<PAGE> 1
As filed with the Securities and Exchange Commission on June 20, 1997
Registration No. 333-_______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
OHIO STATE FINANCIAL SERVICES, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Ohio 6036 31-1529204
- ------------------------------- ---------------------------- ---------------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or organization) Classification Code Number) identification number)
</TABLE>
435 MAIN STREET
BRIDGEPORT, OHIO 43912
(614) 635-0764
-------------------------------------------------------------
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
JON W. LETZKUS
OHIO STATE FINANCIAL SERVICES, INC.
435 MAIN STREET
BRIDGEPORT, OHIO 43912
(614) 635-0764
-------------------------------------------------------------
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
With copies to:
Terri R. Abare
Kathleen M. Molinsky
Vorys, Sater, Seymour and Pease
Atrium Two, 221 East Fourth Street
Cincinnati, Ohio 45202
(513) 723-4000
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the 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]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price aggregate offering Amount of
registered registered per share price(1) registration fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shares,
without par value 892,687 $10.00 $8,926,870 $2,706
=============================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
CROSS REFERENCE SHEET
Showing the location in the Prospectus of the Items of Form S-1
<TABLE>
<CAPTION>
Form S-1 Item and Caption Prospectus Heading
- ------------------------- ------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.................................... Cover Page, Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges..................... PROSPECTUS SUMMARY; RISK FACTORS
4. Use of Proceeds...................................... USE OF PROCEEDS
5. Determination of Offering Price...................... Cover Page; THE CONVERSION - Price and Number of
Common Shares to be Sold
6. Dilution............................................. Not Applicable
7. Selling Security Holders............................. Not Applicable
8. Plan of Distribution................................. Cover Page; THE CONVERSION - General;
- Subscription Offering;
- Community Offering;
- Plan of Distribution
9. Description of Securities to be Registered........... DESCRIPTION OF AUTHORIZED SHARES
10. Interest of Names Experts and Counsel................ Not Applicable
11. Information with Respect to the Registrant
(a) Description of Business......................... THE BUSINESS OF THE ASSOCIATION
(b) Description of Property......................... THE BUSINESS OF THE ASSOCIATION - Properties
(c) Legal Proceedings............................... THE BUSINESS OF THE ASSOCIATION - Legal Proceedings
(d) Market Price and Dividends...................... Cover Page; MARKET FOR COMMON SHARES; DIVIDEND POLICY
(e) Financial Statements............................ FINANCIAL STATEMENTS
(f) Selected Financial Data......................... SELECTED FINANCIAL INFORMATION AND OTHER DATA
(g) Supplementary Financial Information............. Not Applicable
(h) Management's Discussion and Analysis of
Financial Condition and Results of Operations. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(i) Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.................................... Not Applicable
(j) Directors and Executive Officers................ MANAGEMENT
(k) Executive Compensation.......................... MANAGEMENT - Compensation; and - Stock Benefit Plans
(l) Security Ownership of Certain Beneficial
Owners and Management......................... THE CONVERSION - Shares to be Purchased by Management
Pursuant to Subscription Rights
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Form S-1 Item and Caption Prospectus Heading
- ------------------------- ------------------
<S> <C> <C>
(m) Certain Relationships and Related
Transactions.................................. Not Applicable
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..... Not Applicable
</TABLE>
<PAGE> 4
PROSPECTUS SUPPLEMENT
- ---------------------
OHIO STATE FINANCIAL SERVICES, INC.
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
PROFIT SHARING AND SAVINGS PLAN
This Prospectus Supplement relates to the offer and sale to
participants (the "Participants") in the Bridgeport Savings and Loan Association
Employees' Savings and Profit Sharing Plan and Trust of participation interests
and common shares, without par value, of Ohio State Financial Services, Inc.
(the "Common Shares"), as set forth herein.
In connection with the proposed conversion of Bridgeport Savings and
Loan Association (the "Association" or the "Employer") from a mutual savings and
loan association to a stock savings and loan association incorporated under Ohio
law (the "Conversion"), Ohio State Financial Services, Inc., the proposed
holding company for the Association (the "Holding Company"), has been formed.
The Board of Directors of the Association has adopted the Bridgeport Savings and
Loan Association Employees' Savings and Profit Sharing Plan and Trust (the
"Plan" or the "401(k) Plan") which permits the investment of Plan assets in
Common Shares. The Plan will permit Participants to direct the trustee of the
Plan to purchase Common Shares with amounts in the Plan attributable to such
Participants. This Prospectus Supplement relates to the initial election of a
Participant to direct the purchase of Common Shares in connection with the
Conversion and also to elections to purchase Common Shares after the Conversion.
The Prospectus of the Holding Company dated _________________, 1997
(the "Prospectus"), which is attached to this Prospectus Supplement, includes
detailed information regarding the Conversion, the Common Shares and the
financial condition, results of operation and business of the Association and
the Holding Company. This Prospectus Supplement, which provides detailed
information regarding the Plan, should be read only in conjunction with the
Prospectus. Terms not otherwise defined in this Prospectus Supplement are
defined in the Plan or the Prospectus.
A Participant's eligibility to purchase Common Shares in connection
with the Conversion is subject to the Participant's general eligibility to
purchase Common Shares in the Conversion and the minimum and maximum purchase
limitations set forth in the Plan of Conversion. See "THE CONVERSION -
Subscription Offering; Community Offering; and - Limitations on Purchases of
Common Shares" in the Prospectus.
AN INVESTMENT IN THE COMMON SHARES INVOLVES CERTAIN RISKS. FOR A
DISCUSSION OF SUCH RISKS AND OTHER FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS, SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THE
PROSPECTUS.
<PAGE> 5
THESE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT
SUPERVISION (THE "OTS"), THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"),
THE DIVISION OF FINANCIAL INSTITUTIONS OF THE DEPARTMENT OF COMMERCE OF THE
STATE OF OHIO (THE "DIVISION"), OR THE SECURITIES COMMISSION OF ANY STATE, NOR
HAS THE SEC, THE OTS, THE FDIC, THE DIVISION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus Supplement is _________ 1997.
<PAGE> 6
No person has been authorized to give any information or to make any
representations other than as 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 Holding Company, the Association
or the Plan. This Prospectus Supplement does not constitute an offer to sell, or
the solicitation of an offer to buy, any securities, 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 to whom delivery of this Prospectus would be unlawful. Neither the
delivery of this Prospectus Supplement and the Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein 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.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Offering 1
Securities Offered 1
Election to Purchase Common Shares in the Conversion 1
Value of Participation interests 1
Method of Directing Transfer 1
Time for Directing Transfer 2
Irrevocability of Transfer Direction 2
Direction to Purchase Common Shares After the Conversion 2
Purchase Price of Common Shares 2
Nature of a Participant's interest in the Common Shares 3
Voting and Tender Rights of Common Shares 3
Description of the Plan 3
Introduction 3
Eligibility and Participation 4
Contributions under the Plan 5
Limitations on Contributions 5
Investment of Contributions 7
Benefits Under the Plan 10
Withdrawal and Distributions From the Plan 10
Administration of the Plan 11
Reports to Plan Participants 12
Plan Administrator 12
Amendment and Termination 12
Merger, Consolidation or Transfer 13
Federal Income Tax Consequences 13
ERISA and Other Qualifications 15
Restrictions on Resale 16
SEC Reporting and Short-Swing Profit Liability 17
Legal Opinions 17
Investment Form 18
</TABLE>
<PAGE> 8
THE OFFERING
------------
SECURITIES OFFERED
The securities offered hereby are participation interests in the Plan and up to
_________ Common Shares, at the purchase price of $10.00 per Common Share, which
may be acquired by the Plan for the accounts of employees of the Association
participating in the Plan. The Holding Company is the issuer of the Common
Shares. Only employees of the Association may participate in the Plan.
Information regarding the Plan is contained in this Prospectus Supplement and
information with regard to the Conversion and the financial condition, results
of operations and business of the Association and the Holding Company is
contained in the attached Prospectus. The address of the principal office of the
Association is 435 Main Street, Bridgeport, Ohio 43912. The Association's
telephone number is (614) 635-0764.
ELECTION TO PURCHASE COMMON SHARES IN THE CONVERSION
In connection with the Conversion, the Association has adopted the Plan
which permits each Participant to direct the trustee of the Plan (the "Trustee")
to transfer all or part of the funds which represent his or her beneficial
interest in the assets of the Plan to an employer stock fund (the "Employer
Stock Fund") and to use such funds to purchase Common Shares issued in
connection with the Conversion. Amounts transferred will include salary deferral
contributions, Association matching contributions and rollover contributions, if
any. The Employer Stock Fund will consist of investments in the Common Shares
made on or after the effective date of the Conversion. Funds not transferred to
the Employer Stock Fund will remain in the other investment funds of the Plan as
directed by the Participant. A Participant's ability to transfer funds to the
Employer Stock Fund in the Conversion is subject to the Participant's general
eligibility to purchase Common Shares in the Conversion. For general information
as to the ability of Participants to purchase Common Shares in the Conversion,
see "THE CONVERSION - Subscription Offering; and - Community Offering" in the
attached Prospectus.
VALUE OF PARTICIPATION INTERESTS
The assets of the Plan are valued on an ongoing basis and each
Participant is informed of the value of his or her beneficial interest in the
Plan on a quarterly basis. This value represents the market value of past
contributions to the Plan by the Association and by the Participants and
earnings thereon, less previous withdrawals.
METHOD OF DIRECTING TRANSFER
The last page of this Prospectus Supplement is an investment form to
direct a transfer to the Employer Stock Fund (the "Investment Form"). If a
Participant wishes to transfer all or part of his or her beneficial interest in
the assets of the Plan to the Employer Stock Fund to purchase Common Shares
issued in connection with the Conversion, he or she should indicate that
decision in Part 2 of the Investment Form. If a Participant does not wish to
make such an election, he or she does not need to take any action.
-1-
<PAGE> 9
TIME FOR DIRECTING TRANSFER
The deadline for submitting a direction to transfer amounts to the
Employer Stock Fund in order to purchase Common Shares issued in connection with
the Conversion is ______________, 1997. The Investment Form should be returned
to ________________ by noon, Bridgeport, Ohio Time, on such date.
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 Common Shares in connection with the Conversion shall be irrevocable.
Participants, however, will be able to direct the reinvestment of their accounts
under the Plan ("Accounts") after the Conversion as explained below.
DIRECTION TO PURCHASE COMMON SHARES AFTER THE CONVERSION
After the Conversion, a Participant will be able to direct that a
certain percentage of such Participant's interests in the trust assets (the
"Trust") be transferred to the Employer Stock Fund and invested in Common
Shares, or to the other investment funds available under the Plan.
Alternatively, a Participant may direct that a certain percentage of such
Participant's interest in the Employer Stock Fund be transferred from the
Employer Stock Fund to the other investment funds available under the Plan.
Participants will be permitted to direct that future contributions made to the
Plan by or on their behalf be invested in Common Shares. Following the initial
election, the allocation of a Participant's interest in the Employer Stock Fund
may be changed by the Participant, with each change generally becoming effective
on the last business day coinciding with or next following the day the Plan
Administrator receives a written notice for such change. Special restrictions
apply to transfers directed by those Participants who are executive officers,
directors and principal shareholders of the Holding Company who are subject to
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). See "Restrictions on Resale" and "THE CONVERSION -
Restrictions on Transferability of Common Shares by Directors and Officers" in
the Prospectus.
PURCHASE PRICE OF COMMON SHARES
The funds transferred to the Employer Stock Fund for the purchase of
Common Shares in connection with the Conversion will be used by the Trustee to
purchase Common Shares. The price paid for such Common Shares will be $10.00 per
share, the same price paid by all other persons who purchase Common Shares in
the Conversion.
Any Common Shares purchased by the Trustee after the Conversion will be
acquired in open market transactions. The prices paid by the Trustee for Common
Shares purchased in the open market will not exceed "adequate consideration" as
defined in Section 3(18) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
-2-
<PAGE> 10
NATURE OF A PARTICIPANT'S INTEREST IN THE COMMON SHARES
The Common Shares will be held in the name of the Trustee for the Plan,
as trustee. Each Participant has an allocable interest in the investment funds
of the Plan but not in any particular assets of the Plan. Accordingly, a
specific number of Common Shares will not be directly attributable to the
account of any Participant. Net earnings, e. g., gains and losses, are allocated
to the Account of a Participant based on the particular investment designations
of the Participants. Therefore, a Participant's Account earnings should not be
affected by the investment designations (including investments in Common Shares)
of other Participants.
VOTING AND TENDER RIGHTS OF COMMON SHARES
The Trustee generally will exercise voting and tender rights
attributable to all Common Shares 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 Shares have a right to vote, each Participant will be
allocated a number of voting instruction rights reflecting such Participant's
proportionate interest in the Employer Stock Fund. The percentage of Common
Shares held in the Employer Stock Fund that are voted in the affirmative or
negative on each matter shall be the same percentage of the total number of
voting instruction rights that are exercised by Participants in either the
affirmative or negative, respectively. In the event of a tender offer for the
Common Shares, the Plan provides that each Participant will be allocated a
number of tender instruction rights reflecting such Participant's proportionate
interest in the Employer Stock Fund. The percentage of Common Shares held in the
Employer Stock Fund that will be tendered will be the same as the percentage of
the total number of tender instruction rights that are exercised by Participants
in favor of tendering. The remaining Common Shares held in the Employer Stock
Fund will not be tendered. The Plan provides that the Participants may exercise
their voting instruction rights and tender instruction rights on a confidential
basis.
DESCRIPTION OF THE PLAN
INTRODUCTION
Effective as of January l, 1987, the Association adopted the Bridgeport
Savings and Loan Association Profit Sharing and Savings Plan, which was a profit
sharing/401(k) plan sponsored by the Pentegra Services, Inc. In connection with
the proposed Conversion, the Association amended the Plan effective _________,
1997, to provide Participants with an opportunity to invest in Common Shares.
The Plan is a profit sharing plan with a cash or deferred arrangement
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 Association intends that the Plan, in operation, will comply with
the requirements under Section 401(a) and Section 401(k) of the Code. The
Association will adopt any amendments to the Plan that may be necessary to
ensure the qualified status of the Plan under the Code and applicable U.S.
Treasury regulations. The Association will submit the Plan to the IRS
-3-
<PAGE> 11
for a determination that the Plan, as amended, is qualified under Section 401(a)
of the Code and that it satisfies the requirements for a qualified cash or
deferred arrangement under Section 401(k) of the Code.
Employee Retirement Income Securities 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 l of ERISA which by their terms do not
apply to an individual account plan (other than a money purchase pension plan).
The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA.
Neither the funding requirements contained in Part 3 of Title I of ERISA nor the
plan termination insurance provisions contained in Title IV of ERISA will be
extended to Participants or beneficiaries under 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
BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF EMPLOYMENT WITH
THE ASSOCIATION. A SUBSTANTIAL FEDERAL TAX PENALTY MAY ALSO BE IMPOSED ON
WITHDRAWALS MADE PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59 1/2, UNLESS A
PARTICIPANT RETIRES AS PERMITTED UNDER THE PLAN REGARDLESS OF WHETHER SUCH A
WITHDRAWAL OCCURS DURING HIS EMPLOYMENT WITH THE ASSOCIATION OR AFTER
TERMINATION OF EMPLOYMENT.
Reference to Full Text of Plan. The following statements are summaries
of certain material provisions of the Plan. They are not complete and are
qualified in their entirety by the full text of the Plan, which has been filed
as an exhibit to the registration statement of the Holding Company filed with
the SEC. Copies of the Plan are available to all employees by filing a request
with the Plan Administrator. Each employee is urged to read carefully the full
text of the Plan.
ELIGIBILITY AND PARTICIPATION
Any employee of the Association is eligible to participate in the Plan
and will become a Participant in the Plan on the first day of the month
immediately following the completion of a minimum of 1,000 hours of service with
the Association within a twelve consecutive month period of employment with the
Association. The Plan fiscal year is the calendar year (the "Plan Year").
Directors who are not employees of the Association are not eligible to
participate in the Plan.
As of _____________, 1997, there were approximately __ employees
eligible to participate in the Plan, and approximately __ employees had elected
to contribute to the Plan.
-4-
<PAGE> 12
CONTRIBUTIONS UNDER THE PLAN
Participant Contributions. Each Participant in the Plan is permitted to
elect to reduce such Participant's Compensation (hereinafter defined) pursuant
to a salary reduction agreement by an amount not less than 2% nor more than 15%
and have that amount contributed to the Plan on such Participant's behalf
("Deferred Compensation"). Such amounts are credited to the Participant's 401(k)
Account. For purposes of the Plan, "compensation" means a Participant's regular
basic salary ("Basic Salary"). Due to a statutory change, effective January 1,
1994, the annual compensation of each Participant taken into account under the
Plan is limited to $150,000 (adjusted for cost of living as permitted by the
Code). A Participant may elect as of the first day of any month to modify the
amount contributed to the Plan under such Participant's salary reduction
agreement. Deferred contributions are generally transferred by the Association
to the Trustee of the Plan monthly.
Employer Contributions. The Association currently makes no
contributions to the Plan.
Rollover Amount from Other Plans. An employee who is eligible to
participate in the Plan, has satisfied the service requirements and has received
a distribution from another plan qualified under Section 401(a) of the Code,
may, in accordance with Section 402(c) of the Code and procedures approved at
the discretion of the Trustee, transfer the distribution received from the Other
Plan to the Trustee. Any amounts rolled over from an Other Plan will be
contributed to the employee's "Rollover Account."
LIMITATIONS ON CONTRIBUTIONS
Limitations on Annual Additions and Benefits. Pursuant to the
requirements of the Code, the Plan provides that the amount of annual additions
allocated to each Participant's 401(k) Account during any Plan Year may not
exceed the lesser of 25% of the Participant's "Section 415 Compensation" for the
Plan Year or $30,000 (adjusted for increases in the cost of living as permitted
by the Code). Annual additions are the employer contributions, employee
contributions and forfeitures credited to the account of the employee for the
Plan Year. A Participant's "Section 415 Compensation" is a Participant's
compensation from the Association, excluding for Plan Years beginning prior to
January 1, 1998, any amount contributed to the Plan under a compensation
reduction agreement or any employer contribution to the Plan or to any other
plan of deferred compensation or any distributions from a plan of deferred
compensation. In addition, annual additions shall be limited to the extent
necessary to prevent the limitations for the combined plans of the Association
from being exceeded. To the extent that these limitations would be exceeded by
reason of excess annual additions to the Plan with respect to a Participant,
such excess will be disposed of in accordance with procedures set forth in the
Plan.
However, if the annual addition limitations are exceeded with respect
to a Participant in both the Plan and the defined benefit pension plan
maintained by the Association, the Participant's annual additions under the Plan
will be reduced.
-5-
<PAGE> 13
$7,000 Limitation on 401(k) Plan Contributions. The annual amount of
deferred compensation of a Participant (when aggregated with any elective
deferrals of the Participant under any other employer plan, a simplified
employee pension plan or a tax deferred annuity) may not exceed $7,000, adjusted
for increases in the cost of living as permitted by the Code (the limitation for
1997 is $9,500). 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 Excess Deferral is made.
Limitation on Plan Contributions for Highly Compensated Employees.
Sections 401(k) of the Code limit the amount of deferred compensation
contributed to the Plan in any Plan Year on behalf of Highly Compensated
Employees (defined hereinafter) in relation to the amount of deferred
compensation contributed by or on behalf of all other employees eligible to
participate in the Plan. Specifically, the actual deferral percentage for a plan
year (i.e., the average of the ratios, calculated separately for each eligible
employee in each group, by dividing the amount of Deferred Compensation credited
to the 401(k) Account of such eligible employee by such eligible employees
compensation for the Plan Year) of the Highly Compensated Employees may not
exceed the greater of (a) 125% of the actual deferral percentage of all other
eligible employees, or (b) the lesser of (i) 200% of the actual deferral
percentage of all other eligible employees, or (ii) the actual deferral
percentage of all other eligible employees plus two percentage points.
In general, a Highly Compensated Employee includes any employee who,
during the Plan Year or the preceding Plan Year, (1) was at any time a 5% owner
(i.e., owns directly or indirectly more than 5% of the shares of the Employer,
or shares possessing more than 5% of the total combined voting power of all
stock of the Employer) or (2) received compensation from the Employer in excess
of $80,000 for the prior Plan Year. The dollar amount in the foregoing sentence
is for 1997. Such amount is adjusted annually to reflect increases in the cost
of living.
In order to prevent the disqualification of the Plan, any amounts
contributed by Highly Compensated Employees that exceed the average deferral
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. However, the Association will be
subject to a 10% excise tax on any Excess Contributions unless such Excess
Contributions, together with any income allocable thereto, either are
recharacterized or are distributed before the close of the first 2 1/2 months
following the Plan Year to which such excess contributions related.
Top-Heavy Plan Requirements. If for any Plan Year the Plan is a
Top-Heavy Plan (defined hereinafter), then (i) the Association may be required
to make certain minimum
-6-
<PAGE> 14
contributions to the Plan on behalf of Non-Key Employees (defined hereinafter),
and (ii) certain additional restrictions would apply with respect to the
combination of annual additions to the Plan and projected annual benefits under
any defined benefit plan maintained by the Association.
In general, the Plan will be regarded as a "Top-Heavy Plan" for any
Plan Year if, as of the last day of the preceding Plan Year, the aggregate
balance of the Accounts of Participants who are Key Employees exceeds 60% of the
aggregate balance of the Accounts of all Participants. "Key Employees" generally
include any employee who, at any time during the Plan Year or any of the four
preceding Plan Years, is (l) an officer of the Association having annual
compensation in excess of $60,000 (for 1997) who is in an administrative or
policy-making capacity, (2) one of the ten employees having annual compensation
in excess of $30,000 and owning, directly or indirectly, the largest interests
in the employer; (3) a 5% owner of the employer, (i.e., owns directly or
indirectly more than 5% of the shares of the Employer, or shares possessing more
than 5% of the total combined voting power of all stock of the employer or (4) a
1% owner of the employer having annual compensation in excess of $150,000.
INVESTMENT OF CONTRIBUTIONS
All amounts credited to Participants' Accounts under the Plan are held
in the Trust which is administered by the Trustee. The Trustee is appointed by
the Association's Board of Directors. The Plan provides that a Participant may
direct the Trustee to invest all or a portion of his Accounts in various managed
investment portfolios, described below. A Participant may elect to change his
investment directions regarding both past contributions and for more additions
to the Participant's accounts invested in these investment alternatives. These
elections generally become effective on the business day following the day the
Plan Administrator receives the Participant's written notice of the elections.
Any amounts credited to a Participant's Accounts for which investment directions
are not given will be invested by the Trustee in Fund D.
Under the Plan, prior to the effective date of the Conversion, the
Accounts of a Participant held in the Trust will be invested by the Trustee at
the direction of the Participant in the following managed portfolios:
Investment Fund A A passively managed, diversified equity portfolio
with the objective of simulating the performance of
the Standard & Poor's Composite Index of 500 stocks,
managed by Mellon Bank, N.A. as Trustee. An
investment in Fund A provides an opportunity for
investment growth generally consistent with that of
widely traded common stocks, but with a corresponding
risk of decline in value.
Investment Fund B A portfolio of fixed-income contracts primarily
managed by Mellon Bank, N.A. with the objective of
maximizing income at minimum risk of capital.
Contributions are invested in fixed-income
instruments including, but not limited to, group
annuity contracts issued by insurance companies.
-7-
<PAGE> 15
Investment Fund C A passively managed, diversified portfolio of stocks
with the objective of replicating the performance of
the S&P MidCap Index, managed by Mellon Bank, N.A. An
investment in Fund C provides an investment return
generally consistent with that of smaller to medium
sized company stocks, with an above average potential
for increase or decrease in value.
Investment Fund D A government instrument fund with the objective of
maximizing income at minimum risk of capital with
underlying investments in obligations issued or
guaranteed by the U.S. Government or agencies or
instrumentalities thereof, selected by Mellon Bank,
N.A. as Trustee.
Investment Fund E A portfolio of high quality U.S. Treasury, agency,
corporate and asset/mortgage-backed securities
managed by Mellon Bank, N.A. with the objective of
replicating the total performance of' the Lehman
Brother Aggregate Bond Index.
Effective upon the Conversion, a Participant may invest all or a
portion of his Accounts in the portfolios described above and in Fund F,
described below:
Investment Fund F Employer Stock Fund which invests in common shares,
without par value, of Ohio State Financial Services,
Inc., the company of Bridgeport Savings and Loan
Association, an Ohio savings and loan association.
A Participant may elect (in increments of 1%), to have both past and
future contributions and additions to the Participant's Account invested either
in the Employer Stock Fund or in such other managed portfolios listed above.
These elections will generally be effective the business day coinciding with or
next following the day of the plan administrator's receipt of such investment
directions. Any amounts credited to a Participant's Accounts for which
investment directions are not given will be invested in a mutual fund. Because
investment allocations only are required to be made in increments of 1%,
Participants can invest their Accounts in each of the six available investment
funds. Lack of diversification with respect to the investment of a Participant's
Account is not a significant risk given the six investment options available to
Participants and the ability of Participants to make investment designations
daily.
The net gain (or loss) in the Accounts from investments other than the
Employer Stock Fund (including interest payments, dividends, realized and
unrealized gains and losses on securities, and expenses paid from the Trust) are
determined monthly during the Plan Year. Net gain (or loss) in the Account from
investments (including interest, dividends, realized and unrealized gain and
expenses paid) from the Employer Stock Fund will be determined weekly. For
purposes of such allocations, all assets of the Trust are valued at their fair
market value.
-8-
<PAGE> 16
A. Funds under the Plan Prior to the Conversion.
Prior to the Conversion, contributions under the Plan were invested in
the five funds listed below. The annual percentage of returns on these funds,
calculated prior to any fees being charged to the portfolio for 1995 and 1996
was:
1995 1996
---- ----
A. PSI 500 Stock Index Fund
B. PSI Stable Value Fund
C. PSI MidCap Fund
D. PSI Government Money Market Fund
E. PSI Bond Index Fund
B. The Employer Stock Fund.
The Employer Stock Fund will consist of investments in Common Shares
made on and after the effective date of the Conversion. Any cash dividends paid
on Common Shares held in the Employer Stock Fund will be credited to a cash
dividend subaccount for each Participant investing in the Employer Stock Fund.
The Trustee will, to the extent practicable, use all amounts held by it in the
Employer Stock Fund (except the amounts credited to cash dividend subaccounts)
to purchase Common Shares. It is expected that 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 Shares, assets held in the Employer Stock Fund will be placed in bank
deposits and other short-term investments.
When Common Shares are purchased or sold, the cost or net proceeds will
be charged or credited to the Accounts of Participants affected by the purchase
or sale. The Association expects to pay any brokerage commissions, transfer fees
and other expenses incurred in the sale and purchase of Common Shares for the
Employer Stock Fund. A Participant's Account will be adjusted to reflect changes
in the value of Common Shares resulting from stock dividends, stock splits and
similar changes.
To the extent dividends are not paid on Common Shares held in the
Employer Stock Fund, the return on any investment in the Employer Stock Fund
will consist only of the market value appreciation of the Common Shares
subsequent to their purchase. Following the Conversion, the Board of Directors
of the Holding Company may consider a policy of paying dividends on the Common
Shares, however, no decision has been made by the Board of Directors of the
Holding Company regarding the amount or timing of dividends, if any. See
"DIVIDEND POLICY" in the Prospectus.
As of the date of this Prospectus Supplement, with the exception of 100
Common Shares issued to the President of the Holding Company for incorporation
purposes, none of the Common
-9-
<PAGE> 17
Shares have been issued or are outstanding and there is no established market
for the Common Shares. Accordingly, there is no record of the historical
performance of the Employer Stock Fund.
Investments in the Employer Stock Fund may involve certain special
risks associated with investments in Common Shares of the Holding Company. For a
discussion of these risk factors, see "RISK FACTORS" beginning on page 8 in the
Prospectus.
BENEFITS UNDER THE PLAN
Vesting. A Participant has at all times a fully vested, nonforfeitable
interest in all of' his 401(k) Account and Rollover Account and the earnings
thereon under 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 BENEFIT UNDER
THE PLAN PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59 1/2 UNLESS A
PARTICIPANT RETIRES AS PERMITTED UNDER THE PLAN REGARDLESS OF WHETHER SUCH A
WITHDRAWAL OCCURS DURING HIS EMPLOYMENT WITH THE ASSOCIATION.
Withdrawals Prior to Termination of Employment. In certain
circumstances, a Participant may make a withdrawal from his Accounts under the
Plan pursuant to the hardship distribution rules under the Plan. These
requirements insure that Participants have a true financial need before a
withdrawal may be made. A Participant may make a withdrawal from his 401(k)
Contribution Account after the age of 59 1/2, after 60 months of participation,
or after 2 years after the Contributions are made on behalf of the Participant.
Loans to Participants. The Plan allows Participants to borrow an amount
not less than $1,000 from the Plan which is secured by 50% of the Participant's
401(k) Account, Rollover Account and Regular Account. Each loan has a term of
between 12 and 60 months and is repaid through monthly payroll deductions.
Notwithstanding the foregoing, if the purpose of the loan is the purchase of a
primary residence, the term of the loan may be no more than 180 months. The
interest rate charged for each loan is established as of the loan date and is
Barron's Prime Rate plus 1%, as published on the last Saturday of the preceding
month, or such other rate as may be required by applicable law and determined by
reference to the prevailing interest rates charged by commercial lenders under
similar circumstances. If a Participant fails to make a monthly installment
payment when due, he will be deemed to have received a distribution of the
outstanding balance of the loan. If such default occurs after the first 12
monthly payments of the loan have been satisfied, the Participant may pay the
outstanding balance, including accrued interest, within 60 days of the due date
of the missed monthly payment, in which case no distribution will be deemed to
have occurred.
-10-
<PAGE> 18
Distribution Upon Retirement, Disability or Termination of Employment.
Payment of benefits to a Participant who retires, incurs a disability, or
otherwise terminates employment, generally shall be made in a lump sum cash
payment. At the request of the Participant, the distribution may include an
in-kind distribution of Common Shares of the Holding Company credited to the
Participant's Account. A Participant whose total vested account balance equals
or exceeds $500 at the time of termination, may elect, in lieu of a lump sum
payment, to be paid in annual installments over a period of 2 to 10, 15 or 20
years, with the right to take a lump sum distribution of the vested balance at
any time during such period. Benefit payments ordinarily shall be made not later
than 60 days following the end of the Plan Year in which occurs the later of the
Participant's; (i) termination of employment; (ii) attainment of age 65: (iii)
10th anniversary of commencement of participation in the Plan; but in no event
later than the April 1, following the calendar year in which the Participant
attains age 70 1/2. However, if the vested portion of the Participant's Account
balances exceeds $3,500, no distribution shall be made from the Plan prior to
the Participant's attaining age 65 unless the Participant consents to an earlier
distribution. Special restrictions apply to the distribution of Common Shares of
the Holding Company to those Participants who are executive officers, directors
and principal shareholders of the Holding Company who are subject to the
provisions of Section 16(b) of the Exchange Act.
Distribution upon Death. A Participant who dies prior to the benefit
commencement date or retirement, disability or termination of employment, and
who has a surviving spouse shall have his benefits paid to the surviving spouse
in a lump sum by the end of the Plan year following the date of his death, or if
the Participant elects, the surviving spouse shall receive five annual
installments. Notwithstanding the foregoing, if the payment of the Participant's
benefit had commenced before his death, such payments will continue in
accordance with the distribution method in effect at death. 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 of a deceased Participant shall be made in the form of a lump-sum
payment in cash or in Common Shares, or, if the payment of his benefit had
commenced before his death, in accordance with the distribution method in effect
at death.
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,
bankruptcy, pledge, encumbrance, attachment 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
Trustees. The Trustee with respect to the Plan is the named fiduciary
of the Plan for purposes of Section 402 of ERISA. The current trustee of the
Plan is _______________. Effective 30 days after the Conversion, the Trustee of
the Plan will be the ____________.
-11-
<PAGE> 19
Pursuant to the terms of the Plan, the Trustee receives and holds
contributions to the Plan in trust and has exclusive authority and discretion to
manage and control the assets of the Plan pursuant to the terms of the Plan and
to manage, invest and reinvest the Trust assets and income therefrom. The
Trustee has the authority to invest and reinvest the Trust assets and may sell
or otherwise dispose of Trust investments at any time and may hold trust funds
uninvested. The Trustee has authority to invest the assets of the Trust in "any
type of property, investment or security" as defined under ERISA.
The Trustee has full power to vote any corporate securities in the
Trust in person or by proxy, provided, however, that the Plan Administrator
shall direct the Trustee as to voting and tendering of all Common Shares held in
the Employer Stock Fund.
The Trustee is entitled to reasonable compensation for its services and
is also entitled to reimbursement for expenses properly and actually incurred in
the administration of the Trust. The expenses of the Trustee and the
compensation of the persons so employed is paid out of the Trust except to the
extent such expenses and compensation are paid by the Association.
The Trustee must render at least annual reports to the Association and
to the Participants in such form and containing information that the Trustee
deems necessary.
REPORTS TO PLAN PARTICIPANTS
The Administrator will furnish to each Participant a statement at least
quarterly showing (i) the balance in the Participant's Account as of the end of
that period, (ii) the amount of contributions allocated to such Participant's
Account for that period, and (iii) the adjustments to such Participant's Account
to reflect earnings or losses (if any).
PLAN ADMINISTRATOR
Pursuant to the terms of the Plan, the Plan Administrator is
_______________________. The 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
The Association 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 who ceases to be a Participant shall have a fully vested interest
in his Account. The Association reserves the right to make, from time to time,
any amendment or amendments to the Plan which do not cause any part
-12-
<PAGE> 20
of the Trust to be used for, or diverted to, any purpose other than the
exclusive benefit of the Participants or their beneficiaries.
MERGER, CONSOLIDATION OR TRANSFER
In the event of the merger or consolidation of the Plan with another
plan, or the transfer of the Trust to another plan, the Plan requires that each
Participant (if either the Plan or the other plan had then terminated) receive a
benefit immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan or the
other plan had then terminated).
FEDERAL INCOME TAX CONSEQUENCES
The following is only a brief summary of the material 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 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
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN AND RECEIVING
DISTRIBUTIONS FROM THE PLAN.
The Plan will be submitted to the IRS for a determination that it is
qualified under Section 401(a) and 401(k) of the Code, and that 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: (l) the sponsoring employer 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 employer 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.
Assuming that the Plan is administered in accordance with the
requirements of the Code and that the IRS issues a favorable determination as
described in the preceding paragraph, participation in the Plan under existing
federal income tax laws will have the following effects;
(a) Amounts contributed to a Participant's 401(k) Account and the
investment earnings on this 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
-13-
<PAGE> 21
distribution that includes Common Shares or qualifies as a
Lump Sum Distribution (defined hereinafter).
(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" if it
is made: (i) within a single taxable year of the Participant or beneficiary;
(ii) on account of the Participant's death or separation from service, or after
the Participant attains age 59 1/2; and (iii) consists of the balance to the
credit of the Participant under the Plan and all other profit sharing plans, if
any, maintained by the Association. 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 plans
maintained by the Association which is included in such distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
Distribution (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 Employer), may elect for distributions made prior to January
1, 2000, 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 1986 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 Shares Included in Lump Sum Distribution. If a Lump Sum
Distribution includes Common Shares, 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
Shares, i.e., the excess of the value of such Common Shares at the time of the
distribution over its cost to the Plan. The tax basis of such Common Shares to
the Participant or beneficiary for purposes of computing gain or loss on its
subsequent sale will be the value of the Common Shares 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 Shares 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 Shares. Any gain on a subsequent sale or other taxable disposition of the
Common
-14-
<PAGE> 22
Shares 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
Shares. 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.
Distributions: Rollovers and Direct Transfers to Another Qualified Plan
or to an IRA. Pursuant to a change in the law, effective January l, 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 l, 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: (l) 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 tax law change described above did not modify the special tax treatment of
Lump Sum Distributions, that are not rolled over or transferred i.e., forward
averaging, capital gains tax treatment and the nonrecognition of net unrealized
appreciation discussed earlier.
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 of 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 after attainment of age
55; (v) made to pay medical expenses to the extent deductible for federal income
tax purposes; (vi) 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 ERISA to
the IRS has determined that the Plan is qualified under Section 401(a) of the
Code.
THE FOREGOING IS ONLY A BRIEF SUMMARY OF THE MATERIAL FEDERAL INCOME TAX ASPECTS
OF THE PLAN WHICH ARE OF GENERAL APPLICATION
-15-
<PAGE> 23
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.
RESTRICTIONS ON RESALE
Common Shares received by executive officers of the Holding Company
under the Plan will be subject to the restriction that such shares may not be
sold for a period of one year following completion of the Conversion, except in
the event of the death of the shareholder. Any shares issued as a stock
dividend, stock split or otherwise in respect of restricted shares will be
subject to the same restrictions.
Subject to certain exceptions, for a period of three years following
the Conversion, no director or officer of the Holding Company or the
Association, or any of their Associates, may purchase any common shares of the
Holding Company without the prior written approval of the OTS, except through a
broker-dealer registered with the SEC. This restriction will not apply, however,
to negotiated transactions involving more than 1% of a class of outstanding
common shares of the Holding Company or shares acquired by any stock benefit
plan of the Holding Company or the Association.
The Common Shares, like the stock of most public companies, are subject
to the registration requirements of the Act. Accordingly, the Common Shares may
be offered and sold only in compliance with such registration requirements or
pursuant to an applicable exemption from registration. Common Shares received in
the Conversion under the Plan by persons who are not "affiliates" of the Holding
Company may be resold without registration. Common Shares received under the
Plan by affiliates of the Holding Company will be subject to resale
restrictions. An "affiliate" of the Holding Company, for purposes of Rule 144,
is a person who directly, or indirectly through one or more intermediaries,
controls, or is controlled by or is under common control with, the Holding
Company. Rule 144 generally requires that there be publicly available certain
information concerning the Holding Company and that sales subject to Rule 144 be
made in routine brokerage transactions or through a market maker. If the
conditions of Rule 144 are satisfied, each affiliate (or group of persons acting
in concert with one or more affiliates) is generally entitled to sell in the
public market, without registration, in any three-month period, a number of
shares which does not exceed the greater of (i) 1% of the number of outstanding
shares of the Holding Company or (ii) if the shares are admitted to trading on a
national securities exchange or reported through the automated quotation system
of a registered securities association, such as Nasdaq SmallCap, the average
weekly reported volume of trading during the four weeks preceding the sale.
-16-
<PAGE> 24
SEC REPORTING AND SHORT-SWING PROFIT LIABILITY
Section 16 of the Exchange Act imposes reporting and liability
requirements on executive officers, directors and persons beneficially owning
more than ten percent of public companies such as the Holding Company. Section
16(a) of the Exchange Act requires the filing of reports of beneficial
ownership. Within ten 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 SEC. Certain changes in beneficial ownership, such as
purchases, sales, gifts and participation in savings and retirement plans must
be reported periodically, either on a Form 4 within ten 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 Holding Company's fiscal year. Participation in the Employer
Stock Fund of the Plan by executive officers, directors and persons beneficially
owning more than ten percent of Common Stock of the Holding Company must be
reported to the SEC annually on a Form 5 by such individuals.
In addition to the reporting requirements described above, Section
16(b) of the Exchange Act provides for the recovery by the Holding Company of
profits realized by any officer, director or any person beneficially owning more
than ten percent of the Holding Company's Common Shares ("Section 16(b)
Persons") resulting from the purchase and sale or sale and purchase of the
Holding Company's Common Shares within any six-month period.
The SEC has adopted rules that provides 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 Shares 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 Common Shares
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. Finally, the Plan
provides that Section 16(b) Persons who terminate their participation in the
Plan may not rejoin the Plan for six months following the date of their
termination. These Plan restrictions conform with the rules issued by the SEC to
exempt transactions in the Plan from becoming subject to the profit-recovery
rules of Section 16(b) of the Exchange Act.
LEGAL OPINIONS
Certain legal matters pertaining to the Common Shares are being passed
upon for the Holding Company by Vorys, Sater, Seymour and Pease, Cincinnati,
Ohio.
-17-
<PAGE> 25
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN AND TRUST
INVESTMENT FORM
Name of Plan Participant: Address:
-------------------- ---------------------
Social Security Number:
----------------------
INSTRUCTIONS. In connection with the proposed conversion of Bridgeport
Savings and Loan Association from a mutual savings and loan association to a
stock savings and loan association incorporated under Ohio law (the
"Conversion"), the Bridgeport Savings and Loan Association Savings and Profit
Sharing Plan and Trust (the "401(k) Plan") has been amended to permit
Participants to direct their __________, 1997, account balances into a new fund,
the Employer Stock Fund. The percentage of a Participant's account transferred
at the direction of the Participant into the Employer Stock Fund will be used to
purchase common shares, without par value, of Ohio State Financial Services,
Inc. (the "Common Shares").
To direct a transfer of all or a part of the funds credited to your
accounts to the Employer Stock Fund, you must complete and file this form with
the __________________ no later than noon, Bridgeport, Ohio Time, on
___________, 1997. A representative for the Plan Administrator will retain a
copy of this form and return a copy to you. If you need any assistance in
completing this form, please contact ____________________ at ___________. If you
do not complete and return this form to the ____________ by noon, Bridgeport,
Ohio Time, on _________, 1997, the funds credited to your accounts under the
401(k) Plan will continue to be invested in accordance with your prior
investment direction, or in accordance with the terms of the 401(k) Plan if no
investment direction had been provided.
TRANSFER DIRECTIONS. I hereby direct the Plan Administrator to invest the
following percentage (in multiples of not less than 1% of my account balance in
the:
A. PSI 500 Stock Index Fund ____%
B. PSI Stable Value Fund ____%
C. PSI MidCap 400 Stock Index ____%
D. PSI Government Money Market Fund ____%
E. PSI Bond Index Fund ____%
F. Employer Stock Fund ____%
NOTE: THE TOTAL PERCENTAGE STATED ABOVE MAY NOT EXCEED 100%. YOUR ABILITY TO
TRANSFER FUNDS TO THE EMPLOYER STOCK FUND IN THE CONVERSION IS SUBJECT
TO YOUR GENERAL ELIGIBILITY TO PURCHASE COMMON SHARES IN THE CONVERSION
AND THE MAXIMUM AND MINIMUM PURCHASE LIMITATIONS SET FORTH IN THE PLAN
OF CONVERSION. FOR GENERAL INFORMATION AS TO YOUR ELIGIBILITY TO
PURCHASE COMMON SHARES AND THE MINIMUM AND MAXIMUM AMOUNTS THAT MAY BE
PURCHASED IN THE CONVERSION, SEE "THE CONVERSION - SUBSCRIPTION
OFFERING; - COMMUNITY OFFERING; AND - LIMITATION ON PURCHASE OF COMMON
SHARES" IN THE PROSPECTUS of Ohio State Financial Services, Inc. (the
"Prospectus").
ACKNOWLEDGMENT OF PARTICIPANT. I understand that this Investment Form
shall be subject to all of the terms and conditions of the 401(k) Plan.
I acknowledge that I have received a copy of the Prospectus and the
Prospectus Supplement.
Date:
- -------------------------------- ----------------
Signature of Participant
Acknowledgment of Receipt of Plan Administrator. This Investment Form was
received by the Administrator and will become effective on the date noted below.
Pentegra Services, Inc. is hereby authorized to make the above listed change(s)
to this Participant's account.
Date:
- -------------------------------- ----------------
Signature of Administrator
-18-
<PAGE> 26
PROSPECTUS
OHIO STATE FINANCIAL SERVICES, INC.
(PROPOSED HOLDING COMPANY FOR BRIDGEPORT SAVINGS AND LOAN ASSOCIATION)
BRIDGEPORT, OHIO
UP TO 776,250 COMMON SHARES, $10 PURCHASE PRICE PER SHARE
Ohio State Financial Services, Inc., an Ohio corporation (the "Holding
Company"), is hereby offering for sale up to 776,250 common shares, without par
value (the "Common Shares"), in connection with its acquisition of all of the
capital stock to be issued by Bridgeport Savings and Loan Association, an Ohio
mutual savings and loan association located in Bridgeport, Ohio (the
"Association"), upon the conversion of the Association from a mutual savings and
loan association to a permanent capital stock savings and loan association
incorporated under Ohio law (the "Conversion"). The consummation of the
Conversion and the sale of the Common Shares are subject to the approval of the
Association's Plan of Conversion (the "Plan") and the adoption of amended
articles of incorporation and an amended constitution by the members of the
Association at a Special Meeting of Members of the Association to be held at
____, Bridgeport, Ohio Time, on ________, 1997 at ______________________________
(the "Special Meeting").
Based on an independent appraisal of the pro forma market value of the
Association, as converted, as of June 6, 1997, the aggregate purchase price of
the Common Shares offered in connection with the Conversion ranges from a
minimum of $5,737,500 to a maximum of $7,762,500 (the "Valuation Range"),
resulting in a range of 573,750 to 776,250 Common Shares at $10 per share. See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold." Applicable
regulations permit the Holding Company to offer additional Common Shares in an
amount not to exceed 15% above the maximum of the Valuation Range, which would
permit the issuance of up to 892,687 Common Shares with an aggregate purchase
price of $8,926,870. The actual number of Common Shares to be sold in connection
with the Conversion will be based upon the final valuation of the Association,
as determined by the independent appraiser upon the completion of this offering.
(Continued on next page)
AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES CERTAIN
RISKS. FOR A DISCUSSION OF SUCH RISKS AND OTHER FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS, SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF
THIS PROSPECTUS.
THE COMMON SHARES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT
SUPERVISION (THE "OTS"), THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"),
THE DIVISION OF FINANCIAL INSTITUTIONS OF THE DEPARTMENT OF COMMERCE OF THE
STATE OF OHIO (THE "DIVISION"), OR THE SECURITIES COMMISSION OF ANY STATE, NOR
HAS THE SEC, THE OTS, THE FDIC, THE DIVISION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMON SHARES BEING OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
SAVINGS DEPOSITS AND ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.
FOR INFORMATION ON HOW TO SUBSCRIBE, PLEASE CALL THE CONVERSION
INFORMATION CENTER AT (614) 635-1632 OR (614) 635-1633.
<TABLE>
<CAPTION>
=====================================================================================================================
Subscription Estimated Expenses and Estimated Net
Price Underwriting Commissions (1) Proceeds
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share Minimum $10.00 $.62 $9.38
Per share Mid-point $10.00 $.54 $9.46
Per share Maximum $10.00 $.49 $9.51
Per share Maximum, as adjusted (2) $10.00 $.44 $9.56
Total Minimum $5,737,500 $352,930 $5,384,570
Total Mid-point $6,750,000 $366,900 $6,383,100
Total Maximum $7,762,500 $380,870 $7,381,630
Total Maximum, as adjusted (2) $8,926,870 $396,940 $8,529,930
=====================================================================================================================
<FN>
(1) Expenses of the Conversion payable by the Association and the Holding
Company include legal, accounting, appraisal, printing, mailing and
miscellaneous expenses. Such expenses also include sales commissions,
estimated to be between $68,000 and $112,000, and reimbursable expenses
payable to Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. ("Webb"). Such sales commissions may be deemed to be
underwriting fees, although Webb will solicit subscriptions for the
Common Shares on a "best efforts" basis only and has no obligation to
purchase any of the Common Shares. See "THE CONVERSION - Plan of
Distribution." Actual expenses may vary from the estimates.
(2) Gives effect to the increase in the number of Common Shares sold in
connection with the Conversion of up to 15% above the maximum of the
Valuation Range. Such shares may be sold without the resolicitation of
persons who subscribe for Common Shares in the Subscription Offering
and the Community Offering. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold."
</TABLE>
The date of this Prospectus is ___________, 1997.
CHARLES WEBB & COMPANY
A Division of Keefe, Bruyette & Woods, Inc.
<PAGE> 27
In accordance with the Plan, nontransferable subscription rights to
purchase Common Shares at a price of $10 per share are offered hereby in a
subscription offering (the "Subscription Offering"), subject to the rights and
restrictions established by the Plan, to (a) each account holder who, at the
close of business on December 31, 1995 (the "Eligibility Record Date"), had one
or more deposit accounts with deposit balances, in the aggregate, of $50 or more
(a "Qualifying Deposit") with the Association (the "Eligible Account Holders"),
(b) the Employee Stock Ownership Plan (the "ESOP"), (c) each account holder who,
at the close of business on _______, 1997 (the "Supplemental Eligibility Record
Date"), had a Qualifying Deposit with the Association (the "Supplemental
Eligible Account Holders"), and (d) members of the Association eligible to vote
at the Special Meeting ("Other Eligible Members"). ALL SUBSCRIPTION RIGHTS TO
PURCHASE COMMON SHARES IN THE SUBSCRIPTION OFFERING ARE NONTRANSFERABLE AND WILL
EXPIRE AT NOON, BRIDGEPORT, OHIO TIME, ON ________, 1997 (THE "SUBSCRIPTION
EXPIRATION DATE"), UNLESS EXTENDED BY THE ASSOCIATION AND THE HOLDING COMPANY
FOR UP TO 45 DAYS TO _____, 1997. Persons found to be transferring subscription
rights will be subject to forfeiture of such rights and possible further
penalties imposed by the OTS. See "THE CONVERSION - Subscription Offering."
To the extent that all of the Common Shares are not subscribed for in
the Subscription Offering, the remaining Common Shares may be offered to the
general public in a direct community offering in which preference will be given
to natural persons residing in Belmont County, Ohio (the "Community Offering").
See "THE CONVERSION - Community Offering."
The minimum number of Common Shares any person may purchase in the
Offering is 25. Except for the ESOP, which may purchase up to 10% of the total
Common Shares sold in the Offering, no person, together with his or her
Associates (hereinafter defined on page 2) and other persons Acting in Concert
(hereinafter defined on page 2) with him or her, may purchase more than 14,000
Common Shares in the Offering. In connection with the exercise of subscription
rights arising from a deposit account in which two or more persons have an
interest, the aggregate maximum number of Common Shares which the persons having
an interest in such account may purchase is 14,000 Common Shares. Subject to OTS
regulations, the maximum purchase limitation may be increased or decreased after
the commencement of the Offering in the sole discretion of the Boards of
Directors of the Holding Company and the Association. If the maximum purchase
limitation is increased to more than 14,000 Common Shares, persons who have
subscribed for 14,000 Common Shares will be given the opportunity to increase
their subscriptions. See "THE CONVERSION - Limitations on Purchase of Common
Shares."
Common Shares may be subscribed for in the Offering only by returning
the accompanying stock order form and certification form (the "Stock Order
Form"), along with full payment of the purchase price per share for all Common
Shares for which a subscription is made, so that it is received by the
Association no later than noon, Bridgeport, Ohio Time, on ________, 1997.
Payment for Common Shares may be made (i) in cash, if delivered in person; (ii)
by check, bank draft, or money order made payable to the Association; or (iii)
by authorization of withdrawal from deposit accounts in the Association (other
than non-self-directed IRAs). See "THE CONVERSION - Use of Order Forms; and
Payment for Common Shares."
THE CONVERSION OF THE ASSOCIATION FROM A MUTUAL SAVINGS AND LOAN
ASSOCIATION TO A PERMANENT CAPITAL STOCK SAVINGS AND LOAN ASSOCIATION IS
CONTINGENT UPON (I) THE APPROVAL OF THE PLAN AND THE ADOPTION OF THE AMENDED
ARTICLES OF INCORPORATION AND THE AMENDED CONSTITUTION BY THE ASSOCIATION'S
VOTING MEMBERS, (II) THE SALE OF THE REQUISITE NUMBER OF COMMON SHARES AND (III)
CERTAIN OTHER FACTORS. SEE "THE CONVERSION."
-ii-
<PAGE> 28
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
BRIDGEPORT, OHIO
ESTABLISHED IN 1893
[MAP TO BE INSERTED]
-iii-
<PAGE> 29
PROSPECTUS SUMMARY
The following information is not complete and is qualified in its
entirety by the detailed information and the financial statements and
accompanying notes appearing elsewhere in this Prospectus.
OHIO STATE FINANCIAL SERVICES, INC.
The Holding Company was incorporated under Ohio law in March 1997 for
the purpose of purchasing all of the capital stock of the Association to be
issued in connection with the Conversion. The Holding Company has not conducted
and will not conduct any business before the completion of the Conversion, other
than business related to the Conversion. Upon the consummation of the
Conversion, the Holding Company will be a unitary savings and loan holding
company, the principal assets of which initially will be the capital stock of
the Association, the investments made with the net proceeds retained from the
sale of Common Shares in connection with the Conversion and a loan to be made by
the Holding Company to the ESOP to facilitate the ESOP's purchase of Common
Shares in the Conversion. See "USE OF PROCEEDS."
The office of the Holding Company is located at 435 Main Street,
Bridgeport, Ohio 43912, and its telephone number is (614) 635-0764.
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
The Association is a mutual savings and loan association organized
under Ohio law in 1893. As an Ohio savings and loan association, the Association
is subject to supervision and regulation by the OTS and the Division. The
Association is a member of the Federal Home Loan Bank (the "FHLB") of
Cincinnati, and the deposit accounts of the Association are insured up to
applicable limits by the FDIC in the Savings Association Insurance Fund (the
"SAIF"). See "REGULATION."
The Association conducts business from its main office located in
Bridgeport, Ohio, and one full-service branch office located in Shadyside, Ohio.
The principal business of the Association is the origination of permanent
mortgage loans secured by first mortgages on one- to four-family residential
real estate located in the Association's primary market area which consists of
Belmont County, Ohio, and Ohio and Marshall Counties, West Virginia. The
Association also originates a limited number of loans for the construction of
one- to four-family residences and permanent mortgage loans secured by
nonresidential real estate in its market area. In addition to real estate
lending, the Association originates secured and unsecured consumer loans. See
"THE BUSINESS OF THE ASSOCIATION - Lending Activities." For liquidity and
interest rate risk management purposes, the Association invests in
interest-bearing deposits in other financial institutions, U.S. Government and
agency obligations and mortgage-backed securities. See "THE BUSINESS OF THE
ASSOCIATION - Investment Activities." Funds for lending and other investment
activities are obtained primarily from savings deposits, which are insured up to
applicable limits by the FDIC, principal repayments on loans and maturities of
investment securities. See "THE BUSINESS OF THE ASSOCIATION - Deposits and
Borrowings."
The main office of the Association is located at 435 Main Street,
Bridgeport, Ohio 43912, and its telephone number is (614) 635-0764.
THE CONVERSION
GENERAL. The Boards of Directors of the Holding Company and the
Association have unanimously approved the Plan. The Plan provides for the
conversion of the Association from a mutual savings and loan association to a
permanent capital stock savings and loan association incorporated under the laws
of the State of Ohio. The OTS and the Division have approved the Plan, subject
to the approval of the Plan by the Association's voting members at the Special
Meeting, and to the satisfaction of certain other conditions. See "THE
CONVERSION - Termination of the Plan."
The principal factors considered by the Association's Board of
Directors in reaching the decision to pursue a mutual-to-stock conversion were
the numerous competitive advantages which the stock form of organization offers,
including growth opportunities, employee retention, and increased capital
levels. See "THE CONVERSION - Reasons for the Conversion." The Association has
operated as an independent community oriented savings association since 1893. It
is the intention of the Association to continue to operate as an independent
community oriented savings association following the Conversion.
-1-
<PAGE> 30
THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING. Pursuant to the
Plan, subscription rights to purchase Common Shares at a price of $10 per share
are hereby offered to (a) Eligible Account Holders, (b) the ESOP, (c)
Supplemental Eligible Account Holders and (d) Other Eligible Members in the
Subscription Offering. See "THE CONVERSION Subscription Offering."
To the extent Common Shares remain available after the satisfaction of
all subscriptions received in the Subscription Offering, the Holding Company may
offer Common Shares in the Community Offering, subject to certain limitations.
Preference will be given in the Community Offering to natural persons residing
in Belmont County, Ohio. The Boards of Directors of the Holding Company and the
Association have the right to reject, in whole or in part, any order for Common
Shares submitted in the Community Offering. See "THE CONVERSION - Community
Offering."
The Plan authorizes the Boards of Directors of the Holding Company and
the Association to establish limits on the amount of Common Shares which may be
purchased by various categories of persons. The minimum number of Common Shares
any person may purchase in the Offering is 25. Pursuant to the Plan, the Boards
of Directors have set the additional limitation that no person, together with
his or her Associates and other persons Acting in Concert with him or her, may
purchase more than 14,000 Common Shares in connection with the Offering. Such
limitations do not apply to the ESOP, which intends to purchase up to 8% of the
Common Shares sold in the Offering. Subject to applicable regulations, the
purchase limitation may be increased or decreased after the commencement of the
Offering in the sole discretion of the Boards of Directors. See "THE CONVERSION
- - Limitations on Purchases of Common Shares."
"Acting in Concert" is defined as "knowing participation in a joint
activity or independent conscious parallel action towards a common goal" or "a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose." Persons shall be presumed to be Acting in Concert
with each other if: (i) they are purchasing Common Shares in the Conversion and
are (a) executive officers, directors, partners, trustees, or any one who
performs, or whose nominee or representative performs, a similar policy making
function at a company (other than the Association or the Holding Company) or
principal business units or subsidiaries of a company, or (b) any person who
directly or indirectly owns or controls 10% or more of the stock of a company
(other than the Association or the Holding Company); or (ii) one person provides
credit to the other for the purchase of Common Shares or is instrumental in
obtaining that credit. In addition, if a person is presumed to be Acting in
Concert with another person, then the person is presumed to Act in Concert with
anyone else who is, or is presumed to be, Acting in Concert with that other
person.
For purposes of the Plan, (i) the directors of the Association are not
deemed to be Acting in Concert solely by reason of their membership on the Board
of Directors of the Association, and (ii) an associate of a person (an
"Associate") is: (a) any corporation or organization (other than the
Association) of which such person is an officer, partner or, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities; (b) 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; and (c) any relative or spouse of such person, or relative
of such spouse, who either has the same home as such person or who is a director
or officer of the Association. Executive officers and directors of the
Association and their Associates may not purchase, in the aggregate, more than
35% of the total number of Common Shares sold in the Conversion. Shares acquired
by the ESOP will not, pursuant to regulations governing the Conversion, be
aggregated with the shares purchased by the directors, officers and employees of
the Association.
In addition to the purchase limitations established by the Plan, OTS
regulations impose restrictions on certain acquisitions of more than 10% of the
outstanding shares of the Association by any person or company, individually or
Acting in Concert with others. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY AND THE ASSOCIATION." The sale of Common Shares pursuant to
subscriptions received in the Offering will be subject to the approval of the
Plan by the voting members of the Association at the Special Meeting, to the
final valuation of the Association, as determined by the independent appraiser
upon the completion of the Offering, and to certain other conditions. See "THE
CONVERSION Subscription Offering; - Community Offering; and - Pricing and Number
of Common Shares to be Sold."
The Subscription Offering will terminate and subscription rights will
expire if not exercised by noon, Bridgeport, Ohio Time, on ___________________,
1997. The Community Offering will be terminated on or before ______________,
1997, unless extended. Any extension of the Community Offering beyond
___________, 1997, will require the consent of the OTS and the Division, and
persons who have subscribed for Common Shares in the Offering will be given the
right to affirm, increase, decrease or rescind their subscriptions for Common
Shares. Persons who do not affirmatively elect to continue their subscription or
who elect to rescind their subscriptions during any such extension will have all
of their funds
-2-
<PAGE> 31
promptly refunded with interest. Persons who elect to decrease their
subscriptions will have the appropriate portion of their funds promptly refunded
with interest. See "THE CONVERSION - Pricing and Number of Common Shares to be
Sold."
NON-TRANSFERABILITY OF SUBSCRIPTION RIGHTS. OTS and Ohio regulations
provide that subscription rights are non-transferable. OTS regulations
specifically prohibit any person from transferring or entering into any
agreement or understanding before the completion of the Conversion to transfer
the ownership of the subscription rights issued in the Conversion or the shares
to be issued upon the exercise of such subscription rights. Persons attempting
to violate such provision may lose their rights to purchase Common Shares in the
Conversion and may be subject to penalties imposed by the OTS. Each person
exercising subscription rights will be required to certify that his or her
purchase of Common Shares is solely for the subscriber's own account and that
there is no agreement or understanding regarding the sale or transfer of such
Common Shares.
PRICING OF THE COMMON SHARES. RP Financial, LC. ("RP Financial"), a
firm experienced in valuing thrift institutions, has prepared an independent
valuation of the estimated pro forma market value of the Association, as
converted. RP Financial's valuation of the estimated pro forma market value of
the Association, as converted, is $6,750,000 as of ___________, 1997 (the "Pro
Forma Value"). Based on the Pro Forma Value of the Association, the Valuation
Range established in accordance with the Plan is $5,737,500 to $7,762,500. The
Holding Company will issue the Common Shares at a fixed price of $10 per share.
The number of Common Shares to be issued will be determined by dividing the
price per share into the aggregate pro forma value of the Association at the
close of the Offering.
If, due to changing market conditions, the final valuation is less than
$5,737,500 or more than $8,926,870, subscribers will be given notice of such
final valuation and the right to affirm, increase, decrease or rescind their
subscriptions. Any person who does not affirmatively elect to continue his
subscription or elects to rescind his subscription before the date specified in
the notice will have all of his funds promptly refunded with interest. Any
person who elects to decrease his subscription will have the appropriate portion
of his funds promptly refunded with interest. See "THE CONVERSION - Pricing and
Number of Common Shares to be Sold."
USE OF PROCEEDS. The Holding Company will retain up to 50% of the net
proceeds from the sale of the Common Shares, or approximately $3.2 million at
the mid-point of the Valuation Range. Such proceeds will be used by the Holding
Company to make a loan to the ESOP to acquire Common Shares in the Offering, and
for general corporate purposes. See "USE OF PROCEEDS."
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $3.2 million at the mid-point of the Valuation Range, will
be invested by the Holding Company in the capital stock to be issued by the
Association to the Holding Company as a result of the Conversion and will
increase the regulatory capital of the Association. The Association anticipates
that the net proceeds will initially be invested in short-term investments with
maturities of one year or less and utilized, as opportunities arise, to
originate loans and to purchase loan participations within Ohio. See "USE OF
PROCEEDS."
TAX CONSEQUENCES
The consummation of the Conversion is expressly conditioned upon the
receipt by the Holding Company and the Association of a private letter ruling
from the Internal Revenue Service (the "IRS") or an opinion of counsel to the
effect that, for federal income tax purposes, the Conversion will constitute a
tax-free reorganization as defined in Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Holding Company and the Association
intend to proceed with the Conversion based upon an opinion received from Vorys,
Sater, Seymour and Pease that states, in part, that (1) no gain or loss will be
recognized by the Association in connection with the Conversion or the receipt
from the Holding Company of proceeds from the sale of the Common Shares, (2)
assuming that the subscription rights received by deposit account holders in
connection with the Conversion have no ascertainable fair market value, no gain
or loss will be recognized to the deposit account holders of the Association
upon issuance to them of subscription rights or interests in the Liquidation
Account (hereinafter defined) and (3) no taxable income will be realized by
deposit account holders as a result of their exercise of such subscription
rights. Although the IRS could challenge the assumption that the subscription
rights have no ascertainable fair market value, the Holding Company and the
Association have received an opinion from RP Financial supporting such
assumption. See "THE CONVERSION - Principal Effects of the Conversion -- Tax
Consequences."
-3-
<PAGE> 32
MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares. See "RISK FACTORS -
Limited Market for the Common Shares."
The Holding Company has received conditional approval from the Nasdaq
SmallCap Market ("Nasdaq SmallCap") to have the Common Shares quoted on Nasdaq
SmallCap under the symbol "OSFS" upon the completion of the Conversion, subject
to certain conditions which the Association and the Holding Company believe will
be satisfied, although no assurance can be provided that the conditions will be
met. One of the conditions to the Nasdaq SmallCap listing is the commitment of
at least two brokerage firms to make a market in the Common Shares. Keefe,
Bruyette & Woods, Inc. ("KBW") has informed the Holding Company that it intends
to make a market in the Common Shares, but it has no obligation to do so.
If the Common Shares are not listed on the Nasdaq SmallCap, they will
be traded in the over-the-counter market and will be quoted through brokers
participating on the National Daily Quotation Service (the "NDQS").
DIVIDEND POLICY
The declaration and payment of dividends or other capital distributions
by the Holding Company will be subject to the discretion of the Board of
Directors of the Holding Company, to the earnings and financial condition of the
Holding Company and the Association and to general economic conditions. If the
Board of Directors of the Holding Company determines in the exercise of its
discretion that the net income, capital and financial condition of the Holding
Company and the general economy justify the declaration and payment of dividends
by the Holding Company, dividends may be paid on the Common Shares. No assurance
can be given, however, that dividends will be paid or, if paid, will continue in
the future. The Holding Company will not undertake an extraordinary tax-free
return of capital to its shareholders during the first year following the
completion of the Conversion. See "DIVIDEND POLICY" and "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions."
BENEFITS OF THE CONVERSION TO DIRECTORS, OFFICERS AND EMPLOYEES OF THE HOLDING
COMPANY AND THE ASSOCIATION
GENERAL. Among the factors considered by the Board of Directors of the
Association in making the decision to pursue the Conversion is the ability of
the Holding Company and the Association to utilize various types of stock
benefit plans to attract and retain qualified directors and employees. See "THE
CONVERSION - Reasons for the Conversion."
EMPLOYEE STOCK OWNERSHIP PLAN. In connection with the Conversion, the
Holding Company has established the ESOP, which intends to use a loan from the
Holding Company to purchase 8% of the Common Shares issued in the Conversion.
All full-time employees of the Holding Company and the Association who meet
certain age and years of service criteria will be eligible to participate in the
ESOP. See "MANAGEMENT - Stock Benefit Plans -- Employee Stock Ownership Plan."
STOCK OPTION PLAN. After the completion of the Conversion, the Holding
Company intends to establish a stock option and incentive plan (the "Stock
Option Plan"). The Board of Directors of the Holding Company anticipates that a
number of shares equal to 10% of the Common Shares sold in the Offering will be
reserved for issuance to directors, officers and employees of the Holding
Company and the Association upon the exercise of options granted under the Stock
Option Plan. The Stock Option Plan will be administered by a committee comprised
of three directors (the "Stock Option Committee"). Persons eligible for awards
under the Stock Option Plan will consist of directors, officers and key
employees of the Holding Company or the Association who hold positions with
significant responsibilities or whose performance or potential contribution, in
the judgment of the Stock Option Committee, will contribute to the future
success of the Holding Company or the Association. The Stock Option Committee
will consider the position, duties and responsibilities of the directors,
officers and key employees of the Holding Company and the Association, the value
of their services to the Holding Company and the Association and any other
factors the Stock Option Committee may deem relevant.
Under OTS regulations, no stock options may be awarded during the first
year after the completion of the Conversion unless the Stock Option Plan is
approved by the shareholders of the Holding Company at an annual or a special
meeting of shareholders held not less than six months following the completion
of the Conversion. If the Stock Option Plan
-4-
<PAGE> 33
is approved by the Holding Company shareholders at such meeting and implemented
during the first year after the completion of the Conversion, the following
restrictions will apply: (i) the number of shares which may be subject to
options awarded under the Stock Option Plan to directors who are not full-time
employees of the Holding Company may not exceed 5% per person and 30% in the
aggregate of the available shares; (ii) the number of shares which may be
subject to options awarded under the Stock Option Plan to any individual who is
a full-time employee of the Holding Company or its subsidiaries may not exceed
25% of the available shares; (iii) stock options must be awarded with an
exercise price at least equal to the fair market value of the common shares of
the Holding Company at the time of the award; and (iv) stock options will become
exercisable at the rate of one-fifth per year commencing no earlier than one
year from the date the Stock Option Plan is approved by the shareholders,
subject to acceleration of vesting only in the event of the death or disability
of a participant. The ultimate value of any option granted at fair market value
will depend on future appreciation in the fair market value of the shares to
which the option relates. No decision has been made as to anticipated awards
under the Stock Option Plan. See "MANAGEMENT - Stock Benefit Plans -- Stock
Option Plan."
RECOGNITION AND RETENTION PLAN AND TRUST. The Holding Company intends
to establish the Recognition and Retention Plan (the "RRP") after the completion
of the Conversion and anticipates that a number of shares equal to 4% of the
Common Shares sold in connection with the Conversion will be purchased by, or
issued to, the RRP. Shares held in the RRP will be available for awards to
directors, officers and employees of the Holding Company and the Association.
The RRP will be administered by a committee comprised of three directors who are
not employees of the Holding Company (the "RRP Committee"). In selecting the
directors, officers and employees to whom awards will be granted and the number
of shares covered by such awards, the RRP Committee will consider the position,
duties and responsibilities of such persons, the value of their services to the
Holding Company and the Association and any other factors the RRP Committee may
deem relevant. No determination has been made with respect to RRP awards.
Under OTS regulations, no RRP shares may be awarded during the first
year after the completion of the Conversion unless the RRP is approved by the
shareholders of the Holding Company at an annual meeting or a special meeting of
shareholders held not less than six months following the completion of the
Conversion. If the RRP is approved by the Holding Company shareholders at such
meeting and implemented during the first year after the completion of the
Conversion, the following restrictions will apply: (i) the number of shares
which may be subject to awards under the RRP to directors who are not full-time
employees of the Holding Company or its subsidiaries may not exceed 5% per
person and 30% in the aggregate of the available shares; (ii) the number of
shares which may be subject to awards under the RRP to any individual who is a
full-time employee of the Holding Company or its subsidiaries may not exceed 25%
of the available shares; and (iii) RRP awards will be earned at the rate of
one-fifth per year commencing no earlier than one year from the date of the
award subject to acceleration of vesting only in the event of the death or the
disability of the participant. See "MANAGEMENT - Stock Benefit Plans --
Recognition and Retention Plan and Trust."
EMPLOYMENT AGREEMENT. In connection with the Conversion, the
Association will enter into an employment agreement with Jon W. Letzkus, the
President and Managing Officer of the Association. The employment contract will
provide for a term of one year with an annual salary of not less than $78,500.
The employment agreement will also provide for severance payments in the event
the agreement is terminated prior to the expiration of its term upon a change in
control of the Association or for any reason other than just cause, as defined
therein. The payment that would have been made to Mr. Letzkus, assuming
termination of his employment agreement at March 31, 1997, following a change in
control of the Association, would have been approximately $157,000. See
"MANAGEMENT - Employment Agreement."
INVESTMENT RISKS
An investment in the Common Shares involves certain risks. Special
attention should be given to the matters discussed under "RISK FACTORS -
Interest Rate Risk; - Anticipated Reduced Return on Equity; - Market Area; -
Limited Market for the Common Shares; - Price of the Common Shares upon Resale;
- - Legislation and Regulation Which May Adversely Affect Earnings and Operations;
- - Potential Impact of Benefit Plans on Net Earnings and Shareholders' Equity; -
Anti-Takeover Provisions Which May Discourage Sales of Common Shares for Premium
Prices."
-5-
<PAGE> 34
SELECTED FINANCIAL INFORMATION AND OTHER DATA
The following tables set forth certain information concerning the
financial condition, earnings and other data regarding the Association at the
dates and for the periods indicated. Such information should be read in
conjunction with the financial statements and notes thereto appearing elsewhere
herein. In the opinion of management, financial information at March 31, 1997
and 1996, and for the three months then ended reflect all adjustments
(consisting only of normal recurring accruals) which are necessary to present
fairly the results for such periods.
<TABLE>
<CAPTION>
SELECTED FINANCIAL CONDITION At March 31, At December 31,
AND OTHER DATA: --------------------- -------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- -------- --------- --------- --------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total amount of:
Assets $34,564 $34,747 $33,929 $34,553 $33,699 $35,319 $37,164
Cash and cash equivalents 2,613 1,979 2,436 1,177 1,624 6,539 8,077
Investment securities 5,342 5,313 4,936 5,505 7,062 4,078 2,471
Mortgage-backed securities 939 1,157 984 1,191 1,522 2,263 3,882
Loans receivable, net 25,017 25,604 24,892 25,972 22,783 21,645 21,864
Deposits 29,425 29,827 28,791 29,615 29,198 31,158 33,319
Retained earnings 4,860 4,654 4,770 4,558 4,197 3,841 3,521
Number of full-service offices 2 2 2 2 2 2 2
SUMMARY OF EARNINGS: Three months ended
March 31, Year ended December 31,
--------------------- -------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- -------- --------- --------- --------- -------- -------
(In thousands)
Interest income $614 $638 $2,515 $2,478 $2,298 $2,486 $2,866
Interest expense 287 289 1,158 1,108 982 1,184 1,611
----- ----- ------- ------ ------- ------- -------
Net interest income 327 349 1,357 1,370 1,316 1,302 1,255
Provision for loan losses - - - - 17 54 4
----- ----- ------- ------ ------- ------- -------
Net interest income after
provision for loan losses 327 349 1,357 1,370 1,299 1,248 1,251
Other income 9 13 45 42 78 30 25
General, administrative and
other expense (1) 201 217 1,083 865 848 765 807
----- ----- ------- ------ ------- ------- -------
Net income before provision
for income taxes 135 145 319 547 529 513 469
Provision for income taxes 45 49 107 186 174 150 172
Cumulative effect of change in
accounting principle - - - - - 43 -
----- ----- ------- ------ ------- ------- -------
Net income $ 90 $ 96 $ 212 $ 361 $ 355 $ 320 $ 297
===== ===== ======= ====== ======= ======= =======
- ------------------------------
<FN>
(1) Includes a non-recurring pre-tax expense of $190,000 for the year ended
December 31, 1996, for a special one-time assessment to recapitalize
the SAIF.
</TABLE>
-6-
<PAGE> 35
<TABLE>
<CAPTION>
SELECTED FINANCIAL RATIOS: At or for the three
months ended
March 31, At or for the year ended December 31,
--------------------- -------------------------------------------------------
1997(1) 1996(1) 1996 1995 1994 1993 1992
--------- -------- --------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets (2) 1.04% 1.11% 0.62% 1.06% 1.04% 0.88% 0.78%
Return on average equity (2) 7.44 8.33 4.53 8.25 8.87 8.71 8.83
Interest rate spread 3.47 3.76 3.62 3.76 3.66 3.42 3.10
Net interest margin 3.94 4.19 4.08 4.17 3.97 3.71 3.40
Non-interest expense to
average assets (2) 2.34 2.52 3.15 2.54 2.47 2.11 2.11
Efficiency ratio (3) 59.75 60.03 77.27 61.28 60.83 57.42 63.02
Average interest-earning
assets to average
interest-bearing 113.78 112.60 113.28 112.04 110.59 108.55 106.91
liabilities
Capital ratios:
Average equity to average
assets 14.01 13.34 13.64 12.87 11.69 10.12 8.79
Equity to assets, end of
period 14.06 13.40 14.06 13.19 12.45 10.88 9.47
Asset quality ratios:
Nonperforming assets to
average assets (4) 0.62 0.01 0.20 0.02 0.02 0.48 0.17
Nonperforming loans to
total loans 0.85 0.02 0.28 0.02 0.03 0.76 0.26
Allowance for loans losses
to gross loans 0.57 0.56 0.57 0.55 0.62 0.67 0.44
Allowance for loans losses
to nonperforming loans 66.82 2860.00 207.25 2383.33 2042.86 87.88 168.42
Net (charge-offs) recoveries
to average loans - - - - (0.08) (0.02) 0.01
- ------------------------------
<FN>
(1) Ratios for three month periods are stated on an annualized basis. Such
ratios and results are not necessarily indicative of results that may
be expected for the full year.
(2) Includes a nonrecurring pre-tax expense of $190,000 for the year ended
December 31, 1996, for a special one-time assessment to recapitalize
the SAIF.
(3) Non-interest expenses as a percentage of net interest income plus
non-interest income.
(4) Nonperforming assets include non-accrual loans, accruing loans more
than 90 days past due and real estate acquired in settlement of loans.
</TABLE>
-7-
<PAGE> 36
RISK FACTORS
INVESTMENT IN THE COMMON SHARES INVOLVES CERTAIN RISKS. BEFORE
INVESTING, PROSPECTIVE PURCHASERS SHOULD CONSIDER CAREFULLY THE FOLLOWING
MATTERS.
INTEREST RATE RISK
The Association's operating results are dependent to a significant
degree on its net interest income, which is the difference between interest
income from loans and investments and interest expense on deposits and
borrowings. Like most thrift institutions, the Association's interest income and
interest expense change as interest rates fluctuate and assets and liabilities
reprice. Interest rates generally may change because of general economic
conditions, the policies of various regulatory authorities and other factors
beyond the Association's control. The interest rates on specific assets and
liabilities of the Association will change or "reprice" in accordance with the
contractual terms of the asset or liability instrument and in accordance with
customer reaction to general economic trends. See "THE BUSINESS OF THE
ASSOCIATION - Lending Activities; and - Deposits and Borrowings."
At March 31, 1997, $20.8 million, or 83.9%, of the Association's loans
contractually due after March 31, 1998, had fixed rates of interest. The
majority of such loans, however, were secured by one- to four-family residences
with terms of fifteen years. The Association also manages its interest rate risk
by maintaining capital well in excess of regulatory requirements and by
maintaining a high level of liquidity through investments in short-term
instruments with maturities of five years or less. See "THE BUSINESS OF THE
ASSOCIATION - Investment Activities." For the quarter ended March 31, 1997, the
Association's tangible capital was 14.1% of total assets and its liquidity ratio
was 25.32%. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Liquidity and Capital Resources."
In a period of rising interest rates, the interest income earned on the
Association's assets may not increase as rapidly as the interest expense paid on
the Association's liabilities. As a result, the earnings of the Association may
be adversely affected. The degree to which such earnings will be adversely
affected depends upon the rapidity and extent of the increase in interest rates.
In addition, rising interest rates could negatively affect the Association's
earnings due to diminished loan demand. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset and Liability
Management."
ANTICIPATED REDUCED RETURN ON EQUITY
For the last five years, the Association's return on equity has ranged
from a high of 8.87% for 1994 to a low of 4.53% for 1996, with a median of
8.71%. Excluding the effect of the one-time special assessment to recapitalize
the SAIF, the return on equity would have been 7.18% for the year ended December
31, 1996. For the three months ended March 31, 1997, the Association's return on
equity was 7.44%. The increased capital resulting from the Conversion is
expected to reduce the Association's return on equity for a prolonged period
after the Conversion, which may adversely affect the market value of the Common
Shares. Initially, the Conversion proceeds will be invested in short-term
investments which generally have lower yields than loans and longer term
investment securities, which could also adversely affect the return on equity.
See "USE OF PROCEEDS."
MARKET AREA
The Association's primary market area has been adversely affected by
the decline in coal mining, steel manufacturing and related industries which
have traditionally been the primary employers in the area. During the period
from 1990 to 1996, the median household income in Belmont County, Ohio declined
to $21,703, while the median household incomes of the United States and Ohio
increased during the same period to $34,530 and $32,102, respectively. The
strike of steel workers at Wheeling-Pittsburgh Steel, which began on October 1,
1996, has further depressed the local economy. In February 1997, the
unemployment rate for Belmont County was 9.0%, significantly higher than the
comparative U.S. and Ohio rates of 5.7% and 5.9%, respectively. As a result of
the downturn in the economy and the prolonged strike, the Association has
recently experienced an increase in delinquent one- to four-family mortgage
loans. See "THE BUSINESS OF THE ASSOCIATION - Lending Activities --Delinquent
Loans, Nonperforming Assets and Classified Assets." Although the Association has
historically had low levels of nonperforming assets, a continuation of the
current economic conditions or a further deterioration of the economy in the
Association's market area could cause nonperforming assets to increase and net
income to decrease in the future.
-8-
<PAGE> 37
LIMITED MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
The Holding Company has received conditional approval from Nasdaq
SmallCap to have the Common Shares quoted on Nasdaq SmallCap under the symbol
"OSFS" upon the completion of the Conversion, subject to certain conditions
which the Holding Company and the Association believe will be satisfied,
although no assurance can be provided that the conditions will be met. One of
the conditions of the Nasdaq SmallCap listing is the commitment of at least two
brokerage firms to make a market in the Common Shares. KBW has informed the
Holding Company that it intends to make a market in the Common Shares, but it
has no obligation to do so.
If the Common Shares are not listed on the Nasdaq SmallCap, the Holding
Company expects that the Common Shares will be traded in the over-the-counter
market and will be quoted through brokers participating on the NDQS.
PRICE OF THE COMMON SHARES UPON RESALE
The aggregate offering price of the Common Shares is based upon an
independent appraisal of the Association. The appraisal is not a recommendation
as to the advisability of purchasing Common Shares, nor does it represent RP
Financial's opinion as to the price at which the Common Shares may trade. See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold." There can be
no assurance that the Common Shares may later be resold at the price at which
they are purchased in connection with the Conversion.
LEGISLATION AND REGULATION WHICH MAY ADVERSELY AFFECT EARNINGS AND OPERATIONS
The Association is subject to extensive regulation by the OTS, the
Division and the FDIC and is periodically examined by such regulatory agencies
to test compliance with various regulatory requirements. The Holding Company
will also be subject to regulation and examination by the OTS. Such supervision
and regulation of the Association and the Holding Company are primarily for the
protection of the federal deposit insurance fund and not for the maximization of
shareholder value and may affect the ability of the Holding Company to engage in
various business activities. The assessments, filing fees, deposit insurance
premiums and other costs associated with reports, examinations and other
regulatory matters are significant and may have an adverse effect on the Holding
Company's net earnings. See "REGULATION."
Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations. Pursuant to such legislation, Congress may develop a common
charter for all financial institutions, eliminate the OTS and regulate the
Association under federal law as a bank or require it to change its charter,
which would likely change the type of activities in which the Association may
engage and would probably subject the Association to more regulation by the
FDIC. In addition, the Holding Company might become subject to different holding
company regulations, including separate capital requirements and limitations on
activities. Although the Holding Company cannot predict when or whether Congress
may actually pass legislation regarding the Holding Company's and the
Association's regulatory requirements or charter, it is not anticipated that the
current activities of the Holding Company or the Association will be materially
affected by such legislation.
POTENTIAL IMPACT OF BENEFIT PLANS ON NET EARNINGS AND SHAREHOLDERS' EQUITY
In connection with the Conversion, the Holding Company has established
the ESOP which intends to use a loan from the Holding Company to purchase 8% of
the Common Shares issued in connection with the Conversion. All full-time
employees of the Holding Company and the Association who meet certain age and
years of service criteria will be eligible to participate in the ESOP.
Statement of Position ("SOP") No. 93-6, "Employers' Accounting for
Employee Stock Ownership Plans," published by the American Institute of
Certified Public Accountants (the "AICPA"), requires an employer to record
compensation expense in an amount equal to the fair value of shares committed to
be released to employees from an employee stock
-9-
<PAGE> 38
ownership plan. See "PRO FORMA DATA" for pro forma information regarding the
effects of SOP 93-6 on net earnings and shareholders' equity. If the Common
Shares acquired by the ESOP appreciate in value over time, the Holding Company
may incur increased compensation expense relating to the ESOP which would
adversely affected the Holding Company's net earnings.
The ESOP may purchase Common Shares on the open market or may purchase
authorized but unissued shares from the Holding Company. If the ESOP purchases
authorized but unissued shares from the Holding Company, such purchases could
have a dilutive effect on the interests of the Holding Company's shareholders.
The shares acquired by the ESOP in the Conversion will be purchased
with the proceeds of a loan from the Holding Company to the ESOP. The ESOP loan
will be repaid through cash contributions to the ESOP from the Association and
the use of dividends paid on the Common Shares, if any. The Association
currently anticipates that the ESOP loan will be repaid over a period of ten
years. The amount of cash or other assets that can be contributed to the ESOP
each year is limited by certain IRS regulations. The Association intends to make
the maximum contribution to the ESOP permitted by such regulations, which could
result in repayment of the ESOP loan in fewer than ten years. A shorter
repayment period could result in increased compensation expense during the years
in which payments are made on the ESOP loan which would adversely impact the
Holding Company's earnings.
Following the consummation of the Conversion, the Holding Company
intends to adopt the Stock Option Plan and the RRP. The shares issued to
participants under the RRP could be newly issued shares or shares purchased in
the market. In the event the shares issued under the RRP consist of newly issued
common shares, the interests of existing shareholders will be diluted. Shares
issued pursuant to the exercise of options under the Stock Option Plan will be
authorized but unissued shares, unless the Holding Company has treasury shares
at the time of exercise and elects to use the treasury shares. At the midpoint
of the estimated Valuation Range, if all shares under these plans were newly
issued and the exercise price for the option shares were equal to the $10 per
share purchase price in the Conversion, the pro forma book value per share of
the outstanding common shares at March 31, 1997, would decrease from $15.46 to
$14.79. See "PRO FORMA DATA" and MANAGEMENT - Stock Benefit Plans."
ANTI-TAKEOVER PROVISIONS WHICH MAY DISCOURAGE SALES OF COMMON SHARES FOR PREMIUM
PRICES
The Articles of Incorporation and Code of Regulations of the Holding
Company and the Amended Articles of Incorporation of the Association contain
certain provisions that could deter or prohibit non-negotiated changes in the
control of the Holding Company and the Association. Such provisions include (1)
a restriction on the direct or indirect acquisition of more than 10% of the
outstanding shares of the Association by any person during the five-year period
following the effective date of the Conversion, (2) the ability to issue
additional common shares without shareholder approval, and (3) the requirement
of a 75% supermajority voting requirement for the approval of certain matters,
including mergers, acquisitions of a majority of the shares of the Holding
Company or the transfer of substantially all of the assets of the Holding
Company, if the Board of Directors recommends against the approval of any such
matter. See "DESCRIPTION OF AUTHORIZED SHARES" and "RESTRICTIONS ON ACQUISITION
OF THE HOLDING COMPANY AND THE ASSOCIATION."
Officers and directors of the Holding Company and their Associates are
expected to purchase approximately 7.81% of the shares issued in connection with
the Conversion, assuming the sale of 675,000 Common Shares. In addition,
officers of the Holding Company will be able to vote shares allocated to their
accounts under the ESOP, which intends to purchase approximately 8% of the
shares issued in connection with the Conversion. The ESOP trustee must vote
shares allocated under the ESOP as directed by the participants to whom the
shares are allocated and will vote unallocated shares in its sole discretion.
The RRP trustees, who will be three directors of the Association, will vote
shares awarded but not distributed under the RRP in their discretion. In view of
the various provisions of the Articles of Incorporation and the stock benefit
plans of the Holding Company and the Association, the ESOP trustee, the RRP
Committee and the directors and officers of the Holding Company and the
Association will have a significant influence over the vote on any takeover
attempt or proxy contest and may be able to defeat such a proposal. The Boards
of Directors of the Holding Company and the Association believe that such
provisions will be in the best interests of shareholders by encouraging
prospective acquirors to negotiate a proposed acquisition with the directors.
Such provisions could, however, adversely affect the market value of the Common
Shares or restrict or eliminate the opportunity for shareholders to sell their
shares for premium prices.
Federal law and Ohio law also restrict the acquisition of control of
the Holding Company and the Association, and regulations of the OTS restrict the
ability of any person to acquire the beneficial ownership of more than 10% of
any class of voting equity security of the Association or the Holding Company.
Any or all of these provisions may facilitate the
-10-
<PAGE> 39
perpetuation of current management and discourage proxy contests or takeover
attempts not first negotiated with the Board of Directors. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION."
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from
the sale of the Common Shares, based on the Valuation Range:
<TABLE>
<CAPTION>
Minimum Mid-point Maximum Maximum, as adjusted
------- --------- ------- --------------------
<S> <C> <C> <C> <C>
Gross proceeds $5,737,500 $6,750,000 $7,762,500 $8,926,870
Less estimated expenses 352,930 366,900 380,870 396,940
---------- ---------- ---------- ----------
Total net proceeds $5,384,570 $6,383,100 $7,381,630 $8,529,930
========== ========== ========== ==========
</TABLE>
The net proceeds from the sale of the Common Shares may vary depending
upon financial and market conditions at the time of the completion of the
Offering. See "THE CONVERSION - Pricing and Number of Common Shares to be Sold."
The expenses detailed above are estimated. Actual expenses may be more than or
less than estimated. See "THE CONVERSION Plan of Distribution."
The Holding Company will retain up to 50% of the net proceeds from the
sale of the Common Shares, or approximately $3.2 million at the mid-point of the
Valuation Range. Such proceeds will be used to lend up to $621,000, at the
mid-point of the Valuation Range to the ESOP to acquire Common Shares in the
Offering with the balance of the proceeds initially invested in short-term
investments or deposits with staggered maturities ranging up to three years.
Ultimately the proceeds will be used for general corporate purposes, which may
include payments of dividends, repurchases of Common Shares and funding of the
RRP. See "THE CONVERSION - Restrictions on Repurchase of Common Shares." OTS
regulations generally prohibit stock repurchases in the first year following the
completion of the Conversion, without prior approval of the OTS.
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $3.2 million at the mid-point of the Valuation Range, will
be invested by the Holding Company in the capital stock to be issued by the
Association to the Holding Company as a result of the Conversion and will
increase the regulatory capital of the Association and will permit the
Association to expand its lending and investment activities and to enhance
customer services. The Association anticipates that such net proceeds will
initially be invested in short-term investments with maturities of one year or
less and utilized, as opportunities arise, to originate loans and to purchase
loan participations within Ohio.
MARKET FOR COMMON SHARES
There is currently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
A public trading market for the stock of any issuer, including the
Holding Company, depends upon the presence of both willing buyers and willing
sellers at any given time. The Holding Company has received conditional approval
from the Nasdaq SmallCap to have the Common Shares quoted under the symbol
"OSFS" upon completion of the Conversion, subject to certain conditions which
the Association and the Holding Company believe will be satisfied, although no
assurance can be provided that the conditions will be met. One of the conditions
to the Nasdaq SmallCap listing is the commitment of at least two brokerage firms
to make a market in the Common Shares. KBW has informed the Holding Company that
it intends to make a market in the Common Shares, but it has no obligation to do
so.
If the Common Shares are not listed on the Nasdaq SmallCap, the Holding
Company expects that the Common Shares will be traded in the over-the-counter
market and will be quoted through brokers participating on the NDQS.
-11-
<PAGE> 40
The appraisal of the pro forma market value of the Association, as
converted, is not a recommendation as to the advisability of purchasing Common
Shares, nor does it represent RP Financial's opinion as to the price at which
the Common Shares may trade. There can be no assurance that the Common Shares
may later be resold at the price at which they are purchased in connection with
the Conversion. See "RISK FACTORS - Limited Market for the Common Shares."
DIVIDEND POLICY
The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company determines
in the exercise of its discretion that the net income, capital, and consolidated
financial condition of the Holding Company and the general economy justify the
declaration and payment of dividends by the Holding Company, the Board of
Directors of the Holding Company may authorize the payment of dividends on the
Common Shares, subject to the limitation under Ohio law that a corporation may
pay dividends only out of surplus. There can be no assurance that dividends will
be paid on the Common Shares or, if paid, that such dividends will continue to
be paid in the future. In addition, the Holding Company will not undertake an
extraordinary tax-free return of capital to its shareholders during the first
year following the completion of the Conversion.
Other than earnings on the investment of the proceeds retained by the
Holding Company and interest earned on the loan to the ESOP, the principal
source of income of the Holding Company will be dividends periodically declared
and paid by the Board of Directors of the Association on the common shares of
the Association held by the Holding Company. The declaration and payment of
dividends by the Association to the Holding Company will be subject to the
discretion of the Board of Directors of the Association, to the earnings and
financial condition of the Association, to general economic conditions and to
federal and state restrictions on the payment of dividends by thrift
institutions. Under regulations of the OTS applicable to converted associations,
the Association will not be permitted to pay a cash dividend on its capital
stock after the Conversion if its regulatory capital would, as a result of the
payment of such dividend, be reduced below the amount required for the
Liquidation Account or the applicable regulatory capital requirement prescribed
by the OTS. See "THE CONVERSION - Principal Effects of the Conversion --
Liquidation Account" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Liquidity and Capital Resources." The
Association may not pay a dividend unless such dividend also complies with an
OTS regulation limiting capital distributions by savings and loan associations.
Capital distributions, for purposes of such regulation, include, without
limitation, payments of cash dividends, repurchases, and certain other
acquisitions by an association of its shares and payments to stockholders of
another association in an acquisition of such other association. See "REGULATION
- - Office of Thrift Supervision -- Limitations on Capital Distributions."
-12-
<PAGE> 41
REGULATORY CAPITAL COMPLIANCE
The following table sets forth the historical and pro forma regulatory
capital of the Association at March 31, 1997, based on the receipt of 50% of the
net proceeds for the number of Common Shares indicated. Estimated expenses used
in determining the net proceeds are $352,930, $366,900, $380,870 and $396,940,
at the minimum, mid-point, maximum and maximum, as adjusted, respectively, of
the Valuation Range.
<TABLE>
<CAPTION>
Pro forma capital at March 31, 1997, assuming the sale of:
------------------------------------------------------------------------------
573,750 675,000 776,250 892,687
Common Shares Common Shares Common Shares Common Shares
Historical at (offering price (offering price (offering price (offering price
March 31, 1997 of $10 per share) of $10 per share) of $10 per share) of $10 per share)
-------------- ----------------- ----------------- ----------------- -----------------
Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1)
------ ---------- ------ ---------- ------ --------- ------ ---------- ------ ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital under generally
accepted accounting
principles, before
adjustments $4,860 14.1% $6,864 18.5% $7,242 19.3% $7,619 20.1% $8,054 20.9%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Tangible capital:
Capital level $4,860 14.1% $6,864 18.5% $7,242 19.3 $7,619 20.1% $8,054 20.9%
Requirement 518 1.5 555 1.5 562 1.5 569 1.5 577 1.5
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $4,342 12.6% $6,309 17.0% $6,680 17.8% $7,050 18.6% $7,477 19.4%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Core capital:
Capital level $4,860 14.1% $6,864 18.5 $7,242 19.3% $7,619 20.1% $8,054 20.9%
Requirement 1,037 3.0 1111 3.0 1,125 3.0 1,138 3.0 1,154 3.0%
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $3,823 11.1% $5,753 15.5% $6,117 16.3% $6,481 17.1% $6,900 17.9%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Risk-based capital:(2)
Capital level $4,995 29.8% $6,999 38.9% $7,377 40.5% $7,754 42.0% $8,189 43.7%
Requirement 1,342 8.0 1,441 8.0 1,459 8.0 1,477 8.0% 1,498 8.0%
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $3,653 21.8% $5,558 30.9% $5,918 32.5% $6,277 34.0% $6,691 35.7%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
- -------------------------------
<FN>
(1) Generally accepted accounting principles, adjusted, or risk-weighted
assets, as appropriate.
(2) Proposed regulations of the OTS could increase the core capital
requirement to a ratio between 4% and 5%, based upon an association's
regulatory examination rating. Risk-based capital includes tangible
capital plus $135,000 of the Association's allowance for loan losses.
Risk-weighted assets at March 31, 1997 totalled approximately $16.8
million. Net proceeds available for investment by the Association are
assumed to be invested in interest earning assets that have a 50%
risk-weighting.
</TABLE>
-13-
<PAGE> 42
CAPITALIZATION
Set forth below is the historical capitalization of the Association at
March 31, 1997, and the pro forma consolidated capitalization of the Holding
Company as adjusted to give effect to the sale of Common Shares based on the
Valuation Range and estimated expenses. See "USE OF PROCEEDS" and "THE
CONVERSION - Pricing and Number of Common Shares to be Sold."
<TABLE>
<CAPTION>
Pro forma capitalization of the Holding Company
at March 31, 1997, assuming the sale of:
---------------------------------------------------------------------
573,750 675,000 776,250 892,687
Historical Common Common Common Common
capitalization Shares Shares Shares Shares
of the Association at (Offering (Offering (Offering (Offering
March 31, price of price of price of price of
1997 $10 per share) $10 per share) $10 per share) $10 per share)
-------------------- -------------- -------------- -------------- --------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Deposits (1) $29,425 $29,425 $29,425 $29,425 $29,425
======= ======== ======= ======= =======
Borrowings $ - $ - $ - $ - $ -
======= ======== ======= ======= =======
Capital and retained earnings:
Common Shares, no par value per
share: authorized - 3,000,000
shares; assumed outstanding - $ - $ - $ - $ - $ -
as shown (2)
Additional paid-in capital - 5,385 6,383 7,382 8,530
Less Common Shares acquired by
the ESOP (3) - (459) (540) (621) (714)
Less Common Shares acquired by
the RRP (4) - (230) (270) (311) (357)
Retained earnings, net,
substantially restricted (5) 4,860 4,860 4,860 4,860 4,860
------- -------- ------- ------- -------
Total capital and retained earnings $ 4,860 $ 9,556 $10,433 $11,310 $12,319
======= ======== ======= ======= =======
- ------------------------------------
<FN>
(1) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing Common Shares in the Conversion. Any such
withdrawals will reduce pro forma deposits by the amount of such
withdrawals.
(2) The number of Common Shares to be issued will be determined on the
basis of the final valuation of the Association. See "THE CONVERSION -
Pricing and Number of Common Shares to be Sold." Common Shares assumed
outstanding does not reflect the issuance of any common shares which
may be reserved for issuance under the Stock Option Plan. See
"MANAGEMENT - Stock Benefit Plans -- Stock Option Plan." Reflects
receipt of the proceeds from the sale of the Common Shares, net of
estimated expenses which include estimated sales commissions payable to
Webb.
(3) Assumes that 8% of the Common Shares sold in connection with the
Conversion will be acquired by the ESOP with funds borrowed by the ESOP
from the Holding Company for a term of ten years at a rate of 10%. The
ESOP loan will be secured solely by the Common Shares purchased by the
ESOP. The Association has agreed, however, to use its best efforts to
fund the ESOP based on future earnings, which best efforts funding will
reduce the Association's total capital and retained earnings, as
reflected in the table. If the ESOP purchases authorized but unissued
shares from the Holding Company, such purchases would have a dilutive
effect of approximately 7.4% on the voting interests of the Holding
Company's shareholders. See "MANAGEMENT - Stock Benefit Plans."
(4) Assumes that 4% of the Common Shares will be acquired in the open
market by the RRP after the Conversion at a price of $10 per share.
There can be no assurance that the RRP will be implemented, that a
sufficient number of shares will be available for purchase by the RRP,
or that shares could be purchased at a price of $10 per share. A higher
price per share, assuming the purchase of the entire 4% of the shares,
would reduce retained earnings. The RRP may purchase shares in the open
market or may purchase authorized but unissued shares from the Holding
Company. If authorized but unissued shares are purchased, the voting
interests of existing shareholders would be diluted approximately 3.9%.
See "MANAGEMENT - Stock Benefit Plans -- Recognition and Retention Plan
and Trust."
(5) Retained earnings include restricted and unrestricted retained
earnings. See "THE CONVERSION - Principal Effects of the Conversion --
Liquidation Account" for information concerning the liquidation account
to be established in connection with the Conversion and "TAXATION -
Federal Taxation" for information concerning restricted retained
earnings for federal tax purposes.
</TABLE>
-14-
<PAGE> 43
PRO FORMA DATA
Set forth below are the pro forma consolidated net earnings of the
Holding Company for the three months ended March 31, 1997, and for the year
ended December 31, 1996, and the pro forma consolidated shareholders' equity of
the Holding Company at March 31, 1997 and December 31, 1996, along with the
related pro forma earnings per share amounts, giving effect to the sale of the
Common Shares. The computations are based on the assumed issuance of 573,750
Common Shares (minimum of the Valuation Range), 675,000 Common Shares (mid-point
of the Valuation Range), 776,250 Common Shares (maximum of the Valuation Range)
and 892,687 Common Shares (15% above the maximum of the Valuation Range). See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold." The pro forma
data is based on the following assumptions: (i) the sale of the Common Shares
occurred at the beginning of the period and yielded the net proceeds indicated;
(ii) such net proceeds were invested at the beginning of the period to yield
annualized after-tax net returns of 3.96%; and (iii) no withdrawals from
existing deposit accounts were made to purchase the Common Shares. The assumed
returns are based on the one-year U.S. Treasury bill yield of 6.00% in effect at
March 31, 1997. This rate was used as an alternative to the arithmetic average
of the Association's interest-earning assets and interest-bearing deposits. In
calculating pro forma net earnings, a statutory federal income tax rate of 34%
has been assumed for all periods. In the opinion of management, the assumed
after-tax yield does not differ materially from the estimated after-tax yield
which will be obtained on the initial investment of the cash proceeds in
short-term, interest-bearing deposits and is viewed as being more relevant in
the current low interest rate environment than the use of an arithmetic average
of the fiscal year 1996 weighted average yield on interest-earning assets and
weighted average rates paid on deposits during such period. Actual yields may
differ, however, from the assumed returns. The pro forma consolidated net
earnings amounts derived from the assumptions set forth herein should not be
considered indicative of the actual results of operations of the Holding Company
that would have been attained for any period if the Conversion had been actually
consummated at the beginning of such period.
As the table demonstrates, pro forma consolidated earnings per share
and pro forma consolidated shareholders' equity per share decrease as the amount
of Common Shares sold moves from the minimum of the Valuation Range to the
adjusted maximum of the Valuation Range. In addition, the offering price as a
multiple of pro forma earnings per share and as a percent of pro forma
shareholders' equity per share increases as the amount of Common Shares sold
moves from the minimum of the Valuation Range to the adjusted maximum of the
Valuation Range.
THE PRO FORMA DATA AND ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE HEREIN. NO
ASSURANCE CAN BE PROVIDED THAT THE YIELDS WILL BE ACHIEVED ON THE INVESTMENT OF
THE CONVERSION PROCEEDS. THE PRO FORMA DATA DOES NOT PURPORT TO REPRESENT WHAT
THE HOLDING COMPANY'S FINANCIAL POSITION OR RESULTS OF OPERATIONS ACTUALLY WOULD
HAVE BEEN HAD THE AFOREMENTIONED TRANSACTIONS BEEN COMPLETED AS OF THE DATE OR
AT THE BEGINNING OF THE PERIODS INDICATED, OR TO PROJECT THE HOLDING COMPANY'S
FINANCIAL POSITION OR RESULTS OF OPERATIONS AT ANY FUTURE DATE OR FOR ANY FUTURE
PERIOD.
-15-
<PAGE> 44
<TABLE>
<CAPTION>
At or for the three months ended March 31, 1997, assuming the sale of:
--------------------------------------------------------------------------------
573,750 675,000 776,250 892,687
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10 per share) $10 per share) $10 per share) $10 per share)
------------------- ------------------ ------------------ ------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $5,738 $ 6,750 $ 7,763 $8,927
Estimated expenses (353) (367) (381) (397)
------- ------- ------- ------
Estimated net proceeds 5,385 6,383 7,382 8,530
Less Common Shares acquired by the
ESOP (1) (459) (540) (621) (714)
Less Common Shares acquired by the RRP (2) (230) (270) (311) (357)
------- ------- ------- ------
Net cash proceeds $4,696 $ 5,573 $ 6,450 $7,459
====== ======= ======= ======
Net earnings:
Historical $ 90 $ 90 $ 90 $ 90
Pro forma income on net proceeds 46 55 64 74
Pro forma adjustment for the ESOP(1) (8) (9) (10) (12)
Pro forma adjustment for the RRP (2) (8) (9) (10) (12)
Pro forma adjustment for Ohio
franchise tax (3) (8) (10) (11) (13)
------- ------- ------- ------
Pro forma net earnings $ 113 $ 118 $ 122 $ 127
======= ======== ======== ======
Earnings per share:
Historical $ 0.17 $ 0.14 $ 0.12 $ 0.11
Pro forma income on net proceeds 0.09 0.09 0.09 0.09
Pro forma adjustment for the ESOP(1) (0.01) (0.01) (0.01) (0.01)
Pro forma adjustment for the RRP (2) (0.01) (0.01) (0.01) (0.01)
Pro forma adjustment for Ohio
franchise tax (3) (0.02) (0.02) ( 0.02) (0.02)
------- ------- ------- ------
Pro forma net earnings per share $ 0.21 $ 0.19 $ 0.17 $ 0.15
======= ======= ======= ======
Number of shares used in calculating
earnings per share 532,440 626,400 720,360 828,414
Shareholders' equity (book value): (4)
Historical $4,860 $ 4,860 $ 4,860 $ 4,860
Estimated net proceeds from the
sale of Common Shares 5,385 6,383 7,382 8,530
Less unearned ESOP shares (1) (459) (540) (621) (714)
Less unearned RRP shares (2) (230) (270) (311) (357)
------ ------- ------- -------
Pro forma shareholders' equity $9,556 $10,433 $11,310 $12,319
====== ======= ======= =======
Per share shareholders' equity:
Historical $ 8.47 $ 7.20 $ 6.26 $ 5.44
Estimated net proceeds 9.38 9.46 9.51 9.56
Less unearned ESOP shares (1) (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2) (0.40) (0.40) (0.40) (0.40)
----- --------- ---------
Pro forma shareholders' equity per
share (3) $16.66 $ 15.46 $ 14.57 $ 13.80
====== ======= ======= =======
Ratio of offering price to pro forma
shareholders' equity per share (5) 60.04% 64.70% 68.63% 72.47%
===== ===== ===== =====
Offering price as a multiple of pro
forma earnings per share (5)(6) 11.76 13.30 14.74 16.26
===== ===== ===== =====
- ------------------------------------
</TABLE>
(Footnotes on page 18)
-16-
<PAGE> 45
<TABLE>
<CAPTION>
At or for the year ended December 31, 1996, assuming the sale of:
-----------------------------------------------------------------------------
573,750 675,000 776,250 892,687
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10 per share) $10 per share) $10 per share) $10 per share)
-------------- -------------- -------------- --------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $5,738 $ 6,750 $ 7,763 $ 8,927
Estimated expenses (353) (367) (381) (397)
-------- --------- --------- ---------
Estimated net proceeds 5,385 6,383 7,382 8,530
Less Common Shares acquired by the ESOP (1) 459 540 621 714
Less Common Shares acquired by the RRP(2) 230 270 311 357
-------- ---------- ---------- ----------
Net cash proceeds $4,696 $ 5,573 $ 6,450 $ 7,459
====== ======== ======== ========
Net earnings:
Historical $ 212 $ 212 $ 212 $ 212
Pro forma income on net proceeds 186 221 255 295
Pro forma adjustment for the ESOP(1) (30) (36) (41) (47)
Pro forma adjustment for the RRP (2) (30) (36) (41) (47)
Pro forma adjustment for Ohio
franchise tax (3) (32) (39) (45) (52)
------- ----------- --------- ----------
Pro forma net earnings $ 305 $ 323 $ 341 $ 362
====== ========== ======== =========
Earnings per share:
Historical $ 0.40 $ 0.34 $ 0.29 $ 0.26
Pro forma income on net proceeds 0.35 0.35 0.35 0.36
Pro forma adjustment for the ESOP(1) (0.06) (0.06) (0.06) (0.06)
Pro forma adjustment for the RRP (2) (0.06) (0.06) (0.06) (0.06)
Pro forma adjustment for Ohio
franchise tax (3) (0.06) (0.06) (0.06) (0.06)
------- ------------ --------- -----------
Pro forma net earnings per share $ 0.57 $ 0.52 $ 0.47 $ 0.44
======= =========== ========= ==========
Number of shares used in calculating
earnings per share 532,440 626,400 720,360 828,414
Shareholders' equity (book value): (4)
Historical $4,770 $ 4,770 $ 4,770 $ 4,770
Estimated net proceeds from the
sale of Common Shares 5,385 6,383 7,382 8,530
Less unearned ESOP shares (1) (459) (540) (621) (714)
Less unearned RRP shares (2) (230) (270) (311) (357)
------- ----------- --------- ----------
Pro forma shareholders' equity $9,466 $10,343 $11,220 $12,229
====== ======= ======= =======
Per share shareholders' equity:
Historical $ 8.31 $ 7.07 $ 6.14 $ 5.34
Estimated net proceeds 9.38 9.48 9.51 9.56
Less unearned ESOP shares (1) (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2) (0.40) (0.40) (0.40) (0.40)
----- -------- ---------- ---------
Pro forma shareholders' equity per share $16.50 $ 15.32 $ 14.45 $ 13.70
====== ======= ======== =======
Ratio of offering price to pro forma
shareholders' equity per share (5) 60.61% 65.26% 69.18% 73.00%
===== ===== ===== =====
Offering price as a multiple of pro
forma earnings per share (5)(6) 17.46 19.40 21.14 22.92
===== ===== ===== =====
- ------------------------------------
</TABLE>
(Footnotes on next page)
-17-
<PAGE> 46
(1) Assumes 8.0% of the shares sold in the Conversion are purchased by the
ESOP under all circumstances, and that the funds used to purchase such
shares are borrowed from the Company. The approximate amount expected
to be borrowed by the ESOP is not reflected as a liability, but is
reflected as a reduction of capital. The Association intends to make
annual contributions to the ESOP over a ten year period in an amount at
least equal to the principal and interest requirement of the debt. The
pro forma net income assumes that: (i) 4,590, 5,400, 6,210, and 7,141
shares at the minimum, mid-point, maximum, and maximum, as adjusted, of
the Valuation Range, respectively, were committed to be released during
the period at an average fair value of $10.00 per share in accordance
with SOP 93-6 of the AICPA; (ii) the effective tax rate was 34% for
such period; and (iii) only the ESOP shares committed to be released
were considered outstanding for purposes of the per share net earnings.
The pro forma shareholders' equity per share calculation assumes all
ESOP shares were outstanding, regardless of whether such shares would
have been released. Because the Company will loan the funds to ESOP
necessary to purchase the Common Shares, only principal payments on the
ESOP loan are reflected as employee compensation and benefits expense.
As a result, to the extent the value of the Common Shares appreciates
over time, compensation expense related to the ESOP will increase. For
purposes of the preceding tables, it was assumed that a ratable portion
(1/10th) of the shares purchased in the Conversion by the ESOP were
committed to be released during the periods ended March 31, 1997 and
December 31, 1996. See Note 6 below. See "MANAGEMENT - Stock Benefit
Plans -- Employee Stock Ownership Plan."
(2) Assumes that 4% of the Common Shares sold in connection with the
Conversion will be purchased by the RRP after the Conversion at a price
of $10 per share and that one-fifth of the purchase price of the RRP
shares will be expensed in each of the first five years after the
Conversion. If the RRP is implemented in the first year after the
completion of the Conversion, it will be subject to various OTS
requirements, including the requirement that the RRP be approved by the
shareholders of the Holding Company. There can be no assurance that the
RRP will be approved by the shareholders, that a sufficient number of
shares will be available for purchase by the RRP or that the shares
could be purchased at $10 per share. A higher per share price, assuming
the purchase of the entire 4% of the shares, would reduce pro forma net
earnings and pro forma shareholders' equity. If an insufficient number
of shares is available in the open market to fund the RRP at the
desired level, the Holding Company may issue additional authorized
shares. The issuance of authorized but unissued shares in an amount
equal to 4% of the Common Shares issued in the Conversion would result
in a 3.9% dilution in existing shareholders' voting interests. See
"MANAGEMENT - Stock Benefit Plans -- Recognition and Retention Plan and
Trust."
(3) The pro forma Ohio franchise tax adjustment assumes an amount equal to
50% of the net proceeds from the Offering is allocated to the
Association and taxed at an Ohio franchise tax rate of 1.5%, and an
amount equal to 50% of the net proceeds from the Offering is allocated
to the Company and taxed at an Ohio franchise tax rate of .596%. The
resulting combined Ohio franchise tax has been reduced by the federal
tax benefit at a rate of 34.0%.
(4) Consolidated shareholders' equity represents the excess of the carrying
value of the assets of the Company over its liabilities. The
calculations are based upon the number of shares issued in the
Conversion, without giving effect to SOP 93-6. The amounts shown do not
reflect the federal income tax consequences of the potential
restoration to income of the tax bad debt reserves for income tax
purposes, which would be required in the event of liquidation. The
amounts shown also do not reflect the amounts required to be
distributed in the event of liquidation to Eligible Account Holders and
Supplemental Eligible Account Holders from the Liquidation Account
(hereinafter defined) which will be established upon the consummation
of the Conversion. Pro forma shareholders' equity information is not
intended to represent the fair market value of the Common Shares, the
current value of the Association's assets or liabilities, or the
amounts, if any, that would be available for distribution to
shareholders in the event of liquidation. Such pro forma data may be
materially affected by a change in the number of Common Shares to be
sold in the Conversion and by other factors. See "TAXATION - Federal
Taxation."
(5) Assumes that following the consummation of the Conversion, the Holding
Company will adopt the Stock Option Plan and that such plan will be
considered and voted upon at a meeting of the Holding Company's
shareholders to be held no earlier than six months after the
Conversion. Under the Stock Option Plan, employees and directors could
be granted options to purchase an aggregate amount of common shares
equal up to 10% of the Common Shares issued in the Conversion at an
exercise price equal to the market price of the common shares on the
date of grant. In the event the shares issued under the Stock Option
Plan are exercised, the interests of existing shareholders would be
diluted. See "MANAGEMENT - Stock Benefit Plans --Stock Option Plan."
(6) Pro forma net income per share calculations include the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, exclude ESOP shares which would not have been released during the
period. Accordingly, for the three months ended March 31, 1997, and for
the year ended December 31, 1996, 41,310, 48,600, 55,890, and 64,274
shares have been subtracted from the shares assumed to be sold at the
minimum, mid-point, maximum, and maximum, as adjusted, of the Valuation
Range, respectively, and 532,440, 626,400, 720,360, and 828,414 shares
are assumed to be outstanding at the minimum, mid-point, maximum, and
maximum, as adjusted, of the Valuation Range, respectively. See Note 1
above.
-18-
<PAGE> 47
SUMMARY STATEMENTS OF EARNINGSSUMMARY STATEMENTS OF EARNINGS
The following summary sets forth information concerning the Association
for the periods indicated. Such information should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
Three months ended March 31, Year ended December 31,
---------------------------- ---------------------------------------
1997 1996 1996 1995 1994
------- -------- --------- --------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest and dividend income:
Loans $489 $511 $2,000 $1,909 $1,663
Mortgage-backed securities 23 28 102 119 160
Investment securities,
interest-bearing deposits and other 102 99 413 450 474
----- ----- ------- -------- --------
Total interest and dividend income 614 638 2,515 2,478 2,297
Interest expense:
Deposits 286 289 1,158 1,107 982
FHLB advances 1 - - 1 -
------ ----- ------- ------- -------
Total interest expense 287 289 1,158 1,108 982
------ ----- ------- ------- -------
Net interest income before provision
for losses on loans 327 349 1,357 1,370 1,315
Provision for loan losses - - - - 16
------ ----- ------- ------- -------
Net interest income after provision
for loan losses 327 349 1,357 1,370 1,299
Other income 9 13 45 42 79
General, administrative and other
expense(1) 201 217 1,084 866 849
------ ----- ------- ------- -------
Earnings before income taxes 135 145 318 546 529
Federal income taxes 45 49 106 185 174
------ ----- ------- ------- -------
Net earnings $ 90 $ 96 $ 212 $ 361 $ 355
===== ====== ====== ====== ======
- ----------------------------
<FN>
(1) Includes a nonrecurring pre-tax expense of $190,000 for the year ended
December 31, 1996, for a special one-time assessment to recapitalize
the SAIF.
</TABLE>
-19-
<PAGE> 48
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Association is a community-oriented financial institution which is
primarily engaged in the business of attracting savings deposits from the
general public and investing such funds in mortgage loans secured by one- to
four-family residential real estate located in the Association's primary market
area. To a much lesser extent, the Association also originates loans for the
construction or improvement of one- to four-family residential real estate,
loans secured by multi-family residential real estate (over four units), and
nonresidential real estate and consumer loans, and invests in U.S. Government
and agency obligations, interest-bearing deposits in other financial
institutions, mortgage backed securities, and other investments permitted by
law.
The Association's results of operations are primarily dependent on its
net interest income, which is the difference between the interest income earned
on its assets, primarily loans and investments, and the interest expense on its
liabilities, primarily customer deposits. Net interest income may be affected
significantly by general economic and competitive conditions and policies of
regulatory agencies, particularly those with respect to market interest rates.
The Association primarily originates fixed rate loans with terms up to 15 years
and attempts to maintain sufficient capital and other liquid assets to manage
interest rate risk. The results of operations are also significantly influenced
by the level of non-interest expenses, such as employee salaries and benefits,
non-interest income, such as loan fees and service charges, and the
Association's provision for losses on loans.
ANALYSIS OF FINANCIAL CONDITION
The Association's assets totaled $34.6 million at March 31, 1997, an
increase of $635,000, or 1.9%, from $33.9 million at December 31, 1996.
Increases occurred in all asset categories except mortgage-backed securities,
which declined negligibly. Assets totaled $33.9 million at December 31, 1996, a
decrease of $625,000, or 1.8%, from $34.6 million at December 31, 1995. A
decrease in loans receivable was the primary reason for the decline in total
assets.
Between December 31, 1996, and March 31, 1997, loans receivable
increased $125,000, or 0.5%, to $25.0 million. Loans receivable decreased $1.1
million, or 4.2%, from December 31, 1995, to December 31, 1996, primarily as a
result of the prepayment of approximately $820,000 of loan participations.
Proceeds were kept in cash and cash equivalents for liquidity purposes and in
anticipation of future loan demand.
Investment securities declined due to scheduled maturities from $5.7
million at December 31, 1995, to $5.1 million at December 31, 1996, a decrease
of $575,000, or 10.1%, and remained relatively unchanged at March 31, 1997. Cash
and cash equivalents increased $1.3 million, or 106.9%, to $2.4 million at
December 31, 1996, compared to $1.2 million at December 31, 1995, and increased
moderately to $2.6 million at March 31, 1997, as a result of management's
decision to increase liquidity in anticipation of future loan demand.
Total deposits increased $634,000, or 2.2%, to $29.4 million at March
31, 1997, from $28.8 million at December 31, 1996. Total deposits had declined
$824,000, or 2.8%, between December 31, 1995 and 1996. There were no outstanding
borrowings from the FHLB of Cincinnati at March 3l, 1997, or December 31, 1996
and 1995.
Total equity increased $90,000 between December 31, 1996, and March 31,
1997, as a result of net income for the three month period. Total equity at
March 31, 1997, was $4.9 million, or 14.1% of total assets. The Association's
equity increased to $4.8 million at December 31, 1996, from $4.6 million at
December 31, 1995. This represented an increase of $212,000, or 4.7%, which
resulted from net income for the year ended December 31, 1996.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996
GENERAL. The Association's net income totaled $90,000 for the three
months ended March 31, 1997, a decrease of $6,000, or 6.8%, from $96,000 in net
income for the same period in 1996. The decrease in net income was the result of
a $22,000 reduction in net interest income, which was partially offset by a
$17,000 reduction in non-interest expense.
NET INTEREST INCOME. Total interest and dividend income for the three
months ended March 31, 1997, decreased $24,000, or 3.7%, compared to the same
period in 1996, while interest expense decreased $2,000, or .5%, resulting in a
-20-
<PAGE> 49
decrease in net interest income of $22,000, or 6.4%, to approximately $327,000.
The principal factors in the reduction were a 29 basis point decline in the
Association's interest rate spread from 3.76% to 3.47% and a decrease in the
average balances of loans, mortgage-backed securities and investment securities.
Interest income on loans decreased $21,000, or 4.2%, to $489,000 for
the three months ended March 31, 1997, compared to $510,000 for the 1996 period.
The decrease resulted primarily from the prepayment of $820,000 of loan
participations, a decrease in the average balance of loans outstanding during
the 1997 period to $25.1 million, from $25.7 million in the 1996 period, and a
14 basis point decline in the yield on loans. Interest income on mortgage-backed
securities decreased $5,000, or 18.3%, for the three months ended March 31,
1997, compared to the same period in 1996, as a result of a decline in the
average outstanding balance from $1.2 million to $959,000. A reduction of
$370,000 in the average outstanding balance of investment securities from $4.5
million to $4.1 million, combined with a reduction in the yield on investment
securities of 49 basis points, also contributed to the reduction in interest
income. The declines in interest income on loans mortgage-backed securities and
investment securities were partially offset by a $14,000 increase in income from
interest-earning deposits in banks. Although the average balance of
interest-earning deposits increased to $3.0 million in the 1997 period from $1.9
million in the 1996 period, the average yield of 5.34% in the 1997 period was
less than the yields on investment securities or mortgage-backed securities, as
management chose to increase the Association's liquidity in anticipation of
future loan demand.
Total interest expense remained constant between the two periods, with
only a $1,000 decrease from the 1996 period to the 1997 period. The
Association's cost of funds increased to 3.95% in the 1997 period from 3.91% in
the 1996 period, but average outstanding deposits declined $466,000, or 1.6%.
PROVISION FOR LOSSES ON LOANS. There were no provisions for losses on
loans for the three months ended March 31, 1997 and 1996.
NON-INTEREST INCOME. Non-interest income totaled $9,000 for the three
months ended March 31, 1997, a decrease of $4,000, or 30.3%, from $13,000 for
the 1996 period, due primarily to a non-recurring income item in the 1996
period.
NON-INTEREST EXPENSES. Non-interest expenses decreased $17,000, or
7.7%, to $201,000 for the three months ended March 31, 1997, compared to
$217,000 in the 1996 period. The decline was primarily attributable to a
$15,000, or 76.8%, reduction in the Association's federal deposit insurance
premium for the 1997 period, due to a reduction in the Association's premium
rate from $.23 per $100 of deposits to $.065 per $100 of deposits. The largest
component of non-interest expenses, salaries and benefits, increased $4,000, or
3.8%, to $91,000 for the three months ended March 31, 1997. This increase was
primarily due to merit salary increases for the Association's staff. The
Association expects that compensation and benefits may increase following the
Conversion in the event of the adoption and implementation of additional
employee and director benefit plans, including the ESOP. The Holding Company
also expects to incur increased costs associated with being a public company.
See "PRO FORMA DATA" and "RISK FACTORS - Potential Impact of Benefit Plans on
Net Earnings and Shareholders' Equity."
PROVISION FOR INCOME TAXES. The provision for income taxes totaled
$46,000 for the three months ended March 31, 1997, a decrease of $3,000, or
6.1%, from the $49,000 provision in the comparable 1996 period, due to the
decrease in net income before taxes.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
GENERAL. Net income for the year ended December 31, 1996, decreased
$149,000, or 41.2%, to $212,000 from $361,000 for 1995. The decrease resulted
primarily from a decrease of $13,000 in net interest income and an increase of
$218,000, or 25.2%, in non-interest expenses due largely to a $190,000
non-recurring special assessment for the recapitalization of the SAIF, which
were partially offset by an increase of $3,000 in non-interest income and a
decrease in the provision for income taxes of $79,000. Excluding the one-time
SAIF special assessment, pre-tax income decreased $38,000, or 6.9%, to $509,000
in 1996.
NET INTEREST INCOME. Total interest and dividend income for the year
ended December 31, 1996, was $2.5 million, an increase of $36,000, or 1.4%, from
1995. The increase was primarily due to an increase in interest on loans of
$91,000, or 4.7%, due to a $987,000 increase in the average balance of loans
outstanding year to year and a six basis point increase in the yield on loans,
which more than offset declines in income from all other asset categories.
Interest income on mortgage-backed securities for the year ended December 31,
1996, decreased $17,000, or 14.4%, due to a $205,000 decline in the
-21-
<PAGE> 50
average outstanding balance which offset a nine basis point increase in the
yield. Interest earned on interest-bearing deposits decreased $6,000 or 4.0%,
due primarily to a decrease of $196,000 in the average balance outstanding,
which was offset somewhat by an 18 basis point increase in yield. Income on
investment securities decreased by $30,000 due to a 38 basis point decline in
yield and a $209,000 decline in the average balance outstanding.
Total interest expense increased $50,000, or 4.5%, to $1.2 million in
1996. The increase was primarily attributable to a 17 basis point increase in
the cost of funds from 3.78% to 3.95%, as the average balance of deposits
outstanding increased only $33,000 to $29.3 million in 1996. The increase in the
cost of funds was the result of higher rates offered by competing institutions
in the Association's market area.
PROVISION FOR LOAN LOSSES. There were no provisions for losses on loans
for the years ended December 31, 1996 and 1995.
NON-INTEREST INCOME. Non-interest income for the year ended December
31, 1996, increased $3,000, or 7.7%, to $45,000.
NON-INTEREST EXPENSES. Non-interest expenses totaled $1.1 million for
the year ended December 31, 1996, an increase of $218,000, or 25.2%, compared to
1995. The increase resulted primarily from a $191,000 increase in federal
deposit insurance premiums due to a $190,000 non-recurring special assessment
recorded at September 30, 1996, to recapitalize the SAIF, and a $13,000 increase
in depreciation expense due to equipment purchases in late 1995 and 1996.
PROVISION FOR INCOME TAXES. The provision for income taxes for the year
ended December 31, 1996, decreased $79,000, or 42.7%, to $106,000, as a result
of a decrease in net income before income taxes compared to 1995.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
GENERAL. Net income for the year ended December 31, 1995, increased
$6,000, or 1.6%, to $361,000. The increase was a result of an increase in net
interest income of $55,000, or 4.2%, and a decrease in the provision for losses
on loans of $17,000, which were partially offset by a decrease in non-interest
income of $37,000, or 47.2%, and an increase of $17,000, or 2.0%, in
non-interest expenses.
NET INTEREST INCOME. Total interest and dividend income was $2.5
million for the year ended December 31, 1995, an increase of $180,000, or 7.9%,
from 1994. The increase was primarily attributable to a $246,000, or 14.8%,
increase in interest income on loans, which was partially offset by a decline of
$40,000 in interest on mortgage-backed securities and a decline of $28,000 in
interest on interest-bearing deposits and investment securities. The increase in
interest income on loans was primarily the result of a $2.5 million increase in
the average outstanding loan balance, coupled with an increase in yield on loans
from 7.62% in 1994 to 7.86% in 1995. The increase in the average outstanding
loan balance resulted from an increased demand for the Association's loan
products in 1995, primarily fixed-rate conventional mortgage loans and
automobile loans. The increased yield was the result of higher rates charged to
borrowers in the rising interest rate environment in 1995. The increased loan
demand was funded primarily through reductions in the Association's
mortgage-backed securities from $1.7 million to $1.3 million and
interest-bearing deposits in other institutions from $5.5 million in 1994, to
$2.8 million in 1995. The lower average balances account for the decline in
income in these two asset groups.
Total interest expense increased $126,000, or 12.9%, to $1.1 million in
1995, due to an increase in the average cost of funds from 3.28% in 1994 to
3.78% in 1995. This increase was partially offset by a reduction in the average
outstanding balance of deposits from $30.0 million in 1994 to $29.3 million in
1995. The average cost of funds increased as market rates increased during 1995
and the Association decided to offer higher rates to attract and retain
certificates of deposit.
PROVISION FOR LOSSES ON LOANS. There was no provision for losses on
loans during the year ended December 31, 1995, a decrease of $17,000 from 1994,
due to the absence of charge-offs during 1995. In 1994, the Association added
$17,000 to the allowance for loan losses to replenish the allowance due to net
charge-offs of approximately $18,000.
NON-INTEREST INCOME. Non-interest income for the year ended December
31, 1995, declined $37,000, or 47.2%, to $42,000, primarily due to a
non-recurring gain on sale of repossessed real estate of $32,000 in 1994.
NON-INTEREST EXPENSES. Non-interest expenses for the year ended
December 31, 1995, increased $17,000, or 2.0%, to $865,000, due to a $25,000, or
7.7%, increase in salaries and benefits as the result of merit increases and an
increase in
-22-
<PAGE> 51
pension expense of approximately $13,000. These increases were partially offset
by a $7,000 decline in expenses related to real estate acquired in foreclosure.
PROVISION FOR INCOME TAXES. The provision for income taxes increased
$11,000, or 6.5%, for the year ended December 31, 1995, primarily as the result
of higher pre-tax income in 1995.
-23-
<PAGE> 52
YIELDS EARNED AND RATES PAID. The following table sets forth certain
average balance sheet information, including the average yield on
interest-earning assets and the average cost of interest-bearing liabilities for
the years indicated. Such yields and costs are derived by dividing income or
expense by the average monthly balance of interest-earning assets or
interest-bearing liabilities, respectively, for the years presented. Average
balances are derived from month end balances.
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------------------------------------
1997 1996
---------------------------- ---------------------------
Average Interest Average Average Interest Average
outstanding earned/ yield/ outstanding earned/ yield/
balance paid rate(1) balance paid rate
------- ---- ------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits $ 2,997 $ 40 5.34% $ 1,863 $ 26 5.58%
Investment securities (2) 4,138 62 5.99 4,508 73 6.48
Mortgage-backed securities 959 23 9.59 1,171 28 9.56
Loans receivable (3) 25,068 489 7.80 25,744 511 7.94
------ ---- ---- ------- --- ----
Total interest-earning 33,162 614 7.41 33,286 638 7.67
assets
Non-interest-earning assets 1,177 1,218
------- -------
Total assets $34,339 $34,504
======= =======
Interest-bearing liabilities:
NOW and money market
accounts $ 4,272 27 2.53% $ 5,449 36 2.64%
Regular savings accounts 9,937 72 2.90 9,581 70 2.92
Certificates of deposit 14,886 188 5.05 14,531 183 5.04
------ ---- ---- ------- --- ----
Total deposits 29,095 287 3.95 29,561 289 3.91
FHLB advances (4) 50 - - - - -
-------- ---- ---- -------- --- ----
Total interest-bearing
liabilities 29,145 287 3.94 29,561 289 3.91
Non-interest-bearing
liabilities 381 339
------- -------
Total liabilities 29,526 29,900
Retained earnings 4,813 4,604
------- -------
Total liabilities and
retained earnings $34,339 $34,504
======= =======
Net interest income $327 $349
==== ====
Interest rate spread 3.47% 3.76%
==== ====
Net interest margin 3.94% 4.19%
==== ====
Average interest-earning
assets to average
interest-bearing liabilities 113.78% 112.60%
====== ======
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------------------------
1996 1995 1994
--------------------------- ---------------------------- -------------------------------
Average Interest Average Average Interest Average Average Interest Average
outstanding earned/ yield/ outstanding earned/ yield/ outstanding earned/ yield/
balance paid rate balance paid rate balance paid rate
------- ---- ---- ------- ---- ---- ------- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits $ 2,592 $ 144 5.56% $ 2,788 $ 150 5.38% $ 5,509 $ 204 3.70%
Investment securities (2) 4,274 269 6.29 4,483 299 6.67 4,041 271 6.71
Mortgage-backed securities 1,091 102 9.35 1,296 120 9.26 1,740 160 9.20
Loans receivable (3) 25,267 2,000 7.92 24,280 1,909 7.86 21,827 1,663 7.62
------- ----- ---- ------- ------ ---- -------- ----- ----
Total interest-earning 33,224 2,515 7.57 32,847 2,478 7.54 33,117 2,298 6.94
assets
Non-interest-earning assets 1,186 1,161 1,165
------- ------- -------
Total assets $34,410 $34,008 $34,282
======= ======= =======
Interest-bearing liabilities:
NOW and money market
accounts $ 4,910 127 2.59% $ 6,226 176 2.83% $ 8,082 226 2.80%
Regular savings accounts 9,807 287 2.93 9,687 280 2.89 10,584 306 2.89
Certificates of deposit 14,611 744 5.09 13,382 651 4.86 11,280 450 3.99
------- ------ ------ ------- ---- -------- ----- ----
Total deposits 29,328 1,158 3.95 29,295 1,107 3.78 29,946 982 3.28
------ ------ ---- ------- ----- ----
FHLB advances (4) - - - 23 1 4.35 - - -
------- ------ ---- ------ ------ ---- ------- ----- ----
Total interest-bearing
liabilities 29,328 1,158 3.95 29,318 1,108 3.78 29,946 982 3.28
----- ---- ------ ---- ----- ----
Non-interest-bearing
liabilities 389 313 328
------- ------- -------
Total liabilities 29,717 29,631 30,274
Retained earnings 4,693 4,377 4,008
------- ------- -------
Total liabilities and
retained earnings $34,410 $34,008 $34,282
======= ======= =======
Net interest income $1,357 $1,370 $1,316
====== ====== ======
Interest rate spread 3.62% 3.76% 3.66%
==== ==== ====
Net interest margin 4.08% 4.17% 3.97%
==== ==== ====
Average interest-earning
assets to average
interest-bearing liabilities 113.28% 112.04% 110.59%
====== ====== ======
- -------------------
<FN>
(1) Annualized.
(2) Includes dividends on FHLB stock.
(3) Includes nonperforming loans
(4) Interest paid on FHLB advances for the quarter ended March 31, 1997,
was less than $1,000.
</TABLE>
-24-
<PAGE> 53
The following table sets forth, at the dates indicated, the weighted
average yields earned on the Association's interest-earning assets, the weighted
average interest rates paid on interest-bearing liabilities and the interest
rate spread between the weighted average yields and rates at the dates
presented.
<TABLE>
<CAPTION>
At March 31, At December 31,
1997 1996
-------- -------
<S> <C> <C>
Weighted average yield on loans 7.79% 7.77%
Weighted average yield on investment securities
portfolio 5.94 5.96
Weighted average yield on mortgage-backed
securities 9.56 9.56
Weighted average yield on interest-bearing
deposits 5.53 5.52
Weighted average yield on all interest-earning
assets 7.42 7.37
Weighted average rate paid on deposits 4.00 3.99
Weighted average rate paid on
FHLB advances - -
Weighted average rate paid on all
interest-bearing liabilities 4.00 3.99
Interest rate spread 3.42 3.38
</TABLE>
The table below describes the extent to which changes in interest rates
and changes in volume of interest-earning assets and interest-bearing
liabilities have affected the Association's interest income and interest 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 period rate), (ii)
changes in rate (change in rate multiplied by prior period volume) and (iii)
total changes in rate and volume. The combined effects of changes in both volume
and rate, which cannot be separately identified, have been attributed to the
mix:
<TABLE>
<CAPTION>
Three months ended March 31, Year ended December 31,
--------------------------------- ---------------------------------------------------------------------
1997 vs. 1996 1996 vs. 1995 1995 vs. 1994
--------------------------------- ---------------------------------- ---------------------------------
Increase Total Increase Total Increase Total
(decrease) due to increase (decrease) due to increase (decrease) due to increase
----------------- -------- ----------------- -------- ----------------- --------
Volume Rate Mix (decrease) Volume Rate Mix (decrease) Volume Rate Mix (decrease)
------ ---- -------------- ------ ---- --- ---------- ------ ---- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income
attributable to:
Interest-bearing $16 $ (1) $(3) $ 12 $(11) $ 5 $ - $ (6) $(101) $ 93 $(46) $ (54)
deposits
Investment securities (6) (6) 2 (10) (14) (17) 1 (30) 30 2 (3) 28
Mortgage-backed
securities (5) - - (5) (19) 1 - (18) (41) 1 - (40)
Loans receivable (13) (9) 1 (21) 78 15 (1) 91 187 52 7 246
--- --- ---- --- --- -- -- --- --- ---- --- ----
Total interest income (9) (16) - (24) 34 4 - 38 75 148 (42) 181
Interest-bearing
liabilities
Deposits (5) 3 - (2) 1 50 - 51 (21) 150 (3) 125
FHLB advances - - - - (1) - - (1) 1 - - 1
---- ---- ---- ----- -- ---- -- -- ---- ----- --- -----
Total interest expense (5) 3 - (2) - 50 - 50 (20) 150 (3) 126
----- ----- ---- ----- ----- ---- -- ---- ---- --- -- ---
Increase (decrease) in net
interest income $ (4) $(19) $ - $(22) $34 $(46) $ - $(12) $ 95 $ (2) $(39) $ 54
==== ==== ==== ==== === ==== ==== ==== ==== ===== ==== ====
</TABLE>
ASSET AND LIABILITY MANAGEMENT
The Association, like other financial institutions, is subject to
interest rate risk to the extent that its interest-earning assets reprice
differently than its interest-bearing liabilities. Interest rate risk is defined
as the sensitivity of an institution's earnings and net asset values to changes
in interest rates. As part of its effort to monitor and manage the interest rate
risk of the Association, the Board of Directors has adopted an interest rate
risk policy which sets exposure limits for the Association,
-25-
<PAGE> 54
specifies certain transactions that the Association may not engage in without
prior Board authorization and provides for quarterly review by the Board of
Directors of various interest rate risk reports.
One of the methods utilized by the Association to monitor interest rate
risk is the rate shock risk estimates contained in the quarterly rate shock risk
reports prepared by an outside consulting firm that specializes in interest rate
risk assessments. The reports assess the Association's interest rate risk based
on the percent and dollar changes in the Association's net portfolio value
("NPV") projected over permanent and instantaneous parallel shifts in interest
rates. The rate shock methodology attempts to quantify interest rate risk as the
change in the Association's NPV which would result from a theoretical change in
current interest rates. The management and the Board of Directors of the
Association attempt to maintain the projected change in NPV within limits
established by the Board of Directors.
Presented below, as of March 31, 1997, is an analysis of the
Association's interest rate risk as measured by changes in NPV for instantaneous
and parallel shifts of 100 basis points in market interest rates, assuming rates
would stay constant over a twelve-month period. The table also contains the
policy limits set by the Board of Directors of the Association as the maximum
change in NPV that the Board of Directors deems advisable in the event of
various changes in interest rates. Such limits have been established with
consideration of the dollar impact of various rate changes and the Association's
strong capital position.
<TABLE>
<CAPTION>
March 31, 1997
Change in interest rate Board limit ----------------------------------------------
(basis points) % Change in NPV $ Change in NPV % Change in NPV
---------------- --------------- --------------- ---------------
(Dollars in thousands)
<S> <C> <C> <C>
+400 (50)% $(2,159) (51)%
+300 (38) (1,702) (40)
+200 (25) (1,176) (28)
+100 (15) (609) (14)
0 0 0 0
-100 15 538 13
-200 25 794 19
-300 38 839 20
-400 50 1,547 36
</TABLE>
As illustrated by the table, NPV is more sensitive to rising rates than
declining rates. The difference in sensitivity occurs principally because, as
rates rise, borrowers do not prepay fixed-rate loans as quickly as they do when
interest rates are declining. In a rising interest rate environment, because the
Association has a significant amount of fixed-rate loans in its loan portfolio,
the amount of interest the Association would receive on its loans would increase
relatively slowly as the loans are slowly prepaid and new loans are made at
higher rates. Moreover, the interest the Association would pay on its deposits
would increase rapidly because the Association's deposits generally have shorter
periods to reprice. Rising interest rates could also negatively affect the
Association's earnings due to diminished loan demand.
The Board of Directors and management of the Association believe that
certain factors afford the Association the ability to operate successfully
despite its exposure to interest rate risk. Though the Association originates
predominantly fixed-rate loans, such loans are typically secured by residential
real estate and for terms of 15 years. See "THE BUSINESS OF THE ASSOCIATION -
Lending Activities." The Association also manages its interest rate risk by
maintaining capital well in excess of regulatory requirements and by maintaining
a high level of investments in short-term instruments with maturities of five
years or less. See "THE BUSINESS OF THE ASSOCIATION - Investment Activities."
For the quarter ended March 31, 1997, the Association's tangible capital was
14.1% of total assets and its liquidity ratio was 25.32%. See "Liquidity and
Capital Resources."
As with any method of measuring interest rate risk, certain
shortcomings are inherent in the NPV approach. For example, although certain
assets and liabilities may have similar maturities or periods of repricing, they
may react in different degrees to changes in market interest rates. Also, 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. Further, in the event of a change in
interest rates, expected rates of prepayment on loans and mortgage-backed
securities and early withdrawal levels from certificates of deposit would likely
deviate significantly from those assumed in making the risk calculations.
-26-
<PAGE> 55
LIQUIDITY AND CAPITAL RESOURCES
The Association's principal sources of funds are deposits, loan and
mortgage-backed securities repayments, maturities of securities and other funds
provided by operations. The Association also has the ability to borrow from the
FHLB of Cincinnati. See "REGULATION - Federal Home Loan Bank." While scheduled
loan repayments and maturing investments are relatively predictable, deposit
flows and early loan and mortgage-backed security prepayments are influenced to
a greater degree by interest rates, general economic conditions and competition.
The Association maintains investments in liquid assets based upon management's
assessment of (i) the need for funds, (ii) expected deposit flows, (iii) the
yields available on short-term liquid assets and (iv) the objectives of the
Association's asset and liability management program.
OTS regulations presently require the Association to maintain an
average daily balance of liquid assets, which may include, but are not limited
to, investments in U.S. Treasury and federal agency obligations and other
investments having maturities of five years or less, in an amount equal to 5% of
the sum of the Association's average daily balance of net withdrawable deposit
accounts and borrowings payable in one year or less. The liquidity requirement,
which may be changed from time to time by the OTS to reflect changing economic
conditions, is intended to provide a source of relatively liquid funds upon
which the Association may rely if necessary to fund loan originations, deposit
withdrawals or other short-term funding needs. At March 31, 1997, the
Association's regulatory liquidity ratio was 25.32%. At such date, the
Association had commitments to originate loans and loans in process totaling
$178,000 and no commitments to purchase or sell loans. The Association considers
its liquidity and capital resources sufficient to meet its outstanding
short-term and long-term needs. See Note 6 to Consolidated Financial Statements.
The Association's liquidity, primarily represented by cash and cash
equivalents, is a result of the funds used in or provided by the Association's
operating, investing and financing activities. These activities are summarized
below for the three months ended March 31, 1997, and for the years ended
December 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Year ended December 31,
Three months ended --------------------------------------------------
March 31, 1997 1996 1995 1994
------------------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
Net income $ 90 $ 212 $ 361 $ 355
Adjustments to reconcile net income
to net cash from operating activities 24 5 53 (13)
------ ------ ------ ------
Net cash from operating activities 114 217 414 342
Net cash provided by (used in)
investment activities (497) 1,860 (1,272) (3,315)
Net cash provided by (used in)
financing activities 560 (818) 411 (1,942)
------ ------ ------ ------
Net change in cash and cash
equivalents 177 1,259 (447) (4,915)
Cash and cash equivalents at
beginning of period 2,436 1,177 1,624 6,539
------ ------ ------ ------
Cash and cash equivalents at
end of period $2,613 $2,436 $1,177 $1,624
====== ====== ====== ======
</TABLE>
The Association is required by applicable law and regulations to meet
certain minimum capital standards, which include a tangible capital requirement,
a core capital requirement or leverage ratio and a risk-based capital
requirement. See
-27-
<PAGE> 56
"REGULATION - Office of Thrift Supervision -- Regulatory Capital Requirements."
The Association exceeded all of its regulatory capital requirements at March 31,
1997.
OTS regulations require a savings and loan association to maintain core
capital of at least 3% of the association's total assets. "Core capital" is
comprised of common shareholders' equity (including retained earnings),
noncumulative preferred stock and related surplus, minority interests in
consolidated subsidiaries, certain nonwithdrawable accounts, pledged deposits of
mutual associations and intangible assets, primarily certain purchased mortgage
servicing rights. The OTS has proposed to increase the core capital requirement
to 4% and 5%, except for those associations with the highest examination rating
and acceptable levels of risk. See "REGULATION - Office of Thrift Supervision --
Regulatory Capital Requirements."
The tangible capital requirement requires a savings and loan
association to maintain "tangible capital" of not less than 1.5% of the
association's adjusted total assets. Tangible capital is defined in OTS
regulations as core capital minus any intangible assets.
OTS regulations require that a savings and loan association maintain
"risk-based capital" in an amount not less than 8% of its risk-weighted assets.
Risk-based capital is defined as core capital plus certain additional items of
capital, which in the case of the Association includes $135,000 of the
Association's allowance for loan losses.
The following table summarizes the Association's regulatory capital
requirements and actual capital at March 31, 1997:
<TABLE>
<CAPTION>
Excess of actual capital
over current
Actual capital Current requirement requirement Applicable asset total
------------------ ------------------ ------------------ ----------------------
March 31, 1997 Amount Percent Amount Percent Amount Percent
- -------------- ------ ------- ------ ------- ------ -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Tangible capital $4,860 14.1% $ 518 1.5% $4,342 12.6% $34,564
Core capital 4,860 14.1 1,037 3.0 3,823 11.1 34,564
Risk-based capital 4,995 29.8 1,342 8.0 3,653 21.8 16,776
</TABLE>
For information concerning the Association's regulatory capital on a
pro forma basis after the Conversion, see "REGULATORY CAPITAL COMPLIANCE."
IMPACT OF RECENT ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share," which establishes standards for computing and presenting earnings
per share ("EPS") by entities with publicly held common stock or potential
common stock. SFAS No. 128 simplifies the standards for computing earnings per
share previously found in Accounting Principles Board ("APB") Opinion No. 15,
"Earnings Per Share." Basic EPS excludes dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Diluted EPS is computed
similarly to fully diluted EPS pursuant to APB Opinion No. 15. SFAS No. 128
supersedes APB Opinion No. 15 and is effective for financial statements issued
for periods ending after December 15, 1997, including interim periods.
Management does not believe the adoption of SFAS No. 128 will have a material
impact on the disclosure requirements of the Holding Company.
In February 1997, the FASB issued SFAS No. 129, which incorporates the
disclosure requirements of APB Opinion No. 15, and makes them applicable to all
public and nonpublic entities that have issued securities addressed by SFAS No.
129. APB Opinion No. 15 requires disclosure of descriptive information about
securities that is not necessarily related to the computation of EPS. SFAS No.
129 continues the previous requirements to disclose certain information about an
entity's capital structure found in APB Opinions No. 19, "Omnibus Opinion -
1966," and No. 15, and SFAS No. 47, "Disclosure of Long-Term Obligations," for
entities that were subject to the requirements of those standards. SFAS No. 129
eliminates the exemption of nonpublic entities from certain disclosure
requirements of APB Opinion No. 15 as provided by SFAS No. 21,
-28-
<PAGE> 57
"Suspension of the Reporting of Earnings per Share, and Segment Information by
Nonpublic Enterprises." SFAS No. 129 supersedes specific disclosure requirements
of APB Opinions Nos. 10 and 15 and SFAS No. 47 and consolidates them in SFAS No.
129 for ease of retrieval and for greater visibility to nonpublic entities. SFAS
No. 129 is effective for financial statements for periods ending after December
15, 1997. The Association has not previously issued any common shares and SFAS
No. 129 will be adopted by the Holding Company in the initial period after
December 15, 1997. Management believes the adoption of SFAS No. 129 will not
have a material impact on the disclosure requirements of the Holding Company.
In December 1996, the FASB issued SFAS No. 126 which amends SFAS No.
107, "Disclosures About Fair Value of Financial Instruments," to make the
disclosures about fair value of financial instruments prescribed in SFAS No. 107
optional for nonpublic entities with total assets less than $100 million on the
date of the financial statement. SFAS No. 126 also requires that the entity has
not held or issued any derivative financial instruments, as defined in SFAS No.
119, "Disclosure About Derivative Financial Instruments and Fair Value of
Financial Instruments," other than loan commitments, during the reporting
periods.
In June 1996, the FASB issued SFAS No. 125, which is effective, on a
prospective basis, for fiscal years beginning after December 31, 1996. SFAS No.
125 provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on consistent
application of a financial-components approach that focuses on control. SFAS No.
125 extends the "available for sale" and "trading" approach of SFAS No. 115 to
non-security financial assets that can be contractually prepaid or otherwise
settled in such a way that the holder of the asset would not recover
substantially all of its recorded investment. In addition, SFAS No. 125 amends
SFAS No. 115 to prevent a security from being classified as held-to-maturity if
the security can be prepaid or settled in such a manner that the holder of the
security would not recover substantially all of its recorded investment. The
extension of the SFAS No. 115 approach to certain non-security financial assets
and the amendment to SFAS No. 115 are effective for financial assets held on or
acquired after January 1, 1997. Effective January 1,1997, SFAS No. 125
superseded SFAS No. 122, which is discussed above. Management has not yet
determined the effect, if any, SFAS No. 125 will have on the Holding Company's
financial statements.
THE BUSINESS OF THE ASSOCIATION
GENERAL
The Association is a mutual savings and loan association which was
organized under Ohio law in 1893 as "The Bridgeport Building & Loan Society." In
1964, the Association adopted its present name. As an Ohio savings and loan
association, the Association is subject to supervision and regulation by the
OTS, the Division and the FDIC. The Association is a member of the FHLB of
Cincinnati, and the deposits of the Association are insured up to applicable
limits by the FDIC in the SAIF. See "REGULATION."
The Association conducts business from its main office located in
Bridgeport, Ohio, and one full-service branch located in Shadyside, Ohio. The
principal business of the Association is the origination of permanent mortgage
loans on one- to four-family residential real estate located in the
Association's primary market area, which consists of Belmont County, Ohio, and
Ohio and Marshall Counties, West Virginia. The Association also originates a
limited number of loans for the construction of one- to four-family residences
and permanent mortgage loans secured by nonresidential real estate in its market
area. In addition to real estate lending the Association originates secured and
unsecured consumer loans. See "Lending Activities." For liquidity and interest
rate risk management purposes, the Association invests in interest-bearing
deposits in other financial institutions, U.S. Government and agency obligations
and mortgage-backed securities. See "Investment Activities." Funds for lending
and other investment activities are obtained primarily from savings deposits,
which are insured up to applicable limits by the FDIC, principal repayments of
loans and maturities of investment securities. See "Deposits and Borrowings."
Interest on loans and investments is the Association's primary source
of income. The Association's principal expense is interest paid on deposit
accounts. Operating results are dependent to a significant degree on the net
interest income of the Association, which is the difference between interest
income earned on loans, mortgage-backed securities and other investments and
interest paid on deposits. Like most thrift institutions, the Association's
interest income and interest expense are significantly affected by general
economic conditions and by the policies of various regulatory authorities. See
"RISK FACTORS - Interest Rate Risk" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset and Liability Management."
-29-
<PAGE> 58
MARKET AREA
The Association operates two full service offices located in Belmont
County, Ohio. The main office is located in Bridgeport, Ohio, which is
approximately 65 miles southwest of Pittsburgh, Pennsylvania, and approximately
one mile west of Wheeling, West Virginia. A full service branch office is
located in Shadyside, Ohio, which is approximately eight miles south of
Bridgeport. The Association's primary market area for lending and deposits
consists of Belmont County, Ohio, and Ohio and Marshall Counties, West Virginia.
Historically dominated by coal mining and steel-related industries, Belmont
County experienced a decline in employment opportunities in such industries
during the 1980s, with employment growth primarily occurring in lower paying
service jobs. In addition, a major area employer, Wheeling-Pittsburgh Steel is
currently the object of a work stoppage by its union employees. The strike began
on October 1, 1996, and it is not known how long it will continue. It is
believed that the prolonged strike has begun to adversely affect the
Association's earnings. See "Delinquent Loans, Nonperforming Assets and
Classified Assets." Major employers in the Association's market area presently
include Wheeling Hospital, Consolidation Coal, the Bayer Corporation, and the
Kroger Co.
Belmont County's population, approximately 70,000, has declined
slightly since 1990, while the same period was characterized by 1.1% growth in
the national population and 0.5% growth in the population of Ohio. In 1996, the
per capita income level in Belmont County was $10,976, compared to $15,376 for
Ohio and $16,405 for the nation. The median household income in Belmont County
was $21,703 in 1996, compared to $32,102 and $34,530 in Ohio and the United
States, respectively. Unemployment in Belmont County is approximately 9.0%,
compared to 5.9% in Ohio and 5.7% in the United States.
The Association faces competition from branches of two larger
independent commercial banks located in Bridgeport and branches of two larger
independent commercial banks and one branch of a super-regional commercial bank
in Shadyside. In addition, competing financial institutions exist in surrounding
communities located in the Association's market area. The Association's market
penetration in Belmont County is 12.2% of savings association deposits and 3.1%
of all financial institution deposits at June 30, 1996.
LENDING ACTIVITIES
GENERAL. The Association's principal lending activity is the
origination of conventional fixed-rate real estate loans secured by one- to
four-family residences located in the Association's primary market area. Though
the Association currently originates loans for its portfolio and not with the
intention of selling such loans in the secondary market, fixed-rate loans are
generally underwritten according to secondary market guidelines. In addition to
real estate lending, the Association originates consumer loans, including loans
secured by deposit accounts, automobile loans, and unsecured loans.
-30-
<PAGE> 59
LOAN PORTFOLIO COMPOSITION. The following table presents certain
information in respect of the composition of the Association's loan portfolio at
the dates indicated:
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------------------------------
At March 31, 1997 1996 1995 1994
---------------------- --------------------- ---------------------- --------------------
Percent of Percent of Percent of Percent of
Amount total loans Amount total loans Amount total loans Amount total loans
------ ----------- ------ ----------- ------ ----------- ------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family $20,691 81.96% $20,605 81.97% $21,086 79.54% $18,802 80.47%
Multifamily 48 0.19 51 0.20 557 2.10 589 2.52
Nonresidential 418 1.66 460 1.83 1,064 4.01 1,062 4.54
Land 79 0.31 86 0.34 5 0.02 6 0.03
Construction 124 0.49 124 0.49 469 1.77 776 3.32
Consumer loans:
Automobiles 1,821 7.21 1,931 7.68 1,752 6.61 1,166 4.99
Savings accounts 310 1.23 265 1.06 244 0.92 252 1.08
Other 1,653 6.55 1,511 6.01 1,201 4.53 685 2.93
Commercial loans 101 0.40 105 0.42 132 0.50 27 0.12
-------- -------- --------- -------- -------- -------- ---------- --------
Total loans 25,245 100.0% 25,138 100.00% 26,510 100.00% 23,365 100.00%
===== ====== ====== ======
Less:
Loans in process 36 51 328 378
Deferred loan fees 49 52 67 61
Allowance for loan
losses 143 143 143 143
------- ------- ------- -------
Total loans, net $25,017 $24,892 $25,972 $22,783
======= ======= ======= =======
</TABLE>
LOAN MATURITY. The following table sets forth certain information as of
March 31, 1997, regarding the dollar amount of loans maturing in the
Association's portfolio based on their contractual terms to maturity. Demand
loans and other loans having no stated schedule of repayments or no stated
maturity are reported as due in one year or less. Mortgage loans originated by
the Association in its portfolio generally include due-on-sale clauses that
provide the Association with the contractual right to deem the loan immediately
due and payable in the event the borrower transfers the ownership of the
property without the Association's consent. The table does not include the
effects of possible prepayments or scheduled repayments.
<TABLE>
<CAPTION>
During the Due 1-3 Due 3-5 Due 5-10 Due 10-20 Due over
year ending years years years years 20 years
March 31, after after after after after
1998 3/31/98 3/31/98 3/31/98 3/31/98 3/31/98 Total
------------- -------- --------- ---------- ---------- --------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family - $234 $ 168 $1,745 $13,975 $4,569 $20,691
Multifamily - - - 48 - - 48
Nonresidential - - 45 193 180 - 418
Land - 79 - - - - 79
Construction - - - - 124 - 124
Consumer loans 357 642 1,535 1,217 33 0 3,784
Commercial loans 46 3 52 - - - 101
---- ---- ------ ------ ------- ------ -------
Total $403 $958 $1,800 $3,203 $14,312 $4,569 $25,245
==== ==== ====== ====== ======= ====== =======
</TABLE>
-31-
<PAGE> 60
The following table sets forth the dollar amounts of all loans
contractually due after March 31, 1998, and shows the amount of such loans which
have predetermined interest rates and which have floating or adjustable interest
rates:
<TABLE>
<CAPTION>
Fixed Adjustable
rates rates Total
----- ----- -----
(In thousands)
<S> <C> <C> <C>
Real estate loans:
One- to four-family $16,687 $4,004 $20,691
Multifamily 48 - 48
Nonresidential 418 - 418
Land 79 - 79
Construction 124 - 124
Consumer loans 3,427 - 3,427
Commercial loans 55 - 55
------- ------ -------
Total $20,838 $4,004 $24,842
======= ====== =======
</TABLE>
LOANS SECURED BY ONE- TO FOUR-FAMILY REAL ESTATE. The principal lending
activity of the Association is the origination of conventional loans secured by
first mortgages on one- to four-family residences, primarily single-family
residences, located within the Association's primary market area. At March 31,
1997, the Association's one- to four-family residential real estate loans
totaled approximately $20.7 million, or 82.0% of total loans.
OTS regulations and Ohio law limit the amount which the Association may
lend in relationship to the appraised value of the real estate and improvements
which will secure the loan at the time of loan origination. In accordance with
such regulations, the Association makes fixed-rate loans on one- to four-family
residences of up to 80% of the value of the real estate and improvements thereon
(the "LTV").
The Association currently offers fixed-rate loans with terms of up to
25 years, though most loans are originated with terms of 15 years. The
Association does offer adjustable-rate mortgage loans ("ARMs") for terms of up
to 25 years, but has originated very few ARMs since 1990. The maximum interest
rate adjustment period on the ARMs is five years, but can be any number of years
less than five. The interest rate adjustments on ARMs presently offered by the
Association are indexed to the quarterly National Average Cost of Funds to
SAIF-Insured Institutions. Rate adjustments are computed by adding a stated
margin, typically 2%, to the index, with a maximum adjustment of 5% over the
term of the loan.
The Association has purchased interests in loans from other Ohio
financial institutions at times when there was low loan demand in the
Association's primary market area. Such purchases consist of fixed-rate loans
which meet the Association's underwriting standards. The Association's loan
portfolio includes two participation interests in several single-family loans
secured by properties located in Columbus, Ohio. At March 31, 1997, the
outstanding balance of participation loans purchased, which is included in the
one- to four-family loans, was $5.4 million, or 21.2% of the Association's total
loan portfolio.
LOANS SECURED BY MULTIFAMILY RESIDENCES. The Association originates a
limited number of loans secured by multifamily properties, which contain more
than four units. Multifamily loans are offered with fixed rates of interest for
terms of up to 25 years and have LTVs of up to 75%.
Multifamily lending is generally considered to involve a higher degree
of risk than one- to four-family residential lending because the borrower
typically depends upon income generated by the project to cover operating
expenses and debt service. The profitability of a project can be affected by
economic conditions, government policies and other factors beyond the control of
the borrower. The Association attempts to reduce the risk associated with
multifamily lending by evaluating the creditworthiness of the borrower and the
projected income from the project and by obtaining personal guarantees on loans
made to corporations and partnerships. The Association requires borrowers to
agree to submit financial statements annually to enable the Association to
monitor the loan and requires an assignment of rents.
At March 31, 1997, loans secured by multifamily properties totaled
approximately $48,000, or .19% of total loans.
-32-
<PAGE> 61
NONRESIDENTIAL REAL ESTATE. The Association also originates a limited
number of loans for the purchase of nonresidential real estate. The
Association's nonresidential real estate loans have fixed rates, terms of up to
25 years and LTVs of up to 80%. Among the properties securing nonresidential
real estate loans are a church and a used car lot, which are located in the
Association's primary market area.
Nonresidential real estate lending is generally considered to involve a
higher degree of risk than residential lending due to the relatively larger loan
amounts and the effects of general economic conditions on the successful
operation of income-producing properties. The Association has endeavored to
reduce such risk by evaluating the credit history of the borrower, the location
of the real estate, the financial condition of the borrower, the quality and
characteristics of the income stream generated by the property and the
appraisals supporting the property's valuation.
At March 31, 1997, approximately $418,000, or 1.66% of the
Association's total loans, were secured by mortgages on nonresidential real
estate.
LAND LOANS. The Association also originates a limited number of loans
secured by single-family land lots. The Association's land loans are generally
three year amortizing loans and require an LTV of 75% or less. At March 31,
1997, approximately $79,000, or .31% of the Association's total loans, were
secured by land loans made to individuals intending to construct and occupy
single family residences on the properties.
CONSTRUCTION LOANS. The Association originates a limited number of
loans for the construction of single-family residential real estate.
Construction loans are structured as permanent loans with fixed rates of
interest and terms of up to 25 years. During the first six months, while the
residence is being constructed, the borrower is required to pay interest only.
Construction loans have LTVs of up to 80%, with the value of the land counting
as part of the owner's equity. At March 31, 1997, the Association had
approximately $124,000, or 0.5% of its total loans, invested in construction
loans, which represented one loan in process from 1995 due to the halt of
construction. During the three months ended March 31, 1997, and the year ended
December 31, 1996, the Association did not originate any construction loans.
CONSUMER LOANS. The Association originates various types of consumer
loans, including home improvement loans, loans secured by savings accounts and
motor vehicles and unsecured loans. Consumer loans are made at fixed rates of
interest. Consumer loans secured by a deposit or savings account are made at an
interest rate that is 2% above the rate paid on the underlying deposit account.
Automobile loans are originated with terms of up to six years for new
automobiles and up to three years for used automobiles. All automobile loans are
originated directly by the Association.
The Association also makes closed-end home equity loans in an amount
which, when added to the prior indebtedness secured by the real estate, does not
exceed 80% of the estimated value of the real estate. Home equity loans are
secured by real estate. The Association does not offer home equity loans with a
line of credit feature.
Consumer loans may entail greater credit risk than do residential
mortgage loans. The risk of default on consumer loans increases during periods
of recession, high unemployment, and other adverse economic conditions. Although
the Association has not had significant delinquencies on consumer loans, no
assurance can be provided that delinquencies will not increase.
At March 31, 1997, the Association had approximately $3.8 million, or
15.0% of its total loans, invested in consumer loans.
COMMERCIAL LOANS. The Association has occasionally made commercial
loans to businesses in its primary market area. At March 31, 1997, the
Association had approximately $101,000, or .4% of total loans, invested in six
commercial loans. All of the loans were made to local businesses and are secured
by company vehicles. The Association does not currently originate commercial
loans.
LOAN SOLICITATION AND PROCESSING. Loan originations are generally
obtained from existing customers and members of the local community and from
referrals from real estate brokers, lawyers, accountants, and current and former
customers. The Association also advertises in the local print media and
periodically advertises on radio and television.
In underwriting real estate loans, the Association typically obtains a
credit report, verification of employment and other documentation concerning the
creditworthiness of the borrower. An appraisal of the fair market value of the
real estate that will be given as security for the loan is prepared by a
certified fee appraiser approved by the Board of Directors. Upon
-33-
<PAGE> 62
the completion of the appraisal and the receipt of information on the credit
history of the borrower, the application for a loan is submitted for review in
accordance with the Association's underwriting guidelines which are established
annually by the Board of Directors. The President of the Association has
authority to approve loans of less than $100,000. Loans for amounts greater than
$100,000 must be approved by the full Board of Directors of the Association,
which meets twice a month.
Borrowers are required to carry satisfactory fire and casualty
insurance and flood insurance, if applicable, and to name the Association as an
insured mortgagee. The Association obtains an attorney's opinion of title.
The procedure for approval of construction loans is the same as for
permanent real estate loans, except that an appraiser evaluates the building
plans, construction specifications, and estimates of construction costs. The
Association also evaluates the feasibility of the proposed construction project
and the experience and record of the builder. Once approved, the construction
loan is disbursed in installments based upon periodic inspections of
construction progress.
Consumer loans are underwritten on the basis of the borrower's credit
history and an analysis of the borrower's income and expenses, ability to repay
the loan, and the value of the collateral, if any. The President of the
Association has authority to approve secured consumer loans of up to $50,000,
and unsecured consumer loans of up to $25,000. The Assistant Vice President and
the Loan Manager of the Association each have the authority to approve
applications for secured consumer loans up to $25,000 and for unsecured loans up
to $10,000 and $2,000, respectively
LOAN ORIGINATIONS AND PARTICIPATIONS. Currently, the Association is
originating fixed-rate loans for its portfolio and not with the intention of
selling such loans in the secondary market. The Association occasionally
purchases participation interests in fixed-rate loans originated by other
financial institutions which meet the Association's underwriting standards.
Typically the Association purchases a 90% interest in the loan, with the seller
retaining a 10% interest and the servicing of the loan. At March 31, 1997, the
outstanding balance of participation loans purchased, which is included in the
one- to four-family loans, was $5.4 million, or 21.2% of the Association's total
loan portfolio. See "Loans Secured by One- to Four-Family Real Estate."
-34-
<PAGE> 63
The following table presents the Association's total loan origination,
participation and repayment activity for the periods indicated:
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
--------------------- --------------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
Total gross loans receivable at
beginning of period $25,138 $26,510 $26,510 $23,365 $21,815
Loans originated:
Real estate:
One- to four-family 632 174 1,993 3,295 1,080
Multifamily - - - - -
Land - - 90 - -
Nonresidential - - 163 83 275
Construction - - - 507 831
Consumer 512 341 2,136 2,355 1,474
Commercial - - 8 121 27
------- ------- ------- ------- -------
Total loans originated 1,144 515 4,390 6,361 3,687
Loan principal repayments (1,023) (1,079) (5,762) (3,216) (1,949)
Charge-offs - - - - (18)
Foreclosures (14) - - - (170)
------- ------- ------- ------- -------
Net loan activity 107 (564) (1,372) 3,145 1,550
------- ------- ------- ------- -------
Total gross loans receivable at
end of period $25,245 $25,946 $25,138 $26,510 $23,365
======= ======= ======= ======= =======
</TABLE>
The Association issues written commitments to prospective borrowers on
all approved mortgage loans which expire within 30 days of the date of issuance
and charges an application fee. In some instances, commitments may be renewed or
extended. At March 31, 1997, the Association had $142,000 of outstanding
commitments to originate loans and $36,000 in undisbursed funds related to
construction loans. Management believes that less than 1% of loan commitments
expire without being funded.
LOANS TO ONE BORROWER LIMITS. OTS regulations generally limit the
aggregate amount that a savings association may lend to any one borrower to an
amount equal to 15% of the association's unimpaired capital and unimpaired
surplus (the "Lending Limit Capital"). A savings association may lend to one
borrower an additional amount not to exceed 10% of the association's Lending
Limit Capital if the additional amount is fully secured by certain forms of
"readily marketable collateral." Real estate is not considered "readily
marketable collateral." In applying this limit, the regulations require that
loans to certain related or affiliated borrowers be aggregated. An exception to
this limit permits loans of any type to one borrower of up to $500,000.
Based on such limits, the Association was able to lend approximately
$729,000 to one borrower at March 31, 1997. The largest amount the Association
had outstanding to one borrower at March 31, 1997, was $190,000, which consisted
of two loans, each secured by a residential property. At March 31, 1997, both
loans were performing in accordance with their terms.
LOAN ORIGINATION AND OTHER FEES. The Association realizes loan
origination fees and other fee income from its lending activities. In addition,
the Association realizes income from late payment charges, application fees, and
fees for other miscellaneous services.
Loan origination fees and other fees are a volatile source of income,
varying with the volume of lending, loan repayments, and general economic
conditions. All nonrefundable loan origination fees and certain direct loan
origination costs are deferred and recognized in accordance with SFAS No. 91 as
an adjustment to yield over the life of the related loan.
-35-
<PAGE> 64
DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. The
Association attempts to maintain a high level of asset quality through sound
underwriting policies and efficient collection practices.
To discourage late payments, the Association charges a late fee of 5%
of the payment amount after 15 days for loans originated since January 1, 1990.
When a loan is 30 days past due, the borrower is sent a delinquency notice. When
a loan is 31 to 60 days delinquent, the Association sends to the borrower
another delinquency notice and a personalized letter and one of the
Association's loan personnel will telephone the borrower. When a loan becomes 60
days delinquent, additional contacts are made and the loan is generally referred
to an attorney for foreclosure, unless a repayment schedule has been
established.
Loans are reviewed on a monthly basis and are placed on nonaccrual
status when collection in full is considered doubtful by management. Generally,
loans past due 90 days or more as to principal or interest are placed on
nonaccrual status. Interest accrued and unpaid at the time a loan is placed on
nonaccrual status is charged against interest income. Subsequent cash payments
are generally applied to interest income unless, in the opinion of management,
the collection of principal and interest is doubtful. In those cases, subsequent
cash payments would be applied to principal.
The following table reflects the amount of loans in a delinquent status
as of the dates indicated:
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------------------
At March 31, 1997 1996 1995 1994
------------------------ ---------------------- ---------------------- ------------------------
Percent Percent Percent Percent
of total of total of total of total
Number Amount loans Number Amount loans Number Amount loans Number Amount loans
------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans delinquent for:
30 - 59 days - $ - -% 7 $174 0.69% 4 $135 0.51% 6 $136 0.59%
60 - 89 days 9 131 0.52 3 94 0.37 1 9 0.03 - - -
90 days and over 7 200 0.79 2 69 0.27 1 6 0.02 1 6 0.03
-- ----- ---- -- ---- ---- - ---- ---- - ---- ----
Total delinquent
loans 16 $331 1.31% 12 $337 1.34% 6 $150 0.57% 7 $142 0.61%
== ==== ==== == ==== ==== = ==== ==== = ==== ====
</TABLE>
Nonperforming assets include nonaccruing loans, accruing loans which
are delinquent 90 days or more, real estate acquired by foreclosure or by
deed-in-lieu thereof, in-substance foreclosures and repossessed assets.
-36-
<PAGE> 65
The following table sets forth information with respect to the accrual
and nonaccrual status of the Association's loans and other nonperforming assets
at the dates indicated:
<TABLE>
<CAPTION>
At March 31, At December 31,
---------------------- ------------------------------------
1997 1996 1996 1995 1994
-------- -------- ------- ------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Loans accounted for on a nonaccrual basis:
Real estate 180 - 51 - -
Consumer 20 5 18 6 7
---- ------ ----- ------ ------
Total nonaccrual loans 200 5 69 6 7
Total nonperforming loans 200 5 69 6 7
Real estate owned 14 - - - -
---- ------ ----- ------ ------
Total nonperforming assets $214 $ 5 $ 69 $ 6 $ 7
==== ====== ===== ====== ======
Allowance for loan losses $143 $143 $143 $143 $143
==== ==== ==== ==== ====
Nonperforming assets as a percent of
total assets 0.62% 0.01% 0.20% 0.02% 0.02%
Nonperforming loans as a percent of
total loans 0.85% 0.02% 0.28% 0.02% 0.03%
Allowance for loan losses as a
percent of nonperforming loans 66.82% 2,860.00% 207.25% 2,383.33% 2,042.86%
</TABLE>
For the three months ended March 31, 1997, approximately $2,200 would
have been recorded had such nonaccruing loans been accruing pursuant to
contractual terms. During such period, interest collected on such loans and
included in net income was approximately $62.
Real estate acquired in settlement of loans is classified separately on
the balance sheet at the lower of the recorded investment in the property or its
fair value minus estimated costs of sale. Prior to foreclosure, the loan is
written down to the value of the underlying collateral by a charge to the
allowance for loan losses, if necessary. Any subsequent write-downs are charged
against operating expenses. Operating expenses of such properties, net of
related income or loss on disposition, are included in other expenses. At March
31, 1997, the carrying value of real estate acquired in settlement of loans was
$14,000.
The Association classifies its assets on a regular basis in accordance
with federal regulations. Problem assets are classified as "substandard,"
"doubtful" or "loss." "Substandard" assets have one or more defined weaknesses
and are characterized by the distinct possibility that the Association will
sustain some loss if the deficiencies are not corrected. "Doubtful" assets have
the same weaknesses as "substandard" assets, with the additional characteristics
that (i) the weaknesses make collection or liquidation in full, on the basis of
currently existing facts, conditions and values, questionable and (ii) there is
a high possibility of loss. An asset classified "loss" is considered
uncollectible and of such little value that its continuance as an asset of the
Association is not warranted. In addition, federal regulations also contain a
"special mention" category, consisting of assets which do not currently expose
an institution to a different degree of risk to warrant classification but which
possess credit deficiencies or potential weaknesses deserving management's close
attention.
As a result of the work stoppage at the Wheeling-Pittsburgh Steel,
which began on October 1, 1996, the Association has recently experienced an
increase in delinquent loans secured by one- to four-family residences. At this
time it is not known how long the strike will continue. It is believed that the
prolonged strike has begun to increase the amount of nonperforming assets in the
Association's loan portfolio and adversely effect the Association's earnings.
-37-
<PAGE> 66
The aggregate amounts of the Association's classified assets at the
dates indicated were as follows:
<TABLE>
<CAPTION>
At March 31, At December 31,
------------------------ --------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- ------
(In thousands)
<S> <C> <C> <C> <C> <C>
Classified assets:
Substandard $ - $ 5 $ - $6 $7
Doubtful 96 5 132 - -
Loss - - - - -
--- --- ---- -- --
Total classified assets $96 $10 $132 $6 $7
=== === ==== == ==
</TABLE>
The Association establishes a general allowance for loan losses for any
loan classified as substandard or doubtful. If an asset, or portion thereof, is
classified as loss, the Association establishes a specific allowance for loss in
the amount of 100% of the portion of the asset classified loss or charges off
the portion of any real estate loan deemed to be uncollectible. See "Allowance
for Loan Losses."
The Association analyzes each classified asset on a monthly basis to
determine whether changes in the classifications are appropriate under the
circumstances. Such analysis focuses on a variety of factors, including the
amount of any delinquency and the reasons for the delinquency, if any, the use
of the real estate securing the loan, the status of the borrower, and the
appraised value of the real estate. As such factors change, the classification
of the asset will change accordingly. At March 31, 1997, the Association had
classified $243,000 of assets as special mention, $96,000 of assets as doubtful
and no assets as either substandard or loss.
ALLOWANCE FOR LOAN LOSSES. Management reviews on a quarterly basis the
allowance for loan losses as it relates to a number of relevant factors,
including, but not limited to, growth and changes in the composition of the loan
portfolio, trends in the level of delinquent and problem loans, current and
anticipated economic conditions in the primary lending area, past loss
experience, and possible losses arising from specific problem assets.
While management believes that it uses the best information available
to determine the allowance for loan losses, unforeseen market conditions could
result in adjustments and net income could be significantly affected if
circumstances differ substantially from the assumptions used in making the final
determination. In addition, the Association's determination as to the amount of
its allowance for loan losses in subject to review by the OTS, as part of its
examination process, which may result in the establishment of an additional
allowance based upon the judgment of the OTS after a review of the information
available at the time of the OTS examination.
-38-
<PAGE> 67
The following table sets forth an analysis of the Association's
allowance for loan losses for the periods indicated:
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
------------------------ ----------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $143 $143 $143 $143 $145
Charge-offs - - - - (18)
Recoveries - - - - -
---- ---- ---- ---- ----
Net (charge-offs) recoveries - - - - (18)
Provision for losses on loans - - - - 16
---- ---- ---- ---- ----
Balance at end of period $143 $143 $143 $143 $143
==== ==== ==== ==== ====
Ratio of net (charge-offs) recoveries
to average loans outstanding
during the period N/A N/A N/A N/A (0.08)%
Ratio of allowance for loan losses
to total loans 0.57% 0.56% 0.57% 0.55% 0.63%
</TABLE>
The following table sets forth the allocation of the allowance for loan
losses by category. The allocations are based on management's assessment of the
risk characteristics of each of the components of the total loan portfolio and
is subject to changes as and when the risk factors of each such component
changes. The allocation is not indicative of either the specific amounts or the
loan categories in which future charge-offs may be taken, nor should it be taken
as an indicator of future loss trends. The allocation of the allowance to each
category is not necessarily indicative of future loss in any particular category
and does not restrict the use of the allowance to absorb losses in any category.
<TABLE>
<CAPTION>
At December 31,
At March 31, ------------------------------------------------------------------------------
1997 1996 1995 1994
------------------------- ------------------------ ----------------------- -------------------------
Percent of loans Percent of loans Percent of loans Percent of loans
in each category in each category in each category in each category
Amount to total loans Amount to total loans Amount to total loans Amount to total loans
------ -------------- ------ -------------- ------ -------------- ------ --------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate:
One- to $116 81.96% $115 81.97% $117 79.54% $119 80.47%
four-family
Multifamily - 0.19 - 0.20 3 2.10 4 2.52
Nonresidential 2 1.66 3 1.83 6 4.01 7 4.55
Construction - 0.49 - 0.49 - 1.77 - 3.32
Land - 0.31 - 0.34 - 0.02 - 0.03
Consumer 25 14.99 25 14.75 17 12.06 13 9.00
Commercial - 0.40 - 0.42 - 0.50 - 0.12
---- ------ ---- ------ ---- ------ ---- ------
Total $143 100.00% $143 100.00% $143 100.00% $143 100.00%
==== ====== ==== ====== ==== ====== ==== ======
</TABLE>
INVESTMENT ACTIVITIES
GENERAL. Federal regulation and Ohio law permit the Association to
invest in various types of investment securities, including interest-bearing
deposits in other financial institutions, U.S. Treasury and agency obligations,
mortgage-backed securities, and certain other specified investments. The Board
of Directors of the Association has adopted an investment policy which
authorizes management to make investments in U.S. Treasury obligations, U.S.
Government and agency securities, municipal obligations, mortgage-backed
securities, deposits in the FHLB, certificates of deposit in federally-insured
financial institutions, and federal funds at commercial banks. The Association's
investment policy is designed primarily to provide and maintain liquidity within
regulatory guidelines, to maintain a balance of high quality investments to
minimize risk, and to maximize return without sacrificing liquidity and safety.
See "REGULATION" and
-39-
<PAGE> 68
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Analysis of Financial Condition; - Liquidity and Capital
Resources."
The Association's securities available for sale and investment
securities held to maturity at March 31, 1997, did not contain securities of any
issuer with an aggregate book value in excess of 10% of the Association's
equity, excluding those issued by the U. S. Government or its agencies. As of
March 31, 1997, the Association's investment portfolio was comprised of FHLB
stock, U.S. Government and agency securities, mortgage-backed securities, and
stock of a service provider, with an aggregate market value of $5.1 million.
At March 31, 1997, the Association held mortgage-backed securities in
its held to maturity investment portfolio with an amortized cost of $939,000.
The average yield on mortgage-backed securities at March 31, 1997, was 9.56%.
The Association's mortgage-backed securities at March 31, 1997, were all issued
by the Government National Mortgage Association (the "GNMA") or the Federal
National Mortgage Association (the "FNMA"), representing participation interests
in direct pass-through pools of long-term mortgage loans originated and serviced
by the issuers of the securities. Expected maturities will differ from
contractual maturities due to scheduled repayments and because borrowers may
have the right to call or prepay obligations with or without prepayment
penalties.
The following table sets forth the composition of the Association's
interest-bearing deposits and investment securities portfolio, including those
designated as available for sale, at the dates indicated:
<TABLE>
<CAPTION>
At March 31, At December 31,
----------------------- ----------------------------------------------------
1997 1996 1995
----------------------- ----------------------- ----------------------
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
----- ----- ----- ----- ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits $2,085 $2,085 $1,985 $1,985 $ 625 $ 625
Interest-bearing time deposits 1,200 1,200 800 800 1,000 1,000
Investment securities:
Held to maturity:
U.S. Government and
federal agencies 3,798 3,792 3,797 3,811 4,187 4,237
Mortgage-backed securities 939 1,009 984 1,063 1,190 1,281
Available for sale:
FHLB stock 330 330 324 324 303 303
Intrieve Inc. stock 15 15 15 15 15 15
------ ------ ------ ------ ------ ------
Total $8,367 $8,431 $7,905 $7,998 $7,320 $7,461
====== ====== ====== ====== ====== ======
</TABLE>
-40-
<PAGE> 69
The maturities of the Association's interest-bearing deposits and
investment securities (excluding mortgage-backed securities) at March 31, 1997,
are indicated in the following table:
<TABLE>
<CAPTION>
At March 31, 1997
-----------------------------------------------------------------------------------------------------------
After one through After five After ten
One year or less five years through ten years years Total
------------------- ------------------- ------------------- ------------------ --------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Weighted
value yield value yield value yield value yield value average yield
----- ----- ----- ----- ----- ----- ----- ----- ----- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing
deposits $2,085 5.51% $ - -% - -% - -% $2,085 5.51%
Interest-bearing
time deposits 1,100 5.51 100 6.15 - - - - 1,200 5.58
Investment
securities:
U.S. Government
and federal
agencies 2,498 5.87 1,300 5.91 - - - - 3,798 5.88
Intrieve Inc.
stock 15 - - - - - - - 15 -
FHLB stock 330 6.90 - - - - - - 330 6.90
------ ------ -- -- ------
Total $6,028 5.74% $1,400 5.93% $0 -% $- -% $7,428 5.78%
====== ====== == == ======
</TABLE>
The maturities of the Association's interest-bearing deposits and
investment securities (excluding mortgage-backed securities) at December 31,
1996, are indicated in the following table:
<TABLE>
<CAPTION>
At December 31, 1996
-----------------------------------------------------------------------------------------------------------
After one through After five After ten
One year or less five years through ten years years Total
------------------- ------------------- ------------------- ------------------ --------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Weighted
value yield value yield value yield value yield value average yield
----- ----- ----- ----- ----- ----- ----- ----- ----- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing
deposits $1,985 5.49% $ - -% $- -% $ - -% $1,985 5.49%
Interest-bearing
time deposits 700 5.53 100 6.15 - - - - 800 5.61
Investment
securities:
U.S. Government
and federal
agencies 500 5.35 $3,297 5.97 - - - - 3,797 5.89
Intrieve Inc.
stock 15 - - - - - - - 15 -
FHLB stock 324 7.04 - - - - - - 324 7.04
------ ------ -- --- ------
Total $3,524 5.60% $3,397 5.97% $- -% $ - -% $6,921 5.78%
====== ====== == === ======
</TABLE>
The maturities of the Association's mortgage-backed securities
portfolio are indicated in the following tables:
<TABLE>
<CAPTION>
At March 31, 1997
-----------------------------------------------------------------------------------------------------------------
After one After five
One year or less through five years through ten years After ten years Total
---------------- ------------------ ----------------- --------------- ------------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Market
value yield value yield value yield value yield value Yield value
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0 -% $12 9.50% $24 11.55% $903 9.51% $939 9.56% $1,009
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1996
-----------------------------------------------------------------------------------------------------------------
After one After five
One year or less through five years through ten years After ten years Total
---------------- ------------------ ----------------- --------------- ------------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Market
value yield value yield value yield value yield value Yield value
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0 -% $12 9.50% $16 11.55% $956 9.51% $984 9.56% $1,063
</TABLE>
-41-
<PAGE> 70
DEPOSITS AND BORROWINGS
GENERAL. Deposits have traditionally been the primary source of the
Association's funds for use in lending and other investment activities. In
addition to deposits, the Association derives funds from interest payments and
principal repayments on loans and income on earning assets. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." Loan
payments are a relatively stable source of funds, while deposit inflows and
outflows fluctuate in response to general interest rates and money market
conditions. The Association may also borrow funds from the FHLB as a source of
funds.
DEPOSITS. Deposits are attracted principally from within the
Association's market area through the offering of a selection of deposit
instruments, including regular passbook savings accounts, NOW accounts, money
market accounts, and certificates of deposit. Interest rates paid, maturity
terms, service fees, and withdrawal penalties for the various types of accounts
are monitored weekly by the President and reviewed monthly by the Board of
Directors of the Association. The Association does not use brokers to attract
deposits. The amount of deposits from outside the Association's market area is
not significant.
The following table sets forth the dollar amount of deposits in the
various types of accounts offered by the Association at the dates indicated:
<TABLE>
<CAPTION>
At December 31,
At March 31, -----------------------------------------------
1997 1996 1995
------------------- -------------------- --------------------
Percent Percent Percent
of total of total of total
Amount deposits Amount deposits Amount deposits
------ -------- ------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
Regular savings
accounts (1) $10,066 34.20% $ 9,923 34.50% $ 9,565 32.30%
NOW and Super NOW
accounts(2) 1,152 3.92 979 3.40 1,057 3.60
Money market accounts (3) 3,086 10.49 3,290 11.40 4,567 15.40
------- ----- ------ ----- -------- -----
Total transaction
accounts 14,304 48.61 14,192 49.30 15,189 51.30
Certificates of deposit
3.00% or less 21 0.07 - - - -
3.01 - 5.00% 6,346 21.57 6,837 23.75 7,978 26.94
5.01 - 7.00% 8,753 29.75 7,762 26.95 6,177 20.85
7.01 - 9.00% - - - - 271 0.91
------- ----- ------ ----- -------- -----
Total certificates of
deposit (4) 15,120 51.39 14,599 50.70 14,426 48.70
------- ----- ------ ----- -------- -----
Total deposits $29,424 100.00% $28,791 100.00% $29,615 100.00%
======= ====== ======= ====== ======= ======
- -----------------------------
<FN>
(1) The weighted average rate on passbook savings accounts was 3.00% at
March 31, 1997, and December 31, 1996 and 1995, respectively.
(2) The weighted average rate on NOW and Super NOW accounts was 1.75%, at
March 31, 1997, and December 31, 1996 and 1995, respectively.
(3) The weighted average rate on money market accounts was 2.75%, 2.75% and
2.95% at March 31, 1997, and December 31, 1996 and 1995, respectively.
(4) The weighted average rate on all certificates of deposit was 5.10%,
5.09% and 5.04% at March 31, 1997, and December 31, 1996 and 1995,
respectively.
</TABLE>
-42-
<PAGE> 71
The following table shows rate and maturity information for the
Association's certificates of deposit at March 31, 1997:
<TABLE>
<CAPTION>
Amount Due
--------------------------------------------------------------
Over Over
Up to 1 year to 2 years to Over
Rate one year 2 years 3 years 3 years Total
---- -------- ---------- ---------- -------- -----
(In thousands)
<C> <C> <C> <C> <C> <C>
3.00% or less $ 4 $ - $ - $ 17 $ 21
3.01% to 5.00% 4,928 1,328 216 148 6,620
5.01% to 7.00% 6,633 1,275 158 413 8,479
-------- ------- ----- ----- ---------
Total certificates of deposit $11,565 $2,603 $374 $578 $15,120
======= ====== ==== ==== =======
</TABLE>
At March 31, 1997, approximately $11.6 million of the Association's
certificates of deposit mature within one year. Based on past experience and the
Association's prevailing pricing strategies, management believes that a
substantial percentage of such certificates will be renewed with the Association
at maturity. If, however, the Association is unable to renew the maturing
certificates for any reason, borrowings of up to $6.5 million are available from
the FHLB of Cincinnati. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Liquidity and Capital Resources."
The following table presents the amount of the Association's
certificates of deposit of $100,000 or more by the time remaining until maturity
at March 31, 1997:
<TABLE>
<CAPTION>
Maturity Amount
-------- ------
(In thousands)
<S> <C>
Three months or less $ 911
Over 3 months to 6 months 725
Over 6 months to 12 months 2,684
Over 12 months 768
-------
Total $5,088
</TABLE>
All of the above certificates of deposit are held by long-time
depositors at the Association and management believes that a substantial
percentage of such certificates will be renewed with the Association at
maturity.
The following table sets forth the Association's deposit account
balance activity for the periods indicated:
<TABLE>
<CAPTION>
Three months ended March 31, Year ended December 31,
---------------------------- -----------------------
1997 1996 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Beginning balance $28,791 $29,615 $29,615 $29,198
Net increase(decrease) before
interest credited 348 (8) (1,972) (686)
Interest credited 286 280 1,148 1,103
------- ------- ------- -------
Ending balance $29,425 $29,887 $28,791 $29,615
======= ======= ======= =======
Net increase (decrease) $ 634 $ 272 $ ( 824) $ 417
======= ======= ======= =======
</TABLE>
-43-
<PAGE> 72
BORROWINGS. The FHLB system functions as a central reserve bank
providing credit for its member institutions and certain other financial
institutions. See "REGULATION - Federal Home Loan Banks." As a member in good
standing of the FHLB of Cincinnati, the Association is authorized to apply for
advances from the FHLB of Cincinnati, provided certain standards of
creditworthiness have been met. Under current regulations, an association must
meet certain qualifications to be eligible for FHLB advances. The extent to
which an association is eligible for such advances will depend upon whether it
meets the Qualified Thrift Lender (the "QTL") test. See "REGULATION - Office of
Thrift Supervision -- Qualified Thrift Lender Test." If an association meets the
QTL test, the association will be eligible for 100% of the advances it would
otherwise be eligible to receive. If an association does not meet the QTL test,
the association will be eligible for such advances only to the extent it holds
specified QTL test assets. At March 31, 1997, the Association was in compliance
with the QTL test. At March 31, 1997, and during the years ended December 31,
1996 and 1994 the Association did not utilize FHLB advances. For the year ended
December 31, 1995, the average outstanding balance of FHLB advances was $23,000.
For the three months ended March 31, 1997, the Association's average outstanding
balance of FHLB advances was $50,000.
COMPETITION
The Association faces competition for deposits and loans from branches
of two large independent commercial banks located in Bridgeport and branches of
two larger independent commercial banks and one branch of a super-regional
commercial bank in Shadyside. In addition, competing financial institutions
exist in surrounding communities located in the Association's market area. The
primary factors in competition for deposits are customer service and convenience
of office location. The Association competes for loan originations primarily
through the interest rates and loan fees it charges and through the efficiency
and quality of services it provides to borrowers. Competition is intense and is
affected by, among other things, the general availability of lendable funds,
general and local economic conditions, current interest rate levels and other
factors which are not readily predictable. The Association does not offer all of
the products and services offered by some of its competitors, particularly
commercial banks.
SUBSIDIARY ACTIVITY
At March 31, 1997, the Association had one wholly-owned subsidiary,
Trailway Financial, Inc. ("Trailway"). Trailway was formed to acquire stock in
Intrieve, Inc., the Association's data processing servicing company. The
Association's investment in its subsidiary totaled $20,000 at March 31, 1997.
Under current regulations, the Association is no longer required to hold the
Intrieve, Inc. stock in a separate subsidiary and has decided to dissolve
Trailway.
PROPERTIES
The following table sets forth certain information at March 31, 1997,
regarding the properties on which the main office and the branch office of the
Association are located:
<TABLE>
<CAPTION>
Owned or Date Square Net book
Location leased acquired footage value Deposits
- -------- ------ -------- ------- ----- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
435 Main Street Owned 1964 4,744 $109,286 $21,624
Bridgeport, Ohio 43912
4000 Central Avenue Owned 1979 2,197 $289,304 $7,801
Shadyside, Ohio 43943
</TABLE>
EMPLOYEES
At March 31, 1997, the Association had 12 full-time employees and one
part-time employee. The Association believes that relations with its employees
are excellent. The Association offers health, life and disability benefits to
all employees and has a defined benefit pension plan and a 401(k) plan for its
eligible full-time employees. None of the employees of the Association are
represented by a collective bargaining unit.
-44-
<PAGE> 73
LEGAL PROCEEDINGS
The Association is not presently involved in any material legal
proceedings. From time to time, the Association is a party to legal proceedings
incidental to its business to enforce its security interest in collateral
pledged to secure loans made by the Association.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
THE HOLDING COMPANY. The Board of Directors of the Holding Company
consists of five members. All of the directors of the Holding Company were
initially elected to the Board of Directors in 1997. Each director is elected
for a one-year term and until his or her successor is elected or until his or
her earlier resignation, removal from office or death. The following persons are
officers of the Holding Company: Jon W. Letzkus, President; Marianne A. Doyle,
Vice President; Michael P. Eddy, Treasurer and Chief Financial Officer; and
Sherri Yarbrough, Secretary.
THE ASSOCIATION. The Amended Constitution of the Association provides
for a Board of Directors consisting of not less than five directors. The Board
of Directors of the Association currently consists of five directors. Each
director serves for a one-year term. The Board of Directors met 26 times during
the fiscal year ended December 31, 1996, for regular and special meetings. No
director attended fewer than 75% of the aggregate of such meetings and all
meetings of the committees of which such director was a member.
The following table presents certain information with respect to the
present directors of the Association, each of whom is also a director of the
Holding Company, and the executive officers of the Association:
<TABLE>
<CAPTION>
Year of
Position(s) with commencement Term
Name Age(1) the Association of directorship expires
- ---- ------ --------------- --------------- -------
<S> <C> <C> <C> <C>
John O. Costine 72 Director 1975 1998
Anton M. Godez 71 Director 1990 1999
Jon W. Letzkus 53 Director, President and
Managing Officer 1989 1999
William E. Reline 67 Director 1992 1998
Manuel C. Thomas 74 Director and Chairman 1985 1997
Darlene V. Bennington 57 Treasurer and Secretary - -
Marianne Doyle 37 Assistant Vice President - -
Michael P. Eddy 37 Comptroller - -
Sherri Yarbrough 29 Loan Manager -
- ----------------------------
<FN>
(1) As of March 31, 1997.
</TABLE>
JOHN O. COSTINE is an attorney practicing in St. Clairsville, Ohio.
ANTON M. GODEZ is the President of the General Welding Supply Company
located in Martins Ferry, Ohio.
JON W. LETZKUS is the President of both the Holding Company and the
Association and is the designated Managing Officer of the Association. Mr.
Letzkus joined the Association in September 1980 as a vice president. Mr.
Letzkus has served as the President of the Association since 1989.
WILLIAM E. RELINE retired from Cooper Industries, a mining equipment
manufacturing company, in 1989, and has been a consultant to Wheeling Machine
Products since 1996.
MANUEL C. THOMAS is an officer of M. C. Thomas Insurance Agency, Inc.
where he has been employed since 1954.
-45-
<PAGE> 74
DARLENE V. BENNINGTON has served as the Secretary of the Association
since 1996 and as the Treasurer of the Association since 1991. Ms. Bennington
has been employed by the Association since 1980.
MARIANNE DOYLE has served the Association as the Assistant Vice
President since 1994 and as a loan officer since 1985.
MICHAEL P. EDDY has served since 1985 as the Comptroller of the
Association and from 1985 to 1994 he also served as the Secretary of the
Association.
SHERRI YARBROUGH has served the Association as a loan officer and as
the Office Manager since 1990.
COMMITTEES OF DIRECTORS
The full Board of Directors of the Association serves as the
Compensation Committee. The function of the Compensation Committee is to
determine compensation for the Association's employees and to make decisions
regarding employee benefits and related matters. The Compensation Committee met
four times during the year ended December 31, 1996.
The Board of Directors of the Holding Company does not currently have
any committees, but will establish an Audit Committee upon the completion of the
Conversion.
COMPENSATION
Each director of the Association currently receives a fee of $225 per
meeting of the full Board of Directors attended with three paid absences. During
the year ended December 31, 1996, the Association paid a total of $ 22,725 in
directors' fees.
During the fiscal year ended December 31, 1996, no executive officer of
the Association received annual compensation in an amount equal to or greater
than $100,000. The following table presents certain information regarding the
annual compensation received by Mr. Letzkus during such period:
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Compensation
--------------------------
Name and Principal Position Year Salary ($) Bonus
- --------------------------- ---- ------ -----
<S> <C> <C> <C>
Jon W. Letzkus, President 1996 $70,000 $6,024
</TABLE>
DEFINED BENEFIT PLAN
The Association maintains a tax-qualified non-contributory defined
benefit plan (the "Pension Plan") covering employees age 21 or older who have
completed at least one year of service to the Association. Benefits received
under the Pension Plan are based on years of service to the Association and
salary. Employees are not vested in their benefits under the Pension Plan until
they have worked for the Association for five years, at which time they are 100%
vested. The Association's expenses for contributions to the Pension Plan for the
three months ended March 31, 1997, and for the years ended December 31, 1996 and
1995, were $3,418, $10,899 and $21,561, respectively.
401(K) FINANCIAL INSTITUTION THRIFT PLAN
The Association maintains a profit sharing/401(k) plan (the "401(k)
Plan") for all of its employees who have completed 12 months of continuous
employment with the Association. Pursuant to the 401(k) Plan, participants may
elect to contribute up to 15% of their annual compensation on a tax-deferred
basis. In addition, in its sole discretion, the Association may make annual
profit sharing contributions to the 401(k) Plan for the benefit of employee
participants in an amount not exceeding 6% of the total compensation paid to
such employee participants for the year in question. Effective April 1995,
-46-
<PAGE> 75
the Association suspended making profit sharing contributions. The Association's
401(k) Plan expenses, including employer contributions, if any, for the three
months ended March 31, 1997, and for the years ended December 31, 1996 and 1995,
were $360, $940 and $3,542, respectively.
In connection with the Conversion, the Board of Directors of the
Association has amended the 401(k) Plan to allow participants to invest in the
Common Shares through the 401(k) Plan.
STOCK BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN. The Holding Company intends to establish
the ESOP for the benefit of employees of the Holding Company and its
subsidiaries, including the Association, who are age 21 or older and who have
completed at least one year of service with the Holding Company and its
subsidiaries. The Board of Directors of the Holding Company believes that the
ESOP will be in the best interests of the Holding Company and its shareholders.
The ESOP trust intends to borrow funds from the Holding Company with
which to acquire up to 8% of the Common Shares sold in connection with the
Conversion. Such loan will be secured by the Common Shares purchased with the
proceeds from the loan and will be repaid by the ESOP over a period of
approximately ten years with discretionary contributions to the ESOP and
earnings on ESOP assets. Common Shares purchased with such loan proceeds will be
held in a suspense account for allocation among ESOP participants as the loan is
repaid.
The amount of cash or other assets that can be contributed to the ESOP
each year is limited by certain IRS regulations. The Association intends to make
the maximum contribution to the ESOP permitted by such regulations, which could
result in repayment of the ESOP loan in fewer than ten years. A shorter
repayment period could result in increased compensation expense during the years
in which payments are made on the ESOP loan. See "PRO FORMA DATA."
Contributions to the ESOP and shares released from the suspense account
will be allocated pro rata to participants on the basis of compensation. Except
for participants who retire, become disabled, or die during the plan year, all
other participants must have completed at least 1,000 hours of service and be
employed on the last day of the plan year in order to receive an allocation.
Benefits become vested after five years of service. Vesting will be accelerated
upon retirement at or after age 65, death, disability, termination of the ESOP,
or change in control of the Holding Company or the Association. Shares allocated
to the account of a participant whose employment by the Association terminates
prior to such participant having satisfied the vesting requirement will be
forfeited. Forfeitures will be reallocated among remaining participating
employees. Benefits may be paid either in the Holding Company common shares or
in cash. Benefits may be payable upon retirement, death, disability, or
separation from service. Benefits payable under the ESOP cannot be estimated.
A committee appointed by the Board of Directors of the Holding Company
will administer the ESOP. The Common Shares and other ESOP funds will be held by
a trustee selected and appointed by the Holding Company (the "ESOP Trustee").
The ESOP Committee may instruct the ESOP Trustee regarding investments of funds
contributed to the ESOP. The ESOP Trustee must vote all common shares of the
Holding Company held in the ESOP that are allocated to the accounts of ESOP
participants in accordance with the instructions of such participants. Common
shares held by the ESOP that are not allocated to participants' accounts and
allocated shares for which voting instructions are not received will be voted by
the ESOP Trustee in its sole discretion.
The tax-qualified status of the ESOP and its purchase of the Common
Shares of the Holding Company are subject to the subsequent approval of the
Commissioner of the IRS (the "Commissioner"). The Holding Company will submit to
the Commissioner an application for approval of the ESOP. Although no assurances
can be given, the Holding Company expects that the ESOP will be approved by the
Commissioner.
STOCK OPTION PLAN. After the completion of the Conversion, the Board of
Directors of the Holding Company intends to adopt the Stock Option Plan, subject
to approval by the shareholders of the Holding Company. The purposes of the
Stock Option Plan include retaining and providing incentives to the directors,
officers, and employees of the Holding Company and its subsidiaries by
facilitating their purchase of a stock interest in the Holding Company.
Options granted to the officers and employees under the Stock Option
Plan may be "incentive stock options" within the meaning of Section 422 of the
Code ("ISOs"). Options granted under the Stock Option Plan to directors who are
not full-time employees of the Holding Company or the Association will not
qualify under the Code and thus will not be ISOs ("Non-qualified Options").
Although any eligible director, officer, or employee of the Holding Company or
the Association may
-47-
<PAGE> 76
receive Non-qualified Options, it is anticipated that the non-employee directors
will receive Non-qualified Options and other eligible participants will receive
ISOs.
The option exercise price will be determined by the Stock Option
Committee at the time of grant; provided, however, that the exercise price for
an ISO, or for any option if the Stock Option Plan is implemented by the Holding
Company during the first year following completion of the Conversion, must not
be less than 100% of the fair market value of the shares on the date of the
grant. No stock option will be exercisable after the expiration of ten years
from the date of grant, except that in the case of an ISO granted to an employee
who owns more than 10% of the Holding Company's outstanding common shares at the
time such ISO is granted under the Stock Option Plan, the exercise price of the
ISO may not be less than 110% of the fair market value of the shares on the date
of the grant and the ISO may not be exercisable after the expiration of five
years from the date of grant.
An option recipient cannot transfer or assign an option other than by
will, in accordance with the laws of descent and distribution. "Termination for
cause," as defined in the Stock Option Plan, will result in the termination of
any outstanding options.
The Holding Company will receive no monetary consideration for the
granting of options under the Stock Option Plan. Upon the exercise of options,
the Holding Company will receive a payment of cash, common shares of the Holding
Company, or a combination of cash and common shares from option recipients in
exchange for shares issued.
A number of shares equal to 10% of the Common Shares sold in the
Offering is expected to be reserved for issuance by the Holding Company upon the
exercise of options to be granted to certain directors, officers, and employees
of the Holding Company and its subsidiaries from time to time under the Stock
Option Plan. No determination has been made regarding the recipients of awards
under the Stock Option Plan or the number of shares to be awarded to individual
recipients. The Stock Option Committee may grant options under the Stock Option
Plan to the directors, officers, and employees of the Holding Company and the
Association at such times as they deem most beneficial to the Holding Company on
the basis of the individual participant's responsibility, tenure, and future
potential.
Under OTS regulations, no stock options may be awarded during the first
year after the completion of the Conversion unless the Stock Option Plan is
approved by the shareholders of the Holding Company at an annual or a special
meeting of shareholders held not less than six months following the completion
of the Conversion. If the Stock Option Plan is approved by the Holding Company
shareholders at such meeting and implemented during the first year after the
completion of the Conversion, the following restrictions will apply: (i) the
number of shares which may be subject to options awarded under the Stock Option
Plan to directors who are not full-time employees of the Holding Company may not
exceed 5% per person and 30% in the aggregate of the available shares; (ii) the
number of shares which may be subject to options awarded under the Stock Option
Plan to any individual who is a full-time employee of the Holding Company or its
subsidiaries may not exceed 25% of the available shares; (iii) stock options
must be awarded with an exercise price at least equal to the fair market value
of the common shares of the Holding Company at the time of the award; and (iv)
stock options will become exercisable at the rate of one-fifth per year
commencing no earlier than one year from the date of the award, subject to
acceleration of vesting only in the event of the death or disability of a
participant. The ultimate value of any option granted at fair market value will
depend on future appreciation in the fair market value of the shares to which
the option relates. No decision has been made as to anticipated awards under the
Stock Option Plan. See "MANAGEMENT - Stock Benefit Plans -- Stock Option Plan."
RECOGNITION AND RETENTION PLAN AND TRUST. After the completion of the
Conversion, the Association intends to adopt the RRP. The purpose of the RRP is
to provide directors, officers, and certain key employees of the Association
with an ownership interest in the Association in a manner designed to compensate
such directors, officers, and key employees for services to the Association. The
Association expects to contribute sufficient funds to enable the RRP to purchase
up to 4% of the Common Shares sold in the Offering.
The RRP Committee will administer the RRP and determine the number of
shares to be granted to eligible participants. Each participant granted shares
under the RRP will be entitled to the benefit of any dividends or other
distributions paid on such shares prior to the shares being earned, although
dividends or other distributions on shares held in the RRP Trust will not be
distributed to the participant until the shares are distributed to the
participant. Compensation expense in the amount of the fair market value of the
RRP shares will be recognized as the shares are earned.
-48-
<PAGE> 77
No determination has been made regarding recipients of RRP awards or
the number of shares to be awarded to individual recipients. Under OTS
regulations, no RRP shares may be awarded during the first year after the
completion of the Conversion unless the RRP is approved by the shareholders of
the Holding Company at an annual meeting or a special meeting of shareholders
held not less than six months following the completion of the Conversion. If the
RRP is approved by the Holding Company shareholders at such meeting and
implemented during the first year after the completion of the Conversion, the
following restrictions will apply: (i) the number of shares which may be subject
to awards under the RRP to directors who are not full-time employees of the
Holding Company or its subsidiaries may not exceed 5% per person and 30% in the
aggregate of the available shares; (ii) the number of shares which may be
subject to awards under the RRP to any individual who is a full-time employee of
the Holding Company or its subsidiaries may not exceed 25% of the available
shares; and (iii) RRP awards will be earned at the rate of one-fifth per year
commencing no earlier than one year from the date of the award subject to
acceleration of vesting only in the event of the death or the disability of the
participant. See "MANAGEMENT - Stock Benefit Plans -- Recognition and Retention
Plan and Trust."
EMPLOYMENT AGREEMENT
The Association currently has no employment agreements with any of its
officers. The Association intends to enter into an employment agreement with Jon
W. Letzkus (the "Employment Agreement"). The Employment Agreement will provide
for a term of one year and a salary of not less than $78,500 and performance
reviews by the Board of Directors not less often than annually at which time the
Employment Agreement may be extended for a period of one year. The Employment
Agreement will also provide for the inclusion of Mr. Letzkus in any formally
established employee benefit, bonus, pension, and profit-sharing plans for which
senior management personnel are eligible and for vacation and sick leave in
accordance with the Association's prevailing policies.
The Employment Agreement will be terminable by the Association at any
time. In the event of termination by the Association for "just cause," as
defined in the Employment Agreement, Mr. Letzkus will have no right to receive
any compensation or other benefits for any period after such termination. In the
event of termination by the Association other than for just cause, at the end of
the term of the Employment Agreement or in connection with a "change of
control," as defined in the Employment Agreement, Mr. Letzkus will be entitled
to a continuation of salary payments for a period of time equal to the term of
the Employment Agreement and a continuation of benefits substantially equal to
those being provided at the date of termination of employment until the earliest
to occur of the end of the term of the Employment Agreement or the date on which
Mr. Letzkus becomes employed full-time by another employer.
The Employment Agreement also will contain provisions with respect to
the occurrence within one year of a "change of control" of (1) the termination
of employment of Mr. Letzkus for any reason other than just cause, retirement,
or termination at the end of the term of the agreement, or (2) a constructive
termination resulting from change in the capacity or circumstances in which Mr.
Letzkus is employed or a material reduction in his responsibilities, authority,
compensation, or other benefits provided under the Employment Agreement without
Mr. Letzkus' written consent. In the event of any such occurrence, Mr. Letzkus
will be entitled to payment of an amount equal to two times Mr. Letzkus' annual
compensation immediately preceding the termination of his employment. In
addition, Mr. Letzkus will be entitled to continued coverage under all benefit
plans until the earliest of the end of the term of the Employment Agreement or
the date on which he is included in another employer's benefit plans as a
full-time employee. The maximum which Mr. Letzkus may receive, however, is
limited to an amount which will not result in the imposition of a penalty tax
pursuant to Section 280G(b)(3) of the Code. "Control," as defined in the
Employment Agreement, generally refers to the acquisition by any person or
entity of the ownership or power to vote 10% or more of the voting stock of the
Association or the Holding Company, the control of the election of a majority of
the directors of the Association or the Holding Company, or the exercise of a
controlling influence over the management or policies of the Association or the
Holding Company.
The aggregate payments that would have been made to Mr. Letzkus,
assuming his termination at March 31, 1997, following a change of control, would
have been approximately $157,000.
CERTAIN TRANSACTIONS WITH THE ASSOCIATION
In accordance with the OTS regulations, the Association makes loans to
executive officers and directors of the Association in the ordinary course of
business and on the same terms and conditions, including interest rates and
collateral, as those of comparable loans to other persons. All outstanding loans
to executive officers and directors comply with such policy, do not involve more
than the normal risk of collectibility or present other unfavorable features and
are current in their
-49-
<PAGE> 78
payments. Loans to officers and directors and executive officers of the
Association and their related interests totaled $67,000 at March 31, 1997.
REGULATION
GENERAL
As a savings and loan association incorporated under the laws of Ohio,
the Association is subject to regulation, examination and oversight by the OTS
and the Superintendent of the Division (the "Ohio Superintendent"). Because the
Association's deposits are insured by the FDIC, the Association also is subject
to general oversight by the FDIC. The Association must file periodic reports
with the OTS, the Ohio Superintendent, and the FDIC concerning its activities
and financial condition. Examinations are conducted periodically by federal and
state regulators to determine whether the Association is in compliance with
various regulatory requirements and is operating in a safe and sound manner. The
Association is a member of the FHLB of Cincinnati.
The Holding Company will be a savings and loan holding company within
the meaning of the Home Owners Loan Act, as amended (the "HOLA"). Consequently,
the Holding Company will be subject to regulation, examination, and oversight by
the OTS and will be required to submit periodic reports thereto. Because the
Holding Company and the Association are corporations organized under Ohio law,
they are also subject to the provisions of the Ohio Revised Code applicable to
corporations generally.
Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations and the Department of the Treasury is preparing a report for
Congress on the development of a common charter for all financial institutions.
Pursuant to such legislation, Congress may eliminate the OTS and the Association
may be regulated under federal law as a bank or be required to change its
charter. Such change in regulation or charter would likely change the range of
activities in which the Association may engage and would probably subject the
Association to more regulation by the FDIC. In addition, the Holding Company
might become subject to different holding company regulations, including
separate capital requirements. At this time, the Holding Company cannot predict
when or whether Congress may actually pass legislation regarding the Holding
Company's and the Association's regulatory requirements or charter. Although
such legislation may change the activities in which either the Holding Company
and the Association may engage, it is not anticipated that the current
activities of the Holding Company or the Association will be materially affected
by those activity limits.
OHIO SAVINGS AND LOAN LAW
The Ohio Superintendent is responsible for the regulation and
supervision of Ohio savings and loan associations in accordance with the laws of
the State of Ohio. Ohio law prescribes the permissible investments and
activities of Ohio savings and loan associations, including the types of lending
that such associations may engage in and the investments in real estate,
subsidiaries, and corporate or government securities that such associations may
make. The ability of Ohio associations to engage in these state-authorized
investments and activities is subject to oversight and approval by the FDIC, if
such investments or activities are not permissible for a federally chartered
savings and loan association.
The Ohio Superintendent also has approval authority over any mergers
involving or acquisitions of control of Ohio savings and loan associations. The
Ohio Superintendent may initiate certain supervisory measures or formal
enforcement actions against Ohio associations. Ultimately, if the grounds
provided by law exist, the Ohio Superintendent may place an Ohio association in
conservatorship or receivership.
The Ohio Superintendent conducts regular examinations of the
Association approximately once a year. Such examinations are usually conducted
jointly with one or both federal regulators. The Ohio Superintendent imposes
assessments on Ohio associations based on their asset size to cover the cost of
supervision and examination.
OFFICE OF THRIFT SUPERVISION
GENERAL. The OTS is an office in the Department of the Treasury and is
responsible for the regulation and supervision of all federally chartered
savings and loan associations and all other savings and loan associations the
deposits of which are insured by the FDIC. The OTS issues regulations governing
the operation of savings and loan associations,
-50-
<PAGE> 79
regularly examines such associations and imposes assessments on savings
associations based on their asset size to cover the costs of this supervision
and examination. The OTS also may initiate enforcement actions against savings
and loan associations and certain persons affiliated with them for violations of
laws or regulations or for engaging in unsafe or unsound practices. If the
grounds provided by law exist, the OTS may appoint a conservator or receiver for
a savings and loan association.
Savings associations are subject to regulatory oversight under various
consumer protection and fair lending laws. These laws govern, among other
things, truth-in-lending disclosures, equal credit opportunity, fair credit
reporting and community reinvestment. Failure to abide by federal laws and
regulations governing community reinvestment could limit the ability of an
association to open a new branch or engage in a merger. Community reinvestment
regulations evaluate how well and to what extent an institution lends and
invests in its designated service area, with particular emphasis on low- to
moderate-income communities and borrowers in that area. The Association has
received an "outstanding" examination rating under those regulations.
REGULATORY CAPITAL REQUIREMENTS. The Association is required by OTS
regulations to meet certain minimum capital requirements. For information
regarding the Association's regulatory capital at March 31, 1997, and pro forma
regulatory capital after giving effect to the Conversion, see "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources" and "REGULATORY CAPITAL COMPLIANCE."
Current capital requirements call for tangible capital of 1.5% of
adjusted total assets, core capital (which for the Association consists solely
of tangible capital) of 3.0% of adjusted total assets and risk-based capital
(which for the Association consists of core capital and general valuation
allowances) of 8.0% of risk-weighted assets (assets, including certain
off-balance sheet items, are weighted at percentage levels ranging from 0% to
100% depending on the relative risk).
The OTS has proposed to amend the core capital requirement so that
those associations that do not have the highest examination rating and an
acceptable level of risk will be required to maintain core capital of from 4% to
5%, depending on the Association's examination rating and overall risk. The
Association does not anticipate that it will be adversely affected if the core
capital requirement regulation is amended as proposed.
The OTS has adopted an interest rate risk component to the risk-based
capital requirement, though the implementation of that component has been
delayed. Pursuant to that requirement a savings association would have to
measure the effect of an immediate 200 basis point change in interest rates on
the value of its portfolio as determined under the methodology of the OTS. If
the measured interest rate risk is above the level deemed normal under the
regulation, the Association will be required to deduct one-half of such excess
exposure from its total capital when determining its risk-based capital. In
general, an association with less than $300 million in assets and a risk-based
capital ratio in excess of 12% will not be subject to the interest rate risk
component, and the association qualifies for such exemption. Pending
implementation of the interest rate risk component, the OTS has the authority to
impose a higher individualized capital requirement on any savings association it
deems to have excess interest rate risk. The OTS also may adjust the risk-based
capital requirement on an individualized basis to take into account risks due to
concentrations of credit and non-traditional activities. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset
and Liability Management."
The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings and
loan associations. At each successively lower defined capital category, an
association is subject to more restrictive and numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility in
determining how to resolve the problems of the institution. The OTS has defined
these capital levels as follows: (i) well-capitalized associations must have
total risk-based capital of at least 10%, core risk-based capital (consisting
only of items that qualify for inclusion in core capital) of at least 6% and
core capital of at least 5%; (ii) adequately capitalized associations are those
that meet the regulatory minimum of total risk-based capital of 8%, core
risk-based capital of 4%, and core capital of 4% (except for associations
receiving the highest examination rating, in which case the level is 3%) but are
not well-capitalized; (iii) undercapitalized associations are those that do not
meet regulatory limits, but that are not significantly undercapitalized; (iv)
significantly undercapitalized associations have total risk-based capital of
less than 6%, core risk-based capital of less than 3% or core capital of less
than 3%; and (v) critically undercapitalized associations are those with core
capital of less than 2% of total assets. In addition, the OTS generally can
downgrade an association's capital category, notwithstanding its capital level,
if, after notice and opportunity for hearing, the association is deemed to be
engaging in an unsafe or unsound practice because it has not corrected
deficiencies that resulted in it receiving a less than
-51-
<PAGE> 80
satisfactory examination rating on matters other than capital or it is deemed to
be in an unsafe or unsound condition. An undercapitalized association must
submit a capital restoration plan to the OTS within 45 days after it becomes
undercapitalized. Undercapitalized associations will be subject to increased
monitoring and asset growth restrictions and will be required to obtain prior
approval for acquisitions, branching and engaging in new lines of business.
Critically undercapitalized institutions must be placed in conservatorship or
receivership within 90 days of reaching that capitalization level, except under
limited circumstances. The Association's capital at March 31, 1997, meets the
standards for a well-capitalized institution.
Federal law prohibits a savings and loan association from making a
capital distribution to anyone or paying management fees to any person having
control of the association if, after such distribution or payment, the
association would be undercapitalized. In addition, each company controlling an
undercapitalized association must guarantee that the association will comply
with its capital plan until the association has been adequately capitalized on
an average during each of four preceding calendar quarters and must provide
adequate assurances of performance. The aggregate liability pursuant to such
guarantee is limited to the lesser of (i) an amount equal to 5% of the
association's total assets at the time the association became undercapitalized
or (ii) the amount that is necessary to bring the association into compliance
with all capital standards applicable to such association at the time the
association fails to comply with its capital restoration plan.
LIQUIDITY. OTS regulations require that savings associations maintain
an average daily balance of liquid assets (cash, certain time deposits,
association's acceptances, and specified United States government, state or
federal agency obligations) equal to a monthly average of not less than 5% of
its net withdrawable savings deposits plus borrowings payable in one year or
less. Federal regulations also require each member institution to maintain an
average daily balance of short-term liquid assets of not less than 1% of the
total of its net withdrawable savings accounts and borrowings payable in one
year or less. Monetary penalties may be imposed upon member institutions failing
to meet liquidity requirements. The eligible liquidity of the Association at
March 31, 1997, was approximately $7.3 million, or 25%, which exceeded the 5%
liquidity requirement by approximately $5.9 million. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources."
QUALIFIED THRIFT LENDER TEST. Savings associations are required to meet
the QTL test. Prior to September 30, 1996, the QTL test required savings
associations to maintain a specified level of investments in assets that are
designated as qualifying thrift investments ("QTI"), which are generally related
to domestic residential real estate and manufactured housing and include stock
issued by any FHLB, the FHLMC or the FNMA. Under this test 65% of an
institution's "portfolio assets" (total assets less goodwill and other
intangibles, property used to conduct business, and 20% of liquid assets) must
consist of QTI on a monthly average basis in 9 out of every 12 months. Congress
created a second QTL test, effective September 30, 1996, pursuant to which a
savings association may also qualify as a QTL thrift if at least 60% of the
institution's assets (on a tax basis) consist of specified assets (generally
loans secured by residential real estate or deposits, educational loans, cash,
and certain governmental obligations). The OTS may grant exceptions to the QTL
test under certain circumstances. If a savings association fails to meet the QTL
test, the association and its holding company become subject to certain
operating and regulatory restrictions. A savings association that fails to meet
the QTL test will not be eligible for new FHLB advances. At March 31, 1997, the
Association met the QTL test.
LENDING LIMIT. OTS regulations generally limit the aggregate amount
that a savings association can lend to one borrower or group of related
borrowers to an amount equal to 15% of the association's Lending Limit Capital.
A savings association may lend to one borrower an additional amount not to
exceed 10% of the association's Lending Limit Capital, if the additional amount
is fully secured by certain forms of "readily marketable collateral." Real
estate is not considered "readily marketable collateral." Certain types of loans
are not subject to this limit. In applying this limit, the regulations require
that loans to certain related borrowers be aggregated. Notwithstanding the
specified limits, an association may lend to one borrower up to $500,000, for
any purpose. At March 31, 1997, the Association was in compliance with this
lending limit. See "THE BUSINESS OF THE ASSOCIATION - Lending Activities -- Loan
Originations, Purchases and Sales."
TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors, and principal shareholders and their related interests must conform
to the lending limit on loans to one borrower, and the total of such loans to
executive officers, directors, principal shareholders, and their related
interests cannot exceed the association's Lending Limit Capital (or 200% of
Lending Limit Capital for qualifying institutions with less than $100 million in
assets). Most loans to directors, executive officers, and principal shareholders
must be approved in advance by a majority of the "disinterested" members of the
board of directors of the association with any "interested" director not
participating. All loans to directors, executive officers, and principal
shareholders must be made on terms substantially the same as offered in
comparable transactions with
-52-
<PAGE> 81
the general public or as offered to all employees in a company-wide benefit
program, and loans to executive officers are subject to additional limitations.
The Association was in compliance with such restrictions at March 31, 1997.
All transactions between savings associations and their affiliates must
comply with Sections 23A and 23B of the Federal Reserve Act (the "FRA"). An
affiliate of a savings association is any company or entity that controls, is
controlled by or is under common control with, the savings association. The
Holding Company will be an affiliate of the Association. Generally, Sections 23A
and 23B of the FRA (i) limit the extent to which a savings association or its
subsidiaries may engage in "covered transactions" with any one affiliate to an
amount equal to 10% of such institution's capital stock and surplus, (ii) limit
the aggregate of all such transactions with all affiliates to an amount equal to
20% of such capital stock and surplus, and (iii) require that all such
transactions be on terms substantially the same, or at least as favorable to the
association, as those provided in transactions with a non-affiliate. The term
"covered transaction" includes the making of loans, purchase of assets, issuance
of a guarantee, and other similar types of transactions. In addition to the
limits in Sections 23A and 23B, a savings association may not make any loan or
other extension of credit to an affiliate unless the affiliate is engaged only
in activities permissible for a bank holding company and may not purchase or
invest in securities of any affiliate except shares of a subsidiary. The
Association was in compliance with these requirements and restrictions at March
31, 1997.
LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions, according to ratings of associations based on their capital level
and supervisory condition. Capital distributions, for purposes of such
regulation, include, without limitation, payments of cash dividends,
repurchases, and certain other acquisitions by an association of its shares and
payments to stockholders of another association in an acquisition of such other
association.
For purposes of the capital distribution regulations, each institution
is categorized in one of three tiers. Tier 1 consists of associations that,
before and after the proposed capital distribution, meet their fully phased-in
capital requirement. Associations in this category may make capital
distributions during any calendar year equal to the greater of 100% of their net
income, current year-to-date, plus 50% of the amount by which the lesser of such
association's tangible, core or risk-based capital exceeds its fully phased-in
capital requirement for such capital component, as measured at the beginning of
the calendar year, or the amount authorized for a tier 2 association. Tier 2
consists of associations that, before and after the proposed capital
distribution, meet their current minimum, but not fully phased-in capital
requirement. Associations in this category may make capital distributions up to
75% of their net income over the most recent four quarters. Tier 3 associations
do not meet their current minimum capital requirement and must obtain OTS
approval of any capital distribution. A tier 1 association deemed to be in need
of more than normal supervision by the OTS may be downgraded to a tier 2 or tier
3 association.
The Association meets the requirements for a tier 1 association and has
not been notified of any need for more than normal supervision. The Association
will also be prohibited from declaring or paying any dividends or from
repurchasing any of its stock if, as a result, the net worth of the Association
would be reduced below the amount required to be maintained for the liquidation
account established in connection with the Conversion. In addition, as a
subsidiary of the Holding Company, the Association will also be required to give
the OTS 30 days' notice prior to declaring any dividend on its stock. The OTS
may object to the dividend during that 30-day period based on safety and
soundness concerns. Moreover, the OTS may prohibit any capital distribution
otherwise permitted by regulation if the OTS determines that such distribution
would constitute an unsafe or unsound practice.
In December 1994, the OTS issued a proposal to amend the capital
distributions limits. Under that proposal, associations not owned by a holding
company with an examination rating of 1 or 2 could make a capital distribution
without notice to the OTS, if they remain adequately capitalized, as described
above, after the distribution is made. Any other association seeking to make a
capital distribution that would not cause the association to fall below the
capital levels to qualify as adequately capitalized or better, would have to
provide notice to the OTS. Except under limited circumstances and with OTS
approval, no capital distributions would be permitted if it caused the
association to become undercapitalized.
HOLDING COMPANY REGULATION. After the Conversion, the Holding Company
will be a savings and loan holding company within the meaning of the HOLA. As
such, the Holding Company will register with the OTS and will be subject to OTS
regulations, examination, supervision, and reporting requirements.
The HOLA generally prohibits a savings and loan holding company from
controlling any other savings and loan association or savings and loan holding
company, without prior approval of the OTS, or from acquiring or retaining more
than 5% of the voting shares of a savings and loan association or holding
company thereof, which is not a subsidiary. Under
-53-
<PAGE> 82
certain circumstances, a savings and loan holding company is permitted to
acquire, with the approval of the OTS, up to 15% of the previously unissued
voting shares of an undercapitalized savings and loan association for cash
without such savings and loan association's being deemed to be controlled by
such holding company. Except with the prior approval of the OTS, no director or
officer of a savings and loan holding company or person owning or controlling by
proxy or otherwise more than 25% of such company's stock may also acquire
control of any savings institution, other than a subsidiary institution, or any
other savings and loan holding company.
The Holding Company will be a unitary savings and loan holding company.
Under current law, there are generally no restrictions on the activities of
unitary savings and loan holding companies and such companies are the only
financial institution holding companies which may engage in commercial,
securities, and insurance activities without limitation. Congress is considering
legislation which may limit the Holding Company's ability to engage in these
activities and the Holding Company cannot predict if and in what form these
proposals might become law. However, such limits would not impact the Holding
Company's initial activity of holding stock of the Association. The broad
latitude under current law can be restricted if the OTS determines that there is
reasonable cause to believe that the continuation by a savings and loan holding
company of an activity constitutes a serious risk to the financial safety,
soundness, or stability of its subsidiary savings and loan association. The OTS
may impose such restrictions as deemed necessary to address such risk, including
limiting (i) payment of dividends by the savings and loan association; (ii)
transactions between the savings and loan association and its affiliates; and
(iii) any activities of the savings and loan association that might create a
serious risk that the liabilities of the holding company and its affiliates may
be imposed on the savings and loan association. Notwithstanding the foregoing
rules as to permissible business activities of a unitary savings and loan
holding company, if the savings and loan association subsidiary of a holding
company fails to meet the QTL, then such unitary holding company would become
subject to the activities restrictions applicable to multiple holding companies.
At March 31, 1997, the Association met the QTL. See "Qualified Thrift Lender
Test."
If the Holding Company were to acquire control of another savings
institution, other than through a merger or other business combination with the
Association, the Holding Company would become a multiple savings and loan
holding company. Unless the acquisition is an emergency thrift acquisition and
each subsidiary savings and loan association meets the QTL, the activities of
the Holding Company and any of its subsidiaries (other than the Association or
other subsidiary savings and loan associations) would thereafter be subject to
activity restrictions. The HOLA provides that, among other things, no multiple
savings and loan holding company or subsidiary thereof that is not a savings
institution shall commence or continue for a limited period of time after
becoming a multiple savings and loan holding company or subsidiary thereof, any
business activity other than (i) furnishing or performing management services
for a subsidiary savings institution; (ii) conducting an insurance agency or
escrow business; (iii) holding, managing or liquidating assets owned by or
acquired from a subsidiary savings institution; (iv) holding or managing
properties used or occupied by a subsidiary savings institution; (v) acting as
trustee under deeds of trust; (vi) those activities previously directly
authorized by federal regulation as of March 5, 1987, to be engaged in by
multiple holding companies; or (vii) those activities authorized by the FRB as
permissible for bank holding companies, unless the OTS by regulation prohibits
or limits such activities for savings and loan holding companies, and which have
been approved by the OTS prior to being engaged in by a multiple holding
company.
The OTS may approve an acquisition resulting in the formation of a
multiple savings and loan holding company that controls savings and loan
associations in more than one state only if the multiple savings and loan
holding company involved controls a savings and loan association that operated a
home or branch office in the state of the association to be acquired as of March
5, 1987, or if the laws of the state in which the institution to be acquired is
located specifically permit institutions to be acquired by state-chartered
institutions or savings and loan holding companies located in the state where
the acquiring entity is located (or by a holding company that controls such
state-chartered savings institutions). As under prior law, the OTS may approve
an acquisition resulting in a multiple savings and loan holding company
controlling savings and loan associations in more than one state in the case of
certain emergency thrift acquisitions. Bank holding companies have had more
expansive authority to make interstate acquisitions than savings and loan
holding companies since August 1995.
FDIC REGULATIONS
DEPOSIT INSURANCE. The FDIC is an independent federal agency that
insures the deposits, up to prescribed statutory limits, of federally insured
banks and thrifts and safeguards the safety and soundness of the banking and
thrift industries. The FDIC administers two separate insurance funds, the Bank
Insurance Fund (the "BIF") for commercial banks and state savings banks and the
SAIF for savings associations. The FDIC is required to maintain designated
levels of reserves in each fund. The Association is a member of the SAIF and its
deposit accounts are insured by the FDIC up to the prescribed limits. The FDIC
has examination authority over all insured depository institutions, including
the Association, and has authority to
-54-
<PAGE> 83
initiate enforcement actions against federally insured savings associations if
the FDIC does not believe the OTS has taken appropriate action to safeguard
safety and soundness and the deposit insurance fund.
The FDIC is required to maintain designated levels of reserves in each
fund. The FDIC may increase assessment rates for either fund if necessary to
restore the fund's ratio of reserves to insured deposits to its target level
within a reasonable time and may decrease such rates if such target level has
been met. The FDIC has established a risk-based assessment system for both SAIF
and BIF members. Under this system, assessments vary based on the risk the
institution poses to its deposit insurance fund. The risk level is determined
based on the institution's capital level and the FDIC's level of supervisory
concern about the institution.
Because of the differing reserve levels of the funds, deposit insurance
assessments paid by healthy savings associations were reduced significantly
below the level paid by healthy savings associations effective in mid-1995.
Assessments paid by healthy savings associations exceeded those paid by healthy
commercial banks by approximately $.19 per $100 in deposits in late 1995. Such
excess equaled approximately $.23 per $100 in deposits beginning in 1996. This
premium disparity had a negative competitive impact on the Association and other
institutions in the SAIF.
Federal legislation, which was effective September 30, 1996, provided
for the recapitalization of the SAIF by means of a special assessment of $.657
per $100 of SAIF deposits held at March 31, 1995, in order to increase SAIF
reserves to the level required by law. Certain banks holding SAIF deposits are
required to pay the same special assessment on 80% of deposits at March 31,
1995. In addition, the cost of prior thrift failures, which had previously been
paid only by SAIF members, will also be paid by BIF members. As a result, BIF
assessments for healthy banks in 1997 will be $.013 per $100 in deposits, and
SAIF assessments for healthy institutions in 1997 will be $.064 per $100 in
deposits.
The Association had $29.1 million in deposits at March 31, 1995. The
Association paid a special assessment of $190,000 in November 1996, which was
accounted for and recorded as of September 30, 1996. This assessment is
tax-deductible but has reduced earnings for the year ended December 31, 1996.
FRB REGULATIONS
FRB regulations currently require savings associations to maintain
reserves of 3% of net transaction accounts (primarily NOW accounts) up to $49.3
million (subject to an exemption of up to $4.4 million), and of 10% of net
transaction accounts over $49.3 million. At March 31, 1997, the Association was
in compliance with this reserve requirement.
FEDERAL HOME LOAN BANKS
The FHLBs provide credit to their members in the form of advances. See
"THE BUSINESS OF THE ASSOCIATION - Deposits and Borrowings." The Association is
a member of the FHLB of Cincinnati and must maintain an investment in the
capital stock of the FHLB of Cincinnati in an amount equal to the greater of 1%
of the aggregate outstanding principal amount of the Association's residential
mortgage loans, home purchase contracts, and similar obligations at the
beginning of each year, and 5% of its advances from the FHLB. The Association is
in compliance with this requirement with an investment in stock of the FHLB of
Cincinnati of $329,800 at March 31, 1997.
Upon the origination or renewal of a loan or advance, the FHLB of
Cincinnati is required by law to obtain and maintain a security interest in
collateral in one or more of the following categories: fully disbursed, whole
first mortgage loans on improved residential property or securities representing
a whole interest in such loans; securities issued, insured or guaranteed by the
U.S. Government or an agency thereof; deposits in any FHLB; or other real estate
related collateral (up to 30% of the member association's capital) acceptable to
the applicable FHLB, if such collateral has a readily ascertainable value and
the FHLB can perfect its security interest in the collateral.
Each FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances from the FHLBs. The standards take into account a member's performance
under the Community Reinvestment Act and its record of lending to first-time
home buyers. All long-term advances by each FHLB must be made only to provide
funds for residential housing finance.
-55-
<PAGE> 84
TAXATION
FEDERAL TAXATION
The Holding Company and the Association are each subject to the federal
tax laws and regulations which apply to corporations generally. In addition to
the regular income tax, the Holding Company and the Association are subject to a
minimum tax. An alternative minimum tax is imposed at a minimum tax rate of 20%
on "alternative minimum taxable income" (which is the sum of a corporation's
regular taxable income, with certain adjustments, and tax preference items),
less any available exemption. Such tax preference items include interest on
certain tax-exempt bonds issued after August 7, 1986. In addition, 75% of the
amount by which a corporation's "adjusted current earnings" exceeds its
alternative minimum taxable income computed without regard to this preference
item and prior to reduction by net operating losses, is included in alternative
minimum taxable income. Net operating losses can offset no more than 90% of
alternative minimum taxable income. The alternative minimum tax is imposed to
the extent it exceeds the corporation's regular income tax. Payments of
alternative minimum tax may be used as credits against regular tax liabilities
in future years. In addition, for taxable years after 1986 and before 1996, the
Association is also subject to an environmental tax equal to 0.12% of the excess
of alternative minimum taxable income for the taxable year (determined without
regard to net operating losses and the deduction for the environmental tax) over
$2.0 million.
Prior to the enactment of the Small Business Jobs Protection Act (the
"Act"), which was signed into law on August 21, 1996, certain thrift
institutions, including the Association, were allowed deductions for bad debts
under methods more favorable than those granted to other taxpayers. Qualified
thrift institutions could compute deductions for bad debts using either the
specific charge off method of Section 166 of the Code, or one of the two reserve
methods of Section 593 of the Code. The reserve methods under Section 593 of the
Code permitted a thrift institution annually to elect to deduct bad debts under
either (i) the "percentage of taxable income" method applicable only to thrift
institutions, or (ii) the "experience" method that also was available to small
banks. Under the "percentage of taxable income" method, a thrift institution
generally was allowed a deduction for an addition to its bad debt reserve equal
to 8% of its taxable income (determined without regard to this deduction and
with additional adjustments). Under the experience method, a thrift institution
was generally allowed a deduction for an addition to its bad debt reserve equal
to the greater of (i) an amount based on its actual average experience for
losses in the current and five preceding taxable years, or (ii) an amount
necessary to restore the reserve to its balance as of the close of the base
year. A thrift institution could elect annually to compute its allowable
addition to bad debt reserves for qualifying loans either under the experience
method or the percentage of taxable income method. For tax years 1995, 1994 and
1993, the Association used the percentage of taxable income method because such
method provided a higher bad debt deduction than the experience method.
The Act eliminated the percentage of taxable income reserve method of
accounting for bad debts by thrift institutions, effective for taxable years
beginning after 1995. Thrift institutions that would be treated as small banks
are allowed to utilize the experience method applicable to such institutions,
while thrift institutions that are treated as large banks are required to use
only the specific charge off method.
A thrift institution required to change its method of computing
reserves for bad debt will treat such change as a change in the method of
accounting, initiated by the taxpayer, and having been made with the consent of
the Secretary of the Treasury. Section 481(a) of the Code requires certain
amounts to be recaptured with respect to such change. Generally, the amounts to
be recaptured will be determined solely with respect to the "applicable excess
reserves" of the taxpayer. The amount of the applicable excess reserves will be
taken into account ratably over a six-taxable year period, beginning with the
first taxable year beginning after 1995, subject to the residential loan
requirement described below. In the case of a thrift institution that becomes a
large bank, the amount of the institution's applicable excess reserves generally
is the excess of (i) the balances of its reserve for losses on qualifying real
property loans (generally loans secured by improved real estate) and its reserve
for losses on nonqualifying loans (all other types of loans) as of the close of
its last taxable year beginning before January 1, 1996, over (ii) the balances
of such reserves as of the close of its last taxable year beginning before
January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of a thrift
institution that becomes a small bank, the amount of the institution's
applicable excess reserves generally is the excess of (i) the balances of its
reserve for losses on qualifying real property loans and its reserve for losses
on nonqualifying loans as of the close of its last taxable year beginning before
January 1, 1996, over (ii) the greater of the balance of (a) its pre-1988
reserves or (b) what the thrift's reserves would have been at the close of its
last year beginning before January 1, 1996, had the thrift always used the
experience method.
For taxable years that begin after December 31, 1995, and before
January 1, 1998, if a thrift meets the residential loan requirement for a tax
year, the recapture of the applicable excess reserves otherwise required to be
taken into account as
-56-
<PAGE> 85
a Code Section 481(a) adjustment for the year will be suspended. A thrift meets
the residential loan requirement if, for the tax year, the principal amount of
residential loans made by the thrift during the year is not less then its base
amount. The "base amount" generally is the average of the principal amounts of
the residential loans made by the thrift during the six most recent tax years
beginning before January 1, 1996. A residential loan is a loan as described in
Section 7701(a)(19)(C)(v) (generally a loan secured by residential real and
church property and certain mobile homes), but only to the extent that the loan
is made to the owner of the property.
The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e) as modified by the Act which require recapture in the case of
certain excessive distributions to shareholders. The pre-1988 reserves may not
be utilized for payment of cash dividends or other distributions to a
shareholder (including distributions in dissolution or liquidation) or for any
other purpose (excess to absorb bad debt losses). Distribution of a cash
dividend by a thrift institution to a shareholder is treated as made: first, out
of the institution's post-1951 accumulated earnings and profits; second, out of
the pre-1988 reserves; and third, out of such other accounts as may be proper.
To the extent a distribution by the Association to the Holding Company is deemed
paid out of its pre-1988 reserves under these rules, the pre-1988 reserves would
be reduced and the Association's gross income for tax purposes would be
increased by the amount which, when reduced by the income tax, if any,
attributable to the inclusion of such amount in its gross income, equals the
amount deemed paid out of the pre-1988 reserves. As of March 31, 1997, the
Association's pre-1988 reserves for tax purposes totaled approximately $800,000.
The Association believes it had approximately $4.0 million of accumulated
earnings and profits for tax purposes as of March 31, 1997, which would be
available for dividend distributions, provided regulatory restrictions
applicable to the payment of dividends are met. See "REGULATION - Federal
Regulations -- Limitations on Capital Distributions." No representation can be
made as to whether the Association will have current or accumulated earnings and
profits in subsequent years.
The tax returns of the Association have been audited or closed without
audit through fiscal year 1992. In the opinion of management, any examination of
open returns would not result in a deficiency which could have a material
adverse effect on the financial condition of the Association.
OHIO TAXATION
The Holding Company is subject to the Ohio corporation franchise tax,
which, as applied to the Holding Company, is a tax measured by both net earnings
and net worth. The rate of tax is the greater of (i) 5.1% on the first $50,000
of computed Ohio taxable income and 8.9% of computed Ohio taxable income in
excess of $50,000 and (ii) 0.582% times taxable net worth.
In computing its tax under the net worth method, the Holding Company
may exclude 100% of its investment in the capital stock of the Association after
the Conversion, as reflected on the balance sheet of the Holding Company, as
long as it owns at least 25% of the issued and outstanding capital stock of the
Association. The calculation of the exclusion from net worth is based on the
ratio of the excludable investment (net of any appreciation or goodwill included
in such investment) to total assets multiplied by the net value of the stock. As
a holding company, the Holding Company may be entitled to various other
deductions in computing taxable net worth that are not generally available to
operating companies.
A special litter tax is also applicable to all corporations, including
the Holding Company, subject to the Ohio corporation franchise tax other than
"financial institutions." If the franchise tax is paid on the net income basis,
the litter tax is equal to .11% of the first $50,000 of computed Ohio taxable
income and .22% of computed Ohio taxable income in excess of $50,000. If the
franchise tax is paid on the net worth basis, the litter tax is equal to .014%
times taxable net worth.
The Association is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.5% of the
Association's book net worth determined in accordance with GAAP. As a "financial
institution," the Association is not subject to any tax based upon net income or
net profits imposed by the State of Ohio.
-57-
<PAGE> 86
THE CONVERSION
THE OTS AND THE DIVISION HAVE APPROVED THE PLAN, SUBJECT TO THE
APPROVAL OF THE PLAN BY THE MEMBERS OF THE ASSOCIATION ENTITLED TO VOTE ON THE
PLAN AND SUBJECT TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE
OTS AND THE DIVISION. OTS AND DIVISION APPROVAL DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN.
GENERAL
On March 24, 1997, the Board of Directors of the Association
unanimously adopted the Plan and recommended that the voting members of the
Association approve the Plan at the Special Meeting. During and upon completion
of the Conversion, the Association will continue to provide the services
presently offered to depositors and borrowers, will maintain its existing
offices, and will retain its existing management and employees.
Based on the current Valuation Range, between 573,750 and 776,250
Common Shares are expected to be offered in the Subscription Offering and the
Community Offering at a price of $10 per share. Federal regulations require,
with certain exceptions, that shares offered in connection with the Conversion
must be sold up to at least the minimum point of the Valuation Range in order
for the Conversion to become effective. The actual number of Common Shares sold
in connection with the Conversion will be determined upon completion of the
Offering based on the final valuation of the Association, as converted. See
"Pricing and Number of Common Shares to be Sold."
The Common Shares will be offered in the Subscription Offering to the
ESOP and certain present and former depositors of the Association. Any Common
Shares not subscribed for in the Subscription Offering will be offered to the
general public in the Community Offering in a manner which will seek to achieve
the widest distribution of the Common Shares, but which will give preference to
natural persons residing in Belmont County, Ohio. Under OTS regulations, the
Community Offering must be completed within 45 days after completion of the
Subscription Offering, unless such period is extended by the Association with
the approval of the OTS and the Division. If the Community Offering is
determined not to be feasible, an occurrence that is not currently anticipated,
the Boards of Directors of the Holding Company and the Association will consult
with the OTS and the Division to determine an appropriate alternative method of
selling unsubscribed Common Shares up to the minimum of the Valuation Range. No
alternative sales methods are currently planned.
OTS and Ohio regulations require the completion of the Conversion
within 24 months after the date of the approval of the Plan by the voting
members of the Association. The commencement and completion of the Conversion
will be subject to market conditions and other factors beyond the Association's
control. Due to changing economic and market conditions, no assurance can be
given as to the length of time that will be required to complete the sale of the
Common Shares. If delays are experienced, significant changes may occur in the
estimated pro forma market value of the Association. In such circumstances, the
Association may also incur substantial additional printing, legal and accounting
expenses in completing the Conversion. In the event the Conversion is not
successfully completed, the Association will be required to charge all
Conversion expenses against current earnings.
REASONS FOR THE CONVERSION
The principal factors considered by the Association's Board of
Directors in reaching the decision to pursue a mutual-to-stock conversion were
the numerous competitive advantages which the stock form of organization offers,
including growth opportunities, employee retention, and increased capital
levels.
If the Association is to continue to grow and prosper, the mutual form
of organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual to expand through mutual-to-mutual mergers or
acquisitions are limited because cash is the only form of consideration a mutual
institution can offer to another institution. Although the Association does not
have any specific acquisitions planned at this time, the Conversion will
position the Association to take advantage of any acquisition opportunities
which may present themselves. Because a conversion to stock form is a
time-consuming and complex process, the Association cannot wait until an
acquisition is imminent to embark on the conversion process.
-58-
<PAGE> 87
As an increasing number of the Association's competitors convert to
stock form and acquire the ability to use stock-based compensation programs, the
Association, in mutual form, would be at a disadvantage when it comes to
attracting and retaining qualified management. The Association believes that the
ESOP, the Stock Option Plan and the RRP are important tools in achieving such
goals, even though the Association will be required to wait until after the
Conversion to implement the Stock Option Plan and the RRP. See "MANAGEMENT -
Stock Benefit Plans."
Another benefit of the Conversion will be an increase in capital.
Notwithstanding the Association's current capital position, the importance of
higher levels of capital cannot be ignored in the current interest rate
environment. As has been amply demonstrated in the past, changing accounting
principles, interest rate shifts and changing regulations can threaten even
well-capitalized institutions. As a mutual institution, the Association can only
increase capital through retained earnings or the issuance of subordinated
debentures, which do not count as tier 1 capital for regulatory capital
purposes. Capital that may seem unnecessary now may help the Association
withstand future threats to its capital. See "REGULATION - Office of Thrift
Supervision -- Regulatory Capital Requirements."
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Deposit holders who are members of the Association in
its mutual form will have no voting rights in the Association as converted and
will not participate, therefore, in the election of directors or otherwise
control the Association's affairs. Voting rights in the Holding Company will be
held exclusively by its shareholders, and voting rights in the Association will
be held exclusively by the Holding Company as the sole shareholder of the
Association. Each holder of the Holding Company's common shares will be entitled
to one vote for each share owned on any matter to be considered by the Holding
Company's shareholders. See "DESCRIPTION OF AUTHORIZED SHARES."
DEPOSIT ACCOUNTS AND LOANS. Deposit accounts in the Association, as
converted, will be equivalent in amount, interest rate and other terms to the
present deposit accounts in the Association, and the existing FDIC insurance on
such deposits will not be affected by the Conversion. The Conversion will not
affect the terms of loan accounts or the rights and obligations of borrowers
under their individual contractual arrangements with the Association.
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by the Association of a private letter ruling from the
IRS or an opinion of counsel to the effect that the Conversion will constitute a
tax-free reorganization as defined in Section 368(a) of the Code. The
Association intends to proceed with the Conversion based upon an opinion
received from its special counsel, Vorys, Sater, Seymour and Pease, to the
following effect:
(1) The Conversion constitutes a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and no gain or loss will
be recognized by the Association in its mutual form or in its stock
form as a result of the Conversion. The Association in its mutual form
and the Association in its stock form will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by the Association upon
the receipt of money from the Holding Company in exchange for the
capital stock of the Association, as converted;
(3) The assets of the Association will have the same basis in
its hands immediately after the Conversion as they had in its hands
immediately prior to the Conversion, and the holding period of the
assets of the Association after the Conversion will include the period
during which the assets were held by the Association before the
Conversion;
(4) No gain or loss will be recognized by the deposit account
holders of the Association upon the issuance to them, in exchange for
their respective withdrawable deposit accounts in the Association
immediately prior to the Conversion, of withdrawable deposit accounts
in the Association immediately after the Conversion, in the same dollar
amount as their withdrawable deposit accounts in the Association
immediately prior to the Conversion, plus, in the case of Eligible
Account Holders and Supplemental Eligible Account Holders, the
interests in the Liquidation Account of the Association, as described
below;
(5) The basis of the withdrawable deposit accounts in the
Association held by its deposit account holders immediately after the
Conversion will be the same as the basis of their deposit accounts in
the Association immediately prior to the Conversion. The basis of the
interests in the Liquidation Account received by the Eligible Account
Holders and Supplemental Eligible Account Holders will be zero. The
basis of the nontransferable
-59-
<PAGE> 88
subscription rights received by Eligible Account Holders, Supplemental
Eligible Account Holders and Other Eligible Members will be zero
(assuming that at distribution such rights have no ascertainable fair
market value);
(6) No gain or loss will be recognized by Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible
Members upon the distribution to them of nontransferable subscription
rights to purchase Common Shares (assuming that at distribution such
rights have no ascertainable fair market value), and no taxable income
will be realized by such Eligible Account Holders, Supplemental
Eligible Account Holders or Other Eligible Members as a result of their
exercise of such nontransferable subscription rights;
(7) The basis of the Common Shares purchased by members of the
Association pursuant to the exercise of subscription rights will be the
purchase price thereof (assuming that such rights have no ascertainable
fair market value and that the purchase price is not less than the fair
market value of the shares on the date of such exercise), and the
holding period of such shares will commence on the date of such
exercise. The basis of the Common Shares purchased other than by the
exercise of subscription rights will be the purchase price thereof
(assuming in the case of the other subscribers that the opportunity to
buy in the Subscription Offering has no ascertainable fair market
value), and the holding period of such shares will commence on the day
after the date of the purchase;
(8) For purposes of Section 381 of the Code, the Association
will be treated as if there had been no reorganization. The taxable
year of the Association will not end on the effective date of the
Conversion. Immediately after the Conversion, the Association in its
stock form will succeed to and take into account the tax attributes of
the Association in its mutual form immediately prior to the Conversion,
including the Association's earnings and profits or deficit in earnings
and profits;
(9) The bad debt reserves of the Association in its mutual
form immediately prior to the Conversion will not be required to be
restored to the gross income of the Association in its stock form as a
result of the Conversion and immediately after the Conversion such bad
debt reserves will have the same character in the hands of the
Association in its stock form as they would have had if there had been
no Conversion. The Association in its stock form will succeed to and
take into account the dollar amounts of those accounts of the
Association in its mutual form which represent bad debt reserves in
respect of which the Association in its mutual form has taken a bad
debt deduction for taxable years ending on or before the Conversion;
and
(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated
earnings and profits of the Association available for the subsequent
distribution of dividends within the meaning of Section 316 of the
Code. The creation of the Liquidation Account on the records of the
Association will have no effect on its taxable income, deductions for
additions to reserves for bad debts under Section 593 of the Code or
distributions to stockholders under Section 593(e) of the Code.
For Ohio tax purposes, the tax consequences of the Conversion
will be as follows:
(1) The Association is a "financial institution" for State of
Ohio tax purposes, and the Conversion will not change such status;
(2) The Association is subject to the Ohio corporate franchise
tax on "financial institutions," which is imposed annually at a rate of
1.5% of the Association's equity capital determined in accordance with
generally accepted accounting principles ("GAAP"), and the Conversion
will not change such status;
(3) As a "financial institution," the Association is not
subject to any tax based upon net income or net profit imposed by the
State of Ohio, and the Conversion will not change such status;
(4) The Conversion will not be a taxable transaction to the
Association in its mutual or stock form for purposes of the Ohio
corporate franchise tax. As a consequence of the Conversion, however,
the annual Ohio corporate franchise tax liability of the Association
will increase if the taxable net worth of the Association (i.e., book
net worth computed in accordance with GAAP at the close of the
Association's taxable year for federal income tax purposes) increases
thereby; and
-60-
<PAGE> 89
(5) The Conversion will not be a taxable transaction to any
deposit account holder or borrower member of the Association in its
mutual or stock form for purposes of the Ohio corporate franchise tax
and the Ohio personal income tax.
The Association has received an opinion from RP Financial to the effect
that the subscription rights have no ascertainable fair market value because the
rights are received by specified persons at no cost, may not be transferred and
are of short duration. The IRS could challenge the assumption that the
subscription rights have no ascertainable fair market value.
Each Eligible Account Holder, Supplemental Eligible Account Holder and
Other Eligible Member is urged to consult his or her own tax advisor with
respect to the affect of such tax consequences on his or her own particular
facts and circumstances.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the Association in its present mutual form, each depositor in the Association
would receive a pro rata share of any assets of the Association remaining after
payment of the claims of all creditors, including the claims of all depositors
to the withdrawable value of their deposit accounts. A depositor's pro rata
share of such remaining assets would be the same proportion of such assets as
the value of such depositor's deposit accounts bears to the total aggregate
value of all deposit accounts in the Association at the time of liquidation.
In the event of a complete liquidation of the Association in its stock
form after the Conversion, each depositor would have a claim of the same general
priority as the claims of all other general creditors of the Association. Except
as described below, each depositor's claim would be solely in the amount of the
balance in such depositor's deposit account plus accrued interest. The depositor
would have no interest in the assets of the Association above that amount. Such
assets would be distributed to the Holding Company as the sole shareholder of
the Association.
For the purpose of granting a limited priority claim to the assets of
the Association in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain deposit accounts at the Association after the Conversion, the
Association will, at the time of Conversion, establish a liquidation account in
an amount equal to the retained earnings of the Association as of March 31, 1997
(the "Liquidation Account"). The Liquidation Account will not operate to
restrict the use or application of any of the regulatory capital of the
Association.
Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or the Supplemental Eligibility Record Date.
The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date, as the case may be, and the denominator of which is the total
amount of all Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. The balance of each
Subaccount may be decreased but will never be increased. If, at the close of
business on the last day of each fiscal year of the Holding Company subsequent
to the respective record dates, the balance in the deposit account to which a
Subaccount relates is less than the lesser of (i) the deposit balance in such
deposit account at the close of business on the last day of any other fiscal
year of the Holding Company subsequent to the Eligibility Record Date or the
Supplemental Eligibility Record Date or (ii) the amount of the Qualifying
Deposit as of the Eligibility Record Date or the Supplemental Eligibility Record
Date, the balance of the Subaccount for such deposit account shall be adjusted
proportionately to the reduction in such deposit account balance. In the event
of any such downward adjustment, such Subaccount balance shall not be
subsequently increased notwithstanding any increase in the deposit balance of
the related deposit account. If any deposit account is closed, its related
Subaccount shall be reduced to zero upon such closing.
In the event of a complete liquidation of the converted Association
(and only in such event), each Eligible Account Holder and Supplemental Eligible
Account Holder shall receive from the Liquidation Account a distribution equal
to the current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the Holding Company as the sole
shareholder of the Association. Any assets remaining after satisfaction of such
liquidation rights and the claims of the Association's creditors would be
distributed to the Holding Company as the sole shareholder of the
-61-
<PAGE> 90
Association. No merger, consolidation, purchase of bulk assets or similar
combination or transaction with another financial institution, the deposits of
which are insured by the FDIC, will be deemed to be a complete liquidation for
this purpose and, in any such transaction, the Liquidation Account shall be
assumed by the surviving institution.
COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE
INSURED BY THE FDIC. For a description of the characteristics of the Common
Shares, see "DESCRIPTION OF AUTHORIZED SHARES."
INTERPRETATION AND AMENDMENT OF THE PLAN
To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of the Holding Company and the Association will be final.
The Plan may be amended by the Boards of Directors of the Holding Company and
the Association at any time with the concurrence of the OTS and the Division. If
the Association and the Holding Company determine upon advice of counsel and
after consultation with the OTS and the Division that any such amendment is
material, subscribers will be notified of the amendment and will be provided the
opportunity to affirm, increase, decrease or cancel their subscriptions. Any
person who does not affirmatively elect to continue his subscription or elects
to rescind his subscription before the date specified in the notice will have
all of his funds promptly refunded with interest. Any person who elects to
decrease his subscription will have the appropriate portion of his funds
promptly refunded with interest.
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan and
the adoption of the Amended Articles of Incorporation and the Amended
Constitution by the voting members of the Association at the Special Meeting and
the completion of the sale of the requisite amount of Common Shares within 24
months following the date of such approval. If these conditions are not
satisfied, the Plan will automatically terminate and the Association will
continue its business in the mutual form of organization. The Plan may be
voluntarily terminated by the Board of Directors at any time before the Special
Meeting and at any time thereafter with the approval of the OTS and the
Division.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT NOON, BRIDGEPORT, OHIO TIME,
ON _______, 1997. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE THE SUBSCRIPTION
EXPIRATION DATE WILL BE VOID, WHETHER OR NOT THE ASSOCIATION HAS BEEN ABLE TO
LOCATE EACH PERSON ENTITLED TO SUCH SUBSCRIPTION RIGHTS.
Nontransferable subscription rights to purchase Common Shares are being
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. EACH PERSON SUBSCRIBING FOR COMMON SHARES MUST
REPRESENT TO THE ASSOCIATION THAT HE OR SHE IS PURCHASING SUCH SHARES FOR HIS OR
HER OWN ACCOUNT AND THAT HE OR SHE HAS NO AGREEMENT OR UNDERSTANDING WITH ANY
OTHER PERSON FOR THE SALE OR TRANSFER OF SUCH SHARES. ANY PERSON WHO ATTEMPTS TO
TRANSFER HIS OR HER SUBSCRIPTION RIGHTS MAY BE SUBJECT TO PENALTIES AND
SANCTIONS, INCLUDING LOSS OF THE SUBSCRIPTION RIGHTS.
The number of Common Shares which a person who has subscription rights
may purchase will be determined, in part, by the total number of Common Shares
to be issued and the availability of Common Shares for purchase under the
preference categories set forth in the Plan and certain other limitations. See
"Limitations on Purchases of Common Shares." The sale of any Common Shares
pursuant to subscriptions received is contingent upon approval of the Plan by
the voting members of the Association at the Special Meeting.
The preference categories and preliminary purchase limitations which
have been established by the Plan, in accordance with applicable regulations,
for the allocation of Common Shares are as follows:
(a) Each Eligible Account Holder shall receive, without
payment therefor, a nontransferable right to purchase in the
Subscription Offering up to the greater of (i) the amount permitted to
be purchased in the Community Offering (currently 14,000 Common
Shares), (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (iii) 15 times the product (rounded
down to the next whole number) obtained by multiplying the number of
Common Shares to be sold in connection with the Conversion by a
fraction, the numerator of which is the amount of the Eligible Account
Holder's Qualifying Deposit and the denominator of
-62-
<PAGE> 91
which 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 limitations set forth in Section 10 of the Plan
and subject to adjustment by the Board of Directors of the Holding
Company and the Association as set forth in Section 10 of the Plan. If
the exercise of subscription rights by Eligible Account Holders results
in an over-subscription, Common Shares will be allocated among
subscribing Eligible Account Holders in a manner which will, to the
extent possible, make the total allocation of each subscriber equal 100
shares or the amount subscribed for, whichever is less. Any Common
Shares remaining after such allocation has been made will be allocated
among the subscribing Eligible Account Holders whose subscriptions
remain unfilled in the proportion which the amount of their respective
Qualifying Deposits on the Eligibility Record Date bears to the total
Qualifying Deposits of all Eligible Account Holders on such date.
Notwithstanding the foregoing, Common Shares in excess of 776,250, the
maximum of the Valuation Range, may be sold to the ESOP before fully
satisfying the subscriptions of Eligible Account Holders. No fractional
shares will be issued. For purposes of this paragraph (a), increases in
the Qualifying Deposits of directors and executive officers of the
Association during the twelve months preceding the Eligibility Record
Date shall not be considered.
(b) The ESOP shall receive, without payment therefor, a
nontransferable right to purchase in the Subscription Offering an
aggregate amount of up to 10% of the Common Shares sold in the
Conversion, provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders up to the maximum of
the Valuation Range pursuant to paragraph (a) above. Although the Plan
and OTS regulations permit the ESOP to purchase up to 10% of the Common
Shares, the Holding Company anticipates that the ESOP will purchase 8%
of the Common Shares. If the ESOP is unable to purchase all or part of
the Common Shares for which it subscribes, the ESOP may purchase Common
Shares on the open market or may purchase authorized but unissued
Common Shares. If the ESOP purchases authorized but unissued Common
Shares, such purchases could have a dilutive effect on the interests of
the Holding Company's shareholders. See "RISK FACTORS - Potential
Impact of Benefit Plans on Net Earnings and Shareholders' Equity."
(c) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders and the ESOP pursuant
to paragraphs (a) and (b) above each Supplemental Eligible Account
Holder will receive, without payment therefor, a nontransferable right
to purchase up to the greater of (i) the amount permitted to be
purchased in the Community Offering (currently 14,000 Common Shares),
(ii) .10% of the total number of Common Shares sold in connection with
the Conversion, or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the number of Common Shares to be
sold in connection with the Conversion by a fraction, the numerator of
which is the amount of the Supplemental Eligible Account Holder's
Qualifying Deposit and the denominator of which is the total amount of
Qualifying Deposits of all Supplemental Eligible Account Holders, in
each case on the Supplemental Eligibility Record Date, subject to the
overall purchase limitations set forth in Section 10 of the Plan and
subject to adjustment by the Board of Directors of the Holding Company
and the Association as set forth in Section 10 of the Plan. If the
exercise of subscription rights by Supplemental Eligible Account
Holders results in an oversubscription, Common Shares will be allocated
among subscribing Supplemental Eligible Account Holders in a manner
which will, to the extent possible, make the total allocation of each
subscriber equal 100 shares or the amount subscribed for, whichever is
less. Any Common Shares remaining after such allocation has been made
will be allocated among the subscribing Supplemental Eligible Account
Holders whose subscriptions remain unfilled in the proportion which the
amount of their respective Qualifying Deposits on the Supplemental
Eligibility Record Date bears to the total Qualifying Deposits of all
Supplemental Eligible Account Holders on such date. No fractional
shares will be issued.
(d) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders pursuant to paragraphs (a), (b)
and (c) above, each Other Eligible Member, other than an Eligible
Account Holder or Supplemental Eligible Account Holder, shall receive,
without payment therefor, a nontransferable right to purchase a number
of Common Shares up to the greater of the amount permitted to be
purchased in the Community Offering (currently 14,000 Common Shares) or
.10% of the total number of Common Shares sold in connection with the
Conversion, subject to adjustment by the Boards of Directors of the
Association and the Holding Company. In the event of an
oversubscription by Other Eligible Members, the available Common Shares
will be allocated among subscribing Other Eligible Members in the same
proportion that their subscriptions bear to the total amount of
subscriptions by all Other Eligible Members; provided, however, that,
to the extent sufficient Common Shares are available, each subscribing
Other Eligible Member shall receive 25 Common Shares before the
remaining available Common Shares are allocated.
-63-
<PAGE> 92
The Board of Directors may reject any one or more subscriptions if,
based upon the Board of Directors' interpretation of applicable regulations,
such subscriber is not entitled to the shares for which he or she has subscribed
or if the sale of shares subscribed for would be in violation of any applicable
statutes, regulations, or rules.
The Association will make reasonable efforts to comply with the
securities laws of all states in the United States in which persons having
subscription rights reside. However, no such person will be offered or receive
any Common Shares under the Plan who resides in a foreign country or in a state
of the United States with respect to which each of the following apply: (i) a
small number of persons otherwise eligible to subscribe for shares under the
Plan resides in such country or state; (ii) under the securities laws of such
country or state, the granting of subscription rights or the offer or sale of
Common Shares to such persons would require the Holding Company or its officers
or directors to register as a broker or dealer or to register or otherwise
qualify its securities for sale in such country or state; and (iii) such
registration or qualification would be impracticable for reasons of cost or
otherwise.
The term "resident," as used herein with respect to the Subscription
Offering, means any person who, on the date of submission of a Stock Order Form,
maintained a bona fide residence within a jurisdiction in which the Common
Shares are being offered for sale. If a person is a business entity, the
person's residence shall be the location of the principal place of business. If
the person is a personal benefit plan, the residence of the beneficiary shall be
the residence of the plan. In the case of all other benefit plans, the residence
of the trustee shall be the residence of the plan. In all cases, the
determination of a subscriber's residency shall be in the sole discretion of the
Association and the Holding Company.
COMMUNITY OFFERING
To the extent Common Shares remain available after the satisfaction of
all subscriptions received in the Subscription Offering, the Association is
hereby offering Common Shares in the Community Offering subject to the
limitations set forth below. If subscriptions are received in the Subscription
Offering for up to 892,687 Common Shares, Common Shares may not be available in
the Community Offering. All sales of the Common Shares in the Community Offering
will be at the same price per share as in the Subscription Offering.
THE COMMUNITY OFFERING WILL BE TERMINATED ON OR BEFORE ______, 1997,
UNLESS EXTENDED BY THE ASSOCIATION AND THE HOLDING COMPANY WITH THE APPROVAL OF
THE OTS AND THE DIVISION, IF NECESSARY. IN ACCORDANCE WITH THE PLAN, THE
OFFERING MAY NOT BE EXTENDED BEYOND _________, 1999.
In the event shares are available for the Community Offering, each
person, together with any Associate or groups Acting in Concert, may purchase in
the Community Offering up to 14,000 Common Shares. If an insufficient number of
Common Shares is available to fill all of the orders received in the Community
Offering, the available Common Shares will be allocated in a manner to be
determined by the Boards of Directors of the Holding Company and the
Association, subject to the following:
(i) Preference will be given to natural persons who are
residents of Belmont County, Ohio, the county in which the offices of
the Association are located;
(ii) Orders received in the Community Offering will first be
filled up to 2% of the total number of Common Shares offered, with any
remaining shares allocated on an equal number of shares per order basis
until all orders have been filled; and
(iii) The right of any person to purchase Common Shares in the
Community Offering is subject to the right of the Holding Company and
the Association to accept or reject such purchases in whole or in part.
The term "resident," as used herein with respect to the Community
Offering, means any natural person who, on the date of submission of a Stock
Order Form, maintains a bona fide residence within, as appropriate, Belmont
County, Ohio, or a jurisdiction in which the Common Shares are being offered for
sale.
LIMITATIONS ON PURCHASES OF COMMON SHARES
The Plan provides for certain additional limitations to be placed upon
the purchase of Common Shares. To the extent Common Shares are available, the
minimum number of Common Shares that may be purchased by any party is 25, or
-64-
<PAGE> 93
$250. No fractional shares will be issued. Purchases in the Offering are further
subject to the limitation that no person, together with his or her Associates
and other persons Acting in Concert with him or her, may purchase more than
14,000 Common Shares in the Offering. In connection with the exercise of
subscription rights arising from a deposit account in which two or more persons
have an interest, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase is 14,000 Common Shares
in the Offering. Such limitations do not apply to the ESOP. Subject to
applicable regulations, the purchase limitation may be increased or decreased
after the commencement of the Offering by the Boards of Directors.
Purchases of Common Shares in the Offering are also subject to the
change in control regulations which restrict direct and indirect purchases of
10% or more of the stock of any savings association by any person or group of
persons acting in concert, under certain circumstances. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION AND RELATED ANTI-TAKEOVER
PROVISIONS - Federal Law and Regulation."
After the Conversion, Common Shares, except for Common Shares purchased
by affiliates of the Holding Company and the Association, will be freely
transferable, subject to OTS and Division regulations.
PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to this
Prospectus, which is available at the offices of the Association. See
"ADDITIONAL INFORMATION." Officers and directors of the Association will be
available to answer questions about the Conversion and may also hold
informational meetings for interested persons. Such officers and directors will
not be permitted to make statements about the Holding Company or the Association
unless such information is also set forth in this Prospectus, nor will they
render investment advice. The Holding Company will rely on Rule 3a4-1 under the
Securities Exchange Act of 1934 (the "Exchange Act"), and sales of Common Shares
will be conducted within the requirements of Rule 3a4-1, which will permit
officers, directors and employees of the Holding Company and the Association to
participate in the sale of Common Shares. No officer, director or employee of
the Holding Company or the Association 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 Shares.
To assist the Holding Company and the Association in marketing the
Common Shares, the Holding Company and the Association have retained Webb, a
broker-dealer registered with the SEC and member of the National Association of
Securities Dealers, Inc. ("NASD"). Webb will assist the Association in (i)
training and educating the Association's employees regarding the mechanics and
regulatory requirements of the conversion process; (ii) conducting information
meetings for subscribers and other potential purchasers; and (iii) keeping
records of all stock subscriptions. For providing these services, the
Association has agreed to pay Webb (a) a management fee of $25,000, all of which
has been paid, and (b) a marketing fee of 1.5% of the aggregate dollar amount of
Common Shares sold in the Subscription Offering and the Community Offering,
excluding shares sold by Selected Brokers, if any, and shares purchased by the
ESOP and directors, officers, and employees of the Association and members of
their immediate families.
The Association has also agreed to reimburse Webb for its reasonable
legal fees and disbursements. The Association and the Holding Company have also
agreed to indemnify Webb, under certain circumstances, against liabilities and
expenses (including legal fees) arising out of or based upon untrue statements
or omissions contained in the materials used in the Offering or in various
documents submitted to regulatory authorities in respect of the Conversion,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
unless such untrue statement or omission, or alleged untrue statement or
omission, was made in reliance upon certain information furnished to the
Association by Webb expressly for use in the summary proxy statement or
prospectus used in connection with the Offering.
SELECTED BROKERS
If Common Shares remain available after the satisfaction of all
subscriptions received in the Subscription Offering, Webb may enter into an
agreement with other NASD member firms ("Selected Brokers") to assist in the
sale of Common Shares in the Community Offering. If Selected Brokers are used,
Webb will receive commissions of no more than 5.5% of the aggregate purchase
price of the Common Shares sold in the Community Offering by the Selected
Brokers, and Webb will pay to the Selected Brokers a portion of the 5.5%
commission pursuant to selected dealer agreements. During the Community
Offering, Selected Brokers may only solicit indications of interest from their
customers to place orders with the Association as of a certain date (the "Order
Date") for the purchase of Common Shares. When and if the Association believes
that enough indications of interest and orders have been received in the
Community Offering to consummate the
-65-
<PAGE> 94
Conversion, Webb will request, as of the Order Date, Selected Brokers to submit
orders to purchase shares for which they have previously received indications of
interest from the customers. Selected Brokers will send confirmations of the
orders to such customers on the next business day after the Order Date. Selected
Brokers will debit the accounts of their customers on the date which will be
three business days from the Order Date (the "Settlement Date"). On the
Settlement Date, funds received by Selected Brokers will be remitted to the
Association. It is anticipated that the Conversion will be consummated on the
Settlement Date. However, if consummation is delayed after payment has been
received by the Association from Selected Brokers, funds will earn interest at
the passbook rate, currently an annual percentage yield of ____%, until the
completion of the offering. Funds will be returned promptly in the event the
Conversion is not consummated.
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering is conducted and extends beyond
______________, 1997, persons who have subscribed for Common Shares in the
Subscription Offering or in the Community Offering will receive a written notice
that until a date specified in the notice, they have the right to affirm,
increase, decrease or rescind their subscriptions for Common Shares. Persons who
do not affirmatively elect to continue their subscription or who elect to
rescind their subscriptions during any such extension will have all of their
funds promptly refunded with interest. Persons who elect to decrease their
subscriptions will have the appropriate portion of their funds promptly refunded
with interest.
USE OF STOCK ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and in the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to the Association by mail or in person, prior
to noon Bridgeport, Ohio Time, on __________, 1997, a properly executed and
completed Stock Order Form, together with full payment of the subscription price
of $10 for each Common Share for which subscription is made. ANY STOCK ORDER
FORM WHICH IS NOT RECEIVED BY THE ASSOCIATION PRIOR TO NOON, BRIDGEPORT, OHIO
TIME, ON _________, 1997, OR FOR WHICH FULL PAYMENT HAS NOT BEEN RECEIVED BY THE
ASSOCIATION PRIOR TO SUCH TIME, WILL NOT BE ACCEPTED. PHOTOCOPIES, TELECOPIES OR
OTHER REPRODUCTIONS OF STOCK ORDER FORMS WILL NOT BE ACCEPTED. See "ADDITIONAL
INFORMATION." THE FAILURE TO DELIVER A PROPERLY EXECUTED ORIGINAL STOCK ORDER
FORM AND FULL PAYMENT IN A MANNER BY WHICH THEY ARE ACTUALLY RECEIVED BY THE
HOLDING COMPANY NO LATER THAN NOON, BRIDGEPORT, OHIO TIME ON THE SUBSCRIPTION
EXPIRATION DATE WILL PRECLUDE THE PURCHASE OF COMMON SHARES IN THE SUBSCRIPTION
OFFERING.
AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE HOLDING COMPANY, MAY
NOT BE MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE HOLDING
COMPANY, UNLESS (I) THE COMMUNITY OFFERING IS NOT COMPLETED BY ___________,
1997, OR (II) THE FINAL VALUATION OF THE ASSOCIATION, AS CONVERTED, IS LESS THAN
$5,737,500 OR MORE THAN $8,926,870. IF EITHER OF THOSE EVENTS OCCUR, PERSONS WHO
HAVE SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR ORDERED COMMON
SHARES IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT, UNTIL A DATE
SPECIFIED IN THE NOTICE, THEY HAVE A RIGHT TO AFFIRM, INCREASE, DECREASE OR
RESCIND THEIR SUBSCRIPTIONS OR ORDERS. ANY PERSON WHO DOES NOT AFFIRMATIVELY
ELECT TO CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS SUBSCRIPTION DURING
ANY SUCH EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
ANY PERSON WHO ELECTS TO DECREASE HIS SUBSCRIPTION DURING ANY SUCH EXTENSION
WILL HAVE THE APPROPRIATE PORTION OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
IN ADDITION, IF THE MAXIMUM PURCHASE LIMITATION IS INCREASED TO MORE THAN 14,000
COMMON SHARES, PERSONS WHO HAVE SUBSCRIBED FOR 14,000 COMMON SHARES WILL BE
GIVEN THE OPPORTUNITY TO INCREASE THEIR SUBSCRIPTIONS.
PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany a completed Stock Order Form in order for
subscriptions or orders to be valid. Payment for Common Shares may be made (i)
in cash, if delivered in person; (ii) by check, bank draft, or money order made
payable to the Association; or (iii) by authorization of withdrawal from deposit
accounts in the Association (other than non-self-directed IRAs). The Association
cannot lend money or otherwise extend credit to any person to purchase Common
Shares.
Payments made in cash or by check, bank draft, or money order will be
placed in a segregated savings account insured by the FDIC up to applicable
limits until the Conversion is completed or terminated. Interest will be paid by
the Association on such account at the then current passbook savings account
rate, which is currently __% with an annual
-66-
<PAGE> 95
percentage yield of ___%, from the date payment is received until the Conversion
is completed or terminated. Payments made by check will not be deemed to have
been received until such check has cleared for payment.
Instructions for authorizing withdrawals from deposit accounts,
including certificates of deposit, are provided in the Stock Order Form. Once a
withdrawal has been authorized, none of the designated withdrawal amount may be
used by a subscriber for any purpose other than to purchase Common Shares,
unless the Conversion is terminated. All sums authorized for withdrawal will
continue to earn interest at the contract rate for such account or certificate
until the completion or termination of the Conversion. Interest penalties for
early withdrawal applicable to certificate accounts will be waived in the case
of withdrawals authorized for the purchase of Common Shares. If a partial
withdrawal from a certificate account results in a balance less than the
applicable minimum balance requirement, the certificate will be canceled and the
remaining balance will earn interest at the Association's passbook rate
subsequent to the withdrawal.
In order to utilize funds in an IRA maintained at the Association, the
funds must be transferred to a self-directed IRA that permits the funds to be
invested in stock. There will be no early withdrawal or IRS penalties for such
transfer. The beneficial owner of the IRA must direct the trustee of the account
to use funds from such account to purchase Common Shares in connection with the
Conversion. THIS CANNOT BE DONE THROUGH THE MAIL. Persons who are interested in
utilizing IRAs at the Association to subscribe for Common Shares should contact
the Conversion Information Center at (614) 635-1632 or (614) 635-1633 for
instructions and assistance.
Subscriptions will not be filled by the Association until subscriptions
have been received in the Offering for up to 573,750 Common Shares, the minimum
point of the Valuation Range. If the Conversion is terminated, all funds
delivered to the Association for the purchase of Common Shares will be returned
with interest, and all charges to deposit accounts will be rescinded. If
subscriptions are received for at least 573,750 Common Shares, subscribers and
other purchasers will be notified by mail, promptly upon completion of the sale
of the Common Shares, of the number of shares for which their subscriptions have
been accepted. The funds on deposit with the Association for the purchase of
Common Shares will be withdrawn and paid to the Holding Company in exchange for
the Common Shares. Certificates representing Common Shares will be delivered
promptly thereafter. The Common Shares will not be insured by the FDIC.
If the ESOP subscribes for Common Shares in the Subscription Offering,
the ESOP will not be required to pay for the shares subscribed for at the time
it subscribes but may pay for such Common Shares upon consummation of the
Conversion.
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS
The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Association and the Holding Company and their Associates and
persons with whom they may be deemed to be Acting in Concert:
<TABLE>
<CAPTION>
Name Total shares (2) Percent of total offering (1) Aggregate purchase price (2)
- ---- ------------ ------------------------- ------------------------
<S> <C> <C> <C>
John O. Costine 2,000 0.30% $ 20,000
Anton M. Godez 14,000 2.07 140,000
Jon W. Letzkus 14,000 2.07 140,000
Manuel C. Thomas 14,000 2.07 140,000
William E. Reline 5,000 0.74 50,000
All directors and executive
officers as a group (9 persons) 52,700 7.81 $527,000
- -----------------------------
<FN>
(1) Assumes that 675,000 Common Shares, the mid-point of the Valuation
Range, will be sold in connection with the Conversion at $10 per share
and that a sufficient number of Common Shares will be available to
satisfy the intended purchases by directors and executive officers. See
"Pricing and Number of Common Shares to be Sold."
(2) Includes intended purchases by Associates of directors and executive
officers to the extent known.
</TABLE>
-67-
<PAGE> 96
All purchases by executive officers and directors of the Association
are being made for investment purposes only and with no present intent to
resell.
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD
The aggregate offering price of the Common Shares will be based on the
pro forma market value of the shares as determined by an independent appraisal
of the Association. RP Financial, a firm which evaluates and appraises financial
institutions, was retained by the Association to prepare an appraisal of the
estimated pro forma market value of the Association as converted. RP Financial
will receive a fee of $12,500 for its appraisal and one update. Such amount does
not include out-of-pocket expenses of up to $1,250.
RP Financial was selected by the Board of Directors of the Association
because RP Financial has extensive experience in the valuation of thrift
institutions, particularly in the mutual-to-stock conversion context. The Board
of Directors interviewed RP Financial's principal, reviewed the credentials of
RP Financial's appraisal personnel, and obtained references and recommendations
from other companies which have engaged RP Financial. RP Financial is certified
by the OTS as a mutual-to-stock conversion appraiser. The Association and RP
Financial have no relationships which would affect RP Financial's independence.
The appraisal was prepared by RP Financial in reliance upon the
information contained herein. RP Financial also considered the following
factors, among others: the present and projected operating results and financial
condition of the Association and the economic and demographic conditions in the
Association's existing market area; the quality and depth of the Association's
management and personnel; certain historical financial and other information
relating to the Association; a comparative evaluation of the operating and
financial statistics of the Association with those of other thrift institutions;
the aggregate size of the Offering; the impact of the Conversion on the
Association's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions and thrift holding companies; and
general conditions in the markets for such stocks.
The Pro Forma Value of the Association, as converted, determined by RP
Financial, is $6,750,000 as of June 6, 1997. The Valuation Range established in
accordance with the Plan is $5,737,500 to $7,762,500, which, based upon a per
share offering price of $10, will result in the sale of between 573,750 and
776,250 Common Shares. The total number of Common Shares sold in the Conversion
will be based on the Valuation Range. Pro forma shareholders' equity per share
and pro forma earnings per share decrease moving from the low end to the high
end of the Valuation Range. See "PRO FORMA DATA."
If, due to changing market conditions, the final valuation is less than
$5,737,500 or more than $8,926,870, subscribers will be given the right to
affirm, increase, decrease or rescind their subscriptions. Any person who does
not affirmatively elect to continue his subscription or elects to rescind his
subscription before the date specified in the notice will have all of his funds
promptly refunded with interest. Any person who elects to decrease his
subscription will have the appropriate portion of his funds promptly refunded
with interest.
THE APPRAISAL BY RP FINANCIAL IS NOT INTENDED, AND MUST NOT BE
CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING
COMMON SHARES OR VOTING TO APPROVE THE CONVERSION. IN PREPARING THE VALUATION,
RP FINANCIAL HAS RELIED UPON AND ASSUMED THE ACCURACY AND COMPLETENESS OF THE
AUDITED FINANCIAL STATEMENTS AND STATISTICAL INFORMATION PROVIDED BY THE
ASSOCIATION. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS
AND OTHER INFORMATION PROVIDED BY THE ASSOCIATION, NOR DID RP FINANCIAL VALUE
INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE ASSOCIATION OR THE HOLDING
COMPANY. THE VALUATION CONSIDERS THE ASSOCIATION ONLY AS A GOING CONCERN AND
SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF THE
ASSOCIATION. MOREOVER, BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON
ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO
CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING
COMMON SHARES WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT THE CONVERSION
PURCHASE PRICE.
A copy of the complete appraisal is on file and open for inspection at
the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the
Central Regional Office of the OTS, 200 West Madison Street, Suite 1300,
Chicago, Illinois 60606; at the offices of the Division, 77 S. High Street,
Columbus, Ohio 43215; and at the offices of the Association.
-68-
<PAGE> 97
RESTRICTIONS ON REPURCHASE OF COMMON SHARES
OTS regulations generally prohibit the Holding Company from
repurchasing any of its capital stock for three years following the date of
completion of the Conversion, except as part of an open-market stock repurchase
program during the second and third years following the Conversion involving no
more than 5% of the outstanding capital stock during a twelve-month period. The
OTS has recently indicated, however, that it would permit repurchases beginning
after six months following the completion of the Conversion and will, under
certain circumstances, permit repurchases of more than 5% during a twelve-month
period. In addition, after such a repurchase, the Association's regulatory
capital must equal or exceed all regulatory capital requirements. Before the
commencement of a repurchase program, the Holding Company must provide notice to
the OTS, and the OTS may disapprove the program if the OTS determines that it
would adversely affect the financial condition of the Association or if it
determines that there is no valid business purpose for such repurchase. Such
repurchase restrictions would not prohibit the ESOP or the RRP from purchasing
Common Shares during the first year following the Conversion.
Ohio regulations prohibit the Holding Company from repurchasing shares
during the first year after the Conversion if the effect thereof would cause the
Association not to meet its capital requirements.
RESTRICTIONS ON TRANSFER OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors and executive officers of the
Holding Company will be subject to the restriction that such shares may not be
sold for a period of one year following completion of the Conversion, except in
the event of the death of the shareholder. The certificates evidencing Common
Shares issued by the Holding Company to directors and executive officers will
bear a legend giving appropriate notice of the restriction imposed upon them. In
addition, the Holding Company will give appropriate instructions to the transfer
agent (if any) for the Holding Company's common shares in respect of the
applicable restriction on transfer of any restricted shares. Any shares issued
as a stock dividend, stock split or otherwise in respect of restricted shares
will be subject to the same restrictions.
Subject to certain exceptions, for a period of three years following
the Conversion, no director or officer of the Holding Company or the
Association, or any of their Associates, may purchase any common shares of the
Holding Company without the prior written approval of the OTS, except through a
broker-dealer registered with the SEC. This restriction will not apply, however,
to negotiated transactions involving more than 1% of a class of outstanding
common shares of the Holding Company or shares acquired by any stock benefit
plan of the Holding Company or the Association.
The Common Shares, like the stock of most public companies, are subject
to the registration requirements of the Act. Accordingly, the Common Shares may
be offered and sold only in compliance with such registration requirements or
pursuant to an applicable exemption from registration. Common Shares received in
the Conversion by persons who are not "affiliates" of the Holding Company may be
resold without registration. Common Shares received by affiliates of the Holding
Company will be subject to resale restrictions. An "affiliate" of the Holding
Company, for purposes of Rule 144, is a person who directly, or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, the Holding Company. Rule 144 generally requires that there
be publicly available certain information concerning the Holding Company and
that sales subject to Rule 144 be made in routine brokerage transactions or
through a market maker. If the conditions of Rule 144 are satisfied, each
affiliate (or group of persons acting in concert with one or more affiliates) is
generally entitled to sell in the public market, without registration, in any
three-month period, a number of shares which does not exceed the greater of (i)
1% of the number of outstanding shares of the Holding Company or (ii) if the
shares are admitted to trading on a national securities exchange or reported
through the automated quotation system of a registered securities association,
such as Nasdaq SmallCap, the average weekly reported volume of trading during
the four weeks preceding the sale.
RIGHTS OF REVIEW
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves the Plan may obtain review of such action
by filing in the Court of Appeals of the United States for the circuit in which
the principal office or residence of such person is located or in the United
States Court of Appeals for the District of Columbia, a written petition praying
that the final action of the OTS be modified, terminated, or set aside. Such
petition must be filed within 30 days after the date of mailing of proxy
materials to the voting members of the Association or within 30 days after the
date of publication in the Federal Register of notice of approval of the Plan by
the OTS, whichever is later.
-69-
<PAGE> 98
RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION
AND RELATED ANTI-TAKEOVER PROVISIONS
GENERAL
Federal law and regulations, Ohio law, the Articles of Incorporation
and Code of Regulations of the Holding Company, the Amended Articles of
Incorporation and Amended Constitution of the Association, and certain employee
benefit plans to be adopted by the Holding Company and the Association contain
certain provisions which may deter or prohibit a change of control of the
Holding Company and the Association. Such provisions are intended to encourage
any acquiror to negotiate the terms of an acquisition with the Board of
Directors of the Holding Company, thereby reducing the vulnerability of the
Holding Company to takeover attempts and certain other transactions which have
not been negotiated with and approved by the Board of Directors.
Anti-takeover devices and provisions may, however, have the effect of
discouraging sudden and other hostile takeover attempts which are not approved
by the Board of Directors, even under circumstances in which shareholders may
deem such takeovers to be in their best interests or in which shareholders may
receive a substantial premium for their shares over then current market prices.
As a result, shareholders who might desire to participate in such a transaction
may not have an opportunity to participate by virtue of such devices and
provisions. Such provisions may also benefit management by discouraging changes
of control in which incumbent management would be removed from office. The
following is a summary of certain provisions of such laws, regulations and
documents.
FEDERAL LAW AND REGULATION
FEDERAL DEPOSIT INSURANCE ACT. The Federal Deposit Insurance Act (the
"FDIA") provides that no person, acting directly or indirectly or in concert
with one or more persons, shall acquire control of any insured savings
association or holding company unless 60 days' prior written notice has been
given to the OTS, and the OTS has not issued a notice disapproving the proposed
acquisition. Control, for purposes of the FDIA, means the power, directly or
indirectly, to direct the management or policies of an insured institution or to
vote 25% or more of any class of securities of such institution. This provision
of the FDIA is implemented by the OTS in accordance with the Regulations for
Acquisition of Control of an Insured Institution, 12 C.F.R. Part 574 (the
"Control Regulations"). Control, for purposes of the Control Regulations, exists
in situations in which the acquiring party has direct or indirect voting control
of at least 25% of the institution's voting shares or controls in any manner the
election of a majority of the directors of such institution or the Director of
the OTS determines that such person exercises a controlling influence over the
management or policies of such institution. In addition, control is presumed to
exist, subject to rebuttal, if the acquiring party (which includes a group
"acting in concert") has voting control of at least 10% of the institution's
voting stock and any of eight control factors specified in the Control
Regulations exists. There are also rebuttable presumptions in the Control
Regulations concerning whether a group "acting in concert" exists, including
presumed action in concert among members of an "immediate family." The Control
Regulations apply to acquisitions of Common Shares in connection with the
Conversion and to acquisitions after the Conversion.
CHANGE IN CONTROL OF CONVERTED ASSOCIATIONS. A regulation of the OTS
provides that, for a period of three years after the date of the completion of
the Conversion, no person shall, directly or indirectly, offer to acquire or
acquire beneficial ownership of more than 10% of any class of equity security of
the Holding Company or the Association without the prior written approval of the
OTS. In addition to the actual ownership of more than 10% of a class of equity
securities, a person shall be deemed to have acquired beneficial ownership of
more than 10% of the equity securities of the Holding Company or the Association
if the person holds any combination of stock and revocable and/or irrevocable
proxies of the Holding Company under circumstances that give rise to a
conclusive control determination or rebuttable control determination under the
Control Regulations. Such circumstances include (i) holding any combination of
voting shares and revocable and/or irrevocable proxies representing more than
25% of any class of voting stock of the Holding Company enabling the acquirer
(a) to elect one-third or more of the directors, (b) to cause the Holding
Company or the Association's shareholders to approve the acquisition or
corporate reorganization of the Holding Company, or (c) to exert a controlling
influence on a material aspect of the business operations of the Holding Company
or the Association, and (ii) acquiring any combination of voting shares and
irrevocable proxies representing more than 25% of any class of voting shares.
Such three-year restriction does not apply (i) to any offer with a view
toward public resale made exclusively to the Holding Company or the Association
or any underwriter or selling group acting on behalf of the Holding Company or
the Association, (ii) unless made applicable by the OTS by prior written advice,
to any offer or announcement of an offer which,
-70-
<PAGE> 99
if consummated, would result in the acquisition by any person, together with all
other acquisitions by any such person of the same class of securities during the
preceding 12-month period, of not more than 1% of the class of securities, or
(iii) to any offer to acquire or the acquisition of beneficial ownership of more
than 10% of any class of equity security of the Holding Company or the
Association by a corporation whose ownership is or will be substantially the
same as the ownership of the Holding Company or the Association if made more
than one year following the date of the Conversion. The foregoing restriction
does not apply to the acquisition of the capital stock of the Holding Company or
the Association by one or more tax-qualified employee stock benefit plans,
provided that the plan or plans do not have the beneficial ownership in the
aggregate of more than 25% of any class of equity security of the Holding
Company or the Association.
HOLDING COMPANY RESTRICTIONS. Federal law generally prohibits a savings
and loan holding company, without prior approval of the Director of the OTS,
from (i) acquiring control of any other savings association or savings and loan
holding company, (ii) acquiring substantially all of the assets of a savings
association or holding company thereof, or (iii) acquiring or retaining more
than 5% of the voting shares of a savings association or holding company thereof
which is not a subsidiary.
Under certain circumstances, a savings and loan holding company is
permitted to acquire, with the approval of the Director of the OTS, up to 15% of
the previously unissued voting shares of an undercapitalized savings association
for cash without such savings association being deemed to be controlled by the
Holding Company. Except with the prior approval of the Director of the OTS, no
director or officer of the savings and loan holding company or person owning or
controlling by proxy or otherwise more than 25% of such company's voting shares
may acquire control of any savings institution, other than a subsidiary
institution or any other savings and loan holding company.
OHIO LAW
MERGER MORATORIUM STATUTE. Ohio has a merger moratorium statute
regulating certain takeover bids affecting certain public corporations which
have significant ties to Ohio. The statute prohibits, with some exceptions, any
merger, combination or consolidation and any of certain other sales, leases,
distributions, dividends, exchanges, mortgages or transfers between such an Ohio
corporation and any person who has the right to exercise, alone or with others,
10% or more of the voting power of such corporation (an "Interested
Shareholder") for three years following the date on which such person first
becomes an Interested Shareholder. Such a business combination is permitted only
if, prior to the time such person first becomes an Interested Shareholder, the
Board of Directors of the issuing corporation has approved the purchase of
shares which resulted in such person first becoming an Interested Shareholder.
After the initial three-year moratorium, such a business combination
may not occur unless (1) one of the exceptions referred to above applies, (2)
the holders of at least two-thirds of the voting shares, and of at least a
majority of the voting shares not beneficially owned by the Interested
Shareholder, approve the business combination at a meeting called for such
purpose, or (3) the business combination meets certain statutory criteria
designed to ensure that the issuing public corporation's remaining shareholders
receive fair consideration for their shares.
An Ohio corporation, under certain circumstances, may "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. The
statute still prohibits for 12 months, however, any business combination that
would have been prohibited but for the adoption of such an opt-out amendment.
The statute also provides that it will continue to apply to any business
combination between a person who became an Interested Shareholder prior to the
adoption of such an amendment as if the amendment had not been adopted. The
Articles of Incorporation of the Holding Company do not opt out of the
protection afforded by Chapter 1704.
CONTROL SHARE ACQUISITION STATUTE. Section 1701.831 of the Ohio Revised
Code (the "Control Share Acquisition Statute") requires that certain
acquisitions of voting securities which would result in the acquiring
shareholder owning 20%, 33-1/3% or 50% of the outstanding voting securities of
the Holding Company (a "Control Share Acquisition") must be approved in advance
by the holders of at least a majority of the outstanding voting shares
represented at a meeting at which a quorum is present and a majority of the
portion of the outstanding voting shares represented at such a meeting,
excluding the voting shares owned by the acquiring shareholder. The Control
Share Acquisition Statute was intended, in part, to protect shareholders of Ohio
corporations from coercive tender offers.
TAKEOVER BID STATUTE. Ohio law also contains a statute regulating
takeover bids for any Ohio corporation. Such statute provides that no offeror
may make a takeover bid unless (i) at least 20 days prior thereto the offeror
announces publicly the terms of the proposed takeover bid and files with the
Ohio Division of Securities (the "Securities Division") and
-71-
<PAGE> 100
provides the target company with certain information in respect of the offeror,
his ownership of the company's shares and his plans for the company, and (ii)
within ten days following such filing either (a) no hearing is required by the
Securities Division, (b) a hearing is requested by the target company within
such time but the Securities Division finds no cause for hearing exists, or (c)
a hearing is ordered and upon such hearing the Securities Division adjudicates
that the offeror proposes to make full, fair and effective disclosure to
offerees of all information material to a decision to accept or reject the
offer.
The takeover bid statute also states that no offeror shall make a
takeover bid if he owns 5% or more of the issued and outstanding equity
securities of any class of the target company, any of which were purchased
within one year before the proposed takeover bid, and the offeror, before making
any such purchase, failed to announce his intention to gain control of the
target company or otherwise failed to make full and fair disclosure of such
intention to the persons from whom he acquired such securities. The United
States District Court for the Southern District of Ohio has determined that the
Ohio takeover bid statute is preempted by federal regulation.
ARTICLES OF INCORPORATION OF THE HOLDING COMPANY
ABILITY OF THE BOARD OF DIRECTORS TO ISSUE ADDITIONAL SHARES. The
Articles of Incorporation of the Holding Company permit the Board of Directors
of the Holding Company to issue additional common shares. The ability of the
Board of Directors to issue such additional shares may create impediments to
gaining, or otherwise discourage persons from attempting to gain, control of the
Holding Company.
MATTERS REQUIRING ENLARGED SHAREHOLDER VOTE. Article Sixth of the
Articles of Incorporation of the Holding Company provides that, in the event the
Board of Directors recommends against the approval of any of the following
matters, the holders of at least 75% of the voting shares of the Holding Company
are required to approve any such matters:
(1) A proposed amendment to the Articles of Incorporation
of the Holding Company;
(2) A proposed Amendment to the Code of Regulations of
the Holding Company;
(3) A proposal to change the number of directors by
action of the shareholders;
(4) An agreement of merger or consolidation providing for
the proposed merger or consolidation of the Holding
Company with or into one or more other corporations;
(5) A proposed combination or majority share acquisition
involving the issuance of shares of the Holding
Company and requiring shareholder approval;
(6) A proposal to sell, exchange, transfer or otherwise
dispose of all, or substantially all, of the assets,
with or without the goodwill, of the Holding Company;
or
(7) A proposed dissolution of the Holding Company.
ELIMINATION OF CUMULATIVE VOTING. Section 1701.55 of the Ohio Revised
Code provides in substance and effect that shareholders of a for profit
corporation which is not a savings and loan association and which is
incorporated under Ohio law must initially be granted the right to cumulate
votes in the election of directors. The right to cumulate votes in the election
of directors will exist at a meeting of shareholders if notice in writing is
given by any shareholder to the President, a Vice President or the Secretary of
an Ohio corporation, not less than 48 hours before a meeting at which directors
are to be elected, that the shareholder desires that the voting for the election
of directors shall be cumulative and if an announcement of the giving of such
notice is made upon the convening of such meeting by the Chairman or Secretary
or by or on behalf of the shareholder giving such notice. If cumulative voting
is invoked, each shareholder would have a number of votes equal to the number of
directors to be elected, multiplied by the number of shares owned by him, and
would be entitled to distribute his votes among the candidates as he sees fit.
Section 1701.69 of the Ohio Revised Code provides that an Ohio
corporation may eliminate cumulative voting in the election of directors after
the expiration of 90 days after the date of initial incorporation by filing with
the Ohio Secretary of State an amendment to the articles of incorporation
eliminating cumulative voting. The Articles of Incorporation of the Holding
Company will be amended prior to the consummation of the Conversion to eliminate
cumulative voting. The elimination of cumulative voting may make it more
difficult for shareholders to elect as directors persons whose election is not
supported by the Board of Directors of the Holding Company.
-72-
<PAGE> 101
EMPLOYEE BENEFIT PLANS
The Stock Option Plan, the ESOP and the RRP also may be deemed to have
certain anti-takeover effects. See "DESCRIPTION OF AUTHORIZED SHARES" and
"MANAGEMENT - Employee Stock Ownership Plan; - Stock Option Plan; and -
Recognition and Retention Plan and Trust."
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
The Articles of Incorporation of the Holding Company authorize the
issuance of 3,000,000 common shares, without par value. Upon receipt by the
Holding Company of the purchase price therefor and subsequent issuance thereof,
each Common Share issued in the Conversion will be fully paid and nonassessable.
Notwithstanding the foregoing, until payments are received by the Holding
Company from the ESOP in accordance with the terms of a loan agreement to be
entered into by and between the Holding Company and the ESOP, Common Shares
issued to the ESOP for which payment in money has not been received will not be
fully paid and non-assessable. The Common Shares will represent nonwithdrawable
capital and will not and cannot be insured by the FDIC. Each Common Share will
have the same relative rights and will be identical in all respects to every
other Common Share.
The following is a summary description of the rights of the common
shares of the Holding Company, including the material express terms of such
shares as set forth in the Holding Company's Articles of Incorporation.
LIQUIDATION RIGHTS
In the event of the complete liquidation or dissolution of the Holding
Company, the holders of the Common Shares will be entitled to receive all assets
of the Holding Company available for distribution, in cash or in kind, after
payment or provision for payment of (i) all debts and liabilities of the Holding
Company, (ii) any accrued dividend claims, and (iii) any interests in the
Liquidation Account payable as a result of a liquidation of the Association. See
"THE CONVERSION Liquidation Account."
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights
in the Holding Company. Each holder of Common Shares will be entitled to one
vote for each share held of record on all matters submitted to a vote of holders
of common shares. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND
THE ASSOCIATION - Articles of Incorporation of the Holding Company --
Elimination of Cumulative Voting."
DIVIDENDS
The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions" and "TAXATION -
Federal Taxation" for a description of restrictions on the payment of cash
dividends.
PREEMPTIVE RIGHTS
After the consummation of the Conversion, no shareholder of the Holding
Company will have, as a matter of right, the preemptive right to purchase or
subscribe for shares of any class, now or hereafter authorized, or to purchase
or subscribe for securities or other obligations convertible into or
exchangeable for such shares or which by warrants or otherwise entitle the
holders thereof to subscribe for or purchase any such share.
-73-
<PAGE> 102
RESTRICTIONS ON ALIENABILITY
See "THE CONVERSION - Restrictions on Repurchase of Common Shares" for
a description of the limitations on the repurchase of stock by the Holding
Company; "THE CONVERSION - Restrictions on Transfer of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased by officers and directors; and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION AND
RELATED ANTI-TAKEOVER PROVISIONS" for information regarding regulatory
restrictions on acquiring Common Shares.
REGISTRATION REQUIREMENTS
The Holding Company will register its common shares pursuant to Section
12(g) of the Exchange Act prior to or promptly upon the completion of the
Conversion and will not deregister such shares for a period of three years
following the completion of the Conversion. Upon such registration, the proxy
and tender offer rules, insider trading restrictions, annual and periodic
reporting and other requirements of the Exchange Act will apply to the Holding
Company.
LEGAL MATTERS
Certain legal matters pertaining to the Common Shares and the federal
and Ohio tax consequences of the Conversion are being passed upon for the
Holding Company and the Association by Vorys, Sater, Seymour and Pease,
Cincinnati, Ohio. Certain legal matters are being passed upon for Webb by its
counsel, Silver, Freedman & Taff, L.L.P., Washington, D.C.
EXPERTS
RP Financial has consented to the publication herein of the summary of
its letter to the Association setting forth its opinion as to the estimated pro
forma market value of the Association as converted and to the use of its name
and statements with respect to it appearing herein.
The consolidated financial statements of the Association as of December
31, 1996, and for each of the three years in the period ended December 31, 1996,
have been included herein in reliance upon the report of S. R. Snodgrass, A.C.,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Holding Company has filed with the SEC a Registration Statement on
Form S-1 (File No. 333-______) under the Act with respect to the Common Shares
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Such information may be
inspected at the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies may be obtained from the SEC at
prescribed rates.
The Association has filed an Application for Conversion (the
"Application") with the OTS and the Division. This Prospectus omits certain
information contained in the Application. The Application may be inspected at
the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the
Central Regional Office of the OTS, 200 West Madison, Suite 1300, Chicago,
Illinois 60606; and at the offices of the Division, 77 S. High Street, Columbus,
Ohio 43215.
-74-
<PAGE> 103
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
MARCH 31, 1997
Page
Number
------
Independent Auditor's Report 2
Financial Statements
Consolidated Statements of Financial Condition 3 - 4
Consolidated Statements of Operations 5
Consolidated Statements of Changes in Equity 6
Consolidated Statements of Cash Flows 7
Notes to the Consolidated Financial Statements 8 - 25
<PAGE> 104
INDEPENDENT AUDITOR'S REPORT
----------------------------
Board of Directors
Bridgeport Savings and Loan Association
We have audited the consolidated statements of financial condition of Bridgeport
Savings and Loan Association and subsidiary as of December 31, 1996 and 1995,
and the related consolidated statements of operations, retained earnings, and
cash flows for the three years ended December 31, 1996. These financial
statements are the responsibility of the association's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a 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 Bridgeport Savings
and Loan Association and subsidiary as of December 31, 1996 and 1995, and the
results of their operations and cash flows for the three years ended December
31, 1996, in conformity with generally accepted accounting principles.
S.R. Snodgrass, A.C.
Wheeling, West Virginia
January 7, 1997, except for Note 14
which is March 26, 1997
-2-
<PAGE> 105
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
March 31, ------------------------------
ASSETS 1997 1996 1995
----------- ----------- ----------
(Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents (including interest
bearing deposits of $2,085,393 at 3/31/97;
$1,985,410 at 12/31/96; and $625,487 at 12/31/95) $ 2,613,211 $2,435,662 $1,177,023
Interest bearing time deposits 1,200,000 800,000 1,000,000
Investment securities:
Available for sale (at market value) 344,800 339,300 317,700
Held to maturity (market value of $4,800,924 at 3/31/97; 4,736,455 4,781,206 5,377,567
$4,873,596 at 12/31/96; and $5,517,935 at 12/31/95)
Loans receivable, net 25,016,835 24,892,321 25,972,213
Real estate acquired in settlement of loans, net of 17,620 - -
allowances of $-0- at 3/31/97, 12/31/96 and 12/31/95
Office properties and equipment, at cost, less accumulated 462,045 471,672 514,602
depreciation of $732,538 at 3/31/97; $722,911 at
12/31/96; and $652,686 at 12/31/95
Accrued interest receivable, loans and investments (net of 120,755 134,340 151,812
reserve for uncollected interest of $3,985 at 3/31/97;
$1,802 at 12/31/96; and $1,019 at 12/31/95)
Prepaid federal income tax 7,619 45,825 14,585
Prepaid expenses and other assets 45,055 28,328 27,749
----------- ----------- -----------
TOTAL ASSETS $34,564,395 $33,928,654 $34,553,251
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE> 106
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------------
1997 1996 1995
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
LIABILITIES AND RETAINED EARNINGS
NOW and Money Market withdrawal accounts $ 4,238,092 $ 4,268,930 $ 5,624,033
Savings accounts 25,186,609 24,522,191 23,990,762
----------- ----------- -----------
Total deposits 29,424,701 28,791,121 29,614,795
Advances by borrowers for taxes and insurance 81,210 154,245 148,735
Accrued interest payable on savings 9,625 9,071 29,041
Deferred federal income taxes 63,005 55,508 43,813
Other liabilities 126,009 148,366 158,886
----------- ----------- -----------
Total liabilities 29,704,550 29,158,311 29,995,270
Commitments and contingencies (Note 9)
Retained earnings-substantially restricted 4,859,845 4,770,343 4,557,981
----------- ----------- -----------
TOTAL LIABILITIES AND
RETAINED EARNINGS $34,564,395 $33,928,654 $34,553,251
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE> 107
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Year Ended December 31,
March 31, December 31,
------------------------- ----------------------------------------------
1997 1996 1996 1995 1994
--------- ---------- ---------- ---------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans - taxable $489,363 $510,830 $2,000,015 $1,909,388 $1,663,222
Mortgage-backed certificates - taxable 22,523 27,554 102,351 119,631 160,246
Interest-bearing deposits and
investment securities - taxable 96,531 94,041 390,802 429,689 458,467
Dividends on Federal Home Loan Bank 5,598 5,268 21,746 19,785 15,649
stock --------- ---------- ---------- ---------- -----------
Total interest and dividend income 614,015 637,693 2,514,914 2,478,493 2,297,584
--------- --------- ---------- ----------- -----------
INTEREST EXPENSE
Savings deposits 286,720 288,603 1,157,860 1,107,184 982,148
Federal Home Loan Bank advances 505 - - 1,172 -
--------- ---------- ---------- ---------- -----------
Total interest expense 287,225 288,603 1,157,860 1,108,356 982,148
--------- ---------- ---------- ---------- -----------
Net interest income 326,790 349,090 1,357,054 1,370,137 1,315,436
PROVISION FOR LOSSES ON LOANS - - - - 16,669
--------- ---------- ---------- ---------- -----------
Net interest income after provision
for loan losses 326,790 349,090 1,357,054 1,370,137 1,298,767
--------- ---------- ---------- ---------- -----------
NONINTEREST INCOME
Service charges 2,104 2,394 16,313 18,973 24,184
Gains on sale of other real estate - - - - 32,105
Other income and fees 7,052 10,743 28,658 22,765 22,694
--------- ---------- ---------- ---------- -----------
Total noninterest income 9,156 13,137 44,971 41,738 78,983
--------- ---------- ---------- ---------- -----------
NONINTEREST EXPENSES
General and administrative:
Salaries and benefits 90,818 87,476 349,554 351,608 326,553
Occupancy expense 14,647 13,585 59,245 56,750 62,744
Furniture and equipment expense 8,964 13,070 65,632 54,729 51,660
Machine rental and service bureau
expense 12,464 15,834 55,489 49,211 48,151
Stationery printing and office expenses 10,125 6,822 29,022 23,832 25,190
Advertising and public relations 7,719 4,733 32,204 37,686 35,940
Franchise, payroll and other taxes 23,811 24,973 91,559 90,991 89,364
Federal insurance premium 4,621 19,950 270,218 78,913 82,873
Legal and accounting fees 5,287 7,454 29,217 24,272 21,943
Expenses for real estate acquired - - - - 7,482
Other operating expenses 22,285 23,507 101,180 97,212 96,265
--------- ---------- ---------- ---------- -----------
Total noninterest expense 200,741 217,404 1,083,320 865,204 848,165
--------- ---------- ---------- ---------- -----------
Income before income taxes 135,205 144,823 318,705 546,671 529,585
PROVISION FOR INCOME TAXES 45,703 48,893 106,343 185,438 174,127
--------- ---------- ---------- ---------- -----------
Net income $ 89,502 $ 95,930 $ 212,362 $ 361,233 $ 355,458
========= ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE> 108
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
<TABLE>
<CAPTION>
<S> <C>
BALANCE, DECEMBER 31, 1993 $3,841,290
Net income for the year ended December 31, 1994 355,458
----------
BALANCE, DECEMBER 31, 1994 4,196,748
Net income for the year ended December 31, 1995 361,233
----------
BALANCE, DECEMBER 31, 1995 4,557,981
Net income for the year ended December 31, 1996 212,362
----------
BALANCE, DECEMBER 31, 1996 4,770,343
Net income for the three months ended March 31, 1997 (unaudited)
89,502
----------
BALANCE, MARCH 31, 1997 (UNAUDITED) $4,859,845
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-6-
<PAGE> 109
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
---------------------- -------------------------------------
1997 1996 1996 1995 1994
--------- ------- -------- ------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 89,502 $ 95,930 $ 212,362 $ 361,233 $ 355,458
Adjustments:
Depreciation 9,627 15,559 70,225 57,139 52,750
Gain on real estate owned - - - - (32,105)
Provision for loan losses - - - - 16,669
Deferred federal income tax 7,497 - 11,695 (6,001) (23,406)
Accretion of investment security discounts (870) (3,935) (10,714) (23,942) (14,243)
Federal Home Loan Bank stock dividend (5,500) (5,200) (21,600) (19,600) (15,400)
Accrued interest receivable 13,585 17,678 17,472 (11,032) 6,714
Prepaid expenses 21,479 (7,866) (31,819) (32,393) 6,024
Accrued interest payable 554 (16,197) (19,970) 6,117 9,386
Accrued federal income taxes - 34,307 - - (15,069)
Other liabilities (22,357) (33,514) (10,520) 82,146 (4,941)
---------- ---------- ----------- ----------- -----------
Net cash provided by operating activities 113,517 96,762 217,131 413,667 341,837
---------- ---------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of time deposits 100,000 500,000 1,600,000 2,300,000 500,000
Purchases of time deposits (500,000) (300,000) (1,400,000) (700,000) (800,000)
Proceeds from maturities of U.S. Government and agencies
obligations - - 400,000 - 300,000
Purchases of investment securities - - - - (2,959,375)
Proceeds from redemptions of mortgage-backed certificates 45,621 34,028 207,075 332,936 744,688
Net change in loans (142,134) 368,199 1,079,892 (3,189,330) (1,272,035)
Acquisition of office properties and equipment - (10,979) (27,295) (14,999) (42,268)
Disposition of real estate owned - - - - 214,133
---------- ---------- ----------- ----------- -----------
Net cash provided by (used in) investing activities (496,513) 591,248 1,859,672 (1,271,393) (3,314,857)
---------- ---------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in deposits, net 633,580 211,763 (823,674) 416,756 (1,960,377)
Change in mortgage escrow funds, net (73,035) (98,161) 5,510 (6,086) 18,851
---------- ---------- ----------- ----------- -----------
Net cash provided by (used in) financing activities 560,545 113,602 (818,164) 410,670 (1,941,526)
---------- ---------- ----------- ----------- -----------
Change in cash and cash equivalents 177,549 801,612 1,258,639 (447,056) (4,914,546)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,435,662 1,177,023 1,177,023 1,624,079 6,538,625
---------- ---------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,613,211 $1,978,635 $ 2,435,662 $ 1,177,023 $ 1,624,079
========== ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-7-
<PAGE> 110
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997, DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist the
reader in understanding and evaluating the consolidated financial statements
of Bridgeport Savings and Loan Association and Subsidiary. The accounting
and reporting policies of the association conform to generally accepted
accounting principles and to general practice within the savings and loan
industry. The following is a description of the more significant of those
policies.
The consolidated statements of financial condition as of March 31, 1997, and
the consolidated statements of operations, changes in equity, and cash flows
for the three-month periods ended March 31, 1997 and 1996, are unaudited.
However, in the opinion of management, these financial statements include
all material adjustments necessary for the fair presentation of the
association's financial position, consisting solely of normal and recurring
adjustments.
NATURE OF OPERATIONS - Bridgeport Savings and Loan Association provides
banking services to customers through its Bridgeport and Shadyside offices.
The association's subsidiary, Trailways Financial, Inc., conducted no
operations for the periods ended March 31, 1997, December 31, 1996 and
December 31, 1995.
USE OF ESTIMATES - The financial statements have been prepared in conformity
with generally accepted accounting principles and, as such, include amounts
based on informed estimates and judgments of management with consideration
given to materiality. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the association and its wholly-owned subsidiary, Trailways
Financial, Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.
RECLASSIFICATION - Certain amounts for the years ended December 31, 1996,
1995, and 1994, have been reclassified to conform with the current period's
presentation.
OFFICE PROPERTIES AND EQUIPMENT - Land is carried at cost; buildings and
equipment are stated at cost, less accumulated depreciation. Maintenance,
repairs, and minor improvements are charged to operating expenses as
incurred. Major improvements and betterments are capitalized.
Depreciation is computed on the straight-line method for financial reporting
purposes over the following estimated useful lives:
Building and improvements 10 - 50 years
Furniture, fixtures and equipment 5 - 50 years
Automobiles 5 years
-8-
<PAGE> 111
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REAL ESTATE - Real estate acquired in the settlement of loans is carried at
the lower of the recorded investment in the property or its fair value minus
estimated costs of sale.
LOAN FEES, DISCOUNTS, AND PREMIUMS - Bridgeport Savings and Loan Association
accounts for loan fees in conformity with requirements of the Statement of
Financial Accounting Standards No. 91. Accordingly, loan origination and
commitment fees and certain direct loan origination costs are deferred, and
the net amount amortized over the contractual lives of the related loans or
commitments as an adjustment of the related loan's yield using the interest
method.
LOANS RECEIVABLE - Loans receivable are stated at their unpaid principal
balance, net of the allowance for loan losses. Interest on loans is credited
to income as earned and is accrued only if it is considered collectible. An
allowance for uncollected interest on mortgage loans is provided for all
accrued interest on loans which are delinquent 90 days or more, resulting in
interest previously accrued on those loans being reversed from income, and
thereafter, interest is recognized only to the extent of payments received.
Loans are returned to accrual status when less than 90 days delinquent and
when, in management's judgment, collection is probable.
Effective January 1, 1995, the association adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan" and Statement of Financial Accounting Standards No. 118, "Accounting
by Creditors for Impairment of a Loan-Income Recognition and Disclosures"
(FAS 114 and 118). Impaired loans as defined by FAS 114 and 118 exclude
certain consumer loans and residential real estate loans. Loan impairment is
measured based on the present value of expected cash flows discounted at the
loan's effective interest rate or at the fair value of the collateral if the
loan is collateral dependent. Since the adoption of FAS 114 and 118, the
association had no loans which management has determined to be impaired.
-9-
<PAGE> 112
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is maintained at a
level which, in management's judgment, is adequate to absorb credit losses
inherent in the loan portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan portfolio,
including the nature of the portfolio, credit concentrations, trends in
historical loss experience, specific impaired loans, and economic
conditions. Allowances for impaired loans are generally determined based on
collateral values or the present value of estimated cash flows. The
allowance is increased by a provision for loan losses, which is charged to
expense and reduced by charge-offs, net of recoveries. Changes in the
allowance relating to impaired loans are charged or credited to the
provision for loan losses. Because of uncertainties inherent in the
estimation process, management's estimate of credit losses inherent in the
loan portfolio and the related allowance may change in the near term.
INVESTMENT SECURITIES - Effective January 1, 1994, the association adopted
the provisions of Statement of Financial Accounting Standards (FAS) No. 115
"Accounting for Certain Investments in Debt and Equity Securities." Under
FAS No. 115, investment securities in the portfolio are classified as either
available for sale or held to maturity. The association does not currently
conduct short term purchase and sale transactions of investment securities
which would be classified as trading securities.
The initial determination of investments classified as available for sale
was based principally on the association's asset/liability position and
potential liquidity needs. These securities are available for sale at any
time based upon management's assessment of changes in economic or financial
market conditions, interest rate or prepayment risk, liquidity
considerations, and other factors. Securities classified as available for
sale are carried at market value.
All remaining securities in the investment portfolio are classified as held
to maturity. The association purchases these securities with the intent and
the ability to hold until their maturity. Securities classified as held to
maturity are carried at cost, adjusted for amortization of premiums and
accretion of discounts.
-10-
<PAGE> 113
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES - In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." FAS No. 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability
method of accounting for income taxes. Under the asset and liability method
of FAS No. 109, deferred tax assets and liabilities are recognized for the
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 expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
FAS No. 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
RETIREMENT PLAN AND 401(K) THRIFT PLAN - The retirement plan is a
noncontributory plan for all eligible employees and is funded through the
Savings and Loan Retirement Fund. Contributions for past service are being
amortized to expense over a ten-year period. Because the plan is a
multi-employer plan, plan information for the Association is not
determinable.
The thrift plan is a contributory plan for all eligible employees. Employer
contributions and related administrative fees are expensed in the year
incurred.
NOTE 2 - INVESTMENTS
The carrying amounts and fair values of the association's investment
securities at March 31, 1997, and December 31, 1996 and 1995 are summarized
as follows:
<TABLE>
<CAPTION>
March 31, 1997 (unaudited)
-----------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Securities Available for Sale:
Federal Home Loan Bank stock (restricted) $ 329,800 $ - $ - $ 329,800
Intrieve Incorporated 15,000 - - 15,000
---------- ------- ------- ----------
Total available for sale 344,800 - - 344,800
---------- ------- ------- ----------
Securities to be Held to Maturity:
U. S. Government and federal agencies 3,797,677 21,619 27,096 3,792,200
Mortgage-backed securities 938,778 69,946 - 1,008,724
---------- ------- ------- ----------
Total held to maturity 4,736,455 91,565 27,096 4,800,924
---------- ------- ------- ----------
Total $5,081,255 $91,565 $27,096 $5,145,724
========== ======= ======= ==========
</TABLE>
-11-
<PAGE> 114
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Securities Available for Sale:
Federal Home Loan Bank stock (restricted) $ 324,300 $ - $ - $ 324,300
Intrieve Incorporated 15,000 - - 15,000
---------- -------- ------- ----------
Total available for sale 339,300 - - 339,300
---------- -------- ------- ----------
Securities to be Held to Maturity:
U. S. Government and federal agencies 3,797,043 31,468 17,883 3,810,628
Mortgage-backed securities 984,163 78,805 - 1,062,968
---------- -------- ------- ----------
Total held to maturity 4,781,206 110,273 17,883 4,873,596
---------- -------- ------- ----------
Total $5,120,506 $110,273 $17,883 $5,212,896
========== ======== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Securities Available for Sale:
Federal Home Loan Bank stock (restricted) $ 302,700 $ - $ - $302,700
Intrieve Incorporated 15,000 - - 15,000
---------- -------- ------- ----------
Total available for sale 317,700 - - 317,700
---------- -------- ------- ----------
Securities to be Held to Maturity:
U. S. Government and federal agencies 4,186,947 68,508 18,536 4,236,919
Mortgage-backed securities 1,190,620 90,396 - 1,281,016
---------- -------- ------- ----------
Total held to maturity 5,377,567 158,904 18,536 5,517,935
---------- -------- ------- ----------
Total $5,695,267 $158,904 $18,536 $5,835,635
========== ======== ======= ==========
</TABLE>
-12-
<PAGE> 115
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - INVESTMENTS (CONTINUED)
The book value and fair value of investment securities at March 31, 1997,
and December 31, 1996 and 1995, 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.
<TABLE>
<CAPTION>
March 31, 1997 (Unaudited)
-------------------------------------------------------------
Securities to be held Securities
to maturity available for sale
--------------------------- ---------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $2,497,677 $2,494,140 $ - $ -
Due from one year through five years 1,300,000 1,298,060 - -
Equity securities - - 344,800 344,800
Mortgage-backed securities 938,778 1,008,724 - -
---------- ---------- -------- --------
Total $4,736,455 $4,800,924 $344,800 $344,800
========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------------------
Securities to be held Securities
to maturity available for sale
----------------------------- ----------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 500,000 $ 498,905 $ - $ -
Due from one year through five years 3,297,043 3,311,723 - -
Equity securities - - 339,300 339,300
Mortgage-backed securities 984,163 1,062,968 - -
---------- ---------- -------- --------
Total $4,781,206 $4,873,596 $339,300 $399,300
========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------------------
Securities to be held Securities
to maturity available for sale
----------------------------- ----------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Due in one year or less $ 399,437 $ 404,500 $ - $ -
Due from one year through five years 3,787,510 3,832,419 - -
Equity securities - - 317,700 317,700
Mortgage-backed securities 1,190,620 1,281,016 - -
---------- ---------- -------- --------
Total $4,781,206 $5,517,935 $317,700 $317,700
========== ========== ======== ========
</TABLE>
-13-
<PAGE> 116
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - LOANS RECEIVABLE
Loans receivable consisted of the following:
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1997 1996 1995
----------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Mortgage loans:
Construction $ 123,700 $ 123,700 $ 469,000
1-4 family 20,690,739 20,605,236 21,086,654
Multi-family 48,192 51,162 555,925
Commercial 417,503 459,924 1,064,142
Land 78,926 86,225 4,756
----------- ----------- -----------
21,359,060 21,326,247 23,180,477
----------- ----------- -----------
Consumer Loans:
Share loans 310,298 264,620 243,833
Other consumer loans 3,374,741 3,441,738 2,953,265
----------- ----------- -----------
3,785,039 3,706,358 3,197,098
----------- ----------- -----------
Commercial loans: 100,620 105,264 132,187
----------- ----------- -----------
Total 25,244,719 25,137,869 26,509,762
----------- ----------- -----------
Less:
Loans in process 35,556 50,649 327,704
Allowance for loan losses 143,000 143,000 143,000
Deferred loan fees 49,328 51,899 66,845
----------- ----------- -----------
227,884 245,548 537,549
----------- ----------- -----------
Loans receivable, net $25,016,835 $24,892,321 $25,972,213
=========== =========== ===========
</TABLE>
The weighted average interest rate of the association's loans was 7.79% at
March 31, 1997, 7.77% at December 31, 1996, and 7.80% at December 31, 1995.
Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
----------------------- -----------------------------------
1997 1996 1997 1995 1994
--------- --------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $ 143,000 $ 143,000 $ 143,000 $ 143,000 $ 145,000
Provision charged to income - - - - 16,030
Charge-offs - - - - (18,030)
--------- --------- --------- --------- ---------
Balance, end of period $ 143,000 $ 143,000 $ 143,000 $ 143,000 $ 143,000
========= ========= ========= ========= =========
</TABLE>
-14-
<PAGE> 117
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ------------------------------
1997 1996 1995
----------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Land $ 137,638 $ 137,63 $ 137,638
Office buildings and improvements 603,462 603,462 603,462
Furniture, fixtures and equipment 437,920 437,920 437,920
Automobile 15,563 15,563 15,563
---------- ---------- ----------
Total 1,194,583 1,194,583 1,167,288
Less accumulated depreciation 732,538 722,911 652,686
---------- ---------- ----------
Net office properties and equipment $ 462,045 $ 471,672 $ 514,602
========== ========== ==========
</TABLE>
Depreciation charged to operations was $9,627 and $15,559 for the three
months ended March 31, 1997 and 1996, respectively, and $70,225, $57,139,
and $52,750 for the years ended December 31, 1996, 1995, and 1994.
NOTE 5 - DEPOSIT ANALYSIS
The association's deposits by type are summarized as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ----------------------------------------------------
1997 1996 1995
------------------------- -------------------------- ------------------------
Amount Percent Amount Percent Amount Percent
----------- ------- ----------- ------- ----------- ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NOW and Super NOW
accounts $1,152,292 3.92% $979,111 3.40% $1,057,241 3.60%
Money Market 3,085,800 10.49 3,289,819 11.40 4,566,792 15.40
Regular Savings 10,066,363 34.20 9,922,705 34.50 9,565,207 32.30
Certificates of Deposit 15,120,246 51.39 14,599,486 50.70 14,425,555 48.70
----------- ------ ----------- ------ ----------- ------
Total $29,424,701 100.00% $28,791,121 100.00% $29,614,795 100.00%
=========== ====== =========== ====== =========== ======
</TABLE>
Scheduled maturities of certificates of deposit are as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------------
1997 1996 1995
------------ ----------- -----------
(Unaudited)
<S> <C> <C> <C>
Within three months $ 3,389,637 $ 3,211,395 $ 3,703,319
Three to six months 3,403,546 2,979,206 2,969,854
Six to twelve months 4,771,507 4,327,338 3,287,769
One to two years 2,603,000 2,524,351 3,207,795
Two to three years 374,962 914,494 670,123
Three to four years 304,478 260,688 586,695
Four to six years 273,116 382,014 -
----------- ----------- -----------
Total $14,120,246 $14,599,486 $14,425,555
=========== =========== ===========
</TABLE>
-15-
<PAGE> 118
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - DEPOSIT ANALYSIS (CONTINUED)
The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was $5,087,497 at March 31, 1997, $3,921,617 at December 31,
1996, and $3,882,753 at December 31, 1995. Deposits in excess of $100,000
are not federally insured.
Interest expense by deposit category is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
---------------------- ---------------------------------------
1997 1996 1996 1995 1994
-------- -------- ---------- ---------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
NOW and Super NOW Accounts $ 4,830 $ 4,402 $ 17,552 $ 17,970 $ 17,301
Money Market 21,595 31,175 108,629 157,789 208,373
Regular Savings 73,890 71,711 296,929 291,351 319,839
Certificates of Deposit 186,405 181,315 734,750 640,074 436,635
-------- -------- ---------- ---------- --------
Total $286,720 $288,603 $1,157,860 $1,107,184 $982,148
======== ======== ========== ========== ========
</TABLE>
NOTE 6 - REGULATORY MATTERS
The association is subject to various regulatory capital requirements
administered by its primary federal regulator, the Office of Thrift
Supervision. Failure to meet the minimum regulatory capital requirements can
initiate certain mandatory, and possible additional discretionary actions by
regulators, that if undertaken, could have a direct material affect on the
association's financial statements. Under the regulatory capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
association must meet specific capital guidelines involving quantitative
measures of the association's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices.
The association's capital amounts and classification under the prompt
corrective action guidelines are also subject to qualitative judgment by the
regulators about components, risk weighting, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the association to maintain minimum amounts and ratios of tangible
capital, tangible equity, core capital (Tier 1), leverage capital, and
risk-based capital.
As of March 31, 1997, the most recent notification from the OTS categorized
the association as "well capitalized" under the regulatory framework for
prompt corrective action. To be categorized as "well capitalized" the
association must maintain minimum total risk-based, core (Tier 1), leverage,
and tangible ratios set forth in the table below. There are no conditions or
events since that notification that management believes have changed the
institution's category.
-16-
<PAGE> 119
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - REGULATORY MATTERS (CONTINUED)
The association's actual capital amounts and ratios are also presented in
the table. Risk-based capital includes tangible capital plus $135,000 of the
Association's allowance for loan losses.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
----------------- ------------------ ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(In thousands) (In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
As of March 31,1997 (unaudited):
Total risk-based capital $4,995 29.77% $1,342 8.0% $1,678 10.0%
(To risk weighted assets)
Core (Tier 1) capital 4,860 28.97 671 4.0 1,007 6.0
(To total assets)
Core (Tier 1) capital 4,860 14.07 1,037 3.0 1,728 5.0
(To total assets)
Tangible capital 4,860 14.07 518 1.5 Not Defined
(To total assets)
</TABLE>
NOTE 7 - FEDERAL INCOME TAX
The association and subsidiary file a consolidated federal income tax
return. The association was permitted until 1996 a special bad debts
deduction limited generally in the current year to 8 percent of otherwise
taxable income and subject to certain limitations based on aggregate loans
and savings account balances at the end of the year. In 1996, the bad debt
reserve method for thrifts was repealed and in the future bad debts for
federal income taxes will be determined based primarily on the experience
method. If the amounts that qualify as deductions for federal income tax
purposes are later used for purposes other than for bad debt losses, they
will be subject to federal income tax at the then corporate rate. Retained
income at March 31, 1997, December 31, 1996 and 1995, included approximately
$832,500 for which federal income tax has not been provided.
The provisions for Federal income taxes consist of:
<TABLE>
<CAPTION>
Three Month Ended Year Ended
March 31, December 31,
------------------------- ------------------------------------------
1997 1996 1996 1995 1994
------- ------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Current $38,206 $47,055 $94,648 $191,439 $197,533
Deferred 7,497 1,768 11,695 (6,001) (23,406)
------- ------- -------- -------- --------
Total $45,703 $48,823 $106,343 $185,438 $174,127
======= ======= ======== ======== ========
</TABLE>
-17-
<PAGE> 120
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - FEDERAL INCOME TAX (CONTINUED)
The following temporary differences gave rise to the deferred tax liability:
<TABLE>
<CAPTION>
December 31,
March 31, -----------------------
1997 1996 1995
------- ------- -------
(Unaudited)
<S> <C> <C> <C>
Income and expense recognized in the financial
statements on the accrual basis, but on the cash
basis for tax purposes $10,729 $4,956 $ (5,071)
Depreciation 1,520 1,520 7,020
FHLB stock dividend (include. redemptions) 84,230 82,360 68,509
Difference in bad debt deduction (27,477) (26,375) (21,914)
Others (5,997) (6,963) (4,731)
------- ------- -------
Total $63,005 $55,508 $43,813
======= ======= =======
</TABLE>
A reconciliation between the amount of reported income tax expense and the
amount computed by applying the Federal income tax rate to income before
income taxes is as follows:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
--------------------- -----------------------------------
1997 1996 1996 1995 1994
------- ------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Tax at statutory rate (34%) $45,970 $49,240 $108,360 $185,868 $180,059
Increase (decrease) in taxes
resulting from:
Bad debt deduction - - - - 5,667
Sales of other real estate - - - - 1,696
Nontaxable income (267) (347) (2,017) (430) (13,295)
Total $45,703 $48,893 $106,343 $185,438 $174,127
======= ======= ======== ======== ========
Effective rate 33.8% 33.8% 33.4% 33.9% 32.9%
</TABLE>
NOTE 8 - RETIREMENT PLAN AND 401(K) THRIFT PLAN
The association has a noncontributory retirement plan for all eligible
employees. The contribution for past service cost paid is being amortized to
expense over a ten-year period. The pension expense for the years ended
December 31, 1996 and 1995 was $10,899 and $21,561, respectively. Pension
expense for the three months ended March 31, 1997 and 1996, amounted to
$3,418 and $-0-, respectively.
-18-
<PAGE> 121
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - RETIREMENT PLAN AND 401(K) THRIFT PLAN (CONTINUED)
The association adopted a resolution to participate in the Financial
Institutions Thrift Plan, which qualifies under Section 401(k) of the
Internal Revenue Code. The commencement date of the plan was January 1,
1987. The plan is for all eligible employees and allows the association to
match employee contributions to a maximum of 6% of their compensation. The
employer's matching funds are based upon the following schedule: 50% of the
members' contributions during their second and third years of employment,
75% during the fourth and fifth years of employment, and 100% upon
completion of their fifth year of service. The association suspended
matching contributions effective April, 1995. The association's plan
expenses for the years ended December 31, 1996 and 1995, amounted to $940
and $3,542, respectively. Plan expenses for the three months ended March 31,
1997 and 1996, amounted to $360 and $235, respectively. Plan expense amounts
include any employer's matching contributions.
NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Bridgeport Savings and Loan Association is a party to financial instruments
with off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These instruments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
statement of financial condition. The contract amounts of these instruments
reflect the extent of involvement the institution has in particular classes
of financial instruments. The institution uses the same credit policies in
making commitments and conditional obligations as it does for
on-balance-sheet instruments.
The following represents financial instruments whose contract amounts
represent credit risk:
<TABLE>
<CAPTION>
December 31,
March 31, -----------------------
1997 1996 1995
---------- -------- -------
(Unaudited)
<S> <C> <C> <C>
Loans in process $35,556 $50,649 $326,704
Commitments to originate loans 142,000 - -
</TABLE>
-19-
<PAGE> 122
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
(CONTINUED)
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. The institution evaluates each
customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the institution upon extension
of credit, is based on management's credit evaluation of the counterparty.
Collateral held consists primarily of single-family residences. Commitments
to originate loans at March 31, 1997, consisted of fixed-rate mortgage loans
of $122,000 at 8.125% and $20,000 at 7.50%.
Concentration of Credit Risk
----------------------------
The mortgage-backed securities held by Bridgeport Savings and Loan
Association consist of FHLMC and GNMA pass-through securities which are
directly or inherently backed by the full faith and credit of the United
States Government.
Bridgeport Savings and Loan Association's real estate loans and loan
commitments are primarily for properties located throughout Eastern Ohio and
Northern West Virginia. Repayment of these loans is in part dependent upon
the economic conditions in this region. Bridgeport Savings and Loan
Association evaluates each customer's creditworthiness on a case-by-case
basis. Bridgeport Savings and Loan Association requires collateral on all
real estate exposure which consists primarily of residential properties.
The association also has concentration of credit risk exposure in cash. The
association places its cash with high credit quality financial institutions.
At times, such investments may be in excess of the FDIC insurance limit. The
association had total deposits with financial institutions of $279,894,
$279,117, and $145,039 in excess of FDIC limits as of March 31, 1997, and
December 31, 1996 and 1995, respectively.
NOTE 10 - RELATED PARTY TRANSACTIONS
Directors and officers of the association and its wholly-owned subsidiary
were customers of, and had other transactions with the association in the
ordinary course of business during the years ended December 31, 1996 and
1995, and for the three months ended March 31, 1997.
-20-
<PAGE> 123
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - RELATED PARTY TRANSACTIONS (CONTINUED)
Loans and commitments included in such transactions were made with
substantially the same terms and collateral as those prevailing at the time
for comparable transactions with other persons. Loans to directors and
officers did not involve more than the normal risk of collectibility, or
present other unfavorable features. The loans to directors and officers at
March 31, 1997, December 31, 1996 and 1995, were not material in the
aggregate amount.
NOTE 11 - CASH FLOWS INFORMATION
Cash equivalents include amounts due from banks and Federal Home Loan Bank
overnight accounts and term deposits with original maturities of ninety days
or less.
In addition, the institution made federal income tax payments of $141,000
during the year 1996 and $200,000 during the year 1995; no amount was paid
for the period ending March 31, 1997. The institution paid $1,177,830 in
interest expense during 1996 and $1,102,239 during 1995; $286,671 was paid
for the period ending March 31, 1997.
For the period ending March 31, 1997, loans in the amounts of $17,620 were
transferred from loans receivable to real estate acquired in settlement of
loans.
NOTE 12 - DEPOSIT INSURANCE
Saving Association Insurance Fund member institutions were assessed a
one-time deposit insurance premium to recapitalize the Fund. The assessment
totaled approximately $190,300 and was recorded in the year ended December
31, 1996. The premium was based on deposits as of March 31, 1995.
-21-
<PAGE> 124
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases, could not be realized
in immediate settlements of the instruments. Statement 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. In addition, the value of long-term relationships with
depositors and other customers are not reflected. The value of these items
is significant. Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the corporation.
The following methods and assumptions were used in estimating fair value of
financial instruments as disclosed herein:
CASH AND CASH EQUIVALENTS: For those short-term instruments, the carrying
amount is a reasonable estimate of fair value.
TIME DEPOSITS: For those short-term instruments, the carrying amount is a
reasonable estimate of fair value.
INVESTMENT SECURITIES AND SECURITIES HELD FOR SALE: For debt securities and
marketable equity securities held for investment purposes and for sale, fair
values are based on quoted market prices or dealer quotes. If a quoted
market price is not available, fair value is estimated using quoted market
prices for similar securities.
LOANS: For certain homogeneous categories of loans, such as some residential
mortgages, fair value is estimated using the quoted market prices for
securities backed by similar loans. The fair value of other types of loans
is estimated by discounting the future cash flows using the 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 at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar
remaining maturities.
-22-
<PAGE> 125
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the corporation's financial instruments are as
follows:
<TABLE>
<CAPTION>
March 31, 1997
-------------------------------------
Carrying Estimated
Amount Fair Value
----------- -----------
(Unaudited)
<S> <C> <C>
Financial Assets:
Cash and cash equivalents $ 2,613,211 $ 2,613,211
Interest bearing time deposits 1,200,000 1,200,000
Securities available for sale 344,800 344,800
Securities held to maturity 4,736,000 4,800,924
Loans, net 25,017,000 24,441,442
Financial Liabilities:
Deposits 29,425,000 29,506,781
December 31, 1996
-------------------------------------
Carrying Estimated
Amount Fair Value
----------- -----------
Financial Assets:
Cash and cash equivalents $ 2,435,662 $ 2,435,662
Interest bearing time deposits 800,000 800,000
Securities available for sale 339,000 339,000
Securities held to maturity 4,781,000 4,874,000
Loans, net 24,892,000 24,442,543
Financial Liabilities:
Deposits 28,791,000 28,880,000
December 31, 1995
--------------------------------------
Carrying Estimated
Amount Fair Value
----------- ------------
Financial Assets:
Cash and cash equivalents $ 1,177,023 $ 1,177,023
Interest bearing time deposits 1,000,000 1,000,000
Securities available for sale 318,000 318,000
Securities held to maturity 5,378,000 5,518,000
Loans, net 25,972,000 25,048,000
Financial Liabilities:
Deposits 29,615,000 29,662,000
</TABLE>
-23-
<PAGE> 126
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14 - CONVERSION AND REORGANIZATION
On March 24, 1997, the Board of Directors of the association, subject to
regulatory approval, adopted the Plan of Conversion pursuant to which the
association proposed to convert from a mutual savings and loan association
incorporated under Ohio law to a permanent capital stock savings and loan
association incorporated under Ohio law and concurrently form a Holding
Company. The conversion is expected to be accomplished through amendment of
the association's charter and the sale of the holding company's common stock
in an amount equal to the pro forma market value of the association after
giving effect of the conversion. A subscription offering of the sale of the
common stock will be offered initially to the association's depositors and
Tax-Qualified Employee Stock Benefit Plans. Any shares of the common stock
not sold in the subscription offering will be offered for sale to the
general public in the association's market area.
Conversion costs will be deferred and deducted from the proceeds of the
shares sold in the conversion. At March 31, 1997, the association had not
incurred any conversion costs. In the event that the conversion is not
completed, any deferred conversion costs will be charged to operations.
In accordance with regulations, at the time that the association converts
from a mutual savings association to a stock savings institution, a portion
of retained earnings will be restricted by establishing a liquidation
account. The liquidation account will be maintained for the benefit of
eligible account holders who continue to maintain their accounts at the
association after the conversion. The liquidation account will be reduced
annually to the extent that eligible account holders have reduced their
qualifying deposits. Subsequent increases will not restore an eligible
account holder's interest in the liquidation account. In the event of a
complete liquidation of the association, each account holder will be
entitled to receive a distribution from the liquidation account in an amount
proportionate to the current adjusted qualifying balances of accounts then
held. The association may not pay dividends if those dividends would reduce
equity capital below required liquidation account amount.
-24-
<PAGE> 127
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - CONSOLIDATED SUBSIDIARY
The following condensed statements summarize the financial position and
operating results of the association's wholly-owned subsidiary:
TRAILWAYS FINANCIAL, INC.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
March 31, ----------------------
1997 1996 1995
----------- -------- ---------
(Unaudited)
ASSETS
<S> <C> <C> <C>
Cash $2,851 $ 2,875 $ 2,899
Due from parent corporation 433 433 433
Investments 15,000 15,000 15,000
------ ------- --------
Total assets $18,284 $18,308 $18,332
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ - $ - $ -
Stockholders' equity 18,284 18,308 18,332
------- ------- -------
Total liabilities and stockholders'
equity $18,284 $18,308 $18,332
======= ======= =======
</TABLE>
TRAILWAYS FINANCIAL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
--------------------- -----------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- ------
Income: (Unaudited)
<S> <C> <C> <C> <C> <C>
Interest $ 21 $ 21 $ 86 $ 86 $ 87
Expenses:
Taxes 45 80 110 110 110
----- ---- ---- ---- ----
Net loss $(24) ($59) $(24) $(24) $(23)
===== ==== ==== ==== ====
</TABLE>
-25-
<PAGE> 128
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE HOLDING COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITY, OTHER THAN THE
COMMON SHARES 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 TO WHOM DELIVERY OF
THIS PROSPECTUS WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS TO ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY..............................................1
SELECTED FINANCIAL INFORMATION AND OTHER DATA...................6
RISK FACTORS....................................................8
USE OF PROCEEDS................................................11
MARKET FOR COMMON SHARES.......................................11
DIVIDEND POLICY................................................12
REGULATORY CAPITAL COMPLIANCE..................................13
CAPITALIZATION.................................................14
PRO FORMA DATA.................................................15
SUMMARY STATEMENTS OF EARNINGS.................................19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.....................................................21
THE BUSINESS OF THE ASSOCIATION................................29
MANAGEMENT.....................................................45
REGULATION.....................................................50
TAXATION.......................................................56
THE CONVERSION.................................................58
RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY AND THE ASSOCIATION AND RELATED
ANTI-TAKEOVER PROVISIONS.......................................70
DESCRIPTION OF AUTHORIZED SHARES...............................73
REGISTRATION REQUIREMENTS......................................74
LEGAL MATTERS..................................................74
EXPERTS........................................................74
ADDITIONAL INFORMATION.........................................74
FINANCIAL STATEMENTS..........................................F-1
UNTIL 25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS OBLIGATION IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
Up to 776,250 Common Shares
OHIO STATE FINANCIAL SERVICES,
INC.
------------
PROSPECTUS
------------
CHARLES WEBB & COMPANY
A Division of Keefe, Bruyette & Woods, Inc.
_________ , 1997
<PAGE> 129
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- -------- -------------------------------------------
<S> <C>
* Legal Fees..................................................$ 80,000
* Postage.....................................................$ 10,000
* Printing and EDGARIZING.....................................$ 35,000
* Appraisal Fees and Expenses.................................$ 16,500
* Accounting Fees and Expenses................................$ 50,000
* Blue sky filing fees and expenses...........................$ 10,000
* Federal filing fees.........................................$ 15,000
* Conversion Agent Fees.......................................$ 6,500
* Other Expenses..............................................$ 17,000
** Underwriting Fees and Expenses..............................$ 140,870
Total estimated expenses.................................$ 380,870
=========
- -----------------------------
<FN>
* Estimated.
** To assist the Holding Company and the Association in marketing the
Common Shares, the Holding Company and the Association have retained
Charles Webb & Company ("Webb"), a division of Keefe, Bryette & Woods,
Inc. Webb is a broker-dealer registered with the SEC and a member of
the NASD.
</TABLE>
For its services, Webb has received a management fee of $25,000 and
will receive a marketing fee of 1.5% of the aggregate purchase price of
the Common Shares sold other than (i) Common Shares purchased by the
directors, officers and employees of the Association and the Holding
Company and members of their immediate families, (ii) Common Shares
purchased by the ESOP, Stock Option Plan or RRP, and (iii) Common
Shares sold by Selected Brokers (hereinafter defined).
Depending on market conditions, the Common Shares, if any, not
initially subscribed for in the Subscription Offering or the Community
Offering may be offered for sale to the general public on a best
efforts basis in a syndicated community offering by a selling group of
broker-dealers ("Selected Brokers") to be formed by Webb. If Selected
Brokers are employed, the Selected Brokers will be paid a commission
not to exceed 5.5% of the aggregate purchase price received for Common
Shares sold by such Selected Brokers.
The estimated underwriting fees are based on the following assumptions:
(i) 776,250 Common Shares will be sold in the Offering; (ii)
approximately 55,000 Common Shares sold in the Offering will be
purchased by directors, officers and employees of the Association and
the Holding Company and the members of their immediate families; (iii)
62,100 Common Shares sold in the Offering will be purchased by the
ESOP; and (iv) 659,150 Common Shares sold in the Offering will be sold
in the Subscription Offering with sales commissions of 1.5% of the
aggregate dollar amount of such Common Shares.
The Association will also reimburse Webb for all reasonable fees and
expenses of its legal counsel.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- -------- ------------------------------------------
(a) OHIO REVISED CODE
Division (E) of Section 1701.13 of the Ohio Revised Code
governs indemnification by a corporation and provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any
person who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, other than an action by or in the
right of the corporation, by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer,
II-1
<PAGE> 130
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person
who was or is a party or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee or
agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any of the following:
(a) Any claim, issue, or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance
of his duty to the corporation unless, and only to the extent that
the court of common pleas or the court in which such action or suit
was brought determines upon application that, despite the
adjudication of liability, but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity
for such expenses as the court of common pleas or such other court
shall deem proper;
(b) Any action or suit in which the only liability asserted
against a director is pursuant to section 1701.95 of the Revised
Code.
(3) To the extent that a director, trustee, officer, employee, or
agent has been successful on the merits or otherwise in defense of any action,
suit, or proceeding referred to in divisions (E)(1) and (2) of this section, or
in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorney's fees, actually and reasonably incurred by
him in connection with the action, suit, or proceeding.
(4) Any indemnification under divisions (E)(1) and (2) of this
section, unless ordered by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, trustee, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in divisions
(E)(1) and (2) of this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of
the indemnifying corporation who were not and are not parties to or
threatened with any such action, suit, or proceeding;
(b) If the quorum described in division (E)(4)(a) of this
section is not obtainable or if a majority vote of a quorum of
disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders; or
(d) By the court of common pleas or the court in which such
action, suit, or proceeding was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal Counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which action or suit was brought to review the reasonableness of such
determination.
II-2
<PAGE> 131
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section, the articles or the regulations of a corporation state by
specific reference to this division that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section is pursuant to section 1701.95 of the Revised Code,
expenses, including attorney's fees, incurred by a director in defending the
action, suit, or proceeding shall be paid by the corporation as they are
incurred, in advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the director in which he
agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the corporation or undertaken with reckless
disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, or agent in defending any action, suit, or
proceeding referred to in divisions (E)(1) and (2) of this section, may be paid
by the corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding as authorized by the directors in the specific
case upon receipt of an undertaking by or on behalf of the director, trustee,
officer, employee, or agent to repay such amount, if it ultimately is determined
that he is not entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the articles of the regulations or any agreement,
vote of shareholders or disinterested directors, or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including but not limited to trust funds, letters of credit,
or self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, or agent
of another corporation, domestic or foreign, nonprofit or profit, partnership,
joint venture, trust, or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under this section. Insurance may be purchased from
or maintained with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
divisions (E)(1) and (2) of this section does not limit the payment of expenses
as they are incurred, indemnification, insurance, or other protection that may
be provided pursuant to divisions (E)(5), (6), and (7) of this section.
Divisions (E)(1) and (2) of this section do not create any obligation to repay
or return payments made by the corporation pursuant to division (E)(5), (6), or
(7).
(9) As used in this division, references to "corporation" includes
all constituent corporations in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director, officer,
employee, or agent of such a constituent corporation, or is or was serving at
the request of such constituent corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, shall stand in
the same position under this section with respect to the new or surviving
corporation as he would if he had served the new or surviving corporation in the
same capacity.
The Association may authorize payment of reasonable costs and expenses,
including reasonable attorney's fees arising from the defense or settlement of
any Action, to any director, officer or employee if a majority of the directors
of the Association conclude that such person may become entitled to
indemnification. The directors of the Association may impose conditions on such
payment, and, before making an advance payment, the Association shall obtain an
agreement from such person that the Association will be repaid if the person on
whose behalf payment is made is later determined not to be entitled to such
indemnification.
The Association currently maintains a directors' and officers'
liability policy providing for insurance of directors and officers for liability
incurred in connection with performance of their duties as directors and
officers. Such policy does not, however, provide insurance for losses resulting
from willful or criminal misconduct.
II-3
<PAGE> 132
(b) THE HOLDING COMPANY'S CODE OF REGULATIONS
Article Five of The Holding Company's Code of Regulations
provides for the indemnification of officers and directors as follows:
SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything
contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer
or director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, trustee, officer, employee or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, in respect of any claim, issue or matter asserted in
such action or suit as to which he shall have been adjudged to be liable for
acting with reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty to the
corporation unless and only to the extent that the Court of Common Pleas of
Belmont County, Ohio, or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of liability,
and in view of all the circumstances of the case, he is fairly and reasonably
entitled to such indemnity as such Court of Common Pleas or such other court
shall deem proper; and
(B) the corporation shall promptly make any such
unpaid indemnification as is determined by a court to be proper as contemplated
by this Section 5.02.
SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
SECTION 5.04 DETERMINATION REQUIRED. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall be made
by the corporation only upon a determination that such indemnification of the
officer or director is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 5.01. Such determination may
be made only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Belmont County,
Ohio, or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent
II-4
<PAGE> 133
legal counsel under division (B) or by the shareholders under division (C) of
this Section 5.04; and no failure for any reason to make any such determination,
and no decision for any reason to deny any such determination, by the
disinterested directors under division (A) or by independent legal counsel under
division (B) or by shareholders under division (C) of this Section 5.04 shall be
evidence in rebuttal of the presumption recited in Section 5.01. Any
determination made by the disinterested directors under division (A) or by
independent legal counsel under division (B) of this Section 5.04 to make
indemnification in respect of any claim, issue or matter asserted in an action
or suit threatened or brought by or in the right of the corporation shall be
promptly communicated to the person who threatened or brought such action or
suit, and within ten (10) days after receipt of such notification such person
shall have the right to petition the Court of Common Pleas of Belmont County,
Ohio, or the court in which such action or suit was brought, if any, to review
the reasonableness of such determination.
SECTION 5.05. ADVANCES FOR EXPENSES. Expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding referred
to in Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
(A) if it shall ultimately be determined as provided
in Section 5.04 that he is not entitled to be indemnified by the corporation as
provided under Section 5.01; or
(B) if, in respect of any claim, issue or other
matter asserted by or in the right of the corporation in such action or suit, he
shall have been adjudged to be liable for acting with reckless disregard for the
best interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent that
the Court of Common Pleas of Belmont County, Ohio, or the court in which such
action or suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is fairly
and reasonably entitled to all or part of such indemnification.
SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the Articles
or the Regulations or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 5.07. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.
SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this
Article Five, and as examples and not by way of limitation:
(A) A person claiming indemnification under this
Article 5 shall be deemed to have been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 5.01, or in
defense of any claim, issue or other matter therein, if such action, suit or
proceeding shall be terminated as to such person, with or without prejudice,
without the entry of a judgment or order against him, without a conviction of
him, without the imposition of a fine upon him and without his payment or
agreement to pay any amount in settlement thereof (whether or not any such
termination is based upon a judicial or other determination of the lack of merit
of the claims made against him or otherwise results in a vindication of him);
and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
II-5
<PAGE> 134
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" within the meaning of that term as used in this Article Five.
SECTION 5.09. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article Five may be maintained
by the person claiming such indemnification, or by the corporation, in the Court
of Common Pleas of Belmont County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Belmont County, Ohio, in any
such action, suit or proceeding.
(c) INDEMNIFICATION AGREEMENTS
(i) AGREEMENT WITH RP FINANCIAL, LC.
The Association has agreed to indemnify RP Financial, LC. ("RP
Financial"), the firm retained by the Association to provide the appraisal of
the pro forma market value of the Association as converted, in connection with
certain matters related to the appraisal. The Association will indemnify RP
Financial, its affiliates and the respective directors, officers, agents and
employees of RP Financial for certain costs and expenses, including reasonable
legal fees, in connection with claims or litigation arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
financial statements or other information supplied to RP Financial by the
Association or by an omission or alleged omission by the Association to state a
material fact in the information so provided, except where RP Financial has been
negligent or at fault.
(ii) AGREEMENT WITH WEBB
The Association has agreed to indemnify and hold harmless
Webb. In general, the agreement with Webb (the "Agency Agreement") provides that
the Association will indemnify and hold harmless Webb's directors, officers,
employees, agents and any controlling person against any and all loss,
liability, claim, damage or expense (including the fees and disbursements of
counsel reasonably incurred) arising out of any untrue statement, or alleged
untrue statement, of a material fact contained in the Summary Proxy Statement or
the Prospectus, any application to regulatory authorities, any "blue sky"
application, or any other related document prepared or executed by or on behalf
of the Association with its consent in connection with, or in contemplation of,
the transactions contemplated by the Agency Agreement, or any omission therefrom
of a material fact required to be stated therein, unless such untrue statement
or omission, or alleged untrue statement or omission, was made in reliance upon,
and in conformity with, written information regarding Webb furnished to the
Association by Webb expressly for use in the Summary Proxy Statement or the
Prospectus.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
- -------- ----------------------------------------
No securities of the Holding Company have been sold by the Holding
Company without registration pursuant to the Act, except as follows:
On March 26, 1997, in connection with the incorporation of the
Holding Company, 100 common shares, without par value, of the Holding Company
(the "Securities") were sold for an aggregate purchase price of $100 pursuant to
Section 4(2) of the Act in a transaction not involving any public offering. The
Securities were sold to Jon W. Letzkus, the President of the Holding Company,
who had access to all material information about the Holding Company. The
Securities were offered without the use of any form of general solicitation or
advertising. No underwriter was involved in the transaction, and no commission,
discount or other remuneration was paid or given in connection with the sale of
the Securities. Under the terms of the Subscription Agreement between the
Holding Company and Mr. Letzkus, the Securities will be repurchased by the
Holding Company for $100 on the effective date of the Conversion.
II-6
<PAGE> 135
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
- -------- -------------------------------------------
(a) EXHIBITS
The exhibits filed as a part of this Registration Statement
are as follows:
1.1 Engagement letter with Charles Webb & Company
1.2 Form of Agency Agreement with Charles Webb & Company
2 Plan of Conversion
3.1 Articles of Incorporation of Ohio State Financial Services,
Inc.
3.2 Code of Regulations of Ohio State Financial Services, Inc.
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality
of securities being registered
8 Opinion of Vorys, Sater, Seymour and Pease regarding tax
matters
10.1 Ohio State Financial Services, Inc. 1998 Stock Option and
Incentive Plan (proposed)
10.2 Ohio State Financial Services, Inc. Recognition and Retention
Plan and Trust Agreement (proposed)
10.3 Bridgeport Savings and Loan Association Employee Stock
Ownership Plan (proposed)
10.4 Pentegra Services Inc. Employees' Savings & Profit Sharing
Plan Basic Plan Document and Adoption Agreement
10.5 Employment Agreement between Bridgeport Savings and Loan
Association and Jon W. Letzkus (proposed)
23.1 Consent of S.R. Snodgrass, A.C.
23.2 Consent of RP Financial, LC.
23.3 Consent of Vorys, Sater, Seymour and Pease
27 Financial Data Schedule
99.1 Summary Proxy Statement
99.2 Order Form and Form of Certification
99.3 Form of Proxy
99.4 Solicitation and Marketing Material
99.5 Appraisal Agreement between Bridgeport Savings and Loan
Association and RP Financial, LC.
99.6 Appraisal Report prepared by RP Financial, LC.
- -------------------------------------------------------------
(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.
- -------- -------------
(a) The undersigned, the Holding Company, 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 Act;
(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 Act, 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.
II-7
<PAGE> 136
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under
the Act may be permitted to directors, officers and controlling persons of the
Holding Company, pursuant to the foregoing provisions or otherwise, the Holding
Company 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 Holding
Company of expenses incurred or paid by a director, officer or controlling
person of the Holding Company 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 Holding Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-8
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, duly authorized to do so, in the City of
Bridgeport, State of Ohio, on June 9, 1997.
OHIO STATE FINANCIAL SERVICES, INC.
By: /s/ Jon W. Letzkus
--------------------------------
Jon W. Letzkus
its President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed below by the following
persons in the capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John O. Costine Director June 9, 1997
- --------------------------
John O. Costine
/s/ Michael P. Eddy Principal Financial Officer and Treasurer June 9, 1997
- --------------------------
Michael P. Eddy
/s/ Anton M. Godez Director June 9, 1997
- --------------------------
Anton M. Godez
/s/ Jon W. Letzkus President
- -------------------------- (Principal Executive Officer) and June 9, 1997
Jon W. Letzkus Director
/s/ William E. Reline Director June 9, 1997
- --------------------------
William E. Reline
/s/ Manuel C. Thomas Director June 9, 1997
- ---------------------
Manuel C. Thomas
</TABLE>
II-9
<PAGE> 1
February 18, 1997
Mr. Jon W Letzkus
President and Chief Executive Officer
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
Dear Mr. Letzkus:
This proposal is in connection with Bridgeport Savings and Loan Association's
(the "Association") intention to convert from a mutual to a capital stock form
of organization (the "Conversion"). In order to effect the Conversion, it is
contemplated that all of the Association's common stock to be outstanding
pursuant to the Conversion will be issued to a holding company (the "Company")
to be formed by the Association, and that the Company will offer and sell shares
of its common stock first to eligible persons (pursuant to the Association's
Plan of Conversion) in a Subscription Offering and then in a Community Offering.
Charles Webb & Company, a Division of Keefe Bruyette & Woods ("Webb") will act
as the Association's and the Company's exclusive financial advisor and marketing
agent in connection with the Conversion. This letter sets forth selected terms
and conditions of our engagement.
1. ADVISORY/CONVERSION SERVICES. As the Association's and Company's financial
advisor and marketing agent, Webb will provide the Association and the Company
with a comprehensive program of conversion services designed to promote an
orderly, efficient, cost-effective and long-term stock distribution. Webb will
provide financial and logistical advice to the Association and the Company
concerning the offering and related issues. Webb will assist in providing of
conversion enhancement services intended to maximize stock sales in the
Subscription Offering and to residents of the Association's market area, if
necessary, in the Community Offering.
Webb shall provide financial advisory services to the Association which are
typical in connection with an equity offering and include, but are not limited
to, overall financial analysis of the client with a focus on identifying factors
which impact the valuation of an equity security and provide the appropriate
recommendations for the betterment of the equity valuation.
<PAGE> 2
Mr. Jon W. Letzkus
February 18, 1997
Page 2 of 5
Additionally, post conversion financial advisory services will include advice on
shareholder relations, NASDAQ listing, dividend policy, stock repurchase
strategy and communication with market makers. Prior to the closing of the
offering, Webb shall furnish to client a Post-conversion reference manual which
will include specifics relative to these items. (The nature of the services to
be provided by Webb as the Association's and the Company's financial advisor and
marketing agent are further described in Exhibit A attached hereto.)
2. PREPARATION OF OFFERING DOCUMENTS. The Association, the Company and their
counsel will draft the Registration Statement, Application for Conversion,
Prospectus and other documents to be used in connection with the Conversion.
Webb will attend meetings to review these documents and advise you on their form
and content. Webb and its counsel will draft appropriate agency agreement and
related documents as well as marketing materials other than the Prospectus.
3. DUE DILIGENCE REVIEW. Prior to filing the Registration Statement, Application
for Conversion or any offering or other documents naming Webb as the
Association's and the Company's financial advisor and marketing agent, Webb and
its representatives will undertake substantial investigations to learn about the
Association's business and operations ("due diligence review") in order to
confirm information provided to us and to evaluate information to be contained
in the Association's and/or the Company's offering documents. The Association
agrees that it will make available to Webb all relevant information, whether or
not publicly available, which Webb reasonably request, and will permit Webb to
discuss personnel and the operations and prospects of the Association with
management. Webb will treat all material non-public information as confidential.
The Association acknowledges that Webb will rely upon the accuracy and
completeness of all information received from the Association, its officers,
directors, employees-agents and representatives, accountants and counsel
including this letter of intent to serve as the Association's and the Company's
financial advisor and marketing agent.
4. REGULATORY FILINGS. The Association and/or the Company will cause appropriate
offering documents to be filed with all regulatory agencies including, the
Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers ("NASD") and such state securities commissioners as may be
determined by the Association.
5. AGENCY AGREEMENT. The specific terms of the conversion services, conversion
offering enhancement and syndicated offering services contemplated in this
letter shall be set forth in an Agency Agreement between Webb and the
Association and the Company to be executed prior to commencement of the
offering, and dated the date that the Company's Prospectus is declared effective
and/or authorized to be disseminated by the appropriate regulatory agencies, the
SEC, the NASD and such state securities commissioners and other regulatory
agencies as required by applicable law.
<PAGE> 3
Mr. Jon W. Letzkus
February 18, 1997
Page 3 of 5
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Agency Agreement will provide
for customary representations warranties and covenants by the Association and
Webb, and for the Company to indemnify Webb and their controlling persons (and,
if applicable, the members of tile selling group and their controlling persons),
and for Webb to indemnify the Association and the Company against certain
liabilities, including, without limitation, liabilities under the Securities Act
of 1933.
7. FEES. For the services hereunder, the Association and/or Company shall pay
the following fees to Webb at closing unless stated otherwise:
(a) A Management Fee of $25,000 payable in four consecutive monthly
installments of $6,250 commencing with the signing of this letter. Such
fees shall be deemed to have been earned when due. Should the
Conversion be terminated for any reason not attributable to the action
or inaction of Webb, Webb shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination
occurred.
(b) A Success Fee of 1.50% of the aggregate Purchase Price of Common Stock
sold in the Subscription Offering and Community Offering excluding
shares purchased by the Association's officers, directors, or employees
(or members of their immediate families) plus any ESOP, tax-qualified
or stock based compensation plans (except IRA's) or similar plan
created by the Association for some or all of its directors or
employees.
(c) If any shares of the Company's stock remain available after the
subscription offering, at the request of the Association, Webb will
seek to form a syndicate of registered broker-dealers to assist in the
sale of such common stock on a best efforts basis, subject to the terms
and conditions set forth in the selected dealers agreement. Webb will
endeavor to distribute the common stock among dealers in a fashion
which best meets the distribution objectives of the Association and the
Plan of Conversion. Webb will be paid a fee not to exceed 5.5% of the
aggregate Purchase Price of the shares of common stock sold by them.
Webb will pass onto selected broker-dealers, who assist in the
syndicated community, an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock sold at
a comparable price per share in a similar market environment. Fees with
respect to purchases affected with the assistance of a broker/dealer
other than Webb shall be transmitted by Webb to such broker/dealer. The
decision to utilize selected broker-dealers will be made by the
Association upon consultation with Webb. In the event, with respect to
any stock
<PAGE> 4
Mr. Jon W. Letzkus
February 18, 1997
Page 4 of 5
purchases, fees are paid pursuant to this subparagraph 7(c), such fees
shall be in lieu of, and not in addition to, payment pursuant to
subparagraph 7(a) and 7(b).
8. EXPENSES. The Association will bear those expenses of the proposed offering
customarily borne by issuers, including, without limitation, regulatory filing
fees, SEC, "Blue Sky," and NASD filing and registration fees; the fees of the
Association's accountants, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing and syndicate expenses associated with the
Conversion; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
Webb shall be reimbursed for the reasonable fees and expenses of its Counsel.
The selection of such counsel will be done by Webb, with the approval of the
Association. Such fees and legal expenses shall be agreed upon by both Webb and
Client.
Because of the proximity of Webb to the Association, Webb will not be reimbursed
for its reasonable out of pocket expenses, including communication, lodging and
travel expenses.
CONDITIONS. Webb's willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
Webb's opinion, which opinion shall have been formed in good faith by Webb after
reasonable determination and consideration of all relevant factors: (a) full and
satisfactory disclosure of all relevant material, financial and other
information in the disclosure documents and a determination by Webb, in its sole
discretion, that the sale of stock on the terms proposed is reasonable given
such disclosures; (b) no material adverse change in the condition or operations
of the Association subsequent to the execution of the agreement; and (c) no
market conditions at the time of offering which in Webb's opinion make the sale
of the shares by the Company inadvisable.
10. BENEFIT. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and to the parties indemnified hereunder and their
successors, and the obligations and liabilities assumed hereunder by the parties
hereto shall be binding upon their respective successors provided, however, that
this Agreement shall not be assignable by Webb.
11. DEFINITIVE AGREEMENT. This letter reflects Webb's present intention of
proceeding to work with the Association on its proposed conversion. It does not
create a binding obligation on the part of the Association, the Company or Webb
except as to the agreement to maintain the confidentiality of non-public
information set forth in Section 3, the payment of certain fees as set forth in
Section 7(a) and 7(b) and the assumption of expenses as set forth in Section 9,
all of which shall constitute the binding obligations of the parties hereto and
which shall survive the termination of this Agreement or the completion of the
services furnished hereunder and shall remain operative and in full force and
effect. You further acknowledge that any report or analysis rendered by Webb
pursuant to this engagement is rendered for use solely by the
<PAGE> 5
Mr. Jon W. Letzkus
February 18, 1997
Page 5 of 5
management of the Association and its agents in connection with the Conversion.
Accordingly, you agree that you will not provide any such information to any
other person without our prior written consent.
Webb acknowledges that in offering the Company's stock no person will be
authorized to give any information or to make any representation not contained
in the offering prospectus and related offering materials filed as part of a
registration statement to be declared effective in connection with the offering.
Accordingly, Webb agrees that in connection with the offering it will not give
any unauthorized information or make any unauthorized representation. We will be
pleased to elaborate on any of the matters discussed in this letter at your
convenience.
If the foregoing correctly sets forth our mutual understanding, please so
indicate by signing and returning the original copy of this letter to the
undersigned.
Sincerely,
CHARLES WEBB & COMPANY,
A DIVISION OF KEEFE BRUYETTE & WOODS
By: /s/ John Bruno
----------------------------------
John Bruno
Senior Vice President
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
By: /s/ Jon W. Letzkus MARCH 1, 1997
----------------------------------------- ----------------------
Jon W. Letzkus Date
President and
Chief Executive Officer
<PAGE> 6
EXHIBIT A
---------
CONVERSION SERVICES PROPOSAL
TO BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Charles Webb & Company provides thrift institutions converting from mutual to
stock form of ownership with a comprehensive program of conversion services
designed to promote an orderly, efficient, cost-effective and long-term stock
distribution. The following list is representative of the conversion services,
if appropriate, we propose to perform on behalf of the Association.
General Services
- ----------------
Assist management and legal counsel with the design of the transaction
structure.
Analyze and make recommendations on bids from printing, transfer agent and
appraisal firms.
Assist officers and directors in obtaining bank loans to purchase stock, if
requested.
Assist in drafting and distribution of press releases as required or
appropriate.
Conversion Offering Enhancement Services
- ----------------------------------------
Establish and manage Conversion Center at the Association. Conversion Center
personnel will track prospective investors; record stock orders; mail order
confirmations; provide the Association's senior management with daily reports;
answer customer inquiries; and handle special situations as they arise.
Assign Webb's personnel to be at the Association through completion of the
Subscription and Community Offerings to manage the Conversion Center, meet with
prospective shareholders at individual and community information meetings,
solicit local investor interest through a telemarketing campaign, answer
inquiries and otherwise assist in the sale of stock in the Subscription and
Community Offerings. This effort will be lead by a Principal of Webb.
Create target investor list based upon review of the Association's depositor
base.
Provide intensive financial and marketing input for drafting of the prospectus.
<PAGE> 7
Conversion Offering Enhancement Services - Continued
- ----------------------------------------------------
Prepare other marketing materials, including prospecting letters and brochures,
and media advertisements.
Arrange logistics of community information meeting(s) as required.
Prepare audio-visual presentation by senior management for community information
meeting(s).
Prepare management for question-and-answer period at community information
meeting(s).
Attend and address community information meeting(s) and be available to answer
questions.
Broker-assisted Sales Services
- ------------------------------
Arrange for broker information meeting(s) as required.
Prepare audio-visual presentation for broker information meeting(s).
Prepare script for presentation by senior management at broker information
meeting(s).
Prepare management for question-and-answer period at broker information
meeting(s).
Attend and address broker information meeting(s) and be available to answer
questions.
Produce confidential broker memorandum to assist participating brokers in
selling the Association's common stock.
Aftermarket Support Services
- ----------------------------
Keefe, Bruyette & Woods will make a market and provide on-going research to the
Company. In addition, Webb will use its best efforts to secure another market
maker.
<PAGE> 1
Exhibit 1.2
OHIO STATE FINNCIAL SERVICES, INC.
776,250 Shares
COMMON SHARES
(No Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
________ __, 1997
Charles Webb & Company, a division of
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
Ohio State Financial Services, Inc., an Ohio corporation (the
"Company") and Bridgeport Savings and Loan Association, Bridgeport, Ohio, an
Ohio chartered mutual savings and loan association (references to the
"Association" include the Association in the mutual or stock form, as indicated
by the context), with its deposit accounts insured by the Savings Association
Insurance Fund ("SAIF") administered by the Federal Deposit Insurance
Corporation ("FDIC")), hereby confirm their agreement with Charles Webb &
Company, a division of Keefe, Bruyette & Woods, Inc. ("Webb", "KBW" or "the
Agent"), as follows:
SECTION 1. THE OFFERING. The Association, in accordance with its plan
of conversion adopted by its Board of Directors (the "Plan"), intends to convert
from an Ohio chartered mutual savings and loan association to an Ohio chartered
stock savings and loan association, and will issue all of its issued and
outstanding capital stock to the Company. In addition, pursuant to the Plan, the
Company will offer and sell up to 776,250 shares of its common stock, no par
value per share (the "Shares" or "Common Shares"), in a subscription offering
(the "Subscription Offering") to (1) depositors of the Association with
Qualifying
<PAGE> 2
Deposits (as defined in the Association's Plan of Conversion) as of December 31,
1995 ("Eligible Account Holders"), (2) the Ohio State Financial Services, Inc.
Employee Stock Ownership Plan (the "ESOP"), (3) depositors of the Association
with Qualifying Deposits as of September 30, 1997 ("Supplemental Eligible
Account Holders"), (4) the Association's Other Eligible Members (as defined in
the Association's Plan of Conversion) and (5) employees, officers and directors
of the Association. Subject to the prior subscription rights of the above-listed
parties, the Company is offering for sale in a community offering (the
"Community Offering" and when referred to together with the Subscription
Offering, the "Subscription and Community Offering") conducted concurrently with
the Subscription Offering, the Shares not so subscribed for or ordered in the
Subscription Offering to members of the general public to whom a copy of the
Prospectus (as hereinafter defined) is delivered ("Other Subscribers"), with a
preference given to natural persons who reside in Belmont County, Ohio (all such
offerees being referred to in the aggregate as "Eligible Offerees"). It is
anticipated that shares not subscribed for in the Subscription and Community
Offering will be offered to certain members of the general public on a best
efforts basis through a selected dealers arrangement (the "Syndicated Community
Offering") (the Subscription Offering, Community Offering and Syndicated
Community Offering are collectively referred to as the "Offering"). It is
acknowledged that the purchase of Shares in the Offering is subject to the
maximum and minimum purchase limitations as described in the Plan and that the
Company and the Association may reject, in whole or in part, any orders received
in the Community Offering or Syndicated Community Offering. Collectively, these
transactions are referred to herein as the "Conversion."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-_____) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus," except that if any Prospectus is filed by the Company pursuant to
Rule
2
<PAGE> 3
424(b) or (c) of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") differing from the prospectus on file at the time
the Registration Statement initially becomes effective, the term "Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and
after the time said prospectus is filed with the Commission.
In accordance with Title 12, Part 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the Association has filed with the
Office of Thrift Supervision (the "OTS") and the Division of Financial
Institutions of the Department of Commerce of the State of Ohio (the "Division")
an Application for Approval of Conversion on Form AC (the "Conversion
Application"), including the Prospectus and the Conversion Valuation Appraisal
Report prepared by RP Financial (the "Appraisal") and has filed such amendments
thereto as may have been required by the OTS and the Division. The Conversion
Application has been approved by the OTS, the Division and the related
Prospectus has been authorized for use by the OTS and the Division. In addition,
the Company has filed with the OTS its application on Form H-(e)1-S (the
"Holding Company Application") to become a registered savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA"); and it has been
approved.
SECTION 2. RETENTION OF AGENT; COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Company and
the Association hereby appoint the Agent as their exclusive financial advisor
and marketing agent (i) to utilize its best efforts to solicit subscriptions for
Shares of the Company's Common Stock and to advise and assist the Company and
the Association with respect to the Company's sale of the Shares in the Offering
and (ii) to participate in the Offering in the areas of market making, research
coverage and in syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Association as to the matters set forth in the letter agreement ("Letter
Agreement"), dated March 1, 1997 between the Association and Webb (a copy of
which is attached hereto as Exhibit A). It is acknowledged by the Company and
the Association that the Agent shall not be required to purchase any Shares or
be obligated to take any action which is inconsistent with all applicable laws,
regulations, decisions or orders.
3
<PAGE> 4
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Sections 2(d) and (e) hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Company, the Association
and the Agent may agree to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 573,750 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares,
the full amount which it may have received from them plus accrued interest as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due to
the date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and their
counsel. The release of Shares against payment therefor shall be made on a date
and at a place acceptable to the Company, the Association and the Agent.
Certificates for shares shall be delivered directly to the purchasers in
accordance with their directions. The date upon which the Company shall release
or deliver the Shares sold in the Offering, in accordance with the terms herein,
is called the "Closing Date."
4
<PAGE> 5
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $25,000 payable in four consecutive
monthly installments of $6,250, the first of which was due on
March 1, 1997. Such fees shall be deemed to have been earned
when due. Should the Conversion be terminated for any reason
not attributable to the action or inaction of the Agent, the
Agent shall have earned and be entitled to be paid fees
accruing through the stage at which the termination occurred.
(b) A Success Fee of 1.50% of the aggregate Purchase Price of
Common Shares sold in the Subscription Offering and Community
Offering excluding shares purchased by the Association's
officers, directors, or employees (or members of their
immediate families) plus any ESOP, tax-qualified or stock
based compensation plans (except IRA's) or similar plan
created by the Association for some or all of its directors or
employees.
(c) If any of the shares remain available after the Subscription
Offering, at the request of the Association, Webb will seek to
form a syndicate of registered broker-dealers to assist in the
sale of such Common Shares on a best efforts basis, subject to
the terms and conditions set forth in the selected dealers
agreement. Webb will endeavor to distribute the Common Shares
among dealers in a fashion which best meets the distribution
objectives of the Association and the Plan of Conversion. Webb
will be paid a fee not to exceed 5.5% of the aggregate
Purchase Price of the Shares sold by them. Webb will pass onto
selected broker-dealers, who assist in the syndicated
community, an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock
sold at a comparable price per share in a similar market
environment. Fees with respect to purchases affected with the
assistance of a broker/dealer other than Webb shall be
transmitted by Webb to such broker/dealer. The decision to
utilize selected broker-dealers will be made by the
Association upon consultation with Webb. In the event, with
respect to any purchases of Shares, fees paid pursuant to this
subparagraph 2(c), such fees shall be in lieu of, and not in
addition to, payment pursuant to subparagraph 2(a) and 2(b).
5
<PAGE> 6
(d) The Association and the Company hereby agree to reimburse the
Agent for the reasonable fees and expenses of its Counsel.
SECTION 3. PROSPECTUS; OFFERING. The Shares are to be initially
offered in the Offering at the Purchase Price as defined and set forth on the
cover page of the Prospectus.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company and the
Association jointly and severally represent and warrant to and agree with the
Agent as follows:
(a) The Registration Statement which was prepared by the Company
and the Association and filed with the Commission was declared
effective by the Commission on __________ __, 1997. At the
time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement),
became effective, the Registration Statement contained all
statements that were required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations,
complied in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Registration
Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any
information regarding the Company or the Association contained
in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Association for use
in connection with the Offering, did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, and at the time any Rule
424(b) or (c) Prospectus was filed with the Commission and at
the Closing Date referred to in Section 2, the Registration
Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any
information regarding the Company or the Association contained
in Sales Information (as such term is defined in Section 8
hereof)
6
<PAGE> 7
authorized by the Company or the Association for use in
connection with the Offering will contain all statements that
are required to be stated therein in accordance with the 1933
Act and the 1933 Act Regulations and will not contain an
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the
representations and warranties in this Section 4(a) shall not
apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company
or the Association by the Agent or its counsel expressly
regarding the Agent for use in the Prospectus under the
caption "The Conversion-Plan of Distribution" or statements in
or omissions from any Sales Information or information filed
pursuant to state securities or blue sky laws or regulations
regarding the Agent.
(b) The Conversion Application which was prepared by the Company
and the Association and filed with the OTS and the Division
was approved by the OTS and the Division on _______ __, 1997
and the related Prospectus has been authorized for use by the
OTS and the Division. At the time of the approval of the
Conversion Application, including the Prospectus (including
any amendment or supplement thereto), by the OTS and the
Division and at all times subsequent thereto until the Closing
Date, the Conversion Application, including the Prospectus
(including any amendment or supplement thereto), will comply
in all material respects with the Conversion Regulations,
except to the extent waived in writing by the OTS. 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
7
<PAGE> 8
4(b) shall not apply to statements or omissions made in
reliance upon and in conformity with written information
furnished to the Company or the Association by the Agent or
its counsel expressly regarding the Agent for use in the
Prospectus contained in the Conversion Application under the
caption "The Conversion-Plan of Distribution" or statements in
or omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations
regarding the Agent. The Holding Company Application for
approval pursuant to the HOLA and the regulations promulgated
thereunder (the "Control Act Regulations"), has been prepared
by the Association and the Company in material conformity with
the requirements of the Control Act Regulations and has been
filed with and approved by the OTS. A conformed copy of the
Holding Company Application has been delivered to the Agent.
(c) The Company has filed with the OTS the Holding Company
Application, and such Application was deemed complete by the
OTS. As of the Closing Date, approval of the Company's
acquisition of the Association will have been obtained from
the OTS.
(d) No order has been issued by the OTS, the Division or the FDIC
(hereinafter any reference to the FDIC shall include the SAIF)
preventing or suspending the use of the Prospectus, and no
action by or before any such government entity to revoke any
approval, authorization or order of effectiveness related to
the Conversion is, to the best knowledge of the Company or the
Association, pending or threatened.
(e) At the Closing Date, the Plan will have been adopted by the
Boards of Directors of both the Company and the Association
and approved by the members of the Association, and the offer
and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion
Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions,
requirements and provisions
8
<PAGE> 9
precedent to the Conversion imposed upon the Company or the
Association by the OTS, the Commission, or any other
regulatory authority and in the manner described in the
Prospectus. No person has sought to obtain review of the final
action of the OTS in approving the Plan or in approving the
Conversion or the Holding Company Application pursuant to the
HOLA, or any other statute or regulation.
(f) The Association has been organized and is a validly existing
Ohio chartered savings and loan association in mutual form of
organization and upon the Conversion will become a duly
organized and validly existing federally chartered savings and
loan association in capital stock form of organization, in
both instances duly authorized to conduct its business and own
its property as described in the Registration Statement and
the Prospectus; the Association has obtained all material
licenses, permits and other governmental authorizations
currently required for the conduct of its business; all such
licenses, permits and governmental authorizations are in full
force and effect, and the Association is in all material
respects complying with all laws, rules, regulations and
orders applicable to the operation of its business; the
Association is existing under the laws of the state of Ohio
and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
its ownership of property or leasing of property or the
conduct of its business requires such qualification, unless
the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations
or income of the Association. The Association does not own
equity securities or any equity interest in any other business
enterprise except as described in the Prospectus or as would
not be material to the operations of the Association. Upon
completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) the Association will be
converted pursuant to the Plan to an Ohio
9
<PAGE> 10
chartered stock savings and loan association, (ii) all of the
authorized and outstanding capital stock of the Association
will be owned by the Company, and (iii) the Company will have
no direct subsidiaries other than the Association. The
Conversion will have been effected in all material respects in
accordance with all applicable statutes, regulations,
decisions and orders; and, except with respect to the filing
of certain post-sale, post-Conversion reports, and documents
in compliance with the 1933 Act Regulations, the OTS'
resolutions or letters of approval, all terms, conditions,
requirements and provisions with respect to the Conversion
imposed by the Commission, the OTS, the Division and the FDIC,
if any, will have been complied with by the Company and the
Association in all material respects or appropriate waivers
will have been obtained and all material notice and waiting
periods will have been satisfied, waived or elapsed.
(g) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State
of Ohio with corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus,
and at the Closing Date the Company will be qualified to do
business as a foreign corporation in each jurisdiction in
which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a
material adverse effect on the condition, financial or
otherwise, or the business, operations or income of the
Company. The Company has obtained all material licenses,
permits and other governmental authorizations currently
required for the conduct of its business; all such licenses,
permits and governmental authorizations are in full force and
effect, and the Company is in all material respects complying
with all laws, rules, regulations and orders applicable to the
operation of its business.
10
<PAGE> 11
(h) The Association has one wholly owned subsidiary, Trailway
Financial, Inc., which is duly incorporated and validly
existing as a corporation in good standing under the laws of
the State of Ohio, and is duly licensed and possessed of full
corporate power and authority to own its properties and
conduct its business as described in the Prospectus.
(i) The Association is a member of the Federal Home Loan Bank of
Cincinnati ("FHLB-Cincinnati"). The deposit accounts of the
Association are insured by the FDIC up to the applicable
limits; and no proceedings for the termination or revocation
of such insurance are pending or, to the best knowledge of the
Company or the Association, threatened. Upon consummation of
the Conversion, the liquidation account for the benefit of
Eligible Account Holders will be duly established in
accordance with the requirements of the Conversion
Regulations.
(j) The Company, the Association and its subsidiaries have good
and marketable title to all real property and good title to
all other assets material to the business of the Company and
the Association, taken as a whole, and to those properties and
assets described in the Registration Statement and Prospectus
as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in
the Registration Statement and Prospectus, or are not material
to the business of the Company and the Association, taken as a
whole; and all of the leases and subleases material to the
business of the Company and the Association, taken as a whole,
under which the Company or the Association hold properties,
including those described in the Registration Statement and
Prospectus, are in full force and effect.
(k) The Company and the Association have received an opinion of
their special counsel, Vorys, Sater, Seymour and Pease with
respect to the federal and Ohio income tax consequences of the
Conversion; all material aspects of the opinion of Vorys,
11
<PAGE> 12
Sater, Seymour and Pease are accurately summarized in the
Registration Statement and will be accurately summarized in
the Prospectus; and further represent and warrant that the
facts upon which such opinion is based are truthful, accurate
and complete.
(l) The Company and the Association have all such power,
authority, authorizations, approvals and orders as may be
required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the
Shares to be sold by the Company as provided herein and as
described in the Prospectus except approval or confirmation by
the OTS of the final appraisal of the Association. The
consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of
the Company and the Association and this Agreement has been
validly executed and delivered by the Company and the
Association and is the valid, legal and binding agreement of
the Company and the Association enforceable in accordance with
its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or
similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of
savings and loan holding companies, the accounts of whose
subsidiaries are insured by the FDIC or by general equity
principles regardless of whether such enforceability is
considered in a proceeding in equity or at law, and except to
the extent if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(m) The Company and the Association are not in violation of any
directive received from the OTS, the Division, 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,
<PAGE> 13
regulations, decisions, directives and orders of the OTS, the
Division and the FDIC) and, except as may be set forth in the
Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court,
regulatory authority or governmental agency or body, pending
or, to the knowledge of the Company or the Association,
threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and
as described in the Registration Statement and the Prospectus
or which might result in any material adverse change in the
condition (financial or otherwise), earnings, capital or
properties of the Company or the Association, or which would
materially affect their properties and assets.
(n) The financial statements, schedules and notes related thereto
which are included in the Prospectus fairly present the
consolidated balance sheet, income statement, statement of
changes in equity and cash flows of the Association at the
respective dates indicated and for the respective periods
covered thereby and comply as to form in all material respects
with the applicable accounting requirements of Title 12 of the
Code of Federal Regulations and generally accepted accounting
principles (including those requiring the recording of certain
assets at their current market value). Such financial
statements, schedules and notes related thereto have been
prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved,
present fairly in all material respects the information
required to be stated therein and are consistent with the most
recent financial statements and other reports filed by the
Association with the OTS and the Division. The other
financial, statistical and pro forma information and related
notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the
audited and unaudited financial statements of the Association
included in the Prospectus, and as to
13
<PAGE> 14
the pro forma adjustments, the adjustments made therein have
been properly applied on the basis described therein.
(o) Since the respective dates as of which information is given in
the Registration Statement including the Prospectus: (i) there
has not been any material adverse change, financial or
otherwise, in the condition of the Company or the Association
and its subsidiaries considered as one enterprise, or in the
earnings, capital or properties of the Company or the
Association, whether or not arising in the ordinary course of
business; (ii) there has not been any material increase in the
long-term debt of the Association or in the principal amount
of the Association's assets which are classified by the
Association as substandard, doubtful or loss or in loans past
due 90 days or more or real estate acquired by foreclosure, by
deed-in-lieu of foreclosure or deemed in-substance foreclosure
or any material decrease in retained earnings or total assets
of the Association nor has the Company or the Association
issued any securities (other than in connection with the
incorporation of the Company) or incurred any liability or
obligation for borrowing other than in the ordinary course of
business; (iii) there have not been any material transactions
entered into by the Company or the Association; (iv) there has
not been any material adverse change in the aggregate dollar
amount of the Association's deposits or its consolidated net
worth or spread; (v) there has been no material adverse change
in the Company's or the Association's relationship with its
insurance carriers, including, without limitation,
cancellation or other termination of the Company's or the
Association's fidelity bond or any other type of insurance
coverage; (vi) except as disclosed in the Prospectus there has
been no material change in management of the Company or the
Association, neither of which has any material undisclosed
liability of any kind, contingent or otherwise; (vii) the
Company or the Association has not sustained any material loss
or interference with its respective business or
14
<PAGE> 15
properties from fire, flood, windstorm, earthquake, accident
or other calamity, whether or not covered by insurance; (viii)
the Company or the Association is not in default in the
payment of principal or interest on any outstanding debt
obligations; (ix) the capitalization, liabilities, assets,
properties and business of the Company and the Association
conform in all material respects to the descriptions thereof
contained in the Prospectus; and (x) neither the Company, the
Association nor its wholly owned subsidiary has any material
contingent liabilities, except as set forth in the Prospectus.
All documents made available to or delivered or to be made
available to or delivered by the Association or the Company or
their representatives in connection with the issuance and sale
of the Shares, including records of account holders,
depositors, borrowers and other members of the Association, or
in connection with the Agent's exercise of due diligence,
except for those documents which were prepared by parties
other than the Association, the Company or their
representatives, to the best knowledge of the Association and
the Company, were on the dates on which they were delivered,
or will be on the dates on which they are to be delivered,
true, complete and correct in all material respects.
(p) As of the date hereof and as of the Closing Date, neither the
Company, the Association nor its subsidiary is (i) in
violation of its articles of incorporation or code of
regulations or charter or bylaws, respectively (and the
Association will not be in violation of its charter or bylaws
in capital stock form upon consummation of the Conversion), or
(ii) in default in the performance or observance of any
material obligation, agreement, covenant, or condition
contained in any material contract, lease, loan agreement,
indenture or other instrument to which it is a party or by
which it or any of its property may be bound; the consummation
of the Conversion, the execution, delivery and performance of
this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all
necessary corporate action on
15
<PAGE> 16
the part of the Company and the Association and this Agreement
has been validly executed and delivered by the Company and the
Association and is a valid, legal and binding Agreement of the
Company and the Association enforceable in accordance with its
terms, except as the enforceability thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or
hereafter in effect relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of
federal savings institutions, (ii) general equitable
principles, (iii) laws relating to the safety and soundness of
insured depository institutions, and (iv) applicable law or
public policy with respect to the indemnification and/or
contribution provisions contained herein, and except that no
representation or warranty need be made as to the effect or
availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). The consummation of the
transactions herein contemplated will not: (i) conflict with
or constitute a breach of, or default under, or result in the
creation of any material lien, charge or encumbrance (with the
exception of the liquidation account established in the
Conversion) upon any of the assets of the Company or the
Association pursuant to the articles of incorporation and code
of regulations of the Company or the charter and bylaws of the
Association (in either mutual or capital stock form), or any
material contract, lease or other instrument to which the
Company or the Association has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any
authorization, approval, judgement, decree, order, statute,
rule or regulation applicable to the Company or the
Association, except for such violations which would not have a
material adverse effect on the financial condition and results
of operations of the Company and the Association on a
consolidated basis; or (iii) with the exception of the
liquidation account established in the Conversion, result in
the creation of any material
16
<PAGE> 17
lien, charge or encumbrance upon any property of the Company
or the Association.
(q) No default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default, on the
part of the Company, the Association or its subsidiary in the
due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other instrument or
agreement to which the Company or the Association or its
subsidiary is a party or by which any of them or any of their
property is bound or affected, except such defaults which
would not have a material adverse affect on the financial
condition or results of operations of the Company, the
Association and its subsidiary 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 Association or its subsidiary, threatened
any action or proceeding wherein the Company, the Association
or its subsidiary would or might be alleged to be in default
thereunder.
(r) Upon consummation of the Conversion, the authorized, issued
and outstanding equity capital of the Company will be within
the range set forth in the Prospectus under the caption
"Capitalization," and no Shares have been or will be issued
and outstanding prior to the Closing Date (other than in
connection with the incorporation of the Company); the Shares
will have been duly and validly authorized for issuance and,
when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth
in the Plan and in the Prospectus, will be duly and validly
issued, fully paid and non-assessable, except for shares
purchased by the ESOP with funds borrowed from the Company to
the extent payment therefor in cash has not been received by
the Company; except to the extent that subscription rights and
priorities pursuant thereto exist pursuant to the Plan, no
preemptive rights exist with respect to
17
<PAGE> 18
the Shares; and the terms and provisions of the Shares will
conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus. To
the best knowledge of the Company and the Association, upon
the issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
(s) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares,
except for the approval of the Commission, the Division, 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 Stock Market
("Nasdaq").
(t) S.R. Snodgrass, A.C., which has certified the consolidated
audited financial statements and schedules of the Association
included in the Prospectus, has advised the Company and the
Association in writing that they are, with respect to the
Company and the Association, independent public accountants
within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and Title
12 of the Code of Federal Regulations and Section 571.2(c)(3).
(u) RP Financial, which has prepared the Association's Conversion
Valuation Appraisal Report as of _________ _, 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 and the Association within the
meaning of the Conversion Regulations.
(v) The Company, the Association and its subsidiary have timely
filed all required federal, state and local tax returns; the
Company, the Association
18
<PAGE> 19
and its subsidiary have paid all taxes that have become due
and payable in respect of such returns, except where permitted
to be extended, have made adequate reserves for similar future
tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
(w) The Association is in compliance in all material respects with
the applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, and the regulations and
rules thereunder.
(x) To the knowledge of the Company and the Association, neither
the Company, the Association nor employees of the Company or
the Association have made any payment of funds of the Company
or the Association as a loan for the purchase of the Shares or
made any other payment of funds prohibited by law, and no
funds have been set aside to be used for any payment
prohibited by law.
(y) Prior to the Conversion, neither the Company nor the
Association has: (i) issued any securities within the last 18
months (except for notes to evidence other bank loans and
reverse repurchase agreements or other liabilities in the
ordinary course of business or as described in the Prospectus,
and except for any shares issued in connection with the
incorporation of the Company); (ii) had any material dealings
within the 12 months prior to the date hereof with any member
of the NASD, or any person related to or associated with such
member, other than discussions and meetings relating to the
proposed Offering and routine purchases and sales of United
States government and agency securities; (iii) entered into a
financial or management consulting agreement except as
contemplated hereunder; and (iv) engaged any intermediary
between the Agent and the Company and the Association in
connection with the offering of the Shares, and no person is
being compensated in any manner for such service. Appropriate
arrangements have been made for
19
<PAGE> 20
placing the funds received from subscriptions for Shares in a
special interest-bearing account with the Association until
all Shares are sold and paid for, with provision for refund to
the purchasers in the event that the Conversion is not
completed for whatever reason or for delivery to the Company
if all Shares are sold.
(z) The Company and the Association have not relied upon the Agent
or its legal counsel or other advisors for any legal, tax or
accounting advice in connection with the Conversion.
(aa) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(bb) Any certificates signed by an officer of the Company or the
Association pursuant to the conditions of this Agreement and
delivered to the Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and warranty
by the Company or the Association to the Agent as to the
matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
------------------------------
KBW represents and warrants to the Company and the Association that:
(i) it is a corporation and is validly existing in good
standing under the laws of the State of New York and licensed to
conduct business in the State of Ohio and that Webb is an
unincorporated division thereof with full power and authority to
provide the services to be furnished to the Association and the Company
hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Agent,
and this Agreement has been duly and validly executed and delivered by
the Agent and is a legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms.
20
<PAGE> 21
(iii) Each of the Agent and its employees, agent and
representatives who shall perform any of the services hereunder shall
be duly authorized and empowered, and shall have all licenses,
approvals and permits necessary to perform such services.
(iv) The execution and delivery of this Agreement by the
Agent, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict with,
or result in a breach of, any of the terms, provisions or conditions
of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, the articles of
incorporation of the Agent or any agreement, indenture or other
instrument to which the Agent is a party or by which it or its property
is bound.
(v) No approval of any regulatory or supervisory or other
public authority is required in connection with the Agent's execution
and delivery of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before
or by any court, regulatory authority or government agency or body or,
to the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance of this Agreement.
SECTION 5.L COVENANTS OF THE COMPANY AND THE ASSOCIATION. The Company
and the Association hereby jointly and severally covenant with KBW as follows:
(a) The Company will not, at any time after the date the
Registration Statement is declared effective, file any
amendment or supplement to the Registration Statement without
providing the Agent and its counsel an opportunity to review
such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its
counsel shall reasonably object.
(b) The Association will not, at any time after the Conversion
Application is approved by the OTS,
21
<PAGE> 22
file any amendment or supplement to such Conversion
Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the
Agent or its counsel shall reasonably object.
(c) The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or
supplement to such Holding Company Application without
providing the Agent and its counsel an opportunity to review
the nonconfidential portions of such amendment or supplement
or file any amendment or supplement to which amendment or
supplement the Agent or its counsel shall reasonably object.
(d) The Company and the Association will use their best efforts to
cause any post-effective amendment to the Registration
Statement to be declared effective by the Commission and any
post-effective amendment to the Conversion Application to be
approved by the OTS and will immediately upon receipt of any
information concerning the events listed below notify the
Agent: (i) when the Registration Statement, as amended, has
become effective; (ii) when the Conversion Application, as
amended, has been approved by the OTS; (iii) any comments from
the Commission, the OTS or any other governmental entity with
respect to the Conversion or the transactions contemplated by
this Agreement; (iv) of the request by the Commission, the OTS
or any other governmental entity for any amendment or
supplement to the Registration Statement, the Conversion
Application or for additional information; (v) of the issuance
by the Commission, the OTS 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 Company or the Association under the Conversion
Regulations, or other applicable law, or the threat of any
such action; (vi) the issuance by the Commission, the OTS or
any authority of any stop order suspending the effectiveness
of the Registration Statement or of
22
<PAGE> 23
the initiation or threat of initiation or threat of any
proceedings for that purpose; or (vii) of the occurrence of
any event mentioned in paragraph (h) below. The Company and
the Association will make every reasonable effort (i) to
prevent the issuance by the Commission, the OTS or any state
authority of any such order and, if any such order shall at
any time be issued, (ii) to obtain the lifting thereof at the
earliest possible time.
(e) The Company and the Association will deliver to the Agent and
to its counsel two conformed copies of the Registration
Statement, the Conversion Application and the Holding Company
Application, as originally filed and of each amendment or
supplement thereto, including all exhibits. Further, the
Company and the Association will deliver such additional
copies of the foregoing documents to counsel to the Agent as
may be required for any NASD filings.
(f) The Company and the Association will furnish to the Agent,
from time to time during the period when the Prospectus (or
any later prospectus related to this offering) is required to
be delivered under the 1933 Act or the Securities Exchange Act
of 1934 (the "1934 Act"), such number of copies of such
Prospectus (as amended or supplemented) as the Agent may
reasonably request for the purposes contemplated by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the rules and
regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the
Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
(g) The Company and the Association will comply with any and all
material terms, conditions, requirements and provisions with
respect to the Conversion and the transactions contemplated
thereby imposed by the Commission, the Division, the OTS or
the Conversion Regulations, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act
23
<PAGE> 24
and the 1934 Act Regulations to be complied with prior to or
subsequent to the Closing Date and when the Prospectus is
required to be delivered, and during such time period the
Company and the Association will comply, at their own expense,
with all material requirements imposed upon them by the
Commission, the Division, the OTS or the Conversion
Regulations, and by the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations, including, without
limitation, Rule 10b-5 under the 1934 Act, in each case as
from time to time in force, so far as necessary to permit the
continuance of sales or dealing in the Common Shares during
such period in accordance with the provisions hereof and the
Prospectus.
(h) If, at any time during the period when the Prospectus relating
to the Shares is required to be delivered, any event relating
to or affecting the Company, the Association or its subsidiary
shall occur, as a result of which it is necessary or
appropriate, in the opinion of counsel for the Company and the
Association or in the reasonable opinion of the Agent's
counsel, to amend or supplement the Registration Statement or
Prospectus in order to make the Registration Statement or
Prospectus not misleading in light of the circumstances
existing at the time the Prospectus is delivered to a
purchaser, the Company and the Association will immediately so
inform the Agent and prepare and file, at their own expense,
with the Commission, the Division 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
reasonably satisfactory to the Agent and its counsel after a
reasonable time for review) which will amend or supplement the
Registration Statement or Prospectus so that as amended or
supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered
to a purchaser, not misleading. For the purpose
24
<PAGE> 25
of this Agreement, the Company and the Association each will
timely furnish to the Agent such information with respect to
itself as the Agent may from time to time reasonably request.
(i) The Company and the Association will take all necessary
actions, in cooperating with the Agent, and furnish to
whomever the Agent may direct, such information as may be
required to qualify or register the Shares for offering and
sale by the Company or to exempt such Shares from
registration, or to exempt the Company as a broker-dealer and
its officers, directors and employees as broker-dealers or
agents under the applicable securities or blue sky laws of
such jurisdictions in which the Shares are required under the
Conversion Regulations to be sold or as the Agent and the
Company and the Association may reasonably agree upon;
provided, however, that the Company shall not be obligated to
file any general consent to service of process, to qualify to
do business in any jurisdiction in which it is not so
qualified, or to register its directors or officers as
brokers, dealers, salesmen or agents in any jurisdiction. In
each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will
make and file such statements and reports in each fiscal
period as are or may be required by the laws of such
jurisdiction.
(j) The liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly
established and maintained in accordance with the requirements
of the OTS, and such Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain their
savings accounts in the Association will have an inchoate
interest in their pro rata portion of the liquidation account
which shall have a priority superior to that of the holders of
the Common Shares in the event of a complete liquidation of
the Association.
(k) The Company and the Association will not sell or issue,
contract to sell or otherwise dispose of,
25
<PAGE> 26
for a period of 90 days after the Closing Date, without the
Agent's prior written consent, any common shares other than
the Shares or other than in connection with any plan or
arrangement described in the Prospectus, including existing
stock benefit plans.
(l) The Company shall register its Common Shares under Section
12(g) of the 1934 Act concurrently with the Offering pursuant
to the Plan and shall request that such registration be
effective prior to or upon completion of the Conversion. The
Company shall maintain the effectiveness of such registration
for not less than three years or such shorter period as may be
required by the OTS.
(m) During the period during which the Company's Common Shares are
registered under the 1934 Act or for three (3) years from the
date hereof, whichever period is greater, the Company will
furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of
the Company and its subsidiaries as at the end of and for such
year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934
Act).
(n) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable
after such information is publicly available, a copy of each
report of the Company furnished to or filed with the
Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the
Company is listed or quoted (including, but not limited to,
reports on Forms 10-K, 10-Q and 8-K and all proxy statements
and annual reports to stockholders), (ii) a copy of each other
non-confidential report of the Company mailed to its
stockholders or filed with the Commission, the OTS or any
other supervisory or regulatory authority or any national
securities exchange or system on which any class of
26
<PAGE> 27
securities of the Company is listed or quoted, each press
release and material news items and additional documents and
information with respect to the Company or the Association as
the Agent may reasonably request; and (iii) from time to time,
such other nonconfidential information concerning the Company
or the Association as the Agent may reasonably request.
(o) The Company and the Association will use the net proceeds from
the sale of the Shares in the manner set forth in the
Prospectus under the caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations, and the laws of
any state in which the Shares are registered or qualified for
sale or exempt from registration, neither the Company nor the
Association will distribute any prospectus, offering circular
or other offering material in connection with the offer and
sale of the Shares.
(q) The Company will use its best efforts to (i) encourage and
assist a market maker to establish and maintain a market for
the Shares and (ii) list and maintain quotation of the Shares
on a national or regional securities exchange or on Nasdaq
effective on or prior to the Closing Date.
(r) The Association will maintain appropriate arrangements for
depositing all funds received from persons mailing
subscriptions for or orders to purchase Shares in the Offering
on an interest-bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Association's
obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or
until refunds of such funds have been made to the persons
entitled thereto or withdrawal authorizations canceled in
accordance with the Plan and as described in the Prospectus.
The Association will maintain such records of all
27
<PAGE> 28
funds received to permit the funds of each subscriber to be
separately insured by the FDIC (to the maximum extent
allowable) and to enable the Association to make the
appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan
and as described in the Prospectus.
(s) The Company will promptly take all necessary action to
register as a savings and loan holding company under the HOLA.
(t) The Company and the Association will take such actions and
furnish such information as are reasonably requested by the
Agent in order for the Agent to ensure compliance with the
NASD's "Interpretation Relating to Free Riding and
Withholding."
(u) Neither the Company nor the Association will amend the Plan of
Conversion without notifying the Agent prior thereto.
(v) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of
an oversubscription and shall provide the Agent with any
information necessary to assist the Company in allocating the
Shares in such event and such information shall be accurate
and reliable.
(w) Prior to the Closing Date, the Company and the Association
will inform the Agent of any event or circumstances of which
it is aware as a result of which the Registration Statement
and/or Prospectus, as then amended or supplemented, would
contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein not misleading.
(x) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date,
except as otherwise may be indicated or contemplated therein
or set forth in an amendment or supplement thereto, neither
the Company nor the Association will have: (i) issued
28
<PAGE> 29
any securities or incurred any liability or obligation, direct
or contingent, for borrowed money, except borrowings from the
same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any
transaction which is material in light of the business and
properties of the Company and the Association, taken as a
whole.
(y) The facts and representations provided to Vorys, Sater,
Seymour and Pease by the Association and the Company and upon
which Vorys, Sater, Seymour and Pease will base its opinion
under Section 7(c)(1) are and will be truthful, accurate and
complete.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Company
and the Association jointly and severally agree to pay or reimburse the Agent
for: (a) all filing fees in connection with all filings related to the Offering
with the NASD; (b) any stock issue or transfer taxes which may be payable with
respect to the sale of the Shares; (c) all reasonable expenses of the
Conversion, including but not limited to the Company's and the Association's,
and the Agency's attorneys' fees and expenses, blue sky fees, transfer agent,
registrar and other agent charges, fees relating to auditing and accounting or
other advisors and costs of printing all documents necessary in connection with
the Conversion; provided, however, there will be no out-of-pocket expenses
charged by the Agent for expenses such as travel, lodging and meals. In the
event the Company is unable to sell a minimum of 573,750 Shares or the
Conversion is terminated or otherwise abandoned, the Company and the Association
shall promptly reimburse the Agent in accordance with Section 2 hereof.
SECTION 7. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company and the Association herein
are, at and as of the commencement of the Offering and at and as of the Closing
Date, true and correct in all material respects, the condition that the Company
and the Association shall have performed all of their obligations hereunder to
be
29
<PAGE> 30
performed on or before such dates, and to the following
further conditions:
(a) At the Closing Date, the Company and the Association shall
have conducted the Conversion in all material respects in
accordance with the Plan, the Conversion Regulations, and all
other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared effective
by the Commission and the Conversion Application approved by
the OTS and the Division not later than 5:30 p.m. on the date
of this Agreement, or with the Agent's consent at a later time
and date; and at the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefore
initiated or threatened by the Commission or any state
authority, and no order or other action suspending the
authorization of the Prospectus or the consummation of the
Conversion shall have been issued or proceedings therefore
initiated or, to the Company's or the Association's knowledge,
threatened by the Commission, the OTS, the FDIC, or any state
authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Vorys, Sater,
Seymour and Pease, special counsel for the Company and the
Association, in form and substance to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation under the
laws of the State of Ohio.
(ii) The Company has corporate power and
authority to own, lease and operate its properties
30
<PAGE> 31
and to conduct its business as described in the
Registration Statement and the Prospectus.
(iii) The Association is a validly existing
Ohio savings and loan association in mutual form and
immediately following the completion of the
Conversion will be a validly existing Ohio savings
and loan association in capital stock form of
organization, in both instances duly authorized to
conduct its business and own its property as
described in the Registration Statement and the
Prospectus. All of the outstanding capital stock of
the Association upon completion of the Conversion
will be duly authorized and, upon payment therefor,
will be validly issued, fully paid and non-assessable
and will be owned by the Company, to such counsel's
Actual Knowledge, free and clear of any liens,
encumbrances, claims or other restrictions.
(iv) To such counsel's Actual Knowledge, the
Association has one subsidiary, Trailway Financial,
Inc., which is duly incorporated and validly existing
as a corporation in good standing under the laws of
the State of Ohio, and which has full corporate power
and authority to own its own properties and conduct
its business as described in the Prospectus. To such
counsel's Actual Knowledge, the subsidiary holds all
licenses, certificates and permits from governmental
authorities necessary for the conduct of its business
as described in the Prospectus except where the
failure to hold such licenses, certificates or
permits would not have a material adverse effect on
the business, assets or financial condition of the
Association on a consolidated basis; and such
subsidiary is not in material violation of its
articles of incorporation or bylaws. To such
counsel's Actual Knowledge, all of the outstanding
stock of the subsidiary has been duly authorized and
is validly issued, fully paid and nonassessable, and
all such stock is owned directly by the Association,
free and clear of any liens, encumbrances, claims or
other restrictions.
31
<PAGE> 32
(v) The Association is a member of the
FHLB-Cincinnati. The deposit accounts of the
Association are insured by the FDIC up to the maximum
amount allowed under law and no proceedings for the
termination or revocation of such insurance are
pending or, to such counsel's Actual Knowledge,
threatened; the description of the liquidation
account as set forth in the Prospectus under the
captions "The Conversion-Liquidation Account," to the
extent that such information constitutes matters of
law and legal conclusions, has been reviewed by such
counsel and is accurately described in all material
respects.
(vi) Immediately following the 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 Common
Shares have been issued prior to the Closing Date; at
the time of the Conversion, the Shares subscribed for
pursuant to the Offering will have been duly and
validly authorized for issuance, and when issued and
delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth
in the Plan and Prospectus, will be duly and validly
issued and fully paid and non-assessable, except for
shares purchased by the ESOP with funds borrowed from
the Company to the extent payment therefor in cash
has not been received by the Company; except to the
extent that subscription rights and priorities
pursuant thereto exist pursuant to the Plan, 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.
32
<PAGE> 33
(vii) The Association and the Company have
full corporate power and authority to enter into the
Agreement and to consummate the transactions
contemplated thereby and by the Plan of Conversion.
The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
have been duly and validly authorized by all
necessary action on the part of the Company and the
Association; and this Agreement is a valid and
binding obligation of the Company and the
Association, enforceable against the Company and the
Association in accordance with its terms, except as
the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws
now or hereafter in effect relating to or affecting
the enforcement of creditors' rights generally or the
rights of creditors of federal savings institutions,
(ii) general equitable principles, (iii) laws
relating to the safety and soundness of insured
depository institutions, and (iv) applicable law or
public policy with respect to the indemnification
and/or contribution provisions contained herein,
including without limitations the provision of
Sections 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).
(viii) The Conversion Application has been
approved by the Division and 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 Association 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.
(ix) The Plan has been duly adopted by the
required vote of the directors of the Company and
33
<PAGE> 34
the Association, and based upon the certificate of
the inspectors of election, by the members of the
Association.
(x) Subject to the satisfaction of the
conditions to the OTS' approval of the Conversion, no
further approval, registration, authorization,
consent or other order of any federal regulatory
agency, is required in connection with the execution
and delivery of this Agreement, the issuance of the
Shares and the consummation of the Conversion, except
as may be required under the securities or blue sky
laws of various jurisdictions (as to which no opinion
need be rendered) and except as may be required under
the rules and regulations of the NASD and/or Nasdaq
(as to which no opinion need by rendered).
(xi) 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.
(xii) At the time the Conversion
Application, including the Prospectus contained
therein, was approved by the Division and 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, state law, federal law and
all applicable rules and regulations promulgated
thereunder (other than the financial statements, the
notes thereto, and other tabular, financial,
statistical and appraisal data included therein, as
to which no opinion need be rendered).
(xiii) 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
34
<PAGE> 35
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.
(xiv) The terms and provisions of the Shares
of the Company conform, in all material respects, to
the description thereof contained in the Registration
Statement and Prospectus, and the form of certificate
used to evidence the Shares is in due and proper
form.
(xv) 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.
(xvi) 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.
(xvii) The Plan complies in all material
respects with all applicable federal laws, rules,
regulations, decisions and orders including, but not
limited to, the Conversion Regulations; no order has
been issued by the Dvision, the OTS, the Commission,
the FDIC, or any other state authority to suspend the
Offering or the use of the
35
<PAGE> 36
Prospectus, and no action for such purposes has been
instituted or, to such counsel's Actual Knowledge,
threatened by the Division, the OTS, the Commission,
the FDIC, or any state authority and, to such
counsel's Actual Knowledge, no person has sought to
obtain regulatory or judicial review of the final
action of the OTS, approving the Plan, the Conversion
Application, the Holding Company Application or the
Prospectus.
(xviii) To such counsel's Actual Knowledge, the
Company and the Association have obtained all
material 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 and the Association are
in all material respects complying therewith.
(xix) To such counsel's Actual Knowledge,
neither the Company nor the Association is in
violation of its articles of incorporation and code
of regulations or its charter and bylaws, as
appropriate or, to such counsel's Actual Knowledge,
in default or violation of any obligation, agreement,
covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which
it or its property may be bound, except for such
defaults or violations which would not have a
material adverse impact on the financial condition or
results of operations of the Company, the Association
and its subsidiary on a consolidated basis; to such
counsel's Actual Knowledge, the execution and
delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of
the transactions contemplated herein will not
conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or
assets of the Company or the
36
<PAGE> 37
Association pursuant to any material contract,
indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or the
Association is a party or by which any of them may be
bound, or to which any of the property or assets of
the Company or the Association are subject (other than
the establishment of the liquidation account); and,
such action will not result in any violation of the
provisions of the articles of incorporation or code of
regulations of the Company or the charter or bylaws of
the Association or, to such counsel's actual
knowledge, result in any violation of any applicable
federal law, act, regulation need be rendered (except
that no opinion with respect to the securities and
blue sky laws of various jurisdictions or the rules or
regulations of the NASD and/or the Nasdaq Stock
Market) or order or court order, writ, injunction or
decree.
(xx) The Company's articles of incorporation
and code of regulations comply in all materials
respects with the laws of the State of Ohio. The
Association's charter and bylaws comply in all
material respects with the laws of the State of Ohio
and the Rules and Regulations of the Division.
(xxi) To such counsel's Actual Knowledge,
neither the Company nor the Association is in
violation of any directive from the Division, the OTS
or the FDIC to make any material change in the method
of conducting its respective business.
(xxii) The information in the Prospectus
under the captions "Regulation," "The Conversion,"
"Restrictions on Acquisition of the Company and the
Association" and "Description of Authorized Shares,"
to the extent that such information constitutes
matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all
material respects. The description of the Conversion
process under the caption "The Conversion" in the
Prospectus has been reviewed by such counsel and
fairly describes such process in all material
respects. The discussion of statutes or regulations
described or referred to in the Prospectus are
accurate
37
<PAGE> 38
summaries and fairly present the information required
to be shown. The information under the caption "The
Conversion-Principal Effects of the Conversion--Tax
Consequences" has been reviewed by such counsel and
fairly describes the opinions rendered by them to the
Company and the Association with respect to such
matters.
In addition, such counsel shall state that
during the preparation of the Conversion Application,
the Registration Statement and the Prospectus, they
participated in conferences with certain officers of,
the independent public and internal accountants for,
and other representatives of the Company and the
Association, at which conferences the contents of the
Conversion Application, the Registration Statement
and the Prospectus and related matters were discussed
and, while such counsel have not confirmed the
accuracy or completeness of or otherwise verified the
information contained in the Conversion Application,
the Registration Statement or the Prospectus, and do
not assume any responsibility for such information,
based upon such conferences and a review of documents
deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual
matters on certificates of officers and other factual
representations by the Company and the Association,
nothing has come to their attention that would lead
them to believe that the Conversion Application, the
Registration Statement, the Prospectus, or any
amendment or supplement thereto (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein as to which no view need be
rendered) contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading.
In giving such opinion, such counsel may
rely as to all matters of fact on certificates of
officers or directors of the Company and the
38
<PAGE> 39
Association and certificates of public officials. Such
counsel's opinion shall be limited to matters governed
by federal laws and by the laws of the State of Ohio.
The term "Actual Knowledge" as used herein shall have
the meaning set forth in the Legal Opinion Accord of
the American Bar Association Section of Business Law.
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 or the Association
shall have received a copy of such proceedings, order,
stop order or action. In addition, such opinion may be
limited to present statutes, regulations and judicial
interpretations and to facts as they presently exist;
in rendering such opinion, such counsel need assume no
obligation to revise or supplement it should the
present laws be changed by legislative or regulatory
action, judicial decision or otherwise; and such
counsel need express no view, opinion or belief with
respect to whether any proposed or pending
legislation, if enacted, or any proposed or pending
regulations or policy statements issued by any
regulatory agency, whether or not promulgated pursuant
to any such legislation, would affect the validity of
the Conversion or any aspect thereof. Such counsel may
assume that any agreement is the valid and binding
obligation of any parties to such agreement other than
the Company or the Association.
(d) At the Closing Date, the Agent shall have received
the favorable opinion, dated as of the Closing Date,
of Silver, Freedman & Taff, L.L.P., the Agent's
counsel, with respect to such matters as the Agent
may reasonably require. Such opinion may rely upon
the opinions of counsel to the Company and the
Association, and as to matters of fact, upon
certificates of officers and directors of the Company
and the Association delivered pursuant hereto or as
such counsel shall reasonably request.
39
<PAGE> 40
(e) At the Closing Date, the Agent shall receive a
certificate of the Chief Executive Officer and the
Principal Accounting Officer of the Company and the
Association in form and substance reasonably
satisfactory to the Agent's Counsel, dated as of such
Closing Date, to the effect that: (i) they have
carefully examined the Prospectus and, in their
opinion, at the time the Prospectus became authorized
for final use, the Prospectus did not contain any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading; (ii) since
the date the Prospectus became authorized for final
use, no event has occurred which should have been set
forth in an amendment or supplement to the Prospectus
which has not been so set forth, including
specifically, but without limitation, any material
adverse change in the condition, financial or
otherwise, or in the earnings, capital, properties or
business of the Company, the Association or its
subsidiary, 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 the Prospectus, there
has been no material adverse change in the condition,
financial or otherwise, or in the earnings, capital or
properties of the Company, the Association or its
subsidiary, independently, or of the Company, the
Association or its subsidiary, considered as one
enterprise, whether or not arising in the ordinary
course of business; (iv) the representations and
warranties in Section 4 are true and correct with the
same force and effect as though expressly made at and
as of the Closing Date; (v) the Company, and the
Association have complied in all material respects
with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to
the Closing Date and will comply in all material
respects with all obligations to be satisfied by them
after the Conversion; (vi) no stop order suspending
the effectiveness of the Registration Statement has
been initiated or, to the best knowledge of the
Company or the Association,
40
<PAGE> 41
threatened by the Commission or any state authority;
(vii) no order suspending the Offering, the
Conversion, the acquisition of all of the shares of
the Association by the Company or the effectiveness of
the Prospectus has been issued and no proceedings for
that purpose are pending or, to the best knowledge of
the Company or the Association, threatened by the
Division, the OTS, the Commission, the FDIC, or any
state authority; and (viii) to the best knowledge of
the Company or the Association, no person has sought
to obtain review of the final action of the OTS
approving the Plan.
(f) Prior to and at the Closing Date: (i) in the
reasonable opinion of the Agent, there shall have been
no material adverse change in the condition, financial
or otherwise, or in the earnings or business of the
Company, the Association or its subsidiary
independently, or of the Company, the Association and
its subsidiary, considered as one enterprise, from
that as of the latest dates as of which such condition
is set forth in the Prospectus other than transactions
referred to or contemplated therein; (iii) the Company
or the Association shall not have received from the
Division, 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 Agent) or which materially and
adversely would affect the business, operations or
financial condition or income of the Company and the
Association (together with its Subsidiary) taken as a
whole; (iv) the Company, the Association and its
subsidiary shall not have been in default (nor shall
an event have occurred which, with notice or lapse of
time or both, would constitute a default) under any
provision of any agreement or instrument relating to
any outstanding indebtedness; (v) no action, suit or
proceeding, at law or in equity or before or by any
federal or state commission, board or other
administrative agency, shall be pending or, to the
knowledge of the Company, the Association or its
subsidiary, threatened against
411
<PAGE> 42
the Company, the Association or its subsidiary 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 Association and its subsidiary taken as a
whole; and (vi) the Shares have been qualified or
registered for offering and sale or exempted therefrom
under the securities or blue sky laws of the
jurisdictions as the Agent shall have reasonably
requested and as agreed to by the Company and the
Association.
(g) Concurrently with the execution of this Agreement, the
Agent shall receive a letter from S.R. Snodgrass, A.C.
dated as of the date of the Prospectus and addressed
to the Agent: (i) confirming that S.R. Snodgrass, A.C.
is a firm of independent public accounts within the
meaning of Rule 101 of the Code of Professional Ethics
of the American Institute of Certified Public
Accountants and applicable regulations of the OTS and
stating in effect that in its opinion the consolidated
financial statements, schedules and related notes of
the Association as of December 31, 1996 and 1995 and
for each of the three years in the period ended
December 31, 1996, as are included in the Prospectus
and covered by their opinion included therein, comply
as to form in all material respects with the
applicable accounting requirements and related
published rules and regulations of the OTS and the
1933 Act; (ii) stating in effect that, on the basis of
certain agreed upon procedures (but not an audit in
accordance with generally accepted auditing standards)
consisting of a reading of the latest available
unaudited interim consolidated financial statements of
the Association prepared by the Association, a reading
of the minutes of the meetings of the Board of
Directors and members of the Association and
consultations with officers of the Association
responsible for financial and accounting matters,
nothing came to their attention which caused them to
believe that: (A) the unaudited financial statements
included in the Prospectus are not in conformity with
the 1933
42
<PAGE> 43
Act, applicable accounting requirements of the OTS and
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited financial statements included in the
Prospectus; or (B) during the period from the date of
the latest unaudited consolidated financial statements
included in the Prospectus to a specified date not
more than three business days prior to the date of the
Prospectus, except as has been described in the
Prospectus, there was any increase in borrowings,
other than normal deposit fluctuations, by the
Association; or (c) there was any decrease in the
consolidated net assets of the Association at the date
of such letter as compared with amounts shown in the
latest unaudited consolidated statement of condition
included in the Prospectus; and (iii) stating that, in
addition to the audit referred to in their opinion
included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this
subsection (f), they have compared with the general
accounting records of the Association, which are
subject to the internal controls of the Association,
the accounting system and other data prepared by the
Association, directly from such accounting records, to
the extent specified in such letter, such amounts
and/or percentages set forth in the Prospectus as the
Agent may reasonably request; and they have reported
on the results of such comparisons.
(h) At the Closing Date, the Agent shall receive a letter
dated the Closing Date, addressed to the Agent,
confirming the statements made by S.R. Snodgrass,
A.C. in the letter delivered by it pursuant to
subsection (f) of this Section 7, the "specified
date" referred to in clause (ii) of subsection (f)
thereof to be a date specified in such letter, which
shall not be more than three business days prior to
the Closing Date.
(i) At the Closing Date, the Agent shall receive a letter
from RP Financial, dated the date thereof and
addressed to counsel for the Agent (i) confirming that
said firm is independent of the Company and the
Association and is experienced and
43
<PAGE> 44
expert in the area of corporate appraisals within the
meaning of Title 12 of the Code of Federal
Regulations, Section 563b.7(f)(1)(i), (ii) stating in
effect that the Appraisal prepared by such firm
complies in all material respects with the applicable
requirements of Title 12 of the Code of Federal
Regulations, and (iii) further stating that their
opinion of the aggregate pro forma market value of the
Company and the Association expressed in their
Appraisal dated as of _________ __, 1997, and most
recently updated, remains in effect.
(j) The Company and the Association shall not have
sustained since the date of the latest financial
statements included in the Prospectus any material
loss or interference with its business from fire,
explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or
court or governmental action, order or decree,
otherwise than as set forth or contemplated in the
Registration Statement and Prospectus and since the
respective dates as of which information is given in
the Registration Statement and Prospectus, there shall
not have been any change in the long-term debt of the
Company or the Association other than debt incurred in
relation to the purchase of Shares by the
Association's Eligible Plans, or any change, or any
development involving a prospective change, in or
affecting the general affairs, management, financial
position, stockholders' equity or results of
operations of the Company or the Association,
otherwise than as set forth or contemplated in the
Registration Statement and Prospectus, the effect of
which, in any such case described above, is in Webb's
reasonable judgment sufficiently material and adverse
as to make it impracticable or inadvisable to proceed
with the Subscription Offering or the delivery of the
Shares on the terms and in the manner contemplated in
the Prospectus.
(k) At or prior to the Closing Date, the Agent shall
receive: (i) a copy of the letter from the OTS
approving the Conversion Application and
44
<PAGE> 45
authorizing the use of the Prospectus; (ii) a copy of
the order from the Commission declaring the
Registration Statement effective; (iii) a certificate
from the Division and the OTS evidencing the existence
of the Association; (iv) certificate of good standing
from the State of Ohio evidencing the good standing of
the Company and the Association's subsidiary; (v) a
certificate from the FDIC evidencing the Association's
insurance of accounts; (vi) a certificate of the
FHLB-Cincinnati evidencing the Association's
membership thereof; (vii) a copy of the letter from
the OTS approving the Company's Holding Company
Application; and (viii) a copy of the Association's
stock charter.
(l) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or
limitation in trading in securities generally on the
New York Stock Exchange or in the over-the-counter
market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices for
securities have been required by either of such
exchanges or the NASD or by order of the Commission or
any other governmental authority; (ii) a general
moratorium on the operations of commercial banks, Ohio
savings and loan association or federal savings banks
or a general moratorium on the withdrawal of deposits
from commercial banks, Ohio savings banks or federal
savings and loan 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 judgement, makes it impracticable
or inadvisable to proceed with the Offering or the
delivery of the shares on the terms and in the manner
contemplated in the Registration Statement and the
Prospectus.
45
<PAGE> 46
(m) At or prior to the Closing Date, counsel to the Agent
shall have been furnished with such documents and
opinions as they may reasonably require for the
purpose of enabling them to pass upon the sale of the
Shares as herein contemplated and related proceedings
or in order to evidence the occurrence or completeness
of any of the representations or warranties, or the
fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company or
the Association in connection with the Conversion and
the sale of the Shares as herein contemplated shall be
satisfactory in form and substance to Webb and its
counsel.
SECTION 8. INDEMNIFICATION.
(a) The Company and the Association jointly and severally
agree to indemnify and hold harmless the Agent, its
respective officers and directors, employees and
agents, and each person, if any, who controls the
Agent within the meaning of Section 15 of the 1933 Act
or Section 20(a) of the 1934 Act, against any and all
loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses),
joint or several, that the Agent or any of them may
suffer or to which the Agent and any such persons may
become subject under all applicable federal or state
laws or otherwise, and to promptly reimburse the Agent
and any such persons upon written demand for any
expense (including reasonable fees and disbursements
of counsel) incurred by the Agent or any of them in
connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced
or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the
46
<PAGE> 47
Conversion Application (or any amendment or supplement
thereto), the Holding Company Application or any
instrument or document executed by the Company or the
Association or based upon written information supplied
by the Company or the Association filed in any state
or jurisdiction to register or qualify any or all of
the Shares or to claim an exemption therefrom, or
provided to any state or jurisdiction to exempt the
Company as a broker-dealer or its officers, directors
and employees as broker-dealers or agent, under the
securities laws thereof (collectively, the "Blue Sky
Application"), or any document, advertisement, oral
statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the
Company or the Association with their consent or based
upon written or oral information furnished by or on
behalf of the Company or the Association, whether or
not filed in any jurisdiction, in order to qualify or
register the Shares or to claim an exemption therefrom
under the securities laws thereof; (ii) arise out of
or are based upon the omission or alleged omission to
state in any of the foregoing documents or
information, a material fact required to be stated
therein or necessary to make the statements therein,
in light of the circumstances under which they were
made, not misleading; or (iii) arise from any theory
of liability whatsoever relating to or arising from or
based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto),
the Conversion Application (or any amendment or
supplement thereto), any Blue Sky Application or Sales
Information or other documentation distributed in
connection with the Conversion; provided, however,
that no indemnification is 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
47
<PAGE> 48
statement or alleged untrue material statement in, or
material omission or alleged material omission from,
the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the
Conversion Application, any Blue Sky Application or
Sales Information made in reliance upon and in
conformity with information furnished in writing to
the Company or the Association by the Agent or its
counsel regarding the Agent provided, that it is
agreed and understood that the only information
furnished in writing to the Company or the Association
by the Agent regarding the Agent is set forth in the
Prospectus under the caption "the Conversion--Plan of
Distribution"; and, PROVIDED FURTHER, that such
indemnification shall be to the extent permitted by
the Commissioner, the OTS, the FDIC and the Board of
Governors of the Federal Reserve.
(b) The Agent agrees to indemnify and hold harmless the
Company and the Association, their directors and
officers and each person, if any, who controls the
Company or the Association within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the
1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but not
limited to settlement expenses), joint or several,
which they, or any of them, may suffer or to which
they, or any of them may become subject under all
applicable federal and state laws or otherwise, and to
promptly reimburse the Company, the Association, and
any such persons upon written demand for any expenses
(including reasonable fees and disbursements of
counsel) incurred by them, or any of them, in
connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced
or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or
48
<PAGE> 49
alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment or
supplement thereto), the Conversion Application (or
any amendment or supplement thereto), the preliminary
or final Prospectus (or any amendment or supplement
thereto), any Blue Sky Application or Sales
Information, (ii) are based upon the omission or
alleged omission to state in any of the foregoing
documents a material fact required to be stated
therein or necessary to make the statements therein,
in the light of the circumstances under which they
were made, not misleading, or (iii) arise from any
theory of liability whatsoever relating to or arising
from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto),
the Conversion Application (or any amendment or
supplement thereto), or any Blue Sky Application or
Sales Information or other documentation distributed
in connection with the Conversion; provided, however,
that the Agent's obligations under this Section 8(b)
shall exist only if and only to the extent (i) that
such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material
fact was omitted from, the Registration Statement (or
any amendment or supplement thereto), the preliminary
or final Prospectus (or any amendment or supplement
thereto), the Conversion Application (or any amendment
or supplement thereto), any Blue Sky Application or
Sales Information in reliance upon and in conformity
with information furnished in writing to the Company
or the Association by the Agent or its counsel
regarding the Agent. Provided, that it is agreed and
understood that the only information furnished in
writing to the Company or the Association by the Agent
regarding the Agent is set forth in the Prospectus
under the caption "the Conversion--Plan of
Distribution."
49
<PAGE> 50
(c) Each indemnified party shall give prompt written
notice to each indemnifying party of any action,
proceeding, claim (whether commenced or threatened),
or suit instituted against it in respect of which
indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve it from
any liability which it may have on account of this
Section 8 or otherwise. An indemnifying party may
participate at its own expense in the defense of such
action. In addition, if it so elects within a
reasonable time after receipt of such notice, an
indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume
defense of such action with counsel chosen by it and
approved by the indemnified parties that are
defendants in such action, unless such indemnified
parties reasonably object to such assumption on the
ground that there may be legal defenses available to
them that are different from or in addition to those
available to such indemnifying party. If an
indemnifying party assumes the defense of such action,
the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such
action, proceeding or claim, other than reasonable
costs of investigation. In no event shall the
indemnifying parties be liable for the fees and
expenses of more than one separate firm of attorneys
(and any special counsel that said firm may retain)
for each indemnified party in connection with any one
action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same
jurisdiction arising out of the same general
allegations or circumstances.
(d) The agreements contained in this Section 8 and in
Section 9 hereof and the representations and
warranties of the Company and the Association set
forth in this Agreement shall remain operative and in
full
50
<PAGE> 51
force and effect regardless of: (i) any investigation
made by or on behalf of agent or their officers,
directors or controlling persons, agent or employees
or by or on behalf of the Company or the Association
or any officers, directors or controlling persons,
agent or employees of the Company or the Association;
(ii) delivery of and payment hereunder for the Shares;
or (iii) any termination of this Agreement.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Association or the Agent, the
Company, the Association and the Agent shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding of any claims asserted, but after deducting any
contribution received by the Company, the Association or the Agent from persons
other than the other party thereto, who may also be liable for contribution) in
such proportion so that the Agent is responsible for that portion represented by
the percentage that the fees paid to the Agent pursuant to Section 2 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Shares in the Offering, and the Company and the
Association shall be responsible for the balance. If, however, the allocation
provided above is not permitted by applicable law or if the indemnified party
failed to give the notice required under Section 8 above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault of
the Company and the Association on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereto), but also the relative benefits received by the Company and the
Association on the one hand and the Agent on the other from the Offering (before
deducting expenses). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and/or the Association on the one hand or
the
51
<PAGE> 52
Agent on the other and the parties' relative intent, good faith, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Association and the Agent agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro-rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above in this Section 9.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof) referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
It is expressly agreed that the Agent shall not be liable for any loss,
liability, claim, damage or expense or be required to contribute any amount
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement. It is understood that the above stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not found guilty
of such fraudulent misrepresentation. The obligations of the Company and the
Association under this Section 9 and under Section 8 shall be in addition to any
liability which the Company and the Association may otherwise have. For purposes
of this Section 9, each of the Agent's, the Company's or the Association's
officers and directors and each person, if any, who controls the Agent or the
Company or the Association within the meaning of the 1933 Act and the 1934 Act
shall have the same rights to contribution as the Agent, the Company or the
Association. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES.
The respective indemnities of the Company, the Association and the Agent and the
representations and warranties
52
<PAGE> 53
and other statements of the Company, the Association and the Agent set forth in
or made pursuant to this Agreement shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Agent, the Company, the Association or
any controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any successor or assign of the Agent, the Company,
the Association, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required
minimum number of the Shares by June 30, 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
Company to each person who has subscribed for or
ordered any of the Shares the full amount which it may
have received from such person, together with interest
as provided in the Prospectus, and no party to this
Agreement shall have any obligation to the other
hereunder, except for payment by the Company and/or
the Association as set forth in Sections 2(a), 6, 8
and 9 hereof.
(b) If any of the conditions specified in Section 7 shall
not have been fulfilled when and as required by this
Agreement unless waived in writing, or by the Closing
Date, this Agreement and all of the Agent's
obligations hereunder may be cancelled by the Agent by
notifying the Company and the Association of such
cancellation in writing or by telegram at any time at
or prior to the Closing Date, and any such
cancellation shall be without liability of any party
to any other party except as otherwise provided in
Sections 2(a), 6, 8 and 9 hereof.
53
<PAGE> 54
(c) If the Agent elects to terminate this Agreement as
provided in this Section, the Company and the
Association shall be notified promptly by telephone
or telegram, confirmed by letter.
The Company and the Association may terminate this Agreement in the
event the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Association have provided Webb with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Charles Webb &
Company, 211 Bradenton, Dublin, Ohio 43017-5034, Attention: Patricia A. McJoynt
(with a copy to Silver, Freedman & Taff, L.L.P., Attention: Martin L. Meyrowitz,
P.C. and, if sent to the Company and the Association, shall be mailed, delivered
or telegraphed and confirmed to the Company and the Association at 435 Main
Street, Bridgeport, Ohio 43912, Attention: Jon W. Letzkus, President (with a
copy to Vorys, Sater, Seymour and Pease, Attention: _______________).
SECTION 13. PARTIES. The Company and the Association shall be entitled
to act and rely on any request, notice, consent, waiver or agreement purportedly
given on behalf of the Agent when the same shall have been given by the
undersigned. The Agent shall be entitled to act and rely on any request, notice,
consent, waiver or agreement purportedly given on behalf of the Company or the
Association, when the same shall have been given by the undersigned or any other
officer of the Company or the Association. This Agreement shall inure solely to
the benefit of, and shall be binding upon, the Agent, the Company, the
Association, and their respective successors and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained. It is understood and agreed that this Agreement is the exclusive
agreement among the parties hereto, and supersedes any prior agreement among the
parties and may not be varied except in writing signed by all the parties.
54
<PAGE> 55
SECTION 14. CLOSING. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Association. At the closing, the Company and the
Association shall deliver to the Agent in next day funds the commissions, fees
and expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof
and the opinions and certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and 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 Ohio.
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the
Company, the Association and the Agent, please indicate acceptance thereof in
the space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
SECTION 18. ENTIRE AGREEMENT. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct
55
<PAGE> 56
or dealing shall be construed to modify, amend or otherwise affect any of the
provisions hereof.
Very truly yours,
OHIO STATE FINANCIAL BRIDGEPORT SAVINGS AND LOAN
SERVICES, INC. ASSOCIATION
By Its Authorized By Its Authorized
Representative: Representative:
- ------------------------------- ----------------------------
Jon W. Letzkus Jon W. Letzkus
President President
Accepted as of the date first above written
KEEFE, BRUYETTE & WOODS, INC.
By Its Authorized
Representative:
- --------------------------------------
John Bruno
Senior Vice President
56
<PAGE> 1
Exhibit 2
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
PLAN OF CONVERSION
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
1. Introduction.......................................................................................................1
2. Definitions........................................................................................................1
3. Procedures for the Conversion......................................................................................4
4. Purchase Price of Common Shares and Number of Shares to be Offered in Connection with the Conversion...............5
5. Subscription Rights of Eligible Account Holders....................................................................5
6. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans..................................................6
7. Subscription Rights of Supplemental Eligible Account Holders.......................................................6
8. Subscription Rights of Other Eligible Members......................................................................7
9. Community Offering.................................................................................................7
10. Additional Limitations on Purchases................................................................................7
11. Procedures for the Subscription Offering and the Community Offering................................................9
12. Payment for Common Shares..........................................................................................9
13. Expiration of Subscription Rights; Undelivered, Defective or Late Order Forms; Insufficient Payment...............10
14. Compliance with Securities Laws...................................................................................11
15. Rights of Shareholders After Completion of Conversion.............................................................11
16. Establishment of Liquidation Account..............................................................................11
17. Accounts in Converted Association.................................................................................12
18. Restrictions on Purchases and Sales of Common Shares by Officers and Directors Following Conversion...............12
19. Restrictions on Acquisition of the Association or Holding Company.................................................13
20. Amendment or Termination of this Plan.............................................................................13
21. Consummation of Conversion........................................................................................13
22. Tax Rulings/Opinions..............................................................................................13
23. Directors and Officers of the Association.........................................................................13
24. Stock Benefit Plans...............................................................................................13
25. Registration of Common Shares; Market for Common Shares...........................................................13
26. Expenses of Conversion............................................................................................14
27. Mailing of Proxy Materials........................................................................................14
28. Interpretation of the Plan........................................................................................14
</TABLE>
<PAGE> 2
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
PLAN OF CONVERSION
------------------
1. INTRODUCTION.
This Plan of Conversion, adopted by the Board of Directors of
Bridgeport Savings and Loan Association (hereinafter referred to as the
"Association") on March 24, 1997 (hereinafter referred to as this "Plan"),
provides for the conversion of the Association from a mutual savings and loan
association incorporated under Ohio law to a permanent capital stock savings
and loan association incorporated under Ohio law (hereinafter referred to as
the "Conversion") and the acquisition by a holding company to be formed at the
direction of the Association of all of the capital stock to be issued by the
Association in the Conversion. The purpose of the Conversion is to provide the
Association with additional capital to expand lending and investment
activities, enhance customer services and pursue other lawful activities which
the Board of Directors may deem to be in the best interests of the Association.
After the completion of the Conversion, savings accounts in the
Association will be equivalent in amount, interest rate and other terms to the
savings accounts in the Association immediately prior to the Conversion and
will continue to be insured by the Federal Deposit Insurance Corporation to the
maximum extent permitted by law. Rights of account holders with respect to
liquidation and voting will change, however, as a result of the Conversion. As
a permanent capital stock savings and loan association, the Association will
succeed to all of the presently existing rights, interests, duties and
obligations of the Association in mutual form to the extent provided by law,
including, but not limited to, all rights to and interests in its assets and
properties, both real and personal.
This Plan must be approved at the Special Meeting (hereinafter
defined) of Members (hereinafter defined) by the affirmative vote of a majority
of the total outstanding votes entitled to be cast at the Special Meeting.
Before this Plan may be submitted to the members of the Association for
approval at the Special Meeting, however, this Plan must be approved by the OTS
(hereinafter defined) and the Division (hereinafter defined). The Amended
Articles of Incorporation and Amended Constitution of the Association must also
be approved at the Special Meeting by the affirmative vote of at least
three-fifths of the votes cast in person or by proxy at the Special Meeting.
2. DEFINITIONS.
As used in this Plan, the following terms have the corresponding
meanings:
ACTING IN CONCERT means (a) knowing participation in a joint activity
or interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (b) 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.
AFFILIATE, when used to indicate a relationship with a specified Person
(hereinafter defined), means a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is
under common control with the Person specified.
AMENDED ARTICLES means the Amended Articles of Incorporation of the
Association which are in the form attached hereto as Exhibit I and
which authorize the issuance of capital stock and which will be filed
with the Ohio Secretary of State on the date on which the Conversion
becomes effective.
AMENDED CONSTITUTION means the Amended Constitution of the Association
which is in the form attached hereto as Exhibit II and which will be
filed with the Division on the date on which the Conversion becomes
effective.
APPLICATION means the Application for Conversion on Form AC to be filed
by the Association with the OTS pursuant to Title 12, Code of Federal
Regulations, Part 563b and with the Division pursuant to Ohio
Administrative Code Section 1301-2-1-16.
ASSOCIATE, when used to indicate a relationship with any Person, means
(i) any corporation or organization (other than the Association, the
Holding Company (hereinafter defined) or a majority-owned subsidiary of
the Association or the
<PAGE> 3
Holding Company) of which such Person is an 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, except
that such term will not include a Tax-Qualified Employee Stock Benefit
Plan (hereinafter defined), 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 (hereinafter defined) of the
Association, the Holding Company or any of their subsidiaries.
ASSOCIATION means Bridgeport Savings and Loan Association, in its
mutual form or stock form, as appropriate.
BROKER means any Person engaged in the business of effecting
transactions in securities for the account of others.
COMMON SHARES means the common shares of the Holding Company to be
offered and sold by the Holding Company in connection with the
Conversion.
COMMUNITY MEMBER means any natural person who, on the date of
submission of an Order Form (hereinafter defined), is a resident of
Belmont County, the county in which the offices of the Association are
located.
COMMUNITY OFFERING means the offering of Common Shares to the public
concurrently with or after the completion of the Subscription Offering
(hereinafter defined) in a manner by which Community Members are given
preference.
CONVERSION means the change in the form of the Association from the
mutual to the permanent capital stock form upon (i) the filing of the
Amended Articles and the Amended Constitution; (ii) the sale and
issuance of Common Shares by the Holding Company in the Subscription
Offering (hereinafter defined) and the Community Offering, and (iii)
the purchase by the Holding Company of the capital stock of the
Association.
DEALER means any Person who engages either for all or part of such
person's time, directly or indirectly, as an agent, Broker or
principal, in the business of offering, buying, selling or otherwise
dealing or trading in securities issued by another Person.
DIVISION means the Division of Financial Institutions of the Department
of Commerce of the State of Ohio.
ELIGIBILITY RECORD DATE means the close of business on December 31,
1995, the record date set by the Association for determining Eligible
Account Holders (hereinafter defined).
ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying Deposit
(hereinafter defined) in the Association on the Eligibility Record
Date.
FDIC means the Federal Deposit Insurance Corporation, an agency of the
United States Government.
HOLDING COMPANY means the corporation to be formed at the direction of
the Association under Ohio law for the purpose of becoming a savings
and loan holding company through the acquisition of all of the capital
stock to be issued by the Association in connection with the
Conversion.
INDEPENDENT APPRAISER means the firm employed by the Association to
determine the estimated pro forma market value of the Association to be
used as the basis for determining the price of the Common Shares.
LIQUIDATION ACCOUNT means the account established in accordance with
Section 16 of this Plan for Eligible Account Holders and Supplemental
Eligible Account Holders (hereinafter defined) who continue to maintain
a Savings Account (hereinafter defined) at the Association after the
Conversion.
MEMBER means any Person qualifying as a member of the Association under
its articles of incorporation and constitution in effect on the date of
the Special Meeting.
OFFICER means an executive officer of the Holding Company or the
Association, including the Chairman of the Board of Directors, the
President, a Vice President, the Secretary, the Treasurer or principal
financial officer, or the comptroller or principal accounting officer
of the Holding Company or the Association and any other person
performing similar functions for the Holding Company or the
Association.
-2-
<PAGE> 4
ORDER FORMS means the original forms which will be sent to the Eligible
Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders and Other Eligible Members
(hereinafter defined) to enable such Persons to exercise their
respective Subscription Rights (hereinafter defined) in accordance with
this Plan and which may be sent to others in the Community Offering.
OTHER ELIGIBLE MEMBERS means those Persons, other than Eligible Account
Holders and Supplemental Eligible Account Holders, who are eligible to
purchase Common Shares pursuant to this Plan by reason of being Voting
Members (hereinafter defined).
OTS means the Department of the Treasury, Office of Thrift Supervision,
an agency of the United States Government.
PERSON means an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, any unincorporated
organization, or a government or political subdivision thereof.
PROSPECTUS means the document describing the terms and conditions of
the Subscription Offering and the Community Offering, including a
complete description of the business and affairs of the Association and
the Holding Company.
PROXY means the form of authorization by which a Person is, or may be
deemed to be, designated to act for a Voting Member in the exercise of
his or her voting rights in the affairs of the Association.
PROXY MATERIALS means the Notice of Special Meeting, the Proxy
Statement and the form of Proxy used in connection with soliciting
Proxies from Members for use at the Special Meeting.
PURCHASE PRICE means the actual uniform price per share at which Common
Shares will be sold in the Subscription Offering and may be offered in
the Community Offering. Such price shall be based upon the appraised
estimated pro forma market value of such shares, determined as provided
in Section 4 of this Plan.
QUALIFYING DEPOSIT means the aggregate balance of all Savings Accounts
(hereinafter defined) owned by an Eligible Account Holder or a
Supplemental Eligible Account Holder at the close of business on the
Eligibility Record Date or the Supplemental Eligibility Record Date
(hereinafter defined), respectively; provided, however, that Savings
Accounts with aggregate deposit balances of less than $50 will not
constitute Qualifying Deposits.
RESIDENT means any person who, on the Voting Record Date, maintains a
bona fide residence within Belmont County, Ohio, as determined in the
sole discretion of the Association and the Holding Company.
SAVINGS ACCOUNT has the same meaning as specified in Title 12, Code of
Federal Regulations, Part 561, as in effect on the date this Plan is
adopted by the Board of Directors of the Association, and includes
certificates of deposit.
SEC means the Securities and Exchange Commission, an agency of the
United States Government.
SPECIAL MEETING means the meeting of the Voting Members of the
Association called for the specific purpose of submitting this Plan to
the Voting Members for approval.
SUBSCRIPTION OFFERING means the offering of Common Shares to the
holders of Subscription Rights.
SUBSCRIPTION RIGHTS means the nontransferable rights issued by the
Association to the Eligible Account Holders, Tax-Qualified Employee
Stock Benefit Plans, Supplemental Eligible Account Holders and Other
Eligible Members to purchase Common Shares in the Subscription Offering
pursuant to this Plan.
SUPPLEMENTAL ELIGIBILITY RECORD DATE means the record date used for
determining Supplemental Eligible Account Holders. Such date will be
the last day of the calendar quarter preceding the approval of the
Application by the OTS.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person holding a
Qualifying Deposit at the close of business on the Supplemental
Eligibility Record Date, except Officers and directors of the
Association and the Holding Company and their Associates.
-3-
<PAGE> 5
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit
plan or defined contribution plan of the Holding Company or the
Association, such as an employee stock ownership plan, stock bonus
plan, profit sharing plan or other plan which, with its related trust,
meets the requirements for qualification under Section 401 of the
Internal Revenue Code of 1986, as amended.
VOTING MEMBER means any Member of the Association eligible to vote at
the Special Meeting.
VOTING RECORD DATE means the record date fixed by the Board of
Directors of the Association in accordance with Ohio law and the
Articles of Incorporation and Constitution of the Association for
determining the eligibility of Members to vote on this Plan at the
Special Meeting.
3. PROCEDURES FOR THE CONVERSION.
The following procedures will be followed to effect the Conversion:
(a) Promptly after the adoption of this Plan by a vote of at
least two-thirds of the members of the Board of Directors of the
Association, the Association will publish a notice of the adoption of
this Plan in an English language newspaper having general circulation
in Bridgeport, Ohio. Copies of such notice will also be made available
for inspection by Members at the office of the Association.
(b) The Holding Company will be incorporated under Ohio law,
after which the Board of Directors of the Holding Company will consent
to the Plan by at least a two-thirds vote.
(c) The Association will submit this Plan for approval,
together with all other requisite materials, to the OTS and the
Division in the form of the Application.
(d) After the filing of the Application with the OTS and the
Division, the Association (i) will prominently post in the office of
the Association and publish in an English language newspaper having
general circulation in Bridgeport, Ohio a notice to the effect that the
Association has filed the Application with the OTS, and (ii) when
advised by the Division, will prominently post in the office of the
Association and publish in an English language newspaper having general
circulation in Bridgeport, Ohio a notice to the effect that the
Association has filed the Application with the Division.
(e) After the OTS and the Division approve the Application,
the Association will mail Proxy Materials to each of the Voting Members
as of the Voting Record Date at his or her last known address appearing
on the records of the Association for the purpose of soliciting the
Proxies of Voting Members for use at the Special Meeting. The approval
of this Plan will require the affirmative vote, cast in person or by
Proxy, of a majority of the total outstanding votes entitled to be cast
at the Special Meeting.
(f) Subject to the approval of this Plan by the Voting Members
at the Special Meeting, the following will occur:
(i) Common Shares will be offered simultaneously to
the Eligible Account Holders, the Tax-Qualified Employee Stock
Benefit Plans, the Supplemental Eligible Account Holders and
the Other Eligible Members in the respective priorities set
forth in Sections 5, 6, 7 and 8 of this Plan. All sales of
Common Shares to Eligible Account Holders, the Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account
Holders and Other Eligible Members will be completed at the
earliest practicable date following expiration of the
Subscription Rights provided for in this Plan. Notwithstanding
anything in this Plan to the contrary, the Association, in its
sole discretion, may commence the Subscription Offering
concurrently with or at any time after the mailing to the
Voting Members of the Proxy Materials and may complete the
Subscription Offering before the Special Meeting if the
completion of the offer and sale of the Common Shares is
conditioned upon the approval of this Plan by the Voting
Members. In the event that the Association elects, in its
discretion, to commence the Subscription Offering after the
Special Meeting, the Subscription Offering will be commenced
not later than 45 days after the date on which the Special
Meeting is adjourned, except as may otherwise be approved by
the OTS.
-4-
<PAGE> 6
(ii) Concurrently with, following the commencement of
or following the completion of the Subscription Offering, the
Association may also offer Common Shares in the Community
Offering, subject to the prior satisfaction of the
Subscription Rights of Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account
Holders and Other Eligible Members.
(g) All other steps considered necessary or desirable by the
Boards of Directors of the Association and the Holding Company to
effect the Conversion will be taken pursuant to applicable laws and
regulations.
4. PURCHASE PRICE OF COMMON SHARES AND NUMBER OF COMMON SHARES TO BE
OFFERED IN CONNECTION WITH THE CONVERSION.
The Purchase Price will be determined by the Boards of Directors of the
Association and the Holding Company before the commencement of the Subscription
Offering, subject to adjustment as described below. The number of Common Shares
to be sold in connection with the Conversion will be determined by the Boards of
Directors of the Association and the Holding Company before the completion of
all sales of Common Shares contemplated by this Plan on the basis of the
estimated pro forma market value of the Association, as converted, and the
Purchase Price. No fractional shares will be issued in connection with the
Conversion.
The estimated pro forma market value of the Association, as converted,
will be determined by the Independent Appraiser, based upon such factors as the
Independent Appraiser deems appropriate and as are consistent with the
regulations of the OTS and the Division. Immediately before the commencement of
the Subscription Offering, a range will be established for the aggregate
Purchase Price of Common Shares to be offered in the Subscription Offering and
the Community Offering. The maximum of such range shall be 15% above the pro
forma market value of the Association and the minimum of such range shall be 15%
below the pro forma market value of the Association. The Independent Appraiser
will review, from time to time as appropriate or as required by law or
regulation, developments subsequent to its valuation to determine whether the
estimated pro forma market value of the Association, as converted, should be
revised. If, after the commencement of the Subscription Offering, the
Independent Appraiser determines that the estimated pro forma market value of
the Association, as converted, has increased or decreased due to subsequent
developments, the Conversion may be completed without notifying Persons who have
subscribed for Common Shares and without a resolicitation of subscriptions from
such Persons if such pro forma market value is not less than the minimum of the
valuation range approved by the OTS and the Division and does not exceed the
maximum point of the valuation range by more than 15%. If, however, as a result
of any such change, the estimated pro forma market value of the Association is
less than the minimum of the valuation range or exceeds the maximum point of
such valuation range by more than 15%, a new estimated pro forma market
valuation range may be established and the Board of Directors may, with the
approval of the OTS and the Division, elect to increase or decrease the number
of Common Shares to be sold in connection with the Conversion or increase or
decrease the Purchase Price, in which case Persons who have subscribed for
Common Shares will be notified and will be given the opportunity to increase,
decrease or rescind their subscriptions.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
Eligible Account Holders will have the following rights to subscribe
for and to purchase Common Shares:
(a) Each Eligible Account Holder will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount which may be
purchased in the Community Offering, (ii) .10% of the total number of
Common Shares to be sold in connection with the Conversion, and (iii)
15 times the product (rounded down to the next whole number) obtained
by multiplying the total number of Common Shares to be sold in
connection with the Conversion by a fraction, the numerator of which is
the amount of the Eligible Account Holder's Qualifying Deposit and the
denominator of which is the total amount of Qualifying Deposits of all
Eligible Account Holders, in each case on the Eligibility Record Date,
subject to the overall purchase limitations set forth in Section 10 of
this Plan and subject to adjustment by the Boards of Directors of the
Association and the Holding Company as set forth in Section 10 of this
Plan.
In the event that subscriptions for Common Shares are received
from Eligible Account Holders upon the exercise of Subscription Rights
pursuant to paragraph (a) of this Section 5 in excess of the number of
Common Shares available for such subscriptions, the Common Shares
available for purchase will be allocated among the subscribing Eligible
Account Holders in a manner by which each subscribing Eligible Account
Holder, to the extent possible, will be permitted to subscribe for a
number of shares sufficient to make such Eligible Account Holder's
total allocation of Common Shares equal to the lesser of (i) 100 shares
and (ii) the number of
-5-
<PAGE> 7
shares subscribed for by such Eligible Account Holder. Any shares
remaining after such allocation will be allocated among the subscribing
Eligible Account Holders whose subscriptions remain unsatisfied in the
proportion which the amount of each Eligible Account Holder's
Qualifying Deposit bears to the total of the Qualifying Deposits of all
subscribing Eligible Account Holders. No fractional shares will,
however, be issued in connection with the Conversion.
For purposes of this paragraph (a), Subscription Rights held
by Eligible Account Holders who are also Officers or directors of the
Association or the Holding Company, and their Associates, to the extent
that they are attributable to increased deposits during the one-year
period preceding the Eligibility Record Date, will be subordinated to
the Subscription Rights of all other Eligible Account Holders.
(b) The Subscription Rights of the Eligible Account Holders
are subordinate to the limited priority rights of the Tax-Qualified
Employee Stock Benefit Plans of the Association as set forth in Section
6 of this Plan.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
The Tax-Qualified Employee Stock Benefit Plans of the Association will
receive non-transferable Subscription Rights to purchase up to 10% of the Common
Shares to be sold in connection with the Conversion, subject to adjustment by
the Boards of Directors of the Association and the Holding Company as set forth
in Section 10 of this Plan. The Subscription Rights of the Tax-Qualified
Employee Stock Benefit Plans are subordinate to the Subscription Rights of
Eligible Account Holders pursuant to Section 5 of this Plan, except that if the
final pro forma market value of the Association exceeds the maximum of the
valuation range determined pursuant to Section 4 of this Plan, the Tax-Qualified
Employee Stock Benefit Plans shall have first priority with respect to the
amount of Common Shares sold in excess of the maximum of the valuation range.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.
Supplemental Eligible Account Holders will have the following rights to
subscribe for and to purchase Common Shares:
(a) Each Supplemental Eligible Account Holder will receive,
without payment therefor, nontransferable Subscription Rights to
purchase a number of Common Shares up to the greater of (i) the amount
which may be purchased in the Community Offering, (ii) .10% of the
total number of Common Shares to be sold in connection with the
Conversion, and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of Common Shares
to be sold in connection with the Conversion by a fraction, the
numerator of which is the amount of the Supplemental Eligible Account
Holder's Qualifying Deposit and the denominator of which is the total
amount of Qualifying Deposits of all Supplemental Eligible Account
Holders, in each case on the Supplemental Eligibility Record Date,
subject to the overall purchase limitations set forth in Section 10 of
this Plan and subject to adjustment by the Boards of Directors of the
Association and the Holding Company as set forth in Section 10 of this
Plan.
(b) In the event that subscriptions for Common Shares are
received from Supplemental Eligible Account Holders upon the exercise
of Subscription Rights pursuant to paragraph (a) of this Section 7 in
excess of the number of Common Shares available for such subscriptions,
the Common Shares available for purchase will be allocated among the
subscribing Supplemental Eligible Account Holders in a manner by which
each subscribing Supplemental Eligible Account Holder, to the extent
possible, will be permitted to subscribe for a number of Common Shares
sufficient to make such Supplemental Eligible Account Holder's total
allocation of Common Shares equal to the lesser of (i) 100 shares and
(ii) the number of Common Shares subscribed for by such Supplemental
Eligible Account Holder. Any Common Shares remaining after such
allocation will be allocated among the subscribing Supplemental
Eligible Account Holders whose subscriptions remain unsatisfied in the
proportion which the amount of each such Supplemental Eligible Account
Holder's Qualifying Deposit bears to the total amount of the Qualifying
Deposits of all such subscribing Supplemental Eligible Account Holders.
No fractional shares will be issued, however, in connection with the
Conversion.
(c) Subscription Rights received pursuant to this Section 7
are subordinate to the Subscription Rights of Eligible Account Holders
and the Tax-Qualified Employee Stock Benefit Plans pursuant to Sections
5 and 6 of this Plan. Any Subscription Rights received by an Eligible
Account Holder pursuant to Section 5 of this Plan will be applied in
partial satisfaction of Subscription Rights received pursuant to this
Section 7.
-6-
<PAGE> 8
8. SUBSCRIPTION RIGHTS OF OTHER ELIGIBLE MEMBERS.
Other Eligible Members will have the following rights to subscribe for
and to purchase Common Shares:
a) Each Other Eligible Member will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount of Common Shares
which may be purchased in the Community Offering, and (ii) .10% of the
total number of Common Shares to be sold in connection with the
Conversion, subject to adjustment by the Boards of Directors of the
Association and the Holding Company as set forth in Section 10 of this
Plan.
b) In the event that subscriptions for Common Shares are
received from Other Eligible Members upon the exercise of Subscription
Rights pursuant to paragraph (a) of this Section 8 in excess of the
number of Common Shares available for such subscriptions, the Common
Shares available for purchase will be allocated among the subscribing
Other Eligible Members in the same proportion that their respective
subscriptions bear to the aggregate subscriptions of all Other Eligible
Members; provided, however, that, to the extent sufficient Common
Shares are available, each subscribing Other Eligible Member shall be
permitted to purchase 25 Common Shares before the remaining available
Common Shares are allocated.
c) Subscription Rights received by Other Eligible Members
pursuant to this Section 8 are subordinate to the Subscription Rights
received by Eligible Account Holders, the Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders pursuant to
Sections 5, 6 and 7 of this Plan.
9. COMMUNITY OFFERING.
Concurrently with or at any time after the commencement or completion
of the Subscription Offering, the Holding Company may offer Common Shares in
the Community Offering in accordance with the following procedures and
conditions:
a) Any Common Shares not subscribed for in the Subscription
Offering may be offered and sold in the Community Offering. If
conducted, the Community Offering will be conducted in a manner which
will give Community Members a preference in the purchase of Common
Shares and will seek to achieve the widest distribution of Common
Shares.
b) The maximum amount of Common Shares which may be subscribed
for or purchased in the Community Offering by any Person, together with
any Associates or group of Persons Acting in Concert, will be $140,000,
subject to the overall purchase limitations set forth in Section 10 of
this Plan and subject to adjustment by the Boards of Directors of the
Association and the Holding Company as set forth in Section 10 of this
Plan.
c) Orders for Common Shares in the Community Offering will
first be filled up to a maximum of two percent of the Common Shares and
thereafter any remaining shares will be allocated on an equal number of
shares per order basis until all orders for Common Shares have been
filled, subject to the limitations provided in Section 10 of this Plan.
d) The Association or the Holding Company may retain a Broker
to assist in selling the Common Shares in the Community Offering.
e) The Association and the Holding Company reserve the right
to reject, in whole or in part, any order to purchase Common Shares
from any Person in the Community Offering.
10. ADDITIONAL LIMITATIONS ON PURCHASES
The minimum number and maximum number of Common Shares which may be
subscribed for or purchased in connection with the Conversion are as follows:
(a) A minimum of 25 Common Shares must be purchased by each
Person purchasing Common Shares in connection with the Conversion to
the extent Common Shares are available; provided, however, that if the
-7-
<PAGE> 9
Purchase Price is greater than $20 per share, the minimum number of
Common Shares to which a Person may subscribe will be adjusted in a
manner by which the aggregate Purchase Price required to be paid for
such minimum number of Common Shares does not exceed $500. No
fractional shares will be issued, however, in connection with the
Conversion.
(b) If a Qualifying Deposit is held in the name of more than
one Person, the aggregate amount of Common Shares which may be
subscribed for or purchased by all Persons having an interest in such
Qualifying Deposit shall be subject to the applicable purchase
limitations set forth in Sections 5, 7, 8, and 9 of this Plan.
(c) Eligible Account Holders, Supplemental Eligible Account
Holders and Other Eligible Members may purchase Common Shares in the
Community Offering subject to the purchase limitations set forth in
Section 9 of this Plan; provided, however, that the maximum amount of
Common Shares which may be subscribed for or purchased in connection
with the Conversion by any Person, together with any Associate or group
of Persons Acting in Concert, will be $140,000, except that any one or
more of the Tax-Qualified Employee Stock Benefit Plans may purchase in
the aggregate not more than 10% of the Common Shares to be sold in
connection with the Conversion and will be entitled to purchase such
amount regardless of the number of Common Shares purchased by other
Persons. Common Shares held by one or more Tax-Qualified Employee Stock
Benefit Plans or non-tax-qualified employee stock benefit plans and
attributed to a Person will not be aggregated with Common Shares
purchased directly by or otherwise attributable to such Person. For the
purpose of this Section 10, the members of the Boards of Directors of
the Association and the Holding Company will not be deemed to be
Associates or a group of Persons Acting in Concert solely as a result
of their membership on such Boards of Directors.
(d) The maximum number of Common Shares which may be
subscribed for or purchased in connection with the Conversion by
Officers and directors of the Association and their Associates will not
exceed, in the aggregate, 35% of the total number of Common Shares to
be sold in connection with the Conversion. Common Shares held by one or
more Tax-Qualified Employee Stock Benefit Plans or non-tax-qualified
employee stock benefit plans and attributed to a Person will not be
aggregated with Common Shares purchased directly by or otherwise
attributable to such Person.
(e) Subject to any required regulatory approval and the
requirements of applicable laws and regulations, but without further
approval of the Members, the purchase limitations set forth in Sections
9 and 10 of this Plan may be increased or decreased at the sole
discretion of the Boards of Directors of the Association and the
Holding Company at any time. If such limitation is increased after the
commencement of the Subscription Offering, persons who subscribed for
the maximum amount will be given the opportunity to increase their
subscriptions up to the then applicable limit, subject to the rights
and preferences of any person who has priority Subscription Rights. The
Boards of Directors of the Association and the Holding Company may, in
their sole discretion, increase such maximum purchase limitation up to
9.99%; provided, however, that orders for Common Shares exceeding 5% of
the Common Shares to be sold in connection with the Conversion shall
not exceed, in the aggregate, 10% of the Common Shares to be sold in
connection with the Conversion. In the event that the purchase
limitation is decreased after commencement of the Subscription
Offering, the order of any Person who subscribed for the maximum number
of Common Shares shall be decreased by the minimum amount necessary so
that such Person shall be in compliance with the then maximum number of
Common Shares permitted to be subscribed for by such Person. The
maximum purchase limitation for Eligible Account Holders, Supplemental
Eligible Account Holders and Other Eligible Members shall not be
decreased below 1% of the total number of Common Shares to be issued in
connection with the Conversion.
(f) The Subscription Rights granted under this Plan are
nontransferable. Each Subscription Right may be exercised only by the
Person to whom it is issued and only for such Person's own account.
Each Person exercising Subscription Rights will be required to certify
that he or she is purchasing for his or her own account and that he or
she has no agreement or understanding for the sale or transfer of the
Common Shares for which he or she subscribes. The Board of Directors of
the Association may reject any subscription which it reasonably
believes involves an impermissible transfer of a Subscription Right.
The Board of Directors of the Association may require any Person who
the Board reasonably believes to be involved in an impermissible
transfer of a Subscription Right to provide such information or
assurances as the Board may request to verify the validity of a
Subscription Right.
-8-
<PAGE> 10
11. PROCEDURES FOR THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING.
The Subscription Offering and the Community Offering shall be conducted
in the following manner:
(a) Prior to the commencement of the Subscription Offering,
the Holding Company will file a registration statement with the SEC. No
Prospectus may be distributed to Persons who have Subscription Rights
or to Community Members or to any other person who is not a participant
in the preparation of the Prospectus until and unless the SEC has
declared the Prospectus effective.
(b) At the time the Proxy Materials are mailed to the Voting
Members at their last known addresses appearing on the records of the
Association, pursuant to the authorization of the OTS and the Division,
the Association and the Holding Company may commence the Subscription
Offering and the Community Offering.
(c) The Prospectus will contain all the information required
by the OTS, the Division, the SEC and all applicable laws and
regulations necessary to enable the recipients of the Order Forms to
make informed investment decisions regarding the purchase of Common
Shares.
(d) The Order Forms will contain all the information required
by the OTS, the Division and all applicable laws and regulations.
(e) The offer of Common Shares to Persons who have
Subscription Rights, to Community Members and to others will be
conditioned upon the approval of this Plan by the Voting Members at the
Special Meeting.
(f) The Subscription Offering and the Community Offering may
be closed before the Special Meeting.
12. PAYMENT FOR COMMON SHARES.
Common Shares will be paid for in accordance with the following
procedure:
(a) Full payment for all Common Shares subscribed for must be
received by the Association, together with properly completed and
manually signed original Order Forms therefor, before the expiration
time, which will be specified on the Order Forms, unless such date is
extended by the Association. Order Forms which have been photocopied or
reproduced in any other manner will not be accepted. The amount of the
required payment will be the amount which equals the Purchase Price
(which will be specified in the Order Forms or accompanying materials),
multiplied by the number of Common Shares subscribed for in accordance
with the terms of this Plan.
(b) Payment for Common Shares ordered in the Subscription
Offering will be permitted to be made:
(i) In cash, if delivered in person;
(ii) By check, bank draft, money order or negotiable
order of withdrawal; provided, however, that any payment by
check will be accepted subject to payment of such check by the
drawee of such check; or
(iii) By appropriate authorization of withdrawal from
any Savings Account at the Association.
For the purpose of determining the withdrawal balance of any Savings
Account, such withdrawals will be deemed to have been made upon receipt
of appropriate authorization therefor, but interest at the rates
applicable to such accounts will be paid by the Association on the
amounts deemed to have been withdrawn until the date on which the
Conversion is completed or terminated, at which time the authorized
withdrawal actually will be made. Interest will be paid by the
Association on payments for Common Shares paid in cash or by check,
negotiable order of withdrawal or money order at an annual rate equal
to the passbook account rate at the Association or such higher rate as
may be determined by the Association. Such interest will be paid from
the date payments are received by the Association until consummation or
termination of the Conversion.
-9-
<PAGE> 11
(c) The Order Forms will contain appropriate means by which
authorization of withdrawals from Savings Accounts may be made to pay
for subscribed Common Shares. Once a withdrawal has been authorized,
none of the designated withdrawal amount may be withdrawn from the
designated Savings Account (except by the Association as payment for
Common Shares) while this Plan remains in effect. Savings Accounts will
be permitted to be established for the purpose of making payment for
subscribed Common Shares. Notwithstanding any regulatory provisions
regarding penalties for early withdrawal from certificate accounts and
minimum qualifying balances for such accounts, payment for Common
Shares will be permitted through authorization of withdrawals from such
accounts without the assessment of such penalties. If, after such
withdrawal, the applicable minimum balance requirement ceases to be
met, such certificate account will be canceled and the remaining
balance thereof will earn interest only at the passbook account rate at
the Association.
(d) The Association will not lend funds or otherwise extend
credit to any Person to purchase Common Shares.
13. EXPIRATION OF SUBSCRIPTION RIGHTS; UNDELIVERED, DEFECTIVE OR LATE
ORDER FORMS; INSUFFICIENT PAYMENT.
Subscription Rights will expire or terminate in accordance with the
following:
(a) All Subscription Rights provided for in this Plan,
including, without limitation, the Subscription Rights of all Persons
whose Order Forms are returned by the United States Post Office as
undeliverable, will expire at a specified time on a specified date
which will be not less than 20 days nor more than 45 days following the
date on which Order Forms are first sent to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Eligible Members;
provided, however, that the Association will have the power to extend
such expiration time in its discretion only for a reasonable time
beyond such 45-day period.
(b) If the Association is unable to locate particular persons
granted Subscription Rights under this Plan, or if Order Forms (i) are
returned as undeliverable by the United States Post Office, (ii) are
not received by the Association prior to the expiration date specified
thereon, (iii) are defectively filled out or executed, or (iv) are not,
when received by the Association, accompanied by the full required
payment for the Common Shares subscribed for (including cases in which
Savings Accounts from which withdrawals are authorized contain
insufficient funds to satisfy the required payment or the check, bank
draft, negotiable order of withdrawal or money order is not paid by the
drawee thereof), the Subscription Rights will lapse as though the
Person to whom such rights have been granted failed to return the
completed Order Form within the time period specified thereon. In any
such case as discussed in this paragraph (b), all payments accompanying
the Order Forms will be refunded and, in the case of payments
authorized through withdrawal from Savings Accounts as permitted by
Section 12 of this Plan, such withdrawals will not be made.
(c) The Association may, but will not be obligated to, waive
any irregularity on any Order Form or require the submission of a
corrected Order Form or waive the remittance of full payment for shares
subscribed for by such date as it may specify. An executed Order Form,
once received by the Association, may not be modified, amended or
rescinded without the consent of the Association, unless (i) the
Community Offering is not completed within 45 days after the expiration
time of the Subscription Offering, or (ii) the final valuation of the
Association, as converted, is less than the minimum of the valuation
range established by the Independent Appraiser before the commencement
of the Subscription Offering or exceeds the maximum of such valuation
range by more than 15%. If either of those events occurs, persons who
have subscribed for Common Shares in the Subscription Offering will
receive written notice that they have a right to affirm, increase,
decrease or rescind their subscriptions. Subject to the authority of
the OTS and the Division, all interpretations by the Association and
the Holding Company of the terms and conditions of this Plan and of the
Order Forms will be final.
(d) The sale of all Common Shares must be completed within 45
days after the termination of the Subscription Offering, unless
extended by the Association with the consent of the OTS and the
Division, and within 24 months of approval of this Plan by the Voting
Members at the Special Meeting. The 24-month period may not be extended
by the Association, the OTS or the Division.
-10-
<PAGE> 12
14. COMPLIANCE WITH SECURITIES LAWS.
The Association and the Holding Company will make reasonable efforts to
comply with the securities laws of the United States and all other jurisdictions
in which Eligible Account Holders, Supplemental Eligible Account Holders and
Other Eligible Members reside. No person, however, will be offered any
Subscription Rights or sold any Common Shares under this Plan if such Person
resides in a foreign country or in any jurisdiction of the United States in
respect of which (a) the granting of Subscription Rights or the offer or sale of
Common Shares under this Plan to such persons would require the Association, the
Holding Company or their directors, Officers or employees to register under the
securities laws of such jurisdiction as a Broker, Dealer or agent or to register
or otherwise qualify the Common Shares for sale in such state or (b) the
Association determines that compliance with the securities laws of such
jurisdiction would be impracticable for reasons of cost or otherwise. No
payments will be made in lieu of the granting of Subscription Rights to such
persons.
15. RIGHTS OF SHAREHOLDERS AFTER COMPLETION OF CONVERSION.
After the Conversion, the Holding Company will be the sole shareholder
of the Association and will exercise all rights attendant to owning the shares
of the Association. Voting rights in respect of the Holding Company will be held
and exercised exclusively by the holders of the issued and outstanding common
shares of the Holding Company. Neither borrowers from the Association nor
holders of Savings Accounts in the Association will have any voting rights in
the Association or the Holding Company on the basis of such borrowings or
Savings Accounts. The shareholders of the Holding Company will have the
exclusive rights, subject to the rights of Eligible Account Holders and
Supplemental Eligible Account Holders in the Liquidation Account provided for in
Section 16 of this Plan, to receive the distribution of any assets remaining
after payment of creditors' claims, including the claims of Savings Account
holders to the withdrawal value of their accounts, in the event of any voluntary
or involuntary liquidation of the Association after the Conversion.
16. ESTABLISHMENT OF LIQUIDATION ACCOUNT.
A Liquidation Account will be established on the effective date of the
Conversion in accordance with the following:
(a) For purposes of granting a limited priority claim to the
assets of the Association in the event of a complete liquidation
thereof to Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain a Savings Account at the Association
after the Conversion, the Association will, at the time of the
Conversion, establish the Liquidation Account in an amount equal to the
retained earnings of the Association as set forth in its latest
statement of financial condition contained in the Prospectus for the
sale of Common Shares. The Liquidation Account will not operate to
restrict the use or application of any of the regulatory capital of the
Association.
(b) Each Eligible Account Holder and Supplemental Eligible
Account Holder will have a separate inchoate interest in a portion of
the Liquidation Account for each Savings Account making up such account
holder's Qualifying Deposit (herein referred to as the "Subaccount").
(c) The initial balance of each Subaccount will be an amount
determined by multiplying the amount in the Liquidation Account by a
fraction, the numerator of which is the amount of the account holder's
Qualifying Deposits as of the close of business on the Eligibility
Record Date or the Supplemental Eligibility Record Date, as the case
may be, and the denominator of which is the total amount of all
Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. For Savings
Accounts in existence on both the Eligibility Record Date and the
Supplemental Eligibility Record Date, separate Subaccounts will be
determined on the basis of the Qualifying Deposits in such Savings
Accounts on each such date. The balance of each Subaccount will never
be increased above the initial balance. If the balance in the Savings
Account to which a Subaccount relates, at the close of business on the
last day of each fiscal year of the Holding Company subsequent to the
respective record dates, is less than the lesser of (i) the deposit
balance in such Savings Account at the close of business on the last
day of each fiscal year of the Holding Company subsequent to the
Eligibility Record Date or the Supplemental Eligibility Record Date and
(ii) the amount of the Qualifying Deposit as of the Eligibility Record
Date or the Supplemental Eligibility Record Date, the balance of the
Subaccount for such Savings Account will be adjusted in proportion to
the reduction in such Savings Account balance. In the event of any such
downward adjustment, such Subaccount balance will not be subsequently
increased notwithstanding any increase in the deposit balance of the
related Savings Account. If any Savings Account is closed, its related
Subaccount will be
-11-
<PAGE> 13
reduced to zero upon such closing. The Subaccount of an account holder
will be maintained for as long as the account holder maintains the
related Savings Account with the same Social Security or tax
identification number.
(d) In the event of a complete liquidation of the converted
Association (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder will be entitled to receive from
the Liquidation Account a distribution equal to the current adjusted
balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to any holders of the capital
stock of the Association. No merger, consolidation, sale of bulk assets
or similar combination or transaction with another savings association,
the accounts of which are insured by the FDIC, will be deemed to be a
complete liquidation for this purpose and, in any such transaction, the
Liquidation Account will be assumed by the surviving insured
institution.
17. ACCOUNTS IN CONVERTED ASSOCIATION.
Each Savings Account in the Association at the time of the Conversion
will constitute, without payment or further action by the account holder, a
Savings Account in the Association as converted, equal in withdrawable amount to
the withdrawal value, and subject to the same terms and conditions, except as to
voting and liquidation rights, as such Savings Account in the Association
immediately before the Conversion.
18. RESTRICTIONS ON PURCHASES AND SALES OF COMMON SHARES BY OFFICERS AND
DIRECTORS FOLLOWING CONVERSION.
Purchases and sales of shares of the Holding Company after the
Conversion will be restricted in accordance with the following:
(a) All Common Shares purchased by Officers or directors of
the Holding Company or the Association or their Associates pursuant to
this Plan will be subject to the restriction that no such shares will
be sold for a period of one year following the date of purchase of such
shares, except in the event of the death of the Officer, director or
Associate.
(b) With respect to all Common Shares subject to the
restriction on subsequent disposition pursuant to paragraph (a) of this
Section 18, each of the following provisions will apply:
(i) Each certificate representing such shares will
bear the following legend prominently stamped thereon giving
notice of such restriction on transfer:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD BY THE REGISTERED HOLDER HEREOF FOR A PERIOD
OF NOT LESS THAN ONE YEAR FROM THE DATE OF ISSUANCE
HEREOF, EXCEPT IN THE EVENT OF THE DEATH OF
THE REGISTERED HOLDER OF SUCH SHARES.
(ii) Instructions will be given to the transfer agent
for the Holding Company, if any, not to recognize or effect
any transfer of any certificates representing such shares or
any change of record ownership thereof in violation of such
restriction on transfer; and
(iii) Any shares of capital stock of the Holding
Company issued as a stock dividend, stock split or otherwise
with respect to outstanding Common Shares subject to
restrictions on transfer hereunder will be subject to the same
restrictions as are applicable to the Common Shares with
respect to which such shares of stock are issued.
(c) For a period of three years following the Conversion, no
Officer or director of the Association or the Holding Company, or any
Associates of such Officer or director shall, without the prior written
approval of the OTS, purchase the capital stock of the Holding Company
other than from a Broker or Dealer registered with the SEC. This
provision will not apply to (i) negotiated transactions involving more
than 1% of a class of outstanding capital stock of the Holding Company
or (ii) purchases of shares of capital stock made by and held by any
one or more tax-qualified or non-tax-qualified employee stock benefit
plans which may be attributable to individual Officers or directors of
the Holding Company or the Association.
-12-
<PAGE> 14
19. RESTRICTIONS ON ACQUISITION OF THE ASSOCIATION OR THE HOLDING COMPANY.
Acquisition of the capital stock of the Association or the Holding
Company after the Conversion will be subject to various restrictions contained
in the Amended Articles, the Amended Constitution, the Articles of Incorporation
of the Holding Company, the Code of Regulations of the Holding Company and
various state and federal laws and regulations. In addition, the Articles of
Incorporation of the Holding Company or the Amended Articles may include the
limitation that, for a period of up to five years from the date of completion of
the Conversion of the Association from mutual to stock form, no Person may
directly or indirectly offer to acquire or acquire beneficial ownership of more
than 10% of any class of an equity security of the Association or the Holding
Company.
20. AMENDMENT OR TERMINATION OF THIS PLAN.
If deemed necessary or desirable by the Boards of Directors of the
Association and the Holding Company, this Plan may be amended by the Boards of
Directors of the Association and the Holding Company in their sole discretion at
any time prior to the solicitation of Proxies from Voting Members entitled to
vote on this Plan and at any time thereafter with the concurrence of the OTS and
the Division. The Conversion pursuant to this Plan may be terminated by the
Boards of Directors of the Association and the Holding Company in their sole
discretion at any time prior to the Special Meeting and at any time thereafter
with the concurrence of the OTS and the Division.
21. CONSUMMATION OF CONVERSION.
The Conversion of the Association from mutual to stock form will be
deemed to have taken place and to be effective at the time and date provided in
the regulations of the OTS and the Division. The Conversion must be completed
within 24 months of the approval of this Plan by the Members.
22. TAX RULINGS/OPINIONS.
The Conversion is expressly conditioned upon the prior receipt by the
Association and the Holding Company of either rulings from the Internal Revenue
Service and the appropriate Ohio taxing authorities or opinions of legal counsel
or other tax advisors to the Association in form and substance satisfactory to
the Association and to the effect, among other things, that the Conversion will
constitute a tax-free "reorganization" as defined in Section 368(a) of the
Internal Revenue Code of 1986, as amended, and comparable provisions of
applicable state law, or that consummation of the transactions provided for in
this Plan will not otherwise result in any federal, state or other tax
consequences to the Association or the converted Association deemed materially
adverse by the Board of Directors of the Association or the Board of Directors
of the Holding Company.
23. DIRECTORS AND OFFICERS OF THE ASSOCIATION.
It is not intended that the Conversion will result in any change in the
directors or Officers of the Association. The persons serving as Officers on the
date the Application is filed with the OTS and the Division will continue to
serve at the discretion of the Board of Directors of the Association in their
respective capacities as Officers of the converted the Association. The persons
serving as directors of the Association on the date the Application is filed
with the OTS and the Division will continue to serve as directors following the
Conversion until their terms expire or their earlier death, resignation or
removal from office.
24. STOCK BENEFIT PLANS.
Following the completion of the Conversion, the Association or the Holding
Company may establish one or more stock option plans and management recognition
plans to the extent permitted by OTS regulations. The Association and the
Holding Company may make scheduled or discretionary contributions to one or more
stock benefit plans maintained by the Association or the Holding Company for the
benefit of the directors, Officers or employees of the Association or the
Holding Company, provided such contributions do not cause the Association to
fail to meet its regulatory capital requirement.
25. REGISTRATION OF COMMON SHARES; MARKET FOR COMMON SHARES.
(a) Before or promptly following the Conversion, the Holding
Company will register the Common Shares with the SEC pursuant to the
Securities Exchange Act of 1934 and will not deregister such shares for
a period of three years thereafter.
-13-
<PAGE> 15
(b) While there is no assurance that an active market for
the Common Shares will develop following the Conversion, the Holding
Company will use its best efforts to encourage and assist a market
maker to establish and maintain a market for the Common Shares and
will use its best efforts to cause such shares to be quoted on The
Nasdaq Stock Market (or any comparable quotation system which may
hereafter be developed) or listed on a national or regional
securities exchange.
26. EXPENSES OF CONVERSION.
The Association and the Holding Company will use their best efforts to
ensure that the expenses incurred in connection with the Conversion will be
reasonable.
27. MAILING OF PROXY MATERIALS.
The Proxy Materials will only be sent to Voting Members as of the
Voting Record Date.
28. INTERPRETATION OF THE PLAN.
The Boards of Directors of the Association and the Holding Company will
interpret this Plan. To the extent permitted by law, all interpretations of this
Plan by the Boards of Directors of the Association and the Holding Company will
be final.
-14-
<PAGE> 16
AMENDED
ARTICLES OF INCORPORATION
OF
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
FIRST: The name of the corporation shall be Bridgeport Savings
and Loan Association.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is Bridgeport, Belmont County.
THIRD: The purposes for which the corporation is formed are to
raise money to be loaned to its members and others and to engage in any other
lawful act or activity for which corporations may be formed under Chapter 1151
of the Ohio Revised Code.
FOURTH: The authorized capital of the corporation shall be Ten
Million Dollars ($10,000,000) divided into Ten Million (10,000,000) shares,
$1.00 par value per share.
FIFTH: To the extent permitted by law, the directors of the
corporation shall have the power to cause the corporation from time to time and
at any time to purchase, hold, sell, transfer or otherwise deal with (A) shares
of any class or series issued by it, (B) any security or other obligation of the
corporation which may confer upon the holder thereof the right to convert the
same into shares of any class or series authorized by the articles of the
corporation and (C) any security or other obligation which may confer upon the
holder thereof the right to purchase shares of any class or series authorized by
the articles of the corporation. To the extent permitted by law, the corporation
shall have the right to repurchase, if and when any shareholder desires to sell,
or on the happening of any event is required to sell, shares of any class or
series issued by the corporation. The authority granted in this Article Fifth of
these articles shall not otherwise limit the authority of the directors to
purchase, hold, sell, transfer or otherwise deal with shares of any class or
series, securities, or other obligations issued by the corporation or authorized
by its articles.
SIXTH: Until the expiration of five years from the date of the
acquisition by Ohio State Financial Services, Inc. (the "Holding Company") of
the capital stock of the corporation to be issued in connection with the
conversion of the corporation from mutual to stock form, no Person (hereinafter
defined) shall directly or indirectly Offer (hereinafter defined) to Acquire
(hereinafter defined) or Acquire the Beneficial Ownership (hereinafter defined)
of more than 10% of any class of any equity security of the corporation;
provided, however, that such prohibition shall not apply to the purchase of
shares by underwriters in connection with a public offering or the power of
trustees to vote shares of the corporation held by an employee stock ownership
plan for the benefit of employees of the corporation or the Holding Company. In
the event that any shares of the corporation are Acquired in violation of this
Article Sixth, all shares Beneficially Owned by any Person in excess of 10% of
any class of equity security of the corporation shall not be counted as shares
entitled to vote, shall not be voted by any Person and shall not be counted as
voting shares in connection with any matter submitted to the shareholders for a
vote. For purposes of this Article Sixth, the following terms shall have the
meanings set forth below:
(A) "Person" includes an individual, a group acting in
concert, a corporation, a partnership, an
association, a joint stock company, a trust, an
unincorporated organization or similar company, a
syndicate or any other group formed for the purpose
of acquiring or disposing of the equity securities of
the corporation, but does not include an employee
stock ownership plan for the benefit of employees of
the corporation or the Holding Company.
(B) "Offer" includes every offer to buy or otherwise
acquire, solicitations or an offer to sell, tender
offer for, or request or invitation for tenders of, a
security or interest in a security for value.
<PAGE> 17
(C) "Acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or
otherwise.
(D) "Acting in concert" means (i) participation in a
joint activity or 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 contracts,
understanding, relationship, agreement or other
arrangement, whether written or otherwise.
(E) "Affiliate" shall mean a Person that directly or
indirectly, through one or more intermediaries,
controls or is controlled by, or is under common
control with, another Person.
(F) "Associate" of a Person shall mean (i) any
corporation or organization (other than the
corporation or a subsidiary of the corporation) of
which the Person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten
percent or more of any class of equity securities,
(ii) any trust or other estate in which the Person
has a substantial beneficial interest or as to which
the Person serves as trustee or in a similar
fiduciary capacity, except a tax-qualified employee
stock benefit plan in which the Person has a
substantial beneficial interest or serves as a
trustee or in a similar fiduciary capacity or a
tax-qualified employee stock benefit plan, and (iii)
any relative or spouse of the Person, or any relative
of such spouse, who has the same home as the Person
or is a director or officer of the corporation or any
of its parents or subsidiaries.
(G) "Beneficial Ownership" shall include, without
limitation, (i) all shares directly or indirectly
owned by a Person, by an Affiliate of such Person or
by an Associate of such Person or such Affiliate,
(ii) all shares which such Person, Affiliate or
Associate has the right to acquire through the
exercise of any option, warrant or right (whether or
not currently exercisable), through the conversion of
a security, pursuant to the power to revoke a trust,
discretionary account or similar arrangement, or
pursuant to the automatic termination of a trust,
discretionary account or similar arrangement, and
(iii) all shares as to which such Person, Affiliate
or Associate directly or indirectly through any
contract, arrangement, understanding, relationship or
otherwise (including, without limitation, any written
or unwritten agreement to act in concert) has or
shares voting power (which includes the power to
dispose or to direct the disposition of such shares)
or both.
SEVENTH: No shareholder of the corporation shall have, as a
matter of right, the pre-emptive right to purchase or subscribe for shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other obligations convertible into or exchangeable for such shares
or which by warrants or otherwise entitle the holders thereof to subscribe for
or purchase any such share.
EIGHTH: No shareholder of the corporation shall have the right
to vote cumulatively in the election of directors.
These Amended Articles of Incorporation supersede the existing
Articles of Incorporation of the corporation.
-2-
<PAGE> 18
AMENDED
CONSTITUTION
OF
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
ARTICLE ONE
SECTION 1. NAME. The name of this savings and loan association
shall be Bridgeport Savings and Loan Association (this "Association"), and the
principal office of this Association shall be located in Belmont County, Ohio.
ARTICLE TWO
SECTION 1. PURPOSES. The purposes for which this Association
is formed are to raise money to be loaned to its members and others and to
engage in any other lawful act or activity for which corporations may be formed
under Chapter 1151 of the Ohio Revised Code.
ARTICLE THREE
SECTION 1. AUTHORIZED SHARES. The authorized capital of this
Association shall be $10,000,000 divided into 10,000,000 shares, $1.00 par value
per share.
SECTION 2. REPURCHASE OF SHARES. This Association shall have
the power to repurchase its common shares to the fullest extent provided by law.
ARTICLE FOUR
SECTION 1. MEMBERS. Any person who subscribes for, or in any
manner according to law becomes the owner of, any of the common shares of this
Association shall be a member of this Association entitled to all of the
benefits and privileges and subject to all of the liabilities and duties
prescribed by this Constitution, the Bylaws of this Association and the laws of
the State of Ohio.
SECTION 2. ANNUAL MEETINGS. The annual meeting of the
shareholders of this Association for the election of directors, the
consideration of reports to be laid before such meeting and the transaction of
such other business as may properly come before such meeting shall be held on
the third Wednesday in April in each year, at 1:00 p.m., or on such other date
and at such time as may be fixed from time to time by the directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
shareholders of this Association may be called only by the chairman of the
board, president, vice president, a majority of the members of the board of
directors, or by persons who hold at least twenty-five percent of all shares
outstanding and entitled to vote thereat.
SECTION 4. PLACE OF MEETINGS. All meetings of shareholders of
this Association shall be held at the principal office of this Association,
unless otherwise provided by action of the directors. Meetings of shareholders
may be held at any place within or outside the State of Ohio.
SECTION 5. NOTICE OF MEETINGS.
(A) Written notice stating the time, place and purposes of a
meeting of the shareholders of this Association shall be given, by or at the
direction of the president or the secretary, either by personal delivery or by
mail not less than seven nor more than sixty days before the date of the meeting
to each shareholder of record entitled to notice of the meeting. If mailed, such
notice shall be addressed to the shareholder at his address as it appears on the
records of this Association. Notice of adjournment of a meeting need not be
given if the time and place to which it is adjourned are fixed and announced at
such
<PAGE> 19
meeting. In the event of a transfer of shares after the record date for
determining the shareholders who are entitled to receive notice of a meeting of
shareholders, it shall not be necessary to give notice to the transferee.
Nothing herein contained shall prevent the setting of a record date in the
manner provided by law, the Articles of Incorporation of this Association (the
"Articles") or this Constitution for the determination of shareholders who are
entitled to receive notice of or to vote at any meeting of shareholders or for
any purpose required or permitted by law.
(B) Following receipt by the president or the secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called a meeting of the shareholders,
delivered either in person or by registered mail to such officer by any persons
entitled to call a meeting of shareholders, such officer shall cause to be given
to the shareholders entitled thereto notice of a meeting to be held on a date
not less than seven nor more than sixty days after the receipt of such request,
as such officer may fix. If such notice is not given within fifteen days after
the receipt of such request by the president or the secretary, then, and only
then, the persons properly calling the meeting may fix the time of the meeting
and give notice thereof in accordance with the provisions of this Constitution.
SECTION 6. WAIVER OF NOTICE. Notice of the time, place and
purpose or purposes of any meeting of shareholders of this Association may be
waived in writing, either before or after the holding of such meeting, by any
shareholder, which writing shall be filed with or entered upon the records of
such meeting. The attendance of any shareholder, in person or by proxy, at any
such meeting without protesting the lack of proper notice, prior to or at the
commencement of the meeting, shall be deemed to be a waiver by such shareholder
of notice of such meeting.
SECTION 7. QUORUM. At any meeting of shareholders of this
Association, the holders of a majority of the voting shares of this Association
then outstanding and entitled to vote thereat, present in person or by proxy,
shall constitute a quorum for such meeting. The holders of a majority of the
voting shares represented at a meeting, whether or not a quorum is present, or
the chairman of the board, the president, or the officer of the corporation
acting as chairman of the meeting, may adjourn such meeting from time to time,
and if a quorum is present at such adjourned meeting any business may be
transacted as if the meeting had been held as originally called.
SECTION 8. VOTES REQUIRED. At all elections of directors the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the shareholders for their vote shall be decided by the vote
of such proportion of the shares, or of any class of shares, or of each class,
as is required by law, the Articles or this Constitution.
SECTION 9. ORDER OF BUSINESS. The order of business at any
meeting of shareholders shall be determined by the officer of this Association
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of this Association then outstanding,
present in person or by proxy, and entitled to vote at such meeting.
SECTION 10. SHAREHOLDERS ENTITLED TO VOTE. Each shareholder of
record on the books of this Association on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of this Association standing
in his name on the books of this Association on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.
SECTION 11. PROXIES. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.
SECTION 12. INSPECTORS OF ELECTION. In advance of any meeting
of shareholders of this Association, the directors may appoint one or more
inspectors of election to act at such meeting or any adjournment thereof. If
inspectors are not so appointed, the officer of this Association acting as
chairman of any such meeting may make such appointment. In case any person
appointed as inspector fails to appear or act, the vacancy may be filled only by
appointment made by the directors in advance of such meeting or, if not so
filled, at the meeting by the officer of this Association acting as chairman of
such meeting. No other person or persons may appoint or require the appointment
of inspectors of election.
-2-
<PAGE> 20
ARTICLE FIVE
DIRECTORS
SECTION 1. AUTHORITY AND QUALIFICATIONS. Except where the law,
the Articles or this Constitution otherwise provide, all authority of this
Association shall be vested in and exercised by its directors. Directors need
not be shareholders of this Association.
SECTION 2. NUMBER OF DIRECTORS AND TERM OF OFFICE.
(A) Until changed in accordance with the provisions of this
Constitution, the number of directors of this Association shall be five (5).
Each director shall serve for a term of one year until his successor is duly
elected and qualified or until his earlier resignation, removal from office or
death.
(B) The number of directors may be fixed or changed, but in no
event to fewer than five (5), by the directors or by the shareholders at a
meeting of the shareholders of this Association called for the purpose of
electing directors at which a quorum is present, only by the affirmative vote of
the holders of not less than a majority of the voting shares which are
represented at the meeting, in person or by proxy, and entitled to vote on such
proposal.
(C) The directors may fill any director's office that is
created by an increase in the number of directors.
(D) No reduction in the number of directors shall of itself
have the effect of shortening the term of any incumbent director.
SECTION 3. NOMINATION AND ELECTION.
(A) Any nominee for election as a director of this Association
may be proposed only by the directors or by any shareholder entitled to vote for
the election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of this Association
unless such person shall have been proposed in a written notice, delivered or
mailed by first-class United States mail, postage prepaid, to the secretary of
this Association at the principal offices of this Association. In the case of a
nominee proposed for election as a director at an annual meeting of
shareholders, such written notice of a proposed nominee shall be received by the
secretary of this Association not later than the close of business on the
fourteenth calendar day preceding such annual meeting. In the case of a nominee
proposed for election as a director at a special meeting of shareholders at
which directors are to be elected, such written notice of a proposed nominee
shall be received by the secretary of this Association not later than the close
of business on the fourteenth calendar day preceding such special meeting.
Each such written notice of a proposed nominee shall set forth
(i) the name, age, business or residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of common shares of this Association owned beneficially
and/or of record by each such nominee and the length of time any such shares
have been so owned.
(B) If a shareholder shall attempt to nominate one or more
persons for election as a director at any meeting at which directors are to be
elected without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section 3, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.
(C) The election of directors shall be by ballot whenever
requested by the person acting as chairman of the meeting or by the holders of a
majority of the outstanding shares entitled to vote at such meeting and present
in person or by proxy, but unless such request is made, the election shall be by
voice vote.
SECTION 4. REMOVAL. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than 75% of the voting
power of this Association to elect directors in place of those to be removed. In
case of any such removal, a new director may be elected at the same meeting
-3-
<PAGE> 21
for the unexpired term of each director removed. Failure to elect a director to
fill the unexpired term of any director removed shall be deemed to create a
vacancy in the board.
SECTION 5. VACANCIES. Vacancies in the board may be filled in
the manner provided by law, the Articles or this Constitution. The directors
shall have the right to fill all vacancies occurring in the board for the
unexpired term.
SECTION 6. MEETINGS. A meeting of the directors shall be held
immediately following the adjournment of each annual meeting of shareholders of
this Association at which directors are elected, and notice of such meeting need
not be given. The directors shall hold a regular meeting at least once each
month at a day and hour fixed by resolution of the board and may hold such other
meetings as may from time to time be called. Such meetings of directors may be
called only by the chairman of the board, the president, or any two directors.
Meetings of the directors may be held through any communications equipment if
all persons participating can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence at such meeting.
SECTION 7. NOTICE OF MEETINGS. Notice of the time and place of
each meeting of directors for which such notice is required by law, the
Articles, this Constitution or the Bylaws shall be given to each of the
directors by at least one of the following methods:
(A) In a writing mailed not less than three days before such
meeting and addressed to the residence or usual place of business of a director,
as such address appears on the records of the corporation; or
(B) By telegraph, facsimile or a writing sent or delivered to
the residence or usual place of business of a director as the same appears on
the records of the corporation, not later than the day before the date on which
such meeting is to be held.
Notice given to a director by either one of the methods specified in this
Constitution shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of this
Association. Any such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.
SECTION 8. WAIVER OF NOTICE. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
SECTION 9. QUORUM. A majority of the whole authorized number
of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
board, except as otherwise provided by law, the Articles or this Constitution.
SECTION 10. EXECUTIVE COMMITTEE. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such executive committee or other committee of
directors may act by a majority of its members at a meeting or by a writing or
writings signed by all of its members.
Any act or authorization of any act by the executive committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the executive committee or of any other committee of
directors shall be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president or by a member
of such executive or other committee of
-4-
<PAGE> 22
directors. Meetings of the executive committee or of any other committee of
directors may be held through any communications equipment if all persons
participating can hear each other, and participation in such a meeting shall
constitute presence thereat.
SECTION 11. COMPENSATION. The compensation of the directors
shall be fixed by the shareholders at the annual meeting of shareholders and
shall be reasonable in view of the services performed and the financial
condition of this Association.
SECTION 12. DIRECTORS' BYLAWS. The directors shall have the
power to adopt, amend, repeal, and enforce such bylaws, resolutions and orders
as they may deem necessary to enable them to manage and control all the
business, property and rights of this Association.
SECTION 13. ASSESSMENTS. The directors shall have the power to
assess and collect from members and others such fines for late payment of loans
and such premiums on loans made or other assessments as they may deem
appropriate.
ARTICLE SIX
OFFICERS
SECTION 1. OFFICERS. The officers of this Association to be
elected by the directors shall include a president, a secretary and a treasurer
and such other officers and assistant officers as the directors may from time to
time elect. One officer shall be designated as the executive managing officer of
the Association. The directors may elect a chairman of the board, who must be a
director. Officers need not be shareholders of this Association, and may be paid
such compensation as the board of directors may determine. Any two or more
offices may be held by the same person, but no officer shall execute,
acknowledge, or verify any instrument in more than one capacity if such
instrument is required by law, the Articles, this Constitution or the Bylaws to
be executed, acknowledged, or verified by two or more officers.
SECTION 2. TENURE OF OFFICE. The officers of this Association
shall hold office at the pleasure of the directors. Any officer may be removed,
either with or without cause, at any time, by the affirmative vote of a majority
of all of the directors then in office; such removal, however, shall be without
prejudice to the contract rights, if any, of the person so removed.
SECTION 3. DUTIES OF THE OFFICERS. The duties of the officers
shall be established by the directors either in the Bylaws of this Association
or by resolution.
SECTION 4. COMPENSATION. The directors shall set the
compensation of the officers of this Association. The compensation of all
officers of this Association shall be reasonable in view of the services
performed and the financial condition of this Association.
ARTICLE SEVEN
SHARES
SECTION 1. CERTIFICATES. Certificates evidencing ownership of
shares of this Association shall be issued to those entitled to them. Each
certificate evidencing shares of this Association shall bear a distinguishing
number, the signatures of the chairman of the board, the president, or a vice
president, and of the secretary or an assistant secretary (except that when any
such certificate is countersigned by an incorporated transfer agent or
registrar, such signatures may be facsimile, engraved, stamped or printed), and
such recitals as may be required by law. Certificates evidencing shares of this
Association shall be of such tenor and design as the directors may from time to
time adopt and may bear such recitals as are permitted by law.
SECTION 2. TRANSFERS. Where a certificate evidencing a share
or shares of this Association is presented to this Association or its proper
agents with a request to register transfer, the transfer shall be registered as
requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or transfer of shares
evidenced by each such certificate, or signs a power to assign or transfer such
shares, or when the signature of an appropriate person is written without more
on the back of each such certificate; and
-5-
<PAGE> 23
(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; and
(3) All applicable laws, if any, relating to the collection of
transfer or other taxes have been complied with; and
(4) This Association or its agents are not otherwise required
or permitted to refuse to register such transfer.
This Association may refuse to register a transfer of shares
unless the signature of each appropriate person is guaranteed by a commercial
bank or trust company having an office or a correspondent in the City of New
York or by a firm having membership in the New York Stock Exchange.
SECTION 3. TRANSFER AGENTS AND REGISTRARS. The directors may
appoint one or more agents to transfer or to register shares of this
Association, or both.
SECTION 4. LOST, WRONGFULLY TAKEN OR DESTROYED CERTIFICATES.
Except as otherwise provided by law, where the owner of a certificate evidencing
shares of this Association claims that such certificate has been lost, destroyed
or wrongfully taken, the directors must cause this Association to issue a new
certificate in place of the original certificate if the owner:
(1) So requests before this Association has notice that such
original certificate has been acquired by a bona fide purchaser; and
(2) Files with this Association, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory to this
Association, in such sums as the directors may, in their discretion, deem
reasonably sufficient as indemnity against any loss or liability that this
Association may incur by reason of the issuance of each such new certificate;
and
(3) Satisfies any other reasonable requirements which may be
imposed by the directors, in their discretion.
ARTICLE EIGHT
INDEMNIFICATION AND INSURANCE
SECTION 1. To the fullest extent permitted by applicable law,
this Association shall indemnify or agree to indemnify any person who was or is
a party or is threatened to be made a party, to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, other than an action by or in the right of this Association,
by reason of the fact that he is or was a director or officer of this
Association, or is or was serving at the request of this Association as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of this
Association and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of this
Association and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
SECTION 2. This Association shall indemnify or agree to
indemnify any person who was or is a party or is threatened to be made a party,
to any threatened, pending or completed action or suit by or in the right of
this Association to procure a judgment in its favor by reason of the fact that
he is or was a director or officer of this Association or is or was serving at
the request of this Association as a director, trustee, officer, employee, or
agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a
-6-
<PAGE> 24
manner he reasonably believed to be in or not opposed to the best interests of
this Association, except that no indemnification shall be made in respect of any
of the following:
(A) Any claim, issue or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance of his
duty to this Association unless, and only to the extent that, the Court of
Common Pleas of Belmont County, Ohio, or the court in which such action or suit
was brought determines upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the Court of
Common Pleas of Belmont County, Ohio, or such other court shall deem proper;
(B) Any action or suit in which the only liability asserted
against a director is pursuant to 1701.95 of the Ohio Revised Code.
SECTION 3. To the extent that a director or officer has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 or 2 of this Article Eight, or in defense
of any claim, issue, or matter therein, he shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the action, suit, or proceeding.
SECTION 4. Any indemnification under Sections 1 or 2 of this
Article Eight, unless ordered by a court, shall be made by this Association only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 1 or 2 of this Article
Eight. Such determination shall be made as follows:
(A) By a majority vote of a quorum consisting of directors of
this Association who were not and are not parties to or threatened with any such
action, suit, or proceeding;
(B) If the quorum described in Subsection (A) of this Section
4 is not obtainable or if a majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been retained
by or who has performed services for this Association or any person to be
indemnified within the past five years;
(C) By the shareholders;
(D) By the Court of Common Pleas of Belmont County, Ohio, or
the court in which such action, suit, or proceeding was brought.
Any determination made by the disinterested directors under
Subsection (A) of this Section 4 or by independent legal counsel under
Subsection (B) of this Section 4 shall be promptly communicated to the person
who threatened or brought the action or suit by or in the right of this
Association under Section 2 of this Article Eight, and within ten days after
receipt of such notification, such person shall have the right to petition the
Court of Common Pleas of Belmont County, Ohio, or the court in which such action
or suit was brought to review the reasonableness of such determination.
SECTION 5.
(A) Expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by this
Association as they are incurred, in advance of the final disposition of the
action, suit, or proceeding upon receipt of an undertaking by or on behalf of
the director in which he agrees to do both of the following:
(i)Repay such amount if it is proved by clear and
convincing evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to this Association or undertaken with reckless disregard for the
best interests of this Association;
(ii) Reasonably cooperate with this Association
concerning the action, suit, or proceeding.
(B) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, or agent in defending any action, suit, or
proceeding referred to in Section 2 of this Article Eight, may be paid by this
Association as they are
-7-
<PAGE> 25
incurred, in advance of the final disposition of the action, suit, or proceeding
as authorized by the directors in the specific case upon receipt of an
undertaking by or on behalf of the director, trustee, officer, employee, or
agent to repay such amount, if it ultimately is determined that he is not
entitled to be indemnified by this Association.
SECTION 6. The indemnification authorized by this Article
Eight shall not be exclusive of, and shall be in addition to, any other rights
granted to those seeking indemnification under the Articles or the Constitution
of this Association or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors, and administrators of such a person.
SECTION 7. This Association may purchase and maintain
insurance or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, on behalf of or for any person who
is or was a director, officer, employee, or agent of this Association, or is or
was serving at the request of this Association as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not this Association would have
the power to indemnify him against such liability under this section. Insurance
may be purchased from or maintained with a person in which this Association has
a financial interest.
SECTION 8. The authority of this Association to indemnify
persons pursuant to Sections 1 or 2 of this Article Eight does not limit the
payment of expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to Sections 5, 6 and 7 of this Article
Eight. Sections 1 and 2 of this Article Eight do not create any obligation to
repay or return payments made by this Association pursuant to Sections 5, 6 or 7
of this Article Eight.
SECTION 9. As used in this Article Eight, references to this
Association include all constituent corporations in a consolidation or merger
and the new or surviving corporation, so that any person who is or was a
director, officer, employee, or agent of such a constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
trustee, officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with respect to
the new or surviving corporation as he would if he had served the new or
surviving corporation in the same capacity.
SECTION 10. Any action, suit or proceeding to determine a
claim for indemnification under this Article Eight may be maintained by the
person claiming such indemnification, or by the Association, in the Court of
Common Pleas of Belmont County, Ohio. This Association and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Belmont County, Ohio, in any
such action, suit or proceeding.
ARTICLE NINE
DISSOLUTION
SECTION 1. To dissolve this Association, a resolution in
writing asking for such dissolution shall be adopted by the board of directors
or requested in writing in the form of a resolution by the holders of at least
twenty-five percent of the voting shares of this Association.
SECTION 2. Upon the presentation to the board of directors of
one of the resolutions specified in Section 1 of this Article Nine, the board of
directors shall call a special meeting of the shareholders for the purpose of
considering and acting upon such resolution. If at such special meeting, the
holders of a majority of the voting shares of this Association entitled to vote
under the provisions of this Constitution vote for dissolution, the board of
directors shall take the necessary steps to wind up the affairs of this
Association, subject to the contract rights of its borrowers, in accordance with
statutory requirements existing at the date such action is taken.
-8-
<PAGE> 26
ARTICLE TEN
MISCELLANEOUS
SECTION 1. AMENDMENTS. This Constitution may be amended at any
annual or special meeting of the shareholders of this Association by the
affirmative vote of the holders of three-fifths of the shares of record
represented in person or by proxy at such meeting. All proposals to amend this
Constitution shall be presented in writing to the board of directors at a
regular meeting thereof at least thirty (30) days before such annual or special
meeting of the shareholders, and the amendment adopted shall be substantially
the same as proposed.
SECTION 2. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A
MEETING. Anything contained in this Constitution to the contrary
notwithstanding, any action which may be authorized or taken at a meeting of the
shareholders or of the directors or of a committee of the directors, as the case
may be, may be authorized or taken without a meeting with the affirmative vote
or approval of, and in a writing or writings signed by, all the shareholders who
would be entitled to notice of a meeting of the shareholders held for such
purpose, or all the directors, or all the members of such committee of the
directors, respectively, which writings shall be filed with or entered upon the
records of this Association.
-9-
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
OHIO STATE FINANCIAL SERVICES, INC.
The undersigned, desiring to form a corporation for profit
under Chapter 1701 of the Ohio Revised Code, does hereby certify:
FIRST: The name of the corporation shall be Ohio State
Financial Services, Inc.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is the City of Bridgeport, County of Belmont.
THIRD: The purpose for which the corporation is formed is to
engage in any lawful act or activity for which corporations may be formed under
Section 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized shares of the corporation shall be
eight hundred and fifty (850) common shares, each without par value. The
directors of the corporation may adopt an amendment to the Articles of
Incorporation of the corporation in respect of any unissued or treasury shares
of any class and thereby fix or change: the division of such shares into series
and the designation and authorized number of each series; the dividend rate; the
dates of payment of dividends and the dates from which they are cumulative; the
liquidation price; the redemption rights and price; the sinking fund
requirements; the conversion rights; and the restrictions on the issuance of
shares of any class or series.
FIFTH: (A) The board of directors of the corporation shall
have the power to cause the corporation from time to time and at any time to
purchase, hold, sell, transfer or otherwise deal with (i) shares of any class or
series issued by it, (ii) any security or other obligation of the corporation
which may confer upon the holder thereof the right to convert the same into
shares of any class or series authorized by the articles of the corporation, and
(iii) any security or other obligation which may confer upon the holder thereof
the right to purchase shares of any class or series authorized by the Articles
of Incorporation of the corporation.
(B) The corporation shall have the right to repurchase, if and
when any shareholder desires to sell, or on the happening of any event is
required to sell, shares of any class or series issued by the corporation.
<PAGE> 2
(C) The authority granted in this Article Fifth shall not
limit the plenary authority of the directors to purchase, hold, sell, transfer
or otherwise deal with shares of any class or series, securities or other
obligations issued by the corporation or authorized by the Articles of
Incorporation of the corporation.
SIXTH: Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release of the holders of
shares of the corporation entitling them to exercise any proportion of the
voting power of the corporation or of any class or classes thereof, such action,
unless expressly otherwise provided by statute, may be taken by the vote,
consent, waiver or release of the holders of shares entitling them to exercise
not less than a majority of the voting power of the corporation or of such class
or classes; provided, however, that if the board of directors of the corporation
shall recommend against the approval of any of the following matters, the
affirmative vote of the holders of shares entitling them to exercise not less
than seventy-five percent (75%) of the voting power of any class or classes of
shares of the corporation which entitle the holders thereof to vote in respect
of any such matter as a class shall be required to adopt:
(A) A proposed amendment to the Articles of Incorporation
of the corporation;
(B) A proposed amendment to the Code of Regulations of
the corporation;
(C) A proposal to change the number of directors by
action of the shareholders;
(D) An agreement of merger or consolidation providing for
the proposed merger or consolidation of the
corporation with or into one or more other
corporations;
(E) A proposed combination or majority share acquisition
involving the issuance of shares of the corporation
and requiring shareholder approval;
(F) A proposal to sell, exchange, transfer or otherwise
dispose of all, or substantially all, of the assets,
with or without the goodwill, of the corporation; or
(G) A proposed dissolution of the corporation.
SEVENTH: No shareholder of the corporation shall have, as a
matter of right, the pre-emptive right to purchase or subscribe for shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other obligations convertible into or exchangeable for such shares
or which by warrants or otherwise entitle the holders thereof to subscribe for
or purchase any such shares.
<PAGE> 3
IN WITNESS WHEREOF, I have hereunto signed my name this 24th
day of March, 1997.
/s/ Jon W. Letzkus
-----------------------------
Jon W. Letzkus, Incorporator
<PAGE> 4
[SEAL OF SECRETARY OF STATE OF OHIO]
ORIGINAL APPOINTMENT OF STATUTORY AGENT
The undersigned, being at least a majority of the incorporation of Ohio
State Financial Services, Inc., hereby appoint Jon W. Letzkus to be statutory
agent upon whom any process, notice or demand required or permitted by statute
to be served upon the corporation may be served. The compete address of the
agent is:
435 Main Street
- --------------------------------------------------------------------------------
(street address)
Bridgeport , Ohio 43912 .
- ---------------------------------------------- -----------
(city) (zip code)
NOTE: P.O. Box addresses are not acceptable.
/s/ Jon W. Letzkus
------------------------------------------------
Jon W. Letzkus (Incorporator)
------------------------------------------------
(Incorporator)
------------------------------------------------
(Incorporator)
ACCEPTANCE OF APPOINTMENT
The undersigned, Jon W. Letzkus , named herein as the statutory agent for Ohio
State Financial Services, Inc. , hereby acknowledges and accepts the appointment
of statutory agent for said corporation.
/s/ Jon W. Letzkus
----------------------------------------
Jon W. Letzkus Statutory Agent
INSTRUCTIONS
1) Profit and non-profit articles of incorporation must be accompanied by
an original appointment of agent, R.C. 1701.07(B), 1702.06(B).
2) The statutory agent for a corporation may be (a) a natural person who
is a resident of Ohio, or (b) an Ohio corporation or a foreign profit
corporation licensed in Ohio which has a business address in this state
and is explicitly authorized by its articles of incorporation to act as
a statutory agent. R.C. 1701.07(A), 1702.06(A).
3) An original appointment of agent form must be signed by at least a
majority of the incorporators of the corporation. R.C. 1701.07(B),
1702.06(B). These signatures must be the same as the signatures on the
articles of incorporation.
*As of October 8, 1992, R.C. 1702.07(B) will be amended to require
acknowledgment and acceptance by the appointed statutory agent.
<PAGE> 1
EXHIBIT 3.2
CODE OF REGULATIONS
OF
OHIO STATE FINANCIAL SERVICES, INC.
INDEX
Section Caption Page No.
- ------- ------- --------
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
1.01. Annual Meetings................................................ 1
1.02. Calling of Meetings............................................ 1
1.03. Place of Meetings.............................................. 1
1.04. Notice of Meetings............................................. 1
1.05. Waiver of Notice............................................... 2
1.06. Quorum......................................................... 2
1.07. Votes Required................................................. 2
1.08. Order of Business.............................................. 2
1.09. Shareholders Entitled to Vote.................................. 2
1.10. Cumulative Voting.............................................. 2
1.11. Proxies........................................................ 3
1.12. Inspectors of Election......................................... 3
ARTICLE TWO
DIRECTORS
2.01. Authority and Qualifications................................... 3
2.02. Number of Directors and Term of Office......................... 3
2.03. Nomination..................................................... 4
2.04. Election....................................................... 5
2.05. Removal........................................................ 5
2.06. Vacancies...................................................... 5
2.07. Meetings....................................................... 5
2.08. Notice of Meetings............................................. 6
2.09. Waiver of Notice............................................... 6
2.10. Quorum......................................................... 6
2.11. Executive Committee............................................ 6
<PAGE> 2
2.12. Compensation................................................... 7
2.13. Bylaws......................................................... 7
ARTICLE THREE
OFFICERS
3.01. Officers....................................................... 7
3.02. Tenure of Office............................................... 7
3.03. Duties of the Chairman of the Board............................ 7
3.04. Duties of the President........................................ 8
3.05. Duties of the Vice Presidents.................................. 8
3.06. Duties of the Secretary........................................ 8
3.07. Duties of the Treasurer........................................ 8
ARTICLE FOUR
SHARES
4.01. Certificates................................................... 8
4.02. Transfers...................................................... 9
4.03. Transfer Agents and Registrars................................. 9
4.04. Lost, Wrongfully Taken or Destroyed Certificates .............. 9
4.05. Uncertificated Shares.......................................... 10
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01. Mandatory Indemnification...................................... 10
5.02. Court-Approved Indemnification................................. 10
5.03. Indemnification for Expenses................................... 11
5.04 Determination Required......................................... 11
5.05. Advances for Expenses.......................................... 12
5.06. Article Five Not Exclusive..................................... 12
5.07. Insurance...................................................... 12
5.08. Certain Definitions............................................ 12
5.09. Venue.......................................................... 13
ARTICLE SIX
MISCELLANEOUS
6.01. Amendments..................................................... 13
6.02. Action by Shareholders or Directors Without a Meeting ......... 13
<PAGE> 3
CODE OF REGULATIONS
OF
OHIO STATE FINANCIAL SERVICES, INC.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETINGS. The annual meeting of the
shareholders for the election of directors, for the consideration of reports to
be laid before such meeting and for the transaction of such other business as
may properly come before such meeting shall be held on the third Wednesday in
April each year or on such other date as may be fixed from time to time by the
directors.
SECTION 1.02. CALLING OF MEETINGS. Meetings of the
shareholders may be called only by the chairman of the board; the president or,
in case of the president's absence, death, or disability, the vice president
authorized to exercise the authority of the president; the secretary; the
directors by action at a meeting, or a majority of the directors acting without
a meeting; or the holders of at least twenty-five percent of all shares
outstanding and entitled to vote thereat.
SECTION 1.03. PLACE OF MEETINGS. All meetings of shareholders
shall be held at the principal office of the corporation, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at any
place within or without the State of Ohio.
SECTION 1.04. NOTICE OF MEETINGS. (A) Written notice stating
the time, place and purposes of a meeting of the shareholders shall be given
either by personal delivery or by mail not less than seven nor more than sixty
days before the date of the meeting (1) to each shareholder of record entitled
to notice of the meeting, (2) by or at the direction of the president or the
secretary. If mailed, such notice shall be addressed to the shareholder at his
address as it appears on the records of the corporation. Notice of adjournment
of a meeting need not be given if the time and place to which it is adjourned
are fixed and announced at such meeting. In the event of a transfer of shares
after the record date for determining the shareholders who are entitled to
receive notice of a meeting of shareholders, it shall not be necessary to give
notice to the transferee. Nothing herein contained shall prevent the setting of
a record date in the manner provided by law, the Articles of Incorporation of
the corporation (the "Articles") or elsewhere in this Code of Regulations (the
"Regulations") for the determination of shareholders who are entitled to receive
notice of or to vote at any meeting of shareholders or for any purpose required
or permitted by law.
(B) Following receipt by the president or the secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called
1
<PAGE> 4
a meeting of the shareholders, delivered either in person or by registered mail
to such officer by any persons entitled to call a meeting of shareholders, such
officer shall cause to be given to the shareholders entitled thereto notice of a
meeting to be held on a date not less than seven nor more than sixty days after
the receipt of such request, as such officer may fix. If such notice is not
given within fifteen days after the receipt of such request by the president or
the secretary, then, and only then, the persons properly calling the meeting may
fix the time of meeting and give notice thereof in accordance with the
provisions of the Regulations.
SECTION 1.05. WAIVER OF NOTICE. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholders, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.
SECTION 1.06. QUORUM. At any meeting of shareholders, the
holders of a majority of the voting shares of the corporation outstanding and
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting as chairman
of the meeting, may adjourn such meeting from time to time, and if a quorum is
present at such adjourned meeting any business may be transacted as if the
meeting had been held as originally called.
SECTION 1.07. VOTES REQUIRED. At all elections of directors
the candidates receiving the greatest number of votes shall be elected. Any
other matter submitted to the shareholders for their vote shall be decided by
the vote of such proportion of the shares, or of any class of shares, or of each
class, as is required by law, the Articles or the Regulations.
SECTION 1.08. ORDER OF BUSINESS. The order of business at any
meeting of shareholders shall be determined by the officer of the corporation
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such meeting.
SECTION 1.09. SHAREHOLDERS ENTITLED TO VOTE. Each shareholder
of record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation standing
in his name on the books of the corporation on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.
SECTION 1.10. CUMULATIVE VOTING. If notice in writing shall
be given by a shareholder to the president, a vice president or the secretary of
the corporation, not less than forty-
2
<PAGE> 5
eight hours before the time fixed for holding a meeting of the shareholders for
the purpose of electing directors if notice of such meeting shall have been
given at least ten days prior thereto, and otherwise not less than twenty-four
hours before such time, that such shareholder desires that the voting at such
election shall be cumulative, and if an announcement of the giving of such
notice is made upon the convening of the meeting by the chairman or secretary or
by or on behalf of the shareholder giving such notice, each shareholder shall
have the right to cumulate such voting power as he possesses and to give one
candidate as many votes as is determined by multiplying the number of directors
to be elected by the number of votes to which such shareholder is entitled, or
to distribute such number of votes on the same principle among two or more
candidates, as he sees fit; provided, however, that the foregoing procedures
shall not apply if the Articles provide that no shareholder may cumulate his
voting power.
SECTION 1.11. PROXIES. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.
SECTION 1.12. INSPECTORS OF ELECTION. In advance of any
meeting of shareholders, the directors may appoint inspectors of election to act
at such meeting or any adjournment thereof; if inspectors are not so appointed,
the officer of the corporation acting as chairman of any such meeting may make
such appointment. In case any person appointed as inspector fails to appear or
act, the vacancy may be filled only by appointment made by the directors in
advance of such meeting or, if not so filled, at the meeting by the officer of
the corporation acting as chairman of such meeting. No other person or persons
may appoint or require the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
SECTION 2.01. AUTHORITY AND QUALIFICATIONS. Except where the
law, the Articles or the Regulations otherwise provide, all authority of the
corporation shall be vested in and exercised by its directors.
SECTION 2.02. NUMBER OF DIRECTORS AND TERM OF OFFICE.
(A) Until changed in accordance with the provisions of the
Regulations, the number of directors of the corporation shall be five. A term
may not exceed one year. Directors shall serve until their successors are duly
elected and qualified or until their earlier resignation, removal from office,
or death.
3
<PAGE> 6
(B) The number of directors may be fixed or changed at a
meeting of the shareholders called for the purpose of electing directors at
which a quorum is present, only by the affirmative vote of the holders of not
less than a majority of the voting shares which are represented at the meeting,
in person or by proxy, and entitled to vote on such proposal.
(C) The directors may fix or change the number of directors
and may fill any director's office that is created by an increase in the number
of directors; provided, however, that the directors may not increase the number
of directors to greater than ten (10) nor reduce the number of directors to
fewer than five (5).
(D) No reduction in the number of directors shall of itself
have the effect of shortening the term of any incumbent director.
SECTION 2.03. NOMINATION.
(A) Any nominee for election as a director of the corporation
may be proposed only by the directors or by any shareholder entitled to vote for
the election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of the corporation unless
such person shall have been proposed in a written notice, delivered or mailed by
first class United States mail, postage prepaid, to the Secretary of the
corporation at the principal offices of the corporation. In the case of a
nominee proposed for election as a director at an annual meeting of
shareholders, such written notice of a proposed nominee shall be received by the
Secretary of the corporation on or before the sixtieth (60th) day before the
first anniversary of the most recent annual meeting of shareholders of the
corporation held for the election of directors; provided, however, that if the
annual meeting for the election of directors in any year is not held on or
before the thirty-first (31st) day next following such anniversary, then the
written notice required by this subparagraph (A) shall be received by the
Secretary within a reasonable time prior to the date of such annual meeting. In
the case of a nominee proposed for election as a director at a special meeting
of shareholders at which directors are to be elected, such written notice of a
proposed nominee shall be received by the Secretary of the corporation no later
than the close of business on the seventh (7th) day following the day on which
notice of the special meeting was mailed to shareholders. Each such written
notice of a proposed nominee shall set forth (1) the name, age, business or
residence address of each nominee proposed in such notice, (2) the principal
occupation or employment of each such nominee, and (3) the number of common
shares of the corporation owned beneficially and/or of record by each such
nominee and the length of time any such shares have been so owned.
(B) If a shareholder shall attempt to nominate one or more
persons for election as a director at any meeting at which directors are to be
elected without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as Chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.
4
<PAGE> 7
(C) The election of directors shall be by ballot whenever
requested by the person acting as Chairman of the meeting or by the holders of a
majority of the voting shares outstanding, entitled to vote at such meeting and
present in person or by proxy, but unless such request is made, the election
shall be by voice vote.
SECTION 2.04. ELECTION. At each annual meeting of shareholders
for the election of directors, the successors to the directors whose term shall
expire in that year shall be elected, but if the annual meeting is not held or
if one or more of such directors are not elected thereat, they may be elected at
a special meeting called for that purpose. The election of directors shall be by
ballot whenever requested by the presiding officer of the meeting or by the
holders of a majority of the voting shares outstanding, entitled to vote at such
meeting and present in person or by proxy, but unless such request is made, the
election shall be viva voce.
SECTION 2.05. REMOVAL. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than 75% of the voting
power of the corporation to elect directors in place of those to be removed;
provided, however, if the shareholders have a right to vote cumulatively in the
election of directors, unless all the directors, or all the directors of a
particular class (if the directors of the corporation are divided into classes),
are removed, no individual director shall be removed in case the votes of a
sufficient number of shares are cast against his removal that, if cumulatively
voted at an election of all directors, or all the directors of a particular
class, as the case may be, would be sufficient to elect at least one director.
In case of any such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to elect a director to
fill the unexpired term of any director removed shall be deemed to create a
vacancy in the board.
SECTION 2.06. VACANCIES. The remaining directors, though less
than a majority of the whole authorized number of directors, may, by the vote of
a majority of their number, fill any vacancy in the board for the unexpired
term. A vacancy in the board exists within the meaning of this Section 2.06 in
case the shareholders increase the authorized number of directors but fail at
the meeting at which such increase is authorized, or an adjournment thereof, to
elect the additional directors provided for, or in case the shareholders fail at
any time to elect the whole authorized number of directors.
SECTION 2.07. MEETINGS. A meeting of the directors shall be
held immediately following the adjournment of each annual meeting of
shareholders at which directors are elected, and notice of such meeting need not
be given. The directors shall hold such other meetings as may from time to time
be called, and such other meetings of directors may be called only by the
chairman of the board, the president, or any two directors. All meetings of
directors shall be held at the principal office of the corporation or at such
other place as the directors may from time to time determine by resolution.
Meetings of the directors may be held through any communications equipment if
all persons participating can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence at such meeting.
5
<PAGE> 8
SECTION 2.08. NOTICE OF MEETINGS. Notice of the time and place
of each meeting of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to each of the directors
by at least one of the following methods:
(A) In a writing mailed not less than three days before
such meeting and addressed to the residence or usual
place of business of a director, as such address
appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, or a writing
sent or delivered to the residence or usual place of
business of a director as the same appears on the
records of the corporation, not later than the day
before the date on which such meeting is to be held;
or
(C) Personally or by telephone not later than the day
before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of the
corporation. Any such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.
SECTION 2.09. WAIVER OF NOTICE. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
SECTION 2.10. QUORUM. A majority of the whole authorized
number of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
board, except as otherwise provided by law, the Articles or the Regulations.
SECTION 2.11. EXECUTIVE COMMITTEE. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such executive committee or other
6
<PAGE> 9
committee of directors may act by a majority of its members at a meeting or by a
writing or writings signed by all of its members.
Any act or authorization of any act by the executive committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the executive committee or of any other committee of
directors shall be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president or by a member
of such executive or other committee of directors. Meetings of the executive
committee or of any other committee of directors may be held through any
communications equipment if all persons participating can hear each other and
participation in such a meeting shall constitute presence thereat.
SECTION 2.12. COMPENSATION. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as directors
such amounts as the directors may determine.
SECTION 2.13. BYLAWS. The directors may adopt, and amend from
time to time, bylaws for their own government, which bylaws shall not be
inconsistent with the law, the Articles or the Regulations.
ARTICLE THREE
OFFICERS
SECTION 3.01. OFFICERS. The officers of the corporation to be
elected by the directors shall be a president, a secretary, a treasurer, and, if
desired, one or more vice presidents and such other officers and assistant
officers as the directors may from time to time elect. The directors may elect a
chairman of the board, who must be a director. Officers need not be shareholders
of the corporation and may be paid such compensation as the board of directors
may determine. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles, the Regulations or
the bylaws to be executed, acknowledged or verified by two or more officers.
SECTION 3.02. TENURE OF OFFICE. The officers of the
corporation shall hold office at the pleasure of the directors. Any officer of
the corporation may be removed, either with or without cause, at any time, by
the affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to the contract rights, if any, of
the person so removed.
SECTION 3.03. DUTIES OF THE CHAIRMAN OF THE BOARD. The
chairman of the board, if any, shall preside at all meetings of the directors.
He shall have such other powers and duties as the directors shall from time to
time assign to him.
7
<PAGE> 10
SECTION 3.04. DUTIES OF THE PRESIDENT. The president shall be
the chief executive officer of the corporation, shall exercise supervision over
the business of the corporation and shall have, among such additional powers and
duties as the directors may from time to time assign to him, the power and
authority to sign all certificates evidencing shares of the corporation and all
deeds, mortgages, bonds, contracts, notes and other instruments requiring the
signature of the president of the corporation. It shall be the duty of the
president to preside at all meetings of shareholders.
SECTION 3.05. DUTIES OF THE VICE PRESIDENTS. In the absence of
the president or in the event of his inability or refusal to act, the vice
president, if any (or in the event there be more than one vice president, the
vice presidents in the order designated, or in the absence of any designation,
then in the order of their election), shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all
restrictions upon the president. The vice presidents shall perform such other
duties and have such other powers as the directors may from time to time
prescribe.
SECTION 3.06. DUTIES OF THE SECRETARY. It shall be the duty of
the secretary, or of an assistant secretary, if any, in case of the absence or
inability to act of the secretary, to keep minutes of all the proceedings of the
shareholders and the directors and to make a proper record of the same; to
perform such other duties as may be required by law, the Articles or the
Regulations; to perform such other and further duties as may from time to time
be assigned to him by the directors or the president; and to deliver all books,
paper and property of the corporation in his possession to his successor, or to
the president.
SECTION 3.07. DUTIES OF THE TREASURER. The treasurer, or an
assistant treasurer, if any, in case of the absence or inability to act of the
treasurer, shall receive and safely keep in charge all money, bills, notes,
chooses in action, securities and similar property belonging to the corporation,
and shall do with or disburse the same as directed by the president or the
directors; shall keep an accurate account of the finances and business of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, stated capital and shares, together with such
other accounts as may be required and hold the same open for inspection and
examination by the directors; shall give bond in such sum with such security as
the directors may require for the faithful performance of his duties; shall,
upon the expiration of his term of office, deliver all money and other property
of the corporation in his possession or custody to his successor or the
president; and shall perform such other duties as from time to time may be
assigned to him by the directors.
ARTICLE FOUR
SHARES
SECTION 4.01. CERTIFICATES. Certificates evidencing ownership
of shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the
8
<PAGE> 11
corporation shall bear a distinguishing number; the signatures of the chairman
of the board, the president, or a vice president, and of the secretary or an
assistant secretary (except that when any such certificate is countersigned by
an incorporated transfer agent or registrar, such signatures may be facsimile,
engraved, stamped or printed); and such recitals as may be required by law.
Certificates evidencing shares of the corporation shall be of such tenor and
design as the directors may from time to time adopt and may bear such recitals
as are permitted by law.
SECTION 4.02. TRANSFERS. Where a certificate evidencing a
share or shares of the corporation is presented to the corporation or its proper
agents with a request to register transfer, the transfer shall be registered as
requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or transfer of shares
evidenced by each such certificate, or signs a power to assign or transfer such
shares, or when the signature of an appropriate person is written without more
on the back of each such certificate; and
(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; the corporation or its agents may
refuse to register a transfer of shares unless the signature of each appropriate
person is guaranteed by a commercial bank or trust company having an office or a
correspondent in the City of New York or by a firm having membership in the New
York Stock Exchange; and
(3) All applicable laws relating to the collection of transfer
or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise required
or permitted to refuse to register such transfer.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The directors
may appoint one or more agents to transfer or to register shares of the
corporation, or both.
SECTION 4.04. LOST, WRONGFULLY TAKEN OR DESTROYED
CERTIFICATES. Except as otherwise provided by law, where the owner of a
certificate evidencing shares of the corporation claims that such certificate
has been lost, destroyed or wrongfully taken, the directors must cause the
corporation to issue a new certificate in place of the original certificate if
the owner:
(1) So requests before the corporation has notice that such
original certificate has been acquired by a bona fide purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory to the
corporation, in such sums as the directors may, in their discretion, deem
reasonably sufficient as indemnity against any loss or liability that the
corporation may incur by reason of the issuance of each such new certificate;
and
9
<PAGE> 12
(3) Satisfies any other reasonable requirements which may be
imposed by the directors, in their discretion.
SECTION 4.05. UNCERTIFICATED SHARES. Anything contained in
this Article Fourth to the contrary notwithstanding, the directors may provide
by resolution that some or all of any or all classes and series of shares of the
corporation shall be Uncertificated shares, provided that such resolution shall
not apply to (A) shares of the corporation represented by a certificate until
such certificate is surrendered to the corporation in accordance with applicable
provisions of Ohio law or (B) any certificated security of the corporation
issued in exchange for an uncertificated security in accordance with applicable
provisions of Ohio law. The rights and obligations of the holders of
uncertificated shares and the rights and obligations of the holders of
certificates representing shares of the same class and series shall be
identical, except as otherwise expressly provided by law.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything
contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director,
10
<PAGE> 13
trustee, officer, employee or agent of another corporation (domestic or foreign,
nonprofit or for profit), partnership, joint venture, trust or other enterprise,
in respect of any claim, issue or matter asserted in such action or suit as to
which he shall have been adjudged to be liable for acting with reckless
disregard for the best interests of the corporation or misconduct (other than
negligence) in the performance of his duty to the corporation unless and only to
the extent that the Court of Common Pleas of Belmont County, Ohio, or the court
in which such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the circumstances of
the case, he is fairly and reasonably entitled to such indemnity as such Court
of Common Pleas or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by this
Section 5.02.
SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
SECTION 5.04 DETERMINATION REQUIRED. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall be made
by the corporation only upon a determination that such indemnification of the
officer or director is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 5.01. Such determination may
be made only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Belmont County,
Ohio, or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04; and no failure for any reason to make any
such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by shareholders under division
(C) of this Section 5.04 shall be evidence in rebuttal of the presumption
recited in Section 5.01. Any determination made by the disinterested directors
under division (A) or by independent legal counsel under division (B) of this
Section 5.04 to make indemnification in respect of any claim, issue or matter
asserted in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened or
brought
11
<PAGE> 14
such action or suit, and within ten days after receipt of such notification such
person shall have the right to petition the Court of Common Pleas of Belmont
County, Ohio, or the court in which such action or suit was brought, if any, to
review the reasonableness of such determination.
SECTION 5.05. ADVANCES FOR EXPENSES. Expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding referred
to in Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
(A) if it shall ultimately be determined as provided in
Section 5.04 that he is not entitled to be indemnified by the corporation as
provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or suit, he shall
have been adjudged to be liable for acting with reckless disregard for the best
interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent that
the Court of Common Pleas of Belmont County, Ohio, or the court in which such
action or suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is fairly
and reasonably entitled to all or part of such indemnification.
SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the Articles
or the Regulations or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 5.07. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.
SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this
Article Five, and as examples and not by way of limitation:
(A) A person claiming indemnification under this Article 5
shall be deemed to have been successful on the merits or otherwise in defense of
any action, suit or proceeding referred
12
<PAGE> 15
to in Section 5.01, or in defense of any claim, issue or other matter therein,
if such action, suit or proceeding shall be terminated as to such person, with
or without prejudice, without the entry of a judgment or order against him,
without a conviction of him, without the imposition of a fine upon him and
without his payment or agreement to pay any amount in settlement thereof
(whether or not any such termination is based upon a judicial or other
determination of the lack of merit of the claims made against him or otherwise
results in a vindication of him); and
(B) References to an "other enterprise" shall include employee
benefit plans; references to a "fine" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" within the meaning of that term as used in this Article Five.
SECTION 5.09. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article Five may be maintained
by the person claiming such indemnification, or by the corporation, in the Court
of Common Pleas of Belmont County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Belmont County, Ohio, in any
such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.01. AMENDMENTS. The Regulations may be amended, or
new regulations may be adopted, at a meeting of shareholders held for such
purpose, only by the affirmative vote of the holders of shares entitling them to
exercise not less than a majority of the voting power of the corporation on such
proposal, or without a meeting by the written consent of the holders of shares
entitling them to exercise not less than a majority of the voting power of the
corporation on such proposal.
SECTION 6.02. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A
MEETING. Anything contained in the Regulations to the contrary notwithstanding,
except as provided in Section 6.01, any action which may be authorized or taken
at a meeting of the shareholders or of the directors or of a committee of the
directors, as the case may be, may be authorized or taken without a meeting with
the affirmative vote or approval of, and in a writing or writings signed by, all
the shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all the members of
such committee of the directors, respectively, which writings shall be filed
with or entered upon the records of the corporation.
13
<PAGE> 1
EXHIBIT 5
(513) 723-4000
June 18, 1997
Board of Directors
Ohio State Financial Services, Inc.
435 Main Street
Bridgeport, Ohio 43912
Dear Gentlemen:
We are familiar with the proceedings taken and proposed to be taken by
Ohio State Financial Services, Inc. (the "Holding Company") in connection with
the issuance and sale by the Holding Company of up to 892,687 of its common
shares, without par value (the "Common Shares"). The Common Shares are being
offered by the Holding Company in connection with the conversion of Bridgeport
Savings and Loan Association (the "Association") from a mutual savings and loan
association incorporated under the laws of the State of Ohio to a permanent
capital stock savings association incorporated under the laws of the State of
Ohio (the "Conversion").
The Holding Company has been incorporated for the purpose of purchasing
all of the capital stock to be issued by the Association in connection with the
Conversion. We have assisted the Association with matters related to the
incorporation and organization of the Holding Company. In addition, we have
collaborated in the preparation of the Registration Statement on Form S-1 (the
"Registration Statement") to be filed by the Holding Company with the Securities
and Exchange Commission for the registration of the Common Shares under the
Securities Act of 1933, as amended. In connection therewith, we have examined,
among other things, such records and documents as we have deemed necessary in
order to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that the Holding
Company is a duly organized and legally existing corporation under the laws of
the State of Ohio. Assuming compliance with applicable federal and state
securities laws, we are also of
<PAGE> 2
Board of Directors
June 18, 1997
Page 2
the opinion that the Common Shares to be issued and sold by the Holding Company
when the purchase orders have been accepted and the purchase price for the
Common Shares has been paid in money as specified in the Registration Statement
when it shall become effective, will be validly issued and outstanding, fully
paid and non-assessable. Notwithstanding the foregoing, until payments are
received by the Holding Company from the Bridgeport Savings and Loan Association
Employee Stock Ownership Plan (the "ESOP") in accordance with the terms of a
loan agreement to be entered into by and between the Holding Company and the
ESOP, shares for which payment in money has not been received will not be fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included
therein.
Very truly yours,
Vorys, Sater, Seymour and Pease
<PAGE> 1
EXHIBIT 8
(513) 723-4000
June 18, 1997
Board of Directors
Ohio State Financial Services, Inc.
435 Main Street
Bridgeport, Ohio 43912
and
Board of Directors
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
Re: Conversion from a Mutual Savings and Loan Association to a
Stock Savings and Loan Association - Federal and State Tax
Matters
-----------------------------------------------------------
Dear Directors:
You have requested our opinion regarding certain federal income and
state tax consequences resulting from the proposed conversion (the "Conversion")
of Bridgeport Savings and Loan Association (the "Association") from a mutual
savings and loan association to a stock savings and loan association (the "Stock
Association") incorporated under the laws of the State of Ohio and the
simultaneous acquisition by Ohio State Financial Services, Inc., an Ohio
corporation (the "Holding Company"), of all the capital stock to be issued by
the Stock Association upon the Conversion.
We have reviewed the Plan of Conversion adopted by the Association's
Board of Directors on March 24, 1997 (the "Plan"), the Application for
Conversion on Form AC (the "Application") filed with the Office of Thrift
Supervision (the "OTS") and the Ohio Department of Commerce, Division of
Financial Institutions (the "Division"), the Application H-(e)1-S filed with the
OTS and the Summary Proxy Statement, the Prospectus and other solicitation
materials included in the Application, and we have examined such other legal and
factual matters as we
<PAGE> 2
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 2
considered appropriate. Unless otherwise indicated, defined terms in this letter
have the same meaning as in the Plan and the Prospectus.
We have not requested on your behalf nor have we received any rulings
from the Internal Revenue Service ("IRS") in connection with the Conversion or
the attendant federal income tax consequences.
FACTS
- -----
A. The Association
---------------
The Association is a mutual savings and loan association which was
organized under Ohio law in 1893. As a savings and loan association, the
Association is subject to supervision and regulation by the OTS, the Division
and the Federal Deposit Insurance Corporation ("FDIC"). The Association is a
member of the Federal Home Loan Bank of Cincinnati. The deposits of the
Association are insured up to applicable limits by the FDIC in the Savings
Association Insurance Fund ("SAIF").
The principal business of the Association is the origination of loans
secured by first mortgages on one- to four-family residential real estate
located in the Association's primary market area. The Association also
originates loans secured by multifamily real estate (over four units) and
nonresidential real estate. In addition to real estate lending, the Association
originates secured and unsecured consumer loans. For liquidity and interest rate
risk management purposes, the Association invests in mortgage-backed securities,
U.S. Government and agency obligations and other investments permitted by
applicable law. Funds for lending and other investment activities are obtained
primarily from savings deposits, which are insured up to applicable limits by
the FDIC, and principal repayments on loans and mortgage-backed securities.
The Association conducts business from its main office located at 435
Main Street, Bridgeport, Ohio, and a full-service branch office located at 4000
Central Avenue, Shadyside, Ohio.
B. Ohio State Financial Services, Inc.
-----------------------------------
The Holding Company was incorporated under Ohio law in March, 1997, for
the purpose of purchasing all of the capital stock of the Association to be
issued in connection with the Conversion. The Holding Company has not conducted
and will not conduct any business other than business related to the Conversion
prior to the completion of the Conversion. Upon the consummation of the
Conversion, the Holding Company will be a unitary savings and loan holding
company, and its principal asset initially will be the capital stock of the
Stock Association and the investments made with the net proceeds retained from
the sale of
<PAGE> 3
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 3
common shares of the Holding Company (the "Common Shares") in connection with
the Conversion.
The office of the Holding Company is located at 435 Main Street,
Bridgeport, Ohio 43912.
C. The Plan of Conversion
----------------------
On March 24, 1997, the Board of Directors of the Association adopted
the Plan and recommended that the Voting Members of the Association approve the
Plan at the Special Meeting. Under the Plan, (i) the Association will be
converted under Ohio law from a mutual savings and loan association to a stock
savings and loan association, and (ii) Common Shares will be offered for sale
and issued to eligible persons in the Subscription Offering and to the general
public in the Community Offering, with preference being given to residents of
Belmont County, Ohio.
The aggregate purchase price at which the Common Shares will be offered
and sold pursuant to the Plan will be based upon the estimated pro forma market
value of the Stock Association, as determined by an independent appraiser. RP
Financial, LC. ("RP Financial"), a firm experienced in valuing thrift
institutions, has prepared an independent appraisal of the pro forma market
value of the Stock Association. RP Financial's valuation of the estimated pro
forma market value of the Stock Association is $6,750,000 as of June 6, 1997.
The Valuation Range established in accordance with the Plan is $5,737,500 to
$7,762,500, which, based upon a per share offering price of $10.00 , will result
in the sale of between 573,750 and 776,250 Common Shares. The total number of
Common Shares sold in the Conversion will be determined based on the Valuation
Range. Applicable regulations permit the Holding Company to offer additional
Common Shares in an amount not to exceed 15% above the maximum of the Valuation
Range, which would permit the issuance of up to 892,687 Common Shares with an
aggregate purchase price of $8,926,870.
D. Liquidation Account
-------------------
In the event of a complete liquidation of the Association in its
present mutual form, each depositor in the Association would receive a pro rata
share of any assets of the Association remaining after payment of the claims of
all creditors, including the claims of all depositors to the withdrawable value
of their savings accounts. A depositor's pro rata share of such remaining assets
would be the same proportion of such assets as the value of such depositor's
savings deposits bears to the total aggregate value of all savings deposits in
the Association at the time of liquidation.
In the event of a complete liquidation of the Stock Association after
the Conversion, each savings depositor would have a claim of the same general
priority as the claims of all other general creditors of the Stock Association.
Except as described below, each depositor's claim
<PAGE> 4
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 4
would be solely in the amount of the balance in such depositor's savings account
plus accrued interest. The depositor would have no interest in the assets of the
Stock Association above that amount. Such assets would be distributed to the
Holding Company as the sole shareholder of the Stock Association.
For the purpose of granting a limited priority claim to the assets of
the Stock Association in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who maintain their
savings accounts at the Stock Association following the Conversion, the
Association will, at the time of Conversion, establish the Liquidation Account
in an amount equal to the regulatory capital of the Association as of the latest
practicable date prior to the Conversion at which such regulatory capital can be
determined. The Liquidation Account will not operate to restrict the use or
application of any of the regulatory capital of the Stock Association.
Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
and the Supplemental Eligibility Record Date, respectively.
The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the applicable record date and the denominator of which is the
total amount of all Qualifying Deposits of all Eligible Account Holders and
Supplemental Eligible Account Holders on the applicable record date. The balance
of each Subaccount may be decreased but will never be increased. If, at the
close of business on any annual closing date of the Stock Association subsequent
to the respective record dates, the balance in the savings account to which a
Subaccount relates is less than the lesser of (i) the deposit balance in such
savings account at the close of business on any other annual closing date
subsequent to the applicable record date or (ii) the amount of the Qualifying
Deposit as of the applicable record date, the balance of the Subaccount for such
savings account shall be adjusted proportionately to the reduction in such
savings account balance. In the event of any such downward adjustment, such
Subaccount balance shall not be subsequently increased notwithstanding any
increase in the deposit balance of the related savings account. If any savings
account is closed, its related Subaccount shall be reduced to zero upon such
closing.
In the event of a complete liquidation of the Stock Association (and
only in such event), each Eligible Account Holder and Supplemental Eligible
Account Holder shall receive from the Liquidation Account a distribution equal
to the current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the shareholders of the Stock
Association. Any assets remaining after satisfaction of such liquidation rights
and the claims of the Stock Association's creditors would be distributed to the
Holding Company as the sole shareholder of the Stock Association. No merger,
consolidation, purchase of bulk assets or similar combination or transaction
with another association, the deposits of which are insured by
<PAGE> 5
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 5
the FDIC under the SAIF, will be deemed to be a complete liquidation for this
purpose and, in any such transaction, the Liquidation Account shall be assumed
by the surviving association.
E. Issuance of Shares
------------------
1. Subscription Offering
---------------------
Nontransferable subscription rights to purchase Common Shares
will be issued at no cost to all eligible persons and entities in accordance
with the preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. Each person subscribing for shares must
represent to the Stock Association that he or she is purchasing such shares for
his or her own account and that he or she has no agreement or understanding with
any other person for the sale or transfer of such shares.
The number of Common Shares which a person who has
subscription rights may purchase will be determined, in part, by the total
number of Common Shares to be issued and the availability of such shares for
purchase under the preference categories set forth in the Plan and certain other
limitations. The sale of any Common Shares pursuant to subscriptions received is
contingent upon approval of the Plan by the Voting Members of the Association at
the Special Meeting.
The preference categories which have been established by the
Plan, in accordance with applicable regulations, for the allocation of Common
Shares are as follows:
(a) Each Eligible Account Holder shall receive, without
payment therefor, a nontransferable right to purchase in the Subscription
Offering a number of Common Shares up to the greater of (i) the amount permitted
to be purchased in the Community Offering, (ii) .10% of the total number of
Common Shares sold in connection with the Conversion, or (iii) 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of Common Shares sold in connection with the Conversion by a
fraction of which the numerator is the amount of the Eligible Deposit Holder's
Qualifying Deposit and the denominator of which is the total amount of
Qualifying Deposits of all Eligible Account Holders, in each case on the
Eligibility Record Date, subject to the limitation that no person, together with
such person's Associates and other persons acting in concert with such person,
may purchase more than 14,000 Common Shares in the Offering.
If the exercise of subscription rights in this paragraph (a)
results in an over-subscription, Common Shares will be allocated among
subscribing Eligible Account Holders in a manner which will, to the extent
possible, make the total allocation of each subscriber equal 100 shares or the
amount subscribed for, whichever is less. Any Common Shares remaining after such
allocation has been made will be allocated among the subscribing Eligible
Account Holders whose subscriptions remain unfilled in the proportion which the
amount of their respective
<PAGE> 6
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 6
Qualifying Deposits on the Eligibility Date bears to the total Qualifying
Deposits of all Eligible Account Holders on such date. For purposes of this
paragraph (a), increases in the Qualifying Deposits of directors and executive
officers of the Association during the twelve months preceding the Eligibility
Record Date shall not be considered. Notwithstanding the foregoing, Common
Shares in excess of 776,250 , the maximum of the Valuation Range, may be sold to
the ESOP before fully satisfying the subscriptions of Eligible Account Holders.
No fractional shares will be issued.
(b) The ESOP shall receive, without payment therefor, the
nontransferable right to purchase Common Shares in an aggregate amount of up to
10% of the Common Shares sold in connection with the Conversion, provided that
shares remain available after satisfying the subscription rights of Eligible
Account Holders up to the maximum of the Valuation Range pursuant to paragraph
(a) above. Although the Plan and OTS regulations permit the ESOP to purchase up
to 10% of the Common Shares, the Holding Company anticipates that the ESOP will
purchase 8% of the Common Shares. If the ESOP is unable to purchase all or part
of the Common Shares for which it subscribes, the ESOP may purchase Common
Shares on the open market or may purchase authorized but unissued shares of the
Holding Company.
(c) Each Supplemental Eligible Account Holder will receive,
without payment therefor, a nontransferable subscription right to purchase a
number of Common Shares up to the greater of (i) the amount permitted to be
purchased in the Community Offering, (ii) .10% of the total number of Common
Shares sold in connection with the Conversion, or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total number
of Common Shares sold in connection with the Conversion by a fraction of which
the numerator is the amount of the Supplemental Eligible Account Holder's
Qualifying Deposit and the denominator of which is the total amount of
Qualifying Deposits of all Supplemental Eligible Account Holders, in each case
on the Supplemental Eligibility Record Date, subject to the limitation that no
person, together with such person's Associates and other persons acting in
concert with such person, may purchase more than 14,000 Common Shares on the
Offering.
If the exercise of subscription rights by Supplemental
Eligible Account Holders results in an oversubscription, Common Shares will be
allocated among subscribing Supplemental Eligible Account Holders in a manner
which will, to the extent possible, make the total allocation of each subscriber
equal 100 shares or the amount subscribed for, whichever is less. Any Common
Shares remaining after such allocation has been made will be allocated among the
subscribing Supplemental Eligible Account Holders whose subscriptions remain
unfilled in the proportion which the amount of their respective Qualifying
Deposits on the Supplemental Eligibility Record Date bears to the total
Qualifying Deposits of all Supplemental Eligible Account Holders on such date.
No fractional shares will be issued.
<PAGE> 7
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 7
Subscription rights received by Supplemental Eligible
Account Holders will be subordinate to the subscription rights of Eligible
Account Holders and the ESOP.
(d) Each Other Eligible Member, other than an Eligible
Account Holder or Supplemental Eligible Account Holder, shall receive, without
payment therefor, a nontransferable right to purchase in the Subscription
Offering a number of Common Shares up to the greater of the amount permitted to
be purchased in the Community Offering or .10% of the total number of Common
Shares sold in connection with the Conversion, subject to (i) the limitation
that no person, together with such person's Associates and other persons acting
in concert with such person, may purchase more than 14,000 Common Shares in the
Offering and (ii) the limitation that shares remain available after satisfying
the subscription rights of Eligible Account Holders, the ESOP and Supplemental
Eligible Account Holders pursuant to paragraphs (a), (b) and (c) above. In the
event of an over-subscription by Other Eligible Members, the available Common
Shares will be allocated among subscribing Other Eligible Members in the same
proportion that their subscriptions bear to the total amount of subscriptions by
all Other Eligible Members; provided however, that, to the extent sufficient
Common Shares are available, each subscribing Other Eligible Member shall
receive 25 Common Shares before the remaining Common Shares are allocated.
2. Community Offering
------------------
To the extent Common Shares remain available after the
satisfaction of all orders received in the Subscription Offering, the Holding
Company may offer Common Shares in the Community Offering. All sales of Common
Shares in the Community Offering will be at the same price as in the
Subscription Offering.
In the event shares are available for the Community Offering,
members of the general public, each together with his or her Associates and
other persons acting in concert with him or her, may purchase up to 14,000
Common Shares in the Community Offering. If an insufficient number of Common
Shares is available to fill all of the orders received in the Community
Offering, the available shares will be allocated in the discretion of the Board
of Directors, subject to the following:
(i) Preference will be given to natural persons who are
residents of Belmont County, Ohio;
(ii) Orders received in the Community Offering will first
be filled up to a maximum of 2% of the total number of Common Shares offered,
with any remaining shares allocated on an equal number of shares per order
basis until all orders have been filled; and
(iii) The right of any person to purchase shares in the
Community Offering is subject to the right of the Holding Company and the Stock
Association to accept or reject such purchases in whole or in part.
<PAGE> 8
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 8
F. Results of Conversion
---------------------
Savings account holders and borrowers who are members of the
Association will have no voting rights in the Stock Association and will not
participate, therefore, in the election of directors or otherwise control the
Stock Association's affairs. After the Conversion, voting rights in the Stock
Association will be vested exclusively in the Holding Company as the sole
shareholder of the Stock Association. Each holder of Common Shares will be
entitled to one vote for each share owned on any matter to be considered by the
shareholders of the Stock Association.
The Conversion will not interrupt the business of the Association.
During and upon completion of the Conversion, the Association will continue to
provide the services presently offered to depositors and borrowers, will
maintain its existing offices and will retain its existing management and
employees. All savings accounts in the Stock Association will be equivalent in
amount, interest rate and other terms to the present savings accounts in the
Association, and the existing FDIC insurance of such deposits will not be
affected by the Conversion. The Conversion will not affect the terms of loan
accounts or the rights and obligations of borrowers under their individual
contractual arrangements with the Association.
ADDITIONAL REPRESENTATIONS
- --------------------------
You have made the following additional representations upon which we
have relied:
(1) The Holding Company and the Stock Association each has no
plan or intention to redeem or otherwise acquire any of the Common Shares to be
issued in connection with the Conversion.
(2) Immediately following the consummation of the Conversion,
the Stock Association will possess the same assets and liabilities as the
Association held immediately prior to the Conversion, plus proceeds from the
sale of the Common Shares to the Holding Company in exchange for 50% of the net
proceeds of the Conversion. Assets used to pay expenses of the Conversion and
all distributions (except for regular, normal interest payments made by the
Association immediately preceding the Conversion) will in the aggregate
constitute less than one percent of the net assets of the Association and any
such expenses and distributions will be paid by the Association and the Holding
Company from the proceeds of the Subscription Offering.
(3) Following the Conversion, the Stock Association will
continue to engage in its business in substantially the same manner as engaged
in by the Association prior to the Conversion and it has no plan or intention
to sell or otherwise dispose of any of its assets except in the ordinary course
of business.
<PAGE> 9
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 9
(4) The Association is not under the jurisdiction of a court
in any Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code.
(5) The aggregate fair market value of the Qualifying Deposits
held by Eligible Account Holders and Supplemental Eligible Account Holders as of
the close of business on the Eligibility Record Date and the Supplemental
Eligibility Record Date, respectively, will equal or exceed ninety-nine percent
(99%) of the aggregate fair market value of all savings accounts (including
those accounts with less than $50) in the Association as of the close of
business on such dates. No Common Shares will be issued to or purchased by
depositor-employees at a discount or as compensation in the Conversion.
(6) No cash or property will be given to Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible Members in
lieu of (a) nontransferable subscription rights or (b) an interest in the
Liquidation Account of the Stock Association.
(7) The Association utilizes a reserve for bad debts in
accordance with Section 593 of the Code and, following the Conversion, the
Stock Association shall likewise utilize a reserve for bad debts in accordance
with Section 593 of the Code.
(8) The Holding Company has no plan or intention to sell or
otherwise dispose of the shares of the Stock Association purchased by it in the
Conversion.
(9) The Association's savings depositors will pay the
expenses of the Conversion solely attributable to them, if any. The Holding
Company will pay the expenses of the transaction and will not pay any expenses
solely attributable to the savings depositors or to the Holding Company's
shareholders.
(10) No amount of savings accounts or deposits as of the
Eligibility Record Date or the Supplemental Eligibility Record will be excluded
from participation in the Liquidation Account.
(11) The fair market value of the withdrawable savings
accounts plus interests in the Liquidation Account of the Stock Association to
be constructively received under the Plan will in each instance be equal to the
fair market value of the withdrawable savings accounts of the Association
surrendered in exchange therefor. All proprietary rights in the Association
form an integral part of the withdrawable savings accounts being surrendered in
the exchange.
(12) The Board, as defined in Section 368(a)(3)(D)(iii) of
the Code, has not made the certification described in Section 368(a)(3)(D)(ii),
nor will such certification be made prior to or otherwise in connection with
the Conversion.
<PAGE> 10
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 10
STATEMENT OF LAW
- ----------------
In Revenue Ruling 80-105, 1980-1 C.B. 78, the IRS ruled that a
conversion of a federal mutual savings and loan association into a state stock
savings and loan association constituted a tax-free reorganization under Section
368(a)(1)(F) of the Code. Subsequently, the IRS consistently issued letter
rulings that conversions of savings and loans qualify as tax-free
reorganizations under the Code, with the attendant tax consequences to the
depositors and shareholders that follow from such transactions. Although private
rulings may not be relied upon by taxpayers other than those to whom the ruling
is directed, such rulings do indicate the administrative position of the IRS.
OPINION OF COUNSEL
- ------------------
Based upon both our understanding of the facts and your representations
set forth above, and in reliance thereon, we are of the opinion that for federal
income tax purposes:
(1) The Conversion of the Association from a mutual savings
and loan association incorporated under the laws of the State of Ohio to a stock
savings and loan association incorporated under the laws of the State of Ohio
will constitute a reorganization within the meaning of Section 368(a)(1)(F) of
the Code, and no gain or loss will be recognized to the Association or to the
Stock Association as a result of the Conversion. The Association and the Stock
Association will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.
(2) No gain or loss will be recognized to the Stock
Association upon the receipt of money from the Holding Company in exchange for
shares of the Stock Association.
(3) The assets of the Stock Association will have the same
basis in its hands immediately after the Conversion as they had in the hands of
the Association immediately prior to the Conversion, and the holding period of
the assets of the Stock Association after the Conversion will include the period
during which the assets were held by the Association before the Conversion.
(4) No gain or loss will be recognized to the deposit account
holders of the Association upon the issuance to them, in exchange for their
respective withdrawable deposit accounts in the Association immediately prior to
the Conversion, of withdrawable deposit accounts in the Stock Association
immediately after the Conversion, in the same dollar amount as their
withdrawable deposit accounts in the Association immediately prior to the
Conversion, plus, in the case of Eligible Account Holders and Supplemental
Eligible Account Holders, the interests in the Liquidation Account of the Stock
Association, as described above.
<PAGE> 11
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 11
(5) The basis of the withdrawable deposit accounts in the
Stock Association held by the deposit account holders of the Stock Association
immediately after the Conversion will be the same as the basis of their deposit
accounts in the Association immediately prior to the Conversion. The basis of
the interests in the Liquidation Account received by the Eligible Account
Holders and Supplemental Eligible Account Holders will be zero. The basis of the
nontransferable subscription rights received by members will be zero (assuming
that at distribution such rights have no ascertainable fair market value).
(6) No gain or loss will be recognized to Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible Members upon
the distribution to them of nontransferable subscription rights to purchase
Common Shares (assuming that such rights have no readily ascertainable fair
market value), and no taxable income will be realized by such Eligible Account
Holders, Supplemental Eligible Account Holders and Other Eligible Members as a
result of their exercise of such nontransferable subscription rights.
(7) The basis of the Common Shares purchased by Eligible
Account Holders, Supplemental Eligible Account Holders and Other Eligible
Members pursuant to the exercise of subscription rights will be the purchase
price thereof (assuming the subscription rights have no ascertainable fair
market value and that the purchase price is no less than the fair market value
of the shares on the date of such exercise), and the holding period of such
Common Shares will commence on the date of such exercise. The basis of the
Common Shares purchased in the Community Offering will be the purchase price
thereof and the holding period of such Common Shares will commence on the day
after the date of the purchase.
(8) For purposes of Section 381 of the Code, the Association
will be treated as if there had been no reorganization. The taxable year of the
Association will not end on the effective date of the Conversion, and
immediately after the Conversion, the Stock Association will succeed to and take
into account the tax attributes of the Association immediately prior to the
Conversion, including the Association's earnings and profits or deficit in
earnings and profits.
(9) The bad debt reserves of the Association immediately
prior to the Conversion will not be required to be restored to the gross income
of the Association or the Stock Association as a result of the Conversion, and
immediately after the Conversion, such bad debt reserves will have the same
character in the hands of the Stock Association that they would have if there
had been no Conversion. The Stock Association will succeed to and take into
account the dollar amounts of those accounts of the Association which represent
bad debt reserves in respect of which the Association has taken a bad debt
deduction for taxable years ending on or before the Conversion.
(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated earnings
and profits of the Association available for the subsequent distribution of
dividends within the meaning of Section
<PAGE> 12
Boards of Directors
Ohio State Financial Services, Inc.
Bridgeport Savings and Loan Association
Page 12
316 of the Code. The creation of the Liquidation Account on the records of the
Stock Association will have no effect on its taxable income, deductions for
additions to reserves for bad debts under Section 593 of the Code or
distributions to shareholders under Section 593(e).
For Ohio tax purposes, we are of the opinion that:
(1) The Association is a "financial institution" for State of
Ohio tax purposes, and the Conversion will not change such status.
(2) The Association is subject to the Ohio corporate
franchise tax on "financial institutions," which is currently imposed annually
at a rate of 1.5% of the Association's book net worth determined in accordance
with generally accepted accounting principles ("GAAP"), and the Conversion will
not change such status.
(3) As a "financial institution," the Association is not
subject to any tax based upon net income or net profit imposed by the State of
Ohio, and the Conversion will not change such status.
(4) The Conversion will not be a taxable transaction to the
Association or the Stock Association, for purposes of the Ohio corporate
franchise tax; however, as a consequence of the Conversion, the annual Ohio
corporate franchise tax liability of the Stock Association will increase if the
taxable net worth of the Stock Association (i.e., book net worth computed in
accordance with GAAP at the close of the Stock Association's taxable year for
federal income tax purposes) increases thereby.
(5) The Conversion will not be a taxable transaction to any
deposit account holder of the Association or the Stock Association for purposes
of the Ohio corporate franchise tax and the Ohio personal income tax.
Unlike private rulings, an opinion of counsel is not binding on the
IRS, and the IRS could disagree with the conclusions reached in the opinion. In
the event of such disagreement, there can be no assurance that the IRS would
not prevail in a judicial proceeding, although counsel believes that the
positions expressed in its opinion should prevail if the matters are litigated.
Very truly yours,
Vorys, Sater, Seymour and Pease
<PAGE> 1
Exhibit 10.1
OHIO STATE FINANCIAL SERVICES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Ohio State Financial Services, Inc.
1998 Stock Option and Incentive Plan (this "Plan") is to promote and advance
the interests of Ohio State Financial Services, Inc. (the "Company") and its
shareholders by enabling the Company to attract, retain and reward directors,
managerial and other key employees of the Company and any Subsidiary
(hereinafter defined), and to strengthen the mutuality of interests between
such directors and employees and the Company's shareholders by providing such
persons with a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with the rules, regulations and interpretations
promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in substitution, in exchange
or in lieu thereof.
(e) "Company" means Ohio State Financial Services, Inc., an Ohio
corporation, or any successor corporation.
(f) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national
securities exchange at the time of grant of the Stock Option
(hereinafter defined), then the Fair Market Value shall be the
average of the highest and the lowest selling price on such
exchange on the date such Stock Option is granted or, if there
were no sales on such date, then on the next prior business day on
which there was a sale.
<PAGE> 2
(ii) If the Common Shares are quoted on The Nasdaq
SmallCap Market at the time of the grant of the Stock Option, then
the Fair Market Value shall be the mean between the closing high
bid and low asked quotation with respect to a Common Share on such
date on The Nasdaq SmallCap Market.
(iii) If the Common Shares are not traded on a
national securities exchange or quoted on The Nasdaq SmallCap
Market, then the Fair Market Value shall be as determined by the
Committee.
(i) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is intended to be and
is specifically designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an Incentive
Stock Option.
(k) "OTS" means the Office of Thrift Supervision, Department of
the Treasury.
(l) "Participant" means an employee or director of the Company or
a Subsidiary who is granted a Stock Option under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option under
this Plan, the term "Participant" shall include only employees of the Company
or a Subsidiary.
(m) "Plan" means the Ohio State Financial Services, Inc. 1998
Stock Option and Incentive Plan, as set forth herein and as it may be hereafter
amended from time to time.
(n) "Stock Option" means an award to purchase Common Shares
granted pursuant to the provisions of Section 6 of this Plan.
(o) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the total voting power
of all classes of its stock having voting power and includes, without
limitation, Bridgeport Savings and Loan Association.
(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations or similar
offenses), a material violation of a final cease-and-desist order or any other
action of a director or employee which results in a substantial financial loss
to the Company or a Subsidiary.
-2-
<PAGE> 3
3. ADMINISTRATION.
(a) This Plan shall be administered by the Committee to be
comprised of not less than three of the members of the Board who are
not employees of the Company or a Subsidiary. The members of the
Committee shall be appointed from time to time by the Board. Members
of the Committee shall serve at the pleasure of the Board and the
Board may from time to time remove members from, or add members to,
the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. An action
approved in writing by a majority of the members of the Committee then
serving shall be fully as effective as if the action had been taken by
unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and interpret
this Plan and to make all other determinations necessary or advisable
for the administration of this Plan. The Committee may designate
persons other than members of the Committee to carry out its
responsibilities under such conditions and limitations as it may
prescribe. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration, or
application of this Plan shall be final, conclusive and binding upon
all persons participating in this Plan and any person validly claiming
under or through persons participating in this Plan. The Company shall
effect the granting of Stock Options under this Plan in accordance
with the determinations made by the Committee, by execution of
instruments in writing in such form as approved by the Committee.
4. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.
(a) Term. This Plan shall terminate on the date which is ten
(10) years from the date on which this Plan is adopted by the Board,
except with respect to Stock Options then outstanding. Notwithstanding
the foregoing, no Incentive Stock Option may be granted under this
Plan after the date which is ten (10) years from the date on which
this Plan is adopted by the Board or the date on which this Plan is
approved by the shareholders of the Company, whichever is earlier.
(b) Common Shares Subject to Plan. The maximum number of
Common Shares in respect of which Stock Options may be granted under
this Plan, subject to adjustment as provided in Section 9 of this
Plan, shall be ten percent of the total Common Shares sold in
connection with the conversion of Bridgeport Savings and Loan
Association from mutual to stock form.
For the purpose of computing the total number of Common Shares
available for Stock Options under this Plan, there shall be counted against the
foregoing limitations the number of Common Shares subject to issuance upon the
exercise or settlement of Stock Options as of the dates on which such Stock
Options are granted. If any Stock Options are forfeited, terminated or
exchanged for other Stock Options, or expire unexercised, the Common Shares
which were
-3-
<PAGE> 4
theretofore subject to such Stock Options shall again be available for Stock
Options under this Plan to the extent of such forfeiture, termination or
expiration of such Stock Options.
Common Shares which may be issued under this Plan may be either
authorized and unissued shares or issued shares which have been reacquired by
the Company. No fractional shares shall be issued under this Plan.
5. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under
this Plan shall consist of directors and managerial and other key employees of
the Company or a Subsidiary who hold positions with significant
responsibilities or whose performance or potential contribution, in the
judgment of the Committee, will benefit the future success of the Company or a
Subsidiary. In selecting the directors and employees to whom Stock Options will
be awarded and the number of shares subject to such Stock Options, the
Committee shall consider the position, duties and responsibilities of the
eligible directors and employees, the value of their services to the Company
and the Subsidiaries and any other factors the Committee may deem relevant.
6. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions as the Committee
shall deem desirable:
(a) Grant. Stock Options may be granted under this Plan on
terms and conditions not inconsistent with the provisions of this Plan
and in such form as the Committee may from time to time approve and
shall contain such additional terms and conditions, not inconsistent
with the express provisions of this Plan, as the Committee shall deem
desirable; provided, however, that no more than 25% of the shares
subject to Stock Options may be awarded to any individual who is an
employee of the Company or a Subsidiary, no more than 5% of such
shares may be awarded to any director who is not an employee of the
Company or a Subsidiary and no more than 30% of such shares may be
awarded to non-employee directors of the Company or a Subsidiary in
the aggregate.
(b) Stock Option Price. The option exercise price per Common
Share purchasable under a Stock Option shall be determined by the
Committee at the time of grant; provided, however, that in no event
shall the exercise price of a Stock Option be less than 100% of the
Fair Market Value of the Common Shares on the date of the grant of
such Stock Option. Notwithstanding the foregoing, in the case of a
Participant who owns Common Shares representing more than 10% of the
outstanding Common Shares at the time an Incentive Stock Option is
granted, the option exercise price shall in no event be less than 110%
of the Fair Market Value of the Common Shares at the time an Incentive
Stock Option is granted to such Participant.
(c) Stock Option Terms. Subject to the right of the Company
to provide for earlier termination in the event of any merger,
acquisition or consolidation involving the Company, the term of each
Stock Option shall be fixed by the Committee; except that the term of
an Incentive Stock Option will not exceed ten years after the date the
Incentive
<PAGE> 5
Stock Option is granted; provided, however, that in the case of a
Participant who owns a number of Common Shares representing more than
10% of the Common Shares outstanding at the time an Incentive Stock
Option is granted, the term of the Incentive Stock Option granted to
such Participant shall not exceed five years.
(d) Exercisability. Except as set forth in Section 6(f) and
Section 7 of this Plan, Stock Options awarded under this Plan shall
become exercisable at the rate of one-fifth per year commencing on the
date that is one year after the date of the grant of the Stock Option
and shall be subject to such other terms and conditions as shall be
determined by the Committee at the date of grant.
(e) Method of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in cash
or, if acceptable to the Committee in its sole discretion, in Common
Shares already owned by the Participant, or by surrendering
outstanding Stock Options. The Committee may also permit Participants,
either on a selective or aggregate basis, to simultaneously exercise
Stock Options and sell Common Shares thereby acquired, pursuant to a
brokerage or similar arrangement, approved in advance by the
Committee, and use the proceeds from such sale as payment of the
purchase price of such shares.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the number of shares with respect to which
Incentive Stock Options are exercisable under all plans of the Company
or a Subsidiary for the first time by a Participant during any
calendar year exceeds $100,000, or such other limit as may be required
by the Code, such Stock Options shall be Non-Qualified Stock Options
to the extent of such excess.
7. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) Except in the event of the death or disability of a
Participant, upon the resignation, removal or retirement from the
board of directors of any Participant who is a director of the Company
or a Subsidiary or upon the termination of Employment of a Participant
who is not a director of the Company or a Subsidiary, any Stock Option
which has not yet become exercisable shall thereupon terminate and be
of no further force or effect and, subject to extension by the
Committee, any Stock Option which has become exercisable shall
terminate if it is not exercised within 12 months of such resignation,
removal or retirement.
(b) Unless the Committee shall specifically state otherwise
at the time a Stock Option is granted, all Stock Options granted under
this Plan shall become exercisable in full on the date of termination
of a Participant's employment or directorship with the Company or a
Subsidiary because of his death or disability, and, subject to
extension by
-5-
<PAGE> 6
the Committee, all Stock Options shall terminate if not exercised
within 12 months of the Participant's death or disability.
(c) In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Stock Option which has not
been exercised shall terminate as of the date of such termination for
cause.
8. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this
Plan and no rights or interests therein shall be assignable or transferable by
a Participant except by will or pursuant to the laws of descent and
distribution. During the lifetime of a Participant, Stock Options are
exercisable only by, and payments in settlement of Stock Options will be
payable only to, the Participant or his or her legal representative.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power
of the Board or the shareholders of the Company to make or authorize
the following: any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business; any
merger, acquisition or consolidation of the Company; any issuance of
bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Company's capital stock or the rights thereof; the
dissolution or liquidation of the Company or any sale or transfer of
all or any part of its assets or business; or any other corporate act
or proceeding, including any merger or acquisition which would result
in the exchange of cash, stock of another company or options to
purchase the stock of another company for any Stock Option outstanding
at the time of such corporate transaction or which would involve the
termination of all Stock Options outstanding at the time of such
corporate transaction.
(b) In the event of any change in capitalization affecting
the Common Shares of the Company, such as a stock dividend, stock
split, recapitalization, merger, consolidation, spin-off, split-up,
combination or exchange of shares or other form of reorganization, or
any other change affecting the Common Shares, such proportionate
adjustments, if any, as the Board in its discretion may deem
appropriate to reflect such change shall be made with respect to the
aggregate number of Common Shares for which Stock Options in respect
thereof may be granted under this Plan, the maximum number of Common
Shares which may be sold or awarded to any Participant, the number of
Common Shares covered by each outstanding Stock Option, and the
exercise price per share in respect of outstanding Stock Options.
10. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval
of the shareholders, the Board may at any time terminate this Plan or may amend
it from time to time in such respects as the Board may deem advisable, except
that the Board may not, without approval of the shareholders, make any
amendment which would (a) increase the aggregate number of Common Shares which
may be issued under this Plan (except for adjustments pursuant to Section 9 of
this Plan), (b) materially modify the requirements as to eligibility for
participation in
-6-
<PAGE> 7
this Plan, or (c) materially increase the benefits accruing to Participants
under this Plan. The above notwithstanding, the Board may amend this Plan to
take into account changes in applicable securities, federal income tax and
other applicable laws.
11. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests
of the Company; provided, however, that no such modification, extension or
renewal shall reduce the exercise price or confer on the holder of such Stock
Option any right or benefit which could not be conferred on him by the grant of
a new Stock Option at such time and shall not materially decrease the
Participant's benefits under the Stock Option without the consent of the holder
of the Stock Option, except as otherwise permitted under this Plan.
12. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to
deduct from any settlement made under this Plan, including the
delivery or vesting of Common Shares, any federal, state or local
taxes of any kind required by law to be withheld with respect to such
payments or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of
such taxes. If Common Shares are used to satisfy tax withholding, such
shares shall be valued based on the Fair Market Value when the tax
withholding is required to be made.
(b) No Right to Employment. Neither the adoption of this Plan
nor the granting of any Stock Option shall confer upon any employee of
the Company or a Subsidiary any right to continued Employment with the
Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or a Subsidiary to terminate the
Employment of any of its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option
under this Plan payable in cash is provisional until cash is paid in
settlement thereof. The grant of any Stock Option payable in Common
Shares is provisional until the Participant becomes entitled to the
certificate in settlement thereof. In the event the Employment or the
directorship of a Participant is Terminated for Cause, any Stock
Option which is provisional shall be annulled as of the date of such
termination.
(d) Other Company Benefit and Compensation Programs. Payments
and other benefits received by a Participant under a Stock Option made
pursuant to this Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of the termination
indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits
under any other employee benefit plan or similar arrangement provided
by the Company or a Subsidiary unless expressly so provided by such
other plan or arrangement, or except where the Committee expressly
determines that a Stock Option or portion of a Stock Option should
-7-
<PAGE> 8
be included to accurately reflect competitive compensation practices or to
recognize that a Stock Option has been made in lieu of a portion of competitive
annual cash compensation. Stock Options under this Plan may be made in
combination with or in tandem with, or as alternatives to, grants, stock
options or payments under any other plans of the Company or a Subsidiary. This
Plan notwithstanding, the Company or any Subsidiary may adopt such other
compensation programs and additional compensation arrangements as it deems
necessary to attract, retain and reward directors and employees for their
service with the Company and its Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be
issued under this Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for Common Shares
delivered under this Plan may be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Shares
are then listed, and any applicable federal or state securities law.
The Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) Stock Option Agreement. Each Participant receiving a
Stock Option under this Plan shall enter into an agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the Stock Option and such related matters as the
Committee shall, in its sole discretion, determine.
(g) Cost of Plan. The costs and expenses of administering
this Plan shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent that federal law shall be deemed
applicable.
(i) Effective Date. This Plan shall be effective upon the
later of adoption by the Board and approval by the Company's
shareholders. This Plan shall be submitted to the shareholders of the
Company for approval at an annual or special meeting of shareholders
to be held no sooner than six months after the effective date of the
Conversion.
-8-
<PAGE> 1
Exhibit 10.2
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter shall have the meanings set forth below. Wherever
appropriate, the masculine pronoun shall include the feminine pronoun and the
singular shall include the plural:
1.01 "Agreement" means the Bridgeport Savings and Loan Association
Recognition and Retention Plan and Trust Agreement.
1.02 "Association" means Bridgeport Savings and Loan Association, a
savings and loan association organized under the laws of the State of Ohio.
1.03 "Award" means a right granted to a Director or an Employee under
this Plan to receive Plan Shares.
1.04 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under this Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time
to time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's estate.
1.05 "Board" means the Board of Directors of the Association.
1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.
1.07 "Common Shares" means common shares of the Corporation.
1.08 "Conversion" means the conversion of the Association from mutual
to stock form.
1.09 "Corporation" means Ohio State Financial Services, Inc., a
savings and loan holding company incorporated under the laws of the State of
Ohio for the purpose of holding all of the common shares of the Association
issued in connection with the Conversion.
1.10 "Director" means any person who is a member of the Board of
Directors of the Corporation, the Association or a Subsidiary.
1.11 "Employee" means any person who is employed by the Corporation,
the Association or a Subsidiary.
<PAGE> 2
1.12 "Person" means an individual, corporation, partnership, trust,
bank, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
1.13 "Plan" means the Recognition and Retention Plan established by
this Agreement.
1.14 "Plan Shares" means the Common Shares held pursuant to the Trust
or which may be purchased by the Trustee pursuant to Section 5.02 of this
Agreement.
1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.
1.16 "Recipient" means any Director or Employee who receives an Award
under the Plan.
1.17 "Subsidiary" means a subsidiary of the Association, if any,
which, with the consent of the Board, agrees to participate in the Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee" means the person or persons or entity approved by the
Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan assets
for the purposes set forth herein.
ARTICLE II
ESTABLISHMENT OF THE PLAN AND TRUST
2.01 The Association hereby establishes a Recognition and Retention
Plan and Trust upon the terms and subject to the conditions set forth in this
Agreement.
2.02 The Trustee hereby accepts the Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions of this Agreement.
ARTICLE III
PURPOSE OF THE PLAN
3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Association and the Subsidiaries who are in
key positions of responsibility by providing such Directors and Employees with
an equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Association and any Subsidiary.
2
<PAGE> 3
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three
members of the Board. The Committee shall have all of the powers set forth in
this Plan. The interpretation and construction by the Committee of any
provisions of this Agreement or of any Award granted hereunder shall be final,
conclusive and binding. The Committee shall act by the vote, or the written
consent, of a majority of its members. The Committee shall report actions and
decisions with respect to the Plan to the Board upon request by the Board.
4.02 ROLE OF THE BOARD. The members of the Committee and the Trustee
shall be appointed or approved by and shall serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from or add
members to the Committee and may remove, replace or add one or more Trustees.
The Board, in its absolute discretion, may take any action under or with
respect to the Plan which the Committee is authorized to take and may reverse
or override any action taken or decision made by the Committee under or with
respect to the Plan or take any other action reserved to the Board under this
Agreement; provided, however, that the Board may not revoke any Award already
granted under this Agreement. All decisions, determinations and interpretations
of the Board shall be final, conclusive and binding upon all parties having an
interest in the Plan.
4.03 LIMITATION ON LIABILITY. No member of the Board or the Committee,
nor any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If a
member of the Board or of the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of anything done or not done by such member in such capacity under or
with respect to this Plan, the Association shall indemnify such member against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such member in connection with
such action, suit or proceeding if such member acted in good faith and in a
manner such member reasonably believed to be in or not opposed to the best
interests of the Corporation, the Association and any Subsidiary and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe such member's conduct was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the
Association to the Trust. Such amounts shall be paid to the Trustee at the time
of contribution. No contributions to the Trust by Directors or Employees shall
be permitted.
3
<PAGE> 4
5.02 INVESTMENT OF TRUST ASSETS. Except as otherwise permitted by
Section 8.02 of this Agreement, the Trustee shall initially invest all of the
Trust's assets, after providing for any required withholding as needed for tax
purposes, exclusively in Common Shares; provided, however, that the Trust shall
not purchase a number of Common Shares equal to more than four percent (4%) of
the number of Common Shares issued in connection with the Conversion. After
such investment, the Common Shares shall be held by the Trustee in the Plan
Share Reserve until such Common Shares are subject to one or more Awards. Any
funds held by the Trust shall be invested by the Trustee in such accounts at
the Association or elsewhere or such other instruments or investments as the
Trustee shall determine to be appropriate.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON PLAN SHARE
RESERVES. Upon the allocation of Awards under Section 6.02 of this Agreement,
or the decision of the Committee to return Plan Shares to the Corporation, the
Plan Share Reserve shall be reduced by the number of Plan Shares so allocated
or returned. Any Plan Shares subject to an Award which is subject to forfeiture
by the Recipient pursuant to Section 7.01 of this Agreement shall be retained
in the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. Directors and Employees are eligible to receive
Awards within the sole discretion of the Committee.
6.02 ALLOCATIONS. The Committee will determine which of the Directors
and Employees will be granted Awards and the number of Plan Shares covered by
each Award; provided, however, if this Plan is implemented prior to the first
anniversary of the effective date of the Conversion, the following restrictions
shall apply: (a) the aggregate number of Plan Shares covered by Awards to any
one Employee shall not exceed 25% of the total number of Plan Shares, (b) no
more than 5% of the Plan Shares shall be awarded to any Director who is not an
Employee, and (c) no more than 30% of the Plan Shares shall be awarded in the
aggregate to Directors who are not Employees. In the event Plan Shares are
forfeited for any reason or additional Plan Shares are purchased by the
Trustee, the Committee may, from time to time, determine which of the Employees
and Directors will be granted additional Awards to be awarded from forfeited or
additional Plan Shares.
In selecting the Directors and Employees to whom Awards will be
granted and the number of shares covered by such Awards, the Committee shall
consider the position, duties and responsibilities of the eligible Directors
and Employees, the value of their services to the Corporation, the Association
and any Subsidiary and any other factors the Committee may deem relevant.
4
<PAGE> 5
6.03 FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Section 6.02 of this Agreement that an Award
is to be made, the Committee shall notify the Recipient in writing of the grant
of the Award, the number of Plan Shares covered by the Award and the terms upon
which the Plan Shares subject to the Award may be earned. The date on which the
Committee determines that an Award is to be made or a later date designated by
the Committee shall be considered the date of grant of the Awards. The
Committee shall maintain records as to all grants of Awards under the Plan.
6.04 ALLOCATIONS NOT REQUIRED. None of the Directors or Employees,
either individually or as a group, shall have any right or entitlement to
receive an Award under the Plan. The Committee may, with the approval of the
Board, and shall, if so directed by the Board, return all Common Shares and
other assets in the Plan Share Reserve to the Corporation at any time and
thereafter cease issuing Awards.
6.05 SHAREHOLDER APPROVAL. If this Plan is implemented prior to the
first anniversary of the effective date of the Conversion, this Agreement shall
be submitted to the shareholders of the Corporation at an annual or special
meeting to be held no sooner than six months after the effective date of the
Conversion and no Awards shall be granted hereunder until the shareholders of
the Corporation approve this Agreement.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless the Committee shall specifically state
a longer period of time over which Awards shall be earned and non-forfeitable
at the time an Award is granted, if this Plan is implemented prior to the first
anniversary of the effective date of the Conversion, Plan Shares covered by
each Award shall be earned and non-forfeitable by a Recipient over a period of
five years at the rate of one-fifth per year commencing on the date which is
one year after the date of the grant of such Award. As Plan Shares become
earned and non-forfeitable, any cash dividends, returned capital and earnings
thereon shall also be earned and non-forfeitable.
(b) REVOCATION. Unless otherwise permitted by applicable laws
and regulations, any Plan Shares and any cash dividends, returned capital and
earnings thereon that have not been earned and are not non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that (i) a Recipient who is a Director ceases to serve on the Board or
(ii) a Recipient who is not a Director of the Association ceases to be an
Employee of the Association, except as otherwise provided in subsection (c) of
this Section 7.01.
5
<PAGE> 6
(c) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY. All
Plan Shares and cash dividends, returned capital and earnings thereon subject
to an Award held by a Recipient whose service as a Director or Employee of the
Corporation, the Association or any Subsidiary terminates due to (i) death or
(ii) disability (as determined by the Committee) shall be deemed fully earned
and non-forfeitable as of the later of the Recipient's last day of service as a
Director or as an Employee and shall be distributed as soon as practicable
thereafter.
7.02 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. Except as otherwise
provided in this Agreement, Plan Shares shall be distributed to the Recipient
or his or her Beneficiary, as the case may be, as soon as practicable after
they have been earned, together with any cash distributions, returned capital
and earnings thereon with respect to such Plan Shares that have been earned.
(b) FORM OF DISTRIBUTION. All distributions of Plan Shares,
together with any shares representing stock dividends, shall be distributed in
the form of Common Shares. No fractional shares shall be distributed. Payments
representing cash dividends, returned capital and earnings thereon shall be
made in cash.
(c) WITHHOLDING. The Trustee may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes and, if the amount of such cash payment is not sufficient, the
Trustee may require the Recipient or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the Plan Shares.
The Trustee shall pay over to the Association or the Subsidiary which employs
or employed such Recipient or which the Recipient serves or served as a
Director, any such amount withheld from or paid by the Recipient or
Beneficiary.
(d) REGULATORY EXCEPTIONS. Notwithstanding anything to the
contrary in this Agreement, no Plan Shares, upon becoming fully earned and
non-forfeitable, shall be distributed unless and until all of the requirements
of all applicable laws and regulations shall have been met.
7.03 VOTING OF PLAN SHARES. All Common Shares held by the
Trustee in the Plan Share Reserve which have not yet been earned by a Recipient
pursuant to Section 7.01 of this Agreement shall be voted by the Trustee. A
Recipient shall be entitled to direct the voting of Plan Shares which have been
earned pursuant to Section 7.01 of this Agreement but have not yet been
distributed to him.
6
<PAGE> 7
ARTICLE VIII
TRUST
8.01 TRUST. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and the Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
this Agreement.
8.02 MANAGEMENT OF TRUST. The Trustee shall have complete authority
and discretion with respect to the management, control and investment of the
Trust, and the Trustee shall invest all assets of the Trust, except those
attributable to cash dividends or returned capital paid with respect to Plan
Shares not held in the Plan Share Reserve, in Common Shares to the fullest
extent practicable, and except to the extent that the Trustee determines that
the holding of monies in cash or cash equivalents is necessary to meet the
obligations of the Trust. The Trustee shall have the power to do all things and
execute such instruments as may be deemed necessary or proper with respect to
the duties of the Trustee hereunder, including the following powers:
(a) To invest up to 100% of all Trust assets in Common Shares
without regard to any law now or hereafter in force limiting
investments for trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust,
and, in making such investment, the Trustee is authorized to purchase
Common Shares from the Corporation or from any other source. Such
Common Shares so purchased may be outstanding, newly issued or
treasury shares;
(b) To invest any Trust assets not otherwise invested in
accordance with Section 8.02(a) of this Agreement in such deposit
accounts and certificates of deposit (including those issued by the
Association), obligations of the United States government or its
agencies or such other investments as shall be considered the
equivalent of cash;
(c) To sell, exchange or otherwise dispose of any property at
any time held or acquired by the Trust;
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words
indicating that such security is an asset of the Trust (but accurate
records shall be maintained showing that such security is an asset of
the Trust);
(e) To hold cash without interest in such amounts as may be
reasonable, in the opinion of the Trustee, for the proper operation of
the Plan and the Trust;
(f) To employ brokers, agents, custodians, consultants and
accountants;
(g) To hire counsel to render advice with respect to the
rights, duties and obligations of the Trustee hereunder, and such
other legal services or representation as the Trustee may deem
desirable; and
7
<PAGE> 8
(h) To hold funds and securities representing the amounts to
be distributed to a Recipient or his or her Beneficiary as a
consequence of a dispute as to the disposition thereof, whether in a
segregated account or held in common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee shall
not be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of court for the exercise of any power herein
contained, or to give bond.
8.03 RECORDS AND ACCOUNTS. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 EARNINGS. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Recipients or to the general account
of the Trust, depending on the nature and allocation of the assets generating
such earnings, gains and losses. Without limiting the generality of the
foregoing, any earnings on cash dividends or returned capital received with
respect to Plan Shares shall be allocated (a) to accounts for Recipients, if
such shares which are the subject of outstanding Awards, and shall become
earned and distributed as specified in Article VII of this Agreement or (b)
otherwise to the Plan Share Reserve if such Plan Shares are not the subject of
outstanding awards.
8.05 EXPENSES. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Association.
ARTICLE IX
MISCELLANEOUS
9.01 ADJUSTMENTS FOR CAPITAL CHANGES. The aggregate number of Plan
Shares available for issuance pursuant to the Awards and the number of Plan
Shares to which any Award relates shall be proportionately adjusted for any
increase or decrease in the total number of outstanding Common Shares issued
subsequent to the effective date of the Plan if such increase or decrease
resulted from any split, subdivision or consolidation of shares or other
capital adjustment, or other increase or decrease in such shares effected
without receipt or payment of consideration by the Corporation.
9.02 AMENDMENT AND TERMINATION OF PLAN. The Board may, by resolution,
at any time amend or terminate the Plan. The power to amend or terminate the
Plan shall include the power to direct the Trustee to return to the Corporation
or the Association all or any part of the assets of the Trust, including Common
Shares held in the Plan Share Reserve, as well as Common Shares and other
assets subject to Awards which are not yet earned by the Directors or Employees
to whom they are allocated; provided, however, that the termination of the
Trust shall
8
<PAGE> 9
not affect a Recipient's right to earn Awards and to the distribution of Common
Shares relating thereto, including earnings thereon, in accordance with the
terms of this Agreement and the grant by the Committee or the Board.
9.03 NONTRANSFERABLE. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid
to the Recipient who was notified in writing of the Award by the Committee
pursuant to Section 6.03 of this Agreement. No Recipient or Beneficiary shall
have any right in or claim to any assets of the Plan or the Trust, nor shall
the Corporation, the Association or any Subsidiary be subject to any claim for
benefits hereunder.
9.04 DIRECTORSHIP RIGHTS. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Director to continue to serve as a Director of the
Association or any Subsidiary.
9.05 EMPLOYMENT RIGHTS. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Employee to continue in the employ of the Corporation, the
Association or any Subsidiary.
9.06 VOTING AND DIVIDEND RIGHTS. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.
9.07 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Ohio, except to the extent that federal law
shall be deemed applicable.
9.08 EFFECTIVE DATE. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1998.
9.09 TERM OF PLAN. The Plan shall remain in effect until the earlier
of (a) the termination of the Plan by the Board or (b) the distribution of all
assets from the Trust. The termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been earned and paid or by their terms expire or are forfeited.
9.10 TAX STATUS OF TRUST. It is intended that the trust established
hereby be treated as a grantor trust of the Association under the provisions of
Section 671, ET SEQ., of the Internal Revenue Code of 1986, as amended (26
U.S.C.Sect.671 ET SEQ.).
9
<PAGE> 10
IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the ___ day of _________________, 1998.
By: ___________________________ (Trustee)
By: ___________________________ (Trustee)
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed by its duly authorized officer and duly attested, all as of the ___
day of _________________, 1998.
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
By:______________________________________
Jon W. Letzkus
its President
ATTEST:
__________________________________
__________________________________
its_______________________________
10
<PAGE> 1
EXHIBIT 10.3
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
Effective August 1, 1997
<PAGE> 2
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
1 PARTICIPATION ............................................... 1
-------------
1.01 Eligibility Requirements............................... 1
1.02 Service for Eligibility................................ 1
2 CONTRIBUTIONS ............................................... 2
-------------
2.01 Regular Employer Contribution.......................... 2
2.02 Employer Contribution to Reduce
Loan Obligation...................................... 2
2.03 Rollover Contributions/Participant
Contributions........................................ 2
2.04 Limitations on Annual Additions........................ 2
2.05 Dual Plan Limitation................................... 3
2.06 Corrective Adjustments................................. 4
2.07 Contributions Conditioned on
Plan Qualification..................................... 4
3 ALLOCATION OF EMPLOYER CONTRIBUTIONS.......................... 5
------------------------------------
3.01 Allocation of Regular Contributions
and Forfeitures...................................... 5
3.02 Allocation of Employer Shares Purchased
with Proceeds of Plan Loan........................... 5
3.03 Special Restriction on Allocation...................... 5
4 PARTICIPANTS' ACCOUNTS........................................ 6
----------------------
4.01 Establishment of Employer Contributions
Accounts............................................. 6
4.02 Establishment of Suspense Account...................... 6
5 PLAN INVESTMENTS.............................................. 6
----------------
5.01 Primary Investments.................................... 6
5.02 Diversification Requirements........................... 7
<PAGE> 3
SECTION PAGE
- ------- ----
6 VALUATION OF PARTICIPANTS' ACCOUNTS........................... 7
-----------------------------------
6.01 Valuations............................................. 7
6.02 Method of Adjustment................................... 8
7 RETIREMENT BENEFITS........................................... 9
-------------------
7.01 Time of Retirement..................................... 9
7.02 Amount of Retirement Benefits.......................... 9
8 DEATH BENEFITS................................................ 9
--------------
8.01 Amount of Death Benefit................................ 9
8.02 Designation of Beneficiary............................. 9
8.03 Distribution of Death Benefit.......................... 10
9 DISABILITY BENEFITS .......................................... 11
-------------------
9.01 Amount of Disability Benefit........................... 11
9.02 Determination of Total and Permanent
Disability........................................... 11
10 TERMINATION OF EMPLOYMENT ................................... 11
-------------------------
10.01 Amount of Benefits Upon Termination of
Employment........................................... 11
11 VESTING ...................................................... 12
-------
11.01 Determination of Vested Benefits....................... 12
11.02 Service for Vesting.................................... 12
11.03 Full Vesting at Normal Retirement Age,
Death or Disability.................................. 12
11.04 Termination After Eligibility for
Retirement........................................... 13
12 PAYMENT OF BENEFITS........................................... 13
-------------------
12.01 Method of Payment...................................... 13
12.02 Timing of Payments..................................... 13
12.03 Installment Payments................................... 14
12.04 Distributions After Death.............................. 14
<PAGE> 4
SECTION PAGE
- ------- ----
12.05 Cash-Outs/Consent...................................... 15
12.06 Put Option............................................. 16
12.07 Right of First Refusal................................. 17
12.08 Eligible Rollover Distributions........................ 18
13 BREAK IN SERVICE RULES ....................................... 19
----------------------
13.01 Effect of Break in Service on
Eligibility.......................................... 19
13.02 Effect of Break in Service on Vesting.................. 19
13.03 Authorized Leaves of Absence........................... 20
14 TRUST AGREEMENT............................................... 20
---------------
14.01 Description of Trust Agreement......................... 20
15 PLAN ADMINISTRATION........................................... 21
-------------------
15.01 Plan Administrator..................................... 21
15.02 Duties of Plan Administrator........................... 21
16 AMENDMENTS.................................................... 22
----------
16.01 Employer's Right to Amend Plan......................... 22
17 DISTRIBUTIONS ON PLAN TERMINATION............................. 22
---------------------------------
17.01 Full Vesting on Plan Termination....................... 22
17.02 Payment on Plan Termination............................ 23
17.03 Discontinuance of Contributions;
Partial Termination of Plan.......................... 23
18 CREDITORS OF PARTICIPANTS ................................... 23
-------------------------
18.01 Non-Assignability...................................... 23
18.02 Qualified Domestic Relations Orders.................... 23
19 CLAIMS PROCEDURES ............................................ 23
-----------------
19.01 Filing a Claim for Benefits............................ 23
19.02 Denial of Claim........................................ 24
19.03 Remedies Available to Participants..................... 24
<PAGE> 5
SECTION PAGE
- ------- ----
20 VOTING RIGHTS................................................. 25
-------------
20.01 Participant Voting Rights with
Respect to Allocated Shares.......................... 25
20.02 Participant Voting Rights with
Respect to Unallocated Shares.......................... 25
21 TOP HEAVY RULES............................................... 25
---------------
21.01 Definitions............................................ 25
21.02 Top Heavy Status....................................... 27
21.03 Minimum Contributions.................................. 28
21.04 Top-Heavy Vesting...................................... 28
22 EXEMPT LOANS.................................................. 29
------------
22.01 Authority to Borrow.................................... 29
22.02 Requirements for Plan Loans............................ 29
23 MISCELLANEOUS................................................. 30
-------------
23.01 Employment Rights...................................... 30
23.02 Gender................................................. 30
23.03 Notice Requirement..................................... 30
23.04 Merger or Consolidation................................ 31
23.05 Social Security Benefits............................... 31
23.06 Forfeitures............................................ 31
23.07 Named Fiduciaries...................................... 31
23.08 Limitations on Payment................................. 32
23.09 Interpretation of Document............................. 32
23.10 Non-terminable Protections and Rights.................. 32
23.11 Use of Income With Respect to
Employer Shares...................................... 32
24 CERTAIN DEFINITIONS........................................... 33
-------------------
24.01 Account................................................ 33
24.02 Adjustment Factor...................................... 33
24.03 Affiliate.............................................. 33
24.04 Annual Additions....................................... 33
24.05 Beneficiary............................................ 34
24.06 Code................................................... 34
24.07 Compensation........................................... 34
<PAGE> 6
SECTION PAGE
- ------- ----
24.08 Current Participant.................................... 35
24.09 Effective Date......................................... 35
24.10 Employee............................................... 35
24.11 Employer............................................... 35
24.12 Employer Contributions Account......................... 35
24.13 Employer Shares or Shares.............................. 35
24.14 Employment Commencement Date........................... 35
24.15 Entry Date............................................. 36
24.16 ERISA.................................................. 36
24.17 Family Member.......................................... 36
24.18 Forfeiture............................................. 36
24.19 Full Time.............................................. 36
24.20 Hour of Service........................................ 36
24.21 Late Retirement Date................................... 38
24.22 Leased Employee........................................ 38
24.23 Limitation Year........................................ 38
24.24 Normal Retirement Age.................................. 38
24.25 Normal Retirement Date................................. 39
24.26 One-Year Break in Service.............................. 39
24.27 Participant............................................ 39
24.28 Plan................................................... 39
24.29 Plan Administrator..................................... 39
24.30 Plan Year.............................................. 39
24.31 Projected Annual Benefit............................... 39
24.32 Spouse or Surviving Spouse............................. 40
24.33 Trust Agreement........................................ 40
24.34 Trust Fund............................................. 40
24.35 Trustee................................................ 40
24.36 Valuation Date......................................... 40
24.37 Year of Service........................................ 41
<PAGE> 7
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
Ohio State Financial Services, Inc. hereby adopts the following
employee stock ownership plan (hereinafter referred to as the "Plan"),
effective as of the Effective Date. The Plan shall be for the exclusive benefit
of eligible Employees of the Bridgeport Savings and Loan Association and, where
applicable, the designated Beneficiaries of such Employees. It is intended that
this Plan, together with the Trust Agreement, shall comply with the applicable
provisions of the Code and ERISA.
SECTION l
---------
PARTICIPATION
-------------
1.01. Eligibility Requirements
- ---------------------------------
Each Employee who was an Employee on the Effective Date shall become a
Participant in the Plan on such date. Each other Employee of the Employer shall
be eligible to participate in the Plan on the Entry Date coinciding with or
first following the date on which he has completed 12 months of service as a
Full-Time Employee. An Employee shall also be given credit for any 12-month
period as a Full-Time Employee with an Affiliate which is not a participating
employer.
1.02. Service for Eligibility
- --------------------------------
The 12-month period during which the Employee must meet the Full-Time
requirement shall initially be the 12 consecutive months beginning with his
Employment Commencement Date, and thereafter, beginning with the Plan Year that
includes the first anniversary of the Employee's Employment Commencement Date,
shall be the 12-month periods beginning on January 1 of each Plan Year.
<PAGE> 8
SECTION 2
---------
CONTRIBUTIONS
-------------
2.01. Regular Employer Contribution
- --------------------------------------
Subject to its right to terminate or amend this Plan, the Employer may
contribute and pay to the Trustee of the Trust Fund created for the purpose of
carrying out this Plan a contribution in cash or Employer Shares as the Board
of Directors of the Employer may in its discretion determine.
The amount of such contribution by the Employer to be paid to the Plan
in any year shall be such amount as the Board of Directors of the Employer may
in its discretion determine; provided, however, that in any year the amount
contributed shall not exceed the maximum amount deductible from the Employer's
income for such year under Section 404(a)(3) of the Code, or any succeeding
statute of similar import.
2.02. Employer Contribution to Reduce Loan Obligation
- --------------------------------------------------------
In addition to the contributions authorized by Section 2.01, the
Employer may in its discretion contribute amounts sufficient to enable the
Trustee to pay, on or before the due date thereof, each installment of
principal and interest on any Plan loan used to acquire Employer Shares,
provided that the amounts contributed by the Employer pursuant to this Section
2.02, in any year, shall not exceed the maximum amount deductible from the
Employer's income for such year under Section 404(a)(9) of the Code, or any
succeeding statute of similar import.
2.03. Rollover Contributions/Participant Contributions
- ---------------------------------------------------------
Neither rollover contributions nor Participant contributions to the
Plan are permitted.
2.04. Limitations on Annual Additions
- ----------------------------------------
Annual Additions to each Participant's Account shall not exceed the
lesser of (a) $30,000 [or if greater, such increased amount as permitted by the
Secretary of the Treasury]; or (b) 25% of the Participant's "compensation" for
the Limitation Year; provided, however, that for any Plan Year in which the
2
<PAGE> 9
conditions of Code Section 415(c)(6) are satisfied by the Plan, the limitations
contained in this Section 2.04 shall be adjusted to the maximum amount
permitted under such section of the Code.
For purposes of this Section 2.04, the portion of such Employer
contribution which is deemed to be allocated to a Participant's Account shall
be an amount which bears the same ratio to the total contribution made by or on
behalf of the Employer for such Plan Year which is used to repay principal on
one or more Plan loans, or to purchase Employer Shares, as the number of
Employer Shares allocated to such Participant's Account in respect of such Plan
Year bears to the total number of Employer Shares allocated to the Accounts of
all Participants in respect of such Plan Year.
For purposes of this Section 2.04, "compensation" shall mean
compensation as defined in Treasury Regulation Section 1.415-2(d)(1)-(3), or
one of the alternative definitions of compensation set forth in Treasury
Regulation Section 1.415-2(d)(11)(i) or (ii), as selected by the Plan
Administrator.
Effective for Plan Years beginning on and after January 1, 1998,
elective deferrals, as such term is defined by Section 402(g)(3) of the Code,
and amounts contributed or deferred at the election of the Employee by the
Employer which is not includable in the gross income of the Employee by reason
of Section 125 or Section 457 of the Code, shall specifically be included in
the definition of "compensation" selected by the Plan Administrator pursuant to
this section.
2.05. Dual Plan Limitation
- -----------------------------
This Section 2.05 shall apply prior to the first Plan Year coinciding
with or immediately following January 1, 1999.
If the Participant is, or was, covered under a defined benefit plan
and a defined contribution plan maintained by the Employer, the sum of the
Participant's defined benefit plan fraction and defined contribution plan
fraction may not exceed 1.0 in any Limitation Year.
The defined benefit plan fraction is a fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under all
defined benefit plans (whether or not
3
<PAGE> 10
terminated) maintained by the Employer and the denominator of which is the
lesser of (a) 1.25 times the dollar limitation of Section 415(b)(1)(A) of the
Code in effect for the Limitation Year; or (b) 1.4 times the Participant's
average compensation for the three consecutive years that produced the highest
average.
The defined contribution plan fraction is a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's Accounts under
all defined contribution plans maintained by the Employer (whether or not
terminated) for the current and all prior Limitation Years, and the denominator
of which is the sum of the lesser of the following amounts determined for such
year and for each prior Year of Service with the Employer: (a) 1.25 times the
dollar limitation in effect under Section 415(c)(1)(A) of the Code for such
year; or (b) 1.4 times the amount which may be taken into account under Section
415(c)(1)(B) of the Code.
For any years in which the Plan is "top heavy," "1.0" shall be
substituted for "1.25" in the preceding two paragraphs.
If, in any Limitation Year, the sum of the defined benefit plan
fraction and the defined contribution plan fraction exceeds 1.0, the rate of
benefit accruals under this Plan will be reduced so that the sum of the
fractions equals 1.0.
2.06. Corrective Adjustments
- -------------------------------
If, due to a reasonable error in estimating a Participant's annual
compensation or due to the allocation of Forfeitures an excess Annual Addition
exists, such excess will be used to reduce Employer contributions for such
Participant in the next, and succeeding, Limitation Years. If the Participant
was not covered by the Plan at the end of the Limitation Year, such excess will
be applied to reduce Employer contributions for all remaining Participants in
the next, and succeeding, Limitation Years.
2.07. Contributions Conditioned on Plan Qualification
- --------------------------------------------------------
All Employer contributions under this Plan will be made with the
understanding that the Plan will qualify under the provisions of Section 401(a)
of the Code. In the event the Internal Revenue Service initially determines
that this Plan
4
<PAGE> 11
fails to meet the requirements for a qualified plan and the Employer is unable
to amend the Plan so as to receive a favorable determination, then all Employer
contributions under the Plan, less any expenses and adjusted by any gains or
losses, will be refunded to the Employer.
SECTION 3
---------
ALLOCATION OF EMPLOYER CONTRIBUTIONS
------------------------------------
3.01. Allocation of Regular Contributions and Forfeitures
- ------------------------------------------------------------
Each Plan Year, the Employer's regular contribution made pursuant to
Section 2.01, and any Forfeitures available for such year, shall be allocated
to the Accounts of Current Participants. In that regard, the amount allocated
to the Account of a particular Current Participant shall be in the same
proportion to the total amounts available for allocation as the Compensation of
such Current Participant for the Plan Year bears to the Compensation of all
Current Participants for such Plan Year.
3.02. Allocation of Employer Shares Purchased with Proceeds of Plan Loan
- ---------------------------------------------------------------------------
Any Employer Shares purchased with the proceeds of Plan loans shall be
held in a suspense account and allocated to Participants' Employer
Contributions Accounts as such loans are reduced and such Shares are released
pursuant to the terms of the loans and Section 22.02(e) of the Plan. Each year
the number of Employer Shares released under all Plan loans shall be allocated
to each Participant's Employer Contributions Account in the same manner as the
Employer's regular contribution is allocated under Section 3.01.
3.03. Special Restriction on Allocation
- ------------------------------------------
Notwithstanding any provision contained herein, no portion of the
assets of the Plan attributable to Employer Shares acquired by the Plan in a
sale to which either Sections 1042 or 2057 of the Code applies may be
allocated, either directly or indirectly, (a) to the Employer Contributions
Account of a Participant who owns, after application of Section 318(a) of the
Code, more than 25% of either (i) any class of outstanding stock
5
<PAGE> 12
of the Employer; or (ii) the total value of any outstanding stock of the
Employer; or (b) during the non-allocation period [as defined in Code Section
409(n)] to the Employer Contributions Account of a Participant--or any person
related to such Participant within the meaning of Code Section 267(b)--who
makes an election under Code Section 1042(a) with respect to Employer Shares.
SECTION 4
---------
PARTICIPANTS' ACCOUNTS
----------------------
4.01. Establishment of Employer Contributions Accounts
- ---------------------------------------------------------
The Plan Administrator shall establish and maintain an Employer
Contributions Account for each Participant to record:
(a) his share of the Employer contributions and Forfeitures allocated
under Section 3; and
(b) his share of the net income, or net losses, resulting from the
investment thereof.
4.02. Establishment of Suspense Account
- ------------------------------------------
The Plan Administrator shall establish and maintain a suspense account
to record the number of Employer Shares encumbered under all outstanding Plan
loans. As described in Section 3.02, Employer Shares shall be transferred from
the suspense account and allocated to the Participants' Employer Contributions
Accounts as such Shares are released from encumbrance under the terms of such
Plan loans.
SECTION 5
---------
PLAN INVESTMENTS
----------------
5.01. Primary Investments
- ----------------------------
As an employee stock ownership plan, this Plan shall invest primarily
in Employer Shares. Any Plan assets not invested in Employer Shares shall be
invested in other investment vehicles by the Trustee, in its discretion,
pursuant to the provisions of the Trust Agreement.
6
<PAGE> 13
5.02. Diversification Requirements
- -------------------------------------
(a) Any Participant who has completed at least ten years of
participation in the Plan and who has attained age 55 (the "diversification
requirements"), may elect within the first 90 days of each of the six Plan
Years immediately following the Plan Year in which he first satisfies the
diversification requirements, to direct the Plan as to the investment of up to
25% of the total balance of his Account attributable to Employer Shares (to the
extent such 25% portion exceeds the amount to which a prior election under this
paragraph applies). In the case of the Plan Year in which the Participant can
make his last such election, the preceding sentence shall be applied by
substituting "50%" for "25%." The Participant's direction shall be provided to
the Plan Administrator in writing.
(b) The Plan shall, in each instance, distribute [notwithstanding
Section 409(d) of the Code] the portion of the Participant's Account that is
covered by the election within the first 180 days of the Plan Year in which the
election is made. This paragraph (b) shall apply notwithstanding any other
provision of the Plan other than such provisions as require the consent of the
Participant to a distribution with a present value in excess of $3,500. If the
Participant does not consent, such amount shall be retained in the Plan.
(c) In lieu of making the distribution described in paragraph (b)
above, the Plan may satisfy the requirements of paragraph (a) by offering at
least three investment options (other than Employer Shares) to each Participant
making the election described in paragraph (a); and if the Participant so
elects by investing, within the 180-day period specified in paragraph (b), the
amount in question in the option(s) selected by the Participant.
SECTION 6
---------
VALUATION OF PARTICIPANTS' ACCOUNTS
-----------------------------------
6.01. Valuations
- -------------------
As of each Valuation Date, or more frequently at the election of the
Plan Administrator, the Plan Administrator shall
7
<PAGE> 14
obtain an evaluation of the assets of the Trust Fund from the Trustee on the
basis of the market value of the assets of the Trust Fund. On the basis of such
valuation, the Participants' Accounts shall be adjusted as of such Valuation
Date to reflect the effect of income received or accrued, realized and
unrealized profits and losses, expenses, Forfeitures, payments to Participants
and all other transactions in the period since the last preceding Valuation
Date.
For purposes of valuation of Employer Shares under this section and
with respect to all other activities carried on by the Plan which require the
valuation of Employer Shares, at all times during which the Employer Shares are
not readily tradable on an established securities market, such valuations shall
be made by an independent appraiser, within the meaning of Section
401(a)(28)(C) of the Code.
6.02. Method of Adjustment
- -----------------------------
The amount to the credit of each Participant's Account as of each
Valuation Date shall be adjusted as of each succeeding Valuation Date by the
following credits and charges in the order specified:
(a) In the case of each Participant to, for or on behalf of whom
disbursements from the Plan have been made, there shall be debited the total
amount of any disbursements made to him or for his account from his Account
during the period since the last Valuation Date.
(b) In the case of each Participant (including former Employees for
whom Accounts are being maintained), there shall be credited or debited to his
Account that portion of the net increase (including an amount equal to the
non-distributed dividends on allocated Employer Shares) or net decrease of the
value of the assets of the Trust Fund since the last Valuation Date which the
balance of his Account (after completion of the adjustment called for in
Section 6.02(a) above) bears to the total balance of all Accounts after
completion of the adjustments called for in Section 6.02(a) above.
(c) In the case of each Current Participant, there shall be credited
to his Account the Employer's contributions, Forfeitures and Employer Shares
released under Plan loans that
8
<PAGE> 15
are allocable to him under Section 3 of this Plan. In allocating Forfeitures,
Employer Shares shall be allocated only after other assets in the terminated
Participants' Accounts have been allocated.
SECTION 7
---------
RETIREMENT BENEFITS
-------------------
7.01. Time of Retirement
- ---------------------------
A Participant may retire from the employ of the Employer on his Normal
Retirement Date or his Late Retirement Date.
7.02. Amount of Retirement Benefits
- --------------------------------------
The amount which a Participant shall be entitled to receive upon
reaching his Normal Retirement Date or his Late Retirement Date shall be an
amount equal to the value of the Employer Shares credited to his Account and
the net value of the other assets of such Account as of the first Valuation
Date following his Normal Retirement Date or his Late Retirement Date.
SECTION 8
---------
DEATH BENEFITS
--------------
8.01. Amount of Death Benefit
- --------------------------------
The death benefit under this Plan shall be an amount equal to the
value of the Employer Shares and the net value of the other assets credited to
the deceased Participant's Account as of the first Valuation Date following the
date of his death.
8.02. Designation of Beneficiary
- -----------------------------------
Subject to the provisions of Section 8.03, each Participant shall
designate, by a written instrument filed with the Plan Administrator, one or
more Beneficiaries who, upon the death of the Participant, shall be entitled to
receive the death benefit described in Section 8.01. If more than one
Beneficiary is named, the Participant may specify the sequence and/or
proportion in which payments must be made to each Beneficiary. In the
9
<PAGE> 16
absence of such specification, payments shall be made in equal shares to all
named Beneficiaries then living at the time of the Participant's death. To the
extent otherwise consistent with this Plan, a Participant may change his
Beneficiary from time to time by written notice delivered to the Plan
Administrator in the manner prescribed by the Plan Administrator. The Plan
Administrator may, in its discretion, limit the number of Beneficiaries that
may be designated by a Participant. If no Beneficiary has been designated or if
no designated Beneficiary is living at the time of the Participant's death,
payment of such death benefit, if any, to the extent permitted by law, shall be
made to the executors or administrators of the Participant's estate. Any
minor's share shall be paid to such adult or adults as have, in the opinion of
the Plan Administrator, assumed custody and support of such minor. Proof of
death satisfactory to the Plan Administrator must be furnished prior to the
payment of any death benefit under the Plan.
Once benefits begin to be paid to a Beneficiary pursuant to this
section, such Beneficiary shall name an individual or individuals to receive
the remainder of such benefit, if any, upon the death of the Beneficiary. In
the absence of such a designation by the Beneficiary, such remaining benefit,
if any, shall be paid to the estate of the Beneficiary.
8.03. Distribution of Death Benefit
- --------------------------------------
If a Participant dies without a Surviving Spouse and prior to the
commencement of his retirement benefits, the death benefit described in Section
8.01 shall be distributed to the person or persons specified in Section 8.02,
in accordance with the provisions of Section 12 hereof.
If a Participant dies with a Surviving Spouse and prior to the
commencement of his retirement benefits, then, notwithstanding the provisions
of Section 8.02 hereof, the death benefit described in
Section 8.01 shall be paid to his Surviving Spouse in accordance with the
provisions of Section 12 hereof, unless such Surviving Spouse, in accordance
with the provisions of this paragraph, has consented to an alternate
Beneficiary, in which case, such death benefit shall be distributed to such
alternate Beneficiary in accordance with the provisions of Section 12. For
purposes of the preceding sentence, the consent of the Spouse must (a) be in
writing; (b) designate a specific Beneficiary,
10
<PAGE> 17
including any class of beneficiaries or contingent beneficiaries, which may not
be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without further spousal consent); (c)
acknowledge the effect of such consent; and (d) be witnessed by a Plan
representative or notary public.
SECTION 9
---------
DISABILITY BENEFITS
-------------------
9.01. Amount of Disability Benefit
- -------------------------------------
If a Participant becomes "totally and permanently disabled" as defined
in Section 9.02 below, such Participant shall be entitled to receive as a
disability benefit an amount equal to the value of the Employer Shares credited
to his Account and the net value of other assets of such Account as of the
first Valuation Date following the date that the Plan Administrator determines
him to be "totally and permanently disabled."
9.02. Determination of Total and Permanent Disability
- --------------------------------------------------------
A Participant shall be considered to be "totally and permanently
disabled" if it is established by a licensed physician selected by the Plan
Administrator that (a) the Participant has suffered a disability which is
expected to result in his death or last for not less than 12 months; and (b)
the Participant is not able to perform his job or any job for which he is
reasonably suited as a result of his education, training and experience. The
determination by the Plan Administrator with respect to whether a Participant
is totally and permanently disabled shall be made in a nondiscriminatory
manner.
SECTION 10
----------
TERMINATION OF EMPLOYMENT
-------------------------
10.01. Amount of Benefits Upon Termination of Employment
- ----------------------------------------------------------
If a Participant leaves the employ of the Employer for any reason
other than retirement, death or disability in accordance with Sections 7, 8 or
9 hereof, he shall be entitled to receive an amount equal to the nonforfeitable
percentage of the value of the Employer Shares and the net value of the other
11
<PAGE> 18
assets credited to his Account as of the first Valuation Date following the
date of his termination of employment. Such nonforfeitable percentage shall be
determined in accordance with Section 11.01 hereof.
SECTION 11
----------
VESTING
-------
11.01. Determination of Vested Benefits
- -----------------------------------------
Employer contributions allocated to the Participant's Employer
Contributions Account shall become vested in accordance with the table shown
below:
NONFORFEITABLE
YEARS OF SERVICE PERCENTAGE
---------------- ----------
Less than 5 0
5 or more 100
11.02. Service for Vesting
- ----------------------------
Years of Service for vesting purposes shall include all Years of
Service with the Employer. An Employee shall receive credit for two Years of
Service for vesting purposes for each Year of Service completed prior to the
Effective Date of this Plan.
11.03. Full Vesting at Normal Retirement Age, Death or Disability
- -------------------------------------------------------------------
Notwithstanding any provision in this Plan to the contrary, the value
of a Participant's Accounts shall be fully vested and nonforfeitable upon the
Participant's (a) attaining his Normal Retirement Age (providing the
Participant is actively employed with the Employer on such date); (b) becoming
totally and permanently disabled; or (c) death.
12
<PAGE> 19
11.04. Termination After Eligibility for Retirement
- -----------------------------------------------------
The termination of a Participant's employment after he has attained
his Normal Retirement Age shall be considered a retirement for purposes of this
Plan.
SECTION 12
----------
PAYMENT OF BENEFITS
-------------------
12.01. Method of Payment
- --------------------------
At the time a Participant or Beneficiary becomes entitled to receive
any amount because of the Participant's retirement, death, disability or
termination of employment, the Trustee, acting in accordance with the written
instructions of the Plan Administrator, shall make payment from the Trust Fund
to such individual (or his Beneficiary) in a lump sum. All such payments shall
be made by the Trustee, at the option of the Participant (or his Beneficiary) in
Employer Shares, in cash or both.
12.02. Timing of Payments
- ---------------------------
Unless the Participant or Beneficiary elects otherwise, the payment of
retirement, death, disability and termination benefits shall begin no later than
60 days after the close of the Plan Year in which the Participant retires, dies,
becomes disabled or otherwise terminates service with the Employer.
Notwithstanding any provisions hereof to the contrary, benefit payments
under this Plan which are paid to a "5% owner," as such term is defined by Code
Section 416, shall commence by the April 1 following the later of: (a) the
calendar year in which the Participant attains age 70 1/2; and (b) the calendar
year in which the Participant retires. Benefit payments under this Plan which
are paid to a "5% owner," as such term is defined by Code Section 416, shall
commence by the April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2. In such case the "5% owner" may elect
to receive a distribution in any form of benefit set forth in Section 12.01, or
in installments pursuant to Section 12.03, providing such distribution shall at
all times comply with Code Section 401(a)(9) and applicable regulations
thereunder.
13
<PAGE> 20
12.03. Installment Payments
- -----------------------------
Notwithstanding any provisions in this Plan to the contrary, if a
Participant's entire interest is to be distributed pursuant to Section 12.02 in
other than an immediate lump sum, minimum annual payments under the Plan must be
paid over one of the following periods (or a combination thereof):
(a) a period certain not extending beyond the life expectancy of the
Participant; or
(b) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated Beneficiary.
If a Participant's entire interest is to be distributed in other than a
lump sum, then the amount to be distributed each year must be at least an amount
equal to the quotient obtained by dividing the Participant's entire interest by
the life expectancy of the Participant or joint and last survivor expectancy of
the Participant and designated Beneficiary. If the Participant's Spouse is not
the designated Beneficiary, the method of distribution selected must be made in
accordance with Section 401(a)(9) of the Code and the regulations thereunder
including, but not limited to, the minimum incidental benefit requirements of
Section 1.401(a)(9)-2 of the proposed regulations.
12.04. Distributions After Death
- ----------------------------------
If the distribution of the Participant's Account has begun and he dies
before his entire Account has been distributed to him, the remaining portion of
such Account will be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
Subject to the succeeding paragraph and Section 12.05 of the Plan, if
the Participant dies before his distribution has begun, his entire Account shall
be distributed within five years after the fifth anniversary of the first
December 31 coinciding with or next following his death.
If a distribution is made pursuant to this Section 12 in a form of
benefit which is over the life expectancy of the Participant or the life
expectancy of the
14
<PAGE> 21
Participant and his designated Beneficiary, the life expectancy of a Surviving
Spouse may be recalculated annually; however, in the case of any other
designated Beneficiary, such life expectancy will be calculated at the time that
payment first commences without further calculations. In addition, any amount
paid to a child of the Participant will be treated as if it had been paid to the
Surviving Spouse if the amount becomes payable to the Surviving Spouse when the
child reaches the age of majority.
12.05. Cash-Outs/Consent
- ----------------------------
If for any reason a Participant terminates service or dies and the
value of his nonforfeitable Accounts does not exceed (or at the time of any
prior distribution has not exceeded) $3,500, the Participant (or Beneficiary in
the case of the Participant's death) shall receive a distribution of the value
of the entire nonforfeitable portion of such Accounts as soon as
administratively feasible after the first Valuation Date following his date of
termination; and the remainder of such Accounts will be treated as a Forfeiture.
For purposes of this section, if the value of the Participant's nonforfeitable
Account is zero, the Participant shall be Participant's deemed to have received
a distribution of such nonforfeitable Account.
If the value of a Participant's nonforfeitable Accounts exceeds (or
at the time of any prior distribution exceeded) $3,500, no amount shall be
distributed to such Participant prior to his Normal Retirement Age without his
consent. A Participant's election to receive a distribution from the Plan prior
to his Normal Retirement Age shall not be valid unless the Participant has
received a general description of the material features and an explanation of
the relative values of the optional forms of benefits (hereinafter referred to
as "description") under the Plan. The Participant shall be provided with such
description not less than 30 days and not more than 90 days prior to the date
his benefits are scheduled to commence, provided that a distribution may be made
to the Participant prior to such 30-day period, provided the Participant is
informed he has a right to a period of at least 30 days after receiving the
description to consider the decision of whether to elect a distribution from
this Plan, and the Participant, after receiving such information, affirmatively
elects a distribution prior to such 30-day period.
15
<PAGE> 22
If a Participant who is not 100% vested in his Accounts receives a
distribution pursuant to this section which is less than the value of his
Employer Contributions Account and resumes employment covered under this Plan,
the Participant's Accounts will be restored to the amount on the date of
distribution if he repays to the Plan the full amount of his distribution before
the earlier of (a) five years after the first date on which the Participant is
subsequently reemployed by the Employer; or (b) the date on which he incurs five
consecutive One-Year Breaks in Service following the date of distribution.
12.06. Put Option
- ---------------------
Except as otherwise provided in this Section 12.06, any Employer
Shares which are not readily tradable on an established market at the time they
are distributed to Participants or former Participants shall be subject to a put
option which will permit the Participant to put those Employer Shares to the
Employer. Put options shall be exercisable at least during the 16-month period
which begins on the date the Employer Shares subject to the option are
distributed by this Plan. Such an option may be exercised by the holder of the
Shares notifying the Employer in writing that the put option is being exercised.
The price at which the put option must be exercisable is the fair market value
of the Shares determined in accordance with the provisions of Treasury
Regulation Section 54.4975-11(d)(5).
If, pursuant to this section, the Employer is required to repurchase
Employer Shares which are distributed to a Participant within one taxable year
in a distribution that represents the balance to the credit of the Participant's
Account, the amount to be paid for such Employer Shares shall be paid in
substantially equal periodic payments (not less frequently than annually) over a
period beginning not later than 30 days after the exercise of the put option
described in this section and not exceeding five years. Adequate security shall
be provided and reasonable interest shall be paid on the unpaid amounts referred
to in the preceding sentence.
If, pursuant to this section, the Employer is required to repurchase
Employer Shares which are distributed to a Participant as part of an installment
distribution, the amount to be paid for such Employer Shares shall be paid not
later than 30
16
<PAGE> 23
days after the exercise of the put option described in this section.
Notwithstanding any provision of this Plan to the contrary, to the
extent that the Employer is prohibited by law from redeeming or purchasing its
own securities, consistent with the provisions of Section 409(h)(3) of the Code,
Employer Shares under this Plan shall not be subject to the put option described
in this Section 12.06 and, as such, a Participant will not be permitted to put
such Employer Shares to the Employer.
12.07. Right of First Refusal
- ---------------------------------
(a) During any period when Employer Shares are not publicly traded,
all distributions of Employer Shares to any Participant or his Beneficiary by
the Plan shall be subject to a "right of first refusal" upon the terms and
conditions hereinafter set forth. The "right of first refusal" shall provide
that prior to any transfer (as determined by the Plan Administrator) of the
Employer Shares, the Participant or Beneficiary must first offer to sell such
shares to the Plan; and if the Plan refuses to exercise its right to purchase
the Employer Shares, then the Employer shall have a "right of first refusal" to
purchase such Shares. Neither the Plan nor the Employer shall be required to
exercise the "right of first refusal." This Section 12.07 shall not be operative
unless and until the Board of Directors of the Employer so directs.
(b) The terms and conditions of the "right of first refusal" shall
be determined as follows:
(i) If the Participant or Beneficiary receives a bona
fide offer for the purchase of all or any part of his Employer
Shares from a third party, the Participant or Beneficiary shall
forthwith deliver (by registered mail, return receipt requested) a
copy of any such offer to the Plan Administrator. The Trustee (as
directed by the Plan Administrator) or the Employer, as the case may
be, shall then have 14 days after receipt by the Plan Administrator
of the written offer to exercise the right to purchase all or any
portion of the Employer Shares.
17
<PAGE> 24
(ii) The selling price and other terms under the "right
of first refusal" must not be less favorable to the Participant or
Beneficiary than the purchase price and other terms offered by a
buyer other than the Employer or the Plan, making a good faith offer
to purchase the security.
12.08. Eligible Rollover Distributions
- ------------------------------------------
(a) Notwithstanding any provision of this Plan to the contrary that
would otherwise limit a distributee's election under the Plan, a distributee
may elect at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an eligible rollover paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) The following definitions will apply for purposes of this
Section 12.08:
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible
rollover distribution does not include: (A) any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated Beneficiary; (B)
any distribution that is for a specified period of ten years or
more; (C) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and (D) the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(ii) Eligible retirement plan: An eligible retirement
plan is an individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a) or a
qualified trust described in Code Section 401(a) that accepts the
distributee's eligible rollover distribu-
18
<PAGE> 25
tion. However, in the case of an eligible rollover distribution to
the Surviving Spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or
former Employee. In addition, the Spouse or Surviving Spouse of an
Employee or former Employee is a distributee with regard to the
interest of the Spouse or Surviving Spouse.
(iv) Direct rollover: A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the
distributee.
SECTION l3
----------
BREAK IN SERVICE RULES
----------------------
13.01. Effect of Break in Service on Eligibility
- ----------------------------------------------------
If a Participant terminates his employment with the Employer and
subsequently resumes employment after incurring a One-Year Break in Service,
the rehired Participant shall again participate in the Plan as of the date of
his reemployment providing he is an Employee on his date of rehire.
13.02. Effect of Break in Service on Vesting
- ------------------------------------------------
In the case of a Participant who has five or more consecutive
One-Year Breaks in Service, Years of Service performed by such Participant
after such One-Year Breaks in Service will be disregarded for the purpose of
determining the vested percentage of any Employer Contributions that accrued to
his Account before the commencement of such One-Year Breaks in Service.
Moreover, if a Participant incurs five or more consecutive One-Year
Breaks in Service, such Participant's pre-break service will be disregarded in
determining the vested percentage of any post-break Employer contributions that
accrue to his Account if (a) he has no vested interest in his Account at the
time of his separation from service; and (b) upon returning to service, the
number of his consecutive One-Year Breaks in
19
<PAGE> 26
Service is greater than the number of his pre-break Years of Service.
Separate accounts will be maintained for the Participant's pre-break
and post-break Employer contributions. Both accounts will share in the earnings
and losses of the Trust Fund.
In the case of a Participant who does not have five consecutive
One-Year Breaks in Service, both pre-break and post- break Years of Service
will count in determining the vested percentage of pre-break and post-break
Employer contributions that accrue to his Account.
13.03. Authorized Leaves of Absence
- ---------------------------------------
Authorized leaves of absence, as determined by the Plan
Administrator, will be included in determining Years of Service for both
eligibility and vesting purposes. All Employees in similar circumstances will
be treated alike. Notwithstanding anything in the Plan to the contrary,
contributions, benefits and service credit with respect to "qualified military
service," as such term is defined by Section 414(u)(5) of the Code, shall be
provided in accordance with Section 414(u) of the Code.
SECTION 14
----------
TRUST AGREEMENT
---------------
14.01. Description of Trust Agreement
- -----------------------------------------
The Employer proposes to enter into a Trust Agreement with the
Trustee to provide for the administration of the Trust Fund. The Trust
Agreement shall be deemed to form a part of this Plan, and any and all rights
or benefits which may accrue to any person under this Plan shall be subject to
all the terms and provisions of the Trust Agreement. The Plan is designed to
invest primarily in Employer Shares. If and to the extent that Employer Shares
are not available at a price acceptable to the Trustee, the Trustee is
authorized to make other investments as provided in the Trust Agreement.
20
<PAGE> 27
SECTION 15
----------
PLAN ADMINISTRATION
-------------------
15.01. Plan Administrator
- -----------------------------
The Plan shall be administered by a Plan Administrator. Such Plan
Administrator shall be a committee of one or more individuals who shall be
appointed by and serve at the pleasure of the Employer. In the event that no
such appointment is made, Bridgeport Savings and Loan Association shall serve
as Plan Administrator.
15.02. Duties of Plan Administrator
- ---------------------------------------
The Plan Administrator shall supervise the maintenance of such
accounts and records as shall be necessary or desirable to show the
contributions of the Employer, allocations to Participants' Accounts, payments
from Participants' Accounts, valuations of the Trust Fund and all other
transactions pertinent to the Plan.
The Plan Administrator is authorized to perform all functions
necessary to administer the Plan, including, without limitation, to determine
the eligibility and qualification of Employees for benefits under the Plan; to
determine the allocation and vesting of contributions, earnings and profits of
the Plan; to interpret and construe the terms of Plan; to adopt rules,
regulations and procedures consistent therewith and to decide all disputes with
respect to the rights and obligations of Participants in the Plan. If the Trust
Agreement permits, the Plan Administrator may direct the Trustee with respect
to investment of the assets of the Trust Fund or may employ investment counsel
to do so. The Plan Administrator will have absolute discretion in carrying out
its duties and responsibilities under this paragraph.
The Plan Administrator may employ one or more persons to render
advice with regard to any responsibility it has under the Plan and may
designate others to carry out any of its responsibilities.
21
<PAGE> 28
SECTION 16
----------
AMENDMENTS
----------
16.01. Employer's Right to Amend Plan
- -----------------------------------------
The Employer shall have the right at any time, by an instrument in
writing, to modify, alter or amend this Plan in whole or in part, provided that
no such change shall in any way affect the vested rights of the Employees under
this Plan. If an amendment changes the nonforfeitable rights provided in
Section 11, and such amendment does not provide the Participant with a greater
nonforfeitable interest in his Account for each Year of Service earned under
the Plan than each Participant having not less than three Years of Service may
elect, during the period beginning when the amendment is adopted and ending no
earlier than the latest of (a) 60 days after the amendment's adoption; (b) 60
days after the amendment's effective date; or (c) 60 days after the Participant
is issued a written notice of the amendment, to have his nonforfeitable rights
computed without regard to such amendment. No amendment to the Plan shall
decrease a Participant's Account balance or eliminate an optional form of
distribution. Any amendment to the Plan shall be executed by any individual
authorized by the Board of Directors of the Employer.
SECTION 17
----------
DISTRIBUTIONS ON PLAN TERMINATION
---------------------------------
17.01. Full Vesting on Plan Termination
- -------------------------------------------
When and if this Plan is terminated, or upon dissolution or
liquidation of the Employer, after the payment of all expenses and after all
adjustments of Participants' Accounts to reflect such expenses, fund profits or
losses, income and allocations to date of termination, each affected
Participant shall be entitled to receive that number of Employer Shares as is
then credited to his Account and the net value of other assets of such Account.
22
<PAGE> 29
17.02. Payment on Plan Termination
- --------------------------------------
The Plan Administrator shall make payment of each Participant's
Account in cash or Employer Shares. Such payment shall be made to each
Participant in a single lump-sum payment.
17.03. Discontinuance of Contributions; Partial Termination of Plan
- -----------------------------------------------------------------------
Any complete discontinuance of contributions by the Employer or
partial termination of the Plan will be treated as a termination with all
affected Participants acquiring nonforfeitable interests in amounts contributed
to such date of termination.
SECTION 18
----------
CREDITORS OF PARTICIPANTS
-------------------------
18.01. Non-Assignability
- ----------------------------
Except to the extent permitted by ERISA, assignment, pledge or
encumbrance of any character of the benefits under the Plan is not permitted or
recognized under any circumstances; and such benefits shall not be subject to
claims of creditors, execution, attachment, garnishment or any other legal
process.
18.02. Qualified Domestic Relations Orders
- ----------------------------------------------
Section 18.01 shall also apply to the creation, assignment or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order [as defined in Section 414(p) of the Code],
or any domestic relations order entered before January 1, 1985.
SECTION 19
----------
CLAIMS PROCEDURES
-----------------
19.01. Filing a Claim for Benefits
- --------------------------------------
A Participant or Beneficiary, or the Employer acting on behalf of
such Participant or Beneficiary, shall notify the Plan
23
<PAGE> 30
Administrator of a claim for benefits under the Plan. Such request shall be in
writing to the Plan Administrator and shall set forth the basis of such claim
and shall authorize the Plan Administrator to conduct such examinations as may
be necessary to determine the validity of the claim and to take such steps as
may be necessary to facilitate the payment of benefits to which the Participant
or Beneficiary may be entitled under the terms of the Plan.
A decision by the Plan Administrator shall be made promptly and not
later than 90 days after the Plan Administrator's receipt of the claim for
benefits under the Plan, unless special circumstances require an extension of
the time for processing, in which case a decision shall be rendered as soon as
possible, but not later than 180 days after the initial receipt of the claim
for benefits.
19.02. Denial of Claim
- --------------------------
Whenever a claim for benefits by any Participant or Beneficiary has
been denied by the Plan Administrator, a written notice prepared in a manner
calculated to be understood by the Participant or Beneficiary shall be provided
setting forth (a) the specific reasons for the denial; (b) the specific
reference to the pertinent Plan provisions on which the denial is based; (c) a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and (d) an explanation of the Plan's claim review
procedure.
19.03. Remedies Available to Participants
- ---------------------------------------------
Upon denial of his claim by the Plan Administrator, a Participant or
Beneficiary:
(a) may request a review by a named fiduciary, other than the Plan
Administrator, upon written application to the Plan;
(b) may review pertinent Plan documents; and
(c) may submit issues and comments in writing to a named fiduciary.
24
<PAGE> 31
A Participant or Beneficiary shall have 60 days after receipt by the
claimant of written notification of a denial of a claim to request a review of
a denied claim.
A decision by a named fiduciary shall be made promptly and not later
than 60 days after the named fiduciary's receipt of a request for review,
unless special circumstances require an extension of the time for processing;
in which case, a decision shall be rendered as soon as possible, but not later
than 120 days after receipt of a request for review. The decision on review by
a named fiduciary shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by the claimant,
and specific references to the pertinent Plan provisions on which the decision
is based.
SECTION 20
----------
VOTING RIGHTS
-------------
20.01. Participant Voting Rights with Respect to Allocated Shares
- ---------------------------------------------------------------------
All Employer Shares held in the Trust Fund and allocated to
Participants' Accounts shall be voted by the Trustee pursuant to written
instructions received from the Participants. With respect to allocated Shares
for which the Trustee does not receive written instructions from Participants,
such Shares shall be voted by the Trustee in its sole discretion.
20.02. Participant Voting Rights with Respect to Unallocated Shares
- -----------------------------------------------------------------------
All Employer Shares held in the Trust Fund and not allocated to
Participants' Accounts shall be voted by the Trustee in its sole discretion.
SECTION 21
----------
TOP HEAVY RULES
---------------
21.01. Definitions
- ----------------------
If the Plan is or becomes top heavy in any Plan Year, the provisions
of this Section 21 will supersede any conflicting
25
<PAGE> 32
provisions in the Plan. The following definitions and rules are necessary to
comply with related federal tax requirements:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was (i) an officer of the Employer if such individual's annual compensation
exceeds 50% of the dollar limitation under Code Section 415(b)(1)(A); (ii) an
owner (or considered an owner under Code Section 318) of one of the ten largest
interests in the Employer if such individual's annual compensation exceeds the
dollar limitation under Code Section 415(c)(l)(A); (iii) a 5% owner of the
Employer; or (iv) a 1% owner of the Employer who has annual compensation of
more than $150,000. For purposes of this section, annual compensation means
compensation as defined in Code Section 415(c)(3), but including amounts
contributed by the Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code Section 125, 402(a)(8),
402(h) or 403(b). The determination period is the Plan Year containing the
Determination Date and the four preceding Plan Years. The determination of who
is a Key Employee will be made in accordance with Code Section 416(i)(1) and
the regulations thereunder.
(b) Non-Key Employee: Any Employee or former Employee of the
Employer who is not a Key Employee. The Beneficiary of a Non-Key Employee will
be treated as a Non-Key Employee, and the Beneficiary of a former Non-Key
Employee will be treated as a former Non-Key Employee.
(c) Determination Date: For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year,
the last day of such Plan Year.
(d) Permissive Aggregation Group: The Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group: (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the Plan has
terminated); and (ii) any other qualified plan of the Employer which enables a
plan
26
<PAGE> 33
described in (i) to meet the requirements of Code Sections 401(a)(4) or 410.
(f) Top-Heavy Plan: The Plan, if it meets the requirements of
Section 21.02.
21.02. Top Heavy Status
- ---------------------------
This Plan, and any other plans aggregated with it, will become top
heavy pursuant to this Section 21.02, as of the Determination Date, if the
present value of accrued benefits for Key Employees is more than 60% (90% in
the case of "super top heavy") of the sum of the present value of accrued
benefits of all Employees, excluding former Key Employees. In the case of more
than one plan which is to be aggregated, the present value of the accrued
benefits (including distributions for Key Employees and all Employees) is first
determined separately for each plan as of each plan's Determination Date. The
plans then will be aggregated by adding the results of each plan as of the
Determination Dates for such plans that fall within the same calendar year. The
combined results will indicate whether the plans are top heavy.
The account balances and accrued benefits of a Participant who has
not been credited with an Hour of Service for the Employer maintaining the Plan
during the five-year period ending on the Determination Date will be
disregarded.
The present value of accrued benefits as of the Determination Date
for any individual is the sum of (a) the Account balance as of the most recent
Valuation Date occurring within a 12-month period ending on the Determination
Date; (b) an adjustment for contributions due as of the Determination Date; and
(c) the aggregate distributions made with respect to such individual under the
Plan during the five-year period ending on the Determination Date. For an
employee stock ownership plan, the adjustment in (b) is generally the amount of
contributions actually made after the Valuation Date but on or before the
Determination Date.
In determining whether the Plan is top heavy, it must be aggregated
with each plan included in the Required Aggregation Group. In addition, the
Employer may aggregate plans included in the Permissive Aggregation Group.
27
<PAGE> 34
21.03. Minimum Contributions
- --------------------------------
For each Plan Year in which the Plan is top heavy, each Participant
who is a Non-Key Employee (including those Participants who did not complete
1,000 Hours of Service in the Plan Year) must receive an annual allocation of
contributions and Forfeitures (disregarding Social Security benefits) equal to
at least 3% of his Compensation; provided that, if the largest percentage of
Compensation allocated to a Key Employee for a Plan Year is less than 3%, that
largest percentage will be substituted for 3%. For any year in which the
Employer maintains a defined benefit plan in addition to this Plan, the
requirements of this paragraph will be satisfied by providing each Non-Key
Employee with the minimum annual benefit provided under the top heavy
provisions of the defined benefit plan. For any year in which the Employer
maintains another defined contribution plan in addition to this Plan, the
minimum benefit described in this paragraph shall be provided by such other
defined contribution plan.
21.04. Top Heavy Vesting
- ----------------------------
If the Plan should become top heavy, the following vesting schedule
shall apply to each Participant's Employer Contributions Account:
NONFORFEITABLE
YEARS OF SERVICE PERCENTAGE
---------------- ----------
Less than 3 0
3 or more 100
Under no circumstances, however, will a Participant's vested interest be
decreased as a result of the Plan becoming top heavy.
If at any time after becoming top heavy the Plan should cease to be
top heavy, the vesting schedule contained in Section 11 shall again be
applicable. However, any portion of a Participant's Employer Contributions
Account that was nonforfeitable before the Plan ceased to be top heavy shall
remain nonforfeitable. In addition, any Participant with three or more Years of
Service at the time that the Plan ceases to be top heavy may elect to have the
vesting schedule contained in this section
28
<PAGE> 35
remain applicable. The election period shall be the same as described in
Section 16.
SECTION 22
----------
EXEMPT LOANS
------------
22.01. Authority to Borrow
- ------------------------------
The Trustee may borrow funds on behalf of the Plan to purchase
Employer Shares, provided that any Plan loan is an exempt loan within the
meaning of Treasury Regulation Section 54.4975-7(b)(l)(iii).
22.02. Requirements for Plan Loans
- --------------------------------------
Any loan made to the Plan pursuant to this Section 22 must meet the
following requirements:
(a) The proceeds of the loan must be used within a reasonable time
after their receipt by the Plan either (i) to acquire Employer Shares; (ii) to
repay such loan; or (iii) to repay a prior exempt loan.
(b) The interest rate of the loan must not be in excess of a
reasonable rate of interest. All relevant factors will be considered in
determining a reasonable rate of interest, including the amount and duration of
the loan, the security and guarantee (if any) involved, the credit standing of
the Plan and the guarantor (if any) and the interest rate prevailing for
comparable loans.
(c) The loan must be for a specific term. Such loan may not be
payable at the demand of any person, except in the case of default.
(d) The loan must be without recourse against the Plan. Furthermore,
the only assets of the Plan that may be given as collateral for the loan are
Employer Shares of two classes--those acquired with the proceeds of the loan
and those that were used as collateral on a prior exempt loan repaid with the
proceeds of the current loan. No person entitled to payment under the exempt
loan shall have any rights to assets of the Plan other than: (i) collateral
given for the loan; (ii) contribu-
29
<PAGE> 36
tions (other than contributions of Employer Shares) that are made under the
Plan to meet its obligations under the loan; and (iii) earnings attributable to
such collateral and the investment of such contributions.
(e) The loan must provide for the release from encumbrance of Plan
assets used as collateral for the loan. For each Plan Year during the duration
of the loan, the number of securities released must equal the number of
encumbered securities held immediately before release for the current Plan Year
multiplied by a fraction. The Plan Administrator shall select either the
fraction set forth in Treasury Regulation 54.4975-8(i) or (ii). If collateral
includes more than one class of securities, the number of securities of each
class to be released for a Plan Year must be determined by applying the same
fraction to each class.
(f) All other requirements of Treasury Regulation Section
54.4975-7(b).
SECTION 23
----------
MISCELLANEOUS
-------------
23.01. Employment Rights
- ----------------------------
The right of the Employer to terminate the employment of any of its
Employees shall not in any way be affected by the Employee's participation in
this Plan.
23.02. Gender
- -----------------
Wherever used in this Plan the masculine pronoun refers to both men
and women.
23.03. Notice Requirement
- -----------------------------
Notice of the existence and provisions of the Plan and of any
amendment thereto shall be communicated by the Employer to those entitled to
notice thereof.
30
<PAGE> 37
23.04. Merger or Consolidation
- ----------------------------------
In case of any merger or consolidation with, or transfer of assets
or liabilities to, any other plan, each Participant in the Plan would (if this
Plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to, or greater than, the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan then terminated).
23.05. Social Security Benefits
- -----------------------------------
Post-separation Social Security benefit increases shall not affect
benefits under this Plan.
23.06. Forfeitures
- ----------------------
Forfeitures resulting from termination of employment shall be
allocated to other Participants as of the first day of the month coincident
with or following the earlier of: (a) the later of the date on which the
Participant receives an actual distribution of his nonforfeitable Account and
the date the Participant incurs a One-Year Break in Service; or (b) the date
the Participant incurs five consecutive One-Year Breaks in Service.
In the event that a Participant who received a distribution of his
nonforfeitable Account returns to the employment of the Employer before he
incurs five consecutive One-Year Breaks in Service and takes such action as is
necessary to reinstate the portion of his Account that was previously
forfeited, the forfeited portion of his Account shall be restored first from
Forfeitures available for allocation in that year and then from additional
Employer contributions, if necessary. All rights to forfeiture restoration
shall lapse when this Plan is terminated with regard to all Participants who
have not resumed employment prior to Plan termination.
23.07. Named Fiduciaries
- ----------------------------
The named fiduciaries of this Plan shall be Ohio State Financial
Services, Inc. and the Trustee.
31
<PAGE> 38
23.08. Limitations on Payment
- ---------------------------------
No payment shall be made to any incompetent person (through minority
or otherwise) until the Plan Administrator shall have been furnished evidence
satisfactory to it of the person to whom such payment shall be made and his
right to receive the same. Until furnished such evidence, all amounts so
payable shall be held in trust for the person or persons entitled to receive
them, separate and apart from the Plan's general Trust Fund.
23.09. Interpretation of Document
- -------------------------------------
The construction and interpretation of the Plan provisions are
vested with the Plan Administrator, in its absolute discretion, including,
without limitation, the determination of benefits, eligibility and
interpretation of Plan provisions. All such decisions, determinations and
interpretations shall be final, conclusive and binding upon all parties having
an interest in the Plan.
23.10. Non-terminable Protections and Rights
- ------------------------------------------------
Notwithstanding anything contained herein to the contrary, except as
provided by Section 12.06 or 12.07 of the Plan, or as otherwise permitted by
applicable law, no security acquired with the proceeds of an exempt loan may be
subject to a put, call or other option, or buy-sell or similar arrangement
while held by and or distributed from this Plan.
The rights and protections specified in the preceding sentence,
together with the put option rights provided for in Section 12.06 hereof, shall
be non-terminable regardless of whether this Plan ceases to be an employee
stock ownership plan or an exempt loan is paid in full.
23.11. Use of Income With Respect to Employer Shares
- --------------------------------------------------------
The Plan reserves the right to use income with respect to Employer
Shares acquired with the proceeds of an exempt loan to repay such loan.
32
<PAGE> 39
SECTION 24
----------
CERTAIN DEFINITIONS
-------------------
Whenever used in this Plan, the following words and phrases shall
have the meanings specified below. Additional words and phrases may be defined
in the text of the Plan.
24.01. Account
- ------------------
"Account" means a Participant's Employer Contributions Account.
24.02. Adjustment Factor
- ----------------------------
"Adjustment Factor" means the cost-of-living adjustment prescribed
by the Secretary of the Treasury under Code Section 415(d) for years beginning
after December 31, 1987, as applied to such items and in such manner as the
Secretary shall provide.
24.03. Affiliate
- --------------------
"Affiliate" means any other employer which, together with the
Bridgeport Savings and Loan Association, is a member of a controlled group of
corporations or of a commonly controlled trade or business [as defined in Code
Sections 414(b) and (c) and as modified by Code Section 415(h)] or of an
affiliated service group [as defined in Code Section 414(m)] or other
organization described in Code Section 414(o).
24.04. Annual Additions
- ---------------------------
"Annual Additions" means the sum of the following amounts credited
to a Participant for the Limitation Year under all defined contribution plans
maintained by the Employer:
(a) Employer contributions;
(b) Forfeitures;
(c) amounts allocated after March 31, 1984 to an individual medical
account, as defined in Section 415(l)(1) of the Code, which is part of a
defined benefit plan maintained by the Employer; and
33
<PAGE> 40
(d) amounts derived from contributions paid or accrued after
December 31, 1985 in taxable years ending after such date which are
attributable to postretirement medical benefits allocated to the separate
account of a key employee [as defined in Section 416(i) of the Code] under a
welfare benefit fund [as defined in Section 419(e) of the Code] maintained by
the Employer. The amounts described under this paragraph (d) shall not be
subject to the 25% of compensation limit provided in Section 2.04.
Annual Additions shall not include any amounts credited to a
Participant's Account due to Employer contributions relating to interest
payments on a Plan loan, or attributable to a forfeiture of Employer Shares
acquired with the proceeds of a Plan loan.
24.05. Beneficiary
- ----------------------
"Beneficiary" means the individual, individuals or trust designated
by the Participant under the terms of Section 8.02 hereof to receive the death
benefit payable under the Plan.
24.06. Code
- ---------------
"Code" means the Internal Revenue Code of 1986, as may be amended
from time to time, and corresponding provisions of future federal internal
revenue codes.
24.07. Compensation
- -----------------------
"Compensation" means all amounts paid to the Participant by the
Employer for a Plan Year which is treated as wages pursuant to Code Section
3401(a), plus all other payments of compensation which the Employer is required
to report on form W-2, excluding any amounts paid by the Employer during any
Plan Year in excess of $150,000, as adjusted under Code Section 401(a)(17) for
Plan Years after January 1, 1996. For purposes of a Participant's first Plan
Year of eligibility, only Compensation paid to such Participant after the Entry
Date on which he begins to participate in the Plan shall be considered for
purposes of determining allocations under Section 3 hereof.
34
<PAGE> 41
24.08. Current Participant
- ------------------------------
"Current Participant" means, for any Plan Year, (a) a Participant
who was employed by the Employer on the last day of such Plan Year; and (b) a
Participant who died, retired or became totally and permanently disabled during
such Plan Year.
24.09. Effective Date
- -------------------------
"Effective Date" means August 1, 1997.
24.10. Employee
- -------------------
"Employee" means any person who is an employee in the regular
employment of the Employer. For this purpose, the term "Employee" shall not
include any Leased Employee.
24.11. Employer
- -------------------
"Employer" means the Bridgeport Savings and Loan Association and any
Affiliate who, with the consent of the Employer, adopts this Plan.
24.12. Employer Contributions Account
- -----------------------------------------
"Employer Contributions Account" means the account established for
each Participant under this Plan pursuant to Section 4.01.
24.13. Employer Shares or Shares
- ------------------------------------
"Employer Shares" or "Shares" means securities which constitute
"employer securities" under Section 409(l) of the Code and "qualifying employer
securities" under Section 4975(e)(8) of the Code and Section 407(d)(5) of
ERISA.
24.14. Employment Commencement Date
- ---------------------------------------
"Employment Commencement Date" means the date on which an Employee
first performs an Hour of Service for the Employer.
35
<PAGE> 42
24.15. Entry Date
- ---------------------
"Entry Date" means the first day of the month first following the
period described in Section 1.02 in which an Employee satisfied the
requirements of Section 1.01.
24.16. ERISA
- ----------------
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
24.17. Family Member
- ------------------------
"Family Member" means, with respect to any individual, such
individual's Spouse and lineal ascendants or descendants and the spouses of
such lineal ascendants or descendants.
24.18. Forfeiture
- ---------------------
"Forfeiture" means the amount of the value of any Participant's
Account that such Participant is not entitled to receive under Section 11 on
the termination of his employment.
24.19. Full Time
- --------------------
"Full Time" means employment with the Employer for not less than
1,000 hours during the 12 consecutive calendar months for which a determination
is made.
24.20. Hour of Service
- --------------------------
"Hour of Service" means
(a) each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer or an Affiliate. These hours
shall be credited to the Employee for the computation period or periods in
which the duties are performed; and
(b) each hour for which an Employee is paid, or entitled to payment,
by the Employer or an Affiliate on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
36
<PAGE> 43
(including disability), layoff, absence for maternity or paternity reasons,
jury duty, military duty, leave of absence or required by the Family and
Medical Leave Act of 1993. No more than 501 Hours of Service shall be credited
under this paragraph for any single continuous period (whether or not such
period occurs in a single computation period). Hours under this paragraph shall
be calculated and credited pursuant to Section 2530.200b-2 of the Department of
Labor Regulations, which are incorporated herein by this reference; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an Affiliate. The
same hours of service shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These hours
shall be credited to the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made; and
(d) in the case of a Participant who is absent from work for
maternity or paternity reasons, such Participant shall have credited, solely
for purposes of determining whether a One-Year Break in Service has occurred
for eligibility and vesting, in the year in which the absence begins if
necessary to prevent a One-Year Break in Service for such year; or in the
following year, the number of hours that would normally have been credited but
for such absence; or in any case in which such hours cannot be determined, 8
Hours of Service per day of such absence. The total number of hours treated as
Hours of Service under this paragraph shall not exceed 501 hours. For purposes
of this paragraph, an absence from work for maternity or paternity reasons
means an absence (i) by reason of pregnancy of the Participant; (ii) by reason
of the birth of a child of the Participant; (iii) by reason of the placement of
a child with the Participant in connection with the adoption of such child by
such Participant; or (iv) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
(e) If records of actual hours are not maintained for any Employee,
an Employee will be given credit for 190 Hours of Service if he is employed at
any time during the month.
37
<PAGE> 44
24.21. Late Retirement Date
- -------------------------------
"Late Retirement Date" means the first day of the month following
the date on which a Participant elects to retire after his Normal Retirement
Date.
24.22. Leased Employee
- --------------------------
"Leased Employee" means any person (other than an employee of the
recipient) who, pursuant to an agreement between the recipient and any other
person (leasing organization), has performed services for the recipient [or for
the recipient and related persons determined in accordance with Code Sections
414(n) and 414(o)] on a substantially full-time basis for a period of at least
one year, and such services are performed under the primary direction and
control of the recipient employer. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer.
A Leased Employee shall not be considered an employee of the
recipient if (a) such employee is covered by a money purchase pension plan
providing (i) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed by the employer pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Code Section 125, Section
402(a)(8), Section 402(h) or Section 403(b); (ii) immediate participation; and
(iii) full and immediate vesting; and (b) Leased Employees do not constitute
more than 20% of the recipient's non-highly-compensated work force.
24.23. Limitation Year
- --------------------------
"Limitation Year" means the Plan Year.
24.24. Normal Retirement Age
- --------------------------------
"Normal Retirement Age" means age 65.
38
<PAGE> 45
24.25. Normal Retirement Date
- ---------------------------------
"Normal Retirement Date" means the first day of the month coincident
with or following the date on which the Participant attains Normal Retirement
Age; provided, however, that this Plan shall not be interpreted to require that
a Participant retire prior to attaining any specific age.
24.26. One-Year Break in Service
- ------------------------------------
"One-Year Break in Service" means, for eligibility and vesting
purposes, a Plan Year during which a Participant has not completed more than
500 Hours of Service.
24.27. Participant
- ----------------------
"Participant" means either (a) an Employee who is participating in
the Plan in accordance with Section 1.01 for whom Accounts are being
maintained; or (b) a former Employee for whom Accounts are being maintained.
24.28. Plan
- ---------------
"Plan" means the Bridgeport Savings and Loan Association Employee
Stock Ownership Plan as in effect from time to time.
24.29. Plan Administrator
- -----------------------------
"Plan Administrator" means an administrative committee appointed by
Ohio State Financial Services, Inc. to administer this Plan pursuant to Section
15 or, if no such appointment is made, Ohio State Financial Securities, Inc.
24.30. Plan Year
- --------------------
"Plan Year" means the fiscal year of the Plan which begins each
January l and ends each December 31.
24.31. Projected Annual Benefit
- -----------------------------------
"Projected Annual Benefit" means the annual benefit to which the
Participant would be entitled under all Employer sponsored defined benefit
plans, assuming that the Participant
39
<PAGE> 46
continues employment until his Normal Retirement Date, that the Participant's
Compensation continues until his Normal Retirement Date at the rate in effect
during the current calendar year and that all other factors relevant for
determining benefits under the plans remain constant at the level in effect
during the current calendar year.
24.32. Spouse or Surviving Spouse
- -------------------------------------
"Spouse" or "Surviving Spouse" means an individual who is legally
married to the Participant, provided that an individual who was formerly
married to the Participant will be treated as the Spouse or Surviving Spouse to
the extent provided under a qualified domestic relations order as described in
Section 414(p) of the Code.
24.33. Trust Agreement
- --------------------------
"Trust Agreement" means the agreement, and any amendments made
thereto, by and between the Employer and the Trustee for the management,
investment and disbursement of funds held in the Trust Fund.
24.34. Trust Fund
- ---------------------
"Trust Fund" means the fund established pursuant to the terms of the
Trust Agreement.
24.35. Trustee
- ------------------
"Trustee" means the bank, trust company and/or individual or
individuals designated by the Employer to hold and invest the Trust Fund and to
pay benefits and expenses as authorized by the Plan Administrator in accordance
with the terms and provisions of the agreement by and between the Employer and
such bank, trust company and/or individual or individuals.
24.36. Valuation Date
- -------------------------
"Valuation Date" means the last day of each Plan Year and any other
date fixed by the Plan Administrator for the valuation of assets and
adjustments of individual Accounts.
40
<PAGE> 47
24.37. Year of Service
- --------------------------
"Year of Service" means a Plan Year during which a Participant is,
and each Plan Year prior to the Effective Date during which such Participant
was, a Full-Time Employee of the Employer, or a Full-Time Employee of an
Affiliate which is not a participating employer in the Plan.
IN WITNESS WHEREOF, the undersigned has caused this Plan to be
executed by its duly authorized officer effective as of the Effective Date.
OHIO STATE FINANCIAL SERVICES, INC.
By:________________________________
Name (Print):______________________
Title:_____________________________
Date:_____________________
41
<PAGE> 48
BRIDGEPORT SAVINGS AND LOAN ASSOCATION
--------------------------------------
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
-----------------------------------
Effective August 1, 1997
<PAGE> 49
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
---------------------------------------
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
-----------------------------------
TABLE OF CONTENTS
-----------------
ARTICLE I - NAME OF TRUST 1
- ---------
ARTICLE II - CONTRIBUTIONS TO THE TRUST FUND 2
- ----------
ARTICLE III - PAYMENTS FROM THE TRUST FUND 3
- -----------
ARTICLE IV - INVESTMENT OF THE TRUST FUND 3
- ----------
ARTICLE V - POWERS OF THE TRUSTEE 5
- ---------
ARTICLE VI - ADMINISTRATIVE PROVISIONS 9
- ----------
ARTICLE VII - SUBSTITUTION OF TRUSTEE 12
- -----------
ARTICLE VIII - AMENDMENT AND TERMINATION 14
- ------------
ARTICLE IX - MISCELLANEOUS PROVISIONS 14
- ----------
<PAGE> 50
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
---------------------------------------
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
-----------------------------------
THIS AGREEMENT made and entered into this ___ day of ______, 1997,
by and between Ohio State Financial Services, Inc. (hereinafter referred to as
the "Employer"), and ____________________, as trustee (hereinafter "Trustee");
W I T N E S S E T H:
WHEREAS, effective as of August 1, 1997 the Employer adopted and
established an employee stock ownership plan, called the Bridgeport Savings and
Loan Association Employee Stock Ownership Plan (the "Plan"); and
WHEREAS, it is necessary, under applicable law, to establish a trust
(hereinafter the "Trust") to hold the assets of the Plan; and
WHEREAS, the Employer desires to enter into an agreement with the
Trustee to provide for the investment of the assets of the Trust and for the
payment of benefits from the Trust;
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
ARTICLE I
---------
NAME OF TRUST
-------------
1. This Agreement and the Trust it evidences shall be known as the
Bridgeport Savings and Loan Association Employee Stock Ownership Plan Trust
(which trust agreement, as hereinafter set forth and as it may hereafter be
amended, is referred to herein as the "Agreement" or the "Trust Agreement"),
and the provisions hereof are intended to implement on and after the effective
date the provisions of the Plan.
2. The Plan, and any future amendments thereto, shall form a part of
this Trust Agreement, and any amendments hereto, in the same manner as if all
terms and provisions thereof were copied
<PAGE> 51
herein in detail; the terms and provisions of this Trust Agreement, and any
amendments hereto, shall form a part of the Plan, as from time to time amended,
in the same manner as if the same were copied in the Plan in detail.
3. The Trust Agreement is effective as of August 1, 1997.
4. The Trustee is authorized to accept all funds or property
designated to be held under the terms of this Trust Agreement. By execution of
this Trust Agreement, the Trustee acknowledges its acceptance as Trustee
hereunder and accepts the provisions hereof and agrees to hold and administer
all the moneys and other property which, on the effective date hereof, comprise
the assets of the Trust Fund as well as any property hereafter received by it
for the uses and purposes herein expressed.
ARTICLE II
----------
CONTRIBUTIONS TO THE TRUST FUND
-------------------------------
1. Subject to the provisions of Article VIII hereof, the Employer,
on behalf of itself and its employees, intends (but is not required), from time
to time, to deliver or cause to be delivered to the Trustee such amounts of
cash, Employer Shares (as defined in the Plan) and other property acceptable to
the Trustee as the Employer, in its sole discretion, deems necessary to comply
with the provisions of the Plan. All such amounts received by the Trustee from
the Employer shall constitute one common trust fund. Unless the context clearly
applies or indicates the contrary, as used herein, the term "Trust Fund"
comprises all property of every kind held by the Trustee, from time to time,
pursuant to this Trust Agreement. The Trustee shall have no duty, expressed or
implied, to compel any payment to be made to it by the Employer or otherwise be
responsible for the adequacy of the Trust Fund to meet and discharge any
liabilities under the Plan and shall be accountable only for cash and other
property actually received by it.
2. All contributions to the Plan are made subject to continuing
qualification of the Plan and, any provisions of the Plan or this Trust
Agreement to the contrary notwithstanding, the Employer, by delivering to the
Trustee written notification
2
<PAGE> 52
specifying the circumstances which warrant the return of contributions, may
direct the Trustee to return contributions to the Employer in all circumstances
permitted under Section 409(j) of the Internal Revenue Code of 1986, as amended
(the "Code"). In any such event, the Trustee shall return to the Employer,
within the time frame specified in Section 409(j)(3) of the Code, the market
value of the subject contributions.
ARTICLE III
-----------
PAYMENTS FROM THE TRUST FUND
----------------------------
1. Payments shall be made from the Trust Fund by the Trustee to such
persons, in such manner, at such times and in such amounts as the Plan
Administrator (as defined in the Plan) may from time to time direct in writing;
provided, however, that the Trustee may withhold compliance with the Plan
Administrator's direction to the extent that, and so long as, the Trustee shall
deem such withholding necessary to insure payment of the Trustee's expenses.
2. The Plan Administrator may direct the Trustee to make payments to
a paying agent or agents or to the Employer itself as paying agent.
3. The Plan Administrator shall furnish the Trustee with all
necessary factual information required by it to perform its duties as Trustee
hereunder, and the Trustee shall not be required to verify the facts so
furnished by the Plan Administrator. The Trustee, in following the directions
of the Plan Administrator, is authorized to act upon instructions of the Plan
Administrator or of any individual that the Employer shall designate in
writing.
ARTICLE IV
----------
INVESTMENT OF THE TRUST FUND
----------------------------
1. The Trust Fund, except such estimated amounts as in the opinion
of the Trustee are required for current payments and expenses, shall be
invested and reinvested by the Trustee without distinction between principal
and income primarily in qualifying
3
<PAGE> 53
employer securities, as defined in Section 4975(e)(8) of the Code.
2. To the extent that qualifying employer securities are not
available at a favorable price, the Trustee is authorized to invest and
reinvest any portion of the Trust Fund which is not invested in qualifying
employer securities in such bonds; notes; debentures; mortgages; mutual funds;
investment trust certificates; preferred or common stock; real estate; savings
and loan accounts; insurance policies on the lives of participants in the Plan
payable to the Trust; or in such property, real, personal or mixed, either
within or without the state comprising the situs of the Trust, unless
specifically prohibited by law or by the provisions of this Trust Agreement.
All or any part of the Trust Fund may be invested in deposits which bear a
reasonable interest rate in a bank or similar financial institution which is
supervised by the United States or of any state thereof; and the Trustee may
hold any reasonable portion of the Trust Fund in overnight accounts pending
investment or payment of expenses or benefits. The Trustee may, to the extent
it deems it advisable, invest in a common or collective trust fund or pooled
investment fund, including any common trust fund for qualified employee benefit
trusts, maintained by any bank or trust company in the United States which is
supervised by a state or federal agency. During such period of time as an
investment in any such common trust fund shall exist, the Declaration of Trust
of such fund shall constitute a part of this Trust Agreement.
3. The Trustee shall have the right, to the extent permissible under
applicable law, to (a) purchase, sell, exchange and retain preferred or common
stocks or other marketable obligations consisting of bonds, debentures, notes
or certificates, or other evidences of indebtedness, issued by the Employer or
by any "affiliate" [within the meaning of Section 407(d)(7) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")]; and (b) acquire
and hold parcels of real property (and related personal property) which is
leased, or is to be leased, to the Employer or to an "affiliate" [within the
meaning of Section 407(d)(7) of ERISA]. Notwithstanding the foregoing, the
Trustee shall not have the right to invest any Employer Shares held by it which
are either allocated to the accounts of participants, or acquired pursuant to a
loan and held in an unallocated account.
4
<PAGE> 54
4. The Plan Administrator may appoint one or more Investment
Managers to exercise full investment management authority with respect to all
or a portion of the assets of the Trust Fund and to authorize payment of the
fees and expenses of such Investment Manager from the assets of the Trust Fund.
In the event the Plan Administrator exercises this right, it shall certify to
the Trustee and such Investment Manager the scope of the duties and
responsibilities of the Investment Manager. Such Investment Manager shall be
either (a) registered as an investment advisor under the Investment Advisors
Act of 1940; (b) a bank, as defined in the Investment Advisors Act of 1940; or
(c) an insurance company qualified to manage, acquire or dispose of Plan assets
under the laws of more than one state. Upon its appointment, the Investment
Manager shall certify and acknowledge in writing to the Plan Administrator and
the Trustee that it has a copy of the Trust Agreement and the Plan, that it is
a fiduciary with respect to such Plan and Trust and that it has assumed the
duties and responsibilities conferred upon it by the Plan Administrator. The
duties, responsibilities and authority of any such Investment Manager may be
revoked or modified by the Plan Administrator at any time by written notice to
such Investment Manager and to the Trustee. Any Investment Manager duly
appointed and authorized by the Plan Administrator shall, during the period of
its appointment, possess fully and absolutely those powers, rights and duties
of the Trustee (to the extent delegated by the Plan Administrator and to the
extent permissible under the terms of this Trust Agreement) with respect to the
investment or reinvestment of that portion of the Trust Fund over which such
Investment Manager has investment management authority. During any period of
time when such Investment Manager is so appointed and serving, and with respect
to those assets of the Trust Fund over which such Investment Manager exercises
investment management authority, the Trustee's responsibility shall be limited
to holding such assets as a custodian, providing accounting services,
disbursing benefits as authorized and executing such investment instructions
only as directed by such Investment Manager. Any certificates or other
instruments duly signed by such Investment Manager (or the authorized
representative of such Investment Manager), purporting to evidence any
instruction, direction or order of such Investment Manager with respect to the
investment of those assets of the Plan over which the Investment Manager has
investment management authority shall be accepted by the Trustee as conclusive
proof thereof. The Trustee shall also be fully protected in acting in good
faith upon any notice, instruction, direction, order, certificate, opinion,
letter,
5
<PAGE> 55
telegram or other document believed by the Trustee to be genuine and to be by
such Investment Manager (or the authorized representative of such Investment
Manager). Unless the Trustee participates knowingly in, or knowingly undertakes
to conceal, an act or omission of an investment manager, knowing such act or
omission to be a breach of the fiduciary responsibility of the Investment
Manager with respect to the Plan, the Trustee shall not be liable for any act
or omission of an Investment Manager and shall not be under any obligation to
invest or otherwise manage the assets of the Plan that are the subject of the
management of the Investment Manager.
ARTICLE V
---------
POWERS OF THE TRUSTEE
---------------------
1. Subject to any limitations imposed under Article IV, the Trustee is
authorized and empowered:
(a) to sell, exchange, convey, transfer or dispose of and
also to grant options with respect to any property,
whether real or personal at any time held by it; and
any sale may be made by private contract or by public
auction and no person dealing with the Trustee shall
be bound to see to the application of the purchase
money or to inquire into the validity, expediency or
propriety of any such sale or other disposition;
(b) to retain, manage, operate, repair and improve and to
mortgage or lease for any period and on such terms as
the Trustee shall deem proper any real estate or
personal property held by the Trustee, including
power to demolish any buildings or other improvements
in whole or in part and to erect buildings or other
improvements and to make leases that may extend
beyond the term of the Trust; and to foreclose,
extend, renew, assign, release or partially release
and discharge mortgages or other liens;
(c) to compromise, compound and settle any debt or
obligation due from third persons to it, or to third
persons from it as Trustee hereunder, and to
6
<PAGE> 56
reduce the rate of interest on, to extend or
otherwise to modify or to foreclose upon default or
otherwise to enforce such obligation;
(d) except as otherwise provided in Section 20 of the
Plan, (i) to vote in person or by proxy, with or
within power of substitution, on any stocks, bonds or
other securities held by it; (ii) to exercise any
options appurtenant to any stocks, bonds or other
securities for the conversion thereof into other
stocks, bonds or securities or to exercise any rights
to subscribe for additional stocks, bonds or other
securities and to make any and all necessary payments
thereof; (iii) to join in, dissent from or oppose the
reorganization, recapitalization, consolidation, sale
or merger of corporations or properties in which it
may be interested as Trustee, upon such terms and
conditions as it may deem wise; and (iv) to accept
any securities which may be issued upon any such
reorganization, recapitalization, consolidation, sale
or merger and thereafter to hold the same;
(e) to make, execute, acknowledge and deliver any and all
deeds, leases, assignments, documents of transfer and
conveyance, documents of release and satisfaction and
any and all other instruments that may be necessary
or appropriate to carry out the powers herein
granted;
(f) to write covered call options for the purchase of
securities held in the Trust and to enter into
closing purchase transactions for the purpose of
terminating same to acquire and dispose of any call
option and any put option and to grant options
involving disposition of any Trust asset or to take
options for the acquisition by the trust estate of
any asset;
(g) to enforce any right, obligation or claim in its
discretion and in general to protect in any way the
interest of the Trust Fund, either before or after
default; and, in any case, it shall consider such
action for the best interest of the Trust Fund, to
abstain from the enforcement of any
7
<PAGE> 57
right, obligation or claim; to abandon any property,
whether real or personal, which at any time may be
held by it;
(h) to borrow, or raise moneys, from the Employer or other
sources, at a reasonable rate of interest, for the
purposes of the Trust Fund, as it may deem advisable,
and in particular, to borrow money to purchase
qualifying employer securities; and for any sums so
borrowed to issue its promissory note as Trustee and
to secure the repayment thereof by mortgaging or
pledging only the assets purchased with the borrowed
funds. Loans entered into pursuant to this subsection
shall accrue interest at a reasonable rate and shall
be repaid within a definite period, as set forth in
the loan agreement. Proceeds obtained from a loan
entered into pursuant to this subsection may be used
only to acquire qualifying employer securities, repay
the loan, or repay a prior loan entered into pursuant
to this subsection. No lender shall have recourse
against the Trust Fund except with respect to such
assets as the Trustee mortgages or pledges. The
Trustee shall repay such loans only from Employer
contributions and Trust Fund earnings. Upon the
Trustee's payment of any portion of the balance due on
a loan, the assets originally pledged by it as
collateral for such portion shall be released from
encumbrance, and any released securities shall be
allocated in the manner described in the Plan. No
person lending money to the Trustee shall be bound to
see to the application of the money loaned or to
inquire into the validity, expedience or propriety of
any such borrowing;
(i) to cause any investment in the Trust Fund to be
registered in or transferred into its name as Trustee
or the name or names of his nominee or nominees, or to
retain them unregistered or in form permitting
transferability by delivery, but the books and records
of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
8
<PAGE> 58
(j) to acquire property returning no income or slight
income or to retain any such property so long as the
Trustee shall deem advisable;
(k) to consult with counsel, who may be counsel to the
Trustee or the Employer, and in so doing shall be
fully protected in acting upon the advice of such
counsel;
(l) to continue to exercise any powers and discretion
herein granted for a reasonable time after the
termination of the Trust;
(m) to utilize the facilities of any bank as a depository;
and
(n) to perform all acts which it may deem necessary or
proper and to exercise any and all powers of the
Trustee under this Agreement upon such terms and
conditions as it may deem for the best interest of the
Trust Fund.
2. In addition to the powers and authorities herein elsewhere granted,
except as herein expressly provided otherwise, the Trustee shall have the
powers, authorities and discretions set forth in the laws of the state
comprising the situs of the Trust insofar as applicable hereto. The powers and
authorities granted to the Trustee shall not be limited by the fact that such
Trustee may be a bank or other financial institution; and no Trustee duly
appointed, qualified and acting hereunder shall be subject to limitations or
restrictions imposed upon a bank or other financial institution or upon
fiduciaries generally with respect to the type of investment any such
institution or trustee may make of its own funds or the funds of others except
to the extent expressly provided herein or by law. Specifically, such Trustee
may retain, acquire or otherwise deal in stock for which it is registrar,
transfer agent or the like; may deposit Trust funds with itself as Trustee and
as a bank; may contract or otherwise enter into transactions between itself as
Trustee and as a bank or between itself as Trustee and any other institution for
which it then, theretofore, or thereafter may be acting as Trustee, unless
specifically prohibited by law.
3. The Trustee may not maintain the indicia of ownership of any assets
of the Trust Fund outside the jurisdiction of the
9
<PAGE> 59
district courts of the United States, except to the extent otherwise expressly
permitted by law.
ARTICLE VI
----------
ADMINISTRATIVE PROVISIONS
-------------------------
1. The Trustee shall maintain, with respect to the Employer, true and
accurate records and accounts reflecting all receipts and disbursements made by
it pursuant to this Trust Agreement and containing a description of all assets
from time to time held by it hereunder. Such records and accounts shall be open
to the inspection of the Employer and the Plan Administrator at all reasonable
times and may be audited from time to time by such person or persons as the
Employer or the Plan Administrator may designate. Within 90 days after the end
of each fiscal year, and at such other times as the Employer or Plan
Administrator may request in writing, the Trustee shall deliver to the Employer
or Plan Administrator a report and account in writing, covering the period from
the last previous report and account, in such form and detail as the Employer
or Plan Administrator may reasonably request; and the approval of any such
report and account by the Employer or Plan Administrator shall be a full
acquittance and discharge of the Trustee with respect to the matters therein
set forth. Upon the expiration of 120 days from the date of filing such annual
or other report and account, or upon the earlier specific approval thereof as
provided above, the Trustee shall be forever released and discharged from all
liability and accountability, except for actual fraud or a breach of fiduciary
responsibility by failure to abide by the terms of this Trust Agreement, to
anyone with respect to the propriety of its acts and transactions shown in such
report and account except with respect to any such acts or transactions as to
which the Employer or Plan Administrator shall within such 120-day period file
written objections with the Trustee. Nothing herein contained, however, shall
be deemed to preclude the Trustee from its right to have its accounts
judicially settled by a court of competent jurisdiction, in which event, only
the Trustee and the Employer shall be necessary parties.
2. The Trustee may employ such agents, attorneys (who may be counsel
for the Trustee), auditors, clerical and other assistants as, in its judgment,
may be necessary or desirable for the proper administration of the Trust Fund
and to advise the
10
<PAGE> 60
Trustee hereunder and may delegate to any person so employed any ministerial
power of duty of the Trustee.
3. The Trustee may institute, maintain or defend any litigation
necessary in connection with the administration of the Trust Fund, provided the
Trustee shall be under no duty or obligation to do so unless it shall have been
indemnified to its satisfaction against all expenses and liabilities which it
may sustain or reasonably anticipate by reason thereof. The Trustee shall
notify the Employer in writing before instituting, or commencing the defense,
of any such litigation.
4. All expenses of administering the Plan and Trust, including,
without limitation, the Trustee's compensation (to be agreed upon, from time to
time, between the Employer and Trustee) and expenses, Investment Managers' fees
and expenses and legal, accounting and other professional fees and expenses
incurred in connection with the Plan or the Trust, shall be paid from the Trust
fund, unless otherwise paid by the Employer. Notwithstanding any provision
contained herein, to the extent that any Trustee serving under this Agreement
is an employee of the Employer, he shall receive no compensation (other than
the reimbursement of his expenses) for serving as Trustee.
5. No person shall be obliged to see to the application of any money
or property delivered to the Trustee, nor shall any such person be required to
take cognizance of the provisions of this Trust Agreement. The certificate of
the Trustee, duly executed, may be received by any person dealing with the
Trustee as conclusive evidence of any matter relating to this Agreement or the
administration thereof. In general, each person dealing with the Trustee may
act upon any advice, request or representation in writing by the Trustee, or
the Trustee's duly authorized agent, and shall not be liable to any person in
so doing. In case of doubt as to whether the Trustee has or has not been
granted a specific power not enumerated hereunder, the certificate of the
Trustee that the exercise of such power is necessary or desirable for the
proper administration or distribution of the Trust Fund shall be conclusive
upon all persons dealing with the Trustee to the same extent as if such power
had been specifically granted to the Trustee.
6. If the assets held by the Trustee hereunder, or any benefits
payable by the Trustee hereunder, shall become liable for the payment of any
estate, inheritance or income tax, which,
11
<PAGE> 61
in the Trustee's opinion, it shall be or may be required to pay, the Trustee
shall have full power and authority to pay such tax out of any moneys or other
property in its hands for the account of the person whose interests hereunder
are liable for such tax; but, at least ten calendar days prior to making any
such payment, the Trustee shall mail a notice to the Employer or Plan
Administrator of its intention to make such payment. The Trustee also, prior to
making any payment to any beneficiary hereunder, may require such releases or
other documents from any lawful, taxing authority and may require such
indemnity from such beneficiary as it shall deem necessary for its protection.
7. The Employer or Plan Administrator shall furnish to the Trustee all
the information necessary for the Trustee to carry out the purposes of the
Trust Agreement. This information shall include information relative to the
liquidity needs of the Plan and other information regarding the Plan and its
participants that the Trustee may regard as necessary to carry out its
functions.
8. The Trustee shall not be liable for its action in making payment or
delivery of any cash or other property to any person at the direction of the
Employer or Plan Administrator; and, in the event of litigation, actual or
threatened, the Trustee shall not be liable for declining to make delivery
thereof until final adjudication shall have been made by a court of competent
jurisdiction or by agreement of the parties. All costs and expenses of such
litigation shall be paid by the Employer.
9. The Trustee shall be under no duty to inquire into any rule,
regulation, instruction, direction or order purporting to have been issued by
the Employer or Plan Administrator and to be duly signed by an authorized
officer of the Employer or by any other individual designated by the Employer
as authorized to instruct the Trustee; and any certificate duly signed by an
authorized officer or such individual purporting to evidence any such
instruction, direction or order shall be accepted by the Trustee as conclusive
proof thereof. The Trustee shall also be fully protected in acting in good
faith upon any notice, resolution, instruction, direction, order, certificate,
opinion, letter, telegram or other document or communication believed by the
Trustee to be genuine and to be the act of the Employer or Plan Administrator.
12
<PAGE> 62
10. The Trustee shall discharge its duties with respect to the Trust
Fund solely in the interest of the participants and beneficiaries of the Plan
for the exclusive purpose of providing benefits to such participants and
beneficiaries and defraying reasonable expenses in administering the Plan with
respect to which the Trust Fund is established and maintained.
11. The Employer intends that the Trust herein established for the
purpose of implementing the Plan shall qualify under Sections 401 and 501 of
the Code; and until advised to the contrary in writing, the Trustee may assume
that the Trust is so qualified and is entitled to the exemption from taxes
provided for in said sections.
12. No bond shall ever be required of any Trustee, successor Trustee
or ancillary Trustee duly appointed and acting hereunder, except such bond as
may be required by any applicable law or statute of the United States,
including, without limitation, ERISA, or of any state having appropriate
jurisdiction, which required bond may not under such law or statute be waived
by the parties to this Agreement. If requested by the Employer, Trustee shall
from time to time deliver to the Employer copies of Trustee's then most current
audited financial statements.
13. The Trustee shall discharge its duties under this Trust Agreement:
(a) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and
with like aims;
(b) by diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(c) in accordance with the provisions of this Trust Agreement
insofar as they are consistent with the provisions of
ERISA, as the same may be from time to time amended; but
the duties and obligations of the Trustee shall be limited
to those expressly imposed upon it by this Trust Agreement
and any
13
<PAGE> 63
other agreement to which it is a party, notwithstanding
any reference herein to the Plan.
ARTICLE VII
-----------
SUBSTITUTION OF TRUSTEE
-----------------------
1. The Trustee shall serve until a successor Trustee shall be named by
the board of directors of the Employer or until its resignation, death,
incapacity or removal, in which event such board of directors shall name a
successor. A Trustee otherwise eligible to participate in the Plan and Trust
shall not be excluded on the ground that it is a Trustee. The word "Trustee" as
used herein shall include the original and any successor Trustee or Trustees.
2. The Trustee may resign at any time upon giving 30 days' prior
written notice to the Employer or, with the consent of the board of directors
of the Employer, the Trustee may resign with less than 30 days' prior written
notice.
3. The board of directors of the Employer may remove the Trustee by
giving at least 30 days' prior written notice to the Trustee.
4. Upon such removal or resignation of the Trustee, the board of
directors of the Employer shall appoint and designate a successor Trustee which
shall be one or more individual successor Trustees or a corporate Trustee
organized under the laws of the United States or of any state thereof with
authority to accept and execute trusts. Any successor Trustee must accept and
acknowledge in writing its appointment as a successor Trustee before it can act
in such capacity.
5. Title to all property and records or true copies of such records
necessary to the current operation of the Trust Fund held by the Trustee
hereunder shall vest in any successor Trustee acting pursuant to the provisions
hereof, without the execution or filing of any further instrument. Any
resigning or removed Trustee shall execute all instruments and do all acts
necessary to vest such title in any successor Trustee of record. Each successor
Trustee shall have, exercise and enjoy all the powers, both discretionary and
ministerial, herein conferred upon its predecessor. No successor Trustee shall
be obliged to examine
14
<PAGE> 64
the accounts, records and acts of any previous Trustee; and each successor
Trustee in no way or manner shall be responsible for any action or omission to
act on the part of any previous Trustee.
6. Any corporation resulting from any merger or consolidation to which
the Trustee may be a party or succeeding to the Trust Business of the Trustee
or to which substantially all of the Trust Assets of the Trustee may be
transferred shall be the successor to the Trustee hereunder without any further
act or formality with like effect as if such successor Trustee had originally
been named Trustee herein; and, in any such event, it shall not be necessary
for the Trustee or any successor Trustee to give notice thereof to any person;
and any requirement, statutory or otherwise, that notice shall be given is
hereby waived.
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
1. This Trust Agreement may be amended from time to time in any
respect whatsoever by resolution of the Employer specifying such amendment,
subject to the following limitations:
(a) Under no condition shall such amendment or amendments
result in or permit the return or repayment to the
Employer of any property held or acquired by the Trustee
hereunder, or the proceeds thereof, or result in or permit
the distribution of any such property for the benefit of
anyone other than employees of the Employer who are
beneficiaries under the Plan, except to the extent
provided for by Paragraph 2 of Article II.
(b) Such amendment or amendments shall not increase the duties
or responsibilities of the Trustee hereunder without its
written consent.
The Employer or Plan Administrator shall deliver a copy of each amendment to
this Trust Agreement to the Trustee within 90 days of such amendment.
15
<PAGE> 65
2. This Trust Agreement and the Trust may be terminated by the
Employer at any time by delivering to the Trustee evidence of the formal action
specifying that (a) the Plan is being terminated; or (b) contributions
thereunder are being discontinued. This Agreement and Trust shall automatically
terminate when no cash or other property remains in the Trust.
3. Nothing in this Agreement and Trust shall be construed to prevent
the Employer from suspending contributions to the Trust for any period
whatsoever or permanently; but such a suspension, whether temporary or
permanent, shall not of itself terminate the Trust.
ARTICLE IX
----------
MISCELLANEOUS PROVISIONS
------------------------
1. Except to the extent that this provision may not be legally waived,
no personal liability whatever shall attach to or be incurred by any
stockholder, officer, director or employee, as such, of the Employer, under or
by reason of the terms or conditions contained in or implied from this Trust
Agreement. The duties, obligations and rights of the Trustee shall be limited
to and by the provisions of this Trust Agreement, notwithstanding any reference
herein to the Plan; provided, however, the Employer agrees to deliver to the
Trustee a copy of each amendment to the Plan within 90 days of the date of such
amendment.
2. No benefits or beneficial interest provided for hereunder or under
the Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, either voluntary or
involuntary, except as otherwise provided by federal law; and any attempt to so
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be null and void; neither shall such benefits or beneficial interest
be liable for or subject to the debts, contracts, liabilities, engagements or
torts of any person to whom such benefits or funds are payable.
3. The Employer shall have no beneficial interest in the Trust Fund or
any part thereof; and no part of the Trust Fund shall ever revert or be repaid
to the Employer, either directly or indirectly, except as provided in Paragraph
2 of Article II hereof.
16
<PAGE> 66
4. Unless superseded by federal law, the laws of the State of Ohio
shall govern, control and determine all questions arising with respect to the
Trust Fund and interpretation and validity of the provisions of this Agreement.
In the event any provision or provisions of this Agreement shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions of this agreement but shall be fully severable,
and the agreement shall be construed and enforced as if said illegal or invalid
provision or provisions had never been inserted herein.
5. Words and phrases are used interchangeably in the Plan and this
Trust Agreement and a word, term or phrase defined in either is similarly
defined for the purposes of the other. The terms "agreement," "herein,"
"hereunder" and similar terms refer to this Trust Agreement, including the Plan
which is made a part hereof, unless otherwise qualified by the context.
6. This Trust Agreement shall be binding upon persons who are entitled
to any benefits hereunder, their heirs and legal representatives and upon the
Employer, the Trustee and its respective successors and assigns.
7. This Trust Agreement may be executed in any number of counterparts,
each of which shall be an original, and all of which together shall constitute
one and the same instrument.
17
<PAGE> 67
IN WITNESS WHEREOF, Ohio State Financial Services, Inc., as
the Employer, and _____________________________, as Trustee, have caused these
presents to be executed as of the day and year first above written.
ATTEST: OHIO STATE FINANCIAL SERVICES, INC.
________________________ By: _____________________________
________________________ Its: _____________________________
ATTEST: ___________________________________
________________________ By: ______________________________
________________________ Its: ______________________________
18
<PAGE> 1
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
[PENTEGRA LOGO]
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 PURPOSE AND DEFINITIONS
ARTICLE II PARTICIPATION AND MEMBERSHIP
ARTICLE III CONTRIBUTIONS
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
ARTICLE V MEMBERS' ACCOUNTS, UNITS AND VALUATION
ARTICLE VI VESTING OF UNITS
ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS
ARTICLE VIII LOAN PROGRAM
ARTICLE IX ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES
ARTICLE X MISCELLANEOUS PROVISIONS
ARTICLE XI AMENDMENT AND TERMINATION
TRUSTS ESTABLISHED UNDER THE PLAN
</TABLE>
<PAGE> 3
ARTICLE I
PURPOSE AND DEFINITIONS
SECTION 1.1
This Plan and Trust, as evidenced hereby, and the applicable Adoption Agreement
and Trust Agreement(s), are designed and intended to qualify in form as a
qualified profit sharing plan and trust under the applicable provisions of the
Internal Revenue Code of 1986, as now in effect or hereafter amended, or any
other applicable provisions of law including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended.
SECTION 1.2
The following words and phrases as used in this Plan shall have the following
meanings:
(A) "ACCOUNT" means the Plan account established and maintained in respect
of each Member pursuant to Article V, including the Member's after-tax
amounts, 401(k) amounts, Employer matching, basic, supplemental and
qualified nonelective contribution amounts, rollover amounts and profit
sharing amounts, as elected by the Employer.
(B) "ADOPTION AGREEMENT" means the separate document by which the Employer
has adopted the Plan and specified certain of the terms and provisions
hereof. If any term, provision or definition contained in the Adoption
Agreement is inconsistent with any term, provision or definition
contained herein, the one set forth in the Adoption Agreement shall
govern. The Adoption Agreement shall be incorporated into and form an
integral part of the Plan.
(C) "BENEFICIARY" means the person or persons designated to receive any
amount payable under the Plan upon the death of a Member. Such
designation may be made or changed only by the Member on a form
provided by, and filed with, the TPA prior to his death. If the Member
is not survived by a Spouse and if no Beneficiary is designated, or if
the designated Beneficiary predeceases the Member, then any such amount
payable shall be paid to such Member's estate upon his death.
(D) "BOARD" means the Board of Directors of the Employer adopting the Plan.
(E) "BREAK IN SERVICE" means a Plan Year during which an individual has not
completed more than 500 Hours of Employment, as determined by the Plan
Administrator in accordance with the IRS Regulations. Solely for
purposes of determining whether a Break in Service has occurred, an
individual shall be credited with the Hours of Employment which such
individual would have completed but for a maternity or paternity
absence, as determined
1
<PAGE> 4
by the Plan Administrator in accordance with this Paragraph, the Code
and the applicable regulations issued by the DOL and the IRS; provided,
however, that the total Hours of Employment so credited shall not
exceed 501 and the individual timely provides the Plan Administrator
with such information as it may require. Hours of Employment credited
for a maternity or paternity absence shall be credited entirely (i) in
the Plan Year in which the absence began if such Hours of Employment
are necessary to prevent a Break in Service in such year, or (ii) in
the following Plan Year. For purposes of this Paragraph, maternity or
paternity absence shall mean an absence from work by reason of the
individual's pregnancy, the birth of the individual's child or the
placement of a child with the individual in connection with the
adoption of the child by such individual, or for purposes of caring for
a child for the period immediately following such birth or placement.
(F) "CODE" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.
(G) "COMMENCEMENT DATE" means the date on which an Employer begins to
participate in the Plan.
(H) "CONTRIBUTION DETERMINATION PERIOD" means the Plan Year, fiscal year,
or calendar or fiscal quarter, as elected by an Employer, upon which
eligibility for and the maximum permissible amount of any Profit
Sharing contribution, as defined in Article Ill, is determined.
Notwithstanding the foregoing, for purposes of Article VI, Contribution
Determination Period means the Plan Year.
(I) "DISABILITY" means a Member's disability as defined in Article VII,
Section 7.4.
(J) "DOL" means the United States Department of Labor.
(K) "EMPLOYEE" means any person in the Employment of, and who receives
compensation from, the Employer, and any leased employee within the
meaning of Section 414(n)(2) of the Code. Notwithstanding the
foregoing, if such leased employees constitute less than twenty percent
(20%) of the Employer's non-highly compensated work force within the
meaning of Section 414(n)(5)(C)(ii) of the Code, such leased employees
are not Employees if they are covered by a plan meeting the
requirements of Section 414(n)(5)(B) of the Code.
(L) "EMPLOYER" means the proprietorship, partnership or corporation named
in the Adoption Agreement and any corporation which, together
therewith, constitutes an affiliated service group, any corporation
which, together therewith, constitutes a controlled group
2
<PAGE> 5
of corporations as defined in Section 1563 of the Code, and any other
trade or business (whether incorporated or not) which, together
therewith, are under common control as defined in Section 414(c) of the
Code, which have adopted the Plan.
(M) "EMPLOYMENT" means service with an Employer or with any domestic
subsidiary affiliated or associated with an Employer which is a member
of the same controlled group of corporations (within the meaning of
Section 1563(a) of the Code). In accordance with DOL Regulations
(Sections 2530.200-2(b) and (c)), service includes (a) periods of
vacation, (b) periods of layoff, (c) periods of absence authorized by
an Employer for sickness, temporary disability or personal reasons and
(d) if and to the extent required by the Military Selective Service Act
as amended, or any other federal law, service in the Armed Forces of
the United States.
(N) "ENROLLMENT DATE" means the date on which an Employee becomes a Member
as provided under Article II.
(O) "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
(P) "FIDUCIARY" means any person who (i) exercises any discretionary
authority or control with respect to the management of the Plan or
control with respect to the management or disposition of the assets
thereof, (ii) renders any investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan, or has any discretionary authority or
responsibility to do so, or (iii) has any discretionary authority or
responsibility in the administration of the Plan, including any other
persons (other than trustees) designated by any Named Fiduciary to
carry out fiduciary responsibilities, except to the extent otherwise
provided by ERISA.
(Q) "HIGHLY COMPENSATED EMPLOYEE" or "HIGHLY COMPENSATED MEMBER" means an
Employee or Member who is employed during the determination year and
who during the look-back year: (i) received compensation from the
Employer in excess of $75,000 (as adjusted pursuant to Section 415(d)
of the Code); (ii) received compensation from the Employer in excess of
$50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group for such year as defined in Section 414(q)
of the Code; or (iii) was an officer of the Employer and received
compensation during such year that is greater than 50 percent of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code. The
term Highly Compensated Employee also includes: (i) employees who are
both described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and are among the
100 employees who received the most
3
<PAGE> 6
compensation from the Employer during the determination year; and (ii)
employees who are 5 percent owners at any time during the look-back
year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated
Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding
the determination year.
If an Employee is, during a determination year or look-back year, a
family member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
highly compensated Employees ranked on the basis of compensation paid
by the Employer during such year, then the family member and the 5
percent owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the family member and 5 percent owner or
top-ten Highly Compensated Employee shall be treated as a single
Employee receiving compensation and plan contributions or benefits
equal to the sum of such compensation and contributions or benefits of
the family member and 5 percent owner or top-ten Highly Compensated
Employee. For purposes of this Paragraph, family member includes the
spouse, lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated
as officers and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the IRS Regulations
thereunder.
(R) "HOUR OF EMPLOYMENT" means each hour during which an Employee performs
service (or is treated as performing service as required by law) for
the Employer and, except in the case of military service, for which he
is directly or indirectly paid, or entitled to payment, by the Employer
(including any back pay irrespective of mitigation of damages), all as
determined in accordance with applicable DOL Regulations.
(S) "INVESTMENT MANAGER" means any Fiduciary other than a Trustee or Named
Fiduciary who (i) has the power to manage, acquire or dispose of any
asset of the Plan; (ii) is (a) registered as an investment advisor
under the Investment Advisors Act of 1940; (b) is a bank, as defined in
such Act, or (c) is an insurance company qualified to perform the
services described in clause (i) here of under the laws of more than
one state of the United
4
<PAGE> 7
States; and (iii) has acknowledged in writing that he is a Fiduciary
with respect to the Plan.
(T) "IRS" means the United States Internal Revenue Service.
(U) "LEAVE OF ABSENCE" means an absence authorized by an Employee's
Employer and approved by the Plan Administrator, on a uniform basis, in
accordance with Article X.
(V) "MEMBER" means an Employee enrolled in the membership of the Plan under
Article II.
(W) "MONTH" means any calendar month.
(X) "NAMED FIDUCIARY" means the Fiduciary or Fiduciaries named herein or in
the Adoption Agreement who jointly or severally have the authority to
control and manage the operation and administration of the Plan.
(Y) "NORMAL RETIREMENT AGE" means the Member's sixty-fifth (65th) birthday
unless otherwise specified in the Adoption Agreement.
(Z) "PLAN" means the Employees' Savings & Profit Sharing Plan as evidenced
by this document, the applicable Adoption Agreement and all subsequent
amendments thereto.
(AA) "PLAN ADMINISTRATOR" means the Named Fiduciary or, as designated by
such Named Fiduciary and approved by the Board in accordance with
Article IX, any officer or Employee of the Employer.
(BB) "PLAN YEAR" means a 12-month period ending December 31.
(CC) "REGULATIONS" means the applicable regulations issued under the Code,
ERISA or other applicable law, by the IRS, the DOL or any other
governmental authority and any proposed or temporary regulations or
rules promulgated by such authorities pending the issuance of such
regulations.
(DD) "SALARY" means regular basic monthly salary or wages, exclusive of
special payments such as overtime, bonuses, fees, deferred compensation
(other than pre-tax elective deferrals pursuant to a Member's election
under Article Ill), severance payments, and contributions by the
Employer under this or any other plan (other than before-tax
contributions made on behalf of a Member under a Code Section 125
cafeteria plan, unless the Employer specifically elects to exclude such
contributions). Commissions shall be included at the Employer's option
within such limits, if any, as may be set by the Employer in the
Adoption Agreement and applied uniformly to all its commissioned
5
<PAGE> 8
Employees. In addition, Salary may also include, at the Employer's
option, special payments such as (i) overtime or (ii) overtime plus
bonuses. As an alternative to the foregoing definition, at the
Employer's option, Salary may be defined to include total taxable
compensation reported on the Member's IRS Form W-2, plus deferrals, if
any, pursuant to Section 401(k) of the Code and pursuant to Section 125
of the Code (unless the Employer specifically elects to exclude such
Section 125 deferrals), but excluding compensation deferred from
previous years. In no event may a Member's Salary for any Plan Year
exceed for purposes of the Plan $150,000 (adjusted for cost of living
to the extent permitted by the Code and the IRS Regulations).
(EE) "SOCIAL SECURITY TAXABLE WAGE BASE" means the contribution and benefit
base attributable to the OASDI portion of Social Security employment
taxes under Section 230 of the Social Security Act (42 U.S.C.
Section 430) in effect on the first day of each Plan Year.
(FF) "SPOUSE" or "SURVIVING SPOUSE" means the individual to whom a Member or
former Member was married on the date such Member withdraws his
Account, or if such Member has not withdrawn his Account, the
individual to whom the Member or former Member was married on the date
of his death.
(GG) "THIRD PARTY ADMINISTRATOR" or "TPA" means Pentegra Services, Inc., a
non-fiduciary provider of administrative services appointed and
directed by the Plan Administrator or the Named Fiduciary either
jointly or severally.
(HH) "TRUST" means the Trust or Trusts established and maintained pursuant
to the terms and provisions of this document and any separately
maintained Trust Agreement or Agreements.
(II) "TRUSTEE" generally means the person, persons or other entities
designated by the Employer or its Board as the Trustee or Trustees here
of and specified as such in the Adoption Agreement and any separately
maintained Trust Agreement or Agreements.
(JJ) "TRUST AGREEMENT" means the separate document by which the Employer or
its Board has appointed a Trustee of the Plan, specified the terms and
conditions of such appointment and any fees associated therewith.
(KK) "TRUST FUND" means the Trust Fund or Funds established by the Trust
Agreement or Agreements.
(LL) "UNIT" means the unit of measure described in Article V of a Member's
proportionate interest in the available Investment Funds (as defined in
Article IV).
6
<PAGE> 9
(MM) "VALUATION DATE" means the last business day of any month for the
Trustee, except that in the event the underlying portfolio(s) of any
Investment Fund cannot be valued on such date, the Valuation Date for
such Investment Fund shall be the next subsequent date on which the
underlying portfolio(s) can be valued. Valuations shall be made as of
the close of business on such Valuation Date(s).
(NN) "YEAR OF EMPLOYMENT" means a 12-month period of Employment.
(OO) "YEAR OF SERVICE" means any Plan Year during which an individual
completed at least 1,000 Hours of Employment, or satisfied any
alternative requirement, as determined by the Plan Administrator in
accordance with any applicable Regulations issued by the DOL and the
IRS.
SECTION 1.3
The masculine pronoun wherever used shall include the feminine pronoun.
7
<PAGE> 10
ARTICLE II
PARTICIPATION AND MEMBERSHIP
SECTION 2.1 ELIGIBILITY REQUIREMENTS
The Employer may establish as a requirement for eligibility in the Plan (i) the
completion of any number of months not to exceed 12 consecutive months, or (ii)
the completion of one or two 12-consecutive-month periods, and/or (iii) if the
Employer so elects, it may adopt a minimum age requirement of age 21. Such
election shall be made and reflected on the Adoption Agreement. The eligibility
requirement(s) designated by the Employer shall apply uniformly to all Plan
features elected by the Employer. Notwithstanding the foregoing, in the case of
an Employer that adopts the 401(k) feature under Section 3.9, the eligibility
requirements under such feature and any other Plan feature adopted by the
Employer shall be identical and shall not exceed the period described in clause
(i) above, and, at the election of the Employer, attainment of age 21 as
described in clause (iii) above.
Where an Employer designates a one or two 12-consecutive-month eligibility
waiting period, an Employee must complete at least 1,000 Hours of Employment
during each 12-consecutive-month period (measured from his date of Employment
and each anniversary thereafter). Where an Employer designates an eligibility
waiting period of less than 12 months, an Employee must, for purposes of
eligibility, complete a required number of hours (measured from his date of
Employment and each anniversary thereafter) which is arrived at by multiplying
the number of months of the eligibility waiting period requirement by 83 1/3.
SECTION 2.2 EXCLUSION OF CERTAIN EMPLOYEES
To the extent provided in the Adoption Agreement, the following Employees may be
excluded from participation in the Plan:
(i) Employees not meeting the age and service requirements;
(ii) Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employee representatives
and one or more Employers if there is evidence that retirement benefits
were the subject of good faith bargaining between such Employee
representatives and such Employer(s). For this purpose, the term
"Employee representative" does not include any organization where more
than one-half of the membership is comprised of owners, officers and
executives of the Employer;
(iii) Employees who are nonresident aliens and who receive no earned income
from the Employer which constitutes income from sources within the
United States; and
8
<PAGE> 11
(iv) Employees described in Section 2.4 or included in any other ineligible
job classifications set forth in the Adoption Agreement.
SECTION 2.3 WAIVER OF ELIGIBILITY REQUIREMENTS
The Employer, at its election, may waive the eligibility requirement(s) for
participation specified above for (i) all Employees, or (ii) all those employed
on or up to 12 months after its Commencement Date under the Plan. Subject to the
requirements of the Code, the eligibility waiting period shall be deemed to have
been satisfied for an Employee who was previously a Member of the Plan.
All Employees whose Employment commences after the expiration date of the
Employer's waiver of the eligibility requirement(s), if any, shall be enrolled
in the Plan in accordance with the eligibility requirement(s) specified in the
Adoption Agreement.
SECTION 2.4 EXCLUSION OF NON-SALARIED EMPLOYEES
The Employer, at its election, may exclude non-salaried (hourly paid) Employees
from participation in the Plan, regardless of the number of Hours of Employment
such Employees complete in any Plan Year. Notwithstanding the foregoing, for
purposes of this Section and all purposes under the Plan, a non-salaried
Employee that is hired following the adoption date of the Plan by the Employer,
but prior to the adoption of this exclusion by the Employer, shall continue to
be deemed to be an Employee and will continue to receive benefits on the same
basis as a salaried Member, despite classification as a non-salaried Employee.
SECTION 2.5 COMMENCEMENT OF PARTICIPATION
Every eligible Employee (other than non-salaried or such other Employees who, at
the election of the Employer, are excluded from participation) shall commence
participation in the Plan on the later of:
(1) The Employer's Commencement Date, or
(2) The first day of the month or calendar quarter (as designated
by the Employer in the Adoption Agreement) coinciding with or
next following his satisfaction of the eligibility
requirements as specified in the Adoption Agreement.
The date that participation commences shall be hereinafter referred to as his
Enrollment Date. Notwithstanding the above, no Employee shall under any
circumstances become a Member unless and until his enrollment application is
filed with, and accepted by, the Plan Administrator. The
9
<PAGE> 12
Plan Administrator shall notify each Employee of his eligibility for membership
in the Plan and shall furnish him with an enrollment application in order that
he may elect to make or receive contributions on his behalf under Article III at
the earliest possible date consonant with this Article.
If an Employee fails to complete the enrollment form furnished to him, the Plan
Administrator shall do so on his behalf. In the event the Plan Administrator
processes the enrollment form on behalf of the Employee, the Employee shall be
deemed to have elected not to make any contributions and/or elective deferrals
under the Plan, if applicable.
SECTION 2.6 TERMINATION OF PARTICIPATION
Membership under all features and provisions of the Plan shall terminate upon
the earlier of (a) a Member's termination of Employment and payment to him of
his entire vested interest, or (b) his death.
10
<PAGE> 13
ARTICLE III
CONTRIBUTIONS
SECTION 3.1 CONTRIBUTIONS BY MEMBERS
If the Adoption Agreement so provides, each Member may elect to make monthly
non-deductible, after-tax contributions under the Plan, based on increments of
1% of his Salary, provided the amount thereof, when aggregated with the amount
of any pre-tax effective deferrals, does not exceed the limit established by the
Employer in the Adoption Agreement. All such after-tax contributions shall be
separately accounted for, nonforfeitable and distributed with and in addition to
any other benefit to which the Member is entitled hereunder. A Member may change
his contribution rate as designated in the Adoption Agreement, but reduced or
suspended contributions may not subsequently be made up.
SECTION 3.2 ELECTIVE DEFERRALS BY MEMBERS
If the Adoption Agreement so provides, each Member may elect to make monthly
pre-tax elective deferrals (401(k) deferrals) under the Plan, based on
increments of 1% of his Salary, provided the amount thereof, when aggregated
with the amount of any after-tax contributions, does not exceed the limit
established by the Employer in the Adoption Agreement. All such 401(k) deferrals
shall be separately accounted for, nonforfeitable and distributed under the
terms and conditions described under Article VII with and in addition to any
other benefit to which the Member is entitled hereunder. A Member may change his
401(k) deferral rate or suspend his 401(k) deferrals as designated in the
Adoption Agreement, but reduced or suspended deferrals may not subsequently be
made up.
Notwithstanding any other provision of the Plan, no Member may make 401(k)
deferrals during any Plan Year in excess of $7,000 multiplied by the adjustment
factor as provided by the Secretary of the Treasury. The adjustment factor shall
mean the cost of living adjustment factor prescribed by the Secretary of the
Treasury under Section 402(g)(5) of the Code for years beginning after December
31, 1987, as applied to such items and in such manner as the Secretary shall
provide. In the event that the aggregate amount of such 401(k) deferrals for a
Member exceeds the limitation in the previous sentence, the amount of such
excess, increased by any income and decreased by any losses attributable
thereto, shall be refunded to such Member no later than the April 15 of the Plan
Year following the Plan Year for which the 401(k) deferrals were made. If Member
also participates, in any Plan Year, in any other plans subject to the
limitations set forth in Section 402(g) of the Code and has made excess 401(k)
deferrals under this Plan when combined with the other plans subject to such
limits, to the extent the Member, in writing submitted to the TPA no later than
the March 1 of the Plan Year following the Plan Year for which
11
<PAGE> 14
the 401(k) deferrals were made, designates any 401(k) deferrals under this Plan
as excess deferrals, the amount of such designated excess, increased by any
income and decreased by any losses attributable thereto, shall be refunded to
the Member no later than the April 15 of the Plan Year following the Plan Year
for which the 401(k) deferrals were made.
SECTION 3.3 TRANSFER OF FUNDS AND ROLLOVER CONTRIBUTIONS BY MEMBERS
Each Member may elect to make, directly or indirectly, a rollover contribution
to the Plan of amounts held on his behalf in (i) an employee benefit plan
qualified under Section 401(a) of the Code, or (ii) an individual retirement
account or annuity as described in Section 408(d)(3) of the Code. All such
amounts shall be certified in form and substance satisfactory to the Plan
Administrator by the Member as being all or part of an "eligible rollover
distribution" or a "rollover contribution" within the meaning of Section
402(c)(4) or Section 408(d)(3), respectively, of the Code. Such rollover
amounts, along with the earnings related thereto, will be accounted for
separately from any other amounts in the Member's Account. A Member shall have a
nonforfeitable vested interest in all such rollover amounts.
The Employer may, at its option, permit Employees who have not satisfied the
eligibility requirements designated in the Adoption Agreement to make a rollover
contribution to the Plan.
The Trustee of the Plan may also accept a direct transfer of funds, which meets
the requirements of Section 1.411(d)-4 of the IRS Regulations, from a plan
which the Trustee reasonably believes to be qualified under Section 401(a) of
the Code in which an Employee was, is, or will become, as the case may be, a
participant. If the funds so directly transferred are transferred from a
retirement plan subject to Code Section 401(a)(11), then such funds shall be
accounted for separately and any subsequent distribution of those funds, and
earnings thereon, shall be subject to the provisions of Section 7.3 which are
applicable when an Employer elects to provide an annuity option under the Plan.
SECTION 3.4 EMPLOYER CONTRIBUTIONS - GENERAL
The Employer may elect to make regular or discretionary contributions under the
Plan. Such Employer contributions may be in the form of (i) matching
contributions, (ii) basic contributions, and/or (iii) profit sharing
contributions as designated by the Employer in the Adoption Agreement and/or (i)
supplemental contributions and/or (ii) qualified nonelective contributions as
permitted under the Plan. Each such contribution type shall be separately
accounted for by the TPA.
12
<PAGE> 15
SECTION 3.5 EMPLOYER MATCHING CONTRIBUTIONS
The Employer may elect to make regular matching contributions under the Plan.
Such matching contributions on behalf of any Member shall be conditioned upon
the Member making after-tax contributions under Section 3.1 and/or 401(k)
deferrals under Sections 3.2 and 3.9.
If so adopted, the Employer shall contribute monthly under the Plan on behalf of
each of its Members an amount equal to a percentage (as specified by the
Employer in the Adoption Agreement) of the Member's after-tax contributions
and/or 401(k) deferrals not in excess of a maximum percentage as specified by
the Employer in the Adoption Agreement (in increments of 1%) of his Salary for
such month. The percentage elected by the Employer shall be based on 5%
increments not to exceed 200% or in accordance with one of the schedules of
matching contribution formulas listed below, and must be uniformly applicable to
all Members.
<TABLE>
<CAPTION>
Years of Employment Matching %
------------------- ----------
<S> <C> <C>
Formula Step 1 Less than 3 50%
At least 3 but less than 5 75%
5 or more 100%
Formula Step 2 Less than 3 100%
At least 3 but less than 5 150%
5 or more 200%
</TABLE>
SECTION 3.6 EMPLOYER BASIC CONTRIBUTIONS
The Employer may elect to make regular basic contributions under the Plan. Such
basic contributions on behalf of any Member shall not be conditioned upon the
Member making after-tax contributions and/or (401(k) deferrals under this
Article III. If so adopted, the Employer shall contribute monthly under the Plan
on behalf of each Member (as specified by the Employer in the Adoption
Agreement) an amount equal to a percentage not to exceed 15% (as specified by
the Employer in the Adoption Agreement) in increments of 1% of the Member's
Salary for such month. The percentage elected by the Employer shall be uniformly
applicable to all Members. The Employer may elect to restrict the allocation of
such basic contribution to those Members who were employed with the Employer on
the last day of the month for which the basic contribution is made.
SECTION 3.7 SUPPLEMENTAL CONTRIBUTIONS BY EMPLOYER
An Employer may, at its option, make a supplemental contribution under Formula
(1) or (2) below:
13
<PAGE> 16
FORMULA (1) A uniform percentage (as specified by the Employer) of each
Member's contributions which were received by the Plan during
the Plan Year with respect to which the supplemental
contribution relates. If the Employer elects to make such a
supplemental contribution, it shall be made on or before the
last day of February in the Plan Year following the Plan Year
described in the preceding sentence on behalf of all those
Members who were employed with the Employer on the last
working day of the Plan Year with respect to which the
supplemental contribution relates.
FORMULA (2) A uniform dollar amount per Member or a uniform percentage
of each Member's Salary for the Plan Year (or, at the election
of the Employer, the Employer's fiscal year) to which the
supplemental contribution relates. If the Employer elects to
make such a supplemental contribution, it shall be made on or
before the last day of the second month in the Plan Year (or
the fiscal year) following the Plan Year (or the fiscal year)
described in the preceding sentence on behalf of all those
Members who were employed with the Employer on the last
working day of the Plan Year (or the fiscal year) to which the
supplemental contribution relates. The percentage contributed
under this Formula (2) shall be limited in accordance with the
Employer's matching formula and basic contribution rate, if
any, under this Article such that the sum of the Employer's
Formula (2) supplemental contribution plus all other Employer
contributions under this Article shall not exceed 15% of
Salary for such year.
SECTION 3.8 THE PROFIT SHARING FEATURE
An Employer may, at its option, adopt the Profit Sharing Feature as described
herein, subject to any other provisions of the Plan, where applicable. This
Feature may be adopted either in lieu of, or in addition to, any other Plan
Feature contained in this Article III. The Profit Sharing Feature is designed to
provide the Employer a means by which to provide discretionary contributions on
behalf of Employees eligible under the Plan.
If this Profit Sharing Feature is adopted, the Employer may contribute on behalf
of each of its eligible Members, on an annual (or at the election of the
Employer, quarterly) basis for any Plan Year or fiscal year of the Employer (as
the Employer shall elect), a discretionary amount not to exceed the maximum
amount allowable as a deduction to the Employer under the provisions of Section
404 of the Code, and further subject to the provisions of Article X.
14
<PAGE> 17
Any such profit sharing contribution must be received by the Trustee on or
before the last business day of the second month following the close of the
Contribution Determination Period on behalf of all those Members who are
entitled to an allocation of such profit sharing contribution as set forth in
the Adoption Agreement. For purposes of making the allocations described in this
paragraph, a Member who is on a Type 1 non-military Leave of Absence (as defined
in Sections 1.2(U) and 10.8(B)(1)) or a Type 4 military Leave of Absence (as
defined in Sections 1.2(U) and 10.8(B)(4)) shall be treated as if he were a
Member who was an Employee in Employment on the last day of such Contribution
Determination Period.
Profit sharing contributions shall be allocated to each Member's Account for the
Contribution Determination Period at the election of the Employer, in accordance
with one of the following options:
PROFIT SHARING FORMULA 1 - In the same ratio as each Member's Salary during
such Contribution Determination Period bears to the
total of such Salary of all Members.
PROFIT SHARING FORMULA 2 - In the same ratio as each Member's Salary for the
portion of the Contribution Determination Period
during which the Member satisfied the Employer's
eligibility requirement(s) bears to the total of such
Salary of all Members.
The Employer may integrate the Profit Sharing Feature with Social Security in
accordance with the following provision. The annual (or quarterly, if
applicable) profit sharing contributions for any Contribution Determination
Period (which period shall include, for the purposes of the following maximum
integration levels provided hereunder where the Employer has elected quarterly
allocations of contributions, the four quarters of a Plan Year or fiscal year)
shall be allocated to each Member's Account at the election of the Employer, in
accordance with one of the following options:
PROFIT SHARING FORMULA 3 - In a uniform percentage (as specified by the Employer
in the Adoption Agreement) of each Member's Salary
during the Contribution Determination Period up to
the Social Security Taxable Wage Base for such
Contribution Determination Period (the "Base
Contribution Percentage"), plus a uniform percentage
(as specified by the Employer in the Adoption
Agreement) of each Member's Salary for the
Contribution Determination Period in excess of the
Social Security Taxable Wage Base for such
Contribution Determination Period (the "Excess
Contribution Percentage").
15
<PAGE> 18
PROFIT SHARING FORMULA 4 - In a uniform percentage (as specified by the Employer
in the Adoption Agreement) of each Member's Salary
for the portion of the Contribution Determination
Period during which the Member satisfied the
Employer's eligibility requirement(s), if any, up to
the Base Contribution Percentage for such
Contribution Determination Period, plus a uniform
percentage (as specified by the Employer in the
Adoption Agreement) of each Member's Salary for the
portion of the Contribution Determination Period
during which the Member satisfied the Employer's
eligibility requirement(s), equal to the Excess
Contribution Percentage.
The Excess Contribution Percentage described in Profit Sharing Formulas 3 and 4
above may not exceed the lesser of (i) the Base Contribution Percentage, or (ii)
the greater of (1) 5.7% or (2) the percentage equal to the portion of the Code
Section 3111(a) tax imposed on employers under the Federal Insurance
Contributions Act (as in effect as of the beginning of the Plan Year) which is
attributable to old-age insurance. For purposes of this Subparagraph,
"compensation" as defined in Section 414(s) of the Code shall be substituted for
"Salary" in determining the Excess Contribution Percentage and the Base
Contribution Percentage.
Notwithstanding the foregoing, the Employer may not adopt the Social Security
integration options provided above if any other integrated defined contribution
or defined benefit plan is maintained by the Employer during any Contribution
Determination Period.
SECTION 3.9 THE 401(k) FEATURE
The Employer may, at its option, adopt the 401(k) Feature described hereunder
and in Section 3.2 above for the exclusive purpose of permitting its Members to
make 401(k) deferrals to the Plan.
The Employer may make, apart from any matching contributions it may elect to
make, Employer qualified nonelective contributions as defined in Section
1.401(k)-1(g)(13) of the Regulations. The amount of such contributions shall
not exceed 15% of the Salary of all Members eligible to share in the allocation
when combined with all Employer contributions (including 401(k) elective
deferrals) to the Plan for such Plan Year. Allocation of such contributions
shall be made, at the election of the Employer, to the accounts of (i) all
Members, or (ii) only Members who are not Highly Compensated Employees.
Allocation of such contributions shall be made, at the election of the Employer,
in the ratio (i) which each eligible Member's Salary for the Plan Year bears to
the total Salary of all eligible Members for such Plan Year, or (ii) which each
eligible Member's Salary not in excess of a fixed dollar amount specified by the
Employer for the Plan Year bears to the total Salary of all eligible Members
taking into account Salary for each such Member not in excess
16
<PAGE> 19
of the specified dollar amount. Notwithstanding any provision of the Plan to the
contrary, such contributions shall be subject to the same vesting requirements
and distribution restrictions as Members' 401(k) deferrals and shall not be
conditioned on any election or contribution of the Member under the 401(k)
feature. Any such contributions must be made on or before the last day of the
February after the Plan Year to which the contribution relates. Further, for
purposes of the actual deferral percentage or actual contribution percentage
tests described below, the Employer may apply (in accordance with applicable
Regulations) all or any portion of the Employer qualified nonelective
contributions for the Plan Year toward the satisfaction of the actual deferral
percentage test. Any remaining Employer qualified nonelective contributions not
utilized to satisfy the actual deferral percentage test may be applied (in
accordance with applicable Regulations) to satisfy the actual contribution
percentage test.
Notwithstanding any other provision of this 401(k) Feature, the actual deferral
percentages for the Plan Year for Highly Compensated Employees shall not exceed
the greater of the following actual deferral percentages: (a) the actual
deferral percentage for such Plan Year of those Employees who are not Highly
Compensated Employees multiplied by 1.25; or (b) the actual deferral percentage
for the Plan Year of those Employees who are not Highly Compensated Employees
multiplied by 2.0, provided that the actual deferral percentage for the Highly
Compensated Employees does not exceed the actual deferral percentage for such
other Employees by more than 2 percentage points. This determination shall be
made in accordance with the procedure described in Section 3.10 below.
SECTION 3.10 DETERMINING THE ACTUAL DEFERRAL PERCENTAGES
For purposes of this 401(k) Feature, the "actual deferral percentage" for a Plan
Year means, for each specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of (a) the amount of
401(k) deferrals (including, as provided in Section 3.9, any Employer qualified
nonelective contributions) made to the Member's account for the Plan Year, to
(b) the amount of the Member's compensation (as defined in Section 414(s) of the
Code) for the Plan Year or, alternatively, where specifically elected by the
Employer, for only that part of the Plan Year during which the Member was
eligible to participate in the Plan. An Employee's actual deferral percentage
shall be zero if no 401(k) deferral (or, as provided in Section 3.9, Employer
qualified nonelective contribution) is made on his behalf for such Plan Year. If
the Plan and one or more other plans which include cash or deferred arrangements
are considered as one plan for purposes of Sections 401(a)(4) and 410(b) of the
Code, the cash or deferred arrangements included in such plans shall be treated
as one arrangement for purposes of this 401(k) Feature.
17
<PAGE> 20
For purposes of determining the actual deferral percentage of a Member who is a
Highly Compensated Employee subject to the family aggregation rules of Section
414(q)(6) of the Code because such Employee is either a five percent owner or
one of the ten most Highly Compensated Employees as described in Section
414(q)(6) of the Code, the 401(k) deferrals, contributions and compensation (as
defined in Section 414(s) of the Code) of such Member shall include 401(k)
deferrals, contributions and compensation (as defined in Section 414(s) of the
Code) of "family members", within the meaning of Section 414(q)(6) of the Code,
and such "family members" shall not be considered as separate Employees in
determining actual deferral percentages.
The TPA shall determine as of the end of the Plan Year whether one of the actual
deferral percentage tests specified in Section 3.9 above is satisfied for such
Plan Year. This determination shall be made after first determining the
treatment of excess deferrals within the meaning of Section 402(g) of the Code
under Section 3.2 above. In the event that neither of such actual deferral
percentage tests is satisfied, the TPA shall, to the extent permissible under
the Code and the IRS Regulations, refund the excess contributions for the Plan
Year in the following order of priority: by (i) refunding such amounts deferred
by the Member which were not matched by his Employer (and any earnings and
losses allocable thereto), and (ii) refunding amounts deferred for such Plan
Year by the Member (and any earnings and losses allocable thereto), and, solely
to the extent permitted under the Code and applicable IRS Regulations,
distributing to the Member amounts contributed for such Plan Year by the
Employer with respect to the Member's 401(k) deferrals that are returned
pursuant to this Paragraph (and any earnings and losses allocable thereto).
The distribution of such excess contributions shall be made to Highly
Compensated Members to the extent practicable before the 15th day of the third
month immediately following the Plan Year for which such excess contributions
were made, but in no event later than the end of the Plan Year following such
Plan Year or, in the case of the termination of the Plan in accordance with
Article XI, no later than the end of the twelve-month period immediately
following the date of such termination.
For purposes of this 401(k) Feature, "excess contributions" means, with respect
to any Plan Year, the excess of the aggregate amount of 401(k) deferrals (and
any earnings and losses allocable thereto) made to the accounts of Highly
Compensated Members for such Plan Year, over the maximum amount of such
deferrals that could be made by such Members without violating the requirements
described above, determined by reducing 401(k) deferrals, made by or on behalf
of Highly Compensated Members in order of the actual deferral percentages
beginning with the highest of such percentages.
18
<PAGE> 21
SECTION 3.11 DETERMINING THE ACTUAL CONTRIBUTION PERCENTAGES
Notwithstanding any other provision of this Section 3.11, the actual
contribution percentage for the Plan Year for Highly Compensated Employees shall
not exceed the greater of the following actual contribution percentages: (a) the
actual contribution percentage for such Plan Year of those Employees who are not
Highly Compensated Employees multiplied by 1.25, or (b) the actual contribution
percentage for the Plan Year of those Employees who are not Highly Compensated
Employees multiplied by 2.0, provided that the actual contribution percentage
for the Highly Compensated Employees does not exceed the actual contribution
percentage for such other Employees by more than 2 percentage points. For
purposes of this Article III, the "actual contribution percentages for a Plan
Year means, for each specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of (A) the sum of (i)
Member after-tax contributions credited to his Account for the Plan Year, (ii)
Employer matching contributions and/or supplemental contributions under Formula
1 credited to his Account as described in this Article for the Plan Year, and
(iii) in accordance with and to the extent permitted by the IRS Regulations,
401(k) deferrals (and, as provided in Section 3.9, any Employer qualified
nonelective contributions) credited to his Account, to (B) the amount of the
Member's compensation (as defined in Section 414(s) of the Code) for the Plan
Year or, alternatively, where specifically elected by the Employer, for only
that part of the Plan Year during which the Member was eligible to participate
in the Plan. An Employee's actual contribution percentage shall be zero if no
such contributions are made on his behalf for such Plan Year.
The actual contribution percentage taken into account for any Highly Compensated
Employee who is eligible to make Member contributions or receive Employer
matching contributions under two or more plans described in Section 401(a) of
the Code or arrangements described in Section 401(k) of the Code that are
maintained by the Employer shall be determined as if all such contributions were
made under a single plan. For purposes of determining the actual contribution
percentage of a Member who is a Highly Compensated Employee subject to the
family aggregation rules of Section 414(q)(6) of the Code because such Member is
either a five-percent owner or one of the ten most Highly Compensated Employees
as described in Section 414(q)(6) of the Code, the Employer matching
contributions and Member contributions and compensation (as defined in Section
414(s) of the Code) of such Member shall include the Employer matching and
Member contributions and compensation (as defined in Section 414(s) of the Code)
of "family members," within the meaning of Section 414(q)(6) of the Code, and
such "family members" shall not be considered as separate Employees in
determining actual contribution percentages.
The TPA shall determine as of the end of the Plan Year whether one of the actual
contribution percentage tests specified above is satisfied for such Plan Year.
This determination shall be made after first determining the treatment of excess
deferrals within the meaning of Section 402(g) of
19
<PAGE> 22
the Code under Section 3.2 above and then determining the treatment of excess
contributions under Section 3.10 above. In the event that neither of the actual
contribution percentage tests is satisfied, the TPA shall refund the excess
aggregate contributions in the manner described below.
For purposes of this Article III, "excess aggregate contributions" means, with
respect to any Plan Year and with respect to any Member, the excess of the
aggregate amount of contributions (and any earnings and losses allocable
thereto) made as (i) Member after-tax contributions credited to his Account for
the Plan Year, (ii) Employer matching contributions and/or supplemental
contributions under Formula 1 credited to his Account as described in this
Article for the Plan Year, and (iii) in accordance with and to the extent
permitted by the IRS Regulations, 401(k) deferrals (and, as provided in Section
3.9, any Employer qualified nonelective contributions) credited to his Account
(if the Plan Administrator elects to take into account such deferral and
contributions when calculating the actual contribution percentage) of Highly
Compensated Members for such Plan Year, over the maximum amount of such
contributions that could be made as Employer contributions, Member contributions
and 401(k) deferrals of such Members without violating the requirements of any
Subparagraph of this Section 3.11.
If the TPA is required to refund excess aggregate contributions for any Highly
Compensated Member for a Plan Year in order to satisfy the requirements of any
Subparagraph above, then the refund of such excess aggregate contributions shall
be made with respect to such Highly Compensated Members to the extent
practicable before the 15th day of the third month immediately following the
Plan Year for which such excess aggregate contributions were made, but in no
event later than the end of the Plan Year following such Plan Year or, in the
case of the termination of the Plan in accordance with Article XI, no later than
the end of the twelve-month period immediately following the date of such
termination.
For each such Member, the amounts so refunded shall be made in the following
order of priority: (i) to the extent that the amounts contributed by the Member
on an after-tax basis for such Plan Year exceed the highest rate of such
contributions with respect to which amounts were contributed by the Employer, by
refunding such amounts contributed by the Member which were not matched by his
Employer (and any earnings and losses allocable thereto) and (ii) by refunding
amounts contributed for such Plan Year by the Member which were matched by his
Employer (and any earnings and losses allocable thereto) and, solely to the
extent permitted under the Code and applicable IRS Regulations, distributing to
the Member amounts contributed for such Plan Year by the Employer with respect
to the amounts so returned (and any earnings and losses allocable thereto). All
such distributions shall be made to, or shall be with respect to, Highly
Compensated Members on the basis of the respective portions of such amounts
attributable to each such Highly Compensated Member.
20
<PAGE> 23
SECTION 3.12 THE AGGREGATE LIMIT TEST
Notwithstanding any other provision of the Plan, the sum of the actual deferral
percentage and the actual contribution percentage determined in accordance with
the procedures described above of those Employees who are Highly Compensated
Employees may not exceed the aggregate limit as determined below.
For purposes of this Article III, the "aggregate limit" for a Plan Year is the
greater of:
(1) The sum of:
(a) 1.25 times the greater of the relevant actual
deferral percentage or the relevant actual
contribution percentage, and
(b) Two percentage points plus the lesser of the relevant
actual deferral percentage or the relevant actual
contribution percentage. In no event, however, shall
this amount exceed twice the lesser of the relevant
actual deferral percentage or the relevant actual
contribution percentage; or
(2) The sum of:
(a) 1.25 times the lesser of the relevant actual deferral
percentage or the relevant actual contribution
percentage, and
(b) Two percentage points plus the greater of the
relevant actual deferral percentage or the relevant
actual contribution percentage. In no event, however,
shall this amount exceed twice the greater of the
relevant actual deferral percentage or the relevant
actual contribution percentage; provided, however,
that if a less restrictive limitation is prescribed
by the IRS, such limitation shall be used in lieu of
the foregoing. The relevant actual deferral
percentage and relevant actual contribution
percentage are defined in accordance with the Code
and the IRS Regulations.
The TPA shall determine as of the end of the Plan Year whether the aggregate
limit has been exceeded. This determination shall be made after first
determining the treatment of excess deferrals within the meaning of Section
402(g) of the Code under Section 3.2 above, then determining the treatment of
excess contributions under Section 3.10 above, and then determining the
treatment of excess aggregate contributions under this Article III. In the event
that the aggregate limit is exceeded, the actual contribution percentage of
those Employees who are Highly Compensated Employees shall be reduced in the
same manner as described in Section 3.11 of this Article until the aggregate
limit is no longer exceeded, unless the TPA designates, in lieu of the reduction
of the actual contribution percentage a reduction in the actual deferral
percentage of those
21
<PAGE> 24
Employees who are Highly Compensated Employees, which reduction shall occur in
the same manner as described in Section 3.10 of this Article until the aggregate
limit is no longer exceeded. Notwithstanding the provisions of Sections 3.2 and
3.10 above, the amount of excess contributions to be distributed, with respect
to a Member for a Plan Year, shall be reduced by any excess deferrals
distributed to such Member for such Plan Year.
SECTION 3.13 REMITTANCE OF CONTRIBUTIONS
The contributions of both the Employer and the Plan Members shall be recorded by
the Employer and remitted to the TPA for transmittal to the Trustee or custodian
or directly to the Trustee or custodian so that the Trustee or custodian shall
be in receipt thereof by the 15th day of the month next following the month in
respect of which such contributions are payable. Such amounts shall be used to
provide additional Units pursuant to Article V. Any contributions received by
the Trustee or custodian on the first working day of a month shall be deemed to
have been received on the last working day of the immediately preceding month.
Working day shall be defined as any day regular mail is delivered by the United
States Postal Service.
22
<PAGE> 25
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.1 INVESTMENT BY TRUSTEE OR CUSTODIAN
All contributions to the Plan shall, upon receipt by the TPA, be delivered to
the Trustee or custodian to be held in the Trust Fund and invested and
distributed by the Trustee or custodian in accordance with the provisions of the
Plan and Trust Agreement. The Trust Fund shall consist of one or more of the
Investment Funds designated by the Employer in the Adoption Agreement.
With the exception of the Employer Stock Fund, the Trustee may in its discretion
invest any amounts held by it in any Investment Fund in any commingled or group
trust fund described in Section 401(a) of the Code and exempt under Section
501(a) of the Code or in any common trust fund exempt under Section 584 of the
Code, provided that such trust fund satisfies any requirements of the Plan
applicable to such Investment Funds. To the extent that the Investment Funds are
at any time invested in any commingled, group or common trust fund, the
declaration of trust or other instrument pertaining to such fund and any
amendments thereto are hereby adopted as part of the Plan.
The Employer will designate in the Adoption Agreement which of the Investment
Funds described therein will be made available to Members and the terms and
conditions under which such Funds will operate with respect to employee
direction of allocations to and among such designated Funds and the types of
contributions and/or deferrals eligible for investment therein.
SECTION 4.2 MEMBER DIRECTED INVESTMENTS
To the extent permitted by the Employer as set forth in the Adoption Agreement,
each Member shall direct in writing that his contributions and deferrals, if
any, and the contributions made by the Employer on his behalf shall be invested
(a) entirely in any one of the Investment Funds made available by the Employer,
or (b) among the available Investment Funds in any combination of multiples of
1%. If a Member has made any Rollover contributions in accordance with Article
III, Section 3.3, such Member may elect to apply separate investment directions
to such rollover amounts. Any such investment direction shall be followed by the
TPA until changed. Subject to the provisions of the following paragraphs of this
Section, as designated in the Adoption Agreement, a Member may change his
investment direction as to future contributions and also as to the value of his
accumulated Units in each of the available Investment Funds by filing written
notice with the TPA. Such directed change(s) will become effective upon the
Valuation Date coinciding with or next following the date which his notice was
received by the TPA or as soon as administratively practicable thereafter. If
the Adoption Agreement provides for Member
23
<PAGE> 26
directed investments, and if a Member does not make a written designation of an
Investment Fund or Funds, the Employer or its designee shall direct the Trustee
to invest all amounts held or received on account of the such Member in the
Investment Fund which in the opinion of the Employer best protects principal.
Except as otherwise provided below, a Member may not direct a transfer from the
Stable Value Fund to the Government Money Market Fund and/or the Bond Index
Fund. A Member may direct a transfer from the 500 Stock Index Fund, the Midcap
400 Stock Index Fund, and/or the Employer Stock Fund to the Government Money
Market Fund and/or the Bond Index Fund provided that amounts previously
transferred from the Stable Value Fund to the 500 Stock Index Fund, the Midcap
400 Stock Index Fund or the Employer Stock Fund remain in such Funds for a
period of three months prior to being transferred to the Government Money Market
Fund or the Bond Index Fund.
SECTION 4.3 EMPLOYER SECURITIES
If the Employer so elects in the Adoption Agreement, the Employer and/or Members
may direct that contributions will be invested in Qualifying Employer Securities
(within the meaning of Section 407(d)(5) of ERISA) through the Employer Stock
Fund.
24
<PAGE> 27
ARTICLE V
MEMBERS' ACCOUNTS, UNITS AND VALUATION
The TPA shall establish and maintain an Account for each Member showing his
interests in the available Investment Funds, as designated by the Employer in
the Adoption Agreement. The interest in each Investment Fund shall be
represented by Units.
As of each Valuation Date, the value of a Unit in each Investment Fund shall be
determined by dividing (a) the sum of the net assets at market value determined
by the Trustee by (b) the total number of outstanding Units.
The number of additional Units to be credited to a Member's interest in each
available Investment Fund, as of any Valuation Date, shall be determined by
dividing (a) that portion of the aggregate contributions and/or deferrals by and
on behalf of the Member which was directed to be invested in such Investment
Fund and received by the Trustee during the month in which such Valuation Date
occurs by (b) the Unit value of such Investment Fund as of the next Valuation
Date. For purposes of the preceding sentence, in valuing a Member's Account,
contributions and/or deferrals of both Members and the Employer which have been
reported and received by the TPA on the first working day of a month shall be
deemed to have been received on the last working day of the immediately
preceding month. Working day shall be defined as any day regular mail is
delivered by the United States Postal Service.
The value of a Member's Account may be determined as of any Valuation Date by
multiplying the number of Units to his credit in each available Investment Fund
by that Investment Fund's Unit Value on such date and aggregating the results.
25
<PAGE> 28
ARTICLE VI
VESTING OF UNITS
SECTION 6.1 VESTING OF MEMBER CONTRIBUTIONS AND/OR DEFERRALS
All Units credited to a Member's Account based on after-tax contributions and/or
401(k) deferrals made by the Member and any earnings related thereto (including
any rollover contributions allocated to a Member's Account under the Plan and
any earnings thereon) and, as provided in Section 3.9, Employer qualified
nonelective contributions made on behalf of such Member shall be immediately and
fully vested in him at all times.
SECTION 6.2 VESTING OF EMPLOYER CONTRIBUTIONS
The Employer may, at its option, elect one of the available vesting schedules
described herein for each of the employer contribution types applicable to the
Plan as designated in the Adoption Agreement.
SCHEDULE 1: All applicable Units shall immediately and fully vest. If
the eligibility requirement(s) selected by the Employer under
Article II require(s) that an Employee complete a period of
Employment which is longer than 12 consecutive months, this
vesting Schedule 1 shall be automatically applicable.
SCHEDULE 2: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
<TABLE>
<CAPTION>
COMPLETED VESTED
YEARS OF EMPLOYMENT PERCENTAGE
------------------- ----------
<S> <C> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
SCHEDULE 3: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
26
<PAGE> 29
<TABLE>
<CAPTION>
Completed Vested
Years of Employment Percentage
------------------- ----------
<S> <C> <C>
Less than 5 0%
5 or more 100%
</TABLE>
SCHEDULE 4: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
<TABLE>
<CAPTION>
Completed Vested
Years of Employment Percentage
------------------- ----------
<S> <C> <C>
Less than 3 0%
3 or more 100%
</TABLE>
SCHEDULE 5: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
<TABLE>
<CAPTION>
Completed Vested
Years of Employment Percentage
------------------- ----------
<S> <C> <C>
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
SCHEDULE 6: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
<TABLE>
<CAPTION>
Completed Vested
Years of Employment Percentage
------------------- ----------
<S> <C> <C>
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
</TABLE>
SCHEDULE 7: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth in the
Adoption Agreement created by the Employer in accordance with
applicable law.
27
<PAGE> 30
Notwithstanding the vesting schedules above, a Member's interest in his Account
shall become 100% vested in the event that (i) the Member dies while in active
Employment and the TPA has received notification of death, (ii) the Member has
been approved for Disability, pursuant to the provisions of Article VII, and the
TPA has received notification of Disability, or (iii) the Member has attained
Normal Retirement Age.
Except as otherwise provided hereunder, in the event that the Employer adopts
the Plan as a successor plan to another defined contribution plan qualified
under Sections 401(a) and 501(a) of the Code, or in the event that the Employer
changes or amends a vesting schedule adopted under this Article, any Member who
was covered under such predecessor plan or, in the case of a change or amendment
to the vesting schedule, any Member who has completed at least 3 Years of
Employment with the Employer may elect to have the nonforfeitable percentage of
the portion of his Account which is subject to such vesting schedule computed
under such predecessor plan's vesting provisions, or computed without regard to
such change or amendment (a "Vesting Election"). Any Vesting Election made under
this Subparagraph shall be made by notifying the TPA in writing within the
election period hereinafter described. The election period shall begin on the
date such amendment is adopted or the date such change is effective, or the date
the Plan which serves as a successor plan is adopted or effective, as the case
may be, and shall end no earlier than the latest of the following dates: (i) the
date which is 60 days after the day such amendment is adopted; (ii) the date
which is 60 days after the day such amendment or change becomes effective; (iii)
the date which is 60 days after the day the Member is given written notice of
such amendment or change by the TPA; (iv) the date which is 60 days after the
day the Plan is adopted by the Employer or becomes effective; or (v) the date
which is 60 days after the day the Member is given written notice that the Plan
has been designated as a successor plan. Any election made pursuant to this
Subparagraph shall be irrevocable.
To the extent permitted under the Code and Regulations, the Employer may, at its
option, elect to treat all Members who are eligible to make a Vesting Election
as having made such Vesting Election. Furthermore, subject to the requirements
of the applicable Regulations, the Employer may elect to treat all Members, who
were employed by the Employer on or before the effective date of the change or
amendment, as subject to the prior vesting schedule, provided such prior
schedule is more favorable.
SECTION 6.3 FORFEITURES
If a Member who was partially vested in his Account on the date of his
termination of Employment returns to Employment, his Years of Employment prior
to the Break(s) in Service shall be included in determining future vesting and,
if he returns before incurring 5 consecutive one year Breaks in Service, any
Units forfeited from his Account shall be restored to his Account, including
all interest
28
<PAGE> 31
accrued during the intervening period; provided, however, that if such a Member
has received a distribution pursuant to Article VII, his Account Units shall not
be restored unless he repays the full amount distributed to him to the Plan
before the earlier of (i) 5 years after the first date on which the Member is
subsequently reemployed by the Employer, or (ii) the close of the first period
of 5 consecutive one-year Breaks in Service commencing after the withdrawal. The
Units restored to the Member's Account will be valued on the Valuation Date
coinciding with or next following the later of (i) the date the Employee is
rehired, or (ii) the date a new enrollment application is received by the TPA.
If a Member terminates Employment without any vested interest in his Account, he
shall (i) immediately be deemed to have received a total distribution of his
Account and (ii) thereupon forfeit his entire Account; provided that if such
Member returns to Employment before the number of consecutive one-year Breaks in
Service equals or exceeds the greater of (i) 5, or (ii) the aggregate number of
the Member's Years of Service prior to such Break in Service, his Account shall
be restored in the same manner as if such Member had been partially vested at
the time of his termination of Employment, and his Years of Employment prior to
incurring the first Break in Service shall be included in any subsequent
determination of his vesting service.
Forfeited amounts, as defined in the preceding paragraph, shall be made
available to the Employer, through transfer from the Member's Account to the
Employer Credit Account, upon: (1) if the Member had a vested interest in his
Account at his termination of Employment, the earlier of (i) the date as of
which the Member receives a distribution of his entire vested interest in his
Account or (ii) the date upon which the Member incurs 5 consecutive one-year
Breaks in Service, or (2) the date of the Member's termination of Employment, if
the Member then has no vested interest in his Account. Once so transferred, such
amounts shall be used at the option of the Employer to (i) reduce administrative
expenses for that Contribution Determination Period, (ii) offset any
contributions to be made by the Employer for that Contribution Determination
Period or (iii) be allocated to all eligible Members deemed to be employed as of
the last day of the Contribution Determination Period. The Employer Credit
Account, referenced in this Subparagraph, shall be maintained to receive, in
addition to the forfeitures described above, (i) contributions in excess of the
limitations contained in Section 415 of the Code and (ii) Employer contributions
made in advance of the date allocable to Members, if any.
29
<PAGE> 32
ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
SECTION 7.1 GENERAL PROVISIONS
The Employer will define in the Adoption Agreement the terms and conditions
under which withdrawals and distributions will be permitted under the Plan. All
payments in respect of a Member's Account shall be made in cash from the Trust
Fund and in accordance with the provisions of this Article or Article Xl. The
amount of payment will be determined in accordance with the Unit values on the
Valuation Date coinciding with or next following the date proper notice is filed
with the TPA, unless following such Valuation Date a decrease in the Unit values
of the Member's investment in any of the available Investment Funds occurs prior
to the date such Units of the Member are redeemed in which case that part of the
payment which must be provided through the sale of existing Units shall equal
the value of such Units determined on the date of redemption which date shall
occur as soon as administratively practicable on or following the Valuation Date
such proper notice is filed with the TPA. The redemption date Unit value with
respect to a Member's investment in any of the available Investment Funds shall
equal the value of a Unit in such Investment Fund, as determined in accordance
with the valuation method applicable to Unit investments in such Investment Fund
on the date the Member's investment is redeemed.
Except where otherwise specified, payments provided under this Article will be
made in a lump sum as soon as practicable after such Valuation Date or date of
redemption, as may be applicable, subject to any applicable restriction on
redemption imposed on amounts invested in any of the available Investment Funds.
Any partial withdrawal shall be deemed to come:
- - First from the Member's after-tax contributions made prior to January
1, 1987.
- - Next from the Member's after-tax contributions made after December 31,
1986 plus earnings on all of the Member's after-tax contributions.
- - Next from the Member's rollover contributions plus earnings thereon.
- - Next from the Employer matching contributions plus earnings thereon.
- - Next from the Employer supplemental contributions plus earnings
thereon.
- - Next from the Employer basic contributions plus earnings thereon.
30
<PAGE> 33
- - Next from the Member's 401(k) deferrals plus earnings thereon.
- - Next from the Employer qualified nonelective contributions plus
earnings thereon.
- - Next from the Employer profit sharing contributions plus earnings
thereon.
SECTION 7.2 WITHDRAWALS WHILE EMPLOYED
The Employer may, at its option, permit Members to make withdrawals from one or
more of the portions of their Accounts while employed by the Employer, as
designated in the Adoption Agreement, under the terms and provisions described
herein.
VOLUNTARY WITHDRAWALS - To the extent permitted by the Employer as specified in
the Adoption Agreement, a Member may voluntarily withdraw some or all of his
Account (other than his 401(k) deferrals and Employer qualified nonelective
contributions treated as 401(k) deferrals except as hereinafter permitted) while
in Employment by filing a notice of withdrawal with the TPA; provided, however,
that in the event his Employer has elected to provide annuity options under
Section 7.3, no withdrawals may be made from a married Member's Account without
the written consent of such Member's Spouse (which consent shall be subject to
the procedures set forth in Section 7.3). Only one in-service withdrawal may be
made in any Plan Year from each of the rollover amount of the Member's Account
and the remainder of the Member's Account. This restriction shall not, however,
apply to a withdrawal under this Section in conjunction with a hardship
withdrawal.
Notwithstanding the foregoing paragraph, a Member may not withdraw any matching,
basic, supplemental, profit sharing or qualified nonelective contributions made
by the Employer under Article Ill unless (i) the Member has completed 60 months
of participation in the Plan; (ii) the withdrawal occurs at least 24 months
after such contributions were made by the Employer; (iii) the Employer
terminates the Plan without establishing a qualified successor plan; or (iv) the
Member dies, is disabled, retires, attains age 59 1/2 or terminates Employment.
For purposes of the preceding requirements, if the Member's Account includes
amounts which have been transferred from a defined contribution plan established
prior to the adoption of the Plan by the Employer, the period of time during
which amounts were held on behalf of such Member and the periods of
participation of such Member under such defined contribution plan shall be taken
into account.
HARDSHIP WITHDRAWALS - If designated by the Employer in the Adoption Agreement,
a Member may make a withdrawal of his 401(k) deferrals, Employer qualified
nonelective contributions which are treated as elective deferrals, and any
earnings credited thereto prior to January 1, 1989, prior to attaining age 59
1/2, provided that the withdrawal is solely on account of an immediate and heavy
financial need and is necessary to satisfy such financial need. For the purposes
of this Article, the
31
<PAGE> 34
term "immediate and heavy financial need" shall be limited to the need of funds
for (i) the payment of medical expenses (described in Section 213(d) of the
Code) incurred by the Member, the Member's Spouse, or any of the Member's
dependents (as defined in Section 152 of the Code), (ii) the payment of tuition
and room and board for the next 12 months of post-secondary education of the
Member, the Member's Spouse, the Member's children, or any of the Member's
dependents (as defined in Section 152 of the Code), (iii) the purchase
(excluding mortgage payments) of a principal residence for the Member, or (iv)
the prevention of eviction of the Member from his principal residence or the
prevention of foreclosure on the mortgage of the Member's principal residence.
For purposes of this Article, a distribution generally may be treated as
"necessary to satisfy a financial need" if the Plan Administrator reasonably
relies upon the Member's written representation that the need cannot be relieved
(i) through reimbursement or compensation by insurance or otherwise, (ii) by
reasonable liquidation of the Member's available assets, to the extent such
liquidation would not itself cause an immediate and heavy financial need, (iii)
by cessation of Member contributions and/or deferrals pursuant to Article III of
the Plan, to the extent such contributions and/or deferrals are permitted by the
Employer, or (iv) by other distributions or nontaxable (at the time of the loan)
loans from plans maintained by the Employer or by any other employer, or by
borrowing from commercial sources on reasonable commercial terms. The amount of
any withdrawal pursuant to this Article shall not exceed the amount required to
meet the demonstrated financial hardship, including any amounts necessary to pay
any federal income taxes and penalties reasonably anticipated to result from the
distribution as certified to the Plan Administrator by the Member.
Notwithstanding the foregoing, no amounts may be withdrawn on account of
hardship pursuant to this Article prior to a Member's withdrawal of his other
available Plan assets without regard to any other withdrawal restrictions
adopted by the Employer.
SECTION 7.3 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
In accordance with the provisions for distributions designated by the Employer
in the Adoption Agreement, a Member who terminates Employment with the Employer
may request a distribution of his Account at any time thereafter up to
attainment of age 70 1/2. Except as otherwise provided, only one distribution
under this Section 7.3 may be made in any Plan Year and any amounts paid under
this Article may not be returned to the Plan.
Any distribution made under this Section 7.3 requires that a Request for
Distribution be filed with the TPA. If a Member does not file such a Request,
the value of his Account will be paid to him as soon as practicable after his
attainment of age 70 1/2, but in no event shall payment commence later than
April 1 of the calendar year following the calendar year in which the Member
attains age 70 1/2 unless otherwise provided by law.
32
<PAGE> 35
LUMP SUM PAYMENTS - A Member may request a distribution of all or a part of his
Account no more frequently than once per calendar year by filing the proper
Request for Distribution with the TPA. In the event the Employer has elected to
provide an annuity option under the Plan, no distributions may be made from a
married Member's Account without the written consent of such married Member's
spouse (which consent shall be subject to the procedures set forth below).
INSTALLMENT PAYMENTS - To the extent designated by the Employer in the Adoption
Agreement and in lieu of any lump sum payment of his total Account, a Member who
has terminated his Employment may elect in his Request for Distribution to be
paid in up to 20 annual installments, provided that a Member shall not be
permitted to elect an installment period in excess of his remaining life
expectancy and if a Member attempts such an election, the TPA shall deem him to
have elected the installment period with the next lowest multiple within the
Member's remaining life expectancy. The amount of each installment will be equal
to the value of the total Units in the Member's Account, multiplied by a
fraction, the numerator of which is one and the denominator of which is the
number of remaining annual installments including the one then being paid, so
that at the end of the installment period so elected, the total Account will be
liquidated. The value of the Units will be determined in accordance with the
Unit values on the Valuation Date on or next following the TPA's receipt of his
Request for Distribution and on each anniversary thereafter subject to
applicable Regulations under Code Section 401(a)(9). Payment will be made as
soon as practicable after each such Valuation Date, but in no event shall
payment commence later than April 1 of the calendar year following the calendar
year in which the Member attains age 70 1/2 subject to the procedure for making
such distributions described below. The election of installments hereunder may
not be subsequently changed by the Member, except that upon written notice to
the TPA, the Member may withdraw the balance of the Units in his Account in a
lump sum at any time, notwithstanding the fact that the Member previously
received a distribution in the same calendar year.
ANNUITY PAYMENTS - The Employer may, at its option, elect to provide an annuity
option under the Plan. To the extent so designated by the Employer in the
Adoption Agreement and in lieu of any lump sum payment of his total Account, a
Member who has terminated his Employment may elect in his Request for
Distribution to have the value of his total Account be paid as an annuity
secured for the Member by the Plan Administrator through a Group Annuity
Contract adopted by the Plan. In the event the Employer elects to provide the
annuity option, the following provisions shall apply:
UNMARRIED MEMBERS - Any unmarried Member who has terminated his Employment may
elect, in lieu of any other available payment option, to receive a benefit
payable by purchase of a single premium contract providing for (i) a single life
annuity for the life of the Member or (ii) an annuity for the life of the Member
and, if the Member dies leaving a designated Beneficiary, a 50% survivor annuity
for the life of such designated Beneficiary.
33
<PAGE> 36
MARRIED MEMBERS - Except as otherwise provided below, (i) any married Member who
has terminated his Employment shall receive a benefit payable by purchase of a
single premium contract providing for a Qualified Joint and Survivor Annuity, as
defined below, and (ii) the Surviving Spouse of any married Member who dies
prior to the date payment of his benefit commences shall be entitled to a
Preretirement Survivor Annuity, as defined below. Notwithstanding the foregoing,
any such married Member may elect to receive his benefit in any other available
form, and may waive the Preretirement Survivor Annuity, in accordance with the
spousal consent requirements described herein.
For purposes of this Section 7.3, the term "Qualified Joint and Survivor
Annuity" means a benefit providing an annuity for the life of the Member, ending
with the payment due on the last day of the month coinciding with or preceding
the date of his death, and, if the Member dies leaving a Surviving Spouse, a
survivor annuity for the life of such Surviving Spouse equal to one-half of the
annuity payable for the life of the Member under his Qualified Joint and
Survivor Annuity, commencing on the last day of the month following the date of
the Member's death and ending with the payment due on the first day of the month
coinciding with or preceding the date of such Surviving Spouse's death.
For purposes of this Section 7.3, the term "Preretirement Survivor Annuity"
means a benefit providing for payment of 50% of the Member's Account balance as
of the Valuation Date coinciding with or preceding the date of his death.
Payment of a Preretirement Survivor Annuity shall commence in the month
following the month in which the Member dies or as soon as practicable
thereafter; provides however, that to the extent required by law, if the value
of the amount used to purchase a Preretirement Survivor Annuity exceeds $3,500,
then payment of the Preretirement Survivor Annuity shall not commence prior to
the date the Member reached (or would have reached, had he lived) Normal
Retirement Age without the written consent of the Member's Surviving Spouse.
Absence of any required consent will result in a deferral of payment of the
Preretirement Survivor Annuity to the month following the month in which occurs
the earlier of (i) the date the required consent is received by the TPA or (ii)
the date the Member would have reached Normal Retirement Age had he lived.
The TPA shall furnish or cause to be furnished, to each married Member with an
Account subject to this Section 7.3, explanations of the Qualified Joint and
Survivor Annuity and Preretirement Survivor annuity. A Member may, with the
written consent of his Spouse (unless the TPA makes a written determination in
accordance with the Code and the Regulations that no such consent is required),
elect in writing (i) to receive his benefit in a single lump sum payment within
the 90 day period ending on the date payment of his benefit commences; and (ii)
to waive the Preretirement Survivor Annuity within the period beginning on the
first day of the Plan Year in which the Member attains age 35 and ending on the
date of his death. Any election made pursuant to
34
<PAGE> 37
this Subparagraph may be revoked by a Member, without spousal consent, at any
time within which such election could have been made. Such an election or
revocation must be made in accordance with procedures developed by the TPA and
shall be notarized.
Notwithstanding the preceding provisions of this Section 7.3, any benefit of
$3,500, subject to the limits of Article X, or less, shall be paid in cash in a
lump sum in full settlement of the Plan's liability therefor; provided, however,
that in the case of a married Member, no such lump sum payment shall be made
after benefits have commenced without the consent of the Member and his Spouse
or, if the Member has died, the Member's Surviving Spouse. Furthermore, if the
value of the benefit payable to a Member or his Surviving Spouse is greater than
$3,500 and the Member has or had not reached his Normal Retirement Age, then to
the extent required by law, unless the Member (and, if the Member is married and
his benefit is to be paid in a form other than a Qualified Joint and Survivor
Annuity, his Spouse, or, if the Member was married, his Surviving Spouse)
consents in writing to an immediate distribution of such benefit, his benefit
shall continue to be held in the Trust until a date following the earlier of (i)
the date of the TPA's receipt of all required consents or (ii) the date the
Member reaches his earliest possible Normal Retirement Age under the Plan (or
would have reached such date had he lived), and thereafter shall be paid in
accordance with this Section 7.3.
Solely to the extent required under applicable law and regulations, and
notwithstanding any provisions of the Plan to the contrary that would otherwise
limit a Distributee's election under this Subparagraph, a Distributee may elect,
at the time and in the manner prescribed by the TPA, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover. For purposes of this
Subparagraph, the following terms shall have the following meanings:
ELIGIBLE ROLLOVER DISTRIBUTION - Any distribution of all or any portion of
the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under Section 401 (a)(9) of the Code; and the portion of any distribution
that is not includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
ELIGIBLE RETIREMENT PLAN - An individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in Section 403(a) of
the Code, or a qualified trust described in Section 401(a) of the
35
<PAGE> 38
Code, that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a Surviving
Spouse, an Eligible Retirement Plan is an individual retirement account or
an individual retirement annuity.
DISTRIBUTEE - A Distributee may be (i) an Employee, (ii) a former Employee,
(iii) an Employee's Surviving Spouse, (iv) a former Employee's Surviving
Spouse, (v) an Employee's Spouse or former Spouse who is an alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of
the Code, or (vi) a former Employee's Spouse or former Spouse who is an
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, with respect to the interest of the Spouse or
former Spouse.
DIRECT ROLLOVER - A payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
SECTION 7.4 DISTRIBUTIONS DUE TO DISABILITY
A Member who is separated from Employment by reason of a disability which is
expected to last in excess of 12 consecutive months and who is either (i)
eligible for, or is receiving, disability insurance benefits under the Federal
Social Security Act or (ii) approved for disability under the provisions of any
other benefit program or policy' maintained by the Employer, which policy or
program is applied on a uniform and nondiscriminatory basis to all Employees of
the Employer, shall be deemed to be disabled for all purposes under the Plan.
The Plan Administrator shall determine whether a Member is disabled in
accordance with the terms of the immediately preceding paragraph; provided,
however, approval of Disability is conditioned upon notice to the Plan
Administrator of such Member's Disability within 13 months of the Member's
separation from Employment. The notice of Disability shall include a
certification that the Member meets one or more of the criteria listed above.
Upon determination of Disability, a Member may withdraw his total Account
balance under the Plan and have such amounts paid to him in accordance with the
applicable provisions of this Article VII, as designated by the Employer. If a
disabled Member becomes reemployed subsequent to withdrawal of some or all of
his Account balance, such Member may not repay to the Plan any such withdrawn
amounts.
SECTION 7.5 DISTRIBUTIONS DUE TO DEATH
Subject to the provisions of Section 7.3 above, if a married Member dies, his
Spouse, as Beneficiary, will receive a death benefit equal to the value of the
Member's Account determined on the Valuation Date on or next following the TPA's
receipt of notice that such Member died;
36
<PAGE> 39
provided, however, that if such Member's Spouse had consented in writing to the
designation of a different Beneficiary, the Member's Account will be paid to
such designated Beneficiary. Such nonspousal designation may be revoked by the
Member without spousal consent at any time prior to the Member's death. If a
Member is not married at the time of his death, his Account will be paid to his
designated Beneficiary.
A Member may elect that upon his death, his Beneficiary, pursuant to this
Section 7.5, may receive, in lieu of any lump sum payment, payment in 5 annual
installments (10 if the Spouse is the Beneficiary, provided that the Spouse's
remaining life expectancy is at least 10 years) whereby the value of 1/5th of
such Member's Units (or 1/10th in the case of a spousal Beneficiary, provided
that the Spouse's remaining life expectancy is at least 10 years) in each
available Investment Fund will be determined in accordance with the Unit values
on the Valuation Date on or next following the TPA's receipt of notice of the
Member's death and on each anniversary of such Valuation Date. Payment will be
made as soon as practicable after each Valuation Date until the Member's Account
is exhausted. Such election may be filed at any time with the Plan Administrator
prior to the Member's death and may not be changed or revoked after such
Member's death. If such an election is not in effect at the time of the Member's
death, his Beneficiary (including any spousal Beneficiary) may elect to receive
distributions in accordance with this Article, except that any balance remaining
in the deceased Member's Account must be distributed on or before the December
31 of the calendar year which contains the 5th anniversary (the 10th anniversary
in the case of a spousal Beneficiary, provided that the Spouse's remaining life
expectancy is at least 10 years) of the Member's death. Notwithstanding the
foregoing, payment of a Member's Account shall commence not later than the
December 31 of the calendar year immediately following the calendar year in
which the Member died or, in the event such Beneficiary is the Member's
Surviving Spouse, on or before the December 31 of the calendar year in which
such Member would have attained age 70 1/2, if later (or, in either case, on any
later date prescribed by the IRS Regulations). If, upon the Spouse's or
Beneficiary's death, there is still a balance in the Account, the value of the
remaining Units will be paid in a lump sum to such Spouse's or Beneficiary's
estate.
SECTION 7.6 MINIMUM REQUIRED DISTRIBUTIONS
In no evens may payment of a Member's Account begin later than April 1 of the
year following the calendar year in which a Member attains age 70 1/2; provided,
however, if a Member attained age 70 1/2 prior to January 1, 1988, except as
otherwise provided below, any benefit payable to such Member shall commence no
later than the April 1 of the calendar year following the later of (i) the
calendar year in which the Member attains age 70 1/2 or (ii) the calendar year
in which the Member retires. Such benefit shall be paid, in accordance with the
Regulations, over a period not extending beyond the life expectancy of such
Member. Life expectancy for purposes of this
37
<PAGE> 40
Section shall not be recalculated annually in accordance with the Regulations.
If a Member who is a 5% owner attained age 70 1/2 before January 1, 1988, any
benefit payable to such Member shall commence no later than the April 1 of the
calendar year following the later of (i) the calendar year in which the Member
attains age 70 1/2 or (ii) the earlier of (a) the calendar year within which the
Member becomes a 5% owner or (b) the calendar year in which the Member retires.
For purposes of the preceding sentence, 5% owner shall mean a 5% owner of such
Member's Employer as defined in Section 416(i) of the Code at any time during
the Plan Year in which such owner attains age 66 1/2 or any subsequent Plan
Year. Distributions must continue to such Member even if such Member ceases to
own more than 5% of the Employer in a subsequent year.
38
<PAGE> 41
ARTICLE VIII
LOAN PROGRAM
SECTION 8.1 GENERAL PROVISIONS
An Employer may, at its option, make available the loan program described herein
for any Member (and, if applicable under Section 8.8 of this Article, any
Beneficiary), subject to applicable law. The Employer shall so designate its
adoption of the loan program and the terms and provisions of its operation in
the Adoption Agreement. In the event that the Employer has elected to provide an
annuity option under Article VII or amounts are transferred to the Plan from a
retirement plan subject to Section 401(a)(11) of the Code, no loans may be made
from a married Member's Account without the written consent of such Member's
Spouse (in accordance with the spousal consent rules set forth under Section
7.3). In the event the Employer elects to permit loans to be made from rollover
contributions and earnings thereon, as designated in the Adoption Agreement,
loans shall be available from the Accounts of any Employees of the Employer who
have not yet become Members. Only one loan may be made to a Member in the Plan
Year.
SECTION 8.2 LOAN APPLICATION
Subject to the restrictions described in the paragraph immediately following, a
Member in Employment may borrow from his Account in each of the available
Investment Funds by filing a loan application with the TPA. Such application
(hereinafter referred to as a "completed application") shall (i) specify the
terms pursuant to which the loan is requested to be made and (ii) provide such
information and documentation as the TPA shall require, including a note, duly
executed by the Member, granting a security interest of an amount not greater
than 50% of his vested Account, to secure the loan. With respect to such Member,
the completed application shall authorize the repayment of the loan through
payroll deductions. Such loan will become effective upon the Valuation Date
coinciding with or next following the date on which his completed application
and other required documents were submitted, subject to the same conditions with
respect to the amount to be transferred under this Section which are specified
in the Plan procedures for determining the amount of payments made under Article
VII of the Plan.
The Employer shall establish standards in accordance with the Code and ERISA
which shall be uniformly applicable to all Members eligible to borrow from their
interests in the Trust Fund similarly situated and shall govern the TPA's
approval or disapproval of completed applications. The terms for each loan shall
be set solely in accordance with such standards.
39
<PAGE> 42
The TPA shall, in accordance with the established standards, review and approve
or disapprove a completed application as soon as practicable after its receipt
thereof, and shall promptly notify the applying Member of such approval or
disapproval. Notwithstanding the foregoing, the TPA may defer its review of a
completed application, or defer payment of the proceeds of an approved loan, if
the proceeds of the loan would otherwise be paid during the period commencing on
December 1 and ending on the following January 31.
Subject to the preceding paragraph and Section 8.6, upon approval of a completed
application, the TPA shall cause payment of the loan to be made from the
available Investment Fund(s) in the same proportion that the designated portion
of the Member's Account is invested at the time of the loan, and the relevant
portion of the Member's interest in such Investment Fund(s) shall be cancelled
and shall be transferred in cash to the Member. The TPA shall maintain
sufficient records regarding such amounts to permit an accurate crediting of
repayments of the loan.
SECTION 8.3 PERMITTED LOAN AMOUNT
The amount of each loan may not be less than $1,000 nor more than the maximum
amount as described below. The maximum amount available for loan under the Plan
(when added to the outstanding balance of all other loans from the Plan to the
borrowing Member) shall not exceed the lesser of: (a) $50,000 reduced by the
excess (if any) of (i) the highest outstanding loan balance attributable to the
Account of the Member requesting the loan from the Plan during the one-year
period ending on the day preceding the date of the loan, over (ii) the
outstanding balance of all other loans from the Plan to the Member on the date
of the loan, or (b) 50% of the value of the Member's vested portion of his
Account available for borrowing as of the Valuation Date on or next following
the date on which the TPA receives the completed application for the loan and
all other required documents. The maximum amount available for a loan for
purposes of item (b) of the preceding sentence shall be determined by valuing
the Member's interest in that portion of his Account from which the loan will be
deducted as of the applicable Valuation Date. In determining the maximum amount
that a Member may borrow, all vested assets of his Account, regardless of
whether any particular portion of his Account is actually available for the
loan, will be taken into consideration, provided that, where the Employer has
not elected to make a Member's entire Account available for loans, in no event
shall the amount of the loan exceed the value of such portion of the Member's
Account from which loans are permissible.
SECTION 8.4 SOURCE OF FUNDS FOR LOAN
The amount of the loan will be deducted from the Member's Account in the
available Investment Funds in accordance with Section 8.2 of this Article and
the Plan procedures for determining the amount of payments made under Article
VII. Loans shall be deemed to come (to the extent the
40
<PAGE> 43
Employer permits Members to take loans from one or more of the portions of their
Accounts, as designated in the Adoption Agreement):
- - First from the Employer profit sharing contributions plus earnings thereon.
- - Next from the Employer qualified nonelective contributions plus earnings
thereon.
- - Next from the Member's 401(k) deferrals plus earnings thereon.
- - Next from the Employer basic contributions plus earnings thereon.
- - Next from the Employer supplemental contributions plus earnings thereon.
- - Next from the Employer matching contributions plus earnings thereon.
- - Next from the Member's rollover contributions plus earnings thereon.
- - Next from the Member's after-tax contributions made after December 31, 1986
plus earnings on all of the Member's after-tax contributions.
- - Next from the Member's after-tax contributions made prior to January 1,
1987.
SECTION 8.5 CONDITIONS OF LOAN
Each loan to a Member under the Plan shall be repaid in level monthly amounts
through regular payroll deductions after the effective date of the loan, and
continuing thereafter with each payroll. Except as otherwise required by the
Code and the IRS Regulations, each loan shall have a repayment period of not
less than 12 months and not in excess of 60 months, unless the purpose of the
loan is for the purchase of a primary residence, in which case the loan may be
for not more than 180 months.
The rate of interest for the term of the loan will be established as of the loan
date, and will be the Barron's Prime Rate (base rate) plus 1% as published on
the last Saturday of the preceding month, or such other rate as may be required
by applicable law and determined by reference to the prevailing interest rate
charged by commercial lenders under similar circumstances. The applicable rate
would then be in effect through the last business day of the month.
Repayment of all loans under the Plan shall be secured by 50% of the Member's
vested interest in his Account, determined as of the origination of such loan.
41
<PAGE> 44
SECTION 8.6 CREDITING OF REPAYMENT
Upon lending any amount to a Member, the TPA shall establish and maintain a loan
receivable account with respect to, and for the term of, the loan. The
allocations described in this Section shall be made from the loan receivable
account. Upon receipt of each monthly installment payment and the crediting
thereof to the Member's loan receivable account, there shall be allocated to the
Member's Account in the available Investment Funds, in accordance with his most
recent investment instructions, the principal portion of the installment payment
plus that portion of the interest equal to the rate determined in Section 8.5 of
this Article, less 2%. The unpaid balance owed by a Member on a loan under the
Plan shall not reduce the amount credited to his Account. However, from the time
of payment of the proceeds of the loan to the Member, such Account shall be
deemed invested, to the extent of such unpaid balance, in such loan until the
complete repayment thereof or distribution from such Account. Any loan repayment
shall first be deemed allocable to the portions of the Member's Account on the
basis of a reverse ordering of the manner in which the loan was originally
distributed to the Member.
SECTION 8.7 CESSATION OF PAYMENTS ON LOAN
If a Member, while employed, fails to make a monthly installment payment when
due, as specified in the completed application, subject to applicable law, he
will be deemed to have received a distribution of the outstanding balance of the
loan. If such default occurs after the first 12 monthly payments of the loan
have been satisfied, the Member may pay the outstanding balance, including
accrued interest from the due date, within 60 days of the due date of the last
monthly installment payment, in which case no such distribution will be deemed
to have occurred. Subject to applicable law, notwithstanding the foregoing, a
Member that borrows any of his 401(k) deferrals and any of the earnings
attributable thereto may not cease to make monthly installment payments while
employed and receiving a Salary from the Employer.
Except as provided below, upon a Member's termination of Employment, death or
Disability, or the Employer's termination of the Plan, no further monthly
installment payments may be made. Unless the outstanding balance, including
accrued interest from the due date, is paid within 60 days of the date of such
occurrence, the Member will be deemed to have received a distribution of the
outstanding balance of the loan including accrued interest from the due date.
SECTION 8.8 LOANS TO FORMER MEMBERS
Notwithstanding any other provisions of this Article VIII, a member who
terminates Employment for any reason shall be permitted to continue making
scheduled repayments with respect to any loan balance outstanding at the time he
becomes a terminated Member. In addition, a terminated Member may elect to
initiate a new loan from his Account, subject to the conditions otherwise
42
<PAGE> 45
described in this Article VIII. If any terminated Member who continues to make
repayments or who borrows from his Account pursuant to this Section 8.8 fails to
make a scheduled monthly installment payment within 60 days of the scheduled
payment date, he will be deemed to have received a distribution of the
outstanding balance of the loan.
43
<PAGE> 46
ARTICLE IX
ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES
SECTION 9.1 FIDUCIARIES
The following persons are Fiduciaries under the Plan.
a) The Trustee,
b) The Employer,
c) The Plan Administrator or committee, appointed by the Employer pursuant to
this Article IX of the Plan and designated as the "Named Fiduciary" of the
Plan and the Plan Administrator, and
d) Any Investment Manager appointed by the Employer as provided in Section
9.4.
Each of said Fiduciaries shall be bonded to the extent required by ERISA.
The TPA is not intended to have the authority or responsibilities which would
cause it to be considered a Fiduciary with respect to the Plan unless the TPA
otherwise agrees to accept such authority or responsibilities in a service
agreement or otherwise in writing.
SECTION 9.2 ALLOCATION OF RESPONSIBILITIES AMONG: THE FIDUCIARIES
a) THE TRUSTEE
The Employer shall enter into one or more Trust Agreements with a Trustee
or Trustees selected by the Employer. The Trust established under any such
agreement shall be a part of the Plan and shall provide that all funds
received by the Trustee as contributions under the Plan and the income
therefrom (other than such part as is necessary to pay the expenses and
charges referred to in Paragraph (b) of this Section) shall be held in the
Trust Fund for the exclusive benefit of the Members or their Beneficiaries,
and managed, invested and reinvested and distributed by the Trustee in
accordance with the Plan. Sums received for investment may be invested (i)
wholly or partly through the medium of any common, collective or commingled
trust fund maintained by a bank or other financial institution and which is
qualified under Sections 401(a) and 501(a) of the Code and constitutes a
part of the Plan; (ii) wholly or partly through the medium of a group
annuity or other type of contract issued by an insurance company and
constituting a part of the Plan, and utilizing, under any such contract,
44
<PAGE> 47
general, commingled or individual investment accounts; or (iii) wholly or
partly in securities issued by an investment company registered under the
Investment Company Act of 1940. Subject to the provisions of Article Xl,
the Employer may from time to time and without the consent of any Member or
Beneficiary (a) amend the Trust Agreement or any such insurance contract in
such manner as the Employer may deem necessary or desirable to carry out
the Plan, (b) remove the Trustee and designate a successor Trustee upon
such removal or upon the resignation of the Trustee, and (c) provide for an
alternate funding agency under the Plan. The Trustee shall make payments
under the Plan only to the extent, in the amounts, in the manner, at the
time, and to the persons as shall from time to time be set forth and
designated in written authorizations from the Plan Administrator or TPA.
The Trustee shall from time to time charge against and pay out of the Trust
Fund taxes of any and all kinds whatsoever which are levied or assessed
upon or become payable in respect of such Fund, the income or any property
forming a part thereof, or any security transaction pertaining thereto. To
the extent not paid by the Employer, the Trustee shall also charge against
and pay out of the Trust Fund other expenses incurred by the Trustee in the
performance of its duties under the Trust, the expenses incurred by the TPA
in the performance of its duties under the Plan (including reasonable
compensation for agents and cost of services rendered in respect of the
Plan), such compensation of the Trustee as may be agreed upon from time to
time between the Employer and the Trustee, and all other proper charges and
disbursements of the Trustee or the Employer.
b) THE EMPLOYER
The Employer shall be responsible for all functions assigned or reserved to
it under the Plan and any related Trust Agreement. Any authority so
assigned or reserved to the Employer, other than responsibilities assigned
to the Plan Administrator, shall be exercised by resolution of the
Employer's Board of Directors and shall become effective with respect to
the Trustee upon written notice to the Trustee signed by the duly
authorized officer of the Board advising the Trustee of such exercise. By
way of illustration and not by limitation, the Employer shall have
authority and responsibility:
(1) to amend the Plan;
(2) to merge and consolidate the Plan with all or part of the assets or
liabilities of any other plan;
(3) to appoint, remove and replace the Trustee and the Plan Administrator
and to monitor their performances;
45
<PAGE> 48
(4) to appoint, remove and replace one or more Investment Managers, or to
refrain from such appointments, and to monitor their performances;
(5) to communicate such information to the Plan Administrator, TPA,
Trustee and Investment Managers as they may need for the proper
performance of their duties; and
(6) to perform such additional duties as are imposed by law.
Whenever, under the terms of this Plan, the Employer is permitted or
required to do or perform any act, it shall be done and performed by an
officer there unto duly authorized by its Board of Directors.
c) THE PLAN ADMINISTRATOR
The Plan Administrator shall have responsibility and discretionary
authority to control the operation and administration of the Plan in
accordance with the provisions of Article IX of the Plan, including,
without limiting, the generality of the foregoing:
(1) the determination of eligibility for benefits and the amount and
certification thereof to the Trustee;
(2) the hiring of persons to provide necessary services to the Plan;
(3) the issuance of directions to the Trustee to pay any fees, taxes,
charges or other costs incidental to the operation and management of
the Plan;
(4) the preparation and filing of all reports required to be filed with
respect to the Plan with any governmental agency; and
(5) the compliance with all disclosure requirements imposed by state or
federal law.
d) THE INVESTMENT MANAGER
Any Investment Manager appointed pursuant to Section 9.4 shall have sole
responsibility for the investment of the portion of the assets of the Trust
Fund to be managed and controlled by such Investment Manager. An Investment
Manager may place orders for the purchase and sale of securities directly
with brokers and dealers.
SECTION 9.3 NO JOINT FIDUCIARY RESPONSIBILITIES
This Article IX is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to him, and
none of such responsibilities or any other
46
<PAGE> 49
responsibilities shall be shared by two or more of such Fiduciaries unless such
sharing is provided by a specific provision of the Plan or any related Trust
Agreement. Whenever one Fiduciary is required to follow the directions of
another Fiduciary, the two Fiduciaries shall not be deemed to have been assigned
a shared responsibility, but the responsibility of the Fiduciary giving the
directions shall be deemed his sole responsibility, and the responsibility of
the Fiduciary receiving those directions shall be to follow them insofar as such
instructions are on their face proper under applicable law. To the extent that
fiduciary responsibilities are allocated to an Investment Manager, such
responsibilities are so allocated solely to such Investment Manager alone, to be
exercised by such Investment Manager alone and not in conjunction with any other
Fiduciary, and the Trustee shall be under no obligation to manage any asset of
the Trust Fund which is subject to the management of such Investment Manager.
SECTION 9.4 INVESTMENT MANAGER
The Employer may appoint a qualified Investment Manager or Managers to manage
any portion or all of the assets of the Trust Fund. For the purpose of this Plan
and the related Trust, a "qualified Investment Manager" means an individual,
firm or corporation who has been so appointed by the Employer to serve as
Investment Manager hereunder, and who is and has acknowledged in writing that he
is (a) a Fiduciary with respect to the Plan, (b) bonded as required by ERISA,
and (c) either (i) registered as an investment advisor under the Investment
Advisors Act of 1940, (ii) a bank as defined in said Act, or (iii) an insurance
company qualified to perform investment management services under the laws of
more than one state of the United States.
Any such appointment shall be by a vote of the Board of Directors of the
Employer naming the Investment Manager so appointed and designating the portion
of the assets of the Trust Fund to be managed and controlled by such Investment
Manager. Said vote shall be evidenced by a certificate in writing signed by the
duly authorized officer of the Board and shall become effective on the date
specified in such certificate but not before delivery to the Trustee of a copy
of such certificate, together with a written acknowledgment by such Investment
Manager of the facts specified in the second sentence of this Section.
SECTION 9.5 ADVISOR TO FIDUCIARY
A Fiduciary may employ one or more persons to render advice concerning any
responsibility such Fiduciary has under the Plan and related Trust Agreement.
SECTION 9.6 SERVICE IN MULTIPLE CAPACITIES
Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan, specifically including service both as Plan
Administrator and as a Trustee of the Trust;
47
<PAGE> 50
provided, however, that no person may serve in a fiduciary capacity who is
precluded from so serving pursuant to Section 411 of ERISA.
SECTION 9.7 APPOINTMENT OF PLAN ADMINISTRATOR
The Employer shall designate the Plan Administrator in the Adoption Agreement.
The Plan Administrator may be an individual, a committee of two or more
individuals, whether or not, in either such case, the individual or any of such
individuals are Employees of the Employer, a consulting firm or other
independent agent, the Trustee (with its consent), the Board of the Employer, or
the Employer itself. Except as the Employer shall otherwise expressly determine,
the Plan Administrator shall be charged with the full power and responsibility
for administering the Plan in all its details. If no Plan Administrator has been
appointed by the Employer, or if the person designated as Plan Administrator is
not serving as such for any reason, the Employer shall be deemed to be the Plan
Administrator. The Plan Administrator may be removed by the Employer or may
resign by giving written notice to the Employer, and, in the event of the
removal, resignation, death or other termination of service of the Plan
Administrator, the Employer shall, as soon as is practicable, appoint a
successor Plan Administrator, such successor thereafter to have all of the
rights, privileges, duties and obligations of the predecessor Plan
Administrator.
SECTION 9.8 POWERS OF THE PLAN ADMINISTRATOR
The Plan Administrator is hereby vested with all powers and authority necessary
in order to carry out its duties and responsibilities in connection with the
administration of the Plan as herein provided, and is authorized to make such
rules and regulations as it may deem necessary to carry out the provisions of
the Plan and the Trust Agreement. The Plan Administrator may from time to time
appoint agents to perform such functions involved in the administration of the
Plan as it may deem advisable. The Plan Administrator shall have the
discretionary authority to determine any questions arising in the
administration, interpretation and application of the Plan, including any
questions submitted by the Trustee on a matter necessary for it to properly
discharge its duties; and the decision of the Plan Administrator shall be
conclusive and binding on all persons.
SECTION 9.9 DUTIES OF THE PLAN ADMINISTRATOR
The Plan Administrator shall keep on file a copy of the Plan and the Trust
Agreement(s), including any subsequent amendments, and all annual reports of the
Trustee(s), and such annual reports or registration statements as may be
required by the laws of the United States, or other jurisdiction, for
examination by Members in the Plan during reasonable business hours. Upon
request by any Member, the Plan Administrator shall furnish him with a statement
of his interest in the Plan as determined by the Plan Administrator as of the
close of the preceding Plan Year.
48
<PAGE> 51
SECTION 9.10 ACTION BY THE PLAN ADMINISTRATOR
In the event that there shall at any time be two or more persons who constitute
the Plan Administrator, such persons shall act by concurrence of a majority
thereof.
SECTION 9.11 DISCRETIONARY ACTION
Wherever, under the provisions of this Plan, the Plan Administrator is given any
discretionary power or powers, such power or powers shall not be exercised in
such manner as to cause any discrimination prohibited by the Code in favor of or
against any Member, Employee or class of Employees. Any discretionary action
taken by the Plan Administrator hereunder shall be consistent with any prior
discretionary action taken by it under similar circumstances and to this end the
Plan Administrator shall keep a record of all discretionary action taken by it
under any provision here of.
SECTION 9.12 COMPENSATION AND EXPENSES OF PLAN ADMINISTRATOR
Employees of the Employer shall serve without compensation for services as Plan
Administrator, but all expenses of the Plan Administrator shall be paid by the
Employer. Such expenses shall include any expenses incidental to the functioning
of the Plan, including, but not limited to, attorney's fees, accounting and
clerical charges, and other costs of administering the Plan. Non-Employee Plan
Administrators shall receive such compensation as the Employer shall determine.
SECTION 9.13 RELIANCE ON OTHERS
The Plan Administrator and the Employer shall be entitled to rely upon all
valuations, certificates and reports furnished by the Trustee(s), upon all
certificates and reports made by an accountant or actuary selected by the Plan
Administrator and approved by the Employer and upon all opinions given by any
legal counsel selected by the Plan Administrator and approved by the Employer,
and the Plan Administrator and the Employer shall be fully protected in respect
of any action taken or suffered by them in good faith in reliance upon such
Trustee(s), accountant, actuary or counsel and all action so taken or suffered
shall be conclusive upon each of them and upon all Members, retired Members, and
Former Members and their Beneficiaries, and all other persons.
SECTION 9.14 SELF INTEREST
No person who is the Plan Administrator shall have any right to decide upon any
matter relating solely to himself or to any of his rights or benefits under the
Plan. Any such decision shall be made by another Plan Administrator or the
Employer.
49
<PAGE> 52
SECTION 9.15 PERSONAL LIABILITY - INDEMNIFICATION
The Plan Administrator shall not be personally liable by virtue of any
instrument executed by him or on his behalf. Neither the Plan Administrator, the
Employer, nor any of its officers or directors shall be personally liable for
any action or inaction with respect to any duty or responsibility imposed upon
such person by the terms of the Plan unless such action or inaction is
judicially determined to be a breach of that person's fiduciary responsibility
with respect to the Plan under any applicable law. The limitation contained in
the preceding sentence shall not, however, prevent or preclude a compromise
settlement of any controversy involving the Plan, the Plan Administrator, the
Employer, or any of its officers and directors. The Employer may advance money
in connection with questions of liability prior to any final determination of a
question of liability. Any settlement made under this Article IX shall not be
determinative of any breach of fiduciary duty hereunder.
The Employer will indemnify every person who is or was a Plan Administrator,
officer or member of the Board or a person who provides services without
compensation to the Plan for any liability (including reasonable costs of
defense and settlement) arising by reason of any act or omission affecting the
Plan or affecting the Member or Beneficiaries thereof, including, without
limitation, any damages, civil penalty or excise tax imposed pursuant to ERlSA;
provided (1) that the act or omission shall have occurred in the course of the
person's service as Plan Administrator, officer of the Employer or member of the
Board or was within the scope of the Employment of any Employee of the Employer
or in connection with a service provided without compensation to the Plan, (2)
that the act or omission be in good faith as determined by the Employer, whose
determination, made in good faith and not arbitrarily or capriciously, shall be
conclusive, and (3) that the Employer's obligation hereunder shall be offset to
the extent of any otherwise applicable insurance coverage, under a policy
maintained by the Employer, or any other person, or other source of
indemnification.
SECTION 9.16 INSURANCE
The Plan Administrator shall have the right to purchase such insurance as it
deems necessary to protect the Plan and the Trustee from loss due to any breach
of fiduciary responsibility by any person. Any premiums due on such insurance
may be paid from Plan assets provided that, if such premiums are so paid, such
policy of insurance must permit recourse by the insurer against the person who
breaches his fiduciary responsibility. Nothing in this Article IX shall prevent
the Plan Administrator or the Employer, at its, or his, own expense, from
providing insurance to any person to cover potential liability of that person as
a result of a breach of fiduciary responsibility, nor shall any provisions of
the Plan preclude the Employer from purchasing from any insurance company the
right of recourse under any policy by such insurance company.
50
<PAGE> 53
SECTION 9.17 CLAIMS PROCEDURES
Claims for benefits under the Plan shall be filed with the Plan Administrator on
forms supplied by the Employer. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application thereof
is filed unless special circumstances require an extension of time for
processing the claim. If such an extension of time is required, written notice
of the extension shall be furnished to the claimant prior to the termination of
said 90-day period, and such notice shall indicate the special circumstances
which make the postponement appropriate.
SECTION 9.18 CLAIMS REVIEW PROCEDURES
In the event a claim is denied, the reasons for the denial shall be specifically
set forth in the notice described in this Section 9.18 in language calculated to
be understood by the claimant. Pertinent provisions of the Plan shall be cited,
and, where appropriate, an explanation as to how the claimant can request
further consideration and review of the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedures. Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Plan Administrator pursuant to
Section 9.17 shall be entitled to request the Plan Administrator to give further
consideration to his claim by filing with the Plan Administrator (on a form
which may be obtained from the Plan Administrator) a request for a hearing. Such
request, together with a written statement of the reasons why the claimant
believes his claim should be allowed, shall be filed with the Plan Administrator
no later than 60 days after receipt of the written notification provided for in
Section 9.17. The Plan Administrator shall then conduct a hearing within the
next 60 days, at which the claimant may be represented by an attorney or any
other representative of his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of his
claim. At the hearing (or prior thereto upon 5 business days' written notice to
the Plan Administrator), the claimant or his representative shall have an
opportunity to review all documents in the possession of the Plan Administrator
which are pertinent to the claim at issue and its disallowance. A final
disposition of the claim shall be made by the Plan Administrator within 60 days
of receipt of the appeal unless there has been an extension of 60 days and shall
be communicated in writing to the claimant. Such communication shall be written
in a manner calculated to be understood by the claimant and shall include
specific reasons for the disposition and specific references to the pertinent
Plan provisions on which the disposition is based. For all purposes under the
Plan, such decision on claims (where no review is requested) and decision on
review (where review is requested) shall be final, binding and conclusive on all
interested persons as to participation and benefits eligibility, the amount of
benefits and as to any other matter of fact or interpretation relating to the
Plan.
51
<PAGE> 54
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 GENERAL LIMITATIONS
(A) In order that the Plan be maintained as a qualified plan and trust under
the Code, contributions in respect of a Member shall be subject to the
limitations set forth in this Section, notwithstanding any other provision
of the Plan. The contributions in respect of a Member to which this Section
is applicable are his own contributions and/or deferrals and the Employer's
contributions.
For purposes of this Section 10.1, a Member's contributions shall be
determined without regard to any rollover contributions as provided in
Section 402(a)(5) of the Code.
(B) Annual additions to a Member's Account in respect of any Plan Year may not
exceed the limitations set forth in Section 415 of the Code, which are
incorporated herein by reference. For these purposes, "annual additions"
shall have the meaning set forth in Section 415(c)(2) of the Code, as
modified elsewhere in the Code and the Regulations, and the limitation year
shall mean the Plan Year unless any other twelve-consecutive-month period
is designated pursuant to a resolution adopted by the Employer and
designated in the Adoption Agreement. If a Member in the Plan also
participates in any defined benefit plan (as defined in Sections 414(j) and
415(k) of the Code) maintained by the Employer or any of its Affiliates, in
the event that in any Plan Year the sum of the Member's "defined benefit
fraction" (as defined in Section 415(e)(2) of the Code) and the Member's
"defined contribution fraction" (as defined in Section 415(e)(3) of the
Code) exceeds 1.0, the benefit under such defined benefit plan or plans
shall be reduced in accordance with the provisions of that plan or those
plans, so that the sum of such fractions in respect of the Member will not
exceed 1.0. If this reduction does not ensure that the limitation set forth
in this Paragraph (B) is not exceeded, then the annual addition to any
defined contribution plan, other than the Plan, shall be reduced in
accordance with the provisions of that plan but only to the extent
necessary to ensure that such limitation is not exceeded.
(C) In the event that, due to forfeitures, reasonable error in estimating a
Member's compensation, or other limited facts and circumstances, total
contributions and/or deferrals to a Member's Account are found to exceed
the limitations of this Section, the TPA, at the direction of the Plan
Administrator, shall cause contributions made under Article Ill in excess
of such limitations to be refunded to the affected Member, with earnings
thereon, and shall take appropriate steps to reduce, if necessary, the
Employer contributions made with respect to those returned contributions.
Such refunds shall not be deemed to be withdrawals, loans,
52
<PAGE> 55
or distributions from the Plan. If a Member's annual contributions exceed
the limitations contained in Paragraph (B) of this Section after the
Member's Article III contributions, with earnings thereon, if any, have
been refunded to such Member, any Employer supplemental and/or profit
sharing contribution to be allocated to such Member in respect of any
Contribution Determination Period (including allocations as provided in
this Paragraph) shall instead be allocated to or for the benefit of all
other Members who are Employees in Employment as of the last day of the
Contribution Determination Period as determined under the Adoption
Agreement and allocated in the same proportion that each such Member's
Salary for such Contribution Determination Period bears to the total Salary
for such Contribution Determination Period of all such Members or, the TPA
may, at the election of the Employer, utilize such excess to reduce the
contributions which would otherwise be made for the succeeding Contribution
Determination Period by the Employer. If, with respect to any Contribution
Determination Period, there is an excess profit sharing contribution, and
such excess cannot be fully allocated in accordance with the preceding
sentence because of the limitations prescribed in Paragraph (B) of this
Section, the amount of such excess which cannot be so allocated shall be
allocated to the Employer Credit Account and made available to the Employer
pursuant to the terms of Article VI. The TPA, at the direction of the Plan
Administrator, in accordance with Paragraph (D) of this Section, shall take
whatever additional action may be necessary to assure that contributions to
Members' Accounts meet the requirements of this Section.
(D) In addition to the steps set forth in Paragraph (C) of this Section, the
Employer may from time to time adjust or modify the maximum limitations
applicable to contributions made in respect of a Member under this Section
10.1 as may be required or permitted by the Code or ERISA prior to or
following the date that allocation of any such contributions commences and
shall take appropriate action to reallocate the annual contributions which
would otherwise have been made but for the application of this Section.
(E) Membership in the Plan shall not give any Employee the right to be retained
in the Employment of the Employer and shall not affect the right of the
Employer to discharge any Employee.
(F) Each Member, Spouse and Beneficiary assumes all risk in connection with any
decrease in the market value of the assets of the Trust Fund. Neither the
Employer nor the Trustee guarantees that upon withdrawal, the value of a
Member's Account will be equal to or greater than the amount of the
Member's own deferrals or contributions, or those credited on his behalf in
which the Member has a vested interest, under the Plan.
53
<PAGE> 56
(G) The establishment, maintenance or crediting of a Member's Account pursuant
to the Plan shall not vest in such Member any right, title or interest in
the Trust Fund except at the times and upon the terms and conditions and to
the extent expressly set forth in the Plan and the Trust Agreement.
(H) The Trust Fund shall be the sole source of payments under the Plan and the
Employer, Plan Administrator and TPA assume no liability or responsibility
for such payments, and each Member, Spouse or Beneficiary who shall claim
the right to any payment under the Plan shall be entitled to look only to
the Trust Fund for such payment.
SECTION 10.2 TOP HEAVY PROVISIONS
The Plan will be considered a Top Heavy Plan for any Plan Year if it is
determined to be a Top Heavy Plan as of the last day of the preceding Plan Year.
The provisions of this Section 10.2 shall apply and supersede all other
provisions in the Plan during each Plan Year with respect to which the Plan is
determined to be a Top Heavy Plan.
(A) For purposes of this Section 10.2, the following terms shall have the
meanings set forth below:
(1) "AFFILIATE" shall mean any entity affiliated with the Employer within
the meaning of Section 414(b), 414(c) or 414(m) of the Code, or
pursuant to the IRS Regulations under Section 414(o) of the Code,
except that for purposes of applying the provisions hereof with
respect to the limitation on contributions, Section 415(h) of the Code
shall apply.
(2) "AGGREGATION GROUP" shall mean the group composed of each qualified
retirement plan of the Employer or an Affiliate in which a Key
Employee is a member and each other qualified retirement plan of the
Employer or an Affiliate which enables a plan of the Employer or an
Affiliate in which a Key Employee is a member to satisfy Sections
401(a)(4) or 410 of the Code. In addition, the TPA, at the direction
of the Plan Administrator, may choose to treat any other qualified
retirement plan as a member of the Aggregation Group if such
Aggregation Group will continue to satisfy Sections 401(a)(4) and 410
of the Code with such plan being taken into account.
(3) "KEY EMPLOYEE" shall mean a "Key Employee" as defined in Sections
416(i)(1) and (5) of the Code and the IRS Regulations thereunder. For
purposes of Section 416 of the Code and for purposes of determining
who is a Key Employee, an Employer which is not a corporation may have
"officers" only for Plan Years beginning after December 31, 1985. For
purposes of determining who is a Key Employee pursuant to this
54
<PAGE> 57
Subparagraph (3), compensation shall have the meaning prescribed in
Section 414(s) of the Code, or to the extent required by the Code or
the IRS Regulations, Section 1.415-2(d) of the IRS Regulations.
(4) "NON-KEY EMPLOYEE" shall mean a "Non-Key Employee" as defined in
Section 416(i)(2) of the Code and the IRS Regulations thereunder.
(5) "TOP HEAVY PLAN" shall mean a "Top Heavy Plan" as defined in Section
416(g) of the Code and the IRS Regulations thereunder.
(B) Subject to the provisions of Paragraph (D) below, for each Plan Year that
the Plan is a Top Heavy Plan, the Employer's contribution (including
contributions attributable to salary reduction or similar arrangements)
allocable to each Employee (other than a Key Employee) who has satisfied
the eligibility requirement(s) of Article II, Section 2, and who is in
service at the end of the Plan Year, shall not be less than the lesser of
(i) 3% of such eligible Employee's compensation (as defined in Section
414(s) of the Code or to the extent required by the Code or the IRS
Regulations, Section 1.415-2(d) of the Regulations), or (ii) the percentage
at which Employer contributions for such Plan Year are made and allocated
on behalf of the Key Employee for whom such percentage is the highest. For
the purpose of determining the appropriate percentage under clause (ii),
all defined contribution plans required to be included in an Aggregation
Group shall be treated as one plan. Clause (ii) shall not apply if the Plan
is required to be included in an Aggregation Group which enables a defined
benefit plan also required to be included in said Aggregation Group to
satisfy Sections 401(a)(4) or 410 of the Code.
(C) If the Plan is a Top Heavy Plan for any Plan Year, and the Employer has
elected vesting Schedule 3 or 6 under Article VI, the vested interest of
each Member, who is credited with at least one Hour of Employment on or
after the Plan becomes a Top Heavy Plan, in the Units allocated to his
Account shall not be less than the percentage determined in accordance with
the following schedule:
<TABLE>
<CAPTION>
Completed Years of Vested
Employment Percentage
------------------ ----------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
</TABLE>
55
<PAGE> 58
(D) (1) For each Plan Year that the Plan is a Top Heavy Plan, 1.0 shall be
substituted for 1.25 as the multiplicand of the dollar limitation in
determining the denominator of the defined benefit plan fraction and
of the defined contribution plan fraction for purposes of Section
415(e) of the Code.
(2) If, after substituting "90%" for "60%" wherever the latter appears in
Section 416(g) of the Code, the Plan is not determined to be a Top
Heavy Plan, the provisions of Subparagraph (1) of this Paragraph (D)
shall not be applicable if the minimum Employer contribution allocable
to any Member who is a Non-Key Employee as specified in Paragraph (B)
of this Section is determined by substituting "4%" for 3%.
(E) The TPA shall, to the maximum extent permitted by the Code and in
accordance with the IRS Regulations, apply the provisions of this Section
10.2 by taking into account the benefits payable and the contributions made
under any other qualified plan maintained by the Employer, to prevent
inappropriate omissions or required duplication of minimum contributions.
SECTION 10.3 INFORMATION AND COMMUNICATIONS
Each Employer, Member, Spouse and Beneficiary shall be required to furnish the
TPA with such information and data as may be considered necessary by the TPA.
All notices, instructions and other communications with respect to the Plan
shall be in such form as is prescribed from time to time by the TPA, shall be
mailed by first class mail or delivered personally, and shall be deemed to have
been duly given and delivered only upon actual receipt thereof by the TPA. All
information and data submitted by an Employer or a Member, including a Member's
birth date, marital status, salary and circumstances of his Employment and
termination thereof, may be accepted and relied upon by the TPA. All
communications from the Employer or the Trustee to a Member, Spouse or
Beneficiary shall be deemed to have been duly given if mailed by first class
mail to the address of such person as last shown on the records of the Plan.
SECTION 10.4 SMALL ACCOUNT BALANCES
Notwithstanding the foregoing provisions of the Plan, if the value of all
portions of a Member's Account under the Plan, when aggregated, is equal to or
exceeds $3,500, then the Account will not be distributed without the consent of
the Member prior to age 65 (at the earliest), but if the aggregate value of all
portions of his Account is less than $3,500, then his Account will be
distributed as soon as practicable following the termination of Employment by
the Member.
56
<PAGE> 59
SECTION 10.5 AMOUNTS PAYABLE TO INCOMPETENTS MINORS OR ESTATES
If the Plan Administrator shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due him or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may be paid to his Spouse, relative or any other person deemed
by the Plan Administrator to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Trust Fund therefor.
SECTION 10.6 NON-ALIENATION OF AMOUNTS PAYABLE
Except insofar as may otherwise be required by applicable law, or Article VIII,
or pursuant to the terms of a Qualified Domestic Relations Order, no amount
payable under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge
or encumbrance of any kind, and any attempt to so alienate shall be void; nor
shall the Trust Fund in any manner be liable for or subject to the debts or
liabilities of any person entitled to any such amount payable; and further, if
for any reason any amount payable under the Plan would not devolve upon such
person entitled thereto, then the Employer, in its discretion, may terminate his
interest and hold or apply such amount for the benefit of such person or his
dependents as it may deem proper. For the purposes of the Plan, a "Qualified
Domestic Relations Order" means any judgment, decree or order (including
approval of a property settlement agreement) which has been determined by the
Plan Administrator, in accordance with procedures established under the Plan, to
constitute a Qualified Domestic Relations Order within the meaning of Section
414(p)(1) of the Code. No amounts may be withdrawn under Article VII, and no
loans granted under Article VIII, if the TPA has received a document which may
be determined following its receipt to be a Qualified Domestic Relations Order
prior to completion of review of such order by the Plan Administrator within the
time period prescribed for such review by the IRS Regulations.
SECTION 10.7 UNCLAIMED AMOUNTS PAYABLE
If the TPA cannot ascertain the whereabouts of any person to whom an amount is
payable under the Plan, and if, after 5 years from the date such payment is due,
a notice of such payment due is mailed to the address of such person, as last
shown on the records of the Plan, and within 3 months after such mailing such
person has not filed with the TPA or Plan Administrator written claim therefor,
the Plan Administrator may direct in accordance with ERISA that the payment
(including the amount allocable to the Member's contributions) be cancelled, and
used in abatement of the Plan's administrative expenses, provided that
appropriate provision is made for recrediting the payment if such person
subsequently makes a claim therefor.
57
<PAGE> 60
SECTION 10.8 LEAVES OF ABSENCE
(A) If the Employer's personnel policies allow leaves of absence for all
similarly situated Employees on a uniformly available basis under the
circumstances described in Paragraphs (B)(1)-(4) below, then contribution
allocations and vesting service will continue to the extent provided in
Paragraphs (B)(1)-(4).
(B) For purposes of the Plan, there are only four types of approved Leaves of
Absence:
(1) Non-military leave granted to a Member for a period not in excess of
one year during which service is recognized for vesting purposes and
the Member is entitled to share in any supplemental contributions
under Article Ill or forfeitures under Article VI, if any, on a
pro-rata basis, determined by the Salary earned during the Plan Year
or Contribution Determination Period; or
(2) Non-military leave or layoff granted to a Member for a period not in
excess of one year during which service is recognized for vesting
purposes, but the Member is not entitled to share in any contributions
or forfeitures as defined under (1) above, if any, during the period
of the leave; or
(3) To the extent not otherwise required by applicable law, military or
other governmental service leave granted to a Member from which he
returns directly to the service of the Employer. Under this leave, a
Member may not share in any contributions or forfeitures as defined
under (1) above, if any, during the period of the leave, but vesting
service will continue to accrue; or
(4) To the extent not otherwise required by applicable law, a military
leave granted at the option of the Employer to a Member who is subject
to military service pursuant to an involuntary call-up in the Reserves
of the U.S. Armed Services from which he returns to the service of the
Employer within 90 days of his discharge from such military service.
Under this leave, a Member is entitled to share in any contributions
or forfeitures as defined under (1) above, if any, and vesting service
will continue to accrue. Notwithstanding any provision of the Plan to
the contrary, if a Member has one or more loans outstanding at the
time of this leave, repayments on such loan(s) may be suspended, if
the Member so elects, until such time as the Member returns to the
service of the Employer or the end of the leave, if earlier.
58
<PAGE> 61
SECTION 10.9 RETURN OF CONTRIBUTIONS TO EMPLOYER
(A) In the case of a contribution that is made by an Employer by reason of
a mistake of fact, the Employer may request the return to it of such
contribution within one year after the payment of the contribution,
provided such refund is made within one year after the payment of the
contribution.
(B) In the case of a contribution made by an Employer or a contribution
otherwise deemed to be an Employer contribution under the Code, such
contribution shall be conditioned upon the deductibility of the
contribution by the Employer under Section 404 of the Code. To the
extent the deduction for such contribution is disallowed, in accordance
with IRS Regulations, the Employer may request the return to it of such
contribution within one year after the disallowance of the deduction.
(C) In the event that the IRS determines that the Plan is not initially
qualified under the Code, any contribution made incident to that
initial qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is denied, but
only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year
in which the Plan is adopted, or such later date as the Secretary of
the Treasury may prescribe.
The contributions returned under (A), (B) or (C) above may not include any gains
on such excess contributions, but must be reduced by any losses.
SECTION 10.10 CONTROLLING LAW
The Plan and all rights thereunder shall be governed by and construed in
accordance with ERlSA and the laws of the State of New York.
59
<PAGE> 62
ARTICLE XI
AMENDMENT & TERMINATION
SECTION 11.1 GENERAL
While the Plan is intended to be permanent, the Plan may be amended or
terminated completely by the Employer at any time at the discretion of its Board
of Directors. Except where necessary to qualify the Plan or to maintain
qualification of the Plan, no amendment shall reduce any interest of a Member
existing prior to such amendment. Subject to the terms of the Adoption
Agreement, written notice of such amendment or termination as resolved by the
Board shall be given to the Trustee, the Plan Administrator and the TPA. Such
notice shall set forth the effective date of the amendment or termination or
cessation of contributions.
SECTION 11.2 TERMINATION OF PLAN AND TRUST
This Plan and any related Trust Agreement shall in any event terminate whenever
all property held by the Trustee shall have been distributed in accordance with
the terms here of.
SECTION 11.3 LIQUIDATION OF TRUST ASSETS IN THE EVENT OF TERMINATION
In the event that the Employer's Board of Directors shall decide to terminate
the Plan, or, in the event of complete cessation of Employer contributions, the
rights of Members to the amounts standing to their credit in their Accounts
shall be deemed fully vested and the Plan Administrator shall direct the Trustee
to either continue the Trust in full force and effect and continue so much of
the Plan in full force and effect as is necessary to carry out the orderly
distribution of benefits to Members and their Beneficiaries upon retirement,
Disability, death or termination of Employment; or (a) reduce to cash such part
or all of the Plan assets as the Plan Administrator may deem appropriate; (b)
pay the liabilities, if any, of the Plan; (c) value the remaining assets of the
Plan as of the date of notification of termination and proportionately adjust
Members' Account balances; (d) distribute such assets in cash to the credit of
their respective Accounts as of the notification of the termination date; and
(e) distribute all balances which have been segregated into a separate fund to
the persons entitled thereto; provided that no person in the event of
termination shall be required to accept distribution in any form other than
cash.
SECTION 11.4 PARTIAL TERMINATION
The Employer may terminate the Plan in part without causing a complete
termination of the Plan. In the event a partial termination occurs, the Plan
Administrator shall determine the portion of the Plan assets attributable to the
Members affected by such partial termination and the provisions of Section 11.3
shall apply with respect to such portion as if it were a separate fund.
60
<PAGE> 63
SECTION 11.5 POWER TO AMEND
(A) Subject to Section 11.6, the Employer, through its Board of Directors,
shall have the power to amend the Plan in any manner which it deems
desirable, including, but not by way of limitation, the right to change or
modify the method of allocation of such contributions, to change any
provision relating to the distribution of payment, or both, of any of the
assets of the Trust Fund. Further, the Employer may (i) change the choice
of options in the Adoption Agreement; (ii) add overriding language in the
Adoption Agreement when such language is necessary to satisfy Section 415
or Section 416 of the Code because of the required aggregation of multiple
plans; and (iii) add certain model amendments published by the IRS which
specifically provide that their adoption will not cause the Plan to be
treated as individually designed. An Employer that amends the Plan for any
other reason, including a waiver of the minimum funding requirement under
Section 412(d) of the Code, will be considered to have an individually
designed plan.
Any amendment shall become effective upon the vote of the Board of
Directors of the Employer, unless such vote of the Board of Directors of
the Employer specifies the effective date of the amendment.
Such effective date of the amendment may be made retroactive to the vote of
the Board of Directors, to the extent permitted by law.
(B) The Employer expressly recognizes the authority of the Sponsor, Pentegra
Services, Inc., to amend the Plan from time to time, except with respect to
elections of the Employer in the Adoption Agreement, and the Employer shall
be deemed to have consented to any such amendment. The Employer shall
receive a written instrument indicating the amendment of the Plan and such
amendment shall become effective as of the date of such instrument. No such
amendment shall in any way impair, reduce or affect any Member's vested and
nonforfeitable rights in the Plan and Trust.
SECTION 11.6 SOLELY FOR BENEFIT OF MEMBERS, TERMINATED MEMBERS AND
THEIR BENEFICIARIES
No changes may be made in the Plan which shall vest in the Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent assets of the Trust Fund.
No part of the funds of the Trust other than such part as may be required to pay
taxes, administration expenses and fees, shall be reduced by any amendment or be
otherwise used for or diverted to purposes other than the exclusive benefit of
Members, retired Members, Former Members, and their Beneficiaries, except as
otherwise provided in Section 10.9 and under applicable law.
61
<PAGE> 64
No amendment shall become effective which reduces the nonforfeitable percentage
of benefit that would be payable to any Member if his Employment were to
terminate and no amendment which modifies the method of determining that
percentage shall be made effective with respect to any Member with at least
three Years of Service unless such member is permitted to elect, within a
reasonable period after the adoption of such amendment, to have that percentage
determined without regard to such amendment.
SECTION 11.7 SUCCESSOR TO BUSINESS OF THE EMPLOYER
Unless this Plan and the related Trust Agreement be sooner terminated, a
successor to the business of the Employer by whatever form or manner resulting
may continue the Plan and the related Trust Agreement by executing appropriate
supplementary agreements and such successor shall thereupon succeed to all the
rights, powers and duties of the Employer hereunder. The Employment of any
Employee who has continued in the employ of such successor shall not be deemed
to have terminated or severed for any purpose hereunder if such supplemental
agreement so provides.
SECTION 11.8 MERGER CONSOLIDATION AND TRANSFER
The Plan shall not be merged or consolidated, in whole or in part, with any
other plan, nor shall any assets or liabilities of the Plan be transferred to
any other plan unless the benefit that would be payable to any affected Member
under such plan if it terminated immediately after the merger, consolidation or
transfer, is equal to or greater than the benefit that would be payable to the
affected Member under this Plan if it terminated immediately before the merger,
consolidation or transfer.
SECTION 11.9 REVOCABILITY
This Plan is based upon the condition precedent that it shall be approved by the
Internal Revenue Service as qualified under Section 401(a) of the Code and
exempt from taxation under Section 501(a) of the Code. Accordingly,
notwithstanding anything herein to the contrary, if a final ruling shall be
received in writing from the IRS that the Plan does not initially qualify under
the terms of Sections 401(a) and 501(a) of the Code, there shall be no vesting
in any Member of assets contributed by the Employer and held by the Trustee
under the Plan. Upon receipt of notification from the IRS that the Plan fails to
qualify as aforesaid, the Employer reserves the right, at its option, to either
amend the Plan in such manner as may be necessary or advisable so that the Plan
may so qualify, or to withdraw and terminate the Plan.
62
<PAGE> 65
Upon the event of withdrawal and termination, the Employer shall notify the
Trustee and provide the Trustee with a copy of such ruling and the Trustee shall
transfer and pay over to the Employer all of the net assets contributed by the
Employer pursuant to the Plan which remain after deducting the proper expense of
termination and the Trust Agreement shall thereupon terminate. For purposes of
this Article XI, "final ruling" shall mean either (1) the initial letter ruling
from the District Director in response to the Employer's original application
for such a ruling, or (2) if such letter ruling is unfavorable and a written
appeal is taken or protest filed within 60 days of the date of such letter
ruling, it shall mean the ruling received in response to such appeal or protest.
If the Plan is terminated, the Plan Administrator shall promptly notify the IRS
and such other appropriate governmental authority as applicable law may require.
Neither the Employer nor its Employees shall make any further contributions
under the Plan after the termination date, except that the Employer shall remit
to the TPA a reasonable administrative fee to be determined by the TPA for each
Member with a balance in his Account to defray the cost of implementing its
termination. Where the Employer has terminated the Plan pursuant to this
Article, the Employer may elect to transfer assets from the Plan to a successor
plan qualified under Section 401(a) of the Code in which event the Employer
shall remit to the TPA an additional administrative fee to be determined by the
TPA to defray the cost of such transfer transaction.
63
<PAGE> 66
TRUSTS ESTABLISHED UNDER THE PLAN
Assets of the Plan are held in trust under separate Trust Agreements with the
Trustee or Trustees. Any Eligible Employee or Member may obtain a copy of these
Trust Agreements from the Plan Administrator.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the Plan by
the Employer, the Employer has caused these presents to be executed on its
behalf and its corporate seal to be hereunder affixed as of the ______ day of
_________________, 19 _.
ATTEST:
By
- ------------------------------ ----------------------------
Clerk
64
<PAGE> 67
PENTEGRA
108 Corporate Park Drive
White Plains, NY 10604-3805
Tel: 800-872-3473
Fax: 914-694-9384
<PAGE> 68
ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
FOR [NAME OF EMPLOYER]
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
PENTEGRA
<PAGE> 69
ADOPTION AGREEMENT
For [Name of Employer]
Employees' Savings & Profit Sharing Plan and Trust
<TABLE>
<CAPTION>
<S> <C>
Name of Employer: [Name of Employer]
---------------------------------------------------------------------
Address:
---------------------------------------------------------------------
Phone No.:
---------------------------------------------------------------------
Contact Person:
---------------------------------------------------------------------
Name of Plan: [Name of Employer] Employees' Savings & Profit Sharing Plan and Trust
---------------------------------------------------------------------
</TABLE>
THIS ADOPTION AGREEMENT, upon execution by the Employer and the Trustee, and
subsequent approval by a duly authorized representative of Pentegra Services,
Inc. (the "Sponsor"), together with the Sponsor's Employees' Savings & Profit
Sharing Plan and Trust Agreement (the "Agreement"), shall constitute the [Name
of Employer] Employees' Savings & Profit Sharing Plan and Trust (the "Plan").
The terms and provisions of the Agreement are hereby incorporated herein by this
reference; provided, however, that if there is any conflict between the Adoption
Agreement and the Agreement, this Adoption Agreement shall control.
The elections hereinafter made by the Employer in this Adoption Agreement may be
changed by the Employer from time to time by written instrument executed by a
duly authorized representative thereof; but if any other provision hereof or any
provision of the Agreement is changed by the Employer other than to satisfy the
requirements of Section 415 or 41 6 of the Internal Revenue Code of 1 986, as
amended (the "Code"), because of the required aggregation of multiple plans, or
if as a result of any change by the Employer the Plan fails to obtain or retain
its tax-qualified status under Section 401(a) of the Code, the Employer shall be
deemed to have amended the Plan evidenced hereby and by the Agreement into an
individually designed plan, in which event the Sponsor shall thereafter have no
further responsibility for the tax-qualified status of the Plan. However, the
Sponsor may amend any term, provision or definition of this Adoption Agreement
or the Agreement in such manner as the Sponsor may deem necessary or advisable
from time to time and the Employer and the Trustee, by execution hereof,
acknowledge and consent thereto. Notwithstanding the foregoing, no amendment of
this Adoption Agreement or of the Agreement shall increase the duties or
responsibilities of the Trustee without the written consent thereof.
PENTEGRA
1
<PAGE> 70
I. EFFECT OF EXECUTION OF ADOPTION AGREEMENT
The Employer, upon execution of this Adoption Agreement by a duly authorized
representative thereof, (choose 1 or 2):
1. ____ Establishes as a new plan the [Name of Employer] Employees' Savings
& Profit Sharing Plan and Trust, effective __________, 19__
2. ____ Amends its existing defined contribution plan and trust ( Name of
Plan ) dated ______________, 19__, in its entirety into the [Name of
Employer] Employees' Savings & Profit Sharing Plan and Trust,
effective _______________, 19__, except as otherwise provided herein
or in the Agreement.
II. DEFINITIONS
A. Contribution Determination Period" for purposes of determining and
allocating Employer profit sharing contributions means (choose 1, 2, 3 or
4):
1. ____ The Plan Year.
2. ____ The Employer's Fiscal Year (defined as the Plan's "limitation
year") being the twelve (12) consecutive month period commencing
__________ (month/day) and ending _____________ (month/day).
3. ____ The three (3) consecutive monthly periods that comprise each of
the Plan Year quarters.
4. ____ The three (3) consecutive monthly periods that comprise each of
the Employer's Fiscal Year quarters. (Employer's Fiscal Year is
the twelve (12) consecutive month period commencing (month/day)
and ending ________ (month/day).)
B. "Effective Date" means _____________________, 199 _.
C. Employer
1. "Employer," for purposes of the Plan, shall mean: [name of employer] .
2. The Employer is (choose whichever may apply):
(a) ____ A member of a controlled group of corporations under Section
414(b) of the Code.
(b) ____ A member of a group of entities under common control under
Section 414(c) of the Code.
(c) ____ A member of an affiliated service group under Section 414(m)
of the Code.
(d) ____ A corporation.
(e) ____ A sole proprietorship or partnership.
(f) ____ A Subchapter S corporation.
2
<PAGE> 71
3. Employer's Taxable Year Ends on _______________
4. Employer's Federal Taxpayer Identification Number is _________________.
5. Employer's Plan Number is (enter 3-digit number) _____________________.
D. "Entry Date" means the first day of the (choose 1 or 2):
1.____ Calendar month coinciding with or next following the date the
Employee satisfies the Eligibility requirements described in
Section Ill.
2.____ Calendar quarter coinciding with or next following the date the
Employee satisfies the Eligibility requirements described in
Section Ill.
E. "Member" means an Employee enrolled in the membership of the Plan.
F. "Normal Retirement Age" means (choose 1 or 2):
1.____ Attainment of age _______ (select an age not less than 55 and not
greater than 65).
2.____ Later of: (i) attainment of age 65 or (ii) the fifth anniversary
of the date the Member commenced participation in the Plan.
G. "Normal Retirement Date" means the first day of the first calendar month
coincident with or next following the date upon which a Member attains his
or her Normal Retirement Age.
H. "Plan Year" means the twelve (12) consecutive month period beginning on
each January 1.
I. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3):
1.____ Basic Salary only.
2.____ Basic Salary plus one or more of the following (if 2 is chosen,
then choose (a), (b) or (c), whichever shall apply):
(a) ____ Commissions not in excess of $__________
(b) ____ Overtime
(c) ____ Overtime and bonuses
3.____ Total taxable compensation as reported on Form W-2 (exclusive of
any compensation deferred from a prior year).
Note: Member pre-tax elective deferrals, if any, are always included in
Plan Salary.
J. "Salary" shall not include:
_______ Member pre-tax contributions to a Code Section 125 cafeteria plan.
3
<PAGE> 72
III. ELIGIBILITY REQUIREMENTS
A. All Employees shall be eligible to participate in the Plan in accordance
with the provisions of Article Il of the Plan, except the following
Employees shall be excluded (choose whichever shall apply):
1.____ Employees who have not attained age 21.
2.____ Employees who have not, during the ____________ consecutive month
period (1-11, 12 or 24) beginning with an Employee's Date of
Employment, Date of Reemployment or any anniversary thereof,
completed __________________ number of Hours of Service
(determined by multiplying the number of months above by 831/3).
Note: Employers which permit Members to make pre-tax elective
deferrals to the Plan (see V.A.3.) may not elect a 24 month
eligibility period.
3.____ Employees included in a unit of Employees covered by a collective
bargaining agreement, if retirement benefits were the subject of
good faith bargaining between the Employer and Employee
representatives.
4.____ Employees who are nonresident aliens and who receive no earned
income from the Employer which constitutes income from sources
within the United States.
5.____ Employees included in the following lob classifications:
(a) __ Hourly Employees
(b) __ Salaried Employees
6.____ Employees of the following employers which are aggregated under
Section 414(b), 414(c) or 414(m) of the Code:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Note: If no entries are made above, all Employees shall be eligible to
participate in the Plan on the later of: (i) the Effective Date or
(ii) the first day of the calendar month or calendar quarter (as
designated by the Employer in Section ll.D.) coinciding with or
immediately following the Employee's Date of Employment or, as
applicable, Date of Reemployment.
B. Such Eligibility Computation Period established above shall be applicable
to (choose 1 or 2):
1.____ Both present and future Employees.
2.____ Future Employees only.
4
<PAGE> 73
C. Such Eligibility requirements established above shall be (choose 1 or 2):
1.____ Applied to the designated Employee group on and after the
Effective Date of the Plan.
2.____ Waived for the ___________ consecutive monthly period (may not
exceed 1 2) beginning on the Effective Date of the Plan.
IV. HOURS OF EMPLOYMENT AND PRIOR EMPLOYMENT CREDIT
A. The number of Hours of Employment with which an Employee or Member is
credited shall be (choose 1 or 2):
1.____ The actual number of Hours of Employment. (Hour of Service Method)
2.____ 83 1/3 Hours of Employment for every month of Employment. (Elapsed
Time Method)
B. Prior Employment Credit:
____ Employment with the following entity or entities shall be included
for eligibility and vesting purposes:
Note: If this Plan is a continuation of a Predecessor Plan, service under
the Predecessor Plan shall be counted as Employment under this
Plan.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
V. CONTRIBUTIONS
Note: Annual Member pre-tax elective deferrals, Employer matching
contributions, Employer basic contributions, Employer supplemental
contributions, Employer profit sharing contributions and Employer
Qualified Non-Elective contributions, in the aggregate, may not exceed
15% of all Members' Salary (excluding from Salary Member pre-tax
elective deferrals).
A. Employee Contributions (choose 1 or 2; 3 or 4; 5 and/or 6):
1.____ A Member may make after-tax contributions to the Plan, based on
multiples of 1% of monthly Salary.
2.____ A Member may not make after-tax contributions to the Plan.
3.____ A Member may make pre-tax elective deferrals to the Plan, based on
multiples of 1% of monthly Salary.
4.____ A Member may not make pre-tax elective deferrals to the Plan.
5.____ The maximum amount of monthly contributions a Member may make to
the Plan is ____% (1-20) of the Member's monthly Salary.
6.____ An Employee may allocate a rollover contribution to the Plan prior
to satisfying the Eligibility requirements described above.
5
<PAGE> 74
B. A Member may change his or her contribution rate (choose 1 or 2):
1.____ 1 time per calendar month.
2.____ 1 time per calendar quarter.
C. Employer Matching Contributions (choose 1, 2, 3 or 4; and fill in 5 if
applicable):
1.____ No Employer matching contributions will be made to the Plan.
2.____ The Employer shall allocate to each contributing Member's Account
an amount equal to __% (based on 5% increments not to exceed 200%)
of the Member's contributions for that month.
3.____ The Employer shall allocate to each contributing Member's Account
an amount determined in accordance with the following schedule:
Years of Employment Matching %
------------------- ----------
Less than 3 50%
At least 3, but less than 5 75%
5 or more 100%
4.____ The Employer shall allocate to each contributing Member's Account
an amount determined in accordance with the following schedule:
Years of Employment Matching %
------------------- ----------
Less than 3 100%
At least 3, but less than 5 150%
5 or more 200%
5.____ The Employer matching contributions under 2, 3 or 4 above shall be
based on the Member's contributions not in excess of ______% (1-20
but not in excess of the percentage specified in A.5. above) of
the Member's Salary.
D. Employer Basic Contributions (choose 1 or 2):
1.____ No Employer basic contributions will be made to the Plan.
2.____ The Employer shall allocate an amount equal to _________% (based
on 1 % increments not to exceed 15%) of Member's Salary for the
month to (choose (a) or (b)):
(a) ____ The Accounts of all Members
(b) ____ The Accounts of all Members who were employed with the
Employer on the last day of such month.
6
<PAGE> 75
E. Employer Supplemental Contributions:
The Employer may make supplemental contributions for any Plan Year in
accordance with Section 3.7 of the Plan.
F. Employer Profit Sharing Contributions (Choose 1, 2, 3, 4, or 5):
1.____ No Employer Profit Sharing Contributions will be made to the Plan.
Non-Integrated Formula
----------------------
2.____ Profit sharing contributions shall be allocated to each Member in
the same ratio as each Member's Salary during such Contribution
Determination Period bears to the total of such Salary of all
Members.
3.____ Profit sharing contributions shall be allocated to each Member in
the same ratio as each Member's Salary for the portion of the
Contribution Determination Period during which the Member
satisfied the Employer's eligibility requirement(s) bears to the
total of such Salary of all Members.
Integrated Formula
------------------
4.____ Profit sharing contributions shall be allocated to each Member's
Account in a uniform percentage (specified by the Employer as
_____%) of each Member's Salary during the Contribution
Determination Period up to the Social Security Taxable Wage Base
as defined in Section ___ of the Plan ("Base Salary") for the Plan
Year that includes such Contribution Determination Period , plus a
uniform percentage(specified by the Employer as ______%) of each
Member's Salary for the Contribution Determination Period in
excess of the Social Security Taxable Wage Base ("Excess Salary")
for the Plan Year that includes such Contribution Determination
Period, in accordance with Article III of the Plan.
5.____ Profit sharing contributions shall be allocated to each Member's
Account in a uniform percentage (specified by the Employer as
_____%) of each Member's Salary for the portion of the
Contribution Determination Period during which the Member
satisfied the Employer's eligibility requirement(s), if any, up to
the Base Salary for the Plan Year that includes such Contribution
Determination Period, plus a uniform percentage (specified by the
Employer as ______ %) of each Member's Excess Salary for the
portion of the Contribution Determination Period during which the
Member satisfied the Employer's eligibility requirement(s) in
accordance with Article III of the Plan.
G. Allocation of Employer Profit Sharing Contributions:
In accordance with Section V, G above, a Member shall be eligible to share
in Employer Profit Sharing Contributions, if any, as follows (choose 1 or
2):
1.____ A Member shall be eligible for an allocation of Employer Profit
Sharing Contributions for a Contribution Determination Period in
all events.
7
<PAGE> 76
2.____ A Member shall be eligible for an allocation of Employer Profit
Sharing Contributions for a Contribution Determination Period only
if he or she (choose (a), (b) or (c) whichever shall apply):
(a) ____ is employed on the last day of the Contribution
Determination Period or retired, died or became totally and
permanently disabled prior to the last day of the Contribution
Determination Period.
(b) ____ completed 1,000 Hours of Employment if the Contribution
Determination Period is a period of 12 months (250 Hours of
Employment if the Contribution Determination Period is a
period of 3 months) or retired, died or became totally and
permanently disabled prior to the last day of the Contribution
Determination Period.
(c) ____ is employed on the last day of the Contribution Determination
Period and, if such period is 12 months, completed 1,000 Hours
of Employment (250 Hours of Employment if the Contribution
Determination Period is a period of 3 months) or retired, died
or became totally and permanently disabled prior to- the last
day of the Contribution Determination Period.
H. Employer Qualified Nonelective Contributions:
The Employer may make qualified nonelective contributions for any Plan
Year in accordance with Section 3.9 of the Plan.
VI. INVESTMENT FUNDS
The Employer hereby selects the following Investment Funds to be made
available under the Plan (choose whichever shall apply). The Employer
agrees and acknowledges that the selection of Investment Funds made in this
Section VI is solely its responsibility, and no other person, including the
Sponsor, has any discretionary authority or control with respect to such
selection process.
1.____ 500 Stock Index Fund
2.____ Stable Value Fund
3.____ MidCap 400 Stock Index Fund
4.____ Money Market Fund
5.____ Bond Index Fund
6.____ Employer Stock Fund
8
<PAGE> 77
VII. EMPLOYER SECURITIES
A. If the Employer makes available an Employer Stock Fund pursuant to
Section VI of this Adoption Agreement, then voting and tender offer
rights with respect to Employer Stock shall be delegated and exercised
as follows (choose 1 or 2):
1.____ The Plan Administrator shall direct the Trustee as to the voting
of all Employer Stock and as to all rights in the event of a
tender offer involving such Employer Stock.
2.____ Each Member shall be entitled to direct the Plan Administrator
as to the voting and tender offer rights involving Employer
Stock held in such Member's Account, and the Plan Administrator
shall follow or cause the Trustee to follow such directions. If
a Member fails to provide the Plan Administrator with directions
as to voting or tender offer rights, the Plan Administrator
shall exercise those rights as it determines in its discretion
and shall direct the Trustee accordingly.
VIII. INVESTMENT DIRECTION
A. Members shall be entitled to designate what percentage of employee
contributions and employer contributions made on their behalf will be
invested in the various Investment Funds offered by the Employer as
specified in Section VI of this Adoption Agreement; provided, however,
that the following portions of a Member's Account must be invested in
the Employer Stock Fund (choose whichever shall apply):
1.____ Employer Profit Sharing Contributions
2.____ Employer Matching Contributions
3.____ Employer Basic Contributions
4.____ Employer Supplemental Contributions
5.____ Employer Qualified Nonelective Contributions
B. A Member may change his or her investment direction (choose 1, 2 or 3):
1.____ 1 time per business day
2.____ 1 time per calendar month.
3.____ 1 time per calendar quarter.
C. If a Member fails to make an effective investment direction, the
Member's contributions and Employer contributions made on the Member's
behalf shall be invested in ____________________________________
(insert one of the Investment Funds selected in Section VI of this
Adoption Agreement).
9
<PAGE> 78
IX. VESTING SCHEDULES; YEARS OF EMPLOYMENT FOR VESTING PURPOSES
A. (Choose 1, 2, 3, 4, 5, 6 or 7)
<TABLE>
<CAPTION>
Schedule Years of Employment Vested %
-------- ------------------- --------
<S> <C> <C> <C>
1. ______ Immediate Upon Enrollment 100%
2. ______ 2-6 Year Graded Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
3. ______ 5-Year Cliff Less than 5 0%
5 or more 100%
4. ______ 3-Year Cliff Less than 3 0%
3 or more 100%
5. ______ 4-Year Graded Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
Schedule Years of Employment
-------- -------------------
Vested %
- --------
6. ______ 3-7 Year Graded Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
7. ______ Other Less than __ 0%
___ but less than ___ ___%
___ but less than ___ ___%
___ but less than ___ ___%
___ or more ___ 100%
</TABLE>
B. With respect to the schedules listed above, the Employer elects (choose
1, 2, 3 and 4; or 5):
1. Schedule ____ solely with respect to Employer matching
contributions.
2. Schedule ____ solely with respect to Employer basic contributions.
3. Schedule ____ solely with respect to Employer supplemental
contributions.
10
<PAGE> 79
4. Schedule solely with respect to Employer profit sharing
contributions.
5. Schedule with respect to all Employer contributions.
NOTE: Notwithstanding any election by the Employer to the contrary
each Member shall acquire a 1 00% vested interest in his Account
attributable to all Employer contributions made to the Plan upon
the earlier of (i) attainment of Normal Retirement Age, (ii)
approval for disability or (iii) death. In addition, a Member
shall at all times have a 1 00% vested interest in the Employer
Qualified Non-Elective Contributions, if any, and in the pre-tax
elective deferrals and nondeductible after-tax Member
Contributions.
C. Years of Employment Excluded for Vesting Purposes
The following Years of Employment shall be disregarded for vesting
purposes (choose whichever shall apply):
1.____ Years of Employment during any period in which neither the Plan
nor any predecessor plan was maintained by the Employer.
2.____ Years of Employment of a Member prior to attaining age 18.
X. WITHDRAWAL PROVISIONS
A. The following portions of a Member's Account will be eligible for
in-service withdrawals, subject to the provisions of Article VII of the
Plan (choose whichever shall apply):
1.____ Employee after-tax contributions and the earnings thereon.
2.____ Employee pre-tax elective deferrals and the earnings thereon.
3.____ Employee rollover contributions and the earnings thereon.
4.____ Employer matching contributions and the earnings thereon.
5.____ Employer basic contributions and the earnings thereon.
6.____ Employer supplemental contributions and the earnings thereon.
7.____ Employer profit sharing contributions and the earnings thereon.
8.____ Employer qualified nonelective contributions and earnings
thereon.
9.____ In-service withdrawals permitted only in the event of (choose
(a) and/or (b)):
(a)____ Hardship.
(b)____ Attainment of age 59 1/2.
10.____ No in-service withdrawals shall be allowed.
11
<PAGE> 80
B. Notwithstanding any elections made in Subsection A of this Section X
above, the following portions of a Member's Account shall be excluded
from eligibility for in-service withdrawals (choose whichever shall
apply):
1.____ Employer contributions, and the earnings thereon, credited to
the Employer Stock Fund.
2.____ All contributions and/or deferrals, and the earnings thereon,
credited to the Employer Stock Fund.
3.____ Other: ________________________________
XI. DISTRIBUTION OPTION (CHOOSE 1 OR 2)
1.___ Lump Sum and partial lump sum payments only.
2.___ Lump Sum and partial lump sum payments plus one or more of the
following (choose (a) and /or
(a) ___ Installment payments.
(b) ___ Annuity payments.
XII. LOAN PROGRAM (CHOOSE 1, 2 OR 3)
1.___ No loans will be permitted from the Plan.
2.___ Loans will be permitted from the Member's Account.
3.___ Loans will be permitted from the Member's Account, EXCLUDING (choose
whichever shall apply):
(a) Employer Profit sharing contributions and the earnings
thereon.
(b) Employer matching contributions and the earnings thereon.
(c) Employer basic contributions and the earnings thereon.
(d) Employer supplemental contributions and the earnings thereon.
(e) Employee after-tax contributions and the earnings thereon.
(f) Employee pre-tax elective deferrals and the earnings thereon.
(g) Employee rollover contributions and the earnings thereon.
(h) Employer qualified nonelective contributions and the earnings
thereon.
(i) Any amounts to the extent invested in the Employer stock
fund.
12
<PAGE> 81
XIII. ADDITIONAL INFORMATION
If additional space is needed to select or describe an elective feature of
the Plan, the Employer should attach additional pages and use the
following format:
The following is hereby made a part of Section --- of the Adoption
Agreement and is thus incorporated into and made a part of the [Plan Name]
Signature of Employer's Authorized Representative ________________________
Signature of Trustee _____________________________________________________
Supplementary Page -- of [total number of pages].
XIV. PLAN ADMINISTRATOR
The Named Plan Administrator under the Plan shall be the (choose 1, 2, 3
or 4):
Note: Pentegra Services, Inc. may not be appointed Plan Administrator.
1.____ Employer
2.____ Employer's Board of Directors
3.____ Plan's Administrative Committee
4.____ Other (if chosen, then provide the following information)
Name:
---------------------------------------------------
Address:
---------------------------------------------------
Tel No.
---------------------------------------------------
Contact:
---------------------------------------------------
NOTE: IF NO NAMED PLAN ADMINISTRATOR IS DESIGNATED ABOVE, THE EMPLOYER
SHALL BE DEEMED THE NAMED PLAN ADMINISTRATOR.
XV. TRUSTEE
The Employer hereby appoints the following person or entity to serve as
Trustee under the Plan:
Name:
----------------------------------------------------------
Address:
----------------------------------------------------------
Tel No.
----------------------------------------------------------
Contact:
----------------------------------------------------------
13
<PAGE> 82
EXECUTION OF ADOPTION AGREEMENT
By execution of this Adoption Agreement by a duly authorized representative of
the Employer, the Employer acknowledges that it has established or, as the case
may be, amended a tax-qualified retirement plan into the [Name of Employer]
Employees' Savings & Profit Sharing Plan and Trust (the "Plan"). The Employer
hereby represents and agrees that it will assume full fiduciary responsibility
for the operation of the Plan and for complying with all duties and requirements
imposed under applicable law, including, but not limited to, the Employee
Retirement Income Security Act of 1974, as amended, and the Internal Revenue
Code of 1986, as amended. In addition, the Employer represents and agrees that
it will accept full responsibility of complying with any applicable requirements
of federal or state securities law as such laws may apply to the Plan and to any
investments thereunder. The Employer further acknowledges that any opinion
letter issued with respect to the Adoption Agreement and the Agreement by the
Internal Revenue Service ("IRS") to Pentegra Services, Inc., as sponsor of the
Employees' Savings & Profit Sharing Plan, does not constitute a ruling or a
determination with respect to the tax- qualified status of the Plan and that the
appropriate application must be submitted to the IRS in order to obtain such a
ruling or determination with respect to the Plan.
THE FAILURE TO PROPERLY COMPLETE THE ADOPTION AGREEMENT MAY RESULT IN
DISQUALIFICATION OF THE PLAN AND TRUST EVIDENCED THEREBY.
The Sponsor will inform the Employer of any amendments to the Plan or Trust
Agreement or of the discontinuance or abandonment of the Plan or Trust.
Any inquiries regarding the adoption of the Plan should be directed to the
Sponsor as follows:
Pentegra Services, Inc.
108 Corporate Park Drive
White Plains, New York 10604
(914) 694-1300
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officer this ________ day of
______________________, 19 .
[Name of Employer]
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
3/19/97
14
<PAGE> 1
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), is entered into this ___ day of __________, 1997, by and between
the Bridgeport Savings and Loan Association, a savings and loan association
incorporated under Ohio law (hereinafter referred to as the "EMPLOYER"), and Jon
W. Letzkus, an individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President and
Managing Officer of the EMPLOYER;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the EMPLOYER desires to retain the services
of the EMPLOYEE as the President and Managing Officer of the EMPLOYER;
WHEREAS, the EMPLOYEE desires to continue to serve as the President and
Managing Officer of the EMPLOYER; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this
AGREEMENT to set forth the terms and conditions of the employment relationship
between the EMPLOYER and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER and the EMPLOYEE hereby agree as follows:
1. Employment and Term.
-------------------
(a) TERM. Upon the terms and subject to the conditions of this
AGREEMENT, the EMPLOYER hereby employs the EMPLOYEE, and the EMPLOYEE hereby
accepts employment, as the President and Managing Officer of the EMPLOYER. The
term of this AGREEMENT shall commence on the date hereof and shall end on
______________, 1998 unless extended by the EMPLOYER with the consent of the
EMPLOYEE as provided in subsection (b) of this Section 1 (hereinafter referred
to, together with such extensions, as the "TERM").
(b) EXTENSION. On or before each anniversary of the date of this
AGREEMENT, the Board of Directors of the EMPLOYER shall review this AGREEMENT,
document its justification and approval of this AGREEMENT in the board minutes,
and the TERM shall be extended for a one-year period beyond the then effective
expiration date, provided the Board of Directors determines that this AGREEMENT
should be extended. Any such extension shall be subject to the written consent
of the EMPLOYEE.
<PAGE> 2
2. Duties of the EMPLOYEE.
----------------------
(a) GENERAL DUTIES AND RESPONSIBILITIES. The EMPLOYEE shall serve as
the President and Managing Officer of the EMPLOYER. Subject to the direction of
the Board of Directors of the EMPLOYER, the EMPLOYEE shall have responsibility
for the general management and control of the business and affairs of the
EMPLOYER and shall perform all duties and shall have all powers which are
commonly incident to the office of President and Managing Officer or which,
consistent therewith, are delegated to him by the Board of Directors. Such
duties shall include, but not be limited to, (i) managing the day-to-day
operations of the EMPLOYER, (ii) managing the efforts of the EMPLOYER to comply
with applicable laws and regulations, (iii) marketing of the EMPLOYER and its
services, (iv) supervising other employees of the EMPLOYER, (v) providing prompt
and accurate reports to the Board of Directors of the EMPLOYER regarding the
affairs and conditions of the EMPLOYER, and (vi) making recommendations to the
Board of Directors of the EMPLOYER concerning the strategies, capital structure,
tactics, and general operations of the EMPLOYER.
(b) DEVOTION OF ENTIRE TIME TO THE BUSINESS OF THE EMPLOYER. The
EMPLOYEE shall devote his entire productive time, ability and attention during
normal business hours throughout the TERM to the faithful performance of his
duties under this AGREEMENT. The EMPLOYEE shall not directly or indirectly
render any services of a business, commercial or professional nature to any
person or organization other than the EMPLOYER and its sole shareholder, Ohio
State Financial Services Corporation (hereinafter referred to as the "HOLDING
COMPANY") without the prior written consent of the Board of Directors of the
EMPLOYER; provided, however, that the EMPLOYEE shall not be precluded from (i)
vacations and other leave time in accordance with Section 3(d) hereof; (ii)
reasonable participation in community, civic, charitable or similar
organizations; or (iii) the pursuit of personal investments which do not
interfere or conflict with the performance of the EMPLOYEE's duties to the
EMPLOYER. Nothing in this section shall limit the EMPLOYEE's right to invest in
securities of any business that does not provide services or products of the
type or competing with those provided by the EMPLOYER or its subsidiaries or
affiliates.
3. Compensation, Benefits and Reimbursements.
------------------------------------------
(a) SALARY. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $78,500 until changed by the Board of Directors of the
EMPLOYER in accordance with Section 3(b) of this AGREEMENT.
(b) ANNUAL SALARY REVIEW. On or before each anniversary of the date of
this AGREEMENT, the annual salary of the EMPLOYEE shall be reviewed by the Board
of Directors of the EMPLOYER and shall be set at an amount not less than
$78,500, based upon the EMPLOYEE's individual performance and the overall
profitability and financial condition of the EMPLOYER (hereinafter referred to
as the "ANNUAL REVIEW"). The results of the ANNUAL REVIEW shall be reflected in
the minutes of the Board of Directors of the EMPLOYER.
2
<PAGE> 3
(c) EMPLOYEE BENEFIT PROGRAM. During the TERM, the EMPLOYEE shall be
entitled to participate in all formally established employee benefit, bonus,
pension and profit-sharing plans and similar programs that are maintained by the
EMPLOYER from time to time, and all employee benefit plans or programs hereafter
adopted in writing by the Board of Directors of the EMPLOYER, for which senior
management personnel are eligible, including any employee stock ownership plan,
stock option plan or other stock benefit plan (hereinafter collectively referred
to as the "BENEFIT PLANS") in accordance with the terms and conditions of such
BENEFIT PLANS, including but not limited to satisfaction of any participation or
vesting requirements. Notwithstanding any statement to the contrary contained
elsewhere in this AGREEMENT, the EMPLOYER may discontinue or terminate at any
time any such BENEFIT PLANS, now existing or hereafter adopted, to the extent
permitted by the terms of such plans and shall not be required to compensate the
EMPLOYEE for such discontinuance or termination.
(d) VACATION AND SICK LEAVE. The EMPLOYEE shall be entitled, without
loss of pay, to be absent voluntarily from the performance of his duties under
this AGREEMENT, in accordance with the policies periodically established by the
Board of Directors of the EMPLOYER for senior management officials of the
EMPLOYER. The EMPLOYEE shall not be entitled to receive any additional
compensation from the EMPLOYER in the event of his failure to take the full
allotment of vacation time in any calendar year. The EMPLOYEE shall be entitled
to annual sick leave as established by the Board of Directors of the EMPLOYER
for senior management officials of the EMPLOYER. In the event that any sick
leave time shall not have been used during any calendar year, such leave shall
accrue to subsequent calendar years, only to the extent authorized by the Board
of Directors of the EMPLOYER. Upon termination of employment, the EMPLOYEE shall
not be entitled to receive any additional compensation from the EMPLOYER for
unused sick leave.
4. Termination of Employment.
-------------------------
(a) GENERAL. In addition to the termination of the employment of the
EMPLOYEE upon the expiration of the TERM, the employment of the EMPLOYEE shall
terminate at any other time during the TERM upon the delivery by the EMPLOYER of
written notice of employment termination to the EMPLOYEE. The following
subparagraphs (i), (ii) and (iii) of this Section 4(a) shall govern the
obligations of the EMPLOYER to the EMPLOYEE upon the occurrence of the events
described in such subparagraphs:
(i) TERMINATION FOR JUST CAUSE. In the event that the EMPLOYER
terminates the employment of the EMPLOYEE during the TERM because of the
EMPLOYEE's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure or refusal to
perform the duties and responsibilities assigned in this AGREEMENT, willful
violation of any law, rule, regulation or final cease-and-desist order (other
than traffic violations or similar offenses), conviction of a felony or for
fraud or embezzlement, or material breach of any provision of this AGREEMENT
(hereinafter collectively referred to as "JUST CAUSE"), the EMPLOYEE shall not
receive, and shall have no right to receive, any compensation or other benefits
for any period after such termination.
3
<PAGE> 4
(ii) TERMINATION AFTER CHANGE OF CONTROL. In the event that,
before the expiration of the TERM and in connection with or within one year
after a CHANGE OF CONTROL (as defined hereinafter) of the EMPLOYER or the
HOLDING COMPANY, (A) the employment of the EMPLOYEE is terminated for any reason
other than JUST CAUSE, (B) the present capacity or circumstances in which the
EMPLOYEE is employed are materially changed, or (C) the EMPLOYEE's
responsibilities, authority, compensation or other benefits provided under this
AGREEMENT are materially reduced, then the following shall occur:
(I) The EMPLOYER shall promptly pay to
the EMPLOYEE or to his beneficiaries, dependents or estate an amount equal to
the product of two, multiplied by the greater of the annual salary set forth in
Section 3(a) of this AGREEMENT or the annual salary payable to the EMPLOYEE as a
result of any ANNUAL REVIEW;
(II) The EMPLOYEE, his dependents,
beneficiaries and estate shall continue to be covered at the EMPLOYER's expense
under all health, life, disability and other welfare benefit plans of the
EMPLOYER in which the EMPLOYEE was a participant prior to the effective date of
the termination of his employment as if the EMPLOYEE were still employed under
this AGREEMENT until the earliest of the expiration of two years from the
effective date of the termination of employment or the date on which the
EMPLOYEE is included in another employer's benefit plans as a full-time
employee; and
(III) The EMPLOYEE shall not be required
to mitigate the amount of any payment provided for in this AGREEMENT by seeking
other employment or otherwise, nor shall any amounts received from other
employment or otherwise by the EMPLOYEE offset in any manner the obligations of
the EMPLOYER hereunder, except as specifically stated in subparagraph (II).
In the event that payments pursuant to this subsection (ii)
would result in the imposition of a penalty tax pursuant to Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder (hereinafter collectively referred to as "SECTION 280G"),
such payments shall be reduced to the maximum amount which may be paid under
SECTION 280G without exceeding such limits. Payments pursuant to this subsection
also may not exceed the limit set forth in Regulatory Bulletin 27a of the Office
of Thrift Supervision (hereinafter referred to as the "OTS").
(iii) TERMINATION WITHOUT CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated before the expiration of the TERM
other than (A) for JUST CAUSE or (B) in connection with or within one year after
a CHANGE OF CONTROL, then the following shall occur:
(I) The EMPLOYER shall be obligated to
continue to pay on a monthly basis to the EMPLOYEE, his designated beneficiaries
or his estate, his annual salary provided pursuant to Section 3(a) or (b) of
this AGREEMENT until the expiration of the TERM;
4
<PAGE> 5
(II) The EMPLOYER shall continue to provide
to the EMPLOYEE, at the EMPLOYER's expense, health, life, disability, and other
welfare benefits substantially equal to those being provided to the EMPLOYEE at
the date of termination of his employment until the earliest to occur of the
expiration of the TERM or the date on which the EMPLOYEE is included in another
employer's benefit plans as a full-time employee; and
(III) The EMPLOYEE shall not be required to
mitigate the amount of any payment provided for in this AGREEMENT by seeking
other employment or otherwise, nor shall any amounts received from other
employment or otherwise by the EMPLOYEE offset in any manner the obligations of
the EMPLOYER hereunder, except as specifically stated in subparagraph (II).
In the event that payments pursuant to this subsection (iii) would
result in the imposition of a penalty tax pursuant to SECTION 280G, such
payments shall be reduced to the maximum amount which may be paid under SECTION
280G without exceeding those limits. Payments pursuant to this subsection also
may not exceed the limit set forth in Regulatory Bulletin 27a of the OTS.
(b) DEATH OF THE EMPLOYEE. The TERM automatically terminates upon the
death of the EMPLOYEE. In the event of such death, the EMPLOYEE's estate shall
be entitled to receive the compensation due the EMPLOYEE through the last day of
the calendar month in which the death occurred, except as otherwise specified
herein.
(c) "GOLDEN PARACHUTE" PROVISION. Any payments made to the EMPLOYEE
pursuant to this AGREEMENT or otherwise are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
(d) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events; (i) the acquisition of ownership or power to
vote more than 25% of the voting stock of the EMPLOYER or the HOLDING COMPANY;
(ii) the acquisition of the ability to control the election of a majority of the
directors of the EMPLOYER or the HOLDING COMPANY; (iii) during any period of up
to two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the EMPLOYER or the HOLDING COMPANY cease
for any reason to constitute at least two-thirds thereof; provided, however,
that any individual whose election or nomination for election as a member of the
Board of Directors of the EMPLOYER or the HOLDING COMPANY was approved by a vote
of at least two-thirds of the directors then in office shall be considered to
have continued to be a member of the Board of Directors of the EMPLOYER or the
HOLDING COMPANY; or (iv) the acquisition by any person or entity of "conclusive
control" of the EMPLOYER within the meaning of 12 C.F.R. Section 574.4(a), or
the acquisition by any person or entity of "rebuttable control" within the
meaning of 12 C.F.R. Section 574.4(b) that has not been rebutted in accordance
with 12 C.F.R. Section 574.4(c). For purposes of this paragraph, the term
"person" refers to an individual or corporation, partnership, trust,
association, or other organization, but does not include the EMPLOYEE and any
person or persons with whom the EMPLOYEE is "acting in concert" within the
meaning of 12 C.F.R. Part 574.
5
<PAGE> 6
5. SPECIAL REGULATORY EVENTS. Notwithstanding Section 4 of this
AGREEMENT, the obligations of the EMPLOYER to the EMPLOYEE shall be as follows
in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYER's affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the EMPLOYER's obligations under this AGREEMENT
shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
EMPLOYER shall pay the EMPLOYEE all or part of the compensation withheld while
the obligations in this AGREEMENT were suspended and reinstate, in whole or in
part, any of the obligations that were suspended;
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYER's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the FDIA, all obligations of the EMPLOYER under
this AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination;
(c) If the EMPLOYER is in default, as defined in section 3(x)(1) of the
FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected;
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the EMPLOYER, (i) by the Director of
the OTS, or his or her designee at the time that the Federal Deposit Insurance
Corporation enters into an agreement to provide assistance to or on behalf of
the EMPLOYER under the authority contained in Section 13(c) of the FDIA or (ii)
by the Director of the OTS, or his or her designee, at any time the Director of
the OTS approves a supervisory merger to resolve problems related to the
operation of the EMPLOYER or when the EMPLOYER is determined by the Director of
the OTS to be in an unsafe or unsound condition; provided, however that no
vested rights of the EMPLOYEE shall not be affected by any such termination; and
(e) The provisions of this Section 5 are governed by the requirements
of 12 C.F.R. Section 563b.39(b) and in the event that any statements in this
Section 5 are inconsistent with 12 C.F.R. Section 563b.39(b), the provisions of
12 C.F.R. Section 563b.39(b) shall be controlling.
6. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT
shall preclude the EMPLOYER or the HOLDING COMPANY from consolidating with,
merging into, or transferring all, or substantially all, of their assets to
another corporation that assumes all of their obligations and undertakings
hereunder. Upon such a consolidation, merger or transfer of assets, the term
"EMPLOYER" as used herein, shall mean such other corporation or entity, and this
AGREEMENT shall continue in full force and effect.
6
<PAGE> 7
7. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the EMPLOYER and its customers and businesses. The EMPLOYEE agrees and covenants
not to disclose or use for his own benefit, or the benefit of any other person
or entity, any confidential information, unless or until the EMPLOYER consents
to such disclosure or use or such information is otherwise legally in the public
domain. The EMPLOYEE shall not knowingly disclose or reveal to any unauthorized
person any confidential information relating to the EMPLOYER, its subsidiaries,
or affiliates, or to any of the businesses operated by them, and the EMPLOYEE
confirms that such information constitutes the exclusive property of the
EMPLOYER. The EMPLOYEE shall not otherwise knowingly act or conduct himself (a)
to the material detriment of the EMPLOYER, its subsidiaries, or affiliates, or
(b) in a manner which is inimical or contrary to the interests of the EMPLOYER.
8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or legal
representatives without the EMPLOYER's prior written consent; provided, however,
that nothing in this Section 8 shall preclude (a) the EMPLOYEE from designating
a beneficiary to receive any benefits payable hereunder upon his death, or (b)
the executors, administrators, or other legal representatives of the EMPLOYEE or
his estate from assigning any rights hereunder to the person or persons entitled
thereto.
9. NO ATTACHMENT. Except as required by law, no right to receive payment
under this AGREEMENT shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process of assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure to
the benefit of, the EMPLOYEE and the EMPLOYER and their respective permitted
successors and assigns.
11. AMENDMENT OF AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
12. WAIVER. No term or condition of this AGREEMENT shall be deemed to
have been waived, nor shall there be an estoppel against the enforcement of any
provision of this AGREEMENT, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver, unless specifically stated therein, and each waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than the act specifically waived.
13. SEVERABILITY. If, for any reason, any provision of this AGREEMENT is
held invalid, such invalidity shall not affect the other provisions of this
AGREEMENT not held so invalid, and each such other provision shall, to the full
extent consistent with applicable law, continue in full
7
<PAGE> 8
force and effect. If this AGREEMENT is held invalid or cannot be enforced, then
any prior AGREEMENT between the EMPLOYER (or any predecessor thereof) and the
EMPLOYEE shall be deemed reinstated to the full extent permitted by law, as if
this AGREEMENT had not been executed.
14. HEADINGS. The headings of the paragraphs herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this AGREEMENT.
15. GOVERNING LAW. This AGREEMENT has been executed and delivered in the
State of Ohio and its validity, interpretation, performance, and enforcement
shall be governed by the laws of the State of Ohio, except to the extent that
federal law is governing.
16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the EMPLOYER or any predecessor of the EMPLOYER and the
EMPLOYEE.
17. NOTICES. Any notice or other communication required or permitted
pursuant to this AGREEMENT shall be deemed delivered if such notice or
communication is in writing and is delivered personally or by facsimile
transmission or is deposited in the United States mail, postage prepaid,
addressed as follows:
If to the EMPLOYER:
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
with copies to:
Terri Reyering Abare, Esq.
Vorys, Sater, Seymour and Pease
Atrium Two, Suite 2100
221 East Fourth Street
Cincinnati, Ohio 45202
If to the EMPLOYEE:
Mr. Jon W. Letzkus
117 Euclid Avenue
Wheeling, WV 26003
8
<PAGE> 9
IN WITNESS WHEREOF, the EMPLOYER has caused this AGREEMENT to be
executed by its duly authorized officer, and the EMPLOYEE has signed this
AGREEMENT, each as of the day and year first above written.
Attest: Bridgeport Savings and Loan Association
____________________________ By:________________________________
its ____________________________
Attest:
____________________________ ___________________________________
Jon W. Letzkus
9
<PAGE> 1
Board of Directors
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 7, 1997, except for Note 14, which is March 26,
1997, on the consolidated financial statements of Bridgeport Savings and Loan
Association, to the Registration Statement (Form S-1), Application for
Conversion (Form AC), and related Prospectus, and any amendments thereto, of
Ohio State Financial Services, Inc.
S.R. Snodgrass, A.C.
Wheeling, West Virginia
June 19, 1997
<PAGE> 1
June 19, 1997
Board of Directors
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
Gentlemen:
We hereby consent to the use of our firm's name in the Application for
Conversion of Bridgeport Savings and Loan Association, Bridgeport, Ohio, and any
amendments thereto, in the Form S-1 Registration Statement for Ohio State
Financial Services, Inc., and any amendments thereto, and in the Form AC for
Bridgeport Savings and Loan Association, and any amendments thereto. We also
hereby consent to the inclusion of, summary of and references to our Appraisal
Report and our statement concerning subscription rights in such filings
including the Prospectus of Ohio State Financial Services, Inc.
Very truly yours,
RP FINANCIAL, LC.
Gregory E. Dunn
Senior Vice President
<PAGE> 1
(513) 723-4000
CONSENT
-------
Board of Directors
Ohio State Financial Services, Inc.
435 Main Street
Bridgeport, Ohio 43912
Ladies and Gentlemen:
We hereby consent to the use of our firm's name in the
Registration Statement on Form S-1 (the "Form S-1", including all amendments
thereto, filed by Ohio State Financial Services, Inc. (the "Company") to
register 892,687 common shares, without par value, of the Company, pursuant to
the Securities Act of 1933; to the statements with respect to our firm appearing
under the headings "Prospectus Summary", "Legal Matters" and "Principal Effects
of the Conversion" in the Prospectus which is included in the Form S-1; and to
the filing of our opinion regarding the legality of the common shares, included
as Exhibit 5 to the Form S-1, and our opinion regarding federal and state tax
matters, included as Exhibit 8 to the Form S-1.
Very truly yours,
VORYS, SATER, SEYMOUR AND PEASE
Cincinnati, Ohio
June 18, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 450 528
<INT-BEARING-DEPOSITS> 2,785 3,285
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 339 345
<INVESTMENTS-CARRYING> 4,781 4,736
<INVESTMENTS-MARKET> 4,874 4,801
<LOANS> 25,138 25,245
<ALLOWANCE> 143 143
<TOTAL-ASSETS> 33,929 34,564
<DEPOSITS> 28,791 29,425
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 368 279
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 4,770 4,860
<TOTAL-LIABILITIES-AND-EQUITY> 33,929 34,564
<INTEREST-LOAN> 2,000 489
<INTEREST-INVEST> 515 125
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 2,515 614
<INTEREST-DEPOSIT> 1,158 286
<INTEREST-EXPENSE> 1,158 287
<INTEREST-INCOME-NET> 1,357 327
<LOAN-LOSSES> 0 0
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,083 201
<INCOME-PRETAX> 319 135
<INCOME-PRE-EXTRAORDINARY> 212 90
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 212 90
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<YIELD-ACTUAL> 4.08 3.94
<LOANS-NON> 69 200
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 339 139
<ALLOWANCE-OPEN> 143 143
<CHARGE-OFFS> 0 0
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 143 143
<ALLOWANCE-DOMESTIC> 143 143
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
<PAGE> 1
Exhibit 99.1
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
435 MAIN STREET
BRIDGEPORT, OHIO 43912
(614) 635-0764
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members of Bridgeport
Savings and Loan Association (the "Association") will be held at
_____________________________________, on ____________, 1997, at ____ _.m.,
local time (the "Special Meeting"), for the following purposes, all of which are
more completely set forth in the accompanying Summary Proxy Statement:
1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached to the Summary
Proxy Statement as Exhibit A, pursuant to which the Association would
convert from a mutual savings and loan association incorporated under
the laws of the State of Ohio to a permanent capital stock savings and
loan association incorporated under the laws of the State of Ohio (the
"Conversion") and become a wholly-owned subsidiary of Ohio State
Financial Services, Inc., an Ohio corporation organized for the purpose
of acquiring all of the capital stock to be issued by the Association in
the Conversion;
2. To consider and act upon a resolution to adopt the Amended
Articles of Incorporation of the Association, a copy of which is
attached to the Plan as Exhibit I;
3. To consider and act upon a resolution to adopt the Amended
Constitution of the Association, a copy of which is attached to the Plan
as Exhibit II; and
4. To transact such other business as may properly come before
the Special Meeting and any adjournments thereof.
Only those members of the Association who have a savings deposit at the
Association at the close of business on _______________, 1997, are members of
the Association entitled to notice of and to vote at the Special Meeting and any
adjournments thereof. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
WE URGE YOU TO CONSIDER THE ACCOMPANYING SUMMARY PROXY STATEMENT CAREFULLY, TO
COMPLETE THE ENCLOSED PROXY CARD(S) AND TO RETURN THE COMPLETED PROXY CARD(S) TO
THE ASSOCIATION IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE AS SOON AS POSSIBLE
TO ASSURE THAT YOUR VOTE(S) WILL BE COUNTED.
Bridgeport, Ohio By Order of the Board of Directors
_________, 1997
Jon W. Letzkus,
President
<PAGE> 2
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
435 MAIN STREET
BRIDGEPORT, OHIO 43912
(614) 635-0764
SUMMARY PROXY STATEMENT
INTRODUCTION
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Bridgeport Savings and Loan Association (the "Association") for use
at a Special Meeting of Members of the Association to be held at
__________________________________________________________, Ohio, on
____________, 1997, at ____ __.m., local time, and at any adjournments thereof
(the "Special Meeting"). The Special Meeting is being held for the following
purposes:
1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached hereto as Exhibit
A, pursuant to which the Association would convert from a mutual savings
and loan association incorporated under the laws of the State of Ohio to
a permanent capital stock savings and loan association incorporated
under the laws of the State of Ohio (the "Conversion") and become a
wholly-owned subsidiary of Ohio State Financial Services, Inc. (the
"Holding Company"), an Ohio corporation organized for the purpose of
acquiring all of the capital stock to be issued by the Association in
the Conversion;
2. To consider and act upon a resolution to adopt the Amended
Articles of Incorporation of the Association (the "Amended Articles"), a
copy of which is attached to the Plan as Exhibit I;
3. To consider and act upon a resolution to adopt the Amended
Constitution of the Association (the "Amended Constitution"), a copy of
which is attached to the Plan as Exhibit II; and
4. To transact such other business as may properly come before
the Special Meeting.
The Board of Directors of the Association has unanimously adopted the
Plan. The Plan has also been approved by the Office of Thrift Supervision (the
"OTS") and the Ohio Department of Commerce, Division of Financial Institutions
(the "Division"), subject to the approval of the Plan by the members of the
Association at the Special Meeting and the satisfaction of certain other
conditions.
The approval of the Plan will have the effect of (i) terminating the
voting rights of the present members of the Association and (ii) modifying, and
eventually eliminating, their right to receive any surplus in the event of a
complete liquidation of the Association. Except for certain rights in the
special liquidation account established by the Plan (the "Liquidation Account"),
such voting and liquidation rights after the Conversion will vest exclusively in
the holders of the common shares of the Holding Company. See "THE CONVERSION -
Principal Effects of the Conversion."
During and upon the completion of the Conversion, the Association will
continue to provide services to depositors and borrowers pursuant to its current
policies, at its existing offices. In addition, the Association will continue to
be a member of the Federal Home Loan Bank (the "FHLB") of Cincinnati and savings
accounts at the Association will continue to be insured up to applicable limits
by the Federal Deposit Insurance Corporation (the "FDIC").
This Summary Proxy Statement is dated ____________, 1997, and is first
being mailed to members of the Association, together with the Prospectus of the
Holding Company dated _____________, 1997 (the "Prospectus"), in respect of the
common shares of the Holding Company to be issued in connection with the
Conversion (the "Common Shares"), on or about _________, 1997.
1
<PAGE> 3
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
All depositors, including beneficiaries of Individual Retirement
Accounts ("IRAs") at the Association, having a savings account of record with
the Association on _________, 1997 (the "Voting Record Date"), are members of
the Association eligible to vote at the Special Meeting and at any adjournments
thereof ("Voting Members"). Voting Members who are depositors will be entitled
to cast one vote for each $100, and a proportionate fractional vote for an
amount of less than $100, of the withdrawable value of their savings accounts on
the Voting Record Date. No Voting Member may cast more than 1,000 votes.
A savings account in which one or more persons has an interest shall be
deemed to be held by only one Voting Member for the purpose of voting at the
Special Meeting. Any questions as to the eligibility of a member to vote, the
number of votes allocated to each Voting Member or any other matter relating to
voting will be resolved at the time of the Special Meeting by reference to the
records of the Association.
The Association records disclose that, as of the Voting Record Date,
there were __________ votes entitled to be cast at the Special Meeting, a
majority of which are required to approve the Plan. A vote of three-fifths of
the votes cast in person or by proxy at the Special Meeting is required to adopt
the Amended Articles and the Amended Constitution of the Association.
PROXIES
Voting Members may vote in person or by proxy at the Special Meeting.
For Voting Members wishing to vote in person, ballots will be distributed at the
Special Meeting. For Voting Members wishing to vote by proxy at the Special
Meeting, the enclosed Proxy may be completed and given in accordance with this
Summary Proxy Statement. Any other proxy held by the Association will not be
used by the Association for the Special Meeting.
A Proxy will be voted in the manner indicated thereon or, in the absence
of specific instructions, will be voted FOR the approval of the Plan, FOR the
adoption of the Amended Articles and FOR the adoption of the Amended
Constitution. Without affecting any vote previously taken, a Voting Member may
revoke a Proxy at any time before such proxy is exercised by executing and
delivering a later dated proxy or by giving the Association notice of revocation
in writing or in open meeting at the Special Meeting. Attendance at the Special
Meeting will not, of itself, revoke a Proxy.
Proxies may be solicited by the directors, officers and employees of the
Association in person or by telephone, telegraph or mail, for use only at the
Special Meeting and any adjournments thereof and will not be used for any other
meeting. The cost of soliciting Proxies will be borne by the Association.
MANAGEMENT'S RECOMMENDATIONS AND REASONS FOR CONVERSION
THE BOARD OF DIRECTORS RECOMMENDS THAT MEMBERS VOTE FOR THE APPROVAL OF
THE PLAN AND THE ADOPTION OF THE AMENDED ARTICLES AND THE AMENDED CONSTITUTION
OF THE ASSOCIATION.
The principal factors considered by the Association's Board of
Directors in reaching the decision to pursue a mutual-to-stock conversion were
the uncertain future of the mutual form of ownership generally and the numerous
competitive disadvantages which the Association faces if it maintains its mutual
form. These disadvantages relate to a variety of factors, including growth
opportunities, employee retention and regulatory uncertainty.
If the Association is to continue to grow and prosper, the mutual form
of organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual savings and loan association to expand through
mutual-to-mutual mergers or acquisitions are limited because cash is the only
form of consideration a mutual institution can offer to another institution.
Although the Association does not have any specific acquisitions planned at this
time, the Conversion will position the Association to take advantage of any
acquisition opportunities which may present themselves. Because a conversion to
stock form is a time-consuming and complex process, the Association cannot wait
until a prospective acquisition arises to embark on the conversion process.
2
<PAGE> 4
As an increasing number of the Association's competitors convert to
stock form and acquire the ability to use stock-based compensation programs, the
Association, in mutual form, would be at a disadvantage when it comes to
attracting and retaining qualified management. The Association believes that the
employee stock ownership plan (the "ESOP"), the stock option plan (the "Stock
Option Plan") and the recognition and retention plan (the "RRP") are important
tools in achieving such goals, even though the Association will be required to
wait until at least six months after the Conversion to implement the Stock
Option Plan and the RRP. See "MANAGEMENT - Stock Benefit Plans" in the
Prospectus.
Another benefit of the Conversion will be an increase in capital. The
importance of higher levels of capital cannot be ignored in the current interest
rate environment. As has been amply demonstrated in the past, changing
accounting principles, interest rate shifts and changing regulations can
threaten even well-capitalized institutions. As a mutual institution, the
Association can only increase capital through retained earnings or the issuance
of subordinated debentures, which do not count as tier 1 capital for regulatory
capital purposes. Capital that may seem unnecessary now may help the Association
withstand future threats to its capital. See "REGULATION - Office of Thrift
Supervision -- Regulatory Capital Requirements" in the Prospectus.
THE BUSINESS OF THE HOLDING COMPANY
The Holding Company was incorporated under Ohio law in March 1997 for
the purpose of purchasing all of the capital stock of the Association to be
issued in connection with the Conversion. The Holding Company has not conducted
and will not conduct any business before the completion of the Conversion, other
than business related to the Conversion. Upon the consummation of the
Conversion, the Holding Company will be a unitary savings and loan holding
company, the principal assets of which initially will be the capital stock of
the Association, the investments made with the net proceeds retained from the
sale of Common Shares in connection with the Conversion and a loan to be made by
the Holding Company to the ESOP to facilitate the ESOP's purchase of Common
Shares in the Conversion. See "USE OF PROCEEDS."
The office of the Holding Company is located at 435 Main Street,
Bridgeport, Ohio 43912, and its telephone number is (614) 635-0764.
THE BUSINESS OF THE ASSOCIATION
The Association is a mutual savings and loan association organized
under Ohio law in 1893. As an Ohio savings and loan association, the Association
is subject to supervision and regulation by the OTS and the Division. The
Association is a member of the FHLB of Cincinnati, and the deposit accounts of
the Association are insured up to applicable limits by the FDIC in the Savings
Association Insurance Fund (the "SAIF"). See "REGULATION" in the Prospectus.
The Association conducts business from its main office located in
Bridgeport, Ohio, and one full-service branch office located in Shadyside, Ohio.
The principal business of the Association is the origination of permanent
mortgage loans secured by first mortgages on one- to four-family residential
real estate located in the Association's primary market area which consists of
Belmont County, Ohio, and Ohio and Marshall Counties, West Virginia. The
Association also originates a limited number of loans for the construction of
one- to four-family residences and permanent mortgage loans secured by
nonresidential real estate in its market area. In addition to real estate
lending, the Association originates secured and unsecured consumer loans. See
"THE BUSINESS OF THE ASSOCIATION - Lending Activities" in the Prospectus. For
liquidity and interest rate risk management purposes, the Association invests in
interest-bearing deposits in other financial institutions, U.S. Government and
agency obligations and mortgage-backed securities. See "THE BUSINESS OF THE
ASSOCIATION - Investment Activities" in the Prospectus. Funds for lending and
other investment activities are obtained primarily from savings deposits, which
are insured up to applicable limits by the FDIC, and principal repayments on
loans and maturities of investment securities. See "THE BUSINESS OF THE
ASSOCIATION - Deposits and Borrowings" in the Prospectus.
The main office of the Association is located at 435 Main Street,
Bridgeport, Ohio 43912, and its telephone number is (614) 635-0764.
3
<PAGE> 5
THE CONVERSION
THE OTS AND THE DIVISION HAVE APPROVED THE PLAN, SUBJECT TO THE
APPROVAL OF THE PLAN BY THE MEMBERS OF THE ASSOCIATION ENTITLED TO VOTE ON THE
PLAN AND SUBJECT TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE
OTS AND THE DIVISION. OTS AND DIVISION APPROVAL DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN.
GENERAL
The Board of Directors of the Association has unanimously adopted the
Plan and recommends that the Voting Members of the Association approve the Plan
at the Special Meeting. During and upon completion of the Conversion, the
Association will continue to provide the services presently offered to
depositors and borrowers, will maintain its existing office and will retain its
existing management and employees.
Based on an independent appraisal of the pro forma market value of the
Association, as converted, as of ________, 1997, the aggregate purchase price of
the Common Shares to be offered in a subscription offering (the "Subscription
Offering") and a community offering (the "Community Offering") ranges from a
minimum of $5,737,500 to a maximum of $7,762,500 (the "Valuation Range"),
resulting in a range of 573,750 to 776,250 Common Shares at $10 per share. The
actual number of shares sold in connection with the Conversion will be
determined upon completion of the Subscription Offering and the Community
Offering (collectively, the "Offering") and will be based on the final valuation
of the Association, as converted. See "Pricing and Number of Common Shares to be
Sold."
In accordance with the Plan, nontransferable subscription rights to
purchase Common Shares at a price of $10 per share are being offered in the
Subscription Offering, subject to the rights and restrictions established by the
Plan, to (a) eligible depositors of the Association as of December 31, 1995 (the
"Eligibility Record Date") who had deposit accounts with balances, in the
aggregate, of $50 or more (a "Qualifying Deposit"), (b) the ESOP, (c) eligible
depositors of the Association as of _______, 1997 (the "Supplemental Eligibility
Record Date") who had Qualifying Deposits ("Supplemental Eligible Account
Holders") and (d) members of the Association eligible to vote at the Special
Meeting ("Other Eligible Members"). To the extent that all of the Common Shares
are not subscribed for in the Subscription Offering, the remaining Common Shares
may be offered to the general public in the Community Offering, in which
preference will be given to natural persons residing in Belmont County, Ohio.
See "Community Offering."
The minimum number of Common Shares any person may purchase in the
Offering is 25. Except for the ESOP, which may purchase up to 10% of the total
Common Shares sold in the Offering, no person, together with his or her
Associates (hereinafter defined) and other persons Acting in Concert
(hereinafter defined) with him or her, may purchase more than 14,000 Common
Shares. In connection with the exercise of subscription rights arising from a
deposit account in which two or more persons have an interest, the aggregate
maximum number of Common Shares which the persons having an interest in such
account may purchase is 14,000 Common Shares. Subject to OTS regulations, the
maximum purchase limitation may be increased or decreased after the commencement
of the Offering in the sole discretion of the Boards of Directors of the Holding
Company and the Association. If the maximum purchase limitation is increased to
more than 14,000 Common Shares, persons who have subscribed for 14,000 Common
Shares will be given the opportunity to increase their subscriptions. See
"Limitations on Purchase of Common Shares."
OTS and Ohio regulations require the completion of the Conversion
within 24 months after the date of the approval of the Plan by the Voting
Members of the Association. The commencement and completion of the Conversion
will be subject to market conditions and other factors beyond the Association's
control. Due to changing economic and market conditions, no assurance can be
given as to the length of time that will be required to complete the sale of the
Common Shares. If delays are experienced, significant changes may occur in the
estimated pro forma market value of the Association. In such circumstances, the
Association may also incur substantial additional printing, legal and accounting
expenses in completing the Conversion. In the event the Conversion is not
successfully completed, the Association will be required to charge all
Conversion expenses against current earnings.
4
<PAGE> 6
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Savings account holders who are members of the
Association in its mutual form will have no voting rights in the Association as
converted and will not participate, therefore, in the election of directors or
otherwise control the Association's affairs. Voting rights in the Holding
Company will be held exclusively by its shareholders and voting rights in the
Association will be held exclusively by the Holding Company. Each holder of the
Holding Company's common shares will be entitled to one vote for each share
owned on any matter to be considered by the Holding Company's shareholders. See
"DESCRIPTION OF AUTHORIZED SHARES."
SAVINGS ACCOUNTS AND LOANS. Savings accounts in the Association, as
converted, will be equivalent in amount, interest rate and other terms to the
present savings accounts in the Association, and the existing FDIC insurance on
such deposits will not be affected by the Conversion. The Conversion will not
affect the terms of loan accounts or the rights and obligations of borrowers
under their individual contractual arrangements with the Association.
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by the Association of a private letter ruling from the
Internal Revenue Service or an opinion of counsel to the effect that the
Conversion will constitute a tax-free reorganization as defined in Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Association intends to proceed with the Conversion based upon an opinion
rendered by its special counsel, Vorys, Sater, Seymour and Pease, to the
following effect:
(1) The Conversion constitutes a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and no gain or loss will
be recognized by the Association in its mutual form or in its stock
form as a result of the Conversion. The Association in its mutual form
and the Association in its stock form will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by the Association upon
the receipt of money from the Holding Company in exchange for the
capital stock of the Association, as converted;
(3) The assets of the Association will have the same basis in
its hands immediately after the Conversion as they had in its hands
immediately prior to the Conversion and the holding period of the
assets of the Association after the Conversion will include the period
during which the assets were held by the Association before the
Conversion;
(4) No gain or loss will be recognized by the deposit account
holders of the Association upon the issuance to them, in exchange for
their respective withdrawable deposit accounts in the Association
immediately prior to the Conversion, of withdrawable deposit accounts
in the Association immediately after the Conversion, in the same dollar
amount as their withdrawable deposit accounts in the Association
immediately prior to the Conversion, plus, in the case of eligible
depositors of the Association as of the Eligibility Record Date who had
Qualifying Deposits ("Eligible Account Holders") and Supplemental
Eligible Account Holders, the interests in the Liquidation Account of
the Association, as described below;
(5) The basis of the withdrawable deposit accounts in the
Association held by its deposit account holders immediately after the
Conversion will be the same as the basis of their deposit accounts in
the Association immediately prior to the Conversion. The basis of the
interests in the Liquidation Account received by the Eligible Account
Holders and Supplemental Eligible Account Holders will be zero. The
basis of the nontransferable subscription rights received by Eligible
Account Holders, Supplemental Eligible Account Holders and Other
Eligible Members will be zero (assuming that at distribution such
rights have no ascertainable fair market value);
(6) No gain or loss will be recognized by Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible
Members upon the distribution to them of nontransferable subscription
rights to purchase Common Shares (assuming that at distribution such
rights have no ascertainable fair market value), and no taxable income
will be realized by such Eligible Account Holders, Supplemental
Eligible Account Holders or Other Eligible Members as a result of their
exercise of such nontransferable subscription rights;
5
<PAGE> 7
(7) The basis of the Common Shares purchased by members of the
Association pursuant to the exercise of subscription rights will be the
purchase price thereof (assuming that such rights have no ascertainable
fair market value and that the purchase price is not less than the fair
market value of the shares on the date of such exercise), and the
holding period of such shares will commence on the date of such
exercise. The basis of the Common Shares purchased other than by the
exercise of subscription rights will be the purchase price thereof
(assuming in the case of the other subscribers that the opportunity to
buy in the Subscription Offering has no ascertainable fair market
value) and the holding period of such shares will commence on the day
after the date of the purchase;
(8) For purposes of Section 381 of the Code, the Association
will be treated as if there had been no reorganization. The taxable
year of the Association will not end on the effective date of the
Conversion. Immediately after the Conversion, the Association in its
stock form will succeed to and take into account the tax attributes of
the Association in its mutual form immediately prior to the Conversion,
including the Association's earnings and profits or deficit in earnings
and profits;
(9) The bad debt reserves of the Association in its mutual
form immediately prior to the Conversion will not be required to be
restored to the gross income of the Association in its stock form as a
result of the Conversion and immediately after the Conversion such bad
debt reserves will have the same character in the hands of the
Association in its stock form as they would have had if there had been
no Conversion. The Association in its stock form will succeed to and
take into account the dollar amounts of those accounts of the
Association in its mutual form which represent bad debt reserves in
respect of which the Association in its mutual form has taken a bad
debt deduction for taxable years ending on or before the Conversion;
and
(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated
earnings and profits of the Association available for the subsequent
distribution of dividends within the meaning of Section 316 of the
Code. The creation of the Liquidation Account on the records of the
Association will have no effect on its taxable income, deductions for
additions to reserves for bad debts under Section 593 of the Code or
distributions to stockholders under Section 593(e) of the Code.
For Ohio tax purposes, the tax consequences of the Conversion will be
as follows:
(1) The Association is a "financial institution" for State of
Ohio tax purposes, and the Conversion will not change such status;
(2) The Association is subject to the Ohio corporate franchise
tax on "financial institutions," which is imposed annually at a rate of
1.5% of the Association's equity capital determined in accordance with
generally accepted accounting principles ("GAAP"), and the Conversion
will not change such status;
(3) As a "financial institution," the Association is not
subject to any tax based upon net income or net profit imposed by the
State of Ohio, and the Conversion will not change such status;
(4) The Conversion will not be a taxable transaction to the
Association in its mutual or stock form for purposes of the Ohio
corporate franchise tax. As a consequence of the Conversion, however,
the annual Ohio corporate franchise tax liability of the Association
will increase if the taxable net worth of the Association (i.e., book
net worth computed in accordance with GAAP at the close of the
Association's taxable year for federal income tax purposes) increases
thereby; and
(5) The Conversion will not be a taxable transaction to any
deposit account holder member of the Association in its mutual or stock
form for purposes of the Ohio corporate franchise tax and the Ohio
personal income tax.
The Association has received an opinion from RP Financial, LC. ("RP
Financial"), a firm which evaluates and appraises financial institutions, to the
effect that the subscription rights have no ascertainable fair market value
because the rights are
6
<PAGE> 8
received by specified persons at no cost, may not be transferred and are of
short duration. The IRS could challenge the assumption that the subscription
rights have no ascertainable fair market value.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the Association in its present mutual form, each depositor in the Association
would receive a pro rata share of any assets of the Association remaining after
payment of the claims of all creditors, including the claims of all depositors
to the withdrawable value of their savings accounts. A depositor's pro rata
share of such remaining assets would be the same proportion of such assets as
the value of such depositor's savings deposits bears to the total aggregate
value of all savings deposits in the Association at the time of liquidation.
In the event of a complete liquidation of the Association in its stock
form after the Conversion, each savings depositor as of the Eligibility Record
Date and the Supplemental Eligibility Record Date would have a claim of the same
general priority as the claims of all other general creditors of the
Association. Except as described below, each depositor's claim would be solely
in the amount of the balance in such depositor's savings account plus accrued
interest. The depositor would have no interest in the assets of the Association
above that amount. Such assets would be distributed to the shareholders of the
Association.
For the purpose of granting a limited priority claim to the assets of
the Association in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain savings accounts at the Association after the Conversion, the
Association will, at the time of the Conversion, establish the Liquidation
Account in an amount equal to the retained earnings of the Association as of
March 31, 1997. The Liquidation Account will not operate to restrict the use or
application of any of the regulatory capital of the Association.
Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or the Supplemental Eligibility Record Date, as the case may be.
The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date, as the case may be, and the denominator of which is the total
amount of all Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. The balance of each
Subaccount may be decreased but will never be increased. If, at the close of
business on the last day of any fiscal year subsequent to the respective record
dates, the balance in the savings account to which a Subaccount relates is less
than the lesser of (i) the deposit balance in such savings 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 as of the Eligibility Record Date or Supplemental Eligibility
Record Date, the balance of the Subaccount for such savings account shall be
adjusted proportionately to the reduction in such savings account balance. In
the event of any such downward adjustment, such Subaccount balance shall not be
subsequently increased notwithstanding any increase in the deposit balance of
the related savings account. If any savings account is closed, its related
Subaccount shall be reduced to zero upon such closing.
In the event of a complete liquidation of the converted Association
(and only in such event), each Eligible Account Holder and Supplemental Eligible
Account Holder shall receive from the Liquidation Account a distribution equal
to the current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the shareholders of the Association. Any
assets remaining after satisfaction of such liquidation rights and the claims of
the Association's creditors would be distributed to the shareholders of the
Association. No merger, consolidation, purchase of bulk assets or similar
combination or transaction with another financial institution, the deposits of
which are insured by the FDIC, will be deemed to be a complete liquidation for
this purpose and, in any such transaction, the Liquidation Account shall be
assumed by the surviving institution.
COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE
INSURED BY THE FDIC. For a description of the characteristics of the Common
Shares, see "DESCRIPTION OF AUTHORIZED SHARES."
7
<PAGE> 9
INTERPRETATION AND AMENDMENT OF THE PLAN
To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of the Holding Company and the Association will be final.
The Plan may be amended by the Boards of Directors of the Holding Company and
the Association at any time with the concurrence of the OTS and the Division. If
the Association determines, upon advice of counsel and after consultation with
the OTS and the Division, that any such amendment is material, subscribers will
be notified of the amendment and will be provided the opportunity to increase,
decrease or cancel their subscriptions. Any person who does not affirmatively
elect to continue his subscription or elects to rescind his subscription before
the date specified in the notice will have all of his funds promptly refunded
with interest. Any person who elects to decrease his subscription will have the
appropriate portion of his funds promptly refunded with interest.
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan by
the Voting Members of the Association at the Special Meeting and the completion
of the sale of the Common Shares within 24 months following the date of such
approval. If these conditions are not satisfied, the Plan will automatically
terminate and the Association will continue its business in the mutual form of
organization. The Plan may be voluntarily terminated by the Board of Directors
at any time before the Special Meeting and at any time thereafter with the
approval of the OTS and the Division.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT NOON, BRIDGEPORT, OHIO TIME,
ON ____________, 1997. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE NOON,
BRIDGEPORT, OHIO TIME, ON ____________, 1997, WILL BE VOID, WHETHER OR NOT THE
ASSOCIATION HAS BEEN ABLE TO LOCATE THE PERSONS ENTITLED TO SUCH SUBSCRIPTION
RIGHTS.
Nontransferable subscription rights to purchase Common Shares are being
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. EACH PERSON SUBSCRIBING FOR COMMON SHARES MUST
REPRESENT TO THE ASSOCIATION THAT HE OR SHE IS PURCHASING THE COMMON SHARES FOR
HIS OR HER OWN ACCOUNT AND THAT HE OR SHE HAS NO AGREEMENT OR UNDERSTANDING WITH
ANY OTHER PERSON FOR THE SALE OR TRANSFER OF THE COMMON SHARES. ANY PERSON WHO
ATTEMPTS TO TRANSFER HIS OR HER SUBSCRIPTION RIGHTS MAY BE SUBJECT TO PENALTIES
AND SANCTIONS, INCLUDING LOSS OF THE SUBSCRIPTION RIGHTS.
The number of Common Shares which a person who has subscription rights
may purchase will be determined, in part, by the total number of Common Shares
to be issued and the availability of Common Shares for purchase under the
preference categories set forth in the Plan and certain other limitations. See
"Limitations on Purchases of Common Shares." The sale of any Common Shares
pursuant to subscriptions received is contingent upon approval of the Plan by
the Voting Members of the Association at the Special Meeting.
The preference categories and preliminary purchase limitations which
have been established by the Plan, in accordance with applicable regulations,
for the allocation of Common Shares are as follows:
(a) Each Eligible Account Holder shall receive, without
payment therefor, a nontransferable right to purchase in the
Subscription Offering up to the greater of (i) the amount permitted to
be purchased in the Community Offering (currently 14,000 Common
Shares), (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (iii) 15 times the product (rounded
down to the next whole number) obtained by multiplying the number of
Common Shares to be sold in connection with the Conversion by a
fraction, the numerator of which is the amount of the Eligible Account
Holder's Qualifying Deposit and the denominator of which is the total
amount of Qualifying Deposits of all Eligible Account Holders, in each
case on the Eligibility Record Date, subject to the overall purchase
limitations set forth in Section 10 of the Plan and subject to
adjustment by the Board of Directors of the Holding Company and the
Association as set forth in Section 10 of the Plan. If the exercise of
subscription rights by Eligible Account Holders results in an
over-subscription, Common Shares will be allocated among subscribing
Eligible Account Holders in a manner which will, to the extent
possible, make the total allocation of each subscriber equal 100 shares
or the amount subscribed for, whichever is less. Any Common
8
<PAGE> 10
Shares remaining after such allocation has been made will be allocated
among the subscribing Eligible Account Holders whose subscriptions
remain unfilled in the proportion which the amount of their respective
Qualifying Deposits on the Eligibility Record Date bears to the total
Qualifying Deposits of all Eligible Account Holders on such date.
Notwithstanding the foregoing, Common Shares in excess of 776,250, the
maximum of the Valuation Range, may be sold to the ESOP before fully
satisfying the subscriptions of Eligible Account Holders. No fractional
shares will be issued. For purposes of this paragraph (a), increases in
the Qualifying Deposits of directors and executive officers of the
Association during the twelve months preceding the Eligibility Record
Date shall not be considered.
(b) The ESOP shall receive, without payment therefor, a
nontransferable right to purchase in the Subscription Offering an
aggregate amount of up to 10% of the Common Shares sold in the
Conversion, provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders up to the maximum of
the Valuation Range pursuant to paragraph (a) above. Although the Plan
and OTS regulations permit the ESOP to purchase up to 10% of the Common
Shares, the Holding Company anticipates that the ESOP will purchase 8%
of the Common Shares. If the ESOP is unable to purchase all or part of
the Common Shares for which it subscribes, the ESOP may purchase Common
Shares on the open market or may purchase authorized but unissued
Common Shares. If the ESOP purchases authorized but unissued Common
Shares, such purchases could have a dilutive effect on the interests of
the Holding Company's shareholders. See "RISK FACTORS - Potential
Impact of Benefit Plans on Net Earnings and Shareholders' Equity" in
the Prospectus.
(c) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders and the ESOP pursuant
to paragraphs (a) and (b) above, each Supplemental Eligible Account
Holder will receive, without payment therefor, a nontransferable right
to purchase up to the greater of (i) the amount permitted to be
purchased in the Community Offering (currently 14,000 Common Shares),
(ii) .10% of the total number of Common Shares sold in connection with
the Conversion, or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the number of Common Shares to be
sold in connection with the Conversion by a fraction, the numerator of
which is the amount of the Supplemental Eligible Account Holder's
Qualifying Deposit and the denominator of which is the total amount of
Qualifying Deposits of all Supplemental Eligible Account Holders, in
each case on the Supplemental Eligibility Record Date, subject to the
overall purchase limitations set forth in Section 10 of the Plan and
subject to adjustment by the Board of Directors of the Holding Company
and the Association as set forth in Section 10 of the Plan. If the
exercise of subscription rights by Supplemental Eligible Account
Holders results in an oversubscription, Common Shares will be allocated
among subscribing Supplemental Eligible Account Holders in a manner
which will, to the extent possible, make the total allocation of each
subscriber equal 100 shares or the amount subscribed for, whichever is
less. Any Common Shares remaining after such allocation has been made
will be allocated among the subscribing Supplemental Eligible Account
Holders whose subscriptions remain unfilled in the proportion which the
amount of their respective Qualifying Deposits on the Supplemental
Eligibility Record Date bears to the total Qualifying Deposits of all
Supplemental Eligible Account Holders on such date. No fractional
shares will be issued.
(d) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders pursuant to paragraphs (a), (b)
and (c) above, each Other Eligible Member, other than an Eligible
Account Holder or Supplemental Eligible Account Holder, shall receive,
without payment therefor, a nontransferable right to purchase a number
of Common Shares up to the greater of the amount permitted to be
purchased in the Community Offering (currently 14,000 Common Shares) or
.10% of the total number of Common Shares sold in connection with the
Conversion, subject to adjustment by the Boards of Directors of the
Association and the Holding Company. In the event of an
oversubscription by Other Eligible Members, the available Common Shares
will be allocated among subscribing Other Eligible Members in the same
proportion that their subscriptions bear to the total amount of
subscriptions by all Other Eligible Members; provided, however, that,
to the extent sufficient Common Shares are available, each subscribing
Other Eligible Member shall receive 25 Common Shares before the
remaining available Common Shares are allocated.
9
<PAGE> 11
The Board of Directors may reject any one or more subscriptions if,
based upon the Board of Directors' interpretation of applicable regulations,
such subscriber is not entitled to the shares for which he or she has subscribed
or if the sale of shares subscribed for would be in violation of any applicable
statutes, regulations, or rules.
The Association will make reasonable efforts to comply with the
securities laws of all states in the United States in which persons having
subscription rights reside. However, no such person will be offered or receive
any Common Shares under the Plan who resides in a foreign country or in a state
of the United States with respect to which each of the following apply: (i) a
small number of persons otherwise eligible to subscribe for shares under the
Plan resides in such country or state; (ii) under the securities laws of such
country or state, the granting of subscription rights or the offer or sale of
Common Shares to such persons would require the Holding Company or its officers
or directors to register as a broker or dealer or to register or otherwise
qualify its securities for sale in such country or state; and (iii) such
registration or qualification would be impracticable for reasons of cost or
otherwise.
The term "resident," as used herein with respect to the Subscription
Offering, means any person who, on the date of submission of the stock order and
certification form accompanying the Prospectus (the "Stock Order Form"),
maintained a bona fide residence within a jurisdiction in which the Common
Shares are being offered for sale. If a person is a business entity, the
person's residence shall be the location of the principal place of business. If
the person is a personal benefit plan, the residence of the beneficiary shall be
the residence of the plan. In the case of all other benefit plans, the residence
of the trustee shall be the residence of the plan. In all cases, the
determination of a subscriber's residency shall be in the sole discretion of the
Association and the Holding Company.
COMMUNITY OFFERING
To the extent Common Shares remain available after the satisfaction of
all subscriptions received in the Subscription Offering, the Association is
hereby offering Common Shares in the Community Offering subject to the
limitations set forth below. If subscriptions are received in the Subscription
Offering for up to 892,688 Common Shares, Common Shares may not be available in
the Community Offering. All sales of the Common Shares in the Community Offering
will be at the same price per share as in the Subscription Offering.
THE COMMUNITY OFFERING WILL BE TERMINATED ON OR BEFORE ______, 1997,
UNLESS EXTENDED BY THE ASSOCIATION AND THE HOLDING COMPANY WITH THE APPROVAL OF
THE OTS AND THE DIVISION, IF NECESSARY. IN ACCORDANCE WITH THE PLAN, THE
OFFERING MAY NOT BE EXTENDED BEYOND _________, 1999.
In the event shares are available for the Community Offering, each
person, together with any Associate or groups Acting in Concert, may purchase in
the Community Offering up to 14,000 Common Shares. If an insufficient number of
Common Shares is available to fill all of the orders received in the Community
Offering, the available Common Shares will be allocated in a manner to be
determined by the Boards of Directors of the Holding Company and the
Association, subject to the following:
(i) Preference will be given to natural persons who are
residents of Belmont County, Ohio, the county in which the offices of
the Association are located;
(ii) Orders received in the Community Offering will first be
filled up to 2% of the total number of Common Shares offered, with any
remaining shares allocated on an equal number of shares per order basis
until all orders have been filled; and
(iii) The right of any person to purchase Common Shares in the
Community Offering is subject to the right of the Holding Company and
the Association to accept or reject such purchases in whole or in part.
The term "resident," as used herein with respect to the Community
Offering, means any natural person who, on the date of submission of a Stock
Order Form, maintains a bona fide residence within, as appropriate, Belmont
County, Ohio, or a jurisdiction in which the Common Shares are being offered for
sale.
10
<PAGE> 12
LIMITATIONS ON PURCHASES OF COMMON SHARES
The Plan provides for certain additional limitations to be placed upon
the purchase of Common Shares. To the extent Common Shares are available, the
minimum number of Common Shares that may be purchased by any party is 25, or
$250. No fractional shares will be issued. Purchases in the Offering are further
subject to the limitation that no person, together with his or her Associates
and other persons Acting in Concert with him or her, may purchase more than
14,000 Common Shares in the Offering. In connection with the exercise of
subscription rights arising from a deposit account in which two or more persons
have an interest, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase is 14,000 Common Shares
in the Offering. Such limitations do not apply to the ESOP. Subject to
applicable regulations, the purchase limitation may be increased or decreased
after the commencement of the Offering by the Boards of Directors.
"Acting in Concert" is defined as "knowing participation in a joint
activity or independent conscious parallel action towards a common goal" or "a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose." Persons shall be presumed to be Acting in Concert
with each other if: (i) both are purchasing Common Shares in the Conversion and
are (a) executive officers, directors, trustees, or any one who performs, or
whose nominee or representative performs, a similar policy making function at a
company (other than the Association or the Holding Company) or principal
business units or subsidiaries of a company, or (b) any person who directly or
indirectly owns or controls 10% or more of the stock of a company (other than
the Association or the Holding Company); or (ii) one person provides credit to
the other for the purchase of Common Shares or is instrumental in obtaining that
credit. In addition, if a person is presumed to be Acting in Concert with
another person, then the person is presumed to Act in Concert with anyone else
who is, or is presumed to be, acting in concert with that other person.
For purposes of the Plan, (i) the directors of the Association are not
deemed to be Acting in Concert solely by reason of their membership on the Board
of Directors of the Association, and (ii) an associate of a person (an
"Associate") is: (a) any corporation or organization (other than the
Association) of which such person is an officer, partner or, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities; (b) 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; and (c) any relative or spouse of such person, or relative
of such spouse, who either has the same home as such person or who is a director
or officer of the Association. Executive officers and directors of the
Association and their Associates may not purchase, in the aggregate, more than
35% of the total number of Common Shares sold in the Conversion. Shares acquired
by the ESOP will not, pursuant to regulations governing the Conversion, be
aggregated with the shares purchased by the directors, officers and employees of
the Association.
Purchases of Common Shares in the Offering are also subject to the
change in control regulations which restrict direct and indirect purchases of
10% or more of the stock of any savings association by any person or group of
persons acting in concert, under certain circumstances. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION AND RELATED ANTI-TAKEOVER
PROVISIONS - Federal Law and Regulation" in the Prospectus.
After the Conversion, Common Shares, except for Common Shares purchased
by affiliates of the Holding Company and the Association, will be freely
transferable, subject to OTS and Division regulations.
PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to the
Prospectus, which is available at the office of the Association. See "ADDITIONAL
INFORMATION AND STOCK ORDER FORMS." Officers and directors of the Association
will be available to answer questions about the Conversion and may also hold
informational meetings for interested persons. Such officers and directors will
not be permitted to make statements about the Holding Company or the Association
unless such information is also set forth in the Prospectus, nor will they
render investment advice. The Holding Company will rely on Rule 3a4-1 under the
Securities Exchange Act of 1934 (the "Exchange Act"), and sales of Common Shares
will be conducted within the requirements of Rule 3a4-1, which will permit
officers, directors and employees of the Holding Company and the Association to
participate in the sale of Common Shares. No officer, director or employee of
the
11
<PAGE> 13
Holding Company or the Association 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 Shares.
To assist the Holding Company and the Association in marketing the
Common Shares, the Holding Company and the Association have retained Charles
Webb & Company, a division of Keefe, Bruyette & Woods, Inc. ("Webb"), a
broker-dealer registered with the Securities and Exchange Commission (the "SEC")
and member of the National Association of Securities Dealers, Inc. (the "NASD").
Webb will assist the Association in (i) training and educating the Association's
employees regarding the mechanics and regulatory requirements of the conversion
process; (ii) conducting information meetings for subscribers and other
potential purchasers; and (iii) keeping records of all stock subscriptions. For
providing these services, the Association has agreed to pay Webb (a) a
management fee of $25,000, all of which has been paid, and (b) a marketing fee
of 1.5% of the aggregate dollar amount of Common Shares sold in the Subscription
Offering and the Community Offering, excluding shares sold by Selected Brokers,
if any, and shares purchased by the ESOP and directors, officers, and employees
of the Association and members of their immediate families.
The Association has also agreed to reimburse Webb for its reasonable
legal fees and disbursements. The Association and the Holding Company have also
agreed to indemnify Webb, under certain circumstances, against liabilities and
expenses (including legal fees) arising out of or based upon untrue statements
or omissions contained in the materials used in the Offering or in various
documents submitted to regulatory authorities in respect of the Conversion,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
unless such untrue statement or omission, or alleged untrue statement or
omission, was made in reliance upon certain information furnished to the
Association by Webb expressly for use in the summary proxy statement or
prospectus used in connection with the Offering.
SELECTED BROKERS
If Common Shares remain available after the satisfaction of all
subscriptions received in the Subscription Offering, Webb may enter into an
agreement with other NASD member firms ("Selected Brokers") to assist in the
sale of Common Shares in the Community Offering. If Selected Brokers are used,
Webb will receive commissions of no more than 5.5% of the aggregate purchase
price of the Common Shares sold in the Community Offering by the Selected
Brokers, and Webb will pay to the Selected Brokers a portion of the 5.5%
commission pursuant to selected dealer agreements. During the Community
Offering, Selected Brokers may only solicit indications of interest from their
customers to place orders with the Association as of a certain date (the "Order
Date") for the purchase of Common Shares. When and if the Association believes
that enough indications of interest and orders have been received in the
Community Offering to consummate the Conversion, Webb will request, as of the
Order Date, Selected Brokers to submit orders to purchase shares for which they
have previously received indications of interest from the customers. Selected
Brokers will send confirmations of the orders to such customers on the next
business day after the Order Date. Selected Brokers will debit the accounts of
their customers on the date which will be three business days from the Order
Date (the "Settlement Date"). On the Settlement Date, funds received by Selected
Brokers will be remitted to the Association. It is anticipated that the
Conversion will be consummated on the Settlement Date. However, if consummation
is delayed after payment has been received by the Association from Selected
Brokers, funds will earn interest at the passbook rate, currently an annual
percentage yield of ____%, until the completion of the offering. Funds will be
returned promptly in the event the Conversion is not consummated.
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering is conducted and extends beyond
______________, 1997, persons who have subscribed for Common Shares in the
Subscription Offering or in the Community Offering will receive a written notice
that until a date specified in the notice, they have the right to affirm,
increase, decrease or rescind their subscriptions for Common Shares. Persons who
do not affirmatively elect to continue their subscription or who elect to
rescind their subscriptions during any such extension will have all of their
funds promptly refunded with interest. Persons who elect to decrease their
subscriptions will have the appropriate portion of their funds promptly refunded
with interest.
USE OF STOCK ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and in the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the
12
<PAGE> 14
Subscription Offering must do so by delivering to the Association by mail or in
person, prior to noon Bridgeport, Ohio Time, on __________, 1997, a properly
executed and completed Stock Order Form, together with full payment of the
subscription price of $10 for each Common Share for which subscription is made.
ANY STOCK ORDER FORM WHICH IS NOT RECEIVED BY THE ASSOCIATION PRIOR TO NOON,
BRIDGEPORT, OHIO TIME, ON _________, 1997, OR FOR WHICH FULL PAYMENT HAS NOT
BEEN RECEIVED BY THE ASSOCIATION PRIOR TO SUCH TIME, WILL NOT BE ACCEPTED.
PHOTOCOPIES, TELECOPIES OR OTHER REPRODUCTIONS OF STOCK ORDER FORMS WILL NOT BE
ACCEPTED. See "ADDITIONAL INFORMATION." THE FAILURE TO DELIVER A PROPERLY
EXECUTED ORIGINAL STOCK ORDER FORM AND FULL PAYMENT IN A MANNER BY WHICH THEY
ARE ACTUALLY RECEIVED BY THE HOLDING COMPANY NO LATER THAN NOON, BRIDGEPORT,
OHIO TIME ON THE SUBSCRIPTION EXPIRATION DATE WILL PRECLUDE THE PURCHASE OF
COMMON SHARES IN THE OFFERING.
AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE HOLDING COMPANY, MAY
NOT BE MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE HOLDING
COMPANY, UNLESS (I) THE COMMUNITY OFFERING IS NOT COMPLETED BY ___________,
1997, OR (II) THE FINAL VALUATION OF THE ASSOCIATION, AS CONVERTED, IS LESS THAN
$5,737,500 OR MORE THAN $8,926,875. IF EITHER OF THOSE EVENTS OCCUR, PERSONS WHO
HAVE SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR ORDERED COMMON
SHARES IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT, UNTIL A DATE
SPECIFIED IN THE NOTICE, THEY HAVE A RIGHT TO AFFIRM, INCREASE, DECREASE OR
RESCIND THEIR SUBSCRIPTIONS OR ORDERS. ANY PERSON WHO DOES NOT AFFIRMATIVELY
ELECT TO CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS SUBSCRIPTION DURING
ANY SUCH EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
ANY PERSON WHO ELECTS TO DECREASE HIS SUBSCRIPTION DURING ANY SUCH EXTENSION
WILL HAVE THE APPROPRIATE PORTION OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
IN ADDITION, IF THE MAXIMUM PURCHASE LIMITATION IS INCREASED TO MORE THAN 14,000
COMMON SHARES, PERSONS WHO HAVE SUBSCRIBED FOR 14,000 COMMON SHARES WILL BE
GIVEN THE OPPORTUNITY TO INCREASE THEIR SUBSCRIPTIONS.
PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany a completed Stock Order Form in order for
subscriptions or orders to be valid. Payment for Common Shares may be made (i)
in cash, if delivered in person; (ii) by check, bank draft, or money order made
payable to the Association; or (iii) by authorization of withdrawal from deposit
accounts in the Association (other than non-self-directed IRAs). The Association
cannot lend money or otherwise extend credit to any person to purchase Common
Shares.
Payments made in cash or by check, bank draft, or money order will be
placed in a segregated savings account insured by the FDIC up to applicable
limits until the Conversion is completed or terminated. Interest will be paid by
the Association on such account at the then current passbook savings account
rate, which is currently __% with an annual percentage yield of ___%, from the
date payment is received until the Conversion is completed or terminated.
Payments made by check will not be deemed to have been received until such check
has cleared for payment.
Instructions for authorizing withdrawals from deposit accounts,
including certificates of deposit, are provided in the Stock Order Form. Once a
withdrawal has been authorized, none of the designated withdrawal amount may be
used by a subscriber for any purpose other than to purchase Common Shares,
unless the Conversion is terminated. All sums authorized for withdrawal will
continue to earn interest at the contract rate for such account or certificate
until the completion or termination of the Conversion. Interest penalties for
early withdrawal applicable to certificate accounts will be waived in the case
of withdrawals authorized for the purchase of Common Shares. If a partial
withdrawal from a certificate account results in a balance less than the
applicable minimum balance requirement, the certificate will be canceled and the
remaining balance will earn interest at the Association's passbook rate
subsequent to the withdrawal.
In order to utilize funds in an IRA maintained at the Association, the
funds must be transferred to a self-directed IRA that permits the funds to be
invested in stock. There will be no early withdrawal or IRS penalties for such
transfer. The beneficial owner of the IRA must direct the trustee of the account
to use funds from such account to purchase Common Shares in connection with the
Conversion. THIS CANNOT BE DONE THROUGH THE MAIL. Persons who are interested in
utilizing IRAs at the Association to subscribe for Common Shares should contact
the Conversion Information Center at (614) ___-____ for instructions and
assistance.
13
<PAGE> 15
Subscriptions will not be filled by the Association until subscriptions
have been received in the Offering for up to 573,750 Common Shares, the minimum
point of the Valuation Range. If the Conversion is terminated, all funds
delivered to the Association for the purchase of Common Shares will be returned
with interest, and all charges to deposit accounts will be rescinded. If
subscriptions are received for at least 573,750 Common Shares, subscribers and
other purchasers will be notified by mail, promptly upon completion of the sale
of the Common Shares, of the number of shares for which their subscriptions have
been accepted. The funds on deposit with the Association for the purchase of
Common Shares will be withdrawn and paid to the Holding Company in exchange for
the Common Shares. Certificates representing Common Shares will be delivered
promptly thereafter. The Common Shares will not be insured by the FDIC.
If the ESOP subscribes for Common Shares in the Subscription Offering,
the ESOP will not be required to pay for the shares subscribed for at the time
it subscribes but may pay for such Common Shares upon consummation of the
Conversion.
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS
The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Association and the Holding Company and their Associates and
persons with whom they may be deemed to be Acting in Concert:
<TABLE>
<CAPTION>
Name Total shares (2) Percent of total offering (1) Aggregate purchase price (2)
- ---- ------------ ------------------------- ------------------------
<S> <C> <C> <C>
John O. Costine
Anton M. Godez
Jon W. Letzkus
Manuel C. Thomas
William E. Reline
All directors and executive
officers as a group (9 persons)
- -----------------------------
<FN>
(1) Assumes that 675,000 Common Shares, the mid-point of the Valuation
Range, will be sold in connection with the Conversion at $10 per share
and that a sufficient number of Common Shares will be available to
satisfy the intended purchases by directors and executive officers. See
"Pricing and Number of Common Shares to be Sold."
(2) Includes intended purchases by Associates of directors and executive
officers to the extent known.
</TABLE>
All purchases by executive officers and directors of the Association
are being made for investment purposes only and with no present intent to
resell.
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD
The aggregate offering price of the Common Shares will be based on the
pro forma market value of the shares as determined by an independent appraisal
of the Association. RP Financial, a firm which evaluates and appraises financial
institutions, was retained by the Association to prepare an appraisal of the
estimated pro forma market value of the Association as converted. RP Financial
will receive a fee of $12,500 for its appraisal and one update. Such amount does
not include out-of-pocket expenses of up to $1,250.
RP Financial was selected by the Board of Directors of the Association
because RP Financial has extensive experience in the valuation of thrift
institutions, particularly in the mutual-to-stock conversion context. The Board
of Directors interviewed RP Financial's principal, reviewed the credentials of
RP Financial's appraisal personnel, and obtained references and recommendations
from other companies which have engaged RP Financial. RP Financial is certified
by the OTS as a mutual-to-stock conversion appraiser. The Association and RP
Financial have no relationships which would affect RP Financial's independence.
14
<PAGE> 16
The appraisal was prepared by RP Financial in reliance upon the
information contained herein. RP Financial also considered the following
factors, among others: the present and projected operating results and financial
condition of the Association and the economic and demographic conditions in the
Association's existing market area; the quality and depth of the Association's
management and personnel; certain historical financial and other information
relating to the Association; a comparative evaluation of the operating and
financial statistics of the Association with those of other thrift institutions;
the aggregate size of the Offering; the impact of the Conversion on the
Association's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions and thrift holding companies; and
general conditions in the markets for such stocks.
The Pro Forma Value of the Association, as converted, determined by RP
Financial, is $6,750,000 as of ______, 1997. The Valuation Range established in
accordance with the Plan is $5,737,500 to $7,762,500, which, based upon a per
share offering price of $10, will result in the sale of between 573,750 and
776,250 Common Shares. The total number of Common Shares sold in the Conversion
will be based on the Valuation Range. Pro forma shareholders' equity per share
and pro forma earnings per share decrease moving from the low end to the high
end of the Valuation Range. See "PRO FORMA DATA" in the Prospectus.
In the event that RP Financial determines at the close of the
Conversion that the aggregate pro forma value of the Association is higher or
lower than the Pro Forma Value, but is nevertheless within the Valuation Range,
the Holding Company will make an appropriate adjustment by raising or lowering
the total number of Common Shares sold in the Conversion consistent with the
final Valuation Range. If, due to changing market conditions, the final
valuation is less than $5,737,500 or more than $8,926,875, subscribers will be
given the right to affirm, increase, decrease or rescind their subscriptions.
Any person who does not affirmatively elect to continue his subscription or
elects to rescind his subscription before the date specified in the notice will
have all of his funds promptly refunded with interest. Any person who elects to
decrease his subscription will have the appropriate portion of his funds
promptly refunded with interest.
THE APPRAISAL BY RP FINANCIAL IS NOT INTENDED, AND MUST NOT BE
CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING
COMMON SHARES OR VOTING TO APPROVE THE CONVERSION. IN PREPARING THE VALUATION,
RP FINANCIAL HAS RELIED UPON AND ASSUMED THE ACCURACY AND COMPLETENESS OF THE
AUDITED FINANCIAL STATEMENTS AND STATISTICAL INFORMATION PROVIDED BY THE
ASSOCIATION. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS
AND OTHER INFORMATION PROVIDED BY THE ASSOCIATION, NOR DID RP FINANCIAL VALUE
INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE ASSOCIATION OR THE HOLDING
COMPANY. THE VALUATION CONSIDERS THE ASSOCIATION ONLY AS A GOING CONCERN AND
SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF THE
ASSOCIATION. MOREOVER, BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON
ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO
CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING
COMMON SHARES WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT THE CONVERSION
PURCHASE PRICE.
A copy of the complete appraisal is on file and open for inspection at
the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the
Central Regional Office of the OTS, 200 West Madison Street, Suite 1300,
Chicago, Illinois 60606; at the offices of the Division, 77 S. High Street,
Columbus, Ohio 43215; and at the offices of the Association.
RESTRICTIONS ON REPURCHASE OF COMMON SHARES
OTS regulations generally prohibit the Holding Company from
repurchasing any of its capital stock for three years following the date of
completion of the Conversion, except as part of an open-market stock repurchase
program during the second and third years following the Conversion involving no
more than 5% of the outstanding capital stock during a twelve-month period. In
addition, after such a repurchase, the Association's regulatory capital must
equal or exceed all regulatory capital requirements. Before the commencement of
a repurchase program, the Holding Company must provide notice to the OTS, and
the OTS may disapprove the program if the OTS determines that it would adversely
affect the financial condition of the Association or if it determines that there
is no valid business purpose for such repurchase. Such repurchase restrictions
would not prohibit the ESOP or the RRP from purchasing Common Shares during the
first year following the Conversion.
Ohio regulations prohibit the Holding Company from repurchasing shares
during the first year after the Conversion if the effect thereof would cause the
Association not to meet its capital requirements.
15
<PAGE> 17
RESTRICTIONS ON TRANSFER OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors and executive officers of the
Holding Company will be subject to the restriction that such shares may not be
sold for a period of one year following completion of the Conversion, except in
the event of the death of the shareholder. The certificates evidencing Common
Shares issued by the Holding Company to directors and executive officers will
bear a legend giving appropriate notice of the restriction imposed upon them. In
addition, the Holding Company will give appropriate instructions to the transfer
agent (if any) for the Holding Company's common shares in respect of the
applicable restriction on transfer of any restricted shares. Any shares issued
as a stock dividend, stock split or otherwise in respect of restricted shares
will be subject to the same restrictions.
Subject to certain exceptions, for a period of three years following
the Conversion, no director or officer of the Holding Company or the
Association, or any of their Associates, may purchase any common shares of the
Holding Company without the prior written approval of the OTS, except through a
broker-dealer registered with the SEC. This restriction will not apply, however,
to negotiated transactions involving more than 1% of a class of outstanding
common shares of the Holding Company or shares acquired by any stock benefit
plan of the Holding Company or the Association.
The Common Shares, like the stock of most public companies, are subject
to the registration requirements of the Act. Accordingly, the Common Shares may
be offered and sold only in compliance with such registration requirements or
pursuant to an applicable exemption from registration. Common Shares received in
the Conversion by persons who are not "affiliates" of the Holding Company may be
resold without registration. Common Shares received by affiliates of the Holding
Company will be subject to resale restrictions. An "affiliate" of the Holding
Company, for purposes of Rule 144, is a person who directly, or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, the Holding Company. Rule 144 generally requires that there
be publicly available certain information concerning the Holding Company and
that sales subject to Rule 144 be made in routine brokerage transactions or
through a market maker. If the conditions of Rule 144 are satisfied, each
affiliate (or group of persons acting in concert with one or more affiliates) is
generally entitled to sell in the public market, without registration, in any
three-month period, a number of shares which does not exceed the greater of (i)
1% of the number of outstanding shares of the Holding Company or (ii) if the
shares are admitted to trading on a national securities exchange or reported
through the automated quotation system of a registered securities association,
such as Nasdaq SmallCap, the average weekly reported volume of trading during
the four weeks preceding the sale.
OTHER
THE PLAN IS ATTACHED TO THIS SUMMARY PROXY STATEMENT AS EXHIBIT A AND
SHOULD BE REVIEWED CAREFULLY. ALL STATEMENTS MADE IN THIS SUMMARY PROXY
STATEMENT AND THE PROSPECTUS ARE HEREBY QUALIFIED IN THEIR ENTIRETY BY REFERENCE
TO THE PLAN. THE ADOPTION OF THE PLAN BY THE VOTING MEMBERS AT THE SPECIAL
MEETING WILL AUTHORIZE THE BOARDS OF DIRECTORS OF THE HOLDING COMPANY AND THE
ASSOCIATION TO AMEND OR TERMINATE THE PLAN. IF THE BOARDS OF DIRECTORS OF THE
HOLDING COMPANY AND THE ASSOCIATION DETERMINE, UPON ADVICE OF COUNSEL AND AFTER
CONSULTATION WITH THE OTS AND THE DIVISION, THAT ANY SUCH AMENDMENT IS MATERIAL,
SUBSCRIBERS WILL BE NOTIFIED OF THE AMENDMENT AND WILL BE PROVIDED THE
OPPORTUNITY TO INCREASE, DECREASE OR CANCEL THEIR SUBSCRIPTIONS.
16
<PAGE> 18
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from
the sale of the Common Shares, based on the Valuation Range:
<TABLE>
<CAPTION>
Minimum Mid-point Maximum Maximum, as adjusted
------- --------- ------- --------------------
<S> <C> <C> <C> <C>
Gross proceeds $5,737,500 $6,750,000 $7,762,500 $8,926,875
Less estimated expenses 352,930 366,900 380,870 396,940
---------- ---------- ---------- ----------
Total net proceeds $5,384,570 $6,383,100 $7,381,630 $8,529,930
========== ========== ========== ==========
</TABLE>
The net proceeds from the sale of the Common Shares may vary depending
upon financial and market conditions at the time of the completion of the
Offering. See "THE CONVERSION - Pricing and Number of Common Shares to be Sold."
The expenses detailed above are estimated. Actual expenses may be more than or
less than estimated. See "THE CONVERSION Plan of Distribution."
The Holding Company will retain up to 50% of the net proceeds from the
sale of the Common Shares, or approximately $3.2 million at the mid-point of the
Valuation Range. Such proceeds will be used to lend up to $621,000, at the
mid-point of the Valuation Range to the ESOP to acquire Common Shares in the
Offering with the balance of the proceeds initially invested in short-term
investments or deposits with staggered maturities ranging up to three years.
Ultimately, the proceeds will be used for general corporate purposes, which may
include payments of dividends, repurchases of Common Shares and funding of the
RRP. See "THE CONVERSION - Restrictions on Repurchase of Common Shares." OTS
regulations generally prohibit stock repurchases in the first year following the
completion of the Conversion, without prior approval of the OTS.
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $4.2 million at the maximum, as adjusted, of the Valuation
Range, will be invested by the Holding Company in the capital stock to be issued
by the Association to the Holding Company as a result of the Conversion and will
increase the regulatory capital of the Association and will permit the
Association to expand its lending and investment activities and to enhance
customer services. The Association anticipates that such net proceeds will
initially be invested in short-term investments with maturities of one year or
less and then utilized to originate loans, purchase loan participations within
Ohio.
MARKET FOR COMMON SHARES
There is currently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
A public trading market for the stock of any issuer, including the
Holding Company, depends upon the presence of both willing buyers and willing
sellers at any given time. The Holding Company has received conditional approval
from the Nasdaq SmallCap to have the Common Shares quoted under the symbol
"OSFS" upon completion of the Conversion, subject to certain conditions which
the Association and the Holding Company believe will be satisfied, although no
assurance can be provided that the conditions will be met. One of the conditions
to the Nasdaq SmallCap listing is the commitment of at least two brokerage firms
to make a market in the Common Shares. Keefe, Bruyette & Woods, Inc. has
informed the Holding Company that it intends to make a market in the Common
Shares, but it has no obligation to do so.
If the Common Shares are not listed on the Nasdaq SmallCap, the Holding
Company expects that the common shares will be traded in the over-the-counter
market and will be quoted through brokers participating on the National Daily
Quotation Service.
17
<PAGE> 19
The appraisal of the pro forma market value of the Association, as
converted, is not a recommendation as to the advisability of purchasing Common
Shares, nor does it represent RP Financial's opinion as to the price at which
the Common Shares may trade. There can be no assurance that the Common Shares
may later be resold at the price at which they are purchased in connection with
the Conversion. See "RISK FACTORS - Limited Market for the Common Shares" in the
Prospectus.
DIVIDEND POLICY
The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company determines
in the exercise of its discretion that the net income, capital, and consolidated
financial condition of the Holding Company and the general economy justify the
declaration and payment of dividends by the Holding Company, the Board of
Directors of the Holding Company may authorize the payment of dividends on the
Common Shares, subject to the limitation under Ohio law that a corporation may
pay dividends only out of surplus. There can be no assurance that dividends will
be paid on the Common Shares or, if paid, that such dividends will continue to
be paid in the future. In addition, the Holding Company will not undertake an
extraordinary tax-free return of capital to its shareholders during the first
year following the completion of the Conversion.
Other than earnings on the investment of the proceeds retained by the
Holding Company and interest earned on the loan to the ESOP, the principal
source of income of the Holding Company will be dividends periodically declared
and paid by the Board of Directors of the Association on the common shares of
the Association held by the Holding Company. The declaration and payment of
dividends by the Association to the Holding Company will be subject to the
discretion of the Board of Directors of the Association, to the earnings and
financial condition of the Association, to general economic conditions and to
federal and state restrictions on the payment of dividends by thrift
institutions. Under regulations of the OTS applicable to converted associations,
the Association will not be permitted to pay a cash dividend on its capital
stock after the Conversion if its regulatory capital would, as a result of the
payment of such dividend, be reduced below the amount required for the
Liquidation Account or the applicable regulatory capital requirement prescribed
by the OTS. See "THE CONVERSION - Principal Effects of the Conversion --
Liquidation Account" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Liquidity and Capital Resources" in the
Prospectus. The Association may not pay a dividend unless such dividend also
complies with an OTS regulation limiting capital distributions by savings and
loan associations. Capital distributions, for purposes of such regulation,
include, without limitation, payments of cash dividends, repurchases, and
certain other acquisitions by an association of its shares and payments to
stockholders of another association in an acquisition of such other association.
See "REGULATION - Office of Thrift Supervision -- Limitations on Capital
Distributions" in the Prospectus.
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
The Articles of Incorporation of the Holding Company authorize the
issuance of 3,000,000 common shares, without par value. Upon receipt by the
Holding Company of the purchase price therefor and subsequent issuance thereof,
each Common Share issued in the Conversion will be fully paid and nonassessable.
Notwithstanding the foregoing, until payments are received by the Holding
Company from the ESOP in accordance with the terms of a loan agreement to be
entered into by and between the Holding Company and the ESOP, Common Shares
issued to the ESOP for which payment in money has not been received will not be
fully paid and non-assessable. The Common Shares will represent nonwithdrawable
capital and will not and cannot be insured by the FDIC. Each Common Share will
have the same relative rights and will be identical in all respects to every
other Common Share.
The following is a summary description of the rights of the common
shares of the Holding Company, including the material express terms of such
shares as set forth in the Holding Company's Articles of Incorporation.
LIQUIDATION RIGHTS
18
<PAGE> 20
In the event of the complete liquidation or dissolution of the Holding
Company, the holders of the Common Shares will be entitled to receive all assets
of the Holding Company available for distribution, in cash or in kind, after
payment or provision for payment of (i) all debts and liabilities of the Holding
Company, (ii) any accrued dividend claims, and (iii) any interests in the
Liquidation Account payable as a result of a liquidation of the Association. See
"THE CONVERSION - Principal Effects of the Conversion -- Liquidation Account."
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights
in the Holding Company. Each holder of Common Shares will be entitled to one
vote for each share held of record on all matters submitted to a vote of holders
of common shares. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND
THE ASSOCIATION - Articles of Incorporation of the Holding Company --
Elimination of Cumulative Voting" in the Prospectus.
DIVIDENDS
The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions" in the Prospectus
and "TAXATION - Federal Taxation" in the Prospectus for a description of
restrictions on the payment of cash dividends.
PREEMPTIVE RIGHTS
After the consummation of the Conversion, no shareholder of the Holding
Company will have, as a matter of right, the preemptive right to purchase or
subscribe for shares of any class, now or hereafter authorized, or to purchase
or subscribe for securities or other obligations convertible into or
exchangeable for such shares or which by warrants or otherwise entitle the
holders thereof to subscribe for or purchase any such share.
RESTRICTIONS ON ALIENABILITY
See "THE CONVERSION - Restrictions on Repurchase of Common Shares" for
a description of the limitations on the repurchase of stock by the Holding
Company; "THE CONVERSION - Restrictions on Transfer of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased by officers and directors; and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE ASSOCIATION AND
RELATED ANTI-TAKEOVER PROVISIONS" in the Prospectus for information regarding
regulatory restrictions on acquiring Common Shares.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Each director of the Association currently receives a fee of $225 per
meeting of the full Board of Directors attended with three paid absences. During
the year ended December 31, 1996, the Association paid a total of $ 22,725 in
directors' fees.
During the fiscal year ended December 31, 1996, no executive officer of
the Association received annual compensation in an amount equal to or greater
than $100,000. The following table presents certain information regarding the
annual compensation received by Mr. Letzkus during such period:
19
<PAGE> 21
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Compensation
---------------------------
Name and Principal Position Year Salary ($) Bonus
- --------------------------- ---- ------ -----
<S> <C> <C> <C>
Jon W. Letzkus, President 1996 $70,000 $6,024
</TABLE>
EXPERTS
RP Financial has consented to the publication herein of the summary of
its letter to the Association setting forth its opinion as to the estimated pro
forma market value of the Association as converted and to the use of its name
and statements with respect to it appearing herein.
The consolidated financial statements of the Association as of December
31, 1996, and for each of the three years in the period ended December 31, 1996,
have been included herein in reliance upon the report of S. R. Snodgrass, A.C.,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in auditing and accounting.
LEGAL PROCEEDINGS
The Association is not presently involved in any material legal
proceedings. From time to time, the Association is a party to legal proceedings
incidental to its business to enforce its security interest in collateral
pledged to secure loans made by the Association.
ADDITIONAL INFORMATION AND STOCK ORDER FORMS
The Prospectus contains the following: audited financial statements of
the Association, including statements of income and retained earnings, for the
three fiscal years ended December 31, 1996, management's discussion and analysis
of financial condition and results of operations; selected financial information
of the Association for the five fiscal years ended December 31, 1996,
information concerning the capitalization of the Association; a description of
the Association's lending, savings and investment activities; and additional
information about the business and financial condition of the Association. A
copy of the Prospectus accompanies this Summary Proxy Statement. To obtain an
additional copy of the Prospectus, contact the Association's Conversion
Information Center at (614) 635-1632 or (614) 635-1633.
The Subscription Offering will commence on _________, 1997, and end at
noon, Bridgeport, Ohio Time, on ____________, 1997. Stock Order Forms for
purchases of Common Shares in the Subscription Offering must be received by the
Association on or before noon, Bridgeport, Ohio Time, ____________, 1997.
<PAGE> 1
Exhibit 99.2
STOCK ORDER FORM & OHIO STATE FINANCIAL SERVICES, INC.
CERTIFICATION FORM
Note: Please read the Stock Order Form Guide and Instructions on the back of
this form before completion.
- --------------------------------------------------------------------------------
DEADLINE
The Subscription Offering ends at noon, Bridgeport, Ohio Time, on XXXX xx, 1997.
Your Stock Order Form and Certification Form, properly executed and with the
correct payment, must be received at the address on the bottom of this form by
this deadline, or it will be considered void.
- --------------------------------------------------------------------------------
NUMBER OF SHARES
(1) Number of Shares Price Per Share (2) Total Amount Due
The minimum number of shares that may be subscribed for is 25. No person,
together with his Associates and others persons acting in concert with him, may
purchase in the Subscription Offering and in the Community Offering, more than
14,000 Common Shares. In connection with the exercise of subscription rights
arising from a deposit account in which two or more persons have an interest,
the aggregate maximum number of Common Shares which the persons having an
interest in such account may purchase is 14,000 Common Shares.
METHOD OF PAYMENT
(3)[ ] Enclosed is a check, bank draft or money order payable to Ohio State
Financial Services, Inc. of $__________ (or cash if presented in
person.)
(4)[ ] I authorize Bridgeport Savings and Loan Association to make
withdrawals from my Bridgeport Savings and Loan Association certificate
or savings account(s) shown below, and understand that the amounts will
not otherwise be available for withdrawal:
ACCOUNT NUMBER(s) AMOUNT(s)
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
TOTAL WITHDRAWAL
-------------------
There is no penalty for early withdrawals used for this payment.
PURCHASER INFORMATION
(5)[ ] Check here if you are a DEPOSITOR or MEMBER and enter below information
for all accounts you had at the Eligibility Record Date (December 31,
1995), Supplemental Eligibility Record Date (XXXXxx, 1997) or the
Voting Record Date (XXXXx, 1997). If additional space is needed, please
use the back of this form. Please confirm account(s) by initialing
here. ________________
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
----------------------------------------------------
----------------------------
----------------------------------------------------
----------------------------
----------------------------------------------------
[ ] Check here if you are a DIRECTOR, OFFICER or EMPLOYEE of Bridgeport
Savings and Loan Association or a member of such person's immediate family.
<TABLE>
<CAPTION>
(6) STOCK REGISTRATION
<S> <C> <C> <C> <C> <C>
[ ] Individual [ ] Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] Uniform Gift to Minors [ ] Individual Retirement Account
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary/Trust (Under Agreement Dated______)
-------------------------------------------------------------------------------------------------------------------------
Name Social Security or Tax I.D.
-------------------------------------------------------------------------------------------------------------------------
Name Daytime Telephone
-------------------------------------------------------------------------------------------------------------------------
Street Address Evening Telephone
-------------------------------------------------------------------------------------------------------------------------
City State Zip Code County of Residence
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
NASD AFFILIATION (This section only 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 Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- --------------------------------------------------------------------------------
ACKNOWLEDGMENT By signing below, I acknowledge receipt of the Prospectus dated
XXXX xx, 1997, and that I have reviewed all provisions therein. I understand
that I may not change or revoke my order once it is received by Ohio State
Financial Services, Inc. I also certify that this stock order is for my account
and there is no agreement or understanding regarding any further sale or
transfer of these shares. Federal regulations prohibit any persons 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. Bridgeport Savings and
Loan Association 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
under-reporting interest or dividends on your tax return. By signing below, I
also acknowledge that I have not waived any rights under the Securities Act of
1933 and the Securities Exchange Act of 1934.
- --------------------------------------------------------------------------------
<TABLE>
-----------------------------------------------------------
<S> <C> <C> <C>
SIGNATURE THIS FORM MUST BE SIGNED AND DATED. THIS Signature Title (if applicable) Date
ORDER IS NOT VALID IF THE STOCK ORDER FORM AND CERTIFICATION
FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL BE FILED IN
ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS. When
purchasing as a custodian, corporate officer, etc., include your
full title. An additional signature is required only if payment Signature Title (if applicable) Date
is by withdrawal from an account that requires more than one
signature to withdraw funds. If you need help completing this
Form, you may call the Conversion Information Center at (614)
635-1632 or (614) 635-1633.
-----------------------------------------------------------
</TABLE>
THE COMMON SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Date Rec'd __/__/__ Order # _____ Batch #_____ CONVERSION INFORMATION CENTER
OFFICE USE Check ____________ Category _____ 435 Main Street
Amount $____________ Initials _____ Bridgeport, Ohio 43912
(614) 635-1632 or (614) 635-1633
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
OHIO STATE FINANCIAL SERVICES, INC.
STOCK OWNERSHIP GUIDE
- --------------------------------------------------------------------------------
Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
INDIVIDUAL- The shares are to be registered in an individual's name only. You
may not list beneficiaries for this ownership.
JOINT TENANTS- Joint tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
TENANTS IN COMMON- Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
INDIVIDUAL RETIREMENT ACCOUNT- Individual Retirement Account ("IRA") holders may
make share purchases from their deposits through a prearranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
Bridgeport Savings and Loan Association does not offer a self-directed IRA.
Please contact the Conversion Information Center if you have any questions about
your IRA account. There will be no early withdrawal or IRS penalties incurred in
these transactions.
UNIFORM GIFT TO MINORS- For residents of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfer to
Minors Act. For residents in other states, shares may be held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
USE THE MINOR'S SOCIAL SECURITY NUMBER. Only one custodian and one minor may be
designated.
CORPORATION/PARTNERSHIP- Corporation/Partnerships may purchase shares. Please
provide the Corporation/Partnership's legal name and Tax I.D. To have depositor
rights, the Corporation/Partnership must have an account in the legal name.
Please contact the Conversion Information Center to verify depositor rights and
purchase limitations.
FIDUCIARY/TRUST- Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
Instructions: On the first "NAME" line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the fiduciary
is a corporation, list the corporate title on the first "NAME" line. Following
the name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated 06/09/87.
DEFINITION OF ASSOCIATE
- --------------------------------------------------------------------------------
A person's Associates consist of the following (a) any corporation or other
organization (other than Ohio State Financial Services, Inc. (the "Holding
Company"), Bridgeport Savings and Loan Association (the "Association), or a
majority owned subsidiary of the Association) of which such person is a
director, officer or partner or is directly or indirectly the beneficial owner
of 10% or more of any class of equity securities; (b) 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 Holding Company or the Association in which such person has a substantial
beneficial interest or serves as a trustee or in a similar fiduciary capacity;
and (c) any relative or spouse of such person, or any relative of such person,
who either has the same home as such person or who is a director or officer of
the Holding Company or the Association or any of their subsidiaries.
<PAGE> 3
CERTIFICATION FORM
(This Form Must Accompany A Signed Stock Order Form)
I ACKNOWLEDGE THAT THE COMMON SHARES WITHOUT PAR VALUE (THE "COMMON
SHARES") OF OHIO STATE FINANCIAL SERVICES, INC. (THE "HOLDING COMPANY") ARE NOT
DEPOSITS OR ACCOUNTS AND ARE NOT FEDERALLY INSURED, AND ARE NOT GUARANTEED BY
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION OR BY THE FEDERAL GOVERNMENT.
If anyone asserts that the Common Shares are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision Central Regional Director, Ronald N. Karr, at (312) 917-5000.
I further certify that, before purchasing the Common Shares of the Holding
Company, I received a copy of the Prospectus dated, XXX xx, 1997 which discloses
the nature of the Common Shares being offered thereby and describes the
following risks involved in an investment in the Common Shares under the heading
"Risk Factors" beginning on page xx of the Prospectus:
l. Interest Rate Risk
2. Anticipated Reduced Return on Equity
3. Market Area
4. Limited Market for the Common Shares
5. Price of Common Shares Upon Resale
6. Legislation and Regulation Which May Adversely Affect Earnings
and Operations
7. Potential Impact of Benefit Plans on Net Earnings and
Shareholder's Equity
8. Anti-Takeover Provisions Which May Discourage Sales of Common
Shares for Premium Prices
(NOTE: IF SHARES ARE TO BE HELD JOINTLY, BOTH PARTIES MUST SIGN)
Date: , 1997
<PAGE> 4
OHIO STATE FINANCIAL SERVICES, INC.
ITEM INSTRUCTION
- --------------------------------------------------------------------------------
ITEMS 1 AND 2- Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the subscription price of $10.00 per share. The minimum purchase is 25
shares. No person, together with his Associates and others persons acting in
concert with him, may purchase in the Subscription Offering and in the Community
Offering, more than 14,000 Common Shares. In connection with the exercise of
subscription rights arising from a deposit account in which two or more persons
have an interest, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase is 14,000 Common Shares.
Ohio State Financial Services, Inc. has reserved the right to reject the
subscription of any order received in the Community Offering, if any, in whole
or in part.
ITEM 3- Payment for shares may be made in cash (only if delivered by you in
person) by check, bank draft or money order made payable to Ohio State Financial
Services, Inc. DO NOT MAIL CASH. If you choose to make a cash payment, take your
signed Stock Order Form and Certification Form and payment in person to
Bridgeport Savings and Loan Association. Your funds will earn interest at
Bridgeport Savings and Loan Association's current passbook rate of x.xx%.
ITEM 4- To pay by withdrawal from a savings account or certificate at Bridgeport
Savings and Loan Association, insert the account number(s) and the amount(s) you
wish to withdraw from each account. If more than one signature is required to
withdraw, each must sign in the Signature box on the front of this form. To
withdraw from an account with checking privileges, please write a check. No
early withdrawal penalty will be charged on funds used to purchase shares in the
Conversion. A hold will be placed on the account(s) for the amount(s) you show.
Payments will remain in certificate account(s) until the Offering closes and
will continue to earn interest at the account rate until then. If a partial
withdrawal reduces the balance of a certificate account to less than the
applicable minimum, the remaining balance will thereafter earn interest at
Bridgeport Savings and Loan Association's passbook rate.
ITEM 5- Please check this box if you were a depositor on the Eligibility Record
Date (December 31, 1995), the Supplemental Eligibility Record Date (XXXX xx,
199x) or the voting Record Date (XXXX x, 199x). List all names on the account(s)
and all account number(s) of those accounts you had at these dates to ensure
proper identification of your purchase rights.
ITEMS 6- The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Ohio State
Financial Services, Inc. common shares. Print the name(s) in which you want the
shares registered and the mailing address of the registration. Include the first
name, middle initial and last name of the shareholder. Avoid the use of two
initials. Please omit words that do not affect ownership rights, such as "Mrs.",
"Mr.", "Dr.", "special account", etc.
Subscription rights are not transferable. If you are a qualified member, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's names.
Enter the Social Security or Tax I.D. number of one registered owner. This
registered owner must be listed on the first "NAME" line. Be sure to include
your telephone number because we will need to contact you if we cannot execute
your order as given. Review the Stock Ownership Guide and refer to the
instructions for Uniform Gift to Minors/Uniform Transfer to Minors and
Fiduciaries.
CONTINUATION FROM PAGE i SECTION 5, IF ADDITIONAL SPACE IS NEEDED:
ACCOUNT TITLE (NAMES ON ACCOUNT) ACCOUNT NUMBER
----------------------------------------------------------------------------
--------------------------------------------------
----------------------------------------------------------------------------
--------------------------------------------------
----------------------------------------------------------------------------
--------------------------------------------------
----------------------------------------------------------------------------
--------------------------------------------------
----------------------------------------------------------------------------
--------------------------------------------------
----------------------------------------------------------------------------
<PAGE> 1
Exhibit 99.3
REVOCABLE PROXY
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
The undersigned member of Bridgeport Savings and Loan Association, a
savings and loan association incorporated under Ohio law (the "Association"),
hereby nominates, constitutes and appoints ____________ and _______________, or
either one of them, as proxy or proxies for the undersigned member, each with
full power of substitution and resubstitution, to vote all of the votes which
the undersigned member is entitled to cast at the Special Meeting of the Members
of the Association to be held at ____ __.m., local time, on ___________, 1997,
at __________________, Bridgeport, Ohio, and at any adjournments thereof (the
"Special Meeting"), on the following matters and in the manner specified below:
1. The approval of the Plan of Conversion, a copy of which is
attached as Exhibit A to the Summary Proxy Statement mailed to
the undersigned member in connection with the Special Meeting,
pursuant to which the Association would convert from a mutual
savings and loan association incorporated under Ohio law to a
permanent capital stock savings and loan association incorporated
under Ohio law and become a wholly-owned subsidiary of Ohio State
Financial Services, Inc., an Ohio corporation organized for the
purpose of purchasing all of the capital stock to be issued by
the Association in connection with the Conversion.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. The adoption of the Amended Articles of Incorporation of the
Association, a copy of which is attached to the Plan of
Conversion as Exhibit I.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. The adoption of the Amended Constitution of the Association, a
copy of which is attached to the Plan of Conversion as Exhibit
II.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon such other matters as may properly come
before the Special Meeting.
This Revocable Proxy will be voted as directed by the undersigned
member. IF NO DIRECTION IS GIVEN, THIS REVOCABLE PROXY WILL BE VOTED FOR THE
APPROVAL OF THE PLAN OF CONVERSION, FOR THE ADOPTION OF THE AMENDED ARTICLES OF
INCORPORATION AND FOR THE ADOPTION OF THE AMENDED CONSTITUTION.
Without affecting any vote previously taken, this Revocable Proxy may
be revoked by the undersigned at any time before it is exercised by (i)
executing and delivering to the Association a later dated proxy, or (ii) giving
notice of revocation in writing to the Secretary of the Association or in open
meeting to the inspectors of election.
IMPORTANT: PLEASE SIGN AND DATE THIS
REVOCABLE PROXY ON THE REVERSE SIDE.
<PAGE> 2
PROXY
Receipt of the Summary Proxy Statement of the Association and the
Prospectus of Ohio State Financial Services, Inc. dated ______________, 1997, is
hereby acknowledged by the undersigned.
-----------------------------------
Signature
Dated: _____________________, 1997
NOTE: Please sign your name exactly as it appears on this Revocable Proxy. Joint
accounts require only one signature. If you are signing this Revocable Proxy as
an attorney, administrator, agent, corporation, officer, executor, trustee or
guardian, etc., please add your full title to your signature.
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
<PAGE> 1
FACTS ABOUT CONVERSION
The Board of Directors of Bridgeport Savings and Loan Association ("Bridgeport
Savings") unanimously adopted a Plan of Conversion to convert from an Ohio
mutual savings and loan association to an Ohio capital stock savings and loan
association (the "Conversion").
This brochure answers some of the most frequently asked questions about the
Conversion and about your opportunity to invest in common shares of Ohio State
Financial Services, Inc., (the "Holding Company"), the newly formed corporation
that will become the holding company for Bridgeport Savings following the
Conversion.
Investment in the common shares of Ohio State Financial Services, Inc. involves
certain risks. For a discussion of these risks and other factors, including a
complete description of the offering, INVESTORS ARE URGED TO READ THE
ACCOMPANYING PROSPECTUS, especially the discussion under the heading "Risk
Factors" on page x.
WHY IS BRIDGEPORT SAVINGS
CONVERTING TO STOCK FORM?
- --------------------------------------------------------------------------------
The stock form of ownership is used by most business corporations and an
increasing number of savings institutions. Through the sale of stock, Bridgeport
Savings will raise additional capital enabling it to:
- support and expand its current financial and other services.
- allow customers and friends to purchase common shares and share in
the Holding Company's and Bridgeport Saving's future.
WILL THE CONVERSION AFFECT ANY OF MY
DEPOSIT ACCOUNTS OR LOANS?
- --------------------------------------------------------------------------------
No. The Conversion will have no effect on the balance or terms of any savings
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
SAVINGS ACCOUNT IS NOT BEING CONVERTED TO STOCK.
WHO IS ELIGIBLE TO PURCHASE COMMON
SHARES IN THE SUBSCRIPTION OFFERING
AND THE COMMUNITY OFFERING?
- --------------------------------------------------------------------------------
Certain past and present depositors of Bridgeport Savings, the Holding Company's
Employee Shares Ownership Plan and certain members of the general public are
eligible to purchase common shares in the subscription offering and the
community offering.
HOW MANY COMMON SHARES ARE BEING
OFFERED AND AT WHAT PRICE?
- --------------------------------------------------------------------------------
Ohio State Financial Services, Inc. is offering up to 776,250 common shares,
subject to adjustment as described in the Prospectus, at a price of $10.00 per
share through the Prospectus.
HOW MANY SHARES MAY I BUY?
- --------------------------------------------------------------------------------
The minimum order is 25 shares. No person, together with associates of, and
persons acting in concert with such person, may purchase more than $140,000 of
common shares.
DO MEMBERS HAVE TO BUY COMMON
SHARES?
- --------------------------------------------------------------------------------
No. However, the Conversion will allow Bridgeport Saving's depositors an
opportunity to buy common shares and become shareholders of the holding company
for the local financial institution with which they do business.
HOW DO I ORDER COMMON SHARES?
- --------------------------------------------------------------------------------
You must complete the enclosed Stock Order Form and Certification Form.
Instructions for completing your Stock Order Form and Certification Form are
contained in this packet. Your order must be received by noon, Bridgeport, Ohio
Time on XXXX xx, 1997.
HOW MAY I PAY FOR MY COMMON
SHARES?
- --------------------------------------------------------------------------------
First, you may pay for common shares by check, cash or money order. Interest
will be paid by Bridgeport Savings on these funds at the passbook rate, which is
currently x.x% per annum, from the day the funds are received until the
completion or termination of the Conversion. Second, you may authorize us to
withdraw funds from your Bridgeport Savings savings account or certificate of
deposit for the amount of funds you specify for payment. You will not have
access to these funds from the day we receive your order until completion or
termination of the Conversion.
CAN I PURCHASE SHARES USING FUNDS
IN MY BRIDGEPORT SAVINGS IRA
ACCOUNT?
- --------------------------------------------------------------------------------
Federal regulations do not permit the purchase of common shares in connection
with the Conversion from your existing
<PAGE> 2
Bridgeport Savings IRA account. To accommodate our depositors, we have made
arrangements with an outside trustee to allow such purchases. Please call our
Conversion Information Center for additional information.
WILL THE COMMON SHARES BE INSURED?
- --------------------------------------------------------------------------------
No. Like any other common shares, the Holding Company's common shares will not
be insured.
WILL DIVIDENDS BE PAID ON THE
COMMON SHARES?
- --------------------------------------------------------------------------------
The Board of Directors of the Holding Company will consider whether to pay a
cash dividend in the future, subject to regulatory limits and requirements. No
decision has been made as to the amount or timing of such dividends, if any.
HOW WILL THE COMMON SHARES BE
TRADED?
- --------------------------------------------------------------------------------
The Holding Company's stock is expected to trade on The Nasdaq Stock Market.
However, no assurance can be given that an active and liquid market will
develop.
ARE OFFICERS AND DIRECTORS OF
BRIDGEPORT SAVINGS PLANNING TO
PURCHASE STOCK?
- --------------------------------------------------------------------------------
Yes! Bridgeport Saving's officers and directors plan to purchase, in the
aggregate, $x,xxx,xxx worth of stock or approximately xx.x% of the common shares
offered at the midpoint of the offering range.
MUST I PAY A COMMISSION?
- --------------------------------------------------------------------------------
No. You will not be charged a commission or fee on the purchase of common shares
in the Conversion.
SHOULD I VOTE?
- --------------------------------------------------------------------------------
Yes. Your "YES" vote is very important!
PLEASE VOTE, SIGN AND RETURN ALL PROXY CARDS!
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 your accounts.
HOW MANY VOTES DO I HAVE?
- --------------------------------------------------------------------------------
Your proxy card(s) show(s) the number of votes you have. Every depositor is
entitled to cast one vote for each $100, and a proportionate fractional vote for
an amount of less than $100, on deposit as of the voting record date, up to
1,000 votes.
MAY I VOTE IN PERSON AT THE SPECIAL
MEETING?
- --------------------------------------------------------------------------------
Yes, but we would still like you to sign and mail your proxy today. If you
decide to revoke your proxy you may do so by giving notice at the special
meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR CONVERSION INFORMATION CENTER MONDAY
THROUGH SATURDAY.
CONVERSION INFORMATION
CENTER (614) 635-1632 OR (614)
635-1633
Ohio State Financial Services, Inc.
435 Main Street
Bridgeport, Ohio 43912
Phone (614) 635-0764
Fax (614) 635-0768
COMMON SHARE
OFFERING QUESTIONS
AND ANSWERS
Ohio State Financial
Services, Inc.
THE COMMON SHARES 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 SHARES. THE OFFER IS
MADE ONLY BY THE PROSPECTUS.
<PAGE> 3
PROXY GRAM
We recently forwarded to you a proxy statement and related materials regarding a
proposal to convert Bridgeport Savings and Loan Association from an Ohio mutual
savings and loan association to an Ohio capital stock savings and loan
association (the "Conversion").
YOUR VOTE ON OUR PLAN OF CONVERSION HAS NOT YET BEEN RECEIVED. FAILURE TO VOTE
HAS THE SAME EFFECT AS VOTING AGAINST THE 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 Conversion does not obligate you to purchase common shares of
Ohio State Financial Services, Inc. or affect the terms or insurance on your
accounts.
The Board of Directors unanimously recommends you vote "FOR" the Conversion.
- ----------------------------------------------------------------------------
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Bridgeport, Ohio
Jon W. Letzkus
President and Chief Executive Officer
If you mailed the proxy, please accept our thanks and disregard this request.
For further information call (614) 635-1632 or (614) 635-1633.
- --------------------------------------------------------------------------------
The common shares 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 shares. The offer is
made only by the Prospectus of Ohio State Financial Services, Inc.
<PAGE> 4
STOCK GRAM
We are pleased to announce that Bridgeport Savings and Loan Association
("Bridgeport Savings") is converting from an Ohio savings and loan association
to an Ohio capital stock savings and loan association (the "Conversion"). In
conjunction with the Conversion, Ohio State Financial Services, Inc. is offering
common shares in a subscription offering and a community offering (collectively,
the "Offering"). The sale of common shares in connection with the Conversion
will enable Bridgeport Savings to raise additional capital to support and
enhance its current operations.
We previously mailed to you a PROSPECTUS providing detailed information about
Bridgeport Saving's operations and the proposed Offering. We urge you to read
the Prospectus carefully.
We invite our loyal customers and community members to become shareholders of
OHIO STATE FINANCIAL SERVICES, INC. (THE PROPOSED HOLDING COMPANY FOR BRIDGEPORT
SAVINGS AND LOAN ASSOCIATION). If you are interested in purchasing the common
shares of Ohio State Financial Services, Inc., you must submit your signed Stock
Order Form and Certification Form and payment prior to NOON, BRIDGEPORT, OHIO
TIME, ON XXXX XX, 1997.
Should you have additional questions regarding the Offering or need additional
materials, please call the Conversion Information Center at (614) 635-1632 or
(614) 635-1633 or stop by the Conversion Information Center at 435 Main Street
in Bridgeport.
The common shares 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 shares. The offer is
made only by the Prospectus of Ohio State Financial Services, Inc.
<PAGE> 5
XXXX xx, 1997
Dear Prospective Investor:
We are pleased to announce that Bridgeport Savings and Loan Association
("Bridgeport Savings") is converting from an Ohio mutual savings and loan
association to an Ohio capital stock savings and loan association (the
"Conversion"). In conjunction with the Conversion, Ohio State Financial
Services, Inc., the newly-formed corporation that will become the holding
company for Bridgeport Savings, is offering common shares in a subscription
offering and a community offering (collectively, the "Offering"). The sale of
common shares in connection with the Conversion will enable Bridgeport Savings
to raise additional capital to support and enhance its current operations.
We have enclosed the following materials which will help you learn more
about the merits of Ohio State Financial Services, Inc. as an investment. Please
read and review the materials carefully.
PROSPECTUS: This document provides detailed information about
operations at Bridgeport Savings and a complete discussion on the
proposed Offering.
QUESTIONS AND ANSWERS: Key questions and answers about the stock
offering are found in this pamphlet.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
common shares by returning it with your payment in the enclosed
business reply envelope. The deadline for ordering common shares is
noon, Bridgeport, Ohio Time XXXX xx, 1997.
We invite our loyal customers and local community members to become
shareholders of Ohio State Financial Services, Inc. Through the Offering you
have the opportunity to buy common shares directly from Ohio State Financial
Services, Inc., without paying a commission or a fee. The board of directors and
senior management of Bridgeport Savings fully support the Offering.
If you have additional questions regarding the Conversion and Offering,
please call us at (614) 635-1632 or (614) 635-1633, Monday through Wednesday
from 8:30 a.m. to 4:30 p.m., Thursday from 8:30 a.m. to 1:00 p.m., Friday from
8:30 a.m. to 5:00 p.m. and Saturday from 8:30 a.m. to 12:00 p.m., or stop by the
Conversion Information Center at 435 Main Street, Bridgeport, Ohio.
Sincerely,
Jon W. Letzkus
President and Chief Executive Officer
THE COMMON SHARES 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 SHARES. THE OFFER IS
MADE ONLY BY THE PROSPECTUS.
<PAGE> 6
XXXX xx, 1997
Dear Member:
We are pleased to announce that Bridgeport Savings and Loan Association
is converting from an Ohio mutual savings and loan association to an Ohio
capital stock savings and loan association (the "Conversion"). In conjunction
with the Conversion, Ohio State Financial Services, Inc., the newly-formed
corporation that will become the holding company for Bridgeport Savings, is
offering common shares in a subscription offering and a community offering.
Unfortunately, Ohio State Financial Services, Inc. is unable to either
offer or sell its common shares to you because the small number of eligible
subscribers in your jurisdiction makes registration or qualification of the
common shares 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 shares of Ohio
State Financial Services, Inc.
However, as a member of Bridgeport Savings, you have the right to vote
on the Plan of Conversion at the Special Meeting of Members to be held on XXXX
xx, 1997. 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.
I invite you to attend the Special Meeting on XXXX xx, 1997. However,
whether or not you are able to attend, please complete the enclosed proxy card
and return it in the enclosed envelope.
Sincerely,
Jon W. Letzkus
President and Chief Executive Officer
<PAGE> 7
XXXX xx, 1997
Dear Member:
We are pleased to announce that Bridgeport Savings and Loan Association
("Bridgeport Savings") is converting from an Ohio mutual savings and loan
association to an Ohio capital stock savings and loan association (the
"Conversion"). In conjunction with the Conversion, Ohio State Financial
Services, Inc., the newly-formed corporation that will become the holding
company for Bridgeport Savings, is offering common shares in a subscription
offering and a community offering (collectively, the "Offering") to certain of
our depositors, our Employee Stock Ownership Plan and certain member of the
general public, pursuant to a Plan of Conversion.
To accomplish this Conversion, we need your participation in an
important vote. Enclosed is a proxy statement describing the Plan of Conversion
and your voting and subscription rights. Bridgeport Savings' Plan of Conversion
has been approved by the Office of Thrift Supervision and now must be approved
by you. YOUR VOTE IS VERY IMPORTANT.
Enclosed, as part of the proxy material, is your proxy card located
behind the window of your mailing envelope. This proxy should be signed and
returned to us prior to the Special Meeting scheduled on XXXX xx, 1997. Please
take a moment now to sign the enclosed proxy card and return it to us in the
postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING
AGAINST THE CONVERSION.
The Board of Directors of Bridgeport Savings feels that the Conversion
will offer a number of advantages, such as an opportunity for depositors and
customers of Bridgeport Savings to become shareholders. Please remember:
- Your accounts at Bridgeport Savings will continue to be insured up to
the maximum legal limit by the Federal Deposit Insurance Corporation
("FDIC").
- There will be no change in the balance, interest rate, or maturity of
any deposit accounts because of the Conversion.
- Members have a right, but no obligation, to subscribe for common shares
before they are offered to the public.
- Like all stock, the common shares issued in the Offering WILL NOT BE
INSURED BY THE FDIC.
Enclosed are materials describing the Offering. We urge you to read
these materials carefully. If you are interested in purchasing the common shares
of Ohio State Financial Services, Inc., you must submit your Stock Order Form
and Certification Form and payment prior to noon, Bridgeport, Ohio Time. XXXX
xx, 1997.
If you have additional questions regarding the Offering, please call us
at (614) 635-1632 or (614) 635-1633, Monday through Wednesday from 8:30 a.m. to
4:30 p.m., Thursday from 8:30 a.m. to 1:00 p.m., Friday from 8:30 a.m. to 5:00
p.m. and Saturday from 8:30 a.m. to 12:00 p.m., or stop by the Conversion
Information Center at 435 Main Street, Bridgeport, Ohio.
Sincerely,
Jon W. Letzkus
President and Chief Executive Officer
THE COMMON SHARES BEING OFFERED IN THIS OFFERING ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SHARES. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
<PAGE> 8
XXXX xx, 1997
Dear Friend:
We are pleased to announce that Bridgeport Savings and Loan Association
("Bridgeport Savings") is converting from an Ohio mutual savings and loan
association to an Ohio capital stock savings and loan association (the
"Conversion"). In conjunction with the Conversion, Ohio State Financial
Services, Inc., the newly-formed corporation that will become the holding
company for Bridgeport Savings, is offering common shares in a subscription
offering and a community offering (collectively, the "Offering") to certain
depositors, our Employee Stock Ownership Plan and certain members of the general
public, pursuant to a Plan of Conversion. The sale of common shares in
connection with the Conversion will enable Bridgeport Savings to raise
additional capital to support and enhance its current operations.
Because we believe you may be interested in learning more about the
merits of the common shares of Ohio State Financial Services, Inc. as an
investment, we are sending you the following materials which describe the
Offering.
PROSPECTUS: This document provides detailed information about
operations at Bridgeport Savings and the proposed Offering.
QUESTIONS AND ANSWERS: Key questions and answers about the Offering are
found in this pamphlet.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
stock by returning it with your payment in the enclosed business reply
envelope. The deadline for ordering stock is noon, Bridgeport, Ohio
Time XXXX xx, 1997.
As a friend of Bridgeport Savings, you will have the opportunity to buy
common shares directly from Ohio State Financial Services, Inc. in the
Conversion without paying a commission or a fee. If you have additional
questions regarding the Conversion and Offering, please call us at (614)
635-1632 or (614) 635-1633, Monday through Wednesday from 8:30 a.m. to 4:30
p.m., Thursday from 8:30 a.m. to 1:00 p.m., Friday from 8:30 a.m. to 5:00 p.m.
and Saturday from 8:30 a.m. to 12:00 p.m., or stop by the Conversion Information
Center at 435 Main Street, Bridgeport, Ohio.
We are pleased to offer you this opportunity to become a shareholder of
Ohio State Financial Services, Inc.
Sincerely,
Jon W. Letzkus
President and Chief Executive Officer
THE COMMON SHARES 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 SHARES. THE OFFER IS
MADE ONLY BY THE PROSPECTUS.
<PAGE> 9
[CHARLES WEBB & COMPANY LETTERHEAD]
To Members and Friends of
Bridgeport Savings and Loan Association
- --------------------------------------------------------------------------------
Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. and a member
of the National Association of Securities Dealers, Inc. ("NASD"), is assisting
Bridgeport Savings and Loan Association ("Bridgeport Savings") in its conversion
from an Ohio mutual savings and loan association to an Ohio capital stock
savings and loan association (the "Conversion") and the concurrent offering of
common shares by Ohio State Financial Services, Inc. (the "Holding Company"),
the newly formed corporation that will become the holding company of Bridgeport
Savings following the Conversion.
At the request of the Holding Company, we are enclosing materials explaining
this process and your options, including an opportunity to invest in the Holding
Company's common shares being offered to Bridgeport Savings' customers and the
community through XXXX xx, 1997. Please read the enclosed offering materials
carefully. The Holding 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, please visit our Conversion Information Center at 435
Main Street, Bridgeport, Ohio or feel free to call the Conversion Information
Center at (614) 635-1632 or (614) 635-1633.
Very truly yours,
Charles Webb & Company
<PAGE> 1
Exhibit 99.5
RP FINANCIAL, LC.
- ----------------------------------------------
Financial Services Industry Consultants
February 13, 1997
Mr. Jon W. Letzkus
President and Chief Executive Officer
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912-1310
Dear Mr. Letzkus:
This letter sets forth the agreement between Bridgeport Savings and Loan
Association, Bridgeport, Ohio ("Bridgeport Savings" or the "Association"), and
RP Financial, LC. ("RP Financial") for the independent conversion appraisal
services pertaining to the Association's mutual-to-stock conversion and
simultaneous holding company formation. The specific appraisal services to be
rendered by RP Financial are described below. These appraisal services will be
rendered by a team of two to three senior consultants on staff and will be
directed by the undersigned.
Description of Conversion Appraisal Services
- --------------------------------------------
Prior to preparing the valuation report, RP Financial will conduct a
financial due diligence, including on-site interviews of senior management and
reviews of financial and other documents and records, to gain insight into the
Association's operations, financial condition, profitability, market area, risks
and various internal and external factors which impact the pro forma value of
the Association. RP Financial will prepare a written detailed valuation report
of Bridgeport Savings which will be fully consistent with applicable regulatory
guidelines and standard pro forma valuation practices. The appraisal report will
include an in-depth analysis of the Association's financial condition and
operating results, as well as an assessment of the Association's interest rate
risk, credit risk and liquidity risk. The appraisal report will describe the
Association's business strategies, market area, prospects for the future and the
intended use of proceeds both in the short term and over the longer term. A peer
group analysis relative to publicly-traded savings institutions will be
conducted for the purpose of determining appropriate valuation adjustments
relative to the group. We will review pertinent sections of the prospectus to
obtain necessary data and information for the appraisal, including the impact of
key deal elements on the appraised value, such as dividend policy, use of
proceeds and reinvestment rate, tax rate, conversion expenses and
characteristics of stock plans. The appraisal report will conclude with a
midpoint pro forma value which will establish the range of value. The appraisal
report may be periodically updated throughout the conversion process and there
will be at least one updated valuation prepared at the time of the closing of
the stock offering.
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to Bridgeport Savings at the above address in conjunction
with the filing of the regulatory application. Subsequent updates will be filed
promptly as certain events occur which would warrant the preparation and filing
of such valuation updates. Further, RP Financial agrees to perform such other
services as are necessary or required in connection with the regulatory review
of the appraisal and respond to the regulatory comments, if any, regarding the
valuation appraisal and subsequent updates.
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE> 2
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 2
Fee Structure and Payment Schedule
- ----------------------------------
Bridgeport Savings agrees to pay RP Financial a fixed fee of $12,500 for
these appraisal services, plus reimbursable expenses. Payment of these fees
shall be made according to the following schedule:
- $2,500 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
- $7,500 upon delivery of the completed original appraisal report; and
- $2,500 upon completion of the conversion to cover all subsequent
valuation updates that may be required.
The Association will reimburse RP Financial for all travel expenses
incurred in preparation of the valuation. RP Financial will agree to limit
reimbursable out-of-pocket expenses, including printing, telephone, facsimile
and shipping, to a cap of $1,250 for the appraisal and concurrent planning
engagements, subject to written authorization from the Association to exceed
such level. Computer and data services will be provided at no additional charge.
In the event Bridgeport Savings shall, for any reason, discontinue the
proposed conversion prior to delivery of the completed documents set forth above
and payment of the respective progress payment fees, Bridgeport Savings agrees
to compensate RP Financial according to RP Financial's standard billing rates
for consulting services based on accumulated and verifiable time expenses, not
to exceed the respective fee caps noted above, after giving full credit to the
initial retainer fee. RP Financial's standard billing rates range from $75 per
hour for research associates to $250 per hour for managing directors.
If during the course of the proposed transaction, unforeseen events occur
so as to materially change the nature or the work content of the services
described in this contract, the terms of said contract shall be subject to
renegotiation by Bridgeport Savings and RP Financial. Such unforeseen events
shall include, but not be limited to, major changes in the conversion
regulations, appraisal guidelines or processing procedures as they relate to
conversion appraisals, major changes in management or procedures, operating
policies or philosophies, and excessive delays or suspension of processing of
conversion applications by the regulators such that completion of the conversion
transaction requires the preparation by RP Financial of a new appraisal or
financial projections.
Representations and Warranties
- ------------------------------
Bridgeport Savings and RP Financial agree to the following:
1. The Association agrees to make available or to supply to RP Financial
such information with respect to its business and financial condition as RP
Financial may reasonably request in order to provide the aforesaid valuation.
Such information heretofore or hereafter supplied or made available to RP
Financial shall include: annual financial statements, periodic regulatory
filings and material agreements, debt instruments, off balance sheet assets or
liabilities, commitments and contingencies, unrealized gains or losses and
corporate books and records. All information provided by the Association to RP
Financial shall remain strictly confidential (unless such information is
otherwise made available to the public), and if conversion is not consummated or
the services of RP Financial are terminated hereunder, RP Financial shall upon
request promptly return to the Association the original and any copies of such
information.
<PAGE> 3
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 3
2. The Association hereby represents and warrants to RP Financial that any
information provided to RP Financial does not and will not, to the best of the
Association's knowledge, at the times it is provided to RP Financial, contain
any untrue statement of a material fact or fail to state a material fact
necessary to make the statements therein not false or misleading in light of the
circumstances under which they were made.
3. (a) The Association agrees that it will indemnify and hold harmless RP
Financial, any affiliates of RP Financial, the respective directors, officers,
agents and employees of RP Financial or their successors and assigns who act for
or on behalf of RP Financial in connection with the services called for under
this agreement (hereinafter referred to as "RP Financial"), from and against any
and all losses, claims, damages and liabilities (including, but not limited to,
all losses and expenses in connection with claims under the federal securities
laws) attributable to (i) any untrue statement or alleged untrue statement of a
material fact contained in the financial statements or other information
furnished or otherwise provided by the Association to RP Financial, either
orally or in writing; (ii) the omission or alleged omission of a material fact
from the financial statements or other information furnished or otherwise made
available by the Association to RP Financial; or (iii) any action or omission to
act by the Association, or the Association's respective officers, directors,
employees or agents which action or omission is willful or negligent. The
Association will be under no obligation to indemnify RP Financial hereunder if a
court determines that RP Financial was negligent or acted in bad faith with
respect to any actions or omissions of RP Financial related to a matter for
which indemnification is sought hereunder. Any time devoted by employees of RP
Financial to situations for which indemnification is provided hereunder, shall
be an indemnifiable cost payable by the Association at the normal hourly
professional rate chargeable by such employee.
(b) RP Financial shall give written notice to the Association of
such claim or facts within thirty days of the assertion of any claim or
discovery of material facts upon which the RP Financial intends to base a claim
for indemnification hereunder. In the event the Association elects, within seven
days of the receipt of the original notice thereof, to contest such claim by
written notice to RP Financial, RP Financial will be entitled to be paid any
amounts payable by the Association hereunder within five days after the final
determination of such contest either by written acknowledgement of the
Association or a final judgment of a court of competent jurisdiction. If the
Association does not so elect, RP Financial shall be paid promptly and in any
event within thirty days after receipt by the Association of the notice of the
claim.
(c) The Association shall pay for or reimburse the reasonable
expenses, including attorneys' fees, incurred by RP Financial in advance of the
final disposition of any proceeding within thirty days of the receipt of such
request if RP Financial furnishes the Association: (1) a written statement of RP
Financial's good faith belief that it is entitled to indemnification hereunder;
and (2) a written undertaking to repay the advance if it ultimately is
determined in a final adjudication of such proceeding that it or he is not
entitled to such indemnification.
(d) In the event the Association does not pay any indemnified loss
or make advance reimbursements of expenses in accordance with the terms of this
agreement, RP Financial shall have all remedies available at law or in equity to
enforce such obligation.
It is understood that, in connection with RP Financial's above-mentioned
engagement, RP Financial may also be engaged to act for the Association in one
or more additional capacities, and that the terms of the original engagement may
be embodied in one or more separate agreements. The provisions of Paragraph 3
herein shall apply to the original engagement, any such additional engagement,
any modification of the original engagement or such additional engagement and
shall remain in full force and effect following the completion or termination of
RP Financial's engagement(s). This agreement constitutes the entire
understanding of the Association and RP Financial concerning the subject matter
addressed herein, and such contract shall be governed and construed in
<PAGE> 4
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 4
accordance with the laws of the Commonwealth of Virginia. This agreement may not
be modified, supplemented or amended except by written agreement executed by
both parties.
Bridgeport Savings and RP Financial are not affiliated, and neither
Bridgeport Savings nor RP Financial has an economic interest in, or is held in
common with, the other and has not derived a significant portion of its gross
revenues, receipts or net income for any period from transactions with the
other.
* * * * * * * * * *
Please acknowledge your agreement to the foregoing by signing as indicated
below and returning to RP Financial a signed copy of this letter, together with
the initial retainer fee of $2,500.
Sincerely,
/s/ William E. Pommerening
William E. Pommerening
Chief Executive Officer
and Managing Director
Agreed To and Accepted By: Jon W. Letzkus /s/ Jon W. Letzkus
-------------------------------
President and Chief Executive Office
Upon Authorization by the Board of Directors For:
Bridgeport Savings and Loan Association
Bridgeport, Ohio
Date Executed: 3-1-97
---------------
<PAGE> 1
Exhibit 99.6
---------------------------------------------------
CONVERSION APPRAISAL REPORT
OHIO STATE FINANCIAL SERVICES, INC.
PROPOSED HOLDING COMPANY FOR
BRIDGEPORT SAVINGS AND LOAN
ASSOCIATION
Bridgeport, Ohio
Dated As Of:
June 6, 1997
---------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE> 2
RP FINANCIAL, LC.
- -------------------------------------------------
Financial Services industry Consultants
June 6, 1997
Board of Directors
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the common
stock which is to be issued in connection with the mutual-to-stock conversion of
Bridgeport Savings and Loan Association, Bridgeport, Ohio ("Bridgeport Savings"
or the "Association"). The common stock issued in connection with the
Association's conversion will simultaneously be acquired by a holding company,
Ohio State Financial Services, Inc. ("Ohio State Financial" or the "Holding
Company"). The conversion involves the issuance of shares of common stock to
depositors, the Holding Company's employee stock ownership plan ("ESOP"),
members of the local community and the public at large.
This Appraisal is furnished pursuant to the conversion regulations
promulgated by the Office of Thrift Supervision ("OTS"). This Appraisal has been
prepared in accordance with the written valuation guidelines promulgated by the
OTS, most recently updated as of October 21, 1994. Specifically, this Appraisal
has been prepared in accordance with the "Guidelines for Appraisal Reports for
the Valuation of Savings and Loan Associations Converting from Mutual to Stock
Form of Organization" of the OTS, as successor to the Federal Home Loan Bank
Board ("FHLBB"), dated as of October 21, 1994; and applicable regulatory
interpretations thereof.
Description of Reorganization
- -----------------------------
The Board of Directors of the Association has adopted a Plan of Conversion
pursuant to which the Association will convert from an Ohio chartered mutual
savings association to an Ohio chartered stock savings association and issue all
of its outstanding shares to the Holding Company. The Holding Company will sell
in Subscription and Community offerings Holding Company stock in the amount
equal to the appraised value of the Association. Immediately following the
conversion, the only significant assets of the Holding Company will be the
capital stock of the Association and the net conversion proceeds remaining after
purchase of the Association's common stock by the Holding Company. The Holding
Company will use 50 percent of the net conversion proceeds to purchase the
Association's common stock. A portion of the remaining 50 percent of the net
conversion proceeds will be used to fund a loan to the ESOP with the remainder
to be used as general working capital.
RP Financial, LC.
- -----------------
RP Financial, LC. ("RP Financial") is a financial consulting firm serving
the financial services industry nationwide that, among other things, specializes
in financial valuations and analyses of business enterprises and securities,
including the pro forma valuation for savings institutions converting from
mutual-to-stock form. The background and experience of RP Financial is detailed
in Exhibit V-1. We believe that, except for the fee we will receive for our
appraisal and assisting the Association in the preparation of its business plan,
we are independent of the Association and the other parties engaged by the
Association to assist in the stock conversion process.
- --------------------------------------------------------------------------------
WASHINGTON HEADQUARTERS
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE> 3
RP Financial, LC.
Board of Directors
June 6, 1997
Page 2
Valuation Methodology
- ---------------------
In preparing our appraisal, we have reviewed Bridgeport Savings'
application for Approval of Conversion, including the Proxy Statement, as filed
with the OTS, and the Holding Company's Form S-1 registration statement as filed
with the Securities Exchange Commission. We have conducted a financial analysis
of the Association that has included due diligence related discussions with the
Association's management; S.R. Snodgrass, A.C., the Association's independent
auditor; Vorys, Sater, Seymour and Pease, the Association's conversion counsel;
and Charles Webb & Company, which has been retained by the Association as a
financial and marketing advisor in connection with the Holding Company's stock
offering. All conclusions set forth in the appraisal were reached independently
from such discussions. In addition, where appropriate, we have considered
information based on other available published sources that we believe are
reliable. While we believe the information and data gathered from all these
sources are reliable, we cannot guarantee the accuracy and completeness of such
information.
We have investigated the competitive environment within which the
Association operates and have assessed the Association's relative strengths and
weaknesses. We have kept abreast of the changing regulatory and legislative
environment and analyzed the potential impact on the Association and the
industry as a whole. We have analyzed the potential effects of conversion on the
Association's operating characteristics and financial performance as they relate
to the pro forma market value of Bridgeport Savings. We have reviewed the
economy in the Association's primary market area and have compared the
Association's financial performance and condition with selected publicly-traded
thrift institutions with similar characteristics as the Association's, as well
as all publicly-traded thrifts. We have reviewed conditions in the securities
markets in general and in the market for thrift stocks in particular, including
the market for existing thrift issues and the market for initial public
offerings by thrifts.
Our appraisal is based on the Association's representation that the
information contained in the regulatory applications and additional information
furnished to us by the Association and its independent auditors are truthful,
accurate and complete. We did not independently verify the financial statements
and other information provided by the Association and its independent auditors,
nor did we independently value the assets or liabilities of the Association. The
valuation considers the Association only as a going concern and should not be
considered as an indication of the liquidation value of Bridgeport Savings.
Our appraised value is predicated on a continuation of the current
operating environment for the Association and for all thrifts. Changes in the
local and national economy, the legislative and regulatory environment, the
stock market, interest rates, and other external forces (such as natural
disasters or significant world events) may occur from time to time, often with
great unpredictability and may materially impact the value of thrift stocks as a
whole or the Association's value alone. It is our understanding Bridgeport
Savings intends to remain an independent institution and there are no current
plans for selling control of the Association as a converted institution. To the
extent that such factors can be foreseen, they have been factored into our
analysis.
Pro forma market value is defined as the price at which Bridgeport Savings'
stock, immediately upon completion of the conversion offering, would change
hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of relevant
facts.
Valuation Conclusion
- --------------------
It is our opinion that, as of June 6, 1997, the aggregate pro forma market
value of the shares to be issued was $6,750,000 at the midpoint, equal to
675,000 shares offered at a per share value of $10.00. Pursuant to the
conversion guidelines, the 15 percent offering range indicates a minimum value
of $5,737,500 and a
<PAGE> 4
RP Financial, LC.
Board of Directors
June 6, 1997
Page 3
maximum value of $7,762,500. Based on the $10.00 per share offering price, this
valuation range equates to an offering of 573,750 shares at the minimum to
776,250 shares at the maximum. In the event that the Association's appraised
value is subject to an increase, up to 892,687 shares may be sold at an issue
price of $10.00 per share, for an aggregate market value of $8,926,870, without
a resolicitation.
Limiting Factors and Considerations
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
common stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons who purchase
shares of common stock in the conversion will thereafter be able to buy or sell
such shares at prices related to the foregoing valuation of the pro forma market
value thereof.
RP Financial's valuation was determined based on the financial condition
and operations of the Association as of March 31, 1997, the date of the
financial data included in the Holding Company's prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits the company, its
principals or employees from purchasing stock of its client institutions.
The valuation will be updated as provided for in the conversion regulations
and guidelines. These updates will consider, among other things, any
developments or changes in the Association's financial performance and
condition, management policies, and current conditions in the equity markets for
thrift shares. These updates may also consider changes in other external factors
which impact value including, but not limited to: various changes in the
legislative and regulatory environment, the stock market and the market for
thrift stocks, and interest rates. Should any such new developments or changes
be material, in our opinion, to the valuation of the shares, appropriate
adjustments to the estimated pro forma market value will be made. The reasons
for any such adjustments will be explained in the update at the date of the
release of the update.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ William E. Pommerening
William E. Pommerening
Chief Executive Officer
/s/ Gregory E. Dunn
Gregory E. Dunn
Senior Vice President
<PAGE> 5
RP Financial, LC.
TABLE OF CONTENTS
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Bridgeport, Ohio
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
-----------
Introduction 1.1
Strategic Overview 1.1
Balance Sheet Trends 1.4
Income and Expense Trends 1.7
Interest Rate Risk Management 1.10
Lending Activities and Strategy 1.11
Asset Quality 1.14
Funding Composition and Strategy 1.14
Subsidiary 1.15
Legal Proceedings 1.15
CHAPTER TWO MARKET AREA
-----------
Introduction 2.1
Market Area Demographics 2.1
National Economic Factors 2.3
Local Economy 2.6
Competition 2.8
CHAPTER THREE PEER GROUP ANALYSIS
-------------
Selection of Peer Group 3.1
Financial Condition 3.5
Income and Expense Components 3.8
Loan Composition 3.11
Interest Rate Risk 3.11
Credit Risk 3.14
Summary 3.14
</TABLE>
<PAGE> 6
RP Financial, LC.
TABLE OF CONTENTS
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Bridgeport, Ohio
(continued)
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER FOUR VALUATION ANALYSIS
------------
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.6
4. Primary Market Area 4.6
5. Dividends 4.7
6. Liquidity of the Shares 4.8
7. Marketing of the Issue 4.9
A. The Public Market 4.9
B. The New Issue Market 4.13
C. The Acquisition Market 4.16
8. Management 4.16
9. Effect of Government Regulation and Regulatory Reform 4.17
Summary of Adjustments 4.17
Valuation Approaches 4.17
1. Price-to-Earnings ("P/E") 4.18
2. Price-to-Book ("P/B") 4.19
3. Price-to-Assets ("P/A") 4.20
Valuation Conclusion 4.20
</TABLE>
<PAGE> 7
RP Financial, LC.
LIST OF TABLES
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Bridgeport, Ohio
<TABLE>
<CAPTION>
TABLE
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
1.1 Summary Balance Sheet Data 1.5
1.2 Historical Income Statement 1.8
2.1 Summary Demographic Data 2.2
2.2 Major Employers in the Wheeling Metropolitan Area 2.7
2.3 Unemployment Trends 2.8
2.4 Deposit Summary 2.9
3.1 Peer Group of Publicly-Traded Thrifts 3.3
3.2 Balance Sheet Composition and Growth Rates 3.6
3.3 Income as a Percent of Average Assets and Yields, Costs, Spreads 3.9
3.4 Loan Portfolio Composition Comparative Analysis 3.12
3.5 Interest Rate Risk Comparative Analysis 3.13
3.6 Peer Group Credit Risk Comparative Analysis 3.15
4.1 Market Area Unemployment Rates 4.7
4.2 Conversion Pricing Characteristics 4.14
4.3 Market Pricing Comparatives 4.15
4.4 Public Market Pricing 4.22
</TABLE>
<PAGE> 8
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
- ------------
Bridgeport Savings and Loan Association ("Bridgeport Savings" or the
"Association") is an Ohio chartered mutual savings and loan association
headquartered in Bridgeport, Ohio. In addition to its main office, which
includes a full service branch, the Association maintains one other full service
branch in Shadyside, Ohio. Both offices are located in Belmont County, Ohio,
which borders the state line and is located across the Ohio River from Wheeling,
West Virginia. Bridgeport Savings was organized in 1893 and has operated as
traditional thrift throughout its history. Bridgeport Savings is a member of the
Federal Home Loan Bank ("FHLB") system, with its deposits insured up to the
regulatory maximums by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC"). At March 31, 1997, Bridgeport
Savings had $34.6 million in assets, $29.4 million in deposits and net worth of
$4.9 million or 14.1 percent of total assets.
Ohio State Financial Services, Inc. ("Ohio State Financial" or the "Holding
Company"), an Ohio corporation, was recently organized to facilitate the
conversion of Bridgeport Savings. In the course of the conversion, the Holding
Company will acquire all of the capital stock that the Association will issue
upon its conversion from the mutual to stock form of ownership. Going forward,
Ohio State Financial will own 100 percent of the Association's stock, and the
Association will be Ohio State Financial's sole subsidiary. Approximately 50
percent of the net proceeds received from the sale of common stock will be used
to purchase all of the then to be issued and outstanding capital stock of the
Association, with the balance of the proceeds being retained by the Holding
Company. At this time, no other activities are contemplated for Ohio State
Financial other than the ownership of the Association, a loan to the
newly-formed employee stock ownership plan ("ESOP") and investment of the cash
retained at the holding company in investment securities. In the future Ohio
State Financial may acquire or organize other operating subsidiaries.
Strategic Overview
- ------------------
Bridgeport Savings is a community-oriented thrift, with a primary strategic
objective of meeting the borrowing and savings needs of its local customer base.
The market area served by the Association has been experiencing population and
household shrinkage, which has been promulgated by a deteriorating local
economy. Economic contraction in the Association's primary market area reflects
the decline of coal mining and steel-related industries, with the downturn being
further exacerbated by an on-going protracted strike at one of the region's
major employers (Wheeling Pittsburgh Steel). The negative demographic trends of
the
<PAGE> 9
RP Financial, LC.
Page 1.2
Association's primary market area has provided for an intense competitive
environment, in which growth opportunities have to be generally realized through
gaining market share. Located within the Wheeling MSA, Bridgeport Savings faces
notable competition from a number of other community oriented thrifts and banks,
as well as from larger regional financial institutions. In this operating
environment the Association has pursued a strategy of strengthening its capital
position through limiting asset growth and building equity through the retention
of earnings.
Throughout its history, Bridgeport Savings has pursued a traditional thrift
operating strategy and, thus, 1-4 family permanent mortgage loans and retail
deposits have consistently been the principal components of the Association's
assets and liabilities, respectively. Consumer loans represent the most
significant type of lending diversification by the Association, with the
consumer loan portfolio reflecting a concentration in direct auto loans.
Bridgeport Savings' emphasis on originating 1-4 family permanent mortgage loans
in local and familiar markets has been fairly effective in limiting credit risk
exposure, as indicated by the Association's consistently favorable credit
quality measures. Comparatively, the Association maintains a greater degree of
interest rate risk exposure, as Bridgeport Savings' emphasis on fixed rate
lending largely funded by short-and intermediate-term deposits has resulted in a
balance sheet that is liability-sensitive.
As a traditional thrift, Bridgeport Savings' earnings base is largely
dependent upon net interest income and operating expense levels. Maintenance of
a liability-sensitive balance sheet reflects the Association's philosophy that
earnings can be more fully maximized by incurring some interest rate risk, while
Bridgeport Savings' strong capital position and resultant favorable
interest-earning assets to interest-bearing liabilities ("IEA/IBL") ratio will
sustain earnings at lower but profitable levels during periods of rising and
higher interest rates. Bridgeport Savings' ability to take on a certain degree
of interest rate risk in the net margin is further enhanced by the limited risk
that earnings will be negatively impacted to any significant extent by credit
quality related losses. Interest rate risk associated with the net interest
margin is also somewhat negated by Bridgeport Savings' relatively high
concentration of lower costing savings and transaction accounts, which tend to
be less interest-rate sensitive deposits compared to CDs. Overall, Bridgeport
Savings' operating strategy has provided for a relatively strong net interest
margin during the past five and one-quarter fiscal years.
The other major component of Bridgeport Savings' earnings, operating
expenses, has moved higher since fiscal 1992. Normal increases in operating
expenses and the lack of asset growth have accounted for the increase exhibited
in Bridgeport Savings' operating expense ratio. However, most recently, with the
resumption of asset growth in the first quarter of fiscal 1997, the
Association's operating expense ratio declined slightly.
Retail deposits have generally served as the only interest-bearing source
of funds utilized by the Association, as Bridgeport Savings' used of borrowings
has been nominal. Bridgeport Savings' balance of
<PAGE> 10
RP Financial, LC.
Page 1.3
deposits has exhibited a general decline in recent years, reflecting a
non-aggressive pricing strategy for CDs. Maintenance of a relatively high
concentration of transaction and savings accounts, along with a CD pricing
strategy that contains growth through offering less than premium rates, has
supported control of the Association's funding costs.
Over the past five and one-quarter fiscal years, Bridgeport Savings'
operating strategy has resulted in asset shrinkage, an increasing capital
position and healthy core earnings. An emphasis on originating 1-4 family fixed
rate loans for portfolio has served to limit the Association's credit risk
exposure, while the Association's interest rate exposure is more notable as
indicated by its negative short-term gap position. Earnings have been supported
by a generally favorable interest rate environment, in which the Association's
maintenance of a negative short-term gap position has been beneficial to the net
interest margin. Notwithstanding the favorable interest rate environment, the
Association in general has maintained a strong net interest margin as the result
of its high IEA/IBL ratio. Earnings were depressed for the most recent twelve
month period, primarily as the result of the one time special assessment to
recapitalize the SAIF.
The Association's Board of Directors has elected to convert to the stock
form of ownership to improve the competitive position of Bridgeport Savings. The
additional capital realized from conversion proceeds will increase liquidity to
support funding of future loan growth and other interest-earning assets, and
reduce interest rate risk by enhancing the Association's IEA/IBL ratio, which,
will in turn reduce the repricing mismatch between the Association's
interest-rate sensitive assets and interest-rate sensitive liabilities. The
additional funds realized from the stock offering will also serve as an
alternative funding source to deposits in meeting the Association's future
funding needs, which will allow for competitive pricing in the Association's
deposit rates. Additionally, Bridgeport Savings' significant equity-to-assets
ratio will better position the Association to take advantage of expansion
opportunities as they arise. Such expansion would most likely occur through
acquiring branches or other financial institutions in areas that would provide
for further penetration in the markets currently served by the Association or
nearby surrounding markets. Expansion may also be pursued through acquiring
financial services that are not currently offered by the Association. At this
time, the Association has no specific plans for expansion other than internal
growth. The Association's projected internal use of proceeds are highlighted
below.
The proceeds from the conversion are expected to be deployed as follows:
o HOLDING COMPANY. Approximately 50 percent of the net conversion
proceeds will be retained by Ohio State Financial. Such funds will be
invested initially into short-term investments. Over time, the Holding
Company funds may be utilized for various corporate purposes,
including payment of dividends and possible repurchases of common
stock consistent with regulatory limitations.
<PAGE> 11
RP Financial, LC.
Page 1.4
o BRIDGEPORT SAVINGS. The remaining net proceeds of the conversion will
be infused into the Association in exchange for all of the
Association's newly issued stock. Proceeds infused into the
Association will initially be held in short-term investments. Over
time, the proceeds are expected to be redeployed into the
Association's loan growth and normal investment activities.
Overall, it is the Association's objective to pursue growth that will serve
to increase returns, while, at the same time, growth will not be pursued that
could potentially compromise the overall risk associated with Bridgeport
Savings' operations. The Association has acknowledged that it intends to operate
with excess capital in the near term, operating with a below market return on
equity, until such time as the new capital can be leveraged in a safe and sound
manner over an extended period of time.
Balance Sheet Trends
- --------------------
From December 31, 1992 through March 31, 1997, Bridgeport Savings exhibited
annual asset growth of negative 1.7 percent (see Table 1.1). During this period,
the Association's interest-earning asset composition exhibited a shift towards
loans, as the loans receivable balance increased from 58.8 percent of assets at
fiscal year end 1992 to 72.4 of assets at March 31, 1997. Loan growth was
largely funded by liquidity and cash flow generated from the paydown of the
mortgage-backed securities portfolio. Liquidity was also redeployed into
investment securities, which increased from 6.6 percent of assets at fiscal year
end 1992 to 15.5 percent of assets at March 31, 1997. Assets have been primarily
funded by deposits and retained earnings. A summary of Bridgeport Savings' key
operating ratios for the past five and one-quarter fiscal years are presented in
Exhibit I-3.
Bridgeport Savings' loan portfolio increased at a 3.2 percent annual rate
from fiscal year end 1992 through March 31, 1997, with the substantial portion
of the growth being realized during 1995. Consistent with the Association's
traditional emphasis on originating and retaining 1-4 family permanent loans,
the growth realized in the loan portfolio has been primarily attributable to
growth in 1-4 family loans. In particular, during fiscal 1995 when most of the
Association's loan growth was recorded, 1-4 family permanent mortgage loans
accounted for $2.3 million, or 72.6 percent of Bridgeport Savings' loan growth.
As of March 31, 1997, 1-4 family loans comprised 82.0 percent of the
Association's loan balance. The balance of the loan portfolio is diversified
among consumer, commercial real estate, multi-family, construction, land and
commercial business loans, with consumer loans accounting for the Association's
most notable area of lending diversification. As of March 31, 1997, consumer
loans comprised $3.8 million or 15.0 percent of the Association's loan
portfolio. Commercial real estate and multi-family loans represented the next
largest type of lending diversification, totaling $466,000 or 1.8 percent of
total loans outstanding at March 31, 1997. The balance of the loan portfolio
consists of small balances of construction, land and commercial business loans.
<PAGE> 12
RP Financial, LC
Page 1.5
Table 1.1
Bridgeport Savings and Loan Association
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
At Fiscal Year End December 31,
--------------------------------------------------------------------------------
1992 1993 1994 1995
----------------- ------------------- ------------------- -------------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $ 37,164 100.0% $ 35,319 100.0% $ 33,699 100.0% $ 34,553 100.0%
Cash and cash equivalents 8,077 21.7% 6,539 18.5% 1,624 4.8% 1,177 3.4%
Investment securities 2,471 6.6% 4,078 11.5% 7,062 21.0% 5,505 15.9%
Mortgage-backed securities 3,882 10.4% 2,663 7.5% 1,522 4.5% 1,191 3.4%
Loans receivable, net 21,864 58.8% 21,645 61.3% 22,783 67.6% 25,972 75.2%
Deposits 33,319 89.7% 31,158 88.2% 29,198 86.6% 29,615 85.7%
Borrowings 0 0.0% 0 0.0% 0 0.0% 0 0.0%
Total equity 3,521 9.5% 3,841 10.9% 4,197 12.5% 4,558 13.2%
Full service branches 2 2 2 2
<CAPTION>
At Fiscal Year End
December 31, Annual
--------------------- At Growth
1996 March 31, 1997 Rate
--------------------- -------------------- ----
Amount Pct Amount Pct Pct
------ --- ------ --- ---
($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C>
Total Amount of:
Assets $ 33,929 100.0% $ 34,564 100.0% -1.69%
Cash and cash equivalents 2,436 7.2% 2,613 7.6% -23.32%
Investment securities 4,936 14.5% 5,342 15.5% 19.89%
Mortgage-backed securities 984 2.9% 939 2.7% -28.39%
Loans receivable, net 24,892 73.4% 25,017 72.4% 3.22%
Deposits 28,791 84.9% 29,425 85.1% -2.88%
Borrowings 0 0.0% 0 0.0% 0.00%
Total equity 4,770 14.1% 4,860 14.1% 7.88%
Full service branches 2 2
<FN>
- ----------------------------
(1) Ratios are as a percent of ending assets.
Source: Bridgeport Savings' prospectus.
</TABLE>
<PAGE> 13
RP Financial, LC.
Page 1.6
Bridgeport Savings' cash and investments balance peaked at fiscal year end
1993, totaling $10.6 million or 30.0 percent of total assets. Comparatively,
Bridgeport Savings' cash and investments balance totaled $8.0 million or 23.1
percent of assets at March 31, 1997. The decline in the cash and investments
balance resulted from a decline in cash and cash equivalents, reflecting the
redeployment of liquidity into loans. Liquidity was also utilized to fund
purchases of investment securities, which reached a peak balance of $7.1 million
at fiscal year end 1994. As of March 31, 1997, investment securities held by the
Association totaled $5.3 million, with U.S. Government and federal agency
securities ($3.8 million) comprising the largest concentration of the portfolio.
The balance of the investment portfolio, at March 31, 1997, consisted of
interest-bearing time deposits ($1.2 million), FHLB stock ($330,000) and
Intrieve Incorporated stock ($15,000). Intrieve is the Association's provider of
EDP services. Exhibit I-4 provides historical detail of the Association's
investment portfolio. U.S. Government and agency securities are classified as
held to maturity, and the entire portfolio is scheduled to mature within five
years. Interest-bearing time deposits consist substantially of short-term
deposits with maturities of less than one year. The Association's capital
position was not affected by unrealized gains or losses on the investment
portfolio, as the two investments classified as available for sale (FHLB stock
and Intrieve stock) had fair market values equal to the amortized cost of the
securities. In addition to investment securities, the Association held cash and
cash equivalents of $2.6 million, or 7.6 percent of assets, at March 31, 1997.
Bridgeport Savings' cash and cash equivalents balance has moved higher since
reaching a low of $1.2 million at fiscal year end 1995.
Mortgage-backed securities comprise the balance of the Association's
interest-earning assets, serving as an investment alternative to 1-4 family
permanent mortgage loans. The Association's mortgage-backed securities balance
has trended steadily lower over the past five and one-quarter fiscal years,
declining from a high of $3.9 million at fiscal year end 1992 to a low of
$939,000 at March 31, 1997. As indicated by the downward trend exhibited in the
mortgage-backed securities portfolio, Bridgeport Savings' excess cash flow has
been absorbed by loan growth and other investment alternatives in recent years.
Mortgage-backed securities held by the Association consists of participation
certificates, which are guaranteed or insured by federal agencies. As of March
31, 1997, approximately two-thirds of the mortgage-backed securities portfolio
was scheduled to mature in less than five years, and the entire portfolio was
classified as held to maturity.
Over the past five and one-quarter fiscal years, Bridgeport Savings'
funding needs have been substantially met through retail deposits, internal cash
flows and retained earnings. From fiscal year end 1992 through March 31, 1997,
the Association's deposits declined at a 2.9 percent annual rate. Bridgeport
Savings' deposit composition has consistently reflected a relatively high
concentration of lower costing transaction and savings accounts; however, in
recent years, the Association's deposit composition has exhibited a shift
towards a higher concentration of CDs. The shift in deposit composition has been
attributable to positive growth in the
<PAGE> 14
RP Financial, LC.
Page 1.7
CD balance, as well as to a decline in the transaction and savings account
balance. Disintermediation of money market funds has accounted for most of the
decline in the Association's transaction and savings account balance, reflecting
a trend nationally in which depositors have sought higher returns through other
investment alternatives such as mutual funds. As of March 31, 1997, CDs
comprised 51.4 percent of the Association's deposits, versus a comparative ratio
of 36.2 percent at December 31, 1993. Over the past five and one-quarter fiscal
years, Bridgeport Savings' use of borrowings has been limited to nominal
balances of FHLB advances, as deposit run-off has been funded by asset shrinkage
and the retention of earnings.
Positive earnings during the past five and one-quarter fiscal years
translated into an annual capital growth rate of 7.9 percent for the
Association. Capital growth combined with a decline in assets served to increase
Bridgeport Savings' equity-to-assets ratio from 9.5 percent at the end of fiscal
1992 to 14.1 percent at March 31, 1997. All of the Association's capital is
tangible capital, and the Association maintained significant capital surpluses
relative to all of its regulatory capital requirements at March 31, 1997. The
addition of conversion proceeds will serve to strengthen Bridgeport Savings'
capital position and competitive posture within its primary market area, as well
as support expansion into other nearby markets if favorable growth opportunities
are presented. At the same time, as the result of the Association's relatively
high pro forma capital position, which will likely exceed 25.0 percent of
assets, Bridgeport Savings' return on equity ("ROE") can be expected to be well
below industry averages following its conversion.
Income and Expense Trends
- -------------------------
The Association has reported positive earnings over the last five and
one-quarter fiscal years, ranging from a low of 0.59 percent of average assets
for the twelve months ended March 31, 1997 to a high of 1.06 percent of average
assets in fiscal 1995 (see Table 1.2). Earnings during the most recent twelve
month period and for fiscal 1996 were depressed by the one time special
assessment to recapitalize the SAIF. Consistent with the Association's
traditional thrift operating mode, net interest income and operating expenses
have been the dominant factors in Bridgeport Savings' earnings. Non-interest
operating income has been a limited contributor to the Association's earnings,
while the Association's generally favorable credit quality measures limited the
impact of loss provisions on earnings as well. Gains and losses realized from
the sale of loans and investments have not been a factor in the Association's
earnings, reflecting Bridgeport Savings' philosophy of retaining all loan
originations for portfolio and holding investments to maturity.
Bridgeport Savings' level of net interest income before provision for loan
losses peaked at 4.02 percent of average assets in fiscal 1995, paralleling the
peak in earnings posted by the Association. The net interest income to average
assets ratio trended steadily higher from fiscal 1992 through fiscal 1995,
increasing from
<PAGE> 15
RP Financial, LC
Page 1.8
Table 1.2
Bridgeport Savings and Loan Association
Historical Income Statements
(Amount and Percent of Avg. Assets)(1)
<TABLE>
<CAPTION>
For the Fiscal Year Ended December 31,
-------------------------------------------------------------------------
1992 1993 1994 1995
--------------- --------------- --------------- -----------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $2,866 7.53% $2,486 6.84% $2,298 6.73% $2,478 7.28%
Interest Expense (1,611) -4.23% (1,184) -3.26% (982) -2.88% (1,108) -3.25%
------- ------ ------- ------ ----- ------ ------- ------
Net Interest Income $1,255 3.30% $1,302 3.58% $1,316 3.86% $1,370 4.02%
Provision for Loan Losses (4) -0.01% (54) -0.15% (17) -0.05% 0 0.00%
--- ------ ---- ------ ---- ------ - -----
Net Interest Income after Provisions $1,251 3.29% $1,248 3.43% $1,299 3.81% $1,370 4.02%
Other Income 25 0.07% 30 0.08% 46 0.13% 42 0.12%
Operating Expense (807) -2.12% (765) -2.10% (848) -2.48% (865) -2.54%
----- ------ ----- ------ ----- ------ ----- ------
Net Operating Income $469 1.23% $513 1.41% $497 1.46% $547 1.61%
Non-Operating Income
- --------------------
Net gain(loss) on sales of securities $0 0.00% $0 0.00% $0 0.00% $0 0.00%
Net gain(loss) on REO 0 0.00% 0 0.00% 32 0.09% 0 0.00%
Other non-operating income(loss) 0 0.00% 0 0.00% 0 0.00% 0 0.00%
- ----- - ----- - ----- - -----
Net Non-Operating Income 0 0.00% 0 0.00% 32 0.09% 0 0.00%
Net Income Before Tax $469 1.23% $513 1.41% $529 1.55% $547 1.61%
Income Taxes (172) -0.45% (150) -0.41% (174) -0.51% (186) -0.55%
Change in Acctg. Principle -- -- (43) -- -- 0.00% 0 0.00%
-- --- ---- --- --- ----- - -----
Net Income (Loss) $297 0.78% $320 0.88% $355 1.04% $361 1.06%
Core Earnings
- -------------
Net Income Before Ext. Items $297 0.78% $363 1.00% $355 1.04% $361 1.06%
Addback: Non-Operating Losses 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Deduct: Non-Operating Gains 0 0.00% 0 0.00% (32) -0.09% 0 0.00%
Tax Effect Non-Op. Items(2) 0 0.00% 0 0.00% 11 0.03% 0 0.00%
- ----- - ----- -- ----- - -----
Core Net Income $297 0.78% $363 1.00% $334 0.98% $361 1.06%
<CAPTION>
For the 12 Months
1996 Ended 3/31/97
-------------- ------------------
Amount Pct Amount Pct
------ --- ------ ---
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $2,515 7.36% $2,491 7.19%
Interest Expense (1,158) -3.39% (1,156) -3.34%
------- ------ ------- ------
Net Interest Income $1,357 3.97% $1,335 3.85%
Provision for Loan Losses 0 0.00% 0 0.00%
- ----- - -----
Net Interest Income after Provisions $1,357 3.97% $1,335 3.85%
Other Income 45 0.13% 41 0.12%
Operating Expense (893) -2.61% (877) -2.53%
----- ------ ----- ------
Net Operating Income $509 1.49% $499 1.44%
Non-Operating Income
- --------------------
Net gain(loss) on sales of securities $0 0.00% $0 0.00%
Net gain(loss) on REO 0 0.00% 0 0.00%
Other non-operating income(loss) (190) -0.56% (190) -0.55%
----- ------ ----- ------
Net Non-Operating Income (190) -0.56% (190) -0.55%
Net Income Before Tax $319 0.93% $309 0.89%
Income Taxes (107) -0.31% (103) -0.30%
Change in Acctg. Principle -- -- -- --
-- --- -- ---
Net Income (Loss) $212 0.62% $206 0.59%
Core Earnings
- -------------
Net Income Before Ext. Items $212 0.62% $206 0.59%
Addback: Non-Operating Losses 190 0.56% 190 0.55%
Deduct: Non-Operating Gains 0 0.00% 0 0.00%
Tax Effect Non-Op. Items(2) (65) -0.19% (65) -0.19%
---- ------ ---- ------
Core Net Income $337 0.99% $332 0.96%
<FN>
- ----------------------------
(1) Ratios are as a percent of average assets.
(2) Assumes tax rate of 34.0 percent.
Sources: Bridgeport Savings' prospectus and audited financial statements.
</TABLE>
<PAGE> 16
RP Financial, LC.
Page 1.9
3.30 percent in fiscal 1992 to 4.02 percent in fiscal 1995. A lower interest
expense ratio provided for the increase in the net interest income ratio during
fiscal years 1993 and 1994, which was attributable to a reduction in the
Association's funding costs and an improving capital position. Comparatively,
the peak net interest income to average assets ratio posted in fiscal 1995 was
supported by an increase in the yield earned on interest-earning assets,
reflecting a shift in the interest-earning asset composition towards loans.
Loans receivable increased from 67.6 percent of assets at fiscal year end 1994
to 75.2 percent of assets at fiscal year end 1995, providing for an increase in
the yield earned on interest-earning assets from 6.94 percent to 7.54 percent
during fiscal years 1994 and 1995, respectively. Since fiscal 1995, the
Association's net interest income to average assets ratio has declined slightly,
equaling 3.85 percent during the twelve months ended March 31, 1997. A modest
decline in the interest income ratio and a modest increase in the interest
expense ratio accounted for the reduction in the net interest income to average
assets ratio, which was consistent with the narrowing of Bridgeport Savings'
yield-cost spread.
The impact of interest rates on Bridgeport Savings' net interest margin is
further revealed through examination of the Association's historical net
interest rate spreads and yields and costs set forth in Exhibits I-3 and I-5. In
general, trends in the Association's net interest margin paralleled the widening
and narrowing of the yield-cost spread. After peaking at 3.76 percent during
fiscal 1995, Bridgeport Savings' interest rate spread declined to 3.62 percent
and 3.47 percent during fiscal year 1996 and the three months ended March 31,
1997, respectively. The narrowing of the Association's interest rate spread
resulted from an increase in funding costs during fiscal 1996 and a lower yield
earned on interest-earning assets during the first quarter of fiscal 1997.
Higher deposit rates and a shift in deposit composition towards CDs accounted
for the increase in the Association's funding costs during fiscal 1996. The
decline in yield recorded during the first quarter of fiscal 1997 was the result
of a reduction in the level of loans comprising interest-earning assets, as well
as lower yields earned on loans and investments.
Consistent with the Association's adherence to a traditional thrift
operating philosophy and resultant limited diversification, sources of
non-interest operating income have not been a significant contributor to the
Association's earnings. Throughout the period shown in Table 1.2, sources of
non-interest operating income have ranged from a low of 0.07 percent of average
assets in fiscal 1992 to a high of 0.13 percent of average assets in fiscal
years 1994 and 1996. Sources of non-interest operating income consist
substantially of service charges, fees and miscellaneous sources of non-interest
operating income. At this time, the Association has no plans to diversify into
activities that would generate additional non-interest operating income, and,
thus, Bridgeport Savings' earnings can be expected to remain highly dependent
upon the net interest margin.
Bridgeport Savings' operating expense ratio has generally trended higher
over the past five and one-quarter fiscal years, ranging from a low of 2.10
percent of average assets in fiscal 1993 to a high of 2.61 percent
<PAGE> 17
RP Financial, LC.
Page 1.10
of average assets in fiscal 1996. For the twelve months ended March 31, 1997,
the Association's operating expense to average assets ratio equaled 2.53
percent. The upward trend exhibited in the operating expense ratio, during
fiscal years 1994 through 1996, was the result of normalized increases in
operating expenses and asset shrinkage, while, comparatively, the decline in the
operating expense ratio recorded during the most recent twelve month period was
realized through asset growth and a modest reduction in operating expenses.
Further upward pressure will be placed on the Association's operating expense
ratio following the conversion, due to expenses associated with operating as a
publicly-traded company, including expenses related to the stock benefit plans.
While operating expenses will be higher following the conversion, the
Association will also be in a better position to leverage operating expenses
following the infusion of stock proceeds.
Loss provisions established by the Association have not had a significant
impact on earnings over the past five and one-quarter fiscal years, which has
been supported by the maintenance of favorable credit quality measures. In fact,
during the past two and one-quarter fiscal years, no loan loss provisions have
been established by the Association. However, due to a recent increase in the
Association's non-performing loan balance, it may become necessary for
Bridgeport Savings to establish additional loss provisions. As of March 31,
1997, the Association maintained valuation allowances of $143,000, equal to 0.57
percent of net loans receivable and 66.8 percent of non-performing assets.
Exhibit I-6 sets forth the Association's loan loss allowance activity during the
past three and one-quarter fiscal years.
The one time assessment to recapitalize the SAIF has been the only
significant non-recurring item to impact the Association's earnings in recent
years. Bridgeport Savings' assessment was $190,000, equaling 0.55 percent of
average assets for the twelve months ended March 31, 1997. Gains and losses
resulting from the sale of investments and loans were not a factor in the
Association's earnings over the past five and one-quarter fiscal years.
Similarly, with the exception of fiscal 1994, gains and losses realized from the
sale of real estate did not impact Bridgeport Savings' earnings. In fiscal 1994,
the Association recorded a $32,000 gain on the sale of real estate owned.
Interest Rate Risk Management
- -----------------------------
Bridgeport Savings' balance sheet is liability-sensitive, as the
Association's interest-earning assets are primarily funded with deposits that
mature or are subject to repricing within one year. Comparatively, a relatively
higher concentration of Bridgeport Savings' interest-earning assets mature or
reprice in more than one year; particularly, with respect to the Association's
portfolio of 1-4 family loans. As of March 31, 1997, of the total loans due
after one year from March 31, 1997, fixed rate loans comprised 83.9 percent of
those loans (see Exhibit I-7).
<PAGE> 18
RP Financial, LC.
Page 1.11
Bridgeport Savings pursues management of interest rate risk from both the
asset and liability sides of the balance, with the intent of maintaining a
certain degree of interest rate risk that will provide for enhanced
profitability during periods of low and declining interest rates. Strategies
implemented by the Association to support control of interest rate risk on the
asset side include emphasizing the origination of short-term fixed rate loans
(primarily 15-year terms) and maintaining relatively high levels of liquidity
and short-term investments. On the liability side, management of interest rate
risk is largely pursued through maintaining a high concentration of deposits in
transaction and savings accounts, which tend to be lower costing and less
interest-rate sensitive than CDs.
The short-term repricing mismatch between the Association's interest-rate
sensitive assets and liabilities indicates that net interest income will be
somewhat inconsistent in various interest rate environments, with declining and
low interest rate environments being more beneficial to Bridgeport Savings' net
interest margin. Comparatively, the Association's net interest margin is
adversely impacted by rising and higher interest rates, as highlighted by the
recent narrowing of Bridgeport Savings' yield-cost spread. However, given the
Association's current IEA/IBL ratio of 115.3 percent, which will become stronger
following the infusion of conversion proceeds, Bridgeport Savings has the
capacity to take on a certain degree of interest rate risk and sustain positive,
although lower, core earnings during periods of moderately rising interest
rates.
Lending Activities and Strategy
- -------------------------------
The Association's lending activities have concentrated on the origination
and retention of 1-4 family permanent mortgage loans (see Exhibits I-8 and I-9,
which reflect loan composition and lending activity, respectively). As of March
31, 1997, 1-4 family permanent mortgage loans accounted for $20.7 million or
82.0 percent of Bridgeport Savings' total loan portfolio. The Association second
and third largest category of loans were consumer and commercial real
estate/multi-family loans, which totaled $3.8 million, or 15.0 percent, and
$466,000, or 1.8 percent, of gross loans outstanding, respectively, at March 31,
1997. The balance of the loan portfolio was comprised of construction, land and
commercial business loans. Exhibit I-10 provides the contractual maturity of the
Association's loan portfolio, by loan type, as of March 31, 1997.
Bridgeport Savings' originates both fixed rate and adjustable rate 1-4
family loans, retaining all originations for portfolio. To enhance the
interest-rate sensitivity of the loan portfolio, 15-year fixed rate loans are
currently being emphasized by the Association. Various ARM loan products are
offered by Bridgeport Savings, and currently consist of loans with 1, 2, 3, and
5 year repricing periods. ARM loans are indexed to the quarterly National
Average Cost of Funds to SAIF Insured Institutions. The repricing adjustment is
set at the time of origination, with typical repricing adjustments providing for
a 2.0 percent cap for each repricing period
<PAGE> 19
RP Financial, LC.
Page 1.12
and a 5.0 percent lifetime cap. ARM loans are typically priced at rates that are
comparable to the Association's fixed rate loans. The origination of ARM loans
has not been an active lending market for the Association, with substantially
all 1-4 family loan demand currently consisting of fixed rate originations.
Bridgeport Savings offers fixed rate 1-4 family loans with terms of up to 25
years, although most originations currently have terms of 15 years or less. A
loan-to-value ratio of 80.0 percent or less is generally required for all 1-4
family loan originations.
To supplement the origination of 1-4 family loans, Bridgeport Savings
purchases a limited amount of 1-4 family loan participations from time-to-time.
Loan participations are purchased from other Ohio-based institutions, and
consist of fixed rate loans which meet the Association's internal underwriting
standards. Typically, Bridgeport Savings purchases a 90.0 percent participating
interest in the loans, with the seller retaining a 10.0 percent interest and the
servicing on the loans. Loan participation purchases are expected to be a
limited source of loans for the Association going forward.
On a limited basis, the Association originates construction loans to
finance the construction of 1-4 family residences. As of March 31, 1997,
Bridgeport Savings' construction loan balance totaled $124,00, or 0.5 percent of
the total loan portfolio. The construction loan balance represented a loan in
process due to the halt of construction. The Association's construction lending
activities consist of loans to finance the construction of pre-sold
single-family houses, which are extended as a construction/permanent loan.
Construction/permanent loans require payment of interest only during the
construction period and are originated under the same terms as 1-4 family
permanent mortgage loans.
Land loans serve as a complement to the Association's 1-4 family lending
activities, as they consist of single-family lot loans extended to individuals
for building their primary residence. As of March 31, 1997, the Association's
land loan balance amounted to $79,000 or 0.3 percent of the loan balance. Terms
of land loans offered by the Association generally require a LTV ratio of 75.0
percent or less and are three year balloon loans priced at a higher rate than
the comparable 1-4 family loan rate. Both construction and land lending are
expected to remain as minor areas of lending diversification for the
Association.
Commercial real estate and multi-family loans held by the Association are
collateralized by properties in its normal lending territory. In recent year
years, Bridgeport Savings has been largely inactive in originating commercial
real estate and multi-family loans. Commercial real estate and multi-family
loans are generally extended up to a LTV ratio of 80.0 percent and are
originated as either adjustable or fixed rate loans. Consistent with the higher
credit risk associated with commercial real estate and multi-family loans, loan
rates offered on those loans are at a premium to the Association's 1-4 family
loan rates. Properties securing the commercial real estate and multi-family loan
portfolio include a church and a used car lot. Commercial real
<PAGE> 20
RP Financial, LC.
Page 1.13
estate and multi-family lending are expected to remain as minor areas of lending
diversification for the Association.
Diversification into non-mortgage lending has consisted substantially of
consumer loans. Direct auto loans comprise the largest concentration of consumer
loan portfolio ($1.8 million as of March 31, 1997), and are extended up to
6-year terms and a maximum LTV ratio of 90.0 percent for new cars. The balance
of the consumer loan portfolio consists of loans secured by deposits and
miscellaneous other closed end loans, including home equity loans. Home equity
loans are offered as fixed rate loans with terms of up to 10 years and a maximum
LTV ratio of 80.0 percent of the combined balance of the home equity loan and
the first lien. Consumer lending is a desire growth area for the Association,
with such growth expected to be primarily realized in the types of consumer
loans currently offered by Bridgeport Savings.
Other non-mortgage loans held by the Association consist of a nominal
amount of commercial business loans ($101,000 as of March 31, 1997), which are
secured loans extended to local businesses. Commercial business lending is
currently not an active lending area for the Association and, thus, commercial
business loans are expected to remain as a very minor area of lending
diversification for Bridgeport Savings.
Exhibit I-9, which shows the Association's loan originations over the past
three and one-quarter fiscal years, highlights Bridgeport Savings' lending
emphasis on 1-4 family permanent mortgage loans and consumer loans. During the
past three and one-quarter fiscal years, originations of 1-4 family permanent
mortgage loans and consumer loans accounted for $7.0 million, or 44.9 percent,
and $6.5 million, or 41.6 percent, of total loans originated, respectively.
Construction loan originations constituted the largest component of the
Association's remaining lending activities over the past three and one-quarter
fiscal years ($1.3 million or 8.6 percent of total originations), although no
construction loans have been originated by the Association during the past one
and one-quarter fiscal years. Positive loan growth was recorded during fiscal
years 1994 and 1995, respectively, which was followed by loan portfolio
shrinkage during fiscal 1996. The net decline in the fiscal 1996 loan balance
largely resulted from a decline in 1-4 family loan originations and an increase
in loan repayments. Slightly positive loan growth was recorded for the first
quarter of fiscal 1997, which was supported by increased originations of both
1-4 family permanent mortgage loans and consumer loans. Bridgeport Savings'
lending strategy going forward is expected to remain fairly consistent with
recent historical trends, and, thus, the origination of 1-4 family permanent
mortgage loans and consumer loans are expected to remain as the Association's
most prominent lending activities.
<PAGE> 21
RP Financial, LC.
Page 1.14
Asset Quality
- -------------
The Association's historical 1-4 family lending emphasis has generally
supported favorable credit quality measures. Over the past five and one-quarter
fiscal years, Bridgeport Savings' non-performing assets-to-assets ratio has
ranged from a low of 0.02 percent at fiscal year ends 1994 and 1995 to a high of
0.62 percent at March 31, 1997. The recent increase exhibited in the
Association's non-performing assets ratio may be in part attributable to the
prolonged strike that has been occurring at Wheeling Pittsburgh Steel, which is
a major employer in the Association's local market area. Non-performing assets
held by the Association at March 31, 1997 consisted of $200,000 of non-accruing
loans and $14,000 of real estate owned. As shown in Exhibit I-11, the
concentration of the Association's non-performing loans consist of 1-4 family
permanent mortgage loans.
The Association reviews and classifies assets on a monthly basis, and
determines the adequacy of loan loss provisions accordingly. At March 31, 1997,
the Association had $96,000 of loans classified as doubtful, and no loans
classified as substandard or loss. The Association maintained valuation
allowances of $143,000 at March 31, 1997, equal to 0.57 percent of net loans
receivable and 66.8 percent of non-performing assets.
Funding Composition and Strategy
- --------------------------------
Deposits have consistently been the Association's primary source of funds,
and at March 31, 1997 deposits constituted 100 percent of Bridgeport Savings'
interest-bearing liabilities. Exhibit I-12 sets forth the Association's
historical deposit composition and Exhibit I-13 provides the interest rate and
maturity composition of the CD portfolio at March 31, 1997. The Association's
deposit composition has consistently reflected a relatively high concentration
of lower costing savings and transaction accounts, with such deposits accounting
for 48.6 percent of Bridgeport Savings' total deposits at March 31, 1997. Over
the past two and one-quarter fiscal years, the Association's deposit composition
has shifted towards an increase in CDs. In comparison to the 48.6 percent ratio
maintained at March 31, 1997, transaction and savings accounts comprised 51.3
percent of Bridgeport Savings' total deposits at December 31, 1995. The shift in
deposit composition resulted from both a decline in savings and transaction
accounts and an increase in CDs. Overall, the Association's total balance of
deposits has declined slightly over the past two and one-quarter fiscal years.
As with most thrifts today, the concentration of the Association's CDs have
short-term maturities. As of March 31, 1997, the CD portfolio totaled $15.1
million, with 76.5 percent of those CDs having maturities of one year or less.
Jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $5.1
million, or 33.7 percent of Bridgeport Savings' total CDs at March 31, 1997.
Bridgeport Savings generally does not pay premium rates for higher balance CDs.
The Association does not utilize brokered CDs and typically offers CD rates that
are priced in the middle of the range of rates offered by its local competitors.
<PAGE> 22
RP Financial, LC.
Page 1.15
Bridgeport Savings generally does not use borrowings as a funding source
and the Association maintained no borrowings at March 31, 1997. Bridgeport
Savings' deposit growth, internal funding and conversion proceeds are expected
to be adequate enough to fund the substantial portion of the Association's
lending and investment activities for the intermediate-term. If borrowings are
needed, the Association has ample borrowing capacity with the FHLB of
Cincinnati. The Association is expected to borrow from the Holding Company to
finance the purchase of ESOP shares.
Subsidiary
- ----------
At March 31, 1997, the Association had one wholly-owned subsidiary,
Trailway Financial, Inc. ("Trailway"). Trailway was formed to acquire stock in
Intrieve Inc., the Association's data processing servicing company. The
Association's investment in its subsidiary totaled $20,000 at March 31, 1997.
Under current regulations, the Association is no longer required to hold the
Intrieve, Inc. stock in a separate subsidiary and has decided to dissolve
Trailway.
Legal Proceedings
- -----------------
The Association is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition of the Association.
<PAGE> 23
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
- ------------
Bridgeport Savings conducts operations out of its main office in
Bridgeport, Ohio, which includes a full service branch facility, and a full
service branch in Shadyside, Ohio. Both offices are located in Belmont County,
Ohio, which borders the state line and is located across the Ohio River from
Wheeling, West Virginia. The primary market area for Bridgeport Savings is
considered to be Belmont County, supplemented by additional business generated
in the nearby surrounding counties of Ohio and Marshall, both of which are
located in West Virginia. Exhibit II-1 provides information on the Association's
office facilities.
A community-oriented institution, Bridgeport Savings has conducted business
in Belmont County for over 100 years since it was established in 1893. In this
regard, the Association has developed strong ties to the local community and
benefits from a loyal customer base. However, as part of the Wheeling MSA,
Bridgeport Savings faces notable competition from a number of community-oriented
financial institutions, as well regional banks and credit unions. The market
area is somewhat rural in nature, with coal mining and heavy industry
historically serving as the basis of the local economy. Demographic trends in
Bridgeport Savings' primary market area have been negatively impacted by the
decline of those industries, thereby limiting the attractiveness of the market
area in terms of providing growth opportunities for the Association.
Future growth opportunities for Bridgeport Savings depend in part on
national economic factors, the future growth in the market area, which has been
measured by indicators such as demographic growth trends, the health and
stability of the regional and local economy, and the nature and intensity of the
competitive environment for financial institutions. These factors have been
briefly examined to help determine the growth potential that exists for the
Association, and the relative economic health of the Association's market area.
Market Area Demographics
- ------------------------
Demographic and economic growth trends, measured by changes in population,
number of households, age distribution and median household income, provide key
insight into the health of the Association's market area (see Table 2.1). In the
1990s, the Association's market area has exhibited less favorable growth
characteristics than the comparative growth rates of Ohio and the U.S. Belmont
County's population declined slightly from 1990 to 1996, versus comparative
increases posted by Ohio and the U.S. The decline in Belmont County's population
reflects the flight of younger and middle-aged residents to more attractive
economic areas, resulting in an aging population in Belmont County. The median
age of Belmont
<PAGE> 24
RP Financial, LC.
Page 2.2
Table 2.1
Bridgeport Savings and Loan Association
Summary Demographic Data
<TABLE>
<CAPTION>
Year
------------------------------------------------ Growth Rate Growth Rate
POPULATION (000) 1990 1996 2001 1990-96 1996-2001
- ---------------- ---- ---- ---- ------- ---------
<S> <C> <C> <C> <C> <C>
UNITED STATES 248,710 265,295 278,802 1.1% 1.0%
OHIO 10,847 11,200 11,483 0.5% 0.5%
BELMONT COUNTY 71 70 70 -0.2% -0.2%
HOUSEHOLDS (000)
- ----------------
UNITED STATES 91,947 98,239 103,293 1.1% 1.0%
OHIO 4,088 4,229 4,337 0.6% 0.5%
BELMONT COUNTY 28 28 28 -0.2% -0.2%
MEDIAN HOUSEHOLD INCOME ($)
- ---------------------------
UNITED STATES $29,199 $34,530 $33,189 2.8% -0.8%
OHIO 29,276 32,102 29,751 1.5% -1.5%
BELMONT COUNTY 24,469 21,703 18,708 -2.0% -2.9%
PER CAPITA INCOME - ($)
- -------------------------
UNITED STATES $13,179 $16,405 ---- 4.5% N/A
OHIO 12,788 15,376 ---- 3.8% N/A
BELMONT COUNTY 11,145 10,976 ---- -0.3% N/A
1996 AGE DISTRIBUTION(%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Year Median Age
- ------------------------ ---------- ----------- ----------- ----------- --------- -----------
UNITED STATES 22.0 13.7 31.6 19.9 22.8 34.3
OHIO 21.9 13.9 30.1 20.4 13.6 35.0
BELMONT COUNTY 21.7 13.6 25.6 22.9 16.1 38.1
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1996 HH INCOME DIST.(%) $15,000 25,000 $50,000 $100,000 $150,000 $150,000+
- ----------------------- ------- ------ ------- -------- -------- ---------
UNITED STATES 19.7 15.6 34.0 24.4 4.3 2.1
OHIO 18.7 18.4 37.2 21.3 3.2 1.2
BELMONT COUNTY 24.4 22.6 36.6 14.2 1.5 0.7
</TABLE>
Source: CACI.
<PAGE> 25
RP Financial, LC.
Page 2.3
County residents was 38.1 years in 1996, versus comparative U.S. and Ohio
measures of 34.3 years and 35.0 years, respectively. Growth in households
mirrored the population growth rates, further evidencing the less favorable
growth characteristics associated with Belmont County. Belmont County's less
favorable demographic trends can be largely attributed to the decline of the
coal industry, triggered by the implementation of stricter environmental
regulations and utilization of cleaner-burning sources of energy, such as
natural gas and petroleum-based fuels, that have gradually been replacing coal
as an energy source. Over the next five years, population and household growth
trends are projected to remain slightly negative in the Association's primary
market area. Comparatively, Ohio and the U.S. are projected to sustain positive
growth in population and households over the next five years, with their
projected growth rates being slightly less than recent historical trends.
Median household and per capita income measures for Belmont County were
well below the Ohio and U.S. comparative measures in 1996. In general, the lower
than average income levels in the market area reflect the market area's somewhat
rural nature and largely blue collar workforce. The growth rates of median
household and per capita income in Belmont County from 1990 to 1996 were
slightly negative, versus slightly positive comparative growth rates exhibited
by Ohio and the U.S. The declining income measures for Belmont County highlight
that the local economy has been going through a downturn, which has led to
declines in population and households. Consistent with the U.S. and Ohio,
household income is projected to decline in Belmont County over the next five
years. A slightly steeper decline is projected for Belmont County's household
income compared to the U.S. and Ohio, with Belmont County's median household
income in the year 2001 projected to be significantly lower than the 1990
median. In summary, the demographic characteristics of Belmont County are not
considered to be highly conducive for loan or deposit growth, and, thus,
Bridgeport Savings' growth will be somewhat contingent upon gaining market share
or expanding into markets that offer more favorable growth opportunities.
National Economic Factors
- -------------------------
Over the past year, national economic growth has been mixed. In early-April
1996 inflation concerns became more prominent as the result of a stronger than
expected March 1996 employment report; however, other economic indicators
suggested that the pace of economic growth was moderate and inflation was under
control. Inflation concerns were further heightened in late-April, as the result
of higher oil and commodity prices; although, wages, which account for most of
the inflation measures, did not signal that inflation was heating up.
Unemployment data for both May and June suggested a strong pace of economic
growth, with the stronger than expected job growth pushing interest rates
higher. However, other economic measures, such as consumer and producer prices,
reflected a more modest pace of economic growth.
<PAGE> 26
RP Financial, LC.
Page 2.4
The third quarter of 1996 started with a continuation of second quarter
trends, although mid-July Congressional testimony by the Federal Reserve
Chairman hinted of expectations that the economy would taper off slightly in the
second half of 1996. However, much of the economic data released during July and
August continued to indicate a fairly robust pace of economic growth. Such
economic data included a stronger than expected increase in July durable goods
orders, the consumer confidence index hitting a six year high and a decline in
the August unemployment rate. Comparatively, for the balance of the third
quarter, economic data, such as a decline in August durable goods orders and
smaller than expected increases in August retail sales and consumer prices,
suggested that the economy was cooling off. A slight increase in the September
unemployment rate further signaled a slowing economy.
Economic data released at the beginning of the fourth quarter generally
confirmed that the national economy was slowing. October 1996 unemployment
remained at 5.2 percent, although the number of new jobs being added to the
economy was lower compared to job growth recorded during the late-spring and the
summer. Third quarter GDP growth fell to a 2.2 percent annual rate, versus a
comparative 4.7 percent rate in the second quarter. Wage data also indicated
that inflation was under control, as wages remained flat for production and
nonsupervisory workers in October, despite a $0.50 increase in the minimum wage
rate that became effective on October 1, 1996. While the November unemployment
rate climbed to 5.4 percent from 5.2 percent in October, inflation concerns were
heightened somewhat by an unexpectedly sharp $0.09 jump in average hourly
earnings. However, most of the economic data released at the close of 1996,
which included jobless claims rising to a five month high in November and a
decline in November durable goods orders, suggested that the economy was
sluggish and non-inflationary.
While fourth quarter GDP growth came in at a stronger than expected 4.7
percent annual growth rate (subsequently revised to 3.9 percent), most of the
economic data released during the beginning of the first quarter of 1997
indicated a continuation of moderate economic growth. Such measures as a 1.9
percent decline in December durable goods orders and a modest uptick in the
January 1997 unemployment rate to 5.4 percent, versus 5.3 percent in December
1996, eased concerns that the economy was overheating. However, the increase in
the unemployment rate was attributable to more people entering the job force, as
some markets were beginning to experience labor shortages. In congressional
testimony at the end of February 1997, the Federal Reserve Chairman indicated
that he anticipated recent signs of lower job insecurity among workers would
lead to upward pressure in wages, which could possibly trigger the Federal
Reserve to boost interest rates. Signs of inflation became more notable during
March and April, with most economic indicators posting month-to-month increases
from January to February. Most notably, during February industrial production
increased 0.5 percent, housing starts rose 12.2 percent and the sale of existing
homes jumped 9.0 percent. Accelerating economic growth was further indicated by
a decline in the March unemployment rate to 5.2
<PAGE> 27
RP Financial, LC.
Page 2.5
percent, versus 5.3 percent for February, and a higher than expected rise in the
March "core" producer price index, which posted its largest increase in 18
months.
Indications of strong economic growth continued into early-May 1997, as
first quarter GDP growth was measured at 5.8 percent and the April unemployment
rate declined to 4.9 percent. The April unemployment measure was the lowest rate
recorded since 1973. Consumer spending was up dramatically in the first quarter
as well. However, despite the strong growth measures, inflation data indicated
that the economy was not overheating. Prices increased at a modest 2.2 percent
annual rate in the first quarter, which was down from 2.6 percent in the fourth
quarter of 1996. Inflation concerns were further moderated by the balanced
budget agreement reached by the President and Congress in early-May, and April
economic data which generally indicated a slowing pace of economic growth. The
April economic data reflected falling retail sales and producer prices, while
factory production declined for the first time in more than a year. At the end
of May, low unemployment and a favorable job market provided for a 27-year high
in the Consumer Confidence index for May. The labor market showed signs of
further tightening in early-June, as indicated by the May unemployment rate
declining to 4.8 percent of the work force - the lowest level since November
1973.
Consistent with the mixed economic activity, interest rate trends have been
varied as well over the past year. Generally improving economic conditions and
indications that the Federal Reserve would not cut interest rates further,
started an upward trend in interest rates during the first quarter of 1996.
Interest rates continued to edge higher during the second quarter of 1996, as
the 30-year U.S. Government bond yield climbed above 7.0 percent following the
stronger than expected May job growth reported in early-June. In early-July, the
release of a strong June employment report had a more severe effect on bond
prices, as the large drop in unemployment provided for one of the largest one
day declines in bond prices with the yield on the 30-year benchmark bond
increasing from 6.93 percent to 7.18 percent. After trending lower for a brief
period during early- and mid-August, interest rates moved higher in late-August
and early-September as inflation concerns were raised by the stronger than
expected economic growth.
The Federal Reserve's decision not to raise interest rates at its September
and October 1996 meetings, along with economic data providing indications of a
cooling economy, translated into a declining interest rate environment during
late-September and through most of October. Interest rates continued to edge
lower through November, as the October economic data suggested that inflationary
pressures were non-threatening. Bond prices declined slightly in early-December,
as investors focused on weakness in the dollar and rising oil prices. Concern
over Japanese investors slowing their buying of U.S. Treasury notes caused bond
prices to slide in mid-December, despite economic data which continued to
indicate mild inflation. Interest rates were somewhat trendless at the close of
1996, as the Federal Reserve elected not to change interest rates at its
December meeting.
<PAGE> 28
RP Financial, LC.
Page 2.6
With few inflationary signs, interest rates held steady at the beginning of
1997, which was followed by a mild easing in interest rates during the first
half of February. Indications of slowing economic growth and the Federal
Reserve's decision to leave rates unchanged at its early-February meeting
spurred the downward trend in interest rates. However, interest rates edged
higher in late-February, following renewed concerns by the Federal Reserve
Chairman over the sharp rise in the stock market during the past two years.
After stabilizing briefly, the strengthening economy and growing expectations of
a rate increase by the Federal Reserve propelled interest rates higher in
late-March. The Federal Reserve increased short-term interest rates by 0.25
percent in late-March, which was followed by a sharp sell-off in the bond
market. For the first time in six months, the rate on the 30-year benchmark bond
moved above 7.0 percent in late-March.
Inflation concerns pushed interest rates higher during the first half of
April, which was followed by a slight decline in interest rates on rumors of a
national budget accord. News of the budget agreement and favorable inflation
data sustained the rally in bond prices through early-May. Interest rates
stabilized in mid-May, as the Federal Reserve opted not to raise interest rates
at its May meeting. The high level of consumer confidence indicated by the May
reading caused the 30-year bond yield to briefly edge above 7.0 percent in
late-May, which was followed by a mild rally in bond prices on expectations of
slowing economic growth. Despite inflation concerns sparked by the May
unemployment data, bond prices surged higher on the day the unemployment data
was released. As of June 6, 1997, one- and thirty-year U.S. Government bonds
were yielding 5.68 percent and 6.77 percent, respectively. Exhibit II-2 provides
historical interest rate trends from 1991 through June 6, 1997.
Local Economy
- -------------
As part of the Wheeling MSA, Belmont County's economy is heavily influenced
by economic activity in the Wheeling Metropolitan area. Wheeling's economy has
historically been based in coal mining, steel manufacturing and the manufacture
of other products such as chemicals and aluminum. Coal is the most abundant
natural resource available in Belmont County and Belmont County has historically
led the State of Ohio in coal production. The general decline that has been
experienced in the coal mining and steel-related industries has had a ripple
effect on the regional economy, providing for fewer employment opportunities
overall. Further depressing the local economy has been the strike of steel
workers at Wheeling Pittsburgh Steel, which has negatively affected the local
economy since mid-September 1996. As the result of the prolonged strike, the
Association has recently began to experience an increase in 1-4 family
delinquencies. Table 2.2 provides a listing of the major employers in the
Wheeling metropolitan area.
<PAGE> 29
RP Financial, LC.
Page 2.7
Table 2.2
Bridgeport Savings and Loan Association
Major Employers in the Wheeling Metropolitan Area
<TABLE>
<CAPTION>
Employer Location Employment
-------- -------- ----------
<S> <C> <C>
Wheeling Hospital Wheeling, WV 1,700
Consolidation Coal Moundsville, WV 1,514
Bayer Corporation New Martinsville, WV 1,470
Kroger Food & Drug St. Clairsville, OH 1,400
Wheeling Park Commission (in-season) Wheeling, WV 1,000
Ohio Valley Medical Center Wheeling, WV 954
PPG Industries New Martinsville, WV 810
Ohio County Public School System Wheeling, WV 800
Marshall County Public School System Moundsville, WV 750
Wheeling Pittsburgh Steel Martins Ferry, OH 650
</TABLE>
Source: Wheeling Area Chamber of Commerce.
Industry employment data for Belmont County indicates a decline in
manufacturing and mining jobs, with employment growth primarily occurring in
lower paying service jobs. Based on 1994 data (the most recent data available),
the largest employment sector in Belmont County is the services industry (27.2
percent of total employment) followed by retail trade (26.9 percent of total
employment) and the government sector (13.9 percent of total employment).
Manufacturing jobs accounted for only 7.0 percent of Belmont County's employment
in 1994, and 12.5 percent of total employee earnings.
Unemployment trends for Belmont County, Ohio and the U.S. are displayed in
Table 2.3. The lack of economic growth in Belmont County is further evidenced by
its relatively high unemployment rate, which was well above the comparative U.S.
and Ohio measures. Going forward, it is not anticipated that there will be any
dramatic near term changes in Belmont County's unemployment measure, as
indicated by recent historical trends.
<PAGE> 30
RP Financial, LC.
Page 2.8
Table 2.3
Bridgeport Savings and Loan Association
Unemployment Trends(1)
<TABLE>
<CAPTION>
March 1996 March 1997
Region Unemployment Unemployment
------ ------------ ------------
<S> <C> <C>
United States 5.8% 5.5%
Ohio 5.5 5.2
Belmont County 8.0 10.5
<FN>
(1) Unemployment rates have not been seasonally adjusted.
Source: U.S. Bureau of Labor Statistics.
</TABLE>
Competition
- -----------
Competition among financial institutions in the Association's market is
fierce. As larger institutions compete for market share to achieve economies of
scale, the market environment for Bridgeport Savings' products and services is
expected to become increasingly competitive in the future. Smaller institutions
such as Bridgeport Savings will be forced either to compete with larger
institutions on pricing, or to identify and operate in a "niche" that will allow
for operating margins to be maintained at profitable levels.
Bridgeport Savings' retail deposit base is closely tied to the economic
fortunes of Belmont County, where both of the Association's branches are
maintained. Table 2.4 displays deposit market trends for Belmont County, with
additional data presented for the State of Ohio. The data indicates that deposit
growth in the Association's primary market area was slightly positive and less
than the Ohio deposit growth rate. Belmont County's deposit growth was the
result of growth in commercial bank deposits, which was partially offset by a
decline in thrift deposits and, to a lesser extent, a decline in credit union
deposits. The decline in thrift deposits was largely attributable to the trend
of consolidation, in which commercial banks have sought to expand market share
through acquiring thrifts.
Bridgeport Savings' deposit balance exhibited little change from June 30,
1994 through June 30, 1996, which served to preserve its market share of Belmont
County deposits at 3.1 percent. As a percent of thrift deposits, the
Association's market share of Belmont County deposits increased from 8.4 percent
at June 30, 1994 to 12.2 percent at June 30, 1996.
Future deposit growth may potentially be enhanced by the conversion, as the
additional capital will improve Bridgeport Savings' competitive position and
leverage capacity. The Association should also continue
<PAGE> 31
RP Financial, LC.
Page 2.9
--------------------------------------------------------
Table 2.4
Bridgeport Savings and Loan Association
Deposit Summary
--------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
As of June 30,
--------------------------------------------------------------------------
1994 1996
---------------------------------- ------------------------------------- Deposit
Market Number of Market No. of Growth Rate
Deposits Share Branches Deposits Share Branches 1994-1996
-------- ----- -------- -------- ----- -------- ---------
(Dollars In Thousands) (%)
A. Deposit Summary
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
State of Ohio $135,360,615 100.0% 3,954 $145,735,626 100.0% 4,307 3.8%
Commercial Banks 92,563,754 68.4% 3,028 105,326,951 72.3% 2,984 6.7%
Credit Unions 8,102,445 6.0% NA 8,458,828 5.8% 563 2.2%
Savings and Loans 34,694,416 25.6% 926 31,949,847 21.9% 760 -4.0%
Belmont County $946,321 100.0% 40 $965,226 100.0% 37 1.0%
Commercial Banks 586,135 61.9% 29 712,709 73.8% 28 10.3%
Credit Unions 8,281 0.9% NA 7,785 0.8% 2 -3.0%
Savings and Loans 351,905 37.2% 11 244,732 25.4% 7 -16.6%
Bridgeport S&LA (1) 29,727 8.4% 2 29,746 12.2% 2 0.0%
Bridgeport S&LA (2) 3.1% 3.1%
<FN>
(1) Percent of S&L deposits.
(2) Percent of total deposits.
Source: FDIC; OTS.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
RP Financial, LC.
Page 2.10
to benefit from its favorable image as a locally-owned and community-oriented
institution. At the same time, the economic and demographic trends of the
primary market area may negatively impact deposit growth opportunities for the
Association. To augment the growth that is possible internally, Bridgeport
Savings may seek opportunities to expand the Association's growth potential
through acquiring branches or another financial institution in nearby markets.
However, at this time, the Association has no definite plans to acquire
additional branches or other financial institutions.
<PAGE> 33
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
reflective This chapter presents an analysis of Bridgeport Savings'
operations versus a group of comparable savings institutions (the "Peer Group")
selected from the universe of all publicly-traded savings institutions. The
basis of the pro forma market valuation of Bridgeport Savings is provided by
these institutions. Factors affecting the Association's pro forma value such as
financial condition, credit risk, interest rate risk, loan composition and
recent operating results can be readily assessed in relation to the Peer Group.
Current market pricing of the Peer Group, subject to appropriate adjustments to
account for differences between Bridgeport Savings and the Peer Group, will then
be used as a basis for the pro forma valuation of Bridgeport Savings'
to-be-issued common stock.
Selection of Peer Group
- -----------------------
We consider the appropriate Peer Group to be comprised of only those
publicly-traded savings institutions whose common stock is either listed on a
national exchange or is NASDAQ listed, since the market for companies trading in
this fashion is regular and reported. We believe non-listed institutions are
inappropriate since the trading activity for thinly-traded stocks is typically
highly irregular in terms of frequency and price and may not be a reliable
indicator of market value. We have also excluded from the Peer Group those
companies under acquisition, mutual holding companies and recent conversions,
since their pricing ratios are subject to distortion and/or do not have a
seasoned trading history.
From the universe of publicly-traded thrifts, we selected eleven
institutions with characteristics similar to those of Bridgeport Savings. In the
selection process, one "screen" was applied to the universe of all
publicly-traded thrifts:
o SCREEN #1. OHIO AND WEST VIRGINIA INSTITUTIONS WITH ASSETS OF LESS
THAN $300 MILLION, EQUITY-TO-ASSETS RATIOS OF GREATER THAN 8.0
PERCENT, POSITIVE CORE EARNINGS BETWEEN 0.50 PERCENT AND 1.50 PERCENT
OF AVERAGE ASSETS, AND NON-PERFORMING ASSETS-TO-ASSETS RATIOS OF LESS
THAN 2.0 PERCENT. Fifteen companies met the criteria for Screen #1
(Exhibit III-2), and eleven were included in the Peer Group. All
eleven of the companies are based in Ohio: ASB Financial Corp.,
Community Investors Bancorp, Enterprise Federal Bancorp, FFD Financial
Corp., First Franklin Corp., Glenway Financial Corp., Harvest Home
Financial Corp., London Financial Corp., Milton Federal Financial
Corp., OHSL Financial Corp. and Wood Bancorp. All four of the
companies excluded from the Peer Group were recent conversions:
Advance Financial Bancorp of West Virginia (conversion completed
January 1997), Delphos Citizens Bancorp of Ohio (conversion completed
November 1996), Home City Financial Corp. of Ohio (conversion
completed December 1996), and Market Financial Corp. of Ohio
(conversion completed March 1997).
<PAGE> 34
RP Financial, LC.
Page 3.2
Table 3.1 on the following page shows the general characteristics of each
of the Peer Group companies and Exhibit III-3 provides summary demographic data
for the primary market areas served by each of the Peer Group companies. While
there are some differences between the Peer Group companies and Bridgeport
Savings, we believe that the Peer Group provides a good representation of
publicly-traded thrifts with operations comparable to those of the Association
and, thus, will provide a good basis for the valuation. The following sections
present a comparison of Bridgeport Savings' financial condition, income and
expense trends, loan composition, interest rate risk and credit risk versus the
Peer Group. The conclusions drawn from the comparative analysis are then
factored into the valuation analysis discussed in the final chapter.
A summary description of the key characteristics of each of the Peer Group
companies, which we determined warranted their inclusion as a comparable
institution to Bridgeport Savings, is detailed below.
o ASB Financial Corp. of OH. Selected due to Ohio market area, traditional
thrift operating strategy, strong capital position, high concentration of
cash and investments comprising interest-earning assets, and similar
funding composition.
o Community Investors Bancorp. of OH. Selected due to Ohio market area,
traditional thrift operating strategy, small asset size, similar
interest-earning asset mix, strong net interest margin, similar core
earnings strength, high concentration of 1-4 family permanent mortgage
loans comprising MBS and loan portfolio, and comparable credit quality
measures.
o Enterprise Federal Bancorp. of OH. Selected due to Ohio market area,
traditional thrift operating strategy, strong capital position, and
favorable credit quality measures.
o FFD Financial Corp. of OH. Selected due to Ohio market area, traditional
thrift operating strategy, strong capital position, small asset size,
similar core earnings strength, high concentration of MBS and 1-4 family
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
o First Franklin Corp. of OH. Selected due to Ohio market area, traditional
thrift operating strategy, similar funding composition, high concentration
of MBS and 1-4 family permanent mortgage loans comprising the MBS and loan
portfolio, and similar credit quality measures.
o Glenway Financial Corp. of OH. Selected due to Ohio market area,
traditional thrift operating strategy, high concentration of MBS and 1-4
family permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
o Harvest Home Fin. Corp. of OH. Selected due to Ohio market area,
traditional thrift operating strategy, small asset size, strong capital
position, high concentration of cash and investments comprising
interest-earning assets, similar concentration of 1-4 family permanent
mortgage loans comprising the loan and MBS portfolio, and favorable credit
quality measures.
<PAGE> 35
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
June 11, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ -------
($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 281 6 06-30 11/90 24.75 28
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 246 D 5 09-30 10/94 19.00 38
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 230 4 12-31 02/93 23.75 29
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 226 7 12-31 01/88 19.87 23
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 179 2 09-30 10/94 14.12 33
FFWD Wood Bancorp of OH OTC Northern OH Thrift 163 6 06-30 08/93 16.00 24
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 109 1 06-30 04/95 11.75 20
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 97 3 06-30 02/95 19.00 12
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 85 1 06-30 04/96 13.75 20
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 84 D 3 09-30 10/94 10.50 10
LONF London Financial Corp. of OH OTC Central OH Thrift 38 1 09-30 04/96 15.00 8
<FN>
NOTES: (1) Or most recent date available (M=March, S=September, D=December, J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
</TABLE>
Source: Corporate offering circulars, data derived from information
published in SNL Securities Quarterly Thrift Report, and financial
reports of publicly-traded thrifts.
Date of Last Update: 06/11/97
<PAGE> 36
RP Financial, LC.
Page 3.4
o London Financial Corp. of OH. Selected due to Ohio market area, traditional
thrift operating strategy, small asset size, strong capital position,
similar concentration of loans comprising interest-earnings assets,
comparable funding composition, similar core earnings strength, strong net
interest margin, high concentration of MBS and 1-4 family permanent
mortgage loans comprising the MBS and loan portfolio, and similar credit
quality measures.
o Milton Federal Financial Corp. of OH. Selected due to Ohio market area,
traditional thrift operating strategy, strong capital position, high
concentration of cash and investments comprising interest-earning assets,
similar concentration of 1-4 family permanent mortgage loans comprising the
MBS and loan portfolio, and favorable credit quality measures.
o OHSL Financial Corp. of OH. Selected due to Ohio market area, traditional
thrift operating strategy, similar concentration of loans comprising
interest-earning assets, and favorable credit quality measures.
o Wood Bancorp. of OH. Selected due to Ohio market area, traditional thrift
operating strategy, strong capital position, strong net interest margin,
similar level of operating expenses, similar concentration of 1-4 family
permanent mortgage loans comprising the MBS and loan portfolio, and
favorable credit quality measures.
In aggregate, the Peer Group is more highly capitalized than the industry
average (13.98 percent of assets versus 12.85 percent for the all SAIF average),
generates a comparable return on average assets (0.86 percent core ROAA versus
0.84 percent for the all SAIF average), and generates a lower return on equity
(5.98 percent core ROE versus 7.35 percent for the all SAIF average). Overall,
the Peer Group's average P/B ratio and core P/E multiple were below and above
the respective comparable SAIF averages.
<TABLE>
<CAPTION>
As of June 6, 1997
------------------
Peer All SAIF
Group Insured
----- --------
<S> <C> <C>
Equity-to-Assets 13.98% 12.85%
Core Return on Assets ("ROA") 0.86 0.84
Core Return on Equity ("ROE") 5.98 7.35
Price-to-Book Ratio ("P/B") 110.42% 128.40%
Core Price-to-Earnings Multiple ("P/E") 18.91x 17.72x
Price-to-Assets Ratio ("P/A") 15.25% 15.64%
</TABLE>
Source: Table 4.4 - Chapter IV Valuation Analysis.
Ideally, the Peer Group companies would be comparable to Bridgeport Savings
in terms of all of the selection criteria, but the universe of publicly-traded
thrifts does not provide for an appropriate number of such
<PAGE> 37
RP Financial, LC.
Page 3.5
companies. However, in general, the companies selected for the Peer Group were
fairly comparable to Bridgeport Savings, as will be highlighted in the following
comparative analysis.
Financial Condition
- -------------------
Table 3.2 shows comparative balance sheet measures for Bridgeport Savings
and the Peer Group, reflecting the expected similarities and some differences
given the selection procedures outlined above. The Association's and the Peer
Group's ratios reflect balances as of March 31, 1997. Bridgeport Savings' net
worth base of 14.1 percent approximated the Peer Group's average net worth ratio
of 14.0 percent. Accordingly, with the consummation of the conversion and
infusion of the net conversion proceeds, the Association's pro forma
equity-to-assets ratio will be well above the Peer Group's ratio. All of
Bridgeport Savings' capital consisted of tangible capital, while two of the Peer
Group companies maintained nominal balances of goodwill. Bridgeport Savings'
higher pro forma capital position will be favorable from a risk perspective and
in terms of future earnings potential that could be realized through leverage
and lower funding costs. However, at the same time, the Association's high pro
forma capitalization will likely result in a relatively low return on equity for
an extended period of time. Both the Association's and the Peer Group's capital
ratios reflected significant capital surpluses with respect to the regulatory
capital requirements, with the Association's ratios currently indicating
slightly greater capital surpluses.
The interest-earning asset compositions for the Association and the Peer
Group were somewhat similar, with loans and mortgage-backed securities
constituting the bulk of interest-earning assets for both Bridgeport Savings and
the Peer Group. Bridgeport Savings' combined level of loans and mortgage-backed
securities was lower than the Peer Group's ratio (75.1 percent versus 79.7
percent for the Peer Group), with the Association's higher concentration of
loans being more than offset by the Peer Group's higher concentration of
mortgage-backed securities. Comparatively, Bridgeport Saving' cash and
investments-to-assets ratio was higher than the comparable ratio for the Peer
Group (23.0 percent versus 18.0 percent for the Peer Group). Overall, Bridgeport
Savings' interest-earning assets amounted to 98.1 percent of assets, which was
similar to the comparative Peer Group ratio of 97.7 percent.
Bridgeport Savings' funding liabilities reflect a funding strategy similar
to that of the Peer Group's funding composition. The Association's deposits
equaled 85.1 percent of assets, which was higher than the Peer Group average of
74.1 percent. Deposits accounted for all of Bridgeport Savings' interest-bearing
liabilities, while the Peer Group posted a borrowings-to-assets ratios of 11.0
percent. Accordingly, the Association was considered to have slightly greater
borrowing capacity than the Peer Group, although both Bridgeport Savings and the
Peer Group were considered to have ample borrowing capacities. Total interest-
<PAGE> 38
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of March 31, 1997
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan
- ---------------------------
March 31, 1997 23.0 72.4 2.7 85.1 0.0 0.0 14.1 0.0 14.1 0.0
SAIF-Insured Thrifts 17.9 66.7 11.6 71.7 14.3 0.2 12.5 0.2 12.2 0.0
State of OH 16.5 72.6 8.0 73.2 11.6 0.2 14.0 0.2 13.8 0.1
Comparable Group Average 18.0 69.2 10.5 74.1 11.0 0.0 14.0 0.0 14.0 0.0
Mid-West Companies 18.0 69.2 10.5 74.1 11.0 0.0 14.0 0.0 14.0 0.0
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 23.4 64.8 8.4 79.8 2.2 0.0 15.7 0.0 15.7 0.0
CIBI Community Inv. Bancorp of OH 20.6 76.1 2.0 73.9 14.0 0.0 11.5 0.0 11.5 0.0
EFBI Enterprise Fed. Bancorp of OH(1) 13.5 65.6 18.8 58.1 28.4 0.0 12.7 0.0 12.7 0.0
FFDF FFD Financial Corp. of OH 15.2 62.2 21.0 64.1 10.1 0.0 24.7 0.0 24.7 0.0
FFHS First Franklin Corp. of OH 13.9 67.6 16.8 87.9 2.8 0.0 8.8 0.1 8.8 0.0
GFCO Glenway Financial Corp. of OH 6.7 82.8 6.5 81.0 8.1 0.0 9.6 0.1 9.4 0.0
HHFC Harvest Home Fin. Corp. of OH(1) 32.5 51.1 14.3 69.0 17.9 0.0 12.4 0.0 12.4 0.0
LONF London Financial Corp. of OH 12.3 76.3 9.9 77.3 2.1 0.0 19.9 0.0 19.9 0.0
MFFC Milton Fed. Fin. Corp. of OH 23.4 63.9 9.8 76.0 8.8 0.0 14.7 0.0 14.7 0.0
OHSL OHSL Financial Corp. of OH 21.7 71.1 5.1 75.6 12.3 0.0 11.0 0.0 11.0 0.0
FFWD Wood Bancorp of OH 15.0 80.4 2.8 72.1 14.4 0.0 12.7 0.0 12.7 0.0
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan
- ---------------------------
March 31, 1997 0.02 14.81 -3.58 -0.51 0.00 5.25 5.25 14.07 14.07 29.77
SAIF-Insured Thrifts 12.81 3.95 13.24 7.60 23.45 -1.59 -2.09 10.86 10.91 22.90
State of OH 12.74 1.42 15.72 4.70 43.29 0.40 1.05 11.96 11.73 23.72
Comparable Group Average 9.30 -3.82 14.62 2.15 45.51 -9.03 -9.00 11.23 10.95 22.10
Mid-West Companies 9.30 -3.82 14.62 2.15 45.51 -9.03 -9.00 11.23 10.95 22.10
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH -2.06 -13.82 1.65 5.56 68.38 -33.23 -33.23 12.15 12.15 27.02
CIBI Community Inv. Bancorp of OH 13.59 7.33 15.51 0.65 NM -5.46 -5.46 10.40 10.40 20.60
EFBI Enterprise Fed. Bancorp of OH( 18.64 -34.04 35.41 7.23 75.00 -3.55 -3.46 11.40 11.40 21.30
FFDF FFD Financial Corp. of OH 11.98 -39.04 34.68 -18.53 NM NM NM 15.80 15.80 34.10
FFHS First Franklin Corp. of OH 4.68 4.68 4.91 6.20 -13.47 -2.89 -3.57 6.38 6.38 14.72
GFCO Glenway Financial Corp. of OH 2.53 -10.04 3.20 2.65 15.87 1.34 2.19 NM 8.50 13.70
HHFC Harvest Home Fin. Corp. of OH( 18.98 9.87 23.97 2.00 NM -20.70 -20.70 NM NM NM
LONF London Financial Corp. of OH 1.03 -42.35 13.16 0.28 NM -3.79 -3.79 15.50 15.50 29.70
MFFC Milton Fed. Fin. Corp. of OH 4.11 1.68 4.33 8.37 39.85 -23.20 -23.20 12.20 12.20 26.30
OHSL OHSL Financial Corp. of OH 11.85 79.19 1.94 6.62 87.44 -0.60 -0.60 8.92 8.92 18.74
FFWD Wood Bancorp of OH 17.02 -5.52 22.01 2.58 NM 1.80 1.80 8.29 8.29 14.77
<FN>
(1) Financial information is for the quarter ending December 31, 1996.
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 39
RP Financial, LC.
Page 3.7
bearing liabilities as a percent of assets equaled 85.1 percent for both the
Association and the Peer Group, reflecting the comparability of their respective
equity-to-assets ratios.
A key measure of balance sheet strength for a thrift institution is its
IEA/IBL ratio. Presently, the Association's IEA/IBL ratio is comparable to the
Peer Group's ratio, based on respective ratios of 115.3 percent and 114.8
percent. The additional capital realized from stock proceeds should serve to
provide Bridgeport Savings with a more significant IEA/IBL ratio advantage over
the Peer Group, as the interest free capital realized in Bridgeport Savings'
stock offering will be deployed into interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. Bridgeport Savings' growth rates are based on annualized
growth for the fifteen months ended March 31, 1997, while the Peer Group's
growth rates are based on annual growth for the twelve months ended March 31,
1997. Nominal asset growth was recorded by the Association, which was
significantly less than the Peer Group's asset growth rate of 9.3 percent. The
approximately flat asset balance maintained by Bridgeport Savings was the result
of shrinkage in loans and mortgage-backed securities being offset by growth in
cash and investments. Comparatively, the Peer Group posted a 14.6 growth rate in
loans and mortgage-backed securities, which was partially negated by a slight
decline in cash and investments. Overall, the Peer Group's asset growth measures
would tend to support greater earnings growth relative to the Association's
measures.
Retained earnings funded the Association's modest asset growth, as well as
a slight decline in deposits. The Peer Group's asset growth was funded by
deposits and borrowings, with the Peer Group's lower balance of borrowings
exhibiting a significantly higher growth rate. In fact, the Peer Group's
borrowings growth rate shown in Table 3.2 is somewhat understated, as it does
not include the borrowings growth rates of the Peer Group companies which
recorded a more than 100 percent increase in borrowings during the twelve month
period. For the period shown in Table 3.2, all five of the Peer Group companies
with "NMs" indicated as borrowing growth rates in Table 3.2 posted borrowing
growth rates in excess of 100 percent.
Capital growth rates posted by the Association and the Peer Group equaled
positive 5.3 percent and negative 9.0 percent, respectively. Bridgeport Savings'
capital growth rate was realized through the retention of earnings.
Comparatively, dividend payments and stock repurchases, as well as possible SFAS
115 adjustments, were factors that more than offset the Peer Group's positive
earnings. Following the increase in capital realized from conversion proceeds,
the Association's capital growth rate will be depressed by its higher pro forma
capital position, as well as by possible dividend payments and stock repurchase
programs.
<PAGE> 40
RP Financial, LC.
Page 3.8
Income And Expense Components
- -----------------------------
Bridgeport Savings and the Peer Group reported net income to average assets
ratios of positive 0.59 percent and positive 0.58 percent, respectively (see
Table 3.3), based on earnings for the twelve months ended March 31, 1997. Both
the Association's and the Peer Group's earnings were depressed by the one time
assessment to recapitalize the SAIF. With the exception of the SAIF assessment,
the Association's and the Peer Group's earnings were fairly representative of
their core earnings. In terms of core earnings measures, the Association
maintained both a higher net interest margin and a higher level of operating
expenses than the comparative Peer Group ratios, while non-interest operating
income was a limited contributor to both the Association's and the Peer Group's
earnings.
The Association's stronger net interest margin resulted from a lower
interest expense ratio, which was partially offset by the Peer Group's higher
interest income ratio. As highlighted in the yield-cost section of Table 3.3,
the Peer Group's higher interest income ratio was realized through earning a
slightly higher yield on interest-earning assets, reflecting the higher yielding
composition of the Peer Group's interest-earning assets (higher concentration of
loans and MBS and lower concentration of cash and investments). Likewise,
Bridgeport Savings' lower interest expense ratio was realized through
maintaining a lower cost of funds, which was attributable to the Association's
absence of borrowings and maintenance of a relatively high concentration of
deposits in lower costing savings and transaction accounts. Following the
infusion of conversion proceeds, the Association's interest expense ratio should
also benefit from decline in the level of interest-bearing liabilities being
utilized to fund assets. Overall, Bridgeport Savings and the Peer Group reported
net interest income to average assets ratios of 3.85 percent and 3.31 percent,
respectively.
In another key area of core earnings strength, the Association and the Peer
Group reported operating expense to average assets ratios of 2.53 percent and
2.10 percent, respectively. It should be noted that the one time SAIF assessment
expense has been reflected as a non-operating item for both the Association and
the Peer Group companies. Accordingly, the operating expense ratios posted by
the Association and the Peer Group were considered to be representative of their
recurring operating expenses. Bridgeport Savings' higher operating expense ratio
can in part be explained by the relatively high number of employees maintained
for its asset size, as indicated by assets per full time equivalent employee
measures of $2.7 million and $4.5 million for the Association and the Peer
Group, respectively. The Association's lower ratio is largely attributable to
maintaining two full service branch offices, which is relatively high number of
offices for Bridgeport Savings' asset size. Assets per branch equaled $17.3
million for the Association, versus a comparative measure of $44.6 million for
the Peer Group. The absence of asset growth has also served to place upward
pressure on Bridgeport Savings' operating expense ratio in recent years.
<PAGE> 41
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1997
<TABLE>
<CAPTION>
Net Interest Income Other Income
---------------------------- -------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ------ ------- ------- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan
- ---------------------------
March 31, 1997 0.59 7.19 3.34 3.85 0.00 3.85 0.00 0.00 0.12 0.12
SAIF-Insured Thrifts 0.63 7.36 4.10 3.26 0.14 3.12 0.12 0.01 0.28 0.42
State of OH 0.70 7.47 4.13 3.34 0.05 3.28 0.05 0.00 0.21 0.26
Comparable Group Average 0.58 7.42 4.11 3.31 0.05 3.26 0.01 -0.01 0.14 0.13
Mid-West Companies 0.58 7.42 4.11 3.31 0.05 3.26 0.01 -0.01 0.14 0.13
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 0.61 7.49 4.09 3.40 0.02 3.38 0.00 0.02 0.20 0.22
CIBI Community Inv. Bancorp of OH 0.67 7.73 4.18 3.54 0.15 3.39 0.00 -0.13 0.12 -0.01
EFBI Enterprise Fed. Bancorp of OH(1) 0.68 7.40 4.41 3.00 0.05 2.94 0.00 0.00 0.05 0.05
FFDF FFD Financial Corp. of OH 0.77 6.84 3.54 3.30 0.00 3.30 0.00 0.00 0.06 0.06
FFHS First Franklin Corp. of OH 0.14 7.23 4.49 2.74 0.04 2.70 0.05 0.00 0.12 0.17
GFCO Glenway Financial Corp. of OH 0.38 7.40 4.32 3.08 0.07 3.02 0.00 0.00 0.24 0.25
HHFC Harvest Home Fin. Corp. of OH(1) 0.21 7.02 4.07 2.95 0.00 2.95 0.00 0.00 0.08 0.08
LONF London Financial Corp. of OH 0.74 7.54 3.82 3.71 0.00 3.71 0.00 0.00 0.17 0.17
MFFC Milton Fed. Fin. Corp. of OH 0.53 7.37 4.15 3.23 0.09 3.14 0.01 0.00 0.12 0.13
OHSL OHSL Financial Corp. of OH 0.60 7.66 4.39 3.27 0.01 3.26 0.00 0.00 0.14 0.14
FFWD Wood Bancorp of OH 1.00 7.98 3.79 4.19 0.08 4.11 0.00 0.00 0.22 0.22
<CAPTION>
G&A/Other Exp. Non-Op. Items Yields, Costs, and Spreads
---------------- -------------- -------------------------
MEMO: MEMO:
G&A Goodwill Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Expense Amort. Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- ------- ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan
- ---------------------------
March 31, 1997 2.53 0.00 -0.55 0.00 7.51 3.97 3.54 2,659 33.33
SAIF-Insured Thrifts 2.21 0.02 -0.34 0.00 7.39 4.64 2.75 9,248 35.93
State of OH 2.11 0.02 -0.36 0.00 7.29 4.64 2.66 4,075 35.04
Comparable Group Average 2.10 0.01 -0.43 0.00 7.59 4.91 2.68 4,546 33.73
Mid-West Companies 2.10 0.01 -0.43 0.00 7.59 4.91 2.68 4,546 33.73
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 2.28 0.00 -0.40 0.00 7.71 5.22 2.49 4,757 33.92
CIBI Community Inv. Bancorp of OH 1.88 0.00 -0.50 0.00 7.83 4.80 3.03 NM 33.12
EFBI Enterprise Fed. Bancorp of OH(1) 1.87 0.01 -0.10 0.00 7.55 5.22 2.34 6,659 32.83
FFDF FFD Financial Corp. of OH 1.75 0.00 -0.45 0.00 6.95 4.64 2.31 NM 33.54
FFHS First Franklin Corp. of OH 1.92 0.02 -0.71 0.00 7.38 4.97 2.40 4,814 32.84
GFCO Glenway Financial Corp. of OH 2.12 0.08 -0.47 0.00 7.70 4.86 2.85 4,320 37.20
HHFC Harvest Home Fin. Corp. of OH(1) 2.28 0.00 -0.49 0.00 7.17 4.86 2.31 NM 31.79
LONF London Financial Corp. of OH 2.31 0.00 -0.52 0.00 7.66 4.88 2.78 NM 30.23
MFFC Milton Fed. Fin. Corp. of OH 2.17 0.00 -0.30 0.00 7.57 5.06 2.51 3,575 33.90
OHSL OHSL Financial Corp. of OH 2.08 0.00 -0.40 0.00 7.84 5.03 2.81 3,895 34.95
FFWD Wood Bancorp of OH 2.39 0.00 -0.35 0.00 8.11 4.42 3.70 3,802 36.75
<FN>
(1) Financial information is for the quarter ending December 31, 1996.
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 42
RP Financial, LC.
Page 3.10
When viewed together, net interest income and operating expenses provide
considerable insight into a thrift's earnings strength, since those sources of
income and expenses are typically the most prominent components of earnings and
are generally more predictable than losses and gains realized from the sale of
assets or other non-recurring activities. In this regard, as measured by their
expense coverage ratios (net interest margin divided by the operating expense
ratio), Bridgeport Savings' earnings strength was similar to the Peer Group's.
Expense coverage ratios posted by Bridgeport Savings and the Peer Group equaled
1.52x and 1.57x, respectively. An expense coverage ratio of greater than 1.0x
indicates that an institution is able to sustain pre-tax profitability without
having to rely on non-interest sources of income.
Sources of non-interest operating income made minor contributions to the
Association's and the Peer Group's earnings, with such income amounting to 0.12
percent and 0.13 percent of Bridgeport Savings' and the Peer Group's average
assets, respectively. The modest amount of the Association's and the Peer
Group's earnings realized from non-interest operating income is consistent with
their traditional thrift operating strategies, which typically provides for
limited diversification into services that generate non-interest operating
income. Real estate operations were not a material factor in either Bridgeport
Savings' or the Peer Group's non-interest operating income, which was indicative
of their favorable credit quality measures and, in particular, their limited
holdings of real estate owned.
Loan loss provisions established by the Association and the Peer Group were
also reflective of favorable credit quality measures and low risk operating
strategies, as Bridgeport Savings did not establish any loan loss provisions
during the period and loan loss provisions established by the Peer Group
amounted to 0.05 percent of average assets. Net gains were negative for both the
Association and the Peer Group, with such losses amounting to 0.55 percent and
0.43 percent of average assets, respectively. The net loss recorded by the
Association was solely attributable to the special SAIF assessment. Due to the
lower level of deposits maintained by the Peer Group companies on average (74.1
percent of assets versus 85.1 percent for the Association), the special SAIF
assessment had less of an impact on the Peer Group's earnings as a percent of
average assets. Gains realized from the sale of loans and investments may have
also contributed to the lower net loss posted by the Peer Group. Gains and
losses resulting from the sale of loans and investments are generally viewed as
being non-recurring in nature, given that they are highly dependent upon
interest rate movements and typically do not represent a core earnings activity
for a thrift. Similarly, the special SAIF assessment is also viewed as a
non-recurring item. Accordingly, the Association's and the Peer Group's net
losses will be discounted in evaluating the relative strengths and weaknesses of
their respective earnings. Extraordinary items were not a factor in either the
Association's or the Peer Group's earnings.
Overall, net of the SAIF assessment expense, the Association's and the Peer
Group's reported earnings were fairly representative of their core earnings.
<PAGE> 43
RP Financial, LC.
Page 3.11
Loan Composition
- ----------------
Table 3.4 presents data related to the loan composition of Bridgeport
Savings and the Peer Group. An emphasis on low risk residential lending was
apparent in both the Association's and the Peer Group's loan compositions, with
1-4 family permanent mortgage loans and mortgage-backed securities accounting
for 82.6 percent of both the Association's and the Peer Group's loan and MBS
portfolios. The equal ratios were the result of the Association's higher
concentration of 1-4 family loans being offset by the Peer Group's higher
concentration of mortgage-backed securities. Bridgeport Savings' philosophy of
retaining all loan originations for portfolio translated into a zero balance of
loans serviced for others, versus a comparative balance of $15.7 million for the
Peer Group. Four of the Peer Group companies with loans serviced for others
portfolios maintained a modest amount of servicing intangibles.
As indicated by the similar percentage of 1-4 family loans and
mortgage-backed securities maintained by Bridgeport Savings and the Peer Group,
the degree of lending diversification exhibited by the Association and the Peer
Group was also comparable. Bridgeport Savings' lending diversification consisted
substantially of consumer loans (14.5 percent of loans and MBS), followed by
commercial real estate and multi-family loans (1.8 percent of loans and MBS).
Comparatively, the Peer Group's primary area of lending diversification
consisted of commercial real estate and multi-family loans (10.4 percent of
loans and MBS), followed by construction and land loans (4.9 percent of loans
and MBS) and commercial business loans (4.0 percent of loans and MBS).
Commercial business and construction loans represented very minor areas of
lending diversification for Bridgeport Savings, while the Peer Group's
diversification into consumer loans was very limited. The comparable degree of
diversification into higher risk types of lending provided for similar risk
weighted assets-to-assets ratios of 48.5 percent and 47.4 percent for Bridgeport
Savings and the Peer Group, respectively. Overall, both the Association's and
the Peer Group's risk weighted assets ratios were indicative of relatively low
risk operating strategies, as both ratios were lower than the SAIF-insured
average of 51.0 percent.
Interest Rate Risk
- ------------------
Table 3.5 reflects various key ratios highlighting the relative interest
rate risk exposure of the Association versus the Peer Group companies. In terms
of balance sheet composition, Bridgeport Savings' interest rate risk
characteristics were considered to be similar to the Peer Group's, as indicated
by the comparability of their equity-to-assets ratios and IEA/IBL ratios.
Likewise, the Association and the Peer Group maintained comparable levels of
non-interest earning assets, indicating similar earnings capacities that can be
realized from the yield- cost spread. On a pro forma basis, the infusion of
stock proceeds should serve
<PAGE> 44
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of March 31, 1997
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan 3.59 79.02 0.78 1.78 0.39 14.45 48.54 0 0
SAIF-Insured Thrifts 15.13 61.71 5.55 11.64 6.52 1.68 51.04 340,525 2,490
State of OH 10.25 67.32 7.40 12.19 5.59 1.02 51.81 192,563 1,268
Comparable Group Average 12.06 70.50 4.91 10.43 3.97 0.93 47.36 15,729 25
Comparable Group
- ----------------
ASBP ASB Financial Corp. of OH 12.68 60.02 1.83 15.47 8.70 3.03 46.19 0 0
CIBI Community Inv. Bancorp of OH 3.02 81.36 0.51 6.47 9.47 1.17 52.80 0 0
EFBI Enterprise Fed. Bancorp of OH(1) 15.39 59.90 10.40 16.17 3.60 0.58 56.41 0 0
FFDF FFD Financial Corp. of OH 23.02 72.12 2.41 3.43 0.84 0.00 42.97 0 0
FFHS First Franklin Corp. of OH 21.49 62.81 4.83 10.65 2.24 0.00 44.26 54,055 66
GFCO Glenway Financial Corp. of OH 9.28 74.59 4.06 11.71 0.35 0.00 62.90 61,949 0
HHFC Harvest Home Fin. Corp. of OH(1) 12.69 77.59 0.00 9.90 0.00 0.00 12.41 0 0
LONF London Financial Corp. of OH 12.94 69.79 8.24 11.50 2.21 0.61 51.65 0 0
MFFC Milton Fed. Fin. Corp. of OH 11.69 78.68 7.02 5.52 1.70 0.00 46.34 10,243 114
OHSL OHSL Financial Corp. of OH 6.50 61.03 9.30 20.75 5.39 0.97 47.69 23,416 26
FFWD Wood Bancorp of OH 3.92 77.57 5.38 3.20 9.17 3.82 57.33 23,351 67
<FN>
(1) Financial information is for the quarter ending December 31, 1996.
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 45
RP Financial, LC.
Page 3.13
Table 3.5
Bridgeport Savings and Loan Association and the Peer Group
Interest Rate Risk Comparative Analysis
<TABLE>
<CAPTION>
Interest-Earning Non Interest-
Assets/ Earning
Equity/ Interest-Bearing Assets(2)/
Assets Liabilities(1) Assets
------------ -------------- ---------
(%) (%) (%)
<S> <C> <C> <C>
Bridgeport Saving(3) 14.1% 115.3% 2.4%
Peer Group Average 14.0% 115.3% 2.5%
Peer Group(4)
- -------------
ASB Financial Corp. of OH 15.7% 117.8% 4.4%
Community Inv. Bancorp of OH 11.5% 112.3% 2.0%
Enterprise Fed. Bancorp of OH 12.7% 113.2% 2.0%
FFD Financial Corp. of OH 24.7% 132.6% 1.7%
First Franklin Corp. of OH 8.8% 108.4% 2.2%
Glenway Financial Corp. of OH 9.6% 107.7% 4.1%
Harvest Home Fin. Corp. of OH 12.4% 112.7% 2.3%
London Financial Corp. of OH 19.9% 124.1% 2.3%
Milton Fed. Fin. Corp. of OH 14.7% 114.5% 3.0%
OHSL Financial Corp. of OH 11.0% 111.4% 2.0%
Wood Bancorp of OH 12.7% 113.5% 1.8%
</TABLE>
Net Interest Income Analysis
----------------------------
<TABLE>
<CAPTION>
Change Change Change Change
During in Assoc.'s in Peer Group's in 1 Year in 30 Year
Quarter Ended Net Int. Inc.(5) Net Int. Inc.(5) T-Bill T-Bond
------------- ---------------- ---------------- ------ ------
(Basis Points)
<S> <C> <C> <C> <C>
3/31/96 17 0 24 71
6/30/96 -9 20 30 20
9/30/96 -5 -16 1 5
12/31/96 -4 1 -20 -28
3/31/97 2 -9 51 46
<FN>
(1) Interest-earning assets includes cash; interest-bearing liabilities
includes non-interest bearing deposits but excludes escrows.
(2) Comprised of REO, non-accruing loans, and other non interest-earning assets.
(3) Bridgeport Savings' data is as of March 31, 1997.
(4) Peer Group data is as of March 31, 1997 or most recent date available.
(5) Calculated as quarterly change in net interest income as a percent of average
assets, annualized.
</TABLE>
Source: SNL Securities.
<PAGE> 46
RP Financial, LC.
Page 3.14
to provide the Association with a comparative advantage over the Peer Group's
balance sheet characteristics, particularly in terms of increasing Bridgeport
Savings' equity-to-assets ratio and IEA/IBL ratio.
To analyze interest rate risk associated with the net interest margin, we
reviewed quarterly changes in net interest income as a percent of average assets
for Bridgeport Savings and the Peer Group. In general, the relative fluctuations
in both the Association's and the Peer Group's net interest income to average
assets ratios were considered to be fairly limited and, thus, neither Bridgeport
Savings or the Peer Group were viewed as having significant interest rate risk
exposure in their respective net interest margins. The stability of the
Association's net interest margin should be enhanced by the infusion of stock
proceeds, as interest-rate sensitive liabilities will be funding a lower portion
of Bridgeport Savings' assets.
Credit Risk
- -----------
Overall, Bridgeport Savings' credit risk exposure appears to be slightly
greater than the Peer Group's, as indicated by the modestly higher level of
non-performing assets maintained by the Association. As shown in Table 3.6,
Bridgeport Savings' ratio of non-performing assets (REO, non-accruing loans,
troubled debt restructurings and accruing loans more than 90 days past due) to
assets equaled 0.62 percent, versus a comparative ratio of 0.49 percent for the
Peer Group. Additionally, Bridgeport Savings' non-performing loans to loans
ratio was higher than the Peer Group's ratio (0.80 percent versus 0.52 percent
for the Peer Group). Loss reserve ratios further indicated less significant
credit risk exposure for the Peer Group, as the Peer Group maintained a higher
level of loss reserves as a percent of non-performing assets (103.2 percent
versus 66.8 percent for the Association) and non-performing loans (135.5 percent
versus 71.5 percent for the Association). However, the Association maintained a
slightly higher level of loss reserves as a percent of total loans (0.57 percent
versus 0.49 percent for the Peer Group). Net loan charge-offs were not a
significant factor in either the Association's or the Peer Group's earnings.
Notwithstanding the Peer Group's generally more favorable credit risk measures,
the credit risk exposure associated with the Association's credit quality
measures was considered to be relatively limited as well.
Summary
- -------
Based on the above analysis and the criteria employed by RP Financial in
the selection of the companies for the Peer Group, RP Financial concluded that
the Peer Group forms a reasonable basis for determining the pro forma market
value of Bridgeport Savings. Such general characteristics as asset size,
<PAGE> 47
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of March 31, 1997 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan 0.04 0.62 0.80 0.57 71.50 66.82 0 0.00
SAIF-Insured Thrifts 0.29 0.78 0.85 0.83 181.45 129.32 272 0.10
State of OH 0.07 0.53 0.52 0.60 154.79 105.28 137 0.02
Comparable Group Average 0.08 0.49 0.52 0.49 135.47 103.15 34 0.01
Comparable Group
- ----------------
ASBP ASB Financial Corp. of OH 0.61 1.58 1.45 1.23 84.76 50.98 0 0.00
CIBI Community Inv. Bancorp of OH 0.06 0.72 0.86 0.62 71.32 65.53 19 0.10
EFBI Enterprise Fed. Bancorp of OH(1) 0.00 0.01 0.02 0.28 NA NA 0 0.00
FFDF FFD Financial Corp. of OH 0.00 NA NA 0.27 NA NA 1 0.01
FFHS First Franklin Corp. of OH 0.06 0.62 0.65 0.62 95.70 68.29 1 0.00
GFCO Glenway Financial Corp. of OH 0.09 0.32 0.09 0.32 370.94 84.04 5 0.01
HHFC Harvest Home Fin. Corp. of OH(1) 0.00 0.15 0.29 0.26 90.48 90.48 0 0.00
LONF London Financial Corp. of OH 0.00 0.79 1.03 0.64 62.54 62.54 0 0.00
MFFC Milton Fed. Fin. Corp. of OH 0.00 0.32 0.27 0.46 172.55 91.83 0 0.00
OHSL OHSL Financial Corp. of OH 0.00 0.33 0.01 0.31 NA 68.18 5 0.01
FFWD Wood Bancorp of OH 0.02 0.10 NA 0.41 NA 346.50 347 -0.04
<FN>
(1) Financial information is for the quarter ending December 31, 1996.
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 48
RP Financial, LC.
Page 3.16
capital position, interest-earning asset composition, funding composition, core
earnings measures and loan composition all tend to support the reasonability of
the Peer Group from a financial standpoint.
<PAGE> 49
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
- ------------
This chapter presents the valuation analysis, prepared pursuant to the
approved valuation methodology promulgated by the OTS, and valuation factors
used to determine the estimated pro forma market value of the common stock of
the Holding Company. The common stock will be issued in conjunction with the
conversion of Bridgeport Savings from the mutual-to-stock form of ownership. The
valuation has been prepared utilizing the pro forma valuation methodology
promulgated by the OTS, most recently set forth in their 1994 valuation
guidelines.
Appraisal Guidelines
- --------------------
The OTS appraisal guidelines, originally released in October 1983, specify
the methodology for estimating the pro forma market value of an institution. The
methodology provides for: (1) selection of a peer group of comparable
publicly-traded institutions, subsequent guidance from the OTS limited
eligibility to only seasoned public companies in the peer group; (2) a financial
and operational comparison of the subject company to the peer group; and (3) a
valuation analysis in which the pro forma market value of the subject company is
determined based on the market pricing of the peer group as of the date of
valuation.
On October 21, 1994, the OTS released written revisions to the appraisal
guidelines, which had already been implemented in practice by the OTS. As
outlined in the guideline revisions, the basic appraisal methodology to be
followed is unchanged from the October 1983 guidelines. The revised guidelines,
however, limit the amount of a new issue discount which may be incorporated into
the valuation and thereby curtail the potential price appreciation in the
after-market.
RP Financial Approach to the Valuation
- --------------------------------------
RP Financial's valuation analysis complies with the appraisal guidelines as
revised and issued as of October 21, 1994. Accordingly, the valuation
incorporates a detailed analysis based on the Peer Group discussed in Chapter
III, incorporating "fundamental analysis" techniques. Additionally, the
valuation incorporates a "technical analysis" of recently completed stock
conversions, given the significant weight in the valuation process of limiting
the new issue discount. The pricing characteristics of recent conversions serve
as the best proxy for near-term aftermarket trading activity in newly issued
thrift shares, and the pricing characteristics of such recent conversions have
been applied to Bridgeport Savings' valuation in order to
<PAGE> 50
RP Financial, L.C.
Page 4.2
evaluate the Association's potential aftermarket trading characteristics. It
should be noted that such analysis cannot possibly fully account for all the
market forces which impact trading activity and pricing characteristics of a
stock on a given day.
The pro forma market value determined herein is a preliminary value for the
Holding Company's to-be-issued stock. Throughout the conversion process, RP
Financial will: (1) review changes in the Association's operations and financial
condition; (2) monitor the Association's operations and financial condition
relative to the Peer Group to identify any fundamental changes; (3) monitor the
external factors affecting value including, but not limited to, local and
national economic conditions, interest rates, and the stock market environment,
including the market for thrift stocks; and (4) monitor pending conversion
offerings (including those in the offering phase) both regionally and
nationally. If material changes should occur during the conversion process, RP
Financial will prepare updated valuation reports reflecting such changes and
their related impact on value, if any, over the course of the conversion
process. RP Financial will also prepare a final valuation update at the closing
of the conversion offering to determine if the preliminary range of value
continues to be appropriate.
The appraised value determined herein is based on the current market
and operating environment for the Association and for all thrifts. Subsequent
changes in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external forces (such
as natural disasters or major world events), which may occur from time to time
(often with great unpredictability) may materially impact the market value of
all thrift stocks, including Bridgeport Savings, or Bridgeport Savings' value
alone. To the extent a change in factors impacting the Association's value can
be reasonably anticipated and/or quantified, RP Financial has incorporated the
estimated impact into the valuation analysis.
Valuation Analysis
- ------------------
A fundamental analysis discussing similarities and differences relative to
the Peer Group was presented in Chapter III. The following sections focus on
differences between the Association and the Peer Group and how those differences
affect our pro forma valuation. Emphasis is placed on the specific strengths and
weaknesses of the Association relative to the Peer Group in such key areas as
financial condition, profitability, growth and viability of earnings, asset
growth, primary market area, dividends, liquidity of the issue, marketing of the
issue, management, and the effect of government regulations and/or regulatory
reform. We have also considered the market for thrift stocks, and in particular
new issues, to assess the impact on value of Bridgeport Savings coming to market
at this time.
<PAGE> 51
RP Financial, LC.
Page 4.3
1. Financial Condition
-------------------
The financial condition of an institution is an important determinant in
pro forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
Association's and the Peer Group's financial strengths are noted as follows:
o OVERALL A/L COMPOSITION. Residential assets, including 1-4 family
permanent mortgage loans and MBS, funded by retail deposits were the
primary components of both Bridgeport Savings' and the Peer Group's
balance sheets. The Association's interest-earning asset composition
exhibited higher concentrations of loans and cash and investments,
which was offset by the Peer Group's higher concentration of
mortgage-backed securities. Diversification into higher risk types of
loans was comparable for the Association and the Peer Group. Overall,
the Association's and the Peer Group's interest-earning compositions
were fairly comparable in terms of yield potential and credit risk
exposure, with the Peer Group currently maintaining slight advantages
in both areas. Both the Association's and the Peer Group's credit risk
exposure were considered to be fairly limited, as indicated by
relatively low risk weighted assets-to-assets ratios and generally
favorable credit quality measures. There were no material differences
in Bridgeport Savings' and the Peer Group's funding compositions, with
retail deposits meeting the major portion of their respective funding
needs. Borrowings were utilized to a greater degree by the Peer Group,
although both the Association and the Peer Group maintained ample
borrowing capacities. For valuation purposes, RP Financial concluded
no adjustment was warranted for the Association's asset/liability
composition.
o CREDIT QUALITY. Both the Association's and the Peer Group's credit
quality measures were indicative of limited credit risk exposure. The
Peer Group recorded more favorable credit quality measures than the
Association in terms of NPAs to assets (0.49 percent versus 0.62
percent for the Association) and reserves maintained as a percent of
NPAs (103.2 percent versus 66.8 percent for the Association). The
Association's less favorable credit quality was further indicated by
its higher ratio of non-performing loans to loans and lower reserves
maintained as percent of non-performing loans. Notwithstanding
Bridgeport Savings' less favorable credit quality measures, the
Association's measures were also indicative of relatively limited
credit exposures and, thus, the Association's credit quality and
credit risk warranted only a slight downward adjustment for valuation
purposes.
o BALANCE SHEET LIQUIDITY. The Association operated with a higher
balance of cash and investment securities than the Peer Group (23.0
percent of assets versus 18.0 percent for the Peer Group). Bridgeport
Savings and the Peer Group were considered to have ample borrowing
capacities, as Bridgeport Savings did not maintain any borrowings and
the Peer Group's borrowings amounted to 11.0 percent of assets.
Overall, the Association's current balance sheet liquidity is
considered to be more favorable than the Peer Group's, with the
infusion of conversion proceeds expected to further increase
Bridgeport Savings' balance sheet liquidity as the proceeds will
likely be initially deployed into short-term investments. However, at
the same time, the Peer Group maintains significant balance sheet
liquidity as well and, thus, RP Financial concluded that a slight
upward adjustment was warranted for the Association's balance sheet
liquidity.
o FUNDING LIABILITIES. Retail deposits served as the primary
interest-bearing source of funds for the Association and the Peer
Group, with borrowings being utilized to a slightly greater degree by
the Peer Group. Bridgeport Savings' absence of borrowings was
favorable in terms
<PAGE> 52
RP Financial, L.C.
Page 4.4
of providing for lower funding costs and greater future borrowing
capacity. For purposes of the valuation, RP Financial concluded that
Bridgeport Savings' funding composition warranted a slight upward
adjustment.
o CAPITAL. The Association operates with a similar pre-conversion
capital ratio as the Peer Group, 14.1 percent and 14.0 percent
of assets, respectively. Accordingly, Bridgeport Savings will
maintain a higher level of capital than the Peer Group following the
infusion of stock proceeds, providing the Association with greater
leverage potential. At the same time, the Association's more
significant capital surplus will likely result in a
depressed ROE for an extended period of time. Overall, RP Financial
concluded that no valuation adjustment is warranted for the
Association's capital position.
On balance, the characteristics of the Association's and the Peer Group's
financial conditions were not materially different in most respects for
valuation purposes. Bridgeport Savings' balance sheet liquidity and funding
composition represented positive valuation considerations, which was viewed as
being somewhat offset by the Peer Group's more favorable credit quality
measures. Overall, we concluded that no valuation adjustment was warranted for
the Association's financial strength.
2. Profitability, Growth and Viability of Earnings
-----------------------------------------------
Earnings are an important factor in determining pro forma market value, as
the level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings are typically heavily factored
into an investment decision. The historical income statements of Bridgeport
Savings and the Peer Group were generally reflective of traditional thrift
operating strategies, with net interest income and operating expenses being the
major determinants of their respective earnings. The specific factors considered
in the valuation include:
o REPORTED EARNINGS. The Association and the Peer Group recorded
comparable earnings on a ROAA basis (0.59 percent of average assets
versus 0.58 percent for the Peer Group). Both the Association's and
the Peer Group's reported earnings were depressed by the one time
assessment to recapitalize the SAIF, which, in light of the
Association's higher deposits-to-assets ratio, had a slightly larger
impact on Bridgeport Savings' earnings. Absent the SAIF assessment
expense, Bridgeport Savings' and the Peer Group's reported earnings
were substantially representative of their core earnings. Core
earnings posted by the Association and the Peer Group were indicative
of a traditional thrift operating strategy, in which net interest
income and operating expenses were the two dominant components of
earnings, and only a minor earnings contribution was realized from
non-interest operating income. Overall, no adjustment was warranted
for this factor.
o CORE EARNINGS. Net of the SAIF assessment, both the Association's and
the Peer Group's earnings were derived largely from recurring sources,
including net interest income, operating expenses, and non-interest
operating income. In these measures, the Association operated with a
stronger net interest margin, a higher operating expense ratio and a
similar level of non- interest operating income. The Association's
stronger net interest margin and higher level of operating expenses
translated into a slightly lower expense coverage ratio (1.52x versus
1.57x
<PAGE> 53
RP Financial, L.C.
Page 4.5
for the Peer Group). Loss provisions had a slightly larger
impact on the Peer Group's earnings, although the Association's credit
quality measures were slightly less favorable than the Peer Group's.
The Association's core earnings will realize the benefit of
redeploying conversion proceeds into interest-earning assets, which
will be somewhat negated by expenses associated with the stock benefit
plans and operating as a publicly-traded company. Accordingly, we
concluded that no valuation adjustment was warranted for the
Association's core earnings.
o INTEREST RATE RISK. Exposure to interest rate risk is considered to be
somewhat limited for both the Association and the Peer Group, in light
of their strong capital positions and resulting favorable IEA/IBL
ratios. Following the infusion of stock proceeds, the Association will
maintain more favorable equity-to-assets and IEA/IBL ratios than the
Peer Group. Likewise, the stability of Bridgeport Savings' net
interest margin should be enhanced by the reinvestment of stock
proceeds into interest-earning assets. Accordingly, RP Financial
concluded that the interest rate risk associated with the
Association's earnings was less than the Peer Group's, and a slight
upward adjustment was warranted for valuation purposes.
o CREDIT RISK. Loan loss provisions were a slightly larger factor in the
Peer Group's earnings, as no loan loss provisions were established by
the Association during the twelve months ended March 31, 1997. In
terms of future exposure to credit quality related losses, the
Association's and the Peer Group's credit quality measures indicated
relatively limited credit risk exposure. Lending diversification into
higher risk types of lending was similar for the Association and the
Peer Group, which translated into comparable risk weighted
assets-to-assets ratios. Both the Association's and the Peer Group's
risk weighted assets-to-assets ratios were below the average for all
publicly-traded SAIF-insured thrifts and, thus, indicated low credit
risk operating strategies. The most distinguishing characteristics
between the Association's and the Peer Group's potential credit risk
exposure were the Association's higher level of non-performing assets
and lower level of reserves maintained as a percent of non-performing
assets and non-performing loans. Accordingly, RP Financial concluded
that a slight downward adjustment was warranted for this factor.
o EARNINGS GROWTH POTENTIAL. Several factors were considered in
assessing earnings growth potential. First, the Peer Group's
historical growth has been stronger than the Association's, even
though Bridgeport Savings currently maintains comparable leverage
capacity and higher liquidity than the Peer Group. Second, the
infusion of stock proceeds will provide the Association with earnings
growth potential advantages, in terms of leverage capacity and
availability of liquidity to fund loan growth. Lastly, as shown in
Exhibit III-4, opportunities for lending growth in the Association's
primary market area are considered to be less favorable than in the
primary market areas served by the Peer Group companies, as indicated
by comparative population growth rates and per capita income measures.
On balance, the Association's earnings growth potential was considered
to be comparable to the Peer Group's for purposes of this valuation.
o RETURN ON EQUITY. The Association's return on equity will be lower
than the averages for the Peer Group and the thrift industry as a
whole, owing to Bridgeport Savings' significant pro forma
capitalization that will likely provide an equity-to-assets ratio in
excess of 25 percent. In view of the limited capital growth rate that
will be imposed by Bridgeport Savings' relatively high equity
position, it is expected that the market will consider the
Association's stock to be less attractive until the Association can
demonstrate its ability to profitably leverage its equity in a prudent
manner. Therefore, RP Financial concluded that a moderate downward
adjustment was warranted for the Association's ROE.
<PAGE> 54
RP Financial, LC.
Page 4.6
Overall, Bridgeport Savings' earnings characteristics were considered to be
fairly comparable to the Peer Group's, with the most distinguishing factor being
the Association's lower pro forma return on equity. Accordingly, RP Financial
concluded that a slight downward valuation adjustment was warranted for
profitability, growth and viability of the Association's earnings relative to
the Peer Group's.
3. Asset Growth
------------
Bridgeport Savings' asset growth rate was considerably less than the Peer
Group's, despite maintaining comparable leverage capacity as the Peer Group.
Accordingly, while the Association's pro forma capital position will provide for
greater capacity to leverage, it is not viewed as being a material advantage in
terms of the Association's future asset growth potential. The Association's
greater pro forma leverage capacity is viewed as being more than negated by the
limited growth recorded by Bridgeport Savings historically, as well as the less
favorable demographic characteristics of the Association's primary market
area in terms of providing opportunities for loan and deposit growth. On
balance, we believe a slight downward adjustment is warranted for this factor.
4. Primary Market Area
-------------------
The general condition of a financial institution's market area has an
impact on value, as future success is in part dependent upon opportunities for
profitable activities in the local market area. Bridgeport Savings' primary
market area has been experiencing generally weak demographic trends, which can
be attributed to a declining local economy The relatively high level of
unemployment and lack of economic growth in the primary market area has served
to intensify the competitiveness for deposits and loans, particularly as the
primary market area has experienced declines in population and households from
1990 through 1996.
In general, the Peer Group companies operate in healthier and faster
growing market areas than the Association's primary market area (see Exhibit
III-4). Population growth and per capita income measures in the primary market
areas served by the Peer Group companies were both more favorable than the
comparative measures for Belmont County. Likewise, as shown in Table 4.1 below,
unemployment rates in the primary market areas served by the Peer Group
companies were for the most part well below Belmont County's unemployment rate.
Overall, the primary market areas served by the Peer Group companies are
considered to be more favorable in terms of supporting potential growth and in
terms of limiting credit risk exposure. Therefore, we concluded a moderate
downward adjustment was necessary for this factor.
<PAGE> 55
RP Financial, LC.
Page 4.7
Table 4.1
Market Area Unemployment Rates
Bridgeport Savings and the Peer Group Companies (1)
<TABLE>
<CAPTION>
March 1997
County Unemployment
------ ------------
<S> <C> <C>
Bridgeport Savings - OH Belmont 10.5%
The Peer Group
--------------
ASB Financial Corp. - OH Scioto 10.7%
Community Inv. Bancorp -OH Crawford 7.3
Enterprise Fed. Bancorp. - OH Butler 3.8
FFD Financial Corp. - OH Tuscarawas 6.3
First Franklin Corp. - OH Hamilton 3.6
Glenway Financial Corp. - OH Hamilton 3.6
Harvest Home Fin. Corp. - OH Hamilton 3.6
London Financial Corp. - OH Madison 3.6
Milton Fed. Fin Corp. - OH Miami 4.6
OHSL Financial Corp. - OH Hamilton 3.6
Wood Bancorp - OH Wood 3.9
(1) Unemployment rates are not seasonally adjusted.
</TABLE>
Source: U.S. Bureau of Labor Statistics.
5. Dividends
---------
The Holding Company presently has not established a dividend policy,
but will consider instituting a cash dividend policy at some point in the
future, based on numerous factors including growth objectives, financial
condition, the amount of net proceeds retained by the Holding Company in the
conversion, investment opportunities available to the Holding Company and the
Association, profitability, tax considerations, minimum capital requirements,
regulatory limitations, stock market characteristics and general economic
conditions.
Historically, thrifts typically have not established dividend policies at
the time of their conversion to stock ownership. Newly converted institutions,
in general, have preferred to gain market seasoning, establish an earnings track
record and fully invest the conversion proceeds before establishing a dividend
policy. However, during the late-1980s and early-1990s, with negative publicity
surrounding the thrift industry, there was a tendency for more thrifts to
initiate moderate dividend policies concurrent with their conversion as a means
of increasing the attractiveness of the stock offering. Today, fewer
institutions are compelled to initially establish dividend policies at the time
of their conversion offering to increase the attractiveness of the stock issue
as (1) industry profitability has improved, (2) the number of problem thrift
institutions has declined, and
<PAGE> 56
RP Financial, L.C.
Page 4.8
(3) the stock market cycle for thrift stocks is generally more favorable than in
the early-1990s. At the same time, with ROE ratios under pressure, due to high
equity levels, well-capitalized institutions are subject to increased
competitive pressures to offer dividends.
As publicly-traded thrifts' capital levels and profitability have improved
and as weakened institutions have been resolved, the proportion of institutions
with cash dividend policies has increased. All eleven of the institutions in the
Peer Group presently pay regular cash dividends, with implied dividend yields
ranging from 1.60 percent to 5.26 percent. The average dividend yield on the
stocks of the Peer Group institutions was 3.02 percent as of June 6, 1997,
representing an average earnings payout ratio of 41.80 percent (payout ratio is
skewed upwards by the negative earnings impact of the special SAIF assessment).
As of June 6, 1997, approximately 83 percent of all publicly-traded SAIF-insured
thrifts had adopted cash dividend policies (see Exhibit IV-1), exhibiting an
average yield of 2.14 percent and an average payout ratio of 42.82 percent. The
dividend paying thrifts generally maintain higher than average profitability
ratios, facilitating their ability to pay cash dividends, which supports a
slight market pricing premium on average relative to non-dividend paying
thrifts.
The Holding Company will have the capacity to pay a dividend that is
comparable to the Peer Group's average dividend yield, based on pro forma
profitability and capital. Accordingly, the Holding Company's decision to forego
establishing a dividend policy at the time of conversion is not believed to
represent a material impact on the attractiveness of its stock, relative to
the stocks of the Peer Group companies on average. Accordingly, no adjustment
has been applied for this factor.
6. Liquidity of the Shares
-----------------------
The Peer Group is by definition composed of companies that are traded in
the public markets, all of which trade on the NASDAQ. Typically, the number of
shares outstanding and market capitalization provides an indication of how much
liquidity there will be in a particular stock. The market capitalization of the
Peer Group companies ranged from $7.7 million to $38.2 million as of June 6,
1997, with an average market value of $22.3 million. The shares outstanding of
the Peer Group members ranged from 515,000 to 2.3 million, with average shares
outstanding of approximately 1.3 million. The Association's conversion offering
will result in a market value and shares outstanding that will be notably less
than the Peer Group averages. Accordingly, given the relatively small size of
Bridgeport Savings' offering, we anticipate that there will be a less liquid and
efficient trading market for the Association's stock. However, the Association's
stock is expected to qualify for a NASDAQ listing, which will provide for a
certain degree of liquidity in the stock. Overall, we concluded a slight
downward adjustment was required for this factor.
<PAGE> 57
RP Financial, LC.
Page 4.9
7. Marketing of the Issue
----------------------
We believe that three separate markets exists for thrift stocks coming to
market such as Bridgeport Savings: (1) the after-market for public companies, in
which trading activity is regular and investment decisions are made based upon
financial condition, earnings, capital, ROE and dividends; (2) the new issue
market in which converting thrifts are evaluated on a pro forma basis without
the benefit of prior operations as a publicly-held company and stock trading
history; and (3) the acquisition market for thrift franchises in Ohio. All three
of these markets were considered in the valuation of the Association's
to-be-issued stock.
A. The Public Market
-----------------
The value of publicly-traded thrift stocks is easily measurable, and
is tracked by most investment houses and related organizations. Exhibit IV-1
provides pricing and financial data on all publicly-traded thrifts. In general,
thrift stock values react to market stimuli such as interest rates, inflation,
perceived industry health, projected rates of economic growth, regulatory issues
and stock market conditions in general. Exhibit IV-2 displays historical stock
market trends for various indices and includes historical stock price index
values for thrifts and commercial banks. Exhibit IV-3 displays historical stock
price indices for thrifts only.
In terms of assessing general stock market conditions, the stock
market has generally trended higher over the past year. Earnings reports
dominated the stock market in mid-April 1996, with day-to-day fluctuations in
the market reflecting changing investor sentiment regarding the strength of
first quarter earnings and future earnings expectations. Favorable fourth
quarter earnings among technology issues pushed the NASDAQ Composite Index to
new highs in late-April and early-May, while blue chip stocks lagged the overall
market. Stronger than expected first quarter GDP growth reported in early-May
stirred major sell-offs in stocks and bonds, resulting in the 30-year bond
edging above 7.0 percent and a one day drop in the DJIA of almost 77 points.
Inflation concerns receded somewhat following a mid-May report by the Federal
Reserve, which indicated that inflation remained in check and near term interest
rate increases were not likely. The positive reading on inflation by the Federal
Reserve, along with the Federal Reserve's decision to leave interest rates
unchanged at its late-May meeting, served to strengthen bond and stock prices,
with the DJIA posting new highs in late-May and the 30-year bond dropping below
7.0 percent. However, signs of an accelerating economy and revised upward
estimates of second quarter GDP growth provided for a pullback in the stock
market at the end of May. Stronger than expected job growth in May further
depressed bond prices in early-June, which served to stall the stock market as
well.
Expectations that the Federal Reserve would not tighten interest rates
at its July 1996 meeting provided for a rally in the bond market in late-June,
as the 30-year bond yield moved back below 7.0 percent.
<PAGE> 58
RP Financial, LC.
Page 4.10
The positive interest rate outlook also served to boost the stock
market in early-July, but the rally was cut short by a larger than expected
drop in June unemployment. Bond and stock prices tumbled following the June
unemployment report, as highlighted by a 115 point one-day decline in the DJIA
and an increase in the 30-year bond yield to 7.18 percent. The release of
second quarter earnings reports provided for a volatile stock market in
mid-July, especially among the technology stocks. Overall, the stock market
declined due to earnings disappointments, with a more severe decline occurring
in the technology driven NASDAQ Composite Index. At the same time bond prices
recovered, as the 30-year bond yield dropped below 7.0 percent following
statements by the Federal Reserve Chairman which indicated he expected the
economy to slow down in the second half of 1996. Stocks and bonds rallied in
late-July and early-August, as economic data indicated a healthy but moderating
economy. However, higher interest rates pushed stocks lower in late-August,
reflecting increasing expectations that the Federal Reserve would tighten
interest rates in September. The decline in the stock market was reversed in
early-September, as investors reacted positively to the inflation data
contained in the August employment report. Oil stocks sustained the upward
trend in the stock market in early-September, as renewed tension between the
U.S. and Iraq pushed crude oil prices to their highest level in five years.
Both bond and stock prices surged higher in mid-September, as most of the
economic data for August indicated that the economy was slowing down and
investors became more optimistic that the Federal Reserve would not raise
interest rates in September.
The Federal Reserve's decision not to raise interest rates at its
September 1996 meeting, and generally healthy third quarter earnings results
sustained the upward momentum in the stock market during the beginning of the
fourth quarter. Favorable inflation data and lower interest rates further
spurred the upward trend in the stock market prior to the election. Investors
were cheered by the "status quo" election results, as stocks rallied strongly
immediately following the election with the DJIA posting ten consecutive
advances through mid-November. Economic stability and a rising bond market
sustained the stock market rally through the end of November. For the entire
month of November, the DJIA increased 492.3 points, or 8.2 percent. Following
the rapid rise in the stock market during November, stocks retreated during the
first half of December. Profit taking, concern about speculative excesses in the
stock market and higher interest rates all contributed to the decline in the
stock market.
The stock market resumed an upward trend during the end of 1996 and
the first three weeks of 1997, with the DJIA establishing several new highs in
the process. Factors contributing to the rally in the stock market included the
Federal Reserve's decision to leave rates unchanged at its December meeting,
economic data which reflected moderate growth and low inflation, and favorable
fourth quarter earnings particularly in the technology sector. However, a
disappointing fourth quarter earnings report by IBM ignited a sell-off in the
stock market in late-January. Higher interest rates extended the downturn, as
the 30-year bond
<PAGE> 59
RP Financial, LC.
Page 4.11
approached 7.0 percent at the end of January. A high degree of market volatility
was evident throughout most of February 1997, reflecting concern over
speculative excesses in the stock market; particularly, as the DJIA closed above
the 7000 mark in mid-February. Profit taking, growing expectations of a
correction and comments by the Federal Reserve Chairman pulled the market lower
in late-February.
Following a downturn in late-February 1997, the market recovered in
early-March. Despite increasing expectations of an interest rate hike by the
Federal Reserve, the Dow Jones Industrial Average ("DJIA") closed to a new
record high of 7085.16 on March 11, 1997. However, an upward revision to the
January retail sales figure triggered a one day sell-off in stocks and bonds on
March 13, 1997, as the stronger than expected growth heightened expectations of
an interest rate increase by the Federal Reserve. Unease over higher interest
rates, profitability concerns in the technology sector and litigation concerns
for tobacco stocks pulled the stock market lower in mid- March. As expected, the
Federal Reserve increased the rate on short-term funds by 0.25 percent at its
late-March meeting. Following the rate increase, the sell-off in the stock
market became more severe amid further signs of an accelerating economy. Stocks
bottomed-out on news of a stronger than expected rise in core producer prices
for March, with the DJIA closing at 6391.69 on April 11, 1997, or 9.8 percent
below its all-time high recorded a month ago.
Some favorable first quarter earnings reports and news of a possible
settlement by tobacco companies to resolve the threat of liability lawsuits
provided for a modest recovery in the stock market in mid-April 1997. In
late-April, the release of economic data which indicated mild inflationary
pressures furthered the rally in bond and stock prices. News of a budget
agreement and a favorable ruling for tobacco companies sent the stock market
soaring to record highs in early-May. Mixed economic data and the Federal
Reserve's decision to leave its target for the federal-funds rate unchanged at
its May meeting sustained a positive trend in the stock market through the end
of May. Profit worries caused a sell-off in high-technology stocks in
early-June, while declining interest rates served to stabilize the broader
market. On June 6, 1997, the DJIA closed at a record high of 7435.78,
translating into an increase of 30.5 percent from a year ago. A sharp drop in
bond yields supported the new high established in the DJIA, as investors largely
ignored news that the May unemployment rate fell to its lowest level in 24
years.
Similar to the overall stock market, the market for thrift stocks has
generally been favorable during the past twelve months. A bullish outlook on the
financial institution sector in general served to bolster prices in early-April
1996, as a number of analysts forecasted healthy first quarter earnings for
thrift and bank stocks and that the financial institution sector would
outperform the market in general during the balance of 1996. However, thrift
prices declined following the release of the March employment report, as
interest-rate sensitive stocks were pulled lower by the unfavorable interest
rate outlook. The downturn was abbreviated by the generally strong first quarter
earnings posted by bank and thrift issues, which provided for a mild upward
<PAGE> 60
RP Financial, LC.
Page 4.12
trend in thrift stocks in mid-April. Paralleling the stock market in general,
thrift prices dropped sharply in early- May following the rise in interest rates
caused by the strong first quarter GDP growth. Thrift prices rebounded in
mid-May, as interest rates declined slightly on the strength of tame inflation
news. At the end of May and through mid-June, uncertainty over future interest
rate trends provided for a flat thrift stock market.
The Supreme Court's ruling in favor of thrifts seeking damages for
goodwill served to boost thrift prices in the beginning of July 1996, but the
upturn was abbreviated by a sharp increase in interest rates. The sharp rise in
interest rates, which was prompted by the stronger than expected June
unemployment report, pushed interest-rate sensitive issues in general lower.
Generally favorable second quarter earnings and lower interest rates supported a
modest recovery in thrift prices in mid-July, although concerns about future
interest rate trends moderated the impact of the healthy second quarter
earnings. Lower interest rates and the announced acquisitions of two large
California thrifts, American Savings with $20 billion in assets and CalFed
Bancorp with $14 billion in assets, pushed the SNL Index higher in late-July and
through mid-August. Thrift stocks settled into a narrow trading range in
late-August and early- September, as higher interest rates dampened interest in
the thrift sector. For the balance of September, trading activity in thrift
stocks was somewhat mixed. Higher thrift prices were recorded in mid-September,
as the yield on the 30-year U.S. Treasury bond briefly dropped below 7.0
percent. However, the rally in financial services stocks faltered in
late-September, reflecting renewed fears about higher interest rates and rising
bad debt on credit cards.
Thrift prices generally moved higher during October and November
1996. The upward trend in thrift prices was RP Financial, LC. Page 4.24
supported by lower interest rates, with the slow down in economic growth pushing
the 30-year U.S. bond rate below 6.5 percent during the second half of November.
Investors also reacted positively to the SAIF rescue legislation, in light of
the reduction in deposit insurance premiums to be paid by SAIF- insured thrifts
following the one time special assessment. Similar to the overall stock market,
thrift prices traded lower in early-December. Profit taking and expectations of
higher interest rates were factors contributing to the pull back in thrift
issues.
Bullish sentiment for thrift stocks heightened at the beginning of
1997, as investors reacted positively to the favorable inflation data and
generally strong fourth quarter earnings. The rally in thrift issues was driven
by the large California institutions, reflecting expectations that there would
be further consolidation among the large California thrifts. The acquisition
speculation for the large California thrifts became a reality in mid-February,
as H.F. Ahamanson's unsolicited offer to acquire Great Western Financial sent
the SNL Index soaring in mid-February. Stable interest rates and acquisition
activity supported higher thrift prices in early-March, with the SNL Index
posting a new high of 579.1 on March 11, 1997. Like the stock market in general,
the peak in thrift prices was followed by a sharp sell-off in mid-March. In
fact, interest-rate sensitive issues were among the sectors hardest hit by the
revised January retail sales report, as the 30-year bond
<PAGE> 61
RP Financial, LC.
Page 4.13
approached 7.0 percent. Interest-rate sensitive issues continued to experience
selling pressure in late-March and early-April, as signs of a strengthening
economy pushed interest rates higher. The sell-off in thrift stocks culminated
on April 11, 1997, as interest rates increased sharply on news of the higher
than expected rise in core producer prices for March. Thrift prices edged
modestly higher in mid-April, reflecting generally favorable first quarter
earnings and a slight decline in interest rates following the release of
economic data which showed that inflation was low. Favorable inflation data and
the budget agreement provided for a more substantial rally in thrift stocks in
late-April and early- May, as interest-rate sensitive issues were bolstered by a
decline in interest rates. Thrift stocks continued to trend higher through
early-June, based on the improved interest-rate outlook. The SNL Index for all
publicly-traded thrifts closed at 590.8 on June 6, 1997, an increase of 53.4
percent from one year ago.
B. The New Issue Market
--------------------
In addition to thrift stock market conditions in general, the new
issue market for converting thrifts is also an important consideration in
determining the Association's pro forma market value. Interest in converting
thrift issues receded somewhat in the second quarter of 1996, as indicated by
fewer oversubscriptions and generally weak aftermarket trading performance.
However, interest returned to converting issues during the second half of 1996,
as most offerings experienced healthy oversubscriptions. Fewer offerings, more
attractive pricing, lower interest rates, and the general positive trend in
thrift prices were among the most prominent factors contributing to the renewed
investor interest shown for converting thrift issues. The favorable market
environment for converting thrift issues has generally been sustained during the
first two quarters of 1997; however, in comparison to other periods of market
strength for thrift stocks, the number of conversion offerings completed during
the past three months has been relatively low. As shown in Table 4.2, the median
one week change in price for offerings completed during the latest three months
equaled positive 30.0 percent.
In examining the current pricing characteristics of institutions
completing their conversions during the last three months (see Table 4.3), we
note there exists a considerable difference in pricing ratios compared to the
universe of all publicly-traded thrifts. Specifically, the current average P/B
ratio of the conversions completed in the most recent three month period of
92.72 percent reflects a discount of 27.8 percent from the average P/B ratio of
all publicly-traded SAIF-insured thrifts (equal to 128.40 percent), and the
average core P/E ratio of 22.16 times reflects a premium of 25.1 percent from
the all SAIF-insured public average core P/E ratio of 17.72 times. The pricing
ratios of the better capitalized but lower earning recently converted thrifts
(based on return on equity measures) suggest that the investment community has
determined to discount their stocks on a book basis until the earnings improve
through redeployment and leveraging of the proceeds over the longer term.
<PAGE> 62
RP FINANCIAL, LC.
TABLE 4.2
RECENT CONVERSIONS (LAST THREE MONTHS)
CONVERSION PRICING CHARACTERISTICS: SORTED CHRONOLOGICALLY
<TABLE>
<CAPTION>
Institutional Information Pre-Conversion Data Offering Insider Purchases
Financial Info. Asset Quality Information
- ----------------------------------------------------------------------------------------------------------------------------
Benefit Plans
-------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./ Recog. Mgmt.
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc. ESOP Plans & Dirs.
----------- ----- ---- ------ ------ ------ ------ ---- ----- ---------- ---- -------------
($Mil (%) (%)(2 (%) ($Mil) (%) (%) (%) (%) (%)(3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFB Bancorp TN 05/30/97 SFBK $47 10.04% 0.80% 82% $7.7 132% 3.2% 8.0% 4.0% 5.3%
Rocky Ford Financial CO 05/22/97 P.Sheet 21 13.92% 0.00% NA 4.2 132% 8.3% 8.0% 4.0% 23.6%
HCB Bancshares AR 05/07/97 HCBB 176 7.81% 0.21% 110% 26.5 132% 2.8% 8.0% 4.0% 4.3%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 92 10.08% 1.11% 33% 17.9 132% 3.2% 8.0% 4.0% 9.8%
NewSouth Bancorp(1) NC 04/08/97 NSBC 199 9.52% 0.41% 299% 43.6 132% 2.9% 8.0% 4.0% 0.8%
Hemlock Fed. Fin. Corp. IL 04/02/97 HMLK 146 7.86% 0.44% 117% 20.8 132% 3.1% 8.0% 4.0% 6.0%
Cumberland Mtn. Bncshrs(8) KY *04/01/97 P. Sheet 92 5.14% 1.31% 19% 4.4 132% 8.0% 6.2% 4.0% 4.5%
GS Financial Corp. LA *04/01/97 GSLA 88 28.30% 0.29% 107% 34.4 132% 2.4% 8.0% 4.0% 5.3%
Market Fin. Corp. OH 03/27/97 MRKF 46 16.73% 0.99% 11% 13.4 132% 3.5% 8.0% 4.0% 7.8%
Vermilion Bancorp(1) IL *03/26/97 P.Sheet 36 6.63% 0.97% 39% 4.0 132% 7.2% 8.0% 4.0% 16.4%
Averages: $94 11.60% 0.65% 91% $17.7 132% 4.5% 7.8% 4.0% 8.4%
Medians: 90 9.78% 0.62% 82% $15.6 132% 3.2% 8.0% 4.0% 5.6%
Averages, Excluding 2nd S $95 12.32% 0.58% 100% $19.1 132% 4.1% 8.0% 4.0% 8.8%
Medians, Excluding 2nd St $88 10.04% 0.44% 94% $17.9 132% 3.2% 8.0% 4.0% 6.0%
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Pro Forma Data Post-IPO Pricing Trends
Pricing Ratios(Fin. Characteristics Closing Price:
- --------------------------------------------------------------------------------------------------------------------------------
First After After
IPO Trading % First % First %
Institution P/TB P/E(5) P/A ROA TE/A ROE Price Day Chg. Week(6) Chg. Month(7) Chg.
----------- ---- ------ --- --- ---- --- ----- --- ---- ------- ---- -------- ----
(%) (x) (%) (%) (%) (%) ($) ($) (%) ($) (%) ($) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFB Bancorp 70.1% 13.9 14.5% 1.0% 20.7% 5.1%$10.00 $13.81 38.1% $13.38 33.8% NA NA
Rocky Ford Financial 67.9% 14.6 17.7% 1.2% 26.1% 4.6% 10.00 13.00 30.0% 13.13 31.3% $13.00 30.0%
HCB Bancshares 72.9% 34.4 13.3% 0.4% 18.2% 2.1% 10.00 12.63 26.3% 12.69 26.9% 12.88 28.8%
Peoples Sidney Fin. Corp. 71.0% 13.7 16.5% 1.2% 23.3% 5.2% 10.00 12.56 25.6% 13.25 32.5% 12.88 28.8%
NewSouth Bancorp(1) 77.8% 20.7 18.5% 0.9% 23.7% 3.8% 15.00 20.25 35.0% 22.00 46.7% 23.50 56.7%
Hemlock Fed. Fin. Corp. 72.8% 20.3 12.7% 0.6% 17.4% 3.6% 10.00 12.88 28.8% 12.88 28.8% 13.00 30.0%
Cumberland Mtn. Bncshrs(8) 81.2% 13.8 7.1% 0.5% 8.8% 5.9% 10.00 11.88 18.8% 12.25 22.5% 12.63 26.3%
GS Financial Corp. 63.4% 25.9 29.4% 1.1% 46.3% 2.4% 10.00 13.38 33.8% 13.63 36.3% 14.00 40.0%
Market Fin. Corp. 70.6% 20.0 23.4% 1.2% 33.2% 3.5% 10.00 12.94 29.4% 12.50 25.0% 12.63 26.3%
Vermilion Bancorp(1) 71.0% 18.7 10.1% 0.5% 14.2% 3.8% 10.00 12.38 23.7% 12.25 22.5% 11.75 17.5%
71.9% 19.6 16.3% 0.9% 23.2% 4.0%$10.50 $13.57 28.9% $13.79 30.6% $14.03 31.6%
71.0% 19.3 15.5% 1.0% 22.0% 3.8%$10.00 $12.91 29.1% $13.00 30.0% $12.88 28.8%
70.8% 20.2 17.3% 0.9% 24.8% 3.8%$10.56 $13.76 30.1% $13.90 30.8% $11.11 26.3%
71.0% 20.0 16.5% 1.0% 23.3% 3.8% 10.00 12.94 29.4% 13.13 31.3% 12.88 28.8%
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not Applicable, Not Available.
(1) Non-OTS regulated thrifts. June 6, 1997
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Excludes impact of special SAIF assessment on earnings
(6) Latest price if offering less than one week old.
(7) Latest price if offering more than one week but less than one month old.
(8) Second-step conversions.
</TABLE>
<PAGE> 63
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
TABLE 4.3
MARKET PRICING COMPARATIVES
PRICES AS OF JUNE 6, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------
--------------- Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ ---------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------- ------- ------- ------- ------- ------- ------- --------
Financial Institution
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
SAIF-Insured Thrifts 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
Converted Last 3 Mths (no MHC) 13.25 26.85 0.50 14.29 24.71 92.72 24.47 93.40 22.16
Comparable Group
----------------
Converted Last 3 Mths (no MHC)
------------------------------
GSLA GS Financial Corp. of LA 14.37 49.42 0.29 15.77 NM 91.12 42.23 91.12 NM
HCBB HCB Bancshares of AR 12.87 34.04 0.29 13.73 NM 93.74 17.11 97.80 NM
HMLK Hemlock Fed. Fin. Corp. of IL 13.00 26.99 0.49 13.74 NM 94.61 16.46 94.61 26.53
MRKF Market Fin. Corp. of OH 12.87 17.19 0.50 14.17 NM 90.83 30.15 90.83 25.74
PSFC Peoples Sidney Fin. Corp of OH 13.00 23.21 0.73 14.09 23.21 92.26 21.46 92.26 17.81
SFBK SFB Bancorp, Inc. of TN 13.37 10.25 0.72 14.26 26.22 93.76 19.41 93.76 18.57
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- -------
Financial Institution
---------------------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.87 29.08 1,117 12.85 0.78 0.62 5.28 0.84 7.35
Converted Last 3 Mths (no MHC) 0.05 0.37 6.94 116 26.52 0.67 0.59 2.15 0.88 3.55
Comparable Group
----------------
Converted Last 3 Mths (no MHC)
------------------------------
GSLA GS Financial Corp. of LA 0.00 0.00 0.00 117 46.34 0.13 0.85 1.84 0.85 1.84
HCBB HCB Bancshares of AR 0.00 0.00 0.00 199 18.25 NA -0.11 -0.58 0.39 2.11
HMLK Hemlock Fed. Fin. Corp. of IL 0.00 0.00 0.00 164 17.39 NA 0.24 1.38 0.62 3.57
MRKF Market Fin. Corp. of OH 0.00 0.00 0.00 57 33.20 0.89 0.89 2.68 1.17 3.53
PSFC Peoples Sidney Fin. Corp of OH 0.00 0.00 0.00 108 23.26 1.00 0.92 3.97 1.21 5.18
SFBK SFB Bancorp, Inc. of TN 0.30 2.24 41.67 53 20.70 NA 0.74 3.58 1.05 5.05
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month
data, adjusted to omit non-operating items (including the SAIF
assessment) on a tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets;
P/TB = Price to tangible book value; and P/CORE = Price to estimated
core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend
declared.
(5) Indicated dividend as a percent of trailing twelve month estimated
core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot
guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 64
RP Financial, LC.
Page 4.16
In determining our valuation adjustment for marketing of the issue, we
considered trends in both the overall thrift market and the new issue market.
The overall market for thrift stocks is considered to be healthy, as thrift
stocks are currently exhibiting pricing ratios that are approaching historically
high levels. Investor interest in the new issue market has been favorable, as
most of the recently completed offerings have been oversubscribed and have
recorded healthy price increases in initial post-conversion trading activity.
C. The Acquisition Market
----------------------
Also considered in the valuation was the potential impact on
Bridgeport Savings' stock price of recently completed and pending acquisitions
of other thrifts operating in Bridgeport Savings' market area. As shown in
Exhibit IV-4, there were 12 Ohio thrifts acquired in 1995, 1996 and year-to-date
1997 and three acquisitions are currently pending. In light of the Association's
two office operation in a market area that has been experiencing a decline in
population, Bridgeport Savings is not considered to be a highly attractive
acquisition candidate and, thus, acquisition speculation is not expected to have
a material influence on the Association's initial trading price. However, at the
same time, the fairly active acquisition market for Ohio thrifts, may imply a
certain degree of acquisition speculation for the Association's stock. To the
extent that acquisition speculation may impact the Association's offering, we
have largely taken this into account in selecting Ohio-based companies, which
operate in markets that have experienced a comparable or more significant level
of acquisition activity as the Association's market area and, thus, are subject
to the same type of acquisition speculation that may influence Bridgeport
Savings' trading price.
Taking these factors and trends into account, primarily recent trends
in the new issue market, market conditions overall, and recent trends in the
acquisition market, RP Financial concluded that no adjustment was appropriate in
the valuation analysis for purposes of marketing of the issue.
8. Management
----------
Bridgeport Savings' management team has experience and expertise in all of
the key areas of the Association's operations. Exhibit IV-5 provides summary
resumes of Bridgeport Savings' Board of Directors and executive management.
While the Association does not have the resources to develop a great deal of
management depth, given its asset size and the impact it would have on operating
expenses, management and the Board have been effective in implementing an
operating strategy that can be well managed by the Association's present
management structure as indicated by Bridgeport Savings' solid core earnings and
healthy capital position.
<PAGE> 65
RP Financial, LC.
Page 4.17
Similarly, the returns, capital positions, and other operating measures of
the Peer Group companies are indicative of well-managed financial institutions,
which have Boards and management teams that have been effective in implementing
conservative and competitive operating strategies. Therefore, on balance, we
concluded no valuation adjustment relative to the Peer Group was appropriate for
this factor.
9. Effect of Government Regulation and Regulatory Reform
-----------------------------------------------------
The Association and the Peer Group companies were similarly impacted by the
recently enacted SAIF rescue legislation, as they are all SAIF-insured
institutions subject to the same one time assessment and their deposits will be
assessed at the same rate going forward. In summary, as a fully-converted
SAIF-insured savings association, Bridgeport Savings will operate in
substantially the same regulatory environment as the Peer Group members -- all
of whom are adequately capitalized institutions and are operating with no
apparent restrictions. Exhibit IV-6 reflects the Association's pro forma
regulatory capital ratios. On balance, RP Financial concluded that no adjustment
to the Association's value was warranted for this factor.
Summary of Adjustments
- ----------------------
Overall, we believe the Association's pro forma market value should be
discounted relative to the Peer Group as follows:
<TABLE>
<CAPTION>
Key Valuation Parameters: Valuation Adjustment
------------------------ --------------------
<S> <C>
Financial Condition No Adjustment
Profitability, Growth and Viability of Earnings Slight Downward
Asset Growth Slight Downward
Primary Market Area Moderate Downward
Dividends No Adjustment
Liquidity of the Shares Slight Downward
Marketing of the Issue No Adjustment
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
</TABLE>
Valuation Approaches
- --------------------
In applying the accepted valuation methodology promulgated by the OTS
and adopted by the FDIC, i.e., the pro forma market value approach, we
considered the three key pricing ratios in valuing Bridgeport Savings'
to-be-issued stock -- price/earnings ("P/E"), price/book ("P/B"), and
price/assets ("P/A") approaches -- all performed on a pro forma basis including
the effects of the conversion proceeds. In computing the pro
<PAGE> 66
RP Financial, LC.
Page 4.18
forma impact of the conversion and the related pricing ratios, we have
incorporated the valuation parameters disclosed in Bridgeport Savings'
prospectus for offering expenses, the effective tax rate, and stock benefit plan
assumptions (summarized in Exhibits IV-7 and IV-8). A reinvestment rate of 5.68
percent was utilized, equal to the arithmetic average of the Association's
average yield on interest-earnings assets and cost of deposits for the three
months ended March 31, 1997 (the reinvestment rate calculation specified by OTS
conversion guidelines). The 5.68 percent reinvestment rate is believed to be
representative of the blended rate reflecting the Association's business plan as
converted and incorporating the impact of deposit withdrawals to fund a portion
of the stock issued in conversion. In our estimate of value, we assessed the
relationship of the pro forma pricing ratios relative to the Peer Group and the
recent conversions.
RP Financial's valuation placed emphasis on the following:
o P/E APPROACH. The P/E approach is generally the best indicator of
long-term value for a stock. Given the similarities between the
Association's and the Peer Group's earnings and overall financial
condition, the P/E approach was carefully considered in this
valuation.
o P/B APPROACH. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks, with the greater determinant of
long term value being earnings. RP Financial considered the P/B
approach to be a reliable indicator of value given current market
conditions, particularly the market for new conversions which often
exhibit P/E multiples that are well above industry averages and, thus,
are viewed as a less meaningful indicator of value.
o P/A APPROACH. P/A ratios are generally a less reliable indicator of
market value, as investors do not place significant weight on total
assets as a determinant of market value. Investors place significantly
greater weight on book value and earnings -- which have received
greater weight in our valuation analysis.
The Association has adopted Statement of Position ("SOP") 93-6, which will
cause earnings per share computations to be based on shares issued and
outstanding excluding unreleased ESOP shares. For purposes of preparing the pro
forma pricing analyses, we have reflected all shares issued in the offering,
including all ESOP shares, to capture the full dilutive impact, particularly
since the ESOP shares are economically dilutive, receive dividends and can be
voted. However, we did consider the impact of the adoption of SOP 93-6 in the
valuation.
Based on the application of the three valuation approaches, taking into
consideration the valuation adjustments discussed above, and placing the
greatest weight on the P/E and P/B approaches, RP Financial concluded that the
pro forma market value of the Association's conversion stock is $6,750,000 at
the midpoint at this time.
1. PRICE-TO-EARNINGS ("P/E"). The application of the P/E valuation method
requires calculating the Association's pro forma market value by applying a
valuation P/E multiple times the pro forma earnings
<PAGE> 67
RP Financial, LC.
Page 4.19
base. Ideally, the pro forma earnings base is composed principally of the
Association's recurring earnings base, that is, earnings adjusted to exclude any
one-time non-operating items, plus the estimated after-tax earnings benefit of
the reinvestment of net conversion proceeds. Bridgeport Savings' reported
earnings equaled $206,000 for the twelve months ended March 31, 1997. In
deriving Bridgeport Savings' core earnings, the only adjustment made to reported
earnings was to account for the one time expense of the special SAIF assessment.
The special SAIF assessment recorded by the Association amounted to $190,000.
On a tax effected basis, assuming an effective tax rate of 34.0 percent, the
elimination of the SAIF assessment resulted in a $125,000 increase to the
Association's reported earnings. As shown below, after factoring in the
adjustment, Bridgeport Savings' core earnings were determined to equal $331,000
for the twelve months ended March 31, 1997. (Note: see Exhibit IV-9 for the
adjustments applied to the Peer Group's earnings in the calculation of core
earnings).
Amount
------
($000)
Net income $206
Adjustment for SAIF assessment(1) 125
----
Core earnings estimate $331
(1) Tax effected at 34.0 percent.
Based on Bridgeport Savings' trailing twelve month earnings, and
incorporating the impact of the pro forma assumptions discussed previously, the
Association's pro forma core P/E multiple at the $6,750,000 midpoint value was
15.70 times, resulting in a discount of 17.0 percent from the Peer Group average
of 18.91 times core earnings. Such discounts are substantially reduced or
eliminated in the upper portion of the range. In comparison to all SAIF-insured
and Ohio publicly-traded thrifts, the Association's core P/E ratio reflected
discounts of 11.4 percent and 10.8 percent, respectively.
2. PRICE-TO-BOOK ("P/B"). The application of the P/B valuation method
requires calculating the Association's pro forma market value by applying a
valuation P/B ratio to Bridgeport Savings' pro forma book value. Based on the
$6.750 million midpoint valuation, Bridgeport Savings' pro forma P/B ratio was
64.70 percent. In comparison to the average P/B ratio for the Peer Group of
110.42 percent, Bridgeport Savings' valuation reflected a 41.4 percent discount
relative to the Peer Group. RP Financial considered the discount under the P/B
approach to be reasonable, in light of the downward adjustments applied to the
Association's value for earnings, asset growth, market area, and liquidity of
the stock. Additionally, the discounted P/B ratio is also warranted by the
Association's low pro forma ROE (4.12 percent, based on core earnings, versus
5.98 percent for the Peer Group) and resulting pro forma P/E multiple.
<PAGE> 68
RP Financial, LC.
Page 4.20
Given the emphasis in the revised appraisal guidelines on limiting near
term aftermarket price increases in the stocks of converting institutions, RP
Financial also considered the pro forma P/B ratios of recent conversions in its
valuation analysis. It is these companies that provide the best proxy for
aftermarket trading for a new issue such as Bridgeport Savings' conversion
stock (as newly converted thrifts represent an "alternative investment" to
purchasing conversion stock), and it is the pro forma P/B ratio that investors
have recently tended to emphasize in evaluating the trading of new issues. At
the midpoint value of $6,750,000, Bridgeport Savings' pro forma P/B ratio of
64.70 percent was discounted by approximately 8.6 percent from the 70.8 percent
P/B average of the recently completed standard stock conversions at closing
(see Table 4.2) and by approximately 30.2 percent from the 92.72 percent P/B
average of recent conversions currently in the after-market (see Table 4.3).
Bridgeport Savings' lower pro forma pricing is warranted by the smaller size of
its offering, resulting in a less liquid stock, and the negative
characteristics associated with its primary market area. The Association's
pricing in the upper portion of the range approximates the average closing P/B
ratio for the recent conversions. As indicated at the beginning of this
chapter, RP Financial's analysis of recent conversion pricing characteristics
has been limited to a technical analysis and, thus, the pricing characteristics
of recent conversions is not the primary determinate of valuation.
3. PRICE-TO-ASSETS ("P/A"). The P/A valuation methodology determines market
value by applying a valuation P/A ratio to the Association's pro forma asset
base, conservatively assuming no deposit withdrawals are made to fund stock
purchases. In all likelihood there will be deposit withdrawals, which results in
understating the pro forma P/A ratio which is computed herein. At the midpoint
of the valuation range, Bridgeport Savings' value equaled 16.82 percent of pro
forma assets. Comparatively, the Peer Group companies exhibited an average P/A
ratio of 15.25 percent, which implies a 10.3 percent premium is being applied to
the Association's pro forma P/A ratio. While generally emphasized less than the
P/E and P/B approaches, the P/A ratio is an indicator of franchise value and,
thus, was a valuation factor.
Valuation Conclusion
- --------------------
Based on the foregoing, it is our opinion that, as of June 6, 1997, the
aggregate pro forma market value of the Association was $6,750,000 at the
midpoint, equal to 675,000 shares offered at $10.00 per share. Pursuant to the
conversion guidelines, the 15 percent offering range includes a minimum of
$5,737,500 and a maximum of $7,762,500. Based on the $10.00 per share offering
price, this valuation range equates to an offering of 573,750 shares at the
minimum to 776,250 shares at the maximum. The Holding Company's offering also
includes a provision for a super maximum, which would result in an offering size
of $8,926,870, equal to 892,687 shares at the $10.00 per share offering price.
The comparative pro forma valuation ratios relative to the
<PAGE> 69
RP Financial, LC.
Page 4.21
Peer Group are shown in Table 4.4, and the key valuation assumptions are
detailed in Exhibit IV-7. The pro forma calculations for the range are detailed
in Exhibit IV-8.
<PAGE> 70
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
TABLE 4.4
PUBLIC MARKET PRICING
BRIDGEPORT SAVINGS AND LOAN AND THE COMPARABLES
AS OF JUNE 6, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------- ------- ------- ------- ------- ------- ------- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
Bridgeport Savings and Loan
---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Superrange 10.00 8.93 0.52 13.80 26.28 72.47 21.24 72.47 19.21
Range Maximum 10.00 7.76 0.57 14.57 24.17 68.63 18.93 68.63 17.40
Range Midpoint 10.00 6.75 0.64 15.46 22.13 64.70 16.82 64.70 15.70
Range Minimum 10.00 5.74 0.72 16.66 19.86 60.04 14.61 60.04 13.86
SAIF-Insured Thrifts(7)
-----------------------
Averages 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
Medians --- --- --- --- 20.41 123.11 14.25 125.24 16.85
All Non-MHC State of OH(7)
--------------------------
Averages 18.78 121.14 1.13 15.03 21.13 126.15 16.81 120.97 17.60
Medians --- --- --- --- 20.88 113.92 15.67 113.92 15.95
Comparable Group Averages
-------------------------
Averages 17.04 22.29 0.99 15.47 22.81 110.42 15.25 110.66 18.91
Medians --- --- --- --- 23.66 113.10 14.61 113.10 18.99
State of OH
-----------
ASBP ASB Financial Corp. of OH 11.75 20.22 0.57 10.00 NM 117.50 18.48 117.50 20.61
CAFI Camco Fin. Corp. of OH 18.50 56.65 1.16 14.95 18.69 123.75 11.99 134.45 15.95
COFI Charter One Financial of OH 48.00 2224.27 3.66 20.53 16.67 233.80 15.84 NM 13.11
CTZN CitFed Bancorp of Dayton OH 36.75 316.53 2.55 21.59 20.88 170.22 10.78 191.11 14.41
CIBI Community Inv. Bancorp of OH 19.00 12.03 1.47 17.73 19.19 107.16 12.34 107.16 12.93
DCBI Delphos Citizens Bancorp of OH 14.00 28.55 0.62 14.88 22.58 94.09 26.66 94.09 22.58
EMLD Emerald Financial Corp of OH 15.00 75.93 0.96 8.73 20.00 171.82 12.90 174.83 15.63
EFBI Enterprise Fed. Bancorp of OH 19.00 38.21 0.82 15.52 25.33 122.42 15.51 122.58 23.17
FFDF FFD Financial Corp. of OH 13.75 20.01 0.61 14.50 NM 94.83 23.46 94.83 22.54
FFYF FFY Financial Corp. of OH 26.00 112.53 1.72 19.50 21.67 133.33 18.80 133.33 15.12
FFOH Fidelity Financial of OH 15.00 83.91 0.64 12.03 NM 124.69 16.35 141.91 23.44
FDEF First Defiance Fin.Corp. of OH 14.00 131.92 0.60 12.41 NM 112.81 24.16 112.81 23.33
FFSW First Fed Fin. Serv. of OH 34.50 158.29 1.59 14.35 17.16 240.42 14.55 NM 21.70
FFBZ First Federal Bancorp of OH 17.50 27.51 1.18 9.34 20.35 187.37 14.35 187.57 14.83
FFHS First Franklin Corp. of OH 19.87 23.41 1.15 16.93 NM 117.37 10.35 118.20 17.28
GFCO Glenway Financial Corp. of OH 24.75 28.31 1.67 23.46 26.90 105.50 10.08 107.14 14.82
HHFC Harvest Home Fin. Corp. of OH 10.50 9.82 0.44 11.12 NM 94.42 11.74 94.42 23.86
HVFD Haverfield Corp. of OH(7) 25.50 48.60 1.86 15.04 28.98 169.55 14.23 169.55 13.71
HCFC Home City Fin. Corp. of OH 13.25 12.61 0.77 14.77 25.98 89.71 18.48 89.71 17.21
INBI Industrial Bancorp of OH 12.75 68.98 0.86 11.41 28.98 111.74 20.66 111.74 14.83
LONF London Financial Corp. of OH 15.00 7.73 0.79 14.63 27.78 102.53 20.36 102.53 18.99
MRKF Market Fin. Corp. of OH 12.87 17.19 0.50 14.17 NM 90.83 30.15 90.83 25.74
MFFC Milton Fed. Fin. Corp. of OH 14.12 32.86 0.55 11.32 NM 124.73 18.38 124.73 25.67
OHSL OHSL Financial Corp. of OH 23.75 28.69 1.54 21.00 21.99 113.10 12.48 113.10 15.42
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ --------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bridgeport Savings and Loan
---------------------------
Superrange 0.00 0.00 0.00 42 29.31 0.51 0.81 2.76 1.11 3.77
Range Maximum 0.00 0.00 0.00 41 27.58 0.52 0.78 2.84 1.09 3.94
Range Midpoint 0.00 0.00 0.00 40 25.99 0.53 0.76 2.92 1.07 4.12
Range Minimum 0.00 0.00 0.00 39 24.34 0.55 0.74 3.02 1.05 4.33
SAIF-Insured Thrifts(7)
-----------------------
Averages 0.37 1.87 29.08 1,117 12.85 0.78 0.62 5.28 0.84 7.35
Medians --- --- --- --- --- --- --- --- --- ---
All Non-MHC State of OH(7)
--------------------------
Averages 0.42 2.31 31.62 794 14.81 0.53 0.68 5.82 0.96 7.93
Medians --- --- --- --- --- --- --- --- --- ---
Comparable Group Averages
-------------------------
Averages 0.51 3.02 41.80 158 13.98 0.49 0.58 3.88 0.86 5.98
Medians --- --- --- --- --- --- --- --- --- ---
State of OH
-----------
ASBP ASB Financial Corp. of OH 0.40 3.40 70.18 109 15.73 1.58 0.60 3.01 0.88 4.40
CAFI Camco Fin. Corp. of OH 0.52 2.81 44.83 472 9.69 0.68 0.75 8.54 0.88 10.01
COFI Charter One Financial of OH 1.00 2.08 27.32 14,040 6.78 0.32 0.97 14.40 1.23 18.30
CTZN CitFed Bancorp of Dayton OH 0.32 0.87 12.55 2,937 6.33 0.45 0.55 8.47 0.79 12.27
CIBI Community Inv. Bancorp of OH 0.40 2.11 27.21 97 11.52 0.72 0.67 5.52 1.00 8.19
DCBI Delphos Citizens Bancorp of OH 0.00 0.00 0.00 107 28.34 0.10 1.27 6.07 1.27 6.07
EMLD Emerald Financial Corp of OH 0.24 1.60 25.00 589 7.51 0.34 0.69 8.89 0.89 11.37
EFBI Enterprise Fed. Bancorp of OH 1.00 5.26 NM 246 12.67 0.01 0.68 4.72 0.75 5.16
FFDF FFD Financial Corp. of OH 0.30 2.18 49.18 85 24.74 NA 0.78 3.42 1.08 4.74
FFYF FFY Financial Corp. of OH 0.70 2.69 40.70 599 14.10 0.72 0.89 5.44 1.27 7.80
FFOH Fidelity Financial of OH 0.28 1.87 43.75 513 13.12 0.18 0.63 3.90 1.01 6.24
FDEF First Defiance Fin.Corp. of OH 0.32 2.29 53.33 546 21.42 0.45 0.78 3.37 1.06 4.60
FFSW First Fed Fin. Serv. of OH 0.44 1.28 27.67 1,088 6.05 0.38 0.87 15.36 0.69 12.15
FFBZ First Federal Bancorp of OH 0.24 1.37 20.34 192 7.66 0.58 0.74 9.58 1.01 13.14
FFHS First Franklin Corp. of OH 0.32 1.61 27.83 226 8.82 0.62 0.14 1.59 0.62 6.76
GFCO Glenway Financial Corp. of OH 0.68 2.75 40.72 281 9.56 0.32 0.38 3.95 0.68 7.17
HHFC Harvest Home Fin. Corp. of OH 0.40 3.81 NM 84 12.43 0.15 0.21 1.35 0.54 3.49
HVFD Haverfield Corp. of OH(7) 0.56 2.20 30.11 342 8.39 1.00 0.49 5.94 1.03 12.55
HCFC Home City Fin. Corp. of OH 0.32 2.42 41.56 68 20.61 0.62 0.78 5.01 1.17 7.57
INBI Industrial Bancorp of OH 0.48 3.76 55.81 334 18.49 0.42 0.73 3.87 1.43 7.56
LONF London Financial Corp. of OH 0.24 1.60 30.38 38 19.86 0.79 0.74 3.55 1.09 5.19
MRKF Market Fin. Corp. of OH 0.00 0.00 0.00 57 33.20 0.89 0.89 2.68 1.17 3.53
MFFC Milton Fed. Fin. Corp. of OH 0.60 4.25 NM 179 14.74 0.32 0.53 3.00 0.72 4.13
OHSL OHSL Financial Corp. of OH 0.88 3.71 57.14 230 11.04 0.33 0.61 5.15 0.86 7.34
</TABLE>
<PAGE> 71
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
TABLE 4.4
PUBLIC MARKET PRICING
BRIDGEPORT SAVINGS AND LOAN AND THE COMPARABLES
AS OF JUNE 6, 1997
Market Per Share Data
Capitalization --------------- Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------- ------- ------- ------- ------- ------- ------- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. of OH 18.00 41.81 2.03 10.77 11.69 167.13 11.74 167.13 8.87
PFFC Peoples Fin. Corp. of OH 15.63 23.30 0.24 16.18 NM 96.60 25.99 96.60 NM
PSFC Peoples Sidney Fin. Corp of OH 13.00 23.21 0.73 14.09 23.21 92.26 21.46 92.26 17.81
PTRS Potters Financial Corp of OH 20.25 9.86 1.62 21.38 27.00 94.71 8.43 94.71 12.50
SFSL Security First Corp. of OH 21.25 106.31 1.62 11.88 16.60 178.87 16.75 182.09 13.12
SBCN Suburban Bancorp. of OH(7) 18.25 26.92 1.07 17.56 25.35 103.93 12.13 103.93 17.06
WOFC Western Ohio Fin. Corp. of OH 21.00 48.55 0.69 23.21 NM 90.48 12.14 96.02 NM
WEHO Westwood Hmstd Fin Corp of OH 13.25 37.67 0.37 14.15 NM 93.64 28.99 93.64 NM
WFCO Winton Financial Corp. of OH 13.00 25.82 1.07 10.49 15.48 123.93 8.83 127.08 12.15
FFWD Wood Bancorp of OH 16.00 23.89 1.26 13.91 15.69 115.03 14.61 115.03 12.70
Comparable Group
----------------
ASBP ASB Financial Corp. of OH 11.75 20.22 0.57 10.00 NM 117.50 18.48 117.50 20.61
CIBI Community Inv. Bancorp of OH 19.00 12.03 1.47 17.73 19.19 107.16 12.34 107.16 12.93
EFBI Enterprise Fed. Bancorp of OH 19.00 38.21 0.82 15.52 25.33 122.42 15.51 122.58 23.17
FFDF FFD Financial Corp. of OH 13.75 20.01 0.61 14.50 NM 94.83 23.46 94.83 22.54
FFHS First Franklin Corp. of OH 19.87 23.41 1.15 16.93 NM 117.37 10.35 118.20 17.28
GFCO Glenway Financial Corp. of OH 24.75 28.31 1.67 23.46 26.90 105.50 10.08 107.14 14.82
HHFC Harvest Home Fin. Corp. of OH 10.50 9.82 0.44 11.12 NM 94.42 11.74 94.42 23.86
LONF London Financial Corp. of OH 15.00 7.73 0.79 14.63 27.78 102.53 20.36 102.53 18.99
MFFC Milton Fed. Fin. Corp. of OH 14.12 32.86 0.55 11.32 NM 124.73 18.38 124.73 25.67
OHSL OHSL Financial Corp. of OH 23.75 28.69 1.54 21.00 21.99 113.10 12.48 113.10 15.42
FFWD Wood Bancorp of OH 16.00 23.89 1.26 13.91 15.69 115.03 14.61 115.03 12.70
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ --------------- --------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PVFC PVF Capital Corp. of OH 0.00 0.00 0.00 356 7.02 1.20 1.05 15.54 1.39 20.48
PFFC Peoples Fin. Corp. of OH 0.50 3.20 NM 90 26.90 0.01 0.08 0.31 0.40 1.48
PSFC Peoples Sidney Fin. Corp of OH 0.00 0.00 0.00 108 23.26 1.00 0.92 3.97 1.21 5.18
PTRS Potters Financial Corp of OH 0.36 1.78 22.22 117 8.91 0.83 0.31 3.45 0.67 7.45
SFSL Security First Corp. of OH 0.48 2.26 29.63 635 9.36 0.26 1.10 11.88 1.39 15.04
SBCN Suburban Bancorp. of OH(7) 0.60 3.29 56.07 222 11.67 0.19 0.51 4.13 0.75 6.14
WOFC Western Ohio Fin. Corp. of OH 1.00 4.76 NM 400 13.41 0.96 0.31 2.02 0.44 2.90
WEHO Westwood Hmstd Fin Corp of OH 0.28 2.11 NM 130 30.96 NA 0.55 2.11 0.93 3.54
WFCO Winton Financial Corp. of OH 0.46 3.54 42.99 292 7.13 NA 0.66 8.78 0.84 11.18
FFWD Wood Bancorp of OH 0.40 2.50 31.75 163 12.70 0.10 1.00 7.48 1.24 9.24
Comparable Group
----------------
ASBP ASB Financial Corp. of OH 0.40 3.40 70.18 109 15.73 1.58 0.60 3.01 0.88 4.40
CIBI Community Inv. Bancorp of OH 0.40 2.11 27.21 97 11.52 0.72 0.67 5.52 1.00 8.19
EFBI Enterprise Fed. Bancorp of OH 1.00 5.26 NM 246 12.67 0.01 0.68 4.72 0.75 5.16
FFDF FFD Financial Corp. of OH 0.30 2.18 49.18 85 24.74 NA 0.78 3.42 1.08 4.74
FFHS First Franklin Corp. of OH 0.32 1.61 27.83 226 8.82 0.62 0.14 1.59 0.62 6.76
GFCO Glenway Financial Corp. of OH 0.68 2.75 40.72 281 9.56 0.32 0.38 3.95 0.68 7.17
HHFC Harvest Home Fin. Corp. of OH 0.40 3.81 NM 84 12.43 0.15 0.21 1.35 0.54 3.49
LONF London Financial Corp. of OH 0.24 1.60 30.38 38 19.86 0.79 0.74 3.55 1.09 5.19
MFFC Milton Fed. Fin. Corp. of OH 0.60 4.25 NM 179 14.74 0.32 0.53 3.00 0.72 4.13
OHSL OHSL Financial Corp. of OH 0.88 3.71 57.14 230 11.04 0.33 0.61 5.15 0.86 7.34
FFWD Wood Bancorp of OH 0.40 2.50 31.75 163 12.70 0.10 1.00 7.48 1.24 9.24
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data,
adjusted to omit the impact of non-operating items (including the SAIF
assessment) on a tax effected basis, and is shown on a pro forma basis
where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend
declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common
equity and total assets balances.
(7) Excludes from averages and medians those companies the subject of
actual or rumored acquisition activities or unusual operating
characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot
guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 72
EXHIBITS
<PAGE> 73
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
I-1 Map of Office Locations
I-2 Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Loan Loss Allowance Activity
I-7 Fixed Rate and Adjustable Rate Loans
I-8 Loan Portfolio Composition
I-9 Loan Originations, Purchases and Sales
I-10 Contractual Maturity By Loan Type
I-11 Non-Performing Assets
I-12 Deposit Composition
I-13 Time Deposit Rate/Maturity
II-1 Description of Office Facilities
II-2 Historical Interest Rates
III-1 General Characteristics of Publicly-Traded
Institutions
III-2 Financial Analysis of Ohio and West Virginia Institutions
<PAGE> 74
RP Financial, LC.
LIST OF EXHIBITS(continued)
III-3 Peer Group Market Area Comparative Analysis
IV-1 Stock Prices: As of June 6, 1997
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Director and Senior Management Summary Resumes
IV-6 Pro Forma Regulatory Capital Ratios
IV-7 Pro Forma Analysis Sheet
IV-8 Pro Forma Effect of Conversion Proceeds
IV-9 Peer Group Core Earnings Analysis
V-1 Firm Qualifications Statement
<PAGE> 75
EXHIBIT I-1
Bridgeport Savings and Loan Association
Map of Office Locations
<PAGE> 76
[MAP]
BRIDGEPORT S&LA
MARKET AREA
Map of Belmont and Marshall Counties, Ohio with branches marked by asterisks.
* INDICATES BRANCH LOCATION
<PAGE> 77
EXHIBIT I-2
Bridgeport Savings and Loan Association
Audited Financial Statements
[Incorporated by Reference]
<PAGE> 78
EXHIBIT I-3
Bridgeport Savings and Loan Association
Key Operating Ratios
<TABLE>
<CAPTION>
SELECTED FINANCIAL RATIOS: At or for the three
months ended
March 31, At or for the year ended December 31,
----------------------- ----------------------------------------------------
1997(1) 1996(1) 1996 1995 1994 1993 1992
---------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets (2) 1.04% 1.11% 0.62% 1.06% 1.04% 0.88% 0.78%
Return on average equity (2) 7.44 8.33 4.53 8.25 8.87 8.71 8.83
Interest rate spread 3.47 3.76 3.62 3.76 3.66 3.42 3.10
Net interest margin 3.94 4.19 4.08 4.17 3.97 3.71 3.40
Non-interest expense to
average assets (2) 2.34 2.52 3.15 2.54 2.47 2.11 2.11
Efficiency ratio (3) 59.75 60.03 77.27 61.28 60.83 57.42 63.02
Average interest-earning
assets to average
interest-bearing 113.78 112.60 113.28 112.04 110.59 108.55 106.91
liabilities
Capital ratios:
Average equity to average
assets 14.01 13.34 13.64 12.87 11.69 10.12 8.79
Equity to assets, end of
period 14.06 13.40 14.06 13.19 12.45 10.88 9.47
Asset quality ratios:
Nonperforming assets to
average assets (4) 0.62 0.01 0.20 0.02 0.02 0.48 0.17
Nonperforming loans to
total loans 0.85 0.02 0.28 0.02 0.03 0.76 0.26
Allowance for loans losses
to gross loans 0.57 0.56 0.57 0.55 0.62 0.67 0.44
Allowance for loans losses
to nonperforming loans 66.82 2860.00 207.25 2383.33 2042.86 87.88 168.42
Net (charge-offs) recoveries
to average loans - - - - (0.08) (0.02) 0.01
</TABLE>
- ------------------------------
(1) Ratios for three month periods are stated on an annualized basis. Such
ratios and results are not necessarily indicative of results that may be
expected for the full year.
(2) Includes a nonrecurring pre-tax expense of $190,000 for the year ended
December 31, 1996, for a special one-time assessment to recapitalize the
SAIF.
(3) Non-interest expenses as a percentage of net interest income plus
non-interest income.
(4) Nonperforming assets include non-accrual loans, accruing loans more than 90
days past due and real estate acquired in settlement of loans.
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS
<PAGE> 79
EXHIBIT I-4
Bridgeport Savings and Loan Association
Investment Portfolio Composition
<TABLE>
<CAPTION>
At March 31, At December 31,
------------------------ -----------------------------------------------------
1997 1996 1995
------------------------ ----------------------- ----------------------
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
----- ----- ----- ----- ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits $2,085 $2,085 $1,985 $1,985 $ 625 $ 625
Interest-bearing time deposits 1,200 1,200 800 800 1,000 1,000
Investment securities:
Held to maturity:
U.S. Government and
federal agencies
3,798 3,792 3,797 3,811 4,187 4,237
Mortgage-backed
securities 939 1,009 984 1,063 1,190 1,281
Available for sale:
FHLB stock 330 330 324 324 303 303
Intrieve Inc. stock 15 15 15 15 15 15
------ ------ ------ ------ ------ ------
Total $8,367 $8,431 $7,905 $7,998 $7,320 $7,461
====== ====== ====== ====== ====== ======
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 80
EXHIBIT I-5
Bridgeport Savings and Loan Association
Yields and Costs
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
Average Interest Average Average Interest Average
outstanding earned/ yield/ outstanding earned/ yield/
balance paid rate(1) balance paid rate
------- ---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits $ 2,997 $ 40 5.34% $ 1,863 $ 26 5.58%
Investment securities (2) 4,138 62 5.99 4,508 73 6.48
Mortgage-backed securities 959 23 9.59 1,171 28 9.56
Loans receivable (3) 25,068 489 7.80 25,744 511 7.94
------- ---- ---- -------- ---- ----
Total interest-earning
assets 33,162 614 7.41 33,286 638 7.67
Non-interest-earning assets 1,177 1,218
------- -------
Total assets $34,339 $34,504
======= =======
Interest-bearing liabilities:
NOW and money market
accounts $ 4,272 27 2.53% $ 5,449 36 2.64%
Regular savings accounts 9,937 72 2.90 9,581 70 2.92
Certificates of deposit 14,886 188 5.05 14,531 183 5.04
------ ---- ---- ------- --- ----
Total deposits 29,095 287 3.95 29,561 289 3.91
FHLB advances (4) 50 - - - - -
------- ---- ---- -------- ---- ----
Total interest-bearing
liabilities 29,145 287 3.94 29,561 289 3.91
Non-interest-bearing
liabilities 381 339
------- --------
Total liabilities 29,526 29,900
Retained earnings 4,813 4,604
-------- --------
Total liabilities and
retained earnings $34,339 $34,504
======= =======
Net interest income $327 $349
==== ====
Interest rate spread 3.47% 3.76%
==== ====
Net interest margin 3.94% 4.19%
==== ====
Average interest-earning
assets to average
interest-bearing
liabilities 113.78% 112.60%
====== ======
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------------------
1996 1995 1994
--------------------------- ----------------------------- -----------------------------
Average Interest Average Average Interest Average Average Interest Average
outstanding earned/ yield/ outstanding earned/ yield/ outstanding earned/ yield
balance paid rate balance paid rate balance paid rate
---------- ------ ----- --------- -------- ----- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits $ 2,592 $ 144 5.56% $ 2,788 $ 150 5.38% $ 5,509 $ 204 3.70%
Investment securities (2) 4,274 269 6.29 4,483 299 6.67 4,041 271 6.71
Mortgage-backed securities 1,091 102 9.35 1,296 120 9.26 1,740 160 9.20
Loans receivable (3) 25,267 2,000 7.92 24,280 1,909 7.86 21,827 1,663 7.62
-------- ------ ---- -------- ------- ---- -------- ------ ----
Total interest-earning
assets 33,224 2,515 7.57 32,847 2,478 7.54 33,117 2,298 6.94
Non-interest-earning assets 1,186 1,161 1,165
-------- ------- -------
Total assets $34,410 $34,008 $34,282
======= ======= =======
Interest-bearing liabilities:
NOW and money market
accounts $ 4,910 127 2.59% $ 6,226 176 2.83% $ 8,082 226 2.80%
Regular savings accounts 9,807 287 2.93 9,687 280 2.89 10,584 306 2.89
Certificates of deposit 14,611 744 5.09 13,382 651 4.86 11,280 450 3.99
------- ------ ------ ------- ---- -------- ----- ----
Total deposits 29,328 1,158 3.95 29,295 1,107 3.78 29,946 982 3.28
-------- ------- ---- -------- ------ ----
FHLB advances (4) - - - 23 1 4.35 - - -
-------- ------ ---- -------- ------- ---- -------- ------ ----
Total interest-bearing
liabilities 29,328 1,158 3.95 29,318 1,108 3.78 29,946 982 3.28
------ ---- ------- ---- ------ ----
Non-interest-bearing
liabilities 389 313 328
-------- -------- --------
Total liabilities 29,717 29,631 30,274
Retained earnings 4,693 4,377 4,008
--------- -------- ---------
Total liabilities and
retained earnings $34,410 $34,008 $34,282
======= ======= =======
Net interest income $1,357 $1,370 $1,316
====== ====== ======
Interest rate spread 3.62% 3.76% 3.66%
==== ==== ====
Net interest margin 4.08% 4.17% 3.97%
==== ==== ====
Average interest-earning
assets to average
interest-bearing
liabilities 113.28% 112.04% 110.59%
====== ====== ======
<FN>
-------------------
(1) Annualized.
(2) Includes dividends on FHLB stock.
(3) Includes nonperforming loans
(4) Interest paid on FHLB advances for the quarter ended March 31, 1997, was
less than $1,000.
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 81
EXHIBIT I-6
Bridgeport Savings and Loan Association
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
---------------- -----------------------------
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 143 $ 143 $ 143 $ 143 $ 145
Charge-offs -- -- -- -- (18)
Recoveries -- -- -- -- --
----- ----- ----- ----- -----
Net (charge-offs) recoveries -- -- -- -- (18)
Provision for losses on loans -- -- -- -- 16
----- ----- ----- ----- -----
Balance at end of period $ 143 $ 143 $ 143 $ 143 $ 143
===== ===== ===== ===== =====
Ratio of net (charge-offs) recoveries
to average loans outstanding
during the period N/A N/A N/A N/A (0.08)%
Ratio of allowance for loan losses
to total loans 0.57% 0.56% 0.57% 0.55% 0.63%
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS
<PAGE> 82
EXHIBIT I-7
Bridgeport Savings and Loan Association
Fixed Rate and Adjustable Rate Loans
<TABLE>
<CAPTION>
Fixed Adjustable
rates rates Total
----- ----- -----
(In thousands)
<S> <C> <C> <C>
Real estate loans:
One- to four-family $16,687 $4,004 $20,691
Multifamily 48 - 48
Nonresidential 418 - 418
Land 79 - 79
Construction 124 - 124
Consumer loans 3,427 - 3,427
Commercial loans 55 - 55
------- ------ -------
Total $20,838 $4,004 $24,842
======= ====== =======
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 83
EXHIBIT I-8
Bridgeport Savings and Loan Association
Loan Portfolio Composition
<TABLE>
<CAPTION>
At December 31,
------------------------------------------------------------------------
At March 31, 1997 1996 1995 1994
---------------------- --------------------- -------------------- ---------------------
Percent of Percent of Percent of Percent of
Amount total loans Amount total loans Amount total loans Amount total loans
------ ----------- ------ ----------- ------ ----------- ------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family $20,691 81.96% $20,605 81.97% $21,086 79.54% $18,802 80.47%
Multifamily 48 0.19 51 0.20 557 2.10 589 2.52
Nonresidential 418 1.66 460 1.83 1,064 4.01 1,062 4.54
Land 79 0.31 86 0.34 5 0.02 6 0.03
Construction 124 0.49 124 0.49 469 1.77 776 3.32
Consumer loans:
Automobiles 1,821 7.21 1,931 7.68 1,752 6.61 1,166 4.99
Savings accounts 310 1.23 265 1.06 244 0.92 252 1.08
Other 1,653 6.55 1,511 6.01 1,201 4.53 685 2.93
Commercial loans 101 0.40 105 0.42 132 0.50 27 0.12
------- ------ ------- ------ ------- ------ ------ ------
Total loans 25,245 100.0% 25,138 100.00% 26,510 100.00% 23,365 100.00%
===== ====== ====== ======
Less:
Loans in process 36 51 328 378
Deferred loan fees 49 52 67 61
Allowance for loan
losses 143 143 143 143
------- ------- ------- -------
Total loans, net $25,017 $24,892 $25,972 $22,783
======= ======= ======= =======
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS
<PAGE> 84
EXHIBIT I-9
Bridgeport Savings and Loan Association
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
---------------------- -------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Total gross loans receivable at
beginning of period $ 25,138 $ 26,510 $ 26,510 $ 23,365 $ 21,815
Loans originated:
Real estate:
One- to four-family 632 174 1,993 3,295 1,080
Multifamily -- -- -- -- --
Land -- -- 90 -- --
Nonresidential -- -- 163 83 275
Construction -- -- -- 507 831
Consumer 512 341 2,136 2,355 1,474
Commercial -- -- 8 121 27
-------- -------- -------- -------- --------
Total loans originated 1,144 515 4,390 6,361 3,687
Loan principal repayments (1,023) (1,079) (5,762) (3,216) (1,949)
Charge-offs -- -- -- -- (18)
Foreclosures (14) -- -- -- (170)
-------- -------- -------- -------- --------
Net loan activity 107 (564) (1,372) 3,145 1,550
-------- -------- -------- -------- --------
Total gross loans receivable at
end of period $ 25,245 $ 25,946 $ 25,138 $ 26,510 $ 23,365
======== ======== ======== ======== ========
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 85
EXHIBIT I-10
Bridgeport Savings and Loan Association
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
During the Due 1-3 Due 3-5 Due 5-10 Due 10-20 Due over
year ending years years years years 20 years
March 31, after after after after after
1998 3/31/98 3/31/98 3/31/98 3/31/98 3/31/98 Total
----------- ------- -------- -------- ---------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family - $234 $ 168 $1,745 $13,975 $4,569 $20,691
Multifamily - - - 48 - - 48
Nonresidential - - 45 193 180 - 418
Land - 79 - - - - 79
Construction - - - - 124 - 124
Consumer loans 357 642 1,535 1,217 33 0 3,784
Commercial loans 46 3 52 - - - 101
---- ---- ------ ------ ------- ------ -------
Total $403 $958 $1,800 $3,203 $14,312 $4,569 $25,245
==== ==== ====== ====== ======= ====== =======
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 86
EXHIBIT I-11
Bridgeport Savings and Loan Association
Non-Performing Assets
<TABLE>
<CAPTION>
At March 31, At December 31,
------------------- ----------------------------------
1997 1996 1996 1995 1994
------ ---- ---- ---- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Loans accounted for on a nonaccrual basis:
Real estate 180 -- 51 -- --
Consumer 20 5 18 6 7
---- ---- ---- ---- ----
Total nonaccrual loans 200 5 69 6 7
Total nonperforming loans 200 5 69 6 7
Real estate owned 14 -- -- -- --
---- ---- ---- ---- ----
Total nonperforming assets $214 $ 5 $ 69 $ 6 $ 7
==== ==== ==== ==== ====
Allowance for loan losses $143 $143 $143 $143 $143
==== ==== ==== ==== ====
Nonperforming assets as a percent of
total assets 0.62% 0.01% 0.20% 0.02% 0.02%
Nonperforming loans as a percent of
total loans 0.85% 0.02% 0.28% 0.02% 0.03%
Allowance for loan losses as a
percent of nonperforming loans 66.82% 2,860.00% 207.25% 2,383.33% 2,042.86%
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 87
EXHIBIT I-12
Bridgeport Savings and Loan Association
Deposit Composition
<TABLE>
<CAPTION>
At December 31,
At March 31, -------------------------------------------------
1997 1996 1995
---------------------- ---------------------- ---------------------
Percent Percent Percent
of total of total of total
Amount deposits Amount deposits Amount deposits
-------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
Regular savings
accounts (1) $ 10,066 34.20% $ 9,923 34.50% $ 9,565 32.30%
NOW and Super NOW
accounts (2) 1,152 3.92 979 3.40 1,057 3.60
Money market accounts (3) 3,086 10.49 3,290 11.40 4,567 15.40
-------- ------ -------- ------ -------- ------
Total transaction
accounts 14,304 48.61 14,192 49.30 15,189 51.30
Certificates of deposit
3.00% or less 21 0.07 -- -- -- --
3.01 - 5.00% 6,346 21.57 6,837 23.75 7,978 26.94
5.01 - 7.00% 8,753 29.75 7,762 26.95 6,177 20.85
7.01 - 9.00% -- -- -- -- 271 0.91
------- ------- -------- ------ -------- ------
Total certificates of
deposit (4) 15,120 51.39 14,599 50.70 14,426 48.70
-------- ------ -------- ------ -------- ------
Total deposits $ 29,424 100.00% $ 28,791 100.00% $ 29,615 100.00%
======== ====== ======== ====== ======== ======
- -----------------------------
(1) The weighted average rate on passbook savings accounts was 3.00% at March
31, 1997, and December 31, 1996 and 1995, respectively.
(2) The weighted average rate on NOW and Super NOW accounts was 1.75%, at March
31, 1997, and December 31, 1996 and 1995, respectively.
(3) The weighted average rate on money market accounts was 2.75%, 2.75% and
2.95% at March 31, 1997, and December 31, 1996 and 1995, respectively.
(4) The weighted average rate on all certificates of deposit was 5.10%, 5.09%
and 5.04% at March 31, 1997, and December 31, 1996 and 1995, respectively.
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 88
EXHIBIT I-13
Bridgeport Savings and Loan Association
Time Deposit Rate/Maturity
<TABLE>
<CAPTION>
Amount Due
-------------------------------------------------------------
Over Over
Up to 1 year to 2 years to Over
Rate one year 2 years 3 years 3 years Total
---- -------- -- --------- -- --------- -------- -----
(In thousands)
<S> <C> <C> <C> <C> <C>
3.00% or less $ 4 $ - $ - $ 17 $ 21
3.01% to 5.00% 4,928 1,328 216 148 6,620
5.01% to 7.00% 6,633 1,275 158 413 8,479
------- ------ ---- ---- -------
Total certificates of
deposit $11,565 $2,603 $374 $578 $15,120
======= ====== ==== ==== =======
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 89
EXHIBIT II-1
Bridgeport Savings and Loan Association
Description of Office Facilities
<TABLE>
<CAPTION>
Owned or Date Square Net book
Location leased acquired footage value Deposits
- -------- ------ -------- ------- ----- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
435 Main Street Owned 1964 4,744 $109,286 $21,624
Bridgeport, Ohio 43912
4000 Central Avenue Owned 1979 2,197 $289,304 $7,801
Shadyside, Ohio 43943
</TABLE>
SOURCE: BRIDGEPORT SAVINGS' PROSPECTUS.
<PAGE> 90
EXHIBIT II-2
HISTORICAL INTEREST RATES
<PAGE> 91
<TABLE>
<CAPTION>
HISTORICAL INTEREST RATES(1)
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- --------------- ----- ------ ------ ------
<S> <C> <C> <C> <C>
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
Quarter 2 8.25% 5.16% 5.68% 6.87%
Quarter 3 8.25% 5.03% 5.69% 6.92%
Quarter 4 8.25% 5.18% 5.49% 6.64%
1997: Quarter 1 8.50% 5.32% 6.00% 7.10%
June 6, 1997 8.50% 5.04% 5.68% 6.77%
(1) End of period data.
</TABLE>
Source: SNL Securities.
<PAGE> 92
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE> 93
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ -------------------------------- ------ --------------- -------- ------ ------- ----- ----- ------ ------
($Mil) ($) ($Mil)
California Companies
--------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 48,698 345 12-31 10/72 44.37 4,463
GWF Great Western Fin. Corp. of CA NYSE CA,FL Div. 42,878 416 12-31 / 49.62 6,842
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 38,530 232 12-31 05/59 69.75 3,991
GLN Glendale Fed. Bk, FSB of CA NYSE CA Div. 15,394 150 06-30 10/83 26.75 1,346
CSA Coast Savings Financial of CA NYSE California R.E. 8,797 89 12-31 12/85 45.87 853
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 5,484 52 12-31 01/71 21.00 561
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,130 25 12-31 12/83 28.37 300
WES Westcorp Inc. of Orange CA NYSE California Div. 3,406 25 12-31 05/86 16.87 439
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 3,295 33 12-31 / 10.50 192
BVCC Bay View Capital Corp. of CA OTC San Francisco CA M.B. 3,045 27 12-31 05/86 24.87 323
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,536 22 03-31 03/96 15.25 287
CENF CENFED Financial Corp. of CA OTC Los Angeles CA Thrift 2,263 18 12-31 10/91 29.50 170
FRC First Republic Bancorp of CA (3) NYSE CA,NV M.B. 2,183 11 12-31 / 20.37 204
AFFFZ America First Fin. Fund of CA OTC San Francisco CA Div. 2,183 36 12-31 / 38.12 229
CFHC California Fin. Hld. Co. of CA OTC Central CA Thrift 1,315 22 12-31 04/83 29.37 140
REDF RedFed Bancorp of Redlands CA OTC Southern CA Thrift 909 14 12-31 04/94 15.12 108
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 828 S 9 12-31 / 11.37 30
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 827 J 12 06-30 06/95 13.50 85
ITLA Imperial Thrift & Loan of CA (3) OTC Los Angeles CA R.E. 810 11 12-31 / 15.25 119
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 781 8 06-30 12/93 15.87 76
PROV Provident Fin. Holdings of CA OTC M.B. 609 0 06-30 06/96 16.50 84
HBNK Highland Federal Bank of CA OTC Los Angeles CA R.E. 480 11 12-31 / 21.81 50
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 422 6 12-31 02/95 16.37 53
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 400 6 06-30 06/95 12.87 30
PCCI Pacific Crest Capital of CA (3) OTC Southern CA R.E. 343 4 12-31 / 12.25 36
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 117 D 3 12-31 01/96 10.75 10
FSSB First FS&LA of San Bern. CA OTC San Bernard. CA Thrift 104 4 06-30 12/92 9.50 3
Florida Companies
-----------------
</TABLE>
<PAGE> 94
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ -------------------------------- ------ --------------- -------- ------ ------- ----- ----- ------ ------
($Mil) ($) ($Mil)
Florida Companies (continued)
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 2,773 43 12-31 11/83 13.75 255
OCWN Ocwen Financial Corp. of FL OTC Southeast FL Div. 2,649 1 12-31 / 29.25 784
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,558 31 09-30 09/93 30.00 150
BKUNA BankUnited SA of FL OTC Miami FL Thrift 1,453 7 09-30 12/85 9.81 87
HARB Harbor FSB, MHC of FL (46.0) OTC Eastern FL Thrift 1,105 22 09-30 01/94 36.62 182
FFFL Fidelity FSB, MHC of FL (47.4) OTC Southeast FL Thrift 927 20 12-31 01/94 18.75 127
CMSV Commty. Svgs, MHC of FL (48.5) OTC Southeast FL Thrift 682 17 09-30 10/94 21.75 107
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 359 8 12-31 01/94 28.25 66
FFFG F.F.O. Financial Group of FL OTC Central FL R.E. 317 D 11 12-31 10/88 4.31 36
Mid-Atlantic Companies
----------------------
DME Dime Savings Bank, FSB of NY (3) NYSE NY,NJ,FL M.B. 18,465 87 12-31 08/86 17.75 1,868
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,261 82 06-30 01/94 62.62 2,936
SVRN Sovereign Bancorp of PA OTC PA,NJ,DE M.B. 10,287 120 12-31 08/86 13.50 943
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 7,689 46 12-31 11/93 42.37 900
LISB Long Island Bancorp of NY OTC Long Island NY M.B. 5,814 36 09-30 04/94 35.12 851
COFD Collective Bancorp Inc. of NJ OTC Southern NJ Thrift 5,518 79 06-30 02/84 44.00 900
RCSB RCSB Financial, Inc. of NY (3) OTC NY M.B. 4,032 34 11-30 04/86 42.00 622
ALBK ALBANK Fin. Corp. of Albany NY OTC NY,MA Thrift 3,496 63 06-30 04/92 37.25 478
ROSE TR Financial Corp. of NY OTC New York, NY Thrift 3,404 15 12-31 06/93 21.62 381
NYB New York Bancorp, Inc. of NY AMEX Southeastern NY Thrift 3,175 29 09-30 01/88 32.87 538
RSLN Roslyn Bancorp of NY (3) OTC Long Island NY M.B. 2,849 6 12-31 01/97 17.44 761
GRTR Greater New York SB of NY (3) OTC New York NY Div. 2,571 14 12-31 06/87 19.69 269
BKCO Bankers Corp. of NJ (3) OTC Central NJ Thrift 2,542 15 12-31 03/90 25.25 313
CMSB Cmnwealth Bancorp of PA OTC Philadelphia PA M.B. 2,236 39 06-30 06/96 15.12 259
NWSB Northwest SB, MHC of PA (29.9) OTC Pennsylvania Thrift 1,997 53 06-30 11/94 14.37 336
HARS Harris SB, MHC of PA (24.2) OTC Southeast PA Thrift 1,943 31 12-31 01/94 20.75 233
RELY Reliance Bancorp of NY OTC NYC NY Thrift 1,927 28 06-30 03/94 24.62 217
MLBC ML Bancorp of Villanova PA OTC Philadelphia PA M.B. 1,875 D 18 03-31 08/94 18.44 192
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,728 9 12-31 09/93 34.00 147
JSBF JSB Financial, Inc. of NY OTC New York City R.E. 1,519 S 13 12-31 06/90 44.62 439
</TABLE>
<PAGE> 95
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ -------------------------------- ------ --------------- -------- ------ ------- ----- ----- ------ ------
($Mil) ($) ($Mil)
Mid-Atlantic Companies (continued)
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WSFS WSFS Financial Corp. of DE (3) OTC DE Div. 1,478 14 12-31 11/86 13.00 163
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,388 9 12-31 07/96 31.44 285
QCSB Queens County SB of NY (3) OTC New York City NY R.E. 1,373 9 12-31 11/93 41.62 464
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,252 17 06-30 07/94 25.19 121
DIME Dime Community Bancorp of NY OTC New York, NY Thrift 1,237 15 06-30 06/96 17.87 235
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,157 22 06-30 02/84 20.00 139
MFSL Maryland Fed. Bancorp of MD OTC MD Thrift 1,128 25 02-28 06/87 45.00 144
FSLA First SB SLA MHC of NJ (47.5) OTC Eastern NJ Thrift 1,025 17 12-31 06/92 24.75 179
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 973 28 06-30 07/87 28.37 115
PSBK Progressive Bank, Inc. of NY (3) OTC Eastern NY Thrift 878 17 12-31 08/84 27.25 104
PKPS Poughkeepsie SB of NY OTC Poughkeepsie NY R.E. 861 9 12-31 11/85 6.69 84
MBB MSB Bancorp of Middletown NY (3) OTC Southeastern NY Thrift 848 S 17 09-30 08/92 18.12 51
FFIC Flushing Fin. Corp. of NY (3) OTC New York, NY Thrift 811 7 12-31 11/95 19.37 157
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 740 8 09-30 10/94 15.00 165
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 709 7 12-31 06/95 14.87 101
PWBC PennFirst Bancorp of PA OTC Western PA Thrift 706 9 12-31 06/90 13.50 53
FCIT First Cit. Fin. Corp of MD OTC DC Metro Area Thrift 694 14 12-31 12/86 28.62 84
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 670 10 12-31 03/96 16.56 139
THRD TF Financial Corp. of PA OTC Philadelphia PA Thrift 644 11 06-30 07/94 18.00 74
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 636 D 16 03-31 10/95 16.25 78
TSBS Trenton SB, FSB MHC of NJ(35.0 OTC Central NJ Thrift 626 10 12-31 08/95 19.75 178
PBIX Patriot Bank Corp. of PA OTC Southeast PA Thrift 594 7 12-31 12/95 16.00 68
FSNJ First SB of NJ, MHC (45.9) OTC Northern NJ Thrift 579 D 4 05-31 01/95 25.75 79
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 554 16 12-31 12/88 19.75 47
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 516 4 09-30 09/86 18.25 56
FSPG First Home Bancorp of NJ OTC NJ,DE Thrift 508 10 12-31 04/87 19.25 52
ANBK American Nat'l Bancorp of MD OTC Baltimore MD R.E. 487 S 9 07-31 11/95 14.75 53
AHCI Ambanc Holding Co. of NY (3) OTC East-Central NY Thrift 478 9 12-31 12/95 14.37 63
LVSB Lakeview SB of Paterson NJ OTC Northern NJ Thrift 472 D 8 07-31 12/93 29.62 68
CNY Carver FSB of New York, NY OTC New York, NY Thrift 424 8 03-31 10/94 10.12 23
SHEN First Shenango Bancorp of PA OTC Western PA Thrift 401 4 12-31 04/93 25.00 52
PFNC Progress Financial Corp. of PA OTC Southeastern PA M.B. 400 9 12-31 07/83 9.12 35
RARB Raritan Bancorp. of Raritan NJ (3) OTC Central NJ Thrift 375 5 12-31 03/87 29.50 45
</TABLE>
<PAGE> 96
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-Atlantic Companies (continued)
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 367 8 12-31 10/89 19.75 57
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 346 9 12-31 01/95 20.87 51
HARL Harleysville SA of PA OTC Southeastern PA Thrift 333 4 09-30 08/87 22.12 37
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 328 8 09-30 06/88 20.00 31
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 315 5 09-30 01/95 22.75 28
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 305 6 06-30 03/87 19.75 41
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 303 7 12-31 01/96 13.00 36
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 296 4 09-30 09/93 34.00 20
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 284 4 09-30 04/96 14.87 47
LFED Leeds FSB, MHC of MD (36.2) OTC Baltimore MD Thrift 282 1 06-30 03/94 18.00 62
WVFC WVS Financial Corp. of PA (3) OTC Pittsburgh PA Thrift 280 5 06-30 11/93 24.75 43
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 274 3 09-30 04/96 15.50 78
FIBC Financial Bancorp of NY OTC New York, NY Thrift 269 5 09-30 08/94 17.25 30
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 257 D 3 07-31 / 4.87 21
FBER First Bergen Bancorp of NJ OTC Northern NJ Thrift 252 2 09-30 04/96 13.62 41
IFSB Independence FSB of DC OTC Washington DC Ret. 248 S 2 12-31 06/85 8.87 11
WYNE Wayne Bancorp of NJ OTC Thrift 245 0 12-31 06/96 18.50 40
GDVS Greater DV SB,MHC of PA (19.9) (3) OTC Southeast PA Thrift 239 7 12-31 03/95 12.87 42
PHFC Pittsburgh Home Fin. of PA OTC Pittsburgh PA Thrift 237 6 09-30 04/96 15.12 30
ESBK Elmira SB of Elmira NY (3) OTC NY,PA Ret. 223 6 12-31 03/85 20.75 15
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 219 6 03-31 08/94 17.00 30
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 213 4 04-30 11/94 16.25 29
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 209 6 06-30 02/87 21.25 32
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 183 3 06-30 12/95 14.00 45
PLSK Pulaski SB, MHC of NJ (46.0) OTC New Jersey Thrift 169 P 5 12-31 04/97 12.75 26
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 169 3 12-31 06/95 16.62 21
SKBO First Carnegie,MHC of PA(45.0) OTC Western PA Thrift 150 P 3 03-31 04/97 13.44 31
PRBC Prestige Bancorp of PA OTC Thrift 127 0 12-31 06/96 15.50 14
TPNZ Tappan Zee Fin. Corp. of NY OTC Southeast NY Thrift 120 S 1 03-31 10/95 16.50 25
WWFC Westwood Fin. Corp. of NJ OTC Northern NJ Thrift 108 2 03-31 06/96 21.00 14
AFBC Advance Fin. Bancorp of WV OTC Northern Neck WV Thrift 104 2 06-30 01/97 13.62 15
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 98 5 09-30 04/96 14.25 22
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 66 2 09-30 07/93 23.00 6
</TABLE>
<PAGE> 97
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ --------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-Atlantic Companies (continued)
----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PWBK Pennwood SB of PA (3) OTC Pittsburgh PA Thrift 48 3 12-31 07/96 15.00 9
Mid-West Companies
------------------
COFI Charter One Financial of OH OTC OH,MI Div. 14,040 155 12-31 01/88 48.00 2,224
RFED Roosevelt Fin. Grp. Inc. of MO OTC MO,IL,KS Div. 7,796 D 79 12-31 01/87 23.75 1,012
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK M.B. 6,902 98 06-30 12/84 35.75 769
FFHC First Financial Corp. of WI OTC WI,IL Div. 5,809 129 12-31 12/80 28.00 1,020
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,485 52 12-31 05/87 32.81 749
SECP Security Capital Corp. of WI OTC Wisconsin Div. 3,647 42 06-30 01/94 93.00 856
MAFB MAF Bancorp of IL OTC Chicago IL Thrift 3,236 13 06-30 01/90 41.00 428
GTFN Great Financial Corp. of KY OTC Kentucky M.B. 3,002 41 12-31 03/94 33.25 468
CTZN CitFed Bancorp of Dayton OH OTC Dayton OH M.B. 2,937 33 03-31 01/92 36.75 317
STND Standard Fin. of Chicago IL OTC Chicago IL Thrift 2,489 13 12-31 08/94 24.37 395
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,885 33 03-31 07/92 43.12 198
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,579 13 09-30 06/93 29.50 159
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,530 44 12-31 11/89 30.25 184
DNFC D&N Financial Corp. of MI OTC MI,WI Ret. 1,528 35 12-31 02/85 18.25 152
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,481 28 12-31 08/83 21.25 223
ABCL Allied Bancorp of IL OTC Chicago IL M.B. 1,313 10 09-30 07/92 30.25 161
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,148 D 21 12-31 04/93 29.00 144
FFSW First Fed Fin. Serv. of OH OTC Northeastern OH Thrift 1,088 18 12-31 04/87 34.50 158
AADV Advantage Bancorp of WI OTC WI,IL Thrift 1,021 15 09-30 03/92 37.50 121
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 859 26 12-31 08/94 21.37 108
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 834 18 12-31 06/90 23.00 119
IFSL Indiana Federal Corp. of IN OTC Northwestern IN Thrift 819 15 12-31 02/87 26.37 126
NASB North American SB of MO OTC KS,MO M.B. 689 8 09-30 09/85 45.00 102
GSBC Great Southern Bancorp of MO OTC Southwest MO Div. 679 25 06-30 12/89 16.94 140
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 664 15 06-30 01/88 27.00 92
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 663 22 12-31 07/92 8.37 36
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 635 6 03-31 04/95 13.75 48
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 635 13 03-31 01/88 21.25 106
</TABLE>
<PAGE> 98
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-West Companies (continued)
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 618 20 12-31 12/83 19.62 87
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 599 10 06-30 06/93 26.00 113
EMLD Emerald Financial Corp of OH OTC Cleveland OH Thrift 589 13 12-31 / 15.00 76
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 561 19 06-30 04/92 19.37 58
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 553 7 12-31 06/94 21.12 89
COVB CoVest Bancshares of IL OTC Chicago IL Thrift 553 3 12-31 07/92 17.75 54
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 546 9 06-30 10/95 14.00 132
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 520 8 12-31 05/96 19.37 95
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 513 4 12-31 03/96 15.00 84
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 495 5 06-30 02/92 38.00 85
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 486 5 09-30 12/93 18.75 52
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 472 7 12-31 / 18.50 57
FFSX First FS&LA. MHC of IA (46.0) OTC Western IA Thrift 463 12 06-30 06/92 23.00 65
FMBD First Mutual Bancorp of IL OTC Central IL Thrift 425 7 12-31 07/95 15.00 56
PERM Permanent Bancorp of IN OTC Southwest IN Thrift 413 D 11 03-31 04/94 24.25 51
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 409 3 06-30 01/94 19.25 28
SFSB SuburbFed Fin. Corp. of IL OTC IL,IN Thrift 408 12 12-31 02/92 24.00 30
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 402 8 12-31 02/87 15.50 51
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 400 6 12-31 07/94 21.00 49
PMFI Perpetual Midwest Fin. of IA OTC EastCentral IA Thrift 398 4 12-31 03/94 19.37 37
CBSB Charter Financial Inc. of IL OTC Southern IL Thrift 395 6 09-30 12/95 17.37 73
PFSL Pocahnts Fed, MHC of AR (46.4) OTC Northeast AR Thrift 373 5 09-30 04/94 19.50 32
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 372 7 06-30 07/87 19.25 80
SWBI Southwest Bancshares of IL OTC Chicago IL Thrift 372 5 12-31 06/92 20.75 55
MCBS Mid Continent Bancshares of KS OTC Central KS M.B. 371 7 09-30 06/94 26.00 51
CASH First Midwest Fin. Corp. of IA OTC IA,SD R.E. 370 9 09-30 09/93 15.44 44
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 367 11 09-30 10/94 16.62 51
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 359 5 12-31 09/96 16.25 114
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 356 9 06-30 12/92 18.00 42
KNK Kankakee Bancorp of IL AMEX Illinois Thrift 342 10 03-31 12/92 29.00 41
HVFD Haverfield Corp. of OH OTC Cleveland OH Thrift 342 10 12-31 03/85 25.50 49
HMCI Homecorp, Inc. of Rockford IL OTC Northern IL Thrift 336 9 12-31 06/90 14.25 24
INBI Industrial Bancorp of OH OTC Northern OH Thrift 334 10 12-31 08/95 12.75 69
</TABLE>
<PAGE> 99
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-West Companies (continued)
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 328 8 09-30 03/95 20.12 53
WCBI WestCo Bancorp of IL OTC Chicago IL Thrift 310 1 12-31 06/92 24.37 62
SMFC Sho-Me Fin. Corp. of MO OTC Southwest MO Thrift 304 7 12-31 06/94 37.25 57
WFCO Winton Financial Corp. of OH OTC Cincinnati OH R.E. 292 S 4 09-30 08/88 13.00 26
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 283 6 09-30 07/87 21.75 50
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 281 6 06-30 11/90 24.75 28
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 273 1 06-30 04/87 30.75 21
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 272 6 12-31 05/96 16.00 45
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 269 D 6 03-31 09/93 24.75 61
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 250 4 06-30 08/87 9.00 22
WAYN Wayne S&L Co. MHC of OH (47.8) OTC Central OH Thrift 250 D 6 03-31 06/93 26.75 40
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 246 D 5 09-30 10/94 19.00 38
CAPS Capital Savings Bancorp of MO OTC Central MO Thrift 238 7 06-30 12/93 16.25 31
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 234 4 09-30 03/94 19.50 34
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 230 4 12-31 02/93 23.75 29
DFIN Damen Fin. Corp. of Chicago IL OTC Chicago IL Thrift 227 3 11-30 10/95 14.25 46
CBCO CB Bancorp of Michigan City IN OTC Northwest IN Thrift 227 D 3 03-31 12/92 34.00 40
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 226 7 12-31 01/88 19.87 23
LARK Landmark Bancshares of KS OTC Central KS Thrift 224 5 09-30 03/94 20.00 36
SBCN Suburban Bancorp. of OH OTC Cincinnati OH Thrift 222 8 06-30 09/93 18.25 27
BFFC Big Foot Fin. Corp. of IL OTC Chicago IL Thrift 210 D 3 07-31 12/96 16.00 40
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 210 2 06-30 06/93 23.25 31
FFFD North Central Bancshares of IA OTC Central IA Thrift 204 4 12-31 03/96 15.25 52
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 202 7 12-31 04/95 14.75 30
MWFD Midwest Fed. Fin. Corp of WI OTC Central WI Thrift 201 9 12-31 07/92 19.75 32
HCBB HCB Bancshares of AR OTC Southern AR Thrift 199 P 5 06-30 05/97 12.87 34
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 198 3 09-30 04/95 16.75 45
GFED Guarnty FS&LA,MHC of MO (31.0) OTC Southwest MO Thrift 196 4 06-30 04/95 17.00 53
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 192 6 09-30 06/92 17.50 28
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 188 3 12-31 02/95 19.50 18
PULB Pulaski SB, MHC of MO (29.0) OTC St. Louis MO Thrift 179 S 5 09-30 05/94 17.62 37
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 179 2 09-30 10/94 14.12 33
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 178 3 12-31 08/96 14.75 36
</TABLE>
<PAGE> 100
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-West Companies (continued)
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARN Marion Capital Holdings of IN OTC Central IN Thrift 174 2 06-30 03/93 22.50 41
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 173 3 12-31 06/95 16.00 28
EGLB Eagle BancGroup of IL OTC Central IL Thrift 171 1 12-31 07/96 15.25 19
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 166 8 06-30 04/94 17.50 29
HMLK Hemlock Fed. Fin. Corp. of IL OTC Chicago IL Thrift 164 P 3 12-31 04/97 13.00 27
JXSB Jcksnville SB,MHC of IL (44.6) OTC Central IL Thrift 164 4 12-31 04/95 16.25 21
FFWD Wood Bancorp of OH OTC Northern OH Thrift 163 6 06-30 08/93 16.00 24
FBSI First Bancshares of MO OTC Southcentral MO Thrift 160 5 06-30 12/93 19.00 22
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 158 3 06-30 03/93 26.00 18
SJSB SJS Bancorp of St. Joseph MI OTC Southwest MI Thrift 152 S 4 06-30 02/95 26.50 24
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 148 S 2 06-30 04/95 21.00 30
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 147 2 06-30 03/95 13.87 25
CNBA Chester Bancorp of IL OTC Southern IL Ret. 142 6 Dec 10/96 14.62 32
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 139 4 12-31 11/92 31.50 11
RIVR River Valley Bancorp of IN OTC Southeast IN Thrift 138 7 12-31 12/96 14.50 17
GTPS Great American Bancorp of IL OTC East Central IL Thrift 138 3 09-30 06/95 15.50 27
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 130 2 12-31 09/96 13.25 38
CLAS Classic Bancshares of KY OTC Eastern KY Thrift 128 D 1 03-31 12/95 14.62 19
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 128 3 06-30 07/95 12.00 41
MFCX Marshalltown Fin. Corp. of IA OTC Central IA Thrift 127 3 09-30 03/94 15.00 21
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 124 6 09-30 10/92 9.00 15
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 120 2 06-30 12/93 19.50 20
PTRS Potters Financial Corp of OH OTC Northeast OH Thrift 117 4 12-31 12/93 20.25 10
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 109 1 06-30 04/95 11.75 20
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 109 1 09-30 10/93 11.28 11
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 108 2 09-30 10/95 15.00 30
PSFC Peoples Sidney Fin. Corp of OH OTC WestCentral OH Thrift 108 P 2 06-30 04/97 13.00 23
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 108 5 09-30 04/95 18.75 13
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 107 1 09-30 11/96 14.00 29
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 103 3 03-31 09/95 14.62 13
FTNB Fulton Bancorp of MO OTC Central MO Thrift 99 2 04-30 10/96 20.12 35
CNSB CNS Bancorp of MO OTC Central MO Thrift 98 5 12-31 06/96 16.00 26
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 97 3 06-30 02/95 19.00 12
</TABLE>
<PAGE> 101
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-West Companies (continued)
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 97 D 3 03-31 10/94 14.62 14
CBES CBES Bancorp of MO OTC Western MO Thrift 95 2 06-30 09/96 16.12 17
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 95 2 09-30 06/95 10.50 16
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 94 4 12-31 04/96 14.25 15
WCFB Wbstr Cty FSB MHC of IA (45.2) OTC Central IA Thrift 93 1 12-31 08/94 14.75 31
FFBI First Financial Bancorp of IL OTC Northern IL M.B. 93 2 12-31 10/93 16.00 7
INCB Indiana Comm. Bank, SB of IN OTC Central IN Ret. 91 3 06-30 12/94 16.25 15
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 90 2 09-30 09/96 15.63 23
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 89 2 06-30 08/95 10.87 14
GFSB GFS Bancorp of Grinnell IA OTC Central IA Thrift 88 1 06-30 01/94 14.25 14
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 87 S 4 06-30 08/95 15.00 12
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 85 1 06-30 04/96 13.75 20
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 85 2 06-30 01/94 18.50 15
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 84 D 3 09-30 10/94 10.50 10
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 80 D 1 09-30 02/95 19.50 16
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 79 1 12-31 06/95 14.00 18
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 79 3 06-30 03/95 14.75 11
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 78 3 06-30 06/94 19.25 8
MSBF MSB Financial Corp. of MI OTC Southcentral MI Thrift 76 2 06-30 02/95 22.00 14
PSFI PS Financial of Chicago IL OTC Chicago IL Thrift 75 1 12-31 11/96 14.25 31
ATSB AmTrust Capital Corp. of IN OTC Northcentral IN Thrift 71 3 06-30 03/95 12.75 7
MIVI Miss. View Hold. Co. of MN OTC Central MN Thrift 70 1 09-30 03/95 15.00 12
HCFC Home City Fin. Corp. of OH OTC Southwest OH Thrift 68 1 06-30 12/96 13.25 13
GWBC Gateway Bancorp of KY OTC Eastern KY Thrift 66 2 06-30 01/95 16.62 18
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 62 S 1 09-30 06/96 14.75 16
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 60 1 12-31 01/95 19.25 18
NSLB NS&L Bancorp of Neosho MO OTC Southwest MO Thrift 58 2 09-30 06/95 16.50 12
MRKF Market Fin. Corp. of OH OTC Cincinnati OH Thrift 57 P 2 09-30 03/97 12.87 17
CSBF CSB Financial Group Inc of IL (3) OTC Centralia IL Thrift 50 S 1 09-30 10/95 12.00 11
RELI Reliance Bancshares Inc of WI (3) OTC Milwaukee WI Thrift 48 S 1 June 04/96 7.56 19
HBBI Home Building Bancorp of IN OTC Southwest IN Thrift 47 2 09-30 02/95 21.00 7
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 39 0 06-30 07/96 15.75 8
LONF London Financial Corp. of OH OTC Central OH Thrift 38 1 09-30 04/96 15.00 8
</TABLE>
<PAGE> 102
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
Mid-West Companies (continued)
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FLKY First Lancaster Bncshrs of KY OTC Thrift 37 D 0 06-30 07/96 15.00 14
JOAC Joachim Bancorp of MO OTC Eastern MO Thrift 36 1 03-31 12/95 14.75 11
New England Companies
---------------------
PBCT Peoples Bank, MHC of CT (37.4) (3) OTC Southwestern CT Div. 7,538 84 12-31 07/88 24.37 1,487
WBST Webster Financial Corp. of CT OTC Central CT Thrift 5,584 64 12-31 12/86 41.37 495
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH Div. 5,458 82 12-31 12/86 35.25 1,002
CFX CFX Corp of NH (3) AMEX S.W. NH,MA M.B. 1,744 23 12-31 02/87 18.12 236
EGFC Eagle Financial Corp. of CT OTC Western CT Thrift 1,512 19 09-30 02/87 29.62 135
SISB SIS Bank of Springfield MA (3) OTC Central MA Div. 1,349 D 21 12-31 02/95 28.25 160
ANDB Andover Bancorp, Inc. of MA (3) OTC Northeastern MA M.B. 1,210 11 12-31 05/86 29.75 153
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 1,147 10 12-31 08/87 16.62 124
AFCB Affiliated Comm BC, Inc of MA OTC MA Thrift 1,055 10 12-31 / 24.37 157
MDBK Medford Savings Bank of MA (3) OTC Eastern MA Thrift 1,054 16 12-31 03/86 27.25 124
FAB FirstFed America Bancorp of MA AMEX Southeast MA M.B. 980 14 12-31 01/97 14.62 127
FFES First FS&LA of E. Hartford CT OTC Central CT Thrift 975 12 12-31 06/87 25.25 67
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 941 8 12-31 10/95 16.94 101
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 901 14 12-31 05/86 43.00 115
EBCP Eastern Bancorp of NH OTC VT, NH M.B. 866 25 09-30 11/83 26.00 96
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 814 10 12-31 07/86 23.87 123
MECH Mechanics SB of Hartford CT (3) OTC Hartford CT Thrift 789 0 12-31 06/96 18.37 97
NSSB Norwich Financial Corp. of CT (3) OTC Southeastern CT Thrift 701 18 12-31 11/86 20.62 111
NSSY Norwalk Savings Society of CT (3) OTC Southwest CT Thrift 617 8 12-31 06/94 26.87 65
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 589 15 12-31 12/81 35.00 81
CBNH Community Bankshares Inc of NH (3) OTC Southcentral NH M.B. 581 9 06-30 05/86 37.37 92
MWBX Metro West of MA (3) OTC Eastern MA Thrift 555 9 12-31 10/86 5.44 76
PBKB People's SB of Brockton MA (3) OTC Southeastern MA Thrift 549 14 12-31 10/86 13.50 48
SOSA Somerset Savings Bank of MA (3) OTC Eastern MA R.E. 522 5 12-31 07/86 2.69 45
ABBK Abington Savings Bank of MA (3) OTC Southeastern MA M.B. 492 7 12-31 06/86 24.62 47
PBNB Peoples Sav. Fin. Corp. of CT (3) OTC Central CT Thrift 479 8 12-31 08/86 34.25 65
SWCB Sandwich Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 475 11 04-30 07/86 30.75 59
</TABLE>
<PAGE> 103
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ -------------------------------- ------ --------------- -------- ------ ------- ----- ----- ------ ------
($Mil) ($) ($Mil)
New England Companies (continued)
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PETE Primary Bank of NH (3) OTC Southern NH Ret. 436 8 12-31 10/93 24.25 51
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 414 3 12-31 07/86 25.75 66
EIRE Emerald Island Bancorp, MA (3) OTC Eastern MA R.E. 412 7 12-31 09/86 18.00 40
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 361 6 12-31 07/86 18.00 66
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 342 6 12-31 05/86 10.87 46
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 324 D 11 04-30 10/86 17.25 34
NMSB Newmil Bancorp. of CT (3) OTC Eastern CT Thrift 317 12 06-30 02/86 9.50 37
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 313 10 12-31 05/86 15.37 31
POBS Portsmouth Bank Shrs Inc of NH (3) OTC Southeastern NH Thrift 263 3 12-31 02/88 16.12 95
NBN Northeast Bancorp of ME (3) OTC Eastern ME Thrift 248 8 06-30 08/87 14.37 18
TBK Tolland Bank of CT (3) AMEX Northern CT Thrift 237 7 12-31 12/86 18.00 21
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 206 4 12-31 12/88 18.25 24
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 189 2 12-31 08/88 20.25 37
BSBC Branford SB of CT (3) OTC New Haven CT R.E. 177 5 12-31 11/86 4.75 31
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 159 D 4 12-31 05/93 16.37 19
AFED AFSALA Bancorp of NY OTC Central NY Thrift 149 P 4 09-30 10/96 13.50 20
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 133 J 8 12-31 06/93 33.00 14
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 125 4 04-30 12/87 16.25 14
NTMG Nutmeg FS&LA of CT OTC CT M.B. 94 3 12-31 / 7.37 5
FCB Falmouth Co-Op Bank of MA (3) AMEX Southeast MA Thrift 90 1 09-30 03/96 16.12 23
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 58 D 2 03-31 11/89 19.50 4
GLBK Glendale Co-op. Bank of MA (3) OTC Boston MA Thrift 37 D 1 04-30 01/94 26.75 7
North-West Companies
--------------------
WAMU Washington Mutual Inc. of WA (3) OTC WA,OR,ID,UT,MT Div. 46,051 290 12-31 03/83 55.87 6,607
WFSL Washington FS&LA of Seattle WA OTC Western US Thrift 5,789 89 09-30 11/82 26.06 1,236
IWBK Interwest SB of Oak Harbor WA OTC Western WA Div. 1,771 31 12-31 / 34.75 279
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,557 41 06-30 / 18.50 103
FWWB First Savings Bancorp of WA (3) OTC Central WA Thrift 947 S 16 03-31 11/95 21.50 227
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 684 7 09-30 10/95 18.94 189
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 515 12 03-31 08/86 15.37 114
</TABLE>
<PAGE> 104
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ -------------------------------- ------ --------------- -------- ------ ------- ----- ----- ------ ------
($Mil) ($) ($Mil)
North-West Companies (continued)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 417 D 6 12-31 12/85 20.25 50
CASB Cascade SB of Everett WA OTC Seattle WA Thrift 352 6 06-30 08/92 19.00 39
RVSB Rvrview SB,FSB MHC of WA(41.7) OTC Southwest WA M.B. 224 9 03-31 10/93 19.00 46
EFBC Empire Federal Bancorp of MT OTC Southern MT Thrift 110 P 3 06-30 01/97 13.12 34
South-East Companies
--------------------
FFCH First Fin. Holdings Inc. of SC OTC CHARLESTON SC Div. 1,602 32 09-30 11/83 26.75 169
LIFB Life Bancorp of Norfolk VA OTC Southeast VA Thrift 1,408 20 12-31 10/94 22.75 224
MGNL Magna Bancorp of MS OTC MS,AL M.B. 1,383 62 06-30 03/91 23.25 320
AMFB American Federal Bank of SC OTC Northwest SC Thrift 1,307 41 12/31 01/89 30.75 339
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 1,248 29 9-30 12/83 21.50 166
ISBF ISB Financial Corp. of LA OTC SouthCentral LA Thrift 929 D 16 12-31 04/95 22.75 159
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 843 8 06-30 12/95 17.12 294
VFFC Virginia First Savings of VA OTC Petersburg VA M.B. 817 23 06-30 01/78 22.12 128
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 707 D 15 12-31 08/92 45.00 74
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 666 D 10 03-31 04/86 16.31 74
PALM Palfed, Inc. of Aiken SC OTC Southwest SC Thrift 656 19 12-31 12/85 16.50 87
VABF Va. Beach Fed. Fin. Corp of VA OTC Southeast VA M.B. 607 12 12-31 11/80 12.37 62
FFFC FFVA Financial Corp. of VA OTC Southern VA Thrift 550 11 12-31 10/94 25.00 113
CFCP Coastal Fin. Corp. of SC OTC SC Thrift 485 9 09-30 09/90 21.25 99
TSH Teche Holding Company of LA AMEX Southern LA Thrift 394 8 09-30 04/95 18.75 64
COOP Cooperative Bk.for Svgs. of NC OTC Eastern NC Thrift 349 17 03-31 08/91 21.00 31
FSFC First So.east Fin. Corp. of SC OTC Northwest SC Thrift 335 11 06-30 10/93 10.94 48
SOPN First SB, SSB, Moore Co. of NC OTC Central NC Thrift 271 5 06-30 01/94 20.75 77
UFRM United FS&LA of Rocky Mount NC OTC Eastern NC M.B. 270 9 12-31 07/80 11.00 34
ANA Acadiana Bancshares of LA (3) AMEX Southern LA Thrift 264 D 4 12-31 07/96 19.75 54
FSTC First Citizens Corp of GA OTC Western GA M.B. 257 D 8 03-31 03/86 24.75 39
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 239 2 09-30 10/96 16.00 72
MERI Meritrust FSB of Thibodaux LA OTC Southeast LA Thrift 229 8 12-31 / 38.50 30
PERT Perpetual of SC, MHC (46.8) OTC Northwest SC Thrift 223 D 5 09-30 10/96 27.62 42
FLAG Flag Financial Corp of GA OTC Western GA M.B. 222 4 12-31 12/86 12.75 26
</TABLE>
<PAGE> 105
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
South-East Companies (continued)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 206 1 09-30 03/96 17.50 75
PLE Pinnacle Bank of AL AMEX Central AL Thrift 200 5 06-30 12/86 21.88 19
ESX Essex Bancorp of VA AMEX VA,NC M.B. 180 12 12-31 / 1.31 1
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 174 3 09-30 04/96 17.75 76
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 168 5 09-30 07/95 17.62 32
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 167 D 3 03-31 03/88 22.50 29
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 147 7 09-30 02/87 7.50 23
BFSB Bedford Bancshares of VA OTC Southern VA Thrift 132 3 09-30 08/94 19.87 23
FFBS FFBS Bancorp of Columbus MS OTC Columbus MS Thrift 129 3 06-30 06/93 23.00 36
PDB Piedmont Bancorp of NC AMEX Central NC Thrift 119 2 06-30 12/95 10.25 28
GSLA GS Financial Corp. of LA OTC New Orleans LA Thrift 117 P 3 12-31 04/97 14.37 49
GSLC Guaranty Svgs & Loan FA of VA OTC Charltsvl VA M.B. 116 D 3 06-30 / 10.00 15
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 109 4 06-30 11/96 14.50 27
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 105 2 12-31 04/96 26.19 48
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 105 D 4 06-30 10/95 14.37 18
TWIN Twin City Bancorp of TN OTC Northeast TN Thrift 104 3 12-31 01/95 18.50 16
KSAV KS Bancorp of Kenly NC OTC Central NC Thrift 101 3 12-31 12/93 22.00 15
CENB Century Bancshares of NC (3) OTC Charlotte NC Thrift 100 1 06-30 12/96 69.00 28
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 93 2 09-30 02/95 15.00 12
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 87 3 09-30 07/95 15.75 14
CZF Citisave Fin. Corp. of LA AMEX Baton Rouge LA Thrift 75 5 12-31 07/95 20.00 19
SCBS Southern Commun. Bncshrs of AL OTC NorthCentral AL Thrift 73 P 3 09-30 12/96 13.75 16
SSB Scotland Bancorp of NC AMEX S. Central NC Thrift 69 2 09-30 04/96 16.37 30
SFBK SFB Bancorp, Inc. of TN OTC Eastern TN Thrift 53 P 2 12-31 05/97 13.37 10
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 46 1 06-30 07/94 18.87 13
MBSP Mitchell Bancorp of NC (3) OTC Western NC Thrift 34 1 12-31 07/96 16.75 16
South-West Companies
--------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,853 40 12-31 / 27.00 134
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 279 D 5 03-31 06/93 26.50 22
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 218 6 09-30 04/96 14.62 38
</TABLE>
<PAGE> 106
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 11, 1997(1)
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
South-West Companies (continued)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 112 2 09-30 01/95 17.25 19
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 106 3 12-31 08/86 5.75 7
GUPB GFSB Bancorp of Gallup NM OTC Northwest NM Thrift 87 1 06-30 06/95 18.00 15
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,514 D 26 12-31 01/96 18.00 298
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 932 20 06-30 01/94 20.37 113
GBCI Glacier Bancorp of MT OTC Western MT Div. 552 13 06-30 03/84 16.50 112
UBMT United Fin. Corp. of MT OTC Central MT Thrift 108 4 12-31 09/86 19.50 24
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 86 2 12-31 09/93 20.50 12
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 52 1 09-30 03/96 13.62 14
Other Areas
-----------
<FN>
NOTES: (1) Or most recent date available (M=March, S=September, D=December, J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report, and financial reports of publicly
Traded Thrifts.
Date of Last Update: 06/11/97
</TABLE>
<PAGE> 107
EXHIBIT III-2
Financial Analysis of Ohio and West Virginia Institutions
<PAGE> 108
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------
-------------- Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ --------------------------------------
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- -------- ------- ------- ------- ------- ------- ------- ------- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
State of OH 19.02 118.05 1.12 15.03 21.13 127.65 16.78 122.74 17.84
Comparable Group Average 16.08 21.22 0.90 15.25 23.18 105.43 17.16 105.61 19.51
Mid-Atlantic Companies 13.62 14.76 0.71 14.76 0.00 92.28 14.25 92.28 19.18
Mid-West Companies 16.26 21.68 0.91 15.28 23.18 106.37 17.36 106.56 19.54
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
AFBC Advance Fin. Bancorp of WV 13.62 14.76 0.71 14.76 NM 92.28 14.25 92.28 19.18
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 11.75 20.22 0.57 10.00 NM 117.50 18.48 117.50 20.61
CIBI Community Inv. Bancorp of OH 19.00 12.03 1.47 17.73 19.19 107.16 12.34 107.16 12.93
DCBI Delphos Citizens Bancorp of OH 14.00 28.55 0.62 14.88 22.58 94.09 26.66 94.09 22.58
EFBI Enterprise Fed. Bancorp of OH 19.00 38.21 0.82 15.52 25.33 122.42 15.51 122.58 23.17
FFDF FFD Financial Corp. of OH 13.75 20.01 0.61 14.50 NM 94.83 23.46 94.83 22.54
FFHS First Franklin Corp. of OH 19.87 23.41 1.15 16.93 NM 117.37 10.35 118.20 17.28
GFCO Glenway Financial Corp. of OH 24.75 28.31 1.67 23.46 26.90 105.50 10.08 107.14 14.82
HHFC Harvest Home Fin. Corp. of OH 10.50 9.82 0.44 11.12 NM 94.42 11.74 94.42 23.86
HCFC Home City Fin. Corp. of OH 13.25 12.61 0.77 14.77 25.98 89.71 18.48 89.71 17.21
LONF London Financial Corp. of OH 15.00 7.73 0.79 14.63 27.78 102.53 20.36 102.53 18.99
MRKF Market Fin. Corp. of OH 12.87 17.19 0.50 14.17 NM 90.83 30.15 90.83 25.74
MFFC Milton Fed. Fin. Corp. of OH 14.12 32.86 0.55 11.32 NM 124.73 18.38 124.73 25.67
OHSL OHSL Financial Corp. of OH 23.75 28.69 1.54 21.00 21.99 113.10 12.48 113.10 15.42
FFWD Wood Bancorp of OH 16.00 23.89 1.26 13.91 15.69 115.03 14.61 115.03 12.70
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.87 29.08 1,117 12.85 0.78 0.62 5.28 0.84 7.35
State of OH 0.44 2.34 31.62 778 14.64 0.53 0.67 5.74 0.95 7.90
Comparable Group Average 0.42 2.53 35.08 138 16.76 0.49 0.64 4.00 0.92 6.00
Mid-Atlantic Companies 0.32 2.35 45.07 104 15.45 0.37 0.39 3.45 0.79 7.00
Mid-West Companies 0.42 2.54 34.18 141 16.85 0.50 0.66 4.04 0.93 5.93
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
AFBC Advance Fin. Bancorp of WV 0.32 2.35 45.07 104 15.45 0.37 0.39 3.45 0.79 7.00
Mid-West Companies
- ------------------
ASBP ASB Financial Corp. of OH 0.40 3.40 70.18 109 15.73 1.58 0.60 3.01 0.88 4.40
CIBI Community Inv. Bancorp of OH 0.40 2.11 27.21 97 11.52 0.72 0.67 5.52 1.00 8.19
DCBI Delphos Citizens Bancorp of OH 0.00 0.00 0.00 107 28.34 0.10 1.27 6.07 1.27 6.07
EFBI Enterprise Fed. Bancorp of OH 1.00 5.26 NM 246 12.67 0.01 0.68 4.72 0.75 5.16
FFDF FFD Financial Corp. of OH 0.30 2.18 49.18 85 24.74 NA 0.78 3.42 1.08 4.74
FFHS First Franklin Corp. of OH 0.32 1.61 27.83 226 8.82 0.62 0.14 1.59 0.62 6.76
GFCO Glenway Financial Corp. of OH 0.68 2.75 40.72 281 9.56 0.32 0.38 3.95 0.68 7.17
HHFC Harvest Home Fin. Corp. of OH 0.40 3.81 NM 84 12.43 0.15 0.21 1.35 0.54 3.49
HCFC Home City Fin. Corp. of OH 0.32 2.42 41.56 68 20.61 0.62 0.78 5.01 1.17 7.57
LONF London Financial Corp. of OH 0.24 1.60 30.38 38 19.86 0.79 0.74 3.55 1.09 5.19
MRKF Market Fin. Corp. of OH 0.00 0.00 0.00 57 33.20 0.89 0.89 2.68 1.17 3.53
MFFC Milton Fed. Fin. Corp. of OH 0.60 4.25 NM 179 14.74 0.32 0.53 3.00 0.72 4.13
OHSL OHSL Financial Corp. of OH 0.88 3.71 57.14 230 11.04 0.33 0.61 5.15 0.86 7.34
FFWD Wood Bancorp of OH 0.40 2.50 31.75 163 12.70 0.10 1.00 7.48 1.24 9.24
<FN>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data, adjusted to omit non-operating items (including the
SAIF assessment) on a tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/CORE = Price
to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month earnings and average
equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored acquisition activities or unusual operating
characteristics.
</TABLE>
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 109
EXHIBIT III-3
Peer Group Market Area Comparative Analysis
<PAGE> 110
Exhibit III-3
Peer Group Market Area Comparative Analysis
<TABLE>
<CAPTION>
Per Capita Income Deposit
Population Proj. ------------------- Market
---------------- Pop. 1990-96 1996-2001 % State Market
Institution County 1990 1996 2001 % Change % Change Median Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- -------- ---------- ------ ------- --------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASB Financial Corp. of OH Scioto 80 82 83 1.6% 1.3% 36.1 10,370 67.4% 12.0%
Community Inv. Bancorp of OH Crawford 48 48 48 -0.1% -0.1% 36.0 13,226 86.0% 11.6%
Enterprise Fed. Bancorp of OH Butler 291 320 342 9.6% 7.0% 33.0 16,115 104.8% 1.7%
FFD Financial Corp. of OH Tuscarawas 84 88 91 4.6% 3.5% 36.7 12,805 83.3% 4.9%
First Franklin Corp. of OH Hamilton 866 861 858 -0.6% -0.4% 34.0 17,636 114.7% 1.1%
Glenway Financial Corp. of OH Hamilton 866 861 858 -0.6% -0.4% 34.0 17,636 114.7% 1.3%
Harvest Home Fin. Corp. of OH Hamilton 866 861 858 -0.6% -0.4% 34.0 17,636 114.7% 0.4%
London Financial Corp. of OH Madison 37 42 45 12.0% 8.6% 34.9 14,592 94.9% 9.8%
Milton Fed. Fin. Corp. of OH Miami 93 98 101 4.8% 3.7% 35.9 16,952 110.2% 7.1%
OHSL Financial Corp. of OH Hamilton 866 861 858 -0.6% -0.4% 34.0 17,636 114.7% 1.0%
Wood Bancorp of OH Wood 113 118 122 4.3% 3.3% 30.8 16,407 106.7% 9.3%
--- --- --- ---- ---- ---- ------ ------ ----
AVERAGES: 383 385 387 3.1% 2.3% 34.5 15,546 101.1% 5.5%
MEDIANS: 113 118 122 1.6% 1.3% 34.0 16,407 106.7% 4.9%
BRIDGEPORT SAVINGS AND LOAN BELMONT 71 70 70 -1.2% -1.0% 38.1 10,976 71.4% 3.1%
<FN>
(1) Total institution deposits in headquarters county as percent of total county deposits.
</TABLE>
Sources: CACI, Inc; FDIC; OTS.
<PAGE> 111
EXHIBIT IV-1
Stock Prices:
As of June 6, 1997
<PAGE> 112
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(316) 19.97 5,351 139.1 21.12 14.45 19.77 0.93 159.65 14.21
NYSE Traded Companies(9) 36.09 38,943 1,590.3 38.70 23.56 34.52 4.33 229.05 14.68
AMEX Traded Companies(18) 17.47 3,927 78.7 18.74 12.33 17.21 1.23 266.84 13.85
NASDAQ Listed OTC Companies(289) 19.64 4,433 99.4 20.74 14.30 19.48 0.81 149.18 14.22
California Companies(24) 22.70 18,136 640.6 24.53 14.95 22.25 1.08 93.80 14.23
Florida Companies(6) 22.21 12,310 268.4 23.67 14.64 22.01 0.38 122.54 18.87
Mid-Atlantic Companies(60) 20.49 6,524 142.7 21.45 14.07 20.09 1.73 144.37 17.27
Mid-West Companies(153) 19.53 3,184 80.0 20.66 14.58 19.41 0.66 185.30 13.08
New England Companies(11) 20.79 4,473 114.3 21.56 15.25 20.70 0.89 267.88 12.45
North-West Companies(6) 21.73 12,602 313.2 22.78 15.61 22.00 -1.05 119.52 17.01
South-East Companies(44) 19.09 3,309 62.4 20.46 14.16 18.88 1.07 142.72 15.21
South-West Companies(6) 18.19 1,904 39.0 19.19 12.69 18.27 0.03 -14.81 7.55
Western Companies (Excl CA)(6) 18.08 5,290 95.5 18.69 14.31 17.83 1.37 257.59 7.87
Thrift Strategy(245) 19.11 3,468 73.7 20.19 13.98 18.95 0.83 138.76 14.20
Mortgage Banker Strategy(39) 23.97 12,880 423.5 25.23 16.76 23.50 2.14 212.12 16.95
Real Estate Strategy(13) 21.35 7,720 188.6 22.57 14.77 21.51 -2.06 157.49 15.84
Diversified Strategy(14) 27.62 22,414 693.6 29.83 18.65 27.24 1.35 193.89 8.69
Retail Banking Strategy(5) 14.35 3,245 51.7 16.22 11.50 13.92 3.29 226.04 2.32
Companies Issuing Dividends(263) 20.44 5,320 143.2 21.62 14.81 20.22 1.02 174.21 14.22
Companies Without Dividends(53) 17.56 5,505 117.9 18.62 12.61 17.44 0.44 83.43 14.18
Equity/Assets <6%(26) 22.63 16,800 481.6 23.86 14.71 22.06 2.31 166.98 15.91
Equity/Assets 6-12%(156) 22.05 5,836 164.3 23.25 15.51 21.80 1.11 159.83 16.28
Equity/Assets >12%(134) 17.23 2,782 50.7 18.32 13.25 17.15 0.48 148.13 11.47
Converted Last 3 Mths (no MHC)(6) 13.25 2,008 26.9 13.55 12.22 13.21 0.27 0.00 0.00
Actively Traded Companies(45) 27.99 16,659 574.4 29.19 18.89 27.17 2.79 188.95 18.49
Market Value Below $20 Million(68) 15.81 877 13.1 16.70 12.36 15.63 1.11 145.16 11.76
Holding Company Structure(277) 20.21 5,203 140.4 21.36 14.69 19.99 1.02 152.59 13.84
Assets Over $1 Billion(67) 29.24 16,861 532.0 30.75 19.55 28.79 1.42 197.51 16.46
Assets $500 Million-$1 Billion(51) 18.86 5,525 96.3 19.95 13.54 18.74 0.63 175.25 15.75
Assets $250-$500 Million(64) 19.70 2,585 47.0 20.91 14.15 19.55 0.70 122.96 15.16
Assets less than $250 Million(134) 16.32 1,440 22.6 17.31 12.63 16.17 0.93 115.63 12.03
Goodwill Companies(128) 23.03 8,652 235.0 24.28 15.94 22.79 0.91 183.54 15.29
Non-Goodwill Companies(187) 18.01 3,216 77.1 19.10 13.49 17.83 0.94 123.25 13.48
Acquirors of FSLIC Cases(11) 30.06 33,955 1,336.6 31.77 20.09 28.84 3.61 210.30 15.48
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- --------------------------------------------
SAIF-Insured Thrifts(316) 0.83 1.15 15.76 15.25 156.04
NYSE Traded Companies(9) 1.80 2.67 20.84 19.96 373.05
AMEX Traded Companies(18) 0.65 0.97 14.21 14.03 112.01
NASDAQ Listed OTC Companies(289) 0.81 1.12 15.70 15.18 152.19
California Companies(24) 0.70 1.08 16.32 15.33 258.18
Florida Companies(6) 0.98 0.95 13.43 12.73 175.35
Mid-Atlantic Companies(60) 0.97 1.36 15.82 15.14 170.09
Mid-West Companies(153) 0.82 1.11 16.14 15.80 139.58
New England Companies(11) 0.88 1.36 16.82 15.64 223.75
North-West Companies(6) 0.90 1.26 13.25 12.68 151.06
South-East Companies(44) 0.74 1.03 14.28 13.98 119.34
South-West Companies(6) 0.57 1.09 16.27 15.49 216.35
Western Companies (Excl CA)(6) 0.86 1.03 15.88 15.17 103.62
Thrift Strategy(245) 0.76 1.08 15.90 15.44 141.60
Mortgage Banker Strategy(39) 1.21 1.54 16.00 15.08 232.10
Real Estate Strategy(13) 0.80 1.30 15.07 14.83 194.55
Diversified Strategy(14) 1.53 1.81 13.47 13.10 185.83
Retail Banking Strategy(5) 0.19 0.15 13.07 12.70 144.42
Companies Issuing Dividends(263) 0.92 1.24 15.96 15.44 153.23
Companies Without Dividends(53) 0.37 0.68 14.74 14.31 170.30
Equity/Assets <6%(26) 0.85 1.42 13.87 12.94 288.83
Equity/Assets 6-12%(156) 1.03 1.39 16.07 15.30 193.99
Equity/Assets >12%(134) 0.62 0.85 15.75 15.61 91.17
Converted Last 3 Mths (no MHC)(6) 0.31 0.50 14.29 14.20 60.07
Actively Traded Companies(45) 1.47 2.01 17.66 17.03 238.76
Market Value Below $20 Million(68) 0.47 0.76 15.45 15.34 123.27
Holding Company Structure(277) 0.83 1.16 16.11 15.61 153.50
Assets Over $1 Billion(67) 1.42 1.93 18.10 16.78 257.06
Assets $500 Million-$1 Billion(51) 0.86 1.08 14.15 13.43 153.77
Assets $250-$500 Million(64) 0.83 1.19 15.91 15.44 164.28
Assets less than $250 Million(134) 0.55 0.81 15.22 15.15 107.13
Goodwill Companies(128) 1.02 1.40 16.45 15.28 206.70
Non-Goodwill Companies(187) 0.71 0.99 15.31 15.24 123.23
Acquirors of FSLIC Cases(11) 1.51 2.28 18.22 17.23 296.99
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized.
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 113
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(68) 22.18 10,005 310.3 23.06 14.86 21.75 2.22 160.81 16.84
NYSE Traded Companies(3) 33.58 54,046 1,669.3 35.33 17.12 32.46 3.46 214.55 24.59
AMEX Traded Companies(5) 21.40 4,142 83.1 21.50 13.52 20.52 4.88 95.74 29.52
NASDAQ Listed OTC Companies(60) 21.55 7,863 249.0 22.46 14.85 21.21 1.86 163.83 14.99
California Companies(3) 15.96 6,919 119.6 18.54 11.04 15.79 0.82 352.67 9.93
Mid-Atlantic Companies(17) 24.07 17,729 482.7 24.83 15.50 23.58 1.86 97.95 16.86
Mid-West Companies(2) 12.00 942 11.3 12.50 9.00 12.00 0.00 0.00 18.58
New England Companies(37) 20.57 4,870 105.3 21.33 13.72 20.10 2.74 172.09 16.78
North-West Companies(4) 28.25 34,667 1,749.3 29.37 16.51 27.97 1.39 132.30 23.17
South-East Companies(5) 27.20 2,091 39.4 27.97 21.80 26.72 2.15 0.00 15.85
Thrift Strategy(43) 22.08 4,560 138.8 22.92 15.35 21.64 2.18 158.18 15.63
Mortgage Banker Strategy(10) 20.61 29,924 545.4 21.69 13.78 20.09 2.75 163.88 18.14
Real Estate Strategy(7) 18.31 5,731 126.1 19.38 11.61 17.93 3.17 231.47 15.87
Diversified Strategy(6) 29.80 34,470 1,611.1 30.65 16.27 29.38 1.14 146.89 26.53
Retail Banking Strategy(2) 20.75 706 14.6 21.25 14.75 20.75 0.00 44.40 13.70
Companies Issuing Dividends(54) 23.72 8,823 320.7 24.60 15.99 23.28 2.07 158.10 16.32
Companies Without Dividends(14) 15.10 15,440 262.4 16.01 9.63 14.68 2.89 181.10 19.19
Equity/Assets <6%(5) 25.03 59,907 2,171.6 25.91 14.06 24.61 2.55 121.01 26.01
Equity/Assets 6-12%(44) 22.03 5,978 181.7 23.00 14.44 21.57 2.38 170.65 15.74
Equity/Assets >12%(19) 21.82 6,591 134.2 22.50 15.99 21.44 1.77 34.59 17.03
Actively Traded Companies(24) 23.49 17,201 576.7 24.54 15.13 22.90 3.29 199.97 18.70
Market Value Below $20 Million(10) 15.93 940 14.8 16.62 11.19 15.80 0.87 97.23 13.37
Holding Company Structure(44) 22.56 9,756 322.7 23.43 15.50 22.04 2.67 165.65 17.39
Assets Over $1 Billion(16) 29.53 31,693 1,138.6 30.59 17.14 28.88 2.24 170.55 23.09
Assets $500 Million-$1 Billion(16) 21.68 5,807 106.3 22.47 15.30 21.21 2.30 115.14 15.00
Assets $250-$500 Million(18) 19.04 2,951 51.2 20.09 12.87 18.71 2.07 208.77 14.35
Assets less than $250 Million(18) 19.22 1,711 24.5 19.87 14.31 18.90 2.26 145.34 15.87
Goodwill Companies(32) 23.89 16,457 561.9 25.10 15.47 23.47 1.83 152.71 17.55
Non-Goodwill Companies(35) 20.59 3,998 75.9 21.17 14.28 20.15 2.58 173.89 16.20
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(68) 1.39 1.43 15.76 14.92 156.42
NYSE Traded Companies(3) 1.84 1.80 18.92 14.54 225.59
AMEX Traded Companies(5) 1.22 1.21 15.34 14.93 150.13
NASDAQ Listed OTC Companies(60) 1.38 1.43 15.60 14.94 152.75
California Companies(3) 1.27 1.17 12.13 12.11 146.25
Mid-Atlantic Companies(17) 1.21 1.33 16.93 14.89 168.35
Mid-West Companies(2) 0.25 0.38 13.57 12.80 53.10
New England Companies(37) 1.62 1.58 14.02 13.49 162.17
North-West Companies(4) 1.01 1.34 13.86 13.30 179.66
South-East Companies(5) 1.21 1.27 26.67 26.67 97.84
Thrift Strategy(43) 1.39 1.39 17.04 15.98 150.07
Mortgage Banker Strategy(10) 1.29 1.47 13.45 13.30 166.32
Real Estate Strategy(7) 1.37 1.30 10.66 10.65 108.81
Diversified Strategy(6) 1.72 1.98 14.11 13.07 218.17
Retail Banking Strategy(2) 0.89 0.85 19.87 19.02 315.32
Companies Issuing Dividends(54) 1.52 1.56 16.65 15.64 165.24
Companies Without Dividends(14) 0.80 0.82 11.66 11.56 115.85
Equity/Assets <6%(5) 1.08 1.39 11.04 10.64 208.90
Equity/Assets 6-12%(44) 1.66 1.63 14.96 13.75 179.68
Equity/Assets >12%(19) 0.87 0.99 18.74 18.61 90.97
Actively Traded Companies(24) 1.69 1.72 14.88 14.14 181.55
Market Value Below $20 Million(10) 0.79 0.81 14.13 13.60 135.72
Holding Company Structure(44) 1.33 1.40 16.19 15.43 145.73
Assets Over $1 Billion(16) 1.71 1.87 16.12 14.53 196.70
Assets $500 Million-$1 Billion(16) 1.56 1.51 15.61 14.24 169.26
Assets $250-$500 Million(18) 1.25 1.26 14.06 13.84 140.93
Assets less than $250 Million(18) 1.10 1.12 17.16 16.89 123.99
Goodwill Companies(32) 1.47 1.55 15.74 14.00 192.60
Non-Goodwill Companies(35) 1.32 1.31 15.77 15.77 122.73
<FN>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date
and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings
and average common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
</TABLE>
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 114
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 19.93 4,780 34.8 21.57 14.25 19.86 0.28 196.16 15.97
BIF-Insured Thrifts(2) 18.62 32,145 188.8 19.38 11.38 18.25 1.57 209.66 25.35
NASDAQ Listed OTC Companies(23) 19.81 7,268 48.8 21.37 13.98 19.71 0.39 200.66 16.91
Florida Companies(3) 25.71 5,550 64.8 26.96 16.83 25.42 0.81 0.00 4.72
Mid-Atlantic Companies(10) 16.99 7,085 41.0 17.83 12.23 16.71 1.49 147.50 19.03
Mid-West Companies(7) 19.27 2,078 14.9 21.75 14.32 19.16 0.28 244.83 18.71
New England Companies(1) 24.37 61,017 369.3 24.75 13.50 23.63 3.13 209.66 26.60
North-West Companies(1) 19.00 2,416 17.4 24.00 13.07 22.75 -16.48 0.00 19.42
South-East Companies(1) 27.62 1,505 19.5 27.75 20.25 26.50 4.23 0.00 13.90
Thrift Strategy(21) 19.63 4,823 34.3 21.07 14.05 19.36 1.10 196.16 16.23
Mortgage Banker Strategy(1) 19.00 2,416 17.4 24.00 13.07 22.75 -16.48 0.00 19.42
Diversified Strategy(1) 24.37 61,017 369.3 24.75 13.50 23.63 3.13 209.66 26.60
Companies Issuing Dividends(22) 20.12 7,505 50.5 21.74 14.10 20.01 0.39 200.66 16.91
Companies Without Dividends(1) 13.44 2,300 13.9 13.50 11.62 13.37 0.52 0.00 0.00
Equity/Assets 6-12%(15) 21.07 9,586 64.5 23.14 14.60 21.03 0.13 200.66 15.62
Equity/Assets >12%(8) 17.62 3,211 21.3 18.27 12.91 17.41 0.85 0.00 19.93
Actively Traded Companies(1) 24.75 7,247 84.2 24.75 14.09 24.50 1.02 147.50 33.78
Holding Company Structure(1) 24.75 7,247 84.2 24.75 14.09 24.50 1.02 147.50 33.78
Assets Over $1 Billion(5) 24.17 21,565 138.7 25.27 15.37 23.63 2.15 178.58 16.80
Assets $500 Million-$1 Billion(4) 20.08 6,908 57.6 20.91 13.04 19.83 1.32 0.00 11.72
Assets $250-$500 Million(4) 21.81 2,353 19.1 25.31 16.81 21.31 2.27 244.83 12.77
Assets less than $250 Million(10) 16.76 2,194 13.1 17.98 12.44 17.07 -1.51 0.00 21.00
Goodwill Companies(9) 22.37 14,319 94.7 25.08 15.03 22.29 0.31 200.66 16.71
Non-Goodwill Companies(14) 18.04 2,387 17.0 18.80 13.26 17.92 0.45 0.00 17.07
MHC Institutions(23) 19.81 7,268 48.8 21.37 13.98 19.71 0.39 200.66 16.91
MHC Converted Last 3 Months(2) 13.10 2,185 13.0 13.50 11.56 13.19 -0.70 0.00 0.00
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 0.63 0.98 12.67 12.33 121.88
BIF-Insured Thrifts(2) 0.67 0.65 9.38 9.38 98.25
NASDAQ Listed OTC Companies(23) 0.64 0.95 12.37 12.06 119.73
Florida Companies(3) 1.08 1.53 15.32 15.05 166.11
Mid-Atlantic Companies(10) 0.40 0.69 11.05 10.51 98.91
Mid-West Companies(7) 0.57 0.95 12.33 12.31 125.85
New England Companies(1) 1.33 1.06 10.39 10.38 123.54
North-West Companies(1) 0.83 1.06 10.36 9.39 92.87
South-East Companies(1) 1.00 1.41 19.69 19.69 148.17
Thrift Strategy(21) 0.59 0.94 12.57 12.28 120.88
Mortgage Banker Strategy(1) 0.83 1.06 10.36 9.39 92.87
Diversified Strategy(1) 1.33 1.06 10.39 10.38 123.54
Companies Issuing Dividends(22) 0.66 0.98 12.47 12.15 122.32
Companies Without Dividends(1) 0.24 0.35 10.21 10.21 65.23
Equity/Assets 6-12%(15) 0.71 1.09 12.70 12.29 142.53
Equity/Assets >12%(8) 0.52 0.71 11.79 11.67 79.83
Actively Traded Companies(1) 0.69 1.22 13.00 11.52 141.40
Holding Company Structure(1) 0.69 1.22 13.00 11.52 141.40
Assets Over $1 Billion(5) 0.97 1.30 12.74 11.83 149.25
Assets $500 Million-$1 Billion(4) 0.72 0.93 13.06 12.70 114.98
Assets $250-$500 Million(4) 0.78 1.25 14.09 14.06 160.32
Assets less than $250 Million(10) 0.39 0.67 11.29 11.19 90.16
Goodwill Companies(9) 0.86 1.14 12.33 11.58 134.35
Non-Goodwill Companies(14) 0.49 0.82 12.39 12.39 109.61
MHC Institutions(23) 0.64 0.95 12.37 12.06 119.73
MHC Converted Last 3 Months(2) 0.24 0.44 10.02 10.02 73.53
<FN>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date
and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings
and average common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
</TABLE>
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 115
RP FINANCIAL, LC.
- -------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 44.37 100,596 4,463.4 44.87 24.00 40.75 8.88 136.64 36.52
CSA Coast Savings Financial of CA 45.87 18,593 852.9 48.75 29.25 42.50 7.93 296.80 25.26
CFB Commercial Federal Corp. of NE 35.75 21,523 769.4 39.00 24.00 34.87 2.52 868.83 11.72
DME Dime Savings Bank, FSB of NY* 17.75 105,259 1,868.3 18.00 11.75 17.00 4.41 76.44 20.34
DSL Downey Financial Corp. of CA 21.00 26,734 561.4 22.50 12.86 20.00 5.00 93.37 12.36
FRC First Republic Bancorp of CA* 20.37 9,992 203.5 24.62 12.62 19.88 2.46 352.67 21.61
FED FirstFed Fin. Corp. of CA 28.37 10,560 299.6 28.37 16.75 28.31 0.21 75.67 28.95
GLN Glendale Fed. Bk, FSB of CA 26.75 50,306 1,345.7 28.00 16.50 25.50 4.90 64.62 15.05
GDW Golden West Fin. Corp. of CA 69.75 57,218 3,991.0 74.25 51.87 67.75 2.95 166.32 10.50
GWF Great Western Fin. Corp. of CA(8) 49.62 137,885 6,841.9 49.62 21.12 48.50 2.31 185.66 71.10
GPT GreenPoint Fin. Corp. of NY* 62.62 46,888 2,936.1 63.37 27.00 60.50 3.50 N.A. 31.83
WES Westcorp Inc. of Orange CA 16.87 26,014 438.9 23.87 13.25 16.50 2.24 130.15 -22.90
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 19.75 2,731 53.9 19.87 11.69 19.12 3.29 N.A. 32.82
BKC American Bank of Waterbury CT* 35.00 2,302 80.6 35.00 24.12 34.50 1.45 86.67 25.00
BFD BostonFed Bancorp of MA 16.94 5,963 101.0 17.12 11.62 15.13 11.96 N.A. 14.85
CFX CFX Corp of NH* 18.12 13,050 236.5 18.50 11.90 16.75 8.18 52.27 16.90
CZF Citisave Fin. Corp. of LA(8) 20.00 962 19.2 20.00 13.00 20.00 0.00 N.A. 42.86
CBK Citizens First Fin.Corp. of IL 16.00 2,799 44.8 16.75 9.50 16.50 -3.03 N.A. 11.34
ESX Essex Bancorp of VA(8) 1.31 1,055 1.4 2.81 1.00 1.31 0.00 -92.18 -40.18
FCB Falmouth Co-Op Bank of MA* 16.12 1,455 23.5 16.12 10.25 15.88 1.51 N.A. 22.87
FAB FirstFed America Bancorp of MA 14.62 8,707 127.3 15.25 13.62 14.87 -1.68 N.A. N.A.
GAF GA Financial Corp. of PA 16.56 8,408 139.2 17.25 10.25 16.13 2.67 N.A. 9.52
KNK Kankakee Bancorp of IL 29.00 1,420 41.2 29.00 18.50 27.50 5.45 190.00 17.17
KYF Kentucky First Bancorp of KY 10.87 1,319 14.3 15.25 10.62 10.63 2.26 N.A. 0.00
NYB New York Bancorp, Inc. of NY 32.87 16,381 538.4 33.50 16.75 32.75 0.37 363.61 27.26
PDB Piedmont Bancorp of NC 10.25 2,751 28.2 19.12 9.25 10.68 -4.03 N.A. -2.32
PLE Pinnacle Bank of AL 21.88 890 19.5 22.62 15.87 21.94 -0.27 224.15 25.96
SSB Scotland Bancorp of NC 16.37 1,840 30.1 16.75 11.87 15.75 3.94 N.A. 15.93
SZB SouthFirst Bancshares of AL 15.00 821 12.3 15.12 12.00 15.12 -0.79 N.A. 13.21
SRN Southern Banc Company of AL 14.37 1,230 17.7 15.12 12.25 14.37 0.00 N.A. 9.53
SSM Stone Street Bancorp of NC 26.19 1,825 47.8 27.25 16.25 26.25 -0.23 N.A. 27.76
TSH Teche Holding Company of LA 18.75 3,438 64.5 18.75 12.00 17.75 5.63 N.A. 30.48
FTF Texarkana Fst. Fin. Corp of AR 17.62 1,833 32.3 17.62 13.62 17.25 2.14 N.A. 12.73
THR Three Rivers Fin. Corp. of MI 15.00 824 12.4 15.25 12.50 15.00 0.00 N.A. 7.14
TBK Tolland Bank of CT* 18.00 1,172 21.1 18.00 9.62 16.37 9.96 148.28 50.00
WSB Washington SB, FSB of MD 4.87 4,220 20.6 5.69 4.38 5.00 -2.60 289.60 0.00
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 30.75 698 21.5 33.25 24.76 30.50 0.82 N.A. 7.89
AFED AFSALA Bancorp of NY 13.50 1,455 19.6 14.25 11.31 13.50 0.00 N.A. 12.50
ALBK ALBANK Fin. Corp. of Albany NY 37.25 12,819 477.5 38.87 25.12 38.38 -2.94 60.22 18.74
AMFC AMB Financial Corp. of IN 14.25 1,068 15.2 15.00 10.00 15.00 -5.00 N.A. 7.55
ASBP ASB Financial Corp. of OH 11.75 1,721 20.2 18.25 11.50 11.75 0.00 N.A. -9.62
ABBK Abington Savings Bank of MA(8)* 24.62 1,894 46.6 24.62 14.50 23.25 5.89 271.90 26.26
AABC Access Anytime Bancorp of NM 5.75 1,143 6.6 6.25 5.25 5.63 2.13 -14.81 4.55
AFBC Advance Fin. Bancorp of WV 13.62 1,084 14.8 14.50 12.75 14.00 -2.71 N.A. N.A.
AADV Advantage Bancorp of WI 37.50 3,232 121.2 41.25 31.25 39.25 -4.46 307.61 16.28
AFCB Affiliated Comm BC, Inc of MA 24.37 6,456 157.3 24.62 13.30 29.00 -15.97 N.A. 42.51
ALBC Albion Banc Corp. of Albion NY 23.00 250 5.8 23.00 16.50 19.87 15.75 76.92 37.31
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 1.41 2.80 19.05 16.08 484.09
CSA Coast Savings Financial of CA 0.73 2.31 23.45 23.12 473.14
CFB Commercial Federal Corp. of NE 1.99 2.84 18.99 16.90 320.67
DME Dime Savings Bank, FSB of NY* 1.05 1.34 10.01 9.92 175.42
DSL Downey Financial Corp. of CA 0.84 1.42 14.98 14.76 205.15
FRC First Republic Bancorp of CA* 1.38 1.23 16.20 16.19 218.52
FED FirstFed Fin. Corp. of CA 0.95 1.89 18.48 18.24 391.07
GLN Glendale Fed. Bk, FSB of CA 0.65 1.63 17.31 16.10 306.00
GDW Golden West Fin. Corp. of CA 6.49 7.96 42.19 42.19 673.39
GWF Great Western Fin. Corp. of CA(8) 0.67 2.09 17.55 15.54 310.97
GPT GreenPoint Fin. Corp. of NY* 3.09 2.82 30.56 17.51 282.83
WES Westcorp Inc. of Orange CA 1.30 0.51 12.29 12.26 130.92
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 0.29 0.30 17.24 17.24 96.80
BKC American Bank of Waterbury CT* 3.02 2.62 20.39 19.49 255.68
BFD BostonFed Bancorp of MA 0.64 0.88 14.05 13.56 157.81
CFX CFX Corp of NH* 0.94 1.17 10.25 9.56 133.67
CZF Citisave Fin. Corp. of LA(8) 0.40 0.61 12.95 12.95 77.90
CBK Citizens First Fin.Corp. of IL 0.25 0.53 14.21 14.21 97.04
ESX Essex Bancorp of VA(8) -7.54 -3.77 0.12 -0.08 170.55
FCB Falmouth Co-Op Bank of MA* 0.52 0.50 15.17 15.17 62.04
FAB FirstFed America Bancorp of MA -0.28 0.44 14.03 14.03 112.52
GAF GA Financial Corp. of PA 0.77 0.97 13.76 13.76 79.73
KNK Kankakee Bancorp of IL 1.51 1.94 25.74 24.10 241.11
KYF Kentucky First Bancorp of KY 0.53 0.70 10.86 10.86 67.42
NYB New York Bancorp, Inc. of NY 2.39 2.82 9.81 9.81 193.82
PDB Piedmont Bancorp of NC -0.14 0.36 7.31 7.31 43.08
PLE Pinnacle Bank of AL 1.26 1.89 17.34 16.78 224.27
SSB Scotland Bancorp of NC 0.55 0.67 13.74 13.74 37.46
SZB SouthFirst Bancshares of AL 0.05 0.30 15.82 15.82 113.17
SRN Southern Banc Company of AL 0.19 0.50 14.40 14.24 85.57
SSM Stone Street Bancorp of NC 0.99 1.15 20.72 20.72 57.80
TSH Teche Holding Company of LA 0.80 1.10 15.23 15.23 114.47
FTF Texarkana Fst. Fin. Corp of AR 1.25 1.55 14.70 14.70 91.70
THR Three Rivers Fin. Corp. of MI 0.54 0.81 15.35 15.29 106.03
TBK Tolland Bank of CT* 1.35 1.45 13.63 13.21 202.48
WSB Washington SB, FSB of MD 0.31 0.45 5.06 5.06 60.81
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 0.91 0.13 31.17 30.48 391.25
AFED AFSALA Bancorp of NY 0.61 0.61 14.05 14.05 102.70
ALBK ALBANK Fin. Corp. of Albany NY 2.17 2.71 25.10 21.77 272.75
AMFC AMB Financial Corp. of IN 0.55 0.69 14.29 14.29 87.68
ASBP ASB Financial Corp. of OH 0.39 0.57 10.00 10.00 63.58
ABBK Abington Savings Bank of MA(8)* 1.98 1.72 17.86 16.00 259.80
AABC Access Anytime Bancorp of NM -0.57 -0.22 6.34 6.34 93.17
AFBC Advance Fin. Bancorp of WV 0.35 0.71 14.76 14.76 95.55
AADV Advantage Bancorp of WI 1.08 2.68 27.92 25.87 316.04
AFCB Affiliated Comm BC, Inc of MA 1.45 1.66 15.96 15.86 163.41
ALBC Albion Banc Corp. of Albion NY 0.22 0.93 23.62 23.62 265.26
</TABLE>
<PAGE> 116
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ABCL Allied Bancorp of IL 30.25 5,334 161.4 31.25 22.00 29.38 2.96 202.50 21.00
ATSB AmTrust Capital Corp. of IN 12.75 526 6.7 12.75 8.50 12.00 6.25 N.A. 27.50
AHCI Ambanc Holding Co. of NY* 14.37 4,392 63.1 14.37 9.38 14.13 1.70 N.A. 27.73
ASBI Ameriana Bancorp of IN 15.50 3,260 50.5 16.37 13.00 15.50 0.00 67.93 -3.13
AFFFZ America First Fin. Fund of CA(8) 38.12 6,011 229.1 38.12 25.87 38.88 -1.95 103.31 26.02
AMFB American Federal Bank of SC(8) 30.75 11,035 339.3 31.00 15.50 30.75 0.00 547.37 62.96
ANBK American Nat'l Bancorp of MD 14.75 3,613 53.3 14.87 9.75 14.87 -0.81 N.A. 21.70
ABCW Anchor Bancorp Wisconsin of WI 43.12 4,581 197.5 47.00 33.00 42.50 1.46 46.82 20.62
ANDB Andover Bancorp, Inc. of MA* 29.75 5,146 153.1 29.87 19.17 28.88 3.01 176.74 16.12
ASFC Astoria Financial Corp. of NY 42.37 21,243 900.1 43.12 24.62 41.25 2.72 61.41 14.92
AVND Avondale Fin. Corp. of IL 13.75 3,525 48.5 18.50 12.50 13.50 1.85 N.A. -19.68
BKCT Bancorp Connecticut of CT* 25.75 2,560 65.9 26.00 19.56 25.00 3.00 194.29 14.44
BPLS Bank Plus Corp. of CA 10.50 18,245 191.6 13.75 8.75 10.88 -3.49 N.A. -8.70
BWFC Bank West Fin. Corp. of MI 13.87 1,783 24.7 14.25 10.25 13.50 2.74 N.A. 30.60
BANC BankAtlantic Bancorp of FL 13.75 18,553 255.1 14.12 8.16 13.94 -1.36 164.42 28.50
BKUNA BankUnited SA of FL 9.81 8,847 86.8 11.25 7.12 10.00 -1.90 80.66 -1.90
BKCO Bankers Corp. of NJ(8)* 25.25 12,378 312.5 25.62 17.25 25.38 -0.51 304.00 25.50
BVCC Bay View Capital Corp. of CA 24.87 12,970 322.6 28.62 16.19 25.00 -0.52 25.92 17.37
BFSB Bedford Bancshares of VA 19.87 1,142 22.7 20.50 16.00 19.75 0.61 89.24 12.77
BFFC Big Foot Fin. Corp. of IL 16.00 2,513 40.2 16.12 12.31 15.87 0.82 N.A. 23.08
BSBC Branford SB of CT* 4.75 6,559 31.2 4.75 2.87 4.31 10.21 124.06 22.74
BYFC Broadway Fin. Corp. of CA 10.75 893 9.6 11.25 9.00 10.75 0.00 N.A. 16.22
CBCO CB Bancorp of Michigan City IN(8) 34.00 1,162 39.5 34.25 17.00 34.00 0.00 209.09 43.16
CBES CBES Bancorp of MO 16.12 1,025 16.5 17.50 12.62 16.50 -2.30 N.A. 13.12
CCFH CCF Holding Company of GA 15.75 865 13.6 16.37 11.50 16.12 -2.30 N.A. 6.78
CENF CENFED Financial Corp. of CA 29.50 5,760 169.9 31.82 18.86 29.00 1.72 88.14 10.94
CFSB CFSB Bancorp of Lansing MI 23.00 5,167 118.8 23.75 16.11 22.50 2.22 155.56 29.72
CKFB CKF Bancorp of Danville KY 19.25 927 17.8 20.75 17.50 19.25 0.00 N.A. -4.94
CNSB CNS Bancorp of MO 16.00 1,653 26.4 17.50 11.00 15.50 3.23 N.A. 5.82
CSBF CSB Financial Group Inc of IL* 12.00 942 11.3 12.50 9.00 12.00 0.00 N.A. 18.58
CFHC California Fin. Hld. Co. of CA(8) 29.37 4,766 140.0 29.50 20.37 29.50 -0.44 179.71 1.73
CBCI Calumet Bancorp of Chicago IL 38.00 2,238 85.0 38.87 27.75 38.00 0.00 87.65 14.29
CAFI Camco Fin. Corp. of OH 18.50 3,062 56.6 19.29 14.75 18.38 0.65 N.A. 16.57
CMRN Cameron Fin. Corp. of MO 16.75 2,682 44.9 17.00 13.50 16.38 2.26 N.A. 4.69
CAPS Capital Savings Bancorp of MO 16.25 1,892 30.7 18.25 9.00 18.25 -10.96 22.64 25.00
CFNC Carolina Fincorp of NC* 14.50 1,851 26.8 15.25 13.00 14.37 0.90 N.A. 8.45
CNY Carver FSB of New York, NY 10.12 2,314 23.4 10.37 7.37 9.62 5.20 61.92 22.67
CASB Cascade SB of Everett WA 19.00 2,054 39.0 21.00 13.00 21.00 -9.52 48.44 17.87
CATB Catskill Fin. Corp. of NY* 15.50 5,027 77.9 16.50 9.87 15.62 -0.77 N.A. 10.71
CNIT Cenit Bancorp of Norfolk VA 45.00 1,640 73.8 46.00 31.75 43.38 3.73 183.38 8.43
CEBK Central Co-Op. Bank of MA* 17.25 1,965 33.9 18.50 14.75 16.88 2.19 228.57 -1.43
CENB Century Bancshares of NC* 69.00 407 28.1 71.00 62.00 68.25 1.10 N.A. 6.15
CBSB Charter Financial Inc. of IL 17.37 4,220 73.3 18.00 10.87 18.00 -3.50 N.A. 38.96
COFI Charter One Financial of OH 48.00 46,339 2,224.3 49.50 32.02 46.88 2.39 174.29 14.29
CNBA Chester Bancorp of IL 14.62 2,182 31.9 15.37 12.62 15.00 -2.53 N.A. 11.43
CVAL Chester Valley Bancorp of PA 19.75 2,054 40.6 19.75 13.90 19.00 3.95 74.32 33.45
CTZN CitFed Bancorp of Dayton OH 36.75 8,613 316.5 37.25 24.17 37.25 -1.34 308.33 11.36
CLAS Classic Bancshares of KY 14.62 1,322 19.3 14.75 10.37 14.50 0.83 N.A. 25.82
CMSB Cmnwealth Bancorp of PA 15.12 17,111 258.7 16.00 9.75 15.00 0.80 N.A. 0.80
COVB CoVest Bancshares of IL 17.75 3,018 53.6 18.25 15.37 17.75 0.00 166.52 2.90
CBSA Coastal Bancorp of Houston TX 27.00 4,969 134.2 28.25 16.50 27.25 -0.92 N.A. 18.06
CFCP Coastal Fin. Corp. of SC 21.25 4,637 98.5 22.87 12.00 22.68 -6.31 112.50 34.92
COFD Collective Bancorp Inc. of NJ(8) 44.00 20,447 899.7 44.12 23.00 43.00 2.33 477.43 25.28
CMSV Commty. Svgs, MHC of FL (48.5) 21.75 4,921 51.5 22.37 14.75 21.75 0.00 N.A. 6.10
CBNH Community Bankshares Inc of NH(8)* 37.37 2,465 92.1 37.37 17.12 35.25 6.01 896.53 82.29
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ABCL Allied Bancorp of IL 0.63 1.06 22.93 22.63 246.18
ATSB AmTrust Capital Corp. of IN 0.40 0.26 13.73 13.58 135.04
AHCI Ambanc Holding Co. of NY* -0.65 -0.65 13.85 13.85 108.86
ASBI Ameriana Bancorp of IN 0.73 1.06 13.38 13.37 123.36
AFFFZ America First Fin. Fund of CA(8) 5.32 6.51 30.07 29.64 363.18
AMFB American Federal Bank of SC(8) 1.35 1.67 10.65 9.93 118.43
ANBK American Nat'l Bancorp of MD 0.19 0.68 12.33 12.33 134.69
ABCW Anchor Bancorp Wisconsin of WI 3.04 3.97 25.73 25.23 411.48
ANDB Andover Bancorp, Inc. of MA* 2.52 2.60 18.96 18.96 235.06
ASFC Astoria Financial Corp. of NY 1.77 2.62 27.51 22.89 361.97
AVND Avondale Fin. Corp. of IL -1.22 -2.30 14.88 14.88 180.27
BKCT Bancorp Connecticut of CT* 2.01 1.92 16.81 16.81 161.61
BPLS Bank Plus Corp. of CA -0.63 -0.07 8.88 8.86 180.58
BWFC Bank West Fin. Corp. of MI 0.59 0.42 12.62 12.62 82.46
BANC BankAtlantic Bancorp of FL 1.11 0.86 8.23 6.69 149.47
BKUNA BankUnited SA of FL 0.21 0.41 7.33 5.89 164.25
BKCO Bankers Corp. of NJ(8)* 2.04 2.18 15.98 15.72 205.34
BVCC Bay View Capital Corp. of CA 0.94 1.59 14.81 14.08 234.74
BFSB Bedford Bancshares of VA 1.16 1.48 16.49 16.49 115.15
BFFC Big Foot Fin. Corp. of IL -0.24 0.23 14.28 14.28 83.60
BSBC Branford SB of CT* 0.31 0.30 2.58 2.58 27.05
BYFC Broadway Fin. Corp. of CA -0.31 0.16 14.26 14.26 131.13
CBCO CB Bancorp of Michigan City IN(8) 1.76 2.06 17.22 17.22 194.97
CBES CBES Bancorp of MO 0.69 0.86 17.08 17.08 92.90
CCFH CCF Holding Company of GA 0.25 0.41 14.39 14.39 100.51
CENF CENFED Financial Corp. of CA 1.84 2.70 20.06 20.02 392.95
CFSB CFSB Bancorp of Lansing MI 1.17 1.57 12.32 12.32 161.46
CKFB CKF Bancorp of Danville KY 0.84 0.83 15.38 15.38 64.94
CNSB CNS Bancorp of MO 0.31 0.47 14.73 14.73 59.35
CSBF CSB Financial Group Inc of IL* 0.25 0.38 13.57 12.80 53.10
CFHC California Fin. Hld. Co. of CA(8) 1.48 2.27 19.21 19.13 275.92
CBCI Calumet Bancorp of Chicago IL 2.49 3.22 35.23 35.23 220.98
CAFI Camco Fin. Corp. of OH 0.99 1.16 14.95 13.76 154.29
CMRN Cameron Fin. Corp. of MO 0.77 0.96 16.92 16.92 73.71
CAPS Capital Savings Bancorp of MO 0.77 1.10 10.89 10.89 125.75
CFNC Carolina Fincorp of NC* 0.65 0.61 13.92 13.92 58.71
CNY Carver FSB of New York, NY -0.76 -0.05 14.76 14.13 183.02
CASB Cascade SB of Everett WA 0.76 0.96 10.59 10.59 171.53
CATB Catskill Fin. Corp. of NY* 0.84 0.85 14.70 14.70 54.49
CNIT Cenit Bancorp of Norfolk VA 3.17 2.95 30.25 27.58 431.16
CEBK Central Co-Op. Bank of MA* 0.96 1.08 16.94 15.03 165.04
CENB Century Bancshares of NC* 4.31 4.36 73.51 73.51 245.57
CBSB Charter Financial Inc. of IL 0.84 1.06 13.22 11.60 93.56
COFI Charter One Financial of OH 2.88 3.66 20.53 19.10 302.99
CNBA Chester Bancorp of IL 0.71 0.71 14.50 14.50 65.30
CVAL Chester Valley Bancorp of PA 0.87 1.28 12.72 12.72 148.58
CTZN CitFed Bancorp of Dayton OH 1.76 2.55 21.59 19.23 341.03
CLAS Classic Bancshares of KY 0.30 0.50 14.49 12.17 97.10
CMSB Cmnwealth Bancorp of PA 0.66 0.85 12.50 9.60 130.68
COVB CoVest Bancshares of IL 0.31 0.85 16.36 15.59 183.09
CBSA Coastal Bancorp of Houston TX 1.49 2.49 19.64 16.59 574.11
CFCP Coastal Fin. Corp. of SC 0.89 0.98 6.37 6.37 104.51
COFD Collective Bancorp Inc. of NJ(8) 2.45 2.98 18.89 17.08 269.85
CMSV Commty. Svgs, MHC of FL (48.5) 0.83 1.26 15.57 15.57 138.65
CBNH Community Bankshares Inc of NH(8)* 2.08 1.68 16.80 16.80 235.56
</TABLE>
<PAGE> 117
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Share Market --------------- ------------------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFTP Community Fed. Bancorp of MS 17.50 4,282 74.9 20.00 12.25 17.50 0.00 N.A. 2.94
CFFC Community Fin. Corp. of VA 22.50 1,272 28.6 23.50 19.50 22.00 2.27 221.43 8.43
CIBI Community Inv. Bancorp of OH 19.00 633 12.0 19.50 14.75 19.00 0.00 N.A. 11.76
COOP Cooperative Bk.for Svgs. of NC 21.00 1,492 31.3 22.00 16.50 21.00 0.00 110.00 3.70
CRZY Crazy Woman Creek Bncorp of WY 13.62 1,005 13.7 14.25 10.00 13.50 0.89 N.A. 13.50
DNFC D&N Financial Corp. of MI 18.25 8,316 151.8 18.50 12.37 17.75 2.82 108.57 8.96
DFIN Damen Fin. Corp. of Chicago IL 14.25 3,247 46.3 15.00 11.00 14.44 -1.32 N.A. 10.72
DCBI Delphos Citizens Bancorp of OH 14.00 2,039 28.5 14.50 11.75 14.13 -0.92 N.A. 16.67
DIME Dime Community Bancorp of NY 17.87 13,126 234.6 19.62 11.69 17.38 2.82 N.A. 21.15
DIBK Dime Financial Corp. of CT* 23.87 5,136 122.6 23.87 13.75 22.88 4.33 127.33 38.38
EGLB Eagle BancGroup of IL 15.25 1,268 19.3 16.25 10.50 15.63 -2.43 N.A. 2.56
EBSI Eagle Bancshares of Tucker GA 16.31 4,552 74.2 17.50 13.62 16.25 0.37 124.97 5.23
EGFC Eagle Financial Corp. of CT 29.62 4,554 134.9 30.75 23.50 27.75 6.74 238.51 -2.89
ETFS East Texas Fin. Serv. of TX 17.25 1,079 18.6 18.75 14.25 17.25 0.00 N.A. 5.38
EBCP Eastern Bancorp of NH(8) 26.00 3,680 95.7 26.37 15.92 26.00 0.00 107.17 10.64
ESBK Elmira SB of Elmira NY* 20.75 706 14.6 21.25 14.75 20.75 0.00 44.40 13.70
EMLD Emerald Financial Corp of OH 15.00 5,062 75.9 15.00 10.25 14.75 1.69 N.A. 33.33
EIRE Emerald Island Bancorp, MA* 18.00 2,235 40.2 20.50 11.20 17.75 1.41 136.22 12.50
EFBC Empire Federal Bancorp of MT 13.12 2,592 34.0 14.44 12.50 13.12 0.00 N.A. N.A.
EFBI Enterprise Fed. Bancorp of OH 19.00 2,011 38.2 19.12 12.75 19.00 0.00 N.A. 31.03
EQSB Equitable FSB of Wheaton MD 34.00 602 20.5 35.50 22.50 34.00 0.00 N.A. 20.35
FFFG F.F.O. Financial Group of FL(8) 4.31 8,430 36.3 4.56 2.50 4.31 0.00 -48.13 27.89
FCBF FCB Fin. Corp. of Neenah WI 24.75 2,460 60.9 24.75 17.00 24.50 1.02 N.A. 33.78
FFBS FFBS Bancorp of Columbus MS 23.00 1,557 35.8 24.25 19.75 24.00 -4.17 N.A. 0.00
FFDF FFD Financial Corp. of OH 13.75 1,455 20.0 14.00 10.00 13.37 2.84 N.A. 3.77
FFLC FFLC Bancorp of Leesburg FL 28.25 2,342 66.2 28.25 17.75 26.75 5.61 N.A. 31.40
FFFC FFVA Financial Corp. of VA 25.00 4,521 113.0 25.75 15.75 24.50 2.04 N.A. 21.95
FFWC FFW Corporation of Wabash IN 26.00 697 18.1 26.75 19.00 26.00 0.00 N.A. 18.83
FFYF FFY Financial Corp. of OH 26.00 4,328 112.5 26.37 23.25 26.25 -0.95 N.A. 2.73
FMCO FMS Financial Corp. of NJ 19.75 2,386 47.1 20.75 15.50 20.75 -4.82 119.44 8.22
FFHH FSF Financial Corp. of MN 16.62 3,095 51.4 18.25 11.37 17.00 -2.24 N.A. 9.92
FOBC Fed One Bancorp of Wheeling WV 20.87 2,443 51.0 21.00 13.25 20.00 4.35 108.70 32.51
FBCI Fidelity Bancorp of Chicago IL 18.75 2,792 52.4 20.87 15.50 19.37 -3.20 N.A. 10.29
FSBI Fidelity Bancorp, Inc. of PA 20.00 1,541 30.8 21.70 14.54 20.50 -2.44 158.73 10.01
FFFL Fidelity FSB, MHC of FL (47.4) 18.75 6,766 59.8 20.00 12.00 18.75 0.00 N.A. 5.63
FFED Fidelity Fed. Bancorp of IN 9.00 2,490 22.4 12.25 7.50 7.75 16.13 27.66 -7.69
FFOH Fidelity Financial of OH 15.00 5,594 83.9 15.00 9.62 14.88 0.81 N.A. 30.43
FIBC Financial Bancorp of NY 17.25 1,748 30.2 18.50 12.37 17.25 0.00 N.A. 15.00
FBSI First Bancshares of MO 19.00 1,160 22.0 20.75 15.00 19.00 0.00 49.02 14.32
FBBC First Bell Bancorp of PA 14.87 6,803 101.2 17.37 13.12 14.75 0.81 N.A. 12.23
FBER First Bergen Bancorp of NJ 13.62 3,015 41.1 15.12 9.00 13.75 -0.95 N.A. 18.43
SKBO First Carnegie,MHC of PA(45.0) 13.44 2,300 13.9 13.50 11.62 13.37 0.52 N.A. N.A.
FCIT First Cit. Fin. Corp of MD(8) 28.62 2,944 84.3 28.62 16.00 27.75 3.14 229.34 56.82
FSTC First Citizens Corp of GA 24.75 1,588 39.3 26.75 18.25 25.00 -1.00 98.00 -1.98
FFBA First Colorado Bancorp of Co 18.00 16,555 298.0 18.87 12.50 17.50 2.86 445.45 5.88
FDEF First Defiance Fin.Corp. of OH 14.00 9,423 131.9 14.25 9.87 14.25 -1.75 N.A. 13.18
FESX First Essex Bancorp of MA* 16.62 7,484 124.4 17.12 10.00 17.00 -2.24 177.00 26.68
FFES First FS&LA of E. Hartford CT 25.25 2,649 66.9 28.50 16.50 24.62 2.56 288.46 9.78
FSSB First FS&LA of San Bern. CA 9.50 328 3.1 10.75 8.25 9.25 2.70 -5.00 5.56
FFSX First FS&LA. MHC of IA (46.0) 23.00 2,827 19.9 35.00 21.00 22.00 4.55 244.83 17.95
FFSW First Fed Fin. Serv. of OH 34.50 4,588 158.3 35.00 21.80 34.00 1.47 153.68 10.93
BDJI First Fed. Bancorp. of MN 18.75 701 13.1 19.25 12.25 18.25 2.74 N.A. 1.35
FFBH First Fed. Bancshares of AR 19.37 4,896 94.8 20.37 12.75 18.87 2.65 N.A. 22.05
FTFC First Fed. Capital Corp. of WI 30.25 6,089 184.2 31.00 19.50 30.00 0.83 168.89 28.72
FFKY First Fed. Fin. Corp. of KY 19.25 4,165 80.2 22.00 17.75 18.88 1.96 22.22 -4.94
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFTP Community Fed. Bancorp of MS 0.68 0.81 16.13 16.13 48.12
CFFC Community Fin. Corp. of VA 1.31 1.65 18.05 18.05 131.03
CIBI Community Inv. Bancorp of OH 0.99 1.47 17.73 17.73 153.94
COOP Cooperative Bk.for Svgs. of NC -1.96 0.29 17.49 17.49 233.58
CRZY Crazy Woman Creek Bncorp of WY 0.51 0.64 14.42 14.42 51.78
DNFC D&N Financial Corp. of MI 1.06 1.43 10.67 10.56 183.80
DFIN Damen Fin. Corp. of Chicago IL 0.51 0.64 14.12 14.12 70.03
DCBI Delphos Citizens Bancorp of OH 0.62 0.62 14.88 14.88 52.51
DIME Dime Community Bancorp of NY 0.87 0.97 14.53 12.47 94.26
DIBK Dime Financial Corp. of CT* 2.61 2.69 12.41 11.96 158.57
EGLB Eagle BancGroup of IL -0.26 0.15 16.27 16.27 134.49
EBSI Eagle Bancshares of Tucker GA 0.80 1.09 12.74 12.74 146.35
EGFC Eagle Financial Corp. of CT 1.85 2.47 22.91 17.24 332.02
ETFS East Texas Fin. Serv. of TX 0.34 0.68 19.69 19.69 103.51
EBCP Eastern Bancorp of NH(8) 0.87 1.36 17.86 16.95 235.28
ESBK Elmira SB of Elmira NY* 0.89 0.85 19.87 19.02 315.32
EMLD Emerald Financial Corp of OH 0.75 0.96 8.73 8.58 116.28
EIRE Emerald Island Bancorp, MA* 1.41 1.49 12.84 12.84 184.40
EFBC Empire Federal Bancorp of MT 0.35 0.46 14.76 14.76 42.30
EFBI Enterprise Fed. Bancorp of OH 0.75 0.82 15.52 15.50 122.52
EQSB Equitable FSB of Wheaton MD 2.20 3.52 24.92 24.92 491.70
FFFG F.F.O. Financial Group of FL(8) 0.19 0.31 2.41 2.41 37.60
FCBF FCB Fin. Corp. of Neenah WI 0.97 1.17 19.11 19.11 109.16
FFBS FFBS Bancorp of Columbus MS 0.96 1.21 16.05 16.05 82.64
FFDF FFD Financial Corp. of OH 0.44 0.61 14.50 14.50 58.62
FFLC FFLC Bancorp of Leesburg FL 1.00 1.47 22.16 22.16 153.09
FFFC FFVA Financial Corp. of VA 1.27 1.57 15.78 15.43 121.60
FFWC FFW Corporation of Wabash IN 1.98 2.46 22.75 22.75 227.32
FFYF FFY Financial Corp. of OH 1.20 1.72 19.50 19.50 138.32
FMCO FMS Financial Corp. of NJ 1.41 2.15 14.59 14.29 232.02
FFHH FSF Financial Corp. of MN 0.72 0.93 13.97 13.97 118.68
FOBC Fed One Bancorp of Wheeling WV 0.96 1.37 16.45 15.68 141.72
FBCI Fidelity Bancorp of Chicago IL 0.88 1.26 17.74 17.69 174.07
FSBI Fidelity Bancorp, Inc. of PA 1.07 1.70 14.81 14.81 212.78
FFFL Fidelity FSB, MHC of FL (47.4) 0.49 0.78 12.08 11.98 136.99
FFED Fidelity Fed. Bancorp of IN 0.17 0.30 5.17 5.17 100.52
FFOH Fidelity Financial of OH 0.40 0.64 12.03 10.57 91.72
FIBC Financial Bancorp of NY 0.77 1.32 14.98 14.91 154.00
FBSI First Bancshares of MO 1.18 1.45 19.80 19.77 137.97
FBBC First Bell Bancorp of PA 1.07 1.26 10.63 10.63 104.22
FBER First Bergen Bancorp of NJ 0.35 0.63 13.76 13.76 83.68
SKBO First Carnegie,MHC of PA(45.0) 0.24 0.35 10.21 10.21 65.23
FCIT First Cit. Fin. Corp of MD(8) 1.19 1.79 14.39 14.39 235.67
FSTC First Citizens Corp of GA 2.91 2.43 15.18 11.94 162.02
FFBA First Colorado Bancorp of Co 1.03 1.02 13.08 12.92 91.46
FDEF First Defiance Fin.Corp. of OH 0.44 0.60 12.41 12.41 57.95
FESX First Essex Bancorp of MA* 1.27 1.11 11.20 9.65 153.24
FFES First FS&LA of E. Hartford CT 1.56 2.49 23.00 23.00 367.95
FSSB First FS&LA of San Bern. CA -3.66 -3.67 13.70 13.20 316.08
FFSX First FS&LA. MHC of IA (46.0) 0.68 1.17 13.32 13.20 163.72
FFSW First Fed Fin. Serv. of OH 2.01 1.59 14.35 12.12 237.17
BDJI First Fed. Bancorp. of MN 0.48 1.00 17.17 17.17 153.66
FFBH First Fed. Bancshares of AR 0.81 1.16 16.79 16.79 106.16
FTFC First Fed. Capital Corp. of WI 1.77 2.06 15.97 14.97 251.31
FFKY First Fed. Fin. Corp. of KY 1.08 1.29 12.16 11.42 89.39
</TABLE>
<PAGE> 118
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFBZ First Federal Bancorp of OH 17.50 1,572 27.5 19.00 11.75 17.50 0.00 75.00 9.38
FFCH First Fin. Holdings Inc. of SC 26.75 6,326 169.2 28.25 17.50 26.75 0.00 118.37 18.89
FFBI First Financial Bancorp of IL 16.00 415 6.6 16.50 15.50 15.50 3.23 N.A. 0.82
FFHC First Financial Corp. of WI(8) 28.00 36,411 1,019.5 28.62 17.20 27.87 0.47 77.78 14.29
FFHS First Franklin Corp. of OH 19.87 1,178 23.4 20.50 14.25 20.25 -1.88 51.45 20.42
FGHC First Georgia Hold. Corp of GA 7.50 3,052 22.9 8.25 4.00 7.75 -3.23 95.82 32.28
FSPG First Home Bancorp of NJ 19.25 2,708 52.1 19.37 13.31 18.75 2.67 220.83 38.79
FFSL First Independence Corp. of KS 11.28 1,005 11.3 12.25 8.87 10.88 3.68 N.A. 8.78
FISB First Indiana Corp. of IN 21.25 10,505 223.2 24.30 16.80 20.50 3.66 57.41 -0.70
FKFS First Keystone Fin. Corp of PA 22.75 1,228 27.9 22.75 16.75 22.31 1.97 N.A. 18.18
FLKY First Lancaster Bncshrs of KY 15.00 959 14.4 16.25 13.12 15.25 -1.64 N.A. 2.60
FLFC First Liberty Fin. Corp. of GA 21.50 7,725 166.1 22.50 13.67 21.75 -1.15 323.23 17.04
CASH First Midwest Fin. Corp. of IA 15.44 2,827 43.6 17.50 14.50 15.00 2.93 N.A. 0.72
FMBD First Mutual Bancorp of IL 15.00 3,742 56.1 16.00 11.62 15.38 -2.47 N.A. 0.00
FMSB First Mutual SB of Bellevue WA* 20.25 2,453 49.7 20.50 12.25 20.50 -1.22 161.29 15.71
FNGB First Northern Cap. Corp of WI 19.62 4,419 86.7 20.25 15.25 20.25 -3.11 34.75 20.74
FFPB First Palm Beach Bancorp of FL 30.00 5,009 150.3 30.00 19.94 30.00 0.00 N.A. 27.01
FSLA First SB SLA MHC of NJ (47.5) 24.75 7,247 84.2 24.75 14.09 24.50 1.02 147.50 33.78
FSNJ First SB of NJ, MHC (45.9)(8) 25.75 3,064 36.2 25.75 14.00 24.25 6.19 N.A. 11.96
SOPN First SB, SSB, Moore Co. of NC 20.75 3,697 76.7 21.25 16.75 20.00 3.75 N.A. 10.67
FWWB First Savings Bancorp of WA* 21.50 10,569 227.2 22.12 14.37 20.88 2.97 N.A. 17.04
SHEN First Shenango Bancorp of PA 25.00 2,063 51.6 25.75 20.00 24.00 4.17 N.A. 11.11
FSFC First So.east Fin. Corp. of SC 10.94 4,388 48.0 19.00 9.12 10.50 4.19 N.A. 16.63
FLAG Flag Financial Corp of GA 12.75 2,037 26.0 12.87 9.75 12.25 4.08 30.10 18.60
FFIC Flushing Fin. Corp. of NY* 19.37 8,088 156.7 19.94 15.75 18.88 2.60 N.A. 6.90
FBHC Fort Bend Holding Corp. of TX 26.50 822 21.8 27.50 16.87 27.00 -1.85 N.A. 3.92
FTSB Fort Thomas Fin. Corp. of KY 10.50 1,495 15.7 17.75 9.25 10.25 2.44 N.A. -28.18
FKKY Frankfort First Bancorp of KY 12.00 3,385 40.6 12.25 9.75 10.63 12.89 N.A. 5.54
FTNB Fulton Bancorp of MO 20.12 1,719 34.6 20.12 12.50 19.50 3.18 N.A. 30.90
GFSB GFS Bancorp of Grinnell IA 14.25 988 14.1 14.25 10.12 14.25 0.00 N.A. 34.18
GUPB GFSB Bancorp of Gallup NM 18.00 839 15.1 18.62 13.25 18.00 0.00 N.A. 13.42
GSLA GS Financial Corp. of LA 14.37 3,439 49.4 14.37 13.37 14.00 2.64 N.A. N.A.
GWBC Gateway Bancorp of KY(8) 16.62 1,076 17.9 17.25 13.00 16.50 0.73 N.A. 16.63
GBCI Glacier Bancorp of MT 16.50 6,799 112.2 17.00 13.50 16.50 0.00 241.61 1.04
GLBK Glendale Co-op. Bank of MA(8)* 26.75 247 6.6 26.75 16.50 26.75 0.00 N.A. 33.75
GFCO Glenway Financial Corp. of OH 24.75 1,144 28.3 25.75 18.09 24.75 0.00 N.A. 20.73
GTPS Great American Bancorp of IL 15.50 1,760 27.3 16.50 13.19 15.75 -1.59 N.A. 4.66
GTFN Great Financial Corp. of KY 33.25 14,073 467.9 34.75 25.37 33.00 0.76 N.A. 14.18
GSBC Great Southern Bancorp of MO 16.94 8,288 140.4 18.00 13.12 16.87 0.41 480.14 -4.88
GDVS Greater DV SB,MHC of PA (19.9)* 12.87 3,272 8.4 14.00 9.25 12.87 0.00 N.A. 24.11
GRTR Greater New York SB of NY(8)* 19.69 13,678 269.3 19.69 10.12 19.13 2.93 111.49 44.57
GSFC Green Street Fin. Corp. of NC 17.75 4,298 76.3 18.87 12.50 17.88 -0.73 N.A. 14.52
GSLC Guaranty Svgs & Loan FA of VA 10.00 1,499 15.0 11.00 7.25 9.62 3.95 N.A. 14.29
GFED Guarnty FS&LA,MHC of MO (31.0) 17.00 3,125 16.5 17.25 9.75 17.00 0.00 N.A. 40.96
HCBB HCB Bancshares of AR 12.87 2,645 34.0 13.25 12.62 13.12 -1.91 N.A. N.A.
HEMT HF Bancorp of Hemet CA 13.50 6,282 84.8 14.50 9.25 13.38 0.90 N.A. 21.40
HFFC HF Financial Corp. of SD 19.37 2,998 58.1 20.50 14.75 20.00 -3.15 287.40 11.90
HFNC HFNC Financial Corp. of NC 17.12 17,192 294.3 22.06 15.87 17.37 -1.44 N.A. -4.20
HMNF HMN Financial, Inc. of MN 21.12 4,210 88.9 23.75 15.12 22.00 -4.00 N.A. 16.56
HALL Hallmark Capital Corp. of WI 19.25 1,443 27.8 20.00 14.50 19.25 0.00 N.A. 8.45
HARB Harbor FSB, MHC of FL (46.0) 36.62 4,962 83.1 38.50 23.75 35.75 2.43 N.A. 2.43
HRBF Harbor Federal Bancorp of MD 17.00 1,754 29.8 18.75 12.37 18.00 -5.56 70.00 7.94
HFSA Hardin Bancorp of Hardin MO 14.62 859 12.6 15.50 11.00 14.62 0.00 N.A. 16.96
HARL Harleysville SA of PA 22.12 1,651 36.5 23.00 14.00 22.00 0.55 24.62 40.00
HARS Harris SB, MHC of PA (24.2) 20.75 11,221 56.3 22.62 14.75 19.75 5.06 N.A. 13.70
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFBZ First Federal Bancorp of OH 0.86 1.18 9.34 9.33 121.94
FFCH First Fin. Holdings Inc. of SC 1.35 2.05 15.57 15.57 253.24
FFBI First Financial Bancorp of IL -0.05 1.05 17.52 17.52 224.47
FFHC First Financial Corp. of WI(8) 1.43 1.95 11.14 10.82 159.53
FFHS First Franklin Corp. of OH 0.27 1.15 16.93 16.81 192.05
FGHC First Georgia Hold. Corp of GA 0.47 0.28 4.09 3.73 48.20
FSPG First Home Bancorp of NJ 1.63 2.14 12.36 12.14 187.68
FFSL First Independence Corp. of KS 0.53 0.81 11.42 11.42 108.69
FISB First Indiana Corp. of IN 1.26 1.45 13.51 13.34 141.00
FKFS First Keystone Fin. Corp of PA 1.24 1.84 18.12 18.12 256.22
FLKY First Lancaster Bncshrs of KY 0.38 0.49 14.27 14.27 38.43
FLFC First Liberty Fin. Corp. of GA 1.76 1.42 11.87 10.62 161.56
CASH First Midwest Fin. Corp. of IA 0.96 1.24 15.18 13.43 130.94
FMBD First Mutual Bancorp of IL 0.13 0.34 15.22 11.71 113.47
FMSB First Mutual SB of Bellevue WA* 1.60 1.54 11.17 11.17 169.93
FNGB First Northern Cap. Corp of WI 0.81 1.20 16.09 16.09 139.83
FFPB First Palm Beach Bancorp of FL -0.02 0.15 21.04 20.50 311.09
FSLA First SB SLA MHC of NJ (47.5) 0.69 1.22 13.00 11.52 141.40
FSNJ First SB of NJ, MHC (45.9)(8) -0.70 0.47 16.18 16.18 188.83
SOPN First SB, SSB, Moore Co. of NC 0.99 1.19 18.04 18.04 73.34
FWWB First Savings Bancorp of WA* 0.68 0.68 14.13 12.97 89.60
SHEN First Shenango Bancorp of PA 1.55 2.08 20.79 20.79 194.34
FSFC First So.east Fin. Corp. of SC 0.01 0.70 7.80 7.80 76.29
FLAG Flag Financial Corp of GA -0.07 0.15 10.25 10.25 109.02
FFIC Flushing Fin. Corp. of NY* 0.86 0.89 16.06 16.06 100.30
FBHC Fort Bend Holding Corp. of TX 0.74 1.72 21.78 20.15 338.85
FTSB Fort Thomas Fin. Corp. of KY 0.30 0.46 10.19 10.19 63.33
FKKY Frankfort First Bancorp of KY 0.24 0.36 9.93 9.93 37.91
FTNB Fulton Bancorp of MO 0.41 0.58 14.47 14.47 57.86
GFSB GFS Bancorp of Grinnell IA 0.85 1.09 10.32 10.32 89.22
GUPB GFSB Bancorp of Gallup NM 0.69 0.87 16.88 16.88 103.59
GSLA GS Financial Corp. of LA 0.29 0.29 15.77 15.77 34.03
GWBC Gateway Bancorp of KY(8) 0.53 0.74 15.95 15.95 61.16
GBCI Glacier Bancorp of MT 1.00 1.13 7.77 7.55 81.24
GLBK Glendale Co-op. Bank of MA(8)* 1.11 1.07 24.48 24.48 149.50
GFCO Glenway Financial Corp. of OH 0.92 1.67 23.46 23.10 245.47
GTPS Great American Bancorp of IL 0.33 0.42 16.58 16.58 78.35
GTFN Great Financial Corp. of KY 1.46 1.40 19.83 18.97 213.33
GSBC Great Southern Bancorp of MO 1.09 1.23 7.35 7.35 81.94
GDVS Greater DV SB,MHC of PA (19.9)* 0.01 0.24 8.37 8.37 72.95
GRTR Greater New York SB of NY(8)* 0.86 0.74 11.78 11.78 187.93
GSFC Green Street Fin. Corp. of NC 0.57 0.70 14.64 14.64 40.57
GSLC Guaranty Svgs & Loan FA of VA 0.33 0.31 4.43 4.43 77.50
GFED Guarnty FS&LA,MHC of MO (31.0) 0.30 0.49 8.68 8.68 62.73
HCBB HCB Bancshares of AR -0.08 0.29 13.73 13.16 75.24
HEMT HF Bancorp of Hemet CA -0.36 -2.62 12.91 0.00 131.63
HFFC HF Financial Corp. of SD 1.10 1.51 17.21 17.17 187.22
HFNC HFNC Financial Corp. of NC 0.51 0.67 9.23 9.23 49.03
HMNF HMN Financial, Inc. of MN 0.99 1.20 18.71 18.71 131.36
HALL Hallmark Capital Corp. of WI 1.20 1.58 19.82 19.82 283.64
HARB Harbor FSB, MHC of FL (46.0) 1.93 2.54 18.30 17.61 222.68
HRBF Harbor Federal Bancorp of MD 0.51 0.82 16.09 16.09 125.12
HFSA Hardin Bancorp of Hardin MO 0.54 0.88 15.38 15.38 120.32
HARL Harleysville SA of PA 1.30 1.86 12.82 12.82 201.43
HARS Harris SB, MHC of PA (24.2) 0.36 0.88 13.71 11.83 173.19
</TABLE>
<PAGE> 119
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -----------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> >
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFFB Harrodsburg 1st Fin Bcrp of KY 15.00 2,025 30.4 19.00 14.87 15.00 0.00 N.A. -20.51
HHFC Harvest Home Fin. Corp. of OH 10.50 935 9.8 13.75 9.25 11.00 -4.55 N.A. 7.69
HAVN Haven Bancorp of Woodhaven NY 34.00 4,330 147.2 36.00 25.56 34.25 -0.73 N.A. 18.80
HVFD Haverfield Corp. of OH(8) 25.50 1,906 48.6 25.98 17.00 25.50 0.00 64.52 33.37
HTHR Hawthorne Fin. Corp. of CA 11.37 2,629 29.9 11.75 6.62 11.25 1.07 -58.65 39.85
HMLK Hemlock Fed. Fin. Corp. of IL 13.00 2,076 27.0 13.25 12.50 13.13 -0.99 N.A. N.A.
HBNK Highland Federal Bank of CA 21.81 2,282 49.8 24.00 14.25 21.50 1.44 N.A. 28.29
HIFS Hingham Inst. for Sav. of MA* 18.25 1,301 23.7 19.25 14.00 18.63 -2.04 300.22 -2.67
HBEI Home Bancorp of Elgin IL 16.25 7,009 113.9 16.25 11.81 16.00 1.56 N.A. 20.37
HBFW Home Bancorp of Fort Wayne IN 20.12 2,623 52.8 20.87 14.75 20.13 -0.05 N.A. 5.89
HBBI Home Building Bancorp of IN 21.00 312 6.6 22.00 17.00 21.00 0.00 N.A. 6.33
HCFC Home City Fin. Corp. of OH 13.25 952 12.6 14.25 12.00 13.25 0.00 N.A. 0.00
HOMF Home Fed Bancorp of Seymour IN 27.00 3,390 91.5 28.00 17.00 26.88 0.45 168.66 4.85
HWEN Home Financial Bancorp of IN 15.75 486 7.7 15.75 9.87 15.50 1.61 N.A. 23.53
HPBC Home Port Bancorp, Inc. of MA* 20.25 1,842 37.3 20.37 12.50 19.50 3.85 153.13 22.73
HMCI Homecorp, Inc. of Rockford IL 14.25 1,693 24.1 15.17 11.33 14.00 1.79 42.50 11.76
HZFS Horizon Fin'l. Services of IA 19.25 426 8.2 19.25 14.00 19.00 1.32 N.A. 27.31
HRZB Horizon Financial Corp. of WA* 15.37 7,399 113.7 16.00 10.65 14.87 3.36 34.59 30.92
IBSF IBS Financial Corp. of NJ 15.00 11,012 165.2 16.25 10.87 14.87 0.87 N.A. 10.38
ISBF ISB Financial Corp. of LA 22.75 7,001 159.3 26.12 13.62 22.25 2.25 N.A. 26.39
ITLA Imperial Thrift & Loan of CA* 15.25 7,829 119.4 17.25 12.62 15.25 0.00 N.A. 1.67
IFSB Independence FSB of DC 8.87 1,280 11.4 9.75 6.75 8.37 5.97 343.50 10.87
INCB Indiana Comm. Bank, SB of IN 16.25 922 15.0 19.00 13.25 15.00 8.33 N.A. 0.00
IFSL Indiana Federal Corp. of IN(8) 26.37 4,786 126.2 27.25 18.25 26.00 1.42 249.73 17.88
INBI Industrial Bancorp of OH 12.75 5,410 69.0 13.25 9.87 12.50 2.00 N.A. 0.00
IWBK Interwest SB of Oak Harbor WA 34.75 8,018 278.6 36.25 23.87 35.00 -0.71 247.50 7.75
IPSW Ipswich SB of Ipswich MA* 16.37 1,188 19.4 16.37 9.75 15.25 7.34 N.A. 36.42
JSBF JSB Financial, Inc. of NY 44.62 9,830 438.6 45.00 32.62 44.00 1.41 288.00 17.42
JXVL Jacksonville Bancorp of TX 14.62 2,572 37.6 15.75 10.00 14.50 0.83 N.A. 0.00
JXSB Jcksnville SB,MHC of IL (44.6) 16.25 1,272 9.2 18.00 11.50 17.50 -7.14 N.A. 22.64
JSBA Jefferson Svgs Bancorp of MO 29.00 4,971 144.2 30.50 22.25 28.50 1.75 N.A. 11.54
JOAC Joachim Bancorp of MO 14.75 760 11.2 15.25 12.12 14.87 -0.81 N.A. 1.72
KSAV KS Bancorp of Kenly NC 22.00 663 14.6 22.00 18.00 22.00 0.00 N.A. 10.72
KSBK KSB Bancorp of Kingfield ME(8)* 33.00 413 13.6 34.00 20.00 30.00 10.00 N.A. 43.48
KFBI Klamath First Bancorp of OR 18.94 9,962 188.7 19.00 13.37 18.50 2.38 N.A. 20.25
LSBI LSB Fin. Corp. of Lafayette IN 19.50 945 18.4 20.00 14.29 19.41 0.46 N.A. 5.01
LVSB Lakeview SB of Paterson NJ 29.62 2,302 68.2 33.50 17.27 29.00 2.14 N.A. 19.10
LARK Landmark Bancshares of KS 20.00 1,808 36.2 20.00 15.25 19.50 2.56 N.A. 11.11
LARL Laurel Capital Group of PA 21.25 1,498 31.8 22.50 14.50 21.50 -1.16 66.02 28.79
LSBX Lawrence Savings Bank of MA* 10.87 4,256 46.3 10.87 5.12 9.88 10.02 215.99 33.70
LFED Leeds FSB, MHC of MD (36.2) 18.00 3,455 22.5 19.00 13.00 18.00 0.00 N.A. 12.50
LXMO Lexington B&L Fin. Corp. of MO 14.75 1,088 16.0 15.75 9.62 14.50 1.72 N.A. 9.26
LIFB Life Bancorp of Norfolk VA 22.75 9,847 224.0 23.12 14.12 21.88 3.98 N.A. 26.39
LFBI Little Falls Bancorp of NJ 13.00 2,745 35.7 14.00 9.75 13.38 -2.84 N.A. 1.96
LOGN Logansport Fin. Corp. of IN 14.00 1,256 17.6 15.00 11.12 14.00 0.00 N.A. 24.44
LONF London Financial Corp. of OH 15.00 515 7.7 17.50 10.00 15.00 0.00 N.A. 6.23
LISB Long Island Bancorp of NY 35.12 24,228 850.9 39.25 27.69 34.87 0.72 N.A. 0.34
MAFB MAF Bancorp of IL 41.00 10,429 427.6 42.31 22.25 41.75 -1.80 382.35 17.99
MBLF MBLA Financial Corp. of MO(8) 23.25 1,316 30.6 24.00 19.00 20.75 12.05 N.A. 22.37
MFBC MFB Corp. of Mishawaka IN 19.50 1,735 33.8 19.75 13.75 19.37 0.67 N.A. 17.33
MLBC ML Bancorp of Villanova PA 18.44 10,415 192.1 18.44 11.87 17.44 5.73 N.A. 30.59
MBB MSB Bancorp of Middletown NY* 18.12 2,837 51.4 20.50 15.50 17.75 2.08 81.20 -7.65
MSBF MSB Financial Corp. of MI 22.00 630 13.9 22.00 16.50 21.75 1.15 N.A. 15.79
MGNL Magna Bancorp of MS(8) 23.25 13,754 319.8 23.75 16.75 23.50 -1.06 365.00 32.86
MARN Marion Capital Holdings of IN 22.50 1,828 41.1 23.25 19.25 23.25 -3.23 N.A. 16.88
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFFB Harrodsburg 1st Fin Bcrp of KY 0.55 0.73 14.08 14.08 53.43
HHFC Harvest Home Fin. Corp. of OH 0.17 0.44 11.12 11.12 89.47
HAVN Haven Bancorp of Woodhaven NY 2.28 3.32 23.13 23.04 399.03
HVFD Haverfield Corp. of OH(8) 0.88 1.86 15.04 15.04 179.26
HTHR Hawthorne Fin. Corp. of CA 2.39 1.65 12.11 12.11 314.87
HMLK Hemlock Fed. Fin. Corp. of IL 0.19 0.49 13.74 13.74 79.00
HBNK Highland Federal Bank of CA 0.59 1.03 15.70 15.70 210.43
HIFS Hingham Inst. for Sav. of MA* 1.73 1.73 15.10 15.10 158.08
HBEI Home Bancorp of Elgin IL 0.15 0.39 14.39 14.39 51.18
HBFW Home Bancorp of Fort Wayne IN 0.68 1.10 17.43 17.43 124.97
HBBI Home Building Bancorp of IN 0.27 0.74 18.11 18.11 150.01
HCFC Home City Fin. Corp. of OH 0.51 0.77 14.77 14.77 71.68
HOMF Home Fed Bancorp of Seymour IN 1.93 2.29 16.54 16.00 195.77
HWEN Home Financial Bancorp of IN 0.45 0.64 15.12 15.12 81.16
HPBC Home Port Bancorp, Inc. of MA* 1.69 1.68 11.11 11.11 102.72
HMCI Homecorp, Inc. of Rockford IL 0.23 0.77 12.52 12.52 198.73
HZFS Horizon Fin'l. Services of IA 0.75 1.05 19.31 19.31 183.96
HRZB Horizon Financial Corp. of WA* 1.05 1.03 10.61 10.61 69.65
IBSF IBS Financial Corp. of NJ 0.35 0.60 11.45 11.45 67.20
ISBF ISB Financial Corp. of LA 0.75 1.01 16.28 13.74 132.73
ITLA Imperial Thrift & Loan of CA* 1.37 1.37 11.77 11.72 103.52
IFSB Independence FSB of DC 0.26 0.39 13.03 11.28 193.66
INCB Indiana Comm. Bank, SB of IN 0.16 0.50 12.27 12.27 99.06
IFSL Indiana Federal Corp. of IN(8) 1.10 1.56 15.03 14.12 171.11
INBI Industrial Bancorp of OH 0.44 0.86 11.41 11.41 61.71
IWBK Interwest SB of Oak Harbor WA 1.67 2.34 14.82 14.47 220.94
IPSW Ipswich SB of Ipswich MA* 1.51 1.22 8.29 8.29 133.79
JSBF JSB Financial, Inc. of NY 2.58 2.58 33.37 33.37 154.51
JXVL Jacksonville Bancorp of TX 0.74 1.02 13.27 13.27 84.89
JXSB Jcksnville SB,MHC of IL (44.6) 0.33 0.77 13.26 13.26 128.80
JSBA Jefferson Svgs Bancorp of MO 0.57 1.43 18.09 14.12 230.96
JOAC Joachim Bancorp of MO 0.24 0.37 13.60 13.60 46.92
KSAV KS Bancorp of Kenly NC 1.34 1.76 21.01 21.00 151.97
KSBK KSB Bancorp of Kingfield ME(8)* 2.75 2.74 21.90 20.27 320.90
KFBI Klamath First Bancorp of OR 0.59 0.87 14.03 14.03 68.64
LSBI LSB Fin. Corp. of Lafayette IN 0.94 0.79 18.06 18.06 198.97
LVSB Lakeview SB of Paterson NJ 2.85 1.78 20.78 16.64 204.95
LARK Landmark Bancshares of KS 0.98 1.22 18.11 18.11 123.78
LARL Laurel Capital Group of PA 1.50 1.92 14.51 14.51 139.24
LSBX Lawrence Savings Bank of MA* 1.30 1.30 7.06 7.06 80.37
LFED Leeds FSB, MHC of MD (36.2) 0.63 0.90 13.20 13.20 81.59
LXMO Lexington B&L Fin. Corp. of MO 0.42 0.58 17.24 17.24 56.68
LIFB Life Bancorp of Norfolk VA 0.96 1.18 15.42 14.94 142.97
LFBI Little Falls Bancorp of NJ 0.27 0.53 14.30 13.16 110.52
LOGN Logansport Fin. Corp. of IN 0.73 0.95 12.41 12.41 63.14
LONF London Financial Corp. of OH 0.54 0.79 14.63 14.63 73.66
LISB Long Island Bancorp of NY 1.38 1.64 21.62 21.41 239.98
MAFB MAF Bancorp of IL 2.23 3.11 24.46 21.24 310.33
MBLF MBLA Financial Corp. of MO(8) 1.05 1.36 21.51 21.51 159.41
MFBC MFB Corp. of Mishawaka IN 0.71 1.07 19.59 19.59 135.04
MLBC ML Bancorp of Villanova PA 1.26 1.15 13.55 13.22 180.04
MBB MSB Bancorp of Middletown NY* 0.44 0.48 19.57 7.69 299.00
MSBF MSB Financial Corp. of MI 1.22 1.52 19.94 19.94 120.05
MGNL Magna Bancorp of MS(8) 1.33 1.57 9.62 9.30 100.56
MARN Marion Capital Holdings of IN 1.27 1.53 21.99 21.99 95.41
</TABLE>
<PAGE> 120
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MRKF Market Fin. Corp. of OH 12.87 1,336 17.2 13.00 12.25 12.63 1.90 N.A. N.A.
MFCX Marshalltown Fin. Corp. of IA(8) 15.00 1,411 21.2 16.62 14.25 15.00 0.00 N.A. 0.87
MFSL Maryland Fed. Bancorp of MD 45.00 3,210 144.5 45.00 26.91 37.75 19.21 328.57 29.50
MASB MassBank Corp. of Reading MA* 43.00 2,686 115.5 43.00 32.50 42.00 2.38 248.74 12.80
MFLR Mayflower Co-Op. Bank of MA* 16.25 890 14.5 19.75 13.12 17.13 -5.14 225.00 -4.41
MECH Mechanics SB of Hartford CT* 18.37 5,290 97.2 19.00 11.00 17.37 5.76 N.A. 16.63
MDBK Medford Savings Bank of MA* 27.25 4,540 123.7 29.75 20.75 27.06 0.70 289.29 5.83
MERI Meritrust FSB of Thibodaux LA 38.50 774 29.8 38.50 30.75 35.25 9.22 N.A. 21.76
MWBX Metro West of MA* 5.44 13,943 75.8 5.50 3.50 5.44 0.00 32.04 1.30
MCBS Mid Continent Bancshares of KS 26.00 1,958 50.9 27.00 17.50 25.75 0.97 N.A. 11.25
MIFC Mid Iowa Financial Corp. of IA 9.00 1,676 15.1 9.00 6.00 8.50 5.88 80.00 41.29
MCBN Mid-Coast Bancorp of ME 19.50 230 4.5 20.25 18.00 19.50 0.00 241.51 2.63
MWBI Midwest Bancshares, Inc. of IA 31.50 348 11.0 31.50 24.50 29.50 6.78 215.00 18.87
MWFD Midwest Fed. Fin. Corp of WI 19.75 1,625 32.1 24.50 15.12 20.75 -4.82 295.00 6.76
MFFC Milton Fed. Fin. Corp. of OH 14.12 2,327 32.9 16.00 11.50 14.00 0.86 N.A. -2.62
MIVI Miss. View Hold. Co. of MN 15.00 819 12.3 15.63 10.75 15.00 0.00 N.A. 25.00
MBSP Mitchell Bancorp of NC* 16.75 968 16.2 16.75 10.19 16.25 3.08 N.A. 17.54
MBBC Monterey Bay Bancorp of CA 16.37 3,245 53.1 18.25 11.37 16.00 2.31 N.A. 10.98
MSBK Mutual SB, FSB of Bay City MI 8.37 4,274 35.8 8.37 5.12 8.37 0.00 -4.34 52.18
NHTB NH Thrift Bancshares of NH 15.37 2,041 31.4 15.50 9.75 15.00 2.47 232.68 21.79
NSLB NS&L Bancorp of Neosho MO 16.50 708 11.7 17.25 12.00 16.50 0.00 N.A. 21.15
NMSB Newmil Bancorp. of CT* 9.50 3,888 36.9 10.12 6.75 9.50 0.00 49.14 -2.56
NASB North American SB of MO 45.00 2,257 101.6 46.25 29.25 43.50 3.45 958.82 31.39
NBSI North Bancshares of Chicago IL 19.50 1,035 20.2 20.12 15.25 19.50 0.00 N.A. 18.18
FFFD North Central Bancshares of IA 15.25 3,429 52.3 16.62 10.25 15.50 -1.61 N.A. 12.46
NBN Northeast Bancorp of ME* 14.37 1,275 18.3 14.75 12.50 14.37 0.00 22.30 2.64
NEIB Northeast Indiana Bncrp of IN 16.00 1,763 28.2 16.00 11.50 14.75 8.47 N.A. 17.47
NWEQ Northwest Equity Corp. of WI 14.62 929 13.6 15.00 10.25 15.00 -2.53 N.A. 20.63
NWSB Northwest SB, MHC of PA (29.9) 14.37 23,376 100.4 15.75 10.75 14.50 -0.90 N.A. 7.48
NSSY Norwalk Savings Society of CT* 26.87 2,404 64.6 28.13 19.87 28.12 -4.45 N.A. 14.98
NSSB Norwich Financial Corp. of CT* 20.62 5,400 111.3 23.25 13.12 20.00 3.10 194.57 5.10
NTMG Nutmeg FS&LA of CT 7.37 725 5.3 8.00 7.00 7.37 0.00 N.A. -1.73
OHSL OHSL Financial Corp. of OH 23.75 1,208 28.7 24.25 19.25 23.75 0.00 N.A. 11.14
OCFC Ocean Fin. Corp. of NJ 31.44 9,059 284.8 32.37 19.62 31.75 -0.98 N.A. 23.29
OCWN Ocwen Financial Corp. of FL 29.25 26,800 783.9 34.75 20.25 29.38 -0.44 N.A. 9.35
OFCP Ottawa Financial Corp. of MI 21.37 5,040 107.7 22.75 16.00 21.00 1.76 N.A. 27.13
PFFB PFF Bancorp of Pomona CA 15.25 18,846 287.4 16.94 10.37 15.44 -1.23 N.A. 2.56
PSFI PS Financial of Chicago IL 14.25 2,182 31.1 14.25 11.62 13.75 3.64 N.A. 21.28
PVFC PVF Capital Corp. of OH 18.00 2,323 41.8 19.00 12.00 18.00 0.00 309.09 14.29
PCCI Pacific Crest Capital of CA* 12.25 2,937 36.0 13.75 7.87 12.25 0.00 N.A. 6.52
PALM Palfed, Inc. of Aiken SC 16.50 5,278 87.1 17.50 11.62 16.63 -0.78 7.35 17.86
PBCI Pamrapo Bancorp, Inc. of NJ 19.75 2,863 56.5 23.75 18.25 20.25 -2.47 250.80 -1.25
PFED Park Bancorp of Chicago IL 14.75 2,431 35.9 16.12 10.19 14.50 1.72 N.A. 13.46
PVSA Parkvale Financial Corp of PA 28.37 4,060 115.2 29.50 19.60 27.25 4.11 242.63 9.12
PBIX Patriot Bank Corp. of PA 16.00 4,266 68.3 16.75 10.62 16.13 -0.81 N.A. 18.52
PEEK Peekskill Fin. Corp. of NY 14.00 3,203 44.8 15.25 11.25 13.87 0.94 N.A. -1.75
PFSB PennFed Fin. Services of NJ 25.19 4,821 121.4 25.25 14.87 24.13 4.39 N.A. 24.40
PWBC PennFirst Bancorp of PA 13.50 3,911 52.8 14.75 13.00 13.78 -2.03 69.17 -0.88
PWBK Pennwood SB of PA* 15.00 610 9.2 15.00 9.00 14.88 0.81 N.A. 9.09
PBKB People's SB of Brockton MA* 13.50 3,592 48.5 13.75 9.00 13.00 3.85 127.27 27.12
PFDC Peoples Bancorp of Auburn IN 21.75 2,279 49.6 23.00 19.25 22.25 -2.25 24.29 7.41
PBCT Peoples Bank, MHC of CT (37.4)* 24.37 61,017 369.3 24.75 13.50 23.63 3.13 209.66 26.60
PFFC Peoples Fin. Corp. of OH 15.63 1,491 23.3 16.00 10.87 15.50 0.84 N.A. 15.78
PHBK Peoples Heritage Fin Grp of ME* 35.25 28,425 1,002.0 35.25 19.00 33.12 6.43 130.24 25.89
PBNB Peoples Sav. Fin. Corp. of CT(8)* 34.25 1,907 65.3 34.25 20.50 33.50 2.24 247.01 23.42
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MRKF Market Fin. Corp. of OH 0.38 0.50 14.17 14.17 42.68
MFCX Marshalltown Fin. Corp. of IA(8) 0.30 0.63 14.06 14.06 90.08
MFSL Maryland Fed. Bancorp of MD 2.03 2.96 29.68 29.28 351.55
MASB MassBank Corp. of Reading MA* 3.60 3.34 33.49 33.49 335.49
MFLR Mayflower Co-Op. Bank of MA* 1.33 1.30 13.21 12.98 140.10
MECH Mechanics SB of Hartford CT* 0.35 0.37 14.50 14.50 149.06
MDBK Medford Savings Bank of MA* 2.33 2.26 20.43 18.91 232.18
MERI Meritrust FSB of Thibodaux LA 1.77 2.88 23.34 23.34 295.34
MWBX Metro West of MA* 0.50 0.50 2.92 2.92 39.80
MCBS Mid Continent Bancshares of KS 1.75 2.00 19.04 19.04 189.57
MIFC Mid Iowa Financial Corp. of IA 0.64 0.84 6.71 6.70 73.73
MCBN Mid-Coast Bancorp of ME 0.97 1.55 21.63 21.63 251.47
MWBI Midwest Bancshares, Inc. of IA 1.84 3.04 27.71 27.71 399.44
MWFD Midwest Fed. Fin. Corp of WI 1.16 1.13 10.66 10.24 123.74
MFFC Milton Fed. Fin. Corp. of OH 0.40 0.55 11.32 11.32 76.82
MIVI Miss. View Hold. Co. of MN 0.58 0.86 15.55 15.55 85.17
MBSP Mitchell Bancorp of NC* 0.47 0.59 15.17 15.17 35.01
MBBC Monterey Bay Bancorp of CA 0.31 0.57 13.98 12.82 130.16
MSBK Mutual SB, FSB of Bay City MI 0.15 0.06 9.31 9.31 155.02
NHTB NH Thrift Bancshares of NH 0.44 0.65 11.47 9.72 153.37
NSLB NS&L Bancorp of Neosho MO 0.41 0.62 16.35 16.35 82.05
NMSB Newmil Bancorp. of CT* 0.65 0.63 8.13 8.13 81.54
NASB North American SB of MO 3.85 3.74 24.35 23.56 305.38
NBSI North Bancshares of Chicago IL 0.52 0.74 16.94 16.94 115.95
FFFD North Central Bancshares of IA 0.98 1.14 14.59 14.59 59.35
NBN Northeast Bancorp of ME* 0.64 0.61 13.49 11.66 194.14
NEIB Northeast Indiana Bncrp of IN 0.94 1.11 14.87 14.87 98.06
NWEQ Northwest Equity Corp. of WI 0.74 0.95 12.73 12.73 103.89
NWSB Northwest SB, MHC of PA (29.9) 0.56 0.81 8.30 7.80 85.45
NSSY Norwalk Savings Society of CT* 2.42 2.77 20.69 19.95 256.81
NSSB Norwich Financial Corp. of CT* 1.34 1.27 14.27 12.80 129.86
NTMG Nutmeg FS&LA of CT 0.34 0.44 7.35 7.35 129.17
OHSL OHSL Financial Corp. of OH 1.08 1.54 21.00 21.00 190.24
OCFC Ocean Fin. Corp. of NJ -0.06 1.30 27.30 27.30 153.20
OCWN Ocwen Financial Corp. of FL 2.59 1.88 8.40 8.40 98.86
OFCP Ottawa Financial Corp. of MI 0.70 1.20 15.07 12.06 170.42
PFFB PFF Bancorp of Pomona CA 0.14 0.56 14.09 13.93 134.55
PSFI PS Financial of Chicago IL 0.66 0.68 14.88 14.88 34.43
PVFC PVF Capital Corp. of OH 1.54 2.03 10.77 10.77 153.36
PCCI Pacific Crest Capital of CA* 1.06 0.90 8.43 8.43 116.70
PALM Palfed, Inc. of Aiken SC 0.07 0.70 10.07 10.07 124.23
PBCI Pamrapo Bancorp, Inc. of NJ 1.07 1.51 16.43 16.29 128.31
PFED Park Bancorp of Chicago IL 0.53 0.74 15.88 15.88 73.21
PVSA Parkvale Financial Corp of PA 1.64 2.46 17.91 17.76 239.56
PBIX Patriot Bank Corp. of PA 0.52 0.71 11.26 11.26 139.25
PEEK Peekskill Fin. Corp. of NY 0.63 0.81 14.58 14.58 57.01
PFSB PennFed Fin. Services of NJ 1.35 2.01 19.55 16.12 259.78
PWBC PennFirst Bancorp of PA 0.76 1.14 12.77 11.65 180.58
PWBK Pennwood SB of PA* 0.46 0.73 15.30 15.30 78.57
PBKB People's SB of Brockton MA* 1.16 0.69 8.57 8.21 152.78
PFDC Peoples Bancorp of Auburn IN 1.35 1.79 18.87 18.87 124.28
PBCT Peoples Bank, MHC of CT (37.4)* 1.33 1.06 10.39 10.38 123.54
PFFC Peoples Fin. Corp. of OH 0.05 0.24 16.18 16.18 60.15
PHBK Peoples Heritage Fin Grp of ME* 2.00 2.14 15.76 13.30 192.02
PBNB Peoples Sav. Fin. Corp. of CT(8)* 2.20 2.19 24.13 22.61 251.23
</TABLE>
<PAGE> 121
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PSFC Peoples Sidney Fin. Corp of OH 13.00 1,785 23.2 13.62 12.56 12.88 0.93 N.A. N.A.
PERM Permanent Bancorp of IN 24.25 2,083 50.5 25.50 15.75 24.75 -2.02 N.A. 19.75
PMFI Perpetual Midwest Fin. of IA 19.37 1,907 36.9 22.00 17.00 19.25 0.62 N.A. 0.62
PERT Perpetual of SC, MHC (46.8) 27.62 1,505 19.5 27.75 20.25 26.50 4.23 N.A. 13.90
PCBC Perry Co. Fin. Corp. of MO 19.50 808 15.8 20.25 15.50 19.00 2.63 N.A. 14.71
PHFC Pittsburgh Home Fin. of PA 15.12 1,983 30.0 15.50 9.50 14.50 4.28 N.A. 13.09
PFSL Pocahnts Fed, MHC of AR (46.4) 19.50 1,629 14.7 20.00 14.25 19.00 2.63 N.A. 11.43
POBS Portsmouth Bank Shrs Inc of NH(8)* 16.12 5,872 94.7 16.12 12.38 15.25 5.70 54.85 17.49
PTRS Potters Financial Corp of OH 20.25 487 9.9 21.00 15.50 21.00 -3.57 N.A. 1.25
PKPS Poughkeepsie SB of NY 6.69 12,595 84.3 6.75 4.75 6.75 -0.89 -13.68 27.43
PRBC Prestige Bancorp of PA 15.50 920 14.3 16.12 9.75 15.56 -0.39 N.A. 14.81
PETE Primary Bank of NH(8)* 24.25 2,087 50.6 24.25 11.19 23.75 2.11 N.A. 59.12
PFNC Progress Financial Corp. of PA 9.12 3,814 34.8 9.38 5.75 9.13 -0.11 -17.17 8.96
PSBK Progressive Bank, Inc. of NY* 27.25 3,825 104.2 27.25 18.50 26.00 4.81 103.81 19.78
PROV Provident Fin. Holdings of CA 16.50 5,075 83.7 17.19 10.12 16.25 1.54 N.A. 17.86
PULB Pulaski SB, MHC of MO (29.0) 17.62 2,094 10.6 20.00 12.25 17.62 0.00 N.A. 21.52
PLSK Pulaski SB, MHC of NJ (46.0) 12.75 2,070 12.1 13.50 11.50 13.00 -1.92 N.A. N.A.
PULS Pulse Bancorp of S. River NJ 18.25 3,061 55.9 19.12 15.50 18.25 0.00 47.53 15.87
QCFB QCF Bancorp of Virginia MN 21.00 1,426 29.9 21.00 14.00 20.38 3.04 N.A. 15.07
QCBC Quaker City Bancorp of CA 15.87 4,778 75.8 16.40 10.30 19.75 -19.65 111.60 4.41
QCSB Queens County SB of NY* 41.62 11,137 463.5 41.75 23.25 41.00 1.51 N.A. 31.79
RCSB RCSB Financial, Inc. of NY(8)* 42.00 14,816 622.3 42.00 24.00 40.94 2.59 241.19 44.83
RARB Raritan Bancorp. of Raritan NJ* 29.50 1,532 45.2 30.75 20.25 29.50 0.00 202.56 26.88
REDF RedFed Bancorp of Redlands CA 15.12 7,164 108.3 15.44 8.37 14.31 5.66 N.A. 12.00
RELY Reliance Bancorp of NY 24.62 8,823 217.2 26.00 15.25 25.25 -2.50 N.A. 26.26
RELI Reliance Bancshares Inc of WI(8)* 7.56 2,528 19.1 10.12 6.50 7.62 -0.79 N.A. 12.00
RIVR River Valley Bancorp of IN 14.50 1,190 17.3 15.50 13.25 14.75 -1.69 N.A. 5.45
RFED Roosevelt Fin. Grp. Inc. of MO(8) 23.75 42,615 1,012.1 23.75 15.63 23.25 2.15 508.97 13.10
RSLN Roslyn Bancorp of NY* 17.44 43,642 761.1 18.62 15.00 17.50 -0.34 N.A. N.A.
RVSB Rvrview SB,FSB MHC of WA(41.7) 19.00 2,416 17.4 24.00 13.07 22.75 -16.48 N.A. 19.42
SCCB S. Carolina Comm. Bnshrs of SC 18.87 704 13.3 20.50 15.00 19.00 -0.68 N.A. 25.80
SBFL SB Fngr Lakes MHC of NY (33.1) 16.25 1,785 9.6 17.00 12.75 15.38 5.66 N.A. 18.18
SFBK SFB Bancorp, Inc. of TN 13.37 767 10.3 13.81 10.00 13.50 -0.96 N.A. N.A.
SFED SFS Bancorp of Schenectady NY 16.62 1,271 21.1 18.00 11.75 16.50 0.73 N.A. 12.68
SGVB SGV Bancorp of W. Covina CA 12.87 2,342 30.1 13.87 7.75 13.12 -1.91 N.A. 14.40
SISB SIS Bank of Springfield MA* 28.25 5,662 160.0 29.00 16.87 28.37 -0.42 N.A. 23.52
SJSB SJS Bancorp of St. Joseph MI(8) 26.50 918 24.3 26.62 19.50 26.50 0.00 N.A. 4.95
SWCB Sandwich Co-Op. Bank of MA* 30.75 1,906 58.6 34.00 19.37 31.00 -0.81 256.73 3.36
SECP Security Capital Corp. of WI(8) 93.00 9,203 855.9 93.00 59.00 92.00 1.09 N.A. 26.10
SFSL Security First Corp. of OH 21.25 5,003 106.3 22.00 13.12 22.00 -3.41 34.92 17.27
SMFC Sho-Me Fin. Corp. of MO 37.25 1,519 56.6 37.25 15.50 33.25 12.03 N.A. 71.26
SOBI Sobieski Bancorp of S. Bend IN 14.75 760 11.2 16.00 11.75 14.75 0.00 N.A. 1.72
SOSA Somerset Savings Bank of MA(8)* 2.69 16,652 44.8 2.88 1.44 2.58 4.26 -47.46 36.55
SSFC South Street Fin. Corp. of NC* 16.00 4,496 71.9 17.00 12.12 15.63 2.37 N.A. 14.29
SCBS Southern Commun. Bncshrs of AL 13.75 1,137 15.6 14.25 13.00 14.00 -1.79 N.A. 3.77
SMBC Southern Missouri Bncrp of MO 17.50 1,638 28.7 17.50 13.50 17.00 2.94 N.A. 16.67
SWBI Southwest Bancshares of IL 20.75 2,639 54.8 20.75 17.83 19.75 5.06 107.50 13.70
SVRN Sovereign Bancorp of PA 13.50 69,832 942.7 14.00 8.02 13.12 2.90 202.01 23.40
STFR St. Francis Cap. Corp. of WI 29.50 5,386 158.9 32.25 24.00 30.50 -3.28 N.A. 13.46
SPBC St. Paul Bancorp, Inc. of IL 32.81 22,840 749.4 32.81 17.80 31.75 3.34 94.49 39.62
STND Standard Fin. of Chicago IL(8) 24.37 16,204 394.9 24.37 15.12 23.31 4.55 N.A. 24.21
SFFC StateFed Financial Corp. of IA 18.50 790 14.6 19.00 15.00 18.75 -1.33 N.A. 12.12
SFIN Statewide Fin. Corp. of NJ 16.25 4,771 77.5 17.50 11.25 16.37 -0.73 N.A. 13.08
STSA Sterling Financial Corp. of WA 18.50 5,543 102.5 18.50 13.00 18.00 2.78 103.52 31.02
SFSB SuburbFed Fin. Corp. of IL 24.00 1,261 30.3 25.00 16.25 23.25 3.23 259.82 26.32
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PSFC Peoples Sidney Fin. Corp of OH 0.56 0.73 14.09 14.09 60.57
PERM Permanent Bancorp of IN 0.46 1.01 19.23 19.04 198.26
PMFI Perpetual Midwest Fin. of IA 0.18 0.53 17.72 17.72 208.59
PERT Perpetual of SC, MHC (46.8) 1.00 1.41 19.69 19.69 148.17
PCBC Perry Co. Fin. Corp. of MO 0.70 0.95 18.76 18.76 99.51
PHFC Pittsburgh Home Fin. of PA 0.59 0.84 13.71 13.55 119.51
PFSL Pocahnts Fed, MHC of AR (46.4) 1.34 1.87 14.61 14.61 229.14
POBS Portsmouth Bank Shrs Inc of NH(8)* 1.02 0.89 11.25 11.25 44.78
PTRS Potters Financial Corp of OH 0.75 1.62 21.38 21.38 240.08
PKPS Poughkeepsie SB of NY 0.14 0.32 5.75 5.75 68.37
PRBC Prestige Bancorp of PA 0.32 0.68 16.11 16.11 137.86
PETE Primary Bank of NH(8)* 1.68 1.66 13.82 13.79 208.78
PFNC Progress Financial Corp. of PA 0.44 0.54 5.47 4.79 104.97
PSBK Progressive Bank, Inc. of NY* 2.48 2.50 19.17 16.98 229.46
PROV Provident Fin. Holdings of CA 0.26 0.13 17.06 17.06 119.94
PULB Pulaski SB, MHC of MO (29.0) 0.42 0.67 10.75 10.75 85.39
PLSK Pulaski SB, MHC of NJ (46.0) 0.23 0.52 9.83 9.83 81.83
PULS Pulse Bancorp of S. River NJ 1.17 1.75 13.14 13.14 168.55
QCFB QCF Bancorp of Virginia MN 1.32 1.32 18.35 18.35 104.01
QCBC Quaker City Bancorp of CA 0.49 0.89 14.56 14.54 163.42
QCSB Queens County SB of NY* 2.05 2.07 18.47 18.47 123.31
RCSB RCSB Financial, Inc. of NY(8)* 2.62 2.60 21.36 20.82 272.16
RARB Raritan Bancorp. of Raritan NJ* 2.18 2.36 18.80 18.46 244.87
REDF RedFed Bancorp of Redlands CA 0.15 0.57 10.37 10.36 126.84
RELY Reliance Bancorp of NY 1.16 1.76 17.56 12.31 218.38
RELI Reliance Bancshares Inc of WI(8)* 0.25 0.25 11.59 11.59 18.98
RIVR River Valley Bancorp of IN -0.21 -0.21 14.37 14.15 116.24
RFED Roosevelt Fin. Grp. Inc. of MO(8) 0.23 1.77 10.16 9.55 182.95
RSLN Roslyn Bancorp of NY* 0.23 0.93 14.08 14.01 65.29
RVSB Rvrview SB,FSB MHC of WA(41.7) 0.83 1.06 10.36 9.39 92.87
SCCB S. Carolina Comm. Bnshrs of SC 0.52 0.70 17.11 17.11 65.93
SBFL SB Fngr Lakes MHC of NY (33.1) 0.08 0.54 11.27 11.27 119.23
SFBK SFB Bancorp, Inc. of TN 0.51 0.72 14.26 14.26 68.89
SFED SFS Bancorp of Schenectady NY 0.60 1.08 17.26 17.26 132.84
SGVB SGV Bancorp of W. Covina CA 0.22 0.57 12.41 12.18 170.70
SISB SIS Bank of Springfield MA* 3.21 3.11 18.00 18.00 238.19
SJSB SJS Bancorp of St. Joseph MI(8) 0.28 0.79 17.23 17.23 165.45
SWCB Sandwich Co-Op. Bank of MA* 2.24 2.27 20.55 19.59 249.34
SECP Security Capital Corp. of WI(8) 4.40 5.27 62.82 62.82 396.28
SFSL Security First Corp. of OH 1.28 1.62 11.88 11.67 126.88
SMFC Sho-Me Fin. Corp. of MO 1.73 2.06 19.13 19.13 200.46
SOBI Sobieski Bancorp of S. Bend IN 0.30 0.60 16.03 16.03 104.05
SOSA Somerset Savings Bank of MA(8)* 0.18 0.18 1.85 1.85 31.36
SSFC South Street Fin. Corp. of NC* 0.35 0.47 13.51 13.51 53.11
SCBS Southern Commun. Bncshrs of AL 0.40 0.71 13.30 13.30 64.05
SMBC Southern Missouri Bncrp of MO 1.02 1.00 15.85 15.85 101.15
SWBI Southwest Bancshares of IL 1.04 1.46 15.19 15.19 140.80
SVRN Sovereign Bancorp of PA 0.55 0.91 5.96 4.37 147.31
STFR St. Francis Cap. Corp. of WI 1.53 1.81 23.74 20.89 293.16
SPBC St. Paul Bancorp, Inc. of IL 1.28 1.89 17.16 17.11 196.36
STND Standard Fin. of Chicago IL(8) 0.68 1.02 16.74 16.72 153.60
SFFC StateFed Financial Corp. of IA 1.05 1.29 19.00 19.00 107.95
SFIN Statewide Fin. Corp. of NJ 0.66 1.18 14.03 14.00 133.31
STSA Sterling Financial Corp. of WA 0.18 0.86 11.22 9.52 280.93
SFSB SuburbFed Fin. Corp. of IL 1.02 1.67 21.23 21.14 323.39
</TABLE>
<PAGE> 122
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part One
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SBCN Suburban Bancorp. of OH(8) 18.25 1,475 26.9 19.37 14.25 17.75 2.82 N.A. 19.67
THRD TF Financial Corp. of PA 18.00 4,087 73.6 19.25 13.75 17.37 3.63 N.A. 10.77
ROSE TR Financial Corp. of NY 21.62 17,632 381.2 21.62 13.00 20.25 6.77 N.A. 21.80
TPNZ Tappan Zee Fin. Corp. of NY 16.50 1,534 25.3 17.37 11.62 17.25 -4.35 N.A. 21.15
TSBS Trenton SB, FSB MHC of NJ(35.0) 19.75 9,037 61.6 20.37 12.37 19.00 3.95 N.A. 23.44
TRIC Tri-County Bancorp of WY 20.50 609 12.5 20.50 18.00 19.50 5.13 N.A. 13.89
TWIN Twin City Bancorp of TN 18.50 853 15.8 19.50 16.00 18.25 1.37 N.A. 7.25
UFRM United FS&LA of Rocky Mount NC 11.00 3,066 33.7 11.25 7.00 10.75 2.33 238.46 29.41
UBMT United Fin. Corp. of MT 19.50 1,223 23.8 19.75 18.00 19.50 0.00 85.71 1.30
VABF Va. Beach Fed. Fin. Corp of VA 12.37 4,972 61.5 12.81 6.88 10.75 15.07 163.75 31.04
VFFC Virginia First Savings of VA(8) 22.12 5,805 128.4 22.12 11.00 21.38 3.46 ***.** 73.49
WHGB WHG Bancshares of MD 14.25 1,539 21.9 14.75 10.87 13.88 2.67 N.A. 8.61
WSFS WSFS Financial Corp. of DE* 13.00 12,530 162.9 13.00 6.75 12.81 1.48 79.31 27.58
WVFC WVS Financial Corp. of PA* 24.75 1,737 43.0 27.25 20.25 23.75 4.21 N.A. 0.53
WRNB Warren Bancorp of Peabody MA* 18.00 3,691 66.4 18.25 11.87 17.00 5.88 434.12 20.00
WFSL Washington FS&LA of Seattle WA 26.06 47,444 1,236.4 27.50 17.90 26.38 -1.21 78.62 8.18
WAMU Washington Mutual Inc. of WA* 55.87 118,248 6,606.5 58.87 28.75 55.62 0.45 201.02 29.00
WYNE Wayne Bancorp of NJ 18.50 2,156 39.9 18.50 10.75 16.75 10.45 N.A. 21.31
WAYN Wayne S&L Co. MHC of OH (47.8) 26.75 1,499 19.2 27.25 19.00 26.25 1.90 N.A. 9.18
WCFB Wbstr Cty FSB MHC of IA (45.2) 14.75 2,100 14.0 14.75 12.50 14.75 0.00 N.A. 7.27
WBST Webster Financial Corp. of CT 41.37 11,954 494.5 41.37 27.87 40.25 2.78 338.24 12.57
WEFC Wells Fin. Corp. of Wells MN 14.75 2,024 29.9 16.00 11.12 14.00 5.36 N.A. 12.42
WCBI WestCo Bancorp of IL 24.37 2,554 62.2 24.37 20.00 23.25 4.82 143.70 13.35
WSTR WesterFed Fin. Corp. of MT 20.37 5,551 113.1 21.75 13.87 20.50 -0.63 N.A. 11.62
WOFC Western Ohio Fin. Corp. of OH 21.00 2,312 48.6 23.25 19.50 21.75 -3.45 N.A. -3.45
WWFC Westwood Fin. Corp. of NJ 21.00 645 13.5 21.00 10.25 18.00 16.67 N.A. 27.27
WEHO Westwood Hmstd Fin Corp of OH 13.25 2,843 37.7 14.50 10.37 13.50 -1.85 N.A. 9.32
WFCO Winton Financial Corp. of OH 13.00 1,986 25.8 14.50 11.25 14.50 -10.34 N.A. 13.04
FFWD Wood Bancorp of OH 16.00 1,493 23.9 17.25 12.33 16.00 0.00 N.A. -5.88
YFCB Yonkers Fin. Corp. of NY 14.87 3,180 47.3 15.75 9.31 15.25 -2.49 N.A. 15.54
YFED York Financial Corp. of PA 20.00 6,971 139.4 20.00 14.54 19.38 3.20 111.64 23.08
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SBCN Suburban Bancorp. of OH(8) 0.72 1.07 17.56 17.56 150.46
THRD TF Financial Corp. of PA 0.79 1.11 17.09 14.90 157.66
ROSE TR Financial Corp. of NY 1.76 1.54 11.90 11.90 193.08
TPNZ Tappan Zee Fin. Corp. of NY 0.52 0.48 14.00 14.00 78.14
TSBS Trenton SB, FSB MHC of NJ(35.0) 0.84 0.74 11.54 10.55 69.31
TRIC Tri-County Bancorp of WY 1.00 1.30 21.62 21.62 141.17
TWIN Twin City Bancorp of TN 0.70 0.97 15.83 15.83 122.49
UFRM United FS&LA of Rocky Mount NC 0.19 0.40 6.70 6.70 88.12
UBMT United Fin. Corp. of MT 0.94 1.16 19.95 19.95 88.08
VABF Va. Beach Fed. Fin. Corp of VA 0.18 0.50 8.29 8.29 122.16
VFFC Virginia First Savings of VA(8) 1.81 1.66 11.35 10.96 140.79
WHGB WHG Bancshares of MD 0.47 0.47 14.00 14.00 63.98
WSFS WSFS Financial Corp. of DE* 1.39 1.40 6.05 5.99 117.97
WVFC WVS Financial Corp. of PA* 1.64 2.04 20.50 20.50 161.14
WRNB Warren Bancorp of Peabody MA* 2.02 1.67 9.88 9.88 97.88
WFSL Washington FS&LA of Seattle WA 1.86 2.06 14.10 12.70 122.02
WAMU Washington Mutual Inc. of WA* 0.72 2.12 19.53 18.43 389.44
WYNE Wayne Bancorp of NJ 0.39 0.39 16.57 16.57 113.84
WAYN Wayne S&L Co. MHC of OH (47.8) 0.45 1.07 15.22 15.22 166.82
WCFB Wbstr Cty FSB MHC of IA (45.2) 0.46 0.61 10.45 10.45 44.36
WBST Webster Financial Corp. of CT 1.20 2.43 23.72 19.96 467.09
WEFC Wells Fin. Corp. of Wells MN 0.62 1.00 14.20 14.20 99.75
WCBI WestCo Bancorp of IL 1.33 1.71 18.89 18.89 121.35
WSTR WesterFed Fin. Corp. of MT 0.65 0.90 18.44 14.57 167.98
WOFC Western Ohio Fin. Corp. of OH 0.48 0.69 23.21 21.87 173.04
WWFC Westwood Fin. Corp. of NJ 0.67 1.24 15.43 13.67 167.41
WEHO Westwood Hmstd Fin Corp of OH 0.22 0.37 14.15 14.15 45.71
WFCO Winton Financial Corp. of OH 0.84 1.07 10.49 10.23 147.15
FFWD Wood Bancorp of OH 1.02 1.26 13.91 13.91 109.51
YFCB Yonkers Fin. Corp. of NY 0.67 0.92 13.68 13.68 89.43
YFED York Financial Corp. of PA 0.97 1.25 13.99 13.99 166.02
</TABLE>
<PAGE> 123
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(316) 12.93 12.66 0.62 5.30 3.86 0.84 7.32 0.80 125.96 0.83
NYSE Traded Companies(9) 6.02 5.78 0.50 7.79 4.64 0.67 11.62 1.42 69.96 1.38
AMEX Traded Companies(18) 15.58 15.49 0.61 4.61 3.30 0.95 7.23 0.71 120.82 0.74
NASDAQ Listed OTC Companies(289) 12.98 12.69 0.62 5.27 3.87 0.84 7.20 0.78 128.10 0.82
California Companies(24) 7.37 6.76 0.21 3.20 3.20 0.29 5.02 1.75 63.17 1.35
Florida Companies(6) 7.94 7.52 0.90 10.89 4.51 0.82 9.72 1.40 66.01 0.81
Mid-Atlantic Companies(60) 10.57 10.20 0.61 6.30 4.43 0.85 8.83 0.85 98.99 0.94
Mid-West Companies(153) 14.34 14.15 0.66 5.11 3.88 0.89 6.93 0.63 142.36 0.70
New England Companies(11) 8.48 8.08 0.41 5.01 4.01 0.64 8.26 0.74 96.48 1.04
North-West Companies(6) 13.96 13.64 0.79 6.99 3.78 1.05 9.84 0.54 112.30 0.67
South-East Companies(44) 15.62 15.44 0.70 5.09 3.41 0.97 7.04 0.86 133.79 0.89
South-West Companies(6) 11.27 11.10 0.31 1.80 1.54 0.59 5.41 0.88 53.10 0.72
Western Companies (Excl CA)(6) 16.78 16.32 0.99 6.61 4.74 1.18 7.75 0.23 299.54 0.73
Thrift Strategy(245) 14.21 13.95 0.63 4.77 3.80 0.88 6.76 0.67 132.50 0.74
Mortgage Banker Strategy(39) 7.46 7.05 0.52 7.22 4.35 0.66 9.38 1.12 96.28 1.00
Real Estate Strategy(13) 8.77 8.62 0.52 5.25 3.43 0.77 8.85 1.86 86.27 1.30
Diversified Strategy(14) 7.83 7.68 1.08 13.23 5.69 1.14 14.51 1.36 106.28 1.32
Retail Banking Strategy(5) 11.08 10.88 0.26 2.35 1.14 0.26 2.54 0.76 164.76 1.62
Companies Issuing Dividends(263) 13.11 12.84 0.68 5.85 4.23 0.91 7.85 0.72 126.60 0.79
Companies Without Dividends(53) 12.00 11.72 0.31 2.51 1.92 0.48 4.65 1.18 122.46 1.04
Equity/Assets <6%(26) 4.93 4.60 0.34 6.66 4.63 0.52 10.25 1.20 92.43 1.15
Equity/Assets 6-12%(156) 8.60 8.21 0.56 6.51 4.16 0.75 8.74 0.92 120.59 0.94
Equity/Assets >12%(134) 19.05 18.92 0.73 3.74 3.40 1.00 5.27 0.58 138.46 0.65
Converted Last 3 Mths (no MHC)(6) 26.52 26.40 0.59 2.15 2.32 0.88 3.55 0.67 89.00 0.87
Actively Traded Companies(45) 8.66 8.43 0.71 8.59 5.20 0.94 11.71 1.01 106.56 0.97
Market Value Below $20 Million(68) 14.95 14.87 0.50 2.90 3.08 0.75 4.77 0.84 116.34 0.71
Holding Company Structure(277) 13.54 13.27 0.63 5.22 3.81 0.86 7.22 0.76 125.20 0.81
Assets Over $1 Billion(67) 7.80 7.26 0.65 8.52 4.67 0.83 11.17 1.01 89.72 1.01
Assets $500 Million-$1 Billion(51) 10.36 9.89 0.60 5.94 4.18 0.78 7.69 0.80 160.90 1.03
Assets $250-$500 Million(64) 10.76 10.45 0.56 5.32 3.86 0.82 7.78 0.75 136.89 0.79
Assets less than $250 Million(134) 17.27 17.22 0.64 3.60 3.37 0.88 5.22 0.70 125.25 0.69
Goodwill Companies(128) 8.85 8.25 0.57 6.44 4.34 0.76 8.75 0.87 112.49 0.90
Non-Goodwill Companies(187) 15.59 15.53 0.65 4.56 3.55 0.90 6.41 0.75 135.35 0.78
Acquirors of FSLIC Cases(11) 7.16 6.77 0.53 7.05 4.29 0.79 11.06 1.57 52.89 0.91
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(316) 19.99 126.38 15.46 129.26 17.52 0.35 1.79 36.16
NYSE Traded Companies(9) 19.31 170.95 9.94 168.12 14.75 0.29 0.91 19.02
AMEX Traded Companies(18) 22.00 112.94 18.58 114.12 18.53 0.38 2.26 43.41
NASDAQ Listed OTC Companies(289) 19.88 125.80 15.44 129.09 17.55 0.35 1.79 36.44
California Companies(24) 17.98 132.15 9.26 130.66 17.88 0.14 0.54 13.08
Florida Companies(6) 17.31 142.74 14.57 161.48 18.67 0.24 0.91 14.70
Mid-Atlantic Companies(60) 19.00 127.25 13.08 131.65 16.01 0.38 1.83 38.45
Mid-West Companies(153) 20.50 121.79 16.40 122.92 17.50 0.35 1.84 36.41
New England Companies(11) 19.91 121.15 9.99 131.63 16.47 0.43 1.81 38.94
North-West Companies(6) 19.94 164.58 18.89 173.83 19.85 0.34 1.48 26.34
South-East Companies(44) 20.51 135.59 19.97 139.20 19.55 0.42 2.20 44.99
South-West Companies(6) 21.32 109.04 11.66 114.90 17.33 0.31 1.61 50.88
Western Companies (Excl CA)(6) 20.39 124.58 19.18 130.78 18.12 0.54 2.95 51.61
Thrift Strategy(245) 20.52 119.83 16.37 122.99 17.81 0.36 1.91 38.84
Mortgage Banker Strategy(39) 18.17 151.34 10.85 156.81 16.56 0.33 1.33 26.10
Real Estate Strategy(13) 17.83 138.05 11.80 140.12 16.40 0.24 1.13 28.96
Diversified Strategy(14) 17.40 195.74 16.78 193.78 14.84 0.44 1.69 29.95
Retail Banking Strategy(5) 18.90 112.96 12.19 115.43 18.70 0.16 1.27 16.90
Companies Issuing Dividends(263) 20.09 128.49 15.88 131.46 17.45 0.42 2.14 42.82
Companies Without Dividends(53) 19.08 115.53 13.33 117.85 17.99 0.00 0.00 0.00
Equity/Assets <6%(26) 17.49 158.13 8.22 162.35 15.48 0.21 0.82 15.93
Equity/Assets 6-12%(156) 18.66 136.89 11.83 141.77 16.13 0.38 1.70 35.03
Equity/Assets >12%(134) 22.25 109.73 20.70 111.03 19.63 0.36 2.05 42.27
Converted Last 3 Mths (no MHC)(6) 24.71 92.72 24.47 93.40 22.16 0.05 0.37 11.76
Actively Traded Companies(45) 17.92 157.51 13.17 156.34 15.15 0.50 1.87 32.28
Market Value Below $20 Million(68) 22.07 103.86 15.33 104.76 19.18 0.31 1.93 43.17
Holding Company Structure(277) 20.39 124.76 16.00 127.02 17.74 0.37 1.84 37.39
Assets Over $1 Billion(67) 18.59 159.79 12.50 167.08 16.12 0.45 1.52 29.76
Assets $500 Million-$1 Billion(51) 17.91 135.38 13.94 140.25 16.82 0.34 1.71 39.12
Assets $250-$500 Million(64) 19.80 125.18 13.36 129.66 16.62 0.33 1.79 33.55
Assets less than $250 Million(134) 21.76 109.03 18.41 109.75 19.05 0.32 1.94 40.27
Goodwill Companies(128) 18.93 140.82 12.02 148.47 16.71 0.39 1.70 33.68
Non-Goodwill Companies(187) 20.77 116.96 17.72 117.06 18.08 0.33 1.85 38.17
Acquirors of FSLIC Cases(11) 17.79 156.19 10.76 155.53 15.92 0.37 1.61 30.01
<FN>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances; ROI (return on investment) is current EPS divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
</TABLE>
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 124
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(68) 12.01 11.62 0.99 10.28 6.33 1.03 10.43 1.00 124.05 1.49
NYSE Traded Companies(3) 7.97 6.42 0.76 10.56 5.87 0.76 10.88 2.16 39.24 1.08
AMEX Traded Companies(5) 12.93 12.71 0.81 8.54 5.20 0.82 8.81 1.08 109.25 1.43
NASDAQ Listed OTC Companies(60) 12.17 11.84 1.02 10.44 6.47 1.06 10.57 0.92 130.87 1.52
California Companies(3) 8.67 8.65 1.05 12.34 8.14 0.98 11.29 1.43 74.61 1.40
Mid-Atlantic Companies(17) 12.50 11.77 0.78 7.69 4.72 0.91 8.62 1.04 117.90 1.48
Mid-West Companies(2) 25.56 24.11 0.54 2.08 2.08 0.82 3.16 0.74 41.29 0.53
New England Companies(37) 9.09 8.79 1.09 12.86 7.77 1.06 12.44 1.06 134.22 1.71
North-West Companies(4) 10.65 10.25 0.95 8.77 4.80 1.05 10.75 0.40 173.62 1.07
South-East Companies(5) 28.04 28.04 1.06 4.11 3.44 1.17 4.54 0.70 110.74 0.77
Thrift Strategy(43) 13.58 13.10 0.97 9.15 6.04 0.99 9.09 0.94 129.71 1.40
Mortgage Banker Strategy(10) 9.50 9.39 0.77 10.57 5.93 1.00 12.11 1.14 118.19 1.58
Real Estate Strategy(7) 10.03 10.02 1.38 14.00 8.02 1.30 13.08 1.29 91.30 1.65
Diversified Strategy(6) 6.64 6.12 1.06 15.16 7.33 1.13 16.67 1.03 138.02 1.94
Retail Banking Strategy(2) 6.30 6.03 0.28 4.48 4.29 0.27 4.28 0.83 76.33 0.80
Companies Issuing Dividends(54) 11.65 11.21 1.03 10.44 6.50 1.06 10.59 0.90 133.82 1.49
Companies Without Dividends(14) 13.70 13.54 0.82 9.51 5.52 0.88 9.71 1.48 82.04 1.46
Equity/Assets <6%(5) 5.36 5.21 0.73 13.16 6.62 0.80 14.66 1.59 69.24 1.64
Equity/Assets 6-12%(44) 8.49 7.98 1.05 12.49 7.61 1.03 12.22 1.14 123.99 1.61
Equity/Assets >12%(19) 21.61 21.43 0.92 4.56 3.36 1.08 5.34 0.55 139.87 1.17
Actively Traded Companies(24) 8.68 8.29 1.10 12.92 7.72 1.09 12.92 0.96 127.50 1.60
Market Value Below $20 Million(10) 16.75 16.34 0.76 6.98 4.87 0.86 6.93 1.30 59.48 1.07
Holding Company Structure(44) 13.46 13.07 1.03 9.68 5.90 1.09 10.05 0.79 147.78 1.54
Assets Over $1 Billion(16) 9.09 8.43 0.98 12.02 6.36 1.11 13.28 1.14 118.98 1.64
Assets $500 Million-$1 Billion(16) 10.06 9.44 1.06 11.10 7.01 1.03 10.66 0.95 135.97 1.56
Assets $250-$500 Million(18) 11.17 11.05 0.95 10.38 6.53 0.94 10.20 0.91 132.00 1.58
Assets less than $250 Million(18) 17.16 16.96 0.97 7.89 5.47 1.03 7.96 1.01 110.31 1.19
Goodwill Companies(32) 9.31 8.50 0.86 10.43 6.37 0.93 10.95 1.19 110.23 1.56
Non-Goodwill Companies(35) 14.54 14.54 1.11 10.13 6.29 1.11 9.95 0.82 138.41 1.42
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(68) 14.17 143.34 16.16 146.83 15.17 0.46 1.91 27.96
NYSE Traded Companies(3) 17.31 169.32 13.86 152.37 17.34 0.33 0.53 10.79
AMEX Traded Companies(5) 14.73 140.26 16.50 145.24 13.75 0.62 2.63 33.65
NASDAQ Listed OTC Companies(60) 13.88 142.01 16.27 146.76 15.12 0.45 1.92 28.76
California Companies(3) 12.48 133.54 11.52 133.75 13.77 0.00 0.00 0.00
Mid-Atlantic Companies(17) 17.07 142.21 16.84 150.72 17.01 0.45 1.72 34.06
Mid-West Companies(2) 0.00 88.43 22.60 93.75 0.00 0.00 0.00 0.00
New England Companies(37) 12.96 151.16 13.40 153.37 13.35 0.50 2.34 29.68
North-West Companies(4) 13.65 159.44 18.08 163.97 18.14 0.47 1.61 29.00
South-East Companies(5) 19.16 108.29 30.23 108.29 22.66 0.59 1.72 25.72
Thrift Strategy(43) 14.14 133.86 16.92 139.53 15.19 0.49 2.06 31.15
Mortgage Banker Strategy(10) 15.08 156.98 14.05 159.50 14.77 0.33 1.55 9.87
Real Estate Strategy(7) 13.33 167.78 17.45 167.88 13.92 0.28 1.34 18.41
Diversified Strategy(6) 12.22 185.97 13.29 182.07 15.23 0.54 1.70 22.19
Retail Banking Strategy(2) 23.31 104.43 6.58 109.10 24.41 0.64 3.08 71.91
Companies Issuing Dividends(54) 14.51 144.61 16.08 148.75 15.31 0.56 2.33 34.25
Companies Without Dividends(14) 12.01 137.61 16.52 138.58 14.37 0.00 0.00 0.00
Equity/Assets <6%(5) 12.63 183.24 11.08 186.80 17.11 0.37 1.28 12.64
Equity/Assets 6-12%(44) 13.42 150.08 12.75 155.03 13.69 0.50 2.15 27.41
Equity/Assets >12%(19) 18.47 120.68 25.11 121.90 19.44 0.40 1.54 33.34
Actively Traded Companies(24) 13.03 153.77 13.56 155.86 14.19 0.51 2.06 26.61
Market Value Below $20 Million(10) 17.21 118.33 18.19 122.46 20.47 0.29 1.73 34.45
Holding Company Structure(44) 14.59 142.50 17.97 148.17 15.69 0.48 1.94 27.92
Assets Over $1 Billion(16) 14.90 172.34 15.88 169.13 15.85 0.54 1.76 21.80
Assets $500 Million-$1 Billion(16) 12.82 144.23 14.34 159.87 13.66 0.47 2.04 26.39
Assets $250-$500 Million(18) 13.37 137.56 14.57 139.21 13.24 0.41 1.89 28.40
Assets less than $250 Million(18) 15.83 124.69 19.60 126.89 17.77 0.42 1.94 33.42
Goodwill Companies(32) 14.57 146.31 13.36 154.27 15.42 0.51 2.06 28.99
Non-Goodwill Companies(35) 13.78 140.67 18.77 140.67 14.93 0.41 1.77 27.04
<FN>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date
and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings
and average common equity and assets balances; ROI (return on investment) is current EPS divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
</TABLE>
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 125
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ----------------------- ------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 11.67 11.39 0.58 5.01 3.04 0.87 7.77 0.49 180.29 0.79
BIF-Insured Thrifts(2) 9.94 9.94 0.56 6.87 2.77 0.61 6.84 1.85 84.60 1.87
NASDAQ Listed OTC Companies(23) 11.51 11.26 0.57 5.18 3.01 0.84 7.68 0.63 170.22 0.89
Florida Companies(3) 9.42 9.29 0.65 6.87 3.90 0.93 9.78 0.45 120.09 0.78
Mid-Atlantic Companies(10) 12.03 11.57 0.48 3.65 2.26 0.76 6.22 0.88 177.29 0.99
Mid-West Companies(7) 11.99 11.98 0.51 4.58 2.97 0.83 7.57 0.39 159.58 0.74
New England Companies(1) 8.41 8.40 1.10 13.63 5.46 0.88 10.86 0.91 125.48 1.68
North-West Companies(1) 11.16 10.11 0.92 8.38 4.37 1.17 10.71 0.10 372.65 0.54
South-East Companies(1) 13.29 13.29 0.75 6.48 3.62 1.06 9.13 0.00 0.00 1.01
Thrift Strategy(21) 11.69 11.46 0.53 4.60 2.82 0.82 7.37 0.64 160.94 0.86
Mortgage Banker Strategy(1) 11.16 10.11 0.92 8.38 4.37 1.17 10.71 0.10 372.65 0.54
Diversified Strategy(1) 8.41 8.40 1.10 13.63 5.46 0.88 10.86 0.91 125.48 1.68
Companies Issuing Dividends(22) 11.32 11.05 0.58 5.32 3.07 0.86 7.89 0.62 177.81 0.90
Companies Without Dividends(1) 15.65 15.65 0.37 2.35 1.79 0.54 3.43 0.74 33.56 0.66
Equity/Assets 6-12%(15) 9.25 8.95 0.50 5.62 3.15 0.79 8.55 0.68 129.67 0.97
Equity/Assets >12%(8) 15.47 15.29 0.69 4.42 2.78 0.94 6.16 0.50 283.75 0.73
Actively Traded Companies(1) 9.19 8.15 0.51 5.44 2.79 0.90 9.61 0.58 93.31 1.05
Holding Company Structure(1) 9.19 8.15 0.51 5.44 2.79 0.90 9.61 0.58 93.31 1.05
Assets Over $1 Billion(5) 8.69 8.08 0.70 7.95 3.83 0.92 10.32 0.70 115.46 1.20
Assets $500 Million-$1 Billion(4) 12.23 11.73 0.79 5.66 3.56 0.92 7.10 0.55 67.73 0.57
Assets $250-$500 Million(4) 9.95 9.94 0.52 5.65 3.75 0.83 9.08 0.29 365.36 0.61
Assets less than $250 Million(10) 13.33 13.23 0.47 3.47 2.14 0.78 5.98 0.78 141.75 0.95
Goodwill Companies(9) 9.80 9.17 0.73 7.21 3.70 0.92 9.37 0.53 150.03 0.90
Non-Goodwill Companies(14) 12.70 12.70 0.47 3.78 2.53 0.79 6.51 0.71 188.39 0.88
MHC Institutions(23) 11.51 11.26 0.57 5.18 3.01 0.84 7.68 0.63 170.22 0.89
MHC Converted Last 3 Months(2) 13.83 13.83 0.32 2.35 1.79 0.59 4.36 0.71 33.56 0.66
<CAPTION>
Asset Quality Ratios Pricing Ratios Dividend Data(6)
----------------------- ----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
NPAs Resvs/ Resvs/ Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Assets NPAs Loans Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 0.49 180.29 0.79 23.50 157.60 18.19 162.86 20.75 0.64 3.11 50.65
BIF-Insured Thrifts(2) 1.85 84.60 1.87 18.32 194.16 18.68 194.27 22.99 0.52 2.77 50.38
NASDAQ Listed OTC Companies(23) 0.63 170.22 0.89 22.92 160.92 18.23 165.72 20.87 0.63 3.08 50.62
Florida Companies(3) 0.45 120.09 0.78 22.59 165.01 15.27 168.05 18.57 1.03 4.08 72.54
Mid-Atlantic Companies(10) 0.88 177.29 0.99 25.91 153.52 18.26 161.93 22.14 0.39 2.29 42.09
Mid-West Companies(7) 0.39 159.58 0.74 14.55 157.91 18.89 158.13 21.11 0.70 3.72 68.88
New England Companies(1) 0.91 125.48 1.68 18.32 234.55 19.73 234.78 22.99 0.67 2.75 50.38
North-West Companies(1) 0.10 372.65 0.54 22.89 183.40 20.46 202.34 17.92 0.22 1.16 26.51
South-East Companies(1) 0.00 0.00 1.01 27.62 140.27 18.64 140.27 19.59 1.40 5.07 0.00
Thrift Strategy(21) 0.64 160.94 0.86 23.59 156.12 18.05 160.43 20.92 0.65 3.20 54.10
Mortgage Banker Strategy(1) 0.10 372.65 0.54 22.89 183.40 20.46 202.34 17.92 0.22 1.16 26.51
Diversified Strategy(1) 0.91 125.48 1.68 18.32 234.55 19.73 234.78 22.99 0.67 2.75 50.38
Companies Issuing Dividends(22) 0.62 177.81 0.90 22.92 162.32 18.12 167.34 20.87 0.66 3.23 56.94
Companies Without Dividends(1) 0.74 33.56 0.66 0.00 131.64 20.60 131.64 0.00 0.00 0.00 0.00
Equity/Assets 6-12%(15) 0.68 129.67 0.97 21.10 166.45 15.34 172.84 19.54 0.63 2.93 59.13
Equity/Assets >12%(8) 0.50 283.75 0.73 26.57 151.25 23.30 153.26 23.55 0.63 3.36 20.83
Actively Traded Companies(1) 0.58 93.31 1.05 0.00 190.38 17.50 214.84 20.29 0.48 1.94 69.57
Holding Company Structure(1) 0.58 93.31 1.05 0.00 190.38 17.50 214.84 20.29 0.48 1.94 69.57
Assets Over $1 Billion(5) 0.70 115.46 1.20 20.99 189.91 16.49 203.44 19.80 0.69 2.71 62.41
Assets $500 Million-$1 Billion(4) 0.55 67.73 0.57 24.86 155.35 19.29 161.14 22.66 0.68 3.39 41.67
Assets $250-$500 Million(4) 0.29 365.36 0.61 21.56 154.57 15.16 154.96 18.77 0.77 3.59 68.88
Assets less than $250 Million(10) 0.78 141.75 0.95 25.26 150.64 20.02 152.54 22.27 0.53 2.98 13.25
Goodwill Companies(9) 0.53 150.03 0.90 21.87 181.33 17.68 193.06 20.81 0.59 2.54 55.48
Non-Goodwill Companies(14) 0.71 188.39 0.88 24.24 146.79 18.61 146.79 20.93 0.66 3.46 33.58
MHC Institutions(23) 0.63 170.22 0.89 22.92 160.92 18.23 165.72 20.87 0.63 3.08 50.62
MHC Converted Last 3 Months(2) 0.71 33.56 0.66 0.00 130.67 18.09 130.67 24.52 0.15 1.18 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 126
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ --------------------- -------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 3.94 3.32 0.29 6.90 3.18 0.57 13.71 2.06 38.66 1.24
CSA Coast Savings Financial of CA 4.96 4.89 0.16 3.19 1.59 0.50 10.09 1.34 71.08 1.37
CFB Commercial Federal Corp. of NE 5.92 5.27 0.64 10.83 5.57 0.91 15.46 1.01 70.83 0.95
DME Dime Savings Bank, FSB of NY* 5.71 5.65 0.58 10.88 5.92 0.73 13.89 2.36 23.73 0.94
DSL Downey Financial Corp. of CA 7.30 7.19 0.45 5.74 4.00 0.76 9.71 1.11 50.35 0.62
FRC First Republic Bancorp of CA* 7.41 7.41 0.66 10.90 6.77 0.59 9.72 1.28 65.82 0.95
FED FirstFed Fin. Corp. of CA 4.73 4.66 0.24 5.24 3.35 0.48 10.42 1.74 110.91 2.53
GLN Glendale Fed. Bk, FSB of CA 5.66 5.26 0.22 3.99 2.43 0.55 10.01 1.66 64.79 1.45
GDW Golden West Fin. Corp. of CA 6.27 6.27 1.01 15.83 9.30 1.24 19.41 1.44 37.62 0.68
GWF Great Western Fin. Corp. of CA(8) 5.64 5.00 0.21 3.73 1.35 0.66 11.65 1.28 58.56 1.02
GPT GreenPoint Fin. Corp. of NY* 10.81 6.19 1.06 9.91 4.93 0.96 9.05 2.84 28.16 1.36
WES Westcorp Inc. of Orange CA 9.39 9.36 0.99 10.58 7.71 0.39 4.15 1.02 115.45 2.20
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 17.81 17.81 0.31 2.70 1.47 0.33 2.79 0.51 192.62 1.37
BKC American Bank of Waterbury CT* 7.97 7.62 1.27 15.17 8.63 1.10 13.16 1.97 44.68 1.43
BFD BostonFed Bancorp of MA 8.90 8.59 0.48 4.34 3.78 0.65 5.97 0.63 91.43 0.71
CFX CFX Corp of NH* 7.67 7.15 0.90 10.59 5.19 1.12 13.18 0.61 147.62 1.34
CZF Citisave Fin. Corp. of LA(8) 16.62 16.62 0.50 3.00 2.00 0.77 4.58 0.20 46.05 0.15
CBK Citizens First Fin.Corp. of IL 14.64 14.64 0.27 1.98 1.56 0.58 4.19 0.54 35.90 0.24
ESX Essex Bancorp of VA(8) 0.07 -0.05 -3.47 NM NM -1.73 NM 3.23 40.63 1.50
FCB Falmouth Co-Op Bank of MA* 24.45 24.45 0.85 3.46 3.23 0.82 3.32 0.02 NA 1.06
FAB FirstFed America Bancorp of MA 12.47 12.47 -0.27 -3.69 -1.92 0.42 5.80 NA NA 1.06
GAF GA Financial Corp. of PA 17.26 17.26 1.07 5.21 4.65 1.35 6.57 0.12 136.73 0.48
KNK Kankakee Bancorp of IL 10.68 10.00 0.61 5.97 5.21 0.78 7.67 1.06 64.54 1.01
KYF Kentucky First Bancorp of KY 16.11 16.11 0.80 3.99 4.88 1.06 5.27 0.14 295.31 0.77
NYB New York Bancorp, Inc. of NY 5.06 5.06 1.31 24.82 7.27 1.55 29.28 1.29 48.39 1.01
PDB Piedmont Bancorp of NC 16.97 16.97 -0.31 -1.27 -1.37 0.79 3.28 0.91 71.22 0.80
PLE Pinnacle Bank of AL 7.73 7.48 0.58 7.39 5.76 0.88 11.08 1.53 39.16 0.87
SSB Scotland Bancorp of NC 36.68 36.68 1.46 4.01 3.36 1.78 4.88 NA NA 0.50
SZB SouthFirst Bancshares of AL 13.98 13.98 0.05 0.31 0.33 0.27 1.89 0.64 44.97 0.40
SRN Southern Banc Company of AL 16.83 16.64 0.22 1.14 1.32 0.57 3.00 NA NA NA
SSM Stone Street Bancorp of NC 35.85 35.85 1.67 4.76 3.78 1.94 5.52 0.18 274.87 0.62
TSH Teche Holding Company of LA 13.30 13.30 0.73 5.04 4.27 1.01 6.94 0.27 303.33 0.97
FTF Texarkana Fst. Fin. Corp of AR 16.03 16.03 1.39 7.83 7.09 1.72 9.71 0.47 144.57 0.82
THR Three Rivers Fin. Corp. of MI 14.48 14.42 0.54 3.58 3.60 0.81 5.36 1.21 44.02 0.80
TBK Tolland Bank of CT* 6.73 6.52 0.69 10.81 7.50 0.75 11.61 2.31 52.07 1.95
WSB Washington SB, FSB of MD 8.32 8.32 0.51 6.16 6.37 0.74 8.95 NA NA 0.90
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 7.97 7.79 0.24 2.95 2.96 0.03 0.42 0.71 51.00 0.55
AFED AFSALA Bancorp of NY 13.68 13.68 0.59 4.34 4.52 0.59 4.34 NA NA NA
ALBK ALBANK Fin. Corp. of Albany NY 9.20 7.98 0.81 8.74 5.83 1.01 10.91 0.92 78.02 0.98
AMFC AMB Financial Corp. of IN 16.30 16.30 0.69 3.72 3.86 0.87 4.67 0.58 64.22 0.50
ASBP ASB Financial Corp. of OH 15.73 15.73 0.60 3.01 3.32 0.88 4.40 1.58 50.98 1.23
ABBK Abington Savings Bank of MA(8)* 6.87 6.16 0.77 11.55 8.04 0.67 10.04 0.30 133.04 0.64
AABC Access Anytime Bancorp of NM 6.80 6.80 -0.59 -11.49 -9.91 -0.23 -4.44 1.59 26.80 0.94
AFBC Advance Fin. Bancorp of WV 15.45 15.45 0.39 3.45 2.57 0.79 7.00 0.37 89.84 0.40
AADV Advantage Bancorp of WI 8.83 8.19 0.35 3.80 2.88 0.86 9.43 0.56 102.27 1.01
AFCB Affiliated Comm BC, Inc of MA 9.77 9.71 0.93 9.45 5.95 1.07 10.81 0.46 163.49 1.19
ALBC Albion Banc Corp. of Albion NY 8.90 8.90 0.09 0.93 0.96 0.38 3.93 NA NA 0.65
ABCL Allied Bancorp of IL 9.31 9.19 0.42 4.88 2.08 0.71 8.21 0.18 236.73 0.50
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA NM 232.91 9.17 NM 15.85 0.88 1.98 62.41
CSA Coast Savings Financial of CA NM 195.61 9.69 198.40 19.86 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 17.96 188.26 11.15 211.54 12.59 0.28 0.78 14.07
DME Dime Savings Bank, FSB of NY* 16.90 177.32 10.12 178.93 13.25 0.00 0.00 0.00
DSL Downey Financial Corp. of CA 25.00 140.19 10.24 142.28 14.79 0.32 1.52 38.10
FRC First Republic Bancorp of CA* 14.76 125.74 9.32 125.82 16.56 0.00 0.00 0.00
FED FirstFed Fin. Corp. of CA 29.86 153.52 7.25 155.54 15.01 0.00 0.00 0.00
GLN Glendale Fed. Bk, FSB of CA NM 154.53 8.74 166.15 16.41 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 10.75 165.32 10.36 165.32 8.76 0.44 0.63 6.78
GWF Great Western Fin. Corp. of CA(8) NM NM 15.96 NM 23.74 1.00 2.02 NM
GPT GreenPoint Fin. Corp. of NY* 20.27 204.91 22.14 NM 22.21 1.00 1.60 32.36
WES Westcorp Inc. of Orange CA 12.98 137.27 12.89 137.60 NM 0.40 2.37 30.77
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* NM 114.56 20.40 114.56 NM 0.36 1.82 NM
BKC American Bank of Waterbury CT* 11.59 171.65 13.69 179.58 13.36 1.44 4.11 47.68
BFD BostonFed Bancorp of MA 26.47 120.57 10.73 124.93 19.25 0.28 1.65 43.75
CFX CFX Corp of NH* 19.28 176.78 13.56 189.54 15.49 0.88 4.86 NM
CZF Citisave Fin. Corp. of LA(8) NM 154.44 25.67 154.44 NM 0.40 2.00 NM
CBK Citizens First Fin.Corp. of IL NM 112.60 16.49 112.60 NM 0.00 0.00 0.00
ESX Essex Bancorp of VA(8) NM NM 0.77 NM NM 0.00 0.00 NM
FCB Falmouth Co-Op Bank of MA* NM 106.26 25.98 106.26 NM 0.20 1.24 38.46
FAB FirstFed America Bancorp of MA NM 104.21 12.99 104.21 NM 0.00 0.00 NM
GAF GA Financial Corp. of PA 21.51 120.35 20.77 120.35 17.07 0.40 2.42 51.95
KNK Kankakee Bancorp of IL 19.21 112.67 12.03 120.33 14.95 0.48 1.66 31.79
KYF Kentucky First Bancorp of KY 20.51 100.09 16.12 100.09 15.53 0.50 4.60 NM
NYB New York Bancorp, Inc. of NY 13.75 NM 16.96 NM 11.66 0.60 1.83 25.10
PDB Piedmont Bancorp of NC NM 140.22 23.79 140.22 28.47 0.40 3.90 NM
PLE Pinnacle Bank of AL 17.37 126.18 9.76 130.39 11.58 0.80 3.66 63.49
SSB Scotland Bancorp of NC 29.76 119.14 43.70 119.14 24.43 0.30 1.83 54.55
SZB SouthFirst Bancshares of AL NM 94.82 13.25 94.82 NM 0.50 3.33 NM
SRN Southern Banc Company of AL NM 99.79 16.79 100.91 28.74 0.35 2.44 NM
SSM Stone Street Bancorp of NC 26.45 126.40 45.31 126.40 22.77 0.45 1.72 45.45
TSH Teche Holding Company of LA 23.44 123.11 16.38 123.11 17.05 0.50 2.67 62.50
FTF Texarkana Fst. Fin. Corp of AR 14.10 119.86 19.21 119.86 11.37 0.45 2.55 36.00
THR Three Rivers Fin. Corp. of MI 27.78 97.72 14.15 98.10 18.52 0.36 2.40 66.67
TBK Tolland Bank of CT* 13.33 132.06 8.89 136.26 12.41 0.20 1.11 14.81
WSB Washington SB, FSB of MD 15.71 96.25 8.01 96.25 10.82 0.10 2.05 32.26
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN NM 98.65 7.86 100.89 NM 0.40 1.30 43.96
AFED AFSALA Bancorp of NY 22.13 96.09 13.15 96.09 22.13 0.16 1.19 26.23
ALBK ALBANK Fin. Corp. of Albany NY 17.17 148.41 13.66 171.11 13.75 0.60 1.61 27.65
AMFC AMB Financial Corp. of IN 25.91 99.72 16.25 99.72 20.65 0.24 1.68 43.64
ASBP ASB Financial Corp. of OH NM 117.50 18.48 117.50 20.61 0.40 3.40 NM
ABBK Abington Savings Bank of MA(8)* 12.43 137.85 9.48 153.88 14.31 0.40 1.62 20.20
AABC Access Anytime Bancorp of NM NM 90.69 6.17 90.69 NM 0.00 0.00 NM
AFBC Advance Fin. Bancorp of WV NM 92.28 14.25 92.28 19.18 0.32 2.35 NM
AADV Advantage Bancorp of WI NM 134.31 11.87 144.96 13.99 0.40 1.07 37.04
AFCB Affiliated Comm BC, Inc of MA 16.81 152.69 14.91 153.66 14.68 0.48 1.97 33.10
ALBC Albion Banc Corp. of Albion NY NM 97.38 8.67 97.38 24.73 0.31 1.35 NM
ABCL Allied Bancorp of IL NM 131.92 12.29 133.67 28.54 0.65 2.15 NM
</TABLE>
<PAGE> 127
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ -------------------- ------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN 10.17 10.06 0.29 2.88 3.14 0.19 1.87 2.84 23.48 0.93
AHCI Ambanc Holding Co. of NY* 12.72 12.72 -0.62 -4.16 -4.52 -0.62 -4.16 1.06 72.94 1.47
ASBI Ameriana Bancorp of IN 10.85 10.84 0.60 5.40 4.71 0.87 7.85 0.43 63.58 0.38
AFFFZ America First Fin. Fund of CA(8) 8.28 8.16 1.42 19.23 13.96 1.74 23.53 0.41 80.65 0.50
AMFB American Federal Bank of SC(8) 8.99 8.38 1.10 13.34 4.39 1.37 16.50 0.44 193.22 1.30
ANBK American Nat'l Bancorp of MD 9.15 9.15 0.15 1.44 1.29 0.54 5.14 NA NA 1.17
ABCW Anchor Bancorp Wisconsin of WI 6.25 6.13 0.76 12.01 7.05 0.99 15.68 0.75 161.56 1.53
ANDB Andover Bancorp, Inc. of MA* 8.07 8.07 1.09 14.05 8.47 1.13 14.50 1.14 89.41 1.41
ASFC Astoria Financial Corp. of NY 7.60 6.32 0.52 6.54 4.18 0.77 9.68 0.52 35.00 0.50
AVND Avondale Fin. Corp. of IL 8.25 8.25 -0.71 -7.35 -8.87 -1.34 -13.86 1.66 194.88 5.35
BKCT Bancorp Connecticut of CT* 10.40 10.40 1.26 11.92 7.81 1.20 11.39 1.11 108.02 1.98
BPLS Bank Plus Corp. of CA 4.92 4.91 -0.35 -6.90 -6.00 -0.04 -0.77 3.22 49.87 1.96
BWFC Bank West Fin. Corp. of MI 15.30 15.30 0.74 4.25 4.25 0.53 3.03 0.03 458.70 0.20
BANC BankAtlantic Bancorp of FL 5.51 4.48 0.92 14.32 8.07 0.71 11.10 0.78 120.47 1.40
BKUNA BankUnited SA of FL 4.46 3.59 0.18 3.57 2.14 0.35 6.97 0.74 26.73 0.24
BKCO Bankers Corp. of NJ(8)* 7.78 7.66 1.10 13.28 8.08 1.18 14.19 1.20 23.83 0.46
BVCC Bay View Capital Corp. of CA 6.31 6.00 0.38 6.12 3.78 0.64 10.36 0.79 115.33 1.20
BFSB Bedford Bancshares of VA 14.32 14.32 1.05 7.12 5.84 1.35 9.09 0.63 77.52 0.57
BFFC Big Foot Fin. Corp. of IL 17.08 17.08 -0.30 -2.43 -1.50 0.29 2.33 0.11 128.76 0.37
BSBC Branford SB of CT* 9.54 9.54 1.14 12.65 6.53 1.11 12.24 1.94 112.22 3.09
BYFC Broadway Fin. Corp. of CA 10.87 10.87 -0.24 -2.42 -2.88 0.12 1.25 2.42 41.50 1.19
CBCO CB Bancorp of Michigan City IN(8) 8.83 8.83 1.00 10.68 5.18 1.17 12.50 2.41 42.37 2.50
CBES CBES Bancorp of MO 18.39 18.39 0.77 5.22 4.28 0.96 6.51 0.77 54.05 0.46
CCFH CCF Holding Company of GA 14.32 14.32 0.26 1.47 1.59 0.43 2.41 0.34 189.90 0.79
CENF CENFED Financial Corp. of CA 5.10 5.09 0.49 9.61 6.24 0.72 14.11 1.40 51.06 1.03
CFSB CFSB Bancorp of Lansing MI 7.63 7.63 0.75 9.50 5.09 1.00 12.75 0.10 565.80 0.62
CKFB CKF Bancorp of Danville KY 23.68 23.68 1.31 5.12 4.36 1.29 5.05 1.48 12.02 0.20
CNSB CNS Bancorp of MO 24.82 24.82 0.53 2.41 1.94 0.81 3.66 0.45 80.36 0.57
CSBF CSB Financial Group Inc of IL* 25.56 24.11 0.54 2.08 2.08 0.82 3.16 0.74 41.29 0.53
CFHC California Fin. Hld. Co. of CA(8) 6.96 6.93 0.53 8.00 5.04 0.82 12.26 1.04 54.70 0.77
CBCI Calumet Bancorp of Chicago IL 15.94 15.94 1.11 6.86 6.55 1.44 8.87 1.40 84.90 1.54
CAFI Camco Fin. Corp. of OH 9.69 8.92 0.75 8.54 5.35 0.88 10.01 0.68 38.86 0.32
CMRN Cameron Fin. Corp. of MO 22.95 22.95 1.12 4.46 4.60 1.39 5.56 0.60 135.41 0.95
CAPS Capital Savings Bancorp of MO 8.66 8.66 0.65 7.16 4.74 0.92 10.23 0.26 116.53 0.38
CFNC Carolina Fincorp of NC* 23.71 23.71 1.11 4.65 4.48 1.05 4.36 0.28 133.67 0.54
CNY Carver FSB of New York, NY 8.06 7.72 -0.47 -5.07 -7.51 -0.03 -0.33 1.53 34.62 1.12
CASB Cascade SB of Everett WA 6.17 6.17 0.46 7.46 4.00 0.58 9.42 0.59 142.60 1.02
CATB Catskill Fin. Corp. of NY* 26.98 26.98 1.42 6.14 5.42 1.44 6.22 0.50 133.79 1.47
CNIT Cenit Bancorp of Norfolk VA 7.02 6.40 0.74 10.48 7.04 0.68 9.75 0.65 85.28 0.87
CEBK Central Co-Op. Bank of MA* 10.26 9.11 0.59 5.92 5.57 0.66 6.66 1.67 53.48 1.24
CENB Century Bancshares of NC* 29.93 29.93 1.76 5.86 6.25 1.78 5.93 0.39 139.39 0.91
CBSB Charter Financial Inc. of IL 14.13 12.40 0.97 5.94 4.84 1.22 7.50 0.51 114.56 0.80
COFI Charter One Financial of OH 6.78 6.30 0.97 14.40 6.00 1.23 18.30 0.32 147.01 0.77
CNBA Chester Bancorp of IL 22.21 22.21 1.09 4.90 4.86 1.09 4.90 0.25 107.12 0.70
CVAL Chester Valley Bancorp of PA 8.56 8.56 0.63 7.00 4.41 0.92 10.30 0.47 187.15 1.10
CTZN CitFed Bancorp of Dayton OH 6.33 5.64 0.55 8.47 4.79 0.79 12.27 0.45 128.08 0.99
CLAS Classic Bancshares of KY 14.92 12.53 0.42 2.06 2.05 0.71 3.43 0.91 68.31 0.99
CMSB Cmnwealth Bancorp of PA 9.57 7.35 0.56 5.44 4.37 0.72 7.00 0.42 106.34 0.86
COVB CoVest Bancshares of IL 8.94 8.51 0.16 1.78 1.75 0.43 4.89 0.23 118.11 0.43
CBSA Coastal Bancorp of Houston TX 3.42 2.89 0.26 7.87 5.52 0.44 13.15 0.65 37.23 0.56
CFCP Coastal Fin. Corp. of SC 6.10 6.10 0.90 14.66 4.19 0.99 16.14 0.26 350.59 1.14
COFD Collective Bancorp Inc. of NJ(8) 7.00 6.33 0.94 13.56 5.57 1.15 16.49 0.40 60.69 0.47
CMSV Commty. Svgs, MHC of FL (48.5) 11.23 11.23 0.63 5.41 3.82 0.95 8.21 0.57 66.20 0.64
CBNH Community Bankshares Inc of NH(8)* 7.13 7.13 0.93 13.02 5.57 0.75 10.52 0.61 115.48 1.01
CFTP Community Fed. Bancorp of MS 33.52 33.52 1.43 4.31 3.89 1.70 5.13 0.35 79.45 0.47
CFFC Community Fin. Corp. of VA 13.78 13.78 1.04 7.50 5.82 1.31 9.44 0.35 180.62 0.70
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN NM 92.86 9.44 93.89 NM 0.20 1.57 50.00
AHCI Ambanc Holding Co. of NY* NM 103.75 13.20 103.75 NM 0.00 0.00 NM
ASBI Ameriana Bancorp of IN 21.23 115.84 12.56 115.93 14.62 0.60 3.87 NM
AFFFZ America First Fin. Fund of CA(8) 7.17 126.77 10.50 128.61 5.86 1.60 4.20 30.08
AMFB American Federal Bank of SC(8) 22.78 NM 25.96 NM 18.41 0.48 1.56 35.56
ANBK American Nat'l Bancorp of MD NM 119.63 10.95 119.63 21.69 0.12 0.81 63.16
ABCW Anchor Bancorp Wisconsin of WI 14.18 167.59 10.48 170.91 10.86 0.56 1.30 18.42
ANDB Andover Bancorp, Inc. of MA* 11.81 156.91 12.66 156.91 11.44 0.68 2.29 26.98
ASFC Astoria Financial Corp. of NY 23.94 154.02 11.71 185.10 16.17 0.60 1.42 33.90
AVND Avondale Fin. Corp. of IL NM 92.41 7.63 92.41 NM 0.00 0.00 NM
BKCT Bancorp Connecticut of CT* 12.81 153.18 15.93 153.18 13.41 0.88 3.42 43.78
BPLS Bank Plus Corp. of CA NM 118.24 5.81 118.51 NM 0.00 0.00 NM
BWFC Bank West Fin. Corp. of MI 23.51 109.90 16.82 109.90 NM 0.28 2.02 47.46
BANC BankAtlantic Bancorp of FL 12.39 167.07 9.20 205.53 15.99 0.12 0.87 10.81
BKUNA BankUnited SA of FL NM 133.83 5.97 166.55 23.93 0.00 0.00 0.00
BKCO Bankers Corp. of NJ(8)* 12.38 158.01 12.30 160.62 11.58 0.64 2.53 31.37
BVCC Bay View Capital Corp. of CA 26.46 167.93 10.59 176.63 15.64 0.32 1.29 34.04
BFSB Bedford Bancshares of VA 17.13 120.50 17.26 120.50 13.43 0.52 2.62 44.83
BFFC Big Foot Fin. Corp. of IL NM 112.04 19.14 112.04 NM 0.00 0.00 NM
BSBC Branford SB of CT* 15.32 184.11 17.56 184.11 15.83 0.08 1.68 25.81
BYFC Broadway Fin. Corp. of CA NM 75.39 8.20 75.39 NM 0.20 1.86 NM
CBCO CB Bancorp of Michigan City IN(8) 19.32 197.44 17.44 197.44 16.50 0.00 0.00 0.00
CBES CBES Bancorp of MO 23.36 94.38 17.35 94.38 18.74 0.40 2.48 57.97
CCFH CCF Holding Company of GA NM 109.45 15.67 109.45 NM 0.50 3.17 NM
CENF CENFED Financial Corp. of CA 16.03 147.06 7.51 147.35 10.93 0.33 1.12 17.93
CFSB CFSB Bancorp of Lansing MI 19.66 186.69 14.25 186.69 14.65 0.55 2.39 47.01
CKFB CKF Bancorp of Danville KY 22.92 125.16 29.64 125.16 23.19 0.44 2.29 52.38
CNSB CNS Bancorp of MO NM 108.62 26.96 108.62 NM 0.20 1.25 64.52
CSBF CSB Financial Group Inc of IL* NM 88.43 22.60 93.75 NM 0.00 0.00 0.00
CFHC California Fin. Hld. Co. of CA(8) 19.84 152.89 10.64 153.53 12.94 0.44 1.50 29.73
CBCI Calumet Bancorp of Chicago IL 15.26 107.86 17.20 107.86 11.80 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 18.69 123.75 11.99 134.45 15.95 0.52 2.81 52.53
CMRN Cameron Fin. Corp. of MO 21.75 99.00 22.72 99.00 17.45 0.28 1.67 36.36
CAPS Capital Savings Bancorp of MO 21.10 149.22 12.92 149.22 14.77 0.24 1.48 31.17
CFNC Carolina Fincorp of NC* 22.31 104.17 24.70 104.17 23.77 0.20 1.38 30.77
CNY Carver FSB of New York, NY NM 68.56 5.53 71.62 NM 0.00 0.00 NM
CASB Cascade SB of Everett WA 25.00 179.41 11.08 179.41 19.79 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 18.45 105.44 28.45 105.44 18.24 0.28 1.81 33.33
CNIT Cenit Bancorp of Norfolk VA 14.20 148.76 10.44 163.16 15.25 1.00 2.22 31.55
CEBK Central Co-Op. Bank of MA* 17.97 101.83 10.45 114.77 15.97 0.32 1.86 33.33
CENB Century Bancshares of NC* 16.01 93.86 28.10 93.86 15.83 2.00 2.90 46.40
CBSB Charter Financial Inc. of IL 20.68 131.39 18.57 149.74 16.39 0.32 1.84 38.10
COFI Charter One Financial of OH 16.67 233.80 15.84 NM 13.11 1.00 2.08 34.72
CNBA Chester Bancorp of IL 20.59 100.83 22.39 100.83 20.59 0.24 1.64 33.80
CVAL Chester Valley Bancorp of PA 22.70 155.27 13.29 155.27 15.43 0.44 2.23 50.57
CTZN CitFed Bancorp of Dayton OH 20.88 170.22 10.78 191.11 14.41 0.32 0.87 18.18
CLAS Classic Bancshares of KY NM 100.90 15.06 120.13 29.24 0.28 1.92 NM
CMSB Cmnwealth Bancorp of PA 22.91 120.96 11.57 157.50 17.79 0.28 1.85 42.42
COVB CoVest Bancshares of IL NM 108.50 9.69 113.86 20.88 0.40 2.25 NM
CBSA Coastal Bancorp of Houston TX 18.12 137.47 4.70 162.75 10.84 0.48 1.78 32.21
CFCP Coastal Fin. Corp. of SC 23.88 NM 20.33 NM 21.68 0.33 1.55 37.08
COFD Collective Bancorp Inc. of NJ(8) 17.96 232.93 16.31 NM 14.77 1.00 2.27 40.82
CMSV Commty. Svgs, MHC of FL (48.5) 26.20 139.69 15.69 139.69 17.26 0.90 4.14 NM
CBNH Community Bankshares Inc of NH(8)* 17.97 222.44 15.86 222.44 22.24 0.64 1.71 30.77
CFTP Community Fed. Bancorp of MS 25.74 108.49 36.37 108.49 21.60 0.30 1.71 44.12
CFFC Community Fin. Corp. of VA 17.18 124.65 17.17 124.65 13.64 0.56 2.49 42.75
</TABLE>
<PAGE> 128
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CIBI Community Inv. Bancorp of OH 11.52 11.52 0.67 5.52 5.21 1.00 8.19 0.72 65.53 0.62
COOP Cooperative Bk.for Svgs. of NC 7.49 7.49 -0.89 -10.79 -9.33 0.13 1.60 0.45 53.51 0.30
CRZY Crazy Woman Creek Bncorp of WY 27.85 27.85 1.01 3.35 3.74 1.27 4.20 0.23 240.34 1.03
DNFC D&N Financial Corp. of MI 5.81 5.75 0.63 10.98 5.81 0.85 14.82 0.37 192.28 1.01
DFIN Damen Fin. Corp. of Chicago IL 20.16 20.16 0.71 3.13 3.58 0.89 3.93 0.20 76.94 0.38
DCBI Delphos Citizens Bancorp of OH 28.34 28.34 1.27 6.07 4.43 1.27 6.07 0.10 93.46 0.13
DIME Dime Community Bancorp of NY 15.41 13.23 0.93 6.19 4.87 1.03 6.90 0.82 97.78 1.45
DIBK Dime Financial Corp. of CT* 7.83 7.54 1.85 22.66 10.93 1.91 23.35 0.46 337.58 3.23
EGLB Eagle BancGroup of IL 12.10 12.10 -0.20 -1.89 -1.70 0.12 1.09 1.67 31.93 0.80
EBSI Eagle Bancshares of Tucker GA 8.71 8.71 0.59 6.82 4.90 0.80 9.29 0.88 65.80 0.84
EGFC Eagle Financial Corp. of CT 6.90 5.19 0.58 8.18 6.25 0.78 10.92 1.21 47.66 1.01
ETFS East Texas Fin. Serv. of TX 19.02 19.02 0.32 1.70 1.97 0.64 3.41 0.25 100.00 0.53
EBCP Eastern Bancorp of NH(8) 7.59 7.20 0.38 4.96 3.35 0.59 7.76 1.27 25.79 0.57
ESBK Elmira SB of Elmira NY* 6.30 6.03 0.28 4.48 4.29 0.27 4.28 0.83 76.33 0.80
EMLD Emerald Financial Corp of OH 7.51 7.38 0.69 8.89 5.00 0.89 11.37 0.34 75.41 0.34
EIRE Emerald Island Bancorp, MA* 6.96 6.96 0.81 12.00 7.83 0.86 12.68 0.62 105.23 0.97
EFBC Empire Federal Bancorp of MT 34.89 34.89 0.83 2.37 2.67 1.09 3.12 NA NA 0.47
EFBI Enterprise Fed. Bancorp of OH 12.67 12.65 0.68 4.72 3.95 0.75 5.16 0.01 NA 0.28
EQSB Equitable FSB of Wheaton MD 5.07 5.07 0.48 9.33 6.47 0.76 14.93 1.07 19.82 0.31
FFFG F.F.O. Financial Group of FL(8) 6.41 6.41 0.52 8.41 4.41 0.85 13.72 3.17 55.02 2.47
FCBF FCB Fin. Corp. of Neenah WI 17.51 17.51 0.91 5.04 3.92 1.10 6.08 0.11 426.35 0.56
FFBS FFBS Bancorp of Columbus MS 19.42 19.42 1.19 6.07 4.17 1.49 7.65 0.42 109.44 0.66
FFDF FFD Financial Corp. of OH 24.74 24.74 0.78 3.42 3.20 1.08 4.74 NA NA 0.27
FFLC FFLC Bancorp of Leesburg FL 14.48 14.48 0.69 4.30 3.54 1.01 6.32 0.27 116.25 0.46
FFFC FFVA Financial Corp. of VA 12.98 12.69 1.08 7.35 5.08 1.34 9.09 0.10 585.64 1.01
FFWC FFW Corporation of Wabash IN 10.01 10.01 0.90 8.74 7.62 1.11 10.86 0.22 150.42 0.48
FFYF FFY Financial Corp. of OH 14.10 14.10 0.89 5.44 4.62 1.27 7.80 0.72 73.17 0.69
FMCO FMS Financial Corp. of NJ 6.29 6.16 0.64 9.89 7.14 0.97 15.08 1.07 47.56 0.90
FFHH FSF Financial Corp. of MN 11.77 11.77 0.64 4.73 4.33 0.83 6.11 0.10 216.04 0.34
FOBC Fed One Bancorp of Wheeling WV 11.61 11.06 0.68 5.79 4.60 0.98 8.27 0.45 93.85 1.00
FBCI Fidelity Bancorp of Chicago IL 10.19 10.16 0.53 4.92 4.69 0.75 7.05 0.70 24.69 0.23
FSBI Fidelity Bancorp, Inc. of PA 6.96 6.96 0.52 7.41 5.35 0.83 11.77 0.51 100.48 1.06
FFFL Fidelity FSB, MHC of FL (47.4) 8.82 8.75 0.39 4.09 2.61 0.62 6.51 0.30 77.48 0.31
FFED Fidelity Fed. Bancorp of IN 5.14 5.14 0.16 3.18 1.89 0.28 5.62 0.16 455.75 0.85
FFOH Fidelity Financial of OH 13.12 11.52 0.63 3.90 2.67 1.01 6.24 0.18 174.34 0.38
FIBC Financial Bancorp of NY 9.73 9.68 0.51 5.14 4.46 0.88 8.82 NA NA 0.85
FBSI First Bancshares of MO 14.35 14.33 0.91 5.88 6.21 1.11 7.22 0.32 88.44 0.35
FBBC First Bell Bancorp of PA 10.20 10.20 1.19 7.34 7.20 1.40 8.65 0.09 107.87 0.12
FBER First Bergen Bancorp of NJ 16.44 16.44 0.42 2.50 2.57 0.75 4.50 0.74 161.82 2.41
SKBO First Carnegie,MHC of PA(45.0) 15.65 15.65 0.37 2.35 1.79 0.54 3.43 0.74 33.56 0.66
FCIT First Cit. Fin. Corp of MD(8) 6.11 6.11 0.53 8.65 4.16 0.79 13.02 1.92 52.05 1.33
FSTC First Citizens Corp of GA 9.37 7.37 1.80 19.17 11.76 1.50 16.01 1.26 87.96 1.40
FFBA First Colorado Bancorp of Co 14.30 14.13 1.13 7.87 5.72 1.12 7.80 0.19 136.49 0.37
FDEF First Defiance Fin.Corp. of OH 21.42 21.42 0.78 3.37 3.14 1.06 4.60 0.45 93.68 0.55
FESX First Essex Bancorp of MA* 7.31 6.30 1.01 13.37 7.64 0.88 11.68 0.62 143.10 1.42
FFES First FS&LA of E. Hartford CT 6.25 6.25 0.43 7.04 6.18 0.69 11.23 0.51 55.25 1.57
FSSB First FS&LA of San Bern. CA 4.33 4.18 -1.18 -24.68 NM -1.18 -24.75 2.31 45.41 1.47
FFSX First FS&LA. MHC of IA (46.0) 8.14 8.06 0.43 5.19 2.96 0.73 8.93 0.14 263.34 0.52
FFSW First Fed Fin. Serv. of OH 6.05 5.11 0.87 15.36 5.83 0.69 12.15 0.38 73.66 0.40
BDJI First Fed. Bancorp. of MN 11.17 11.17 0.32 2.58 2.56 0.66 5.38 0.31 127.79 0.82
FFBH First Fed. Bancshares of AR 15.82 15.82 0.79 5.42 4.18 1.13 7.76 0.19 127.62 0.31
FTFC First Fed. Capital Corp. of WI 6.35 5.96 0.74 11.32 5.85 0.86 13.18 0.17 308.37 0.68
FFKY First Fed. Fin. Corp. of KY 13.60 12.78 1.25 9.03 5.61 1.49 10.79 0.40 115.33 0.53
FFBZ First Federal Bancorp of OH 7.66 7.65 0.74 9.58 4.91 1.01 13.14 0.58 153.04 1.02
FFCH First Fin. Holdings Inc. of SC 6.15 6.15 0.55 8.85 5.05 0.84 13.43 1.82 39.24 0.84
FFBI First Financial Bancorp of IL 7.81 7.81 -0.02 -0.27 -0.31 0.47 5.76 0.27 200.40 0.69
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CIBI Community Inv. Bancorp of OH 19.19 107.16 12.34 107.16 12.93 0.40 2.11 40.40
COOP Cooperative Bk.for Svgs. of NC NM 120.07 8.99 120.07 NM 0.00 0.00 NM
CRZY Crazy Woman Creek Bncorp of WY 26.71 94.45 26.30 94.45 21.28 0.40 2.94 NM
DNFC D&N Financial Corp. of MI 17.22 171.04 9.93 172.82 12.76 0.00 0.00 0.00
DFIN Damen Fin. Corp. of Chicago IL 27.94 100.92 20.35 100.92 22.27 0.24 1.68 47.06
DCBI Delphos Citizens Bancorp of OH 22.58 94.09 26.66 94.09 22.58 0.00 0.00 0.00
DIME Dime Community Bancorp of NY 20.54 122.99 18.96 143.30 18.42 0.18 1.01 20.69
DIBK Dime Financial Corp. of CT* 9.15 192.34 15.05 199.58 8.87 0.40 1.68 15.33
EGLB Eagle BancGroup of IL NM 93.73 11.34 93.73 NM 0.00 0.00 NM
EBSI Eagle Bancshares of Tucker GA 20.39 128.02 11.14 128.02 14.96 0.60 3.68 75.00
EGFC Eagle Financial Corp. of CT 16.01 129.29 8.92 171.81 11.99 0.92 3.11 49.73
ETFS East Texas Fin. Serv. of TX NM 87.61 16.67 87.61 25.37 0.20 1.16 58.82
EBCP Eastern Bancorp of NH(8) 29.89 145.58 11.05 153.39 19.12 0.64 2.46 73.56
ESBK Elmira SB of Elmira NY* 23.31 104.43 6.58 109.10 24.41 0.64 3.08 71.91
EMLD Emerald Financial Corp of OH 20.00 171.82 12.90 174.83 15.63 0.24 1.60 32.00
EIRE Emerald Island Bancorp, MA* 12.77 140.19 9.76 140.19 12.08 0.28 1.56 19.86
EFBC Empire Federal Bancorp of MT NM 88.89 31.02 88.89 28.52 0.30 2.29 NM
EFBI Enterprise Fed. Bancorp of OH 25.33 122.42 15.51 122.58 23.17 1.00 5.26 NM
EQSB Equitable FSB of Wheaton MD 15.45 136.44 6.91 136.44 9.66 0.00 0.00 0.00
FFFG F.F.O. Financial Group of FL(8) 22.68 178.84 11.46 178.84 13.90 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 25.52 129.51 22.67 129.51 21.15 0.72 2.91 74.23
FFBS FFBS Bancorp of Columbus MS 23.96 143.30 27.83 143.30 19.01 0.50 2.17 52.08
FFDF FFD Financial Corp. of OH NM 94.83 23.46 94.83 22.54 0.30 2.18 68.18
FFLC FFLC Bancorp of Leesburg FL 28.25 127.48 18.45 127.48 19.22 0.48 1.70 48.00
FFFC FFVA Financial Corp. of VA 19.69 158.43 20.56 162.02 15.92 0.48 1.92 37.80
FFWC FFW Corporation of Wabash IN 13.13 114.29 11.44 114.29 10.57 0.72 2.77 36.36
FFYF FFY Financial Corp. of OH 21.67 133.33 18.80 133.33 15.12 0.70 2.69 58.33
FMCO FMS Financial Corp. of NJ 14.01 135.37 8.51 138.21 9.19 0.20 1.01 14.18
FFHH FSF Financial Corp. of MN 23.08 118.97 14.00 118.97 17.87 0.50 3.01 69.44
FOBC Fed One Bancorp of Wheeling WV 21.74 126.87 14.73 133.10 15.23 0.58 2.78 60.42
FBCI Fidelity Bancorp of Chicago IL 21.31 105.69 10.77 105.99 14.88 0.32 1.71 36.36
FSBI Fidelity Bancorp, Inc. of PA 18.69 135.04 9.40 135.04 11.76 0.36 1.80 33.64
FFFL Fidelity FSB, MHC of FL (47.4) NM 155.22 13.69 156.51 24.04 0.80 4.27 NM
FFED Fidelity Fed. Bancorp of IN NM 174.08 8.95 174.08 30.00 0.40 4.44 NM
FFOH Fidelity Financial of OH NM 124.69 16.35 141.91 23.44 0.28 1.87 70.00
FIBC Financial Bancorp of NY 22.40 115.15 11.20 115.69 13.07 0.40 2.32 51.95
FBSI First Bancshares of MO 16.10 95.96 13.77 96.11 13.10 0.20 1.05 16.95
FBBC First Bell Bancorp of PA 13.90 139.89 14.27 139.89 11.80 0.40 2.69 37.38
FBER First Bergen Bancorp of NJ NM 98.98 16.28 98.98 21.62 0.12 0.88 34.29
SKBO First Carnegie,MHC of PA(45.0) NM 131.64 20.60 131.64 NM 0.00 0.00 0.00
FCIT First Cit. Fin. Corp of MD(8) 24.05 198.89 12.14 198.89 15.99 0.00 0.00 0.00
FSTC First Citizens Corp of GA 8.51 163.04 15.28 207.29 10.19 0.44 1.78 15.12
FFBA First Colorado Bancorp of Co 17.48 137.61 19.68 139.32 17.65 0.40 2.22 38.83
FDEF First Defiance Fin.Corp. of OH NM 112.81 24.16 112.81 23.33 0.32 2.29 72.73
FESX First Essex Bancorp of MA* 13.09 148.39 10.85 172.23 14.97 0.48 2.89 37.80
FFES First FS&LA of E. Hartford CT 16.19 109.78 6.86 109.78 10.14 0.60 2.38 38.46
FSSB First FS&LA of San Bern. CA NM 69.34 3.01 71.97 NM 0.00 0.00 NM
FFSX First FS&LA. MHC of IA (46.0) NM 172.67 14.05 174.24 19.66 0.48 2.09 70.59
FFSW First Fed Fin. Serv. of OH 17.16 240.42 14.55 NM 21.70 0.44 1.28 21.89
BDJI First Fed. Bancorp. of MN NM 109.20 12.20 109.20 18.75 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 23.91 115.37 18.25 115.37 16.70 0.20 1.03 24.69
FTFC First Fed. Capital Corp. of WI 17.09 189.42 12.04 202.07 14.68 0.72 2.38 40.68
FFKY First Fed. Fin. Corp. of KY 17.82 158.31 21.53 168.56 14.92 0.52 2.70 48.15
FFBZ First Federal Bancorp of OH 20.35 187.37 14.35 187.57 14.83 0.24 1.37 27.91
FFCH First Fin. Holdings Inc. of SC 19.81 171.80 10.56 171.80 13.05 0.72 2.69 53.33
FFBI First Financial Bancorp of IL NM 91.32 7.13 91.32 15.24 0.00 0.00 NM
</TABLE>
<PAGE> 129
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFHC First Financial Corp. of WI(8) 6.98 6.78 0.93 12.87 5.11 1.26 17.55 0.29 137.23 0.65
FFHS First Franklin Corp. of OH 8.82 8.75 0.14 1.59 1.36 0.62 6.76 0.62 68.29 0.62
FGHC First Georgia Hold. Corp of GA 8.49 7.74 0.96 11.69 6.27 0.57 6.97 1.35 50.33 0.79
FSPG First Home Bancorp of NJ 6.59 6.47 0.90 13.90 8.47 1.19 18.24 0.79 93.39 1.41
FFSL First Independence Corp. of KS 10.51 10.51 0.50 4.27 4.70 0.76 6.53 0.90 69.84 0.97
FISB First Indiana Corp. of IN 9.58 9.46 0.89 9.68 5.93 1.03 11.14 1.55 85.76 1.59
FKFS First Keystone Fin. Corp of PA 7.07 7.07 0.51 6.65 5.45 0.76 9.86 2.46 34.36 1.46
FLKY First Lancaster Bncshrs of KY 37.13 37.13 0.98 1.94 2.53 1.26 2.50 0.75 32.89 0.29
FLFC First Liberty Fin. Corp. of GA 7.35 6.57 1.09 14.83 8.19 0.88 11.96 0.75 114.80 1.23
CASH First Midwest Fin. Corp. of IA 11.59 10.26 0.76 6.54 6.22 0.98 8.44 0.79 81.68 0.97
FMBD First Mutual Bancorp of IL 13.41 10.32 0.15 0.75 0.87 0.38 1.97 0.16 207.98 0.46
FMSB First Mutual SB of Bellevue WA* 6.57 6.57 1.01 15.36 7.90 0.98 14.78 NA NA 1.24
FNGB First Northern Cap. Corp of WI 11.51 11.51 0.60 5.05 4.13 0.89 7.48 0.13 368.77 0.54
FFPB First Palm Beach Bancorp of FL 6.76 6.59 -0.01 -0.09 -0.07 0.05 0.69 1.09 46.69 0.74
FSLA First SB SLA MHC of NJ (47.5) 9.19 8.15 0.51 5.44 2.79 0.90 9.61 0.58 93.31 1.05
FSNJ First SB of NJ, MHC (45.9)(8) 8.57 8.57 -0.34 -4.31 -2.72 0.23 2.89 0.87 58.25 1.21
SOPN First SB, SSB, Moore Co. of NC 24.60 24.60 1.39 5.48 4.77 1.67 6.58 0.12 192.97 0.32
FWWB First Savings Bancorp of WA* 15.77 14.48 1.01 5.46 3.16 1.01 5.46 0.25 261.72 1.07
SHEN First Shenango Bancorp of PA 10.70 10.70 0.83 7.07 6.20 1.12 9.49 0.50 144.74 1.14
FSFC First So.east Fin. Corp. of SC 10.22 10.22 0.01 0.11 0.09 0.92 7.48 0.11 362.15 0.50
FLAG Flag Financial Corp of GA 9.40 9.40 -0.06 -0.68 -0.55 0.14 1.45 4.52 44.14 2.91
FFIC Flushing Fin. Corp. of NY* 16.01 16.01 0.90 5.16 4.44 0.93 5.34 0.27 251.62 1.28
FBHC Fort Bend Holding Corp. of TX 6.43 5.95 0.23 3.44 2.79 0.54 7.99 NA NA 0.95
FTSB Fort Thomas Fin. Corp. of KY 16.09 16.09 0.50 2.50 2.86 0.76 3.83 2.02 25.00 0.57
FKKY Frankfort First Bancorp of KY 26.19 26.19 0.62 2.19 2.00 0.93 3.29 0.06 138.89 0.08
FTNB Fulton Bancorp of MO 25.01 25.01 0.74 3.81 2.04 1.05 5.39 NA NA 1.01
GFSB GFS Bancorp of Grinnell IA 11.57 11.57 0.99 8.43 5.96 1.27 10.81 1.54 45.77 0.81
GUPB GFSB Bancorp of Gallup NM 16.30 16.30 0.74 3.86 3.83 0.93 4.86 NA NA 0.69
GSLA GS Financial Corp. of LA 46.34 46.34 0.85 1.84 2.02 0.85 1.84 0.13 214.61 0.85
GWBC Gateway Bancorp of KY(8) 26.08 26.08 0.82 3.25 3.19 1.15 4.54 0.78 15.82 0.40
GBCI Glacier Bancorp of MT 9.56 9.29 1.39 14.68 6.06 1.57 16.59 0.28 212.30 0.85
GLBK Glendale Co-op. Bank of MA(8)* 16.37 16.37 0.75 4.64 4.15 0.72 4.47 NA NA 0.72
GFCO Glenway Financial Corp. of OH 9.56 9.41 0.38 3.95 3.72 0.68 7.17 0.32 84.04 0.32
GTPS Great American Bancorp of IL 21.16 21.16 0.43 1.95 2.13 0.55 2.48 0.16 188.02 0.42
GTFN Great Financial Corp. of KY 9.30 8.89 0.73 7.40 4.39 0.70 7.09 3.42 13.77 0.72
GSBC Great Southern Bancorp of MO 8.97 8.97 1.36 14.03 6.43 1.53 15.83 1.83 124.20 2.60
GDVS Greater DV SB,MHC of PA (19.9)* 11.47 11.47 0.01 0.12 0.08 0.33 2.81 2.78 43.72 2.05
GRTR Greater New York SB of NY(8)* 6.27 6.27 0.46 7.67 4.37 0.40 6.60 7.49 8.61 1.72
GSFC Green Street Fin. Corp. of NC 36.09 36.09 1.33 4.48 3.21 1.64 5.50 0.14 97.92 0.19
GSLC Guaranty Svgs & Loan FA of VA 5.72 5.72 0.46 7.73 3.30 0.43 7.26 NA NA 1.00
GFED Guarnty FS&LA,MHC of MO (31.0) 13.84 13.84 0.50 3.50 1.76 0.81 5.71 0.54 206.36 1.42
HCBB HCB Bancshares of AR 18.25 17.49 -0.11 -0.58 -0.62 0.39 2.11 NA NA 1.47
HEMT HF Bancorp of Hemet CA 9.81 0.00 -0.31 -2.63 -2.67 -2.27 -19.11 NA NA 1.10
HFFC HF Financial Corp. of SD 9.19 9.17 0.59 6.44 5.68 0.81 8.85 0.40 200.58 1.04
HFNC HFNC Financial Corp. of NC 18.83 18.83 1.07 3.82 2.98 1.41 5.01 0.99 94.51 1.26
HMNF HMN Financial, Inc. of MN 14.24 14.24 0.75 4.93 4.69 0.91 5.98 0.08 555.50 0.70
HALL Hallmark Capital Corp. of WI 6.99 6.99 0.45 6.30 6.23 0.60 8.30 0.02 NA 0.60
HARB Harbor FSB, MHC of FL (46.0) 8.22 7.91 0.93 11.11 5.27 1.22 14.62 0.47 216.59 1.38
HRBF Harbor Federal Bancorp of MD 12.86 12.86 0.43 3.20 3.00 0.68 5.15 0.13 131.49 0.26
HFSA Hardin Bancorp of Hardin MO 12.78 12.78 0.51 3.17 3.69 0.82 5.16 0.37 41.58 0.29
HARL Harleysville SA of PA 6.36 6.36 0.69 10.70 5.88 0.99 15.31 0.12 475.58 0.77
HARS Harris SB, MHC of PA (24.2) 7.92 6.83 0.25 2.68 1.73 0.60 6.55 0.70 61.77 0.98
HFFB Harrodsburg 1st Fin Bcrp of KY 26.35 26.35 1.03 3.73 3.67 1.36 4.95 0.47 58.12 0.37
HHFC Harvest Home Fin. Corp. of OH 12.43 12.43 0.21 1.35 1.62 0.54 3.49 0.15 90.48 0.26
HAVN Haven Bancorp of Woodhaven NY 5.80 5.77 0.62 10.26 6.71 0.91 14.94 0.78 84.95 1.23
HVFD Haverfield Corp. of OH(8) 8.39 8.39 0.49 5.94 3.45 1.03 12.55 1.00 87.44 1.00
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFHC First Financial Corp. of WI(8) 19.58 NM 17.55 NM 14.36 0.60 2.14 41.96
FFHS First Franklin Corp. of OH NM 117.37 10.35 118.20 17.28 0.32 1.61 NM
FGHC First Georgia Hold. Corp of GA 15.96 183.37 15.56 201.07 26.79 0.05 0.67 10.64
FSPG First Home Bancorp of NJ 11.81 155.74 10.26 158.57 9.00 0.40 2.08 24.54
FFSL First Independence Corp. of KS 21.28 98.77 10.38 98.77 13.93 0.25 2.22 47.17
FISB First Indiana Corp. of IN 16.87 157.29 15.07 159.30 14.66 0.48 2.26 38.10
FKFS First Keystone Fin. Corp of PA 18.35 125.55 8.88 125.55 12.36 0.20 0.88 16.13
FLKY First Lancaster Bncshrs of KY NM 105.12 39.03 105.12 NM 0.00 0.00 0.00
FLFC First Liberty Fin. Corp. of GA 12.22 181.13 13.31 202.45 15.14 0.40 1.86 22.73
CASH First Midwest Fin. Corp. of IA 16.08 101.71 11.79 114.97 12.45 0.36 2.33 37.50
FMBD First Mutual Bancorp of IL NM 98.55 13.22 128.10 NM 0.32 2.13 NM
FMSB First Mutual SB of Bellevue WA* 12.66 181.29 11.92 181.29 13.15 0.20 0.99 12.50
FNGB First Northern Cap. Corp of WI 24.22 121.94 14.03 121.94 16.35 0.64 3.26 NM
FFPB First Palm Beach Bancorp of FL NM 142.59 9.64 146.34 NM 0.60 2.00 NM
FSLA First SB SLA MHC of NJ (47.5) NM 190.38 17.50 214.84 20.29 0.48 1.94 69.57
FSNJ First SB of NJ, MHC (45.9)(8) NM 159.15 13.64 159.15 NM 0.50 1.94 NM
SOPN First SB, SSB, Moore Co. of NC 20.96 115.02 28.29 115.02 17.44 0.80 3.86 NM
FWWB First Savings Bancorp of WA* NM 152.16 24.00 165.77 NM 0.28 1.30 41.18
SHEN First Shenango Bancorp of PA 16.13 120.25 12.86 120.25 12.02 0.48 1.92 30.97
FSFC First So.east Fin. Corp. of SC NM 140.26 14.34 140.26 15.63 0.24 2.19 NM
FLAG Flag Financial Corp of GA NM 124.39 11.70 124.39 NM 0.34 2.67 NM
FFIC Flushing Fin. Corp. of NY* 22.52 120.61 19.31 120.61 21.76 0.24 1.24 27.91
FBHC Fort Bend Holding Corp. of TX NM 121.67 7.82 131.51 15.41 0.28 1.06 37.84
FTSB Fort Thomas Fin. Corp. of KY NM 103.04 16.58 103.04 22.83 0.25 2.38 NM
FKKY Frankfort First Bancorp of KY NM 120.85 31.65 120.85 NM 0.36 3.00 NM
FTNB Fulton Bancorp of MO NM 139.05 34.77 139.05 NM 0.20 0.99 48.78
GFSB GFS Bancorp of Grinnell IA 16.76 138.08 15.97 138.08 13.07 0.20 1.40 23.53
GUPB GFSB Bancorp of Gallup NM 26.09 106.64 17.38 106.64 20.69 0.40 2.22 57.97
GSLA GS Financial Corp. of LA NM 91.12 42.23 91.12 NM 0.00 0.00 0.00
GWBC Gateway Bancorp of KY(8) NM 104.20 27.17 104.20 22.46 0.40 2.41 NM
GBCI Glacier Bancorp of MT 16.50 212.36 20.31 218.54 14.60 0.43 2.61 43.00
GLBK Glendale Co-op. Bank of MA(8)* 24.10 109.27 17.89 109.27 25.00 0.00 0.00 0.00
GFCO Glenway Financial Corp. of OH 26.90 105.50 10.08 107.14 14.82 0.68 2.75 73.91
GTPS Great American Bancorp of IL NM 93.49 19.78 93.49 NM 0.40 2.58 NM
GTFN Great Financial Corp. of KY 22.77 167.68 15.59 175.28 23.75 0.60 1.80 41.10
GSBC Great Southern Bancorp of MO 15.54 230.48 20.67 230.48 13.77 0.40 2.36 36.70
GDVS Greater DV SB,MHC of PA (19.9)* NM 153.76 17.64 153.76 NM 0.36 2.80 NM
GRTR Greater New York SB of NY(8)* 22.90 167.15 10.48 167.15 26.61 0.20 1.02 23.26
GSFC Green Street Fin. Corp. of NC NM 121.24 43.75 121.24 25.36 0.40 2.25 70.18
GSLC Guaranty Svgs & Loan FA of VA NM 225.73 12.90 225.73 NM 0.10 1.00 30.30
GFED Guarnty FS&LA,MHC of MO (31.0) NM 195.85 27.10 195.85 NM 0.40 2.35 NM
HCBB HCB Bancshares of AR NM 93.74 17.11 97.80 NM 0.00 0.00 NM
HEMT HF Bancorp of Hemet CA NM 104.57 10.26 NM NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 17.61 112.55 10.35 112.81 12.83 0.36 1.86 32.73
HFNC HFNC Financial Corp. of NC NM 185.48 34.92 185.48 25.55 0.28 1.64 54.90
HMNF HMN Financial, Inc. of MN 21.33 112.88 16.08 112.88 17.60 0.00 0.00 0.00
HALL Hallmark Capital Corp. of WI 16.04 97.12 6.79 97.12 12.18 0.00 0.00 0.00
HARB Harbor FSB, MHC of FL (46.0) 18.97 200.11 16.45 207.95 14.42 1.40 3.82 72.54
HRBF Harbor Federal Bancorp of MD NM 105.66 13.59 105.66 20.73 0.40 2.35 NM
HFSA Hardin Bancorp of Hardin MO 27.07 95.06 12.15 95.06 16.61 0.40 2.74 74.07
HARL Harleysville SA of PA 17.02 172.54 10.98 172.54 11.89 0.40 1.81 30.77
HARS Harris SB, MHC of PA (24.2) NM 151.35 11.98 175.40 23.58 0.58 2.80 NM
HFFB Harrodsburg 1st Fin Bcrp of KY 27.27 106.53 28.07 106.53 20.55 0.40 2.67 72.73
HHFC Harvest Home Fin. Corp. of OH NM 94.42 11.74 94.42 23.86 0.40 3.81 NM
HAVN Haven Bancorp of Woodhaven NY 14.91 147.00 8.52 147.57 10.24 0.60 1.76 26.32
HVFD Haverfield Corp. of OH(8) 28.98 169.55 14.23 169.55 13.71 0.56 2.20 63.64
</TABLE>
<PAGE> 130
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HTHR Hawthorne Fin. Corp. of CA 3.85 3.85 0.81 21.02 21.02 0.56 14.51 NA NA 1.92
HMLK Hemlock Fed. Fin. Corp. of IL 17.39 17.39 0.24 1.38 1.46 0.62 3.57 NA NA 1.37
HBNK Highland Federal Bank of CA 7.46 7.46 0.29 3.88 2.71 0.51 6.77 3.23 57.68 2.28
HIFS Hingham Inst. for Sav. of MA* 9.55 9.55 1.16 12.00 9.48 1.16 12.00 0.55 125.50 0.91
HBEI Home Bancorp of Elgin IL 28.12 28.12 0.31 1.41 0.92 0.81 3.66 0.35 77.63 0.37
HBFW Home Bancorp of Fort Wayne IN 13.95 13.95 0.56 3.74 3.38 0.90 6.05 0.09 468.58 0.53
HBBI Home Building Bancorp of IN 12.07 12.07 0.19 1.47 1.29 0.53 4.02 0.52 32.51 0.28
HCFC Home City Fin. Corp. of OH 20.61 20.61 0.78 5.01 3.85 1.17 7.57 0.62 110.38 0.87
HOMF Home Fed Bancorp of Seymour IN 8.45 8.17 1.03 12.42 7.15 1.22 14.74 0.43 121.80 0.61
HWEN Home Financial Bancorp of IN 18.63 18.63 0.57 3.68 2.86 0.82 5.23 NA NA 0.63
HPBC Home Port Bancorp, Inc. of MA* 10.82 10.82 1.70 15.85 8.35 1.69 15.76 0.25 501.45 1.53
HMCI Homecorp, Inc. of Rockford IL 6.30 6.30 0.11 1.87 1.61 0.38 6.24 3.68 13.13 0.62
HZFS Horizon Fin'l. Services of IA 10.50 10.50 0.43 3.87 3.90 0.60 5.42 1.02 36.63 0.56
HRZB Horizon Financial Corp. of WA* 15.23 15.23 1.55 9.82 6.83 1.52 9.64 0.01 NA 0.85
IBSF IBS Financial Corp. of NJ 17.04 17.04 0.52 2.73 2.33 0.88 4.68 0.15 94.57 0.52
ISBF ISB Financial Corp. of LA 12.27 10.35 0.74 4.49 3.30 1.00 6.05 NA NA 0.79
ITLA Imperial Thrift & Loan of CA* 11.37 11.32 1.46 13.06 8.98 1.46 13.06 1.78 75.09 1.63
IFSB Independence FSB of DC 6.73 5.82 0.13 1.97 2.93 0.20 2.96 NA NA 0.34
INCB Indiana Comm. Bank, SB of IN 12.39 12.39 0.16 1.24 0.98 0.51 3.88 NA NA 0.71
IFSL Indiana Federal Corp. of IN(8) 8.78 8.25 0.67 7.44 4.17 0.95 10.55 0.82 102.87 1.11
INBI Industrial Bancorp of OH 18.49 18.49 0.73 3.87 3.45 1.43 7.56 0.42 115.71 0.55
IWBK Interwest SB of Oak Harbor WA 6.71 6.55 0.84 12.48 4.81 1.18 17.49 0.69 69.69 0.81
IPSW Ipswich SB of Ipswich MA* 6.20 6.20 1.22 20.19 9.22 0.99 16.31 1.94 49.55 1.26
JSBF JSB Financial, Inc. of NY 21.60 21.60 1.65 7.56 5.78 1.65 7.56 1.08 33.09 0.62
JXVL Jacksonville Bancorp of TX 15.63 15.63 0.88 5.43 5.06 1.21 7.48 1.04 48.35 0.67
JXSB Jcksnville SB,MHC of IL (44.6) 10.30 10.30 0.29 2.50 2.03 0.67 5.84 0.39 125.08 0.63
JSBA Jefferson Svgs Bancorp of MO 7.83 6.11 0.25 3.41 1.97 0.63 8.56 0.52 117.45 0.82
JOAC Joachim Bancorp of MO 28.99 28.99 0.51 1.71 1.63 0.78 2.64 0.68 30.45 0.31
KSAV KS Bancorp of Kenly NC 13.83 13.82 0.92 6.45 6.09 1.21 8.47 0.42 70.56 0.35
KSBK KSB Bancorp of Kingfield ME(8)* 6.82 6.32 0.88 13.36 8.33 0.88 13.31 NA NA 1.00
KFBI Klamath First Bancorp of OR 20.44 20.44 0.90 3.79 3.12 1.33 5.59 0.10 176.70 0.24
LSBI LSB Fin. Corp. of Lafayette IN 9.08 9.08 0.50 5.26 4.82 0.42 4.42 1.34 68.99 1.07
LVSB Lakeview SB of Paterson NJ 10.14 8.12 1.43 13.88 9.62 0.89 8.67 NA NA NA
LARK Landmark Bancshares of KS 14.63 14.63 0.84 5.40 4.90 1.05 6.72 0.60 62.24 0.57
LARL Laurel Capital Group of PA 10.42 10.42 1.12 10.59 7.06 1.43 13.55 0.51 181.26 1.31
LSBX Lawrence Savings Bank of MA* 8.78 8.78 1.66 20.38 11.96 1.66 20.38 0.36 290.57 2.27
LFED Leeds FSB, MHC of MD (36.2) 16.18 16.18 0.79 4.89 3.50 1.13 6.98 0.02 977.36 0.30
LXMO Lexington B&L Fin. Corp. of MO 30.42 30.42 0.97 4.48 2.85 1.34 6.18 0.63 58.31 0.49
LIFB Life Bancorp of Norfolk VA 10.79 10.45 0.71 6.30 4.22 0.87 7.74 0.49 144.60 1.54
LFBI Little Falls Bancorp of NJ 12.94 11.91 0.25 1.78 2.08 0.50 3.48 0.90 36.77 0.82
LOGN Logansport Fin. Corp. of IN 19.65 19.65 1.17 5.26 5.21 1.53 6.84 0.45 67.13 0.42
LONF London Financial Corp. of OH 19.86 19.86 0.74 3.55 3.60 1.09 5.19 0.79 62.54 0.64
LISB Long Island Bancorp of NY 9.01 8.92 0.62 6.41 3.93 0.74 7.62 1.04 56.14 0.95
MAFB MAF Bancorp of IL 7.88 6.84 0.79 10.58 5.44 1.10 14.75 0.49 113.73 0.72
MBLF MBLA Financial Corp. of MO(8) 13.49 13.49 0.66 4.90 4.52 0.86 6.34 0.25 111.87 0.49
MFBC MFB Corp. of Mishawaka IN 14.51 14.51 0.56 3.37 3.64 0.85 5.09 0.03 529.85 0.20
MLBC ML Bancorp of Villanova PA 7.53 7.34 0.72 9.30 6.83 0.65 8.49 NA NA 1.73
MBB MSB Bancorp of Middletown NY* 6.55 2.57 0.18 2.32 2.43 0.20 2.53 0.70 36.62 0.60
MSBF MSB Financial Corp. of MI 16.61 16.61 1.20 6.08 5.55 1.49 7.58 1.02 48.65 0.57
MGNL Magna Bancorp of MS(8) 9.57 9.25 1.38 14.29 5.72 1.63 16.86 3.25 22.63 1.12
MARN Marion Capital Holdings of IN 23.05 23.05 1.32 5.68 5.64 1.59 6.85 0.76 153.22 1.35
MRKF Market Fin. Corp. of OH 33.20 33.20 0.89 2.68 2.95 1.17 3.53 0.89 10.40 0.20
MFCX Marshalltown Fin. Corp. of IA(8) 15.61 15.61 0.34 2.17 2.00 0.71 4.55 NA NA 0.19
MFSL Maryland Fed. Bancorp of MD 8.44 8.33 0.58 6.97 4.51 0.84 10.17 0.53 77.57 0.46
MASB MassBank Corp. of Reading MA* 9.98 9.98 1.10 10.91 8.37 1.02 10.12 0.19 128.64 0.88
MFLR Mayflower Co-Op. Bank of MA* 9.43 9.26 1.00 10.42 8.18 0.98 10.18 1.03 90.08 1.56
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HTHR Hawthorne Fin. Corp. of CA 4.76 93.89 3.61 93.89 6.89 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL NM 94.61 16.46 94.61 26.53 0.00 0.00 0.00
HBNK Highland Federal Bank of CA NM 138.92 10.36 138.92 21.17 0.00 0.00 0.00
HIFS Hingham Inst. for Sav. of MA* 10.55 120.86 11.54 120.86 10.55 0.40 2.19 23.12
HBEI Home Bancorp of Elgin IL NM 112.93 31.75 112.93 NM 0.40 2.46 NM
HBFW Home Bancorp of Fort Wayne IN 29.59 115.43 16.10 115.43 18.29 0.20 0.99 29.41
HBBI Home Building Bancorp of IN NM 115.96 14.00 115.96 28.38 0.30 1.43 NM
HCFC Home City Fin. Corp. of OH 25.98 89.71 18.48 89.71 17.21 0.32 2.42 62.75
HOMF Home Fed Bancorp of Seymour IN 13.99 163.24 13.79 168.75 11.79 0.50 1.85 25.91
HWEN Home Financial Bancorp of IN NM 104.17 19.41 104.17 24.61 0.20 1.27 44.44
HPBC Home Port Bancorp, Inc. of MA* 11.98 182.27 19.71 182.27 12.05 0.80 3.95 47.34
HMCI Homecorp, Inc. of Rockford IL NM 113.82 7.17 113.82 18.51 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 25.67 99.69 10.46 99.69 18.33 0.32 1.66 42.67
HRZB Horizon Financial Corp. of WA* 14.64 144.86 22.07 144.86 14.92 0.35 2.28 33.33
IBSF IBS Financial Corp. of NJ NM 131.00 22.32 131.00 25.00 0.32 2.13 NM
ISBF ISB Financial Corp. of LA NM 139.74 17.14 165.57 22.52 0.40 1.76 53.33
ITLA Imperial Thrift & Loan of CA* 11.13 129.57 14.73 130.12 11.13 0.00 0.00 0.00
IFSB Independence FSB of DC NM 68.07 4.58 78.63 22.74 0.22 2.48 NM
INCB Indiana Comm. Bank, SB of IN NM 132.44 16.40 132.44 NM 0.36 2.22 NM
IFSL Indiana Federal Corp. of IN(8) 23.97 175.45 15.41 186.76 16.90 0.72 2.73 65.45
INBI Industrial Bancorp of OH 28.98 111.74 20.66 111.74 14.83 0.48 3.76 NM
IWBK Interwest SB of Oak Harbor WA 20.81 234.48 15.73 240.15 14.85 0.56 1.61 33.53
IPSW Ipswich SB of Ipswich MA* 10.84 197.47 12.24 197.47 13.42 0.20 1.22 13.25
JSBF JSB Financial, Inc. of NY 17.29 133.71 28.88 133.71 17.29 1.40 3.14 54.26
JXVL Jacksonville Bancorp of TX 19.76 110.17 17.22 110.17 14.33 0.50 3.42 67.57
JXSB Jcksnville SB,MHC of IL (44.6) NM 122.55 12.62 122.55 21.10 0.40 2.46 NM
JSBA Jefferson Svgs Bancorp of MO NM 160.31 12.56 205.38 20.28 0.40 1.38 70.18
JOAC Joachim Bancorp of MO NM 108.46 31.44 108.46 NM 0.50 3.39 NM
KSAV KS Bancorp of Kenly NC 16.42 104.71 14.48 104.76 12.50 0.60 2.73 44.78
KSBK KSB Bancorp of Kingfield ME(8)* 12.00 150.68 10.28 162.80 12.04 0.20 0.61 7.27
KFBI Klamath First Bancorp of OR NM 135.00 27.59 135.00 21.77 0.30 1.58 50.85
LSBI LSB Fin. Corp. of Lafayette IN 20.74 107.97 9.80 107.97 24.68 0.32 1.64 34.04
LVSB Lakeview SB of Paterson NJ 10.39 142.54 14.45 178.00 16.64 0.25 0.84 8.77
LARK Landmark Bancshares of KS 20.41 110.44 16.16 110.44 16.39 0.40 2.00 40.82
LARL Laurel Capital Group of PA 14.17 146.45 15.26 146.45 11.07 0.44 2.07 29.33
LSBX Lawrence Savings Bank of MA* 8.36 153.97 13.52 153.97 8.36 0.00 0.00 0.00
LFED Leeds FSB, MHC of MD (36.2) 28.57 136.36 22.06 136.36 20.00 0.76 4.22 NM
LXMO Lexington B&L Fin. Corp. of MO NM 85.56 26.02 85.56 25.43 0.30 2.03 71.43
LIFB Life Bancorp of Norfolk VA 23.70 147.54 15.91 152.28 19.28 0.48 2.11 50.00
LFBI Little Falls Bancorp of NJ NM 90.91 11.76 98.78 24.53 0.12 0.92 44.44
LOGN Logansport Fin. Corp. of IN 19.18 112.81 22.17 112.81 14.74 0.40 2.86 54.79
LONF London Financial Corp. of OH 27.78 102.53 20.36 102.53 18.99 0.24 1.60 44.44
LISB Long Island Bancorp of NY 25.45 162.44 14.63 164.04 21.41 0.60 1.71 43.48
MAFB MAF Bancorp of IL 18.39 167.62 13.21 193.03 13.18 0.42 1.02 18.83
MBLF MBLA Financial Corp. of MO(8) 22.14 108.09 14.59 108.09 17.10 0.40 1.72 38.10
MFBC MFB Corp. of Mishawaka IN 27.46 99.54 14.44 99.54 18.22 0.32 1.64 45.07
MLBC ML Bancorp of Villanova PA 14.63 136.09 10.24 139.49 16.03 0.40 2.17 31.75
MBB MSB Bancorp of Middletown NY* NM 92.59 6.06 235.63 NM 0.60 3.31 NM
MSBF MSB Financial Corp. of MI 18.03 110.33 18.33 110.33 14.47 0.56 2.55 45.90
MGNL Magna Bancorp of MS(8) 17.48 241.68 23.12 250.00 14.81 0.60 2.58 45.11
MARN Marion Capital Holdings of IN 17.72 102.32 23.58 102.32 14.71 0.88 3.91 69.29
MRKF Market Fin. Corp. of OH NM 90.83 30.15 90.83 25.74 0.00 0.00 0.00
MFCX Marshalltown Fin. Corp. of IA(8) NM 106.69 16.65 106.69 23.81 0.00 0.00 0.00
MFSL Maryland Fed. Bancorp of MD 22.17 151.62 12.80 153.69 15.20 0.80 1.78 39.41
MASB MassBank Corp. of Reading MA* 11.94 128.40 12.82 128.40 12.87 1.08 2.51 30.00
MFLR Mayflower Co-Op. Bank of MA* 12.22 123.01 11.60 125.19 12.50 0.60 3.69 45.11
</TABLE>
<PAGE> 131
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MECH Mechanics SB of Hartford CT* 9.73 9.73 0.25 2.93 1.91 0.27 3.10 1.71 67.13 1.72
MDBK Medford Savings Bank of MA* 8.80 8.14 1.04 11.72 8.55 1.01 11.37 0.45 146.30 1.22
MERI Meritrust FSB of Thibodaux LA 7.90 7.90 0.60 7.91 4.60 0.98 12.87 0.38 80.65 0.58
MWBX Metro West of MA* 7.34 7.34 1.37 18.25 9.19 1.37 18.25 1.19 88.62 1.37
MCBS Mid Continent Bancshares of KS 10.04 10.04 1.02 9.26 6.73 1.17 10.58 0.19 53.92 0.19
MIFC Mid Iowa Financial Corp. of IA 9.10 9.09 0.91 9.88 7.11 1.19 12.96 0.13 186.45 0.44
MCBN Mid-Coast Bancorp of ME 8.60 8.60 0.40 4.53 4.97 0.64 7.23 0.40 128.70 0.61
MWBI Midwest Bancshares, Inc. of IA 6.94 6.94 0.46 6.80 5.84 0.77 11.24 0.82 61.28 0.84
MWFD Midwest Fed. Fin. Corp of WI 8.61 8.28 0.94 10.88 5.87 0.91 10.60 0.14 543.01 1.01
MFFC Milton Fed. Fin. Corp. of OH 14.74 14.74 0.53 3.00 2.83 0.72 4.13 0.32 91.83 0.46
MIVI Miss. View Hold. Co. of MN 18.26 18.26 0.68 3.67 3.87 1.01 5.44 0.25 488.70 1.93
MBSP Mitchell Bancorp of NC* 43.33 43.33 1.34 3.08 2.81 1.68 3.86 2.06 24.32 0.62
MBBC Monterey Bay Bancorp of CA 10.74 9.85 0.28 2.17 1.89 0.51 3.99 0.36 94.16 0.61
MSBK Mutual SB, FSB of Bay City MI 6.01 6.01 0.09 1.62 1.79 0.04 0.65 0.17 168.15 0.71
NHTB NH Thrift Bancshares of NH 7.48 6.34 0.33 4.46 2.86 0.49 6.59 1.03 91.05 1.14
NSLB NS&L Bancorp of Neosho MO 19.93 19.93 0.49 2.30 2.48 0.74 3.47 0.06 127.27 0.13
NMSB Newmil Bancorp. of CT* 9.97 9.97 0.82 7.86 6.84 0.80 7.62 1.30 123.07 3.01
NASB North American SB of MO 7.97 7.71 1.23 16.83 8.56 1.19 16.35 3.34 26.40 1.00
NBSI North Bancshares of Chicago IL 14.61 14.61 0.46 2.95 2.67 0.65 4.19 NA NA 0.28
FFFD North Central Bancshares of IA 24.58 24.58 1.70 6.31 6.43 1.98 7.35 0.22 457.01 1.18
NBN Northeast Bancorp of ME* 6.95 6.01 0.33 4.74 4.45 0.31 4.52 1.37 77.15 1.32
NEIB Northeast Indiana Bncrp of IN 15.16 15.16 1.04 5.98 5.88 1.23 7.07 0.49 126.20 0.71
NWEQ Northwest Equity Corp. of WI 12.25 12.25 0.76 5.86 5.06 0.97 7.52 1.53 32.36 0.61
NWSB Northwest SB, MHC of PA (29.9) 9.71 9.13 0.69 6.88 3.90 1.00 9.95 0.84 80.17 0.89
NSSY Norwalk Savings Society of CT* 8.06 7.77 0.97 12.51 9.01 1.11 14.32 2.09 56.84 1.70
NSSB Norwich Financial Corp. of CT* 10.99 9.86 1.03 9.60 6.50 0.97 9.10 1.00 200.13 2.87
NTMG Nutmeg FS&LA of CT 5.69 5.69 0.27 4.76 4.61 0.35 6.16 NA NA 0.60
OHSL OHSL Financial Corp. of OH 11.04 11.04 0.61 5.15 4.55 0.86 7.34 0.33 68.18 0.31
OCFC Ocean Fin. Corp. of NJ 17.82 17.82 -0.04 -0.29 -0.19 0.95 6.33 0.64 69.12 0.88
OCWN Ocwen Financial Corp. of FL 8.50 8.50 2.70 32.38 8.85 1.96 23.50 4.10 19.90 1.19
OFCP Ottawa Financial Corp. of MI 8.84 7.08 0.43 4.52 3.28 0.74 7.76 0.31 112.26 0.42
PFFB PFF Bancorp of Pomona CA 10.47 10.35 0.11 0.93 0.92 0.45 3.74 1.87 58.44 1.50
PSFI PS Financial of Chicago IL 43.22 43.22 1.92 4.46 4.63 1.98 4.59 0.43 57.23 0.52
PVFC PVF Capital Corp. of OH 7.02 7.02 1.05 15.54 8.56 1.39 20.48 1.20 61.53 0.79
PCCI Pacific Crest Capital of CA* 7.22 7.22 1.05 13.05 8.65 0.89 11.08 1.23 82.93 1.62
PALM Palfed, Inc. of Aiken SC 8.11 8.11 0.06 0.70 0.42 0.57 6.99 2.52 42.12 1.29
PBCI Pamrapo Bancorp, Inc. of NJ 12.80 12.70 0.84 5.70 5.42 1.18 8.04 3.60 20.89 1.33
PFED Park Bancorp of Chicago IL 21.69 21.69 0.77 4.08 3.59 1.07 5.70 0.20 139.28 0.76
PVSA Parkvale Financial Corp of PA 7.48 7.41 0.71 9.51 5.78 1.07 14.27 0.24 604.11 2.08
PBIX Patriot Bank Corp. of PA 8.09 8.09 0.47 4.26 3.25 0.65 5.81 0.13 242.39 0.65
PEEK Peekskill Fin. Corp. of NY 25.57 25.57 1.07 3.74 4.50 1.38 4.81 1.23 26.98 1.36
PFSB PennFed Fin. Services of NJ 7.53 6.21 0.57 7.10 5.36 0.85 10.57 0.69 31.83 0.31
PWBC PennFirst Bancorp of PA 7.07 6.45 0.43 5.89 5.63 0.64 8.84 0.58 86.14 1.57
PWBK Pennwood SB of PA* 19.47 19.47 0.61 3.89 3.07 0.97 6.17 1.13 57.64 1.40
PBKB People's SB of Brockton MA* 5.61 5.37 0.80 14.39 8.59 0.47 8.56 0.88 91.08 1.65
PFDC Peoples Bancorp of Auburn IN 15.18 15.18 1.10 7.16 6.21 1.45 9.50 0.42 73.36 0.39
PBCT Peoples Bank, MHC of CT (37.4)* 8.41 8.40 1.10 13.63 5.46 0.88 10.86 0.91 125.48 1.68
PFFC Peoples Fin. Corp. of OH 26.90 26.90 0.08 0.31 0.32 0.40 1.48 0.01 NA 0.41
PHBK Peoples Heritage Fin Grp of ME* 8.21 6.93 1.24 14.93 5.67 1.32 15.97 0.94 130.42 1.77
PBNB Peoples Sav. Fin. Corp. of CT(8)* 9.60 9.00 0.93 9.31 6.42 0.92 9.26 0.54 70.66 0.69
PSFC Peoples Sidney Fin. Corp of OH 23.26 23.26 0.92 3.97 4.31 1.21 5.18 1.00 42.00 0.45
PERM Permanent Bancorp of IN 9.70 9.60 0.24 2.35 1.90 0.52 5.16 1.08 46.35 0.98
PMFI Perpetual Midwest Fin. of IA 8.50 8.50 0.09 0.99 0.93 0.26 2.92 0.41 172.00 0.94
PERT Perpetual of SC, MHC (46.8) 13.29 13.29 0.75 6.48 3.62 1.06 9.13 NA NA 1.01
PCBC Perry Co. Fin. Corp. of MO 18.85 18.85 0.71 3.66 3.59 0.96 4.97 0.05 64.10 0.20
PHFC Pittsburgh Home Fin. of PA 11.47 11.34 0.57 4.58 3.90 0.81 6.53 1.74 30.40 0.78
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MECH Mechanics SB of Hartford CT* NM 126.69 12.32 126.69 NM 0.00 0.00 0.00
MDBK Medford Savings Bank of MA* 11.70 133.38 11.74 144.10 12.06 0.72 2.64 30.90
MERI Meritrust FSB of Thibodaux LA 21.75 164.95 13.04 164.95 13.37 0.70 1.82 39.55
MWBX Metro West of MA* 10.88 186.30 13.67 186.30 10.88 0.12 2.21 24.00
MCBS Mid Continent Bancshares of KS 14.86 136.55 13.72 136.55 13.00 0.40 1.54 22.86
MIFC Mid Iowa Financial Corp. of IA 14.06 134.13 12.21 134.33 10.71 0.08 0.89 12.50
MCBN Mid-Coast Bancorp of ME 20.10 90.15 7.75 90.15 12.58 0.52 2.67 53.61
MWBI Midwest Bancshares, Inc. of IA 17.12 113.68 7.89 113.68 10.36 0.60 1.90 32.61
MWFD Midwest Fed. Fin. Corp of WI 17.03 185.27 15.96 192.87 17.48 0.34 1.72 29.31
MFFC Milton Fed. Fin. Corp. of OH NM 124.73 18.38 124.73 25.67 0.60 4.25 NM
MIVI Miss. View Hold. Co. of MN 25.86 96.46 17.61 96.46 17.44 0.16 1.07 27.59
MBSP Mitchell Bancorp of NC* NM 110.42 47.84 110.42 28.39 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 117.10 12.58 127.69 28.72 0.10 0.61 32.26
MSBK Mutual SB, FSB of Bay City MI NM 89.90 5.40 89.90 NM 0.00 0.00 0.00
NHTB NH Thrift Bancshares of NH NM 134.00 10.02 158.13 23.65 0.50 3.25 NM
NSLB NS&L Bancorp of Neosho MO NM 100.92 20.11 100.92 26.61 0.50 3.03 NM
NMSB Newmil Bancorp. of CT* 14.62 116.85 11.65 116.85 15.08 0.24 2.53 36.92
NASB North American SB of MO 11.69 184.80 14.74 191.00 12.03 0.80 1.78 20.78
NBSI North Bancshares of Chicago IL NM 115.11 16.82 115.11 26.35 0.48 2.46 NM
FFFD North Central Bancshares of IA 15.56 104.52 25.70 104.52 13.38 0.25 1.64 25.51
NBN Northeast Bancorp of ME* 22.45 106.52 7.40 123.24 23.56 0.32 2.23 50.00
NEIB Northeast Indiana Bncrp of IN 17.02 107.60 16.32 107.60 14.41 0.32 2.00 34.04
NWEQ Northwest Equity Corp. of WI 19.76 114.85 14.07 114.85 15.39 0.48 3.28 64.86
NWSB Northwest SB, MHC of PA (29.9) 25.66 173.13 16.82 184.23 17.74 0.32 2.23 57.14
NSSY Norwalk Savings Society of CT* 11.10 129.87 10.46 134.69 9.70 0.40 1.49 16.53
NSSB Norwich Financial Corp. of CT* 15.39 144.50 15.88 161.09 16.24 0.56 2.72 41.79
NTMG Nutmeg FS&LA of CT 21.68 100.27 5.71 100.27 16.75 0.00 0.00 0.00
OHSL OHSL Financial Corp. of OH 21.99 113.10 12.48 113.10 15.42 0.88 3.71 NM
OCFC Ocean Fin. Corp. of NJ NM 115.16 20.52 115.16 24.18 0.80 2.54 NM
OCWN Ocwen Financial Corp. of FL 11.29 NM 29.59 NM 15.56 0.00 0.00 0.00
OFCP Ottawa Financial Corp. of MI NM 141.80 12.54 177.20 17.81 0.40 1.87 57.14
PFFB PFF Bancorp of Pomona CA NM 108.23 11.33 109.48 27.23 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 21.59 95.77 41.39 95.77 20.96 0.32 2.25 48.48
PVFC PVF Capital Corp. of OH 11.69 167.13 11.74 167.13 8.87 0.00 0.00 0.00
PCCI Pacific Crest Capital of CA* 11.56 145.31 10.50 145.31 13.61 0.00 0.00 0.00
PALM Palfed, Inc. of Aiken SC NM 163.85 13.28 163.85 23.57 0.12 0.73 NM
PBCI Pamrapo Bancorp, Inc. of NJ 18.46 120.21 15.39 121.24 13.08 1.00 5.06 NM
PFED Park Bancorp of Chicago IL 27.83 92.88 20.15 92.88 19.93 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 17.30 158.40 11.84 159.74 11.53 0.52 1.83 31.71
PBIX Patriot Bank Corp. of PA NM 142.10 11.49 142.10 22.54 0.35 2.19 67.31
PEEK Peekskill Fin. Corp. of NY 22.22 96.02 24.56 96.02 17.28 0.36 2.57 57.14
PFSB PennFed Fin. Services of NJ 18.66 128.85 9.70 156.27 12.53 0.28 1.11 20.74
PWBC PennFirst Bancorp of PA 17.76 105.72 7.48 115.88 11.84 0.36 2.67 47.37
PWBK Pennwood SB of PA* NM 98.04 19.09 98.04 20.55 0.28 1.87 60.87
PBKB People's SB of Brockton MA* 11.64 157.53 8.84 164.43 19.57 0.44 3.26 37.93
PFDC Peoples Bancorp of Auburn IN 16.11 115.26 17.50 115.26 12.15 0.60 2.76 44.44
PBCT Peoples Bank, MHC of CT (37.4)* 18.32 234.55 19.73 234.78 22.99 0.67 2.75 50.38
PFFC Peoples Fin. Corp. of OH NM 96.60 25.99 96.60 NM 0.50 3.20 NM
PHBK Peoples Heritage Fin Grp of ME* 17.63 223.67 18.36 NM 16.47 0.72 2.04 36.00
PBNB Peoples Sav. Fin. Corp. of CT(8)* 15.57 141.94 13.63 151.48 15.64 0.92 2.69 41.82
PSFC Peoples Sidney Fin. Corp of OH 23.21 92.26 21.46 92.26 17.81 0.00 0.00 0.00
PERM Permanent Bancorp of IN NM 126.11 12.23 127.36 24.01 0.30 1.24 65.22
PMFI Perpetual Midwest Fin. of IA NM 109.31 9.29 109.31 NM 0.30 1.55 NM
PERT Perpetual of SC, MHC (46.8) 27.62 140.27 18.64 140.27 19.59 1.40 5.07 NM
PCBC Perry Co. Fin. Corp. of MO 27.86 103.94 19.60 103.94 20.53 0.40 2.05 57.14
PHFC Pittsburgh Home Fin. of PA 25.63 110.28 12.65 111.59 18.00 0.24 1.59 40.68
</TABLE>
<PAGE> 132
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFSL Pocahnts Fed, MHC of AR (46.4) 6.38 6.38 0.58 9.56 6.87 0.81 13.35 0.28 170.57 1.20
POBS Portsmouth Bank Shrs Inc of NH(8)* 25.12 25.12 2.24 8.99 6.33 1.95 7.85 0.38 69.08 0.70
PTRS Potters Financial Corp of OH 8.91 8.91 0.31 3.45 3.70 0.67 7.45 0.83 231.18 3.23
PKPS Poughkeepsie SB of NY 8.41 8.41 0.21 2.47 2.09 0.47 5.65 4.21 26.20 1.45
PRBC Prestige Bancorp of PA 11.69 11.69 0.27 2.17 2.06 0.58 4.61 0.32 78.54 0.39
PETE Primary Bank of NH(8)* 6.62 6.61 0.84 13.14 6.93 0.83 12.98 1.05 54.10 1.02
PFNC Progress Financial Corp. of PA 5.21 4.56 0.45 8.54 4.82 0.56 10.49 1.36 61.30 1.22
PSBK Progressive Bank, Inc. of NY* 8.35 7.40 1.10 13.18 9.10 1.11 13.28 0.84 127.85 1.58
PROV Provident Fin. Holdings of CA 14.22 14.22 0.23 1.72 1.58 0.11 0.86 1.97 44.11 1.03
PULB Pulaski SB, MHC of MO (29.0) 12.59 12.59 0.49 3.91 2.38 0.78 6.24 NA NA 0.33
PLSK Pulaski SB, MHC of NJ (46.0) 12.01 12.01 0.28 2.34 1.80 0.64 5.29 0.68 NA NA
PULS Pulse Bancorp of S. River NJ 7.80 7.80 0.72 8.47 6.41 1.08 12.67 0.75 60.59 1.83
QCFB QCF Bancorp of Virginia MN 17.64 17.64 1.24 6.25 6.29 1.24 6.25 NA NA NA
QCBC Quaker City Bancorp of CA 8.91 8.90 0.32 3.44 3.09 0.57 6.25 1.49 69.17 1.25
QCSB Queens County SB of NY* 14.98 14.98 1.72 10.84 4.93 1.74 10.94 0.75 91.25 0.80
RCSB RCSB Financial, Inc. of NY(8)* 7.85 7.65 0.96 12.27 6.24 0.96 12.17 0.79 88.29 1.38
RARB Raritan Bancorp. of Raritan NJ* 7.68 7.54 0.93 12.34 7.39 1.01 13.36 0.46 179.82 1.27
REDF RedFed Bancorp of Redlands CA 8.18 8.17 0.12 1.71 0.99 0.47 6.50 3.26 34.86 1.33
RELY Reliance Bancorp of NY 8.04 5.64 0.56 6.66 4.71 0.85 10.11 0.75 33.69 0.56
RELI Reliance Bancshares Inc of WI(8)* 61.06 61.06 1.32 2.16 3.31 1.32 2.16 NA NA 0.52
RIVR River Valley Bancorp of IN 12.36 12.17 -0.18 -1.46 -1.45 -0.18 -1.46 0.12 700.00 1.06
RFED Roosevelt Fin. Grp. Inc. of MO(8) 5.55 5.22 0.11 2.23 0.97 0.85 17.13 0.98 29.36 0.50
RSLN Roslyn Bancorp of NY* 21.57 21.46 0.35 1.63 1.32 1.42 6.61 0.31 264.38 3.59
RVSB Rvrview SB,FSB MHC of WA(41.7) 11.16 10.11 0.92 8.38 4.37 1.17 10.71 0.10 372.65 0.54
SCCB S. Carolina Comm. Bnshrs of SC 25.95 25.95 0.82 2.99 2.76 1.10 4.03 1.78 35.52 0.81
SBFL SB Fngr Lakes MHC of NY (33.1) 9.45 9.45 0.07 0.71 0.49 0.49 4.77 0.78 68.91 1.22
SFBK SFB Bancorp, Inc. of TN 20.70 20.70 0.74 3.58 3.81 1.05 5.05 NA NA NA
SFED SFS Bancorp of Schenectady NY 12.99 12.99 0.46 3.46 3.61 0.83 6.22 0.69 58.23 0.57
SGVB SGV Bancorp of W. Covina CA 7.27 7.14 0.14 1.66 1.71 0.37 4.29 0.61 49.82 0.42
SISB SIS Bank of Springfield MA* 7.56 7.56 1.50 20.13 11.36 1.46 19.50 0.46 254.44 2.57
SJSB SJS Bancorp of St. Joseph MI(8) 10.41 10.41 0.17 1.51 1.06 0.49 4.26 0.36 131.93 0.65
SWCB Sandwich Co-Op. Bank of MA* 8.24 7.86 0.94 11.30 7.28 0.95 11.45 1.28 62.63 1.13
SECP Security Capital Corp. of WI(8) 15.85 15.85 1.15 7.17 4.73 1.38 8.58 0.11 989.84 1.46
SFSL Security First Corp. of OH 9.36 9.20 1.10 11.88 6.02 1.39 15.04 0.26 301.46 0.87
SMFC Sho-Me Fin. Corp. of MO 9.54 9.54 0.91 8.68 4.64 1.09 10.34 0.09 664.29 0.70
SOBI Sobieski Bancorp of S. Bend IN 15.41 15.41 0.29 1.67 2.03 0.58 3.35 0.25 102.04 0.35
SOSA Somerset Savings Bank of MA(8)* 5.90 5.90 0.58 10.29 6.69 0.58 10.29 6.50 19.62 1.69
SSFC South Street Fin. Corp. of NC* 25.44 25.44 0.77 4.27 2.19 1.03 5.74 0.28 63.69 0.39
SCBS Southern Commun. Bncshrs of AL 20.77 20.77 0.62 3.01 2.91 1.11 5.34 2.28 50.34 2.02
SMBC Southern Missouri Bncrp of MO 15.67 15.67 1.03 6.46 5.83 1.01 6.33 1.10 37.60 0.64
SWBI Southwest Bancshares of IL 10.79 10.79 0.75 6.83 5.01 1.05 9.59 0.18 112.82 0.28
SVRN Sovereign Bancorp of PA 4.05 2.97 0.41 10.30 4.07 0.68 17.04 0.60 81.74 0.77
STFR St. Francis Cap. Corp. of WI 8.10 7.13 0.59 6.39 5.19 0.69 7.56 0.27 143.07 0.88
SPBC St. Paul Bancorp, Inc. of IL 8.74 8.71 0.68 7.65 3.90 1.00 11.30 0.48 163.91 1.18
STND Standard Fin. of Chicago IL(8) 10.90 10.89 0.47 4.12 2.79 0.71 6.18 0.22 137.54 0.49
SFFC StateFed Financial Corp. of IA 17.60 17.60 1.04 5.59 5.68 1.27 6.87 1.89 15.67 0.37
SFIN Statewide Fin. Corp. of NJ 10.52 10.50 0.50 4.60 4.06 0.89 8.23 0.49 80.61 0.81
STSA Sterling Financial Corp. of WA 3.99 3.39 0.07 1.61 0.97 0.31 7.68 0.43 119.58 0.81
SFSB SuburbFed Fin. Corp. of IL 6.56 6.54 0.33 4.93 4.25 0.54 8.08 0.27 75.49 0.33
SBCN Suburban Bancorp. of OH(8) 11.67 11.67 0.51 4.13 3.95 0.75 6.14 0.19 725.46 1.73
THRD TF Financial Corp. of PA 10.84 9.45 0.54 4.44 4.39 0.76 6.24 0.33 88.83 0.60
ROSE TR Financial Corp. of NY 6.16 6.16 0.98 15.66 8.14 0.85 13.70 0.40 108.61 0.83
TPNZ Tappan Zee Fin. Corp. of NY 17.92 17.92 0.69 4.14 3.15 0.64 3.82 NA NA 1.18
TSBS Trenton SB, FSB MHC of NJ(35.0 16.65 15.22 1.36 7.47 4.25 1.20 6.58 0.77 59.50 0.75
TRIC Tri-County Bancorp of WY 15.31 15.31 0.76 4.72 4.88 0.99 6.14 0.05 965.12 1.16
TWIN Twin City Bancorp of TN 12.92 12.92 0.57 4.36 3.78 0.79 6.04 0.19 127.41 0.33
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFSL Pocahnts Fed, MHC of AR (46.4) 14.55 133.47 8.51 133.47 10.43 0.90 4.62 67.16
POBS Portsmouth Bank Shrs Inc of NH(8)* 15.80 143.29 36.00 143.29 18.11 0.60 3.72 58.82
PTRS Potters Financial Corp of OH 27.00 94.71 8.43 94.71 12.50 0.36 1.78 48.00
PKPS Poughkeepsie SB of NY NM 116.35 9.78 116.35 20.91 0.10 1.49 71.43
PRBC Prestige Bancorp of PA NM 96.21 11.24 96.21 22.79 0.12 0.77 37.50
PETE Primary Bank of NH(8)* 14.43 175.47 11.62 175.85 14.61 0.00 0.00 0.00
PFNC Progress Financial Corp. of PA 20.73 166.73 8.69 190.40 16.89 0.08 0.88 18.18
PSBK Progressive Bank, Inc. of NY* 10.99 142.15 11.88 160.48 10.90 0.68 2.50 27.42
PROV Provident Fin. Holdings of CA NM 96.72 13.76 96.72 NM 0.00 0.00 0.00
PULB Pulaski SB, MHC of MO (29.0) NM 163.91 20.63 163.91 26.30 1.00 5.68 NM
PLSK Pulaski SB, MHC of NJ (46.0) NM 129.70 15.58 129.70 24.52 0.30 2.35 NM
PULS Pulse Bancorp of S. River NJ 15.60 138.89 10.83 138.89 10.43 0.70 3.84 59.83
QCFB QCF Bancorp of Virginia MN 15.91 114.44 20.19 114.44 15.91 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA NM 109.00 9.71 109.15 17.83 0.00 0.00 0.00
QCSB Queens County SB of NY* 20.30 225.34 33.75 225.34 20.11 0.80 1.92 39.02
RCSB RCSB Financial, Inc. of NY(8)* 16.03 196.63 15.43 201.73 16.15 0.60 1.43 22.90
RARB Raritan Bancorp. of Raritan NJ* 13.53 156.91 12.05 159.80 12.50 0.72 2.44 33.03
REDF RedFed Bancorp of Redlands CA NM 145.81 11.92 145.95 26.53 0.00 0.00 0.00
RELY Reliance Bancorp of NY 21.22 140.21 11.27 200.00 13.99 0.64 2.60 55.17
RELI Reliance Bancshares Inc of WI(8)* NM 65.23 39.83 65.23 NM 0.00 0.00 0.00
RIVR River Valley Bancorp of IN NM 100.90 12.47 102.47 NM 0.00 0.00 NM
RFED Roosevelt Fin. Grp. Inc. of MO(8) NM 233.76 12.98 248.69 13.42 0.68 2.86 NM
RSLN Roslyn Bancorp of NY* NM 123.86 26.71 124.48 18.75 0.20 1.15 NM
RVSB Rvrview SB,FSB MHC of WA(41.7) 22.89 183.40 20.46 202.34 17.92 0.22 1.16 26.51
SCCB S. Carolina Comm. Bnshrs of SC NM 110.29 28.62 110.29 26.96 0.60 3.18 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 144.19 13.63 144.19 NM 0.40 2.46 NM
SFBK SFB Bancorp, Inc. of TN 26.22 93.76 19.41 93.76 18.57 0.30 2.24 58.82
SFED SFS Bancorp of Schenectady NY 27.70 96.29 12.51 96.29 15.39 0.28 1.68 46.67
SGVB SGV Bancorp of W. Covina CA NM 103.71 7.54 105.67 22.58 0.00 0.00 0.00
SISB SIS Bank of Springfield MA* 8.80 156.94 11.86 156.94 9.08 0.48 1.70 14.95
SJSB SJS Bancorp of St. Joseph MI(8) NM 153.80 16.02 153.80 NM 0.44 1.66 NM
SWCB Sandwich Co-Op. Bank of MA* 13.73 149.64 12.33 156.97 13.55 1.20 3.90 53.57
SECP Security Capital Corp. of WI(8) 21.14 148.04 23.47 148.04 17.65 1.20 1.29 27.27
SFSL Security First Corp. of OH 16.60 178.87 16.75 182.09 13.12 0.48 2.26 37.50
SMFC Sho-Me Fin. Corp. of MO 21.53 194.72 18.58 194.72 18.08 0.00 0.00 0.00
SOBI Sobieski Bancorp of S. Bend IN NM 92.01 14.18 92.01 24.58 0.28 1.90 NM
SOSA Somerset Savings Bank of MA(8)* 14.94 145.41 8.58 145.41 14.94 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* NM 118.43 30.13 118.43 NM 0.40 2.50 NM
SCBS Southern Commun. Bncshrs of AL NM 103.38 21.47 103.38 19.37 0.30 2.18 75.00
SMBC Southern Missouri Bncrp of MO 17.16 110.41 17.30 110.41 17.50 0.50 2.86 49.02
SWBI Southwest Bancshares of IL 19.95 136.60 14.74 136.60 14.21 0.76 3.66 73.08
SVRN Sovereign Bancorp of PA 24.55 226.51 9.16 NM 14.84 0.08 0.59 14.55
STFR St. Francis Cap. Corp. of WI 19.28 124.26 10.06 141.22 16.30 0.48 1.63 31.37
SPBC St. Paul Bancorp, Inc. of IL 25.63 191.20 16.71 191.76 17.36 0.48 1.46 37.50
STND Standard Fin. of Chicago IL(8) NM 145.58 15.87 145.75 23.89 0.40 1.64 58.82
SFFC StateFed Financial Corp. of IA 17.62 97.37 17.14 97.37 14.34 0.40 2.16 38.10
SFIN Statewide Fin. Corp. of NJ 24.62 115.82 12.19 116.07 13.77 0.40 2.46 60.61
STSA Sterling Financial Corp. of WA NM 164.88 6.59 194.33 21.51 0.00 0.00 0.00
SFSB SuburbFed Fin. Corp. of IL 23.53 113.05 7.42 113.53 14.37 0.32 1.33 31.37
SBCN Suburban Bancorp. of OH(8) 25.35 103.93 12.13 103.93 17.06 0.60 3.29 NM
THRD TF Financial Corp. of PA 22.78 105.32 11.42 120.81 16.22 0.40 2.22 50.63
ROSE TR Financial Corp. of NY 12.28 181.68 11.20 181.68 14.04 0.52 2.41 29.55
TPNZ Tappan Zee Fin. Corp. of NY NM 117.86 21.12 117.86 NM 0.20 1.21 38.46
TSBS Trenton SB, FSB MHC of NJ(35.0 23.51 171.14 28.50 187.20 26.69 0.35 1.77 41.67
TRIC Tri-County Bancorp of WY 20.50 94.82 14.52 94.82 15.77 0.60 2.93 60.00
TWIN Twin City Bancorp of TN 26.43 116.87 15.10 116.87 19.07 0.64 3.46 NM
</TABLE>
<PAGE> 133
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
(continued)
Weekly Thrift Market Line - Part Two
Prices As Of June 6, 1997
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
UFRM United FS&LA of Rocky Mount NC 7.60 7.60 0.22 2.86 1.73 0.47 6.02 0.85 124.07 1.42
UBMT United Fin. Corp. of MT 22.65 22.65 1.09 4.70 4.82 1.34 5.80 0.42 16.41 0.21
VABF Va. Beach Fed. Fin. Corp of VA 6.79 6.79 0.15 2.19 1.46 0.41 6.09 1.15 63.74 0.96
VFFC Virginia First Savings of VA(8) 8.06 7.78 1.36 17.14 8.18 1.25 15.72 2.29 47.29 1.19
WHGB WHG Bancshares of MD 21.88 21.88 0.74 3.28 3.30 0.74 3.28 0.39 57.59 0.28
WSFS WSFS Financial Corp. of DE* 5.13 5.08 1.30 22.90 10.69 1.31 23.06 2.19 76.62 2.83
WVFC WVS Financial Corp. of PA* 12.72 12.72 1.08 8.12 6.63 1.34 10.10 0.31 229.86 1.31
WRNB Warren Bancorp of Peabody MA* 10.09 10.09 2.10 22.37 11.22 1.73 18.49 1.39 81.06 1.81
WFSL Washington FS&LA of Seattle WA 11.56 10.41 1.65 14.21 7.14 1.83 15.74 0.90 52.91 0.66
WAMU Washington Mutual Inc. of WA* 5.01 4.73 0.24 4.46 1.29 0.70 13.14 0.93 85.52 1.13
WYNE Wayne Bancorp of NJ 14.56 14.56 0.37 2.58 2.11 0.37 2.58 0.85 91.84 1.24
WAYN Wayne S&L Co. MHC of OH (47.8) 9.12 9.12 0.27 2.96 1.68 0.64 7.04 0.71 50.17 0.42
WCFB Wbstr Cty FSB MHC of IA (45.2) 23.56 23.56 1.01 4.44 3.12 1.35 5.89 0.27 141.96 0.67
WBST Webster Financial Corp. of CT 5.08 4.27 0.34 6.67 2.90 0.69 13.50 0.94 97.81 1.44
WEFC Wells Fin. Corp. of Wells MN 14.24 14.24 0.63 4.43 4.20 1.02 7.14 0.30 106.53 0.36
WCBI WestCo Bancorp of IL 15.57 15.57 1.10 7.06 5.46 1.41 9.08 0.84 33.74 0.39
WSTR WesterFed Fin. Corp. of MT 10.98 8.67 0.56 4.33 3.19 0.78 5.99 0.22 226.57 0.76
WOFC Western Ohio Fin. Corp. of OH 13.41 12.64 0.31 2.02 2.29 0.44 2.90 0.96 45.88 0.59
WWFC Westwood Fin. Corp. of NJ 9.22 8.17 0.43 4.44 3.19 0.80 8.22 0.14 146.31 0.54
WEHO Westwood Hmstd Fin Corp of OH 30.96 30.96 0.55 2.11 1.66 0.93 3.54 NA NA 0.19
WFCO Winton Financial Corp. of OH 7.13 6.95 0.66 8.78 6.46 0.84 11.18 NA NA 0.33
FFWD Wood Bancorp of OH 12.70 12.70 1.00 7.48 6.38 1.24 9.24 0.10 346.50 0.41
YFCB Yonkers Fin. Corp. of NY 15.30 15.30 0.84 5.28 4.51 1.16 7.25 0.73 51.78 1.17
YFED York Financial Corp. of PA 8.43 8.43 0.60 7.20 4.85 0.77 9.28 2.49 22.69 0.65
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
UFRM United FS&LA of Rocky Mount NC NM 164.18 12.48 164.18 27.50 0.24 2.18 NM
UBMT United Fin. Corp. of MT 20.74 97.74 22.14 97.74 16.81 0.96 4.92 NM
VABF Va. Beach Fed. Fin. Corp of VA NM 149.22 10.13 149.22 24.74 0.20 1.62 NM
VFFC Virginia First Savings of VA(8) 12.22 194.89 15.71 201.82 13.33 0.10 0.45 5.52
WHGB WHG Bancshares of MD NM 101.79 22.27 101.79 NM 0.20 1.40 42.55
WSFS WSFS Financial Corp. of DE* 9.35 214.88 11.02 217.03 9.29 0.00 0.00 0.00
WVFC WVS Financial Corp. of PA* 15.09 120.73 15.36 120.73 12.13 0.80 3.23 48.78
WRNB Warren Bancorp of Peabody MA* 8.91 182.19 18.39 182.19 10.78 0.52 2.89 25.74
WFSL Washington FS&LA of Seattle WA 14.01 184.82 21.36 205.20 12.65 0.88 3.38 47.31
WAMU Washington Mutual Inc. of WA* NM NM 14.35 NM 26.35 1.04 1.86 NM
WYNE Wayne Bancorp of NJ NM 111.65 16.25 111.65 NM 0.20 1.08 51.28
WAYN Wayne S&L Co. MHC of OH (47.8) NM 175.76 16.04 175.76 25.00 0.92 3.44 NM
WCFB Wbstr Cty FSB MHC of IA (45.2) NM 141.15 33.25 141.15 24.18 0.80 5.42 NM
WBST Webster Financial Corp. of CT NM 174.41 8.86 207.26 17.02 0.80 1.93 66.67
WEFC Wells Fin. Corp. of Wells MN 23.79 103.87 14.79 103.87 14.75 0.00 0.00 0.00
WCBI WestCo Bancorp of IL 18.32 129.01 20.08 129.01 14.25 0.60 2.46 45.11
WSTR WesterFed Fin. Corp. of MT NM 110.47 12.13 139.81 22.63 0.42 2.06 64.62
WOFC Western Ohio Fin. Corp. of OH NM 90.48 12.14 96.02 NM 1.00 4.76 NM
WWFC Westwood Fin. Corp. of NJ NM 136.10 12.54 153.62 16.94 0.20 0.95 29.85
WEHO Westwood Hmstd Fin Corp of OH NM 93.64 28.99 93.64 NM 0.28 2.11 NM
WFCO Winton Financial Corp. of OH 15.48 123.93 8.83 127.08 12.15 0.46 3.54 54.76
FFWD Wood Bancorp of OH 15.69 115.03 14.61 115.03 12.70 0.40 2.50 39.22
YFCB Yonkers Fin. Corp. of NY 22.19 108.70 16.63 108.70 16.16 0.20 1.34 29.85
YFED York Financial Corp. of PA 20.62 142.96 12.05 142.96 16.00 0.60 3.00 61.86
</TABLE>
<PAGE> 134
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE> 135
HISTORICAL STOCK PRICE INDICES(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ---- ------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
Quarter 4 6442.5 737.0 1,280.7 483.6 280.1
1997: Quarter 1 6583.5 757.1 1,221.7 527.7 292.5
June 6, 1997 7435.8 858.0 1,404.8 590.8 327.4
<FN>
(1) End of period data.
</TABLE>
Sources: SNL Securities; Wall Street Journal.
<PAGE> 136
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE> 137
MONTHLY MARKET REPORT
INDEX VALUES
<TABLE>
<CAPTION>
Index Values Percent Change
------------------------------------------------- --------------------------------
04/30/97 1 month YTD 52 week 1 month YTD 52 week
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 537.2 527.7 483.6 380.2 1.79 11.08 41.30
MHC Index 587.7 600.3 538.0 455.7 -2.11 9.22 28.95
INSURANCE INDICES
- ---------------------------------------------------------------------------------------------------------------------------
SAIF Thrifts 484.2 475.6 439.2 356.3 1.80 10.23 35.88
BIF Thrifts 689.7 677.9 616.8 451.8 1.74 11.81 52.67
STOCK EXCHANGE INDICES
- ---------------------------------------------------------------------------------------------------------------------------
AMEX Thrifts 166.7 165.9 156.2 134.7 0.48 6.73 23.72
NYSE Thrifts 314.7 303.4 277.3 249.9 3.74 13.52 25.95
OTC Thrifts 622.5 617.2 659.7 460.3 0.85 9.26 35.24
GEOGRAPHICAL INDICES
- ---------------------------------------------------------------------------------------------------------------------------
Mid-Atlantic Thrifts 1,077.4 1,051.1 970.7 746.3 2.50 10.99 44.36
Midwestern Thrifts 1,234.5 1,226.6 1,159.3 979.8 0.64 6.49 25.99
New England Thrifts 458.4 460.9 428.9 319.0 -0.54 6.49 25.99
Southeastern Thrifts 499.4 490.6 447.2 380.6 1.78 11.66 31.21
Southwestern Thrifts 347.5 349.1 315.9 255.6 -0.44 10.03 35.97
Western Thrifts 539.7 526.0 474.7 364.5 2.61 13.69 48.05
ASSET SIZE INDICES
- ---------------------------------------------------------------------------------------------------------------------------
Less than $250M 639.4 634.8 586.6 544.7 0.73 9.01 17.40
$250M to $500M 865.2 861.7 789.8 691.6 0.41 9.55 25.11
$500M to $1B 558.9 565.1 521.8 429.5 -1.10 7.11 30.11
$1B to $5B 593.8 592.0 546.0 431.2 0.30 8.74 37.72
Over $5B 344.1 333.4 305.8 231.8 3.21 12.51 48.43
COMPARATIVE INDICES
- ---------------------------------------------------------------------------------------------------------------------------
Dow Jones Industrials 7,009.0 6,583.5 6,448.3 5,569.1 6.46 8.70 25.86
S&P 500 801.3 757.1 740.7 654.2 5.84 8.18 22.50
</TABLE>
All SNL indices are market-value weighted: i.e., an institution's effect on an
index is proportionate to that institution's market capitalization. All SNL
thrift indices, except for the SNL MHC indices, began at 100 on March 30, 1984.
The SNL MHC index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift
Index on that date. On March 30, 1984, the S&P 500 closed at 159.2 and the Dow
Jones Industrials stood at 1164.9.
Mid-Atlantic: Ed, DC, PA, MD, NJ, PR; Midwestern: IA, IL, IN, KS, KY, MI,
MN, MO, ND, NE, OH, SD, WI; New England: CT, ME, MA, NH, RI, VT; Southeastern:
AL, AR, FL, GA, MS, NC, SC, TN, VA, WV; Southwestern: CO, LA, NM, OK, TX, UT;
Western: AZ, AK, CA, HI, ID, MT, NV, OR, WA, WY.
Source: SNL Securities.
<PAGE> 138
EXHIBIT IV-4
Market Arca Acquisition Activity
<PAGE> 139
RP Financial, LC
May 6, 1997
Exhibit IV-4
Ohio Thrift Acquistions 1995-Present
<TABLE>
<CAPTION>
Seller's Financials at Completion (1) Deal Terms at Completion (1)
---------------------------------------------------- ---------------------------
Comp/ Pooling, Total TgEq/ TTM TTM NPAs/ Rsrvs/ Deal Deal
Ann'd Purch, Assets Assets ROAA ROAE Assets NPLs Value Price Per Consider
Date Seller ST Not Disc ($000) (%) (%) (%) (%) (%) ($M) Share ($) Type
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pending Unity Savings Bank OH Pooling 65,078 11.46 0.87% 7.61% NA NA 12.1 129.625 Stock
04/29/97 Oak Hill Financial OH
Pending Haverfield Corp. OH Pooling 346,856 8.17 0.43% 5.32% 0.78 108.34 52.8 27.000 Stock
04/23/97 Charter One Fin'l OH
Pending Suburban Bancorp OH Not Disc 218,734 11.81 0.18% 1.50% 0.26 875.42 33.3 21.419 Stock
03/13/97 Fifth Third Bancorp OH
02/28/97 Jefferson Svgs Bank OH Purchase 66,134 6.62 0.52% 7.78% 1.16 41.19 7.3 NA Cash
04/02/96 CoBancorp, Inc OH
11/14/96 Seven Hills Fin'l OH Purchase 45,511 21.21 0.36% 1.72% 0.01 NA 11.0 19.698 Cash
06/14/96 Western Ohio Fncl OH
10/22/96 Third Financial OH Purchase 156,981 17.72 1.34% 7.59% 0.24 321.01 40.3 33.410 Cash
04/22/96 Security Banc Corp OH
10/11/96 Circle Fin'l Corp. OH Purchase 222,438 9.54 0.48% 4.38% 0.15 148.83 28.1 38.500 Mixture
04/29/96 Fidelity Fin'l of OH OH
04/10/96 First Kent Fncl Corp OH Pooling 78,609 17.21 1.18% 6.87% 0.14 201.80 18.0 21.675 Stock
10/19/95 Security First Corp OH
03/29/96 Mayflower Fncl Corp OH Purchase 52,839 11.67 0.82% 6.99% 0.59 186.39 10.0 28.500 Cash
08/31/95 Western Ohio Fncl OH
01/04/96 Blue Chip Svgs Bank OH Pooling 34,143 12.14 0.54% 4.46% 0.00 NA 3.9 22.854 Stock
06/16/95 Winton Fin'l Corp OH
08/31/95 PSB Holdings Corp OH Pooling 179,919 17.61 1.14% 6.40% 0.10 NA 58.7 25.253 Stock
03/01/95 CitFed Bancorp, Inc. OH
07/21/95 Falls Financial Inc OH Pooling 580,832 8.73 0.94% 10.77% 0.08 NA 84.1 26.949 Stock
12/12/94 Fifth Third Bancorp OH
Deal Pricing at Completion (1)
------------------------------
Comp/ Pr/ Pr/ Pr/
Ann'd Pr/Bk Tg Bk Assets EPS
Date Seller (%) (%) (%) (X)
<S> <C> <C> <C> <C>
Pending Unity Savings Bank 162.07 162.24 18.59 21.3
04/29/97 Oak Hill Financial
Pending Haverfield Corp. 181.57 181.7 15.22 34.18
04/23/97 Charter One Fin'l
Pending Suburban Bancorp NA NA NA NA
03/13/97 Fifth Third Bancorp
02/28/97 Jefferson Svgs Bank 146.53 146.53 11.60 10.80
04/02/96 CoBancorp, Inc
11/14/96 Seven Hills Fin'l 108.77 108.77 24.47 59.69
06/14/96 Western Ohio Fncl
10/22/96 Third Financial 132.42 132.42 25.85 18.88
04/22/96 Security Banc Corp
10/11/96 Circle Fin'l Corp. 111.27 127.53 11.62 24.68
04/29/96 Fidelity Fin'l of OH
04/10/96 First Kent Fncl Corp 128.94 128.94 22.89 21.25
10/19/95 Security First Corp
03/29/96 Mayflower Fncl Corp 163.43 163.43 19.38 26.60
08/31/95 Western Ohio Fncl
01/04/96 Blue Chip Svgs Bank 88.28 88.28 11.55 16.96
06/16/95 Winton Fin'l Corp
08/31/95 PSB Holdings Corp 175.00 176.59 33.58 NA
03/01/95 CitFed Bancorp, Inc.
07/21/95 Falls Financial Inc 153.12 153.12 14.00 18.09
12/12/94 Fifth Third Bancorp
</TABLE>
<PAGE> 140
RP Financial, LC
May 6, 1997
Exhibit IV-4
Ohio Thrift Acquisitions 1995-Present
<TABLE>
<CAPTION>
Seller's Financials at Completion (1) Deal Terms at Completion (1)
---------------------------------------------------- -------------------------
Comp/ Pooling, Total TgEq/ TTM TTM NPAs/ Rsrvs/ Deal Deal
Ann'd Purch, Assets Assets ROAA ROAE Assets NPLs Value Price Per Consider
Date Seller ST Not Disc ($000) (%) (%) (%) (%) (%) ($M) Share ($) Type
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/03/95 Brentwood Fin'l Corp OH Purchase 100,346 12.95 0.91% 7.02% NA NA 20.8 29.000 Cash
08/03/94 PNC Bank Corp PA
01/31/95 CIVISTA Corp. OH Pooling 808,210 11.07 1.40% 12.63% 1.34 NA 139.7 39.091 Stock
08/10/94 FirstMerit Corp OH
01/20/95 Mutual FSB OH Pooling 85,168 17.11 1.46% 8.52% 0.40 NA 20.8 30.200 Stock
05/10/94 Fifth Third Bancorp OH
Average: 202,787 13.00 0.84% 6.64% 0.40 269.00 36.1 35.227
Median: 100,346 11.81 0.87% 6.99% 0.24 186.39 20.8 27.750
Deal Pricing at Completion (1)
-------------------------------
Comp/ Pr/ Pr/ Pr/
Ann'd Pr/Bk Tg Bk Assets EPS
Date Seller (%) (%) (%) (X)
<S> <C> <C> <C> <C>
03/03/95 Brentwood Fin'l Corp 149.72 149.72 21.47 46.77
08/03/94 PNC Bank Corp
01/31/95 CIVISTA Corp. 224.30 224.30 18.34 12.67
08/10/94 FirstMerit Corp
01/20/95 Mutual FSB 131.25 131.25 25.56 26.26
Average: 146.90 148.20 19.58 26.01
Median: 148.13 148.13 18.98 21.30
</TABLE>
(1) Pending deal data is as of announcment date.
Source: SNL Securities, LP. May 6, 1997
<PAGE> 141
EXHIBIT IV-5
Bridgeport Savings and Loan Association
Director and Senior Management Summary Resumes
<PAGE> 142
Bridgeport Savings and Loan Association
John O. Costine is an attorney practicing in St. Clairsville, Ohio.
Anton M. Godez is the President of the General Welding Supply Company in
Martins Ferry, Ohio.
Jon W. Letzkus is the President of both the Holding Company and the
Association and is the designated Managing Officer of the Association.
Mr. Letzkus joined the Association in September 1980 as a vice president.
Mr. Letzkus has served as the President of the Association since 1989.
William E. Reline retired from Cooper Industries, a mining manufacturing
company, in 1989, and has been a consultant to Wheeling Machine Products since
1996.
Manuel C. Thomas is an officer of M.C. Thomas Insurance Agency, Inc. where he
has been employed since 1954.
Darlene V. Bennington has served as the Secretary of the Association since 1996
and as the Treasurer of the Association since 1991. Ms Bennington has been
employed by the Association since 1980.
Mariann Doyle has served the Association as the Assistant Vice President since
1994 and as a loan officer since 1985.
Michael P. Eddy has served since 1985 as the Comptroller of the Association and
from 1985 to 1994 he also served as the Secretary of the Association.
Sherri Yarbrough has served the Association as a loan officer and as the Office
Manager since 1990.
Source: Bridgeport Savings' prospectus.
<PAGE> 143
EXHIBIT IV-6
Bridgeport Savings and Loan Association
Pro Forma Regulatory Capital Ratios
<PAGE> 144
EXHIBIT IV-6
Bridgeport Savings and Loan Association
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
Pro forma capital at March 31, 1997 assuming the sale of:
----------------------------------------------------------------------------------
573,750 675,000 776,250 892,687
Common Shares Common Shares Common Shares Common Shares
Historical at (offering price (offering price (offering price (offering price
March 31, 1997 of $10 per share) of $10 per share) of $10 per share) of $10 per share)
----------------- ------------------ ----------------- -------------------- -------------------
Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital under generally
accepted accounting
principal, before
adjustments $4,860 14.1% $6.864 18.5% $7.242 19.3% $7,619 20.1% $8.054 20.9%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Tangible capital:
Capital level $4,860 14.1% $6,864 18.5% $7,242 19.3% $7,619 20.1% $8,054 20.9%
Requirement 518 1.5 555 1.5 562 1.5 569 1.5 577 1.5
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $4,342 12.6% $6,309 17.0% $6,680 17.8% $7,050 18.6% $7,477 19.4%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Core capital:
Capital level $4,860 14.1% $6,864 18.5 $7,242 19.3% $7,619 20.1% $8,054 20.9%
Requirement 1,037 3.0 1,111 3.0 1,125 3.0 1,138 3.0 1,154 3.0%
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $3,823 11.1% $5,753 15.5% $6,117 16.3% $6,481 17.1% $6,900 17.9%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
Risk-based capital:(2)
Capital level $4,995 29.8% $6,999 38.9% $7,377 40.5% $7,754 42.0% $8,189 43.7%
Requirement 1,342 8.0 1,441 8.0 1,459 8.0 1,477 8.0% 1,498 8.0%
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Excess $3,653 21.8% $5,558 30.9% $5,918 32.5% $6,277 34.0% $6,691 35.7%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
</TABLE>
- --------------------------
(1) Generally accepted accounting principles, adjusted, or risk-weighted
assets, as appropriate.
(2) Proposed regulations of the OTS could increase the core capital requirement
to a ratio between 4% and 5%, based upon an association's regulatory
examination rating. Risk-based capital includes tangible capital plus
$135,000 of the Association's allowance for loan losses. Risk-weighted
assets at March 31, 1997 totally approximately $16.8 million. Net proceeds
available for investments by the Association are assumed to be invested in
interest earning assets have a 50% risk-weighting.
Source: Bridgeport Saving's prospectus.
<PAGE> 145
EXHIBIT IV-7
Bridgeport Savings and Loan Association
Pro Forma Analysis Sheet
<PAGE> 146
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-7
PRO FORMA ANALYSIS SHEET -- PAGE 1
Bridgeport Savings and Loan
Prices as of June 6, 1997
<TABLE>
<CAPTION>
Comparable All OH All SAIF
Companies Companies Companies
------------- ------------- --------------
Price Multiple: Symbol Subject(1) Mean Median Mean Median Mean Median
- -------------- ------ ---------- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 22.13x 22.81x 23.66x 21.13x 20.88x 20.14x 20.41x
Price-core earnings = P/CORE 15.70x 18.91x 18.99x 17.60x 15.95x 17.72x 16.85x
Price-book ratio = P/B 64.70% 110.42% 113.10% 126.15% 113.92% 128.40% 123.11%
Price-tng book ratio = P/TB 64.70% 110.66% 113.10% 120.97% 113.92% 131.47% 125.24%
Price-assets ratio = P/A 16.82% 15.25% 14.61% 16.81% 15.67% 15.64% 14.25%
Valuation Parameters
- --------------------
Pre-Conv Earnings (Y) $ 206,000 Est ESOP Borrowings (E) $ 540,000
Pre-Conv Book Value (B) $ 4,860,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv Assets (A) $ 34,564,000 Amort of ESOP Borrowings (T) 10 Years
Reinvestment Rate(2) (R) 3.75% Recognition Plans Amount (M)
$ 270,000
Est Conversion Exp(3) (X) 367,000 Recognition Plans Expense (N)
$ 54,000
Proceeds Not Reinvested (Z) $ 810,000 Incr. Ohio Franchise Tax (O) $ 58,517 (2)
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V = P/E (Y-R(X+Z)-ES-(1-TAX)E/T-(1-TAX)N-(1-TAX)O) V = $ 6,750,509
-------------------------------------------------
1-(P/E)R
2. V = P/B (B-X-E-M) V = $ 6,750,428
-----------------------
1-P/B
3. V = P/A (A-X-M-E) V = $ 6,751,254
-----------------------
1-P/A
</TABLE>
<TABLE>
<CAPTION>
Total Price Total
Conclusion Shares Per Share Value
- ---------- -------- --------- --------
<S> <C> <C> <C>
Appraised Value 675,000 $10.00 $ 6,750,000
RANGE:
- ------
- Minimum 573,750 $10.00 $ 5,737,500
- Maximum 776,250 $10.00 $ 7,762,500
- Superrange 892,687 $10.00 $ 8,926,875
</TABLE>
(1) Pricing ratios shown reflect the midpoint appraised value.
(2) Net return assumes a reinvestment rate of 5.68 percent, and a tax rate of
34.00 percent. Increased Ohio franchise tax is 1.1 percent of net proceeds.
(3) Conversion expenses reflect estimated expenses as presented in offering
document.
(4) Assumes a borrowings cost of 0.00 percent and a tax rate of 34.00 percent.
<PAGE> 147
RP Financial, Inc.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-7
PRO FORMA ANALYSIS SHEET -- PAGE 2
Bridgeport Savings and Loan
Prices as of June 6, 1997
<TABLE>
<CAPTION>
Mean Pricing Median Pricing
--------------- -----------------
Valuation Approach Subject Peers (Disc) Peers (Disc)
------------------ ------- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
P/E Price-earnings 22.13x 22.81x -3.00% 23.66x -6.48%
P/CORE Price-core earnings 15.70x 18.91x -16.98% 18.99x -17.33%
P/B Price-book 64.70% 110.42% -41.41% 113.10x -42.79%
P/TB Price-tang. book 64.70% 110.66% -41.53% 113.10x -42.79%
P/A Price-assets 16.82% 15.25% 10.25% 14.61% 15.10%
Average Premium (Discount) -18.53% -18.86%
</TABLE>
<PAGE> 148
EXHIBIT IV-8
Bridgeport Savings and Loan Association
Pro Forma Effect of Conversion Proceeds
<PAGE> 149
RP Financial, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Bridgeport Savings and Loan
At the Minimum of the Range
<TABLE>
<S> <C>
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 5,737,500
Less: Estimated offering expenses --------------- 353,000
------------
Net Conversion Proceeds ----------------------------- $ 5,384,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 5,384,500
Less: Held in Non-Earning Assets(5)(1) ---------- 688,500
------------
Net Proceeds Reinvested ----------------------------- $ 4,696,000
Estimated net incremental rate of return ------------ 3.75 %
------------
Earnings Increase ----------------------------------- $ 176,044
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 30,294
Less: Recognition Plans Expense(4)--------------- 30,294
Less: Increased Ohio franchise tax ------------- 32,543
------------
Net Earnings Increase ------------------------------- $ 82,912
</TABLE>
3. Pro-Forma Earnings (rounded)
<TABLE>
<CAPTION>
Period Before Conversion After Conversion
------ ----------------- ----------------
<S> <C> <C>
12 Months ended March 31, 1997 $ 206,000 $ 288,912
12 Months ended March 31, 1997 (Core) $ 331,000 $ 413,912
</TABLE>
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 4,860,000 $ 4,696,000 (3)(4) $ 9,556,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 34,564,000 $ 4,696,000 $ 39,260,000
</TABLE>
NOTE: Shares for calculating per share amounts: 573,750
(1) Estimated ESOP borrowings of $ 459,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $459,000 are omitted from net worth.
(4) $229,500 purchased by the Recognition Plans with an estimated pre-tax
expense of $45,900 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE> 150
RP Financial, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Bridgeport Savings and Loan
At the Midpoint of the Range
<TABLE>
<CAPTION>
<S> <C>
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 6,750,000
Less: Estimated offering expenses --------------- 367,000
------------
Net Conversion Proceeds ----------------------------- $ 6,383,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 6,383,000
Less: Held in Non-Earning Assets(5)(1) ---------- 810,000
------------
Net Proceeds Reinvested ----------------------------- $ 5,573,000
Estimated net incremental rate of return ------------ 3.75 %
------------
Earnings Increase ----------------------------------- $ 208,921
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 35,640
Less: Recognition Plans Expense(4)--------------- 35,640
Less: Increased Ohio franchise tax ------------- 38,621
------------
Net Earnings Increase ------------------------------- $ 99,020
</TABLE>
3. Pro-Forma Earnings (rounded)
<TABLE>
<CAPTION>
Period Before Conversion After Conversion
------ ----------------- ----------------
<S> <C> <C>
12 Months ended March 31, 1997 $ 206,000 $ 305,020
12 Months ended March 31, 1997 (Core) $ 331,000 $ 430,020
</TABLE>
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 4,860,000 $ 5,573,000 (3)(4) $ 10,433,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
<S> <C> <C> <C
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
March 31, 1997 $ 34,564,000 $ 5,573,000 $ 40,137,000
</TABLE>
NOTE: Shares for calculating per share amounts: 675,000
(1) Estimated ESOP borrowings of $540,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $540,000 are omitted from net worth.
(4) $270,000 purchased by the Recognition Plans with an estimated pre-tax
expense of $54,000 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE> 151
RP Financial, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Bridgeport Savings and Loan
At the Maximum of the Range
<TABLE>
<CAPTION>
<S> <C>
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 7,762,500
Less: Estimated offering expenses --------------- 381,000
------------
Net Conversion Proceeds ----------------------------- $ 7,381,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 7,381,500
Less: Held in Non-Earning Assets(5)(1) ---------- 931,500
------------
Net Proceeds Reinvested ----------------------------- $ 6,450,000
Estimated net incremental rate of return ------------ 3.75 %
------------
Earnings Increase ----------------------------------- $ 241,798
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 40,986
Less: Recognition Plans Expense(4)--------------- 40,986
Less: Increased Ohio franchise tax ------------- 44,698
------------
Net Earnings Increase ------------------------------- $ 115,127
</TABLE>
3. Pro-Forma Earnings (rounded)
<TABLE>
<CAPTION>
Period Before Conversion After Conversion
------ ----------------- ----------------
<S> <C> <C>
12 Months ended March 31, 1997 $ 206,000 $ 321,127
12 Months ended March 31, 1997 (Core) $ 331,000 $ 446,127
</TABLE>
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 4,860,000 $ 6,450,000 (3)(4) $ 11,310,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 34,564,000 $ 6,450,000 $ 41,014,000
</TABLE>
NOTE: Shares for calculating per share amounts: 776,250
(1) Estimated ESOP borrowings of $621,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $621,000 are omitted from net worth.
(4) $310,500 purchased by the Recognition Plans with an estimated pre-tax
expense of $62,100 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE> 152
RP Financial, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Bridgeport Savings and Loan
At the Superrange Maximum
<TABLE>
<CAPTION>
<S> <C>
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 8,926,875
Less: Estimated offering expenses --------------- 397,000
------------
Net Conversion Proceeds ----------------------------- $ 8,529,875
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 8,529,875
Less: Held in Non-Earning Assets(5)(1) ---------- 1,071,225
------------
Net Proceeds Reinvested ----------------------------- $ 7,458,650
Estimated net incremental rate of return ------------ 3.75 %
-----------
Earnings Increase ----------------------------------- $ 279,610
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 47,134
Less: Recognition Plans Expense(4)--------------- 47,134
Less: Increased Ohio franchise tax ------------- 51,688
------------
Net Earnings Increase ------------------------------- $ 133,654
</TABLE>
3. Pro-Forma Earnings (rounded)
<TABLE>
<CAPTION>
Period Before Conversion After Conversion
------ ----------------- ----------------
<S> <C> <C>
12 Months ended March 31, 1997 $ 206,000 $ 339,654
12 Months ended March 31, 1997 (Core) $ 331,000 $ 464,654
</TABLE>
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 4,860,000 $ 7,458,650 (3)(4) $ 12,318,650
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ----------------
<S> <C> <C> <C>
March 31, 1997 $ 34,564,000 $ 7,458,650 $ 42,022,650
</TABLE>
NOTE: Shares for calculating per share amounts: 892,687
(1) Estimated ESOP borrowings of $714,150 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $714,150 are omitted from net worth.
(4) $357,075 purchased by the Recognition Plans with an estimated pre-tax
expense of $71,415 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE> 153
EXHIBIT IV-9
Peer Group Core Earnings Analysis
<PAGE> 154
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1997
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------------- ----- ---------
($000) ($000) $000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
- ----------------
ASBP ASB Financial Corp. of OH 678 448 -152 0 974 1,721 0.57
CIBI Community Inv. Bancorp of OH 626 461 -157 0 930 633 1.47
EFBI Enterprise Fed. Bancorp of OH(1) 1,506 212 -72 0 1,646 2,011 0.82
FFDF FFD Financial Corp. of OH 636 375 -128 0 884 1,455 0.61
FFHS First Franklin Corp. of OH 317 1,572 -534 0 1,355 1,178 1.15
GFCO Glenway Financial Corp. of OH 1,057 1,300 -442 0 1,915 1,144 1.67
HHFC Harvest Home Fin. Corp. of OH(1) 161 374 -127 0 408 935 0.44
LONF London Financial Corp. of OH 277 193 -66 0 404 515 0.79
MFFC Milton Fed. Fin. Corp. of OH 940 525 -179 0 1,287 2,327 0.55
OHSL OHSL Financial Corp. of OH 1,299 853 -290 0 1,862 1,208 1.54
FFWD Wood Bancorp of OH 1,525 540 -184 0 1,881 1,493 1.26
</TABLE>
(1) Financial information is for the quarter ending December 31, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 155
EXHIBIT V-1
RP Financial, L.C.
Firm Qualification Statement
<PAGE> 156
RP FINANCIAL, LC.
- ---------------------------------------- FIRM QUALIFICATION STATEMENT
FINANCIAL SERVICES INDUSTRY CONSULTANTS
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial'sconsulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (17)
William E. Pommerening, Managing Director (11)
Gregory E. Dunn, Senior Vice President (15)
James P. Hennessey, Senior Vice President (10)
James J. Oren, Vice President (10)
Timothy M. Biddle, Vice President (7)
Alan P. Carruthers, Director-Community Banking (15)
- -------------------------------------------------------------------------------
WASHINGTON HEADQUARTERS
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788