As filed with the Securities and Exchange Commission on August 6, 1997
Registration No. 333-30203
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
(Including Exhibits)
RIVERVIEW BANCORP, INC.
(Exact name of registrant in its charter)
Washington 6035 91-1838969
- ------------------------------- ---------------- ----------------
(State or other jurisdiction of (Primary SIC No.) (I.R.S. Employer
incorporation or organization) Identification No.)
700 N.E. Fourth Avenue
Camas, Washington 98607
(360) 834-2231
(Address and telephone number of principal executive offices and
place of business)
John F. Breyer, Jr., Esquire
Victor L. Cangelosi, Esquire
BREYER & AGUGGIA
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
(202) 737-7900
(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
=========================================================================================================================
Calculation of Registration Fee
=========================================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Securities Amount Being Proposed Offering Aggregate Offering Amount of
Being Registered Registered(1) Price(1) Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.01 Par Value 5,447,056 $10.00 $54,470,560 $16,507(2)
Participation Interests 50,000 -- -- (3)
=========================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee. As
described in the Prospectus, the actual number of shares to be issued and sold
are subject to adjustment based upon the estimated pro forma market value of the
registrant and market and financial conditions.
(2) Previously filed.
(3) The securities of Riverview Bancorp, Inc. to be purchased by the Riverview
Savings Bank, FSB 401(k) Plan are included in the amount shown for Common Stock.
Accordingly, pursuant to Rule 457(h) of the Securities Act of 1933, as amended,
no separate fee is required for the participation interests. Pursuant to such
rule, the amount being registered has been calculated on the basis of the number
of shares of Common Stock that may be purchased with the current assets of such
Plan.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
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>
<TABLE>
<CAPTION>
Cross Reference Sheet showing the location in the Prospectus
of the Items of Form S-1
<S> <C>
1. Front of Registration Front of Registration Statement;
Statement and Outside Front Outside Front Cover Page
Cover of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page; Outside Back
Cover Pages of Prospectus Cover Page
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds; Capitalization
5. Determination of Offering Price Market for Common Stock; The Conversion and
Reorganization -- Stock Pricing, Exchange Ratio and
Number of Shares to be Issued
6. Dilution *
7. Selling Security-Holders *
8. Plan of Distribution The Conversion and Reorganization
9. Legal Proceedings Business of the Savings Bank -- Legal Proceedings
10. Directors, Executive Officers, Management of the Holding Company; Management of
Promoters and Control Persons the Savings Bank
11. Security Ownership of Certain Beneficial *
Owners and Management
12. Description of Securities Description of Capital Stock of the Holding Company
13. Interest of Named Experts and Legal and Tax Opinions; Experts
Counsel
14. Disclosure of Commission Position Part II -- Item 17
on Indemnification for Securities
Act Liabilities
15. Organization Within Last Business of the Savings Bank
Five Years
16. Description of Business Business of the Holding Company;
Business of the Savings Bank
17. Management's Discussion and Management's Discussion and Analysis of
Analysis or Plan of Operation Financial Condition and Results of Operations
18. Description of Property Business of the Savings Bank -- Properties
</TABLE>
<PAGE>
<TABLE>
<S> <C>
19. Certain Relationships and Management of the Savings Bank -- Transactions
Related Transactions with the Savings Bank
20. Market Price for Common Equity Outside Front Cover Page; Market for
and Related Stockholder Matters Common Stock; Dividend Policy
21. Executive Compensation Management of the Savings Bank -- Executive
Compensation; and -- Benefits
22. Financial Statements Financial Statements; Pro Forma Data
23. Changes in and Disagreements *
with Accountants on Accounting
and Financial Disclosure
</TABLE>
- ----------
*Item is omitted because answer is negative or item inapplicable.
<PAGE>
PROSPECTUS SUPPLEMENT
RIVERVIEW BANCORP, INC.
RIVERVIEW SAVINGS BANK, FSB
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
This Prospectus Supplement relates to the offer and sale to participants
("Participants") in the Riverview Savings Bank, FSB Employees' Savings and
Profit Sharing Plan ("Plan" or "401(k) Plan") of participation interests and
shares of Riverview Bancorp, Inc. common stock, par value $.01 per share
("Common Stock"), as set forth herein.
In connection with the proposed reorganization of Riverview Savings Bank,
FSB ("Savings Bank" or "Employer") from the mutual holding company form of
organization to a wholly owned subsidiary of a stock savings and loan holding
company, Riverview Bancorp, Inc. (the "Holding Company") has been formed. The
reorganization of the Savings Bank as a wholly-owned subsidiary of the Holding
Company, the exchange of shares of Savings Bank common stock ("Savings Bank
Common Stock") by public stockholders of the Savings Bank (the "Public
Stockholders") for Common Stock and the sale of Common Stock to the public (the
"Conversion Offerings") are herein referred to as the "Conversion and
Reorganization." Applicable provisions of the 401(k) Plan permit the investment
of the Plan assets in Common Stock at the direction of a Plan Participant. This
Prospectus Supplement relates to the election of a Participant to direct the
purchase of Common Stock in connection with the Conversion and Reorganization.
The Prospectus dated ______, 1997 of the Holding Company ("Prospectus")
which is attached to this Prospectus Supplement includes detailed information
with respect to the Conversion and Reorganization, the Conversion Offerings, the
Common Stock and the financial condition, results of operation and business of
the Savings Bank and the Holding Company. This Prospectus Supplement, which
provides detailed information with respect to 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 Stock in the Conversion and
Reorganization through the Plan is subject to the Participant's general
eligibility to purchase shares of Common Stock in the Conversion Offerings and
the maximum and minimum limitations set forth in the Plan of Conversion. See
"THE CONVERSION AND REORGANIZATION" and "-- Limitations on Purchases of Shares"
in the Prospectus.
For a discussion of certain factors that should be considered by each
Participant, see "RISK FACTORS" in the Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), THE OFFICE OF THRIFT SUPERVISION ("OTS"), THE
FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER FEDERAL AGENCY OR
ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC, THE OTS, THE FDIC OR ANY OTHER
AGENCY OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus Supplement is ______, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in the Prospectus or this Prospectus
Supplement in connection with the offering made hereby, and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Holding Company, the Savings Bank or the Plan. This Prospectus
Supplement does not constitute an offer to sell or solicitation of an offer to
buy any securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation in such jurisdiction. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall
under any circumstances create any implication that there has been no change in
the affairs of the Savings Bank or the Plan since the date hereof, or that the
information herein contained or incorporated by reference is correct as of any
time subsequent to the date hereof. This Prospectus Supplement should be read
only in conjunction with the Prospectus that is attached herein and should be
retained for future reference.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
The Offering
<S> <C>
Securities Offered..........................................................................................
Election to Purchase Common Stock in the Conversion.........................................................
Value of Participation Interests............................................................................
Method of Directing Transfer................................................................................
Time for Directing Transfer.................................................................................
Irrevocability of Transfer Direction........................................................................
Treatment of Savings Bank Common Stock Held in the Plan.....................................................
Direction to Purchase Common Stock After the Conversion.....................................................
Purchase Price of Common Stock..............................................................................
Nature of a Participant's Interest in the Holding Company Common Stock......................................
Voting and Tender Rights of Common Stock....................................................................
Description of the Plan
Introduction................................................................................................
Eligibility and Participation...............................................................................
Contributions Under the Plan................................................................................
Limitations on Contributions................................................................................
Investment of Contributions.................................................................................
The Employer Stock Fund.....................................................................................
Benefits Under the Plan.....................................................................................
Withdrawals and Distributions from the Plan.................................................................
Administration of the Plan..................................................................................
Reports to Plan Participants................................................................................
Plan Administrator..........................................................................................
Amendment and Termination...................................................................................
Merger, Consolidation or Transfer...........................................................................
Federal Income Tax Consequences.............................................................................
Restrictions on Resale......................................................................................
Legal Opinions.....................................................................................................
Investment Form....................................................................................................
</TABLE>
i
<PAGE>
THE OFFERING
Securities Offered
The securities offered hereby are participation interests in the Plan and
up to ______ shares, at the actual purchase price of $10.00 per share, of Common
Stock which may be acquired by the Plan for the accounts of employees
participating in the Plan. The Holding Company is the issuer of the Common
Stock. Only employees and former employees of the Savings Bank and their
beneficiaries may participate in the Plan. Information with regard to the Plan
is contained in this Prospectus Supplement and information with regard to the
Conversion and Reorganization and the financial condition, results of operation
and business of the Savings Bank and the Holding Company is contained in the
attached Prospectus. The address of the principal executive office of the
Savings Bank is 700 N.E. Fourth Avenue, Camas, Washington 98607. The Savings
Bank's telephone number is (360) 834-2231.
Election to Purchase Common Stock in the Conversion and Reorganization
In connection with the Savings Bank's Conversion and Reorganization, each
Participant in the 401(k) Plan may direct the trustees of the Plan
(collectively, the "Trustee") to transfer up to ___% of a Participant's
beneficial interest in the assets of the Plan to the Employer Stock Fund and to
use such funds to purchase Common Stock issued in connection with the Conversion
and Reorganization. Amounts transferred may include salary deferral, Employer
matching and profit sharing contributions. The Employer Stock Fund consists of
investments in the Common Stock. Funds not transferred to the Employer Stock
Fund will be invested at the Participant's discretion in the other investment
options available under the Plan. See "DESCRIPTION OF THE PLAN -- Investment of
Contributions" below. A Participant's ability to transfer funds to the Employer
Stock Fund in the Conversion Offerings is subject to the Participant's general
eligibility to purchase shares of Common Stock in the Conversion Offerings. For
general information as to the ability of the Participants to purchase shares in
the Conversion Offerings, see "THE CONVERSION AND REORGANIZATION-- The
Subscription, Direct Community and Syndicated Community Offerings" 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
_______ basis. This value represents the market value of past contributions to
the Plan by the Savings Bank and by the Participants and earnings thereon, less
previous withdrawals, and transfers from the Savings Fund.
Method of Directing Transfer
The last page of this Prospectus Supplement is an investment form to direct
a transfer to the Employer Stock Fund ("Investment Form"). If a Participant
wishes to transfer funds to the
S-1
<PAGE>
Employer Stock Fund to purchase Common Stock issued in connection with the
Conversion Offerings, the Participant 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.
Time for Directing Transfer
The deadline for submitting a direction to transfer amounts to the Employer
Stock Fund in order to purchase Common Stock issued in connection with the
Conversion Offerings is _______, 1997. The Investment Form should be returned to
___________ at the Savings Bank no later than the close of business 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 shares of Common Stock in connection with the Conversion Offerings
shall be irrevocable. Participants, however, will be able to direct the sale of
Common Stock, as explained below.
Treatment of Savings Bank Common Stock Held in the Plan
Shares of Savings Bank Common Stock held in the Employer Stock Fund prior
to the consummation of the Conversion and Reorganization will treated in the
same manner as shares held by other Public Stockholders. Such shares will be
exchanged for shares of Common Stock pursuant to the Exchange Ratio. Application
of the Exchange Ratio will result in the holders of the outstanding Savings Bank
Common Stock owning, in the aggregate, approximately the same percentage of the
Common Stock to be outstanding upon the completion of the Conversion and
Reorganization as the percentage of Savings Bank Common Stock owned by them, in
the aggregate, immediately prior to the consummation of the Conversion. For
additional information regarding the treatment of Savings Bank Common Stock,
See, "THE CONVERSION AND REORGANIZATION" in the Prospectus.
Direction to Purchase Common Stock After the Conversion and Reorganization
After the Conversion and Reorganization, a Participant will be able to
direct that a certain percentage of such Participant's interests in the trust
assets ("Trust") be transferred to the Employer Stock Fund and invested in
Common Stock 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 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 Stock. Following the initial
election, the allocation of a Participant's interest in the Employer Stock Fund
may be changed by the Participant on a monthly basis. Special restrictions may
apply to transfers directed by those Participants who are executive officers,
directors and principal
S-2
<PAGE>
stockholders of the Holding Company who are subject to the provisions of Section
16(b) of the Securities and Exchange Act of 1934, as amended ("Exchange Act").
Purchase Price of Common Stock
The funds transferred to the Employer Stock Fund for the purchase of Common
Stock in connection with the Conversion will be used by the Trustee to purchase
shares of Common Stock. The price paid for such shares of Common Stock will be
the same price as is paid by all other persons who purchase shares of Common
Stock in the Conversion Offerings.
Nature of a Participant's Interest in the Holding Company Stock
The Holding Company Stock purchased for an account of a Participant will be
held in the name in the Employer Stock Fund. Any earnings, losses or expenses
with respect to the Holding Company Stock, including dividends and appreciation
or depreciation in value, will be credited or debited to the account and will
not be credited to or borne by any other accounts.
Voting and Tender Rights of Common Stock
The Trustee generally will exercise voting and tender rights attributable
to all Common Stock held by the Trust as directed by Participants with an
interest in the Employer Stock Fund. With respect to each matter as to which
holders of Common Stock have the 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 shares of
Common Stock 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 in either the affirmative or
negative, respectively.
DESCRIPTION OF THE PLAN
Introduction
The Savings Bank adopted the Plan effective April 1, 1997 as an amendment
and restatement of the Savings Bank's prior retirement plan. The Plan is a cash
or deferred arrangement established in accordance with the requirement under
Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as
amended ("Code").
The Savings Bank intends that the Plan, in operation, will comply with the
requirements under Section 401(a) and Section 401(k) of the Code. The Savings
Bank will adopt any amendments to the Plan that may be necessary to ensure the
qualified status of the Plan under the Code and applicable Treasury Regulations.
The Savings Bank has received a determination from the Internal Revenue Service
("IRS") that the Plan 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.
S-3
<PAGE>
Employee Retirement Income Security Act. The Plan is an "individual account
plan" other than a "money purchase pension plan" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As such,
the Plan is subject to all of the provisions of Title I (Protection of Employee
Benefit Rights) and Title II (Amendments to the Internal Revenue Code Relating
to Retirement Plans) of ERISA, except the funding requirements contained in Part
3 of Title I of ERISA, which by their terms do not apply to an individual
account plan (other than a money purchase pension plan). The Plan is not subject
to Title IV (Plan Termination Insurance) of ERISA. Neither the funding
requirements contained in Title IV of ERISA nor the plan termination insurance
provisions contained in Title IV 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 OR HER
BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF EMPLOYMENT WITH
THE SAVINGS BANK. 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 THIS PLAN REGARDLESS OF WHETHER SUCH A
WITHDRAWAL OCCURS DURING HIS OR HER EMPLOYMENT WITH THE SAVINGS BANK OR AFTER
TERMINATION OF EMPLOYMENT.
Reference to Full Text of Plan. The following statements are summaries of
the material provisions of the Plan. They are not complete and are qualified in
their entirety by the full text of the Plan, which is filed as an exhibit to the
registration statement 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 Savings Bank is eligible to participate and will become
a Participant in the Plan following completion of 1,000 hours of service with
the Savings Bank within a consecutive 12 month period of employment and the
attainment of age 21. The Plan fiscal year is the calendar year ("Plan Year").
Directors who are not employees of the Savings Bank are not eligible to
participate in the Plan.
During 1996, approximately _____ employees participated in the Plan.
Contributions Under the Plan
Participant Contributions. Each Participant in the Plan is permitted to
elect to reduce such Participant's Compensation (as defined below) pursuant to a
salary reduction agreement and have that amount contributed to the Plan on such
Participant's behalf. Such amounts are credited to the Participant's deferral
contributions account. For purposes of the Plan, "Compensation"
S-4
<PAGE>
means a Participant's total amount of earnings reportable W-2 wages for federal
income tax withholding purposes plus a Participant's elective deferrals pursuant
to a salary reduction agreement under the Plan or any elective deferrals to a
Section 125 plan. Due to recent statutory changes, the annual Compensation of
each Participant taken into account under the Plan is limited to $160,000 (as
adjusted under applicable Code provisions). A Participant may elect to modify
the amount contributed to the Plan under the participant's salary reduction
agreement during the Plan Year. Deferral contributions are generally transferred
by the Savings Bank to the Trustee of the Plan on a periodic basis.
Employer Contributions. The Savings Bank currently matches 50% of a
Participant's monthly deferral contributions to a maximum of 3% of Compensation.
In addition, the Savings Bank may make discretionary contributions in proportion
to each Participant's Compensation.
Limitations on Contributions
Limitations on Annual Additions and Benefits. Pursuant to the requirements
of the Code, the Plan provides that the amount of contributions allocated to
each Participant's 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 (as
adjusted periodically under applicable Code provisions). A Participant's
"Section 415 Compensation" is a Participant's Compensation, excluding any amount
contributed to the Plan under a salary reduction agreement or any employer
contribution to the Plan or to any other plan or deferred compensation or any
distributions from a plan of deferred compensation. In addition, annual
additions are limited to the extent necessary to prevent the limitations for the
combined plans of the Savings Bank 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, the excess must be reallocated to the remaining
Participants who are eligible for an allocation of Employer contributions for
the Plan Year.
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 $9,500 (as adjusted periodically
under applicable Code provisions). Contributions in excess of this limitation
("excess deferrals") will be included in the Participant's gross 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) and 401(m) of the Code limit the amount of deferred compensation
contributed to the Plan
S-5
<PAGE>
in any Plan Year on behalf of Highly Compensated Employees (defined below) 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 salary reduction contributions credited to the salary reduction
contribution account of such eligible employee by such employee's compensation
for the Plan Year) of the Highly Compensated Employees may not exceed the
greater of (a) 125% of the actual deferred percentage of all other eligible
employees, or (b) the lesser of (i) 200% of the actual deferred percentage of
all other eligible employees, or (ii) the actual deferral percentage of all
other eligible employees plus two percentage points. In addition, the actual
contribution 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 employer contributions credited to the Matching contributions account
of such eligible employee by each eligible employee's compensation for the Plan
Year) of the Highly Compensated Employees may not exceed the greater of (a) 125%
of the actual contribution percentage of all other eligible employees, or (b)
the lesser of (i) 200% of the actual contributions percentage of all other
eligible employees, or (ii) the actual contribution 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 stock of the Employer, or stock
possessing more than 5% of the total combines voting power of all stock of the
Employer) or, (2) during the preceding Plan Year, received Section 415
Compensation in excess of $80,000 (as adjusted periodically under applicable
Code provisions) and, if elected by the Savings Bank, was in the top paid group
of employees for such Plan Year.
In order to prevent 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 Savings Bank 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 relate. In addition, in order to avoid
disqualification of the Plan, any contributions by Highly Compensated Employees
that exceed the average contribution limitation in any Plan Year ("excess
aggregate contributions") together with any income allocable thereto, must be
distributed to such Highly Compensated Employees before the close of the
following Plan Year. However, the 10% excise tax will be imposed on the Savings
Bank with respect to any excess aggregate contributions, unless such amounts,
plus any income allocable thereto, are distributed within 2 1/2 months following
the close of the Plan Year in which they arose.
Top-Heavy Plan Requirements. If, for any Plan Year, the Plan is a
Top-Heavy Plan (as defined below), then (i) the Savings Bank may be required to
make certain minimum contributions to the Plan on behalf of non-key employees
(as defined below), and (ii) certain
S-6
<PAGE>
additional restrictions would apply with respect to the combination of annual
additions to the Plan and projected annual benefits under any defined plan
maintained by the Savings Bank.
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 all Participants who are key Employees exceeds 60% of the
aggregate balance of the Accounts of the Participants. "Key Employees" generally
include any employee, who at any time during the Plan Year or any other the four
preceding Plan Years, if (1) an officer of the Savings Bank having annual
compensation in excess of $60,000 who is in administrative or policy-making
capacity, (2) one of the ten employees having annual compensation in excess of
$30,000 and owing, directly or indirectly, the largest interest in the employer,
(3) a 5% owner of the employer (i.e., owns directly or indirectly more than 5%
of the stock of the employer, or stock possessing more than 5% of the total
combined voting power of all stock of the employer), or (4) a 1% of owner of the
employer having compensation in excess of $150,000.
Investment of Contributions
All amounts credited to Participant's Accounts under the Plan are held in
the Trust which is administered by the Trustee. The Trustee is appointed by the
Savings Bank's Board of Directors. The Plan provides that a Participant may
direct the Trustee to invest all or a portion of his or her Accounts in various
managed investment portfolios, as described below. A Participant may
periodically elect to change his or her investment directions with respect to
both past contributions and for more additions to the Participant's accounts
invested in these investment alternatives.
Under the Plan, the Accounts of 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.
Investment Fund C - A passively managed, diversified portfolio of stock with
the objective of replicating the performance of the S &
P MidCap Index, managed by Mellon Bank, N.A. An
investment return generally consistent with that of
S-7
<PAGE>
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 United States government or agencies
or instrumentalities thereof, selected by Mellon Bank,
N.A., as Trustee.
Investment Fund E - A portfolio of high quality 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 Brothers Aggregate Bond index.
A Participant may also invest all or a portion of his or her Accounts in
the portfolios described above and in Fund F, described below:
Investment Fund F - The Employer Stock Fund which invests in common stock of
the Holding Company.
A Participant may elect, to have both past and future contributions and
additions to the Participant's Account invested either in the Employer Stock
Fund or in any of the other managed portfolios listed above. Any amounts
credited to a Participant's Accounts for which investment directions are not
given will be invested in Investment Fund D.
The net gain (or loss) in the Accounts from investments (including interest
payments, dividends, realized and unrealized gains and losses on securities, and
expenses paid from the Trust) are determined monthly on a quarterly basis. For
purposes of such allocation, all assets of the Trust are valued at their fair
market value.
The Employer Stock Fund
The Employer Stock Fund consists of investments in Common Stock. In
connection with the Conversion Offerings, pursuant to the attached Investment
Form, Participants will be able to change their investments at a time other than
the normal election intervals. Any cash dividends paid on Common Stock held in
the Employer Stock Fund will be credited to a cash dividend subaccount for each
Participant investing in the Employer Stock Fund. To the extent practicable, all
amounts held in the Employer Stock Fund (except the amounts credited to cash
dividend subaccounts) will be used to purchase shares of Common Stock. It is
expected that all purchases will be made at prevailing market prices. Pending
investment in Common Stock, assets held in the Employer Stock Fund will be
placed in bank deposits and other short-term investments.
When Common Stock is purchased or sold, the cost or net proceeds are
charged or credited to the Accounts of Participants affected by the purchase or
sale. A Participant's Account
S-8
<PAGE>
will be adjusted to reflect changes in the value of shares of Common Stock
resulting from stock dividends, stock splits and similar changes.
To the extent dividends are not paid on Common Stock 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 Stock subsequent to its
purchase.
Investments in the Employer Stock Fund may involve certain risk factors
associated with investments in Common Stock of the Holding Company. For a
discussion of these risk factors, see "RISK FACTORS" on pages 1 through 7 in the
Prospectus.
Benefits Under the Plan
Vesting. A Participant, has at all times a fully vested, nonforfeitable
interest in all of his or her deferred contributions and the earnings thereon
under the Plan. A Participant is 100% vested in his or her matching
contributions account and employer discretionary contributions after the
completion of six years of service under the Plan's vesting schedule (20% per
year beginning with the completion of two years of service).
Withdrawals and Distributions from the Plan
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL RESTRICTIONS
ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR HIS OR HER
BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59 1/2
UNLESS A PARTICIPANT RETIRES AS PERMITTED UNDER THE PLAN REGARDLESS OF WHETHER
SUCH A WITHDRAWAL OCCURS DURING HIS OR HER EMPLOYMENT WITH THE SAVINGS BANK.
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 Stock of the Holding Company credited to the
Participant's Account. A Participant whose total vested account balance equals
or exceeds $3,500 at the time of termination, may elect, in lieu of a lump sum
payments, to be paid in annual installments over a period not exceeding the life
expectancy of the Participant or the joint life expectancies of the Participant
and his or her designated beneficiary. Benefits payments ordinarily shall be
made not later than 60 days following the end of the Plan Year in which occurs
later of the Participant's: (i) termination of employment; (ii) attainment of
age 65; or (iii) tenth anniversary of commencement of participation in the Plan;
but in no event later than April 1 following the calendar year in which the
Participant attains age 70 1/2 (if the Participant is retired). 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 rules
may apply to the distribution of
S-9
<PAGE>
Common Stock 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 for retirement, disability or termination of employment, and
who has a surviving spouse, shall have his or her benefits paid to the surviving
spouse in a lump sum, or if the payment of his or her benefits had commenced
before his or her death, in accordance with the distribution method in effect at
his or her 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, payments 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 Stock, or if the payment of his or her benefit had
commenced before his or her death, in accordance with the distribution method if
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, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to
benefits payable under the Plan shall be void.
Administration of the Plan
Trustee. The Trustee with respect to Plan assets, other than the Employer
Stock Fund, is currently Mellon Bank, N.A. Mellon Bank also serves as custodian
of the Employer Stock Fund assets. Members of the Board of Directors of the
Savings Bank serve as trustees with respect to the Employer Stock Fund. Except
as otherwise indicated by the context, references in this Prospectus Supplement
to the Trustee refer to Mellon Bank.
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 and income therefrom. The Trustee has
the authority to invest and reinvest the Trust 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 Participants will direct the
Trustee as to voting and tendering of all Common Stock held in the Employer
Stock Fund.
S-10
<PAGE>
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 Savings Bank.
The Trustee must render at least annual reports to the Savings Bank 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
semiannually 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
The Savings Bank currently serves as the Plan Administrator. The Plan
Administrator is responsible for the administration of the Plan, interpretation
of the provisions of the Plan, prescribing procedures for filing applications
for benefits, preparation and distribution of information explaining the Plan,
maintenance of plan records, books of account and all other data necessary for
the proper administration of the Plan, and preparation and filing of all returns
and reports relating to the Plan which are required to be filed with the U.S.
Department of Labor and the IRS, and for all disclosures required to be made to
Participants, beneficiaries and others under Sections 104 and 105 of ERISA.
Amendment and Termination
The Savings Bank may terminate the Plan at any time. If the Plan is
terminated in whole or in part, then regardless of other provisions in the Plan,
each employee who ceases to be a Participant shall have a fully vested interest
in his or her Account. The Savings Bank reserves the right to make, from time to
time, any amendment or amendments to the Plan which do not cause any part of the
Trust to be used for, or diverted to, any purpose other than the exclusive
benefit of 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 then terminated) receive a
benefit immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had then
terminated).
S-11
<PAGE>
Federal Income Tax Consequences
The following is only a brief summary of certain federal income tax aspects
of the Plan which are of general application under the Code and is not intended
to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan. The
summary is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may
not be the same as under the federal income tax laws.
PARTICIPANTS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO ANY
DISTRIBUTION FROM THE PLAN AND TRANSACTIONS INVOLVING THE PLAN.
The Plan has received a determination from the IRS 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: (1) the sponsoring employer is allowed an immediate tax deduction
for the amount contributed to the Plan of 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. The Savings Bank expects to timely
adopt any amendments to the Plan that may be necessary to maintain the qualified
status of the Plan under the Code. Following such an amendment, the Plan will be
submitted to the IRS for a determination that the Plan, as amended, continues to
qualify under Sections 401(a) and 501(a) of the Code and that it continues to
satisfy the requirements for a qualified cash or deferred arrangement under
Section 401(k) of the Code.
Assuming that the Plan is administered in accordance with the requirements
of the Code, participation in the Plan under existing federal income tax laws
will have the following effects:
(a) Amounts contributed to a Participant's 401(k) account and the
investment earnings are actually distributed or withdrawn from the Plan.
Special tax treatment may apply to the taxable portion of any distribution
that includes Common Stock or qualified as a "Lump Sum Distribution" (as
described below).
(b) Income earned on assets held by the Trust will not be taxable to
the Trust.
Lump Sum Distribution. A distribution from the Plan to a Participant or the
beneficiary of a Participant will qualify as a "Lump Sum Distribution" 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
S-12
<PAGE>
to the credits of the Participant under the Plan and all other profit sharing
plans, if any, maintained by the Savings Bank. The portion of any Lump Sum
Distribution that is required to be included in the Participant's or
beneficiary's taxable income for federal income tax purposes ("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 Savings Bank which is included in such
distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
Distribution ("ordinary income portion") will be taxable generally as ordinary
income for federal income tax purposes. However, for distributions occurring
prior to January 1, 2000, 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 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. The special five-year averaging rule has been
repealed for distributions occurring after December 31, 1999. 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 (if available)
or the prior law ten-year averaging rule. Such individuals also may elect to
have that portion of the Lump Sum Distribution attributable to the Participant's
pre-1974 participation in the Plan taxed at a flat 20% rate as gain from the
sale of a capital asset.
Common Stock Included in Lump Sum Distribution. If a Lump Sum Distribution
includes Common Stock, the distribution generally will be taxed in the manner
described above, except that the total taxable amount will be reduced by the
amount of any net unrealized appreciation with respect to such Common Stock,
i.e., the excess of the value of such Common Stock at the time of the
distribution over its cost to the Plan. The tax basis of such Common Stock to
the Participant or beneficiary for purposes of computing gain or loss on its
subsequent sale will be the value of the Common Stock at the time of
distribution less the amount of net unrealized appreciation. Any gain on a
subsequent sale or other taxable disposition of such Common Stock, to the extent
of the amount of net unrealized appreciation at the time of distribution, will
be considered long-term capital gain regardless of the holding period of such
Common Stock. Any gain on a subsequent sale or other taxable disposition of the
Common Stock in excess of the amount of net unrealized appreciation at the time
of distribution will be considered either short- term capital gain or long-term
capital gain depending upon the length of the holding period of the Common
Stock. The recipient of a distribution may elect to include the amount of any
net unrealized appreciation in the total taxable amount of such distribution to
the extent allowed by the regulations by the IRS.
S-13
<PAGE>
Distributions: Rollovers and Direct Transfers to Another Qualified Plan or
to an IRA. Pursuant to a change in the law, effective January 1, 1993, virtually
all distributions from the Plan may be rolled over to another qualified Plan or
to an individual retirement account ("IRA") without regard to whether the
distribution is a Lump Sum Distribution or Partial Distribution. Effective
January 1, 1993, Participants have the right to elect to have the Trustee
transfer all or any portion of an "eligible rollover distribution" directly to
another plan qualified under Section 401(a) of the Code or to an IRA. If the
Participant does not elect to have an "eligible rollover distribution"
transferred directly to another qualified plan of to an IRA, the distribution
will be subject to a mandatory federal withholding tax equal to 20% of the
taxable distribution. An "eligible rollover distribution" means any amount
distributed from the Plan except: (1) a distribution that is (a) one of a series
of substantially equal periodic payments made (not less frequently than
annually) over the Participant's life of 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 or her
beneficiary, (iv) made to the Participant after separation from service on
account of early retirement under the Plan after attainment of age 55, (v) made
to pay medical expenses to the extent deductible for federal income tax
purposes, (vi) pursuant to a qualified domestic relations order, or (vii) made
to effect the distribution of excess contributions or excess deferrals.
THE FOREGOING IS ONLY A BRIEF SUMMARY OF CERTAIN FEDERAL INCOME TAX ASPECTS
OF THE PLAN WHICH ARE OF GENERAL APPLICATION UNDER THE CODE AND IS NOT INTENDED
TO BE A COMPLETE OR DEFINITIVE DESCRIPTION OF THE FEDERAL INCOME TAX
CONSEQUENCES OF PARTICIPATING IN OR RECEIVING DISTRIBUTIONS FROM THE PLAN.
ACCORDINGLY, EACH PARTICIPANT IS URGED TO CONSULT A TAX ADVISOR CONCERNING THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN AND RECEIVING
DISTRIBUTIONS FROM THE PLAN.
S-14
<PAGE>
Restrictions on Resale
Any person receiving shares of the Common Stock under the Plan who is an
"affiliate" of the Savings Bank or the Holding Company as the term "affiliate"
is used in Rules 144 and 405 under the Securities Act of 1933, as amended
("Securities Act") (e.g., directors, officers and substantial shareholders of
the Savings Bank) may reoffer or resell such shares only pursuant to a
registration statement filed under the Securities Act (the Holding Company and
the Savings Bank having no obligation to file such registration statement) or,
assuming the availability thereof, pursuant to Rule 144 or some other exemption
from the registration requirements of the Securities Act. Any person who may be
an "affiliate" of the Savings Bank or the Holding Company may wish to consult
with counsel before transferring any Common Stock owned by him or her. In
addition, Participants are advised to consult with counsel as to the
applicability of the reporting and short-swing profit liability rules of Section
16 of the Exchange Act which may affect the purchase and sale of the Common
Stock where acquired or sold under the Plan or otherwise.
LEGAL OPINIONS
The validity of the issuance of the Common Stock will be passed upon by
Breyer & Aguggia, Washington, D.C., which firm is acting as special counsel for
the Holding Company in connection with the Savings Bank's Conversion and
Reorganization from the mutual holding company of organization to a wholly-owned
subsidiary by the Holding Company.
S-15
<PAGE>
Investment Form
(Employer Stock Fund)
RIVERVIEW SAVINGS BANK, FSB
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
Name of Participant:_________________________
Social Security Number:______________________
1. Instructions. In connection with the proposed reorganization of
Riverview Savings Bank, FSB ("Savings Bank") from the mutual holding form of
organization to a wholly-owned subsidiary of a savings and loan holding company
("Conversion and Reorganization"), participants in the Riverview Savings Bank,
FSB Employees' Savings and Profit Sharing Plan ("Plan") may elect to direct the
investment of up to ___% of their ___________, 1997 account balances into the
Employer Stock Fund ("Employer Stock Fund"). Amounts transferred at the
direction of Participants into the Employer Stock Fund will be used to purchase
shares of the common stock of Riverview Bancorp, Inc. ("Common Stock"), the
proposed holding company for the Savings Bank. A Participant's eligibility to
purchase shares of Common Stock is subject to the Participant's general
eligibility to purchase shares of Common Stock in the Conversion Offerings and
the maximum and minimum limitations set forth in the Plan of Conversion. See the
Prospectus for additional information.
You may use this form to direct a transfer of funds credited to your
account to the Employer Stock Fund, to purchase Common Stock in the Conversion
Offerings. To direct such a transfer to the Employer Stock Fund, you should
complete this form and return it to ___________ at the Savings Bank, no later
than the close of business on _______, 1997. The Savings Bank will keep a copy
of this form and return a copy to you. (If you need assistance in completing
this form, please contact ___________.
2. Transfer Direction. I hereby direct the Plan Administrator to transfer
$__________ (in increments of $10) from my Plan account to the Employer Stock
Fund to be applied to the purchase of Common Stock in the Conversion Offerings.
Please transfer this amount from the following investments in the amounts
indicated:
3. Effectiveness of Direction. I understand that this Investment Form shall
be subject to all of the terms and conditions of the Plan and the terms and
conditions of the Conversion and Reorganization. I acknowledge that I have
received a copy of the Prospectus and the Prospectus Supplement.
- -------------------------------- ------------------------------
Signature Date
* * * * *
4. Acknowledgement of Receipt. This Investment Form was received by the
Plan Administrator and will become effective on the date noted below.
- -------------------------------- ------------------------------
Plan Administrator Date
S-16
<PAGE>
PROSPECTUS
RIVERVIEW BANCORP, INC.
(PROPOSED HOLDING COMPANY FOR RIVERVIEW SAVINGS BANK, FSB)
UP TO 4,736,571 SHARES OF COMMON STOCK
$10.00 PURCHASE PRICE PER SHARE
Riverview Bancorp, Inc. ("Holding Company"), a Washington corporation,
is offering up to 4,736,571 shares (which may be increased to 5,447,056 shares
under circumstances described in footnote 4 of the table below) of its common
stock, par value $.01 per share ("Common Stock"), in connection with (i) the
Exchange Offering, described below, to effect the reorganization of Riverview
Savings Bank, FSB ("Savings Bank") as a wholly-owned subsidiary of the Holding
Company and (ii) the Conversion Offerings, described below, to effect the
conversion of Riverview, M.H.C. ("MHC") from a mutual holding company to a stock
holding company. The Holding Company, Savings Bank and MHC are collectively
referred to herein as the "Primary Parties." The transactions contemplated by
the Exchange Offering and the Conversion Offerings, which are collectively
referred to herein as the "Conversion and Reorganization," are undertaken
pursuant to a Plan of Conversion and Agreement and Plan of Reorganization ("Plan
of Conversion") adopted by the Boards of Directors of the Primary Parties.
THE EXCHANGE OFFERING. Pursuant to the Plan of Conversion, each share
of common stock, par value $.01 per share, of the Savings Bank ("Savings Bank
Common Stock") held by the MHC (1,407,891 shares, or 58.21% of the outstanding
shares, as of the date of this Prospectus) will be canceled and each share of
Savings Bank Common Stock held by the Savings Bank's public stockholders
("Public Savings Bank Shares" and "Public Stockholders," respectively)
(1,010,610 shares, or 41.79% of the outstanding shares, as of the date of this
Prospectus) will be exchanged for shares of Common Stock ("Exchange Shares")
pursuant to a ratio ("Exchange Ratio") that will result in the Public
Stockholders' aggregate ownership of approximately 41.73% of the outstanding
shares of Common Stock before any (i) payment of cash in lieu of issuing
fractional Exchange Shares and (ii) Conversion Shares (as defined below)
purchased by the Public Stockholders and by the Savings Bank's employee stock
ownership plan ("ESOP") in the Conversion Offerings, described below, or
thereafter. As discussed under "Independent Valuation" below, the final Exchange
Ratio will be based on the Public Stockholders' ownership interest and not on
the market value of the Public Savings Bank Shares.
FOR INFORMATION ON HOW TO SUBSCRIBE FOR
SHARES OF COMMON STOCK, CALL THE STOCK
INFORMATION CENTER AT (360) ____-_____.
FORA DISCUSSION OF CERTAIN RISKS THAT SHOULD
BE CONSIDERED BY EACH PROSPECTIVE INVESTOR,
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS AND WILL NOT BE
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE SAVINGS
ASSOCIATION INSURANCE FUND ("SAIF") OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), THE OFFICE OF THRIFT SUPERVISION ("OTS"), THE FDIC
OR ANY OTHER FEDERAL AGENCY OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC,
THE OTS, THE FDIC OR ANY OTHER AGENCY OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
(COVER CONTINUED ON FOLLOWING PAGE)
CHARLES WEBB & COMPANY, PACIFIC CREST SECURITIES, INC.
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
The date of this Prospectus is August___, 1997.
<PAGE>
<TABLE>
<CAPTION>
Estimated Underwriting
Purchase Commissions and Estimated Net
Price(1) Other Fees and Expenses(2) Proceeds(3)
<S> <C> <C> <C>
Minimum Price Per Share.................................. $10.00 $0.38 $9.62
- --------------------------------------------------------------------------------------------------------------------------
Midpoint Price Per Share................................. $10.00 $0.35 $9.65
- --------------------------------------------------------------------------------------------------------------------------
Maximum Price Per Share.................................. $10.00 $0.32 $9.68
- --------------------------------------------------------------------------------------------------------------------------
Maximum Price Per Share, as adjusted(4).................. $10.00 $0.30 $9.70
- --------------------------------------------------------------------------------------------------------------------------
Minimum Total(5)......................................... $20,400,000 $780,000 $19,620,000
- --------------------------------------------------------------------------------------------------------------------------
Midpoint Total(6)........................................ $24,000,000 $830,000 $23,170,000
- --------------------------------------------------------------------------------------------------------------------------
Maximum Total(7)......................................... $27,600,000 $880,000 $26,720,000
- --------------------------------------------------------------------------------------------------------------------------
Maximum Total, as adjusted(4)(8)......................... $31,740,000 $937,000 $30,803,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Determined in accordance with an independent appraisal prepared by RP
Financial, LC., Arlington, Virginia ("RP Financial"). See "Independent
Valuation" on the cover page of this Prospectus and "THE CONVERSION AND
REORGANIZATION -- Stock Pricing, Exchange Ratio and Number of Shares to
be Issued."
(2) Includes estimated expenses to the Holding Company and the Savings Bank
arising from the Conversion and Reorganization, including fees to be
paid to Charles Webb & Company, a Division of Keefe, Bruyette & Woods,
Inc. ("Webb") in connection with the Conversion Offerings. Such amounts
exclude any fees to be paid to Pacific Crest Securities, Inc. ("Pacific
Crest") as compensation for its management of the Syndicated Community
Offering (as defined below), if any. Webb's fees amount to $274,000,
$324,000, $373,000 and $431,000 at the minimum, midpoint, maximum and
15% above the Estimated Valuation Range, respectively, which may be
deemed to be underwriting fees. Webb and Pacific Crest may be deemed to
be underwriters. Expenses, other than fees to be paid to Webb, are
estimated to total approximately $506,000 at each of the minimum,
midpoint, maximum and 15% above the Estimated Valuation Range. Actual
expenses may be more or less than estimated amounts. The Holding
Company and the Savings Bank have agreed to indemnify Webb against
certain liabilities, including liabilities that might arise under the
Securities Act of 1933, as amended ("Securities Act"). See "USE OF
PROCEEDS" and "THE CONVERSION AND REORGANIZATION -- Plan of
Distribution for the Subscription, Direct Community and Syndicated
Community Offerings."
(3) Actual net proceeds can vary substantially from the estimated amounts
depending upon actual expenses and the relative number of shares sold
in the Conversion Offerings. See "USE OF PROCEEDS" and "PRO FORMA
DATA."
(4) Gives effect to an increase in the number of shares that could be sold
in the Conversion Offerings resulting from an increase in the pro forma
market value of the MHC and the Savings Bank, as converted, up to 15%
above the maximum of the Estimated Valuation Range, without the
resolicitation of subscribers or any right of cancellation. The ESOP
shall have a first priority right to subscribe for such additional
shares up to an aggregate of 8% of the Common Stock issued in the
Conversion. The issuance of such additional shares will be conditioned
on a determination by RP Financial that such issuance is compatible
with its determination of the estimated pro forma market value of the
Holding Company and the Savings Bank, as converted. See "THE CONVERSION
AND REORGANIZATION -- Stock Pricing, Exchange Ratio and Number of
Shares to be Issued."
(5) Assumes the issuance of 2,040,000 Conversion Shares at $10.00 per
share.
(6) Assumes the issuance of 2,400,000 Conversion Shares at $10.00 per
share.
(7) Assumes the issuance of 2,760,000 Conversion Shares at $10.00 per
share.
(8) Assumes the issuance of 3,174,000 Conversion Shares at $10.00 per
share.
THE CONVERSION OFFERINGS. Pursuant to the Plan of Conversion,
nontransferable rights to subscribe ("Subscription Rights") for up to 2,760,000
shares (which may be increased to 3,174,000 shares under circumstances described
in footnote 4 of the table appearing on the cover page of this Prospectus) of
Common Stock ("Conversion Shares") have been granted, in order of priority, to
(i) depositors with $50.00 or more on deposit at the Savings Bank as of December
31, 1995 ("Eligible Account Holders"), (ii) the ESOP, a tax-qualified employee
benefit plan, (iii) depositors with $50.00 or more on deposit at the Savings
Bank as of June 30, 1997 ("Supplemental Eligible
<PAGE>
Account Holders"), and (iv) depositors of the Savings Bank (other than Eligible
Account Holders and Supplemental Eligible Account Holders) as of July 31, 1997
("Voting Record Date"), and borrowers of the Savings Bank with loans outstanding
as of October 22, 1993 which continue to be outstanding as of the Voting Record
Date ("Other Members"), subject to the priorities and purchase limitations set
forth in the Plan of Conversion ("Subscription Offering"). SUBSCRIPTION RIGHTS
ARE NONTRANSFERABLE. PERSONS SELLING OR OTHERWISE TRANSFERRING THEIR RIGHTS TO
SUBSCRIBE FOR COMMON STOCK IN THE SUBSCRIPTION OFFERING OR SUBSCRIBING FOR
COMMON STOCK ON BEHALF OF ANOTHER PERSON WILL BE SUBJECT TO FORFEITURE OF SUCH
RIGHTS AND POSSIBLE FURTHER SANCTIONS AND PENALTIES IMPOSED BY THE OTS OR OTHER
AGENCY OF THE U.S. GOVERNMENT. Concurrently, but subject to the prior rights of
Subscription Rights holders, the Holding Company is offering the Conversion
Shares for sale to members of the general public through a direct community
offering ("Direct Community Offering") with preference given first to Public
Stockholders (who are not Eligible Account Holders, Supplemental Eligible
Account Holders or Other Members) and then to natural persons and trusts of
natural persons who are permanent residents of Clark, Cowlitz, Klickitat and
Skamania Counties of Washington ("Local Community"). It is anticipated that any
Conversion Shares not subscribed for in the Subscription Offering or purchased
in the Direct Community Offering will be offered to eligible members of the
general public on a best efforts basis by a selling group of broker-dealers
managed by Pacific Crest in a syndicated community offering ("Syndicated
Community Offering"). The Subscription Offering, Direct Community Offering and
the Syndicated Community Offering are referred to collectively as the
"Conversion Offerings." The Primary Parties reserve the right, in their absolute
discretion, to accept or reject, in whole or in part, any or all orders in the
Direct Community Offering or Syndicated Community Offering either at the time of
receipt of an order or as soon as practicable following the termination of the
Conversion Offerings. If an order is rejected in part, the purchaser does not
have the right to cancel the remainder of the order.
THE SUBSCRIPTION OFFERING WILL EXPIRE AT ____, PACIFIC TIME, ON
________, 1997 ("EXPIRATION DATE"), UNLESS EXTENDED BY THE PRIMARY PARTIES FOR
UP TO ___ DAYS TO __________, 1997. SUCH EXTENSION MAY BE GRANTED WITHOUT
ADDITIONAL NOTICE TO SUBSCRIBERS. The Direct Community Offering is also expected
to terminate at ______, Pacific Time, on _______, 1997 or at a date thereafter,
however, in no event later than ________, 1997. The Holding Company must receive
at an office of the Savings Bank by the Expiration Date the accompanying
original Stock Order Form and a fully executed Certification Form (collectively,
the "Stock Order Form") (facsimile copies and photocopies will not be accepted),
along with full payment (or appropriate instructions authorizing a withdrawal
from a deposit account at the Savings Bank) of $10.00 per share ("Purchase
Price") for all Conversion Shares subscribed for or ordered. Payment by wire
transfer will not be accepted. Funds so received will be placed in segregated
accounts created for this purpose at the Savings Bank, and interest will be paid
at the Savings Bank's passbook rate from the date payment is received until the
Conversion and Reorganization is consummated or terminated. Payments authorized
by withdrawals from deposit accounts will continue to earn interest at their
contractual rate until the Conversion and Reorganization is consummated or
terminated, although such funds will be unavailable for withdrawal until the
Conversion and Reorganization is consummated or terminated. ORDERS SUBMITTED ARE
IRREVOCABLE UNTIL THE CONSUMMATION OR TERMINATION OF THE CONVERSION AND
REORGANIZATION. If the Conversion and Reorganization is not consummated within
45 days after the last day of the Subscription and Direct Community Offering
(which date will be no later than ________, 1997) and the OTS consents to an
extension of time to consummate the Conversion and Reorganization, subscribers
will be notified in writing of the time period within which the subscriber must
notify the Primary Parties of his or her intention to increase, decrease or
rescind his or her subscription. If an affirmative response to any such
resolicitation is not received by the Primary Parties from subscribers, such
orders will be rescinded and all funds will be returned promptly with interest.
If such period is not extended or, in any event, if the Conversion and
Reorganization is not consummated by ________, 1997, all subscription funds will
be promptly returned, together with accrued interest, and all withdrawal
authorizations terminated. Such extensions may not go beyond ________ __, 1999.
The Primary Parties have engaged Webb as their financial advisor and to
assist the Holding Company in the sale of the Conversion Shares in the
Conversion Offerings. Webb and Pacific Crest are registered broker-dealers and
members of the National Association of Securities Dealers, Inc. ("NASD").
Neither Webb nor Pacific Crest nor any other registered broker-dealer is
obligated to take or purchase any Conversion Shares in the Conversion Offerings.
See "THE CONVERSION AND REORGANIZATION -- Plan of Distribution for the
Subscription, Direct Community and Syndicated Community Offerings."
<PAGE>
INDEPENDENT VALUATION. OTS regulations require that the offering of
Conversion Shares in the Conversion Offerings be based on an independent
valuation of the pro forma market value of the Savings Bank and the MHC, as
converted. OTS policy requires that the independent valuation be multiplied by
58.27%, which represents the MHC's percentage ownership interest in the Savings
Bank. Accordingly, RP Financial's independent appraisal as of June 6, 1997
states that the aggregate pro forma market value of the Savings Bank and the
MHC, as converted, ranged from $20.4 million to $27.6 million, with a midpoint
of $24.0 million ("Estimated Valuation Range").
The Primary Parties' Boards of Directors determined that the Conversion
Shares would be sold at $10.00 per share ("Purchase Price"), resulting in a
range of 2,040,000 to 2,760,000 shares of Conversion Shares, with a midpoint of
2,400,000 Conversion Shares. Upon consummation of the Conversion and
Reorganization, the Conversion Shares and the Exchange Shares will represent
approximately 58.27% and 41.73%, respectively, of the total outstanding shares
of Common Stock. Based upon the Estimated Valuation Range, the Exchange Ratio is
expected to range from 1.4488 to 1.9601, resulting in a range of 1,460,943
Exchange Shares to 1,976,571 Exchange Shares to be issued in the Exchange
Offering. The 4,736,571 shares of Common Stock offered hereby include up to
2,760,000 Conversion Shares (subject to adjustment up to 3,147,000 shares as
described herein) and up to 1,976,571 Exchange Shares (subject to adjustment up
to 2,273,056 shares as described herein). The Estimated Valuation Range may be
increased or decreased to reflect changes in market and economic conditions
prior to completion of the Conversion and Reorganization, and under certain
circumstances specified herein subscribers will be resolicited and given the
right to modify or cancel their orders. See "The CONVERSION AND REORGANIZATION
- -- Stock Pricing, Exchange Ratio and Number of Shares to be Issued."
PURCHASE LIMITATIONS ON CONVERSION SHARES. Except for the ESOP, which
is expected to subscribe for 8% of the shares of Conversion Shares issued in the
Conversion Offerings, the Plan of Conversion provides for the following purchase
limitations: (i) no person may purchase in either the Subscription Offering,
Direct Community Offering or Syndicated Community Offering more than 1% of the
Conversion Shares issued in the Conversion Offerings, (ii) no person, together
with associates of or persons acting in concert with such person, may purchase
in either the Subscription Offering, Direct Community Offering or Syndicated
Community Offering more than 2% of the Conversion Shares issued in the
Conversion Offerings, (iii) the maximum number of Conversion Shares which may be
subscribed for or purchased in all categories in the Conversion Offerings by any
person, when combined with any Exchange Shares received, shall not exceed 1.4%
of the Common Stock to be issued in the Conversion and Reorganization, and (iv)
the maximum number of shares of Conversion Shares which may be subscribed for or
purchased in all categories in the Conversion Offerings by any person, together
with any associate or any group of persons acting in concert, when combined with
any Exchange Shares received, shall not exceed 2% of the Common Stock to be
issued in the Conversion and Reorganization. The minimum order is 25 Conversion
Shares. See "THE CONVERSION AND REORGANIZATION -- The Subscription, Direct
Community and Syndicated Community Offerings," "-- Procedure for Purchasing
Conversion Shares in the Subscription and Direct Community Offerings and "--
Limitations on Purchase of Conversion Shares."
MARKET FOR THE COMMON STOCK. The Holding Company has received
conditional approval to list the Common Stock on the Nasdaq National Market
under the symbol "RVSB." Prior to the Conversion and Reorganization, the Public
Savings Bank Shares have been listed on the Nasdaq SmallCap Market under the
same trading symbol. There can be no assurance that an active and liquid trading
market for the Common Stock will develop or, if developed, will be maintained.
See "RISK FACTORS -- Absence of Prior Market for the Common Stock" and "MARKET
FOR COMMON STOCK."
<PAGE>
RIVERVIEW SAVINGS BANK, FSB
CAMAS, WASHINGTON
[Map of Washington with enlarged maps of Cowlitz, Clark, Skamania and Klickitat
Counties depicting main office and branch office locations for Riverview Savings
Bank, FSB, in the cities of Camas, Washougal, Stevenson, White Salmon, Battle
Ground, Goldendale, Vancouver and Longview, Washington.]
THE CONVERSION AND REORGANIZATION IS CONTINGENT UPON APPROVAL OF THE PLAN OF
CONVERSION BY AT LEAST A MAJORITY OF THE MHC'S ELIGIBLE VOTING MEMBERS, BY THE
HOLDERS OF TWO-THIRDS OF THE OUTSTANDING SHARES OF SAVINGS BANK COMMON STOCK AND
BY THE HOLDERS OF A MAJORITY OF THE PUBLIC SAVINGS BANK SHARES, THE SALE OF AT
LEAST 2,040,000 CONVERSION SHARES PURSUANT TO THE PLAN OF CONVERSION, AND THE
RECEIPT OF ALL APPLICABLE REGULATORY APPROVALS.
<PAGE>
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS AND WILL NOT BE
INSURED OR GUARANTEED BY THE FDIC, THE SAIF OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS SUMMARY
THE INFORMATION SET FORTH BELOW SHOULD BE READ IN CONJUNCTION WITH AND
IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND CONSOLIDATED
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) PRESENTED ELSEWHERE IN THIS
PROSPECTUS. THE PURCHASE OF COMMON STOCK IS SUBJECT TO CERTAIN RISKS. SEE "RISK
FACTORS."
RIVERVIEW BANCORP, INC.
The Holding Company was organized on June 23, 1997 under Washington law
at the direction of the Savings Bank to acquire the Savings Bank as a
wholly-owned subsidiary upon consummation of the Conversion and Reorganization.
The Holding Company has only engaged in organizational activities to date. The
Holding Company has received conditional OTS approval to become a savings and
loan holding company through the acquisition of 100% of the capital stock of the
Savings Bank. Immediately following the Conversion, the only significant assets
of the Holding Company will be the outstanding capital stock of the Savings
Bank, 50% of the net investable proceeds of the Conversion Offerings (see table
under "PRO FORMA DATA") as permitted by the OTS to be retained by it) and a note
receivable from the ESOP evidencing a loan to enable the ESOP to purchase 8% of
the Conversion Shares issued in the Conversion and Reorganization. Funds
retained by the Holding Company will be used for general business activities.
See "USE OF PROCEEDS." Upon consummation of the Conversion and Reorganization,
the Holding Company will be classified as a unitary savings and loan holding
company subject to OTS regulation. See "REGULATION -- Savings and Loan Holding
Company Regulations." The main office of the Holding Company is located at 700
N.E. Fourth Avenue, Camas, Washington 98607 and its telephone number is (360)
834-2231.
RIVERVIEW, M.H.C.
The MHC is the federally-chartered mutual holding company for the
Savings Bank. The MHC was formed in October 1993 as a result of the
reorganization of the Savings Bank into a federally chartered mutual holding
company ("MHC Reorganization"). The members of the MHC consist of depositors of
the Savings Bank and those current borrowers of the Savings Bank who had loans
outstanding as of the consummation date of the MHC Reorganization (October 22,
1993). Currently, the MHC's sole business activity is holding the 1,407,891
shares of Savings Bank Common Stock, which represents 58.21% of the outstanding
shares as of the date of this Prospectus. The MHC's main office is located at
700 N.E. Fourth Avenue, Camas, Washington 98067, and its telephone number is
(360) 834-2231. As part of the Conversion and Reorganization, the MHC will
convert to a federally-chartered interim stock savings bank and simultaneously
merge with and into the Savings Bank, with the Savings Bank as the surviving
entity.
RIVERVIEW SAVINGS BANK, FSB
The Savings Bank is a federally-chartered savings bank, founded in 1923
and headquartered in Camas, Washington. The Savings Bank's deposits are insured
by the FDIC up to applicable legal limits under the SAIF. The Savings Bank has
been a member of the Federal Home Loan Bank ("FHLB") system since 1937. The
Savings Bank is regulated by the OTS and the FDIC. At March 31, 1997, the
Savings Bank had total assets of $224.4 million, total deposit accounts of
$169.4 million, and total shareholders' equity of $25.0 million, on a
consolidated basis.
(i)
<PAGE>
On October 22, 1993, when the MHC Reorganization was consummated, the
Savings Bank completed its initial stock offering by issuing 1,725,000 shares of
Savings Bank Common Stock, of which 690,000 shares were purchased by the Public
Stockholders and 1,007,400 shares were issued to the MHC. Stock dividends issued
and stock options exercised subsequent to the initial public offering have
increased the total shares issued and outstanding to 2,418,501 as of the date of
this Prospectus, of which 1,010,610 shares are held by the Public Stockholders
and 1,407,891 shares are held by the MHC.
The Savings Bank is a community oriented financial institution offering
traditional financial services to the residents of its primary market area. The
Savings Bank considers Clark, Cowlitz, Klickitat and Skamania Counties of
Washington as its primary market area. The Savings Bank is engaged primarily in
the business of attracting deposits from the general public and using such funds
to originate fixed-rate mortgage loans and adjustable rate mortgage ("ARM")
loans secured by one- to- four family residential real estate located in its
primary market area. The Savings Bank is also an active originator of
residential construction loans and consumer loans. At March 31, 1997, one- to-
four family mortgage loans were $94.5 million, or 62.3% of total net loans
receivable and loans held for sale (collectively, "total net loans receivable"),
residential construction loans were $32.5 million, or 21.4% of total net loans
receivable, and consumer loans were $14.3 million, or 9.4% of total net loans
receivable. To a lesser extent, the Savings Bank originates land loans ($7.9
million or 5.2% of total net loans receivable at March 31, 1997) and commercial
real estate loans ($9.0 million or 5.9% of total net loans receivable at March
31, 1997). Substantially all of the Savings Bank's real estate loans are secured
by real estate located in its primary market area. Construction, consumer, land
and commercial real estate loans generally involve a greater risk of loss than
one- to- four family mortgage loans. See "RISK FACTORS -- Certain Lending
Risks."
In addition to originating one- to- four family loans for its
portfolio, the Savings Bank is an active mortgage broker for several third party
mortgage lenders. In recent periods, such mortgage brokerage activities have
reduced the volume of fixed-rate one- to- four family loans that are originated
and sold by the Savings Bank. See "-- Loan Originations, Sales and Purchases"
and "-- Mortgage Brokerage."
The Savings Bank also invests in short- to- intermediate term U.S.
Treasury securities and U.S. Government agency obligations, and mortgage-backed
securities issued by U.S. Government agencies. At March 31, 1997, the Savings
Bank's investment and mortgage-backed securities portfolio had a carrying value
of $53.7 million. See "BUSINESS OF THE SAVINGS BANK -- Investment Securities."
Deposits have been the primary source of funds for the Savings Bank's
investment and lending activities. The Savings Bank plans to continue to fund
its operations primarily with deposits, although advances from the FHLB-Seattle
have been used as a supplemental source of funds. The Savings Bank has also used
FHLB advances to purchase investment securities, with the goal of recognizing
income on the difference between the interest rate earned on the investment
securities and the interest rate paid on the FHLB advances. See "BUSINESS OF THE
SAVINGS BANK -- Deposits and Other Sources of Funds."
The Savings Bank conducts its operations from its main office and eight
branch offices located in Southwest Washington State. See "BUSINESS OF THE
SAVINGS BANK -- Properties." The Savings Bank's main office is located at 700
N.E. Fourth Avenue, Camas, Washington, and its telephone number is (360)
834-2231.
THE CONVERSION AND REORGANIZATION
PURPOSES OF THE CONVERSION AND REORGANIZATION. The Boards of Directors
of the Primary Parties believe that the Conversion and Reorganization is in the
best interests of the MHC and its members, the Savings Bank and its
stockholders, and the communities served by the MHC and the Savings Bank. In
their decision to pursue the Conversion and Reorganization, the Boards of
Directors considered the various regulatory uncertainties associated with the
mutual holding company structure, including the MHC's future ability to waive
any dividends from the Savings Bank and the uncertain future of the federal
thrift charter. See "RISK FACTORS -- Recent Legislation and the Future of the
Thrift Industry." In addition, the Boards of Directors considered the various
advantages of the stock
(ii)
<PAGE>
holding company form of organization, including: (i) the Holding Company's
ability to repurchase shares of its common stock without adverse tax
consequences, unlike the Savings Bank; (ii) the Holding Company's greater
flexibility under current law and regulations relative to the MHC to acquire
other financial institutions and diversify its operations; (iii) the larger
capital base of the Holding Company relative to the Savings Bank that will
result from the Conversion Offering; and (iv) the potential increased liquidity
in the Common Stock relative to the Public Savings Bank Shares because of the
larger number of shares of Common Stock to be outstanding upon consummation of
the Conversion and Reorganization. Currently, the Boards of Directors of the
Primary Parties have no specific plans, arrangements or understandings, written
or oral, regarding any stock repurchases, acquisitions or diversification of
operations. See "THE CONVERSION AND REORGANIZATION -- Purposes of Conversion and
Reorganization."
DESCRIPTION OF THE CONVERSION AND REORGANIZATION. The Conversion and
Reorganization are being undertaken pursuant to the Plan of Conversion that was
adopted by the Boards of Directors of the Savings Bank and the MHC on May 21,
1997 and subsequently amended on July 16 and July 25, 1997. Under the Plan of
Conversion, (i) the MHC will convert to an interim federal stock savings bank
("Interim A") and simultaneously merge with and into the Savings Bank, pursuant
to which the MHC will cease to exist and the outstanding shares of Savings Bank
Common Stock held by the MHC (1,407,891 shares or 58.21% of the outstanding
Savings Bank Common Stock as of the date of this Prospectus) will be canceled,
and (ii) an interim federal stock savings bank ("Interim B") will be formed as a
wholly-owned subsidiary of the Holding Company and will merge with and into the
Savings Bank, resulting in the Savings Bank becoming a wholly-owned subsidiary
of the Holding Company and the outstanding Public Savings Bank Shares (1,010,610
shares or 41.79% of the outstanding Savings Bank Common Stock as of the date of
this Prospectus) will be converted into the Exchange Shares pursuant to the
Exchange Ratio. The Exchange Ratio will result in the holders of the outstanding
Public Savings Bank Shares owning in the aggregate approximately the same
percentage of the Common Stock to be outstanding upon the completion of the
Conversion and Reorganization (i.e., the Conversion Shares and the Exchange
Shares) as the percentage of Savings Bank Common Stock owned by them in the
aggregate immediately before the consummation of the Conversion and
Reorganization, before giving effect to any (i) payment of cash in lieu of
issuing fractional Exchange Shares and (ii) shares of Conversion Shares
purchased by the Savings Bank's stockholders in the Conversion Offerings or the
ESOP thereafter.
The following diagram outlines the current organizational structure of
the Primary Parties' and their ownership interests:
--------------------- ---------------------
| MHC | | Public |
| | | Stockholders |
--------------------- ---------------------
| |
58.21%| |41.79%
| |
---------------------
| Savings Bank |
| |
---------------------
|
|100%
|
---------------------
| Holding Company |
| |
---------------------
|
|100%
|
---------------------
| Interim B |
| (in formation) |
---------------------
(iii)
<PAGE>
The following diagram reflects the post-Conversion and Reorganization
organizational structure of the Holding Company and the Savings Bank and their
ownership interests. The ownership interests presented assumes no fractional
Exchange Shares are issued, and does not give effect to purchases of any
Conversion Shares by the Public Stockholders or the exercise of outstanding
stock options.
--------------------- ---------------------
| Purchasers of | | Former Public |
| Conversion Shares | | Stockholders |
--------------------- ---------------------
| |
58.21%| |41.79%
| |
---------------------
| Holding Company |
| |
---------------------
|
|
|
---------------------
| Savings Bank |
| |
---------------------
REQUIRED APPROVALS. The OTS has approved the Plan of Conversion subject
to (i) the approval of the holders of at least a majority of the total number of
votes eligible to be cast by the members of the MHC as of the close of business
on the Voting Record Date (July 31, 1997) at a special meeting of members called
for the purpose of submitting the Plan of Conversion for approval ("Members'
Special Meeting"), (ii) the approval of the holders of at least two-thirds of
the outstanding shares of Savings Bank Common Stock (including those shares held
by the MHC) as of the close of business on the Voting Record Date at a meeting
of stockholders called for the purpose of considering the Plan ("Stockholders'
Meeting"), and (iii) the approval of the holders of at least a majority of the
Public Savings Bank Shares as of the close of business on the Voting Record Date
present in person or by proxy at the Stockholders' Meeting. The MHC intends to
vote its shares of Savings Bank Common Stock, which amount to 58.21% of the
outstanding shares, in favor of the Plan of Conversion at the Stockholders'
Meeting. In addition, as of March 31, 1997, directors and executive officers of
the Primary Parties as a group (10 persons) beneficially owned 264,768, or
10.64%, of the outstanding shares of Savings Bank Common Stock, which they
intend to vote in favor of the Plan of Conversion at the Stockholders' Meeting.
THE CONVERSION OFFERINGS
The Conversion Offerings, which consist of the Subscription Offering,
the Direct Community Offering and the Syndicated Community Offering (if any),
are being undertaken pursuant to the Plan of Conversion. The Holding Company is
offering up to 2,760,000 Conversion Shares in the Conversion Offerings.
Conversion Shares are first being offered in the Subscription Offering through
the exercise of Subscription Rights issued, in order of priority, to (i)
Eligible Account Holders; (ii) the ESOP; (iii) Supplemental Eligible Account
Holders; and (iv) Other Members. The Subscription Offering will expire at
________, Pacific Time, on _________ __, 1997, unless extended.
Subject to the prior rights of Subscription Rights holders, Conversion
Shares not subscribed for in the Subscription Offering are being offered in the
Direct Community Offering to members of the general public with preference given
first to Public Stockholders (who are not Eligible Account Holders, Supplemental
Eligible Account Holders or Other Members) and then to natural persons and
trusts of natural persons who are permanent residents of the Local Community. It
is anticipated that shares not subscribed for in the Subscription Offering and
Direct Community Offering may be offered to certain members of the general
public in the Syndicated Community Offering. The Primary Parties reserve the
absolute right to reject or accept any orders in the Direct Community Offering
or the Syndicated Community Offering (if any), in whole or in part, either at
the time of receipt of an order
(iv)
<PAGE>
or as soon as practicable following the Expiration Date. The closing with
respect to all shares sold in the Conversion Offerings will occur
simultaneously, and all Conversion Shares will be sold at a uniform price of
$10.00 per share.
The Primary Parties have retained Webb as their consultant and advisor
in connection with the Conversion Offerings and to assist in soliciting
subscriptions in the Conversion Offerings on a best efforts basis. See "The
CONVERSION AND REORGANIZATION -- The Subscription, Direct Community and
Syndicated Offerings."
BENEFITS OF THE CONVERSION AND REORGANIZATION TO MANAGEMENT
ESOP. In connection with the MHC Reorganization, the Savings Bank
adopted the ESOP, a tax-qualified employee benefit plan for officers and
employees, which acquired 55,200 shares of the Savings Bank Common Stock. Upon
consummation of the Conversion and Reorganization, the Savings Bank Common Stock
held by the ESOP will be converted into Exchange Shares based upon the Exchange
Ratio. In connection with the Conversion and Reorganization, the ESOP will
purchase 8% of the Conversion Shares (220,800 shares of Common Stock based on
the issuance of the maximum of the Estimated Valuation Range). The ESOP's
purchase will be funded with the proceeds of a loan from the Holding Company. In
the event the number of shares offered in the Conversion Offerings is increased
above the maximum of the Estimated Valuation Range, the ESOP shall have a
priority right to purchase any such shares exceeding the maximum of the
Estimated Valuation Range up to an aggregate of 8% of the Common Stock. In the
event that the ESOP's subscription is not filled in its entirety, the ESOP may
purchase additional shares in the open market or may purchase authorized but
unissued shares with cash contributed to it by the Savings Bank. See "MANAGEMENT
OF THE SAVINGS BANK -- Benefits -- Employee Stock Ownership Plan." As a result
of the ESOP's acquisition of Common Stock, the Holding Company will recognize
compensation expense in an amount equal to the fair market value of the ESOP
shares when such shares are committed to be released to participants' accounts.
See "RISK FACTORS -- Expenses Associated With ESOP and MRP" and "PRO FORMA
DATA."
MRP. The Holding Company expects to seek stockholder approval of the
Riverview Bancorp, Inc. 1997 Management Recognition Plan ("1997 MRP"). The 1997
MRP will reserve a number of shares equal to 4% of the number of shares issued
in the Conversion Offerings. Under current OTS regulations, the approval of a
majority vote of the Holding Company's outstanding shares of Common Stock is
required prior to the implementation of the 1997 MRP within one year of the
consummation of the Conversion and Reorganization. If stockholder approval of
the 1997 MRP is obtained, it is expected that awards of up to 110,400 shares of
Common Stock (based on the issuance of the maximum of the Estimated Valuation
Range) will be made to key employees and directors of the Holding Company and
the Savings Bank at no cost to the recipient. Although no specific award
determinations have been made at this time, the Holding Company and the Savings
Bank anticipate that if stockholder approval is obtained it would provide awards
to its directors, officers and employees to the extent permitted by applicable
regulations. Under current OTS regulations, if the 1997 MRP is implemented
within one year of the consummation of the Conversion and Reorganization, (i) no
officer or employee could receive an award covering in excess of 25%, (ii) no
nonemployee director could receive in excess of 5% and (iii) nonemployee
directors, as a group, could not receive in excess of 30% of the number of
shares reserved for issuance under the 1997 MRP. In addition, all awards would
be subject to vesting at a minimum rate of 20% per year. The size of individual
awards will be determined prior to submitting the 1997 MRP for stockholder
approval, and disclosure of anticipated awards will be included in the proxy
materials for such meeting. See "PRO FORMA DATA" and "MANAGEMENT OF THE SAVINGS
BANK -- Benefits -- Management Recognition Plan."
STOCK OPTION PLAN. The Holding Company expects to seek stockholder
approval of the Riverview Bancorp, Inc. 1997 Stock Option Plan ("1997 Stock
Option Plan"). The 1997 Stock Option Plan will reserve a number of shares equal
to 10% of the number of shares issued in the Conversion and Reorganization.
Under current OTS regulations, the approval of a majority vote of the Holding
Company's outstanding shares of Common Stock is required prior to the
implementation of the 1997 Stock Option Plan within one year of the consummation
of the Conversion and Reorganization. If stockholder approval of the 1997 Stock
Option Plan is obtained, it is expected that options to acquire up to 276,000
shares of Common Stock of the Holding Company will be awarded to key
(v)
<PAGE>
employees and directors of the Holding Company and the Savings Bank (based on
the issuance of the maximum of the Estimated Valuation Range). Such options will
be in addition to options outstanding under the Savings Bank's 1993 Stock Option
and Incentive Plan ("1993 Stock Option Plan") that was adopted in connection
with MHC Reorganization. Options outstanding under the 1993 Stock Option Plan
will be assumed by the Holding Company with appropriate adjustments made to the
exercise price and the number of shares of Common Stock underlying each option
to reflect the applicable Exchange Ratio. The exercise price of such options
will be 100% of the fair market value of the Common Stock on the date the option
is granted. Although no specific award determinations have been made at this
time, the Holding Company and the Savings Bank anticipate that if stockholder
approval is obtained it would provide awards to its directors, officers and
employees to the extent permitted by applicable regulations. Under current OTS
regulations, if the 1997 Stock Option Plan is implemented within one year of the
consummation of the Conversion and Reorganization, (i) no officer or employees
could receive an award of options covering in excess of 25%, (ii) no nonemployee
director could receive in excess of 5% and (iii) nonemployee directors, as a
group, could not receive in excess of 30% of the number of shares reserved for
issuance under the 1997 Stock Option Plan. In addition, all awards would be
subject to vesting at a minimum rate of 20% per year. The size of individual
awards will be determined prior to submitting the 1997 Stock Option Plan for
stockholder approval, and disclosure of anticipated awards will be included in
the proxy materials for such meeting. Options are valuable only to the extent
that they are exercisable and the market price for the underlying share of
Common Stock is in excess of the exercise price. An option effectively
eliminates the market risk of holding the underlying securities since no
consideration is paid for the option until it is exercised. Therefore, the
recipient may, within the limits of the term of the option, wait to exercise the
option until the market price exceeds the exercise price. See "MANAGEMENT OF THE
SAVINGS BANK -- Benefits -- 1997 Stock Option Plan."
EMPLOYMENT AND SEVERANCE AGREEMENTS. The MHC and the Savings Bank
currently maintain employment agreements with Mr. Patrick Sheaffer (President
and Chief Executive Officer of the Savings Bank and the Holding Company) and Ron
Wysaske (Executive Vice President and Chief Financial Officer of the Savings
Bank and the Holding Company) that were entered into in connection with the MHC
Reorganization. In connection with the Conversion and Reorganization, the
Holding Company and the Savings Bank will enter into three-year employment
agreements with Messrs. Sheaffer and Wysaske, which have substantially the same
terms as and will replace the existing agreements. The agreements will provide
certain benefits in the event of the officers' termination of employment
following a change in control of the Holding Company or the Savings Bank. In the
event of a change in control of the Holding Company or the Savings Bank, as
defined in the agreement, each executive officer will be entitled to a package
of cash and/or benefits with a maximum value equal to 2.99 times their average
annual compensation during the five-year period preceding the change in control.
Assuming a change of control occurred as of March 31, 1997, the aggregate value
of the severance benefits payable to Messrs. Sheaffer and Wysaske under the
agreements would have been approximately $883,000. See "MANAGEMENT OF
THE SAVINGS BANK -- Executive Compensation -- Employment Agreements."
The MHC and the Savings Bank also currently maintains severance
agreements with certain senior officers that were entered into in connection
with the MHC Reorganization. In connection with the Conversion and
Reorganization, the Holding Company and the Savings Bank will enter into new
severance agreements with these officers, which have substantially the same
terms as and will replace the existing agreements. The severance agreements
provide certain benefits in the event of the officers' termination following a
change in control of the Holding Company or the Savings Bank. In the event of a
change in control of the Holding Company or the Savings Bank, as defined in the
agreement, each senior officer will be entitled to a package of cash and/or
benefits with a maximum value equal to 2.99 times their average annual
compensation during the five-year period preceding the change in control.
Assuming a change of control occurred as of March 31, 1997, the aggregate value
of the severance benefits payable to these senior officers under the agreements
would have been approximately $552,000. See "MANAGEMENT OF THE SAVINGS
BANK -- Executive Compensation -- Severance Agreements."
EMPLOYEE SEVERANCE COMPENSATION PLAN. In connection with the Conversion
and Reorganization, the Board of Directors of the Savings Bank intends to adopt
an Employee Severance Compensation Plan ("Severance
(vi)
<PAGE>
Plan") to provide benefits to eligible employees in the event of a change in
control of the Holding Company or the Savings Bank. Officers who enter into
separate employment or severance agreements with the Holding Company and the
Savings Bank will not be eligible to participate in the Severance Plan. The
Severance Plan will provide that, in the event of a change in control of the
Holding Company or the Savings Bank, eligible employees who are terminated or
who terminate employment (but only upon the occurrence of events specified in
the plan) within 12 months of the effective date of a change in control will be
entitled to a payment based on years of service and/or position with the Savings
Bank, subject to certain limits. Assuming that a change in control had occurred
at March 31, 1997 and the termination of all eligible employees, the maximum
aggregate payment due under the Severance Plan would be approximately
$__________________. See "MANAGEMENT OF THE SAVINGS BANK -- Executive
Compensation -- Employee Severance Compensation Plan."
For information concerning the possible voting control of officers,
directors and employees following the Conversion and Reorganization, see "RISK
FACTORS -- Anti-takeover Considerations -- Voting Control by Insiders."
PROSPECTUS DELIVERY AND PROCEDURE FOR PURCHASING CONVERSION SHARES
To ensure that each prospective purchaser receives a Prospectus at
least 48 hours prior to the Expiration Date as required by Rule 15c2-8 under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), no Prospectus will
be mailed later than five days or hand delivered later than two days prior to
the Expiration Date. Execution of the Stock Order Form will confirm receipt or
delivery of a Prospectus as required by Rule 15c2-8. Stock Order Forms will be
distributed only with a Prospectus.
To ensure that Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members are properly identified as to their stock purchase
priorities, such parties must list all deposit accounts, or in the case of Other
Members who are only borrowers, loans held at the Savings Bank, on the Stock
Order Form giving all names on each deposit account and/or loan and the account
and/or loan numbers at the applicable eligibility date.
Full payment by check, cash (only if delivered in person at an office
of the Savings Bank), money order, bank draft or withdrawal authorization
(payment by wire transfer will not be accepted) must accompany an original Stock
Order Form (facsimile copies and photocopies will not be accepted) and a fully
executed separate Certification Form. ORDERS CANNOT AND WILL NOT BE ACCEPTED
WITHOUT EXECUTION OF THE CERTIFICATION APPEARING ON THE REVERSE SIDE OF THE
STOCK ORDER FORM. See "THE CONVERSION AND REORGANIZATION -- Procedure for
Purchasing Conversion Shares in the Subscription and Direct Community Offering."
PURCHASE LIMITATIONS
Except for the ESOP, which is expected to subscribe for 8% of the
Conversion Shares issued in the Conversion and Reorganization, the Plan of
Conversion provides for the following purchase limitations: (i) no person may
purchase in either the Subscription Offering, Direct Community Offering or
Syndicated Community Offering more than 1% of the Conversion Shares issued in
the Conversion Offerings, (ii) no person, together with associates of or persons
acting in concert with such person, may purchase in either the Subscription
Offering, Direct Community Offering or Syndicated Community Offering more than
2% of the Conversion Shares issued in the Conversion Offerings, (iii) the
maximum number of Conversion Shares which may be subscribed for or purchased in
all categories in the Conversion Offerings by any person, when combined with any
Exchange Shares received, shall not exceed 1.4% of the Common Stock to be issued
in the Conversion and Reorganization, and (iv) the maximum number of Conversion
Shares which may be subscribed for or purchased in all categories in the
Conversion Offerings by any person, together with any associate or any group of
persons acting in concert, when combined with any Exchange Shares received,
shall not exceed 2% of the Common Stock to be issued in the Conversion and
Reorganization. The minimum order is 25 Conversion Shares. For purposes of these
purchase limitations, Exchange Shares will be valued at $10.00 per share which
is the same price at which the Conversion Shares will be issued in the
Conversion Offerings. At any time during the
(vii)
<PAGE>
Conversion Offerings, and without furtherapproval by the MHC members or the
Public Stockholders, the Primary Parties, in their sole discretion, may increase
any of the purchase limitations by up to 5% of the Conversion Shares issued in
the Conversion and Reorganization. Under certain circumstances, subscribers may
be resolicited in the event of such an increase and given the opportunity to
increase, decrease or rescind their orders. If there is an oversubscription in
the Conversion Offerings, Conversion Shares will be allocated as set forth in
the Plan of Conversion. See "THE CONVERSION AND REORGANIZATION -- The
Subscription, Direct Community and Syndicated Community Offerings," "--
Procedure for Purchasing Conversion Shares in the Subscription and Direct
Community Offerings" and "-- Limitations on Purchases of Conversion Shares."
Because the purchase limitations set forth in the Plan of Conversion take into
account the Exchange Shares to be issued to the Public Stockholders for their
Public Savings Bank Shares, the ability of certain Public Stockholders to
purchase Conversion Shares in the Conversion Offerings may be limited.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION AND
REORGANIZATION
OTS regulations require the aggregate purchase price of the Conversion
Shares be consistent with the independent appraisal of the estimated pro forma
market value of the MHC and the Savings Bank, as converted, which was estimated
by RP Financial to range from $20.4 million to $27.6 million as of June 6, 1997,
or from 2,040,000 shares to 2,760,000 shares based on the Purchase Price.
Because the Public Stockholders will continue to hold the same aggregate
percentage ownership interest in the Holding Company as they held in the Savings
Bank before the Conversion and Reorganization, before giving effect to the
payment of cash in lieu of issuing fractional Exchange Shares and any Conversion
Shares purchased by the Public Stockholders in the Conversion Offerings or the
ESOP thereafter. The independent appraisal valuation was multiplied by 58.27%
(which represents the MHC's percentage interest in the Savings Bank to determine
the midpoint of the Estimated Valuation Range, which is $24.0 million, or
2,400,000 shares based on the Purchase Price). The full text of the independent
appraisal describes the procedures followed, the assumptions made, limitations
on the review undertaken and matters considered, which included but did not
depend on the trading market for the Savings Bank Common Stock (see "MARKET FOR
COMMON STOCK"). The appraisal will be updated or confirmed at the completion of
the Conversion Offerings. The maximum of the Estimated Valuation Range may be
increased by up to 15% and the number of Conversion Shares may be increased to
3,174,000 shares due to material changes in the financial condition or results
of operations of the Savings Bank or changes in market conditions or general
financial, economic or regulatory conditions. No resolicitation of subscribers
will be made and subscribers will not be permitted to modify or cancel their
subscriptions unless the gross proceeds from the sale of the Conversion Shares
are less than the minimum or more than 15% above the maximum of the current
Estimated Valuation Range. All Conversion Shares will be sold at the uniform
Purchase Price ($10.00 per share), which was established by the Boards of
Directors of the Primary Parties. Any increase or decrease in the number of
shares of Conversion Stock will result in a corresponding change in the number
of Exchange Shares, so that upon consummation of the Conversion and
Reorganization, the Conversion Shares and the Exchange Shares will represent
approximately 58.27% and 41.73%, respectively, of the total outstanding shares
of Common Stock. See "PRO FORMA DATA" and "THE CONVERSION AND REORGANIZATION --
Stock Pricing, Exchange Ratio and Number of Shares to be Issued." THE APPRAISAL
IS NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION OF ANY
KIND AS TO THE ADVISABILITY OF PURCHASING COMMON STOCK IN THE CONVERSION
OFFERINGS NOR CAN ASSURANCE BE GIVEN THAT PURCHASERS OF THE COMMON STOCK IN THE
CONVERSION OFFERINGS WILL BE ABLE TO SELL SUCH SHARES AFTER CONSUMMATION OF THE
CONVERSION AND REORGANIZATION AT A PRICE THAT IS EQUAL TO OR ABOVE THE PURCHASE
PRICE. Furthermore, the pro forma stockholders' equity is not intended to
represent the fair market value of the Common Stock and may be greater than
amounts that would be available for distribution to stockholders in the event of
liquidation. A complete copy of the appraisal is available in the manner set
forth under "ADDITIONAL INFORMATION."
(viii)
Based on the 1,010,610 Public Savings Bank Shares outstanding at the
date of this Prospectus, and assuming a minimum of 2,040,000 and a maximum of
2,760,000 Conversion Shares are issued in the Conversion Offerings, the Exchange
Ratio is expected to range from approximately 1.4488 Exchange Shares to 1.9601
Exchange Shares for each Public Savings Bank Share issued and outstanding
immediately prior to the consummation of the Conversion and Reorganization. The
Exchange Ratio will be affected if any stock options to purchase shares of
Savings Bank Common Stock are exercised after the date of this Prospectus and
before the consummation of the Conversion and Reorganization. If any stock
options are outstanding immediately before the consummation of the Conversion
and Reorganization, they will be converted into options to purchase shares of
Common Stock, with the number of shares subject to the option and the exercise
price per share to be adjusted based upon the Exchange Ratio so that the
aggregate exercise price remains unchanged. The duration of the options will
also be unchanged. As of the date of this Prospectus, there were outstanding
options to purchase 88,117 shares of Savings Bank Common Stock at a
weighted-average exercise price of $8.88 per share. The Savings Bank has no
plans to grant additional stock options before the consummation of the
Conversion and Reorganization.
<TABLE>
<CAPTION>
Shares
Conversion Shares to Exchange Stock to of Common
Be Issued(1) Be Issued(1) Stock to be Exchange
Amount Percent Amount Percent Outstanding(1) Ratio(1)
<S> <C> <C> <C> <C> <C> <C>
Minimum.............. 2,040,000 58.27% 1,460,943 41.73% 3,500,943 1.4488
Midpoint............. 2,400,000 58.27 1,718,757 41.73 4,118,757 1.7044
Maximum.............. 2,760,000 58.27 1,976,571 41.73 4,736,571 1.9601
15% above
Maximum............. 3,174,000 58.27 2,273,056 41.73 5,447,056 2.2541
</TABLE>
(1) Assumes that outstanding options to purchase 72,046 shares of Savings
Bank Common Stock at March 31, 1997 are not exercised before
consummation of the Conversion and Reorganization. However, assuming
exercise, the percentages represented by the Conversion Shares and the
Exchange Shares would be 56.58% and 43.42%, respectively, and the
Exchange Ratio would be 1.4069, 1.6552, 1.9035, and 2.1890, at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Valuation Range, respectively.
DIFFERENCES IN STOCKHOLDER RIGHTS
The Holding Company is a Washington corporation subject to the
provisions of the Washington Business Corporation Act, as amended ("WBCA"), and
the Savings Bank is a federally chartered savings bank subject to federal laws
and regulations. Upon consummation of the Conversion and Reorganization, the
Public Stockholders will become stockholders of the Holding Company and their
rights will be governed by the Holding Company's Articles of Incorporation and
Bylaws and Washington law, rather than the Savings Bank's Federal Stock Charter
and Bylaws, federal law and OTS regulations. The rights of stockholders of the
Savings Bank are materially different in certain respects from the rights of
stockholders of the Holding Company. See "COMPARISON OF STOCKHOLDERS' RIGHTS"
and "DESCRIPTION OF CAPITAL STOCK OF THE HOLDING COMPANY."
USE OF PROCEEDS
The net proceeds from the sale of the Conversion Shares are estimated
to range from $19.6 million to $26.7 million, or to $30.8 million if the
Estimated Valuation Range is increased by 15%, depending upon the number of
shares sold and the expenses of the Conversion and Reorganization. The Holding
Company has received conditional OTS approval to purchase all of the capital
stock of the Savings Bank to be issued in the Conversion and Reorganization in
exchange for 50% of the net proceeds of the Conversion Offerings from which it
will fund the ESOP and the 1997 MRP. This will result in the Holding Company
retaining approximately $9.8 million to $13.4 million of the net proceeds, or up
to $15.4 million if the Estimated Valuation Range is increased
(ix)
<PAGE>
by 15%, from which it will fund the ESOP and the 1997 MRP, and the Savings Bank
receiving an equal amount. See "PRO FORMA DATA."
Receipt of 50% of the net proceeds of the sale of the Common Stock will
increase the Savings Bank's capital and will support the expansion of the
Savings Bank's existing business activities. The Savings Bank will use the funds
contributed to it for general corporate purposes, including, initially, lending
and investment in short-term U.S. Government and agency obligations.
A portion of the net proceeds retained by the Holding Company will be
used for a loan by the Holding Company to the ESOP to enable it to refinance its
existing third party loan used to purchase shares of Savings Bank Common Stock
in the MHC Reorganization ($237,000 outstanding balance at March 31, 1997) and
to purchase 8% of the shares of Conversion Shares issued in the Conversion and
Reorganization. Such loan would fund the entire purchase price of the Conversion
Shares to be purchased by the ESOP in the Conversion Offerings ($2.2 million at
the maximum of the Estimated Valuation Range) and would be repaid principally
from the Savings Bank's contributions to the ESOP and from dividends payable on
the Common Stock held by the ESOP. The remaining proceeds retained by the
Holding Company initially will be invested primarily in short-term U.S.
Government and agency obligations. Such proceeds will be available for
additional contributions to the Savings Bank in the form of debt or equity, to
support future growth and diversification activities, as a source of dividends
to the stockholders of the Holding Company and for future repurchases of Common
Stock (including possible repurchases to fund the 1997 MRP), or to provide
shares to be issued upon exercise of stock options) to the extent permitted
under Washington law and OTS regulations. The Holding Company may consider
exploring opportunities to use such funds to expand operations through acquiring
or establishing additional branch offices and the acquisition of other financial
institutions. Currently, there are no specific plans, arrangements, agreements
or understandings, written or oral, regarding any such activities.
MARKET FOR COMMON STOCK
The Holding Company has never issued capital stock to the public and,
consequently, there is no existing market for the Common Stock. The Holding
Company has received conditional approval to have the Common Stock listed on the
Nasdaq National Market System under the symbol "RVSB" (the current symbol for
the Public Savings Bank Shares, which are listed on the Nasdaq SmallCap Market).
Keefe, Bruyette and Pacific Crest have agreed to act as a market makers for the
Holding Company's Common Stock following consummation of the Conversion and
Reorganization. No assurance can be given that an active and liquid trading
market for the Common Stock will develop or, if developed, will be maintained.
Further, no assurance can be given that purchasers will be able to sell their
shares at or above the Purchase Price after the Conversion and Reorganization.
See "RISK FACTORS -- Absence of Prior Market for the Common Stock" and "MARKET
FOR COMMON STOCK."
DIVIDEND POLICY
Following consummation of the Conversion and Reorganization, the
Holding Company's Board of Directors intends to declare cash dividends on the
Common Stock at an initial quarterly rate equal to $0.06 per share divided by
the final Exchange Ratio, commencing with the first full quarter following
consummation of the Conversion and Reorganization. Based upon the Estimated
Valuation Range, the Exchange Ratio is expected to be 1.4488, 1.7044, 1.9601 and
2.2541 at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Valuation Range, respectively, resulting in an initial quarterly
dividend rate of $0.0414, $0.0352, $0.03606 and $0.0266 per share, respectively,
following consummation of the Conversion and Reorganization. Declarations of
dividends by the Holding Company's Board of Directors will depend upon a number
of factors, including the amount of the net proceeds from the Conversion
Offerings retained by the Holding Company, investment opportunities available to
the Holding Company or the Savings Bank, capital requirements, regulatory
limitations, the Holding Company's and the Savings Bank's financial condition
and results of operations, tax considerations and general economic conditions.
Consequently, there can be no assurance that any dividends will be paid on the
Common Stock or that, if paid, such dividends will not be reduced or eliminated
in future periods. The Savings Bank intends to continue to pay regular
(x)
<PAGE>
quarterly dividends through either the date of consummation of the Conversion
and Reorganization (on a pro rata basis) or the end of the fiscal quarter during
which the Conversion and Reorganization is consummated. See "DIVIDEND POLICY."
OFFICERS' AND DIRECTORS' COMMON STOCK PURCHASES AND BENEFICIAL OWNERSHIP
At March 31, 1997, officers and directors of the Savings Bank (10
persons) beneficially owned 264,768 shares of Savings Bank Common Stock. See
"MANAGEMENT OF THE SAVINGS BANK -- Beneficial Ownership of Savings Bank Common
Stock by Directors and Executive Officers." In addition to an aggregate of
451,270 Exchange Shares to be received by officers and directors of the Savings
Bank in the Exchange Offering based on an Exchange Ratio of 1.7044, officers and
directors are expected to subscribe for an aggregate of approximately 10,200
Conversion Shares, or less than 1% of the shares based on both the minimum and
the maximum of the Estimated Valuation Range, respectively. See "CONVERSION
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS."
Furthermore, purchases by the ESOP, allocations under the 1997 MRP, and the
exercise of stock options issued under the Riverview Bancorp, Inc. 1997 Stock
Option Plan ("1997 Stock Option Plan"), will increase the number of shares
beneficially owned by directors, officers and employees. Assuming (i) the
Exchange Shares to be received and the Conversion Shares to be subscribed for by
officers and directors described above, (ii) implementation of the MRP and the
1997 Stock Option Plan and the exercise of remaining options under the 1993
Stock Option Plan, (iii) the open market purchase of shares on behalf of the
1997 MRP, (iv the purchase by the ESOP of 8% of the Conversion Shares sold in
the Conversion Offerings, and (v) the exercise of stock options equal to 10% of
the number of Conversion Shares issued in the Conversion and Reorganization,
directors, officers and employees of the Holding Company and the Savings Bank
would have voting control, on a fully diluted basis, of _____% and _____% of the
Common Stock, based on the issuance of the minimum and maximum of the Estimated
Valuation Range, respectively. See "RISK FACTORS -- Anti-takeover Considerations
- -- Voting Control by Insiders." The MRP and Stock Option Plan are subject to
approval by the stockholders of the Holding Company at a meeting to be held no
earlier than six months following consummation of the Conversion and
Reorganization.
RISK FACTORS
See "RISK FACTORS" beginning on page 1 for a discussion of certain
risks related to the Conversion and Reorganization that should be considered by
all prospective investors.
(xi)
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
THE FOLLOWING TABLES SET FORTH CERTAIN INFORMATION CONCERNING THE
CONSOLIDATED FINANCIAL POSITION AND RESULTS OF OPERATIONS OF THE SAVINGS BANK
AND ITS SUBSIDIARIES AT THE DATES AND FOR THE PERIODS INDICATED. THIS
INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION CONTAINED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
PRESENTED ELSEWHERE IN THIS PROSPECTUS.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands)
SELECTED FINANCIAL CONDITION DATA:
<S> <C> <C> <C> <C> <C>
Total assets.................................. $224,385 $209,506 $190,609 $131,511 $117,023
Loans receivable, net(1)...................... 151,774 128,169 103,772 90,860 83,554
Mortgage-backed certificates held
to maturity, at amortized cost............... 26,402 28,375 31,922 17,196 11,097
Mortgage-backed certificates available
for sale, at fair value...................... 2,990 2,004 -- -- --
Cash and interest-bearing deposits............ 6,951 5,585 6,499 7,363 7,772
Investment securities held to
maturity, at amortized cost.................. 22,212 31,356 38,049 12,294 10,167
Investment securities available for
sale, at fair value.......................... 3,899 3,932 -- -- --
Deposit accounts.............................. 169,416 158,159 145,449 106,478 105,953
Federal Home Loan Bank advances............... 27,180 26,050 23,000 5,000 --
Shareholders' equity (retained
earnings before 1994)(2)..................... 25,022 23,086 20,533 18,359 9,803
Year Ended March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands)
SELECTED OPERATING DATA:
Interest income............................... $17,476 $15,996 $13,232 $10,305 $10,230
Interest expense.............................. 8,923 8,416 5,927 3,840 4,625
------- ------- ------- ------- -------
Net interest income........................... 8,553 7,580 7,305 6,465 5,605
Provision for loan losses..................... 180 -- -- 200 187
------- --------- --------- ------- -------
Net interest income after provision
for loan losses.............................. 8,373 7,580 7,305 6,265 5,418
Gains from sale of loans,
securities and real estate owned............. 106 391 111 342 1,018
Noninterest income............................ 1,768 1,624 1,139 1,064 1,185
Noninterest expenses(3)....................... 7,204 5,607 4,889 3,936 3,890
------- ------- ------- ------- -------
Income before federal income tax
provision and extraordinary item
Provision for federal income taxes............ 1,035 1,375 1,220 1,335 1,350
----- ----- ----- ----- -----
Income before extraordinary items............. 2,008 2,613 2,446 2,380 2,381
Cumulative effect of accounting
changes...................................... -- -- -- 170 --
--------- --------- --------- ------- --------
Net income.................................... $ 2,008 $ 2,613 $ 2,446 $ 2,210 $ 2,381
======= ======= ======= ======= =======
(xii)
<PAGE>
Year Ended March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
PER SHARE DATA (3):
Net income per share:
Before cumulative effect of
accounting changes.................. $0.85 $1.11 $1.04 $1.02 N/A
Cumulative effect of accounting
change.............................. -- -- -- 0.07 N/A
------------- ------------ ------------- ----- ---
Net income............................ $ 0.85 $ 1.11 $ 1.04 $1.09 N/A
=========== =========== =========== ===== ===
Dividends per share (4)................ $ 0.21 $ 0.17 $ 0.42 -- N/A
Weighted average shares
outstanding........................... 2,374,077 2,362,450 2,348,306 2,236,285 --
At March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
SELECTED OTHER DATA:
Number of:
Real estate loans outstanding......... 3,260 2,939 2,894 2,722 2,723
Deposit accounts...................... 19,300 18,318 16,816 13,877 14,176
Full service offices.................. 9 9 9 6 6
At or For the Year Ended March 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
SELECTED FINANCIAL RATIOS:
PERFORMANCE RATIOS:
Return on average assets................ 0.92% 1.31% 1.41% 2.06% 2.05%
Return on average equity................ 8.38 12.02 12.59 18.39 27.58
Dividend payout ratio(4)(5)............. 10.56 6.62 16.80 N/A N/A
Interest rate spread.................... 3.72 3.62 4.11 5.11 4.89
Net interest margin..................... 4.19 4.05 4.49 5.25 5.12
Noninterest expense to
average assets(6)...................... 3.30 2.80 2.82 3.17 3.35
Efficiency ratio (non-
interest expense divided by
the sum of net interest
income and noninterest
income)(7)............................. 69.09 58.44 57.15 50.00 49.82
ASSET QUALITY RATIOS:
Average interest-earning assets
to interest-bearing liabilities........ 110.80 109.63 110.39 112.66 105.32
Allowance for loan losses to
total loans at end of period........... 0.50 0.47 0.58 0.62 0.55
(xiii)
<PAGE>
Net charge-offs (recoveries) to
average outstanding loans during
the period............................. 0.00 0.00 (0.01) 0.07 0.38
Ratio of nonperforming assets
to total assets........................ 0.10 0.26 0.13 0.38 1.41
CAPITAL RATIOS:
Average equity to average assets........ 10.98 10.87 11.20 11.18 7.44
Equity to assets at end of fiscal year.. 11.15 11.02 10.77 13.96 8.38
(1) Includes loans held for sale.
(2 The Savings Bank was not a public company until the consummation of the
MHC Reorganization on October 22, 1993.
(3) Includes $947,000 special SAIF assessment in the year ended March 31, 1997.
(4) All cash dividends paid by the Savings Bank have been waived by the MHC.
(5) Excludes cash dividends waived by the MHC.
(6) Noninterest expense to average assets was 2.87% at March 31, 1997 without special SAIF assessment.
(7) Efficiency ratio was 60.00% at March 31, 1997 without special SAIF assessment.
</TABLE>
(xiv)
<PAGE>
RISK FACTORS
BEFORE INVESTING IN SHARES OF THE COMMON STOCK OFFERED HEREBY,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS PRESENTED BELOW, IN
ADDITION TO MATTERS DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
CERTAIN LENDING RISKS
CONSTRUCTION LENDING RISKS. Prompted by the high demand for residential
housing units in its primary market area, the Savings Bank has been an active
originator of residential construction loans, including speculative loans to
approximately 50 local residential builders. Residential construction loans have
increased from $19.6 million at March 31, 1993 to $32.5 million at March 31,
1997. At March 31, 1997, speculative residential construction loans amounted to
$16.8 million, or 49.9% of the residential construction loan portfolio. Subject
to market conditions, the Savings Bank intends to continue to be an active
originator of residential construction loans.
Construction lending generally involves greater credit risk than one-
to- four family mortgage lending. Construction loans generally have higher loan
balances than one- to- four family mortgage loans. In addition, the potential
for cost overruns because of the inherent difficulties in estimating
construction costs and, therefore, collateral values and the difficulties and
costs associated with monitoring construction progress, among other things, are
major contributing factors to this greater credit risk. Speculative construction
loans have the added risk that there is not an identified buyer for the
completed home when the loan is originated, with the risk that the builder will
have to service the construction loan debt and finance the other carrying costs
of the completed home for an extended time period until a buyer is identified.
Furthermore, the demand for construction loans and the ability of construction
loan borrowers to service their debt depends highly on the state of the general
economy, including market interest rate levels, and the state of the economy of
the Savings Bank's primary market area. A material downturn in economic
conditions would be expected to have a material adverse effect on the credit
quality of the construction loan portfolio, and may require management to
reassess the adequacy of the Savings Bank's allowance for loan losses and to
establish additional provisions for loan losses, which would have a material
adverse effect on net income. See "BUSINESS OF THE SAVINGS BANK -- Lending
Activities -- Construction Lending" and "-- Allowance for Loan Losses."
CONSUMER LENDING RISKS. At March 31, 1997, the Savings Bank's consumer
loan portfolio amounted to $14.3 million, or 9.4% of total net loans receivable.
Consumer lending is also generally viewed to involve greater credit risk than
one- to- four family mortgage lending. Collateral such as automobiles, boats and
other personal property depreciate rapidly and are often an inadequate repayment
source if a borrower defaults. In addition, consumer loan repayments depend on
the borrower's continuing financial stability and are more likely to be
adversely affected by job loss, divorce, illness, personal bankruptcy and other
financial hardship. See "BUSINESS OF THE SAVINGS BANK -- Lending Activities --
Consumer Lending."
COMMERCIAL REAL ESTATE LENDING. At March 31, 1997, the Savings Bank's
commercial real estate loan portfolio amounted to $9.0 million, or 5.9% of total
net loans receivable. Commercial real estate lending generally involves greater
credit risk than one- to- four family mortgage lending. Because payments on
loans secured by commercial properties often depend upon the successful
operation and management of the properties, repayment of such loans may be
affected by adverse conditions in the real estate market or the economy, among
other things. See "BUSINESS OF THE SAVINGS BANK -- Lending Activities --
Commercial Real Estate Lending."
COMMERCIAL BUSINESS LENDING. At March 31, 1997, the Savings Bank's
commercial business loan portfolio amounted to $794,000, or 0.5% of total net
loans receivable. Subject to market conditions and other factors, the Savings
Bank intends to expand its commercial business lending activities within its
primary market area. Commercial business lending generally involves greater
credit risk than one- to- four family mortgage lending. Although commercial
business loans are often collateralized by equipment, inventory, accounts
receivable or other business assets, the liquidation value of these assets in
the event of a borrower default is often an insufficient source
1
<PAGE>
of repayment because accounts receivable may be uncollectible and inventories
and equipment may be obsolete or of limited use, among other things. See
"BUSINESS OF THE SAVINGS BANK -- Lending Activities -- Commercial Business
Lending."
CONCENTRATION OF CREDIT RISK. The Savings Bank has no significant
concentration of credit risk other than that a substantial portion of its loan
portfolio is secured by real estate, either as primary or secondary collateral,
located in its primary market area. This concentration of credit risk could have
a material adverse effect on the Savings Bank's financial condition and results
of operations to the extent there is a material deterioration in that area's
economy and real estate values. See "BUSINESS OF THE SAVINGS BANK -- Lending
Activities."
INTEREST RATE RISK
GENERAL. Like all financial institutions, the Savings Bank's financial
condition and results of operations are influenced significantly by general
economic conditions, the related monetary and fiscal policies of the federal
government and government regulations. Deposit flows and the cost of funds are
influenced by interest rates of competing investments and general market
interest rates. Lending activities are affected by the demand for mortgage
financing and for consumer and other types of loans, which in turn is affected
by the interest rates at which such financing may be offered and by other
factors affecting the supply of housing and the availability of funds. The
Savings Bank's profitability, like that of most financial institutions, depends
largely on its net interest income, which is the difference between the interest
income received from its interest-earning assets and the interest expense
incurred in connection with its interest-bearing liabilities. To better control
the impact of changes in interest rates, the Savings Bank has sought to improve
the match between asset and liability maturities or repricing periods and rates
by emphasizing the origination and purchase of ARM loans and shorter term
construction, commercial real estate, and consumer loans.
POTENTIAL ADVERSE IMPACT ON RESULTS OF OPERATIONS. The Savings Bank's
results of operations would be adversely affected by a material prolonged
increase in market interest rates. At March 31, 1997, assuming, for example, an
instantaneous 200 basis point increase in market interest rates, the Savings
Bank's net portfolio value ("NPV") (the present value of expected cash flows
from assets, liabilities and off-balance sheet contracts) would decrease by
approximately $5.6 million, or 17%. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Asset and Liability
Management."
POTENTIAL ADVERSE IMPACT ON FINANCIAL CONDITION. Changes in the level
of interest rates also affect the volume of loans originated or purchased by the
Savings Bank and, thus, the amount of loan and commitment fees, as well as the
market value of the Savings Bank's investment securities and other
interest-earning assets. Changes in interest rates also can affect the average
life of loans. Decreases in interest rates may result in increased prepayments
of loans, as borrowers refinance to reduce borrowing costs. Under these
circumstances, the Savings Bank is subject to reinvestment risk to the extent
that it is not able to reinvest such prepayments at rates which are comparable
to the rates on the maturing loans or securities. Moreover, volatility in
interest rates also can result in disintermediation, or the flow of funds away
from savings institutions into direct investments, such as U.S. Government and
corporate securities and other investment vehicles which, because of the absence
of federal insurance premiums and reserve requirements, generally pay higher
rates of return than savings institutions.
At March 31, 1997, out of total gross loans of $165.5 million in the
Savings Bank's portfolio, $78.2 million were ARM loans, substantially all of
which reprice every year. Furthermore, the Savings Bank's ARM loans contain
periodic and lifetime interest rate adjustment limits which, in a rising
interest rate environment, may prevent such loans from repricing to market
interest rates. While management anticipates that ARM loans will better offset
the adverse effects of an increase in interest rates as compared to fixed-rate
mortgages, the increased mortgage payments required of ARM borrowers in a rising
interest rate environment could potentially cause an increase in delinquencies
and defaults. The Savings Bank has not historically had an increase in such
delinquencies and defaults on ARM loans, but no assurance can be given that such
delinquencies or defaults would not occur in the future. The marketability of
the underlying property also may be adversely affected in a high interest rate
environment.
2
<PAGE>
Moreover, the Savings Bank's ability to originate or purchase ARM loans may be
affected by changes in the level of interest rates and by market acceptance of
the terms of such loans. In a relatively low interest rate environment, as
currently exists, borrowers generally tend to favor fixed-rate loans over ARM
loans to hedge against future increases in interest rates.
COMPETITION
The Savings Bank has faced, and will continue to face, strong
competition both in making loans and attracting deposits. The Savings Bank's
primary market has a high concentration of financial institutions, many of which
are branches of large California and Pacific Northwest bank holding companies
which have greater financial resources than the Savings Bank and all of which
compete with the Savings Bank in varying degrees. Competition for loans
principally comes from commercial banks, thrift institutions, credit unions and
mortgage banking companies. Historically, commercial banks, thrift institutions
and credit unions have been the Savings Bank's most direct competition for
deposits. The Savings Bank also competes with short-term money market mutual
funds and with other financial institutions, such as brokerage firms and
insurance companies, for deposits. In competing for loans, the Savings Bank may
be forced to offer lower loan interest rates periodically. Conversely, in
competing for deposits, the Savings Bank may be forced to offer higher deposit
interest rates periodically. Either case or both cases could adversely affect
net interest income. See "BUSINESS OF THE SAVINGS BANK -- Competition."
RETURN ON EQUITY AFTER CONVERSION AND REORGANIZATION
Return on equity (net income for a given period divided by average
equity during that period) is a ratio used by many investors to compare the
performance of a particular financial institution to its peers. The Savings
Bank's return on equity for the year ended March 31, 1997 was, and the Holding
Company's post-Conversion and Reorganization return on equity will be, less than
the average return on equity for publicly traded thrift institutions and their
holding companies. See "SELECTED CONSOLIDATED FINANCIAL INFORMATION" for
numerical information regarding the Savings Bank's historical return on equity
and "CAPITALIZATION" for a discussion of the Holding Company's estimated pro
forma consolidated capitalization as a result of the Conversion and
Reorganization. In order for the Holding Company to achieve a return on equity
comparable to the historical levels of the Savings Bank, the Holding Company
either would have to increase net income or reduce stockholders' equity, or
both, commensurate with the increase in equity resulting from the Conversion and
Reorganization. Reductions in equity could be achieved by, among other things,
the payment of regular or special cash dividends (although no assurances can be
given as to their payment or, if paid, their amount and frequency), the
repurchase of shares of Common Stock subject to applicable regulatory
restrictions, or the acquisition of branch offices, other financial institutions
or related businesses (neither the Holding Company nor the Savings Bank has any
present plans, arrangements, or understandings, written or oral, regarding any
repurchase or acquisitions). See "DIVIDEND POLICY" and "USE OF PROCEEDS."
Achievement of increased net income levels will depend on several important
factors outside management's control, such as general economic conditions,
including the level of market interest rates, competition and related factors,
among others. In addition, the expenses associated with the ESOP and the MRP
(see "-- New Expenses Associated with ESOP and MRP"), along with other
post-Conversion and Reorganization expenses are expected to contribute initially
to reduced earnings levels. Subject to market conditions, initially the Savings
Bank intends to deploy the net proceeds of the Conversion Offerings to support
its core lending activities to increase earnings per share and book value per
share, with the goal of achieving a return on equity comparable to the average
for publicly traded thrift institutions and their holding companies. This goal
will likely take a number of years to achieve and no assurances can be given
that this goal can be attained. Consequently, for the foreseeable future,
investors should not expect a return on equity which will meet or exceed the
average return on equity for publicly traded thrift institutions, many of which
are not newly converted institutions and have had time to deploy their
conversion capital.
3
<PAGE>
EXPENSES ASSOCIATED WITH ESOP AND MRP
The Savings Bank will recognize material employee compensation and
benefit expenses assuming the ESOP and the MRP are implemented. The actual
aggregate amount of these new expenses cannot be currently predicted because
applicable accounting practices require that they be based on the fair market
value of the shares of Common Stock when the expenses are recognized, which
would occur when shares are committed to be released in the case of the ESOP and
over the vesting period of awards made to recipients in the case of the MRP.
These expenses have been reflected in the pro forma financial information under
"PRO FORMA DATA" assuming the Purchase Price ($10.00 per share) as fair market
value. Actual expenses, however, will be based on the fair market value of the
Common Stock at the time of recognition, which may be higher or lower than the
Purchase Price. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Impact of Accounting Pronouncements and Regulatory
Policies -- Accounting for Employee Stock Ownership Plans," "-- Accounting for
Stock-Based Compensation," "MANAGEMENT OF THE SAVINGS BANK - - Benefits --
Employee Stock Ownership Plan" and "-- Benefits -- Management Recognition Plan."
ANTI-TAKEOVER CONSIDERATIONS
PROVISIONS IN THE HOLDING COMPANY'S GOVERNING INSTRUMENTS AND
WASHINGTON AND FEDERAL LAW. Certain provisions included in the Holding Company's
Articles of Incorporation and in the WBCA might discourage potential proxy
contests and other potential takeover attempts, particularly those that have not
been negotiated with the Board of Directors. As a result, these provisions may
preclude takeover attempts that certain stockholders may deem to be in their
best interest and may tend to perpetuate existing management. These provisions
include, among other things, a provision limiting voting rights of beneficial
owners of more than 10% of the Common Stock and supermajority voting
requirements for certain business combinations. In addition, the Articles of
Incorporation provides for the election of directors to staggered terms of three
years, eliminates cumulative voting for directors, and permits the removal of
directors without cause only upon the vote of holders of 80% of the outstanding
voting shares. Certain provisions of the Articles of Incorporation of the
Holding Company cannot be amended by stockholders unless an 80% stockholder vote
is obtained. The Articles of Incorporation also contains provisions regarding
the timing and content of stockholder proposals and nominations and limiting the
calling of special meetings. The existence of these anti-takeover provisions
could result in the Holding Company being less attractive to a potential
acquiror and in stockholders receiving less for their shares than otherwise
might be available in the event of a takeover attempt. Furthermore, federal
regulations prohibit for three years after consummation of the Conversion and
Reorganization the ownership of more than 10% of the Savings Bank or the Holding
Company without prior OTS approval. Federal law also requires OTS approval prior
to the acquisition of "control" (as defined in OTS regulations) of an insured
institution. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY."
VOTING CONTROL BY INSIDERS. In addition to an aggregate of 451,270
Exchange Shares to be received by directors and officers of the Savings Bank and
the Holding Company in the Exchange Offering based on an Exchange Ratio of
1.7044, directors and officers expect to subscribe for 10,200 Conversion Shares,
or less than 1% of the shares issued in the Conversion Offerings at both the
minimum and the maximum of the Estimated Valuation Range, respectively.
Directors and officers are also expected to control indirectly the voting of
approximately 8% of the shares of Common Stock issued in the Conversion and
Reorganization through the ESOP (assuming shares have been allocated under the
ESOP). Under the terms of the ESOP, the unallocated shares will be voted by the
ESOP trustees in the same proportion as the votes cast by participants with
respect to the allocated shares. Patrick Sheaffer, President and Chief Executive
Officer of the Holding Company and the Savings Bank, and Ron Wysaske, Treasurer
of the Holding Company and Executive Vice President of the Savings Bank, serve
as the ESOP trustees.
At a meeting of stockholders to be held no earlier than six months
following the consummation of the Conversion and Reorganization, the Holding
Company expects to seek approval of the 1997 MRP, which is a non- tax-qualified
restricted stock plan for the benefit of key employees and directors of the
Holding Company and the Savings Bank. The Holding Company expects to acquire
common stock of the Holding Company on behalf of the
4
<PAGE>
1997 MRP in an amount equal to 4% of the Common Stock issued in the Conversion
and Reorganization, or 81,600 and 110,400 shares at the minimum and the maximum
of the Estimated Valuation Range, respectively. These shares will be acquired
either through open market purchases through a trust established in conjunction
with the 1997 MRP or from authorized but unissued shares of Common Stock. A
committee of the Board of Directors of the Holding Company will administer the
1997 MRP, the members of which would also serve as trustees of the 1997 MRP
trust, if formed. Under the terms of the 1997 MRP, the 1997 MRP committee or the
MRP trustees, will have the power to vote unallocated and unvested shares. In
addition, the Holding Company intends to reserve for future issuance pursuant to
the Riverview Bancorp, Inc. 1997 Stock Option Plan ("1997 Stock Option Plan") a
number of authorized shares of Common Stock equal to 10% of the Conversion
Shares issued in the Conversion and Reorganization (204,000 and 276,000 shares
at the minimum and the maximum of the Estimated Valuation Range, respectively).
The Holding Company also intends to seek approval of the 1997 Stock Option Plan
at a meeting of stockholders to be held no earlier than six months following the
consummation of the Conversion and Reorganization.
Assuming (i) the receipt of Exchange Shares and the purchase of
Conversion Shares by the directors and officers described above, (ii) the
implementation of the 1997 MRP and the 1997 Stock Option Plan, (iii) the open
market purchase of shares on behalf of the 1997 MRP, (iv) the purchase by the
ESOP of 8% of the Conversion Shares sold in the Conversion Offerings, and (v)
the exercise of stock options equal to 10% of the number of shares of Conversion
Shares issued in the Conversion and Reorganization, directors, officers and
employees of the Holding Company and the Savings Bank would have voting control,
on a fully diluted basis, of _____% and _____% of the Common Stock, based on the
issuance of the minimum and maximum of the Estimated Valuation Range,
respectively. Management's potential voting control alone, as well as together
with additional stockholder support, might preclude or make more difficult
takeover attempts that certain stockholders may deem to be in their best
interest and might tend to perpetuate existing management.
PROVISIONS OF EMPLOYMENT AND SEVERANCE AGREEMENTS AND SEVERANCE PLAN.
The employment and severance agreements of Patrick Sheaffer, Chairman of the
Board, President and Chief Executive Officer of the Holding Company and the
Savings Bank, and Ron Wysaske, Treasurer and Chief Financial Officer of the
Holding Company and Executive Vice President and Chief Financial Officer of the
Savings Bank, and other senior officers of the Holding Company and the Savings
Bank provide for cash severance payments and/or the continuation of health, life
and disability benefits in the event of their termination of employment
following a change in control of the Holding Company or the Savings Bank.
Assuming a change of control occurred as of March 31, 1997, the aggregate value
of the severance benefits available to these executive officers under the
agreements would have been approximately $1.4 million. In addition, assuming
that a change in control had occurred at March 31, 1997 and the termination of
all eligible employees, the maximum aggregate payment due under the Savings
Bank's Severance Plan would be approximately $______. These agreements and plans
may have the effect of increasing the costs of acquiring the Holding Company,
thereby discouraging future attempts to take over the Holding Company or the
Savings Bank.
See "MANAGEMENT OF THE SAVINGS BANK -- Benefits," "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY" and "DESCRIPTION OF CAPITAL STOCK OF THE
HOLDING COMPANY."
POSSIBLE DILUTIVE EFFECT OF BENEFIT PROGRAMS
The 1997 MRP intends to acquire an amount of Common Stock of the
Holding Company equal to 4% of the Conversion Shares issued in the Conversion
and Reorganization. Such shares of Common Stock may be acquired by the Holding
Company in the open market or from authorized but unissued shares of Common
Stock of the Holding Company. If the 1997 MRP acquires authorized but unissued
shares of Common Stock from the Holding Company, the voting interests of
existing stockholders will be diluted and net income per share and stockholders'
equity per share will be decreased. See "PRO FORMA DATA" and "MANAGEMENT OF THE
SAVINGS BANK -- Benefits -- Management Recognition Plan." The 1997 MRP is
subject to approval by the Holding Company's stockholders.
5
<PAGE>
The 1997 Stock Option Plan will provide for options to acquire up to a
number of shares of Common Stock of the Holding Company equal to 10% of the
Conversion Shares issued in the Conversion and Reorganization. Such shares may
be authorized but unissued shares of Common Stock of the Holding Company and,
upon exercise of the options, will result in the dilution of the voting
interests of existing stockholders and may decrease net income per share and
stockholders' equity per share. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits
- -- 1997 Stock Option Plan." The 1997 Stock Option Plan is subject to approval by
the Holding Company's stockholders.
The Savings Bank maintains a 1993 Stock Option Plan ("1993 Stock Option
Plan") that was implemented in connection with the MHC Reorganization. As of the
date of this Prospectus, no shares of Savings Bank Common Stock remain reserved
for issuance under the 1993 Stock Option Plan and options for 88,117 shares have
been granted to optionees, which are exercisable but remain unexercised. Upon
consummation of the Conversion and Reorganization, the 1993 Stock Option Plan
will be assumed by the Holding Company and shares of Common Stock will be issued
in lieu of shares of Savings Bank Common Stock pursuant to the terms of the 1993
Stock Option Plan.
Assuming implementation of the 1997 MRP with authorized but unissued
shares acquired from the Holding Company, the implementation of the 1997 Stock
Option Plan, and the exercise of all outstanding stock options under the 1993
Stock Option Plan, the ownership interest of the shareholders of the Holding
Company would be diluted by 9.65%, 9.34%, 9.11% and 8.90% at the minimum,
midpoint, maximum, and maximum, as adjusted, of the Estimated Valuation Range,
respectively.
Pursuant to OTS requirements, the Plan of Conversion provides that the
limitations on the purchase of Conversion Shares in the Conversion Offerings
take into account the Exchange Shares issued to the Public Stockholders in
exchange for their Public Savings Bank Shares. As a result, the ability of
certain Public Stockholders to purchase Conversion Shares may be limited.
Consequently, such Public Stockholders may be prevented from purchasing
Conversion Shares so as to maintain their current ownership percentage in the
Savings Bank as a result of the Conversion and Reorganization. See "THE
CONVERSION AND REORGANIZATION -- Limitations on Purchases of Conversion Shares."
ABSENCE OF PRIOR MARKET FOR THE COMMON STOCK
The Holding Company has never issued capital stock and, consequently,
there is no existing market for the Common Stock. Prior to the Conversion and
Reorganization, the Public Savings Bank Shares have been listed on the Nasdaq
Smallcap Market under the symbol "RVSB." Although the Holding Company has
received conditional approval to list the Common Stock on the Nasdaq National
Market also under the symbol "RVSB," there can be no assurance that an active
and liquid trading market for the Common Stock will develop or, if developed,
will continue. Furthermore, there can be no assurance that purchasers will be
able to sell their shares at or above the Purchase Price.
See "MARKET FOR COMMON STOCK."
POSSIBLE INCREASE IN ESTIMATED PRICE RANGE AND NUMBER OF SHARES ISSUED
The Estimated Valuation Range may be increased up to 15% to reflect
material changes in the financial condition or results of operations of the
Savings Bank or changes in market conditions or general financial, economic or
regulatory conditions following the commencement of the Conversion Offerings. If
the Estimated Valuation Range is increased, it is expected that the Holding
Company would increase the Estimated Price Range so that up to 3,174,000
Conversion Shares at the Purchase Price would be issued for an aggregate price
of up to $31,740,000. This increase in the number of shares would decrease a
subscriber's pro forma net income per share and stockholders' equity per share,
increase the Holding Company's pro forma consolidated stockholders' equity and
net
6
<PAGE>
earnings, and increase the Purchase Price as a percentage of pro forma
stockholders' equity per share and net income per share. See "PRO FORMA DATA."
POSSIBLE ADVERSE INCOME TAX CONSEQUENCES OF THE DISTRIBUTION OF SUBSCRIPTION
RIGHTS
If the Subscription Rights granted to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members of the Savings Bank are
deemed to have an ascertainable value, receipt of such rights may be a taxable
event (either as capital gain or ordinary income) to those Eligible Account
Holders, Supplemental Eligible Account Holders or Other Members who receive
and/or exercise the Subscription Rights in an amount equal to such value.
Additionally, the Savings Bank could be required to recognize a gain for tax
purposes on such distribution. Whether Subscription Rights are considered to
have ascertainable value is an inherently factual determination. The Savings
Bank has been advised by RP Financial that such rights have no value; however,
RP Financial's conclusion is not binding on the Internal Revenue Service
("IRS"). See "THE CONVERSION AND REORGANIZATION -- Effects of Conversion and
Reorganization on Depositors and Borrowers of the Savings Bank -- Tax Effects."
RIVERVIEW BANCORP, INC.
The Holding Company was organized on June 23, 1997 under Washington law
at the direction of the Savings Bank to become the holding company for the
Savings Bank upon consummation of the Conversion and Reorganization. The Holding
Company has received conditional OTS approval to become a savings and loan
holding company through the acquisition of 100% of the capital stock of the
Savings Bank. Prior to the Conversion and Reorganization, the Holding Company
will not engage in any material operations. After the Conversion and
Reorganization, the Holding Company will be classified as a unitary savings and
loan holding company subject to regulation by the OTS, and its principal
business will be the ownership of the Savings Bank. Immediately following the
Conversion and Reorganization, the only significant assets of the Holding
Company will be the capital stock of the Savings Bank, 50% of the net investable
proceeds of the Conversion Offerings as permitted by the OTS to be retained by
it, and a note receivable from the ESOP evidencing a loan to enable the ESOP to
purchase 8% of the
7
<PAGE>
Common Stock issued in the Conversion and Reorganization. See "PRO FORMA DATA"
and "BUSINESS OF THE HOLDING COMPANY."
The holding company structure will permit the Holding Company to expand
the financial services currently offered through the Savings Bank. Management
believes that the holding company structure and retention of a portion of the
proceeds of the Conversion Offerings will, should it decide to do so, facilitate
the expansion and diversification of its operations. The holding company
structure will also enable the Holding Company to repurchase its stock without
adverse tax consequences, subject to applicable regulatory restrictions,
including waiting periods. There are no present plans, arrangements, agreements,
or understandings, written or oral, regarding any such activities or
repurchases. See "REGULATION -- Savings and Loan Holding Company Regulations."
RIVERVIEW SAVINGS BANK, FSB
The Savings Bank is a federally-chartered savings bank, founded in 1923
and headquartered in Camas, Washington. The Savings Bank's deposits are insured
by the FDIC up to applicable legal limits under the SAIF. The Savings Bank has
been a member of the FHLB system since 1937. The Savings Bank is regulated by
the OTS and the FDIC. At March 31, 1997, the Savings Bank had total assets of
$224.4 million, total deposit accounts of $169.4 million, and total
shareholders' equity of $25.0 million, on a consolidated basis.
The Savings Bank is a community oriented financial institution offering
traditional financial services to the residents of its primary market area. The
Savings Bank considers the Local Community as its primary market area. The
Savings Bank is engaged primarily in the business of attracting deposits from
the general public and using such funds to originate fixed-rate mortgage loans
and ARM loans secured by one- to- four family residential real estate located in
its primary market area. The Savings Bank is also an active originator of
residential construction loans and consumer loans. At March 31, 1997, one- to-
four family mortgage loans were $94.5 million, or 62.3% of total net loans
receivable, residential construction loans were $32.5 million, or 21.4% of total
net loans receivable, and consumer loans were $14.3 million, or 9.4% of total
net loans receivable. To a lesser extent, the Savings Bank originates land loans
($7.9 million, or 5.2%, of total net loans receivable at March 31, 1997) and
commercial real estate loans ($9.0 million or 5.9% of total net loans receivable
at March 31, 1997). Substantially all of the Savings Bank's real estate loans
are secured by real estate located in its primary market area. Construction,
consumer, land and commercial real estate loans generally involve a greater risk
of loss than one- to- four family mortgage loans.
See "RISK FACTORS -- Certain Lending Risks."
The Savings Bank also invests in short- to- intermediate term U.S.
Treasury securities and U.S. Government agency obligations, and mortgage-backed
securities issued by U.S. Government agencies. At March 31, 1997, the Savings
Bank's investment and mortgage-backed securities portfolio had a carrying value
of $53.7 million. See "BUSINESS OF THE SAVINGS BANK -- Investment Securities."
Deposits have been the primary source of funds for the Savings Bank's
investment and lending activities. The Savings Bank plans to continue to fund
its operations primarily with deposits, although advances from the FHLB-Seattle
have been used as a supplemental source of funds. The Savings Bank has also used
FHLB advances to purchase investment securities, with the goal of recognizing
income on the difference between the interest rate earned on the investment
securities and the interest rate paid on the FHLB advances. See "BUSINESS OF THE
SAVINGS BANK -- Deposits and Other Sources of Funds."
The Savings Bank conducts its operations from its main office and eight
branch offices located in Southwest Washington State. See "BUSINESS OF THE
SAVINGS BANK -- Properties."
8
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock offered hereby are
estimated to range from $19.6 million to $26.7 million, or up to $30.8 million
if the Estimated Valuation Range is increased by 15%. See "PRO FORMA DATA" for
the assumptions used to arrive at such amounts. The Holding Company has received
conditional OTS approval to purchase all of the capital stock of the Savings
Bank to be issued in the Conversion and Reorganization in exchange for 50% of
the net proceeds of the Conversion Offerings, from which it will fund the ESOP
and the 1997 MRP. This will result in the Holding Company retaining
approximately $9.8 million to $13.4 million of net proceeds, or up to $15.4
million if the Estimated Valuation Range is increased by 15%, from which it will
fund the ESOP and the 1997 MRP, and the Savings Bank receiving an equal amount.
See "PRO FORMA DATA."
Receipt of 50% of the net proceeds of the sale of the Common Stock will
increase the Savings Bank's capital and will support the expansion of the
Savings Bank's existing business activities. The Savings Bank will use the funds
contributed to it for general corporate purposes, including, initially, lending
and investment in short-term U.S. Government and agency obligations.
In connection with the Conversion and Reorganization and the ESOP, the
Holding Company intends to loan the ESOP the amount necessary to refinance the
ESOP's existing third party loan used to purchase shares of Savings Bank Common
Stock in the MHC Reorganization ($237,000 outstanding balance at March 31, 1997)
and to purchase 8% of the shares of Common Stock sold in the Conversion
Offerings. The Holding Company's loan to fund the ESOP's purchase of shares of
Common Stock in the Conversion Offerings may range from $1.6 million to $2.2
million based on the sale of 2,040,000 shares to the ESOP (at the minimum of the
Estimated Valuation Range) and 2,760,000 shares (at the maximum of the Estimated
Valuation Range), respectively, at $10.00 per share. If 15% above the maximum of
the Estimated Valuation Range, or 3,174,000 Conversion Shares, are sold in the
Conversion and Reorganization, the Holding Company's loan to the ESOP would be
approximately $2.5 million (based on the sale of 253,920 shares to the ESOP). It
is anticipated that the ESOP loan will have a ten-year term with interest
payable at the prime rate as published in THE WALL STREET JOURNAL on the closing
date of the Conversion and Reorganization. The loan will be repaid principally
from the Savings Bank's contributions to the ESOP and from any dividends paid on
shares of Common Stock held by the ESOP.
The remaining net proceeds retained by the Holding Company initially
will be invested primarily in short-term U.S. Government and agency obligations
or in a deposit account either at the Savings Bank or another financial
institution. Such proceeds will be available for additional contributions to the
Savings Bank in the form of debt or equity, to support future diversification or
acquisition activities, as a source of dividends to the stockholders of the
Holding Company and for future repurchases of Common Stock to the extent
permitted under Washington law and federal regulations. The Holding Company will
consider exploring opportunities to use such funds to expand operations through
acquiring or establishing additional branch offices or acquiring other financial
institutions. Currently, there are no specific plans, arrangements, agreements
or understandings, written or oral, regarding any diversification activities.
Following consummation of the Conversion and Reorganization, the
Holding Company's Board of Directors will have the authority to adopt plans for
repurchases of Common Stock, subject to statutory and regulatory requirements.
Since the Holding Company has not yet issued stock, there currently is
insufficient information upon which an intention to repurchase stock could be
based. The facts and circumstances upon which the Board of Directors may
determine to repurchase stock in the future would include but are not limited
to: (i) market and economic factors such as the price at which the stock is
trading in the market, the volume of trading, the attractiveness of other
investment alternatives in terms of the rate of return and risk involved in the
investment, the ability to increase the book value and/or earnings per share of
the remaining outstanding shares, and the ability to improve the Holding
Company's return on equity; (ii) the avoidance of dilution to stockholders by
not having to issue additional shares to cover the exercise of stock options or
to fund employee stock benefit plans; and (iii) any
9
<PAGE>
other circumstances in which repurchases would be in the best interests of the
Holding Company and its stockholders. Any stock repurchases will be subject to a
determination by the Board of Directors that both the Holding Company and the
Savings Bank will be capitalized in excess of all applicable regulatory
requirements after any such repurchases and that capital will be adequate,
taking into account, among other things, the level of nonperforming and
classified assets, the Holding Company's and the Savings Bank's current and
projected results of operations and asset/liability structure, the economic
environment and tax and other regulatory considerations. For a discussion of the
regulatory limitations applicable to stock repurchases and current OTS policy
with respect thereto, see "THE CONVERSION AND REORGANIZATION -- Restrictions on
Repurchase of Stock."
DIVIDEND POLICY
GENERAL
Upon completion of the Conversion and Reorganization, the Holding
Company's Board of Directors will have the authority to declare dividends on the
Common Stock, subject to statutory and regulatory requirements. Following
consummation of the Conversion and Reorganization, the Board of Directors of the
Holding Company intends to pay cash dividends on the Common Stock at an initial
quarterly rate equal to $0.06 per share divided by the Exchange Ratio. Based
upon the Estimated Valuation Range, the Exchange Ratio is expected to be 1.4488,
1.7044, 1.9601 and 2.2541 at the minimum, midpoint, maximum and 15% above the
maximum of the Valuation Price Range, respectively, resulting in an initial
quarterly dividend rate of $0.0414, $0.0352, $0.03606 and $0.0266 per share,
respectively, commencing with the first full quarter following consummation of
the Conversion and Reorganization. In addition, the Board of Directors may
determine to pay periodic special cash dividends in addition to, or in lieu of,
regular cash dividends. Declarations or payments of any dividends (regular and
special) will be subject to determination by the Board of Directors, which will
take into account the amount of the net proceeds retained by the Holding
Company, the Holding Company's financial condition, results of operations, tax
considerations, capital requirements, industry standards, economic conditions
and other factors, including the regulatory restrictions that affect the payment
of dividends by the Savings Bank to the Holding Company discussed below. No
assurances can be given that any dividends, either regular or special, will be
declared or, if declared, what the amount of dividends will be or whether such
dividends, if commenced, will continue.
CURRENT RESTRICTIONS
Dividends from the Holding Company will depend, in part, upon receipt
of dividends from the Association because the Holding Company initially will
have no source of income other than dividends from the Association and earnings
from the investment of the net proceeds from the Conversion retained by the
Holding Company. OTS regulations require the Association to give the OTS 30 days
advance notice of any proposed declaration of dividends to the Holding Company,
and the OTS has the authority under its supervisory powers to prohibit the
payment of dividends to the Holding Company. In addition, the Association may
not declare or pay a cash dividend on its capital stock if the effect thereof
would be to reduce the regulatory capital of the Association below the amount
required for the liquidation account to be established pursuant to the
Association's Plan of Conversion. See "REGULATION -- Dividend Limitations," "THE
CONVERSION -- Effects of Conversion to Stock Form on Depositors and Borrowers of
the Association -- Liquidation Account" and Note 13 of Notes to the Consolidated
Financial Statements included elsewhere herein.
10
<PAGE>
Under Washington law, the Holding Company is prohibited from paying a
dividend if, as a result of its payment, the Holding Company would be unable to
pay its debts as they become due in the normal course of business, or if the
Holding Company's total liabilities would exceed its total assets.
The Holding Company has committed to the OTS not to make any tax-free
distributions to stockholders in the form of a return of capital, or take any
action in contemplation of any such distributions, within the first year
following the consummation of the Conversion and Reorganization.
TAX CONSIDERATIONS
In addition to the foregoing, retained earnings of the Savings Bank
appropriated to bad debt reserves and deducted for federal income tax purposes
cannot be used by the Savings Bank to pay cash dividends to the Holding Company
without the payment of federal income taxes by the Savings Bank at the then
current income tax rate on the amount deemed distributed, which would include
the amount of any federal income taxes attributable to the distribution. See
"TAXATION -- Federal Taxation" and Note 10 of Notes to the Consolidated
Financial Statements included elsewhere herein. The Holding Company does not
contemplate any distribution by the Savings Bank that would result in a
recapture of the Savings Bank's bad debt reserve or create the above-mentioned
federal tax liabilities.
11
<PAGE>
MARKET FOR COMMON STOCK
The Holding Company has never issued capital stock and, consequently,
there is no existing market for the Common Stock. Although the Holding Company
has received conditional approval to list the Common Stock on the Nasdaq
National Market System under the symbol "RVSB," there can be no assurance that
the Holding Company will meet Nasdaq National Market System listing
requirements, which include a minimum market capitalization, at least three
market makers and a minimum number of record holders. Keefe, Bruyette and
Pacific Crest have agreed to make a market for the Common Stock following
consummation of the Conversion and Reorganization and will assist the Holding
Company in seeking to encourage at least one additional market maker to
establish and maintain a market in the Common Stock. Making a market involves
maintaining bid and ask quotations and being able, as principal, to effect
transactions in reasonable quantities at those quoted prices, subject to various
securities laws and other regulatory requirements. Based on the level of market
making in the Public Savings Bank Shares, the Holding Company anticipates that
prior to the completion of the Conversion and Reorganization it will be able to
obtain the commitment from at least one additional broker-dealer to act as
market maker for the Common Stock. Additionally, the development of a liquid
public market depends on the existence of willing buyers and sellers, the
presence of which is not within the control of the Holding Company, the Savings
Bank or any market maker. There can be no assurance that an active and liquid
trading market for the Common Stock will develop or that, if developed, it will
continue. The number of active buyers and sellers of the Common Stock at any
particular time may be limited. Under such circumstances, investors in the
Common Stock could have difficulty disposing of their shares on short notice and
should not view the Common Stock as a short-term investment. Furthermore, there
can be no assurance that purchasers will be able to sell their shares at or
above the Purchase Price or that quotations will be available on the Nasdaq
National Market System as contemplated.
Since October 22, 1993, the Public Savings Bank Shares have been listed
on the Nasdaq SmallCap Market under the symbol "RVSB." The following table sets
forth the high and low trading prices, as reported by Nasdaq, and cash dividends
paid for each quarter during the 1996 and 1997 fiscal years. Stock dividends of
10% were also declared and paid in fiscal years 1996 and 1997. Trading prices
and cash dividends declared have been adjusted retroactively for all stock
dividends paid since the consummation of the MHC Reorganization. At March 31,
1997, there were four market makers in the Public Savings Bank Shares as
reported by the Nasdaq Stock Market.
<TABLE>
<CAPTION>
Cash Dividend
Fiscal Year Ended March 31, 1996 High Low Declared
- -------------------------------- ---- --- --------
<S> <C> <C> <C>
Quarter Ended June 30, 1995.....................$11.57 $ 9.50 $0.041
Quarter Ended Sept. 30, 1995....................$12.40 $11.15 $0.041
Quarter Ended Dec. 31, 1995.....................$14.46 $11.77 $0.041
Quarter Ended March 31, 1996....................$15.08 $13.43 $0.045
Cash Dividend
Fiscal Year Ended March 31, 1997 High Low Declared
- -------------------------------- ---- --- --------
Quarter Ended June 30, 1996.....................$15.45 $13.18 $0.05
Quarter Ended Sept. 30, 1996....................$14.55 $13.18 $0.05
Quarter Ended Dec. 31, 1996.....................$15.91 $14.09 $0.05
Quarter Ended March 31, 1997....................$23.00 $15.23 $0.055
</TABLE>
12
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of the Savings
Bank at March 31, 1997, and the pro forma consolidated capitalization of the
Holding Company after giving effect to the assumptions set forth under "PRO
FORMA DATA," based on the sale of the number of shares of Common Stock at the
minimum, midpoint, maximum and maximum, as adjusted, of the Estimated Valuation
Range. The shares that would be issued at the maximum, as adjusted, of the
Estimated Valuation Range would be subject to receipt of OTS approval of an
updated appraisal confirming such valuation. A CHANGE IN THE NUMBER OF SHARES TO
BE ISSUED IN THE CONVERSION AND REORGANIZATION WOULD MATERIALLY AFFECT PRO FORMA
CONSOLIDATED CAPITALIZATION.
<TABLE>
<CAPTION>
Holding Company Pro Forma Consolidated Capitalization
Based Upon the Sale of
2,040,000 2,400,000 2,760,000 3,174,000
Capitalization Shares at Shares at Shares at Shares at
at $10.00 $10.00 $10.00 $10.00
March 31, 1997 Per Share(1) Per Share(1) Per Share(1) Per Share(2)
(In thousands)
<S> <C> <C> <C> <C> <C>
Deposits(3)............................. $169,416 $169,416 $169,416 $169,416 $169,416
FHLB advances........................... 27,180 27,180 27,180 27,180 27,180
ESOP debt(4)............................ 237 -- -- -- --
---------- ------------ ------------ ------------ ------------
Total deposits and
borrowed funds......................... $196,833 $196,596 $196,596 $196,596 $196,596
======== ======== ======== ======== ========
Stockholders' equity:
Preferred stock:
250,000 shares, $.01
par value per share,
authorized; none issued
or outstanding..................... $ -- $ -- $ -- $ -- $ --
Common Stock:
50,000,000 shares, $.01 par
value per share, authorized;
specified number of shares
assumed to be issued and
outstanding(5)..................... 2,416 35 41 47 54
Additional paid-in capital........... 16,043 38,044 41,588 45,132 49,208
Retained earnings(6)................. 7,033 7,127 7,127 7,127 7,127
Unrealized loss on securities
available-for-sale, net of tax...... (84) (84) (84) (84) (84)
Less:
Savings Bank Common Stock
acquired by ESOP in MHC
Reorganization.................... (386) -- -- -- --
Common Stock acquired
by ESOP(7)........................ -- (2,018) (2,306) (2,594) (2,925)
Common Stock to be acquired
by MRP(8)......................... -- (816) (960) (1,104) (1,270)
--------- -------- -------- -------- --------
Total stockholders' equity.............. $25,022 $42,288 $45,406 $48,524 $52,111
======= ======= ======= ======= =======
</TABLE>
13
<PAGE>
- ---------------
(1) Does not reflect the possible increase in the Estimated Valuation Range to
reflect material changes in the financial condition or results of
operations of the Savings Bank or changes in market conditions or general
financial, economic and regulatory conditions, or the issuance of
additional shares under the 1997 Stock Option Plan.
(2) This column represents the pro forma capitalization of the Holding Company
if the aggregate number of Conversion Shares issued in the Conversion and
Reorganization is 15% above the maximum of the Estimated Valuation Range.
See "PRO FORMA DATA" and Footnote 1 thereto.
(3) Withdrawals from deposit accounts for the purchase of Conversion Shares
are not reflected. Such withdrawals will reduce pro forma deposits by the
amounts thereof.
(4) Represents outstanding balance on third party loan used by ESOP to acquire
shares of Savings Bank Common Stock in the MHC Reorganization.
(5) The Savings Bank's authorized capital will consist solely of 1,000 shares
of common stock, par value $1.00 per share, 1,000 shares of which will be
issued to the Holding Company, and 9,000 shares of preferred stock, no par
value per share, none of which will be issued in connection with the
Conversion and Reorganization.
(6) Retained earnings are substantially restricted by applicable regulatory
capital requirements. Additionally, the Savings Bank will be prohibited
from paying any dividend that would reduce its regulatory capital below
the amount in the liquidation account, which will be established for the
benefit of Eligible Account Holders and Supplemental Eligible Account
Holders at the consummation of the Conversion and Reorganization and
adjusted downward thereafter as such account holders reduce their balances
or cease to be depositors. See "THE CONVERSION AND REORGANIZATION --
Effects of Conversion and Reorganization on Depositors and Borrowers of
the Savings Bank -- Liquidation Account."
(7) Assumes that 8% of the Conversion Shares sold in the Conversion and
Reorganization will be acquired by the ESOP with funds borrowed from the
Holding Company. Under generally accepted accounting principles ("GAAP"),
the amount of Conversion Shares to be purchased by the ESOP represents
unearned compensation and is, accordingly, reflected as a reduction of
capital. As shares are released to ESOP participants' accounts, a
corresponding reduction in the charge against capital will occur. Since
the funds are borrowed from the Holding Company, the borrowing will be
eliminated in consolidation and no liability will be reflected in the
consolidated financial statements of the Holding Company. See "MANAGEMENT
OF THE SAVINGS BANK -- Benefits -- Employee Stock Ownership Plan."
(8) Assumes the purchase in the open market at the Purchase Price, pursuant to
the proposed 1997 MRP, of a number of shares equal to 4% of the shares of
Conversion Shares issued in the Conversion and Reorganization at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Valuation Range. The issuance of such additional Conversion Shares of the
MRP from authorized but unissued shares of Holding Company Common Stock
would dilute the ownership interest of stockholders by 2.28%. The shares
are reflected as a reduction of stockholders' equity. See "RISK FACTORS --
Possible Dilutive Effect of Benefit Programs," "PRO FORMA DATA" and
"MANAGEMENT OF THE SAVINGS BANK -- Benefits -- Management Recognition
Plan." The 1997 MRP is subject to stockholder approval, which is expected
to be sought at a meeting to be held no earlier than six months following
consummation of the Conversion and Reorganization.
14
<PAGE>
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE
The following table presents the Savings Bank's historical and pro
forma capital position relative to its capital requirements at March 31, 1997.
The amount of capital infused into the Savings Bank for purposes of the
following table is 50% of the net proceeds of the Conversion Offerings. For
purpose of the table below, the amount expected to be borrowed by the ESOP and
the cost of the shares expected to be acquired by the 1997 MRP are deducted from
pro forma regulatory capital. For a discussion of the assumptions underlying the
pro forma capital calculations presented below, see "USE OF PROCEEDS,"
"CAPITALIZATION" and "PRO FORMA DATA." The definitions of the terms used in the
table are those provided in the OTS capital regulations as discussed under
"REGULATION -- Federal Regulation of the Savings Bank -- Capital Requirements."
PRO FORMA AT MARCH 31, 1997
<TABLE>
<CAPTION>
15% above
Minimum of Estimated Midpoint of Estimated Maximum of Estimated Maximum of Estimated
Valuation Range Valuation Range Valuation Range Valuation Range
2,040,000 Shares 2,400,000 Shares 2,760,000 Shares 3,174,000 Shares
March 31, 1997 at $10.00 Per Share at $10.00 Per Share at $10.00 Per Share at $10.00 Per Share
------------------- --------------------- -------------------- ------------------- ----------------------
Percent of Percent of Percent of Percent of Percent of
Adjusted Adjusted Adjusted Adjusted Adjusted
Total Total Total Total Total
Amount Assets (1) Amount Assets (1) Amount Assets (1) Amount Assets (1) Amount Assets (1)
------ ----------- ------ ----------- ------ ----------- ------ ----------- ------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital(2)........$25,022 11.15% $32,478 13.91% $33,821 14.39% $35,164 14.85% $36,709 15.38%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Tangible capital(2).... 22,777 10.25 30,233 13.08 31,576 13.57 32,919 14.05 34,464 14.59
Tangible capital 3,330 1.50 3,466 1.50 3,491 1.50 3,515 1.50 3,544 1.50
requirement ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess.................$19,447 8.75% $26,767 11.58% $28,085 12.07% $29,404 12.55% $30,920 13.09%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Core capital(2)........ 22,777 10.25 30,233 13.08 31,576 13.57 32,919 14.05 34,464 14.59
Core capital 6,664 3.00 6,933 3.00 6,982 3.00 7,031 3.00 7,087 3.00
requirement (3) ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess.................$16,113 7.25% $23,300 10.08% $24,594 10.57% $25,888 11.05% $27,377 11.59%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Total capital(4).......$22,986 20.89% $30,442 27.26% $31,785 28.38% $33,128 29.50% $34,673 30.77%
Risk-based
capital requirement... 8,804 8.00 8,932 8.00 8,959 8.00 8,985 8.00 9,015 8.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess.................$14,182 12.89% $21,510 19.26% $22,826 20.38% $24,143 21.50% $25,658 22.77%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
- -------------------
(1) Based upon total tangible assets of $222.0 million at March 31, 1997 and
$231.1 million, $232.7 million, $234.4 million and $236.2 million at the
minimum, midpoint, maximum, and maximum, as adjusted, of the Estimated
Valuation Range, respectively, for purposes of the tangible capital
requirement, upon total adjusted assets of $222.1 million at March 31, 1997
and $231.1 million, $232.7 million, $234.4 million and $236.2 million at
the minimum, midpoint, maximum, and maximum, as adjusted, of the Estimated
Valuation Range, respectively, and upon risk-weighted assets of $110.0
million at March 31, 1997 and $111.7 million, $112.0 million, $112.3
million and $112.7 million at the minimum, midpoint, maximum, and maximum,
as adjusted, of the Estimated Valuation Range, respectively, for purposes
of the risk-based capital requirement.
(2) An unrealized loss on securities available-for-sale, net of taxes, of
$84,000 and a core deposit intangible asset of $2.3 million account for the
difference between GAAP capital and both tangible capital and core capital.
(3) The current OTS core capital requirement for savings associations is 3% of
total adjusted assets. The OTS has proposed core capital requirements which
would require a core capital ratio of 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and
soundness and a core capital ratio of 4% to 5% for all other thrifts. See
Note 13 of Notes to Consolidated Financial Statements.
(4) Percentage represents total core and supplementary capital divided by total
risk-weighted assets. Assumes net proceeds are invested in assets that
carry a 20% risk-weighting.
15
<PAGE>
PRO FORMA DATA
Under the Plan of Conversion, the Conversion Shares must be sold at a
price equal to the estimated pro forma market value of the MHC and the Savings
Bank, as converted, based upon an independent valuation. The Estimated Valuation
Range as of June 6, 1997 is from a minimum of $20.4 million to a maximum of
$27.6 million with a midpoint of $24.0 million or, at a price per share of
$10.00, a minimum number of shares of 2,040,000, a maximum number of shares of
2,760,000 and a midpoint number of shares of 2,400,000. The actual net proceeds
from the sale of the Conversion Shares cannot be determined until the Conversion
and Reorganization is completed. However, net proceeds set forth on the
following table are based upon the following assumptions: (i) Webb will receive
fees of $274,000, $324,000, $373,000 and $431,000 at the minimum, midpoint,
maximum and 15% above the Estimated Valuation Range, respectively (see "THE
CONVERSION AND REORGANIZATION -- Plan of Distribution for the Subscription,
Direct Community and Syndicated Community Offerings); (ii) all of the Conversion
Shares will be sold in the Subscription and Direct Community Offerings; and
(iii) Conversion and Reorganization expenses, excluding the fees paid to Webb,
will total approximately $506,000 at each of the minimum, midpoint, maximum and
15% above the Estimated Valuation Range. Actual expenses may vary from this
estimate, and the fees paid will depend upon the percentages and total number of
shares sold in the Subscription, Direct Community and Syndicated Community
Offerings and other factors.
The pro forma consolidated net income of the Savings Bank for the year
ended March 31, 1997 has been calculated as if the Conversion and Reorganization
had been consummated at the beginning of the period and the estimated net
proceeds received by the Holding Company and the Savings Bank had been invested
at 6.00% at the beginning of the period, which represents the yield on the
one-year U.S. Treasury Bill at March 31, 1997. Although OTS regulations require
the use of the arithmetic average of the average yield on all interest-earning
assets and the average rate paid on all deposits in computing investment returns
on net proceeds, the yield on the one-year U.S. Treasury Bill is used because
management believes it more appropriately reflects a market rate of return.
As discussed under "USE OF PROCEEDS," the Holding Company expects to retain 50%
of the net proceeds of the Conversion Offerings from which it will fund the ESOP
loan. A pro forma after-tax return of 4.32% is used for both the Holding Company
and the Savings Bank for the period, after giving effect to an incremental
combined federal and state income tax rate of 34.0% for the year ended March 31,
1997. Historical and pro forma per share amounts have been calculated by
dividing historical and pro forma amounts by the number of shares of Common
Stock indicated in the footnotes to the table. Per share amounts have been
computed as if the Common Stock had been outstanding at the beginning of the
period or at March 31, 1997, but without any adjustment of per share historical
or pro forma stockholders' equity to reflect the earnings on the estimated net
proceeds.
The following tables summarize the historical net income and retained
earnings of the Savings Bank and the pro forma consolidated net income and
stockholders' equity of the Holding Company for the periods and at the date
indicated, based on the minimum, midpoint and maximum of the Estimated Valuation
Range and based on a 15% increase in the maximum of the Estimated Valuation
Range. No effect has been given to: (i) the shares to be reserved for issuance
under the 1997 Stock Option Plan, which is expected to be voted upon by
stockholders at a meeting to be held no earlier than six months following
consummation of the Conversion and Reorganization; (ii) withdrawals from deposit
accounts for the purpose of purchasing Conversion Shares in the Conversion
Offerings; (iii) the issuance of shares from authorized but unissued shares to
the 1997 MRP, which is expected to be voted upon by stockholders at a meeting to
be held no earlier than six months following consummation of the Conversion and
Reorganization; or (iv) the establishment of a liquidation account for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders.
See "MANAGEMENT OF THE SAVINGS BANK -- Benefits -- 1997 Stock Option Plan" and
"THE CONVERSION AND REORGANIZATION -- Stock Pricing, Exchange Ratio and Number
of Shares Issued." Conversion Shares may be purchased with funds on deposit at
the Savings Bank, which will reduce deposits by the amounts of such purchases.
Accordingly, the net amount of funds available for investment will be reduced by
the amount of deposit withdrawals used to fund such purchases.
THE FOLLOWING PRO FORMA INFORMATION MAY NOT BE REPRESENTATIVE OF THE
FINANCIAL EFFECTS OF THE CONVERSION AND REORGANIZATION AT THE DATE ON WHICH THE
CONVERSION AND REORGANIZATION ACTUALLY OCCURS AND SHOULD NOT BE TAKEN AS
INDICATIVE OF FUTURE RESULTS OF OPERATIONS. STOCKHOLDERS' EQUITY REPRESENTS THE
DIFFERENCE BETWEEN THE STATED AMOUNTS OF CONSOLIDATED ASSETS AND LIABILITIES OF
THE HOLDING COMPANY COMPUTED ACCORDING TO GAAP. STOCKHOLDERS' EQUITY HAS NOT
BEEN INCREASED OR DECREASED TO REFLECT THE DIFFERENCE BETWEEN THE CARRYING VALUE
OF LOANS AND OTHER ASSETS AND MARKET VALUE. STOCKHOLDERS' EQUITY IS NOT INTENDED
TO REPRESENT FAIR MARKET VALUE NOR DOES IT REPRESENT AMOUNTS THAT WOULD BE
AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS IN THE EVENT OF LIQUIDATION.
16
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended March 31, 1997
Minimum of Midpoint of Maximum of 15% Above
Estimated Estimated Estimated Maximum of
Valuation Valuation Valuation Estimated
Range Range Range Valuation Range
--------- --------- --------- ---------------
2,040,00 2,400,000 2,760,000 3,174,000
Shares Shares Shares Shares
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share
--------- --------- --------- ---------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds.............................. $20,400 $24,000 $27,600 $31,740
Less: estimated expenses.................... 780 830 880 937
------- ------- ------- -------
Estimated net proceeds...................... 19,620 23,170 26,720 30,803
Less: Common Stock acquired by ESOP ........ (1,632) (1,920) (2,208) (2,539)
Less: Common Stock to be acquired by
1997 MRP............................. (816) (960) (1,104) (1,270)
Add: Assets consolidated from MHC......... 94 94 94 94
------- ------- ------- -------
Net investable proceeds................ $17,266 $20,384 $23,502 $27,088
======= ======= ======= =======
Consolidated net income:
Historical................................. $2,008 $2,008 $2,008 $2,008
Pro forma income on net proceeds(2)........ 684 807 931 1,073
Pro forma ESOP adjustments(3).............. (108) (127) (146) (168)
Pro forma 1997 MRP adjustments(4).......... (108) (127) (146) (168)
------- ------- ------- -------
Pro forma net income..................... $2,476 $2,561 $2,647 $2,745
====== ====== ====== ======
Consolidated net income per share (5)(6):
Historical................................. $0.60 $0.51 $0.44 $0.38
Pro forma income on net proceeds........... 0.20 0.20 0.20 0.20
Pro forma ESOP adjustments(3).............. (0.03) (0.03) (0.03) (0.03)
Pro forma 1997 MRP adjustments(4).......... (0.03) (0.03) (0.03) (0.03)
------ ------ ------ ------
Pro forma net income per share........... $0.74 $0.65 $0.58 $0.53
===== ===== ===== =====
Consolidated stockholders' equity (book value):
Historical(10)............................. $25,116 $25,116 $25,116 $25,116
Estimated net proceeds..................... 19,620 23,170 26,720 30,803
Less: Common Stock acquired by ESOP........ (1,632) (1,920) (2,208) (2,539)
Less: Common Stock to be acquired by
1997 MRP(4)......................... (816) (960) (1,104) (1,270)
-------- -------- -------- --------
Pro forma stockholders' equity(7)........ $42,288 $45,406 $48,524 $52,110
======= ======= ======= =======
Consolidated stockholders' equity per share(6)(8):
Historical(6)(10).......................... $7.17 $6.10 $5.30 $4.61
Estimated net proceeds..................... 5.61 5.62 5.64 5.66
Less: Common Stock acquired by ESOP........ (0.47) (0.47) (0.47) (0.47)
Less: Common Stock to be acquired by
1997 MRP(4)......................... (0.23) (0.23) (0.23) (0.23)
------- ------- ------- -------
Pro forma stockholders' equity per share(9)$12.08 $11.02 $10.24 $ 9.57
====== ====== ====== ======
Consolidated tangible stockholders' equity per share:
Historical(6)(10).......................... $7.17 $6.10 $5.30 $4.61
Estimated net proceeds..................... 5.60 5.63 5.64 5.65
Less: Common stock acquired by ESOP....... (0.47) (0.47) (0.47) (0.47)
Less: Common stock to be acquired by 1997 MRP(0.23) (0.23) (0.23) (0.23)
Less: Core deposit intangible (11)........ (0.67) (0.57) (0.49) (0.43)
------- ------- ------- -------
Pro forma tangible stockholders' equity per share$11.41 $10.46 $ 9.75 $ 9.14
====== ====== ====== ======
Purchase Price as a percentage of pro forma
stockholders' equity per share............. 82.78% 90.74% 97.66% 104.49%
===== ===== ===== ======
Purchase Price as a percentage of pro forma
tangible stockholders' equity per share.... 87.64% 95.60% 102.56% 109.41%
===== ===== ====== ======
Purchase Price as a multiple of pro forma
net income per share....................... 13.16x 14.93x 16.67x 18.52x
===== ===== ===== =====
</TABLE>
(FOOTNOTES ON SECOND FOLLOWING PAGE)
17
<PAGE>
- -------------------
(1) Gives effect to the sale of an additional 414,000 Conversion Shares in the
Conversion and Reorganization, which may be issued to cover an increase in
the pro forma market value of the MHC and the Savings Bank, as converted,
without the resolicitation of subscribers or any right of cancellation.
The issuance of such additional shares will be conditioned on a
determination by RP Financial that such issuance is compatible with its
determination of the estimated pro forma market value of the MHC and the
Savings Bank, as converted. See "THE CONVERSION AND REORGANIZATION --
Stock Pricing, Exchange Ratio and Number of Shares to be Issued."
(2) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing Conversion Shares. Since funds on deposit at the
Savings Bank may be withdrawn to purchase shares of Common Stock (which
will reduce deposits by the amount of such purchases), the net amount of
funds available to the Savings Bank for investment following receipt of
the net proceeds of the Conversion Offerings will be reduced by the amount
of such withdrawals.
(3) It is assumed that 8% of the Conversion Shares issued in the Conversion
and Reorganization will be purchased by the ESOP. The funds used to
acquire such shares will be borrowed by the ESOP (at an interest rate
equal to the prime rate as published in THE WALL STREET JOURNAL on the
closing date of the Conversion and Reorganization, which rate is currently
8.50%) from the net proceeds from the Conversion Offerings retained by the
Holding Company. The amount of this borrowing has been reflected as a
reduction from gross proceeds to determine estimated net investable
proceeds. The Savings Bank intends to make contributions to the ESOP at
least equal to the principal and interest requirement of the debt. As the
debt is repaid, stockholders' equity will be increased. The Savings Bank's
payment of the ESOP debt is based upon equal installments of principal
over a 10-year period, assuming a combined federal and state income tax
rate of 34.0%. Interest income earned by the Holding Company on the ESOP
debt offsets the interest paid by the Savings Bank on the ESOP loan. No
reinvestment is assumed on proceeds contributed to fund the ESOP. The ESOP
expense reflects adoption of Statement of Position ("SOP") 93-6, which
will require recognition of expense based upon shares committed to be
released and the exclusion of unallocated shares from earnings per share
computations. The valuation of shares committed to be released would be
based upon the average market value of the shares during the year, which,
for purposes of this calculation, was assumed to be equal to the $10.00
per share Purchase Price. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits
-- Employee Stock Ownership Plan."
(4) In calculating the pro forma effect of the 1997 MRP, it is assumed that
the required stockholder approval has been received, that the shares were
acquired by the 1997 MRP at the beginning of the period presented in open
market purchases at the Purchase Price, that 20% of the amount contributed
was an amortized expense during such period, and that the combined federal
and state income tax rate is 34.0%. The issuance of authorized but
unissued shares of the Common Stock instead of open market purchases would
dilute the voting interests of existing stockholders by approximately
2.29% and pro forma net income per share would be $0.73, $0.64, $0.58 and
$0.52 at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Valuation Range for the year ended March 31, 1997, respectively,
and pro forma stockholders' equity per share would be $12.03, $11.00,
$10.24 and $9.58 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range at March 31, 1997, respectively.
Shares issued under the 1997 MRP vest 20% per year and, for purposes of
this table, compensation expense is recognized on a straight-line basis
over each vesting period. In the event the fair market value per share is
greater than $10.00 per share on the date shares are awarded under the
1997 MRP, total 1997 MRP expense would increase. SEE "RISK FACTORS -- New
Expenses Associated with ESOP and MRP." The total estimated 1997 MRP
expense was multiplied by 20% (the total percent of shares for which
expense is recognized in the first year) resulting in pre-tax 1997 MRP
expense of $163,200, $192,000, $220,800 and $253,920 at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range for the year ended March 31, 1997, respectively. No effect has been
given to the shares reserved for issuance under the proposed 1997 Stock
Option Plan. If stockholders approve the 1997 Stock Option Plan following
the Conversion and Reorganization, the Holding Company will have reserved
for issuance under the 1997 Stock Option Plan authorized but unissued
shares of Common Stock representing an amount of shares equal to 10% of
the Conversion Shares sold in the Conversion Offerings. If all of the
options were to be exercised utilizing these
18
<PAGE>
authorized but unissued shares rather than treasury shares which could be
acquired, the voting and ownership interests of existing stockholders
would be diluted by approximately 5.51%. Assuming stockholder approval of
the 1997 Stock Option Plan and that all options were exercised at the end
of the year ended March 31, 1997 at an exercise price of $10.00 per share,
pro forma net earnings per share would be $0.72, $0.64, $0.57 and $0.52,
respectively, for the year ended March 31, 1997, and pro forma
stockholders' equity per share would be $11.96, $10.97, $10.23 and $9.59,
respectively, for the year ended March 31, 1997 at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range. See
"MANAGEMENT OF THE SAVINGS BANK -- Benefits -- 1997 Stock Option Plan" and
"-- Benefits -- Management Recognition Plan" and "RISK FACTORS -- Possible
Dilutive Effect of Benefit Programs."
(5) Per share amounts are based upon shares outstanding of 3,345,903,
3,936,357, 4,526,811 and 5,205,832 at the minimum, midpoint, maximum and
15% above the maximum of the Estimated Valuation Range for the year ended
March 31, 1997, respectively, which includes the Conversion Shares sold in
the Conversion and Reorganization, less the number of shares assumed to be
held by the ESOP not committed to be released within the first year
following the Conversion and Reorganization.
(6) Historical per share amounts have been computed as if the Conversion
Shares expected to be issued in the Conversion and Reorganization had been
outstanding at the beginning of the period or on the date shown, but
without any adjustment of historical net income or historical retained
earnings to reflect the investment of the estimated net proceeds of the
sale of shares in the Conversion and Reorganization, the additional ESOP
expense or the proposed 1997 MRP expense, as described above.
(7) "Book value" represents the difference between the stated amounts of the
Savings Bank's assets and liabilities. The amounts shown do not reflect
the liquidation account which will be established for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders in the
Conversion and Reorganization, or the federal income tax consequences of
the restoration to income of the Savings Bank's special bad debt reserves
for income tax purposes which would be required in the unlikely event of
liquidation. See "THE CONVERSION AND REORGANIZATION -- Effects of
Conversion and Reorganization to Stock Form on Depositors and Borrowers of
the Savings Bank" and "TAXATION." The amounts shown for book value do not
represent fair market values or amounts distributable to stockholders in
the unlikely event of liquidation.
(8) Per share amounts are based upon shares outstanding of 3,500,943,
4,118,757, 4,736,571 and 5,447,056 at the minimum, midpoint, maximum and
15% above the maximum of the Estimated Valuation Range, respectively.
(9) Does not represent possible future price appreciation or depreciation of
the Common Stock.
(10) Historical book value includes $94,000 of assets held by the MHC, which
will be consolidated with the Savings Bank's book value upon consummation
of the Conversion and Reorganization.
(11) At March 31, 1997, there was a core deposit intangible asset of $2.3
million related to the acquisition of certain branch offices in 1994. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- Comparison of Operating Results for the Years Ended March
31, 1997 and 1996 -- Noninterest Expense" and "BUSINESS OF THE SAVINGS
BANK -- Properties."
19
<PAGE>
CONVERSION SHARES TO BE PURCHASED
BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS
The following table sets forth, for each director and executive officer
and for all of the directors and executive officers as a group, (i) Exchange
Shares to be held upon consummation of the Conversion and Reorganization, based
upon their beneficial ownership of Savings Bank Common Stock as of March 31,
1997, (ii) proposed purchases of Conversion Shares, assuming shares available to
satisfy their subscriptions, and (iii) total shares of Common Stock to be held
upon consummation of the Conversion and Reorganization, in each case assuming
that 2,400,000 Conversion Shares are sold at the midpoint of the Estimated
Valuation Range. No individual has entered into a binding agreement with respect
to such intended purchases, and, therefore, actual purchases could be more or
less than indicated below. Directors and executive officers and their associates
may not purchase in excess of 31% of the shares sold in the Conversion and
Reorganization. Directors, officers and employees will pay the Purchase Price
($10.00 per share) for each share for which they subscribe.
<TABLE>
<CAPTION>
Number of
Exchange Proposed Purchase of Total Common Stock
Shares to Conversion Shares to be Held
be Held Number Number Percentage
(1)(2) Amount of Shares of Shares of Total
------------ ------ --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Patrick Sheaffer 91,168 $-- -- 91,168 2.2%
President, Chief Executive
Officer and Chairman of the Board
Robert K. Leick 3,328 -- -- 3,328 *
Director
Roger Malfait 27,106 -- -- 27,106 *
Director
Gary R. Douglass 11,910 50,000 5,000 16,910 *
Director
Paul L. Runyan 39,402 -- -- 39,402 1.0
Director
Dale E. Scarbrough 27,106 -- -- 27,106 *
Director
Ronald Wysaske 59,154 -- -- 59,154 1.4
Executive Vice President and Director
Michael C. Yount 22,907 7,200 720 23,627 0.6
Senior Vice President of Operations
Karen Nelson 15,733 40,000 4,000 19,733 *
Vice President of Lending
Phyllis Kreibich 2,902 5,000 500 3,402 *
Corporate Secretary
All directors and executive 284,983 102,000 10,200 310,936 7.5
officers as a group (10 persons)
</TABLE>
(1) Excludes shares which may be received upon the exercise of outstanding
stock options granted under the 1993 Stock Option Plan. Based upon the
Exchange Ratio of 1.7044 Exchange Shares for each Public Savings Bank
Share at the midpoint of the Estimated Valuation Range, the persons
named in the table would have options to purchase Common Stock as
follows: Mr. Sheaffer, 35,337 shares; Mr. Leick, 6,573 shares; Mr.
Malfait, 6,573 shares; Mr. Douglass, 1,564 shares; Mr. Runyan, 2,730
shares; Mr. Scarbrough, 6,573 shares; Mr. Wysaske, 27,776 shares; Mr.
Yount, 21,366 shares; Ms. Nelson, 14,298 shares; Ms. Kreibich, none;
and all directors and executive officers as a group, 122,795 shares.
(2) Excludes stock options that may be granted under the 1997 Stock Option
Plan and awards that may be granted under 1997 MRP if such plans are
approved by stockholders at an annual or special meeting at least six
months following the Conversion and Reorganization. See "MANAGEMENT OF
THE SAVINGS BANK -- Benefits."
(*) Less than 1%.
20
<PAGE>
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THE FOLLOWING CONSOLIDATED STATEMENTS OF INCOME OF RIVERVIEW SAVINGS
BANK, FSB AND SUBSIDIARY FOR THE FISCAL YEARS ENDED MARCH 31, 1997, 1996 AND
1995 HAVE BEEN AUDITED BY DELOITTE & TOUCHE LLP, PORTLAND, OREGON, INDEPENDENT
AUDITORS, WHOSE REPORT THEREON APPEARS ELSEWHERE IN THIS PROSPECTUS. THESE
STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE HEREIN.
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans receivable..................... $13,339,000 $11,252,000 $ 9,223,000
Interest on investment securities......................... 1,832,000 2,528,000 2,180,000
Interest on mortgage-backed securities.................... 2,135,000 2,020,000 1,586,000
Other interest and dividends.............................. 170,000 196,000 243,000
----------- ----------- -----------
Total interest income.................................... 17,476,000 15,996,000 13,232,000
----------- ----------- -----------
INTEREST EXPENSE:
Interest on deposit accounts.............................. 7,034,000 6,583,000 5,121,000
Interest on borrowings.................................... 1,889,000 1,833,000 806,000
----------- ----------- -----------
Total interest expense................................... 8,923,000 8,416,000 5,927,000
----------- ----------- -----------
Net interest income...................................... 8,553,000 7,580,000 7,305,000
Less provision for loan losses............................. 180,000 -- --
----------- ------------- -------------
Net interest income after provision for loan losses...... 8,373,000 7,580,000 7,305,000
----------- ----------- -----------
NONINTEREST INCOME:
Fees and service charges.................................. 1,368,000 1,182,000 693,000
Loan servicing income..................................... 279,000 342,000 358,000
Gain on sale of mortgage-backed and
other securities available for sale...................... 37,000 216,000 --
Gain on sale of loans held for sale....................... 69,000 180,000 85,000
Trading activity gains (losses)........................... -- (5,000) 26,000
Other..................................................... 121,000 100,000 88,000
----------- ----------- -----------
Total noninterest income................................. 1,874,000 2,015,000 1,250,000
----------- ----------- -----------
NONINTEREST EXPENSES:
Salaries and employee benefits............................ 3,386,000 2,851,000 2,255,000
Occupancy and depreciation................................ 1,174,000 1,090,000 983,000
Special SAIF assessment................................... 947,000 -- --
Amortization of core deposit intangible................... 327,000 327,000 286,000
Marketing expense......................................... 257,000 263,000 312,000
FDIC insurance premium.................................... 275,000 336,000 290,000
Other..................................................... 838,000 740,000 763,000
----------- ----------- -----------
Total noninterest expenses............................... 7,204,000 5,607,000 4,889,000
----------- ----------- -----------
INCOME BEFORE FEDERAL INCOME TAXES......................... $ 3,043,000 $ 3,988,000 $ 3,666,000
PROVISION FOR FEDERAL INCOME TAXES......................... 1,035,000 1,375,000 1,220,000
----------- ----------- -----------
NET INCOME................................................. $ 2,008,000 $ 2,613,000 $ 2,446,000
=========== =========== ===========
PER COMMON SHARE:
Net income................................................ $ 0.85 $ 1.11 $ 1.04
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING................................. 2,374,077 2,362,450 2,348,306
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Management's discussion and analysis of financial condition and results
of operations is intended to assist in understanding the financial condition and
results of operations of the Savings Bank. The information contained in this
section should be read in conjunction with the Consolidated Financial Statements
and accompanying Notes thereto and the other sections contained in this
Prospectus.
OPERATING STRATEGY
The Savings Bank's business consists principally of attracting retail
deposits from the general public and using these funds to originate mortgage
loans secured by one- to- four family residences located in its primary market
area. The Savings Bank also actively originates residential construction loans
secured by properties located in its primary market area. To a lesser extent,
the Savings Bank also originates consumer loans, commercial real estate loans
and land loans. In addition, the Savings Bank invests in U.S. Government and
federal agency obligations, and mortgage-backed securities. The Savings Bank
intends to continue to fund its assets primarily with retail deposits, although
FHLB- Seattle advances may be used as a supplemental source of funds.
The Savings Bank's profitability depends primarily on its net interest
income, which is the difference between the income it receives on its loan and
investment portfolio and its cost of funds, which consists of interest paid on
deposits. Net interest income is also affected by the relative amounts of
interest-earning assets and interest-bearing liabilities. When interest-earning
assets equal or exceed interest-bearing liabilities, any positive interest rate
spread will generate net interest income. The Savings Bank's profitability is
also affected by the level of other income and expenses. Other income, net,
includes income associated with the origination and sale of mortgage loans,
brokering loans, loan servicing fees, income from real estate owned and net
gains and losses on sales of interest-earning assets. Other expenses include
compensation and benefits, occupancy and equipment expenses, deposit insurance
premiums, data servicing expenses and other operating costs. The Savings Bank's
results of operations are also significantly affected by general economic and
competitive conditions, particularly changes in market interest rates,
government legislation and regulation and monetary and fiscal policies.
The Savings Bank's business strategy is to operate as a
well-capitalized, profitable and independent community savings bank, dedicated
to home mortgage lending, consumer installment lending, small business lending
and providing quality financial services to local customers. Management believes
that it can best serve an important segment of the marketplace and enhance the
long-term value of the Savings Bank by operating independently and continuing
with and expanding its community-oriented approach, especially in light of
recent consolidations of financial institutions in the Savings Bank's primary
market area. The Savings Bank has sought to implement this strategy by: (i)
emphasizing the origination of residential mortgage loans, including one- to-
four family residential construction loans; (ii) providing high quality,
personalized financial services to customers and communities served by its
branch network; (iii) operating as a mortgage banker by selling fixed rate
mortgages to the secondary market on a servicing- retained basis, thereby
increasing the loan servicing portfolio and income; (iv) brokering customer
loans to third-party lenders, which generates fee income; (v) reducing interest
rate risk exposure by matching asset and liability durations and rates; (vi)
improving asset quality; (vii) containing operating expenses; and (viii)
maintaining capital in excess of regulatory requirements combined with prudent
growth.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1997 AND 1996
Total assets were $224.4 million at March 31, 1997 compared to $209.5
million at March 31, 1996. This increase resulted primarily from growth in the
loan portfolio, which was funded primarily by deposit growth and the proceeds of
maturing securities.
22
<PAGE>
Loans receivable, net, were $151.7 million at March 31, 1997 compared
to $126.2 million at March 31, 1996, a 20.2% increase. Increases primarily in
residential construction loans and consumer loans contributed to the increase in
loans receivable, net. Residential construction and consumer loans have greater
credit risk than one- to- four family mortgage loans. See "RISK FACTORS --
Certain Lending Risks" and "BUSINESS OF THE SAVINGS BANK -- Lending Activities."
Loans held-for-sale were $80,000 at March 31, 1997, compared to $1.9
million at March 31, 1996, as a result of timing differences on sales.
Investment securities held-to-maturity were $20.5 million at March 31,
1997, compared to $29.7 million at March 31, 1996, as a result of maturities,
the proceeds of which were used to fund loan growth.
Mortgage-backed securities held-to-maturity were $26.4 million at March
31, 1997, compared to $28.4 million at March 31, 1996, as a result of
prepayments, the proceeds of which funded loan growth.
Cash increased to $7.0 million at March 31, 1997 from $5.6 million at
March 31, 1996 as a result of increased deposits and the maturities of
investment securities.
Total deposits were $169.4 million at March 31, 1997, compared to
$158.2 million at March 31, 1996. Management attributes this increase primarily
to the growth in the Savings Bank's market area and to promotions of checking
accounts.
FHLB advances increased to $27.2 million at March 31, 1997 from $26.1
million at March 31, 1996. Approximately $20.0 million of the outstanding
advances at March 31, 1997 and $23.6 million at March 31, 1996 were used to
purchase mortgage-backed securities, classified as held-to-maturity, with the
goal of recognizing income on the difference between the rate paid on the
advances and the rate earned on the mortgage-backed securities. See "BUSINESS OF
THE SAVINGS BANK -- Investment Activities" and "-- Deposit Activities and Other
Sources of Funds -- Borrowings."
Shareholders' equity increased to $25.0 million at March 31, 1997 from
$23.1 million at March 31, 1996 primarily because of growth in retained
earnings, less cash dividends of $212,000 paid to the Public Stockholders.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
NET INCOME. Net income was $2.0 million, or $0.85 per share, for the
year ended March 31, 1997, compared to $2.6 million, or $1.11 per share, for the
year ended March 31, 1996. Earnings per share information has been retroactively
adjusted for stock dividends paid. The decrease in net income was primarily
attributable to the legislatively- mandated, one-time assessment levied by the
FDIC on all SAIF-insured institutions to recapitalize the SAIF. Without this
assessment, which amounted to $947,000 ($625,000 after tax), net income would
have been $2.6 million, or $1.11 per share, for the year ended March 31, 1997.
NET INTEREST INCOME. Net interest income increased $973,000 to $8.6
million for the year ended March 31, 1997 compared to $7.6 million for the year
ended March 31, 1996. The increased net interest income resulted primarily from
the increase in the average balance of net loans to $141.4 million in 1997
compared to $116.4 million in 1996. Net interest margin for the year ended March
31, 1997 rose to 4.19% from 4.05% for the 1996 fiscal year primarily because of
a lower average rate paid on FHLB advances as a result of the renewal of
maturing advances at lower interest rates.
INTEREST INCOME. Interest income totalled $17.5 million and $16.0
million for fiscal years 1997 and 1996, respectively. Average interest-earning
assets increased 9.1% to $204.0 million for the year ended March 31, 1997,
compared to $187.0 million for the year ended March 31, 1996, and the yield on
all interest-earning assets increased to 8.57% from 8.55% for the fiscal years
1997 and 1996, respectively. The increase in average yield was primarily
23
<PAGE>
a result of a higher proportion of loans in portfolio, which tend to have higher
yields than securities. The proportion of loans- to-assets at March 31, 1997 was
67.6% compared to 61.2% at March 31, 1996.
INTEREST EXPENSE. Interest expense for the year ended March 31, 1997
totalled $8.9 million, a $507,000, or 6.0%, increase from $8.4 million the prior
year. The increase was primarily a result of an increase in the average balances
of certificates of deposit from $90.7 million to $99.7 million for the 1996 and
1997 fiscal years, respectively, as a result of deposit growth unaffected by any
special promotions. The average cost on other interest-bearing liabilities
(primarily FHLB advances) were 6.50% in fiscal 1997 compared 6.94% in fiscal
1996 as a result of the renewal of maturing FHLB advances at lower interest
rates, while average balances increased to $29.1 million in fiscal 1997 from
$26.4 million in fiscal 1996 to fund loan growth. The combined effect was to
produce interest expense of $1.9 million for other interest-bearing liabilities
for the year ended March 31, 1997, compared to $1.8 million for the year ended
March 31, 1996.
PROVISION FOR LOAN LOSSES. The provision for loan losses for the year
ended March 31, 1997 was $180,000 compared to no provision for loan losses for
the years ended March 31, 1996. The increase in the provision for loan losses
resulted primarily from the increased size of the loan portfolio, particularly
with respect to construction and consumer loans which inherently involve greater
risk than residential mortgage loans. The Savings Bank establishes a general
reserve for loan losses through a periodic provision for loan losses based on
management's evaluation of the loan portfolio and current economic conditions.
The provisions for loan losses are based on management's estimate of net
realizable value or fair value of the collateral, as applicable and the Savings
Bank's actual loss experience, and standards applied by the OTS and the FDIC.
The Savings Bank regularly reviews its loan portfolio, including non-performing
loans, to determine whether any loans require classification or the
establishment of appropriate reserves. In addition, various regulatory agencies,
as an integral part of their examination process, periodically review the
Savings Bank's allowance for loan losses. Such agencies may require the Savings
Bank to provide additions to the allowance for loan losses based upon judgments
different from management. The allowance for loan losses is provided based upon
management's continuing analysis of the pertinent factors underlying the quality
of the loan portfolio. These factors include changes in the size and composition
of the loan portfolio, actual loan loss experience, current and anticipated
economic conditions, and detailed analysis of individual loans for which full
collectibility may not be assured. The detailed analysis includes techniques to
estimate the fair value of the loan collateral and the existence of potential
alternative sources of repayment. Assessment of the adequacy of the allowance
for loan losses involves subjective judgments regarding future events, and thus
there can be no assurance that additional provisions for credit losses will not
be required in future periods. Although management uses the best information
available, future adjustments to the allowance may be necessary due to economic,
operating, regulatory and other conditions that may be beyond the Savings Bank's
control. Any increase or decrease in the provision for loan losses has a
corresponding negative or positive effect on net income. The allowance for loan
losses at March 31, 1997 was $831,000, or 0.50% of total loans receivable,
compared to $653,000, or 0.47%, at March 31, 1996. At March 31, 1997, management
deemed the allowance for loan losses adequate at that date. Non-performing
assets totalled $222,000, or 0.10%, of total assets, at March 31, 1997 as
compared to $548,000 or 0.26% at March 31, 1996.
NONINTEREST INCOME. The Savings Bank's principal sources of noninterest
income include loan fees, deposit service charges, and net gains on the sale of
loans and securities available-for-sale. Noninterest income including gains on
sales of assets for fiscal years 1997 and 1996 was $1.9 million and $2.0 million
respectively. Mortgage broker fees (included in fees and service charges)
totalled $394,000 for the year ended March 31, 1997 compared to $283,000 for the
previous year and related commission compensation expense was $335,000 for the
fiscal year ended March 31, 1997 compared to $243,000 for the fiscal year ended
March 31, 1996, both as a result of an increase in brokered loan production from
$40.7 million in 1996 to $60.9 million in 1997. For the fiscal year ended March
31, 1997, gains on sale of loans and investments totalled $106,000 compared to
$391,000 of gains recorded in 1996. The decrease in the gains on sale of loan
and investments resulted from the sale of one investment security in 1996 at a
gain of $216,000 and no comparable gain in 1997. The total loans-serviced-for-
others portfolio was $98.8 million at March 31, 1997 and generated $279,000
of servicing fees for fiscal 1997, versus $342,000 for fiscal 1996. The
purchased and
24
<PAGE>
originated mortgage servicing rights assets were $402,000 and $67,000,
respectively, at March 31, 1997, and were being amortized over the life of the
underlying loan servicing.
NONINTEREST EXPENSE. Noninterest expense increased by $1.6 million in
fiscal 1997 compared to fiscal 1996, as total noninterest expense was $7.2
million and $5.6 million for fiscal 1997 and 1996, respectively. The primary
cause for the $1.6 million increase was the FDIC insurance premium surcharge. On
September 30, 1996, President Clinton signed into law legislation requiring all
SAIF members (like the Savings Bank) to pay a special one-time premium of 65.7
basis points based on assessable deposits at March 31, 1995. The special premium
of $947,000, pre-tax, was accounted for as an expense and immediately reduced
the capital of the Savings Bank by the amount of the premium, net of taxes of
approximately $322,000, and reduced net income by approximately $625,000.
Effective January 1, 1997, the special assessment increased the SAIF reserve
level to the statutory requirement of 1.25%. The legislation also reduced the
Savings Bank's ongoing insurance premiums from an average of 23.0 basis points
to 6.5 basis points.
The other principal component of the Savings Bank's noninterest expense
has been and continues to be salaries and employee benefits of $3.4 million for
fiscal 1997 and $2.9 million for fiscal 1996, including the mortgage broker
commissions, as a result of full-time equivalent employees increasing to 82 at
March 31, 1997 from 73 at March 31, 1996. Other components of noninterest
expense include building, furniture, and equipment depreciation and expense,
deposit insurance premiums, data processing expense, and advertising expense.
The acquisition of the Hazel Dell and Longview branches from the
Resolution Trust Corporation ("RTC") in fiscal 1995 (see "BUSINESS OF THE
SAVINGS BANK -- Properties"), and the related acquisition of $42 million in
customer deposits, gave rise to a $3.2 million core deposit intangible asset
("CDI"), representing the excess of cost over fair value of deposits acquired.
The CDI ($2.3 million at March 31, 1997) is being amortized over the remaining
life of the underlying customer relationships, currently estimated at seven
years. The amortization cost of the CDI was $327,000 for both fiscal years 1997
and 1996.
PROVISION FOR INCOME TAXES. Provision for income taxes was $1.0 million
for the year ended March 31, 1997 compared to $1.4 million for the year March
31, 1996 as a result of lower income before income taxes. The effective tax rate
for fiscal year 1997 was 34.0% compared to 34.5% for fiscal 1996.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
NET INCOME. Net income was $2.6 million, or $1.11 per share, for the
year ended March 31, 1996, compared to $2.4 million, or $1.04 per share, for the
year ended March 31, 1995. Earnings per share information has been retroactively
adjusted for stock dividends paid.
NET INTEREST INCOME. Net interest income increased $275,000 to $7.6
million for the year ended March 31, 1996 compared to $7.3 million for the year
ended March 31, 1995. The increased net interest income resulted primarily from
the increased assets, particularly loans receivable, for 1996 compared to 1995.
The net interest margin for the year ended March 31, 1996 decreased to 4.05%
from 4.49% for the 1995 fiscal year as a result of rising short-term market
interest rates. The Savings Bank also experienced a decline in the ratio of the
average balances of interest earning assets to interest-bearing liabilities to
109.6% for 1996 compared to 110.4% for 1995. This occurred as a result of the
construction of a branch facility in Battle Ground (see "BUSINESS OF THE SAVINGS
BANK -- Properties"), resulting in premises and equipment, net, increasing
$330,000 to $4.4 million at March 31, 1996.
INTEREST INCOME. Interest income totalled $16.0 million and $13.2
million, for fiscal years 1996 and 1995, respectively. Average interest-earning
assets increased 14.9% to $187.0 million for the year ended March 31, 1996,
compared to $162.7 million for the year ended March 31, 1995, and the yield on
all interest-earning assets increased to 8.55% from 8.13% for the fiscal years
1996 and 1995, respectively. The increase in the average balance of
interest-earning assets was primarily attributable to an increase in the average
balance of loans from $98.4 million
25
<PAGE>
in 1996 to $116.4 million in 1997 and an increase in the average balance of
mortgaged-backed securities and investment securities from $59.4 million in 1996
to $66.5 million in 1997, and were funded by increases in deposits and FHLB
advances. The increase in average yield was primarily a result of rising market
interest rates and a higher proportion of loans in portfolio, which tend to have
higher yields than securities. The proportion of loans-to-assets at March 31,
1996 was 61.2% compared to 54.4% at March 31, 1995.
INTEREST EXPENSE. Interest expense for the year ended March 31, 1996 totalled
$8.4 million, a 42.0% increase from $5.9 million the prior year. The increase
was a result of an increase in average cost of interest-bearing liabilities to
4.93% in 1996 from 4.02% in 1995, and the increase in total average
interest-bearing liabilities to $170.6 million for fiscal 1996 compared to
$147.4 million for fiscal 1995. The increase in the average balance of
interest-bearing liabilities was primarily attributable to an increase in the
average balance of deposits from $134.7 million in 1996 to $144.2 million in
1997, primarily as a result of increases in transaction accounts and
certificates of deposit at the newly opened Orchards Branch (see "BUSINESS OF
THE SAVINGS BANK -- Properties"), and the average balance of FHLB advances
increased from $12.6 million in 1996 to $26.4 million in 1997 as advances were
used to purchase mortgage-backed securities. Rising market interest rates
increased the rates paid on deposits and on FHLB advances.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for
the years ended March 31, 1996 and 1995. Based on management's evaluation of the
loan portfolio during these periods, particularly the low level of delinquent
loans and charge-offs, the allowance for loan losses was deemed adequate and no
provision for loan losses was required in management's judgment. Allowance for
loan losses at March 31, 1996 was $653,000, or 0.47% of total loans receivable,
compared to $657,000, or 0.58%, at March 31, 1995. Non-performing assets
totalled $548,000, or 0.26%, of total assets at March 31, 1996 as compared to
$240,000, or 0.13%, at March 31, 1995.
NONINTEREST INCOME. Noninterest income including gains on sales of
assets for fiscal years 1996 and 1995 was $2.0 million and $1.3 million
respectively. The increase of $765,000 was primarily a result of increased
account service charges, mortgage broker fees and gains on the sale of loans and
investments. Mortgage broker fees (included in fees and service charges)
totalled $283,000 for the year ended March 31, 1996 compared to zero for the
previous year as brokerage operations commenced in fiscal 1996. For the year
ended March 31, 1996, gains on sale of loans and investments totalled $391,000
compared to $111,000 of gains recorded in 1995. The total
loans-serviced-for-others portfolio was $106.2 million at March 31, 1996 and
generated $342,000 of servicing fees for fiscal 1996, versus $358,000 for fiscal
1995. The purchased mortgage servicing rights asset was $451,000 at March 31,
1996 and $484,000 at March 31, 1995.
NONINTEREST EXPENSE. Noninterest expense increased by $718,000 in
fiscal 1996 compared to fiscal 1995, as total noninterest expense was $5.6
million and $4.9 million for fiscal 1996 and 1995, respectively. Salaries and
employee benefits totalled $2.9 million for fiscal 1996 and $2.3 million for
fiscal 1995 as a result of additional personnel associated with the three new
branch offices. Other components of noninterest expense include building,
furniture, and equipment depreciation and expense, deposit insurance premiums,
data processing expense, and advertising expense. Occupancy costs rose $107,000
to $1,090,000 for the fiscal year 1996 compared to $983,000 for the fiscal year
1995, due to the addition of the new Battle Ground facility in July 1995. The
amortization of the CDI related to the acquisition from the RTC in May 1994 for
the fiscal year ended March 31, 1996 was $327,000 versus $286,000 for the year
ended March 31, 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes was $1.4
million for the year ended March 31, 1996, compared to $1.2 million for the
year ended March 31, 1995 as a result of higher income before income taxes.
The effective tax rate for fiscal year 1996 was 34.5% compared to 33.3% for
fiscal 1995.
AVERAGE BALANCE SHEET
The following table sets forth, for the periods indicated, information
regarding average balances of assets and liabilities as well as the total dollar
amounts of interest income from average interest-earning assets and interest
26
<PAGE>
expense on average interest-bearing liabilities, resultant yields, interest rate
spread, ratio of interest-earning assets to interest-bearing liabilities and net
interest margin. Average balances for a period have been calculated using the
monthly average balances during such period.
27
<PAGE>
<TABLE>
<CAPTION>
Year Ended March 31,
1997 1996
--------------------------------- -----------------------------------
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost
(Dollars in thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans.........................$128,552 $12,087 9.40% $107,902 $10,413 9.65%
Non-mortgage loans..................... 12,835 1,252 9.75 8,474 839 9.90
------- ------ ------- ------
Total net loans...................... 141,387 13,339 9.43 116,376 11,252 9.67
Mortgage-backed securities.............. 30,212 2,135 7.07 29,779 2,020 6.78
Investment securities................... 29,048 1,832 6.31 36,729 2,528 6.88
Daily interest-bearing.................. 708 40 5.65 1,626 91 5.60
Other earning assets.................... 2,619 130 4.96 2,491 105 4.22
-------- -------- ----- -------- ------- -----
Total interest-earning assets.......... 203,974 17,476 8.57 187,001 15,996 8.55
Noninterest-earning assets:
Office properties and equipment........ 4,516 4,342
net
Real estate, net....................... 471 --
Other noninterest-earning assets....... 9,375 8,634
-------- --------
Total assets...........................$218,336 $199,977
======== ========
Interest-earning liabilities:
Regular savings accounts............... 21,408 588 2.75 22,259 617 2.77
NOW accounts........................... 15,915 234 1.47 15,322 247 1.61
Money market accounts.................. 18,046 617 3.42 15,879 599 3.77
Certificates of deposit................ 99,657 5,595 5.61 90,710 5,120 5.64
-------- -------- ----- -------- ------- -----
Total deposits........................ 155,026 7,034 4.54 144,170 6,583 4.57
Other interest-bearing................. 29,068 1,889 6.50 26,404 1,833 6.94
liabilities -------- -------- ----- -------- ------- -----
Total interest-bearing................ 184,094 8,923 4.85 170,574 8,416 4.93
liabilities
Noninterest-bearing
liabilities
Noninterest-bearing.................... 7,047 5,095
deposits
Other liabilities...................... 3,229 2,570
-------- --------
Total liabilities..................... 194,370 178,239
Stockholders' equity................... 23,966 21,738
-------- --------
Total liabilities and................... $218,336 $199,977
stockholders' equity ======== ========
Net interest income..................... $8,553 $7,580
====== ======
Interest rate spread.................... 3.72% 3.62%
==== ====
Net interest margin..................... 4.19% 4.05%
==== ====
Ratio of average interest-
earning assets to average
interest-bearing liabilities 110.80% 109.63%
====== ======
</TABLE>
1995
----------------------------------
Interest
Average and Yield/
Balance Dividends Cost
Interest-earning assets:
Mortgage loans......................... $ 93,627 $ 8,729 9.32%
Non-mortgage loans..................... 4,763 494 10.37
------ -----
Total net loans...................... 98,390 9,223 9.37
Mortgage-backed securities.............. 27,530 1,586 5.76
Investment securities................... 31,891 2,180 6.84
Daily interest-bearing.................. 3,450 166 4.81
Other earning assets.................... 1,438 77 5.35
-------- ------- -----
Total interest-earning assets.......... 162,699 13,232 8.13
Noninterest-earning assets:
Office properties and equipment........ 2,955
net
Real estate, net....................... --
Other noninterest-earning assets....... 7,865
--------
Total assets........................... $173,519
========
Interest-earning liabilities:
Regular savings accounts............... 28,559 919 3.22
NOW accounts........................... 13,733 264 1.92
Money market accounts.................. 10,694 331 3.10
Certificates of deposit................ 81,757 3,607 4.41
-------- ------ -----
Total deposits........................ 134,743 5,121 3.80
Other interest-bearing................. 12,638 806 6.38
liabilities -------- ------ -----
Total interest-bearing................ 147,381 5,927 4.02
liabilities
Noninterest-bearing
liabilities
Noninterest-bearing.................... 4,638
deposits
Other liabilities...................... 2,070
--------
Total liabilities..................... 154,089
Stockholders' equity................... 19,430
--------
Total liabilities and................... $173,519
stockholders' equity ========
Net interest income..................... $7,305
======
Interest rate spread.................... 4.11%
====
Net interest margin..................... 4.49%
====
Ratio of average interest-
earning assets to average
interest-bearing liabilities 110.39%
======
28
<PAGE>
YIELDS EARNED AND RATES PAID
The following table sets forth for the periods and at the date
indicated and the weighted average yields earned on the Savings Bank's assets,
the weighted average interest rates paid on the Savings Bank's liabilities,
together with the net yield on interest-earning assets.
<TABLE>
<CAPTION>
At March 31, Year Ended March 31,
1997 1997 1996 1995
Weighted average yield earned on:
<S> <C> <C> <C> <C>
Total net loans(1).............................. 8.50 9.43% 9.67% 9.37%
Mortgage-backed securities...................... 7.13 7.07 6.78 5.76
Investment securities........................... 6.34 6.31 6.88 6.84
All interest-earning assets..................... 8.06 8.57 8.55 8.13
Weighted average rate paid on:
Deposits........................................ 4.35 4.54 4.57 3.80
FHLB advances and other borrowings.............. 6.51 6.50 6.94 6.38
All interest-bearing liabilities................ 4.65 4.85 4.93 4.02
Interest rate spread (spread between weighted
average rate on all interest-earning
assets and all interest-bearing liabilities).... 3.41 3.72 3.62 4.11
Net interest margin (net interest income
(expense) as a percentage of average
interest-earning assets)........................ N/A 4.19 4.05 4.49
</TABLE>
(1) Weighted average yield on total net loans at March 31, 1997 excludes
deferred loan fees.
29
<PAGE>
RATE/VOLUME ANALYSIS
The following table sets forth the effects of changing rates and
volumes on net interest income of the Savings Bank. Information is provided with
respect to (i) effects on interest income attributable to changes in volume
(changes in volume multiplied by prior rate); (ii) effects on interest income
attributable to changes in rate (changes in rate multiplied by prior volume);
and (iii) changes in rate/volume (change in rate multiplied by change in
volume).
<TABLE>
<CAPTION>
Year Ended March 31,
1997 vs. 1996 1996 vs. 1995
------------------------------------------------- -------------------------------------
Increase (Decrease) Increase (Decrease)
Due to Total Due to Total
Rate/ Increase Rate/ Increase
Volume Rate Volume (Decrease) Volume Rate Volume (Decrease)
(In Thousands)
Interest Income:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans............................. $1,993 $(268) $(51) $1,674 $1,330 $ 309 $ 45 $1,684
Non-mortgage loans......................... 432 (13) (6) 413 385 (22) (18) 345
Mortgage-backed securities................. 29 85 1 115 130 281 23 434
Investment securities...................... (528) (212) 44 (696) 331 13 4 348
Daily interest-bearing..................... (51) -- -- (51) (88) 27 (14) (75)
Other earning assets....................... 5 19 1 25 56 (16) (12) 28
------- ------ ----- ------- ------- --------- ------- --------
Total interest-earning assets............ 1,880 (389) (11) 1,480 2,144 592 28 2,764
------- ------- ------ ------- ------- -------- ------ --------
Interest Expense:
Regular savings accounts................... (24) (4) (1) (29) (203) (129) 30 (302)
NOW accounts............................... 10 (23) -- (13) 31 (42) (6) (17)
Money market accounts...................... 82 (56) (8) 18 161 72 35 268
Certificates of deposit.................... 505 (27) (3) 475 395 1,007 111 1,513
Other interest-bearing liabilities......... 185 (118) (11) 56 878 71 78 1,027
------- ------- ------ ------- ------- ------- ------ --------
Total interest-bearing liabilities...... 758 (228) (23) 507 1,262 979 248 2,489
------- ------- ------ ------- ------- ------- ------ --------
Net increase (decrease) in interest income.. $1,122 $(161) $ 12 $ 973 $ 882 $ (387) $(220) $ 275
====== ====== ==== ====== ====== ======= ====== =======
</TABLE>
ASSET AND LIABILITY MANAGEMENT
The Savings Bank's principal financial objective is to achieve
long-term profitability while reducing its exposure to fluctuating market
interest rates. The Savings Bank has sought to reduce the exposure of its
earnings to changes in market interest rates by attempting to manage the
mismatch between asset and liability maturities and interest rates. The
principal element in achieving this objective is to increase the interest-rate
sensitivity of the Savings Bank's interest-earning assets by retaining for its
portfolio loans with interest rates subject to periodic adjustment to market
conditions and selling fixed-rate one- to- four family mortgage loans with terms
of more than 15 years. The Savings Bank relies on retail deposits as its primary
source of funds. Management believes retail deposits, compared to brokered
deposits, reduce the effects of interest rate fluctuations because they
generally represent a more stable source of funds. As part of its interest rate
risk management strategy, the Savings Bank promotes transaction accounts and
certificates of deposit with terms up to ten years.
The Savings Bank has adopted a strategy that is designed to maintain or
improve the interest rate sensitivity of assets relative to its liabilities. The
primary elements of this strategy involve the origination of ARM loans or
purchase of adjustable rate mortgage-backed securities for its portfolio;
maintaining consumer and residential construction loans as a portion of total
net loans receivable because of their generally shorter terms and higher yields
than other one-to-four-family residential mortgage loans; matching asset and
liability maturities; investing in short
30
<PAGE>
term mortgage-backed and other securities; and the origination of fixed-rate
loans for sale in the secondary market and the retention of the related loan
servicing rights. This approach has remained consistent throughout the past year
as the Savings Bank has experienced growth in assets, deposits, and FHLB
advances.
Deposit accounts typically react more quickly to changes in market
interest rates than mortgage loans because of the shorter maturities of
deposits. As a result, sharp increases in interest rates may adversely affect
the Savings Bank's earnings while decreases in interest rates may beneficially
affect the Savings Bank's earnings. To reduce the potential volatility of the
Savings Bank's earnings, management has sought to improve the match between
asset and liability maturities and rates, while maintaining an acceptable
interest rate spread. Pursuant to this strategy, the Savings Bank actively
originates ARM loans for retention in its loan portfolio. Fixed-rate mortgage
loans with terms of more than 15 years generally are originated for the intended
purpose of resale in the secondary mortgage market. The Savings Bank has also
invested in adjustable rate mortgage-backed securities to increase the level of
short term adjustable assets. At March 31, 1997, ARM loans and adjustable rate
mortgage-backed securities constituted $77.1 million, or 45.6%, of the Savings
Bank's total combined mortgage loan and mortgage-backed securities portfolio.
Although the Savings Bank has sought to originate ARM loans, the ability to
originate and purchase such loans depends to a great extent on market interest
rates and borrowers' preferences. Particularly in lower interest rate
environments, borrowers often prefer to obtain fixed rate loans.
The Savings Bank's mortgage servicing activities provide additional
protection from interest rate risk. The Savings Bank retain servicing rights on
all mortgage loans sold. As market interest rates rise the fixed rate loans held
in portfolio diminish in value. However, the value of the servicing portfolio
tends to rise as market interest rates increase because borrowers tend not to
prepay the underlying mortgages, thus providing an interest rate risk hedge
versus the fixed rate loan portfolio. The loan servicing portfolio totalled
$98.8 million at March 31, 1997, including $38.0 million of purchased mortgage
servicing. The purchase of loan servicing replaced loan servicing balances
extinguished through prepayment of the underlying loans. The average balance of
the servicing portfolio was $102.4 million and produced service fees of $279,000
for the year ended March 31, 1997. See "BUSINESS OF THE SAVINGS BANK -- Lending
Activities -- Mortgage Loan Servicing."
Consumer loans and construction loans typically have shorter terms and
higher yields than permanent residential mortgage loans, and accordingly reduce
the Savings Bank's exposure to fluctuations in interest rates. At March 31,
1997, the construction and consumer loan portfolios amounted to $33.4 million
and $14.3 million, or 22.0% and 9.4% of total net loans receivable,
respectively. See "BUSINESS OF THE SAVINGS BANK -- Lending Activities --
Construction Lending" and "-- Lending Activities -- Consumer Lending."
The Savings Bank also invests in short-term to medium-term U.S.
Government securities as well as mortgage-backed securities issued or guaranteed
by U.S. Government agencies. At March 31, 1997, the combined portfolio of $53.7
million had an average term to repricing or maturity of 1.7 years. See "BUSINESS
OF THE SAVINGS BANK -- Investment Activities."
In order to encourage institutions to reduce their interest rate risk,
the OTS adopted a rule incorporating an interest rate risk component into the
risk-based capital rules. Using data compiled by the FHLB-Seattle, the Savings
Bank receives a report which measures interest rate risk by modeling the change
in NPV over a variety of interest rate scenarios. This procedure for measuring
interest rate risk was developed by the OTS to replace the "gap" analysis (the
difference between interest-earning assets and interest-bearing liabilities that
mature or reprice within a specific time period). NPV is the present value of
expected cash flows from assets, liabilities and off- balance sheet contracts.
The calculation is intended to illustrate the change in NPV that will occur in
the event of an immediate change in interest rates of at least 200 basis points
with no effect given to any steps that management might take to counter the
effect of that interest rate movement. Under proposed OTS regulations, an
institution with a greater than "normal" level of interest rate risk will be
subject to a deduction from total capital for purposes of calculating its
risk-based capital. An institution with a "normal" level of interest rate risk
is defined as one whose "measured interest rate risk" is less than 2.0%.
Institutions with assets of less than $300 million and a risk-based capital
ratio of more than 12.0% are exempt. The Savings Bank is exempt because its
assets are less than $300
31
<PAGE>
million. Based on the Savings Bank's regulatory capital levels at March 31,
1997, the Savings Bank believes that, if the proposed regulation was implemented
at that date, the regulation would not have had a material adverse effect on the
Savings Bank's regulatory capital compliance.
<TABLE>
<CAPTION>
At March 31, 1997
Net Portfolio Value Net Portfolio Value as a
Change Dollar Dollar Percent Percent of Present Value of Assets
In Rates Amount Change Change NPV Ratio Change
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
400bp $20,523 $(11,830) (37)% 9.56% (445) bp
300bp 26,632 (8,721) (27) 10.80 (321) bp
200bp 26,766 (5,588) (17) 12.00 (201) bp
100bp 29,720 (2,633) (8) 13.09 (93) bp
--bp 32,353 -- -- 14.01 --
(100)bp34,487 2,134 7 14.72 71 bp
(200)bp35,635 3,282 10 15.06 105 bp
(300)bp36,779 4,425 14 15.39 138 bp
(400)bp38,401 6,048 19 15.87 186 bp
</TABLE>
The above table illustrates, for example, that an instantaneous 200
basis point increase in market interest rates at March 31, 1997 would reduce the
Savings Bank's NPV by approximately $5.6 million, or 17%, at that date.
Certain assumptions utilized by the FHLB-Seattle in assessing the
interest rate risk of savings associations within its region were utilized in
preparing the preceding table. These assumptions relate to interest rates, loan
prepayment rates, deposit decay rates, and the market values of certain assets
under differing interest rate scenarios, among others.
As with any method of measuring interest rate risk, certain
shortcomings are inherent in the method of analysis presented in the foregoing
table. For example, although certain assets and liabilities may have similar
maturities or periods to repricing, they may react in different degrees to
changes in market interest rates. 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. Additionally, certain assets, such as ARM loans, have features which
restrict changes in interest rates on a short-term basis and over the life of
the asset. Further, in the event of a change in interest rates, expected rates
of prepayments on loans and early withdrawals from certificates could deviate
significantly from those assumed in calculating the table.
LIQUIDITY AND CAPITAL RESOURCES
The Savings Bank's primary sources of funds are customer deposits,
proceeds from principal and interest payments on and the sale of loans, maturing
securities and FHLB advances. While maturities and scheduled amortization of
loans are a predictable source of funds, deposit flows and mortgage prepayments
are greatly influenced by general interest rates, economic conditions and
competition.
The Savings Bank must maintain an adequate level of liquidity to
ensure the availability of sufficient funds to fund loan originations and
deposit withdrawals, to satisfy other financial commitments and to take
advantage of investment opportunities. The Savings Bank generally maintains
sufficient cash and short-term investments to meet short-term liquidity needs.
At March 31, 1997, cash and cash equivalents totalled $7.0 million, or 3.1% of
total assets. At March 31, 1997, the Savings Bank also maintained an uncommitted
credit facility with the FHLB-Seattle that provided for immediately available
advances up to an aggregate amount of $78.5 million, under which $27.2 million
was outstanding.
32
<PAGE>
OTS regulations require savings institutions to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at least
5.0% of the average daily balance of its net withdrawable deposits and
short-term borrowings. In addition, short-term liquid assets currently must
constitute 1.0% of the sum of net withdrawable deposit accounts plus short-term
borrowings. The Savings Bank's actual short- and long-term liquidity ratios at
March 31, 1997 were 8.3% and 18.0%, respectively.
Liquidity management is both a short- and long-term responsibility of
the Savings Bank's management. The Savings Bank adjusts its investments in
liquid assets based upon management's assessment of (i) expected loan demand,
(ii) projected loan sales, (iii) expected deposit flows, (iv) yields available
on interest-bearing deposits, and (v) liquidity of its asset/liability
management program. Excess liquidity is invested generally in interest-bearing
overnight deposits and other short-term government and agency obligations. If
the Savings Bank requires funds beyond its ability to generate them internally,
it has additional borrowing capacity with the FHLB and collateral for repurchase
agreements.
The Savings Bank's primary investing activity is the origination of
one- to- four family mortgage loans. During the years ended March 31, 1997, 1996
and 1995, the Savings Bank originated $67.9 million, $63.6 million and $49.7
million of such loans, respectively. At March 31, 1997, the Savings Bank had
mortgage loan commitments totalling $2.1 million, consumer loan commitments
totalling $4.4 million, and undisbursed loans in process totalling $11.1
million. The Savings Bank anticipates that it will have sufficient funds
available to meet current loan commitments. Certificates of deposit that are
scheduled to mature in less than one year from March 31, 1997 totalled $79.7
million. Historically, the Savings Bank has been able to retain a significant
amount of its deposits as they mature.
OTS regulations require the Savings Bank to maintain specific amounts
of regulatory capital. As of March 31, 1997, the Savings Bank complied with all
regulatory capital requirements as of that date with tangible, core and
risk-based capital ratios of 10.3%, 10.3% and 20.9%, respectively. For a
detailed discussion of regulatory capital requirements, see "REGULATION --
Federal Regulation of the Savings Bank -- Capital Requirements." See also
"HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE."
IMPACT OF ACCOUNTING PRONOUNCEMENTS AND REGULATORY POLICIES
ACCOUNTING FOR EMPLOYEE STOCK OWNERSHIP PLANS. In November 1993 the
American Institute of Certified Public Accountants issued SOP 93-6, which
requires an employer to record compensation expense in an amount equal to the
fair value of shares committed to be released to employees from an employee
stock ownership plan and to exclude unallocated shares from earnings per share
computations. The effect of SOP 93-6 on net income and book value per share in
future periods cannot be predicted due to the uncertainty of the fair value of
the shares at the time they will be committed to be released. See "PRO FORMA
DATA."
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENT OF LIABILITIES. See Note 1 of Notes to the Consolidated Financial
Statements for a discussion of Statement of Financial Accounting Standards
("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities," and of SFAS No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125." SFAS No. 127
defers the effective date of the application of certain portions of SFAS No. 125
until January 1, 1998. The adoption of the provisions of SFAS No. 125 did not
have a material impact on the Savings Bank's financial condition or results of
operations.
EARNINGS PER SHARE. SFAS No. 128, "Earnings Per Share," issued in
February 1997, establishes standards for computing and presenting earnings per
share ("EPS") and applies to entities with publicly-held common stock or
potential common stock. It replaces the presentation of primary EPS with a
presentation of basis EPS and requires the dual presentation of basic and
diluted EPS on the face of the income statement. SFAS No. 128 is effective for
the financial statements for the periods ending after December 15, 1997. SFAS
No. 128 requires restatement of all prior period EPS data presented. The impact
of its adoption is not expected to be material to the Savings Bank.
33
<PAGE>
DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE. SFAS No. 129,
"Disclosure of Information About Capital Structure," establishes standards for
disclosing information about an entity's capital structure and applies to all
entities. SFAS No. 129 continues the previous requirements to disclose certain
information about an entity's capital structure found in APB Opinions No. 10,
"Omnibus Opinion - 1966," and No. 15, "Earnings Per Share," and SFAS No. 47,
"Disclosure of Long-Term Obligations," for entities that were subject to those
standards. SFAS No. 129 is effective for financial statements for periods ending
after December 15, 1997. SFAS No. 129 contains no change in disclosure
requirements for entities that were previously subject to the requirements of
APB Opinions Nos. 10 and 15 and SFAS No. 47. The adoption of the provisions of
SFAS No. 129 is not expected to have a material impact on the Savings Bank.
COMPREHENSIVE INCOME. SFAS No. 130, "Reporting Comprehensive Income,"
issued in July 1997, establishes standards for reporting and presenting of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general-purpose financial statements. It requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
presented with the same prominence as other financial statements. SFAS No. 130
requires that companies (i) classify items of other comprehensive income by
their nature in a financial statement and (ii) display the accumulated balance
of other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of financial condition.
SFAS No. 130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comprehensive purposes is required.
DISCLOSURE ABOUT SEGMENTS. SFAS No. 131, "Disclosure About Segments of
an Enterprise and Related Information," issued in June 1997, establishes
standards for disclosure about operating segments in annual financial statements
and selected information in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic areas,
and major customers. SFAS No. 131 supersedes SFAS No. 14, "Financial reporting
for Segments of a Business Enterprise." SFAS No. 131 becomes effective for the
Savings Bank's fiscal year ending March 31, 1999, and requires that comparative
information from earlier years be restated to conform to its requirements. The
adoption of the provisions of SFAS No. 131 is not expected to have a material
impact on the Savings Bank.
EFFECT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and related financial data
presented herein have been prepared in accordance with GAAP, which require the
measurement of financial position and operating results in terms of historical
dollars without considering the change in the relative purchasing power of money
over time due to inflation. The primary impact of inflation is reflected in the
increased cost of the Savings Bank's operations. Unlike most industrial
companies, virtually all the assets and liabilities of a financial institution
are monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than do general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.
34
<PAGE>
RECENT DEVELOPMENTS
THE FOLLOWING TABLES SET FORTH CERTAIN INFORMATION CONCERNING THE
CONSOLIDATED FINANCIAL POSITION AND RESULTS OF OPERATIONS OF THE SAVINGS BANK AT
THE DATES AND FOR THE PERIODS INDICATED. INFORMATION AT JUNE 30, 1997 AND FOR
THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996 ARE UNAUDITED, BUT, IN THE OPINION
OF MANAGEMENT, CONTAIN ALL ADJUSTMENTS (NONE OF WHICH WERE OTHER THAN NORMAL
RECURRING ENTRIES) NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS OF SUCH
PERIODS. THE SELECTED OPERATIONS DATA FOR THE THREE MONTHS ENDED JUNE 30, 1997
ARE NOT NECESSARILY INDICATIVE OF THE RESULTS OF OPERATION FOR THE ENTIRE FISCAL
YEAR. THIS INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO PRESENTED ELSEWHERE IN THIS PROSPECTUS.
At At
June 30, March 31,
1997 1997
-------------- --------
(In Thousands)
SELECTED FINANCIAL CONDITION DATA:
Total assets............................. $229,652 $224,385
Loans receivable, net(1) ................ 154,327 151,774
Mortgage-backed certificates
held to maturity, at amortized cost..... 24,942 26,402
Mortgage-backed certificates
available for sale, at fair value....... 12,800 2,990
Cash and interest-bearing deposits....... 5,264 6,951
Investment securities held
to maturity, at amortized cost.......... 17,433 20,456
Investment securities
available for sale, at fair value....... 2,986 3,899
Deposit accounts......................... 168,622 169,416
FHLB advances............................ 32,550 27,180
Shareholders' equity..................... 25,811 25,022
Three Months
Ended June 30,
1997 1996
(In Thousands)
SELECTED OPERATING DATA:
Interest income.....................................$4,623 $4,212
Interest expense.................................... 2,250 2,166
----- -----
Net interest income................................. 2,373 2,046
Provision for loan losses........................... 45 45
----- -----
Net interest income after provision for loan losses. 2,328 2,001
Gains from sale of loans,
securities and real estate owned................... 23 14
Noninterest income.................................. 446 423
Noninterest expenses................................ 1,662 1,473
----- -----
Income before federal income tax provision.......... 1,135 965
Provision for federal income taxes.................. 390 330
----- -----
Net income.......................................... $ 745 $ 635
===== =====
34
<PAGE>
At or For the
Three Months
Ended June 30,
1997 1996
PER SHARE DATA:
Net income per share.......................... $0.31 $0.27
Dividends per share(2)........................ 0.06 0.055
Weighted average shares outstanding........... 2,383,698 2,370,889
SELECTED FINANCIAL RATIOS(3):
PERFORMANCE RATIOS:
Return on average assets...................... 1.31% 1.20%
Return on average equity...................... 11.72 10.89
Dividend payout ratio(2)(4)................... 8.19 8.35
Interest rate spread.......................... 3.46 3.13
Net interest margin........................... 4.38 4.06
Noninterest expenses to average assets........ 2.93 2.78
Efficiency ratio (non-interest expenses
divided by the sum of net interest
income and noninterest income)............... 58.48 59.32
Average interest-earning assets
to average interest-bearing liabilities...... 109.07 108.37
ASSET QUALITY RATIOS:
Allowance for loan losses to
total loans at end of period................. 0.51 0.47
Net charge-offs (recoveries) to average
outstanding loans during the period.......... 0.01 --
Ratio of nonperforming assets to total assets. 0.14 0.22
CAPITAL RATIOS:
Average equity to average assets.............. 11.20 11.02
Equity to assets at end of period............. 11.21 11.02
(1) Includes loans held for sale.
(2) All cash dividends paid by the Savings Bank have been waived by the
MHC.
(3) Annualized, where appropriate.
(4) Excludes cash dividends waived by the MHC.
36
<PAGE>
REGULATORY CAPITAL
The table below sets forth the Savings Bank's capital position relative
to its OTS capital requirements at the date indicated. The definitions of the
terms used in the table are those provided in the capital regulations issued by
the OTS. See "REGULATION -- Federal Regulation of the Savings Bank -- Capital
Requirements."
At June 30, 1997
Percent of Adjusted
Amount Total Assets(1)
(In Thousands)
Tangible capital...................... $23,576 10.6%
Tangible capital requirement.......... 3,330 1.5
------ ----
Excess................................ $20,246 9.1%
======= ===
Core capital.......................... $23,576 10.6%
Core capital requirement(2)........... 6,661 3.0
------ ----
Excess................................ $16,915 7.6%
======= ===
Risk-based capital(3)................. $23,821 21.3%
Risk-based capital requirement........ 8,949 8.0
------ ----
Excess................................ $14,872 13.3%
======= ====
- -----------------------
(1) Based on total tangible assets of $222.0 million for purposes of the
tangible capital requirement, total adjusted assets of $222.0 million
for purposes of the core capital requirements, and risk-weighted assets
of $111.9 million for purposes of the risk-based capital requirement.
(2) The current OTS core capital requirement for savings associations is 3%
of total adjusted assets. The OTS has proposed core capital
requirements that would require a core capital ratio of 3% of total
adjusted assets for thrifts that receive the highest supervisory rating
for safety and soundness and a core capital ratio of 4% to 5% for all
other thrifts.
(3) Percentage represents total core and supplementary capital divided by
total risk-weighted assets.
NONPERFORMING ASSETS AND DELINQUENCIES
At June 30, 1997, the Savings Bank had $311,000 of loans accounted for
on a non-accrual basis ($286,000 in residential real estate and $25,000 in
consumer loans) compared to $87,000 at March 31, 1997. At June 30, 1997, the
Savings Bank had no accruing loans which were contractually past due 90 days or
more, no restructured loans and no real estate owned. At March 31, 1997, there
were no accruing loans which were contractually past due 90 days or more and
$135,000 of real estate owned.
The allowance for loan losses was $866,000 at June 30, 1997.
Charge-offs for the three months ended June 30, 1997 were $11,000, compared to
$2,000 for the three months ended June 30, 1996. Recoveries for the three months
ended June 30, 1997 were $2,000, compared to $3,000 for the three months ended
June 30, 1996.
37
<PAGE>
The following table sets forth the breakdown of the allowance for loan losses
by category at June 30, 1997.
Loan Cateogory
as a Percent of
Amount Total Loans
(in thousands)
Real estate -- mortgage:
Residential........................... $133 60.69%
Nonresidential........................ 224 9.65
Construction.......................... 103 20.01
Consumer............................... 146 8.94
Commercial............................. 50 0.71
Unallocated............................ 210 --
--- ------
Total allowance for loan losses...... $866 100.00%
==== ======
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND MARCH 31, 1997
Total assets were $229.7 million at June 30, 1997, compared to $224.4
million at March 31, 1997. This increase resulted primarily from growth in the
loan portfolio, which was funded primarily by proceeds of maturing securities,
FHLB advances and retained earnings.
Loans receivable, net, were $154.3 million at June 30, 1997, compared
to $151.7 million at March 31, 1997, a 1.7% increase. Increases primarily in
one- to- four family mortgage loans, commercial real estate loans, commercial
business loans, and consumer loans contributed to the increase in loans
receivable, net. Commercial real estate, commercial business and consumer loans
have greater credit risk than one- to- four family mortgage loans. See "RISK
FACTORS -- Certain Lending Risks" and "BUSINESS OF THE SAVINGS BANK -- Lending
Activities."
Investment securities held-to-maturity were $17.4 million at June 30,
1997, compared to $20.5 million at March 31, 1997, as a result of maturities,
the proceeds of which were used to fund loan growth.
Mortgage-backed securities held-to-maturity were $24.9 million at June
30, 1997, compared to $26.4 million at March 31, 1997, as a result of
prepayments, the proceeds of which funded loan growth.
Cash decreased to $5.3 million at June 30, 1997 from $7.0 million at
March 31, 1997 as a result of deposit outflows.
Total deposits were $168.6 million at June 30, 1997, compared to $169.4
million at March 31, 1997. Management attributes this decrease primarily to the
withdrawal of funds by a regular savings depositor for the purpose of paying
personal income taxes.
FHLB advances increased to $32.6 million at June 30, 1997 from $27.2
million at March 31, 1997. Approximately $30.0 million of the outstanding
advances at June 30, 1997 and $20.0 million at March 31, 1997 were used to
purchase mortgage-backed securities, with the goal of recognizing income on the
difference between the rate paid on the advances and the rate earned on the
mortgage-backed securities. At June 30, 1997, $10.0 million of such
mortgage-backed securities were classified as available-for-sale and the
remainder were classified as held-to-maturity. At March 31, 1997, all such
mortgage-backed securities were classified as held-to-maturity. See "BUSINESS OF
THE SAVINGS BANK -- Investment Activities" and "-- Deposit Activities and Other
Sources of Funds -- Borrowings."
38
<PAGE>
Shareholders' equity increased to $25.8 million at June 30, 1997 from
$25.0 million at March 31, 1997 primarily because of growth in retained
earnings, less cash dividends of $61,000 paid to the Public Stockholders.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1997
AND 1996
NET INCOME. Net income was $745,000, or $0.31 per share, for the three
months ended June 30, 1997, compared to $635,000, or $0.27 per share, for the
three months ended June 30, 1996. Earnings per share information has been
retroactively adjusted for stock dividends paid. The increase in net income was
primarily attributable to an increase in net interest income, offset by an
increase in noninterest expenses.
NET INTEREST INCOME. Net interest income increased $327,000 to $2.4
million for the three months ended June 30, 1997, compared to $2.0 million for
the three months ended June 30, 1996. The increased net interest income resulted
primarily from the increase in the average balance of net loans to $153.0
million for the three months ended June 30, 1997 compared to $132.0 million for
the three months ended June 30, 1996. Net interest margin for the three months
ended June 30, 1997 rose to 4.38% from 4.06% for the three months ended June 30,
1996.
INTEREST INCOME. Interest income totalled $4.6 million and $4.2 million
for the three months ended June 30, 1997 and 1996, respectively. Average
interest-earning assets increased 7.6% to $216.9 million for the three months
ended June 30, 1997, compared to $201.6 million for the three months ended June
30, 1996, and the yield on all interest-earning assets increased to 8.09% from
7.82% for the three months ended June 30, 1997 and 1996, respectively. The
increase in average yield was primarily a result of a higher proportion of loans
in portfolio, which tend to have higher yields than securities. The proportion
of loans-to-assets at June 30, 1997 was 67.2% compared to 63.5% at June 30,
1996.
INTEREST EXPENSE. Interest expense for the three months ended June 30,
1997 totalled $2.3 million, a $84,000, or 3.9%, increase from $2.2 million for
the three months ended June 30, 1996. The increase was primarily a result of an
increase in the average balance of deposits from $158.7 million for the three
months ended June 30, 1996 to $169.0 million for the three months ended June 30,
1997, as a result of growth (unaffected by any special promotions) in all
deposit categories other than passbook savings accounts. The average cost on
other interest-bearing liabilities (primarily FHLB advances) was 6.30% for the
three months ended June 30, 1997, compared 6.58% for the three months ended June
30, 1996, as a result of maturing of advances and new advances at lower interest
rates, while the average balance of FHLB advances increased to $29.9 million for
the three months ended June 30, 1997 from $27.4 million for the three months
ended June 30, 1996 to fund loan growth.
PROVISION FOR LOAN LOSSES. The provision for loan losses was $45,000
for both the three months ended June 30, 1997 and 1996. The allowance for loan
losses at June 30, 1997 was $866,000, or 0.51% of total loans receivable,
compared to $699,000, or 0.47%, at June 30, 1996. At June 30, 1997, management
deemed the allowance for loan losses adequate at that date. See "BUSINESS OF THE
SAVINGS BANK -- Lending Activities -- Allowance for Loan Losses." Nonperforming
assets totalled $311,000, or 0.14%, of total assets, at June 30, 1997, compared
to $461,000, or 0.22%, at June 30, 1996. See "BUSINESS OF THE SAVINGS BANK --
Lending Activities -- Nonperforming Assets."
NONINTEREST INCOME. The Savings Bank's principal sources of noninterest
income include loan fees, deposit service charges, and net gains on the sale of
loans and securities available-for-sale. Noninterest income, excluding gains on
sales of assets, was $446,000 for the three months ended June 30, 1997, compared
to $423,000 for the three months ended June 30, 1996. This $23,000 increase was
primarily the result of increased deposit account service charges attributable
to increased numbers of accounts and increased loan origination fees
attributable to higher volume of brokered loans.
39
<PAGE>
NONINTEREST EXPENSE. Noninterest expense increased by $189,000 to $1.7
million for the three months ended June 30, 1997, compared to $1.5 million for
the three months ended June 30, 1996, primarily as a result of additional salary
and employee benefits expense attributable to the hiring of nine full-time
equivalent employees.
PROVISION FOR INCOME TAXES. Provision for income taxes was $390,000 for
the three months ended June 30, 1997, compared to $330,000 for the three months
June 30, 1996 as a result of higher income before income taxes. The effective
tax rate was approximately 34% for both periods.
BUSINESS OF THE HOLDING COMPANY
GENERAL
The Holding Company was organized as a Washington business corporation
at the direction of the Savings Bank on June 23, 1997 for the purpose of
becoming a holding company for the Savings Bank upon completion of the
Conversion and Reorganization. As a result of the Conversion and Reorganization,
the Savings Bank will be a wholly-owned subsidiary of the Holding Company and
all of the issued and outstanding capital stock of the Savings Bank will be
owned by the Holding Company.
BUSINESS
Prior to the Conversion and Reorganization, the Holding Company has not
and will not engage in any significant activities other than of an
organizational nature. Upon completion of the Conversion and Reorganization, the
Holding Company's primary business activity will be the ownership of the
outstanding capital stock of the Savings Bank. In the future, the Holding
Company may acquire or organize other operating subsidiaries, although there are
no current plans, arrangements, agreements or understandings, written or oral,
to do so.
Initially, the Holding Company will neither own nor lease any property
but will instead use the premises, equipment and furniture of the Savings Bank
with the payment of appropriate rental fees, as required by applicable law and
regulations.
Since the Holding Company will only hold the outstanding capital stock
of the Savings Bank upon consummation of the Conversion and Reorganization, the
competitive conditions applicable to the Holding Company will be the same as
those confronting the Savings Bank. See "BUSINESS OF THE SAVINGS BANK --
Competition."
BUSINESS OF THE SAVINGS BANK
GENERAL
The Savings Bank operates, and intends to continue to operate, as a
community oriented financial institution and is devoted to serving the needs of
its customers. The Savings Bank's business consists primarily of attracting
retail deposits from the general public and using those funds to originate real
estate loans. See "-- Lending Activities."
MARKET AREA
The Savings Bank conducts operations from its home office in Camas and
eight branch offices in Washougal, Stevenson, White Salmon, Battle Ground,
Goldendale, Vancouver (2 branch offices) and Longview, Washington. The Savings
Bank's market area for lending and deposit taking activities encompasses Clark,
Cowlitz, Skamania and Klickitat Counties, throughout the Columbia River Gorge
area. Camas is located in Clark County which is approximately 15 miles east of
Portland, Oregon.
40
<PAGE>
Several businesses are located in the Camas area because of the
favorable tax structure and relatively lower energy costs as compared to Oregon.
Washington has no state income tax and Clark County operates a public electric
utility which provides relatively lower cost electricity than does Oregon.
Located in the Camas area are Sharp Electronics, Hewlett Packard, James River,
Underwriters Laboratory and Wafer Tech, as well as several support industries.
In addition to this industrial base, the Columbia River Gorge Scenic Area has
been a source of tourism which has transformed the area from its past dependence
on the timber industry. The primary tourist destination of the Gorge area is the
Skamania Lodge, a $25 million resort complex opened in 1993. In addition, the
Hood River, Oregon, area has become internationally renowned for windsurfing and
has attracted young professionals, many of whom have purchased second residences
in the area.
The Savings Bank faces strong competition from many financial
institutions for deposits and loan originations. See "-- Competition" and "RISK
FACTORS -- Competition."
LENDING ACTIVITIES
GENERAL. At March 31, 1997, the Savings Bank's total net loans
receivable amounted to $151.8 million, or 67.6% of total assets at that date.
The principal lending activity of the Savings Bank is the origination of
residential mortgage loans through its mortgage banking activities, including
residential construction loans, though the Savings Bank has originated loans
collateralized by commercial properties. The Savings Bank, to a lesser extent,
also makes consumer loans and has made commercial business loans. A substantial
portion of the Savings Bank's loan portfolio is secured by real estate, either
as primary or secondary collateral, located in its primary market area.
See "RISK FACTORS -- Certain Lending Risks -- Concentration of Credit Risk."
41
<PAGE>
LOAN PORTFOLIO ANALYSIS. The following table sets forth the composition
of the Savings Bank's loan portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995
------------------------- ------------------------- ----------------------
Amount Percent Amount Percent Amount Percent
(Dollars in thousands)
Real estate loans:
<S> <C> <C> <C> <C> <C> <C>
One-to-four family(1).................. $ 94,536 62.29% $ 88,140 68.77% $ 73,047 70.39%
Multi-family........................... 5,439 3.58 2,958 2.31 2,048 1.97
Construction one-to-four family........ 32,529 21.43 22,596 17.63 20,822 20.07
Construction multi-family.............. 547 0.36 361 0.28 -- --
Construction commercial................ 634 0.42 500 0.39 344 0.33
Land................................... 7,900 5.21 7,546 5.89 5,226 5.04
Commercial real estate ................ 8,997 5.93 6,518 5.08 5,335 5.14
-------- ------ -------- ------ -------- -------
Total real estate loans............. 150,582 99.21 128,619 100.35 106,822 102.94
Commercial business..................... 794 0.53 969 0.76 925 0.89
Consumer loans:
Automobile loans....................... 2,889 1.90 2,384 1.86 1,623 1.56
Savings account loans.................. 734 0.48 613 0.48 480 0.46
Home equity loans...................... 8,254 5.44 5,107 3.99 1,743 1.68
Other consumer loans................... 2,416 1.59 1,695 1.32 1,448 1.40
-------- ------ ------- ------ -------- -------
Total consumer loans................ 14,293 9.41 9,799 7.65 5,294 5.10
-------- ------ ------- ------ -------- -------
Total loans and loans held for sale..... 165,669 139,387 113,041
Less:
Undisbursed loans in process........... 11,087 7.30 8,876 6.93 7,098 6.84
Unamortized loan origination fees,
net of direct costs................... 1,967 1.30 1,678 1.31 1,502 1.45
Unearned discounts..................... 10 0.01 11 0.01 12 0.01
Allowance for possible loan losses..... 831 0.55 653 0.51 657 0.63
-------- ------ --------- ------- --------- -------
Total loans receivable, net(1).......... $151,774 100.00% $128,169 100.00% $103,772 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
At March 31,
1994 1993
------------------------ ------------------
Amount Percent Amount Percent
Real estate loans:
<S> <C> <C> <C> <C>
One-to-four family(1).................. $64,068 70.51% $57,254 68.52%
Multi-family........................... 1,350 1.49 2,688 3.22
Construction one-to-four family........ 25,280 27.82 19,571 23.42
Construction multi-family.............. -- -- -- --
Construction commercial................ -- -- -- --
Land................................... 2,870 3.16 2,338 2.80
Commercial real estate ................ 6,238 6.87 7,187 8.60
-------- ------- -------- -------
Total real estate loans............. 99,806 109.85 89,038 106.56
Commercial business..................... 803 0.88 972 1.16
Consumer loans:
Automobile loans....................... 1,510 1.66 1,561 1.87
Savings account loans.................. 449 0.49 561 0.67
Home equity loans...................... -- -- -- --
Other consumer loans................... 1,358 1.50 1,385 1.66
------- ------- -------- -------
Total consumer loans................ 3,317 3.65 3,507 4.20
------- ------- -------- -------
Total loans and loans held for sale..... 103,926 93,517
Less:
Undisbursed loans in process........... 10,917 12.02 8,209 9.82
Unamortized loan origination fees,
net of direct costs................... 1,502 1.65 1,206 1.44
Unearned discounts..................... -- -- 33 0.04
Allowance for possible loan losses..... 647 0.71 515 0.62
-------- ------- -------- -------
Total loans receivable, net(1).......... $90,860 100.00% $83,554 100.00%
======= ====== ======= ======
</TABLE>
(1) Includes loans held for sale of $80,000, $1.9 million, $247,000, $4.5
million and $10.7 million at March 31, 1997, 1996, 1995, 1994 and 1993,
respectively.
42
<PAGE>
ONE- TO- FOUR FAMILY REAL ESTATE LENDING. Historically, the Savings
Bank's primary lending activity has been the origination of mortgage loans to
enable borrowers to purchase one- to- four family properties. At March 31, 1997,
approximately $94.5 million, or 62.3% of total net loans receivable, consisted
of loans secured by one- to four-family residential real estate. One- to- four
family mortgage loans accounted for $67.9 million, or 79.3% of total loan
originations, for the year ended March 31, 1997.
In addition to originating one- to- four family loans for its
portfolio, the Savings Bank is an active mortgage broker for several third party
mortgage lenders. In recent periods, such mortgage brokerage activities have
reduced the volume of fixed-rate one- to- four family loans that are originated
and sold by the Savings Bank. See "-- Loan Originations, Sales and Purchases"
and "-- Mortgage Brokerage."
The Savings Bank originates both fixed-rate mortgage loans and ARM
loans secured by one- to-four family properties. Borrower demand for ARM loans
versus fixed-rate mortgage loans is a function of the level of interest rates,
the expectations of changes in the level of interest rates and the difference
between the interest rates and loan fees offered for fixed-rate mortgage loans
and the first year interest rates and loan fees for ARM loans. The relative
amount of fixed-rate mortgage loans and ARM loans that can be originated at any
time is largely determined by the demand for each in a competitive environment.
The Savings Bank originates fixed-rate mortgage loans for terms of 15
to 30 years as well as balloon mortgage loans with terms of either five or seven
years. The interest rates on the balloon mortgage loans are adjusted after the
expiration of the initial balloon term. Fixed rate mortgage loans are generally
originated to conform to standards that allow them to be sold in the secondary
mortgage market. The Savings Bank generally sells fixed-rate mortgage loans with
maturities of 15 years or more to the Federal Home Loan Mortgage Corporation
("FHLMC"), servicing retained. See "-- Lending Activities -- Loan Originations,
Sales and Purchases" and "-- Lending Activities -- Mortgage Loans Servicing."
The Savings Bank offers ARM loans at rates and terms competitive with
market conditions. At March 31, 1997, $59.6 million, or 46.9%, of the Savings
Bank's one- to- four family loan portfolio consisted of ARM loans. ARM loans are
originated with interest rates and payments that adjust annually based on a rate
equal to 2.75% to 3.75% above the prevailing rate on the one-year constant
maturity U.S. Treasury Bill Index.
At March 31, 1997, the Savings Bank charged an origination fee on ARM
loans ranging from 1% to 3% of the loan principal amount and an initial interest
rate that ranged from 6.25% to 7.25% per annum. The annual interest rate cap
(the maximum amount by which the interest rate may be increased per year) on ARM
loans is generally 2% and the lifetime interest rate cap is generally 5% to 6%
over the initial interest rate. The Savings Bank does not originate negative
amortization loans.
As a marketing incentive, the Savings Bank offers ARM loans with a
discounted or "teaser" rate of up to 2% below the normal rate offered. The
borrower, however, is qualified at the fully indexed rate. Annual and lifetime
interest rate caps are based on the initial discounted rate. "Teaser" rate loans
are subject to prepayment penalty during the first three years of the loan term
if the borrower repays more than 20% of the outstanding principal balance per
year. During the first year, the penalty is 3% of the outstanding principal
balance; during year two, it is 2% of the outstanding principal balance; and
during year three, it is 1% of the outstanding principal balance.
The retention of ARM loans in the portfolio helps reduce the Savings
Bank's exposure to changes in interest rates. There are, however, unquantifiable
credit risks resulting from the potential of increased costs arising from
changed rates to be paid by the customer. It is possible that during periods of
rising interest rates the risk of default on ARM loans may increase as a result
of repricing and the increased costs to the borrower. Furthermore, because
"teaser" rate loans originated by the Savings Bank generally provide for initial
rates of interest below the rates which would apply were the adjustment index
used for pricing initially (discounting), these loans are subject to increased
risks of default of delinquency. Another consideration is that although ARM
loans allow the Savings Bank to
43
<PAGE>
increase the sensitivity of its asset base to changes in interest rates, the
extent of this interest sensitivity is limited by the periodic and lifetime
interest rate adjustment limits. Because of these considerations, the Savings
Bank has no assurance that yields on ARM loans will be sufficient to offset
increases in its cost of funds.
While one- to- four family residential real estate loans typically are
originated with 30-year terms and the Savings Bank permits its ARM loans to be
assumed by qualified borrowers, such loans generally remain outstanding for
substantially shorter periods because borrowers often prepay their loans in full
upon sale of the property pledged as security or upon refinancing the original
loan. In addition, substantially all of the fixed interest rate loans in the
Savings Bank's loan portfolio contain due-on-sale clauses providing that the
Savings Bank may declare the unpaid amount due and payable upon the sale of the
property securing the loan. The Savings Bank enforces these due-on-sale clauses
to the extent permitted by law. Thus, average loan maturity is a function of,
among other factors, the level of purchase and sale activity in the real estate
market, prevailing interest rates and the interest rates payable on outstanding
loans.
The Savings Bank requires title insurance insuring the status of its
lien on all of the real estate secured loans and also requires that the fire and
extended coverage casualty insurance (and, if appropriate, flood insurance) be
maintained in an amount at least equal to the lesser of the loan balance and the
replacement cost of the improvements. Where the value of the unimproved real
estate exceeds the amount of the loan on the real estate, the Savings Bank may
make exceptions to its property insurance requirements.
The Savings Bank generally does not make conventional loans with
loan-to-value ratios exceeding 80% and makes loans with a loan-to-value ratio in
excess of 80% only when secured by first liens on owner-occupied one-to-four
family residences. On loans with loan-to-value ratios in excess of 80%, the
Savings Bank requires private mortgage insurance ("PMI"), with coverage ranging
from 12% to 25% of the appraised value of the property or the amount required by
the FHLMC, depending on the loan-to-value ratio. Loans with loan-to-value ratios
in excess of 80% must have a mortgage escrow account from which disbursements
are made for real estate taxes, hazard and flood insurance and PMI.
CONSTRUCTION LENDING. Prompted by favorable economic conditions,
including a favorable long term interest rate environment, and increased
residential housing demand in its primary market area, the Savings Bank actively
originates three types of residential construction loans: (i) speculative
construction loans, (ii) custom construction loans and (iii)
construction/permanent loans. Annual originations of residential construction
loans have increased from $33.6 million during the year ended March 31, 1995 to
$43.9 million during the year ended March 31, 1997. Subject to market
conditions, the Savings Bank intends to increase its residential construction
lending activities. See "RISK FACTORS -- Certain Lending Risks." To a
substantially lesser extent, the Savings bank also originates construction loans
for the development of multi-family and commercial properties.
At March 31, 1997, the composition of the Savings Bank's construction
loan portfolio was as follows:
Outstanding Percent of
Balance(1) Total
(In thousands)
Speculative construction............ $16,814 49.9%
Custom construction................. 6,658 19.7
Construction/permanent.............. 10,238 30.4
-------- ------
Total............................. $33,710 100.0%
======= =====
- --------------------
(1) Includes loans in process.
44
<PAGE>
Speculative construction loans are made to home builders and are termed
"speculative" because the home builder does not have, at the time of loan
origination, a signed contract with a home buyer who has a commitment for
permanent financing with either the Savings Bank or another lender for the
finished home. The home buyer may be identified either during or after the
construction period, with the risk that the builder will have to debt service
the speculative construction loan and finance real estate taxes and other
carrying costs of the completed home for a significant time after the completion
of construction until the home buyer is identified. The Savings Bank lends to
approximately 50 local builders, many of whom may have only one or two
speculative loans outstanding from the Savings Bank. The Savings Bank considers
approximately 20 builders as core borrowers with several speculative loans
outstanding at any one time. Rather than originating lines of credit to home
builders to construct several homes at once, the Savings Bank originates and
underwrites a separate loan for each home. Speculative construction loans are
originated for a term of 12 months, with interest rates ranging from 1.5% to
2.0% above the prime lending rate, and with a loan-to-value ratio of no more
than 80% of the appraised estimated value of the completed property. At March
31, 1997, the Savings Bank had four borrowers each with aggregate outstanding
speculative loan balances of more than $700,000, all of which were performing
according to their respective terms and the largest of which amounted to $1.2
million.
Unlike speculative construction loans, custom construction loans are
made to home builders who, at the time of construction, have a signed contract
with a home buyer who has a commitment for permanent financing for the finished
home with the Savings Bank or another lender. Custom construction loans are
generally originated for a term of 12 months, with fixed interest rates ranging
from 7.75% to 8.25%, and with loan-to-value ratios of 80% of the appraised
estimated value of the completed property or cost, whichever is less. At March
31, 1997, the largest outstanding custom construction loan had an outstanding
balance of $457,000 and was performing according to its terms.
Construction/permanent loans are originated to the home owner rather
than the home builder along with a commitment by the Savings Bank to originate a
permanent loan to the home owner to repay the construction loan at the
completion of construction. The construction phase of a construction/permanent
loan generally lasts six months and the interest rate charged is generally 6.25%
to 8.75%, fixed, and with loan-to-value ratios of 80% (or up to 95% with PMI) of
the appraised estimated value of the completed property or cost, whichever is
less. At the completion of construction, the Savings Bank may either originate a
fixed-rate mortgage loan or an ARM loan for retention in its portfolio or use
its mortgage brokerage capabilities to obtain permanent financing for the
customer with another lender. See "-- Mortgage Brokerage." When the Savings Bank
issues a commitment to provide permanent financing upon completion of
construction, the interest rate charged on the construction loan generally
includes an additional 0.375% to 0.625% as a protection against the risk of an
increase in interest rates before the permanent loan is funded. See "-- Lending
Activities -- Loan Originations and Sales" and "-- Lending Activities --
Mortgage Loan Servicing." At March 31, 1997, the largest outstanding
construction/permanent loan had an outstanding balance of $340,000 and was
performing according to its terms.
To a substantially lesser extent, the Savings Bank also provides
construction financing for non-residential properties (i.e., multi-family and
commercial properties). At March 31, 1997, such construction loans amounted to
$1.2 million.
All construction loans must be approved by the Savings Bank's Loan
Committee. See "-- Loan Solicitation and Processing." Prior to preliminary
approval of any construction loan application, an independent fee appraiser
inspects the site and the Savings Bank reviews the existing or proposed
improvements, identifies the market for the proposed project, analyzes the pro
forma data and assumptions on the project. In the case of a speculative or
custom construction loan, the Savings Bank reviews the experience and expertise
of the builder. After preliminary approval has been given, the application is
processed, which includes obtaining credit reports, financial statements and tax
returns on the borrowers and guarantors, an independent appraisal of the
project, and any other expert reports necessary to evaluate the proposed
project. In the event of cost overruns, the Savings Bank requires that the
borrower increase the loan amount by depositing its own funds into a loans in
process account and the Savings Bank disburses additional loan proceeds
consistent with the original loan-to-value ratio.
45
<PAGE>
The construction loan documents require that construction loan proceeds
be disbursed in increments as construction progresses. Disbursements are based
on periodic on-site inspections by independent fee inspectors and Savings Bank
personnel. At inception, the Savings Bank also requires borrowers to deposit
funds to the loans-in-process account covering the difference between the actual
cost of construction and the loan amount. The Savings Bank regularly monitors
the construction loan portfolio and the economic conditions and housing
inventory. Property inspections are performed by the Savings Bank's property
inspector. The Savings Bank believes that the internal monitoring system helps
reduce many of the risks inherent in its construction lending.
Construction lending affords the Savings Bank the opportunity to
achieve higher interest rates and fees with shorter terms to maturity than does
its single-family permanent mortgage lending. Construction lending, however, is
generally considered to involve a higher degree of risk than single-family
permanent mortgage lending because of the inherent difficulty in estimating both
a property's value at completion of the project and the estimated cost of the
project. The nature of these loans is such that they are generally more
difficult to evaluate and monitor. If the estimate of construction cost proves
to be inaccurate, the Savings Bank may be required to advance funds beyond the
amount originally committed to permit completion of the project. If the estimate
of value upon completion proves to be inaccurate, the Savings Bank may be
confronted with a project whose value is insufficient to assure full repayment.
Projects may also be jeopardized by disagreements between borrowers and builders
and by the failure of builders to pay subcontractors. Loans to builders to
construct homes for which no purchaser has been identified carry more risk
because the payoff for the loan depends on the builder's ability to sell the
property prior to the time that the construction loan is due. The Savings Bank
has sought to address these risks by adhering to strict underwriting policies,
disbursement procedures, and monitoring practices. In addition, because the
Savings Bank's construction lending is in its primary market area, changes in
the local economy and real estate market could adversely affect the Savings
Bank's construction loan portfolio.
MULTI-FAMILY LENDING. At March 31, 1997, the Savings Bank had $5.4
million, or 3.6% of the Savings Bank's total net loans receivable, secured by
multi-family dwelling units (more than four units) located primarily in the
Savings Bank's primary market area. Subject to market conditions, the Savings
Bank intends to become a more active originator of multi-family loans within its
primary market area.
Multi-family loans are generally originated with variable rates of
interest equal to 3.75% over the one-year constant maturity U.S. Treasury Bill
Index, with principal and interest payments fully amortizing over terms of up to
25 years. Multi-family loans generally range in principal balance from $200,000
to $400,000. At March 31, 1997, the largest multi-family loan had an outstanding
principal balance of $1.3 million and was secured by an 18- unit adult assisted
living center located in the Savings Bank's primary market area. At March 31,
1997, this loan was performing according to its terms.
The maximum loan-to-value ratio for multi-family loans is generally
75%. The Savings Bank requires its multi-family loan borrowers to submit
financial statements and rent rolls on the subject property annually. The
Savings Bank also inspects the subject property annually.
Multi-family mortgage lending affords the Savings Bank an opportunity
to receive interest at rates higher than those generally available from one- to-
four family residential lending. However, loans secured by such properties
usually are greater in amount, more difficult to evaluate and monitor and,
therefore, involve a greater degree of risk than one- to- four family
residential mortgage loans. Because payments on loans secured by multi-family
properties are often dependent on the successful operation and management of the
properties, repayment of such loans may be affected by adverse conditions in the
real estate market or the economy. The Savings Bank seeks to minimize these
risks by strictly scrutinizing the financial condition of the borrower, the
quality of the collateral and the management of the property securing the loan.
The Savings Bank also generally obtains personal guarantees from financially
capable parties based on a review of personal financial statements.
LAND LENDING. The Savings Bank originates loans to local real estate
developers with whom it has established relationships for the purpose of
developing residential subdivisions (i.e., installing roads, sewers, water
46
<PAGE>
and other utilities), as well as loans to individuals to purchase building lots.
At March 31, 1997, subdivision development loans totalled $2.4 million, or 1.6%
of total net loans receivable, and building lot loans amounted to $5.5 million,
or 3.6% of the total net loans receivable. Land loans are secured by a lien on
the property and made for a period of five years with an interest rate that
adjusts with the prime rate, and are made with loan-to-value ratios not
exceeding 75%. Monthly interest payments are required during the term of the
loan. Subdivision loans are structured so that the Savings Bank is repaid in
full upon the sale by the borrower of approximately 90% of the subdivision lots.
All of the Savings Bank's land loans are secured by property located in its
primary market area. In addition, the Savings Bank also generally obtains
personal guarantees from financially capable parties based on a review of
personal financial statements. At March 31, 1997, the Savings Bank had no
nonaccruing land loans.
Loans secured by undeveloped land or improved lots involve greater
risks than one- to- four family residential mortgage loans because such loans
are advanced upon the predicted future value of the developed property. If the
estimate of such future value proves to be inaccurate, in the event of default
and foreclosure the Savings Bank may be confronted with a property the value of
which is insufficient to assure full repayment. The Savings Bank attempts to
minimize this risk by limiting the maximum loan-to-value ratio on land loans to
60% of the estimated developed value of the secured property. Loans on raw land
may run the risk of adverse zoning changes, environmental or other restrictions
on future use.
COMMERCIAL REAL ESTATE LENDING. Commercial real estate loans totalled
$9.6 million, or 6.3% of total net loans receivable at March 31, 1997. The
Savings Bank originates commercial real estate loans generally at variable
interest rates and secured by properties, such as office buildings,
retail/wholesale facilities and industrial buildings, located in its primary
market area. The principal balance of an average commercial real estate loan
generally ranges between $300,000 and $500,000. At March 31, 1997, the largest
commercial real estate loan had an outstanding balance of $897,000 and is
secured by a mobile home park located in the Savings Bank's primary market area.
Such loan was performing according to its terms at March 31, 1997.
The Savings Bank requires appraisals of all properties securing
commercial real estate loans. Appraisals are performed by an independent
appraiser designated by the Savings Bank, all of which are reviewed by
management. The Savings Bank considers the quality and location of the real
estate, the credit of the borrower, the cash flow of the project and the quality
of management involved with the property. The Savings Bank generally imposes a
debt to income ratio of approximately 33% for originated loans secured by income
producing properties. Loan-to-value ratios on commercial real estate loans are
generally limited to 75%. The Savings Bank generally obtains loan guarantees
from financially capable parties based on a review of personal financial
statements.
Commercial real estate lending affords the Savings Bank an opportunity
to receive interest at rates higher than those generally available from one- to-
four family residential lending. However, loans secured by such properties
usually are greater in amount, more difficult to evaluate and monitor and,
therefore, involve a greater degree of risk than one- to- four family
residential mortgage loans. Because payments on loans secured by commercial
properties often depend upon the successful operation and management of the
properties, repayment of such loans may be affected by adverse conditions in the
real estate market or the economy. The Savings Bank seeks to minimize these
risks by limiting the maximum loan-to-value ratio to 75% and strictly
scrutinizing the financial condition of the borrower, the quality of the
collateral and the management of the property securing the loan.
COMMERCIAL BUSINESS LENDING. The Savings Bank engages in limited
amounts of commercial business lending. At March 31, 1997, commercial business
loans amounted to $794,000, or 0.5% of total net loans receivable. Commercial
business loans are generally made to customers who are well known to the Savings
Bank and are generally secured by business equipment and are made at variable
rates of interest equal to a negotiated margin above the prime rate. The Savings
Bank also generally obtains personal guarantees from financially capable parties
based on a review of personal financial statements.
Commercial business lending generally involves greater risk than
residential mortgage lending and involves risks that are different from those
associated with residential and commercial real estate lending. Real estate
lending
47
<PAGE>
is generally considered to be collateral based lending with loan amounts based
on predetermined loan to collateral values and liquidation of the underlying
real estate collateral is viewed as the primary source of repayment in the event
of borrower default. Although commercial business loans are often collateralized
by equipment, inventory, accounts receivable or other business assets, the
liquidation of collateral in the event of a borrower default is often an
insufficient source of repayment because accounts receivable may be
uncollectible and inventories and equipment may be obsolete or of limited use,
among other things. Accordingly, the repayment of a commercial business loan
depends primarily on the creditworthiness of the borrower (and any guarantors),
while liquidation of collateral is a secondary and often insufficient source of
repayment.
CONSUMER LENDING. The Savings Bank originates a variety of consumer
loans, including home equity lines of credit, home improvement loans, loans for
debt consolidation and other purposes, automobile and boat loans and savings
account loans. At March 31, 1997, consumer loans totalled $14.3 million, or 9.4%
of total net loans receivable.
Home equity lines of credit, which are secured by a second mortgage on
the borrower's primary residence, are a large and growing portion of the
consumer loan portfolio. The Savings Bank has actively marketed home equity
lines of credit with television advertising and intends to continue to do so
subject to market conditions. At March 31, 1997, approved home equity lines of
credit totalled $9.5 million, of which $6.9 million was outstanding. Home equity
lines of credit are made at loan-to-value ratios of 90% or less, taking into
consideration the outstanding balance on the first mortgage on the property.
Lines of credit with a loan to value ratio of 80% or less are made at variable
interest rates equal to 2% above the rate on the three-year U.S. Treasury Bill
with a maximum annual interest rate adjustment of 2% and a maximum lifetime
interest rate adjustment of 8%, with an interest rate not to exceed 16%.
Otherwise, the rate is 3% above the rate on the three-year U.S. Treasury Bill
with an annual interest rate adjustment of 3% and a maximum lifetime interest
rate adjustment of 9%, with an interest rate not to exceed 16%.
The Savings Bank also originates fully amortizing second mortgage loans
for terms up to ten years with generally fixed interest rates, and with
loan-to-value ratios of more than 80% (taking into account any outstanding first
mortgage loan balance). At March 31, 1997, such second mortgage loans amounted
to $1.4 million.
The Savings Bank's procedures for underwriting consumer loans include
an assessment of the applicant's payment history on other debts and ability to
meet existing obligations and payments on the proposed loans. Although the
applicant's creditworthiness is a primary consideration, the underwriting
process also includes a comparison of the value of the security, if any, to the
proposed loan amount.
Consumer loans generally entail greater risk than do residential
mortgage loans, particularly in the case of consumer loans that are unsecured or
secured by assets that depreciate rapidly, such as mobile homes, automobiles,
boats and recreational vehicles. In such cases, repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment for the
outstanding loan and the remaining deficiency often does not warrant further
substantial collection efforts against the borrower. In addition, consumer loan
collections are dependent on the borrower's continuing financial stability, and
thus are more likely to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Furthermore, the application of various federal and state
laws, including federal and state bankruptcy and insolvency laws, may limit the
amount which can be recovered on such loans. Such loans may also give rise to
claims and defenses by the borrower against the Savings Bank as the holder of
the loan, and a borrower may be able to assert claims and defenses which it has
against the seller of the underlying collateral. The Savings Bank adds a general
provision to its consumer loan loss allowance, based on general economic
conditions and prior loss experience.
LOAN MATURITY AND REPRICING. The following table sets forth certain
information at March 31, 1997 regarding the dollar amount of loans maturing in
the Savings Bank's portfolio based on their contractual terms to maturity, but
does not include potential prepayments. Demand loans, loans having no stated
schedule of repayments and no stated maturity, and overdrafts are reported as
due in one year or less. Mortgage loans which have adjustable-
48
<PAGE>
rates are shown as maturing at their next repricing date. Loan balances do not
include unearned discounts, unearned income and allowance for loan losses.
<TABLE>
<CAPTION>
After One After 3 After 5
Within Year to Years to Years to Beyond
One Year 3 Years 5 Years 10 Years 10 Years Total
-------- --------- -------- -------- -------- -----
(In thousands)
Residential one- to-four family:
<S> <C> <C> <C> <C> <C> <C>
Adjustable-rate................ $ 846 $ 2,954 $ 1,555 $ 8,023 $46,185 $ 59,563
Fixed-rate..................... 6,627 4,975 6,593 12,661 36,566 67,422
Other residential and
all non-residential:
Adjustable-rate................ 157 549 289 1,490 8,579 11,064
Fixed-rate..................... 1,259 1,242 1,605 3,452 4,895 12,453
Consumer and commercial:
Adjustable-rate................ 652 424 278 92 6,101 7,547
Fixed-rate..................... 3,317 2,257 1,414 442 110 7,540
------ ------ ----- ------ ------ -------
Total gross loans............. $84,831 $10,358 $9,612 $16,836 $43,952 $165,589
======= ======= ====== ======= ======= ========
</TABLE>
The following table sets forth the dollar amount of all loans due one
year after March 31, 1997 which have fixed interest rates and have floating or
adjustable interest rates.
Fixed- Floating- or
Rates Adjustable-Rates
(In thousands)
Real estate mortgage:
One- to-four family.......................$60,795 $4,297
Other mortgage loans...................... 11,194 249
Consumer and commercial.................... 4,223 --
------ -----
Total....................................$76,212 $4,546
======= ======
Scheduled contractual principal repayments of loans do not reflect the
actual life of such assets. The average life of a loan is substantially less
than its contractual terms because of prepayments. In addition, due-on-sale
clauses on loans generally give the Savings Bank the right to declare loans
immediately due and payable in the event, among other things, that the borrower
sells the real property. The average life of mortgage loans tends to increase,
however, when current mortgage loan market rates are substantially higher than
rates on existing mortgage loans and, conversely, decrease when rates on
existing mortgage loans are substantially higher than current mortgage loan
market rates. Furthermore, management believes that a significant number of the
Savings Bank's residential mortgage loans are outstanding for a period less than
their contractual terms because of the transitory nature of many of the
borrowers who reside in its primary market area.
LOAN SOLICITATION AND PROCESSING. The Savings Bank's lending activities
are subject to the written, non-discriminatory, underwriting standards and loan
origination procedures established by the Board of Directors and management. The
customary sources of loan originations are realtors, walk-in customers,
referrals and existing customers. The Savings Bank also uses commissioned loan
brokers and television and print advertising to market its products and
services.
Upon receipt of a loan application, a credit report is ordered to
verify specific information relating to the loan applicant's employment, income
and credit standing. A loan applicant's income is verified through the
applicant's employer or from the applicant's tax returns. In the case of a real
estate loan, an appraisal of the real
49
<PAGE>
estate intended to secure the proposed loan is undertaken, generally by an
independent appraiser approved by the Savings Bank. The Savings Bank's mortgage
loan documents conform to FHLMC standards.
Consumer loans are generally approved by individual loan officers and
authorized branch managers. Residential mortgage loans within the FHLMC lending
limit (currently $214,600) may be approved by the Vice President of Lending.
Residential mortgage loans in excess of this limit but not more than $350,000
and all other loans of $350,000 or less require the approval of the Vice
President of Lending and one other designated senior officer. All loans in
excess of $350,000 must be approved by the Executive Loan Committee consisting
of President Sheaffer and two other members of the Board of Directors. All loans
are subsequently ratified by the full Board of Directors.
The Savings Bank's policy requires borrowers to obtain certain types of
insurance to protect the Savings Bank's interest in the collateral securing the
loan. The Savings Bank requires either a title insurance policy insuring that
the Savings Bank has a valid first lien on the mortgaged real estate or an
opinion by an attorney regarding the validity of title. Fire and casualty
insurance and, if applicable, flood insurance, is also required on collateral
for loans. The Savings Bank requires escrows for insurance on all loans with a
loan-to-value exceeding 80%.
LOAN COMMITMENTS. The Savings Bank issues commitments for residential
mortgage loans conditioned upon the occurrence of certain events. Such
commitments are made in writing on specified terms and conditions and are
honored for up to 10 days from approval, depending on the type of transaction.
The Savings Bank had outstanding mortgage loan commitments of approximately $2.1
million at March 31, 1997. See Note 5 of Notes to Consolidated Financial
Statements.
LOAN ORIGINATIONS, SALES AND PURCHASES. While the Savings Bank
originates both adjustable-rate and fixed-rate loans, its ability to generate
each type of loan depends upon relative customer demand for loans in its primary
market area. During the years ended March 31, 1997 and 1996, the Savings Bank's
total loan originations were $85.7 million and $78.0 million, respectively, of
which 53.8% and 51.4%, respectively, were subject to periodic interest rate
adjustment and 46.2% and 48.6% were fixed-rate loans, respectively.
The Savings Bank customarily sells the fixed-rate loans that it
originates with maturities of 15 years or more to the FHLMC as part of its asset
liability strategy. The sale of such loans allows the Savings Bank to continue
to make loans during periods when savings flows decline or funds are not
otherwise available for lending purposes; however, the Savings Bank assumes an
increased risk if such loans cannot be sold in a rising interest rate
environment. Changes in the level of interest rates and the condition of the
local and national economies affect the amount of loans originated by the
Savings Bank and demanded by investors to whom the loans are sold. Generally,
the Savings Bank's loan origination and sale activity and, therefore, its
results of operations, may be adversely affected by an increasing interest rate
environment to the extent such environment results in decreased loan demand by
borrowers and/or investors. Accordingly, the volume of loan originations and the
profitability of this activity can vary significantly from period to period.
Mortgage loans are sold to the FHLMC on a nonrecourse basis whereby foreclosure
losses are generally the responsibility of the FHLMC and not the Savings Bank.
Between the time that origination commitments are issued and the time
the loans are sold, the Savings Bank is exposed to movements in the price (due
to changes in interest rates) of such loans (or of securities into which such
loans are sometimes converted). Differences between the volume or timing of
actual loan originations and in management's estimates or in actual sales of the
loans can expose the Savings Bank to significant losses. This activity is
managed daily. There can be no assurance that the Savings Bank will be
successful in its efforts to reduce the risk of interest rate fluctuation
between the time of origination of a mortgage loan and the time of the ultimate
sale of the loan. To the extent that the Savings Bank does not adequately manage
its interest rate risk, the Savings Bank may incur significant mark-to-market
losses or losses relating to the sale of such loans, adversely affecting
financial condition and results of operations.
The Savings Bank is not an active purchaser of loans.
50
<PAGE>
The following table shows total loans originated, purchased, sold and
repaid during the periods indicated.
<TABLE>
<CAPTION>
For the Years Ended March 31,
1997 1996 1995
(In thousands)
Total net loans receivable at beginning of period..... $128,169 $103,772 $ 90,860
------- ------- -------
Loans originated:
<S> <C> <C> <C>
Residential one- to-four family...................... 24,039 26,397 16,115
Multi-family......................................... 479 790 869
Construction one- to-four family..................... 43,887 37,165 33,591
Construction other................................... 1,646 861 344
Land and non-residential............................. 9,983 8,250 3,839
Other loans.......................................... 5,617 4,548 2,099
-------- -------- ---------
Total loans originated............................. 85,651 78,011 56,857
-------- -------- ---------
Loans purchased....................................... -- -- 53
---------- ---------- ----------
Residential one- to-four family loans sold............ 6,943 7,661 7,962
-------- --------- ---------
Repayment of principal................................ 52,426 44,004 39,833
-------- --------- ---------
Increase (decrease) in loans in process............... (2,677) (1,949) 3,797
--------- ---------- ----------
Net increase in loans................................. 23,605 24,397 12,912
-------- --------- ----------
Total net loans receivable at end of period........... $151,774 $128,169 $103,772
======== ======== ========
</TABLE>
MORTGAGE BROKERAGE. In addition to originating mortgage loans for
retention in its portfolio, the Savings Bank employs three commissioned brokers
who originate mortgage loans (including construction loans) for various mortgage
companies predominately in the Portland and Seattle metropolitan areas, as well
as for the Savings Bank. The loans brokered to such mortgage companies are
closed in the name of and funded by the purchasing mortgage company and they are
not originated as an asset of the Savings Bank. In return, the Savings Bank
receives a fee ranging from 1% to 1.25% of the loan amount that it shares
equally with the commissioned broker. For loans brokered to the Savings Bank,
they are closed on the Savings Bank's books as if the Savings Bank had
originated them and the commissioned broker receives a fee of approximately
0.50% of the loan amount. During the year ended March 31, 1997, brokered loans
totalled $60.9 million (including $25.6 million brokered to the Savings Bank).
Gross fees of $394,000 (excluding the portion of fees shared with the
commissioned brokers) were recognized for the year ended March 31, 1997.
MORTGAGE LOAN SERVICING. The Savings Bank is a qualified servicer for
the FHLMC. The Savings Bank's general policy is to close its residential loans
on the FHLMC modified loan documents to facilitate future sales to the FHLMC.
The Savings Bank continues to collect payments on the loans, to supervise
foreclosure proceedings, if necessary, and otherwise to service the loans prior
to selling the servicing rights. The Savings Bank retains a portion of the
interest paid by the borrower on the loans as consideration for its servicing
activities.
The Savings Bank generally retains the servicing rights on the
fixed-rate mortgage loans that it sells to the FHLMC. At March 31, 1997, total
loans serviced for others were $98.8 million.
51
<PAGE>
In 1994, the Savings Bank purchased the servicing rights to an
underlying portfolio of residential mortgage loans secured by properties
predominately located in the Seattle Metropolitan Area. At March 31, 1997, the
value of these purchased servicing rights was $402,000 and was being amortized
over the life of the underlying loan servicing.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Impact of Accounting Pronouncements and Regulatory
Policies" for a discussion of SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities."
LOAN ORIGINATION AND OTHER FEES. The Savings Bank generally receives
loan origination fees and discount "points." Loan fees and points are a
percentage of the principal amount of the mortgage loan that are charged to the
borrower for funding the loan. The Savings Bank usually charges origination fees
of 2% to 3% on one- to four-family residential real estate loans, long-term
commercial real estate loans and residential construction loans. Current
accounting standards require fees received for originating loans to be deferred
and amortized into interest income over the contractual life of the loan.
Deferred fees associated with loans that are sold are recognized as income at
the time of sale. The Savings Bank had $2.0 million of net deferred loan fees at
March 31, 1997. The Savings Bank also receives loan servicing fees on the loans
it sells and on which it retains the servicing rights.
DELINQUENCIES. The Savings Bank's collection procedures for all loans
except consumer loans provide for a series of contacts with delinquent
borrowers. A late charge delinquency notice is first sent to the borrower when
the loan becomes 17 days past due. A follow-up telephone call, or letter if the
borrower cannot be contacted by telephone, is made when the loan becomes 22 days
past due. A delinquency notice is sent to the borrower when the loan becomes 30
days past due. When payment becomes 60 days past due, a notice of default letter
is sent to the borrower stating that foreclosure proceedings will be commenced
unless the delinquency is cured. If a loan continues in a delinquent status for
90 days or more, the Savings Bank generally initiates foreclosure proceedings.
In certain instances, however, the Savings Bank may decide to modify the loan or
grant a limited moratorium on loan payments to enable the borrower to reorganize
their financial affairs.
A delinquent consumer loan borrower is contacted on the fifteenth day
of delinquency. A letter of intent to repossess collateral is mailed to the
borrower after the loan becomes 45 days past due and repossession proceedings
are initiated after the loan becomes 90 days delinquent.
NONPERFORMING ASSETS. Loans are reviewed regularly and when a loan
become 90 days delinquent, it is placed on nonaccrual status at which time the
accrual of interest ceases and the reserve for any unrecoverable accrued
interest is established and charged against operations. Typically, payments
received on a nonaccrual loan are applied to the outstanding principal and
interest as determined at the time of collection of the loan.
52
<PAGE>
The following table sets forth information with respect to the Savings
Bank's nonperforming assets at the dates indicated. At the dates indicated, the
Savings Bank had no restructured loans within the meaning of SFAS No. 15.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands)
Loans accounted for on a nonaccrual basis:
<S> <C> <C> <C> <C> <C>
Residential real estate.................... $76 $541 $239 $499 $ 518
Consumer................................... 11 7 1 1 52
---- ------ ----- ------ --------
Total.................................... 87 548 240 500 570
---- ----- ---- ----- --------
Accruing loans which are contractually
past due 90 days or more................... -- -- -- -- --
------ ------ ------ ------ -------
Total of nonaccrual and
90 days past due loans.................... 87 548 240 500 570
---- ----- ----- ----- -------
Real estate owned (net)..................... 135 -- -- -- 1,085
---- ------ ------ ------ -------
Total nonperforming assets............. $222 $548 $240 $500 $1,655
==== ==== ==== ==== ======
Total loans delinquent 90 days
or more to net loans...................... 0.06% 0.43% 0.23% 0.55% 0.68%
Total loans delinquent 90 days or
more to total assets...................... 0.04 0.26 0.13 0.38 0.49
Total nonperforming assets to total assets.. 0.10 0.26 0.13 0.38 1.41
</TABLE>
The Savings Bank does not accrue interest on loans over 90 days past
due. However, if interest on nonaccrual loans had been accrued, interest income
of approximately $1,000 would have been recorded for the year ended March 31,
1997. Income of approximately $7,000 was received and recorded on nonaccrual
loans for the year ended March 31, 1997.
ASSET CLASSIFICATION. The OTS has adopted various regulations regarding
problem assets of savings institutions. The regulations require that each
insured institution review and classify its assets on a regular basis. In
addition, in connection with examinations of insured institutions, OTS examiners
have authority to identify problem assets and, if appropriate, require them to
be classified. There are three classifications for problem assets: substandard,
doubtful and loss. Substandard assets have one or more defined weaknesses and
are characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. An asset classified as loss is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. If an asset or portion thereof is classified as loss, the insured
institution establishes specific allowances for loan losses for the full amount
of the portion of the asset classified as loss. All or a portion of general loan
loss allowances established to cover possible losses related to assets
classified substandard or doubtful can be included in determining an
institution's regulatory capital, while specific valuation allowances for loan
losses generally do not qualify as regulatory capital. Assets that do not
currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are designated "special mention" and monitored by the Savings Bank.
53
<PAGE>
The aggregate amount of the Savings Bank's classified assets, general
loss allowances and charge-offs were as follows at the dates indicated:
At or For the Year
Ended March 31,
1997 1996
---- ----
(In thousands)
Substandard assets......................... $346 $722
Doubtful assets............................ -- --
Loss assets................................ 150 150
General loss allowances.................... 681 503
Specific loss allowances................... 150 150
Charge-offs................................ 11 23
REAL ESTATE OWNED. Real estate properties acquired through foreclosure
or by deed-in-lieu of foreclosure are recorded at the lower of cost or fair
value less estimated costs of disposal. Valuations are periodically performed by
management and an allowance for losses is established by a charge to operations
if the carrying value exceeds the estimated net realizable value. At March 31,
1997, the Savings Bank had $135,000 of real estate owned and in judgment,
consisting of a one- to- four family residence. The original loan on the
property was originated as a speculative construction loan. Upon foreclosure,
the Savings Bank completed the construction. The property is under contract for
sale and the Savings Bank does not expect to incur a material loss on its sale.
ALLOWANCE FOR LOAN LOSSES. The Savings Bank's management evaluates the
need to establish reserves against losses on loans and other assets each year
based on estimated losses on specific loans and on any real estate held for sale
or investment when a finding is made that a significant and permanent decline in
value has occurred. Such evaluation includes a review of all loans for which
full collectibility may not be reasonably assured and considers, among other
matters, the estimated market value of the underlying collateral of problem
loans, prior loss experience, economic conditions and overall portfolio quality.
These provisions for losses are charged against earnings in the year they are
established. At March 31, 1997, the Savings Bank had an allowance for loan
losses of $831,000, or 0.50% of total outstanding loans at that date. Based on
past experience and future expectations, management believes that loan loss
reserves are adequate.
While the Savings Bank believes it has established its existing
allowance for loan losses in accordance with GAAP, there can be no assurance
that regulators, in reviewing the Savings Bank's loan portfolio, will not
request the Savings Bank to increase significantly its allowance for loan
losses, therefore negatively affecting the Savings Bank's financial condition
and results of operations.
54
<PAGE>
The following table sets forth an analysis of the Savings Bank's
allowance for loan losses for the periods indicated.
<TABLE>
<CAPTION>
Year Ended March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period............. $653 $657 $647 $515 $687
--- --- ---- ---- ----
Provision for loan losses.................. 180 -- -- 200 187
Recoveries:
Residential real estate................... 1 8 3 15 --
Consumer.................................. 8 11 26 41 20
----- ----- ----- ----- -------
Total recoveries........................ 9 19 29 56 20
----- ----- ----- ----- -------
Charge-offs:
Residential real estate................... -- -- -- 39 --
Commercial real estate.................... -- -- -- -- 300
Consumer.................................. 11 23 19 85 79
----- ------ ----- ------ -----
Total charge-offs....................... 11 23 19 124 379
----- ------ ----- ------ -----
Net charge-offs (recoveries).......... 2 4 (10) 68 359
----- ------ ------ ------ -----
Balance at end of period................... $831 $653 $657 $647 $515
==== ==== ==== ==== ====
Ratio of allowance to total loans
outstanding at end of period.............. 0.50% 0.47% 0.58% 0.62% 0.55%
Ratio of net charge-offs (recoveries) to
average loans outstanding during period... 0.00 0.00 (0.01) 0.07 0.38
Ratio of allowance to total of nonaccrual
and 90 days past due loans................ 955.17 119.16 273.75 129.40 90.35
</TABLE>
55
<PAGE>
The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995 1994 1993
--------------------- ------------------- ------------------- --------------------- ---------------------
Loan Loan Loan Loan Loan
Category Category Category Category Category
as a Percent as a Percent as a Percent as a Percent as a Percent
of Total of Total of Total of Total of Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate -- mortgage
Residential............. $124 60.34% $115 65.35% $ 97 66.44% $ 84 62.95% $ 87 64.09%
Nonresidential.......... 224 10.20 225 10.09 170 9.34 146 8.76 151 10.19
Construction............ 103 20.35 58 16.83 53 18.72 60 24.33 35 20.93
Consumer.................. 153 8.13 98 7.03 63 4.68 43 3.19 63 3.75
Commercial................ 40 0.48 46 0.70 46 0.82 40 0.77 71 1.04
Unallocated............... 187 -- 111 -- 228 -- 274 -- 108 --
---- -------- ----- -------- ----- -------- ----- -------- ----- --------
Total allowance......... $831 100.00% $653 100.00% $657 100.00% $647 100.00% $515 100.00%
for loan losses ==== ====== ==== ====== ==== ====== ==== ====== ==== ======
</TABLE>
56
<PAGE>
INVESTMENT ACTIVITIES
Savings institutions have authority to invest in various types of
liquid assets, including U.S. Treasury obligations, securities of various
federal agencies and of state and municipal governments, deposits at the
applicable FHLB, certificates of deposit of federally insured institutions,
certain bankers' acceptances and federal funds. Subject to various restrictions,
such savings institutions may also invest a portion of their assets in
commercial paper, corporate debt securities and mutual funds, the assets of
which conform to the investments that federally chartered savings institutions
are otherwise authorized to make directly. Savings institutions are also
required to maintain minimum levels of liquid assets which vary from time to
time. See "REGULATION -- Federal Regulation of the Savings Bank -- Federal Home
Loan Bank System." The Savings Bank may decide to increase its liquidity above
the required levels depending upon the availability of funds and comparative
yields on investments in relation to return on loans.
Federal regulations require the Savings Bank to maintain a minimum
amount of liquid assets and to make certain other securities investments. See
"REGULATION." The balance of the Savings Bank's investments in short-term
securities in excess of regulatory requirements reflects management's response
to the significantly increasing percentage of deposits with short maturities. At
March 31, 1997, the Savings Bank's short- and long-term regulatory liquidity
ratios were 8.3% and 18.0%, respectively, which exceeded regulatory
requirements. It is the intention of management to hold securities with short
maturities in the Savings Bank's investment portfolio in order to enable the
Savings Bank to match more closely the interest-rate sensitivities of its assets
and liabilities.
Investment decisions are made by the Investment Committee composed of
the Chief Executive Officer and Chief Financial Officer. The Savings Bank's
investment objectives are: (i) to provide and maintain liquidity within
regulatory guidelines; (ii) to maintain a balance of high quality, diversified
investments to minimize risk; (iii) to provide collateral for pledging
requirements; (iv) to serve as a balance to earnings; and (v) to optimize
returns. At March 31, 1997, the Savings Bank's investment and mortgage-backed
securities portfolio totalled approximately $53.7 million and consisted
primarily of obligations of the U.S. Government and agency obligations and
Federal National Mortgage Association ("FNMA") and FHLMC mortgage-backed
securities.
At March 31, 1997, the Savings Bank's investment securities portfolio
did not contain any tax-exempt securities or securities of any issuer with an
aggregate book value in excess of 10% of the Savings Bank's consolidated
shareholders' equity, excluding those securities issued by the U.S. Government
or its agencies.
The Board of Directors sets the investment policy of the Savings Bank
which dictates that investments be made based on the safety of the principal
amount, liquidity requirements of the Savings Bank and the return on the
investments. At March 31, 1997, no investment securities were held for trading.
The policy does not permit investment in non-investment grade bonds and permits
investment in various types of liquid assets permissible under OTS regulation,
which includes U.S. Treasury obligations, securities of various federal
agencies, "bank qualified" municipal bonds, certain certificates of deposits of
insured banks, repurchase agreements and federal funds.
The Savings Bank has adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which requires the classification of
securities at acquisition into one of three categories: held to maturity,
available for sale, or trading. See Note 1 of Notes to Consolidated Financial
Statements.
57
<PAGE>
The following table sets forth the investment securities portfolio and
carrying values at the dates indicated. The market value of the investment and
mortgage-backed securities portfolio was $53.8 million, $64.6 million, $67.9
million, $28.4 million and $20.1 million and at March 31, 1997, 1996, 1995, 1994
and 1993, respectively.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995
----------------------- ----------------------------- ------------------------
Carrying Percent of Carrying Percent of Carrying Percent of
Value Portfolio Value Portfolio Value Portfolio
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
HELD TO MATURITY (AT AMORTIZED COST):
U. S. Government treasury obligations..... $7,989 14.86% $11,987 18.72% $11,987 32.60%
FNMA debentures........................... 2,000 3.72 4,005 6.25 6,004 16.33
FHLB debentures........................... 10,467 19.47 10,737 16.77 10,011 27.23
FHLMC debentures.......................... -- -- 3,000 4.68 7,765 21.12
Student Loan Marketing Association
("SLMA") debentures...................... -- -- -- -- 1,000 2.72
Real estate mortgage investment
conduits ("REMICs")...................... 6,641 12.36 5,108 7.98 -- --
FHLMC mortgage-backed securities.......... 6,800 12.65 9,030 14.10 14,919 21.72
FNMA mortgage-backed securities........... 12,961 24.12 14,237 22.23 17,003 24.75
------ ----- ------ ----- ------ ------
$46,858 87.18 $58,104 90.73 $68,689
------- ----- ------- ----- -------
AVAILABLE FOR SALE (AT MARKET VALUE):
U.S. Government treasury obligations...... 2,924 5.44 992 1.55 -- --
FHLB debentures........................... 975 1.82 2,940 4.59 -- --
REMICs.................................... 1,903 3.54 2,004 3.13 -- --
FHLMC mortgage-backed securities.......... 1,087 2.02 -- -- -- --
------- ---- ------- -- ------- --
Total investment securities.............. $53,747 100.00% $64,040 100.00% $68,689 100.00%
======= ====== ======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
At March 31,
1994 1993
----------------------------- ------------------------
Carrying Percent of Carrying Percent of
Value Portfolio Value Portfolio
<S> <C> <C> <C> <C>
HELD TO MATURITY (AT AMORTIZED COST):
U. S. Government treasury obligations..... $ 8,088 72.94% $6,103 67.04%
FNMA debentures........................... 2,000 18.04 3,000 32.96
FHLB debentures........................... -- -- -- --
FHLMC debentures.......................... -- -- -- --
Student Loan Marketing Association
("SLMA") debentures...................... -- -- -- --
Real estate mortgage investment
conduits ("REMICs")...................... -- -- -- --
FHLMC mortgage-backed securities.......... 9,060 32.03 10,676 52.85
FNMA mortgage-backed securities........... 8,136 28.76 421 2.09
------ ------ ------ ------
100.00 $28,284 100.00 $20,200
------ ------- ------ -------
AVAILABLE FOR SALE (AT MARKET VALUE):
U.S. Government treasury obligations...... -- -- -- --
FHLB debentures........................... -- -- -- --
REMICs.................................... -- -- -- --
FHLMC mortgage-backed securities.......... -- -- -- --
------- -- ------ --
Total investment securities.............. $28,284 100.00% $20,200 100.00%
======= ====== ======= ======
</TABLE>
58
<PAGE>
The following table sets forth the maturities and weighted average
yields of the debt securities in the investment securities portfolio at March
31, 1997.
<TABLE>
<CAPTION>
Less Than One to More than Five More than
One Year Five Years to Ten Years Ten Years
Weighted Weighted Weighted Weighted
Average Average Average Average
Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1)
------ -------- ------ -------- ------ --------- ------ --------
(Dollars in thousands)
U.S. Government
<S> <C> <C> <C> <C> <C> <C> <C> <C>
treasury obligations........... $6,989 6.28% $ 1,987 5.42% $1,937 6.51% $ -- --%
FNMA debentures................. 1,000 4.33 -- -- 1,000 6.86 -- --
FHLB debentures................. 999 6.60 10,443 6.67 -- -- -- --
FHLMC debentures................ -- -- -- -- -- -- -- --
SLMA debentures................. -- -- -- -- -- -- -- --
REMICs.......................... -- -- -- -- 912 6.53 7,632 7.59
FHLMC mortgage-backed
securities..................... -- -- -- -- 4,551 6.90 3,336 7.37
FNMA mortgage-backed
securities..................... -- -- 490 5.66 7,351 6.78 5,120 7.20
------ ------- ------ -------
Total........................ $8,988 6.10 $12,920 6.44 $15,751 6.77 $16,088 7.42
====== ======= ======= =======
</TABLE>
(1) For available-for-sale securities carried at fair value, to weighted
average yield is computed using amortized cost.
59
<PAGE>
Aside from U.S. Government Treasury obligations, the Savings Bank
invests in mortgage-backed securities and REMICs. Mortgage-backed securities
(which are also known as mortgage participation certificates or pass-through
certificates) represent a participation interest in a pool of single-family or
multi-family mortgages, the principal and interest payments on which are passed
from the mortgage originators, through intermediaries (i.e., FNMA, FHLMC and the
Government National Mortgage Association ("GNMA") that pool and repackage the
participation interests in the form of securities, to investors such as the
Savings Bank. Mortgage-backed securities generally increase the quality of the
Savings Bank's assets by virtue of the guarantees that back them, are more
liquid than individual mortgage loans and may be used to collateralize
borrowings as other obligations of the Savings Bank. See Note 4 of Notes to
Consolidated Financial Statements for additional information.
REMICs are generally classified as derivative financial instruments
because they are created by redirecting the cash flows from the pool of
mortgages or mortgage-backed securities underlying these securities to create
two or more classes (or tranches) with different maturity or risk
characteristics designed to meet a variety of investor needs and preferences.
Management believes these securities may represent attractive alternatives
relative to other investments because of the wide variety of maturity, repayment
and interest rate options available. Current investment practices of the Savings
Bank prohibit the purchase of high risk REMICs. At March 31, 1997, the Savings
Bank held REMICs with a net carrying value of $8.5 million, of which $6.6
million were classified as held- to-maturity and $1.9 million of which were
available -for-sale. REMICs may be sponsored by private issuers, such as
mortgage bankers or money center banks, or by U.S. Government agencies and
government sponsored entities.
At March 31, 1997, the Savings Bank did not own any privately issued REMICs.
Investments in mortgage-backed securities, including REMICs, involve a
risk that actual prepayments will be greater than estimated prepayments over the
life of the security, which may require adjustments to the amortization of any
premium or accretion of any discount relating to such instruments thereby
reducing the net yield on such securities. There is also reinvestment risk
associated with the cash flows from such securities. In addition, the market
value of such securities may be adversely affected by changes in interest rates.
DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS
GENERAL. Deposits, loan repayments and loan sales are the major sources
of the Savings Bank's funds for lending and other investment purposes. Loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows and loan prepayments are significantly influenced by general interest
rates and money market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in the availability of funds from other sources.
They may also be used on a longer term basis for general business purposes.
DEPOSIT ACCOUNTS. Deposits are attracted from within the Savings Bank's
primary market area through the offering of a broad selection of deposit
instruments, including NOW accounts, money market accounts, regular savings
accounts, certificates of deposit and retirement savings plans. Deposit account
terms vary according to the minimum balance required, the time periods the funds
must remain on deposit and the interest rate, among other factors. In
determining the terms of its deposit accounts, the Savings Bank considers the
rates offered by its competition, profitability to the Savings Bank, matching
deposit and loan products and its customer preferences and concerns. The Savings
Bank generally reviews its deposit mix and pricing weekly.
60
<PAGE>
DEPOSIT BALANCES
The following table sets forth information concerning the Savings
Bank's time deposits and other interest-bearing deposits at March 31, 1997.
<TABLE>
<CAPTION>
Percent
Interest Minimum of Total
Rate Term Category Amount Balance Deposits
(In thousands)
<C> <C> <C> <C> <C> <C>
1.500% None NOW Accounts $ 100 $ 18,474 10.90%
2.750 None Regular Savings 100 21,234 12.53
1.750 None Maxi Checking 2,500 1,606 0.95
3.750 None Money Market
Deposit Account 2,500 17,553 10.36
None None Noninterest Checking 100 7,085 4.18
Certificates of Deposit
4.403 28-92 Days Fixed-Term, Fixed-Rate 1,000 2,199 1.30
5.186 4-6 Months Fixed-Term, Fixed-Rate 1,000 8,233 4.86
5.549 12-17 Months Fixed-Term, Fixed-Rate 1,000 50,686 29.92
5.350 18 Months Fixed-Term, Variable
Rate Individual
Retirement Account
("IRA") 1,000 470 0.28
5.281 18-23 Months Fixed-Term, Fixed-Rate 1,000 2,795 1.65
5.837 24-35 Months Fixed-Term, Fixed-Rate 1,000 24,066 14.21
5.382 36-59 Months Fixed-Term, Fixed-Rate 1,000 2,824 1.67
6.055 60-83 Months Fixed-Term, Fixed-Rate 1,000 10,745 6.34
5.894 84-119 Months Fixed-Term, Fixed-Rate 1,000 1,446 0.85
--------- -------
Total $169,416 100.00%
======== ======
</TABLE>
At March 31, 1997, the Savings Bank's jumbo certificates of deposit
totalled $513,000, all of which were due within three months after March 31,
1997. Jumbo certificates of deposit require minimum deposits of $100,000 and
have negotiable interest rates.
61
<PAGE>
DEPOSIT FLOW
The following table sets forth the balances of savings deposits in the
various types of savings accounts offered by the Savings Bank at the dates
indicated.
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------- -------------------------------- ------------------------------
Balance Percent Increase Balance Percent Increase/ Balance Percent Increase/
------- ------- ------- ------- ------- -------
(Decrease) (Decrease) (Decrease)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand.......$ 7,085 4.18% $ 1,738 $ 5,347 3.38% $ 709 $ 4,638 3.19% $ (352)
NOW checking..................... 18,474 10.91 1,469 17,005 10.75 1,737 15,268 10.50 2,208
Regular savings accounts......... 21,234 12.53 (541) 21,775 13.77 (3,555) 25,330 17.42 (2,406)
Money market deposit accounts.... 19,159 11.31 1,388 17,771 11.24 4,752 13,019 8.95 4,121
Fixed-rate certificates which
mature(1):
Within 12 months............. 79,709 47.05 (12,197) 67,512 42.68 3,465 64,047 44.02 33,348
Within 12-36 months.......... 18,216 10.75 (4,230) 22,446 14.19 5,884 16,562 11.39 2,192
Beyond 36 months............. 5,539 3.27 (764) 6,303 3.99 (282) 6,585 4.53 (140)
-------- ------- -------- --------- ------- -------- --------- ------- ---------
Total.......................$169,416 100.00% $11,257 $158,159 100.00% $12,710 $145,449 100.00% $38,971(2)
======== ====== ======= ======== ====== ======= ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
At March 31,
1994 1993
-----------------------------------------------------------
Balance Percent Increase/ Balance Percent Increase/
------- ------- ------- -------
(Decrease) (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand.......$ 4,990 4.69% $ 1,237 $ 3,753 3.54% $ 42
NOW checking..................... 13,060 12.26 1,050 12,010 11.34 1,431
Regular savings accounts......... 27,736 26.05 2,938 24,798 23.40 5,248
Money market deposit accounts.... 8,898 8.36 (643) 9,541 9.01 60
Fixed-rate certificates which
mature(1):
Within 12 months............. 30,699 28.83 (9,617) 40,316 38.05 (6,098)
Within 12-36 months.......... 14,370 13.50 2,789 11,581 10.93 (2,955)
Beyond 36 months............. 6,725 6.31 2,771 3,954 3.73 1,631
--------- ------- -------- --------- ------- ------
Total....................... $106,478 100.00% $ 525 $105,953 100.00% $(641)
======== ====== ======= ======== ====== =====
</TABLE>
(1) IRAs of $10.9 million, $11.0 million, $10.8 million, $8.8 million and
$9.1 million at March 31, 1997, 1996, 1995, 1994 and 1993,
respectively, are included in certificate balances. At March 31, 1997,
1996, 1995, 1994 and 1993 jumbo certificates amounted to $513,000,
$302,000, $706,000, $200,000 and $516,000, respectively.
(2) Increase primarily reflects assumption of deposits resulting from
acquisition of two branches from the RTC. See "-- Properties."
62
<PAGE>
TIME DEPOSITS BY RATES AND MATURITIES
The following table sets forth the time deposits in the Savings Bank
classified by rates as of the dates indicated.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Below 4.00%...................................... $ 212 $ 483 $ 5,201 $22,166 $ 9,656
4.00 - 4.99%.................................... 4,063 7,084 32,471 15,662 25,074
5.00 - 5.99%.................................... 82,336 56,739 32,740 7,807 6,649
6.00 - 7.99%.................................... 16,786 31,776 16,079 5,046 11,490
8.00 - 9.99%.................................... 67 179 666 1,077 2,722
10.00 - 11.99%.................................... -- -- 37 36 261
----------- ---------- --------- --------- ---------
Total.......................................... $103,464 $96,261 $87,194 $51,794 $55,852
======== ======= ======= ======= =======
</TABLE>
The following table sets forth the amount and maturities of time
deposits at March 31, 1997.
<TABLE>
<CAPTION>
Amount Due
Less Than 1-2 After After
One Year Years 2-3 Years 3 Years Total
(In thousands)
<S> <C> <C> <C> <C> <C>
Below 4.00%......................... $ 212 $ -- $ -- $ -- $ 212
4.00 - 4.99%...................... 3,752 304 7 -- 4,063
5.00 - 5.99%...................... 64,571 13,212 1,734 2,819 82,336
6.00 - 7.99%...................... 11,128 1,250 1,688 2,720 16,786
8.00 - 8.99%...................... 46 12 9 -- 67
9.00 - 11.99%...................... -- -- -- -- --
Over 11.99%........................ -- -- -- -- --
---------- ---------- -------- --------- ----------
Total............................. $79,709 $14,778 $3,438 $5,539 $103,464
======= ======= ====== ====== ========
</TABLE>
SAVINGS ACTIVITIES
The following table sets forth the savings activities of the Savings
Bank for the periods indicated.
<TABLE>
<CAPTION>
Year Ended March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Beginning balance................. $158,159 $145,449 $106,478 $105,953 $106,594
-------- -------- -------- -------- -------
Net increase (decrease)
before interest
credited......................... 4,225 7,005 35,069 (2,599) (4,438)
Interest credited................ 7,032 5,705 3,902 3,124 3,797
-------- -------- -------- -------- ---------
Net increase (decrease) in
savings deposits................. 11,257 12,710 38,971 525 (641)
-------- --------- --------- --------- ---------
Ending balance.................... $169,416 $158,159 $145,449 $106,478 $105,953
======== ======== ======== ======== ========
</TABLE>
63
<PAGE>
In the unlikely event the Savings Bank is liquidated, depositors will
be entitled to full payment of their deposit accounts prior to any payment being
made to the stockholders of the Savings Bank. Substantially all of the Savings
Bank's depositors are residents of the States of Washington or Oregon.
BORROWINGS. Savings deposits are the primary source of funds for the
Savings Bank's lending and investment activities and for its general business
purposes. The Savings Bank has at times relied upon advances from the
FHLB-Seattle to supplement its supply of lendable funds and to meet deposit
withdrawal requirements. Advances from the FHLB-Seattle are typically secured by
the Savings Bank's first mortgage loans.
The FHLB functions as a central reserve bank providing credit for
savings and loan associations and certain other member financial institutions.
As a member, the Savings Bank is required to own capital stock in the FHLB and
is authorized to apply for advances on the security of such stock and certain of
its mortgage loans and other assets (principally securities which are
obligations of, or guaranteed by, the United States) provided certain standards
related to creditworthiness have been met. Advances are made pursuant to several
different programs. Each credit program has its own interest rate and range of
maturities. Depending on the program, limitations on the amount of advances are
based either on a fixed percentage of an institution's net worth or on the
FHLB's assessment of the institution's creditworthiness. Under its current
credit policies, the FHLB generally limits advances to 20% of a member's assets,
and short-term borrowings of less than one year may not exceed 10% of the
institution's assets. The FHLB determines specific lines of credit for each
member institution and the Savings Bank has a 35% line of credit with the FHLB
of Seattle and authority to borrow up to 5% of assets under a short-term line of
credit.
At March 31, 1997, the Savings Bank had $27.2 million of outstanding
advances from the FHLB-Seattle under a available credit facility of $78.5
million. Approximately $20.0 million of such outstanding advances were used to
purchase mortgage-backed securities, classified as held-to-maturity at March 31,
1997, with the goal of recognizing income on the difference between the rate
paid on the advances and the rate earned on the mortgage-backed securities. The
success of this activity depends on maintaining over time a positive
differential between the yields earned on the securities and the rates paid on
the advances. Since the yields earned on the securities are generally capped
while the rates paid on the advances generally are not capped, there is the risk
that this differential will narrow or be eliminated in a rising interest rate
environment. See Note 4 of Notes to Consolidated Financial Statements.
The Savings Bank may occasionally enter into sales of securities under
agreements to repurchase ("repurchase agreements") with nationally recognized
primary securities dealers. The Repurchase agreements are generally for terms up
to 30 days. Repurchase agreements are accounted for as borrowings and are
secured by designated investment securities. At March 31, 1997, the Savings Bank
had no reverse repurchase agreements outstanding.
The following tables set forth certain information concerning the
Savings Bank's borrowings at the dates and for the periods indicated.
<TABLE>
<CAPTION>
At March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Weighted average rate paid on
<S> <C> <C> <C> <C> <C>
FHLB advances.................. 6.49% 6.66% 7.03% 4.81% --%
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
Year Ended March 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Maximum amounts of FHLB
advances outstanding
at any month end................ $32,750 $29,850 $23,000 $8,000 $410
Approximate average FHLB
advances outstanding............ 29,068 26,404 12,638 23,085 32
Approximate weighted
average rate paid on
FHLB advances................... 6.50% 6.94% 6.38% 4.81% 3.34%
</TABLE>
COMPETITION
There are several financial institutions in the Savings Bank's primary
market area from which the Savings Bank faces strong competition in the
attraction of savings deposits (its primary source of lendable funds) and in the
origination of loans. Its most direct competition for savings deposits and loans
has historically come from other thrift institutions, credit unions and
commercial banks located in its market area. Particularly in times of high
interest rates, the Savings Bank has faced additional significant competition
for investors' funds from money market mutual funds and other short-term money
market securities and corporate and government securities. The Savings Bank's
competition for loans comes principally from other thrift institutions, credit
unions, commercial banks, mortgage banking companies and mortgage brokers.
SUBSIDIARY
Under OTS regulations, the Savings Bank is authorized to invest up to
3% of its assets in subsidiary corporations, with amounts in excess of 2% only
if primarily for community purposes. At March 31, 1997, the Savings Bank's
investment of $423,000 in Riverview Services, Inc. ("Riverview Services"), its
sole wholly-owned subsidiary, was within these limitations.
Riverview Services acts as trustee for deeds of trust on mortgage loans
granted by the Savings Bank, and receives a reconveyance fee of approximately
$35 for each deed of trust. Riverview Services also operates a courier service
for the benefit of the Savings Bank. Riverview Services had net income of
$53,000 for the fiscal year ended March 31, 1997 and total assets of $423,000 at
that date. Riverview Services' operations are included in the consolidated
financial statements of the Savings Bank appearing elsewhere herein.
PROPERTIES
The following table sets forth certain information relating to the
Savings Bank's offices as of March 31, 1997. All offices are owned by the
Savings Bank except as noted in the table.
Net
Approximate Book
Location Year Opened Square Footage Deposits Value
MAIN OFFICE:
700 N.E. Fourth Avenue 1975 25,000 $37,025 $1,335
Camas, Washington
65
<PAGE>
<TABLE>
<CAPTION>
Net
Approximate Book
Location Year Opened Square Footage Deposits Value
(In thousands)
BRANCH OFFICES:
<C> <C> <C> <C> <C>
1737 B Street 1982 2,200 $22,144 $106
Washougal, Washington
225 S.W. 2nd Street 1979 1,700 22,213 196
Stevenson, Washington
100 North Main 1977 1,800 16,111 141
White Salmon, Washington(1)
813 West Main 1979 2,000 15,109 775
Battle Ground, Washington
412 South Columbus 1983 2,500 8,193 70
Goldendale, Washington
11505-K Fourth Plain Boulevard 1994 3,500 7,656 1,079
Vancouver, Washington
"Orchards" Office
7735 N.E. Highway 99(2) 1994 4,800 27,395 560
Vancouver, Washington
"Hazell Dell" Office
1011 Washington Way(2) 1994 2,000 13,570 370
Longview, Washington
- ------------------
</TABLE>
(1) Leased.
(2) Former branches of Great American Federal Savings Association, San
Diego, California, that were acquired from the RTC on May 13, 1994. In
the acquisition, the Savings Bank assumed all insured deposit
liabilities of both branch offices totalling approximately $42.0
million.
The Savings Bank maintains two proprietary automatic teller machines in
Camas and Stevenson, Washington, which are part of a nationwide cash exchange
network.
The Savings Bank uses an outside data processing system to process
customer records and monetary transactions, post deposit and general ledger
entries and record activity in installment lending, loan servicing and loan
originations. At March 31, 1997, the net book value of the Savings Bank's office
properties, furniture, fixtures and equipment was $4.6 million.
PERSONNEL
As of March 31, 1997, the Savings Bank had 79 full-time employees and
12 part-time employees, none of whom are represented by a collective bargaining
unit. The Savings Bank believes its relationship with its employees is good.
66
<PAGE>
LEGAL PROCEEDINGS
Periodically, there have been various claims and lawsuits involving the
Savings Bank, such as claims to enforce liens, condemnation proceedings on
properties in which the Savings Bank holds security interests, claims involving
the making and servicing of real property loans and other issues incident to the
Savings Bank's business. The Savings Bank is not a party to any pending legal
proceedings that it believes would have a material adverse effect on the
financial condition or operations of the Savings Bank.
MANAGEMENT OF THE HOLDING COMPANY
Directors shall be elected by the stockholders of the Holding Company
for staggered three-year terms, or until their successors are elected and
qualified, at the first annual meeting of stockholders following the
consummation of the Conversion and Reorganization. The Holding Company's Board
of Directors consists of seven persons divided into three classes, each of which
contains approximately one third of the Board. One class, consisting of Messrs.
_________________ has a term of office expiring at the first annual meeting of
stockholders after their election; a second class, consisting of Messrs.
_____________________, has a term of office expiring at the second annual
meeting of stockholders after their election; and a third class, consisting of
Messrs. ______________, has a term of office expiring at the third annual
meeting of stockholders after their election.
The executive officers of the Holding Company are elected annually and
hold office until their respective successors have been elected and qualified or
until death, resignation or removal by the Board of Directors. The executive
officers of the Holding Company are:
Name Position
Patrick Sheaffer Chairman of the Board, President and Chief Executive Officer
Ron Wysaske Treasurer and Chief Financial Officer
Phyllis Kreibich Corporate Secretary
Since the formation of the Holding Company, none of the executive
officers, directors or other personnel has received remuneration from the
Holding Company. For information concerning the principal occupations,
employment and compensation of the directors and executive officers of the
Holding Company during the past five years, see "MANAGEMENT OF THE SAVINGS BANK
- -- Biographical Information."
MANAGEMENT OF THE SAVINGS BANK
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Savings Bank is presently composed of
seven members who are elected for terms of three years, approximately one third
of whom are elected annually in accordance with the Bylaws of the Savings Bank.
In addition to a Chairman of the Board, a Vice Chairman of the Board is elected
annually by the non-employee directors. The executive officers of the Savings
Bank are elected annually by the Board of Directors and serve at the Board's
discretion. The following table sets forth information with respect to the
Directors and executive officers of the Savings Bank.
67
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS
Current
Director Term
Name Age (1) Position with Savings Bank Since Expires
- ---- ------- -------------------------- ------- -------
<S> <C> <C> <C> <C>
Patrick Sheaffer 57 Chairman of the Board, President
and Chief Executive Officer 1979 1997
Roger Malfait(2) 67 Director 1973 1997
Gary R. Douglass 55 Director 1984 1997
Dale E. Scarbrough 69 Director 1972 1998
Ron Wysaske 45 Executive Vice President, 1985 1998
Chief Financial Officer
and Director
Robert K. Leick(3) 61 Director 1972 1999
Paul L. Runyan 62 Director 1979 1999
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Name Age (1) Position with Savings Bank
Michael C. Yount 47 Senior Vice President
Karen Nelson 39 Vice President of Lending
Phyllis Kreibich 64 Corporate Secretary
</TABLE>
- -----------------------
(1) At March 31, 1997.
(2) Immediate past Vice-Chairman of the Board.
(3) Vice-Chairman of the Board.
BIOGRAPHICAL INFORMATION
Set forth below is certain information regarding the Directors and
executive officers of the Savings Bank. Unless otherwise stated, each Director
and executive officer has held his or her current occupation for the last five
years. There are no family relationships among or between the Directors or
executive officers.
PATRICK SHEAFFER joined the Savings Bank in 1965 and has served as
President and Chief Executive Officer since 1976. He became Chairman of the
Board in March 1993. He is responsible for the daily operations and the
management of the Savings Bank. Mr. Sheaffer is active in numerous professional
and civic organizations. Mr. Sheaffer is a founding director of Epitope Biotech
Company, a Nasdaq-listed company located in Portland, Oregon.
ROGER MALFAIT is a semi-retired real estate developer and cattle
rancher.
GARY R. DOUGLASS, a certified public accountant, is a principal with
Douglass & Paulson, P.C., Camas, Washington.
DALE E. SCARBROUGH is the retired Chief Financial Officer for the City
of Camas, Washington. He is a member of the American Legion and numerous
professional financial organizations.
RON WYSASKE joined the Savings Bank in 1976. Before joining the Savings
Bank, he was an audit and tax accountant at Price Waterhouse & Co. He became
Executive Vice President, Treasurer and Chief Financial Officer in 1981. He is
responsible for administering all finance, accounting and treasury functions at
the Savings Bank. He is a member of several professional organizations,
including the American Institute of Certified Public
68
<PAGE>
Accountants and the Financial Managers Society. Mr. Wysaske is a licensed
certified public accountant in the State of Washington.
ROBERT K. LEICK, an attorney in private practice, was a prosecuting
attorney with Skamania County, Washington, from 1967 to 1997. He is an active
member of numerous community and civic organizations, including the Skamania
County Historical Society, Skamania County Chamber of Commerce, Skamania County
Economic Development Council and the American Legion.
PAUL L. RUNYAN owns and operates Runyan's Jewelry Stores in Camas and
White Salmon, Washington. He is an active member of numerous civic and community
organizations, including the White Salmon Elks, Camas Moose Lodge, Camas Lions
Club and the Stevenson Eagles.
MICHAEL C. YOUNT joined the Savings Bank in 1979 and has served in
various capacities, such as appraiser, loan officer, loan collections and
supervisor of lending. He became Senior Vice President in 1989 and is
responsible for the daily operations and mortgage brokerage operations of the
Savings Bank and reports directly to the President.
Mr. Yount is a member of the Washougal City Council.
KAREN NELSON joined Savings Bank in 1979 and has served in various
capacities, such as loan servicing clerk, operations officer, checking
administrator, consumer loan officer, and loan originator, and became Vice
President of Lending in 1990. She is responsible for all lending and mortgage
servicing activities and of the Savings Bank reports directly to the President.
PHYLLIS KREIBICH joined the Savings Bank since 1987 and has served as
Corporate Secretary since 1989. She is responsible for maintaining the corporate
books and records of the Savings Bank and reports directly to the President.
BENEFICIAL OWNERSHIP OF SAVINGS BANK COMMON STOCK BY DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth, as of March 31, 1997, certain
information as to the beneficial ownership of Savings Bank Common Stock by: (i)
persons known by the Savings Bank to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) the directors of the Savings Bank,
(iii) the executive officers of the Savings Bank, and (iv) by all officers and
directors as a group. For purposes of this table, an individual is considered to
beneficially own shares of Savings Bank Common Stock if he or she has or shares
voting power (which includes the power to vote or direct the voting of the
shares) or investment power (which includes the power to dispose of or direct
the disposition of the shares). Unless otherwise indicated, all shares are owned
directly by the officers and directors or by the officers and directors
indirectly through a trust, corporation or association, or by the officers and
directors or their spouses as custodians or trustees for the shares of minor
children. The officers and directors effectively exercise sole voting and
investment power over such shares. Shares which are subject to stock options
that are exercisable within 60 days of March 31, 1997 are deemed to be
beneficially owned. For information regarding proposed purchases of Conversion
Shares by the directors and officers and their anticipated ownership of Common
Stock upon consummation of the Conversion and Reorganization, see "CONVERSION
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS."
69
<PAGE>
Shares Beneficially
Owned at March
Name 31, 1997
- ---- -------------------------------------
Number Percent
------ -------
Riverview, M.H.C 1,407,891 58.27%
Patrick Sheaffer 74,223(1) 3.05
Roger Malfait 19,761(2) 0.82
Gary R. Douglass 7,906(3) 0.33
Dale E. Scarbrough 19,761(4) 0.82
Ron Wysaske 51,004(5) 2.10
Robert K. Leick 5,810(6) 0.24
Paul L. Runyan 41,004(7) 1.70
Michael C. Yount 25,976(8) 1.07
Karen Nelson 17,620(9) 0.73
Phyllis Kreibich 1,703 0.07
All officers and directors
as a group (10 persons) 264,768(10) 10.64
- -------------
(1) Includes 20,733 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days of
March 31, 1997.
(2) Includes 3,857 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days of
March 31, 1997.
(3) Includes 918 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(4) Includes 3,857 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(5) Includes 16,297 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(6) Includes 3,857 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(7) Includes 1,602 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days of
March 31, 1997.
(8) Includes 12,536 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(9) Includes 8,389 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
(10) Includes 72,046 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from March 31, 1997.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Savings Bank is conducted through meetings and
activities of its Board of Directors and its committees. During the fiscal year
ended March 31, 1997, the Board of Directors held 13 regular meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
of the Savings Bank and committees on which such director served.
The Savings Bank has standing Executive, Audit, Nominating and
Personnel/Compensation Committees, among others.
70
<PAGE>
The Executive Committee of the Board of Directors, which consists of
Directors Malfait, Leick and Sheaffer (Chairman), meets as necessary in between
meetings of the full Board of Directors. The Executive Committee met 12 times
during the fiscal year ended March 31, 1997.
The Audit Committee of the Savings Bank consists of Directors Scarbrough
(Chairman), Douglass and Runyan. It is responsible for developing and monitoring
the Savings Bank's audit program. The Committee meets with the Savings Bank's
independent auditors to discuss the results of the annual audit and any related
matters. The members of the committee also receive and review all the reports
and findings and other information presented to them by the Savings Bank's
officers regarding financial reporting policies and practices. The Audit
Committee met once during the fiscal year ended March 31, 1997.
The Nominating Committee consists of Directors Malfait (Chairman),
Douglass and Scarbrough. This Committee submits nominations for the annual
election of directors. The Nominating Committee met once during the fiscal year
ended March 31, 1997.
The Personnel/Compensation Committee consists of Director Runyan
(Chairman), Douglass and Leick. This Committee determines annual grade and
salary levels for employees and establishes personnel policies. The
Personnel/Compensation Committee met two times during the fiscal year ended
March 31, 1997.
DIRECTORS' COMPENSATION
Directors receive an annual retainer of $4,600 (except for the current and
immediate past Vice-Chairman of the Board who each receive an annual retainer of
$5,000) and a monthly fee of $320 provided that they attend all meetings held
during the month. Directors also receive $200 for each committee meeting
attended, except no fees are paid for service on the Executive Committee.
Director and committee fees totalled $104,000 for the year ended March 31, 1997.
Directors may elect to defer their monthly fees until retirement with no
income tax payable by the director until retirement benefits are received. This
alternative is available through a non-qualified deferred compensation plan
adopted by the Savings Bank in December 1986, and subsequently amended. If the
participant's employment is terminated on or after the date he attains age 65 or
five years of participation in the Plan ("Normal Retirement Date"), the Savings
Bank shall pay the participant or his designated beneficiaries in annual or
monthly installments over a period of 120 months, an amount equal to the balance
in the participant's account immediately before the date on which benefits
commence, plus interest on the unpaid balance. Participants may also choose two
optional forms of benefit payments: (i) a lump-sum payment within five years of
the Normal Retirement Date or (ii) an annuity over the life of the participant,
or a joint survivor annuity over the lives of the participant and the
participant's spouse. Benefits are also payable upon disability, early
retirement, termination of service or death. The Savings Bank pays annual
interest on assets under the plans based on a formula relating to gross
revenues, which amounted to 7.9% for the year ended March 31, 1997. The
estimated liability under the plan is accrued as earned by the participant. At
March 31, 1997, the Savings Bank's aggregate liability under the plans was
$663,000.
71
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following information is furnished for
Messrs. Sheaffer, Wysaske and Yount for the year ended March 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(2)
<S> <C> <C> <C> <C> <C>
Patrick Sheaffer 1997 $128,902 $56,720 $-- $19,364
President and Chief 1996 124,246 27,772 -- 20,875
Executive Officer 1995 111,896 59,178 -- 18,220
Ron Wysaske 1997 91,615 36,677 16,446
Executive Vice 1996 88,818 23,328 -- 15,560
President 1995 86,028 49,816 -- 16,393
Michael C. Yount 1997 81,528 27,384 -- 13,934
Senior Vice 1996 77,259 19,332 -- 13,333
President 1995 75,712 42,108 -- 14,111
- ----------------
</TABLE>
(1) The aggregate amount of perquisites and other personal benefits was
less than 10% of the annual salary and bonus reported.
(2) Consists of contributions to profit sharing plan and ESOP. Such
contributions for 1997 amount to: Mr. Sheaffer, $4,500 and $14,864,
respectively; Mr. Wysaske, $3,833 and $12,613, respectively; and Mr.
Yount, $3,251 and $10,683, respectively.
EMPLOYMENT AGREEMENTS. The MHC and the Savings Bank currently maintain
employment agreements with Messrs. Sheaffer and Wysaske that were entered into
in connection with the MHC Reorganization. In connection with the Conversion and
Reorganization, the Holding Company and the Savings Bank (collectively, the
"Employers") will enter into three-year employment agreements ("Employment
Agreements") with Messrs. Sheaffer and Wysaske (individually, the "Executive"),
which have substantially the same terms as and will replace the existing
agreements.
Under the Employment Agreements, the initial salary levels for Messrs.
Sheaffer and Wysaske will be $129,000 and $92,000, respectively, which amounts
will be paid by the Savings Bank and may be increased at the discretion of the
Board of Directors of the Savings Bank or an authorized committee of the Board.
On each anniversary of the commencement date of the Employment Agreements, the
term of each agreement may be extended for an additional year at the discretion
of the Board. The agreement is terminable by the Employers at any time, by the
Executive if the Executive is assigned duties inconsistent with his initial
position, duties, responsibilities and status, or upon the occurrence of certain
events specified by federal regulations. In the event that an Executive's
employment is terminated without cause or upon the Executive's voluntary
termination following the occurrence of an event described in the preceding
sentence, the Savings Bank would be required to honor the terms of the agreement
through the expiration of the current term, including payment of current cash
compensation and continuation of employee benefits.
The Employment Agreements also provide for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employers. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, an Executive is assigned
duties inconsistent with his position, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreement as having occurred when, among other things, (a) a
person other than the Holding Company purchases
72
<PAGE>
shares of Common Stock pursuant to a tender or exchange offer for such shares,
(b) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Holding Company representing 25% or more of the combined
voting power of the Holding Company's then outstanding securities, (c) the
membership of the Board of Directors changes as the result of a contested
election, or (d) shareholders of the Holding Company approve a merger,
consolidation, sale or disposition of all or substantially all of the Holding
Company's assets, or a plan of partial or complete liquidation.
The maximum value of the severance benefits under the Employment
Agreements is 2.99 times the Executive's average annual compensation during the
five-year period preceding the effective date of the change in control (the
"base amount"). The Employment Agreements provide that the value of the maximum
benefit may be distributed, at the Executive's election, (i) in the form of a
lump sum cash payment equal to 2.99 times the Executive's base amount or (ii) a
combination of a cash payment and continued coverage under the Employers'
health, life and disability programs for a 36-month period following the change
in control, the total value of which does not exceed 2.99 times the Executive's
base amount. Assuming that a change in control had occurred at March 31, 1997
and that each Executive elected to receive a lump sum cash payment, Messrs.
Sheaffer and Wysaske would be entitled to payments of approximately $502,000 and
$381,000, respectively. Section 280G of the Internal Revenue Code of 1986, as
amended ("Code"), provides that severance payments that equal or exceed three
times the individual's base amount are deemed to be "excess parachute payments"
if they are contingent upon a change in control. Individuals receiving excess
parachute payments are subject to a 20% excise tax on the amount of such excess
payments, and the Employers would not be entitled to deduct the amount of such
excess payments.
The Employment Agreements restrict each Executive's right to compete
against the Employers for a period of one year from the date of termination of
the agreement if an Executive voluntarily terminates employment, except in the
event of a change in control.
SEVERANCE AGREEMENTS. The MHC and the Savings Bank currently maintain
employment agreements with Mr. Yount and Ms. Nelson that were entered into in
connection with the MHC Reorganization. In connection with the Conversion and
Reorganization, the Holding Company and the Savings Bank will enter into
severance agreements with Mr. Yount and Ms. Nelson, which have substantially the
same terms as and will replace the existing agreements.
It is anticipated that the new severance agreements will have an
initial term of three years. On each anniversary of the commencement date of the
severance agreements, the term of each agreement may be extended for an
additional year at the discretion of the Board of Directors of the Savings Bank.
The severance agreements will provide for severance payments and
continuation of other employee benefits in the event of involuntary termination
of employment in connection with any change in control of the Employers in the
same manner as provided for in the employment agreements. Severance payments and
benefits also will be provided on a similar basis in connection with a voluntary
termination of employment where, subsequent to a change in control, an officer
is assigned duties inconsistent with his position, duties, responsibilities and
status immediately prior to such change in control.
The term "change in control" is defined in the agreement as having
occurred when, among other things, (a) a person other than the Holding Company
purchases shares of Common Stock pursuant to a tender or exchange offer for such
shares, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Holding Company representing 25% or more of the combined
voting power of the Holding Company's then outstanding securities, (c) the
membership of the Board of Directors changes as the result of a contested
election, or (d) shareholders of the Holding Company approve a merger,
consolidation, sale or disposition of all or substantially all of the Holding
Company's assets, or a plan of partial or complete liquidation.
73
<PAGE>
Assuming that a change in control had occurred at March 31, 1997, and
excluding any other benefits due under the severance agreements, the aggregate
value of the severance benefits payable to the two officers would be
approximately $552,000.
EMPLOYEE SEVERANCE COMPENSATION PLAN. In connection with the Conversion
and Reorganization, the Board of Directors of the Savings Bank intends to adopt
an Employee Severance Compensation Plan (the "Severance Plan") to provide
benefits to eligible employees in the event of a change in control of the
Holding Company or the Savings Bank (as defined in the Severance Plan). In
general, all employees with _________ or more years of service (except for
officers who enter into separate employment or severance agreements with the
Holding Company and the Savings Bank) will be eligible to participate in the
Severance Plan. Under the Severance Plan, in the event of a change in control of
the Holding Company or the Savings Bank, eligible employees who are terminated
or who terminate employment (but only upon the occurrence of events specified in
the Severance Plan) within 12 months of the effective date of a change in
control will be entitled to a payment based on years of service or position with
the Savings Bank. However, the maximum payment for any eligible employee would
be equal to ___ weeks of their current compensation. The Severance Plan also
provides that employees who have not met the _______-year service requirement
for participation would receive a payment equal to _____ weeks' compensation.
Assuming that a change in control had occurred at March 31, 1997 and the
termination of all eligible employees, the maximum aggregate payment due under
the Severance Plan would be approximately $_____________.
401(K) PLAN. The Savings Bank maintains the Riverview Employees'
Savings & Profit Sharing Plan (the "401(k) Plan") for the benefit of eligible
employees of the Savings Bank. The 401(k) Plan is intended to be a tax-qualified
plan under Sections 401(a) and 401(k) of the Code. Employees of the Savings Bank
who have completed 1,000 hours of service during 12 consecutive months and who
have attained age 21 are eligible to participate in the 401(k) Plan.
Participants may contribute up to 15% of their annual compensation to the 401(k)
Plan through a salary reduction election. The Savings Bank matches 50% of
participant contributions to a maximum of 3% of the participant's salary. In
addition to employer matching contributions, the Savings Bank may contribute a
discretionary amount to the 401(k) Plan in any plan year which is allocated to
individual participants in the proportion that their annual compensation bears
to the total compensation of all participants during the plan year. To be
eligible to receive a discretionary employer contribution, the participant must
complete 1,000 hours of service during the plan year and remain employed by the
Savings Bank on the last day of the plan year. Participants are at all times
100% vested in their 401(k) Plan accounts. For the year ended March 31, 1997,
the Savings Bank incurred total contribution-related expenses of $52,000 in
connection with the 401(k) Plan.
Generally, the investment of 401(k) Plan assets is directed by plan
participants. In connection with the Conversion and Reorganization, the
participants will be able to direct the investment of up to ___% of their 401(k)
Plan account balance to purchase shares of Common Stock. A participant in the
401(k) Plan who elects to purchase Common Stock in the Conversion and
Reorganization through the 401(k) Plan will receive the same subscription
priority and will be subject to the same individual purchase limitations as if
the participant had elected to make such purchase using other funds. See "THE
CONVERSION AND REORGANIZATION -- Limitations on Purchases of Conversion Shares."
BENEFITS
GENERAL. The Savings Bank currently pays 100% of the premiums for
medical, life and disability insurance benefits for full-time employees, subject
to certain deductibles.
EMPLOYEE STOCK OWNERSHIP PLAN. In connection with the MHC
Reorganization, the Savings Bank adopted the ESOP, which acquired 55,200 shares
of the Savings Bank Common Stock with the proceeds of a $552,000 loan from an
unaffiliated financial institution ("1993 Loan"). Upon consummation of the
Conversion and Reorganization, the Savings Bank Common Stock held by the ESOP
will be converted into Exchange Shares based upon the Exchange Ratio.
74
<PAGE>
In order to fund the purchase of up to 8% of the Conversion Shares to
be issued in the Conversion and Reorganization, it is anticipated that the ESOP
will borrow funds from the Holding Company equal to 100% of the aggregate
purchase price of the Conversion Shares. In addition, the Holding Company will
lend sufficient funds to the ESOP to enable the ESOP to repay the 1993 Loan
which had an outstanding principal balance of $237,000 at March 31, 1997. The
loan to the ESOP will be repaid principally from the Savings Bank's
contributions to the ESOP and dividends payable on Common Stock held by the ESOP
over the anticipated 10-year term of the loan. The interest rate for the ESOP
loan is expected to be the prime rate as published in THE WALL STREET JOURNAL on
the closing date of the Conversion and Reorganization. See "PRO FORMA DATA." To
the extent that the ESOP is unable to acquire 8% of the Common Stock issued in
the Conversion and Reorganization, it is anticipated that the additional shares
will be acquired following the Conversion and Reorganization through open market
purchases.
Shares purchased by the ESOP with the proceeds of the loan (including
shares originally acquired by the ESOP with the proceeds of the 1993 Loan) will
be held in a suspense account and released on a pro rata basis as the loan is
repaid. Discretionary contributions to the ESOP and shares released from the
suspense account will be allocated among participants on the basis of each
participant's proportional share of total compensation. Forfeitures will be
reallocated among the remaining plan participants.
In any plan year, the Savings Bank may make additional discretionary
contributions to the ESOP for the benefit of plan participants in either cash or
shares of Common Stock, which may be acquired through the purchase of
outstanding shares in the market or from individual stockholders or which
constitute authorized but unissued shares or shares held in treasury by Holding
Company. The timing, amount, and manner of such discretionary contributions will
be affected by several factors, including applicable regulatory policies, the
requirements of applicable laws and regulations, and market conditions.
Employees of the Savings Bank who have completed 1,000 hours of service
during 12 consecutive months and who have attained age 21 are eligible to
participate in the ESOP. Participants vest in their accrued benefits under the
ESOP at the rate of 20% per year, beginning upon the completion of two years of
service, with full vesting after six years of service. A participant is fully
vested at retirement, in the event of death or disability or upon termination of
the ESOP. Benefits are distributable upon a participant's retirement, early
retirement, death, disability, or termination of employment. The Savings Bank's
contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.
Messrs. Sheaffer and Wysaske currently serve as trustees of the ESOP.
Under the ESOP, the trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of plan participants and unallocated shares and
allocated shares for which no instructions are received must be voted in the
same ratio on any matter as those shares for which instructions are given.
Pursuant to SOP 93-6, compensation expense for a leveraged ESOP is
recorded at the fair market value of the ESOP shares when committed to be
released to participants' accounts. See "PRO FORMA DATA" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Comparison of Operating Results for the Years Ended March 31, 1997 and 1996."
The ESOP is be subject to the requirements of Employee Retirement
Income Security Act ("ERISA") and the regulations of the Internal Revenue
Service ("IRS") and the Department of Labor issued thereunder. The Savings Bank
has received a favorable determination letter from the IRS regarding the
tax-qualified status of the ESOP.
75
<PAGE>
1993 STOCK OPTION AND INCENTIVE PLAN. In connection with the Public MHC
Reorganization, the Savings Bank adopted the 1993 Stock Option Plan. The plan
was approved by the Public Stockholders at the Savings Bank's 1994 annual
meeting of stockholders. Options for all shares reserved for issuance under the
1993 Stock Option Plan have been granted to nonemployee directors, officers and
employees of the Savings Bank and are exercisable. In connection with the
Conversion and Reorganization, the 1993 Stock Option Plan will be assumed by the
Holding Company and appropriate adjustments will be made to the exercise price
and the number of shares underlying each option to reflect the applicable
Exchange Ratio.
No options were granted to Messrs. Sheaffer, Wysaske and Yount under
the 1993 Stock Option Plan during the fiscal year ended March 31, 1997.
Set forth below is certain information for Messrs. Sheaffer, Wysaske
and Yount concerning exercised and unexercisable options under the 1993 Stock
Option Plan at and for the fiscal year ended March 31, 1997.
<TABLE>
<CAPTION>
=======================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
- ---------------------------------------------------------------------------------------
Number Value of
of Number of Unexercised
Shares Unexercised In-the-Money
Acquired Dollar Options at Options at
on Value Fiscal Year End Fiscal Year End
Name Exercise Realized (Exercisable) (Exercisable)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Patrick Sheaffer -- $-- 20,733 $224,746
Ron Wysaske -- -- 16,297 176,659
Michael C. Yount -- -- 12,536 135,890
=======================================================================================
</TABLE>
1993 MANAGEMENT DEVELOPMENT AND RECOGNITION PLANS. In connection with
the MHC Reorganization, the Savings Bank adopted Management Development and
Recognition Plans (collectively, the "1993 MRPs") for officers, employees and
nonemployee directors of the Savings Bank. The 1993 MRPs were approved by the
Public Stockholders at the Savings Bank's 1994 annual meeting of stockholders.
All shares under the 1993 MRP have been awarded and are fully vested. For
purposes of the Conversion and Reorganization, the shares awarded under the 1993
MRP participants will be treated in the same manner as shares held by other
minority shareholders.
1997 STOCK OPTION PLAN. The Board of Directors of the Holding Company
intends to adopt the 1997 Stock Option Plan and to submit it to the stockholders
for approval at a meeting held no earlier than six months following consummation
of the Conversion and Reorganization. Under current OTS regulations, the
approval of a majority vote of the Holding Company's outstanding shares is
required prior to the implementation of the 1997 Stock Option Plan within one
year of the consummation of the Conversion and Reorganization. The Stock Option
Plan will comply with all applicable regulatory requirements. However, the 1997
Stock Option Plan will not be approved or endorsed by the OTS.
The 1997 Stock Option Plan will be designed to attract and retain
qualified management personnel and nonemployee directors, to provide such
officers, key employees and nonemployee directors with a proprietary interest in
the Holding Company as an incentive to contribute to the success of the Holding
Company and the Savings Bank, and to reward officers and key employees for
outstanding performance. The 1997 Stock Option Plan will provide for the grant
of incentive stock options ("ISOs") intended to comply with the requirements of
Section 422 of the Code and for nonqualified stock options ("NQOs"). Upon
receipt of stockholder approval of the 1997 Stock Option
76
<PAGE>
Plan, stock options may be granted to key employees of the Holding Company and
its subsidiaries, including the Savings Bank. Unless sooner terminated, the 1997
Stock Option Plan will continue in effect for a period of ten years from the
date the 1997 Stock Option Plan is approved by stockholders.
A number of authorized shares of Common Stock equal to 10% of the
number of Conversion Shares of issued in connection with the Conversion and
Reorganization will be reserved for future issuance under the 1997 Stock Option
Plan (276,000 shares based on the issuance of 2,760,000 Conversion Shares at the
maximum of the Estimated Valuation Range). Shares acquired upon exercise of
options will be authorized but unissued shares or treasury shares. In the event
of a stock split, reverse stock split, stock dividend, or similar event, the
number of shares of Common Stock under the 1997 Stock Option Plan, the number of
shares to which any award relates and the exercise price per share under any
option may be adjusted by the Committee (as defined below) to reflect the
increase or decrease in the total number of shares of Common Stock outstanding.
The 1997 Stock Option Plan will be administered and interpreted by a
committee of the Board of Directors ("Committee"). Subject to applicable OTS
regulations, the Committee will determine which nonemployee directors, officers
and key employees will be granted options, whether, in the case of officers and
employees, such options will be ISOs or NQOs, the number of shares subject to
each option, and the exercisability of such options. All options granted to
nonemployee directors will be NQOs. The per share exercise price of all options
will equal at least 100% of the fair market value of a share of Common Stock on
the date the option is granted.
Under current OTS regulations, if the 1997 Stock Option Plan is
implemented within one year of the consummation of the Conversion and
Reorganization, (i) no officer or employees could receive an award of options
covering in excess of 25%, (ii) no nonemployee director could receive in excess
of 5% and (iii) nonemployee directors, as a group, could not receive in excess
of 30% of the number of shares reserved for issuance under the 1997 Stock Option
Plan.
It is anticipated that all options granted under the 1997 Stock Option
Plan will be granted subject to a vesting schedule whereby the options become
exercisable over a specified period following the date of grant. Under OTS
regulations, if the 1997 Stock Option plan is implemented within the first year
following consummation of the Conversion and Reorganization the minimum vesting
period will be five years. All unvested options will be immediately exercisable
in the event of the recipient's death or disability. Unvested options also will
be exercisable following a change in control (as defined in the 1997 Stock
Option Plan) of the Holding Company or the Savings Bank to the extent authorized
or not prohibited by applicable law or regulations. OTS regulations currently
provide that if the 1997 Stock Option Plan is implemented prior to the first
anniversary of the Conversion and Reorganization, vesting may not be accelerated
upon a change in control of the Holding Company or the Savings Bank.
Each stock option that is awarded to an officer or key employee will
remain exercisable at any time on or after the date it vests through the earlier
to occur of the tenth anniversary of the date of grant or three months after the
date on which the optionee terminates employment (one year in the event of the
optionee's termination by reason of death or disability), unless such period is
extended by the Committee. Each stock option that is awarded to a nonemployee
director will remain exercisable through the earlier to occur of the tenth
anniversary of the date of grant or one year (two years in the event of a
nonemployee director's death or disability) following the termination of a
nonemployee director's service on the Board. All stock options are
nontransferable except by will or the laws of descent or distribution.
Under current provisions of the Code, the federal tax treatment of ISOs
and NQOs is different. With respect to ISOs, an optionee who satisfies certain
holding period requirements will not recognize income at the time the option is
granted or at the time the option is exercised. If the holding period
requirements are satisfied, the optionee will generally recognize capital gain
or loss upon a subsequent disposition of the shares of Common Stock received
upon the exercise of a stock option. If the holding period requirements are not
satisfied, the difference between the fair market value of the Common Stock on
the date of grant and the option exercise price, if any, will be taxable
77
<PAGE>
to the optionee at ordinary income tax rates. A federal income tax deduction
generally will not be available to the Holding Company as a result of the grant
or exercise of an ISO, unless the optionee fails to satisfy the holding period
requirements. With respect to NQOs, the grant of an NQO generally is not a
taxable event for the optionee and no tax deduction will be available to the
Holding Company. However, upon the exercise of an NQO, the difference
between the fair market value of the Common Stock on the date of exercise and
the option exercise price generally will be treated as compensation to the
optionee upon exercise, and the Holding Company will be entitled to a
compensation expense deduction in the amount of income realized by the optionee.
Although no specific award determinations have been made at this time,
the Holding Company and the Savings Bank anticipate that if stockholder approval
is obtained it would provide awards to its directors, officers and employees to
the extent and under terms and conditions permitted by applicable regulations.
The size of individual awards will be determined prior to submitting the 1997
Stock Option Plan for stockholder approval, and disclosure of anticipated awards
will be included in the proxy materials for such meeting.
MANAGEMENT RECOGNITION PLAN. Following the Conversion and
Reorganization, the Board of Directors of the Holding Company intends to adopt
the 1997 MRP for officers, employees, and nonemployee directors of the Holding
Company and the Savings Bank, subject to shareholder approval. The 1997 MRP will
enable the Holding Company and the Savings Bank to provide participants with a
proprietary interest in the Holding Company as an incentive to contribute to the
success of the Holding Company and the Savings Bank. The 1997 MRP will comply
with all applicable regulatory requirements. However, the 1997 MRP will not be
approved or endorsed by the OTS. Under current OTS regulations, the approval of
a majority vote of the Holding Company's outstanding shares is required prior to
the implementation of the 1997 MRP within one year of the consummation of the
Conversion and Reorganization.
The MRP expects to acquire a number of shares of Common Stock equal to
4% of the Conversion Shares issued in connection with the Conversion and
Reorganization (110,400 shares based on the issuance of 2,760,000 Conversion
Shares at the maximum of the Estimated Valuation Range). Such shares will be
acquired on the open market, if available, with funds contributed by the Holding
Company or the Savings Bank to a trust which the Holding Company may establish
in conjunction with the 1997 MRP ("1997 MRP Trust") or from authorized but
unissued shares or treasury shares of the Holding Company.
A committee of the Board of Directors of the Holding Company will
administer the 1997 MRP, the members of which will also serve as trustees of the
1997 MRP Trust, if formed. The trustees will be responsible for the investment
of all funds contributed by the Holding Company or the Savings Bank to the 1997
MRP Trust. The Board of Directors of the Holding Company may terminate the 1997
MRP at any time and, upon termination, all unallocated shares of Common Stock
will revert to the Holding Company.
Shares of Common Stock granted pursuant to the 1997 MRP will be in the
form of restricted stock payable ratably over a specified vesting period
following the date of grant. During the period of restriction, all shares will
be held in escrow by the Holding Company or by the 1997 MRP Trust. Under OTS
regulations, if the 1997 MRP is implemented within the first year following
consummation of the Conversion and Reorganization, the minimum vesting period
will be five years. All unvested 1997 MRP awards will vest in the event of the
recipient's death or disability. Unvested 1997 MRP awards will also vest
following a change in control (as defined in the 1997 MRP) of the Holding
Company or the Savings Bank to the extent authorized or not prohibited by
applicable law or regulations. OTS regulations currently provide that, if the
1997 MRP is implemented prior to the first anniversary of the Conversion and
Reorganization, vesting may not be accelerated upon a change in control of the
Holding Company or the Savings Bank.
A recipient of an 1997 MRP award in the form of restricted stock
generally will not recognize income upon an award of shares of Common Stock, and
the Holding Company will not be entitled to a federal income tax deduction,
until the termination of the restrictions. Upon such termination, the recipient
will recognize ordinary income in an amount equal to the fair market value of
the Common Stock at the time and the Holding Company will
78
<PAGE>
be entitled to a deduction in the same amount after satisfying federal income
tax withholding requirements. However, the recipient may elect to recognize
ordinary income in the year the restricted stock is granted in an amount equal
to the fair market value of the shares at that time, determined without regard
to the restrictions. In that event, the Holding Company will be entitled to a
deduction in such year and in the same amount. Any gain or loss recognized by
the recipient upon subsequent disposition of the stock will be either a capital
gain or capital loss.
Although no specific award determinations have been made at this time,
the Holding Company and the Savings Bank anticipate that if stockholder approval
is obtained it would provide awards to its directors, officers and employees to
the extent and under terms and conditions permitted by applicable regulations.
Under current OTS regulations, if the 1997 MRP is implemented within one year of
the consummation of the Conversion and Reorganization, (i) no officer or
employees could receive an award covering in excess of 25%, (ii) no nonemployee
director could receive in excess of 5% and (iii) nonemployee directors, as a
group, could not receive in excess of 30% of the number of shares reserved for
issuance under the 1997 MRP. The size of individual awards will be determined
prior to submitting the 1997 MRP for stockholder approval, and disclosure of
anticipated awards will be included in the proxy materials for such meeting.
TRANSACTIONS WITH THE SAVINGS BANK
Federal regulations require that all loans or extensions of credit to
executive officers and directors must generally be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons (unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee) and must not involve more than the normal risk of repayment or present
other unfavorable features. The Savings Bank's policy is not to make any new
loans or extensions of credit to the Savings Bank's executive officers and
directors at different rates or terms than those offered to the general public.
In addition, loans made to a director or executive officer in an amount that,
when aggregated with the amount of all other loans to such person and his
related interests, are in excess of the greater of $25,000 or 5% of the Savings
Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors.
See "REGULATION -- Federal Regulation of Savings Banks -- Transactions with
Affiliates." The aggregate amount of loans by the Savings Bank to its executive
officers and directors was $1.0 million at March 31, 1997, or approximately
2.09% of pro forma stockholders' equity (based on the issuance of the maximum of
the Estimated Valuation Range).
REGULATION
GENERAL
The Savings Bank is subject to extensive regulation, examination and
supervision by the OTS as its chartering agency, and the FDIC, as the insurer of
its deposits. The activities of federal savings institutions are governed by the
Home Owners' Loan Act, as amended ("HOLA") and, in certain respects, the Federal
Deposit Insurance Act ("FDIA") and the regulations issued by the OTS and the
FDIC to implement these statutes. These laws and regulations delineate the
nature and extent of the activities in which federal savings associations may
engage. Lending activities and other investments must comply with various
statutory and regulatory capital requirements. In addition, the Savings Bank's
relationship with its depositors and borrowers is also regulated to a great
extent, especially in such matters as the ownership of deposit accounts and the
form and content of the Savings Bank's mortgage documents. The Savings Bank must
file reports with the OTS and the FDIC concerning its activities and financial
condition in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with, or acquisitions of, other financial
institutions. There are periodic examinations by the OTS and the FDIC to review
the Savings Bank's compliance with various regulatory requirements. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such policies, whether by the
79
<PAGE>
OTS, the FDIC or Congress, could have a material adverse impact on the Holding
Company, the Savings Bank and their operations. The Holding Company, as a
savings and loan holding company, will also be required to file certain reports
with, and otherwise comply with the rules and regulations of, the OTS and the
Securities and Exchange Commission ("SEC").
FEDERAL REGULATION OF THE SAVINGS BANK
OFFICE OF THRIFT SUPERVISION. The OTS is an office in the Department of
the Treasury subject to the general oversight of the Secretary of the Treasury.
The OTS generally possesses the supervisory and regulatory duties and
responsibilities formerly vested in the Federal Home Loan Bank Board. Among
other functions, the OTS issues and enforces regulations affecting federally
insured savings associations and regularly examines these institutions.
FEDERAL HOME LOAN BANK SYSTEM. The FHLB System, consisting of 12 FHLBs,
is under the jurisdiction of the Federal Housing Finance Board ("FHFB"). The
designated duties of the FHFB are to: supervise the FHLBs; ensure that the FHLBs
carry out their housing finance mission; ensure that the FHLBs remain adequately
capitalized and able to raise funds in the capital markets; and ensure that the
FHLBs operate in a safe and sound manner. The Savings Bank, as a member of the
FHLB-Seattle, is required to acquire and hold shares of capital stock in the
FHLB- Seattle in an amount equal to the greater of (i) 1.0% of the aggregate
outstanding principal amount of residential mortgage loans, home purchase
contracts and similar obligations at the beginning of each year, or (ii) 1/20 of
its advances (borrowings) from the FHLB-Seattle. At March 31, 1997, the Savings
Bank complied with this requirement with an investment in FHLB-Seattle stock of
$1.8 million. Among other benefits, the FHLB-Seattle provides a central credit
facility primarily for member institutions. It is funded primarily from proceeds
derived from the sale of consolidated obligations of the FHLB System. It makes
advances to members in accordance with policies and procedures established by
the FHFB and the Board of Directors of the FHLB-Seattle.
FEDERAL DEPOSIT INSURANCE CORPORATION. The FDIC is an independent
federal agency established originally to insure the deposits, up to prescribed
statutory limits, of federally insured banks and to preserve the safety and
soundness of the banking industry. The FDIC maintains two separate insurance
funds: the BIF and the SAIF. As insurer of the Savings Bank's deposits, the FDIC
has examination, supervisory and enforcement authority over all savings
associations.
The Savings Bank's deposit accounts are insured by the FDIC under the
SAIF to the maximum extent permitted by law. The Savings Bank pays deposit
insurance premiums to the FDIC based on a risk-based assessment system
established by the FDIC for all SAIF-member institutions. Under applicable
regulations, institutions are assigned to one of three capital groups that are
based solely on the level of an institution's capital ("well capitalized,"
"adequately capitalized" or "undercapitalized"), which are defined in the same
manner as the regulations establishing the prompt corrective action system under
the FDIA as discussed below. The matrix so created results in nine assessment
risk classifications, with rates that until September 30, 1996 ranged from 0.23%
for well capitalized, financially sound institutions with only a few minor
weaknesses to 0.31% for undercapitalized institutions that pose a substantial
risk of loss to the SAIF unless effective corrective action is taken. The
Savings Bank's assessments expensed for the year ended March 31, 1997 equaled
$1.2 million, which includes the $947,000 special SAIF assessment.
Pursuant to the DIF Act, which was enacted on September 30, 1996, the
FDIC imposed a special assessment on each depository institution with
SAIF-assessable deposits which resulted in the SAIF achieving its designated
reserve ratio. In connection therewith, the FDIC reduced the assessment schedule
for SAIF members, effective January 1, 1997, to a range of 0% to 0.27%, with
most institutions, including the Savings Bank, paying 0%. This assessment
schedule is the same as that for the BIF, which reached its designated reserve
ratio in 1995. In addition, since January 1, 1997, SAIF members are charged an
assessment of 0.065% of SAIF-assessable deposits for the purpose of paying
interest on the obligations issued by the Financing Corporation ("FICO") in the
1980s to help fund the thrift industry cleanup. BIF-assessable deposits will be
charged an assessment to help pay interest on the FICO
80
<PAGE>
bonds at a rate of approximately .013% until the earlier of December 31, 1999 or
the date upon which the last savings association ceases to exist, after which
time the assessment will be the same for all insured deposits.
The DIF Act provides for the merger of the BIF and the SAIF into the
Deposit Insurance Fund on January 1, 1999, but only if no insured depository
institution is a savings association on that date. The DIF Act contemplates the
development of a common charter for all federally chartered depository
institutions and the abolition of separate charters for national banks and
federal savings associations. It is not known what form the common charter may
take and what effect, if any, the adoption of a new charter would have on the
operation of the Savings Bank.
The FDIC may terminate the deposit insurance of any insured depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, order or
any condition imposed by an agreement with the FDIC. It also may suspend deposit
insurance temporarily during the hearing process for the permanent termination
of insurance, if the institution has no tangible capital. If insurance of
accounts is terminated, the accounts at the institution at the time of
termination, less subsequent withdrawals, shall continue to be insured for a
period of six months to two years, as determined by the FDIC. Management is
aware of no existing circumstances that could result in termination of the
deposit insurance of the Savings Bank.
LIQUIDITY REQUIREMENTS. Under OTS regulations, each savings institution
is required to maintain an average daily balance of liquid assets (cash, certain
time deposits and savings accounts, bankers' acceptances, and specified U.S.
Government, state or federal agency obligations and certain other investments)
equal to a monthly average of not less than a specified percentage (currently
5.0%) of its net withdrawable accounts plus short-term borrowings. OTS
regulations also require each savings institution to maintain an average daily
balance of short-term liquid assets at a specified percentage (currently 1.0%)
of the total of its net withdrawable savings accounts and borrowings payable in
one year or less. Monetary penalties may be imposed for failure to meet
liquidity requirements. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources."
PROMPT CORRECTIVE ACTION. Each federal banking agency is required to
implement a system of prompt corrective action for institutions that it
regulates. The federal banking agencies have promulgated substantially similar
regulations to implement this system of prompt corrective action. Under the
regulations, an institution shall be deemed to be (i) "well capitalized" if it
has a total risk-based capital ratio of 10.0% or more, has a Tier I risk-based
capital ratio of 6.0% or more, has a leverage ratio of 5.0% or more and is not
subject to specified requirements to meet and maintain a specific capital level
for any capital measure; (ii) "adequately capitalized" if it has a total
risk-based capital ratio of 8.0% or more, a Tier I risk-based capital ratio of
4.0% or more and a leverage ratio of 4.0% or more (3.0% under certain
circumstances) and does not meet the definition of "well capitalized;" (iii)
"undercapitalized" if it has a total risk-based capital ratio that is less than
8.0%, a Tier I risk-based capital ratio that is less than 4.0% or a leverage
ratio that is less than 4.0% (3.0% under certain circumstances); (iv)
"significantly undercapitalized" if it has a total risk-based capital ratio that
is less than 6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a
leverage ratio that is less than 3.0%; and (v) "critically undercapitalized" if
it has a ratio of tangible equity to total assets that is equal to or less than
2.0%.
A federal banking agency may, after notice and an opportunity for a
hearing, reclassify a well capitalized institution as adequately capitalized and
may require an adequately capitalized institution or an undercapitalized
institution to comply with supervisory actions as if it were in the next lower
category if the institution is in an unsafe or unsound condition or has received
in its most recent examination, and has not corrected, a less than satisfactory
rating for asset quality, management, earnings or liquidity. The OTS may not,
however, reclassify a significantly undercapitalized institution as critically
undercapitalized.
An institution generally must file a written capital restoration plan
that meets specified requirements, as well as a performance guaranty by each
company that controls the institution, with the appropriate federal banking
agency within 45 days of the date that the institution receives notice or is
deemed to have notice that it is undercapitalized,
81
<PAGE>
significantly undercapitalized or critically undercapitalized. Immediately upon
becoming undercapitalized, an institution shall become subject to various
mandatory and discretionary restrictions on its operations.
At March 31, 1997, the Savings Bank was categorized as "well
capitalized" under the prompt corrective action regulations of the OTS.
STANDARDS FOR SAFETY AND SOUNDNESS. The FDIA requires the federal
banking regulatory agencies to prescribe, by regulation, standards for all
insured depository institutions relating to: (i) internal controls, information
systems and internal audit systems; (ii) loan documentation; (iii) credit
underwriting; (iv) interest rate risk exposure; (v) asset growth; and (vi)
compensation, fees and benefits. The federal banking agencies recently adopted
final regulations and Interagency Guidelines Prescribing Standards for Safety
and Soundness ("Guidelines"). The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. If the OTS
determines that the Savings Bank fails to meet any standard prescribed by the
Guidelines, the agency may require the Savings Bank to submit to the agency an
acceptable plan to achieve compliance with the standard. OTS regulations
establish deadlines for the submission and review of such safety and soundness
compliance plans.
QUALIFIED THRIFT LENDER TEST. All savings associations are required to
meet a qualified thrift lender ("QTL") test to avoid certain restrictions on
their operations. A savings institution that fails to become or remain a QTL
shall either become a national bank or be subject to the following restrictions
on its operations: (i) the association may not make any new investment or engage
in activities that would not be permissible for national banks; (ii) the
association may not establish any new branch office where a national bank
located in the savings institution's home state would not be able to establish a
branch office; (iii) the association shall be ineligible to obtain new advances
from any FHLB; and (iv) the payment of dividends by the association shall be
subject to the statutory and regulatory dividend restrictions applicable to
national banks. Also, beginning three years after the date on which the savings
institution ceases to be a QTL, the savings institution would be prohibited from
retaining any investment or engaging in any activity not permissible for a
national bank and would be required to repay any outstanding advances to any
FHLB. In addition, within one year of the date on which a savings association
controlled by a company ceases to be a QTL, the company must register as a bank
holding company and become subject to the rules applicable to such companies. A
savings institution may requalify as a QTL if it thereafter complies with the
QTL test.
Currently, the QTL test requires that either an institution qualify as
a domestic building and loan association under the Code or that 65% of an
institution's "portfolio assets" (as defined) consist of certain housing and
consumer-related assets on a monthly average basis in nine out of every 12
months. Assets that qualify without limit for inclusion as part of the 65%
requirement are loans made to purchase, refinance, construct, improve or repair
domestic residential housing and manufactured housing; home equity loans;
mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); FHLB stock; direct or indirect
obligations of the FDIC; and loans for educational purposes, loans to small
businesses and loans made through credit cards. In addition, the following
assets, among others, may be included in meeting the test subject to an overall
limit of 20% of the savings institution's portfolio assets: 50% of residential
mortgage loans originated and sold within 90 days of origination; 100% of
consumer loans; and stock issued by FHLMC or FNMA. Portfolio assets consist of
total assets minus the sum of (i) goodwill and other intangible assets, (ii)
property used by the savings institution to conduct its business, and (iii)
liquid assets up to 20% of the institution's total assets. At March 31, 1997,
the qualified thrift investments of the Savings Bank were approximately 93.6% of
its portfolio assets.
CAPITAL REQUIREMENTS. Under OTS regulations a savings association must
satisfy three minimum capital requirements: core capital, tangible capital and
risk-based capital. Savings associations must meet all of the standards in order
to comply with the capital requirements. The Holding Company is not subject to
any minimum capital requirements.
82
<PAGE>
OTS capital regulations establish a 3% core capital or leverage ratio
(defined as the ratio of core capital to adjusted total assets). Core capital is
defined to include common stockholders' equity, noncumulative perpetual
preferred stock and any related surplus, and minority interests in equity
accounts of consolidated subsidiaries, less (i) any intangible assets, except
for certain qualifying intangible assets; (ii) certain mortgage servicing
rights; and (iii) equity and debt investments in subsidiaries that are not
"includable subsidiaries," which is defined as subsidiaries engaged solely in
activities not impermissible for a national bank, engaged in activities
impermissible for a national bank but only as an agent for its customers, or
engaged solely in mortgage-banking activities. In calculating adjusted total
assets, adjustments are made to total assets to give effect to the exclusion of
certain assets from capital and to account appropriately for the investments in
and assets of both includable and nonincludable subsidiaries. An institution
that fails to meet the core capital requirement would be required to file with
the OTS a capital plan that details the steps they will take to reach
compliance. In addition, the OTS's prompt corrective action regulation provides
that a savings institution that has a leverage ratio of less than 4% (3% for
institutions receiving the highest CAMEL examination rating) will be deemed to
be "undercapitalized" and may be subject to certain restrictions. See "--
Federal Regulation of the Savings Bank -- Prompt Corrective Action."
As required by federal law, the OTS has proposed a rule revising its
minimum core capital requirement to be no less stringent than that imposed on
national banks. The OTS has proposed that only those savings associations rated
a composite one (the highest rating) under the CAMEL rating system for savings
associations will be permitted to operate at or near the regulatory minimum
leverage ratio of 3%. All other savings associations will be required to
maintain a minimum leverage ratio of 4% to 5%. The OTS will assess each
individual savings association through the supervisory process on a case-by-case
basis to determine the applicable requirement. No assurance can be given as to
the final form of any such regulation, the date of its effectiveness or the
requirement applicable to the Savings Bank.
Savings associations also must maintain "tangible capital" not less
than 1.5% of the Savings Bank's adjusted total assets. "Tangible capital" is
defined, generally, as core capital minus any "intangible assets" other than
purchased mortgage servicing rights.
Each savings institution must maintain total risk-based capital equal
to at least 8% of risk-weighted assets. Total risk-based capital consists of the
sum of core and supplementary capital, provided that supplementary capital
cannot exceed core capital, as previously defined. Supplementary capital
includes (i) permanent capital instruments such as cumulative perpetual
preferred stock, perpetual subordinated debt and mandatory convertible
subordinated debt, (ii) maturing capital instruments such as subordinated debt,
intermediate-term preferred stock and mandatory convertible subordinated debt,
subject to an amortization schedule, and (iii) general valuation loan and lease
loss allowances up to 1.25% of risk-weighted assets.
The risk-based capital regulation assigns each balance sheet asset held
by a savings institution to one of four risk categories based on the amount of
credit risk associated with that particular class of assets. Assets not included
for purposes of calculating capital are not included in calculating
risk-weighted assets. The categories range from 0% for cash and securities that
are backed by the full faith and credit of the U.S. Government to 100% for
repossessed assets or assets more than 90 days past due. Qualifying residential
mortgage loans (including multi-family mortgage loans) are assigned a 50% risk
weight. Consumer, commercial, home equity and residential construction loans are
assigned a 100% risk weight, as are nonqualifying residential mortgage loans and
that portion of land loans and nonresidential construction loans that do not
exceed an 80% loan-to-value ratio. The book value of assets in each category is
multiplied by the weighing factor (from 0% to 100%) assigned to that category.
These products are then totalled to arrive at total risk-weighted assets.
Off-balance sheet items are included in risk- weighted assets by converting them
to an approximate balance sheet "credit equivalent amount" based on a conversion
schedule. These credit equivalent amounts are then assigned to risk categories
in the same manner as balance sheet assets and included risk-weighted assets.
The OTS has incorporated an interest rate risk component into its
regulatory capital rule. Under the rule, savings associations with "above
normal" interest rate risk exposure would be subject to a deduction from total
capital
83
<PAGE>
for purposes of calculating their risk-based capital requirements. A savings
association's interest rate risk is measured by the decline in the net portfolio
value of its assets (i.e., the difference between incoming and outgoing
discounted cash flows from assets, liabilities and off-balance sheet contracts)
that would result from a hypothetical 200 basis point increase or decrease in
market interest rates divided by the estimated economic value of the
association's assets, as calculated in accordance with guidelines set forth by
the OTS. A savings association whose measured interest rate risk exposure
exceeds 2% must deduct an interest rate risk component in calculating its total
capital under the risk-based capital rule. The interest rate risk component is
an amount equal to one-half of the difference between the institution's measured
interest rate risk and 2%, multiplied by the estimated economic value of the
association's assets. That dollar amount is deducted from an association's total
capital in calculating compliance with its risk- based capital requirement.
Under the rule, there is a two quarter lag between the reporting date of an
institution's financial data and the effective date for the new capital
requirement based on that data. A savings association with assets of less than
$300 million and risk-based capital ratios in excess of 12% is not subject to
the interest rate risk component, unless the OTS determines otherwise. The rule
also provides that the Director of the OTS may waive or defer an association's
interest rate risk component on a case-by-case basis. Under certain
circumstances, a savings association may request an adjustment to its interest
rate risk component if it believes that the OTS-calculated interest rate risk
component overstates its interest rate risk exposure. In addition, certain
"well-capitalized" institutions may obtain authorization to use their own
interest rate risk model to calculate their interest rate risk component in lieu
of the OTS-calculated amount. The OTS has postponed the date that the component
will first be deducted from an institution's total capital.
See "HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE" for a
table that sets forth in terms of dollars and percentages the OTS tangible, core
and risk-based capital requirements, the Savings Bank's historical amounts and
percentages at March 31, 1997 and pro forma amounts and percentages based upon
the assumptions stated therein.
LIMITATIONS ON CAPITAL DISTRIBUTIONS. OTS regulations impose uniform
limitations on the ability of all savings associations to engage in various
distributions of capital such as dividends, stock repurchases and cash-out
mergers. In addition, OTS regulations require the Savings Bank to give the OTS
30 days' advance notice of any proposed declaration of dividends, and the OTS
has the authority under its supervisory powers to prohibit the payment of
dividends. The regulation utilizes a three-tiered approach which permits various
levels of distributions based primarily upon a savings association's capital
level.
A Tier 1 savings association has capital in excess of its fully
phased-in capital requirement (both before and after the proposed capital
distribution). A Tier 1 savings association may make (without application but
upon prior notice to, and no objection made by, the OTS) capital distributions
during a calendar year up to 100% of its net income to date during the calendar
year plus one-half its surplus capital ratio (i.e., the amount of capital in
excess of its fully phased-in requirement) at the beginning of the calendar year
or the amount authorized for a Tier 2 association. Capital distributions in
excess of such amount require advance notice to the OTS. A Tier 2 savings
association has capital equal to or in excess of its minimum capital requirement
but below its fully phased-in capital requirement (both before and after the
proposed capital distribution). Such an association may make (without
application) capital distributions up to an amount equal to 75% of its net
income during the previous four quarters depending on how close the association
is to meeting its fully phased-in capital requirement. Capital distributions
exceeding this amount require prior OTS approval. A Tier 3 savings association
has capital below the minimum capital requirement (either before or after the
proposed capital distribution). A Tier 3 savings association may not make any
capital distributions without prior approval from the OTS.
The Savings Bank currently meets the criteria to be designated a Tier 1
association and, consequently, could at its option (after prior notice to, and
no objection made by, the OTS) distribute up to 100% of its net income during
the calendar year plus 50% of its surplus capital ratio at the beginning of the
calendar year less any distributions previously paid during the year.
84
<PAGE>
LOANS TO ONE BORROWER. Under the HOLA, savings institutions are
generally subject to the national bank limit on loans to one borrower.
Generally, this limit is 15% of the Savings Bank's unimpaired capital and
surplus, plus an additional 10% of unimpaired capital and surplus, if such loan
is secured by readily-marketable collateral, which is defined to include certain
financial instruments and bullion. The OTS by regulation has amended the loans
to one borrower rule to permit savings associations meeting certain
requirements, including capital requirements, to extend loans to one borrower in
additional amounts under circumstances limited essentially to loans to develop
or complete residential housing units. At March 31, 1997, the Savings Bank's
largest aggregate amount of loans to one borrower was $1.8 million, which
represented 7.4% of the Savings Bank's unimpaired capital and surplus at March
31, 1997.
ACTIVITIES OF SAVINGS BANKS AND THEIR SUBSIDIARIES. When a savings
association establishes or acquires a subsidiary or elects to conduct any new
activity through a subsidiary that the association controls, the savings
association must notify the FDIC and the OTS 30 days in advance and provide the
information each agency may, by regulation, require. Savings associations also
must conduct the activities of subsidiaries in accordance with existing
regulations and orders.
The OTS may determine that the continuation by a savings association of
its ownership control of, or its relationship to, the subsidiary constitutes a
serious risk to the safety, soundness or stability of the association or is
inconsistent with sound banking practices or with the purposes of the FDIA.
Based upon that determination, the FDIC or the OTS has the authority to order
the savings association to divest itself of control of the subsidiary. The FDIC
also may determine by regulation or order that any specific activity poses a
serious threat to the SAIF. If so, it may require that no SAIF member engage in
that activity directly.
TRANSACTIONS WITH AFFILIATES. Savings associations must comply with
Sections 23A and 23B of the Federal Reserve Act ("Sections 23A and 23B")
relative to transactions with affiliates in the same manner and to the same
extent as if the savings association were a Federal Reserve member bank. A
savings and loan holding company, its subsidiaries and any other company under
common control are considered affiliates of the subsidiary savings association
under the HOLA. Generally, Sections 23A and 23B: (i) limit the extent to which
the insured association or its subsidiaries may engage in certain covered
transactions with an affiliate to an amount equal to 10% of such institution's
capital and surplus and place an aggregate limit on all such transactions with
affiliates to an amount equal to 20% of such capital and surplus, and (ii)
require that all such transactions be on terms substantially the same, or at
least as favorable to the institution or subsidiary, as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans, the
purchase of assets, the issuance of a guarantee and similar types of
transactions. Any loan or extension of credit by the Savings Bank to an
affiliate must be secured by collateral in accordance with Section 23A.
Three additional rules apply to savings associations: (i) a savings
association may not make any loan or other extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank holding
companies; (ii) a savings association may not purchase or invest in securities
issued by an affiliate (other than securities of a subsidiary); and (iii) the
OTS may, for reasons of safety and soundness, impose more stringent restrictions
on savings associations but may not exempt transactions from or otherwise
abridge Section 23A or 23B. Exemptions from Section 23A or 23B may be granted
only by the Federal Reserve Board, as is currently the case with respect to all
FDIC-insured banks. The Savings Bank has not been significantly affected by the
rules regarding transactions with affiliates.
The Savings Bank's authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by such persons,
is governed by Sections 22(g) and 22(h) of the Federal Reserve Act, and
Regulation O thereunder. Among other things, these regulations generally require
that such loans be made on terms and conditions substantially the same as those
offered to unaffiliated individuals and not involve more than the normal risk of
repayment. Generally, Regulation O also places individual and aggregate limits
on the amount of loans the Savings Bank may make to such persons based, in part,
on the Savings Bank's capital position, and requires
85
<PAGE>
certain board approval procedures to be followed. The OTS regulations, with
certain minor variances, apply Regulation O to savings institutions.
COMMUNITY REINVESTMENT ACT. Under the federal Community Reinvestment
Act ("CRA"), all federally-insured financial institutions have a continuing and
affirmative obligation consistent with safe and sound operations to help meet
all the credit needs of its delineated community. The CRA does not establish
specific lending requirements or programs nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to meet all the credit needs of its delineated community. The CRA
requires the federal banking agencies, in connection with regulatory
examinations, to assess an institution's record of meeting the credit needs of
its delineated community and to take such record into account in evaluating
regulatory applications to establish a new branch office that will accept
deposits, relocate an existing office, or merge or consolidate with, or acquire
the assets or assume the liabilities of, a federally regulated financial
institution, among others. The CRA requires public disclosure of an
institution's CRA rating. The Savings Bank received an "outstanding" rating as a
result of its latest evaluation.
REGULATORY AND CRIMINAL ENFORCEMENT PROVISIONS. The OTS has primary
enforcement responsibility over savings institutions and has the authority to
bring action against all "institution-affiliated parties," including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers or directors,
receivership, conservatorship or termination of deposit insurance. Civil
penalties cover a wide range of violations and can amount to $27,500 per day, or
$1.1 million per day in especially egregious cases. Under the FDIA, the FDIC has
the authority to recommend to the Director of the OTS that enforcement action be
taken with respect to a particular savings institution. If action is not taken
by the Director, the FDIC has authority to take such action under certain
circumstances. Federal law also establishes criminal penalties for certain
violations.
SAVINGS AND LOAN HOLDING COMPANY REGULATIONS
HOLDING COMPANY ACQUISITIONS. The HOLA and OTS regulations issued
thereunder generally prohibit a savings and loan holding company, without prior
OTS approval, from acquiring more than 5% of the voting stock of any other
savings association or savings and loan holding company or controlling the
assets thereof. They also prohibit, among other things, any director or officer
of a savings and loan holding company, or any individual who owns or controls
more than 25% of the voting shares of such holding company, from acquiring
control of any savings association not a subsidiary of such savings and loan
holding company, unless the acquisition is approved by the OTS.
HOLDING COMPANY ACTIVITIES. As a unitary savings and loan holding
company, the Holding Company generally is not subject to activity restrictions
under the HOLA. If the Holding Company acquires control of another savings
association as a separate subsidiary other than in a supervisory acquisition, it
would become a multiple savings and loan holding company. There generally are
more restrictions on the activities of a multiple savings and loan holding
company than on those of a unitary savings and loan holding company. The HOLA
provides that, among other things, no multiple savings and loan holding company
or subsidiary thereof which is not an insured association shall commence or
continue for more than two years after becoming a multiple savings and loan
association holding company or subsidiary thereof, any business activity other
than: (i) furnishing or performing management services for a subsidiary insured
institution, (ii) conducting an insurance agency or escrow business, (iii)
holding, managing, or liquidating assets owned by or acquired from a subsidiary
insured institution, (iv) holding or managing properties used or occupied by a
subsidiary insured institution, (v) acting as trustee under deeds of trust, (vi)
those activities previously directly authorized by regulation as of March 5,
1987 to be engaged in by multiple holding companies or (vii) those activities
authorized by the Federal Reserve Board as permissible for bank holding
companies, unless the OTS by regulation, prohibits or limits such activities for
savings and loan holding companies. Those activities described in (vii) above
also must be approved by the OTS prior to being engaged in by a multiple savings
and loan holding company.
86
<PAGE>
QUALIFIED THRIFT LENDER TEST. The HOLA provides that any savings and
loan holding company that controls a savings association that fails the QTL
test, as explained under "-- Federal Regulation of the Savings Bank - -
Qualified Thrift Lender Test," must, within one year after the date on which the
association ceases to be a QTL, register as and be deemed a bank holding company
subject to all applicable laws and regulations.
TAXATION
FEDERAL TAXATION
GENERAL. Upon consummation of the Conversion and Reorganization, the
Holding Company and the Savings Bank will report their income on a fiscal year
basis using the accrual method of accounting and will be subject to federal
income taxation in the same manner as other corporations with some exceptions,
including particularly the Savings Bank's reserve for bad debts discussed below.
The following discussion of tax matters is intended only as a summary and does
not purport to be a comprehensive description of the tax rules applicable to the
Savings Bank or the Holding Company.
BAD DEBT RESERVE. Historically, savings institutions such as the
Savings Bank which met certain definitional tests primarily related to their
assets and the nature of their business ("qualifying thrift") were permitted to
establish a reserve for bad debts and to make annual additions thereto, which
may have been deducted in arriving at their taxable income. The Savings Bank's
deductions with respect to "qualifying real property loans," which are generally
loans secured by certain interest in real property, were computed using an
amount based on the Savings Bank's actual loss experience, or a percentage equal
to 8% of the Savings Bank's taxable income, computed with certain modifications
and reduced by the amount of any permitted additions to the non-qualifying
reserve. Due to the Savings Bank's loss experience, the Savings Bank generally
recognized a bad debt deduction equal to 8% of taxable income.
The provisions repealing the current thrift bad debt rules were passed
by Congress as part of "The Small Business Job Protection Act of 1996." The new
rules eliminate the 8% of taxable income method for deducting additions to the
tax bad debt reserves for all thrifts for tax years beginning after December 31,
1995. These rules also require that all institutions recapture all or a portion
of their bad debt reserves added since the base year (last taxable year
beginning before January 1, 1988). The Savings Bank has previously recorded a
deferred tax liability equal to the bad debt recapture and as such the new rules
will have no effect on the net income or federal income tax expense. For taxable
years beginning after December 31, 1995, the Savings Bank's bad debt deduction
will be determined under the experience method using a formula based on actual
bad debt experience over a period of years or, if the Savings Bank is a "large"
association (assets in excess of $500 million) on the basis of net charge-offs
during the taxable year. The new rules allow an institution to suspend bad debt
reserve recapture for the 1996 and 1997 tax years if the institution's lending
activity for those years is equal to or greater than the institutions average
mortgage lending activity for the six taxable years preceding 1996 adjusted for
inflation. For this purpose, only home purchase or home improvement loans are
included and the institution can elect to have the tax years with the highest
and lowest lending activity removed from the average calculation. If an
institution is permitted to postpone the reserve recapture, it must begin its
six year recapture no later than the 1998 tax year. The unrecaptured base year
reserves will not be subject to recapture as long as the institution continues
to carry on the business of banking. In addition, the balance of the pre-1988
bad debt reserves continue to be subject to provisions of present law referred
to below that require recapture in the case of certain excess distributions to
shareholders.
DISTRIBUTIONS. To the extent that the Savings Bank makes "nondividend
distributions" to the Holding Company, such distributions will be considered to
result in distributions from the balance of its bad debt reserve as of December
31, 1987 (or a lesser amount if the Savings Bank's loan portfolio decreased
since December 31, 1987) and then from the supplemental reserve for losses on
loans ("Excess Distributions"), and an amount based on the Excess Distributions
will be included in the Savings Bank's taxable income. Nondividend distributions
include distributions in excess of the Savings Bank's current and accumulated
earnings and profits, distributions in redemption of stock and distributions in
partial or complete liquidation. However, dividends paid out of the Savings
87
<PAGE>
Bank's current or accumulated earnings and profits, as calculated for federal
income tax purposes, will not be considered to result in a distribution from the
Savings Bank's bad debt reserve. The amount of additional taxable income created
from an Excess Distribution is an amount that, when reduced by the tax
attributable to the income, is equal to the amount of the distribution. Thus,
if, after the Conversion, the Savings Bank makes a "nondividend distribution,"
then approximately one and one-half times the Excess Distribution would be
includable in gross income for federal income tax purposes, assuming a 34%
corporate income tax rate (exclusive of state and local taxes). See "REGULATION"
and "DIVIDEND POLICY" for limits on the payment of dividends by the Savings
Bank. The Savings Bank does not intend to pay dividends that would result in a
recapture of any portion of its tax bad debt reserve.
CORPORATE ALTERNATIVE MINIMUM TAX. The Code imposes a tax on
alternative minimum taxable income ("AMTI") at a rate of 20%. The excess of the
tax bad debt reserve deduction using the percentage of taxable income method
over the deduction that would have been allowable under the experience method is
treated as a preference item for purposes of computing the AMTI. In addition,
only 90% of AMTI can be offset by net operating loss carryovers. AMTI is
increased by an amount equal to 75% of the amount by which the Savings Bank's
adjusted current earnings exceeds its AMTI (determined without regard to this
preference and prior to reduction for net operating losses). For taxable years
beginning after December 31, 1986, and before January 1, 1996, an environmental
tax of 0.12% of the excess of AMTI (with certain modification) over $2.0 million
is imposed on corporations, including the Savings Bank, whether or not an
Alternative Minimum Tax is paid.
DIVIDENDS-RECEIVED DEDUCTION. The Holding Company may exclude from its
income 100% of dividends received from the Savings Bank as a member of the same
affiliated group of corporations. The corporate dividends-received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Holding Company and the Savings Bank will not file a consolidated
tax return, except that if the Holding Company or the Savings Bank owns more
than 20% of the stock of a corporation distributing a dividend, then 80% of any
dividends received may be deducted.
AUDITS. Neither the MHC's nor the Savings Bank's federal income tax
returns have been audited within the past five years.
STATE TAXATION
GENERAL. The Savings Bank is subject to a business and occupation tax
imposed under Washington law at the rate of 1.70% of gross receipts; however,
interest received on loans secured by mortgages or deeds of trust on residential
properties is exempt from such tax.
AUDITS. The Savings Bank's business and occupation tax returns were
audited for the period January 1, 1992 through December 31, 1995 resulting in an
additional tax liability of $48,000, which the Savings Bank has paid.
88
<PAGE>
THE CONVERSION AND REORGANIZATION
THE OTS HAS APPROVED THE PLAN OF CONVERSION SUBJECT TO ITS APPROVAL BY
THE MEMBERS OF THE SAVINGS BANK AND THE STOCKHOLDERS OF THE SAVINGS BANK
ENTITLED TO VOTE THEREON AND TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS
IMPOSED BY THE OTS IN ITS APPROVAL. OTS APPROVAL DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN OF CONVERSION.
GENERAL
On May 21, 1997, the Boards of Directors of the MHC and the Savings
Bank, and on ________, 1997, the Holding Company's Board of Directors,
unanimously adopted the Plan of Conversion, pursuant to which the MHC will
convert from a mutual holding company to a stock holding company and the Savings
Bank simultaneously reorganize as a wholly-owned subsidiary of the Holding
Company, a newly formed Washington corporation. THE FOLLOWING DISCUSSION OF ALL
MATERIAL ASPECTS OF THE PLAN OF CONVERSION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PLAN OF CONVERSION, WHICH IS ATTACHED AS EXHIBIT A TO BOTH THE
MHC'S PROXY STATEMENT AND THE SAVINGS BANK'S PROXY STATEMENT, AND IS AVAILABLE
TO BOTH MEMBERS OF THE MHC AND STOCKHOLDERS OF THE SAVINGS BANK UPON REQUEST.
The Plan of Conversion is also filed as an exhibit to the Registration
Statement. See "ADDITIONAL INFORMATION." The OTS has approved the Plan of
Conversion subject to its approval by the members of the MHC entitled to vote on
the matter at the Special Meeting of Members called for that purpose to be held
on September 24, 1997, its approval by the stockholders of the Savings Bank
entitled to vote on the matter at the Stockholders' Meeting called for that
purpose to be held on September 24, 1997, and its approval by the stockholders
of the Savings Bank (excluding the MHC) entitled to vote on the matter at the
Stockholders' Meeting, and subject to the satisfaction of certain other
conditions imposed by the OTS in its approval.
Pursuant to the Plan of Conversion, (i) the MHC will convert from a
federally-chartered mutual holding company to a federally-chartered interim
stock savings bank (i.e. Interim A) and simultaneously merge with and into the
Savings Bank, pursuant to which the MHC will cease to exist and the shares of
Savings Bank Common Stock held by the MHC will be canceled, and (ii) Interim A
will then merge with and into the Savings Bank. As a result of the merger of
Interim A with and into the Savings Bank, the Savings Bank will become a wholly
owned subsidiary of the Holding Company and the Public Savings Bank Shares will
be converted into the Exchange Shares pursuant to the Exchange Ratio, which will
result in the holders of such shares owning in the aggregate approximately the
same percentage of the Common Stock to be outstanding upon the completion of the
Conversion and Reorganization (i.e., the Conversion Shares and the Exchange
Shares) as the percentage of Savings Bank Common Stock owned by them in the
aggregate immediately prior to consummation of the Conversion and
Reorganization, but before giving effect to (a) the payment of cash in lieu of
issuing fractional Exchange Shares and (b) any shares of Conversion Stock
purchased by the Savings Bank's stockholders in the Conversion Offerings or the
ESOP thereafter.
As part of the Conversion and Reorganization, the Holding Company is
offering Conversion Shares in the Subscription Offering to holders of
Subscription Rights in the following order of priority: (i) Eligible Account
Holders (depositors of the Savings Bank with $50.00 or more on deposit as of
December 31, 1995); (ii) the ESOP; (iii) Supplemental Eligible Account Holders
(depositors of the Savings Bank with $50.00 or more on deposit as of June 30,
1997); and (iv) Other Members (depositors of the Savings Bank as of July 31,
1997 and borrowers of the Savings Bank with loans outstanding as of October 22,
1993, which continue to be outstanding as of July 31, 1997).
Concurrently with the Subscription Offering, any Conversion Shares not
subscribed for in the Subscription Offering may be offered for sale in the
Direct Community Offering to members of the general public, with priority being
given first to Public Stockholders (who are not Eligible Account Holders,
Supplemental Eligible Account Holders or Other Members) and then to natural
persons and trusts of natural persons residing in the Local Community.
Conversion Shares not sold in the Subscription and Direct Community Offerings
may be offered in the Syndicated Community Offering. Regulations require that
the Direct Community and Syndicated Community Offerings be completed within 45
days after completion of the fully extended Subscription Offering unless
extended
89
<PAGE>
by the Savings Bank or the Holding Company with the approval of the regulatory
authorities. If the Syndicated Community Offering is determined not to be
feasible, the Board of Directors of the Savings Bank will consult with the
regulatory authorities to determine an appropriate alternative method for
selling the unsubscribed Conversion Shares. The Plan of Conversion provides that
the Conversion and Reorganization must be completed within 24 months after the
date of the approval of the Plan of Conversion by the members of the MHC.
No sales of Common Stock may be completed, either in the Subscription
Offering, Direct Community Offering or Syndicated Community Offerings unless the
Plan of Conversion is approved by the members of the MHC and the stockholders of
the Savings Bank.
The completion of the Conversion Offerings, however, is subject to
market conditions and other factors beyond the Savings Bank's control. No
assurance can be given as to the length of time after approval of the Plan of
Conversion at the Special Members Meeting and the Stockholders Meeting that will
be required to complete the Direct Community or Syndicated Community Offerings
or other sale of the Conversion Shares. If delays are experienced, significant
changes may occur in the estimated pro forma market value of the MHC and the
Savings Bank, as converted, together with corresponding changes in the net
proceeds realized by the Holding Company from the sale of the Conversion Shares.
If the Conversion and Reorganization is terminated, the Savings Bank would be
required to charge all Conversion and Reorganization expenses against current
income.
Orders for Conversion Shares will not be filled until at least
2,040,000 Conversion Shares have been subscribed for or sold and the OTS
approves the final valuation and the Conversion and Reorganization closes. If
the Conversion and Reorganization is not completed within 45 days after the last
day of the fully extended Subscription Offering and the OTS consents to an
extension of time to complete the Conversion and Reorganization, subscribers
will be given the right to increase, decrease or rescind their subscriptions.
Unless an affirmative indication is received from subscribers that they wish to
continue to subscribe for shares, the funds will be returned promptly, together
with accrued interest at the Savings Bank's passbook rate from the date payment
is received until the funds are returned to the subscriber. If such period is
not extended, or, in any event, if the Conversion and Reorganization is not
completed, all withdrawal authorizations will be terminated and all funds held
will be promptly returned together with accrued interest at the Savings Bank's
passbook rate from the date payment is received until the Conversion and
Reorganization is terminated.
PURPOSES OF CONVERSION AND REORGANIZATION
The MHC, as a federally chartered mutual holding company, does not have
stockholders and has no authority to issue capital stock. As a result of the
Conversion and Reorganization, the Holding Company will be structured in the
form used by holding companies of commercial banks, most business entities and a
growing number of savings institutions. The holding company form of organization
will provide the Holding Company with the ability to diversify the Holding
Company's and the Savings Bank's business activities through acquisition of or
mergers with both stock savings institutions and commercial banks, as well as
other companies. Although there are no current arrangements, understandings or
agreements regarding any such opportunities, the Holding Company will be in a
position after the Conversion and Reorganization, subject to regulatory
limitations and the Holding Company's financial position, to take advantage of
any such opportunities that may arise.
In their decision to pursue the Conversion and Reorganization, the
Board of Directors of the MHC and the Savings Bank considered various regulatory
uncertainties associated with the mutual holding company structure including the
ability to waive dividends in the future as well as the general uncertainty
regarding a possible elimination of the federal savings association charter. See
"RISK FACTORS -- Recent Legislation and the Future of the Thrift Industry."
The Conversion and Reorganization will be important to the future
growth and performance of the holding company organization by providing a larger
capital base to support the operations of the Savings Bank and Holding Company
and by enhancing their future access to capital markets, their ability to
diversify into other financial
90
<PAGE>
services related activities, and their ability to provide services to the
public. Although the Savings Bank currently has the ability to raise additional
capital through the sale of additional shares of Savings Bank Common Stock, that
ability is limited by the mutual holding company structure which, among other
things, requires that the MHC hold a majority of the outstanding shares of
Savings Bank Common Stock.
The Conversion and Reorganization also will result in an increase in
the number of shares of Common Stock to be outstanding as compared to the number
of outstanding shares of Public Savings Bank Shares which will increase the
likelihood of the development of an active and liquid trading market for the
Common Stock. See "MARKET FOR COMMON STOCK." In addition, the Conversion and
Reorganization permit to the Holding Company to engage in stock repurchases
without adverse federal income tax consequences, unlike the Savings Bank.
Currently, the Holding Company has no plans or intentions to engage in any stock
repurchases.
An additional benefit of the Conversion and Reorganization will be an
increase in the accumulated earnings and profits of the Savings Bank for federal
income tax purposes. When the Savings Bank (as a mutual institution) transferred
substantially all of its assets and liabilities to its stock savings bank
successor in the MHC Reorganization, its accumulated earnings and profits tax
attribute was not able to be transferred to the Savings Bank because no tax-free
reorganization was involved. Accordingly, this tax attribute was retained by the
Savings Bank when it converted its charter to that of the MHC, even though the
underlying retained earnings were transferred to the Savings Bank. The
Conversion and Reorganization has been structured to re-unite the accumulated
earnings and profits tax attribute retained by the MHC in the MHC Reorganization
with the retained earnings of the Savings Bank by merging the MHC with and into
the Savings Bank in a tax-free reorganization. This transaction will increase
the Savings Bank's ability to pay dividends to the Holding Company in the
future. See "DIVIDEND POLICY."
If the Savings Bank had undertaken a standard conversion involving the
formation of a stock holding company in 1993, applicable OTS regulations would
have required a greater amount of common stock to be sold than the amount of net
proceeds raised in the MHC Reorganization. Management believed that it was
advisable to profitably invest the $6.5 million of net proceeds raised in the
MHC Reorganization prior to raising the larger amount of capital that would have
been raised in a standard conversion. A standard conversion in 1993 also would
have immediately eliminated all aspects of the mutual form of organization.
In light of the foregoing, the Boards of Directors of the Primary
Parties believe that the Conversion and Reorganization is in the best interests
of the MHC and the Savings Bank, their respective members and stockholders, and
the communities served by the Savings Bank.
EFFECTS OF CONVERSION AND REORGANIZATION ON DEPOSITORS AND BORROWERS OF THE
SAVINGS BANK
GENERAL. Prior to the Conversion and Reorganization, each depositor in
the Savings Bank has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the MHC based upon the balance in his or
her account, which interest may only be realized in the event of a liquidation
of the MHC. However, this ownership interest is tied to the depositor's account
and has no tangible market value separate from such deposit account. A depositor
who reduces or closes his account receives a portion or all of the balance in
the account but nothing for his ownership interest in the net worth of the MHC,
which is lost to the extent that the balance in the account is reduced.
Consequently, the depositors of the Savings Bank normally have no way
to realize the value of their ownership interest in the MHC, which has
realizable value only in the unlikely event that the MHC is liquidated. In such
event, the depositors of record at that time, as owners, would share pro rata in
any residual surplus and reserves of the MHC after other claims are paid.
Upon consummation of the Conversion and Reorganization, permanent
nonwithdrawable capital stock will be created to represent the ownership of the
net worth of the Holding Company. The Common Stock is separate and apart from
deposit accounts and cannot be and is not insured by the FDIC or any other
governmental agency.
91
<PAGE>
Certificates are issued to evidence ownership of the permanent stock. The stock
certificates are transferable, and therefore the stock may be sold or traded if
a purchaser is available with no effect on any deposit and/or loan account(s)
the seller may hold in the Savings Bank.
CONTINUITY. The Conversion and Reorganization will not interrupt the
Savings Bank's normal business of accepting deposits and making loans. The
Savings Bank will continue to be subject to regulation by the OTS and the FDIC.
After the Conversion and Reorganization, the Savings Bank will continue to
provide services for depositors and borrowers under current policies by its
present management and staff.
The directors and officers of the Savings Bank at the time of the
Conversion and Reorganization will continue to serve as directors and officers
of the Savings Bank after the Conversion and Reorganization. The directors and
officers of the Holding Company consist of individuals currently serving as
directors and officers of the MHC and the Savings Bank, and they generally will
retain their positions in the Holding Company after the Conversion and
Reorganization.
EFFECT ON PUBLIC SAVINGS BANK SHARES. Under the Plan of Conversion,
upon consummation of the Conversion and Reorganization, the Public Savings Bank
Shares shall be converted into Exchange Shares based upon the Exchange Ratio
without any further action on the part of the holder thereof. Upon surrender of
the Public Savings Bank Shares, Common Stock will be issued in exchange for such
shares. See "-- Delivery and Exchange of Stock Certificates."
Upon consummation of the Conversion and Reorganization, the Public
Stockholders will become stockholders of the Holding Company. For a description
of certain changes in the rights of stockholders as a result of the Conversion
and Reorganization, see "COMPARISON OF STOCKHOLDERS" RIGHTS."
VOTING RIGHTS. Presently, depositors and borrowers of the Savings Bank
are members of, and have voting rights in, the MHC as to all matters requiring
membership action. Upon completion of the Conversion and Reorganization, the MHC
will cease to exist and all voting rights in the Savings Bank will be vested in
the Holding Company as the sole stockholder of the Savings Bank. Exclusive
voting rights with respect to the Holding Company will be vested in the holders
of Common Stock. Depositors and borrowers of the Savings Bank will not have
voting rights in the Holding Company after the Conversion and Reorganization,
except to the extent that they become stockholders of the Holding Company.
SAVINGS ACCOUNTS AND LOANS. The Savings Bank's savings accounts,
account balances and existing FDIC insurance coverage of savings accounts will
not be affected by the Conversion and Reorganization. Furthermore, the
Conversion and Reorganization will not affect the loan accounts, loan balances
or obligations of borrowers under their individual contractual arrangements with
the Savings Bank.
TAX EFFECTS. The Savings Bank has received an opinion from Breyer &
Aguggia, Washington, D.C., that the Conversion and Reorganization will
constitute a nontaxable reorganization under Section 368(a)(1)(A) of the Code.
Among other things, the opinion provides that: (i) the conversion of the MHC
from a mutual holding company to a federally-chartered interim stock savings
bank (i.e., Interim A) and its simultaneous merger with and into the Savings
Bank, with the Savings Bank as the surviving entity will qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, (ii) no
gain or loss will be recognized by the Savings Bank upon the receipt of the
assets of the MHC in such merger, (iii) the merger of Interim B with and into
the Savings Bank, with the Savings Bank as the surviving entity, will qualify as
a reorganization within the meaning of Section 368(a)(1)(A) of the Code, (iv) no
gain or loss will be recognized by Interim B upon the transfer of its assets to
the Savings Bank, (v) no gain or loss will be recognized by the Savings Bank
upon the receipt of the assets of Interim B, (vi) no gain or loss will be
recognized by the Holding Company upon the receipt of Savings Bank Common Stock
solely in exchange for Common Stock, (vii) no gain or loss will be recognized by
the Public Stockholders upon the receipt of Exchange Shares in exchange for
their Public Savings Bank Shares, (viii) the basis of the Exchange Shares to be
received by the Public Stockholders will be the same as the basis of the Public
Savings Bank Shares surrendered in
92
<PAGE>
exchange therefor, before giving effect to any payment of cash in lieu of
fractional Exchange Shares, (ix) the holding period of the Exchange Shares to be
received by the Public Stockholders will include the holding period of the
Public Savings Bank Shares, provided that the Public Savings Bank Shares were
held as a capital asset on the date of the exchange, (x) no gain or loss will be
recognized by the Holding Company upon the sale of shares of Conversion Shares
in the Conversion Offerings, (xi) the Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in the Savings Bank following
the Conversion and Reorganization, interests in the liquidation account and
nontransferable subscription rights to purchase Conversion Stock, but only to
the extent of the value, if any, of the subscription rights, and (xii) the tax
basis to the holders of Conversion Shares purchased in the Conversion Offerings
will be the amount paid therefor, and the holding period for the Conversion
Shares will begin on the date of consummation of the Conversion Offerings, if
purchased through the exercise of Subscription Rights, and on the day after the
date of purchase, if purchased in the Community Offering or the Syndicated
Community Offering. Unlike a private letter ruling issued by the IRS, an opinion
of counsel is not binding on the IRS and the IRS could disagree with the
conclusions reached therein. In the event of such disagreement, no assurance can
be given that the conclusions reached in an opinion of counsel would be
sustained by a court if contested by the IRS.
Based upon past rulings issued by the IRS, the opinion provides that
the receipt of Subscription Rights by Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members under the Plan of Conversion will be
taxable to the extent, if any, that the Subscription Rights are deemed to have a
fair market value. RP Financial, a financial consulting firm retained by the
Savings Bank, whose findings are not binding on the IRS, has issued a letter
indicating that the Subscription Rights do not have any value, based on the fact
that such rights are acquired by the recipients without cost, are
nontransferable and of short duration and afford the recipients the right only
to purchase shares of the Common Stock at a price equal to its estimated fair
market value, which will be the same price paid by purchasers in the Direct
Community Offering for unsubscribed shares of Common Stock. If the Subscription
Rights are deemed to have a fair market value, the receipt of such rights may
only be taxable to those Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members who exercise their Subscription Rights. The Savings
Bank could also recognize a gain on the distribution of such Subscription
Rights. Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members are encouraged to consult with their own tax advisors as to the
tax consequences in the event the Subscription Rights are deemed to have a fair
market value.
The Savings Bank has also received an opinion from Knapp, O'Dell &
Lewis, Camas, Washington, that, assuming the Conversion and Reorganization does
not result in any federal income tax liability to the Savings Bank, its account
holders, or the Holding Company, implementation of the Plan of Conversion will
not result in any Washington tax liability to such entities or persons.
The opinions of Breyer & Aguggia and Knapp, O'Dell & Lewis and the
letter from RP Financial are filed as exhibits to the Registration Statement.
See "ADDITIONAL INFORMATION."
PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
REGARDING THE TAX CONSEQUENCES OF THE CONVERSION AND REORGANIZATION
PARTICULAR TO THEM.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the MHC, each depositor of the Savings Bank would receive his or her pro rata
share of any assets of the MHC remaining after payment of claims of all
creditors. Each depositor's pro rata share of such remaining assets would be in
the same proportion as the value of his or her deposit account was to the total
value of all deposit accounts in the Savings Bank at the time of liquidation.
After the Conversion and Reorganization, each depositor, in the event of a
complete liquidation of the Savings Bank, would have a claim as a creditor of
the same general priority as the claims of all other general creditors of the
Savings Bank. However, except as described below, his or her claim would be
solely in the amount of the balance in his or her deposit account plus accrued
interest. Each stockholder would not have an interest in the value or assets of
the Savings Bank or the Holding Company above that amount.
93
<PAGE>
The Plan of Conversion provides for the establishment, upon the
completion of the Conversion and Reorganization, of a special "liquidation
account" for the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders in an amount equal to the amount of any dividends waived by the
MHC plus the greater of (1) the Savings Bank's retained earnings of $9.8 million
at March 31, 1993, the date of the latest statement of financial condition
contained in the final offering circular utilized in the MHC Reorganization, or
(2) 58.21% of the Savings Bank's total stockholders' equity as reflected in its
latest statement of financial condition contained in the final Prospectus
utilized in the Conversion Offerings. As of the date of this Prospectus, the
initial balance of the liquidation account would be $14.6 million. Each Eligible
Account Holder and Supplemental Eligible Account Holder, if he or she were to
continue to maintain his deposit account at the Savings Bank, would be entitled,
upon a complete liquidation of the Savings Bank after the Conversion and
Reorganization to an interest in the liquidation account prior to any payment to
the Holding Company as the sole stockholder of the Savings Bank. Each Eligible
Account Holder and Supplemental Eligible Account Holder would have an initial
interest in such liquidation account for each deposit account, including
passbook accounts, transaction accounts such as checking accounts, money market
deposit accounts and certificates of deposit, held in the Savings Bank at the
close of business on December 31, 1995 or June 30, 1997, as the case may be.
Each Eligible Account Holder and Supplemental Eligible Account Holder will have
a pro rata interest in the total liquidation account for each of his or her
deposit accounts based on the proportion that the balance of each such deposit
account on the December 31, 1995 Eligibility Record Date or the June 30, 1997
Supplemental Eligibility Record Date, as the case may be, bore to the balance of
all deposit accounts in the Savings Bank on such date.
If, however, on any March 31 annual closing date of the Savings Bank,
commencing March 31, 1997, the amount in any deposit account is less than the
amount in such deposit account on December 31, 1995 or June 30, 1997, as the
case may be, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced by the
proportion of any such reduction, and such interest will cease to exist if such
deposit account is closed. In addition, no interest in the liquidation account
would ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders are satisfied would be
distributed to the Holding Company as the sole stockholder of the Savings Bank.
THE SUBSCRIPTION, DIRECT COMMUNITY AND SYNDICATED COMMUNITY OFFERINGS
SUBSCRIPTION OFFERING. In accordance with the Plan of Conversion,
nontransferable Subscription Rights to purchase the Conversion Shares have been
issued to persons and entities entitled to purchase the Conversion Shares in the
Subscription Offering. The amount of Conversion Shares which these parties may
purchase will be subject to the availability of the Conversion Shares for
purchase under the categories set forth in the Plan of Conversion. Subscription
priorities have been established for the allocation of stock to the extent that
the Conversion Shares are available. These priorities are as follows:
CATEGORY 1: ELIGIBLE ACCOUNT HOLDERS. Each depositor with $50.00 or
more on deposit at the Savings Bank as of December 31, 1995 will receive
nontransferable Subscription Rights to subscribe for up to the greater of 1% of
the shares of Conversion Stock issued in the Conversion and Reorganization,
one-tenth of one percent of the total offering of Common Stock or 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of Common Stock to be issued by a fraction of which the
numerator is the amount of qualifying deposit of the Eligible Account Holder and
the denominator is the total amount of qualifying deposits of all Eligible
Account Holders. If the exercise of Subscription Rights in this category results
in an oversubscription, shares of Common Stock will be allocated among
subscribing Eligible Account Holders so as to permit each Eligible Account
Holder, to the extent possible, to purchase a number of shares sufficient to
make such person's total allocation equal 100 shares or the number of shares
actually subscribed for, whichever is less. Thereafter, unallocated shares will
be allocated among subscribing Eligible Account Holders proportionately, based
on the amount of their respective qualifying deposits as compared to total
qualifying deposits of all Eligible Account Holders. Subscription Rights
received by officers and directors in this category based on their increased
deposits
94
<PAGE>
in the Savings Bank in the one year period preceding December 31, 1995 are
subordinated to the Subscription Rights of other Eligible Account Holders.
CATEGORY 2: ESOP. The Plan of Conversion provides that the ESOP shall
receive nontransferable Subscription Rights to purchase up to 10% of the shares
of Common Stock issued in the Conversion and Reorganization. The ESOP intends to
purchase 8% of the shares of Common Stock issued in the Conversion and
Reorganization. In the event the number of shares offered in the Conversion and
Reorganization is increased above the maximum of the Estimated Valuation Range,
the ESOP shall have a priority right to purchase any such shares exceeding the
maximum of the Estimated Valuation Range up to an aggregate of 8% of the Common
Stock.
CATEGORY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. Each depositor with
$50.00 or more on deposit as of June 30, 1997 will receive nontransferable
Subscription Rights to subscribe for up to the greater of 1% of the shares of
Conversion Stock issued in the Conversion and Reorganization, one-tenth of one
percent of the total offering of Common Stock or 15 times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction of which the numerator is the
amount of qualifying deposits of the Supplemental Eligible Account Holder and
the denominator is the total amount of qualifying deposits of all Supplemental
Eligible Account Holders. If the exercise of Subscription Rights in this
category results in an oversubscription, shares of Common Stock will be
allocated among subscribing Supplemental Eligible Account Holders so as to
permit each Supplemental Eligible Account Holder, to the extent possible, to
purchase a number of shares sufficient to make his total allocation equal 100
shares or the number of shares actually subscribed for, whichever is less.
Thereafter, unallocated shares will be allocated among subscribing Supplemental
Eligible Account Holders proportionately, based on the amount of their
respective qualifying deposits as compared to total qualifying deposits of all
Supplemental Eligible Account Holders.
CATEGORY 4: OTHER MEMBERS. Each depositor of the Savings Bank as of the
Voting Record Date (July 31, 1997) and each borrower with a loan outstanding on
October 22, 1993, which continues to be outstanding as of the Voting Record
Date, will receive nontransferable Subscription Rights to purchase up to 1% of
the shares of Conversion Stock issued in the Conversion and Reorganization to
the extent shares are available following subscriptions by Eligible Account
Holders, the Savings Bank's ESOP and Supplemental Eligible Account Holders. In
the event of an oversubscription in this category, the available shares will be
allocated proportionately based on the amount of the respective subscriptions.
SUBSCRIPTION RIGHTS ARE NONTRANSFERABLE. PERSONS SELLING OR OTHERWISE
TRANSFERRING THEIR RIGHTS TO SUBSCRIBE FOR COMMON STOCK IN THE SUBSCRIPTION
OFFERING OR SUBSCRIBING FOR COMMON STOCK ON BEHALF OF ANOTHER PERSON WILL BE
SUBJECT TO FORFEITURE OF SUCH RIGHTS AND POSSIBLE FURTHER SANCTIONS AND
PENALTIES IMPOSED BY THE OTS OR ANOTHER AGENCY OF THE U.S. GOVERNMENT. EACH
PERSON EXERCISING SUBSCRIPTION RIGHTS WILL BE REQUIRED TO CERTIFY THAT HE OR SHE
IS PURCHASING SUCH SHARES SOLELY 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. ONCE TENDERED, SUBSCRIPTION ORDERS CANNOT BE REVOKED WITHOUT THE
CONSENT OF THE SAVINGS BANK AND THE HOLDING COMPANY.
The Holding Company and the Savings Bank will make reasonable attempts
to provide a Prospectus and related offering materials to holders of
Subscription Rights. However, the Subscription Offering and all Subscription
Rights under the Plan of Conversion will expire at ______, Pacific Time, on the
Expiration Date, whether or not the Savings Bank has been able to locate each
person entitled to such Subscription Rights. ORDERS FOR COMMON STOCK IN THE
SUBSCRIPTION OFFERING RECEIVED IN HAND BY THE SAVINGS BANK AFTER THE EXPIRATION
DATE WILL NOT BE ACCEPTED. The Subscription Offering may be extended by the
Holding Company and the Savings Bank up to _____, 1997 without the OTS's
approval. OTS regulations require that the Holding Company complete the sale of
Conversion Shares within 45 days after the close of the Subscription Offering.
If the Direct Community Offering and the Syndicated Community Offerings are not
completed by _____, 1997 (or _______, 1997, if the Subscription Offering is
fully extended), all funds received will be promptly returned with interest at
the Savings Bank's passbook
95
<PAGE>
rate and all withdrawal authorizations will be canceled or, if regulatory
approval of an extension of the time period has been granted, all subscribers
and purchasers will be given the right to increase, decrease or rescind their
orders. If an extension of time is obtained, all subscribers will be notified of
such extension and of the duration of any extension that has been granted, and
will be given the right to increase, decrease or rescind their orders. If an
affirmative response to any resolicitation is not received by the Holding
Company from a subscriber, the subscriber's order will be rescinded and all
funds received will be promptly returned with interest (or withdrawal
authorizations will be canceled). No single extension can exceed 90 days.
DIRECT COMMUNITY OFFERING. Any shares of Common Stock which remain
unsubscribed for in the Subscription Offering will be offered by the Holding
Company to certain members of the general public in a Direct Community Offering,
with preference given first to Public Stockholders (who are not eligible to
subscribe for Conversion Shares in the Subscription Offering) and then to
natural persons and trusts of natural persons residing in the Local Community.
Purchasers in the Direct Community Offering are eligible to purchase up to 1% of
the shares of Conversion Stock issued in the Conversion and Reorganization. In
the event an insufficient number of shares are available to fill orders in the
Direct Community Offering, the available shares will be allocated on a pro rata
basis determined by the amount of the respective orders. The Direct Community
Offering, if held, is expected to commence immediately subsequent to the
Expiration Date, but may begin at anytime during the Subscription Offering. The
Direct Community Offering may terminate on or at any time subsequent to the
Expiration Date, but no later than 45 days after the close of the Subscription
Offering, unless extended by the Holding Company and the Savings Bank, with
approval of the OTS. Any extensions beyond 45 days after the close of the fully
extended Subscription Offering would require a resolicitation of orders, wherein
subscribers for the maximum numbers of shares of Common Stock would be, and
certain other large Subscribers in the discretion of the Holding Company and the
Savings Bank may be, given the opportunity to continue their orders, in which
case they will need to reconfirm affirmatively their subscriptions prior to the
expiration of the resolicitation offering or their subscription funds will be
promptly refunded with interest at the Savings Bank's passbook rate, or be
permitted to modify or cancel their orders. THE RIGHT OF ANY PERSON TO PURCHASE
SHARES IN THE DIRECT COMMUNITY OFFERING IS SUBJECT TO THE ABSOLUTE RIGHT OF THE
HOLDING COMPANY AND THE SAVINGS BANK TO ACCEPT OR REJECT SUCH PURCHASES IN WHOLE
OR IN PART. IF AN ORDER IS REJECTED IN PART, THE PURCHASER DOES NOT HAVE THE
RIGHT TO CANCEL THE REMAINDER OF THE ORDER. THE HOLDING COMPANY PRESENTLY
INTENDS TO TERMINATE THE DIRECT COMMUNITY OFFERING AS SOON AS IT HAS RECEIVED
ORDERS FOR ALL SHARES AVAILABLE FOR PURCHASE IN THE CONVERSION AND
REORGANIZATION.
If all of the Common Stock offered in the Subscription Offering is
subscribed for, no Common Stock will be available for purchase in the Direct
Community Offering.
SYNDICATED COMMUNITY OFFERING. The Plan of Conversion provides that, if
necessary, all shares of Common Stock not purchased in the Subscription Offering
and Direct Community Offering, if any, may be offered for sale to certain
members of the general public in a Syndicated Community Offering through a
syndicate of registered broker-dealers to be managed by Pacific Crest acting as
agent of the Holding Company. THE HOLDING COMPANY AND THE SAVINGS BANK HAVE THE
RIGHT TO REJECT ORDERS, IN WHOLE OR PART, IN THEIR SOLE DISCRETION IN THE
SYNDICATED COMMUNITY OFFERING. Neither Webb nor any registered broker-dealer
shall have any obligation to take or purchase any shares of the Common Stock in
the Syndicated Community Offering; however, Webb has agreed to use its best
efforts in the sale of shares in the Syndicated Community Offering.
Conversion Shares sold in the Syndicated Community Offering also will
be sold at the $10.00 Purchase Price. See "-- Stock Pricing, Exchange Ratio and
Number of Shares to be Issued." No person will be permitted to subscribe in the
Syndicated Community Offering for Conversion Shares that exceeds 1% of the
Conversion Shares issued in the Conversion and reorganization. See "-- Plan of
Distribution for the Subscription, Direct Community and Syndicated Community
Offerings" for a description of the commission to be paid to the selected
dealers and to Webb.
Webb may enter into agreements with selected dealers to assist in the
sale of shares in the Syndicated Community Offering. During the Syndicated
Community Offering, selected dealers may only solicit indications of
96
<PAGE>
interest from their customers to place orders with the Holding Company as of a
certain date ("Order Date") for the purchase of shares of Conversion Stock. When
and if Webb and the Holding Company believe that enough indications of interest
and orders have been received in the Subscription Offering, the Direct Community
Offering and the Syndicated Community Offering to consummate the Conversion and
Reorganization, Webb will request, as of the Order Date, selected dealers to
submit orders to purchase shares for which they have received indications of
interest from their customers. Selected dealers will send confirmations to such
customers on the next business day after the Order Date. Selected dealers may
debit the accounts of their customers on a date which will be three business
days from the Order Date ("Settlement Date"). Customers who authorize selected
dealers to debit their brokerage accounts are required to have the funds for
payment in their account on but not before the Settlement Date. On the
Settlement Date, selected dealers will remit funds to the account that the
Holding Company established for each selected dealer. Each customer's funds so
forwarded to the Holding Company, along with all other accounts held in the same
title, will be insured by the FDIC up to the applicable $100,000 legal limit.
After payment has been received by the Holding Company from selected dealers,
funds will earn interest at the Savings Bank's passbook rate until the
completion of the Conversion Offerings. At the completion of the Conversion and
Reorganization, the funds received in the Conversion Offerings will be used to
purchase the shares of Common Stock ordered. The shares issued in the Conversion
and Reorganization cannot and will not be insured by the FDIC or any other
government agency. In the event the Conversion and Reorganization is not
consummated as described above, funds with interest will be returned promptly to
the selected dealers, who, in turn, will promptly credit their customers'
brokerage accounts.
The Syndicated Community Offering may terminate on or at any time
subsequent to the Expiration Date, but no later than 45 days after the close of
the Subscription Offering, unless extended by the Holding Company and the
Savings Bank, with approval of the OTS.
In the event the Savings Bank is unable to find purchasers from the
general public for all unsubscribed shares, other purchase arrangements will be
made by the Board of Directors of the Savings Bank, if feasible. Such other
arrangements will be subject to the approval of the OTS. The OTS may grant one
or more extensions of the offering period, provided that (i) no single extension
exceeds 90 days, (ii) subscribers are given the right to increase, decrease or
rescind their subscriptions during the extension period, and (iii) the
extensions do not go more than two years beyond the date on which the members
approved the Plan of Conversion. If the Conversion and Reorganization is not
completed within 45 days after the close of the Subscription Offering, either
all funds received will be returned with interest (and withdrawal authorizations
canceled) or, if the OTS has granted an extension of time, all subscribers will
be given the right to increase, decrease or rescind their subscriptions at any
time prior to 20 days before the end of the extension period. If an extension of
time is obtained, all subscribers will be notified of such extension and of
their rights to modify their orders. If an affirmative response to any
resolicitation is not received by the Holding Company from a subscriber, the
subscriber's order will be rescinded and all funds received will be promptly
returned with interest (or withdrawal authorizations will be canceled).
PERSONS IN NON-QUALIFIED STATES. The Holding Company and the Savings
Bank will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan of Conversion reside. However, the Holding Company and the
Savings Bank are not required to offer stock in the Subscription Offering to any
person who resides in a foreign country or resides in a state of the United
States with respect to which (i) a small number of persons otherwise eligible to
subscribe for shares of Common Stock reside in such state or (ii) the Holding
Company or the Savings Bank determines that compliance with the securities laws
of such state would be impracticable for reasons of cost or otherwise, including
but not limited to a request or requirement that the Holding Company and the
Savings Bank or their officers, directors or trustees register as a broker,
dealer, salesman or selling agent, under the securities laws of such state, or a
request or requirement to register or otherwise qualify the Subscription Rights
or Common Stock for sale or submit any filing with respect thereto in such
state. Where the number of persons eligible to subscribe for shares in one state
is small, the Holding Company and the Savings Bank will base their decision as
to whether or not to offer the Common Stock in such state on a number of
factors, including the size of accounts held by account holders in the state,
the cost of reviewing the registration and qualification requirements of the
state (and of actually
97
<PAGE>
registering or qualifying the shares) or the need to register the Holding
Company, its officers, directors or employees as brokers, dealers or salesmen.
PLAN OF DISTRIBUTION FOR THE SUBSCRIPTION, DIRECT COMMUNITY AND SYNDICATED
COMMUNITY OFFERINGS
The Primary Parties have retained Webb to consult with and to advise
the Saving Bank and the Holding Company, and to assist the Holding Company on a
best efforts basis, in the distribution of the Conversion Shares in the
Subscription Offering and Direct Community Offering. The services that Webb will
provide include, but are not limited to (i) training the employees of the
Savings Bank who will perform certain ministerial functions in the Subscription
Offering and the Direct Community Offering regarding the mechanics and
regulatory requirements of the stock offering process, (ii) managing the Stock
Information Center by assisting interested stock subscribers and by keeping
records of all stock orders, (iii) preparing marketing materials, and (iv)
assisting in the solicitation of proxies from the MHC's members and the
stockholders of the Savings Bank for use at the Special Members' Meeting and the
Stockholders' Meeting, respectively. For its services, Webb will receive a
management fee of $25,000 and a success fee of 1.5% of the aggregate Purchase
Price of the Conversion Shares sold in the Subscription Offering and the Direct
Community Offering, excluding shares purchased by the ESOP and officers,
directors and employees of the Savings Bank, or members of their immediate
families. The management fee shall be applied to the success fee. If selected
broker-dealers are used to assist in the sale of the Conversion Shares in the
Syndicated Community Offering, Webb will be paid a fee of up to 5.5% of the
aggregate Purchase Price of the Conversion Shares sold by such broker-dealers
and Webb will pay to such broker-dealers an amount competitive with gross
underwriting commissions then charged for comparable amounts of stock sold at a
comparable price per share in a similar market environment. The Primary Parties
have agreed to reimburse Webb for its out-of-pocket expenses up to $15,000 and
its legal fees up to $30,000. The Primary Parties have also agreed to indemnify
Webb against certain claims and liabilities under the Securities Act, including
those in connection with material misstatements or omissions from this
Prospectus or otherwise arising from the use of this Prospectus (except for
claims and liabilities arising out of Webb's bad faith or gross negligence), and
will contribute to payments Webb may be required to make in connection with any
such claims or liabilities.
DESCRIPTION OF SALES ACTIVITIES
The Common Stock will be offered in the Subscription Offering and
Direct Community Offering principally by the distribution of this Prospectus and
through activities conducted at the Savings Bank's Stock Information Center at
its main office facility. The Stock Information Center is expected to operate
during normal business hours throughout the Subscription Offering and Direct
Community Offering. It is expected that at any particular time one or more Webb
employees will be working at the Stock Information Center. Stock Information
Center personnel will be responsible for mailing materials relating to the
Conversion Offerings, responding to questions regarding the Conversion and
Reorganization and the Conversion Offerings and processing stock orders.
Sales of Common Stock will be made by registered representatives
affiliated with Webb or by the selected dealers managed by Pacific Crest. The
management and employees of the Savings Bank may participate in the Conversion
Offerings in clerical capacities, providing administrative support in effecting
sales transactions or, when permitted by state securities laws, answering
questions of a mechanical nature relating to the proper execution of the Order
Form. Management of the Savings Bank may answer questions regarding the business
of the Savings Bank when permitted by state securities laws. Other questions of
prospective purchasers, including questions as to the advisability or nature of
the investment, will be directed to registered representatives. The management
and employees of the Holding Company and the Savings Bank have been instructed
not to solicit offers to purchase Common Stock or provide advice regarding the
purchase of Common Stock.
No officer, director or employee of the Savings Bank or the Holding
Company will be compensated, directly or indirectly, for any activities in
connection with the offer or sale of securities issued in the Conversion and
Reorganization.
98
<PAGE>
None of the Savings Bank's personnel participating in the Conversion
Offerings is registered or licensed as a broker or dealer or an agent of a
broker or dealer. The Savings Bank's personnel will assist in the
above-described sales activities pursuant to an exemption from registration as a
broker or dealer provided by Rule 3a4-1 ("Rule 3a4-1") promulgated under the
Exchange Act. Rule 3a4-1 generally provides that an "associated person of an
issuer" of securities shall not be deemed a broker solely by reason of
participation in the sale of securities of such issuer if the associated person
meets certain conditions. Such conditions include, but are not limited to, that
the associated person participating in the sale of an issuer's securities not be
compensated in connection therewith at the time of participation, that such
person not be associated with a broker or dealer and that such person observe
certain limitations on his participation in the sale of securities. For purposes
of this exemption, "associated person of an issuer" is defined to include any
person who is a director, officer or employee of the issuer or a company that
controls, is controlled by or is under common control with the issuer.
PROCEDURE FOR PURCHASING SHARES IN THE SUBSCRIPTION AND DIRECT COMMUNITY
OFFERINGS
To ensure that each purchaser receives a prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 under the Exchange
Act, no Prospectus will be mailed any later than five days prior to such date or
hand delivered any later than two days prior to such date. Execution of the
Order Form will confirm receipt or delivery in accordance with Rule 15c2-8.
Order Forms will only be distributed with a Prospectus. The Savings Bank will
accept for processing only orders submitted on original Order Forms. The Savings
Bank is not obligated to accept orders submitted on photocopied or telecopied
Order Forms. ORDERS CANNOT AND WILL NOT BE ACCEPTED WITHOUT THE EXECUTION OF THE
CERTIFICATION APPEARING ON THE REVERSE SIDE OF THE ORDER FORM.
To purchase shares in the Subscription Offering, an executed Order Form
with the required full payment for each share subscribed for, or with
appropriate authorization for withdrawal of full payment from the subscriber's
deposit account with the Savings Bank (which may be given by completing the
appropriate blanks in the Order Form), must be received by the Savings Bank by
______, Pacific Time, on the Expiration Date. Order Forms which are not received
by such time or are executed defectively or are received without full payment
(or without appropriate withdrawal instructions) are not required to be
accepted. The Holding Company and the Savings Bank have the right to waive or
permit the correction of incomplete or improperly executed Order Forms, but do
not represent that they will do so. Pursuant to the Plan of Conversion, the
interpretation by the Holding Company and the Savings Bank of the terms and
conditions of the Plan of Conversion and of the Order Form will be final. In
order to purchase shares in the Direct Community Offering, the Order Form,
accompanied by the required payment for each share subscribed for, must be
received by the Savings Bank prior to the time the Direct Community Offering
terminates, which may be on or at any time subsequent to the Expiration Date.
Once received, an executed Order Form may not be modified, amended or rescinded
without the consent of the Savings Bank unless the Conversion and Reorganization
has not been completed within 45 days after the end of the Subscription
Offering, unless such period has been extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priorities, depositors as of the Eligibility Record Date (December 31,
1995) and/or the Supplemental Eligibility Record Date (June 30, 1997) and/or the
Voting Record Date (July 31, 1997) must list all accounts on the Order Form
giving all names in each account, the account number and the approximate account
balance as of such date.
Full payment for subscriptions may be made (i) in cash if delivered in
person at the Stock Information Center, (ii) by check, bank draft, or money
order, or (iii) by authorization of withdrawal from deposit accounts maintained
with the Savings Bank. Appropriate means by which such withdrawals may be
authorized are provided on the Order Form. No wire transfers will be accepted.
Interest will be paid on payments made by cash, check, bank draft or money order
at the Savings Bank's passbook rate from the date payment is received until the
completion or termination of the Conversion and Reorganization. If payment is
made by authorization of withdrawal from deposit accounts, the funds authorized
to be withdrawn from a deposit account will continue to accrue interest at the
contractual rates until completion or termination of the Conversion and
Reorganization (unless the certificate
99
<PAGE>
matures after the date of receipt of the Order Form but prior to closing, in
which case funds will earn interest at the passbook rate from the date of
maturity until consummation of the Conversion and Reorganization), but a hold
will be placed on such funds, thereby making them unavailable to the depositor
until completion or termination of the Conversion and Reorganization. At the
completion of the Conversion and Reorganization, the funds received in the
Conversion Offerings will be used to purchase the shares of Common Stock
ordered. THE SHARES OF COMMON STOCK ISSUED IN THE CONVERSION AND REORGANIZATION
CANNOT AND WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. If
the Conversion and Reorganization is not consummated for any reason, all funds
submitted will be promptly refunded with interest as described above.
If a subscriber authorizes the Savings Bank to withdraw the amount of
the aggregate Purchase Price from his or her deposit account, the Savings Bank
will do so as of the effective date of Conversion and Reorganization, though the
account must contain the full amount necessary for payment at the time the
subscription order is received. The Savings Bank not will waive any applicable
penalties for early withdrawal from certificate accounts. If the remaining
balance in a certificate account is reduced below the applicable minimum balance
requirement at the time that the funds actually are transferred under the
authorization the certificate will be canceled at the time of the withdrawal,
without penalty, and the remaining balance will earn interest at the Savings
Bank's passbook rate.
The ESOP will not be required to pay for the shares subscribed for at
the time it subscribes, but rather may pay for such shares of Common Stock
subscribed for at the Purchase Price upon consummation of the Conversion and
Reorganization, provided that there is in force from the time of its
subscription until such time, a loan commitment from an unrelated financial
institution or the Holding Company to lend to the ESOP, at such time, the
aggregate Purchase Price of the shares for which it subscribed.
IRAs maintained in the Savings Bank do not permit investment in the
Common Stock. A depositor interested in using his or her IRA funds to purchase
Common Stock must do so through a self-directed IRA. Since the Savings Bank does
not offer such accounts, it will allow such a depositor to make a
trustee-to-trustee transfer of the IRA funds to a trustee offering a
self-directed IRA program with the agreement that such funds will be used to
purchase the Holding Company's Common Stock in the Conversion Offerings. There
will be no early withdrawal or IRS interest penalties for such transfers. The
new trustee would hold the Common Stock in a self-directed account in the same
manner as the Savings Bank now holds the depositor's IRA funds. An annual
administrative fee may be payable to the new trustee. Depositors interested in
using funds in a Savings Bank IRA to purchase Common Stock should contact the
Stock Information Center so that the necessary forms may be forwarded for
execution and returned prior to the Expiration Date. In addition, the provisions
of ERISA and IRS regulations require that officers, directors and 10%
shareholders who use self-directed IRA funds to purchase shares of Common Stock
in the Subscription Offering, make such purchases for the exclusive benefit of
IRAs.
STOCK PRICING, EXCHANGE RATIO AND NUMBER OF SHARES TO BE ISSUED
The Plan of Conversion requires that the purchase price of the
Conversion Shares must be based on the appraised pro forma market value of the
Conversion Shares, as determined on the basis of an independent valuation. The
Primary Parties have retained RP Financial to make such valuation. For its
services in making such appraisal and any expenses incurred in connection
therewith, RP Financial will receive a maximum fee of $25,000 plus out of pocket
expenses, together with a fee of no greater than $5,000 plus out of pocket
expenses for the preparation of a business plan and other services performed in
connection with the Holding Company's holding company application to the OTS.
The Primary Parties have agreed to indemnify RP Financial and its employees and
affiliates against certain losses (including any losses in connection with
claims under the federal securities laws) arising out of its services as
appraiser, except where RP Financial's liability results from its negligence or
bad faith.
The appraisal has been prepared by RP Financial in reliance upon the
information contained in this Prospectus, including the Consolidated Financial
Statements. RP Financial also considered the following factors, among others:
the present and projected operating results and financial condition of the
Primary Parties and the economic and demographic conditions in the Savings
Bank's existing market area; certain historical, financial and
100
<PAGE>
other information relating to the Savings Bank; a comparative evaluation of the
operating and financial statistics of the Savings Bank with those of other
similarly situated publicly-traded companies located in Washington and other
regions of the United States; the aggregate size of the offering of the
Conversion Shares; the impact of the Conversion and Reorganization on the
Savings Bank's capital and earnings potential; the proposed dividend policy of
the Holding Company and the Savings Bank; and the trading market for the Savings
Bank Common Stock and securities of comparable companies and general conditions
in the market for such securities.
On the basis of the foregoing, RP Financial has advised the Primary
Parties in its opinion that the estimated pro forma market value of the MHC and
the Savings Bank, as converted, was $24.0 million as of June 6, 1997. Because
the holders of the Public Savings Bank Shares will continue to hold the same
aggregate percentage ownership interest in the Holding Company as they currently
hold in the Savings Bank (before giving effect to the payment of cash in lieu of
issuing fractional Exchange Shares and any Conversion Shares purchased by the
Savings Bank's stockholder in the Conversion Offerings), the appraisal was
multiplied by 58.27%, which represents the MHC's percentage interest in the
Savings Bank. The resulting amount represents the midpoint of the valuation
($24.0 million), and the minimum and maximum of the valuation were set at 15%
below and above the midpoint, respectively, resulting in a range of $20.4
million to $27.6 million. The Boards of Directors of the Primary Parties
determined that the Conversion Shares would be sold at $10.00 per share,
resulting in a range of 2,040,000 to 2,760,000 Conversion Shares being offered.
Upon consummation of the Conversion and Reorganization, the Conversion Shares
and the Exchange Shares will represent approximately 58.27% and 41.73,
respectively, of the Holding Company's total outstanding shares. The Boards of
Directors of the Primary Parties reviewed RP Financial's appraisal report,
including the methodology and the assumptions used by RP Financial, and
determined that the Estimated Valuation Range was reasonable and adequate. The
Boards of Directors of the Primary Parties also established the formula for
determining the Exchange Ratio. Based upon such formula and the Estimated
Valuation Range, the Exchange Ratio ranged from a minimum of 1.4488 to a maximum
of 1.9601 Exchange Shares for each Public Savings Bank Shares, with a midpoint
of 1.7044. Based upon these Exchange Ratios, the Holding Company expects to
issue between 1,460,943 and 1,976,571 shares of Exchange Shares to the holders
of Public Savings Bank Shares outstanding immediately prior to the consummation
of the Conversion and Reorganization. The Estimated Valuation Range and the
Exchange Ratio may be amended with the approval of the OTS, if required, or if
necessitated by subsequent developments in the financial condition of any of the
Primary Parties or market conditions generally. If the appraisal is updated to
below $20.4 million or above $27.6 million (the maximum of the Estimated
Valuation Range, as adjusted by 15%), such Appraisal will be filed with the SEC
by post-effective amendment.
Based upon current market and financial conditions and recent practices
and policies of the OTS, in the event the Holding Company receives orders for
Conversion Shares in excess of $27.6 million (the maximum of the Estimated
Valuation Range) and up to $31.7 million (the maximum of the Estimated Valuation
Range, as adjusted by 15%), the Holding Company may be required by the OTS to
accept all such orders. No assurances, however, can be made that the Holding
Company will receive orders for Conversion Shares in excess of the maximum of
the Estimated Valuation Range or that, if such orders are received, that all
such orders will be accepted because the Holding Company's final valuation and
number of shares to be issued are subject to the receipt of an updated appraisal
from RP Financial which reflects such an increase in the valuation and the
approval of such increase by the OTS. There is no obligation or understanding on
the part of management to take and/or pay for any shares of Conversion Shares to
complete the Conversion Offerings.
RP Financial's valuation is not intended, and must not be construed, as
a recommendation of any kind as to the advisability of purchasing such shares.
RP Financial did not independently verify the Savings Bank's Consolidated
Financial Statements and other information provided by the Savings Bank and the
MHC, nor did RP Financial value independently the assets or liabilities of the
Savings Bank. The valuation considers the Savings Bank and the MHC as going
concerns and should not be considered as an indication of the liquidation value
of the Savings Bank and the MHC. 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 Conversion Shares or receiving Exchange Shares in the Conversion and
Reorganization will thereafter
101
<PAGE>
be able to sell such shares at prices at or above the Purchase Price or in the
range of the foregoing valuation of the pro forma market value thereof.
No sale of Conversion Shares or issuance of Exchange Shares may be
consummated unless prior to such consummation RP Financial confirms that nothing
of a material nature has occurred which, taking into account all relevant
factors, would cause it to conclude that the Purchase Price is materially
incompatible with the estimate of the pro forma market value of a share of
Common Stock upon consummation of the Conversion and Reorganization. If such is
not the case, a new Estimated Valuation Range may be set, a new Exchange Ratio
may be determined based upon the new Estimated Valuation Range, a new
Subscription and Community Offering and/or Syndicated Community Offering or
Public Offering may be held or such other action may be taken as the Primary
Parties shall determine and the OTS may permit or require.
Depending upon market or financial conditions following the
commencement of the Subscription Offering, the total number of Conversion Shares
to be issued in the Conversion Offerings may be increased or decreased without a
resolicitation of subscribers, provided that the product of the total number of
shares times the Purchase Price is not below the minimum or more than 15% above
the maximum of the Estimated Valuation Range. In the event market or financial
conditions change so as to cause the aggregate Purchase Price of the shares to
be below the minimum of the Estimated Valuation Range or more than 15% above the
maximum of such range, purchasers will be resolicited (i.e., permitted to
continue their orders, in which case they will need to affirmatively reconfirm
their subscriptions prior to the expiration of the resolicitation offering or
their subscription funds will be promptly refunded with interest at the Savings
Bank's passbook rate of interest, or be permitted to modify or rescind their
subscriptions). Any increase or decrease in the number of Conversion Shares will
result in a corresponding change in the number of Exchange Shares, so that upon
consummation of the Conversion and Reorganization, the Conversion Shares and the
Exchange Shares will represent approximately 58.27% and 41.73%, respectively, of
the Holding Company's total outstanding shares of Common Stock (exclusive of the
effects of the exercise of outstanding stock options).
An increase in the number of Conversion Shares as a result of an
increase in the appraisal of the estimated pro forma market value would decrease
both a subscriber's ownership interest and the Holding Company's pro forma net
earnings and stockholders' equity on a per share basis while increasing pro
forma net earnings and stockholders' equity on an aggregate basis. A decrease in
the number of Conversion Shares would increase both a subscriber's ownership
interest and the Holding Company's pro forma net earnings and stockholders'
equity on a per share basis while decreasing pro forma net earnings and
stockholders' equity on an aggregate basis. See "RISK FACTORS -- Possible
Dilutive Effect of Benefit Plans" and "PRO FORMA DATA."
The appraisal report of RP Financial has been filed as an exhibit to
this Registration Statement and Application for Conversion of which this
Prospectus is a part and is available for inspection in the manner set forth
under "ADDITIONAL INFORMATION."
LIMITATIONS ON PURCHASES OF CONVERSION SHARES
The Plan of Conversion provides for certain limitations to be placed
upon the purchase of Common Shares by eligible subscribers and others in the
Conversion and Reorganization. Each subscriber must subscribe for a minimum of
25 Conversion Shares. Except for the ESOP, which is expected to subscribe for 8%
of the shares of Conversion Shares issued in the Conversion and Reorganization,
the Plan of Conversion provides for the following purchase limitations: (i) no
person may purchase in either the Subscription Offering, Direct Community
Offering or Syndicated Community Offering more than 1% of the shares of
Conversion Stock issued in the Conversion and Reorganization, (ii) no person,
together with associates of or persons acting in concert with such person, may
purchase in either the Subscription Offering, Direct Community Offering or
Syndicated Community Offering more than 2% of the shares of Conversion Stock
issued in the Conversion and Reorganization, (iii) the maximum number of shares
of Conversion Shares which may be subscribed for or purchased in all categories
in the Conversion and Reorganization by any person, when combined with any
Exchange Shares received, shall not exceed 1.4% of the
102
<PAGE>
Common Stock to be issued in the Conversion and Reorganization, and (iv) the
maximum number of shares of Conversion Shares which may be subscribed for or
purchased in all categories in the Conversion and Reorganization by any person,
together with any associate or any group of persons acting in concert, when
combined with any Exchange Shares received, shall not exceed 2% of the Common
Stock to be issued in the Conversion and Reorganization. For purposes of the
Plan of Conversion, the directors are not deemed to be acting in concert solely
by reason of their Board membership. Pro rata reductions within each
Subscription Rights category will be made in allocating shares to the extent
that the maximum purchase limitations are exceeded.
The Boards of Directors of the Primary Parties may, in their sole
discretion, increase the maximum purchase limitation set forth above up to 9.99%
of the Conversion Shares sold in the Conversion and Reorganization, provided
that orders for shares which exceed 5% of the Conversion Shares sold in the
Conversion and Reorganization may not exceed, in the aggregate, 10% of the
shares sold in the Conversion and Reorganization. The Savings Bank and the
Holding Company do not intend to increase the maximum purchase limitation unless
market conditions are such that an increase in the maximum purchase limitation
is necessary to sell a number of shares in excess of the minimum of the
Estimated Valuation Range. If the Boards of Directors decide to increase the
purchase limitation above, persons who subscribed for the maximum number of
Conversion Shares will be, and other large subscribers in the discretion of the
Holding Company and the Savings Bank may be, given the opportunity to increase
their subscriptions accordingly, subject to the rights and preferences of any
person who has priority Subscription Rights.
The term "acting in concert" is defined in the Plan of Conversion to
mean (i) knowing participation in a joint activity or interdependent conscious
parallel action towards a common goal whether or not pursuant to an express
agreement; or (ii) a combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise. In general, a person who acts in concert with another party shall
also be deemed to be acting in concert with any person who is also acting in
concert with that other party.
The term "associate" of a person is defined in the Plan of Conversion
to mean (i) any corporation or organization (other than the Savings Bank or a
majority-owned subsidiary of the Savings Bank) 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 (excluding tax-qualified
employee plans); and (iii) any relative or spouse of such person, or any
relative of such spouse, who either has the same home as such person or who is a
director or officer of the Savings Bank or any of its parents or subsidiaries.
For example, a corporation of which a person serves as an officer would be an
associate of such person and, therefore, all shares purchased by such
corporation would be included with the number of shares which such person could
purchase individually under the above limitations.
The term "officer" is defined in the Plan of Conversion to mean an
executive officer of the Savings Bank, including its Chairman of the Board,
President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents in
charge of principal business functions, Secretary and Treasurer.
Common Shares purchased pursuant to the Conversion and Reorganization
will be freely transferable, except for shares purchased by directors and
officers of the Savings Bank and the Holding Company and by NASD members. See
"-- Restrictions on Transferability by Directors and Officers and NASD Members."
DELIVERY AND EXCHANGE OF STOCK CERTIFICATES
CONVERSION STOCK. Certificates representing Conversion Shares will be
mailed by the Holding Company's transfer agent to the persons entitled thereto
at the addresses of such persons appearing on the Stock Order Form as soon as
practicable following the consummation of the Conversion and Reorganization. Any
undeliverable certificates will be held by the Holding Company until claimed by
persons legally entitled thereto or otherwise
103
<PAGE>
disposed according to applicable law. Purchasers of Conversion Shares may be
unable to sell such shares until certificates are available and delivered to
them.
EXCHANGE SHARES. After the consummation of the Conversion and
Reorganization, each holder of a certificate(s) theretofore evidencing issued
and outstanding shares of Savings Bank Common Stock (other than the MHC), upon
surrender of the same to an agent, duly appointed by the Holding Company, which
is anticipated to be the transfer agent for the Common Stock ("Exchange Agent"),
shall be entitled to receive in exchange therefor a certificate(s) representing
the number of full Exchange Shares based on the Exchange Ratio. The Exchange
Agent shall mail a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to such certificate shall
pass, only upon delivery of such certificate to the Exchange Agent) advising
such holder of the terms of the Exchange Offering and the procedure for
surrendering to the Exchange Agent such certificates in exchange for a
certificate(s) evidencing Common Stock. THE SAVINGS BANK STOCKHOLDERS SHOULD NOT
FORWARD SAVINGS BANK COMMON STOCK CERTIFICATES TO THE SAVINGS BANK OR THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED THE TRANSMITTAL LETTER.
No holder of a certificate theretofore representing shares of Savings
Bank Common Stock shall be entitled to receive any dividends on the Common Stock
until the certificate representing such shares is surrendered in exchange for
certificates representing shares of Common Stock. In the event that dividends
are declared and paid by the Holding Company in respect of Common Stock after
the consummation of the Conversion and Reorganization, but before surrender of
certificates representing shares of Savings Bank Common Stock, dividends payable
in respect of shares of Common Stock not then issued shall accrue (without
interest). Any such dividends shall be paid (without interest) upon surrender of
the certificates representing such shares of Savings Bank Common Stock. After
the consummation of the Conversion and Reorganization, the Holding Company shall
be entitled to treat certificates representing shares of Savings Bank Common
Stock as evidencing ownership of the number of full shares of Common Stock into
which the shares of Savings Bank Common Stock represented by such certificates
shall have been converted, notwithstanding the failure on the part of the holder
thereof to surrender such certificates.
The Holding Company shall not be obligated to deliver a certificate(s)
representing shares of Common Stock to which a holder of Savings Bank Common
Stock would otherwise be entitled as a result of the Conversion and
Reorganization until such holder surrenders the certificate(s) representing the
shares of Savings Bank Common Stock for exchange as provided above, or, in
default thereof, an appropriate affidavit of loss and indemnity agreement and/or
a bond as may be required in each case by the Holding Company. If any
certificate evidencing shares of Common Stock is to be issued in a name other
than that in which the certificate evidencing Savings Bank Common Stock
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of Common Stock in any name other
than that of the registered holder of the certificate surrendered or otherwise
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
RESTRICTIONS ON REPURCHASE OF STOCK
Pursuant to OTS regulations, OTS-regulated savings associations (and
their holding companies) may not for a period of three years from the date of an
institution's mutual-to-stock conversion repurchase any of its common stock from
any person, except in the event of (i) an offer made to all of its stockholders
to repurchase the common stock on a pro rata basis, approved by the OTS; or (ii)
the repurchase of qualifying shares of a director; or (iii) a purchase in the
open market by a tax-qualified or non-tax-qualified employee stock benefit plan
in an amount reasonable and appropriate to fund the plan. Furthermore,
repurchases of any common stock are prohibited if the effect thereof would cause
the association's regulatory capital to be reduced below (a) the amount required
for the liquidation account or (b) the regulatory capital requirements imposed
by the OTS. Repurchases are generally prohibited during the first year following
conversion. Upon ten days' written notice to the OTS, and if the OTS does not
object, an institution may make open market repurchases of its outstanding
common stock during years two and three following the conversion, provided that
certain regulatory conditions are met and that the repurchase would
104
<PAGE>
not adversely affect the financial condition of the association. Any repurchases
of common stock by the Holding Company would be subject to these regulatory
restrictions unless the OTS would provide otherwise.
RESTRICTIONS ON TRANSFERABILITY BY DIRECTORS AND OFFICERS AND NASD MEMBERS
Shares of Common Stock purchased in the Conversion Offerings by
directors and officers of the Holding Company may not be sold for a period of
one year following consummation of the Conversion and Reorganization, except in
the event of the death of the stockholder or in any exchange of the Common Stock
in connection with a merger or acquisition of the Holding Company. Shares of
Common Stock received by directors or officers through the ESOP or the MRP or
upon exercise of options issued pursuant to the Stock Option Plan or purchased
subsequent to the Conversion and Reorganization are not subject to this
restriction. Accordingly, shares of Common Stock issued by the Holding Company
to directors and officers shall bear a legend giving appropriate notice of the
restriction and, in addition, the Holding Company will give appropriate
instructions to the transfer agent for the Holding Company's Common Stock with
respect to the restriction on transfers. Any shares issued to directors and
officers as a stock dividend, stock split or otherwise with respect to
restricted Common Stock shall be subject to the same restrictions.
Purchases of outstanding shares of Common Stock of the Holding Company
by directors, executive officers (or any person who was an executive officer or
director of the Savings Bank after adoption of the Plan of Conversion and
Reorganization) and their associates during the three-year period following
Conversion and Reorganization may be made only through a broker or dealer
registered with the SEC, except with the prior written approval of the OTS. This
restriction does not apply, however, to negotiated transactions involving more
than 1% of the Holding Company's outstanding Common Stock or to the purchase of
stock pursuant to the Stock Option Plan.
The Holding Company has filed with the SEC a registration statement
under the Securities Act for the registration of the Common Stock to be issued
pursuant to the Conversion and Reorganization. The registration under the
Securities Act of shares of the Common Stock to be issued in the Conversion and
Reorganization does not cover the resale of such shares. Shares of Common Stock
purchased by persons who are not affiliates of the Holding Company may be resold
without registration. Shares purchased by an affiliate of the Holding Company
will be subject to the resale restrictions of Rule 144 under the Securities Act.
If the Holding Company meets the current public information requirements of Rule
144 under the Securities Act, each affiliate of the Holding Company who complies
with the other conditions of Rule 144 (including those that require the
affiliate's sale to be aggregated with those of certain other persons) would be
able to sell in the public market, without registration, a number of shares not
to exceed, in any three-month period, the greater of (i) 1% of the outstanding
shares of the Holding Company or (ii) the average weekly volume of trading in
such shares during the preceding four calendar weeks. Provision may be made in
the future by the Holding Company to permit affiliates to have their shares
registered for sale under the Securities Act under certain circumstances.
Under guidelines of the NASD, members of the NASD and their associates
are subject to certain restrictions on the transfer of securities purchased in
accordance with Subscription Rights and to certain reporting requirements upon
purchase of such securities.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL. As a result of the Conversion and Reorganization, holders of
the Savings Bank Common Stock will become stockholders of the Holding Company, a
Washington corporation. There are certain differences in stockholder rights
arising from distinctions between the Savings Bank's Federal Stock Charter and
Bylaws and the Holding Company's Articles of Incorporation and Bylaws and from
distinctions between laws with respect to federally chartered savings
institutions and Washington law.
The discussion herein is not intended to be a complete statement of the
differences affecting the rights of stockholders, but rather summarizes the
material differences and similarities affecting the rights of stockholders. The
105
<PAGE>
discussion herein is qualified in its entirety by reference to the Articles of
Incorporation and Bylaws of the Holding Company and the WBCA. See "ADDITIONAL
INFORMATION" for procedures for obtaining a copy of the Holding Company's
Articles of Incorporation and Bylaws.
AUTHORIZED CAPITAL STOCK. The Holding Company's authorized capital
stock consists of 50,000,000 shares of Common Stock, par value $.01 per share
and 250,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). The Savings Bank's authorized capital stock consists of 4,000,000
shares of Savings Bank Common Stock and 1,000,000 shares of serial preferred
stock, par value $1.00 per share. The shares of Common Stock and Preferred Stock
were authorized in an amount greater than that to be issued in the Conversion
and Reorganization to provide the Holding Company's Board of Directors with
flexibility to effect, among other transactions, financings, acquisitions, stock
dividends, stock splits and employee stock options. However, these additional
authorized shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of the Holding Company.
The Board of Directors also has sole authority to determine the terms of any one
or more series of Preferred Stock, including voting rights, conversion rates,
and liquidation preferences. As a result of the ability to fix voting rights for
a series of Preferred Stock, the Board has the power, to the extent consistent
with its fiduciary duty, to issue a series of Preferred Stock to persons
friendly to management in order to attempt to block a post tender offer merger
or other transaction by which a third party seeks control, and thereby assist
management to retain its position. The Holding Company's Board currently has no
plan for the issuance of additional shares, other than the issuance of
additional shares pursuant to stock benefit plans.
ISSUANCE OF CAPITAL STOCK. Pursuant to applicable laws and regulations,
the MHC is required to own not less than a majority of the outstanding Savings
Bank Common Stock. There will be no such restriction applicable to the Holding
Company following consummation of the Conversion and Reorganization.
The Holding Company's Articles of Incorporation do not contain
restrictions on the issuance of shares of capital stock to directors, officers
or controlling persons of the Holding Company, whereas the Savings Bank's
Federal Stock Charter restricts such issuance to general public offerings, or if
qualifying shares, to directors, unless the share issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal stockholders meeting. Thus, stock-related
compensation plans such as stock option plans could be adopted by the Holding
Company without stockholder approval and shares of Holding Company capital stock
could be issued directly to directors or officers without stockholder approval.
The Bylaws of the NASD, however, generally require corporations with securities
which are quoted on the Nasdaq National Market System to obtain stockholder
approval of most stock compensation plans for directors, officers and key
employees of the corporation. Moreover, although generally not required,
stockholder approval of stock related compensation plans may be sought in
certain instances in order to qualify such plans for favorable federal income
tax and securities law treatment under current laws and regulations. The Holding
Company plans to submit the stock compensation plans discussed herein to its
stockholders for approval.
VOTING RIGHTS. Neither the Savings Bank's Federal Stock Charter or
Bylaws nor the Holding Company's Articles of Incorporation or Bylaws currently
provide for cumulative voting in elections of directors. For additional
information regarding voting rights, see "-- Limitations on Acquisitions of
Voting Stock and Voting Rights" below.
PAYMENT OF DIVIDENDS. The ability of the Savings Bank to pay dividends
on its capital stock is restricted by OTS regulations and by federal income tax
considerations related to savings institutions such as the Savings Bank. See
"REGULATION -- Federal Regulation of the Savings Bank -- Capital Requirements"
and "TAXATION." Although the Holding Company is not subject to these
restrictions as a Washington corporation, such restrictions will indirectly
affect the Holding Company because dividends from the Savings Bank will be a
primary source of funds of the Holding Company for the payment of dividends to
stockholders of the Holding Company.
Certain restrictions generally imposed on Washington corporations may
also have an impact on the Holding Company's ability to pay dividends. The WBCA
provides that dividends may be paid only if, after giving effect to the
dividend, the Holding Company will be able to pay its debts as they become due
in the ordinary course of
106
<PAGE>
business and the Holding Company's total assets will not be less than the sum of
its total liabilities plus the amount that would be needed, if the Holding
Company were to be dissolved at the time of the dividend, to satisfy the
preferential rights of persons whose right to payment is superior to those
receiving the dividend.
BOARD OF DIRECTORS. The Savings Bank's Federal Stock Charter and Bylaws
and the Holding Company's Articles of Incorporation and Bylaws each require the
Board of Directors of the Savings Bank and the Holding Company to be divided
into three classes as nearly equal in number as possible and that the members of
each class shall be elected for a term of three years and until their successors
are elected and qualified, with one class being elected annually.
Under the Savings Bank's Bylaws, any vacancies in the Board of
Directors of the Savings Bank may be filled by the affirmative vote of a
majority of the remaining directors although less than a quorum of the Board of
Directors. Persons elected by the directors of the Savings Bank to fill
vacancies may only serve until the next annual meeting of stockholders. Under
the Holding Company's Articles of Incorporation, any vacancy occurring in the
Board of Directors of the Holding Company, including any vacancy created by
reason of an increase in the number of directors, may be filled by the remaining
directors, and any director so chosen shall hold office for the remainder of the
term to which the director has been elected and until his or her successor is
elected and qualified.
Under the Savings Bank's Bylaws, any director may be removed for cause
by the holders of a majority of the outstanding voting shares. The Holding
Company's Articles of Incorporation provide that any director may be removed for
cause by a majority of the directors of the Holding Company or by the holders of
at least 80% of the outstanding voting shares of the Holding Company.
LIMITATIONS ON LIABILITY. The Holding Company's Articles of
Incorporation provides that the directors of the Holding Company shall not be
personally liable for monetary damages to the Holding Company for certain
breaches of their fiduciary duty as directors, except for liabilities that
involve intentional misconduct by the director, the authorization or illegal
distributions or receipt of an improper personal benefit from their actions as
directors. This provision might, in certain instances, discourage or deter
shareholders or management from bringing a lawsuit against directors for a
breach of their duties even though such an action, if successful, might have
benefitted the Holding Company.
Currently, federal law does not permit federally chartered savings
institutions such as the Savings Bank to limit the personal liability of
directors in the manner provided by the WBCA and the laws of many other states.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The
Savings Bank's Federal Stock Charter and Bylaws do not contain any provision
relating to indemnification of directors and officers of the Savings Bank. Under
current OTS regulations, however, the Savings Bank shall indemnify its
directors, officers and employees for any costs incurred in connection with any
litigation involving any such person's activities as a director, officer or
employee if such person obtains a final judgment on the merits in his or her
favor. In addition, indemnification is permitted in the case of a settlement, a
final judgment against such person or final judgment other than on the merits,
if a majority of disinterested directors determine that such person was acting
in good faith within the scope of his or her employment as he or she could
reasonably have perceived it under the circumstances and for a purpose he or she
could reasonably have believed under the circumstances was in the best interest
of the Savings Bank or its stockholders. The Savings Bank also is permitted to
pay ongoing expenses incurred by a director, officer or employee if a majority
of disinterested directors concludes that such person may ultimately be entitled
to indemnification. Before making any indemnification payment, the Savings Bank
is required to notify the OTS of its intention and such payment cannot be made
if the OTS objects thereto.
The officers, directors, agents and employees of the Holding Company
are indemnified with respect to certain actions pursuant to the Holding
Company's Articles of Incorporation, which complies with the WBCA regarding
indemnification. The WBCA allows the Holding Company to indemnify the
aforementioned persons for expenses, settlements, judgments and fines in suits
in which such person has made a party by reason of the fact that
107
<PAGE>
he or she is or was an agent of the Holding Company. No such indemnification may
be given if the acts or omissions of the person are adjudged to be in violation
of law, if such person is liable to the corporation for an unlawful
distribution, or if such person personally received a benefit to which he or she
was not entitled.
SPECIAL MEETINGS OF STOCKHOLDERS. The Holding Company's Articles of
Incorporation provides that special meetings of the stockholders of the Holding
Company may be called by the Chairman, President, a majority of the Board of
Directors or the holders of not less than a majority of the outstanding capital
stock of the Holding Company entitled to vote at the meeting. The Savings Bank's
Federal Stock Charter provides that, until October 22, 1998 (i.e., five years
after the consummation of the MHC Reorganization), special meeting of the
Savings Bank's stockholders may only be called by the Board of Directors.
Thereafter, special meetings may be called by the Chairman, President, a
majority of the Board of Directors or the holders of not less than a majority of
the outstanding capital stock of the Savings Bank entitled to vote at the
meeting.
STOCKHOLDER NOMINATIONS AND PROPOSALS. The Savings Bank's Bylaws
generally provide that stockholders may submit nominations for election as
director at an annual meeting of stockholders and any new business to be taken
up at such a meeting by filing such in writing with the Savings Bank at least
thirty days before the date of any such meeting.
The Holding Company's Bylaws generally provide that any stockholder
desiring to make a nomination for the election of directors or a proposal for
new business at a meeting of stockholders must submit written notice to the
Holding Company at least 30 days and not more than 60 days in advance of the
meeting, together with certain information relating to the nomination or new
business. Failure to comply with these advance notice requirements will preclude
such nominations or new business from being considered at the meeting.
Management believes that it is in the best interests of the Holding Company and
its stockholders to provide sufficient time to enable management to disclose to
stockholders information about a dissident slate of nominations for directors.
This advance notice requirement may also give management time to solicit its own
proxies in an attempt to defeat any dissident slate of nominations, should
management determine that doing so is in the best interest of stockholders
generally. Similarly, adequate advance notice of stockholder proposals will give
management time to study such proposals and to determine whether to recommend to
the stockholders that such proposals be adopted. In certain instances, such
provisions could make it more difficult to oppose management's nominees or
proposals, even if stockholders believe such nominees or proposals are in their
best interests.
STOCKHOLDER ACTION WITHOUT A MEETING. The Bylaws of the Holding Company
and the Savings Bank provide that any action to be taken or which may be taken
at any annual or special meeting of stockholders may be taken if a consent in
writing, setting forth the actions so taken, is given by the holders of all
outstanding shares entitled to vote.
STOCKHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS. A federal regulation
which is applicable to the Savings Bank provides that stockholders may inspect
and copy specified books and records of a federally chartered savings
institution after proper written notice for a proper purpose. The WBCA similarly
provides that a stockholder may inspect books and records upon written demand
stating the purpose of the inspection, if such purpose is reasonably related to
such person's interest as a stockholder.
LIMITATIONS ON ACQUISITIONS OF VOTING STOCK AND VOTING RIGHTS. The
Holding Company's Articles of Incorporation provide that no person shall
directly or indirectly offer to acquire or acquire the beneficial ownership of
(i) more than 10% of the issued and outstanding shares of any class of an equity
security of the Holding Company, or (ii) any securities convertible into, or
exercisable for, any equity securities of the Holding Company if, assuming
conversion or exercise by such person of all securities of which such person is
the beneficial owner which are convertible into, or exercisable for, such equity
securities (but of no securities convertible into, or exercisable for, such
equity securities of which such person is not the beneficial owner), such person
would be the beneficial owner of more than 10% of any class of an equity
security of the Holding Company. The term "person" is broadly defined in the
Articles of Incorporation to prevent circumvention of this restriction.
108
<PAGE>
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Holding Company by underwriters or
a selling group acting on its behalf, (ii) any employee benefit plan established
by the Holding Company or the Savings Bank, and (iii) any other offer or
acquisition approved in advance by the affirmative vote of two-thirds of the
Holding Company's Board of Directors. In the event that shares are acquired in
violation of this restriction, all shares beneficially owned by any person in
excess of 10% shall not be counted as shares entitled to vote and shall not be
voted by any person or counted as voting shares in connection with any matters
submitted to stockholders for a vote.
Neither the Charter nor the Bylaws of the Savings Bank contains a
provision which restricts voting rights of certain stockholders of the Savings
Bank in the manner set forth above.
MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. A federal regulation
requires the approval of two-thirds the Board of Directors of the Savings Bank
and the holders of two-thirds of the outstanding stock of the Savings Bank
entitled to vote thereon for mergers, consolidations and sales of all or
substantially all of the Savings Bank's assets. Such regulation permits the
Savings Bank to merge with another corporation without obtaining the approval of
its stockholders if: (i) it does not involve an interim savings institution;
(ii) the Savings Bank's Federal Stock Charter is not changed; (iii) each share
of the Savings Bank's stock outstanding immediately prior to the effective date
of the transaction is to be an identical outstanding share or a treasury share
of the Savings Bank after such effective date; and (iv) either: (A) no shares of
voting stock of the Savings Bank and no securities convertible into such stock
are to be issued or delivered under the plan of combination or (B) the
authorized unissued shares or the treasury shares of voting stock of the Savings
Bank to be issued or delivered under the plan of combination, plus those
initially issuable upon conversion of any securities to be issued or delivered
under such plan, do not exceed 15% of the total shares of voting stock of the
Savings Bank outstanding immediately prior to the effective date of the
transaction.
The WBCA generally provides that the affirmative vote of the holders of
at least two-thirds of the outstanding shares entitled to vote thereon (and, if
any class or series of shares is entitled to vote thereon separately, the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of each such class or series) is required to authorize any merger, share
exchange or consolidation of the Holding Company in which the Holding Company is
not the surviving corporation, or any sale, lease, exchange, transfer or other
disposition of all, or substantially all, of the assets of the Holding Company.
The WBCA further restricts certain business combination between the Holding
Company and an interested shareholder (i.e., a person or group that beneficially
owns ten percent or more of the outstanding voting shares of the Holding
Company). The WBCA generally precludes the Holding Company from engaging in any
business combination with an interested shareholder within five years after the
acquisition pursuant to which the shareholder became an interested shareholder,
unless the business combination or the purchase of shares that caused the
shareholder to become an interested shareholder is approved by a majority of the
directors of the Holding Company prior to the person becoming an interested
shareholder.
The Holding Company's Articles of Incorporation requires the approval
of the holders of (i) at least 80% of the Holding Company's outstanding shares
of voting stock, and (ii) at least a majority of the Holding Company's
outstanding shares of voting stock, not including shares held by a "Related
Person," to approve certain "Business Combinations," except in cases where the
proposed transaction has been approved in advance by a majority of those members
of the Holding Company's Board of Directors who were directors prior to the time
when the Related Person became a Related Person. In the event the requisite
approval of the Board were given, the normal vote requirement of applicable
Washington law as described above would apply, or, for certain transactions, no
shareholder vote would be necessary. The term "Related Person" is defined to
include any individual, corporation, partnership or other entity which owns
beneficially or controls, directly or indirectly, 10% or more of the outstanding
shares of voting stock of the Holding Company. The term "Business Combination"
is defined to include among other things: (i) any merger or consolidation of the
Holding Company or any of its affiliates with or into any Related Person; (ii)
any sale, lease, exchange, mortgage, transfer, or other disposition of all or a
substantial part of the assets of the Holding Company or any of its affiliates
to any Related Person (the term "substantial part" is defined to include more
than 25% of the Holding Company's total assets); (iii) any sale, lease,
exchange, or other transfer by
109
<PAGE>
any Related Person to the Holding Company of all or a substantial part of the
assets of Related Person; (iv) the acquisition by the Holding Company of any
securities of the Related Person; (v) any reclassification of the Holding
Company Common Stock; and (vi) any agreement, contract or other arrangement
providing for any of the transactions described above. The increased shareholder
vote required to approve a Business Combination may have the effect of
foreclosing mergers and other business combinations which a majority of
shareholders deem desirable and place the power to prevent such a merger or
combination in the hands of a minority of shareholders.
The Holding Company's Articles of Incorporation requires the Holding
Company's Board of Directors to consider certain factors in addition to the
amount of consideration to be paid when evaluating certain business combinations
or a tender or exchange offer. These additional factors include: (i) the social
and economic effects of the transaction; (ii) the business and financial
condition and earnings prospects of the acquiring person or entity; and (iii)
the competence, experience, and integrity of the acquiring person or entity and
its management.
As holder of all of the outstanding Savings Bank Common Stock after
consummation of the Conversion and Reorganization, the Holding Company generally
will be able to authorize a merger, consolidation or other business combination
involving the Savings Bank without the approval of the stockholders of the
Holding Company.
DISSENTERS' RIGHTS OF APPRAISAL. An OTS regulation, which is applicable
to the Savings Bank, generally provides that a stockholder of a federally
chartered savings institution which engages in a merger, consolidation or sale
of all or substantially all of its assets shall have the right to demand from
such institution payment of the fair or appraised value of his or her stock in
the institution, subject to specified procedural requirements. This regulation
also provides, however, that the stockholders of a federally chartered savings
institution with stock which is listed on a national securities exchange or
quoted on the Nasdaq System are not entitled to dissenters' rights in connection
with a merger involving such savings institution if the stockholder is required
to accept only "qualified consideration" for his or her stock, which is defined
to include cash, shares of stock of any institution or corporation which at the
effective date of the merger will be listed on a national securities exchange or
quoted on the Nasdaq System or any combination of such shares of stock and cash.
Under the WBCA, shareholders of the Holding Company will generally have
dissenter's appraisal rights in connection with (i) a plan of merger to which
the Holding Company is a party; (ii) a plan of share exchange to which the
Holding Company is a party as the corporation whose shares will be acquired;
(iii) certain sales or exchanges of all, or substantially all, of the Holding
Company's property other than in the regular course of business; and (iv)
amendments to the Holding Company's Articles of Incorporation effecting a
material reverse stock split.
AMENDMENT OF GOVERNING INSTRUMENTS. No amendment of the Savings Bank's
Federal Stock Charter may be made unless it is first proposed by the Board of
Directors of the Savings Bank, then preliminarily approved by the OTS, and
thereafter approved by the holders of a majority of the total votes eligible to
be cast at a legal meeting. The Holding Company's Articles of Incorporation may
be amended by the vote of the holders of a majority of the outstanding shares of
Holding Company Common Stock, except that the provisions of the Articles of
Incorporation governing (i) the duration of the corporation, (ii) the purpose
and powers of the corporation, (iii) authorized capital stock, (iv) denial of
preemptive rights, (v) the number and staggered terms of directors, (vi) removal
of directors, (vii) approval of certain business combinations, (viii) the
evaluation of certain business combinations, (ix) elimination of directors'
liability, (x) indemnification of officers and directors, (xi) calling of
special meetings of shareholders, (xii) the authority to repurchase shares and
(xiii) the manner of amending the Articles of Incorporation may not be repealed,
altered, amended or rescinded except by the vote of the holders of at least 80%
of the outstanding shares of the Holding Company. This provision is intended to
prevent the holders of a lesser percentage of the outstanding stock of the
Holding Company from circumventing any of the foregoing provisions by amending
the Articles of Incorporation to delete or modify one of such provisions.
The Bylaws of the Savings Bank may be amended by a majority vote of the
full Board of Directors of the Savings Bank or by a majority vote of the votes
cast by the stockholders of the Savings Bank at any legal meeting.
110
<PAGE>
The Holding Company's Bylaws only be amended by a majority vote of the Board of
Directors of the Holding Company or by the holders of at least 80% of the
outstanding stock by the Holding Company.
PURPOSE AND TAKEOVER DEFENSIVE EFFECTS OF THE HOLDING COMPANY'S
ARTICLES OF INCORPORATION AND BYLAWS. The Board of Directors of the Savings Bank
believes that the provisions described above are prudent and will reduce the
Holding Company's vulnerability to takeover attempts and certain other
transactions that have not been negotiated with and approved by its Board of
Directors. These provisions will also assist the Savings Bank in the orderly
deployment of the Conversion and Reorganization proceeds into productive assets
during the initial period after the Conversion and Reorganization. The Board of
Directors believes these provisions are in the best interest of the Savings Bank
and Holding Company and its stockholders. In the judgment of the Board of
Directors, the Holding Company's Board will be in the best position to determine
the true value of the Holding Company and to negotiate more effectively for what
may be in the best interests of its stockholders. Accordingly, the Board of
Directors believes that it is in the best interest of the Holding Company and
its stockholders to encourage potential acquirors to negotiate directly with the
Board of Directors of the Holding Company and that these provisions will
encourage such negotiations and discourage hostile takeover attempts. It is also
the view of the Board of Directors that these provisions should not discourage
persons from proposing a merger or other transaction at a price reflective of
the true value of the Holding Company and that is in the best interest of all
stockholders.
Attempts to acquire control of financial institutions and their holding
companies have recently become increasingly common. Takeover attempts that have
not been negotiated with and approved by the Board of Directors present to
stockholders the risk of a takeover on terms that may be less favorable than
might otherwise be available. A transaction that is negotiated and approved by
the Board of Directors, on the other hand, can be carefully planned and
undertaken at an opportune time in order to obtain maximum value of the Holding
Company for its stockholders, with due consideration given to matters such as
the management and business of the acquiring corporation and maximum strategic
development of the Holding Company's assets.
An unsolicited takeover proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Although a tender offer
or other takeover attempt may be made at a price substantially above the current
market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, stockholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous, or retaining their investment in an enterprise
that is under different management and whose objectives may not be similar to
those of the remaining stockholders. The concentration of control, which could
result from a tender offer or other takeover attempt, could also deprive the
Holding Company's remaining stockholders of benefits of certain protective
provisions of the Exchange Act, if the number of beneficial owners became less
than 300, thereby allowing for deregistration under the Exchange Act.
Despite the belief of the Savings Bank and the Holding Company as to
the benefits to stockholders of these provisions of the Holding Company's
Articles of Incorporation and Bylaws, these provisions may also have the effect
of discouraging a future takeover attempt that would not be approved by the
Holding Company's Board, but pursuant to which stockholders may receive a
substantial premium for their shares over then current market prices. As a
result, stockholders who might desire to participate in such a transaction may
not have any opportunity to do so. Such provisions will also render the removal
of the Holding Company's Board of Directors and of management more difficult.
The Board of Directors of the Savings Bank and the Holding Company, however,
have concluded that the potential benefits outweigh the possible disadvantages.
Following the Conversion and Reorganization, pursuant to applicable law
and, if required, following the approval by stockholders, the Holding Company
may adopt additional anti-takeover charter provisions or other devices regarding
the acquisition of its equity securities that would be permitted for a
Washington business corporation.
The cumulative effect of the restriction on acquisition of the Holding
Company contained in the Articles of Incorporation and Bylaws of the Holding
Company and in Federal and Washington law may be to discourage
111
<PAGE>
potential takeover attempts and perpetuate incumbent management, even though
certain stockholders of the Holding Company may deem a potential acquisition to
be in their best interests, or deem existing management not to be acting in
their best interests.
RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY
The following discussion is a summary of certain provisions of federal
law and regulations and Washington corporate law relating to stock ownership and
transfers, the Board of Directors and business combinations, all of which may be
deemed to have "anti-takeover" effects. The description of these provisions is
necessarily general and reference should be made to the actual law and
regulations.
CONVERSION REGULATIONS
OTS regulations prohibit any person from making an offer, announcing an
intent to make an offer or participating in any other arrangement to purchase
stock or acquiring stock or subscription rights in a converting institution (or
its holding company) from another person prior to completion of its conversion.
Further, without the prior written approval of the OTS, no person may make such
an offer or announcement of an offer to purchase shares or actually acquire
shares in the converting institution (or its holding company) for a period of
three years from the date of the completion of the conversion if, upon the
completion of such offer, announcement or acquisition, that person would become
the beneficial owner of more than 10% of the outstanding stock of the
institution (or its holding company). The OTS has defined "person" to include
any individual, group acting in concert, corporation, partnership, association,
joint stock company, trust, unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring, holding or
disposing of securities of an insured institution. However, offers made
exclusively to an association (or its holding company) or an underwriter or
member of a selling group acting on the converting institution's (or its holding
company's) behalf for resale to the general public are excepted. The regulation
also provides civil penalties for willful violation or assistance in any such
violation of the regulation by any person connected with the management of the
converting institution (or its holding company) or who controls more than 10% of
the outstanding shares or voting rights of a converting or converted institution
(or its holding company).
As permitted by OTS regulations, the Savings Bank's Federal Stock
Charter contains a provision whereby the acquisition or offer to acquire
ownership of more than 10% of the issued and outstanding shares of any class of
equity securities of the Savings Bank by any person, either directly or through
an affiliate of such person, will be prohibited for a period of five years
following the date of consummation of the Conversion and Reorganization. Any
stock in excess of 10% acquired in violation of the Federal Stock Charter
provision will not be counted as outstanding for voting purposes. Furthermore,
for five years from the consummation date of the MHC Reorganization,
stockholders of the Savings Bank will not be permitted to call a special meeting
of stockholders relating to a change of control of the Savings Bank or a charter
amendment and will not be permitted to cumulate their votes in the election of
directors.
CHANGE OF CONTROL REGULATIONS
Under the Change in Bank Control Act, no person may acquire control of
an insured federal savings and loan association or its parent holding company
unless the OTS has been given 60 days' prior written notice and has not issued a
notice disapproving the proposed acquisition. In addition, OTS regulations
provide that no company may acquire control of a savings association without the
prior approval of the OTS. Any company that acquires such control becomes a
"savings and loan holding company" subject to registration, examination and
regulation by the OTS.
Control, as defined under federal law, means ownership, control of or
holding irrevocable proxies representing more than 25% of any class of voting
stock, control in any manner of the election of a majority of the savings
association's directors, or a determination by the OTS that the acquiror has the
power to direct, or directly
112
<PAGE>
or indirectly to exercise a controlling influence over, the management or
policies of the institution. Acquisition of more than 10% of any class of a
savings association's voting stock, if the acquiror also is subject to any one
of eight "control factors," constitutes a rebuttable determination of control
under the regulations. Such control factors include the acquiror being one of
the two largest stockholders. The determination of control may be rebutted by
submission to the OTS, prior to the acquisition of stock or the occurrence of
any other circumstances giving rise to such determination, of a statement
setting forth facts and circumstances which would support a finding that no
control relationship will exist and containing certain undertakings. The
regulations provide that persons or companies which acquire beneficial ownership
exceeding 10% or more of any class of a savings association's stock must file
with the OTS a certification form that the holder is not in control of such
institution, is not subject to a rebuttable determination of control and will
take no action which would result in a determination or rebuttable determination
of control without prior notice to or approval of the OTS, as applicable. There
are also rebuttable presumptions in the regulations concerning whether a group
"acting in concert" exists, including presumed action in concert among members
of an "immediate family."
The OTS may prohibit an acquisition of control if it finds, among other
things, that (i) the acquisition would result in a monopoly or substantially
lessen competition, (ii) the financial condition of the acquiring person might
jeopardize the financial stability of the institution, or (iii) the competence,
experience or integrity of the acquiring person indicates that it would not be
in the interest of the depositors or the public to permit the acquisition of
control by such person.
DESCRIPTION OF CAPITAL STOCK OF THE HOLDING COMPANY
GENERAL
The Holding Company is authorized to issue 50,000,000 shares of Common
Stock having a par value of $.01 per share and 250,000 shares of preferred stock
having a par value of $.01 per share. The Holding Company currently expects to
issue up to 4,736,571 shares of Common Stock (subject to adjustment up to
5,447,056 shares) and no shares of preferred stock in the Conversion and
Reorganization. Each share of the Holding Company's Common Stock will have the
same relative rights as, and will be identical in all respects with, each other
share of Common Stock. Upon payment of the Purchase Price for the Common Stock,
in accordance with the Plan of Conversion, all such stock will be duly
authorized, fully paid and nonassessable.
THE COMMON STOCK OF THE HOLDING COMPANY WILL REPRESENT NONWITHDRAWABLE
CAPITAL, WILL NOT BE AN ACCOUNT OF ANY TYPE, AND WILL NOT BE INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY.
COMMON STOCK
DIVIDENDS. The Holding Company can pay dividends out of statutory
surplus or from certain net profits if, as and when declared by its Board of
Directors. The payment of dividends by the Holding Company is subject to
limitations which are imposed by law and applicable regulation. See "DIVIDEND
POLICY" and "REGULATION." The holders of Common Stock of the Holding Company
will be entitled to receive and share equally in such dividends as may be
declared by the Board of Directors of the Holding Company out of funds legally
available therefor. If the Holding Company issues preferred stock, the holders
thereof may have a priority over the holders of the Common Stock with respect to
dividends.
STOCK REPURCHASES. The Plan of Conversion and OTS regulations place
certain limitations on the repurchase of the Holding Company's capital stock.
See "THE CONVERSION AND REORGANIZATION -- Restrictions on Repurchase of Stock"
and "USE OF PROCEEDS."
VOTING RIGHTS. Upon Conversion and Reorganization, the holders of
Common Stock of the Holding Company will possess exclusive voting rights in the
Holding Company. They will elect the Holding Company's Board of Directors and
act on such other matters as are required to be presented to them under
Washington law or
113
<PAGE>
as are otherwise presented to them by the Board of Directors. Except as
discussed in "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY," each holder
of Common Stock will be entitled to one vote per share and will not have any
right to cumulate votes in the election of directors. If the Holding Company
issues preferred stock, holders of the Holding Company preferred stock may also
possess voting rights. Certain matters require a vote of 80% of the outstanding
shares entitled to vote thereon. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY."
As a federal stock savings bank, corporate powers and control of the
Savings Bank are vested in the Board of Directors, who elect the officers of the
Savings Bank and who fill any vacancies on the Board of Directors as it exists
upon Conversion and Reorganization. Subsequent to Conversion and Reorganization,
voting rights will be vested exclusively in the owners of the shares of capital
stock of the Savings Bank, all of which will be owned by the Holding Company,
and voted at the direction of the Holding Company's Board of Directors.
Consequently, the holders of the Common Stock will not have direct control of
the Savings Bank.
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of the Savings Bank, the Holding Company, as holder of the Savings Bank's
capital stock would be entitled to receive, after payment or provision for
payment of all debts and liabilities of the Savings Bank (including all deposit
accounts and accrued interest thereon) and after distribution of the balance in
the special liquidation account to Eligible Account Holders and Supplemental
Eligible Account Holders (see "THE CONVERSION AND REORGANIZATION"), all assets
of the Savings Bank available for distribution. In the event of liquidation,
dissolution or winding up of the Holding Company, the holders of its common
stock would be entitled to receive, after payment or provision for payment of
all its debts and liabilities, all of the assets of the Holding Company
available for distribution. If Holding Company preferred stock is issued, the
holders thereof may have a priority over the holders of the Common Stock in the
event of liquidation or dissolution.
PREEMPTIVE RIGHTS. Holders of the Common Stock of the Holding Company
will not be entitled to preemptive rights with respect to any shares that may be
issued. The Common Stock is not subject to redemption.
PREFERRED STOCK
None of the shares of the authorized Holding Company preferred stock
will be issued in the Conversion and Reorganization and there are no plans to
issue the preferred stock. Such stock may be issued with such designations,
powers, preferences and rights as the Board of Directors may from time to time
determine. The Board of Directors can, without stockholder approval, issue
preferred stock with voting, dividend, liquidation and conversion rights that
could dilute the voting strength of the holders of the Common Stock and may
assist management in impeding an unfriendly takeover or attempted change in
control.
RESTRICTIONS ON ACQUISITION
Acquisitions of the Holding Company are restricted by provisions in its
Articles of Incorporation and Bylaws and by the rules and regulations of various
regulatory agencies. See "REGULATION" and "RESTRICTIONS ON ACQUISITION OF THE
HOLDING COMPANY."
REGISTRATION REQUIREMENTS
The Holding Company will register the Common Stock with the SEC
pursuant to Section 12(g) of the Exchange Act upon the completion of the
Conversion and Reorganization and will not deregister its Common Stock for a
period of at least three years following the completion of the Conversion and
Reorganization. Upon such registration, the proxy and tender offer rules,
insider trading reporting and restrictions, annual and periodic reporting and
other requirements of the Exchange Act will be applicable.
114
<PAGE>
LEGAL AND TAX OPINIONS
The legality of the Common Stock has been passed upon for the Holding
Company by Breyer & Aguggia, Washington, D.C. The federal tax consequences of
the Conversion and Reorganization have been opined upon by Breyer & Aguggia and
the Washington tax consequences of the Conversion and Reorganization have been
opined upon by Knapp, O'Dell & Lewis, Camas, Washington. Breyer & Aguggia and
Knapp, O'Dell & Lewis have consented to the references herein to their opinions.
Certain legal matters will be passed upon for Webb by Stevens & Lee, Reading,
Pennsylvania.
EXPERTS
The consolidated financial statements of the Savings Bank as of March
31, 1997 and 1996 and for the years ended March 31, 1997, 1996 and 1995 included
in this Prospectus have been audited by Deloitte & Touche LLP, Portland, Oregon,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary of
its report to the Savings Bank setting forth its opinion as to the estimated pro
forma market value of the MHC and the Savings Bank, as converted, and its letter
with respect to subscription rights and to the use of its name and statements
with respect to it appearing herein.
ADDITIONAL INFORMATION
The Holding Company has filed with the SEC a Registration Statement on
Form S-1 (File No. 333-30203) under the Securities Act with respect to the
Common Stock offered in the Conversion and Reorganization. This Prospectus does
not contain all 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., Room 1024, Washington, D.C.
20549 and at its regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies may be obtained at prescribed rates from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Registration Statement also is available through the SEC's World Wide Web site
on the Internet (http://www.sec.gov).
The MHC has filed with the OTS an Application for Approval of
Conversion, which includes proxy materials for the Special Members' Meeting and
the Stockholders' Meeting and certain other information. This Prospectus omits
certain information contained in such Application. The Application, including
the proxy materials, exhibits and certain other information that are a part
thereof, may be inspected, without charge, at the offices of the OTS, 1700 G
Street, N.W., Washington, D.C. 20552 and at the office of the Regional Director
of the OTS at the OTS West Regional Office, 1 Montgomery Street, Suite 400, San
Francisco, California 94104.
115
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
Page
Independent Auditors' Report .............................................. F-1
Consolidated Statements of Financial Condition
as of March 31, 1997 and 1996 ............................................ F-2
Consolidated Statements of Income for the
Years Ended March 31, 1997, 1996 and 1995 ................................ 20
Consolidated Statements of Shareholders' Equity
for the Years Ended March 31, 1997, 1996 and 1995 ........................ F-3
Consolidated Statements of Cash Flows for the
Years Ended March 31, 1997, 1996 and 1995 ................................ F-4
Notes to Consolidated Financial Statements................................. F-6
* * *
All schedules are omitted as the required information either is not
applicable or is included in the Consolidated Financial Statements or related
Notes.
Separate financial statements for the MHC have not been included herein
because the MHC has no material assets other than its shares of Savings Bank
Common Stock (which will be canceled as part of the Conversion and
Reorganization) and no significant liabilities (contingent or otherwise),
revenues or expenses, and has not engaged in any significant activities to date.
Separate financial statements for the Holding Company have not been
included herein because the Holding Company, which has engaged in only
organizational activities to date, has no significant assets, liabilities
(contingent or otherwise), revenues or expenses.
116
<PAGE>
[Letterhead of Deloitte & Touche]
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Riverview Savings Bank, FSB
We have audited the accompanying consolidated statements of financial condition
of Riverview Savings Bank, FSB and Subsidiary (the "Bank") as of March 31, 1997
and 1996, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended March 31,
1997. These financial statements are the responsibility of the Bank'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, such consolidated financial statements present fairly, in all
material respects, the financial position of Riverview Savings Bank, FSB and
Subsidiary as of March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
May 27, 1997
F-1
<PAGE>
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 1997 AND 1996
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Cash (including interest-earning accounts of $1,450,000
and $1,793,000) $ 6,951,000 $ 5,585,000
Loans held for sale 80,000 1,941,000
Investment securities held to maturity, at amortized cost
(fair value of $20,438,000 and $29,956,000) 20,456,000 29,729,000
Investment securities available for sale, at fair value
(amortized cost of $3,993,000 and $3,994,000) 3,899,000 3,932,000
Mortgage-backed securities held to maturity, at amortized
cost (fair value of $26,488,000 and $28,716,000) 26,402,000 28,375,000
Mortgage-backed securities available for sale, at fair value
(amortized cost of $3,022,000 and $2,002,000) 2,990,000 2,004,000
Loans receivable (net of allowance of $831,000 and $653,000
for loan losses) 151,694,000 126,228,000
Real estate owned 135,000 -
Prepaid expenses and other assets 1,141,000 1,048,000
Accrued interest receivable 1,449,000 1,511,000
Federal Home Loan Bank stock 1,756,000 1,627,000
Premises and equipment 4,632,000 4,399,000
Land held for development 471,000 471,000
Core deposit intangible, net 2,329,000 2,656,000
----------- -----------
TOTAL ASSETS $ 224,385,000 $ 209,506,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 169,416,000 $ 158,159,000
Accrued expenses and other liabilities 2,264,000 1,702,000
Advance payments by borrowers for taxes and
insurance 123,000 51,000
Deferred income taxes, net 143,000 143,000
Other borrowed funds 237,000 315,000
Federal Home Loan Bank advances 27,180,000 26,050,000
----------- -----------
Total liabilities 199,363,000 186,420,000
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value; 4,000,000 authorized,
1997 - 2,416,301 issued, 2,383,239 outstanding;
1996 - 2,195,281 issued, 2,155,206 outstanding 2,416,000 2,195,000
Additional paid-in capital 16,043,000 12,233,000
Unearned shares issued to employee stock ownership
trust (386,000) (439,000)
Retained earnings 7,033,000 9,137,000
Net unrealized loss on securities available for
sale, net of tax (84,000) (40,000)
--------- ---------
Total shareholders' equity 25,022,000 23,086,000
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 224,385,000 $209,506,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
- --------------------------------------------------------------------------------
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE YEARS ENDED MARCH 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNEARNED
SHARES
ISSUED TO UNREALIZED
COMMON STOCK EMPLOYEE LOSS ON
-------------------------- ADDITIONAL STOCK SECURITIES
PAID-IN OWNERSHIP RETAINED AVAILABLE
SHARES AMOUNT CAPITAL TRUST EARNINGS FOR SALE TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 1994 $ 1,761,523 $ 1,809,00 $ 6,884,000 $ (503,000) $ 10,169,000 $ - $ 18,359,000
Net income - - - - 2,446,000 - 2,446,000
Cash dividends - - - - (411,000) - (411,000)
Exercise of stock options 2,898 3,000 25,000 - - - 28,000
Earned ESOP shares 8,280 - 32,000 79,000 - - 111,000
10% stock dividend 177,136 183,000 2,214,000 (49,000) (2,348,000) - -
--------- --------- ----------- --------- ------------ ----------- ----------
BALANCE, MARCH 31, 1995 1,949,837 1,995,000 9,155,000 (473,000) 9,856,000 - 20,533,000
Net income - - - - 2,613,000 - 2,613,000
Cash dividends - - - - (173,000) - (173,000)
Exercise of stock options 500 1,000 4,000 - - - 5,000
Earned ESOP shares 9,108 - 55,000 93,000 - - 148,000
10% stock dividend 195,761 199,000 3,019,000 (59,000) (3,159,000) - -
Unrealized loss on securities
available for sale, net
of tax - - - - - (40,000) (40,000)
-------- -------- -------- -------- -------- --------- ----------
BALANCE, MARCH 31, 1996 2,155,206 2,195,000 12,233,000 (439,000) 9,137,000 (40,000) 23,086,000
Net income - - - - 2,008,000 - 2,008,000
Cash dividends - - - - (212,000) - (212,000)
Exercise of stock options 1,500 2,000 10,000 - - - 12,000
Earned ESOP shares 10,019 - 65,000 107,000 - - 172,000
10% stock dividend 216,514 219,000 3,735,000 (54,000) (3,900,000) - -
Increase in unrealized loss on
securities available for
sale, net of tax - - - - - (44,000) (44,000)
-------- -------- -------- -------- -------- --------- ----------
BALANCE, MARCH 31, 1997 2,383,239 $ 2,416,000 $ 16,043,000 $ (386,000) $ 7,033,000 $ (84,000) $ 25,022,000
=========== =========== ============ ========== =========== ========= ============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,008,000 $2,613,000 $2,446,000
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization 878,000 746,000 566,000
Provision for losses on loans and real estate owned 180,000 - -
Noncash compensation expense related to ESOP benefit 172,000 148,000 111,000
Increase in deferred loan origination fees, net of amortization 289,000 176,000 25,000
Federal Home Loan Bank stock dividend (130,000) (105,000) (76,000)
Accretion of discounts on investment securities, purchased
loans, and mortgage-backed securities (84,000) (167,000) (17,000)
Net (gain) loss on sale of real estate owned, mortgage-backed and investment
securities and premises and equipment (37,000) (301,000) 36,000
Changes in assets and liabilities:
Decrease (increase) in loans held for sale 1,861,000 (1,694,000) 4,227,000
Decrease (increase) in prepaid expenses and other assets (93,000) (98,000) 31,000
Decrease (increase) in accrued interest receivable 62,000 (113,000) (545,000)
Increase in accrued expenses and other liabilities 562,000 518,000 111,000
Decrease in net deferred taxes - 493,000 52,000
Other, net - (8,000) (111,000)
------------ ------------ ------------
Net cash provided by operating activities 5,668,000 2,208,000 6,856,000
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations (85,651,000) (74,568,000) (57,648,000)
Principal repayments on loans 59,369,000 51,733,000 40,479,000
Proceeds from call, maturity, or sale of securities available for sale 3,535,000 6,047,000 26,741,000
Purchase of investment securities available for sale (3,502,000) (4,996,000) (26,741,000)
Purchase of mortgage-backed securities available for sale (1,100,000) (2,002,000) -
Principal repayments on mortgage-backed securities held to maturity 5,104,000 5,656,000 4,818,000
Principal repayments on mortgage-backed securities available for sale 80,000 - -
Purchase of mortgage-backed securities held to maturity (3,035,000) (2,017,000) (19,544,000)
Purchase of investment securities held to maturity - (4,006,000) (25,651,000)
Proceeds from call or maturity of investment securities held to maturity 9,265,000 6,271,000 -
Purchase of premises and equipment (699,000) (749,000) (3,152,000)
Purchase of deposit relationships - - (3,269,000)
Purchase of Federal Home Loan Bank stock - (240,000) -
Purchase of mortgage servicing rights - - (252,000)
Proceeds from sale of real estate 140,000 225,000 -
------------ ------------ ------------
Net cash used in investing activities (16,494,000) (18,646,000) (64,219,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 11,257,000 12,710,000 38,971,000
Dividends paid (200,000) (164,000) (373,000)
Proceeds from Federal Home Loan Bank advances 68,880,000 40,050,000 31,050,000
Repayment of Federal Home Loan Bank advances (67,750,000) (37,000,000) (13,050,000)
Net increase (decrease) in advance payments by borrowers 72,000 2,000 (48,000)
Repayment of other borrowed funds (79,000) (79,000) (79,000)
Proceeds from exercise of stock options 12,000 5,000 28,000
------------ ------------ ------------
Net cash provided by financing activities 12,192,000 15,524,000 56,499,000
------------ ------------ ------------
NET DECREASE IN CASH $ 1,366,000 $ (914,000) $ (864,000)
(continued)
F-4
<PAGE>
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
NET DECREASE IN CASH $ 1,366,000 $ (914,000) $ (864,000)
CASH, BEGINNING OF YEAR
5,585,000 6,499,000 7,363,000
----------- ----------- -----------
CASH, END OF YEAR $ 6,951,000 $ 5,585,000 $ 6,499,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest $ 8,921,000 $ 8,405,000 $ 5,895,000
Income taxes 951,000 870,000 1,175,000
NONCASH INVESTING ACTIVITIES:
Transfer of loans to real estate owned $ 269,000 $ - $ -
Loans arising from sale of real estate owned and land held
for investment - 225,000 -
Real estate transferred to land held for sale - - 471,000
Compensation expense recognized for shares released for
allocation to participants of the ESOP 172,000 148,000 111,000
December 29, 1995 transfer of securities from held to maturity to available
for sale at estimated fair value - 5,061,000 -
Fair value adjustment to securities available for sale (65,000) (62,000) -
Income tax effect related to fair value adjustment 21,000 22,000 -
See notes to consolidated financial statements. (Concluded)
</TABLE>
F-5
<PAGE>
RIVERVIEW SAVINGS BANK, FSB AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED MARCH 31, 1997
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Riverview Savings Bank, FSB and its wholly-owned
subsidiary, Riverview Services, Inc. (collectively, the "Bank"). All
significant intercompany transactions and balances have been eliminated in
consolidation.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
NATURE OF OPERATIONS - The Bank is a nine branch community-oriented
financial institution operating in rural and suburban communities in
southwest Washington state. The Bank is engaged primarily in the business
of attracting deposits from the general public and using such funds,
together with other borrowings, to invest in various consumer-based real
estate loans, investment securities, and mortgage-backed securities.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of related
revenue and expense during the reporting period. Actual results could
differ from those estimates.
STOCK OFFERING AND REORGANIZATION - On October 22, 1993, an initial public
stock offering of 690,000 shares of common stock was completed by
Riverview Savings Bank, FSB, a federally-chartered capital stock savings
bank. The Bank was formed from the reorganization of the former Riverview
Savings Bank, a mutual savings bank, into a mutual holding company known
as Riverview M.H.C. (the "MHC"). An additional 1,007,400 shares of common
stock were issued to the MHC in exchange for substantially all of the
assets and all of the liabilities of the former mutual savings bank. Upon
completion of these transactions, the MHC owned 58.4% of the Bank's
outstanding common stock (see also Note 16).
INTEREST INCOME - Interest on loans is credited to income as earned,
unless the collectibility of the interest is in doubt, at which time the
accrual of interest ceases and a reserve for any nonrecoverable accrued
interest is established and charged against operations and the loan
is placed on nonaccrual status. If ultimate collection of principal is
in doubt, all cash receipts on nonaccrual loans are applied to reduce
the principal balance.
Premiums or discounts on loans purchased and sold are amortized or
accreted using the level yield method over a period approximating the
average life of the loans.
LOAN FEES - Loan fee income, net of the direct origination costs, is
deferred and accreted to interest income by the level yield method over
the contractual life of the loan.
F-6
<PAGE>
SECURITIES - The Bank has adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. SFAS 115 requires the classification of securities at
acquisition into one of three categories: held to maturity, available for
sale, or trading.
In accordance with SFAS No. 115, investment securities are classified as
held to maturity where the Bank has the ability and positive intent to
hold them to maturity. Investment securities held to maturity are carried
at cost, adjusted for amortization of premiums and accretion of discounts
to maturity. Unrealized losses on securities held to maturity due to
fluctuations in fair value are recognized when it is determined that an
other than temporary decline in value has occurred. Investment securities
bought and held principally for the purpose of sale in the near term are
classified as trading securities. Investment securities not classified as
trading securities, or as held to maturity securities, are classified as
securities available for sale. For purposes of computing gains and losses,
cost of securities sold is determined using the specific identification
method. Unrealized holding gains and losses on securities available for
sale are excluded from earnings and reported net of tax as a separate
component of shareholders' equity until realized. At March 31, 1997 and
1996, the Bank had no trading securities.
On December 29, 1995, the Company reclassified $4.8 million of investment
securities held to maturity to investment securities available for sale at
fair value of $5.1 million. These investment securities were subsequently
sold for a gain of $216,000 before tax during the fiscal year 1996. The
reclassification was in accordance with the FASB issuing a special report,
A GUIDE TO IMPLEMENTATION OF STATEMENT 115 ON ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES, that permitted this one-time
reassessment without tainting the remaining securities held to maturity.
TRADING ACCOUNT SECURITIES ACTIVITY - Under the terms of the Bank's
investment policy, the Bank is authorized to purchase and sell U.S.
Treasury and government agency securities with maturity dates not to
exceed ten years. The policy limits such investments to 5% of total Bank
assets. Securities in the Bank's trading portfolio are carried at fair
value. There was no trading activity during the year ended March 31, 1997.
During the years ended March 31, 1996 and 1995, the Bank purchased and
sold $2.0 million and $21.9 million, respectively, of U.S. Treasury and
government agency securities and realized gross trading gains of $1,000
and $42,000 and gross trading losses of $6,000 and $16,000, respectively.
REAL ESTATE OWNED ("REO") - REO consists of properties acquired through
foreclosure. Specific charge-offs are taken based upon detailed analysis
of the fair value of collateral underlying loans on which the Bank is in
the process of foreclosing. Such collateral is transferred into REO at the
lower of recorded cost or fair value less estimated costs of disposal.
Subsequently, properties are evaluated and any additional declines in
value are provided for in the REO reserve for losses. The amounts the Bank
will ultimately recover from REO may differ from the amounts used in
arriving at the net carrying value of these assets because of future
market factors beyond the Bank's control or because of changes in the
Bank's strategy for the sale of the property. At March 31, 1996, there was
no REO.
ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is maintained at
a level sufficient to provide for estimated loan losses based on
evaluating known and inherent risks in the loan portfolio. The allowance
is provided based upon management's continuing analysis of the pertinent
factors underlying the quality of the loan portfolio. These factors
include changes in the size and composition of the loan portfolio, actual
loan loss experience, current and anticipated economic conditions, and
detailed analysis of individual loans for which full collectibility may
not be assured. The detailed analysis includes techniques to estimate the
fair value of loan collateral and the existence of potential alternative
sources of repayment. The appropriate allowance level is estimated based
upon factors and trends identified by management at the time the
consolidated financial statements are prepared.
F-7
<PAGE>
In accordance with SFAS No. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN, and SFAS No. 118, an amendment of SFAS No. 114, a loan is
considered impaired when it is probable that a creditor will be unable
to collect all amounts (principal and interest) due according to the
contractual terms of the loan agreement. Large groups of smaller balance
homogenous loans such as consumer secured loans, residential mortgage
loans, and consumer unsecured loans are collectively evaluated for
potential loss. When a loan has been identified as being impaired, the
amount of the impairment is measured by using discounted cash flows,
except when, as a practical expedient, the current fair value of the
collateral, reduced by costs to sell, is used. When the measurement of
the impaired loan is less than the recorded investment in the loan
(including accrued interest, net deferred loan fees or costs, and
unamortized premium or discount), an impairment is recognized by creating
or adjusting an allocation of the allowance for credit losses. Uncollected
accrued interest is reversed against interest income. If ultimate
collection of principal is in doubt, all cash receipts on impaired loans
are aplied to reduce the principal balance. The Bank adopted SFAS No. 114
and No. 118 as of April 1, 1995.
PREMISES AND EQUIPMENT - Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is generally computed on the
straight-line method over the estimated useful lives as follows:
Buildings and improvements 3 to 60 years
Furniture and equipment 3 to 20 years
ASSET IMPAIRMENT - Effective April 1, 1996, the Company adopted SFAS No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF. This statement requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
adoption of SFAS No. 121 had no material impact on the financial
statements.
LOANS HELD FOR SALE - Under the terms of the Bank's investment policy, the
Bank is authorized to sell certain loans when such sales result in higher
net yields. Accordingly, such loans are classified as held for sale in the
accompanying consolidated financial statements and are carried at the
lower of aggregate cost or net realizable value.
MORTGAGE SERVICING - Fees earned for servicing loans for the FHLMC are
reported as income when the related mortgage loan payments are collected.
Loan servicing costs are charged to expense as incurred.
Effective January 1, 1997, the Bank records its mortgage servicing rights
at fair values in accordance with SFAS No. 125, ACCOUNTING FOR TRANSFERS
AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT OF LIABILITIES, which
amended SFAS Nos. 65 and 122. SFAS No. 125 requires the bank to allocate
the total cost of all mortgage loans, whether originated or purchased, to
the mortgage servicing rights and the loans (without the mortgage
servicing rights) based on their relative fair values if it is practicable
to estimate those fair values. The Bank is amortizing the mortgage
servicing assets over the period of estimated net servicing income.
CORE DEPOSIT INTANGIBLE - On May 13, 1994, the Bank assumed $42 million of
deposits from the Resolution Trust Corporation for a deposit premium of
$3.2 million. In conjunction with the assumption of these deposits, the
Bank also acquired two branch facilities located in Vancouver and
Longview, Washington for $688,200. The deposit premium is reflected on the
consolidated statements of financial condition as core deposit intangible
and is being amortized to noninterest expense on a straight-line basis
over ten years.
F-8
<PAGE>
INCOME TAXES - The Bank accounts for income taxes in accordance with the
provisions of SFAS No. 109, ACCOUNTING FOR INCOME TAXES, which requires
the use of the asset and liability method of accounting for income taxes
and eliminates, on a prospective basis, the exemption from deferred income
taxes of thrift bad debt reserves. These thrift bad debt reserves are
included in taxable income of later years only if the allowance for losses
is used subsequently for purposes other than to absorb bad debt losses.
Because the Bank does not intend to use the allowance for purposes other
than to absorb loan losses, no deferred taxes have been provided for the
thrift bad debt reserves. Bad debt deductions on which federal income
taxes have not been provided approximate $1,100,000 at March 31, 1997. The
Bank files a consolidated federal income tax return.
LAND HELD FOR DEVELOPMENT - Land held for development, which is carried at
the lower of cost or net realizable value, consists of a parcel of land
which the Bank intends to develop either for Bank operation or for
ultimate sale.
EMPLOYEE STOCK OWNERSHIP PLAN - The Bank sponsors a leveraged Employee
Stock Ownership Plan ("ESOP"). The ESOP is accounted for in accordance
with the American Institute of Certified Public Accountants (AICPA)
Statement of Position 93-6, EMPLOYER'S ACCOUNTING FOR EMPLOYEE STOCK
OWNERSHIP PLAN. Accordingly, the debt of the ESOP is recorded as other
borrowed funds of the Bank and the shares pledged as collateral are
reported as unearned shares issued to the employee stock ownership trust
in the statement of financial condition. As shares are released from
collateral, compensation expense is recorded equal to the then current
market price of the shares, and the shares become outstanding for
earnings-per-share calculations. Stock and cash dividends on allocated
shares are recorded as a reduction of retained earnings and paid directly
to plan participants or distributed directly to participants' accounts.
Cash dividends on unallocated shares are recorded as a reduction of debt
and accrued interest. Stock dividends on unallocated shares are recorded
as an increase to the unearned shares issued to the employee stock
ownership trust contra-equity account and distributed to participants over
the remaining debt service period.
EARNINGS PER SHARE - The weighted average number of shares of common stock
outstanding for all periods presented have been retroactively restated for
a 10% stock dividend declared on March 19, 1997 and payable on April 11,
1997. ESOP shares are not considered outstanding for earnings per share
purposes until they are allocated. Allocated ESOP shares for the year
ended March 31, 1997 were considered outstanding for three months. Shares
granted but not yet issued under the Bank's stock option plans are
considered common stock equivalents for earnings per share calculations;
however, these options had less than a 3% dilutive effect and, therefore,
are not reflected in the per share data.
SFAS No. 128, EARNINGS PER SHARE, issued in February 1997, establishes
standards for computing and presenting earnings per share ("EPS") and
applies to entities with publicly-held common stock or potential common
stock. It replaces the presentation of primary EPS with a presentation of
basic EPS and requires the dual presentation of basic and diluted EPS on
the face of the income statement. This statement is effective for the
Bank's financial statements beginning with the quarter ending December 31,
1997. This statement requires restatement of all prior period EPS data
presented. The impact of the adoption of this statement is not expected to
be material to the Bank.
STATEMENT OF CASH FLOWS - Cash includes amounts on hand, due from banks,
and interest-earning deposits in other banks with maturities of 90 days or
less.
F-9
<PAGE>
STOCK-BASED COMPENSATION - The Company accounts for stock compensation
using the intrinsic value method as prescribed in Accounting Principles
Board APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and
related interpretations. Under the intrinsic value based method,
compensation cost for stock options is measured as the excess, if any, of
the quoted market price of the stock at grant date over the amount an
employee must pay to acquire the stock. Stock options granted have no
intrinsic value at the grant date and, under APB No. 25, there is no
compensation cost to be recognized.
Effective April 1, 1996, the Company adopted SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, which encourages, but does not require,
companies to record compensation costs for stock-based employee
compensation plans at fair value. The fair value approach measures
compensation costs based on factors such as the term of the option, the
market price at grant date, and the option exercise price, with expense
recognized over the vesting period. See Note 11 for pro forma effect on
net income and earnings per share as if the fair value method encouraged
by SFAS No. 123 was used.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - During 1997, the Financial
Accounting Standards Board issued SFAS No. 129, DISCLOSURE OF INFORMATION
ABOUT CAPITAL STRUCTURE.
SFAS No. 129 establishes standards for disclosing information about an
entity's capital structure. It applies to all entities. This Statement
continues the previous requirements to disclose certain information about
an entity's capital structure found in APB Opinions No. 10, OMNIBUS
OPINION - 1966, and No. 15, EARNINGS PER SHARE, and FASB Statement No. 47,
DISCLOSURE OF LONG-TERM OBLIGATIONS, for entities that were subject to the
requirements of those standards. This Statement is effective for financial
statements beginning with the quarter ending December 31, 1997. It
contains no change in disclosure requirements for entities that were
previously subject to the requirements of Opinions 10 and 15 and
Statement 47. The adoption of the provisions of SFAS No. 129 is not
expected to have a significant impact on the financial statements of the
Bank.
2. INTEREST RATE RISK MANAGEMENT
The Bank is engaged principally in gathering deposits and providing first
mortgage loans to individuals and commercial enterprises. At March 31,
1997 and 1996, the asset portfolio consisted of fixed and variable rate
interest-earning assets. Those assets were funded primarily with
short-term deposits that have market interest rates that vary over time.
The shorter maturity of the interest-sensitive liabilities indicates that
the Bank could be exposed to interest rate risk because, generally in an
increasing rate environment, interest-bearing liabilities will be
repricing faster at higher interest rates than interest-earning assets,
thereby reducing net interest income, as well as the market value of
long-term assets. Management is aware of this interest rate risk and in
its opinion actively monitors such risk and manages it to the extent
practicable.
3. INVESTMENT SECURITIES
The amortized cost and approximate fair value of investment securities
held to maturity consisted of the following:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997 COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
Agency securities $ 12,467,000 $ 60,000 $ (79,000) $ 12,448,000
U.S. Treasury securities 7,989,000 12,000 (11,000) 7,990,000
------------ -------- ---------- ------------
$ 20,456,000 $ 72,000 $ (90,000) $ 20,438,000
============ ======== ========== ============
F-10
<PAGE>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1996 COST GAINS LOSSES VALUE
Agency securities $ 17,742,000 $ 225,000 $ (70,000) $ 17,897,000
U.S. Treasury securities 11,987,000 91,000 (19,000) 12,059,000
------------ -------- ---------- ------------
$ 29,729,000 $ 316,000 $ (89,000) $ 29,956,000
============ ======== ========== ============
</TABLE>
The contractual maturities of securities held to maturity are as follows:
MARCH 31, 1997
---------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
Due in one year or less $ 8,988,000 $ 8,995,000
Due after one year through five years 10,468,000 10,476,000
Due after five years through ten years 1,000,000 967,000
-------------- ------------
$ 20,456,000 $ 20,438,000
============== ============
There were no sales of securities held to maturity during the years ended
March 31, 1997 and 1996.
The amortized cost and approximate fair value of investment securities
available for sale consisted of the following:
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997 COST GAINS LOSSES VALUE
Agency securities $ 1,000,000 $ - $ (25,000) $ 975,000
U.S. Treasury securities 2,993,000 $ - $ (69,000) $ 2,924,000
----------- ---------- ----------- -----------
$ 3,993,000 $ - $ (94,000) $ 3,899,000
=========== ========== =========== ===========
MARCH 31, 1996
Agency securities $ 3,002,000 $ - $ (62,000) $ 2,940,000
U.S. Treasury securities 992,000 $ - $ - $ 992,000
----------- ---------- ----------- -----------
$ 3,994,000 $ - $ (62,000) $ 3,932,000
=========== ========== =========== ===========
The contractual maturities of securities available for sale are as
follows:
MARCH 31, 1997
--------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
Due after one year through five years $ 1,995,000 $ 1,961,000
Due after five years through ten years 1,998,000 1,938,000
--------------- ---------------
$ 3,993,000 $ 3,899,000
============== == ============
Securities with a book value of $1,000,000 and a fair value of $967,000
and $1,016,000 at March 31, 1997 and 1996, respectively, were pledged as
collateral for public funds held by the Bank.
F-11
<PAGE>
4. MORTGAGE-BACKED SECURITIES
Mortgage-backed securities held to maturity consisted of the following:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997 COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
Real estate mortgage investment conduits $ 6,641,000 $ 139,000 $ (4,000) $ 6,776,000
FHLMC mortgage-backed securities 6,800,000 89,000 (94,000) 6,795,000
FNMA mortgage-backed securities 12,961,000 125,000 (169,000) 12,917,000
------------ --------- ----------- ------------
$ 26,402,000 $ 353,000 $ (267,000) $ 26,488,000
============ ========= =========== ============
MARCH 31, 1996
Real estate mortgage investment conduits $ 5,108,000 $ 255,000 $ - $ 5,363,000
FHLMC mortgage-backed securities 9,030,000 82,000 (40,000) 9,072,000
FNMA mortgage-backed securities 14,237,000 108,000 (64,000) 14,281,000
------------ --------- ----------- ------------
$ 28,375,000 $ 445,000 $ (104,000) $ 28,716,000
============ ========= =========== ============
</TABLE>
The real estate mortgage investment conduits consist of FHLMC and FNMA
securities.
The contractual maturities of mortgage-backed securities held to maturity
are as follows:
MARCH 31, 1997
--------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
Due after one year through five years $ 490,000 $ 478,000
Due after five years through ten years 10,815,000 10,638,000
Due after ten years 15,097,000 15,372,000
------------- -------------
$ 26,402,000 $ 26,488,000
============= =============
There were no sales of mortgage-backed securities held to maturity during
the years ended March 31, 1997 and 1996.
Mortgage-backed securities available for sale consisted of the following:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997 COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
Real estate mortgage investment conduits $ 1,922,000 $ - $ (19,000) $ 1,903,000
FHLMC mortgage-backed securities
1,100,000 - (13,000) 1,087,000
----------- --------- ---------- -----------
$ 3,022,000 $ - $ (32,000) $ 2,990,000
=========== ========= ========== ===========
MARCH 31, 1996
Real estate mortgage investment conduits $ 2,002,000 $ 2,000 $ - $ 2,004,000
=========== ========= ========== ===========
</TABLE>
The real estate mortgage investment conduits consist of FHLMC and FNMA
securities.
Expected maturities of mortgage-backed securities held to maturity will
differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties.
F-12
<PAGE>
The contractual maturities of mortgage-backed securities available for
sale are as follows:
MARCH 31, 1997
--------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
Due after five years through ten years $ 2,019,000 $ 1,999,000
Due after ten years 1,003,000 991,000
------------- ------------
$ 3,022,000 $ 2,990,000
============= ============
Mortgage-backed securities held to maturity with a book value of $82,000
and $85,000 and a fair value of $82,000 and $84,000 at March 31, 1997 and
1996, respectively, were pledged as collateral for public funds held by
the Bank.
The Bank, as a member of the Federal Home Loan Bank System, is required to
maintain cash and certain marketable securities in an amount equal to 5%
of its deposits. The Bank met this requirement as of March 31, 1997 and
1996.
5. LOANS RECEIVABLE
Loans receivable consisted of the following:
MARCH 31,
---------------------------------------
1997 1996
Residential:
One to four family $ 94,456,000 $ 86,199,000
Multi-family 5,439,000 2,958,000
Construction:
One to four family 32,529,000 22,596,000
Multi-family 547,000 361,000
Commercial real estate 634,000 500,000
Commercial 794,000 969,000
Consumer:
Secured 12,797,000 8,545,000
Unsecured 1,496,000 1,254,000
Land 7,900,000 7,546,000
Non-residential 8,997,000 6,518,000
-------------- --------------
165,589,000 137,446,000
Less:
Undisbursed portion of loans 11,087,000 8,876,000
Deferred loan fees 1,967,000 1,678,000
Allowance for possible loan losses 831,000 653,000
Unearned discounts 10,000 11,000
-------------- --------------
Loans receivable, net $ 151,694,000 $ 126,228,000
============== ==============
F-13
<PAGE>
Loans, by maturity or repricing date, were as follows:
MARCH 31,
------------------------------------
1997 1996
Adjustable rate loans:
Within one year $ 73,628,000 $ 56,942,000
After one but within five years 1,884,000 6,864,000
After five but within ten years 281,000 -
After ten years 2,381,000 -
-------------- --------------
78,174,000 63,806,000
-------------- --------------
Fixed rate loans:
Within one year 11,203,000 3,443,000
After one but within five years 18,086,000 6,278,000
After five but within ten years 16,555,000 6,720,000
After ten years 41,571,000 57,199,000
-------------- --------------
87,415,000 73,640,000
-------------- --------------
$ 165,589,000 $ 137,446,000
================ ==============
Loans receivable with adjustable rates primarily reprice based on the one
year treasury index. The remaining adjustable rate loans adjust based on
the Federal Home Loan Bank ("FHLB") cost of funds index. Adjustable rate
loans may reprice a maximum of 2% per year and up to 6% over the life of
the loan.
At March 31, 1997, 99% of the loans in the portfolio were secured by
properties located in Washington and Oregon.
The Bank services loans for others totaling $98,751,000 and $106,167,000,
and $112,663,000 as of March 31, 1997 and 1996, and 1995, respectively.
These loan balances are not included in the consolidated statements of
financial condition as they are not assets of the Bank.
At March 31, 1997, the Bank had commitments to originate fixed rate
mortgage loans of $524,000 at interest rates ranging from 7.875% to
10.00%. At March 31, 1997, adjustable rate mortgage loan commitments were
$1,536,000 at interest rates ranging from 6.50% to 10.50%. The Bank has
the same credit policies in making commitments as it does for on-balance
sheet loans. Collateral is not required to support commitments.
Consumer loan commitments totaled $4,428,000 at March 31, 1997.
Aggregate loans to officers and directors, all of which are current,
consist of the following:
YEAR ENDED MARCH 31,
------------------------------------------------------
1997 1996 1995
Beginning balance $ 1,000,000 $ 1,107,000 $ 764,000
Originations 155,000 243,000 540,000
-17-
<PAGE>
Principal repayments (141,000) (350,000) (197,000)
------------- -------------- ---------------
Total $ 1,014,000 $ 1,000,000 $ 1,107,000
============= ============== ===============
F-14
<PAGE>
6. ALLOWANCE FOR LOSSES ON LOANS RECEIVABLE
Valuation allowances for loans receivable were as follows:
1997 1996 1995
BEGINNING BALANCE $ 653,000 $ 657,000 $ 647,000
Provision for losses 180,000 - -
Write-offs (11,000) (23,000) (19,000)
Recoveries 9,000 19,000 29,000
----------- ----------- -----------
ENDING BALANCE $ 831,000 $ 653,000 $ 657,000
=========== =========== ===========
At March 31, 1997 and 1996, the Bank's recorded investment in loans for
which an impairment has been recognized under the guidance of SFAS No. 114
and SFAS No. 118 was $87,000 and $548,000. The allowance for loan losses
in excess of specific reserves is available to absorb losses from all
loans, although allocations have been made for certain loans and loan
categories as part of management's analysis of the allowance. The average
investment in impaired loans was approximately $326,000 and $219,000
during the years ended March 31, 1997 and 1996.
7. PREMISES AND EQUIPMENT
Premises and equipment consisted of the following:
MARCH 31,
------------------------------------
1997 1996
Land $ 1,399,000 $ 1,399,000
Buildings and improvements 3,679,000 3,552,000
Furniture and equipment 2,424,000 2,056,000
---------------- ----------------
Subtotal 7,502,000 7,007,000
Less accumulated depreciation (2,870,000) (2,608,000)
---------------- -----------------
Total $ 4,632,000 $ 4,399,000
=============== =============
Rent expense was $8,000, $12,000, and $35,000 for the years ended March
31, 1997, 1996, and 1995, respectively.
F-15
<PAGE>
8. DEPOSIT ACCOUNTS
Deposit accounts consisted of the following:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
INTEREST MARCH 31, INTEREST MARCH 31,
ACCOUNT TYPE RATE 1997 RATE 1996
<S> <C> <C> <C> <C>
NOW Accounts:
Noninterest-bearing 0.00 % $ 7,085,00 0.00 % $ 5,347,000
Regular 1.50 18,474,000 1.50 17,005,000
Maxi 1.75 1,606,000 1.75 1,624,000
Insured money market 3.75 17,553,000 3.75 16,147,000
Savings accounts 2.75 21,234,000 2.75 21,775,000
Certificate accounts 5.62 103,464,000 5.72 96,261,000
------------- -------------
Total $ 169,416,000 $ 158,159,000
============= =============
Weighted average interest rate 4.35 % 4.42 %
====== ======
</TABLE>
Certificate accounts as of March 31, 1997, mature as follows:
AMOUNT
Less than one year $ 79,709,000
One year to two years 14,778,000
Two years to three years 3,438,000
Three years to four years 3,110,000
Four years to five years 1,782,000
After five years 647,000
--------------
Total $ 103,464,000
==============
Deposit accounts in excess of $100,000 are not insured by the Federal
Deposit Insurance Corporation.
Interest expense by deposit type was as follows:
YEAR ENDED MARCH 31,
--------------------------------------------------
1997 1996 1995
NOW Accounts:
Regular $ 234,000 $ 247,000 $ 264,000
Maxi 29,000 37,000 43,000
Insured money market accounts 588,000 562,000 288,000
Savings accounts 588,000 617,000 919,000
Certificate accounts 5,595,000 5,120,000 3,607,000
-------------- ------------- -------------
Total $ 7,034,000 $ 6,583,000 $ 5,121,000
============== ============= =============
F-16
<PAGE>
9. FEDERAL HOME LOAN BANK ADVANCES
At March 31, 1997, advances from the FHLB totaled $27,180,000, of which
$22,550,000 had fixed interest rates ranging from 5.54% to 8.15% with a
weighted average interest rate of 6.452%. The remaining $4,630,000
adjustable rate advance had an interest rate of 6.70%, which is the "Cash
Management Advance Rate" quoted by the FHLB from time to time, each change
in interest rate to take effect simultaneously with the corresponding
change in the Cash Management Rate.
At March 31, 1997, the Bank had additional borrowing commitments available
of $51,355,000 from the FHLB.
FHLB advances are collateralized as provided for in the Advance, Pledge
and Security Agreements with the FHLB by certain investment and
mortgage-backed securities, stock owned by the Bank, deposits with the
FHLB, and certain mortgages on deeds of trust securing such properties as
provided in the agreements with the FHLB.
Payments required to service the Bank's FHLB advances during the next five
years ended March 31 are as follows: 1998 - $12,630,000; 1999 -
$7,000,000; 2000 - $7,000,000; 2001 - $550,000; and 2002 - zero.
10. FEDERAL INCOME TAXES
Income tax expense attributable to operations for the three years ended
March 31 consisted of the following:
1997 1996 1995
Current $ 1,035,000 $ 882,000 $ 1,168,000
Deferred - 493,000 52,000
------------ ------------- ------------
Total $ 1,035,000 $ 1,375,000 $ 1,220,000
============ ============= ============
A reconciliation between the statutory federal income taxes computed at
the statutory rate and the effective tax rate for the year ended March 31
is as follows:
1997 1996 1995
Federal statutory rate 34.0 % 34.0 % 34.0 %
ESOP market value adjustment 0.7 0.5 0.3
Other, net (0.7) -- (1.0)
------------ ------------- ------------
Total 34.0 % 34.5 % 33.3 %
============ ============= ============
Taxes related to gains on sales of securities were $13,000, $72,000, and
$9,000 for the years ended March 31, 1997, 1996, and 1995, respectively.
F-17
<PAGE>
The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at March 31,
1997 and 1996 are as follows:
1997 1996
Deferred tax assets:
Deferred compensation $ 225,000 $ 186,000
Loan loss reserve 195,000 153,000
Core deposit intangible 106,000 69,000
Accrued expenses 72,000 36,000
Accumulated depreciation 56,000 24,000
Deferred loan fees 16,000 70,000
Unrealized loss on securities available for sale 43,000 20,000
---------- -----------
Total deferred tax asset 713,000 558,000
---------- -----------
Deferred tax liabilities:
FHLB stock dividend (350,000) (306,000)
Tax qualified loan loss reserve (282,000) (282,000)
Other (224,000) (113,000)
----------- -----------
Total deferred tax liability (856,000) (701,000)
----------- -----------
Deferred tax liability, net $ (143,000) $ (143,000)
=========== ===========
For the fiscal year ended March 31, 1996 and years prior, the Company
determined bad debt expense to be deducted from taxable income based on 8%
of taxable income before such deduction as provided by a provision in the
Internal Revenue Code ("IRC"). In August 1996, the provision in the IRC
allowing the 8% of taxable income deduction was repealed. Accordingly, the
Company is required to use the write-off method to record bad debt in the
current period and must recapture the excess reserve accumulated from
April 1, 1987 to March 31, 1996 from use of the 8% method ratably over a
six-taxable year period. The income tax provision from 1987 to 1996
included an amount of $282,000 for the tax effect on such excess reserves.
The IRC regulation allows the Bank the opportunity to defer the recapture
of the excess reserve for a period of up to two years if the Bank meets a
residential loan requirement. The Bank met the requirement to delay
recapture for the current taxable year.
No valuation allowance for deferred tax assets was deemed necessary at
March 31, 1997 or 1996, based on the Bank's anticipated future ability to
generate taxable income from operations.
11. EMPLOYEE BENEFITS PLANS
RETIREMENT PLAN - The Riverview Retirement and Savings Plan (the "Plan")
is a defined contribution profit-sharing plan incorporating the provisions
of Section 401(k) of the Internal Revenue Code. The retirement plan covers
all employees with at least one year of service who are over the age of
21. The Bank matches 50% of the employee's elective contribution up to 3%
of the employee's compensation. Bank expenses related to this plan for the
years ended March 31, 1997, 1996, and 1995 were $52,000, $66,000, and
$49,000, respectively.
F-18
<PAGE>
DIRECTOR DEFERRED COMPENSATION PLAN - Directors may elect to defer their
monthly directors' fees until retirement with no income tax payable by the
director until retirement benefits are received. This alternative is made
available to them through a nonqualified deferred compensation plan. The
Bank accrues annual interest on assets under the plan based upon a formula
relating to gross revenues, which amounted to 7.90%, 7.65%, and 7.32% for
the years ended March 31, 1997, 1996, and 1995, respectively. The
estimated liability under the plan is accrued as earned by the
participant. At March 31, 1997 and 1996, the Bank's aggregate liability
under the plan was $663,000 and $546,000, respectively.
BONUS PROGRAMS - The Bank maintains a bonus program for senior management.
The senior management bonus represents approximately 5% of fiscal year
profits, assuming profit goals are attained, and is divided among senior
management members in proportion to their salaries. Under these programs,
the Bank paid $140,000, $87,000, and $181,000 in bonuses during the years
ended March 31, 1997, 1996, and 1995, respectively. Accrued bonuses were
$201,000 and $140,000 at March 31, 1997 and 1996.
STOCK OPTION PLANS - The Board of Directors approved a Stock Option and
Incentive Plan for officers, directors, and key employees ("Stock Plan"),
which authorizes the grant of stock options. The maximum number of shares
of common stock of the Bank which may be issued under the Stock Plan is
96,431 shares. All options granted under the Stock Plan are immediately
exercisable and expire October 22, 2003.
Stock option activity, which includes the impact of stock dividends, is
summarized in the following table:
WEIGHTED
AVERAGE
NUMBER OF OPTION PRICE
SHARES PER SHARE
OUTSTANDING AND EXERCISABLE APRIL 1, 1995 74,301 $ 7.20
Grants 6,050 11.36
Options exercised (605) 7.16
-------- --------
OUTSTANDING AND EXERCISABLE MARCH 31, 1996 79,746 7.51
Grants 5,500 15.27
Options exercised (1,650) 7.16
-------- --------
OUTSTANDING AND EXERCISABLE MARCH 31, 1997 83,596 $ 8.03
======== ========
Additional information regarding options outstanding as of March 31, 1997
is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- --------------------------
WEIGHTED AVG. WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE (YRS) PRICE EXERCISABLE PRICE
<S> <C> <C> <C> <C> <C>
$7.16 to 11.36 78,096 6.58 $ 7.52 78,096 $ 7.52
14.77 to 16.03 5,500 6.58 15.27 5,500 15.27
</TABLE>
F-19
<PAGE>
ADDITIONAL STOCK PLAN INFORMATION - As discussed in Note 1, the Bank
continues to account for its stock-based awards using the intrinsic value
method in accordance with Accounting Principles Board No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and its related interpretations.
Accordingly, no compensation expense has been recognized in the financial
statements for employee stock arrangements.
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the
disclosure of pro forma net income and earnings per share had the Bank
adopted the fair value method as of the beginning of fiscal 1996. Under
SFAS No. 123, the fair value of stock-based awards to employees is
calculated through the use of option pricing models, even though such
models were developed to estimate the fair value of freely
tradable, fully transferable options without vesting restrictions,
which significantly differ from the Bank's stock option awards. These
models also require subjective assumptions, including future stock
price volatility and expected time to exercise, which greatly affect the
calculated values. The Bank's calculations were made using the
Black-Scholes option pricing model with the following weighted average
assumptions:
RISK FREE
INTEREST EXPECTED EXPECTED EXPECTED
RATE LIFE VOLATILITY DIVIDENDS
Fiscal 1997 6.85 % 6.58 yrs 25.03 % 2.46 %
Fiscal 1996 6.33 % 7.58 yrs 28.78 % 3.16 %
The Bank's calculations are based on a multiple option valuation approach
and forfeitures are recognized as they occur. The weighted average fair
value of 1997 and 1996 awards was $5.20 and $4.24, respectively. If the
accounting provisions of the new pronouncement had been adopted as of the
beginning of fiscal 1996, the effect on 1997 and 1996 net income and
earnings per share in both years would not have been material.
12. EMPLOYEE STOCK OWNERSHIP PLAN
The Bank sponsors a leveraged ESOP that covers all employees with at least
one year of service who are over the age of 21. The Bank makes annual
contributions to the ESOP equal to the ESOP's debt service. All unreleased
ESOP shares are pledged as collateral for this debt. Shares are released
for allocation and allocated to participant accounts on the same date
annual debt payments are due, which is at December 31 of each year until
1999. Dividends on allocated ESOP shares may either be paid directly to
Plan participants or retained in the participant's accounts. Cash
dividends on unallocated shares are recorded as a reduction to ESOP debt
and accrued interest. ESOP compensation expense included in salaries and
benefits was $173,000, $148,000, and $111,000 for the years ended March
31, 1997, 1996, and 1995, respectively.
F-20
<PAGE>
ESOP share activity is summarized in the following table:
UNRELEASED ALLOCATED
ESOP AND RELEASED
SHARES SHARES TOTAL
BALANCE, APRIL 1, 1995 45,540 18,216 63,756
December 31, 1995 (9,108) 9,108 -
Adjusted for stock dividend 3,644 2,732 6,376
-------- ------ ------
BALANCE, MARCH 31, 1996 40,076 30,056 70,132
December 31, 1996 (10,019) 10,019 -
Adjusted for stock dividend 3,005 4,009 7,014
-------- ------ ------
BALANCE, MARCH 31, 1997 33,062 44,084 77,146
======== ====== ======
The fair value of unreleased shares was $661,000, $646,000, and $569,000
at March 31, 1997, 1996, and 1995, respectively.
Other borrowed funds consisted of a promissory note to fund the Bank's
ESOP. Interest is payable at the prime rate (8.25% at March 31, 1997),
adjusted each December 31. Annual principal payments of $78,860 plus
interest are due through December 31, 1999. All unreleased ESOP shares are
pledged as collateral for this promissory note.
The Employee Stock Ownership Trust Term Loan Agreement contains certain
negative and affirmative covenants regarding eligible acquisitions and
investments, restrictions on incurring debt and other liabilities, and
standards of recordkeeping. The Bank was in compliance with all covenants
as of March 31, 1997.
13. SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS
The Board of Directors authorized 1,000,000 shares of serial preferred
stock as part of the stock offering and reorganization completed on
October 22, 1993. No preferred shares were issued or outstanding at March
31, 1997 or 1996.
Office of Thrift Supervision ("OTS") regulations permit the MHC to waive
receipt of dividends from the Bank with prior OTS approval. Under the
provisions of the notice of intent to waive dividends approved by the OTS,
the cumulative amount of such waived dividends, beginning March 7, 1995,
constitutes restricted retained earnings and is available for declaration
as a dividend solely to the MHC. Such dividends must be considered as
having been paid by the Bank in evaluating any proposed dividend under OTS
capital distribution regulations. As of March 31, 1997, the cumulative
amount of dividends waived by the MHC and restricted by the above
provisions was $579,000.
The Bank is subject to various regulatory capital requirements
administered by the OTS. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions
by regulators that, if undertaken, could have a direct material effect on
the Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgments by
the regulators about components, risk, weightings, and other factors.
F-21
<PAGE>
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier
I capital to risk-weighted assets, of Tier 1 capital to total assets, and
tangible capital to tangible assets (set forth in the table below).
Management believes the Bank meets all capital adequacy requirements to
which it is subject as of March 31, 1997.
As of March 31, 1997, the most recent notification from the OTS
categorized the Bank as "well capitalized" under the regulatory framework
for prompt corrective action. To be categorized as "well capitalized," the
Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table below. There are no conditions
or events since that notification that management believes have changed
the Bank's category.
The Bank's actual and required minimum capital amounts and ratios are
presented in the following table:
<TABLE>
<CAPTION>
CATEGORIZED AS "WELL
CAPITALIZED" UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISION
------------------------- ------------------------ -----------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1997
Total Capital:
(To Risk Weighted Assets) $ 22,986,000 20.89 % $ 8,804,000 8.0 % $ 11,005,000 10.0 %
Tier I Capital:
(To Risk Weighted Assets) 22,777,000 20.70 % N/A N/A 6,603,000 6.0 %
Tier 1 Capital:
(To Total Assets) 22,777,000 10.25 % 6,664,000 3.0 % 11,107,000 5.0 %
Tangible Capital:
(To Tangible Assets) 22,777,000 10.26 % 3,330,000 1.5 % N/A N/A
AS OF MARCH 31, 1996
Total Capital:
(To Risk Weighted Assets) 20,502,000 21.13 % 7,763,000 8.0 % 9,704,000 10.0 %
Tier I Capital:
(To Risk Weighted Assets) 20,470,000 21.09 % N/A N/A 5,823,000 6.0 %
Tier 1 Capital:
(To Total Assets) 20,470,000 9.89 % 6,207,000 3.0 % 10,344,000 5.0 %
Tangible Capital:
(To Tangible Assets) 20,470,000 9.89 % 3,103,000 1.5 % N/A N/A
</TABLE>
The following table is a reconciliation of the Bank's capital, calculated
according to generally accepted accounting principles (GAAP), to
regulatory tangible and risk-based capital at March 31, 1997:
Equity $ 25,022,000
Unrealized securities loss, net 84,000
Core deposit intangible asset (2,329,000)
---------------
Tangible capital 22,777,000
Land held for development (471,000)
General valuation allowance 680,000
---------------
Total capital $ 22,986,000
===============
F-22
<PAGE>
On August 23, 1993, the OTS issued a regulation which would add an
interest rate risk component to the risk capital standards (the "final IRR
rule"). Institutions with a greater than normal interest rate risk
exposure will be required to take a deduction from the total capital
available to meet their risk based capital requirement. That deduction is
equal to one-half of the difference between the Bank's actual measured
exposure as defined by the regulation. Savings institutions, such as the
Bank, with less than $300,000,000 in assets and risk-based capital in
excess of 12% will not be subject to the final IRR rule.
At periodic intervals, the OTS and the Federal Deposit Insurance
Corporation ("FDIC") routinely examine the Bank's financial statements as
part of their legally prescribed oversight of the savings and loan
industry. Based on their examinations, these regulators can direct that
the Bank's financial statements be adjusted in accordance with their
findings. A future examination by the OTS or the FDIC could include a
review of certain transactions or other amounts reported in the Bank's
1997 financial statements. In view of the uncertain regulatory environment
in which the Bank operates, the extent, if any, to which a forthcoming
regulatory examination may ultimately result in adjustments to the 1997
financial statements cannot presently be determined.
On September 30, 1996, the United States Congress passed and the President
signed into law the omnibus appropriations package (C.R.), including the
Bank Insurance Fund/Savings Association Insurance Fund ("BIF/SAIF") and
Regulatory Burden Relief packages. Included in this legislation is a
requirement for SAIF-insured institutions to recapitalize the SAIF
insurance fund through a one-time special assessment to be paid within 60
days of the first of the month following the enactment. The FDIC is
charged with the ultimate responsibility of determining the specific
assessment, which was determined to be 65.7 basis points of the March 31,
1995 SAIF deposit assessment base. As the Bank is insured by the SAIF, the
assessment resulted in a pre-tax charge to other expenses of $947,000,
based on the SAIF assessment base of $144.2 million.
14. STOCK DIVIDEND
On March 19, 1997, the Bank declared a 10% stock dividend, payable April
11, 1997 to shareholders of record on March 31, 1997. Average shares
outstanding, and all per share amounts included in the financial
statements and notes, have been adjusted retroactively to reflect this
dividend.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair
value amounts have been determined by the Bank using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessary to interpret market data in the development of the
estimates of fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Bank could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair
value amounts.
F-23
<PAGE>
The estimated fair value of financial instruments is as follows at March
31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------------------------ ----------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C>
Assets:
Cash $ 6,951,000 $ 6,951,000 $ 5,585,000 $ 5,585,000
Investment securities 20,456,000 20,438,000 29,729,000 29,956,000
Investment securities available 3,993,000 3,899,000 3,994,000 3,932,000
for sale
Mortgage-backed securities 26,402,000 26,488,000 28,375,000 28,716,000
Mortgage-backed securities 3,022,000 2,990,000 2,002,000 2,004,000
available for sale
Loans receivable, net 151,694,000 150,436,000 126,228,000 127,045,000
Loans held for sale, net 80,000 82,000 1,941,000 1,941,000
FHLB stock 1,756,000 1,756,000 1,627,000 1,627,000
Liabilities:
Demand deposits 65,952,000 65,952,000 61,898,000 61,898,000
Time deposits 103,464,000 103,401,000 96,261,000 96,628,000
FHLB advances - short-term 12,630,000 12,678,000 10,500,000 10,585,000
FHLB advances - long-term 14,550,000 14,401,000 15,550,000 15,643,000
Other borrowed funds 237,000 237,000 315,000 315,000
</TABLE>
Fair value estimates, methods, and assumptions are set forth below for the
Bank's financial instruments.
INVESTMENTS AND MORTGAGE-BACKED SECURITIES - Fair values were based on
quoted market rates and dealer quotes.
LOANS RECEIVABLE - Loans were priced using a discounted cash flow method.
The discount rate used was the rate currently offered on similar products,
risk adjusted for credit concerns or dissimilar characteristics.
No adjustment was made to the entry-value interest rates for changes in
credit of performing loans for which there are no known credit concerns.
Management believes that the risk factor embedded in the entry-value
interest rates, along with the general reserves applicable to the loan
portfolio for which there are no known credit concerns, result in a fair
valuation of such loans on an entry-value basis.
DEPOSITS - The fair value of time deposits with no stated maturity such as
noninterest-bearing demand deposits, savings, NOW accounts, and money
market and checking accounts is equal to the amount payable on demand. The
fair value of time deposits was based on the discounted value of
contractual cash flows. The discount rate was estimated using rates
available in the local market.
FHLB ADVANCES - The fair value for FHLB advances is based on the
discounted cash flow method. The discount rate was estimated using rates
currently available from the FHLB.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - The estimated fair value of loan
commitments approximates fees recorded associated with such commitments
as of March 31, 1997 and 1996.
OTHER - The carrying value of other financial instruments was determined
to be a reasonable estimate of their fair value.
LIMITATIONS - The fair value estimates presented herein were based on
pertinent information available to management as of March 31, 1997 and
1996. Although management was not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have
not been comprehensively revalued for purposes of these financial
statements on those dates and, therefore, current estimates of fair value
may differ significantly from the amounts presented herein.
F-24
<PAGE>
Fair value estimates were based on existing financial instruments without
attempting to estimate the value of anticipated future business. The fair
value has not been estimated for assets and liabilities that were not
considered financial instruments. Significant assets and liabilities that
are not financial instruments include the mortgage banking operations,
deferred tax liabilities, premises and equipment.
16. PLAN OF CONVERSION AND STOCK ISSUANCE - SUBSEQUENT EVENT (UNAUDITED)
On May 21, 1997, the Board of Directors of Riverview, M.H.C., the mutual
holding company of the Bank, adopted a Plan of Conversion and Agreement
and Plan of Reorganization (the "Plan") to convert Riverview, M.H.C. to
stock form and to reorganize Riverview, M.H.C., and the Bank by forming a
new stock Washington stock corporation to become the parent company of the
Bank. The new Washington corporation will exchange certain shares of its
common stock for the outstanding common stock of the Bank and will
issue and offer for sale certain additional shares of its common
stock. The additional shares of common stock of the new Washington
corporation will be offered to eligible account holders of the Bank as
of December 31, 1995, who will receive nontransferable subscription
rights to purchase these shares, as well as certain other persons as
provided for in the Plan. The amount and pricing of the proposed stock
offering will be based on an independent appraisal of the Bank.
In connection with the proposed transaction, Riverview, M.H.C. will file
applications with the Office of Thrift Supervision and a registration
statement with the U.S. Securities and Exchange Commission with respect to
the reorganization and common stock offering. After receipt of the
required regulatory approvals, the Plan of Conversion will be submitted to
the members of Riverview, M.H.C. for approval by at least a majority of
the votes eligible to be cast at a special meeting and will also be
submitted to the Bank's stockholders for approval at a special meeting.
The transaction is expected to be completed during the third calendar
quarter of 1997.
The Plan provides that when the conversion is completed, a "Liquidation
Account" will be established in an amount equal to the amount of dividends
with respect to the common stock of the Bank waived by Riverview, M.H.C.
plus the greater of (1) the Bank's total retained earnings as of the date
of the latest statement of financial condition contained in the final
offering circular used in connection with the Bank's reorganization as a
majority-owned subsidiary of Riverview M.H.C., or (2) 58.3% of the Bank's
total shareholders' equity as of the date of the latest statement of
financial condition contained in the final Prospectus used in connection
with the conversion. The Liquidation Account is established to provide a
limited priority claim to the assets of the Bank to qualifying depositors
as of specified dates (as set forth in the Plan) who continue to maintain
deposits in the Bank after the conversion. In the unlikely event of a
complete liquidation of the Bank, and only in such an event, such
qualifying depositors would receive from the Liquidation Account a
liquidation distribution based on their proportionate share of the then
total remaining qualifying deposits.
Subsequent to the conversion, the Bank may not declare or pay cash
dividends on or repurchase any of its shares of common stock if the effect
thereof would cause equity to be reduced below applicable regulatory
capital maintenance requirements or if such declaration and payment would
otherwise violate regulatory requirement.
Costs relating to the conversion will be deferred and, upon conversion,
such costs and any additional costs will be charged against the proceeds
from the sale of stock. As of March 31, 1997, deferred costs relating to
the conversion were not material. If the conversion is not completed,
these deferred costs will be expensed to operations.
* * * * * *
F-25
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made,
such other information or representation must not be relied upon as having been
authorized by Riverview Bancorp, Inc., Riverview, M.H.C. or Riverview Savings
Bank, FSB. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby to any
person or 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 it is unlawful to make such offer
or solicitation in such jurisdiction. Neither the delivery of this Prospectus
nor any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of Riverview Bancorp, Inc., Riverview,
M.H.C. or Riverview Savings Bank, FSB since any of the dates as of which
information is furnished herein or since the date hereof.
Table of Contents Page
Prospectus Summary...................................
Selected Consolidated Financial Information..........
Risk Factors.........................................
Riverview Bancorp, Inc...............................
Riverview Savings Bank, FSB..........................
Use of Proceeds......................................
Dividend Policy......................................
Market for Common Stock..............................
Capitalization.......................................
Historical and Pro Forma Regulatory Capital Compliance
Pro Forma Data.......................................
Conversion Shares to be Purchased by Management
Pursuant to Subscription Rights.....................
Riverview Savings Bank, FSB and Subsidiary
Consolidated Statements of Income...................
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................
Recent Developments..................................
Business of the Holding Company......................
Business of the Savings Bank.........................
Management of the Holding Company....................
Management of the Savings Bank.......................
Regulation...........................................
Taxation.............................................
The Conversion and Reorganization....................
Comparison of Stockholders' Rights...................
Restrictions on Acquisition of the Holding Company...
Description of Capital Stock of the Holding Company
Registration Requirements............................
Legal and Tax Opinions...............................
Experts..............................................
Additional Information...............................
Index to Consolidated Financial Statements...........
UNTIL THE LATER OF ______, 1997, OR 25 DAYS AFTER COMMENCEMENT OF THE SYNDICATED
COMMUNITY OFFERING OF COMMON STOCK, IF ANY, ALL DEALERS EFFECTING TRANSACTIONS
IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
RIVERVIEW BANCORP, INC.
[Logo]
(Proposed Holding Company for
Riverview Savings Bank, FSB)
3,500,943 to 4,736,571 Shares of
Common Stock
PROSPECTUS
CHARLES WEBB & COMPANY, a Division
of Keefe, Bruyette & Woods, Inc.
PACIFIC CREST SECURITIES, INC.
August ___, 1997
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Officers and Directors
In accordance with the Washington Business Corporation Law, RCW
ss.23B.08.570, Article XIII of the Registrant's Articles of Incorporation
provides as follows:
"ARTICLE XIII. Indemnification. The corporation shall indemnify and advance
expenses to its directors, officers, agents and employees as follows:
A. Directors and Officers. In all circumstances and to the full extent
permitted by the Washington Business Corporation Act now or hereafter in
force, the corporation shall indemnify any person who is or was a director,
officer or agent of the corporation and 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 and whether formal or informal (including an action by or in
the right of the corporation), by reason of the fact that he is or was an
agent of the corporation, against expenses, judgments, fines, and amounts
paid in settlement and incurred by him in connection with such action, suit
or proceeding. However, such indemnity shall not apply on account of: (a)
acts or omissions of the director and officer finally adjudged to be in
violation of law; (b) conduct of the director and officer finally adjudged
to be in violation of RCW 23B.08.310, or (c) any transaction with respect
to which it was finally adjudged that such director and officer personally
received a benefit in money, property, or services to which the director
was not legally entitled. The corporation shall advance expenses incurred
in a proceeding for such persons pursuant to the terms set forth in a
separate directors' resolution or contract.
B. Implementation. The Board of Directors may take such action as is
necessary to carry out these indemnification and expense advancement
provisions. It is expressly empowered to adopt, approve and amend from time
to time such Bylaws, resolutions, contracts or further indemnification and
expense advancement arrangements as may be permitted by law, implementing
these provisions. Such Bylaws, resolutions, contracts, or further
arrangements shall include, but not be limited to, implementing the manner
in which determinations as to any indemnity or advancement of expenses
shall be made.
C. Survival of Indemnification Rights. No amendment or repeal of this
Article shall apply to or have any effect on any right to indemnification
provided hereunder with respect to acts or omissions occurring prior to
such amendment or repeal.
D. Service for Other Entities. The indemnification and advancement of
expenses provided under this Article shall apply to directors, officers,
employees, or agents of the corporation for both (a) service in such
capacities for the corporation, and (b) service at the corporations's
request as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise. A person is considered to be
serving an employee benefit plan at the corporation's request if such
person's duties to the corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan.
E. 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,
partnership, joint venture, trust or other enterprise against liability
asserted against him and incurred by him in such capacity or arising out of
his status as such, whether or not the corporation would have had the power
to indemnify him against such liability under the provisions of this bylaw
and Washington law.
F. Other Rights. The indemnification provided by this section shall
not be deemed exclusive of any other right to which those indemnified may
be entitled under any other bylaw, agreement, vote of stockholders, or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such an 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 person."
II-1
<PAGE>
Item 25. Other Expenses of Issuance and Distribution(1)
Legal fees and expenses................................ $150,000
Securities Marketing Firm legal fees................... 30,000
EDGAR, printing, copying, postage, mailing............. 150,000
Appraisal/business plan fees and expenses.............. 30,000
Accounting fees........................................ 90,000
Securities marketing fees (1).......................... 323,700
Data processing fees and expenses...................... 7,500
SEC filing fee......................................... 16,500
OTS filing fee......................................... 8,400
Blue sky legal fees and expenses....................... 7,500
Other.................................................. 16,400
--------
Total............................................ $830,000
========
- ----------
(1) Assumes a total offering of Conversion Shares of $24.0 million
(midpoint of the Estimated Valuation Range), a management fee payable to Webb
equal to $25,000 and a success fee of 1.5% of the aggregate Purchase Price of
the shares of Common Stock sold in the Subscription and Direct Community
Offering and the Syndicated Community Offering, excluding shares purchased by
the ESOP and officers and directors of the Savings Bank. See "THE CONVERSION AND
REORGANIZATION -- Plan of Distribution for the Subscription, Direct Community
and Syndicated Community Offerings."
Item 26. Recent Sales of Unregistered Securities.
Not Applicable
Item 27. Exhibits
The exhibits filed as part of this Registration Statement are as
follows:
(a) List of Exhibits
1.1 -- Form of proposed Agency Agreement among Riverview Bancorp, Inc.,
Riverview Savings Bank, FSB, Riverview, M.H.C. and Charles Webb &
Company
1.2 -- Engagement Letter with Riverview Savings Bank, FSB and Charles Webb &
Company (a)
2 -- Plan of Conversion and Agreement and Plan of Reorganization of
Riverview, M.H.C. and Riverview Savings Bank, FSB (a)
3.1 -- Articles of Incorporation of Riverview Bancorp, Inc. (a)
3.2 -- Bylaws of Riverview Bancorp, Inc. (a)
4 -- Form of Certificate for Common Stock (a)
5 -- Opinion of Breyer & Aguggia regarding legality of securities
registered (a)
8.1 -- Federal Tax Opinion of Breyer & Aguggia
8.2 -- State Tax Opinion of Deloitte & Touche LLP
II-2
<PAGE>
8.3 -- Opinion of RP Financial, LC. as to the value of subscription
rights (a)
10.1 -- Proposed Form of Employment Agreement for Certain Executive
Officers (a)
10.2 -- Proposed Form of Severance Agreement for Key Employees (a)
10.3 -- Proposed Form of Employee Stock Ownership Plan (a)
10.4 -- Proposed Form of Employee Severance Compensation Plan (a)
10.5 -- Proposed Form of Employee Savings & Profit Sharing Plan and Trust
11 -- Statement Regarding Computation of Earnings Per Share
21 -- Subsidiaries of Riverview Bancorp, Inc. (a)
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Breyer & Aguggia (a)
23.3 -- Consent of RP Financial, LC. (a)
24 -- Power of Attorney (a)
99.1 -- Order and Acknowledgement Form (contained in the marketing materials
included herein as Exhibit 99.2) (a)
99.2 -- Solicitation and Marketing Materials
99.3 -- Appraisal Agreement with RP Financial, LC. (a)
99.4 -- Appraisal Report of RP Financial, LC.
99.5 -- Proxy Statement for Special Meeting of Members of Riverview, M.H.C.
99.6 -- Proxy Statement for Annual Meeting of Stockholders of Riverview
Savings Bank, FSB
- ----------
(a) Previously filed.
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended ("Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
II-3
<PAGE>
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time shall be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) The undersigned registrant hereby undertakes to provide the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is therefore, unenforceable. In the event that a
claim for indemnification against liabilities (other than the payment by the
small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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 Securities Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amended Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Camas,
State of Washington, on this 6th day of August 1997.
RIVERVIEW BANCORP, INC.
By: /s/ Patrick Sheaffer
-------------------------------------
Patrick Sheaffer
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Patrick Sheaffer President, Chief Executive August 6, 1997
- ------------------------- and Director
Patrick Sheaffer (Principal Executive Officer)
/s/ Ron Wysaske* Treasurer, Chief Financial August 6, 1997
- ------------------------- Officer and Director
Ron Wysaske (Principal Financial and
Accounting Officer)
/s/ Roger Malfait* Director August 6, 1997
- -------------------------
Roger Malfait
/s/ Gary R. Douglass* Director August 6, 1997
- -------------------------
Gary R. Douglass
/s/ Dale E. Scarbrough* Director August 6, 1997
- -------------------------
Dale E. Scarbrough
/s/ Paul L. Runyan* Director August 6, 1997
- -------------------------
Paul L. Runyan
/s/ Robert K. Leick* Director August 6, 1997
- -------------------------
Robert K. Leick
*By power of attorney dated June 25, 1997.
II-5
<PAGE>
As filed with the Securities and Exchange Commission on August 6, 1997
Registration No. 333-30203
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
AMENDMENT NO. 1
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
RIVERVIEW BANCORP, INC.
(Exact name of registrant as specified in charter)
Washington 6035 91-1838969
(State or other jurisdiction of (Primary SICC No.) (I.R.S. Employer
incorporation or organization) Identification No.)
700 N.E. Fourth Avenue
Camas, Washington 98607
(360) 834-2231
(Address and telephone number of principal executive offices)
John F. Breyer, Jr., Esquire
Victor L. Cangelosi, Esquire
BREYER & AGUGGIA
Suite 470 East
1300 I Street, N.W.
Washington, D.C. 20005
(Name and address of agent for service)
<PAGE>
INDEX TO EXHIBITS
1.1 -- Form of proposed Agency Agreement among Riverview Bancorp, Inc.,
Riverview Savings Bank, FSB, Riverview, M.H.C. and Charles Webb &
Company
1.2 -- Engagement Letter between Riverview Savings Bank, FSB and Charles
Webb & Company (a)
2 -- Plan of Conversion and Reorganization of Riverview Savings Bank, FSB
and Riverview, M.H.C. (a)
3.1 -- Articles of Incorporation of Riverview Bancorp, Inc. (a)
3.2 -- Bylaws of Riverview Bancorp, Inc. (a)
4 -- Form of Certificate for Common Stock (a)
5 -- Opinion of Breyer & Aguggia regarding legality of securities
registered (a)
8.1 -- Federal Tax Opinion of Breyer & Aguggia
8.2 -- State Tax Opinion of Deloitte & Touche LLP
8.3 -- Opinion of RP Financial, LC. as to the value of subscription
rights (a)
10.1 -- Proposed Form of Employment Agreement For Senior Officers (a)
10.2 -- Proposed Form of Severance Agreement for Key Officers (a)
10.3 -- Proposed Form of Employee Stock Ownership Plan (a)
10.4 -- Proposed Form of Employee Severance Compensation Plan (a)
10.5 -- Proposed Form of Employee's Savings & Profit Sharing Plan and Trust
11 -- Statement Regarding Computation of Earnings Per Share
21 -- Subsidiaries of Riverview Bancorp, Inc. (a)
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Breyer & Aguggia (a)
23.3 -- Consent of RP Financial, LC. (a)
24 -- Power of Attorney (a)
99.1 -- Order and Acknowledgement Form (contained in the marketing materials
included herein as Exhibit 99.2)
99.2 -- Solicitation and Marketing Materials
99.3 -- Appraisal Agreement with RP Financial, LC. (a)
99.4 -- Appraisal Report of RP Financial, LC.
99.5 -- Proxy Statement for Special Meeting of Members of Riverview, M.H.C.
99.6 -- Proxy Statement for Annual Meeting of Stockholders of Riverview
Savings Bank, FSB
- ---------------------
(a) Previously filed.
Form of Proposed Agency Agreement Among Riverview Bancorp,
Inc., Riverview Savings Bank, FSB, Riverview, M.H.C. and
Charles Webb & Company
<PAGE>
RIVERVIEW BANCORP, INC.
(a Washington Corporation)
4,736,571 Shares
(Subject to Increase Up to 5,447,056 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_____ __, 1997
Charles Webb & Company
A Division of Keefe, Bruyette & Woods, Inc.
211 Bradenton Avenue
Dublin, Ohio 43017
Pacific Crest Securities, Inc.
U.S. Bancorp Tower, Suite 4250
111 S.W. Fifth Avenue
Portland, Oregon 97204
Ladies and Gentlemen:
Riverview Bancorp, Inc. (the "Holding Company"), Riverview, M.H.C. (the
"MHC") and Riverview Savings Bank, FSB (the "Bank") (collectively, the "Primary
Parties") hereby confirm, jointly and severally, their agreement with Charles
Webb & Company ("Webb" or the "Agent"), a Division of Keefe, Bruyette & Woods,
Inc. ("KBW"), and with Pacific Crest Securities, Inc. ("PCS"), as follows:
SECTION 1. THE OFFERING. The Holding Company is offering up to
4,736,571 shares of common stock, par value $.01 per share (the "Common Stock")
(subject to an increase up to 5,447,056 shares), in (i) an exchange offering
(the "Exchange Offering"), (ii) a subscription offering (the "Subscription
Offering"), (iii) a direct community offering (the "Direct Community Offering")
and, if necessary, (iv) a syndicated community offering (the "Syndicated
Community Offering"), in connection with the reorganization of the Bank from a
subsidiary of the MHC to a wholly-owned subsidiary of the Holding Company (the
"Reorganization"), all pursuant to the Plan of Conversion from Mutual Holding
Company to Stock Holding Company and Agreement and Plan of Reorganization, as
amended (the "Plan"). Pursuant to the Plan, the Reorganization will be effected
as follows: (i) the MHC will convert to an interim federal stock
1
<PAGE>
savings bank and merge simultaneously with and into the Bank, with the Bank as
the surviving entity and (ii) a newly-formed interim federal stock savings bank
("Interim FSB"), wholly owned by the Holding Company, will merge with and into
the Bank, resulting in the Bank becoming a wholly owned subsidiary of the
Holding Company.
In the Exchange Offering, each share of the common stock, par value
$1.00 per share, of the Bank (the "Bank Common Stock") held by the MHC will be
cancelled and each share of Bank Common Stock held by the Bank's other
stockholders (the "Public Stockholders") will be exchanged for shares of Common
Stock ("Exchange Shares") pursuant to an exchange ratio (the "Exchange Ratio")
that will result in the Public Stockholders owning in the aggregate the same
percentage of the outstanding shares of Common Stock, upon consummation of the
Reorganization, as the percentage of outstanding Bank Common Stock they owned
immediately prior to the Reorganization, excluding fractional shares for which
cash will be received and shares purchased by the Public Stockholders in the
Conversion Offerings (defined below), all as described in the Plan.
In the Subscription Offering, non-transferable rights to subscribe for
up to 2,760,000 shares (subject to an increase up to 3,174,000 shares) of the
Common Stock ("Subscription Rights") will be granted, in the following priority:
(1) the Bank's depositors with account balances of $50.00 or more as of December
31, 1995 ("Eligible Account Holders"); (2) the Bank's tax-qualified Employee
Stock Ownership Plan ("ESOP"); (3) the Bank's depositors with account balances
of $50.00 or more as of June 30, 1997 ("Supplemental Eligible Account Holders");
and (4) depositors of the Bank (other than Eligible Account Holders and
Supplemental Eligible Account Holders) as of July 31, 1997 (the "Voting Record
Date") and borrowers of the Bank with loans outstanding as of October 22, 1993
which continue to be outstanding as of the Voting Record Date (collectively,
"Other Members"), subject to the priorities and purchase limitations set forth
in the Plan. Concurrently with the Subscription Offering, the Holding Company
will offer all shares of Common Stock offered but not subscribed for in the
Subscription Offering, if any, in the Direct Community Offering to members of
the general public, with first preference given to Public Stockholders (who are
not Eligible Account Holders, Supplemental Eligible Account Holders or Other
Members) and then to natural persons and trusts of natural persons who are
permanent residents of Clark, Cowlitz, Klickitat and Skamania Counties of
Washington. Depending on market conditions, shares not subscribed for in the
Subscription Offering or purchased in the Direct Community Offering may be
offered in the Syndicated Community Offering to eligible members of the general
public on a best efforts basis by approved broker-dealer firms ("Assisting
Brokers") which are members of the National Association of Securities Dealers,
Inc. ("NASD").
2
<PAGE>
The Holding Company will issue shares of its Common Stock in the
Subscription Offering, Direct Community Offering, and Syndicated Community
Offering, (collectively, the "Conversion Offerings") (the "Conversion Shares")
at a purchase price of $10.00 per share (the "Purchase Price"). If the number of
Conversion Shares and Exchange Shares (collectively, the "Shares") is increased
or decreased in accordance with the Plan, the term "Shares" shall mean such
greater or lesser number, where applicable.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File No.
333-30203) containing a prospectus relating to the Exchange Offering and the
Conversion Offerings (collectively, the "Offerings") for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), and has
filed such amendments thereto as have been required to the date hereof (the
"Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially became effective is hereinafter
called the "Prospectus," except that if any prospectus is filed by the Holding
Company pursuant to Rule 424(b) or (c) of the regulations of the Commission
under the 1933 Act differing from the prospectus included in the Registration
Statement at the time it 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 and shall include
any supplements and amendments thereto from and after their dates of
effectiveness or use, respectively.
In connection with the Reorganization, the MHC filed with the Office of
Thrift Supervision, Department of the Treasury (the "OTS"), pursuant to Title
12, Part 563b of the Code of Federal Regulations (the "Conversion Regulations"),
an Application for Approval of Conversion, including exhibits and the
Prospectus, and has filed amendments thereto as required by the OTS (as so
amended, the "Application for Conversion"). The Holding Company filed with the
OTS its application on Form H-(e)1-S (the "Holding Company Application") to
acquire the Bank under the Home Owners Loan Act, as amended, and the regulations
promulgated thereunder ("HOLA"). The Bank's applications with the OTS for
approval of (i) the merger of MHC (after its conversion to an interim federal
stock savings bank) with and into the Bank and (ii) the merger of Interim FSB
with and into the Bank (collectively, the "Merger Applications"). The
Application for Conversion and Holding Company Application (including the Merger
Applications) shall collectively be hereinafter referred to as the "OTS
Applications."
SECTION 2. APPOINTMENT OF THE AGENT AND PCS. Subject to the terms and
conditions of this Agreement, the Primary Parties hereby appoint Webb as their
financial advisor and marketing agent to utilize its best efforts to solicit
subscriptions for the Conversion Shares and to advise and assist the Primary
3
<PAGE>
Parties with respect to the sale of the Conversion Shares in the Conversion
Offerings.
On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to consult with and
advise the Holding Company and the Bank as to the matters set forth in the
letter agreement ("Letter Agreement"), dated April 9, 1997, between the Bank and
Webb (a copy of which is attached hereto as Exhibit A). It is acknowledged by
the Primary Parties that the Agent shall not be obligated to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Subscriptions for Conversion
Shares will be offered by means of order forms as described in the Prospectus.
Except as provided in the paragraph below, the appointment of the Agent
hereunder shall terminate upon consummation of the Offerings.
Webb agrees to act as financial advisor to the Bank and the Holding
Company for a period of one year following the consummation of the
Reorganization for no additional fee to render general advice on financial
matters, including dividend policy, and share repurchase programs, assistance
with shareholder reporting and shareholder relations matters, general advice on
mergers and acquisitions, and other related financial matters which are brought
to the attention of the Bank or the Holding Company. However, nothing in this
Agreement shall require the Holding Company or the Bank to obtain such financial
advisory services from Webb. After the completion of such one year period, if
the parties wish to continue the relationship, a fee will be negotiated and an
agreement with respect to specific advisory services will be entered into at
that time. Should discussions commence for a specific acquisition transaction
by, or a sale of, the Bank or the Holding Company during the period in which the
Agent is acting as financial advisor to the Bank and the Holding Company, the
general financial advisory relationship as set forth in this paragraph will
terminate with respect to the specific transaction. If the Bank or the Holding
Company and the Agent wish to have the Agent initiate, negotiate and/or process
such specific transaction, an appropriate fee will be negotiated at that time.
If selected broker-dealers are used to assist in the sale of Conversion
Shares in the Syndicated Community Offering, the Primary Parties hereby appoint,
subject to the terms and conditions of this Agreement, PCS to manage such
broker-dealers in the Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, PCS accepts such appointment and
agrees to manage the selling group of broker-dealers in the Syndicated Community
Offering.
4
<PAGE>
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the
Reorganization is not consummated for any reason, including but not limited to
the inability to sell the Conversion Shares during the Offerings (including any
permitted extension thereof), this Agreement shall terminate and any persons who
have subscribed for any of the Conversion Shares shall have refunded to them the
full amount which has been received from such person, together with interest at
the Bank's current passbook rate, from the date payment is received as provided
in the Prospectus. Upon termination of this Agreement, neither the Agent nor the
Primary Parties shall have any obligation to the other except that (i) the
Primary Parties shall remain liable for any amounts due pursuant to Sections
4(a), 8, 10 and 11 hereof, unless the transaction is not consummated due to the
breach by the Agent of a warranty, representation or covenant; and (ii) the
Agent shall remain liable for any amount due pursuant to Sections 10 and 11
hereof, unless the transaction is not consummated due to the breach by the
Primary Parties of a warranty, representation or covenant.
SECTION 4. FEES. In addition to the expenses specified in Section 8
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) A management fee in the amount of $25,000. Such fee has
been earned and paid in full.
(b) A fee of 1.5% of the aggregate Purchase Price of the
Conversion Shares sold in the Subscription Offering and the Direct Community
Offering, excluding those shares purchased by the Bank's officers, directors or
employees (or members of their immediate families), the ESOP, and any tax
qualified or stock based compensation plan (except Individual Retirement
Accounts) or similar plan created by the Bank for some or all of its directors
or employees. In the event, with respect to any stock purchases, fees are paid
pursuant to this subsection (b), such fees shall be paid in lieu of, and not in
addition to, payments to the Agent pursuant to subsection (a).
(c) A fee not to exceed 5.5% of the aggregate Purchase Price
of the Conversion Shares sold by Assisting Brokers in any Syndicated Community
Offering. The Agent will pay the Assisting Brokers which assisted in the
purchase of Conversion Shares in the Syndicated Community Offering a fee
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. The decision to utilize Assisting Brokers will be made
jointly by the Agent on the one hand, and the Primary Parties, on the other
hand, and it is agreed that PCS will manage the Assisting Brokers in the
Syndicated Offering.
5
<PAGE>
(d) PCS shall not be paid any fees for its services rendered
hereunder except for fees received as an Assisting Broker under subsection (c)
hereof.
SECTION 5. CLOSING. If the minimum number of Conversion Shares
permitted to be sold in the Reorganization on the basis of the most recently
updated Reorganization appraisal are subscribed for at or before the termination
of the Offerings, and the other conditions to the completion of the
Reorganization are satisfied, the Holding Company agrees to issue the Shares on
the Closing Date (as hereinafter defined) against payment therefor by the means
authorized by the Plan and to deliver certificates evidencing ownership of the
Conversion Shares in such authorized denominations and registered in such names
as may be indicated on the subscription order forms directly to the purchasers
thereof as promptly as practicable after the Closing Date. The Closing shall be
held at the offices of special counsel to the Primary Parties, or at such other
place as shall be agreed upon among the Primary Parties and the Agent, at 10:00
a.m. on a business day selected by the Holding Company which business day shall
be no less than two business days following the giving of prior notice by the
Holding Company to the Agent or at such other time as shall be agreed upon by
the Primary Parties and the Agent. At the Closing, the Primary Parties shall
deliver to the Agent in same-day funds the commissions, fees and expenses owing
to the Agent as set forth in Sections 4 and 8 hereof and the opinions 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. The Holding Company shall notify
the Agent when funds shall have been received for the minimum number of shares
of the Common Stock. The date upon which the Holding Company shall release the
Conversion Shares for delivery in accordance with the terms hereof is referred
to herein as the "Closing Date."
As soon as practicable after the Closing Date, the Holding Company and
the Bank shall cause a letter of transmittal to be mailed to each Public
Stockholder advising such Public Stockholder of the terms of the Exchange
offering and the procedure for surrendering to an agent, duly appointed by the
Holding Company (the "Exchange Agent"), the certificates evidencing shares of
Bank Common Stock issued and outstanding as of the Closing Date. Upon surrender
of each such certificate to the Exchange Agent, the Holding Company agrees to
issue to the holder thereof or his or her designee a certificate or certificates
representing the number of full Exchange Shares based on the Exchange Ratio.
SECTION 6.A. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY
PARTIES. The Primary Parties jointly and severally represent and
warrant to the Agent and PCS that:
6
<PAGE>
(a) The Primary Parties 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 as provided herein and as described in the Prospectus. The
consummation of the Reorganization, 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 Primary Parties and this Agreement has been validly executed and
delivered by the Primary Parties and, assuming valid execution and delivery by
the Agent and PCS, is the valid, legal and binding agreement of the Primary
Parties enforceable in accordance with its terms, except to the extent, if any,
that the provisions of Sections 10 and 11 hereof may be unenforceable as against
public policy, and except to the extent that such enforceability may be limited
by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of savings institutions
insured by the FDIC (including the laws relating to the rights of the
contracting parties to equitable remedies).
(b) The Plan has been approved by the OTS.
(c) The Registration Statement was declared effective by the
Commission on August __, 1997; and no stop order has been issued with respect
thereto and no proceedings therefor have been initiated or to the best knowledge
of the Primary Parties threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the requirements of
the 1933 Act and the regulations promulgated thereunder and the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement thereto), any Blue Sky Application or any Sales Information (as
such terms are defined in Section 10 hereof) authorized by the Primary Parties
for use in connection with the Offerings did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and at the time any Rule 424(b) or (c)
Prospectus was filed with the Commission and at the Closing Date referred to in
Section 5, the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any Blue Sky
Application or any Sales Information authorized by the Primary Parties for use
in connection with the Offerings will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this Section 6A(c) shall not apply to statements or omissions made in reliance
upon and in
7
<PAGE>
conformity with written information furnished to the Primary Parties by the
Agent expressly regarding the Agent or KBW, or by PCS expressly regarding PCS,
for use under the captions ["Market for Common Stock,"] "The Conversion and
Reorganization -- Plan of Distribution for the Subscription, Direct Community
and Syndicated Community Offerings" and "--Description of Sales Activities" or
written statements or omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations regarding the Agent
or PCS.
(d) The Application for Conversion, including the Prospectus,
was approved by the OTS on _________________, 1997; and the Proxy Statement of
the MHC relating to the special meeting of the members of the MHC at which the
Plan shall be considered for approval by the MHC's eligible voting members, and
the Proxy Statement of the Bank relating to the annual meeting of stockholders
at which the Plan shall be considered for approval by the Bank's eligible voting
stockholders (collectively, the "Proxy Statements"), have each been authorized
for use by the OTS. At the time of the approval of the Application for
Conversion, including the Prospectus, by the OTS (including any amendment or
supplement thereto) and at all times subsequent thereto until the Closing Date,
the Application for Conversion, including the Prospectus, did and will comply as
to form in all material respects with the Conversion Regulations and any other
applicable rules and regulations of the OTS (except as modified or waived in
writing by the OTS). At the time of the approval of the Application for
Conversion, and as of the date of this Agreement, the Application for
Conversion, including the Prospectus (including any amendment or supplement
thereto), did not and does not include any untrue statement of a material fact
or omit to state any 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 representations or warranties in
this subsection (d) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent or KBW, or by PCS expressly regarding
PCS, for use in the Prospectus contained in the Application for Conversion under
the captions ["Market for Common Stock,"] "The Conversion -- Plan of
Distribution for the Subscription, Direct Community and Syndicated Community
Offerings" and "--Description of Sales Activities" or written statements or
omissions from any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent or PCS.
(e) No order has been issued by the OTS, the Commission or the
FDIC (now and hereinafter references to the FDIC shall include the SAIF), or any
state regulatory authority, 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
8
<PAGE>
Reorganization is pending or, to the best knowledge of the Primary Parties,
threatened.
(f) The Plan has been adopted by the Board of Directors of
both the MHC and the Bank, and has been acknowledged by the Board of Directors
of the Holding Company. To the best knowledge of the Primary Parties, no person
has, or at the Closing Date will have, sought to obtain review of the final
action of the OTS in approving the Plan, the Reorganization, or the OTS
Applications, pursuant to the HOLA or any other statute or regulation.
(g) The Holding Company has filed with the OTS the Holding
Company Application (including the Merger Applications) and the OTS has approved
of the Holding Company's acquisition of the Bank.
(h) R.P. Financial, LC., which prepared the appraisal of the
pro forma market value of the Bank and the MHC on which the Offerings were based
(the "Appraisal"), has advised the Primary Parties in writing that it is
independent with respect to each of the Primary Parties within the meaning of
the Conversion Regulations.
(i) Deloitte & Touche LLP, which certified the financial
statements filed as part of the Registration Statement and the Application for
Conversion, has advised the Primary Parties in writing that they are, with
respect to each of the Primary Parties, independent certified public accountants
within the meaning of 12 C.F.R. Sections 563c.3 and 571.2(c)(3) and under the
1933 Act and the regulations promulgated thereunder.
(j) The financial statements and the notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly the financial condition and shareholders' equity of the Bank as
of the dates indicated and the results of operations and cash flows for the
periods specified. The financial statements comply in all material respects with
the applicable accounting requirements of Title 12 of the Code of Federal
Regulations, Regulation S-X of the Commission and generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods presented
except as otherwise noted therein, 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 Bank with the OTS and
the FDIC except that accounting principles employed in such filings conform to
requirements of such authorities and not necessarily to GAAP. 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 included in the
Prospectus, and as to the pro forma adjustments, the adjustments made therein
have been properly applied on the basis described therein.
9
<PAGE>
(k) 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 in the financial condition or in the earnings,
capital, properties or business affairs of any of the Primary Parties or of the
Primary Parties considered as one enterprise, whether or not arising in the
ordinary course of business; (ii) there has not been any increase of more than
$_______ in the aggregate amount of loans past due ninety (90) days or more, any
real estate acquired by foreclosure or loans characterized as "in substance
foreclosure" or any change in total assets of the Bank in an amount greater than
$10.0 million; nor has the Bank issued any securities or incurred any liability
or obligation for borrowings other than in the ordinary course of business;
(iii) there have not been any material transactions entered into by any of the
Primary Parties, other than those in the ordinary course of business; and (iv)
the capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in the Registration
Statement or the Prospectus.
(l) The Holding Company is a corporation organized and in good
standing under the laws of the State of Washington, with corporate power and
authority to own its properties and to conduct its business as described in the
Prospectus, and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business requires such
qualification unless the failure to qualify in one or more of such jurisdictions
would not have a material adverse effect on the financial condition, earnings,
capital, properties or business affairs of the Primary Parties. The Holding
Company has obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business, except those that
individually or in the aggregate would not materially adversely affect the
financial condition, earnings, capital, assets or properties of the Primary
Parties taken as a whole; and all such licenses, permits and governmental
authorizations are in full force and effect, and the Holding Company is
complying in all material respects therewith.
(m) The MHC is organized and is validly existing as a
federally chartered mutual holding company under the laws of the United States,
duly authorized to conduct its business and own its property as described in the
Registration Statement and the Prospectus; the MHC has obtained all licenses,
permits and other governmental authorizations required for the conduct of its
business except those that individually or in the aggregate would not materially
adversely affect the financial condition, earnings, capital, assets or
properties of the Primary Parties taken as a whole; all such licenses, permits
and governmental authorizations are in full force and effect and the MHC is
complying therewith in all material respects; the MHC is duly
10
<PAGE>
qualified as a foreign corporation to transact business in each jurisdiction in
which the failure to be so qualified in one or more of such jurisdictions would
have a material adverse effect on the financial condition, earnings, capital,
assets properties or business of the Primary Parties.
(n) The MHC does not own any equity securities or any equity
interest in any business enterprise except as described in the Prospectus.
(o) The Bank is organized and validly existing federally
chartered savings bank in stock form, duly authorized to conduct its business as
described in the Prospectus; the activities of the Bank are permitted by the
rules, regulations and practices of the OTS; the Bank has obtained all licenses,
permits and other governmental authorizations currently required for the conduct
of its business except those that individually or in the aggregate would not
materially adversely affect the financial condition of the Primary Parties taken
as a whole; all such licenses, permits and other governmental authorizations are
in full force and effect and the Bank is duly qualified as a foreign corporation
to transact business in each jurisdiction in which failure to so qualify would
have a material adverse effect upon the financial condition, earnings, capital,
properties or business affairs of the Bank; all of the issued and outstanding
capital stock of the Bank after the Reorganization will be duly and validly
issued and fully paid and nonassessable; and the Holding Company will directly
own all of such capital stock free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction. The Bank does not own equity securities or
any equity interest in any other business enterprise except for Riverview
Services, Inc. (the "Subsidiary") and as otherwise described in the Prospectus.
(p) The Bank is a member of the Federal Home Loan Bank of
Seattle ("FHLB of Seattle"); the deposit accounts of the Bank are insured by the
FDIC up to applicable limits.
(q) The Bank's authorized capital stock consists solely of
4,000,000 shares of the Bank Common Stock, of which ______________ shares are
issued and outstanding as of the date hereof and 1,000,000 shares of preferred
stock, $1.00 par value per share, none of which are issued and outstanding as of
the date hereof; and the MHC is not authorized to issue any shares of capital
stock.
(r) Subsidiary is the Bank's sole subsidiary; the Subsidiary
is organized, validly existing and in good standing under the laws of the State
of Washington, with full power and authority to own its property and conduct its
business and is not required to be qualified to do business as foreign
corporation in any jurisdiction where non-qualification has or would have a
material adverse effect on the financial condition, earnings, capital, assets or
properties of the Primary Parties, taken as a
11
<PAGE>
whole; the Subsidiary holds all licenses, certificates and permits from
governmental authorities necessary for the conduct of its business, except where
failure to hold such licenses, permits or authorizations would not have a
material adverse effect on the financial condition, earnings, capital, assets or
properties of the Primary Parties, taken as a whole; all of the outstanding
capital stock of the Subsidiary has been duly authorized and is fully paid and
non-assessable, and is owned directly by the Bank, free and clear of any liens
or encumbrances; the activities of the Subsidiary are permitted to be conducted
by subsidiaries of a federally-chartered savings bank pursuant to the OTS
regulations and the policies and practices of the OTS.
(s) Upon consummation of the Reorganization, the authorized,
issued and outstanding equity capital of the Holding Company will be within the
range set forth in the Prospectus under the caption "Capitalization," and,
except for the shares of Common Stock held by the Bank, which will be cancelled
as of the Closing Date, no shares of Common Stock have been or will be issued
and outstanding prior to the Closing Date; the shares of Common Stock to be
issued in the Exchange Offering and subscribed for in the Conversion Offering
have been duly and validly authorized for issuance, and when issued and
delivered by the Holding Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and the Prospectus, will be
duly and validly issued and fully paid and nonassessable; the issuance of the
shares of Common Stock is not subject to preemptive rights, except for the
Subscription Rights granted pursuant to the Plan; and the terms and provisions
of the shares of Common Stock will conform in all material respects to the
description thereof contained in the Prospectus. Upon issuance of the Shares,
good title to the Shares will be transferred from the Holding Company to the
Public Stockholders in the Exchange Offering and to the purchasers of Shares
against payment therefor in the Conversion Offering as set forth in the Plan and
the Prospectus, subject to such claims as may be asserted against the purchasers
thereof by third party claimants.
(t) None of the Primary Parties are in violation of their
respective Articles of Incorporation or charter or their respective bylaws, or
in material default in the performance or observance of any obligation,
agreement, covenant, or condition contained in any contract, lease, loan
agreement, indenture or other instrument to which they are a party or by which
they, or any of their respective property, may be bound which would result in a
material adverse change in the financial condition, earnings, capital,
properties or business affairs of the Primary Parties considered as one
enterprise or which would materially affect their properties or assets. The
consummation of the transactions herein contemplated will not (i) conflict with
or constitute a breach of, or default under, the articles of incorporation or
bylaws of the Holding Company, or the charter or
12
<PAGE>
bylaws of MHC or the Bank, or materially conflict with or constitute a material
breach of, or default under, any material contract, lease or other instrument to
which any of the Primary Parties has a beneficial interest, or any applicable
law, rule, regulation or order that is material to the financial condition of
the Primary Parties on a consolidated basis; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable to the
Primary Parties except for such violations which would not have a material
adverse effect on the financial condition and results of operations of the
Primary Parties on a consolidated basis; or (iii) with the exception of the
liquidation account established in the Reorganization, result in the creation of
any material lien, charge or encumbrance upon any property of the Primary
Parties.
(u) No material default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a material default
on the part of any of the Primary Parties, 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 material instrument or
agreement to which any of the Primary Parties is a party or by which any of them
or any of their property is bound or affected in any respect which, in any such
case, is material to the Primary Parties considered as one enterprise, and 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 Primary Parties,
threatened any action or proceeding wherein any of the Primary Parties is
alleged to be in default thereunder under circumstances where such action or
proceeding, if determined adversely to any of the Primary Parties, would have a
material adverse effect upon the Primary Parties considered as one enterprise.
(v) The Primary Parties have good and marketable title to all
assets which are material to the businesses of the Primary Parties and to those
assets described in the Prospectus as owned by them free and clear of all
material liens, charges, encumbrances, restrictions or other claims, except such
as are described in the Prospectus or which do not have a material adverse
effect on the businesses of the Primary Parties taken as a whole; and all of the
leases and subleases which are material to the businesses of the Primary
Parties, as described in the Registration Statement or Prospectus, are in full
force and effect.
(w) Except as may be described in the Prospectus, the Primary
Parties are not in material violation of any directive from the OTS, the FDIC,
the Commission or any other agency to make any material change in the method of
conducting their respective businesses; the Primary Parties have conducted and
are conducting their respective businesses so as to comply in all respects with
all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders
13
<PAGE>
of the OTS, the Commission and the FDIC), except where the failure to so comply
would not reasonably be expected to result in any material adverse change in the
financial condition, results of operations, capital, properties or business
affairs of the Primary Parties considered as one enterprise and, except as set
forth in the Prospectus, there is no charge, investigation, action, suit or
proceeding before or by any court, regulatory authority or governmental agency
or body pending or, to the best knowledge any of the Primary Parties,
threatened, which would reasonably be expected to materially and adversely
affect the Reorganization, the performance of this Agreement, or the
consummation of the transactions contemplated in the Plan as described in the
Registration Statement, or which would reasonably be expected to result in any
material adverse change in the financial condition, results of operations,
capital, properties or business affairs of the Primary Parties considered as one
enterprise.
(x) The Primary Parties have received an opinion of its
special counsel, Breyer & Aguggia, with respect to the federal income tax
consequences of the Reorganization, as described in the Registration Statement
and the Prospectus, and an opinion from Knapp, O'Dell & Lewis with respect to
the tax consequences of the proposed transaction under the laws of the State of
Washington; and the facts and representations upon which such opinions are based
are truthful, accurate and complete, and none of the Primary Parties will take
any action inconsistent therewith.
(y) Since ______________, the Primary Parties have timely
filed all required federal and state tax returns, 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.
(z) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for the approval of the OTS and the Commission (which have
been received) and any necessary qualification, notification, or 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 Nasdaq.
(aa) None of the Primary Parties has: (i) issued any
securities within the last 18 months (except for (a) notes to evidence bank
loans or other liabilities in the ordinary course of business or as described in
the Prospectus, (b) shares of Common Stock issued to the Bank with respect to
the initial capitalization of the Holding Company, and (c) shares of Bank
14
<PAGE>
Common Stock issued pursuant to (1) the exercise of options under the Bank's
1993 Stock Option Plan, (2) a 10% stock dividend issued on April 12, 1996 or (3)
a 10% stock dividend issued on April 11, 1997); (ii) had any dealings with
respect to sales of securities 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 Offerings and
purchases and sales of U.S. government and agency and other securities in the
ordinary course of business; (iii) entered into a financial or management
consulting agreement except for the Letter Agreement and as contemplated
hereunder; or (iv) engaged any intermediary between the Agent and the Primary
Parties in connection with the offering of Shares, and no person is being
compensated in any manner for such service.
(ab) Neither the Primary Parties nor, to the best knowledge of
the Primary Parties, any employees of the Primary Parties have made any payment
of funds of the Primary Parties as a loan to any person for the purchase of
Conversion Shares, except for the Holding Company's loan to the ESOP the
proceeds of which will be used to refinance certain indebtedness of the ESOP and
to purchase Conversion Shares, or has 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.
(ac) The Bank complies in all material respects with the
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, and the regulations
and rules thereunder.
(ad) The Primary Parties have not relied upon Webb, PCS or
their counsel for any legal, tax or accounting advice in connection with the
Reorganization.
(ae) The records of Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are accurate and complete in all
material respects.
(af) To the best knowledge of the Primary Parties, the Primary
Parties comply with all laws, rules and regulations relating to environmental
protection, and none of them has been notified or is otherwise aware that any of
them is potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any other Federal, state or local environmental laws and
regulations; no action, suit, regulatory investigation or other proceeding is
pending, threatened against the Primary Parties relating to environmental
protection, nor do the Primary parties have any reason to believe any such
proceedings may be brought against any of them; and to the best knowledge of the
Primary Parties, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has
15
<PAGE>
occurred on, in, at or about any facilities or properties owned or leased by any
of the Primary Parties or, to the best knowledge of the Bank, in which the Bank
has a security interest.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent, PCS, or their counsel that refer to this Agreement shall
be deemed to be a representation and warranty by the Primary Parties to the
Agent and PCS as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 6.B. REPRESENTATIONS AND WARRANTIES OF THE AGENT.
Agent represents and warrants to the Primary Parties that:
(a) KBW is a corporation and is validly existing in good
standing under the laws of the State of New York with full power and authority
to provide the services to be furnished to the Primary Parties hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of KBW, and this Agreement has
been duly and validly executed and delivered by KBW, and is the legal, valid and
binding agreement of Agent, enforceable in accordance with its terms except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or other similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii)
general equity principles regardless of whether such enforceability is
considered in a proceeding in equity or at law, and (iii) the extent, if any,
that the provisions of Sections 10 or 11 hereof may be unenforceable as against
public policy.
(c) Each of Agent and its employees, agents and
representatives who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and permits
necessary to perform such services.
(d) The execution and delivery of this Agreement by Agent, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or event
which with notice or lapse of time or both would constitute a default) under,
the articles of incorporation of KBW or any agreement, indenture or other
instrument to which KBW is a party or by which it or its property is bound.
(e) No action, suit, charge or proceeding is pending, or to
the knowledge of Agent threatened, against Agent which, if determined adversely
to Agent, would have a material adverse
16
<PAGE>
effect upon the ability of Agent to perform obligations under this Agreement.
(f) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by Agent of this Agreement, except as may have been
received.
SECTION 6.C. REPRESENTATIONS AND WARRANTIES OF PCS. PCS
represents and warrants to the Primary Parties that:
(a) PCS is a corporation and is validly existing in good
standing under the laws of the State of _________________ with full power and
authority to provide the services to be furnished to the Primary Parties
hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of PCS, and this Agreement has
been duly and validly executed and delivered by PCS, and is the legal, valid and
binding agreement of PCS, enforceable in accordance with its terms except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, (ii) general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (iii) the extent, if any, that the
provisions of Sections 10 or 11 hereof may be unenforceable as against public
policy.
(c) Each of PCS and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary to
perform such services.
(d) The execution and delivery of this Agreement by PCS, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or event
which with notice or lapse of time or both would constitute a default) under,
the articles of incorporation of PCS or any agreement, indenture or other
instrument to which PCS is a party or by which it or its property is bound.
(e) No action, suit, charge or proceeding is pending, or to
the knowledge of PCS threatened, against PCS which, if determined adversely to
PCS, would have a material adverse effect upon the ability of PCS to perform
obligations under this Agreement.
17
<PAGE>
(f) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by PCS of this Agreement, except as may have been
received.
SECTION 7.A. COVENANTS OF THE PRIMARY PARTIES. The Primary
Parties hereby jointly and severally covenant with the Agent and
PCS as follows:
(a) The Holding 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 file any amendment or
supplement to which amendment the Agent or its counsel shall reasonably object.
(b) The Primary Parties will not, at any time after the date
any OTS Application is approved, file any amendment or supplement to such OTS
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 Primary Parties 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 OTS
Applications to be approved by the OTS, and will immediately upon receipt of any
information concerning the events listed below notify the Agent and PCS (i) when
the Registration Statement, as amended, has become effective; (ii) when the
Application for Conversion, as amended, has been approved by the OTS; (iii) when
the Holding Company Application, as amended, has been approved by the OTS; (iv)
when each of the Merger Applications, as amended, has been approved by the OTS;
(v) of the receipt of any comments from the Commission, the OTS, or any other
governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (vi) of any request by the Commission, the OTS,
any other governmental entity for any amendment or supplement to the
Registration Statement or the OTS Applications or for additional information;
(vii) of the issuance by the Commission, the OTS, or any other governmental
agency of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (viii) of the issuance by the Commission, the OTS, the FDIC
or any state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (ix) of the occurrence of any event
mentioned in paragraph (f) below. The Primary Parties will make every reasonable
effort to prevent the issuance by the Commission, the OTS, the FDIC or any state
authority of any order referred to in (vii) and (viii) above and, if any such
order
18
<PAGE>
shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The Primary Parties will deliver to the Agent, PCS and to
their counsel conformed copies of each of the following documents, with all
exhibits: each of the OTS Applications as originally filed and of each amendment
or supplement thereto, and the Registration Statement, as originally filed and
each amendment thereto. Further, the Primary Parties will deliver such
additional copies of the foregoing documents to counsel to the Agent and PCS as
may be required for any NASD filings. In addition, the Primary Parties will also
deliver to the Agent and PCS such number of copies of the Prospectus, as amended
or supplemented, as the Agent or PCS may reasonably request.
(e) The Primary Parties will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
Securities Exchange Act of 1934 (the "1934 Act") and the rules and regulations
of the Commission promulgated under such statutes, to be complied with prior to
or subsequent to the Closing Date; and when the Prospectus is required to be
delivered, the Primary Parties will comply in all material respects, at their
own expense, with all material requirements imposed upon them by the OTS, the
Conversion Regulations (except as modified or waived in writing by the OTS), the
FDIC, the Commission, by applicable state law and regulations and by the 1933
Act, the 1934 Act and the rules and regulations of the Commission promulgated
under such statutes, in each case as from time to time in force, so far as
necessary to permit the continuance of sales or dealing in shares of Common
Stock during such period in accordance with the provisions hereof and the
Prospectus.
(f) The Primary Parties will inform the Agent and PCS of any
event or circumstances of which it is aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Primary Parties or for
the Agent, to amend or supplement the Registration Statement or the Prospectus
in order to correct such untrue statement of a material fact or to make the
statements therein not misleading in light of the circumstances existing at the
time of their use, the Primary Parties will, at their expense, forthwith
prepare, file with the Commission and the OTS, and furnish to the Agent, a
reasonable number of copies of an amendment or amendments of, or a supplement or
supplements to, the Registration Statement and the Prospectus (in form and
substance reasonably satisfactory to counsel for the Agent after a reasonable
time for review) which will amend or supplement the
19
<PAGE>
Registration Statement and/or the 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, not misleading. For the purpose of this
subsection, each of the Primary Parties will furnish such information with
respect to itself as the Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company
will endeavor in good faith, in cooperation with the Agent, to register or to
qualify the Shares for offering and sale or to exempt such Shares from
registration and to exempt the Holding Company and its officers, directors and
employees from registration as broker-dealers, under the applicable securities
laws of the jurisdictions in which the Offerings will be conducted; provided,
however, that the Holding Company shall not be obligated to file any general
consent to service of process or to qualify to do business in any jurisdiction
in which it is not so qualified. In each jurisdiction where any of the Shares
shall have been registered or qualified as above provided, the Holding Company
will make and file such statements and reports in each year as are or may be
required by the laws of such jurisdictions.
(h) 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 Bank will have an inchoate
interest in their pro rata portion of the liquidation account which shall have a
priority superior to that of the holders of shares of Common Stock in the event
of a complete liquidation of the Bank.
(i) The Holding Company will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the date hereof,
without the Agent's prior written consent, which consent shall not be
unreasonably withheld, any shares of Common Stock other than in connection with
any plan or arrangement described in the Prospectus.
(j) For the period of three years from the date of this
Agreement, the Holding Company will furnish to the Agent and PCS upon request
(i) a copy of each report of the Holding 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 Holding Company is listed or quoted, (ii) a
copy of each report of the Holding Company mailed to holders of Common Stock or
non-confidential report filed with the Commission or the OTS or any other
supervisory or regulatory authority or any national securities exchange or
system on which any class of the securities of the Holding Company is listed or
quoted, and (iii) from time to time, such other publicly available
20
<PAGE>
information concerning the Holding Company and the Bank as the Agent or PCS may
reasonably request.
(k) The Holding Company and the Bank will use the net proceeds
from the sale of the Common Stock in the manner set forth in the Prospectus
under the caption "Use of Proceeds."
(l) The Holding Company and the Bank will distribute the
Prospectus or other offering materials in connection with the offering and sale
of the Common Stock only in accordance with the Conversion Regulations, the 1933
Act and the 1934 Act and the rules and regulations promulgated under such
statutes, and the laws of any state in which the shares are qualified for sale.
(m) The Holding Company shall register its Common Stock under
Section 12(g) of the 1934 Act, concurrent with the effective date of the
Registration Statement. The Holding Company shall maintain the effectiveness of
such registration for not less than three years or such shorter period as
permitted by the OTS.
(n) For so long as the Common Stock is registered under the
1934 Act, the Holding Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year such reports and other information
as are required to be furnished to its stockholders under the 1934 Act
(including consolidated financial statements of the Holding Company and its
subsidiaries, certified by independent public accountants).
(o) The Holding Company will comply with the provisions of
Rule 158 of the 1933 Act.
(p) The Holding Company will file with the Commission, within
the required time period, such reports on Form SR as may be required pursuant to
Rule 463 under the 1933 Act.
(q) The Holding Company will use its best efforts to obtain
approval for the listing of, and maintain the quotation of, the Common Stock on
the Nasdaq National Market System, effective on or prior to the Closing Date.
(r) The Primary Parties will maintain appropriate arrangements
for depositing all funds received from persons mailing subscriptions for or
orders to purchase Conversion Shares 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 Holding Company's obligation to
refund payments received from persons subscribing for or ordering Conversion
Shares in the Conversion Offering, in accordance with the Plan 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 Primary Parties will maintain such
records of all funds received to permit the
21
<PAGE>
funds of each subscriber to be separately insured by the FDIC (to the maximum
extent allowable) and to enable the Primary Parties 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 Holding Company will promptly register as a savings
and loan holding company under the HOLA.
(t) The Holding Company and the Bank will take such actions
and furnish such information as are reasonably requested by the Agent in order
for the Agent to ensure compliance with the "Interpretation of the Board of
Governors of the NASD on Free Riding and Withholding."
(u) The Primary Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(v) The Primary Parties will not amend the Plan of Conversion
without notifying the Agent prior thereto.
(w) The Holding Company shall provide the Agent with any
information necessary to carry out the allocation of the Conversion Shares in
the event of an oversubscription and such information shall be accurate and
reliable in all material respects.
(x) The Holding Company will not deliver the Shares until the
Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 9A hereof, unless such condition is waived in writing by the
Agent.
(y) Upon completion of the sale by the Holding Company of the
Shares contemplated by the Plan and the Prospectus, (i) the MHC shall have been
converted pursuant to the Plan to an interim federal stock savings bank and
merged with and into the Bank, (ii) all of the issued and outstanding capital
stock of the Bank shall be owned by the Holding Company, (iii) the Company shall
have no direct subsidiaries other than the Bank, and (iv) the Reorganization
shall have been effected in accordance with all applicable statutes,
regulations, decisions and orders; and all terms, conditions, requirements and
provisions with respect to the Reorganization (except those that are conditions
subsequent) imposed by the Commission, the OTS or any other governmental agency,
if any, shall have been complied with by the Primary Parties in all material
respects or appropriate waivers shall have been obtained and all notice and
waiting periods shall have been satisfied, waived or elapsed.
(z) Prior to the Closing Date, the Plan shall have been
approved by the eligible voting members of the MHC and the
22
<PAGE>
eligible voting stockholders of the Bank in accordance with the Conversion
Regulations and the provisions of MHC's and the Bank's respective charter and
bylaws.
(aa) As of the Closing Date, the Primary Parties shall have
completed all conditions precedent to the Reorganization in accordance with the
Plan and shall have complied in all material respects with applicable laws,
regulations (except as modified or waived in writing by the OTS), decisions and
orders, including all terms, conditions, requirements and provisions precedent
to the Reorganization imposed upon it by the OTS as set forth in correspondence
received from the OTS.
(ab) On or before the Closing Date, the MHC and the Bank will
have completed all conditions precedent to the Reorganization specified in the
Plan and the offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion Regulations
(except as modified or waived in writing by the OTS) and with all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Reorganization imposed
upon any of the Primary Parties by the OTS, the Commission or any other
regulatory authority and in the manner described in the Prospectus.
SECTION 7.B. COVENANTS OF AGENT. Agent hereby covenants with the
Primary Parties as follows:
(a) During the period when the Prospectus is used, Agent will
comply, in all material respects and at its own expense, with all requirements
imposed upon it by the OTS and, to the extent applicable, by the 1933 Act, the
1934 Act and the rules and regulations promulgated under the 1933 Act and the
1934 Act.
(b) Agent will distribute any Prospectus or offering materials
in connection with the offering and sale of the Common Stock only in accordance
with the Conversion Regulations and the requirements of the 1933 Act and 1934
Act and the rules and regulations promulgated thereunder.
(c) KBU intends, together with PCS, to make a market in the
Common Stock after the completion of the Offerings.
(d) PCS intends, together with KBW, to make a market in the
Common Stock after the completion of the Offering.
SECTION 7.C. COVENANTS OF PCS. PCS hereby covenants with the Primary
Parties as follows:
(a) During the period when the Prospectus is used, PCS will
comply, in all material respects and at its own expense, with all requirements
imposed upon it by the OTS and, to the
23
<PAGE>
extent applicable, by the 1933 Act, the 1934 Act and the rules and regulations
promulgated under the 1933 Act and the 1934 Act.
(b) PCS will distribute any Prospectus or offering materials
in connection with the offering and sale of the Common Stock only in accordance
with the Conversion Regulations and the requirements of the 1933 Act and 1934
Act and the rules and regulations promulgated thereunder.
(c) PCS intends, together with KBW, to make a market in the
Common Stock after the completion of the Offerings.
SECTION 8. PAYMENT OF EXPENSES. Whether or not the Reorganization is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the OTS Applications; (b) the preparation, printing, filing,
delivery and shipment of the Registration Statement, including the Prospectus,
and all amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD; and (e)
the reasonable expenses of the Agent, including without limitation, accounting,
communications, legal and travel expenses. Any such expense incurred by the
Agent shall be reimbursed by the Primary Parties. If this Agreement is
terminated in accordance with the provisions of Sections 3, 9, or 13, the
Primary Parties shall pay the Agent the fees earned pursuant to Section 4 and
will reimburse the Agent for the reasonable expenses of the Agent, including
without limitation accounting, communication, legal and travel expenses. The
Agent's non-legal expenses shall not exceed $15,000 of the Expenses shall not be
incurred by Agent's counsel without the prior approval of the Holding Company or
the Bank. The Agent's legal fees shall not exceed $30,000.
SECTION 9.A. CONDITIONS TO THE AGENT'S AND PCS' OBLIGATIONS. The
obligations of the Agent and PCS hereunder and the occurrence of the Closing and
the Reorganization are subject to the condition that all representations and
warranties and other statements of the Primary Parties herein contained are, at
and as of the commencement of the Offerings and at and as of the Closing Date,
true and correct, the condition that the Primary Parties shall have performed
all of their obligations hereunder to be performed on or before such dates and
to the following further conditions:
(a) The Registration Statement shall have been declared
effective by the Commission and the OTS Applications approved by the OTS not
later than 5:30 p.m. on the date of this
24
<PAGE>
Agreement, and no stop order or other action suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or, to any of the Primary Parties' best knowledge, threatened
by the Commission or any state authority and no order or other action suspending
the authorization for use of the Prospectus or the consummation of the
Reorganization shall have been issued or proceedings therefor initiated or, to
any of the Primary Parties' best knowledge, threatened by the OTS, the
Commission, or any other governmental body.
(b) At the Closing Date, the Agent and PCS shall have each
received:
(1) The favorable opinion, dated as of the Closing
Date, of Breyer & Aguggia, special counsel for the Primary Parties, or Knapp,
O'Dell & Lewis, local counsel to the Primary Parties, in form and substance
satisfactory to counsel for the Agent to the effect that:
(i) The Holding Company is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Washington, with corporate power and authority to own its properties
and to conduct its business as described in the Prospectus, and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification and in which the
failure to qualify would have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of the Primary
Parties.
(ii) The Bank is a duly organized and
validly existing federally chartered capital stock savings bank with full power
and authority to own its properties and to conduct its business as described in
the Prospectus and to enter into this Agreement and perform its obligations
hereunder; the activities of the Bank as described in the Prospectus are
permitted by the rules, regulations and practices of the OTS; the issuance and
sale of the capital stock of the Bank to the Holding Company in the
Reorganization has been duly and validly authorized by all necessary corporate
action on the part of the Holding Company and the Bank and, upon payment
therefor in accordance with the terms of the Plan, will be validly issued, fully
paid and nonassessable; and will be owned of record and beneficially by the
Holding Company, free and clear of any mortgage, pledge, lien, encumbrance,
claim or restriction.
(iii) The Bank is a member of the FHLB of
Seattle and the Bank is an insured depository institution under the provisions
of the Federal Deposit Insurance Act, as amended, and to such counsel's
knowledge no proceedings for the termination or revocation of such insurance are
pending or threatened; and the description of the liquidation account as set
forth in the Prospectus under the caption "The Conversion and
25
<PAGE>
Reorganization -- Effects of Conversion and Reorganization on Depositors and
Borrowers of the Savings Bank -- Liquidation Account" has been reviewed by such
counsel and, to the extent that such information constitutes matters of law or
legal conclusions, is accurate in all material respects.
(iv) The MHC has been duly organized and is
validly existing as a federally chartered mutual holding company, duly
authorized to conduct its business and own its properties as described in the
Registration Statement and Prospectus.
(v) The Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Washington, and has been duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where the
ownership or leasing of its properties 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 financial
condition, earnings, capital, assets or properties of the Primary Parties, taken
as a whole; to such counsel's knowledge, the Subsidiary holds all licenses,
certificates and permits from governmental authorities necessary for the conduct
of its business, except where the failure to hold such licenses, certificates or
permits would not have a material adverse effect on the financial condition,
earnings, capital, assets or properties of the Primary Parties, taken as a
whole; the Subsidiary is not in violation of its articles of incorporation or
bylaws; all of the outstanding capital stock of the Subsidiary has been duly
authorized and is validly issued, fully paid and nonassessable, and owned
directly by the Bank, free and clear of any liens, charges, encumbrances or
restrictions except such as would not result in a material adverse effect on the
financial condition, earnings, capital, assets or properties of the Primary
Parties, taken as a whole; all of the leases and subleases material to the
business of the Subsidiary under which the Subsidiary holds properties are in
full force and effect; and the activities of the Subsidiary are permitted to
subsidiaries of a federally chartered savings bank by the regulations and the
policies and practices of the OTS.
(vi) Upon consummation of the
Reorganization, the authorized, issued and outstanding capital stock of the
Holding Company will be within the range set forth in the Prospectus under the
caption "Capitalization," and no shares of Common Stock have been or will be
issued and outstanding prior to the Closing Date (except for the shares issued
to the Bank upon incorporation of the Holding Company, which have been
cancelled); the shares of Common Stock of the Holding Company to be subscribed
for or exchanged in the Offerings have been duly and validly authorized for
issuance, and when issued and delivered by the Holding Company pursuant to the
Plan against payment of the consideration calculated as set forth in the Plan,
will be fully paid and nonassessable; and the
26
<PAGE>
issuance of the shares of Common Stock is not subject to preemptive rights under
the charter, articles of incorporation or bylaws of any of the Primary Parties,
or arising or outstanding by operation of law or, to the best knowledge of such
counsel, under any contract, indenture, agreement, instrument or other document,
except for the subscription rights under the Plan.
(vii) The authorized, issued and outstanding
capital stock of the Bank is as set forth in the Prospectus under the caption
"Capitalization," and all of the outstanding shares of such capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
(viii) The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporation action on the part of the Primary
Parties; and this Agreement constitutes a valid, legal and binding obligation of
each of the Primary Parties, enforceable in accordance with its terms, except to
the extent that the provisions of Sections 10 and 11 hereof may be unenforceable
as against public policy, and except to the extent that such enforceability may
be limited by bankruptcy laws, insolvency laws, or other laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
savings institutions insured by the FDIC (including the laws relating to the
rights of the contracting parties to equitable remedies).
(ix) The Plan has been duly adopted by the
board of directors of both the MHC and the Bank, as required by the Conversion
Regulations, and approved by the members of the MHC and the eligible voting
stockholders of the Bank, as required by the Conversion Regulations and the
MHC's and the Bank's respective charter and bylaws.
(x) The OTS Applications have been approved
by the OTS and the Prospectus and the Proxy Statements have been authorized for
use by the OTS, and subject to the satisfaction of any conditions set forth in
such OTS approvals, no further approval, registration, authorization, consent or
other order of any federal regulatory agency, public board or body is required
in connection with the execution and delivery of this Agreement, the offer, sale
and issuance of the Shares and the consummation of the Reorganization.
(xi) The purchase by the Holding Company of
all of the issued and outstanding capital stock of the Bank has been authorized
by the OTS and no action has been taken, or, to such counsel's knowledge, is
pending or threatened, to revoke any such authorization or approval.
(xii) The Registration Statement has become
effective under the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued, and,
27
<PAGE>
to the best of such counsel's knowledge, no proceedings for that purpose have
been instituted or threatened.
(xiii) The material tax consequences of the
Reorganization are set forth in the Prospectus under the caption "The Conversion
and Reorganization -- Effects of Conversion and Reorganization on Depositors and
Borrowers of the Savings Bank -- Tax Effects." The information in the Prospectus
under the caption "The Conversion and Reorganization -- Effects of Conversion
and Reorganization on Depositors and Borrowers of the Savings Bank -- Tax
Effects" has been reviewed by such counsel and fairly describes such opinions
rendered by Breyer & Aguggia and Knapp, O'Dell & Lewis to the Primary Parties
with respect to such matters.
(xiv) The terms and provisions of the shares
of Common Stock conform to the description thereof contained in the Registration
Statement and the Prospectus and such description describes in all material
respects the rights of the holders thereof; the information in the Prospectus
under the captions "Comparison of Stockholders' Rights," "Restrictions on
Acquisition of the Holding Company" and "Description of Capital Stock of the
Holding Company," to the extent that they constitute matters of law or legal
conclusions, has been prepared by such counsel and is accurate in all material
respects; and the forms of certificates proposed to be used to evidence the
shares of Common Stock are in due and proper form.
(xv) At the time the Application for
Conversion, including the Prospectus contained therein, was approved, the
Application for Conversion (as amended or supplemented) complied as to form in
all material respects with the requirements of the Conversion Regulation and all
applicable laws, rules and regulations and decisions and orders of the OTS,
except as modified or waived in writing by the OTS (other than the financial
statements, notes to financial statements, financial tables and other financial
and statistical data included therein and the appraisal valuation as to which
counsel need express no opinion). To such counsel's knowledge, no person has
sought to obtain regulatory or judicial review of the final action of the OTS
approving the OTS Applications.
(xvi) At the time that the Registration
Statement became effective the Registration Statement, including the Prospectus
contained therein, (as amended or supplemented) (other than the financial
statements, notes to financial statements, financial tables or other financial
and statistical data included therein and the appraisal valuation as to which
counsel need express no opinion), complied as to form in all material respects
with the requirements of the 1933 Act and the rules and regulations promulgated
thereunder; and except as modified or waived in writing by the OTS, the
Conversion Regulations and all other rules, regulations and decisions and orders
of the OTS.
28
<PAGE>
(xvii) To the best of such counsel's
knowledge, there are no legal or governmental proceedings pending, or threatened
(i) asserting the invalidity of this Agreement or (ii) seeking to prevent the
Reorganization or the offer, sale or issuance of the Shares.
(xviii) The information in the Prospectus
under the captions "Regulation," "The Conversion and Reorganization" and "Legal
and Tax Opinions," to the extent that it constitutes matters of law, summaries
of legal matters, documents or proceedings, or legal conclusions, has been
prepared by such counsel and is accurate in all material respects (except as to
the financial statements and other financial data included therein as to which
such counsel need express no opinion).
(xix) None of the Primary Parties is in
violation of its articles of incorporation or its charter, as the case may be,
or its bylaws or to the best of such counsel's knowledge, in violation of any
material obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
filed as on exhibit to, or incorporated by reference in, the Registration
Statement, which violation would have a material adverse effect on the financial
condition of the Primary Parties considered as one enterprise, or on the
earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise; the execution and delivery of this Agreement by
the Primary Parties, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein, will not materially
conflict with, constitute a material breach of, or default under, or result in
the creation or imposition of any material lien, charge or encumbrance upon any
property or assets of any of the Primary Parties which are material to their
business considered as one enterprise, pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which any of the
Primary Parties is a party or by which any of them may be bound, or to which any
of the property or assets of the Primary Parties are subject. In addition, such
action will not result in any material violation of the provisions of the
articles of incorporation or charter, as the case may be, or bylaws of any of
the Primary Parties or any material violation of any applicable law, act,
regulation or to such counsel's knowledge, order or court order, writ,
injunction or decree.
The opinion may be limited to matters governed by the laws of the
United States or the State of Washington. In rendering such opinion, such
counsel may rely (A) as to matters involving the application of laws of any
jurisdiction other than the United States, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of other counsel of good
standing, as long as such other opinion indicates that the Agent and PCS may
rely on the opinion, and (B) as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible
29
<PAGE>
officers of the Primary Parties and public officials; provided copies of any
such opinion(s) or certificates of public officials are delivered to Agent and
PCS together with the opinion to be rendered hereunder by special counsel to the
Primary Parties. The opinion of such counsel for the Primary Parties shall state
that it has no reason to believe that the Agent and PCS are not justified in
relying thereon.
(2) The letter of Breyer & Aguggia, special counsel
for the Primary Parties, in form and substance to the effect that during the
preparation of the Registration Statement and the Prospectus, Breyer & Aguggia
participated in conferences with certain officers of and other representatives
of the Primary Parties, counsel to the Agent and PCS, representatives of the
independent public accountants for the Primary Parties and representatives of
the Agent and PCS at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although Breyer & Aguggia is
not passing upon and does not assume the accuracy of the statements contained in
the Registration Statement and Prospectus, on the basis of the foregoing without
independent verification (relying as to materiality as to factual matters on
certificates of officers and other factual representations by the Primary
Parties), nothing has come to the attention of Breyer & Aguggia that caused
Breyer & Aguggia to believe that the Registration Statement at the time it was
declared effective by the SEC or the Prospectus as of its date, contained or
contains any untrue statement of a material fact or omitted to state any
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 (it being understood that counsel need express no comment or opinion
with respect to the financial statements, schedules and other financial and
statistical data included, or statistical or appraisal methodology employed, in
the Registration Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing
Date, of Stevens & Lee, counsel for the Agent and PCS, with respect to such
matters as the Agent and PCS may reasonably require; such opinion may rely, as
to matters of fact, upon certificates of officers and directors of the Primary
Parties delivered pursuant hereto or as such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the
Agent and PCS shall each receive a letter from Deloitte & Touche, LLP, dated the
date hereof and addressed to the Agent and PCS, (i) such letter confirming that
Deloitte & Touche, LLP is a firm of independent public accountants within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants, the 1933 Act and the regulations promulgated
thereunder and 12 C.F.R. Section 571.2(c)(3), and no information concerning its
relationship with or interests in the Primary Parties is required by the OTS
Applications or Item 10 of
30
<PAGE>
the Registration Statement, and stating in effect that in Deloitte & Touche's
opinion the financial statements of the Bank included in the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 act and the related published rules and regulations of
the Commission thereunder and the Conversion Regulations and generally accepted
accounting principles consistently applied; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an audit examination in
accordance with generally accepted auditing standards) consisting of a reading
of the latest available unaudited interim financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board of
Directors of each of the Primary Parties, the members of the MHC and the
stockholders of each of the Holding Company and the Bank, a review of interim
financial information in accordance with Statement on Auditing Standards No. 71,
and consultations with officers of the Bank responsible for financial and
accounting matters, nothing came to their attention which caused them to believe
that: (A) such unaudited financial statements, including Recent Developments, if
any, are not in conformity with 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 hereof, there was any increase in borrowings (defined as advances from the
FHLB of Seattle, securities sold under agreements to repurchase and any other
form of debt other than deposits) of any of the Primary Parties or in
nonperforming loans of the Bank; or (C) there was any decrease in stockholders'
equity of the Bank at the date of such letter as compared with amounts shown in
the latest unaudited statement of condition included in the Prospectus or there
was any decrease in net income or net interest income of the Bank for the number
of full months commencing immediately after the period covered by the latest
unaudited income statement included in the Prospectus and ended on the latest
month end prior to the date of the Prospectus or in such letter as compared to
the corresponding period in the preceding year; and (iii) stating that, in
addition to the audit examination referred to in its opinion included in the
Prospectus and the performance of the procedures referred to in clause (ii) of
this subsection (c), they have compared with the general accounting records of
the Primary Parties, which are subject to the internal controls of the
accounting system of the Primary Parties and other data prepared by the Primary
Parties 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
and PCS may reasonably request, and they have found such amounts and percentages
to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent and PCS shall each receive
letters from Deloitte & Touche, LLP dated the Closing
31
<PAGE>
Date, addressed to the Agent and PCS, confirming the statements made by its
letter delivered by it pursuant to subsection (c) of this Section 9A, the
"specified date" referred to in clause (ii)(B) thereof to be a date specified in
such letter, which shall not be more than three business days prior to the
Closing Date.
(e) At the Closing Date, counsel to the Agent and PCS shall
have been furnished with such documents and opinions as counsel for the Agent
and PCS may require for the purpose of enabling them to advise the Agent and PCS
with respect to the issuance and sale of the Common Stock as herein contemplated
and related proceedings, or in order to evidence the accuracy of any of the
representations and warranties, or the fulfillment of any of the conditions
herein contained.
(f) At the Closing Date, the Agent and PCS shall each receive
a certificate of the Chief Executive Officer and Chief Financial Officer of each
of the Primary Parties, dated the Closing Date, to the effect that (i) they have
carefully examined the Prospectus and at the time the Prospectus became
authorized for final use, the Prospectus did 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 the light of the circumstances under which they were
made, not misleading; (ii) there has not been, since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
financial condition or in the earnings, capital, properties, business prospects
or business affairs of the Primary Parties, considered as one enterprise,
whether or not arising in the ordinary course of business; (iii) the
representations and warranties contained in Section 6A of this Agreement are
true and correct with the same force and effect as though made at and as of the
Closing Date; (iv) the Primary Parties have complied in all material respects
with all material agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date including the conditions
contained in this Section 9A; (v) no stop order has been issued or, to the best
of their knowledge, is threatened, by the Commission or any other governmental
body; (vi) no order suspending the Offerings, the Reorganization, the
acquisition of all of the shares of the Bank by the Holding Company or the
effectiveness of the Prospectus has been issued and to the best of their
knowledge, no proceedings for any such purpose have been initiated or threatened
by the OTS, the Commission, the FDIC, or any other federal or state authority;
(vii) to the best of their knowledge, no person has sought to obtain regulatory
or judicial review of the action of the OTS in approving the Plan or to enjoin
the Reorganization.
(g) At the Closing Date, the Agent and PCS shall each receive
a letter from R.P. Financial, LC., dated as of the Closing Date, (i) confirming
that said firm is independent of the Primary Parties and is experienced and
expert in the area of
32
<PAGE>
corporate appraisals within the meaning of the Conversion Regulations, (ii)
stating in effect that the Appraisal complies in all material respects with the
applicable requirements of the Conversion Regulations, and (iii) further stating
that its opinion of the aggregate pro forma market value of the Primary Parties,
as converted, expressed in the Appraisal as most recently updated, remains in
effect.
(h) None of the Primary Parties shall have sustained, since
the date of the latest audited financial statements included in the Registration
Statement and 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 in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
material change, or any development involving a prospective material change in,
or affecting the general affairs of, management, financial position,
stockholders' equity or results of operations of any of the Primary Parties,
otherwise than as set forth or contemplated in the Registration Statement and
the Prospectus, the effect of which, in any such case described above, is in the
Agent's reasonable judgment sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Offerings or the delivery of
the Shares on the terms and in the manner contemplated in the Prospectus.
(i) 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
financial condition or in the earnings, capital, properties or business affairs
of any of the Primary Parties independently, or of the Primary Parties,
considered as one enterprise, from that as of the latest dates as of which such
condition is set forth in the Prospectus, except as referred to therein; (ii)
there shall have been no material transaction entered into by the Primary
Parties, considered as one enterprise, from the latest date as of which the
financial condition of the Primary Parties is set forth in the Prospectus, other
than transactions referred to or contemplated therein; (iii) none of the Primary
Parties shall have received from the OTS or the FDIC any direction (oral or
written) to make any material change in the method of conducting their business
with which it has not complied in all material respects (which direction, if
any, shall have been disclosed to the Agent and PCS) and which would reasonably
be expected to have a material and adverse effect on the condition (financial or
otherwise) or on the earnings, capital, properties or business affairs of the
Primary Parties considered as one enterprise; (iv) none of the Primary Parties
shall 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
33
<PAGE>
instrument relating to any material 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 Primary Parties, threatened against any of the Primary Parties
or affecting any of their properties wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a material and adverse effect on
the financial condition or on the earnings, capital, properties or business
affairs of the Primary Parties, considered as one enterprise; and (vi) the
Shares have been qualified or registered for offering and sale under the
securities or blue sky laws of the jurisdictions as to which the Primary Parties
and the Agent shall have agreed.
(j) At or prior to the Closing Date, the Agent and PCS shall
each receive (i) a copy of the letter from the OTS authorizing the use of the
Prospectus and approving the Application for Conversion, (ii) a copy of the
order from the Commission declaring the Registration Statement effective, (iii)
a copy of certificate of existence for the Bank from the OTS, (iv) a certificate
of good standing from the State of Washington evidencing the good standing of
the Holding Company, (v) a copy of the letter from the OTS approving the Holding
Company Application, (vi) a certificate from the FDIC evidencing the Bank's
insurance of accounts, (vii) a certificate of the FHLB of Seattle evidencing the
Bank's membership therein, (viii) a certificate from the OTS evidencing the
existence of the MHC, (ix) a copy of the letters from the OTS approving the
Merger Applications and (x) any other documents that Agent or PCS shall
reasonably request.
(k) 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 American 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 or
other federally-insured financial institutions or general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either 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 any of (i) through (iv) herein, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offerings or the delivery of
the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
34
<PAGE>
SECTION 9.B. CONDITIONS TO THE PRIMARY PARTIES' OBLIGATIONS. The
obligations of the Primary Parties hereunder are subject to the representations
and warranties of the Agent and PCS being true and correct at and as of the
commencement of the Offerings and at and as of the Closing Date, to the
performance by the Agent and PCS of their respective obligations hereunder and
to the satisfaction of the conditions contained in Paragraph (a) of Section 9A
hereunder.
SECTION 10. INDEMNIFICATION.
(a) The Primary Parties jointly and severally agree to
indemnify and hold harmless the Agent and PCS, their respective officers,
directors, agents, servants and employees and each person, if any, who controls
the Agent or PCS 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, PCS or any of such officers, directors, agents,
servants, employees and controlling Persons (collectively, the "Related
Persons") may suffer or to which the Agent, PCS or the Related Persons may
become subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Agent, PCS and any Related Persons upon written demand
for any reasonable expenses (including fees and disbursements of counsel)
incurred by the Agent, PCS or any Related Persons 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 OTS Applications, or
any blue sky application or other instrument or document of the Primary Parties
or based upon written information supplied by any of the Primary Parties filed
in any state or jurisdiction to register or qualify any or all of the Shares
under the securities laws thereof (collectively, the "Blue Sky Applications"),
or any application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the Primary
Parties with its consent or based upon written information furnished by or on
behalf of any of the Primary Parties, whether or not filed in any jurisdiction
in order to qualify or register the Shares under the securities laws thereof,
(ii) arise out of or based upon the omission or alleged omission to state in any
of the foregoing documents or information, a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; (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 OTS Applications,
35
<PAGE>
any Blue Sky Applications or Sales Information or other documentation
distributed in connection with the Reorganization; result from any claims made
with respect to the accuracy, reliability and completeness of the records of
Eligible Account Holders, Supplemental Eligible Account Holders and Other
Members or for any denial or reduction of a subscription or order to purchase
Common Stock, whether as a result of a properly calculated allocation pursuant
to the Plan or otherwise, based upon such records; 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 statements or alleged untrue material statements in, or material
omission or alleged material omission from, the Registration Statement (or any
amendment or supplement thereto) or the preliminary or final Prospectus (or any
amendment or supplement thereto), the OTS Applications, the Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Reorganization made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent with respect
to the Agent, or PCS with respect to PCS, expressly for use in the Registration
Statement (or any amendment or supplement thereto) or Prospectus (or any
amendment or supplement thereto) under the captions "Market for Common Stock,"
"The Conversion and Reorganization -- Plan of Distribution for the Subscription,
Direct Community and Syndicated Community Offerings" and "-- Description of
Sales Activities" or statistical information regarding the Holding Company
prepared by the Agent or PCS for use in the Sales Information, except for
information derived from the Prospectus. Provided further, that the Primary
Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent they result primarily from actions taken or omitted to be
taken by the Agent or PCS in bad faith or from the Agent's or PCS' gross
negligence or willful misconduct, and the Agent and PCS each agree to repay to
the Primary Parties any amounts advanced to it by the Primary Parties in
connection with matters as to which it is found not to be entitled to
indemnification hereunder. Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Bank to the extent
that such indemnification by the Bank would constitute a covered transaction
under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the
Primary Parties, their directors and officers, agents, servants and employees
and each person, if any, who controls any of the Primary Parties 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
Primary Parties and any such persons upon written demand for any reasonable
36
<PAGE>
expenses (including fees and disbursements of counsel) incurred by them in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment of supplement thereto), the OTS
Applications or any Blue Sky Applications or Sales Information or are based upon
the omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Agent's obligations under this Section
10(b) shall exist only if and only to the extent 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) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Primary Parties by the Agent expressly for use under the captions "Market for
Common Stock," "The Conversion and Reorganization -- Plan of Distribution for
the Subscription, Direct Community and Syndicated Community Offerings" and
"--Description of Sales Activities" or statistical information regarding the
Holding Company prepared by the Agent for use in the Sales information.
(c) PCS agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties 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 Primary
Parties and any such persons upon written demand for any reasonable expenses
(including fees and disbursements of counsel) incurred by them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment of supplement thereto), the OTS Applications or any
Blue Sky Applications or Sales Information or are based upon the omission or
alleged omission to state in any of the foregoing documents a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that PCS' obligations under this Section 10(c) shall exist
only if and only to the extent that such untrue statement or alleged untrue
statement was made in, or such material fact or alleged material fact was
omitted from, the
37
<PAGE>
Registration Statement (or any amendment or supplement thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Primary Parties by PCS
expressly for use under the caption "The Conversion and Reorganization -- Plan
of Distribution for the Subscription, Direct Community and Syndicated Community
Offerings" and "--Description of Sales Activities" or statistical information
regarding the Holding Company prepared by PCS for use in the Sales information.
(d) 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 10 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 all indemnified parties 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.
(e) The agreements contained in this Section 10 and in Section
11 hereof and the representations and warranties of the Primary Parties set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent, PCS or
their respective officers, directors, controlling persons, agents or employees
or by or on behalf of any of the Primary Parties or any officers, directors,
controlling persons, agents or employees of any of the Primary Parties; (ii)
delivery of and payment hereunder for the Shares; or (iii) any termination of
this Agreement.
38
<PAGE>
SECTION 11. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 10 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from the Primary Parties, the Agent or PCS, as the case may be, the
Primary Parties, the Agent or PCS, as the case may be, shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit or proceeding of any claims asserted, but after
deducting any contribution received by the Primary Parties, the Agent or PCS, as
the case may be, from persons other than the other party thereto, who may also
be liable for contribution) in such proportion so that (i) the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 4 of this Agreement (not including expenses), less
any portion of such fees paid by Agent to Assisting Brokers, bear to the gross
proceeds received by the Primary Parties from the sale of the Conversion Shares
in the Conversion Offerings, (ii) PCS is responsible for that portion
represented by the percentage that the fees paid to PCS by the Agent pursuant to
Section 4 of this Agreement bear to the gross proceeds received by the Primary
Parties from the sale of the Conversion Shares in the Conversion Offerings, and
(iii) the Primary Parties 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 10 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 Primary Parties on the one hand and the Agent or PCS
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 thereof), but also the relative benefits received by the Primary
Parties on the one hand and the Agent or PCS on the other from the offering, as
well as any other relevant equitable considerations. The relative benefits
received by the Primary Parties on the one hand and the Agent or PCS on the
other shall be deemed to be in the same proportion as the total gross proceeds
from the Conversion Offerings (before deducting expenses) received by the
Primary Parties bear, with respect to the Agent, to the total fees (not
including expenses) received by the Agent less the portion of such fees paid by
the Agent to Assisting Brokers, and with respect to PCS, to the total fees
received by PCS from the Agent under Section 4, if any. 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 Primary Parties on the
one hand or the Agent or PCS on the other and the parties relative intent, good
faith, knowledge, access to
39
<PAGE>
information and opportunity to correct or prevent such statement or omission.
The Primary Parties, the Agent and PCS agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by
pro-rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 11.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or action, proceedings or claims in respect
thereof) referred to above in this Section 11 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 less the portion of such fees paid by the
Agent to Assisting Brokers, and that PCS 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 to PCS by the Agent under this
Agreement. It is understood that the above-stated limitation on the Agent's and
PCS' liability is essential to the Agent and PCS and that the Agent and PCS
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 duties, obligations and liabilities of
the Primary Parties, the Agent and PCS under this Section 11 and under Section
10 shall be in addition to any duties, obligations and liabilities which the
Primary Parties, the Agent and PCS may otherwise have. For purposes of this
Section 11, each of the Agent's, PCS' and the Primary Parties' officers and
directors and each person, if any, who controls the Agent, PCS or any of the
Primary Parties within the meaning of the 1933 Act and the 1934 Act shall have
the same rights to contribution as the Primary Parties, the Agent and PCS. 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
11, will notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relive the party from whom
contribution may be sought from any other obligation it may have hereunder or
otherwise than under this Section 11.
SECTION 12. REPRESENTATIONS, WARRANTIES AND INDEMNITIES TO SURVIVE
DELIVERY. All representations, warranties and indemnities and other statements
contained in this Agreement, or contained in certificates of officers of the
Primary Parties, the Agent or PCS submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on
40
<PAGE>
behalf of the Agent, PCS or their respective controlling persons, or by or on
behalf of the Primary Parties and shall survive the issuance of the Shares, and
any legal representative, successor or assign of the Agent, PCS, any of the
Primary Parties, and any indemnified person shall be entitled to the benefit of
the respective agreements, indemnities, warranties and representations.
SECTION 13. TERMINATION. Webb may terminate this Agreement
by giving the notice indicated below in this Section at any time
after this Agreement becomes effective as follows:
(a) In the event the Holding Company fails to sell the minimum
number of the Conversion Shares within the period specified 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 Primary
Parties to each person who has subscribed for or ordered any of the Conversion
Shares the full amount which it may have received from such person, together
with interest in accordance with Section 3, and no party to this Agreement shall
have any obligation to the other hereunder, except as set forth in Sections 3,
4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9A shall not
have been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by the Agent, this Agreement and all of the Agent's
and PCS' obligations hereunder may be canceled by the Agent by notifying the
Bank of such cancellation in writing 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 3, 4, 8, 10 and 11 hereof.
(c) If Webb elects to terminate this Agreement as provided in
this Section, the Primary Parties shall be notified by the Agent as provided in
Section 14 hereof.
SECTION 14. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Webb shall be
directed to Charles Webb & Company at 211 Bradenton Avenue, Dublin, Ohio 43017,
Attention: Ms. Patricia A. McJoynt (with a copy to Edward C. Hogan, Esquire,
Stevens & Lee, One Glenhardie Corporate Center, 1275 Drummers Lane, P.O. Box
236, Wayne, Pennsylvania 19087- 0236); notices to the Primary Parties shall be
directed to 700 N.E. Fourth Avenue, Camas, Washington 98607, Attention: Patrick
Sheaffer, Chairman of the Board, President, and Chief Executive Officer (with a
copy to John F. Breyer, Jr., Breyer & Aguggia, 1300 I Street, N.W., Suite 470
East, Washington, D.C. 20005); and notices to PCS shall be directed to U.S.
Bancorp Tower, Suite 4250, 111 S.W. Fifth Avenue, Portland,
41
<PAGE>
Oregon 97204, Attention: Scott Sandbo (with a copy to Agent and Stevens & Lee in
accordance with the provisions set forth above).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Agent, PCS and the Primary Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 10 and 11 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties.
SECTION 16. PARTIAL INVALIDITY. In the event that any term, provision
or covenant herein or the application thereof to any circumstances 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 circumstance 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 17. CONSTRUCTION. This Agreement shall be construed in
accordance with the laws of the State of Ohio.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become
42
<PAGE>
a binding agreement between you and us in accordance with its terms.
Very truly yours,
RIVERVIEW BANCORP, INC.
By:_____________________________
Patrick Sheaffer,
Chairman of the Board, President
and Chief Executive Officer
RIVERVIEW, M.H.C.
By:_____________________________
Patrick Sheaffer
Chairman of the Board, President
and Chief Executive Officer
RIVERVIEW SAVINGS BANK, FSB
By:________________________
Patrick Sheaffer,
Chairman of the Board, President
and Chief Executive Officer
The foregoing Agency Agreement is hereby confirmed and accepted as of the date
first set and above written.
CHARLES WEBB & COMPANY, A DIVISION
OF KEEFE, BRUYETTE & WOODS, INC.
By:_______________________________
Patricia A. McJoynt,
Executive Vice President and
Chief Operating Officer
PACIFIC CREST SECURITIES, INC.
By:_______________________________
Name:
Title:
43
<PAGE>
RIVERVIEW BANCORP, INC.
(A Washington Corporation)
Up to 2,760,000 Shares
(Par Value $.01 Per Share)
SELECTED DEALERS' AGREEMENT
_______________, 1997
Ladies and Gentlemen:
We have agreed to assist Riverview, M.H.C. (the "MHC"), a federally
chartered mutual holding company, and Riverview Savings Bank, FSB ("Riverview
Savings" or the "Bank"), a federally chartered stock savings bank, in connection
with the offer and sale of up to 2,760,000 shares of the common stock, $0.01 par
value per share (the "Common Stock"), of Riverview Bancorp, Inc. (the "Holding
Company"). Theses shares are to be issued in connection with the reorganization
of the Bank from a subsidiary of the MHC to a wholly owned subsidiary of the
Holding Company (the "Reorganization") in accordance with the Plan of Conversion
from Mutual Holding Company to Stock Holding Company and Agreement and Plan of
Reorganization (the "Plan"). The offering price per share of the Common Stock
has been fixed at $10.00. The Common Stock and certain of the terms on which it
is being offered are more fully described in the enclosed prospectus dated
______________, 1997 (the "Prospectus"). Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Prospectus.
In connection with the Reorganization, the Holding Company is offering
the Common Stock in a Subscription Offering to the Eligible Account Holders, the
ESOP, the Supplemental Eligible Account Holders and the Other Members, and
concurrently therewith, in a Direct Community Offering to members of the general
public, with preference given first to Public Stockholders (who are not Eligible
Account Holders, Supplemental Eligible Account Holders or Other Members) and
then to natural persons and trusts of natural persons who are permanent
residents of Clark, Cowlitz, Klickitat and Skamania Counties of Washington. The
Common Stock is also being offered in accordance with the Plan by a selling
group of broker-dealers in the Syndicated Offering.
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common Stock
and we will pay you a fee in the amount of _______ percent (______%) of the
dollar amount of the Common Stock sold on behalf of the Holding Company by you,
as evidenced
1
<PAGE>
by the authorized designation of your firm on the order form or forms for such
Common Stock accompanying the funds transmitted for payment therefor to the
special account established by the Bank for the purpose of holding such funds.
Any purchase of Common Stock made pursuant to this Agreement is subject to the
maximum purchase limitations provided for in the Plan and described in the
Prospectus. It is understood, of course, that payment of your fee will be made
to you directly by the Holding Company for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Conversion
Offerings, the Holding Company will remit to you the fees to which you are
entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form should clearly identify
your firm. You shall instruct any subscriber who elects to send his order form
to you to make any accompanying check payable to the Bank.
This offer is made subject to the terms and conditions herein set forth
and contained in the Plan and is made only to selected dealers who are (i)
members in good standing of the National Association of Securities Dealers, Inc.
(the "NASD") who are to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
or (ii) foreign dealers not eligible for membership in the NASD who agree (A)
not to sell any Common Stock within the United States, its territories or
possessions or to persons who are citizens thereof or resident therein and (B)
in making other sales to comply with the above-mentioned NASD Interpretation,
Sections 8, 24 and 36 of the above-mentioned Article III as if they were NASD
members and Section 25 of such Article III as it applies to non-member brokers
or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Holding Company, reserve the right in our
uncontrolled discretion to reject any order in whole or in part, to accept or
reject orders in the order of their receipt or otherwise, and to allot. Neither
you nor any other person is authorized by the Holding Company or by us to give
any information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No selected
dealer is authorized to act as agent for us when soliciting offers to buy the
Common Stock from the public or otherwise. No selected dealer shall engage in
any stabilizing (as defined in Regulation M promulgated under the Securities
Exchange Act of 1934) with respect to the Common Stock during the offering.
2
<PAGE>
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. In addition, we
and each selected dealer confirm that the Securities and Exchange Commission
interprets Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as
requiring that a Prospectus be supplied to each person who is expected to
receive a confirmation of sale 48 hours prior to delivery of such person's order
form.
We and each selected dealer within the meaning of Rule 15c3-1(a)(1)
further agree to the extent that our customers desire to pay for shares with
funds held by or to be deposited with us, in accordance with the interpretation
of the Securities and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding Company for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customer indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute the
order form on the customer's behalf, (ii) we will mail acknowledgements of
receipt of orders to each customer confirming interest on the business day
following such confirmation, (iii) we will debit accounts of such customers on
the third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward completed order forms together with
such funds to the Holding Company on or before twelve noon on the next business
day following the Debit Date for deposit in a segregated account. We and each
selected dealer acknowledge that if the procedure in (b) is adopted, our
customers' funds are not required to be in their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon
the closing date of this offering. We may terminate this Agreement or any
provisions hereof at any time by written or telegraphic notice to you. Of
course, our obligations hereunder are subject to the successful completion of
the offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Holding Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the offering. We shall be
under no liability to you except for lack
3
<PAGE>
of good faith and for obligations expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of Ohio.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Charles Webb & Company,
211 Bradenton, Dublin, Ohio 43017-3514. The enclosed duplicate copy will
evidence the
agreement between us.
CHARLES WEBB & COMPANY
By:_______________________________
Patricia A. McJoynt
Executive Vice President
Agreed and accepted as of ________________, 1997
- ------------------------------
By:___________________________
4
<PAGE>
Exhibit 8.1
Federal Tax Opinion of Breyer & Aguggia
July 30, 1997
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
700 N.E. Fourth Avenue
Camas, Washington 98607
Gentlemen:
In accordance with your request, set forth herein is our opinion
relating to the federal income tax consequences of the two integrated
transactions described herein. Capitalized terms used herein which are not
expressly defined herein shall have the meaning ascribed to them in the Amended
Plan of Conversion and Agreement and Plan of Reorganization (the "Plan").
The Proposed Transactions
Based upon our review of the Plan, we understand that the relevant
facts are as follows.
In October 1993, Riverview Savings Bank, FSB, a federally-chartered
mutual savings bank (the "Savings Bank"), reorganized into the mutual holding
company form of organization. To accomplish this transaction, the Savings Bank
organized a federally-chartered, stock savings bank as a wholly-owned subsidiary
(the "Stock Savings Bank"). The Savings Bank then transferred substantially all
of its assets and liabilities to the Stock Savings Bank in exchange for all of
the outstanding shares of the common stock of the Stock Savings Bank ("Stock
Savings Bank Common Stock"), and reorganized itself into a federally-chartered
mutual holding company known as Riverview, M.H.C. (the "MHC"). In connection
with the foregoing transaction, the Stock Savings Bank simultaneously sold
600,000 shares of Stock Savings Bank Common Stock to depositors of the Stock
Savings Bank, employee stock benefit plans of the Stock Savings Bank, directors,
officers and employees of the Stock Savings Bank and members of the general
public. As of the date hereof, the MHC and the other stockholders ("Public
Stockholders") own an aggregate of 58.27% and 41.73%, respectively, of the
outstanding Stock Savings Bank Common Stock.
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 2
The reorganization of Savings Bank into the mutual holding company form
of organization, and the sale of Stock Savings Bank Common Stock are sometimes
hereinafter collectively referred to as the "MHC Transaction."
At the present time, two transactions are being undertaken. The first
transaction, which is sometimes referred to herein as "Merger 1," is the
conversion of the MHC from the mutual form of organization to a federal interim
stock savings bank ("Interim") and the simultaneous merger of Interim with and
into the Stock Savings Bank. The second transaction, which is sometimes referred
to herein as "Merger 2," is the acquisition of the Stock Savings Bank by
Riverview Bancorp, Inc. ("the Holding Company"), a newly organized Washington
corporation, by means of the merger of the Stock Savings Bank with a federal
interim stock savings institutions (the "Interim Stock Savings Bank"), which
will be organized as a wholly-owned subsidiary of the Holding Company. Merger 1
and Merger 2 are sometimes collectively referred to herein as the "Conversion
and Reorganization."
Merger 1 and Merger 2 are being accomplished pursuant to the Plan. The
Plan complies in all material respects with the provisions of Subpart A of 12
C.F.R. Part 563b, the Office of Thrift Supervision ("OTS") regulations governing
the conversion of mutual institutions to stock form. The Plan also complies in
all material respects with the provisions of 12 C.F.R. Section 575.12(a),
governing the conversion of mutual holding companies to stock form. Because the
proposed transaction involves two mergers, the Plan also includes two related
plans of merger with language that complies in all material respects with 12
C.F.R. Section 552.13, governing mergers involving federal stock associations.
In Merger 1, a liquidation account is being established by the Stock
Savings Bank for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders. Pursuant to Section XIV of the Plan, the initial
balance of the liquidation account will equal the amount of any dividends waived
by the MHC plus the greater of (1) $9.8 million, which is equal to 100% of the
retained earnings of Savings Bank as of March 31, 1993, the date of the latest
statement of financial condition contained in the final offering circular
utilized in the formation of the MHC, or (2) 58.27% of the Stock Savings Bank's
total stockholders' equity as reflected in its latest statement of financial
condition contained in the final Prospectus to be utilized in the Conversion and
Reorganization. The $9.8 million is the amount that the liquidation account
would have been if the MHC Transaction had been a standard conversion not
involving a mutual holding company.
Under the above formula, the initial balance of the liquidation account
will be at least $14.6 million. At March 31, 1997, the total stockholders'
equity of the Stock Savings Bank amounted to $25 million, of which 58.27%
equaled $14.6 million.
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 3
Upon consummation of Merger 1, the shares of Stock Savings Bank Common
Stock held by the MHC will be canceled.
Upon consummation of Merger 2 (the "Effective Date"), all of the then
outstanding shares of Stock Savings Bank Common Stock held by the Public
Stockholders will be converted into and become shares of common stock of the
Holding Company ("Holding Company Common Stock") at the Exchange Ratio (the
"Exchange Shares"). The common stock of the Interim Stock Savings Bank owned by
the Holding Company prior to Merger 2 will be converted into and become shares
of common stock of the Stock Savings Bank on the Effective Date. The Holding
Company Common Stock held by the Stock Savings Bank immediately prior to Merger
2 will be canceled on the Effective Date.
Immediately following Merger 2, Holding Company Common Stock will be
sold pursuant to the Conversion Offerings. The stockholders of the Holding
Company will be the Public Stockholders, plus those persons who purchase Holding
Company Common Stock in the Conversion Offerings. Nontransferable rights to
subscribe for Holding Company Common Stock will be granted to eligible
depositors and other persons in the priorities set forth in the Plan (the
"Subscription Rights").
Upon the Effective Date, Interim Stock Savings Bank will be merged with
and into the Stock Savings Bank and Interim Stock Savings Bank will cease to
exist as a legal entity. As a result, the Holding Company will be a publicly
held corporation, will register the Holding Company Common Stock under Section
12(g) of the Securities Exchange Act of 1934, as amended, and will become
subject to the rules and regulations thereunder and file periodic reports and
proxy statements with the SEC. The Stock Savings Bank will become a wholly owned
subsidiary of the Holding Company and will continue to carry on its business and
activities as conducted immediately prior to Merger 2.
Analysis
Section 368(a)(1)(A) of the Code defines the term "reorganization" to
include a "statutory merger or consolidation" of corporations such as Merger 1
and Merger 2. Section 368(a)(2)(E) of the Code provides that a transaction
otherwise qualifying as a merger under Section 368(a)(1)(A), such as Merger 2,
will not be disqualified by reason of the fact that common stock of a
corporation (referred to in the Code as the "controlling corporation")(i.e., the
Holding Company) which before the merger was in control of the merged
corporation is used in the transaction if:
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 4
(i) after the transaction, the corporation surviving the merger
(i.e., Stock Savings Bank) holds substantially all of its
properties and the properties of the merged corporation (i.e.,
Interim Stock Savings Bank) (other than common stock of the
controlling corporation (i.e., the Holding Company)
distributed in the transaction; and
(ii) in the transaction, former stockholders of the surviving
corporation (i.e., the Public Stockholders) exchanged, for an
amount of voting common stock of the controlling corporation,
an amount of common stock in the surviving corporation which
constitutes control of such corporation.
Section 1.368-2(b)(1) of the Treasury Regulations provides that, in
order to qualify as a reorganization under Section 368(a)(1)(A), a transaction
must be a merger or consolidation effected pursuant to the corporate laws of the
United States or a state. The Plan provides that Mergers 1 and 2 will be
accomplished in accordance with applicable federal law.
Treasury Regulations and case law require that, in addition to the
existence of statutory authority for a merger, certain other conditions must be
satisfied in order to qualify a proposed transaction as a reorganization within
the meaning of Section 368(a)(1)(A) of the Code. The "business purpose test,"
which requires a proposed merger to have a bona fide business purpose, must be
satisfied. See 26 C.F.R. Section 1.368-1(c). We believe that Merger 1 and Merger
2 satisfy the business purpose test for the reasons set forth in the Prospectus
under the caption "The Conversion and Reorganization - Purposes of the
Conversion and Reorganization." The "continuity of business enterprise test"
requires an acquiring corporation either to continue an acquired corporation's
historic business or use a significant portion of its historic assets in a
business. See 26 C.F.R. Section 1.368-1(d). We believe that the continuity of
business enterprise test is satisfied since the Plan provides that the business
conducted by Stock Savings Bank prior to Merger 1 and Merger 2 will be
unaffected by the transactions.
The "continuity of interest doctrine" requires that the continuing
common stock interest of the former owners of an acquired corporation,
considered in the aggregate, represent a "substantial part" of the value of
their former interest, and provide them with a "definite and substantial
interest" in the affairs of the acquiring corporation or a corporation in
control of the acquiring corporation. Paulsen v. Comm'r., 469 U.S. 131 (1985);
Helvering v. Minnesota Tea Co., 296 U.S. 378 (1935); John A Nelson Co. v.
Helvering, 296 U.S. 374 (1935); Southwest Natural Gas Co. v. Comm'r., 189 F.2d
332 (5th Cir. 1951), cert. denied, 342 U.S. 860 (1951). We believe that Merger 1
satisfies the continuity of interest doctrine based upon a series of private
letter rulings issued by the IRS in substantially identical transactions as the
Conversion and Reorganization and based upon the information set forth in the
Registration Statement. See
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 5
e.g., PLRs 9510044 and 9437020. Specifically, the IRS has ruled in substantially
identical transactions that:
(1) The exchange of the members' equity interests in the MHC for
interests in a liquidation account established at the Stock
Savings Bank in Merger 1 will not violate the continuity of
interest requirement of Section 1.368-1(b) of the Treasury
Regulations.
(2) Interests in the liquidation account established at the Stock
Savings Bank, and the shares of Stock Savings Bank Common
Stock held by the MHC prior to consummation of Merger 1, will
be disregarded for the purpose of determining whether an
amount of stock in the Stock Savings Bank which constitutes
"control" of such corporation was acquired by the Holding
Company in exchange for shares of Holding Company Common Stock
pursuant to Merger 2.
(3) The exchange of shares of Holding Company Common Stock for the
shares of the Stock Savings Bank Common Stock in Merger 2,
following consummation of Merger 1, will satisfy the
continuity of interest requirement of Section 1.368-1(b) of
the Treasury Regulations in Merger 2.
Accordingly, we also believe that Merger 2 satisfies the continuity of
interest doctrine because those persons who are the Stock Savings Bank's
stockholders following Merger 1 will receive only Exchange Shares for their
shares of Stock Savings Bank Common Stock. In addition, we believe other
applicable requirements of the Treasury Regulations and case law which are
preconditions to qualification of Merger 1 and Merger 2 as a reorganization,
within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of the Code, are
satisfied on the basis of the information contained in the Plan and the
Prospectus.
Section 354 of the Code provides that no gain or loss shall be
recognized by stockholders who exchange common stock in a corporation, such as
the Stock Savings Bank, which is a party to a reorganization, solely for common
stock in another corporation which is a party to the reorganization, such as the
Holding Company. Section 356 of the Code provides that stockholders shall
recognize gain to the extent they receive money as part of a reorganization,
such as cash received in lieu of fractional shares. Section 358 of the Code
provides that, with certain adjustments for money received in reorganization,
such as cash received in lieu of fractional shares, a stockholders' basis in the
common stock he or she receives in a reorganization shall equal the basis of the
common stock which he or she surrendered, he or she shall be deemed to have held
the property received for the same period as the property exchange, provided
that the property exchanged had been held as a capital asset.
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 6
Section 361 of the Code provides that no gain or loss shall be
recognized to a corporation such as the Interim Stock Savings Bank which is a
party to a reorganization on any transfer of property pursuant to a plan of
reorganization such as the Plan. Section 362 of the Code provides that if
property is acquired by a corporation such as the Stock Savings Bank in
connection with a reorganization, then the basis of such property shall be the
same as it would be in the hands of the transferor immediately prior to the
transfer. Section 1223(s) of the Code states that where a corporation such as
the Stock Savings Bank will have a carryover basis in property received from
another corporation which is a party to a reorganization, the holding period of
such assets in the hands of the acquiring corporation shall include the period
for which such assets were held by the transferor, provided that the property
transferred had been held as a capital asset. Section 1032 of the Code states
that no gain or loss shall be recognized to a corporation, such as the Holding
Company of the receipt of property in exchange for common stock.
Opinions
In connection with the opinions expressed herein below, we have relied
upon the assumption that the representations required for advance rulings
outlined in Rev. Proc. 86-42, 1986-2 C.B. 722, are true and correct as it
applies to the Conversion and Reorganization.
Based on the foregoing assumptions and the description of Merger 1 and
Merger 2, the representations which have been made to us by management of the
Stock Savings Bank and the Holding Company, and subject to the qualifications
and limitations set forth in this letter, we are of the opinion that, if Merger
1 were to be consummated as described above as of the date hereof, then:
1. Merger 1 qualifies as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code.
2. No gain or loss will be recognized by the Stock Savings Bank
upon the receipt of the assets of the MHC in Merger 1.
In addition, we are of the opinion that, if Merger 2 were to be
consummated as described above as of the date hereof, then:
1. Merger 2 qualifies as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code. Pursuant to Section
368(a)(2)(E) of the Code, Merger 2 is not disqualified from
qualifying as a reorganization within the meaning of Section
368(a)(1)(A) because Holding Company Common Stock will be
conveyed to the
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 7
Stock Savings Bank's stockholders in exchange for their Stock
Savings Bank Common Stock.
2. No gain or loss will be recognized by the Interim Stock
Savings Bank upon the transfer of its assets to the Stock
Savings Bank.
3. No gain or loss will be recognized by the Stock Savings Bank
upon the receipt of the assets of Interim Stock Savings Bank.
4. No gain or loss will be recognized by the Holding Company on
Stock Savings Bank upon the exchange of Exchange Shares for
Stock Savings Bank Common Stock.
5. No gain or loss will be recognized by the Public Stockholders
upon the receipt of the Exchange Shares solely in exchange for
their shares of Stock Savings Bank Common Stock.
6. The basis of the Exchange Shares to be received by the Public
Stockholders will be the same as the basis of the Stock
Savings Bank Common Stock surrendered in exchange therefor,
before giving effect to any payment of cash in lieu of
fractional shares.
7. The holding period of the Exchange Shares to be received by
the Public Stockholders will include the holding period of the
Stock Savings Bank Common Stock, provided that the Stock
Savings Bank Common Stock was held as a capital asset on the
date of the exchange.
8. No gain or loss will be recognized by the Holding Company upon
the sale of Holding Company Common Stock in the Conversion
Offerings.
9. Eligible Account Holders and Supplemental Eligible Accounts
Holders will realize gain, if any, upon the constructive
issuance to them of Subscription Rights and/or interest in the
liquidation account of Stock Savings Bank. Any gain resulting
therefrom will be recognized, but only in an amount not in
excess of the fair market value of the liquidation accounts
and/or Subscription Rights received. The liquidation account
will have normal, if any, fair market value. Based solely on
the accuracy of the conclusion reached by RP Financial, L.C.
in its written opinion to Stock Savings Bank (the "Appraiser's
Opinion") that the Subscription Rights have no value at the
time of distribution or exercise and our reliance thereon, no
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 8
gain or loss will be required to be recognized by depositors
upon receipt or distribution of Subscription Rights. (Section
1001 of the Code.) See Paulsen v. Commissioner, 469 U.S.
131,139 (1985).
Based solely on the accuracy of the conclusions reached in the
Appraiser's Opinion, and our reliance thereon, we are of the
opinion that: (a) no taxable income will be recognized by the
borrowers, directors, officers and employees of Stock Savings
Bank upon the distribution to them of Subscription Rights or
upon the exercise or lapse of the Subscription Rights to
acquire Holding Company Common Stock at fair market value; (b)
no taxable income will be realized by the depositors of Stock
Savings Bank as result of the exercise of lapse of the
Subscription Rights to purchase Holding Company Common Stock
at fair market value. Rev. Rul. 56-572, 1956-2 C.B. 182; and
(c) no taxable income will be realized by Stock Savings Bank,
or Holding Company upon the issuance or distribution of
Subscription Rights to depositors of Stock Savings Bank to
purchase shares of Holding Company Common Stock at fair market
value. (Section 311 of the Code.)
Notwithstanding the Appraiser's Opinion, if the Subscription
Rights are subsequently found to have a fair market value,
income may be recognized by various recipients of the
Subscription Rights (in certain cases, whether or not the
rights are exercised) and Holding Company and/or Stock Savings
Bank may be taxable on the distribution of the Subscription
Rights. (Section 311 of the Code.) In this regard, the
Subscription Rights may be taxed partially or entirely at
ordinary income tax rates.
10. The tax basis to the holders of the Holding Company Common
Stock purchased in the Conversion Offerings will be the amount
paid therefor, and the holding period for such shares will
begin on the date of consummation of the Conversion Offerings
if purchased through the exercise of Subscription Rights. If
purchased in the Community Offering or Syndicated Community
Offering, the holding period for such stock will begin on the
day after the date of purchase.
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
federal, state, local, foreign or other tax considerations. If any of the
information upon which we have relied is incorrect, or if changes in the
relevant facts occur after the date hereof, our opinion could be affected
thereby. Moreover, our opinion is based on the case law, Code, Treasury
Regulations thereunder and Internal Revenue Service rulings as they now exist.
These authorities are all subject to change,
<PAGE>
Boards of Directors
Riverview Savings Bank, FSB
Riverview, M.H.C.
Riverview Bancorp, Inc.
July 30, 1997
Page 9
and such change may be made with retroactive effect. We can give no assurance
that, after such change, our opinion would not be different. We undertake no
responsibility to update or supplement our opinion. This opinion is not binding
on the Internal Revenue Service and there can be no assurance, and none is
hereby given, that the Internal Revenue Service will not take a position
contrary to one or more of the positions reflected in the foregoing opinion, or
that our opinion will be upheld by the courts if challenged by the Internal
Revenue Service.
We hereby consent to the filing of this opinion with the OTS as an
exhibit to the Application H-(e)1-S filed by the Holding Company with the OTS in
connection with the Conversion and the reference to our firm in the Application
H-(e)1-S under Item 110.55 therein.
We also hereby consent to the filing of this opinion with the SEC and
the OTS as exhibits to the Registration Statement and the Savings Bank's
Application for Conversion on Form AC ("Form AC"), respectively, and the
reference on our firm in the Prospectus, which is a part of both the
Registration Statement and the Form AC, under the headings "THE CONVERSION AND
REORGANIZATION -- Effects of Conversion and Reorganization on Depositors and
Borrowers of the Savings Bank -- Tax Effects" and "LEGAL AND TAX OPINIONS."
Very truly yours,
/s/ Breyer & Aguggia
BREYER & AGUGGIA
Exhibit 8.2
State Income Tax Opinion of Deloitte & Touche LLP
July 30, 1997
Boards of Directors
Riverview, M.H.C.
Riverview Savings Bank, FSB
Riverview Bancorp, Inc.
700 N.E. Fourth Avenue
Camas, Washington 98607
Gentlemen:
You have requested an opinion from this firm relative to the Washington State
tax consequences of the transactions contemplated by the Amended Plan of
Conversion and Agreement and Plan of Reorganization (the "Plan") whereby (i) the
Riverview, M.H.C. will convert from a mutual holding company to a federal
interim stock savings bank and merge with and into Riverview Savings Bank, FSB
and (ii) Riverview Savings Bank, FSB will be acquired by a newly formed stock
holding company, known as Riverview Bancorp, Inc., by means of the merger of
Riverview Savings Bank, FSB with a second federal interim stock savings bank.
The foregoing transactions will be accompanied by a public offering of the
shares of Riverview Bancorp, Inc. to certain depositors and borrowers of
Riverview Savings Bank, FSB and members of the general public. In addition,
shares of the common stock of Riverview Savings Bank, FSB currently held by
members of the general public will be exchanged at a predetermined ratio for
shares of Riverview Bancorp, Inc. common stock.
We have been provided with an opinion of special counsel to Riverview, M.H.C.
and Riverview Savings Bank, FSB, Breyer & Aguggia, Washington, D.C., dated July
30, 1997 ("Federal Tax Opinion"), pertaining to the treatment of the foregoing
transactions for federal income tax purposes under the Internal Revenue Code of
1986, as amended ("Code").
The State of Washington does not have a state income tax per se, but relies
instead for its revenue on other types of taxes. These other taxes primarily
include property taxes, retail sales/use taxes, and business and occupation
taxes. Money, credits, accounts, bonds, stocks and shares of private
corporations, along with various other intangibles, are expressly exempted from
and valorem (property) taxation, under RCW 84.36.070. Through reasoning similar
to that employed by the federal taxing authority in the case of exchanges
described in under Code Section 351, the State of Washington, Department of
Revenue takes the position, in WAC 458-20-106, that the retail sales/use tax
does not apply to a transfer of
<PAGE>
Boards of Directors
July 30, 1997
Page Two
capital to a corporation in exchange for stock therein. Likewise, the business
and occupation ("B&O") tax does not apply to "casual or isolated sales," WAC
458-20-106, which are defined as "sales[s] made by a person who is not engaged
in the business of selling the type of property involved." Since Riverview
Bancorp, Inc. is not in the business of selling shares of stock in itself, we
are of the opinion that issuance of shares of stock in exchange for capital
contributions fits within this definition, and is, therefore, a casual or
isolated sale not subject to the B&O tax.
Based upon the facts and circumstances attendant to the proposed reorganization,
as they have been related to us via the Breyer & Aguggia opinion letter referred
to above, it is our opinion that, under the laws of the State of Washington, no
adverse tax consequences will be incurred by either Riverview or its depositors
as a result of the implementation of the transactions contemplated by the Plan.
No opinion is expressed on any matter other than state tax consequences which
might result from the implementation of the reorganization.
We hereby consent to the filing of this opinion with the OTS as an exhibit to
the Application H-(e)1-S filed by the Holding Company with the OTS in connection
with the Conversion and the reference to our firm in the Application H-(e)1-S.
We also hereby consent to the filing of this opinion with the SEC and the OTS as
exhibits to the Registration Statement on Form S-1 and the Savings Bank's
Application for Conversion on Form AC ("Form AC") respectively, and the
reference on our firm in the Prospectus, which is a part of both the
Registration Statement on Form S-1 and the Form AC, under the headings "THE
CONVERSION AND REORGANIZATION -- Effects of Conversion and Reorganization on
Depositors and Borrowers of the Savings Bank -- Tax Effects" and "LEGAL AND TAX
OPINIONS."
Very truly yours,
KNAPP, O'DELL & LEWIS
/s/ Roger D. Knapp
Roger D. Knapp
RDK/ad
Exhibit 10.5
Proposed Form of Employees' Savings & Profit Sharing Plan and Trust
ADOPTION AGREEMENT
FOR RIVERVIEW SAVINGS BANK, FSB
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
PENTEGRA
<PAGE>
Name of Employer: Riverview Savings Bank, FSB
Address: 700 NE Fourth Avenue, Camas, WA 98607
Phone No.: (360) 834-2231
Contact Person: Ronald A. Wysaske
Name of Plan: Riverview Savings Bank, FSB Employees' Savings &
Profit Sharing Plan and Trust
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
Riverview Savings Bank, FSB 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 416 of the Internal Revenue Code of 1986, 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.
1
<PAGE>
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 Riverview Savings Bank, FSB
Employees' Savings & Profit Sharing Plan and Trust, effective
___, 19__.
2. X Amends its existing defined contribution plan and trust
(Riverview Retirement and Employee Stock Ownership Plan) dated
July 21, 19 93 , in its entirety into the Riverview Savings
Bank, FSB Employees' Savings & Profit Sharing Plan and Trust,
effective April 19, 19 97 , 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. X 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 April 1 , 19 97 .
---------- -----
C. Employer
1. "Employer," for purposes of the Plan, shall mean:
Riverview Savings Bank, FSB.
2. The Employer is (choose whichever may apply):
(a) X 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) X A corporation.
(e) A sole proprietorship or partnership.
(f) A Subchapter S corporation.
2
<PAGE>
3. Employer's Taxable Year Ends on 3/31 .
4. Employer's Federal Taxpayer Identification Number is
91-1609689 .
5. Employer's Plan Number is (enter 3-digit number) 004
.
D. "Entry Date" means the first day of the (choose 1 or 2):
1. X Calendar month coinciding with or next following
the date the Employee satisfies the Eligibility
requirements described in Section III.
2. Calendar quarter coinciding with or next following
the date the Employee satisfies the Eligibility
requirements described in Section III.
E. "Member" means an Employee enrolled in the membership of the
Plan.
F. "Normal Retirement Age" means (choose 1 or 2):
1. X Attainment of age 65 (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. X Basic Salary plus one or more of the following (if
2 is chosen, then choose (a), (b) or (c), whichever
shall apply):
(a) X Commissions not in excess of $
(b) Overtime
(c) X 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>
III. ELIGIBILITY REQUIREMENTS
A. All Employees shall be eligible to participate in the Plan in
accordance with the provisions of Article II of the Plan,
except the following Employees shall be excluded (choose
whichever shall apply):
1. X Employees who have not attained age 21.
2. X Employees who have not, during the 12 consecutive
month period (1- 11, 12 or 24) beginning with an
Employee's Date of Employment, Date of Reemployment
or any anniversary thereof, completed 1000 number of
Hours of Service (determined by multiplying the
number of months above by 83-1/3).
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 job
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 II.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. X Both present and future Employees.
2. Future Employees only.
4
<PAGE>
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 12) 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. X 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. X A Member may not make after-tax contributions to
the Plan.
3. X 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. X The maximum amount of monthly contributions a
Member may make to the Plan is 15 % (1-20) of the
Member's monthly Salary.
5
<PAGE>
6. X An Employee may allocate a rollover contribution to
the Plan prior to satisfying the Eligibility
requirements described above.
B. A Member may change his or her contribution rate (choose 1 or
2):
1. X 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. X The Employer shall allocate to each contributing
Member's Account an amount equal to 50 % (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:
<TABLE>
<CAPTION>
Years of Employment Matching %
<S> <C> <C>
Less than 3 50%
At least 3, but less than 5 75%
5 or more 100%
</TABLE>
4. The Employer shall allocate to each contributing
Member's Account an amount determined in accordance
with the following schedule:
<TABLE>
<CAPTION>
Years of Employment Matching %
<S> <C> <C>
Less than 3 100%
At least 3, but less than 5 150%
5 or more 200%
</TABLE>
5. The Employer matching contributions under 2, 3 or 4
above shall be based on the Member's contributions
not in excess of 3% (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>
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>
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. X 500 Stock Index Fund
2. X Stable Value Fund
3. X MidCap 400 Stock Index Fund
4. X Government Money Market Fund
5. X Bond Index Fund
6. X Employer Stock Fund - Frozen Assets. Not available for
additional contributions or deposits.
8
<PAGE>
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. X 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 or 2):
1. X 1 time per calendar month.
2. 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 Government Money
Market Fund (insert one of the Investment Funds selected in
Section VI of this Adoption Agreement).
9
<PAGE>
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. X 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 %
----- ----- ----
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 X 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>
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 100% 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 100% 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. X 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. X Employer matching contributions and the earnings
thereon.
5. Employer basic contributions and the earnings
thereon.
6. X 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>
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. X Lump Sum and partial lump sum payments plus one or
more of the following (choose (a) and/or (b)):
(a) X Installment payments.
(b) Annuity payments.
XII. LOAN PROGRAM (CHOOSE 1, 2 OR 3)
1. No loans will be permitted from the Plan.
2. X 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) X Any amounts to the extent invested
in the Employer stock fund.
12
<PAGE>
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
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. X 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:
<TABLE>
<CAPTION>
==========================================================================================================================
Name: Mellon Bank Patrick Sheaffer/Ronald A. Wysaske
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Address: 1 Cabot Road c/o Riverview Savings Bank, FSB
Medford, MA 02155 700 NE Fourth Avenue
Camas, WA 98607
- --------------------------------------------------------------------------------------------------------------------------
Tel No. 617-382-9849 360-834-2231
- --------------------------------------------------------------------------------------------------------------------------
Contact: James Antonellis Ronald A. Wysaske
==========================================================================================================================
</TABLE>
13
<PAGE>
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 Riverview Savings Bank,
FSB 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 13th day of March , 19 97 .
Riverview Savings Bank, FSB
By: /s/ Pat Sheaffer
Name: Pat Sheaffer
Title: Chairman of the Board/President/CEO
14
<PAGE>
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
PENTEGRA
4/13/95
<PAGE>
TABLE OF CONTENTS
ARTICLE I 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
<PAGE>
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 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
1
<PAGE>
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 III, 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
nonhighly 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 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.
2
<PAGE>
(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 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
3
<PAGE>
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) hereof under the laws of more than one state of the United
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.
4
<PAGE>
(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 III), 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 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. ss.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 hereof 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.
5
<PAGE>
(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).
(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.
6
<PAGE>
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 1 2-consecutive-month eligibility
waiting period, an Employee must complete at least 1,000 Hours of Employment
during each 1 2-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
(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
7
<PAGE>
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 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.
8
<PAGE>
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 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
9
<PAGE>
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.
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>
10
<PAGE>
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:
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
11
<PAGE>
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.
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").
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.
12
<PAGE>
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 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.
13
<PAGE>
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.
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,
14
<PAGE>
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.
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 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 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 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
15
<PAGE>
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 deferrals 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.
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
16
<PAGE>
(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 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.
17
<PAGE>
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 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
18
<PAGE>
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.
19
<PAGE>
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.
20
<PAGE>
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:
Completed Vested
Years of Employment Percentage
------------------- ----------
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%
SCHEDULE 3: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 5 0%
5 or more 100%
SCHEDULE 4: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 or more 100%
21
<PAGE>
SCHEDULE 5: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
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 6: All applicable Units shall become nonforfeitable and fully
vested in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 5 60%
6 but less than 7 80%
7 or more 100%
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.
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
22
<PAGE>
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 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.
23
<PAGE>
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 XI. 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:
o First from the Member's after-tax contributions made prior to
January 1, 1987.
o Next from the Member's after-tax contributions made after December 31,
1986 plus earnings on all of the Member's after-tax contributions.
o Next from the Member's rollover contributions plus earnings thereon.
o Next from the Employer matching contributions plus earnings thereon.
o Next from the Employer supplemental contributions plus earnings thereon.
o Next from the Employer basic contributions plus earnings thereon.
o Next from the Member's 401(k) deferrals plus earnings thereon.
o Next from the Employer qualified nonelective contributions plus earnings
thereon.
o Next from the Employer profit sharing contributions plus earnings thereon.
24
<PAGE>
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 III 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 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
25
<PAGE>
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.
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.
26
<PAGE>
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.
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; provided, 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
27
<PAGE>
of his death. Any election made pursuant to 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 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.
28
<PAGE>
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; 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
29
<PAGE>
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 event 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% 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 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% 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.
30
<PAGE>
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.
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 canceled
and shall be transferred in
31
<PAGE>
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 Employer permits Members
to take loans from one or more of the portions of their Accounts, as designated
in the Adoption Agreement):
o First from the Employer profit sharing contributions plus earnings thereon.
o Next from the Employer qualified nonelective contributions plus earnings
thereon.
o Next from the Member's 401(k) deferrals plus earnings thereon.
o Next from the Employer basic contributions plus earnings thereon.
o Next from the Employer supplemental contributions plus earnings thereon.
o Next from the Employer matching contributions plus earnings thereon.
o Next from the Member's rollover contributions plus earnings thereon.
o Next from the Member's after-tax contributions made after December 31,
1986 plus earnings on all of the Member's after-tax contributions.
o Next from the Member's after-tax contributions made prior to January 1,
1987.
32
<PAGE>
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.
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.
33
<PAGE>
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
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.
34
<PAGE>
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, 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 XI, 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.
35
<PAGE>
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;
(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 thereunto 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:
36
<PAGE>
(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 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
37
<PAGE>
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 acknowledgement 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; 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.
38
<PAGE>
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.
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 hereof.
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.
39
<PAGE>
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 ERISA:
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.
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.
40
<PAGE>
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.
41
<PAGE>
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
III 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, 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
42
<PAGE>
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.
(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.
43
<PAGE>
(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
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:
44
<PAGE>
Completed Vested
Years of Employment Percentage
------------------- ----------
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%
(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(9) 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.
45
<PAGE>
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 canceled, 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.
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).
46
<PAGE>
(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 III 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.
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
47
<PAGE>
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 ERISA and the laws of the State of New York.
48
<PAGE>
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 hereof.
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.
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
49
<PAGE>
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.
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.
50
<PAGE>
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.
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.
51
<PAGE>
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 13th day of
March, 1997.
ATTEST:
/s/ Ron Wysaske By: /s/ Patrick Sheaffer
- -------------------------- -----------------------------
Ron Wysaske Patrick Sheaffer
Clerk
52
<PAGE>
Exhibit 11
Riverview Savings Bank, FSB
Statement Regarding Computation of Earnings Per Share
(unaudited)
Year Ended March 31,
--------------------------------
1997 1996 1995
---- ------ ------
Earnings Applicable to Common Stock ....... $2,008,000 $2,613,000 $2,446,000
Net Income Available for Fully-Diluted
Common Stock.............................. $2,008,000 $2,613,000 $2,446,000
Average Common Shares Outstanding.......... 2,374,077 2,362,450 2,348,306
Stock Options............................ 41,523 28,737 20,141
Fully-Diluted Common Stock................. 2,415,600 2,391,187 2,368,447
Fully-Diluted Earnings Per Share of Common
Stock................................... $0.83 $1.09 $1.03
Note: Primary earnings per share are computed on the weighted daily average
number of common shares outstanding each year. Outstanding stock options are
common stock equivalents but are excluded from primary earnings per share
computations due to immateriality.
Exhibit 23.1
Consent of Deloitte & Touche LLP
Deloitte &
Touche LLP
- ----------- ---------------------------------------------------
Suite 3900 Telephone: (503) 222-1341
111 S.W. Fifth Avenue Facsimile: (503) 224-2172
Portland, Oregon 97204-3698
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Riverview, M.H.C.
Riverview Savings Bank, FSB
Camas, Washington
We consent to the use in this Registration Statement of Riverview Bancorp, Inc.
on Amendment No. 1 on Form S-1 of our report dated May 27, 1997 appearing in the
Prospectus, which is part of this Registration Statement, relating to the
consolidated financial statements of Riverview Savings Bank, FSB and Subsidiary,
which appear in such Registration Statement. We also consent to the reference to
us under the heading "Experts" contained in the Prospectus, which is a part of
such Registration Statement.
/s/ Deloitte & Touche
DELOITTE & TOUCHE LLP
Portland, Oregon
August 6, 1997
- ---------------
Deloitte Touche
Tohmatsu
International
_______________
Exhibit 99.2
Solicitation and Marketing Materials
<PAGE>
<PAGE>
[LETTERHEAD] Charles Webb & Company
A Division of
KEEFE, BRUYETTE & WOODS, INC.
August xx, 1997
To Members and Friends of Riverview,
M.H.C. and Stockholders of
Riverview Savings, FSB
Charles Webb & Company, a member of the National Association of Securities
Dealers, Inc. ("NASD"), is assisting Riverview, M.H.C. (the "MHC") in its
conversion from a mutual holding company to a stock holding company and the
concurrent offering of shares of common stock by Riverview Bancorp, Inc. (the
"Holding Company"), the newly-formed corporation that will serve as holding
company for Riverview Savings Bank, FSB ("Riverview Savings") following the
conversion.
At the request of the Holding Company, we are enclosing materials explaining the
conversion and your options, including an opportunity to invest in shares of the
Holding Company's common stock being offered to members of the MHC, Riverview
Saving's Employee Stock Ownership Plan, stockholders of Riverview Savings and
the community through September 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 Stock Information Center at 700 N.E.
Fourth Avenue, Camas, Washington or feel free to call the Stock Information
Center at (360) xxx-xxxx.
Very truly yours,
Charles Webb & Company
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
August xx, 1997
Dear Member:
We are pleased to announce that Riverview, M.H.C. is converting from a mutual
holding company to a stock holding company and Riverview Savings Bank, FSB
("Riverview Savings") is simultaneously reorganizing as a wholly-owned
subsidiary of a newly-formed corporation (the "Conversion and Reorganization").
In conjunction with the Conversion and Reorganization, Riverview Bancorp, Inc.
("Riverview Bancorp"), the newly-formed corporation that will serve as holding
company for Riverview Savings, is offering shares of common stock in a
subscription offering and direct community offering.
Unfortunately, Riverview Bancorp is unable to either offer or sell its common
stock to you because the small number of eligible subscribers in your
jurisdiction makes registration or qualification of the common stock under the
securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common stock of Riverview Bancorp.
However, you have the right to vote on the Plan of Conversion and Agreement and
Plan of Reorganization at the Special Meeting of Members to be held on September
xx, 1997. Therefore, enclosed is a proxy card, a Proxy Statement (which includes
the Notice of the Special Meeting), a Prospectus (which is provided solely as an
accompaniment to the Proxy Statement) and a return envelope for your proxy card.
I invite you to attend the Special Meeting on September 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,
Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY.
<PAGE>
August xx, 1997
Dear Member:
We are pleased to announce that Riverview, M.H.C. is converting from a mutual
holding company to a stock holding company and Riverview Savings Bank, FSB
("Riverview Savings") is simultaneously reorganizing as a wholly-owned
subsidiary of a newly-formed holding company (the "Conversion and
Reorganization"). In conjunction with the Conversion and Reorganization,
Riverview Bancorp, Inc., the newly-formed corporation that will serve as holding
company for Riverview Savings, is offering shares of common stock in a
subscription offering and direct community offering to certain of our depositors
and borrowers, to Riverview Saving's Employee Stock Ownership Plan and some
members of the general public pursuant to a Plan of Conversion and
Reorganization.
To accomplish the Conversion and Reorganization, we need your participation in
an important vote. Enclosed is a proxy statement describing the Plan of
Conversion and Reorganization and your voting and subscription rights. The Plan
of Conversion and Reorganization 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 card should be signed and returned
to us prior to the Special Meeting of Members to be held on September xx, 1997.
Please take a moment 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 AND REORGANIZATION.
The Boards of Directors of Riverview, M.H.C. and Riverview Savings believe that
the Conversion and Reorganization is in the best interests of Riverview, M.H.C.
and its members and Riverview Savings and its stockholders. Please remember:
o Your deposit accounts at Riverview Savings will continue to be insured
up to the maximum legal limit by the Federal Deposit Insurance
Corporation ("FDIC").
o There will be no change in the balance, interest rate, or maturity of
any deposit or loan accounts because of the Conversion and
Reorganization.
o Members have a right, but no obligation, to buy stock before it is
offered to the public.
o Like all stock, stock issued in this offering will not be insured by
the FDIC.
Enclosed are materials describing the stock offering. We urge you to read these
materials carefully before submitting your Stock Order and Certification Form.
If you are interested in purchasing the common stock of Riverview Bancorp, Inc.,
you must submit your Stock Order and Certification Form and payment prior to
x:xx p.m., Pacific Time on September xx, 1997.
If you have additional questions regarding the stock offering, please call us at
(360) xxx-xxxx, Monday through Thursday 9:00 a.m. to 5:00 p.m. and Friday 9:00
a.m. to 5:30 p.m., or stop by the Stock Information Center located at 700 N.E.
Fourth Avenue, in Camas, Washington.
Sincerely,
Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
August xx, 1997
Dear Friend:
We are pleased to announce that Riverview, M.H.C. is converting from a mutual
holding company to a stock holding company and Riverview Savings Bank, FSB
("Riverview Savings") is simultaneously reorganizing as a wholly-owned
subsidiary of a newly formed holding company (the "Conversion and
Reorganization"). In conjunction with the Conversion and Reorganization,
Riverview Bancorp, Inc. ("Riverview Bancorp"), the newly-formed corporation that
will serve as holding company for Riverview Savings, is offering shares of
common stock in a subscription offering and direct community offering. The sale
of stock in connection with the Conversion and Reorganization will enable
Riverview 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
Riverview Bancorp's stock as an investment, we are sending you the following
materials which describe the stock offering. Please read these materials
carefully before you submit a Stock Order and Certification Form.
o PROSPECTUS: This document provides detailed information about the
operations of Riverview Bancorp, Riverview Savings and the proposed
stock offering.
o QUESTIONS AND ANSWERS: Key questions and answers about the stock
offering are found in this pamphlet.
o STOCK ORDER AND 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 x:xx p.m., Pacific Time,
September xx, 1997.
As a friend of Riverview, M.H.C., you will have the opportunity to buy stock
directly from Riverview Bancorp without commission or fee. If you have
additional questions regarding the Conversion and Reorganization and stock
offering, please call us at (360) xxx-xxxx, Monday through Thursday 9:00 a.m. to
5:00 p.m. and Friday 9:00 a.m. to 5:30 p.m., or stop by the Stock Information
Center at 700 N.E. Fourth Avenue, Camas, Washington.
We are pleased to offer you this opportunity to become a charter shareholder of
Riverview Bancorp, Inc.
Sincerely,
Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
August xx, 1997
Dear Prospective Investor:
We are pleased to announce that Riverview, M.H.C. is converting from a mutual
holding company to a stock holding company and Riverview Savings Bank, FSB
("Riverview Savings") is simultaneously reorganizing as a wholly-owned
subsidiary of a newly-formed holding company (the "Conversion and
Reorganization"). In conjunction with the Conversion and Reorganization,
Riverview Bancorp, Inc. ("Riverview Bancorp") the newly-formed corporation that
will serve as holding company for Riverview Savings, is offering shares of
common stock in a subscription offering and direct community offering. The sale
of stock in connection with the Conversion and Reorganization will enable
Riverview 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 stock offering of Riverview Bancorp. Please read and review the materials
carefully before you submit a Stock Order and Certification Form.
o PROSPECTUS: This document provides detailed information about the
operations of Riverview Bancorp, Riverview Savings and the proposed
stock offering.
o QUESTIONS AND ANSWERS: Key questions and answers about the stock
offering are found in this pamphlet.
o STOCK ORDER AND 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 x:xx p.m., Pacific Time,
September xx, 1997.
We invite our loyal customers and local community members to become charter
shareholders of Riverview Bancorp. Through this offering you have the
opportunity to buy stock directly from Riverview Bancorp, without commission or
fee. The board of directors and management of Riverview Savings and Riverview,
M.H.C. fully support the stock offering.
If you have additional questions regarding the Conversion and Reorganization and
stock offering, please call us at (360) xxx-xxxx, Monday through Thursday 9:00
a.m. to 5:00 p.m. and Friday 9:00 a.m. to 5:30 p.m., or stop by the Stock
Information Center located at 700 N.E. Fourth Avenue, Camas, Washington.
Sincerely,
Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
(Dear stockholder Dark blue sky)
August xx, 1997
Dear Shareholder:
We are pleased to announce that Riverview, M.H.C. is converting from a mutual
holding company to a stock holding company and Riverview Savings Bank, FSB
("Riverview Savings") is simultaneously reorganizing as a wholly-owned
subsidiary of a newly-formed corporation (the "Conversion and Reorganization").
In conjunction with the Conversion and Reorganization, Riverview Bancorp, Inc.
("Riverview Bancorp"), the newly-formed corporation that will serve as holding
company for Riverview Savings, is offering shares of common stock in a
subscription offering and direct community offering.
Unfortunately, Riverview Bancorp is unable to either offer or sell its common
stock to you because the small number of eligible subscribers in your
jurisdiction makes registration or qualification of the common stock under the
securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common stock of Riverview Bancorp.
However, you have the right to vote on the Plan of Conversion and Agreement and
Plan of Reorganization at the Special Meeting of Members to be held on September
xx, 1997. Therefore, enclosed is a proxy card, a Proxy Statement (which includes
the Notice of the Special Meeting), a Prospectus (which is provided solely as an
accompaniment to the Proxy Statement) and a return envelope for your proxy card.
I invite you to attend the Special Meeting on September 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,
Patrick Sheaffer
Chairman, President and Chief Executive Officer
<PAGE>
(Stockholder Letter REGISTERED HOLDERS- Riverview Savings letterhead)
Dear Stockholder:
We are pleased to inform you that the Boards of Directors of Riverview Savings,
FSB ("Riverview Savings") of Camas, Washington, Riverview, M.H.C. (the "MHC")
and Riverview Financial Corporation (the "Company") have adopted a Plan of
Conversion and Reorganization (the "Plan of Conversion") whereby the MHC and
Riverview Savings will be reorganized into a stock holding company (the
"Conversion and Reorganization"). Riverview Savings has organized the Company to
become the holding company for all of Riverview Savings' stock. Pursuant to the
Plan of Conversion, the existing shareholders of Riverview Savings (other than
the MHC) will be issued shares of the Company's Common Stock in exchange for
their shares of Riverview Savings common stock (the "Exchange"). The Exchange
will result in those shareholders owning in the aggregate the same percent of
the Company as they owned of the Riverview Savings. In addition to the shares of
Company stock to be issued in the Exchange, the Company is also offering up to
2,760,000 shares of common stock (subject to increase up to 3,174,000 shares in
certain circumstances) to the MHC's members, Riverview Savings' stockholders and
members of the public. Consummation of the Plan of Conversion and Reorganization
is subject to (i) the approval of the members of the MHC, (ii) the approval of
the stockholders of the Riverview Savings and (iii) various regulatory
approvals.
We are asking stockholders of the Riverview Savings as of August xx, 1997, the
voting record date, to vote FOR the Plan of Conversion. If you and/or members of
your family hold stock in different names, you may receive more than one proxy
mailing. Please vote all proxy cards received and return them today in the
enclosed postage-paid envelope. Should you choose to attend the meeting and wish
to vote in person, you may do so by executing your previously submitted proxy.
Your vote FOR the Plan of Conversion will not obligate you to buy any additional
stock in the Conversion and Reorganization. A Proxy Statement relating to the
Conversion and Reorganization is enclosed.
We have enclosed the following materials which will help you learn more about
investing in Riverview Bancorp's common stock. Please read and review the
materials carefully before making an investment decision.
o PROSPECTUS: This document provides detailed information about the
operations of Riverview Bancorp, Riverview Savings and the proposed
stock offering.
o QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the
stock offering are found in this pamphlet.
o STOCK ORDER AND CERTIFICATION FORM: This form is used to purchase
stock by signing and returning it with your payment in the enclosed
business reply envelope. The deadline for ordering stock is x:xx p.m.,
Pacific Time, on September xx, 1997.
We are invite our loyal customers, existing stockholders, and local community
members to become stockholders of Riverview Bancorp. Through this offering you
have the opportunity to buy additional stock directly from Riverview Bancorp
without commission or fee.
Should you have additional questions regarding the Conversion and Reorganization
and stock offering, please call the Stock Information Center at (360) xxx-xxxx,
Monday through Thursday 9:00 a.m. to 5:00 p.m. and Friday 9:00 a.m. to 5:30
p.m., Pacific Time, or stop by the Stock Information Center at 700 N.E. Fourth
Avenue in Camas.
Sincerely,
Riverview Savings, FSB
By: Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
(Stockholder Letter STREET HOLDERS- Riverview Savings letterhead)
Dear Stockholder:
We are pleased to inform you that the Boards of Directors of Riverview Savings,
FSB ("Riverview Savings") of Camas, Washington, Riverview, M.H.C. (the "MHC")
and Riverview Financial Corporation (the "Company") have adopted a Plan of
Conversion and Reorganization (the "Plan of Conversion") whereby the MHC and
Riverview Savings will be reorganized into a stock holding company (the
"Conversion and Reorganization"). Riverview Savings has organized the Company to
become the holding company for all of Riverview Savings' stock. Pursuant to the
Plan of Conversion, the existing shareholders of Riverview Savings (other than
the MHC) will be issued shares of the Company's Common Stock in exchange for
their shares of Riverview Savings common stock (the "Exchange"). The Exchange
will result in those shareholders owning in the aggregate the same percent of
the Company as they owned of the Riverview Savings. In addition to the shares of
Company stock to be issued in the Exchange, the Company is also offering up to
2,760,000 shares of common stock (subject to increase up to 3,174,000 shares in
certain circumstances) to the MHC's members, Riverview Savings' stockholders and
members of the public. Consummation of the Plan of Conversion and Reorganization
is subject to (i) the approval of the members of the MHC, (ii) the approval of
the stockholders of the Riverview Savings and (iii) various regulatory
approvals.
We are asking stockholders of the Riverview Savings as of August xx, 1997, the
voting record date, to vote FOR the Plan of Conversion. If you and/or members of
your family hold stock in different names, you may receive more than one proxy
mailing. Please vote all proxy cards received and return them today in the
enclosed postage-paid envelope. Should you choose to attend the meeting and wish
to vote in person, you may do so by executing your previously submitted proxy.
Your vote FOR the Plan of Conversion will not obligate you to buy any additional
stock in the Conversion and Reorganization. A Proxy Statement relating to the
Conversion and Reorganization is enclosed.
We have enclosed the following materials which will help you learn more about
investing in Riverview Bancorp's common stock. Please read and review the
materials carefully before making an investment decision.
o PROSPECTUS: This document provides detailed information about the
operations of Riverview Bancorp, Riverview Savings and the proposed
stock offering.
o QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the
stock offering are found in this pamphlet.
o STOCK ORDER AND CERTIFICATION FORM: This form is used to purchase
stock by signing and returning it with your payment in the enclosed
business reply envelope. The deadline for ordering stock is x:xx p.m.,
Pacific Time, on September xx, 1997. You may obtain a Stock Order and
Certification Form from your broker or by contacting the Stock
Information Center.
We are invite our loyal customers, existing stockholders, and local community
members to become stockholders of Riverview Bancorp. Through this offering you
have the opportunity to buy additional stock directly from Riverview Bancorp
without commission or fee.
Should you have additional questions regarding the Conversion and Reorganization
and stock offering, please call the Stock Information Center at (360) xxx-xxxx,
Monday through Thursday 9:00 a.m. to 5:00 p.m. and Friday 9:00 a.m. to 5:30
p.m., Pacific Time, or stop by the Stock Information Center at 700 N.E. Fourth
Avenue in Camas.
Sincerely,
Riverview Savings, FSB
By: Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
(Stockholder Letter Street holders - 2nd mailing-Riverview Savings Letterhead)
August xx, 1997
Dear Stockholder:
Under separate cover on this date, we forwarded to you information regarding the
Plan of Conversion and Reorganization of Riverview Savings Bank, FSB ("Riverview
Savings") and Riverview, M.H.C. (the "MHC") and the concurrent offering of
common stock by Riverview Bancorp, Inc. ("Riverview Bancorp").
As a result of certain requirements, we could not forward a Stock Order and
Certification Form with the other packet of materials. They are enclosed herein,
along with a Prospectus.
The deadline for ordering Riverview Bancorp's common stock is at x:xx p.m.,
Pacific Time, on September xx, 1997.
Should you have additional questions regarding the Conversion and Reorganization
and stock offering, please call the Stock Information Center at (360) xxx-xxxx,
Monday through Thursday from 9:00 a.m. to 5:00 p.m., and Friday from 9:00 a.m.
to 5:30 p.m., Pacific Time, or stop by the Stock Information Center at 700 N.E.
Fourth Avenue in Camas.
Sincerely,
Riverview Savings Bank, FSB
By: Patrick Sheaffer
Chairman, President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
FACTS ABOUT CONVERSION AND
REORGANIZATION
The Boards of Directors of Riverview Savings Bank, FSB ("Riverview Savings" or
the "Savings Bank") and Riverview, M.H.C. (the "MHC") unanimously adopted a Plan
of Conversion and Agreement and Plan of Reorganization (the "Plan") to convert
the MHC from a mutual holding company to a stock holding company and
simultaneously reorganize Riverview Savings as a wholly-owned subsidiary of a
newly-formed corporation ("Conversion and Reorganization").
This brochure answers some of the most frequently asked questions about the Plan
and about your opportunity to invest in Riverview Bancorp, Inc., (the "Holding
Company" or "Riverview Bancorp"), the newly formed corporation that will serve
as the holding company for Riverview Savings following the Conversion and
Reorganization.
Investment in the stock of the Holding Company involves certain risks. For a
discussion of these risks, other factors, and a complete description of the
offerings investors are urged to read the accompanying Prospectus, especially
the discussion under the heading "Risk Factors".
WHY IS THE MHC CONVERTING TO THE STOCK HOLDING COMPANY STRUCTURE?
- --------------------------------------------------------------------------------
The stock holding company structure is a more common form of ownership than the
mutual holding company structure and offers the ability to diversify the MHC's
and the Savings Bank's business activities. The Conversion and Reorganization
will increase both the capital base of the Savings Bank and the number of
outstanding shares, which will increase the likelihood of the development of an
active and liquid market for the common stock of the Holding Company.
WILL THE PLAN AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?
No. The Plan will not effect 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 STOCK IN THE SUBSCRIPTION OFFERING AND DIRECT
COMMUNITY OFFERING?
- --------------------------------------------------------------------------------
Depositors of Riverview Savings as of certain dates, the Savings Bank's Employee
Stock Ownership Plan, Riverview Savings' public stockholders, certain borrowers
and members of the general public.
HOW MANY SHARES OF STOCK ARE BEING OFFERED AND AT WHAT PRICE?
Riverview Bancorp is offering up to 1,976,571 shares of common stock ("Exchange
Shares"). The outstanding shares of common stock of the Savings Bank will be
exchanged for exchange shares according to the Exchange Ratio described in the
next section. Riverview Bancorp, Inc. is also offering up to 2,760,000 shares of
common stock ("Conversion Shares"), subject to adjustment as described in the
Prospectus, at a price of $10.00 per share through the Prospectus.
I AM AN EXISTING STOCKHOLDER. HOW WILL MY STOCK BE TREATED?
- --------------------------------------------------------------------------------
The Plan ensures that existing shareholders of the Savings Bank will own the
same aggregate percentage of the Holding Company's common stock as they own of
the Savings Bank. Depending upon where the offering closes in the Estimated
Valuation Range, an exchange ratio ranging from approximately 1.4488 to 1.9601
Exchange Shares will be applied to each share of Savings Bank common stock.
HOW MANY CONVERSION SHARES MAY I BUY?
- --------------------------------------------------------------------------------
The minimum order is 25 shares. In each of the Subscription Offering, the Direct
Community Offering or any Syndicated Offering, the maximum purchase for any
person including associates is xx,xxx shares, including any Exchange Shares to
which such person may be entitled as a shareholder of the Savings Bank.
DO MEMBERS HAVE TO BUY CONVERSION SHARES?
- --------------------------------------------------------------------------------
No. However, if a member of the MHC is also a stockholder of the Savings Bank,
his or her shares of Savings Bank stock will be converted automatically to
Exchange Shares.
HOW DO I ORDER CONVERSION 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 x:xx p.m., Pacific
Time, on September xx, 1997.
HOW MAY I PAY FOR MY CONVERSION SHARES?
- --------------------------------------------------------------------------------
First, you may pay by check, cash or money order. Interest will be paid by
Riverview Savings on these funds at the current passbook rate from the day the
funds are received until the completion or termination of the Plan. Second, you
may authorize us to withdraw funds from your Riverview 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 Plan. Riverview Savings will waive any early
withdrawal penalties on certificate accounts used to purchase stock.
<PAGE>
CAN I PURCHASE SHARES USING FUNDS IN MY RIVERVIEW SAVINGS IRA ACCOUNT?
- --------------------------------------------------------------------------------
Federal regulations do not permit the purchase of Conversion Shares from your
existing IRA account at the Savings Bank. Please call our Stock Information
Center for additional
information.
WILL THE STOCK BE INSURED?
- --------------------------------------------------------------------------------
No. Like any other common stock, the Holding Company's common stock will not be
insured.
WILL DIVIDENDS BE PAID ON THE STOCK?
- --------------------------------------------------------------------------------
The Board of Directors of the Holding Company intends to pay cash dividends on
the common stock at an initial quarterly rate equal to $0.xx per share divided
by the final exchange ratio, commencing with the first full quarter following
consummation of the conversion and reorganization. However no assurances can be
given that such dividends will be paid, or if paid, will continue.
HOW WILL THE STOCK BE TRADED?
- --------------------------------------------------------------------------------
The Company's common stock has been approved for listing on the Nasdaq National
Market System under the symbol "RVSB". However, no assurance can be given that
an active and liquid market will develop.
MUST I PAY A COMMISSION?
- --------------------------------------------------------------------------------
No. You will not be charged a commission or fee on the purchase of shares in the
Conversion and Reorganization.
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. If you own shares of
common stock of the Savings Bank in more than one account, you could receive
more than on proxy card for the Savings Bank's Meeting of Stockholders.
HOW MANY VOTES DO I HAVE?
- --------------------------------------------------------------------------------
Your proxy card(s) show(s) the number of votes you have. Every member of the MHC
entitled to vote may cast one vote for each $100, or fraction thereof, on
deposit at the Savings Bank as of the voting record date. Additionally, certain
borrowers of the Savings Bank entitled to vote may cast one vote for each loan
with the Savings Bank. Each stockholder of the Savings Bank is entitled to cast
one vote for each share held as of the voting record date.
MAY I VOTE IN PERSON AT THE SPECIAL MEETING OF MEMBERS AND/OR THE MEETING OF
STOCKHODLERS?
- --------------------------------------------------------------------------------
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 appropriate
meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK INFORMATION CENTER BETWEEN
9:00 A.M. AND 5:00 P.M. MONDAY THROUGH THURSDAY OR FRIDAY BETWEEN 9:00 A.M. AND
5:30 P.M., PACIFIC TIME.
================================================================================
STOCK INFORMATION CENTER
(360) xxx-xxxx
================================================================================
Riverview Bancorp, Inc.
700 N.E. Fourth Avenue
Camas, Washington 98067
STOCK OFFERING
QUESTIONS
AND
ANSWERS
- --------------------------------------------------------------------------------
Riverview Bancorp, Inc.
THE STOCK OFFERED IN THE CONVERSION IS NOT A DEPOSIT OR ACCOUNT AND IS NOT
FEDERALLY INSURED OR GUARANTEED. THIS IS NOT AN OFFER TO SELL OR A SOLICIATION
OF AN OFFER TO BUY STOCK. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS
ACCOMPANIED BY A STOCK ORDER FORM AND CERTIFICATION FORM.
<PAGE>
================================================================================
PROXY GRAM
We recently forwarded to you a proxy statement and letter advising that
Riverview, M.H.C. had received conditional approval to convert from a mutual
holding company to a stock holding company.
Your vote on our Plan of Conversion and Agreement and Plan of Reorganization has
not yet been received. Failure to Vote has the Same Effect as Voting Against the
Plan of Conversion and Agreement and Plan of Reorganization.
Your vote is important to us. Therefore, we are requesting that you sign the
enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Plan of Conversion and Agreement and Plan of Reorganization does
not obligate you to purchase stock or affect the terms or insurance on your
accounts.
The Boards of Directors of Riverview, M.H.C. unanimously recommend that you vote
"FOR" the Plan of Conversion and Agreement and Plan of Reorganization.
RIVERVIEW, M.H.C.
Camas, Washington
Patrick Sheaffer
Chairman, President and Chief Executive Officer
- --------------------------------------------------------------------------------
If you mailed the proxy, please accept our thanks and disregard this request.
For further information call (360) xxx-xxxx.
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund or any other governmental agency. This is not an offer to sell or
a solicitation of an offer to buy stock. The offer is made only by the
Prospectus.
================================================================================
<PAGE>
Proxy Card
- -------------------------------------------------------------------------------
Riverview Bancorp, Inc.
Proposed Holding Company for Riverview Savings Bank, FSB
Stock Information Center
700 N.E. Fourth Street
Camas, Washington
(360) xxx-xxxx
Stock Order Form
- --------------------------------------------------------------------------------
Deadline The Subscription Offering ends at x:xx p.m., Pacific Time, on September
xx, 1997. Your original Stock Order and Certification Form, properly executed
and with the correct payment, must be received at the address on the top of this
form by this deadline, or it will be considered void.
- --------------------------------------------------------------------------------
(1) Number of Shares Price Per Share (2) Total Amount Due
x $10.00 = $
- -------------------- --------------------
The minimum number of shares that may be subscribed for is 25. The maximum
individual subscription, when combined with exchange shares, is xx,xxx shares in
the Subscription Offering and Direct Community Offering.
- --------------------------------------------------------------------------------
Method of Payment
(3)[ ] Enclosed is a check, bank draft or money order payable to Riverview
Bancorp, Inc. for $_________________ (or cash if presented in person).
(4)[ ] I authorize Riverview Savings to make withdrawals from my Riverview
Savings 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
-------------------------
(5)[ ] Check here if you are a director, officer or employee of Riverview
Savings or a member of such person's immediate family.
- --------------------------------------------------------------------------------
(6)[ ] Associate - Acting in Concert
Check here, and complete the reverse side of this form, if you or any
associates (as defined on the reverse side of this form) or persons
acting in concert with you have submitted other orders for shares in the
Subscription Offering and/or Direct Community Offering.
- --------------------------------------------------------------------------------
(7) Purchaser Information (additional space on back of form)
a.[ ] Eligible Account Holder - Check here if you were a depositor with $50.00
or more on deposit with Riverview Savings as of December 31, 1995. Enter
information below for all deposit accounts that you had at Riverview
Savings on December 31, 1995.
b.[ ] Supplemental Eligible Account Holder - Check here if you were a
depositor with $50.00 or more on deposit with Riverview Savings as of
XXXX 3x, 1997, but are not an Eligible Account Holder. Enter information
below for all deposit accounts that you had at Riverview Savings on XXXX
3x, 1997.
c.[ ] Other Member - Check here if you were a depositor of Riverview Savings
as of August xx, 1997, and borrowers of Riverview Savings with loans
outstanding as of October 22, 1993 which continue to be outstanding as
of August xx, 1997 but are not an Eligible Account Holder or a
Supplemental Eligible Account Holder. Enter information below for all
deposit accounts that you had at Riverview Savings on August xx, 1997.
d.[ ] Local Community - Check here if you are a permanent resident of Clark,
Cowlitz, Klickitat or Skamania counties, Washington.gs
e.[ ] Shareholder - Check here if you are a shareholder of Riverview Savings
as of August xx, 1997.
Account Title (Names on Accounts) Account Number
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(8)[ ] Stock Registration
<TABLE>
<S> <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 _________________)
</TABLE>
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Street Addressr Daytime Telephone
- --------------------------------------------------------------------------------
City State Zip Code Evening Telephone
- --------------------------------------------------------------------------------
[ ]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 stock 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
August xx, 1997 and understand I may not change or revoke my order once it is
received by Riverview Bancorp, 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. Riverview Savings Bank,
FSB will pursue any and all legal and equitable remedies in the event it becomes
aware of the transfer of subscription rights and will not honor orders known by
it to involve such transfer. Under penalties of perjury, I further certify that:
(1) the social security number or taxpayer identification number given above is
correct; and (2) I am not subject to backup withholding. You must cross out this
item, (2) above, if you have been notified by the Internal Revenue Service that
you are subject to backup withholding because of 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.
Signature THIS FORM MUST BE SIGNED AND DATED TWICE: Here and on the
Certification Form on the reverse side. THIS ORDER IS NOT VALID IF THE STOCK
ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL BE FILLED
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 is by withdrawal from an account that
requires more than one signature to withdraw funds.
THE SHARES OF COMMON STOCK 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.
- --------------------------------------------------------------------------------
Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR OFFICE Date Rec'd ___/___/___ Order # ________
USE Check # ___________ Category ________
Batch# _______ Amount $ ___________ Deposit _________
<PAGE>
Proxy Card
- -------------------------------------------------------------------------------
Riverview Bancorp, Inc.
Proposed Holding Company for Riverview Savings Bank, FSB
- --------------------------------------------------------------------------------
Item (6) continued; Associate - Acting in Concert
Associates listed on Number of
other stock orders shares ordered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Item (7) continued; Purchaser Informations
Account Title (Names on Accounts) Account Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Definition of Associate
The term "associate" of a person is defined to mean (i) any corporation or other
organization (other than Riverview Bancorp, Inc. ("Holding Company"), Riverview
Savings Bank , FSB ("Riverview Savings"), or a majority owned subsidiary of
Riverview Savings) of which such person is a director, officer or partner or is
directly or indirectly the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not
include any tax-qualified employee stock benefit plan of the Holding Company or
Riverview Savings in which such person has a substantial beneficial interest or
serves as a trustee or in a similar fiduciary capacity; and (iii) any relative
or spouse of such person, or any relative of such person, who either has the
same home as such person or who is a director or officer of the Holding Company
or Riverview Savings or any of their subsidiaries.
- --------------------------------------------------------------------------------
CERTIFICATION FORM
(This Certification Must Be Signed In Addition to the Stock Order Form On
Reverse Side)
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF
RIVERVIEW BANCORP, INC. IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT FEDERALLY
INSURED, AND IS NOT GUARANTEED BY RIVERVIEW SAVINGS BANK, FSB OR BY THE FEDERAL
GOVERNMENT.
If anyone asserts that the shares of common stock are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision Western Regional Acting Director, Charles A. Deardorf, at
(415) 616-1500.
I further certify that, before purchasing the shares of common stock of
Riverview Bancorp, Inc., I received a copy of the Prospectus dated, August xx,
1997 which discloses the nature of the shares of common stock being offered
thereby and describes the following risks involved in an investment in the
common stock under the heading "Risk Factors" beginning on page 1 of the
Prospectus:
1. Certain Lending Risks
2. Interest Rate Risk
3. Competition
4. Return on Equity After Conversion and Reorganization
5. Expenses Associated with ESOP and MRP
6. Anti-takeover Considerations
7. Possible Dilutive Effect of Benefit Programs
8. Absence of Prior Market for the Common Stock
9. Possible Increase in Estimated Price Range and Number of Shares Issued
10. Recent Legislation and the Future of the Thrift Industry
11. Possible Adverse Income Tax Consequences of the Distribution of
Subscription Rights
- --------------------------------------------------------------------------------
Signature Date Signature Date
- --------------------------------------------------------------------------------
(Note: If stock is to be held jointly, both parties must sign)
<PAGE>
Riverview Bancorp, Inc.
Stock Ownership Guide and Stock Order Form Instructions
Stock Order Form Instructions
- --------------------------------------------------------------------------------
Item 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 ordered bye subscription price of $10.00 per share. The minimum purchase
is 25 shares. The maximum individual subscription, when combined with exchange
shares, is xx,xxx shares in the Subscription and Direct Community Offerings.
Riverview Bancorp, Inc. reserves the right to reject the subscription of any
order received in the Direct 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 payable to Riverview Bancorp, Inc.
DO NOT MAIL CASH. Your funds will earn interest at Riverview Saving's current
passbook rate of x.xx%.
Item 4 - To pay by withdrawal from a savings account or certificate at Riverview
Savings, 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 stock. A hold will be placed on the
account(s) for the amount(s) you show. Payments will remain in account(s) until
the stock offering closes. 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 the passbook rate.
Item 5 - Please check this box to indicate whether you are a director, officer
or employee of Riverview Savings Bank, FSB or a member of such person's
immediate family
Item 6 - Please check this box if you or any associate (as defined on the
reverse side of the Stock Order Form) or person acting in concert with you has
submitted another order for shares and complete the reverse side of the Stock
Order Form.
Item 7 - Please check the appropriate box if you were:
a) depositor with $50.00 or more on deposit at Riverview Savings as of
December 31, 1995. Enter information below for all deposit accounts
that you had at Riverview Savings on December 31, 1995.
b) A depositor with $50.00 or more on deposit at Riverview Savings as of
XXXX 3x, 1997, but are not an Eligible Account Holder. Enter
information below for all deposit accounts that you had at Riverview
Savings on XXXX 3x, 1997.
c) A depositor of Riverview Savings as of August xx, 1997 or a borrower
of Riverview Savings with loans outstanding as of October 22, 1993
which continue to be outstanding as of August xx, 1997, but are not an
Eligible Account Holder or a Supplemental Eligible Account Holder.
Enter information below for all deposit accounts that you had at
Riverview Savings on August xx, 1997.
d) A permanent resident of Clark, Cowlitz, Klickitat or Skamania
Counties, Washington.
e) Shareholder of Riverview Savings as of August xx, 1997.
Item 8 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Riverview Bancorp,
Inc. common stock. Please complete this section as fully and accurately as
possible, and be certain to supply your social security or Tax I.D. number(s)
and your daytime and evening phone numbers. We will need to call you if we can
not execute you order as given. If you have any questions regarding the
registration of your stock, please consult your legal advisor. 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.
Stock Ownership Guide
- --------------------------------------------------------------------------------
Individual - The Stock is to be registered in an individual's name only, You man
not list beneficiaries for this ownership
Joint Tenants - Joint tenants with rights of survivorship identifies two or more
owners. When stock is 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
stock is to be held by tenants in common, upon the death of one co-tenant,
ownership of the stock 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.
Uniform Gift to Minors - For residents of many states, stock may by held in the
name of a custodian for the benefit of a minor under the Uniform Gift to Minors
Act. For residents in other states, stock may be held in a similar type of
ownership under the Uniform Transfer to Minors Act of the individual state. For
either ownership, the minor is the actual owner of the stock with the adult
custodian being responsible for the investment until the child reaches legal
age. Only one custodian and one minor may be designated.
Instructions: On the first name line, print the first name, middle initial and
last name of the custodian, with the abbreviation "CUST" after the name. Print
the first name, middle initial and last name of the minor on the second name
line. Use the minor's social security number.
Corporation/Partnership - Corporation/Partnerships may purchase stock. 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 Stock Information Center to verify depositor rights and
purchase limitations.
Individual Retirement Account - Individual Retirement Account ("IRA") holders
may make stock purchases from their deposits through a prearranged
"trustee-to-trustee" transfer. Stock may only be held in a self-directed IRA.
Riverview Savings does not offer a self-directed IRA.
Please contact the Stock Information Center if you have any questions about your
IRA account.
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 legal document establishing a fiduciary relationship,
your stock 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 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.
<PAGE>
RIVERVIEW BANCORP, INC.
THE HOLDING COMPANY FOR
RIVERVIEW SAVINGS BANK , FSB
Become a Shareholder!
<PAGE>
Capital Requirements
(Bar graph appears here with the following plot points.)
Tangible Core Risk-
Capital Capital Based
Capital
Required 1.5% 3.0% 8.0%
3/31/97 10.3% 10.3% 20.9%
Pro Forma* 13.6% 13.6% 28.4%
*Assumes the sale of 2,400,000 shares and retention of 50% of the net
convertion proceeds by the Holding Company
As of March 31, 1997, Riverview Savings Bank, FSB complied with all
regulatory capital requirements.
Loan Portfolio Composition
(Pie chart appears with the following plot points.)
Consumer 8.63%
Land 4.77%
Construction 20.19%
Commercial real estate
and business 5.91%
Multi-family 3.28%
One to four-family 57.23%
The principal lending activity of Riverview Savings Bank is the origination of
residential mortgage loans through its mortgage banking activities including
residential construction loans, through the Savings Bank has originated loans
collateralized by commercial properties. The Savings Bank, to a lesser
extent, also makes consumer loans and has made commercial business loans.
Exchange Ratio
<TABLE>
<CAPTION>
Conversion Shares Exchange Stock Shares
to Be Issued to Be Issued to Be Exchange
Amount Percent Amount Percent Outstanding Ratio
<S> <C> <C> <C> <C> <C> <C>
Minimum 2,040,000 52.27% 1,460,943 41.73% 3,500,943 1.4488
Midpoint 2,400,000 52.27% 1,718,757 41.73% 4,118,757 1.7044
Maximum 2,760,000 52.27% 1,976,571 41.73% 7,736,571 1.9601
15% above Maximum 3,174,000 52.27% 2,273,056 41.73% 5,447,056 2.2541
</TABLE>
<PAGE>
Pro Forma Data*
At or For the Year Ended March 31, 1997
<TABLE>
<CAPTION>
15% ABOVE
MINIMUM MIDPOINT MAXIMUM MAXIMUM
OF RANGE OF RANGE OF RANGE OF RANGE
<S> <C> <C> <C> <C>
Shares Issued in Offering 2,040,000 2,400,000 2,760,000 3,174,000
Exchange Shares to be Issued 1,460,943 1,718,757 1,976,571 2,273,056
Total Shares Outstanding 3,500,943 4,118,757 4,736,571 5,447,056
Purchase Price Per Share $10.00 $10.00 $10.00 $10.00
Pro Forma Stockholders' Equity $42,228 $45,406 $48,524 $52,110
Stockholder's Equity per Share (a) $12.08 $11.02 $10.24 $9.57
Tangible Stockholders' Equity per Share (a) $11.41 $10.46 $9.75 $9.14
Price to Book Ratio 82.78% 90.74% 97.66% 104.49%
Price to Tangible Book Ratio 87.64% 95.60% 102.56% 109.41%
Net Income Per Common Share $0.76 $0.67 $0.60 $0.54
Price to Earnings Ratio 13.16x 14.93x 16.67x 18.52x
</TABLE>
* Information based upon assumptions in the Prospectus under "Pro Forma Data".
(a) This is not intended to represent potential price appreciation. There are
no assurances that the market price will be at or above the offering price
once the shares are issued.
Selected Financial Ratios
<TABLE>
<CAPTION>
At or For the Year Ended March 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Return on average assets 0.92% 1.31% 1.41% 2.06% 2.05%
Return on average equity 8.38% 12.02% 12.59% 18.39% 27.58%
Interest rate spread 3.72% 3.62% 4.11% 5.11% 4.89%
Efficiency ratio 69.09% 58.44% 57.15% 50.00% 49.82%
Equity to assets at end of fiscal year 11.15% 11.02% 10.77% 13.96% 8.38%
Nonperforming assets to total assets 0.10% 0.26% 0.13% 0.38% 1.41%
Allowance for loan losses to
total loans at end of period 0.50% 0.47% 0.58% 0.62% 0.55%
</TABLE>
The shares of common stock offered in the Conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund, or any other
government agency. This is not an offer to sell or a solicitation of an offer to
buy the stock. The offer is made only by the Prospectus.
<PAGE>
YOU ARE CORDIALLY INVITED...
to a community investor meeting and reception to learn about formation of
Riverview Bancorp, Inc. and the related offering of common stock. Senior
executives of Riverview Savings Bank, FSB and its' Investment Bankers will
present information and answer your questions about Riverview Savings Plan
of Conversion and Reorganization as well as its business focus and operating
results.
Wednesday, September 9, 1997 Wednesday, September 10, 1997
Skamania Lodge Red Lion Inn
Address Address
xxxxx, Washington xxxxx, Washington
All Community Investor Meetings will begin at x:xx p.m., Pacific Time.
Please call the Riverview Bancorp, Inc. Stock Information Center at
(360) 834-7979 for more information.
<PAGE>
RIVERVIEW BANCORP, INC.
STOCK INFORMATION CENTER
700 N.E. Fourth Avenue
Camas, Washington 98607
(360) 834-7979
<PAGE>
<PAGE>
RIVERVIEW BANCORP, INC. - COMMUNITY INVESTOR MEETING
<TABLE>
<CAPTION>
Slides
- ------
<S> <C>
1. Title - Riverview Bancorp, Inc. - Community Investor Meeting, September 9th and 10th, 1997
2. List - Management of the bank - Patrick Sheaffer, Chairman of the Board, President and
Chief Executive Officer; Ron Wysaske, Executive Vice President and Chief Financial
Officer; Michael C. Yount, Senior Vice President; Karen Nelson, Vice President of Lending;
Phyllis Kreibich, Corporate Secretary
3. Title - Financial Performance
4. Bar chart - Total Assets (3/31/93 - $117.0 million, 3/31/94 - $131.5 million, 3/31/95 -$190.6
million, 3/31/96 - $209.5 million, 3/31/97 - $224.4 million)
5. Pie chart - Asset Mix at 3/31/97 (Net loans - 67.6%, Other - 4.5%, Investment securities -
11.6%, Mortgaged-backed securities - 13.1%, Cash and interest bearing deposits - 3.1%)
6. Bar chart - Loans Receivable, net (3/31/93 - $83.6 million, 3/31/94 - $90.9 million, 3/31/95 -
$103.8 million, 3/31/96 - $128.2 million, 3/31/97 - $151.8 million)
7. Pie chart - Loan Portfolio at 3/31/97 (One- to four-family - 57.1%, Consumer - 8.6%, Land -
4.8%, Commercial business - .5%, Construction - 20.3%, Multi-family - 3.3%, Commercial
real estate - 5.4%)
8. Combination bar and line chart - Loan Origination (3/31/95: Total - $56,857 thousand, One-
to four-family - $16,115 thousand, Construction - $33,935 thousand, Land - $3,839 thousand,
Other - $2,968; 3/31/96: Total - $78,011 thousand, One- to four-family - $26,397 thousand,
Construction - $38,026 thousand, Land - $8,250 thousand, Other - $5,338; 3/31/97: Total -
$85,651 thousand, One- to four-family - $24,039 thousand, Construction - $45,533 thousand,
Land - $9,983 thousand, Other - $6,096)
9. Bar chart - Non-performing Assets to Total Assets (3/31/93 - 1.41%, 3/31/94 - .38%, 3/31/95
- .13%, 3/31/96 .26%, 3/31/97 - .1%)
10. Bar chart - Allowance for Loan Losses to Total Loans (3/31/93 - .55%, 3/31/94 - .62%,
3/31/95 - .58%, 3/31/96 .47%, 3/31/97 - .5%)
11. Pie chart - Deposit Composition at 3/31/97 (Noninterest checking - 4.2%, Money market -
10.4%, Regular savings - 12.5%, NOW - 10.9%, Maxi checking - .9%, CD - 61.1%)
12. Bar chart - Shareholders' Equity (3/31/93 - $9.8 million, 3/31/94 - $18.4 million, 3/31/95 -
$20.5 million, 3/31/96 - $23.1 million, 3/31/97 - $25.0 million)
13. Bar chart - Capital Requirements (Tangible: Requirement - 1.5%, 3/31/97 - 10.26%, Pro
Forma - 13.57%; Core: Requirement - 3.0%, 3/31/97 - 10.25%, Pro Forma - 13.57%; Total
Risk-based: Requirement - 8.0%, 3/31/97 - 20.89%, Pro Forma - 28.38%)
14. Bar chart - Equity to Total Assets (3/31/93 - 8.38%, 3/31/94 - 13.96%, 3/31/95 - 10.77%,
3/31/96 11.02%, 3/31/97 - 11.15%)
15. Bar chart - Net Income (3/31/93 - $2,381 thousand, 3/31/94 - $2,210 thousand, 3/31/95 -
$2,446 thousand, 3/31/96 - $2,613 thousand, 3/31/97 - $2,008 thousand)
16. Bar chart - Return on Average Assets (3/31/93 - 2.05%, 3/31/94 - 2.06%, 3/31/95 - 1.41%,
3/31/96 1.31%, 3/31/97 - .92%)
17. Bar chart - Return on Average Equity (3/31/93 - 27.58%, 3/31/94 - 18.39%, 3/31/95 -
12.59%, 3/31/96 12.02%, 3/31/97 - 8.38%)
<PAGE>
18. Bar chart - Interest Rate Spread (3/31/93 - 4.89%, 3/31/94 - 5.11%, 3/31/95 - 4.11%, 3/31/96
3.62%, 3/31/97 - 3.72%)
19. Bar chart - Net Interest Margin (3/31/93 - 5.12%, 3/31/94 - 5.25%, 3/31/95 - 4.49%, 3/31/96
4.05%, 3/31/97 - 4.19%)
20. Bar chart - Efficiency Ratio (3/31/93 - 49.82%, 3/31/94 - 50.00%, 3/31/95 - 57.15%, 3/31/96
58.44%, 3/31/97 - 69.09%)
21. Title - Franchise
22. Map - Franchise Map (Map denoting branch locations)
23. Table - Branch summary ($000s)- Camas, Clark County, $35,998, 22.6% of deposits, 32.6%
of city and 1.8% of county; Vancouver, Clark County, $27,268, 17.1% of deposits, 1.7% of
city and 1.4% of county; Washougal, Clark County, $21,788, 13.7% of deposits, 33.6% of
city and 1.1% of county; Stevenson, Skamania County, $21,038, 13.2% of deposits, 56.3%
of city and 56.0% of county, White Salmon, Klickitat County, $16,049, 10.1% of deposits,
20.5% of city and 10.5% of county; Battle Ground, Clark County, $12,654, 7.9% of deposits,
12.3% of city and .6% of county; Longview, Cowlitz County, $11,795, 7.4% of deposits,
2.9% of city and 2.2% of county; Goldendale, Klickitat County, $7,681, 4.8% of deposits,
11.3% of city and 5.0% of county; Vancouver, Clark County, $5,336, 3.3% of deposits, .3%
of city and .3% of county
24. List - Riverview Savings Bank, FSB History - Riverview Bancorp, Inc. is the proposed
holding company for Riverview Savings Bank, FSB which was founded in 1923 in Camas,
Washington; The initial reorganization resulted in the formation of a mutual holding
company which was completed in October 1993: Sold 690,000 shares at $10.00 each
25. Chart - Current Corporate Structure (Riverview, MHC owns xx.x % of Riverview Savings
Bank, FSB, Public Stockholders own xx.x% of of Riverview Savings Bank, FSB)
26. Chart - Post-Conversion and Reorganization Corporate Structure (Public Stockholders own
100% of Riverview Bancorp, Inc. which owns 100% of Riverview Bancorp, Inc.)
27. Table -Exchange Ratio - Conversion shares to be issued: Minimum - 2,040,000, Midpoint -
2,400,000, Maximum - 2,760,000, 15% above Maximum - 3,174,000; Exchange stock to be
issued: Minimum - 1,460,943, Midpoint - 1,718,757, Maximum - 1,976,571, 15% above
Maximum - 2,273,056; Shares to be Outstanding: Minimum - 3,500,943, Midpoint -
4,118,757, Maximum - 4,736,571, 15% above Maximum - 5,447,056; Exchange Ratio:
Minimum - 1.4488, Midpoint - 1.7044, Maximum - 1.9601, 15% above Maximum - 2.2541
28. Table - Pro Forma Data ($000s; except per share)- Gross Proceeds: Minimum - 20,400,
Midpoint - 24,000, Maximum - 27,600, 15% above Maximum - 31,740; Stockholders'
Equity: Minimum - 42,288, Midpoint - 45,406, Maximum - 48,524, 15% above Maximum -
52,110; Book Value Per Share: Minimum - 12.08, Midpoint - 11.02, Maximum - 10.24, 15%
above Maximum - 9.57; Tangible Book Value Per Share: Minimum - 11.41, Midpoint -
10.46, Maximum - 9.75, 15% above Maximum - 9.14; Net Income: Minimum - 2,538,
Midpoint - 2,635, Maximum - 2,732, 15% above Maximum - 2,843; Earnings Per Share:
Minimum - .76, Midpoint - .67, Maximum - .60, 15% above Maximum - .54; Price to Book:
Minimum - 82.78%, Midpoint - 90.74%, Maximum - 97.66%, 15% above Maximum -
104.49%; Price to Tangible Book: Minimum - 87.64%, Midpoint - 95.60%, Maximum -
102.56%, 15% above Maximum - 109.41%; Price to Earnings: Minimum - 13.16x, Midpoint
- 14.93x, Maximum - 16.67x, 15% above Maximum - 18.52x
<PAGE>
29. List - Preference Categories - 1 Eligible Account Holders; 2 Employee Stock Ownership
Plan (ESOP); 3 Supplemental Eligible Account Holders; 4 Other Members; 5 Residents of
Local Community; 7 General Public
30. Title - We thank you for your interest in Riverview Bancorp, Inc., NASDAQ NMS: "RVSB"
</TABLE>
Exhibit 99.4
Appraisal Report of RP Financial, LC.
<PAGE>
CONVERSION APPRAISAL REPORT
RIVERVIEW BANCORP, INC.
PROPOSED HOLDING COMPANY FOR
RIVERVIEW SAVINGS BANK, FSB
CAMAS, WASHINGTON
STOCK PRICES AS OF:
JUNE 6, 1997
PREPARED BY:
RP FINANCIAL, LC.
1700 NORTH MOORE STREET
SUITE 2210
ARLINGTON, VIRGINIA 22209
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
June 6, 1997
Boards of Directors
Riverview, M.H.C
Riverview Savings Bank, FSB
700 NE 4th Avenue
Camas, Washington 98607
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal of the estimated pro forma market value of the common stock which is
to be issued by Riverview Bancorp, Inc., Camas, Washington ("Riverview Bancorp"
or the "Holding Company"), in connection with the mutual-to-stock conversion of
Riverview, M.H.C. (the "Mutual Holding Company"). The Mutual Holding Company
currently has a majority ownership interest in, and its principal asset consists
of, the common stock of Riverview Savings Bank, FSB, Camas, Washington
("Riverview" or the "Bank"). It is our understanding that the Holding Company
will offer its stock in a Subscription and Community offering to the Bank's
Eligible Account Holders, to the Bank's employee stock ownership plan ("ESOP"),
to Supplemental Eligible Account Holders of the Bank, to Other Members of the
Bank, to Public Stockholders, and to the community (the "Subscription and
Community Offerings").
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
On May 21, 1997, the Board of Directors of the Bank and the Mutual Holding
Company adopted the Plan of Conversion and Agreement and Plan of Reorganization
(the "Plan") pursuant to which the Mutual Holding Company will convert from a
federally chartered mutual holding company to a Washington chartered stock
corporation. In the reorganization process, to become effective concurrent with
the completion of the stock sale, which is targeted for the third calendar
quarter of 1997: (1) the Mutual Holding Company will convert to an interim
federal stock savings bank ("Interim A") and simultaneously merge with and into
the Bank, pursuant to which the Mutual Holding Company will cease to exist and
the outstanding shares of Savings Bank Common Stock held by the Mutual Holding
Company will be cancelled (52.87 percent of the outstanding Savings Bank Common
Stock as of the date hereof), and (ii) an interim federal stock savings bank
("Interim B") will be formed as a wholly-owned subsidiary of the Holding Company
and will merge with and into the Bank, resulting in the Bank becoming a
wholly-owned subsidiary of the Holding Company and the outstanding Public
Savings Bank Shares (41.73 percent of the outstanding Savings Bank Common Stock
as of the date hereof) will be converted into the Exchange Shares pursuant to
the Exchange Ratio. The Exchange Ratio will result in the holders of the
outstanding Public Savings Bank Shares owning in the aggregate approximately the
same percentage of the Common Stock to be outstanding upon the completion of the
Conversion and Reorganization (i.e., the Conversion Shares and the Exchange
Shares) as the percent of Savings Bank Common Stock owned by
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
RP Financial, L.C.
Boards of Directors
June 6, 1997
Page 2
them in the aggregate immediately before consummation of the Conversion and
Reorganization, before giving effect to any (i) payment of cash in lieu of
issuing fractional Exchange Shares and (ii) shares of Conversion Shares
purchased by the Savings Bank's stockholders in the Conversion Offerings or in
the ESOP thereafter.
RP Financial, LC.
RP Financial, LC. ("RP Financial") is a financial consulting firm that
specializes in financial valuations and analyses of business enterprises and
securities. The background and experience of RP Financial are detailed in
Exhibit V-1. We believe that, except for the fee we will receive for our
appraisal and assisting the Bank in the preparation of its business plan, we are
independent of the Bank, the Mutual Holding Company, the Holding Company and
other parties engaged by the Bank to assist in the stock issuance process.
Valuation Methodology
In preparing our appraisal, we have reviewed the Holding Company's
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 and Exchange Commission ("SEC"). We have conducted an
analysis of the Bank and the Mutual Holding Company (hereinafter, collectively
referred to as "the Bank"), that has included due diligence related discussions
with the Bank's management. All conclusions and assumptions 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 Bank
operates, and have assessed the Bank's relative strengths and weaknesses. We
have kept abreast of the changing regulatory and legislative environment and
analyzed the potential impact on the Bank and the industry as a whole. We have
analyzed the potential effects of the stock offering on the Bank's operating
characteristics and financial performance as they relate to the pro forma market
value of the Bank. We have reviewed the economy in the Bank's primary market
area and have compared the Bank's financial performance and condition with
selected publicly-traded thrift institutions in the State of Washington, the
western U.S. and U.S. as a whole. We have reviewed conditions in the securities
markets in general and for thrift stocks in particular, including the market for
existing thrift issues, the market for initial public offerings and second step
conversion offerings by thrifts and the market for the Public Savings Bank
Shares.
Our appraisal is based on the Bank's representation that the information
contained in the regulatory applications and additional information furnished to
us by the Bank and its independent auditors are truthful, accurate and complete.
We did not independently verify the financial statements and other information
provided by the Bank and its independent auditors, nor did we independently
value the individual assets or liabilities of the Bank. The valuation considers
the Bank only as a going concern and should not be considered as an indication
of the liquidation value of the Bank.
Our appraised value is predicated on a continuation of the current
operating environment for the Bank 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) may occur
from time to time, often with great unpredictability and may materially impact
the value of thrift stocks as a whole or the Bank's value alone. To the extent
that such factors can be foreseen, they have been factored into our analysis.
<PAGE>
RP Financial, L.C.
Boards of Directors
June 6, 1997
Page 3
Pro forma market value is defined as the price at which the Holding
Company's shares 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 Bank and the Mutual Holding Company, inclusive of the sale
of an approximate 58.27 percent ownership interest in the Subscription and
Community Offerings, was $41,187,575 at the midpoint. Based on this valuation
and the approximate 58.27 percent ownership interest being sold in the
Subscription and Community Offerings, the midpoint of the Holding Company's
stock offering was $24,000,000, equal to 2,400,000 shares offered at a per share
value of $10.00. Pursuant to OTS conversion guidelines, the 15 percent offering
range includes a minimum of $20,400,000 and a maximum of $27,600,000. Based on
the $10.00 per share offering price, this range equates to an offering of
2,040,000 shares at the minimum to 2,760,000 shares at the maximum. The Holding
Company's offering also includes a provision for a super range, which if
exercised, would result in an offering size of $31,740,000, equal to 3,174,000
shares at the $10.00 per share offering price.
Exchange Ratio for Public Shares
OTS regulations provide that in a conversion of a mutual holding
company, the minority stockholders are entitled to exchange their shares of the
Bank's common stock for common stock of the Holding Company. The Board of
Directors of the Mutual Holding Company has independently established a formula
to determine the exchange ratio. The formula has been designed to preserve the
current aggregate percentage ownership in the Bank represented by the Public
Savings Bank Shares, which is an approximate 41.73 percent ownership interest.
Pursuant to the formula, the Exchange Ratio will be determined at the end of the
Holding Company's stock offering based on the total number of shares sold in the
Subscription and Community Offerings. Based upon this formula, and the valuation
conclusion and offering range concluded herein, the Exchange Ratio would be
1.4488 shares, 1.7044 shares, 1.9601 shares and 2.2541 shares of Riverview
Bancorp stock issued for each Public Savings Bank Share, at the minimum,
midpoint, maximum and super range of the offering, respectively.
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 initial offering will thereafter be able to sell
such shares at prices related to the foregoing valuation of the pro forma market
value. The appraisal reflects only a valuation range as of this date for the pro
forma market value of the Bank immediately upon issuance of the stock.
RP Financial's valuation was determined based on the financial
condition, operations and shares outstanding as of March 31, 1997, the date of
the financial data included in the Prospectus. The proposed Exchange Ratio and
the exchange of Public Shares for newly issued Holding Company shares was
determined by the Boards of Directors of the Mutual Holding Company and the
Bank. RP Financial expresses no opinion on the proposed Exchange Ratio and the
exchange of Public Savings Bank Shares for newly issued Holding Company shares.
<PAGE>
RP Financial, L.C.
Boards of Directors
June 6, 1997
Page 4
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 should market conditions or changes in Riverview's
operating results warrant.
The valuation will also be updated at the completion of the Holding
Company's stock offering. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, current conditions in the equity markets for thrift shares,
both existing issues and new issues, and the market for the Public Savings Bank
Shares. Also, these updates will consider changes in other external factors
which impact value including, but not limited to: various changes in the
legislative and regulatory environment (including changes in the appraisal
guidelines), 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/ James P. Hennessey
James P. Hennessey
Senior Vice President
<PAGE>
RP FINANCIAL, LC.
TABLE OF CONTENTS
RIVERVIEW BANCORP, INC.
RIVERVIEW SAVINGS BANK, FSB OF CAMAS
PAGE
DESCRIPTION NUMBER
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction 1.1
Plan of Conversion and Holding Company Reorganization 1.1
Strategic Discussion 1.3
Balance Sheet Trends 1.5
Income and Expense Trends 1.8
Interest Rate Risk Management 1.11
Lending Activities and Strategy 1.12
Asset Quality 1.15
Funding Composition and Strategy 1.16
Subsidiary 1.17
Legal Proceedings 1.17
CHAPTER TWO MARKET AREA
Introduction 2.1
Market Area Demographics 2.2
Economy 2.3
Residential Real Estate Market 2.4
Unemployment 2.5
Competition 2.6
CHAPTER THREE PEER GROUP ANALYSIS
Selection of Peer Group 3.1
Financial Condition 3.4
Income and Expense Components 3.7
Loan Composition 3.10
Credit Risk 3.12
Interest Rate Risk 3.12
Summary 3.15
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
RIVERVIEW BANCORP, INC.
RIVERVIEW SAVINGS BANK, FSB OF CAMAS
(CONTINUED)
PAGE
DESCRIPTION NUMBER
CHAPTER FOUR VALUATION ANALYSIS
Introduction 4.1
Appraisal Guidelines 4.1
Valuation Analysis 4.2
1. Financial Condition 4.2
2. Profitability, Growth and Viability of Earnings 4.3
3. Asset Growth 4.4
4. Primary Market Area 4.4
5. Dividends 4.5
6. Liquidity of the Shares 4.7
7. Marketing of the Issue 4.7
A. The Public Market 4.7
B. The New Issue Market 4.11
C. The Acquisition Market 4.12
D. Acquisition Market 4.17
E. Market for Riverview Stock 4.17
8. Management 4.18
9. Effect of Government Regulation and Regulatory Reform 4.18
Summary of Adjustments 4.18
Valuation Approaches 4.19
1. Price-to-Book ("P/B") 4.20
2. Price-to-Earnings ("P/E") 4.21
3. Price-to-Assets ("P/A") 4.21
Valuation Conclusion 4.22
Establishment of Exchange Ratio 4.22
<PAGE>
RP FINANCIAL, LC.
LIST OF TABLES
RIVERVIEW SAVINGS BANK OF WASHINGTON
CAMAS, WASHINGTON
TABLE
NUMBER DESCRIPTION PAGE
1.1 Historical Balance Sheets 1.6
1.2 Historical Income Statements 1.9
2.1 Major Employers in the Camas/Washington Area 2.4
2.2 Clark County Single Family Residence 2.5
2.3 Market Area Unemployment Trends 2.6
2.4 Deposit Summary 2.7
3.1 Peer Group of Publicly-Traded Thrifts 3.3
3.2 Balance Sheet Composition and Growth Rates 3.5
3.3 Income as a Percent of Average Assets and Yields, Costs, Spreads 3.8
3.4 Loan Portfolio Composition Comparative Analysis 3.11
3.5 Credit Risk Measures and Related Information 3.13
3.6 Interest Rate Risk Comparative Analysis 3.14
4.1 Market Area Unemployment Rates 4.5
4.2 Conversion Pricing Characteristics 4.13
4.3 Market Pricing Comparatives 4.14
4.4 Completed Second Step Conversion 4.15
4.5 Inplied Pricing Ratios Full Conversion Basis 4.16
4.6 Public Market Pricing 4.23
4.7 Calculation of Exchange Ratio 4.24
<PAGE>
RP FINANCIAL, LC.
PAGE 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
Riverview Savings Bank, F.S.B. ("Riverview" or the "Bank") is a
federally chartered stock savings bank headquartered in Camas, Washington. Camas
is located in Clark County, which is situated on the Columbia River in southwest
Washington at the head of the navigable portion of the Columbia River,
approximately 70 miles from the Pacific Ocean. Clark County is located within
the Portland metropolitan area, situated on the opposite bank of the Columbia
River from Portland, and Clark County is benefitting from the significant growth
in the greater Portland metropolitan area.
Riverview was organized in 1923 and has a long history of service to
its primary market. Currently, Riverview is a member of the Federal Home Loan
Bank ("FHLB") system, with its deposits insured up to the regulatory maximums by
the Federal Deposit Insurance Corporation ("FDIC") under the Savings Association
Insurance Fund ("SAIF"). The Bank's primary federal regulator is the Office of
Thrift Supervision ("OTS"). At March 31, 1997, Riverview had total assets of
$224.4 million, total deposits of $169.4 million, and stockholders' equity of
$25.0 million equal to 11.2 percent of total assets. For the fiscal year ended
March 31, 1997, the Bank reported net income of $2.0 million for a return of
0.92 percent of average assets.
On October 22, 1993, the Bank completed a reorganization from a mutual
savings bank to a stock savings bank through the formation of a federal mutual
holding company. Pursuant to the reorganization, Riverview transferred
substantially all of its assets and liabilities to a newly-formed stock bank in
exchange for 1,007,400 shares of stock issued to Riverview, M.H.C. (the "Mutual
Holding Company"). Simultaneously, the Bank sold 690,000 shares of stock to the
public in a subscription and community offering. As of March 31, 1997, after
taking into account stock dividends and the exercise of options, there were
2,416,301 total shares of the Bank common stock issued and outstanding, of which
1,407,891 shares, or 58.27 percent, are owned by the Mutual Holding Company and
1,008,410 shares, or 41.73 percent, are owned by the public. Since the mutual
holding company reorganization, Riverview has declared a five percent stock
dividend (fiscal 1994) and three ten percent stock dividends (fiscal years 1995
through 1997), all of which have been paid to both the Mutual Holding Company
and the public shareholders. In addition, Riverview has periodically declared
and paid cash dividends, which have been waived by the Mutual Holding Company.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.2
Plan of Conversion and Holding Company Reorganization
On May 21, 1997, the Board of Directors of the Bank and the Mutual
Holding Company adopted the Plan of Conversion and Agreement and Plan of
Reorganization (the "Plan") pursuant to which the Mutual Holding Company will
convert from a federally chartered mutual holding company to a Washington
chartered stock corporation. In the reorganization process, to become effective
concurrent with the completion of the stock sale, which is targeted for the
third calendar quarter of 1997: (1) the Mutual Holding Company will convert to
an interim federal stock savings bank ("Interim A") and simultaneously merge
with and into the Bank, pursuant to which the Mutual Holding Company will cease
to exist and the outstanding shares of Savings Bank Common Stock held by the
Mutual Holding Company will be cancelled (52.87 percent of the outstanding
Savings Bank Common Stock as of the date hereof), and (ii) an interim federal
stock savings bank ("Interim B") will be formed as a wholly-owned subsidiary of
the Holding Company and will merge with and into the Bank, resulting in the Bank
becoming a wholly-owned subsidiary of the Holding Company and the outstanding
Public Savings Bank Shares (41.73 percent of the outstanding Savings Bank Common
Stock as of the date hereof) will be converted into the Exchange Shares pursuant
to the Exchange Ratio. The Exchange Ratio will result in the holders of the
outstanding Public Savings Bank Shares owning in the aggregate approximately the
same percentage of the Common Stock to be outstanding upon the completion of the
Conversion and Reorganization (i.e., the Conversion Shares and the Exchange
Shares) as the percent of Savings Bank Common Stock owned by them in the
aggregate immediately before consummation of the Conversion and Reorganization,
before giving effect to any (i) payment of cash in lieu of issuing fractional
Exchange Shares and (ii) shares of Conversion Shares purchased by the Savings
Bank's stockholders in the Conversion Offerings or in the ESOP thereafter. Other
than shares of the Bank, the only material asset of the Mutual Holding Company
is approximately $94,292 of cash that will be merged with the Bank's assets upon
completion of the reorganization.
Going forward, Riverview Bancorp will own 100 percent of the Bank's
stock, and the Bank will be Riverview Bancorp's sole subsidiary. Up to 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
Bank, with the balance of the proceeds being retained by the Holding Company. At
this time, no other activities are contemplated for Riverview Bancorp other than
the ownership of the Bank, a loan to the employee stock ownership plan ("ESOP"),
the payment of quarterly dividends to shareholders, and investment of the cash
retained at the Holding Company in investment securities and mortgage-backed
securities ("MBS") consistent with the Bank's current investment practices and
procedures. In the future, Riverview Bancorp may repurchase shares, diversify
its business possibly through existing or newly-formed subsidiaries, through
acquisitions or mergers of other insured financial institutions as well as other
related companies. There are currently no arrangements, understandings or
agreements regarding any such acquisitions or mergers.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.3
Strategic Discussion
Riverview has historically pursued a residential lending strategy
typical of a thrift institution. To this day, the Bank retains its traditional
thrift balance sheet, with assets dominated by residential loans and liabilities
comprised primarily of retail deposits. In addition to the residential portfolio
lending activity typical of most thrifts, however, the Bank has pursued several
strategies designed to take advantage of the strong growth in the Clark County
market. For example, the Bank has successfully implemented an aggressive
construction lending program (construction loans comprised 53 percent of total
lending volume in fiscal 1997) including both speculative and
construction-permanent lending. The Bank has also successfully implemented a
brokered loan program, with three loan brokers working out of Bank facilities to
originate loans for third party lenders. And, the Bank has successfully accessed
the growth in its primary market area to increase its retail deposit base with
core deposits. The construction lending strategy has supported asset yields. The
brokered loan program has generated non-interest fee income. And the deposit
growth has leveraged capital and stabilized funding costs.
More recently, the Bank has adopted strategies designed to further its
objectives of becoming a community bank. Such strategies have included
diversifying the loan portfolio with increased consumer lending, primarily home
equity loans, increased multi-family and commercial real estate lending, and
beginning to originate commercial business loans. On the liability side, the
Bank has successfully sought to increase non-interest demand deposits. The Bank
continues to pursue deposit growth in its local markets, with an emphasis on
retail core deposits and, wherever possible, demand deposits of the retail and
commercial variety.
Following the mutual holding company reorganization in 1993, the Bank
embarked on a growth and expansion strategy with the objectives of building the
franchise and leveraging capital. For example, in May 1994, Riverview acquired
branch offices and $42 million of customer deposits in Longview and Hazel Dell,
Washington, from the RTC. This transaction resulted in significant balance sheet
growth and the creation of a $3.2 million core deposit intangible ("CDI") which
is being amortized over a period of approximately 10 years. The Bank also opened
a branch in the Orchards area of Vancouver, Washington in December 1994 and
relocated to a new full-service office in Battle Ground. During the time period,
Riverview also expanded its loan portfolio considerably and in particular, its
residential construction loan portfolio.
Riverview has achieved significant progress in implementing its
business plan to date as core earnings are strong, the Bank's capital levels
have increased over the last several years, and the Bank has achieved
significant growth. The future business plan of the Bank is largely a
continuation of the current lending and deposit strategies, with the additional
capital raised in the second step conversion being utilized to fund further
<PAGE>
RP FINANCIAL, LC.
PAGE 1.4
growth and investment in fast growing Clark County and to be positioned well to
take advantage of anticipated future growth in Cowlitz County.
Riverview's Board of Directors has determined that a full conversion to
stock form is an attractive business strategy at this time for several reasons.
First, it will provide the capital necessary to improve the overall competitive
position of the Bank in its market area, as the additional capital will enhance
the Bank's flexibility with regard to rates and services. Second, the conversion
will provide the opportunity for expanded local stock ownership which could
enhance the financial success of the Bank as local shareholders consolidate
their banking business with Riverview and promote the Bank's products and
services to other local residents, thereby contributing to growth in the Bank's
loans, deposits, and earnings. Third, the conversion is expected to provide the
Bank with greater flexibility to expand its franchise via internal growth,
branch purchases and de novo branching. The additional capital will also provide
additional capital for future acquisitions although there are presently no
specific plans for such activities.
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 Riverview Bancorp. Such funds will be
invested initially into short term liquidity investments consistent
with the Bank's current portfolio composition, and a loan to the
Bank's Employee Stock Ownership Plan ("ESOP") to fund stock purchases
in the conversion. Going forward, the Holding Company funds will be
utilized for various corporate purposes, including the payment of
regular dividends and possibly special dividends, possible repurchase
of common stock consistent with OTS limitations and time frames, and
possible diversification through the purchase of other operating
entities or financial institutions.
o Riverview. The remaining 50 percent of the net proceeds of the
conversion will be infused into the Bank in exchange for all
of the Bank's newly issued stock. Proceeds infused into the
Bank will initially be held in short-term cash and investments
until the Bank is able to redeploy the funds into loans
receivable or MBS pursuant to the underlying lending
objectives of the Bank.
On a pro forma basis, Riverview will be in an overcapitalized position.
The Board of Directors has determined to pursue a strategy of controlled growth
in the greater Portland metropolitan area in order to leverage capital and, over
time, to diversify Riverview's product lines in conjunction with changing market
demand. Asset growth is expected to be funded through internal deposit growth,
branching and borrowings. The Board recognizes that asset growth is a long term
strategy, however, and that the Bank will operate in the near term in an
overcapitalized position.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.5
Balance Sheet Trends
After the minority stock offering in 1994, Riverview embarked on a
growth and expansion strategy which included internal growth, acquisition of
branches from the RTC and de novo branching. The impact of this strategy is
evidenced in the summary balance sheet data set forth in Table 1.1 which shows
that Riverview's total assets increased from $117.0 million at the end of fiscal
1993 to $224.4 million at the end of fiscal 1997, which reflects a strong 17.7
percent annual increase. Riverview's capital ratio increased significantly from
8.4 percent of assets as of the end of fiscal 1993 to 14.0 percent as of the end
of fiscal 1994, through the retention of earnings and the completion of the
stock offering in conjunction with the formation of the mutual holding company.
Riverview's reported and tangible capital ratios were reduced in fiscal 1995
with the acquisition of two RTC branches and approximately $42 million of
deposit liabilities, which also resulted in the creation of approximately $3.2
million of core deposit intangible. Since fiscal 1995, Riverview's reported and
tangible capital have increased significantly in dollar terms as a result of the
Bank's strong earnings but only modestly as a percent of assets as a result of
interim growth of assets. As of March 31, 1997, stockholders' equity equaled
$25.0 million, or 11.2 percent of assets. Tangible equity equaled $22.7 million,
equal to 10.1 percent of assets.
Although Riverview has undertaken significant balance sheet growth
since the end of fiscal 1993, the mixture of Riverview's interest-earning assets
has remained generally unchanged. Loans receivable comprise the largest segment
of interest-earning assets, totaling $151.8 million or 67.6 percent of total
assets as of March 31, 1997. The balance of loans receivable reflects steady
growth over the last five fiscal years, with compounded annual growth equal to
16.1 percent. The ratio of loans to assets has fluctuated, decreasing in fiscal
1995 following the acquisition of the two RTC branches and increasing thereafter
as a result of the Bank's strong lending activity. Residential construction and
permanent loans are the predominant loan types in the portfolio comprising
approximately 62.5 percent and 32.3 percent of loans receivable, respectively.
Management generally seeks to maximize the amount of assets deployed into higher
yielding loans while maintaining adequate levels of liquidity so as to improve
the Bank's asset yields and overall earnings.
As a result of Riverview's strengthened capital position since 1994,
the Bank has utilized MBS as a means to increase the level of interest-earning
assets, as an avenue to deploy excess liquidity, and as an investment vehicle to
leverage the balance sheet. MBS equaled $29.4 million, or 13.1 percent of assets
as of March 31, 1997, which is comparable to the level of MBS reported as of the
prior two fiscal year ends. At March 31, 1997, approximately $20 million of MBS
were considered to be deployed in leverage transactions, with such securities
funded by FHLB advances of comparable maturities. MBS consist primarily of
straight agency pass-through securities and, to a lesser extent, CMOs
collateralized by FHLMC/FNMA securities. The Bank views MBS as an adjunct to its
loan portfolio, deploying funds into MBS when demand for whole loans is low or,
at various times, in conjunction with leverage transactions. Due to interest
rate risk considerations, the
<PAGE>
Table 1.1
Riverview Savings Bank, FSB
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31,
----------------------------------------------------------------------------------------
1993 1994 1995 1996
--------------------- --------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amount Pct Amount Pct Amount Pct Amount Pct
($000) (%) ($000) (%) ($000) (%) ($000) (%)
Total Amount of:
Assets $117,023 100.0% $131,511 100.0% $190,609 100.0% $209,506 100.0%
Loans Receivable (net) 83,554 71.4% 90,860 69.1% 103,772 54.4% 128,169 61.2%
Mortgage-Backed Securities 11,097 9.5% 17,196 13.1% 31,922 16.7% 30,379 14.5%
Cash and Interest Bearing Deposits 7,772 6.6% 7,363 5.6% 6,449 3.4% 5,585 2.7%
Investment Securities Held to Maturity 10,167 8.7% 12,294 9.3% 38,049 20.0% 31,356 15.0%
Investment Securities Available for Sale 0 0.0% 0 0.0% 0 0.0% 3,932 1.9%
Core Deposit Intangible 0 0.0% 0 0.0% 2,983 1.6% 2,656 1.3%
Deposits 105,953 90.5% 106,478 81.0% 145,449 76.3% 158,159 75.5%
Borrowings 0 0.0% 5,000 3.8% 23,000 12.1% 26,050 12.4%
Stockholders' Equity 9,803 8.4% 18,359 14.0% 20,533 10.8% 23,086 11.0%
Tangible Stockholders' Equity 9,803 8.4% 18,359 14.0% 17,550 9.2% 20,430 9.8%
</TABLE>
Annual
Growth
1997 Rate
Amount Pct Pct
($000) (%) (%)
--------------------- -------
Assets $224,384 100.0% 17.67%
Loans Receivable (net) 151,774 67.6% 16.09%
Mortgage-Backed Securities 29,392 13.1% 27.57%
Cash and Interest Bearing Deposits 6,951 3.1% -2.75%
Investment Securities Held to Maturity 20,456 9.1% 19.10%
Investment Securities Available for Sale 3,899 1.7% NA
Core Deposit Intangible 2,329 1.0% NA
Deposits 169,416 75.5% 12.45%
Borrowings 27,417 12.2% NA
Stockholders' Equity 25,025 11.2% 26.40%
Tangible Stockholders' Equity 22,696 10.1% 23.35%
(1) Ratios are as a percent of ending assets.
Source: Riverview's audited financial reports. RP Financial calculations.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.7
substantial majority of Riverview's MBS carry either adjustable rates or are
shorter term securities (five to seven year maturities) or, in the case of CMOs,
have relatively short durations with limited extension risk. As of March 31,
1997, $3.0 million of MBS were classified as available for sale. In the future,
Riverview anticipates continuing to invest in MBS for leveraging purposes or
during periods of heavy cash flow or weak loan demand. Should MBS be utilized
for leveraging purposes, management expects that such wholesale funding
transactions will be undertaken in increments in the range of $3 million to $10
million.
The balance of interest-earning assets have been invested in cash,
interest-earning assets and investment securities which totaled $31.3 million,
equal to 14.0 percent of total assets. As described above, the balance of cash
and investments increased substantially following the RTC branch acquisition
(the RTC transferred cash to the Bank along with the deposit liabilities). Cash
and investments gradually declined subsequent to the branch purchase, as the
Bank redeployed funds into MBS and whole loans in an orderly investment
strategy. Riverview anticipates the level of cash and investments will initially
increase following the completion of the second step conversion and stock
offering and be gradually reduced as the Bank redeploys such funds into loans,
which is its long-term use of proceeds. Riverview's investment policy is
relatively conservative with investment securities limited to U.S. Treasury and
agency issues with a maximum remaining maturity of ten years, though the Bank
does not typically purchase securities with maturities greater than five years.
The largest segment of the cash and investment portfolio is comprised of
securities classified as "held to maturity", which equaled $20.5 million or 9.1
percent of total assets. New securities purchased are primarily held as
"available for sale" securities.
As of March 31, 1997, intangible assets consisted of the remaining
unamortized CDI equal to $2.3 million, or 1.0 percent of total assets. The CDI
was created in the acquisition of RTC branches in fiscal 1995, which was
accounted for as a purchase. The original CDI balance of $3.2 million is being
amortized into expense over approximately ten years on a straight-line basis.
Over the last five years, Riverview has primarily relied on retail
deposits raised through the branches, internal cash flows and retained earnings
to fund operations. Deposit balances have realized relatively strong growth
equal to 12.4 percent compounded annually with most growth attributable to the
aforementioned RTC branch acquisition. In the future, the Bank will be seeking
to continue to increase retail deposits by offering a competitive array of
products and services, with the objective of growing the deposit base in
conjunction with the overall growth in the greater Portland market.
The utilization of borrowed funds, primarily consisting of FHLB
advances, increased significantly in fiscal 1995 in conjunction with
implementation of a leverage strategy entailing wholesale funding and
investments. Since 1994, the outstanding balance of FHLB advances has increased
from $5.0 million to $27.4
<PAGE>
RP FINANCIAL, LC.
PAGE 1.8
million as of March 31, 1997. Riverview has utilized advances from the FHLB of
Seattle primarily as a means of funding investments in MBS for the purpose of
leveraging capital and enhancing earnings. Approximately $20 million of the
advances are currently employed in such leverage transactions. Additionally, the
Bank utilizes term advances as a means of lengthening the duration of
liabilities and minimizing interest rate risk exposure.
Income and Expense Trends
Riverview's earnings have been relatively strong over the last five
fiscal years. As detailed in Table 1.2, Riverview's profitability has fluctuated
from a high of $2.6 million, equal to 1.31 percent of average assets, in fiscal
1996 to a low of $2.1 million, equal to 0.93 percent of average assets, in
fiscal 1997. Fiscal earnings in 1997 reflected the one time SAIF assessment
incurred in September 1996. Core earnings (i.e., earnings adjusted for one-time
non-recurring events such as the SAIF assessment) reflect a more favorable trend
with core earnings increasing to $2.5 million, equal to 1.17 percent of average
assets in the most recent fiscal year.
Riverview's strong pre-conversion earnings may be largely attributed to
its three prong lending strategy which focuses on (1) construction lending which
provides high yielding, short-term assets; (2) ARM lending for portfolio which
is done without deep teaser rates; and (3) mortgage broker operations where the
Bank originates loans for others (generating fee income) and secondary market
sales of in-house originations to generate fee income and build earnings from an
off-balance sheet servicing portfolio. The foregoing operating strategies have
been particularly successful for the Bank due to management's residential
lending expertise. Additionally, the Bank's lending operations have been
supported by strong population growth being realized in Riverview's primary
market and Clark County in particular
The impact of the Bank's operating strategy is evidenced in the summary
statement of operations for the last five fiscal periods set forth in Table 1.2.
Net interest income earned by Riverview reached a recent historical high in
fiscal 1997, totaling $8.6 million or 3.94 percent of average assets. The Bank
generates a favorable net interest margin, due both to strong asset yields and
interest earnings and a comparatively low cost of funds (see Exhibit I-3 for
detail regarding the Bank's yield-cost spreads).
While net interest income has expanded rapidly in dollar terms, net
interest income as a percent of average assets has declined relative to peak
levels of 5.22 percent of average assets reported in fiscal 1994. The factors
leading to the decline include the consummation of the branch acquisition in
1995, which led to an influx of low yielding cash, and more recently to
competitive pressures which have squeezed asset yields. Additionally,
Riverview's deposit costs have escalated owing to a general increase in market
interest rate levels
<PAGE>
Table 1.2
Riverview Savings Bank, FSB
Historical Income Statement
(Amount and Percent of Average Assets)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31,
--------------------------------------------------------
1993 1994 1995
---------------- ------------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Amount Pct Amount Pct Amount Pct
($000) (%) ($000) (%) ($000) (%)
Interest Income $ 10,230 8.81 $ 10,305 8.32 $ 13,232 7.63%
Interest Expense (4,625) -3.98% (3,840) -3.10% (5,927) -3.42%
-------- ------ -------- ------ --------- ------
Net Interest Income $ 5,605 4.83 $ 6,465 5.22 $ 7,305 4.21%
Provision for Loan Losses (187) -0.16% (200) -0.16% 0 0.00%
-------- ------ -------- ------ --------- ------
Net Interest Income after Provisions $ 5,418 4.66 $ 6,265 5.06 $ 7,305 4.21%
Other Non-Interest Income 1,185 1.02 1,064 0.86 1,139 0.66%
Operating Expense (3,890) -3.35% (3,936) -3.18% (4,889) -2.82%
-------- ------ -------- ------ --------- ------
Net Operating Income $ 2,713 2.34 $ 3,393 2.74 $ 3,555 2.05%
Gain on Loans Held for Sale $ 640 0.55 $ 303 0.24 $ 85 0.05%
Gain on Sale of REO 4 0.00 34 0.03 0 0.00%
Trading Activity Gains 47 0.04 5 0.00 26 0.01%
Gains on Sale of MBS and Other Sec. Held for Sale 327 0.28 0 0.00 0 0.00%
Special SAIF Assessment 0 0.00 0 0.00 0 0.00%
-------- ------ -------- ------ --------- ------
Gains and Net Non-Operating Income $ 1,018 0.88 $ 342 0.28 $ 111 0.06%
Net Income Before Tax $ 3,731 3.21 $ 3,735 3.02 $ 3,666 2.11%
Income Taxes (1,350) -1.16% (1,355) -1.09% (1,220) -0.70%
-------- ------ -------- ------ --------- ------
Net Income (Loss) Before Extraordinary Items $ 2,381 2.05 $ 2,380 1.92 $ 2,446 1.41%
Extraordinary Items 0 0.00 170 0.14 0 0.00%
-------- ------ -------- ------ --------- ------
Net Income (Loss) After Extraordinary Items $ 2,381 2.05 $ 2,550 2.06 $ 2,446 1.41%
Estimated Core Net Income Calculations
Net Income (Loss) Bef. Extra. Items $ 2,381 2.05 $ 2,380 1.92 $ 2,446 1.41%
Adjust. for Net Non-Oper. Income (1,018) -0.88% (342) -0.28% (111) -0.06%
Taxes on Adjustments(2) 346 0.33 116 0.10 38 0.02%
-------- ------ -------- ------ --------- ------
Estimated Core Net Income $ 1,750 1.51% $ 2,168 1.75% $ 2,377 1.37%
</TABLE>
<TABLE>
<CAPTION>
-------------------------- ------------------------
1996 1997
-------------------------- ------------------------
<S> <C> <C> <C> <C>
Amount Pct Amount Pct
($000) (%) ($000) (%)
Interest Income $15,996 8.02% $17,476 8.01%
Interest Expense (8,416) -4.22% (8,923) -4.09%
-------- ------ -------- ------
Net Interest Income $7,580 3.80% $8,553 3.92%
Net Interest Income 0 0.00% (180) -0.08%
Provision for Loan Losses -------- ------ -------- ------
Net Interest Income after Provisions $7,580 3.80% $8,373 3.84%
Other Non-Interest Income 1,624 0.81% 1,767 0.81%
Operating Expense (5,607) -2.81% (6,257) -2.87%
-------- ------ -------- ------
Net Operating Income $3,597 1.80% $3,883 1.78%
Gain on Loans Held for Sale $180 0.09% 69 0.03%
Gain on Sale of REO 0 0.00% 0 0.00%
Trading Activity Gains (5) -0.00% 0 0.00%
Gains on Sale of MBS and Other Sec. Held for Sale 216 0.11% 37 0.02%
Special SAIF Assessment 0 0.00% (947) -0.43%
-------- ------ -------- ------
Gains and Net Non-Operating Income $391 0.20% ($840) -0.38%
Net Income Before Tax $3,988 2.00% $3,043 1.39%
Income Taxes (1,375) -0.69% (1,035) -0.47%
-------- ------ -------- ------
Net Income (Loss) Before Extraordinary Items $2,613 1.31% $2,008 0.92%
Extraordinary Items 0 0.00% 0 0.00%
-------- ------ -------- ------
Net Income (Loss) After Extraordinary Items $2,613 1.31% $2,008 0.92%
Estimated Core Net Income Calculations
Net Income (Loss) Bef. Extra. Items $2,613 1.31% $2,008 0.92%
Adjust. for Net Non-Oper. Income (391) -0.20% 840 0.38%
Taxes on Adjustments(2) 133 0.07% (286) -0.15%
-------- ------ -------- ------
Estimated Core Net Income $2,371 1.19% $2,529 1.16%
</TABLE>
(1) Ratios are as a percent of average assets.
(2) Assumes tax rate of 34 percent throughout periods shown.
Source: Riverview's prospectus and audited financial reports.
RP Financial calculations.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.10
since fiscal 1994 and due to competitive pressures. In the future, we anticipate
that net interest income generated by Riverview may likely improve as the Bank
reinvests the proceeds from the second step conversion offering.
The Bank's diversified lending operations, including heavy construction
loan origination volumes, mortgage broker operations, and loan servicing
activities, provide Riverview with strong non-interest revenues. Non-interest
income including fees on loan sales have exceeded 60 basis points on assets over
the last five fiscal periods and for the twelve months ended March 31, 1997,
non-interest income totaled $1.8 million or 0.81 percent of assets, which
primarily consists of fees earned through the mortgage broker operations,
various fees and service charges on deposits and various other products as well
as fees earned on loans serviced for others. As of March 31, 1997, Riverview was
servicing loans for others with a principal balance of $99 million. It is
management's long term objective to continue to build the servicing portfolio in
order to maintain its customer relationships and increase non-interest sensitive
fee income.
Similar to non-interest income discussed above, Riverview's operating
expenses are inflated by its diversification into construction lending and
mortgage banking activities, thereby offsetting their earnings benefits to an
extent. For the twelve months ended March 31, 1997, operating expenses totaled
$6.3 million, equal to 2.88 percent of average assets. In addition to the normal
costs of maintaining traditional thrift operations (branch operations, financial
reporting and portfolio lending), Riverview's operations also include the costs
of the Bank's mortgage broker activity, secondary market operations (i,.e.,
marketing, originating, and selling loans), as well as servicing loans for
others. Construction lending also entails significant expense as such lending is
relatively labor intensive in relation to residential mortgage lending. No
material increases to the Bank's expenses are anticipated by management in the
future although Riverview may likely experience upward pressures on expense
levels due to inflation and the cost of stock based benefit plans resulting from
the second step conversion.
Non-operating gains have significantly diminished over the last several
years relative to the levels reported in fiscal 1993. The reduction is primarily
the result of a decline in the level of mortgage banking activity and the
related gains on the sale of loans. During fiscal 1997, Riverview also recorded
a $0.9 million expense related the replenishment of the SAIF insurance fund.
Only partially offsetting the loss were gains on the sale of mortgage loans
equal to $69,000 and gains on the sale of MBS and securities held for sale equal
to $37,000. One advantage of the recent BIF/SAIF legislation is the resulting
reduction in Riverview's deposit insurance premium.
Overall, Riverview's asset quality is relatively good and credit
related losses have been low, particularly given the level of construction
lending. As of March 31, 1997, the Bank maintained valuation allowances of
<PAGE>
RP FINANCIAL, LC.
PAGE 1.11
$831,000, equal to 0.50 percent of net loans receivable and 372.6 percent of
non-performing assets ("NPAs"). It is anticipated that valuation allowances will
be established in future periods per the Bank's adopted general reserve policy,
and management will continue to assess the adequacy of valuation allowances
relative to the performance of its loan portfolio on an ongoing basis. The
Bank's current policy is to accrue $45,000 per quarter in valuation allowances.
Interest Rate Risk Management
Riverview's March 31, 1997 NPV analysis shows that the Bank's NPV would
decline by approximately $5.6 million, or 17 percent, relative to base case
levels (i.e., no change in market interest rates) pursuant to a 200 basis point
instantaneous and permanent increase in interest rates, while the NPV would
increase by $3.3 million, or 10 percent assuming a 200 basis point decrease in
rates. Assuming a 400 basis point instantaneous and sustained increase in
interest rates, the Bank's NPV is estimated to diminish by $11.8 million or 37
percent relative to base case levels.
The foregoing NPV values indicates a liability sensitive position,
notwithstanding management's efforts to match the repricing of assets and
liabilities. The Bank's interest rate risk exposure has resulted primarily from
the presence of fixed rate loans in the portfolio, some of which remaining from
past lending practices and other which are the result of retaining shorter term
fixed rate loans in portfolio (the Bank retains fixed rate loans with maturities
of less than 15 years as portfolio loans). As of March 31, 1997, fixed rate
loans comprised $69.6 million, equal to 94 percent of loans with maturities of
one year or more carrying fixed rates (see Exhibit I-8). Riverview manages
interest rate risk primarily from the asset side of the balance sheet, 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 Bank to support control of interest rate risk
include limiting the maturities of the investment portfolio to five years or
less, originating ARM loans for portfolio (and utilizing prepayment penalties on
ARM loans to ensure they do not prepay), selling longer term fixed rate loans
into the secondary market, avoiding completely the interest rate risk of 30 year
fixed lending by offering mortgage broker services (i.e., 30 year fixed loans
never hit the books of the Bank), diversifying into loans with relatively short
terms to maturity such as construction loans and consumer loans, and maintaining
a strong capital position. Riverview also maintains an off-balance sheet
portfolio of loans serviced for others (principal balance of $99 million) which
enhances non-interest fee income and which is a macro-hedge against the long
term fixed rate financial assets on the Bank's balance sheet.
<PAGE>
RP FINANCIAL, LC.
PAGE 1.12
Lending Activities and Strategy
Riverview's lending strategy has been adapted to take advantage of the
rapid growth in the Clark County market north of Portland. The lending strategy
includes a focus on residential permanent and construction loans, with a
secondary emphasis on land loans, consumer loans and commercial business loans
consistent with the Bank's stated community bank strategy. The strategic focus
of Riverview's lending strategy is evidenced in the Bank's loan portfolio
composition (see Exhibits I-9 and I-10, loan composition and lending activity,
respectively). As of March 31, 1997, permanent mortgage loans secured by 1-4
family properties totaled $94.8 million, or 57.2 percent of gross loans, and 1-4
family construction loans totaled $32.3 million, or 19.5 percent of gross loans.
Together, 1-4 family construction and permanent loans comprised a dominant 76.7
percent of Riverview's total loan portfolio.
Consistent with the Bank's community banking strategy, the Bank offers
a wide array of products and services and has diversified its loan portfolio
with consumer loans including home equity lines (8.6 percent of gross loans),
commercial real estate loans (5.4 percent), land loans (4.8 percent), and
multi-family loans (3.3 percent). In the future, Riverview will seek further
diversification consistent with community bank operations, including efforts to
originate and service small business lending and deposit relationships.
Management's strategy will be to employ experienced commercial bankers that can
assist the Bank in developing the plans and programs to profitably originate and
service these relationships. Likewise, the Bank will be seeking to more fully
develop its consumer lending ability. It is management's belief that the
development of non-mortgage commercial and consumer lending will enhance the
Bank's profitability and consistency of earnings.
The Bank's residential lending efforts include a mortgage broker
operation, where loans are originated for third party lenders, and an in-house
lending operation in which the Bank originates both fixed rate and adjustable
rate mortgages secured by 1-4 family properties. In the mortgage broker
operation, Riverview currently employs three (3) commissioned loan brokers who
originate fixed rate loans for third party lenders. Loans originated by the
mortgage brokers are generally fixed rate, conforming loans originated to third
party specifications. Broker loans are generally made at rates that would be
unprofitable to Riverview, but are profitable to the third party lenders by
virtue of their significant lending volume. These loans are originated by the
brokers, but are underwritten and funded by the "end lender" and are never
recorded on the Bank's financial statements. Riverview works with over 15 end
lenders in this program. Loans originated through the mortgage broker operation
are a source of non-interest income (i.e., loan fees) and non-interest expense
(i.e., commissions for the brokers). During fiscal 1997, the brokers originated
approximately $35 million of broker loans, generating approximately $188,000 of
net fee income for Riverview.
Although Riverview originates considerable loan volume through the
brokers, Riverview's preference
<PAGE>
RP FINANCIAL, LC.
PAGE 1.13
is to originate in-house loans where the Bank retains servicing (and the
customer) and benefits from the interest yield or servicing income from the
loans. Riverview's in-house residential lending includes fixed and adjustable
rate loans. Fixed rate loans are originated generally in accordance with the
guidelines of the various secondary market agencies. Riverview generally retains
fixed rate loans with maturities of less than 15 years and balloon loans. Fixed
rate loans with maturities of 15 years or over are generally sold into the
secondary market on a servicing retained basis. Non-conforming fixed rate loans
are retained in portfolio but are generally originated at a premium to the
prevailing secondary market rate to compensate for the greater illiquidity of
the loans and the additional interest rate risk incurred in holding such assets.
The Bank offers a wide array of fixed rate loans, including loans with
maturities ranging from 10 to 30 years and balloon loans (5/25 and 7/23 loans).
Although not presently in great demand by borrowers, the Bank also
stresses adjustable rate mortgage loans ("ARMs") whenever possible. Riverview's
ARMs have annual repricing terms and are indexed to the one year Treasury Bill.
In the past, the Bank offered ARMs indexed to the 11th District Cost of Funds
Index, and the portfolio continues to retain some of these COFI indexed ARMs.
The Bank originates ARMs under a variety of terms, including for owner-occupied
loans, an adjustment margin of 2.75 percent and annual and lifetime adjustment
caps of 2.00 percent and 5.00 percent, and for non-owner occupied loans, and
adjustment margin of 3.75 percent and annual and lifetime caps of 2.00 percent
and 6.00 percent. All ARMs are retained in portfolio. The Bank originates ARM
loans with prepayment penalties to discourage prepayments within the first three
years.
Construction lending is a key aspect of Riverview's overall operating
strategy and has enabled the Bank to more actively participate in the growth
occurring in its market, shorten the average duration of assets, and has helped
to support the Bank's yields albeit at the expense of accepting a somewhat
higher level of credit risk. Approximately 90 percent of the Bank's construction
lending is in Clark County. The Bank's preference is to make construction loans
for pre-sold homes, but it also provides financing on "spec" houses as well
(approximately [35 TO 40] percent of 1-4 family construction loans are "spec"
loans). For pre-sold homes, the Bank makes either fixed rate or ARM construction
loans at terms comparable to its permanent loan products with a few exceptions:
loans are interest-only for the construction period; for fixed rate construction
loans, the rate is set at an approximate 5/8 percent premium to the permanent
fixed rate loan rate; and, non-owner occupied loans require a 75 percent loan to
value ratio. The Bank has had good historical experience with the credit quality
of its pre-sold construction loans.
Spec construction loans are made to local builders approved by the Loan
Committee. There are approximately 45 to 50 builders on the approved list at any
point in time. Spec construction loans are generally fixed rate loans with rates
of Prime plus either 1.5 or 2.0 percent at origination, made with a term of
twelve
<PAGE>
RP FINANCIAL, LC.
PAGE 1.14
months which may be extended in exchange for a fee. Riverview has taken a number
of steps to minimize the risks inherent in construction lending. Spec loans are
secured by individual houses (i.e., no line of credit loans). Funding of
construction loan draws is carefully controlled, construction loan officers are
carefully trained, and the Bank has a contract inspector responsible for all
Clark and Cowlitz County construction loans. Additionally, construction lending
is subject to the following limitations pursuant to the Bank's loan underwriting
guidelines: (1) spec construction loans are limited to 75 percent of capital;
(2) total construction loans are limited to 30 percent of total assets. The risk
in spec construction lending is further minimized by limiting the maximum
exposure to any one builder to 5 houses. Riverview does not finance large tract
developments but will finance small ($2 million or less) projects for lot
development. In the past, the Bank has made a limited amount of multi-family and
non-residential construction loans, but at present, is not actively engaged in
such lending.
In conjunction with its construction lending, the Bank has also made
land loans, which totaled $7.9 million at March 31, 1997. Land loans are made to
local developers with whom the Bank has established relationships for the
purpose of developing residential subdivisions (i.e., installing roads, sewers,
water and other utilities), as well as loans to individuals to build lots. At
March 31, 1997, subdivision loans totaled $2.4 million and building lot loans
totaled $5.5 million. Land loans are secured by a lien on the property and made
with a variety of fixed and adjustable terms with maturities ranging up to 10
years and are made with maximum loan-to-value ratios of 60%. All of the Bank's
land loans are secured by property in the primary market area, and the Bank
seeks to obtain personal guarantees from the principals of its corporate
borrowers.
As part of its efforts to offer a broader line of products and
services, Riverview offers home equity lines of credit. As of March 31, 1997,
the balance of home equity lines of credit was $8.3 million, or 5.0 percent of
gross loans receivable. The credit lines may be secured by first or second
mortgages and have a floating rate tied to the three year U.S. Treasury rate,
are adjustable quarterly, and are generally made with a 16 percent rate cap and
also possess a rate floor. Home equity lines with an 80 percent LTV have a 2.0
percent adjustment margin and an 8.0 percent floor (lines with a 90 percent LTV
have a 3.0 percent margin and a 9.0 percent floor). Home equity lines have a $75
annual fee.
The balance of Riverview's loan portfolio is comprised of various types
of multi-family and commercial real estate loans as well as consumer loans.
Riverview's commercial real estate and multi-family loan portfolios are
comprised of loans originated in-house and secured by properties in the primary
market in southwest Washington state. At March 31, 1997, the balance of
multi-family loans was $5.4 million (3.6 percent of gross loans) and commercial
real estate loans was $9.0 million (5.4 percent of gross loans). Multi-family
and commercial real estate lending is conducted on a case-by-case basis. The
Bank has been a relatively active multi-family lender, mostly apartment
buildings in Washougal and Clark County. Multi-family loans are
<PAGE>
RP FINANCIAL, LC.
PAGE 1.15
generally in the range of $0.2 million to $0.4 million in principal balance, are
generally made as one year ARMs, indexed to the one year Treasury rate plus a
3.75 percent adjustment margin, with 25 year amortization. The Bank underwrites
such loans with a 75 percent LTV ratio and considers debt service coverage
ratios in its credit decision. Commercial real estate loans are generally in the
$0.3 million to $0.5 million principal balance range, generally originated with
the same terms and underwriting as multi-family loans. Consistent with the broad
product line appropriate for a community bank, Riverview's lending activity is
expected to continue to include multi-family and commercial real estate lending.
Non-mortgage loans consist primarily of consumer loans ($6.0 million at
March 31, 1997) including automobile loans, loans on deposits and credit card
loans, and secondarily of commercial business loans ($0.8 million at March 31,
1997). Riverview intends to continue to increase consumer loans in the future as
the Bank continues to implement its community bank operating strategy.
Commercial business loans also are targeted for growth as the Bank seeks to
increase its community bank orientation.
The Bank's historical loan origination, purchase and sale information
is shown in Exhibit I-11. Residential mortgage lending, and specifically
construction lending, predominates the Bank's loan originations. During fiscal
1997, Riverview originated $85.3 million of loans, of which permanent 1-4 family
mortgage loans totaling $23.7 million and construction 1-4 family loans totaled
$43.9 million. At maturity, a portion of the construction 1-4 family loans
convert to permanent status but are not reflected in the above totals. Not shown
in Exhibit I-11 are approximately $36 million of loans originated through the
broker operation that never hit the books of Riverview. Since fiscal 1995,
consistent with growth trends in the Clark County market, the Bank has
originated generally increasing levels of residential loans (permanent and
construction), home equity lines, land and non-residential loans, and consumer
loans. Loan sales have diminished since peaking at $28.1 million in fiscal 1993
and equaled $6.6 million in fiscal 1997. Loan sales have diminished primarily
because most conforming 30 year fixed rate loans (i.e., loans that the Bank
would typically sell) are currently originated by the mortgage broker operation
and do not appear on the Bank's books. The Bank's secondary market loan sales,
along with selected purchases of loan servicing rights, have contributed to an
off-balance sheet portfolio of loans serviced for others of approximately $99
million.
Asset Quality
Riverview's asset quality reflects improvement since the early 1990s as
a result of a strong local economy and the Bank's focus on lower risk
residential lending activities. Specifically, as reflected in Exhibit I-12, the
balance of NPAs in Riverview's portfolio has declined from $1.655 million or
1.41 percent of assets at the end of fiscal 1993 to $223,000 or 0.10 percent of
assets as of March 31, 1997. As of March 31, 1997,
<PAGE>
RP FINANCIAL, LC.
PAGE 1.16
Riverview's NPAs consisted of non-accrual loans with a principal balance of
$88,000 and real estate owned with a net book value of $135,000. At that date,
the Bank's loan loss reserves equaled $831,000 or 0.50 percent of the net loan
portfolio and 372.65 percent of NPAs. These credit quality ratios, coupled with
the strong local economy, reflect relatively good credit quality and low risk of
credit losses at the Bank.
Funding Composition and Strategy
Deposits have consistently been the Bank's primary source of funds, and
as of March 31, 1997, totaled $169.4 million, which reflects 12.5 percent
compounded annual growth since the end of fiscal 1993. As discussed previously,
following the mutual holding company reorganization in 1993, Riverview embarked
on a growth and expansion strategy with the objective of building the franchise
and leveraging capital. Growth and entry into new markets has been facilitated
by the acquisition of the Longview and Hazel Dell offices and the opening of a
de novo branch office in Vancouver. Management believes that Riverview's deposit
pricing places the Bank in the middle of the range of the local competition.
Notwithstanding pricing deposits "at the market", Riverview has been successful
in growing its deposit base as a result of economic and population growth in the
local markets and attracting new customers as a result of consolidation in the
local banking industry.
As with most savings institutions, short-term CDs have been Riverview's
primary source of deposits. As of March 31, 1997, the CD portfolio totaled
$103.5 million, with $64.4 million or 62.2 percent of those CDs having remaining
maturities of one year or less. Jumbo CDs, which tend to more rate sensitive
than other types of CDs, amounted to $0.5 million or less than one percent of
total CDs at March 31, 1997. The Bank does not utilize brokered CDs. Exhibits
I-14 and I-15 provide further detail with respect to the Bank's deposit base.
Lower costing savings and transaction accounts comprised the balance of
Riverview's deposits, totaling $70.0 million or 38.9 percent of total deposits
at March 31, 1997. Like most financial institutions, Riverview has cut rates
paid on NOW and regular savings accounts, with those accounts paying nominal
rates of 2.25 percent and 3.25 percent, respectively, at March 31, 1997. In
comparison to the 38.9 percent ratio maintained at March 31, 1997, transaction
and savings accounts comprised 47.3 percent of the Bank's total deposits at June
30, 1993. The increase in CDs is primarily attributable to two factors: (1) the
acquisition of deposits at the Hazel Dell and Longview offices were primarily in
CDs; and (2) a general rise in market interest rate levels since 1993 have
caused deposits to shift into CDs to capture higher yields. In the future, the
management of Riverview will be seeking to build the proportion of checking
accounts including business checking accounts pursuant to the implementation of
its retail bank strategy.
Borrowed funds have become a more significant source of funds for the
Bank over the last several fiscal years with the implementation of Riverview's
leverage strategies in fiscal 1995. Borrowed funds,
<PAGE>
RP FINANCIAL, LC.
PAGE 1.17
consisting primarily of FHLB advances equaled $27.4 million as of March 31,
1997. The Bank has attempted to match the repricing characteristics of its
borrowings with those of the investments/MBS purchased. For this reason, a large
component of the borrowed funds are short-term FHLB advances with 1 month
floating rates tied to LIBOR (matching the monthly floating LIBOR securities
purchased with the borrowings). The borrowings are primarily shorter-term
advances. On a post-conversion basis, the Bank has indicated that it will
consider use of additional borrowings in conjunction with its leverage strategy.
The leverage strategy would be pursued in increments, with the repricing of
borrowed funds matched with the repricing of assets.
Subsidiary
Riverview currently has one wholly-owned subsidiary, Riverview
Services, Inc., which had a net book value of $0.4 million as of March 31, 1997.
The activities of Riverview Services, Inc., are twofold: (1) acting as trustee
for deeds of trust on mortgage loans granted by the Bank and receives a
reconveyance fee of $35 for each deed of trust; and (2) operating a courier
service for the benefit of the Bank. The operations of Riverview Services are
relatively small in relation to the Bank's equity and earnings.
Legal Proceedings
Other than the routine legal proceedings that occur in the Bank's
ordinary course of business, the Bank is not involved in litigation which is
expected to have a material impact on the Bank's financial condition or
operations.
<PAGE>
RP FINANCIAL, LC.
PAGE 2.1
II. MARKET AREA
Riverview conducts operations out of its headquarters office in Camas,
Washington. Camas is part of Clark County, which is located in the Columbia
River Gorge in southwest Washington at the head of the navigable portion of the
Columbia River, approximately 70 miles distant from the Pacific Ocean.
Importantly, Camas and Clark County are located in the Portland metropolitan
area and portions of Clark County are situated across the Columbia River from
the City of Portland.
In addition to its main office in Camas, the Bank operates a branch in
Camas as well as three other offices in Clark County (Battle Ground, Hazel Dell,
Vancouver and Washougal). The Bank has extended its market area eastward in
areas along the Columbia River through branches located in Stevenson (Skamania
County) as well as Goldendale and White Salmon (Klickitat County). Additionally,
Riverview operates a branch office in Longview located north of Portland along
the Columbia River.
The market environment in Clark County is highly influenced by the
trends prevailing within the Portland metropolitan area. Traditionally, the
economy of Riverview's market has been dependent upon agriculture and natural
resources including most importantly, timber and related manufactured products
such as paper. Clark County's economy has become more diversified over the last
several decades as electronics companies have found the Pacific Northwest an
attractive area to operate -- Computer/electronics manufacturers such as Hewlett
Packard, Wafertech and Sharp rank among the largest employers operating in
Riverview's market. Outlying areas of the Bank's market including Skamania and
Klickitat County have largely retained their rural character and continue to
possess resource-based economies.
While the Bank's four county market has experienced significant growth
and development in recent years, Riverview's markets and Clark County in
particular (i.e., Riverview's largest market) are substantially influenced by
economic trends prevailing in the City of Portland and the surrounding
metropolitan area. Importantly, given the proximity of Portland to Clark County,
many of Clark County's residents commute to Portland daily. In this regard, the
economic growth and development of Portland has supported both economic and
demographic growth in Riverview's markets.
Understanding the key characteristics and trends prevailing in
Riverview's market is important to the valuation as they affect the relative
risk level of an investment in the Bank's stock as well as its ability to
generate future earnings and sustain earnings growth. Critical areas to be
assessed included demographic statistics and the related growth trends, the
nature and stability of the local economy including an analysis of major
industries and/or employers and income and employment trends and the nature and
intensity of the competitive environment. The focus of the analysis will be on
the four counties where Riverview operates
<PAGE>
RP FINANCIAL, LC.
PAGE 2.2
branch offices including Clark, Cowlitz, Klickitat and Skamania Counties, with
particular emphasis on Clark County given the relatively large proportion of the
Bank's overall business generated there (more than one-half of Riverview's total
deposits are in the main office or the two Clark County branches).
Market Area Demographics
The following section presents demographic details regarding
Riverview's market area. Exhibit II-3 displays comparative demographic trends
for all four counties where Riverview operates branch offices in addition to the
Portland MSA. Data for the State of Washington and the United States has been
provided for comparative purposes.
Demographic data including that pertaining to total population and
households provides evidence of several noteworthy trends. First, the population
base of the Pacific Northwest region in general, including the State of
Washington experienced relatively rapid growth through the 1980s, with
compounded annual growth rates exceeding the national average by 81 percent.
Relatively high growth rates for the region have resulted from a variety of
factors including growth of trade with Japan and other Asian nations, a
perceived attractive lifestyle, and a relatively moderate cost of living
(particularly in comparison to California), among other factors.
Such broad regional trends have influenced demographic trends in the
Bank's market as well. Clark County, lying within the Portland metropolitan
area, is suburban in character over large portions of the county with outlying
areas being rural in nature. The total population of Clark County was estimated
to equal approximately 303,000, which reflects a 27 percent increase from the
beginning of the decade and a 4.0 percent compounded annual growth rate, which
is well above the average for the nation and the State of Washington. As
referenced earlier, Clark County's location across the Columbia River has been a
principal factor leading to Clark County's relatively high rate of population
growth since 1980. Furthermore, such trends appear to be intensifying and strong
economic and population growth for Clark County is projected to continue through
the end of the decade.
In contrast to population and household figures and trends for Clark
County, Cowlitz, Klickitat and Skamania Counties where Riverview operates a
total of four offices are rural areas where population growth trends have been
comparatively more modest. Cowlitz County is situated downriver from Clark
County while Klickitat and Skamania Counties are situated east of the Bank's
Camas headquarters. Based on 1996 estimates, Cowlitz County had a population of
approximately 90,000 while Klickitat and Skamania Counties had estimated
populations of approximately 19,000 and 9,000, residents, respectively and
experienced comparatively low growth rates since 1980, as their distance from
major population centers and economies based on logging and
<PAGE>
RP FINANCIAL, LC.
PAGE 2.3
the manufacture of wood-related products, agriculture, and aluminum smelting has
not supported higher growth levels.
Income levels including median household income and per capita income
reflect the relatively strong population and economic growth prevailing in Clark
County and the rural nature and comparatively modest economic and demographic
growth trends experienced in outlying areas. Specifically, median household
income for Clark County in 1996 equaled $34,880, which was comparable to the
state and national average. Income levels for Cowlitz, Klickitat and Skamania
Counties was somewhat lower reflecting their rural nature including the lower
cost of living.
Economy
Historically, the economy of Riverview's markets have been based on
agriculture and timber. Agriculture has been supported by the relatively mild
climate and resultant long growing season, and ample rainfall which the area
receives. Logging and ancillary industries have also provided a substantial
portion of earnings with the area's renowned forests providing a large supply of
relatively inexpensive and accessible wood. While these sectors continue to
remain important, their role has diminished with the growth of the Portland
metropolitan area, development of transportation routes, among other factors. In
this regard, Portland has evolved into a major west coast city with a large
port, airport and major highway and rail links to other regions of the country.
Supported by a relatively good educational system and an attractive living
environment, the economy of the Portland area has diversified and has become a
major financial and trade center. Many of these same factors have led to the
growth of electronic research and manufacturing in the Bank's market.
Table 2.1 provides a list of the major employers in Clark County and
evidences the mixture of new and old-line industries (the largest employer is a
paper manufacturer and the next two largest employers with over 1,000 employees
are involved in electronics-related industries).
<PAGE>
RP FINANCIAL, LC.
PAGE 2.4
Table 2.1
Riverview Savings Bank
Major Employers in the Camas/Washougal Area
Company Product Employees
Hewlett-Packard Computer Printers 2,700
James River Pulp and Paper 1,650
Wafertech Silicon Wafers 800
Sharp Microelectronics Liquid Crystal Displays 600
Pendleton Woolen Mills Woolen Fabrics 330
Fiberweb North America Non-woven materials 169
Source: Camas Washougal Chamber of Commerce
The Cowlitz, Klickitat and Skamania County economy's reflect little
change from their historical roots. Logging and lumber milling continue to
provide the largest source of employment while agriculture is also present
(wheat, alfalfa hay and livestock are the primary products raised).
Additionally, government employment is also significant in these areas owing to
the presence of the national forests and hydroelectric generating stations on
the Columbia River. This latter characteristic, which provides the area with
relatively inexpensive electric power has fostered growth in the aluminum
smelting industry.
In contrast to the economy of Clark County, which has been realizing
relatively strong growth, Klickitat and Skamania Counties remain relatively
depressed as a result of a number of factors including generally tightened
restrictions on logging. Over the long term, the prospects for economic growth
as tourism and recreational businesses develop along the Columbia River Gorge
scenic area however, near term improvements are anticipated to be limited.
Residential Real Estate Market
Strong population growth trends prevailing in Clark County have
supported residential real estate market and loan demand. Strong demand for
housing has supported an escalation in housing prices over the last decade,
increasing the underlying value of the collateral securing the majority of the
Bank's loan portfolio. Evidence of the overall strength of the Clark County
housing market is set forth in Table 2.2, which details the number and dollar
value of residential building permits issued from 1982 to 1996. The data
reflects that the number and value of building permits issued increased rapidly
from 1982 to 1990 before falling off somewhat in 1991. Building permits issued
reflect an increasing trend through the early 1990s but have declined over the
last several years from the extraorinarily high levels posted in 1993 and 1994.
For 1997 thus far, developers have received permits for 1,075 single family
houses, 56 permits for 2 unit, 42 permits for 3-4 unit and 106 permits for 5+
unit residential buildings.
<PAGE>
RP FINANCIAL, LC.
PAGE 2.5
Table 2.2
Riverview Savings Bank
Clark County Single Family Residence
Permit Number and Value 1982-1997
Year No. $ Value
1982 387 $23,515,504
1983 707 44,985,649
1984 756 53,276,078
1985 813 60,747,831
1986 1,015 77,897,892
1987 1,230 105,785,140
1988 1,417 123,239,888
1989 1,811 160,548,881
1990 2,481 222,484,626
1991 1,949 178,700,091
1992 2,924 277,082,341
1993 3,361 307,910,562
1994 3,681 367,026,467
1995 3,048 343,797,392
1996 2,375 237,149,113
April 97 YTD 1,075 117,862,675
Unemployment
Notwithstanding the relatively high population growth rates prevailing
in Clark County, unemployment levels are above the state average and equal to
the national average as of the latest available date. Unemployment rates are
very high in Klickitat and Skamania counties although management believes that
many of those counted as unemployed in these areas are able to earn income on a
contract or day basis in logging or from other sources.
<PAGE>
RP FINANCIAL, LC.
PAGE 2.6
Table 2.3
Riverview Savings Bank
Market Area Unemployment Trends(1)
February 1996 February 1997
Region Unemployment Unemployment
United States 6.0% 5.7%
Washington 7.7 6.2
Portland MSA 4.8 4.8
Clark County 4.8 4.5
Cowlitz County 9.7 8.1
Klickitat County 16.8 14.4
Skamania County 16.4 14.1
(1) Unemployment rates are not seasonally adjusted.
Source: Bureau of Labor Statistics.
Competition
Forecasts of increases in population, households and median household
income should support deposit growth by financial institutions operating in the
market area. Table 2.4 display deposit trends for savings institutions and
commercial banks in the markets served by Riverview. The data indicates that
since 1994 for Washington overall, commercial bank deposits grew at the expense
of thrift deposits, with commercial bank deposits increasing at a 4.1 percent
annual rate while deposits at savings institutions declined slightly. Overall,
the thrift institution market share declined from 31.7 percent as of June 30,
1994, to 29.7 percent as of June 30, 1996. The deposit markets in the counties
encompassing Riverview's markets parallel trends observed for Washington as a
whole, with growth of commercial bank deposits generally exceeding deposit
growth for savings institutions.
Overall, the market area is extremely competitive due to the number and
size of financial institutions that operate within it. Additionally, not only
does Riverview face substantial competition from large banks and savings
institutions such as Washington Mutual Savings Bank, and U.S. Bancorp. Since
1994, Riverview has been seeking to actively grow both through internal growth
through existing branches and by acquiring or building new branches. Most growth
achieved over the last several years has been realized through acquisition but
business volumes at existing branches have increased as well. Overall, the
growth realized at Riverview's branches is in line with the broader market
averages.
<PAGE>
RP FINANCIAL, LC.
PAGE 2.7
Table 2.4
Riverview Savings Bank
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) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
A. Deposit Summary
State of Washington $50,224,072 100.0% 1,528 $52,893,344 100.0% 1,663 2.6%
Commercial Banks 34,312,879 68.3% 1,147 37,163,437 70.3% 1,280 4.1%
Savings and Loans 15,911,193 31.7% 381 15,729,907 29.7% 383 -0.6%
Clark County $1,818,898 100.0% 71 $1,971,431 100.0% 70 4.1%
Commercial Banks 1,189,356 65.4% 49 1,318,529 66.9% 50 5.3%
Savings and Loans 629,542 34.6% 22 652,902 33.1% 20 1.8%
Riverview SB (1) 94,099 14.9% 4 103,044 15.8% 5 4.6%
Riverview SB (2) 5.2% 5.2%
Cowlitz County $443,536 100.0% 22 $539,838 100.0% 19 10.3%
Commercial Banks 395,447 89.2% 18 459,007 85.0% 17 7.7%
Savings and Loans 48,089 10.8% 4 80,831 15.0% 2 29.6%
Riverview SB (1) 11,974 24.9% 1 11,795 14.6% 1 -0.8%
Riverview SB (2) 2.7% 2.2%
Klickitat County $143,589 100.0% 7 $152,714 100.0% 8 3.1%
Commercial Banks 122,014 85.0% 5 128,984 84.5% 6 2.8%
Savings and Loans 21,575 15.0% 2 23,730 15.5% 2 4.9%
Riverview SB (1) 21,575 100.0% 2 23,730 100.0% 2 4.9%
Riverview SB (2) 15.0% 15.5%
Skamania County $41,127 100.0% 2 $37,573 100.0% 3 -4.4%
Commercial Banks 22,340 54.3% 1 16,535 44.0% 2 -14.0%
Savings and Loans 18,787 45.7% 1 21,038 56.0% 1 5.8%
Riverview SB (1) 18,787 100.0% 1 21,038 100.0% 1 5.8%
Riverview SB (2) 45.7% 56.0%
</TABLE>
(1) Percent of S&L deposits.
(2) Percent of total deposits.
Source: FDIC; OTS.
<PAGE>
RP FINANCIAL, LC.
PAGE 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Bank's 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 the Bank is provided by these institutions. Factors affecting the
Bank'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 Bank and the Peer
Group, will then be used as a basis for the pro forma valuation of Bank's
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, and recent conversions, since their pricing ratios
are subject to distortion and/or do not have a seasoned trading history. We have
considered only "fully converted" institutions, i.e., no mutual holding company
subsidiaries, because on a pro forma basis after the second step conversion
Riverview will be a fully converted institution.
From the universe of publicly-traded thrifts, we selected ten
institutions with characteristics similar to those of Bank. In the selection
process, we applied two primary "screens" to the universe of all public
companies:
o SCREEN #1. NORTHWESTERN AND WESTERN INSTITUTIONS, WITH ASSETS OF $100
MILLION TO $2 BILLION, EQUITY-TO-ASSETS RATIOS BETWEEN 10.0 PERCENT
AND 25.0 PERCENT, AND POSITIVE CORE EARNINGS. Six companies met the
criteria for Screen #1 and were included in the Peer Group including
First Colorado Bancorp, First Savings Bank of Washington, Klamath
First Bancorp of Oregon, WesterFed Financial Corp. of Montana,
Horizon Financial Corp. of Washington and United Financial Corp. of
Montana. Exhibit III-2 details the financial characteristics of all
publicly-traded Northwestern and Western institutions.
o SCREEN #2. MID-WEST INSTITUTIONS WITH ASSETS OF $125 TO $500 MILLION,
EQUITY-TO-ASSETS RATIOS IN EXCESS OF 12 PERCENT AND CONSTRUCTION LOAN
PORTFOLIOS IN EXCESS OF 10 PERCENT OF TOTAL LOANS. Five institutions
met the selection criteria for Screen #2 (see Exhibit III-3), and
four were included as part of Bank's Peer Group: FSF Financial Corp.,
Enterprise Federal Bancorp, Cameron Financial Corp. and Bank West
Financial Corp. Guaranty Federal Savings and Loan Association was
excluded based on its mutual holding company form of organization
which
<PAGE>
RP FINANCIAL, LC.
PAGE 3.2
renders its pricing ratios less meaningful in the pricing of a
company with 100 percent of its shares issued and outstanding.
Table 3.1 on the following page shows the general characteristics of
each of the Peer Group companies and Table 4.1 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 Bank, we believe
that the Peer Group provides a good representation of publicly-traded thrifts
with operations comparable to those of the Bank and, thus, will provide a good
basis for valuation. The following sections present a comparison of Bank's
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 Bank, is detailed below.
o First Colorado Bancorp of Colorado. Selected based on its location in a
healthy expanding market which has facilitated growth as well as strong
earnings and asset quality. Moreover, First Colorado is primarily a
residential mortgage lender although it does not undertake construction
lending to the same extent as Riverview. Additionally, like Riverview,
First Colorado operated in mutual holding company form until completing
its second step conversion in January 1996.
o First Savings Bancorp of Washington. Selected based on its location in
the State of Washington and overall similarity of operations including
a focus on residential lending supplemented by construction and other
high risk weight loans. First Savings Bancorp also generates strong
earnings, has a modest loan servicing portfolio, and maintains a high
capital ratio; all the foregoing characteristics are similar to
Riverview on a pro forma basis.
o Klamath First Bancorp of OR. Selected due to its Northwest market area,
comparable size of branch network, strong capital and earnings levels
and similar interest-earning asset composition, including a focus on
residential mortgage lending.
o WesterFed Financial Corp. Included in the Peer Group given its location
in the West, maintenance of a modestly sized loan servicing portfolio
and strong capital position. WesterFed Financial Corp. was included in
the Peer Group notwithstanding its comparatively lower earnings levels.
o Horizon Financial Corp. of WA. Selected due to Horizon Financial's
Northwest market area, strong capital position, similar
interest-earning asset composition, strong net interest margin and a
notable balance of loans serviced for others.
o FSF Financial Corp. of MN. Included in the Peer Group primarily based
on its similar lending strategy including a significant investment in
construction loans. FSF Financial Corp. also operates with a strong
capital position, appears to possess good asset quality and maintains a
modest portfolio of loans serviced for others.
<PAGE>
RP FINANCIAL, LC.
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
July 14, 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>
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,514 D 26 12-31 01/96 18.00 298
FWWB First Savings Bancorp of WA (3) OTC Central WA Thrift 977 D 16 03-31 11/95 21.50 227
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 932 20 06-30 01/94 20.37 113
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
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 367 11 09-30 10/94 16.62 51
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 246 D 5 09-30 10/94 19.00 38
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 198 3 09-30 04/95 16.75 45
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 147 2 06-30 03/95 13.87 25
UBMT United Fin. Corp. of MT OTC Central MT Thrift 108 4 12-31 09/86 19.50 24
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
NOTES: (1) Or most recent date available (M=March, S=September, D=December, J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information published in SNL Securities Quarterly Thrift
Report, and financial reports of publicly-traded thrifts.
</TABLE>
Date of Last Update: 07/14/97
<PAGE>
RP FINANCIAL, LC.
PAGE 3.4
o Enterprise Federal Bancorp of Ohio. Like the other midwest companies,
Enterprise Federal Bancorp is primarily a residential lender with a
comparatively high level of construction loans. Enterprise Federal also
maintains a comparable asset size and branch network in comparison to
Riverview. Earnings however, are modestly lower than the earnings
reported by Riverview.
o Cameron Financial Corp. of MO. Cameron Financial Corp. maintains a
similar asset size and equity level relative to Riverview on a pro
forma basis. Cameron Financial also deploys a significant portion of
interest-earning assets into construction loans (in excess of 30
percent of loans and MBS) which enhances its comparability relative to
Riverview. Cameron Financial's strong earnings are an additional factor
warranting its inclusion in the Peer Group.
o Bank West Financial Corp. of MI. Selected based on the similarity of
lending operations including a relatively large investment in
construction loans. Other factors considered in including Bank West
Financial Corp. in the Peer Group were its strong capital levels,
maintenance of portfolio of loans serviced for others and its
relatively comparable operating expense ratio.
o United Financial Corp. of MT. Selected due to Western market area,
strong capital and earnings levels and relatively good credit quality.
In aggregate, the Peer Group companies are more highly capitalized than
the industry average (16.14 percent of assets versus 12.85 percent for the all
SAIF average), generate higher earnings as a percent of average assets (1.06
percent core ROAA versus 0.84 percent for the all SAIF average), and generate a
lower ROE (6.01 percent core ROE versus 7.35 percent for the all SAIF average).
Overall, the Peer Group's average P/B ratio was slightly lower than, and the
core P/E multiple was slightly higher than, the respective comparable SAIF
averages (see Table 4.6 in Chapter IV for a summary pricing analysis). We
reviewed this pricing differential with two conclusions: first, the slightly
lower P/B of the Peer Group is consistent with the Peer Group's higher
equity-to-assets ratio and lower ROE relative to the all SAIF average; and
second, the pricing discount reflected in the Peer Group versus the all SAIF
average is muted by the Peer Group's geographic location in the Northwest U.S.,
a market that has traditionally enjoyed a pricing premium versus the rest of the
U.S. In general, the companies selected for the Peer Group were fairly
comparable to Bank, as will be highlighted in the following comparative
analysis.
Financial Condition
Table 3.2 shows comparative balance sheet measures for Bank and the
Peer Group, reflecting the expected similarities and some differences given the
selection procedures outlined above. The Bank's ratios reflect balances as of
March 31, 1997, while the Peer Group's ratios reflect balances as of December
31, 1996 or March 31, 1997. The Bank's stockholders' equity equal to 11.2
percent was below the Peer Group's average net worth ratio of 17.1 percent;
however, with the addition of stock proceeds, the Bank's pro forma capital
position
<PAGE>
RP FINANCIAL, LC.
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
-----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
------------ ----- ---- -------- -------- ----- ----- -------- ------ ----------
Riverview SB, FSB
-----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1997 14.7 67.6 13.1 75.5 12.1 0.0 11.2 0.0 10.1 0.0
SAIF-Insured Thrifts 17.9 66.1 11.8 71.6 13.9 0.1 12.7 0.2 12.5 0.0
State of WA 12.2 68.5 15.3 64.8 23.6 0.1 9.3 0.4 8.9 0.2
Comparable Group Average 20.7 66.4 9.7 65.5 15.5 0.0 17.1 0.0 17.1 0.0
Mid-West Companies 21.7 69.9 5.1 61.6 21.2 0.0 16.4 0.0 16.4 0.0
North-West Companies 13.8 71.8 11.9 65.6 12.9 0.0 17.8 0.0 17.8 0.0
Western Companies (Excl CA) 26.3 56.3 13.7 70.6 10.5 0.0 17.3 0.1 17.2 0.0
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 24.7 68.6 1.4 68.1 15.4 0.0 15.8 0.0 15.8 0.0
CMRN Cameron Fin. Corp. of MO 13.5 83.0 0.0 64.7 9.5 0.0 24.7 0.0 24.7 0.0
EFBI Enterprise Fed. Bancorp of OH 13.5 65.6 18.8 58.1 28.4 0.0 12.7 0.0 12.7 0.0
FFHH FSF Financial Corp. of MN 35.1 62.4 0.0 55.4 31.6 0.0 12.4 0.0 12.4 0.0
North-West Companies
--------------------
FWWB First Savings Bancorp of WA 16.7 61.6 18.2 54.5 22.5 0.0 15.1 0.0 15.1 0.0
HRZB Horizon Financial Corp. of WA 10.3 81.4 6.0 82.7 0.0 0.0 15.5 0.0 15.5 0.0
KFBI Klamath First Bancorp of OR 14.3 72.6 11.5 59.7 16.2 0.0 22.7 0.0 22.7 0.0
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of Co 22.5 70.1 4.8 75.0 8.4 0.0 14.3 0.2 14.1 0.0
UBMT United Fin. Corp. of MT 39.9 33.9 22.0 75.8 0.0 0.0 23.5 0.0 23.5 0.0
WSTR WesterFed Fin. Corp. of MT 16.4 64.8 14.4 61.0 23.2 0.0 14.1 0.0 14.1 0.0
</TABLE>
<TABLE>
<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.
------- ----------- ----- -------- -------- ----- ------- -------- ----- --------
Riverview SB, FSB
-----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1997 7.10 -19.11 14.27 7.12 4.34 8.39 11.09 10.26 10.26 20.89
SAIF-Insured Thrifts 11.95 6.97 13.06 6.87 16.68 -2.24 -2.90 10.89 10.94 22.94
State of WA 20.12 16.88 11.51 17.54 25.79 7.55 7.43 8.29 9.48 19.07
Comparable Group Average 11.75 1.31 7.66 9.08 -0.88 -5.75 -5.74 13.25 13.54 26.81
Mid-West Companies 11.41 1.90 16.29 8.00 36.16 -9.56 -9.54 13.31 13.31 23.88
North-West Companies 27.50 -23.62 18.04 18.49 NM -3.95 -3.95 17.92 15.72 31.76
Western Companies (Excl CA) -3.55 25.46 -10.79 1.11 -37.92 -2.48 -2.48 11.61 11.66 25.76
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 3.38 68.18 -11.42 10.69 0.09 -17.43 -17.43 13.30 13.30 26.46
CMRN Cameron Fin. Corp. of MO 10.19 -25.92 18.05 2.24 NM -3.60 -3.60 17.95 17.95 26.76
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
FFHH FSF Financial Corp. of MN 13.45 -0.64 23.14 11.83 33.40 -13.66 -13.66 10.60 10.60 21.00
North-West Companies
--------------------
FWWB First Savings Bancorp of WA 64.24 -22.49 NM 44.65 NM -3.64 -3.64 NM 14.01 26.72
HRZB Horizon Financial Corp. of WA 5.01 -17.64 9.09 5.67 NM 0.37 0.37 NM 15.22 30.43
KFBI Klamath First Bancorp of OR 13.26 -30.73 26.99 5.15 NM -8.57 -8.57 17.92 17.92 38.14
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of Co 2.29 68.93 -8.67 5.14 -2.81 -9.26 -9.26 11.11 11.27 21.92
UBMT United Fin. Corp. of MT -9.27 4.07 -17.78 0.52 -100.00 -1.10 -1.10 15.20 15.20 40.40
WSTR WesterFed Fin. Corp. of MT -3.67 3.37 -5.90 -2.32 -10.96 2.92 2.92 8.51 8.51 14.96
</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>
RP Financial, LC.
Page 3.6
(consolidated with the holding company) can be expected to be comparable to or
exceed the Peer Group's ratio. Intangibles equaled 1.1 percent of assets for
Riverview while intangible assets were nominal for the Peer Group on average
(0.4 percent of assets). Factoring in intangible assets, Riverview's tangible
capital equaled 10.1 percent versus an average of 15.8 percent for the Peer
Group. Both the Bank's and the Peer Group's capital ratios reflected capital
surpluses with respect to the regulatory capital requirements, with the Peer
Group's ratios currently indicating slightly greater capital surpluses. On a pro
forma basis, the Bank's capital surpluses will be more comparable to the Peer
Group's ratios.
The interest-earning asset compositions for the Bank and the Peer Group
were broadly similar, with loans and mortgage-backed securities constituting the
bulk of interest-earning assets for Bank and the Peer Group. The Bank's combined
level of loans and mortgage-backed securities was slightly higher than the Peer
Group's ratio (80.7 percent versus 76.1 percent for the Peer Group), with the
difference attributable to Riverview modestly greater investment in MBS (the
proportion of loans to assets was relatively comparable). Comparatively, the
Bank's cash and investments to assets ratio was lower than the comparable ratio
for the Peer Group (14.7 percent versus 20.7 percent for the Bank). A more
detailed analysis of the respective loan portfolios of Riverview and the Peer
Group will be detailed in a following section and will show that; (1) both
Riverview and the Peer Group are primarily mortgage lenders; and (2) Riverview
has a greater proportion of its portfolio invested in residential construction
loans while conversely, the Peer Group has diversified its portfolio to include
a higher proportion of income producing property loans including commercial real
estate and multi-family mortgage loans. Overall, Bank's interest-earning assets
amounted to 95.4 percent of assets, which was below the comparable Peer Group
ratio of 96.8 percent.
The Bank's funding liabilities reflect a funding strategy similar to
that of the Peer Group's funding composition, with retail deposits constituting
the major source of interest-bearing funds utilized by the Bank and the Peer
Group. The Bank's deposits equaled 75.5 percent of assets, which was higher than
the Peer Group average of 65.5 percent. Partially offsetting Bank's higher ratio
of deposits was its slightly lower level of borrowings, as indicated by
borrowings-to-assets ratios of 12.1 percent and 15.5 percent for the Bank and
the Peer Group, respectively. Total interest-bearing liabilities maintained by
the Bank and the Peer Group, as a percent of assets, equaled 87.7 percent and
81.0 percent, respectively, with the Peer Group's lower ratio being supported by
maintenance of a higher capital position, a situation which will largely be
addressed with the completion of the conversion of the mutual holding company
and the second step stock offering.
A key measure of balance sheet strength for a thrift institution is its
IEA/IBL ratio. Presently, the Bank's IEA/IBL ratio is lower than the Peer
Group's ratio, based on respective ratios of 108.9 percent and 119.5 percent.
The additional capital realized from stock proceeds should serve to partially
address the lower IEA/IBL ratio currently maintained by the Bank, as the
interest free capital realized in Bank's stock offering
<PAGE>
RP Financial, LC.
Page 3.7
will be deployed into interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. Bank's growth rates are based on annual growth for the
twelve months ended March 31, 1997, while the Peer Group's growth rates are
based on annual growth for the most recent twelve month period available. Asset
growth rates of positive 7.1 percent and 11.8 percent were posted by the Bank
and the Peer Group, respectively. The Bank's asset growth measures reflect that
strong loan growth was recorded during the period (positive growth rate of 14.3
percent), with funding for the loan portfolio being largely provided by the cash
and investments portfolio (shrinkage of 19.1 percent). The Peer Group's stronger
asset growth was skewed upward by the strong growth posted by First Savings
Bancorp of Washington which completed an acquisition during the year. (The
median growth rate for the Peer Group equaled 7.6 percent which closely
approximated the average for the Bank.) Paralleling growth trends observed with
respect to Riverview's operations, the Peer Group's growth was primarily
realized in the loan and MBS portfolio with such growth funded partially with a
reduction in cash and investments.
Riverview's operations were funded both through growth of deposits,
which increased by 7.1 percent in the most recent fiscal year and by increasing
borrowings, which grew by 4.3 percent. The Peer Group's deposit growth was
skewed somewhat by the aforementioned institution that completed an acquisition,
but the average deposit growth nonetheless compared closely to the Bank. Despite
recording a modestly lower return on average assets ratio, Bank posted a
stronger capital growth rate than the Peer Group (positive 8.4 percent versus
negative 5.8 percent for the Peer Group). Higher dividend payments and stock
repurchases (the Peer Group is comprised of full stock companies), as well as
possible negative SFAS 115 adjustments, were likely factors that accounted for
the Peer Group's slightly negative capital growth rate. Following the increase
in capital realized from conversion proceeds, the Bank's capital growth rate
will be depressed by (1) a higher pro forma capital position and comparatively
lower marginal returns, (2) dividends which will be paid on all outstanding
shares (dividends on shares owned by the mutual holding company have been waived
to date) and (3) potentially stock repurchases.
Income and Expense Components
The Bank and the Peer Group reported net income to average assets
ratios of 0.92 percent and 0.95 percent, respectively, based on earnings for the
twelve months ended March 31, 1997 or the most recent twelve month period
reported (see Table 3.3). Both the Bank's and most of the Peer Group's earnings
were depressed by the one time assessment to recapitalize the SAIF, which is
shown as a non-operating item under
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income
------------------------------------- --------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ----- ------ ------- ---- ----- ------ ------
Riverview SB, FSB
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1997 0.92 8.01 4.09 3.92 0.08 3.84 0.63 0.00 0.18 0.81
SAIF-Insured Thrifts 0.58 7.16 4.01 3.15 0.13 3.00 0.11 0.01 0.28 0.40
State of WA 0.85 7.59 4.40 3.19 0.17 3.02 0.13 0.00 0.29 0.43
Comparable Group Average 0.93 7.23 3.94 3.29 0.08 3.21 0.14 0.00 0.15 0.30
Mid-West Companies 0.78 7.32 4.09 3.23 0.10 3.12 0.07 0.00 0.15 0.23
North-West Companies 1.16 7.50 4.00 3.50 0.08 3.43 0.10 0.00 0.09 0.19
Western Companies (Excl CA) 0.91 6.85 3.68 3.17 0.06 3.12 0.27 0.00 0.21 0.49
Comparable Group
- ----------------
Mid-West Companies
- ------------------
BWFC Bank West Fin. Corp. of MI 0.76 7.12 4.13 2.99 0.05 2.94 0.15 0.00 0.23 0.39
CMRN Cameron Fin. Corp. of MO 1.12 7.77 3.73 4.03 0.28 3.75 0.07 0.00 0.02 0.09
EFBI Enterprise Fed. Bancorp of OH 0.68 7.40 4.41 3.00 0.05 2.94 0.00 0.00 0.05 0.05
FFHH FSF Financial Corp. of MN 0.57 6.98 4.10 2.88 0.02 2.86 0.07 0.00 0.32 0.39
North-West Companies
- --------------------
FWWB First Savings Bancorp of WA 1.06 7.56 4.07 3.49 0.17 3.32 0.10 0.00 0.16 0.26
HRZB Horizon Financial Corp. of WA 1.53 7.69 4.15 3.54 0.04 3.50 0.21 0.00 0.05 0.26
KFBI Klamath First Bancorp of OR 0.89 7.25 3.77 3.48 0.02 3.46 0.00 0.01 0.06 0.07
Western Companies (Excl CA)
- ---------------------------
FFBA First Colorado Bancorp of Co(3) 1.13 7.05 3.90 3.15 0.16 2.99 0.00 0.01 0.33 0.34
UBMT United Fin. Corp. of MT 1.04 6.86 3.37 3.49 0.00 3.49 0.42 0.00 0.23 0.65
WSTR WesterFed Fin. Corp. of MT 0.55 6.64 3.76 2.88 0.01 2.87 0.40 0.00 0.07 0.47
</TABLE>
<TABLE>
<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
------- ------- ----- ------ --------- -------- -------- -------- ---------
Riverview SB, FSB
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1997 2.72 0.15 -0.38 0.00 8.57 4.85 3.72 2,640 34.01
SAIF-Insured Thrifts 2.17 0.02 -0.33 0.00 7.34 4.63 2.71 9,075 36.13
State of WA 1.87 0.06 -0.22 0.00 8.14 5.19 2.96 3,824 38.09
Comparable Group Average 1.90 0.00 -0.16 0.00 6.88 4.60 2.28 3,753 35.79
Mid-West Companies 2.04 0.00 -0.09 0.00 7.65 5.16 2.49 4,239 35.74
North-West Companies 1.67 0.00 -0.17 0.00 7.79 5.31 2.47 3,660 35.59
Western Companies (Excl CA) 1.92 0.01 -0.23 0.00 4.94 3.12 1.82 2,921 36.18
Comparable Group
- ----------------
Mid-West Companies
- ------------------
BWFC Bank West Fin. Corp. of MI 2.60 0.00 0.42 0.00 7.50 5.17 2.33 2,652 33.99
CMRN Cameron Fin. Corp. of MO 1.68 0.00 -0.40 0.00 8.21 5.30 2.91 3,620 36.56
EFBI Enterprise Fed. Bancorp of OH 1.87 0.01 -0.10 0.00 7.55 5.22 2.34 6,659 32.83
FFHH FSF Financial Corp. of MN 2.03 0.00 -0.28 0.00 7.35 4.96 2.39 4,026 39.58
North-West Companies
- --------------------
FWWB First Savings Bancorp of WA 2.17 0.00 0.08 0.00 7.79 5.54 2.25 2 29.04
HRZB Horizon Financial Corp. of WA 1.50 0.00 0.05 0.00 7.99 5.11 2.88 4,312 33.76
KFBI Klamath First Bancorp of OR 1.36 0.00 -0.65 0.00 7.58 5.29 2.29 6,664 43.98
Western Companies (Excl CA)
- ---------------------------
FFBA First Colorado Bancorp of Co(3) 1.47 0.02 0.02 0.00 0.00 0.00 0.00 4,277 NM
UBMT United Fin. Corp. of MT 2.10 0.00 -0.38 0.00 7.06 4.38 2.68 NM 37.04
WSTR WesterFed Fin. Corp. of MT 2.19 0.00 -0.33 0.00 7.76 4.99 2.77 1,566 35.32
</TABLE>
(3) Income and expense information has been annualized from available financial
information.
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>
RP Financial, LC.
Page 3.9
net gains in Table 3.3. The Bank's operations compared favorably to the Peer
Group with respect to net interest income and non-interest income, which is
partially reflective of the high yields and fee income generated by Riverview's
construction lending operations. The benefits of the Bank's higher revenues
however, are offset by its higher operating expenses.
Riverview's net interest income equaled 3.92 percent of average assets
versus an average of 3.29 percent reported by the Peer Group. A number of
factors contribute to Riverview's favorable level of net interest income
including a strong spread supported by high yields and modestly lower cost of
funds. Asset yields are supported by Riverview's greater proportionate
investment in higher yielding loans and the composition of the loan portfolio
which is heavily weighted toward comparatively higher yielding construction
loans. The yield on the loan portfolio is further enhanced as many of the Bank's
residential loans were originated as construction/permanent loans wherein the
Bank is typically able to charge a modest rate premium.
In another key area of core earnings strength, the Bank maintained a
considerably higher level of operating expenses than the Peer Group. For the
period covered in Table 3.3, the Bank and the Peer Group recorded operating
expense to average assets ratios of 2.72 percent and 1.90 percent, respectively.
The Bank's higher operating expense ratio can in part be explained by its
construction lending operations, which are personnel intensive but which also
generate notably higher yields and fee revenues. Additionally, the Bank's
mortgage broker activities generate fee income and compensation expense without
any corresponding assets reflected on the books, the Bank has been an active
seller of loans to the secondary market, and the Bank currently maintains and
services an off-balance sheet portfolio of loans serviced for others equal to
$99 million. The Bank also maintains a relatively large number of branches for
its asset size. Overall, the relatively high level of personnel maintained by
the Bank is indicated by an assets per full time equivalent employee measure of
$2.7 million, which was well below the Peer Group average of $4.5 million.
Sources of non-interest operating income, which does not include gains
realized from the Bank's secondary market loan sales and other sources of
non-operating income, made a higher contribution to the Bank's earnings than the
Peer Group's, based on comparative non-interest operating income to average
assets ratios of 0.81 percent and 0.30 percent, respectively. The higher
non-interest income is attributable to many of the same factors which tend to
increase Riverview's expenses relative to the Peer Group - including fee income
from loans serviced for others, loan fees from the mortgage broker operation,
loan fees related to construction lending and other retail banking fees.
Given the high level of non-interest income generated by Riverview, the
Bank's expense coverage ratio provides a less meaningful indication of core
earnings strength compared to the expense coverage ratios of the
<PAGE>
RP Financial, LC.
Page 3.10
Peer Group companies, which in general maintain a lower level of diversification
and less significant off-balance sheet operations than Bank. The Bank maintained
a less favorable expense coverage than the Peer Group, reporting expense
coverage ratios of 1.20 percent and 1.41 percent of average assets,
respectively. Even after taking non-interest income into account (but not gains
on sale), however, the Bank's efficiency ratio of 58.6 percent compares more
closely (but remains less favorable) to the Peer Group's average efficiency
ratio of 52.9 percent.
On a post-conversion basis, the Bank's operating expenses can be
expected to increase with the addition of the expenses related to the stock
benefit plans and continued efforts at diversifying operations consistent with
the community banking strategy. However, at the same time, the infusion of
interest-earning assets following the completion of the stock offering will
enhance overall earnings levels.
Loss provisions had a comparable impact on Riverview's and the Peer
Group's earnings with both reporting loan loss provisions equal to 0.08 percent
of assets on average. The modest level of loan loss provisions reported by
Riverview and the Peer Group is reflective of their generally good asset quality
and reserve coverage ratios to date. Going forward, Riverview may be required to
increase the provision for loan losses as it seeks to diversify it loan
portfolio to include a higher ratio of non-mortgage consumer and commercial
loans.
Non-operating losses had a more significant impact on Riverview's
earnings than the earnings of the Peer Group, totaling 0.38 percent of assets
and 0.16 percent of assets. Non-operating losses for Riverview and the Peer
Group were primarily attributable to expenses related to the recapitalization of
the SAIF insurance fund. Both the Bank and the Peer Group companies were in a
fully taxable position with effective tax rates in the range of 34 to 36
percent.
Loan Composition
Table 3.4 presents data related to the loan composition of Bank and the
Peer Group. An emphasis on mortgage lending for both Riverview and the Peer
Group is apparent as non-mortgage loans (i.e., consumer and commercial business
loans) totaled only 8.33 percent and 5.85 percent, respectively. 1-4 family
mortgage loans and MBS comprised 68.5 percent for Riverview and averaged 78.9
percent for the Peer Group.
Riverview's loan portfolio reflects a modestly greater level of
diversification into high risk-weight assets, with the Bank more heavily
invested in construction loans and the Peer Group more active in the areas of
commercial and multi-family mortgage lending. Based on the most recent available
data, Riverview's construction loan portfolio equaled approximately 27.8 percent
of loans and MBS which is well in excess of the
<PAGE>
RP FINANCIAL, LC.
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
----------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ----- ------ ------- ------- -------- -------- ------ ---------- ---------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Riverview SB, FSB 16.22 52.23 27.79 3.00 0.44 7.89 49.04 98,800 469
SAIF-Insured Thrifts 15.13 61.71 5.55 11.64 6.52 1.68 51.04 340,525 2,490
State of WA 15.26 55.49 11.31 15.16 2.88 2.30 48.76 3,186,219 20,193
Comparable Group Average 11.03 67.90 9.84 9.21 4.96 0.89 51.79 63,533 81
Comparable Group
- ----------------
BWFC Bank West Fin. Corp. of MI 2.15 87.45 13.28 1.53 0.73 1.04 49.67 27,519 144
CMRN Cameron Fin. Corp. of MO 0.01 71.13 32.92 4.64 3.98 0.36 65.61 0 0
EFBI Enterprise Fed. Bancorp of OH 15.39 59.90 10.40 16.17 3.60 0.58 56.41 0 0
FFHH FSF Financial Corp. of MN 0.04 68.10 12.73 6.58 15.53 2.79 51.14 40,099 26
FFBA First Colorado Bancorp of Co 9.80 71.27 3.23 11.72 5.36 0.03 51.87 22 468
FWWB First Savings Bancorp of WA 6.05 59.08 8.56 16.32 3.57 2.87 54.28 213,000 26
HRZB Horizon Financial Corp. of WA 5.59 82.29 2.45 11.11 0.08 0.00 51.61 83,742 0
KFBI Klamath First Bancorp of OR 11.33 83.53 2.88 4.15 0.73 0.01 44.48 1,089 0
UBMT United Fin. Corp. of MT 40.95 36.06 9.53 11.65 4.84 1.18 34.34 0 0
WSTR WesterFed Fin. Corp. of MT 18.95 60.18 2.47 8.21 11.15 0.00 58.44 269,860 142
</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>
RP Financial, LC.
Page 3.12
Peer Group average of 9.8 percent. Conversely, the Peer Group's ratio of
multi-family and commercial mortgage loans averaged 9.2 percent as compared to
3.0 percent for Riverview.
Notwithstanding the Bank's diversification into higher risk types of
lending, the Bank maintained a slightly lower risk weighted assets-to-assets
ratio than the Peer Group (48.98 percent versus 50.83 percent for the Peer
Group). Overall, while there is higher credit risk and yield potential
associated with the Bank's loan portfolio composition, the overall balance sheet
structure of Riverview is relatively comparable in terms of credit risk relative
to the Peer Group. In addition, some of the credit risk of the construction loan
portfolio may be diminished by the relative strength and growth trends
prevailing in the markets served by Riverview.
Credit Risk
Table 3.5 reflects the relative credit risk factors of Riverview and
the Peer Group companies. In the financial analysis of the Bank included in
Section One, we noted that Riverview's asset quality reflects a general
improving trend since 1993 and loan losses and chargeoffs over this time period
have been low. The Peer Group's asset quality is also relatively favorable and
their asset quality ratios are generally comparable to the levels reported by
the Bank. As shown in Table 3.5, Bank's ratio of non-performing assets and
accruing loans that are more than 90 days past due equaled 0.10 percent of
assets, versus a comparative ratio of 0.19 percent for the Peer Group.
Similarly, the Bank and the Peer Group's ratio of non-performing loans to total
loans was similarly low, equal to 0.06 percent and 0.15 percent of loans,
respectively. Coverage ratios for the Bank and the Peer Group were also similar
as the ratio of valuation allowances to total loans equaled 0.55 percent and
0.53 percent for the Bank and the Peer Group, respectively. Valuation allowances
as a percent of non-performing assets equaled 372.65 percent and 203.51 percent
for the Bank and the Peer Group, respectively.
Interest Rate Risk
Table 3.6 reflects various key ratios highlighting the relative
interest rate risk exposure of the Bank versus the Peer Group companies. In
terms of balance sheet composition, Bank's interest rate risk characteristics
were considered to be less favorable than the Peer Group's. In particular,
Bank's lower capital position and lower IEA/IBL ratio indicate a greater
dependence on the yield-cost spread to sustain the net interest margin.
Likewise, Bank's higher level of non-interest earning assets results in a lower
capacity to generate interest income in comparison to the Peer Group. However,
on a pro forma basis, the infusion of stock proceeds should serve to address the
Bank's lower equity-to-assets ratio, while Bank's IEA/IBL ratio and level of
non-interest earning assets will likely remain less favorable than the Peer
Group's ratios.
<PAGE>
RP FINANCIAL, LC.
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.5
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
----------- ------ ------- ----- ------ ------- ------- --------- ------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Riverview SB, FSB 0.06 0.10 0.06 0.55 944.32 372.65 2 0.00
SAIF-Insured Thrifts 0.29 0.78 0.85 0.83 181.45 129.32 272 0.10
State of WA 0.27 0.49 0.48 0.90 337.18 157.81 91 0.03
Comparable Group Average 0.06 0.19 0.15 0.53 358.64 203.51 13 0.01
Comparable Group
----------------
BWFC Bank West Fin. Corp. of MI 0.03 0.03 NA 0.20 NA 458.70 0 0.00
CMRN Cameron Fin. Corp. of MO 0.00 0.60 0.33 0.95 288.53 135.41 8 0.02
EFBI Enterprise Fed. Bancorp of OH 0.00 0.01 0.02 0.28 NA NA 0 0.00
FFHH FSF Financial Corp. of MN 0.03 0.10 0.12 0.34 285.51 216.04 19 0.03
FFBA First Colorado Bancorp of Co 0.11 0.19 0.12 0.37 305.71 136.49 52 0.02
FWWB First Savings Bancorp of WA 0.09 0.25 0.22 1.07 492.49 261.72 5 0.00
HRZB Horizon Financial Corp. of WA 0.00 0.01 NA 0.85 NA NA 0 0.00
KFBI Klamath First Bancorp of OR 0.00 0.10 0.13 0.24 176.70 176.70 0 0.00
UBMT United Fin. Corp. of MT 0.39 0.42 NA 0.21 NA 16.41 0 0.00
WSTR WesterFed Fin. Corp. of MT 0.00 0.22 0.13 0.76 602.90 226.57 47 0.04
</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>
RP FINANCIAL, LC.
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
Equity/ IEA/ Assets/ ----------------------------------------------------------
Institution Assets IBL Assets 03/31/97 12/31/96 09/30/96 06/30/96 03/31/96 12/31/95
- ----------- ------- ----- --------- -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Riverview SB, FSB 10.1 108.9 4.6 -25 11 4 11 -12 23
SAIF-Insured Thrifts 12.2 111.8 4.2 0 -1 -2 8 4 6
State of WA 8.9 108.8 4.1 6 -12 4 11 13 16
Comparable Group Average 15.9 118.6 3.4 -12 0 0 9 6 9
Comparable Group
- ----------------
BWFC Bank West Fin. Corp. of MI 15.3 114.3 4.0 -7 -4 -8 2 15 0
CMRN Cameron Fin. Corp. of MO 23.0 126.1 4.4 -24 4 -6 6 9 6
EFBI Enterprise Fed. Bancorp of OH 12.7 113.3 2.0 NA 9 -35 40 0 18
FFHH FSF Financial Corp. of MN 11.8 111.7 2.2 -1 -10 8 22 -13 -19
FFBA First Colorado Bancorp of Co 14.1 116.7 2.6 NA NA NA 16 48 9
FWWB First Savings Bancorp of WA 15.1 125.2 3.6 NA -5 27 -17 -25 87
HRZB Horizon Financial Corp. of WA 15.2 118.5 2.3 -16 13 -3 2 19 -1
KFBI Klamath First Bancorp of OR 20.4 125.5 1.9 -7 -20 -8 -1 23 NA
UBMT United Fin. Corp. of MT 22.6 126.5 3.6 6 7 16 9 -16 -24
WSTR WesterFed Fin. Corp. of MT 8.7 107.7 7.2 -32 6 7 15 1 8
</TABLE>
NA=Change is greater than 100 basis points during the quarter.
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>
RP Financial, LC.
Page 3.15
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 Bank and the Peer Group. Based on the greater fluctuation exhibited
in the Bank's net interest margin during the five quarters ended March 31, 1997,
the data indicates that there is greater interest rate risk associated with the
Bank's net interest margin compared to the net margins of the Peer Group
companies on average. However, the relative fluctuations in both the Bank's and
the Peer Group's net interest income to average assets ratios were considered to
be fairly limited and, thus, neither Bank or the Peer Group were viewed as
having significant interest rate risk exposure in their respective net interest
margins. It is expected that the infusion of stock proceeds will serve to
enhance the stability of the Bank's net interest margin, as interest-sensitive
liabilities will be funding a lower proportion of Bank's assets.
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 Bank. Such general characteristics as regional market area,
asset size, capital position, interest-earning asset composition, funding
composition, core earnings measures and loan composition all tend to support the
reasonability of the Peer Group from a financial standpoint.
<PAGE>
RP FINANCIAL, LC.
PAGE 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis, consistent with current
valuation methodology promulgated by the OTS, and key valuation factors and
assumptions considered in estimating pro forma market value of the common stock
to be issued in conjunction with the conversion of the MHC. The MHC is
converting to a Washington stock corporation pursuant to the Plan. The valuation
has been prepared utilizing the same general pro forma valuation methodology
that has been used in the valuation of standard conversions since 1983. The pro
forma valuation methodology has been modified to reflect the unique
characteristics of the conversion of the MHC, specifically the fact that the MHC
will be selling only a partial ownership interest in the Subscription and
Community Offerings, instead of a 100 percent ownership interest as would be the
case in a standard conversion.
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 included: (1) selection of a peer group of comparable seasoned
publicly-traded institutions whose pricing is not distorted due to a variety of
factors; (2) a fundamental analysis of the subject company to the peer group;
and (3) a pro forma valuation analysis of the subject company based on the
market pricing of the peer group as of the date of valuation. The amended
valuation guidelines also 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's valuation analysis complies with the October 1983 OTS
appraisal guidelines as revised on October 21, 1994, incorporating a
"fundamental analysis" relative to the Peer Group and a "technical analysis" of
final conversion pricing and trading levels of recently completed conversions
(given the emphasis of limiting after-market appreciation). It should be noted
that such analysis cannot possibly fully account for all the market forces which
impact after-market 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 Bank's operations and financial
condition; (2) monitor the Bank'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,
<PAGE>
RP Financial, LC.
Page 4.2
including he market for thrift stocks; and (4) monitor pending initial and
second step cnversion 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 Bank 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 Riverview, or Riverview's value alone. To the extent a change
in factors impacting the Bank's value can be reasonably anticipated and/or
quantified, RP Financial has incorporated the estimated impact into its
analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences relative to
the Peer Group was presented in Chapter III. The following sections summarize
such differences between the Bank and the Peer Group and how those differences
affect the pro forma valuation. Emphasis is placed on the specific strengths and
weaknesses of the Bank 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, including second step conversions, to assess the impact on value of
Riverview coming to market at this time.
1. Financial Condition
The financial strength 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
Bank's financial strength can be summarized as follows:
o Overall A/L Composition. Residential mortgage loans and MBS
funded by retail deposits were the primary components of both
Riverview's and the Peer Group's balance sheets. The Bank
maintains a higher proportion overall of loans receivable than
the Peer Group, offset by a lower level of cash and
investments. Riverview also reported a higher level of
diversification
<PAGE>
RP Financial, LC.
Page 4.3
into higher risk weight loans relative to the Peer Group,
indicating higher yield potential but greater potential credit
risk. The Peer Group relied on borrowed funds to a greater
extent than the Bank, although retail deposits comprised the
major portion of the respective funding needs.
o Credit Risk. Riverview maintains comparatively lower
NPAs/assets and NPLs/loans ratios, despite a higher credit
risk profile. The Bank's reserves-to-loans ratio is comparable
to the Peer Group, and reserve coverage is superior. Neither
the Bank nor the Peer Group appears to be exposed to material
credit risk based on traditional asset quality measures.
However, the high concentration of construction loans in the
Bank's loan portfolio makes the Bank's credit quality highly
sensitive to changes in local market demographics.
o Liquidity. Riverview maintained a lower level of cash and
investments than the Peer Group and a higher proportion of
MBS. The Bank's proportion of cash and investments is likely
to initially increase on a pro forma basis. Borrowings were
utilized to a slightly higher degree by the Peer Group, and
both maintain ample borrowings capacity. Overall, Riverview
appears to have comparable balance sheet liquidity relative to
the Peer Group.
o Capital. While the Bank maintains a lower capital position in
relation to the Peer Group, following the infusion of
conversion proceeds, the Bank's capital position is expected
to slightly exceed the Peer Group average. As a result, the
Bank will have comparable or slightly greater leverage
capacity than the Peer Group.
On balance, RP Financial applied a slight downward adjustment for
financial condition primarily due to the perceived credit risk concerns from
construction lending.
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 Riverview 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 core earnings. The specific factors considered
in the valuation include:
o Reported Earnings. The Bank reported comparable net income of
0.92 percent of average assets for the most recent twelve
month period versus earnings of 0.95 percent for the Peer
Group, with both reflecting the special SAIF assessment.
o Core Earnings. The Bank maintains a favorable core
earnings posture relative to the Peer Group. The Bank operated
with greater net interest income (3.92 percent of average
assets versus 3.34 percent for the Peer Group), more favorable
non-interest operating income (0.81 percent versus 0.31
percent for the Peer Group), but less favorable operating
expenses than the Peer Group (2.87 percent of average assets
versus 1.93 percent for the Peer Group). Redeployment of
conversion proceeds into interest-earning assets should
enhance Riverview's net interest income, while operating
expenses for the Bank are expected to increase as well.
<PAGE>
RP Financial, LC.
Page 4.4
On a pro forma basis, Riverview's core profitability is
expected to exceed that of the Peer Group.
o Interest Rate Risk. Riverview's NPV measures indicated
relatively low exposure to rising interest rates. Although gap
and NPV data was not available for the Peer Group, other
analyses indicated that interest rate risk between the Bank
and the Peer Group is comparable. The pro forma increase in
the IEA/IBL ratio can be expected to reduce the Bank's
interest rate risk exposure further.
o Credit Risk. Loss provisions had a lower impact on the
earnings of the Bank in comparison to the Peer Group. In terms
of credit quality, the Bank maintained comparable levels of
reserves-to-loans and higher reserve coverage ratios as a
percent of non-accruing loans and total NPAs. Notwithstanding
these ratios, the Bank's higher risk loan portfolio and
concentration of construction loans exposes it to potentially
greater credit risk than the Peer Group, which adds a higher
risk of earnings volatility relative to the Peer Group.
o Earnings Growth Potential. Several factors were considered in
assessing earnings growth potential. Riverview's recent loan
demand has been strong, the surrounding market area is growing
rapidly, deposit growth has been healthy, and the Bank will
have excess capital to leverage. In light of these factors,
the Bank's earnings appear to have superior upside potential
than the Peer Group.
o Return on Equity. On a pro forma basis the Bank's pro forma
return on equity will be similar to the Peer Group average, as
the Bank's pro forma profitability is measured against a
comparatively higher capital position.
Overall, after considering the strengths of the Bank's current
earnings and future earnings potential and the risk of earnings volatility
inherent in construction lending, RP Financial made no adjustment to the
valuation for profitability, growth and viability of earnings.
3. Asset Growth
The Bank's asset growth in recent periods has been slower than
the Peer Group's. However, growth in the key balance sheet components of loans
and MBS and deposits has been relatively consistent between the Bank and the
median figures for the Peer Group. Since both the Bank and the Peer Group
companies operate in healthy growing markets and key growth rates are comparable
on a median basis, we concluded that no adjustment was warranted relative to the
Peer Group for the Bank's asset growth potential.
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. Summary
<PAGE>
Table 4.1
Peer Group Primary Market Area Demographic/Competition Trends
<TABLE>
<CAPTION>
Proj.
Population Pop. 1990-97 1997-2002
Institution County 1990 1997 2002 % Change % Change Median Age
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C>
Bank West Fin. Corp. of MI Kent 501 541 569 8.1% 5.2% 32.7
Cameron Fin. Corp. of MO Clinton 17 18 20 10.8% 6.7% 36.8
Enterprise Fed. Bancorp of OH Butler 291 328.263 354 12.6% 7.7% 33.5
FSF Financial Corp. of MN McLeod 32 34 35 6.0% 3.9% 34.1
First Colorado Bancorp of CO Jefferson 438 500 543 14.1% 8.5% 35.9
First Savings Bancorp of WA Walla Walla 48 54 58 11.2% 6.9% 35.0
Horizon Financial Corp. of WA Whatcom 128 156 175 21.9% 12.4% 34.5
Klamath First Bancorp of OR Klamath 58 63 67 10.0% 6.3% 36.7
United Fin. Corp. of MT Cascade 78 81 84 4.6% 3.1% 34.9
WesterFed Fin. Corp. of MT Missoula 79 90 97 14.1% 8.5% 34.0
Averages: 166.9464 186.6224 200.1905 11.4% 6.9% 34.8
Medians: 78.189 85.543 90.616 11.0% 6.8% 34.7
Riverview SB of WA Clark 238 316 371 32.9% 17.1% 34.6
</TABLE>
<TABLE>
<CAPTION>
Per Capita Income Deposit Unempl.
% State Market Rate
Institution Amount Average Share(1) 04/97
<S> <C> <C> <C> <C>
Bank West Fin. Corp. of MI 21,033 108.9% 1.2% 2.9%
Cameron Fin. Corp. of MO 15,721 89.0% 39.4% 5.1%
Enterprise Fed. Bancorp of OH 18,051 104.7% 1.7% 3.4%
FSF Financial Corp. of MN 19,509 93.7% 22.1% 3.3%
First Colorado Bancorp of CO 28,823 114.4% 7.1% 2.3%
First Savings Bancorp of WA 14,165 81.2% 21.9% 6.5%
Horizon Financial Corp. of WA 16,204 92.9% 16.1% 5.7%
Klamath First Bancorp of OR 13,879 81.9% 35.5% 9.8%
United Fin. Corp. of MT 14,055 102.5% 7.0% 5.1%
WesterFed Fin. Corp. of MT 14,021 102.3% 14.7% 4.3%
17,546 97.2% 16.7% 4.8%
15,963 98.0% 15.4% 4.7%
Riverview SB of WA 16,249 93.2% 4.1% 4.0%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total co
deposits.
Sources: CACI, Inc; SNL Securities, LP, Bureau of Labor Statistics
<PAGE>
RP Financial, LC.
Page 4.6
demographic and deposit market share data for the Bank and the Peer Group is
included in Table 4.1. The Bank's primary market area of Clark County,
Washington is a rapidly growing, healthy market area with an influx of new
employers and a healthy construction industry. The Bank's primary market is
growing at a faster rate than the Peer Group primary market areas (17.1 percent
projected growth for Clark County projected through 2002 versus 6.9 percent
growth on average for the Peer Group). The counties adjacent to Clark County are
slower growth markets that provide the Bank with funds to support lending in
Clark County market. Offsetting the advantage provided by faster population
growth in Clark County, the Bank's competitive position is less attractive than
the Peer Group (the Bank's deposit market share is 4.1 percent versus and
average of 16.7 percent for the Peer Group on average). The per capita income in
the Bank's market falls within the range indicated by the Peer Group ($16,249 in
per capita income for Clark County versus an average and median of $17,546 and
$15,963, respectively for the Peer Group). Based on comparative demographic
figures and the generally healthy market areas of the Bank and the Peer Group,
on average, we concluded that the Bank benefits to a comparable extent from its
market area as the Peer Group and, on balance, RP Financial concluded that no
valuation adjustment was warranted for market area.
5. Dividends
The Holding Company has indicated its intentions to pay an annual cash
dividend at a yield ranging from 0.98 percent to 1.52 percent dependent upon the
total shares sold in the offering) based on the initial offering price of $10.00
per share. As publicly-traded thrifts' capital levels and profitability have
improved and as weak institutions have been resolved, the proportion of
institutions with cash dividend policies has increased. All ten institutions in
the Peer Group presently pay regular cash dividends, with implied dividend
yields ranging from 1.30 percent to 5.26 percent. The average dividend yield on
the stocks of the Peer Group institutions was 2.63 percent as of June 6, 1997,
representing an average earnings payout ratio of 42.54 percent. As of June 6,
1997, approximately 83 percent of all publicly-traded SAIF-insured thrifts have
adopted cash dividend policies (see Exhibit IV-2), 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 market
pricing premium on average relative to non-dividend paying thrifts. Riverview's
planned initial dividend yield is lower than the Peer Group's average dividend
yield which suggests a valuation discount; however, Riverview has the earnings
strength to support a cash dividend at a level more comparable to the Peer Group
(i.e., comparable dividend paying capacity) and we thus concluded that the
Bank's dividend policy warrants just a slight downward adjustment in the
valuation.
<PAGE>
RP Financial, LC.
Page 4.7
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 system. 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 $24 million to $298
million as of June 6, 1997, with an average market value of $112 million. The
shares outstanding of the Peer Group members ranged from 1.2 million to 16.6
million, with average shares outstanding of approximately 6.0 million. The
Bank's pro forma market value will be materially lower than the Peer Group
average, and pro forma shares outstanding will be lower than the Peer Group
average -- both factors which would suggest lower liquidity in the shares of
Riverview stock. At the same time, it is anticipated that Riverview's stock will
be traded on the NASDAQ National Market System, which will provide adequate
liquidity to the shares. Accordingly, in general, we anticipate that there will
be a relatively liquid trading market for the Bank's stock, which will be
similar but slightly less attractive than the stock liquidity characteristics of
the Peer Group companies on average. We applied a slight downward adjustment for
this factor.
7. Marketing of the Issue
We believe that several separate markets exist for thrift stocks coming to
market such as Riverview: (A) 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; (B) the new issue
market in which converting thrifts are evaluated on the basis of the same
factors but on a pro forma basis without the benefit of a stock trading history
and reporting quarterly operating results as a publicly-held company; (C) the
market for second step conversions by MHCs; (D) the acquisition market for
thrift franchises in Washington state; and (E) the market for the public stock
of Riverview. All of these markets were considered in the valuation of the
Bank's second step conversion.
A. 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.
<PAGE>
RP Financial, LC.
Page 4.8
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. 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.
<PAGE>
RP Financial, LC.
Page 4.9
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 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. In late-April, the release of economic data
<PAGE>
RP Financial, LC.
Page 4.10
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 an improving interest-rate outlook sustained a positive trend
in the stock market through mid-June. On June 6, 1997, the DJIA closed at
7435.78, translating into an increase of 30.5 percent from a year ago.
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
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 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
<PAGE>
Rp Financial, LC.
Page 4.11
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 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 edge high through mid-May, 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, with most offerings experiencing oversubscriptions
and trading higher in initial post-
<PAGE>
RP Financial, LC.
Page 4.12
conversion trading activity. As shown in Table 4.2, the median one week change
in price for offerings completed during the latest three months equaled positive
27.8 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/TB
ratio of the conversions completed in the most recent three month period of
93.40 percent reflects a discount of 29.0 percent from the average P/TB ratio of
all publicly-traded SAIF-insured thrifts (equal to 131.47 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.
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. Second Step Conversion Market
There is a pronounced difference in the pricing of second step conversions
relative to full conversion offerings in which 100 percent of the shares are
issued. As noted in Table 4.4, during the past 12 months, the median pro forma
price/tangible book ratios of second step conversions exceeded 81 percent, as
compared to the median price/tangible book of conversions over the last three
months which just exceeds 71 percent, perhaps reflecting the smaller offering
and some seasoning as a public company for second steps. Furthermore, as shown
in Table 4.5, assuming the publicly-traded MHCs completed second step
conversions (utilizing standard assumptions for each MHC) at their current
market prices, the implied median price/tangible book is computed at
approximately 86 percent -- apparently the investment community is factoring in
the potential impact of a second step conversion into the market price of MHCs
today. Accordingly, before adjusting Riverview's value for fundamental
differences, it would be expected that the pro forma price/tangible book would
share more pricing similarity with the second step transactions than the
standard stock conversion offerings.
<PAGE>
RP Financial, LC.
Table 4.2
Recent Conversions (Last Three Months)
Conversion Pricing Characteristics: Sorted Chronologically
<TABLE>
<CAPTION>
Institutional Information Pre-Conversion Data Insider Purchases
Financial Info. Asset Quality Offering 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 Steps $95 12.32% 0.58% 100% $19.1 132% 4.1% 8.0% 4.0% 8.8%
Medians, Excluding 2nd Steps $88 10.04% 0.44% 94% $17.9 132% 3.2% 8.0% 4.0% 6.0%
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Pro Forma Data
-------------------------------------------------------------------
Pricing Ratios(4) Fin. Characteristics
-------------------------------------------------------------------
First After After
Conversion IPO Trading %
State Date Ticker P/TB P/E(5) P/A ROA TE/A ROE Price Day Chg.
(%) (x) (%) (%) (%) (%) ($) ($) (%)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFB Bancorp TN 05/30/97 SFBK 70.1% 13.9 14.5% 1.0% 20.7% 5.1% $10.00 $13.81 38.1%
Rocky Ford Financial CO 05/22/97 P.Sheet 67.9% 14.6 17.7% 1.2% 26.1% 4.6% 10.00 13.00 30.0%
HCB Bancshares AR 05/07/97 HCBB 72.9% 34.4 13.3% 0.4% 18.2% 2.1% 10.00 12.63 26.3%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 71.0% 13.7 16.5% 1.2% 23.3% 5.2% 10.00 12.56 25.6%
NewSouth Bancorp(1) NC 04/08/97 NSBC 77.8% 20.7 18.5% 0.9% 23.7% 3.8% 15.00 20.25 35.0%
Hemlock Fed. Fin. Corp. IL 04/02/97 HMLK 72.8% 20.3 12.7% 0.6% 17.4% 3.6% 10.00 12.88 28.8%
Cumberland Mtn. Bncshrs.(8) KY 04/01/97 P./Sheet 81.2% 13.8 7.1% 0.5% 8.8% 5.9% 10.00 11.88 18.8%
GS Financial Corp. LA 04/01/97 GSLA 63.4% 25.9 29.4% 1.1% 46.3% 2.4% 10.00 13.38 33.8%
Market Fin. Corp. OH 03/27/97 MRKF 70.6% 20.0 23.4% 1.2% 33.2% 3.5% 10.00 12.94 29.4%
Vermilion Bancorp(1) IL 03/26/97 P.Sheet 71.0% 18.7 10.1% 0.5% 14.2% 3.8% 10.00 12.38 23.7%
Averages: 71.9% 19.6 16.3% 0.9% 23.2% 4.0% $10.50 $13.57 28.9%
Medians: 71.0% 19.3 15.5% 1.0% 22.0% 3.8% $10.00 $12.91 29.1%
Averages, Excluding 2nd Steps 70.8% 20.2 17.3% 0.9% 24.8% 3.8% $10.56 $13.76 30.1%
Medians, Excluding 2nd Steps 71.0% 20.0 16.5% 1.0% 23.3% 3.8% 10.00 12.94 29.4%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------
Post-IPO Pricing Trends
-----------------------------------
Closing Price:
-----------------------------------
Conversion First % First %
State Date Ticker Week(6) Chg. Month(7) Chg.
($) (%) ($) (%)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SFB Bancorp TN 05/30/97 SFBK NA NA NA NA
Rocky Ford Financial CO 05/22/97 P.Sheet 13.25 32.5% NA NA
HCB Bancshares AR 05/07/97 HCBB 12.69 26.9% 13.13 31.3%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 13.25 32.5% 12.88 28.8%
NewSouth Bancorp(1) NC 04/08/97 NSBC 22.00 46.7% 23.50 56.7%
Hemlock Fed. Fin. Corp. IL 04/02/97 HMLK 12.88 28.8% 13.00 30.0%
Cumberland Mtn. Bncshrs.(8) KY 04/01/97 P./Sheet 12.25 22.5% 12.63 26.3%
GS Financial Corp. LA 04/01/97 GSLA 13.63 36.3% 14.00 40.0%
Market Fin. Corp. OH 03/27/97 MRKF 12.50 25.0% 12.63 26.3%
Vermilion Bancorp(1) IL 03/26/97 P.Sheet 12.25 22.5% 11.75 17.5%
Averages: $13.85 30.4% $14.19 32.1%
Medians: $12.78 29.1% $12.75 27.5%
Averages, Excluding 2nd Steps $14.05 31.4% $11.11 32.9%
Medians, Excluding 2nd Steps 12.88 28.8% 12.88 28.8%
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrifts.
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Excludes impact of special SAIF assessment on earnings
(6) Latest price if offering less than one week old.
(7) Latest price if offering more than one week but less than one month old.
(8) Second-step conversions.
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization _______________ Pricing Ratios(3) Dividends(4)
--------------- Core Book ------------------------------------ ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------- ------- ------- ------- ------------ ------ --------
Financial Institution
--------------------- ($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <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 0.37 1.87 29.08
Grouping(8) 13.25 26.85 0.50 14.29 24.71 92.72 24.47 93.40 22.16 0.05 0.37 6.94
State of WA 25.59 963.46 1.42 12.93 19.55 178.35 16.31 187.66 18.79 0.39 1.40 22.99
Comparable Group
----------------
Special Comparative Group(8)
----------------------------
GSLA GS Financial Corp. of LA 14.37 49.42 0.29 15.77 NM 91.12 42.23 91.12 NM 0.00 0.00 0.00
HCBB HCB Bancshares of AR 12.87 34.04 0.29 13.73 NM 93.74 17.11 97.80 NM 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp.
of IL 13.00 26.99 0.49 13.74 NM 94.61 16.46 94.61 26.53 0.00 0.00 0.00
MRKF Market Fin. Corp. of OH 12.87 17.19 0.50 14.17 NM 90.83 30.15 90.83 25.74 0.00 0.00 0.00
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 0.00 0.00 0.00
SFBK SFB Bancorp, Inc. of TN 13.37 10.25 0.72 14.26 26.22 93.76 19.41 93.76 18.57 0.30 2.24 41.67
Financial Characteristics(6)
--- --------------------------------------------------
Total Equity/ NPAs/ Reported Core
--------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------ ------- ------- ------- ------- --------
($Mil) (%) (%) (%) (%) (%) (%)
SAIF-Insured Thrifts 1,117 12.85 0.78 0.62 5.28 0.84 7.35
Special Selection\
Grouping(8) 116 26.52 0.67 0.59 2.15 0.88 3.55
State of WA 6,406 9.06 0.49 0.87 8.82 1.03 11.55
Comparable Group
----------------
Special Comparative Group(8)
----------------------------
GSLA GS Financial Corp. of LA 117 46.34 0.13 0.85 1.84 0.85 1.84
HCBB HCB Bancshares of AR 199 18.25 NA -0.11 -0.58 0.39 2.11
HMLK Hemlock Fed. Fin. Corp.
of IL 164 17.39 NA 0.24 1.38 0.62 3.57
MRKF Market Fin. Corp. of OH 57 33.20 0.89 0.89 2.68 1.17 3.53
PSFC Peoples Sidney Fin. Corp
of OH 108 23.26 1.00 0.92 3.97 1.21 5.18
SFBK SFB Bancorp, Inc. of TN 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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 4.5
MHC INSTITUTIONS -- IMPLIED PRICING RATIOS FULL CONVERSION BASIS
Riverview MHC and the Comparables
As of June 6, 1997
Fully Converted
Implied Value Per Share (8)
---------------- --------------
Implied Core Book Pricing Ratios (3)
Price/ Market 12-Mth Value/ ---------------------------------------
Share(1) Val(8) 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(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 WA(7)
- --------------------------
Averages 24.58 414.15 1.56 12.68 19.94 190.90 13.69 204.77 17.20
Medians -- -- -- -- 17.72 180.35 15.04 187.81 17.36
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
Averges 19.81 153.90 1.23 22.54 20.95 87.09 16.53 88.31 17.52
Medians -- -- -- -- 20.50 86.00 15.54 85.91 16.74
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
CMSV Commty. Svgs, MHC of FL (48.5) 21.75 107.03 1.52 25.06 19.95 86.79 14.68 86.79 14.31
FFFL Fidelity FSB, MHC of FL (47.4) 18.75 126.86 1.01 20.41 26.04 91.87 12.90 92.32 18.56
SKBO First Carnegie, MHC of PA (45.0) 13.44 30.91 0.52 16.42 NM 81.85 18.81 81.85 25.85
FFSX First FS&LA. MHC of IA (46.0) 23.00 65.02 1.53 26.72 22.12 86.08 12.99 86.47 15.03
FSLA First SB SLA MHC of NJ (47.5) 24.75 179.36 1.52 24.02 25.00 103.04 16.24 109.80 16.28
GDVS Greater DV SB, MHC of PA (19.9) 12.87 42.11 0.47 17.03 NM 75.57 15.77 75.57 27.38
GFED Guarnty FS&LA, MHC of MO (31.0) 17.00 53.13 0.76 18.53 29.82 91.74 23.42 91.74 22.37
HARB Harbor FSB, MHC of FL (46.0) 36.62 181.71 2.99 34.99 15.39 104.66 15.30 106.76 12.25
HARS Harris SB, MHC of PA (24.2) 20.75 232.84 1.24 26.92 28.82 77.08 11.13 82.87 16.73
JXSB Jcksnville SB, MHC of IL (44.6) 16.25 20.67 0.97 20.83 NM 78.01 11.92 78.01 16.75
LFED Leeds FSB, MHC of MD (36.2) 18.00 62.19 1.16 22.86 20.22 78.74 19.73 78.74 15.52
NWSB Northwest SB, MHC of PA (29.9) 14.37 335.91 1.04 16.76 18.19 85.74 15.30 88.38 13.82
PBCT Peoples Bank, MHC of CT (37.4) 24.37 1486.98 1.48 25.78 13.93 94.53 17.54 94.57 16.47
PERT Perpetual of SC, MHC (46.8) 27.62 41.57 1.74 32.02 20.77 86.26 17.21 86.26 15.87
PFSL Pocahnts Fed, MHC of AR (46.4) 19.50 31.77 2.11 23.41 12.34 83.30 8.20 83.30 9.24
PULB Pulaski SB, MHC of MO (29.0) 17.62 36.90 0.96 21.31 24.82 82.68 18.36 82.68 18.35
PLSK Pulaski SB, MHC of NJ (46.0) 12.75 26.39 0.68 15.61 NM 81.68 14.55 81.68 18.75
RVSB Rvrview SB, FSB MHC of WA (41.7) 19.00 45.90 1.33 20.27 17.27 93.73 18.49 98.45 14.29
SBFL SB Fngr Lakes MHC of NY (33.1) 16.25 29.01 0.79 20.41 NM 79.62 12.66 79.62 20.57
TSBS Trenton SB, FSB MHC of NJ (35.0) 19.75 178.48 1.03 22.41 17.48 88.13 24.63 92.20 19.17
WAYN Wayne S&L Co. MHC of OH (47.8) 26.75 40.10 1.39 26.96 NM 99.22 14.98 99.22 19.24
WCFB Wbstr Cty FSB MHC of IA (45.2) 14.75 30.98 0.79 17.24 23.05 85.56 28.84 85.56 18.67
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
------------------------- -----------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
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(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 WA(7)
- --------------------------
Averages 0.36 1.25 16.66 2,368 7.11 0.65 0.75 8.94 0.97 12.58
Medians -- -- -- -- -- -- -- -- -- --
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
Averages 0.63 3.08 41.49 955 19.05 0.63 0.76 3.97 1.01 5.37
Medians -- -- -- -- -- -- -- -- -- --
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
CMSV Cmmty. Svgs, MHC of FL (48.5) 0.90 4.14 59.21 729 16.92 0.57 0.77 4.39 1.07 6.12
FFFL Fidelity FSB, MHC of FL (47.4) 0.80 4.27 NM 983 14.04 0.30 0.54 3.55 0.75 4.97
SKBO First Carnegie, MHC of PA (45.0) 0.00 0.00 0.00 164 22.98 0.74 0.57 2.50 0.73 3.17
FFSX First FS&LA. MHC of IA (46.0) 0.48 2.09 31.37 501 15.09 0.14 0.60 3.92 0.88 5.77
FSLA First SB SLA MHC of NJ (47.5) 0.48 1.94 31.58 1,105 15.76 0.58 0.68 4.18 1.04 6.41
GDVS Greater DV SB, MHC of PA (19.9) 0.36 2.80 NM 267 20.87 2.78 0.30 1.40 0.58 2.73
GFED Giarmtu FS&LA, MHC of MO (31.0) 0.40 2.35 52.63 227 25.53 0.54 0.81 3.09 1.08 4.12
HARB Harbor FSB, MHC of FL (46.0) 1.40 3.82 46.82 1,188 14.62 0.47 1.06 6.99 1.33 8.78
HARS Harris SB, MHC of PA (24.2) 0.58 2.80 46.77 2,092 14.44 0.70 0.45 2.70 0.78 4.65
JXSB Jcksnville SB, MHC of IL (44.6) 0.40 2.46 41.24 173 15.27 0.39 0.43 2.55 0.79 4.67
LFED Leeds FSB, MHC of MD (36.2) 0.76 4.22 65.52 315 25.05 0.02 1.00 3.95 1.30 5.14
NWSB Northwest SB, MHC of PA (29.9) 0.32 2.23 30.77 2,195 17.85 0.84 0.88 4.76 1.16 6.27
PBCT Peoples Bank, MHC of CT (37.4) 0.67 2.75 45.27 8,477 18.56 0.91 1.29 6.96 1.09 5.88
PERT Perpetual of SC, MHC (46.8) 1.40 5.07 NM 242 19.95 NA 0.92 4.79 1.20 6.27
PFSL Pocahnts Fed, MHC of AR (46.4) 0.90 4.62 42.65 388 9.84 0.28 0.66 6.93 0.88 9.25
PULB Pulaski SB, MHC of MO (29.0) 1.00 5.68 NM 201 22.21 NA 0.74 3.33 1.00 4.51
PLSK Pulaski SB, MHC of NJ (46.0) 0.30 2.35 44.12 181 17.82 0.68 0.45 2.50 0.78 4.36
RVSB Rvrview SB, FSB MHC of WA (41.7) 0.22 1.16 16.54 248 19.72 0.10 1.10 5.55 1.33 6.71
SBFL SB Fngr Lakes MHC of NY (33.1) 0.40 2.46 50.63 229 15.90 0.78 0.28 1.61 0.66 3.86
TSBS Trenton SB, FSB MHC of NJ (35.0) 0.35 1.77 33.98 725 27.95 0.77 1.56 5.11 1.42 4.66
WAYN Wayne S&L Co. MHC of OH (47.8) 0.92 3.44 66.19 268 15.10 0.71 0.43 2.86 0.78 5.16
WCFB Wbstr Cty FSB MHC of IA (45.2) 0.80 5.42 NM 107 33.70 0.27 1.23 3.73 1.52 4.61
</TABLE>
(1) Current stock price of minority stock. Average of High/Low or Bid/Ask price
per share.
(2) EPS (estimated core earnings) is based on reported trailing twelve month
data, adjusted to omit non-operating gains and losses (including the SAIF
assessment) on a tax effected basis. Public MHC data reflects additional
earnings from reinvestment of proceeds of second step conversion.
(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. Ratios
are pro forma assuming a second step conversion to full stock form.
(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 (earnings adjusted to reflect second step
conversion).
(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 and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
(8) Figures estimated by RP Financial to reflect a second step conversion of the
MHC to full stock form.
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>
RP Financials, LC.
Page 4.17
D. Acquisition Market
Also considered in the valuation was the potential impact on
Riverview's stock price of recently completed and pending acquisitions of other
thrifts operating in Riverview's market area. As shown in Exhibit IV-4, there
was one Northwest U.S. (Washington, Oregon, Idaho) thrift acquired in 1996 and
1997, but the Northwest U.S. market is home to several highly acquisitive
financial institutions and Northwest U.S. based institutions typically trade
with some acquisition speculation built into their stock prices. The acquisition
speculation involving Northwest U.S. thrifts may imply a certain degree of
acquisition speculation for the Bank's stock. To the extent that acquisition
speculation may impact the Bank's offering, we have largely taken this into
account in selecting primarily Northwest U.S. thrifts. E. Market for Riverview
Stock
E. Market for Riverview Stock
Since Riverview's minority stock currently trades under the
symbol "RVSB" on the NASDAQ National Market system, RP Financial also considered
the recent trading activity in its valuation analysis. Riverview had a total of
2,416,301 shares issued and outstanding at March 31, 1997, of which 1,008,410
were held by Public Stockholders and were traded as public securities. As of
June 6, 1997, the Bank's stock price was $20.25 per share (the closing price
from June 4, 1997 after which there were not subsequent trades). Prior to the
announcement of the second step conversion, the shares were trading in the range
of $18.00 to $22.00 per share. Immediately after the second step was announced,
the shares increased to between $20.00 and $24.00. We attribute the price
increase to some speculation, and the current pricing has placed it at a premium
to other MHCs. There are significant differences between the Bank's minority
stock (currently being traded) and the conversion stock that will be issued by
the Holding Company. Such differences include different liquidity
characteristics (the new conversion stock will be significantly more liquid
owing to greater public shares available to trade), and a lower return on equity
for the Company's conversion stock, and the anticipated difference in dividend
policy (versus a $0.24 per share annual cash dividend and regular stock
dividends currently) for the conversion stock. Since the pro forma impact has
not been publicly disseminated to date, it is appropriate to discount the
current trading level. As the pro forma impact is made known publicly, the
trading level will become more informative.
* * * * * * * * * * *
Taking these factors and trends into account, primarily recent
trends in the new issue market, market conditions overall, recent trends in the
acquisition market, and the trading level of Public Savings Bank Shares, RP
Financial concluded that no adjustment was appropriate in the valuation analysis
for purposes of marketing of the issue.
<PAGE>
RP Financials, LC.
Page 4.18
8. Management
Riverview's management team has experience and expertise in all of the
key areas of the Bank's operations. Exhibit IV-5 lists Riverview's Board of
Directors and executive management with summary resumes. The Bank's operations
to date indicates that Riverview's management team, in conjunction with the
Board, has developed and implemented an effective operating philosophy.
Riverview has no apparent senior management or Board vacancies and there appears
to be a well-defined organizational structure. Similarly, the financial results
of the Peer Group companies indicate that they have been effectively managed, as
all of the Peer Group companies maintained healthy capital positions, solid core
earnings and favorable credit quality measures. We have therefore concluded
that, in general, Riverview is currently being operated at least as effectively
as the Peer Group companies and no adjustment for this factor was necessary.
9. Effect of Government Regulation and Regulatory Reform
The Bank and most of the Peer Group companies were similarly impacted by
the recently enacted SAIF rescue legislation, as the affected institutions are
SAIF-insured and subject to the same one time assessment and their deposits will
be assessed at the same rate going forward. In summary, as a fully-converted
SAIF-insured savings bank, Riverview 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 Bank's pro forma regulatory capital ratios. On
balance, RP Financial concluded that no adjustment to the Bank's value was
warranted for this factor.
Summary of Adjustments
Overall, we believe the Bank's pro forma market value should take
intoaccount the valuation adjustments relative to the Peer Group:
<TABLE>
<CAPTION>
Key Valuation Parameters: Valuation Adjustment
<S> <C>
Financial Condition Slight Downward
Profitability, Growth and Viability of Earnings No Adjustment
Asset Growth No Adjustment
Primary Market Area No Adjustment
Dividends Slight Downward
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>
RP Financial, LC.
Page 4.19
Valuation Approaches
In applying the accepted valuation methodology promulgated by the OTS,
i.e., the pro forma market value approach, we considered the three key pricing
ratios in valuing Riverview's to-be-issued stock -- the 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 from selling
the MHC's interest to the public. In computing the pro forma impact of the
conversion and the related pricing ratios, we have incorporated the assumptions
disclosed in Riverview's prospectus for offering expenses, and the effective tax
rate and stock benefit plan assumptions (summarized in Exhibits IV-7 and IV-8).
We have utilized the reinvestment rate set forth in the prospectus, derived from
the OTS's suggested formula equal to the arithmetic average of the yield on
interest earning assets and the cost of deposits (6.55 percent). We compared
this assumption to the blended rate reflected the Bank's business plan, and
concluded it to be appropriate. With regard to the employee stock ownership plan
and stock reward plans, we have performed the valuation assuming the ESOP
purchases an amount equal to 8.0 percent of the second step offering (10 year
amortization) and the MRP acquires 4.0 percent of the second step offering. 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. Since the Bank and
the Peer Group reported pro forma core profitability, the P/E
approach was considered in this valuation. In applying this
approach, we took into account primarily estimated core
earnings.
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. We have also
modified the P/B approach to exclude the impact of intangible
assets (i.e., price/tangible book value or "P/TB"). RP
Financial considered the P/TB approach to be a reliable
indicator of value given current market conditions,
particularly the market for new conversions, which often
exhibit a willingness to pay premium P/E multiples in the
expectation that such institutions will implement leveraging
strategies to promote earnings growth. At the same time, with
lower ROE ratios, new conversions are typically discounted on
a book value basis relative to the market at least until
there is partial realization of leveraging strategies.
o P/A Approach. P/A ratios are generally a less reliable
indicator of market value, as investors do not place
exclusive weight simply on the size of total assets as a
determinant of market value. Furthermore, this approach does
not take into account the amount of stock purchases funded by
deposit withdrawals, thus understating the pro forma P/A
ratio. Investors place significantly greater weight on book
value and earnings -- which have received greater weight in
our valuation analysis. At the same time, the P/A ratio is an
indicator of franchise value and, in the case of a highly
capitalized institution, a high P/A ratio limits the
investment community's willingness to pay average market
multiples for earnings and book value when ROE is low.
<PAGE>
RP Financial, LC.
Page 4.20
o Trading of RVSB Stock. Converting institutions generally do
not have stock outstanding. Riverview, however, has public
shares outstanding due to the mutual holding company form of
ownership. Because RVSB stock is currently traded in the
markets, it is an indicator of investor interest in the
Bank's conversion stock and therefore received some weight in
our valuation. Based on the June 6, 1997 stock price of
$20.25 per share and the 2,416,301 shares of Bank stock
issued and outstanding, the implied value of $48.9 million
was considered in the valuation process. However, since the
conversion stock will have different characteristics than the
minority shares and since pro forma information has not been
publicly disseminated to date, the current trading price of
RVSB stock was somewhat discounted herein but will become
more important towards the closing of the offering.
The Bank intends to adopt Statement of Position ("SOP" 93-6), which
will cause earnings per share computations to be based on shares issued and
outstanding excluding shares owned by an ESOP where there is not a commitment to
release such shares. For the purpose of preparing the pro forma pricing tables
and exhibits, we have reflected all shares issued in the offering including
shares purchased by the ESOP as outstanding to capture the full dilutive impact
of such stock to the Bank's shareholders. However, we have considered the impact
of adoption of SOP 93-6 on the Bank in the determination of the Bank's pro forma
value.
Based on the application of the OTS valuation approaches, taking into
consideration the valuation adjustments discussed above, and placing the
greatest weight on the P/TB and P/E approaches, considering the recent trading
in RVSB stock, and followed by the P/A approach, RP Financial concluded that the
pro forma market value of the Bank's conversion stock is $41,187,575 at the
midpoint at this time (please note this valuation figure reflects the rounding
of the stock offering amount).
1. Price-to-Tangible Book ("P/TB"). The application of the P/TB
valuation method requires calculating the Bank's pro forma market value by
applying a valuation P/TB ratio to Riverview's pro forma tangible book value.
The pre-conversion book value for Riverview of $25,119,000 was equal to the
Bank's reported capital at March 31, 1997, plus the $94,000 of mutual holding
company assets which will be consolidated with the Holding Company as a result
of the conversion. Tangible capital, inclusive of mutual holder company assets,
was $22,790,000. Based on the $41,187,575 midpoint valuation, Riverview's pro
forma P/TB ratio was 95.90 percent. In comparison to the average P/TB ratio for
the Peer Group of 126.09 percent, Riverview's valuation reflected a discount of
23.9 percent. RP Financial considered the discount under the P/TB approach to be
reasonable in light of the valuation adjustments discussed previously. Given the
historically high P/TB pricing for thrifts in today's market, a valuation
discount under the P/TB approach could only be expected and is consistent with
the aftermarket trading of new conversion issues.
Given the emphasis on limiting near term aftermarket trading in the
revised appraisal guidelines, RP Financial also considered the pro forma P/TB
ratios of recent conversions in its valuation analysis. It is these
<PAGE>
RP Financial, LC.
Page 4.21
companies that provide a proxy for aftermarket trading for new thrift issues.
At the midpoint value of $41,187,575, Riverview's pro forma P/TB ratio of 95.90
percent represented a premium of 2.7 percent from the 93.40 percent average
P/TB ratio of the recently converted thrifts (see Table 4.3).
2. Price-to-Earnings ("P/E"). The application of the P/E valuation
method requires calculating the Bank's pro forma market value by applying a
valuation P/E multiple times the pro forma earnings base. Ideally, the pro forma
earnings base is composed principally of the Bank'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. As shown below, the Bank recorded several non-operating items during
the twelve month period which were all deemed non-operating and not included in
the core earnings base. The Bank's core earnings were calculated to equal the
following (Note: the adjustments applied to the Peer Group's earnings in the
calculation of core earnings are shown in Exhibit IV-9, including the SAIF
assessment):
Amount
($000)
Net Income $2,008
Less: Gains of Loans HFS (69)
Less: Gains on MBS & Investments (37)
Plus: SAIF Assessment 947
Tax-Effect Adjustments @ 34% (320)
-----
Adjusted (Core) Income After Tax $2,529
Based on Riverview's trailing twelve month core earnings, and
incorporating the impact of the pro forma assumptions previously discussed, the
Bank's pro forma core P/E multiple at the $41,187,575 midpoint value equaled
13.09 times. Comparatively, the Peer Group posted an average core P/E multiple
of 20.02 times, which indicates a discount of 34.6 percent in the Bank's pro
forma earnings multiple. In reaching the valuation conclusion, we also evaluated
the Bank's price/earnings multiple on the basis of projected earnings as
reflected in the business plan.
3. Price-to-Assets ("P/A"). The P/A valuation methodology determines
market value by applying a valuation P/A ratio to the Bank's pro forma asset
base, conservatively assuming no deposit withdrawals are made to fund stock
purchases. In all likelihood there will be deposit withdrawals, which results in
understating the pro forma P/A ratio which is computed herein. At the midpoint
of the valuation range, Riverview's value equaled 16.84 percent of pro forma
assets. Comparatively, the Peer Group companies exhibited an average
<PAGE>
RP Financial, LC.
<TABLE>
<CAPTION>
(State/Fed.) ($Mil) (%) %)(2) (%) ($000) (%) (%)
----------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cumberland Mntn. Bncshrs. KY * F 04/01/97 P. Sheet 92 5.14% 1.31% 19% 4,397 132.3% 8.0%
Kenwood Bancorp OH * F 07/01/96 P. Sheet 48 6.88% 0.00% NM 1,577 101.7% 22.2%
Commonwealth Bancorp PA * F 06/17/96 CMSB 2,054 6.71% 0.51% 109% 98,721 109.7% 1.9%
Westwood Financial Corp. NJ F 06/07/96 WWFC 85 7.05% 0.00% NM 3,853 99.4% 9.9%
Jacksonville Bancorp TX F 04/01/96 JXVL 198 10.47% 1.41% 36% 16,184 106.4% 4.4%
North Central Bancshares IA F 03/21/96 FFFD 180 16.47% 0.17% 562% 26,255 105.6% 3.5%
Fidelity Financial of Ohio OH * F 02/04/96 FFOH 227 13.23% 0.50% 69% 22,781 132.1% 3.2%
First Colorado Bancorp CO * F 01/02/96 FFBA 1,400 12.71% 0.31% 20% 134,076 105.3% 1.9%
Charter Financial IL * F 12/29/95 CBSB 293 12.17% 0.27% 281% 29,205 115.7% 3.4%
American National Bancorp MD * F 11/03/95 ANBK 426 6.80% 2.23% 67% 21,821 132.3% 3.3%
First Defiance Fin. Corp. OH * F 10/02/95 FDEF 476 15.27% 0.24% 135% 64,769 132.3% 2.3%
Community Bank Shares IN * F 04/10/95 CBIN 205 7.00% 0.33% 80% 10,117 132.3% 4.4%
Fed One Bancorp WV * F 01/19/95 FOBC 305 9.25% 0.32% 142% 16,124 85.0% 7.7%
Home Financial Corp. FL * F 10/25/94 HOFL 1,005 13.43% 0.91% 44% 175,580 111.6% 3.1%
Jefferson Bancorp LA * F 08/18/94 JEBC 257 6.26% 0.91% 25% 16,116 107.4% 3.9%
AVERAGES: $483 9.92% 0.63% 122% $42,772 113.9% 5.5%
MEDIANS: 257 9.25% 0.33% 69% 21,821 109.7% 3.5%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: An asterisk (*) signifies conversion appraisals performed by RP Financial.
(1) Includes only those companies who offered stock when the MHC was formed.
(2) As indicated in prospectus.
(3) As indicated in prospectus. Does not include stock options.
(4) Does not account for the adoption of SOP 93-6.
Completed Second Step Conversions (1)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
INSIDER PURCHASES PRO FORMA DATA
--------------------------------------------------------------------
PRICING RATIOS(4) FIN. CHARACTERISTICS
---------------------------------------------------------------------
BENEFIT PLANS
--------------------------
Conversion RECOG. MGMT.
State Charter Date Ticket ESOP PLANS & DIRS. P/TB P/E P/A ROA TE/A ROE
---- ------ ----- ------ ---- ----- ------- ---- --- --- --- ---- ---
(State/Fed.) (%) (%) (%)(3) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cumberland Mntn. Bncshrs. KY * F 04/01/97 P. Sheet 6.2% 4.0% 4.5% 81.2% 13.8 7.1% 0.5% 8.8% 5.9%
Kenwood Bancorp OH * F 07/01/96 P. Sheet 8.0% 4.0% 6.4% 67.6% NM 6.0% 0.1% 8.8% 1.7%
Commonwealth Bancorp PA * F 06/17/96 CMSB 8.0% 4.0% 0.1% 109.3% 12.1 8.4% 0.7% 6.7% 10.4%
Westwood Financial Corp. NJ F 06/07/96 WWFC 0.0% 0.0% 2.5% 80.0% 10.1 7.3% 0.7% 9.2% 7.9%
Jacksonville Bancorp TX F 04/01/96 JXVL 8.0% 4.0% 2.0% 77.7% 14.9 12.6% 0.8% 16.2% 5.2%
North Central Bancshares IA F 03/21/96 FFFD 3.2% 0.0% 0.5% 74.2% 12.1 19.7% 1.6% 26.5% 6.1%
Fidelity Financial of Ohio OH * F 02/04/96 FFOH 8.0% 4.0% 5.6% 82.6% 18.1 16.6% 0.9% 20.0% 4.6%
First Colorado Bancorp CO * F 01/02/96 FFBA 10.0% 2.0% 2.0% 87.0% 12.7 13.2% 1.0% 15.2% 6.9%
Charter Financial IL * F 12/29/95 CBSB 3.3% 0.0% 0.1% 81.4% 12.3 15.5% 1.3% 19.1% 6.6%
American National Bancorp MD * F 11/03/95 ANBK 8.0% 4.0% 0.6% 83.9% 17.7 9.0% 0.5% 10.7% 4.7%
First Defiance Fin. Corp. OH * F 10/02/95 FDEF 8.0% 4.0% 0.9% 85.6% 18.2 20.6% 1.1% 24.1% 4.7%
Community Bank Shares IN * F 04/10/95 CBIN 8.0% 0.0% 17.9% 85.5% 10.3 9.3% 0.9% 10.9% 8.3%
Fed One Bancorp WV * F 01/19/95 FOBC 7.0% 4.0% 0.9% 67.9% 9.0 8.8% 1.0% 13.0% 7.6%
Home Financial Corp. FL * F 10/25/94 HOFL 8.0% 4.0% 0.6% 86.4% 10.6 21.3% 2.0% 24.6% 8.2%
Jefferson Bancorp LA * F 08/18/94 JEBC 7.0% 3.0% 1.5% 71.7% 10.2 7.9% 0.8% 11.1% 7.0%
AVERAGES: 6.7% 2.7% 3.1% 81.5% 13.0 12.2% 0.9% 15.0% 6.4%
MEDIANS: 8.0% 4.0% 1.5% 81.4% 2.2 9.3% 0.9% 13.0% 6.6%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
JUNE 6, 1997
Note: An asterisk (*) signifies conversion appraisals performed by RP Financial.
(1) Includes only those companies who offered stock when the MHC was formed.
(2) As indicated in prospectus.
(3) As indicated in prospectus. Does not include stock options.
(4) Does not account for the adoption of SOP 93-6.
RP Financial, LC.
Page 4.22
P/A ratio of 19.59 percent, which implies a 14.0 percent discount being applied
to the Bank's pro forma P/A ratio.
Valuation Conclusion
It is our opinion that, as of June 6, 1997, the aggregate pro forma
market value of the Bank, inclusive of the sale of the MHC's ownership interest
in the Subscription and Community Offering was $41,187,575 at the midpoint.
Based on this valuation and the approximate 58.27 percent ownership interest
being sold in the Subscription and Community Offerings, the midpoint value of
the Holding Company's stock offering was $24,000,000 (i.e., 0.5827 x
$41,187,575), equal to 2,400,000 shares at a per share value of $10.00. Pursuant
to OTS conversion guidelines, the 15 percent offering range includes a minimum
offering value of $20,400,000 and a maximum value of $27,600,000. Based on the
$10.00 per share offering price, this range equates to an offering of 2,040,000
shares at the minimum to 2,760,000 shares at the maximum. The Holding Company's
offering also includes a provision for a superrange, which if exercised, would
result in an offering size of $31,740,000, equal to 3,174,000 shares at the
$10.00 per share offering price. The comparative pro forma valuation ratios
relative to the Peer Group are shown in Table 4.6, and the key valuation
assumptions are detailed in Exhibit IV-7. The pro forma calculations for the
range are detailed in Exhibit IV-8.
Establishment of Exchange Ratio
OTS regulations provide that in a conversion of a mutual holding
company, the minority stockholders are entitled to exchange their shares of the
Bank's common stock for common stock of the Holding Company. The Board of
Directors of the Mutual Holding Company has independently established a formula
to determine the exchange ratio. The formula has been designed to preserve the
current aggregate percentage ownership in the Bank represented by the Public
Savings Bank Shares, which is an approximate 41.73 percent ownership interest.
Pursuant to the formula, the Exchange Ratio will be determined at the end of the
Holding Company's stock offering based on the total number of shares sold in the
Subscription and Community offerings. Based upon this formula, and the valuation
conclusion and offering range concluded above, the Exchange Ratio would be
1.4488 shares, 1.7044 shares, 1.9601 shares and 2.2541 shares of Riverview
Bancorp stock issued for each Public Savings Bank Share, at the minimum,
midpoint, maximum and supermaximum of the offering, respectively.
The Exchange Ratio formula and share exchange procedures were
determined independently by the Board of Directors. RP Financial expresses no
opinion on the proposed exchange of Holding Company shares for the Public
Savings Bank Shares or on the proposed Exchange Ratio.
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 4.6
Public Market Pricing
Riverview SB, FSB and the Comparables
As of June 6, 1997
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
-------- ----- ------ ----- --- --- --- ---- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Riverview SB, FSB
- -----------------
Superrange 10.00 54.47 0.52 9.51 19.28 105.19 21.70 110.15 16.28
Range Maximum 10.00 47.37 0.57 10.20 17.43 98.06 19.13 103.03 14.62
Range Midpoint 10.00 41.19 0.64 10.99 15.69 90.96 16.84 95.90 13.09
Range Minimum 10.00 35.01 0.72 12.07 13.82 82.85 14.50 87.69 11.46
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 WA(7)
- --------------------------
Averages 26.41 1081.72 1.46 13.25 19.00 177.63 15.79 185.56 18.89
Medians -- -- -- -- 17.72 180.35 15.04 187.81 17.36
Comparable Group Averages
- -------------------------
Averages 17.99 112.39 0.89 14.91 21.68 122.97 19.59 126.09 20.02
Medians -- -- -- -- 22.42 120.70 20.87 128.79 17.87
State of WA
- -----------
CASB Cascade SB of Everett WA 19.00 39.03 0.96 10.59 25.00 179.41 11.08 179.41 19.79
FMSB First Mutual SB of Bellevue WA 20.25 49.67 1.54 11.17 12.66 181.29 11.92 181.29 13.15
FWWB First Savings Bancorp of WA 21.50 227.23 0.77 13.99 26.88 153.68 23.26 153.68 27.92
HRZB Horizon Financial Corp. of WA 15.37 113.72 1.03 10.61 14.64 144.86 22.07 144.86 14.92
IWBK Interwest SB of Oak Harbor WA 34.75 278.63 2.34 14.82 20.81 234.48 15.73 240.15 14.85
STSA Sterling Financial Corp. of WA 18.50 102.55 0.86 11.22 NM 164.88 6.59 194.33 21.51
WFSL Washington FS&LA of Seattle WA 26.06 1236.39 2.06 14.10 14.01 184.82 21.36 205.20 12.65
WAMU Washington Mutual Inc. of WA 55.87 6606.52 2.12 19.53 NM NM 14.35 NM 26.35
Comparable Group
- ----------------
BWFC Bank West Fin. Corp. of MI 13.87 24.73 0.42 12.62 23.51 109.90 16.82 109.90 NM
CMRN Cameron Fin. Corp. of MO 16.75 44.92 0.96 16.92 21.75 99.00 22.72 99.00 17.45
EFBI Enterprise Fed. Bancorp of OH 19.00 38.21 0.82 15.52 25.33 122.42 15.51 122.58 23.17
FFHH FSF Financial Corp. of MN 16.62 51.44 0.93 13.97 23.08 118.97 14.00 118.97 17.87
FFBA First Colorado Bancorp of Co 18.00 297.99 1.02 13.08 17.48 137.61 19.68 139.32 17.65
FWWB First Savings Bancorp of WA 21.50 227.23 0.77 13.99 26.88 153.68 23.26 153.68 27.92
HRZB Horizon Financial Corp. of WA 15.37 113.72 1.03 10.61 14.64 144.86 22.07 144.86 14.92
KFBI Klamath First Bancorp of OR 18.94 188.68 0.87 14.03 NM 135.00 27.59 135.00 21.77
UBMI United Fin. Corp. of MT 19.50 23.85 1.16 19.95 20.74 97.74 22.14 97.74 16.81
WSTR WesterFed Fin. Corp. of MT 20.37 113.07 0.90 18.44 NM 110.47 12.13 139.81 22.63
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- ---------------------------------------------- MEMO:
Amount/ Payout Total Equity/ NPAs/ Reported Core Exchange MEMO:
Share Yield Ratio(5) Assets Assets Assets ---------- ---------- Ratio Offering
------ ----- ------- ------ ------ ------ ROA ROE ROA ROE
--- --- --- ---
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Riverview SB, FSB
- -----------------
Superrange 0.10 0.98 18.82 251 20.63 0.09 1.13 5.46 1.33 6.46 2.2541 31.7
Range Maximum 0.11 1.12 19.56 248 19.51 0.09 1.10 5.63 1.31 6.71 1.9601 27.6
Range Midpoint 0.13 1.29 20.25 245 18.52 0.09 1.07 5.80 1.29 6.95 1.7044 24.0
Range Minimum 0.15 1.52 20.99 242 17.50 0.09 1.05 5.99 1.26 7.23 1.4488 20.4
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 WA(7)
- --------------------------
Averages 0.41 1.43 24.88 7,179 8.80 0.54 0.86 8.88 1.01 11.66
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
- -------------------------
Averages 0.48 2.63 42.54 569 16.14 0.19 0.95 5.43 1.06 6.01
Medians -- -- -- -- -- -- -- -- -- --
State of WA
- -----------
CASB Cascade SB of Everett WA 0.00 0.00 0.00 352 6.17 0.59 0.46 7.46 0.58 9.42
FMSB First Mutual SB of Bellevue WA 0.20 0.99 12.99 417 6.57 NA 1.01 15.36 0.98 14.78
FWWB First Savings Bancorp of WA 0.28 1.30 36.36 977 15.13 0.25 1.05 5.61 1.01 5.40
HRZB Horizon Financial Corp. of WA 0.35 2.28 33.98 515 15.23 0.01 1.55 9.82 1.52 9.64
IWBK Interwest SB of Oak Harbor WA 0.56 1.61 23.93 1,771 6.71 0.69 0.84 12.48 1.18 17.49
STSA Sterling Financial Corp. of WA 0.00 0.00 0.00 1,557 3.99 0.43 0.07 1.61 0.31 7.68
WFSL Washington FS&LA of Seattle WA 0.88 3.38 42.72 5,789 11.56 0.90 1.65 14.21 1.83 15.74
WAMU Washington Mutual Inc. of WA 1.04 1.86 49.06 46,051 5.01 0.93 0.24 4.46 0.70 13.14
Comparable Group
- ----------------
BWFC Bank West Fin. Corp. of MI 0.28 2.02 66.67 147 15.30 0.03 0.74 4.25 0.53 3.03
CMRN Cameron Fin. Corp. of MO 0.28 1.67 29.17 198 22.95 0.60 1.12 4.46 1.39 5.56
EFBI Enterprise Fed. Bancorp of OH 1.00 5.26 NM 246 12.67 0.01 0.68 4.72 0.75 5.16
FFHH FSF Financial Corp. of MN 0.50 3.01 53.76 367 11.77 0.10 0.64 4.73 0.83 6.11
FFBA First Colorado Bancorp of Co 0.40 2.22 39.22 1,514 14.30 0.19 1.13 7.87 1.12 7.80
FWWB First Savings Bancorp of WA 0.28 1.30 36.36 977 15.13 0.25 1.05 5.61 1.01 5.40
HRZB Horizon Financial Corp. of WA 0.35 2.28 33.98 515 15.23 0.01 1.55 9.82 1.52 9.64
KFBI Klamath First Bancorp of OR 0.30 1.58 38.48 684 20.44 0.10 0.90 3.79 1.33 5.59
UBMI United Fin. Corp. of MT 0.96 4.92 NM 108 22.65 0.42 1.09 4.70 1.34 5.80
WSTR WesterFed Fin. Corp. of MT 0.42 2.06 46.67 932 10.98 0.22 0.56 4.33 0.78 5.99
</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>
RP Financial, LC.
Page 4.24
Table 4.7
Riverview Savings Bank, FSB
Calculation of Exchange Ratios
Shares Price/ Exchange Implied
Offered Share Shares(1) Exch. Ratio (2)
($000)
Super Maximum 3,174,000 $10.00 2,273,057 2.2541
Maximum 2,760,000 10.00 1,976,571 1.9601
Midpoint 2,400,000 10.00 1,718,757 1.7044
Minimum 2,040,000 10.00 1,460,944 1.4488
(1) Calculated to preserve the Public Savings Bank Shares percentage
ownership in the Holding Company at 41.73 percent (1,008,410 existing
public shares outstanding divided by 2,416,301 total shares
outstanding).
(2) Calculated as pro forma shares divided by 1,008,410 existing Public
Savings Bank Shares outstanding.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- -------- --------------------------------------------
I-1 Map of Office Location
I-2 Riverview's 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 NPV Analysis
I-9 Loan Portfolio Composition
I-10 Contractual Maturity By Loan Type
I-11 Loan Originations, Purchases, and Sales
I-12 Non-Performing Assets
I-13 Classified Assets
I-14 Deposit Composition
I-15 Time Deposit Rate/Maturity
I-16 Borrowings
II-1 List of Branch Offices
II-2 Historical Interest Rates
II-3 Demographic/Economic Reports
II-4 Sources of Personal Income/Employment Sectors
III-1 General Characteristics of Publicly-Traded
Institutions
III-2 Northwest U.S. and Western U.S. Peer Thrifts
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS(continued)
III-3 Midwest U.S. Comparable Peer Thrifts
IV-1 Stock Prices: June 6, 1997
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Directors and 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>
EXHIBIT I-1
Riverview Savings Bank, FSB
Map of Office Location
<PAGE>
Riverview Savings Bank, FSB
Market Area
(Map appears here)
<PAGE>
EXHIBIT I-2
Riverview Savings Bank, FSB
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT I-3
Riverview Savings Bank, FSB
Key Operating Ratios
<PAGE>
EXHIBIT I-3
Riverview Savings Bank, FSB
Key Operating Ratios
<TABLE>
<CAPTION>
At or For the Year Ended March 31,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS:
Performance Ratios:
Return on average assets .......................... 0.92% 1.31% 1.41% 2.06% 2.05%
Return on average equity .......................... 8.38 12.02 12.59 18.39 27.58
Dividend payout ratio(4)(5) ....................... 10.56 6.62 16.80 N/A N/A
Interest rate spread .............................. 3.72 3.62 4.11 5.11 4.89
Net interest margin ............................... 4.19 4.05 4.49 5.25 5.12
Noninterest expense to
average assets(6) ................................ 3.30 2.80 2.82 3.17 3.35
Efficiency ratio (non-
interest expense divided by
the sum of net interest
income and noninterest
income)(7) ....................................... 69.09 58.44 57.15 50.00 49.82
</TABLE>
<PAGE>
EXHIBIT I-4
Riverview Savings Bank, FSB
Investment Portfolio Composition
<PAGE>
EXHIBIT I-4
Riverview Savings Bank, FSB
Investment Portfolio Composition
<TABLE>
<CAPTION>
At March 31,
--------------------------------------------------------------------
1997 1996 1995
---------------------- -------------------- --------------------
Carrying Percent of Carrying Percent of Carrying Percent of
Value Portfolio Value Portfolio Value Portfolio
--------- --------- --------- ---------- -------- ----------
(Dollars in thousands)
Held to maturity (at amortized cost):
<S> <C> <C> <C> <C> <C> <C>
U. S. Government treasury obligations $7,989 14.86% $11,987 18.72% $11,987 32.60%
FNMA debentures ..................... 2,000 3.72 4,005 6.25 6,004 16.33
FHLB debentures ..................... 10,467 19.47 10,737 16.77 10,011 27.23
FHLMC debentures .................... -- -- 3,000 4.68 7,765 21.12
Student Loan Marketing Association
("SLMA") debentures ................ -- -- -- -- 1,000 2.72
Real estate mortgage investment
conduits ("REMICs") ................ 6,641 12.36 5,108 7.98 -- --
FHLMC mortgage-backed securities .... 6,800 12.65 9,030 14.10 14,919 21.72
FNMA mortgage-backed securities ..... 12,961 24.12 14,237 22.23 17,003 24.75
------- ------ ------- ------ ------- ------
$46,858 87.18 $58,104 90.73 $68,689 100.00
------- ------ ------- ------ ------- ------
Available for sale (at market value):
U.S. Government treasury obligations 2,924 5.44 992 1.55 -- --
FHLB debentures ..................... 975 1.82 2,940 4.59 -- --
REMICs .............................. 1,903 3.54 2,004 3.13 -- --
FHLMC mortgage-backed securities .... 1,087 2.02 -- -- -- --
------- ------ ------- ------ ------- ------
Total investment securities ........ $53,747 100.00% $64,040 100.00% $68,689 100.00%
======= ====== ======= ====== ======= ======
<CAPTION>
At March 31,
--------------------------------------------
1994 1993
-------------------- ---------------------
Carrying Percent of Carrying Percent of
Value Portfolio Value Portfolio
-------- ---------- -------- ----------
Held to maturity (at amortized cost):
<S> <C> <C> <C> <C>
U. S. Government treasury obligations $8,088 72.94% $6,103 67.04%
FNMA debentures ..................... 2,000 18.04 3,000 32.96
FHLB debentures ..................... -- -- -- --
FHLMC debentures .................... -- -- -- --
Student Loan Marketing Association
("SLMA") debentures ................ -- -- -- --
Real estate mortgage investment
conduits ("REMICs") ................ -- -- -- --
FHLMC mortgage-backed securities .... 9,060 32.03 10,676 52.85
FNMA mortgage-backed securities ..... 8,136 28.76 421 2.09
------- ------ ------- ------
$28,284 100.00 $20,200 100.00
------- ------ ------- ------
Available for sale (at market value):
U.S. Government treasury obligations -- -- -- --
FHLB debentures ..................... -- -- -- --
REMICs .............................. -- -- -- --
FHLMC mortgage-backed securities .... -- -- -- --
------- ------ ------- ------
Total investment securities ........ $28,284 100.00% $20,200 100.00%
======= ====== ======= ======
</TABLE>
<PAGE>
EXHIBIT I-5
Riverview Savings Bank, FSB
Yields and Costs
<PAGE>
EXHIBIT I-5
Riverview Savings Bank, FSB
Yields and Costs
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------------------------------------------------------------
1997 1996 1995
------------------------- -------------------------- --------------------------
Interest Interest Interest
Average and Yield/ Average and Yield/ Average and Yield/
Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost
------- --------- ---- ------- --------- ---- ------- --------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans .......................... $128,552 $12,087 9.40% $107,902 $10,413 9.65% $93,627 $8,729 9.32%
Non-mortgage loans ...................... 12,835 1,252 9.75 8,474 839 9.90 4,763 494 10.37
-------- -------- ---- -------- -------- ---- -------- -------- ----
Total net loans ....................... 141,387 13,339 9.43 116,376 11,252 9.67 98,390 9,223 9.37
Mortgage-backed securities ............... 30,212 2,135 7.07 29,779 2,020 6.78 27,530 1,586 5.76
Investment securities .................... 29,048 1,832 6.31 36,729 2,528 6.88 31,891 2,180 6.84
Daily interest-bearing ................... 708 40 5.65 1,626 91 5.60 3,450 166 4.81
Other earning assets ..................... 2,619 130 4.96 2,491 105 4.22 1,438 77 5.35
-------- -------- ---- -------- -------- ---- -------- -------- ----
Total interest-earning assets ........... 203,974 17,476 8.57 187,001 15,996 8.55 162,699 13,232 8.13
Noninterest-earning assets:
Office properties and equipment, net 4,516 4,342 2,955
Real estate, net....................... 471 -- --
Other noninterest-earning assets 9,375 8,634 7,865
-------- -------- --------
Total assets........................... $218,336 $199,977 $173,519
======== ======== ========
Interest-earning liabilities:
Regular savings accounts ................ 21,408 588 2.75 22,259 617 2.77 28,559 919 3.22
NOW accounts ............................ 15,915 234 1.47 15,322 247 1.61 13,733 264 1.92
Money market accounts ................... 18,046 617 3.42 15,879 599 3.77 10,694 331 3.10
Certificates of deposit ................. 99,657 5,595 5.61 90,710 5,120 5.64 81,757 3,607 4.41
-------- -------- ---- -------- -------- ---- -------- -------- ----
Total deposits ......................... 155,026 7,034 4.54 144,170 6,583 4.57 134,743 5,121 3.80
Other interest-bearing liabilities ...... 29,068 1,889 6.50 26,404 1,833 6.94 12,638 806 6.38
-------- -------- ---- -------- -------- ---- -------- -------- ----
Total interest-bearing liabilities ..... 184,094 8,923 4.85 170,574 8,416 4.93 147,381 5,927 4.02
Noninterest-bearing liabilities
Noninterest-bearing deposits 7,047 5,095 4,638
Other liabilities...................... 3,229 2,570 2,070
-------- -------- --------
Total liabilities..................... 194,370 178,239 154,089
Stockholders' equity................... 23,966 21,738 19,430
-------- -------- --------
Total liabilities and stockholders'
equity................................ $218,336 $199,977 $173,519
======== ======== ========
Net interest income..................... $ 8,553 $7,580 $7,305
======== ======== =======
Interest rate spread.................... 3.72% 3.62% 4.11%
===== ===== =====
Net interest margin..................... 4.19% 4.05% 4.49%
===== ===== =====
Ratio of average interest-earning
assets to average interest-bearing
liabilities........................... 110.80% 109.63% 110.39%
====== ====== ======
</TABLE>
<PAGE>
EXHIBIT I-5 (continued)
Riverview Savings Bank, FSB
Yields and Costs
Year Ended March 31,
At March 31, --------------------
1997 1997 1996 1995
---- ---- ---- ----
Weighted average yield earned on:
Total net loans(1) ......................... 8.50 9.43% 9.67% 9.37%
Mortgage-backed securities ................. 7.13 7.07 6.78 5.76
Investment securities ...................... 6.34 6.31 6.88 6.84
All interest-earning assets ................ 8.06 8.57 8.55 8.13
Weighted average rate paid on:
Deposits ................................... 4.35 4.54 4.57 3.80
FHLB advances and other borrowings ......... 6.51 6.50 6.94 6.38
All interest-bearing liabilities ........... 4.65 4.85 4.93 4.02
Interest rate spread (spread between weighted
average rate on all interest-earning
assets and all interest-bearing liabilities) 3.41 3.72 3.62 4.11
Net interest margin (net interest income
(expense) as a percentage of average
interest-earning assets) ................... N/A 4.19 4.05 4.49
- ----------
(1) Weighted average yield on total net loans at March 31, 1997 excludes
deferred loan fees.
<PAGE>
EXHIBIT I-6
Riverview Savings Bank, FSB
Loan Loss Allowance Activity
<PAGE>
EXHIBIT I-6
Riverview Savings Bank, FSB
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ----- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period ............................. $653 $657 $647 $515 $687
---- ---- ----- ---- ----
Provision for loan losses .................................. 180 -- -- 200 187
Recoveries:
Residential real estate ................................... 1 8 3 15 --
Consumer .................................................. 8 11 26 41 20
---- ---- ----- ---- ----
Total recoveries ........................................ 9 19 29 56 20
---- ---- ----- ---- ----
Charge-offs:
Residential real estate ................................... -- -- -- 39 --
Commercial real estate .................................... -- -- -- -- 300
Consumer .................................................. 11 23 19 85 79
---- ---- ----- ---- ----
Total charge-offs ....................................... 11 23 19 124 379
---- ---- ----- ---- ----
Net charge-offs (recoveries) .......................... 2 4 (10) 68 359
---- ---- ----- ---- ----
Balance at end of period ................................... $831 $653 $657 $647 $515
==== ==== ===== ==== ====
Ratio of allowance to total loans
outstanding at end of period .............................. 0.50% 0.47% 0.58% 0.62% 0.55%
Ratio of net charge-offs (recoveries) to
average loans outstanding during period ................... 0.00% 0.00% (0.01%) 0.07% 0.38%
Ratio of allowance to total of nonaccrual
and 90 days past due loans ................................ 955.17% 119.16% 273.75% 129.40% 90.35%
</TABLE>
<PAGE>
EXHIBIT I-7
Riverview Savings Bank, FSB
Fixed Rate and Adjustable Rate Loans
<PAGE>
EXHIBIT I-7
Riverview Savings Bank, FSB
Fixed Rate and Adjustable Rate Loans
Fixed- Floating- or
Rates Adjustable-Rates
----- ----------------
(In thousands)
Real estate mortgage:
One- to-four family..................... $60,795 $4,297
Other mortgage loans.................... 11,194 249
Consumer and commercial.................. 4,223 --
------ -----
Total.................................. $76,212 $4,546
======= ======
<PAGE>
EXHIBIT I-8
Riverview Savings Bank, FSB
NPV Analysis
<PAGE>
EXHIBIT I-8
Riverview Savings Bank, FSB
NPV Analysis
<TABLE>
<CAPTION>
At March 31, 1997
---------------------------------------------------------------------------------------
Net Portfolio Value Net Portfolio Value as a
------------------------------------------------ Percent of Present Value of Assets
Change Dollar Dollar Percent ----------------------------------
In Rates Amount Change Change NPV Ratio Change
- -------- ------ ------ ------ --------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
400bp ...................... $20,523 $(11,830) (37)% 9.56% (445) bp
300bp ...................... 26,632 (8,721) (27) 10.80 (321) bp
200bp ...................... 26,766 (5,588) (17) 12.00 (201) bp
100bp ...................... 29,720 (2,633) (8) 13.09 (93) bp
--bp ...................... 32,353 -- -- 14.01 --
(100)bp ....................... 34,487 2,134 7 14.72 71 bp
(200)bp ....................... 35,635 3,282 10 15.06 105 bp
(300)bp ....................... 36,779 4,425 14 15.39 138 bp
(400)bp ....................... 38,401 6,048 19 15.87 186 bp
</TABLE>
<PAGE>
EXHIBIT I-9
Riverview Savings Bank, FSB
Loan Portfolio Composition
<PAGE>
EXHIBIT I-9
Riverview Savings Bank, FSB
Loan Portfolio Composition
<TABLE>
<CAPTION>
At March 31,
-------------------------------------------------------------------
1997 1996 1995
------------------- ------------------- ------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(Dollars in thousands)
Real estate loans:
One-to-four family(1) ............ $94,536 62.29% $88,140 68.77% $73,047 70.39%
Multi-family ..................... 5,439 3.58 2,958 2.31 2,048 1.97
Construction one-to-four family .. 32,529 21.43 22,596 17.63 20,822 20.07
Construction multi-family ........ 547 0.36 361 0.28 -- --
Construction commercial .......... 634 0.42 500 0.39 344 0.33
Land ............................. 7,900 5.21 7,546 5.89 5,226 5.04
Commercial real estate ........... 8,997 5.93 6,518 5.08 5,335 5.14
-------- ---------- -------- ---------- -------- ----------
Total real estate loans ....... 150,582 99.21 128,619 100.35 106,822 102.94
Commercial business ............... 794 0.53 969 0.76 925 0.89
Consumer loans:
Automobile loans ................. 2,889 1.90 2,384 1.86 1,623 1.56
Savings account loans ............ 734 0.48 613 0.48 480 0.46
Home equity loans ................ 8,254 5.44 5,107 3.99 1,743 1.68
Other consumer loans ............. 2,416 1.59 1,695 1.32 1,448 1.40
-------- ---------- -------- ---------- -------- ----------
Total consumer loans .......... 14,293 9.41 9,799 7.65 5,294 5.10
-------- ---------- -------- ---------- -------- ----------
Total loans and loans held for sale 165,669 139,387 113,041
Less:
Undisbursed loans in process ..... 11,087 7.30 8,876 6.93 7,098 6.84
Unamortized loan origination fees,
net of direct costs ............. 1,967 1.30 1,678 1.31 1,502 1.45
Unearned discounts ............... 10 0.01 11 0.01 12 0.01
Allowance for possible loan losses 831 0.55 653 0.51 657 0.63
-------- ---------- -------- ---------- -------- ----------
Total loans receivable, net(1) .... $151,774 100.00% $128,169 100.00% $103,772 100.00%
======== ========== ======== ========== ======== ==========
<CAPTION>
At March 31,
-------------------------------------------
1994 1993
----------------- --------------------
Amount Percent Amount Percent
------ ------- ------ -------
Dollars in thousands
<S> <C> <C> <C> <C>
Real estate loans:
One-to-four family(1) ............ $64,068 70.51% $57,254 68.52%
Multi-family ..................... 1,350 1.49 2,688 3.22
Construction one-to-four family .. 25,280 27.82 19,571 23.42
Construction multi-family ........ -- -- -- --
Construction commercial .......... -- -- -- --
Land ............................. 2,870 3.16 2,338 2.80
Commercial real estate ........... 6,238 6.87 7,187 8.60
-------- ---------- -------- ---------
Total real estate loans ....... 99,806 109.85 89,038 106.56
Commercial business ............... 803 0.88 972 1.16
Consumer loans:
Automobile loans ................. 1,510 1.66 1,561 1.87
Savings account loans ............ 449 0.49 561 0.67
Home equity loans ................ -- -- -- --
Other consumer loans ............. 1,358 1.50 1,385 1.66
-------- ---------- -------- ---------
Total consumer loans .......... 3,317 3.65 3,507 4.20
-------- ---------- -------- ---------
Total loans and loans held for sale 103,926 93,517
Less:
Undisbursed loans in process ..... 10,917 12.02 8,209 9.82
Unamortized loan origination fees,
net of direct costs ............. 1,502 1.65 1,206 1.44
Unearned discounts ............... -- -- 33 0.04
Allowance for possible loan losses 647 0.71 515 0.62
-------- ---------- -------- ---------
Total loans receivable, net(1) .... $90,860 100.00% $83,554 100.00%
======== ========== ======== =========
</TABLE>
- ----------
(1) Includes loans held for sale of $80,000, $1.9 million, $247,000, $4.5
million and $10.7 million at March 31, 1997, 1996, 1995, 1994 and 1993,
respectively.
<PAGE>
EXHIBIT I-10
Riverview Savings Bank, FSB
Contractual Maturity By Loan Type
<PAGE>
EXHIBIT I-10
Riverview Savings Bank, FSB
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
After One After 3 After 5
Within Year to Years to Years to Beyond
One Year 3 Years 5 Years 10 Years 10 Years Total
-------- ------- ------- -------- -------- -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Residential one- to-four family:
Adjustable-rate ............................... $55,266 $1,884 $ -- $281 $2,132 $59,563
Fixed-rate .................................... 6,627 4,975 6,593 12,661 36,566 67,422
Other residential and
all non-residential:
Adjustable-rate ............................... 10,815 -- -- -- 249 11,064
Fixed-rate .................................... 1,259 1,242 1,605 3,452 4,895 12,453
Consumer and commercial:
Adjustable-rate ............................... 7,547 -- -- -- -- 7,547
Fixed-rate .................................... 3,317 2,257 1,414 442 110 7,540
-------- ------- ------- -------- -------- -------
Total gross loans ............................. 84,831 10,358 9,612 16,836 43,952 165,589
======== ======= ======= ======== ======== =======
</TABLE>
<PAGE>
EXHIBIT I-11
Riverview Savings Bank, FSB
Loan Originations, Purchases, and Sales
<PAGE>
EXHIBIT I-11
Riverview Savings Bank, FSB
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ----- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period ............................. $653 $657 $647 $515 $687
---- ---- ----- ---- ----
Provision for loan losses .................................. 180 -- -- 200 187
Recoveries:
Residential real estate ................................... 1 8 3 15 --
Consumer .................................................. 8 11 26 41 20
---- ---- ----- ---- ----
Total recoveries ........................................ 9 19 29 56 20
---- ---- ----- ---- ----
Charge-offs:
Residential real estate ................................... -- -- -- 39 --
Commercial real estate .................................... -- -- -- -- 300
Consumer .................................................. 11 23 19 85 79
---- ---- ----- ---- ----
Total charge-offs ....................................... 11 23 19 124 379
---- ---- ----- ---- ----
Net charge-offs (recoveries) .......................... 2 4 (10) 68 359
---- ---- ----- ---- ----
Balance at end of period ................................... $831 $653 $657 $647 $515
==== ==== ===== ==== ====
Ratio of allowance to total loans
outstanding at end of period .............................. 0.50% 0.47% 0.58% 0.62% 0.55%
Ratio of net charge-offs (recoveries) to
average loans outstanding during period ................... 0.00 0.00 (0.01) 0.07 0.38
Ratio of allowance to total of nonaccrual
and 90 days past due loans ................................ 955.17 119.16 273.75 129.40 90.35
</TABLE>
<PAGE>
EXHIBIT I-12
Riverview Savings Bank, FSB
Non-Performing Assets
<PAGE>
EXHIBIT I-12
Riverview Savings Bank, FSB
Non-Performing Assets
<TABLE>
<CAPTION>
At March 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ------
(Dollars in thousands)
Loans accounted for on a nonaccrual basis:
<S> <C> <C> <C> <C> <C>
Residential real estate ................................... $76 $541 $239 $499 $518
Consumer .................................................. 11 7 1 1 52
---- ---- ---- ---- ------
Total ................................................... 87 548 240 500 570
---- ---- ---- ---- ------
Accruing loans which are contractually
past due 90 days or more .................................. -- -- -- -- --
---- ---- ---- ---- ------
Total of nonaccrual and
90 days past due loans ................................... 87 548 240 500 570
---- ---- ---- ---- ------
Real estate owned (net) .................................... 135 -- -- -- 1,085
---- ---- ---- ---- ------
Total nonperforming assets ............................ $222 $548 $240 $500 $1,655
==== ==== ==== ==== ======
Total loans delinquent 90 days
or more to net loans ..................................... 0.06% 0.43% 0.23% 0.55% 0.68%
Total loans delinquent 90 days or
more to total assets ..................................... 0.04 0.26 0.13 0.38 0.49
Total nonperforming assets to total assets ................. 0.10 0.26 0.13 0.38 1.41
</TABLE>
<PAGE>
EXHIBIT I-13
Riverview Savings Bank, FSB
Classified Assets
<PAGE>
EXHIBIT I-13
Riverview Savings Bank, FSB
Classified Assets
At or For the Year
Ended March 31,
----------------------
1997 1996
---- ----
(In thousands)
Substandard assets ............................. $346 $722
Doubtful assets ................................ -- --
Loss assets .................................... 150 150
General loss allowances ........................ 681 503
Specific loss allowances ....................... 150 150
Charge-offs .................................... 11 23
<PAGE>
EXHIBIT I-14
Riverview Savings Bank, FSB
Deposit Composition
<PAGE>
EXHIBIT I-14
Riverview Savings Bank, FSB
Deposit Composition
<TABLE>
<CAPTION>
Percent
Interest Minimum of Total
Rate Term Category Amount Balance Deposits
- ---- ---- -------- ------ ------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
1.500% None NOW Accounts $ 100 $ 18,474 10.90%
2.750 None Regular Savings 100 21,234 12.53
1.750 None Maxi Checking 2,500 1,606 0.95
3.750 None Money Market
Deposit Account 2,500 17,553 10.36
None None Noninterest Checking 100 7,085 4.18
Certificates of Deposit
-----------------------
4.403 28-92 Days Fixed-Term, Fixed-Rate 1,000 2,199 1.30
5.186 4-6 Months Fixed-Term, Fixed-Rate 1,000 8,233 4.86
5.549 12-17 Months Fixed-Term, Fixed-Rate 1,000 50,686 29.92
5.350 18 Months Fixed-Term, Variable
Rate Individual
Retirement Account
("IRA") 1,000 470 0.28
5.281 18-23 Months Fixed-Term, Fixed-Rate 1,000 2,795 1.65
5.837 24-35 Months Fixed-Term, Fixed-Rate 1,000 24,066 14.21
5.382 36-59 Months Fixed-Term, Fixed-Rate 1,000 2,824 1.67
6.055 60-83 Months Fixed-Term, Fixed-Rate 1,000 10,745 6.34
5.894 84-119 Months Fixed-Term, Fixed-Rate 1,000 1,446 0.85
-------- ------
Total $169,416 100.00%
======== ======
</TABLE>
At March 31, 1997, the Savings Bank's jumbo certificates of deposit
totalled $513,000, all of which were due within three months after March 31,
1997. Jumbo certificates of deposit require minimum deposits of $100,000 and
have negotiable interest rates.
<PAGE>
EXHIBIT I-15
Riverview Savings Bank, FSB
Time Deposit Rate/Maturity
<PAGE>
EXHIBIT I-15
Riverview Savings Bank, FSB
Time Deposit Rate/Maturity
<TABLE>
<CAPTION>
At March 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
--------- ------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
Below 4.00%...................................... $ 212 $ 483 $ 5,201 $22,166 $ 9,656
4.00 - 4.99%.................................... 4,063 7,084 32,471 15,662 25,074
5.00 - 5.99%.................................... 82,336 56,739 32,740 7,807 6,649
6.00 - 7.99%.................................... 16,786 31,776 16,079 5,046 11,490
8.00 - 9.99%.................................... 67 179 666 1,077 2,722
10.00 - 11.99%.................................... -- -- 37 36 261
--------- ------- ------- ------- -------
Total.......................................... $ 103,464 $96,261 $87,194 $51,794 $55,852
========= ======= ======= ======= =======
</TABLE>
The following table sets forth the amount and maturities of time deposits
at March 31, 1997.
<TABLE>
<CAPTION>
Amount Due
---------------------------------------------------------------
Less Than 1-2 After After
One Year Years 2-3 Years 3 Years Total
------- ------- ------ ------ --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Below 4.00%......................... $ 212 $ -- $ -- $ -- $ 212
4.00 - 4.99%...................... 3,752 304 7 -- 4,063
5.00 - 5.99%...................... 64,571 13,212 1,734 2,819 82,336
6.00 - 7.99%...................... 11,128 1,250 1,688 2,720 16,786
8.00 - 8.99%...................... 46 12 9 -- 67
9.00 - 11.99%...................... -- -- -- -- --
Over 11.99%........................ -- -- -- -- --
------- ------- ------ ------ --------
Total............................. $79,709 $14,778 $3,438 $5,539 $103,464
======= ======= ====== ====== ========
</TABLE>
<PAGE>
EXHIBIT I-16
Riverview Savings Bank, FSB
Borrowings
<PAGE>
EXHIBIT I-16
Riverview Savings Bank, FSB
Borrowings
<TABLE>
<CAPTION>
At March 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Weighted average rate paid on
FHLB advances.................. 6.49% 6.66% 7.03% 4.81% --%
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Maximum amounts of FHLB
advances outstanding
at any month end ...... $32,750 $29,850 $23,000 $8,000 $410
Approximate average FHLB
advances outstanding .. 29,068 26,404 12,638 23,085 32
Approximate weighted
average rate paid on
FHLB advances ......... 6.50% 6.94% 6.38% 4.81% 3.34%
</TABLE>
<PAGE>
EXHIBIT II-1
Riverview Savings Bank, FSB
List of Office Locations
<PAGE>
EXHIBIT II-1
Riverview Savings Bank, FSB
List of Office Locations
<TABLE>
<CAPTION>
Net
Approximate Book
Location Year Opened Square Footage Deposits Value
- -------- ----------- -------------- -------- -----
(In thousands)
<S> <C> <C> <C> <C>
Main Office:
700 N.E. Fourth Avenue .............................. 1975 25,000 $37,025 $1,335
Camas, Washington
Branch Offices:
1737 B Street ....................................... 1982 2,200 $22,144 $106
Washougal, Washington
225 S.W. 2nd Street ................................. 1979 1,700 22,213 196
Stevenson, Washington
100 North Main ...................................... 1977 1,800 16,111 141
White Salmon, Washington(1)
813 West Main ....................................... 1979 2,000 15,109 775
Battle Ground, Washington
412 South Columbus .................................. 1983 2,500 8,193 70
Goldendale, Washington
11505-K Fourth Plain Boulevard ...................... 1994 3,500 7,656 1,079
Vancouver, Washington
7735 N.E. Highway 99(2) ............................. 1994 4,800 27,395 560
Vancouver, Washington
"Hazell Dell" Office
1011 Washington Way(2) .............................. 1994 2,000 13,570 370
Longview, Washington
</TABLE>
- ----------
(1) Leased.
(2) Former branches of Great American Federal Savings Association, San Diego,
California, that were acquired from the RTC on May 13, 1994. In the
acquisition, the Savings Bank assumed all insured deposit liabilities of
both branch offices totalling approximately $42.0 million.
<PAGE>
EXHIBIT II-2
Historical Interest Rates
<PAGE>
EXHIBIT II-2
Historical Interest Rates
HISTORICAL INTEREST RATES(1)
<TABLE>
<CAPTION>
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.
Source: SNL Securities.
</TABLE>
<PAGE>
EXHIBIT II-3
Demographic/Economic Reports
<PAGE>
EXHIBIT II-3
Demographic/Economic Reports
STATE DEMOGRAPHIC REPORT
STATE 00
STATE NAME UNITED STATES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 226,542,204 0-4 7.2 Total $35,584
1990 248,709,873 5-9 7.4 Householder <35 $30,999
1997 267,805,150 10-14 7.1 Householder 35-44 $40,281
2002 281,208,787 15-19 7.1 Householder 45-54 $45,940
20-24 6.5 Householder 55-64 $39,611
Population Growth Rate 1 25-44 31.4 Householder 65+ $22,603
45-64 20.5
Households 65-84 11.3
1990 91,947,410 85+ 1.4
1997 99,019,931 18+ 74.3 Spending Potential Index*
2002 104,000,643 Auto Loan 100
Median Age Home Loan 100
Household Growth Rate 1 1990 32.9 Investments 100
Average Household Size 2.64 1997 34.8 Retirement Plans 100
Home Repair 100
Families Male/Female Ratio 95.9 Lawn & Garden 100
1990 64,517,947 Remodeling 100
1997 68,999,546 Per Capita Income $18,100 Appliances 100
Electronics 100
Family Growth Rate 0.9 1997 Household Income Furniture 100
Base 99,019,225 Restaurants 100
Race 1990 1997 %<$15K 17.7 Sporting Goods 100
% White 80.3 78.4 %$15K-25K 14.4 Theater/Concerts 100
% Black 12.1 12.4 %$25K-50K 33.5 Toys & Hobbies 100
% Asian %$50K-100K 26.5 Travel 100
/Pacific Isl. 2.9 3.7 %$100K-150K 5.4 Video Rental 100
%>$150 K 2.6 Apparel 100
% Hispanic 9 10.8 Median Household Income Auto Aftermarket 100
1997 $36,961 Health Insurance 100
2002 $42,042 Pets & Supplies 100
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
STATE DEMOGRAPHIC REPORT
STATE 53
STATE NAME WASHINGTON
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 4,132,353 0-4 7.1 Total $35,220
1990 4,866,692 5-9 7.5 Householder <35 $29,181
1997 5,622,133 10-14 7.4 Householder 35-44 $39,261
2002 6,143,145 15-19 7.1 Householder 45-54 $46,172
20-24 6.6 Householder 55-64 $40,443
Population Growth Rate 2 25-44 30.9 Householder 65+ $22,358
45-64 21.5
Households 65-84 10.5
1990 1,872,431 85+ 1.4
1997 2,150,214 18+ 73.9 Spending Potential Index*
2002 2,343,179 Auto Loan 100
Median Age Home Loan 99
Household Growth Rate 1.9 1990 33.1 Investments 98
Average Household Size 2.56 1997 35.1 Retirement Plans 98
Home Repair 99
Families Male/Female Ratio 98.3 Lawn & Garden 99
1990 1,264,934 Remodeling 101
1997 1,478,750 Per Capita Income $17,434 Appliances 100
Electronics 100
Family Growth Rate 2.2 1997 Household Income* Furniture 100
Base 2,150,211 Restaurants 101
Race 1990 1997 %<$15K 16.8 Sporting Goods 98
% White 88.5 86.4 %$15K-25K 15.4 Theater/Concerts 98
% Black 3.1 3.3 %$25K-50K 36.1 Toys & Hobbies 100
% Asian %$50K-100K 25.7 Travel 97
/Pacific Isl. 4.3 5.7 %$100K-150K 4.2 Video Rental 99
%>$150 K 1.8 Apparel 100
% Hispanic 4.4 5.5 Median Household Income Auto Aftermarket 99
1997 $36,073 Health Insurance 99
2002 $38,812 Pets & Supplies 99
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 53011
COUNTY NAME CLARK WA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 192,227 0-4 7.4 Total $34,630
1990 238,053 5-9 7.7 Householder <35 $29,592
1997 316,477 10-14 7.8 Householder 35-44 $38,691
2002 370,555 15-19 7.5 Householder 45-54 $43,964
20-24 6.4 Householder 55-64 $38,207
Population Growth Rate 4 25-44 30.2 Householder 65+ $21,505
45-64 22.2
Households 65-84 9.6
1990 88,440 85+ 1.2
1997 116,812 18+ 72.5 Spending Potential Index*
2002 136,464 Auto Loan 100
Median Age Home Loan 96
Household Growth Rate 3.9 1990 32.9 Investments 92
Average Household Size 2.69 1997 34.6 Retirement Plans 95
Home Repair 97
Families Male/Female Ratio 97.2 Lawn & Garden 97
1990 63,895 Remodeling 101
1997 86,775 Per Capita Income $16,249 Appliances 100
Electronics 100
Family Growth Rate 4.2 1997 Household Income* Furniture 99
Base 116,812 Restaurants 100
Race 1990 1997 %<$15K 15.2 Sporting Goods 98
% White 94.6 93.3 %$15K-25K 14.8 Theater/Concerts 97
% Black 1.3 1.5 %$25K-50K 38.5 Toys & Hobbies 100
% Asian %$50K-100K 26.6 Travel 93
/Pacific Isl. 2.4 3.2 %$100K-150K 3.7 Video Rental 99
%>$150 K 1.2 Apparel 100
% Hispanic 2.5 3.2 Median Household Income Auto Aftermarket 99
1997 $36,686 Health Insurance 98
2002 $38,855 Pets & Supplies 99
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spend locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 53015
COUNTY NAME COWLITZ WA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 79,548 0-4 7.1 Total $29,189
1990 82,119 5-9 7.4 Householder <35 $25,087
1997 91,158 10-14 7.6 Householder 35-44 $33,469
2002 97,391 15-19 7.6 Householder 45-54 $40,441
20-24 6.2 Householder 55-64 $33,614
Population Growth Rate 1.5 25-44 27.6 Householder 65+ $17,284
45-64 22.6
Households 65-84 12.2
1990 31,640 85+ 1.6
1997 35,063 18+ 73.3 Spending Potential Index*
2002 37,434 Auto Loan 98
Median Age Home Loan 88
Household Growth Rate 1.4 1990 34.3 Investments 93
Average Household Size 2.57 1997 36.1 Retirement Plans 90
Home Repair 99
Families Male/Female Ratio 96.7 Lawn & Garden 96
1990 22,611 Remodeling 103
1997 25,128 Per Capita Income $14,158 Appliances 99
Electronics 96
Family Growth Rate 1.5 1997 Household Income* Furniture 94
Base 35,063 Restaurants 93
Race 1990 1997 %<$15K 23.3 Sporting Goods 95
% White 95.6 94.8 %$15K-25K 16.1 Theater/Concerts 93
% Black 0.4 0.4 %$25K-50K 37.2 Toys & Hobbies 98
% Asian %$50K-100K 20.8 Travel 91
/Pacific Isl. 1.4 1.9 %$100K-150K 2.2 Video Rental 97
%>$150 K 0.5 Apparel 93
% Hispanic 2 2.5 Median Household Income Auto Aftermarket 94
1997 $30,550 Health Insurance 99
2002 $32,337 Pets & Supplies 97
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 53039
COUNTY NAME KLICKITAT WA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 15,822 0-4 7.3 Total $25,482
1990 16,616 5-9 7.6 Householder <35 $20,559
1997 18,816 10-14 8.1 Householder 35-44 $30,425
2002 20,332 15-19 8.5 Householder 45-54 $29,466
20-24 6 Householder 55-64 $30,207
Population Growth Rate 1.7 25-44 26.1 Householder 65+ $18,207
45-64 23.1
Households 65-84 11.8
1990 6,210 85+ 1.6
1997 7,029 18+ 71.3 Spending Potential Index*
2002 7,592 Auto Loan 98
Median Age Home Loan 75
Household Growth Rate 1.7 1990 34.5 Investments 80
Average Household Size 2.65 1997 36.2 Retirement Plans 82
Home Repair 94
Families Male/Female Ratio 100.2 Lawn & Garden 91
1990 4,534 Remodeling 111
1997 5,202 Per Capita Income $11,974 Appliances 98
Electronics 94
Family Growth Rate 1.9 1997 Household Income* Furniture 85
Base 7,029 Restaurants 84
Race 1990 1997 %<$15K 27.8 Sporting Goods 93
% White 92.6 91.7 %$15K-25K 20.7 Theater/Concerts 85
% Black 0.2 0.1 %$25K-50K 36 Toys & Hobbies 96
% Asian %$50K-100K 13.4 Travel 81
/Pacific Isl. 0.8 0.9 %$100K-150K 1.6 Video Rental 97
%>$150 K 0.6 Apparel 86
% Hispanic 5.6 7 Median Household Income Auto Aftermarket 90
1997 $25,559 Health Insurance 100
2002 $26,112 Pets & Supplies 97
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 53059
COUNTY NAME SKAMANIA WA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
1980 7,919 0-4 7.3 Total $26,458
1990 8,289 5-9 7.8 Householder <35 $24,669
1997 9,588 10-14 8.3 Householder 35-44 $30,322
2002 10,485 15-19 8.4 Householder 45-54 $31,964
20-24 5.9 Householder 55-64 $29,141
Population Growth Rate 2 25-44 27.5 Householder 65+ $14,617
45-64 23.9
Households 65-84 9.9
1990 3,066 85+ 1.1
1997 3,537 18+ 71.2 Spending Potential Index*
2002 3,863 Auto Loan 100
Median Age Home Loan 79
Household Growth Rate 2 1990 33.7 Investments 83
Average Household Size 2.7 1997 36.1 Retirement Plans 86
Home Repair 95
Families Male/Female Ratio 101 Lawn & Garden 91
1990 2,304 Remodeling 115
1997 2,697 Per Capita Income $12,021 Appliances 99
Electronics 96
Family Growth Rate 2.2 1997 Household Income* Furniture 89
Base 3,537 Restaurants 89
Race 1990 1997 %<$15K 25.6 Sporting Goods 97
% White 96.4 96.1 %$15K-25K 16.5 Theater/Concerts 88
% Black 0.1 0.1 %$25K-50K 41.2 Toys & Hobbies 100
% Asian %$50K-100K 15 Travel 82
/Pacific Isl. 0.6 0.6 %$100K-150K 0.9 Video Rental 98
%>$150 K 0.7 Apparel 90
% Hispanic 2.1 2.6 Median Household Income Auto Aftermarket 92
1997 $28,092 Health Insurance 100
2002 $28,308 Pets & Supplies 100
- ------------------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- -----------------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/23/97
</TABLE>
<PAGE>
EXHIBIT II-4
Sources of Personal Income/Employment Sectors
<PAGE>
June 23, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(53-000) WASHINGTON
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Income by place of residence
Total personal income ($000) 85,837,927 94,420,291 101,206,147 109,808,532 114,808,532 120,359,599
Nonfarm personal income 84,551,830 93,090,718 99,832,573 108,136,078 113,006,982 119,011,808
Farm income 2/ 1,286,097 1,329,573 1,373,574 1,542,494 1,801,550 1,347,791
Population (thousands) 3/ 4,746.3 4,901.2 5,018.2 5,146.1 5,258.7 5,343.2
Per capita personal income (dollars) 18,085 19,265 20,168 21,313 21,832 22,526
Derivation of total personal income
Earnings by place of work 61,720,547 67,714,969 72,686,190 79,506,546 82,620,602 86,489,904
Less: Personal cont. for social insur. 4/ 3,943,060 4,348,410 4,604,523 4,949,475 5,152,453 5,531,690
Plus: Adjustment for residence 5/ 819,201 904,840 981,591 1,039,383 1,113,048 1,208,185
Equals: Net earn. by place of residence 58,596,688 64,271,399 69,063,258 75,596,454 78,581,197 82,166,399
Plus: Dividends, interest, and rent 6/ 14,705,624 16,268,165 16,519,752 16,953,333 17,756,682 18,765,320
Plus: Transfer payments 12,535,615 13,880,727 15,623,137 17,128,785 18,470,663 19,427,880
Earnings by place of work
Components of Earnings:
Wages and salaries 48,871,618 54,138,170 57,960,221 62,938,652 64,643,379 67,701,950
Other labor income 4,221,517 4,778,362 5,389,265 6,085,587 6,549,704 7,051,462
Proprietors' income 8,627,412 8,798,437 9,336,704 10,482,307 11,427,519 11,736,492
Farm proprietors' income 872,626 837,953 889,510 1,064,916 1,285,104 810,010
Nonfarm proprietors' income 7,754,786 7,960,484 8,447,194 9,417,391 10,142,415 10,926,482
Earnings by Industry:
Farm earnings 1,286,097 1,329,573 1,373,574 1,542,494 1,801,550 1,347,791
Nonfarm earnings 60,434,450 66,385,396 71,312,616 77,964,052 80,819,052 85,142,113
Private earnings 49,446,842 54,365,159 58,078,596 63,632,562 65,780,047 69,619,370
Ag. serv., for., fish., and other 8/ 901,691 1,068,518 1,189,304 1,160,267 1,134,947 1,214,162
Mining 160,853 169,335 176,685 169,823 163,915 182,024
Construction 3,985,418 4,509,377 4,776,033 5,194,479 5,365,643 5,763,916
Manufacturing 12,887,987 13,802,351 13,800,156 14,645,082 14,460,971 14,897,039
Nondurable goods 3,219,702 3,509,449 3,309,438 3,495,486 3,703,486 3,940,838
Durable goods 9,668,285 10,292,902 10,490,718 11,149,596 10,757,930 10,956,201
Transportation and public utilities 3,918,864 4,198,698 4,439,202 4,751,763 4,960,036 5,207,909
Wholesale trade 3,810,856 4,261,944 4,572,855 4,930,327 5,074,603 5,430,529
Retail trade 6,407,801 6,966,200 7,374,321 7,915,781 8,252,821 8,849,976
Finance insurance, and real estate 3,266,391 3,581,681 3,790,542 4,544,021 4,835,997 4,838,003
Services 14,106,981 15,807,055 17,959,498 20,321,019 21,531,114 23,235,812
Government and government enterprises 10,987,608 12,020,237 13,234,020 14,331,490 15,039,005 15,522,743
Federal, civilian 2,246,275 2,447,024 2,598,514 2,734,296 2,864,954 2,943,175
Military 1,381,118 1,458,485 1,561,706 1,664,826 1,638,036 1,664,083
State and local 7,360,215 8,114,728 9,073,800 9,932,368 10,536,015 10,925,485
</TABLE>
See footnotes at end of table REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
June 23, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(53-011) CLARK WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income by place of residence
Total personal income ($000) 3,937,453 4,305,364 4,615,355 5,047,682 5,474,950 5,945,064
Nonfarm personal income 3,918,775 4,285,398 4,595,717 5,020,509 5,449,545 5,925,209
Farm income 2/ 18,678 19,966 19,638 27,173 25,405 19,855
Population (thousands) 3/ 230.9 240.8 252.1 260.5 271.3 281.7
Per capita personal income (dollars) 17,054 17,876 18,311 19,374 20,179 21,102
Derivation of total personal income
Earnings by place of work 2,195,087 2,387,156 2,550,243 2,800,146 3,034,265 3,317,737
Less: Personal cont. for social insur. 4/ 144,020 157,306 166,682 179,601 195,238 217,572
Plus: Adjustment for residence 5/ 664,889 733,343 816,187 857,696 937,274 1,049,404
Equals: Net earn. by place of residence 2,715,956 2,963,193 3,199,748 3,478,241 3,776,301 4,149,569
Plus: Dividends, interest, and rent 6/ 683,207 743,007 723,628 786,929 844,167 891,931
Plus: Transfer payments 538,290 599,164 691,979 782,512 854,482 903,564
Earnings by place of work
Components of Earnings:
Wages and salaries 1,665,701 1,816,096 1,933,770 2,097,166 2,261,194 2,481,706
Other labor income 147,379 162,933 185,841 207,503 236,631 264,689
Proprietors' income 7/ 382,007 408,127 430,632 495,477 536,440 571,342
Farm proprietors' income 16,422 16,605 16,079 23,833 22,189 16,619
Nonfarm proprietors' income 365,585 391,522 414,553 471,644 514,251 554,723
Earnings by Industry:
Farm earnings 18,678 19,966 19,638 27,173 25,405 19,855
Nonfarm earnings 2,176,409 2,367,190 2,530,605 2,772,973 3,008,860 3,297,882
Private earnings 1,822,982 1,977,902 2,104,942 2,304,539 2,500,679 2,764,511
Ag. serv., for., fish., and other 8/ 11,677 15,819 17,689 17,365 18,343 21,119
Mining 17,727 19,176 20,202 11,829 8,113 10,088
Construction 228,153 233,301 246,017 279,321 291,130 337,229
Manufacturing 547,522 559,982 554,451 603,403 670,444 731,947
Nondurable goods 247,595 248,917 251,862 266,613 280,709 301,042
Durable goods 299,927 311,065 302,589 336,790 389,735 430,905
Transportation and public utilities 105,823 119,584 166,025 167,973 182,159 197,791
Wholesale trade 94,418 107,051 113,443 124,884 138,439 168,031
Retail trade 219,918 247,547 263,525 288,794 308,195 337,873
Finance, insurance, and real estate 112,668 127,542 110,392 130,445 150,070 162,065
Services 485,076 547,900 613,198 680,525 733,786 798,368
Government and government enterprises 353,427 389,288 425,663 468,434 508,181 533,371
Federal, civilian 85,167 93,150 99,729 110,025 119,713 121,506
Military 8,323 8,794 9,070 9,864 10,818 11,875
State and local 259,937 287,344 316,864 348,545 377,650 399,990
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(53-015) COWLITZ WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income by place of residence
Total personal income ($000) 1,266,840 1,373,849 1,486,898 1,540,828 1,592,169 1,678,658
Nonfarm personal income 1,252,750 1,359,802 1,472,377 1,521,867 1,571,626 1,659,312
Farm income 2/ 14,090 14,047 14,521 18,961 20,543 19,346
Population (thousands) 3/ 80.7 82.4 84.1 85.1 86.3 87.6
Per capita personal income (dollars) 15,689 16,663 17,679 18,099 18,449 19,159
Derivation of total personal income
Earnings by place of work 950.015 1,028,552 1,113,574 1,112,011 1,149,272 1,233,886
Less: Personal cont. for social insur. 4/ 63,603 68,959 73,475 72,131 75,196 82,058
Plus: Adjustment for residence 5/ -43,454 -44.518 -55,663 -38,495 -40,640 -53,953
Equals: Net earn. by place of residence 842,958 915,075 984,436 1,001,385 1,033,436 1,087,875
Plus: Dividends, interest, and rent 6/ 199.656 210,831 220,312 226,111 222,253 234,742
Plus: Transfer payments 224,226 247,943 282,150 313,332 336,480 356,041
Earnings by place of work
Components of Earnings:
Wages and salaries 770,207 841,405 911,635 893,832 915,314 972,803
Other labor income 73,858 81,215 92,410 95,802 102,463 110,350
Proprietors' income 7/ 105,950 105,932 109,529 122,377 131,495 140,733
Farm proprietors' income 12,230 11,937 12,149 16,375 17,796 16,596
Nonfarm proprietors' income 93,720 93,995 97,380 106,002 113,699 124,136
Earnings By Industry:
Farm earnings 14,090 14,047 14,521 18,961 20,543 19,346
Nonfarm earnings 935,925 1,014,505 1,099,053 1,093,050 1,128,729 1,204,540
Private earnings 828,953 895,066 968,486 951,086 980,310 1,050,827
Ag. serv., for., fish., and other 8/ 9,363 9,644 9,903 10,521 9,831 10,839
Mining 1,908 1,799 5,147 5,035 5,762 6,859
Construction 68,364 90,050 128,762 78,827 87,397 111,471
Manufacturing 389,481 403,173 406,575 419,306 413,747 441,468
Nondurable goods 204,158 216,298 225,636 231,873 237,101 258,452
Durable goods 185,323 186,875 180,939 187,433 176,646 183,016
Transportation and public utilities 60,608 61,108 59,977 64,363 66,113 67,112
Wholesale trade 34,183 39,394 40,598 42,512 40,259 41,935
Retail trade 102,585 108,949 115,387 121,326 127,503 137.216
Finance, insurance, and real estate 24,717 28,198 31,627 30,400 35,354 32,349
Services 137,744 152,751 170,510 178,796 194,344 201,578
Government and government enterprises 106,972 119,439 130,567 141,964 148,419 153,713
Federal, civilian 7,419 8,174 7,936 8,538 8,951 9,682
Military 2,657 2,768 2,787 2,961 3,023 3,032
State and local 96,896 108,497 119,844 130,465 136,445 140,999
See footnotes at end of table. REGIONAL ECONOMIC INFORMATIONS SYSTEM
Table CAOS June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Countries and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(53-039) KLICKITAT WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income by place of residence
Total personal income ($000) 226,567 251,363 258,945 280,648 303,990 306,473
Nonfarm personal income 201,957 229,879 236,453 252,221 266,859 279,619
Farm income 2/ 24,610 21,484 22,492 28,427 37,131 26,854
Population (thousands) 3/ 16.4 16.7 16.8 17.2 17.5 17.8
Per capita personal income (dollars) 13,801 15,073 15,439 16,324 17,339 17,197
Deprivation of total personal income
Earnings by place of work 148,127 164,636 164,513 174,905 189,133 189,729
Less: Personal cont. for social insur. 4/ 8,626 9,741 9,578 9,791 10,243 11,115
Plus: Adjustment fo residence 5/ -4,090 -7,553 -5,364 -4,744 -3,843 -4,039
Equals: Net earn by place of residence 135,411 147,342 149,571 160,370 175,047 173,575
Plus: Dividends, interest, and rent 6/ 42,002 46,557 46,007 50,332 53,549 56,420
Plus: Transfer payments 49,154 57,464 63,367 69,946 75,394 76,478
Earnings by place of work
Components of Earnings:
Wages and salaries 102,148 119,441 117,054 121,061 125,122 133,351
Other labor income 11,121 14,658 14,673 15,204 15,984 17,168
Proprietors' income 7/ 34,858 30,537 32,786 38,640 48,027 38,210
Farm proprietors' income 21,308 17,524 19,440 24,581 32,827 21,905
Nonfarm proprietors' income 13,550 13,013 13,346 14,059 15,200 16,305
Earnings by industry:
Farm earnings 24,610 21,484 22,492 28,427 37,131 26,854
Nonfarm earnings 123,517 143,152 142,021 146,078 152,002 161,875
Private earnings 94,404 110,339 106,683 109,182 112,084 119,656
Ag. serv., for., fish., and other 8/ (D) (D) (D) (D) (D) (D)
Mining 197 232 276 376 473 413
Construction 3,704 4,031 4,333 4,825 5,576 6,258
Manufacturing 49,488 62,406 54,723 52,603 50,148 50,141
Nondurable goods 224 266 1,251 1,487 1,507 1,563
Durable goods 49,264 62,140 53,472 51,116 48,641 48,578
Transportation and public utilities 11,444 12,393 13,729 15,532 18,217 21,084
Wholesale trade (D) (D) (D) (D) (D) (D)
Retail trade 8,243 8,116 8,684 9,115 9,412 10,422
Finance, insurance, and real estate 1,893 1,972 2,400 3,408 3,197 3,320
Services 14,211 14,962 15,792 16,149 16,977 18,330
Government and government enterprises 29,113 32,813 35,338 37,296 39,918 42,219
Federal, civilian 5,053 6,218 6,808 6,610 7,719 8,327
Military 537 554 551 593 608 612
State and local 23,523 26,041 27,979 30,093 31,591 33,280
See footnotes at end of table REGIONAL ECONOMIC INFORMATION SYSTEM
Table CAO5 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(53-059) SKAMANIA WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income by place of residence
Total personal income ($000) 121,082 133,119 142,530 146,247 152,622 162,286
Nonfarm personal income 119,399 131,433 140,811 143,686 149,870 159,681
Farm income 2/ 1,683 1,686 1,719 2,561 2,752 2,605
Population (thousands) 3/ 8.2 8.3 8.5 8.6 8.8 9.0
Per capita personal income (dollars) 14,833 15,983 16,760 17,095 17,377 18,116
Derivation of toal personal income
Earnings by place of work 53,506 53,311 55,786 53,352 60,491 63,298
Less: Personal cont. for social insur. 4/ 3,209 3,164 3,308 3,070 3,530 3,754
Plus: Adjustment for residence 5/ 31,678 38,102 39,412 43,095 43,940 48,482
Equals: Net earn. by place of residence 81,975 88,249 91,890 93,377 100,901 108,026
Plus: Dividends, interest, and rent 6/ 19,767 24,228 26,230 25,358 23,067 24,351
Plus: Transfer payments 19,340 20,642 24,410 27,512 28,654 29,909
Earnings by place of work
Components of Earnings:
Wages and salaries 36,503 36,339 38,436 36,026 40,963 42,514
Other labor income 3,536 3,713 4,176 4,183 4,789 5,075
Proprietors' income 7/ 13,467 13,259 13,174 13,143 14,739 15,709
Farm proprietors' income 1,669 1,608 1,612 2,475 2,659 2,501
Nonfarm proprietor' income 11,798 11,651 11,562 10,668 12,080 13,208
Earnings by Industry:
Farm earnings 1,683 1,686 1,719 2,561 2,752 2,605
Nonfarm earnings 51,823 51,625 54,067 50,791 57,739 60,693
Private earnings 32,905 31,382 32,162 28,032 35,447 37,533
Ag. serv., for., fish., and other 8/ 4,776 5,542 (D) 4,474 4,455 4,974
Mining 575 266 (D) (D) (D) (D)
Construction 1,543 1,676 2,015 1,861 2,059 2,465
Manufacturing 17,798 15,540 15,213 10,521 11,702 11,945
Nondurable goods (D) (D) 217 (D) (D) (D)
Durable goods (D) (D) 14,996 (D) (D) (D)
Transportation and public utilities 1,915 2,060 2,881 3,169 3,450 2,915
Wholesale trade 684 568 944 1,023 1,090 1,095
Retail trade 2,597 2,721 2,616 2,888 3,128 3,282
Finance, insurance, and real estate 212 192 309 (D) (D) (D)
Services 2,805 2,817 3,035 3,315 8,770 9,990
Government and government enterprises 18,918 20,243 21,905 22,759 22,292 23,160
Federal, civilian 9,131 9,623 10,315 10,031 9,236 9,729
Military 297 277 280 295 304 307
State and local 9,520 10,343 11,310 12,433 12,752 13,124
See footnotes at end of table REGIONAL ECONOMIC INFORMATION SYSTEM
Table CAO5 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
Footnotes for Table CAO5
1/ 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC. 1988-94 based
on 1987 SIC.
2/ Farm income consists of proprietors' net farm income, the wages of hired
farm labor, the pay-in-kind of hired farm labor, and the salaries of
officers of corporate farms.
3/ Census Bureau midyear population estimates. Estimates fo r1990-94 reflect
county population estimates available as of October 1995.
4/ Personal contributions for social insurance are included in earnings by
type and industry but excluded from personal income.
5/ U.S. adjustment for residence consists of adjustments for border workers;
income of U.S. residents commuting outside U.S. borders to work less
income of foreign residents commuting inside U.S. borders to work plus
certain Caribbean seasonal workers.
6/ Includes the capitl consumption adjustment for rental income of persons.
7/ Includes the inventory valuation and capital consumption adjustments.
8/ "Other" consists of wages and salaries of U.S. resident employed by
international organizations and foreign embassies and consulates in the
U.S.
13/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census; those for prior years reflect Alaska Census
Division as defined in the 1970 Decennial Census. Estimates from 1988
forward separte Aleutian Island Census Area into Aleutians East Borough
and Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin
in 1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon
Census Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
14/ Cibola, NM was separated from Valencia in June 1981, but in these estimates.
Valencia includes Cibola through the end of 1981.
15/ La Paz county, AZ was separated from Yuma county on January 1, 1983.
E The estimate shown here constitutes the major portion of the true estimate.
(D) Not shown to avoid disclosure of confidential information.
(L) Less than $50,000. Estimates are included in totals.
(N) Data not available for this year.
REGIONAL ECONOMIC INFORMATION SYSTEM
Table CAO5 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jos)
<TABLE>
<CAPTION>
(53-000) WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 2,709,394 2,849,112 2,899,285 2,954,509 3,001,833 3,071,025
By Type:
Wage and salary employment 2,261,708 2,369,933 2,388,656 2,424,985 2,465,499 2,526,349
Proprietors' employment 447,686 479,179 510,629 529,524 536,334 544,676
Farm proprietors' employment 37,971 36,838 36,647 36,809 35,565 35,077
Nonfarm Proprietors' employment 409,715 442,341 473,982 492,715 500,769 509,599
By Industry:
Farm employment 78,800 82,364 78,769 70,304 74,373 78,495
Nonfarm employment 2,630,594 2,766,748 2,820,516 2,884,205 2,927,460 2,992,530
Private employment 2,173,067 2,291,854 2,336,034 2,387,944 2,427,505 2,486,235
Ag.serv.,for.,fish.,and other 3/ 45,147 48,776 51,830 51,354 55,800 57,724
Mining 5,494 5,507 5,288 4,897 4,810 4,911
Construction 145,151 159,794 162,862 169,395 170,138 175,562
Manufacturing 380,605 388,741 370,157 366,230 361,537 359,011
Transportation and public utilities 121,821 126,936 128,141 128,755 130,564 134,290
Wholesale trade 134,486 141,816 144,706 148,993 148,793 155,508
Retail trade 449,430 470,056 478,678 494,467 501,757 518,825
Finance, insurance, and real estate 213,507 219,959 223,535 226,232 231,400 232,587
Services 677,426 730,269 770,837 797,621 822,706 847,817
Government and government enterprises 457,527 474,894 484,482 496,261 499,955 506,295
Federal, civilian 71,827 74,794 72,965 73,471 72,205 72,188
Military 80,627 79,718 78,443 79,058 76,603 75,289
State and local 305,073 320,382 333,074 343,732 351,147 358,818
See footnote REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
<TABLE>
<CAPTION>
(53-000) WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 2,709,394 2,849,112 2,899,285 2,954,509 3,001,833 3,071,025
By Type:
Wage and salary employment 2,261,708 2,369,933 2,388,656 2,424,985 2,465,499 2,526,349
Proprietors' employment 447,686 479,179 510,629 529,524 536,334 544,676
Farm proprietors' employment 37,971 36,838 36,647 36,809 35,565 35,077
Nonfarm proprietors' employment 2/ 409,715 442,341 473,982 492,715 500,769 509,599
By Industry:
Farm employment 78.800 82,364 78,769 70,304 74,373 78,495
Nonfarm employment 2,630,594 2,766,748 2,820,516 2,884,205 2,927,460 2,992,530
Private employment 2,173,067 2,291,854 2,336,034 2,387,944 2,427,505 2,486,235
Ag.serv.,for fish., and other 3/ 45,147 48,776 51,830 51,354 55,800 57,724
Mining 5,494 5,507 5,288 4,897 4,810 4,911
Construction 145,151 159,794 162,862 169,395 170,138 175,562
Manufacturing 380,605 388,741 370,157 366,230 361,537 359,011
Transportation and public utilities 121,821 126,936 128,141 128,755 130,564 134,290
Wholesale trade 134,486 141,816 144,706 148,993 148,793 155,508
Retail trade 449,430 470,056 478,678 494,467 501,757 518,825
Finance, insurance, and real estate 213,507 219,959 223,535 226,232 231,400 232,587
Services 677,426 730,269 770,837 797,621 822,706 847,817
Government and government enterprises 457,527 474,894 484,482 496,261 499,955 506,295
Federal, civilian 71,827 74,794 72,965 73,471 72,205 72,188
Military 80,627 79,718 78,443 79,058 76,603 75,289
State and local 305,073 320,382 333,074 343,732 351,147 358,818
</TABLE>
See footnote June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
<TABLE>
(53-011) CLARK WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 100,856 106,804 109,040 113,221 117,955 125,005
By Type:
Wage and salary employment 81,419 85,677 86,206 88,937 93,400 100,031
Proprietors employment 19,437 21,127 22,834 24,284 24,555 24,974
Farm proprietors employment 1,628 1,585 1,578 1,582 1,528 1,508
Non-farm proprietors' employment 2/ 17,809 19,542 21,256 22,702 23,027 23,466
By Industry:
Farm employment 1,841 1,911 1,887 1,812 1,786 1,792
Nonfarm employment 99,015 104,893 107,153 111,409 116,169 123,213
Private employment 84,107 89,257 91,261 95,136 99,280 105,668
Ag.serv.,for.,fish.,and other 3/ 926 1,094 1,242 1,156 1,246 1,342
Mining 437 459 483 311 266 328
Construction 8,158 8,496 8,671 9,307 9,547 10,565
Manufacturing 17,945 17,848 16,930 17,660 19,210 20,033
Transportation and public utilities 3,667 4,118 4,818 4,772 5,050 5,447
Wholesale trade 3,509 3,715 3,804 4,085 4,332 5,036
Retail trade 17,053 18,444 18,837 19,990 20,302 21,575
Finance insurance, and real estate 7,994 8,180 8,128 8,399 8,892 9,226
Services 24,418 26,903 28,348 29,456 30,435 32,116
Government and government enterprises 14,908 15,636 15,892 16,273 16,889 17,545
Federal, civilian 2,410 2,468 2,451 2,551 2,551 2,512
Military 1,256 1,265 1,298 1,345 1,334 1,332
State and local 11,232 11,903 12,143 12,377 13,004 13,701
See footnotes at end of table REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
<TABLE>
<CAPTION>
(53-015) COWLITZ WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 40,951 43,160 44,227 42,901 43,395 44,724
By Type:
Wage and salary employment 34,998 36,763 37,495 35,976 36,345 37,538
Proprietors' employment 5,953 6,397 6,732 6,925 7,050 7,186
Farm proprietors' employment 495 482 481 482 465 459
Nonfarm proprietors' employment 2/ 5,458 5,915 6,251 6,443 6,585 6,727
By Industry:
Farm employment 648 663 690 659 645 657
Nonfarm employment 40,303 42,497 43,537 42,242 42,750 44,067
Private employment 35,371 37,389 38,228 36,768 37,309 38,464
Ag. serv., for., and other 3/ 717 722 720 683 735 776
Mining 64 60 138 144 158 194
Construction 2,409 2,941 3,722 2,638 2,800 3,237
Manufacturing 10,737 10,835 10,318 10,166 9,795 10,007
Transportation and public utilities 1,884 1,884 1,799 1,852 1,912 1,901
Wholesale trade 1,342 1,477 1,499 1,359 1,310 1,308
Retail trade 7,414 7,835 7,932 8,072 8,196 8,534
Finance, insurance, and real estate 2,109 2,261 2,349 2,207 2,320 2,254
Services 8,695 9,374 9,751 9,647 10,083 10,253
Government and government enterprises 4,932 5,108 5,309 5,474 5,441 5,603
Federal, civilian 234 243 217 220 224 244
Military 433 426 426 432 410 390
State and local 4,265 4,439 4,666 4,822 4,807 4,969
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
<TABLE>
<CAPTION>
(53-039) KLICKITAT WASHINGTON
- ------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 7,278 7,442 7,478 7,566 7,605 7,918
By Type:
Wage and salary employment 5,547 5,676 5,631 5,730 5,730 6,062
Proprietors' employment 1,731 1,766 1,847 1,836 1,837 1,856
Farm proprietors' employment 617 599 596 598 578 570
Nonfarm proprietors' employment 2/ 1,114 1,167 1,251 1,238 1,259 1,286
By Industry:
Farm employment 900 914 844 882 865 940
Nonfarm employment 6,378 6,528 6,634 6,684 6,740 6,978
Private employment 4,912 4,945 5,048 5,088 5,114 5,303
Ag. serv., for., and other 3/ (D) (D) (D) (D) (D) (D)
Mining 11 15 16 21 29 24
Construction 225 260 273 305 325 335
Manufacturing 1,710 1,609 1,515 1,500 1,438 1,343
Transportation and public utilities 366 404 417 435 483 540
Wholesale trade (D) (D) (D) (D) (D) (D)
Retail trade 811 780 821 834 834 892
Finance, insurance, and real estate 238 219 244 253 252 250
Services 1,169 1,250 1,336 1,317 1,307 1,364
Government and government enterprises 1,466 1,583 1,586 1,596 1,626 1,675
Federal, civilian 198 237 227 230 254 247
Military 88 86 85 87 83 79
State and local 1,180 1,260 1,274 1,279 1,289 1,349
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
<TABLE>
<CAPTION>
(53-059) SKAMANIA WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employment by Place of Work
Total full- & part-time employment 2,512 2,535 2,552 2,355 2,608 2,631
By Type:
Wage and salary employment 2,034 2,053 2,062 1,844 2,090 2,103
Proprietors' employment 478 482 490 511 518 528
Farm proprietors' employment 88 85 85 86 84 82
Nonfarm proprietors' employment 2/ 390 397 405 425 434 446
By Industry:
Farm employment 88 97 103 97 96 94
Nonfarm employment 2,424 2,438 2,449 2,258 2,512 2,537
Private employment 1,544 1,510 1,495 1,284 1,606 1,630
Ag. serv., for., and other 3/ 70 54 (D) 33 36 42
Mining 33 19 (D) (D) (D) (D)
Construction 93 106 106 119 125 131
Manufacturing 639 594 552 320 317 287
Transportation and public utilities 70 69 85 92 100 90
Wholesale trade 22 14 11 11 11 (L)
Retail trade 249 262 250 262 284 282
Finance, insurance, and real estate 58 57 55 (D) (D) (D)
Services 310 335 373 380 662 711
Government and government enterprises 880 928 954 974 906 907
Federal, civilian 367 381 385 371 304 301
Military 44 43 43 43 42 40
State and local 469 504 526 560 560 566
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
Footnotes for Table CA25
1/ 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC.
1988-94 based on 1987 SIC.
2/ Excludes limited partners.
3/ "Other" consists of the number of jobs held by U.S. residents employed by
international organizations and foreign embassies and consulates in the
United States.
4/ Cibola, NM was separated from Valencia in June 1981, but in these estimates
Valencia includes Cibola through the end of 1981.
5/ La Paz county, AZ was separated from Yuma county on January 1, 1983.
6/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census: those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Bor. and
Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin in
1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon Census
Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
E Estimate shown constitutes the major portion of the true estimate.
(D) Not shown to avoid disclosure of confidential information.
(L) Less than 10 jobs. Estimates are included in totals.
(N) Data not available for this year.
<PAGE>
June 23, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(53-000) WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
Total personal income ($000) 85,837,927 94,420,291 101,206,147 109,678,572 114,808,532 120,359,599
Nonfarm personal income 84,551,830 93,090,718 99,832,573 108,136,078 113,006,982 119,011,808
Farm income 1,286,097 1,329,573 1,737,574 1,542,494 1,801,550 1,347,791
Derivation of Total Personal Income
Net earnings 1/ 58,596,688 64,271,399 69,093,258 75,596,454 78,581,197 82,166,399
Transfer payments 12,535,615 13,880,727 15,623,137 17,128,785 18,470,653 19,427,880
Income maintenance 2/ 936,599 1,033,494 1,269,911 1,463,732 1,595,315 1,675,315
Unemployment insurance 395,663 479,161 672,953 940,858 1,148,628 1,058,170
Retirement and other 11,203,353 12,368,072 13,680,273 14,724,195 15,726,710 16,694,395
Dividends, interest, and rent 14,705,624 16,268,165 16,519,752 16,953,333 17,756,682 18,765,320
Population (thousands) 3/ 4,746.3 4,901.2 5,018.2 5,146.1 5,258.7 5,343.2
Per Capita Incomes ($) 4/
Per capita personal income 18,015 19,265 20,168 21,313 21,832 22,526
Per capita net earnings 12,346 13,113 13,726 14,690 14,943 15,378
Per capita transfer payments 2,641 2,832 3,113 3,328 3,512 3,636
Per capita income maintenance 197 211 253 284 303 314
Per capita unemployment insurance 83 98 134 183 218 198
Per capita retirement & other 2,360 2,523 2,726 2,861 2,991 3,124
Per capita dividends, interest, & rent 3,098 3,319 3,292 3,294 3,377 3,512
Place of Work Profile
Total earnings (place of work, $000) 61,720,547 67,714,969 72,686,190 79,506,546 82,620,602 86,489,904
Wages and salaries 48,871,618 54,138,170 57,960,221 62,938,652 64,643,379 67,701,950
Other labor income 4,221,517 4,778,362 5,389,265 6,085,587 6,549,074 7,051,462
Proprietors' income 8,627,412 8,798,437 9,336,704 10,482,307 11,427,519 11,736,492
Nonfarm proprietors' income 7,754,786 7,960,484 8,447,194 9,417,391 10,142,415 10,926,482
Farm proprietors' income 872,626 837,953 889,510 1,064,916 1,285,104 810,010
Total employment (full & part-time) 2,709,394 2,849,112 2,899,285 2,954,509 3,001,833 3,071,025
Wage and salary jobs 2,261,708 2,369,933 2,388,656 2,424,985 2,465,499 2,526,349
Number of proprietors 447,686 479,179 510,629 529,524 536,334 544,676
Number of nonfarm proprietors /5 409,715 442,341 473,982 492,715 500,769 509,599
Number of farm proprietors 37,971 36,838 36,647 36,809 35,565 35,077
Average earnings per job ($) 22,780 23,767 25,070 26,910 27,523 28,163
Wage & salary earnings per job ($) 21,608 22,844 24,265 25,954 26,219 26,798
Average earnings per nonfarm proprietor ($) 18,927 17,996 17,822 19,113 20,254 21,441
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(53-011) CLARK WASHINGTON
- -------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
Total personal income ($000) 3,937,453 4,305,364 4,615,355 5,047,682 5,474,950 5,945,064
Nonfarm personal income 3,918,775 4,285,398 4,595,717 5,020,509 5,449,545 5,925,209
Farm income 18,678 19,966 19,638 27,173 25,405 19,855
Derivation of Total Personal Income
Net earnings 1/ 2,715,956 2,963,193 3,199,748 3,478,241 3,776,301 4,149,569
Transfer payments 538,290 599,164 691,979 782,512 854,482 903,564
Income maintenance 2/ 44,182 47,556 61,702 73,047 81,545 87,071
Unemployment insurance 18,855 24,490 35,987 49,149 55,498 47,653
Retirement and other 475,253 527,118 594,290 660,316 717,439 768,840
Dividends, interest, and rent 683,207 743,007 723,628 786,929 844,167 891,931
Population (thousands) 3/ 230.9 240.8 252.1 260.5 271.3 281.7
Per Capita Incomes ($) 4/
Per capita personal income 17,054 17,876 18,311 19,374 20,179 21,102
Per capita net earnings 11,764 12,303 12,694 13,350 13,919 14,729
Per capita transfer payments 2,332 2,488 2,745 3,003 3,149 3,207
Per capita income maintenance 191 197 245 280 301 309
Per capita unemployment insurance 82 102 143 189 205 169
Per capita retirement & other 2,058 2,189 2,358 2,534 2,644 2,729
Per capita dividends, interest, & rent 2,959 3,085 2,871 3,020 3,111 3,166
Place of Work Profile
Total earnings (place of work, $000) 2,195,087 2,387,156 2,550,243 2,800,146 3,034,265 3,317,737
Wages and salaries 1,665,701 1,816,096 1,933,770 2,097,166 2,261,194 2,481,706
Other labor income 147,379 162,933 185,841 207,503 236,631 264,689
Proprietors' income 382,007 408,127 430,632 495,477 536,440 571,342
Nonfarm proprietors' income 365,585 391,522 414,553 471,644 514,251 554,723
Farm proprietors' income 16,422 16,605 16,079 23,833 22,189 16,619
Total employment (full & part-time) 100,856 106,804 109,040 113,221 117,955 125,005
Wage and salary jobs 81,419 85,677 86,206 88,937 93,400 100,031
Number of proprietors 19,437 21,127 22,834 24,284 24,555 24,974
Number of nonfarm proprietors /5 17,809 19,542 21,256 22,702 23,027 23,466
Number of farm proprietors 1,628 1,585 1,578 1,582 1,528 1,508
Average earnings per job ($) 21,765 22,351 23,388 24,732 25,724 26,541
Wage & salary earnings per job ($) 20,458 21,197 22,432 23,580 24,210 24,809
Average earnings per nonfarm proprietor ($) 20,528 20,035 19,503 20,775 22,333 23,639
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(53-015) COWLITZ WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
Total personal income ($000) 1,266,840 1,373,849 1,486,898 1,540,828 1,592,169 1,678,658
Nonfarm personal income 1,252,750 1,359,802 1,472,377 1,521,626 1,659,312
Farm income 14,090 14,047 14,521 18,961 20,543 19,346
Derivation of Total Personal Income
Net earnings 1/ 842,958 915,075 984,436 1,001,385 1,033,436 1,007,875
Transfer payments 224,226 247,943 282,150 313,332 336,480 356,041
Income maintenance 2/ 21,310 22,734 28,004 32,619 35,854 38,254
Unemployment insurance 8,081 10,462 13,577 19,452 24,275 20,186
Retirement and other 194,835 214,747 240,569 261,261 276,351 297,601
Dividends, interest, and rent 199,656 210,831 220,312 226,111 222,253 234,742
Population (thousands) 3/ 80.7 82.4 84.1 85.1 86.3 87.6
Per Capita Incomes ($) 4/
Per capita personal income 15,689 16,663 17,679 18,099 18,449 19,159
Per capita net earnings 10,440 11,099 11,705 11,762 11,975 12,417
Per capita transfer payments 2,777 3,007 3,355 3,680 3,899 4,064
Per capita income maintenance 264 276 333 383 415 437
Per capita unemployment insurance 100 127 161 228 281 230
Per capita retirement & other 2,413 2,605 2,860 3,069 3,202 3,397
Per capita dividends, interest, & rent 2,473 2,557 2,619 2,656 2,575 2,679
Place of Work Profile
Total earnings (place of work, $000) 950,015 1,028,552 1,113,574 1,112,011 1,149,272 1,223,886
Wages and salaries 770,207 841,405 911,635 893,832 915,314 972,803
Other labor income 73,858 81,215 92,410 95,802 102,463 110,350
Proprietors' income 105,950 105,932 109,529 122,377 131,495 140,733
Nonfarm proprietors' income 93,720 93,995 97,380 106,002 113,699 124,136
Farm proprietors' income 12,230 11,937 12,149 16,375 17,796 16,597
Total employment (full & part-time) 40,951 43,160 44,227 42,901 43,395 44,724
Wage and salary jobs 34,998 36,763 37,495 35,976 36,345 37,538
Number of proprietors 5,953 6,397 6,732 6,925 7,050 7,186
Number of nonfarm proprietors /5 5,458 5,915 6,251 6,443 6,585 6,727
Number of farm proprietors 495 482 481 482 465 459
Average earnings per job ($) 23,199 23,831 25,179 25,920 26,484 27,365
Wage & salary earnings per job ($) 22,007 22,887 24,314 24,845 25,184 25,915
Average earnings per nonfarm proprietor ($) 17,171 15,891 15,578 16,452 17,266 18,453
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(53-039) KLICKITAT WASHINGTON
- -----------------------------------------------------------------------------------------------------------------------------------
Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
Total personal income ($000) 226,567 251,363 258,945 280,648 303,990 306,473
Nonfarm personal income 201,957 229,879 236,453 252,221 266,859 279,619
Farm income 24,610 21,484 22,492 28,427 37,131 26,854
Derivation of Total Personal Income
Net earnings 1/ 135,411 147,342 149,571 160,370 175,047 173,575
Transfer payments 49,154 57,464 63,367 69,946 75,394 76,478
Income maintenance 2/ 5,287 6,289 7,466 8,289 9,136 9,128
Unemployment insurance 2,826 3,586 4,408 5,449 6,922 5,967
Retirement and other 41,041 47,589 51,493 56,208 59,336 61,383
Dividends, interest, and rent 42,002 46,557 46,007 50,332 53,549 56,420
Population (thousands) 3/ 16.4 16.7 16.8 17.2 17.5 17.8
Per Capita Incomes ($) 4/
Per capita personal income 13,801 15,073 15,439 16,324 17,339 17,197
Per capita net earnings 8,248 8,836 8,918 9,328 9,984 9,740
Per capita transfer payments 2,994 3,446 3,778 4,069 4,300 4,291
Per capita income maintenance 322 377 445 482 521 512
Per capita unemployment insurance 172 215 263 317 395 335
Per capita retirement & other 2,500 2,854 3,070 3,269 3,384 3,444
Per capita dividends, interest, & rent 2,558 2,792 2,743 2,928 3,054 3,166
Place of Work Profile
Total earnings (place of work, $000) 148,127 164,636 164,513 174,905 189,133 188,729
Wages and salaries 102,148 119,441 117,054 121,061 125,122 133,351
Other labor income 11,121 14,658 14,673 15,204 15,984 17,168
Proprietors' income 34,858 30,537 32,786 38,640 48,027 38,210
Nonfarm proprietors' income 13,550 13,013 13,346 14,059 15,200 16,305
Farm proprietors' income 21,308 17,524 19,440 24,581 32,827 21,905
Total employment (full & part-time) 7,278 7,442 7,478 7,566 7,605 7,918
Wage and salary jobs 5,547 5,676 5,631 5,730 5,768 6,062
Number of proprietors 1,731 1,766 1,847 1,836 1,837 1,856
Number of nonfarm proprietors /5 1,114 1,167 1,251 1,238 1,259 1,286
Number of farm proprietors 617 599 596 598 578 570
Average earnings per job ($) 20,353 22,123 22,000 23,117 24,870 23,835
Wage & salary earnings per job ($) 18,415 21,043 20,787 21,128 21,692 21,998
Average earnings per nonfarm proprietor ($) 12,163 11,151 10,668 11,356 12,073 12,679
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
June 23, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(53-059) SKAMANIA WASHINGTON
Item 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
Total personal income ($000) 121,082 133,119 142,530 146,247 152,622 162,286
Nonfarm personal income 119,399 131,433 140,811 143,686 149,870 159,681
Farm income 1,683 1,686 1,719 2,561 2,752 2,605
Derivation of Total Personal Income
Net earnings 1/ 81,975 88,249 91,890 93,377 100,901 108,026
Transfer payments 19,340 20,642 24,410 27,512 28,654 29,909
Income maintenance 2/ 2,232 2,404 3,031 3,479 3,463 3,054
Unemployment insurance 1,152 1,398 1,932 3,004 3,210 2,542
Retirement and other 15,956 16,840 19,447 21,029 21,981 24,313
Dividends, interest, and rent 19,767 24,228 26,230 25,358 23,067 24,351
Population (thousands) 3/ 8.2 8.3 8.5 8.6 8.8 9.0
Per Capita Incomes ($) 4/
Per capita personal income 14,833 15,983 16,760 17,095 17,377 18,116
Per capita net earnings 10,042 10,595 10,806 10,915 11,488 12,059
Per capita transfer payments 2,369 2,478 2,870 3,216 3,262 3,339
Per capita income maintenance 273 289 356 407 394 341
Per capita unemployment insurance 141 168 227 351 365 284
Per capita retirement & other 1,955 2,022 2,287 2,458 2,503 2,714
Per capita dividends, interest, & rent 2,422 2,909 3,084 2,964 2,626 2,718
Place of Work Profile
Total earnings (place of work, $000) 53,506 53,311 55,786 53,352 60,491 63,298
Wages and salaries 36,503 36,339 38,436 36,016 40,963 42,514
Other labor income 3,536 3,173 4,176 4,183 4,789 5,075
Proprietors' income 13,467 13,259 13,174 13,143 14,739 15,709
Nonfarm proprietors' income 11,798 11,651 11,562 10,668 12,080 13,208
Farm proprietors' income 1,669 1,608 1,612 2,475 2,659 2,501
Total employment (full & part-time) 2,512 2,535 2,552 2,335 2,608 2,631
Wage and salary jobs 2,034 2,053 2,062 1,844 2,090 2,103
Number of proprietors 478 482 490 511 518 528
Number of nonfarm proprietors /5 390 397 405 425 434 446
Number of farm proprietors 88 85 85 86 84 82
Average earnings per job ($) 21,300 21,030 21,860 22,655 23,194 24,059
Wage & salary earnings per job ($) 17,946 17,700 18,640 19,537 19,600 20,216
Average earnings per nonfarm proprietor ($) 30,251 29,348 28,548 25,101 27,834 29,614
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE>
Footnotes for Table CA30
1/ Total earnings less personal contributions for social insurance adjusted
to place of residence.
2/ Includes supplemental security income payments, payments to families with
dependent children (AFDC), general assistance payments, food stamp
payments, and other assistance payments, including emergency assistance.
3/ Census Bureau midyear population estimates. Estimates for 1990-94 reflect
county population estimates available as of October 1996.
4/ Type of income divided by population yields a per capita for that type
of income.
5/ Excludes limited partners.
6/ Cibola, NM was separated from Valencia in June 1981, but in these
extimates Valencia includes Cibola through the end of 1981.
7/ La Paz county, AZ was separated from Yuma county on January 1, 1983.
8/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census: those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Bor. and
Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin in
1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon Census
Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
(L) Less than $50,000 or less than 10 jobs, as appropriate. Estimates are
included in totals.
(N) Data not available for this year.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
June 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
---------------------------- ----- ---------- --------- ------ ------- ----- ---- ----- -------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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 977 D 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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 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) ($) ($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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 14, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
South-West Companies (continued)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 112 2 09-30 01/95 17.25 19
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 106 3 12-31 08/86 5.75 7
GUPB GFSB Bancorp of Gallup NM OTC Northwest NM Thrift 87 1 06-30 06/95 18.00 15
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,514 D 26 12-31 01/96 18.00 298
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 932 20 06-30 01/94 20.37 113
GBCI Glacier Bancorp of MT OTC Western MT Div. 552 13 06-30 03/84 16.50 112
UBMT United Fin. Corp. of MT OTC Central MT Thrift 108 4 12-31 09/86 19.50 24
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 86 2 12-31 09/93 20.50 12
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 52 1 09-30 03/96 13.62 14
Other Areas
-----------
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report,
and financial reports of publicly Traded Thrifts.
Date of Last Update: 06/21/97
<PAGE>
EXHIBIT III-2
Northwest U.S. and Western U.S. Peer Thrifts
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
All North-West Companies;
June 21, 1997 (1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat. (2) Assets Offices Year Date Price Value
- ------ --------------------------- ------ -------------- ---------- ------- ------- ----- ----- ------ -------
($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 977 D 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
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
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and Ret.=Retail
Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, data derived from information published in
SNL Securitites Quarterly Thrift Report, and financial reports of
publicly-traded thrifts.
Date of Last Update: 06/21/97
<PAGE>
RP Financial, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 17.9 66.1 11.8 71.6 13.9 0.1 12.7 0.2 12.5 0.0
Special Selection Grouping(4) 12.9 67.0 13.5 65.7 20.8 0.1 11.3 0.3 11.0 0.2
State of WA 12.2 68.5 15.3 64.8 23.6 0.1 9.3 0.4 8.9 0.2
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 10.4 75.2 9.9 64.7 27.0 0.0 6.1 0.0 6.1 0.0
EFBC Empire Federal Bancorp of MT(1)(3) 17.5 47.6 0.0 79.8 0.0 0.0 18.4 0.0 18.4 0.0
FMSB First Mutual SB of Bellevue WA 5.9 76.8 12.7 78.8 13.0 0.0 6.6 0.0 6.6 0.0
FWWB First Savings Bancorp of WA 16.7 61.6 18.2 54.5 22.5 0.0 15.1 0.0 15.1 0.0
HRZB Horizon Financial Corp. of WA 10.3 81.4 6.0 82.7 0.0 0.0 15.5 0.0 15.5 0.0
IWBK Interwest SB of Oak Harbor WA 28.3 57.4 10.0 67.8 24.7 0.0 6.8 0.2 6.7 0.0
KFBI Klamath First Bancorp of OR 14.3 72.6 11.5 59.7 16.2 0.0 22.7 0.0 22.7 0.0
RVSB Rvrview SB,FSB MHC of WA(41.7) 16.5 65.3 13.1 74.7 13.2 0.0 10.9 1.1 9.8 0.0
STSA Sterling Financial Corp. of WA 9.2 60.8 24.5 58.7 32.8 1.1 5.8 0.7 5.2 1.6
WFSL Washington FS&LA of Seattle WA 7.0 70.4 19.4 47.3 39.6 0.0 11.3 1.2 10.1 0.0
WAMU Washington Mutual Inc. of WA 5.2 67.6 23.5 54.0 39.7 0.0 5.4 0.3 5.1 0.3
</TABLE>
<TABLE>
<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>
SAIF-Insured Thrifts 11.95 6.97 13.06 6.87 16.68 -2.24 -2.90 10.89 10.94 22.94
Special Selection Grouping(4) 17.73 11.59 11.71 15.26 25.79 5.65 5.66 12.37 11.70 26.52
State of WA 20.12 16.88 11.51 17.54 25.79 7.55 7.43 8.29 9.48 19.07
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 10.79 NM 3.39 11.57 8.47 5.79 5.79 6.30 6.30 11.36
EFBC Empire Federal Bancorp of MT(1)(3) 3.03 NM -2.22 7.21 NM 4.66 NM 23.16 23.16 67.09
FMSB First Mutual SB of Bellevue WA 15.30 -3.18 12.99 19.63 -2.07 15.72 15.72 NM 6.80 NM
FWWB First Savings Bancorp of WA 64.24 -22.49 NM 44.65 NM -3.64 -3.64 NM 14.01 26.72
HRZB Horizon Financial Corp. of WA 5.01 -17.64 9.09 5.67 NM 0.37 0.37 NM 15.22 30.43
IWBK Interwest SB of Oak Harbor WA 32.86 81.59 18.11 33.35 32.90 26.59 25.55 NM 6.69 14.15
KFBI Klamath First Bancorp of OR 13.26 -30.73 26.99 5.15 NM -8.57 -8.57 17.92 17.92 38.14
RVSB Rvrview SB,FSB MHC of WA(41.7) 9.61 -15.30 17.08 9.13 10.50 7.96 10.70 10.26 10.26 20.93
STSA Sterling Financial Corp. of WA 1.98 40.57 -1.46 1.53 4.40 -2.98 0.63 6.71 6.71 11.69
WFSL Washington FS&LA of Seattle WA 21.20 13.22 21.40 14.75 33.75 10.63 4.36 9.89 9.89 18.18
WAMU Washington Mutual Inc. of WA NM 58.25 NM NM 92.56 NM NM NM NM NM
</TABLE>
(1) Financial information is for the quarter ending September 30, 1996.
(3) Growth rates have been annualized from available financial information.
(4) Includes North-West Companies;
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>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income
---------------------------- -------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ------ ------- ------- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.58 7.16 4.01 3.15 0.13 3.00 0.11 0.01 0.28 0.40
Special Selection Grouping(4) 0.75 7.39 4.21 3.18 0.14 2.79 0.11 0.00 0.33 0.36
State of WA 0.85 7.59 4.40 3.19 0.17 3.02 0.13 0.00 0.29 0.43
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 0.50 7.60 4.96 2.63 0.00 2.63 0.19 -0.01 0.08 0.25
EFBC Empire Federal Bancorp of MT(1)(3) -0.35 5.75 2.96 2.79 0.00 0.00 0.00 0.00 0.93 0.00
FMSB First Mutual SB of Bellevue WA 1.01 8.23 4.73 3.50 0.44 3.06 0.23 0.00 0.15 0.37
FWWB First Savings Bancorp of WA 1.06 7.56 4.07 3.49 0.17 3.32 0.10 0.00 0.16 0.26
HRZB Horizon Financial Corp. of WA 1.53 7.69 4.15 3.54 0.04 3.50 0.21 0.00 0.05 0.26
IWBK Interwest SB of Oak Harbor WA 0.78 7.36 4.25 3.11 0.13 2.98 0.12 0.08 0.52 0.72
KFBI Klamath First Bancorp of OR 0.89 7.25 3.77 3.48 0.02 3.46 0.00 0.01 0.06 0.07
RVSB Rvrview SB,FSB MHC of WA(41.7) 0.95 7.82 4.04 3.78 0.06 3.72 0.13 -0.01 0.66 0.78
STSA Sterling Financial Corp. of WA 0.16 7.45 4.90 2.54 0.12 2.42 0.07 -0.01 0.53 0.59
WFSL Washington FS&LA of Seattle WA 1.57 7.78 4.34 3.44 0.07 3.37 0.05 0.00 0.03 0.08
WAMU Washington Mutual Inc. of WA 0.13 6.82 4.16 2.66 0.46 2.20 0.09 -0.01 0.45 0.53
</TABLE>
<TABLE>
<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>
SAIF-Insured Thrifts 2.17 0.02 -0.33 0.00 7.34 4.63 2.71 9,075 36.13
Special Selection Grouping(4) 1.90 0.05 -0.39 0.00 7.35 4.73 2.63 3,725 38.68
State of WA 1.87 0.06 -0.22 0.00 8.14 5.19 2.96 3,824 38.09
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 2.10 0.00 -0.03 0.00 8.08 5.55 2.53 3,446 33.95
EFBC Empire Federal Bancorp of MT(1)(3) 2.63 0.00 -1.65 0.00 0.00 0.00 0.00 2 NM
FMSB First Mutual SB of Bellevue WA 1.94 0.00 0.05 0.00 8.45 5.17 3.27 NM 34.33
FWWB First Savings Bancorp of WA 2.17 0.00 0.08 0.00 7.79 5.54 2.25 2 29.04
HRZB Horizon Financial Corp. of WA 1.50 0.00 0.05 0.00 7.99 5.11 2.88 4,312 33.76
IWBK Interwest SB of Oak Harbor WA 2.13 0.01 -0.48 0.00 8.16 4.90 3.26 3,025 34.00
KFBI Klamath First Bancorp of OR 1.36 0.00 -0.65 0.00 7.58 5.29 2.29 6,664 43.98
RVSB Rvrview SB,FSB MHC of WA(41.7) 2.63 0.15 -0.27 0.00 8.38 4.67 3.71 2,737 34.34
STSA Sterling Financial Corp. of WA 2.10 0.21 -0.38 0.00 7.94 5.34 2.60 3,012 48.44
WFSL Washington FS&LA of Seattle WA 0.68 0.07 -0.26 0.00 8.31 5.20 3.11 8,974 35.76
WAMU Washington Mutual Inc. of WA 1.62 0.08 -0.71 0.00 8.21 5.20 3.01 5,078 59.24
</TABLE>
(1) Financial information is for the quarter ending September 30, 1996.
(3) Income and expense information has been annualized from available financial
information.
(4) Includes North-West Companies;
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 15.13 61.71 5.55 11.64 6.52 1.68 51.04 340,525 2,490
Special Selection Grouping(4) 14.87 58.29 10.47 14.06 2.66 2.07 47.79 2,607,011 16,521
State of WA 15.26 55.49 11.31 15.16 2.88 2.30 48.76 3,186,219 20,193
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 14.65 58.44 10.50 20.08 0.45 0.00 61.97 92,577 713
EFBC Empire Federal Bancorp of MT(1) NA NA NA NA NA NA 43.27 67 0
FMSB First Mutual SB of Bellevue WA 8.18 39.61 6.68 45.38 0.11 0.04 6.83 380,000 716
FWWB First Savings Bancorp of WA 6.05 59.08 8.56 16.32 3.57 2.87 54.28 213,000 26
HRZB Horizon Financial Corp. of WA 5.59 82.29 2.45 11.11 0.08 0.00 51.61 83,742 0
IWBK Interwest SB of Oak Harbor WA 18.50 49.42 10.64 12.92 4.02 2.07 51.34 279,987 359
KFBI Klamath First Bancorp of OR 11.33 83.53 2.88 4.15 0.73 0.01 44.48 1,089 0
RVSB Rvrview SB,FSB MHC of WA(41.7) 13.27 58.58 23.13 5.60 7.55 0.55 48.95 98,751 468
STSA Sterling Financial Corp. of WA 28.95 24.95 20.42 12.77 6.43 14.17 61.52 522,159 1,390
WFSL Washington FS&LA of Seattle WA 18.92 68.51 15.63 2.59 0.11 0.00 53.59 133,708 0
WAMU Washington Mutual Inc. of WA 23.23 58.53 3.83 9.67 3.59 1.03 NA 26,872,046 ******
</TABLE>
(1) Financial information is for the quarter ending September 30, 1996.
(3) Includes North-West Companies;
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.29 0.78 0.85 0.83 181.45 129.32 272 0.10
Special Selection Grouping(4) 0.22 0.44 0.44 0.80 317.12 160.17 75 0.05
State of WA 0.27 0.49 0.48 0.90 337.18 157.81 91 0.03
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 0.30 0.59 0.36 1.02 287.71 142.60 0 0.00
EFBC Empire Federal Bancorp of MT(1) 0.00 NA NA 0.47 NA NA 19 0.18
FMSB First Mutual SB of Bellevue WA 0.00 NA NA 1.24 NA NA 0 0.00
FWWB First Savings Bancorp of WA 0.09 0.25 0.22 1.07 492.49 261.72 5 0.00
HRZB Horizon Financial Corp. of WA 0.00 0.01 NA 0.85 NA NA 0 0.00
IWBK Interwest SB of Oak Harbor WA 0.74 0.69 0.53 0.81 152.32 69.69 220 0.09
KFBI Klamath First Bancorp of OR 0.00 0.10 0.13 0.24 176.70 176.70 0 0.00
RVSB Rvrview SB,FSB MHC of WA(41.7) 0.27 0.10 0.06 0.54 944.32 372.65 5 0.01
STSA Sterling Financial Corp. of WA 0.26 0.43 0.27 0.81 298.69 119.58 442 0.18
WFSL Washington FS&LA of Seattle WA 0.55 0.90 0.88 0.66 75.12 52.91 57 -0.01
WAMU Washington Mutual Inc. of WA 0.21 0.93 1.03 1.13 109.64 85.52 NM NM
</TABLE>
(1) Financial information is for the quarter ending September 30, 1996.
(3) Includes North-West Companies;
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
----------------------------------------------------------
Equity/ IEA/ Assets/
Institution Assets IBL Assets 03/31/97 12/31/96 09/30/96 06/30/96 03/31/96 12/31/95
- ----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 12.2 111.8 4.2 0 -1 -2 8 4 6
Special Selection Grouping(4) 10.8 107.9 6.7 4 -12 3 10 14 16
State of WA 8.9 108.8 4.1 6 -12 4 11 13 16
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CASB Cascade SB of Everett WA 6.2 103.3 5.2 10 13 -90 82 17 18
EFBC Empire Federal Bancorp of MT(1) 18.4 81.6 34.9 NA NA NA NA NA NA
FMSB First Mutual SB of Bellevue WA 6.6 103.9 4.6 NA 4 4 2 18 8
FWWB First Savings Bancorp of WA 15.1 125.2 3.6 NA -5 27 -17 -25 87
HRZB Horizon Financial Corp. of WA 15.2 118.5 2.3 -16 13 -3 2 19 -1
IWBK Interwest SB of Oak Harbor WA 6.6 103.5 4.2 -3 -28 39 2 22 16
KFBI Klamath First Bancorp of OR 20.4 125.5 1.9 -7 -20 -8 -1 23 NA
RVSB Rvrview SB,FSB MHC of WA(41.7) 10.1 108.8 4.6 34 -24 11 4 11 -7
STSA Sterling Financial Corp. of WA 5.0 101.7 5.7 7 26 5 4 17 15
WFSL Washington FS&LA of Seattle WA 10.4 111.7 3.2 8 -21 0 16 19 3
WAMU Washington Mutual Inc. of WA 5.0 102.8 3.8 1 -81 40 8 22 4
</TABLE>
(1) Financial information is for the quarter ending September 30, 1996.
(3) Includes North-West Companies;
NA=Change is greater than 100 basis points during the quarter.
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>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Per Share Data
Market ---------------
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
Special Selection Grouping(8) 23.85 808.53 1.28 13.20 19.55 165.07 18.67 172.52 19.94
State of WA 25.59 963.46 1.42 12.93 19.55 178.35 16.31 187.66 18.79
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CASB Cascade SB of Everett WA 19.00 39.03 0.96 10.59 25.00 179.41 11.08 179.41 19.79
EFBC Empire Federal Bancorp of MT 13.12 34.01 0.46 14.76 NM 88.89 31.02 88.89 28.52
FMSB First Mutual SB of Bellevue WA 20.25 49.67 1.54 11.17 12.66 181.29 11.92 181.29 13.15
FWWB First Savings Bancorp of WA 21.50 227.23 0.77 13.99 26.88 153.68 23.26 153.68 27.92
HRZB Horizon Financial Corp. of WA 15.37 113.72 1.03 10.61 14.64 144.86 22.07 144.86 14.92
IWBK Interwest SB of Oak Harbor WA 34.75 278.63 2.34 14.82 20.81 234.48 15.73 240.15 14.85
KFBI Klamath First Bancorp of OR 18.94 188.68 0.87 14.03 NM 135.00 27.59 135.00 21.77
RVSB Rvrview SB,FSB MHC of WA(41.7) 19.00 17.40 1.06 10.36 22.89 183.40 20.46 202.34 17.92
STSA Sterling Financial Corp. of WA 18.50 102.55 0.86 11.22 NM 164.88 6.59 194.33 21.51
WFSL Washington FS&LA of Seattle WA 26.06 1236.39 2.06 14.10 14.01 184.82 21.36 205.20 12.65
WAMU Washington Mutual Inc. of WA 55.87 6606.52 2.12 19.53 NM NM 14.35 NM 26.35
</TABLE>
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
---------------- ---------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.87 29.08 1,117 12.85 0.78 0.62 5.28 0.84 7.35
Special Selection Grouping(8) 0.38 1.50 27.87 5,313 12.44 0.44 0.86 7.78 1.06 10.25
State of WA 0.39 1.40 22.99 6,406 9.06 0.49 0.87 8.82 1.03 11.55
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CASB Cascade SB of Everett WA 0.00 0.00 0.00 352 6.17 0.59 0.46 7.46 0.58 9.42
EFBC Empire Federal Bancorp of MT 0.30 2.29 65.22 110 34.89 NA 0.83 2.37 1.09 3.12
FMSB First Mutual SB of Bellevue WA 0.20 0.99 12.99 417 6.57 NA 1.01 15.36 0.98 14.78
FWWB First Savings Bancorp of WA 0.28 1.30 36.36 977 15.13 0.25 1.05 5.61 1.01 5.40
HRZB Horizon Financial Corp. of WA 0.35 2.28 33.98 515 15.23 0.01 1.55 9.82 1.52 9.64
IWBK Interwest SB of Oak Harbor WA 0.56 1.61 23.93 1,771 6.71 0.69 0.84 12.48 1.18 17.49
KFBI Klamath First Bancorp of OR 0.30 1.58 34.48 684 20.44 0.10 0.90 3.79 1.33 5.59
RVSB Rvrview SB,FSB MHC of WA(41.7) 0.22 1.16 7.87 224 11.16 0.10 0.92 8.38 1.17 10.71
STSA Sterling Financial Corp. of WA 0.00 0.00 0.00 1,557 3.99 0.43 0.07 1.61 0.31 7.68
WFSL Washington FS&LA of Seattle WA 0.88 3.38 42.72 5,789 11.56 0.90 1.65 14.21 1.83 15.74
WAMU Washington Mutual Inc. of WA 1.04 1.86 49.06 46,051 5.01 0.93 0.24 4.46 0.70 13.14
</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.
(8) Includes North-West Companies;
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 17.9 66.1 11.8 71.6 13.9 0.1 12.7 0.2 12.5 0.0
Special Selection Grouping(4) 27.4 55.1 14.4 63.8 17.0 0.0 17.8 0.1 17.7 0.0
State of WA 12.2 68.5 15.3 64.8 23.6 0.1 9.3 0.4 8.9 0.2
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 32.0 50.6 15.6 55.3 14.2 0.0 29.8 0.0 29.8 0.0
FFBA First Colorado Bancorp of Co 22.5 70.1 4.8 75.0 8.4 0.0 14.3 0.2 14.1 0.0
GBCI Glacier Bancorp of MT 17.5 70.3 8.4 58.9 29.0 0.0 9.5 0.3 9.2 0.0
TRIC Tri-County Bancorp of WY 36.0 41.1 21.1 56.5 27.3 0.0 15.3 0.0 15.3 0.0
UBMT United Fin. Corp. of MT 39.9 33.9 22.0 75.8 0.0 0.0 23.5 0.0 23.5 0.0
WSTR WesterFed Fin. Corp. of MT 16.4 64.8 14.4 61.0 23.2 0.0 14.1 0.0 14.1 0.0
</TABLE>
<TABLE>
<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>
SAIF-Insured Thrifts 11.95 6.97 13.06 6.87 16.68 -2.24 -2.90 10.89 10.94 22.94
Special Selection Grouping(4) 16.60 30.97 11.97 12.63 -25.48 5.50 4.74 13.26 13.29 29.51
State of WA 20.12 16.88 11.51 17.54 25.79 7.55 7.43 8.29 9.48 19.07
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 38.94 NM 24.65 0.92 NM NM NM 19.97 19.97 48.63
FFBA First Colorado Bancorp of Co 2.29 68.93 -8.67 5.14 -2.81 -9.26 -9.26 11.11 11.27 21.92
GBCI Glacier Bancorp of MT 40.70 56.05 36.09 62.63 11.85 37.55 33.74 9.48 9.48 17.05
TRIC Tri-County Bancorp of WY 30.60 22.41 43.46 8.86 NM -2.59 -2.59 15.30 15.30 34.10
UBMT United Fin. Corp. of MT -9.27 4.07 -17.78 0.52 -100.00 -1.10 -1.10 15.20 15.20 40.40
WSTR WesterFed Fin. Corp. of MT -3.67 3.37 -5.90 -2.32 -10.96 2.92 2.92 8.51 8.51 14.96
</TABLE>
(4) Includes Western Companies (Excl CA);
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>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income
---------------------------- -------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ------ ------- ------- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.58 7.16 4.01 3.15 0.13 3.00 0.11 0.01 0.28 0.40
Special Selection Grouping(4) 0.91 6.97 3.62 3.35 0.05 3.30 0.21 0.00 0.32 0.53
State of WA 0.85 7.59 4.40 3.19 0.17 3.02 0.13 0.00 0.29 0.43
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 0.81 6.90 3.45 3.45 0.00 3.45 0.00 0.00 0.14 0.14
FFBA First Colorado Bancorp of Co(3) 1.13 7.05 3.90 3.15 0.16 2.99 0.00 0.01 0.33 0.34
GBCI Glacier Bancorp of MT 1.28 7.51 3.46 4.05 0.16 3.90 0.44 0.00 0.98 1.42
TRIC Tri-County Bancorp of WY 0.67 6.84 3.77 3.07 0.00 3.07 0.00 0.00 0.16 0.16
UBMT United Fin. Corp. of MT 1.04 6.86 3.37 3.49 0.00 3.49 0.42 0.00 0.23 0.65
WSTR WesterFed Fin. Corp. of MT 0.55 6.64 3.76 2.88 0.01 2.87 0.40 0.00 0.07 0.47
</TABLE>
<TABLE>
<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>
SAIF-Insured Thrifts 2.17 0.02 -0.33 0.00 7.34 4.63 2.71 9,075 36.13
Special Selection Grouping(4) 2.09 0.01 -0.28 0.00 6.34 3.93 2.41 3,553 35.63
State of WA 1.87 0.06 -0.22 0.00 8.14 5.19 2.96 3,824 38.09
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 2.03 0.00 -0.37 0.00 7.49 5.16 2.33 5,259 31.55
FFBA First Colorado Bancorp of Co(3) 1.47 0.02 0.02 0.00 0.00 0.00 0.00 4,277 NM
GBCI Glacier Bancorp of MT 2.86 0.02 -0.28 0.00 8.32 4.22 4.10 2,141 40.52
TRIC Tri-County Bancorp of WY 1.88 0.00 -0.34 0.00 7.40 4.84 2.57 4,520 33.70
UBMT United Fin. Corp. of MT 2.10 0.00 -0.38 0.00 7.06 4.38 2.68 NM 37.04
WSTR WesterFed Fin. Corp. of MT 2.19 0.00 -0.33 0.00 7.76 4.99 2.77 1,566 35.32
</TABLE>
(3) Income and expense information has been annualized from available financial
information.
(4) Includes Western Companies (Excl CA);
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 15.13 61.71 5.55 11.64 6.52 1.68 51.04 340,525 2,490
Special Selection Grouping(4) 21.89 57.26 3.61 9.18 8.12 1.42 47.24 64,309 181
State of WA 15.26 55.49 11.31 15.16 2.88 2.30 48.76 3,186,219 20,193
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 24.06 58.12 1.55 6.71 9.76 0.47 42.25 79 0
FFBA First Colorado Bancorp of Co 9.80 71.27 3.23 11.72 5.36 0.03 51.87 22 468
GBCI Glacier Bancorp of MT 10.01 59.77 4.11 8.53 12.36 6.36 58.51 115,731 478
TRIC Tri-County Bancorp of WY 27.58 58.15 0.74 8.28 5.24 0.50 38.01 159 0
UBMT United Fin. Corp. of MT 40.95 36.06 9.53 11.65 4.84 1.18 34.34 0 0
WSTR WesterFed Fin. Corp. of MT 18.95 60.18 2.47 8.21 11.15 0.00 58.44 269,860 142
</TABLE>
(3) Includes Western Companies (Excl CA);
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.29 0.78 0.85 0.83 181.45 129.32 272 0.10
Special Selection Grouping(4) 0.10 0.23 0.17 0.73 419.00 299.54 36 0.03
State of WA 0.27 0.49 0.48 0.90 337.18 157.81 91 0.03
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 0.00 0.23 0.43 1.03 240.34 240.34 0 0.00
FFBA First Colorado Bancorp of Co 0.11 0.19 0.12 0.37 305.71 136.49 52 0.02
GBCI Glacier Bancorp of MT 0.04 0.28 0.16 0.85 527.06 212.30 115 0.12
TRIC Tri-County Bancorp of WY 0.04 0.05 0.02 1.16 NA 965.12 0 0.00
UBMT United Fin. Corp. of MT 0.39 0.42 NA 0.21 NA 16.41 0 0.00
WSTR WesterFed Fin. Corp. of MT 0.00 0.22 0.13 0.76 602.90 226.57 47 0.04
</TABLE>
(3) Includes Western Companies (Excl CA);
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>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
----------------------------------------------------------
Equity/ IEA/ Assets/
Institution Assets IBL Assets 03/31/97 12/31/96 09/30/96 06/30/96 03/31/96 12/31/95
- ----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 12.2 111.8 4.2 0 -1 -2 8 4 6
Special Selection Grouping(4) 16.3 119.1 3.5 -13 -10 18 7 -11 4
State of WA 8.9 108.8 4.1 6 -12 4 11 13 16
Comparable Group
- ----------------
Special Comparative Group(4)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 27.8 137.5 1.9 -17 8 -8 NA -74 33
FFBA First Colorado Bancorp of Co 14.1 116.7 2.6 NA NA NA 16 48 9
GBCI Glacier Bancorp of MT 9.3 109.4 3.5 -15 -65 81 6 -17 3
TRIC Tri-County Bancorp of WY 15.3 116.9 2.1 -6 -5 -6 -8 -5 -7
UBMT United Fin. Corp. of MT 22.6 126.5 3.6 6 7 16 9 -16 -24
WSTR WesterFed Fin. Corp. of MT 8.7 107.7 7.2 -32 6 7 15 1 8
</TABLE>
(3) Includes Western Companies (Excl CA);
NA=Change is greater than 100 basis points during the quarter.
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>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Per Share Data
Market _______________
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
Special Selection Grouping(8) 18.08 95.54 1.03 15.88 20.39 124.58 19.18 130.78 18.12
State of WA 25.59 963.46 1.42 12.93 19.55 178.35 16.31 187.66 18.79
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 13.62 13.69 0.64 14.42 26.71 94.45 26.30 94.45 21.28
FFBA First Colorado Bancorp of Co 18.00 297.99 1.02 13.08 17.48 137.61 19.68 139.32 17.65
GBCI Glacier Bancorp of MT 16.50 112.18 1.13 7.77 16.50 212.36 20.31 218.54 14.60
TRIC Tri-County Bancorp of WY 20.50 12.48 1.30 21.62 20.50 94.82 14.52 94.82 15.77
UBMT United Fin. Corp. of MT 19.50 23.85 1.16 19.95 20.74 97.74 22.14 97.74 16.81
WSTR WesterFed Fin. Corp. of MT 20.37 113.07 0.90 18.44 NM 110.47 12.13 139.81 22.63
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
---------------- ---------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.37 1.87 29.08 1,117 12.85 0.78 0.62 5.28 0.84 7.35
Special Selection Grouping(8) 0.54 2.95 46.52 541 16.78 0.23 0.99 6.61 1.18 7.75
State of WA 0.39 1.40 22.99 6,406 9.06 0.49 0.87 8.82 1.03 11.55
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CRZY Crazy Woman Creek Bncorp of WY 0.40 2.94 62.50 52 27.85 0.23 1.01 3.35 1.27 4.20
FFBA First Colorado Bancorp of Co 0.40 2.22 39.22 1,514 14.30 0.19 1.13 7.87 1.12 7.80
GBCI Glacier Bancorp of MT 0.43 2.61 38.05 552 9.56 0.28 1.39 14.68 1.57 16.59
TRIC Tri-County Bancorp of WY 0.60 2.93 46.15 86 15.31 0.05 0.76 4.72 0.99 6.14
UBMT United Fin. Corp. of MT 0.96 4.92 NM 108 22.65 0.42 1.09 4.70 1.34 5.80
WSTR WesterFed Fin. Corp. of MT 0.42 2.06 46.67 932 10.98 0.22 0.56 4.33 0.78 5.99
</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.
(8) Includes Western Companies (Excl CA);
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>
EXHIBIT III-3
Midwest U.S. Comparable Peer Thrifts
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Comparable Group. Publicly-Traded Thrifts
July 14, 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>
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 367 11 09-30 10/94 16.62 51
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 246 D 5 09-30 10/94 19.00 38
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
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 147 2 06-30 03/95 13.87 25
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September,
D=December, J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking. (3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information
published in SNL Securities Quarterly Thrift Report, and financial
reports of publicly-traded thrifts.
Date of Last Update: 07/14/97
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 17.9 66.1 11.8 71.6 13.9 0.1 12.7 0.2 12.5 0.0
State of WA 12.2 68.5 15.3 64.8 23.6 0.1 9.3 0.4 8.9 0.2
Comparable Group Average 19.2 71.0 5.9 64.6 18.7 0.0 15.9 0.0 15.9 0.0
Mid-West Companies 19.2 71.0 5.9 64.6 18.7 0.0 15.9 0.0 15.9 0.0
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 24.7 68.6 1.4 68.1 15.4 0.0 15.8 0.0 15.8 0.0
CMRN Cameron Fin. Corp. of MO 13.5 83.0 0.0 64.7 9.5 0.0 24.7 0.0 24.7 0.0
EFBI Enterprise Fed. Bancorp of OH 13.5 65.6 18.8 58.1 28.4 0.0 12.7 0.0 12.7 0.0
FFHH FSF Financial Corp. of MN 35.1 62.4 0.0 55.4 31.6 0.0 12.4 0.0 12.4 0.0
GFED Guarnty FS&LA,MHC of MO (31.0) 9.1 75.2 9.4 76.9 8.5 0.0 14.0 0.0 14.0 0.0
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 11.95 6.97 13.06 6.87 16.68 -2.24 -2.90 10.89 10.94 22.94
State of WA 20.12 16.88 11.51 17.54 25.79 7.55 7.43 8.29 9.48 19.07
Comparable Group Average 9.62 -7.70 15.16 4.84 36.16 -7.37 -7.35 13.25 13.25 23.94
Mid-West Companies 9.62 -7.70 15.16 4.84 36.16 -7.37 -7.35 13.25 13.25 23.94
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 3.38 68.18 -11.42 10.69 0.09 -17.43 -17.43 13.30 13.30 26.46
CMRN Cameron Fin. Corp. of MO 10.19 -25.92 18.05 2.24 NM -3.60 -3.60 17.95 17.95 26.76
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
FFHH FSF Financial Corp. of MN 13.45 -0.64 23.14 11.83 33.40 -13.66 -13.66 10.60 10.60 21.00
GFED Guarnty FS&LA,MHC of MO (31.0) 2.45 -46.09 10.61 -7.80 NM 1.39 1.39 13.02 13.02 24.16
</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>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income G&A/Other Exp.
---------------------------- ---------------- -----------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
------ ------ ------- ------ ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.58 7.16 4.01 3.15 0.13 3.00 0.11 0.01 0.28 0.40 2.17 0.02
State of WA 0.85 7.59 4.40 3.19 0.17 3.02 0.13 0.00 0.29 0.43 1.87 0.06
Comparable Group Average 0.78 7.35 4.14 3.21 0.08 3.13 0.06 0.00 0.15 0.21 2.08 0.00
Mid-West Companies 0.78 7.35 4.14 3.21 0.08 3.13 0.06 0.00 0.15 0.21 2.08 0.00
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 0.76 7.12 4.13 2.99 0.05 2.94 0.15 0.00 0.23 0.39 2.60 0.00
CMRN Cameron Fin. Corp. of MO 1.12 7.77 3.73 4.03 0.28 3.75 0.07 0.00 0.02 0.09 1.68 0.00
EFBI Enterprise Fed. Bancorp of OH 0.68 7.40 4.41 3.00 0.05 2.94 0.00 0.00 0.05 0.05 1.87 0.01
FFHH FSF Financial Corp. of MN 0.57 6.98 4.10 2.88 0.02 2.86 0.07 0.00 0.32 0.39 2.03 0.00
GFED Guarnty FS&LA,MHC of MO (31.0) 0.75 7.50 4.33 3.16 0.00 3.16 0.02 -0.01 0.12 0.14 2.25 0.00
</TABLE>
<TABLE>
<CAPTION>
Non-Op. Items Yields, Costs, and Spreads
-------------- -------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------ ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts -0.33 0.00 7.34 4.63 2.71 9,075 36.13
State of WA -0.22 0.00 8.14 5.19 2.96 3,824 38.09
Comparable Group Average -0.04 0.00 7.72 5.16 2.56 4,050 36.32
Mid-West Companies -0.04 0.00 7.72 5.16 2.56 4,050 36.32
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 0.42 0.00 7.50 5.17 2.33 2,652 33.99
CMRN Cameron Fin. Corp. of MO -0.40 0.00 8.21 5.30 2.91 3,620 36.56
EFBI Enterprise Fed. Bancorp of OH -0.10 0.00 7.55 5.22 2.34 6,659 32.83
FFHH FSF Financial Corp. of MN -0.28 0.00 7.35 4.96 2.39 4,026 39.58
GFED Guarnty FS&LA,MHC of MO (31.0) 0.17 0.00 7.98 5.16 2.82 3,292 38.66
</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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of December 31, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 15.13 61.71 5.55 11.64 6.52 1.68 51.04 340,525 2,490
State of WA 15.26 55.49 11.31 15.16 2.88 2.30 48.76 3,186,219 20,193
Comparable Group Average 5.90 69.84 16.89 8.29 5.19 0.99 55.94 16,268 34
Comparable Group
----------------
BWFC Bank West Fin. Corp. of MI 2.15 87.45 13.28 1.53 0.73 1.04 49.67 27,519 144
CMRN Cameron Fin. Corp. of MO 0.01 71.13 32.92 4.64 3.98 0.36 65.61 0 0
EFBI Enterprise Fed. Bancorp of OH 15.39 59.90 10.40 16.17 3.60 0.58 56.41 0 0
FFHH FSF Financial Corp. of MN 0.04 68.10 12.73 6.58 15.53 2.79 51.14 40,099 26
GFED Guarnty FS&LA,MHC of MO (31.0) 11.91 62.61 15.12 12.55 2.13 0.15 56.85 13,722 0
</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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.29 0.78 0.85 0.83 181.45 129.32 272 0.10
State of WA 0.27 0.49 0.48 0.90 337.18 157.81 91 0.03
Comparable Group Average 0.04 0.26 0.22 0.64 313.40 254.13 9 -0.04
Comparable Group
----------------
BWFC Bank West Fin. Corp. of MI 0.03 0.03 NA 0.20 NA 458.70 0 0.00
CMRN Cameron Fin. Corp. of MO 0.00 0.60 0.33 0.95 288.53 135.41 8 0.02
EFBI Enterprise Fed. Bancorp of OH 0.00 0.01 0.02 0.28 NA NA 0 0.00
FFHH FSF Financial Corp. of MN 0.03 0.10 0.12 0.34 285.51 216.04 19 0.03
GFED Guarnty FS&LA,MHC of MO (31.0) 0.13 0.54 0.39 1.42 366.16 206.36 20 -0.26
</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>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of December 31, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
----------------------------------------------------------
Equity/ IEA/ Assets/
Institution Assets IBL Assets 03/31/97 12/31/96 09/30/96 06/30/96 03/31/96 12/31/95
----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 12.2 111.8 4.2 0 -1 -2 8 4 6
State of WA 8.9 108.8 4.1 6 -12 4 11 13 16
Comparable Group Average 15.3 114.7 4.0 -13 2 -5 19 1 -2
Comparable Group
----------------
BWFC Bank West Fin. Corp. of MI 15.3 114.3 4.0 -7 -4 -8 2 15 0
CMRN Cameron Fin. Corp. of MO 23.0 126.1 4.4 -24 4 -6 6 9 6
EFBI Enterprise Fed. Bancorp of OH 12.7 113.3 2.0 NA 9 -35 40 0 18
FFHH FSF Financial Corp. of MN 11.8 111.7 2.2 -1 -10 8 22 -13 -19
GFED Guarnty FS&LA,MHC of MO (31.0) 13.8 108.4 7.5 -19 13 17 27 -6 -14
</TABLE>
NA=Change is greater than 100 basis points during the quarter.
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>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Market Pricing Comparatives
Prices As of June 6, 1997
<TABLE>
<CAPTION>
Per Share Data
Market _______________
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
---------------------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 19.97 132.40 1.14 15.56 20.14 128.40 15.64 131.47 17.72
State of WA 25.59 963.46 1.42 12.93 19.55 178.35 16.31 187.66 18.79
Comparable Group Average 16.65 35.15 0.72 13.54 23.42 129.23 19.23 129.26 19.50
Mid-West Companies 16.65 35.15 0.72 13.54 23.42 129.23 19.23 129.26 19.50
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 13.87 24.73 0.42 12.62 23.51 109.90 16.82 109.90 NM
CMRN Cameron Fin. Corp. of MO 16.75 44.92 0.96 16.92 21.75 99.00 22.72 99.00 17.45
EFBI Enterprise Fed. Bancorp of OH 19.00 38.21 0.82 15.52 25.33 122.42 15.51 122.58 23.17
FFHH FSF Financial Corp. of MN 16.62 51.44 0.93 13.97 23.08 118.97 14.00 118.97 17.87
GFED Guarnty FS&LA,MHC of MO (31.0) 17.00 16.47 0.49 8.68 NM 195.85 27.10 195.85 NM
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($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 WA 0.39 1.40 22.99 6,406 9.06 0.49 0.87 8.82 1.03 11.55
Comparable Group Average 0.49 2.86 49.87 231 15.31 0.26 0.74 4.33 0.86 5.11
Mid-West Companies 0.49 2.86 49.87 231 15.31 0.26 0.74 4.33 0.86 5.11
Comparable Group
----------------
Mid-West Companies
------------------
BWFC Bank West Fin. Corp. of MI 0.28 2.02 66.67 147 15.30 0.03 0.74 4.25 0.53 3.03
CMRN Cameron Fin. Corp. of MO 0.28 1.67 29.17 198 22.95 0.60 1.12 4.46 1.39 5.56
EFBI Enterprise Fed. Bancorp of OH 1.00 5.26 NM 246 12.67 0.01 0.68 4.72 0.75 5.16
FFHH FSF Financial Corp. of MN 0.50 3.01 53.76 367 11.77 0.10 0.64 4.73 0.83 6.11
GFED Guarnty FS&LA,MHC of MO (31.0) 0.40 2.35 NM 196 13.84 0.54 0.50 3.50 0.81 5.71
</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>
EXHIBIT IV-1
Stock Prices:
As of June 6, 1997
<PAGE>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 (less than) 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 (greater than) 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 $250 Million(134) 16.32 1,440 22.6 17.31 12.63 16.17 0.93 115.63 12.03
Goodwill Companies(128) 23.03 8,652 235.0 24.28 15.94 22.79 0.91 183.54 15.29
Non-Goodwill Companies(187) 18.01 3,216 77.1 19.10 13.49 17.83 0.94 123.25 13.48
Acquirors of FSLIC Cases(11) 30.06 33,955 1,336.6 31.77 20.09 28.84 3.61 210.30 15.48
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured Thrifts(no MHC)
---------------------------------------------
<S> <C> <C> <C> <C> <C>
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 (less than) 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 (greater than) 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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(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 (less than) 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 (greater than) 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 $250 Million(18) 19.22 1,711 24.5 19.87 14.31 18.90 2.26 145.34 15.87
Goodwill Companies(31) 23.99 16,684 574.8 25.22 15.51 23.57 1.79 152.71 17.57
Non-Goodwill Companies(36) 20.62 4,217 81.0 21.20 14.29 20.17 2.59 173.89 16.23
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
--------------------------------------------
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(68) 1.40 1.43 15.75 14.93 156.47
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) 1.39 1.43 15.60 14.96 152.81
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) 1.04 1.37 13.83 13.55 180.37
South-East Companies(5) 1.21 1.27 26.67 26.67 97.84
Thrift Strategy(43) 1.39 1.39 17.03 16.00 150.14
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) 1.53 1.56 16.64 15.67 165.30
Companies Without Dividends(14) 0.80 0.82 11.66 11.56 115.85
Equity/Assets (less than) 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 (greater than) 12%(19) 0.88 0.99 18.73 18.68 91.15
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 15.45 145.81
Assets Over $1 Billion(16) 1.71 1.87 16.12 14.53 196.70
Assets $500 Million-$1 Billion(16) 1.57 1.52 15.60 14.31 169.46
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(31) 1.50 1.59 15.81 14.04 196.56
Non-Goodwill Companies(36) 1.30 1.30 15.71 15.71 121.72
</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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 (greater than) 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 $250 Million(10) 16.76 2,194 13.1 17.98 12.44 17.07 -1.51 0.00 21.00
Goodwill Companies(9) 22.37 14,319 94.7 25.08 15.03 22.29 0.31 200.66 16.71
Non-Goodwill Companies(14) 18.04 2,387 17.0 18.80 13.26 17.92 0.45 0.00 17.07
MHC Institutions(23) 19.81 7,268 48.8 21.37 13.98 19.71 0.39 200.66 16.91
MHC Converted Last 3 Months(2) 13.10 2,185 13.0 13.50 11.56 13.19 -0.70 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
---------------------------------
<S> <C> <C> <C> <C> <C>
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 (greater than) 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
</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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NYSE Traded Companies
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA 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. -2.38
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
</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
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NYSE Traded Companies
---------------------
<S> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
---------------------------------------
<S> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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/
EPS(3) EPS(3) Share Share(4) Share
Financial Institution -------- ------- ------- ------- -------
- --------------------- ($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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* 0.80 0.77 13.99 13.99 92.45
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
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
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 (less than) 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 (greater than) 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 $250 Million(134) 17.27 17.22 0.64 3.60 3.37 0.88 5.22 0.70 125.25 0.69
Goodwill Companies(128) 8.85 8.25 0.57 6.44 4.34 0.76 8.75 0.87 112.49 0.90
Non-Goodwill Companies(187) 15.59 15.53 0.65 4.56 3.55 0.90 6.41 0.75 135.35 0.78
Acquirors of FSLIC Cases(11) 7.16 6.77 0.53 7.05 4.29 0.79 11.06 1.57 52.89 0.91
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 (less than) 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 (greater than) 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
</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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(68) 12.00 11.64 0.99 10.28 6.34 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) 12.16 11.85 1.02 10.44 6.49 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) 10.49 10.42 0.96 8.81 4.94 1.05 10.74 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) 13.57 13.12 0.97 9.16 6.06 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) 11.64 11.22 1.03 10.45 6.51 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 (less than) 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 (greater than) 12%(19) 21.57 21.47 0.92 4.57 3.40 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) 13.44 13.09 1.03 9.68 5.91 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) 10.01 9.49 1.06 11.11 7.05 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 $250 Million(18) 17.16 16.96 0.97 7.89 5.47 1.03 7.96 1.01 110.31 1.19
Goodwill Companies(31) 9.06 8.27 0.86 10.63 6.50 0.93 11.16 1.23 104.40 1.58
Non-Goodwill Companies(36) 14.56 14.56 1.10 9.98 6.20 1.11 9.79 0.80 142.98 1.41
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(68) 14.46 143.36 16.15 146.60 15.43 0.46 1.91 27.83
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) 14.21 142.04 16.25 146.50 15.42 0.45 1.92 28.61
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) 18.06 159.94 17.90 159.94 20.59 0.47 1.61 26.94
South-East Companies(5) 19.16 108.29 30.23 108.29 22.66 0.59 1.72 25.72
Thrift Strategy(43) 14.58 133.90 16.90 139.20 15.60 0.49 2.06 30.97
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) 14.83 144.64 16.07 148.47 15.61 0.56 2.33 34.09
Companies Without Dividends(14) 12.01 137.61 16.52 138.58 14.37 0.00 0.00 0.00
Equity/Assets (less than) 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 (greater than) 12%(19) 19.52 120.78 25.06 121.15 20.22 0.40 1.54 32.82
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) 15.03 142.55 17.95 147.82 16.08 0.48 1.94 27.70
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) 13.99 144.34 14.29 159.01 14.84 0.47 2.04 25.92
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(31) 14.57 146.08 12.95 153.77 15.42 0.52 2.09 28.43
Non-Goodwill Companies(36) 14.35 141.10 18.92 141.10 15.45 0.40 1.75 27.34
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 (greater than) 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 $250 Million(10) 13.33 13.23 0.47 3.47 2.14 0.78 5.98 0.78 141.75 0.95
Goodwill Companies(9) 9.80 9.17 0.73 7.21 3.70 0.92 9.37 0.53 150.03 0.90
Non-Goodwill Companies(14) 12.70 12.70 0.47 3.78 2.53 0.79 6.51 0.71 188.39 0.88
MHC Institutions(23) 11.51 11.26 0.57 5.18 3.01 0.84 7.68 0.63 170.22 0.89
MHC Converted Last 3 Months(2) 13.83 13.83 0.32 2.35 1.79 0.59 4.36 0.71 33.56 0.66
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(21) 23.50 157.60 18.19 162.86 20.75 0.64 3.11 50.65
BIF-Insured Thrifts(2) 18.32 194.16 18.68 194.27 22.99 0.52 2.77 50.38
NASDAQ Listed OTC Companies(23) 22.92 160.92 18.23 165.72 20.87 0.63 3.08 50.62
Florida Companies(3) 22.59 165.01 15.27 168.05 18.57 1.03 4.08 72.54
Mid-Atlantic Companies(10) 25.91 153.52 18.26 161.93 22.14 0.39 2.29 42.09
Mid-West Companies(7) 14.55 157.91 18.89 158.13 21.11 0.70 3.72 68.88
New England Companies(1) 18.32 234.55 19.73 234.78 22.99 0.67 2.75 50.38
North-West Companies(1) 22.89 183.40 20.46 202.34 17.92 0.22 1.16 26.51
South-East Companies(1) 27.62 140.27 18.64 140.27 19.59 1.40 5.07 0.00
Thrift Strategy(21) 23.59 156.12 18.05 160.43 20.92 0.65 3.20 54.10
Mortgage Banker Strategy(1) 22.89 183.40 20.46 202.34 17.92 0.22 1.16 26.51
Diversified Strategy(1) 18.32 234.55 19.73 234.78 22.99 0.67 2.75 50.38
Companies Issuing Dividends(22) 22.92 162.32 18.12 167.34 20.87 0.66 3.23 56.94
Companies Without Dividends(1) 0.00 131.64 20.60 131.64 0.00 0.00 0.00 0.00
Equity/Assets 6-12%(15) 21.10 166.45 15.34 172.84 19.54 0.63 2.93 59.13
Equity/Assets (greater than) 12%(8) 26.57 151.25 23.30 153.26 23.55 0.63 3.36 20.83
Actively Traded Companies(1) 0.00 190.38 17.50 214.84 20.29 0.48 1.94 69.57
Holding Company Structure(1) 0.00 190.38 17.50 214.84 20.29 0.48 1.94 69.57
Assets Over $1 Billion(5) 20.99 189.91 16.49 203.44 19.80 0.69 2.71 62.41
Assets $500 Million-$1 Billion(4) 24.86 155.35 19.29 161.14 22.66 0.68 3.39 41.67
Assets $250-$500 Million(4) 21.56 154.57 15.16 154.96 18.77 0.77 3.59 68.88
Assets less than $250 Million(10) 25.26 150.64 20.02 152.54 22.27 0.53 2.98 13.25
Goodwill Companies(9) 21.87 181.33 17.68 193.06 20.81 0.59 2.54 55.48
Non-Goodwill Companies(14) 24.24 146.79 18.61 146.79 20.93 0.66 3.46 33.58
MHC Institutions(23) 22.92 160.92 18.23 165.72 20.87 0.63 3.08 50.62
MHC Converted Last 3 Months(2) 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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) ($) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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* 15.13 15.13 1.05 5.61 3.72 1.01 5.40 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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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* 26.88 153.68 23.26 153.68 27.92 0.28 1.30 35.00
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
HISTORICAL STOCK PRICE INDICES(1)
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ---- ------- --------- ----- -----
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
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 6935.5 793.2 1,293.0 560.6 315.1
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE>
MONTHLY MARKET REPORT
Index Values
<TABLE>
<CAPTION>
Index Values Percent Change
05/30/97 1 Month YTD 52 Week 1 Month YTD 52 Week
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 577.9 537.2 483.6 383.4 7.58 19.50 50.75
MHC Index 628.7 587.7 538.0 424.8 6.98 16.84 47.98
Insurance Indices
SAIF Thrifts 516.8 484.2 439.2 359.6 6.75 17.67 43.74
BIF Thrifts 757.3 689.7 616.8 454.9 9.80 22.78 66.49
Stock Exchange Indices
AMEX Thrifts 172.6 166.7 156.2 134.9 3.52 10.49 27.95
NYSE Thrifts 342.3 314.7 277.3 257.9 8.75 23.45 32.71
OTC Thrifts 667.0 622.5 569.7 459.1 7.16 17.08 45.28
Geographical Indices
Mid-Atlantic Thrifts 1,148.2 1,077.4 970.7 745.1 6.58 18.29 54.09
Midwestern Thrifts 1,293.8 1,234.5 1,159.3 970.8 4.80 11.60 33.27
New England Thrifts 498.8 458.4 428.9 318.4 8.82 16.31 56.68
Southeastern Thrifts 521.3 499.4 447.2 383.9 4.40 16.58 35.80
Southwestern Thrifts 383.5 347.5 315.9 264.2 10.35 21.41 45.14
Western Thrifts 592.5 539.7 474.7 377.6 9.78 24.81 56.90
Asset Size Indices
Less than $250M 648.7 639.4 586.6 545.1 1.45 10.59 19.01
$250M to $500M 898.1 865.2 789.8 688.3 3.80 13.72 30.49
$500M to $1B 590.0 558.9 521.8 434.1 5.56 13.07 35.90
$1B to $5B 639.9 593.8 546.0 430.8 7.77 17.19 48.53
Over $5B 374.7 344.1 305.8 238.0 8.89 22.51 57.41
Comparative Indices
Dow Jones Industrials 7,331.0 7,009.0 6,448.3 5,693.4 4.59 13.69 28.76
S&P 500 848.3 801.3 740.7 671.7 5.86 14.52 26.29
</TABLE>
All SNL indices are market-value weighted: i.e. an institution's effect on an
index is proportionate to that institution's market capitalization. All SNL
thrift indices, except for the SNL MHC Index, began at 100 on March 30, 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: DE, DC, PA, MD, NJ, NY, PR; Midwest: IA, IL, IN, KS, KY, MI, MN,
MO, ND, NE, OH, SD, WI; New England: CT, ME, MA, NH, RI, VT; Southeast: AL, AR,
FL, GA, MS, NC, SC, TN, VA, WV; Southwest: CO, LA, NM, OK, TX, UT; West: AZ, AK,
CA, HI, ID, MT, NV, OR, WA, WY
JUNE 1997 -25-
<PAGE>
EXHIBIT IV-4
Riverview Savings Bank, FSB
Market Area Acquisition Activity
<PAGE>
RP Financial, LC.
Washington State Thrift Acquisitions Announced after 01/01/96
<TABLE>
<CAPTION>
Seller's Financials at Completion Deal Terms at Completion
Total Tang. TTM TTM NPAs/ Rsrvs/ Deal Deal
Comp/ Seller/ Assets Equity/ ROAE ROAA Assets NPLs Value Price Per Consider
Ann'd Buyer ST ($000) Assets (%) (%) (%) (%) ($M) Share ($) Type
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/29/96 Metropolitan Bancorp WA 761,014 6.14 7.68% 0.52% NA NA 67.5 19.834 Com Stock
07/12/96 Washington Federal WA
</TABLE>
<TABLE>
<CAPTION>
Deal Pricing at Completion
Price/ Price/ Price/ 4-Qtr
Comp/ Seller/ Book Tg Bk Assets EPS
Ann'd Buyer ST (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C>
11/29/96 Metropolitan Bancorp WA 149.98 149.98 8.95 NA
07/12/96 Washington Federal WA
</TABLE>
Source: SNL Securities
<PAGE>
EXHIBIT IV-5
Riverview Savings Bank, FSB
Directors and Management Summary Resumes
<PAGE>
EXHIBIT IV-5
Riverview Savings Bank, FSB
Directors and Management Summary Resumes
Robert K. Leick, an attorney in private practice, was a prosecuting
attorney with Skamania County, Washington, from 1967 to 1997. He is an active
member of numerous community and civic organizations, including the Skamania
County Historical Society, Skamania County Chamber of Commerce, Skamania County
Economic Development Council and the American Legion.
Paul L. Runyan owns and operates Runyan's Jewelry Stores in Camas and White
Salmon, Washington. He is an active member of numerous civic and community
organizations, including the White Salmon Elks, Camas Moose Lodge, Camas Lions
Club and the Stevenson Eagles.
Michael C. Yount joined the Savings Bank in 1979 and has served in various
capacities, such as appraiser, loan officer, loan collections and supervisor of
lending. He became Senior Vice President in 1989 and is responsible for the
daily operations and mortgage brokerage operations of the Savings Bank and
reports directly to the President. Mr. Yount is a member of the Washougal City
Council.
Karen Nelson joined Savings Bank in 1979 and has served in various
capacities, such as loan servicing clerk, operations officer, checking
administrator, consumer loan officer, and loan originator, and became Vice
President of Lending in 1990. She is responsible for all lending and mortgage
servicing activities and of the Savings Bank reports directly to the President.
Phyllis Kreibich joined the Savings Bank since 1987 and has served as
Corporate Secretary since 1989. She is responsible for maintaining the corporate
books and records of the Savings Bank and reports directly to the President.
Patrick Sheaffer joined the Savings Bank in 1965 and has served as
President and Chief Executive Officer since 1976. He became Chairman of the
Board in March 1993. He is responsible for the daily operations and the
management of the Savings Bank. Mr. Sheaffer is active in numerous professional
and civic organizations. Mr. Sheaffer is a founding director of Epitope Biotech
Company, a Nasdaq-listed company located in Portland, Oregon.
Roger Malfait is a semi-retired real estate developer and cattle rancher.
Gary R. Douglass, a certified public accountant, is a principal with
Douglass & Paulson, P.C., Camas, Washington.
Dale E. Scarbrough is the retired Chief Financial Officer for the City of
Camas, Washington. He is a member of the American Legion and numerous
professional financial organizations.
Ron Wysaske joined the Savings Bank in 1976. Before joining the Savings
Bank, he was an audit and tax accountant at Price Waterhouse & Co. He became
Executive Vice President, Treasurer and Chief Financial Officer in 1981. He is
responsible for administering all finance, accounting and treasury functions at
the Savings Bank. He is a member of several professional organizations,
including the American Institute of Certified Public
<PAGE>
EXHIBIT IV-6
Riverview Savings Bank, FSB
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
PRO FORMA AT MARCH 31, 1997
---------------------------------------------------------------------------
15% above
Minimum of Midpoint of Maximum of Maximum of
Estimated Estimated Estimated Estimated
Valuation Range Valuation Range Valuation Range Valuation Range
--------------- --------------- ---------------- ---------------
2,040,000 Shares 2,400,000 Shares 2,760,000 Shares 3,174,000 Shares
at $10.00 at $10.00 at $10.00 at $10.00
March 31, 1997 Per Share Per Share Per Share Per Share
------------------ ------------------ ------------------ ------------------ -----------------
Percent of Percent of Percent of Percent of Percent of
Adjusted Adjusted Adjusted Adjusted Adjusted
Total Total Total Total Total
Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1) Amount Assets(1)
------ --------- ------ --------- ------ --------- ------ --------- ------ ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital(2) ................. $25,022 11.15% $32,478 13.91% $33,821 14.39% $35,164 14.85% $36,709 15.38%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Tangible capital(2) ............. 22,777 10.26 30,233 13.08 31,576 13.57 32,919 14.05 34,464 14.59
Tangible capital requirement .... 3,330 1.50 3,466 1.50 3,491 1.50 3,515 1.50 3,544 1.50
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess .......................... $19,447 8.76% $26,767 11.58% $28,085 12.07% $29,404 12.55% $30,920 13.09%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Core capital(2) ................. 22,777 10.25 30,233 13.08 31,576 13.57 32,919 14.05 34,464 14.59
Core capital requirement(3) ..... 6,664 3.00 6,933 3.00 6,982 3.00 7,031 3.00 7,087 3.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess .......................... $16,113 7.25% $23,300 10.08% $24,594 10.57% $25,888 11.05% $27,377 11.59%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Total capital(4) ................ $22,986 20.89% $30,442 27.26% $31,785 28.38% $33,128 29.50% $34,673 30.77%
Risk-based
capital requirement ............ 8,804 8.00 8,932 8.00 8,959 8.00 8,985 8.00 9,015 8.00
----- ------- ----- ------- ----- ------- ----- ------- -----
Excess .......................... $14,182 12.89% $21,510 19.26% $22,826 20.38% $24,143 21.50% $25,658 22.77%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
- -------------------
(1) Based upon total tangible assets of $222.0 million at March 31, 1997 and
$231.1 million, $232.7 million, $234.4 million and $236.2 million at the
minimum, midpoint, maximum, and maximum, as adjusted, of the Estimated
Valuation Range, respectively, for purposes of the tangible capital
requirement, upon total adjusted assets of $222.1 million at March 31, 1997
and $231.1 million, $232.7 million, $234.4 million and $236.2 million at
the minimum, midpoint, maximum, and maximum, as adjusted, of the Estimated
Valuation Range, respectively, and upon risk-weighted assets of $109.8
million at March 31, 1997 and $111.7 million, $112.0 million, $112.3
million and $112.7 million at the minimum, midpoint, maximum, and maximum,
as adjusted, of the Estimated Valuation Range, respectively, for purposes
of the risk-based capital requirement.
(2) An unrealized loss on securities available-for-sale, net of taxes, of
$84,000 and a core deposit intangible asset of $2.3 million account for the
difference between GAAP capital and both tangible capital and core capital.
(3) The current OTS core capital requirement for savings associations is 3% of
total adjusted assets. The OTS has proposed core capital requirements which
would require a core capital ratio of 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and
soundness and a core capital ratio of 4% to 5% for all other thrifts. See
Note 13 of Notes to Consolidated Financial Statements.
(4) Percentage represents total core and supplementary capital divided by total
risk-weighted assets. Assumes net proceeds are invested in assets that
carry a 20% risk-weighting.
<PAGE>
Exhibit IV-7
PRO FORMA ANALYSIS SHEET
Riverview Savings Bank, FSB
Prices as of June 6, 1997
<TABLE>
<CAPTION>
Peer Group Washington Companies All SAIF Insured
-------------------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
Price-earnings ratio = P/E 15.x5 21.68x 22.42x 19.00x 17.72x 20.14x 20.41x
Price-book ratio = P/B 90.70% 122.97% 120.70% 177.63% 180.35% 128.40% 123.11%
Price-tangible book ratio = P/TB 95.61% 126.09% 128.79% 185.56% 187.81% 131.47% 125.24%
Price-assets ratio = P/A 16.83% 19.59% 20.87% 15.79% 15.04% 15.64% 14.25%
Valuation Parameters
Pre-Conversion Earnings (Y) $2,008,000 ESOP Stock Purchases (E) 8.00%
Pre-Conversion Book Value (B) $25,119,000 Cost of ESOP Borrowings (S) 0.(4)
Pre-Conv. Tang. Book Value (TB) $22,790,000 ESOP Amortization (T) 10.years
Pre-Conversion Assets (A) $224,384,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 4.32% RRP Vesting (N) 5.years
Est. Conversion Expenses (3)(X) 3.46% Percentage Sold (PCT) 58.27%
Tax rate (TAX) 34.00%
Calculation of Pro Forma Value After Conversion
1. V= P/E * Y V= $41,187,575
-------------------------------------------------------------------
1 - P/E * PCT * ((1-X-E-M)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * B V= $41,187,575
--------------------------------
1 - P/B * PCT * (1-X-E-M)
3. V= P/TB * TB V= $41,187,575
---------------------------------------------------
1 - P/TB * PCT * (1-X-E-M)
4. V= P/A * A V= $41,187,575
---------------------------------------------------
1 - P/A * PCT * (1-X-E-M)
Full
Gross Exchange Conversion
Conclusion Proceeds Ratio Value
Minimum $20,400,000 1.4488 $35,009,439
Midpoint $24,000,000 1.7044 $41,187,575
Maximum $27,600,000 1.9601 $47,365,711
Supermaximum Value $31,740,000 2.2541 $54,470,568
</TABLE>
(1) Pricing ratios shown reflect the midpoint of the offering.
(2) Net return reflects a reinvestment rate of 6.55 percent, and a tax rate of
34.00 percent.
(3) Estimated offering expenses based on prospectus.
(4) No cost is applicable since holding company will fund the ESOP loan.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Riverview Savings Bank, FSB
At the Minimum Value
1. Conversion Proceeds
Full Conversion Value $35,009,439
Exchange Ratio 1.4488
Offering Proceeds $20,400,000
Less: Estimated Offering Expenses 780,320
Net Conversion Proceeds $19,619,680
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $19,619,680
Less: Non-Cash Stock Purchases (1) 2,448,000
Net Proceeds Reinvested $17,171,680
Estimated net incremental rate of return 4.32%
Earnings Increase $741,817
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 107,712
Less: Recognition Plan Vesting (4) 107,712
Net Earnings Increase $526,393
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
12 Months ended March 31, 1997 (reported) $2,008,000 $526,393 $2,534,393
12 Months ended March 31, 1997 (core) $2,529,000 $526,393 $3,055,393
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
Reported as of March 31, 1997 $25,119,000 $17,171,680 $42,290,680
Tangible as of March 31, 1997 $22,790,000 $17,171,680 $39,961,680
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
Reported as of March 31, 1997 $224,384,000 $17,171,680 $241,555,680
</TABLE>
(1) Includes ESOP and Recognition Plan stock purchases equal to 8.0 percent and
4.0 percent of the offering, respectively. (2) ESOP stock purchases are
internally financed by a loan from the holding company. (3) ESOP borrowings are
amortized over 10 years, amortization expense is tax-effected at a 34.00 percent
rate. (4) Recognition plan is vested over five years, amortization expense is
tax-effected at a 34.00 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Riverview Savings Bank, FSB
At the Midpoint Value
1. Conversion Proceeds $41,187,575
Full Conversion Value 1.7044
Exchange Ratio
Offering Proceeds $24,000,000
Less: Estimated Offering Expenses 830,000
Net Conversion Proceeds $23,170,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $23,170,000
Less: Non-Cash Stock Purchases (1) 2,880,000
Net Proceeds Reinvested $20,290,000
Estimated net incremental rate of return 4.32%
Earnings Increase $876,528
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 126,720
Less: Recognition Plan Vesting (4) 126,720
Net Earnings Increase $623,088
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
<S> <C> <C> <C> <C>
12 Months ended March 31, 1997 (reported) $2,008,000 $623,088 $2,631,088
12 Months ended March 31, 1997 (core) $2,529,000 $623,088 $3,152,088
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
Reported as of March 31, 1997 $25,119,000 $20,290,000 $45,409,000
Tangible as of March 31, 1997 $22,790,000 $20,290,000 $43,080,000
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
Reported as of March 31, 1997 $224,384,000 $20,290,000 $244,674,000
</TABLE>
(1) Includes ESOP and Recognition Plan stock purchases equal to 8.0 percent and
4.0 percent of the offering, respectively. (2) ESOP stock purchases are
internally financed by a loan from the holding company. (3) ESOP borrowings are
amortized over 10 years, amortization expense is tax-effected at a 34.00 percent
rate. (4) Recognition plan is vested over five years, amortization expense is
tax-effected at a 34.00 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Riverview Savings Bank, FSB
At the Maximum Value
1. Conversion Proceeds
Full Conversion Value $47,365,711
Exchange Ratio 1.9601
Offering Proceeds $27,600,000
Less: Estimated Offering Expenses 879,680
Net Conversion Proceeds $26,720,320
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $26,720,320
Less: Non-Cash Stock Purchases (1) 3,312,000
Net Proceeds Reinvested $23,408,320
Estimated net incremental rate of return 4.32%
Earnings Increase $1,011,239
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 145,728
Less: Recognition Plan Vesting (4) 145,728
Net Earnings Increase $719,783
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
<S> <C> <C> <C> <C>
12 Months ended March 31, 1997 (reported) $2,008,000 $719,783 $2,727,783
12 Months ended March 31, 1997 (core) $2,529,000 $719,783 $3,248,783
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
Reported as of March 31, 1997 $25,119,000 $23,408,320 $48,527,320
Tangible as of March 31, 1997 $22,790,000 $23,408,320 $46,198,320
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
Reported as of March 31, 1997 $224,384,000 $23,408,320 $247,792,320
</TABLE>
(1) Includes ESOP and Recognition Plan stock purchases equal to 8.0 percent and
4.0 percent of the offering, respectively. (2) ESOP stock purchases are
internally financed by a loan from the holding company. (3) ESOP borrowings are
amortized over 10 years, amortization expense is tax-effected at a 34.00 percent
rate. (4) Recognition plan is vested over five years, amortization expense is
tax-effected at a 34.00 percent rate.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Riverview Savings Bank, FSB
At the Supermaximum Value
1. Conversion Proceeds
Full Conversion Value $54,470,568
Exchange Ratio 2.2541
Offering Proceeds $31,740,000
Less: Estimated Offering Expenses 936,812
Net Conversion Proceeds $30,803,188
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $30,803,188
Less: Non-Cash Stock Purchases (1) 3,808,800
Net Proceeds Reinvested $26,994,388
Estimated net incremental rate of return 4.32%
Earnings Increase $1,166,158
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 167,587
Less: Recognition Plan Vesting (4) 167,587
Net Earnings Increase $830,983
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
<S> <C> <C> <C> <C>
12 Months ended March 31, 1997 (reported) $2,008,000 $830,983 $2,838,983
12 Months ended March 31, 1997 (core) $2,529,000 $830,983 $3,359,983
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
Reported as of March 31, 1997 $25,119,000 $26,994,388 $52,113,388
Tangible as of March 31, 1997 $22,790,000 $26,994,388 $49,784,388
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
March 31, 1997 $224,384,000 $26,994,388 $251,378,388
</TABLE>
(1) Includes ESOP and Recognition Plan stock purchases equal to 8.0 percent and
4.0 percent of the offering, respectively. (2) ESOP stock purchases are
internally financed by a loan from the holding company. (3) ESOP borrowings are
amortized over 10 years, amortization expense is tax-effected at a 34.00 percent
rate. (4) Recognition plan is vested over five years, amortization expense is
tax-effected at a 34.00 percent rate.
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- ----------
($000) ($000) $000) ($000) ($000) ($000) ($)
Comparable Group
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BWFC Bank West Fin. Corp. of MI 1,053 -473 161 0 741 1,783 0.42
CMRN Cameron Fin. Corp. of MO 2,077 749 -255 0 2,571 2,682 0.96
EFBI Enterprise Fed. Bancorp of OH(1) 1,506 212 -72 0 1,646 2,011 0.82
FFHH FSF Financial Corp. of MN 2,234 989 -336 0 2,887 3,095 0.93
FFBA First Colorado Bancorp of Co(1)(5) 4,280 -77 26 0 4,229 16,555 1.02
FWWB First Savings Bancorp of WA(1) 8,508 -624 212 0 8,096 10,569 0.77
HRZB Horizon Financial Corp. of WA 7,803 -269 91 0 7,625 7,399 1.03
KFBI Klamath First Bancorp of OR 5,856 4,252 -1,446 0 8,662 9,962 0.87
UBMT United Fin. Corp. of MT 1,150 400 -136 0 1,414 1,223 1.16
WSTR WesterFed Fin. Corp. of MT 3,596 2,151 -731 0 5,016 5,551 0.90
</TABLE>
(1) Financial information is for the quarter ending December 31, 1996.
(5) Figures are for one quarter of financial data, EPS figures are annualized.
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>
EXHIBIT V-1
RP Financial, LC
Firm Qualifications Statement
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program 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's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
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 (13)
Gregory E. Dunn, Senior Vice President (15)
James P. Hennessey, Senior Vice President (12)
James J. Oren, Vice President (10)
Timothy M. Biddle, Vice President (8)
Washington Headquarters Telephone: (703 528-1700
Rosslyn Center Fax: (703) 528-1788
1700 North Moore Street, Suite 2210
Arlington, VA 22209
RIVERVIEW, M.H.C.
700 N.E. FOURTH AVENUE
P.O. BOX 1068
CAMAS, WASHINGTON 98607
(360) 834-2231
NOTICE OF SPECIAL MEETING OF MEMBERS
TO BE HELD ON SEPTEMBER 24, 1997
Notice is hereby given that a special meeting ("Special Meeting") of
members of Riverview, M.H.C. ("MHC") will be held at the main office of
Riverview Savings Bank, FSB ("Savings Bank") at 700 N.E. Fourth Avenue, Camas,
Washington, on Wednesday, September 24, 1997, at ___:___ __.m., Pacific Time.
Business to be taken up at the Special Meeting shall be:
(1) To approve an Amended Plan of Conversion from Mutual Holding
Company to Stock Holding Company and Agreement and Plan of
Reorganization ("Plan of Conversion") between the MHC and
Riverview Savings Bank, FSB ("Savings Bank"), pursuant to
which the Savings Bank organized Riverview Bancorp, Inc.
("Holding Company") and, upon consummation of the following
transactions, the Savings Bank will become a wholly owned
subsidiary of the Holding Company: (i) the MHC, which
currently owns ____% of the outstanding shares of common stock
of the Savings Bank, will convert from mutual holding company
to a federal interim stock savings bank ("Interim A") and
simultaneously merge with and into the Savings Bank, with the
Savings Bank as the surviving entity; (ii) the Savings Bank
will merge with and into an interim stock savings bank
("Interim B") to be formed as a wholly owned subsidiary of the
Holding Company, with the Savings Bank being the surviving
entity; (iii) the outstanding shares of common stock of the
Savings Bank (other than those held by the MHC which will be
canceled) ("Public Savings Bank Shares") will be exchanged for
shares of common stock of the Holding Company ("Exchange
Shares") pursuant to a ratio that will result in the holders
of such shares owning in the aggregate the same percentage of
the outstanding shares of common stock of the Holding Company
as they currently own in the Savings Bank, before giving
effect to such stockholders purchasing additional shares of
common stock of the Holding Company ("Conversion Shares") in a
concurrent stock offering by the Holding Company ("Conversion
Offerings") or by the Savings Bank's employee stock ownership
plan thereafter or receiving cash in lieu of fractional
Exchange Shares; and (iv) the offer and sale of Conversion
Shares by the Holding Company in the Conversion Offerings
(collectively, "Conversion and Reorganization"), all
undertaken pursuant to the laws of the United States and the
rules and regulations of the Office of Thrift Supervision; and
(2) To consider and vote upon any other matters that may lawfully
come before the Special Meeting.
Note: As of the date of mailing of this Notice, the Board of Directors
is not aware of any other matters that may come before the Special Meeting.
<PAGE>
The members entitled to vote at the Special Meeting shall be those
members of the MHC at the close of business on July 31, 1997, and who continue
as members until the Special Meeting, and should the Special Meeting be, from
time to time, adjourned to a later time, until the final adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS KREIBICH
SECRETARY
Camas, Washington
August ___, 1997
PLEASE SIGN AND RETURN PROMPTLY EACH PROXY CARD YOU RECEIVE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS WILL ASSURE NECESSARY REPRESENTATION AT THE SPECIAL
MEETING, BUT WILL NOT PREVENT YOU FROM VOTING IN PERSON IF YOU SO DESIRE. THE
PROXY IS SOLICITED ONLY FOR THIS SPECIAL MEETING (AND ANY ADJOURNMENTS THEREOF)
AND WILL NOT BE USED FOR ANY OTHER MEETING. YOU MAY REVOKE YOUR WRITTEN PROXY BY
WRITTEN INSTRUMENT DELIVERED TO PHYLLIS KREIBICH, SECRETARY, RIVERVIEW, M.H.C.,
AT THE ABOVE ADDRESS AT ANY TIME PRIOR TO OR AT THE SPECIAL MEETING.
<PAGE>
RIVERVIEW, M.H.C.
700 N.E. FOURTH AVENUE
CAMAS, WASHINGTON 98607
(360) 834-2231
PROXY STATEMENT
SEPTEMBER 24, 1997
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF
DIRECTORS OF RIVERVIEW, M.H.C. FOR USE AT A SPECIAL MEETING OF MEMBERS TO BE
HELD ON WEDNESDAY, SEPTEMBER 24, 1997, AND ANY ADJOURNMENT OF THAT MEETING, FOR
THE PURPOSES SET FORTH IN THE FOREGOING NOTICE OF SPECIAL MEETING. YOUR BOARD OF
DIRECTORS AND MANAGEMENT URGE YOU TO VOTE FOR THE PLAN OF CONVERSION.
PURPOSE OF MEETING -- SUMMARY
A special meeting of members ("Special Meeting") of Riverview, M.H.C.
("MHC") will be held at the Savings Bank's main office at 700 N.E. Fourth
Avenue, Camas, Washington, on Wednesday, September 24, 1997, at __:00 _.m.,
Pacific Time, for the purpose of considering and voting upon an Amended Plan of
Conversion and Agreement and Plan of Reorganization ("Plan of Conversion"),
which, if approved by a majority of the total votes of the members eligible to
be cast, will permit the Savings Bank to become a subsidiary of the Holding
Company, a newly organized Washington corporation formed by the Savings Bank.
The reorganization of the Savings Bank and the acquisition of control of the
Savings Bank by the Holding Company are collectively referred to herein as the
"Conversion and Reorganization."
Pursuant to the MHC's Federal Mutual Holding Company Charter,
depositors of the Savings Bank, and borrowers of the Savings Bank with a loan
outstanding as of October 22, 1993 and for as long as such loan remains
outstanding, are members of the MHC. Members entitled to vote on the Plan of
Conversion are members of the MHC as of July 31, 1997 ("Voting Record Date") who
continue as members until the Special Meeting, and should the Special Meeting
be, from time to time, adjourned to a later time, until the final adjournment
thereof. The Conversion and Reorganization requires the approval of not less
than a majority of the total votes eligible to be cast at the Special Meeting.
Pursuant to the Plan of Conversion, (i) the MHC will convert from a
federally-chartered mutual holding company to a federally-chartered interim
stock savings bank (i.e. Interim A) and simultaneously merge with and into the
Savings Bank, pursuant to which the MHC will cease to exist and the shares of
Savings Bank Common Stock held by the MHC will be canceled, and (ii) Interim A
will then merge with and into the Savings Bank. As a result of the merger of
Interim A with and into the Savings Bank, the Savings Bank will become a wholly
owned subsidiary of the Holding Company and the shares of Savings Bank Common
Stock held by persons other than the MHC ("Public Savings Bank Shares") will be
converted into shares of common stock of the Holding Company ("Exchange Shares")
pursuant to a ratio ("Exchange Ratio"), which will result in the holders of such
shares owning in the aggregate approximately the same percentage of the Common
Stock to be outstanding upon the completion of the Conversion and Reorganization
as the percentage of Savings Bank Common Stock owned by them in the aggregate
immediately prior to consummation of the Conversion and Reorganization, but
before giving effect to (a) the payment of cash in lieu of issuing fractional
Exchange Shares and (b) any Conversion Shares (defined below) purchased by the
Savings Bank's stockholders in the Conversion Offerings (defined below) or the
ESOP thereafter.
As part of the Plan of Conversion, nontransferable rights to subscribe
("Subscription Rights") for up to 2,760,000 shares of common stock ("Conversion
Shares") have been granted, in order of priority, to (i) depositors with $50.00
or more on deposit at the Savings Bank as of December 31, 1995 ("Eligible
Account Holders"), (ii) the
1
<PAGE>
ESOP, a tax-qualified employee benefit plan, (iii) depositors with $50.00 or
more on deposit at the Savings Bank as of June 30, 1997 ("Supplemental Eligible
Account Holders"), and (iv) depositors of the Savings Bank (other than Eligible
Account Holders and Supplemental Eligible Account Holders) as of July 31, 1997
("Voting Record Date"), and borrowers of the Savings Bank with loans outstanding
as of October 22, 1993 which continue to be outstanding as of the Voting Record
Date ("Other Members"), subject to the priorities and purchase limitations set
forth in the Plan of Conversion ("Subscription Offering"). Concurrently, but
subject to the prior rights of Subscription Rights holders, the Holding Company
is offering the Conversion Shares for sale to members of the general public
through a direct community offering ("Direct Community Offering") with
preference given first to Public Stockholders (who are not Eligible Account
Holders, Supplemental Eligible Account Holders or Other Members) and then to
natural persons and trusts of natural persons who are permanent residents of
Clark, Calix, Klickitat and Skamania Counties of Washington ("Local Community").
It is anticipated that any Conversion Shares not subscribed for in the
Subscription Offering or purchased in the Direct Community Offering will be
offered to eligible members of the general public on a best efforts basis by a
selling group of broker-dealers managed by Pacific Crest in a syndicated
community offering ("Syndicated Community Offering"). The Subscription Offering,
Direct Community Offering and the Syndicated Community Offering are referred to
collectively as the "Conversion Offerings." The Holding Company, Savings Bank
and MHC are collectively referred to herein as the "Primary Parties." The
Primary parties reserve the right, in their absolute discretion, to accept or
reject, in whole or in part, any or all orders in the Direct Community Offering
or Syndicated Community Offering either at the time of receipt of an order or as
soon as practicable following the termination of the Conversion Offerings. If an
order is rejected in part, the purchaser does not have the right to cancel the
remainder of the order.
RIVERVIEW, M.H.C.
The MHC is the federally-chartered mutual holding company for the
Savings Bank. The MHC was formed in October 1993 as a result of the
reorganization of the Savings Bank into a federally chartered mutual holding
company ("MHC Reorganization"). The members of the MHC consist of depositors of
the Savings Bank and those current borrowers of the Savings Bank who had loans
outstanding as of the consummation date of the MHC Reorganization (October 22,
1993). Currently, the MHC's sole business activity is holding the _______ shares
of Savings Bank Common Stock, which represents ___% of the outstanding shares as
of the date of this Prospectus. The MHC's main office is located at 700 N.E.
Fourth Avenue, Camas, Washington 98607, and its telephone number is (360)
834-2231. As part of the Conversion and Reorganization, the MHC will convert to
a federally-chartered interim stock savings bank and simultaneously merge with
and into the Savings Bank, with the Savings Bank as the surviving entity.
RIVERVIEW SAVINGS BANK, FSB
The Savings Bank is a federally-chartered savings bank, founded in 1923
and headquartered in Camas, Washington. The Savings Bank's deposits are insured
by the FDIC up to applicable legal limits under the SAIF. The Savings Bank has
been a member of the Federal Home Loan Bank ("FHLB") system since 1937. The
Savings Bank is regulated by the OTS and the FDIC. At March 31, 1997, the
Savings Bank had total assets of $224.4 million, total deposit accounts of
$169.4 million, and total shareholders' equity of $25.0 million, on a
consolidated basis.
On October 22, 1993, when the MHC Reorganization was consummated, the
Savings Bank completed its initial stock offering by issuing 1,725,000 shares of
Savings Bank Common Stock, of which 690,000 shares were purchased by the Public
Stockholders and 1,007,400 shares were issued to the MHC. Stock dividends issued
and stock options exercised subsequent to the initial public offering have
increased the total shares issued and outstanding to _______ as of the date of
this Prospectus, of which ________ shares are held by the Public Stockholders
and _______ shares are held by the MHC.
The Savings Bank is a community oriented financial institution offering
traditional financial services to the residents of its primary market area. The
Savings Bank considers Clark, Cowlitz, Klickitat and Skamania Counties
2
<PAGE>
of the State of Washington as its primary market area. The Savings Bank is
engaged primarily in the business of attracting deposits from the general public
and using such funds to originate fixed-rate mortgage loans and adjustable rate
mortgage ("ARM") loans secured by one- to- four family residential real estate
located in its primary market area. The Savings Bank is also an active
originator of residential construction loans and consumer loans. At March 31,
1997, one- to- four family mortgage loans were $94.5 million, or 62.3% of total
net loans receivable and loans held for sale (collectively, "total net loans
receivable"), residential construction loans were $32.5 million, or 21.4% of
total net loans receivable, and consumer loans were $14.3 million, or 9.4% of
total net loans receivable. To a lesser extent, the Savings Bank originates land
loans ($7.9 million or 5.2% of total net loans receivable at March 31, 1997) and
commercial real estate loans ($9.0 million or 5.9% of total net loans receivable
at March 31, 1997). Substantially all of the Savings Bank's real estate loans
are secured by real estate located in its primary market area. Construction,
consumer, land and commercial real estate loans generally involve a greater risk
of loss than one- to- four family mortgage loans. See "RISK FACTORS -- Certain
Lending Risks" in the Prospectus.
In addition to originating one- to- four family loans for its
portfolio, the Savings Bank is an active mortgage broker for several third party
mortgage lenders. In recent periods, such mortgage brokerage activities have
reduced the volume of fixed-rate one- to- four family loans that are originated
and sold by the Savings Bank. See "-- Loan Originations, Sales and Purchases"
and "-- Mortgage Brokerage" in the Prospectus.
The Savings Bank also invests in short- to- intermediate term U.S.
Treasury securities and U.S. Government agency obligations, and mortgage-backed
securities issued by U.S. Government agencies. At March 31, 1997, the Savings
Bank's investment and mortgage-backed securities portfolio had a carrying value
of $53.7 million. See "BUSINESS OF THE SAVINGS BANK -- Investment Securities" in
the Prospectus.
Deposits have been the primary source of funds for the Savings Bank's
investment and lending activities. The Savings Bank plans to continue to fund
its operations primarily with deposits, although advances from the FHLB-Seattle
have been used as a supplemental source of funds. The Savings Bank has also used
FHLB advances to purchase investment securities, with the goal of recognizing
income on the difference between the interest rate earned on the investment
securities and the interest rate paid on the FHLB advances. See "BUSINESS OF THE
SAVINGS BANK -- Deposits and Other Sources of Funds" in the Prospectus.
The Savings Bank conducts its operations from its main office and eight
branch offices located in Southwest Washington State. See "BUSINESS OF THE
SAVINGS BANK -- Properties" in the Prospectus. The Savings Bank's main office is
located at 700 N.E. Fourth Avenue, Camas, Washington, and its telephone number
is (360) 834-2231.
RIVERVIEW BANCORP, INC.
The Holding Company was organized on June 23, 1997 under Washington law
at the direction of the Savings Bank to acquire the Savings Bank as a
wholly-owned subsidiary upon consummation of the Conversion and Reorganization.
The Holding Company has only engaged in organizational activities to date. The
Holding Company has received conditional OTS approval to become a savings and
loan holding company through the acquisition of 100% of the capital stock of the
Savings Bank. Immediately following the Conversion, the only significant assets
of the Holding Company will be the outstanding capital stock of the Savings
Bank, 50% of the net investable proceeds of the Conversion Offerings (see table
under "PRO FORMA DATA" in the Prospectus) as permitted by the OTS to be retained
by it) and a note receivable from the ESOP evidencing a loan to enable the ESOP
to purchase 8% of the Conversion Shares issued in the Conversion and
Reorganization. Funds retained by the Holding Company will be used for general
business activities. See "USE OF PROCEEDS" in the Prospectus. Upon consummation
of the Conversion and Reorganization, the Holding Company will be classified as
a unitary savings and loan holding company subject to OTS regulation. See
"REGULATION -- Savings and Loan Holding Company Regulations" in the Prospectus.
The main office of the Holding Company is located at 700 N.E. Fourth Avenue,
Camas, Washington 98607 and its telephone number is (360) 834-2231.
3
<PAGE>
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
The MHC's Board of Directors has fixed the close of business on July
31, 1997 as the record date for the determination of members entitled to notice
of and to vote at the Special Meeting. All holders of savings or other
authorized accounts of the Savings Bank, and borrowers of the Savings Bank with
loans outstanding as of October 22, 1993 and for as long as such loans remain
outstanding, are members of the Savings Bank under its current charter. All
members of record as of the close of business on the Voting Record Date who
continue to be members on the date of the Special Meeting or any adjournment
thereof will be entitled to vote at the Special Meeting or such adjournment.
Each eligible depositor member will be entitled at the Special Meeting
to cast one vote for each $100, or fraction thereof, of the aggregate withdrawal
value of all of the depositor's savings accounts in the Savings Bank as of the
Voting Record Date. Borrowers with loans outstanding as of October 22, 1993,
which continue to be outstanding as of the Voting Record Date will be entitled
to cast one vote for the period of time such borrowings remain in existence. No
member is entitled to cast more than 1,000 votes. Any number of members present
and voting, represented in person or by proxy, at the Special Meeting will
constitute a quorum.
Approval of the Plan of Conversion will require the affirmative vote of
a majority of the total outstanding votes of the MHC's members eligible to be
cast at the Special Meeting. As of the Voting Record Date for the Special
Meeting, there were approximately _________ votes eligible to be cast, of which
_________ votes may be cast by depositor members and _____ votes may be cast by
borrower members.
PROXIES
Members may vote at the Special Meeting or any adjournment thereof in
person or by proxy. Enclosed is a proxy which may be used by any eligible member
to vote on the Plan of Conversion. All properly executed proxies received by
management will be voted in accordance with the instructions indicated thereon
by the members giving such proxies. If no instructions are given, such proxies
will be voted in favor of the Plan of Conversion. If any other matters are
properly presented at the Special Meeting and may properly be voted on, all
proxies will be voted on such matters in accordance with the best judgment of
the proxy holders named therein. If the enclosed proxy is returned, it may be
revoked at any time before it is voted by written notice to the Secretary of the
Savings Bank, by submitting a later dated proxy, or by attending and voting in
person at the Special Meeting. The proxies being solicited are only for use at
the Special Meeting and at any and all adjournments thereof and will not be used
for any other meeting. Management is not aware of any other business to be
presented at the Special Meeting.
The trustees for individual retirement accounts at the Savings Bank,
will vote in favor of the Plan of Conversion, unless the beneficial owner
executes and returns the enclosed proxy for the Special Meeting or attends the
Special Meeting and votes in person.
To the extent necessary to permit approval of the Plan of Conversion,
proxies may be solicited by officers, directors or regular employees of the MHC,
in person, by telephone or through other forms of communication. Such persons
will be reimbursed by the MHC for their reasonable out-of-pocket expenses
incurred in connection with such solicitation. If necessary, the Special Meeting
may be adjourned to an alternative date.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
PLAN OF CONVERSION. VOTING IN FAVOR OF THE PLAN OF CONVERSION WILL NOT OBLIGATE
ANY VOTER TO PURCHASE ANY CONVERSION STOCK.
4
<PAGE>
THE CONVERSION AND REORGANIZATION
THE OTS HAS APPROVED THE PLAN OF CONVERSION SUBJECT TO ITS APPROVAL BY
THE MEMBERS OF THE SAVINGS BANK AND THE STOCKHOLDERS OF THE SAVINGS BANK
ENTITLED TO VOTE THEREON AND TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS
IMPOSED BY THE OTS IN ITS APPROVAL. OTS APPROVAL DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN OF CONVERSION.
GENERAL
On May 21, 1997, the Boards of Directors of the MHC and the Savings
Bank unanimously adopted, and on July 16 and July 25, 1997, unanimously amended,
the Plan of Conversion, pursuant to which the MHC will convert from a mutual
holding company to a stock holding company and the Savings Bank simultaneously
reorganize as a wholly-owned subsidiary of the Holding Company, a newly formed
Washington corporation. THE FOLLOWING DISCUSSION OF THE PLAN OF CONVERSION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN OF CONVERSION, WHICH IS
ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT. The Plan of Conversion is also
filed as an exhibit to the Registration Statement. See "ADDITIONAL INFORMATION."
Pursuant to the Plan of Conversion, (i) the MHC will convert from a
federally-chartered mutual holding company to a federally-chartered interim
stock savings bank (i.e. Interim A) and simultaneously merge with and into the
Savings Bank, pursuant to which the MHC will cease to exist and the shares of
Savings Bank Common Stock held by the MHC will be canceled, and (ii) Interim A
will then merge with and into the Savings Bank. As a result of the merger of
Interim A with and into the Savings Bank, the Savings Bank will become a wholly
owned subsidiary of the Holding Company and the Public Savings Bank Shares will
be converted into the Exchange Shares pursuant to the Exchange Ratio, which will
result in the holders of such shares owning in the aggregate approximately the
same percentage of the Common Stock to be outstanding upon the completion of the
Conversion and Reorganization (i.e., the Conversion Shares and the Exchange
Shares) as the percentage of Savings Bank Common Stock owned by them in the
aggregate immediately prior to consummation of the Conversion and
Reorganization, but before giving effect to (a) the payment of cash in lieu of
issuing fractional Exchange Shares and (b) any shares of Conversion Stock
purchased by the Savings Bank's stockholders in the Conversion Offerings or the
ESOP thereafter.
As part of the Conversion and Reorganization, the Holding Company is
offering Conversion Shares in the Subscription Offering to holders of
Subscription Rights in the following order of priority: (i) Eligible Account
Holders (depositors of the Savings Bank with $50.00 or more on deposit as of
December 31, 1995); (ii) the ESOP; (iii) Supplemental Eligible Account Holders
(depositors of the Savings Bank with $50.00 or more on deposit as of June 30,
1997); and (iv) Other Members (depositors of the Savings Bank as of July 31,
1997 and borrowers of the Savings Bank with loans outstanding as of October 22,
1993, which continue to be outstanding as of ________, 1997).
Concurrently with the Subscription Offering, any Conversion Shares not
subscribed for in the Subscription Offering may be offered for sale in the
Direct Community Offering to members of the general public, with priority being
given first to Public Stockholders (who are not Eligible Account Holders,
Supplemental Eligible Account Holders or Other Members) and then to natural
persons and trusts of natural persons residing in the Local Community.
Conversion Shares not sold in the Subscription and Direct Community Offerings
may be offered in the Syndicated Community Offering. Regulations require that
the Direct Community and Syndicated Community Offerings be completed within 45
days after completion of the fully extended Subscription Offering unless
extended by the Savings Bank or the Holding Company with the approval of the
regulatory authorities. If the Syndicated Community Offering is determined not
to be feasible, the Board of Directors of the Savings Bank will consult with the
regulatory authorities to determine an appropriate alternative method for
selling the unsubscribed Conversion Shares. The Plan of Conversion provides that
the Conversion and Reorganization must be completed within 24 months after the
date of the approval of the Plan of Conversion by the members of the MHC.
5
<PAGE>
No sales of Common Stock may be completed, either in the Subscription
Offering, Direct Community Offering or Syndicated Community Offerings unless the
Plan of Conversion is approved by the members of the MHC and the stockholders of
the Savings Bank.
The completion of the Conversion Offerings, however, is subject to
market conditions and other factors beyond the Savings Bank's control. No
assurance can be given as to the length of time after approval of the Plan of
Conversion at the Special Members Meeting and the Stockholders Meeting that will
be required to complete the Direct Community or Syndicated Community Offerings
or other sale of the Conversion Shares. If delays are experienced, significant
changes may occur in the estimated pro forma market value of the MHC and the
Savings Bank, as converted, together with corresponding changes in the net
proceeds realized by the Holding Company from the sale of the Conversion Shares.
If the Conversion and Reorganization is terminated, the Savings Bank would be
required to charge all Conversion and Reorganization expenses against current
income.
Orders for Conversion Shares will not be filled until at least
2,040,000 Conversion Shares have been subscribed for or sold and the OTS
approves the final valuation and the Conversion and Reorganization closes. If
the Conversion and Reorganization is not completed within 45 days after the last
day of the fully extended Subscription Offering and the OTS consents to an
extension of time to complete the Conversion and Reorganization, subscribers
will be given the right to increase, decrease or rescind their subscriptions.
Unless an affirmative indication is received from subscribers that they wish to
continue to subscribe for shares, the funds will be returned promptly, together
with accrued interest at the Savings Bank's passbook rate from the date payment
is received until the funds are returned to the subscriber. If such period is
not extended, or, in any event, if the Conversion and Reorganization is not
completed, all withdrawal authorizations will be terminated and all funds held
will be promptly returned together with accrued interest at the Savings Bank's
passbook rate from the date payment is received until the Conversion and
Reorganization is terminated.
PURPOSES OF CONVERSION AND REORGANIZATION
The MHC, as a federally chartered mutual holding company, does not have
stockholders and has no authority to issue capital stock. As a result of the
Conversion and Reorganization, the Holding Company will be structured in the
form used by holding companies of commercial banks, most business entities and a
growing number of savings institutions. The holding company form of organization
will provide the Holding Company with the ability to diversify the Holding
Company's and the Savings Bank's business activities through acquisition of or
mergers with both stock savings institutions and commercial banks, as well as
other companies. Although there are no current arrangements, understandings or
agreements regarding any such opportunities, the Holding Company will be in a
position after the Conversion and Reorganization, subject to regulatory
limitations and the Holding Company's financial position, to take advantage of
any such opportunities that may arise.
In their decision to pursue the Conversion and Reorganization, the
Board of Directors of the MHC and the Savings Bank considered various regulatory
uncertainties associated with the mutual holding company structure including the
ability to waive dividends in the future as well as the general uncertainty
regarding a possible elimination of the federal savings association charter. See
"RISK FACTORS -- Recent Legislation and the Future of the Thrift Industry" in
the Prospectus.
The Conversion and Reorganization will be important to the future
growth and performance of the holding company organization by providing a larger
capital base to support the operations of the Savings Bank and Holding Company
and by enhancing their future access to capital markets, their ability to
diversify into other financial services related activities, and their ability to
provide services to the public. Although the Savings Bank currently has the
ability to raise additional capital through the sale of additional shares of
Savings Bank Common Stock, that ability is limited by the mutual holding company
structure which, among other things, requires that the MHC hold a majority of
the outstanding shares of Savings Bank Common Stock.
6
<PAGE>
The Conversion and Reorganization also will result in an increase in
the number of shares of Common Stock to be outstanding as compared to the number
of outstanding shares of Public Savings Bank Shares which will increase the
likelihood of the development of an active and liquid trading market for the
Common Stock. See "MARKET FOR COMMON STOCK" in the Prospectus. In addition, the
Conversion and Reorganization permit to the Holding Company to engage in stock
repurchases without adverse federal income tax consequences, unlike the Savings
Bank. Currently, the Holding Company has no plans or intentions to engage in any
stock repurchases.
An additional benefit of the Conversion and Reorganization will be an
increase in the accumulated earnings and profits of the Savings Bank for federal
income tax purposes. When the Savings Bank (as a mutual institution) transferred
substantially all of its assets and liabilities to its stock savings bank
successor in the MHC Reorganization, its accumulated earnings and profits tax
attribute was not able to be transferred to the Savings Bank because no tax-free
reorganization was involved. Accordingly, this tax attribute was retained by the
Savings Bank when it converted its charter to that of the MHC, even though the
underlying retained earnings were transferred to the Savings Bank. The
Conversion and Reorganization has been structured to re-unite the accumulated
earnings and profits tax attribute retained by the MHC in the MHC Reorganization
with the retained earnings of the Savings Bank by merging the MHC with and into
the Savings Bank in a tax-free reorganization. This transaction will increase
the Savings Bank's ability to pay dividends to the Holding Company in the
future. See "DIVIDEND POLICY" in the Prospectus.
If the Savings Bank had undertaken a standard conversion involving the
formation of a stock holding company in 1993, applicable OTS regulations would
have required a greater amount of common stock to be sold than the amount of net
proceeds raised in the MHC Reorganization. Management believed that it was
advisable to profitably invest the $6.5 million of net proceeds raised in the
MHC Reorganization prior to raising the larger amount of capital that would have
been raised in a standard conversion. A standard conversion in 1993 also would
have immediately eliminated all aspects of the mutual form of organization.
In light of the foregoing, the Boards of Directors of the Primary
Parties believe that the Conversion and Reorganization is in the best interests
of the MHC and the Savings Bank, their respective members and stockholders, and
the communities served by the Savings Bank.
EFFECTS OF CONVERSION AND REORGANIZATION ON DEPOSITORS AND BORROWERS OF THE
SAVINGS BANK
GENERAL. Prior to the Conversion and Reorganization, each depositor in
the Savings Bank has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the MHC based upon the balance in his or
her account, which interest may only be realized in the event of a liquidation
of the MHC. However, this ownership interest is tied to the depositor's account
and has no tangible market value separate from such deposit account. A depositor
who reduces or closes his account receives a portion or all of the balance in
the account but nothing for his ownership interest in the net worth of the MHC,
which is lost to the extent that the balance in the account is reduced.
Consequently, the depositors of the Savings Bank normally have no way
to realize the value of their ownership interest in the MHC, which has
realizable value only in the unlikely event that the MHC is liquidated. In such
event, the depositors of record at that time, as owners, would share pro rata in
any residual surplus and reserves of the MHC after other claims are paid.
Upon consummation of the Conversion and Reorganization, permanent
nonwithdrawable capital stock will be created to represent the ownership of the
net worth of the Holding Company. The Common Stock is separate and apart from
deposit accounts and cannot be and is not insured by the FDIC or any other
governmental agency. Certificates are issued to evidence ownership of the
permanent stock. The stock certificates are transferable, and therefore the
stock may be sold or traded if a purchaser is available with no effect on any
deposit and/or loan account(s) the seller may hold in the Savings Bank.
7
<PAGE>
CONTINUITY. The Conversion and Reorganization will not interrupt the
Savings Bank's normal business of accepting deposits and making loans. The
Savings Bank will continue to be subject to regulation by the OTS and the FDIC.
After the Conversion and Reorganization, the Savings Bank will continue to
provide services for depositors and borrowers under current policies by its
present management and staff.
The directors and officers of the Savings Bank at the time of the
Conversion and Reorganization will continue to serve as directors and officers
of the Savings Bank after the Conversion and Reorganization. The directors and
officers of the Holding Company consist of individuals currently serving as
directors and officers of the MHC and the Savings Bank, and they generally will
retain their positions in the Holding Company after the Conversion and
Reorganization.
EFFECT ON PUBLIC SAVINGS BANK SHARES. Under the Plan of Conversion,
upon consummation of the Conversion and Reorganization, the Public Savings Bank
Shares shall be converted into Exchange Shares based upon the Exchange Ratio
without any further action on the part of the holder thereof. Upon surrender of
the Public Savings Bank Shares, Common Stock will be issued in exchange for such
shares.
Upon consummation of the Conversion and Reorganization, the Public
Stockholders will become stockholders of the Holding Company. For a description
of certain changes in the rights of stockholders as a result of the Conversion
and Reorganization, see "COMPARISON OF STOCKHOLDERS" RIGHTS" in the Prospectus.
VOTING RIGHTS. Presently, depositors and borrowers of the Savings Bank
are members of, and have voting rights in, the MHC as to all matters requiring
membership action. Upon completion of the Conversion and Reorganization, the MHC
will cease to exist and all voting rights in the Savings Bank will be vested in
the Holding Company as the sole stockholder of the Savings Bank. Exclusive
voting rights with respect to the Holding Company will be vested in the holders
of Common Stock. Depositors and borrowers of the Savings Bank will not have
voting rights in the Holding Company after the Conversion and Reorganization,
except to the extent that they become stockholders of the Holding Company.
SAVINGS ACCOUNTS AND LOANS. The Savings Bank's savings accounts,
account balances and existing FDIC insurance coverage of savings accounts will
not be affected by the Conversion and Reorganization. Furthermore, the
Conversion and Reorganization will not affect the loan accounts, loan balances
or obligations of borrowers under their individual contractual arrangements with
the Savings Bank.
TAX EFFECTS. The Savings Bank has received an opinion from Breyer &
Aguggia, Washington, D.C., that the Conversion and Reorganization will
constitute a nontaxable reorganization under Section 368(a)(1)(A) of the Code.
Among other things, the opinion provides that: (i) the conversion of the MHC
from a mutual holding company to a federally-chartered interim stock savings
bank (i.e., Interim A) and its simultaneous merger with and into the Savings
Bank, with the Savings Bank as the surviving entity will qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, (ii) no
gain or loss will be recognized by the Savings Bank upon the receipt of the
assets of the MHC in such merger, (iii) the merger of Interim B with and into
the Savings Bank, with the Savings Bank as the surviving entity, will qualify as
a reorganization within the meaning of Section 368(a)(1)(A) of the Code, (iv) no
gain or loss will be recognized by Interim B upon the transfer of its assets to
the Savings Bank, (v) no gain or loss will be recognized by the Savings Bank
upon the receipt of the assets of Interim B, (vi) no gain or loss will be
recognized by the Holding Company upon the receipt of Savings Bank Common Stock
solely in exchange for Common Stock, (vii) no gain or loss will be recognized by
the Public Stockholders upon the receipt of Exchange Shares in exchange for
their Public Savings Bank Shares, (viii) the basis of the Exchange Shares to be
received by the Public Stockholders will be the same as the basis of the Public
Savings Bank Shares surrendered in exchange therefor, before giving effect to
any payment of cash in lieu of fractional Exchange Shares, (ix) the holding
period of the Exchange Shares to be received by the Public Stockholders will
include the holding period of the Public Savings Bank Shares, provided that the
Public Savings Bank Shares were held as a capital asset on the date of the
exchange, (x) no gain or loss will be recognized by the Holding Company upon the
sale of shares of Conversion Shares in the Conversion Offerings, (xi) the
Eligible Account Holders, Supplemental Eligible Account Holders and
8
<PAGE>
Other Members will recognize gain, if any, upon the issuance to them of
withdrawable savings accounts in the Savings Bank following the Conversion and
Reorganization, interests in the liquidation account and nontransferable
subscription rights to purchase Conversion Stock, but only to the extent of the
value, if any, of the subscription rights, and (xii) the tax basis to the
holders of Conversion Shares purchased in the Conversion Offerings will be the
amount paid therefor, and the holding period for the Conversion Shares will
begin on the date of consummation of the Conversion Offerings, if purchased
through the exercise of Subscription Rights, and on the day after the date of
purchase, if purchased in the Community Offering or the Syndicated Community
Offering. Unlike a private letter ruling issued by the IRS, an opinion of
counsel is not binding on the IRS and the IRS could disagree with the
conclusions reached therein. In the event of such disagreement, no assurance can
be given that the conclusions reached in an opinion of counsel would be
sustained by a court if contested by the IRS.
Based upon past rulings issued by the IRS, the opinion provides that
the receipt of Subscription Rights by Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members under the Plan of Conversion will be
taxable to the extent, if any, that the Subscription Rights are deemed to have a
fair market value. RP Financial, a financial consulting firm retained by the
Savings Bank, whose findings are not binding on the IRS, has issued a letter
indicating that the Subscription Rights do not have any value, based on the fact
that such rights are acquired by the recipients without cost, are
nontransferable and of short duration and afford the recipients the right only
to purchase shares of the Common Stock at a price equal to its estimated fair
market value, which will be the same price paid by purchasers in the Direct
Community Offering for unsubscribed shares of Common Stock. If the Subscription
Rights are deemed to have a fair market value, the receipt of such rights may
only be taxable to those Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members who exercise their Subscription Rights. The Savings
Bank could also recognize a gain on the distribution of such Subscription
Rights. Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members are encouraged to consult with their own tax advisors as to the
tax consequences in the event the Subscription Rights are deemed to have a fair
market value.
The Savings Bank has also received an opinion from Knapp, O'Dell &
Lewis, Camas, Washington, that, assuming the Conversion and Reorganization does
not result in any federal income tax liability to the Savings Bank, its account
holders, or the Holding Company, implementation of the Plan of Conversion will
not result in any Washington tax liability to such entities or persons.
The opinions of Breyer & Aguggia and Knapp, O'Dell & Lewis and the
letter from RP Financial are filed as exhibits to the Registration Statement.
See "ADDITIONAL INFORMATION."
PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
REGARDING THE TAX CONSEQUENCES OF THE CONVERSION AND REORGANIZATION
PARTICULAR TO THEM.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the MHC, each depositor of the Savings Bank would receive his or her pro rata
share of any assets of the MHC remaining after payment of claims of all
creditors. Each depositor's pro rata share of such remaining assets would be in
the same proportion as the value of his or her deposit account was to the total
value of all deposit accounts in the Savings Bank at the time of liquidation.
After the Conversion and Reorganization, each depositor, in the event of a
complete liquidation of the Savings Bank, would have a claim as a creditor of
the same general priority as the claims of all other general creditors of the
Savings Bank. However, except as described below, his or her claim would be
solely in the amount of the balance in his or her deposit account plus accrued
interest. Each stockholder would not have an interest in the value or assets of
the Savings Bank or the Holding Company above that amount.
The Plan of Conversion provides for the establishment, upon the
completion of the Conversion and Reorganization, of a special "liquidation
account" for the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders in an amount equal to the amount of any dividends waived by the
MHC plus the greater of (1) the Savings Bank's retained earnings of $9.8 million
at March 31, 1993, the date of the latest statement of
9
<PAGE>
financial condition contained in the final offering circular utilized in the MHC
Reorganization, or (2) ______% of the Savings Bank's total stockholders' equity
as reflected in its latest statement of financial condition contained in the
final Prospectus utilized in the Conversion Offerings. As of the date of this
Prospectus, the initial balance of the liquidation account would be $25.0
million. Each Eligible Account Holder and Supplemental Eligible Account Holder,
if he or she were to continue to maintain his deposit account at the Savings
Bank, would be entitled, upon a complete liquidation of the Savings Bank after
the Conversion and Reorganization to an interest in the liquidation account
prior to any payment to the Holding Company as the sole stockholder of the
Savings Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder would have an initial interest in such liquidation account for each
deposit account, including passbook accounts, transaction accounts such as
checking accounts, money market deposit accounts and certificates of deposit,
held in the Savings Bank at the close of business on December 31, 1995 or June
30, 1997, as the case may be. Each Eligible Account Holder and Supplemental
Eligible Account Holder will have a pro rata interest in the total liquidation
account for each of his or her deposit accounts based on the proportion that the
balance of each such deposit account on the December 31, 1995 Eligibility Record
Date or the June 30, 1997 Supplemental Eligibility Record Date, as the case may
be, bore to the balance of all deposit accounts in the Savings Bank on such
date.
If, however, on any March 31 annual closing date of the Savings Bank,
commencing March 31, 1997, the amount in any deposit account is less than the
amount in such deposit account on December 31, 1995 or June 30, 1997, as the
case may be, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced by the
proportion of any such reduction, and such interest will cease to exist if such
deposit account is closed. In addition, no interest in the liquidation account
would ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders are satisfied would be
distributed to the Holding Company as the sole stockholder of the Savings Bank.
REVIEW OF OTS ACTION
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves a plan of conversion pursuant to this part
may obtain review of such action by filing in the court of appeals of the United
States for the circuit in which the principal office or residence of such person
is located, or in the United States Court of Appeals for the District of
Columbia, a written petition praying that the final action of the OTS be
modified, terminated or set aside. Such petition must be filed within 30 days
after the publication of notice of such final action in the Federal Register, or
30 days after the mailing by the applicant of the notice to members as provided
for in 12 C.F.R. ss.563b.6(c), whichever is later. The further procedure for
review is as follows: A copy of the petition is forthwith transmitted to the OTS
by the clerk of the court and thereupon the OTS files in the court the record in
the proceeding, as provided in Section 2112 of Title 28 of the United States
Code. Upon the filing of the petition, the court has jurisdiction, which upon
the filing of the record is exclusive, to affirm, modify, terminate, or set
aside in whole or in part, the final action of the OTS. Review of such
proceedings is as provided in Chapter 7 of Title 5 of the United States Code.
The judgment and decree of the court is final, except that they are subject to
review by the United States Supreme Court upon certiorari as provided in Section
1254 of Title 28 of the United States Code.
ADDITIONAL INFORMATION
The Holding Company has filed with the SEC a Registration Statement on
Form S-1 (File No. 333-30203) under the Securities Act of 1933, as amended, with
respect to the Common Stock offered in the Conversion and Reorganization. The
accompanying Prospectus does not contain all 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.,
Room 1024, Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Room
1100, Chicago, Illinois 60661; and 75 Park Place, New York, New York 10007.
Copies may be obtained at prescribed rates from the Public
10
<PAGE>
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Registration Statement also is available through the SEC's World Wide Web
site on the Internet (http://www.sec.gov).
The Savings Bank has filed with the OTS an Application for Approval of
Conversion. The accompanying Prospectus omits certain information contained in
such Application. The Application, including exhibits and certain other
information that are a part thereof, may be inspected, without charge, at the
offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552 and at the
office of the Regional Director of the OTS at the OTS West Regional Office,
Pacific Telesis Tower, 1 Montgomery Street, Suite 400, San Francisco, California
94104.
Copies of the Holding Company's Articles of Incorporation and Bylaws
may be obtained by written request to the Savings Bank.
All persons eligible to vote at the Special Meeting should review both
this Proxy Statement and the accompanying Prospectus carefully. However, no
person is obligated to purchase any Common Stock. For additional information,
you may call the Stock Information Center at (360) ___-____.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS KREIBICH
SECRETARY
Camas, Washington
August __, 1997
YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT AND THE PROSPECTUS AND, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, TO FILL IN, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS POSSIBLE TO ASSURE THAT YOUR VOTES
WILL BE COUNTED. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND
THE SPECIAL MEETING. YOU MAY REVOKE YOUR PROXY BY WRITTEN INSTRUMENT DELIVERED
TO THE SECRETARY OF THE SAVINGS BANK AT ANY TIME PRIOR TO OR AT THE SPECIAL
MEETING OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY STOCK. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS IN THOSE
JURISDICTIONS IN WHICH IT IS LAWFUL TO MAKE SUCH OFFER.
11
<PAGE>
EXHIBIT 99.6
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS OF RIVERVIEW SAVINGS BANK, FSB
<PAGE>
___________, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Riverview Savings Bank, FSB, which will be held at the main office of the
Savings Bank, 700 N.E. Fourth Avenue, Camas, Washington, on Wednesday, September
24, 1997, at __:00 _.m., Pacific Daylight Time.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be transacted at the meeting. In
addition to the routine matters of electing directors and ratifying the
appointment of independent auditors, you will be asked to approve a Plan of
Conversion From Mutual Holding Company to Stock Holding Company and Agreement
and Plan of Reorganization ("Plan of Conversion"). The Plan of Conversion
provides for the conversion of Riverview, M.H.C. from a mutual holding company
to a stock holding company, to be known as Riverview Bancorp, Inc. ("Holding
Company"), and the reorganization of the Savings Bank as a wholly-owned
subsidiary of the Holding Company.
During the meeting, we will also report on the operations of the
Savings Bank. Directors and Officers of the Savings Bank, as well as a
representative of Deloitte & Touche LLP, the Savings Bank's independent
auditors, will be present to respond to appropriate questions from stockholders.
Detailed information regarding the Savings Bank's activities and
operating performance during the fiscal year ended March 31, 1997, is contained
in the Holding Company's Prospectus dated August ___, 1997, which also is
enclosed. The Prospectus is provided in lieu of the Savings Bank's Annual Report
to Stockholders.
Your vote is important, regardless of the number of shares you own. THE
BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This
will not prevent you from voting in person at the Annual Meeting, but will
assure that your vote is counted if you are unable to attend.
Sincerely,
Patrick Sheaffer
President, Chief Executive Officer
and Chairman of the Board
12
<PAGE>
RIVERVIEW SAVINGS BANK, FSB
700 N.E. FOURTH AVENUE
P.O. BOX 1068
CAMAS, WASHINGTON 98607
(360) 834-2231
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Meeting") of Riverview Savings Bank, FSB ("Savings Bank") will be held at the
Savings Bank's main office, 700 N.E. Fourth Avenue, Camas, Washington, on
Wednesday, September 24, 1997, at __:00 _.m., Pacific Daylight Time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. To approve a Plan of Conversion from Mutual Holding Company to
Stock Holding Company and Agreement and Plan of Reorganization
("Plan of Conversion") providing for the conversion of
Riverview, M.H.C. ("MHC"), the mutual holding company of the
Savings Bank, to a stock holding company, with the concurrent
issuance and sale of all of the Savings Bank's outstanding
common stock to Riverview Bancorp, Inc., ("Holding Company"),
a Washington corporation, and the issuance and sale of the
Holding Company's common stock to the public; and the other
transactions provided for in the Plan of Conversion;
2. The election of three directors of the Savings Bank;
3. The approval of the appointment of Deloitte & Touche LLP as
independent auditors for the Savings Bank for the fiscal year
ending March 31, 1998; and
4. Such other matters as may properly come before the Meeting or
any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to
come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Savings Bank's Bylaws, the Board of Directors has fixed the close of business on
July 31, 1997, as the record date for the determination of the stockholders
entitled to notice of and to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed form of Proxy,
which is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend the Meeting and vote
in person.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS KREIBICH, SECRETARY
Camas, Washington
August __, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE SAVINGS BANK THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
OF
RIVERVIEW SAVINGS BANK, FSB
700 N.E. FOURTH AVENUE
P.O. BOX 1068
CAMAS, WASHINGTON 98607
(360) 834-2231
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 24, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Riverview Savings Bank, FSB ("Savings
Bank") to be used at the Annual Meeting of Stockholders (as may be adjourned or
postponed, the "Meeting") of the Savings Bank. The Meeting will be held at the
Savings Bank's main office, 700 N.E. Fourth Avenue, Camas, Washington, on
Wednesday, September 24, 1997, at __:00 _.m., Pacific Daylight Time. The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about August __, 1997.
REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting. Proxies may be revoked by written notice delivered in person or
mailed to the Secretary of the Savings Bank at the above address, or the filing
of a later proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of the Savings Bank
will be voted in accordance with the directions given therein. Where no
instructions are indicated, executed proxies will be voted for the nominees for
directors set forth below and in favor of the other proposals set forth herein.
VOTING SECURITIES AND SECURITIES OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stockholders of record as of the close of business on July 31, 1997
("Voting Record Date"), are entitled to one vote for each share of common stock
of the Savings Bank ("Savings Bank Common Stock") then held. As of the Voting
Record Date, _________ shares of Savings Bank Common Stock were issued and
outstanding, __________ of which were owned by the MHC, the Savings Bank's
mutual holding company. All share data included herein has been adjusted to
reflect all stock dividends paid by the Savings Bank.
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Meeting. SINCE THE MHC OWNS MORE THAN 50% OF THE
OUTSTANDING SHARES OF COMMON STOCK, THE VOTES CAST BY THE MHC WILL CONSTITUTE
THE PRESENCE OF A QUORUM AND WILL DETERMINE THE OUTCOME OF THE PROPOSAL II
(ELECTION OF DIRECTORS) AND PROPOSAL III (APPROVAL OF APPOINTMENT OF INDEPENDENT
AUDITORS) SET FORTH HEREIN. PROPOSAL I (APPROVAL OF PLAN OF CONVERSION FROM
MUTUAL HOLDING COMPANY TO STOCK HOLDING COMPANY AND AGREEMENT AND PLAN OF
REORGANIZATION) MUST BE APPROVED BY THE HOLDERS OF AT LEAST TWO-THIRDS OF THE
OUTSTANDING SHARES OF SAVINGS BANK COMMON STOCK AND BY THE HOLDERS OF AT LEAST A
MAJORITY OF THE OUTSTANDING SHARES OF SAVINGS BANK COMMON STOCK PRESENT IN
PERSON OR BY PROXY AT THE MEETING (OTHER THAN THOSE HELD BY THE MHC).
1
<PAGE>
The nominees for directors who receive a plurality of the votes cast by
the holders of the outstanding Common Stock entitled to vote at the Meeting will
be elected. Votes may be cast for or withheld from each nominee. Votes that are
withheld will have no effect on the outcome of the election because directors
will be elected by a plurality of votes cast. An affirmative majority of the
votes cast is required to ratify the appointment of independent auditors.
Abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which instructions have not been received and the broker or
nominee does not have discretionary voting power) will be treated as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. The vote of a stockholder who abstains will, however, have the same
effect as a vote "against" a proposal. "Broker non-votes" will have no effect on
whether or not a proposal passes.
Persons and groups beneficially owning in excess of 5% of the Common
Stock are required to file with the Office of Thrift Supervision ("OTS"), and
provide a copy to the Savings Bank, certain reports disclosing such ownership
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act").
Based upon such reports, the following table sets forth, as of the Voting Record
Date, certain information as to those persons who were beneficial owners of more
than 5% of the outstanding shares of Common Stock and as to the shares of Common
Stock beneficially owned by the Savings Bank's named executive officers and by
all officers and directors of the Savings Bank as a group. See "PROPOSAL II --
ELECTION OF DIRECTORS" for information concerning the beneficial ownership of
shares of Common Stock by each of the Savings Bank's directors.
Amount and Nature Percent of
of Beneficial Common Stock
Beneficial Owner Ownership(a) Outstanding
Riverview, M.H.C 1,407,891 58.27%
700 N.E. Fourth Avenue
Camas, Washington 98607
NAMED EXECUTIVE OFFICERS(B):
Patrick Sheaffer 74,223(c) 3.05
Ron Wysaske 51,004(d) 2.10
Michael C. Yount 25,976(e) 1.07
All Officers and
Directors as a
Group (10 persons) 264,768(e) 10.64
- --------------------
(a) Unless otherwise indicated, all shares are owned directly by the
officers and directors or by the officers and directors indirectly
through a trust, corporation or association, or by the officers and
directors or their spouses as custodians or trustees for the shares of
minor children. The officers and directors effectively exercise voting
and investment power over such shares.
(b) Under applicable regulations the term "named executive officers" is
defined to include the chief executive officer, regardless of
compensation level, and the four most highly compensated executive
officers other than the chief executive officer whose total annual
salary and bonus for the last completed fiscal year exceeded $100,000.
Messrs. Sheaffer, Wysaske and Yount were the Savings Bank's only named
executive officers during the fiscal year ended March 31, 1997.
(c) Includes 20,733 shares of Savings Bank Common Stock which may be
received upon the exercise of stock options that are exercisable within
60 days of from the Voting Record Date.
(d) Includes 16,297 shares of Savings Bank Common Stock which may be
received upon the exercise of stock options that are exercisable within
60 days from the Voting Record Date.
2
<PAGE>
(e) Includes 12,536 shares of Savings Bank Common Stock which may be
received upon the exercise of stock options that are exercisable within
60 days from the Voting Record Date.
(f) Includes 72,046 shares of Savings Bank Common Stock which may be
received upon the exercise of stock options that are exercisable within
60 days from the Voting Record Date.
PROPOSAL I -- APPROVAL OF PLAN OF CONVERSION FROM MUTUAL HOLDING COMPANY
TO STOCK HOLDING COMPANY AND AGREEMENT AND PLAN OF REORGANIZATION
On May 21, 1997, the Boards of Directors of the MHC and the Savings
Bank unanimously adopted, and on July 16 and July 25, 1997, unanimously amended,
the Plan of Conversion, pursuant to which the MHC will convert from a mutual
holding company to a stock holding company and the Savings Bank simultaneously
reorganize as a wholly-owned subsidiary of the Holding Company, a newly formed
Washington corporation. THE FOLLOWING DISCUSSION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PLAN OF CONVERSION, WHICH IS ATTACHED AS AN EXHIBIT TO THIS
PROXY STATEMENT, AND THE INFORMATION SET FORTH UNDER "INCORPORATION BY
REFERENCE" BELOW.
Pursuant to the Plan of Conversion, (i) the MHC will convert from a
federally-chartered mutual holding company to a federally-chartered interim
stock savings bank ("Interim A") and simultaneously merge with and into the
Savings Bank, pursuant to which the MHC will cease to exist and the shares of
Savings Bank Common Stock held by the MHC will be canceled, and (ii) Interim A
will then merge with and into the Savings Bank. As a result of the merger of
Interim A with and into the Savings Bank, the Savings Bank will become a wholly
owned subsidiary of the Holding Company and the shares of Savings Bank Common
Stock held by persons other than the MHC ("Public Savings Bank Shares") will be
converted into shares of common stock of the Holding Company ("Exchange Shares:)
pursuant to a ratio ("Exchange Ratio"), which will result in the holders of such
shares owning in the aggregate approximately the same percentage of the Common
Stock to be outstanding upon the completion of the Conversion and Reorganization
as the percentage of Savings Bank Common Stock owned by them in the aggregate
immediately prior to consummation of the Conversion and Reorganization, but
before giving effect to (a) the payment of cash in lieu of issuing fractional
Exchange Shares and (b) any shares of Conversion Stock (defined below) purchased
by the Savings Bank's stockholders in the Conversion Offerings (defined below)
or the ESOP thereafter.
As part of the Conversion and Reorganization, the Holding Company is
offering Conversion Shares in the Subscription Offering to holders of
Subscription Rights in the following order of priority: (i) Eligible Account
Holders (depositors of the Savings Bank with $50.00 or more on deposit as of
December 31, 1995); (ii) the ESOP; (iii) Supplemental Eligible Account Holders
(depositors of the Savings Bank with $50.00 or more on deposit as of June 30,
1997); and (iv) Other Members (depositors of the Savings Bank as of July 31,
1997 and borrowers of the Savings Bank with loans outstanding as of October 22,
1993, which continue to be outstanding as of July 31, 1997).
Concurrently with the Subscription Offering, any Conversion Shares not
subscribed for in the Subscription Offering may be offered for sale in the
Direct Community Offering to members of the general public, with priority being
given first to Public Stockholders (who are not Eligible Account Holders,
Supplemental Eligible Account Holders or Other Members) and then to natural
persons and trusts of natural persons residing in the Local Community.
Conversion Shares not sold in the Subscription and Direct Community Offerings
may be offered in the Syndicated Community Offering. The Subscription Offering,
Direct Community Offering and Syndicated Community Offering are collectively
referred to herein as the "Conversion Offerings." Regulations require that the
Direct Community and Syndicated Community Offerings be completed within 45 days
after completion of the fully extended Subscription Offering unless extended by
the Savings Bank or the Holding Company with the approval of the regulatory
authorities. If the Syndicated Community Offering is determined not to be
feasible, the Board of Directors of the Savings Bank will consult with the
regulatory authorities to determine an appropriate alternative method for
selling the unsubscribed Conversion Shares. The Plan of Conversion provides that
the
3
<PAGE>
Conversion and Reorganization must be completed within 24 months after the date
of the approval of the Plan of Conversion by the members of the MHC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PLAN OF
CONVERSION.
INCORPORATION BY REFERENCE
Each person receiving this Proxy Statement is also receiving the
accompanying Prospectus of Riverview Bancorp, Inc. dated August ___, 1997.
Although such Prospectus is incorporated herein by reference, this Proxy
Statement does not constitute an offer to buy or a solicitation of an offer to
by the common stock of the Holding Company.
The Savings Bank urges each recipient of this Prospectus to read
carefully the sections of the Prospectus that describe (i) the Conversion and
Reorganization (see "THE CONVERSION AND REORGANIZATION") and the (ii) business
of the Holding Company and the Savings Bank (see "BUSINESS OF THE HOLDING
COMPANY" AND "BUSINESS OF THE SAVINGS BANK"), (iii) reasons for the Conversion
and reorganization and management's belief that the Conversion and
Reorganization is in the best interests of the Savings Bank and its
stockholders, (iv) employment agreements, severance agreements, severance plans
and stock benefit plans that the Savings Bank and/or the Holding Company intend
to implement in connection with the Conversion and Reorganization (see
"MANAGEMENT OF THE SAVINGS BANK"), (v) the common stock of the Holding Company
(see "DESCRIPTION OF CAPITAL STOCK OF THE HOLDING COMPANY"), (vi) the historical
capitalization of the Savings Bank and the pro forma capitalization of the
Holding Company (see "CAPITALIZATION"), (vii) the historical and pro forma
capital compliance of the Savings Bank (see "HISTORICAL AND PRO FORMA CAPITAL
COMPLIANCE"), (viii) pro forma financial information with respect to the
Conversion and reorganization (see "PRO FORMA DATA"), (ix) the Holding Company
and the Savings Bank's respective intended use of proceeds of the Conversion
Offerings (see "USE OF PROCEEDS"), (x) the Holding Company's proposed dividend
policy (See "DIVIDEND POLICY"), (xi) restrictions on the acquisition of the
Holding Company, including anti-takeover provisions in the Holding Company's
Articles of Incorporation and Bylaws (see "RESTRICTIONS ON THE ACQUISITION OF
THE HOLDING COMPANY"), (xii) a comparison of the rights of the holders of
Savings Bank Common Stock and rights of the holders of the Holding Company's
common stock, and (xiii) the consolidated financial statements of the Savings
Bank appearing in the Prospectus.
PROPOSAL II -- ELECTION OF DIRECTORS
The Savings Bank's Board of Directors consists of seven members. The
Savings Bank's Bylaws provide that directors are elected for terms of three
years, one-third of whom are elected annually. The Nominating Committee has
nominated for election as directors Roger Malfait, Gary R. Douglass and Patrick
Sheaffer, for the terms set forth in the table on the following page. The
nominees are current members of the Board of Directors of the Savings Bank.
Stockholders are not permitted to cumulate their votes for the election of
directors.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the Board of Directors may amend the Bylaws and
reduce the size of the Board. At this time, the Board knows of no reason why any
nominee might be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
NAMED BELOW FOR DIRECTORS OF THE SAVINGS BANK.
4
<PAGE>
The following table sets forth certain information as to each nominee
and director continuing in office.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Shares of
Year Common Stock
First Beneficially
Appointed or Year Owned at the Percent
Principal Occupation Elected Term Voting Record of
Name Age(1) for Past Five Years Director Expires Date(2) Class
---- ------ ------------------- -------- ------- ------- -----
BOARD NOMINEES
Roger Malfait(3) 67 Semi-retired real estate developer 1973 2000(4) 19,761(5) 0.82%
and cattle rancher
Gary R. Douglass 55 Certified Public Accountant with 1994 2000(4) 7,906(6) 0.33
Douglass & Paulson, P.C.
Patrick Sheaffer 57 President, Chief Executive Officer and Chairman of 1979 2000(4) 74,223(7) 3.05
the Board of the Savings Bank; director of Epitope
Biotech Company, a Nasdaq-listed company.
DIRECTORS CONTINUING IN OFFICE
Dale E. Scarbrough 69 Retired Chief Financial Officer for the 1972 1998 19,761(8) 0.82
City of Camas, Washington
Ronald Wysaske 45 Executive Vice President and Chief Financial Officer 1985 1998 51,004(9) 2.10
of the Savings Bank
Paul L. Runyan 62 Owner and operator of Runyan's Jewelry Stores, 1979 1999 41,004(10) 1.70
Camas and White Salmon, Washington
Robert K. Leick(11) 61 Sole practitioner attorney at law; former 1972 1999 5,810(12) 0.24
Prosecuting Attorney with Skamania County,
Stevenson, Washington, until retirement
in 1994
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
5
<PAGE>
(1) At March 31, 1997.
(2) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he has shared voting and/or investment power with respect
to such security. Includes shares owned by spouses other immediate family
members in trust, shares held in retirement accounts or funds for the
benefit of the named individuals, and other forms of ownership, over
which shares the named persons possess voting and investment power.
(3) Immediate past Vice-Chairman of the Board.
(4) Assuming re-election at the Meeting.
(5) Includes 3,857 shares of Savings Bank Common Stock which may be
received upon the exercise of stock options that are exercisable within
60 days of the Voting Record Date.
(6) Includes 918 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from the Voting Record Date.
(7) Includes 20,733 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days of
the Voting Record Date.
(8) Includes 3,857 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from the Voting Record Date.
(9) Includes 16,297 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from the Voting Record Date.
(10) Includes 1,602 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days of
the Voting Record Date.
(11) Vice-Chairman of the Board.
(12) Includes 3,857 shares of Savings Bank Common Stock which may be received
upon the exercise of stock options that are exercisable within 60 days
from the Voting Record Date.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Savings Bank is conducted through meetings and
activities of its Board of Directors and its committees. During the fiscal year
ended March 31, 1997, the Board of Directors held 13 regular meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
of the Savings Bank and committees on which such director served.
The Savings Bank has standing Executive, Audit, Nominating and
Personnel/Compensation Committees, among others.
The Executive Committee of the Board of Directors, which consists of
Directors Malfait, Leick and Sheaffer (Chairman), meets as necessary in between
meetings of the full Board of Directors. The Executive Committee met 12 times
during the fiscal year ended March 31, 1997.
The Audit Committee of the Savings Bank consists of Directors Scarbrough
(Chairman), Douglass and Runyan. It is responsible for developing and monitoring
the Savings Bank's audit program. The Committee meets with the Savings Bank's
independent auditors to discuss the results of the annual audit and any related
matters. The members of the committee also receive and review all the reports
and findings and other information presented to them by the Savings Bank's
officers regarding financial reporting policies and practices. The Audit
Committee met once during the fiscal year ended March 31, 1997.
The Nominating Committee consists of Directors Malfait (Chairman),
Douglass and Scarbrough. This Committee submits nominations for the annual
election of directors. The Nominating Committee met once during the fiscal year
ended March 31, 1997.
6
<PAGE>
The Personnel/Compensation Committee consists of Director Runyan
(Chairman), Douglass and Leick. This Committee determines annual grade and
salary levels for employees and establishes personnel policies. The
Personnel/Compensation Committee met two times during the fiscal year ended
March 31, 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is provided for the named executive officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(2)
Patrick Sheaffer 1997 $128,902 $56,720 $-- $19,364
President and Chief 1996 124,246 27,772 -- 20,875
Executive Officer 1995 111,896 59,178 -- 18,220
Ron Wysaske 1997 91,615 36,677 16,446
Executive Vice 1996 88,818 23,328 -- 15,560
President 1995 86,028 49,816 -- 16,393
Michael C. Yount 1997 81,528 27,384 -- 13,934
Senior Vice 1996 77,259 19,332 -- 13,333
President 1995 75,712 42,108 -- 14,111
</TABLE>
- ----------------
(1) The aggregate amount of perquisites and other personal benefits was
less than 10% of the annual salary and bonus reported.
(2) Consists of contributions to profit sharing plan and ESOP. Such
contributions for 1997 amount to: Mr. Sheaffer, $4,500 and $14,864,
respectively; Mr. Wysaske, $3,833 and $12,613, respectively; and Mr.
Yount, $3,251 and $10,683, respectively.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The MHC and the Savings Bank (collectively, the "Employers") have
entered into three-year employment agreements ("Employment Agreements" or
"Agreements") with Messrs. Sheaffer and Wysaske. Under the Agreements, the
current base salaries for Messrs. Sheaffer and Wysaske are $124,246 and $88,818,
respectively, which will be paid by the Savings Bank and may be increased at the
discretion of the Board of Directors or an authorized committee of the Board of
Directors of the Savings Bank. Messrs. Sheaffer's and Wysaske's salaries may not
be decreased during the term of the Employment Agreement without their prior
written consent. On the anniversary of the commencement date of the Agreements,
the term of the Agreements may be extended by the Board of Directors for an
additional year unless a termination notice is given by Messrs. Sheaffer and
Wysaske. The Agreements are terminable by the Employers for just cause at any
time or in certain events specified by OTS regulations.
The Agreements provide for severance payments if employment is
terminated following a change in control. These payments, which will be made
promptly after any change in control, will be equal to 2.99 times the average
annual compensation paid to Messrs. Sheaffer and Wysaske during the five years
immediately preceding the change in control. Under the Agreements, a "change in
control" is deemed to occur if, at anytime during the term of the Agreement, any
person or persons acting in concert obtain beneficial ownership of 20% or more
of the Savings
7
<PAGE>
Bank's Common Stock, or a merger, acquisition or other business combination
involving the Savings Bank or the MHC has occurred.
The Employers have also entered into a severance agreement with Mr.
Yount providing for payments in the event of this termination following a change
in control. The payments and the definition of "change in control" under Mr.
Yount's agreement are similar to the related provisions of the Agreements.
The aggregate severance payments that would have been payable under the
terms of the Agreement to Messrs. Sheaffer, Wysaske and Yount had a change in
control occurred in 1997 would have been $_______, $_______ and $_______,
respectively, based on their respective current base salaries under the
Agreements.
OPTION GRANTS
No options were granted under the Savings Bank's 1993 Option Plan
("1993 Stock Option Plan") to the named executive officers during the fiscal
year ended March 31, 1997.
OPTION EXERCISE/VALUE TABLE
The following information is presented for the named executive officers
in connection with the 1993 Stock Option Plan.
================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number Value of
of Number of Unexercised
Shares Unexercised In-the-Money
Acquired Dollar Options at Options at
on Value Fiscal Year End Fiscal Year End
Name Exercise Realized (Exercisable) (Exercisable)
- -----------------------------------------------------------------------------------------------------------------------------
Patrick Sheaffer -- $-- 20,733 $224,746
Ronald Wysaske -- -- 16,297 176,659
Michael C. Yount -- -- 12,536 135,890
=============================================================================================================================
</TABLE>
DIRECTORS' COMPENSATION
Directors receive an annual retainer of $4,600 (except for the current
and immediate past Vice-Chairman of the Board who each receive an annual
retainer of $5,000) and a monthly fee of $320 provided that they attend all
meetings held during the month. Directors also receive $200 for each committee
meeting attended, except no fees are paid for service on the Executive
Committee. Director and committee fees totalled $104,000 for the year ended
March 31, 1997.
Directors may elect to defer their monthly fees until retirement with
no income tax payable by the director until retirement benefits are received.
This alternative is available through a non-qualified deferred compensation plan
adopted by the Savings Bank in December 1986, and subsequently amended. If the
participant's employment is terminated on or after the date he attains age 65 or
five years of participation in the Plan ("Normal Retirement Date"), the Savings
Bank shall pay the participant or his designated beneficiaries in annual or
monthly installments
8
<PAGE>
over a period of 120 months, an amount equal to the balance in the participant's
account immediately before the date on which benefits commence, plus interest on
the unpaid balance. Participants may also choose two optional forms of benefit
payments: (i) a lump-sum payment within five years of the Normal Retirement Date
or (ii) an annuity over the life of the participant, or a joint survivor annuity
over the lives of the participant and the participant's spouse. Benefits are
also payable upon disability, early retirement, termination of service or death.
The Savings Bank pays annual interest on assets under the plans based on a
formula relating to gross revenues, which amounted to 7.9% for the year ended
March 31, 1997. The estimated liability under the plan is accrued as earned by
the participant. At March 31, 1997, the Savings Bank's aggregate liability under
the plans was $663,000.
PROPOSAL III -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche LLP was the Savings Bank's independent auditors for
the fiscal year ended March 31, 1997. The Board of Directors has appointed
Deloitte & Touche LLP as independent auditors for the fiscal year ending March
31, 1998, subject to approval by the Savings Bank's stockholders. A
representative of Deloitte & Touche LLP is expected to be present at the Meeting
to respond to stockholders' questions and will have the opportunity to make a
statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF
THE SAVINGS BANK FOR THE FISCAL YEAR ENDING MARCH 31, 1998.
TRANSACTIONS WITH THE SAVINGS BANK
Federal regulations require that all loans or extensions of credit to
executive officers and directors must generally be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons (unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee) and must not involve more than the normal risk of repayment or present
other unfavorable features. The Savings Bank's policy is not to make any new
loans or extensions of credit to the Savings Bank's executive officers and
directors at different rates or terms than those offered to the general public.
In addition, loans made to a director or executive officer in an amount that,
when aggregated with the amount of all other loans to such person and his
related interests, are in excess of the greater of $25,000 or 5% of the Savings
Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors.
The aggregate amount of loans by the Savings Bank to its executive officers and
directors was $1.0 million at March 31, 1997.
OTHER MATTERS
The Board of Directors of the Savings Bank is not aware of any business
to come before the Meeting other than those matters described above in this
Proxy Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or persons voting
the proxies.
The cost of solicitation of proxies will be borne by the Savings Bank.
In addition to solicitations by mail, directors, officers and regular employees
of the Savings Bank may solicit proxies personally or by telegraph or telephone
without additional compensation.
9
<PAGE>
FINANCIAL STATEMENTS
The Prospectus of Riverview Bancorp, Inc. dated August ___, 1997, which
includes consolidated financial statements of the Savings Bank, has been mailed
to all stockholders of record as of the close of business on the Voting Record
Date. Any stockholder who has not received a copy of such Prospectus may obtain
a copy by writing to the Secretary of the Savings Bank. The Prospectus is
incorporated herein in its entirety.
STOCKHOLDER PROPOSALS
Upon consummation of the Conversion and Reorganization, the
stockholders of the Savings bank will become stockholders of the Holding
Company. In order to be eligible for inclusion in the Holding Company's proxy
materials for its Annual Meeting of Stockholders next year, any stockholder
proposal to take action at such meeting must be received at the Holding
Company's main office at 700 N.E. Fourth Avenue, Camas, Washington, no later
than ___________, 1998. Any such proposals shall be subject to the requirements
of the proxy solicitation rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS KREIBICH
SECRETARY
Camas, Washington
August __, 1997
A COPY OF THE FORM 10-KSB AS FILED WITH THE OFFICE OF THRIFT SUPERVISION WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO PHYLLIS KREIBICH, SECRETARY, RIVERVIEW SAVINGS BANK, FSB, 700 N.E.
FOURTH AVENUE, P.O. BOX 1068, CAMAS, WASHINGTON 98607.
10
<PAGE>
REVOCABLE PROXY
RIVERVIEW SAVINGS BANK, FSB
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 24, 1997
The undersigned hereby appoints the full Board of Directors with full
powers of substitution, as attorneys and proxies for the undersigned, to vote
all shares of common stock of Riverview Savings Bank, FSB which the undersigned
is entitled to vote at the Annual Meeting of Stockholders, to be held at the
Savings Bank's main office at 700 N.E. Fourth Avenue, Camas, Washington, on
Wednesday, September 24, 1997, at ______ ___.m., Pacific Daylight Time, and at
any and all adjournments thereof, as follows:
<TABLE>
<CAPTION>
<C> <S> <C> <C>
FOR AGAINST
1. To approve an Amended Plan of Conversion from Mutual [ ] [ ]
Holding Company to Stock Holding Company and Agreement
and Plan of Reorganization providing for the conversion
of Riverview, M.H.C., the mutual holding company of
Riverview Savings bank, FSB ("Savings Bank"), to a
stock holding company, with the concurrent issuance and
sale of all of the Savings Bank's outstanding common
stock to Riverview Bancorp, Inc. ("Holding Company"),
a Washington corporation, and the issuance and sale of
the Holding Company's common stock to the public; and
the other transactions provided for in the Plan of
Conversion;
VOTE
FOR WITHHELD
2. The election as directors of all nominees [ ] [ ]
listed below (except as marked to the
contrary below).
Roger Malfait
Gary R. Douglass
Patrick Sheaffer
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE BELOW.
FOR AGAINST ABSTAIN
3. The approval of the appointment of Deloitte [ ] [ ] [ ]
& Touche LLP as independent auditors for the
Savings Bank for the fiscal year ending March 31, 1998.
4. Such other matters as may properly come before the Meeting or any adjournments thereof.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to the Secretary of
the Savings Bank at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Savings Bank, prior to
the execution of this proxy, of the Notice of Annual Meeting of Stockholders, a
proxy statement for the Annual Meeting of Stockholders, and a Prospectus of
Riverview Bancorp, Inc. dated August ___, 1997.
Dated: , 1997
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
<PAGE>
