provided that orders for Holding Company Common Stock exceeding 5% of the shares
of Conversion Stock issued in the Conversion shall not exceed in the aggregate
10% of the total shares of Conversion Stock issued in the Conversion. Requests
to purchase additional shares of the Conversion Stock in the event that the
purchase limitation is so increased will be determined by the Board of Directors
of the Holding Company in its sole discretion.
In the event of an increase in the total number of shares offered in
the Subscription Offering due to an increase in the maximum of the Offering
Range of up to 15% (the "Adjusted Maximum"), the additional shares will be used
in the following order of priority: (i) to fill the Employee Plans' subscription
to the Adjusted Maximum; (ii) in the event that there is an oversubscription at
the Eligible Account Holder, Supplemental Eligible Account Holder, Other Member,
or Minority Stockholder levels, to fill unfulfilled subscriptions of such
subscribers according to such respective priorities exclusive of the Adjusted
Maximum; and (iii) to fill unfulfilled subscriptions in the Community Offering
exclusive of the Adjusted Maximum with preference given first to Minority
Stockholders and then to natural persons residing in the Community.
For purposes of this Section 14, the Directors of the Bank, the
Mid-Tier Holding Company and the Holding Company shall not be deemed to be
Associates or a group affiliated with each other or otherwise Acting in Concert
solely as a result of their being Directors of the Bank, the Mid-Tier Holding
Company or the Holding Company.
Each Person purchasing Holding Company Common Stock in the Conversion
shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.
15. PAYMENT FOR CONVERSION STOCK
All payments for Holding Company Common Stock subscribed for in the
Subscription, Community and Syndicated Community Offerings must be delivered in
full to the Holding Company, together with a properly completed and executed
Order Form and certification or acknowledgment form, or purchase order in the
case of the Syndicated Community Offering, on or prior to the expiration date of
the Offering; provided, however, that if the Employee Plans subscribe for shares
during the Subscription Offering, such plans will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Holding
Company Common Stock subscribed for by such plans at the Subscription Price upon
consummation of the Conversion. Notwithstanding the foregoing, the Holding
Company shall have the right, in its sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Offering and to
thereafter submit payment by wire transfer for the Holding Company Common Stock
for which they are subscribing in the Offering at any time prior to 48 hours
before the completion of the Conversion, unless such 48 hour period is waived by
the Holding Company in its sole discretion.
Payment for Holding Company Common Stock subscribed for shall be made
either in cash (if delivered in person), check, money order, certified or
teller's check or bank draft. Alternatively, subscribers in the Subscription and
Community Offerings may pay for the shares for which they have subscribed by
authorizing the Bank on the Order Form to make a withdrawal from the
subscriber's Deposit Account at the Bank in an amount equal to the Subscription
Price of such shares. Such authorized withdrawal, whether from a savings
passbook or certificate account, shall be without penalty as to premature
withdrawal. If the authorized withdrawal is from a certificate account, and the
remaining balance does not meet the applicable minimum balance requirement, the
certificate shall be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate. Funds for which a
withdrawal is authorized will remain in the subscriber's Deposit Account but may
not be used
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by the subscriber during the Subscription and Community Offerings. Thereafter,
the withdrawal will be given effect only to the extent necessary to satisfy the
subscription (to the extent it can be filled) at the Subscription Price per
share. Interest will continue to be earned on any amounts authorized for
withdrawal until such withdrawal is given effect. Interest will be paid by the
Bank at not less than the passbook annual rate on payments for Holding Company
Common Stock received in cash or by check. Such interest will be paid from the
date payment is received by the Bank until consummation or termination of the
Conversion. If for any reason the Conversion is not consummated, all payments
made by subscribers in the Subscription, Community and Syndicated Community
Offerings will be refunded to them with interest. In case of amounts authorized
for withdrawal from Deposit Accounts, refunds will be made by canceling the
authorization for withdrawal. The Bank is prohibited by regulation from
knowingly making any loans or granting any lines of credit for the purchase of
stock in the Conversion, and therefore, will not do so.
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding
Company and Bank has been declared effective by the SEC, Order Forms will be
distributed to the Eligible Account Holders, Employee Plans, Supplemental
Eligible Account Holders and Other Members at their last known addresses
appearing on the records of the Bank for the purpose of subscribing for shares
of Holding Company Common Stock in the Subscription Offering and will be made
available for use by those Persons entitled to purchase in the Community
Offering. Notwithstanding the foregoing, the Bank may elect to send Order Forms
only to those Persons who request them after receipt of such notice in a form
approved by the OTS and which is adequate to apprise the Eligible Account
Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members
of the pendency of the Subscription Offering. Such notice may be included with
the proxy statement for the Special Meeting of Members and the proxy statement
for the Special Meeting of Stockholders and may also be included in the notice
of the pendency of the Conversion and the Special Meeting of Members sent to all
Eligible Account Holders in accordance with regulations of the OTS.
Each Order Form will be preceded or accompanied by a prospectus
describing the Holding Company, the Bank, the Holding Company Common Stock and
the Subscription and Community Offerings. Each Order Form will contain, among
other things, the following:
A. A specified date by which all Order Forms must be received by the
Holding Company, which date shall be not less than twenty (20), nor more than
forty-five (45) days, following the date on which the Order Forms are mailed by
the Holding Company, and which date will constitute the termination of the
Subscription Offering;
B. The Subscription Price per share for shares of Holding Company
Common Stock to be sold in the Subscription and Community Offerings;
C. A description of the minimum and maximum number of Subscription
Shares which may be subscribed for pursuant to the exercise of subscription
rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the Order Form is to
indicate thereon the number of Subscription Shares for which such person elects
to subscribe and the available alternative methods of payment therefor;
E. An acknowledgment that the recipient of the Order Form has received
a final copy of the prospectus prior to execution of the Order Form;
F. A statement to the effect that all subscription rights are
nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription
period such properly completed and executed Order Form, together with payment in
the full amount of the aggregate purchase price as specified in the Order Form
for the shares of Holding Company Common Stock for which the recipient elects to
subscribe in the Subscription Offering (or by authorizing on the Order Form that
the Bank withdraw said amount from the subscriber's Deposit Account at the
Bank); and
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<PAGE>
G. A statement to the effect that the executed Order Form, once
received by the Holding Company, may not be modified or amended by the
subscriber without the consent of the Holding Company.
Notwithstanding the above, the Holding Company reserves the right in
its sole discretion to accept or reject orders received on photocopied or
facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event Order Forms (a) are not delivered and are returned to the
Holding Company or the Bank by the United States Postal Service or the Holding
Company is unable to locate the addressee, (b) are not received back by the
Holding Company or are received by the Holding Company after the expiration date
specified thereon, (c) are defectively filled out or executed, (d) are not
accompanied by the full required payment, or, in the case of institutional
investors in the Community Offering, by delivering irrevocable orders together
with a legally binding commitment to pay in cash, check, money order or wire
transfer the full amount of the Subscription Price prior to 48 hours before the
completion of the Conversion, unless waived by the Holding Company, for the
shares of Holding Company Common Stock subscribed for (including cases in which
deposit accounts from which withdrawals are authorized are insufficient to cover
the amount of the required payment), or (e) are not mailed pursuant to a "no
mail" order placed in effect by the account holder, the subscription rights of
the Person to whom such rights have been granted will lapse as though such
Person failed to return the completed Order Form within the time period
specified thereon; provided, however, that the Holding Company may, but will not
be required to, waive any immaterial irregularity on any Order Form or require
the submission of corrected Order Forms or the remittance of full payment for
subscribed shares by such date as the Holding Company may specify. The
interpretation of the Holding Company of terms and conditions of this Plan and
of the Order Forms will be final, subject to the authority of the OTS.
18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
The Holding Company will make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Holding Company Common Stock pursuant to this Plan
reside. However, no such Person will be issued subscription rights or be
permitted to purchase shares of Holding Company Common Stock in the Subscription
Offering if such Person resides in a foreign country; or in a State of the
United States with respect to which all of the following apply: (A) a small
number of Persons otherwise eligible to subscribe for shares under the Plan
reside in such state; (B) the issuance of subscription rights or the offer or
sale of shares of Holding Company Common Stock to such Persons would require the
Holding Company under the securities laws of such state, to register as a
broker, dealer, salesman or agent or to register or otherwise qualify its
securities for sale in such state; (C) such registration or qualification would
be impracticable for reasons of cost or otherwise.
19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
The Mid-Tier Holding Company shall establish at the time of the MHC
Merger, and the Bank shall establish at the time of the Mid-Tier Merger a
liquidation account in an amount equal to the greater of: (a) the sum of (i) the
percentage of the outstanding shares of the common stock of the Mid-Tier Holding
Company owned by the Mutual Holding Company multiplied by the Mid-Tier Holding
Company's total stockholders' equity as reflected in the latest statement of
financial condition contained in the final Prospectus utilized in the
Conversion, and (ii) the restricted retained earnings account that reflects
certain dividends waived by the Mutual Holding Company; or (b) the retained
earnings of the Bank at the time the Bank underwent its mutual holding company
reorganization. Following the Conversion, the Liquidation Account will be
maintained by the Bank for the benefit of the Eligible Account Holders and
Supplemental Eligible Account Holders who continue to maintain their Deposit
Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder shall, with respect to his Deposit Account, hold a related
inchoate interest in a portion of the liquidation account balance, in relation
to his Deposit Account balance at the Eligibility Record Date or Supplemental
Eligibility Record Date, respectively, or to such balance as it may be
subsequently reduced, as hereinafter provided.
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In the unlikely event of a complete liquidation of the Bank (and only
in such event), following all liquidation payments to creditors (including those
to Account Holders to the extent of their Deposit Accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the Liquidation Account, in the amount
of the then adjusted subaccount balance for his Deposit Account then held,
before any liquidation distribution may be made to any holders of the Bank's
capital stock. No merger, consolidation, purchase of bulk assets with assumption
of Deposit Accounts and other liabilities, or similar transactions with an
FDIC-insured institution, in which the Bank is not the surviving institution,
shall be deemed to be a complete liquidation for this purpose. In such
transactions, the liquidation account shall be assumed by the surviving
institution.
The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder shall be
determined by multiplying the opening balance in the Liquidation Account by a
fraction, the numerator of which is the amount of the Qualifying Deposits of
such account holder and the denominator of which is the total amount of all
Qualifying Deposits of all Eligible Account Holders and Supplemental Account
Holders. Such initial subaccount balance shall not be increased, but shall be
subject to downward adjustment as described below.
If, at the close of business on any December 31 annual closing date,
commencing on or after the effective date of the Conversion, the deposit balance
in the Deposit Account of an Eligible Account Holder or Supplemental Eligible
Account Holder is less than the lesser of (i) the balance in the Deposit Account
at the close of business on any other annual closing date subsequent to the
Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the
amount of the Qualifying Deposit in such Deposit Account as of the Eligibility
Record Date or Supplemental Eligibility Record Date, the subaccount balance for
such Deposit Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
such downward adjustment, the subaccount balance shall not be subsequently
increased, notwithstanding any subsequent increase in the deposit balance of the
related Deposit Account. If any such Deposit Account is closed, the related
subaccount shall be reduced to zero.
The creation and maintenance of the Liquidation Account shall not
operate to restrict the use or application of any of the net worth accounts of
the Bank, except that the Bank shall not declare or pay a cash dividend on, or
repurchase any of, its capital stock if the effect thereof would cause its net
worth to be reduced below (i) the amount required for the Liquidation Account;
or (ii) the net worth requirements of the Bank contained in Part 567 of the
Rules and Regulations of the OTS.
20. VOTING RIGHTS OF STOCKHOLDERS
Following consummation of the Conversion, voting rights with respect to
the Bank shall be held and exercised exclusively by the holders of its capital
stock. The holders of the voting capital stock of the Holding Company shall have
the exclusive voting rights with respect to the Holding Company.
21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
A. All Subscription Shares purchased by Directors or Officers of the
Holding Company or the Bank in the Offering shall be subject to the restriction
that, except as provided in this Section or as may be approved by the OTS, no
interest in such shares may be sold or otherwise disposed of for value for a
period of one year following the date of purchase in the Offering.
B. The restriction on disposition of Subscription Shares set forth
above in this Section shall not apply to the following:
(i) Any exchange of such shares in connection with a merger or
acquisition involving the Bank or the Holding Company, as the case may
be, which has been approved by the OTS; and
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(ii) Any disposition of such shares following the death of the
person to whom such shares were initially sold under the terms of the
Plan.
C. With respect to all Subscription Shares subject to restrictions on
resale or subsequent disposition, each of the following provisions shall apply:
(i) Each certificate representing shares restricted by this
section shall bear a legend prominently stamped on its face giving
notice of the restriction;
(ii) Instructions shall be issued to the stock transfer agent
for the Holding Company not to recognize or effect any transfer of any
certificate or record of ownership of any such shares in violation of
the restriction on transfer; and
(iii) Any shares of capital stock of the Holding Company
issued with respect to a stock dividend, stock split, or otherwise with
respect to ownership of outstanding Subscription Shares subject to the
restriction on transfer hereunder shall be subject to the same
restriction as is applicable to such Conversion Stock.
22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING
THE CONVERSION
For a period of three years following the Conversion, no Officer,
Director or their Associates shall purchase, without the prior written approval
of the OTS, any outstanding shares of Holding Company Common Stock except from a
broker-dealer registered with the SEC. This provision shall not apply to
negotiated transactions involving more than 1% of the outstanding shares of
Holding Company Common Stock, the exercise of any options pursuant to a stock
option plan or purchases of Holding Company Common Stock made by or held by any
Tax-Qualified Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock
Benefit Plan of the Bank or the Holding Company (including the Employee Plans)
which may be attributable to any Officer or Trustee. As used herein, the term
"negotiated transaction" means a transaction in which the securities are offered
and the terms and arrangements relating to any sale are arrived at through
direct communications between the seller or any person acting on its behalf and
the purchaser or his investment representative. The term "investment
representative" shall mean a professional investment advisor acting as agent for
the purchaser and independent of the seller and not acting on behalf of the
seller in connection with the transaction.
23. TRANSFER OF DEPOSIT ACCOUNTS
Each person holding a Deposit Account at the Bank at the time of
Conversion shall retain an identical Deposit Account at the Bank following
Conversion in the same amount and subject to the same terms and conditions
(except as to voting and liquidation rights).
24. REGISTRATION AND MARKETING
Within the time period required by applicable laws and regulations, the
Holding Company will register the securities issued in connection with the
Conversion pursuant to the Securities Exchange Act of 1934 (or will be a
successor issuer that succeeds to the registration of the Mid-Tier Holding
Company) and will not deregister such securities for a period of at least three
years thereafter, except that the maintenance of registration for three years
requirement may be fulfilled by any successor to the Bank or any holding company
of the Bank. In addition, the Bank or Holding Company will use its best efforts
to encourage and assist a market-maker to establish and maintain a market for
the Conversion Stock and to list those securities on a national or regional
securities exchange or the Nasdaq Stock Market.
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25. TAX RULINGS OR OPINIONS
Consummation of the Conversion is expressly conditioned upon prior
receipt by the Mutual Holding Company, the Mid-Tier Holding Company and the Bank
of either a ruling or an opinion of counsel with respect to federal tax laws,
and either a ruling , an opinion of counsel, or a letter of advice from their
tax advisor with respect to New Jersey tax laws, to the effect that consummation
of the transactions contemplated by the Conversion and this Plan will not result
in a taxable reorganization under the provisions of the applicable codes or
otherwise result in any adverse tax consequences to the Mutual Holding Company,
the Mid-Tier Holding Company, the Holding Company or the Bank, or the account
holders receiving subscription rights before or after the Conversion, except in
each case to the extent, if any, that subscription rights are deemed to have
value on the date such rights are issued.
26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
A. The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion,
including without limitation, an ESOP. Existing as well as any newly created
Tax-Qualified Employee Stock Benefit Plans may purchase shares of Conversion
Stock in the Conversion, to the extent permitted by the terms of such benefit
plans and this Plan.
B. As a result of the Conversion, the Holding Company shall be deemed
to have ratified and approved the 1996 Stock Option Plan and 1996 Recognition
Plan maintained by the Bank and the Mid-Tier Holding Company and shall have
agreed to issue (and reserve for issuance) Holding Company Common Stock in lieu
of common stock of the Mid-Tier Holding Company pursuant to the terms of such
benefit plans. Upon consummation of the Conversion, the Mid-Tier Holding Company
common stock held by such benefit plans shall be converted into Holding Company
Common Stock based upon the Exchange Ratio. Also upon consummation of the
Conversion, (i) all rights to purchase, sell or receive Mid-Tier Holding Company
common stock and all rights to elect to make payment in Mid-Tier Holding Company
common stock under any agreement between the Bank or the Mid-Tier Holding
Company and any Director, Officer or Employee thereof or under any plan or
program of the Bank or the Mid-Tier Holding Company (including, without
limitation, the 1996 Recognition Plan), shall automatically, by operation of
law, be converted into and shall become an identical right to purchase, sell or
receive Holding Company Common Stock and an identical right to make payment in
Holding Company Common Stock under any such agreement between the Bank or the
Mid-Tier Holding Company and any Director, Officer or Employee thereof or under
such plan or program of the Bank, and (ii) rights outstanding under the 1996
Stock Option Plan shall be assumed by the Holding Company and thereafter shall
be rights only for shares of Holding Company Common Stock, with each such right
being for a number of shares of Holding Company Common Stock based upon the
Exchange Ratio and the number of shares of Mid-Tier Holding Company common stock
that were available thereunder immediately prior to consummation of the
Conversion, with the price adjusted to reflect the Exchange Ratio but with no
change in any other term or condition of such right.
C. The Holding Company and the Bank are authorized to enter into
employment agreements with their executive officers.
D. The Holding Company and the Bank are authorized to adopt stock
option plans, restricted stock grant plans and other Non-Tax-Qualified Employee
Stock Benefit Plans, provided that such plans conform to any applicable
requirements of OTS regulators.
27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
A. In accordance with OTS regulations, for a period of three years from
the date of consummation of the Conversion, no Person, other than the Holding
Company, shall directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of the Bank
without the prior written consent of the OTS.
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B. (i) The charter of the Bank contains a provision stipulating that no
person, except the Holding Company, for a period of five years following the
date of the Bank's mutual holding company reorganization, shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more than 10%
of any class of an equity security of the Bank, without the prior written
approval of the OTS. In addition, such charter may also provide that for a
period of five years following the Bank's mutual holding company reorganization,
shares beneficially owned in violation of the above-described charter provision
shall not be entitled to vote and shall not be voted by any person or counted as
voting stock in connection with any matter submitted to stockholders for a vote.
In addition, special meetings of the stockholders relating to changes in control
or amendment of the charter may only be called by the Board of Directors, and
shareholders shall not be permitted to cumulate their votes for the election of
directors.
(ii) The Certificate of Incorporation of the Holding Company
will contain a provision stipulating that in no event shall any record owner of
any outstanding shares of Holding Company Common Stock who beneficially owns in
excess of 10% of such outstanding shares be entitled or permitted to any vote in
respect to any shares held in excess of 10%. In addition, the Certificate of
Incorporation and Bylaws of the Holding Company contain provisions which provide
for staggered terms of the directors, noncumulative voting for directors,
limitations on the calling of special meetings, a fair price provision for
certain business combinations and certain notice requirements.
C. For the purposes of this section:
(i) The term "person" includes an individual, a firm, a
corporation or other entity;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value;
(iii) The term "acquire" includes every type of acquisition,
whether effected by purchase, exchange, operation of law or otherwise;
and
(iv) The term "security" includes non-transferable
subscription rights issued pursuant to a plan of conversion as well as
a "security" as defined in 15 U.S.C. ss. 8c(a)(10).
28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
A. The Holding Company shall comply with any applicable OTS regulation
in the repurchase of any shares of its capital stock during the first three
years following consummation of the Conversion.
B. The Bank shall not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause its regulatory
capital to be reduced below (i) the amount required for the liquidation account
or (ii) the federal regulatory capital requirement in Section 567.2 of the Rules
and Regulations of the OTS. Otherwise, the Bank may declare dividends or make
capital distributions in accordance with applicable law and regulations,
including 12 C.F.R. Section 563.134 or its successor.
29. CHARTER AND BYLAWS
By voting to adopt this Plan, Members of the Mutual Holding Company
will be voting to adopt a Stock Certificate of Incorporation and Bylaws for a
Delaware corporation attached as Exhibits D and E to this Plan.
30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
The Effective Date of the Conversion shall be the date upon which the
Articles of Combination shall be filed with the OTS with respect to the MHC
Merger, the Mid-Tier Merger and the Bank Merger. The Articles of Combination
shall be filed with the OTS after all requisite regulatory, member and
stockholder approvals have been
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obtained, all applicable waiting periods have expired, and sufficient
subscriptions and orders for Subscription Shares have been received. The Closing
of the sale of all Subscription Shares sold in the Subscription Offering,
Community Offering and/or Syndicated Community Offering shall occur
simultaneously on the effective date of the Closing.
31. EXPENSES OF CONVERSION
The Mutual Holding Company, the Mid-Tier Holding Company, the Bank and
the Holding Company may retain and pay for the services of legal, financial and
other advisors to assist in connection with any or all aspects of the
Conversion, including the Offering, and such parties shall use their best
efforts to assure that such expenses shall be reasonable.
32. AMENDMENT OR TERMINATION OF PLAN
If deemed necessary or desirable, this Plan may be substantively
amended as a result of comments from regulatory authorities or otherwise at any
time prior to solicitation of proxies from Members and Bank stockholders to vote
on this Plan by the Board of Directors of the Mutual Holding Company, and at any
time thereafter by the Board of Directors of the Mutual Holding Company with the
concurrence of the OTS. Any amendment to this Plan made after approval by the
Members and Bank stockholders with the approval of the OTS shall not necessitate
further approval by the Members unless otherwise required by the OTS. This Plan
may be terminated by the Board of Directors of the Mutual Holding Company at any
time prior to the Special Meeting of Members and the Special Meeting of
Stockholders to vote on this Plan, and at any time thereafter with the
concurrence of the OTS.
By adoption of the Plan, the Members of the Mutual Holding Company
authorize the Board of Directors of the Mutual Holding Company to amend or
terminate the Plan under the circumstances set forth in this Section.
33. CONDITIONS TO CONVERSION
Consummation of the Conversion pursuant to this Plan is expressly
conditioned upon the following:
A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding
Company, and the Bank of rulings of the United States Internal Revenue Service
and the New Jersey State taxing authorities, or opinions of counsel or tax
advisers as described in Section 26 hereof;
B. The sale of the Subscription Shares offered in the Conversion; and
C. The completion of the Conversion within the time period specified in
Section 3 of this Plan.
34. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the OTS.
Dated: September 24, 1997, as amended January 28, 1998
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EXHIBIT A
AGREEMENT OF MERGER BETWEEN PEOPLES MHC AND PEOPLE BANCORP, INC.
<PAGE>
FORM OF
AGREEMENT OF MERGER BETWEEN
PEOPLES BANCORP, MHC AND PEOPLES BANCORP, INC.
THIS AGREEMENT OF MERGER (the "MHC Merger Agreement") dated as of March
__, 1998, is made by and among Peoples Bancorp, M.H.C., a federal mutual holding
company (the "Mutual Holding Company") and Peoples Bancorp, Inc., a federal
mid-tier company (the "Mid-Tier Holding Company").
R E C I T A L S :
1. The Mutual Holding Company is a federal mutual holding company with
no authorized shares of capital stock.
2. The Mid-Tier Holding Company is a federal company which owns 100% of
the common stock of Trenton Savings Bank FSB (the "Bank").
3. The majority of the shares of common stock of the Mid-Tier Holding
Company are owned by the Mutual Holding Company, and the remainder of the shares
of common stock of the Mid-Tier Holding Company are owned by the Bank's
employees, directors and the public (the "Minority Stockholders").
4. As of the date hereof, the Mid-Tier Holding Company has authorized
capital stock consisting of 20,000,000 shares of common stock and 1,000,000
shares of preferred stock, of which there are _____ shares of common stock and
no shares of preferred stock issued and outstanding.
5. At least two-thirds of the members of the boards of directors of the
Mid-Tier Holding Company and the Mutual Holding Company have approved this
Merger Agreement and the MHC Merger and authorized the execution and delivery
thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the Merger (as defined
below), the Mutual Holding Company shall be merged with and into the Mid-Tier
Holding Company with the Mid-Tier Holding Company as the surviving or resulting
institution (the "Resulting Institution"), whereupon the shares of Mid-Tier
Holding Company common stock owned by the Mutual Holding Company shall be
canceled. As part of the Merger, each Eligible Account Holder and Supplemental
Eligible Account Holder (as defined in the Plan of Conversion and Reorganization
(the "Plan"))) shall automatically receive an interest in the Liquidation
Account, which shall be established in the Mid-Tier Holding Company, in exchange
for such person's interest in the Mutual Holding Company as set forth in the
Plan.
2. Effective Date. The Merger shall not be effective until and unless
it is approved by the Director of the Office of Thrift Supervision (the "OTS")
after approval by (i) two-thirds of the outstanding common stock of the Mid-Tier
Holding Company, (ii) a majority vote of Minority Stockholders present in person
or by proxy at a meeting of stockholders, and (iii) a majority of the members of
the Mutual Holding Company, and the Articles of Combination shall have been
filed with the OTS with respect to the Merger. Approval of the Plan by the
members of the Mutual Holding Company shall also constitute approval of this MHC
Merger Agreement.
3. Name. The name of the Resulting Institution shall be Peoples
Bancorp, Inc.
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4. Offices. The headquarters of the Resulting Institution shall be 134
Franklin Corner Road, Lawrenceville, New Jersey. The offices of the Bank that
were in lawful operation prior to the Merger shall continue to be operated as
the branch offices of the Bank.
5. Directors and Officers. The directors and officers of the Mid-Tier
Holding Company immediately prior to the Effective Date shall be the directors
and officers of the Resulting Institution after the Effective Date.
6. Rights and Duties of the Resulting Institution. At the Effective
Date, the Mutual Holding Company shall be merged with and into the Mid-Tier
Holding Company with the Mid-Tier Holding Company as the Resulting Institution.
The business of the Resulting Institution shall be that of a federal stock
holding company under the laws of the United States, the regulations of the OTS,
and as provided for in the Mid-Tier Holding Company's Charter. All assets,
rights, interests, privileges, powers, franchises and property (real, personal
and mixed) of the Mutual Holding Company shall be automatically transferred to
and vested in the Resulting Institution by virtue of the Merger without any deed
or other document of transfer. The Resulting Institution, without any order or
action on the part of any court or otherwise and without any documents of
assumption or assignment, shall hold and enjoy all of the properties, franchises
and interests, including appointments, powers, designations, nominations and all
other rights and interests as the agent or other fiduciary in the same manner
and to the same extent as such rights, franchises, and interests and powers were
held or enjoyed by the Mutual Holding Company. The Resulting Institution shall
be responsible for all of the liabilities, restrictions and duties of every kind
and description of both the Mutual Holding Company immediately prior to the MHC
Merger, including liabilities, debts, obligations and contracts of the Mutual
Holding Company, matured or unmatured, whether accrued, absolute, contingent or
otherwise and whether or not reflected or reserved against on balance sheets,
books or accounts or records of the Mutual Holding Company. The stockholders of
the Mid-Tier Holding Company shall possess all voting rights with respect to the
shares of stock of the Mid-Tier Holding Company. All rights of creditors and
other obligees and all liens on property of either the Mutual Holding Company
shall be preserved and shall not be released or impaired.
7. Other Terms. All terms used in this MHC Merger Agreement shall,
unless defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of this MHC Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Mid-Tier Holding Company and the Mutual Holding
Company have caused this Agreement to be executed as of the date first above
written.
Peoples Bancorp, M.H.C.
(a federal mutual holding company)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
Peoples Bancorp, Inc.
(a federal stock holding company)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
A-2
<PAGE>
EXHIBIT B
AGREEMENT OF MERGER BETWEEN
PEOPLES BANCORP, INC. AND TRENTON SAVINGS BANK FSB
A-3
<PAGE>
FORM OF AGREEMENT OF MERGER BETWEEN
PEOPLES BANCORP, INC. (A FEDERAL CORPORATION)
AND TRENTON SAVINGS BANK FSB
THIS AGREEMENT OF MERGER (the "Mid-Tier Merger Agreement") dated as of
March __, 1998, is made by and among Peoples Bancorp, Inc., a federal
corporation (the "Mid-Tier Holding Company") , Trenton Savings Bank FSB (the
"Bank") and Trenton Interim Savings Bank II, an interim federal savings bank
("Interim").
R E C I T A L S :
1. The Mid-Tier Holding Company is a federal company which owns 100% of
the common stock of Trenton Savings Bank FSB (the "Bank"). As of the date
hereof, the Mid-Tier Holding Company has authorized capital stock consisting of
20,000,000 shares of common stock and 10,000,000 shares of preferred stock, of
which there are _____ shares of common stock and no shares of preferred stock
issued and outstanding.
2. Contemporaneously with the transactions contemplated by this
Mid-Tier Merger Agreement, Trenton Interim Savings Bank shall merge with and
into the Bank with the Bank as the surviving entity (the "Bank Merger").
Constructive shareholders of the Bank (i.e., Minority Stockholders immediately
prior to the Conversion) will exchange the shares of Bank common stock that they
constructively received in the transactions contemplated by this Mid-Tier Merger
Agreement for common stock of Peoples Bancorp, Inc. a Delaware corporation that
will own 100% of the Bank's common stock at the conclusion of the Conversion.
3. At least two-thirds of the members of the boards of directors of the
Bank and the Mid-Tier Holding Company have approved this Mid-Tier Merger
Agreement under which the Mid-Tier Holding Company shall be merged with and into
the Bank with the Bank as the surviving or resulting institution, and authorized
the execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the Merger (as defined
below), the Mid-Tier Holding Company shall convert into Interim II, and will
merge with and into the Bank (the "Mid-Tier Merger") with the Bank as the
resulting entity, and (i) the Mid-Tier Holding Company stockholders other than
the Mutual Holding Company ("Minority Stockholders") shall constructively
receive shares of Bank common stock in exchange for their Mid-Tier Holding
Company common stock and (ii) each Eligible Account Holder and Supplemental
Eligible Account Holder (as defined in the Plan) will receive an interest in a
Liquidation Account of the Bank in exchange for such person's interest in the
Mid-Tier Holding Company.
2. Effective Date. The Holding Company Merger shall not be effective
until and unless it is approved by the Director of the Office of Thrift
Supervision (the "OTS") after approval by at least two-thirds of the outstanding
common stock of the Mid-Tier Holding Company, including at least a majority of
the shares held by Minority Stockholders, and the Articles of Combination shall
have been filed with the OTS with respect to the Mid-Tier Merger.
3. Name. The name of the Resulting Institution shall be Trenton Savings
Bank FSB.
4. Offices. The main banking office of the Resulting Institution shall
be 134 Franklin Corner Road, Lawrenceville, New Jersey. The branch offices of
the Bank that were in lawful operation prior to the Merger shall be operated as
branch offices of the Bank.
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5. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
6. Rights and Duties of the Resulting Institution. At the Effective
Date, the Mid-Tier Holding Company shall convert to Interim II, which shall be
merged with and into the Bank (the "Resulting Institution"). The business of the
Resulting Institution shall be that of a federal savings bank as provided in its
Charter. All assets, rights, interests, privileges, powers, franchises and
property (real, personal and mixed) of the Mid-Tier Holding Company shall be
automatically transferred to and vested in the Resulting Institution through
Interim II by virtue of such Merger without any deed or other document of
transfer. The Resulting Institution, without any order or action on the part of
any court or otherwise and without any documents of assumption or assignment,
shall hold and enjoy all of the properties, franchises and interests, including
appointments, powers, designations, nominations and all other rights and
interests as the agent or other fiduciary in the same manner and to the same
extent as such rights, franchises, and interests and powers were held or enjoyed
by the Mid-Tier Holding Company. The Resulting Institution shall be responsible
for all of the liabilities, restrictions and duties of every kind and
description of the Mid-Tier Holding Company, immediately prior to the Merger,
including liabilities for all debts, obligations and contracts of the Mid-Tier
Holding Company, matured or unmatured, whether accrued, absolute, contingent or
otherwise and whether or not reflected or reserved against on balance sheets,
books or accounts or records of the Mid-Tier Holding Company. The stockholders
of the Bank shall possess all voting rights with respect to the shares of stock
of the Bank. All rights of creditors and other obligees and all liens on
property of the Mid-Tier Holding Company shall be preserved and shall not be
released or impaired.
7. Other Terms. All terms used in this Merger Agreement shall, unless
defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of the Holding
Company Merger Agreement and the Conversion.
IN WITNESS WHEREOF, the Mid-Tier Holding Company and the Bank have
caused this Mid-Tier Merger Agreement to be executed as of the date first above
written.
Peoples Bancorp, Inc.
(a federal corporation)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
Trenton Savings Bank FSB
(a federal savings bank)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
ATTEST: Trenton Interim Savings Bank II
(in formation)
_________________________________________ By:__________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
B-2
<PAGE>
EXHIBIT C
AGREEMENT OF MERGER
BETWEEN TRENTON SAVINGS BANK, FSB
AND TRENTON INTERIM SAVINGS BANK
B-3
<PAGE>
FORM OF AGREEMENT OF MERGER BETWEEN
TRENTON SAVINGS BANK FSB
AND TRENTON INTERIM SAVINGS BANK
THIS AGREEMENT OF MERGER (the "Bank Merger Agreement") dated as of
March __, 1998, is made by and among Trenton Savings Bank FSB, a federal savings
bank (the "Bank") and Trenton Interim Savings Bank, an interim federal savings
Bank ("Interim").
R E C I T A L S :
1. The Bank is a federal savings bank that prior to the transactions
contemplated by this Bank Merger Agreement and the Plan of Conversion and
Reorganization of Peoples Bancorp, Inc. (the "Plan") was a wholly owned
subsidiary of Peoples Bancorp, Inc. (the "Mid-Tier Holding Company"), a federal
corporation.
2. Contemporaneously with the transactions contemplated by this Bank
Merger Agreement, the Mid-Tier Holding Company shall convert into Trenton
Interim Savings Bank II, an interim federal savings bank ("Interim II") and
merge with and into the Bank (the "Mid-Tier Merger") with the Bank as the
resulting entity, and (i) the Mid-Tier Holding Company stockholders other than
the Peoples Bancorp, MHC (the "Mutual Holding Company," and such stockholders
"Minority Stockholders" shall constructively receive shares of Bank common stock
in exchange for their Mid-Tier Holding Company common stock and (ii) each
Eligible Account Holder and Supplemental Eligible Account Holder (as defined in
the Plan of Conversion and Reorganization of Peoples Bancorp, Inc. (the "Plan"))
shall have received an interest in a Liquidation Account of the Bank in exchange
for such person's interest in the Mid-Tier Holding Company.
3. At least two-thirds of the members of the boards of directors of the
Bank and Interim have approved this Bank Merger Agreement under which Interim
shall be merged with and into the Bank with the Bank as the surviving or
resulting institution, and authorized the execution and delivery thereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto have agreed as follows:
1. Merger. At and on the Effective Date of the Merger (as defined
below) and contemporaneously with the Mid-Tier Merger, Interim will merge with
and into the Bank with the Bank as the surviving entity (the "Bank Merger").
Constructive shareholders of the Bank (i.e., Minority Stockholders immediately
prior to the Conversion) will exchange the shares of Bank common stock that they
constructively received in the Mid-Tier Merger for Holding Company Common Stock.
2. Stock Offering. Contemporaneously with the Bank Merger, Peoples
Bancorp, Inc., a Delaware Corporation shall sell shares of its common stock in a
subscription offering as described in the Plan.
3. Effective Date. The Bank Merger shall not be effective until and
unless it is approved by the Director of the Office of Thrift Supervision (the
"OTS") after approval by at least two-thirds of the outstanding common stock of
the Mid-Tier Holding Company, including at least a majority of the shares held
by Minority Stockholders, and the Articles of Combination shall have been filed
with the OTS with respect to the Mid-Tier Merger.
4. Name. The name of the Resulting Institution shall be Trenton Savings
Bank FSB.
5. Offices. The main banking office of the Resulting Institution shall
be 134 Franklin Corner Road, Lawrenceville, New Jersey. The branch offices of
the Bank that were in lawful operation prior to the Merger shall be operated as
branch offices of the Bank.
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<PAGE>
6. Directors and Officers. The directors and officers of the Bank
immediately prior to the Effective Date shall be the directors and officers of
the Resulting Institution after the Effective Date.
7. Rights and Duties of the Resulting Institution. At the Effective
Date, Interim shall be merged with and into the Bank (the "Resulting
Institution"). The business of the Resulting Institution shall be that of a
federal savings bank as provided in its Charter. All assets, rights, interests,
privileges, powers, franchises and property (real, personal and mixed) of
Interim shall be automatically transferred to and vested in the Resulting
Institution by virtue of such Merger without any deed or other document of
transfer. The Resulting Institution, without any order or action on the part of
any court or otherwise and without any documents of assumption or assignment,
shall hold and enjoy all of the properties, franchises and interests, including
appointments, powers, designations, nominations and all other rights and
interests as the agent or other fiduciary in the same manner and to the same
extent as such rights, franchises, and interests and powers were held or enjoyed
by Interim. The Resulting Institution shall be responsible for all of the
liabilities, restrictions and duties of every kind and description of Interim,
immediately prior to the Bank Merger, including liabilities for all debts,
obligations and contracts of Interim, matured or unmatured, whether accrued,
absolute, contingent or otherwise and whether or not reflected or reserved
against on balance sheets, books or accounts or records of Interim. The
stockholders of the Bank shall possess all voting rights with respect to the
shares of stock of the Bank. All rights of creditors and other obligees and all
liens on property of Interim shall be preserved and shall not be released or
impaired.
8. Other Terms. All terms used in this Bank Merger Agreement shall,
unless defined herein, have the meanings set forth in the Plan. The Plan is
incorporated herein by this reference and made a part hereof to the extent
necessary or appropriate to effect and consummate the terms of the Bank Merger
Agreement and the Conversion.
IN WITNESS WHEREOF, the Bank and Interim have caused this Mid-Tier
Merger Agreement to be executed as of the date first above written.
Trenton Savings Bank FSB
(a federal savings bank)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
Trenton Interim Savings Bank
(a federal savings bank)
ATTEST:
_________________________________________ By:________________________________
Robert C. Hollenbeck, Corporate Secretary Wendell T. Breithaupt, President
C-2
<PAGE>
EXHIBIT D
CERTIFICATE OF INCORPORATION OF THE HOLDING COMPANY
C-3
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PEOPLES BANCORP, INC.
FIRST: The name of the Corporation is Peoples Bancorp, Inc.
(hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH:
A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is seventy-one million (71,000,000)
consisting of:
1. one million (1,000,000) shares of Preferred Stock, par value
one cent ($.01) per share (the "Preferred Stock"); and
2. seventy million (70,000,000) shares of Common Stock, par value
one cent ($.01) per share (the "Common Stock").
B. The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware (such certificate being hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then-outstanding shares of
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit. The number of votes which may be cast by
any record owner by virtue of the provisions hereof in respect of Common Stock
beneficially owned by such person owning shares in excess of the Limit shall be
a number equal to the total number of votes which a single record owner of all
Common Stock owned by such person would be entitled to cast, multiplied by a
fraction, the numerator of which is the number of shares of such class or series
which are both beneficially owned by such person and owned of record by such
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<PAGE>
record owner and the denominator of which is the total number of shares of
Common Stock beneficially owned by such person owning shares in excess of the
Limit.
2. The following definitions shall apply to this Section C of
this Article FOURTH:
(a) "Affiliate" shall have the meaning ascribed to it in
Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on
the date of filing of this Certificate of
Incorporation.
(b) "Beneficial ownership" shall be determined pursuant
to Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934 (or any
successor rule or statutory provision), or, if said
Rule 13d-3 shall be rescinded and there shall be no
successor rule or statutory provision thereto,
pursuant to said Rule 13d-3 as in effect on the date
of filing of this Certificate of Incorporation;
provided, however, that a person shall, in any event,
also be deemed the "beneficial owner" of any Common
Stock:
(1) which such person or any of its affiliates
beneficially owns, directly or indirectly;
or
(2) which such person or any of its affiliates
has (i) the right to acquire (whether such
right is exercisable immediately or only
after the passage of time), pursuant to any
agreement, arrangement or understanding (but
shall not be deemed to be the beneficial
owner of any voting shares solely by reason
of an agreement, contract, or other
arrangement with this Corporation to effect
any transaction which is described in any
one or more of clauses of Section A of
Article EIGHTH) or upon the exercise of
conversion rights, exchange rights,
warrants, or options or otherwise, or (ii)
sole or shared voting or investment power
with respect thereto pursuant to any
agreement, arrangement, understanding,
relationship or otherwise (but shall not be
deemed to be the beneficial owner of any
voting shares solely by reason of a
revocable proxy granted for a particular
meeting of stockholders, pursuant to a
public solicitation of proxies for such
meeting, with respect to shares of which
neither such person nor any such Affiliate
is otherwise deemed the beneficial owner);
or
(3) which is beneficially owned, directly or
indirectly, by any other person with which
such first mentioned person or any of its
Affiliates acts as a partnership, limited
partnership, syndicate or other group
pursuant to any agreement, arrangement or
understanding for the purpose of acquiring,
holding, voting or disposing of any shares
of capital stock of this Corporation;
and provided further, however, that (1) no Director
or Officer of this Corporation (or any Affiliate of
any such Director or Officer) shall, solely by reason
of any or all of such Directors or Officers acting in
their capacities as such, be deemed, for any purposes
hereof, to beneficially own any Common Stock
beneficially owned by another such Director or
Officer (or any Affiliate thereof), and (2) neither
any
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<PAGE>
employee stock ownership plan or similar plan of this
Corporation or any subsidiary of this Corporation,
nor any trustee with respect thereto or any Affiliate
of such trustee (solely by reason of such capacity of
such trustee), shall be deemed, for any purposes
hereof, to beneficially own any Common Stock held
under any such plan. For purposes of computing the
percentage beneficial ownership of Common Stock of a
person the outstanding Common Stock shall include
shares deemed owned by such person through
application of this subsection but shall not include
any other Common Stock which may be issuable by this
Corporation pursuant to any agreement, or upon
exercise of conversion rights, warrants or options,
or otherwise. For all other purposes, the outstanding
Common Stock shall include only Common Stock then
outstanding and shall not include any Common Stock
which may be issuable by this Corporation pursuant to
any agreement, or upon the exercise of conversion
rights, warrants or options, or otherwise.
(c) A "person" shall mean any individual, firm,
corporation, or other entity.
3. The Board of Directors shall have the power to construe and
apply the provisions of this section and to make all determinations necessary or
desirable to implement such provisions, including but not limited to matters
with respect to (i) determining the number of shares of Common Stock
beneficially owned by any person, (ii) determining whether a person is an
affiliate of another, (iii) determining whether a person has an agreement,
arrangement, or understanding with another as to the matters referred to in the
definition of beneficial ownership, (iv) determining the application of any
other definition or operative provision of the section to the given facts, or
(v) any other matter relating to the applicability or effect of this section.
4. The Board of Directors shall have the right to demand that
any person who is reasonably believed to beneficially own Common Stock in excess
of the Limit (or holds of record Common Stock beneficially owned by any person
in excess of the Limit) supply the Corporation with complete information as to
(i) the record owner(s) of all shares beneficially owned by such person who is
reasonably believed to own shares in excess of the Limit, (ii) any other factual
matter relating to the applicability or effect of this section as may reasonably
be requested of such person.
5. Except as otherwise provided by law or expressly provided
in this section, the presence, in person or by proxy, of the holders of record
of shares of capital stock of the Corporation entitling the holders thereof to
cast a majority of the votes (after giving effect, if required, to the
provisions of this section) entitled to be cast by the holders of shares of
capital stock of the Corporation entitled to vote shall constitute a quorum at
all meetings of the stockholders, and every reference in this Certificate of
Incorporation to a majority or other proportion of capital stock (or the holders
thereof) for purposes of determining any quorum requirement or any requirement
for stockholder consent or approval shall be deemed to refer to such majority or
other proportion of the votes (or the holders thereof) then entitled to be cast
in respect of such capital stock giving effect to the provisions of this Article
FOURTH.
6. Any constructions, applications, or determinations made by
the Board of Directors pursuant to this section in good faith and on the basis
of such information and assistance as was then reasonably available for such
purpose shall be conclusive and binding upon the Corporation and its
stockholders.
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<PAGE>
7. In the event any provision (or portion thereof) of this
section shall be found to be invalid, prohibited or unenforceable for any
reason, the remaining provisions (or portions thereof) of this section shall
remain in full force and effect, and shall be construed as if such invalid,
prohibited or unenforceable provision had been stricken herefrom or otherwise
rendered inapplicable, it being the intent of this Corporation and its
stockholders that such remaining provision (or portion thereof) of this section
remain, to the fullest extent permitted by law, applicable and enforceable as to
all stockholders, including stockholders owning an amount of stock over the
Limit, notwithstanding any such finding.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its Directors and stockholders:
A. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In
addition to the powers and authority expressly conferred upon them by
statute or by this Certificate of Incorporation or the Bylaws of the
Corporation, the Directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by
the Corporation.
B. The Directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
C. Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may
not be effected by any consent in writing by such stockholders.
D. Special meetings of stockholders of the Corporation may
be called only by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directorships
whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board
for adoption (the "Whole Board") or as otherwise provided in the
Bylaws.
SIXTH:
A. The number of Directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a majority of the
Whole Board. The Directors shall be divided into three classes, with the term of
office of the first class to expire at the first annual meeting of stockholders,
the term of office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third class to
expire at the annual meeting of stockholders two years thereafter with each
director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders following such initial
classification and election, Directors elected to succeed those Directors whose
terms expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election with each
director to hold office until his or her successor shall have been duly elected
and qualified.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of Directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
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<PAGE>
office or other cause may be filled only by a majority vote of the Directors
then in office, though less than a quorum, and Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been chosen expires. No decrease
in the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
C. Advance notice of stockholder nominations for the election of
Directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
D. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least 80 percent of the voting power of all of the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of Directors (after giving effect to the provisions of
Article FOURTH of this Certificate of Incorporation ("Article FOURTH")), voting
together as a single class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of
the Bylaws of the Corporation by the Board of Directors shall require the
approval of a majority of the Whole Board. The stockholders shall also have
power to adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that, in addition to any vote of the holders of any class or series of
stock of the Corporation required by law or by this Certificate of
Incorporation, the affirmative vote of the holders of at least 80 percent of the
voting power of all of the then-outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH), voting together as a single
class, shall be required to adopt, amend or repeal any provisions of the Bylaws
of the Corporation.
EIGHTH:
A. In addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly provided in this
section:
1. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder, or any Affiliate of any Interested
Stockholder, of any assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value (as hereinafter defined) equaling or
exceeding 25% or more of the combined assets of the Corporation and its
Subsidiaries; or
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value (as hereinafter defined)
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equaling or exceeding 25% of the combined Fair Market Value of the
then-outstanding common stock of the Corporation and its Subsidiaries,
except to an employee benefit plan of the Corporation or any Subsidiary
thereof; or
4. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of an Interested Stockholder;
or
5. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportional share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
an Interested Stockholder or any Affiliate of an Interested
Stockholder;
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then-outstanding shares of stock of the Corporation entitled to
vote in the election of Directors (the "Voting Stock") (after giving effect to
the provisions of Article FOURTH), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or by any other
provisions of this Certificate of Incorporation or any Preferred Stock
Designation or in any agreement with any national securities exchange or
otherwise.
The term "Business Combination" as used in this Article EIGHTH shall
mean any transaction which is referred to in any one or more of paragraphs 1
through 5 of Section A of this Article EIGHTH.
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only the affirmative vote of the majority of the outstanding
shares of capital stock entitled to vote, or such vote as is required by law or
by this Certificate of Incorporation, if, in the case of any Business
Combination that does not involve any cash or other consideration being received
by the stockholders of the Corporation solely in their capacity as stockholders
of the Corporation, the condition specified in the following paragraph 1 is met
or, in the case of any other Business Combination, all of the conditions
specified in either of the following paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by
two-thirds of the Disinterested Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the
Business Combination of consideration other than cash
to be received per share by the holders of Common
Stock in such Business Combination shall at least be
equal to the higher of the following:
(1) (if applicable) the Highest Per Share Price
(as hereinafter defined), including any
brokerage commissions, transfer taxes and
soliciting dealers' fees, paid
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by the Interested Stockholder or any of its
Affiliates for any shares of Common Stock
acquired by it (i) within the two-year
period immediately prior to the first public
announcement of the proposal of the Business
Combination (the "Announcement Date"), or
(ii) in the transaction in which it became
an Interested Stockholder, whichever is
higher.
(2) the Fair Market Value per share of Common
Stock on the Announcement Date or on the
date on which the Interested Stockholder
became an Interested Stockholder (such
latter date is referred to in this Article
EIGHTH as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the
Business Combination of consideration other than cash
to be received per share by holders of shares of any
class of outstanding Voting Stock other than Common
Stock shall be at least equal to the highest of the
following (it being intended that the requirements of
this subparagraph (b) shall be required to be met
with respect to every such class of outstanding
Voting Stock, whether or not the Interested
Stockholder has previously acquired any shares of a
particular class of Voting Stock):
(1) (if applicable) the Highest Per Share Price
(as hereinafter defined), including any
brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the
Interested Stockholder for any shares of
such class of Voting Stock acquired by it
(i) within the two-year period immediately
prior to the Announcement Date, or (ii) in
the transaction in which it became an
Interested Stockholder, whichever is higher;
(2) (if applicable) the highest preferential
amount per share to which the holders of
shares of such class of Voting Stock are
entitled in the event of any voluntary or
involuntary liquidation, dissolution or
winding up of the Corporation; and
(3) the Fair Market Value per share of such
class of Voting Stock on the Announcement
Date or on the Determination Date, whichever
is higher.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock
(including Common Stock) shall be in cash or in the
same form as the Interested Stockholder has paid for
shares of such class of Voting Stock. If the
Interested Stockholder has previously paid for shares
of any class of Voting Stock with varying forms of
consideration, the form of consideration to be
received per share by holders of shares of such class
of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class
of Voting Stock previously acquired by the Interested
Stockholder. The price determined in accordance with
subparagraph B.2 of this Article EIGHTH shall be
subject to appropriate adjustment in the event of any
stock dividend, stock split, combination of shares or
similar event.
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(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation
of such Business Combination: (1) except as approved
by a majority of the Disinterested Directors, there
shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding stock
having preference over the Common Stock as to
dividends or liquidation; (2) there shall have been
(i) no reduction in the annual rate of dividends paid
on the Common Stock (except as necessary to reflect
any subdivision of the Common Stock), except as
approved by a majority of the Disinterested
Directors, and (ii) an increase in such annual rate
of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock,
unless the failure to so increase such annual rate is
approved by a majority of the Disinterested
Directors; and (3) neither such Interested
Stockholder or any of its Affiliates shall have
become the beneficial owner of any additional shares
of Voting Stock except as part of the transaction
which results in such Interested Stockholder becoming
an Interested Stockholder.
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Business
Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall be mailed to stockholders of the
Corporation at least 30 days prior to the
consummation of such Business Combination (whether or
not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent
provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture,
a pool, a joint stock company, a trust, an unincorporated organization
or similar company, a syndicate or any other group formed for the
purpose of acquiring, holding or disposing of securities.
2. "Interested Stockholder" shall mean any person (other than
the Corporation or any holding company or Subsidiary thereof) who or
which:
(a) is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the outstanding Voting
Stock; or
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(b) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date
in question was the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the then-outstanding
Voting Stock; or
(c) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
3. For purposes of this Article EIGHTH, "beneficial ownership"
shall be determined in the manner provided in Section C of Article
FOURTH hereof.
4. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
the date of filing of this Certificate of Incorporation.
5. "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Interested Stockholder set forth in paragraph 2 of this section, the
term "Subsidiary" shall mean only a corporation of which a majority of
each class of equity security is owned, directly or indirectly, by the
Corporation.
6. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any Director who is
thereafter chosen to fill any vacancy of the Board of Directors or who
is elected and who, in either event, is unaffiliated with the
Interested Stockholder and in connection with his or her initial
assumption of office is recommended for appointment or election by a
majority of Disinterested Directors then on the Board of Directors.
7. "Fair Market Value" means: (a) in the case of stock, the
highest closing sales price of the stock during the 30-day period
immediately preceding the date in question of a share of such stock on
the National Association of Securities Dealers Automated Quotation
System or any system then in use, or, if such stock is admitted to
trading on a principal United States securities exchange registered
under the Securities Exchange Act of 1934, Fair Market Value shall be
the highest sales price reported during the 30-day period preceding the
date in question, or, if no such quotations are available, the Fair
Market Value on the date in question of a share of such stock as
determined by the Board of Directors in good faith, in each case with
respect to any class of stock, appropriately adjusted for any dividend
or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater
number of shares of such stock or any combination or reclassification
of outstanding shares of such stock into a smaller number of shares of
such stock, and (b) in the case of property other than cash or stock,
the Fair Market Value of such property on the date in question as
determined by the Board of Directors in good faith.
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8. Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate adjustment
for any dividend or distribution in shares of such stock or any stock
split or reclassification of outstanding shares of such stock into a
greater number of shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller
number of shares of such stock.
9. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in subparagraphs (a) and (b) of paragraph 2 of
Section B of this Article EIGHTH shall include the shares of Common
Stock and/or the shares of any other class of outstanding Voting Stock
retained by the holders of such shares.
D. A majority of the Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry (a) whether a person is an
Interested Stockholder; (b) the number of shares of Voting Stock beneficially
owned by any person; (c) whether a person is an Affiliate or Associate of
another; and (d) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value equaling or exceeding 25% of the
combined Fair Market Value of the common stock of the Corporation and its
Subsidiaries. A majority of the Directors shall have the further power to
interpret all of the terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
F. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least 80 percent of the voting power of all of the
then-outstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when evaluating any
offer of another Person (as defined in Article EIGHTH hereof) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge
or consolidate the Corporation with another corporation or entity or (C)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, may, in connection with the exercise of its judgment
in determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and those of its
Subsidiaries (as defined in Article EIGHTH hereof); on the communities in which
the Corporation and its Subsidiaries operate or are located; on the ability of
the Corporation to fulfill its corporate objectives as a savings bank holding
company and on the ability of its subsidiary savings bank to fulfill the
objectives of a stock savings bank under applicable statutes and regulations.
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TENTH:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has
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not met any applicable standard for indemnification set forth in the Delaware
General Corporation Law. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such suit that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article TENTH or otherwise shall be on the
Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH: A Director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the Director derived an
improper personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.
TWELFTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
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notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80 percent of the voting power of
all of the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors (after giving effect to
the provisions of Article FOURTH), voting together as a single class, shall be
required to amend or repeal this Article TWELFTH, Section C of Article FOURTH,
Sections C or D of Article FIFTH, Article SIXTH, Article SEVENTH, or Article
EIGHTH.
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I, THE UNDERSIGNED, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereto set my hand this 16th day of December, 1997.
/s/ Edward A. Quint
-------------------
Edward A. Quint
Incorporator
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EXHIBIT E
BYLAWS OF THE HOLDING COMPANY
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PEOPLES BANCORP, INC.
BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of Directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within thirteen (13) months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series of
preferred stock of the Corporation, special meetings of stockholders of the
Corporation may be called by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of Directors which the Corporation
would have if there were no vacancies on the Board of Directors (hereinafter the
"Whole Board").
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
At any meeting of the stockholders, the holders of a majority of all of
the shares of the stock entitled to vote at the meeting, present in person or by
proxy (after giving effect to the Article FOURTH of the Corporation's
Certificate of Incorporation), shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law. Where a separate vote by a class or classes is required, a
majority of the shares of such class or classes present in person or represented
by proxy shall constitute a quorum entitled to take action with respect to that
vote on that matter.
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If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the meeting to another place,
date, or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, then except as otherwise required by law,
those present at such adjourned meeting shall constitute a quorum, and all
matters shall be determined by a majority of the votes cast at such meeting.
Section 5. Organization.
Such person as the Board of Directors may have designated or, in the
absence of such a person, the Chairman of the Board of the Corporation or, in
his or her absence, the Chief Executive Officer or, in his or her absence, such
person as may be chosen by the holders of a majority of the shares entitled to
vote who are present, in person or by proxy, shall call to order any meeting of
the stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such person
as the chairman appoints.
Section 6. Conduct of Business.
(a) The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
or her in order. The date and time of the opening and closing of the polls for
each matter upon which the stockholders will vote at the meeting shall be
announced at the meeting.
(b) At any annual meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting: (i)
by or at the direction of the Board of Directors or: (ii) by any stockholder of
the Corporation who is entitled to vote with respect thereto and who complies
with the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the business must
relate to a proper subject matter for stockholder action and the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive offices of the Corporation not less than
ninety (90) days prior to the date of the annual meeting; provided, however,
that in the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter such
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (ii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder; and (iv) any material
interest of such stockholder in such business. Notwithstanding anything in these
Bylaws to the contrary, no business shall be brought before or conducted at an
annual meeting except in accordance with the provisions of this Section 6(b).
The Officer of the Corporation or other person presiding over the annual meeting
shall, if the facts so warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 6(b) and, if he or
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she should so determine, he or she shall so declare to the meeting and any such
business so determined to be not properly brought before the meeting shall not
be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
(c) Only persons who are nominated in accordance with the
procedures set forth in these Bylaws shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders at which Directors are to
be elected only: (i) by or at the direction of the Board of Directors or; (ii)
by any stockholder of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the notice procedures set forth in
this Section 6(c). Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made by timely notice in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice shall
be delivered or mailed to and received at the principal executive offices of the
Corporation not less than ninety (90) days prior to the date of the meeting;
provided, however, that in the event that less than one hundred (100) days'
notice or prior disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth: (i) as to each person whom such
stockholder proposes to nominate for election or re-election as a Director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for the election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934 (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected); and (ii) as to
the stockholder giving notice (x) the name and address, as they appear on the
Corporation's books, of such stockholder and (y) the class and number of shares
of the Corporation's capital stock that are beneficially owned by such
stockholder. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a Director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a Director of the Corporation unless nominated in accordance
with the provisions of this Section 6(c). The Officer of the Corporation or
other person presiding at the meeting shall, if the facts so warrant, determine
that a nomination was not made in accordance with such provisions and, if he or
she should so determine, he or she shall declare to the meeting and the
defective nomination shall be disregarded.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of Directors but excepting where
otherwise required by law or by the governing documents of the Corporation, may
be by a voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or by his or her proxy, a stock vote shall be
taken.
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Every stock vote shall be taken by ballots, each of which shall state the name
of the stockholder or proxy voting and such other information as may be required
under the procedure established for the meeting. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting shall appoint one or more inspectors to act
at the meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by the Certificate of Incorporation or by law, all
other matters shall be determined by a majority of the votes present and cast at
a properly called meeting of stockholders.
Section 8. Stock List.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
Subject to the rights of the holders of any class or series of
preferred stock of the Corporation, any action required or permitted to be taken
by the stockholders of the Corporation must be effected at an annual or special
meeting of stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number and Term of Office.
The business and affairs of the Corporation shall be under the
direction of its Board of Directors. The number of Directors who shall
constitute the Whole Board shall be such number as the Board of Directors shall
from time to time have designated by resolution. The Board of Directors shall
annually elect a Chairman of the Board from among its members who shall, when
present, preside at its meetings.
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The Directors, other than those who may be elected by the holders of
any class or series of Preferred Stock, shall be divided, with respect to the
time for which they severally hold office, into three classes, with the term of
office of the first class to expire at the first annual meeting of stockholders,
the term of office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third class to
expire at the annual meeting of stockholders two years thereafter, with each
Director to hold office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders, commencing with the first
annual meeting, Directors elected to succeed those Directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election, with each Director to hold
office until his or her successor shall have been duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any class or series of
preferred stock, and unless the Board of Directors otherwise determines, newly
created Directorships resulting from any increase in the authorized number of
Directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the Directors then in office, though
less than a quorum, and Directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such Director's
successor shall have been duly elected and qualified. No decrease in the number
of authorized Directors constituting the Board shall shorten the term of any
incumbent Director.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by a majority
of the Directors then in office (rounded up to the nearest whole number) or by
the Chairman of the Board or by the President and Chief Executive Officer and
shall be held at such place, on such date, and at such time as they or he or she
shall fix. Notice of the place, date, and time of each such special meeting
shall be given to each Director by whom it is not waived by mailing written
notice not less than five (5) days before the meeting or be telegraphing or
telexing or by facsimile transmission of the same not less than twenty-four (24)
hours before the meeting. Unless otherwise indicated in the notice thereof, any
and all business may be transacted at a special meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a majority of the Whole Board
shall constitute a quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.
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<PAGE>
Section 6. Participation in Meetings By Conference Telephone
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted
in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the Directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 8. Powers.
The Board of Directors may, except as otherwise required by law,
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, including, without limiting the generality of the
foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with
law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such
form as it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any Officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any Officer
upon any other person for the time being;
(5) To confer upon any Officer of the Corporation the power to
appoint, remove and suspend subordinate Officers, employees and agents;
(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for Directors, Officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for Directors, Officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent
with these Bylaws, for the management of the Corporation's business and affairs.
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<PAGE>
Section 9. Compensation of Directors.
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committee of the Board of Directors.
The Board of Directors, by a vote of a majority of the Whole Board, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a Director or Directors to serve as the member or members, designating, if
it desires, other Directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
Law if the resolution which designates the committee or a supplemental
resolution of the Board of Directors shall so provide. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or she or they constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum, and all matters shall be determined by a majority vote of
the members present, subject to a quorum being present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filled with the minutes of the
proceedings of such committee.
Section 3. Nominating Committee.
The Board of Directors shall appoint a Nominating Committee of the
Board, consisting of not less than three (3) members, one of which shall be the
Chairman of the Board. The Nominating Committee shall have authority (a) to
review any nominations for election to the Board of Directors made by a
stockholder of the Corporation pursuant to Section 6(c) (ii) of Article I of
these Bylaws in order to determine compliance with such By-law provision and (b)
to recommend to the Whole Board nominees for election to the Board of Directors
to replace those Directors whose terms expire at the annual meeting of
stockholders next ensuing.
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<PAGE>
ARTICLE IV - OFFICERS
Section 1. Generally.
(a) The Board of Directors as soon as may be practicable after
the annual meeting of stockholders shall choose a Chairman of the Board, a
President and Chief Executive Officer, one or more Vice Presidents, and a
Secretary and from time to time may choose such other Officers as it may deem
proper. The Chairman of the Board shall be chosen from among the Directors. Any
number of offices may be held by the same person.
(b) The term of office of all Officers shall be until the next
annual election of Officers and until their respective successors are chosen,
but any Officer may be removed from office at any time by the affirmative vote
of two-thirds of the authorized number of Directors then constituting the Board
of Directors, or removed by an Officer pursuant to authority delegated by the
Board to such Officer in accordance with Section 8(5) of Article II
(c) All Officers chosen by the Board of Directors shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article IV. Such Officers shall also
have such powers and duties as from time to time may be conferred by the Board
of Directors or by any committee thereof.
Section 2. Chairman of the Board.
The Chairman of the Board shall, subject to the provisions of these
Bylaws and to the direction of the Board of Directors, serve in a general
executive capacity and, when present, shall preside at all meetings of the Board
of Directors. The Chairman of the Board shall perform all duties and have all
powers which are commonly incident to the office of Chairman of the Board or
which are delegated to him or her by the Board of Directors. He or she shall
have power to sign all stock certificates, contracts and other instruments of
the Corporation which are authorized.
Section 3. President and Chief Executive Officer.
The President and Chief Executive Officer (the "President") shall have
general responsibility for the management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the offices of President and Chief Executive
Officer or which are delegated to him or her by the Board of Directors. Subject
to the direction of the Board of Directors, the President shall have power to
sign all stock certificates, contracts and other instruments of the Corporation
which are authorized and shall have general supervision of all of the other
Officers (other than the Chairman of the Board), employees and agents of the
Corporation.
Section 4. Vice President.
The Vice President or Vice Presidents shall perform the duties of the
President in his or her absence or during his disability to act. In addition,
the Vice Presidents shall perform the duties and exercise the powers usually
incident to their respective offices and/or such other duties and powers as may
be properly assigned to them by the Board of Directors, the Chairman of the
Board or the President. A Vice President or Vice Presidents may be designated as
Executive Vice President or Senior Vice President
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<PAGE>
or any such designation as the Board of Directors, Chairman of the Board or
President deems appropriate.
Section 5. Secretary.
The Secretary or an Assistant Secretary shall issue notices of
meetings, shall keep their minutes, shall have charge of the seal and the
corporate books, shall perform such other duties and exercise such other powers
as are usually incident to such offices and/or such other duties and powers as
are properly assigned thereto by the Board of Directors, the Chairman of the
Board or the President.
Section 6. Assistant Secretaries and Other Officers.
The Board of Directors may appoint one or more Assistant Secretaries
and such other Officers who shall have such powers and shall perform such duties
as are provided in these Bylaws or as may be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
Section 7. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or
any Officer of the Corporation authorized by the President shall have power to
vote and otherwise act on behalf of the Corporation, in person or by proxy, at
any meeting of stockholders of or with respect to any action of stockholders of
any other corporation in which the Corporation may hold securities and otherwise
to exercise any and all rights and powers which the Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by, or in
the name of the Corporation by, the Chairman of the Board or the President, and
by the Secretary or an Assistant Secretary, or any Treasurer or Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
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<PAGE>
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required by law,
all notices required to be given to any stockholder, Director, Officer, employee
or agent shall be in writing and may in every instance be effectively given by
hand delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram or other
courier. Any such notice shall be addressed to such stockholder, Director,
Officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
mailgram or other courier, shall be the time of the giving of the notice.
Section 2. Waivers.
A written waiver of any notice, signed by a stockholder, Director,
Officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, Director, Officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
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ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any Officer or
Officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name
of the Corporation, which seal shall be in the charge of the Secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Comptroller or by an Assistant Secretary or
an assistant to the Comptroller.
Section 3. Reliance upon Books, Reports and Records.
Each Director, each member of any committee designated by the Board of
Directors, and each Officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its Officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such Director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
Section 5. Time Periods.
In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE VIII - AMENDMENT
The Board of Directors may by a two-thirds vote amend, alter or repeal
these Bylaws at any meeting of the Board, provided notice of the proposed change
is given not less than two days prior to the meeting. The stockholders shall
also have power to amend, alter or repeal these Bylaws at any meeting of
stockholders, provided notice of the proposed change was given in the Notice of
the Meeting; provided, however, that, notwithstanding any other provisions of
these Bylaws or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock Designation or these Bylaws, the
affirmative votes of the holders of at least 80% of the voting power of all the
then-outstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal any provisions of these Bylaws.
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Exhibit 8.1
[Letterhead of Luse Lehman Gorman Pomerenk & Schick]
February 4, 1998
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
Ladies and Gentlemen:
You have requested this firm's opinion regarding certain federal income
tax consequences which will result from the conversion of Peoples Bancorp,
M.H.C., from the two-tier holding company structure to the stock holding company
form, as effectuated pursuant to the three integrated transactions described
below.
In connection therewith, we have made such investigations as we have
deemed relevant or necessary for the purpose of this opinion. In our
examination, we have assumed the authenticity of original documents, the
accuracy of copies and the genuineness of signatures. We have further assumed
the absence of adverse facts not apparent from the face of the instruments and
documents we examined and have relied upon the accuracy of the factual matters
set forth in the Plan of Conversion and Reorganization (the "Plan") and the
Registration Statement filed by Peoples Bancorp, Inc. (the "Company") with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended, and the Application for Conversion on Form AC filed with the office of
thrift Supervision (the "OTS").
Our opinion is based upon the existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code) and regulations thereunder (the
"Treasury Regulations"), and upon current Internal Revenue Service ("IRS")
published rulings and existing court decisions, any of which could be changed at
any time. Any such changes may be retroactive and could significantly modify the
statements and opinions expressed herein. Similarly, any change in the facts and
assumptions stated below, upon which this opinion is based, could modify the
conclusions. This opinion is as of the date hereof, and we disclaim any
obligation to advise you of any change in any matter considered herein after the
date hereof.
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 2
We, of course, opine only as to the matters we expressly set forth, and
no opinions should be inferred as to any other matters or as to the tax
treatment of the transactions that we do not specifically address. We express no
opinion as to other federal 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 specifically express no opinion concerning tax matters relating to
the Plan under state and local tax laws and under Federal income tax laws except
on the basis of the documents and assumptions described above. We note that in
December 1994, the IRS published Revenue Procedure 94-76 which states that the
IRS will not issue private letter rulings with respect to a transaction in which
one corporation owns stock in a second corporation, the first corporation is not
the 80 percent distributee of the second corporation and the two corporations
are merged. The IRS has assumed this "no-rule" position to study whether such
downstream mergers circumvent the purpose behind the repeal of General Utilities
& Operating Co. v. Helvering, 296 U.S. 200 (1935). If the IRS were to conclude
that such mergers circumvent the repeal of General Utilities, the IRS could
issue regulations which could have the effect of taxing to the merging
corporation, as of the effective time of the merger, the fair market value of
the assets of such corporation over its basis in such assets. Accordingly, the
issuance of such regulations could significantly modify the opinions expressed
herein.
For purposes of this opinion, we are relying on the opinion of FinPro
the appraiser of the Company, to the effect that the subscription rights
distributed to Eligible Account Holders and Supplemental Eligible Account
Holders have no value; and on the representations provided to us by the Mutual
Holding Company and the Bank as described in the Affidavit of the President of
the Mutual Holding Company and the Bank, incorporated herein by reference.
The Proposed Transactions
Based solely upon our review of the documents described above, and in
reliance upon such documents, we understand that the relevant facts are as
follows. On August 3, 1995, Trenton Savings Bank ("Trenton"), a federally
chartered mutual savings bank, reorganized into the mutual holding company form
of organization. To accomplish this transaction, Trenton organized Trenton
Savings Bank, FSB (the "Bank") as a wholly-owned subsidiary. Trenton then
transferred virtually all of its assets and liabilities to the Bank in exchange
for 5,796,000 shares of common stock, par value $.10 per share ("Bank Common
Stock") of the Bank, and reorganized itself into "Peoples Bancorp, M.H.C." (the
"Mutual Holding Company").
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 3
In connection with the foregoing transaction, the Bank raised
approximately $30 million by selling 3,214,160 shares of Bank Common Stock at
$10.00 per share to the public (the "Minority Stockholders"). After the
conclusion of the sale to Minority Stockholders, the Mutual Holding Company held
64.14% of the Bank's Common Stock outstanding. The shares of Bank Common Stock
that were sold to the Minority Stockholders constituted approximately 35.86% of
the issued and outstanding shares of the Bank Common Stock. The reorganization
of Trenton into the mutual holding company form of organization, and the sale to
the Minority Stockholders of stock in the Bank, are sometimes herein
collectively referred to as the "MHC Reorganization." On June 23, 1997 the Bank
reorganized into a two-tier holding company form of organization whereby Peoples
Bancorp, Inc., a federally-chartered mutual holding company with the power to
issue stock ("Mid-Tier Holding Company") became the parent of the Bank and the
Mid-Tier Holding Company became the majority owned subsidiary of the Mutual
Holding Company. To accomplish this Transaction, the Bank chartered the Mid-Tier
Holding Company as a wholly owned subsidiary and the Mid-Tier Holding Company
chartered an interim ("Interim") federal stock savings bank as a wholly owned
subsidiary. Interim then merged into the Bank with the Bank's shareholders,
including the Mutual Holding Company, receiving shares of the Mid-Tier Holding
Company in exchange for their shares of Bank Common Stock. The shares of the
Mid-Tier Holding Company owned by the Bank were canceled.
Following the reorganization to the two-tier holding company form of
organization on September 24, 1997, the Mutual Holding Company adopted the Plan
of Conversion and Reorganization ("Plan") providing for the conversion of the
Mutual Holding Company into the capital stock form of organization (as
converted, the "Holding Company").
At the present time, three transactions referred to as the "MHC
Merger", the "Mid-Tier Merger", and the "Bank Merger" are being undertaken.
Pursuant to the Plan, the conversion ("Conversion") will be effected in the
following steps, each of which will be completed contemporaneously.
(i) The Bank will establish the Company as a first-tier Delaware chartered
stock holding company subsidiary.
(ii) The Company will charter an interim federal association ("Interim
Savings Bank").
(iii)The Mutual Holding Company will merge with and into the Mid-Tier
Holding Company (the "MHC Merger"), shares of Mid-Tier common stock
("Mid-Tier
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Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 4
Common Stock") held by the Mutual Holding Company will be canceled and
each Eligible Account Holder and Supplemental Eligible Account Holder
will receive an interest in a liquidation account of the Mid-Tier
Holding Company in exchange for such person's interest in the Mutual
Holding Company.
(iv) The Mid-Tier Holding Company will convert to a federal interim stock
savings bank (as converted, the entity shall continue to be referred
to as the "Mid-Tier Holding Company") and will merge with and into the
Bank (the "Mid-Tier Merger") with the Bank as the resulting entity and
(i) Minority Stockholders will constructively receive shares of Bank
Common Stock in exchange for their Mid- Tier Common Stock and (ii)
each Eligible Account Holder and Supplemental Eligible Account Holder
will receive an interest in a liquidation account ("Liquidation
Account") of the Bank in exchange for such person's interest in the
Mid-Tier Holding Company.
(v) Contemporaneously with the Mid-Tier Merger, Interim Savings Bank will
merge with and into the Bank with the Bank as the surviving entity
(the "Bank Merger"). Constructive shareholders of the Bank (i.e.,
Minority Stockholders immediately prior to the Conversion) will
exchange the shares of Bank Common Stock that they constructively
received in the Mid-Tier Merger for Company common stock ("Company
Common Stock") pursuant to the exchange ratio ("Exchange Ratio").
(vi) Contemporaneously with the Bank Merger, the Company will sell Company
Common Stock in the Offering.
In the MHC Merger, a liquidation account is being established by the
Mid- Tier Holding Company for the benefit of Eligible Account Holders and
Supplemental Account Holders. Pursuant to Section 19 of the Plan, the
liquidation account will be equal to the greater of (a) the sum of (i) the
percentage of the outstanding shares of the common stock of the Mid-Tier Holding
Company owned by the Mutual Holding Company multiplied by the Mid-Tier Holding
Company's total stockholders' equity as reflected in the latest statement of
financial condition contained in the final Prospectus utilized in the
Conversion, and (ii) the restricted retained earnings account that reflects
certain dividends waived by the Mutual Holding Company; or (b) the retained
earnings of the Bank at the time the Bank underwent its mutual holding company
reorganization. In the Mid-Tier Merger, the liquidation account established at
the Mid-Tier Holding Company will become a part of the Liquidation Account at
the Bank.
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Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 5
The Plan complies with the provisions of Subpart A of 12 C.F.R. Part
563b, which sets forth the OTS regulations for conversion of mutual institutions
to stock form. The Plan also complies with the provisions of 12 C.F.R. Section
575.12(a), which is the OTS regulation governing the conversion of mutual
holding companies to stock form.
Upon the date of consummation of the Bank Merger ("the Effective
Date"), Interim Savings Bank will be merged with and into the Bank and Interim
Savings Bank will cease to exist as a legal entity. All of the then outstanding
shares of Bank Common Stock will be converted into and become shares of Company
Common Stock pursuant to the Exchange Ratio that ensures that after the
Conversion and before giving effect to Minority Stockholders' purchases in the
Offering, receipt of cash in lieu of fractional shares, and shares for which
dissenters' rights have been exercised, Minority Stockholders will own the same
aggregate percentage of the Company's Common Stock as they currently own of the
Bank Common Stock. The common stock of the Interim Savings Bank owned by the
Company prior to the Bank Merger will be converted into and become shares of
common stock of the Bank on the Effective Date. The Company Common Stock held by
the Bank immediately prior to the Effective Date will be canceled on the
Effective Date. Immediately following the Bank Merger, additional shares of
Company Common Stock will be sold to depositors and former shareholders of the
Bank and to members of the public in the Offering.
As a result of the MHC Merger, the Mid-Tier Merger and the Bank Merger,
the Company will be a publicly held corporation, will register the Company
Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and will become subject to the rules and
regulations thereunder and file periodic reports and proxy statements with the
SEC. The Bank will become a wholly owned subsidiary of the Company and will
continue to carry on its business and activities as conducted immediately prior
to the Conversion.
The stockholders of the Company will be the former Minority
Stockholders of the Mid-Tier Holding Company immediately prior to the MHC Merger
(i.e., all stockholders of the Bank, excluding the Mutual Holding Company), plus
those persons who purchase shares of Company Common Stock in the Offering.
Nontransferable rights to subscribe for the Company Common Stock have been
granted, in order of priority, to depositors of the Bank who have account
balances of $50.00 or more as of the close of business on August 31, 1996
("Eligible Account Holders"), the Bank's tax-qualified employee plans ("Employee
Plans"), depositors of the Bank who have account balances of $50.00 or more as
of the close of business on December 31, 1997 ("Supplemental Eligible Account
Holders"), other members of the Bank (other than Eligible Account Holders and
Supplemental Eligible Account Holders) ("Other Members"), and owners
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Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 6
of shares of Bank Common Stock other than the Mutual Holding Company ("Minority
Stockholders"). Subscription rights are nontransferable. The Company will also
offer shares of Company Common Stock not subscribed for in the subscription
offering, if any, for sale in a community offering to certain members of the
general public.
Opinions
Based on the foregoing description of the MHC Merger, the Mid-Tier
Merger and the Bank Merger, and subject to the qualifications and limitations
set forth in this letter, we are of the opinion that:
1. The MHC Merger qualifies as a tax-free reorganization within the
meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(1)(A) of the Code.)
2. The exchange of the members' equity interests in the Mutual Holding
Company for interests in a liquidation account established at the Mid-Tier
Holding Company in the MHC Merger will satisfy the continuity of interest
requirement of Section 1.368-1(b) of the Income Tax Regulations (cf. Rev. Rul.
69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).
3. The Mutual Holding Company will not recognize any gain or loss on
the transfer of its assets to the Mid-Tier Holding Company in exchange for an
interest in a liquidation account established in the Mid-Tier Holding Company
for the benefit of the Mutual Holding Company's members who remain depositors of
the Bank. (Section 361 of the Code.)
4. No gain or loss will be recognized by the Mid-Tier Holding Company
upon the receipt of the assets of the Mutual Holding Company in the MHC Merger
in exchange for the transfer to the members of the Mutual Holding Company of an
interest in the liquidation account in the Mid-Tier Holding Company. (Section
1032(a) of the Code.)
5. The basis of the assets of Mutual Holding Company (other than stock
in the Mid-Tier Holding Company) to be received by Mid-Tier Holding Company will
be the same as the basis of such assets in the hands of the Mutual Holding
Company immediately prior to the transfer. (Section 362(b) of the Code.)
6. The holding period of the assets of the Mutual Holding Company
(other than stock in Mid-Tier Holding Company) to be received by Mid-Tier
Holding Company will include the
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Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 7
holding period of those assets in the hands of the Mutual Holding Company.
(Section 1223(2) of the Code.)
7. Mutual Holding Company members will recognize no gain or loss upon
the receipt of an interest in the liquidation account in Mid-Tier Holding
Company for their membership interest in Mutual Holding Company. (Section 354(a)
of the Code.)
8. The conversion of the Mid-Tier Holding Company to a federally
chartered interim stock savings bank will constitute a mere change in identity,
form or place of organization within the meaning of Section 368(a)(1)(F) of the
Code.
9. The Mid-Tier Merger qualifies as a tax-free reorganization within
the meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(1)(A) of the
Code.)
10. The exchange of the interest in the Mid-Tier Holding Company's
liquidation account for interests in a Liquidation Account established at the
Bank in the Mid-Tier Merger will satisfy the continuity of interest requirement
of Section 1.368-1(b) of the Income Tax Regulations (cf. Rev. Rul. 69-3, 1969-1
C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).
11. The Mid-Tier Holding Company will not recognize any gain or loss on
the transfer of its assets to the Bank in exchange for an interest in a
Liquidation Account established in the Bank for the benefit of those persons who
remain depositors of the Bank and the Bank's assumption of the Mid-Tier Holding
Company's liabilities, if any. (Section 361 of the Code.)
12. No gain or loss will be recognized by the Bank upon the receipt of
the assets of the Mid-Tier Holding Company in the Mid-Tier Merger (Section
1032(a) of the Code).
13. The basis of the assets of the Mid-Tier Holding Company (other than
stock in the Bank) to be received by Bank will be the same as the basis of such
assets in the hands of the Mid-Tier Holding Company immediately prior to the
transfer. (Section 362(b) of the Code.)
14. The holding period of the assets of the Mid-Tier Holding Company
(other than stock in Bank) to be received by Bank will include the holding
period of those assets in the hands of the Mid-Tier Holding Company immediately
prior to the transfer. (Section 1223(2) of the Code.)
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 8
15. Persons who have an interest in the liquidation account established
in the Mid -Tier Holding Company (i.e., former members of the Mutual Holding
Company) will recognize no gain or loss upon the receipt of an interest in the
Liquidation Account in the Bank in exchange for their interest in the Mid-Tier
Holding Company liquidation account. (Section 354(a) of the Code).
16. The Mid-Tier Holding Company shareholders will not recognize any
gain or loss upon their constructive exchange of Mid-Tier Holding Company Common
Stock for Bank Common Stock.
In addition, we are of the opinion that, based on the foregoing:
17. The Bank Merger qualifies as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code, pursuant to Section 368(a)(2)(E) of the Code.
For these purposes, each of the Bank, the Company and Interim Savings Bank are
"a party to the reorganization within the meaning of Section 368(b) of the Code.
18. Interests in the liquidation account established at the Bank, and
the shares of Bank Common Stock held by Mid-Tier Holding Company prior to
consummation of the Mid-Tier Merger, will be disregarded for the purpose of
determining that an amount of stock in the Bank which constitutes "control" of
such corporation was acquired by the Company in exchange for shares of common
stock of the Company pursuant to the Bank Merger (Code Section 368(c)).
19. The exchange of shares of Company Common Stock for the shares of
the Bank Common Stock in the Bank Merger, following consummation of the Mid-Tier
Merger, will satisfy the continuity of interest requirement of Income Tax
Regulation Section 1.368-1(b) in the Bank Merger.
20. Interim Savings Bank will not recognize any gain or loss on the
transfer of its assets to Bank in exchange for Bank Common Stock and the
assumption by Bank of the liabilities, if any, of Interim Savings Bank. (Section
361(a) and 357(a) of the Code.)
21. Bank will not recognize any gain or loss on the receipt of the
assets of Interim Savings Bank in exchange for Bank Common Stock. (Section
1032(a) of the Code.)
22. Bank's basis in the assets received from Interim Savings Bank in
the proposed transaction will, in each case, be the same as the basis of such
assets in the hands of Interim Savings Bank immediately prior to the
transaction. (Section 362(b) of the Code.)
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 9
23. Bank's holding period for the assets received from Interim Savings
Bank in the proposed transaction will, in each instance, include the period
during which such assets were held by Interim Savings Bank. (Section 1223(2) of
the Code.)
24. The Company will not recognize any gain or loss upon its receipt of
Bank Common Stock in exchange for Interim Savings Bank stock. (Section 354(a) of
the Code.)
25. Bank shareholders will not recognize any gain or loss upon their
exchange of Bank Common Stock solely for shares of Company Common Stock.
(Section 354(a) of the Code.)
26. Each Bank shareholder's aggregate basis in his or her Company
Common Stock received in the exchange will be the same as the aggregate basis of
the Bank Common Stock surrendered in exchange therefor. (Section 358(a) of the
Code.)
27. Each Bank shareholder's holding period in his or her Company Common
Stock received in the exchange will include the period during which the Bank
Common Stock surrendered was held, provided that the Bank Common Stock
surrendered is a capital asset in the hands of the Bank shareholder on the date
of the exchange. (Section 1223(1) of the Code.)
28. No gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders upon distribution to them of subscription
rights to purchase shares of Common Stock, provided that the amount to be paid
for the Common Stock is equal to the fair market value of the Common Stock.
Analysis
Section 368(a)(1)(A) of the Code defines the term "reorganization" to
include a "statutory merger or consolidation" of corporations such as the MHC
Merger and the Mid-Tier Merger. Section 368(a)(2)(E) of the Code provides that a
transaction otherwise qualifying as a merger under Section 368(a)(1)(A), such as
the Bank Merger, shall not be disqualified by reason of the fact that common
stock of a corporation (referred to in the Code as the "controlling
corporation") (i.e., the Company) which before the merger was in control of the
merged corporation is used in the transaction if:
(i) after the transaction, the corporation surviving the merger (the Bank)
holds substantially all of its properties and the properties of the
merged corporation
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Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 10
(Interim Savings Bank) (other than common stock of the controlling
corporation (the Company) distributed in the transaction); and
(ii) in the transaction, former stockholders of the surviving corporation
(the Bank stockholders) exchanged, for an amount of voting common
stock of the controlling corporation, an amount of common stock in the
surviving corporation which constitutes control of such corporation.
Section 1.368-2(b)(1) of the Treasury Regulations provides that, in
order to qualify as a reorganization under Section 368(a)(1)(A), a transaction
must be a merger or consolidation effected pursuant to the corporation laws of
the United States or a state. The Plan provides that the MHC Merger, the
Mid-Tier Merger and the Bank Merger will be accomplished in accordance with
applicable state and federal law.
Treasury Regulations and case law require that, in addition to the
existence of statutory authority for a merger, certain other conditions must be
satisfied in order to qualify a proposed transaction as a reorganization within
the meaning of Section 368(a)(1)(A) of the Code. The "business purpose test,"
which requires a proposed merger to have a bona fide business purpose, must be
satisfied. See 26 C.F.R. Section 1.368-1(c). We believe that the MHC Merger, the
Mid- --- tier Merger and the Bank Merger satisfy the business purpose test for
the reasons set forth in the Prospectus under the caption "The
Conversion--Reasons for the Conversion." The "continuity of business enterprise
test" requires an acquiring corporation either to continue an acquired
corporation's historic business or use a significant portion of its historic
assets in a business. See --- 26 C.F.R. Section 1.368-1(d). We believe that the
business conducted by the Bank prior to the MHC Merger, the Mid-Tier Merger and
the Bank Merger will be unaffected by the transactions.
The "continuity of interest doctrine" requires that the continuing
common stock interest of the former owners of an acquired corporation,
considered in the aggregate, represent a "substantial part" of the value of
their former interest, and provide them with a "definite and substantial
interest" in the affairs of the acquiring corporation or a corporation in
control of the acquiring corporation. Paulsen v. Comm'r., 469 U.S. 131 (1985);
Helvering v. Minnesota Tea Co., 296 U.S. 378 (1935); John A. Nelson Co. v.
Helvering, 296 U.S. 374 (1935); Southwest Natural Gas Co. v. Comm'r., 189 F.2d
332 (5th Cir. 1951), cert. denied, 342 U.S. 860 (1951). We believe that the MHC
Merger satisfies the continuity of interest doctrine based on the information
set forth in the Company's Registration Statement and based on Revenue Rulings
69- 646, 1969-2 C.B. 54 and 69-3, 1965-1 C.B. 103. The Mutual Holding Company,
as a federally- chartered mutual holding company, does not have stockholders and
has no authority to issue
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 11
capital stock. Instead, the Mutual Holding Company has members who are accorded
a variety of proprietary rights such as voting rights and certain rights in the
unlikely event of liquidation. Prior to the MHC Merger, certain depositors of
the Bank have both a deposit account in the Bank and a proprietary interest in
the net worth of the Mutual Holding Company based upon the balance in his
account in the Bank, an interest which may only be realized in the event of a
liquidation of the Mutual Holding Company. In accordance with the Plan, the
members will receive an interest in a liquidation account in the Stock Holding
Company in exchange for their proprietary rights in the Mutual Holding Company.
This interest in the liquidation account in the Stock Holding Company will be
exchanged for an interest in a Liquidation Account in the Bank in connection
with the Mid-Tier Merger. Although the Liquidation Account in the Stock Holding
Company and the subsequent Liquidation Account in the Bank would not allow the
former Mutual Holding Company members the right to vote or the right to pro rata
distributions of earnings, they would be entitled to share in the distribution
of assets upon the liquidation of the Stock Holding Company following the MHC
Merger, or the Bank following the Mid-Tier Merger. Therefore, it would seem that
the exchange of the members proprietary interests in the Mutual Holding Company
for liquidation accounts in the Stock Holding Company followed by the exchange
of such Stock Holding Company liquidation accounts for Liquidation Accounts in
the Bank should not violate the continuity of interest requirement of Section
1.368-1(b) of the Treasury Regulations. In PLR 9510044, the IRS held on similar
facts that the exchange of equity interests in a mutual holding company for a
liquidation account in a stock bank satisfied the continuity of interest
doctrine. Although a private letter ruling cannot be cited as precedent, it is
illustrative of the IRS' position on an issue.
We believe that the Mid-Tier Merger satisfies the continuity of
interest doctrine based on representations received from the Bank in connection
with the preparation of this opinion, to the effect that, to the best knowledge
of the management of the Mid-Tier Holding Company and the Bank, former
shareholders of the Mid-Tier Holding Company (disregarding the Mutual Holding
Company) owning 50% or more of all the outstanding stock of the Mid-Tier Holding
Company immediately prior to the Mid-Tier Merger, would continue to own shares
of the Bank immediately after the Mid-Tier Merger or, following the Bank Merger
which occurs immediately after the Mid-Tier Merger, shares of the Company, the
will own 100% of the Bank. In addition, we believe other applicable requirements
of the Treasury Regulations and case law which are preconditions to
qualification of the MHC Merger, the Mid-Tier Merger and the Bank Merger as a
reorganization, within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code, are satisfied on the basis of the information contained in the Plan
and the Prospectus.
One of the requirements of Section 368(a)(2)(E) of the Code is that
subsequent to the transaction, the corporation surviving the merger must hold
substantially all of its properties and
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 12
the properties of the merged corporation. The Bank has represented that,
following the Bank Merger, it will hold 90% of the fair market value of its net
assets and at least 70%of the fair market value of its gross assets, and at
least 90% of the fair market value of Interim Savings Bank's net assets and at
least 70% of the fair market value of Interim Savings Bank's gross assets held
immediately prior to the Bank Merger. Based upon representations, the Bank will
clearly satisfy this requirement of Code Section 368(a)(2)(E).
Pursuant to Code Section 368(a)(2)(E), the Company must also acquire
control of the Bank in the Bank Merger. Control is defined as at least 80% of
the total combined voting power of all classes of stock entitled to vote, and at
least 80% of the total number of shares. Subsequent to the Bank Merger, the
Company will hold all of the Bank Common Stock. However, there is an issue as to
whether the Bank liquidation accounts must be taken into account for purposes of
this "control" test. In PLR 9510044, on facts substantially similar to those in
the present case, the IRS ruled that the liquidation interests in the bank were
to be disregarded in determining whether control of the bank was obtained by the
holding company in accordance with Section 368(c) of the Code. We believe that
the position taken by the IRS in PLR 9510044, while not binding on the IRS with
respect to this taxpayer, is appropriate and should be followed.
In December 1994, the IRS published Revenue Procedure 94-76 which
states that the IRS will not issue private letter rulings with respect to a
transaction in which one corporation owns stock in a second corporation, the
first corporation is not the 80 percent distributee of the second corporation
and the two corporations are merged. The IRS has assumed this "no-rule" position
to study whether such downstream mergers circumvent the purpose behind the
repeal of General Utilities & Operating Co. v. Helvering, 296 U.S. 200 (1935).
Although the IRS has assumed a "no-rule" position to study the issues associated
with such mergers, the IRS has not specifically rescinded its prior position
with respect to such mergers, and therefore, at the time that this transaction
is consummated, the law prior to the publication of Rev. Proc. 94-76, as
reflected in the Code, Treasury Regulations, case law and rulings, continues to
control the transaction. Under such law, we believe that the MHC Merger
qualifies as a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Code. Moreover, there is no indication that the IRS position
will change as the result of its study. If the IRS does change its position with
respect to the downstream merger of one corporation into its less than 80
percent owned distributee, there is no reason to believe that any such change
will have retroactive effect.
Section 354 of the Code provides that no gain or loss shall be
recognized by stockholders who exchange common stock in a corporation, which is
a party to a reorganization, solely for common stock in another corporation
which is a party to the reorganization. Section 356 of the Code provides that
stockholders shall recognize gain to the extent they receive money as part of
<PAGE>
Boards of Directors
Trenton Savings Bank FSB
Peoples Bancorp, Inc.
Peoples Bancorp, M.H.C.
February 4, 1998
Page 13
a reorganization, such as cash received in lieu of fractional shares. Section
358 of the Code provides that, with certain adjustments for money received in a
reorganization, such as cash received in lieu of fractional shares, a
stockholder's basis in the common stock he or she receives in a reorganization
shall equal the basis of the common stock which he or she surrendered in the
transaction. Section 1223(1) states that, where a stockholder receives property
in an exchange which has the same basis as the property surrendered, he or she
shall be deemed to have held the property received for the same period as the
property exchanged, provided that the property exchanged had been held as a
capital asset.
Section 361 of the Code provides that no gain or loss shall be
recognized to a corporation which is a party to a reorganization on any transfer
of property pursuant to a plan of reorganization such as the Plan. Section 362
of the Code provides that if property is acquired by a corporation in connection
with a reorganization, then the basis of such property shall be the same as it
would be in the hands of the transferor immediately prior to the transfer.
Section 1223(2) of the Code states that where a corporation will have a
carryover basis in property received from another corporation which is a party
to a reorganization, the holding period of such assets in the hands of the
acquiring corporation shall include the period for which such assets were held
by the transferor, provided that the property transferred had been held as a
capital asset. Section 1032 of the Code states that no gain or loss shall be
recognizes to a corporation on the receipt of property in exchange for common
stock.
We hereby consent to the filing of the opinion as an exhibit to the
MHC's Application for Approval for Conversion filed with the Commissioner and to
the Company's Registration Statement on Form S-1 as filed with the SEC. We also
consent to the references to our firm in the Prospectus contained in the
Application for Approval of Conversion and S-1 under the captions "The
Conversion-Tax Aspects" and "Legal Opinions."
Very truly yours,
LUSE LEHMAN GORMAN POMERENK
& SCHICK, A PROFESSIONAL CORPORATION
By: /s/ Luse Lehman Gorman Pomerenk & Schick
----------------------------------------
Independent Accountants' Consent
The Board of Directors
Peoples Bancorp. Inc.:
We consent to the use of our report dated January 21, 1997, except as to Note 21
which is as of December 31, 1997, relating to the consolidated statements of
condition of Peoples Bancorp, Inc. as of December 31, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 1996, included
herein, and to the reference to our Firm under the heading "Experts" in the
Registration Statement/Prospectus of Peoples Bancorp, Inc.
/s/ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
February 3, 1998
Exhibit 23.3
February 3, 1998
Board of Directors
Trenton Savings Bank
134 Franklin Corner Road
Lawrenceville, NJ 08648
Dear Board Members:
We hereby consent to the use of our firm's name, FinPro, Inc. ("FinPro") in the
Form S-1 Registration Statement and Amendments thereto of Peoples Bancorp, Inc.
so filed with the Securities and Exchange Commission, the Form AC Application
for Conversion and the prospectus included therein filed by Peoples Bancorp,
M.H.C. and any amendments thereto, for the Valuation Appraisal Report ("Report")
regarding the valuation of Trenton Savings Bank provided by FinPro, and our
opinion regarding subscription rights filed as exhibits to the Form S-1 and Form
AC referred to below. We also consent to the use of our firm's name and the
inclusion of, summary of and references to our Report and Opinion in the
prospectus included in the Form S-1, and any amendments thereto.
Very Truly Yours,
/s/ Donald J. Musso
Donald J. Musso
Liberty Corner, New Jersey
February 3, 1998
Peoples Bancorp, Inc.
Conversion Valuation Appraisal
Date Issued: December 17, 1997
Date of Market Prices: December 18, 1997
<PAGE>
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Table of Contents
Peoples Bancorp, Inc.
Lawrenceville, New Jersey
INTRODUCTION 1
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1. OVERVIEW AND FINANCIAL ANALYSIS 6
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GENERAL OVERVIEW 6
HISTORY 7
STRATEGIC DIRECTION 8
BALANCE SHEET TRENDS 10
LOAN PORTFOLIO 13
SECURITIES 16
INVESTMENTS AND MORTGAGE-BACKED SECURITIES 17
ASSET QUALITY 18
FUNDING COMPOSITION 21
ASSET/LIABILITY MANAGEMENT 23
NET WORTH AND CAPITAL 24
INCOME AND EXPENSE TRENDS 25
SUBSIDIARIES 29
LEGAL PROCEEDINGS 29
2. MARKET AREA ANALYSIS 30
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MARKET AREA DEMOGRAPHICS 30
MARKET AREA DEPOSIT CHARACTERISTICS 34
3. COMPARISONS WITH PUBLICLY TRADED THRIFTS 35
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INTRODUCTION 35
SELECTION SCREENS 35
SELECTION CRITERIA 36
COMPARABLE GROUP PROFILES 38
CORPORATE DATA 43
KEY FINANCIAL DATA 44
CAPITAL DATA 45
ASSET QUALITY DATA 46
PROFITABILITY DATA 47
INCOME STATEMENT DATA 48
GROWTH DATA 49
MARKET CAPITALIZATION DATA 50
DIVIDEND DATA 51
- --------------------------------------------------------------------------------
<PAGE>
PRICING DATA 52
EARNINGS DATA 53
4. MARKET VALUE DETERMINATION 54
- --------------------------------------------------------------------------------
INTRODUCTION 54
BALANCE SHEET STRENGTH 55
ASSET QUALITY 56
EARNINGS QUALITY, PREDICTABILITY AND GROWTH 57
MARKET AREA 61
MANAGEMENT 62
DIVIDENDS 63
LIQUIDITY OF THE ISSUE 64
SUBSCRIPTION INTEREST 65
RECENT REGULATORY MATTERS 66
MARKET FOR SEASONED THRIFT STOCKS 67
SECOND STEP CONVERSIONS 71
ACQUISITION MARKET 73
ADJUSTMENTS TO VALUE 78
VALUATION APPROACH 79
VALUATION CONCLUSION 84
- --------------------------------------------------------------------------------
<PAGE>
List of Figures
Peoples Bancorp, Inc.
Lawrenceville, New Jersey
FIGURE 1 - CURRENT BRANCH LIST 6
FIGURE 2 - ASSET AND RETAINED EARNINGS CHART 10
FIGURE 3 - AVERAGE YIELDS AND COSTS 11
FIGURE 4 - KEY BALANCE SHEET DATA 12
FIGURE 5 - KEY RATIOS 12
FIGURE 6 - LOAN MIX AS OF SEPTEMBER 30, 1997 CHART 13
FIGURE 7 - NET LOANS RECEIVABLE CHART 14
FIGURE 8 - LOAN MIX 15
FIGURE 9 - SECURITIES CHART 16
FIGURE 10 - INVESTMENT MIX 17
FIGURE 11 - INVESTMENT PORTFOLIO MATURITY 17
FIGURE 12 - NON-PERFORMING ASSETS CHART 18
FIGURE 13 - NON-PERFORMING LOANS 19
FIGURE 14 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART 20
FIGURE 15 - DEPOSIT MIX 21
FIGURE 16 - DEPOSIT AND BORROWING TREND CHART 22
FIGURE 17 - NET PORTFOLIO VALUE 23
FIGURE 18 - CAPITAL ANALYSIS 24
FIGURE 19 - NET INCOME CHART 25
FIGURE 20 - SPREAD AND MARGIN CHART 26
FIGURE 21 - INCOME STATEMENT TRENDS 27
FIGURE 22 - PROFITABILITY TREND CHART 28
FIGURE 23 - MERCER COUNTY POPULATION DEMOGRAPHICS 30
FIGURE 24 - MERCER COUNTY HOUSEHOLD CHARACTERISTICS 31
FIGURE 25 - BURLINGTON AND OCEAN COUNTY POPULATION DEMOGRAPHICS 32
FIGURE 26 - BURLINGTON AND OCEAN COUNTY HOUSEHOLD CHARACTERISTICS 33
FIGURE 27 - BRANCH DEPOSITS 34
FIGURE 28 - KEY FINANCIAL INDICATORS 41
FIGURE 29 - COMPARABLE CORPORATE DATA 43
FIGURE 30 - COMPARABLE KEY FINANCIAL DATA 44
FIGURE 31 - COMPARABLE CAPITAL DATA 45
FIGURE 32 - COMPARABLE ASSET QUALITY DATA 46
FIGURE 33 - COMPARABLE PROFITABILITY DATA 47
FIGURE 34 - COMPARABLE INCOME STATEMENT DATA 48
FIGURE 35 - COMPARABLE GROWTH DATA 49
FIGURE 36 - COMPARABLE MARKET CAPITALIZATION DATA 50
FIGURE 37 - COMPARABLE DIVIDEND DATA 51
FIGURE 38 - COMPARABLE PRICING DATA 52
FIGURE 39 - COMPARABLE EARNINGS DATA 53
FIGURE 40 - ASSET QUALITY TABLE 56
FIGURE 41 - NET INCOME CHART 58
FIGURE 42 - SPREAD AND MARGIN CHART 59
FIGURE 43 - SNL THRIFT INDEX CHART 67
FIGURE 44 - HISTORICAL SNL INDEX 68
FIGURE 45 - EQUITY INDICES 69
FIGURE 46 - HISTORICAL RATES 70
FIGURE 47 - SECOND STEP CONVERSIONS SINCE JANUARY 1, 1996 71
- --------------------------------------------------------------------------------
<PAGE>
FIGURE 48 - HISTORICAL STOCK PERFORMANCE 72
FIGURE 49 - DEALS FOR LAST ELEVEN QUARTERS 73
FIGURE 50 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO BOOK 74
FIGURE 51 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO TANGIBLE BOOK 75
FIGURE 52 - THRIFT ACQUISITION MULTIPLES, PRICE TO EARNINGS 75
FIGURE 53 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO ASSETS 76
FIGURE 54 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO DEPOSITS 76
FIGURE 55 - DEAL MULTIPLES 77
FIGURE 56 - ACQUISITION TABLE 77
FIGURE 57 - VALUE RANGE OFFERING DATA 80
FIGURE 58 - VALUE RANGE OFFERING DATA 81
FIGURE 59 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA MIDPOINT 82
FIGURE 60 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA
SUPERMAXIMUM 82
FIGURE 61 - RECENT SECOND STEP CONVERSION TRADING MULTIPLES TO THE BANK'S
PROFORMA MIDPOINT 82
FIGURE 62 - RECENT SECOND STEP CONVERSION TRADING MULTIPLES TO THE BANK'S
PROFORMA SUPERMAXIMUM 82
FIGURE 63 - COMPARISON TO HARBOR FEDERAL 83
FIGURE 64 - COMPARISON TO HARBOR FEDERAL 83
- --------------------------------------------------------------------------------
<PAGE>
List of Exhibits
Peoples Bancorp, Inc.
Lawrenceville, New Jersey
Exhibit
- -------
1 Consolidated Statements of Financial Condition
2 Consolidated Statements of Income
3 Consolidated Statements of Changes in Net Worth
4 Consolidated Statements of Cash Flows
5 Selected Data on All Public Thrifts
6 Industry Multiples
7 Second Step Conversions 1996 to Date - Selected Market Data
8 Ownership Profile
9 Appraisal Proforma September 30, 1997 - 12 Months Data
10 Offering Circular Proforma December 31, 1996 - 12 Months Data
11 Offering Circular Proforma September 30, 1997 - 9 Months Data
12 Profile of FinPro, Inc.
- --------------------------------------------------------------------------------
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 1
================================================================================
Introduction
This report represents FinPro, Inc.'s ("FinPro") independent appraisal of the
estimated pro-forma market value of the common stock ( the "Common Stock") of
Peoples Bancorp, Inc. and Trenton Savings Bank, FSB (the "Bank" or "Peoples") in
connection with the Second Step Conversion ("Conversion") of the Bank. The Bank
is headquartered in Lawrenceville, New Jersey and at September 30, 1997 had
$638.9 million in assets, $493.3 million in deposits and $108.2 million in
stockholders' equity. The Bank is a Federally Chartered Stock Savings Bank whose
principal regulator is the Office of Thrift Supervision ("OTS"). All of the
Bank's deposit accounts, up to the regulatory limits, are insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC"). As
of September 30, 1997, the Bank maintained fourteen offices located in Mercer,
Burlington and Ocean Counties, all of which are located in New Jersey.
Pursuant to the Plan adopted by the Bank and Mutual Holding Company, the Bank
will become a subsidiary of the Company upon consummation of the transactions
described herein (collectively, with the Offerings, the "Conversion and
Reorganization"). As a result of the Conversion and Reorganization, each share
of common stock, par value $.01 per share, of the Bank ("Bank Common Stock")
held by the Mutual Holding Company, which currently holds 5,796,000 shares, or
64.1% of the outstanding Bank Common Stock, will be canceled and each share of
Bank Common Stock held by the Bank's public stockholders (the "Public Bank
Shares"), which amounted to 3,250,444 shares, or 35.9% of the outstanding Bank
Common Stock at September 30, 1997, will be converted into shares of the
Company's Common Stock ("Exchange Shares") pursuant to a ratio (the "Exchange
Ratio") that will result in the holders of such shares (the "Public
Stockholders") owning in the aggregate approximately the same percentage of the
Company as they owned of the Bank, before giving effect to (a) the payment of
cash in lieu of fractional Exchange Shares, (b) any shares of Common Stock
purchased by such stockholders in the Offerings described herein or the Bank's
ESOP thereafter (the "Exchange").
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 2
================================================================================
In addition to the Exchange, non-transferable subscription rights to subscribe
for up to 17,601,341 shares (which may be increased to 23,277,802 shares under
certain circumstances described below) of Common Stock (the "Conversion Stock")
have been granted, in order of priority, to each of the Bank's Eligible Account
Holders, to the ESOP, to the Bank's Supplemental Eligible Account Holders, and
to certain Other Members (each as defined herein) in a subscription rights will
be subject to the forfeiture of such rights and possible further sanctions and
penalties imposed by the Office of Thrift Supervision ("OTS"). Concurrently, and
subject to the prior rights of holders of subscription rights, the Company is
offering the shares of Conversion Stock not subscribed for in the Subscription
Offering for sale in a community offering to certain members of the general
public, with a preference given to holders of the Public Bank Shares and a
second preference to natural persons residing in New Jersey in the counties of
Burlington and Mercer (the "Community Offering") (the Subscription Offering and
Community Offering are referred to collectively as the "Subscription and
Community Offerings"). Shares not subscribed for in the Subscription and
Community Offerings will be offered to members of the general public in a
syndicated community offering (the "Syndicated Community Offering") (the
Subscription and Community Offerings and the Syndicated Community Offering are
referred to collectively as the "Offerings").
Except for the ESOP, no Eligible Account Holder, Supplemental Eligible Account
Holder or Other Member may, in their respective capacities as such, purchase in
the Subscription Offering more than 60,000 of the total number of shares of
Conversion Stock offered for sale in the Conversion; no person, together with
associates of and persons acting in concert with such person, may purchase in
the Community Offering and the Syndicated Community Offering more than 60,000 of
the total number of shares offered for sale in the Conversion; and no person,
together with associates of and persons acting in concert with such person, may
purchase in the aggregate more than the number of shares of Conversion Stock
that when combined with Exchange Shares received by such person would exceed the
overall maximum purchase limitation of 5.0% of the total number of shares of
Conversion Stock offered for sale in the Conversion; provided, however, that
such purchase limitations and the amount that may be subscribed for may be
increased or decreased in the sole discretion of the Company, the Mutual Holding
Company and the Bank (the "Primary Parties") without further approval of the
Mutual Holding Company's members or the Public Stockholders. The minimum
purchase is 25 shares.
The Company has received conditional approval to have its Common Stock traded on
the Nasdaq National Market under the Company's previous symbol "TSBS" upon
completion of the Conversion.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 3
================================================================================
The Company was organized in November 1997 by the Bank for the purpose of owning
all of the capital stock of the Bank upon completion of the conversion.
Immediately following the Conversion, the only significant assets of the Company
will be the capital stock of the Bank and that percentage of the Offering
proceeds retained by the Company.
The Mutual Holding Company is a federal mutual holding company that was
organized on August 3, 1995 in connection with the mutual holding company
reorganization of the Bank's mutual savings bank predecessor. The Mutual Holding
Company has no material assets other than the Mid-Tier Common Stock.
Accordingly, all financial and other information contained in this Prospectus
relates to the business, financial condition, and results of operations of the
Mid-Tier Holding Company and/or its wholly-owned subsidiary, the Bank, Upon
consummation of the Conversion, the Mutual Holding Company will convert from
mutual to stock form and simultaneously merge with and into Mid-Tier Holding
Company.
The Mid-Tier Holding Company was formed to become the stock holding company of
the Bank in the two-tier reorganization (the "Two-Tier Reorganization") of the
Bank and the Mutual Holding Company, which was completed in July1997. In the
Two-Tier Reorganization, all of the outstanding shares of the Bank's common
stock ("Bank Common Stock"), including shares held by the Mutual Holding Company
and Minority Stockholders, were converted into shares of Mid-Tier Common Stock,
and the Bank became the wholly-owned subsidiary of the Mid-Tier Holding Company.
As of September 30, 1997, the Mid-Tier Holding Company's only material asset
consisted of 100% of the outstanding shares of common stock of the Bank.
The Bank conducts its business from a corporate center located in Lawrenceville,
New Jersey and 14 branch offices located in Mercer, Burlington and Ocean
Counties, New Jersey. On January 1, 1995, the Bank completed a charter change
from a New Jersey chartered mutual savings bank to a federally chartered mutual
savings bank, permitting expansion of branch offices into adjacent market areas
in Pennsylvania. On August 3, 1995, the Bank's mutual predecessor reorganized
from a federally chartered mutual savings bank into the Mutual holding Company
and concurrently formed the Bank, which succeeded to the name and operations of
the Bank's mutual predecessor (the "Reorganization"). At the time of the
Reorganization, the Bank conducted a stock offering (the "Minority Stock
Offering") in which it raised approximately $30.0 million of net proceeds.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 4
================================================================================
The following table provides a synopsis of the aforementioned elements for all
points in the EVR.
-------------------------------------------------------
Appraised Value
-------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum*
- ---------- -------------------------------------------------------
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Full Conversion Value $232,900,000 $274,000,000 $315,100,000 $362,365,000
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Exchange Percent 34.30% 34.30% 34.30% 34.30%
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Conversion Percent 65.70% 65.70% 65.70% 65.70%
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $232,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
Exchange Ratio 2.4580 2.8917 3.3255 3.8243
-------------------------------------------------------
* SuperMaximum is an overallotment option that is 15% above the maximum amount.
This appraisal has been prepared in accordance with Regulation 563b.7 and with
the "Guidelines for Appraisal Reports for the Valuation of Savings and Loan
Associations Converting from Mutual to Stock Form of Organization" of the Office
of Thrift Supervision ("OTS") which have been adopted in practice by the Federal
Deposit Insurance Corporation ("FDIC"), including the most recent revisions as
of October 21, 1994, and applicable regulatory interpretations thereof.
In the course of preparing our report, we reviewed the unaudited nine month
period ended September 30, 1997, audited financial statements of the Bank's
operations for the twelve month period ended December 31, 1996 and the Bank's
operations and financial condition for the prior two year period. We have
conducted due diligence analysis of the Bank and the Company (hereinafter,
collectively referred to as "the Bank") and held due diligence related
discussions with the Bank's management and board, KPMG Peat Marwick (the Bank's
independent audit firm), Luse Lehman Gorman Pomerenk & Schick (the Bank's
special counsel), and Friedman, Billings, Ramsey & Co., Inc. (the Bank's
financial and marketing advisor). The valuation parameters set forth in the
appraisal were predicated on these discussions but all conclusions related to
the valuation were reached and made independent of such discussions.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 5
================================================================================
Where appropriate, we considered information based upon other publicly available
sources, which we believe to be reliable; however, we cannot guarantee the
accuracy or completeness of such information. We visited the Bank's primary
market area and reviewed the market area economic condition. We also reviewed
the competitive environment in which the Bank operates and its relative
strengths and weaknesses. We compared the Bank's performance with selected
publicly traded thrift institutions. We reviewed conditions in the securities
markets in general and in the market for savings institutions in particular. Our
analysis included a review of the estimated effects of the Reorganization on the
Bank, operation and expected financial performance as they related to the Bank's
estimated pro-forma value.
In preparing our valuation, we relied upon and assumed the accuracy and
completeness of financial and other information provided to us by the Bank and
its independent accountants. We did not independently verify the financial
statements and other information provided by the Bank and its independent
accountants, nor did we independently value any of the Bank's assets or
liabilities. This estimated valuation considers the Bank only as a going concern
and should not be considered as an indication of its liquidation value.
Our valuation is not intended, and must not be construed, to be a recommendation
of any kind as the advisability of purchasing shares of Common Stock in the
Conversion and Reorganization. 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 and Reorganization will
thereafter be able to sell such shares at prices related to the foregoing
valuation of the pro-forma market value thereof. FinPro is not a seller of
securities within the meaning of any federal or state securities laws and any
report prepared by FinPro shall not be used as an offer or solicitation with
respect to the purchase or sale of any securities.
The estimated valuation herein will be updated as appropriate. These updates
will consider, among other factors, any developments or changes in the Bank's
financial condition, operating performance, management policies and procedures,
and current conditions in the securities market for thrift institution common
stock. Should any such developments or changes, in our opinion, be material to
the estimated pro-forma market value of the Bank, appropriate adjustments to the
estimated pro-forma market value will be made. The reasons for any such
adjustments will be explained at that time.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 6
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1. Overview and Financial Analysis
- ------------------------------
GENERAL OVERVIEW
- ------------------------------
The Bank after the Second Step Conversion, will be a federally chartered stock
savings bank. As of September 30, 1997, the Bank had $638.9 million in total
assets, $493.3 million in deposits, $397.9 million in net loans and $108.2
million in equity.
The following table shows the Bank's branch network as of September 30, 1997.
FIGURE 1 - CURRENT BRANCH LIST
Branch Office Town
- --------------------------------------------------------------------
Mercer County
- -------------
33 West State Street Trenton
1980 North Olden Road Trenton
2465 South Broad Street Trenton
2371 Route 33 Robbinsville
Route 1 and Texas Avenue Lawrenceville
2583 Pennington Road Pennington
1750 Whitehorse-Mercerville Road Mercerville
1349 Princeton-Hightstown Road West Winsor
Burlington County
- -----------------
332 High Street Burlington
1660 Beverly Road Burlington
Burlington Avenue & Coopertown Road Delanco
501 High Street Mt. Holly
Ocean County
- ------------
1 Dumbarton Drive Lakewood
3-C Buckingham Drive Lakehurst
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 7
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- ------------------------------
HISTORY
- ------------------------------
1844 The Bank opened as a state chartered mutual savings bank.
1983 The Bank acquired Burlington County Savings Bank.
1986 The Bank acquired the deposits of two branches and one branch site
from The Provident Bank.
1995 With nine branches, the Bank changed to a federally chartered
mutual savings bank.
1995 The Bank purchased $34 million of RTC deposits from Carteret,
consolidating facilities.
1995 The Bank converted to a Mutual Holding Company ("MHC").
1996 Burlington County Bank was acquired with its two branches.
1996 TSBusiness Finance Corp., an asset based lending subsidiary, was
founded.
1996 The Bank opened its West Windsor and Leisure Village East branches.
1997 A leverage strategy was implemented.
1997 The Bank opened Leisure Village West branch.
1997 The Bank converted to the two tier structure.
1997 Manchester Trust Bank was acquired.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 8
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- ------------------------------
STRATEGIC DIRECTION
- ------------------------------
It is anticipated, for planning purposes that the second step offering will
raise gross proceeds of $176.0 million, based upon preliminary appraisal data
for the midpoint of the value range. Conversion costs are estimated to be
approximately $1.9 million at the midpoint.
The Board of Directors of the Bank believes that the second step is in the best
interests of all parties associated with the bank. The resultant entity will:
o be financially stronger, primarily as a result of additional capital;
o be better positioned to compete in the markets the Bank serves;
o facilitate possible acquisition opportunities and possible
diversification;
o provide access to capital markets;
o allow for a wider array of products and services; and
o provide financial capacity to buy or build critical mass in new
geographic markets or in the markets it currently serves.
The second step also provides the Bank and its Holding Company the corporate
flexibility to raise additional capital and further diversify into bank related
activities when such opportunities or needs arise. The Bank can utilize the
Holding Company structure to:
o form new subsidiaries;
o purchase branches, acquire or merge with other banks, thrifts or
financial services related company; and
o repurchase its own stock without adverse tax consequences.
Although there are no current arrangements, understandings or agreements
regarding any such opportunities, the Holding Company will be in a position
after the conversion (subject to regulatory limitations and the Holding
Company's financial condition) to take advantage of any such opportunity that
may arise.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 9
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This Bank projects aggressive, but controlled balance sheet growth with the Bank
originating a broad array of lending products, including one to four family
residential, home equity and consumer, multi family residential and commercial
loans. Additionally, the Bank intends to acquire several institutions, either
thrift or commercial. On the liability side, the Bank will grow deposits
emphasizing core deposits and an increase in transaction accounts.
The Bank anticipates that its interest rate spread and margin will slightly
decrease due to competition but total interest income will increase through
controlled loan growth. In addition, the Bank will maintain earnings by
emphasizing asset quality and controlling expenses.
The Bank plans the following major thrusts over the five-year planning horizon:
1. Completed the conversion to a stock institution to raise capital to
fund growth opportunities and strengthen the capital position of the
Bank;
2. Open de-novo branches;
3. Add ATMs in 1998 to the existing branch network;
4. Implement a name change;
5. Complete a renovation of the administrative headquarters in 1998;
6. Acquire institutions;
7. Implement leverage strategies;
8. Acquire fee generating business(es) and
9. Grow the TSBusiness and Manchester Trust subsidiaries.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 10
================================================================================
- ------------------------------
BALANCE SHEET TRENDS
- ------------------------------
Since December 31, 1992, the Bank's balance sheet has grown from $409.2 million
to $638.9 million. This represents growth of 56.13% since December 31, 1992.
Retained earnings has increased $67.6 million from $40.6 million at December 31,
1992 to $108.2 million at September 30, 1997. Of the $67.6 million,
approximately $30 million was the result of the minority issuance associated
with the conversion to MHC form in 1995.
FIGURE 2 - ASSET AND RETAINED EARNINGS CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 11
================================================================================
Interest rate spread increased for the nine months ending September 30, 1997,
when compared to the same period ending September 30, 1996, while the margin
decreased for the same period.
FIGURE 3 - AVERAGE YIELDS AND COSTS
<TABLE>
<CAPTION>
At September 30, For the Nine Months Ended September 30,
----------------- ------------------------------------------------------
1997 1997 1996
----------------- -------------------------- --------------------------
Weighted Average Average
Actual Average Average Yield/ Average Yield/
Balance Rate Balance Interest Cost Balance Interest Cost
------- -------- ------- -------- ------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans $282,679 7.43% $268,505 $14,810 7.35% $263,421 $14,503 7.34%
Consumer loans 62,245 8.10% 56,946 3,335 7.81% 45,012 2,669 7.91%
Commercial business loans 56,109 8.54% 62,867 4,248 9.01% 13,497 913 9.02%
Securities available for sale:
Debt securities 127,641 6.55% 117,810 5,764 6.51% 72,540 3,462 6.36%
Equity securities 10 0.00% 485 61 16.77% 1,478 132 11.91%
Investments held to maturity:
Debt securities and FHLB stock 34,544 6.06% 39,562 1,787 6.02% 40,924 1,967 6.41%
Mortgage backed securities 39,603 5.72% 44,085 2,205 6.67% 48,942 2,497 6.80%
Federal funds sold 2,300 6.25% 9,181 406 5.90% 13,035 519 5.31%
-------- ------ -------- ------- ------ -------- ------- ------
Total interest-earning assets 605,131 7.14% 599,441 32,616 7.25% 498,849 26,662 7.12%
Non-interest earning assets 33,811 29,750 19,293
-------- -------- --------
Total assets $638,942 $629,191 $518,142
======== ======== ========
Liabilities and Retained Earnings:
Interest-bearing liabilities:
Deposits:
Certificates of deposits 290,229 5.40% 289,656 11,614 5.35% 262,765 10,304 5.23%
Transaction and savings deposits 203,105 2.16% 196,854 3,123 2.12% 149,635 2,561 2.28%
Borrowed funds 30,000 6.03% 31,950 1,486 6.20% -- -- 0.0%
-------- ------ -------- ------- ------ -------- ------- ------
Total interest-bearing liabilities 523,334 4.18% 518,460 16,223 4.19% 412,400 12,865 4.16%
Non-interest bearing liabilities 7,369 6,809 5,924
-------- -------- --------
Total liabilities 530,703 525,269 418,324
======== ======== ========
Stockholders' equity 108,239 103,922 99,818
-------- -------- --------
Total liabilities and retained earnings $638,942 $629,191 $518,142
======== ======== ========
Net interest income $16,393 $13,797
======= =======
Interest rate spread 2.96% 3.06% 2.96%
====== ====== ======
Net interest margin as a percent of
interest earning assets 3.61% 3.65% 3.69%
====== ====== ======
Interest earning assets to interest
bearing liabilities 115.63% 115.62% 120.96%
====== ====== ======
</TABLE>
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 12
================================================================================
The following tables set forth certain information concerning the financial
position of the Bank along with selected ratios at the dates indicated.
FIGURE 4 - KEY BALANCE SHEET DATA
<TABLE>
<CAPTION>
At September 30, At December 31,
---------------- ----------------------------------------------------
1997 1996 1995 1994 1993 1992
---------------- -------- -------- -------- -------- --------
Selected Consolidated Financial Data: (unaudited) (In thousands)
---------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $638,942 $601,016 $514,218 $441,019 $435,746 $409,227
Cash and cash equivalents 13,209 20,938 16,253 12,665 15,763 11,983
Securities available for sale 127,651 87,648 83,776 64,961 -- --
Securities held to maturity:
Investment securities 31,158 37,935 36,945 27,017 121,814 161,923
Mortage backed securities 39,603 48,618 54,316 35,087 33,169 23,800
FHLB stock 3,386 3,089 2,864 2,495 -- --
Loans, net 397,866 380,288 306,093 289,504 255,656 201,889
Deposits 493,334 491,246 410,770 377,559 383,840 366,069
Stockholders' equity 108,239 103,352 97,542 58,769 49,123 40,624
Intangibles 10,834 9,164 2,325 -- -- --
Borrowings 30,000 -- -- -- -- --
</TABLE>
Source: Offering Prospectus
FIGURE 5 - KEY RATIOS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30, For the Fiscal Year Ended December 31,
------------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets 1.25% 1.66% 1.56% 1.73% 1.72% 2.00% 1.64%
Return on average equity 7.57% 8.61% 8.34% 11.33% 13.45% 18.75% 17.52%
Interest rate spread 3.06% 2.96% 2.98% 2.96% 3.49% 3.94% 3.62%
Net interest margin 3.65% 3.69% 3.66% 3.47% 3.87% 4.26% 3.97%
Net interest income after provision for loan
losses to total operating expenses 151.41% 214.44% 196.11% 209.93% 219.89% 254.30% 245.27%
Operating expenses to average total assets 2.09% 1.66% 1.80% 1.56% 1.67% 1.54% 1.51%
Efficiency Ratio 55.81% 43.77% 46.53% 43.84% 42.95% 45.15% 43.07%
Asset Quality Ratios:
Non-performing loans as a percent to net
loans at the end of the period 1.43% 0.47% 1.03% 0.71% 0.87% 0.71% 0.82%
Non-performing assets as a percent to total
assets at the end of the period 0.91% 0.33% 0.69% 0.43% 0.59% 0.42% 0.40%
Allowance for loan losses to non-performing loans 56.25% 109.15% 74.19% 80.91% 65.24% 80.65% 38.35%
Average interest-earning assets to average
interest-liabilities 116.06% 120.96% 119.80% 114.32% 112.72% 109.92% 108.36%
Capital and Equity Ratios
Average equity to average assets 16.52% 19.26% 18.67% 15.27% 12.78% 10.67% 9.38%
Equity to assets at end of period 16.94% 19.38% 17.20% 18.97% 13.33% 11.27% 9.93%
Per Share Data
Book value per share $11.97 $11.24 $11.44 $10.94 N/A N/A N/A
Earnings per share $ 0.65 $ 0.72 $ 0.94 N/A N/A N/A N/A
Other Data:
Branch offices 14 11 14 10 9 9 9
</TABLE>
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 13
================================================================================
- ------------------------------
LOAN PORTFOLIO
- ------------------------------
The Bank has a relatively diverse loan mix when compared to a typical thrift.
FIGURE 6 - LOAN MIX AS OF SEPTEMBER 30, 1997 CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 14
================================================================================
The Bank increased its lending portfolio by $196.0 million, from $201.9 million
at December 31, 1992, to $397.9 million at September 30, 1997. The Bank's net
loan to asset ratio was 62.27% at September 30, 1997.
FIGURE 7 - NET LOANS RECEIVABLE CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 15
================================================================================
Since December 31, 1992, the Bank's loan mix has shifted away from 1-4 family
mortgage loans and toward commercial and consumer loans.
FIGURE 8 - LOAN MIX
<TABLE>
<CAPTION>
At September 30, At December 3l,
---------------- -----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------------- -------------- --------------- --------------- --------------- ---------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
Mortgage loans:
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Conventional 1-4 family loans $242,374 60.4% $239,470 62.5% $227,717 74.0% $228,133 78.3% $206,585 80.2% $163,322 80.3%
Commercial real estate and
multi-family 40,305 10.1% 53,415 14.0% 27,827 9.0% 23,833 8.2% 18,972 7.4% 12,732 6.3%
-------- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total mortgage loans 282,679 70.5% 292,885 76.5% 255,544 83.0% 251,986 86.5% 225,557 87.6% 176,054 86.6%
Non-mortgage loans:
- -------------------
Home equity loans 33,914 8.5% 28,138 7.3% 21,833 7.1% 22,043 7.6% 19,117 7.4% 16,673 8.2%
Commercial 62,245 15.5% 34,488 9.0% 11,573 3.8% 8,998 3.1% 7,300 2.9% 8,023 4.0%
Other consumer loans 22,195 5.5% 27,478 7.2% 18,783 6.1% 8,258 2.8% 5,513 2.1% 2,488 1.2%
-------- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total other loans 118,354 29.5% 90,102 23.5% 52,189 17.0% 39,297 13.5% 31,930 12.4% 27,184 13.4%
Total loans receivable 401,033 100.0% 382,987 100.0% 307,733 100.0% 291,263 100.0% 257,487 100.0% 203,238 100.0%
----- ----- ----- ----- ----- -----
Less:
Premiums (discounts) 17 (24) 23 -- -- --
Deffered cost (fees) (18) (226) (104) 117 360 715
Allowance for loan losses 3,202 2,901 1,767 1,642 1,471 634
-------- -------- -------- -------- -------- --------
Loans receivable, net $397,866 $380,288 $308,093 $289,504 $255,656 $201,889
======== ======== ======== ======== ======== ========
</TABLE>
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 16
================================================================================
- ------------------------------
SECURITIES
- ------------------------------
The Bank's security portfolio has grown from $124.9 million at December 31,
1994, to $201.2 million at September 30, 1997, with the majority of the growth
coming in the form of agency securities.
FIGURE 9 - SECURITIES CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
Note: The chart above refers to investment portfolio's amortized cost.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 17
================================================================================
- ------------------------------
INVESTMENTS AND MORTGAGE-
BACKED SECURITIES
- ------------------------------
The majority of the Bank's investment portfolio is classified as
available-for-sale. This portfolio has shifted toward U.S. governments and
agencies.
FIGURE 10 - INVESTMENT MIX
<TABLE>
<CAPTION>
At September 30, At December 31,
----------------- ---------------------------------------------------------
1997 1996 1995 1994
----------------- ----------------- ----------------- -----------------
Carrying Market Carrying Market Carrying Market Carrying Market
Value Value Value Value Value Value Value Value
-------- ------ -------- ------ -------- ------ -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments and MBS held to maturity:
United States Government Agency Securities $ 14,350 $ 14,321 $ 17,042 $ 16,907 $ 24,934 $ 24,928 $ 5,826 $ 5,666
Obligations of State and political subdivisions 2,293 2,412 3,400 3,497 1,055 1,156 1,055 1,081
Federal Home Loan Bank Stock 3,386 3,386 3,089 3,089 2,864 2,864 2,495 2,495
Mortgage-backed securities 39,603 39,650 48,618 48,587 54,316 55,032 35,087 34,096
Other corporate bonds 14,515 14,539 17,493 17,521 10,955 11,041 20,136 19,991
-------- -------- -------- -------- -------- -------- -------- --------
Total investments held to maturity
(including FHLB stock) 74,147 74,308 89,642 89,601 94,124 95,021 64,599 63,329
Securities available for sale:
United States Treasury securities 51,320 51,444 65,336 65,507 -- -- -- --
United States Government and Agency obligations 46,067 46,386 9,924 9,767 75,955 76,653 51,958 50,866
Equity securities 10 10 894 3,201 2,536 7,123 8,375 14,095
Mortgage-backed securities 15,072 15,221 -- -- -- -- -- --
Other bonds 14,547 14,590 9,151 9,172 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total securities available for sale 127,016 127,651 85,305 87,647 78,491 83,776 60,333 64,961
-------- -------- -------- -------- -------- -------- -------- --------
$201,163 $201,959 $174,947 $177,248 $172,615 $178,797 $124,932 $128,290
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
Source: Offering Prospectus
FIGURE 11 - INVESTMENT PORTFOLIO MATURITY
<TABLE>
<CAPTION>
At September 30, 1997
-----------------------------------------------------------------------------------------
Due in
-----------------------------------------------------------------------------------------
Between One Between Five More than
One Year or Less and Five Years and Ten Years Ten Years Total
----------------- ---------------- ---------------- ---------------- ----------------
Weighted Weighted Weighted Weighted Weighted
Amort. Average Amort. Average Amort. Average Amort. Average Amort. Average
Mortgage-backed Security Maturities Cost Yield Cost Yield Cost Yield Cost Yield Cost Yield
- ----------------------------------- ------- --------- ------- -------- ------- -------- ------- -------- ------- --------
(in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments and MBS held to maturity:
Mortgage-backed securities $ 5,540 5.6% $21,884 6.7% $ -- 0.0% $12,179 7.4% $ 39,603 6.7%
Federal Home Loan Bank Stock -- 0.0% -- 0.0% -- 0.0% 3,386 0.0% 3,386 0.0%
United States Government Agency
Securities 350 4.7% 14,000 6.0% -- 0.0% -- 0.0% 14,350 6.0%
Obligations of State and political
subdivisions 909 6.2% 418 6.7% 200 6.9% 766 10.5% 2,292 7.8%
Other corporate bonds 10,009 5.9% 3,156 6.3% 1,348 7.5% -- 0.0% 14,514 6.1%
------- --- ------- --- ------- --- ------- ---- -------- ---
Total investments held to maturity 16,808 39,458 1,548 16,331 74,145
(including FHLB stock)
Securities available for sale:
Mortgage-backed securities -- 0.0% -- 0.0% -- 0.0% 15,071 7.4% 15,071 7.4%
United States Treasury securities 26,186 5.8% 25,134 6.0% -- 0.0% -- 0.0% 51,320 5.9%
United States Government and Agency
obligation 30O 5.1% 299 7.4% 45,468 7.2% -- 0.0% 46,067 7.1%
Equity securities -- 0.0% -- 0.0% -- 0.0% 10 0.0% 10 0.0%
Other bonds 6,011 6.1% 7,659 6.3% 877 6.6% -- 0.0% 14,547 6.2%
------- --- ------- --- ------- --- ------- ---- -------- ---
Total securities available for sale $32,497 $33,092 $46,345 $15,081 $127,015
</TABLE>
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 18
================================================================================
- ------------------------------
ASSET QUALITY
- ------------------------------
Non-performing loans have increased from $2.5 million at December 31, 1994, to
$5.7 million at September 30, 1997. As a percentage of assets, total
non-performing assets have increased from 0.59% at December 31, 1994, to 0.91%
at September 30, 1997.
FIGURE 12 - NON-PERFORMING ASSETS CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 19
================================================================================
FIGURE 13 - NON-PERFORMING LOANS
- --------------------------------------------------------------------------------
At September 30, 1997
($ in thousands)
- --------------------------------------------------------------------------------
Non-performing loans $5,692
- --------------------------------------------------------------------------------
Real estate owned, net $ 142
- --------------------------------------------------------------------------------
Total non-performing assets $5,834
- --------------------------------------------------------------------------------
Non-performing loans as a percentage of net loans 1.43%
- --------------------------------------------------------------------------------
Non-performing assets as a percent of total assets 0.91%
- --------------------------------------------------------------------------------
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 20
================================================================================
The Bank has grown its allowance for loan and lease losses from $1.6 million at
December 31, 1994 to $3.2 million at September 30, 1997. ALLL to non-performing
assets was 54.89% as of September 30, 1997.
FIGURE 14 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 21
================================================================================
- ------------------------------
FUNDING COMPOSITION
- ------------------------------
The Bank's deposit mix as of September 30, 1997, is presented below. Time
deposits composed 58.8% of the deposit mix at September 30, 1997. The Bank has
grown its noninterest checking and money market accounts.
FIGURE 15 - DEPOSIT MIX
<TABLE>
<CAPTION>
Year Ended Decomeber 3l,
Year Ended ------------------------------------------------------------------------
September 30, 1997 1996 1995 1994
-------------------------- -------------------------- -------------------------- ----------------
Amount Percent $ Change Amount Percent $ Change Amount Percent $ Change Amount Percent
------ ------- -------- ------ ------- -------- ------ ------- -------- ------ -------
Certificates of deposit:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maturing within 12 months $218,046 44.2% $ 29,302 $188,744 38.4% $ 5,086 $183,658 44.7% $57,884 $125,774 33.3%
Maturing within 13-24 months 47,621 9.6% 7,818 39,803 8.2% 11,883 27,920 6.7% (8.517) 36,437 9.7%
Maturing within 25-36 months 20,474 4.2% 176 20,298 4.1% (7,455) 27,753 6.8% (2,341) 30,094 8.0%
Maturing beyond 36 months 4,088 0.8% (43,613) 47,701 9.7% 25,235 22,466 5.5% (9,747) 32,213 8.5%
-------- ----- -------- -------- ----- ------- -------- ----- ------- -------- -----
Total certificates of
deposits 290,229 58.8% (6,317) 296,546 60.4% 34,749 261,797 63.7% 37,279 224,518 59.5%
Transaction Accounts:
NOW 14,955 3.0% (1,476) 16,431 3.3% 6,876 9.555 2.3% 38 9,517 2.5%
Noninterest-bearing demand 27,982 5.7% 2,616 25,366 5.2% 14,566 10,800 2.6% 1,405 9,395 2.5%
Passbook 95,132 19.3% (9,078) 104,210 21.2% 11,464 92,746 22.6% (6,694) 99,440 26.3%
Club account 1,069 0.2% 800 269 0.1% 50 219 0.1% 7 212 0.1%
Money Market demand deposit 58,394 11.8% 13,600 44,794 9.1% 11,899 32,895 8.0% 1,349 31,546 8.3%
Other 5,573 1.1% 1,943 3,630 0.7% 872 2,758 0.7% (173) 2,931 0.8%
-------- ----- -------- -------- ----- ------- -------- ----- ------- -------- -----
Total Transaction Accounts 203,105 41.2% 8,405 194,700 39.6% 45,727 148,973 36.3% (4,068) 153,041 40.5%
Total Deposits $493,334 100.0% $ 2,088 $491,246 100.0% $80,476 $410,770 100.0% $33,211 $377,559 100.0%
</TABLE>
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 22
================================================================================
Deposits have grown $109.5 million from $366.1 at December 31, 1992 to $493.3
million at September 30, 1997, or 28.53%. The Bank had $30 million in borrowings
as of September 30, 1997.
FIGURE 16 - DEPOSIT AND BORROWING TREND CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 23
================================================================================
- ------------------------------
ASSET/LIABILITY MANAGEMENT
- ------------------------------
The Bank manages its interest rate risk through normal balance sheet activities
and does not utilize any hedging techniques. The following chart illustrates the
Bank's net portfolio value at September 30, 1997, as calculated by the Federal
Home Loan Bank of Atlanta.
FIGURE 17 - NET PORTFOLIO VALUE
[GRAPHIC OMITTED]
Source: Federal Home Loan Bank of Atlanta
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 24
================================================================================
- ------------------------------
NET WORTH AND CAPITAL
- ------------------------------
At September 30, 1997, the Bank had capital in excess of the minimum
requirements for all three measures.
FIGURE 18 - CAPITAL ANALYSIS
Historical At Percent of
Regulatory Capital Position September 30, 1997 Adj. Assets
- --------------------------- ------------------ -----------
($ in thousands)
GAAP Capital: $108,329 16.90%
======== =====
Tangible Capital:
Capital Level $ 97,200 15.48%
Required $ 9,418 1.50%
-------- -----
Excess: $ 87,782 13.98%
======== =====
Core Capital:
Capital Level $ 97,200 15.48%
Required $ 18,835 3.00%
-------- -----
Excess: $ 78,365 12.48%
======== =====
Total Capital:
Capital Level $100,401 26.48%
Required $ 30,324 8.00%
-------- -----
Excess: $ 70,077 18.48%
======== =====
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 25
================================================================================
- ------------------------------
INCOME AND EXPENSE TRENDS
- ------------------------------
The Bank's net income, for the September 30, 1997 period annualized, of $7.9
million was lower than the two previous year ends. This is partially the result
in the posting of $1.5 million in provision for loan and lease losses.
FIGURE 19 - NET INCOME CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
Note: The September 30, 1997 income figure is nine month data annualized.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 26
================================================================================
The following chart illustrates the Bank's spread and margin since December 31,
1992. Both spread and margin have rebounded since the low of December 31, 1995.
FIGURE 20 - SPREAD AND MARGIN CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 27
================================================================================
A summary of the Bank's income statement is presented below. The Bank's net
income, for the September 30, 1997 nine month period, of $5.9 million was lower
than that for the same nine month period ending September 30, 1996. This is
primarily the result in the posting of a $1.5 million in provision for loan and
lease losses.
FIGURE 21 - INCOME STATEMENT TRENDS
For the Nine Months For the Year
Ended September 30, Ended December 31,
------------------- ---------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
($ In Thousands)
Total interest Income $32,616 $26,662 $36,903 $33,518 $29,468
Total interest Expense 16,223 12,865 17,941 17,010 12,851
------- ------- ------- ------- -------
Net interest income 16,393 13,797 18,962 16,508 16,617
Provision for loan losses 1,488 -- -- 150 180
------- ------- ------- ------- -------
Net interest income after
provision for loan losses 14,905 13,797 18,962 16,358 16,437
------- ------- ------- ------- -------
Total non-interest income 4,169 2,711 3,818 4,946 3,150
Total non-interest expense 9,844 6,434 9,669 7,792 7,475
------- ------- ------- ------- -------
Income before taxes 9,230 10,074 13,111 13,512 12,112
------- ------- ------- ------- -------
Income tax provision 3,332 3,626 4,720 4,864 4,437
Net income $ 5,898 $ 6,448 $ 8,391 $ 8,648 $ 7,675
======= ======= ======= ======= =======
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 28
================================================================================
The ROA and ROE have declined since December 31, 1993.
FIGURE 22 - PROFITABILITY TREND CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 29
================================================================================
- ------------------------------
SUBSIDIARIES
- ------------------------------
The Bank completed the acquisition of Manchester Trust Bank ("MTB") on September
9, 1997, a trust services company with $125 million of assets under management.
MTB will be operated as a wholly owned subsidiary of the Bank.
TSBusiness Finance Corporation, headquartered in Lawrenceville, was forced in
October 1996 to provide structured, secured commercial financing throughout New
Jersey and the Delaware Valley. This subsidiary will finance businesses
requiring lines of credit between $500,000 and $5 million, who may not qualify
for traditional unsecured accommodations.
- ------------------------------
LEGAL PROCEEDINGS
- ------------------------------
There are various claims and lawsuits in which the Bank is periodically involved
incident to the Bank's business. In the opinion of management, no material loss
is expected from any such pending claims or law suits.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 30
================================================================================
2. Market Area Analysis
- ------------------------------
MARKET AREA DEMOGRAPHICS
- ------------------------------
The following tables summarize the demographics for the Bank's markets in Mercer
County.
FIGURE 23 - MERCER COUNTY POPULATION DEMOGRAPHICS
<TABLE>
<CAPTION>
MERCERVILLE HAMILTON EWING LAWRENCEVILLE PENNINGTON ROBBINSVILLE TRENTON W. WINDSOR
----------- -------- ----- ------------- ---------- ------------ ------- ----------
POPULATI0N CHARACTERISTICS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAND AREA (miles) 7.02 7.02 7.02 7.02 7.01 7.02 5.13 7.02
POPULATION
1980 CENSUS 17,939 23,867 29,784 15,089 2,970 5,807 63,546 4,043
1990 CENSUS 20,980 22,471 28,288 15,261 3,293 7,041 61,076 5,691
1997 ESTIMATE 20,897 21,611 27,200 15,815 3,427 7,764 56,546 6,758
2002 PROJECTION 20,789 21,061 26,533 16,100 3,496 8,128 53,937 7,305
GROWTH 1980 TO 1990 16.95% -5.85% -5.02% 1.14% 10.87% 21.26% -3.89% 40.77%
PROJECTED GROWTH 1990 TO 2002 -0.91% -6.27% -6.20% 5.50% 6.16% 15.43% -11.69% 28.37%
POPULATION DENSITY 1997(persons/sq mile) 2,989.7 3,202.1 4,031.5 2,174.8 469.4 1,003.4 11,914.7 811.0
POPULATION BY URBAN VS. RURAL 20,862 22,505 28,294 14,616 1,450 6,003 61,095 (5,672)
URBAN 100.02% 100.00% 100.00% 102.21% 163.51% 108.28% 100.00% 0.00%
RURAL -0.02% 0.00% 0.00% -2.21% -63.51% -8.28% 0.00% 100.00%
POPULATION BY SEX - 1997 EST 20,897 21,611 27,200 15,815 3,427 7,764 56,546 6,758
MALE 46.76% 46.75% 46.85% 47.55% 49.02% 48.54% 49.26% 49.56%
FEMALE 53.24% 53.25% 53.15% 52.45% 50.98% 51.46% 50.74% 50.44%
MARITAL STATUS 17,565 18,856 22,799 12,849 2,652 5,602 46,700 4,370
SINGLE 25.44% 26.92% 35.02% 33.40% 27.72% 22.87% 42.80% 25.52%
MARRIED 54.74% 52.60% 44.80% 50.70% 60.95% 64.50% 31.45% 63.40%
SEPERATED/DIVORCED 9.94% 9.87% 11.48% 7.72% 5.71% 6.08% 16.17% 7.52%
WIDOWED 9.87% 10.61% 8.69% 8.18% 5.63% 6.55% 9.59% 3.55%
POPULATION BY RACE - 1997 EST 20,897 21,611 27,200 15,815 3,427 7,764 56,546 6,758
WHITE 89.03% 82.80% 46.34% 77.82% 88.00% 92.14% 18.69% 73.46%
BLACK 4.51% 11.64% 47.97% 12.95% 6.99% 1.92% 59.21% 6.07%
INDIAN 0.12% 0.19% 0.16% 0.16% 0.04% 0.13% 0.18% 0.08%
ASIAN 3.35% 1.41% 1.31% 3.89% 2.60% 3.91% 0.33% 15.07%
OTHER 0.09% 0.05% 0.12% 0.14% 0.06% 0.10% 0.26% 0.10%
HISPANIC 2.89% 3.91% 4.10% 5.04% 2.32% 1.79% 21.33% 5.22%
POPULATION BY AGE - 1997 EST 20,897 21,611 27,200 15,815 3,427 7,764 56,546 6,758
UNDER 5 YEARS 5.71% 5.57% 6.70% 5.40% 5.79% 6.39% 8.69% 7.56%
5 TO 14 YEARS 11.44% 11.31% 13.15% 11.22% 13.09% 13.76% 15.91% 16.04%
16 TO 24 YEARS 9.86% 10.02% 13.66% 17.04% 14.99% 11.25% 14.14% 11.99%
25 TO 34 YEARS 16.13% 14.37% 14.24% 12.31% 10.32% 13.56% 16.72% 13.53%
35 TO 44 YEARS 17.12% 16.71% 15.90% 15.60% 16.51% 17.95% 15.53% 20.18%
45 TO 54 YEARS 13.38% 12.56% 12.53% 12.43% 15.97% 14,90% 9.80% 16.34%
55 TO 64 YEARS 9.03% 9.94% 8.94% 9.28% 9.70% 9.95% 7.18% 7.86%
65 + YEARS 17.33% 19.52% 14.87% 16.71% 13.64% 12.25% 12.02% 6.50%
MEDIAN AGE 39.2 40.4 38.1 37.1 40.5 36.9 31.6 36.0
MEDIAN AGE OF HOUSEHOLDER 48.0 51.8 50.1 51.0 51.7 45.4 46.8 45.7
POPULATION 25+ BY EDUCATION LEVEL 14,975 16,178 18,502 9,934 2,155 4,711 37,229 3,672
ELEMENTARY 8.21% 10.45% 8.39% 8.79% 2.79% 6.53% 17.50% 3.03%
SOME HIGH SCHOOL 12.87% 18.35% 17.20% 11.97% 6.08% 10.41% 27.83% 3.30%
HIGH SCHOOL GRADUATE 32.52% 35.88% 30.05% 30.06% 19.96% 29.05% 29.12% 17.65%
SOME COLLEGE 17.96% 15.85% 18.13% 15.32% 13.80% 17.99% 13.73% 15.84%
ASSOCIATES DEGREE ONLY 6.80% 5.93% 4.63% 5.84% 4.91% 7.37% 3.15% 6.17%
BACHELORS DEGREE ONLY 15.39% 9.85% 13.13% 17.69% 28.51% 19.31% 5.62% 30.00%
GRADUATE DEGREE 6.26% 3.70% 8.47% 10.35% 23.96% 9.32% 3.05% 24.02%
POPULATION ENROLLED IN SCHOOL 4,307 4,631 7,235 4,548 986 1,781 15,320 1,592
PRE-PRIMARY - PUBLIC 5.32% 4.50% 3.81% 2.59% 4.97% 3.10% 4.79% 4.20%
PRE-PRIMARY - PRIVATE 5.89% 4.11% 4.33% 3.57% 7.12% 5.50% 2.64% 7.52%
ELEM/HIGH - PUBLIC 47.47% 48.49% 47.79% 37.04% 43.93% 51.06% 61.74% 57.34%
ELEM/HIGH - PRIVATE 8.05% 13.06% 9.83% 6.54% 7.25% 12.53% 11.25% 7.70%
COLLEGE - PUBLIC 24.98% 22.76% 27.98% 26.97% 24.91% 19.44% 14.97% 16.57%
COLLEGE - PRIVATE 8.28% 7.09% 6.26% 23.29% 11.82% 8.37% 4.61% 6.67%
</TABLE>
Source: Claritas
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 31
================================================================================
FIGURE 24 - MERCER COUNTY HOUSEHOLD CHARACTERISTICS
<TABLE>
<CAPTION>
MERCERVILLE HAMILTON EWING LAWRENCEVILLE PENNINGTON ROBBINSVILLE TRENTON W. WINDSOR
----------- -------- ----- ------------- ---------- ------------ ------- ----------
HOUSEHOLD CHARACTERISTICS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HOUSEHOLDS
1980 CENSUS 6,732 9,201 10.147 4,884 969 1,751 22,355 1,391
1990 CENSUS 8,606 9,138 10,216 5,389 1,112 2,356 20,479 2,006
1997 ESTIMATE 8,502 8,727 9,790 5,579 1,151 2,615 18,641 2,308
2002 PROJECTION 8,452 8,507 9,569 5,686 1,175 2,755 17,667 2,470
GROWTH 1980 TO 1990 27.85% -0.69% 0.68% 10.34% 14.73% 34.54% -8.39% 44.18%
PROJECTED GROWTH 1990 TO 2002 -1.79% -6.90% -6.34% 5.51% 5.67% 16.96% -13.73% 23.16%
HOUSEHOLD SIZE
AVG PERSONS PER HH 1980 2.66 2.59 2.94 3.09 3.07 3.32 2.84 2.91
AVG PERSONS PER HH 1990 2.44 2.46 2.77 2.83 2.96 2.99 2.98 2.84
AVG PERSONS PER HH 1997 EST 2.46 2.48 2.78 2.83 2.98 2.97 3.03 2.93
AVG PERSONS PER HH 2002 PROJ 2.46 2.48 2.77 2.83 2.98 2.95 3.05 2.96
CHANGE 1980 TO 1997 -0.21 -0.12 -0.16 -0.25 -0.09 -0.35 0.19 0.02
POPULATION BY HOUSEHOLD TYPE 8,502 8,727 9,790 5,579 1,151 2,615 18,641 2,308
FAMILY HOUSEHOLDS 65.49% 66.22% 68.50% 70.20% 78.44% 81.25% 63.68% 76.46%
NON-FAMILY HOUSEHOLDS 30.55% 33.22% 21.88% 4.25% 3.53% 15.88% 18.74% 22.88%
GROUP QUARTERS 3.96% 0.56% 9.62% 25.55% 18.02% 2.87% 17.58% 0.66%
HOUSEHOLDS BY TYPE 8,606 9,138 10,216 5,389 1,112 2,356 20,479 2,006
SINGLE MALE 9.67% 9.71% 9.12% 8.50% 6.13% 5.13% 11.87% 9.26%
SINGLE FEMALE 18.00% 18.03% 16.15% 15.83% 10.59% 8.58% 17.81% 10.18%
MARRIED COUPLE 53.62% 51.81% 46.86% 57.58% 70.30% 74.14% 30.58% 66.82%
OTHER FAMILY - MALE HEAD 2.99% 3.49% 3.95% 3.22% 2.42% 2.68% 6.14% 2.31%
OTHER FAMILY - FEMALE HEAD 9.97% 12.10% 18.91% 10.60% 6.86% 6.80% 27.78% 6.65%
NON FAMILY - MALE HEAD 3.26% 2.65% 2.75% 2.27% 2.17% 1.56% 3.57% 2.81%
NON FAMILY - FEMALE HEAD 2.49% 2.21% 2.27% 2.00% 1.53% 1.10% 2.26% 1.97%
HOUSEHOLDS WITH CHILDREN 8,580 9,119 10,234 5,360 1,104 2,319 20,416 2,015
MARRIED COUPLE FAMILY 54.60% 54.14% 47.31% 57.90% 71.94% 73.50% 32.06% 67.53%
OTHER FAMILY - MALE HEAD 2.97% 2.62% 4.50% 3.01% 2.05% 3.12% 6.82% 2.98%
OTHER FAMILY - FEMALE HEAD 9.08% 11.00% 18.64% 11.10% 5.12% 7.05% 27.26% 6.23%
NON FAMILY 33.35% 32.24% 29.55% 27.99% 20.89% 16.33% 33.87% 23.27%
HOUSEHOLDS BY INCOME - 1991 EST 8,502 8,727 9,790 5,579 1,151 2,615 18,641 2,308
UNDER $5,000 1.52% 1.95% 3.09% 1.05% 0.88% 1.04% 6.78% 0.72%
$5,000 TO $10,000 3.88% 5.95% 5.28% 4.09% 2.22% 1.78% 12.49% 1.56%
$10,000 TO $15,000 4.65% 6.00% 5.45% 5.26% 2.24% 1.85% 10.26% 1.78%
$15,000 TO $25,000 9.90% 11.98% 13.17% 9.85% 4.63% 5.87% 17.63% 5.04%
$25,000 TO $35,000 11.37% 14.17% 12.16% 11.82% 6.72% 7.39% 14.12% 7.49%
$35,000 TO $50,000 19.00% 16.63% 17.96% 14.85% 12.15% 13.47% 15.34% 12.07%
$50,000 TO $75,000 27.83% 24.89% 20.70% 21.95% 20.73% 23.99% 14.37% 19.46%
$75,000 TO $100,000 12.89% 11.41% 11.85% 13.27% 17.66% 21.87% 5.53% 16.70%
$100,000 OR MORE 8.96% 7.02% 10.34% 17.87% 32.77% 22.74% 3.48% 35.18%
MEDIAN HOUSEHOLD INCOME - 1997 EST $50,870 $43,947 $48,159 $58,247 $78,481 $62,569 $27,124 $ 94,116
MEDIAN FAMILY INCOME - 1997 EST $60,067 $56,788 $57,953 $69,688 $87,008 $71,598 $34,200 $100,629
PER CAPITA INCOME - 1997 EST $23,238 $21,093 $21,632 $25,431 $36,940 $27,479 $12,606 $ 34,340
PUBLIC ASSISTANCE INCOME 8,580 9,119 10,234 5,360 1,104 2,319 20,416 2,015
WITH PUBLIC ASSISTANCE INCOME 3.13% 3.81% 7.01% 3.07% 1.50% 2.16% 14.99% 1.38%
NO PUBLIC ASSISTANCE INCOME 96.87% 96.19% 92.99% 96.93% 98.50% 97.84% 85.01% 98.62%
RETIREMENT INCOME 8,580 9,119 10,234 5,360 1,104 2,319 20,416 2,015
WITH RETIREMENT INCOME 19.39% 25.96% 20.56% 22.67% 19.27% 16.46% 16.23% 7.72%
NO RETIREMENT INCOME 83.84% 78.01% 86.98% 80.50% 82.25% 85.75% 101.40% 93.68%
HOUSEHOLDS BY NUMBER OF VEHICLES 8,631 9,146 10,212 5,391 1,112 2,328 20,484 2,000
NO VEHICLES 6.64% 11.37% 15.16% 6.52% 2.51% 2.69% 36.80% 1.78%
1 VEHICLE 36.79% 37.75% 37.46% 34.73% 23.81% 21.27% 38.24% 29.38%
2 VEHICLES 42.49% 38.24% 34.18% 41.88% 50.52% 51.18% 19.30% 51.07%
3+ VEHICLES 14.08% 12.64% 13.20% 16.87% 23.15% 24.86% 5.67% 17.77%
ESTIMATED TOTAL VEHICLES 14,657 14,344 15.351 9,501 2,262 4.903 19,565 3,838
</TABLE>
Source: Claritas
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The following tables summarize the demographics for the Bank's markets in
Burlington and Ocean Counties.
FIGURE 25 - BURLINGTON AND OCEAN COUNTY POPULATION DEMOGRAPHICS
<TABLE>
<CAPTION>
BURLINGTON MT. HOLLY BEVERLY RD DELANCO LV EAST LV WEST
---------- --------- ---------- ------- ------- -------
POPULATI0N CHARACTERISTICS
<S> <C> <C> <C> <C> <C> <C>
LAND AREA (miles) 5.31 7.02 5.55 4.43 1.53 0.85
POPULATION
1980 CENSUS 11,991 12,079 14,861 12,343 5,744 824
1990 CENSUS 11,821 12,743 14,200 11,463 6,290 1,265
1997 ESTIMATE 12,184 14,149 14,944 11,495 6,587 1,400
2002 PROJECTION 12,379 14.911 15,344 11,485 6,888 1,501
GROWTH 1980 TO 1990 -1.42% 5.50% -4.44% -7.13% 9.51% 53.47%
PROJECTED GROWTH 1990 TO 2002 4.72% 17.02% 8.05% 0.19% 9.51% 18.67%
POPULATION DENSITY 1997(persons/sq mile) 2,224.6 1,815.9 2,556.7 2,587.6 4,115.1 1,489.5
POPULATION BY URBAN VS. RURAL 11,611 11,614 14,054 11,481 6,290 921
URBAN 100.91% 104.91% 100.43% 100.00% 100.00% 118.67%
RURAL -0.91% -4.91% -0.43% 0.00% 0.00% -18.67%
POPULATION BY SEX - 1997 EST 12,184 14,149 14,944 11,495 6,587 1,400
MALE 47.22% 48.18% 47.81% 48.35% 48.72% 44.65%
FEMALE 52.78% 51.82% 52.19% 51.65% 51.28% 55.35%
MARITAL STATUS 9,568 9,762 11,400 8,996 5,106 1,069
SINGLE 28.43% 27.57% 28.26% 27.94% 23.93% 13.25%
MARRIED 48.35% 53.23% 54.14% 53.63% 62.73% 65.12%
SEPERATED/DIVORCED 12.56% 11.58% 10.53% 11.45% 5.88% 5.00%
WIDOWED 10.66% 7.62% 7.07% 6.97% 7.46% 16.63%
POPULATON BY RACE - 1997 EST 12,184 14,149 14,944 11,495 6,587 1,400
WHITE 68.27% 68.85% 65.76% 71.66% 93.56% 91.30%
BLACK 26.69% 20.60% 25.94% 21.84% 0.05% 4.59%
INDIAN 0.25% 0.55% 0.30% 0.31% 0.11% 0.06%
ASIAN 1.30% 2.14% 2.76% 1.89% 1.65% 0.87%
OTHER 0.04% 0.25% 0.06% 0.19% 0.11% 0.02%
HISPANIC 3.44% 7.61% 5.17% 4.12% 4.52% 3.16%
POPULATION BY AGE - 1997 EST 12,184 14,149 14,944 11,495 6,587 1,400
UNDER 5 YEARS 6.91% 8.66% 6.86% 7.30% 5.68% 5.04%
5 TO 14 YEARS 12.92% 15.33% 13.36% 14.16% 12.90% 10.25%
15 TO 24 YEARS 11.30% 13.08% 13.02% 13.60% 13.31% 7.93%
25 TO 34 YEARS 14.66% 14.67% 14.74% 15.53% 12.39% 8.71%
35 TO 44 YEARS 15.50% 16.47% 16.03% 16.10% 15.04% 11.13%
45 TO 54 YEARS 11.23% 11.32% 12.88% 12.51% 15.21% 9.19%
55 TO 64 YEARS 8.97% 7.96% 9.49% 8.87% 7.92% 5.56%
65 + YEARS 18.51% 12.50% 13.61% 11.93% 17.53% 42.19%
MEDIAN AGE 38.1 34.6 36.3 35.1 39.1 51.9
MEDIAN AGE OF HOUSEHOLDER 49.7 46.0 48.1 46.8 50.5 68.8
POPULATION 25+ BY EDUCATION LEVEL 8,108 7,962 9,283 7,375 4,215 993
ELEMENTARY 11.13% 8.48% 6.31% 5.67% 7.00% 9.06%
SOME HIGH SCHOOL 18.60% 15.87% 13.48% 14.27% 15.42% 17.17%
HIGH SCHOOL GRADUATE 38.96% 33.52% 38.57% 36.31% 42.28% 39.82%
SOME COLLEGE 15.04% 17.12% 19.57% 19.41% 16.20% 16.72%
ASSOCIATES DEGREE ONLY 4.59% 4.98% 6.22% 6.59% 3.84% 4.56%
BACHELORS DEGREE ONLY 8.38% 13.26% 12.28% 12.32% 10.58% 8.50%
GRADUATE DEGREE 3.30% 6.76% 3.56% 5.43% 4.67% 4.17%
POPULATION ENROLLED IN SCHOOL 2,457 3,213 3,354 2,748 1,479 218
PRE-PRIMARY - PUBLIC 7.27% 5.92% 6.31% 5.23% 2.84% 4.83%
PRE-PRIMARY - PRIVATE 2.80% 2.29% 3.13% 4.10% 2.43% 4.06%
ELEM/HIGH - PUBLIC 57.05% 62.18% 52.53% 53.22% 65.86% 65.46%
ELEM/HIGH - PRIVATE 11.85% 8.66% 14.83% 13.49% 10.01% 6.31%
COLLEGE - PUBLIC 17.20% 16.38% 19.51% 20.44% 11.43% 13.66%
COLLEGE - PRIVATE 3.83% 4.57% 3.70% 3.52% 7.44% 5.67%
</TABLE>
Source: Claritas
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FIGURE 26 - BURLINGTON AND OCEAN COUNTY HOUSEHOLD CHARACTERISTICS
<TABLE>
<CAPTION>
BURLINGTON MT. HOLLY BEVERLY RD DELANCO LV EAST LV WEST
---------- --------- ---------- ------- ------- -------
HOUSEHOLD CHARACTERISTICS
<S> <C> <C> <C> <C> <C> <C>
HOUSEHOLDS
1980 CENSUS 4,385 4,109 4,977 4,332 1,800 369
1990 CENSUS 4,579 4,398 5,110 4,140 2,206 570
1997 ESTIMATE 4,772 4,963 5,425 4,155 2,309 631
2002 PROJECTION 4,881 5,273 5,610 4,163 2,420 679
GROWTH 1980 TO 1990 4.43% 7.04% 2.69% -4.44% 22.56% 54.35%
PROJECTED GROWTH 1990 TO 2002 6.60% 19.89% 9.77% 0.56% 9.70% 19.19%
HOUSEHOLD SIZE
AVG PERSONS PER HH 1980 2.73 2.94 2.99 2.85 3.19 2.23
AVG PERSONS PER HH 1990 2.58 2.90 2.78 2.77 2.85 2.22
AVG PERSONS PER HH 1997 EST 2.55 2.85 2.75 2.77 2.85 2.22
AVG PERSONS PER HH 2002 PROJ 2.54 2.83 2.74 2.76 2.85 2.21
CHANGE 1980 TO 1997 -0.18 -0.09 -0.23 -0.08 -0.34 -0.01
POPULATION BY HOUSEHOLD TYPE 4,772 4,963 5,425 4,155 2,309 631
FAMILY HOUSEHOLDS 67.92% 75.19% 74.41% 73.93% 80.47% 65.55%
NON-FAMILY HOUSEHOLDS 29.77% 19.80% 24.86% 26.04% 19.53% 32.29%
GROUP QUARTERS 2.31% 5.01% 0.73% 0.03% 0.00% 2.16%
HOUSEHOLDS BY TYPE 4,579 4,398 5,110 4,140 2,206 570
SINGLE MALE 9.96% 7.14% 8.13% 8.60% 5.58% 5.94%
SINGLE FEMALE 17.68% 12.50% 12.64% 12.34% 10.29% 25.79%
MARRIED COUPLE 47.48% 55.74% 57.64% 56.08% 70.58% 59.77%
OTHER FAMILY - MALE HEAD 4.38% 3.88% 3.81% 3.96% 3.04% 1.46%
OTHER FAMILY - FEMALE HEAD 16.14% 16.35% 13.61% 14.19% 7.98% 5.35%
NON FAMILY - MALE HEAD 2.54% 2.37% 2,65% 3.06% 1.59% 0.95%
NON FAMILY - FEMALE HEAD 1.83% 2.02% 1.51% 1.76% 0.95% 0.74%
HOUSEHOLDS MTH CHILDREN 4,604 4,456 5,091 4,117 2,252 579
MARRIED COUPLE FAMILY 48.44% 54.75% 59.86% 57.82% 71.58% 60.27%
OTHER FAMILY - MALE HEAD 4.64% 4.25% 3.32% 4.50% 2.75% 1.47%
OTHER FAMILY - FEMALE HEAD 16.02% 17.14% 13.69% 11.82% 8.53% 5.31%
NON FAMILY 30.89% 23.85% 23.13% 25.86% 17.14% 32.95%
HOUSEHOLDS BY INCOME - 1997 EST 4,772 4,963 5,425 4,155 2,309 631
UNDER $5,000 2.09% 2.89% 1.23% 0.74% 1.43% 1.91%
$5,000 TO 10,000 8.15% 6.17% 4.06% 5.66% 2.77% 6.17%
$10,000 TO $15,000 7.82% 5.83% 4.59% 5.54% 3.29% 7.76%
$15,000 TO $25,000 12.79% 13.21% 11.56% 10.60% 13.43% 16.18%
$25,000 TO $35,000 14.70% 9,72% 11.48% 11.19% 13.90% 17.66%
$35,000 TO $50,000 19.60% 17.22% 17.64% 19.32% 19.92% 17.64%
$56,000 TO $75,000 22.46% 25.02% 28,27% 25.15% 21.96% 20.88%
$75,000 TO $100,000 8.53% 12.12% 13.64% 13.28% 14.29% 7.53%
$100,000 OR MORE 3.84% 7.82% 7.53% 8.51% 9.01% 4.29%
MEDIAN HOUSEHOLD INCOME - 1997 EST $40,679 $54,644 $49,344 $48,747 $45,678 $35,246
MEDIAN FAMILY INCOME - 1997 EST $48.958 $60,453 $56,537 $55,221 $53,710 $45,193
PER CAPITA INCOME - 1997 EST $18,918 $23,058 $19,789 $20,568 $19,595 $19,881
PUBLIC ASSISTANCE INCOME 4,604 4,456 5,091 4,117 2,252 579
WITH PUBLIC ASSISTANCE INCOME 7.04% 8.77% 6.26% 5.14% 2.44% 2.73%
NO PUBLIC ASSISTANCE INCOME 92.96% 91.23% 93.74% 94.86% 97.56% 97.27%
RETIREMENT INCOME 4,604 4,456 5,091 4,117 2,252 579
WITH RETIREMENT INCOME 23.22% 25.77% 22.07% 18.20% 23.26% 40.32%
NO RETIREMENT INCOME 84.36% 83.84% 84.61% 87.22% 79.24% 62.49%
HOUSEHOLDS BY NUMBER OF VEHICLES 4,578 4,407 5,070 4,141 2,206 565
NO VEHICLES 13.89% 11.79% 8.50% 5.91% 4.81% 10.45%
1 VEHICLE 41.28% 34.19% 33.28% 34.96% 30.87% 55.03%
2 VEHICLES 32.90% 40.55% 39.38% 38.41% 40.93% 26.19%
3+ VEHICLES 11.93% 13.47% 18.85% 20.72% 23.39% 8.33%
ESTIMATED TOTAL VEHICLES 6,728 7,037 8,880 7,470 4,251 767
</TABLE>
Source: Claritas
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- ------------------------------
MARKET AREA DEPOSIT
CHARACTERISTICS
- ------------------------------
The following table summarizes the Bank's deposits in each branch and compares
them to the deposits of the market, as defined by a one-and-one half mile radius
surrounding each branch.
FIGURE 27 - BRANCH DEPOSITS
<TABLE>
<CAPTION>
June 30, 1992 June 30, 1996
------------------------------- ------------------------------- Change
Market Bank Market Market Bank Market in Mkt Sh
Branch Deposits Deposits Share Deposits Deposits Share 92-96
- ------ -------- -------- ----- -------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Beverly Road $ 38,407 $ 38,407 100.00% $ 59,147 $ 54,970 92.94% -7.06%
Burlington 320,530 44,831 13.99% 341,026 45,418 13.32% -0.67%
Delanco 98,721 7,128 7.22% 98,843 16,042 16.23% 9.01%
Ewing 446,509 55,986 12.54% 443,451 49,494 11.16% -1.38%
Leisure Village West 252,417 0 0.00% 250,037 0 0.00% 0.00%
Leisure Village East 218,366 0 0.00% 189,691 1,752 0.92% 0.92%
Lawrenceville 170,248 25,652 15.07% 162,811 33,040 20.29% 5.23%
Mt Holly 204,181 14,835 7.27% 216,305 26,068 12.05% 4.79%
Pennington 142,988 26,075 18.24% 120,768 37,529 31.08% 12.84%
Robbinsville 138,522 36,838 26.59% 171,883 36,906 21.47% -5.12%
Trenton 1,403,501 68,625 4.89% 1,633,778 53,561 3.28% -1.61%
Mercerville 582,388 7,890 1.35% 590,762 40,360 6.83% 5.48%
Hamilton 256,820 77,280 30.09% 299,703 75,212 25.10% -5.00%
W Windsor 0 0 0.00% 0 0 0.00% 0.00%
---------- -------- ------ ---------- -------- ----- -----
$4,274,331 $403,547 9.44% $4,579,532 $471,034 10.29% 0.84%
========== ======== ====== ========== ======== ===== =====
</TABLE>
Springside was closed and consolidated into several other branches.
Note: The Leisure Village West branch was opened after June 30, 1996.
Source: FDIC data, FinPro calculations.
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3. Comparisons With Publicly Traded Thrifts
- ------------------------------
INTRODUCTION
- ------------------------------
This chapter presents an analysis of the Bank's operations against a Comparable
Group of publicly traded savings institutions. The Comparable Group ("Comparable
Group") was selected from a universe of 399 public thrifts as of December 8,
1997. The Comparable Group was selected based upon similarity of characteristics
to the Bank. The Comparable Group multiples provide the basis for the fair
market valuation of the Bank. Factors that influence the Bank's value such as
balance sheet structure and size, profitability, income and expense trends,
capital levels, credit risk, interest rate risk and recent operating results can
be measured against the Comparable Group. The Comparable Group current market
pricing, coupled with the appropriate adjustments for differences between the
Bank and the Comparable Group, will then be utilized as the basis for the
pro-forma valuation of the Bank to-be-issued common stock.
- ------------------------------
SELECTION SCREENS
- ------------------------------
When selecting the Comparables, it was determined that the balance sheet size of
the institution was of greater importance than geography due to economies of
scale.
The selection screens utilized to identify possible Comparables from the list of
399 public thrifts at December 8, 1997 included:
1. The IPO date had to be on or before June 30, 1996, eliminating any new
conversions.
2. The conversion type had to be a full standard conversion.
3. The total asset size had to be less than or equal to $2.0 billion, but
greater than or equal to $600 million.
4. The efficiency ratio had to be less than or equal to 70.00%
5. The loan to asset ratio had to be less than or equal to 65.00%
6. The current price to earnings trading multiple had to be less or equal
to 23.00X to eliminate weak earners.
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7. The price to book trading multiple had to be less than or equal to
200% to eliminate those institutions with speculation included in
their price.
This resulted in 12 institutions.
<TABLE>
<CAPTION>
NUMBER
OF
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE
- -------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. NASDAQ Andover MA 15 08/04/87
FFES First Federal of East Hartford NASDAQ East Hartford CT 12 06/23/87
FFIC Flushing Financial Corp. NASDAQ Flushing NY 7 11/21/95
GAF GA Financial Inc. AMSE Pittsburgh PA 13 03/26/96
JSB JSB Financial Inc. NYSE Lynbrook NY 13 06/27/90
MASB MASSBANK Corp. NASDAQ Reading MA 15 05/28/86
MDBK Medford Bancorp Inc. NASDAQ Medford MA 16 03/18/86
PWBC PennFirst Bancorp Inc. NASDAQ Ellwood City PA 11 06/13/90
SFIN Statewide Financial Corp. NASDAQ Jersey City NJ 16 10/02/95
SISB SIS Bancorp Inc. NASDAQ Springfield MA 25 02/08/95
STFR St. Francis Capital Corp. NASDAQ Milwaukee WI 23 06/21/93
THRD TF Financial Corp. NASDAQ Newtown PA 14 07/13/94
</TABLE>
- ------------------------------
SELECTION CRITERIA
- ------------------------------
Excluded from the Comparable Group were institutions that were pending mergers
or acquisitions along with companies whose prices appear to be distorted by
speculative factors or unusual operating conditions. Also, institutions that
completed their conversions within the last year were also excluded as the
earnings of newly converted institutions do not reflect a full years benefit
from the reinvestment of proceeds, and thus the price/earnings multiples and
return on equity measures for these institutions tend to be skewed upward and
downward respectively.
In an ideal world, all of the Comparable Group would contain the exact
characteristics of the Bank. The goal of the selection criteria process is to
find those institutions that most closely match those of the Bank. None of the
Comparables selected will be exact clones of the Bank.
<PAGE>
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The members of the Comparable Group were selected based upon the following
criteria:
1. Asset size
2. Profitability
3. Capital level
4. Asset mix
5. Operating strategy
6. Date of conversion
1. Asset size The Comparable Group should have a similar asset size to the
Bank. Large institutions are not appropriate for the peer group due to a more
extensive branch network, greater financial strength, more access to diverse
markets and more capacity in terms of infrastructure. The Comparable Group
ranged in size from $625.3 million to $1.7 billion in total assets with an
average of $1.1 billion. The Bank's asset size was $638.9 million as of
September 30, 1997 and will be $798.8 million on a proforma basis at the
midpoint of the valuation range.
2. Profitability The Comparable Group should have similar financial
conditions and recent earnings that are comparable to the Bank. They should show
a comparable return on equity and return on assets measures. As such, the
Comparable Group have ROAAs averaging 0.97% and ROAEs averaging 9.05% for the
most recent quarter available. The Comparable Group profitability measures had a
dispersion about the mean for the ROAA measure ranging from a low of 0.46% to a
high of 2.23% while the ROAE measure ranged from a low of 5.80% to a high of
12.46%. The Bank had an ROAA of 1.25% and ROAE of 7.57% for the nine month
period ending September 30, 1997.
3. Capital level The Comparable Group should have a capital level similar to
the Bank's. Capital is important in that it is a determinant of asset size and
regulatory rating. Institutions with capital in a similar range as the Bank were
selected. The average equity to assets ratio for the Comparable Group was 10.86%
with a high of 23.21% and a low of 6.63%. At September 30, 1997, the Bank had an
equity to assets ratio of 16.94%. On a proforma basis, at the midpoint the Bank
would have an equity to assets ratio of 33.58%.
4. Asset Mix The asset mix is very important in the selection criteria for
Comparables. At September 30, 1997, the Bank had a total net loan to asset ratio
of 62.27%, but this ratio will be substantially lower after the offering. The
average loan to asset ratio for the Comparables was 45.17%, ranging from a low
of 19.07% to a high of 61.03%.
<PAGE>
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5. Operating strategy An institution's operating characteristics are
important because they determine future performance. They also affect expected
rates of return and investor's general perception of the quality, risk and
attractiveness of a given company. Specific operating characteristics include
profitability, balance sheet growth, asset quality, capitalization, and
non-financial factors such as management strategies and lines of business.
6. Date of conversion Recent conversions, those completed after June 30,
1996, were excluded since the earnings of a newly converted institution do not
reflect a full year's benefits of reinvestment of conversion proceeds.
Additionally, new issues tend to trade at a discount to the market averages.
- ------------------------------
COMPARABLE GROUP PROFILES
- ------------------------------
o First Essex Bancorp Inc. FESX is a BIF insured thrift that operates 15
branches in Andover, Massachusetts and has $1.2 billion in assets.
FESX had the second highest loan to asset ratio, 60.22%, the second
highest interest income ratio, 7.52%, and the second highest ROAE
ratio, 12.02%, in the Comparable Group. FESX was select based on asset
size, dependence on net interest income, moderate level of NPLs,
modest efficiency ratio, number of offices and solid profitability.
o First Federal of East Hartford. FFES is a SAIF insured institution
that operates 12 branches in Connecticut and is $987 million in
assets. FFES had the second highest level of borrowings in the
Comparable Group, 34.97%. First Federal also has the lowest level of
loans to assets, 19.07%, the lowest equity to assets ratio 6.63%, the
second lowest ROAA, 0.54%, the second lowest margin, 2.17%, and the
second lowest interest income, 6.76%. FFES was selected to the Group
based on asset size, low level of noninterest income, moderate
efficiency ratio, number of branches, and dependence on net interest
income.
o Flushing Financial Corp. FFIC is a BIF insured institution with $960
million in assets. FFIC had 7 branches, the fewest in the Comparable
Group. FFIC had the second lowest ROAE, 6.53%, despite having the
second highest margin, 3.81%. Flushing had the lowest current dividend
yield, 1.02%. FFIC was selected to the Group based on asset size, low
level of noninterest income, moderate efficiency ratio, loan to asset
ratio, capital level, and dependence on net interest income.
<PAGE>
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o GA Financial Inc. GAF is a SAIF insured institution that operates 13
branches and is located in Pittsburgh, Pennsylvania. GAF had the
second lowest deposit to asset ratio of the Comparable Group, 56.94%,
the second highest level of equity, 14.63% and the second highest ROA,
1.16%. It was selected as a comparable based on its asset size,
dependence on net interest income, low level of non-interest income,
moderate efficiency ratio, number of branches, asset quality and
moderate loan to asset ratio.
o JSB Financial Inc. JSB has 13 branches and is a BIF insured
institution located in Lynbrook, New York. JSB has the highest loan to
asset ratio in the Comparable Group, 61.03%, and has the highest level
of non-performing assets as a percentage of assets, 1.02%. JSB
Financial is the only Comparable without borrowings. JSB has the
highest net interest margin, 4.66%, the lowest cost of funds, 2.63%,
the best efficiency ratio, 39.09%, and the highest ROAA, 2.23%. JSB
was included in the Comparable Group based on its asset size, number
of branches, solid efficiency ratio, strong profitability, and loans
to assets ratio.
o MASSBANK Corp. MASB is a BIF insured institution with 15 branches
located in Reading, Massachusetts. MASSBANK had the second lowest
loans to assets ratio, 28.79%, the highest deposits to assets ratio,
88.01%, and the second lowest level of borrowings 0.10% of assets.
MASB had lowest NPAs/assets to 0.16%. MASSBANK was included with the
Comparable Group based on its size, loan to asset ratio, deposit to
assets ratio, asset quality, profitability and number of branches.
o Medford Bancorp Inc. MDBK is a BIF insured institution that operates
16 offices in Medford, Massachusetts. MDBK has $1.1 billion in assets
and is listed on NASDAQ. Medford has the second highest reserve to
NPLs ratio, 235.75%. MDBK was included in the Comparable Group based
on its asset size, modest interest income, level of loans, number of
branches, capital levels, ROAA and ROAE ratios, and efficiency ratio.
o PennFirst Bancorp Inc. PWBC is a SAIF insured Pennsylvania institution
that operates 11 branches. PennFirst had total assets of $822 million.
Home Building had the lowest deposit to asset ratio, 47.93%, and the
highest borrowing to asset ratio, 42.64%. PWBC had the lowest net
interest margin, 2.17%, primarily due to the highest cost of funds,
4.86%. PWBC was included in the Comparable Group based on its asset
size, number of branches, dependence on net interest income, low level
of non-interest income, and a moderate level of non-performing assets.
<PAGE>
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o Statewide Financial Corp. SFIN is a SAIF insured institution that
operates 16 branches and is based in Jersey City, New Jersey.
Statewide had $703 in assets and is the second smallest of the
Comparable Group. SFIN had the second highest efficiency ratio,
63.67%, primarily due to the second highest level of noninterest
expense, 2.44%, in the Comparable Group. It was included in the
Comparable Group based on its asset size, capital levels, moderate
profitability, number of branches, and modest noninterest income.
o SIS Bancorp Inc. SISB is located in Springfield, Massachusetts and
operates 25 branches. SIS had the highest efficiency 65.55% ratio
primarily due to a high level of noninterest expense, 2.87%. SISB is
one of three Comparables without intangibles. SIS Bancorp had the
highest level of reserves to NPLs, 405.76%. It was included due to its
branch network, balance sheet size, asset quality, solid
profitability, and capital levels.
o St. Francis Capital Corp. STFR is located in Milwaukee, Wisconsin and
operates 23 branches. STFR had the lowest ROAA and ROAE 0.46% and
5.80%, respectively. St. Francis had the second highest level of
interest expense, 4.58% and the lowest level of NPLs as a percentage
of loans, 0.40%. STFR was included due to its branch network, balance
sheet size, asset quality, loans to assets ratio, and capital levels.
o TF Financial Corp. THRD is a SAIF insured institution that operates
14 branches and is based in Newton, Pennsylvannia. THRD had $625 in
assets and is the smallest of the Comparable Group. TF Financial also
is the smallest Comparable in terms of market capitalization, $90.8
million. THRD had the second highest level of intangibles, 11.69%, and
the second lowest NPLs to loans ratio, 0.50%, in the Comparable Group.
It was included in the Comparable Group based on its asset size,
capital levels, moderate profitability, number of branches, and modest
noninterest income.
All data presented in figures 28 through 39 is from SNL Securities utilizing the
most recent quarter for balance sheet and income statement related items. All
data for the Bank is from the prospectus or the audited financials. The market
pricing data for the Comparables is as of December 8, 1997.
<PAGE>
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FIGURE 28 - KEY FINANCIAL INDICATORS
The Bank and the Comparable Group
- --------------------------------------------------------------------------------
The Bank at Comparable Group
September 30, 1997 Quarter Average
(Most Recent
Quarter)
- --------------------------------------------------------------------------------
Balance Sheet Data
- --------------------------------------------------------------------------------
Gross Loans to Deposits 81.94% 69.13%
- --------------------------------------------------------------------------------
Total Net Loans to Assets 62.27% 45.17%
- --------------------------------------------------------------------------------
Deposits to Assets 77.21% 66.37%
- --------------------------------------------------------------------------------
Borrowed Funds to Assets 4.70% 21.05%
- --------------------------------------------------------------------------------
Balance Sheet Growth
- --------------------------------------------------------------------------------
Asset Growth Rate 8.41% 9.08%
- --------------------------------------------------------------------------------
Loan Growth Rate 6.16% 12.48%
- --------------------------------------------------------------------------------
Deposit Growth Rate 0.57% 3.34%
- --------------------------------------------------------------------------------
Capital
- --------------------------------------------------------------------------------
Equity to Assets 16.94% 10.86%
- --------------------------------------------------------------------------------
Tangible Equity to Assets 15.48% 10.44%
- --------------------------------------------------------------------------------
Intangible Assets to Equity 10.01% 4.98%
- --------------------------------------------------------------------------------
Regulatory Core Capital to Assets 15.48% 8.79%
- --------------------------------------------------------------------------------
Equity + Reserves to Assets 17.44% 11.37%
- --------------------------------------------------------------------------------
Total Capital to Risk Adjusted Assets 26.48% 20.37%
- --------------------------------------------------------------------------------
<PAGE>
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================================================================================
- --------------------------------------------------------------------------------
The Bank Comparable Group
- --------------------------------------------------------------------------------
Asset Quality
- --------------------------------------------------------------------------------
Non-Performing Loans to Loans 1.43% 0.79%
- --------------------------------------------------------------------------------
Reserves to Non-Performing Loans 56.25% 167.67%
- --------------------------------------------------------------------------------
Non-Performing Assets to Assets 0.91% 0.39%
- --------------------------------------------------------------------------------
Non-Performing Assets to Equity 5.39% 3.82%
- --------------------------------------------------------------------------------
Reserves to Loans 0.80% 1.13%
- --------------------------------------------------------------------------------
Reserves to Non-Performing Assets + 90 Days Del. 56.25% 143.55%
- --------------------------------------------------------------------------------
Profitability
- --------------------------------------------------------------------------------
Return on Average Assets 1.25% 0.97%
- --------------------------------------------------------------------------------
Return on Average Equity 7.57% 9.05%
- --------------------------------------------------------------------------------
Income Statement
- --------------------------------------------------------------------------------
Net Interest Margin 3.65% 3.25%
- --------------------------------------------------------------------------------
Interest Income to Average Assets 7.01% 7.11%
- --------------------------------------------------------------------------------
Interest Expense to Average Assets 3.49% 4.00%
- --------------------------------------------------------------------------------
Net Interest Income to Average Assets 3.52% 3.12%
- --------------------------------------------------------------------------------
Noninterest Income to Average Assets 0.90% 0.31%
- --------------------------------------------------------------------------------
Noninterest Expense to Average Assets 2.11% 1.91%
- --------------------------------------------------------------------------------
Efficiency Ratio 47.87% 54.22%
- --------------------------------------------------------------------------------
Overhead Ratio 34.62% 49.88%
- --------------------------------------------------------------------------------
Source: The Bank Offering Prospectus, FinPro calculations and SNL Securities
Note: All of the Bank data is for the nine months ended September 30, 1997 and
annualized where appropriate.
Note: All of the Comparable data is as of the most recent quarter.
<PAGE>
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- ------------------------------
CORPORATE DATA
- ------------------------------
FIGURE 29 - COMPARABLE CORPORATE DATA
<TABLE>
<CAPTION>
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- -------------------------------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. NASDAQ Andover MA 15 08/04/87 BIF Regular
FFES First Federal of East Hartford NASDAQ East Hartford CT 12 06/23/87 SAIF Regular
FFIC Flushing Financial Corp. NASDAQ Flushing NY 7 11/21/95 BIF Regular
GAF GA Financial Inc. AMSE Pittsburgh PA 13 03/26/96 SAIF Regular
JSB JSB Financial Inc. NYSE Lynbrook NY 13 06/27/90 BIF Regular
MASB MASSBANK Corp. NASDAQ Reading MA 15 05/28/86 BIF Regular
MDBK Medford Bancorp Inc. NASDAQ Medford MA 16 03/18/86 BIF Regular
PWBC PennFirst Bancorp Inc. NASDAQ Ellwood City PA 11 06/13/90 SAIF Regular
SFIN Statewide Financial Corp. NASDAQ Jersey City NJ 16 10/02/95 SAIF Regular
SISB SIS Bancorp Inc. NASDAQ Springfield MA 25 02/08/95 BIF Regular
STFR St. Francis Capital Corp. NASDAQ Milwaukee WI 23 06/21/93 SAIF Regular
THRD TF Financial Corp. NASDAQ Newtown PA 14 07/13/94 SAIF Regular
</TABLE>
Source: SNL Securities
<PAGE>
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================================================================================
- ------------------------------
KEY FINANCIAL DATA
- ------------------------------
Selected balance sheet ratios for the Comparable Group are shown in the
following table:
FIGURE 30 - COMPARABLE KEY FINANCIAL DATA
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
---------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- -------------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 1,209,698 98.35 60.22 61.23 29.32
FFES First Federal of East Hartford 987,416 32.97 19.07 57.83 34.97
FFIC Flushing Financial Corp. 960,130 89.51 59.99 67.02 17.19
GAF GA Financial Inc. 802,304 66.62 37.94 56.94 24.98
JSB JSB Financial Inc. 1,531,068 83.22 61.03 73.33 0.00
MASB MASSBANK Corp. 932,757 32.71 28.79 88.01 0.10
MDBK Medford Bancorp Inc. 1,106,345 71.20 53.04 74.50 15.99
PWBC PennFirst Bancorp Inc. 822,350 85.15 40.81 47.93 42.64
SFIN Statewide Financial Corp. 703,112 75.00 47.20 62.93 26.75
SISB SIS Bancorp Inc. 1,453,017 67.39 47.38 70.31 19.67
STFR St. Francis Capital Corp. 1,660,649 68.41 44.78 65.46 25.31
THRD TF Financial Corp. 625,338 58.98 41.84 70.94 15.73
---------------------------------------------------
Average 1,066,182 69.13 45.17 66.37 21.05
Median 973,773 69.81 45.99 66.24 22.33
Maximum 1,660,649 98.35 61.03 88.01 42.64
Minimum 625,338 32.71 19.07 47.93 0.00
</TABLE>
Source: SNL Securities
<PAGE>
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================================================================================
- ------------------------------
CAPITAL DATA
- ------------------------------
FIGURE 31 - COMPARABLE CAPITAL DATA
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 7.40 6.54 12.52 6.42 8.26 11.76
FFES First Federal of East Hartford 6.63 6.63 0.00 6.75 6.90 22.45
FFIC Flushing Financial Corp. 14.21 13.71 4.00 10.17 14.88 21.05
GAF GA Financial Inc. 14.63 14.51 0.97 12.07 14.78 33.50
JSB JSB Financial Inc. 23.21 23.21 0.00 15.07 23.59 20.78
MASB MASSBANK Corp. 10.78 10.64 1.50 9.81 11.02 34.04
MDBK Medford Bancorp Inc. 9.02 8.50 6.29 8.53 9.61 15.90
PWBC PennFirst Bancorp Inc. 8.37 7.51 11.07 7.13 8.96 20.13
SFIN Statewide Financial Corp. 9.36 9.35 0.17 8.37 9.76 22.15
SISB SIS Bancorp Inc. 7.36 7.36 0.00 7.13 8.63 13.07
STFR St. Francis Capital Corp. 7.74 6.91 11.53 7.14 8.11 12.21
THRD TF Financial Corp. 11.63 10.41 11.69 6.90 11.97 17.43
-----------------------------------------------------------------------
Average 10.86 10.44 4.98 8.79 11.37 20.37
Median 9.19 8.93 2.75 7.76 9.69 20.46
Maximum 23.21 23.21 12.52 15.07 23.59 34.04
Minimum 6.63 6.54 0.00 6.42 6.90 11.76
</TABLE>
Source: SNL Securities
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- ------------------------------
ASSET QUALITY DATA
- ------------------------------
FIGURE 32 - COMPARABLE ASSET QUALITY DATA
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
------------------------------------------------------
NPLs/ RESERVES/ NPAs/ NPAs/ RESERVES/ RESERVES/
LOANS NPLs ASSETS EQUITY LOANS NPAs + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 0.81 175.40 0.58 7.78 1.43 149.29
FFES First Federal of East Hartford 1.31 109.43 0.25 3.78 1.44 87.85
FFIC Flushing Financial Corp. 0.59 189.94 0.39 2.74 1.12 172.94
GAF GA Financial Inc. 0.64 63.36 0.24 1.66 0.41 63.36
JSB JSB Financial Inc. 1.56 39.27 1.02 4.39 0.61 35.16
MASB MASSBANK Corp. 0.43 193.81 0.16 1.44 0.84 113.84
MDBK Medford Bancorp Inc. 0.48 235.75 0.27 3.02 1.12 219.01
PWBC PennFirst Bancorp Inc. 1.50 96.88 0.68 8.07 1.45 87.79
SFIN Statewide Financial Corp. 0.64 132.09 0.33 3.56 0.84 104.03
SISB SIS Bancorp Inc. 0.66 405.76 0.33 4.42 2.67 379.00
STFR St. Francis Capital Corp. 0.40 207.08 0.21 2.65 0.83 181.82
THRD TF Financial Corp. 0.50 163.39 0.27 2.29 0.82 128.49
------------------------------------------------------
Average 0.79 167.67 0.39 3.82 1.13 143.55
Median 0.64 169.40 0.30 3.29 0.98 121.17
Maximum 1.56 405.76 1.02 8.07 2.67 379.00
Minimum 0.40 39.27 0.16 1.44 0.41 35.16
</TABLE>
Source: SNL Securities
<PAGE>
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================================================================================
- ------------------------------
PROFITABILITY DATA
- ------------------------------
FIGURE 33 - COMPARABLE PROFITABILITY DATA
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- -------------------------------------- -------------------------------------------
<S> <C> <C> <C>
FESX First Essex Bancorp Inc. 0.86 12.02
FFES First Federal of East Hartford 0.54 8.22
FFIC Flushing Financial Corp. 0.97 6.53
GAF GA Financial Inc. 1.16 7.59
JSB JSB Financial Inc. 2.23 9.73
MASB MASSBANK Corp. 1.12 10.53
MDBK Medford Bancorp Inc. 0.99 11.07
PWBC PennFirst Bancorp Inc. 0.70 8.50
SFIN Statewide Financial Corp. 0.81 8.62
SISB SIS Bancorp Inc. 0.88 12.46
STFR St. Francis Capital Corp. 0.46 5.80
THRD TF Financial Corp. 0.87 7.57
-------------------------------------------
Average 0.97 9.05
Median 0.88 8.56
Maximum 2.23 12.46
Minimum 0.46 5.80
</TABLE>
Source: SNL Securities
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 48
================================================================================
- ------------------------------
INCOME STATEMENT DATA
- ------------------------------
FIGURE 34 - COMPARABLE INCOME STATEMENT DATA
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
-------------------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/ EFFICIENCY OVERHEAD
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS RATIO RATIO
TICKER SHORT NAME (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 3.18 7.52 4.49 3.02 0.23 1.79 53.06 49.51
FFES First Federal of East Hartford 2.28 6.76 4.54 2.22 0.16 1.39 58.33 55.25
FFIC Flushing Financial Corp. 3.81 7.67 4.04 3.64 0.36 2.22 54.55 50.07
GAF GA Financial Inc. 3.54 7.34 3.90 3.45 0.32 1.95 51.11 46.59
JSB JSB Financial Inc. 4.66 6.99 2.63 4.36 0.36 1.78 39.09 34.10
MASB MASSBANK Corp. 2.86 6.66 3.85 2.81 0.20 1.37 44.23 40.27
MDBK Medford Bancorp Inc. 3.25 6.99 3.87 3.12 0.24 1.75 48.58 44.69
PWBC PennFirst Bancorp Inc. 2.17 6.97 4.86 2.11 0.15 1.24 51.40 47.90
SFIN Statewide Financial Corp. 3.69 7.36 3.79 3.59 0.23 2.44 63.67 61.29
SISB SIS Bancorp Inc. 3.68 7.11 3.62 3.49 0.88 2.87 65.55 56.85
STFR St. Francis Capital Corp. 2.66 7.03 4.58 2.45 0.38 1.78 59.45 53.17
THRD TF Financial Corp. 3.25 6.94 3.80 3.14 0.23 2.28 61.65 58.87
-------------------------------------------------------------------------------------------
Average 3.25 7.11 4.00 3.12 0.31 1.91 54.22 49.88
Median 3.25 7.01 3.89 3.13 0.24 1.79 53.81 49.79
Maximum 4.66 7.67 4.86 4.36 0.88 2.87 65.55 61.29
Minimum 2.17 6.66 2.63 2.11 0.15 1.24 39.09 34.10
</TABLE>
Source: SNL Securities
<PAGE>
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- ------------------------------
GROWTH DATA
- ------------------------------
FIGURE 35 - COMPARABLE GROWTH DATA
<TABLE>
<CAPTION>
ASSET LOAN DEPOSIT
GROWTH GROWTH GROWTH
RATE RATE RATE
TICKER SHORT NAME (%) (%) (%)
- -------------------------------------- -------------------------
<S> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. (11.47) 4.91 6.43
FFES First Federal of East Hartford 2.55 15.63 (5.73)
FFIC Flushing Financial Corp. 46.56 84.34 35.89
GAF GA Financial Inc. 28.04 33.72 (1.62)
JSB JSB Financial Inc. (0.01) 14.77 (3.47)
MASB MASSBANK Corp. 12.08 19.91 11.24
MDBK Medford Bancorp Inc. 12.60 10.12 (0.21)
PWBC PennFirst Bancorp Inc. 2.64 6.65 3.13
SFIN Statewide Financial Corp. 17.76 1.49 (5.36)
SISB SIS Bancorp Inc. 5.15 15.81 2.45
STFR St. Francis Capital Corp. 3.67 13.10 12.34
THRD TF Financial Corp. (9.62) (70.73) (14.98)
-------------------------
Average 9.08 12.48 3.34
Median 4.41 13.94 1.12
Maximum 46.56 84.34 35.89
Minimum (11.47) (70.73) (14.98)
</TABLE>
Source: SNL Securities
<PAGE>
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- ------------------------------
MARKET CAPITALIZATION DATA
- ------------------------------
FIGURE 36 - COMPARABLE MARKET CAPITALIZATION DATA
<TABLE>
<CAPTION>
MARKET DATA AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------
MRQ MRQ MRQ MRQ MRQ PUBLICLY MRQ TANGIBLE
MARKET PRICE PRICE PRICE REPORTED PUBLICLY REP
VALUE PER SHARE HIGH LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($) ($) ($) ($)
- -------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 158.06 20.375 20.500 16.500 11.90 10.41
FFES First Federal of East Hartford 98.74 36.500 36.750 29.000 24.40 24.40
FFIC Flushing Financial Corp. 188.61 24.000 24.000 20.000 17.08 16.40
GAF GA Financial Inc. 155.96 18.625 19.000 16.500 14.72 14.58
JSB JSB Financial Inc. 482.91 48.938 49.375 41.000 35.91 35.91
MASB MASSBANK Corp. 166.08 47.500 47.500 35.625 28.25 27.83
MDBK Medford Bancorp Inc. 171.43 36.000 36.500 29.250 21.96 20.58
PWBC PennFirst Bancorp Inc. 97.58 17.625 19.500 14.318 12.96 11.52
SFIN Statewide Financial Corp. 105.40 21.500 21.625 18.000 14.34 14.32
SISB SIS Bancorp Inc. 211.37 34.750 34.750 27.625 18.94 18.94
STFR St. Francis Capital Corp. 209.52 37.375 38.000 33.875 24.54 21.71
THRD TF Financial Corp. 90.84 25.375 25.438 19.125 19.21 16.96
--------------------------------------------------------------
Average 178.04 30.71 31.08 25.07 20.35 19.46
Median 162.07 30.06 30.09 23.81 19.08 17.95
Maximum 482.91 48.94 49.38 41.00 35.91 35.91
Minimum 90.84 17.63 19.00 14.32 11.90 10.41
</TABLE>
Source: SNL Securities
<PAGE>
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- ------------------------------
DIVIDEND DATA
- ------------------------------
FIGURE 37 - COMPARABLE DIVIDEND DATA
<TABLE>
<CAPTION>
DIVIDENDS
-------------------------
CURRENT LTM DIVIDEND
DIVIDEND PAYOUT
YIELD RATIO
TICKER SHORT NAME ($) (%)
- -------------------------------------- -------------------------
<S> <C> <C> <C>
FESX First Essex Bancorp Inc. 2.286 34.78
FFES First Federal of East Hartford 1.630 32.09
FFIC Flushing Financial Corp. 1.016 18.87
GAF GA Financial Inc. 2.423 39.58
JSB JSB Financial Inc. 2.875 47.37
MASB MASSBANK Corp. 2.065 30.56
MDBK Medford Bancorp Inc. 1.907 35.98
PWBC PennFirst Bancorp Inc. 1.959 32.25
SFIN Statewide Financial Corp. 1.882 32.28
SISB SIS Bancorp Inc. 1.479 18.54
STFR St. Francis Capital Corp. 1.400 21.82
THRD TF Financial Corp. 1.404 31.15
-------------------------
Average 1.86 31.27
Median 1.89 32.17
Maximum 2.88 47.37
Minimum 1.02 18.54
</TABLE>
Source: SNL Securities
<PAGE>
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- ------------------------------
PRICING DATA
- ------------------------------
FIGURE 38 - COMPARABLE PRICING DATA
<TABLE>
<CAPTION>
CURRENT PRICING DATA AS OF 12/08/97
---------------------------------------------------------------
PRICE/ PRICE/ PRICE/TANG
LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP PUBLICLY REP
CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE BOOK VALUE
TICKER SHORT NAME (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 17.95 13.07 15.44 15.22 176.47 201.73
FFES First Federal of East Hartford 17.36 10.00 19.58 19.69 150.87 150.87
FFIC Flushing Financial Corp. 22.08 19.64 19.69 22.29 138.32 144.05
GAF GA Financial Inc. 21.08 19.69 17.08 20.64 134.60 135.89
JSB JSB Financial Inc. 19.17 31.48 14.84 17.08 135.58 135.58
MASB MASSBANK Corp. 18.31 17.75 16.61 17.22 164.60 167.09
MDBK Medford Bancorp Inc. 17.00 15.49 16.56 15.79 171.90 183.43
PWBC PennFirst Bancorp Inc. 17.67 11.87 17.01 17.67 141.78 159.51
SFIN Statewide Financial Corp. 18.41 15.26 17.71 18.41 163.01 163.23
SISB SIS Bancorp Inc. 18.66 14.55 16.61 18.48 199.97 199.97
STFR St. Francis Capital Corp. 18.35 12.62 16.95 18.18 163.00 184.25
THRD TF Financial Corp. 26.64 18.63 21.59 23.36 148.36 168.04
---------------------------------------------------------------
Average 19.39 16.67 17.47 18.67 157.37 166.14
Median 18.38 15.38 16.99 18.30 156.94 165.16
Maximum 26.64 31.48 21.59 23.36 199.97 201.73
Minimum 17.00 10.00 14.84 15.22 134.60 135.58
</TABLE>
Source: SNL Securities
<PAGE>
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- ------------------------------
EARNINGS DATA
- ------------------------------
FIGURE 39 - COMPARABLE EARNINGS DATA
<TABLE>
<CAPTION>
INCOME
--------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- -------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 2,650 2,298 0.29 18.10
FFES First Federal of East Hartford 1,324 1,455 0.52 17.70
FFIC Flushing Financial Corp. 2,193 2,216 0.30 19.69
GAF GA Financial Inc. 2,166 2,086 0.28 17.69
JSB JSB Financial Inc. 8,554 6,677 0.64 19.02
MASB MASSBANK Corp. 2,589 2,324 0.63 18.45
MDBK Medford Bancorp Inc. 2,710 2,633 0.55 17.16
PWBC PennFirst Bancorp Inc. 1,432 1,405 0.26 17.67
SFIN Statewide Financial Corp. 1,382 1,382 0.33 17.71
SISB SIS Bancorp Inc. 3,169 3,074 0.55 17.22
STFR St. Francis Capital Corp. 1,899 3,395 1.05 9.52
THRD TF Financial Corp. 1,367 933 0.23 30.98
--------------------------------------------------------------
Average 2,620 2,490 0.47 18.41
Median 2,180 2,257 0.43 17.71
Maximum 8,554 6,677 1.05 30.98
Minimum 1,324 933 0.23 9.52
</TABLE>
Source: SNL Securities
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 54
================================================================================
4. Market Value Determination
- ------------------------------
INTRODUCTION
- ------------------------------
The estimated pro-forma market value of the Bank, along with certain adjustments
to its value relative to market values for the Comparable Group are delineated
in this section. The adjustments delineated in this section are made from
potential investors' viewpoints. A potential investor includes depositors
holding subscription rights and unrelated parties who may purchase stock in the
community offering and who are assumed to be aware of all relevant and necessary
facts as they pertain to the value of the Bank relative to other publicly traded
thrift institutions and relative to alternative investment opportunities.
There are numerous criteria on which the market value adjustments are based, but
the major ones utilized for purposes of this report include:
o Balance Sheet
o Asset Quality
o Earnings Quality, Predictability and Growth
o Market Area
o Management
o Dividends
o Liquidity of the Issue
o Subscription Interest
o Recent Regulatory Matters
o Market for Seasoned Thrift Stocks
o Acquisition Market
After identifying the adjustments that should be made to market value, the
pro-forma market value for the Bank is computed and adjusted. The estimated
pro-forma market value for the Bank is then compared with the market valuation
ratios of the Comparable Group, recently converted public thrifts and the
aggregate ratios for all public thrifts.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 55
================================================================================
- ------------------------------
BALANCE SHEET STRENGTH
- ------------------------------
The balance sheet strength of an institution is an important market value
determinant, as the investment community considers such factors as bank
liquidity, capitalization, asset composition, funding mix, intangible levels and
interest rate risk in assessing the attractiveness of investing in the common
stock of a thrift. Following is a synopsis of the key financial elements of the
Bank measured against the Comparable Group. The numbers utilized for the Bank in
this comparison were on a pro-forma basis.
Liquidity - The liquidity of the Bank and the Comparable Group appear
similar and were sufficient to meet all regulatory guidelines.
Capitalization - The Comparable Group's average equity to assets ratio of
10.86% is lower than the Bank's ratio of 16.94%, and will be well below the
Bank's pro forma equity to assets ratio of 32.22% at the midpoint of the
valuation range.
Asset Composition - The Bank's net loan to asset ratio of 62.27% is well
above the average for the Comparable Group of 45.17%. However, the Bank's
loan to asset ratio after the conversion will be significantly lower.
Funding Mix - The Bank is funded through deposits and retained earnings.
The Comparable Group had 21.05% of its funding base from borrowings while
the Bank's ratio is 4.70%. The Bank's lower level of borrowings leaves room
for an additional funding source in the future.
Intangible Levels - One of the most important factors influencing market
values is the level of intangibles that an institution carries on its
books. The Comparable Group has a limited level of intangibles averaging
4.98% of equity. Thrifts trade more on tangible book than on book. The Bank
had an intangible assets to equity ratio of 10.01% at September 30, 1997.
However, the tangible equity to asset ratio for the Bank is 15.48%,
compared to only 10.09% for the Comparable Group.
Interest Rate Risk - The Bank has a minimal level of interest rate risk,
evidenced by a cumulative one year gap of -2.7% and a net portfolio value
above tangible equity at all but the +200 and +300 rate shocks.
Based on these factors, the Bank's market value should not be adjusted in
comparison to the Comparable Group for these measures.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 56
================================================================================
- ------------------------------
ASSET QUALITY
- ------------------------------
The asset quality of an institution is an important determinant of market value.
The investment community considers levels of nonperforming loans, REO and levels
of ALLL in assessing the attractiveness of investing in the common stock of an
institution.
FIGURE 40 - ASSET QUALITY TABLE
- --------------------------------------------------------------------------------
As of September 30, 1997
- --------------------------------------------------------------------------------
Dollars in Thousands
Nonperforming Loans $5,692
REO $ 142
ALLL $3,202
ALLL to Loans 0.80%
ALLL to Nonperforming Loans 56.25%
- --------------------------------------------------------------------------------
The Bank has a higher level of non-performing loans to total loans at 1.43% when
compared to the Comparable Group at 0.79%, as well as a higher level of
non-performing assets to assets of 0.91% as compared to the Comparable Group at
0.39%. These levels are still low relative to historic levels, however, and are
in part a reflection of the Bank's diversified asset mix. The ALLL to loans
ratio is 0.80%, which is below the Comparable Group's 1.13%. Based on these
factors a slight downward adjustment is warranted for this element.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 57
================================================================================
- ------------------------------
EARNINGS QUALITY,
PREDICTABILITY AND GROWTH
- ------------------------------
The earnings quality, predictability and growth are critical components in the
establishment of market values for thrifts. Thrift earnings are primarily a
function of:
o net interest income
o loan loss provision
o non-interest income
o non-interest expense
The quality and predictability of earnings is dependent on both internal and
external factors. Some internal factors include the mix of the balance sheet,
the interest rate sensitivity of the balance sheet, the asset quality, and the
infrastructure in place to deliver the assets and liabilities to the public.
External factors include the competitive market for both assets and liabilities,
the global interest rate scenario, local economic factors and regulatory issues.
Each of these factors can influence the earnings of an institution, and each of
these factors is volatile. Investors prefer stability and consistency. As such,
solid, consistent earnings are preferred to high but risky earnings. Investors
also prefer earnings to be diversified and not entirely dependent on interest
income.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 58
================================================================================
The Bank's earnings trend indicates fluctuations on an actual basis, but a
declining in the return on assets for the four annual periods ending December
31, 1996 and the nine month period ending September 30, 1997. The September 30,
1997 nine month net income includes one time charges with respect to loan
provisions and accelerated MRP amortization. The twelve month period ending
December 31, 1996 includes a small one-time SAIF assessment for the Bank's OAKAR
deposits.
FIGURE 41 - NET INCOME CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
Note: The September 1997 net income is for the nine month period.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 59
================================================================================
The Bank has reversed the declining trend of its net interest spread and margin
by diversifying its lending portfolio and concentrating on low cost core
deposits.
FIGURE 42 - SPREAD AND MARGIN CHART
[GRAPHIC OMITTED]
Source: Offering Prospectus
The Bank has generated more non-interest income than the Comparable Group. For
the nine months ended September 30, 1997 annualized, the Bank had 0.90% of
average assets in non-interest income, compared to the Comparable average of
0.31%.
For the nine months ended September 30, 1997, the Bank had a non-interest
expense to average assets ratio of 2.11% which was greater than the 1.91%
average of the Comparable Group. However, the Bank is more profitable than the
Comparable Group with respect to net interest income and non-interest income as
a percentage of average assets, resulting in an efficiency ratio of 47.87%,
which is lower than the average of the Comparable Group at 54.22%.
Currently, investors are focusing on earnings sustainability as the interest
rate volatility has caused wide variation in income levels. With the intense
competition for both assets and deposits, banks can not easily replace lost
spread and margin with balance sheet growth.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 60
================================================================================
The Bank has grown its balance sheet through acquisition and internal growth, it
has reversed the decline in its spread and margin, and it has generated
additional fee income through two new subsidiaries. Therefore, a slight upward
adjustment is warranted to the market value for earnings.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 61
================================================================================
- ------------------------------
MARKET AREA
- ------------------------------
The market area that an institution serves has a significant impact on value, as
future success is interrelated with the economic, demographic and competitive
aspects of the market. Specifics on the Bank's market were delineated in Section
2 - Market Area Analysis.
Demographically, the Bank's markets are disparate. Of the eight Mercer County
markets, four are projected to have declining population and housing bases.
Though all four of the Burlington County markets and both of the Ocean County
markets are projected to increase, the population and household base is
substantially less per market than Mercer County.
Deposits within the Bank's markets have grown $0.3 billion, or 7.21%, from $4.3
billion at June 30, 1992 to $4.6 billion at June 30, 1996 and the Bank has grown
its deposits by $67 million, or 16.72%, over the same time period.
Based on these factors no adjustment is warranted for this factor.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 62
================================================================================
- ------------------------------
MANAGEMENT
- ------------------------------
The Bank has developed a good management team with considerable banking
experience and length of service with the bank. In its efforts to migrate
towards a commercial bank structure, the Bank's organizational chart has been
constructed for growth and diversification. The Board is active and oversees and
advises on all key strategic and policy decisions and holds the management to
high performance standards.
As such, no adjustment appears to be warranted for this factor.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 63
================================================================================
- ------------------------------
DIVIDENDS
- ------------------------------
Historically, banks have not established dividend policies immediately at or
after conversion to stock ownership. Rather, newly converted institutions, in
general, have preferred to establish an earnings track record, fully invest the
conversion proceeds, and allow for seasoning of the stock before establishing a
dividend policy. In the late 1980's and early 1990's however, there has been a
tendency toward initiating dividend policies concurrent with the conversion as a
means of increasing the attractiveness of the issue and to utilize the proceeds.
The last few years have seen yet another shift away from dividend policies
concurrent with conversion. Recent issues have been fully or over subscribing
without the need for the additional enticement of dividends. After the
conversion is another issue, however. Recent pressures on ROE and on internal
rate of returns to investors has prompted the industry toward cash dividends.
This trend is exacerbated by the lack of growth potential. Typically, when
institutions are in a growth mode, they issue stock dividends or do not declare
a dividend. When growth is stunted, these institutions shift toward reducing
equity levels and thus utilize cash dividends as a tool in this regard.
All of the twelve comparable institutions had declared dividends. The average
dividend payout ratio for the Comparable Group was 31.27%, ranging from a high
of 47.37% to a low of 18.54%.
The Bank will have the capital levels to afford to pay dividends. As such, no
adjustment is indicated for this factor.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 64
================================================================================
- ------------------------------
LIQUIDITY OF THE ISSUE
- ------------------------------
The Comparable Group is by definition composed only of companies that trade in
the public markets with all of the Comparables trading on NASDAQ or AMEX.
Typically, the number of shares outstanding and the market capitalization
provides an indication of how much liquidity there will be in a given stock. The
actual liquidity can be measured by volume traded over a given period of time.
The market capitalization values of the Comparable Group range from a low of
$90.8 million to a high of $482.91 million with an average market capitalization
of $178.0 million. The Bank expects to have $268.3 million of market capital at
the midpoint on a pro forma basis.
Based on the comparison with the Comparable Group and the above data, no
adjustment appears warranted.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 65
================================================================================
- ------------------------------
SUBSCRIPTION INTEREST
- ------------------------------
The outcome of subscription offerings has been, historically, difficult to
predict. Since 1992, however, the conversions have experienced robust
subscription interest with the exception of late 1994 when the pricing multiples
were high. During late 1994, many subscriptions had the need to resolicit due to
lack of professional investor demand. During 1995, the investor demand returned
and the subscription interest increased, primarily the result of lower market
multiples. There were some offerings in July and June 1996 that went off at or
below the midpoint, indicating a possible shift away from interest in thrift
public offerings at that time. The vast majority of recent conversions have
oversubscribed and gone off at the maximum or super-maximum.
Of more importance is the general strength of the aftermarket. Thrift stock
prices have soared upwards in recent months (see Figure 43) and is showing
strength across the board. Additionally, as shown in Exhibit 7, the most recent
second step conversions (since January 1, 1996) have demonstrated a strong price
appreciation.
Recently, on a national level there were two deals which significantly over
subscribed, resulting in re-solicitations.
As such, an upward adjustment for subscription interest is warranted at this
time.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 66
================================================================================
- ------------------------------
RECENT REGULATORY MATTERS
- ------------------------------
As a result of large after-market price increases of conversions during 1993 and
early 1994, the regulatory agencies have issued guidelines on appraisals for
conversions. The regulators publicly indicated that only modest immediate
after-market price increases are appropriate for converting institutions. The
guidelines issued November 22, 1994, indicate that the reasonableness and
adequacy of an appraisal will be partially judged by the immediate price
movement of the conversion stock in the after-market, using a very short time
frame of the second day of trading following closing. The guidelines further
discuss that the average price appreciation for all IPOs has been between 10%
and 15%, which was deemed to be too high.
At around the same time period, IPO pricing was elevated on a book basis and
IPOs in late 1994 did not experience much appreciation. In fact, numerous IPOs
actually depreciated. 1995 brought back lower premiums to book but they have
been rising throughout 1996 to approximately the same levels as late 1994. 1997
has continued the trend with IPOs popping over 40% on average, for the first day
of trading.
The recent interest in thrift IPOs has caused large oversubscriptions, which in
turn have caused large price appreciations in the aftermarket. Recently,
regulators have been indicating the need for increased pricing of new issues in
the attempt lessen the aftermarket appreciation. Also, regulators have been
concerned with capital redistributions from thrifts which have converted within
the past three years. Regulatory agencies are publicly indicating that they will
enforce the limits of stock buy backs to: 0% in the first year, 5% in the second
year and 5% in the third year.
This threat to newly converted institutions, of not being able to use all of the
capital markets tools available, will hurt the stocks attractiveness, as it will
put them at a significant competitive disadvantage to the rest of the industry.
As such, a downward adjustment for this measure is warranted based on the
uncertainty surrounding the regulatory environment.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 67
================================================================================
- ------------------------------
MARKET FOR SEASONED
THRIFT STOCKS
- ------------------------------
Data for all public thrifts as of December 8, 1997 is provided in Exhibit 5. A
common measure utilized as a proxy for the performance of the thrift industry is
the SNL thrift index graphically shown below and tabularly shown on the
following page:
FIGURE 43 - SNL THRIFT INDEX CHART
[GRAPHIC OMITTED]
Source: SNL Securities
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 68
================================================================================
FIGURE 44 - HISTORICAL SNL INDEX
------------------------------------
SNL THRIFT INDEX MONTHLY PERFORMANCE
January 2, 1992 to December 8, 1997
------------------------------------
<TABLE>
<CAPTION>
SNL % Change % Change % Change % Change % Change % Change
Thrift Since Since Since Since Since Since
Date Index 1/2/92 1/4/93 1/3/94 12/30/94 12/29/95 12/31/96
- --------- ------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-92 143.9 -- -- -- -- -- --
Jul-92 175.1 21.7% -- -- -- -- --
Jan-93 201.1 39.7% -- -- -- -- --
Jul-93 220.5 53.2% 9.6% -- -- -- --
Jan-94 252.5 75.5% 25.6% -- -- -- --
Jul-94 273.8 90.3% 36.2% 8.4% -- -- --
Jan-95 256.1 78.0% 27.3% 1.4% -- -- --
Jul-95 328.2 128.1% 63.2% 30.0% 28.2% -- --
Jan-96 370.7 157.6% 84.3% 46.8% 44.7% -- --
Jul-96 389.9 171.0% 93.9% 54.4% 52.2% 5.2% --
Jan-97 520.1 261.4% 158.6% 106.0% 103.1% 40.3% --
Jul-97 684.5 375.7% 240.4% 171.1% 167.3% 84.7% 31.6%
08-Dec-97 799.6 455.7% 297.6% 216.7% 212.2% 115.7% 53.7%
</TABLE>
Source: SNL Securities
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 69
================================================================================
FIGURE 45 - EQUITY INDICES
[GRAPHIC OMITTED]
INDEX COMPARISONS
-----------------------------------------
SNL S&P DJIA
-----------------------------------------
6/30/94 269.6 444.3 3,625.0
12/30/94 244.7 459.3 3,834.4
6/30/95 313.5 544.8 4,556.1
12/29/95 376.5 615.9 5,117.1
6/28/96 387.2 670.6 5,654.6
12/31/96 483.6 740.7 6,448.3
6/30/97 624.5 885.2 7,672.8
11/14/97 738.5 928.4 7,572.5
------------------------------------------
As the Figures 43 and 44 illustrate, the performance of the SNL index has been
robust through 1992, 1993, 1994 and 1995. The dip in the index, occurring in
late 1994, was the product of the interest rate rise during that period along
with the overall uneasiness in the stock market in general. The rate scenario
covering the same period as the SNL index can be seen in the following chart.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 70
================================================================================
FIGURE 46 - HISTORICAL RATES
[GRAPHIC OMITTED]
Source: Prudential Bache Securities
As the graph demonstrates, the rate rise in late 1994 correlates closely to the
fall in thrift prices. The drop in rates in 1995 was one of the primary drivers
of the rapid rise in the SNL index. During 1996, rates increased slightly and
then remained stable, fueling the rise in the conversion prices. 1997 has seen a
continuation of this trend, with the average IPO pricing at 70.9%, 69.7%, 70.9%,
and 73.6% of book value for the first, second, third, and fourth quarters of
1997, respectively.
Thrift pricing in general was robust in 1995 due to the falling interest rates,
the industry consolidation and renewed earnings. Contrasting this view, in late
1994 investors faced shrinking spreads and margins due to rising rates and
consolidation that was tailing off and slowing down. The blockbuster level of
consolidations have led many investors to think that all institutions are fair
game for acquisitions and prices have risen accordingly.
As Figure 45 and 46 show, in 1997, the SNL index has continued to increase as a
result of the flat interest rate environment. In addition, the market continues
to demonstrate evidence of acquisition speculation.
As such, no adjustment for this measure is warranted, as MHC institutions are
already valued on an earnings basis.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 71
================================================================================
- ------------------------------
SECOND STEP CONVERSIONS
- ------------------------------
As the Bank is undergoing a second step conversion, it should be compared to
institutions that have recently completed second step conversions.
FIGURE 47 - SECOND STEP CONVERSIONS SINCE JANUARY 1, 1996
<TABLE>
<CAPTION>
MARKET DATA AS OF 12/08/97
-------------------------------------------------------------------------
CURRENT PRICE TO
CURRENT -------------------------------------------------------------------------
STOCK PRICE BOOK VALUE TANG. BOOK LTM EARNINGS EARNINGS CORE EPS LTM EPS ASSETS
TICKER SHORT NAME IPO DATE 12/8/97 (%) (%) (X) (X) (X) (X) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSNJ Bayonne Bancshares Inc. 08/22/97 12.125 114.600 114.600 NA NA NA NA 17.900
MONT Montgomery Financial Corp. 07/01/97 12.438 105.320 105.320 NA NA NA NA 20.160
WFSG Wilshire Financial Services 12/19/96 28.000 293.190 293.190 NA 8.970 12.960 NA 15.470
BNKU Bank United Corp. 08/09/96 44.125 232.970 238.380 18.230 17.510 18.700 23.470 11.650
CMSB Commonwealth Bancorp Inc. 06/17/96 21.125 162.250 208.130 20.920 21.130 29.340 27.080 15.060
WWFC Westwood Financial Corp. 06/07/96 27.625 173.200 193.590 23.020 36.350 36.350 21.580 16.140
JXVL Jacksonville Bancorp Inc. 04/01/96 19.125 141.140 141.140 24.840 11.660 11.660 8.390 21.060
FFFD North Central Bancshares Inc. 03/21/96 18.500 122.270 122.270 16.090 14.920 14.920 16.090 28.020
FFOH Fidelity Financial of Ohio 03/04/96 15.000 121.560 137.110 19.230 17.050 17.050 16.850 15.830
FFBA First Colorado Bancorp Inc. 01/02/96 26.125 217.710 220.650 23.540 20.410 20.410 23.540 28.470
-----------------------------------------------------------------------------------------------------------------------------
Average 22.4 168.4 177.4 20.8 18.5 20.2 19.6 19.0
Median 20.1 151.7 167.4 20.9 17.3 17.9 21.6 17.0
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Bank's stock has recently risen dramatically as the market is reflecting the
effect of a second step conversion in the Bank's price.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 72
================================================================================
FIGURE 48 - HISTORICAL STOCK PERFORMANCE
[GRAPHIC OMITTED]
As the Bank will be priced fully on an earnings multiple basis, as compared to
the recent second step institutions, no adjustment is required for this factor.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 73
================================================================================
- ------------------------------
ACQUISITION MARKET
- ------------------------------
The level of bank and thrift deals is cyclical, peaking in the third quarter of
each year for banks and in the second quarter for thrifts.
FIGURE 49 - DEALS FOR LAST ELEVEN QUARTERS
[GRAPHIC OMITTED]
Source: SNL Securities
Note: Figures for the fourth quarter of 1997 are through December 8, 1997.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 74
================================================================================
From 1994 through December 8, 1997, thrift deal prices remained high. As
illustrated by the following graphs and tables, thrift deal prices as a multiple
of book value and earnings continue to climb through December 8, 1997, for all
thrifts, thrifts in the Mid-Atlantic region, and thrifts of a similar size.
FIGURE 50 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO BOOK
[GRAPHIC OMITTED]
<PAGE>
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================================================================================
FIGURE 51 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO TANGIBLE BOOK
[GRAPHIC OMITTED]
FIGURE 52 - THRIFT ACQUISITION MULTIPLES, PRICE TO EARNINGS
[GRAPHIC OMITTED]
<PAGE>
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================================================================================
FIGURE 53 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO ASSETS
[GRAPHIC OMITTED]
FIGURE 54 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO DEPOSITS
[GRAPHIC OMITTED]
<PAGE>
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================================================================================
FIGURE 55 - DEAL MULTIPLES
- --------------------------------------------------------------------------------
MEDIAN PRICE TO LTM EARNINGS 1994 1995 1996 1997 YTD
Thrifts - Nationwide 13.8 18.6 17.7 25.3
Thrifts - Mid-Atlantic 13.3 17.9 17.0 21.7
Thrifts - Deal Value 100-500 Million 14.3 17.4 15.2 23.2
AVERAGE PRICE TO BOOK
Thrifts - Nationwide 154.5 144.7 149.5 180.3
Thrifts - Mid-Atlantic 153.9 156.5 156.9 198.4
Thrifts - Deal Value 100-500 Million 168.0 149.4 148.6 192.7
AVERAGE PRICE TO TANGIBLE BOOK
Thrifts - Nationwide 158.9 149.1 153.6 185.2
Thrifts - Mid-Atlantic 160.4 157.6 159.4 204.1
Thrifts - Deal Value 100-500 Million 180.4 155.8 162.4 204.3
AVERAGE PRICE TO ASSETS
Thrifts - Nationwide 13.9 14.8 15.0 18.2
Thrifts - Mid-Atlantic 13.2 15.3 17.7 16.5
Thrifts - Deal Value 100-500 Million 13.9 15.5 14.1 19.2
AVERAGE PRICE TO DEPOSITS
Thrifts - Nationwide 17.1 19.2 19.9 24.4
Thrifts - Mid-Atlantic 16.2 20.3 24.5 25.2
Thrifts - Deal Value 100-500 Million 17.4 20.8 20.2 26.9
- --------------------------------------------------------------------------------
Currently, there is one thrift acquisition pending in New Jersey. Westwood
Financial Corporation, a Bergen County thrift is being acquired by Lakeview
Financial Corporation for a price to book of 186% and a price to LTM earnings of
37.5. The acquisition multiples associated with all deals are shown below.
FIGURE 56 - ACQUISITION TABLE
At Announcement Offer Divided By
--------------------------------
Book Value LTM EPS
---------- -------
Pending Merger Median 192% 25.9x
Completed Merger Median 201% 23.6x
Source: SNL Securities
No adjustment is warranted for this factor at time of conversion as the Bank's
midpoint pro forma price to earnings is 23.26x.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 78
================================================================================
- ------------------------------
ADJUSTMENTS TO VALUE
- ------------------------------
Overall, FinPro believes that the Bank pro-forma market value should be
discounted relative to the Comparable Group, reflecting the following
adjustments.
Key Valuation Parameters Valuation Adjustment
----------------------------------------------------------------------
Balance Sheet Strength No Adjustment
Asset Quality Slight Downward
Earnings Quality Slight Upward
Market Area No Adjustment
Management No Adjustment
Dividends No Adjustment
Liquidity of the Issue No Adjustment
Subscription Interest Upward
Recent Regulatory Matters Downward
Market for Seasoned Thrift Stocks No Adjustment
Second Step Conversions No Adjustment
Acquisition Market No Adjustment
As a result of all the factors discussed, a full offering premium of
approximately 28% on an earnings multiple basis and a 37% discount on a price to
book basis appears to be reasonable.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 79
================================================================================
- ------------------------------
VALUATION APPROACH
- ------------------------------
In applying the accepted valuation methodology promulgated by the regulators,
i.e., the pro-forma market value approach, four key pricing multiples were
considered. The four multiples include:
Price to earnings ("P/E")
Price to tangible book value ("P/TB")
Price to book value ("P/B")
Price to assets ("P/A")
All of the approaches were calculated on a pro-forma basis including the effects
of the conversion proceeds. All of the assumptions utilized are presented in
Exhibit 8, 9,10 and 11.
To ascertain the pro-forma estimated market value of the Bank, the market
multiples for the Comparable Group, all publicly traded thrifts and the recent
(1996 to date) second step conversion group were assessed.
Since thrift earnings in general have had a high degree of volatility over the
past decade, the P/B approach had gained in importance and is utilized
frequently as the benchmark for market value. It is interesting to note that the
P/B approach is more of a benchmark than a reliable valuation technique. A
better approach is the P/TB approach. In general, investors tend to price
financial institutions on a tangible book basis, because it incorporates the P/B
approach adjusted for intangibles. Most recently, the P/E approach has regained
favor among investors.
The evidence of the movement towards the P/E Multiple can be seen in the
acquisition, trading and IPO markets. The P/LTM EPS multiple for the completed
mergers is 23.6x, for all public thrifts the trading P/LTM is 23.23x and for
recent IPO's it is 22.3x.
As such, in estimating the market value for the Bank, the most emphasis was
placed on the P/E approach. The P/B and P/TB were given much less weight and the
P/A ratio was not given much weight at all.
In terms of the market multiples, most weight was given to the Comparable Group.
Less weight was ascribed to all public thrifts and all New Jersey thrifts. The
multiples for the Comparable Group, all publicly traded thrifts, and New Jersey
publicly traded thrifts are shown in Exhibit 6.
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 80
================================================================================
Based upon the premiums and discounts defined in the section above, the Bank
pricing at the midpoint is estimated to be $270,000,000. Based upon a range
below and above the midpoint value, the relative values are $229,500,000 at the
minimum and $310,500,000 at the maximum respectively. At the supermaximum of the
range the offering value would be $357,075,000.
This equates to exchange ratios of 2.4578, 2.8915, 3.3252, and 3.8240 at the
minimum, midpoint, maximum and supermaximum, respectively. As such, the Bank
would raise gross proceeds of $79,889,420, $93,986,590, $108,083,770 and
$124,296,980 respectively at the minimum, midpoint, maximum and supermaximum of
the EVR.
At the various levels of the estimated value range, the offering would result in
the following offering data:
FIGURE 57 - VALUE RANGE OFFERING DATA
-------------------------------------------------------
Appraised Value
-------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum*
- ---------- -------------------------------------------------------
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Full Conversion Value $232,900,000 $274,000,000 $315,100,000 $362,365,000
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Exchange Percent 34.30% 34.30% 34.30% 34.30%
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Conversion Percent 65.70% 65.70% 65.70% 65.70%
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $232,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
Exchange Ratio 2.4580 2.8917 3.3255 3.8243
-------------------------------------------------------
Source: FinPro Inc. Proforma Model
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 81
================================================================================
FIGURE 58 - VALUE RANGE OFFERING DATA
----------------------------------------
Minimum Midpoint Maximum Supermaximum
----------------------------------------
Price-Earnings Ratio
- --------------------------------------------------------------------------------
Comparable Mean 18.23
Median 18.16
- --------------------------------------------------------------------------------
State Mean 23.00
Median 20.33
- --------------------------------------------------------------------------------
National Mean 23.23
Median 19.44
- --------------------------------------------------------------------------------
Recent Second Step Conversions Mean 19.60
Median 21.60
- --------------------------------------------------------------------------------
Bank Mean 21.28 23.26 25.64 27.03
- --------------------------------------------------------------------------------
Price-Book Ratio
- --------------------------------------------------------------------------------
Comparable Mean 159.97%
Median 163.01%
- --------------------------------------------------------------------------------
State Mean 182.27%
Median 167.91%
- --------------------------------------------------------------------------------
National Mean 171.50%
Median 156.91%
- --------------------------------------------------------------------------------
Recent Second Step Conversions Mean 168.40%
Median 151.70%
- --------------------------------------------------------------------------------
Bank Mean 94.16% 100.70% 106.04% 111.23%
- --------------------------------------------------------------------------------
Price-Tangible Book Ratio
- --------------------------------------------------------------------------------
Comparable Mean 172.50%
Median 165.16%
- --------------------------------------------------------------------------------
State Mean 191.80%
Median 179.22%
- --------------------------------------------------------------------------------
National Mean 178.20%
Median 160.41%
- --------------------------------------------------------------------------------
Recent Second Step Conversions Mean 177.40%
Median 167.40%
- --------------------------------------------------------------------------------
Bank Mean 98.52% 104.93% 110.01% 115.07%
- --------------------------------------------------------------------------------
Price-Assets Ratio
- --------------------------------------------------------------------------------
Comparable Mean 16.35%
Median 15.05%
- --------------------------------------------------------------------------------
State Mean 20.47%
Median 17.15%
- --------------------------------------------------------------------------------
National Mean 19.69%
Median 17.70%
- --------------------------------------------------------------------------------
Recent Second Step Conversions Mean 19.00%
Median 17.00%
- --------------------------------------------------------------------------------
Bank Mean 29.95% 34.14% 38.09% 42.34%
- --------------------------------------------------------------------------------
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 82
================================================================================
This equates to the following multiples:
FIGURE 59 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA MIDPOINT
------------------------------------------------
Price Relative to
------------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------------
The Bank (at midpoint) 23.26 100.70% 104.93% 34.14%
- --------------------------------------------------------------------------------
Comparable Group Median 18.16 163.01% 165.16% 15.05%
- --------------------------------------------------------------------------------
(Discount) Premium 28.08% -38.22% -36.47% 126.84%
- --------------------------------------------------------------------------------
Source: FinPro Calculations
FIGURE 60 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA SUPERMAXIMUM
------------------------------------------------
Price Relative to
------------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------------
The Bank (at the supermax) 27.03 111.23% 115.07% 42.34%
- --------------------------------------------------------------------------------
Comparable Group Median 18.16 163.01% 165.16% 15.05%
- --------------------------------------------------------------------------------
(Discount) Premium 48.84% -31.76% -30.33% 181.33%
- --------------------------------------------------------------------------------
Source: FinPro Calculations
As the figure 59 demonstrates, the Bank is priced at a premium of 28.08% on an
earnings basis. A discount of 38.22% is applied to the Bank relative to the
Comparable Group on a price to book basis. When comparing the Bank's EVR at the
supermaximum to the Comparable Group, the Bank is priced at a 48.84% premium on
an earnings basis and at a 31.76% discount on a book basis
As figure 62 illustrates, the Bank (at the supermaximum of the EVR) is priced at
a 25.14% premium on an earnings basis and at a 26.67% discount on a book basis
when compared to recent second step conversions.
FIGURE 61 - RECENT SECOND STEP CONVERSION TRADING MULTIPLES TO THE BANK'S
PROFORMA MIDPOINT
------------------------------------------------
Price Relative to
------------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------------
The Bank (at midpoint) 23.26 100.70% 104.93% 34.14%
- --------------------------------------------------------------------------------
Recent Second Step Conversions 21.60 151.70% 167.40% 17.00%
- --------------------------------------------------------------------------------
(Discount) Premium 7.69% -33.62% -37.32% 100.82%
- --------------------------------------------------------------------------------
Source: FinPro Calculations
FIGURE 62 - RECENT SECOND STEP CONVERSION TRADING MULTIPLES TO THE BANK'S
PROFORMA SUPERMAXIMUM
------------------------------------------------
Price Relative to
------------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------------
The Bank (at the supermax) 27.03 111.23% 115.07% 42.34%
- --------------------------------------------------------------------------------
Recent Second Step Conversions 21.60 151.70% 167.40% 17.00%
- --------------------------------------------------------------------------------
(Discount) Premium 25.14% -26.67% -31.26% 149.06%
- --------------------------------------------------------------------------------
Source: FinPro Calculations
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 83
================================================================================
The following tables compare the Bank's pricing Harbor Federal, a current second
step conversion which is pending. As illustrated below the Bank is priced at a
premium to earnings and at a discount on a book basis.
FIGURE 63 - COMPARISON TO HARBOR FEDERAL
- --------------------------------------------------------------------------------
PRICE TO EARNINGS
Minimum Midpoint Maximum Supermaximum
------- -------- ------- ------------
Harbor Federal 16.39 18.52 20.41 22.73
Peoples Bancorp 21.28 23.26 25.64 27.03
- --------------------------------------------------------------------------------
Source: FinPro Calculations
FIGURE 64 - COMPARISON TO HARBOR FEDERAL
- --------------------------------------------------------------------------------
PRICE TO BOOK VALUE
Minimum Midpoint Maximum Supermaximum
------- -------- ------- ------------
Harbor Federal 107.99% 116.69% 124.07% 131.23%
Peoples Bancorp 94.16% 100.70% 106.04% 111.23%
- --------------------------------------------------------------------------------
Source: FinPro Calculations
<PAGE>
Conversion Valuation Appraisal Report Page: 1 - 84
================================================================================
- ------------------------------
VALUATION CONCLUSION
- ------------------------------
It is, therefore, our opinion that as of December 16, 1997, the estimated
pro-forma market value of the Bank in a full offering was $274,000,000 at the
midpoint of a range with a minimum of $232,900,000 to a maximum of $315,100,000
at 15% below and 15% above the midpoint of the range respectively. Assuming an
adjusted maximum value of 15% above the maximum value, the adjusted maximum
value or supermaximum value in a full offering is $362,365,000. The stock will
be issued at $10.00 per share. At the midpoint of the EVR, 9,399,309 shares will
be exchanged and 18,000,691 conversion shares will be issued based on an
exchange ratio of 2.8917.
Pro-forma comparisons of the Bank's value range with the Comparable Group, all
public thrifts, New Jersey public thrifts and the recent second step conversion
group is shown in Exhibits 9, 10 and 11.
<PAGE>
Exhibit 1
- --------------------------------------------------------------------------------
Assets At September 30, At December 31,
------ ---------------- ---------------
1997 1996 1995
---- ---- ----
(unaudited)
Assets:
- -------
Cash and due from banks $ 10,909 $ 12,938 $ 6,253
Federal funds sold 2,300 8,000 10,000
-------- -------- --------
Total cash and cash equivalents 13,209 20,938 16,253
Securities available for sale 127,651 87,648 83,776
Securities held to maturity 70,761 86,553 91,260
FHLB stock at cost 3,386 3,089 2,864
Loans, net 397,866 380,288 306,093
Bank premises and equipment, net 6,800 6,982 5,868
Accrued interest receivable 4,823 3,602 3,765
Prepaid expenses 1,822 1,471 767
Intangible assets 10,834 9,164 2,325
Other assets 1,790 1,281 1,247
-------- -------- --------
Total assets $638,942 $601,016 $514,218
Liabilities and Net Worth
-------------------------
Liabilities:
- ------------
Savings deposits 493,334 491,246 410,770
Borrowed money 30,000 0 0
Accrued expenses and other liabilities 7,369 6,418 5,906
-------- -------- --------
Total liabilities 530,703 497,664 416,676
Stockholders' equity:
- ---------------------
Common stock 904 904 891
Additional paid-in capital 30,495 30,357 28,687
Retained earnings, substantially restricted 77,592 72,545 65,267
Unearned management recognition plan shares -954 -1,543 0
Net unrealized gain on securities, net of taxes 202 1,089 2,697
-------- -------- --------
Total retained earnings 108,239 103,352 97,542
-------- -------- --------
Total liabilities and retained earnings $638,942 $601,016 $514,218
- --------------------------------------------------------------------------------
Source: Audited Financial Statements
<PAGE>
Exhibit 2
Consolidated Statements of Income
$ in 000's
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
For the Nine Months For the Years Ended
Ended September 30, December 31,
------------------- ---------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $22,393 $18,085 $25,503 $22,346 $20,569
Interest on securities available for sale 5,825 3,594 4,762 4,484 5,058
Interest and dividends on investment securities
held to maturity on mortgage-backed securities 3,992 4,464 5,861 5,183 3,485
Interest on federal funds sold 406 519 777 1,505 355
------- ------- ------- ------- -------
Total interest income 32,616 26,662 36,903 33,518 29,467
Interest expense on deposits 14,734 12,865 17,941 17,010 12,851
Interest expense on borrowings 1,489 0 0 0 0
------- ------- ------- ------- -------
Total interest expense 16,223 12,865 17,941 17,010 12,851
Net interest income before provision for loan losses 16,393 13,797 18,962 16,508 16,616
Provision for loan losses 1,488 0 0 150 180
------- ------- ------- ------- -------
Net interest income after provision for loan losses 14,905 13,797 18,962 16,358 16,436
Other income:
Service fees on deposits accounts 651 259 485 361 347
Fees and other income 595 240 471 390 395
Gain on sale of other real estate 0 23 23 2 3
Gain on sale of securities 2,923 2,189 2,839 4,193 2,406
------- ------- ------- ------- -------
Total other income 4,169 2,711 3,818 4,946 3,151
Operating Expense:
Compensation and employee benefits 5,357 3,361 5,104 3,959 3,626
Net occupancy expense 1,171 903 1,306 1,131 1,033
Equipment expense 84 53 88 58 71
Data processing service 392 302 416 346 334
Amortization of intangibles assets 577 204 389 226 20
FDIC insurance premium 39 232 233 492 873
FDIC special assessment 0 177 0 0 0
Other 2,224 1,202 2,133 1,580 1,518
------- ------- ------- ------- -------
Total operating expense 9,844 6,434 9,669 7,792 7,475
Income before taxes 9,230 10,074 13,111 13,512 12,112
Income taxes 3,332 3,626 4,720 4,864 4,437
Net income 5,898 6,448 8,391 8,648 7,675
======= ======= ======= ======= =======
Earnings per share $ 0.65 $ 0.72 $ 0.94
Weighted average common shares outstanding 9,129 8,966 8,966
- ------------------------------------------------------------------------------------------------------
</TABLE>
Source: Audited Financial Statements
<PAGE>
Exhibit 3
Consolidated Statements of Changes in Net Worth
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized
Additional Unearned Gain on
Number of Common Paid-in Retained Management Securities
Shares Stock Capital Earnings Shares AFS, net Total
--------- ------ ---------- -------- ---------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 -- $ -- $ -- $49,123 $ -- $ 49,123
Cumulative effect of accounting change-net
unrealized gain in securities AFS, net -- 0 -- 0 -- 5,371 5,371
Net income 0 -- 0 7,675 0 -- $ 7,675
Net change in net unrealized gain in securities AFS -- -- -- -- -- (3,401) (3,401)
--------- ---- ------- ------- ------ ------- --------
Balance at December 31, 1994 -- -- -- 56,798 -- 1,970 58,768
Proceeds of stock offering 8,912,500 891 28,687 29,578
Net income -- -- -- 8,648 -- -- 8,648
Dividends declared (179) -179
Net change in net unrealized gain in securities AFS -- -- -- -- -- 727 727
--------- ---- ------- ------- ------ ------- --------
Balance at December 31, 1995 8,912,500 891 28,687 65,267 -- 2,697 97,542
Net income -- -- -- 8,391 -- -- 8,391
Dividends declared (1,113) -1,113
Establishment of management recongtion plan 124,660 12 1,670 (1,683)
Amortization on unearned management recognition
plan shares 140 140
Net change in net unrealized gain in securities AFS -- -- -- -- -- (1,608) (1,608)
--------- ---- ------- ------- ------ ------- --------
Balance at December 31, 1996 9,037,160 903 30,357 72,545 (1,543) 1,089 103,352
Net income for nine month period (unaudited) -- -- -- 5,898 -- -- 5,898
Dividends declared (851) -851
Proceeds from excersising stock options 8,635 13 13
Amortization on unearned management recognition
plan shares 125 589 714
Net change in net unrealized gain in securities AFS -- -- -- -- -- (887) (887)
--------- ---- ------- ------- ------ ------- --------
Balance at September 30, 1997 (unaudited) 9,045,795 $903 $30,495 $77,592 $ (954) $ 202 $108,239
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Audited Financial Statements
<PAGE>
Exhibit 4
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the Nine Months For the Years Ended
Ended September 30, December 31,
------------------- ---------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,898 $ 6,448 $ 8,391 $ 8,648 $ 7,675
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 1,488 -- -- 150 180
Depreciation and amortization expense 579 203 648 432 389
Amortization of intangible assets 577 204 389 226 21
Net accretion of premiums and discounts on securities (64) (126) (586) (204) (81)
(Increase) Decresa in accrued interest payable and other liabilities (3,626) 361 602 (4,997) 124
Increse (decrease) in accrued interest payable and other liabilities 826 (565) 863 855 750
Net gain on sale of securities (2,923) (2,189) (2,839) (4,193) (2,408)
Net gain on sale of other real estate -- (23) (22,664) (2) (3)
------- ------- ------- ------- -------
Net cash provided by (used in) operating activities 2,755 4,313 (15,196) 915 6,647
Cash flows from investing activities:
Proceeds from maturities of securities AFS and HTM 39,940 44,055 51,756 44,850 56,960
Purchases of securities HTM -- (11,522) (11,759) (34,016) (6,491)
Purchases of securities AFS (73,046) (16,997) (40,281) (44,949) (29,127)
Proceeds from sales of securities AFS 3,816 3,583 9,368 10,056 12,661
Purchase of FHLB stock (297) (225)
Maturities and repayments of mortage backed securities 9,337 11,042 12,177 6,700 6,576
Purchases of mortage backed securities HTD -- -- (6,065) (25,495) (9,540)
Net increase in loans (17,578) (29,715) (26,266) (16,776) (34,106)
Net additions to bank premises, furnitures and equipment (398) (478) (742) (387) (402)
Proceeds from sale of bank premises, furniture and equipment 312 -- -- -- --
Proceeds from sales of other real estate owned -- 105 106 79 3
Payment of purchase of Burlington Co. bank, net of cash acquired -- -- 3,363 -- --
Payment of purchase of Manchester Trust bank, net of cash acquired (3,807) -- -- -- --
------- ------- ------- ------- -------
Net cash used in investing activities (41,721) (152) (8,343) (59,938) (3,466)
Cash flows from financing activities:
Net proceeds received from stock offerings -- -- -- 29,778 --
Dividends paid (851) (828) (1,113) (179) --
Capitalization of mutual holding company -- -- -- (200) --
Net cash received from assumption of deposit liabilities -- -- -- 31,468 --
Net increase in demand deposits 16,475 3,688 4,856 1,405 929
Net increase (decrease) in savings and time deposits (14,387) 2,671 2,443 338 (7,209)
Repayment of subordinated note -- -- (600) -- --
Net increase in borrowings 30,000 -- -- -- --
------- ------- ------- ------- -------
Net cash provided by financing activities 31,237 5,531 5,586 62,610 (6,280)
Increase (decrease) in cash and cash equivalents (7,729) 9,692 4,685 3,587 (3,098)
Cash and cash equivalents, beginning of year 20,938 16,253 16,253 12,665 15,763
------- ------- ------- ------- -------
Cash and cash equivalents, end of year $13,209 $25,945 $20,938 $16,252 $12,665
======= ======= ======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowed funds $13,578 $10,829 $15,577 $16,394 $12,673
Income taxes 3,351 3,975 4,875 5,805 4,320
Noncash investing activities - transfer of loans to foreclosed real estate -- -- -- -- 93,872
Transfer of securities available for sale to securities held to maturity 37,112
Assets acquired in settlement of loans 374 110 723 34 77
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Audited Financial Statements
<PAGE>
Exhibit 5
Selected Data on all Public Thrifts
<TABLE>
<CAPTION>
Corporate
--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB Private San Francisco CA 227 NA SAIF Not Avail.
%CCMD Chevy Chase Bank, FSB Private Chevy Chase MD 107 NA SAIF Not Avail.
AABC Access Anytime Bancorp Inc. NASDAQ Clovis NM 3 08/08/86 SAIF Regular
AADV Advantage Bancorp Inc. NASDAQ Kenosha WI 15 03/23/92 SAIF Regular
ABBK Abington Bancorp Inc. NASDAQ Abington MA 8 06/10/86 BIF Regular
ABCL Alliance Bancorp Inc. NASDAQ Hinsdale IL 14 07/07/92 SAIF Regular
ABCW Anchor BanCorp Wisconsin NASDAQ Madison WI 35 07/16/92 SAIF Regular
AFBC Advance Financial Bancorp NASDAQ Wellsburg WV 2 01/02/97 SAIF Regular
AFCB Affiliated Community Bancorp NASDAQ Waltham MA 12 10/19/95 SAIF Not Avail.
AFED AFSALA Bancorp Inc. NASDAQ Amsterdam NY 5 10/01/96 SAIF Regular
AFFFZ America First Financial Fund NASDAQ San Francisco CA 36 NA SAIF Not Avail.
AHCI Ambanc Holding Co. NASDAQ Amsterdam NY 12 12/27/95 BIF Regular
AHM H.F. Ahmanson & Co. NYSE Irwindale CA 371 10/25/72 SAIF Regular
ALBC Albion Banc Corp. NASDAQ Albion NY 2 07/26/93 SAIF Regular
ALBK ALBANK Financial Corp. NASDAQ Albany NY 108 04/01/92 SAIF Regular
AMFC AMB Financial Corp. NASDAQ Munster IN 4 04/01/96 SAIF Regular
ANA Acadiana Bancshares Inc. AMSE Lafayette LA 5 07/16/96 SAIF Regular
ANDB Andover Bancorp Inc. NASDAQ Andover MA 12 05/08/86 BIF Regular
ANE Alliance Bncorp of New England AMSE Tolland CT 7 12/19/86 BIF Regular
ASBI Ameriana Bancorp NASDAQ New Castle IN 8 03/02/87 SAIF Regular
ASBP ASB Financial Corp. NASDAQ Portsmouth OH 1 05/11/95 SAIF Regular
ASFC Astoria Financial Corp. NASDAQ Lake Success NY 61 11/18/93 SAIF Regular
ATSB AmTrust Capital Corp. NASDAQ Peru IN 2 03/28/95 SAIF Regular
AVND Avondale Financial Corp. NASDAQ Chicago IL 5 04/07/95 SAIF Regular
BANC BankAtlantic Bancorp Inc. NASDAQ Fort Lauderdale FL 60 11/29/83 SAIF Regular
BDJI First Federal Bancorporation NASDAQ Bemidji MN 5 04/04/95 SAIF Regular
BFD BostonFed Bancorp Inc. AMSE Burlington MA 10 10/24/95 SAIF Regular
BFFC Big Foot Financial Corp. NASDAQ Long Grove IL 3 12/20/96 SAIF Regular
BFSB Bedford Bancshares Inc. NASDAQ Bedford VA 3 08/22/94 SAIF Regular
BKC American Bank of Connecticut AMSE Waterbury CT 14 12/01/81 BIF Regular
BKCT Bancorp Connecticut Inc. NASDAQ Southington CT 3 07/03/86 BIF Regular
BKUNA BankUnited Financial Corp. NASDAQ Coral Gables FL 16 12/11/85 SAIF Regular
BNKU Bank United Corp. NASDAQ Houston TX 71 08/09/96 SAIF Not Avail.
BPLS Bank Plus Corp. NASDAQ Los Angeles CA 37 NA SAIF Not Avail.
BSBC Branford Savings Bank NASDAQ Branford CT 5 11/04/86 BIF Regular
BTHL Bethel Bancorp NASDAQ Portland ME 8 08/19/87 BIF Regular
BVCC Bay View Capital Corp. NASDAQ San Mateo CA 37 05/09/86 SAIF Regular
BWFC Bank West Financial Corp. NASDAQ Grand Rapids MI 3 03/30/95 SAIF Regular
BYFC Broadway Financial Corp. NASDAQ Los Angeles CA 3 01/09/96 SAIF Regular
CAFI Camco Financial Corp. NASDAQ Cambridge OH 11 NA SAIF Not Avail.
CAPS Capital Savings Bancorp Inc. NASDAQ Jefferson City MO 8 12/29/93 SAIF Regular
CASB Cascade Financial Corp. NASDAQ Everett WA 11 09/16/92 SAIF Regular
CASH First Midwest Financial Inc. NASDAQ Storm Lake IA 12 09/20/93 SAIF Regular
CATB Catskill Financial Corp. NASDAQ Catskill NY 4 04/18/96 BIF Regular
CBCI Calumet Bancorp Inc. NASDAQ Dolton IL 5 02/20/92 SAIF Regular
CBES CBES Bancorp Inc. NASDAQ Excelsior Springs MO 2 09/30/96 SAIF Regular
CBK Citizens First Financial Corp. AMSE Bloomington IL 7 05/01/96 SAIF Regular
CBSA Coastal Bancorp Inc. NASDAQ Houston TX 37 NA SAIF Not Avail.
CBSB Charter Financial Inc. NASDAQ Sparta IL 8 12/29/95 SAIF Not Avail.
CCFH CCF Holding Company NASDAQ Jonesboro GA 5 07/12/95 SAIF Regular
CEBK Central Co-operative Bank NASDAQ Somerville MA 8 10/24/86 BIF Regular
CENB Century Bancorp Inc. NASDAQ Thomasville NC 1 12/23/96 SAIF Regular
CENF CENFED Financial Corp. NASDAQ Pasadena CA 18 10/25/91 SAIF Regular
CFB Commercial Federal Corp. NYSE Omaha NE 108 12/31/84 SAIF Regular
CFBC Community First Banking Co. NASDAQ Carrollton GA 12 07/01/97 SAIF Regular
CFCP Coastal Financial Corp. NASDAQ Myrtle Beach SC 9 09/26/90 SAIF Regular
CFFC Community Financial Corp. NASDAQ Staunton VA 4 03/30/88 SAIF Regular
CFNC Carolina Fincorp Inc. NASDAQ Rockingham NC 4 11/25/96 SAIF Regular
CFSB CFSB Bancorp Inc. NASDAQ Lansing MI 17 06/22/90 SAIF Regular
CFTP Community Federal Bancorp NASDAQ Tupelo MS 2 03/26/96 SAIF Regular
CFX CFX Corp. AMSE Keene NH 43 02/12/87 BIF Regular
CIBI Community Investors Bancorp NASDAQ Bucyrus OH 3 02/07/95 SAIF Regular
CKFB CKF Bancorp Inc. NASDAQ Danville KY 1 01/04/95 SAIF Regular
CLAS Classic Bancshares Inc. NASDAQ Ashland KY 3 12/29/95 SAIF Regular
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Corporate
--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp NASDAQ Cameron MO 3 04/03/95 SAIF Regular
CMSB Commonwealth Bancorp Inc. NASDAQ Norristown PA 56 06/17/96 SAIF Not Avail.
CMSV Community Savings Bnkshrs(MHC) NASDAQ North Palm Beach FL 20 1 0/24/94 SAIF Mutual HC
CNIT CENIT Bancorp Inc. NASDAQ Norfolk VA 19 08/06/92 SAIF Regular
CNSB CNS Bancorp Inc. NASDAQ Jefferson City MO 5 06/12/96 SAIF Regular
CNY Carver Bancorp Inc. AMSE New York NY 7 10/25/94 SAIF Regular
COFI Charter One Financial NASDAQ Cleveland OH 221 01/22/88 SAIF Regular
CONE Conestoga Bancorp, Inc. NASDAQ Roslyn NY 8 03/30/94 SAIF Regular
COOP Cooperative Bankshares Inc. NASDAQ Wilmington NC 16 08/21/91 SAIF Regular
CRZY Crazy Woman Creek Bancorp NASDAQ Buffalo WY 1 03/29/96 SAIF Regular
CSA Coast Savings Financial NYSE Los Angeles CA 91 12/23/85 SAIF Regular
CSBF CSB Financial Group Inc. NASDAQ Centralia IL 2 10/09/95 SAIF Regular
CTZN CitFed Bancorp Inc. NASDAQ Dayton OH 35 01/23/92 SAIF Regular
CVAL Chester Valley Bancorp Inc. NASDAQ Downingtown PA 7 03/27/87 SAIF Regular
DCBI Delphos Citizens Bancorp Inc. NASDAQ Delphos OH 1 11/21/96 SAIF Regular
DIBK Dime Financial Corp. NASDAQ Wallingford CT 11 07/09/86 BIF Regular
DIME Dime Community Bancorp Inc. NASDAQ Brooklyn NY 15 06/26/96 BIF Regular
DME Dime Bancorp Inc. NYSE New York NY 91 08/19/86 BIF Regular
DNFC D & N Financial Corp. NASDAQ Hancock MI 37 02/13/85 SAIF Regular
DSL Downey Financial Corp. NYSE Newport Beach CA 85 01/01/71 SAIF Not Avail.
EBSI Eagle Bancshares NASDAQ Tucker GA 14 04/01/86 SAIF Regular
EFBC Empire Federal Bancorp Inc. NASDAQ Livingston MT 3 01/27/97 SAIF Regular
EFBI Enterprise Federal Bancorp NASDAQ West Chester OH 5 10/17/94 SAIF Regular
EGFC Eagle Financial Corp. NASDAQ Bristol CT 30 02/03/87 SAIF Regular
EGLB Eagle BancGroup Inc. NASDAQ Bloomington IL 3 07/01/96 SAIF Regular
EIRE Emerald Isle Bancorp Inc. NASDAQ Quincy MA 9 09/08/86 BIF Regular
EMLD Emerald Financial Corp. NASDAQ Strongsville OH 14 NA SAIF Regular
EQSB Equitable Federal Savings Bank NASDAQ Wheaton MD 4 09/10/93 SAIF Supervisory
ESBK Elmira Savings Bank (The) NASDAQ Elmira NY 6 03/01/85 BIF Regular
ESX Essex Bancorp Inc. AMSE Norfolk VA 4 07/18/90 SAIF Not Avail.
ETFS East Texas Financial Services NASDAQ Tyler TX 2 01/10/95 SAIF Regular
FAB FirstFed America Bancorp Inc. AMSE Swansea MA 13 01/15/97 SAIF Regular
FBBC First Bell Bancorp Inc. NASDAQ Pittsburgh PA 7 06/29/95 SAIF Regular
FBCI Fidelity Bancorp Inc. NASDAQ Chicago IL 5 12/15/93 SAIF Regular
FBCV 1ST Bancorp NASDAQ Vincennes IN 2 04/07/87 SAIF Regular
FBER 1st Bergen Bancorp NASDAQ Wood-Ridge NJ 4 04/01/96 SAIF Regular
FBHC Fort Bend Holding Corp. NASDAQ Rosenberg TX 6 06/30/93 SAIF Regular
FBNW FirstBank Corp. NASDAQ Lewiston ID 5 07/02/97 SAIF Regular
FBSI First Bancshares Inc. NASDAQ Mountain Grove MO 6 12/22/93 SAIF Regular
FCB Falmouth Bancorp Inc. AMSE Falmouth MA 3 03/28/96 BIF Regular
FCBF FCB Financial Corp. NASDAQ Oshkosh WI 13 09/24/93 SAIF Regular
FCME First Coastal Corp. NASDAQ Westbrook ME 7 NA BIF Not Avail.
FDEF First Defiance Financial NASDAQ Defiance OH 10 10/02/95 SAIF Not Avail.
FED FirstFed Financial Corp. NYSE Santa Monica CA 24 12/16/83 SAIF Regular
FESX First Essex Bancorp Inc. NASDAQ Andover MA 15 08/04/87 BIF Regular
FFBA First Colorado Bancorp Inc. NASDAQ Lakewood CO 27 01/02/96 SAIF Not Avail.
FFBH First Federal Bancshares of AR NASDAQ Harrison AR 13 05/03/96 SAIF Regular
FFBI First Financial Bancorp Inc. NASDAQ Belvidere IL 2 10/04/93 SAIF Regular
FFBS FFBS BanCorp Inc. NASDAQ Columbus MS 3 07/01/93 SAIF Regular
FFBZ First Federal Bancorp Inc. NASDAQ Zanesville OH 6 07/13/92 SAIF Regular
FFCH First Financial Holdings Inc. NASDAQ Charleston SC 34 11/10/83 SAIF Regular
FFDB FirstFed Bancorp Inc. NASDAQ Bessemer AL 8 11/19/91 SAIF Regular
FFDF FFD Financial Corp. NASDAQ Dover OH 1 04/03/96 SAIF Regular
FFED Fidelity Federal Bancorp NASDAQ Evansville IN 4 08/31/87 SAIF Regular
FFES First Federal of East Hartford NASDAQ East Hartford CT 12 06/23/87 SAIF Regular
FFFC FFVA Financial Corp. NASDAQ Lynchburg VA 12 10/12/94 SAIF Regular
FFFD North Central Bancshares Inc. NASDAQ Fort Dodge IA 4 03/21/96 SAIF Not Avail.
FFFL Fidelity Bankshares Inc. (MHC) NASDAQ West Palm Beach FL 20 01/07/94 SAIF Mutual HC
FFHH FSF Financial Corp. NASDAQ Hutchinson MN 11 10/07/94 SAIF Regular
FFHS First Franklin Corp. NASDAQ Cincinnati OH 7 01/26/88 SAIF Regular
FFIC Flushing Financial Corp. NASDAQ Flushing NY 7 11/21/95 BIF Regular
FFKY First Federal Financial Corp. NASDAQ Elizabethtown KY 8 07/15/87 SAIF Regular
FFLC FFLC Bancorp Inc. NASDAQ Leesburg FL 9 01/04/94 SAIF Regular
FFOH Fidelity Financial of Ohio NASDAQ Cincinnati OH 12 03/04/96 SAIF Not Avail.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
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--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. NASDAQ West Palm Beach FL 47 09/29/93 SAIF Regular
FFSL First Independence Corp. NASDAQ Independence KS 2 10/08/93 SAIF Regular
FFSX First Fed SB of Siouxland(MHC) NASDAQ Sioux City IA 13 07/13/92 SAIF Mutual HC
FFWC FFW Corp. NASDAQ Wabash IN 4 04/05/93 SAIF Regular
FFWD Wood Bancorp Inc. NASDAQ Bowling Green OH 7 08/31/93 SAIF Regular
FFYF FFY Financial Corp. NASDAQ Youngstown OH 10 06/28/93 SAIF Regular
FGHC First Georgia Holding Inc. NASDAQ Brunswick GA 7 02/11/87 SAIF Regular
FIBC Financial Bancorp Inc. NASDAQ Long Island City NY 5 08/17/94 SAIF Regular
FISB First Indiana Corporation NASDAQ Indianapolis IN 26 08/02/83 SAIF Regular
FKFS First Keystone Financial NASDAQ Media PA 5 01/26/95 SAIF Regular
FKKYD Frankfort First Bancorp Inc. NASDAQ Frankfort KY 3 07/10/95 SAIF Regular
FLAG FLAG Financial Corp. NASDAQ LaGrange GA 4 12/11/86 SAIF Regular
FLFC First Liberty Financial Corp. NASDAQ Macon GA 31 12/06/83 SAIF Regular
FLGS Flagstar Bancorp Inc. NASDAQ Bloomfield Hills MI 19 NA SAIF Not Avail.
FLKY First Lancaster Bancshares NASDAQ Lancaster KY 1 07/01/96 SAIF Regular
FMBD First Mutual Bancorp Inc. NASDAQ Decatur IL 14 07/05/95 SAIF Regular
FMCO FMS Financial Corp. NASDAQ Burlington NJ 20 12/14/88 SAIF Regular
FMSB First Mutual Savings Bank NASDAQ Bellevue WA 8 12/17/85 BIF Regular
FNGB First Northern Capital Corp. NASDAQ Green Bay WI 19 12/29/83 SAIF Regular
FOBC Fed One Bancorp NASDAQ Wheeling WV 11 01/19/95 SAIF Not Avail.
FPRY First Financial Bancorp NASDAQ Tallahassee FL 6 03/29/88 SAIF Regular
FSBI Fidelity Bancorp Inc. NASDAQ Pittsburgh PA 8 06/24/88 SAIF Regular
FSFC First Southeast Financial Corp NASDAQ Anderson SC 13 10/08/93 SAIF Regular
FSFF First SecurityFed Financial NASDAQ Chicago IL 5 10/31/97 SAIF Regular
FSLA First Savings Bank (MHC) NASDAQ Woodbridge NJ 17 07/10/92 SAIF Mutual HC
FSNJ Bayonne Bancshares Inc. NASDAQ Bayonne NJ 4 08/22/97 SAIF Not Avail.
FSPG First Home Bancorp Inc. NASDAQ Pennsville NJ 10 04/20/87 SAIF Regular
FSPT FirstSpartan Financial Corp. NASDAQ Spartanburg SC 7 07/09/97 SAIF Regular
FSSB First FS&LA of San Bernardino NASDAQ San Bernardino CA 4 02/02/93 SAIF Regular
FSTC First Citizens Corp. NASDAQ Newnan GA 9 03/01/86 SAIF Regular
FTF Texarkana First Financial Corp AMSE Texarkana AR 5 07/07/95 SAIF Regular
FTFC First Federal Capital Corp. NASDAQ La Crosse WI 49 11/02/89 SAIF Regular
FTNB Fulton Bancorp Inc. NASDAQ Fulton MO 2 10/18/96 SAIF Regular
FTSB Fort Thomas Financial Corp. NASDAQ Fort Thomas KY 2 06/28/95 SAIF Regular
FWWB First SB of Washington Bancorp NASDAQ Walla Walla WA 20 11/01/95 SAIF Regular
GAF GA Financial Inc. AMSE Pittsburgh PA 13 03/26/96 SAIF Regular
GBCI Glacier Bancorp Inc. NASDAQ Kalispell MT 18 03/30/84 SAIF Regular
GDVS Greater Delaware Valley (MHC) NASDAQ Broomall PA 7 03/03/95 SAIF Mutual HC
GDW Golden West Financial NYSE Oakland CA 249 05/29/59 SAIF Not Avail.
GFCO Glenway Financial Corp. NASDAQ Cincinnati OH 5 11/30/90 SAIF Regular
GFED Guaranty Federal SB (MHC) NASDAQ Springfield MO 4 04/10/95 SAIF Mutual HC
GFSB GFS Bancorp Inc. NASDAQ Grinnell IA 1 01/06/94 SAIF Regular
GLMR Gilmer Financial Svcs, Inc. NASDAQ Gilmer TX 1 02/09/95 SAIF Regular
GOSB GSB Financial Corp. NASDAQ Goshen NY 2 07/09/97 BIF Regular
GPT GreenPoint Financial Corp. NYSE New York NY 74 01/28/94 BIF Regular
GSB Golden State Bancorp Inc. NYSE Glendale CA 178 10/01/83 SAIF Regular
GSBC Great Southern Bancorp Inc. NASDAQ Springfield MO 25 12/14/89 SAIF Regular
GSFC Green Street Financial Corp. NASDAQ Fayetteville NC 3 04/04/96 SAIF Regular
GSLA GS Financial Corp. NASDAQ Metairie LA 3 04/01/97 SAIF Regular
GTFN Great Financial Corp. NASDAQ Louisville KY 43 03/31/94 SAIF Regular
GTPS Great American Bancorp NASDAQ Champaign IL 3 06/30/95 SAIF Regular
GUPB GFSB Bancorp Inc. NASDAQ Gallup NM 1 06/30/95 SAIF Regular
GWBC Gateway Bancorp Inc. NASDAQ Catlettsburg KY 2 01/18/95 SAIF Regular
HALL Hallmark Capital Corp. NASDAQ West Allis WI 3 01/03/94 SAIF Regular
HARB Harbor Florida Bancorp (MHC) NASDAQ Fort Pierce FL 23 01/06/94 SAIF Mutual HC
HARL Harleysville Savings Bank NASDAQ Harleysville PA 4 08/04/87 SAIF Regular
HARS Harris Financial Inc. (MHC) NASDAQ Harrisburg PA 33 01/25/94 SAIF Mutual HC
HAVN Haven Bancorp Inc. NASDAQ Woodhaven NY 33 09/23/93 SAIF Regular
HBBI Home Building Bancorp NASDAQ Washington IN 2 02/08/95 SAIF Regular
HBEI Home Bancorp of Elgin Inc. NASDAQ Elgin IL 4 09/27/96 SAIF Regular
HBFW Home Bancorp NASDAQ Fort Wayne IN 9 03/30/95 SAIF Regular
HBNK Highland Federal Bank FSB NASDAQ Burbank CA 7 NA SAIF Not Avail.
HBS Haywood Bancshares Inc. AMSE Waynesville NC 4 12/18/87 BIF Not Avail.
HCBB HCB Bancshares Inc. NASDAQ Camden AR 7 05/07/97 SAIF Regular
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
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--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. NASDAQ Springfield OH 1 12/30/96 SAIF Regular
HEMT HF Bancorp Inc. NASDAQ Hemet CA 19 06/30/95 SAIF Regular
HFFB Harrodsburg First Fin Bancorp NASDAQ Harrodsburg KY 2 10/04/95 SAIF Regular
HFFC HF Financial Corp. NASDAQ Sioux Falls SD 19 04/08/92 SAIF Regular
HFGI Harrington Financial Group NASDAQ Richmond IN 4 NA SAIF Not Avail.
HFNC HFNC Financial Corp. NASDAQ Charlotte NC 10 12/29/95 SAIF Regular
HFSA Hardin Bancorp Inc. NASDAQ Hardin MO 3 09/29/95 SAIF Regular
HHFC Harvest Home Financial Corp. NASDAQ Cheviot OH 3 10/10/94 SAIF Regular
HIFS Hingham Instit. for Savings NASDAQ Hingham MA 5 12/20/88 BIF Regular
HMCI HomeCorp Inc. NASDAQ Rockford IL 9 06/22/90 SAIF Regular
HMLK Hemlock Federal Financial Corp NASDAQ Oak Forest IL 3 04/02/97 SAIF Regular
HMNF HMN Financial Inc. NASDAQ Spring Valley MN 7 06/30/94 SAIF Regular
HOMF Home Federal Bancorp NASDAQ Seymour IN 16 01/23/88 SAIF Regular
HPBC Home Port Bancorp Inc. NASDAQ Nantucket MA 2 08/25/88 BIF Regular
HRBF Harbor Federal Bancorp Inc. NASDAQ Baltimore MD 9 08/12/94 SAIF Regular
HRZB Horizon Financial Corp. NASDAQ Bellingham WA 12 08/01/86 BIF Regular
HTHR Hawthorne Financial Corp. NASDAQ El Segundo CA 6 NA SAIF Not Avail.
HWEN Home Financial Bancorp NASDAQ Spencer IN 1 07/02/96 SAIF Regular
HZFS Horizon Financial Svcs Corp. NASDAQ Oskaloosa IA 3 06/30/94 SAIF Regular
IBSF IBS Financial Corp. NASDAQ Cherry Hill NJ 10 10/13/94 SAIF Regular
IFSB Independence Federal Svgs Bank NASDAQ Washington DC 2 06/06/85 SAIF Regular
INBI Industrial Bancorp Inc. NASDAQ Bellevue OH 10 08/01/95 SAIF Regular
INCB Indiana Community Bank SB NASDAQ Lebanon IN 4 12/15/94 SAIF Regular
IPSW Ipswich Savings Bank NASDAQ Ipswich MA 6 05/26/93 BIF Regular
ISBF ISB Financial Corp. NASDAQ New Iberia LA 28 04/07/95 SAIF Regular
ITLA ITLA Capital Corp. NASDAQ La Jolla CA 6 10/24/95 BIF Not Avail.
IWBK InterWest Bancorp Inc. NASDAQ Oak Harbor WA 39 NA SAIF Not Avail.
JOAC Joachim Bancorp Inc. NASDAQ De Soto MO 1 12/28/95 SAIF Regular
JSB JSB Financial Inc. NYSE Lynbrook NY 13 06/27/90 BIF Regular
JSBA Jefferson Savings Bancorp NASDAQ Ballwin MO 32 04/08/93 SAIF Regular
JXSB Jacksonville Savings Bk (MHC) NASDAQ Jacksonville IL 4 04/21/95 SAIF Mutual HC
JXVL Jacksonville Bancorp Inc. NASDAQ Jacksonville TX 6 04/01/96 SAIF Not Avail.
KFBI Klamath First Bancorp NASDAQ Klamath Falls OR 33 10/05/95 SAIF Regular
KNK Kankakee Bancorp Inc. AMSE Kankakee IL 9 01/06/93 SAIF Regular
KSAV KS Bancorp Inc. NASDAQ Kenly NC 4 12/30/93 SAIF Regular
KSBK KSB Bancorp Inc. NASDAQ Kingfield ME 8 06/24/93 BIF Regular
KYF Kentucky First Bancorp Inc. AMSE Cynthiana KY 2 08/29/95 SAIF Regular
LARK Landmark Bancshares Inc. NASDAQ Dodge City KS 5 03/28/94 SAIF Regular
LARL Laurel Capital Group Inc. NASDAQ Allison Park PA 6 02/20/87 SAIF Regular
LFBI Little Falls Bancorp Inc. NASDAQ Little Falls NJ 6 01/05/96 SAIF Regular
LFCO Life Financial Corp. NASDAQ Riverside CA 5 NA SAIF Not Avail.
LFED Leeds Federal Savings Bk (MHC) NASDAQ Baltimore MD 1 05/02/94 SAIF Mutual HC
LIFB Life Bancorp Inc. NASDAQ Norfolk VA 21 10/11/94 SAIF Regular
LISB Long Island Bancorp Inc. NASDAQ Melville NY 35 04/18/94 SAIF Regular
LOGN Logansport Financial Corp. NASDAQ Logansport IN 1 06/14/95 SAIF Regular
LONF London Financial Corporation NASDAQ London OH 1 04/01/96 SAIF Regular
LSBI LSB Financial Corp. NASDAQ Lafayette IN 4 02/03/95 BIF Regular
LSBX Lawrence Savings Bank NASDAQ North Andover MA 5 05/02/86 BIF Regular
LVSB Lakeview Financial NASDAQ Paterson NJ 8 12/22/93 SAIF Regular
LXMO Lexington B&L Financial Corp. NASDAQ Lexington MO 1 06/06/96 SAIF Regular
MAFB MAF Bancorp Inc. NASDAQ Clarendon Hills IL 21 01/12/90 SAIF Regular
MARN Marion Capital Holdings NASDAQ Marion IN 2 03/18/93 SAIF Regular
MASB MASSBANK Corp. NASDAQ Reading MA 15 05/28/86 BIF Regular
MBB MSB Bancorp Inc. AMSE Goshen NY 16 09/03/92 BIF Regular
MBBC Monterey Bay Bancorp Inc. NASDAQ Watsonville CA 7 02/15/95 SAIF Regular
MBLF MBLA Financial Corp. NASDAQ Macon MO 2 06/24/93 SAIF Regular
MBSP Mitchell Bancorp Inc. NASDAQ Spruce Pine NC 1 07/12/96 SAIF Regular
MCBN Mid-Coast Bancorp Inc. NASDAQ Waldoboro ME 2 11/02/89 SAIF Regular
MCBS Mid Continent Bancshares Inc. NASDAQ El Dorado KS 10 06/27/94 SAIF Regular
MDBK Medford Bancorp Inc. NASDAQ Medford MA 16 03/18/86 BIF Regular
MECH Mechanics Savings Bank NASDAQ Hartford CT 14 06/26/96 BIF Regular
MERI Meritrust Federal SB NASDAQ Thibodaux LA 8 NA SAIF Not Avail.
METF Metropolitan Financial Corp. NASDAQ Mayfield Heights OH 15 NA SAIF Not Avail.
MFBC MFB Corp. NASDAQ Mishawaka IN 5 03/25/94 SAIF Regular
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
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--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. NASDAQ Marshalltown IA 3 03/31/94 SAIF Regular
MFFC Milton Federal Financial Corp. NASDAQ West Milton OH 3 10/07/94 SAIF Regular
MFLR Mayflower Co-operative Bank NASDAQ Middleboro MA 4 12/23/87 BIF Regular
MFSL Maryland Federal Bancorp NASDAQ Hyattsville MD 27 06/02/87 SAIF Regular
MIFC Mid-Iowa Financial Corp. NASDAQ Newton IA 7 10/14/92 SAIF Regular
MIVI Mississippi View Holding Co. NASDAQ Little Falls MN 1 03/24/95 SAIF Regular
MLBC ML Bancorp Inc. NASDAQ Villanova PA 29 08/11/94 SAIF Regular
MONT Montgomery Financial Corp. NASDAQ Crawfordsville IN 4 07/01/97 SAIF Not Avail.
MRKF Market Financial Corp. NASDAQ Mount Healthy OH 2 03/27/97 SAIF Regular
MSBF MSB Financial Inc. NASDAQ Marshall MI 2 02/06/95 SAIF Regular
MSBK Mutual Savings Bank FSB NASDAQ Bay City MI 22 07/17/92 SAIF Regular
MWBI Midwest Bancshares Inc. NASDAQ Burlington IA 4 11/12/92 SAIF Regular
MWBX MetroWest Bank NASDAQ Framingham MA 12 10/10/86 BIF Regular
MWFD Midwest Federal Financial NASDAQ Baraboo WI 9 07/08/92 SAIF Regular
NASB North American Savings Bank NASDAQ Grandview MO 7 09/27/85 SAIF Not Avail.
NBN Northeast Bancorp AMSE Auburn ME 11 08/19/87 BIF Regular
NBSI North Bancshares Inc. NASDAQ Chicago IL 2 12/21/93 SAIF Regular
NEIB Northeast Indiana Bancorp NASDAQ Huntington IN 3 06/28/95 SAIF Regular
NHTB New Hampshire Thrift Bncshrs NASDAQ Newport NH 10 05/22/86 SAIF Regular
NMSB NewMil Bancorp Inc. NASDAQ New Milford CT 15 02/01/86 BIF Regular
NSLB NS&L Bancorp Inc. NASDAQ Neosho MO 2 06/08/95 SAIF Regular
NSSB Norwich Financial Corp. NASDAQ Norwich CT 17 11/14/86 BIF Regular
NSSY NSS Bancorp Inc. NASDAQ Norwalk CT 8 06/16/94 BIF Regular
NTMG Nutmeg Federal S&LA NASDAQ Danbury CT 3 NA SAIF Not Avail.
NWEQ Northwest Equity Corp. NASDAQ Amery WI 3 10/11/94 SAIF Regular
NWSB Northwest Savings Bank (MHC) NASDAQ Warren PA 58 11/07/94 SAIF Mutual HC
NYB New York Bancorp Inc. NYSE Douglaston NY 31 01/28/88 SAIF Regular
OCFC Ocean Financial Corp. NASDAQ Toms River NJ 10 07/03/96 SAIF Regular
OCN Ocwen Financial Corp. NYSE West Palm Beach FL 1 NA SAIF Not Avail.
OFCP Ottawa Financial Corp. NASDAQ Holland MI 26 08/19/94 SAIF Regular
OHSL OHSL Financial Corp. NASDAQ Cincinnati OH 5 02/10/93 SAIF Regular
OSFS Ohio State Financial Services NASDAQ Bridgeport OH 2 09/29/97 SAIF Regular
OTFC Oregon Trail Financial Corp. NASDAQ Baker City OR 7 10/06/97 SAIF Regular
PALM Palfed Inc. NASDAQ Aiken SC 22 12/15/85 SAIF Regular
PBCI Pamrapo Bancorp Inc. NASDAQ Bayonne NJ 10 11/14/89 SAIF Regular
PBCT People's Bank (MHC) NASDAQ Bridgeport CT 111 07/06/88 BIF Mutual HC
PBHC Oswego City Savings Bk (MHC) NASDAQ Oswego NY 5 11/16/95 BIF Mutual HC
PBKB People's Bancshares Inc. NASDAQ New Bedford MA 14 10/30/86 BIF Regular
PCBC Perry County Financial Corp. NASDAQ Perryville MO 1 02/13/95 SAIF Regular
PDB Piedmont Bancorp Inc. AMSE Hillsborough NC 1 12/08/95 SAIF Regular
PEEK Peekskill Financial Corp. NASDAQ Peekskill NY 3 12/29/95 SAIF Regular
PERM Permanent Bancorp Inc. NASDAQ Evansville IN 11 04/04/94 SAIF Regular
PERT Perpetual Bank (MHC) NASDAQ Anderson SC 6 10/26/93 SAIF Mutual HC
PFDC Peoples Bancorp NASDAQ Auburn IN 7 07/07/87 SAIF Regular
PFED Park Bancorp Inc. NASDAQ Chicago IL 3 08/12/96 SAIF Regular
PFFB PFF Bancorp Inc. NASDAQ Pomona CA 23 03/29/96 SAIF Regular
PFFC Peoples Financial Corp. NASDAQ Massillon OH 2 09/13/96 SAIF Regular
PFNC Progress Financial Corp. NASDAQ Blue Bell PA 10 07/18/83 SAIF Regular
PFSB PennFed Financial Services Inc NASDAQ West Orange NJ 18 07/15/94 SAIF Regular
PFSL Pocahontas FS&LA (MHC) NASDAQ Pocahontas AR 6 04/05/94 SAIF Mutual HC
PHBK Peoples Heritage Finl Group NASDAQ Portland ME 135 12/04/86 BIF Regular
PHFC Pittsburgh Home Financial Corp NASDAQ Pittsburgh PA 9 04/01/96 SAIF Regular
PHSB Peoples Home Savings Bk (MHC) NASDAQ Beaver Falls PA 9 07/10/97 SAIF Mutual HC
PKPS Poughkeepsie Financial Corp. NASDAQ Poughkeepsie NY 15 11/19/85 SAIF Regular
PLSK Pulaski Savings Bank (MHC) NASDAQ Springfield NJ 6 04/03/97 SAIF Mutual HC
PMFI Perpetual Midwest Financial NASDAQ Cedar Rapids IA 5 03/31/94 SAIF Regular
PRBC Prestige Bancorp Inc. NASDAQ Pleasant Hills PA 4 06/27/96 SAIF Regular
PROV Provident Financial Holdings NASDAQ Riverside CA 10 06/28/96 SAIF Regular
PSBK Progressive Bank Inc. NASDAQ Fishkill NY 17 08/01/84 BIF Regular
PSFC Peoples-Sidney Financial Corp. NASDAQ Sidney OH 1 04/28/97 SAIF Regular
PSFI PS Financial Inc. NASDAQ Chicago IL 1 11/27/96 SAIF Regular
PTRS Potters Financial Corp. NASDAQ East Liverpool OH 4 12/31/93 SAIF Regular
PULB Pulaski Bank, Svgs Bank (MHC) NASDAQ St. Louis MO 5 05/11/94 SAIF Mutual HC
PULS Pulse Bancorp NASDAQ South River NJ 4 09/18/86 SAIF Regular
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
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--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. NASDAQ Bedford Heights OH 9 12/30/92 SAIF Supervisory
PVSA Parkvale Financial Corporation NASDAQ Monroeville PA 29 07/16/87 SAIF Regular
PWBC PennFirst Bancorp Inc. NASDAQ Ellwood City PA 11 06/13/90 SAIF Regular
PWBK Pennwood Bancorp Inc. NASDAQ Pittsburgh PA 3 07/15/96 SAIF Regular
QCBC Quaker City Bancorp Inc. NASDAQ Whittier CA 8 12/30/93 SAIF Regular
QCFB QCF Bancorp Inc. NASDAQ Virginia MN 2 04/03/95 SAIF Regular
QCSB Queens County Bancorp Inc. NASDAQ Flushing NY 11 11/23/93 BIF Regular
RARB Raritan Bancorp Inc. NASDAQ Raritan NJ 6 03/01/87 BIF Regular
REDF RedFed Bancorp Inc. NASDAQ Redlands CA 14 04/08/94 SAIF Regular
RELI Reliance Bancshares Inc. NASDAQ Milwaukee WI 1 04/19/96 SAIF Regular
RELY Reliance Bancorp Inc. NASDAQ Garden City NY 30 03/31/94 SAIF Regular
RIVR River Valley Bancorp NASDAQ Madison IN 6 12/20/96 SAIF Regular
ROSE TR Financial Corp. NASDAQ Garden City NY 15 06/29/93 BIF Regular
RSLN Roslyn Bancorp Inc. NASDAQ Roslyn NY 8 01/13/97 BIF Regular
RVSB Riverview Bancorp Inc. NASDAQ Camas WA 9 10/01/97 SAIF Regular
SBFL SB of the Finger Lakes (MHC) NASDAQ Geneva NY 5 11/11/94 SAIF Mutual HC
SBOS Boston Bancorp (The) NASDAQ South Boston MA 7 11/09/83 BIF Regular
SCBS Southern Community Bancshares NASDAQ Cullman AL 1 12/23/96 SAIF Regular
SCCB S. Carolina Community Bancshrs NASDAQ Winnsboro SC 3 07/07/94 SAIF Regular
SFED SFS Bancorp Inc. NASDAQ Schenectady NY 4 06/30/95 SAIF Regular
SFFC StateFed Financial Corp. NASDAQ Des Moines IA 2 01/05/94 SAIF Regular
SFIN Statewide Financial Corp. NASDAQ Jersey City NJ 16 10/02/95 SAIF Regular
SFSB SuburbFed Financial Corp. NASDAQ Flossmoor IL 12 03/04/92 SAIF Regular
SFSL Security First Corp. NASDAQ Mayfield Heights OH 14 01/22/88 SAIF Regular
SGVB SGV Bancorp Inc. NASDAQ West Covina CA 8 06/29/95 SAIF Regular
SHEN First Shenango Bancorp Inc. NASDAQ New Castle PA 4 04/06/93 SAIF Regular
SHSB SHS Bancorp Inc. NASDAQ Pittsburgh PA 3 10/01/97 SAIF Regular
SISB SIS Bancorp Inc. NASDAQ Springfield MA 25 02/08/95 BIF Regular
SKAN Skaneateles Bancorp Inc. NASDAQ Skaneateles NY 9 06/02/86 BIF Regular
SKBO First Carnegie Deposit (MHC) NASDAQ Carnegie PA 3 04/04/97 SAIF Mutual HC
SMBC Southern Missouri Bancorp Inc. NASDAQ Poplar Bluff MO 8 04/13/94 SAIF Regular
SMFC Sho-Me Financial Corp. NASDAQ Mt. Vernon MO 8 07/01/94 SAIF Regular
SOBI Sobieski Bancorp Inc. NASDAQ South Bend IN 3 03/31/95 SAIF Regular
SOPN First Savings Bancorp Inc. NASDAQ Southern Pines NC 5 01/06/94 SAIF Regular
SOSA Somerset Savings Bank NASDAQ Somerville MA 5 07/09/86 BIF Regular
SPBC St. Paul Bancorp Inc. NASDAQ Chicago IL 52 05/18/87 SAIF Regular
SRN Southern Banc Co. AMSE Gadsden AL 4 10/05/95 SAIF Regular
SSB Scotland Bancorp Inc. AMSE Laurinburg NC 2 04/01/96 SAIF Regular
SSFC South Street Financial Corp. NASDAQ Albemarle NC 2 10/03/96 SAIF Regular
SSM Stone Street Bancorp Inc. AMSE Mocksville NC 2 04/01/96 SAIF Regular
STFR St. Francis Capital Corp. NASDAQ Milwaukee WI 23 06/21/93 SAIF Regular
STSA Sterling Financial Corp. NASDAQ Spokane WA 41 NA SAIF Not Avail.
SVRN Sovereign Bancorp Inc. NASDAQ Wyomissing PA 150 08/12/86 SAIF Regular
SWBI Southwest Bancshares NASDAQ Hometown IL 6 06/24/92 SAIF Regular
SWCB Sandwich Bancorp Inc. NASDAQ Sandwich MA 11 07/25/86 BIF Regular
SZB SouthFirst Bancshares Inc. AMSE Sylacauga AL 2 02/14/95 SAIF Regular
THR Three Rivers Financial Corp. AMSE Three Rivers MI 4 08/24/95 SAIF Regular
THRD TF Financial Corp. NASDAQ Newtown PA 14 07/13/94 SAIF Regular
TPNZ Tappan Zee Financial Inc. NASDAQ Tarrytown NY 1 10/05/95 SAIF Regular
TRIC Tri-County Bancorp Inc. NASDAQ Torrington WY 2 09/30/93 SAIF Regular
TSBS Trenton SB (MHC) NASDAQ Lawrenceville NJ 14 08/03/95 BIF Mutual HC
TSH Teche Holding Co. AMSE Franklin LA 9 04/19/95 SAIF Regular
TWIN Twin City Bancorp NASDAQ Bristol TN 3 01/04/95 SAIF Regular
UBMT United Financial Corp. NASDAQ Great Falls MT 4 09/23/86 SAIF Regular
UFRM United Federal Savings Bank NASDAQ Rocky Mount NC 13 07/01/80 SAIF Regular
USAB USABancshares, Inc. NASDAQ Philadelphia PA 1 NA BIF Not Avail.
VABF Virginia Beach Fed. Financial NASDAQ Virginia Beach VA 14 11/01/80 SAIF Not Avail.
WAMU Washington Mutual Inc. NASDAQ Seattle WA 914 03/11/83 BIF Regular
WAYN Wayne Savings Bancshares (MHC) NASDAQ Wooster OH 6 06/25/93 SAIF Mutual HC
WBST Webster Financial Corp. NASDAQ Waterbury CT 84 12/12/86 SAIF Regular
WCBI Westco Bancorp NASDAQ Westchester IL 1 06/26/92 SAIF Regular
WCFB Webster City Federal SB (MHC) NASDAQ Webster City IA 1 08/15/94 SAIF Mutual HC
WEFC Wells Financial Corp. NASDAQ Wells MN 8 04/11/95 SAIF Regular
WEHO Westwood Homestead Fin. Corp. NASDAQ Cincinnati OH 2 09/30/96 SAIF Regular
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Corporate
--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp NYSE Irvine CA 26 05/01/86 SAIF Not Avail.
WFI Winton Financial Corp. AMSE Cincinnati OH 5 08/04/88 SAIF Regular
WFSG Wilshire Financial Services NASDAQ Portland OR 2 12/19/96 SAIF Not Avail.
WFSL Washington Federal Inc. NASDAQ Seattle WA 104 11/17/82 SAIF Regular
WHGB WHG Bancshares Corp. NASDAQ Lutherville MD 5 04/01/96 SAIF Regular
WOFC Western Ohio Financial Corp. NASDAQ Springfield OH 10 07/29/94 SAIF Regular
WRNB Warren Bancorp Inc. NASDAQ Peabody MA 6 07/09/86 BIF Regular
WSB Washington Savings Bank, FSB AMSE Waldorf MD 5 NA SAIF Not Avail.
WSFS WSFS Financial Corp. NASDAQ Wilmington DE 16 11/26/86 BIF Regular
WSTR WesterFed Financial Corp. NASDAQ Missoula MT 36 01/10/94 SAIF Regular
WVFC WVS Financial Corp. NASDAQ Pittsburgh PA 5 11/29/93 SAIF Regular
WWFC Westwood Financial Corp. NASDAQ Westwood NJ 2 06/07/96 SAIF Not Avail.
WYNE Wayne Bancorp Inc. NASDAQ Wayne NJ 5 06/27/96 SAIF Regular
YFCB Yonkers Financial Corporation NASDAQ Yonkers NY 4 04/18/96 SAIF Regular
YFED York Financial Corp. NASDAQ York PA 22 02/01/84 SAIF Regular
-------------------------------------------------------------------------
Average
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Corporate
--------------------------------------------------------------------------
Deposit
Number Insurance
of Agency Conversion
Ticker Short Name Exchange City State Offices IPO Date (BIF/SAIF) Type
- -------------------------------------- --------------------------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. NASDAQ Andover MA 15 08/04/87 BIF Regular
FFES First Federal of East Hartford NASDAQ East Hartford CT 12 06/23/87 SAIF Regular
FFIC Flushing Financial Corp. NASDAQ Flushing NY 7 11/21/95 BIF Regular
GAF GA Financial Inc. AMSE Pittsburgh PA 13 03/26/96 SAIF Regular
JSB JSB Financial Inc. NYSE Lynbrook NY 13 06/27/90 BIF Regular
MASB MASSBANK Corp. NASDAQ Reading MA 15 05/28/86 BIF Regular
MDBK Medford Bancorp Inc. NASDAQ Medford MA 16 03/18/86 BIF Regular
PWBC PennFirst Bancorp Inc. NASDAQ Ellwood City PA 11 06/13/90 SAIF Regular
SFIN Statewide Financial Corp. NASDAQ Jersey City NJ 16 10/02/95 SAIF Regular
SISB SIS Bancorp Inc. NASDAQ Springfield MA 25 02/08/95 BIF Regular
STFR St. Francis Capital Corp. NASDAQ Milwaukee WI 23 06/21/93 SAIF Regular
THRD TF Financial Corp. NASDAQ Newtown PA 14 07/13/94 SAIF Regular
-------------------------------------------------------------------------
Average
Median
Maximum
Minimum
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 30,876,530 124.06 66.94 53.96 34.85
%CCMD Chevy Chase Bank, FSB 6,167,982 72.67 56.98 78.42 11.47
AABC Access Anytime Bancorp Inc. 105,639 57.86 52.34 90.46 0.00
AADV Advantage Bancorp Inc. 1,037,462 85.13 55.04 64.66 23.95
ABBK Abington Bancorp Inc. 501,622 98.39 61.89 62.91 28.88
ABCL Alliance Bancorp Inc. 1,371,184 100.42 73.10 72.79 16.34
ABCW Anchor BanCorp Wisconsin 1,954,749 114.73 78.89 68.76 22.93
AFBC Advance Financial Bancorp 105,717 113.20 86.57 76.48 7.32
AFCB Affiliated Community Bancorp 1,128,579 100.84 62.81 62.29 27.34
AFED AFSALA Bancorp Inc. 159,181 55.4 47.07 84.96 0.95
AFFFZ America First Financial Fund 2,250,517 77.99 68.13 87.36 3.45
AHCI Ambanc Holding Co. 529,309 84.84 53.00 62.47 19.64
AHM H.F. Ahmanson & Co. 46,799,157 95.74 66.38 69.33 22.60
ALBC Albion Banc Corp. 70,810 92.67 71.80 77.48 13.07
ALBK ALBANK Financial Corp. 3,716,954 91.51 73.09 79.87 6.42
AMFC AMB Financial Corp. 103,388 102.43 73.06 71.33 13.06
ANA Acadiana Bancshares Inc. 274,018 110.19 76.00 68.97 13.37
ANDB Andover Bancorp Inc. 1,280,601 101.82 73.43 72.12 19.02
ANE Alliance Bncorp of New England 241,918 69.22 62.45 90.22 1.98
ASBI Ameriana Bancorp 393,028 92.69 75.86 81.84 4.87
ASBP ASB Financial Corp. 112,449 86.15 68.38 79.37 3.00
ASFC Astoria Financial Corp. 7,904,363 73.81 42.58 57.69 33.36
ATSB AmTrust Capital Corp. 69,685 102.96 71.52 69.47 18.78
AVND Avondale Financial Corp. 596,918 87.83 58.34 66.42 23.66
BANC BankAtlantic Bancorp Inc. 2,844,996 112.94 70.00 61.98 26.55
BDJI First Federal Bancorporation 111,492 65.08 48.45 74.45 12.76
BFD BostonFed Bancorp Inc. 960,704 137.81 81.79 59.35 31.22
BFFC Big Foot Financial Corp. 215,162 79.91 45.31 56.70 23.98
BFSB Bedford Bancshares Inc. 139,179 112.70 83.90 74.45 10.78
BKC American Bank of Connecticut 609,923 78.72 58.18 73.91 16.64
BKCT Bancorp Connecticut Inc. 423,800 84.57 62.07 73.40 15.12
BKUNA BankUnited Financial Corp. 2,145,406 147.96 82.47 55.74 38.10
BNKU Bank United Corp. 11,967,072 172.16 75.49 43.85 46.14
BPLS Bank Plus Corp. 3,920,257 103.17 73.74 71.48 23.25
BSBC Branford Savings Bank 182,868 75.19 66.15 87.98 1.09
BTHL Bethel Bancorp 218,187 114.79 77.14 67.20 22.23
BVCC Bay View Capital Corp. 3,162,207 149.10 76.58 51.36 41.71
BWFC Bank West Financial Corp. 164,854 112.88 72.01 63.80 21.23
BYFC Broadway Financial Corp. 124,740 97.58 83.95 86.04 2.00
CAFI Camco Financial Corp. 502,186 115.83 86.30 74.51 14.36
CAPS Capital Savings Bancorp Inc. 242,259 113.43 80.07 70.58 18.58
CASB Cascade Financial Corp. 426,451 118.27 84.10 71.11 19.76
CASH First Midwest Financial Inc. 404,589 104.43 63.53 60.83 27.71
CATB Catskill Financial Corp. 289,619 62.83 43.58 69.37 3.93
CBCI Calumet Bancorp Inc. 488,346 111.75 79.08 70.76 10.89
CBES CBES Bancorp Inc. 106,635 126.14 90.59 71.82 9.14
CBK Citizens First Financial Corp. 277,962 119.28 83.77 70.23 15.16
CBSA Coastal Bancorp Inc. 2,929,560 93.80 44.58 47.52 46.99
CBSB Charter Financial Inc. 393,268 106.54 74.28 69.72 14.83
CCFH CCF Holding Company 109,342 103.98 82.17 79.03 9.15
CEBK Central Co-operative Bank 358,424 89.07 69.37 77.88 11.44
CENB Century Bancorp Inc. 100,937 93.44 64.56 69.09 0.00
CENF CENFED Financial Corp. 2,304,678 101.07 69.17 68.44 25.10
CFB Commercial Federal Corp. 7,207,143 125.38 74.09 59.09 33.07
CFBC Community First Banking Co. 394,570 94.04 75.08 79.84 1.72
CFCP Coastal Financial Corp. 494,003 120.08 84.38 70.27 21.73
CFFC Community Financial Corp. 183,278 126.26 88.35 69.97 15.82
CFNC Carolina Fincorp Inc. 114,069 93.98 71.26 75.82 0.00
CFSB CFSB Bancorp Inc. 859,962 136.97 88.52 64.63 25.98
CFTP Community Federal Bancorp 215,953 95.52 59.24 62.02 8.47
CFX CFX Corp. 2,821,182 100.34 68.85 68.61 21.74
CIBI Community Investors Bancorp 94,328 107.50 84.42 78.53 9.05
CKFB CKF Bancorp Inc. 59,868 129.49 92.32 71.29 3.71
CLAS Classic Bancshares Inc. 132,186 89.59 67.32 75.14 8.95
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 212,504 138.55 83.96 60.60 16.59
CMSB Commonwealth Bancorp Inc. 2,278,099 84.24 56.52 67.10 20.97
CMSV Community Savings Bnkshrs(MHC) 709,220 77.42 59.42 76.75 9.46
CNIT CENIT Bancorp Inc. 701,708 96.17 69.83 72.61 19.87
CNSB CNS Bancorp Inc. 97,411 93.03 69.68 74.91 0.00
CNY Carver Bancorp Inc. 415,561 89.48 58.10 64.93 25.92
COFI Charter One Financial 15,196,993 124.08 64.83 52.25 39.09
CONE Conestoga Bancorp, Inc. 494,348 28.70 23.21 80.86 2.02
COOP Cooperative Bankshares Inc. 359,535 99.85 80.28 80.40 11.19
CRZY Crazy Woman Creek Bancorp 59,952 98.07 48.27 49.22 26.19
CSA Coast Savings Financial 9,040,413 95.45 68.05 71.30 22.00
CSBF CSB Financial Group Inc. 48,844 74.99 55.73 74.31 0.00
CTZN CitFed Bancorp Inc. 3,294,554 115.93 63.61 54.87 37.67
CVAL Chester Valley Bancorp Inc. 322,321 101.43 82.46 81.30 9.10
DCBI Delphos Citizens Bancorp Inc. 107,796 109.07 78.29 71.78 0.93
DIBK Dime Financial Corp. 921,510 47.95 41.24 86.00 4.83
DIME Dime Community Bancorp Inc. 1,385,356 80.26 57.80 72.02 12.67
DME Dime Bancorp Inc. 19,413,597 94.41 65.13 68.98 23.69
DNFC D & N Financial Corp. 1,754,069 127.30 74.96 58.88 32.94
DSL Downey Financial Corp. 5,853,968 111.12 90.79 81.70 10.23
EBSI Eagle Bancshares 872,706 107.63 73.40 68.19 20.05
EFBC Empire Federal Bancorp Inc. 110,540 65.37 40.30 61.65 0.64
EFBI Enterprise Federal Bancorp 274,888 131.01 69.73 53.22 34.56
EGFC Eagle Financial Corp. 2,097,179 84.24 54.36 64.53 24.86
EGLB Eagle BancGroup Inc. 172,160 94.94 72.65 76.52 10.89
EIRE Emerald Isle Bancorp Inc. 443,503 86.14 70.84 82.24 10.30
EMLD Emerald Financial Corp. 603,493 90.10 78.03 86.61 4.67
EQSB Equitable Federal Savings Bank 308,197 87.64 69.79 79.63 14.44
ESBK Elmira Savings Bank (The) 228,268 84.47 76.74 90.85 1.97
ESX Essex Bancorp Inc. 191,886 108.86 85.65 78.67 12.39
ETFS East Texas Financial Services 115,949 64.80 49.49 76.37 3.62
FAB FirstFed America Bancorp Inc. 1,036,062 127.05 86.78 68.31 17.52
FBBC First Bell Bancorp Inc. 681,215 111.83 83.14 74.35 12.62
FBCI Fidelity Bancorp Inc. 497,862 120.18 78.08 64.97 22.78
FBCV 1ST Bancorp 260,935 133.34 68.92 51.68 38.42
FBER 1st Bergen Bancorp 284,739 57.55 43.56 75.69 9.60
FBHC Fort Bend Holding Corp. 319,414 55.74 46.96 84.24 5.05
FBNW FirstBank Corp. 177,870 123.60 75.39 61.00 19.76
FBSI First Bancshares Inc. 162,755 114.35 84.39 73.80 11.89
FCB Falmouth Bancorp Inc. 96,391 NA NA 74.89 0.77
FCBF FCB Financial Corp. 522,991 128.34 77.68 60.53 21.90
FCME First Coastal Corp. 148,571 91.39 71.56 78.30 11.76
FDEF First Defiance Financial 574,364 113.58 75.94 66.86 12.63
FED FirstFed Financial Corp. 4,104,647 164.52 78.63 47.79 45.71
FESX First Essex Bancorp Inc. 1,209,698 98.35 60.22 61.23 29.32
FFBA First Colorado Bancorp Inc. 1,512,605 98.08 74.50 75.95 8.92
FFBH First Federal Bancshares of AR 547,119 94.30 77.74 82.44 1.83
FFBI First Financial Bancorp Inc. 84,242 83.44 67.21 80.54 9.73
FFBS FFBS BanCorp Inc. 134,952 90.62 71.00 78.35 3.41
FFBZ First Federal Bancorp Inc. 203,703 138.86 86.32 62.17 29.36
FFCH First Financial Holdings Inc. 1,712,931 132.53 82.73 62.42 29.09
FFDB FirstFed Bancorp Inc. 176,464 78.49 70.03 89.21 0.57
FFDF FFD Financial Corp. 88,220 103.14 66.97 64.93 9.39
FFED Fidelity Federal Bancorp 235,336 110.50 84.36 76.35 16.04
FFES First Federal of East Hartford 987,416 32.97 19.07 57.83 34.97
FFFC FFVA Financial Corp. 567,266 79.70 58.15 72.96 13.05
FFFD North Central Bancshares Inc. 215,133 131.59 85.18 64.73 11.88
FFFL Fidelity Bankshares Inc. (MHC) 1,045,692 97.51 73.78 75.66 13.70
FFHH FSF Financial Corp. 388,135 125.55 67.36 53.65 34.48
FFHS First Franklin Corp. 231,189 75.46 66.30 87.86 2.64
FFIC Flushing Financial Corp. 960,130 89.51 59.99 67.02 17.19
FFKY First Federal Financial Corp. 382,585 117.81 87.74 74.48 10.84
FFLC FFLC Bancorp Inc. 383,382 96.21 77.13 80.17 5.22
FFOH Fidelity Financial of Ohio 528,704 104.81 83.82 79.97 6.26
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 1,808,420 93.56 63.60 67.98 23.71
FFSL First Independence Corp. 112,523 98.69 66.85 67.75 21.06
FFSX First Fed SB of Siouxland(MHC) 456,850 107.08 76.03 71.01 18.93
FFWC FFW Corp. 181,468 104.83 66.40 63.34 25.79
FFWD Wood Bancorp Inc. 166,520 110.66 82.06 74.15 12.63
FFYF FFY Financial Corp. 610,974 103.79 76.28 73.50 10.83
FGHC First Georgia Holding Inc. 156,383 105.35 85.03 80.71 8.85
FIBC Financial Bancorp Inc. 296,956 72.49 52.09 71.86 17.85
FISB First Indiana Corporation 1,547,121 119.42 84.48 70.74 18.34
FKFS First Keystone Financial 373,430 85.34 52.08 61.03 26.78
FKKYD Frankfort First Bancorp Inc. 133,255 145.28 92.71 63.82 17.89
FLAG FLAG Financial Corp. 238,463 92.76 69.10 74.49 14.27
FLFC First Liberty Financial Corp. 1,288,919 93.15 68.83 73.89 17.43
FLGS Flagstar Bancorp Inc. 2,033,260 178.76 88.94 49.75 35.36
FLKY First Lancaster Bancshares 47,184 190.54 90.69 47.59 21.02
FMBD First Mutual Bancorp Inc. 402,389 95.81 76.87 80.24 5.34
FMCO FMS Financial Corp. 581,660 64.86 53.29 82.17 10.31
FMSB First Mutual Savings Bank 451,120 96.72 79.01 81.69 9.94
FNGB First Northern Capital Corp. 656,745 123.51 89.96 72.84 13.86
FOBC Fed One Bancorp 357,721 65.70 46.55 70.85 17.47
FPRY First Financial Bancorp 240,379 88.86 77.63 87.36 5.41
FSBI Fidelity Bancorp Inc. 380,951 75.68 48.51 64.10 28.39
FSFC First Southeast Financial Corp 350,038 97.15 79.06 81.38 7.14
FSFF First SecurityFed Financial 267,332 81.39 67.52 82.95 4.49
FSLA First Savings Bank (MHC) 1,044,513 70.81 54.88 77.50 11.92
FSNJ Bayonne Bancshares Inc. 609,053 54.40 38.60 70.95 12.39
FSPG First Home Bancorp Inc. 525,092 87.30 53.80 61.63 31.09
FSPT FirstSpartan Financial Corp. 482,314 110.82 79.38 71.62 0.00
FSSB First FS&LA of San Bernardino 103,674 75.29 71.56 95.05 0.00
FSTC First Citizens Corp. 337,197 94.36 78.03 82.69 6.03
FTF Texarkana First Financial Corp 178,710 103.68 83.08 80.13 2.79
FTFC First Federal Capital Corp. 1,559,672 108.40 79.35 73.20 18.80
FTNB Fulton Bancorp Inc. 103,713 133.46 87.17 65.31 8.19
FTSB Fort Thomas Financial Corp. 97,843 124.42 91.37 73.44 9.04
FWWB First SB of Washington Bancorp 1,098,615 130.11 67.33 51.75 32.85
GAF GA Financial Inc. 802,304 66.62 37.94 56.94 24.98
GBCI Glacier Bancorp Inc. 573,968 119.73 72.40 60.47 27.16
GDVS Greater Delaware Valley (MHC) 248,792 78.64 60.93 77.48 10.51
GDW Golden West Financial 39,228,359 135.94 83.98 61.78 29.67
GFCO Glenway Financial Corp. 293,245 108.40 85.03 78.44 10.76
GFED Guaranty Federal SB (MHC) 210,139 115.61 80.92 69.99 15.30
GFSB GFS Bancorp Inc. 94,496 130.67 85.38 65.34 21.64
GLMR Gilmer Financial Svcs, Inc. 42,171 81.48 56.24 69.02 20.27
GOSB GSB Financial Corp. 154,649 NA NA 62.41 0.00
GPT GreenPoint Financial Corp. 13,093,985 77.96 65.70 84.28 2.22
GSB Golden State Bancorp Inc. 16,432,304 131.08 74.49 56.83 35.00
GSBC Great Southern Bancorp Inc. 727,533 128.87 85.30 66.19 24.11
GSFC Green Street Financial Corp. 177,962 114.47 72.46 63.30 0.00
GSLA GS Financial Corp. 131,071 85.99 36.77 42.76 13.00
GTFN Great Financial Corp. 2,893,505 103.64 68.74 66.33 21.96
GTPS Great American Bancorp 139,568 100.56 78.95 78.51 0.00
GUPB GFSB Bancorp Inc. 109,964 97.89 53.72 54.88 31.24
GWBC Gateway Bancorp Inc. 62,609 47.93 34.34 71.65 0.00
HALL Hallmark Capital Corp. 418,467 100.96 67.84 67.20 23.56
HARB Harbor Florida Bancorp (MHC) 1,131,024 92.82 74.81 80.60 8.88
HARL Harleysville Savings Bank 345,239 90.01 71.38 79.30 13.43
HARS Harris Financial Inc. (MHC) 2,110,299 79.99 42.76 53.46 37.26
HAVN Haven Bancorp Inc. 1,833,284 81.37 58.16 71.48 21.31
HBBI Home Building Bancorp 41,746 90.93 68.65 75.50 9.58
HBEI Home Bancorp of Elgin Inc. 342,518 119.21 85.28 71.53 0.00
HBFW Home Bancorp 334,862 95.19 81.78 85.92 0.00
HBNK Highland Federal Bank FSB 515,990 120.29 80.59 66.99 23.84
HBS Haywood Bancshares Inc. 152,796 97.44 75.44 77.42 6.87
HCBB HCB Bancshares Inc. 199,946 69.89 51.89 74.25 5.00
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 70,110 116.70 85.94 73.64 6.15
HEMT HF Bancorp Inc. 1,050,377 61.99 50.58 81.59 9.04
HFFB Harrodsburg First Fin Bancorp 108,949 102.71 73.91 71.96 0.00
HFFC HF Financial Corp. 574,889 103.03 77.89 75.59 11.78
HFGI Harrington Financial Group 521,043 71.85 19.16 26.66 67.60
HFNC HFNC Financial Corp. 866,859 157.03 80.13 51.02 28.47
HFSA Hardin Bancorp Inc. 117,364 76.50 49.43 64.61 22.58
HHFC Harvest Home Financial Corp. 87,596 79.16 51.58 65.15 22.43
HIFS Hingham Instit. for Savings 216,240 104.75 77.07 73.58 15.82
HMCI HomeCorp Inc. 326,877 88.83 81.29 91.52 0.73
HMLK Hemlock Federal Financial Corp 161,905 47.25 37.61 79.60 0.00
HMNF HMN Financial Inc. 568,847 97.51 62.86 64.46 19.69
HOMF Home Federal Bancorp 694,109 113.07 85.58 75.69 14.82
HPBC Home Port Bancorp Inc. 201,014 118.88 84.50 71.08 17.35
HRBF Harbor Federal Bancorp Inc. 217,202 87.29 69.02 79.06 6.78
HRZB Horizon Financial Corp. 531,028 95.84 79.05 82.48 0.00
HTHR Hawthorne Financial Corp. 891,163 100.52 87.57 87.11 5.90
HWEN Home Financial Bancorp 41,309 136.66 85.56 62.61 19.37
HZFS Horizon Financial Svcs Corp. 87,784 97.51 62.52 64.12 25.16
IBSF IBS Financial Corp. 734,751 37.20 28.73 77.22 4.67
IFSB Independence Federal Svgs Bank 251,561 75.18 60.02 79.84 12.00
INBI Industrial Bancorp Inc. 354,116 116.04 88.34 76.12 5.93
INCB Indiana Community Bank SB 96,089 87.84 76.66 87.28 0.00
IPSW Ipswich Savings Bank 202,509 93.07 75.75 81.38 11.44
ISBF ISB Financial Corp. 956,048 82.57 67.64 81.92 4.92
ITLA ITLA Capital Corp. 901,555 103.22 84.31 81.68 6.82
IWBK InterWest Bancorp Inc. 2,046,705 95.90 54.89 57.24 35.72
JOAC Joachim Bancorp Inc. 35,073 100.35 70.44 70.19 0.00
JSB JSB Financial Inc. 1,531,068 83.22 61.03 73.33 0.00
JSBA Jefferson Savings Bancorp 1,257,753 89.04 75.72 85.04 4.08
JXSB Jacksonville Savings Bk (MHC) 164,235 90.76 79.43 87.51 0.16
JXVL Jacksonville Bancorp Inc. 226,182 91.84 75.36 82.06 0.88
KFBI Klamath First Bancorp 980,078 82.01 56.40 68.77 14.90
KNK Kankakee Bancorp Inc. 339,937 86.29 70.11 81.25 6.98
KSAV KS Bancorp Inc. 109,937 107.50 84.55 78.65 7.28
KSBK KSB Bancorp Inc. 149,657 107.81 77.38 71.77 19.43
KYF Kentucky First Bancorp Inc. 88,089 90.77 56.42 62.15 20.17
LARK Landmark Bancshares Inc. 227,736 NA NA 63.55 20.29
LARL Laurel Capital Group Inc. 209,980 85.38 70.26 82.29 5.26
LFBI Little Falls Bancorp Inc. 324,425 64.60 45.05 69.74 18.03
LFCO Life Financial Corp. 294,102 141.11 76.69 54.35 24.32
LFED Leeds Federal Savings Bk (MHC) 285,425 76.69 62.79 81.88 0.22
LIFB Life Bancorp Inc. 1,486,357 88.26 43.99 49.84 38.55
LISB Long Island Bancorp Inc. 5,930,784 98.53 61.97 62.90 25.32
LOGN Logansport Financial Corp. 85,801 99.17 71.36 71.96 6.41
LONF London Financial Corporation 38,210 99.00 77.60 78.39 0.79
LSBI LSB Financial Corp. 200,266 130.80 88.50 67.66 23.32
LSBX Lawrence Savings Bank 352,980 62.22 44.27 71.15 18.13
LVSB Lakeview Financial 505,882 61.48 45.06 73.30 12.57
LXMO Lexington B&L Financial Corp. 59,236 107.94 76.69 71.05 0.00
MAFB MAF Bancorp Inc. 3,370,587 115.74 78.85 68.12 22.38
MARN Marion Capital Holdings 179,822 127.59 85.56 67.05 8.06
MASB MASSBANK Corp. 932,757 32.71 28.79 88.01 0.10
MBB MSB Bancorp Inc. 773,991 NA NA 88.38 0.04
MBBC Monterey Bay Bancorp Inc. 409,663 83.42 64.53 77.36 10.58
MBLF MBLA Financial Corp. 224,013 124.51 57.97 46.56 40.09
MBSP Mitchell Bancorp Inc. 34,591 151.12 83.76 55.42 0.00
MCBN Mid-Coast Bancorp Inc. 61,473 112.62 81.53 72.40 18.61
MCBS Mid Continent Bancshares Inc. 405,262 104.80 61.11 58.32 30.05
MDBK Medford Bancorp Inc. 1,106,345 71.20 53.04 74.50 15.99
MECH Mechanics Savings Bank 830,741 86.35 67.67 78.36 10.35
MERI Meritrust Federal SB 233,311 58.22 52.50 90.19 0.00
METF Metropolitan Financial Corp. 865,572 94.13 74.69 79.35 15.19
MFBC MFB Corp. 255,921 117.11 78.66 67.16 18.71
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 125,491 63.93 52.84 82.64 0.00
MFFC Milton Federal Financial Corp. 209,958 89.59 60.94 68.03 18.85
MFLR Mayflower Co-operative Bank 129,033 71.93 56.52 78.57 10.85
MFSL Maryland Federal Bancorp 1,175,006 123.18 86.29 70.06 19.10
MIFC Mid-Iowa Financial Corp. 128,017 74.65 52.12 69.82 19.53
MIVI Mississippi View Holding Co. 68,546 NA NA 80.51 0.00
MLBC ML Bancorp Inc. 2,315,784 103.95 44.90 43.20 46.94
MONT Montgomery Financial Corp. 101,986 125.36 89.00 71.00 8.26
MRKF Market Financial Corp. 56,121 75.22 47.32 62.91 0.00
MSBF MSB Financial Inc. 77,014 169.02 92.01 54.44 27.61
MSBK Mutual Savings Bank FSB 654,127 76.84 47.13 61.34 30.57
MWBI Midwest Bancshares Inc. 149,850 86.57 61.14 70.62 21.69
MWBX MetroWest Bank 585,760 92.94 76.36 82.17 9.29
MWFD Midwest Federal Financial 211,689 101.01 76.07 75.31 14.46
NASB North American Savings Bank 736,585 125.19 86.56 69.14 22.12
NBN Northeast Bancorp 265,442 135.67 78.84 58.12 33.39
NBSI North Bancshares Inc. 122,081 104.73 62.73 59.90 23.84
NEIB Northeast Indiana Bancorp 190,319 175.42 89.38 50.95 34.15
NHTB New Hampshire Thrift Bncshrs 319,338 96.15 81.03 84.28 7.06
NMSB NewMil Bancorp Inc. 317,407 61.12 53.59 87.69 1.26
NSLB NS&L Bancorp Inc. 59,711 75.61 55.74 73.72 5.02
NSSB Norwich Financial Corp. 700,860 82.33 69.88 84.88 2.23
NSSY NSS Bancorp Inc. 670,749 104.06 66.01 63.43 27.12
NTMG Nutmeg Federal S&LA 105,151 111.58 88.08 78.94 9.99
NWEQ Northwest Equity Corp. 96,954 127.25 82.18 64.58 23.09
NWSB Northwest Savings Bank (MHC) 2,100,744 94.37 75.87 80.40 8.75
NYB New York Bancorp Inc. 3,244,200 121.06 62.85 51.92 38.65
OCFC Ocean Financial Corp. 1,489,220 78.83 51.12 64.85 19.31
OCN Ocwen Financial Corp. 2,956,300 105.37 70.25 66.67 12.56
OFCP Ottawa Financial Corp. 866,966 115.78 85.74 74.05 16.03
OHSL OHSL Financial Corp. 234,600 93.54 72.30 77.29 10.98
OSFS Ohio State Financial Services 38,559 89.49 63.95 71.46 0.00
OTFC Oregon Trail Financial Corp. 341,988 77.22 42.33 54.82 1.86
PALM Palfed Inc. 668,504 97.19 83.37 85.78 4.86
PBCI Pamrapo Bancorp Inc. 371,958 69.58 56.42 81.10 4.16
PBCT People's Bank (MHC) 7,731,200 91.68 66.58 72.62 16.48
PBHC Oswego City Savings Bk (MHC) 193,005 73.80 59.68 80.87 6.40
PBKB People's Bancshares Inc. 717,451 112.33 54.60 48.60 42.99
PCBC Perry County Financial Corp. 81,105 21.97 16.44 74.83 5.55
PDB Piedmont Bancorp Inc. 126,544 123.82 83.07 67.08 15.45
PEEK Peekskill Financial Corp. 181,242 35.78 26.03 72.75 0.00
PERM Permanent Bancorp Inc. 433,568 78.11 50.25 64.33 25.23
PERT Perpetual Bank (MHC) 256,211 90.61 68.28 75.36 10.93
PFDC Peoples Bancorp 290,601 97.66 81.26 83.20 1.09
PFED Park Bancorp Inc. 174,515 54.05 39.73 73.50 1.72
PFFB PFF Bancorp Inc. 2,615,466 110.35 72.31 65.53 22.97
PFFC Peoples Financial Corp. 86,486 84.64 60.45 71.43 0.00
PFNC Progress Financial Corp. 436,746 93.16 69.39 74.48 14.56
PFSB PennFed Financial Services Inc 1,363,950 99.59 71.19 71.48 20.29
PFSL Pocahontas FS&LA (MHC) 383,417 112.60 42.10 37.39 55.11
PHBK Peoples Heritage Finl Group 6,056,083 95.41 67.25 70.48 19.35
PHFC Pittsburgh Home Financial Corp 273,304 131.74 66.87 50.76 37.21
PHSB Peoples Home Savings Bk (MHC) 206,426 58.33 49.11 84.19 1.51
PKPS Poughkeepsie Financial Corp. 883,981 107.39 74.32 69.20 20.92
PLSK Pulaski Savings Bank (MHC) 178,987 67.24 56.62 84.21 3.17
PMFI Perpetual Midwest Financial 401,665 107.69 83.15 77.21 12.75
PRBC Prestige Bancorp Inc. 137,834 103.90 67.89 65.34 22.62
PROV Provident Financial Holdings 640,634 110.09 89.88 81.64 2.94
PSBK Progressive Bank Inc. 884,617 72.86 65.94 90.51 0.00
PSFC Peoples-Sidney Financial Corp. 102,835 120.18 89.29 74.29 0.00
PSFI PS Financial Inc. 85,698 86.24 41.58 48.21 9.92
PTRS Potters Financial Corp. 122,716 78.90 64.84 82.19 8.03
PULB Pulaski Bank, Svgs Bank (MHC) 180,232 95.56 79.58 83.28 1.22
PULS Pulse Bancorp 526,016 31.55 24.65 78.14 12.87
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 383,278 113.83 93.49 82.13 8.58
PVSA Parkvale Financial Corporation 1,005,440 83.81 74.64 89.06 2.17
PWBC PennFirst Bancorp Inc. 822,350 85.15 40.81 47.93 42.64
PWBK Pennwood Bancorp Inc. 47,645 79.26 60.79 76.69 3.06
QCBC Quaker City Bancorp Inc. 847,024 118.76 78.89 66.43 22.27
QCFB QCF Bancorp Inc. 158,192 62.15 41.07 66.09 13.43
QCSB Queens County Bancorp Inc. 1,541,049 129.11 88.10 68.23 17.99
RARB Raritan Bancorp Inc. 407,262 77.95 64.29 82.48 8.62
REDF RedFed Bancorp Inc. 967,309 101.81 87.95 86.39 3.56
RELI Reliance Bancshares Inc. 46,987 153.59 57.86 37.67 12.86
RELY Reliance Bancorp Inc. 2,034,753 62.83 44.88 71.43 18.47
RIVR River Valley Bancorp 138,461 98.31 82.13 83.54 2.17
ROSE TR Financial Corp. 3,691,564 84.73 53.28 62.88 28.41
RSLN Roslyn Bancorp Inc. 3,474,150 49.04 26.48 54.00 26.44
RVSB Riverview Bancorp Inc. 282,247 83.91 56.04 66.79 11.53
SBFL SB of the Finger Lakes (MHC) 227,970 57.88 46.64 80.59 9.08
SBOS Boston Bancorp (The) 1,715,070 24.42 19.25 78.85 7.61
SCBS Southern Community Bancshares 70,370 75.43 58.98 78.19 0.00
SCCB S. Carolina Community Bancshrs 45,619 109.53 79.44 72.53 0.00
SFED SFS Bancorp Inc. 174,093 86.44 74.40 86.08 0.00
SFFC StateFed Financial Corp. 87,542 130.17 77.82 59.78 21.70
SFIN Statewide Financial Corp. 703,112 75.00 47.20 62.93 26.75
SFSB SuburbFed Financial Corp. 432,559 90.79 66.08 72.78 19.27
SFSL Security First Corp. 680,827 126.75 89.36 70.50 19.25
SGVB SGV Bancorp Inc. 408,975 106.09 76.00 71.63 20.00
SHEN First Shenango Bancorp Inc. 401,437 95.80 65.27 68.13 19.46
SHSB SHS Bancorp Inc. 88,460 89.35 65.63 73.46 12.05
SISB SIS Bancorp Inc. 1,453,017 67.39 47.38 70.31 19.67
SKAN Skaneateles Bancorp Inc. 247,643 102.29 85.98 84.05 7.42
SKBO First Carnegie Deposit (MHC) 147,102 80.98 42.39 52.35 29.42
SMBC Southern Missouri Bancorp Inc. 163,297 96.07 69.00 71.83 10.74
SMFC Sho-Me Financial Corp. 344,849 150.04 87.47 58.30 31.63
SOBI Sobieski Bancorp Inc. 84,279 110.72 76.81 69.37 15.44
SOPN First Savings Bancorp Inc. 295,315 95.38 66.67 69.90 6.10
SOSA Somerset Savings Bank 520,339 86.71 76.29 87.98 4.53
SPBC St. Paul Bancorp Inc. 4,548,436 94.00 67.96 72.29 17.57
SRN Southern Banc Co. 106,164 43.79 35.93 82.04 0.00
SSB Scotland Bancorp Inc. 64,399 108.28 72.54 66.99 8.54
SSFC South Street Financial Corp. 240,524 79.41 46.74 58.86 14.55
SSM Stone Street Bancorp Inc. 104,773 135.09 86.03 63.68 4.82
STFR St. Francis Capital Corp. 1,660,649 68.41 44.78 65.46 25.31
STSA Sterling Financial Corp. 1,870,513 104.75 55.97 53.43 39.60
SVRN Sovereign Bancorp Inc. 14,601,008 133.15 70.68 53.08 40.58
SWBI Southwest Bancshares 375,004 99.46 73.03 73.43 13.56
SWCB Sandwich Bancorp Inc. 511,765 88.81 71.73 80.76 10.17
SZB SouthFirst Bancshares Inc. 97,283 114.80 73.80 64.29 19.01
THR Three Rivers Financial Corp. 94,216 105.19 67.97 64.62 19.89
THRD TF Financial Corp. 625,338 58.98 41.84 70.94 15.73
TPNZ Tappan Zee Financial Inc. 124,603 57.25 46.56 81.33 0.00
TRIC Tri-County Bancorp Inc. 88,173 83.25 44.68 53.66 29.89
TSBS Trenton SB (MHC) 638,942 81.30 62.77 77.21 4.70
TSH Teche Holding Co. 404,097 124.95 86.67 69.37 16.18
TWIN Twin City Bancorp 106,931 84.74 71.02 83.81 0.94
UBMT United Financial Corp. 103,082 47.48 33.21 69.95 4.85
UFRM United Federal Savings Bank 285,744 96.04 85.32 88.84 0.00
USAB USABancshares, Inc. 64,269 73.78 53.03 71.88 18.99
VABF Virginia Beach Fed. Financial 605,486 120.74 77.29 64.01 28.11
WAMU Washington Mutual Inc. 95,607,369 134.09 71.94 53.65 38.46
WAYN Wayne Savings Bancshares (MHC) 250,241 98.96 83.34 84.21 5.59
WBST Webster Financial Corp. 6,811,014 89.84 56.25 62.62 31.00
WCBI Westco Bancorp 309,070 93.21 76.83 82.43 0.00
WCFB Webster City Federal SB (MHC) 94,481 76.90 57.76 75.11 0.27
WEFC Wells Financial Corp. 204,761 130.15 91.85 70.57 14.16
WEHO Westwood Homestead Fin. Corp. 142,878 129.96 78.26 60.22 11.74
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WES Westcorp 3,757,362 100.05 51.60 51.57 23.40
WFI Winton Financial Corp. 324,532 117.08 86.70 74.05 17.69
WFSG Wilshire Financial Services 1,369,761 215.90 64.27 29.77 61.49
WFSL Washington Federal Inc. 5,719,589 145.09 73.70 50.80 34.57
WHGB WHG Bancshares Corp. 100,235 108.52 79.50 73.26 3.99
WOFC Western Ohio Financial Corp. 397,425 126.01 76.82 60.96 24.66
WRNB Warren Bancorp Inc. 364,130 74.24 64.44 86.80 1.05
WSB Washington Savings Bank, FSB 267,870 52.42 45.70 87.19 3.73
WSFS WSFS Financial Corp. 1,495,609 129.91 64.09 49.33 43.25
WSTR WesterFed Financial Corp. 999,203 104.72 66.09 63.11 23.81
WVFC WVS Financial Corp. 282,235 98.18 57.56 58.62 27.85
WWFC Westwood Financial Corp. 110,425 44.84 36.50 81.39 9.06
WYNE Wayne Bancorp Inc. 267,285 93.56 66.75 71.34 15.61
YFCB Yonkers Financial Corporation 312,956 67.43 44.80 66.44 19.20
YFED York Financial Corp. 1,155,725 102.06 87.20 85.44 4.01
-----------------------------------------------------
Average 1,513,822 97.64 67.61 70.70 15.12
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Key Financial Data as of The Most Recent Quarter
-----------------------------------------------------
Total Loans/ Loans/ Deposits/ Borrowings/
Assets Deposits Assets Assets Assets
Ticker Short Name ($000) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 1,209,698 98.35 60.22 61.23 29.32
FFES First Federal of East Hartford 987,416 32.97 19.07 57.83 34.97
FFIC Flushing Financial Corp. 960,130 89.51 59.99 67.02 17.19
GAF GA Financial Inc. 802,304 66.62 37.94 56.94 24.98
JSB JSB Financial Inc. 1,531,068 83.22 61.03 73.33 0.00
MASB MASSBANK Corp. 932,757 32.71 28.79 88.01 0.10
MDBK Medford Bancorp Inc. 1,106,345 71.20 53.04 74.50 15.99
PWBC PennFirst Bancorp Inc. 822,350 85.15 40.81 47.93 42.64
SFIN Statewide Financial Corp. 703,112 75.00 47.20 62.93 26.75
SISB SIS Bancorp Inc. 1,453,017 67.39 47.38 70.31 19.67
STFR St. Francis Capital Corp. 1,660,649 68.41 44.78 65.46 25.31
THRD TF Financial Corp. 625,338 58.98 41.84 70.94 15.73
-----------------------------------------------------
Average 1,066,182 69.13 45.17 66.37 21.05
Median 973,773 69.81 45.99 66.24 22.33
Maximum 1,660,649 98.35 61.03 88.01 42.64
Minimum 625,338 32.71 19.07 47.93 0.00
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 7.44 5.33 29.97 5.73 8.77 11.83
%CCMD Chevy Chase Bank, FSB 5.60 5.02 10.86 6.48 7.19 13.21
AABC Access Anytime Bancorp Inc. 8.65 8.65 0.00 7.35 9.14 16.79
AADV Advantage Bancorp Inc. 9.54 8.94 6.97 6.43 10.10 14.81
ABBK Abington Bancorp Inc. 7.13 6.50 9.37 6.30 7.56 13.58
ABCL Alliance Bancorp Inc. 9.41 9.31 1.20 8.24 9.81 15.93
ABCW Anchor BanCorp Wisconsin 6.40 6.30 1.74 5.69 7.54 10.54
AFBC Advance Financial Bancorp 15.40 15.40 0.00 15.50 15.68 24.60
AFCB Affiliated Community Bancorp 9.76 9.71 0.54 9.87 10.50 18.92
AFED AFSALA Bancorp Inc. 13.47 13.47 0.00 13.48 14.15 32.75
AFFFZ America First Financial Fund 8.37 8.28 1.05 7.27 8.69 16.53
AHCI Ambanc Holding Co. 11.37 11.37 0.00 9.30 12.16 21.90
AHM H.F. Ahmanson & Co. 5.10 4.51 12.00 5.89 5.91 11.81
ALBC Albion Banc Corp. 8.56 8.56 0.00 NA 8.95 NA
ALBK ALBANK Financial Corp. 9.24 8.23 11.91 6.40 9.95 11.70
AMFC AMB Financial Corp. 13.94 13.94 0.00 9.15 14.31 18.10
ANA Acadiana Bancshares Inc. 16.95 16.95 0.00 13.74 17.95 26.66
ANDB Andover Bancorp Inc. 8.12 8.12 0.00 8.30 9.10 14.80
ANE Alliance Bncorp of New England 7.36 7.20 2.38 7.2 8.61 13.3
ASBI Ameriana Bancorp 11.21 11.20 0.06 10.46 11.49 19.12
ASBP ASB Financial Corp. 15.57 15.57 0.00 12.33 16.30 27.81
ASFC Astoria Financial Corp. 7.71 6.60 15.40 5.82 7.90 15.62
ATSB AmTrust Capital Corp. 10.93 10.83 0.98 10.50 11.66 17.60
AVND Avondale Financial Corp. 7.72 7.72 0.00 7.55 8.68 13.18
BANC BankAtlantic Bancorp Inc. 5.50 4.60 17.26 6.65 6.50 11.31
BDJI First Federal Bancorporation 10.71 10.71 0.00 9.70 11.09 19.21
BFD BostonFed Bancorp Inc. 8.52 8.22 3.73 NA 9.14 NA
BFFC Big Foot Financial Corp. 17.48 17.48 0.00 12.26 17.62 33.92
BFSB Bedford Bancshares Inc. 14.10 14.10 0.00 12.40 14.58 22.83
BKC American Bank of Connecticut 8.81 8.52 3.64 7.85 9.67 14.65
BKCT Bancorp Connecticut Inc. 10.75 10.75 0.00 10.41 11.99 17.32
BKUNA BankUnited Financial Corp. 4.64 4.01 14.33 8.07 4.82 11.27
BNKU Bank United Corp. 5.00 4.89 2.27 7.77 5.33 13.18
BPLS Bank Plus Corp. 4.52 4.51 0.18 5.76 6.01 11.63
BSBC Branford Savings Bank 9.63 9.63 0.00 9.64 11.68 17.97
BTHL Bethel Bancorp 8.48 7.36 14.28 7.38 9.63 13.39
BVCC Bay View Capital Corp. 5.82 4.91 16.48 5.86 7.06 10.24
BWFC Bank West Financial Corp. 14.15 14.15 0.00 11.72 14.30 21.91
BYFC Broadway Financial Corp. 10.57 10.57 0.00 8.61 11.43 14.69
CAFI Camco Financial Corp. 9.59 8.94 7.45 9.25 9.84 16.51
CAPS Capital Savings Bancorp Inc. 9.14 9.14 0.00 8.21 9.45 17.03
CASB Cascade Financial Corp. 6.64 6.64 0.00 6.62 7.58 11.85
CASH First Midwest Financial Inc. 10.75 9.66 11.19 8.19 11.33 14.06
CATB Catskill Financial Corp. 24.78 24.78 0.00 20.63 25.44 61.28
CBCI Calumet Bancorp Inc. 16.22 16.22 0.00 9.91 17.44 16.24
CBES CBES Bancorp Inc. 16.92 16.92 0.00 12.09 17.40 15.10
CBK Citizens First Financial Corp. 13.75 13.75 0.00 10.49 13.99 18.28
CBSA Coastal Bancorp Inc. 3.47 2.93 15.93 5.38 3.71 11.88
CBSB Charter Financial Inc. 14.47 13.02 11.52 11.65 15.06 21.47
CCFH CCF Holding Company 10.66 10.66 0.00 9.53 11.23 15.08
CEBK Central Co-operative Bank 9.90 9.00 9.95 NA 10.69 NA
CENB Century Bancorp Inc. 30.29 30.29 0.00 19.16 30.84 44.50
CENF CENFED Financial Corp. 5.56 5.55 0.16 5.69 6.30 11.43
CFB Commercial Federal Corp. 6.16 5.55 10.50 6.59 6.83 13.92
CFBC Community First Banking Co. 17.80 17.61 1.32 12.00 18.36 17.42
CFCP Coastal Financial Corp. 6.56 6.56 0.00 6.31 7.55 11.05
CFFC Community Financial Corp. 13.21 13.21 0.00 11.34 13.80 17.23
CFNC Carolina Fincorp Inc. 22.59 22.59 0.00 NA 22.94 NA
CFSB CFSB Bancorp Inc. 7.71 7.71 0.00 7.46 8.25 13.46
CFTP Community Federal Bancorp 26.72 26.72 0.00 24.09 26.99 57.37
CFX CFX Corp. 8.71 8.42 3.60 8.38 9.47 14.98
CIBI Community Investors Bancorp 11.75 11.75 0.00 11.20 12.25 21.3
CKFB CKF Bancorp Inc. 23.67 23.67 0.00 20.15 23.87 34.56
CLAS Classic Bancshares Inc. 14.88 12.92 15.08 11.60 15.51 23.20
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 21.02 21.02 0.00 16.80 21.78 25.80
CMSB Commonwealth Bancorp Inc. 9.28 7.39 22.06 6.30 9.68 13.00
CMSV Community Savings Bnkshrs(MHC) 11.34 11.34 0.00 11.40 11.71 23.10
CNIT CENIT Bancorp Inc. 6.95 6.40 8.41 NA 7.49 NA
CNSB CNS Bancorp Inc. 24.33 24.33 0.00 19.92 24.73 40.19
CNY Carver Bancorp Inc. 8.40 8.10 3.86 7.41 9.02 14.78
COFI Charter One Financial 7.05 6.52 8.16 5.64 7.49 10.78
CONE Conestoga Bancorp, Inc. 16.18 16.18 0.00 12.17 16.22 27.71
COOP Cooperative Bankshares Inc. 7.69 7.69 0.00 7.70 7.92 14.60
CRZY Crazy Woman Creek Bancorp 23.70 23.70 0.00 18.22 24.21 45.57
CSA Coast Savings Financial 5.20 5.14 1.16 5.58 6.13 11.37
CSBF CSB Financial Group Inc. 25.04 23.99 5.53 25.34 25.36 54.92
CTZN CitFed Bancorp Inc. 6.27 5.73 9.13 5.78 6.82 12.77
CVAL Chester Valley Bancorp Inc. 8.66 8.66 0.00 8.59 9.58 14.77
DCBI Delphos Citizens Bancorp Inc. 26.64 26.64 0.00 13.89 26.74 28.64
DIBK Dime Financial Corp. 8.14 7.93 2.87 8.14 9.46 21.22
DIME Dime Community Bancorp Inc. 13.49 11.85 13.82 9.62 14.30 19.44
DME Dime Bancorp Inc. 5.42 5.18 4.78 6.03 5.95 12.10
DNFC D & N Financial Corp. 5.25 5.20 1.00 6.42 5.87 11.63
DSL Downey Financial Corp. 7.13 7.05 1.31 6.40 7.66 12.30
EBSI Eagle Bancshares 8.17 8.17 0.00 5.97 8.86 9.13
EFBC Empire Federal Bancorp Inc. 36.37 36.37 0.00 23.83 36.55 65.78
EFBI Enterprise Federal Bancorp 11.43 11.43 0.06 10.46 11.64 19.04
EGFC Eagle Financial Corp. 6.90 5.57 20.44 7.58 7.37 17.84
EGLB Eagle BancGroup Inc. 11.85 11.85 0.00 9.89 12.38 17.31
EIRE Emerald Isle Bancorp Inc. 6.99 6.99 0.00 6.99 7.67 10.75
EMLD Emerald Financial Corp. 7.80 7.70 1.47 7.52 8.08 12.65
EQSB Equitable Federal Savings Bank 5.04 5.04 0.00 5.04 5.22 11.24
ESBK Elmira Savings Bank (The) 6.35 6.20 2.62 6.19 7.01 10.23
ESX Essex Bancorp Inc. 7.83 7.75 1.16 8.07 8.92 14.47
ETFS East Texas Financial Services 18.01 18.01 0.00 15.20 18.24 40.22
FAB FirstFed America Bancorp Inc. 12.20 12.20 0.00 10.23 13.21 19.58
FBBC First Bell Bancorp Inc. 10.53 10.53 0.00 10.23 10.64 22.98
FBCI Fidelity Bancorp Inc. 10.48 10.46 0.21 NA 10.57 NA
FBCV 1ST Bancorp 8.65 8.50 1.90 8.76 9.10 15.96
FBER 1st Bergen Bancorp 13.65 13.65 0.00 10.60 14.73 29.30
FBHC Fort Bend Holding Corp. 6.16 5.77 6.62 6.70 6.67 14.80
FBNW FirstBank Corp. 16.43 16.43 0.00 16.40 17.00 16.96
FBSI First Bancshares Inc. 13.92 13.92 0.00 11.21 14.23 16.98
FCB Falmouth Bancorp Inc. 23.66 23.66 0.00 NA NA NA
FCBF FCB Financial Corp. 13.89 13.89 0.00 11.78 14.55 20.43
FCME First Coastal Corp. 9.75 9.75 0.00 9.02 11.53 15.95
FDEF First Defiance Financial 19.66 19.66 0.00 13.7 20.10 21.80
FED FirstFed Financial Corp. 5.16 5.11 0.98 6.16 7.18 12.06
FESX First Essex Bancorp Inc. 7.40 6.54 12.52 6.42 8.26 11.76
FFBA First Colorado Bancorp Inc. 13.08 12.93 1.30 11.97 13.37 22.67
FFBH First Federal Bancshares of AR 14.89 14.89 0.00 11.81 15.11 22.48
FFBI First Financial Bancorp Inc. 8.92 8.92 0.00 8.44 9.50 15.17
FFBS FFBS BanCorp Inc. 16.71 16.71 0.00 14.04 17.13 26.11
FFBZ First Federal Bancorp Inc. 7.67 7.66 0.11 6.82 8.56 11.31
FFCH First Financial Holdings Inc. 6.12 6.12 0.00 6.47 6.80 10.66
FFDB FirstFed Bancorp Inc. 9.63 8.89 8.49 9.69 10.08 17.08
FFDF FFD Financial Corp. 24.34 24.34 0.00 NA 24.65 NA
FFED Fidelity Federal Bancorp 6.11 6.11 0.00 7.36 6.92 11.80
FFES First Federal of East Hartford 6.63 6.63 0.00 6.75 6.90 22.45
FFFC FFVA Financial Corp. 13.31 13.08 2.01 10.35 13.88 20.94
FFFD North Central Bancshares Inc. 22.92 22.92 0.00 17.43 23.91 32.67
FFFL Fidelity Bankshares Inc. (MHC) 8.20 8.16 0.62 7.90 8.41 15.80
FFHH FSF Financial Corp. 11.17 11.17 0.00 10.10 11.39 19.20
FFHS First Franklin Corp. 9.02 8.97 0.56 6.56 9.44 14.12
FFIC Flushing Financial Corp. 14.21 13.71 4.00 10.17 14.88 21.05
FFKY First Federal Financial Corp. 13.70 13.03 5.65 12.51 14.16 20.21
FFLC FFLC Bancorp Inc. 13.73 13.73 0.00 11.30 14.14 22.60
FFOH Fidelity Financial of Ohio 13.03 11.72 11.32 10.07 13.34 18.74
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 6.25 6.11 2.33 7.07 6.58 14.76
FFSL First Independence Corp. 10.25 10.25 0.00 8.42 10.84 19.53
FFSX First Fed SB of Siouxland(MHC) 8.73 8.67 0.80 8.62 9.13 17.10
FFWC FFW Corp. 9.70 8.89 9.23 6.81 10.10 12.72
FFWD Wood Bancorp Inc. 12.44 12.44 0.00 9.01 12.79 15.28
FFYF FFY Financial Corp. 13.69 13.69 0.00 9.67 14.17 17.27
FGHC First Georgia Holding Inc. 8.22 7.59 8.23 8.21 8.85 10.29
FIBC Financial Bancorp Inc. 9.04 9.00 0.47 7.22 9.52 18.75
FISB First Indiana Corporation 9.64 9.54 1.19 8.63 11.08 12.46
FKFS First Keystone Financial 6.63 6.63 0.00 8.12 7.06 19.91
FKKYD Frankfort First Bancorp Inc. 16.83 16.83 0.00 18.38 16.90 35.95
FLAG FLAG Financial Corp. 9.11 9.11 0.00 8.65 11.06 14.54
FLFC First Liberty Financial Corp. 7.37 6.69 9.87 6.50 8.26 11.48
FLGS Flagstar Bancorp Inc. 5.98 5.75 3.98 5.71 6.22 10.83
FLKY First Lancaster Bancshares 29.47 29.47 0.00 26.90 29.79 43.10
FMBD First Mutual Bancorp Inc. 13.40 10.55 23.78 18.97 13.76 19.64
FMCO FMS Financial Corp. 6.49 6.40 1.46 7.51 6.99 16.23
FMSB First Mutual Savings Bank 6.79 6.79 0.00 6.89 7.82 11.74
FNGB First Northern Capital Corp. 11.09 11.09 0.00 10.24 11.56 16.77
FOBC Fed One Bancorp 11.18 10.73 4.43 9.94 11.59 24.28
FPRY First Financial Bancorp 6.35 6.35 0.00 6.20 7.00 10.80
FSBI Fidelity Bancorp Inc. 6.79 6.79 0.00 8.76 7.30 18.52
FSFC First Southeast Financial Corp 10.28 10.28 0 9.80 10.68 20.31
FSFF First SecurityFed Financial 11.76 11.66 0.97 11.60 12.43 24.60
FSLA First Savings Bank (MHC) 9.50 8.71 9.09 8.68 10.07 22.38
FSNJ Bayonne Bancshares Inc. 15.62 15.62 0.00 15.86 16.16 47.40
FSPG First Home Bancorp Inc. 6.86 6.77 1.51 6.57 7.60 17.05
FSPT FirstSpartan Financial Corp. 26.79 26.79 0.00 17.70 27.18 31.50
FSSB First FS&LA of San Bernardino 4.33 4.18 3.63 4.29 5.38 8.52
FSTC First Citizens Corp. 10.12 8.15 21.19 8.17 11.23 12.05
FTF Texarkana First Financial Corp 15.32 15.32 0.00 15.29 15.95 25.82
FTFC First Federal Capital Corp. 6.73 6.37 5.76 6.11 7.24 11.93
FTNB Fulton Bancorp Inc. 24.67 24.67 0.00 16.40 25.59 29.10
FTSB Fort Thomas Financial Corp. 16.13 16.13 0.00 15.08 16.62 24.30
FWWB First SB of Washington Bancorp 13.68 12.77 7.62 12.61 14.33 23.31
GAF GA Financial Inc. 14.63 14.51 0.97 12.07 14.78 33.50
GBCI Glacier Bancorp Inc. 9.99 9.77 2.45 9.59 10.60 16.93
GDVS Greater Delaware Valley (MHC) 11.64 11.64 0.00 11.73 12.25 27.04
GDW Golden West Financial 6.56 6.56 0.00 6.34 7.13 13.83
GFCO Glenway Financial Corp. 9.46 9.36 1.20 8.50 9.78 13.80
GFED Guaranty Federal SB (MHC) 13.02 13.02 0.00 12.20 14.06 21.30
GFSB GFS Bancorp Inc. 11.51 11.51 0.00 9.92 12.18 18.51
GLMR Gilmer Financial Svcs, Inc. 9.02 9.02 0.00 8.80 9.75 19.20
GOSB GSB Financial Corp. 8.11 8.11 0.00 NA NA NA
GPT GreenPoint Financial Corp. 9.69 5.44 46.40 6.95 10.51 15.76
GSB Golden State Bancorp Inc. 6.35 5.79 9.34 5.71 7.32 11.41
GSBC Great Southern Bancorp Inc. 8.65 8.65 0.00 7.65 10.85 11.41
GSFC Green Street Financial Corp. 35.37 35.37 0.00 35.37 35.51 83.14
GSLA GS Financial Corp. 43.13 43.13 0.00 32.84 43.42 95.29
GTFN Great Financial Corp. 10.07 9.70 4.01 8.59 10.58 18.81
GTPS Great American Bancorp 20.43 20.43 0.00 13.78 20.76 23.54
GUPB GFSB Bancorp Inc. 12.82 12.82 0.00 NA 13.16 NA
GWBC Gateway Bancorp Inc. 27.74 27.74 0.00 25.60 27.87 81.70
HALL Hallmark Capital Corp. 7.30 7.30 0.00 6.59 7.75 12.64
HARB Harbor Florida Bancorp (MHC) 8.56 8.31 3.15 7.29 9.59 15.15
HARL Harleysville Savings Bank 6.62 6.62 0.00 6.64 7.18 14.01
HARS Harris Financial Inc. (MHC) 8.20 7.32 11.56 6.95 8.61 14.34
HAVN Haven Bancorp Inc. 6.00 5.98 0.32 6.67 6.65 14.46
HBBI Home Building Bancorp 14.12 14.12 0.00 10.69 14.31 21.42
HBEI Home Bancorp of Elgin Inc. 27.56 27.56 0.00 21.10 27.86 38.39
HBFW Home Bancorp 13.29 13.29 0.00 10.18 13.70 22.30
HBNK Highland Federal Bank FSB 7.67 7.67 0.00 7.69 9.28 11.77
HBS Haywood Bancshares Inc. 14.18 13.77 3.42 13.78 14.66 27.54
HCBB HCB Bancshares Inc. 19.09 18.52 3.63 NA 19.84 NA
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 19.61 19.61 0.00 15.19 20.24 26.57
HEMT HF Bancorp Inc. 7.93 6.70 16.67 6.07 8.34 15.48
HFFB Harrodsburg First Fin Bancorp 26.92 26.92 0.00 21.10 27.21 43.05
HFFC HF Financial Corp. 9.43 9.42 0.01 7.47 10.26 12.62
HFGI Harrington Financial Group 4.84 4.84 0.00 6.09 4.88 31.27
HFNC HFNC Financial Corp. 18.81 18.81 0.00 16.70 19.66 31.41
HFSA Hardin Bancorp Inc. 11.53 11.53 0.00 10.00 11.71 26.82
HHFC Harvest Home Financial Corp. 11.81 11.81 0.00 NA 11.95 NA
HIFS Hingham Instit. for Savings 9.71 9.71 0.00 9.77 10.41 15.97
HMCI HomeCorp Inc. 6.83 6.83 0.00 5.46 7.32 9.09
HMLK Hemlock Federal Financial Corp 19.31 19.31 0.00 13.16 19.77 38.90
HMNF HMN Financial Inc. 14.88 14.88 0.00 10.68 15.32 24.62
HOMF Home Federal Bancorp 8.66 8.42 2.95 8.16 9.20 12.06
HPBC Home Port Bancorp Inc. 10.67 10.67 0.00 10.66 11.97 18.55
HRBF Harbor Federal Bancorp Inc. 13.06 13.06 0.00 9.92 13.25 21.76
HRZB Horizon Financial Corp. 15.64 15.64 0.00 15.59 16.31 29.30
HTHR Hawthorne Financial Corp. 6.16 6.16 0.00 7.41 7.64 11.99
HWEN Home Financial Bancorp 17.55 17.55 0.00 14.95 18.18 25.47
HZFS Horizon Financial Svcs Corp. 9.95 9.95 0.00 7.52 10.37 14.19
IBSF IBS Financial Corp. 17.42 17.42 0.00 17.24 17.57 61.60
IFSB Independence Federal Svgs Bank 7.25 6.50 10.99 6.43 7.46 16.01
INBI Industrial Bancorp Inc. 17.18 17.18 0.00 15.72 17.66 30.02
INCB Indiana Community Bank SB 11.88 11.88 0.00 NA 12.59 NA
IPSW Ipswich Savings Bank 5.61 5.61 0.00 5.54 6.44 11.28
ISBF ISB Financial Corp. 12.06 10.50 14.43 10.29 12.60 19.30
ITLA ITLA Capital Corp. 10.72 10.68 0.37 10.39 11.94 13.02
IWBK InterWest Bancorp Inc. 6.34 6.24 1.78 6.62 6.77 NA
JOAC Joachim Bancorp Inc. 28.14 28.14 0.00 23.30 28.37 46.50
JSB JSB Financial Inc. 23.21 23.21 0.00 15.07 23.59 20.78
JSBA Jefferson Savings Bancorp 9.03 7.22 21.56 7.44 9.70 13.91
JXSB Jacksonville Savings Bk (MHC) 10.55 10.55 0.00 10.30 11.00 15.10
JXVL Jacksonville Bancorp Inc. 14.92 14.92 0.00 13.77 15.45 27.90
KFBI Klamath First Bancorp 14.74 13.59 9.06 11.06 14.87 23.12
KNK Kankakee Bancorp Inc. 11.43 10.85 5.71 9.02 12.06 16.32
KSAV KS Bancorp Inc. 13.24 13.23 0.03 NA 13.53 12.99
KSBK KSB Bancorp Inc. 7.36 7.02 4.93 6.79 8.19 11.02
KYF Kentucky First Bancorp Inc. 16.70 16.70 0.00 15.14 17.13 28.44
LARK Landmark Bancshares Inc. 14.08 14.08 0.00 NA NA NA
LARL Laurel Capital Group Inc. 10.47 10.47 0.00 10.19 11.35 21.37
LFBI Little Falls Bancorp Inc. 11.68 10.87 7.77 8.04 12.03 22.13
LFCO Life Financial Corp. 16.82 16.82 0.00 6.06 17.46 13.31
LFED Leeds Federal Savings Bk (MHC) 16.64 16.64 0.00 16.27 16.83 35.34
LIFB Life Bancorp Inc. 10.72 10.45 2.76 8.98 11.30 22.46
LISB Long Island Bancorp Inc. 9.21 9.13 0.93 7.75 9.78 16.22
LOGN Logansport Financial Corp. 18.89 18.89 0.00 18.90 19.17 35.56
LONF London Financial Corporation 19.90 19.90 0.00 NA 20.39 NA
LSBI LSB Financial Corp. 8.63 8.63 0.00 8.07 9.37 11.48
LSBX Lawrence Savings Bank 9.52 9.52 0.00 9.45 10.56 18.54
LVSB Lakeview Financial 12.22 10.65 14.33 7.60 12.89 16.99
LXMO Lexington B&L Financial Corp. 28.32 28.32 0.00 23.30 28.69 44.10
MAFB MAF Bancorp Inc. 7.79 6.91 12.15 7.04 8.34 14.81
MARN Marion Capital Holdings 21.95 21.95 0.00 20.30 23.08 31.40
MASB MASSBANK Corp. 10.78 10.64 1.50 9.81 11.02 34.04
MBB MSB Bancorp Inc. 9.84 6.23 39.05 6.23 NA NA
MBBC Monterey Bay Bancorp Inc. 11.51 10.76 7.30 9.11 11.90 17.52
MBLF MBLA Financial Corp. 12.65 12.65 0.00 12.01 12.94 32.63
MBSP Mitchell Bancorp Inc. 41.35 41.35 0.00 33.60 41.88 57.00
MCBN Mid-Coast Bancorp Inc. 8.58 8.58 0.00 8.33 9.11 14.96
MCBS Mid Continent Bancshares Inc. 9.87 9.87 0.00 8.90 9.98 22.60
MDBK Medford Bancorp Inc. 9.02 8.50 6.29 8.53 9.61 15.90
MECH Mechanics Savings Bank 10.41 10.41 0.00 9.82 12.12 18.71
MERI Meritrust Federal SB 8.26 8.26 0.00 8.10 8.53 18.06
METF Metropolitan Financial Corp. 4.03 3.69 8.74 5.46 4.66 8.63
MFBC MFB Corp. 13.10 13.10 0.00 12.43 13.24 25.40
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 16.16 16.16 0.00 12.47 16.26 32.99
MFFC Milton Federal Financial Corp. 12.57 12.57 0.00 10.34 12.83 22.83
MFLR Mayflower Co-operative Bank 9.64 9.50 1.60 9.64 10.52 17.10
MFSL Maryland Federal Bancorp 8.48 8.40 1.14 7.90 8.89 15.61
MIFC Mid-Iowa Financial Corp. 9.42 9.41 0.11 NA 9.66 NA
MIVI Mississippi View Holding Co. 17.61 17.61 0.00 16.32 NA 33.17
MLBC ML Bancorp Inc. 6.92 6.49 6.70 5.45 7.69 12.44
MONT Montgomery Financial Corp. 19.14 19.14 0.00 14.62 19.32 22.49
MRKF Market Financial Corp. 35.45 35.45 0.00 23.40 35.54 68.20
MSBF MSB Financial Inc. 16.54 16.54 0.00 12.89 16.95 21.63
MSBK Mutual Savings Bank FSB 6.37 6.37 0.00 6.47 6.67 15.89
MWBI Midwest Bancshares Inc. 6.92 6.92 0.00 6.09 7.40 14.23
MWBX MetroWest Bank 7.47 7.47 0.00 7.58 8.65 11.32
MWFD Midwest Federal Financial 9.00 8.73 3.32 7.27 9.77 10.01
NASB North American Savings Bank 7.68 7.44 3.36 7.70 8.52 13.00
NBN Northeast Bancorp 7.71 6.96 10.49 6.99 8.67 12.21
NBSI North Bancshares Inc. 13.43 13.43 0.00 11.81 13.60 32.16
NEIB Northeast Indiana Bancorp 14.37 14.37 0.00 12.09 14.97 20.03
NHTB New Hampshire Thrift Bncshrs 7.82 6.79 14.10 6.43 8.74 11.92
NMSB NewMil Bancorp Inc. 10.17 10.17 0 10.35 11.92 20.26
NSLB NS&L Bancorp Inc. 19.56 19.56 0.00 15.00 19.63 35.10
NSSB Norwich Financial Corp. 11.67 10.71 9.22 10.37 13.56 14.80
NSSY NSS Bancorp Inc. 8.14 7.92 2.94 7.80 9.10 15.87
NTMG Nutmeg Federal S&LA 8.25 8.25 0.00 8.15 8.73 13.42
NWEQ Northwest Equity Corp. 11.69 11.69 0.00 8.81 12.17 13.88
NWSB Northwest Savings Bank (MHC) 9.64 9.15 5.59 8.97 10.29 18.32
NYB New York Bancorp Inc. 5.21 5.21 0.00 5.11 5.79 11.83
OCFC Ocean Financial Corp. 15.17 15.17 0.00 11.89 15.61 30.15
OCN Ocwen Financial Corp. 14.14 13.82 2.60 10.48 14.92 13.99
OFCP Ottawa Financial Corp. 8.74 7.18 19.21 NA 9.11 NA
OHSL OHSL Financial Corp. 10.92 10.92 0.00 9.17 11.15 17.42
OSFS Ohio State Financial Services 27.08 27.08 0.00 27.08 27.45 58.85
OTFC Oregon Trail Financial Corp. 19.06 19.06 0.00 12.28 19.28 18.50
PALM Palfed Inc. 8.52 8.52 0.00 6.90 9.60 10.50
PBCI Pamrapo Bancorp Inc. 12.91 12.83 0.70 12.82 13.59 27.59
PBCT People's Bank (MHC) 9.02 9.01 0.11 8.40 10.13 13.90
PBHC Oswego City Savings Bk (MHC) 11.94 10.23 15.99 9.84 12.34 16.90
PBKB People's Bancshares Inc. 4.10 3.94 4.11 5.97 4.69 11.47
PCBC Perry County Financial Corp. 19.20 19.20 0.00 16.2 19.23 72.6
PDB Piedmont Bancorp Inc. 16.43 16.43 0.00 15.37 17.10 28.59
PEEK Peekskill Financial Corp. 26.10 26.10 0.00 25.20 26.45 97.40
PERM Permanent Bancorp Inc. 9.46 9.35 1.31 8.44 9.97 21.01
PERT Perpetual Bank (MHC) 11.83 11.83 0.00 10.90 12.42 19.00
PFDC Peoples Bancorp 15.24 15.24 0.00 12.00 15.55 24.67
PFED Park Bancorp Inc. 23.14 23.14 0.00 15.90 23.42 43.60
PFFB PFF Bancorp Inc. 10.06 9.96 1.05 8.51 11.10 16.47
PFFC Peoples Financial Corp. 27.21 27.21 0.00 20.00 27.44 45.30
PFNC Progress Financial Corp. 5.33 4.78 10.81 6.70 6.11 10.58
PFSB PennFed Financial Services Inc 7.33 6.27 15.31 5.71 7.52 12.33
PFSL Pocahontas FS&LA (MHC) 6.32 6.32 0.00 6.32 6.77 16.22
PHBK Peoples Heritage Finl Group 7.45 6.43 14.64 8.62 8.49 14.26
PHFC Pittsburgh Home Financial Corp 10.54 10.44 1.05 22.59 11.06 10.26
PHSB Peoples Home Savings Bk (MHC) 13.67 13.67 0.00 13.20 14.34 28.00
PKPS Poughkeepsie Financial Corp. 8.42 8.42 0.00 7.06 9.42 12.10
PLSK Pulaski Savings Bank (MHC) 11.98 11.98 0.00 11.98 12.52 29.17
PMFI Perpetual Midwest Financial 8.51 8.51 0.00 7.95 9.22 12.24
PRBC Prestige Bancorp Inc. 11.21 11.21 0.00 11.24 11.48 23.95
PROV Provident Financial Holdings 13.33 13.33 0.00 9.59 14.21 15.08
PSBK Progressive Bank Inc. 8.73 7.93 9.93 7.75 9.82 15.34
PSFC Peoples-Sidney Financial Corp. 25.30 25.30 0.00 16.90 25.70 27.70
PSFI PS Financial Inc. 37.32 37.32 0.00 37.33 37.54 110.85
PTRS Potters Financial Corp. 8.81 8.81 0.00 7.98 10.53 17.63
PULB Pulaski Bank, Svgs Bank (MHC) 13.04 13.04 0.00 13.00 13.31 30.20
PULS Pulse Bancorp 8.21 8.21 0.00 7.63 8.66 27.74
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 7.18 7.18 0.00 7.38 7.86 10.55
PVSA Parkvale Financial Corporation 7.72 7.67 0.65 7.09 9.15 14.52
PWBC PennFirst Bancorp Inc. 8.37 7.51 11.07 7.13 8.96 20.13
PWBK Pennwood Bancorp Inc. 18.34 18.34 0.00 18.05 18.97 34.17
QCBC Quaker City Bancorp Inc. 8.46 8.46 0.00 7.14 9.36 13.06
QCFB QCF Bancorp Inc. 16.45 16.45 0 NA 17.27 NA
QCSB Queens County Bancorp Inc. 11.22 11.22 0.00 10.32 11.83 16.85
RARB Raritan Bancorp Inc. 7.37 7.26 1.53 7.42 8.18 13.43
REDF RedFed Bancorp Inc. 8.32 8.29 0.38 7.81 9.13 11.85
RELI Reliance Bancshares Inc. 48.31 48.31 0.00 46.44 48.63 70.47
RELY Reliance Bancorp Inc. 8.26 6.20 26.55 5.42 8.54 14.72
RIVR River Valley Bancorp 12.72 12.56 1.43 NA 13.59 NA
ROSE TR Financial Corp. 6.24 6.24 0.00 6.27 6.64 18.56
RSLN Roslyn Bancorp Inc. 17.64 17.57 0.48 12.52 18.33 28.53
RVSB Riverview Bancorp Inc. 20.75 20.13 3.70 12.90 21.07 26.30
SBFL SB of the Finger Lakes (MHC) 9.34 9.34 0.00 9.22 9.85 23.73
SBOS Boston Bancorp (The) 12.34 12.34 0.00 10.06 12.45 26.75
SCBS Southern Community Bancshares 21.32 21.32 0.00 NA 22.47 NA
SCCB S. Carolina Community Bancshrs 26.58 26.58 0.00 23.70 27.22 49.80
SFED SFS Bancorp Inc. 12.47 12.47 0.00 12.45 12.91 24.20
SFFC StateFed Financial Corp. 17.53 17.53 0.00 10.42 17.79 18.56
SFIN Statewide Financial Corp. 9.36 9.35 0.17 8.37 9.76 22.15
SFSB SuburbFed Financial Corp. 6.63 6.61 0.33 NA 6.83 NA
SFSL Security First Corp. 9.26 9.13 1.55 7.91 10.01 11.21
SGVB SGV Bancorp Inc. 7.44 7.33 1.53 6.45 7.74 14.23
SHEN First Shenango Bancorp Inc. 11.62 11.62 0.00 9.43 12.39 19.10
SHSB SHS Bancorp Inc. 13.34 13.34 0 10.68 13.82 23.70
SISB SIS Bancorp Inc. 7.36 7.36 0.00 7.13 8.63 13.07
SKAN Skaneateles Bancorp Inc. 7.00 6.81 2.88 6.79 7.84 11.29
SKBO First Carnegie Deposit (MHC) 16.59 16.59 0.00 NA 16.94 NA
SMBC Southern Missouri Bancorp Inc. 16.15 16.15 0.00 13.33 16.60 25.36
SMFC Sho-Me Financial Corp. 9.03 9.03 0.00 7.95 9.58 14.77
SOBI Sobieski Bancorp Inc. 14.78 14.78 0.00 11.20 15.01 26.80
SOPN First Savings Bancorp Inc. 23.01 23.01 0.00 22.92 23.21 50.87
SOSA Somerset Savings Bank 6.60 6.60 0.00 6.62 8.03 10.70
SPBC St. Paul Bancorp Inc. 8.99 8.97 0.28 8.6 9.74 16.65
SRN Southern Banc Co. 17.08 16.95 0.90 NA 17.15 NA
SSB Scotland Bancorp Inc. 22.61 22.61 0.00 NA 23.00 NA
SSFC South Street Financial Corp. 25.66 25.66 0.00 25.65 25.84 75.38
SSM Stone Street Bancorp Inc. 29.57 29.57 0.00 25.00 30.10 45.54
STFR St. Francis Capital Corp. 7.74 6.91 11.53 7.14 8.11 12.21
STSA Sterling Financial Corp. 5.25 4.83 8.47 7.46 5.71 13.71
SVRN Sovereign Bancorp Inc. 5.08 4.31 15.92 5.31 5.73 12.14
SWBI Southwest Bancshares 11.34 11.34 0.00 7.77 11.55 13.81
SWCB Sandwich Bancorp Inc. 7.93 7.65 3.89 7.74 8.70 14.57
SZB SouthFirst Bancshares Inc. 14.00 14.00 0.00 14.00 14.29 23.27
THR Three Rivers Financial Corp. 13.77 13.73 0.35 11.71 14.29 22.64
THRD TF Financial Corp. 11.63 10.41 11.69 6.90 11.97 17.43
TPNZ Tappan Zee Financial Inc. 17.15 17.15 0.00 13.60 17.70 38.80
TRIC Tri-County Bancorp Inc. 15.31 15.31 0.00 13.24 15.78 35.78
TSBS Trenton SB (MHC) 16.94 15.51 10.01 15.48 17.44 26.48
TSH Teche Holding Co. 13.45 13.45 0.00 11.95 14.28 22.46
TWIN Twin City Bancorp 12.94 12.94 0.00 12.14 13.08 22.32
UBMT United Financial Corp. 24.02 24.02 0.00 16.10 24.09 42.70
UFRM United Federal Savings Bank 7.33 7.33 0.00 7.32 8.12 10.47
USAB USABancshares, Inc. 8.43 8.32 1.51 11 8.83 11.2
VABF Virginia Beach Fed. Financial 7.15 7.15 0.00 6.92 7.89 12.68
WAMU Washington Mutual Inc. 5.58 5.21 6.98 NA 6.29 NA
WAYN Wayne Savings Bancshares (MHC) 9.54 9.54 0.00 9.53 9.92 17.69
WBST Webster Financial Corp. 5.34 4.63 13.90 5.74 6.14 13.69
WCBI Westco Bancorp 15.54 15.54 0.00 13.40 15.83 28.80
WCFB Webster City Federal SB (MHC) 23.38 23.38 0.00 23.38 23.79 53.48
WEFC Wells Financial Corp. 14.22 14.22 0.00 10.96 14.58 19.27
WEHO Westwood Homestead Fin. Corp. 27.66 27.66 0.00 22.56 27.83 36.90
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp 9.09 9.07 0.25 9.39 10.01 12.47
WFI Winton Financial Corp. 7.17 7.04 1.99 6.88 7.43 10.75
WFSG Wilshire Financial Services 7.28 7.28 0.00 NA 13.81 NA
WFSL Washington Federal Inc. 12.55 11.64 8.19 10.74 12.98 19.67
WHGB WHG Bancshares Corp. 20.66 20.66 0.00 15.11 20.89 32.25
WOFC Western Ohio Financial Corp. 13.87 13.06 6.65 12.1 14.38 22.6
WRNB Warren Bancorp Inc. 10.65 10.65 0.00 9.75 11.76 13.96
WSB Washington Savings Bank, FSB 8.38 8.38 0.00 7.78 8.84 21.24
WSFS WSFS Financial Corp. 5.54 5.51 0.72 6.76 7.26 10.73
WSTR WesterFed Financial Corp. 10.62 8.75 19.33 8.41 11.10 14.19
WVFC WVS Financial Corp. 12.00 12.00 0.00 11.70 12.70 26.10
WWFC Westwood Financial Corp. 9.32 8.42 10.54 7.18 9.53 19.80
WYNE Wayne Bancorp Inc. 12.43 12.43 0.00 10.18 13.22 23.21
YFCB Yonkers Financial Corporation 14.02 14.02 0.00 12.05 14.37 32.08
YFED York Financial Corp. 8.85 8.85 0.00 7.69 9.45 12.29
-----------------------------------------------------------------------
Average 12.52 12.28 2.91 10.85 13.10 22.15
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Capital as of The Most Recent Quarter
-----------------------------------------------------------------------
Tangible Intangible Regulatory Equity + Total Capital/
Equity/ Equity/ Assets/ Core Cap/ Reserves/ Risk Adjusted
Assets Tang Assets Equity Assets Assets Assets
Ticker Short Name (%) (%) (%) (%) (%)
- -------------------------------------- -----------------------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 7.40 6.54 12.52 6.42 8.26 11.76
FFES First Federal of East Hartford 6.63 6.63 0.00 6.75 6.90 22.45
FFIC Flushing Financial Corp. 14.21 13.71 4.00 10.17 14.88 21.05
GAF GA Financial Inc. 14.63 14.51 0.97 12.07 14.78 33.50
JSB JSB Financial Inc. 23.21 23.21 0.00 15.07 23.59 20.78
MASB MASSBANK Corp. 10.78 10.64 1.50 9.81 11.02 34.04
MDBK Medford Bancorp Inc. 9.02 8.50 6.29 8.53 9.61 15.90
PWBC PennFirst Bancorp Inc. 8.37 7.51 11.07 7.13 8.96 20.13
SFIN Statewide Financial Corp. 9.36 9.35 0.17 8.37 9.76 22.15
SISB SIS Bancorp Inc. 7.36 7.36 0.00 7.13 8.63 13.07
STFR St. Francis Capital Corp. 7.74 6.91 11.53 7.14 8.11 12.21
THRD TF Financial Corp. 11.63 10.41 11.69 6.90 11.97 17.43
-----------------------------------------------------------------------
Average 10.86 10.44 4.98 8.79 11.37 20.37
Median 9.19 8.93 2.75 7.76 9.69 20.46
Maximum 23.21 23.21 12.52 15.07 23.59 34.04
Minimum 6.63 6.54 0.00 6.42 6.90 11.76
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 1.24 160.38 1.11 14.92 1.99 119.83 1.14 15.22
%CCMD Chevy Chase Bank, FSB 0.73 378.42 2.11 37.76 2.78 74.92 0.18 3.30
AABC Access Anytime Bancorp Inc. 2.90 32.57 1.58 18.26 0.95 31.35 5.02 62.33
AADV Advantage Bancorp Inc. 0.55 183.39 0.48 5.00 1.02 117.02 1.13 12.28
ABBK Abington Bancorp Inc. 0.20 355.43 0.15 2.17 0.71 269.74 0.89 12.82
ABCL Alliance Bancorp Inc. 0.23 240.81 0.21 2.28 0.54 184.61 0.95 10.57
ABCW Anchor BanCorp Wisconsin 0.62 230.31 0.98 15.37 1.44 115.36 1.03 15.92
AFBC Advance Financial Bancorp 0.36 90.58 0.31 2.02 0.33 38.01 0.78 5.06
AFCB Affiliated Community Bancorp 0.54 218.71 0.34 3.48 1.18 218.65 1.07 10.92
AFED AFSALA Bancorp Inc. 0.95 150.77 0.45 3.32 1.43 150.77 0.79 5.83
AFFFZ America First Financial Fund 0.38 126.79 0.35 4.14 0.48 94.92 0.95 11.24
AHCI Ambanc Holding Co. 1.09 135.52 0.62 5.46 1.48 107.99 0.58 4.79
AHM H.F. Ahmanson & Co. 2.19 55.92 1.86 36.38 1.22 43.81 0.81 15.85
ALBC Albion Banc Corp. 0.17 321.43 0.12 1.39 0.53 321.43 0.53 6.17
ALBK ALBANK Financial Corp. 0.88 111.13 0.73 7.85 0.97 75.89 1.03 11.14
AMFC AMB Financial Corp. 0.27 192.08 0.32 2.28 0.51 118.29 1.17 8.14
ANA Acadiana Bancshares Inc. 0.59 223.09 0.50 2.94 1.32 201.03 1.03 5.96
ANDB Andover Bancorp Inc. 1.13 118.00 0.91 11.24 1.33 107.23 1.06 13.31
ANE Alliance Bncorp of New England 2.71 73.68 1.92 26.08 2.00 62.8 0.88 12.18
ASBI Ameriana Bancorp 0.56 65.63 0.49 4.40 0.37 53.03 1.01 9.07
ASBP ASB Financial Corp. 1.31 81.19 0.90 5.77 1.07 75.72 0.87 5.59
ASFC Astoria Financial Corp. 0.64 67.43 0.40 5.18 0.43 39.39 0.87 11.18
ATSB AmTrust Capital Corp. 2.70 38.11 2.20 20.12 1.03 33.49 0.34 3.24
AVND Avondale Financial Corp. 1.76 93.35 1.11 14.33 1.65 86.78 (6.08) (65.30)
BANC BankAtlantic Bancorp Inc. 0.82 173.48 0.90 16.39 1.42 108.06 0.93 16.78
BDJI First Federal Bancorporation 0.00 NM 0.24 2.20 0.79 120.28 0.71 6.50
BFD BostonFed Bancorp Inc. 0.38 200.74 0.34 3.98 0.76 184.11 0.71 7.91
BFFC Big Foot Financial Corp. 0.00 NM 0.00 0.00 0.31 150.75 0.43 2.47
BFSB Bedford Bancshares Inc. 0.00 NM 0.15 1.08 0.58 92.88 1.20 8.48
BKC American Bank of Connecticut 2.73 54.15 1.77 20.09 1.48 48.58 1.34 15.88
BKCT Bancorp Connecticut Inc. 1.25 160.30 0.95 8.82 2.00 118.74 1.42 13.67
BKUNA BankUnited Financial Corp. 0.72 28.96 0.62 13.41 0.21 27.63 0.45 8.66
BNKU Bank United Corp. 0.60 72.61 0.62 12.33 0.43 53.09 0.69 13.47
BPLS Bank Plus Corp. 2.36 85.58 2.21 48.94 2.02 67.35 0.36 7.69
BSBC Branford Savings Bank 2.26 136.75 1.56 16.15 3.09 131.46 0.92 9.65
BTHL Bethel Bancorp NA NA NA NA 1.48 NA 0.56 6.48
BVCC Bay View Capital Corp. 0.48 335.73 0.63 10.86 1.62 195.87 0.39 6.28
BWFC Bank West Financial Corp. 0.28 74.16 0.21 1.5 0.21 69.91 1.46 10.30
BYFC Broadway Financial Corp. 0.93 109.40 1.62 15.37 1.02 52.84 0.33 3.10
CAFI Camco Financial Corp. 0.16 180.6 0.30 3.09 0.29 41.84 1.38 14.45
CAPS Capital Savings Bancorp Inc. 0.20 197.92 0.17 1.87 0.39 84.67 0.99 11.00
CASB Cascade Financial Corp. 0.19 597.76 0.28 4.25 1.12 332.14 0.65 9.35
CASH First Midwest Financial Inc. 1.12 82.75 0.75 6.97 0.93 78.49 0.95 8.60
CATB Catskill Financial Corp. 0.73 206.00 0.40 1.62 1.50 162.15 1.34 5.35
CBCI Calumet Bancorp Inc. 0.92 168.50 1.27 7.81 1.55 96.64 1.36 8.66
CBES CBES Bancorp Inc. 0.37 141.16 0.59 3.49 0.53 81.11 1.17 6.81
CBK Citizens First Financial Corp. 0.29 97.19 0.46 3.36 0.28 38.86 0.52 3.76
CBSA Coastal Bancorp Inc. 1.05 51.73 0.59 16.90 0.54 38.71 0.37 10.87
CBSB Charter Financial Inc. 0.58 135.95 0.56 3.89 0.79 104.84 1.93 13.68
CCFH CCF Holding Company 0.24 288.02 0.20 1.86 0.70 288.02 (0.02) (0.23)
CEBK Central Co-operative Bank 0.76 151.19 0.53 5.33 1.15 151.19 0.85 8.56
CENB Century Bancorp Inc. 0.32 269.42 0.25 0.83 0.85 219.37 1.57 5.20
CENF CENFED Financial Corp. 0.90 118.49 0.97 17.36 1.07 76.38 0.74 14.21
CFB Commercial Federal Corp. 0.91 99.22 0.88 14.29 0.90 75.53 0.96 15.83
CFBC Community First Banking Co. 0.74 101.37 2.19 12.28 0.75 25.76 0.92 5.32
CFCP Coastal Financial Corp. 0.06 NM 0.10 1.57 1.18 966.86 1.30 20.45
CFFC Community Financial Corp. 0.51 129.84 0.56 4.22 0.67 105.58 0.73 5.45
CFNC Carolina Fincorp Inc. 0.22 226.67 0.16 0.70 0.50 226.67 1.26 5.55
CFSB CFSB Bancorp Inc. 0.18 335.26 0.19 2.41 0.61 283.10 1.32 17.07
CFTP Community Federal Bancorp 0.75 61.14 0.50 1.88 0.46 54.53 1.16 4.28
CFX CFX Corp. 0.61 179.69 0.55 6.32 1.10 137.87 (0.02) (0.27)
CIBI Community Investors Bancorp 0.57 103.28 0.53 4.48 0.59 94.97 1.01 8.53
CKFB CKF Bancorp Inc. 0.76 28.47 0.70 2.95 0.22 16.62 1.49 6.26
CLAS Classic Bancshares Inc. 0.32 294.70 0.43 2.88 0.94 93.71 0.83 5.61
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 0.21 436.56 0.18 0.83 0.91 139.04 1.22 5.73
CMSB Commonwealth Bancorp Inc. 0.77 92.49 0.47 5.06 0.71 85.46 0.70 7.35
CMSV Community Savings Bnkshrs(MHC) 0.55 113.79 0.41 3.61 0.62 90.57 0.88 7.78
CNIT CENIT Bancorp Inc. 0.28 273.59 0.45 6.49 0.77 103.38 0.98 13.65
CNSB CNS Bancorp Inc. 0.72 80.20 0.50 2.07 0.58 80.20 0.78 3.19
CNY Carver Bancorp Inc. 1.68 63.83 0.99 11.83 1.07 47.60 0.32 3.79
COFI Charter One Financial 0.25 275.27 0.20 2.83 0.68 159.82 1.30 18.97
CONE Conestoga Bancorp, Inc. 0.23 80.00 0.16 0.99 0.18 26.87 0.60 3.72
COOP Cooperative Bankshares Inc. 0.00 NM 0.10 1.24 0.29 109.36 0.59 7.70
CRZY Crazy Woman Creek Bancorp 0.78 134.22 0.38 1.58 1.04 134.22 1.29 5.33
CSA Coast Savings Financial 1.05 129.78 1.23 23.75 1.37 75.26 0.89 17.69
CSBF CSB Financial Group Inc. 1.00 57.14 0.56 2.23 0.57 57.14 0.43 1.71
CTZN CitFed Bancorp Inc. 0.41 210.75 0.40 6.43 0.86 136.26 0.88 13.85
CVAL Chester Valley Bancorp Inc. 0.65 173.12 0.53 6.16 1.12 173.12 1.06 12.41
DCBI Delphos Citizens Bancorp Inc. 0.58 21.81 0.45 1.69 0.13 21.81 1.74 6.32
DIBK Dime Financial Corp. 0.75 429.54 0.36 4.46 3.21 353.73 1.97 24.63
DIME Dime Community Bancorp Inc. 0.9 155.47 0.6 4.42 1.39 135.05 0.84 6.07
DME Dime Bancorp Inc. 1.43 56.53 1.02 18.78 0.81 51.61 0.78 15.14
DNFC D & N Financial Corp. 0.33 247.89 0.35 6.61 0.83 178.16 0.90 16.49
DSL Downey Financial Corp. 0.79 73.34 0.95 13.34 0.58 55.50 0.71 10.28
EBSI Eagle Bancshares 1.32 70.86 1.26 15.37 0.94 54.76 0.81 9.68
EFBC Empire Federal Bancorp Inc. 0.00 NM 0.00 0.00 0.45 357.14 1.49 4.04
EFBI Enterprise Federal Bancorp 0.10 297.93 0.07 0.61 0.30 297.93 0.79 6.74
EGFC Eagle Financial Corp. 0.65 132.05 0.53 7.70 0.86 87.59 0.84 12.19
EGLB Eagle BancGroup Inc. 1.52 47.89 1.48 12.51 0.73 35.66 0.24 2.04
EIRE Emerald Isle Bancorp Inc. 0.23 416.26 0.17 2.36 0.97 416.26 0.85 12.09
EMLD Emerald Financial Corp. 0.22 164.42 0.17 2.18 0.36 115.15 1.04 13.69
EQSB Equitable Federal Savings Bank 0.01 NM 0.15 2.99 0.26 36.72 0.70 13.94
ESBK Elmira Savings Bank (The) 0.64 133.3 0.63 9.89 0.86 103.23 0.58 9.14
ESX Essex Bancorp Inc. 1.06 119.50 1.92 24.53 1.27 51.58 (1.03) (12.86)
ETFS East Texas Financial Services 0.54 88.06 0.27 1.48 0.48 88.06 0.72 4.00
FAB FirstFed America Bancorp Inc. 0.37 312.47 0.39 3.18 1.16 259.57 0.69 5.69
FBBC First Bell Bancorp Inc. 0.10 132.41 0.09 0.86 0.13 116.26 1.04 10.35
FBCI Fidelity Bancorp Inc. 0.47 25.44 0.41 3.88 0.12 22.74 0.88 8.40
FBCV 1ST Bancorp 1.40 46.55 1.12 12.98 0.65 34.59 0.68 8.11
FBER 1st Bergen Bancorp 1.77 139.83 0.84 6.18 2.47 127.66 0.69 4.94
FBHC Fort Bend Holding Corp. 1.18 91.73 0.56 9.15 1.08 89.94 0.64 10.31
FBNW FirstBank Corp. 2.02 37.79 1.67 10.18 0.76 33.83 1.21 9.91
FBSI First Bancshares Inc. 0.04 875.44 0.13 0.94 0.36 45.57 1.27 9.48
FCB Falmouth Bancorp Inc. NA NA NA NA NA NA 0.89 3.75
FCBF FCB Financial Corp. 0.27 319.33 0.24 1.71 0.85 277.72 1.29 9.06
FCME First Coastal Corp. 2.06 121.23 1.59 16.33 2.49 108.25 0.89 9.35
FDEF First Defiance Financial 0.51 115.07 0.45 2.29 0.59 99.07 0.97 4.80
FED FirstFed Financial Corp. 1.22 211.08 1.20 23.17 2.57 168.73 0.58 11.53
FESX First Essex Bancorp Inc. 0.81 175.40 0.58 7.78 1.43 149.29 0.86 12.02
FFBA First Colorado Bancorp Inc. 0.16 237.9 0.20 1.56 0.39 141.52 1.37 10.55
FFBH First Federal Bancshares of AR 1.18 24.28 0.96 6.42 0.29 23.38 0.97 6.49
FFBI First Financial Bancorp Inc. 0.48 180.81 0.32 3.61 0.87 178.83 0.56 6.40
FFBS FFBS BanCorp Inc. 0.04 NM 0.03 0.17 0.59 72.88 1.36 7.57
FFBZ First Federal Bancorp Inc. 0.54 192.58 0.46 6.03 1.03 172.30 1.01 13.11
FFCH First Financial Holdings Inc. 0.94 86.85 1.46 23.90 0.82 45.68 0.85 13.96
FFDB FirstFed Bancorp Inc. 0.64 98.49 0.98 10.16 0.63 33.87 0.95 9.99
FFDF FFD Financial Corp. NA NA NA NA 0.46 NA 1.02 4.17
FFED Fidelity Federal Bancorp 0.07 NM 0.09 1.53 0.96 626.40 0.85 14.75
FFES First Federal of East Hartford 1.31 109.43 0.25 3.78 1.44 87.85 0.54 8.22
FFFC FFVA Financial Corp. 0.26 373.99 0.16 1.19 0.99 361.92 1.48 11.20
FFFD North Central Bancshares Inc. 0.13 870.90 0.22 0.97 1.16 446.43 1.82 7.96
FFFL Fidelity Bankshares Inc. (MHC) 0.47 58.82 0.40 4.82 0.28 51.95 0.79 9.48
FFHH FSF Financial Corp. 0.19 170.40 0.15 1.32 0.33 148.95 0.89 7.92
FFHS First Franklin Corp. 0.5 127.79 0.33 3.69 0.64 90.77 0.71 7.91
FFIC Flushing Financial Corp. 0.59 189.84 0.39 2.74 1.12 172.94 0.97 6.53
FFKY First Federal Financial Corp. 0.00 NM 0.08 0.57 0.53 94.29 1.69 12.33
FFLC FFLC Bancorp Inc. 0.15 352.85 0.18 1.30 0.52 226.46 0.96 7.06
FFOH Fidelity Financial of Ohio 0.35 106.32 0.29 2.23 0.37 106.32 0.92 7.10
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 0.68 76.91 0.56 8.96 0.53 58.39 0.56 8.76
FFSL First Independence Corp. 1.46 60.78 0.99 9.64 0.89 47.61 0.72 7.02
FFSX First Fed SB of Siouxland(MHC) 0.20 260.79 0.16 1.85 0.53 185.09 0.73 8.51
FFWC FFW Corp. 0.24 250.34 0.18 1.90 0.60 217.37 1.04 10.77
FFWD Wood Bancorp Inc. 0.02 NM 0.03 0.26 0.44 101.19 1.48 11.98
FFYF FFY Financial Corp. 0.87 72.24 0.66 4.84 0.63 72.24 1.25 9.24
FGHC First Georgia Holding Inc. 1.48 50.53 1.41 17.21 0.75 20.52 1.00 11.97
FIBC Financial Bancorp Inc. 1.40 64.93 1.59 17.62 0.91 27.02 0.94 10.07
FISB First Indiana Corporation 1.34 127.05 1.39 14.43 1.70 103.20 1.25 12.75
FKFS First Keystone Financial 1.27 66.15 1.11 16.70 0.84 39.39 0.83 11.60
FKKYD Frankfort First Bancorp Inc. 0.00 NM 0.00 0.00 0.08 80.00 1.13 6.72
FLAG FLAG Financial Corp. 5.47 51.58 3.92 43.07 2.82 49.66 0.86 9.60
FLFC First Liberty Financial Corp. 0.75 172.78 0.81 10.97 1.29 110.00 1.11 14.89
FLGS Flagstar Bancorp Inc. 2.44 11.23 3.04 50.79 0.27 8.02 1.41 21.01
FLKY First Lancaster Bancshares 2.52 13.93 2.28 7.74 0.35 13.93 0.99 3.17
FMBD First Mutual Bancorp Inc. 0.07 715.69 0.06 0.44 0.47 138.78 0.27 2.01
FMCO FMS Financial Corp. 1.63 57.50 1.15 17.73 0.94 43.53 1.00 15.05
FMSB First Mutual Savings Bank 0.00 NM 0.00 0.00 1.31 NM 1.06 15.53
FNGB First Northern Capital Corp. 0.09 600.39 0.08 0.74 0.53 574.86 0.98 8.77
FOBC Fed One Bancorp 0.37 236.45 0.19 1.70 0.88 91.97 0.90 8.14
FPRY First Financial Bancorp NA NA NA NA 0.84 NA 0.43 6.80
FSBI Fidelity Bancorp Inc. 0.60 173.03 0.29 4.31 1.04 171.64 0.86 12.73
FSFC First Southeast Financial Corp 0.3 165.95 0.24 2.34 0.50 164.77 1.06 10.50
FSFF First SecurityFed Financial 0.00 NM NA NA 0.98 NA 1.29 10.95
FSLA First Savings Bank (MHC) 0.67 154.73 0.50 5.31 1.04 105.63 0.69 7.31
FSNJ Bayonne Bancshares Inc. 1.93 71.59 0.81 5.18 1.38 47.67 0.64 5.32
FSPG First Home Bancorp Inc. 1.11 122.39 0.77 11.17 1.36 95.63 0.89 13.20
FSPT FirstSpartan Financial Corp. 0.39 123.16 0.32 1.20 0.49 56.19 1.64 6.87
FSSB First FS&LA of San Bernardino 1.43 102.26 2.31 53.29 1.47 45.41 (0.12) (2.83)
FSTC First Citizens Corp. 1.4 102.39 NA NA 1.43 NA 1.55 15.61
FTF Texarkana First Financial Corp 0.00 NM 0.07 0.46 0.76 276.17 1.72 11.10
FTFC First Federal Capital Corp. 0.12 538.65 0.13 1.90 0.64 395.30 1.20 18.27
FTNB Fulton Bancorp Inc. 0.79 133.75 0.86 3.50 1.06 57.19 1.33 5.33
FTSB Fort Thomas Financial Corp. 2.09 25.43 1.91 11.86 0.53 24.60 1.33 8.25
FWWB First SB of Washington Bancorp 0.16 613.23 0.25 1.85 0.97 241.66 1.21 8.67
GAF GA Financial Inc. 0.64 63.36 0.24 1.66 0.41 63.36 1.16 7.59
GBCI Glacier Bancorp Inc. 0.14 584.06 0.12 1.25 0.84 243.94 1.62 16.97
GDVS Greater Delaware Valley (MHC) 0.29 351.50 1.55 13.29 1.00 33.64 0.89 7.68
GDW Golden West Financial 1.20 56.00 1.18 17.98 0.67 47.94 0.92 14.23
GFCO Glenway Financial Corp. 0.28 131.05 0.25 2.69 0.37 123.32 0.85 8.92
GFED Guaranty Federal SB (MHC) 0.67 192.44 0.64 4.93 1.29 162.46 1.03 6.88
GFSB GFS Bancorp Inc. 0.89 87.87 0.98 8.54 0.78 67.81 1.28 11.13
GLMR Gilmer Financial Svcs, Inc. 2.51 51.93 1.65 18.25 1.30 44.52 (0.52) (5.64)
GOSB GSB Financial Corp. NA NA NA NA NA NA 0.40 4.05
GPT GreenPoint Financial Corp. 4.08 30.73 2.88 29.68 1.26 28.68 1.08 11.39
GSB Golden State Bancorp Inc. 1.33 97.20 1.36 21.42 1.30 70.96 0.70 11.06
GSBC Great Southern Bancorp Inc. 1.64 157.04 1.91 22.05 2.58 115.21 2.18 25.30
GSFC Green Street Financial Corp. 0.13 147.40 0.10 0.27 0.20 147.40 1.64 4.58
GSLA GS Financial Corp. 0.00 NM 0.01 0.02 0.81 211.96 1.67 3.81
GTFN Great Financial Corp. 0.47 157.96 0.38 3.76 0.74 16.32 1.12 11.41
GTPS Great American Bancorp 0.02 NM 0.01 0.07 0.42 126.83 0.66 3.15
GUPB GFSB Bancorp Inc. 0.55 115.79 0.29 2.29 0.63 115.79 0.70 5.11
GWBC Gateway Bancorp Inc. 2.01 18.71 0.76 2.75 0.38 14.39 0.53 1.94
HALL Hallmark Capital Corp. 0.09 741.02 0.12 1.65 0.67 355.91 0.62 8.57
HARB Harbor Florida Bancorp (MHC) 0.30 453.14 0.43 5.06 1.38 238.88 1.24 14.77
HARL Harleysville Savings Bank 0.00 NM 0.00 0.00 0.78 NM 1.02 15.38
HARS Harris Financial Inc. (MHC) 0.66 145.38 0.64 7.82 0.96 60.65 1.01 12.65
HAVN Haven Bancorp Inc. 1.18 95.03 0.76 12.67 1.12 85.85 0.54 9.01
HBBI Home Building Bancorp 0.64 44.51 0.44 3.09 0.28 44.51 0.73 5.35
HBEI Home Bancorp of Elgin Inc. 0.32 110.11 0.35 1.28 0.35 85.96 0.70 2.65
HBFW Home Bancorp 0.00 NM 0.00 0.00 0.51 835.54 0.89 6.61
HBNK Highland Federal Bank FSB 2.54 78.84 2.52 32.89 2.00 63.92 1.34 18.04
HBS Haywood Bancshares Inc. 0.71 90.28 0.67 4.76 0.64 71.19 2.18 15.52
HCBB HCB Bancshares Inc. NA NA NA NA 1.44 NA 0.58 3.08
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 0.95 77.27 0.82 4.16 0.73 77.27 1.39 6.94
HEMT HF Bancorp Inc. 1.94 41.66 1.65 20.74 0.81 24.89 0.20 2.44
HFFB Harrodsburg First Fin Bancorp 0.00 NM 0.00 0.00 0.38 59.81 1.39 5.23
HFFC HF Financial Corp. 0.55 196.34 0.48 5.12 1.08 173.70 1.15 12.55
HFGI Harrington Financial Group 0.35 60.57 0.20 4.17 0.21 20.13 0.26 5.07
HFNC HFNC Financial Corp. 0.99 107.36 0.92 4.90 1.06 92.55 1.85 10.06
HFSA Hardin Bancorp Inc. 0.17 211.11 0.09 0.79 0.36 195.33 0.65 5.31
HHFC Harvest Home Financial Corp. 0.22 117.00 0.11 0.97 0.26 117.00 0.80 6.60
HIFS Hingham Instit. for Savings 1.16 78.90 0.89 9.19 0.91 78.90 1.26 13.12
HMCI HomeCorp Inc. 0.66 91.94 2.16 31.58 0.61 22.97 0.58 8.75
HMLK Hemlock Federal Financial Corp 0.00 NM 0.00 0.00 1.22 NM 1.03 5.41
HMNF HMN Financial Inc. 0.08 922.02 0.07 0.44 0.71 465.21 1.07 7.35
HOMF Home Federal Bancorp 0.49 129.66 0.48 5.56 0.63 112.57 1.42 16.70
HPBC Home Port Bancorp Inc. 0.00 NM 0.00 0.00 1.54 NM 1.65 15.56
HRBF Harbor Federal Bancorp Inc. 0.15 189.19 0.10 0.78 0.28 189.19 0.77 5.88
HRZB Horizon Financial Corp. 0.00 NM 0.00 0.00 0.85 NM 1.56 10.00
HTHR Hawthorne Financial Corp. 7.35 23.12 8.07 131.10 1.70 18.43 1.46 24.27
HWEN Home Financial Bancorp 1.90 38.19 1.70 9.71 0.73 36.51 0.76 4.43
HZFS Horizon Financial Svcs Corp. 0.90 74.24 0.71 7.10 0.67 44.31 1.14 11.52
IBSF IBS Financial Corp. 0.39 130.07 0.13 0.75 0.50 110.72 0.70 3.99
IFSB Independence Federal Svgs Bank NA NA NA NA 0.36 NA 0.33 4.69
INBI Industrial Bancorp Inc. 0.15 363.60 0.14 0.79 0.54 193.84 1.40 8.06
INCB Indiana Community Bank SB NA NA NA NA 0.93 NA 0.59 4.91
IPSW Ipswich Savings Bank 0.42 257.34 0.84 15.05 1.09 97.31 1.17 20.59
ISBF ISB Financial Corp. 0.31 256.07 0.27 2.28 0.80 196.73 0.55 4.53
ITLA ITLA Capital Corp. 1.14 127.34 1.54 14.34 1.45 79.64 1.44 13.42
IWBK InterWest Bancorp Inc. 0.43 178.44 0.58 9.09 0.77 73.44 1.08 16.65
JOAC Joachim Bancorp Inc. 0.28 115.94 0.20 0.70 0.32 95.24 0.75 2.68
JSB JSB Financial Inc. 1.56 39.27 1.02 4.39 0.61 35.16 2.23 9.73
JSBA Jefferson Savings Bancorp 0.49 183.25 0.67 7.38 0.89 101.16 0.74 8.43
JXSB Jacksonville Savings Bk (MHC) 0.91 61.70 0.79 7.51 0.56 56.34 0.74 7.16
JXVL Jacksonville Bancorp Inc. 0.76 91.63 0.78 5.23 0.70 67.63 1.75 11.48
KFBI Klamath First Bancorp 0.05 510.24 0.03 0.18 0.23 510.24 0.99 5.90
KNK Kankakee Bancorp Inc. 0.55 162.42 0.80 6.97 0.90 60.22 0.86 7.66
KSAV KS Bancorp Inc. 0.56 62.21 0.53 3.98 0.35 55.44 1.10 8.19
KSBK KSB Bancorp Inc. 1.73 61.53 1.39 18.89 1.07 52.04 1.21 16.68
KYF Kentucky First Bancorp Inc. 0.07 NM 0.04 0.23 0.76 457.83 1.21 7.26
LARK Landmark Bancshares Inc. NA NA NA NA NA NA 1.04 7.46
LARL Laurel Capital Group Inc. 0.55 225.74 0.43 4.15 1.25 201.97 1.48 14.41
LFBI Little Falls Bancorp Inc. 1.68 45.47 0.90 7.67 0.77 38.49 0.57 4.75
LFCO Life Financial Corp. 1.42 58.16 1.42 8.44 0.83 44.57 6.43 34.47
LFED Leeds Federal Savings Bk (MHC) 0.09 315.29 0.06 0.36 0.30 315.29 1.21 7.36
LIFB Life Bancorp Inc. 0.75 176.99 0.41 3.83 1.32 141.46 0.93 8.71
LISB Long Island Bancorp Inc. 1.28 71.97 0.91 9.83 0.92 63.07 0.88 9.58
LOGN Logansport Financial Corp. 0.52 74.21 0.49 2.62 0.39 55.66 1.41 7.39
LONF London Financial Corporation NA NA NA NA 0.63 NA 1.34 6.77
LSBI LSB Financial Corp. 1.18 69.89 1.05 12.14 0.83 69.89 0.83 9.62
LSBX Lawrence Savings Bank 1.06 221.30 0.66 6.98 2.35 156.71 1.76 19.33
LVSB Lakeview Financial 1.67 89.5 1.13 9.29 1.50 59.43 1.54 14.17
LXMO Lexington B&L Financial Corp. 0.62 78.37 0.48 1.68 0.49 78.37 1.52 5.43
MAFB MAF Bancorp Inc. 0.41 168.83 0.38 4.82 0.69 128.75 1.10 14.00
MARN Marion Capital Holdings 1.23 108.01 1.08 4.94 1.32 104.36 1.50 6.72
MASB MASSBANK Corp. 0.43 193.81 0.16 1.44 0.84 113.84 1.12 10.53
MBB MSB Bancorp Inc. NA NA NA NA NA NA 0.62 6.62
MBBC Monterey Bay Bancorp Inc. 1.05 57.32 0.76 6.58 0.60 51.39 0.50 4.44
MBLF MBLA Financial Corp. 0.99 50.27 0.57 4.53 0.50 50.27 0.89 7.13
MBSP Mitchell Bancorp Inc. 2.37 26.45 2.25 5.45 0.63 23.36 1.44 3.50
MCBN Mid-Coast Bancorp Inc. 0.67 95.27 0.55 6.41 0.64 82.14 0.82 9.90
MCBS Mid Continent Bancshares Inc. 0.38 49.89 0.24 2.43 0.19 47.79 0.97 9.93
MDBK Medford Bancorp Inc. 0.48 235.75 0.27 3.02 1.12 219.01 0.99 11.07
MECH Mechanics Savings Bank 1.06 237.55 0.91 8.72 2.53 188.34 0.93 8.95
MERI Meritrust Federal SB 0.42 125.29 0.25 3.00 0.52 70.30 1.14 13.75
METF Metropolitan Financial Corp. 0.41 203.68 0.54 13.35 0.84 107.95 0.71 17.67
MFBC MFB Corp. 0.00 NM 0.00 0.00 0.18 141.76 0.79 6.00
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 0.00 NM 0.00 0.00 0.19 NM 0.57 3.58
MFFC Milton Federal Financial Corp. 0.25 176.18 0.15 1.21 0.44 91.98 0.68 5.29
MFLR Mayflower Co-operative Bank 1.01 155.53 0.57 5.89 1.56 154.47 1.04 10.73
MFSL Maryland Federal Bancorp 0.40 115.79 0.45 5.31 0.46 85.54 0.83 9.80
MIFC Mid-Iowa Financial Corp. NA NA NA NA 0.45 NA 1.09 11.66
MIVI Mississippi View Holding Co. NA NA NA NA NA NA 1.07 5.86
MLBC ML Bancorp Inc. 0.80 213.57 0.43 6.19 1.71 178.98 0.74 10.77
MONT Montgomery Financial Corp. 0.71 28.59 0.73 3.84 0.20 24.43 0.89 4.65
MRKF Market Financial Corp. 0.00 NM 0.00 0.00 0.20 27.23 1.27 3.61
MSBF MSB Financial Inc. 0.02 NM 0.02 0.13 0.45 40.20 1.54 9.16
MSBK Mutual Savings Bank FSB 0.05 NM 0.05 0.73 0.64 650.66 0.12 1.86
MWBI Midwest Bancshares Inc. 0.81 96.78 0.81 11.76 0.79 59.23 1.13 16.37
MWBX MetroWest Bank 0.71 218.22 0.69 9.20 1.55 131.24 1.36 18.19
MWFD Midwest Federal Financial NA NA NA NA 1.02 NA 1.48 16.67
NASB North American Savings Bank 2.97 32.94 3.11 40.56 0.98 27.16 1.57 20.06
NBN Northeast Bancorp 1.09 112.63 1.03 13.34 1.22 93.77 0.84 10.96
NBSI North Bancshares Inc. 0.00 NM 0.00 0.00 0.27 NM 0.37 2.69
NEIB Northeast Indiana Bancorp 0.19 353.23 0.17 1.20 0.67 350.00 1.28 8.66
NHTB New Hampshire Thrift Bncshrs 0.52 219.29 0.61 7.80 1.14 151.10 0.95 12.64
NMSB NewMil Bancorp Inc. 1.75 186.1 1.05 10.34 3.26 128.18 0.88 8.67
NSLB NS&L Bancorp Inc. 0.03 466.67 0.02 0.08 0.13 210 0.94 4.78
NSSB Norwich Financial Corp. 1.33 203.29 1.20 10.27 2.71 158.13 1.19 10.36
NSSY NSS Bancorp Inc. 1.69 86.23 1.14 14.03 1.46 73.30 1.01 12.61
NTMG Nutmeg Federal S&LA NA NA NA NA 0.55 NA 0.81 9.74
NWEQ Northwest Equity Corp. 1.67 35.23 1.42 12.14 0.59 33.84 1.06 9.23
NWSB Northwest Savings Bank (MHC) 0.72 120.38 0.77 7.95 0.87 85.90 0.92 9.68
NYB New York Bancorp Inc. 1.11 82.89 0.74 14.15 0.92 65.33 1.70 32.90
OCFC Ocean Financial Corp. 0.89 96.09 0.52 3.44 0.86 83.85 0.98 6.37
OCN Ocwen Financial Corp. 1.05 105.69 5.79 40.95 1.11 13.48 2.78 26.47
OFCP Ottawa Financial Corp. 0.28 154.47 0.27 3.11 0.43 106.15 0.80 9.22
OHSL OHSL Financial Corp. 0.04 777.94 0.03 0.27 0.31 121.89 0.86 7.84
OSFS Ohio State Financial Services 0.68 83.93 0.44 1.61 0.57 83.93 0.88 4.16
OTFC Oregon Trail Financial Corp. 0.17 312.00 0.07 0.39 0.54 307.09 0.84 4.43
PALM Palfed Inc. 1.38 94.27 2.04 23.92 1.30 53.36 0.56 6.75
PBCI Pamrapo Bancorp Inc. 2.71 44.5 1.92 14.87 1.21 28.48 1.36 10.63
PBCT People's Bank (MHC) 1.07 154.97 0.76 8.40 1.66 146.25 1.16 13.67
PBHC Oswego City Savings Bk (MHC) 1.03 64.65 0.91 7.58 0.67 43.96 1.01 8.49
PBKB People's Bancshares Inc. 0.95 114.27 0.53 13.02 1.08 110.55 0.78 16.53
PCBC Perry County Financial Corp. 0.18 104.17 0.03 0.15 0.19 104.17 1.14 6.10
PDB Piedmont Bancorp Inc. 0.76 106.35 0.63 3.86 0.81 75.98 1.34 7.97
PEEK Peekskill Financial Corp. 2.09 64.74 0.66 2.55 1.35 28.37 1.09 4.20
PERM Permanent Bancorp Inc. 2.08 48.17 1.07 11.32 1.00 47.01 0.60 6.39
PERT Perpetual Bank (MHC) 0.15 570.30 0.12 1.00 0.87 502.32 1.06 8.77
PFDC Peoples Bancorp 0.32 115.65 0.26 1.73 0.38 106.74 1.56 10.25
PFED Park Bancorp Inc. 0.52 138.5 0.24 1.04 0.72 118.76 1.03 4.49
PFFB PFF Bancorp Inc. 1.78 80.73 1.61 15.96 1.44 64.39 0.50 4.97
PFFC Peoples Financial Corp. 0.00 NM 0.00 0.00 0.39 NM 0.92 3.39
PFNC Progress Financial Corp. 0.69 160.46 1.37 25.69 1.11 37.27 0.84 15.98
PFSB PennFed Financial Services Inc 0.71 39.41 0.61 8.39 0.28 32.20 0.80 10.98
PFSL Pocahontas FS&LA (MHC) 0.28 380.57 0.12 1.94 1.07 274.52 0.55 8.74
PHBK Peoples Heritage Finl Group 0.95 162.28 0.75 10.13 1.55 121.04 1.31 16.91
PHFC Pittsburgh Home Financial Corp 2.03 38.30 1.69 16.01 0.78 30.77 0.86 8.03
PHSB Peoples Home Savings Bk (MHC) 0.80 172.12 0.40 2.91 1.37 148.08 0.91 6.80
PKPS Poughkeepsie Financial Corp. 3.96 33.92 3.58 42.47 1.34 23.86 0.48 5.71
PLSK Pulaski Savings Bank (MHC) 1.14 83.38 0.65 5.39 0.95 83.38 0.73 6.12
PMFI Perpetual Midwest Financial 0.33 259.53 0.29 3.42 0.86 240.42 0.55 6.51
PRBC Prestige Bancorp Inc. 0.47 84.2 0.33 2.93 0.40 82.34 0.59 5.27
PROV Provident Financial Holdings 1.28 76.52 1.56 11.70 0.98 55.80 0.93 6.90
PSBK Progressive Bank Inc. 1.31 125.50 0.92 10.56 1.65 115.80 0.99 11.52
PSFC Peoples-Sidney Financial Corp. 0.87 51.50 0.78 3.08 0.45 40.10 1.31 5.18
PSFI PS Financial Inc. 1.64 31.79 0.68 1.83 0.52 31.79 1.98 5.25
PTRS Potters Financial Corp. 0.68 389.09 0.44 5.00 2.65 389.09 0.91 10.07
PULB Pulaski Bank, Svgs Bank (MHC) 0.22 150.32 0.20 1.56 0.33 41.41 1.19 9.16
PULS Pulse Bancorp 2.18 83.43 0.56 6.85 1.82 59.52 1.10 13.55
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 0.83 86.55 1.13 15.79 0.72 57.57 1.33 18.75
PVSA Parkvale Financial Corporation 0.35 551.02 0.26 3.38 1.91 547.66 1.08 14.80
PWBC PennFirst Bancorp Inc. 1.50 96.88 0.68 8.07 1.45 87.79 0.70 8.50
PWBK Pennwood Bancorp Inc. 1.42 73.41 0.94 5.12 1.04 42.39 1.06 5.88
QCBC Quaker City Bancorp Inc. 1.28 89.96 1.35 15.92 1.15 67.38 0.74 8.62
QCFB QCF Bancorp Inc. 0.52 383.78 0.24 1.45 2 345.09 1.63 9.58
QCSB Queens County Bancorp Inc. 0.50 138.71 0.53 4.74 0.69 89.32 1.46 12.78
RARB Raritan Bancorp Inc. 0.57 223.05 0.39 5.29 1.26 208.57 1.01 12.81
REDF RedFed Bancorp Inc. 1.44 63.73 1.80 21.67 0.92 44.74 1.19 14.21
RELI Reliance Bancshares Inc. 0.00 NM 0.00 0.00 0.56 NM 1.36 2.72
RELY Reliance Bancorp Inc. 1.24 49.94 0.65 7.85 0.62 41.66 0.95 11.59
RIVR River Valley Bancorp 0.79 133.67 0.71 5.56 1.05 122.47 0.90 7.20
ROSE TR Financial Corp. 0.89 85.30 0.50 7.99 0.76 74.97 1.00 16.11
RSLN Roslyn Bancorp Inc. 0.94 276.76 0.27 1.52 2.60 257.00 1.35 7.10
RVSB Riverview Bancorp Inc. 0.25 226.93 0.14 0.68 0.58 226.93 1.31 11.39
SBFL SB of the Finger Lakes (MHC) 0.90 121.93 0.50 5.33 1.10 103.35 0.35 3.67
SBOS Boston Bancorp (The) 1.41 42.86 0.65 5.23 0.61 18.09 3.18 28.19
SCBS Southern Community Bancshares 3.67 52.99 2.16 10.15 1.94 46.17 1.20 5.55
SCCB S. Carolina Community Bancshrs 0.82 98.65 0.87 3.28 0.81 73.62 1.03 3.95
SFED SFS Bancorp Inc. 0.87 66.37 0.71 5.73 0.58 57.32 0.68 5.59
SFFC StateFed Financial Corp. 2.28 14.63 2.19 12.51 0.33 10.16 1.03 5.86
SFIN Statewide Financial Corp. 0.64 132.09 0.33 3.56 0.84 104.03 0.81 8.62
SFSB SuburbFed Financial Corp. NA NA NA NA 0.30 NA 0.68 10.34
SFSL Security First Corp. 0.37 226.56 0.33 3.57 0.84 226.25 1.39 14.85
SGVB SGV Bancorp Inc. 1.08 37.81 1.06 14.21 0.41 29.26 0.32 4.39
SHEN First Shenango Bancorp Inc. 0.46 254.17 0.51 4.41 1.17 149.56 1.17 10.32
SHSB SHS Bancorp Inc. 2.13 34.68 1.42 10.67 0.74 33.94 0.66 4.98
SISB SIS Bancorp Inc. 0.66 405.76 0.33 4.42 2.67 379.00 0.88 12.46
SKAN Skaneateles Bancorp Inc. 1.62 60.52 1.78 25.49 0.98 41.25 0.69 10.03
SKBO First Carnegie Deposit (MHC) NA NA NA NA 0.83 NA 0.87 5.27
SMBC Southern Missouri Bancorp Inc. 1.21 54.42 0.88 5.44 0.66 51.46 0.88 5.41
SMFC Sho-Me Financial Corp. 0.15 425.56 0.29 3.21 0.63 190.55 1.35 14.79
SOBI Sobieski Bancorp Inc. 0.16 188.68 0.13 0.85 0.31 188.68 0.60 4.00
SOPN First Savings Bancorp Inc. 0.44 70.15 0.29 1.27 0.31 70.15 1.73 7.55
SOSA Somerset Savings Bank 5.93 31.60 5.91 89.61 1.87 24.16 1.36 21.14
SPBC St. Paul Bancorp Inc. 0.26 424.17 0.23 2.51 1.10 210.72 1.08 12.26
SRN Southern Banc Co. 0.00 NM 0.00 0.00 0.20 NM 0.54 3.19
SSB Scotland Bancorp Inc. NA NA NA NA 0.53 NA 2.38 7.92
SSFC South Street Financial Corp. 0.65 59.09 0.31 1.21 0.38 57.66 1.20 4.70
SSM Stone Street Bancorp Inc. 0.00 NM 0.00 0.00 0.62 229.34 1.49 4.98
STFR St. Francis Capital Corp. 0.40 207.08 0.21 2.65 0.83 181.82 0.46 5.80
STSA Sterling Financial Corp. 0.45 183.74 0.47 9.02 0.82 96.7 0.61 10.69
SVRN Sovereign Bancorp Inc. 0.73 125.97 0.60 11.77 0.92 99.50 0.07 1.36
SWBI Southwest Bancshares 0.28 101.05 0.20 1.79 0.28 101.05 1.12 10.12
SWCB Sandwich Bancorp Inc. 1.05 101.03 0.82 10.31 1.06 93.38 0.98 12.66
SZB SouthFirst Bancshares Inc. 0.50 78.95 0.53 3.81 0.40 39.15 0.52 3.73
THR Three Rivers Financial Corp. 1.23 62.42 0.87 6.30 0.77 59.98 0.95 6.98
THRD TF Financial Corp. 0.50 163.39 0.27 2.29 0.82 128.49 0.87 7.57
TPNZ Tappan Zee Financial Inc. 2.48 47.26 1.16 6.74 1.17 32.52 0.78 4.6
TRIC Tri-County Bancorp Inc. 0.00 NM 0.00 0.00 1.05 NM 0.96 6.34
TSBS Trenton SB (MHC) 1.16 68.57 0.75 4.43 0.80 55.06 1.05 6.20
TSH Teche Holding Co. 0.32 300.63 0.28 2.11 0.96 291.99 0.93 6.91
TWIN Twin City Bancorp 0.00 NM 0.08 0.60 0.20 88.17 1.08 8.38
UBMT United Financial Corp. 0.00 NM 0.35 1.44 0.22 15.21 1.53 6.52
UFRM United Federal Savings Bank 0.69 132.70 0.62 8.39 0.92 101.45 0.71 9.60
USAB USABancshares, Inc. 1.07 70.22 0.57 6.75 0.75 70.22 0.91 9.65
VABF Virginia Beach Fed. Financial 0.14 677.24 0.50 6.98 0.95 59.4 0.72 10.36
WAMU Washington Mutual Inc. NA NA NA NA 0.98 NA (0.54) (9.52)
WAYN Wayne Savings Bancshares (MHC) 0.26 174.36 0.58 6.05 0.46 65.29 0.79 8.31
WBST Webster Financial Corp. 1.00 143.53 0.72 13.55 1.43 111.52 0.59 10.99
WCBI Westco Bancorp 0.27 139.06 0.21 1.32 0.37 139.06 1.63 10.60
WCFB Webster City Federal SB (MHC) 0.02 NM 0.07 0.32 0.72 560.00 1.38 5.94
WEFC Wells Financial Corp. 0.22 174.11 0.23 1.59 0.39 114.71 1.09 7.68
WEHO Westwood Homestead Fin. Corp. 0.00 NM 0.00 0.00 0.22 77.88 0.56 1.97
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp 1.12 159.17 0.76 8.31 1.78 121.61 0.96 10.59
WFI Winton Financial Corp. 0.14 210.69 0.28 3.89 0.29 84.06 1.10 15.34
WFSG Wilshire Financial Services NA NA NA NA 10.15 NA 2.20 33.52
WFSL Washington Federal Inc. 0.58 100.17 0.69 5.52 0.58 62.10 1.93 15.60
WHGB WHG Bancshares Corp. 0.18 160.96 0.15 0.71 0.29 160.96 0.93 4.37
WOFC Western Ohio Financial Corp. 0.56 118.98 0.44 3.19 0.66 115.19 0.06 0.44
WRNB Warren Bancorp Inc. 1.07 162.25 1.15 10.81 1.73 97.04 1.90 17.92
WSB Washington Savings Bank, FSB 2.72 37.27 1.53 18.21 1.01 30.34 0.82 9.86
WSFS WSFS Financial Corp. 1.55 173.18 1.21 21.88 2.68 134.95 1.15 20.84
WSTR WesterFed Financial Corp. 0.35 203.21 0.24 2.26 0.72 116.74 0.73 6.84
WVFC WVS Financial Corp. 0.34 361.83 0.19 1.61 1.21 361.83 1.29 11.09
WWFC Westwood Financial Corp. 0.00 NM 0.00 0.00 0.58 158.78 0.43 0.47
WYNE Wayne Bancorp Inc. 1.34 88.41 0.89 7.20 1.18 88.41 0.76 5.57
YFCB Yonkers Financial Corporation 0.81 96.05 0.48 3.46 0.78 72.05 1.00 6.94
YFED York Financial Corp. 0.16 437.40 1.30 14.72 0.69 23.98 0.83 9.65
------------------------------------------------------ -----------------------
Average 0.83 165.01 0.71 7.87 0.92 124.79 0.99 9.20
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Profitability as of
Asset Quality as of The Most Recent Quarter The Most Recent Quarter
------------------------------------------------------ -----------------------
NPLs/ Reserves/ NPAs/ NPAs/ Reserves/ Reserves/ Return on Return on
Loans NPLs Assets Equity Loans NPAs + 90 Avg Assets Avg Equity
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- ------------------------------------------------------ -----------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 0.81 175.40 0.58 7.78 1.43 149.29 0.86 12.02
FFES First Federal of East Hartford 1.31 109.43 0.25 3.78 1.44 87.85 0.54 8.22
FFIC Flushing Financial Corp. 0.59 189.84 0.39 2.74 1.12 172.94 0.97 6.53
GAF GA Financial Inc. 0.64 63.36 0.24 1.66 0.41 63.36 1.16 7.59
JSB JSB Financial Inc. 1.56 39.27 1.02 4.39 0.61 35.16 2.23 9.73
MASB MASSBANK Corp. 0.43 193.81 0.16 1.44 0.84 113.84 1.12 10.53
MDBK Medford Bancorp Inc. 0.48 235.75 0.27 3.02 1.12 219.01 0.99 11.07
PWBC PennFirst Bancorp Inc. 1.50 96.88 0.68 8.07 1.45 87.79 0.70 8.50
SFIN Statewide Financial Corp. 0.64 132.09 0.33 3.56 0.84 104.03 0.81 8.62
SISB SIS Bancorp Inc. 0.66 405.76 0.33 4.42 2.67 379.00 0.88 12.46
STFR St. Francis Capital Corp. 0.40 207.08 0.21 2.65 0.83 181.82 0.46 5.80
THRD TF Financial Corp. 0.50 163.39 0.27 2.29 0.82 128.49 0.87 7.57
------------------------------------------------------ -----------------------
Average 0.79 167.67 0.39 3.82 1.13 143.55 0.97 9.05
Median 0.64 169.40 0.30 3.29 0.98 121.17 0.88 8.56
Maximum 1.56 405.76 1.02 8.07 2.67 379.00 2.23 12.46
Minimum 0.40 39.27 0.16 1.44 0.41 35.16 0.46 5.80
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 2.69 6.88 4.42 2.46 0.97 2.08 56.58 39.42
%CCMD Chevy Chase Bank, FSB 4.55 7.73 3.92 3.81 4.65 7.16 80.49 56.67
AABC Access Anytime Bancorp Inc. 3.10 6.94 3.94 3.00 0.68 3.42 92.86 91.24
AADV Advantage Bancorp Inc. 3.22 7.60 4.51 3.09 0.71 2.19 54.83 44.47
ABBK Abington Bancorp Inc. 3.40 7.26 4.02 3.23 0.84 2.63 62.17 52.37
ABCL Alliance Bancorp Inc. 3.27 7.57 4.43 3.14 1.29 2.67 59.35 42.60
ABCW Anchor BanCorp Wisconsin 3.16 7.74 4.71 3.03 0.40 1.89 54.87 48.86
AFBC Advance Financial Bancorp 3.82 7.70 3.98 3.72 0.29 2.70 67.46 64.96
AFCB Affiliated Community Bancorp 3.32 7.51 4.28 3.23 0.15 1.64 48.61 46.24
AFED AFSALA Bancorp Inc. 3.55 6.97 3.59 3.38 0.22 2.24 62.20 59.76
AFFFZ America First Financial Fund 2.92 7.17 4.38 2.80 0.42 2.11 64.10 58.72
AHCI Ambanc Holding Co. 3.15 6.96 3.90 3.06 0.20 2.40 72.57 70.81
AHM H.F. Ahmanson & Co. 2.66 7.16 4.60 2.56 0.53 1.72 49.73 39.24
ALBC Albion Banc Corp. 3.50 7.67 4.30 3.37 0.52 2.94 75.66 71.89
ALBK ALBANK Financial Corp. 4.01 7.44 3.64 3.81 0.35 2.32 52.23 47.83
AMFC AMB Financial Corp. 3.47 7.49 4.09 3.40 0.60 2.82 70.52 65.32
ANA Acadiana Bancshares Inc. 3.55 7.56 4.09 3.47 0.38 2.32 60.42 56.10
ANDB Andover Bancorp Inc. 3.22 7.21 4.15 3.06 0.45 1.82 49.83 42.43
ANE Alliance Bncorp of New England 3.51 7.10 3.76 3.35 0.49 2.68 66.55 61.67
ASBI Ameriana Bancorp 3.16 7.42 4.39 3.02 0.64 2.20 59.96 51.52
ASBP ASB Financial Corp. 3.30 7.70 4.44 3.25 0.23 2.18 62.45 59.78
ASFC Astoria Financial Corp. 2.69 7.08 4.49 2.59 0.18 1.36 44.91 41.01
ATSB AmTrust Capital Corp. 2.75 6.92 4.29 2.63 0.59 2.85 88.42 85.84
AVND Avondale Financial Corp. 4.43 8.82 4.67 4.15 1.30 3.83 72.51 63.93
BANC BankAtlantic Bancorp Inc. 3.72 7.73 4.29 3.44 0.77 3.02 68.62 61.64
BDJI First Federal Bancorporation 3.29 7.30 4.16 3.14 0.51 2.42 66.73 61.34
BFD BostonFed Bancorp Inc. 3.43 7.32 4.01 3.32 0.40 2.35 63.61 59.20
BFFC Big Foot Financial Corp. 3.06 6.63 3.66 2.98 0.13 2.44 78.07 77.14
BFSB Bedford Bancshares Inc. 4.08 7.82 3.93 3.89 0.46 2.38 54.68 49.33
BKC American Bank of Connecticut 3.31 7.26 4.08 3.17 0.53 1.68 42.34 32.68
BKCT Bancorp Connecticut Inc. 3.85 7.59 3.83 3.76 0.24 2.06 51.78 48.75
BKUNA BankUnited Financial Corp. 1.92 7.28 5.42 1.86 0.15 1.30 62.60 59.51
BNKU Bank United Corp. 2.42 7.29 5.01 2.27 0.52 1.53 53.93 43.43
BPLS Bank Plus Corp. 2.24 6.98 4.80 2.18 0.33 1.91 71.52 67.23
BSBC Branford Savings Bank 4.35 7.70 3.42 4.28 0.30 3.51 76.34 74.67
BTHL Bethel Bancorp 4.39 8.43 4.25 4.18 0.73 3.83 75.36 71.06
BVCC Bay View Capital Corp. 2.92 7.81 4.98 2.83 0.44 2.23 64.19 58.62
BWFC Bank West Financial Corp. 3.00 7.34 4.51 2.83 0.62 2.59 75.09 69.63
BYFC Broadway Financial Corp. 4.28 7.39 3.27 4.12 0.48 4.15 87.17 85.69
CAFI Camco Financial Corp. 3.56 7.73 4.36 3.38 0.61 2.21 54.91 46.74
CAPS Capital Savings Bancorp Inc. 3.41 7.67 4.38 3.29 0.64 2.33 59.22 51.30
CASB Cascade Financial Corp. 3.33 8.45 5.23 3.21 0.42 2.34 64.04 59.30
CASH First Midwest Financial Inc. 3.23 7.68 4.56 3.13 0.37 1.95 52.89 47.29
CATB Catskill Financial Corp. 4.15 7.33 3.28 4.06 0.14 1.91 45.86 43.93
CBCI Calumet Bancorp Inc. 3.89 7.91 4.32 3.59 0.22 1.63 47.88 44.75
CBES CBES Bancorp Inc. 4.58 8.35 3.92 4.43 0.44 2.87 56.72 52.43
CBK Citizens First Financial Corp. 3.24 7.44 4.33 3.11 0.48 2.69 74.63 70.68
CBSA Coastal Bancorp Inc. 1.98 6.92 5.01 1.92 0.20 1.44 64.11 60.31
CBSB Charter Financial Inc. 3.87 7.66 4.04 3.62 0.61 2.17 47.05 38.18
CCFH CCF Holding Company 4.06 7.62 3.93 3.69 0.69 4.43 101.29 101.53
CEBK Central Co-operative Bank 3.31 7.07 3.83 3.24 0.21 2.44 68.34 66.32
CENB Century Bancorp Inc. 3.74 7.25 3.56 3.69 0.02 1.31 35.47 35.12
CENF CENFED Financial Corp. 2.36 7.33 5.04 2.29 0.35 1.38 49.02 41.18
CFB Commercial Federal Corp. 2.50 7.45 5.03 2.42 0.88 1.73 49.58 31.16
CFBC Community First Banking Co. 4.90 8.35 3.79 4.56 1.08 3.97 70.01 62.92
CFCP Coastal Financial Corp. 4.03 8.05 4.23 3.82 0.71 2.71 59.21 51.60
CFFC Community Financial Corp. 3.82 7.83 4.18 3.65 0.39 2.05 50.66 45.35
CFNC Carolina Fincorp Inc. 4.18 7.53 3.57 3.96 0.50 2.45 54.88 49.15
CFSB CFSB Bancorp Inc. 3.11 7.47 4.43 3.04 0.64 1.83 49.45 38.9
CFTP Community Federal Bancorp 3.40 6.87 3.65 3.22 0.18 1.75 51.64 48.94
CFX CFX Corp. 3.85 7.49 3.91 3.58 0.63 2.67 62.17 55.52
CIBI Community Investors Bancorp 3.59 7.80 4.32 3.49 0.18 2.09 56.07 53.75
CKFB CKF Bancorp Inc. 3.81 7.68 3.93 3.75 0.11 1.56 40.55 38.87
CLAS Classic Bancshares Inc. 3.78 7.26 3.71 3.55 0.33 3.49 83.15 81.58
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 3.86 8.04 4.33 3.71 0.11 1.95 50.77 49.26
CMSB Commonwealth Bancorp Inc. 3.32 6.95 3.85 3.10 0.71 3.00 72.02 65.59
CMSV Community Savings Bnkshrs(MHC) 3.53 7.33 4.00 3.33 0.52 2.83 73.86 69.80
CNIT CENIT Bancorp Inc. 3.27 7.34 4.26 3.08 0.69 2.27 59.31 50.25
CNSB CNS Bancorp Inc. 3.62 7.22 3.77 3.45 0.18 2.26 62.43 60.47
CNY Carver Bancorp Inc. 3.42 6.89 3.69 3.20 0.34 2.80 77.42 75.02
COFI Charter One Financial 2.71 7.36 4.72 2.64 0.53 1.28 39.52 27.45
CONE Conestoga Bancorp, Inc. 2.84 6.42 3.68 2.73 0.16 2.05 70.85 69.16
COOP Cooperative Bankshares Inc. 3.00 7.42 4.52 2.90 0.18 2.07 66.84 64.79
CRZY Crazy Woman Creek Bancorp 3.38 7.26 3.94 3.32 0.14 1.57 45.36 43.12
CSA Coast Savings Financial 2.60 7.09 4.61 2.48 0.55 1.66 52.64 42.03
CSBF CSB Financial Group Inc. 3.40 6.68 3.40 3.28 0.19 2.58 70.71 69.02
CTZN CitFed Bancorp Inc. 2.29 6.94 4.76 2.18 1.06 1.91 56.14 34.78
CVAL Chester Valley Bancorp Inc. 3.83 7.80 4.05 3.75 0.43 2.64 63.09 58.87
DCBI Delphos Citizens Bancorp Inc. 3.87 7.35 3.52 3.83 0.29 1.50 36.37 31.55
DIBK Dime Financial Corp. 3.26 7.30 4.10 3.20 0.24 1.50 43.16 38.92
DIME Dime Community Bancorp Inc. 3.76 7.36 3.78 3.58 0.28 2.00 46.57 42.36
DME Dime Bancorp Inc. 2.47 6.94 4.56 2.38 0.44 1.46 50.94 41.88
DNFC D & N Financial Corp. 3.10 7.78 4.75 3.03 0.41 2.14 61.65 56.42
DSL Downey Financial Corp. 2.62 7.30 4.79 2.51 0.25 1.52 60.36 56.50
EBSI Eagle Bancshares 4.15 8.25 4.51 3.74 1.53 3.86 76.11 66.31
EFBC Empire Federal Bancorp Inc. 4.40 7.15 2.84 4.30 0.80 2.68 52.47 43.60
EFBI Enterprise Federal Bancorp 2.40 7.29 4.93 2.36 0.07 1.41 57.67 56.42
EGFC Eagle Financial Corp. 3.23 7.04 3.96 3.08 0.36 2.01 52.37 46.79
EGLB Eagle BancGroup Inc. 2.49 7.23 4.81 2.42 0.24 2.27 85.85 84.46
EIRE Emerald Isle Bancorp Inc. 3.48 7.69 4.30 3.39 0.23 2.21 60.64 57.94
EMLD Emerald Financial Corp. 2.84 7.59 4.81 2.78 0.32 1.52 48.30 42.33
EQSB Equitable Federal Savings Bank 2.38 7.22 4.91 2.31 0.52 1.75 60.61 51.69
ESBK Elmira Savings Bank (The) 3.72 7.58 4.07 3.51 0.70 3.32 75.95 71.18
ESX Essex Bancorp Inc. 2.99 7.84 5.00 2.83 1.09 4.89 112.65 117.52
ETFS East Texas Financial Services 3.02 7.01 4.05 2.96 0.20 2.20 70.24 68.20
FAB FirstFed America Bancorp Inc. 3.06 7.24 4.33 2.91 0.46 2.01 59.55 53.16
FBBC First Bell Bancorp Inc. 2.34 7.13 4.82 2.31 0.07 0.72 29.94 27.67
FBCI Fidelity Bancorp Inc. 2.96 7.36 4.46 2.90 0.23 1.79 56.71 53.22
FBCV 1ST Bancorp 2.49 7.49 5.12 2.38 0.44 1.85 63.00 56.08
FBER 1st Bergen Bancorp 3.33 7.16 3.95 3.21 0.11 2.09 61.81 60.48
FBHC Fort Bend Holding Corp. 3.33 7.01 3.94 3.08 1.74 4.02 83.07 73.48
FBNW FirstBank Corp. 4.91 8.75 4.18 4.56 0.80 3.85 71.73 66.80
FBSI First Bancshares Inc. 3.48 7.68 4.36 3.32 0.29 1.79 51.58 47.37
FCB Falmouth Bancorp Inc. 4.17 7.07 3.01 4.06 0.13 3.05 72.89 72.05
FCBF FCB Financial Corp. 3.24 7.53 4.34 3.19 0.40 1.78 49.61 43.31
FCME First Coastal Corp. 4.24 7.96 4.03 3.93 0.46 3.32 74.02 70.97
FDEF First Defiance Financial 4.18 7.90 3.91 3.99 0.23 2.44 56.72 54.21
FED FirstFed Financial Corp. 2.38 7.34 5.04 2.30 0.23 1.04 40.54 34.48
FESX First Essex Bancorp Inc. 3.18 7.52 4.49 3.02 0.23 1.79 53.06 49.51
FFBA First Colorado Bancorp Inc. 3.32 7.21 4.02 3.19 0.37 1.71 48.76 42.89
FFBH First Federal Bancshares of AR 3.06 7.56 4.55 3.01 0.27 1.75 53.55 49.45
FFBI First Financial Bancorp Inc. 3.15 7.16 4.14 3.02 0.64 3.03 82.99 79.40
FFBS FFBS BanCorp Inc. 3.62 7.61 4.05 3.56 0.51 1.87 46.01 38.29
FFBZ First Federal Bancorp Inc. 3.84 7.78 4.31 3.47 0.34 2.25 52.38 47.76
FFCH First Financial Holdings Inc. 3.05 7.47 4.54 2.93 0.73 2.18 58.98 48.74
FFDB FirstFed Bancorp Inc. 3.68 7.64 4.10 3.54 0.48 2.45 59.44 53.97
FFDF FFD Financial Corp. 3.46 7.10 3.69 3.41 0.05 1.93 55.63 54.92
FFED Fidelity Federal Bancorp 2.88 8.17 5.49 2.68 1.31 2.76 69.05 53.87
FFES First Federal of East Hartford 2.28 6.76 4.54 2.22 0.16 1.39 58.33 55.25
FFFC FFVA Financial Corp. 3.80 7.86 4.17 3.69 0.26 1.75 43.84 39.83
FFFD North Central Bancshares Inc. 4.01 7.68 3.79 3.88 1.11 2.08 41.66 24.98
FFFL Fidelity Bankshares Inc. (MHC) 3.23 7.31 4.24 3.06 0.39 2.38 69.59 65.73
FFHH FSF Financial Corp. 2.93 7.40 4.54 2.87 0.42 1.78 54.03 47.29
FFHS First Franklin Corp. 2.61 7.27 4.73 2.54 0.20 1.74 63.03 60.14
FFIC Flushing Financial Corp. 3.81 7.67 4.04 3.64 0.36 2.22 54.55 50.07
FFKY First Federal Financial Corp. 4.15 7.92 4.03 3.89 0.66 2.01 42.86 33.23
FFLC FFLC Bancorp Inc. 3.46 7.56 4.21 3.34 0.24 1.99 55.71 52.57
FFOH Fidelity Financial of Ohio 3.07 7.33 4.38 2.95 0.22 1.78 51.83 48.19
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 2.62 7.33 4.81 2.52 0.41 1.95 70.04 65.17
FFSL First Independence Corp. 2.75 7.36 4.66 2.70 0.26 1.75 63.89 60.45
FFSX First Fed SB of Siouxland(MHC) 3.05 7.39 4.49 2.90 0.54 2.29 66.44 60.16
FFWC FFW Corp. 3.30 7.74 4.55 3.19 0.48 2.01 52.29 45.08
FFWD Wood Bancorp Inc. 4.33 8.20 4.02 4.18 0.27 2.32 52.04 48.90
FFYF FFY Financial Corp. 3.70 7.83 4.24 3.59 0.18 1.81 47.91 45.25
FGHC First Georgia Holding Inc. 4.31 8.37 4.45 3.92 0.79 3.11 64.51 57.32
FIBC Financial Bancorp Inc. 3.80 7.39 3.80 3.59 0.25 1.91 49.62 46.05
FISB First Indiana Corporation 4.49 8.60 4.30 4.31 0.78 2.75 54.56 46.37
FKFS First Keystone Financial 3.41 7.42 4.12 3.29 0.31 2.26 62.98 59.49
FKKYD Frankfort First Bancorp Inc. 3.04 7.26 4.30 2.97 0.04 1.28 42.77 42.07
FLAG FLAG Financial Corp. 3.69 7.43 4.06 3.37 1.32 3.40 72.20 61.34
FLFC First Liberty Financial Corp. 3.92 7.88 4.31 3.58 0.81 2.67 58.06 48.52
FLGS Flagstar Bancorp Inc. 2.43 6.98 4.78 2.21 3.83 3.50 50.87 (34.40)
FLKY First Lancaster Bancshares 4.69 8.37 3.73 4.63 0.00 2.89 62.38 62.38
FMBD First Mutual Bancorp Inc. 3.08 7.09 4.25 2.84 0.38 2.76 80.41 77.80
FMCO FMS Financial Corp. 3.82 7.34 3.71 3.64 0.45 2.49 57.71 52.47
FMSB First Mutual Savings Bank 3.68 8.45 4.81 3.64 0.35 2.17 54.48 50.06
FNGB First Northern Capital Corp. 3.24 7.33 4.20 3.12 0.44 2.02 56.71 50.62
FOBC Fed One Bancorp 3.35 7.30 4.06 3.24 0.16 2.01 57.03 54.89
FPRY First Financial Bancorp 3.15 7.62 4.63 2.98 0.52 2.92 82.09 78.98
FSBI Fidelity Bancorp Inc. 2.89 7.22 4.41 2.81 0.23 1.85 60.79 57.59
FSFC First Southeast Financial Corp 3.25 7.58 4.44 3.14 0.33 1.71 50.03 44.86
FSFF First SecurityFed Financial 3.71 7.51 3.87 3.64 0.24 1.72 44.33 40.65
FSLA First Savings Bank (MHC) 3.23 7.10 4.02 3.09 0.21 1.80 52.47 49.20
FSNJ Bayonne Bancshares Inc. 2.60 6.80 4.25 2.55 0.19 1.69 61.74 58.88
FSPG First Home Bancorp Inc. 2.99 7.56 4.65 2.92 0.18 1.72 54.09 51.25
FSPT FirstSpartan Financial Corp. 4.27 7.59 3.47 4.13 0.36 1.78 39.76 34.47
FSSB First FS&LA of San Bernardino 3.67 7.74 4.33 3.41 0.89 4.27 100.81 101.02
FSTC First Citizens Corp. 4.64 8.11 3.69 4.42 0.68 2.99 57.62 51.06
FTF Texarkana First Financial Corp 3.83 7.94 4.22 3.73 0.46 1.48 35.46 27.52
FTFC First Federal Capital Corp. 3.07 7.51 4.61 2.90 1.19 2.59 62.76 47.46
FTNB Fulton Bancorp Inc. 3.89 7.61 3.79 3.82 0.47 2.39 54.11 48.51
FTSB Fort Thomas Financial Corp. 4.26 8.53 4.46 4.07 0.28 2.20 50.57 47.21
FWWB First SB of Washington Bancorp 3.67 7.85 4.33 3.52 0.31 1.90 47.52 42.89
GAF GA Financial Inc. 3.54 7.34 3.90 3.45 0.32 1.95 51.11 46.59
GBCI Glacier Bancorp Inc. 4.74 7.85 3.54 4.32 1.49 3.11 53.15 37.03
GDVS Greater Delaware Valley (MHC) 3.53 7.21 3.80 3.41 0.23 2.25 62.98 60.50
GDW Golden West Financial 2.33 7.32 5.05 2.26 0.19 0.85 34.58 29.12
GFCO Glenway Financial Corp. 3.21 7.53 4.44 3.09 0.33 1.98 56.59 52.01
GFED Guaranty Federal SB (MHC) 3.66 7.88 4.38 3.51 0.35 2.24 53.45 48.86
GFSB GFS Bancorp Inc. 3.52 8.16 4.67 3.49 0.21 1.67 45.19 41.89
GLMR Gilmer Financial Svcs, Inc. 2.39 7.78 5.43 2.35 0.34 2.41 89.32 87.80
GOSB GSB Financial Corp. 2.89 5.52 2.72 2.81 0.20 2.31 76.75 75.06
GPT GreenPoint Financial Corp. 3.78 7.44 3.91 3.53 0.35 2.00 42.55 36.86
GSB Golden State Bancorp Inc. 2.74 7.11 4.52 2.59 0.61 1.79 54.13 43.36
GSBC Great Southern Bancorp Inc. 4.25 8.43 4.35 4.07 1.30 2.77 52.53 37.43
GSFC Green Street Financial Corp. 4.39 7.51 3.13 4.37 0.05 1.70 38.49 37.73
GSLA GS Financial Corp. 4.85 7.21 2.53 4.69 0.02 1.98 42.04 41.85
GTFN Great Financial Corp. 3.03 7.42 4.58 2.84 0.88 2.40 63.75 52.53
GTPS Great American Bancorp 4.37 7.47 3.36 4.10 0.51 3.39 73.61 70.33
GUPB GFSB Bancorp Inc. 2.95 7.51 4.59 2.92 0.06 1.74 58.23 57.39
GWBC Gateway Bancorp Inc. 3.39 6.85 3.50 3.35 0.01 2.59 77.02 76.94
HALL Hallmark Capital Corp. 2.55 7.72 5.24 2.48 0.21 1.52 56.69 53.04
HARB Harbor Florida Bancorp (MHC) 3.72 7.79 4.17 3.62 0.40 1.88 47.35 41.47
HARL Harleysville Savings Bank 2.74 7.40 4.72 2.68 0.13 1.26 45.09 42.45
HARS Harris Financial Inc. (MHC) 2.48 7.16 4.76 2.40 0.55 1.69 54.77 44.44
HAVN Haven Bancorp Inc. 3.06 7.17 4.26 2.91 0.71 2.61 71.35 64.38
HBBI Home Building Bancorp 3.53 7.58 4.16 3.43 0.26 2.42 65.74 63.11
HBEI Home Bancorp of Elgin Inc. 4.19 7.13 3.08 4.05 0.30 3.17 72.86 70.88
HBFW Home Bancorp 2.95 7.44 4.56 2.89 0.08 1.41 47.51 46.08
HBNK Highland Federal Bank FSB 4.10 8.75 4.93 3.82 0.30 1.97 43.12 38.63
HBS Haywood Bancshares Inc. 3.18 7.29 4.25 3.04 0.29 0.10 60.82 57.12
HCBB HCB Bancshares Inc. 3.42 7.35 4.06 3.29 0.28 2.62 71.75 69.38
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 4.34 8.64 4.40 4.23 0.10 2.19 50.59 49.39
HEMT HF Bancorp Inc. 2.50 7.17 4.76 2.41 0.24 2.30 71.67 68.86
HFFB Harrodsburg First Fin Bancorp 3.65 7.13 3.54 3.59 0.10 1.53 41.46 39.84
HFFC HF Financial Corp. 3.85 8.22 4.56 3.66 1.58 3.27 60.48 43.41
HFGI Harrington Financial Group 1.32 6.59 5.30 1.28 0.06 1.02 76.04 75.02
HFNC HFNC Financial Corp. 3.26 7.69 4.49 3.19 0.12 1.82 55.05 53.30
HFSA Hardin Bancorp Inc. 2.78 7.49 4.72 2.77 0.22 1.97 65.81 63.10
HHFC Harvest Home Financial Corp. 2.82 7.24 4.47 2.77 0.07 1.63 57.52 56.51
HIFS Hingham Instit. for Savings 4.05 7.83 3.90 3.92 0.27 2.05 48.89 45.41
HMCI HomeCorp Inc. 3.23 7.38 4.44 2.95 0.61 2.69 88.94 86.66
HMLK Hemlock Federal Financial Corp 3.65 7.05 3.44 3.60 0.22 2.22 57.98 55.37
HMNF HMN Financial Inc. 2.77 7.24 4.54 2.70 0.19 1.56 54.04 50.78
HOMF Home Federal Bancorp 3.70 7.96 4.44 3.52 0.89 2.07 46.83 33.34
HPBC Home Port Bancorp Inc. 4.72 8.07 3.55 4.52 0.52 2.27 45.02 38.66
HRBF Harbor Federal Bancorp Inc. 3.07 7.50 4.46 3.04 0.18 1.95 60.53 58.21
HRZB Horizon Financial Corp. 3.56 7.69 4.26 3.43 0.27 1.50 40.66 35.96
HTHR Hawthorne Financial Corp. 3.81 8.81 5.13 3.69 0.61 2.14 55.06 47.63
HWEN Home Financial Bancorp 4.34 8.51 4.30 4.21 0.25 3.25 72.81 71.20
HZFS Horizon Financial Svcs Corp. 3.25 7.53 4.47 3.06 0.61 2.30 61.65 53.98
IBSF IBS Financial Corp. 3.11 7.03 4.00 3.03 0.09 2.02 64.65 63.57
IFSB Independence Federal Svgs Bank 2.46 7.24 4.88 2.36 1.04 3.07 86.55 80.60
INBI Industrial Bancorp Inc. 3.97 8.05 4.16 3.90 0.14 1.85 45.95 44.06
INCB Indiana Community Bank SB 4.22 7.81 3.69 4.11 1.14 3.97 75.62 68.85
IPSW Ipswich Savings Bank 3.45 7.14 3.85 3.29 0.54 2.34 63.29 57.26
ISBF ISB Financial Corp. 3.65 7.28 3.88 3.40 0.75 3.09 70.43 63.87
ITLA ITLA Capital Corp. 4.91 10.02 5.16 4.86 0.10 2.05 40.92 39.67
IWBK InterWest Bancorp Inc. 3.20 7.63 4.61 3.01 0.59 2.30 62.02 54.62
JOAC Joachim Bancorp Inc. 4.25 7.23 3.13 4.10 0.15 3.03 71.24 70.19
JSB JSB Financial Inc. 4.66 6.99 2.63 4.36 0.36 1.78 39.09 34.10
JSBA Jefferson Savings Bancorp 3.06 7.65 4.69 2.96 0.19 1.94 56.77 53.99
JXSB Jacksonville Savings Bk (MHC) 3.69 7.78 4.38 3.40 0.48 2.76 71.08 67.00
JXVL Jacksonville Bancorp Inc. 4.37 8.28 4.02 4.26 0.58 2.02 46.59 39.26
KFBI Klamath First Bancorp 3.44 7.53 4.14 3.39 0.23 2.00 51.04 47.70
KNK Kankakee Bancorp Inc. 3.21 7.25 4.19 3.07 0.46 2.34 64.47 59.10
KSAV KS Bancorp Inc. 3.99 8.26 4.47 3.80 0.15 2.02 50.98 49.03
KSBK KSB Bancorp Inc. 4.50 8.46 4.10 4.37 0.73 3.04 58.24 51.27
KYF Kentucky First Bancorp Inc. 3.42 7.28 3.94 3.34 0.20 1.79 50.45 47.50
LARK Landmark Bancshares Inc. 3.17 7.63 4.52 3.11 0.24 1.59 47.48 43.39
LARL Laurel Capital Group Inc. 3.67 7.46 3.85 3.61 0.35 1.68 42.45 36.87
LFBI Little Falls Bancorp Inc. 2.63 6.71 4.17 2.54 0.05 1.66 58.39 57.55
LFCO Life Financial Corp. 4.50 9.31 5.03 4.28 14.22 6.83 36.70 (173.79)
LFED Leeds Federal Savings Bk (MHC) 2.91 7.06 4.19 2.86 0.10 1.04 35.21 32.93
LIFB Life Bancorp Inc. 2.58 7.29 4.81 2.48 0.20 1.22 44.10 39.54
LISB Long Island Bancorp Inc. 2.77 7.03 4.37 2.66 0.50 1.90 57.74 49.72
LOGN Logansport Financial Corp. 3.90 7.54 3.81 3.73 0.18 1.54 39.30 36.29
LONF London Financial Corporation 3.48 7.52 4.08 3.44 0.23 2.01 54.70 51.67
LSBI LSB Financial Corp. 3.54 7.89 4.56 3.34 0.37 2.40 64.84 60.96
LSBX Lawrence Savings Bank 3.08 7.15 4.16 2.99 0.52 2.11 60.36 53.43
LVSB Lakeview Financial 3.37 6.83 3.60 3.23 0.58 2.32 52.19 43.56
LXMO Lexington B&L Financial Corp. 3.99 7.77 3.85 3.91 0.13 1.69 41.86 39.86
MAFB MAF Bancorp Inc. 2.91 7.21 4.44 2.77 0.45 1.42 49.44 41.24
MARN Marion Capital Holdings 4.19 7.78 3.87 3.90 0.32 2.25 48.39 44.11
MASB MASSBANK Corp. 2.86 6.66 3.85 2.81 0.20 1.37 44.23 40.27
MBB MSB Bancorp Inc. 3.34 6.61 3.53 3.08 0.61 2.56 56.53 47.91
MBBC Monterey Bay Bancorp Inc. 2.78 7.11 4.45 2.66 0.33 2.22 67.42 63.40
MBLF MBLA Financial Corp. 2.13 7.05 4.94 2.11 0.01 0.60 28.49 28.25
MBSP Mitchell Bancorp Inc. 5.16 7.63 2.70 4.92 0.01 2.47 50.12 50.00
MCBN Mid-Coast Bancorp Inc. 3.96 7.97 4.26 3.71 0.40 2.90 70.36 67.14
MCBS Mid Continent Bancshares Inc. 2.70 7.07 4.54 2.52 2.06 2.39 52.04 12.91
MDBK Medford Bancorp Inc. 3.25 6.99 3.87 3.12 0.24 1.75 48.58 44.69
MECH Mechanics Savings Bank 3.82 7.06 3.50 3.56 0.88 2.64 60.42 50.69
MERI Meritrust Federal SB 3.49 7.29 3.95 3.35 0.70 2.20 55.11 45.73
METF Metropolitan Financial Corp. 3.51 8.33 5.01 3.32 0.47 2.45 63.90 58.77
MFBC MFB Corp. 3.29 7.62 4.42 3.21 0.19 2.07 61.05 58.77
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 2.74 7.07 4.39 2.68 0.08 1.90 69.38 68.48
MFFC Milton Federal Financial Corp. 2.89 7.34 4.54 2.80 0.15 1.98 67.94 66.27
MFLR Mayflower Co-operative Bank 3.95 7.47 3.76 3.71 0.35 2.43 59.04 55.16
MFSL Maryland Federal Bancorp 2.69 7.24 4.61 2.64 0.24 1.59 54.73 50.67
MIFC Mid-Iowa Financial Corp. 2.98 7.35 4.43 2.91 0.99 2.17 55.66 40.63
MIVI Mississippi View Holding Co. 3.93 7.49 3.61 3.88 0.31 2.48 59.34 56.12
MLBC ML Bancorp Inc. 3.20 7.22 4.23 2.99 0.50 2.39 66.47 60.81
MONT Montgomery Financial Corp. 3.65 7.84 4.34 3.50 0.03 1.93 55.87 55.47
MRKF Market Financial Corp. 3.88 6.73 2.90 3.83 0.01 1.92 49.82 49.63
MSBF MSB Financial Inc. 4.77 8.38 3.77 4.60 0.46 2.79 56.15 51.72
MSBK Mutual Savings Bank FSB 1.76 6.47 4.76 1.72 0.47 2.13 97.82 97.23
MWBI Midwest Bancshares Inc. 2.85 7.42 4.67 2.75 0.22 1.67 55.83 52.26
MWBX MetroWest Bank 4.08 7.73 3.84 3.89 0.33 2.61 59.94 56.49
MWFD Midwest Federal Financial 3.99 8.09 4.24 3.85 0.87 2.98 62.36 53.90
NASB North American Savings Bank 3.51 8.29 4.85 3.44 0.79 2.08 49.48 37.85
NBN Northeast Bancorp 3.90 8.19 4.41 3.78 0.65 3.06 66.44 60.63
NBSI North Bancshares Inc. 3.06 7.25 4.25 3.00 0.19 2.64 82.61 81.52
NEIB Northeast Indiana Bancorp 3.63 8.08 4.50 3.58 0.33 1.68 42.99 37.74
NHTB New Hampshire Thrift Bncshrs 3.85 7.91 4.31 3.60 0.74 3.10 69.28 63.00
NMSB NewMil Bancorp Inc. 3.97 7.40 3.55 3.85 0.47 2.73 66.66 62.62
NSLB NS&L Bancorp Inc. 3.23 6.62 3.48 3.14 0.24 1.96 58.03 54.76
NSSB Norwich Financial Corp. 4.48 7.62 3.39 4.23 0.52 2.95 59.44 54.44
NSSY NSS Bancorp Inc. 3.14 7.20 4.17 3.03 0.67 2.35 63.32 55.21
NTMG Nutmeg Federal S&LA 4.29 7.25 3.19 4.06 1.20 3.91 71.45 63.00
NWEQ Northwest Equity Corp. 3.78 8.01 4.43 3.58 0.51 2.42 56.49 50.23
NWSB Northwest Savings Bank (MHC) 3.74 7.83 4.24 3.59 0.34 2.18 54.37 50.05
NYB New York Bancorp Inc. 3.67 7.65 4.08 3.58 0.37 1.57 39.84 33.69
OCFC Ocean Financial Corp. 3.09 7.04 4.04 3.01 0.16 1.58 49.88 47.28
OCN Ocwen Financial Corp. 6.17 10.67 5.52 5.15 1.15 3.80 70.25 63.61
OFCP Ottawa Financial Corp. 3.37 7.55 4.41 3.13 0.42 2.17 57.51 51.84
OHSL OHSL Financial Corp. 3.14 7.74 4.67 3.07 0.14 1.92 59.86 58.09
OSFS Ohio State Financial Services 3.63 6.81 3.24 3.57 0.09 2.33 63.66 62.77
OTFC Oregon Trail Financial Corp. 2.82 5.33 2.56 2.77 0.29 1.64 53.59 48.65
PALM Palfed Inc. 4.02 8.24 4.40 3.84 0.65 3.05 62.36 55.98
PBCI Pamrapo Bancorp Inc. 4.74 7.70 3.26 4.43 0.40 2.59 51.13 46.69
PBCT People's Bank (MHC) 3.57 6.81 3.51 3.30 2.44 4.13 70.91 49.39
PBHC Oswego City Savings Bk (MHC) 4.20 7.54 3.65 3.88 0.48 2.94 63.62 59.10
PBKB People's Bancshares Inc. 3.06 7.30 4.33 2.96 0.28 2.72 79.83 77.95
PCBC Perry County Financial Corp. 2.99 6.90 3.96 2.94 0.04 1.08 36.33 35.47
PDB Piedmont Bancorp Inc. 3.95 7.92 4.06 3.86 0.32 2.17 51.89 47.95
PEEK Peekskill Financial Corp. 3.66 6.80 3.18 3.62 0.13 1.81 48.42 46.63
PERM Permanent Bancorp Inc. 2.67 7.18 4.62 2.57 0.43 1.95 64.49 58.50
PERT Perpetual Bank (MHC) 3.84 7.73 4.02 3.72 1.07 3.03 63.44 52.90
PFDC Peoples Bancorp 3.68 7.78 4.12 3.66 0.29 1.42 34.09 28.88
PFED Park Bancorp Inc. 3.60 7.13 3.66 3.46 0.09 2.03 66.22 65.35
PFFB PFF Bancorp Inc. 2.82 7.23 4.50 2.73 0.49 1.99 61.67 54.82
PFFC Peoples Financial Corp. 3.71 7.00 3.38 3.62 0.02 2.26 61.97 61.73
PFNC Progress Financial Corp. 4.65 8.31 3.98 4.33 1.39 4.11 70.83 61.46
PFSB PennFed Financial Services Inc 2.54 7.14 4.69 2.44 0.16 1.28 41.50 37.75
PFSL Pocahontas FS&LA (MHC) 1.97 7.00 5.07 1.92 0.40 1.46 62.68 54.91
PHBK Peoples Heritage Finl Group 4.72 7.77 3.41 4.37 1.00 3.33 59.15 49.80
PHFC Pittsburgh Home Financial Corp 2.89 7.59 4.76 2.84 0.21 1.81 59.29 56.25
PHSB Peoples Home Savings Bk (MHC) 3.67 7.26 3.70 3.56 0.46 2.89 71.80 68.16
PKPS Poughkeepsie Financial Corp. 3.34 7.76 4.56 3.20 0.57 2.76 65.91 59.89
PLSK Pulaski Savings Bank (MHC) 3.20 7.29 4.21 3.08 0.07 1.99 63.24 62.35
PMFI Perpetual Midwest Financial 3.03 7.71 4.82 2.89 0.35 2.22 68.26 64.38
PRBC Prestige Bancorp Inc. 3.19 7.16 4.07 3.09 0.25 2.31 68.95 66.42
PROV Provident Financial Holdings 3.22 7.24 4.10 3.14 0.79 2.81 72.96 66.16
PSBK Progressive Bank Inc. 4.03 7.77 3.94 3.83 0.37 2.37 53.16 48.59
PSFC Peoples-Sidney Financial Corp. 4.01 7.74 3.80 3.94 0.06 1.87 46.65 45.81
PSFI PS Financial Inc. 4.99 7.50 2.63 4.87 0.08 1.38 27.85 26.65
PTRS Potters Financial Corp. 3.42 7.27 3.96 3.31 0.29 2.40 66.57 63.66
PULB Pulaski Bank, Svgs Bank (MHC) 3.77 7.59 3.91 3.68 0.26 2.31 58.54 55.64
PULS Pulse Bancorp 2.62 6.97 4.41 2.57 0.10 0.94 34.98 32.43
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 3.74 8.67 4.95 3.72 0.37 2.12 51.93 47.14
PVSA Parkvale Financial Corporation 3.04 7.29 4.34 2.95 0.23 1.43 44.49 40.17
PWBC PennFirst Bancorp Inc. 2.17 6.97 4.86 2.11 0.15 1.24 51.40 47.90
PWBK Pennwood Bancorp Inc. 4.42 8.02 3.86 4.16 0.26 2.83 65.1 62.95
QCBC Quaker City Bancorp Inc. 2.96 7.57 4.66 2.92 0.32 1.80 52.81 47.66
QCFB QCF Bancorp Inc. 4.14 7.19 3.12 4.06 0.36 1.72 39.00 33.63
QCSB Queens County Bancorp Inc. 4.34 8.21 4.00 4.22 0.09 1.83 42.55 41.31
RARB Raritan Bancorp Inc. 3.50 7.15 3.82 3.32 0.31 1.93 52.13 47.61
REDF RedFed Bancorp Inc. 3.30 7.19 4.05 3.13 0.74 2.55 62.37 53.46
RELI Reliance Bancshares Inc. 4.71 7.14 2.63 4.51 (0.02) 2.11 46.94 47.13
RELY Reliance Bancorp Inc. 3.39 7.25 4.04 3.21 0.18 1.83 47.57 44.62
RIVR River Valley Bancorp 4.10 7.62 3.62 4.00 0.56 3.05 66.58 61.91
ROSE TR Financial Corp. 2.59 7.21 4.68 2.54 0.20 1.27 46.21 41.97
RSLN Roslyn Bancorp Inc. 3.10 7.25 4.20 3.06 0.19 1.38 41.99 38.32
RVSB Riverview Bancorp Inc. 4.51 8.43 4.20 4.24 0.94 3.17 58.41 49.14
SBFL SB of the Finger Lakes (MHC) 3.07 7.17 4.20 2.97 0.19 2.64 81.18 79.95
SBOS Boston Bancorp (The) 2.95 6.88 4.00 2.87 0.15 1.27 42.96 39.99
SCBS Southern Community Bancshares 4.24 7.11 2.90 4.20 0.43 2.76 59.46 55.28
SCCB S. Carolina Community Bancshrs 4.17 7.69 3.60 4.09 0.26 2.61 59.96 57.42
SFED SFS Bancorp Inc. 3.46 7.31 3.94 3.37 0.26 2.45 68.05 65.59
SFFC StateFed Financial Corp. 3.12 7.54 4.61 2.93 0.08 1.41 51.53 50.24
SFIN Statewide Financial Corp. 3.69 7.36 3.78 3.59 0.23 2.44 63.67 61.29
SFSB SuburbFed Financial Corp. 2.87 7.18 4.39 2.79 0.70 2.61 74.61 68.25
SFSL Security First Corp. 4.00 8.32 4.45 3.88 0.28 1.94 46.41 42.54
SGVB SGV Bancorp Inc. 2.54 7.17 4.72 2.45 0.29 2.14 77.41 74.75
SHEN First Shenango Bancorp Inc. 3.25 7.52 4.32 3.19 0.18 1.47 42.69 39.37
SHSB SHS Bancorp Inc. 2.79 7.41 4.67 2.74 0.12 1.78 62.09 60.40
SISB SIS Bancorp Inc. 3.68 7.11 3.62 3.49 0.88 2.87 65.55 56.85
SKAN Skaneateles Bancorp Inc. 4.19 7.79 3.82 3.97 0.73 3.33 69.38 63.71
SKBO First Carnegie Deposit (MHC) 2.72 6.89 4.24 2.65 0.05 1.53 56.80 55.95
SMBC Southern Missouri Bancorp Inc. 3.18 7.11 3.97 3.14 0.35 2.15 60.88 56.50
SMFC Sho-Me Financial Corp. 3.35 8.02 4.73 3.29 0.44 1.57 42.13 34.31
SOBI Sobieski Bancorp Inc. 3.33 7.21 4.01 3.20 0.23 2.37 69.20 67.02
SOPN First Savings Bancorp Inc. 3.92 7.60 3.79 3.81 0.16 1.23 31.01 28.03
SOSA Somerset Savings Bank 4.07 8.17 4.30 3.87 0.22 2.87 61.62 59.48
SPBC St. Paul Bancorp Inc. 3.04 7.08 4.17 2.91 0.90 2.19 58.83 46.13
SRN Southern Banc Co. 2.75 7.07 4.36 2.71 0.08 1.94 67.98 67.04
SSB Scotland Bancorp Inc. 4.91 7.91 3.08 4.83 0.14 2.41 48.62 47.15
SSFC South Street Financial Corp. 2.95 7.30 4.40 2.90 0.07 1.29 43.23 41.83
SSM Stone Street Bancorp Inc. 4.75 8.10 3.43 4.66 0.14 2.33 48.51 46.98
STFR St. Francis Capital Corp. 2.66 7.03 4.58 2.45 0.38 1.78 59.45 53.17
STSA Sterling Financial Corp. 2.68 8.40 5.61 2.79 0.49 2.27 65.54 59.52
SVRN Sovereign Bancorp Inc. 2.59 7.19 4.69 2.50 0.24 1.34 45.73 40.51
SWBI Southwest Bancshares 3.38 7.47 4.30 3.17 0.19 1.72 54.63 51.90
SWCB Sandwich Bancorp Inc. 3.73 7.28 3.72 3.56 0.50 2.36 56.31 50.18
SZB SouthFirst Bancshares Inc. 3.85 7.52 3.94 3.58 1.51 4.13 81.08 73.11
THR Three Rivers Financial Corp. 3.66 7.63 4.08 3.54 0.52 2.72 68.78 64.24
THRD TF Financial Corp. 3.25 6.94 3.80 3.14 0.23 2.28 61.65 58.87
TPNZ Tappan Zee Financial Inc. 3.79 7.48 3.79 3.69 0.12 2.46 64.47 63.33
TRIC Tri-County Bancorp Inc. 3.13 7.39 4.34 3.05 0.17 1.77 55.01 52.53
TSBS Trenton SB (MHC) 3.59 6.94 3.51 3.43 0.33 2.36 57.51 53.37
TSH Teche Holding Co. 3.38 7.62 4.31 3.31 0.77 2.62 65.90 57.96
TWIN Twin City Bancorp 3.98 7.86 4.02 3.84 0.37 2.54 60.58 56.75
UBMT United Financial Corp. 3.78 7.03 3.40 3.63 0.73 1.91 43.84 32.53
UFRM United Federal Savings Bank 4.05 8.38 4.59 3.79 0.99 3.66 76.46 70.33
USAB USABancshares, Inc. 4.54 8.71 4.30 4.41 1.01 3.41 60.81 51.85
VABF Virginia Beach Fed. Financial 3.22 8.03 4.91 3.11 0.44 2.62 72.78 68.98
WAMU Washington Mutual Inc. 2.94 7.37 4.58 2.80 0.86 1.96 51.06 36.03
WAYN Wayne Savings Bancshares (MHC) 3.41 7.67 4.40 3.28 0.26 2.42 68.55 66.07
WBST Webster Financial Corp. 3.17 7.08 4.05 3.02 0.51 1.99 52.11 44.09
WCBI Westco Bancorp 3.63 7.60 4.08 3.52 0.29 1.51 40.40 35.57
WCFB Webster City Federal SB (MHC) 3.57 7.12 3.63 3.49 0.16 1.40 38.48 35.59
WEFC Wells Financial Corp. 3.36 7.59 4.27 3.32 0.55 1.95 50.43 42.27
WEHO Westwood Homestead Fin. Corp. 3.52 7.80 4.33 3.47 0.11 1.92 53.47 52.00
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp 3.70 7.67 4.54 3.13 3.46 6.62 101.28 102.70
WFI Winton Financial Corp. 3.11 8.04 4.99 3.05 0.15 1.99 61.46 59.58
WFSG Wilshire Financial Services 1.94 9.34 7.59 1.75 7.40 5.53 66.72 (74.35)
WFSL Washington Federal Inc. 3.68 8.22 4.64 3.58 0.09 0.70 18.41 16.37
WHGB WHG Bancshares Corp. 3.93 7.25 3.48 3.77 0.12 2.32 59.46 58.16
WOFC Western Ohio Financial Corp. 2.95 7.51 4.63 2.88 0.11 2.09 68.45 67.19
WRNB Warren Bancorp Inc. 4.94 7.93 3.20 4.74 0.24 2.53 50.49 47.99
WSB Washington Savings Bank, FSB 2.58 8.13 5.66 2.47 0.24 1.68 70.03 67.14
WSFS WSFS Financial Corp. 3.49 8.20 4.78 3.42 0.68 2.34 55.91 47.07
WSTR WesterFed Financial Corp. 3.48 7.37 4.15 3.21 0.70 2.67 64.87 57.22
WVFC WVS Financial Corp. 3.61 7.67 4.10 3.57 0.12 1.56 42.16 40.14
WWFC Westwood Financial Corp. 2.83 6.86 4.10 2.76 0.23 2.10 67.31 64.57
WYNE Wayne Bancorp Inc. 3.59 7.63 4.10 3.53 0.23 2.35 64.55 62.25
YFCB Yonkers Financial Corporation 3.85 7.45 3.69 3.76 0.29 2.17 53.32 49.70
YFED York Financial Corp. 3.32 7.60 4.47 3.13 0.44 2.14 57.20 51.23
--------------------------------------------------------------------------------------------
Average 3.46 7.51 4.19 3.32 0.50 2.26 58.59 52.59
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Income Statement as of The Most Recent Quarter
--------------------------------------------------------------------------------------------
Net Interest Interest Net Interest Noninterest Noninterest
Interest Income/ Expense/ Income/ Income/ Expense/ Efficiency Overhead
Margin Avg Assets Avg Assets Avg Assets Avg Assets Avg Assets Ratio Ratio
Ticker Short Name (%) (%) (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 3.18 7.52 4.49 3.02 0.23 1.79 53.06 49.51
FFES First Federal of East Hartford 2.28 6.76 4.54 2.22 0.16 1.39 58.33 55.25
FFIC Flushing Financial Corp. 3.81 7.67 4.04 3.64 0.36 2.22 54.55 50.07
GAF GA Financial Inc. 3.54 7.34 3.90 3.45 0.32 1.95 51.11 46.59
JSB JSB Financial Inc. 4.66 6.99 2.63 4.36 0.36 1.78 39.09 34.10
MASB MASSBANK Corp. 2.86 6.66 3.85 2.81 0.20 1.37 44.23 40.27
MDBK Medford Bancorp Inc. 3.25 6.99 3.87 3.12 0.24 1.75 48.58 44.69
PWBC PennFirst Bancorp Inc. 2.17 6.97 4.86 2.11 0.15 1.24 51.40 47.90
SFIN Statewide Financial Corp. 3.69 7.36 3.78 3.59 0.23 2.44 63.67 61.29
SISB SIS Bancorp Inc. 3.68 7.11 3.62 3.49 0.88 2.87 65.55 56.85
STFR St. Francis Capital Corp. 2.66 7.03 4.58 2.45 0.38 1.78 59.45 53.17
THRD TF Financial Corp. 3.25 6.94 3.80 3.14 0.23 2.28 61.65 58.87
--------------------------------------------------------------------------------------------
Average 3.25 7.11 4.00 3.12 0.31 1.91 54.22 49.88
Median 3.25 7.01 3.89 3.13 0.24 1.79 53.81 49.79
Maximum 4.66 7.67 4.86 4.36 0.88 2.87 65.55 61.29
Minimum 2.17 6.66 2.63 2.11 0.15 1.24 39.09 34.10
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 0.00 (1.29) 0.07 NA NA NA NA NA NA
%CCMD Chevy Chase Bank, FSB 0.13 (14.05) 41.61 NA NA NA NA NA NA
AABC Access Anytime Bancorp Inc. 3.77 13.54 (0.89) 12.83 7.598 8.088 5.822 7.51 7.51
AADV Advantage Bancorp Inc. 7.04 (1.89) 9.06 220.85 57.000 57.000 38.000 30.60 28.47
ABBK Abington Bancorp Inc. 0.29 10.58 6.37 67.52 32.000 33.000 25.500 19.43 17.61
ABCL Alliance Bancorp Inc. (9.42) (8.14) (8.96) 222.59 24.250 24.250 20.000 16.10 15.91
ABCW Anchor BanCorp Wisconsin 6.00 6.09 5.34 318.14 29.125 30.000 24.125 13.82 13.58
AFBC Advance Financial Bancorp 4.41 23.52 3.89 18.71 16.250 16.250 14.875 15.01 15.01
AFCB Affiliated Community Bancorp 13.99 13.60 15.70 206.32 28.000 30.125 23.500 17.28 17.19
AFED AFSALA Bancorp Inc. 18.20 8.16 21.47 26.03 14.625 14.813 12.563 15.92 15.92
AFFFZ America First Financial Fund 10.93 12.83 16.30 303.53 41.500 41.938 39.000 29.41 29.10
AHCI Ambanc Holding Co. 36.56 13.26 5.54 83.98 16.125 16.375 15.125 13.98 13.98
AHM H.F. Ahmanson & Co. (6.17) (0.68) (3.60) 5,959.71 56.813 57.563 44.938 20.17 17.14
ALBC Albion Banc Corp. 12.72 14.47 19.43 7.00 25.750 25.750 22.000 24.25 24.25
ALBK ALBANK Financial Corp. 12.74 15.89 (2.40) 582.72 42.250 45.875 37.125 26.69 23.51
AMFC AMB Financial Corp. 39.11 23.96 50.47 15.42 15.625 15.625 14.000 14.95 14.95
ANA Acadiana Bancshares Inc. 10.51 21.51 (1.04) 63.10 22.250 22.250 19.750 17.21 17.21
ANDB Andover Bancorp Inc. 9.48 22.14 1.46 201.60 36.750 36.750 29.625 20.20 20.20
ANE Alliance Bncorp of New England 6.20 10.73 8.76 27.86 16.750 18.000 13.172 10.95 10.69
ASBI Ameriana Bancorp (4.73) 7.04 (6.28) 65.44 20.250 22.000 16.250 13.63 13.62
ASBP ASB Financial Corp. (0.07) 10.35 (2.22) 22.32 13.375 13.375 11.750 10.30 10.30
ASFC Astoria Financial Corp. 12.52 36.31 1.27 1,175.37 50.313 50.313 45.375 29.51 24.96
ATSB AmTrust Capital Corp. (14.17) (10.99) (38.23) 7.37 13.875 13.875 12.500 14.46 14.32
AVND Avondale Financial Corp. (6.82) 0.33 15.00 59.41 17.500 17.563 13.625 13.18 13.18
BANC BankAtlantic Bancorp Inc. 16.78 6.20 (1.07) 319.38 15.750 16.625 12.500 7.03 5.82
BDJI First Federal Bancorporation 3.27 5.49 3.19 18.83 22.000 22.000 19.750 17.75 17.75
BFD BostonFed Bancorp Inc. (6.24) 3.25 (7.97) 115.12 21.063 22.063 18.000 15.43 14.86
BFFC Big Foot Financial Corp. NA NA NA 47.11 17.375 17.875 16.000 14.97 14.97
BFSB Bedford Bancshares Inc. 11.00 1.93 14.25 33.13 24.500 25.250 23.500 18.04 18.04
BKC American Bank of Connecticut 2.68 (9.25) 2.85 113.35 40.250 40.250 35.750 23.22 22.38
BKCT Bancorp Connecticut Inc. (4.26) 5.08 (0.99) 117.66 17.750 18.000 12.250 8.96 8.96
BKUNA BankUnited Financial Corp. 74.86 75.18 34.51 132.27 13.125 13.313 9.625 7.94 6.25
BNKU Bank United Corp. 18.46 34.84 (0.17) 1,394.16 44.250 44.250 35.875 18.94 18.51
BPLS Bank Plus Corp. 43.72 6.17 14.88 249.61 12.875 13.250 10.750 9.16 9.14
BSBC Branford Savings Bank (7.91) (4.81) (6.11) 39.77 5.500 5.500 4.500 2.69 2.69
BTHL Bethel Bancorp 3.68 (5.87) (7.28) 15.15 13.250 13.250 11.000 13.71 11.51
BVCC Bay View Capital Corp. 8.53 15.82 11.62 439.40 27.375 28.125 24.875 14.81 12.37
BWFC Bank West Financial Corp. 23.59 16.60 8.98 45.90 12.667 12.667 9.000 8.87 8.87
BYFC Broadway Financial Corp. 8.16 23.71 (0.85) 11.01 11.500 11.500 10.500 14.77 14.77
CAFI Camco Financial Corp. 10.09 18.48 3.40 77.14 22.750 22.750 17.381 14.98 13.86
CAPS Capital Savings Bancorp Inc. (0.43) 6.34 (0.10) 45.64 17.500 17.500 15.500 11.70 11.70
CASB Cascade Financial Corp. 63.38 64.71 95.53 43.18 15.125 15.125 12.000 8.36 8.36
CASH First Midwest Financial Inc. 31.76 (3.67) 10.11 57.35 19.875 20.250 16.250 16.11 14.31
CATB Catskill Financial Corp. 7.57 2.59 3.32 83.83 16.875 17.250 15.250 15.41 15.41
CBCI Calumet Bancorp Inc. (6.62) 8.43 (9.66) 103.30 30.833 31.583 24.833 25.01 25.01
CBES CBES Bancorp Inc. 22.00 22.51 33.32 22.55 20.500 20.500 17.125 17.60 17.60
CBK Citizens First Financial Corp. 9.41 6.67 (5.73) 46.51 18.375 18.563 15.375 16.30 16.30
CBSA Coastal Bancorp Inc. (4.66) (11.30) 8.05 149.77 32.250 33.250 29.000 20.13 16.92
CBSB Charter Financial Inc. (1.57) 0.43 (0.83) 98.05 17.750 18.000 16.750 13.71 12.13
CCFH CCF Holding Company 33.89 36.10 42.89 16.40 16.750 17.125 16.500 14.21 14.21
CEBK Central Co-operative Bank 16.26 23.83 19.08 51.83 22.500 22.750 18.250 18.05 16.25
CENB Century Bancorp Inc. 1.18 14.49 0.21 33.81 77.500 80.250 69.750 75.05 75.05
CENF CENFED Financial Corp. 1.60 5.29 8.57 243.43 35.938 36.875 32.500 21.51 21.48
CFB Commercial Federal Corp. 6.23 2.45 (10.96) 1,138.96 47.125 48.188 37.625 20.59 18.43
CFBC Community First Banking Co. (49.78) 15.27 (51.52) 95.34 37.750 37.750 31.875 31.49 31.07
CFCP Coastal Financial Corp. (6.97) 17.50 18.22 104.55 22.875 27.750 22.875 6.97 6.97
CFFC Community Financial Corp. 17.93 15.83 37.49 34.48 21.500 23.250 21.500 18.99 18.99
CFNC Carolina Fincorp Inc. 9.21 11.16 13.04 33.79 17.500 17.875 15.000 13.92 13.92
CFSB CFSB Bancorp Inc. 6.87 6.21 -3.27 179.07 28.875 31 23.25 13.03 13.03
CFTP Community Federal Bancorp 13.24 5.50 3.00 97.20 17.750 18.500 17.250 13.40 13.40
CFX CFX Corp. 207.02 197.28 215.28 684.04 21.438 21.438 18.813 10.25 9.88
CIBI Community Investors Bancorp 8.77 14.08 6.39 14.66 15.250 16.000 12.750 12.09 12.09
CKFB CKF Bancorp Inc. (6.21) (1.00) 4.43 16.71 19.000 20.000 19.000 16.91 16.91
CLAS Classic Bancshares Inc. 5.09 9.41 0.89 21.94 15.750 16.250 13.875 15.13 12.85
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 8.46 4.47 12.67 53.16 19.250 19.250 17.125 17.43 17.43
CMSB Commonwealth Bancorp Inc. (1.90) 16.65 2.53 343.17 18.000 19.500 15.750 13.02 10.15
CMSV Community Savings Bnkshrs(MHC) 5.39 8.63 2.78 178.32 36.250 36.875 22.000 16.22 16.22
CNIT CENIT Bancorp Inc. (4.42) 2.01 (0.89) 112.50 61.750 61.750 48.500 31.01 28.40
CNSB CNS Bancorp Inc. (3.82) 15.74 (1.68) 35.13 17.750 18.500 16.000 14.34 14.34
CNY Carver Bancorp Inc. 1.72 7.24 0.44 38.62 12.625 13.375 11.625 15.08 14.50
COFI Charter One Financial 17.50 33.96 8.39 4,017.38 56.310 57.262 49.524 21.63 19.87
CONE Conestoga Bancorp, Inc. 4.86 (4.86) 5.85 NA 20.625 20.780 20.125 17.58 17.58
COOP Cooperative Bankshares Inc. 8.05 9.32 8.59 54.45 17.000 17.000 10.625 9.27 9.27
CRZY Crazy Woman Creek Bancorp 41.84 14.35 11.84 14.77 15.063 15.125 13.250 14.88 14.88
CSA Coast Savings Financial (2.74) (0.03) 2.06 1,178.43 52.438 52.750 44.438 25.21 24.92
CSBF CSB Financial Group Inc. 7.07 (4.82) 6.29 12.36 12.000 12.500 11.000 12.99 12.27
CTZN CitFed Bancorp Inc. 25.44 41.87 18.96 470.68 33.750 33.833 25.083 15.92 14.47
CVAL Chester Valley Bancorp Inc. (1.67) 8.91 1.99 59.66 23.000 23.000 19.286 12.89 12.89
DCBI Delphos Citizens Bancorp Inc. 2.35 24.22 7.60 34.29 17.250 17.500 14.750 14.65 14.65
DIBK Dime Financial Corp. 21.80 (9.75) 19.41 158.74 31.250 31.750 25.375 14.54 14.12
DIME Dime Community Bancorp Inc. 21.39 26.73 14.25 314.04 20.375 20.375 18.563 14.81 12.76
DME Dime Bancorp Inc. (13.41) 27.77 1.71 2,607.13 21.063 21.750 17.000 10.38 9.88
DNFC D & N Financial Corp. 36.11 44.09 4.91 220.02 21.125 21.500 18.625 11.18 11.07
DSL Downey Financial Corp. (2.15) (7.52) 13.10 775.87 24.375 24.375 21.500 15.61 15.41
EBSI Eagle Bancshares 11.42 22.77 11.05 111.12 19.375 20.938 16.125 12.59 12.59
EFBC Empire Federal Bancorp Inc. 7.27 6.67 14.85 42.77 17.625 17.750 14.375 15.51 15.51
EFBI Enterprise Federal Bancorp 16.08 15.68 1.15 55.60 23.750 25.125 18.000 15.82 15.81
EGFC Eagle Financial Corp. 16.65 (0.06) (9.28) 333.17 40.000 40.250 30.750 22.91 18.23
EGLB Eagle BancGroup Inc. (4.93) 13.00 1.09 23.80 17.625 17.625 15.500 17.03 17.03
EIRE Emerald Isle Bancorp Inc. 17.40 31.60 2.77 71.99 24.750 25.875 19.000 13.78 13.78
EMLD Emerald Financial Corp. 0.27 13.89 0.41 98.90 16.250 16.250 13.375 9.28 9.14
EQSB Equitable Federal Savings Bank 16.48 19.84 9.65 28.60 37.000 38.500 33.250 25.80 25.80
ESBK Elmira Savings Bank (The) 0.77 6.64 0.01 21.72 29.750 29.750 19.500 21.07 20.52
ESX Essex Bancorp Inc. 3.79 14.01 13.59 5.16 4.750 7.938 1.000 0.03 (0.16)
ETFS East Texas Financial Services 11.54 18.42 (3.36) 20.53 20.500 20.500 18.000 20.34 20.34
FAB FirstFed America Bancorp Inc. 5.95 6.07 (10.19) 182.85 21.875 22.125 17.625 15.63 15.63
FBBC First Bell Bancorp Inc. (18.56) (1.96) (2.95) 117.19 17.375 17.375 15.625 11.02 11.02
FBCI Fidelity Bancorp Inc. 6.55 7.48 (14.20) 67.08 25.375 25.375 18.563 18.66 18.62
FBCV 1ST Bancorp (14.13) 9.25 (26.20) 28.01 24.000 27.333 19.333 21.75 21.34
FBER 1st Bergen Bancorp (0.04) 2.65 2.30 54.07 18.375 19.500 15.250 13.57 13.57
FBHC Fort Bend Holding Corp. 0.94 (29.79) 0.75 33.28 20.000 20.125 14.625 11.88 11.09
FBNW FirstBank Corp. 61.57 24.32 (13.11) 36.70 17.000 19.000 15.500 15.99 15.99
FBSI First Bancshares Inc. (2.97) 8.23 8.27 27.61 23.000 25.250 20.000 20.74 20.74
FCB Falmouth Bancorp Inc. 10.55 NA 11.77 30.00 20.875 21.250 16.375 15.68 15.68
FCBF FCB Financial Corp. (2.44) (0.56) (1.36) 107.65 27.000 28.000 25.500 18.72 18.72
FCME First Coastal Corp. (10.01) 8.29 (3.78) 19.71 13.125 13.188 9.250 10.66 10.66
FDEF First Defiance Financial 16.04 3.77 0.63 142.19 15.750 15.938 14.500 12.61 12.61
FED FirstFed Financial Corp. -8.45 4.52 0.28 413.58 34.125 34.875 30.75 20.01 19.81
FESX First Essex Bancorp Inc. (11.47) 4.91 6.43 158.06 20.375 20.500 16.500 11.90 10.41
FFBA First Colorado Bancorp Inc. 0.73 6.75 1.15 438.65 21.500 21.500 17.375 12.00 11.84
FFBH First Federal Bancshares of AR 8.91 8.74 6.20 110.16 21.313 21.625 20.375 16.64 16.64
FFBI First Financial Bancorp Inc. (1.37) 14.75 (3.95) 8.72 19.500 19.500 18.125 18.10 18.10
FFBS FFBS BanCorp Inc. 12.82 10.63 7.48 35.38 21.250 26.000 21.000 15.07 15.07
FFBZ First Federal Bancorp Inc. 4.85 6.62 (7.56) 30.91 18.750 20.250 17.000 9.06 9.05
FFCH First Financial Holdings Inc. 10.98 8.21 0.01 302.49 37.875 39.250 30.000 16.45 16.45
FFDB FirstFed Bancorp Inc. (0.15) (6.25) 3.36 24.49 17.750 18.281 16.531 14.77 13.52
FFDF FFD Financial Corp. 1.00 23.71 1.33 26.91 16.500 16.500 14.125 14.86 14.86
FFED Fidelity Federal Bancorp (7.77) (12.53) (4.66) 28.26 9.000 9.750 8.375 5.15 5.15
FFES First Federal of East Hartford 1.55 15.63 (5.73) 98.74 36.500 36.750 29.000 24.40 24.40
FFFC FFVA Financial Corp. 6.00 (1.87) 4.07 150.98 31.625 33.000 26.250 17.84 17.48
FFFD North Central Bancshares Inc. 4.25 20.02 8.80 60.43 18.000 18.000 15.750 15.13 15.13
FFFL Fidelity Bankshares Inc. (MHC) 18.57 18.27 5.96 194.22 28.500 28.500 19.750 12.65 12.57
FFHH FSF Financial Corp. 10.47 23.12 2.42 59.44 19.625 21.000 17.375 16.24 16.24
FFHS First Franklin Corp. 7.48 (4.65) 7.35 33.97 23.500 23.750 19.750 17.49 17.39
FFIC Flushing Financial Corp. 46.56 84.34 35.89 188.61 24.000 24.000 20.000 17.08 16.40
FFKY First Federal Financial Corp. 5.52 7.52 5.13 92.77 21.875 23.000 20.750 12.60 11.89
FFLC FFLC Bancorp Inc. (3.84) 32.25 7.29 88.20 18.450 19.350 16.350 13.73 13.73
FFOH Fidelity Financial of Ohio 3.02 8.18 (7.12) 83.70 16.000 16.375 14.625 12.34 10.94
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 34.09 8.46 0.65 195.60 34.813 35.000 30.250 22.39 21.87
FFSL First Independence Corp. 5.94 11.18 10.52 14.67 14.750 14.750 11.500 11.78 11.78
FFSX First Fed SB of Siouxland(MHC) (10.00) 5.03 (2.86) 90.30 29.500 30.750 22.000 14.08 13.97
FFWC FFW Corp. 3.14 20.08 (4.06) 29.98 30.500 31.750 26.125 24.64 22.36
FFWD Wood Bancorp Inc. 6.35 14.40 9.73 39.22 17.000 18.000 11.709 9.77 9.77
FFYF FFY Financial Corp. 7.83 2.04 (1.05) 131.66 27.875 28.250 25.500 20.30 20.30
FGHC First Georgia Holding Inc. 25.26 18.60 19.25 25.18 7.750 8.250 7.000 4.21 3.86
FIBC Financial Bancorp Inc. 20.49 0.25 7.67 41.89 22.500 23.938 18.125 15.71 15.64
FISB First Indiana Corporation 6.93 8.27 0.23 308.92 23.750 26.000 20.500 14.12 13.95
FKFS First Keystone Financial 65.63 13.91 (1.45) 45.45 32.250 33.250 23.125 20.15 20.15
FKKYD Frankfort First Bancorp Inc. 3.69 8.44 (4.28) 30.34 20.250 22.250 17.000 13.68 13.68
FLAG FLAG Financial Corp. 29.81 24.63 (6.10) 36.92 16.125 16.500 14.000 10.66 10.66
FLFC First Liberty Financial Corp. 13.10 6.61 32.78 260.90 21.500 22.500 21.000 12.30 11.09
FLGS Flagstar Bancorp Inc. 109.50 108.28 47.45 263.15 20.750 21.500 16.000 8.89 8.54
FLKY First Lancaster Bancshares 40.89 45.61 5.95 14.98 16.000 16.000 15.250 14.62 14.62
FMBD First Mutual Bancorp Inc. (14.66) 2.61 (8.12) 71.89 18.500 18.500 15.000 16.77 12.78
FMCO FMS Financial Corp. 19.27 (1.03) 2.40 78.20 27.250 31.500 23.500 15.80 15.57
FMSB First Mutual Savings Bank 17.67 7.59 27.70 75.75 17.833 18.250 11.500 7.53 7.53
FNGB First Northern Capital Corp. 11.93 13.01 0.38 121.63 13.625 14.000 11.000 8.24 8.24
FOBC Fed One Bancorp 1.12 22.05 (4.03) 61.42 25.500 26.750 20.000 17.45 16.68
FPRY First Financial Bancorp 15.07 16.41 12.26 NA 20.750 21.125 20.250 17.07 17.07
FSBI Fidelity Bancorp Inc. 19.43 15.92 9.31 42.76 22.250 23.250 20.000 16.65 16.65
FSFC First Southeast Financial Corp 1.73 4.33 0.10 66.37 16.063 16.063 13.438 8.2 8.2
FSFF First SecurityFed Financial NA NA NA 104.53 NA NA NA NA NA
FSLA First Savings Bank (MHC) 4.53 15.41 (2.81) 352.79 32.273 32.273 24.773 12.39 11.26
FSNJ Bayonne Bancshares Inc. 4.55 (1.77) (9.63) 109.73 12.500 13.063 9.206 10.58 10.58
FSPG First Home Bancorp Inc. 2.06 12.24 18.86 62.29 22.000 22.375 18.875 13.31 13.11
FSPT FirstSpartan Financial Corp. (110.08) 18.24 (8.78) 169.46 38.750 39.000 35.000 29.17 29.17
FSSB First FS&LA of San Bernardino 12.49 (10.05) 13.89 3.16 9.750 10.500 9.000 13.68 13.18
FSTC First Citizens Corp. (1.96) 5.44 (2.48) 79.57 23.333 23.417 17.500 12.44 9.80
FTF Texarkana First Financial Corp 17.16 9.07 8.78 46.02 23.750 24.875 19.625 15.32 15.32
FTFC First Federal Capital Corp. (3.13) 9.61 22.87 279.53 29.000 29.000 23.000 11.46 10.80
FTNB Fulton Bancorp Inc. 12.55 5.88 1.37 37.82 24.000 26.500 19.750 14.88 14.88
FTSB Fort Thomas Financial Corp. 3.73 9.65 8.41 22.43 13.125 13.125 10.375 10.56 10.56
FWWB First SB of Washington Bancorp 9.10 13.79 12.25 265.13 24.750 24.875 21.625 15.83 14.62
GAF GA Financial Inc. 28.04 33.72 (1.62) 155.96 18.625 19.000 16.500 14.72 14.58
GBCI Glacier Bancorp Inc. 4.48 6.6 20.71 150.00 18.875 19.5 17.75 8.41 8.2
GDVS Greater Delaware Valley (MHC) 7.21 (0.77) 9.97 104.72 25.250 25.250 15.125 8.85 8.85
GDW Golden West Financial 1.36 11.32 3.30 5,321.84 89.750 90.938 71.813 45.36 45.36
GFCO Glenway Financial Corp. 8.58 14.75 5.56 42.21 15.000 15.250 11.500 12.17 12.02
GFED Guaranty Federal SB (MHC) 21.41 24.26 (11.02) 81.25 22.500 24.250 16.750 8.76 8.76
GFSB GFS Bancorp Inc. 10.57 7.90 14.74 16.86 15.000 15.500 13.375 11.01 11.01
GLMR Gilmer Financial Svcs, Inc. 7.45 2.51 20.03 2.70 11.000 12.000 11.000 19.88 19.88
GOSB GSB Financial Corp. 246.95 NA 67.93 37.94 NA NA NA NA NA
GPT GreenPoint Financial Corp. (6.20) 17.05 (5.05) 2,944.29 63.375 66.000 58.688 33.65 18.04
GSB Golden State Bancorp Inc. 5.28 5.71 (0.77) 1,728.11 29.875 31.500 26.750 16.16 14.46
GSBC Great Southern Bancorp Inc. 11.13 14.23 19.41 205.91 19.000 19.500 16.000 7.79 7.79
GSFC Green Street Financial Corp. 7.69 5.34 15.54 79.52 20.750 20.750 17.125 14.64 14.64
GSLA GS Financial Corp. 25.40 17.07 (11.45) 61.03 16.375 16.375 14.875 16.44 16.44
GTFN Great Financial Corp. (20.05) (7.29) 5.44 702.41 42.625 42.875 32.875 21.08 20.23
GTPS Great American Bancorp 7.57 37.38 12.08 32.24 19.250 19.250 16.500 18.44 18.44
GUPB GFSB Bancorp Inc. 68.96 51.28 17.12 16.21 21.250 22.000 18.500 17.60 17.60
GWBC Gateway Bancorp Inc. (7.64) 7.89 (12.59) 21.23 18.000 18.250 17.500 16.15 16.15
HALL Hallmark Capital Corp. 8.44 12.46 (0.44) 42.21 12.875 13 10.5 10.59 10.59
HARB Harbor Florida Bancorp (MHC) 5.12 7.62 2.95 331.98 56.000 58.219 43.250 19.46 18.85
HARL Harleysville Savings Bank 10.19 2.25 1.30 47.36 26.500 27.750 21.750 13.76 13.76
HARS Harris Financial Inc. (MHC) 12.91 6.28 (11.82) 660.82 15.750 16.000 7.083 5.12 4.53
HAVN Haven Bancorp Inc. 11.62 33.69 24.01 191.89 21.375 21.500 17.813 12.54 12.50
HBBI Home Building Bancorp (29.45) 4.92 (41.96) 6.62 22 23 20.5 20.43 20.43
HBEI Home Bancorp of Elgin Inc. (11.41) 15.97 (6.53) 127.69 17.875 19.313 16.750 13.77 13.77
HBFW Home Bancorp 8.63 17.84 12.85 69.43 20.875 20.875 20.125 17.62 17.62
HBNK Highland Federal Bank FSB 9.21 13.94 (23.83) 73.60 31.000 31.000 25.000 17.20 17.20
HBS Haywood Bancshares Inc. 6.33 10.40 5.12 25.94 21.625 21.750 17.375 17.33 16.74
HCBB HCB Bancshares Inc. (0.84) 14.44 (7.28) 36.70 13.750 14.125 12.875 14.43 13.91
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 0.83 26.72 11.21 15.72 15.000 16.250 13.750 15.20 15.20
HEMT HF Bancorp Inc. 26.66 34.21 8.28 109.93 16.500 17.000 13.875 13.26 11.05
HFFB Harrodsburg First Fin Bancorp 2.82 2.03 0.46 36.19 14.875 16.000 14.875 15.68 15.68
HFFC HF Financial Corp. 9.09 (0.24) 15.68 77.85 25.750 27.000 21.250 18.22 18.22
HFGI Harrington Financial Group 66.47 23.95 8.07 40.30 13.000 13.500 11.000 7.74 7.74
HFNC HFNC Financial Corp. (11.67) 17.20 (1.38) 255.74 16.125 17.125 14.875 9.48 9.48
HFSA Hardin Bancorp Inc. 34.61 15.02 8.96 15.25 17.750 18.250 15.000 15.75 15.75
HHFC Harvest Home Financial Corp. 21.63 10.50 (3.41) 13.49 10.875 11.500 10.250 11.31 11.31
HIFS Hingham Instit. for Savings (2.47) 3.07 2.49 36.34 27.375 28.625 21.000 16.10 16.10
HMCI HomeCorp Inc. -5.71 -4.03 -7.25 46.74 17.25 18 14 13.07 13.07
HMLK Hemlock Federal Financial Corp (6.42) 26.52 (1.80) 35.56 15.375 15.625 13.875 15.06 15.06
HMNF HMN Financial Inc. 1.40 9.59 1.42 108.25 24.750 25.750 22.375 20.09 20.09
HOMF Home Federal Bancorp 6.63 6.91 (1.85) 137.91 21.500 22.833 18.833 11.77 11.42
HPBC Home Port Bancorp Inc. 4.56 13.84 35.84 42.13 23.625 23.750 19.250 11.65 11.65
HRBF Harbor Federal Bancorp Inc. 1.54 5.28 2.69 38.31 22.750 22.750 18.750 16.74 16.74
HRZB Horizon Financial Corp. 9.54 11.16 8.86 132.05 16.063 16.500 14.875 11.17 11.17
HTHR Hawthorne Financial Corp. 13.01 21.92 11.61 70.25 18.000 18.000 12.250 14.01 14.01
HWEN Home Financial Bancorp (11.28) 11.59 (4.50) 7.66 16.688 17.250 14.875 15.61 15.61
HZFS Horizon Financial Svcs Corp. 8.44 17.85 (9.41) 9.79 10.000 10.000 9.375 10.27 10.27
IBSF IBS Financial Corp. 0.77 14.24 1.71 191.61 17.063 18.750 15.625 11.69 11.69
IFSB Independence Federal Svgs Bank (10.68) (17.96) 4.06 17.94 14.125 14.75 8.75 14.23 12.67
INBI Industrial Bancorp Inc. 8.68 13.44 7.21 93.11 18.000 18.000 13.625 11.76 11.76
INCB Indiana Community Bank SB 10.19 (2.42) 11.05 18.90 16.000 17.000 15.000 12.38 12.38
IPSW Ipswich Savings Bank 27.73 39.93 31.45 32.76 13.250 14.125 7.875 4.78 4.78
ISBF ISB Financial Corp. 3.78 16.55 3.42 194.95 27.500 27.500 24.000 17.75 15.19
ITLA ITLA Capital Corp. 24.16 31.33 27.50 143.99 20.250 20.250 15.750 12.32 12.27
IWBK InterWest Bancorp Inc. 46.74 4.55 (0.87) 322.01 40.250 43.250 37.000 16.13 15.84
JOAC Joachim Bancorp Inc. 1.55 6.42 0.18 10.84 15.250 15.250 14.250 13.66 13.66
JSB JSB Financial Inc. (0.01) 14.77 (3.47) 482.91 48.938 49.375 41.000 35.91 35.91
JSBA Jefferson Savings Bancorp (10.61) (10.99) (2.39) 212.14 40.375 40.375 28.250 24.57 19.27
JXSB Jacksonville Savings Bk (MHC) 3.66 3.37 3.24 33.39 21.000 22.500 16.625 13.62 13.62
JXVL Jacksonville Bancorp Inc. 14.35 18.34 15.21 46.73 15.063 15.125 13.250 13.55 13.55
KFBI Klamath First Bancorp 138.58 15.06 247.74 222.91 22.125 22.500 18.625 15.64 14.22
KNK Kankakee Bancorp Inc. (2.04) 6.42 (2.48) 49.89 31.500 31.875 29.000 27.25 25.69
KSAV KS Bancorp Inc. 14.38 10.66 12.52 19.92 18.000 19.125 18.000 16.44 16.43
KSBK KSB Bancorp Inc. 10.33 23.46 10.24 22.29 13.250 16.000 12.500 8.90 8.46
KYF Kentucky First Bancorp Inc. (3.45) 3.31 (4.99) 18.82 14.125 14.250 10.625 11.29 11.29
LARK Landmark Bancshares Inc. (0.64) NA 3.69 39.26 25.250 27.250 20.000 18.99 18.99
LARL Laurel Capital Group Inc. (3.79) (2.43) (5.07) 40.15 24.875 24.875 21.000 15.20 15.20
LFBI Little Falls Bancorp Inc. 32.58 52.55 1.57 52.16 18.500 18.500 15.250 14.53 13.40
LFCO Life Financial Corp. 202.39 270.15 68.33 102.21 18.375 19.250 13.625 7.56 7.56
LFED Leeds Federal Savings Bk (MHC) (2.19) 8.68 1.92 117.89 20.167 21.500 12.833 9.19 9.19
LIFB Life Bancorp Inc. (0.51) (2.94) 1.31 350.82 26.375 26.625 23.625 16.17 15.72
LISB Long Island Bancorp Inc. 1.49 3.41 2.62 1,147.09 47.000 47.500 35.188 22.74 22.53
LOGN Logansport Financial Corp. 12.74 10.13 8.88 19.22 15.250 16.000 13.250 12.86 12.86
LONF London Financial Corporation (0.31) (0.07) 4.92 8.11 15.375 15.625 14.750 14.76 14.76
LSBI LSB Financial Corp. 12.67 11.84 14.38 25.43 26.000 26.500 20.250 20.24 20.24
LSBX Lawrence Savings Bank (14.56) (8.44) 2.56 63.73 12.625 12.875 10.938 7.84 7.84
LVSB Lakeview Financial 20.13 33.26 (2.92) 111.04 16.500 16.938 13.625 13.71 11.75
LXMO Lexington B&L Financial Corp. (3.43) 5.15 (2.59) 19.64 16.625 16.625 14.125 14.73 14.73
MAFB MAF Bancorp Inc. 5.92 15.05 (0.96) 517.23 32.375 34.750 27.417 17.22 15.13
MARN Marion Capital Holdings 15.04 10.10 (3.91) 49.33 28.000 28.000 22.000 22.22 22.22
MASB MASSBANK Corp. 12.08 19.91 11.24 166.08 47.5 47.5 35.625 28.25 27.83
MBB MSB Bancorp Inc. (19.61) NA (20.38) 87.10 28.875 28.875 19.875 22.40 11.94
MBBC Monterey Bay Bancorp Inc. (3.05) 14.43 (2.01) 62.17 20.500 20.500 16.000 15.60 14.46
MBLF MBLA Financial Corp. (18.41) 8.79 9.20 34.22 26.250 27.000 23.250 22.35 22.35
MBSP Mitchell Bancorp Inc. 18.54 8.37 33.95 16.06 17.250 17.375 16.375 15.36 15.36
MCBN Mid-Coast Bancorp Inc. 11.61 1.55 19.95 6.70 27.000 27.000 19.500 22.65 22.65
MCBS Mid Continent Bancshares Inc. (3.26) 33.05 (17.29) 85.34 38.250 38.375 29.250 20.20 20.20
MDBK Medford Bancorp Inc. 12.60 10.12 (0.21) 171.43 36.000 36.500 29.250 21.96 20.58
MECH Mechanics Savings Bank 3.48 9.81 (5.24) 148.21 26.250 26.250 18.875 16.33 16.33
MERI Meritrust Federal SB 8.45 3.41 7.97 53.42 47.000 47.000 39.000 24.89 24.89
METF Metropolitan Financial Corp. 21.57 (27.58) 13.39 102.24 19.000 20.000 15.500 9.90 9.03
MFBC MFB Corp. 12.38 30.60 10.43 38.79 23.250 23.500 19.000 20.31 20.31
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. (6.39) 17.50 (10.13) 24.35 17.250 17.250 15.500 14.37 14.37
MFFC Milton Federal Financial Corp. 19.42 23.26 11.97 35.44 15.250 15.250 13.625 12.31 12.31
MFLR Mayflower Co-operative Bank 10.70 (2.85) 3.45 22.04 23.000 24.500 16.750 13.97 13.75
MFSL Maryland Federal Bancorp 6.07 0.85 7.84 171.39 21.500 25.250 19.250 15.42 15.24
MIFC Mid-Iowa Financial Corp. 7.89 2.61 38.27 19.72 9.750 10.000 8.500 7.19 7.18
MIVI Mississippi View Holding Co. (7.05) NA (1.21) 12.95 17.000 17.250 14.625 16.30 16.30
MLBC ML Bancorp Inc. 47.45 59.55 42.82 350.03 27.375 27.375 18.750 14.41 13.44
MONT Montgomery Financial Corp. (5.47) 16.92 6.41 20.56 12.000 12.375 11.000 11.81 11.81
MRKF Market Financial Corp. (3.23) 9.91 (6.85) 20.62 15.000 15.250 13.250 14.89 14.89
MSBF MSB Financial Inc. 12.40 9.64 2.09 24.06 17.250 18.000 11.875 10.33 10.33
MSBK Mutual Savings Bank FSB (11.45) 24.54 (3.43) 55.63 14.625 14.625 9.750 9.73 9.73
MWBI Midwest Bancshares Inc. 9.03 16.77 (3.60) 18.07 13.583 13.583 10.417 10.18 10.18
MWBX MetroWest Bank 13.59 7.64 10.14 129.97 7.688 7.688 5.625 3.13 3.13
MWFD Midwest Federal Financial 8.96 17.68 (0.66) 44.15 23.500 23.500 19.000 11.70 11.31
NASB North American Savings Bank 27.47 19.39 10.55 120.76 47.750 47.750 38.000 25.37 24.52
NBN Northeast Bancorp 5.56 5.21 (0.38) 41.30 19.000 19.875 14.438 14.27 12.61
NBSI North Bancshares Inc. 8.35 (5.51) 8.33 25.09 24.000 24.500 19.250 17.04 17.04
NEIB Northeast Indiana Bancorp 31.79 33.84 42.16 35.25 19.500 20.250 14.750 15.51 15.51
NHTB New Hampshire Thrift Bncshrs 5.15 (3.32) 8.01 44.61 20.750 20.750 15.500 12.04 10.34
NMSB NewMil Bancorp Inc. (7.00) (3.47) 4.26 51.77 14.250 14.250 10.875 8.42 8.42
NSLB NS&L Bancorp Inc. 11.17 15.69 12.96 13.09 17.250 17.250 16.250 16.51 16.51
NSSB Norwich Financial Corp. (6.64) (0.53) (7.40) 171.12 29.000 29.250 20.750 15.05 13.66
NSSY NSS Bancorp Inc. 4.27 (6.46) (4.29) 97.94 36.000 37.000 28.375 22.49 21.83
NTMG Nutmeg Federal S&LA 10.59 10.36 (8.78) 9.44 11.250 11.250 8.500 7.84 7.84
NWEQ Northwest Equity Corp. 0.26 5.83 (3.80) 15.94 16.125 16.750 14.625 14.53 14.53
NWSB Northwest Savings Bank (MHC) 1.79 11.28 11.74 712.99 12.813 13.125 7.813 4.33 4.09
NYB New York Bancorp Inc. (4.81) 2.96 (1.56) 794.12 29.938 32.000 26.344 7.93 7.93
OCFC Ocean Financial Corp. 11.35 15.85 2.05 300.56 35.500 35.750 33.063 27.63 27.63
OCN Ocwen Financial Corp. 24.32 47.30 (41.42) 1,580.70 21.063 22.375 16.063 6.91 6.73
OFCP Ottawa Financial Corp. 2.62 4.54 3.64 155.94 27.125 27.125 20.455 14.15 11.43
OHSL OHSL Financial Corp. 7.94 6.03 15.70 34.26 26.000 26.000 23.250 21.42 21.42
OSFS Ohio State Financial Services 50.14 (2.31) (19.37) 9.59 15.500 15.500 15.500 16.47 16.47
OTFC Oregon Trail Financial Corp. NA NA NA 74.83 NA NA NA NA NA
PALM Palfed Inc. 2.19 6.42 7.95 152.69 24.625 24.625 15.5 10.74 10.74
PBCI Pamrapo Bancorp Inc. 1.05 5.45 (0.93) 71.07 23.750 24.000 19.750 16.89 16.77
PBCT People's Bank (MHC) (7.05) (15.89) 1.65 2,177.61 32.063 32.250 25.750 11.41 11.40
PBHC Oswego City Savings Bk (MHC) 4.41 9.84 (5.90) 54.62 22.125 22.125 12.875 12.02 10.10
PBKB People's Bancshares Inc. 90.00 165.42 15.66 68.94 20.000 20.000 15.250 8.96 8.59
PCBC Perry County Financial Corp. 6.98 29.54 (9.68) 19.25 20.000 20.000 18.750 18.81 18.81
PDB Piedmont Bancorp Inc. 12.33 16.42 0.15 30.26 10.875 11.125 10.000 7.56 7.56
PEEK Peekskill Financial Corp. (2.89) 9.12 (1.68) 55.88 16.750 17.250 15.250 14.81 14.81
PERM Permanent Bancorp Inc. 0.30 2.45 (6.79) 55.21 24.000 26.500 22.750 20.25 19.98
PERT Perpetual Bank (MHC) 17.16 23.38 17.24 79.93 29.500 29.750 24.125 20.14 20.14
PFDC Peoples Bancorp 4.22 11.01 3.38 84.80 19.500 20.667 14.833 13.06 13.06
PFED Park Bancorp Inc. (2.40) 4.97 3.30 43.77 17.750 17.750 15.875 16.61 16.61
PFFB PFF Bancorp Inc. (2.42) (0.55) (2.29) 345.77 19.375 20.000 18.063 14.69 14.54
PFFC Peoples Financial Corp. (14.28) 33.49 (17.68) 20.34 15.625 15.625 15.000 15.78 15.78
PFNC Progress Financial Corp. 17.28 13.08 30.99 61.67 14.688 15.125 9.762 5.85 5.22
PFSB PennFed Financial Services Inc 12.77 15.82 24.76 167.58 31.500 31.500 27.125 22.43 18.99
PFSL Pocahontas FS&LA (MHC) 4.98 17.59 6.50 56.93 33.000 35.000 20.750 14.85 14.85
PHBK Peoples Heritage Finl Group 33.26 18.55 5.18 1,204.89 42.313 43.125 36.250 16.42 14.02
PHFC Pittsburgh Home Financial Corp 26.60 22.48 (0.11) 36.43 19.125 19.500 15.000 14.63 14.48
PHSB Peoples Home Savings Bk (MHC) (15.52) 3.22 (15.61) 52.44 17.000 17.250 13.625 10.22 10.22
PKPS Poughkeepsie Financial Corp. 1.72 1.47 7.90 132.25 9.250 9.375 7.250 5.91 5.91
PLSK Pulaski Savings Bank (MHC) 3.70 0.90 3.40 41.14 18.250 18.250 13.250 10.36 10.36
PMFI Perpetual Midwest Financial 4.47 24.95 6.52 53.38 22.250 23.000 18.750 18.24 18.24
PRBC Prestige Bancorp Inc. 6.23 10.50 5.26 17.61 18.875 18.875 15.625 16.88 16.88
PROV Provident Financial Holdings 16.33 24.50 11.23 103.98 19.750 20.125 16.750 17.66 17.66
PSBK Progressive Bank Inc. 2.64 (9.00) 1.39 135.92 34.250 38.000 27.500 20.18 18.18
PSFC Peoples-Sidney Financial Corp. (1.19) 11.18 (3.35) 30.80 16.500 17.000 13.625 15.72 15.72
PSFI PS Financial Inc. 14.69 (10.61) (6.76) 37.85 17.125 18.000 14.000 14.76 14.76
PTRS Potters Financial Corp. 5.04 18.46 5.79 17.36 14.125 14.125 10.500 11.21 11.21
PULB Pulaski Bank, Svgs Bank (MHC) 5.41 13.00 1.08 62.82 18.375 19.625 17.375 11.23 11.23
PULS Pulse Bancorp 4.47 24.93 (1.92) 80.09 24.000 25.250 20.000 14.03 14.03
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 10.93 15.71 36.78 52.13 20.250 21.750 16.705 10.63 10.63
PVSA Parkvale Financial Corporation 5.73 13.97 6.43 149.35 26.100 26.500 21.400 15.20 15.10
PWBC PennFirst Bancorp Inc. 2.64 6.65 3.13 97.58 17.625 19.500 14.318 12.96 11.52
PWBK Pennwood Bancorp Inc. -18.7 24.94 8.04 10.89 17.75 17.75 14.75 15.34 15.34
QCBC Quaker City Bancorp Inc. 22.77 9.09 6.86 105.14 22.750 22.750 17.563 15.33 15.33
QCFB QCF Bancorp Inc. 3.74 15.73 3.35 39.44 25 26.25 21.25 18.83 18.83
QCSB Queens County Bancorp Inc. 20.22 23.98 7.91 547.68 34.542 36.167 29.792 13.26 13.26
RARB Raritan Bancorp Inc. 29.34 12.59 2.50 66.42 25.000 25.500 19.500 12.64 12.45
REDF RedFed Bancorp Inc. 24.15 29.78 15.53 143.13 17.375 18.000 15.750 11.21 11.17
RELI Reliance Bancshares Inc. (0.19) (8.09) 2.41 22.56 8.500 9.000 8.000 9.18 9.18
RELY Reliance Bancorp Inc. 11.73 (0.53) 4.86 301.67 33.000 33.000 27.688 19.29 14.17
RIVR River Valley Bancorp (5.64) (1.09) (1.19) 22.17 17 17.25 15.5 14.8 14.59
ROSE TR Financial Corp. 15.74 19.80 (12.66) 598.13 31.875 31.875 23.000 13.94 13.94
RSLN Roslyn Bancorp Inc. 39.86 135.39 23.66 1,020.14 22.250 24.313 21.438 14.04 13.97
RVSB Riverview Bancorp Inc. 91.61 7.67 47.16 94.60 12.816 12.816 8.281 9.56 9.21
SBFL SB of the Finger Lakes (MHC) 18.98 26.70 21.31 53.55 24.000 25.500 17.250 11.92 11.92
SBOS Boston Bancorp (The) (36.27) (23.33) 3.59 NA 41.750 42.250 36.250 40.29 40.29
SCBS Southern Community Bancshares 1.51 17.18 4.60 21.61 14.625 14.625 13.500 13.19 13.19
SCCB S. Carolina Community Bancshrs (8.40) (0.10) (11.03) 16.07 23.375 25.250 18.500 17.35 17.35
SFED SFS Bancorp Inc. 2.88 14.87 5.01 28.93 22.250 23.000 16.875 17.64 17.64
SFFC StateFed Financial Corp. 8.70 (1.62) 15.79 21.80 12.875 13.375 9.500 9.86 9.86
SFIN Statewide Financial Corp. 17.76 1.49 (5.36) 105.40 21.500 21.625 18.000 14.34 14.32
SFSB SuburbFed Financial Corp. 5.49 21.59 (3.95) 43.80 31.750 32.000 25.750 22.73 22.65
SFSL Security First Corp. 16.90 13.30 12.89 161.00 19.000 19.250 14.667 8.31 8.18
SGVB SGV Bancorp Inc. (0.36) 34.54 6.40 42.17 17.875 17.875 13.750 12.98 12.78
SHEN First Shenango Bancorp Inc. (9.70) 0.86 7.83 68.79 31.500 31.750 25.500 22.55 22.55
SHSB SHS Bancorp Inc. 26.41 5.49 (2.01) 13.22 NA NA NA NA NA
SISB SIS Bancorp Inc. 5.15 15.81 2.45 211.37 34.750 34.750 27.625 18.94 18.94
SKAN Skaneateles Bancorp Inc. (0.09) 3.19 (0.40) 27.26 19.000 19.167 13.833 12.10 11.75
SKBO First Carnegie Deposit (MHC) (0.05) (0.17) (4.66) 43.99 19.125 19.250 13.250 10.61 10.61
SMBC Southern Missouri Bancorp Inc. 7.24 15.46 (4.75) 31.44 17.625 18.000 17.000 16.36 16.36
SMFC Sho-Me Financial Corp. 19.52 16.90 2.54 76.08 42.500 43.125 36.750 22.63 22.63
SOBI Sobieski Bancorp Inc. 12.46 22.17 (6.21) 15.20 17.000 17.750 14.750 17.26 17.26
SOPN First Savings Bancorp Inc. 1.49 8.40 4.15 89.19 23.875 23.875 20.000 18.43 18.43
SOSA Somerset Savings Bank 4.54 2.98 5.13 80.14 5.250 5.250 2.563 2.06 2.06
SPBC St. Paul Bancorp Inc. (5.46) (8.09) (0.86) 867.00 25.000 25.000 22.000 11.98 11.95
SRN Southern Banc Co. 2.77 20.85 1.58 21.84 16.125 16.375 15.250 14.74 14.61
SSB Scotland Bancorp Inc. (29.25) (12.07) 6.48 19.61 12.500 19.250 12.500 7.61 7.61
SSFC South Street Financial Corp. (2.02) 5.43 (1.92) 86.00 19.500 19.500 16.375 14.84 14.84
SSM Stone Street Bancorp Inc. (5.06) 16.60 (0.32) 42.71 21.250 22.000 20.750 16.32 16.32
STFR St. Francis Capital Corp. 3.67 13.10 12.34 209.52 37.375 38.000 33.875 24.54 21.71
STSA Sterling Financial Corp. 43.67 20.05 14.78 161.75 19.063 20.375 17.625 12.98 11.88
SVRN Sovereign Bancorp Inc. 33.73 92.44 12.63 1,735.34 17.500 17.500 14.688 7.33 5.99
SWBI Southwest Bancshares (3.51) 0.17 (4.30) 65.80 20.750 21.750 20.188 16.01 16.01
SWCB Sandwich Bancorp Inc. 7.87 17.80 11.48 86.36 37.000 39.000 30.250 21.16 20.34
SZB SouthFirst Bancshares Inc. 18.83 27.83 (7.99) 17.16 16.000 16.000 13.875 16.06 16.06
THR Three Rivers Financial Corp. (3.84) 11.18 3.54 16.68 16.625 16.813 15.625 15.75 15.69
THRD TF Financial Corp. (9.62) (70.73) (14.98) 90.84 25.375 25.438 19.125 19.21 16.96
TPNZ Tappan Zee Financial Inc. 1.46 8.65 1.89 29.39 18.625 18.625 16.5 14.36 14.36
TRIC Tri-County Bancorp Inc. (5.74) 22.43 4.05 16.05 23.125 24.250 21.250 23.13 23.13
TSBS Trenton SB (MHC) 5.03 14.88 4.49 346.00 33.125 33.125 19.375 11.97 10.77
TSH Teche Holding Co. (2.12) 5.94 2.52 70.90 20.625 20.625 17.500 15.81 15.81
TWIN Twin City Bancorp (1.54) (4.84) (3.38) 18.29 13.500 13.875 12.833 10.87 10.87
UBMT United Financial Corp. (9.54) (2.03) (10.52) 31.81 23.750 24.250 22.000 20.24 20.24
UFRM United Federal Savings Bank 14.83 42.04 14.83 36.12 12.500 12.500 11.500 6.82 6.82
USAB USABancshares, Inc. 132.22 250.03 79.14 7.23 8.500 9.750 7.406 6.73 6.63
VABF Virginia Beach Fed. Financial (7.98) (7.04) 0.85 83.71 16.250 16.750 13.250 8.70 8.70
WAMU Washington Mutual Inc. 13.28 20.27 (3.64) 18,323.79 69.750 70.250 58.875 20.28 18.79
WAYN Wayne Savings Bancshares (MHC) (6.28) (1.88) (3.90) 69.91 24.750 24.750 17.000 10.58 10.58
WBST Webster Financial Corp. 58.36 26.26 25.79 869.16 58.750 59.063 44.000 26.83 23.10
WCBI Westco Bancorp (3.26) 5.98 (2.15) 65.56 27.000 27.000 25.500 19.42 19.42
WCFB Webster City Federal SB (MHC) (0.92) (1.53) (2.43) 44.63 19.000 19.000 15.625 10.52 10.52
WEFC Wells Financial Corp. 5.40 7.01 2.21 34.29 16.500 17.000 15.000 14.86 14.86
WEHO Westwood Homestead Fin. Corp. 24.43 34.60 16.99 49.39 18.000 18.000 14.125 14.20 14.20
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp 8.61 13.16 (11.86) 436.50 22.875 22.875 17.938 13.00 12.97
WFI Winton Financial Corp. 9.00 9.96 10.55 38.98 17.375 17.500 12.500 11.72 11.49
WFSG Wilshire Financial Services 58.08 10.59 (33.74) 211.96 26.125 26.125 16.250 9.55 9.55
WFSL Washington Federal Inc. (2.83) 2.01 4.95 1,549.97 29.625 29.750 25.563 15.11 13.87
WHGB WHG Bancshares Corp. 7.22 4.57 12.00 23.76 15.250 15.250 13.750 14.16 14.16
WOFC Western Ohio Financial Corp. 0.94 (2.41) 3.66 63.02 27.125 27.125 21.250 23.40 21.84
WRNB Warren Bancorp Inc. 6.83 13.02 2.22 77.97 19.500 19.625 17.250 10.20 10.20
WSB Washington Savings Bank, FSB 14.77 (25.56) 14.79 30.98 6.250 7.000 4.875 5.16 5.16
WSFS WSFS Financial Corp. (3.43) 9.78 (9.36) 250.40 18.375 18.750 13.500 6.66 6.61
WSTR WesterFed Financial Corp. 18.23 16.04 (0.15) 134.20 26.000 26.375 20.125 19.03 15.35
WVFC WVS Financial Corp. (16.91) 5.74 (12.69) 54.63 29.125 29.25 25.75 19.38 19.38
WWFC Westwood Financial Corp. (3.48) (10.49) (4.30) 17.83 27.625 27.625 18.250 15.95 14.27
WYNE Wayne Bancorp Inc. 9.59 14.27 12.40 43.80 24.500 24.875 19.000 16.49 16.49
YFCB Yonkers Financial Corporation 34.53 134.68 7.40 56.26 19.875 20.000 15.250 14.53 14.53
YFED York Financial Corp. (2.29) (0.52) (2.27) 222.36 20.600 21.400 15.600 11.62 11.62
---------------------------------------------------------------------------------------------
Average 10.37 14.20 6.05 246.35 23.08 23.68 19.13 15.34 14.84
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Growth as of
The Most Recent Quarter Market Data as of The Most Recent Quarter
-------------------------- ----------------------------------------------------------------
Asset Loan Deposit MRQ MRQ MRQ MRQ MRQ Publicly MRQ Tangible
Growth Growth Growth Market Price Price Price Reported Publicly Rep
Rate Rate Rate Value Per Share High Low Book Value Book Value
Ticker Short Name (%) (%) (%) ($) ($) ($) ($) ($) ($)
- -------------------------------------- -------------------------- ----------------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. (11.47) 4.91 6.43 158.06 20.375 20.500 16.500 11.90 10.41
FFES First Federal of East Hartford 1.55 15.63 (5.73) 98.74 36.500 36.750 29.000 24.40 24.40
FFIC Flushing Financial Corp. 46.56 84.34 35.89 188.61 24.000 24.000 20.000 17.08 16.40
GAF GA Financial Inc. 28.04 33.72 (1.62) 155.96 18.625 19.000 16.500 14.72 14.58
JSB JSB Financial Inc. (0.01) 14.77 (3.47) 482.91 48.938 49.375 41.000 35.91 35.91
MASB MASSBANK Corp. 12.08 19.91 11.24 166.08 47.500 47.500 35.625 28.25 27.83
MDBK Medford Bancorp Inc. 12.60 10.12 (0.21) 171.43 36.000 36.500 29.250 21.96 20.58
PWBC PennFirst Bancorp Inc. 2.64 6.65 3.13 97.58 17.625 19.500 14.318 12.96 11.52
SFIN Statewide Financial Corp. 17.76 1.49 (5.36) 105.40 21.500 21.625 18.000 14.34 14.32
SISB SIS Bancorp Inc. 5.15 15.81 2.45 211.37 34.750 34.750 27.625 18.94 18.94
STFR St. Francis Capital Corp. 3.67 13.10 12.34 209.52 37.375 38.000 33.875 24.54 21.71
THRD TF Financial Corp. (9.62) (70.73) (14.98) 90.84 25.375 25.438 19.125 19.21 16.96
---------------------------------------------------------------------------------------------
Average 9.08 12.48 3.34 178.04 30.71 31.08 25.07 20.35 19.46
Median 4.41 13.94 1.12 162.07 30.06 30.09 23.81 19.08 17.95
Maximum 46.56 84.34 35.89 482.91 48.94 49.38 41.00 35.91 35.91
Minimum (11.47) (70.73) (14.98) 90.84 17.63 19.00 14.32 11.90 10.41
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA NA NA NA NA NA NA
%CCMD Chevy Chase Bank, FSB NA NA NA NA NA NA NA NA
AABC Access Anytime Bancorp Inc. 0.000 0.00 9.6 12.38 2.49 8.6 143.14 143.14
AADV Advantage Bancorp Inc. 0.586 12.30 24.55 21.29 20.07 22.09 223.04 239.73
ABBK Abington Bancorp Inc. 1.081 18.96 19.58 13.57 16.23 17.54 190.43 210.11
ABCL Alliance Bancorp Inc. 1.586 24.57 21.51 16.23 17.79 23.92 172.36 174.42
ABCW Anchor BanCorp Wisconsin 0.914 13.89 18.92 16.21 17.16 17.68 253.26 257.73
AFBC Advance Financial Bancorp 1.855 NA NA 17.70 21.56 NA 114.92 114.92
AFCB Affiliated Community Bancorp 1.890 27.59 18.25 18.26 18.46 18.25 183.74 184.70
AFED AFSALA Bancorp Inc. 1.280 NA NA 17.14 20.38 NA 117.78 117.78
AFFFZ America First Financial Fund 3.168 26.27 8.24 13.49 16.40 8.29 171.71 173.54
AHCI Ambanc Holding Co. 1.026 NM NM 15.87 25.66 NM 139.48 139.48
AHM H.F. Ahmanson & Co. 1.394 25.43 21.25 12.73 18.79 18.24 312.96 368.29
ALBC Albion Banc Corp. 1.143 35.34 21.37 9.89 18.92 21.05 115.46 115.46
ALBK ALBANK Financial Corp. 1.591 23.68 17.08 15.67 16.88 17.01 169.54 192.47
AMFC AMB Financial Corp. 1.750 24.00 22.86 14.92 12.50 16.00 107.02 107.02
ANA Acadiana Bancshares Inc. 1.516 33.64 22.84 23.38 20.47 22.2 138.00 138.00
ANDB Andover Bancorp Inc. 1.942 25.7 16.1 15.73 15.53 15.71 193.69 193.69
ANE Alliance Bncorp of New England 1.168 12.83 15.86 11.52 13.81 14.89 156.39 160.20
ASBI Ameriana Bancorp 3.160 54.46 19.85 16.65 16.33 18.08 148.57 148.68
ASBP ASB Financial Corp. 2.991 794.12 20.90 20.22 20.90 19.67 129.85 129.85
ASFC Astoria Financial Corp. 1.055 17.99 20.83 14.87 17.55 19.68 192.73 227.86
ATSB AmTrust Capital Corp. 1.429 26.79 41.18 10.58 29.17 25.00 96.82 97.77
AVND Avondale Financial Corp. 0.000 0.00 NM 9.95 NM NM 128.98 128.98
BANC BankAtlantic Bancorp Inc. 0.910 866.11 28.43 11.35 15.76 15.26 206.26 249.14
BDJI First Federal Bancorporation 0.000 0.00 23.73 16.89 20.59 23.14 157.75 157.75
BFD BostonFed Bancorp Inc. 1.374 21.24 19.78 11.98 16.98 18.03 132.05 137.11
BFFC Big Foot Financial Corp. 0.000 NA NA 21.90 46.88 NA 125.25 125.25
BFSB Bedford Bancshares Inc. 1.931 36.05 19.86 23.80 19.08 19.73 160.75 160.75
BKC American Bank of Connecticut 2.939 48.90 18.22 18.59 14.58 15.36 211.02 218.95
BKCT Bancorp Connecticut Inc. 2.162 42.07 24.60 27.75 21.41 22.24 258.09 258.09
BKUNA BankUnited Financial Corp. 0.000 0.00 28.91 6.17 23.13 25.69 174.75 222.00
BNKU Bank United Corp. 1.450 23.14 23.47 11.65 17.51 18.23 232.97 238.38
BPLS Bank Plus Corp. 0.000 0.00 22.64 6.37 17.93 18.98 140.90 141.20
BSBC Branford Savings Bank 1.319 27.59 20.91 21.75 25.26 20.91 225.39 225.39
BTHL Bethel Bancorp 2.560 20.83 16.89 6.89 16.45 13.02 91.17 108.60
BVCC Bay View Capital Corp. 0.905 24.24 24.40 13.90 38.45 26.80 238.86 285.97
BWFC Bank West Financial Corp. 1.218 30.13 50.00 27.92 19.02 28.23 197.29 197.29
BYFC Broadway Financial Corp. 1.509 51.28 30.81 8.83 30.11 33.97 89.71 89.71
CAFI Camco Financial Corp. 2.250 28.16 16.33 15.36 11.32 13.87 160.21 173.16
CAPS Capital Savings Bancorp Inc. 0.995 20.17 20.80 18.84 19.46 20.27 206.20 206.20
CASB Cascade Financial Corp. 0.000 0.00 18.21 10.13 18.75 17.96 152.51 152.51
CASH First Midwest Financial Inc. 2.259 28.35 17.56 14.18 16.10 16.73 131.91 148.50
CATB Catskill Financial Corp. 1.778 25.61 22.50 28.94 20.45 21.95 116.81 116.81
CBCI Calumet Bancorp Inc. 0.000 0.00 16.48 21.15 16.65 16.15 130.45 130.45
CBES CBES Bancorp Inc. 1.818 23.44 18.97 21.15 17.19 17.19 125.00 125.00
CBK Citizens First Financial Corp. 0.000 0.00 34.62 16.73 34.62 31.03 110.43 110.43
CBSA Coastal Bancorp Inc. 1.600 18.72 13.27 5.11 14.42 12.77 149.03 177.30
CBSB Charter Financial Inc. 1.354 26.92 22.29 24.93 13.13 22.72 172.32 194.77
CCFH CCF Holding Company 2.750 516.67 NM 15.00 NM 133.33 140.75 140.75
CEBK Central Co-operative Bank 1.213 21.33 18.71 14.46 17.35 17.58 146.12 162.31
CENB Century Bancorp Inc. 2.410 NA NA 33.49 19.76 NA 110.59 110.59
CENF CENFED Financial Corp. 0.886 13.86 18.64 10.50 14.11 16.79 188.87 189.13
CFB Commercial Federal Corp. 0.626 9.40 17.64 15.80 16.91 17.70 256.19 286.22
CFBC Community First Banking Co. 1.519 NA NA 24.16 NA NA 125.44 127.13
CFCP Coastal Financial Corp. 1.600 28.99 21.84 21.16 17.05 18.91 322.81 322.81
CFFC Community Financial Corp. 2.074 36.67 18.00 18.79 25.96 18.00 142.18 142.18
CFNC Carolina Fincorp Inc. 1.315 NA NA 29.62 22.81 NA 131.11 131.11
CFSB CFSB Bancorp Inc. 1.929 30.24 20.14 20.85 16.63 18.85 270.53 270.53
CFTP Community Federal Bancorp 1.429 400.00 30.00 45.02 37.50 30.00 156.72 156.72
CFX CFX Corp. 3.088 81.48 21.92 24.22 NM 26.39 278.05 288.46
CIBI Community Investors Bancorp 1.969 26.68 15.48 15.79 14.51 15.48 134.41 134.41
CKFB CKF Bancorp Inc. 2.703 117.60 19.68 27.91 17.79 14.80 109.40 109.40
CLAS Classic Bancshares Inc. 1.659 24.14 24.82 16.59 19.18 19.40 111.53 131.32
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 1.349 28.87 21.39 25.02 19.95 21.39 119.05 119.05
CMSB Commonwealth Bancorp Inc. 1.325 26.73 27.08 15.06 21.13 20.92 162.25 208.13
CMSV Community Savings Bnkshrs(MHC) 2.571 81.02 35.35 25.14 28.23 32.41 215.78 215.78
CNIT CENIT Bancorp Inc. 1.471 30.30 21.12 16.03 16.67 20.61 219.28 239.44
CNSB CNS Bancorp Inc. 1.129 41.18 40.87 36.06 40.87 41.67 148.19 148.19
CNY Carver Bancorp Inc. 0.000 NM 50.57 9.29 27.81 NM 110.66 115.09
COFI Charter One Financial 1.587 25.32 17.85 20.55 16.58 17.45 291.26 317.06
CONE Conestoga Bancorp, Inc. NA 28.17 NA NA NA NA NA NA
COOP Cooperative Bankshares Inc. 0.000 0 26.45 15.14 28.52 26.45 196.87 196.87
CRZY Crazy Woman Creek Bancorp 2.586 54.79 20.9 24.64 18.42 21.19 103.96 103.96
CSA Coast Savings Financial 0.000 0.00 21.08 13.04 15.35 22.51 250.89 253.81
CSBF CSB Financial Group Inc. 0.000 0.00 48.61 25.31 54.69 77.21 101.04 106.97
CTZN CitFed Bancorp Inc. 0.662 11.51 18.98 14.29 17.43 18.98 227.7 250.52
CVAL Chester Valley Bancorp Inc. 1.615 27.74 21.12 18.51 17.47 20.04 211.40 211.40
DCBI Delphos Citizens Bancorp Inc. 0.000 NA NA 31.81 18.23 NA 119.45 119.45
DIBK Dime Financial Corp. 1.431 12.54 10.68 17.22 9.49 10.42 211.49 217.78
DIME Dime Community Bancorp Inc. 0.965 4.21 24.63 22.67 27.04 23.25 167.96 194.95
DME Dime Bancorp Inc. 0.623 6.45 21.06 13.43 16.90 20.72 247.48 260.00
DNFC D & N Financial Corp. 0.749 3.09 17.79 12.54 15.52 16.47 238.71 241.08
DSL Downey Financial Corp. 1.103 21.11 20.57 13.25 18.59 19.59 185.78 188.19
EBSI Eagle Bancshares 3.077 69.77 18.4 12.66 16.81 22.67 154.88 154.88
EFBC Empire Federal Bancorp Inc. 1.818 NA NA 38.70 24.26 NA 106.38 106.38
EFBI Enterprise Federal Bancorp 3.571 142.28 27.18 20.23 25.00 22.76 176.99 177.10
EGFC Eagle Financial Corp. 1.896 87.04 36.38 15.89 20.29 48.84 230.25 289.36
EGLB Eagle BancGroup Inc. 0.000 0.00 58.82 13.92 55.56 44.44 117.44 117.44
EIRE Emerald Isle Bancorp Inc. 0.875 17.83 19.28 16.23 20.00 20.38 232.22 232.22
EMLD Emerald Financial Corp. 1.231 20.17 17.57 16.39 16.25 16.39 210.13 213.35
EQSB Equitable Federal Savings Bank 0.000 0 14.39 9.28 14.31 23.06 184.11 184.11
ESBK Elmira Savings Bank (The) 2.081 47.06 27.95 9.52 16.02 22.61 145.94 149.85
ESX Essex Bancorp Inc. 0.000 0.00 NM 2.69 NM NM NM NM
ETFS East Texas Financial Services 1.000 25.64 27.4 17.70 23.81 25.64 98.33 98.33
FAB FirstFed America Bancorp Inc. 0.000 NA NA 17.65 23.86 NA 134.36 134.36
FBBC First Bell Bancorp Inc. 2.222 293.10 15.93 17.20 15.00 15.52 163.34 163.34
FBCI Fidelity Bancorp Inc. 1.333 21.74 17.39 13.47 15.79 17.39 128.62 128.89
FBCV 1ST Bancorp 1.037 14.56 29.35 10.74 15.70 14.92 124.14 126.52
FBER 1st Bergen Bancorp 1.060 19.18 25.86 18.99 26.22 25.86 139.09 139.09
FBHC Fort Bend Holding Corp. 2.000 16.32 27.40 10.37 20.83 21.05 168.35 180.34
FBNW FirstBank Corp. 1.514 NA NA 20.63 NA NA 115.70 115.70
FBSI First Bancshares Inc. 0.792 11.76 16.40 16.95 12.88 14.85 121.75 121.75
FCB Falmouth Bancorp Inc. 0.970 36.36 41.25 31.13 28.65 37.50 131.54 131.54
FCBF FCB Financial Corp. 2.883 59.20 21.68 20.58 15.77 22.20 148.24 148.24
FCME First Coastal Corp. 0.000 0 3.35 13.27 15.10 3.22 136.02 136.02
FDEF First Defiance Financial 2.016 53.33 26.91 24.75 26.46 26.46 125.89 125.89
FED FirstFed Financial Corp. 0.000 0 18.17 10.07 17.76 18.17 195.22 197.19
FESX First Essex Bancorp Inc. 2.286 34.78 17.95 13.07 15.44 15.22 176.47 201.73
FFBA First Colorado Bancorp Inc. 1.837 37.84 23.54 28.47 20.41 23.54 217.71 220.65
FFBH First Federal Bancshares of AR 1.067 13.22 19.57 20.13 19.40 18.60 135.22 135.22
FFBI First Financial Bancorp Inc. 0.000 0.00 23.08 10.35 18.10 NM 116.02 116.02
FFBS FFBS BanCorp Inc. 2.222 208.33 18.75 26.21 18.75 18.75 149.30 149.30
FFBZ First Federal Bancorp Inc. 1.427 21.05 18.00 15.17 16.92 17.21 216.61 216.85
FFCH First Financial Holdings Inc. 1.768 32.29 21.89 17.66 20.83 21.30 288.75 288.75
FFDB FirstFed Bancorp Inc. 2.350 37.41 14.88 13.88 15.20 14.48 144.08 157.40
FFDF FFD Financial Corp. 1.611 20.00 30.04 30.50 27.39 14.90 125.34 125.34
FFED Fidelity Federal Bancorp 3.951 71.43 14.89 12.01 13.32 14.46 196.60 196.60
FFES First Federal of East Hartford 1.630 32.09 17.36 10.00 19.58 19.69 150.87 150.87
FFFC FFVA Financial Corp. 1.438 28.22 21.26 26.60 18.96 20.48 187.08 190.93
FFFD North Central Bancshares Inc. 1.351 21.74 16.09 28.02 14.92 16.09 122.27 122.27
FFFL Fidelity Bankshares Inc. (MHC) 3.144 87.77 35.78 18.57 23.85 30.45 226.28 227.72
FFHH FSF Financial Corp. 2.532 47.17 18.81 15.31 16.46 18.63 121.61 121.61
FFHS First Franklin Corp. 1.404 33.33 23.55 14.69 21.59 27.94 162.95 163.89
FFIC Flushing Financial Corp. 1.016 18.87 22.08 19.64 19.69 22.29 138.32 144.05
FFKY First Federal Financial Corp. 2.503 35.62 15.54 24.32 14.72 15.33 177.58 188.18
FFLC FFLC Bancorp Inc. 1.252 30.67 27.06 23.00 23.96 25.56 167.52 167.52
FFOH Fidelity Financial of Ohio 1.867 33.33 16.85 15.83 17.05 19.23 121.56 137.11
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 1.548 32.43 25.00 10.82 20.18 20.95 173.07 177.18
FFSL First Independence Corp. 1.667 34.93 22.06 13.04 18.75 22.06 127.33 127.33
FFSX First Fed SB of Siouxland(MHC) 1.506 40.34 27.48 19.77 26.56 26.79 226.38 228.17
FFWC FFW Corp. 1.725 26.83 17.32 16.45 15.81 16.97 169.44 186.72
FFWD Wood Bancorp Inc. 2.162 29.05 19.89 23.54 16.52 18.32 189.36 189.36
FFYF FFY Financial Corp. 2.500 37.84 17.58 21.59 16.33 17.30 157.64 157.64
FGHC First Georgia Holding Inc. 0.646 17.77 22.30 16.10 17.19 27.50 195.96 213.73
FIBC Financial Bancorp Inc. 1.633 25.00 15.41 14.11 15.31 16.33 155.95 156.65
FISB First Indiana Corporation 1.641 29.87 22.33 19.97 17.01 18.51 207.15 209.68
FKFS First Keystone Financial 0.541 8.81 17.79 12.17 15.16 16.3 183.62 183.62
FKKYD Frankfort First Bancorp Inc. 3.892 NM 35.58 22.77 19.27 NM 135.23 135.23
FLAG FLAG Financial Corp. 1.876 34.00 22.66 15.48 18.13 18.13 170.03 170.03
FLFC First Liberty Financial Corp. 1.304 29.52 22.06 20.23 18.75 25.76 274.39 304.33
FLGS Flagstar Bancorp Inc. 0.000 NA NA 12.94 10.69 42.78 216.54 225.41
FLKY First Lancaster Bancshares 3.175 45.45 28.64 31.75 32.81 28.64 107.73 107.73
FMBD First Mutual Bancorp Inc. 1.561 94.12 66.13 17.86 64.06 60.29 122.24 160.41
FMCO FMS Financial Corp. 0.855 9.65 14.43 13.44 14.36 14.36 207.28 210.34
FMSB First Mutual Savings Bank 1.074 12.47 18.63 16.79 17.25 18.26 247.34 247.34
FNGB First Northern Capital Corp. 2.327 49.22 22.18 18.51 20.22 21.48 166.87 166.87
FOBC Fed One Bancorp 2.396 44.03 19.45 17.17 19.60 19.31 148.28 155.13
FPRY First Financial Bancorp NA 39.66 NA NA NA NA NA NA
FSBI Fidelity Bancorp Inc. 1.309 19.56 16.37 11.22 13.75 16.08 165.17 165.17
FSFC First Southeast Financial Corp 1.587 27.16 18.67 18.96 18.01 18.67 184.45 184.45
FSFF First SecurityFed Financial 0.000 NA NA NA NA NA NA NA
FSLA First Savings Bank (MHC) 1.091 34.97 37.61 33.73 50.00 39.29 355.13 390.76
FSNJ Bayonne Bancshares Inc. 1.402 NA NA 17.90 NA NA 114.60 114.60
FSPG First Home Bancorp Inc. 1.739 23.26 13.69 11.86 13.69 13.37 172.80 175.44
FSPT FirstSpartan Financial Corp. 1.569 NA NA 35.13 NA NA 131.13 131.13
FSSB First FS&LA of San Bernardino 0.000 0.00 NM 3.05 NM NM 70.36 73.03
FSTC First Citizens Corp. 1.011 14.16 15.68 23.58 16.48 14.01 233.12 295.92
FTF Texarkana First Financial Corp 2.175 30.79 15.80 25.75 14.63 15.70 168.08 168.08
FTFC First Federal Capital Corp. 1.574 27.31 22.10 17.92 15.89 18.37 266.14 282.41
FTNB Fulton Bancorp Inc. 0.909 NA NA 36.47 26.19 NA 147.85 147.85
FTSB Fort Thomas Financial Corp. 1.667 37.97 18.99 22.92 16.30 18.99 142.05 142.05
FWWB First SB of Washington Bancorp 1.082 20 21.04 24.13 19.03 19.9 163.46 176.98
GAF GA Financial Inc. 2.423 39.58 21.08 19.69 17.08 20.64 134.60 135.89
GBCI Glacier Bancorp Inc. 2.182 37.16 17.6 26.13 16.18 18.03 261.59 268.29
GDVS Greater Delaware Valley (MHC) 1.125 52.94 47.06 42.09 47.06 47.06 361.58 361.58
GDW Golden West Financial 0.534 7.47 16.15 13.56 14.82 15.91 206.54 206.54
GFCO Glenway Financial Corp. 2.162 35.86 19.27 14.38 17.13 18.69 152.01 153.91
GFED Guaranty Federal SB (MHC) 1.692 96.77 43.33 38.67 38.24 41.94 296.80 296.80
GFSB GFS Bancorp Inc. 1.524 20.54 15.23 17.84 14.71 15.23 154.98 154.98
GLMR Gilmer Financial Svcs, Inc. 0.000 0 20.77 6.41 NM 117.71 71.05 71.05
GOSB GSB Financial Corp. 0.000 NA NA NA NA NA NA NA
GPT GreenPoint Financial Corp. 1.455 26.69 20.04 22.49 18.09 19.31 204.31 381.10
GSB Golden State Bancorp Inc. 0.000 0.00 20.76 10.52 21.41 25.00 211.94 236.86
GSBC Great Southern Bancorp Inc. 1.725 26.14 17.59 28.32 13.56 16.67 327.34 327.34
GSFC Green Street Financial Corp. 2.378 85.07 27.61 44.69 27.21 27.61 126.37 126.37
GSLA GS Financial Corp. 1.577 NA NA 46.56 26.10 NA 107.97 107.97
GTFN Great Financial Corp. 1.181 24.77 31.56 24.28 21.53 23.31 241.05 251.18
GTPS Great American Bancorp 2.105 102.56 44.19 23.10 36.54 48.72 103.04 103.04
GUPB GFSB Bancorp Inc. 1.975 41.67 21.09 14.75 22.01 21.09 115.06 115.06
GWBC Gateway Bancorp Inc. 2.038 67.80 33.26 33.72 61.33 33.26 121.52 121.52
HALL Hallmark Capital Corp. 0.000 0 16.43 10.09 16.62 16.07 138.1 138.1
HARB Harbor Florida Bancorp (MHC) 2.097 50.75 25.28 29.35 23.84 25.09 343.01 354.11
HARL Harleysville Savings Bank 1.544 19.30 14.18 13.72 14.25 14.18 207.12 207.12
HARS Harris Financial Inc. (MHC) 1.125 37.15 45.50 31.32 32.61 37.62 382.09 431.85
HAVN Haven Bancorp Inc. 1.371 23.62 17.09 10.47 20.25 17.22 174.44 175.00
HBBI Home Building Bancorp 1.412 26.09 18.81 15.86 19.68 18.48 104.01 104.01
HBEI Home Bancorp of Elgin Inc. 2.148 43.48 42.33 37.28 46.56 40.49 135.26 135.26
HBFW Home Bancorp 0.727 26.32 23.50 20.73 22.18 36.18 156.07 156.07
HBNK Highland Federal Bank FSB 0.000 0.00 17.68 14.26 10.96 13.56 186.05 186.05
HBS Haywood Bancshares Inc. 2.699 35.90 13.3 16.98 7.86 13.30 119.73 123.95
HCBB HCB Bancshares Inc. 0.000 NA NA 18.36 31.53 NA 96.15 99.75
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 2.072 NA NA 22.42 14.98 NA 114.31 114.31
HEMT HF Bancorp Inc. 0.000 0.00 58.33 10.47 54.69 NM 131.98 158.37
HFFB Harrodsburg First Fin Bancorp 2.238 93.22 23.83 33.22 22.34 30.30 114.00 114.00
HFFC HF Financial Corp. 1.585 20.05 15.41 12.92 12.05 14.17 145.44 145.44
HFGI Harrington Financial Group 0.970 8.82 22.50 7.73 30.94 18.20 159.88 159.88
HFNC HFNC Financial Corp. 1.882 788.06 25.65 29.50 14.30 22.2 156.91 156.91
HFSA Hardin Bancorp Inc. 2.704 45.83 19.51 13.00 20.17 18.49 112.70 112.70
HHFC Harvest Home Financial Corp. 2.983 NM 27.83 15.40 19.41 56.73 130.42 130.42
HIFS Hingham Instit. for Savings 1.722 26.77 14.08 16.80 13.40 14.08 173.14 173.14
HMCI HomeCorp Inc. 0.000 0 36.99 14.3 26.32 29.76 209.45 209.45
HMLK Hemlock Federal Financial Corp 1.401 NA NA 21.96 19.46 NA 113.71 113.71
HMNF HMN Financial Inc. 0.000 0.00 21.56 19.16 17.02 18.35 128.80 128.80
HOMF Home Federal Bancorp 1.296 17.86 17.53 19.85 14.67 16.07 229.40 236.43
HPBC Home Port Bancorp Inc. 3.497 45.45 13.07 20.96 12.71 13.00 196.35 196.35
HRBF Harbor Federal Bancorp Inc. 2.122 44.68 24.07 17.64 22.63 24.07 135.16 135.16
HRZB Horizon Financial Corp. 2.479 62.01 16.28 24.85 15.85 15.99 158.91 158.91
HTHR Hawthorne Financial Corp. 0.000 0.00 18.20 7.88 12.10 17.23 162.38 162.38
HWEN Home Financial Bancorp 1.212 26.67 25.38 18.55 21.71 22.00 105.70 105.70
HZFS Horizon Financial Svcs Corp. 1.565 20.51 18.25 11.15 9.91 14.74 111.98 111.98
IBSF IBS Financial Corp. 2.286 99.37 32.41 26.08 36.46 32.41 149.70 149.70
IFSB Independence Federal Svgs Bank 1.571 20.18 30.43 7.13 21.88 12.84 98.38 110.5
INBI Industrial Bancorp Inc. 3.111 33.66 18.75 26.29 18.00 17.82 153.06 153.06
INCB Indiana Community Bank SB 1.756 69.23 39.42 19.67 34.17 39.42 165.59 165.59
IPSW Ipswich Savings Bank 0.873 13.10 20.22 16.14 14.95 16.37 287.66 287.66
ISBF ISB Financial Corp. 1.770 39.05 27.43 20.39 35.31 26.90 159.15 185.98
ITLA ITLA Capital Corp. 0.000 0.00 12.31 15.97 11.47 12.31 148.90 149.50
IWBK InterWest Bancorp Inc. 1.600 23.79 18.35 15.73 15.63 16.13 247.99 252.53
JOAC Joachim Bancorp Inc. 3.333 131.58 39.47 30.90 41.67 39.47 109.81 109.81
JSB JSB Financial Inc. 2.875 47.37 19.17 31.48 14.84 17.08 135.58 135.58
JSBA Jefferson Savings Bancorp 1.322 17.67 20.28 16.87 21.62 19.71 172.47 219.90
JXSB Jacksonville Savings Bk (MHC) 1.524 50.63 39.77 20.33 27.34 33.23 192.73 192.73
JXVL Jacksonville Bancorp Inc. 2.614 64.94 8.39 21.06 11.66 24.84 141.14 141.14
KFBI Klamath First Bancorp 1.438 34.09 25.28 22.74 25.28 25.28 142.26 156.47
KNK Kankakee Bancorp Inc. 1.371 22.55 17.41 14.68 17.86 17.16 128.44 136.24
KSAV KS Bancorp Inc. 2.667 71.02 17.18 18.12 18.15 17.05 136.86 136.94
KSBK KSB Bancorp Inc. 0.444 5.68 13.85 14.89 11.84 13.95 202.25 212.77
KYF Kentucky First Bancorp Inc. 3.448 437.50 18.35 21.44 16.48 18.13 128.43 128.43
LARK Landmark Bancshares Inc. 1.720 29.41 19.38 17.24 17.10 17.10 122.43 122.43
LARL Laurel Capital Group Inc. 1.874 23.47 14.68 19.11 13.60 14.16 182.57 182.57
LFBI Little Falls Bancorp Inc. 1.000 19.40 33.33 16.08 27.78 29.85 137.65 149.25
LFCO Life Financial Corp. 0.000 0.00 7.23 34.75 6.51 7.23 206.68 206.68
LFED Leeds Federal Savings Bk (MHC) 2.228 75.91 35.00 41.30 33.46 35.00 247.55 247.55
LIFB Life Bancorp Inc. 1.347 33.33 27.62 23.60 25.45 25.82 220.32 226.62
LISB Long Island Bancorp Inc. 1.257 28.85 26.98 19.34 21.70 22.96 209.98 211.94
LOGN Logansport Financial Corp. 2.623 44.44 16.22 22.41 16.58 16.94 118.58 118.58
LONF London Financial Corporation 1.524 29.63 20.72 21.24 14.58 19.44 106.71 106.71
LSBI LSB Financial Corp. 1.225 19.07 18.88 12.70 15.08 16.62 137.10 137.10
LSBX Lawrence Savings Bank 0.000 0.00 10.86 18.05 10.63 10.86 189.73 189.73
LVSB Lakeview Financial 0.508 10.19 28.30 21.95 16.20 20.52 179.61 209.57
LXMO Lexington B&L Financial Corp. 1.739 26.32 22.70 33.15 19.60 30.26 117.11 117.11
MAFB MAF Bancorp Inc. 0.818 11.11 14.70 15.49 14.76 14.64 198.90 226.37
MARN Marion Capital Holdings 3.171 52.83 17.68 27.40 19.27 17.45 124.89 124.89
MASB MASSBANK Corp. 2.065 30.56 18.31 17.75 16.61 17.22 164.60 167.09
MBB MSB Bancorp Inc. 1.959 53.57 27.34 11.25 23.20 27.34 136.72 256.49
MBBC Monterey Bay Bancorp Inc. 0.623 18.64 35.00 15.18 30.08 32.63 123.40 133.13
MBLF MBLA Financial Corp. 1.481 29.85 19.71 15.29 17.76 20.15 120.81 120.81
MBSP Mitchell Bancorp Inc. 2.319 64.52 27.82 46.42 28.75 27.82 112.30 112.30
MCBN Mid-Coast Bancorp Inc. 1.809 26.8 15.63 10.90 13.31 14.82 126.93 126.93
MCBS Mid Continent Bancshares Inc. 0.920 18.60 18.67 21.06 21.75 20.23 215.35 215.35
MDBK Medford Bancorp Inc. 1.907 35.98 17.00 15.49 16.56 15.79 171.90 183.43
MECH Mechanics Savings Bank 0.000 0.00 10.45 17.84 19.44 10.45 171.46 171.46
MERI Meritrust Federal SB 1.014 21.54 21.23 22.90 21.56 21.23 277.22 277.22
METF Metropolitan Financial Corp. 0.000 0.00 21.01 11.81 17.26 19.73 292.93 321.15
MFBC MFB Corp. 1.362 28.07 20.61 15.16 20.26 20.61 115.71 115.71
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 0.000 0.00 31.94 19.40 35.94 30.26 120.04 120.04
MFFC Milton Federal Financial Corp. 3.902 490.48 27.46 16.88 24.02 24.40 124.90 124.90
MFLR Mayflower Co-operative Bank 2.747 40.41 19.04 17.08 16.72 16.95 177.17 180.00
MFSL Maryland Federal Bancorp 1.585 33.70 16.26 14.59 18.40 23.04 171.85 173.88
MIFC Mid-Iowa Financial Corp. 0.681 8.89 14.33 15.40 14.69 13.06 163.42 163.65
MIVI Mississippi View Holding Co. 0.914 16.67 18.42 18.90 18.23 18.23 107.36 107.36
MLBC ML Bancorp Inc. 1.356 30.95 32.78 15.12 21.07 23.41 204.72 219.49
MONT Montgomery Financial Corp. 1.769 NA NA 20.16 NA NA 105.32 105.32
MRKF Market Financial Corp. 1.814 NA NA 36.74 25.73 NA 103.68 103.68
MSBF MSB Financial Inc. 1.436 29.78 22.67 31.23 20.31 21.91 188.77 188.77
MSBK Mutual Savings Bank FSB 0.000 0 NM 8.50 81.25 86.67 133.61 133.61
MWBI Midwest Bancshares Inc. 1.352 18.02 18.30 12.06 11.68 15.99 174.36 174.36
MWBX MetroWest Bank 1.289 31.13 17.57 22.19 16.63 17.57 297.54 297.54
MWFD Midwest Federal Financial 1.253 19.53 20.87 20.86 15.07 16.05 231.84 239.83
NASB North American Savings Bank 1.481 17.60 14.14 16.34 10.89 13.33 212.85 220.23
NBN Northeast Bancorp 1.148 26.89 29.65 13.58 20.50 23.42 195.34 221.05
NBSI North Bancshares Inc. 1.829 61.33 39.18 20.68 54.69 35.00 154.05 154.05
NEIB Northeast Indiana Bancorp 1.700 26.45 16.53 18.52 15.15 16.53 128.95 128.95
NHTB New Hampshire Thrift Bncshrs 2.326 50.51 26.88 13.97 16.29 21.72 178.57 207.93
NMSB NewMil Bancorp Inc. 2.370 37.50 22.50 16.31 19.85 21.09 160.33 160.33
NSLB NS&L Bancorp Inc. 2.703 113.64 30.83 21.92 24.34 42.05 112.05 112.05
NSSB Norwich Financial Corp. 1.778 43.36 24.05 24.41 21.28 22.03 209.30 230.60
NSSY NSS Bancorp Inc. 1.003 12.20 54.62 14.43 14.45 16.21 177.30 182.66
NTMG Nutmeg Federal S&LA 1.569 6.94 34.46 8.97 26.56 23.61 162.63 162.63
NWEQ Northwest Equity Corp. 2.947 37.10 15.83 16.44 14.39 15.32 130.76 130.76
NWSB Northwest Savings Bank (MHC) 1.049 37.21 36.31 33.94 34.66 35.47 352.19 372.86
NYB New York Bancorp Inc. 1.611 23.33 18.26 24.48 15.02 16.56 469.74 469.74
OCFC Ocean Financial Corp. 2.133 24.39 22.87 20.59 20.83 22.87 135.72 135.72
OCN Ocwen Financial Corp. 0.000 0.00 30.74 53.47 18.66 17.53 378.08 388.19
OFCP Ottawa Financial Corp. 1.368 28.08 24.38 18.06 24.38 23.78 206.71 255.91
OHSL OHSL Financial Corp. 3.171 51.83 17.45 14.60 16.92 16.92 129.55 129.55
OSFS Ohio State Financial Services 0.000 NA NA 24.87 NA NA 91.80 91.80
OTFC Oregon Trail Financial Corp. 0.000 NA NA NA NA NA NA NA
PALM Palfed Inc. 0.416 22.92 34.71 22.84 40.02 60.03 268.28 268.28
PBCI Pamrapo Bancorp Inc. 4.000 59.45 15.43 19.11 14.20 15.24 148.02 149.08
PBCT People's Bank (MHC) 2.133 44.06 38.31 28.17 23.44 24.91 312.23 312.50
PBHC Oswego City Savings Bk (MHC) 0.982 22.43 29.69 28.30 27.40 26.64 237.10 282.18
PBKB People's Bancshares Inc. 2.095 28.89 28.38 9.61 14.58 15.56 234.37 244.47
PCBC Perry County Financial Corp. 1.720 41.67 17.22 23.73 19.38 24.22 123.60 123.60
PDB Piedmont Bancorp Inc. 3.636 NM 42.31 23.91 18.33 NM 145.50 145.50
PEEK Peekskill Financial Corp. 2.057 53.73 26.12 30.83 25.74 26.12 118.16 118.16
PERM Permanent Bancorp Inc. 1.524 35.12 21.88 12.73 21.88 21.69 129.63 131.38
PERT Perpetual Bank (MHC) 2.635 105.93 33 31.20 30.18 45.02 263.78 263.78
PFDC Peoples Bancorp 1.707 33.34 20.49 29.18 18.94 20.49 191.42 191.42
PFED Park Bancorp Inc. 0.000 0.00 22.78 25.08 22.50 21.95 108.37 108.37
PFFB PFF Bancorp Inc. 0.000 0.00 28.83 13.22 25.41 29.26 131.47 132.83
PFFC Peoples Financial Corp. 3.604 NA NA 23.92 24.78 NA 87.93 87.93
PFNC Progress Financial Corp. 0.774 9.95 22.79 14.23 19.38 18.02 264.96 296.93
PFSB PennFed Financial Services Inc 0.806 12.90 16.01 12.29 15.51 16.01 154.93 182.99
PFSL Pocahontas FS&LA (MHC) 2.581 60.62 24.05 14.85 26.42 23.89 234.85 234.85
PHBK Peoples Heritage Finl Group 1.917 28.24 17.18 19.88 16.11 17.18 266.83 312.50
PHFC Pittsburgh Home Financial Corp 1.297 27.88 19.89 13.33 15.42 17.79 126.45 127.76
PHSB Peoples Home Savings Bk (MHC) 0.000 NA NA 25.40 NA NA 185.91 185.91
PKPS Poughkeepsie Financial Corp. 1.905 28.57 30.00 14.96 32.81 30 177.66 177.66
PLSK Pulaski Savings Bank (MHC) 1.509 NA NA 22.98 31.05 NA 191.84 191.84
PMFI Perpetual Midwest Financial 1.053 36.59 43.18 13.29 24.57 34.76 156.25 156.25
PRBC Prestige Bancorp Inc. 0.623 9.89 21.15 12.78 20.05 21.15 114.04 114.04
PROV Provident Financial Holdings 0.000 0.00 46.74 16.23 16.80 22.40 121.74 121.74
PSBK Progressive Bank Inc. 1.915 29.24 16.44 15.36 15.57 16.14 175.92 195.27
PSFC Peoples-Sidney Financial Corp. 1.623 NA NA 29.95 21.56 NA 109.73 109.73
PSFI PS Financial Inc. 2.630 NA NA 46.14 24.01 NA 123.64 123.64
PTRS Potters Financial Corp. 1.111 13.68 15.65 14.15 16.07 15.38 160.57 160.57
PULB Pulaski Bank, Svgs Bank (MHC) 3.667 172.41 38.46 34.86 28.85 51.72 267.14 267.14
PULS Pulse Bancorp 2.692 38.89 14.44 15.23 14.44 14.44 185.32 185.32
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 0.000 0.00 11.70 13.60 10.94 11.18 189.32 189.32
PVSA Parkvale Financial Corporation 1.778 22.10 14.63 14.85 14.34 14.63 192.43 193.71
PWBC PennFirst Bancorp Inc. 1.959 32.25 17.67 11.87 17.01 17.67 141.78 159.51
PWBK Pennwood Bancorp Inc. 1.673 34.88 20.56 22.87 19.92 22.24 124.67 124.67
QCBC Quaker City Bancorp Inc. 0.000 0.00 19.4 12.41 17.05 18.75 146.77 146.77
QCFB QCF Bancorp Inc. 0.000 0 14.54 24.89 13.7 14.54 151.35 151.35
QCSB Queens County Bancorp Inc. 2.207 36.77 25.89 35.54 23.85 25.53 273.38 273.38
RARB Raritan Bancorp Inc. 1.714 29.44 18.42 16.31 18.42 18.18 221.52 224.90
REDF RedFed Bancorp Inc. 0.000 0 15.95 14.80 13.12 15.82 177.86 178.50
RELI Reliance Bancshares Inc. 0.000 NM 36.5 48.00 32.59 35.1 99.40 99.40
RELY Reliance Bancorp Inc. 1.848 32.46 19.24 14.83 16.33 18.13 179.50 244.35
RIVR River Valley Bancorp 0.859 NA NA 16.01 16.06 NA 125.84 127.66
ROSE TR Financial Corp. 1.882 26.2 20.24 16.20 16.67 18.18 243.90 243.90
RSLN Roslyn Bancorp Inc. 1.198 NA NA 29.37 20.87 NA 166.49 167.32
RVSB Riverview Bancorp Inc. 0.000 NM NA 33.52 NM NM 161.49 167.62
SBFL SB of the Finger Lakes (MHC) 1.333 90.91 103.45 23.49 68.18 68.18 251.68 251.68
SBOS Boston Bancorp (The) NA 10.89 NA NA NA NA NA NA
SCBS Southern Community Bancshares 1.579 NA NA 30.71 22.62 NA 144.05 144.05
SCCB S. Carolina Community Bancshrs 2.609 76.92 29.49 35.23 31.94 29.49 132.56 132.56
SFED SFS Bancorp Inc. 1.191 26.26 23.74 16.62 23.50 23.74 133.22 133.22
SFFC StateFed Financial Corp. 1.429 27.78 19.44 24.91 23.33 19.44 141.99 141.99
SFIN Statewide Financial Corp. 1.882 32.28 18.41 15.26 17.71 18.41 163.01 163.23
SFSB SuburbFed Financial Corp. 0.923 15.69 20.77 10.12 16.06 17.00 152.61 153.15
SFSL Security First Corp. 1.506 29.48 20.43 23.69 19.68 20.43 255.72 259.78
SGVB SGV Bancorp Inc. 0.000 0.00 33.33 10.31 30.00 26.47 138.67 140.85
SHEN First Shenango Bancorp Inc. 1.805 24.22 14.98 17.14 14.58 14.91 147.45 147.45
SHSB SHS Bancorp Inc. 0.000 NA NA NA NA NA NA NA
SISB SIS Bancorp Inc. 1.479 18.54 18.66 14.55 16.61 18.48 199.97 199.97
SKAN Skaneateles Bancorp Inc. 1.404 22.61 16.52 10.99 15.83 16.1 157.02 161.70
SKBO First Carnegie Deposit (MHC) 1.569 NA NA 29.90 34.15 NA 180.25 180.25
SMBC Southern Missouri Bancorp Inc. 2.564 53.19 21.2 19.25 22.16 20.74 119.19 119.19
SMFC Sho-Me Financial Corp. 0.000 0.00 19.90 22.06 16.92 18.94 224.26 224.26
SOBI Sobieski Bancorp Inc. 1.641 33.33 31.97 18.04 27.08 29.55 112.98 112.98
SOPN First Savings Bancorp Inc. 3.648 64.23 19.61 30.11 18.85 19.61 130.90 130.90
SOSA Somerset Savings Bank 0 0.00 16.04 15.4 12.03 15.53 233.64 233.64
SPBC St. Paul Bancorp Inc. 1.576 24 18.66 19.04 18.13 18.8 211.81 212.34
SRN Southern Banc Co. 1.972 83.33 42.26 20.57 34.13 42.26 120.42 121.49
SSB Scotland Bancorp Inc. 2.927 851.35 13.85 30.46 10.68 13.85 134.69 134.69
SSFC South Street Financial Corp. 2.092 NA NA 35.75 28.13 NA 128.87 128.87
SSM Stone Street Bancorp Inc. 2.000 512.08 25.28 40.76 28.13 25.28 137.87 137.87
STFR St. Francis Capital Corp. 1.400 21.82 18.35 12.62 16.95 18.18 163.00 184.25
STSA Sterling Financial Corp. 0.000 0.00 19.26 8.65 16.19 17.52 164.68 179.92
SVRN Sovereign Bancorp Inc. 0.412 11.84 20.04 11.89 242.98 28.59 265.18 324.51
SWBI Southwest Bancshares 3.232 52.78 17.68 17.54 16.28 17.19 154.59 154.59
SWCB Sandwich Bancorp Inc. 3.111 50.85 19.40 16.87 18.15 19.07 212.67 221.24
SZB SouthFirst Bancshares Inc. 2.469 NM 106.58 17.64 33.75 NM 126.09 126.09
THR Three Rivers Financial Corp. 1.975 34.91 20.05 17.70 17.46 19.10 128.57 129.06
THRD TF Financial Corp. 1.404 31.15 26.64 18.63 21.59 23.36 148.36 168.04
TPNZ Tappan Zee Financial Inc. 1.418 30.56 27.82 23.58 29.04 27.43 137.53 137.53
TRIC Tri-County Bancorp Inc. 2.909 29.80 17.86 18.21 19.10 18.21 118.89 118.89
TSBS Trenton SB (MHC) 0.915 40.23 62.70 54.16 53.13 43.97 319.55 355.15
TSH Teche Holding Co. 2.424 42.02 18.09 17.55 18.42 17.33 130.46 130.46
TWIN Twin City Bancorp 2.783 59.28 23.96 17.10 15.63 19.97 132.24 132.24
UBMT United Financial Corp. 3.846 77.24 21.31 30.86 19.70 21.14 128.46 128.46
UFRM United Federal Savings Bank 2.043 34.92 23.50 12.64 18.36 18.65 172.29 172.29
USAB USABancshares, Inc. 0.000 0.00 37.98 11.25 15.43 34.05 146.73 148.94
VABF Virginia Beach Fed. Financial 1.190 25.33 27.56 13.83 19.11 22.42 193.25 193.25
WAMU Washington Mutual Inc. 1.572 192.45 30.45 19.17 NM 134.43 351.33 379.19
WAYN Wayne Savings Bancshares (MHC) 2.000 76.12 40.79 27.94 35.23 38.27 293.01 293.01
WBST Webster Financial Corp. 1.248 35.68 19.49 12.76 23.23 30.11 239.00 277.60
WCBI Westco Bancorp 2.264 35.29 16.56 21.21 14.10 15.59 136.46 136.46
WCFB Webster City Federal SB (MHC) 3.765 123.08 32.69 47.23 33.20 32.69 202.00 202.00
WEFC Wells Financial Corp. 2.743 10.91 16.06 16.75 15.09 15.91 117.77 117.77
WEHO Westwood Homestead Fin. Corp. 1.577 42.00 32.27 34.57 55.47 35.50 125.00 125.00
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WES Westcorp 2.406 30.30 NM 11.62 12.22 12.59 127.88 128.18
WFI Winton Financial Corp. 2.344 27.78 14.65 12.01 11.15 12.11 167.45 170.80
WFSG Wilshire Financial Services 0.000 NA NA 15.47 8.97 NA 293.19 293.19
WFSL Washington Federal Inc. 2.820 40.64 14.83 27.10 14.31 14.76 215.92 235.22
WHGB WHG Bancshares Corp. 1.969 42.86 28.02 23.70 23.90 46.43 114.76 114.76
WOFC Western Ohio Financial Corp. 3.738 149.25 33.44 15.86 222.92 39.93 114.32 122.48
WRNB Warren Bancorp Inc. 2.537 43.59 12.97 21.39 12.20 10.51 200.98 200.98
WSB Washington Savings Bank, FSB 1.404 41.67 20.96 11.56 14.84 29.69 138.08 138.08
WSFS WSFS Financial Corp. 0.000 0.00 15.97 16.74 14.80 15.85 302.18 304.46
WSTR WesterFed Financial Corp. 1.912 36.19 19.89 13.43 18.80 19.10 126.45 156.76
WVFC WVS Financial Corp. 3.840 149.76 15.17 19.35 14.74 15.10 161.25 161.25
WWFC Westwood Financial Corp. 0.724 20.83 21.58 16.14 36.35 23.02 173.20 193.59
WYNE Wayne Bancorp Inc. 0.920 13.89 20.14 16.39 21.75 20.14 131.90 131.90
YFCB Yonkers Financial Corporation 1.289 20.59 18.08 17.98 17.25 18.26 128.18 128.18
YFED York Financial Corp. 1.901 39.34 24.28 19.24 24.28 20.70 217.30 217.30
---------------------------------------------------------------------------------------
Average 1.516 48.52 23.69 19.69 22.32 23.23 171.50 178.20
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
Dividends Current Pricing Data as of 12/08/97
---------------------- ---------------------------------------------------------------
Current LTM Dividend Price/ Price/ Price/Tang
Dividend Payout LTM Price/ Price/ Price/ Publicly Rep Publicly Rep
Yield Ratio Core EPS Assets Earnings LTM EPS Book Value Book Value
Ticker Short Name ($) (%) (x) (%) (x) (x) (%) (%)
- -------------------------------------- ---------------------- ---------------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 2.286 34.78 17.95 13.07 15.44 15.22 176.47 201.73
FFES First Federal of East Hartford 1.630 32.09 17.36 10.00 19.58 19.69 150.87 150.87
FFIC Flushing Financial Corp. 1.016 18.87 22.08 19.64 19.69 22.29 138.32 144.05
GAF GA Financial Inc. 2.423 39.58 21.08 19.69 17.08 20.64 134.60 135.89
JSB JSB Financial Inc. 2.875 47.37 19.17 31.48 14.84 17.08 135.58 135.58
MASB MASSBANK Corp. 2.065 30.56 18.31 17.75 16.61 17.22 164.60 167.09
MDBK Medford Bancorp Inc. 1.907 35.98 17.00 15.49 16.56 15.79 171.90 183.43
PWBC PennFirst Bancorp Inc. 1.959 32.25 17.67 11.87 17.01 17.67 141.78 159.51
SFIN Statewide Financial Corp. 1.882 32.28 18.41 15.26 17.71 18.41 163.01 163.23
SISB SIS Bancorp Inc. 1.479 18.54 18.66 14.55 16.61 18.48 199.97 199.97
STFR St. Francis Capital Corp. 1.400 21.82 18.35 12.62 16.95 18.18 163.00 184.25
THRD TF Financial Corp. 1.404 31.15 26.64 18.63 21.59 23.36 148.36 168.04
---------------------------------------------------------------------------------------
Average 1.86 31.27 19.39 16.67 17.47 18.67 157.37 166.14
Median 1.89 32.17 18.38 15.38 16.98 18.30 156.94 165.16
Maximum 2.88 47.37 26.64 31.48 21.59 23.36 199.97 201.73
Minimum 1.02 18.54 17.00 10.00 14.84 15.22 134.60 135.58
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB NA 87,873 74,987 NA NA
%CCMD Chevy Chase Bank, FSB 4,142 2,796 (11,488) NA NA
AABC Access Anytime Bancorp Inc. NA 1,319 1,288 1.05 2.56
AADV Advantage Bancorp Inc. 290 2,917 2,588 0.75 22.75
ABBK Abington Bancorp Inc. 165 1,127 1,025 0.52 17.79
ABCL Alliance Bancorp Inc. 443 3,340 3,815 0.45 15.42
ABCW Anchor BanCorp Wisconsin 547 4,975 4,560 0.47 18.62
AFBC Advance Financial Bancorp NA 205 192 0.19 22.70
AFCB Affiliated Community Bancorp 205 2,949 2,850 0.42 18.90
AFED AFSALA Bancorp Inc. 44 310 310 0.23 20.38
AFFFZ America First Financial Fund 380 5,244 5,453 0.80 15.78
AHCI Ambanc Holding Co. NA 736 523 0.14 34.82
AHM H.F. Ahmanson & Co. 7,812 95,539 94,968 0.83 19.01
ALBC Albion Banc Corp. NA 93 93 0.37 18.92
ALBK ALBANK Financial Corp. 1,223 9,378 9,355 0.67 16.88
AMFC AMB Financial Corp. NA 290 161 0.18 22.22
ANA Acadiana Bancshares Inc. 84 694 648 0.27 21.99
ANDB Andover Bancorp Inc. 279 3,348 3,297 0.62 15.78
ANE Alliance Bncorp of New England 87 523 260 0.15 28.54
ASBI Ameriana Bancorp 145 994 913 0.28 18.08
ASBP ASB Financial Corp. 22 246 246 0.16 20.90
ASFC Astoria Financial Corp. 933 16,892 14,826 0.71 20.03
ATSB AmTrust Capital Corp. NA 61 29 0.06 58.33
AVND Avondale Financial Corp. 205 (9,318) (2,414) (0.69) NM
BANC BankAtlantic Bancorp Inc. 1,065 6,429 2,547 0.09 40.28
BDJI First Federal Bancorporation 41 194 200 0.35 20.00
BFD BostonFed Bancorp Inc. 259 1,701 1,479 0.26 19.59
BFFC Big Foot Financial Corp. NA 232 232 0.10 46.88
BFSB Bedford Bancshares Inc. 37 413 404 0.37 19.59
BKC American Bank of Connecticut 135 2,016 1,742 0.73 16.78
BKCT Bancorp Connecticut Inc. 110 1,507 1,305 0.23 25.14
BKUNA BankUnited Financial Corp. 246 2,166 1,641 0.10 34.69
BNKU Bank United Corp. 1,541 19,925 18,523 0.59 18.70
BPLS Bank Plus Corp. 539 3,408 3,171 0.17 18.98
BSBC Branford Savings Bank 71 422 422 0.06 25.26
BTHL Bethel Bancorp NA 302 263 0.16 19.53
BVCC Bay View Capital Corp. 627 3,064 4,961 0.37 23.90
BWFC Bank West Financial Corp. 58 592 223 0.09 48.61
BYFC Broadway Financial Corp. 51 102 29 0.02 165.63
CAFI Camco Financial Corp. 194 1,706 1,442 0.45 13.33
CAPS Capital Savings Bancorp Inc. 81 602 568 0.29 20.80
CASB Cascade Financial Corp. 130 646 746 0.20 15.94
CASH First Midwest Financial Inc. 101 927 846 0.30 17.71
CATB Catskill Financial Corp. 65 949 946 0.22 20.45
CBCI Calumet Bancorp Inc. 135 1,676 1,679 0.49 16.65
CBES CBES Bancorp Inc. 54 305 268 0.28 19.64
CBK Citizens First Financial Corp. 105 359 323 0.12 37.50
CBSA Coastal Bancorp Inc. 442 2,717 2,646 0.51 14.71
CBSB Charter Financial Inc. 104 1,909 1,071 0.25 23.63
CCFH CCF Holding Company 67 (6) (29) (0.05) NM
CEBK Central Co-operative Bank NA 745 521 0.27 24.42
CENB Century Bancorp Inc. 11 396 396 1.05 19.76
CENF CENFED Financial Corp. 339 4,300 4,099 0.69 14.72
CFB Commercial Federal Corp. 1,530 17,108 16,726 0.76 17.35
CFBC Community First Banking Co. 176 916 916 NA NA
CFCP Coastal Financial Corp. 172 1,621 1,288 0.26 21.63
CFFC Community Financial Corp. 52 329 330 0.26 25.96
CFNC Carolina Fincorp Inc. 41 355 347 0.20 22.81
CFSB CFSB Bancorp Inc. NA 2,801 2,611 0.49 17.98
CFTP Community Federal Bancorp 33 615 586 0.13 40.38
CFX CFX Corp. 1,004 (173) 5,832 0.34 20.96
CIBI Community Investors Bancorp 26 236 236 0.28 14.51
CKFB CKF Bancorp Inc. 9 225 224 0.26 17.79
CLAS Classic Bancshares Inc. NA 274 72 0.06 70.31
</TABLE>
57
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<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 55 643 637 0.26 19.95
CMSB Commonwealth Bancorp Inc. 724 4,001 2,918 0.18 29.34
CMSV Community Savings Bnkshrs(MHC) 273 1,549 1,151 0.23 38.04
CNIT CENIT Bancorp Inc. NA 1,709 1,596 0.95 17.89
CNSB CNS Bancorp Inc. 27 192 192 0.13 40.87
CNY Carver Bancorp Inc. 110 329 329 0.15 27.81
COFI Charter One Financial 2,702 47,809 46,260 0.92 17.12
CONE Conestoga Bancorp, Inc. 105 742 334 0.07 NA
COOP Cooperative Bankshares Inc. 115 526 526 0.16 28.52
CRZY Crazy Woman Creek Bancorp 10 189 192 0.21 18.42
CSA Coast Savings Financial 1,512 20,228 23,965 1.22 12.96
CSBF CSB Financial Group Inc. 15 52 51 0.06 54.69
CTZN CitFed Bancorp Inc. 753 7,003 7,000 0.52 17.43
CVAL Chester Valley Bancorp Inc. 109 853 796 0.36 18.92
DCBI Delphos Citizens Bancorp Inc. 21 467 467 0.24 18.23
DIBK Dime Financial Corp. 148 4,395 4,301 0.79 9.73
DIME Dime Community Bancorp Inc. 246 2,838 2,827 0.23 27.04
DME Dime Bancorp Inc. 3,162 39,527 37,678 0.36 17.84
DNFC D & N Financial Corp. 507 3,722 3,305 0.38 17.56
DSL Downey Financial Corp. 1,161 10,557 9,544 0.35 20.71
EBSI Eagle Bancshares 539 1,723 1,756 0.30 16.25
EFBC Empire Federal Bancorp Inc. NA 408 408 0.17 24.26
EFBI Enterprise Federal Bancorp 38 531 426 0.22 31.82
EGFC Eagle Financial Corp. 410 4,262 4,201 0.64 20.61
EGLB Eagle BancGroup Inc. 52 104 73 0.06 83.33
EIRE Emerald Isle Bancorp Inc. 112 923 982 0.43 18.60
EMLD Emerald Financial Corp. 121 1,577 1,503 0.29 16.81
EQSB Equitable Federal Savings Bank 71 532 528 0.82 14.48
ESBK Elmira Savings Bank (The) 111 331 174 0.25 30.75
ESX Essex Bancorp Inc. 95 (491) (491) (0.85) NM
ETFS East Texas Financial Services 29 207 188 0.19 26.32
FAB FirstFed America Bancorp Inc. NA 1,782 1,527 0.19 27.63
FBBC First Bell Bancorp Inc. 59 1,846 1,851 0.30 15.00
FBCI Fidelity Bancorp Inc. NA 1,082 1,082 0.38 15.79
FBCV 1ST Bancorp 85 455 411 0.39 17.31
FBER 1st Bergen Bancorp 55 490 490 0.18 26.22
FBHC Fort Bend Holding Corp. 142 503 402 0.19 26.32
FBNW FirstBank Corp. 90 481 336 NA NA
FBSI First Bancshares Inc. 63 521 464 0.44 14.35
FCB Falmouth Bancorp Inc. NA 212 170 0.14 36.83
FCBF FCB Financial Corp. NA 1,690 1,563 0.41 16.92
FCME First Coastal Corp. 68 334 263 0.19 19.08
FDEF First Defiance Financial 150 1,383 1,308 0.14 28.35
FED FirstFed Financial Corp. 433 5,971 5,942 0.55 17.76
FESX First Essex Bancorp Inc. 307 2,650 2,298 0.29 18.10
FFBA First Colorado Bancorp Inc. 292 5,180 5,129 0.32 20.41
FFBH First Federal Bancshares of AR 156 1,311 1,311 0.29 19.40
FFBI First Financial Bancorp Inc. 37 119 91 0.22 23.86
FFBS FFBS BanCorp Inc. 32 451 451 0.30 18.75
FFBZ First Federal Bancorp Inc. 70 505 486 0.28 17.52
FFCH First Financial Holdings Inc. 543 3,607 3,497 0.55 21.59
FFDB FirstFed Bancorp Inc. NA 420 420 0.35 15.20
FFDF FFD Financial Corp. NA 224 224 0.17 27.39
FFED Fidelity Federal Bancorp 105 509 467 0.17 14.89
FFES First Federal of East Hartford 182 1,324 1,455 0.52 17.70
FFFC FFVA Financial Corp. 135 2,082 1,966 0.42 19.87
FFFD North Central Bancshares Inc. NA 973 973 0.31 14.92
FFFL Fidelity Bankshares Inc. (MHC) NA 2,010 1,493 0.22 32.53
FFHH FSF Financial Corp. 90 854 844 0.30 16.46
FFHS First Franklin Corp. 50 409 373 0.30 23.75
FFIC Flushing Financial Corp. 180 2,193 2,216 0.30 19.69
FFKY First Federal Financial Corp. 99 1,604 1,528 0.36 15.54
FFLC FFLC Bancorp Inc. 126 926 723 0.19 30.26
FFOH Fidelity Financial of Ohio 103 1,216 1,195 0.22 17.05
</TABLE>
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<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp Inc. 427 2,455 2,018 0.39 24.84
FFSL First Independence Corp. 24 203 203 0.20 18.75
FFSX First Fed SB of Siouxland(MHC) 160 841 809 0.29 27.48
FFWC FFW Corp. 52 470 460 0.65 16.06
FFWD Wood Bancorp Inc. 47 612 541 0.25 18.50
FFYF FFY Financial Corp. 175 1,903 1,872 0.48 16.67
FGHC First Georgia Holding Inc. 82 381 381 0.12 17.19
FIBC Financial Bancorp Inc. 56 670 670 0.40 15.31
FISB First Indiana Corporation 592 4,706 3,699 0.34 21.51
FKFS First Keystone Financial 74 696 639 0.56 16.52
FKKYD Frankfort First Bancorp Inc. 25 376 376 0.24 19.27
FLAG FLAG Financial Corp. 108 502 405 0.20 22.66
FLFC First Liberty Financial Corp. 543 3,496 3,195 0.41 20.58
FLGS Flagstar Bancorp Inc. 1,088 6,194 6,194 0.45 10.69
FLKY First Lancaster Bancshares NA 111 111 0.12 32.81
FMBD First Mutual Bancorp Inc. 168 271 222 0.07 73.21
FMCO FMS Financial Corp. 281 1,394 1,389 0.57 14.36
FMSB First Mutual Savings Bank 118 1,167 1,177 0.27 17.25
FNGB First Northern Capital Corp. 215 1,586 1,494 0.16 21.48
FOBC Fed One Bancorp 129 803 784 0.32 20.21
FPRY First Financial Bancorp NA 257 141 0.15 NA
FSBI Fidelity Bancorp Inc. NA 802 777 0.48 14.32
FSFC First Southeast Financial Corp 116 926 926 0.21 18.01
FSFF First SecurityFed Financial NA 861 849 NA NA
FSLA First Savings Bank (MHC) 209 1,805 2,294 0.28 39.29
FSNJ Bayonne Bancshares Inc. 71 969 972 NA NA
FSPG First Home Bancorp Inc. 119 1,152 1,123 0.41 14.02
FSPT FirstSpartan Financial Corp. 114 2,035 2,035 NA NA
FSSB First FS&LA of San Bernardino 51 (32) (32) (0.10) NM
FSTC First Citizens Corp. NA 1,309 1,139 0.38 19.08
FTF Texarkana First Financial Corp 35 756 748 0.44 14.63
FTFC First Federal Capital Corp. 670 4,691 3,515 0.36 21.18
FTNB Fulton Bancorp Inc. NA 339 280 0.17 32.35
FTSB Fort Thomas Financial Corp. 19 323 323 0.23 16.30
FWWB First SB of Washington Bancorp NA 3,297 3,101 0.32 20.21
GAF GA Financial Inc. 204 2,166 2,086 0.28 17.69
GBCI Glacier Bancorp Inc. 247 2,318 2,305 0.34 16.18
GDVS Greater Delaware Valley (MHC) 69 549 549 0.17 47.06
GDW Golden West Financial 4,088 90,007 88,782 1.56 15.01
GFCO Glenway Financial Corp. 68 613 613 0.27 17.13
GFED Guaranty Federal SB (MHC) NA 517 492 0.16 40.63
GFSB GFS Bancorp Inc. 16 298 300 0.29 14.71
GLMR Gilmer Financial Svcs, Inc. 12 (54) (57) (0.32) NM
GOSB GSB Financial Corp. NA 125 124 NA NA
GPT GreenPoint Financial Corp. 1,962 36,093 35,596 0.94 18.28
GSB Golden State Bancorp Inc. 3,083 28,517 31,460 0.45 19.03
GSBC Great Southern Bancorp Inc. 423 3,860 3,433 0.42 15.18
GSFC Green Street Financial Corp. 31 723 723 0.17 27.21
GSLA GS Financial Corp. 33 529 529 0.17 26.10
GTFN Great Financial Corp. 846 8,148 5,667 0.41 30.98
GTPS Great American Bancorp NA 228 228 0.13 36.54
GUPB GFSB Bancorp Inc. NA 179 177 0.23 22.01
GWBC Gateway Bancorp Inc. 9 84 83 0.08 61.33
HALL Hallmark Capital Corp. 73 645 656 0.22 16.62
HARB Harbor Florida Bancorp (MHC) 327 3,510 3,476 0.69 24.18
HARL Harleysville Savings Bank 53 861 861 0.50 14.25
HARS Harris Financial Inc. (MHC) 495 5,258 4,315 0.12 40.76
HAVN Haven Bancorp Inc. 630 2,451 2,553 0.28 19.53
HBBI Home Building Bancorp 15 78 78 0.27 19.68
HBEI Home Bancorp of Elgin Inc. 121 623 623 0.10 46.56
HBFW Home Bancorp 81 738 738 0.31 22.18
HBNK Highland Federal Bank FSB 116 1,739 1,145 0.48 16.67
HBS Haywood Bancshares Inc. 34 827 827 0.66 7.86
HCBB HCB Bancshares Inc. NA 292 282 0.11 31.53
</TABLE>
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<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HCFC Home City Financial Corp. 15 243 243 0.29 14.98
HEMT HF Bancorp Inc. NA 502 448 0.07 62.50
HFFB Harrodsburg First Fin Bancorp 15 378 378 0.20 22.34
HFFC HF Financial Corp. 262 1,684 1,540 0.50 13.25
HFGI Harrington Financial Group 59 317 236 0.07 44.20
HFNC HFNC Financial Corp. 123 4,074 1,902 0.12 30.99
HFSA Hardin Bancorp Inc. 19 178 166 0.21 21.13
HHFC Harvest Home Financial Corp. 17 171 170 0.19 19.41
HIFS Hingham Instit. for Savings 63 681 681 0.52 13.40
HMCI HomeCorp Inc. 177 481 391 0.21 32.59
HMLK Hemlock Federal Financial Corp 53 420 420 0.22 19.46
HMNF HMN Financial Inc. NA 1,524 1,131 0.28 23.10
HOMF Home Federal Bancorp 249 2,461 2,229 0.42 16.07
HPBC Home Port Bancorp Inc. 49 822 814 0.45 12.71
HRBF Harbor Federal Bancorp Inc. 47 411 411 0.25 22.63
HRZB Horizon Financial Corp. 121 2,048 1,810 0.25 17.75
HTHR Hawthorne Financial Corp. 196 3,214 3,212 0.47 12.10
HWEN Home Financial Bancorp 18 80 59 0.14 29.46
HZFS Horizon Financial Svcs Corp. 28 247 177 0.21 13.69
IBSF IBS Financial Corp. 130 1,278 1,278 0.12 36.46
IFSB Independence Federal Svgs Bank NA 211 91 0.07 50.00
INBI Industrial Bancorp Inc. 83 1,230 1,230 0.25 18.00
INCB Indiana Community Bank SB NA 140 140 0.15 34.17
IPSW Ipswich Savings Bank 63 573 448 0.18 19.10
ISBF ISB Financial Corp. 388 1,302 1,234 0.19 37.17
ITLA ITLA Capital Corp. 149 3,188 3,188 0.40 11.47
IWBK InterWest Bancorp Inc. 621 5,241 3,994 0.49 20.41
JOAC Joachim Bancorp Inc. 14 66 66 0.09 41.67
JSB JSB Financial Inc. 354 8,554 6,677 0.64 19.02
JSBA Jefferson Savings Bancorp NA 2,359 2,217 0.46 23.03
JXSB Jacksonville Savings Bk (MHC) 81 305 250 0.20 32.81
JXVL Jacksonville Bancorp Inc. 71 974 974 0.41 11.66
KFBI Klamath First Bancorp 222 2,114 2,114 0.22 25.28
KNK Kankakee Bancorp Inc. 114 736 719 0.48 18.23
KSAV KS Bancorp Inc. 31 296 296 0.31 18.15
KSBK KSB Bancorp Inc. NA 448 425 0.36 12.50
KYF Kentucky First Bancorp Inc. 21 267 260 0.21 17.26
LARK Landmark Bancshares Inc. NA 592 528 0.30 19.38
LARL Laurel Capital Group Inc. 50 777 750 0.49 14.16
LFBI Little Falls Bancorp Inc. 41 457 457 0.18 27.78
LFCO Life Financial Corp. NA 3,931 3,931 0.60 6.51
LFED Leeds Federal Savings Bk (MHC) 27 865 865 0.17 33.46
LIFB Life Bancorp Inc. 219 3,430 3,243 0.33 26.99
LISB Long Island Bancorp Inc. 1,446 12,943 10,513 0.45 26.53
LOGN Logansport Financial Corp. 13 297 309 0.24 15.89
LONF London Financial Corporation NA 128 102 0.22 17.90
LSBI LSB Financial Corp. 63 414 373 0.41 16.92
LSBX Lawrence Savings Bank 99 1,570 1,558 0.35 10.63
LVSB Lakeview Financial 87 1,907 847 0.17 36.21
LXMO Lexington B&L Financial Corp. 9 226 226 0.22 19.60
MAFB MAF Bancorp Inc. 850 9,196 9,055 0.57 15.02
MARN Marion Capital Holdings NA 660 660 0.36 19.27
MASB MASSBANK Corp. 185 2,589 2,324 0.63 18.45
MBB MSB Bancorp Inc. NA 1,230 1,183 0.31 24.70
MBBC Monterey Bay Bancorp Inc. 98 511 401 0.13 37.02
MBLF MBLA Financial Corp. 13 505 505 0.38 17.76
MBSP Mitchell Bancorp Inc. 6 125 125 0.15 28.75
MCBN Mid-Coast Bancorp Inc. 25 126 116 0.50 14.38
MCBS Mid Continent Bancshares Inc. 166 977 1,325 0.68 15.99
MDBK Medford Bancorp Inc. 255 2,710 2,633 0.55 17.16
MECH Mechanics Savings Bank 230 1,910 1,898 0.36 19.44
MERI Meritrust Federal SB 95 657 657 0.80 21.56
METF Metropolitan Financial Corp. 277 1,489 1,406 0.40 18.13
MFBC MFB Corp. 69 496 496 0.29 20.26
</TABLE>
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<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFCX Marshalltown Financial Corp. 32 181 181 0.12 35.94
MFFC Milton Federal Financial Corp. 58 345 321 0.15 25.63
MFLR Mayflower Co-operative Bank 48 330 305 0.34 18.20
MFSL Maryland Federal Bancorp 259 2,429 2,251 0.33 20.08
MIFC Mid-Iowa Financial Corp. NA 347 347 0.20 14.69
MIVI Mississippi View Holding Co. NA 185 179 0.23 19.02
MLBC ML Bancorp Inc. 471 4,068 2,970 0.26 28.37
MONT Montgomery Financial Corp. 32 226 226 NA NA
MRKF Market Financial Corp. 9 179 179 0.15 25.73
MSBF MSB Financial Inc. 19 291 263 0.22 22.16
MSBK Mutual Savings Bank FSB 237 192 82 0.02 162.50
MWBI Midwest Bancshares Inc. 39 417 299 0.27 16.44
MWBX MetroWest Bank 174 1,952 1,949 0.14 16.63
MWFD Midwest Federal Financial NA 777 544 0.32 21.19
NASB North American Savings Bank 245 2,796 2,216 0.98 13.78
NBN Northeast Bancorp NA 553 482 0.29 24.03
NBSI North Bancshares Inc. 34 112 113 0.12 54.69
NEIB Northeast Indiana Bancorp 40 586 586 0.33 15.15
NHTB New Hampshire Thrift Bncshrs 113 701 428 0.20 26.88
NMSB NewMil Bancorp Inc. 124 701 674 0.16 21.09
NSLB NS&L Bancorp Inc. 19 139 139 0.19 24.34
NSSB Norwich Financial Corp. 239 2,088 1,719 0.30 26.25
NSSY NSS Bancorp Inc. NA 1,677 1,422 0.59 16.90
NTMG Nutmeg Federal S&LA NA 210 174 0.10 31.88
NWEQ Northwest Equity Corp. 35 256 248 0.32 14.84
NWSB Northwest Savings Bank (MHC) 796 4,837 4,954 0.11 34.66
NYB New York Bancorp Inc. 516 13,870 12,613 0.56 16.63
OCFC Ocean Financial Corp. 235 3,540 3,539 0.45 20.83
OCN Ocwen Financial Corp. 944 20,165 12,172 0.21 31.10
OFCP Ottawa Financial Corp. 251 1,730 1,720 0.30 24.38
OHSL OHSL Financial Corp. 61 501 491 0.40 17.34
OSFS Ohio State Financial Services NA 80 80 NA NA
OTFC Oregon Trail Financial Corp. NA 722 722 NA NA
PALM Palfed Inc. NA 941 1,516 0.29 24.84
PBCI Pamrapo Bancorp Inc. 98 1,265 1,265 0.44 14.20
PBCT People's Bank (MHC) 3,103 23,300 10,495 0.17 52.39
PBHC Oswego City Savings Bk (MHC) 75 483 434 0.23 30.98
PBKB People's Bancshares Inc. 224 1,219 508 0.15 35.00
PCBC Perry County Financial Corp. 9 230 233 0.30 19.38
PDB Piedmont Bancorp Inc. 30 414 389 0.14 19.64
PEEK Peekskill Financial Corp. 25 495 495 0.17 25.74
PERM Permanent Bancorp Inc. 126 645 624 0.29 22.63
PERT Perpetual Bank (MHC) 113 661 662 0.44 30.18
PFDC Peoples Bancorp 78 1,131 1,131 0.33 18.94
PFED Park Bancorp Inc. 40 449 443 0.20 22.50
PFFB PFF Bancorp Inc. 508 3,286 3,235 0.19 25.41
PFFC Peoples Financial Corp. 19 202 197 0.14 24.78
PFNC Progress Financial Corp. 190 902 911 0.20 19.38
PFSB PennFed Financial Services Inc 197 2,686 2,686 0.56 15.51
PFSL Pocahontas FS&LA (MHC) 60 528 521 0.33 26.42
PHBK Peoples Heritage Finl Group 2,381 18,606 18,575 0.68 16.11
PHFC Pittsburgh Home Financial Corp NA 570 467 0.25 18.50
PHSB Peoples Home Savings Bk (MHC) 75 471 467 NA NA
PKPS Poughkeepsie Financial Corp. 280 1,054 1,095 0.08 32.81
PLSK Pulaski Savings Bank (MHC) 42 326 326 0.16 31.05
PMFI Perpetual Midwest Financial 108 554 484 0.25 28.50
PRBC Prestige Bancorp Inc. 35 202 204 0.24 20.05
PROV Provident Financial Holdings NA 1,467 778 0.17 31.62
PSBK Progressive Bank Inc. 264 2,195 2,148 0.56 15.85
PSFC Peoples-Sidney Financial Corp. 17 338 338 0.20 21.56
PSFI PS Financial Inc. 15 418 417 0.19 24.01
PTRS Potters Financial Corp. 45 274 242 0.25 18.00
PULB Pulaski Bank, Svgs Bank (MHC) 85 534 460 0.22 34.09
PULS Pulse Bancorp 57 1,434 1,434 0.45 14.44
</TABLE>
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<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. 124 1,261 1,212 0.44 11.43
PVSA Parkvale Financial Corporation 245 2,696 2,696 0.51 14.34
PWBC PennFirst Bancorp Inc. 133 1,432 1,405 0.26 17.67
PWBK Pennwood Bancorp Inc. 11 128 128 0.24 19.92
QCBC Quaker City Bancorp Inc. 141 1,530 1,511 0.33 17.05
QCFB QCF Bancorp Inc. NA 640 640 0.52 13.70
QCSB Queens County Bancorp Inc. 279 5,395 5,395 0.38 23.85
RARB Raritan Bancorp Inc. 85 967 962 0.38 18.42
REDF RedFed Bancorp Inc. 273 2,802 2,803 0.38 13.12
RELI Reliance Bancshares Inc. NA 163 163 0.07 32.59
RELY Reliance Bancorp Inc. 389 4,741 3,856 0.43 20.13
RIVR River Valley Bancorp NA 315 282 0.26 17.91
ROSE TR Financial Corp. 437 9,032 7,859 0.44 19.32
RSLN Roslyn Bancorp Inc. 401 11,034 10,049 0.26 22.48
RVSB Riverview Bancorp Inc. 93 756 724 NA NA
SBFL SB of the Finger Lakes (MHC) 74 193 157 0.09 83.33
SBOS Boston Bancorp (The) NA 14,315 5,073 0.95 NA
SCBS Southern Community Bancshares 18 211 211 0.21 22.62
SCCB S. Carolina Community Bancshrs NA 119 119 0.18 31.94
SFED SFS Bancorp Inc. 60 296 296 0.25 23.50
SFFC StateFed Financial Corp. NA 224 224 0.15 23.33
SFIN Statewide Financial Corp. NA 1,382 1,382 0.33 17.71
SFSB SuburbFed Financial Corp. NA 730 571 0.42 20.65
SFSL Security First Corp. 152 2,305 2,338 0.27 19.68
SGVB SGV Bancorp Inc. 94 331 310 0.14 32.14
SHEN First Shenango Bancorp Inc. 101 1,178 1,166 0.56 14.84
SHSB SHS Bancorp Inc. NA 147 147 NA NA
SISB SIS Bancorp Inc. 494 3,169 3,074 0.55 17.22
SKAN Skaneateles Bancorp Inc. 110 430 425 0.30 15.83
SKBO First Carnegie Deposit (MHC) NA 320 245 0.11 43.47
SMBC Southern Missouri Bancorp Inc. 56 357 336 0.21 23.21
SMFC Sho-Me Financial Corp. 78 1,124 1,119 0.75 16.92
SOBI Sobieski Bancorp Inc. 24 124 124 0.18 27.08
SOPN First Savings Bancorp Inc. 43 1,276 1,276 0.32 18.85
SOSA Somerset Savings Bank 150 1,749 1,637 0.09 13.37
SPBC St. Paul Bancorp Inc. 1,083 12,374 12,282 0.35 18.13
SRN Southern Banc Co. NA 144 144 0.13 34.13
SSB Scotland Bancorp Inc. NA 399 399 0.24 10.68
SSFC South Street Financial Corp. 38 723 634 0.15 31.88
SSM Stone Street Bancorp Inc. 18 386 386 0.20 28.13
STFR St. Francis Capital Corp. 355 1,899 3,395 1.05 9.52
STSA Sterling Financial Corp. 502 2,531 2,153 0.28 19.08
SVRN Sovereign Bancorp Inc. 1,963 2,540 15,730 0.29 16.76
SWBI Southwest Bancshares 91 1,059 1,006 0.36 17.19
SWCB Sandwich Bancorp Inc. 155 1,238 1,220 0.61 18.44
SZB SouthFirst Bancshares Inc. 45 124 125 0.15 33.75
THR Three Rivers Financial Corp. NA 225 211 0.27 18.75
THRD TF Financial Corp. 152 1,367 933 0.23 30.98
TPNZ Tappan Zee Financial Inc. 14 244 237 0.17 29.04
TRIC Tri-County Bancorp Inc. 19 211 244 0.42 16.37
TSBS Trenton SB (MHC) 144 1,668 579 0.06 159.38
TSH Teche Holding Co. 163 930 927 0.28 18.42
TWIN Twin City Bancorp 53 290 241 0.19 18.91
UBMT United Financial Corp. NA 402 402 0.33 19.70
UFRM United Federal Savings Bank 144 501 461 0.15 19.58
USAB USABancshares, Inc. NA 128 122 0.15 16.46
VABF Virginia Beach Fed. Financial 192 1,099 838 0.17 24.73
WAMU Washington Mutual Inc. 20,302 (126,954) 170,152 0.65 27.40
WAYN Wayne Savings Bancshares (MHC) 91 496 452 0.20 38.75
WBST Webster Financial Corp. 1,225 9,690 13,452 0.96 16.70
WCBI Westco Bancorp 57 1,272 1,133 0.42 15.77
WCFB Webster City Federal SB (MHC) 21 328 328 0.16 33.20
WEFC Wells Financial Corp. NA 555 539 0.28 15.63
WEHO Westwood Homestead Fin. Corp. 20 194 358 0.15 29.58
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WES Westcorp 2,717 8,928 (3,187) (0.12) NM
WFI Winton Financial Corp. NA 879 639 0.32 15.33
WFSG Wilshire Financial Services NA 7,068 5,084 0.54 12.96
WFSL Washington Federal Inc. 656 27,528 27,139 0.56 14.56
WHGB WHG Bancshares Corp. 28 231 231 0.17 23.90
WOFC Western Ohio Financial Corp. 103 60 397 0.20 33.44
WRNB Warren Bancorp Inc. 137 1,704 1,350 0.33 15.53
WSB Washington Savings Bank, FSB 76 541 397 0.09 19.79
WSFS WSFS Financial Corp. 300 4,280 4,219 0.34 14.80
WSTR WesterFed Financial Corp. 369 1,809 1,795 0.32 18.80
WVFC WVS Financial Corp. 58 935 935 0.53 14.74
WWFC Westwood Financial Corp. 15 120 120 0.19 36.35
WYNE Wayne Bancorp Inc. 56 483 483 0.25 21.75
YFCB Yonkers Financial Corporation 61 744 741 0.27 17.25
YFED York Financial Corp. 390 2,433 2,027 0.22 28.69
--------------- -----------------------------------------------------------
Average 369 2,608 3,128 0.31 24.18
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
Productivity Income
--------------- -----------------------------------------------------------
Full Time
Equivalent
Employees Net Income Core Income Core EPS Price/
Ticker Short Name Most Recent Qtr Most Recent Qtr Most Recent Qtr Most Recent Qtr Core EPS
- -------------------------------------- --------------- -----------------------------------------------------------
Comparable Thrift Data
<S> <C> <C> <C> <C> <C> <C>
FESX First Essex Bancorp Inc. 307 2,650 2,298 0.29 18.10
FFES First Federal of East Hartford 182 1,324 1,455 0.52 17.70
FFIC Flushing Financial Corp. 180 2,193 2,216 0.30 19.69
GAF GA Financial Inc. 204 2,166 2,086 0.28 17.69
JSB JSB Financial Inc. 354 8,554 6,677 0.64 19.02
MASB MASSBANK Corp. 185 2,589 2,324 0.63 18.45
MDBK Medford Bancorp Inc. 255 2,710 2,633 0.55 17.16
PWBC PennFirst Bancorp Inc. 133 1,432 1,405 0.26 17.67
SFIN Statewide Financial Corp. NA 1,382 1,382 0.33 17.71
SISB SIS Bancorp Inc. 494 3,169 3,074 0.55 17.22
STFR St. Francis Capital Corp. 355 1,899 3,395 1.05 9.52
THRD TF Financial Corp. 152 1,367 933 0.23 30.98
--------------- -----------------------------------------------------------
Average 254.64 2,620 2,490 0.47 18.41
Median 204.00 2,180 2,257 0.43 17.71
Maximum 494.00 8,554 6,677 1.05 30.98
Minimum 133.00 1,324 933 0.23 9.52
</TABLE>
64
<PAGE>
Exhibit 6
Industry Multiples
Pricing Data as of December 8, 1997
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA NA NA NA NA NA NA NA NA
%CCMD Chevy Chase Bank, FSB NA NA NA NA NA NA NA NA NA NA
AABC Access Anytime Bancorp Inc. 10.75 12.83 2.49 8.60 9.60 2.56 143.14 143.14 12.38 0.00
AADV Advantage Bancorp Inc. 68.25 220.85 20.07 22.09 24.55 22.75 223.04 239.73 21.29 0.59
ABBK Abington Bancorp Inc. 37.00 67.52 16.23 17.54 19.58 17.79 190.43 210.11 13.57 1.08
ABCL Alliance Bancorp Inc. 27.75 222.59 17.79 23.92 21.51 15.42 172.36 174.42 16.23 1.59
ABCW Anchor BanCorp Wisconsin 35.00 318.14 17.16 17.68 18.92 18.62 253.26 257.73 16.21 0.91
AFBC Advance Financial Bancorp 17.25 18.71 21.56 NA NA 22.70 114.92 114.92 17.70 1.86
AFCB Affiliated Community Bancorp 31.75 206.32 18.46 18.25 18.25 18.90 183.74 184.70 18.26 1.89
AFED AFSALA Bancorp Inc. 18.75 26.03 20.38 NA NA 20.38 117.78 117.78 17.14 1.28
AFFFZ America First Financial Fund 50.50 303.53 16.40 8.29 8.24 15.78 171.71 173.54 13.49 3.17
AHCI Ambanc Holding Co. 19.50 83.98 25.66 NM NM 34.82 139.48 139.48 15.87 1.03
AHM H.F. Ahmanson & Co. 63.13 5,959.71 18.79 18.24 21.25 19.01 312.96 368.29 12.73 1.39
ALBC Albion Banc Corp. 28.00 7.00 18.92 21.05 21.37 18.92 115.46 115.46 9.89 1.14
ALBK ALBANK Financial Corp. 45.25 582.72 16.88 17.01 17.08 16.88 169.54 192.47 15.67 1.59
AMFC AMB Financial Corp. 16.00 15.42 12.50 16.00 22.86 22.22 107.02 107.02 14.92 1.75
ANA Acadiana Bancshares Inc. 23.75 63.10 20.47 22.20 22.84 21.99 138.00 138.00 23.38 1.52
ANDB Andover Bancorp Inc. 39.13 201.60 15.53 15.71 16.10 15.78 193.69 193.69 15.73 1.94
ANE Alliance Bncorp of New England 17.13 27.86 13.81 14.89 15.86 28.54 156.39 160.20 11.52 1.17
ASBI Ameriana Bancorp 20.25 65.44 16.33 18.08 19.85 18.08 148.57 148.68 16.65 3.16
ASBP ASB Financial Corp. 13.38 22.32 20.90 19.67 20.90 20.90 129.85 129.85 20.22 2.99
ASFC Astoria Financial Corp. 56.88 1,175.37 17.55 19.68 20.83 20.03 192.73 227.86 14.87 1.06
ATSB AmTrust Capital Corp. 14.00 7.37 29.17 25.00 41.18 58.33 96.82 97.77 10.58 1.43
AVND Avondale Financial Corp. 17.00 59.41 NM NM NM NM 128.98 128.98 9.95 0.00
BANC BankAtlantic Bancorp Inc. 14.50 319.38 15.76 15.26 28.43 40.28 206.26 249.14 11.35 0.91
BDJI First Federal Bancorporation 28.00 18.83 20.59 23.14 23.73 20.00 157.75 157.75 16.89 0.00
BFD BostonFed Bancorp Inc. 20.38 115.12 16.98 18.03 19.78 19.59 132.05 137.11 11.98 1.37
BFFC Big Foot Financial Corp. 18.75 47.11 46.88 NA NA 46.88 125.25 125.25 21.90 0.00
BFSB Bedford Bancshares Inc. 29.00 33.13 19.08 19.73 19.86 19.59 160.75 160.75 23.80 1.93
BKC American Bank of Connecticut 49.00 113.35 14.58 15.36 18.22 16.78 211.02 218.95 18.59 2.94
BKCT Bancorp Connecticut Inc. 23.13 117.66 21.41 22.24 24.60 25.14 258.09 258.09 27.75 2.16
BKUNA BankUnited Financial Corp. 13.88 132.27 23.13 25.69 28.91 34.69 174.75 222.00 6.17 0.00
BNKU Bank United Corp. 44.13 1,394.16 17.51 18.23 23.47 18.70 232.97 238.38 11.65 1.45
BPLS Bank Plus Corp. 12.91 249.61 17.93 18.98 22.64 18.98 140.90 141.20 6.37 0.00
BSBC Branford Savings Bank 6.06 39.77 25.26 20.91 20.91 25.26 225.39 225.39 21.75 1.32
BTHL Bethel Bancorp 12.50 15.15 16.45 13.02 16.89 19.53 91.17 108.60 6.89 2.56
BVCC Bay View Capital Corp. 35.38 439.40 38.45 26.80 24.40 23.90 238.86 285.97 13.90 0.91
BWFC Bank West Financial Corp. 17.50 45.90 19.02 28.23 50.00 48.61 197.29 197.29 27.92 1.22
BYFC Broadway Financial Corp. 13.25 11.01 30.11 33.97 30.81 165.63 89.71 89.71 8.83 1.51
CAFI Camco Financial Corp. 24.00 77.14 11.32 13.87 16.33 13.33 160.21 173.16 15.36 2.25
CAPS Capital Savings Bancorp Inc. 24.13 45.64 19.46 20.27 20.80 20.80 206.20 206.20 18.84 1.00
CASB Cascade Financial Corp. 12.75 43.18 18.75 17.96 18.21 15.94 152.51 152.51 10.13 0.00
CASH First Midwest Financial Inc. 21.25 57.35 16.10 16.73 17.56 17.71 131.91 148.50 14.18 2.26
CATB Catskill Financial Corp. 18.00 83.83 20.45 21.95 22.50 20.45 116.81 116.81 28.94 1.78
CBCI Calumet Bancorp Inc. 32.63 103.30 16.65 16.15 16.48 16.65 130.45 130.45 21.15 0.00
CBES CBES Bancorp Inc. 22.00 22.55 17.19 17.19 18.97 19.64 125.00 125.00 21.15 1.82
CBK Citizens First Financial Corp. 18.00 46.51 34.62 31.03 34.62 37.50 110.43 110.43 16.73 0.00
CBSA Coastal Bancorp Inc. 30.00 149.77 14.42 12.77 13.27 14.71 149.03 177.30 5.11 1.60
CBSB Charter Financial Inc. 23.63 98.05 13.13 22.72 22.29 23.63 172.32 194.77 24.93 1.35
CCFH CCF Holding Company 20.00 16.40 NM 133.33 NM NM 140.75 140.75 15.00 2.75
CEBK Central Co-operative Bank 26.38 51.83 17.35 17.58 18.71 24.42 146.12 162.31 14.46 1.21
CENB Century Bancorp Inc. 83.00 33.81 19.76 NA NA 19.76 110.59 110.59 33.49 2.41
CENF CENFED Financial Corp. 40.63 243.43 14.11 16.79 18.64 14.72 188.87 189.13 10.50 0.89
CFB Commercial Federal Corp. 52.75 1,138.96 16.91 17.70 17.64 17.35 256.19 286.22 15.80 0.63
CFBC Community First Banking Co. 39.50 95.34 NA NA NA NA 125.44 127.13 24.16 1.52
CFCP Coastal Financial Corp. 22.50 104.55 17.05 18.91 21.84 21.63 322.81 322.81 21.16 1.60
</TABLE>
Page 1 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFFC Community Financial Corp. 27.00 34.48 25.96 18.00 18.00 25.96 142.18 142.18 18.79 2.07
CFNC Carolina Fincorp Inc. 18.25 33.79 22.81 NA NA 22.81 131.11 131.11 29.62 1.32
CFSB CFSB Bancorp Inc. 35.25 179.07 16.63 18.85 20.14 17.98 270.53 270.53 20.85 1.93
CFTP Community Federal Bancorp 21.00 97.20 37.50 30.00 30.00 40.38 156.72 156.72 45.02 1.43
CFX CFX Corp. 28.50 684.04 NM 26.39 21.92 20.96 278.05 288.46 24.22 3.09
CIBI Community Investors Bancorp 16.25 14.66 14.51 15.48 15.48 14.51 134.41 134.41 15.79 1.97
CKFB CKF Bancorp Inc. 18.50 16.71 17.79 14.80 19.68 17.79 109.40 109.40 27.91 2.70
CLAS Classic Bancshares Inc. 16.88 21.94 19.18 19.40 24.82 70.31 111.53 131.32 16.59 1.66
CMRN Cameron Financial Corp 20.75 53.16 19.95 21.39 21.39 19.95 119.05 119.05 25.02 1.35
CMSB Commonwealth Bancorp Inc. 21.13 343.17 21.13 20.92 27.08 29.34 162.25 208.13 15.06 1.33
CMSV Community Savings Bnkshrs(MHC) 35.00 178.32 28.23 32.41 35.35 38.04 215.78 215.78 25.14 2.57
CNIT CENIT Bancorp Inc. 68.00 112.50 16.67 20.61 21.12 17.89 219.28 239.44 16.03 1.47
CNSB CNS Bancorp Inc. 21.25 35.13 40.87 41.67 40.87 40.87 148.19 148.19 36.06 1.13
CNY Carver Bancorp Inc. 16.69 38.62 27.81 NM 50.57 27.81 110.66 115.09 9.29 0.00
COFI Charter One Financial 63.00 4,017.38 16.58 17.45 17.85 17.12 291.26 317.06 20.55 1.59
CONE Conestoga Bancorp, Inc. NA NA NA NA NA NA NA NA NA NA
COOP Cooperative Bankshares Inc. 18.25 54.45 28.52 26.45 26.45 28.52 196.87 196.87 15.14 0.00
CRZY Crazy Woman Creek Bancorp 15.47 14.77 18.42 21.19 20.90 18.42 103.96 103.96 24.64 2.59
CSA Coast Savings Financial 63.25 1,178.43 15.35 22.51 21.08 12.96 250.89 253.81 13.04 0.00
CSBF CSB Financial Group Inc. 13.13 12.36 54.69 77.21 48.61 54.69 101.04 106.97 25.31 0.00
CTZN CitFed Bancorp Inc. 36.25 470.68 17.43 18.98 18.98 17.43 227.70 250.52 14.29 0.66
CVAL Chester Valley Bancorp Inc. 27.25 59.66 17.47 20.04 21.12 18.92 211.40 211.40 18.51 1.62
DCBI Delphos Citizens Bancorp Inc. 17.50 34.29 18.23 NA NA 18.23 119.45 119.45 31.81 0.00
DIBK Dime Financial Corp. 30.75 158.74 9.49 10.42 10.68 9.73 211.49 217.78 17.22 1.43
DIME Dime Community Bancorp Inc. 24.88 314.04 27.04 23.25 24.63 27.04 167.96 194.95 22.67 0.97
DME Dime Bancorp Inc. 25.69 2,607.13 16.90 20.72 21.06 17.84 247.48 260.00 13.43 0.62
DNFC D & N Financial Corp. 26.69 220.02 15.52 16.47 17.79 17.56 238.71 241.08 12.54 0.75
DSL Downey Financial Corp. 29.00 775.87 18.59 19.59 20.57 20.71 185.78 188.19 13.25 1.10
EBSI Eagle Bancshares 19.50 111.12 16.81 22.67 18.40 16.25 154.88 154.88 12.66 3.08
EFBC Empire Federal Bancorp Inc. 16.50 42.77 24.26 NA NA 24.26 106.38 106.38 38.70 1.82
EFBI Enterprise Federal Bancorp 28.00 55.60 25.00 22.76 27.18 31.82 176.99 177.10 20.23 3.57
EGFC Eagle Financial Corp. 52.75 333.17 20.29 48.84 36.38 20.61 230.25 289.36 15.89 1.90
EGLB Eagle BancGroup Inc. 20.00 23.80 55.56 44.44 58.82 83.33 117.44 117.44 13.92 0.00
EIRE Emerald Isle Bancorp Inc. 32.00 71.99 20.00 20.38 19.28 18.60 232.22 232.22 16.23 0.88
EMLD Emerald Financial Corp. 19.50 98.90 16.25 16.39 17.57 16.81 210.13 213.35 16.39 1.23
EQSB Equitable Federal Savings Bank 47.50 28.60 14.31 23.06 14.39 14.48 184.11 184.11 9.28 0.00
ESBK Elmira Savings Bank (The) 30.75 21.72 16.02 22.61 27.95 30.75 145.94 149.85 9.52 2.08
ESX Essex Bancorp Inc. 4.88 5.16 NM NM NM NM NM NM 2.69 0.00
ETFS East Texas Financial Services 20.00 20.53 23.81 25.64 27.40 26.32 98.33 98.33 17.70 1.00
FAB FirstFed America Bancorp Inc. 21.00 182.85 23.86 NA NA 27.63 134.36 134.36 17.65 0.00
FBBC First Bell Bancorp Inc. 18.00 117.19 15.00 15.52 15.93 15.00 163.34 163.34 17.20 2.22
FBCI Fidelity Bancorp Inc. 24.00 67.08 15.79 17.39 17.39 15.79 128.62 128.89 13.47 1.33
FBCV 1ST Bancorp 27.00 28.01 15.70 14.92 29.35 17.31 124.14 126.52 10.74 1.04
FBER 1st Bergen Bancorp 18.88 54.07 26.22 25.86 25.86 26.22 139.09 139.09 18.99 1.06
FBHC Fort Bend Holding Corp. 20.00 33.28 20.83 21.05 27.40 26.32 168.35 180.34 10.37 2.00
FBNW FirstBank Corp. 18.50 36.70 NA NA NA NA 115.70 115.70 20.63 1.51
FBSI First Bancshares Inc. 25.25 27.61 12.88 14.85 16.40 14.35 121.75 121.75 16.95 0.79
FCB Falmouth Bancorp Inc. 20.63 30.00 28.65 37.50 41.25 36.83 131.54 131.54 31.13 0.97
FCBF FCB Financial Corp. 27.75 107.65 15.77 22.20 21.68 16.92 148.24 148.24 20.58 2.88
FCME First Coastal Corp. 14.50 19.71 15.10 3.22 3.35 19.08 136.02 136.02 13.27 0.00
FDEF First Defiance Financial 15.88 142.19 26.46 26.46 26.91 28.35 125.89 125.89 24.75 2.02
FED FirstFed Financial Corp. 39.06 413.58 17.76 18.17 18.17 17.76 195.22 197.19 10.07 0.00
FESX First Essex Bancorp Inc. 21.00 158.06 15.44 15.22 17.95 18.10 176.47 201.73 13.07 2.29
FFBA First Colorado Bancorp Inc. 26.13 438.65 20.41 23.54 23.54 20.41 217.71 220.65 28.47 1.84
FFBH First Federal Bancshares of AR 22.50 110.16 19.40 18.60 19.57 19.40 135.22 135.22 20.13 1.07
FFBI First Financial Bancorp Inc. 21.00 8.72 18.10 NM 23.08 23.86 116.02 116.02 10.35 0.00
</TABLE>
Page 2 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFBS FFBS BanCorp Inc. 22.50 35.38 18.75 18.75 18.75 18.75 149.30 149.30 26.21 2.22
FFBZ First Federal Bancorp Inc. 19.63 30.91 16.92 17.21 18.00 17.52 216.61 216.85 15.17 1.43
FFCH First Financial Holdings Inc. 47.50 302.49 20.83 21.30 21.89 21.59 288.75 288.75 17.66 1.77
FFDB FirstFed Bancorp Inc. 21.28 24.49 15.20 14.48 14.88 15.20 144.08 157.40 13.88 2.35
FFDF FFD Financial Corp. 18.63 26.91 27.39 14.90 30.04 27.39 125.34 125.34 30.50 1.61
FFED Fidelity Federal Bancorp 10.13 28.26 13.32 14.46 14.89 14.89 196.60 196.60 12.01 3.95
FFES First Federal of East Hartford 36.81 98.74 19.58 19.69 17.36 17.70 150.87 150.87 10.00 1.63
FFFC FFVA Financial Corp. 33.38 150.98 18.96 20.48 21.26 19.87 187.08 190.93 26.60 1.44
FFFD North Central Bancshares Inc. 18.50 60.43 14.92 16.09 16.09 14.92 122.27 122.27 28.02 1.35
FFFL Fidelity Bankshares Inc. (MHC) 28.63 194.22 23.85 30.45 35.78 32.53 226.28 227.72 18.57 3.14
FFHH FSF Financial Corp. 19.75 59.44 16.46 18.63 18.81 16.46 121.61 121.61 15.31 2.53
FFHS First Franklin Corp. 28.50 33.97 21.59 27.94 23.55 23.75 162.95 163.89 14.69 1.40
FFIC Flushing Financial Corp. 23.63 188.61 19.69 22.29 22.08 19.69 138.32 144.05 19.64 1.02
FFKY First Federal Financial Corp. 22.38 92.77 14.72 15.33 15.54 15.54 177.58 188.18 24.32 2.50
FFLC FFLC Bancorp Inc. 23.00 88.20 23.96 25.56 27.06 30.26 167.52 167.52 23.00 1.25
FFOH Fidelity Financial of Ohio 15.00 83.70 17.05 19.23 16.85 17.05 121.56 137.11 15.83 1.87
FFPB First Palm Beach Bancorp Inc. 38.75 195.60 20.18 20.95 25.00 24.84 173.07 177.18 10.82 1.55
FFSL First Independence Corp. 15.00 14.67 18.75 22.06 22.06 18.75 127.33 127.33 13.04 1.67
FFSX First Fed SB of Siouxland(MHC) 31.88 90.30 26.56 26.79 27.48 27.48 226.38 228.17 19.77 1.51
FFWC FFW Corp. 41.75 29.98 15.81 16.97 17.32 16.06 169.44 186.72 16.45 1.73
FFWD Wood Bancorp Inc. 18.50 39.22 16.52 18.32 19.89 18.50 189.36 189.36 23.54 2.16
FFYF FFY Financial Corp. 32.00 131.66 16.33 17.30 17.58 16.67 157.64 157.64 21.59 2.50
FGHC First Georgia Holding Inc. 8.25 25.18 17.19 27.50 22.30 17.19 195.96 213.73 16.10 0.65
FIBC Financial Bancorp Inc. 24.50 41.89 15.31 16.33 15.41 15.31 155.95 156.65 14.11 1.63
FISB First Indiana Corporation 29.25 308.92 17.01 18.51 22.33 21.51 207.15 209.68 19.97 1.64
FKFS First Keystone Financial 37.00 45.45 15.16 16.30 17.79 16.52 183.62 183.62 12.17 0.54
FKKYD Frankfort First Bancorp Inc. 18.50 30.34 19.27 NM 35.58 19.27 135.23 135.23 22.77 3.89
FLAG FLAG Financial Corp. 18.13 36.92 18.13 18.13 22.66 22.66 170.03 170.03 15.48 1.88
FLFC First Liberty Financial Corp. 33.75 260.90 18.75 25.76 22.06 20.58 274.39 304.33 20.23 1.30
FLGS Flagstar Bancorp Inc. 19.25 263.15 10.69 42.78 NA 10.69 216.54 225.41 12.94 0.00
FLKY First Lancaster Bancshares 15.75 14.98 32.81 28.64 28.64 32.81 107.73 107.73 31.75 3.18
FMBD First Mutual Bancorp Inc. 20.50 71.89 64.06 60.29 66.13 73.21 122.24 160.41 17.86 1.56
FMCO FMS Financial Corp. 32.75 78.20 14.36 14.36 14.43 14.36 207.28 210.34 13.44 0.86
FMSB First Mutual Savings Bank 18.63 75.75 17.25 18.26 18.63 17.25 247.34 247.34 16.79 1.07
FNGB First Northern Capital Corp. 13.75 121.63 20.22 21.48 22.18 21.48 166.87 166.87 18.51 2.33
FOBC Fed One Bancorp 25.88 61.42 19.60 19.31 19.45 20.21 148.28 155.13 17.17 2.40
FPRY First Financial Bancorp NA NA NA NA NA NA NA NA NA NA
FSBI Fidelity Bancorp Inc. 27.50 42.76 13.75 16.08 16.37 14.32 165.17 165.17 11.22 1.31
FSFC First Southeast Financial Corp 15.13 66.37 18.01 18.67 18.67 18.01 184.45 184.45 18.96 1.59
FSFF First SecurityFed Financial 16.31 104.53 NA NA NA NA NA NA NA 0.00
FSLA First Savings Bank (MHC) 44.00 352.79 50.00 39.29 37.61 39.29 355.13 390.76 33.73 1.09
FSNJ Bayonne Bancshares Inc. 12.13 109.73 NA NA NA NA 114.60 114.60 17.90 1.40
FSPG First Home Bancorp Inc. 23.00 62.29 13.69 13.37 13.69 14.02 172.80 175.44 11.86 1.74
FSPT FirstSpartan Financial Corp. 38.25 169.46 NA NA NA NA 131.13 131.13 35.13 1.57
FSSB First FS&LA of San Bernardino 9.63 3.16 NM NM NM NM 70.36 73.03 3.05 0.00
FSTC First Citizens Corp. 29.00 79.57 16.48 14.01 15.68 19.08 233.12 295.92 23.58 1.01
FTF Texarkana First Financial Corp 25.75 46.02 14.63 15.70 15.80 14.63 168.08 168.08 25.75 2.18
FTFC First Federal Capital Corp. 30.50 279.53 15.89 18.37 22.10 21.18 266.14 282.41 17.92 1.57
FTNB Fulton Bancorp Inc. 22.00 37.82 26.19 NA NA 32.35 147.85 147.85 36.47 0.91
FTSB Fort Thomas Financial Corp. 15.00 22.43 16.30 18.99 18.99 16.30 142.05 142.05 22.92 1.67
FWWB First SB of Washington Bancorp 25.88 265.13 19.03 19.90 21.04 20.21 163.46 176.98 24.13 1.08
GAF GA Financial Inc. 19.81 155.96 17.08 20.64 21.08 17.69 134.60 135.89 19.69 2.42
GBCI Glacier Bancorp Inc. 22.00 150.00 16.18 18.03 17.60 16.18 261.59 268.29 26.13 2.18
GDVS Greater Delaware Valley (MHC) 32.00 104.72 47.06 47.06 47.06 47.06 361.58 361.58 42.09 1.13
GDW Golden West Financial 93.69 5,321.84 14.82 15.91 16.15 15.01 206.54 206.54 13.56 0.53
GFCO Glenway Financial Corp. 18.50 42.21 17.13 18.69 19.27 17.13 152.01 153.91 14.38 2.16
</TABLE>
Page 3 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GFED Guaranty Federal SB (MHC) 26.00 81.25 38.24 41.94 43.33 40.63 296.80 296.80 38.67 1.69
GFSB GFS Bancorp Inc. 17.06 16.86 14.71 15.23 15.23 14.71 154.98 154.98 17.84 1.52
GLMR Gilmer Financial Svcs, Inc. 14.13 2.70 NM 117.71 20.77 NM 71.05 71.05 6.41 0.00
GOSB GSB Financial Corp. 16.88 37.94 NA NA NA NA NA NA NA 0.00
GPT GreenPoint Financial Corp. 68.75 2,944.29 18.09 19.31 20.04 18.28 204.31 381.10 22.49 1.46
GSB Golden State Bancorp Inc. 34.25 1,728.11 21.41 25.00 20.76 19.03 211.94 236.86 10.52 0.00
GSBC Great Southern Bancorp Inc. 25.50 205.91 13.56 16.67 17.59 15.18 327.34 327.34 28.32 1.73
GSFC Green Street Financial Corp. 18.50 79.52 27.21 27.61 27.61 27.21 126.37 126.37 44.69 2.38
GSLA GS Financial Corp. 17.75 61.03 26.10 NA NA 26.10 107.97 107.97 46.56 1.58
GTFN Great Financial Corp. 50.81 702.41 21.53 23.31 31.56 30.98 241.05 251.18 24.28 1.18
GTPS Great American Bancorp 19.00 32.24 36.54 48.72 44.19 36.54 103.04 103.04 23.10 2.11
GUPB GFSB Bancorp Inc. 20.25 16.21 22.01 21.09 21.09 22.01 115.06 115.06 14.75 1.98
GWBC Gateway Bancorp Inc. 19.63 21.23 61.33 33.26 33.26 61.33 121.52 121.52 33.72 2.04
HALL Hallmark Capital Corp. 14.63 42.21 16.62 16.07 16.43 16.62 138.10 138.10 10.09 0.00
HARB Harbor Florida Bancorp (MHC) 66.75 331.98 23.84 25.09 25.28 24.18 343.01 354.11 29.35 2.10
HARL Harleysville Savings Bank 28.50 47.36 14.25 14.18 14.18 14.25 207.12 207.12 13.72 1.54
HARS Harris Financial Inc. (MHC) 19.56 660.82 32.61 37.62 45.50 40.76 382.09 431.85 31.32 1.13
HAVN Haven Bancorp Inc. 21.88 191.89 20.25 17.22 17.09 19.53 174.44 175.00 10.47 1.37
HBBI Home Building Bancorp 21.25 6.62 19.68 18.48 18.81 19.68 104.01 104.01 15.86 1.41
HBEI Home Bancorp of Elgin Inc. 18.63 127.69 46.56 40.49 42.33 46.56 135.26 135.26 37.28 2.15
HBFW Home Bancorp 27.50 69.43 22.18 36.18 23.50 22.18 156.07 156.07 20.73 0.73
HBNK Highland Federal Bank FSB 32.00 73.60 10.96 13.56 17.68 16.67 186.05 186.05 14.26 0.00
HBS Haywood Bancshares Inc. 20.75 25.94 7.86 13.30 13.30 7.86 119.73 123.95 16.98 2.70
HCBB HCB Bancshares Inc. 13.88 36.70 31.53 NA NA 31.53 96.15 99.75 18.36 0.00
HCFC Home City Financial Corp. 17.38 15.72 14.98 NA NA 14.98 114.31 114.31 22.42 2.07
HEMT HF Bancorp Inc. 17.50 109.93 54.69 NM 58.33 62.50 131.98 158.37 10.47 0.00
HFFB Harrodsburg First Fin Bancorp 17.88 36.19 22.34 30.30 23.83 22.34 114.00 114.00 33.22 2.24
HFFC HF Financial Corp. 26.50 77.85 12.05 14.17 15.41 13.25 145.44 145.44 12.92 1.59
HFGI Harrington Financial Group 12.38 40.30 30.94 18.20 22.50 44.20 159.88 159.88 7.73 0.97
HFNC HFNC Financial Corp. 14.88 255.74 14.30 22.20 25.65 30.99 156.91 156.91 29.50 1.88
HFSA Hardin Bancorp Inc. 17.75 15.25 20.17 18.49 19.51 21.13 112.70 112.70 13.00 2.70
HHFC Harvest Home Financial Corp. 14.75 13.49 19.41 56.73 27.83 19.41 130.42 130.42 15.40 2.98
HIFS Hingham Instit. for Savings 27.88 36.34 13.40 14.08 14.08 13.40 173.14 173.14 16.80 1.72
HMCI HomeCorp Inc. 27.38 46.74 26.32 29.76 36.99 32.59 209.45 209.45 14.30 0.00
HMLK Hemlock Federal Financial Corp 17.13 35.56 19.46 NA NA 19.46 113.71 113.71 21.96 1.40
HMNF HMN Financial Inc. 25.88 108.25 17.02 18.35 21.56 23.10 128.80 128.80 19.16 0.00
HOMF Home Federal Bancorp 27.00 137.91 14.67 16.07 17.53 16.07 229.40 236.43 19.85 1.30
HPBC Home Port Bancorp Inc. 22.88 42.13 12.71 13.00 13.07 12.71 196.35 196.35 20.96 3.50
HRBF Harbor Federal Bancorp Inc. 22.63 38.31 22.63 24.07 24.07 22.63 135.16 135.16 17.64 2.12
HRZB Horizon Financial Corp. 17.75 132.05 15.85 15.99 16.28 17.75 158.91 158.91 24.85 2.48
HTHR Hawthorne Financial Corp. 22.75 70.25 12.10 17.23 18.20 12.10 162.38 162.38 7.88 0.00
HWEN Home Financial Bancorp 16.50 7.66 21.71 22.00 25.38 29.46 105.70 105.70 18.55 1.21
HZFS Horizon Financial Svcs Corp. 11.50 9.79 9.91 14.74 18.25 13.69 111.98 111.98 11.15 1.57
IBSF IBS Financial Corp. 17.50 191.61 36.46 32.41 32.41 36.46 149.70 149.70 26.08 2.29
IFSB Independence Federal Svgs Bank 14.00 17.94 21.88 12.84 30.43 50.00 98.38 110.50 7.13 1.57
INBI Industrial Bancorp Inc. 18.00 93.11 18.00 17.82 18.75 18.00 153.06 153.06 26.29 3.11
INCB Indiana Community Bank SB 20.50 18.90 34.17 39.42 39.42 34.17 165.59 165.59 19.67 1.76
IPSW Ipswich Savings Bank 13.75 32.76 14.95 16.37 20.22 19.10 287.66 287.66 16.14 0.87
ISBF ISB Financial Corp. 28.25 194.95 35.31 26.90 27.43 37.17 159.15 185.98 20.39 1.77
ITLA ITLA Capital Corp. 18.34 143.99 11.47 12.31 12.31 11.47 148.90 149.50 15.97 0.00
IWBK InterWest Bancorp Inc. 40.00 322.01 15.63 16.13 18.35 20.41 247.99 252.53 15.73 1.60
JOAC Joachim Bancorp Inc. 15.00 10.84 41.67 39.47 39.47 41.67 109.81 109.81 30.90 3.33
JSB JSB Financial Inc. 48.69 482.91 14.84 17.08 19.17 19.02 135.58 135.58 31.48 2.88
JSBA Jefferson Savings Bancorp 42.38 212.14 21.62 19.71 20.28 23.03 172.47 219.90 16.87 1.32
JXSB Jacksonville Savings Bk (MHC) 26.25 33.39 27.34 33.23 39.77 32.81 192.73 192.73 20.33 1.52
</TABLE>
Page 4 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JXVL Jacksonville Bancorp Inc. 19.13 46.73 11.66 24.84 8.39 11.66 141.14 141.14 21.06 2.61
KFBI Klamath First Bancorp 22.25 222.91 25.28 25.28 25.28 25.28 142.26 156.47 22.74 1.44
KNK Kankakee Bancorp Inc. 35.00 49.89 17.86 17.16 17.41 18.23 128.44 136.24 14.68 1.37
KSAV KS Bancorp Inc. 22.50 19.92 18.15 17.05 17.18 18.15 136.86 136.94 18.12 2.67
KSBK KSB Bancorp Inc. 18.00 22.29 11.84 13.95 13.85 12.50 202.25 212.77 14.89 0.44
KYF Kentucky First Bancorp Inc. 14.50 18.82 16.48 18.13 18.35 17.26 128.43 128.43 21.44 3.45
LARK Landmark Bancshares Inc. 23.25 39.26 17.10 17.10 19.38 19.38 122.43 122.43 17.24 1.72
LARL Laurel Capital Group Inc. 27.75 40.15 13.60 14.16 14.68 14.16 182.57 182.57 19.11 1.87
LFBI Little Falls Bancorp Inc. 20.00 52.16 27.78 29.85 33.33 27.78 137.65 149.25 16.08 1.00
LFCO Life Financial Corp. 15.63 102.21 6.51 7.23 7.23 6.51 206.68 206.68 34.75 0.00
LFED Leeds Federal Savings Bk (MHC) 22.75 117.89 33.46 35.00 35.00 33.46 247.55 247.55 41.30 2.23
LIFB Life Bancorp Inc. 35.63 350.82 25.45 25.82 27.62 26.99 220.32 226.62 23.60 1.35
LISB Long Island Bancorp Inc. 47.75 1,147.09 21.70 22.96 26.98 26.53 209.98 211.94 19.34 1.26
LOGN Logansport Financial Corp. 15.25 19.22 16.58 16.94 16.22 15.89 118.58 118.58 22.41 2.62
LONF London Financial Corporation 15.75 8.11 14.58 19.44 20.72 17.90 106.71 106.71 21.24 1.52
LSBI LSB Financial Corp. 27.75 25.43 15.08 16.62 18.88 16.92 137.10 137.10 12.70 1.23
LSBX Lawrence Savings Bank 14.88 63.73 10.63 10.86 10.86 10.63 189.73 189.73 18.05 0.00
LVSB Lakeview Financial 24.63 111.04 16.20 20.52 28.30 36.21 179.61 209.57 21.95 0.51
LXMO Lexington B&L Financial Corp. 17.25 19.64 19.60 30.26 22.70 19.60 117.11 117.11 33.15 1.74
MAFB MAF Bancorp Inc. 34.25 517.23 14.76 14.64 14.70 15.02 198.90 226.37 15.49 0.82
MARN Marion Capital Holdings 27.75 49.33 19.27 17.45 17.68 19.27 124.89 124.89 27.40 3.17
MASB MASSBANK Corp. 46.50 166.08 16.61 17.22 18.31 18.45 164.60 167.09 17.75 2.07
MBB MSB Bancorp Inc. 30.63 87.10 23.20 27.34 27.34 24.70 136.72 256.49 11.25 1.96
MBBC Monterey Bay Bancorp Inc. 19.25 62.17 30.08 32.63 35.00 37.02 123.40 133.13 15.18 0.62
MBLF MBLA Financial Corp. 27.00 34.22 17.76 20.15 19.71 17.76 120.81 120.81 15.29 1.48
MBSP Mitchell Bancorp Inc. 17.25 16.06 28.75 27.82 27.82 28.75 112.30 112.30 46.42 2.32
MCBN Mid-Coast Bancorp Inc. 28.75 6.70 13.31 14.82 15.63 14.38 126.93 126.93 10.90 1.81
MCBS Mid Continent Bancshares Inc. 43.50 85.34 21.75 20.23 18.67 15.99 215.35 215.35 21.06 0.92
MDBK Medford Bancorp Inc. 37.75 171.43 16.56 15.79 17.00 17.16 171.90 183.43 15.49 1.91
MECH Mechanics Savings Bank 28.00 148.21 19.44 10.45 10.45 19.44 171.46 171.46 17.84 0.00
MERI Meritrust Federal SB 69.00 53.42 21.56 21.23 21.23 21.56 277.22 277.22 22.90 1.01
METF Metropolitan Financial Corp. 29.00 102.24 17.26 19.73 21.01 18.13 292.93 321.15 11.81 0.00
MFBC MFB Corp. 23.50 38.79 20.26 20.61 20.61 20.26 115.71 115.71 15.16 1.36
MFCX Marshalltown Financial Corp. 17.25 24.35 35.94 30.26 31.94 35.94 120.04 120.04 19.40 0.00
MFFC Milton Federal Financial Corp. 15.38 35.44 24.02 24.40 27.46 25.63 124.90 124.90 16.88 3.90
MFLR Mayflower Co-operative Bank 24.75 22.04 16.72 16.95 19.04 18.20 177.17 180.00 17.08 2.75
MFSL Maryland Federal Bancorp 26.50 171.39 18.40 23.04 16.26 20.08 171.85 173.88 14.59 1.59
MIFC Mid-Iowa Financial Corp. 11.75 19.72 14.69 13.06 14.33 14.69 163.42 163.65 15.40 0.68
MIVI Mississippi View Holding Co. 17.50 12.95 18.23 18.23 18.42 19.02 107.36 107.36 18.90 0.91
MLBC ML Bancorp Inc. 29.50 350.03 21.07 23.41 32.78 28.37 204.72 219.49 15.12 1.36
MONT Montgomery Financial Corp. 12.44 20.56 NA NA NA NA 105.32 105.32 20.16 1.77
MRKF Market Financial Corp. 15.44 20.62 25.73 NA NA 25.73 103.68 103.68 36.74 1.81
MSBF MSB Financial Inc. 19.50 24.06 20.31 21.91 22.67 22.16 188.77 188.77 31.23 1.44
MSBK Mutual Savings Bank FSB 13.00 55.63 81.25 86.67 NM 162.50 133.61 133.61 8.50 0.00
MWBI Midwest Bancshares Inc. 17.75 18.07 11.68 15.99 18.30 16.44 174.36 174.36 12.06 1.35
MWBX MetroWest Bank 9.31 129.97 16.63 17.57 17.57 16.63 297.54 297.54 22.19 1.29
MWFD Midwest Federal Financial 27.13 44.15 15.07 16.05 20.87 21.19 231.84 239.83 20.86 1.25
NASB North American Savings Bank 54.00 120.76 10.89 13.33 14.14 13.78 212.85 220.23 16.34 1.48
NBN Northeast Bancorp 27.88 41.30 20.50 23.42 29.65 24.03 195.34 221.05 13.58 1.15
NBSI North Bancshares Inc. 26.25 25.09 54.69 35.00 39.18 54.69 154.05 154.05 20.68 1.83
NEIB Northeast Indiana Bancorp 20.00 35.25 15.15 16.53 16.53 15.15 128.95 128.95 18.52 1.70
NHTB New Hampshire Thrift Bncshrs 21.50 44.61 16.29 21.72 26.88 26.88 178.57 207.93 13.97 2.33
NMSB NewMil Bancorp Inc. 13.50 51.77 19.85 21.09 22.50 21.09 160.33 160.33 16.31 2.37
NSLB NS&L Bancorp Inc. 18.50 13.09 24.34 42.05 30.83 24.34 112.05 112.05 21.92 2.70
NSSB Norwich Financial Corp. 31.50 171.12 21.28 22.03 24.05 26.25 209.30 230.60 24.41 1.78
NSSY NSS Bancorp Inc. 39.88 97.94 14.45 16.21 54.62 16.90 177.30 182.66 14.43 1.00
</TABLE>
Page 5 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NTMG Nutmeg Federal S&LA 12.75 9.44 26.56 23.61 34.46 31.88 162.63 162.63 8.97 1.57
NWEQ Northwest Equity Corp. 19.00 15.94 14.39 15.32 15.83 14.84 130.76 130.76 16.44 2.95
NWSB Northwest Savings Bank (MHC) 15.25 712.99 34.66 35.47 36.31 34.66 352.19 372.86 33.94 1.05
NYB New York Bancorp Inc. 37.25 794.12 15.02 16.56 18.26 16.63 469.74 469.74 24.48 1.61
OCFC Ocean Financial Corp. 37.50 300.56 20.83 22.87 22.87 20.83 135.72 135.72 20.59 2.13
OCN Ocwen Financial Corp. 26.13 1,580.70 18.66 17.53 30.74 31.10 378.08 388.19 53.47 0.00
OFCP Ottawa Financial Corp. 29.25 155.94 24.38 23.78 24.38 24.38 206.71 255.91 18.06 1.37
OHSL OHSL Financial Corp. 27.75 34.26 16.92 16.92 17.45 17.34 129.55 129.55 14.60 3.17
OSFS Ohio State Financial Services 15.12 9.59 NA NA NA NA 91.80 91.80 24.87 0.00
OTFC Oregon Trail Financial Corp. 15.94 74.83 NA NA NA NA NA NA NA 0.00
PALM Palfed Inc. 28.81 152.69 40.02 60.03 34.71 24.84 268.28 268.28 22.84 0.42
PBCI Pamrapo Bancorp Inc. 25.00 71.07 14.20 15.24 15.43 14.20 148.02 149.08 19.11 4.00
PBCT People's Bank (MHC) 35.63 2,177.61 23.44 24.91 38.31 52.39 312.23 312.50 28.17 2.13
PBHC Oswego City Savings Bk (MHC) 28.50 54.62 27.40 26.64 29.69 30.98 237.10 282.18 28.30 0.98
PBKB People's Bancshares Inc. 21.00 68.94 14.58 15.56 28.38 35.00 234.37 244.47 9.61 2.10
PCBC Perry County Financial Corp. 23.25 19.25 19.38 24.22 17.22 19.38 123.60 123.60 23.73 1.72
PDB Piedmont Bancorp Inc. 11.00 30.26 18.33 NM 42.31 19.64 145.50 145.50 23.91 3.64
PEEK Peekskill Financial Corp. 17.50 55.88 25.74 26.12 26.12 25.74 118.16 118.16 30.83 2.06
PERM Permanent Bancorp Inc. 26.25 55.21 21.88 21.69 21.88 22.63 129.63 131.38 12.73 1.52
PERT Perpetual Bank (MHC) 53.13 79.93 30.18 45.02 33.00 30.18 263.78 263.78 31.20 2.64
PFDC Peoples Bancorp 25.00 84.80 18.94 20.49 20.49 18.94 191.42 191.42 29.18 1.71
PFED Park Bancorp Inc. 18.00 43.77 22.50 21.95 22.78 22.50 108.37 108.37 25.08 0.00
PFFB PFF Bancorp Inc. 19.31 345.77 25.41 29.26 28.83 25.41 131.47 132.83 13.22 0.00
PFFC Peoples Financial Corp. 13.88 20.34 24.78 NA NA 24.78 87.93 87.93 23.92 3.60
PFNC Progress Financial Corp. 15.50 61.67 19.38 18.02 22.79 19.38 264.96 296.93 14.23 0.77
PFSB PennFed Financial Services Inc 34.75 167.58 15.51 16.01 16.01 15.51 154.93 182.99 12.29 0.81
PFSL Pocahontas FS&LA (MHC) 34.88 56.93 26.42 23.89 24.05 26.42 234.85 234.85 14.85 2.58
PHBK Peoples Heritage Finl Group 43.81 1,204.89 16.11 17.18 17.18 16.11 266.83 312.50 19.88 1.92
PHFC Pittsburgh Home Financial Corp 18.50 36.43 15.42 17.79 19.89 18.50 126.45 127.76 13.33 1.30
PHSB Peoples Home Savings Bk (MHC) 19.00 52.44 NA NA NA NA 185.91 185.91 25.40 0.00
PKPS Poughkeepsie Financial Corp. 10.50 132.25 32.81 30.00 30.00 32.81 177.66 177.66 14.96 1.91
PLSK Pulaski Savings Bank (MHC) 19.88 41.14 31.05 NA NA 31.05 191.84 191.84 22.98 1.51
PMFI Perpetual Midwest Financial 28.50 53.38 24.57 34.76 43.18 28.50 156.25 156.25 13.29 1.05
PRBC Prestige Bancorp Inc. 19.25 17.61 20.05 21.15 21.15 20.05 114.04 114.04 12.78 0.62
PROV Provident Financial Holdings 21.50 103.98 16.80 22.40 46.74 31.62 121.74 121.74 16.23 0.00
PSBK Progressive Bank Inc. 35.50 135.92 15.57 16.14 16.44 15.85 175.92 195.27 15.36 1.92
PSFC Peoples-Sidney Financial Corp. 17.25 30.80 21.56 NA NA 21.56 109.73 109.73 29.95 1.62
PSFI PS Financial Inc. 18.25 37.85 24.01 NA NA 24.01 123.64 123.64 46.14 2.63
PTRS Potters Financial Corp. 18.00 17.36 16.07 15.38 15.65 18.00 160.57 160.57 14.15 1.11
PULB Pulaski Bank, Svgs Bank (MHC) 30.00 62.82 28.85 51.72 38.46 34.09 267.14 267.14 34.86 3.67
PULS Pulse Bancorp 26.00 80.09 14.44 14.44 14.44 14.44 185.32 185.32 15.23 2.69
PVFC PVF Capital Corp. 20.13 52.13 10.94 11.18 11.70 11.43 189.32 189.32 13.60 0.00
PVSA Parkvale Financial Corporation 29.25 149.35 14.34 14.63 14.63 14.34 192.43 193.71 14.85 1.78
PWBC PennFirst Bancorp Inc. 18.38 97.58 17.01 17.67 17.67 17.67 141.78 159.51 11.87 1.96
PWBK Pennwood Bancorp Inc. 19.13 10.89 19.92 22.24 20.56 19.92 124.67 124.67 22.87 1.67
QCBC Quaker City Bancorp Inc. 22.50 105.14 17.05 18.75 19.40 17.05 146.77 146.77 12.41 0.00
QCFB QCF Bancorp Inc. 28.50 39.44 13.70 14.54 14.54 13.70 151.35 151.35 24.89 0.00
QCSB Queens County Bancorp Inc. 36.25 547.68 23.85 25.53 25.89 23.85 273.38 273.38 35.54 2.21
RARB Raritan Bancorp Inc. 28.00 66.42 18.42 18.18 18.42 18.42 221.52 224.90 16.31 1.71
REDF RedFed Bancorp Inc. 19.94 143.13 13.12 15.82 15.95 13.12 177.86 178.50 14.80 0.00
RELI Reliance Bancshares Inc. 9.13 22.56 32.59 35.10 36.50 32.59 99.40 99.40 48.00 0.00
RELY Reliance Bancorp Inc. 34.63 301.67 16.33 18.13 19.24 20.13 179.50 244.35 14.83 1.85
RIVR River Valley Bancorp 18.63 22.17 16.06 NA NA 17.91 125.84 127.66 16.01 0.86
ROSE TR Financial Corp. 34.00 598.13 16.67 18.18 20.24 19.32 243.90 243.90 16.20 1.88
RSLN Roslyn Bancorp Inc. 23.38 1,020.14 20.87 NA NA 22.48 166.49 167.32 29.37 1.20
RVSB Riverview Bancorp Inc. 15.44 94.60 NM NM NA NA 161.49 167.62 33.52 0.00
</TABLE>
Page 6 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SBFL SB of the Finger Lakes (MHC) 30.00 53.55 68.18 68.18 103.45 83.33 251.68 251.68 23.49 1.33
SBOS Boston Bancorp (The) NA NA NA NA NA NA NA NA NA NA
SCBS Southern Community Bancshares 19.00 21.61 22.62 NA NA 22.62 144.05 144.05 30.71 1.58
SCCB S. Carolina Community Bancshrs 23.00 16.07 31.94 29.49 29.49 31.94 132.56 132.56 35.23 2.61
SFED SFS Bancorp Inc. 23.50 28.93 23.50 23.74 23.74 23.50 133.22 133.22 16.62 1.19
SFFC StateFed Financial Corp. 14.00 21.80 23.33 19.44 19.44 23.33 141.99 141.99 24.91 1.43
SFIN Statewide Financial Corp. 23.38 105.40 17.71 18.41 18.41 17.71 163.01 163.23 15.26 1.88
SFSB SuburbFed Financial Corp. 34.69 43.80 16.06 17.00 20.77 20.65 152.61 153.15 10.12 0.92
SFSL Security First Corp. 21.25 161.00 19.68 20.43 20.43 19.68 255.72 259.78 23.69 1.51
SGVB SGV Bancorp Inc. 18.00 42.17 30.00 26.47 33.33 32.14 138.67 140.85 10.31 0.00
SHEN First Shenango Bancorp Inc. 33.25 68.79 14.58 14.91 14.98 14.84 147.45 147.45 17.14 1.81
SHSB SHS Bancorp Inc. 16.12 13.22 NA NA NA NA NA NA NA 0.00
SISB SIS Bancorp Inc. 37.88 211.37 16.61 18.48 18.66 17.22 199.97 199.97 14.55 1.48
SKAN Skaneateles Bancorp Inc. 19.00 27.26 15.83 16.10 16.52 15.83 157.02 161.70 10.99 1.40
SKBO First Carnegie Deposit (MHC) 19.13 43.99 34.15 NA NA 43.47 180.25 180.25 29.90 1.57
SMBC Southern Missouri Bancorp Inc. 19.50 31.44 22.16 20.74 21.20 23.21 119.19 119.19 19.25 2.56
SMFC Sho-Me Financial Corp. 50.75 76.08 16.92 18.94 19.90 16.92 224.26 224.26 22.06 0.00
SOBI Sobieski Bancorp Inc. 19.50 15.20 27.08 29.55 31.97 27.08 112.98 112.98 18.04 1.64
SOPN First Savings Bancorp Inc. 24.13 89.19 18.85 19.61 19.61 18.85 130.90 130.90 30.11 3.65
SOSA Somerset Savings Bank 4.81 80.14 12.03 15.53 16.04 13.37 233.64 233.64 15.40 0.00
SPBC St. Paul Bancorp Inc. 25.38 867.00 18.13 18.80 18.66 18.13 211.81 212.34 19.04 1.58
SRN Southern Banc Co. 17.75 21.84 34.13 42.26 42.26 34.13 120.42 121.49 20.57 1.97
SSB Scotland Bancorp Inc. 10.25 19.61 10.68 13.85 13.85 10.68 134.69 134.69 30.46 2.93
SSFC South Street Financial Corp. 19.13 86.00 28.13 NA NA 31.88 128.87 128.87 35.75 2.09
SSM Stone Street Bancorp Inc. 22.50 42.71 28.13 25.28 25.28 28.13 137.87 137.87 40.76 2.00
STFR St. Francis Capital Corp. 40.00 209.52 16.95 18.18 18.35 9.52 163.00 184.25 12.62 1.40
STSA Sterling Financial Corp. 21.38 161.75 16.19 17.52 19.26 19.08 164.68 179.92 8.65 0.00
SVRN Sovereign Bancorp Inc. 19.44 1,735.34 242.98 28.59 20.04 16.76 265.18 324.51 11.89 0.41
SWBI Southwest Bancshares 24.75 65.80 16.28 17.19 17.68 17.19 154.59 154.59 17.54 3.23
SWCB Sandwich Bancorp Inc. 45.00 86.36 18.15 19.07 19.40 18.44 212.67 221.24 16.87 3.11
SZB SouthFirst Bancshares Inc. 20.25 17.16 33.75 NM 106.58 33.75 126.09 126.09 17.64 2.47
THR Three Rivers Financial Corp. 20.25 16.68 17.46 19.10 20.05 18.75 128.57 129.06 17.70 1.98
THRD TF Financial Corp. 28.50 90.84 21.59 23.36 26.64 30.98 148.36 168.04 18.63 1.40
TPNZ Tappan Zee Financial Inc. 19.75 29.39 29.04 27.43 27.82 29.04 137.53 137.53 23.58 1.42
TRIC Tri-County Bancorp Inc. 27.50 16.05 19.10 18.21 17.86 16.37 118.89 118.89 18.21 2.91
TSBS Trenton SB (MHC) 38.25 346.00 53.13 43.97 62.70 159.38 319.55 355.15 54.16 0.92
TSH Teche Holding Co. 20.63 70.90 18.42 17.33 18.09 18.42 130.46 130.46 17.55 2.42
TWIN Twin City Bancorp 14.38 18.29 15.63 19.97 23.96 18.91 132.24 132.24 17.10 2.78
UBMT United Financial Corp. 26.00 31.81 19.70 21.14 21.31 19.70 128.46 128.46 30.86 3.85
UFRM United Federal Savings Bank 11.75 36.12 18.36 18.65 23.50 19.58 172.29 172.29 12.64 2.04
USAB USABancshares, Inc. 9.88 7.23 15.43 34.05 37.98 16.46 146.73 148.94 11.25 0.00
VABF Virginia Beach Fed. Financial 16.81 83.71 19.11 22.42 27.56 24.73 193.25 193.25 13.83 1.19
WAMU Washington Mutual Inc. 71.25 18,323.79 NM 134.43 30.45 27.40 351.33 379.19 19.17 1.57
WAYN Wayne Savings Bancshares (MHC) 31.00 69.91 35.23 38.27 40.79 38.75 293.01 293.01 27.94 2.00
WBST Webster Financial Corp. 64.13 869.16 23.23 30.11 19.49 16.70 239.00 277.60 12.76 1.25
WCBI Westco Bancorp 26.50 65.56 14.10 15.59 16.56 15.77 136.46 136.46 21.21 2.26
WCFB Webster City Federal SB (MHC) 21.25 44.63 33.20 32.69 32.69 33.20 202.00 202.00 47.23 3.77
WEFC Wells Financial Corp. 17.50 34.29 15.09 15.91 16.06 15.63 117.77 117.77 16.75 2.74
WEHO Westwood Homestead Fin. Corp. 17.75 49.39 55.47 35.50 32.27 29.58 125.00 125.00 34.57 1.58
WES Westcorp 16.63 436.50 12.22 12.59 NM NM 127.88 128.18 11.62 2.41
WFI Winton Financial Corp. 19.63 38.98 11.15 12.11 14.65 15.33 167.45 170.80 12.01 2.34
WFSG Wilshire Financial Services 28.00 211.96 8.97 NA NA 12.96 293.19 293.19 15.47 0.00
WFSL Washington Federal Inc. 32.63 1,549.97 14.31 14.76 14.83 14.56 215.92 235.22 27.10 2.82
WHGB WHG Bancshares Corp. 16.25 23.76 23.90 46.43 28.02 23.90 114.76 114.76 23.70 1.97
WOFC Western Ohio Financial Corp. 26.75 63.02 222.92 39.93 33.44 33.44 114.32 122.48 15.86 3.74
WRNB Warren Bancorp Inc. 20.50 77.97 12.20 10.51 12.97 15.53 200.98 200.98 21.39 2.54
</TABLE>
Page 7 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WSB Washington Savings Bank, FSB 7.13 30.98 14.84 29.69 20.96 19.79 138.08 138.08 11.56 1.40
WSFS WSFS Financial Corp. 20.13 250.40 14.80 15.85 15.97 14.80 302.18 304.46 16.74 0.00
WSTR WesterFed Financial Corp. 24.06 134.20 18.80 19.10 19.89 18.80 126.45 156.76 13.43 1.91
WVFC WVS Financial Corp. 31.25 54.63 14.74 15.10 15.17 14.74 161.25 161.25 19.35 3.84
WWFC Westwood Financial Corp. 27.63 17.83 36.35 23.02 21.58 36.35 173.20 193.59 16.14 0.72
WYNE Wayne Bancorp Inc. 21.75 43.80 21.75 20.14 20.14 21.75 131.90 131.90 16.39 0.92
YFCB Yonkers Financial Corporation 18.63 56.26 17.25 18.26 18.08 17.25 128.18 128.18 17.98 1.29
YFED York Financial Corp. 25.25 222.36 24.28 20.70 24.28 28.69 217.30 217.30 19.24 1.90
</TABLE>
Page 8 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New Jersey
FBER 1st Bergen Bancorp 18.88 54.07 26.22 25.86 25.86 26.22 139.09 139.09 18.99 1.06
FMCO FMS Financial Corp. 32.75 78.20 14.36 14.36 14.43 14.36 207.28 210.34 13.44 0.86
FSLA First Savings Bank (MHC) 44.00 352.79 50.00 39.29 37.61 39.29 355.13 390.76 33.73 1.09
FSNJ Bayonne Bancshares Inc. 12.13 109.73 NA NA NA NA 114.60 114.60 17.90 1.40
FSPG First Home Bancorp Inc. 23.00 62.29 13.69 13.37 13.69 14.02 172.80 175.44 11.86 1.74
IBSF IBS Financial Corp. 17.50 191.61 36.46 32.41 32.41 36.46 149.70 149.70 26.08 2.29
LVSB Lakeview Financial 24.63 111.04 16.20 20.52 28.30 36.21 179.61 209.57 21.95 0.51
LFBI Little Falls Bancorp Inc. 20.00 52.16 27.78 29.85 33.33 27.78 137.65 149.25 16.08 1.00
OCFC Ocean Financial Corp. 37.50 300.56 20.83 22.87 22.87 20.83 135.72 135.72 20.59 2.13
PBCI Pamrapo Bancorp Inc. 25.00 71.07 14.20 15.24 15.43 14.20 148.02 149.08 19.11 4.00
PFSB PennFed Financial Services Inc 34.75 167.58 15.51 16.01 16.01 15.51 154.93 182.99 12.29 0.81
TSBS Trenton SB (MHC) 38.25 346.00 53.13 43.97 62.70 159.38 319.55 355.15 54.16 0.92
PLSK Pulaski Savings Bank (MHC) 19.88 41.14 31.05 NA NA 31.05 191.84 191.84 22.98 1.51
PULS Pulse Bancorp 26.00 80.09 14.44 14.44 14.44 14.44 185.32 185.32 15.23 2.69
RARB Raritan Bancorp Inc. 28.00 66.42 18.42 18.18 18.42 18.42 221.52 224.90 16.31 1.71
SFIN Statewide Financial Corp. 23.38 105.40 17.71 18.41 18.41 17.71 163.01 163.23 15.26 1.88
WYNE Wayne Bancorp Inc. 21.75 43.80 21.75 20.14 20.14 21.75 131.90 131.90 16.39 0.92
WWFC Westwood Financial Corp. 27.63 17.83 36.35 23.02 21.58 36.35 173.20 193.59 16.14 0.72
</TABLE>
Page 9 of 10
<PAGE>
<TABLE>
<CAPTION>
Current Price in Relation to
Current Current ------------------------------------------------------------------ Current
Stock Market Price/LTM Price/ Tangible Dividend
Price Value Earnings LTM EPS Core EPS Core Book Value Book Value Assets Yield
Ticker Short Name ($) ($M) (x) (x) (x) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
FESX First Essex Bancorp Inc. 21.00 158.06 15.44 15.22 17.95 18.10 176.47 201.73 13.07 2.29
FFES First Federal of East Hartford 36.81 98.74 19.58 19.69 17.36 17.70 150.87 150.87 10.00 1.63
FFIC Flushing Financial Corp. 23.63 188.61 19.69 22.29 22.08 19.69 138.32 144.05 19.64 1.02
GAF GA Financial Inc. 19.81 155.96 17.08 20.64 21.08 17.69 134.60 135.89 19.69 2.42
JSB JSB Financial Inc. 48.69 482.91 14.84 17.08 19.17 19.02 135.58 135.58 31.48 2.88
MASB MASSBANK Corp. 46.50 166.08 16.61 17.22 18.31 18.45 164.60 167.09 17.75 2.07
MDBK Medford Bancorp Inc. 37.75 171.43 16.56 15.79 17.00 17.16 171.90 183.43 15.49 1.91
PWBC PennFirst Bancorp Inc. 18.38 97.58 17.01 17.67 17.67 17.67 141.78 159.51 11.87 1.96
SFIN Statewide Financial Corp. 23.38 105.40 17.71 18.41 18.41 17.71 163.01 163.23 15.26 1.88
SISB SIS Bancorp Inc. 37.88 211.37 16.61 18.48 18.66 17.22 199.97 199.97 14.55 1.48
STFR St. Francis Capital Corp. 40.00 209.52 16.95 18.18 18.35 9.52 163.00 184.25 12.62 1.40
THRD TF Financial Corp. 28.50 90.84 21.59 23.36 26.64 30.98 148.36 168.04 18.63 1.40
Comparable Average 178.04 17.47 18.67 19.39 18.41 157.37 166.14 16.67 1.86
Comparable Median 162.07 16.98 18.30 18.38 17.71 156.94 165.16 15.38 1.89
All Public Average 246.35 22.32 23.23 23.69 24.18 171.50 178.20 19.69 1.52
All Public Median 61.23 18.59 19.44 20.79 19.66 156.91 160.41 17.70 1.52
New Jersey Average 125.10 25.18 23.00 24.73 32.00 182.27 191.80 20.47 1.51
New Jersey Median 79.15 20.83 20.33 20.86 21.75 167.91 179.22 17.15 1.25
</TABLE>
Page 10 of 10
<PAGE>
Exhibit 7
Second Steps - 1996 to Date
Selected Market Data
Market Data as of 12/08/97
<TABLE>
<CAPTION>
------------------------------------------
Price to Pro-Forma
Pro-Forma ------------------------------------------
Gross Conversion Total Pro-Forma Pro-Forma Pro-Forma Adjusted
IPO Price Proceeds Assets Equity Book Value Tang. Book Earnings Assets
Ticker Short Name IPO Date ($) ($000) ($000) ($000) (%) (%) (x) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSNJ Bayonne Bancshares Inc. 08/22/97 10.000 NA NA NA NA NA NA NA
MONT Montgomery Financial Corp. 07/01/97 10.000 NA NA NA NA NA NA NA
WFSG Wilshire Financial Services 12/19/96 NA NA NA NA NA NA NA NA
BNKU Bank United Corp. 08/09/96 20.000 NA NA NA NA NA NA NA
CMSB Commonwealth Bancorp Inc. 06/17/96 10.000 NA NA NA 100.0 NA NA NA
WWFC Westwood Financial Corp. 06/07/96 10.000 NA NA NA 100.0 NA NA NA
JXVL Jacksonville Bancorp Inc. 04/01/96 10.000 NA NA NA 100.0 NA NA NA
FFFD North Central Bancshares Inc. 03/21/96 10.000 NA NA NA 100.0 NA NA NA
FFOH Fidelity Financial of Ohio 03/04/96 10.000 NA NA NA 100.0 NA NA NA
FFBA First Colorado Bancorp Inc. 01/02/96 10.000 NA NA NA NA NA NA NA
--------------------------------------------------------------------------------------------------------------------------
Average 100.0 0.0 0.0 0.0
Median 100.0 0.0 0.0 0.0
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------- ------------------------------------------------------
Percent Change from IPO Current Price to
------------------------------- Current ------------------------------------------------------
After After After After Stock Book Tang. LTM Core LTM
1 Day 1 Week 1 Month 3 Months Price Value Book Earnings Earnings EPS EPS Assets
Ticker Short Name (%) (%) (%) (%) 9/8/97 (%) (%) (X) (X) (X) (X) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSNJ Bayonne Bancshares Inc. 17.50% 18.75% 26.88% 22.50% 12.125 114.600 114.600 NA NA NA NA 17.900
MONT Montgomery Financial Corp. 11.25% 12.50% 20.63% 22.50% 12.438 105.320 105.320 NA NA NA NA 20.160
WFSG Wilshire Financial Services NA NA NA NA 28.000 293.190 293.190 NA 8.970 12.960 NA 15.470
BNKU Bank United Corp. 14.38% 20.00% 20.63% 28.13% 44.125 232.970 238.380 18.230 17.510 18.700 23.470 11.650
CMSB Commonwealth Bancorp Inc. 5.00% 7.50% 0.00% 11.25% 21.125 162.250 208.130 20.920 21.130 29.340 27.080 15.060
WWFC Westwood Financial Corp. 7.50% 3.75% 6.25% 8.75% 27.625 173.200 193.590 23.020 36.350 36.350 21.580 16.140
JXVL Jacksonville Bancorp Inc. 11.08% -3.75% -1.25% 6.25% 19.125 141.140 141.140 24.840 11.660 11.660 8.390 21.060
FFFD North Central Bancshares Inc. 8.75% 6.90% 4.40% 11.90% 18.500 122.270 122.270 16.090 14.920 14.920 16.090 28.020
FFOH Fidelity Financial of Ohio 5.00% 0.00% 1.25% 0.00% 15.000 121.560 137.110 19.230 17.050 17.050 16.850 15.830
FFBA First Colorado Bancorp Inc. 14.38% 16.25% 20.00% 23.75% 26.125 217.710 220.650 23.540 20.410 20.410 23.540 28.470
-----------------------------------------------------------------------------------------------------------------------------
Average 10.54% 9.10% 10.98% 15.00% 22.4 168.4 177.4 20.8 18.5 20.2 19.6 19.0
Median 11.08% 7.50% 6.25% 11.90% 20.1 151.7 167.4 20.9 17.3 17.9 21.6 17.0
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 8
Ownership Computation
Aggregate Waived Dividends $ 4,897,620 Use in Computation
Stockholders' Equity @ 09/30/97 $108,238,618 $20,903 Assets at
Holding Company
Current Ownership 35.93% 3,250,444 11.96476958 $0 Options included
in footnote
computation
MHC Ownership @ 09/30/97 64.07% 5,796,000
------------
Total at 09/30/97 9,046,444
------------
PCT = (Stockholders' Equity @09/30/97-Aggregate Excess Waived)*Current Ownership
--------------------------------------------------------------------------
Stockholders Equity @ 09/30/97
times Appraised Value - Other Assets at Holding Company
-------------------------------------------------
Appraised Value of Holding Company
PCT = 34.30% times 100.00%
PCT = 34.30%
<PAGE>
Peoples Bancorp, Inc.
Pro-Forma Analysis Sheet - Twelve Months Ended
September 30, 1997
Includes SOP 93-6
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Bank Comparables State National
----------------------------------------------------------------------------------------------
Mean Median Mean Median Mean Median
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Min 21.28
Price-Earnings Ratio P/E Mid 23.26 18.23 18.16 23.00 20.33 23.23 19.44
- ------------------------ Max 25.64
Smax 27.03
Min 94.16%
Price-to-Book Ratio P/B Mid 100.70% 159.97% 163.01% 182.27% 167.91% 171.50% 156.91%
- ----------------------- Max 106.04%
Smax 111.23%
Min 98.52%
Price-to-Tangible Book Ratio P/TB Mid 104.93% 172.50% 165.16% 191.80% 179.22% 178.20% 160.41%
- --------------------------------- Max 110.01%
Smax 115.07%
Min 29.95%
Price-to-Assets Ratio P/A Mid 34.14% 16.35% 15.05% 20.47% 17.15% 19.69% 17.70%
- ------------------------- Max 38.09%
Smax 42.34%
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prior Twelve Mos. Earning Base Y
Period Ended September 30, 1997 $ 7,841 (1)
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Book Value B
As of September 30, 1997 $ 108,238
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Assets A
As of September 30, 1997 $ 638,817
- -------------------------------------------------------------------------------------------------------
Return on Money R 3.53%(2)
- -------------------------------------------------------------------------------------------------------
Conversion Expenses $ 1,935
X 0.71%(3)
- -------------------------------------------------------------------------------------------------------
Proceeds Not Invested $ 14,400 (4)
- -------------------------------------------------------------------------------------------------------
Estimated ESOP Borrowings $ 7,200
ESOP Purchases E 4.00%(5)
Cost of ESOP Borrowings $ 600 (5)
Cost of ESOP Borrowings S 0.00%(5)
Amort of ESOP Borrowings T 12 Years
- -------------------------------------------------------------------------------------------------------
Amort of MRP Amount N 5 Years
Estimated MRP Amount $ 7,200 (6)
MRP Purchases M 4.00%
MRP Expense $ 1,440
- -------------------------------------------------------------------------------------------------------
Foundation Amount $ - (7)
Foundation Amount F 0.00% 0.00%
Foundation Opportunity Cost $ 0
Tax Benefit Z $ 0 (8)
- -------------------------------------------------------------------------------------------------------
Tax Rate TAX 36.00%
- -------------------------------------------------------------------------------------------------------
Percentage Sold PCT 65.70%
- -------------------------------------------------------------------------------------------------------
Amount to be issued to Public $ 180,007 (9)
- -------------------------------------------------------------------------------------------------------
Earnings Multiple (1 if stub period, 0 if full twelve months) 12 0
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net income for the twelve months ended September 30, 1997.
(2) Net Return assumes a reinvestment rate of 5.52 percent (the 1 year Treasury
at September 30, 1997), and a tax rate of 36%.
(3) Conversion expenses reflect estimated expenses as presented in the offering
document.
(4) Includes Stock from ESOP and MRP.
(5) Assumes ESOP is amortized straight line over 12 years.
(6) Assumes MRP is amortized straight line over 5 years.
(7) Not applicable.
(8) Not Applicable.
(9) The amount to be offered to public.
Page 2
<PAGE>
Pro Forma Calculation
Calculation of Estimated Value (V) at Midpoint Value
3. V= P/E*Y = $274,000,000
-----
1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)
2. V= P/B*(B+Z) = $274,000,000
--------
1-P/B*PCT*(1-X-E-M-F)
1. V= P/A*A = $274,000,000
-----
1-P/A*PCT*(1-X-E-M-F)
Total Shares Price Total
Conclusion Shares Per Share Value
- ---------- ------ --------- -----
Appraised Value - Midpoint 27,400,000 $10 $274,000,000
Range:
- Minimum 23,290,000 $10 $232,900,000
- Maximum 31,510,000 $10 $315,100,000
- Super Maximum 36,236,500 $10 $362,365,000
Pre Foundation
----------------------------------------------------------
Appraised Value
----------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum *
----------------------------------------------------------
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Full Conversion Value $232,900,000 $274,000,000 $315,100,000 $362,365,000
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Exchange Percent 34.30% 34.30% 34.30% 34.30%
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Conversion Percent 65.70% 65.70% 65.70% 65.70%
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
Exchange Ratio 2.4580 2.8917 3.3255 3.8243
----------------------------------------------------------
* SuperMaximum is an overallotment option that is 15% above the maximum amount.
Page 3
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
- ------------------------------------- ----------------------------------------------------
Conversion Proceeds Minimum Midpoint Maximum SuperMax
- ------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares Offered 23,290,000 27,400,000 31,510,000 36,236,500
Conversion Shares Offered 15,300,408 18,000,691 20,700,648 23,805,827
Price Per Share $10 $10 $10 $10
----------------------------------------------------
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Plus: Value issued to Foundation (9) $0 $0 $0 $0
----------------------------------------------------
Pro Forma Market Capitalization $153,004 $180,007 $207,006 $238,058
====================================================
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Less: Est. Conversion Expenses $1,935 $1,935 $1,935 $1,935
----------------------------------------------------
Net Proceeds $151,069 $178,072 $205,071 $236,123
====================================================
- -------------------------------------
Estimated Income from Proceeds
- -------------------------------------
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Less: ESOP Adjustment (3) $6,120 $7,200 $8,280 $9,522
Less: MRP Adjustment (3) $6,120 $7,200 $8,280 $9,522
----------------------------------------------------
Net Proceeds Reinvested $138,829 $163,672 $188,511 $217,079
Estimated Incremental Rate of Return 3.53% 3.53% 3.53% 3.53%
----------------------------------------------------
Estimated Incremental Return $4,901 $5,778 $6,654 $7,663
Less: Cost of ESOP (4) $0 $0 $0 $0
Less: Amortization of ESOP (7) $326 $384 $442 $508
Less: MRP Adjustment (7) $783 $922 $1,060 $1,219
----------------------------------------------------
Pro-forma Net Income $3,792 $4,472 $5,152 $5,936
Earnings Before Conversion $7,841 $7,841 $7,841 $7,841
----------------------------------------------------
Earnings Excluding Adjustment $11,633 $12,313 $12,993 $13,777
Earnings Adjustment (6) ($1,120) ($1,120) ($1,120) ($1,120)
----------------------------------------------------
Earnings After Conversion $10,513 $11,193 $11,873 $12,657
----------------------------------------------------
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
----------------------------------------------------
Minimum Midpoint Maximum SuperMax
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------
Pro-forma Net Worth
- ---------------------------------------
Net Worth at September 30, 1997 $ 108,238 $ 108,238 $ 108,238 $ 108,238
Net Conversion Proceeds 151,069 178,072 205,071 236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: After tax Foundation Contributio - - - -
Less: ESOP Adjustment (1) ($6,120) ($7,200) ($8,280) ($9,522)
Less: MRP Adjustment (2) ($6,120) ($7,200) ($8,280) ($9,522)
----------------------------------------------------
Pro-forma Net Worth $247,088 $271,931 $296,770 $325,338
- ---------------------------------------
Pro-forma Tangible Net Worth
- ---------------------------------------
Pro-forma Net Worth $247,088 $271,931 $296,770 $325,338
Less: Intangible (5) $10,834 $10,834 $10,834 $10,834
----------------------------------------------------
Pro-forma Tangible Net Worth $236,254 $261,097 $285,936 $314,504
- ---------------------------------------
Pro-forma Assets
- ---------------------------------------
Total Assets at September 30, 1997 $ 638,817 $ 638,817 $ 638,817 $ 638,817
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: Tax Benefit of Foundation - - - -
Less: ESOP Adjustment (1) (6,120) (7,200) (8,280) (9,522)
Less: MRP Adjustment (2) (6,120) (7,200) (8,280) (9,522)
----------------------------------------------------
Pro-forma Assets Excluding Adjustment 777,667 802,510 827,349 855,917
Plus: Adjustment (6) 0 0 0 0
----------------------------------------------------
Pro-forma Total Assets $777,667 $802,510 $827,349 $855,917
----------------------------------------------------
- ---------------------------------------
Stockholder's Equity Per Share
- ---------------------------------------
Net Worth at September 30, 1997 $4.65 $3.95 $3.44 $2.99
Estimated Net Proceeds $6.49 $6.50 $6.51 $6.52
Plus: MHC Adjustment $0.00 $0.00 $0.00 $0.00
Plus: Foundation Contribution $0.00 $0.00 $0.00 $0.00
Less: ESOP Stock ($0.26) ($0.26) ($0.26) ($0.26)
Less: MRP Stock ($0.26) ($0.26) ($0.26) ($0.26)
----- ----- ----- -----
Pro-forma Net Worth Per Share $10.62 $9.93 $9.43 $8.99
Less: Intangible $0.47 $0.40 $0.34 $0.30
----- ----- ----- -----
Pro-forma Tangible Net Worth Per Share $10.15 $9.53 $9.09 $8.69
----------------------------------------------------
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
----------------------------------------------------
Minimum Midpoint Maximum SuperMax
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------
Net Earnings Per Share
- ---------------------------------------
Historical Earnings Per Share (8) $0.34 $0.29 $0.25 $0.22
Incremental return Per Share (8) $0.22 $0.22 $0.22 $0.22
ESOP Adjustment Per Share (8) ($0.01) ($0.01) ($0.01) ($0.01)
MRP Adjustment Per Share (8) ($0.03) ($0.03) ($0.03) ($0.03)
Normalizing Adjustment Per Share ($0.05) ($0.04) ($0.04) ($0.03
----- ----- ----- -----)
Proforma Earnings Per Share (8) $0.47 $0.43 $0.39 $0.37
- ---------------------------------------
Shares Utilized
- ---------------------------------------
Shares Utilized 22,729 26,740 30,751 35,364
- ---------------------------------------
Pro-forma Ratios
- ---------------------------------------
Price/EPS without Adjustment 19.23 21.28 23.26 25.00
Price/EPS with Adjustment 21.28 23.26 25.64 27.03
Price/Book Value per Share 94.16% 100.70% 106.04% 111.23%
Price/Tangible Book Value 98.52% 104.93% 110.01% 115.07%
Market Value/Assets 29.95% 34.14% 38.09% 42.34%
----------------------------------------------------
</TABLE>
(1) ESOP Borrowings are deducted from net worth and assets, and amortized over
12 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over 5
years.
(3) Consists of ESOP and MRP amortization.
(4) The ESOP loan is from the Holding Company and therefore, there are no
costs.
(5) Excess of purchase price over fair market value.
(6) One time expenses of $1.5 million (provision) and $0.3 million (MRP) offset
by $3.6 million (gain on sale) tax impacted at 36%.
(7) ESOP and MRP are amortized over 12 and 5 years respectively, and tax
impacted at 36%.
(8) All EPS computations are done in accordance with SOP 93-6.
(9) Not applicable.
Page 6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------
Expense Calculations
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares Offered 15,300 18,001 20,701 23,806
Price Per Share $10 $10 $10 $10
----------------------------------------------------
Gross Proceeds 153,004 180,007 207,006 238,058
Estimated Insider Purchases -1,000 -1,000 -1,000 -1,000
ESOP Purchases -6,120 -7,200 -8,280 -9,522
----------------------------------------------------
Proceeds to Base Fee On 145,884 171,807 197,726 227,536
Underwriters Percentage 0.00% 0.00% 0.00% 0.00%
----------------------------------------------------
Underwriters Fee 0 0 0 0
Advisory Fee 0 0 0 0
----------------------------------------------------
Total Underwriters Fee 0 0 0 0
All Other Expenses 1,935 1,935 1,935 1,935
----------------------------------------------------
Total Expense 1,935 1,935 1,935 1,935
- ---------------------------------------
Shares Calculations
- ---------------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Less: Old ESOP Adjustment (1) 0 0 0 0
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
Plus: Old SOP 93-6 ESOP Shares (2) 0 0 0 0
-- -- -- --
Shares for all EPS Calculations 22,729 26,740 30,751 35,364
Dilution of Stock Options 10.25%
Dilution of MRP 4.10%
</TABLE>
<TABLE>
<CAPTION>
Post Foundation
------------------------------------------------------------
Appraised Value
------------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum
------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Issued and Exchanged 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Shares Issued to Foundation - - - -
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Implied Exhange Ratio 2.4580 2.8917 3.3255 3.8243
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
------------------------------------------------------------
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------
MRP Dilution
- ---------------------------------
<S> <C> <C> <C> <C> <C>
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: New MRP issued (1) 612 720 828 952
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
(2)
Shares for all EPS Calculations 23,341 27,460 31,579 36,316
EPS $ 0.46 $ 0.42 $ 0.39 $ 0.36
BV/Share $10.34 $9.67 $9.18 $8.75
- ---------------------------------
Option Dilution
- ---------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: Options (1) 1,530 1,800 2,070 2,381
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
(2)
Shares for all EPS Calculations 24,259 28,540 32,821 37,744
EPS $ 0.43 $ 0.39 $ 0.36 $ 0.34
BV/Share $10.57 $9.93 $9.45 $9.04
Aftertax expense $0 $0 $0 $0
EPS $0.47 $0.43 $0.39 $0.37
Adjusted EPS 0.46 0.42 0.39 0.36
</TABLE>
Page 8
<PAGE>
Exhibit 12
[GRAPHIC OMITTED]
- ------------------------------
About the Firm
- ------------------------------
FinPro, Inc. was established in 1988 as a full service management consulting
firm specializing in providing advisory services to the Financial Institutions
Industry. FinPro provides management advisory services for Banks, Thrifts,
Finance Companies and NonBank Banks. Additionally, FinPro has performed work for
the Federal Bankruptcy Court, Federal Deposit Insurance Corporation, Office of
Thrift Supervision and the Resolution Trust Corporation. FinPro is recognized as
an expert in banking and in loan analysis by the Federal Bankruptcy Court.
FinPro is independently owned, not associated or affiliated with any transaction
oriented firm. This provides FinPro with an unbiased platform from which to make
analytical recommendations. FinPro believes that a client deserves to be told
all of the alternatives, along with their associated benefits and downsides and
that a decision should be made on its merits. This uniquely positions FinPro as
an objective third party willing to suggest the unpopular strategies, unlike its
competitors who rely on a transaction to get paid.
FinPro is headquartered in Liberty Corner, New Jersey and has a branch office in
Buffalo, New York. FinPro focuses geographically on the Mid-Atlantic region, but
has performed work in all other regions across the nation.
FinPro principals are frequent speakers and presenters at financial institution
trade association functions. In addition, FinPro designed the Statistical Report
Analysis currently produced quarterly by the New Jersey Savings League for its
members. FinPro also hosts a tri-annual President's Breakfast for Presidents of
New Jersey Community Banks.
FinPro maintains a library of databases encompassing bank and thrift capital
markets data, census data, branch deposit data, national peer data, market
research data along with many other related topics. As such, FinPro can provide
quick, current and precise analytical assessments based on timely data. In
addition, FinPro's geographic mapping capabilities give it a unique capability
to thematically illustrate multiple issues and to provide targeted marketing
opportunities to its clients.
<PAGE>
FinPro, Inc.
About the Firm Page: 2
- --------------------------------------------------------------------------------
FinPro has also designed and built PC-based software programs to utilize as
tools in its work. Examples include:
o A proprietary software program (LaRS (R)) to perform loan review
analytics.
o A duration based asset/liability model.
o A five year strategic planning, three year business planning, and one
year budgetary model that completely simulates an entire institution.
o A branch and product profitability model.
o A market performance grid and branch improvement grid model.
Using systems such as these, FinPro provides state-of-the-art end products in
all of its product and service areas.
<PAGE>
FinPro, Inc.
About the Firm Page: 3
- --------------------------------------------------------------------------------
- ------------------------------
Key Player Biographies
- ------------------------------
Donald J. Musso - Managing Director and President
Donald founded FinPro, Inc. in 1987 as a consulting and investment banking
firm located in New Jersey that specializes in providing advisory services
to the financial institutions industry. Mr. Musso has a broad background in
capital markets, bank valuations, enhancing franchise value, corporate
finance, mergers and acquisitions, asset/liability management, strategic
planning, market feasibility and differentiation, branch acquisition,
sales, consolidation and profitability, financial modeling and analysis,
balance sheet restructuring, product and segment profitability, business
development and project management. Besides his consulting experience, he
has solid industry experience, having worked for two $10 billion plus east
coast financial institutions.
Mr. Musso has provided expert testimony on financial institutions matters
for the Federal Bankruptcy Court, the Office of Thrift Supervision and the
United States Attorney's Office.
He is a frequent speaker on Financial Institution related topics and has
assisted trade groups in various activities.
Prior to establishing FinPro, Donald had direct industry experience having
managed the Corporate Planning and Mergers and Acquisitions departments for
Meritor Financial Group, a $20 billion institution in Philadelphia. Before
that, he had responsibility for the banking, thrift and real estate
consulting practice in the State of New Jersey for Deloitte Haskins &
Sells.
Donald has a B.S. in Finance from Villanova University and a M.B.A. in
Finance from Fairleigh Dickenson University.
<PAGE>
FinPro, Inc.
About the Firm Page: 4
- --------------------------------------------------------------------------------
Steven P. Musso - Managing Director
Steve joined FinPro in 1989 and is one of the founding members of the firm.
He has extensive experience in performing a wide array of market
feasibility studies, branch profitability analysis, CRA analysis, loan
reviews and work-outs and strategic planning engagements.
Steve manages the FinPro office in Western New York. Additionally, he is
responsible for managing many strategic planning, loan reviews, market
feasibility and CRA engagements.
Steve is responsible for the development of FinPro's CRA, market
feasibility and Loan Review products.
Steve is currently a licensed real estate agent in New Jersey. Prior to
joining FinPro he practiced real estate in Philadelphia, Pennsylvania.
Mr. Musso has a B.S. in Finance from Syracuse University.
<PAGE>
FinPro, Inc.
About the Firm Page: 5
- --------------------------------------------------------------------------------
Kenneth G. Emerson, CPA - Director
Ken joined FinPro in October 1996 and has concentrated on bank valuations,
strategic plans, and branch profitability. His twelve years of experience
at banks and brokerage firms, with respect to accounting, reporting, and
information systems serve him well in this capacity. Ken's prior employers
include Summit Bancorp, Valley Savings Bank, Howard Savings Bank, Carteret
Mortgage Company, CIT Data Corp., and Mahler & Emerson Inc. While at those
institutions his responsibilities included asset/liability, cash, back
office, operations, objective, and LAN management, in addition to
regulatory reporting (FRB, FDIC, OTS, State of New Jersey Department of
Banking, and NASD), SEC reporting, shareholder reporting, budgeting,
acquisitions, sales, conversions, interfaces, and FASB implementation.
Mr. Emerson has a B.A. in Accounting from Franklin & Marshall College.
<PAGE>
FinPro, Inc.
About the Firm Page: 6
- --------------------------------------------------------------------------------
Dennis E. Gibney - Senior Financial Analyst
Dennis has been concentrating on the firm's asset/liability products.
Market feasibility, competitive analysis, branch profitability and branch
sales/acquisitions are other areas of specialization.
Dennis joined the firm in June of 1996. He received a B.S. from Babson
College with a triple-major in Finance, Investments and Economics. Prior to
joining the firm, Dennis received broad based experience in the securities
industry.
Dennis worked for Merrill Lynch & Co. supporting their Mortgage-Backed
trading desk in New York as an Allocations Specialist and for Sandler
O'Neill & Partners, where he provided sales and trade support.
<PAGE>
Peoples Bancorp, Inc.
Pro-Forma Analysis Sheet - Twelve Months Ended
December 31, 1996
Includes SOP 93-6
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Bank Comparables State National
----------------------------------------------------------------------------------------------
Mean Median Mean Median Mean Median
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Min 18.18
Price-Earnings Ratio P/E Mid 20.41 18.23 18.16 23.00 20.33 23.23 19.44
- ------------------------ Max 22.22
Smax 23.81
Min 96.06%
Price-to-Book Ratio P/B Mid 102.56% 159.97% 163.01% 182.27% 167.91% 171.50% 156.91%
- ----------------------- Max 107.87%
Smax 112.99%
Min 99.80%
Price-to-Tangible Book Ratio P/TB Mid 106.16% 172.50% 165.16% 191.80% 179.22% 178.20% 160.41%
- --------------------------------- Max 111.36%
Smax 116.28%
Min 31.48%
Price-to-Assets Ratio P/A Mid 35.83% 16.35% 15.05% 20.47% 17.15% 19.69% 17.70%
- ------------------------- Max 39.91%
Smax 44.29%
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prior Twelve Mos. Earning Base Y
Period Ended December 31, 1997 $ 8,391 (1)
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Book Value B
As of December 31, 1997 $ 103,352
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Assets A
As of December 31, 1997 $ 601,016
- -------------------------------------------------------------------------------------------------------
Return on Money R 3.53%(2)
- -------------------------------------------------------------------------------------------------------
Conversion Expenses $ 1,935
X 0.71%(3)
- -------------------------------------------------------------------------------------------------------
Proceeds Not Invested $ 14,400 (4)
- -------------------------------------------------------------------------------------------------------
Estimated ESOP Borrowings $ 7,200
ESOP Purchases E 4.00%(5)
Cost of ESOP Borrowings $ 600 (5)
Cost of ESOP Borrowings S 0.00%(5)
Amort of ESOP Borrowings T 12 Years
- -------------------------------------------------------------------------------------------------------
Amort of MRP Amount N 5 Years
Estimated MRP Amount $ 7,200 (6)
MRP Purchases M 4.00%
MRP Expense $ 1,440
- -------------------------------------------------------------------------------------------------------
Foundation Amount $ - (7)
Foundation Amount F 0.00% 0.00%
Foundation Opportunity Cost $ 0
Tax Benefit Z $ 0 (8)
- -------------------------------------------------------------------------------------------------------
Tax Rate TAX 36.00%
- -------------------------------------------------------------------------------------------------------
Percentage Sold PCT 65.70%
- -------------------------------------------------------------------------------------------------------
Amount to be issued to Public $ 180,007 (9)
- -------------------------------------------------------------------------------------------------------
Earnings Multiple (1 if stub period, 0 if full twelve months) 12 0
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net income for the twelve months ended December 31, 1997.
(2) Net Return assumes a reinvestment rate of 5.52 percent (the 1 year Treasury
at September 30, 1997), and a tax rate of 36%.
(3) Conversion expenses reflect estimated expenses as presented in the offering
document.
(4) Includes Stock from ESOP and MRP.
(5) Assumes ESOP is amortized straight line over 12 years.
(6) Assumes MRP is amortized straight line over 5 years.
(7) Not applicable.
(8) Not Applicable.
(9) The amount to be offered to public.
Page 2
<PAGE>
Pro Forma Calculation
Calculation of Estimated Value (V) at Midpoint Value
3. V= P/E*Y = $274,000,000
-----
1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)
2. V= P/B*(B+Z) = $274,000,000
--------
1-P/B*PCT*(1-X-E-M-F)
1. V= P/A*A = $274,000,000
-----
1-P/A*PCT*(1-X-E-M-F)
Total Shares Price Total
Conclusion Shares Per Share Value
- ---------- ------ --------- -----
Appraised Value - Midpoint 27,400,000 $10 $274,000,000
Range:
- Minimum 23,290,000 $10 $232,900,000
- Maximum 31,510,000 $10 $315,100,000
- Super Maximum 36,236,500 $10 $362,365,000
Pre Foundation
----------------------------------------------------------
Appraised Value
----------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum *
----------------------------------------------------------
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Full Conversion Value $232,900,000 $274,000,000 $315,100,000 $362,365,000
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Exchange Percent 34.30% 34.30% 34.30% 34.30%
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Conversion Percent 65.70% 65.70% 65.70% 65.70%
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
Exchange Ratio 2.4580 2.8917 3.3255 3.8243
----------------------------------------------------------
* SuperMaximum is an overallotment option that is 15% above the maximum amount.
Page 3
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of December 31, 1996
(Dollars in Thousands)
- ------------------------------------- ----------------------------------------------------
Conversion Proceeds Minimum Midpoint Maximum SuperMax
- ------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares Offered 23,290,000 27,400,000 31,510,000 36,236,500
Conversion Shares Offered 15,300,408 18,000,691 20,700,648 23,805,827
Price Per Share $10 $10 $10 $10
----------------------------------------------------
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Plus: Value issued to Foundation (9) $0 $0 $0 $0
----------------------------------------------------
Pro Forma Market Capitalization $153,004 $180,007 $207,006 $238,058
====================================================
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Less: Est. Conversion Expenses $1,935 $1,935 $1,935 $1,935
----------------------------------------------------
Net Proceeds $151,069 $178,072 $205,071 $236,123
====================================================
- -------------------------------------
Estimated Income from Proceeds
- -------------------------------------
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Less: ESOP Adjustment (3) $6,120 $7,200 $8,280 $9,522
Less: MRP Adjustment (3) $6,120 $7,200 $8,280 $9,522
----------------------------------------------------
Net Proceeds Reinvested $138,829 $163,672 $188,511 $217,079
Estimated Incremental Rate of Return 3.53% 3.53% 3.53% 3.53%
----------------------------------------------------
Estimated Incremental Return $4,901 $5,778 $6,654 $7,663
Less: Cost of ESOP (4) $0 $0 $0 $0
Less: Amortization of ESOP (7) $326 $384 $442 $508
Less: MRP Adjustment (7) $783 $922 $1,060 $1,219
----------------------------------------------------
Pro-forma Net Income $3,792 $4,472 $5,152 $5,936
Earnings Before Conversion $8,391 $8,391 $8,391 $8,391
----------------------------------------------------
Earnings Excluding Adjustment $12,183 $12,863 $13,543 $14,327
Earnings Adjustment (6) $0 $0 $0 $0
----------------------------------------------------
Earnings After Conversion $12,183 $12,863 $13,543 $14,327
----------------------------------------------------
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of December 31, 1996
(Dollars in Thousands)
-------------------------------------------------
Minimum Midpoint Maximum SuperMax
-------------------------------------------------
- ----------------------------------------
Pro-forma Net Worth
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Net Worth at December 31, 1996 $ 103,352 $ 103,352 $ 103,352 $ 103,352
Net Conversion Proceeds 151,069 178,072 205,071 236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: After tax Foundation Contribution - - - -
Less: ESOP Adjustment (1) ($6,120) ($7,200) ($8,280) ($9,522)
Less: MRP Adjustment (2) ($6,120) ($7,200) ($8,280) ($9,522)
-------------------------------------------------
Pro-forma Net Worth $242,202 $267,045 $291,884 $320,452
- ----------------------------------------
Pro-forma Tangible Net Worth
- ----------------------------------------
Pro-forma Net Worth $242,202 $267,045 $291,884 $320,452
Less: Intangible (5) $9,164 $9,164 $9,164 $9,164
-------------------------------------------------
Pro-forma Tangible Net Worth $233,038 $257,881 $282,720 $311,288
- ----------------------------------------
Pro-forma Assets
- ----------------------------------------
Total Assets at December 31, 1996 $ 601,016 $ 601,016 $ 601,016 $ 601,016
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: Tax Benefit of Foundation - - - -
Less: ESOP Adjustment (1) (6,120) (7,200) (8,280) (9,522)
Less: MRP Adjustment (2) (6,120) (7,200) (8,280) (9,522)
-------------------------------------------------
Pro-forma Assets Excluding Adjustment 739,866 764,709 789,548 818,116
Plus: Adjustment (6) 0 0 0 0
-------------------------------------------------
Pro-forma Total Assets $739,866 $764,709 $789,548 $818,116
-------------------------------------------------
- ----------------------------------------
Stockholder's Equity Per Share
- ----------------------------------------
Net Worth at December 31, 1996 $4.44 $3.77 $3.28 $2.85
Estimated Net Proceeds $6.49 $6.50 $6.51 $6.52
Plus: MHC Adjustment $0.00 $0.00 $0.00 $0.00
Plus: Foundation Contribution $0.00 $0.00 $0.00 $0.00
Less: ESOP Stock ($0.26) ($0.26) ($0.26) ($0.26)
Less: MRP Stock ($0.26) ($0.26) ($0.26) ($0.26)
------- ------- ------- -------
Pro-forma Net Worth Per Share $10.41 $9.75 $9.27 $8.85
Less: Intangible $0.39 $0.33 $0.29 $0.25
------ ----- ----- -----
Pro-forma Tangible Net Worth Per Share $10.02 $9.42 $8.98 $8.60
-------------------------------------------------
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of December 31, 1996
(Dollars in Thousands)
-------------------------------------------------
Minimum Midpoint Maximum SuperMax
-------------------------------------------------
- ----------------------------------------
Net Earnings Per Share
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Historical Earnings Per Share (8) $0.37 $0.31 $0.27 $0.24
Incremental return Per Share (8) $0.22 $0.22 $0.22 $0.22
ESOP Adjustment Per Share (8) ($0.01) ($0.01) ($0.01) ($0.01)
MRP Adjustment Per Share (8) ($0.03) ($0.03) ($0.03) ($0.03)
Normalizing Adjustment Per Share $0.00 $0.00 $0.00 $0.00
------ ------ ------ -----
Proforma Earnings Per Share (8) $0.55 $0.49 $0.45 $0.42
- ----------------------------------------
Shares Utilized
- ----------------------------------------
Shares Utilized 22,729 26,740 30,751 35,364
- ----------------------------------------
Pro-forma Ratios
- ----------------------------------------
Price/EPS without Adjustment 18.18 20.41 22.22 23.81
Price/EPS with Adjustment 18.18 20.41 22.22 23.81
Price/Book Value per Share 96.06% 102.56% 107.87% 112.99%
Price/Tangible Book Value 99.80% 106.16% 111.36% 116.28%
Market Value/Assets 31.48% 35.83% 39.91% 44.29%
-------------------------------------------------
</TABLE>
(1) ESOP Borrowings are deducted from net worth and assets, and amortized over
12 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over 5
years.
(3) Consists of ESOP and MRP amortization.
(4) The ESOP loan is from the Holding Company and therefore, there are no
costs.
(5) Excess of purchase price over fair market value.
(6) Not applicable.
(7) ESOP and MRP are amortized over 12 and 5 years respectively, and tax
impacted at 36%.
(8) All EPS computations are done in accordance with SOP 93-6.
(9) Not applicable.
Page 6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------
Expense Calculations
- ----------------------------------------
<S> <C> <C> <C> <C>
Total Shares Offered 15,300 18,001 20,701 23,806
Price Per Share $10 $10 $10 $10
-------------------------------------------------
Gross Proceeds 153,004 180,007 207,006 238,058
Estimated Insider Purchases -1,000 -1,000 -1,000 -1,000
ESOP Purchases -6,120 -7,200 -8,280 -9,522
-------------------------------------------------
Proceeds to Base Fee On 145,884 171,807 197,726 227,536
Underwriters Percentage 0.00% 0.00% 0.00% 0.00%
-------------------------------------------------
Underwriters Fee 0 0 0 0
Advisory Fee 0 0 0 0
-------------------------------------------------
Total Underwriters Fee 0 0 0 0
All Other Expenses 1,935 1,935 1,935 1,935
-------------------------------------------------
Total Expense 1,935 1,935 1,935 1,935
- ----------------------------------------
Shares Calculations
- ----------------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Less: Old ESOP Adjustment (1) 0 0 0 0
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
Plus: Old SOP 93-6 ESOP Shares (2) 0 0 0 0
-- -- -- --
Shares for all EPS Calculations 22,729 26,740 30,751 35,364
Dilution of Stock Options 10.25%
Dilution of MRP 4.10%
</TABLE>
<TABLE>
<CAPTION>
Post Foundation
--------------------------------------------------------
Appraised Value
--------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum
--------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Issued and Exchanged 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Shares Issued to Foundation - - - -
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Implied Exhange Ratio 2.4580 2.8917 3.3255 3.8243
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
--------------------------------------------------------
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------
MRP Dilution
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: New MRP issued (1) 612 720 828 952
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
(2)
Shares for all EPS Calculations 23,341 27,460 31,579 36,316
EPS $ 0.53 $ 0.48 $ 0.44 $ 0.40
BV/Share $10.13 $9.50 $9.03 $8.62
- ----------------------------------------
Option Dilution
- ----------------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: Options (1) 1,530 1,800 2,070 2,381
Plus: New SOP 93-6 ESOP Shares (2) 51 60 69 79
(2)
Shares for all EPS Calculations 24,259 28,540 32,821 37,744
EPS $ 0.50 $ 0.45 $ 0.41 $ 0.38
BV/Share $10.37 $9.76 $9.31 $8.91
Aftertax expense $0 $0 $0 $0
EPS $0.55 $0.49 $0.45 $0.42
Adjusted EPS 0.54 0.48 0.44 0.41
</TABLE>
Page 8
<PAGE>
Peoples Bancorp, Inc.
Pro-Forma Analysis Sheet - Nine Months Ended
September 30, 1997
Includes SOP 93-6
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Bank Comparables State National
----------------------------------------------------------------------------------------------
Mean Median Mean Median Mean Median
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Min 19.74
Price-Earnings Ratio P/E Mid 22.06 18.23 18.16 23.00 20.33 23.23 19.44
- ------------------------ Max 24.19
Smax 25.86
Min 94.16%
Price-to-Book Ratio P/B Mid 100.70% 159.97% 163.01% 182.27% 167.91% 171.50% 156.91%
- ----------------------- Max 106.04%
Smax 111.23%
Min 98.52%
Price-to-Tangible Book Ratio P/TB Mid 104.93% 172.50% 165.16% 191.80% 179.22% 178.20% 160.41%
- --------------------------------- Max 110.01%
Smax 115.07%
Min 29.95%
Price-to-Assets Ratio P/A Mid 34.14% 16.35% 15.05% 20.47% 17.15% 19.69% 17.70%
- ------------------------- Max 38.09%
Smax 42.34%
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nine Months Ended Y
Period Ended September 30, 1997 $ 5,898 (1)
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Book Value B
As of September 30, 1997 $ 108,238
- -------------------------------------------------------------------------------------------------------
Pre-Conversion Assets A
As of September 30, 1997 $ 638,817
- -------------------------------------------------------------------------------------------------------
Return on Money R 3.53%(2)
- -------------------------------------------------------------------------------------------------------
Conversion Expenses $ 1,935
X 0.71%(3)
- -------------------------------------------------------------------------------------------------------
Proceeds Not Invested $ 14,400 (4)
- -------------------------------------------------------------------------------------------------------
Estimated ESOP Borrowings $ 7,200
ESOP Purchases E 4.00%(5)
Cost of ESOP Borrowings $ 600 (5)
Cost of ESOP Borrowings S 0.00%(5)
Amort of ESOP Borrowings T 12 Years
- -------------------------------------------------------------------------------------------------------
Amort of MRP Amount N 5 Years
Estimated MRP Amount $ 7,200 (6)
MRP Purchases M 4.00%
MRP Expense $ 1,440
- -------------------------------------------------------------------------------------------------------
Foundation Amount $ - (7)
Foundation Amount F 0.00% 0.00%
Foundation Opportunity Cost $ 0
Tax Benefit Z $ 0 (8)
- -------------------------------------------------------------------------------------------------------
Tax Rate TAX 36.00%
- -------------------------------------------------------------------------------------------------------
Percentage Sold PCT 65.70%
- -------------------------------------------------------------------------------------------------------
Amount to be issued to Public $ 180,007 (9)
- -------------------------------------------------------------------------------------------------------
Earnings Multiple (1 if stub period, 0 if full twelve months) 9 1
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net income for the nine months ended September 30, 1997.
(2) Net Return assumes a reinvestment rate of 5.52 percent (the 1 year Treasury
at September 30, 1997), and a tax rate of 36%.
(3) Conversion expenses reflect estimated expenses as presented in the offering
document.
(4) Includes Stock from ESOP and MRP.
(5) Assumes ESOP is amortized straight line over 12 years.
(6) Assumes MRP is amortized straight line over 5 years.
(7) Not applicable.
(8) Not Applicable.
(9) The amount to be offered to public.
Page 2
<PAGE>
Pro Forma Calculation
Calculation of Estimated Value (V) at Midpoint Value
3. V= P/E*Y = $274,000,000
-----
1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)
2. V= P/B*(B+Z) = $274,000,000
--------
1-P/B*PCT*(1-X-E-M-F)
1. V= P/A*A = $274,000,000
-----
1-P/A*PCT*(1-X-E-M-F)
Total Shares Price Total
Conclusion Shares Per Share Value
- ---------- ------ --------- -----
Appraised Value - Midpoint 27,400,000 $10 $274,000,000
Range:
- Minimum 23,290,000 $10 $232,900,000
- Maximum 31,510,000 $10 $315,100,000
- Super Maximum 36,236,500 $10 $362,365,000
Pre Foundation
----------------------------------------------------------
Appraised Value
----------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum *
----------------------------------------------------------
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Full Conversion Value $232,900,000 $274,000,000 $315,100,000 $362,365,000
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Exchange Percent 34.30% 34.30% 34.30% 34.30%
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Conversion Percent 65.70% 65.70% 65.70% 65.70%
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
Exchange Ratio 2.4580 2.8917 3.3255 3.8243
----------------------------------------------------------
* SuperMaximum is an overallotment option that is 15% above the maximum amount.
Page 3
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
- ------------------------------------- ----------------------------------------------------
Conversion Proceeds Minimum Midpoint Maximum SuperMax
- ------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares Offered 23,290,000 27,400,000 31,510,000 36,236,500
Conversion Shares Offered 15,300,408 18,000,691 20,700,648 23,805,827
Price Per Share $10 $10 $10 $10
----------------------------------------------------
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Plus: Value issued to Foundation (9) $0 $0 $0 $0
----------------------------------------------------
Pro Forma Market Capitalization $153,004 $180,007 $207,006 $238,058
====================================================
Gross Proceeds $153,004 $180,007 $207,006 $238,058
Less: Est. Conversion Expenses $1,935 $1,935 $1,935 $1,935
----------------------------------------------------
Net Proceeds $151,069 $178,072 $205,071 $236,123
====================================================
- -------------------------------------
Estimated Income from Proceeds
- -------------------------------------
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Less: ESOP Adjustment (3) $6,120 $7,200 $8,280 $9,522
Less: MRP Adjustment (3) $6,120 $7,200 $8,280 $9,522
----------------------------------------------------
Net Proceeds Reinvested $138,829 $163,672 $188,511 $217,079
Estimated Incremental Rate of Return 3.53% 3.53% 3.53% 3.53%
----------------------------------------------------
Estimated Incremental Return $3,675 $4,333 $4,991 $5,747
Less: Cost of ESOP (4) $0 $0 $0 $0
Less: Amortization of ESOP (7) $245 $288 $331 $381
Less: MRP Adjustment (7) $588 $691 $795 $914
----------------------------------------------------
Pro-forma Net Income $2,842 $3,354 $3,865 $4,452
Earnings Before Conversion $5,898 $5,898 $5,898 $5,898
----------------------------------------------------
Earnings Excluding Adjustment $8,740 $9,252 $9,763 $10,350
Earnings Adjustment (6) $0 $0 $0 $0
----------------------------------------------------
Earnings After Conversion $8,740 $9,252 $9,763 $10,350
----------------------------------------------------
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
----------------------------------------------------
Minimum Midpoint Maximum SuperMax
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------
Pro-forma Net Worth
- ---------------------------------------
Net Worth at September 30, 1997 $ 108,238 $ 108,238 $ 108,238 $ 108,238
Net Conversion Proceeds 151,069 178,072 205,071 236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: After tax Foundation Contributio - - - -
Less: ESOP Adjustment (1) ($6,120) ($7,200) ($8,280) ($9,522)
Less: MRP Adjustment (2) ($6,120) ($7,200) ($8,280) ($9,522)
----------------------------------------------------
Pro-forma Net Worth $247,088 $271,931 $296,770 $325,338
- ---------------------------------------
Pro-forma Tangible Net Worth
- ---------------------------------------
Pro-forma Net Worth $247,088 $271,931 $296,770 $325,338
Less: Intangible (5) $10,834 $10,834 $10,834 $10,834
----------------------------------------------------
Pro-forma Tangible Net Worth $236,254 $261,097 $285,936 $314,504
- ---------------------------------------
Pro-forma Assets
- ---------------------------------------
Total Assets at September 30, 1997 $ 638,817 $ 638,817 $ 638,817 $ 638,817
Net Conversion Proceeds $151,069 $178,072 $205,071 $236,123
Plus: MHC Adjustment (7) 21 21 21 21
Plus: Tax Benefit of Foundation - - - -
Less: ESOP Adjustment (1) (6,120) (7,200) (8,280) (9,522)
Less: MRP Adjustment (2) (6,120) (7,200) (8,280) (9,522)
----------------------------------------------------
Pro-forma Assets Excluding Adjustment 777,667 802,510 827,349 855,917
Plus: Adjustment (6) 0 0 0 0
----------------------------------------------------
Pro-forma Total Assets $777,667 $802,510 $827,349 $855,917
----------------------------------------------------
- ---------------------------------------
Stockholder's Equity Per Share
- ---------------------------------------
Net Worth at September 30, 1997 $4.65 $3.95 $3.44 $2.99
Estimated Net Proceeds $6.49 $6.50 $6.51 $6.52
Plus: MHC Adjustment $0.00 $0.00 $0.00 $0.00
Plus: Foundation Contribution $0.00 $0.00 $0.00 $0.00
Less: ESOP Stock ($0.26) ($0.26) ($0.26) ($0.26)
Less: MRP Stock ($0.26) ($0.26) ($0.26) ($0.26)
----- ----- ----- -----
Pro-forma Net Worth Per Share $10.62 $9.93 $9.43 $8.99
Less: Intangible $0.47 $0.40 $0.34 $0.30
----- ----- ----- -----
Pro-forma Tangible Net Worth Per Share $10.15 $9.53 $9.09 $8.69
----------------------------------------------------
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
Proforma Effect of Conversion Proceeds
As of September 30, 1997
(Dollars in Thousands)
--------------------------------------------------
Minimum Midpoint Maximum SuperMax
--------------------------------------------------
- ---------------------------------------
Net Earnings Per Share
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Historical Earnings Per Share (8) $0.26 $0.22 $0.19 $0.17
Incremental return Per Share (8) $0.16 $0.16 $0.16 $0.16
ESOP Adjustment Per Share (8) ($0.01) ($0.01) ($0.01) ($0.01)
MRP Adjustment Per Share (8) ($0.03) ($0.03) ($0.03) ($0.03)
Normalizing Adjustment Per Share $0.00 $0.00 $0.00 $0.00
------ ------ ------ -----
Proforma Earnings Per Share (8) $0.38 $0.34 $0.31 $0.29
- ---------------------------------------
Shares Utilized
- ---------------------------------------
Shares Utilized 22,716 26,725 30,734 35,345
- ---------------------------------------
Pro-forma Ratios
- ---------------------------------------
Price/EPS without Adjustment 19.74 22.06 24.19 25.86
Price/EPS with Adjustment 19.74 22.06 24.19 25.86
Price/Book Value per Share 94.16% 100.70% 106.04% 111.23%
Price/Tangible Book Value 98.52% 104.93% 110.01% 115.07%
Market Value/Assets 29.95% 34.14% 38.09% 42.34%
--------------------------------------------------
</TABLE>
(1) ESOP Borrowings are deducted from net worth and assets, and amortized over
12 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over 5
years.
(3) Consists of ESOP and MRP amortization.
(4) The ESOP loan is from the Holding Company and therefore, there are no
costs.
(5) Excess of purchase price over fair market value.
(6) Not applicable.
(7) ESOP and MRP are amortized over 12 and 5 years respectively, and tax
impacted at 36%.
(8) All EPS computations are done in accordance with SOP 93-6.
(9) Not applicable.
Page 6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------
Expense Calculations
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Total Shares Offered 15,300 18,001 20,701 23,806
Price Per Share $10 $10 $10 $10
----------------------------------------------
Gross Proceeds 153,004 180,007 207,006 238,058
Estimated Insider Purchases -1,000 -1,000 -1,000 -1,000
ESOP Purchases -6,120 -7,200 -8,280 -9,522
----------------------------------------------
Proceeds to Base Fee On 145,884 171,807 197,726 227,536
Underwriters Percentage 0.00% 0.00% 0.00% 0.00%
----------------------------------------------
Underwriters Fee 0 0 0 0
Advisory Fee 0 0 0 0
----------------------------------------------
Total Underwriters Fee 0 0 0 0
All Other Expenses 1,935 1,935 1,935 1,935
----------------------------------------------
Total Expense 1,935 1,935 1,935 1,935
- ---------------------------------------
Shares Calculations
- ---------------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Less: Old ESOP Adjustment (1) 0 0 0 0
Plus: New SOP 93-6 ESOP Shares (2) 38 45 52 60
Plus: Old SOP 93-6 ESOP Shares (2) 0 0 0 0
-- -- -- --
Shares for all EPS Calculations 22,716 26,725 30,734 35,345
Dilution of Stock Options 10.25%
Dilution of MRP 4.10%
</TABLE>
<TABLE>
<CAPTION>
Post Foundation
----------------------------------------------------------
Appraised Value
----------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum
----------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Issued and Exchanged 23,290,000 27,400,000 31,510,000 36,236,500
Price per Share $10 $10 $10 $10
Shares Issued to Foundation - - - -
Total Shares 23,290,000 27,400,000 31,510,000 36,236,500
Exchange Shares 7,989,592 9,399,309 10,809,352 12,430,673
Conversion Shares 15,300,408 18,000,691 20,700,648 23,805,827
Implied Exhange Ratio 2.4580 2.8917 3.3255 3.8243
Gross Proceeds $153,004,080 $180,006,910 $207,006,480 $238,058,270
Exchange Value $79,895,920 $93,993,090 $108,093,520 $124,306,730
----------------------------------------------------------
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------
MRP Dilution
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: New MRP issued (1) 612 720 828 952
Plus: New SOP 93-6 ESOP Shares (2) 38 45 52 60
(2)
Shares for all EPS Calculations 23,328 27,445 31,562 36,297
EPS $ 0.38 $ 0.34 $ 0.32 $ 0.29
BV/Share $10.34 $9.67 $9.18 $8.75
- ---------------------------------------
Option Dilution
- ---------------------------------------
Shares Outstanding 23,290 27,400 31,510 36,237
Less: New ESOP Adjustment 612 720 828 952
Plus: Options (1) 1,530 1,800 2,070 2,381
Plus: New SOP 93-6 ESOP Shares (2) 38 45 52 60
(2)
Shares for all EPS Calculations 24,246 28,525 32,804 37,725
EPS $ 0.36 $ 0.32 $ 0.30 $ 0.27
BV/Share $10.57 $9.93 $9.45 $9.04
Aftertax expense $0 $0 $0 $0
EPS $0.38 $0.34 $0.31 $0.29
Adjusted EPS 0.38 0.35 0.32 0.29
</TABLE>
Page 8
STOCK
OFFERINGS
QUESTIONS
and
ANSWERS
Peoples
Bancorp, Inc.
<PAGE>
STOCK OFFERINGS
QUESTIONS & ANSWERS
Facts about the Plan of Conversion and Reorganization
The Boards of Directors of Peoples Bancorp, Inc. ("Bancorp"), its wholly owned
subsidiary Trenton Savings Bank FSB ("Trenton Savings" or the "Bank") and
Peoples Bancorp, M.H.C. (the "MHC") unanimously adopted a Plan of Conversion and
Reorganization (the "Plan") to convert from a mutual holding company structure
to a newly formed Delaware stock holding company, Peoples Bancorp, Inc. (the
"Company"). We refer to this as the "Conversion."
This brochure answers some of the most frequently asked questions about the
Conversion and about your opportunity to invest in Peoples Bancorp, Inc.
Investment in the common stock of the Company involves certain risks. For a
discussion of these risks and other factors, investors are urged to read the
accompanying Prospectus, especially the discussion under the heading "Risk
Factors."
Why are Bancorp and its subsidiary, the Bank, and the MHC converting to the
stock holding company structure?
The stock holding company form of ownership is used by most business
corporations and an increasing number of banks and savings institutions. Through
the sale of the stock, the Company will raise additional capital enabling it to:
o Purchase all the capital stock of the Bank, contributing a portion of the
proceeds raised from the sale of the Company's common stock to the Bank.
The Bank, in turn, will utilize these funds to support and broaden its
range of its products and services offered; and
o Allow customers of the Bank and friends to subscribe to purchase stock and
share in the Company and the Bank's future.
Will the Conversion affect any of my deposit account(s) or loan(s)?
No. The Conversion will have no effect on the balance or terms of any deposit
account or loan, and your deposits will continue to be federally insured by the
Federal Deposit Insurance Corporation ("FDIC") to the maximum legal limit. Your
deposit account will not be converted to stock. The common stock purchased from
the Company, however, cannot and will not be insured by the FDIC or any other
governmental agency.
Who is eligible to purchase stock in the offerings?
Depositors and borrowers of Trenton Savings as of certain dates, the Company's
Employee Stock Ownership Plan, the Bancorp's public stockholders, and members of
the general public.
How many shares of stock are being offered and at what price?
<PAGE>
The Company is offering up to 20,241,623 shares of Common Stock at a price of
$10.00 per share through the Prospectus. Shares held by Bancorp stockholders
will also be exchanged.
I am an existing Bancorp stockholder. How will my shares be exchanged?
Each share of Bancorp common stock will automatically be converted into shares
of the Company's common stock according to a ratio that will result in you
retaining nearly the same aggregate percentage ownership in the Company's common
stock after the Conversion. This percentage will be adjusted downward pursuant
to the Office of Thrift Supervision's policy to reflect assets contributed to
the Bancorp by the MHC. Depending on the amount of the Company's common stock
sold in the Offering, an Exchange Ratio ranging from approximately 2.4578 to
3.3252 (up to 3.8240 at the adjusted maximum number of shares sold) Exchange
Shares of the Company's common stock will be exchanged for each share of Bancorp
common stock. The Exchange Agent will provide each stockholder of record a
letter of transmittal with instructions for the exchange of shares.
Holders of Bancorp Common Stock should not forward shares to the Bank or
Exchange Agent until they have received instructions from the Exchange Agent.
How much stock may I buy?
The minimum order is 25 shares. The maximum purchase limit for any person (or
persons on a single account) is $600,000 and for associates of or persons acting
in concert the maximum purchase limitation is $600,000.
The maximum purchase for any person or associates of or persons acting in
concert when combined with Exchange Shares shall not exceed 5% of the Shares
sold in the Offering.
Do Bank members have to buy stock?
No. The Conversion, however, will allow the Bank's depositors and borrowers an
opportunity to subscribe to buy stock and become initial stockholders of the
holding company for the bank with which they do business.
How do I order stock?
You must complete the Stock Order and Certification Form. Be sure to follow the
instructions for completing the Stock Order and Certification. Your order must
be received at the Stock Center or at one of the branches of Trenton Savings by
12:00 noon, New Jersey Time, on ___________, 1998.
If I place an order for stock, am I guaranteed to receive that stock?
No. Placing an order for stock does not guarantee that you will receive any or
all of your order. Orders are filled on a priority basis. For detailed
information on the preference categories, refer to the Conversion and
Reorganization section of the Prospectus.
<PAGE>
How do I pay for my shares of stock?
You must pay for stock by check, cash (if delivered in person) or money order.
Interest will be paid by the Bank on these funds at the passbook rate from the
day the funds are received until the completion or termination of the
Conversion.
You may also authorize us to withdraw funds from your Trenton Savings deposit
account or certificate of deposit for the amount of funds you specify for
payment.
Note: You will not have access to these funds from the day we receive your order
until the completion or termination of the Conversion.
Can I purchase shares using funds in my Trenton Savings IRA account?
Federal regulations do not permit the purchase of conversion stock in your
existing Trenton Savings IRA account. To accommodate our IRA depositors, we have
made arrangements to have funds transferred into self-directed IRA accounts with
a third party broker-dealer to allow for such purchases. Please call our Stock
Center as soon as possible at ( ) - for additional information.
Will the stock be insured?
No. Like any other common stock, the Company's common stock will not be insured
by the Federal Deposit Insurance Corporation, the Bank Insurance Fund, the
Savings Association Insurance Fund or any other governmental agency.
Will dividends be paid on the stock?
The Board of Directors of the Company intends to declare cash dividends on the
common stock commencing with the first quarter following the consummation of the
Conversion. It is expected that the annual dividend will be $0.10 per share if
the maximum as adjusted number of shares are sold in the conversion. However,
there can be no assurance that such dividends will not be reduced or eliminated
in the future.
How will the stock be traded?
The Company's common stock will trade on the Nasdaq National Market under the
symbol "TSBS". However, no assurances can be given that an active and liquid
market will develop.
Do I pay a commission?
No. You will not be charged a commission or fee on the purchase of shares in the
Offering.
Should I vote in favor of the Plan of Conversion?
Yes. The Boards of Directors of the Bank, Bancorp, and MHC recommend that you
vote in favor of the plan of conversion. Your "FOR" vote is very important!
Why did I get several proxy cards?
If you have more than one account, you could receive more than one proxy card,
depending on the ownership structure of
<PAGE>
your accounts. PLEASE VOTE, SIGN AND
RETURN ALL PROXY CARDS!
How many votes do I have?
Your proxy card(s) show the number of votes you have. Every depositor entitled
to vote may cast one vote for each $100, or fraction thereof, on deposit as of
the voting record date up to $100,000.
May I vote in person at the Special Meeting?
Yes, but we would still like you to sign and mail your proxy card today. If you
decide to revoke your proxy, you may do so by voting at the Special Meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK CENTER AT ( ) - between 9:00
a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
The shares of common stock offered in the Conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund or any other
governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
[Member Letter - Trenton Savings Bank FSB letterhead]
_____________, 1998
Dear Member:
I am pleased to inform you that the Boards of Directors of Trenton
Savings Bank FSB (the "Bank"), Peoples Bancorp, Inc. ("Bancorp") and Peoples
Bancorp, M.H.C. (the "MHC") have adopted a Plan of Conversion and Agreement and
Plan of Reorganization (the "Plan of Conversion"). Pursuant to the Plan of
Conversion, the Bank will become a subsidiary of a newly formed Delaware stock
holding company, Peoples Bancorp, Inc. (the "Company"), and the existing
stockholders of Bancorp (other than the MHC) will be issued shares of the
Company's common stock in exchange for their shares of Bancorp's common stock
(the "Exchange"). The Exchange will result in those stockholders owning in the
aggregate approximately the same percentage of the Company as they had owned in
Bancorp, subject to certain adjustments. In addition to the shares of Company
common stock to be issued in the Exchange, the Company is also offering up to
20,241,623 shares of common stock to the MHC's members, Bancorp's stockholders
and members of the public (the "Conversion"). Consummation of the Plan of
Conversion is subject to (i) the approval of the members of the MHC, (ii) the
approval of the stockholders of Bancorp and (iii) various regulatory approvals.
Upon completion of the Conversion and Reorganization, your deposits and
loans with the Bank will continue to be deposits and loans with the Bank; there
will be no change in the balance, interest rate or maturity of deposits or loans
because of this restructuring. Your deposits will continue to be insured by the
Federal Deposit Insurance Corporation to the maximum amount permitted by law to
the same extent as prior to the Conversion.
We are asking depositors of the Bank as of _________, 1998, the voting
record, who continue to be depositors as of the Special Meeting of Members, to
vote FOR the Plan of Conversion. If you and/or members of your family have
multiple accounts with the Bank, you may receive more than one proxy mailing.
Federal regulations do not allow the combining of accounts unless they represent
identical forms of ownership. Please vote all proxy cards found in the front of
the mailing envelope and return them today in the enclosed postage-paid
envelope, even if you plan to attend the meeting. Your vote FOR the Conversion
and Reorganization will not require you to buy any stock. A Proxy Statement
relating to the Conversion is enclosed.
As part of this process, the Company is offering shares of its common
stock in accordance with federal regulations. You may take advantage of your
nontransferable right to purchase shares directly from the Company, without
commission or fee. We have enclosed a package of information, including a Stock
Order Form and a Prospectus, which will help you learn more about investing in
the Company's common stock. Please read and review the materials carefully
before making an investment decision. The Stock Order and Certification Form and
payment MUST be received at the Stock Center or at one of the branches of
Trenton Savings by 12:00 noon, New Jersey Time, on ____________, 1998.
If you have any questions about the Conversion, please call ( ) - or
stop by the Stock Center located at 134 Franklin Corner Road, Lawrenceville, New
Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
[Closed Account Letter - Trenton Savings Bank FSB Letterhead]
______________, 1998
Dear Friend:
I am pleased to inform you that the Boards of Directors of Trenton
Savings Bank FSB (the "Bank"), Peoples Bancorp, Inc. ("Bancorp") and Peoples
Bancorp, M.H.C. (the "MHC") have adopted a Plan of Conversion and Agreement and
Plan of Reorganization (the "Plan of Conversion"). Pursuant to the Plan of
Conversion, the Bank will become a subsidiary of a newly formed Delaware stock
holding company, Peoples Bancorp, Inc. (the "Company"), and the existing
stockholders of Bancorp (other than the MHC) will be issued shares of the
Company's common stock in exchange for their shares of Bancorp's common stock
(the "Exchange"). The Exchange will result in those stockholders owning in the
aggregate approximately the same percentage of the Company as they had owned in
Bancorp, subject to certain adjustments. In addition to the shares of Company
common stock to be issued in the Exchange, the Company is also offering up to
20,241,623 shares of common stock to the MHC's members, Bancorp's stockholders
and members of the public (the "Conversion"). Consummation of the Plan of
Conversion is subject to (i) the approval of the members of the MHC, (ii) the
approval of the stockholders of Bancorp and (iii) various regulatory approvals.
As part of the Conversion, the Company is offering shares of its common
stock in accordance with federal regulations. Because you had a deposit account
with the Bank as of either August 31, 1996 or December 31, 1997 but closed the
account prior to __________, 1998, you are entitled to purchase the common stock
being offered but may not vote on the Plan of Conversion. You may take advantage
of your nontransferable right to purchase shares directly from the Company,
without paying a commission or fee. We have enclosed a package of information,
including a Stock Order Form and a Prospectus, which will help you learn more
about investing in the Company's common stock. Please read and review the
materials carefully before making an investment decision. The Stock Order and
Certification Form and payment MUST be received at the Stock Center or at one of
the branches of Trenton Savings by 12:00 noon, New Jersey Time, on ____________,
1998.
If you have any questions about the Conversion, please call ( ) - or
stop by the Stock Center located at 134 Franklin Corner Road, Lawrenceville, New
Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
(Prospective Investor Letter - Trenton Savings Bank FSB letterhead)
_______, 1998
Dear Prospective Investor:
I am pleased to announce that Trenton Savings Bank FSB (the"Bank"), its
mutual holding company, Peoples Bancorp, M.H.C. (the "MHC") and Peoples Bancorp,
Inc. ("Bancorp") are converting and reorganizing into the stock holding company
structure (the "Conversion"). In conjunction with this Conversion, Peoples
Bancorp, Inc. (the "Company"), the newly formed proposed Delaware stock holding
company for the Bank, is offering shares of common stock in Subscription, Public
Stockholders and Community Offerings.
We have enclosed the following materials that will help you learn more
about investing in the Company's common stock. Please read and review the
materials carefully before making an investment decision.
PROSPECTUS: This document provides detailed information about the proposed
stock offerings and about the Company's operations.
QUESTIONS AND ANSWERS: Key questions and answers about the stock offerings
are found in this pamphlet.
INVITATION: We are hosting an informational community meeting where you can
learn more about the Conversion and Stock Offerings. Please call the Stock
Center to reserve a seat.
STOCK ORDER AND CERTIFICATION FORM: This form is used to purchase stock by
properly executing and returning it with your payment to the Stock Center
in the enclosed envelope labeled Order Forms or in person. The Stock Order
and Certification Form and payment MUST be received at the Stock Center or
at one of the branches of Trenton Savings by 12:00 noon, New Jersey Time,
on ____________, 1998.
We invite you to become a stockholder of the Company. Through this
offering, you have the opportunity to buy stock directly from the Company
without paying a commission or fee.
If you have any questions about the Conversion, please call ( ) - or stop
by the Stock Center located at 134 Franklin Corner Road, Lawrenceville, New
Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
[Broker Dealer Letter - FBR Letterhead]
To Members and Friends of Trenton Savings Bank FSB and Stockholders of Peoples
Bancorp, Inc.:
Friedman, Billings, Ramsey & Co., Inc., a member of the National
Association of Securities Dealers ("NASD"), is assisting Trenton Savings Bank
FSB (the "Bank") and Peoples Bancorp, Inc. ("Bancorp") with their conversion and
reorganization into a newly formed Delaware stock holding company, Peoples
Bancorp, Inc. (the "Company") and its concurrent offerings of shares of common
stock.
At the request of the Company, we are enclosing materials explaining this
process and your opportunity to invest in shares of the Company's common stock
being offered to customers, stockholders and the community through ___________,
1998. Please read the enclosed offering materials carefully. The Company has
asked us to forward these documents to you in view of certain requirements of
the securities laws in your state.
If you have any questions about the Conversion, please call ( ) - or stop
by the Stock Center located at 134 Franklin Corner Road, Lawrenceville, New
Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
Very truly yours,
Friedman, Billings, Ramsey & Co., Inc.
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
(Stockholder Letter- STREET HOLDERS#1- TSBS letterhead)
______________, 1998
Dear Stockholder:
I am pleased to inform you that the Boards of Directors of Trenton Savings
Bank FSB (the "Bank"), Peoples Bancorp, Inc. ("Bancorp") and Peoples Bancorp,
M.H.C. (the "MHC") have adopted a Plan of Conversion and Agreement and Plan of
Reorganization (the "Plan of Conversion"). Pursuant to the Plan of Conversion,
the Bank will become a subsidiary of a newly formed Delaware stock holding
company, Peoples Bancorp, Inc. (the "Company"), and the existing stockholders of
Bancorp (other than the MHC) will be issued shares of the Company's common stock
in exchange for their shares of Bancorp's common stock (the "Exchange"). The
Exchange will result in those stockholders owning in the aggregate approximately
the same percentage of the Company as they had owned in Bancorp, subject to
certain adjustments. In addition to the shares of Company common stock to be
issued in the Exchange, the Company is also offering up to 20,241,623 shares of
common stock to the MHC's members, Bancorp's stockholders and members of the
public (the "Conversion"). Consummation of the Plan of Conversion is subject to
(i) the approval of the members of the MHC, (ii) the approval of the
stockholders of Bancorp and (iii) various regulatory approvals.
We are asking stockholders of Bancorp as of ____________,1998, the voting
record date, to vote FOR the Plan of Conversion. If you and/or members of your
family hold stock in different names, you may receive more than one proxy
mailing. Please vote all proxy cards received and return them today in the
enclosed postage-paid envelope labeled Proxy Card. Your vote FOR the Conversion
will not require you to buy any additional stock in the Conversion. A Proxy
Statement relating to the Conversion is enclosed.
We have enclosed the following materials that will help you learn more
about investing in the Company's common stock. Please read and review the
materials carefully before making an investment decision.
PROSPECTUS: This document provides detailed information about the Bank's
operations and the proposed stock offerings.
QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the stock
offerings are found in this pamphlet.
INVITATION: We are hosting an informational community meeting where you can
learn more about the Conversion and Stock Offerings. Please call the Stock
Center to reserve a seat in the meeting.
We are inviting our customers, existing stockholders and the general public
to become stockholders of the Company. Through this offering you have the
opportunity to buy additional stock directly from the Company without
paying a commission or fee. You may obtain a Stock Order Form and
Certification Form by contacting the Bank.
STOCK ORDER AND CERTIFICATION FORM: This form is used to purchase stock by
properly executing and returning it with your payment to the Stock Center
in the enclosed envelope labeled Order Forms or in person. The Stock Order
and Certification Form and payment MUST be received at the Stock Center or
at one of the branches of Trenton Savings by 12:00 noon, New Jersey Time,
on ____________, 1998.
If you have any questions about the Conversion, please call ( ) - or stop
by the Stock Center located at 134 Franklin Corner Road, Lawrenceville, New
Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through
Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
(Stockholder Letter REGISTERED HOLDERS- TSBS letterhead)
__________, 1998
Dear Stockholder:
I am pleased to inform you that the Boards of Directors of Trenton Savings
Bank FSB (the "Bank"), Peoples Bancorp, Inc. ("Bancorp") and Peoples Bancorp,
M.H.C. (the "MHC") have adopted a Plan of Conversion and Agreement and Plan of
Reorganization (the "Plan of Conversion"). Pursuant to the Plan of Conversion,
the Bank will become a subsidiary of a newly formed Delaware stock holding
company, Peoples Bancorp, Inc. (the "Company"), and the existing stockholders of
Bancorp (other than the MHC) will be issued shares of the Company's common stock
in exchange for their shares of Bancorp's common stock (the "Exchange"). The
Exchange will result in those stockholders owning in the aggregate approximately
the same percentage of the Company as they had owned in Bancorp, subject to
certain adjustments. In addition to the shares of Company common stock to be
issued in the Exchange, the Company is also offering up to 20,241,623 shares of
common stock to the MHC's members, Bancorp's stockholders and members of the
public (the "Conversion"). Consummation of the Plan of Conversion is subject to
(i) the approval of the members of the MHC, (ii) the approval of the
stockholders of Bancorp and (iii) various regulatory approvals.
We are asking stockholders of Bancorp as of __________,1998, the voting
record date, to vote FOR the Plan of Conversion. If you and/or members of your
family hold stock in different names, you may receive more than one proxy
mailing. Please vote all proxy cards received and return them today in the
enclosed postage-paid envelope labeled Proxy Card. Your vote FOR the Conversion
will not require you to buy any additional stock in the Conversion. A Proxy
Statement relating to the Conversion is enclosed.
We have enclosed the following materials that will help you learn more
about investing in the Company's common stock. Please read and review the
materials carefully before making an investment decision.
PROSPECTUS: This document provides detailed information about the Bank's
operations and the proposed stock offerings.
QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the stock
offerings are found in this pamphlet.
INVITATION: We are hosting an informational community meeting where you can
learn more about the Conversion and Stock Offerings. Please call the Stock
Center to reserve a seat.
STOCK ORDER AND CERTIFICATION FORM: This form is used to purchase stock by
properly executing and returning it with your payment to the Stock Center
in the enclosed envelope labeled Order Forms or in person. The Stock Order
and Certification Form and payment MUST be received at the Stock Center or
at one of the branches of Trenton Savings by 12:00 noon, New Jersey Time,
on ____________, 1998.
We are inviting our customers, existing stockholders and the general public
to become stockholders of the Company. Through this offering you have the
opportunity to buy additional stock directly from the Company without paying a
commission or fee.
If you have any questions about the Conversion and Reorganization, please
call ( ) - or stop by the Stock Center located at 134 Franklin Corner Road,
Lawrenceville, New Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
(Stockholder Letter- NoBo's - 2nd mailing-TSBS Letterhead)
___________, 1998
Dear Stockholder:
Under separate cover on this date, we forwarded to you information
regarding the Plan of Conversion of Peoples Bancorp, M.H.C. (the "MHC") and
Reorganization between the MHC and Peoples Bancorp, Inc. ("Bancorp") (the
"Conversion") and its wholly owned subsidiary Trenton Savings Bank FSB (the
"Bank") and the offering of Common Stock by the newly formed Delaware stock
holding company, Peoples Bancorp, Inc. (the "Company").
As a result of certain requirements, we could not forward a Stock Order and
Certification Form with the other packet of materials. They are enclosed herein,
along with a Prospectus.
The Stock Order and Certification Form and payment MUST be received at
the Stock Center or at one of the branches of Trenton Savings by 12:00 noon, New
Jersey Time, on ____________, 1998.
If you have any questions about the Conversion, please call ( ) - or stop
by the Stock Center located at 134 Franklin Road, Lawrenceville, New Jersey
between 9:00 a.m. and 5:00 p.m., New Jersey Time, Monday through Friday.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
(Dear Member "Dark Blue Sky" & Foreign Accounts - Trenton Savings Bank FSB
letterhead)
___________,1998
Dear Member:
I am pleased to announce that Trenton Savings Bank FSB (the"Bank"), its
mutual holding company, Peoples Bancorp, M.H.C. and Peoples Bancorp, Inc.
("Bancorp") are converting and reorganizing into the stock holding company
structure (the "Conversion"). In conjunction with this Conversion, Peoples
Bancorp, Inc. (the "Company"), the newly formed proposed Delaware stock holding
company for the Bank, is offering shares of common stock in Subscription, Public
Stockholders and Community Offerings.
Unfortunately, the Company is unable to either offer or sell its common
stock to you because the small number of eligible subscribers in your
jurisdiction makes registration or qualification of the common stock under the
securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common stock of the Company.
However, as a member of the Bank, you have the right to vote on the Plan of
Conversion at the Special Meeting of Members to be held on March __, 1998.
Therefore, enclosed is a proxy card, a Proxy Statement (which includes the
Notice of the Special Meeting), a Prospectus (which contains information
incorporated into the Proxy Statement) and a return envelope for your proxy
card.
If you have any questions about the Conversion and Reorganization, please
call ( ) or stop by the Stock Center located at 134 Franklin Corner Road,
Lawrenceville, New Jersey between 9:00 a.m. and 5:00 p.m., New Jersey Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus accompanied by the Stock Order Form.
<PAGE>
Meeting Invitation
Peoples Bancorp, Inc.
You Are Cordially Invited To a Community Investor Meeting & Reception to Learn
About the Plan of Conversion and Related Offerings of Peoples Bancorp, Inc. (a
newly formed holding company for Trenton Savings Bank FSB) common
stock.
TBD DATE
TBD PLACE
TBD TIME
Senior executives of Trenton Savings Bank FSB will present information and
answer your questions about Trenton Savings Bank's Plan of Conversion and
Reorganization and related Stock Offerings. You will also be presented with
information about Trenton Savings Bank's business focus and results of
operations.
Seating is Limited
Please call the Stock Center to make your reservation.
( ) -
This invitation is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offer is made only by the Prospectus accompanied by
the Stock Order Form. The shares of common stock are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund or any other
governmental agency.
<PAGE>
Proxy Gram
We recently forwarded to you information advising that the Boards of Directors
of Trenton Savings Bank FSB, Peoples Bancorp Inc., and Peoples Bancorp M.H.C.
had received regulatory approval to reorganize into the stock holding company
form of ownership.
Your vote on our Plan of Conversion has not yet been received. Failure to Vote
has the Same Effect as Voting Against the Plan of Conversion.
Your vote is important to us, and we, therefore, are requesting that you sign
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Plan does not obligate you to purchase stock; approval of the
Plan will not affect the terms or insurance of your accounts at Trenton Savings
Bank FSB.
The Board of Directors unanimously recommends that you vote "FOR" the Plan
TRENTON SAVINGS BANK FSB, PEOPLES BANCORP INC., and PEOPLES BANCORP M.H.C.
Wendell T. Breithaupt
President and Chief Executive Officer
If you already mailed the proxy, please accept our thanks and disregard this
request. For further information call our Stock Center at ( ) - .
The common stock is not a deposit or account and is not federally insured or
guaranteed. This is not an offer to sell or a solicitation of an offer to buy
stock. The offer is made only by the Prospectus accompanied by the Stock Order
Form.
<PAGE>
Ads will run two times in each county. Ad will be 6 7/16 X 10(3x10)
Peoples Bancorp, Inc.
Peoples Bancorp, Inc., a newly formed holding company for Trenton Savings
Bank FSB, is offering up to 20,241,623 shares of common stock.
You are invited...
to a Community Investor Meeting and Reception
Senior executives of Trenton Savings Bank FSB are hosting a Community Investor
Meeting. In addition to learning details about the stock offering, you'll be
presented with information about Trenton Savings Bank's business focus and
results of operations.
TBD DATE
TBD PLACE
TBD TIME
To receive a copy of the Prospectus or to make a reservation to attend the
meeting, please call the Stock Center at ( ) - from 9:00 a.m. to 5:00 p.m., New
Jersey Time, Monday through Friday.
This invitation is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offer is made only by the Prospectus accompanied by
the Stock Order Form. The shares of common stock are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund or any other
governmental agency.
Exhibit 99.6
Peoples
Bancorp, Inc
(Logo)
STOCK CENTER
134 Franklin Corner Road
Lawrenceville, NJ 08648
1-888-844-7205
(Proposed Holding Company for
Trenton Savings Bank FSB)
STOCK ORDER FORM & CERTIFICATION FORM Note: Please read the Stock Order Form
Guide and Instructions included in the packet of information before completion.
DEADLINE The Subscription Offering expires at 12:00 Noon, New Jersey time,___,
1998. Your Original Stock Order Form and Certification Form, properly executed
and with the correct payment, must be received at the Stock Center or a branch
of Trenton Savings Bank FSB by this deadline, or it will be considered void. No
photocopied or faxed Order Forms will be accepted.
NUMBER OF SHARES / AMOUNT OF PAYMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(1) NUMBER OF SHARES OF PEOPLES
BANCORP, INC. CURRENTLY OWNED (2) Number of Shares Price per Share (3) Total Amount Due
X $10.00 = $
(Minimum 25)
</TABLE>
The minimum number of shares for which you may subscribe is 25. For persons who
do not currently own shares of Peoples Bancorp, Inc., the maximum purchase
limitations are as follows: (i) the maximum number of shares that any person (or
persons on a single account) may purchase in the Offering is ___ shares of
Common Stock, and (ii) the maximum number of shares that any person together
with any associate or group of persons acting in concert may purchase in the
Offering is ___ shares of Common Stock. For persons who currently own shares of
Peoples Bancorp, Inc., the share and share purchase limitations are reduced by
the product of the final Exchange Ratio and the number of shares of Peoples
Bancorp, Inc. currently owned by the person or persons submitting this Order
Form (as indicated in Item 1). The total number of shares to be sold is based on
a valuation that is subject to review prior to filling individual stock orders.
METHOD OF PAYMENT
(4) Enclosed is a check, bank draft or money order payable to PEOPLES BANCORP,
INC. for $____________________ (or cash, if presented in person).
(5) I authorize TRENTON SAVINGS BANK FSB make the withdrawals from my Harbor
Federal account(s) shown below, and understand that the amounts will not
otherwise be available for withdrawal:
PURCHASER INFORMATION
(6) Check here if you are a DIRECTOR, OFFICER or EMPLOYEE of Trenton Savings
Bank FSB or a member of such person's immediate family.
Check here if you were a depositor with at least $50.00 on deposit at the
Eligibility Record Date (August 31, 1996) and/or the Suplemental
Eligibility Record Date (December 31, 1997) and/or a depositor or borrrower
on the Voting Record Date (February 6, 1997). List all the names on the
account(s) and all the account numbers(s) of those accounts you had at
these dates to ensure proper identification of your purchase rights.
Confirm account(s) by initialing here________________.
ACCOUNT NUMBER(S) AMOUNT(S)
$
Total Withdrawal $
THERE IS NO PENALTY FOR EARLY WITHDRAWALS USED FOR THIS PAYMENT. TO WITHDRAW
FROM AN ACCOUNT WITH CHECKING PRIVILEGES, PLEASE WRITE A CHECK.
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
If additional space is needed, please use the back side of this form.
(7) STOCK REGISTRATION Form of stock ownership
<TABLE>
<CAPTION>
<S> <C> <C>
\ \ Individual \ \ Uniform Transfer to Minors \ \ Partnership
\ \ Joint Tenants (WROS) \ \ Uniform Gift to Minors \ \ Individual Retirement Account
\ \ Tenants in Common \ \ Corporation \ \ Fiduciary/Trust (Under Agreement Dated ____________)
</TABLE>
<PAGE>
(8) Name Social Security or Tax I.D.
Name Daytime Telephone
Street Address Evening Telephone
City State Zip Code County of Residence
(9) NASD AFFILIATION (This section applies to those individuals who meet the
delineated criteria)
Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to FreeRiding and Withholding is available, you agree, if you have checked the
NASD affiliation box, (i) not to sell, transfer or hypothecate the stock for a
period of 90 days following the issuance, and (ii) to report this subscription
in writing to the applicable NASD member within one day of the payment therefor.
(10) ASSOCIATE--ACTING IN CONCERT
Check here, and complete the reverse side of this Form, if you or any
associates (as defined on the reverse side of this Form) or persons acting in
concert with you have submitted other orders for shares in the Subscription
and/or Community Offerings.
ACKNOWLEDGMENT By signing below, I acknowledge receipt of the Prospectus dated ,
1998 and the provisions therein and understand that I may not change or revoke
my order once it is received by Peoples Bancorp, Inc. I also certify that this
stock order is for my account only and there is no agreement or understanding
regarding any further sale or transfer of these shares. Federal regulations
prohibit any person from transferring, or entering into any agreement directly
or indirectly to transfer, the legal or beneficial ownership of conversion
subscription rights or the underlying securities to the account of another
person. Trenton Savings Bank FSB will pursue any and all legal and equitable
remedies in the event it becomes aware of the transfer of subscription rights
and will not honor orders known by it to involve such transfer. Under penalties
of perjury, I further certify that: (1) the social security number or taxpayer
identification number given above is correct; and (2) I am not subject to backup
withholding. You must cross out this item, (2) above, if you have been notified
by the Internal Revenue Service that you are subject to backup withholding
because of underreporting interest or dividends on your tax return.
(11) SIGNATURE
THIS FORM MUST BE DATED AND SIGNED IN THE SPACE PROVIDED (ALONG WITH YOUR
DATED AND SIGNED CERTIFICATION FORM ON THE REVERSE SIDE). When purchasing as a
custodian, corporate officer, etc., include your full title. An additional
signature is required only when payment is by withdrawal from an account that
requires more than one signature to withdraw funds.
SIGNATURE Title (if applicable) Date
SIGNATURE Title (if applicable) Date
YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS.
THIS ORDER IS NOT VALID IF NOT SIGNED. If you need help completing this Form,
you may call the Stock Information Center at 1-(888) 844-7205.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER CORPORATION, FUND, OR GOVERNMENTAL AGENCY.
FOR OFFICE USE ONLY
Date Rec'd ____/____/____ Check # _________________ Amount $ _________________
Category _______ Order # _________ Batch _______ Initials ____
BE SURE TO COMPLETE AND SIGN THE CERTIFICATION FORM ON THE REVERSE SIDE.
1
<PAGE>
Peoples
Bancorp, Inc
(Logo)
ITEM (6) -- (CONTINUED)
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER(S)
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER(S)
ITEM (10) -- (CONTINUED)
List below all other orders submitted by you or your Associates (as defined)
or by persons acting in concert with you.
NAMES LISTED ON OTHER NUMBER OF SHARES ORDERED
STOCK ORDER FORMS
The term "associate," when used to indicate a relationship with any person, is
defined to mean (i) a corporation or organization (other than the Mutual Holding
Company or Bancorp, a majority-owned subsidiary of Bancorp or the Bank) 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 Bank 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 has
the same home as such person or who is a director or officer of Bancorp or the
Bank or any of the subsidiaries of the foregoing.
CERTIFICATION FORM
(This form must be dated and signed along with your dated and signed
Stock Order Form on the reverse side.)
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE
("COMMON STOCK"), OF PEOPLESBANCORP, INC. ("COmpany"), THE PROPOSED HOLDING
COMPANY FOR TRENTON SAVINGS BANK FSB ("THEBANK"), ARE NOT FEDERALLY INSURED AND
ARE NOT GUARANTEED BY THE COmpany, THE BANK OR THE FEDERAL GOVERNMENT.
If anyone asserts that the shares of Common Stock are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision's Northeast Regional Director, Robert Albanese at (201)
413-1000.
I further certify that, before purchasing the shares of Common Stock of the
Company, I received a copy of the Prospectus dated _____ , 1998 which discloses
the nature of the shares of Common Stock being offered thereby and describes the
following risks involved in an investment in the Common Stock under the heading
"Risk Factors" beginning on page 19 of the Prospectus:
1. Low Return of equity Following the Conversion ......................(Page )
2. Uncertaintly as to Future Growth Opportunities and Ability to Successfully
Deploy Offering Proceds ............................................(Page )
3. Independent Valuation of the Company and its Impact on the Trading Price of
Common Stocks ......................................................(Page )
4. Absence of Securities Gains ........................................(Page )
5. Possible Increase in Offering Range and Number of Shares Issued ....(Page )
6. Potential Effects of Charges in Interest Rates and the Current Interest
Rate Environment ...................................................(Page )
7. Risks Related to Increasing Portfolio of Higher Yielding Loans .....(Page )
8. Certain Anti-Takeover Provisions ...................................(Page )
9. Possible Dilutive Effect of Issujoance of Additional Shares ........(Page )
10. Higher Compensation Expenses in Future Periods .....................(Page )
11. Regulatory Oversight and Legislation ...............................(Page )
12. Capability of the Bank's Data Processing Hardware to Accommodate the Year
2000 ...............................................................(Page )
Signature Date Signature Date
Name (Please Print) Name (Please Print)
(NOTE: ALL PARTIES NAMED AS REGISTERED OWNERS IN ITEM 8 ON THE REVERSE SIDE MUST
SIGN CERTIFICATION FORM)
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